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A. Kluth: "We have a constitutional crisis in the EU"

Hernán Garcés

14 de Mayo de 2020, 20:09

An interview with Andreas Kluth, columnist for Bloomberg Opinion, and former editor-in-chief of Handelsblatt Global, the English-language edition of Germany’s leading business newspaper, about the European Union and Germany.

Hernán Garcés.- Ever since the crisis of 2008, whenever one has denounced the serious deficiencies in the functioning of the European Union the Eurocrats and Europhiles have responded that "European integration always moves forward through crisis". Given the flawed management of the migrant crisis and what we are seeing with Covid-19, do you believe that the time has come for a real debate on these serious deficiencies?

Andreas Kluth.- Yes, I think that time has come. First, there’s the pandemic, which now looks likely to last two years or more and might become endemic. Second, there are the EU’s pre-existing conditions, including Italy’s huge debts even before Covid-19, the lack of migration reform and so forth. Third, there’s now also the surprising ruling from Germany’s constitutional court, which you ask about in another question.

On top of these crises, there may be others to come. So yes, I think Eurocrats can longer just repeat their old platitudes and keep muddling through. I think we need big changes or the European project is at risk. Saying that doesn’t make such changes any more likely, though.

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H. G.- You recently published in Bloomberg the article 'Why Germany Will Never Be Europe’s Leader', which I personally consider to be the most realistic analysis of what has recently been being discussed about Germany. In your analysis, you mention that in Germany a "hegemony debate" began in 2012 with an essay by Professor Christoph Schoenberger. Could you enlighten us on this debate?

A. K.- A hegemon in this context is not a dominant power that opposes its will on smaller countries, but a powerful country that defines its own interests to include the preservation of a larger system. So Britain was a hegemon during the 19th-century gold standard, and the U.S. was a hegemon during the Bretton Woods System after World War II.

The debate launched by Schoenberger was about whether the euro area is such a system and therefore needs a hegemon, and whether Germany could fill that role. Some people say no, because the EU was built so that no one member state could lead. Other say yes, because the euro area will persist only if its largest member and de facto paymaster becomes its lender of last resort.

But the German public doesn’t like the idea of leading. On the left, that’s because of historical guilt and fear of being hated. On the right it’s fear of getting sucked into financing a transfer union. So the debate has basically stalled. German politicians, unlike academics, hide from the debate.

[Escuche el 'podcast' de Agenda Pública: ¿Giro tecno-autoritario, centralizador y feminista?]

H. G.- For those familiar with constitutional law, the Federal Constitutional Court is considered one of the most prestigious, rigorous and independent courts in the world. However, for some its recent decision has been a great disappointment. How do you read the decision?

A. K.- I think the ECB, with help from the Bundesbank, will be able to show that the quantitative easing program in questions, PSPP, is indeed proportionate, so that the Bundesbank can keep participating in it. That was the immediate demand from the German court.

The larger implication of the verdict is that the German court has now drawn a line around the ECB’s mandate and ruled out further "treaty change by stealth," as I called it in a recent column. So Europe’s leaders can’t just stuff new roles into institutions like the ECB through the back door anymore. They now need treaty change to give the euro area a common budget, government, and debt. Otherwise, it will eventually fall apart.

The German court has also put a big question mark over the European Court of Justice. If one national court can overrule the Luxembourg court, then others can, too, in Poland and Hungary for instance. So we have a constitutional crisis in the European Union, as I said in my most recent column. We have to clarify the relationship between the nations and Europe. Where does the buck stop?

H. G.- In light of this decision, do you think it is realistic, as France and the southern European countries are advocating, to mutualize the debt?

A. K.-I think the northern countries won’t ever accept it, so it won’t happen. That said, the idea behind euro bonds and coronabonds has always been wrong, as I’ve argued here. It would be like asking Texans to guarantee Californian debt, which they would never do. But you can ask Texans, Californians and 48 other states to accept a federal entity above them that issues U.S. debt. That’s the big idea that could bring Europe forward: In a properly designed currency union, the euro area would have its own government, legislature, tax revenues, budget powers and debt.

Such a big leap might have been possible in the 1990s, but it’s inconceivable today. That’s why I’m pessimistic that the euro area can survive in its present form in the long term.

H. G.- According to the 'Financial Times', one member of the ECB council said that "the court’s arguments are ridiculous" and he added that this view was shared by the 24 other members. Do you think that the ECB would ever reconsider the 'whatever it takes' approach to saving the euro?

A. K.-No, I think both the ECB and the European Court in Luxembourg will now fight back on principle. If the ECB withdrew its whatever it takes pledge, it could pack up and go home. The markets would cause a crisis overnight. If the ECJ accepted being overruled by a national court, it could pack up as well. Unfortunately, this means a long and protracted legal wrangle, and therefore a limbo in which reform is even harder.

?H. G.- According to Enrico Letta, former prime minister of Italy, the EU faces a "deadly risk" from the global pandemic. Likewise, for Nathalie Tocci, a former adviser to the EU foreign policy chief, the virus is "definitely a make-it-or-break-it moment for the European project." Do you agree with these statements?

A. K.- Yes, I agree, and I’ve written exactly that. The pandemic is the kind of crisis –like a hypothetical Russian invasion or natural disaster or some other cataclysmic event– that forces the Europeans to decide: Will they ever become a United States of Europe that can defend itself against the world as one? Or will they remain just a league of nation states?

This ambiguity surrounding shared sovereignty is the EU’s curse. And today it’s no longer tenable. As it happens, exactly this same ambiguity and tension was also the dilemma of the Holy Roman Empire during its last century. Was it an empire? Or was it 300 independent principalities? It never resolved or answered that question, so it gradually became irrelevant, until Napoleon dissolved it in 1806. Something like that could one day happen to the EU, as I’ve argued here.

(You can find here the Spanish version of this interview)

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