Column: Will Europe stay united

Written by Meghnad Desai | Updated: Jun 2 2014, 09:49am hrs
While we in India have been creating a transformative atmosphere, have a thought for the other side of the world where a different sort of change is threatened. At the most recent elections for the European Parliament, the responsible parties have suffered losses across the Union. Germany is one of the few major members which has not seen the revival of a right-wing nationalist party. This has its own explanation due to Germanys history with Nazism.In France, the UK, Austria there is a strong revival of anti-European Union sentiment. As it is, even the bigger parties in the UK have ceased to be strongly pro-EU. David Cameron has been promising a referendum on being in or out of the EU. But that is not till 2017. The Conservative Party has been growing steadily Eurosceptical. The Labour Party has lost its Euro-enthusiasm. But the new right-wing Eurosceptics are fiercely anti-European. While other parties are mildly unhappy about the structure and institutions of the EU, parties like the UK Independent Party (UKIP), the French National Front want to withdraw from the EU altogether. They are right-wing, but not in favour of liberal capitalism. They are, if anything, corporatist . They are also anti-immigration, not just of people from outside Europe but of anyone from outside their country. The European Union had established the idea of free flow of labour across the single market which the EU has legislated. It is this which has roused the ire of the right-wing parties. The established parties had also argued for the Euro and promised good times. Now, with years of the Eurocrisis and a drastic fall in living standards, the lower classes are keen to abandon the European experiment.The European experiment began after the War mainly to maintain peace between France and Germany whose quarrels had by then caused three major wars over seventy five years. But the project was top-down, begun by two

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