HARD TIMES call for ambitious thinking and a readiness to confront reality imaginatively and honestly. These qualities have been sorely lacking in the public debates on the sovereign debt crisis in the European Union and the future of the euro zone. As a result political efforts to deal with the crisis have been reactive and half-hearted, usually failing to keep pace with market activity and lacking proper democratic accountability.
The current negotiations on a fiscal compact for tighter budgetary controls in the euro zone are thereby dissociated from the further bold measures required to deal with debt, stabilise the currency and restore sustainable economic growth and employment.
All the more reason to welcome the radical proposals made by Declan Ganley and Brendan Simms for a democratic federalisation of the EU if these problems are to be tackled effectively. They invoke the history of federalism in the United States to argue for a pooling of state indebtedness, enabling some of it to be written down, along with the issue of union bonds backed by the entire tax revenue of the euro zone. The authors clearly understand that the economic and political consequences of the euro failing could be much more serious than most people realise, resulting in a balkanisation of the Continent and reversing most of the progress made in the last 60 years.
They go on to call for a political transformation of the EU to make it much more directly accountable to its citizens and member states. This would merge the presidents of the European Commission and European Council into one executive subject to election by all EU citizens on a weighted basis, create a new upper house of the European Parliament, give the union a monopoly of soft and hard power in external action and make English the union’s official language. Mr Ganley’s involvement with these proposals has surprised many, given his previous campaigning against the Lisbon Treaty. But there is a common logic in his commitment to democratic accountability and his business experience gives him an insight into the potentially dire economic consequences should the euro fail. Discussion of these issues is often bedevilled by misunderstandings about the nature of federalism. Federal methods and institutions can exist without creating a federal state. They are indeed necessary in creating a supranational entity like the EU in which national self-rule and shared European rule coexist democratically. Many will not go as far as these authors do in pooling political sovereignty; but their espousal of direct elections for the EU executive deserves support and so does their confidence that citizens are capable of responding constructively if given the opportunity.
The sovereign debt and euro zone crises have exposed unacceptably large gaps between economic and political integration, between technocratic modes of governing and democratic accountability and has highlighted the weaknesses of political leaders tackling them. That must change if the euro and the EU itself are to survive and prosper.