Tuesday, November 30, 2010

"European Integration Is Dead"

From Henry Farrell:

I’m a bit surprised not to have seen anyone making this point, but one obvious consequence of the current situation in Ireland is that European integration (to the extent that it is driven by Treaty change) is dead for the foreseeable future. New Treaties – if they are to be passed, not only require unanimity, but have to pass through two veto points.

First, they have to get a majority vote in a referendum in Ireland. This is thanks to a legal ruling (the Crotty ruling) that Treaty texts which have constitutional implications (which any Treaty involving significant further integration obviously would have) require popular assent in a referendum. Given popular anger at the way that the bailout has been structured, I imagine that the chances of Ireland voting ‘yes’ to any new European initiative are close to zero.

Yet even if somehow the Irish people could be persuaded to say yes to some initiative – perhaps because it put in place a more equitable system of fiscal transfers in the case of crisis – it would have to pass through the second veto point – the German Constitutional Court. The Court has made it clear in recent rulings that it is not prepared to countenance major new initiatives that might e.g. shift responsibility for decisions over fiscal policy to the EU level. In other words – any more equitable system of economic governance is likely to be vetoed.

It is extremely hard to envisage Treaty changes that could get a yes vote in Ireland. It is next to impossible to imagine any new Treaty that could both get a yes vote in Ireland, and survive scrutiny in Karlsruhe. Hence – the process of ‘ever closer union’ through Treaty change is effectively dead. One can imagine other mechanisms of change (drift, policy incrementalism, ECJ rulings) coming into play, but they are unlikely to result in any very obvious changes except over the very long run.

Very true. And then of course the question is whether the euro can survive without further integration, which seems increasingly doubtful, and whether the EU can survive without the euro. Consider, for example, Paul Krugman:

I still don’t see a wide euro breakup. But I guess it’s worth posting, for future reference, one thought I have here: namely, that a rump eurozone, without the southern Europeans, doesn’t look workable to me. It’s not about economics per se; it’s about political economy.
One thing that’s really essential for the euro to work as a political matter is for Germany not to be too dominant. We can’t really have a North American Monetary Union, because the US is too dominant: either it’s just American monetary hegemony, or America takes an unacceptable loss of sovereignty to minor partners. Europe, by contrast, has four and a half big economies; Britain chose not to be in, but that still left France, Italy, and Spain to share the running of the thing. But France, Germany, and a few Flemings and Walloons doesn’t make for anything that even looks like an equal partnership.

Damned if you do and damned if you don't, I guess. Not a very hopeful picture.


Anonymous said...

But a couple of decades of demographic growth for France and demographic decline for Germany will probably result in a quite different picture.

FrédéricLN said...

Things are not as different as that from the USA.

Germany is managed properly (Ms Merkel is risk-adverse, so the US diplomatic cables? How lucky the Germans are).

Many other countries in the Euroland are not, including France.

And we share the same currency.

Well, we are in the same situation as California. Why should we bother more than Californians do? Er, the issue with France is that Ms Lagarde and most UMP leaders, or Ms Royal and most PS leaders, tell us not to bother anyway. Recovery is round the corner and "l'égalité réelle" next door.

We should import Arnold Schwarzenegger back in Europe.