This EU Won't Work

The question is often asked, ‘why is the EU so inflexible in its operations?’ There are no doubt many parts to the answer; one which we have offered is ideology, which permeates the foundations of the project and is held tenaciously by its leaders. 

A related characteristic of the EU is its constitution. Now the EU doesn’t have a written constitution but its major treaties perform a very similar function and dictate many of its responses to requests for reform or better performance.

In November last year Jeremy Smith, a British barrister and co-director of Prime Economics (http://www.primeeconomics.org/) an organisation dedicated to de-mystifying economics, published his research into the background of the EU’s treaties. His title is:

Making space for an economically democratic European Union

( http://www.primeeconomics.org/articles/making-space-for-an-economically-democratic-european-union )

In his article Smith “sets out the reasons why we should press for significant changes to the EU Treaties in terms of their economic policy content and related issues.” He argues that “because much of the economic policy of the EU is embedded in its Treaties, which can normally only be changed if all member states agree, there is a growing frustration that the democratic will of Europe’s people simply cannot be expressed if on any point it differs from that set out in the Treaties”.

The EU attempted to create a written constitution in 2005 but this needed the unanimous approval of all member states, which was not granted when France and the Netherlands would not ratify it after their citizens rejected the constitution in national referendums. “However, its contents were effectively maintained (almost unchanged in substance) but redistributed as amendments into the newly named TEU and TFEU Treaties”.

(TEU = Treaty on European Union (aka ‘Lisbon’) and TFEU = Treaty on the Functioning of the European Union (aka ‘Rome’).)

“The European Court of Justice [ECJ] had itself, in a formal Opinion delivered as long ago as 1991, described the (then) European Economic Community Treaty” as a “constitutional charter”. In 2008 the ECJ pronounced that “the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty”.

It is notable that between them these two treaties contain 413 articles while the written constitution of the United States comprises 34 articles and amendments. Because it “is the task of constitutions to define the very principles on which societies are based”, the EU has built into its foundations a detailed and rigid complexity that makes it difficult to reform any laws, policies or practices in ways that challenge the treaties. The provisions of a constitutions “are harder to amend than ordinary laws”.

Smith goes on to say that “the European Union is extremely unusual – and unique in the degree of detail – in laying down the economic philosophy (or ideology) and detailed rules to govern day-to-day economic policy-making.” From his studies of written constitutions in developed, democratic economies he notes that “the content and details of economic and monetary policy are quite absent … the content of the policies is left to the product of democratic debate through Parliamentary law-making (as well as day-to-day operational management)”.

For example, “If one looks beyond Europe, to the USA or Japan, India or New Zealand … there are no provisions that lay down binding economic policy rules in the way the EU Treaties do.

Smith then looks in some detail at Article 3 of the TEU, in order to understand the particular “binding economic policy rules” that the EU has chosen. 

“The general values and aims of the EU are set out in the TEU, while the detailed policies and rules are laid down in the TFEU. One needs to examine both to see how the economic philosophy and rules interact. And the rules for changing any provision are the same for all articles under both Treaties – and very difficult.”

Article 3 has this:

3.3 The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment…

Smith responds that “The priority here is curious, since establishing an internal market should surely be a means to the end, not the primary objective. Yet it comes ahead of the rest.”

Full employment and social progress come towards the end of the list, thus indicating that these goals are subject to the specific design of the “highly competitive social market economy”. 

“The problem of course is that at European level, the working of the social market economy to date has precisely not delivered full employment; unemployment in August 2016 was still at 10% across the Eurozone, and had fallen below that level for only one month in seven years.”

“The current deficit/debt rules have helped to contribute to an overall low rate of GDP increase in the Eurozone in particular … and a higher rate of unemployment for the Eurozone as a whole.”

Such facts on the ground challenge the particular orthodoxy selected by the EU to direct its economic activities, which “should be subject to democratic debate and not embedded in constitutional forms that preclude democratic change.”

Smith argues that “it is extraordinary that the EU – which is expressly committed to democracy as a key value – should use Treaties to close off debate and the democratic choice of other legitimate economic policy options.”

From our own study of the EU, its origins (as the European Economic Community) and the deceitful means by which it continues to be promulgated, we believe that, since it could not get off the ground without the participation and wholehearted support of Europe’s largest nation, the EU project is insincere in its proclaimed commitment to democracy, full employment, economic growth and social progress across the whole region. 

In our recent post ‘Germany calling the shots’ we looked at some evidence that German influence outweighs all others in the practices to which the EU is committed. Jeremy Smith adds research weight to our arguments by showing that the particular economic theory that the EU has adopted is based on the theory to which Germany subscribes, so-called ‘ordo-liberalism’. This ‘ideology’ underlies Germany’s economic policies and has been adopted by the EU as its own. Even if it works for Germany, there is no reason to believe that it could be made to work for other European nations; it clearly doesn’t.

One other related issue the article raises is the status of the ECJ. “In many respects, the court performs a positive and necessary function. Yet is has reached many decisions which appear to stretch the meaning of the Treaties beyond what the drafters are likely to have intended.” This “has the consequence that – being an interpretation of Treaties – the decision of the Court cannot be simply overridden by legislation.” 

We will leave this topic, for now, with Smith’s conclusion that “many key economic and social policies are decided not through debate and elections, but…via inflexible EU Treaties which lay down a specific economic ideology and policy framework. No matter how they vote, citizens are not allowed to choose a truly different set of economic policies. The treaties themselves are enforced ultimately via the ECJ, and changeable only by unanimous agreement of all 28 Member States. Thus, we have a democratic blockage, and the imposition of a centrally-controlled economic policy that has in reality made the standard of living worse for many, especially for the less well-off.”