visionary civil servants from the two sides
Monnet and Schumann. At first, the six nations which came together in 1957 were interested in economic cooperation. It was called the European Common Market. Then, two processes happened simultaneously. More countries joined the European Community and its role expanded till it became a European Community. Then, it enlarged after the fall of the Berlin Wall to become a Union.
Now, with thirty-plus countries as members, the EU is neither a federation nor a confederation. It has a very small budgetaround 1.5% of Euro GDP. It has no system of interstate transfer and no Euro wide taxation. But it has rules and regulations which appear irksome and imposed rather than agreed upon. Resentment of the European Commission, the secretariat of the EU as unelected is widespread. Euro bureaucracy is not large but always described as so. The EU and its Commission are seen as alien, unelected bodies.The EU President is not directly elected but selected by the Council of Europe which
comprises heads of the various member governments. The Commissioners are nominated by member governments and the President of the Commission has been only recently had to be approved by the European Parliament. This mixture of selection and appointment has been evolved over a long time by the elite and now seems remote.
In the immediate post-war mood, the experiment sounded fine. For decades, it was welcome as it helped lower trade barriers among the members. It ran a protectionist policy for European agriculture which thrived in its inefficiency. It was a Customs Union which reluctantly became a single market, a transition as it were from Friedrich List to Adam Smith. But its structure is resistant to reform. The single market has still, after twenty years, not made the migration of skilled professional across the borders easy. Reform requires a Treaty which has to be approved by all member countries. Some hold a referendum on each Treaty, Ireland for example. Others do it through their parliament. But the process is so slow that the members hesitate to embark on reforms.
The EU is badly in need of reform. It needs to make up its mind whether it will be a full-fledged federation like India or become a loosely united confederation. It needs to have some way of making transfers from rich to poor countries. It is growing way below its potential having adopted a single currency without a single political authority.
It is unlikely any of these changes will happen without a serious crisis. May be the arrival of the right wing parties may hasten action on part of the middle of the road parties. May be not. Then, EU will balkanise back into fragments of the nation-states as it was before the Second World War.
The author is a prominent economist and Labour peer