The UN needs reform. Madeleine Albright

The State of the Union

Jean-Claude Juncker will be a compromise president but no strong leader. What Europe really needs is an anti-Juncker willing to introduce new policies and to be held accountable for them.

Jean-Claude Juncker is a symbol of a European Union that desperately needs to change but has no desire to do so. Juncker was meant to be the first democratically elected Commission president. Yet all the efforts that went into the grand election of the Spitzenkandidat were completely invalidated by numerous meetings, secret votes and the sheer amount of time it took to announce the unlikely winner.

If Brussels wanted to convey the sense that it had become more democratic, then it is clearly detached from the reality of how it is perceived. At this point it comes across as a circus of people randomly vesting more and more power in themselves. In this circus, Juncker is dangled about and is regarded as probably the least bad choice. He is neither an ultra-federalist like Guy Verhofstadt, the liberals’ man, nor a creature of the parliament like Mr Schulz. Categories such as these can be helpful to simplify and to convey the complexity of the world, but at the end of the day, debates around the federalism, centralism or parliamentarianism of candidates and commissioners are of little interest to anyone outside of Brussels.

The European bazaar

What we need is actual change, real reform and politicians willing to introduce new policies and to be held accountable for them. There is a simple word for all of this. It’s called governance, the public kind, not the private.

The eurozone and the Monetary Union are the institutions most in need of reform. The founding rules of the Monetary Union – most notably the deficit criteria and the “no-bailout rule” (Art. 125 TFEU) – were not only ill designed and unenforceable, but weren’t meant to be mechanisms of governance in the first place. They are symbolic of the kind of “privatization” or “out-sourcing” of government responsibility that occurs when we vest our faith entirely in the markets. Instead of creating sound rules to govern monetary policy, it was hoped that with a couple of simple incentives, the financial markets would ensure that no state goes insolvent or runs up a significant deficit.

During the crisis, the EU and its institutions were further isolated from responsibility, as the member states passed the relevant legislation in the form of treaties outside the primacy of European Union law. Here, the eurozone took on its new identity as a bazaar in which the European north collusively bargains against the south: the north wanted “stability” and austerity in times when the south needed “growth” and investment. The north ultimately won by massively expanding the fiscal controls that the eurozone can exercise.

The only EU institution that has been willing to take on responsibility in full strides has been the European Central Bank. The Bank had its “coming to Jesus moment” back in 2012 when Mario Draghi promised to do whatever it takes to save the euro. Since then it has bought government bonds, drastically lowered the interest rate and offered outright money transactions to re-boost economies and offer liquidity in times of need. Whilst the primary legal competence of the bank is to ensure price stability and its economic policy endeavors are legally limited to supporting the economic policies in the Union (Art. 127 TFEU), no other institution has stepped up to the responsibility of ensuring that these exist in the first place.

We need an anti-Juncker

After a fairly long dry stretch, last weekend’s summit also witnessed the return of the great growth versus stability debate. While Germany insists on stability, countries such as Italy and France are demanding more investments to enable growth. But a slower debt reduction is only the first step to the creation of a fairer Union that cuts a better deal for the southern periphery. Economic and fiscal policies are by definition not limited to budgetary restrictions and austerity. Any balanced and sustainable economic and fiscal policy needs to include investment schemes and duties to ensure growth and prosperity.

Thomas Piketty, the German Glienecke Group and Greek economist Yanis Varoufakis have made valuable suggestions on both institutional and substantive reforms. Now all we need is an anti-Juncker willing to wash his eyes in the Pool of Siloam so that we may all regain a vision of how great and equal a union this could be.

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