WHICH INSTITUTIONS FOR RIGOR, WHICH INSTITUTIONS FOR GROWTH?

 

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Demonstrators march to protest against the British government’s spending cuts and austerity measures in London on June 20, 2015. (Agence France-Presse)

The role of rigor (and austerity) as a way to correct fiscal imbalances in the midst of the economic crisis, has been extensively debated over the last few years, and it is still a contentious issue to this date. The recipes imposed by the Eurozone authorities and by the IMF in the European sovereign debt crises have been widely criticized and contested. In one specific case, they have even been recognized as wrong. Well-known economists Carmen Reinhardt and  Kenneth Rogoff have been questioned in their main research finding of an existing inverse relationship between public debt levels and growth rates, beyond a certain critical threshold. On the other hand, there is a consensus that high levels of public debt are not desirable as they may pose a serious issue of sustainability and financial vulnerability. As a result, the need to keep the public budget under check is a broadly shared policy objective. A hotly debated issue, though, is whether the fiscal adjustment should be done during the crisis, at the risk of depressing growth, or whether it should be backloaded thus allowing the fiscal budget to support output and employment.

But, one fact is a logical antecedent to the debate itself: which institutions are supposed to be the best judges for choosing the optimal balance between rigor and growth?

A tentative way to start addressing this question is to assume a division of tasks between global agencies (like the IMF and G20), regional institutions (like the EU), and nation states. Each with its own set of competencies and responsibilities.

We then need to have some understanding of growth and rigor.

It’s hard to define growth. It is the result of a mixture of heterogeneous ingredients. Most of them are economic ones: the state may stimulate growth through public policies aimed at supporting investment and entrepreneurial initiatives. Similarly important are the institutional ingredients, such as the set of norms and rules aimed at encouraging certain economic behaviors or discouraging others, or the measures to make public administration more efficient or to reduce its costs. Other ingredients are social ones, such as public investment in health, education, and inclusiveness, which produce results in the long run. The whole mix of ingredients, moreover, has to communicate a sense of social justice and of shared efforts in order for it to be acceptable for the population.
Even though good practices may be of inspiration to countries engaging in pro-growth strategies, there is no such a thing as “the” right recipe for growth. Successful growth strategies differ from country to country, and across periods, and vary according to the strengths and weaknesses of each country, its culture, institutions, and level of technological development. The international context may influence domestic growth significantly.

It may be argued that growth has some kind of conceptual primacy inscribed in the mission of international institutions such as the IMF and World Bank, as well as of many regional organizations aimed at economic and financial cooperation. Of course, the way growth and other objectives are articulated in the charters of such institutions reflects, besides the different purpose and peculiarities of each, also the different times when their charters were written. Therefore, for instance, while the IMF Articles of Agreement (1944) show a conception of growth that is deliberately based on purely economic terms, the EU Treaty (1957 and revised many times) aims at a different, holistic, idea of growth, complemented by social elements, reflecting the cultures and politics of the region, as it has evolved over time.

Let’s explore now the meaning of rigor: it is understood to be a conduct (or even a set of rules) aimed at limiting excessive public debt and state deficit, and at restoring good governance and sound public finances. In practice, in the case of excessive deficits and/or debts due to cyclical or structural difficulties, rigor often translates into austerity policies, with cuts to public expenditures and high social costs.

Moving to the responsibilities and tools of international organizations, we do find many examples of interventions aimed at strengthening rigor rather than supporting growth. On the occasion of the recent European sovereign debt crisis, both IMF and EU engaged in supporting and restoring public finances in several countries. The Eurozone itself, in the process of strengthening its governance, added new instruments and regulations for disciplining public finances more effectively.

In the Treaty on the Functioning of European Union (TFEU) we find several rules of hard law that are intended for achieving more rigor, like, for instance, the articles 123-126 on fiscal discipline.

The best-known one is art. 126:

 “1. Member States shall avoid excessive government deficits. (…)”

There are, moreover, various legal acts specifying rules for rigor and the sanctions for violating them.

Frameworks for growth have also been contemplated at the global and European level, of which many G20 communiques and the Europe 2020 strategy are good examples. Yet they are all nothing more than good intentions, or soft laws at best. All the relevant policy instruments – and especially the budgets – are in the hands of national governments and parliaments.

We can draw the first conclusion: while international multilateral organizations have economic growth in their statutory mission, they are in fact best equipped for delivering rigor.

Why is this so? A simple but nonetheless convincing line of reasoning is that rigor is unpopular. And since the ultimate goal of politicians is generally to be elected
(or re-elected), policies for rigor tend to be avoided as much as possible by democratic governments (and, even more, by populist governments), unless they can be blamed on somebody else. On the other hand, nation states are best positioned and equipped to deal with growth policies, since it is at this level of government that one finds (i) democratic representation of citizens in order to have legitimate choices; and (ii) resources necessary for growth initiatives.

Thus, it is really not surprising that states have transferred the political price of unpopular (but necessary) measures for rigor to different levels of government, levels where there are no political elections. One of the consequences is that states are risking to kill international levels of government with unpopularity.

This dichotomy suggests a number of questions: (i) is nationally driven growth the best solution? Is it the best solution, if international organizations are responsible for imposing rigor?

The choice to place the tools for growth at the national level may appear in contradiction with the goals attributed to the IMF and the EU (as already mentioned), but also with the plans and guidelines for growth formulated periodically by the European Council and the Groups of States (G8, G20), which point to the need for making growth a commonly shared objective by the global community, one which requires international cooperative governance frameworks. At the same time, nation-states run against formidable obstacles to growth, as the international orientation to rigor inhibits their efforts to that end.

Back to growth: which are the main obstacles met by international organizations when they want to deal with growth? A first take involves responsibilities

If we believe that growth involves creative thinking and requires discretion, then we necessarily end up in the field of Politics (with capital P!), and leave the realm of technocracy.

This is substantially different than simply applying rules, which is what happens when international organizations intervene to enforce discipline.

Another obstacle is related to the budget. It’s not just a matter of having limited resources (even though, of course, larger budgets expand the set of feasible choices), but there is also an issue of “who” controls the budget. Only resources that are truly “owned” can guarantee independent (and creative) thinking.

Finally, there is an institutional issue. Growth requires a participative approach and a democratic institutional setup. A hard problem to be addressed is the coordination between the global and the national (as well as regional and local) levels of government. This is an area for multilevel governance and subsidiarity. Regional and global economic institutions may not impose growth recipes over populations but can offer useful fora for governments to discuss policy options and choices, which in the end only they can enforce.

In conclusion: if we consider rigor and growth from a purely “governance perspective”, we easily see that:

  • rigor is basically the application of rules;
  • it may be handled technocratically;
  • it has to be impartial (rules based);
  • it requires negligible budgetary resources;
  • it is easily and more conveniently delegated to supranational levels of government.

Growth, on the other hand, lays within the realm of political decisions. It implies a vision and requires making choices out of an infinite number of possible alternatives and combinations. The number of feasible choices grows with the increase of budgetary resources. Deciding on a growth strategy that is sustainable and inclusive demands democratic institutions.

 Rigor may, in fact, overrule growth preferences. The consequences are not merely economic, as they can have a significant impact on the democratic governance as well.

THE EUROPEAN ECONOMIC AND MONETARY UNION AFTER THE CRISIS: LESSONS LEARNED

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My latest book is out and, yes, this is the title…. and, yes, there are some lessons we have learned, even if some of us wouldn’t have waited so long… they were clear enough since the beginning.

The Economic and Monetary Union was an unfinished project already in the Maastricht Treaty. This was the topic of my first book!

Anyway, now, the evidence is there for everybody, impossible to deny.

The simple, plain truth is that we have in the Eurozone a monetary union (or, better, it is a monetary union), but we have nowhere an economic union. Yes, we have a customs union, a common market, and some important side policies, as common regulations on consumers and environment protection (which is great), but we don’t have any European fiscal policy, just a coordination of national ones. And we have a European tiny budget not up to the task of any reallocation or redistribution of resources, almost no tax harmonization, no European welfare and even less hope to save a State risking default. Every financial intervention to rescue the states in crisis was an attempt to cope with this lack of competence and tools. Sometimes it worked, but, even then, it was too little too late.

In my new book, I try to describe – as clearly as possible – the Maastricht compromise: a monetary union without fiscal union, somehow replaced by a set of budget constraints intended to keep the budgets under control but, still, fully national. Then, I analyze the rules and regulations adopted after 2010 to face the crisis and the evolution of the role of the ECB. Finally, I explore the possible solutions: the reforms which would make the Union (or the Eurozone) a fiscal union. Some of them have been suggested by institutions, experts, and academicians, some are just my attempts to connect the dots…

This is the flyer of the book, available, for now, only in Italian

locandina libro

And this is the English translation of the TOC, I hope there will be soon an English edition:

THE EUROPEAN ECONOMIC AND MONETARY UNION AFTER THE CRISIS: LESSONS LEARNED

INTRODUCTION

The crisis of the law and the law of the crisis

Chapter I: THE UNFINISHED MONETARY UNION

  1. At the origins of the Maastricht agreements.
  2. The dichotomy of models for economic and monetary policies.
  3. The regulatory model of economic policy: reasons and limits:
  4. a) the coordination of economic policies;
  5. b) the code of conduct;
  6. c) the principle of “no bail out”.
  7. The institutional model of monetary policy:
  8. a) the reasons for monetary unification;
  9. b) the European Central Bank;
  10. c) independence and a strict mandate.

 

Chapter II: THE CRISIS AND THE EMERGENCY SOLUTIONS

  1. The global financial crisis and its European edition.
  2. The heterogeneity of policy instruments.
  3. The verticalization of politics and the intergovernmental management of the crisis.
  4. The impact on the democratic principles of the Union and of the Member States.

 

Chapter III: THE EVOLUTION OF THE ROLE OF THE ECB

  1. The European Union is not an optimal currency area
  2. The ECB’s intervention in the crisis.
  3. The controversial legitimacy of its tools and the intervention of the EU Court of Justice.
  4. The role of a central bank: technocracy vs democracy

 

Chapter IV: THE MISSING TILE: THE EXTERNAL DIMENSION OF THE MONETARY UNION

  1. Europe’s role in global economic governance;
  2. The European Union and the euro area in the Bretton Woods institutions;
  3. The European participation in the groups of states;
  4. Who represents Europe?

Chapter V: REFORMS ON THE WAY, REFORMS NEEDED

  1. Two paths for reform: Rethinking the regulatory model of economic policy and making the Eurozone an optimal currency area;
  2. A Treasury and a Minister in charge for it;
  3. A European budget;
  4. Real own resources;
  5. Adjustment mechanisms for an optimal currency area:
  6. a) taxation;
  7. b) welfare;
  8. c) free movement of people

Chapter VI: THE DIFFICULT RELATIONSHIP BETWEEN THE UNION AND THE EURO AREA

  1. common and conflicting interests and goals;
  2. The unity of the institutional framework and its limits;
  3. How to stay together while respecting different views
  4. Possible scenarios after the Brexit

CONCLUSIONS

What if an economic union is also a good reason for a supranational democracy?

APPENDIX

A proposal: the European Agency for sustainable growth.

Manifesto: “A genuine European Union to ensure welfare, security, and democracy”

We European citizens are worried and scared. The economic and financial crisis has impoverished many of us. Youth unemployment risks creating a lost generation. Inequality grows and social cohesion is in peril. The EU is surrounded by war and instability from Ukraine to Turkey, the Middle East and North Africa. The flux of refugees and migrants has become a structural feature we must address together, in a human and forward-looking manner. In many Member states we witness authoritarian tendencies and the rise of nationalist and xenophobic forces. Democracy and the core values of the European modern civilization are under attack. The EU itself is questioned, although it ensured peace, democracy and welfare for decades.

We European citizens don’t want our national politicians to care only about their next local or national election. They ask for European solutions to European problems but then they act to render those solutions impossible or ineffective. They disregard sensible Commission proposals or fail to implement decisions already taken , including when agreed by all. They claim, one day, for Europe to do something and protest, the following day, Europe’s proposed actions. We ask national politicians and the media to stop depicting integration as a zero-sum game, thus pitting nations against one another. In an interdependent world no nation can satisfy all of its citizens’ basic needs and appeals for social justice. In this context, integration and supranational government is a positive-sum game. Our European social model based on liberal democracy and a social market economy can only survive in a multi-level framework of government, on the basis of the subsidiarity principle.

We European citizens are aware that globalization is transforming the world. We need a European government to foster our common values and contribute to the solution of the global problems threatening humanity. The world needs an outward-looking cosmopolitan Europe to help build a more effective and democratic global governance to cope with climate change, peace, global poverty, and the transition to an environmentally and socially sustainable economy.

We European citizens recognise the EU as an incomplete Res Publica. It has a ridiculous budget (0,9% of GDP) and no financial autonomy from Member states, while its current competences are out of date for what is necessary to successfully answer the challenges of the current crises. It has a federal like legislative, judiciary and central bank. But democracy is the possibility for citizens to choose the government and make it accountable. For the Union to work and be democratic its decisions, including budget, foreign and defence policy, and the reform of the Treaties, should primarily be taken by a qualified majority representing the majority will of European citizens and states. The Commission should evolve into a fully-fledged government, setting and promoting a political agenda legitimated through elections. European parties should present their candidates to the Presidency at the European election. The alternative is a directly elected President of the EU merging the Presidencies of the Commission and the European Council.

On 14 February 1984 the European Parliament adopted the Draft Treaty establishing the European Union, the so-called Spinelli Project, pointing towards a political union, which Member states disregarded. On 14 February 2017 we call upon the European Parliament, the only directly elected body of the EU, to take a new initiative to kick-start the EU on strengthened democratic basis. Talking about banking, fiscal, economic, energy, security, defence and political unions makes sense only within a genuine democratic European Union, with all those policies under a European government.

On 25 March 2017 the Heads of state and government will celebrate the Treaties of Rome establishing the European Economic Community and Euratom in 1957. We call upon them to match the vision of the Founders. They should open the way to the re-foundation of the EU on the basis of the European Parliament proposal, and immediately exploit all the Lisbon Treaties’ instruments to strengthen EU institutions and policies, especially on foreign and security, economic and social policies. We call upon the Europe’s youth, its civil society, workers, entrepreneurs, academia, local governments and European citizens to participate in the March for Europe in Rome on March 25. Together we shall give the political leaders the strength and courage to push forward the EU to a new beginning. European unity is key to solve our common problems, safeguard our values and ensure our welfare, security and democracy.

If you agree, please consider adding your signature to the ones by over 300 European intellectuals and academics. You can easily do it here.

You can also join us in Rome on March 25, the programme is here.

SUPRANATIONALITY IN PRACTICE: THE EUROPEAN CITIZENSHIP

The European Union’s founding Treaty (TEU) recalls and reaffirms the role of citizens in articles 9, 10 and 11 – provisions dedicated to its “democratic principles” – with the intent to establish a direct link between EU citizenship and democracy in the Union.

european-peopleThis need to look for (and find) legitimacy in citizenship – the dual legitimacy of the Union and of its member states – deserves to be analyzed as it is a peculiar expression of this supranational system. Although we find its most effective expression in the last edition of the EU Treaty, this quest for legitimacy is not new in the European integration process.

This is even more interesting as we consider that the lack of citizens’ ownership is often considered a cardinal sin in the process of European integration, whose elitist nature is often blamed.

We may find, instead, that citizens – as beneficiaries of rights as well as actors in democratic processes have always been important.

We can read in the article 2 of the Treaty establishing the European Union that:

“The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.”

Even if the significance of the word “democracy” remains unspecified, we could give a first and provisional definition referring to the values listed in art.2 itself, to the constitutional principles common to the member states and to the content of the European Charter of fundamental rights.

In terms of political participation, the European notion of democracy gained significance through the direct election of the European Parliament since 1979. Then, with the creation of a European citizenship by the Maastricht Treaty in 1992 and, eventually, thanks to the inclusion in the latest version of the Treaty of a title entitled to the Union’s democratic principles: the art. 9-11.

“Article 9

In all its activities, the Union shall observe the principle of the equality of its citizens, who shall receive equal attention from its institutions, bodies, offices and agencies. Every national of a Member State shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship.

Article 10

  1. The functioning of the Union shall be founded on representative democracy.
  2. Citizens are directly represented at Union level in the European Parliament. Member States are represented in the European Council by their Heads of State or Government and in the Council by their governments, themselves democratically accountable either to their national Parliaments, or to their citizens.
  3. Every citizen shall have the right to participate in the democratic life of the Union. Decisions shall be taken as openly and as closely as possible to the citizen.
  4. Political parties at European level contribute to forming European political awareness and to expressing the will of citizens of the Union.

Article 11

  1. The institutions shall, by appropriate means, give citizens and representative associations the opportunity to make known and publicly exchange their views in all areas of Union action.

  2. The institutions shall maintain an open, transparent and regular dialogue with representative associations and civil society.

  3. The European Commission shall carry out broad consultations with parties concerned in order to ensure that the Union’s actions are coherent and transparent.

  4. Not less than one million citizens who are nationals of a significant number of Member States may take the initiative of inviting the European Commission, within the framework of its powers, to submit any appropriate proposal on matters where citizens consider that a legal act of the Union is required for the purpose of implementing the Treaties. (…)”

This trail was actually prepared by the ECJ case law.  The  starting point was the Van Gend en Loos case (1963). In it the European Courts defines – for the first time – the Community as “a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields and the subjects of which comprise not only member states but also their nationals”. The Court quoted itself, using the same statement in other famous decisions such as Costa vs. ENEL (case 6/64), Simmenthal (case 106/77), Francovich (cases C-6/90 and C-9/90), opinions 1/91 (December 14th 1991) and 1/2009 (March 8th 2011).

After this first step came, one year later, the Costa vs ENEL case, where we read that “the member states have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves”. In this case the Court clarifies two cardinal principles – the direct application and the prevalence of European law over national law – both are grounded on this direct relation between the European legal order and the citizens which are direct beneficiaries of its norms

This direct relationship between the citizens and the supranational organization is not immediately qualified as a supranational citizenship – which will appear only in 1992 – and it never became a “supranational nationality”.

Since 1992, in fact, the European citizenship is nothing but a set of additional rights, a status added to national citizenships, barely visible if not in the passport format. Keystone of this status is the principle of non-discrimination, walkway between many European peoples and a common citizenship.

Splitting the two concepts of citizenship and nationality – the first existing at two different levels (national and European) the second limited to the national level –  is therefore a basic element of a clear political project.

The strictly legal content of the European citizenship is indisputable, comparable to that which characterized the notion of the Roman civitas.

The abstractness of a citizenship that is pure legal concept becomes a strong choice where it appears to be an alternative to the notion of nationality or people, terms which instead bring with them a rich substratum of history, culture, religion, language, identity and belonging.

And, in fact, the Union’s objective is not to eliminate the nationality or  the peoples of the member states. Article 1 TEU refers to an “ever closer union among the peoples of Europe”, article 3 specifies that the Union’s aim is promoting “peace, its values and the well-being of its peoples“, the same provision recalls the richness of its cultural and linguistic diversity.

So, we have a clear separation between the two notions: a European politeia/citizenship and national demos/people, the first including a number of different national demoi living together in peace, under a roof of common values, principles and rules.

The same distinction is very clear in the preamble of the Charter of Fundamental Rights, where we read:

“Conscious of its spiritual and moral heritage, the Union is founded on the indivisible, universal values of human dignity, freedom, equality and solidarity; it is based on the principles of democracy and the rule of law. It places the individual at the heart of its activities, by establishing the citizenship of the Union and by creating an area of freedom, security and justice.”

And

“The Union contributes to the preservation and to the development of these common values while respecting the diversity of the cultures and traditions of the peoples of Europe as well as the national identities of the Member States”. (Emphasis added)

Therefore, this European integration as a legal process – which coexists with strong national identities – is not necessarily a weakness of the system or the mark of an unfinished process, but it seems rather a choice.

Among the European countries there are strong elements of cultural commonality, especially when viewed in perspective, in the context of a globalized world. Europe’s common “spiritual and moral heritage” is not a rhetoric invention, but it was a clear choice to ground its legal order on a “citizenship without a people.”

This choice has some advantages: first, it does not conflict with the national identity recalled and guaranteed by the Treaty and it promotes an integration model based on the coexistence of diversities; second, it should respond better to the need to reassure the defenders of national sovereignty, reducing the risks of nationalist reactions or to the fear -even irrational- of losing national identities (even if, as Brexit is there to prove, it wasn’t enough). Finally, it prevents a possible European nationalism, a typical degenerative disease of nationality.

As we can see, it is a quite different model from the American melting pot.

This belonging to a polity, expressed in purely legal terms, is the real novelty of the European model, replicable in other geographical areas or global organizations – which could generate – one day – their one partial citizenships – and it opens the door to multiple and cumulative citizenships, not conflicting among each other, to communities partially overlapping.

Alongside this European polity – that performs the dual function of building an area of justice and rights and to legitimize the EU supranational institutions, there is another peculiarity of the European democracy: the absence of an explicit reference to collective self-government.

“Sovereignty belongs to the people” is a recurring formula in the states’ constitution and funding acts, so…how can possibly exist a democracy without a people? This requisite appears to be an essential and indispensable element of democracy – as also pointed out by the General Assembly of the United Nations (resolution no. 55/96 of 4 December 2000).

And here we see why this reference to the peoples of the Member States – alongside with national democracy – is also important: it becomes an implicit reference to national constitutions that recognize and codify these collective sovereignties.

The European polity thus integrates a second democratic level on top of the national one, the two being mutually invigorating. It’s no accident that democracy is an essential requirement for the accession to the Union (art.49TUE).

And yet, some people and some political figures still blame the Union for the persistence of a democratic deficit. We believe that this deficit is not in the EU institutional system but in some essential transmission belts required for a genuine democracy: European parties, a European political debate and – even more – a press reporting to citizens what happens in the European Parliament and the other bodies at work over the national level.

Another real gap is in the absence of awareness of many European citizens about their rights and their status in Europe, even if, once the mentioned tools in place, that would be maybe filled up.

So far, in vain  the European Commission launched communication campaigns designed to fill these gaps. The system is formally democratic, but essentially perceived as distant from its citizens.

Its democratic formula – being so disconnected from a sense of identity and belonging – is especially difficult to communicate. Even more difficult if press and political elites don’t give it a try.

“EUROPEANS FOR EUROPE”. RECOVERY IN THE AGE OF INTERDEPENDENCE

Europe is going through multiple crises: an economic crisis, a political and institutional crisis, a confidence and trust crisis. They are mutually reinforcing themselves.

The difficulty to face both the migrant crisis and the inner economic crisis fostered narratives grounded on nationalism: the apology of good old times or the ” we can do better by ourselves ” encouraged debates à la Brexit in several countries, moreover some political parties didn’t resist the temptation to blame foreigners or Europe for events which are really outside national and European control or which involve in various degrees the responsibility of local, national and European politics. The raise of anti-European parties, the walls under construction between countries and the step back on the Schengen commitments are all symptoms of a deeper problem.

The main road to restore confidence in the European institutions is a bold reform of the European treaties, improving the democratic side of the economic and monetary union through an increased involvement of the European Parliament and the establishment of a fiscal union.

The Eurozone still needs many elements which would make it a real optimal currency area, such as a bigger budget, real own resources (as some common taxes) and few elements of common welfare as would be an unemployment benefit. These would introduce automatic adjustments in case of crisis. Moreover, the discretion lost by national governments in the field of economic policy would finally be gained by the European level of government, which is now blocked by intergovernmental procedures and inadequate tools.

Unfortunately (i) all this requires time, as a new treaty needs a minimum of two years to be negotiated and ratified, even more to be implemented; (ii) all this postulates a strong and shared political will across Europe as treaty reforms require unanimous consent by member states. There is, vice-versa a need to act now, to restore the confidence in the Union and the credibility of the European integration project in order to prepare the ground for the so needed reforms. The best interventions are those able to answer to the immediate needs of the population and counter the narrative that Europe is damaging its own citizens. Only so, the raise of anti-European parties would be stopped.

What is needed is something similar to the Marshall plan for Europe, or to the New Deal for the United States: a big and bold recovery program.
What if money could be found almost for free, out of generosity, for a good cause?
For this reason I imagined a dedicated European Agency: the “Europeans for Europe Investment Fund”, for crowdfunding and investing on the basis of two basic assumptions:

  1. Citizens are willing to contribute to Europe’s Recovery ;
  2. European States are heavily indebted and the European budget is just too small for an ambitious investment plan, BUT private assets and savings are definitely relevant in Europe, making it (still!) one of the richest regions in the world

The “Europeans for Europe” recovery plan is not just intended to foster economic growth, but to address the multiple crises affecting Europe. Together with a financial crisis we are living a confidence crisis in Europe together with an identity crisis and a leadership crisis. There is a urge to bring back citizens to the public sphere, to make them feel fully involved in the choices, to counter the lowering level of participation to the electoral consultations, to give them pride in being Europeans, pride for what they have accomplished in the past, for their heritage of values and most of all for what they still can do for themselves and for the world.

The proposed plan is not intended to replace the necessary institutional reforms in Europe. Conversely, the necessary debates and negotiations have to start right now. It has nonetheless the aim to act in parallel and to prepare the ground for the political and popular approval of them, restoring a climate of confidence together with economic growth.

My project was submitted to the MGI Essay Prize: “Crowdsourcing ideas for revitalizing growth in Europe” as well as other 400 others. Unfortunately it was not among the three winners. Nonetheless, it was shortlisted among the 20 most innovative ideas submitted, as you can read in a booklet free to download on the prize page.

The full text of my paper is available on Academia. Feel free to comment, share and have a say!

 

 

To Brexit or Not To Brexit

The nowadays famous article 50 of the EU Treaty didn’t exist before the 2009 Lisbon reform.

The founding fathers’ vision of an ever closer union didn’t contemplate a way back … or a way out. The marriage had to be for life. But then, after the big enlargments in 2004 and 2007, some practical minds decided to foresee the possibility of a divorce.

And here we are, with a divorce we didn’t expect to see.
As a British colleague made me notice, the 48% of the voters who expressed the will to remain are not parties in this divorce process, they are the victims: the children.

And the divorce is not formalized yet and this doesn’t seem to happen anytime soon.

Those who say that enacting art.50 is a competence of the British parliament are certainly right, as the  parliament ratified and enforced the European treaties in the British legal order and cannot be bypassed by the goverment, repealing these acts. By the way, both the parliament and the government  look reluctant as they didn’t really want this outcome.

Those who say that the will of the citizens cannot be ignored are right too. It is absolutely reasonable that such an important decision should require a larger majority, but there wasn’t any rule about it and a majority won.

Both the fields -the Brexit supporters and the remain supporters – have solid arguments on their side.

But there isn’t only the British membership of the European Union at stake. That would be too simple an assumption.

The remain voters are not necessarily supporters of this Union, which has its own undeniable flaws. Most of them stand for an idea: being united with our  diversities, being  stronger together, being peaceful as a family which solves its own divergences discussing at a common table.
Most of them know that the Union is a work in progress which can be improved only from the inside. And they know there is much to gain from the EU’s open borders and European citizenships’ rights if you are willing to move, explore and challenge yourself and your national limiting beliefs. They reasonably don’t want to lose these rights.

The Brexit  voters come from a range of different experiences:

  • Some of them  have suffered and still suffer austerity;
  • Some identify Europe with a suffocating bureaucracy and  a political failure, which is how Europe as been sold to British people for decades: as a useful scapegoat.
  • Some expressed a feeling of antipolitics, they would probably have rejected any political establishment and just prove the  crisis of democracy we all see around us.
  • Then there are the champions of national sovereignty, and all sorts of nationalism.
    This feeling has been fueled by the huge migrations from the southern shore of the Mediterranean. It is a real emergency and nationalist attitudes won’t help to find a solution whatsoever. But still we can understand where this feeling comes from: fear. Fear of invasion, fear of sharing already meager work opportunities and national resources.
  • Finally, some think that a free rider state will thrive on the global market, possibly a more and more deregulated global market. This is a completely different attitude, but still anti-EU. And more than the other views it looks anti-historical as the world goes in the opposite direction: solving problems which become more and more global will require more integration, not less. Even little tax heavens are (finally!) under threat of extinction.

    I am totally empathetic with the “remain” voters and still, while I wish the best outcome for them, I wonder if a Brexit is politically avoidable.

    However the dilemma will be solved, some lessons need to be driven:

    ⁃       austerity has not been the solution to the financial crisis. In some countries it even worsened the economic situation. In many states unemployment is still at record level. The price was especially paid by the weaker part of the population, poverty and inequality provided a good soil for populism and nationalism. Moreover, it has been errouneously attributed to Europe, while it was a national solution (as I already explained).
    ⁃       There is a crisis of democracy and a rise of antipolitics almost everywhere. I have my theory about that: the nation states are not anymore the right institutional framework for tackling most of our problems, we need to go more local and more global at the same time. But – be right or wrong my explanation – we need a serious reflection on our contemporary democracies.
    ⁃       Finally, we need to work for a better Europe, we owe this to those who voted against it as to those who voted in favour. I have written about this and for sure I will write more extensively in the future. I’ve already been too long!

    For those who arrived to the end of my reflections: these are challenges not just for polical elites, not just for governments and states, but for all of us. And this is a call of duty for new brave political leaders at all levels.