The EU needs a dose of democracy

Sally McNamara Senior Policy Analyst in European Affairs, The Heritage Foundation
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Sitting alongside two of the E.U.’s many unelected presidents yesterday, U.S. President Barack Obama declared: “The United States stands ready to do our part to help [the E.U.] resolve this issue.” White House spokesman Jay Carney was quick to point out that President Obama didn’t mean that America would be sending more U.S. dollars Europe’s way. Rather, he said, the president wants to see the E.U. take more “decisive action” to solve the Eurozone’s two-year sovereign debt crisis.

Of course, no one is urging Europe to take indecisive action in this crisis. But the president’s statement, as clarified by Carney, is far from innocuous. It was, essentially, a call for the 17 nations of the Eurozone to fully integrate their economic policies with one another and create a single European fiscal policy. After all, if there’s a common currency, why shouldn’t there be a common economic policy?

For two reasons. First, it won’t work. Even if Germany was able to rein in Greek overspending, Greece would still be 30 percent less competitive than Germany. Their economies are fundamentally incompatible. To make a common currency work in these circumstances, there needs to be enormous cash transfers from the richer nations to the poorer ones. And it is not clear that Germans are prepared to work until their 70s so that Greeks can still retire in their 50s.

But more importantly, the creation of an economic United States of Europe is anti-democratic. The revelation that a draft of Ireland’s budget was circulated to German parliamentarians before it was sent to Ireland’s own elected MPs is chilling. Who’s running Ireland — the Oireachtas or the Bundestag? Of course, Greece and Italy have done away with elections entirely. In those nations, E.U.-approved “technocratic” governments now rule in place of democratically elected ones for the time being. Italians might have finally despaired at the irascible Silvio Berlusconi, but surely it was their job — not the E.U.’s — to remove him from office.

However, democracy has never stood in the way of the E.U. before, and it is unlikely to do so this time around. If Presidents Barroso and Van Rompuy (those two unelected and unaccountable E.U. bureaucrats sitting next to Barack Obama yesterday) have their way, there’ll be a blueprint for full economic integration on the table in time for the next E.U. summit on December 9.

German Chancellor Angela Merkel seems to be opting for further E.U. integration as the least bad option. The other options are too unpalatable. One alternative — issuing Eurobonds — means that Germany would essentially subsume the debts of the other Eurozone members. Thrifty Germans (rightly) balk at the idea of sharing their balance sheet with profligate Southern Europeans. The other option — allowing the European Central Bank to become “the lender of last resort” — essentially means letting it print money. Germans do not have good historical experiences with printing money. So, Frau Merkel is likely to punt for full economic integration in the end.

Throwing democracy and national sovereignty to the wolves is, however, the worst option that the E.U. can pursue. It’s almost as big a folly as creating a single currency on the back of nothing but a political dream. Democracy might be an imperfect form of government, but it’s far better than all the others that have been tried.

And, where’s the growth coming from? The E.U. economic model is by and large sclerotic, over-regulated and socialist. It’s unlikely that even Germany can export enough BMWs to keep the entire Eurozone afloat.

So what should President Obama have said yesterday? Nothing, because he shouldn’t have held the summit in the first place. The G-20 met in France just weeks ago. There was no need to host, once again, the very men who got Europe into this mess in the first place.

The singularly most valuable thing President Obama could do for Europe is get America back to work. But as a man with an out-of-control spending habit of his own and a predilection for racking up debts at the taxpayers’ expense, there’s not much chance of that.

Sally McNamara is a senior policy analyst in European affairs at The Heritage Foundation’s Margaret Thatcher Center for Freedom.