Will Scotland Save the EU?

The European Union is facing a major economic crisis that has not only caused immense human suffering but that has also largely destroyed its moral standing in the eyes of its own citizens and it is imperilling its very survival. 

Other federal or multi national countries such as the USA and the UK, that were even more directly and heavily hit by the crises, are now recovering fast while the EU is still stuck in stagnation with little hope of a meaningful recovery any time soon.

The difference is not due to technological or economic factors, the EU has in these fields resources that are comparable or superior to those of any other developed country. The inability of the EU to get out of this crisis is due to a tragic and possibly fatal flaw in its own institutional structure: the lack of powerful political and economic institutions politically responsible to the whole Union.

The root of the problem is that the European Union has been built according to two distinct and opposite principles:

• as a club of national states

• as a fully fledged federal state

This ambiguity in its funding principles is reflected in its major institutions. The European Parliament, elected directly by all EU citizens and organised according to ideological rather than national lines, is a genuinely federal institution. The European Central Bank (responsible for monetary politics in the Eurozone) and the European Commission (the European “government”), sit somewhere in the middle, with a state-based make up (one councillor or commissioner per state) but with an overall responsibility to the whole Union. The bulk of European power is however concentrated in the European Council, the group of heads of state or government of the EU member states, that’s to say in a group of politicians that respond to their own national constituencies and not to the EU as a whole.

But state-based politics is, by its very nature, unable to successfully face crises that hit the EU member states in an asymmetric way. The tragic consequences of this limit have become apparent when the last economic crises struck. The strongest countries (Germany in particular) were less affected than the other member states. Being less affected, they perceived the cost of providing assistance to the weaker EU members as higher than its short term benefits. Being stronger, they were able to impose their will on the other countries forcing the adoption of austerity policies that favoured them while strangling the economies of their weaker partners. The result was the near collapse of the political, social and economic systems of Greece, Cyprus, Spain and Italy and an EU wide economic stagnation ¹. The EU’s skin has so far been saved, though only barely and temporarily, by the intervention of the one powerful authority that is politically responsible to the whole Eurozone, the European Central Bank. Though limited by the state-based composition of its governing council, the Central Bank has acted with a certain determination, managing to stop or at least postpone what seemed an inevitable collapse of the Euro.

On the contrary, in the UK and USA, the presence of both federal automatic redistribution mechanisms (unemployment benefits and other handouts) as well as of central political figures and institutions whose political survival depends on the good will of the whole country, not just of its wealthiest areas, has led to the adoption of courageous monetary and fiscal interventions that have managed to restart the economic engine.

It is vital to understand that the EU mismanagement of the current economic crisis is not an one-off accident. With the present institutional arrangements and when faced with a crisis that hits its member states in an asymmetric way, the EU will always end up in the paradoxical situation that those states that have the resources to put an end to the crises will be unwilling to do so while those who suffer most from it will be unable to do so. This is damaging, unfair and unsustainable as it creates tensions of such magnitude to eventually lead to the demise of the whole EU experiment.

The solution is obvious, make the EU into a proper federal state with a sovereign Parliament to which the Commission will be solely responsible and replace the European Council with a state based Senate with limited powers, following the model of the German Bundesrat.

A federal EU is tantalising close, almost all the pieces are already in place, it’s just a matter of rearranging them. But how to get there?

There are only two ways in which unifying central institutions can be created: 

• The UK model: whereby one nation, England, enjoyed a power that was so prevalent over the others that centralised control could be imposed by virtue of force alone. 
• The USA or Switzerland model: where the lack of states with significant power also led, in time, to the common agreement on increasingly powerful centralised institutions.

The EU cannot follow either of these models, as is built around a small group of very powerful states (France, Germany and the UK, with Spain and Italy also playing a significant role) with long and glorious histories, different national languages and national characters. None of them is powerful enough to exercise hegemony over all the others, all of them are jealous of their prerogatives and each of them is powerful enough to stop the creation of sovereign federal institutions.

Fact is, the largest European states are just too powerful to be stably chained to the EU wagon. French, Germans, British, Italian and Spaniards will have to choose between their national states or the European project, they cannot possibly have both. If a federal Europe has to appear, the big national states have to go ².

Luckily, there is an even deeper level of history and identity in Europe. Most European national states are an amalgamation of regions and cities that have their own, sometime major, history. The city states of Italy and the Flanders, the micro states of Germany, the great and powerful regions of France, the many different communities that were only loosely integrated in the former Austrian-Hungarian Empire are still there. Florence, Bruges, Catalonia, Bavaria, Corsica, Brittany, the Basque country and hundreds of others are not just geographical terms, they are communities and cultural and linguistic areas that are still deeply meaningful to the people that inhabit them. All these ancient political entities, whose history largely predates that of the European national states, still exude pride and identity, they still have the power to foster allegiance and to be the building blocks of a different and better Europe.

What really stands in the way of a federal Europe are the incentives that drive the political elites of the major EU countries. French and UK political elites are engendered in small exclusive national institutions (the Grandes écoles in France, Oxbridge in the UK). This creates strongly connected clusters of individuals that get preferential access to most of their nations’ resources, both public and private. This beautiful mechanism of class exploitation would be severely disrupted if these nations were to break up and real power move to Bruxelles. The UK, France and Spain also still have huge economic interests and exercise a certain hegemony over significant parts of their ancient empires, an advantage that their political elites are well used to exploit to their advantage. German politicians, sitting on Europe strongest economy, are favoured beyond reason by state based politics. They have the power, they know it and they are going to hang on it. Italian politicians are simply culturally unfit to operate at an European level ³. In an European environment, they find it much harder to perform the two key functions of a well trained Latin politician: know what arses to lick and who to solicit for a bribe.

On the contrary, the political elites of the smaller EU states have nothing to gain from state based politics. Though they enjoy over-proportional power and representation in the EU institutions ⁴ they know perfectly well that at the high table of European politics they are just poor relatives, invited at Christmas lunch for the sake of appearances, but destined to be nothing but pawns in the hands of the real operators. A federal Europe, with politics structured around party rather than state lines, would offer much better prospects for cosmopolitan, multi lingual and ambitious politicians from smaller countries. As Bill Clinton hailed from Arkansas, the next major pan-European leader might well be from Estonia.

Therefore, the key to a federal Europe is the dissolution of the major EU countries and the increase in the number and power of small and medium countries.

This is why the upcoming Scotland referendum is so important. If Scotland leaves the UK, it will start up the process of melting the major European national states into the kiln of the European Union framework ⁵. If Scotland opens the way, showing how independence can be achieved democratically and orderly, with no bloodshed and no major economic or social catastrophes, many other European regions might soon follow ⁶.

Spain, with its extremely powerful independentist movements of Catalonia and the Basque Country, might be the first to go. Italy’s ⁷ weak central state will probably be next and eventually Germany, that already has a federal structure, and even über centralised France might eventually break down ⁸.

It won’t be easy, it won’t be uncontroversial, but the move from nations to regions is the only process that can create a stable, peaceful, prosperous and fair Europe. Europe will be a Europe of Regions or it simply won’t be.

So, go Scotland go!

Originally published on Medium.Com on the 17th of September 2014.