Hungary’s Delusion of Sovereignty

On October 3, 2024, The European Commission, the E.U.’s executive branch, filed a legal complaint against the E.U. state of Hungary with the E.U.’s judicial branch—the high court of which being the European Court of Justice (ECJ). The Commission had won a case against the state and recently subtracted the amount of fine issued by the court from the federal money set to go to the state because the Hungarian government was refusing to recognize the verdict. Like Britain before it had seceded from the Union, Hungary was operating under the incorrect premise that it still enjoyed full sovereignty even though every state delegates some of its governmental sovereignty to the Union in becoming a state thereof. In the case of Hungary, the state law at issue in 2024 had in its very name the fundamental problem out of which the state’s disputes with the E.U. were emanating.

The full essay is at "Hungary's Delusion of Soveriegnty."

A Teachable Moment for Americans: Solidarity as a Shared Value in European Identity

Speaking at the Schloss Bellevue palace in Berlin, President Joachim Gauck used a televised speech in February 2013 to make the case for more European integration. At the time, calling for “more Europe” in terms of shifting still more governmental sovereignty from the state governments to that of the Union was not a very popular task. Further limiting the power of his message is the fact that the German presidency is largely ceremonial , unlike the office of governor in an American state. Nevertheless, Gauck was determined to put the contemporary condition of the “European project” in favorable perspective. The most striking—and even effective—aspect of his speech is his repeated references to “European citizens.” Had he used “Germans” instead, he would have subtly undercut his own message. The prime minister of the E.U. state of Britain at the time would never have used the term, "European citizens." Nor would he have agreed with the E.U. value of solidarity and especially the ensuing social policy. The American media tended to follow suit, rather than covering the otherness of the other: the European Union as having a societal political value that has been very recessive in the United States. In this regard, I contend, the American media companies let down the American people, who would have stood to benefit from the wider perspective that would have enriched American political debates from the tyranny of the hegemonic value ensconced in American culture: that of the self-sustaining individual ideally in the state of nature, economically speaking. Reporting on the principle of solidarity would have given Americans the acccurate picture of the E.U. as being more than just a trading "bloc." This point in turn could have resulted in Americans coming to the realization that the E.U. is equivalent to the U.S.—both being empire-scale federal systems wherein governmental sovereignty is split.

The full essay is at "Solidarity as a European Value."

Van Rompuy as the European Council's First Extended-Term President

“In a sense, Europe seemed to be living down to expectations. Earlier, the foreign minister of Sweden, Carl Bildt, warned against a 'minimalist solution' that would reduce the European Union’s 'opportunity to have a clear voice in the world.'"  Olivier Ferrand, president of Terra Nova, a center-left research institute in France, said, “It is quite astounding. . . . It is jaw-dropping. It is the end of ambition for the E.U. — really disappointing.”

The full essay is at "Van Rompuy as the First President."

Source:

Stephen Castle and Steven Erlanger, "Low-Profile Leaders Chosen for Top European Posts," The New York Times, November 19, 2009.

A "Banking Union" or Coordinated State Laws and Regulations?

A subtle though important difference exists between American and European federalism, each of which covers both the "kingdom" (i.e., early modern, now mostly republics) and "empire" (i.e., ancient and early modern, now usually huge federal systems) scales. So I am referring to federal systems like the U.S., E.U. and Russia (and U.S.S.R), rather than to federal systems within any of their respective political subunits (e.g., Belgium, the Netherlands, and Germany). The difference between the E.U. and U.S. that I discuss here can be grasped by looking at the two competing proposals for federal bank regulation in the European Union. The crucial question facing the E.U. finance ministers concerns which system of government. 

The complete essay is at Essays on Two Federal Empires.

This picture depicts the distinctive European model of modern federalism wherein the state governments play a salient role in implementing (and modifying) federal law.   source: mapperywordpress.com

Should Icelanders Push for E.U. Statehood Anyway?

In late April 2013, a slight majority of Icelanders who voted in the parliamentary election went for a return to the center-right Independence and Progressive parties even though they had been responsible for the banking crisis that bankrupted Iceland. The two parties promised to forgive or renegotiate the Icelanders’ personal debt and end the four years of austerity by lowering taxes, ending capital controls and stimulating foreign investment, according to the New York Times. The center-left governing parties, including the Social Democrats, had cut spending and raised taxes, making the carrots being offered by the center-right parties all that more alluring. Although not the main issue of the election, the prospects for Iceland becoming a state in the European Union lessened significantly with the ousting of the center-left government. Unlike that government, the center-right parties voiced skepticism and advocated a referendum before any the government would take any further steps. In the wake of the election, it might be helpful to reflect on whether Iceland should become a state. After going over some economic and political factors, I want to highlight subtler factors whose influence is typically understated in newspaper headlines.

The complete essay is at Essays on Two Federal Empires.

From this perspective, it can be said that Britain are Ireland are part of Europe, but what about Iceland? Source: luventicus

Britain Challenges the E.U.’s Financial Transactions Tax

In April 2013, the state of Britain mounted a legal challenge at the European Court of Justice against E.U. financial transactions tax (FTT) going into effect in eleven other states. The way in which the challenge was depicted by state officials in Britain suggests that the real challenge was not just to more European integration, but also to the E.U. itself.

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

E.U. Passes Financial Transactions Tax (FTT)

Out of a “desire to ensure that the financial sector fairly and substantially contributes to the costs of the crisis and that [the sector] is taxed in a fair way [relative to] other sectors for the future, to disincentivise excessively risky activities by financial institutions, [and] to complement regulatory measures aimed at avoiding future crises and to generate additional revenue for general budgets or specific policy purposes,” the Council of the European Union took a decision on 14 January 2013 to allow 11 states, including Belgium, France, Germany, and Italy, to act in a coordinated fashion with the Commission and each other in establishing and administrating a tax on financial transactions. That is to say, the tax is to be jointly administered by the Commission and the states, and both levels would share in the proceeds. A few states, most notably Britain and the Czech Republic, abstained in the voting.

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

Divergent Fiscal Policies in the E.U.

States on divergent fiscal paths can test the flexibility of an empire-scale union, particularly if it is relatively new and still developing. Simply having different industrial/agricultural make-ups can put states at odds with each other. That the richer states can use fiscal policy to become even richer, while the policies imposed on poorer states may aggravate their fiscal conditions, can mean that the economic distinctions between states can become an increasing problem in a federal system, even given the allowances enabled by federalism itself (e.g., by the principle of subsidiarity). 

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

Predicting Future Events in Political Risk Analysis: On the European Debt Crisis

Political risk assessment is a nasty business in that the future has a stubborn habit of not wanting to be too predictable. Even though tomorrow displays a remarkable tendency to be similar to the world of today—the status quo enjoying the right of default—forecasting future events is notoriously difficult. To use statistics to nail down probabilities may actually involve considerable luck. Not even the stature of the person making the predictions may be decisive, after all. I have in mind the predictions of Alexei Kudrin, the former Russian finance minister, on the European debt crisis and the euro.

                                                             

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

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

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

On the Plight of the Euro

Relative to the U.S. dollar, the euro of the E.U. was not in as dire shape in 2011 as was typically presumed. As the euro celebrated its ten-year anniversary on January 1, 2012 at $1.29, a ten-year perspective could assuage the irrational exaggeration of fear over the currency’s impending demise. Besides the human propensity to develop tunnel vision—looking only right straight ahead—we tend to over-dramatize some things (while ignoring other things).

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

A Fifty-Percent Write-Down: Discounting Debt Insurance?

In “Europe’s Rescue Plan,” The Economist (October 29, 2011) opines on the “fixes” that had been announced just days before by E.U. leaders on the public debt crisis. I find three points of note that are particularly worth elaboration. 

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