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Archiv: July 2013

Much Ado about Nothing

26. July 2013, von Alexandre Abreu, Comments (1)

As many readers will have heard or read through other media, the last few weeks have seen a political crisis emerge, develop and finally subside in Portugal. The plot has been a convoluted one, with much toing-and-froing and backtracking, as well as attempts to change the game altogether – but all it came down to in the end was next to nothing. Anyway, now that none of the key players seem to have any cards left to play in the immediate future, it seems like a good time to summarise the events which took place throughout the month of July.

Act 1.
The proximate cause of this political crisis was the resignation of the former Minister of Finance, Vítor Gaspar, on July 1st. Mr Gaspar, a technocrat, was the chief domestic ideologue and implementer of austerity and an all-powerful figure in the centre-right coalition government. His resignation immediately brought on a political earthquake because instead of claiming personal reasons and quietly leaving the stage (as is the standard practice in these cases), he was candid enough to write a public letter of resignation in which he acknowledged the failure of the strategy that has been adopted thus far. Then, on the following day, Paulo Portas, then Minister of Foreign Affairs and leader of the junior coalition partner (the Popular Party, or CDS-PP), seized the opportunity to tender his own resignation from the government. His allegedly irrevocable decision was driven by strictly tactical political considerations: up until now, his party has succeeded in playing a duplicitous role whereby it actively supports austerity measures while simultaneously criticising them in public for leaving insufficient room for “the economy”. As a result of this Janus-faced strategy, the CDS-PP has managed to maintain its poll ratings at around 12% even while the senior coalition partner, the PSD, has been plummeting in the polls (from 39% in the June 2011 elections to 25% at present). However, as even tougher times lie ahead (with the Troika demanding additional permanent budget cuts worth around 3% of GDP in the near future), and with local elections coming up in September of this year, Mr Gaspar’s resignation (and the alleged appointment of a new minister of finance by the prime minister without consulting with the junior partner) seemed like a good opportunity for the CDS-PP to leave the government and avoid the electoral erosion that would surely come about in the next few months.

Act 2.
The resignations of both Mr Gaspar and Mr Portas seemed to signal the government’s imminent downfall, but in fact the play had barely begun. The prime minister, Pedro Passos Coelho, responded by refusing to accept Mr Portas’ public resignation and offering to negotiate. In return for the continuing support of the CDS-PP, Mr Coelho offered the junior coalition partner the leadership of the negotiations with the Troika and control over economic decision-making, in addition to offering to appoint Mr Portas as “Deputy Prime Minister” (a hitherto-inexistent post). This was too much for a party worth 12% of the electorate to turn down, even at the cost of future electoral erosion, so Mr Portas backtracked on his “irrevocable” decision, and the cabinet reshuffling was publicly announced and officially proposed to President Cavaco Silva (who also hails from the PSD). Then, as analysts argued over whether the president would simply confirm the reshuffling or refuse to condone the change in the balance of power in favour of the CDS-PP (thus bringing down the government and calling an early election); Mr Cavaco Silva surprised everyone by attempting to change the game altogether. He refused to follow either option and instead called for broad-based discussions to be held between both coalition partners as well as the main opposition party (the Socialist Party, or PS), with a view to the signing of a “national salvation pact” which would commit all three parties to endorsing austerity regardless of the outcome of the next general election (which would be anticipated by a year to coincide with the formal conclusion of the Troika’s period of supervision in June 2014). Mr Cavaco Silva was thus offering the socialists the opportunity to move into power one year ahead of schedule in return for their formal commitment to maintaining the same political course as the current government.

Act 3.
The president’s surprising proposal was an attempt to set a booby-trap for the socialists. If the latter refused to negotiate, they could be accused of adopting an irresponsible and uncompromising stance in the face of national emergency; if they agreed to endorse the “national salvation pact”, they would be decisively compromised in their ability to simply carry on waiting for the government to fall, and contestation within the party itself would increase significantly. Therefore, it was quite obvious that accepting such a proposal would amount to political suicide on the part of the PS – so what followed was a week of mock negotiations, supposedly leading up to the signing of a pact that at least one of the concerned parties had really no interest in. Eventually, the various parties announced that the negotiations had come to nothing, and did their best to blame each other for the outcome. And the President, whose move failed to bring about the desired results, ended up confirming the cabinet reshuffling that had been proposed a week before and withdrawing the promise of an early general election in September 2014.

The ultimate cause of this political crisis was, of course, the country’s ever-worsening economic and financial situation and the increasingly obvious fact that austerity is spreading social and economic destruction without even bringing public finances under control. As the political fall-out from all this becomes increasingly imminent, cracks have begun to emerge in the ruling coalition and in this instance these were only overcome at the cost of offering the junior coalition partner effective control over economic policy (though this will change nothing of substance). The president seized the opportunity to try and tie the main opposition party to the same pro-austerity course of action through a formal long-term pact, but this was an ill-considered move that had little chance of succeeding. The final outcome is a government whose credibility and popularity, which were already in shambles, have been additionally shaken and whose downfall was only temporarily postponed through offering vastly increased powers to the junior partner. Given that the economic and financial strategy will remain virtually unaltered, the social, economic and political situation will continue to deteriorate, so sooner or later a new crisis will erupt. For the time being, however, it was really much ado about nothing.

German Government Embraces Multi-Speed Europe

25. July 2013, von Almut Möller, Comments (0)

It almost slipped off my radar in the summer break, which Berlin dived into at the end of June: the German government seems to change course on its stance towards a multi-speed Europe or, as analysts like to put it, differentiated integration.

If this is really the case then here is some revolutionary news that will change the face of the union as we have known it.

So, what happened? In an opinion piece for Frankfurter Allgemeine Zeitung, one of Germany’s leading daily newspapers, Foreign Minister Guido Westerwelle made the case for a hands-on approach towards different speeds for Europe last week.

It is worth quoting what I consider the essential passage of the piece:

“The dilemma is that in Europe 17 countries share a currency, but there are 28 in the Union. How can we move forward given this tension?

That will only be possible if we start thinking in new ways on integration policy. Reinforcing the eurozone means a clearer commitment by Europe to the principle of different speeds than was previously the case.”

To my knowledge this has so far been the most explicit statement on the need to embrace different speeds in order to engineer the widening gaps between the ‘ins’ and ‘outs’ of the eurozone by a member of the government over the past years. Up till now, the federal government carefully avoided to openly address the de facto decoupling of the eurozone from the wider union. Officials frequently pointed out that, according to the treaties, the euro was the currency of the whole union. With a few exceptions all EU members were ‘pre-ins’ to EMU. Obviously, such an approach reflects the destructive potential that multiple speeds might develop for the union as a whole. In the course of the crisis centrifugal forces have already stretched the cohesion of the union to its limits, and the eurozone is far from being a healthy core naturally taking the lead.

It is noteworthy that in his piece Westerwelle now uses the “17/28”, and not the “25 and a few odd outs” formula usually put forward by the government. Now, the question obviously is what to make of this? Arguably, this is a minister known for initiatives such as the “future of Europe group” that have never quite taken off. The newest declaration adopted in Palma de Mallorca this week went down almost unnoticed. It might well be that the minister’s move, regardless of its timeliness and strategic value, is lost in the silly season. Even more importantly, it depends on whether his message is supported in the federal chancellery. This is where all major strategic decisions have eventually been taken on the Eurozone over the past years. Clearly, the foreign office suffers from being marginalised even further over Germany’s ‘ Europapolitik’. It is possible that the minister and his aides in the foreign office now make an attempt to win back some territory over the strategic questions related to the future of the union. But will this initiative fly?

Politically speaking the contentious issue of multiple speeds is much more relevant for both insiders and outsiders of the eurozone than the initiatives of Guido Westerwelle to trigger an institutional debate on Europe’s future. In terms of substance there might well be allies in Paris on differentiated integration, certainly more so than on the institutional questions over which the German foreign office struggled to bring the French counterparts in. Interestingly, Jacques Delors has been promoting his ideas of rethinking EMU and reconciling it with what he calls “Greater Europe” on various occasions over the past months. Is he intellectually paving the way for the socialist leaders in Paris to find common ground on the future of Europe with Germany again?

It is difficult to tell whether the minister’s piece reflects the wider views in the government, and whether it turns into government policy in the fall. The federal elections could obviously make a difference if they brought a different coalition into office. But if we see more of the same in September, and if Westerwelle’s move is indeed part of the overall thinking in the German government (remember that Wolfgang Schäuble has a soft spot for differentiated integration too), we might see Germany starting to actively engineer a new kind of union under the next government.

“We must always have an eye on the part, but also on the whole” is how the foreign minister concludes his piece. Is Germany about to plot out in greater detail a strategy for a Europe of different speeds that balances the needs of the eurozone with those of the wider union? There will be tough issues to address in the coming months and years. The most important one is clearly whether it will be possible at all to reconcile the future economic and monetary union with the common market as a whole. And what is the glue that will bind the new layers of membership together? In terms of substance, process and alliances there is still a great deal of thinking to be done to make a union within the union work.

Barroso Stretches the Limits of Subsidiarity

15. July 2013, von Adriaan Schout, Comments (0)

By Adriaan Schout and Judith Hoevenaars (Instituut Clingendael)

The eurocrisis has reignited debates on subsidiarity. On June 21st, the Dutch government presented the (disappointing) results of a subsidiarity review, listing 54 EU measures or policy fields which could better be regulated at the national level. The UK is working on a more extensive proposal to flow back European powers to the national level. These national exercises are a response to delinking enthusiasm for the ‘ever closer union’, while Brussels’ influence over the Member States grows. Subsidiarity, which governs the exercise of European powers, is under pressure as EU competences are expanding and it is no surprise that it tops the agenda in several Member States.

Yet, the principle of subsidiarity suffers from institutional vagueness. Subsidiarity is not just a technical or judicial concept, but also a political one. A legalistic interpretation of subsidiarity would emphasise that the EU should legislate ‘as closely as possible to the citizens’, especially in areas where it has no exclusive competence. However, the application of the principle, of which the rules are laid down in Protocol No 2 attached to the Treaties, inherently entails a political assessment. Subsidiarity is aimed at preventing unnecessary centralisation of powers just because that would favour the functioning of the EU in the view of the European institutions. Hence, the Commission has to justify each new proposal with a convincing argumentation why Europeanisation is required. Yet, the eurocrisis has stretched the boundaries of subsidiarity and the division of competences between Member States and the EU to its limits.

As it seems, the EU Commission’s political agenda is to centralise more powers in Brussels. In this respect, the Commission is using the political opportunity and room of maneuver in the application of the principle of subsidiarity to expand EU control. Barroso calls for a full banking, economic, fiscal and political union in the ‘Blueprint for a deep and genuine economic and monetary union’. His vision of the EU includes European ministers, an increased EU budget and centralised banking supervision. In particular, the Blueprint calls for centralisation of democratic control by the European Parliament. The institutional ambitions of the Commission and its wish for further conferral of competences to the EU level are legitimised by underlining that “national economic policy-making paid insufficient attention to the European context within which the economies operate”. In other words, the message is that the Member States can’t govern their economies, so national competences have to be handed over so that the EU will do it for them.

The blueprint is not written in the spirit of subsidiarity, exploring how the national administrations of the Member States can be strengthened to meet EU requirements, but from a centralised perspective. In response to the eurocrisis, the economic governance powers of the Commission have already expanded substantially. In the traditional division of roles the European institutions would set the standards (3% and 60%), the national governments or regions would be responsible for the implementation and the Commission would monitor and control the Member States. The EU reaction to the crisis has set aside this model of governance, deviating from the principle of subsidiarity, by pleading for more powers and budgets.

The principle of subsidiarity is reduced to a mere check box in the legislative procedure and has fallen victim to the political aspirations of the Commission. National governments and especially national parliaments – as guardians of the principle of subsidiarity – must ensure a strong subsidiarity test as a mandatory part of each EU legislative process also when it comes to the responses to the eurocrisis.

Blog Authors

avatar for Adriaan SchoutAdriaan Schout

Dr Adriaan Schout is Deputy Director Research/Europe at Clingendael, Netherlands Institute of International relations. (read more...)

avatar for Alexandre AbreuAlexandre Abreu

Dr Alexandre Abreu is a 33-year-old Portuguese economist with a PhD from the University of London. Currently he is a lecturer in Development Economics at the Institute of Economics and Business Administration, Technical University of Lisbon, and a Researcher at the Centre for African and Development Studies of the same University.

avatar for Almut MöllerAlmut Möller

Almut Möller is a political analyst in European integration and European foreign policy. She is currently the head of the Alfred von Oppenheim Centre for European Policy Studies at the German Council on Foreign Relations (DGAP) in Berlin. (read more...)

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