Solidarity vs. Austerity: Mistakes of the Past and Why We Need to Re-invent the Union

By Panos Stasinopoulos

Jacques Delors, the three-time President of the European Commission, once declared that “you cannot fall in love with the common market”. This surprising statement was uttered by the very person who ushered in the creation of the common market in an era characterised by euro-sclerosis. Arguably, the slow pace of European integration, combined with the lack of significant trade advantages deriving from the European Economic Community (EEC) membership set the pace for the creation of the common market. 

The Delors Commissions led to the introduction of the Single European Act in 1986, a treaty with an ambitious goal: to pave the way for the introduction of a fully functioning common market. Since then, the open market has been functioning in an exemplary fashion, albeit with some elements, such as capital, being freer than others, like services. However, a clear discrepancy remains between the market and the European social model, especially in times of grave financial crises. In 2011, it appears that neither is functioning particularly well but the similarities between the financial problems and one of the EU’s most intriguing concepts (that of EU citizenship) tell an interesting story.

When the common market was being designed, it was understood that a purely economic union would not mean much to Europeans. Therefore, the EEC took other steps to introduce a more meaningful concept of free movement of persons which, ultimately, led to the introduction of Union citizenship by the 1992 Treaty on the European Union (the Maastricht Treaty). The current configuration of citizenship is not designed to include third country nationals (TCNs) or give them any substantial political rights. It has been deemed undemocratic, as well as unfit to cover new types of identities and feelings of belonging, especially considering the higher frequency of inter-state movement. In order to further democratise the Union, scholars have suggested the introduction of a more domicile-based version of citizenship. It would be based on a more inclusive ratione personae and ratione materiae, enough so as to include residents who are not necessarily citizens of a member state of the EU. It would also provide more political rights and, potentially, more obligations for all. Such a solution would also provide the Union with a much-needed, more relevant raison d’être, which would embody the many different meanings the EU has for each of its current member states. The lack of political will to proceed in this fashion has inevitably lead to current problems around the democratic deficit of the Union, immigration policies, and the European integration process as a whole.

The euro has a similar lesson to teach us: it was, and still is, a rather ambitious experiment. It was conceived when the EU was a much smaller entity, comprised of twelve member states, immensely richer and more popular than today. By the time the currency was introduced, however, the Union had spread to fifteen member states and was about to welcome ten more, all of which were expected to join the eurozone as per their accession treaties. Moreover, after the introduction of the common currency, it became obvious that even the relatively few countries that were using the euro differed in principle with regard to their fiscal policies. Thus, the lack of homogenisation of rules and regulations on fiscal policies became more worrying. Member states would not easily abandon their sovereignty: indeed, the euro is currently suffering from this lack of political foresight and boldness. In this context, Jean Claude Trichet, the current president of the European Central Bank, has suggested a finance ministry based in Brussels with powers to draw up the eurozone’s fiscal policy. This suggestion, although quite unsurprising, has been simplistically dismissed as a step too far in a Union that cannot (or will not) accept more transfer of powers to Brussels. It is arguably true that Trichet was in an easy position to propose this solution: he does not have to worry about being re-elected, unlike Sarkozy, Merkel or Papandreou, all of whom have been particularly slow in their responses to the crisis, primarily owing to local elections or fears of the omnipresent political cost factor.

The common themes in the two aforementioned examples are the reliance upon a theory according to which political integration will come more easily if it is preceded by an economic union. In this framework, the inability to act effectively in order to promote common interests may lead to decreased national sovereignty. The merits of this theory notwithstanding, the current political and economic climate has rendered neither of the solutions described above politically attainable. Extending citizenship rights, such as freedom of movement and establishment, or the right to vote, would be an unpopular suggestion at a time when the suspension of the Schengen Treaty has been suggested by populist leaders like Sarkozy and Berlusconi as a potential solution to Europe’s immigration problems in the aftermath of the Libyan crisis. Similarly, the notion of a centralised finance ministry is unlikely to gain momentum, but could theoretically be more easily realised. It is becoming evident that austerity measures are plunging European economies into more severe recessions with dire social consequences as the Spanish and Greek examples show. Indeed, Europe can only prosper if it stays united and boldly decides to move towards a tighter fiscal union. 


Panos Stasinopoulos is currently reading for his PhD at King’s College London School of Law. His research focuses on European integration in the context of EU social rights. Panos has worked for the Ministry of Foreign Affairs in Athens whereas his work on human trafficking and EU fundamental freedoms has been published by the EU and in academic journals.        


1 July 2011


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Roland Bensted, Can the Euro Survive? 

Panos Stasinopoulos, Europe Through the Looking Glass: Could the Debt Crisis Negate Decades of Integration?