EU Crisis and Common Identity

1. Introductory Remarks: the vicious circle of the EU democratic gap
There is now a broad consensus among economists, political scientists and journalists about the nature of the EU crisis: it is not only an economic crisis, but a governance crisis coupled to a democracy crisis, and this is not only a Europe disease but a global one as the economic crisis is too.
The global economic crisis has awakened popular worries and insecurity feelings among citizens, which, joined by the awareness of growing income inequalities and the growing exclusion exposure makes more visible the growing divergence between citizens and their elected policymakers. This phenomenon is not new and is known as the “democratic gap” but it seems to reach presently a critical threshold making clear an amazing gap between the collective expectations of the citizens about the EU and the deterioration of the (subjective) perception by them of its positive results. Although probably due to popular misperceptions of the effective advantages of the European integration, the reality is a growing rejection by citizens of their elites and traditional policymakers by citizens. This disease paves the way for populist movements which exploit emotionally the popular dissatisfactions by providing simpler and less rational arguments. We can see the systematic abuse of frightening confusions between the EU governance caveats or failures and the EU integration itself, as well as between multiculturalism failures and cultural openness or globalization. The purpose of these strategies is to manipulate public opinions for claiming “democratically” a return to nationalism (or sub-national autonomy) as an easy way to crowd-out intellectual elites and the incumbent governing parties for extracting rents for the sake of populist new leaders and non-transparent interests behind them.
Faced to this challenge of a regression in integration, incumbent powers try to counteract with opposite answer: “more Europe” considering a binary world organised along a simple linear axis going from national autonomy towards federal supranational order upon which integration imposes to go towards federal centralization for preventing a regression to nationalism leading to disintegration. Unfortunately, reality is not so simplistic and they neglect other dimensions and the fact that the EU governance of the existing Treaties is biased towards inter-governmental powers which could explain most mistakes. Therefore, even paved with good intentions, their reactions are inappropriate for not giving a genuine answer to citizens’ dissatisfactions but in fact making things worse and giving more arguments strengthening populist movements.

This paper is based upon the conviction that the EU institutional caveats play an important role for explaining populism reactions in Europe because these movements exploit subtly the EU caveats and unfinished governance for turning them against the EU integration itself. This fabricated confusion for attributing the crisis effects to the EU integration is a typical populist strategy for taking over incumbent elites by exploiting some effective diseases or real problems for feeding EU rejection upon nostalgic remembers of a pre-EU period. Similar processes for exploiting the nostalgic illusion of a better past appears also in other present cases of populism, like the Trump’s strategy to “make America great again” and to restore lost unskilled jobs and real wages by protectionist measures, or the Putin’s attempt to justify domestic concentration of powers for recovering external power and international respect, or the Brexit illusion of attributing to the EU all negative development upon which national sovereignty could not change anything but to win power and change traditional dominant elites.
In all these cases, objective difficulties and social problems have deepened with globalization and technological changes. They need to be solved but the recipes cannot be based upon misconceptions and binary options.
In the EU case, the popular disappointment comes from the inability to protect people which makes citizens to question the value-added of the EU without realizing the positive aspects of integration considered as their property.
This issue is amplified in the EU case by the unresolved opposition between “supranational sovereignty” (i.e. the fact that some transfers of national sovereignties generate more effective sovereignty but at the collective level) and “national sovereignty”. This opposition makes impossible to build EU consensual solutions between democratic parties competing with populist movements exploiting the nostalgia of national sovereignty. This electoral competition provokes reactions in the wrong directions among democratic parties: political elections and sanctions remaining national, the trend is to claim for even more national powers through more intergovernmental method which makes worse the EU governance by impeding effective supranational solutions. This bias deepens the EU crisis and EU democratic gap, worsening EU misperceptions and increasing confusion between wrong governance and EU integration in a vicious circle.
The amazing aspect of the democratic gap and the rise of populism is their generalized feature independently of the degree of gravity of the economic crisis itself. For example, Germany, close to full employment, is affected too, as the US is or Poland. Therefore, there is need for an explanatory scheme and a more systematic way to explicit the assumptions currently accepted about nations, identities and EU integration.

2. The need to start from clearer definitions of the concepts of nations and identities
A historical overview shows some interesting facts which seems however not sufficiently known.

1) There is no general model for the creation and development of nations, but several historical schemes have existed in parallel in their histories: there were nations which were states (like the kingdoms of France, England, etc.), there were states which were not nations (like Austria, Sweden, Venice, Prussia, Russia, etc.), there were nations without state (like Italy, Germany, Poland, Hungary, Norway, Scotland, Ireland, Catalan, etc.), there were disappeared Kingdoms by absorption by others (like Hungary, Poland, Bulgaria, Portugal).

A first important conclusion to draw upon is that nations are not a fact from “nature”, but they result from relatively recent political constructions, mostly appearing during the romantic period in the XIX century, and generally in systematic attempts for making borders to coincide with some ethno-cultural communities, either from an existing state which tends to extend for covering these communities, or against a unified state for winning an autonomy for a local community for creating their own “citizenship rights” different from the existing one.

2) There is a general propensity to project wrongly to a farer past the image of nation-states which did not exist before the XIX or XX century! The idea of national identity is linked to the awareness of sovereignty which in fact appeared only with the French Revolution and the others political changes in the XIX century. References to an older period is used for winning more legitimacy from a longer history.

3) All nations share some common basic features: a common history creating the feeling to share common cultural characters (religion, language, traditions), a long historical settlement on a same territory, an explicit will to keep or conquest self-government and sovereignty (a state) through a political process for making nationality and creating national identities, presence of nationalist movements which idealize the nation and try to refer to some “natural laws” or to a very long past of fights against neighbours or enemies

The conclusion is that any nation is based upon a process of identity differentiation i.e. the cohesion required for getting the expected governance comes from an opposition to neighbours. National identity is thus a political tool in hands of elites pursuing objectives – good or bad – but history shows that democracy emerged first locally and could extend at the whole nation through the inner cohesion of a national identity able to prevail. So, national identities contribute to spread over democratic governance, in the same way they were previously able to maintain or expand totalitarism or as populism could also weaken or destroy democracy.

The main issue which emerges from these facts: is the EU able to ensure the same democratic process with the same method as it used to be observed at national scale?

1. Is there a European Identity? What kind of identity is it?

1.1. Does a common identity exist in Europe? YES it does because European nations share a common “Ethos” i.e. common values and references as a result of their respective histories: Greek and Roman basis upon which the Christian roots grew up and led to their progressive laic translation through the enlightenment into civil and political society.

Tangible proof is the main objective result: a common set of democratic rules which allows for peaceful co-existence and a formal will for diplomatic conflict resolution, especially established after two bloody world wars and the fall of the Berlin wall. It means that common features are more powerful than the numerous differences and remaining acute conflict oppositions which shaped national identities.

Such a common awareness of sharing more common interests than divergent ones characterizes a community feeling able to trigger the win-win game of cooperative policies. This game shows that pooling some sovereign decisions yields direct value added for efficiency reason. It means that national identity converges towards a common identity or that integration is driven by national interests acknowledging a common collective interest which provides more benefits to each member than pursuing non-cooperative objective by each of them.

In terms of game theory, the European identity is the moving factor allowing for escaping the prisoner dilemma in which national identities tend to trap governments at a higher costs.

1.2. Is this identity similar to the national ones?

NO, it is not, the process and nature of formation of European identity is not only different but rather opposed to the national ones:
Cohesion with versus opposition against foreigners
Inclusion versus exclusion
Democratic choices versus coercive assimilation and violent domination
Openness/no-discrimination versus protectionism/segregation
Voluntary cooperation versus antagonistic strategy
Cooperative win-win game versus individual loss-loss game

2. What kind of effective governance does use the EU?

The EU is built upon strong heterogeneous identities organized exclusively at national level (i.e. without acknowledging sub-national identities). The supra-nationality remains strictly limited, therefore, the EU governance is in fact very intergovernmental minded.

The EU is not even a federal state, and the Community is only partially more than a confederation of national states as regards its “first pillar” (EMU and Single Market). Supranational powers are indeed very limited and intergovernmental methods still dominate most of the governance fields. Even in the effective way supranational power has been developed (in the few common policies: EMU, Custom Union, Agriculture and Energy) a trend has appeared towards re-nationalization, and since the global crisis, even a rejection of supranational power has been developing, especially after the EMU crisis and the consequent reforms or proposals for reforms which tends towards more intergovernmental features.

Recently, anti-EU movements are winning speed using the loss of EU credibility and legitimacy for opposing to supra-nationality considered as political errors for being felt as contrary and detrimental to national identity. Logically, incumbent governments and European Commission are resisting by taking the opposite direction: “more-Europe” they say they want, but in fact what effectively is emerging from these official political answers are more intergovernmental powers and more German/French grip upon the EU governance and institutions.

Therefore, wouldn’t be the solution to move to more federal power i.e. to shift more policies and instruments from national states to the supra-national EU level, as recommended by some reformers and the “federalist movement”?

3. The fundamental error of the EU architecture: the implicit assumption that a common identity is substituting for national identities paving the way for a linear process towards a centralistic federal state

We don’t think that more federal central power could solve the EU crisis because deciding to make such a step assumes and need the absence of EU crisis since each nation would accept to renounce to its identity and sovereignty. Although a federalist option seems logical and ideally in line with the initial attractive dream of creating the “United States of Europe”, it would expose the EU to serious risk for a democratic governance and the construction of European identity. Indeed, the Federalists’ idealistic view is also not only unrealistic but more dangerously perverse for being logically incoherent with the European identity and the reality of the national and sub-national differences of local identities. A move to a centralistic federalism would be unsustainable, exposing the European integration to even more populist reactions for being dangerously undemocratic.

The key for understanding both the nature of this fundamental governance issue and the reasons for being so reluctant against the politically correct “nice dream” of a federal Union in Europe (although being a strong supporter of regional integration and a sustainable EU), relies in the analysis of the identity realities along Mirta R. Acero’s thesis1. Indeed, she demonstrates that for being sustainable the EU project and governance structure require to fit better with the EU identity which by nature does not correspond to the same phenomenon as the national identities of Member States. These two kinds of identity are opposed by definition and the big mistake of the EU architecture and governance is simply to pretend to follow a linear process for moving towards a federal governance from national governance i.e. to rely upon the implicit hypothesis that the European identity would be of the same nature as national identities.

This implicit assumption that European identity would actually substitute “naturally” for national forms of identity is totally wrong but biases the whole EU architecture and political philosophy. EU supra-national power is shaped upon a super-national identity which does not exist. This generates a competition for controlling this power with the result that big Member States take advantages in national politician interests, winning power without democratic transparency since electoral sanctions remain fully at national level while EU level remains less transparent, attracting national politicians for bargaining collusions and undemocratic arrangements hidden behind the appealing ideal of constructing the EU.

This is a wrong way, reflecting a misunderstanding about what regional integration process is: the respect of national sovereignty allowing to create a Community Value Added without need for a Big Federal State.

Acero’s idea explains that the EU governance and the institutional architecture are not only imperfect, they are inadequate, creating additional risks for the coherence and sustainability of a genuine European regional integration.

What we mean is that EU project or EU integration remains more than ever essential and vital for the future of European societies, but there is an urgent need for a change in the basic, implicit assumptions upon which the Treaties were built. Correcting the malfunctioning governance dispositions are a necessity for preventing the disintegration threats which could explode in case of no reform or worse, in case of implementation of inter-governmental strengthening hidden in politically correct slogan for more central power for imposing more discipline by some big Member States. This appeal to “more Europe” tends to bypass the democratic process in the benefit of big countries because it uses a confusion between integration and centralization.

4. The fundamental principles for an alternative approach

A successful integration is a process based upon the subsidiarity principles which combines two types of actions:

The respect of heterogeneous national sovereignties which should remain the driving force,
For making legitimate and desirable a progressive pooling of some limited national powers for efficiency reasons

SUBSIDIARITY principle is therefore necessarily a two-ways action i.e. centralizing very limited policies, but decentralizing all the other policies under a cooperative method which makes possible a consensus building for closer cooperation. This process does emerge step by step by democratic consensus, showing that regional integration is not just a linear axis under an historical law toward more centralistic powers.

As explained by Mirta R. Acero, the democratic gap comes ultimately from the wrong implicit hypothesis that EU identity would be similar to national identities, biasing the whole EU governance and institutional architecture towards the “one-fits-for-all” and a Jacobin centralized power which is not supra-national but in fact inter-governmental and fundamentally undemocratic.

Nevertheless, the European integration process has reached to make its own way for progressing through a “trial and error” practice demonstrating the multidimensional feature of regional integration. An effective “European method of integration” has emerged as an attempt to allow for a progressive natural selection of practices favouring the ability to find a cooperative formula between various opposed components. The inner character of the European identity is the ability to capitalize in a collegial way from heterogeneous cultures and differences in identity features and modalities. Therefore, the European identity is the result of interactions between national differences along a long “trial-and-error” process, which allows for a progressive natural selection favouring the building of sustainable cooperation formulas across heterogeneous components.

This observed operational path demonstrates that regional integration is not linear i.e. captured only by this binary axis opposing nationalism to federal centralization. Integration develops in a multi-dimensional space which cannot be reduced to the degree of geographical centralization of power. It is clear that integration imposes more centralization in some limited areas where externalities dominate, but this is not a deterministic “historic law”. Unfortunately, the Jacobin vision has been plaguing the European philosophy of the EU governance by assimilating the need to internalise growing spillovers due to integration with a geographical centralization of power. There exist alternatives in which consensual common rules or procedures could ensure a better decentralised governance through adequate incentives agreed upon by the autonomous local powers.

1. What is the common EU identity?

The history of the EU construction shows that the European identity is a set of values that makes possible and easier to use differences for generating a value added, as far as a cooperative system does effectively work.

A Common European identity is very different from the national ones upon which it has emerged and developed in parallel, because it has to solve a peculiar paradox: the contradiction between:
– the necessary decentralization inherent to democratic pluralism, where cultures and local sub-identities are durably different because there are protected by democracy,
– and the necessary centralization of some actions and limited tools for making attractive and feasible the integration process, by creating its value-added as a result of economic efficiency

Democracy tends to require a narrower geographical scope while integration requires a broader scope of actions with some degrees of centralization of powers which tends however to weaken the democratic effectiveness.

The solution does exist and is simple: democracy must get also a spatial dimension through the subsidiarity principle: it makes compatible democracy with centralization as far as there is sufficient awareness of the advantages of a clear centralization in very few areas while protecting differences where these advantages are not obvious or not desirable.

2. Acero’s proposals: The Europe of the three regions – E3R

Mirta R. Acero developed a concrete proposal for applying these analytical principles: to open in the EU institutional structure an intermediary level for grouping the 3 main cultural identities which form the EU: North, South and East.

In a nutshell the working principles are:
to launch this intermediary level inside the present Treaty i.e. without any change, only by voluntary grouping of countries for preparatory consultations (like for example the French-German axis) which could be later officialised and agreed upon by Ministerial initiative inside the EU Council
Inside each of these three main regions, drawing upon their closer identities and cultural cohesion some new cooperative dynamics could be created for building closer consensus, especially for going further in policy coordination for their own sake, making them stronger for legitimizing differences without losing common EU identity
In this way it will be easier and faster to reach previous agreement inside each of these regions before each EU Council decisions, allowing for making more explicit possible divergences with one or the two other regions, the EU level being in charge of resolving the conflicts according to existing decision procedures, although the European Parliament should be progressively more involved in these debates.
the macroeconomic policy coordination, especially the fiscal discipline, should be the privilege area for experimenting this proposal; the Treaty and the “political sanctions” of the Stability and Growth Pact have been ineffective for implementing the required discipline the EMU needs. The main reason being the fact that the members of the Ecofin Council are “judge-and-parts” making inter-governmental what should defend the EU interests.
In particular, the proposed scheme uses financial market sanctions, in both directions (positive and negative) rather than politically decided sanctions, for imposing the respect of common EMU/EU rules and discipline. These two-ways sanctions work thanks to a (new) “European Mechanism for Stability – EMS” for rewarding/sanctioning the national policies with a rule-based system of issuance of national debt submitted to a subordination clause. This clause gives priority of reimbursement to those debt issuances by Member States respecting the technical common rules or the agreed upon adjustment plan decided for those which failed to respect them but accept to rectify; the subordination clause implies a spread in interest rates between the two categories of bonds: the “Blue Bonds” enjoying a guarantee by the EU under strict conditionality, benefit from a lower yield rate while the “Red bonds” for the other sovereign bonds are castigated by a spread in their yields for being a second class of debts without guarantee and being subordinated to the first class priority given to the Blue bonds

1. Conclusions

The democratic gap which is reaching alarming proportions in the EU indicates a fundamental flaw in the institutional architecture of the EU. Populist movements express a legitimate reaction against this imperfection but instead of proposing to correct it they seize it for destructing the integration institutions that would limit their appetite for authoritarian power. Our analysis points to the danger coming from the incumbent authorities which defend the EU project and their own power with arguments making worse the defect of the present architecture. There is a high risk to assist to the amplification of a vicious circle: democratic gap – populist reaction – more inter-governmentalism – majority of citizens opposed to the EU project.

Therefore, this article tries to make understand that the issue is not so much to debate about the orientation on a single linear axis opposing nationalism to EU integration but to create the modalities able to make legitimate nationalism reflecting idiosyncratic identities compatible with EU integration in due conformity with the essence of our European identity. In fact, the other complementary dimensions of regional integration among sovereign states could be dealt with subsidiarity which allows for respecting national identities while achieving the construction of common EU identity.

The real EU problem is that the present institutional architecture does not fit well with the common identity because it implicitly pretends to substitute “naturally” the national identities for a common one which would level all in a single one as on a simple linear axis while reality is multidimensional and integration needs local autonomies making legitimate federal cooperation. The EU remains trapped by the old Jacobin illusion and its “one-fits-for-all” prescription, exposing the EU to dangerous but legitimate citizen reactions, like the Brexit for example.

The solution is to make legitimate consensual common rules and key principles within which autonomous actors (national or sub-national) act responsibly under electoral and financial sanctions in function of their ability to optimize the balance between national interests and general interest for the EU as a whole. The best example is the fiscal common discipline and the EMU failure to make it respected inside the linear conception of a central coordination scheme (SGP), while a system of financial market sanctions through interest rate spreads do act better upon national sovereign budgetary decisions. This issue remains the key problem since German Treasury proposals as well as French ones (creating a Finance Minister for the Euro area) pretend to increase the Jacobin bias and the inter-governmentalism of big Member States in an undemocratic way. Continuing along this path will lead to EU disintegration for being at odd with the European deep identity and giving a democratic power to undemocratic populist leaders.

Dr. Christian Ghymers

Senior Advisor of Global Governance & Macro Policies at OSI Occidental Studies Institute, President at IRELAC, Deputy-Chairman at Triffin Foundation, President of Belgo-Chilean Chamber of Commerce, Former Advisor at DF ECFIN and Senior Advisor G-20 Chinese Presidency. Belgium.