European federalism is not dead yet

One conclusion of the Greek crisis seems clear: the dream of moving harmoniously towards a federal Europe is dead. The rancour incited by the crisis has pitted nation against nation and revived some of the continent’s worst stereotypes. Rather than hastening Europe’s historic integration, the introduction of the euro may have only led to its slow-motion disintegration.

The mood of the times is reflected in a recent cover of Marianne, a weekly French magazine. Condemning the deal with Greece as a German-inspired diktat, the magazine pictured Angela Merkel in a Pickelhaube, describing her as the “empress of the creditors” before whom all other European leaders bowed in homage. “Farewell to the Europe of the founding fathers, farewell to the Europe of nations . . . the time of Mitteleuropa has arrived,” the magazine said, employing the provocative German term once used by Prussian imperialists and Nazi ­ideologues.


But history rarely advances in straight lines, and it may be premature to write the obituary of European federalism just yet. If it is to happen at all, further integration will be driven by brutal economic necessity. Fuzzy federalist talk of spreading solidarity has proved little more than hollow words; financial logic remains a more insistent force.

That is certainly one interpretation of Alexis Tsipras’s decision to accede to the creditors’ main demands. In spite of calling a referendum to reject the creditors’ deal, Greece’s prime minister concluded that leaving the eurozone would be more painful than remaining in it. Having peered through the gates of Hell, he realised the attractions of Purgatory. Regardless of the political cost, Greece could not abandon its European destiny.

As some of the more clear-headed — or cynical — federalists have argued, the creation of the euro would serve as a means of reverse engineering a federal Europe. They have often drawn inspiration from US experience and the remarkable debates about the nature of federal government contained in the Federalist Papers. These were published in the late 18th-century as the infant republic grappled with what it meant to forge a common political entity.

A constant theme of the Federalist Papers was the division of financial responsibility between Washington and the states and, in particular, the partition of debts. As Alexander Hamilton, a US founding father, wrote: “There is, perhaps, nothing more likely to disturb the tranquillity of nations than their being bound to mutual contributions for any common object that does not yield an equal and coincident benefit. For it is an observation, as true as it is trite, that there is nothing men differ so readily about as the payment of money.” Sound familiar?

It took many decades for the US to calibrate the balance of powers between the federal centre and its constituent states and in the meantime it fought a civil war. A common currency system was only fully created in 1913 with the foundation of the Federal Reserve.


In some senses, federalism remains a work in progress in the US. You can hear echoes of the original antifederalist position in the rhetoric of the Tea Party today. Functioning federalism is a process that needs to be reinvented every day, not a constitutional flat pack that can be assembled overnight.

A dispassionate analysis of the eurozone’s options published last year by the Centre for European Reform concluded that a strengthening of fiscal federalism represented the best way of completing the eurozone’s ramshackle edifice — even if at the time that appeared to be politically impossible.


The report sketched out three other possible scenarios: a German-led Europe run by creditor nations; a technocratic currency bloc run by Brussels bureaucrats and central bankers; and a more flexible, decentralised eurozone. It argued that all these alternatives were less economically viable than fiscal federalism — and in different ways might prove just as contentious. Some European officials have reached similar conclusions. In an interview with the FT last month, Pier Carlo Padoan, Italy’s finance minister, argued that the eurozone ought to respond to the Greek crisis by moving towards political union.

“To have a full-fledged economic and monetary union, you need a fiscal union and you need a fiscal policy,” Mr Padoan said. “And this fiscal policy must respond to a parliament, and this parliament must be elected. Otherwise there is no accountability.”

Such talk will strike many politicians, especially among the anti-euro populist parties and British eurosceptics, as madness. We need less Europe, they argue, not more. They highlight the profound differences between the US and Europe, arguing it is impossible to forge a United States of Europe from so many diverse nations when there is no popular support to do so.

But there are many types of federalism, and many paths to a destination. By almost any measure — political, economic, social, religious, ethnic — India is more diverse than the eurozone, yet it remains bound by a common idea. Its federalism has often served as a rough-and-ready means of mediating differences rather than exacerbating them.

It will require a Herculean effort of persuasion. But if they want the currency bloc to survive, eurozone politicians may need to make the case to voters that flexible federalism remains the least bad option.




Fonte: FT