How macron Can Unite Europe

The Baltic Times - - COMMENTARY - Hans-werner Sinn

Em­manuel Macron’s vic­tory in the French pres­i­den­tial elec­tion sent a wave of re­lief and eu­pho­ria across Europe. But now, a re­al­ity check is in or­der, be­cause we do not yet know how the new pres­i­dent in­tends to re­store the French econ­omy. The coun­try suf­fers from an un­em­ploy­ment rate of nearly 10%, and its man­u­fac­tur­ing sec­tor is still op­er­at­ing 12% be­low its level be­fore the 2008 global fi­nan­cial cri­sis.

Macron has in­di­cated that he does not want to in­crease the re­tire­ment age, change the 35-hour work­week, or make it eas­ier for firms to dis­miss work­ers. At the same time, he wants north­ern eu­ro­zone coun­tries to send money to south­ern coun­tries, to pro­tect French fi­nan­cial and eco­nomic mar­kets in these re­gions.

This is an ad­mit­tedly broad-brush por­trayal of the pro­gram that got Macron elected, but it is none­the­less to the point. What else could he pos­si­bly mean when he calls for a newly cre­ated Eu­ro­zone Fi­nance Min­istry that can ac­crue jointly guar­an­teed debt and col­lect its own taxes. What about when he asks for com­mon Eu­ro­zone de­posit pro­tec­tion and un­em­ploy­ment in­sur­ance? The mo­tive be­hind these ideas is all too ob­vi­ous: sup­port the do­mes­tic econ­omy at oth­ers’ ex­pense.

Macron also sup­ports pro­pos­als for a new Eu­ro­zone Par­lia­ment, pro­claim­ing a two-tier Europe. But that is sim­ply a recipe for split­ting up the Euro­pean Union.

Turn­ing the Eu­ro­zone into a trans­fer union with its own par­lia­ment would only deepen the di­vide be­tween the Eu­ro­zone coun­tries and the EU’S north­ern and east­ern Mem­ber States: Den­mark, Swe­den, Poland, the Czech Repub­lic, Croa­tia, Hun­gary, Ro­ma­nia, and Bul­garia. Be­cause most of those coun­tries will not join a Euro­pean trans­fer union, they would be cut off per­ma­nently. As Don­ald Tusk, the Pol­ish Pres­i­dent of the Euro­pean Coun­cil has wryly ob­served, we al­ready had a two-tier Europe up un­til 1989, and we should not wish for a re­turn to that ar­range­ment.

German pol­i­cy­mak­ers, for their part, could not eas­ily help Macron bi­fur­cate the EU even if they wanted to, be­cause Ger­many’s Con­sti­tu­tion grants the Bun­destag the in­alien­able author­ity to man­age the coun­try’s fis­cal af­fairs. Even if ev­ery sin­gle mem­ber of the Bun­destag agreed to trans­fer part of its fis­cal sovereignty to a Euro­pean-level in­sti­tu­tion, such a de­ci­sion could still be made only through a for­mal ref­er­en­dum. Ger­many’s pow­er­ful Con­sti­tu­tional Court has al­ready made it clear that eu­ro­zone bailouts and other in­ter­ven­tions rep­re­sent the outer lim­its of what is pos­si­ble un­der Ger­many’s Ba­sic Law. The court may have de­ferred to the Euro­pean Court of Jus­tice on the ques­tion of the Euro­pean Cen­tral Bank’s “out­right mone­tary trans­ac­tions” scheme; but it will not be able to do the same with re­spect to fis­cal sovereignty, be­cause the con­sti­tu­tion is clear, and the ECJ has no stand­ing to in­ter­pret German con­sti­tu­tional law.

That be­ing said, it is im­por­tant that Euro­pean in­te­gra­tion moves for­ward. There is still much work to do to im­prove the EU’S cross-bor­der traf­fic routes, and to strengthen its se­cu­rity part­ner­ships. In­deed, Europe should take a les­son from the wars of the twen­ti­eth cen­tury and do away with na­tional armies al­to­gether. Only then will Europe’s union for peace be­come a re­al­ity, and not just a plat­i­tude in­voked by politi­cians.

Dur­ing the post-war era, Euro­pean heads of state drafted a treaty to es­tab­lish a Western Euro­pean de­fense com­mu­nity. But the pro­posal fell through in 1954, ow­ing to a veto by France’s Na­tional Assem­bly, against the rec­om­men­da­tion of Charles de Gaulle, the leg­endary post­war pres­i­dent. Later, the United King­dom op­posed a joint Euro­pean mil­i­tary.

But the UK will no longer be a part of the EU, at least for the fore­see­able fu­ture; and France has a young, dy­namic new pres­i­dent. So, it is time to try again. The German peo­ple can prob­a­bly be per­suaded to agree to this form of in­te­gra­tion in the same ref­er­en­dum that will have to be held any­way, to ap­prove Macron’s fis­cal plans. The same can be said for the peo­ple of East­ern Europe.

By pur­su­ing true po­lit­i­cal in­te­gra­tion based on a com­mon army and se­cu­rity part­ner­ship for the en­tire EU, Macron can guar­an­tee his place in the his­tory books. To achieve this goal, how­ever, he will have to break from the prece­dent set by his pre­de­ces­sors, who al­ways cat­e­gor­i­cally ruled out a po­lit­i­cal union. And he will have to ac­knowl­edge Ger­many’s con­cerns that by es­tab­lish­ing a fis­cal union now, Europe would lose the op­por­tu­nity to pur­sue a po­lit­i­cal union in the fu­ture.

Com­bin­ing Europe’s mil­i­tary forces un­der a joint com­mand is the only way for­ward. Cre­at­ing a fis­cal union with­out a po­lit­i­cal union would for­ever block the road to Euro­pean uni­fi­ca­tion, and set the peo­ple of Europe against one an­other more than the Euro ever did. No one who wants to build a union for peace can af­ford to per­mit, much less en­cour­age, that out­come.

Hans-werner Sinn, Pro­fes­sor of Eco­nom­ics at the Univer­sity of Mu­nich, was Pres­i­dent of the Ifo In­sti­tute for Eco­nomic Re­search and serves on the German Econ­omy Min­istry’s Ad­vi­sory Coun­cil.

Hans-werner Sinn

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