Bottom-Heavy Federalism: The E.U. Stability and Growth Pact

With Russia still in Ukraine in 2025, the E.U. faced pressure to enact more laws and regulations at the federal, yes, federal level to reap the benefits of collective, coordinated action. Although the fear that Russia might invade one or more of the eastern E.U. states was probably unrealistic, given that Russia was still mired in Ukraine, the crisis of an invasion so close to the E.U. could legitimately serve as a “wake-up call” for the federal and state officials in the E.U. to get their federal system of dual sovereignty in order. The ability of state governments to successfully evade the state deficit and debt limits in the federal Stability and Growth Pact and the flipside of the Commission’s weakness can be read as indicative that more work is needed to get to a viable federal system. The states have been able to weaken the limitations successively over years, including by leveraging the fear of invasion by Russia as a call for more defense spending at the state rather than at the federal level.

The full essay is at "Bottom-Heavy Federalism."

The European Commission as Political

The European Commission, the E.U.’s executive branch, has been known for being a technocratic institution. Yet in drafting regulations, imposing fines, and negotiating trade deals, the Commission is much like the U.S.’s executive branch. In fact, high-level appointments must secure the approval of the legislature through confirmation hearings. Yet the top of the U.S. executive branch, the White House, has been known for being ideological and definitely political. That that executive branch also promulgates and enforces regulations can be easily missed. That the E.U.’s executive branch is also political has definitely been missed or dismissed in the ideological illusion that the E.U. is merely a technocratic international organization rather than a federal system of governments. This illusion could finally be seen as such after the election of Ursula van der Leyen as President of the European Commission in 2019.

The full essay is at "The European Commission as Political."

Misconceptions of the E.U. Budget

Could it be that at least some of the British voters who were in favor of secession from the E.U. held misconceptions of the federal budget? If so, perhaps the antagonism was unduly harsh in the referendum.  

The full essay is at "Misconceptions of the E.U. Budget."

Russia’s Common Economic Area: Not Another European Union

On January 1, 2012, a new version of the common economic area between Russia, Belarus and Kazakhstan came into effect. The three countries had already founded a customs union in 2007. As of the end of 2011, Kyrgyzstan and Tajikistan were still in talks about joining as well. Putin insisted that integration with the E.U. could take place by 2015. I cannot help but wonder if E.U. leaders were aware of this possible union of unions. It could be argued that Putin was making several category mistakes.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Rolling the Dice: The E.U.’s Financial Regulatory Agency (the ESMA)

Even though the European financial sector integrated significantly during the first decade of the twenty-first century, the E.U. Government’s regulatory infrastructure and content did not keep up. As in the U.S. until 1933, state regulation carried the bulk of the weight. As the twenty-first century notably differs from the nineteenth, the relatively integrated financial sector in the E.U. means more risk is entailed in continuing to rely on state regulators. This is not good news for David Cameron, who in late 2011 tried and failed at a European Council meeting to hold strengthened enforcement of state-deficit limits hostage by demanding protection for state-level financial regulation over federal regulation. Like South Carolina was in the nineteenth century, United Kingdom was decidedly in the states’ rights camp as late as a decade into the twenty-first.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

Selecting the President of the European Commission: An Analysis

An amendment to the E.U.’s basic law came into effect in 2010 concerning how the president of the European Commission is selected. The process begins with the European Parliament voting. The person obtaining the most votes has the chance to build a coalition in order to achieve a majority of the vote in the legislature. In the event that the candidate is successful, the power then shifts to the European Council, which can confirm or reject him or her.

The complete essay is at Essays on Two Federal Empires.

Obama: Egyptian Coup? What Coup?

In late July 2013, the Obama administration decided that it was not legally required to determine whether the Egyptian military had led a coup in ousting President Morsi. The decision permitted the administration to continue $1.5 billion annually in American aid to Egypt. One senior official said only, “The law does not require us to make a formal determination as to whether a coup took place, and it is not in our national interest to make such a determination. We will not say it was a coup, we will not say it was not a coup, we will just not say,” the official said.”[1] I’m reminded of one of Captain Renault’s famous lines in the film, Casablanca. “I’m shocked, shocked to find that gambling is going on in here!” Coup? What coup? To be sure, the administration had its reasons, strategic of course, yet a bigger picture perspective could be helpful here, considering that an effort to violate at least the spirit of a law is involved here.

 

 

Administration officials said the U.S. Government would continue to use financial aid as a lever to pressure Egypt’s new government to push through a transition to democracy. Yet what cost to the U.S. Government would this intent to manipulate the Egyptian military exact?

 

                                                                                            A Coup or a Book-Signing?

                                                                 Refusing even to decide if this is a coup reflects on the refuser.

 

On July 3, 2013, Egyptian generals deposed President Morsi, put him under arrest, and suspended the constitution. “Under the terms of the Foreign Assistance Act, no aid other than that for democracy promotion can be given to ‘any country whose duly elected head of government is deposed by military coup d’état.’ The law does not allow a presidential waiver, and stipulates that aid cannot be restored until ‘a democratically elected government has taken office.’”[2] Refusing to decide whether a coup took place is essentially refusing to enforce the law, given the events in Egypt on July 3, 2013.

 

 

Fittingly, one of Morsi’s senior advisors, Wael Haddara, accused the administration of “verbal acrobatics,” and asked, “With the entire world calling this a coup, why isn’t the American administration calling it so?”[3] The reference to “verbal acrobatics” is particularly important, for it hints on the discrediting long-term impact on the U.S. Government by its president’s decision to take an easy out. Generally speaking, political convenience can come back to bite even if the pain is not ever felt directly. In other words, the Obama administration sacrificed some of the U.S. Government’s credibility to be able to manipulate another government through money.

 

 

A similar trade-off existed at the time in Europe regarding the matter of Turkey’s possible accession an E.U. state. Turkey would be the largest state by population, and thus would have tremendous influence in the E.U. Government. The added cultural and political diversity to the E.U. could cause it added strain, if not compromise the very viability of the Union. So why would the E.U. admit Turkey when doing so could put the E.U. itself at risk internally? Similar to the Obama administration’s desire to have more influence in the Egyptian military, the European Commission would like to use Turkey as a “way in” to influence Middle East international relations.

 

 

Both cases evince putting one’s own federal government at risk in order to manipulate other governments. At the very least, the strategy of undercutting oneself to extend one’s influence seems counterproductive. That the influence comes well before “the bill comes due” creates the illusion of a costless choice. Looking out for the long-term governing of a union of diverse states, whether in Europe or North America, is easily shirked when the opportunity to pull more levers externally presents itself. A federal government willingly undercutting its own credibility or ability to govern for a short-term advantage is not only short-sighted; it is also indicative of a certain lack of character. The question is perhaps whether that lack of character is societal in nature or merely in ruling elites.

 

See the video made to accompany this essay: http://youtu.be/_1yuvnOq5YE

 

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1. Mark Landler, “Aid to Egypt Can Keep Flowing, Despite Overthrow, White House Decides,” The New York Times, July 25, 2013.

2. Ibid.
3. Ibid.

Regulating Snus in the E.U.

Should the E.U. be able to regulate sales of a product that can legally be sold only in one state? Would such regulations encroach too much on the governmental sovereignty of the state? In the U.S., Congress has steadily extended its power to regulate interstate commerce to the point that commercial transactions taking place entirely within one state are routinely covered. Is the E.U. headed toward the same outcome?

The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

Genetically-Modified Foods: Health in the E.U. and Rights in the U.S.

With regard to genetically-modified (GM) foodstuffs, an interesting cultural difference between Americans and Europeans surfaces. Even though both peoples are fully capable of over-reacting to a presumed danger, what they select and how they react differently can be instructive, culturally speaking.

The complete essay is at Essays on Two Federal Empires.

Federalism on Different Levels: Switzerland Capitulates to the E.U.

In 1960, Switzerland was one of the two founders of the European Free Trade Association. All of the countries participating in that free-trade agreement except Switzerland went on to ratify the EEA (European Economic Area) free-trade treaty, an agreement akin to NAFTA in America. In a referendum in December 1992, the Swiss turned down the proposed treaty. Rather than gain access to the E.U.’s domestic market through EEA, the Swiss opted to do so through bilateral treaties with the E.U. by which the independent state agreed to E.U. laws relevant to the single market. Switzerland also signed on to the  Schengen arrangement, which became an E.U. law in 1999, and provisions concerning security and asylum. Even so, changes to the relevant E.U. federal law are binding on Switzerland via the bilateral treaties only if a bilateral commission approves. Admittedly, “Bilateral” is somewhat misleading here, as a basic equivalence is erroneously assumed between the E.U. and Switzerland.


The complete essay is at Essays on Two Federal Empires.

 Switzerland, shown in orange, would not even be a large state in the E.U.    Source:  battlecat.net

Merkel Siding with China against the E.U.: Federalism Imploding?

In May 2013, German Chancellor Angela Merkel interjected herself into the brewing trade conflict between the E.U. and China. At issue was the European Commission’s proposal to impose import tariffs on some Chinese solar and telecommunications products in response to suspected dumping by China. Merkel’s involvement involves a conflict of interest for her and exploits a vulnerability in the E.U.’s federal system.

Although the flags of the E.U. and China both have stars, the E.U. has a federal system while China is centrally governed.  Both forms of government have drawbacks, but at the "empire level," federalism usually works better than a central government, given the expanse.   Source: ipolitics.ca

The full essay is at Essays on the E.U. Political Economy, available at Amazon.

Excessive Standardization Pushed by the European Commission?

The E.U.’s internal market is not typically construed in terms of federalism. Whereas the market connotes homogeneity or at least easy transfers across state lines, a union of states wherein both are semi-sovereign implies diversity within certain commonalities. The economic and political systems are not mutually exclusive, or inert, however. Put another way, too much economic standardization begins to run up against the heterogeneity that is inherent in an empire-level union of republics.

The full essay is at Essays on the E.U. Political Economy, available at Amazon. 

Mario Monti: Succumbing to Power?

He was supposed to have been reluctantly pushed into briefly stepping in as prime minister in Italy to push austerity measures through the state legislature.  According to Deutche Welle, “The 69-year-old former European Commissioner was appointed to lead Italy’s government . . . to restore Italy’s finances following Berlusconi’s departure.” The technocrat was not supposed to so interested in power that he would want to stay on. At the end of December 2012, Mario Monti announced that he would lead a centrist group of politicians against the Democratic Party and Berlusconi’s People of Freedom party in the upcoming election.  Had the former bureaucrat “found religion” in some political cause, or had he developed a taste for power? If the latter, we might ascribe the motive to the human propensity to resist giving up power willingly.

  Mario Monti at the European Commission. A launching point for Italian politics?    (source: nytimes.com)

The full essay is at Essays on the E.U. Political Economy, which is available at Amazon.

Women on Corporate Boards: Britain vs. the E.U. Justice Commissioner

In 2012, women made up 13.7% of board positions in large listed companies in the E.U., and 15% for nonexecutive board positions, according to The Wall Street Journal. In the U.S., according to Kay Koplovitz of USA Network, the number of women on corporate boards had been stalled at more or less 15 percent for over ten years. Whereas in the U.S., people would look at Congress to enact a uniform inter-state standard or else leave the matter to individual corporations, the E.U. has other alternative means, such as the directive. That device relies on the state governments to decide on the penalties as well as enforcement against violators of the E.U. law. Even though the Commission could take a state refusing to implement a directive to the European Court of Justice, the “cost” of the flexibility in the state-based implementation is a possible dilution in the law’s aims being achieved throughout the E.U. rather than just in a few states. Put another way, even as the ideological diversity within the empire-scale union is accommodated, advocates of more female representation on corporate boards may be disappointed as some states give non-complying companies only a slap on the wrist.

The full essay is at Essays on the E.U. Political Economy, available at Amazon.

Is the Commission Blackmailing Britain?

In October 2012, the Daily Online reported, “Brussels officials are threatening to hit Britain with millions of pounds in fines in retaliation for pulling out of pan-European justice and crime policies.” It is the element of “retaliation” that was particularly provocative in the state known for its outspoken Euro-skeptic element. The E.U. cannot afford such an atmosphere to foment. Moreover, the dual-track trajectory should be fostered rather than retarded by the E.U. Government, due to the very different notions of the E.U. among the states.

The complete essay is at Essays on Two Federal Empires, available at Amazon.

2012 Nobel Peace Prize Winner: The European Union

In the modern world of organizations and the members who inhabit them, it perhaps makes sense that the Nobel peace prize would go to a government rather than to a particular official thereof. One immediate problem was figuring out which officials in the E.U. would accept the award. Martin Schulz, the president of the European Parliament, immediately issued a statement indicating that his institution expected to be part of the award ceremony. Herman Van Rompuy, president of the upper chamber, and Jose Barroso, president of the E.U. Commission, could also be said to have had legitimate claims in receiving the award on behalf of the E.U. itself. The absence of an “overall” figurehead in the E.U. is likely a result of Europe’s unhappy experience with “one man rule.” Indeed, the E.U. itself can be said to be a check on such nationalist excesses. In this regard, the peace prize provided Europeans with a change to catch their breath and take in the big picture amid an austerity/debt crisis.

The full essay is in Essays on the E.U. Political Economy, available  in print and as an ebook at Amazon. 

E.U. Presses Italy to Tax Church Businesses

One of the chief benefits of federalism is the ability of one system of government to check another within the overall federal system. In the European Union, the state governments have so much power at the federal level—in the E.U. institutions—that it is difficult for the E.U. Government to check excesses and abuses in the state governments. E.U. law, regulation and directives rely on the state governments, albeit to varying extents. In the United States, the case is the reverse. The U.S. Government holds so many of the cards that the state governments cannot act to check abuses in the federal government. Actually, for all of the power that the U.S. Government has amassed, it does a horrible job in aiding citizens against abuses in their own state governments. Fortunately, we can look to Europe for a bright spot: the E.U. Commission and Italy, á grace de Mario Monti who is both governor of the state of Italy and a former commissioner in the E.U. Commission (the E.U.’s executive branch).

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Fiscal Training-Wheels for the E.U.

The government of the E.U. state of Greece announced on September 11, 2011 that its cabinet had decided to impose a new property tax to cover a 2 billion euro ($2.7 billion) projected revenue shortfall for the year. The government expected the state to meet its deficit goals of 17.1 billion euros (8.2% of GDP) in 2011 and 14.9 billion in 2012.[1] Earlier in September, talks between the state government and the E.U. Commission, the European Central Bank, and the International Monetary Fund had broken down in a dispute over whether Greece had done enough to meet its deficit targets. Pressure to assuage the “troika” amid popular protests in Greece apparently trumped questions on the legitimacy of a tax increase enacted by a cabinet without the approval of the state legislature.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

1. Granitsas Alkman, “Greece Announces New Tax as Unrest Flares,” The Wall Street Journal, September 12, 2011; David Gauthier-Villars and Nathalie Boschat, “Woes at French Banks Signal a Broader Crisis,” The Wall Street Journal, September 12, 2011; Ainsley Thomson and Marcus Walker, “Support Grows for New EU Treaty to Boost Fiscal Ties in Euro Zone,” The Wall Street Journal, September 12, 2011.

E.U.: Ever Closer Energy

Günther Oettinger, the energy commissioner at the E.U. Commission (the E.U.’s executive branch), said at a news conference on September 7, 2011 that the E.U. needs to look “beyond its borders to ensure the security of energy supplies.”[1] Having the states “act together and speak with one voice” through their federal government is the rationale for ever closer union.[2] To be sure, ever closer union has its limits; the hominization of Europe via political consolidation would ignore the innate diversity that exists within any empire-level union of states, whether the E.U., A.U. or U.S. Even so, fear of consolidation need not hamper Europe from being able to benefit from united action.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

1. James Kanter, “Brussels Seeks More Control Over Energy Deals,” The New York Times, September 8, 2011.

2. Ibid.

                                                                             

The European Council: Head of State of the E.U.

Concerning the European Council and the Council of the E.U., it can reasonably be asked whether such similar nomenclature is really necessary. It can be quite confusing. For example, I didn't realize that the European Council does not legislate; I had assumed that the Council of Ministers (a.k.a. the Council of the E.U.) handled the technical aspects of E.U. legislation while the European Council votes on broad and highly significant legislation.  Instead, the European Council "sets the EU's goals and the course for achieving them. It provides the impetus for the EU's main policy initiatives and resolves issues that cannot be settled at the ministerial level. It does not legislate."[1] In contrast, the Council of the EU (aka the Council of Ministers) "adopts EU laws, a responsibility it shares with the European Parliament in most policy areas."[2]  The Council of the E.U. also "concludes international agreements between the EU and other countries . . . ; plays a key role in the development of the EU's Common Foreign and Security Policy (CFSP), based on guidelines set by the European Council."[3] It is the Council of the E.U., rather than the European Council, that corresponds to the U.S. Senate. Beyond both bodies representing state governments, the unique foreign policy role is shared by both “upper chambers.” An implication is that cabinet secretaries in the American state governments could replace U.S. Senators (and, conversely, the people of the European states could elect delegates or senators to represent their states in the Council of the E.U.).  In my view, the use of state cabinet secretaries (and having the governor’s association set the U.S. agenda) would be an improvement on senators (and the U.S. President in setting the Union’s agenda).  Such a change would reinvigorate American federalism against continued consolidation.

The complete essay is in Essays on Two Federal Empires. available at Amazon. 

1. “How the EU Works,” Foreign Policy, May/June 2011.

2. Ibid.

3. Ibid.