“Federalism or Bust for Europe?” by Jean Pisani-Ferry | Project Syndicate

The legislative triangle of the European Union

The legislative triangle of the European Union (Photo credit: Wikipedia)

European flag outside the Commission

European flag outside the Commission (Photo credit: Wikipedia)

This is an excellent article by Jean Pisani-Ferry and well worth a read. Check it out!

“Federalism or Bust for Europe?” by Jean Pisani-Ferry | Project Syndicate.

The author, Jean Pisani-Ferry,  is Director of Bruegel, the Brussels-based economic-policy think tank, and Professor of Economics at Université Paris-Dauphine. He was an adviser to the European Commission’s Directorate-General for Economic and Financial Affairs, and was Director of CEPII, France’s leading international economics research institute. He has also served as Senior Economic Adviser to the French finance minister, Executive President of the French prime minister’s Council of Economic Analysis, and Senior Adviser to the director of the French Treasury.

Jean Pisani-Ferry challenges:

The big question to which nobody has a clear answer is whether Europe is in the process of inventing a model of its own, or has only taken a detour from the inevitable choice between disaggregation and convergence on the standard federal template. One solution could be to provide national representatives a venue to convene for European-wide debates. Another would be to transfer the insurance role to a federal institution accountable to the European parliament.

Personally, I look at the Euro crisis as huge Action Research project, with an iterative approach to analysis and intervention, often stimulated by the markets and the credit rating agencies. I do not see a simple choice between  disaggregation and convergence. I expect Europe to invent i’s own model of federalsm.

What do you think?

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10 responses

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  5. May I put in a plea here for a rather more democratic approach to the problem?

    The problem with the EU is that a very large number of people within its borders have never agreed to it becoming what it has become. It follows that national governments can retain power only by being devious. The EU is fundamentally undemocratic and until that is put right all the other measures that are being considered will fail to solve the Eurozone’s economic ills.

    Rodney Willett

    • Rodney, many thanks for a thoughtful posting. Some would argue that appointing MPs to the European Parliament provides the required democracy. The real challenge I think is the transfer of power from national parliaments, either to the European Parliament or to un-elected European bodies. . Perhaps, greater democracy could be provided by more frequent referendums but this would be extremely costly when Europe is struggling right now.

  6. Alf,
    People other than myself think that to fix the flawed Euro will either take about 6 trillion Euros, the so called “Big Bazooka” or perhaps a 2 speed Euro with different rules being applied to Northern and Southern Europe.

    There is no agreement on a 2 speed Euro and Europe is only willing to fund a £1.6 trillion Euro bailout which is far short of what is required to do the job.

    Chancellor Merkel asked the Chinese to fund the difference last year but they refused, reasoning that Europe could not repay them.

    Middle ground might be possible if all the countries of Europe could agree but so far I see no evidence to suggest that there is a willingness to agree or the remotest understanding of just how uncompetitive Europe has become amongst its leaders other than Chancellor Merkel.

    Nor do I see any comprehension by the populations within Europe of what needs to be done to raise productivity, improve competitiveness and earn foreign exchange through exports.

    Unless and until all this changes Europe is on the road to economic decline.

    • John,

      I understand your argument.

      My original point was quite simple. Based on the logic of the expert article. I reasoned that break=up of the Euro and formal federalism would be rejected, therefore a middle ground would evolve, over the many iterations.

      Short-term, it seems that the ECB is issuing quasi-Eurobonds.

      It will be interesting to see if the German Constitutional Court further erodes Angela Merkel’s negotiating room wiyh it’s decision due Sept. 12.

      However, I do agree with you about Europe being uncompetitive and in economic decline where:

      1. Wages are too high
      2. Productivity is too low, and
      3. Labor is inflexible.

      Much of the problem emanates from EU rules that were designed for another era, and are no longer appropriate to the prevailing context. Matters are most acute in the Public Sector, across Europe, including the EU bureaucracy itself

  7. Europe can invent what it likes but a Federal Europe will not work unless there is a governing body at the top to run everything and sufficient money to pay for everything.

    Inevitably, this will be headed by the most powerful player in Europe which is Germany.

    We have always tried to stop this from happening because Germany as the war criminal and elder statesman Dr Kissinger put it “Germany is too big for Europe but too small for the world”.

    Because of this “fear of Germany”, Europe will not speak with one voice or act in unison.

    We want to control things, which we can no longer do without America in the background, and Germany wants to control things which is one of the reasons, apart from their desire to export and collaborate, that they are closer to China than anyone else in Europe and are hedging their bets by not always doing what America wants.

    Europe is what is known as a “bit player”, lacking the military resources, will or money to do very much but still important as a market and for its component countries/capabilities.

    • John,

      Many thanks for your posting.

      With respect, I believe that you are pre-judging an evolving situation, so your argument is a bit speculative.

      Surely, the point is that Europe must find a solution to a systemically flawed Euro? One option is to let it fail, another is full-blown federalism but I am suggesting that perhaps there is room for middle ground, yet to be defined.

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