VOTING WILL NOT CHANGE EUROPE´S REAL POWER / THE FINANCIAL TIMES COMMENT & ANALYSIS

May 4, 2014 6:15 pm

Voting will not change Europe’s real power balance

By Wolfgang Münchau

Get Alerts

Start alertsGet a daily email alert for Wolfgang Münchau

A popular backlash against Brussels should not be surprising

©EPA

“This difference between the parliament and those who take the real decisions is very clear to the citizens.”

The words of Herman Van Rompuy, president of the European Council, delivered in a recent interview with Süddeutsche Zeitung, are simultaneously infuriating and true. They also go right to the main issue in EU politics ahead of this month’s elections to the European Parliament: where does real power lie? With the parliament or, as in the past, with the European Council – the heads of state and government – just as Mr Van Rompuy so succinctly put it?

The biggest irony of the EU is that with every new treaty the formal powers of parliament have increased, yet in reality the council is becoming ever stronger. The European Commission, the EU’s executive arm, has also lost power and standing. This power shift raises three questions: why did it happen; does it matter; and is it reversible?

So why did it happen? The formal answer is bad luck. The eurozone crisis was the dominating event of the past five years. The European treaties did not empower the EU’s institutions to do anything relevant, such as create new mechanisms or replace unworkable rules with new ones. The council was left to fill this power vacuum by default. It set up the European Stability Mechanism “outside the treaty”, as it is known in the Brussels jargon. This means the ESM is not a formal EU institution. Its legal basis is a separate treaty between countries. Banking union is another example. Some of it is inside the treaty, some of it outside.

This formal explanation is misleading, however. Real power is not formal power. In the past the commission was at its most powerful when it led the big debates. It did so in the late 1980s and early 1990s in the run-up to the Maastricht treaty, which set the basis for the euro. The commission was then not empowered by law. It just did it. Its main role was to provide political leadership when no one else did. It succeeded because it sought allies.

The failure over the past five years has been intellectual. When crisis struck, Europe’s institutions were off-script. I recall meeting a senior EU official right after the collapse of Lehman Brothers. His main concern was the impact of any bank rescue package on European competition policy. He did not even think about deposit insurance or joint supervision. Nor did he have any contingency plans in his drawers.

Does it matter? I think so. The council has proved more flexible in the crisis than I expected, but it has fallen well short of what it needed to do. All it did was to agree the minimum required to keep the show on the road. A voter backlash against this amorphous political cloud called Brussels should not be surprising. 

Voters do not care about inter-institutional rivalries. They are protesting against bad policies that have delivered austerity, high unemployment and low investment. The system of checks and balances between EU institutions is out of whack, and this in turn contributed to bad policies. The commission and the parliament are the junior associates of the team, visible and loud, but in the wrong room.

Is the power shift reversible? Until recently, I thought it might be. After the recent banking union fiasco, I am no longer so confident. The council agreed on legislation for a bank resolution fund in December. The legislation then duly moved to the parliament, and then to an inter-institutional conciliation process. That is where the parliament caved in. The draft of the legislation as originally agreed by the council had flaws. Many were irritating. 

One was fatal. It was the lack of a provision to deal with a contagious banking crisis, which was the whole point of the legislation. Germany ruled out any fiscal backstop, and the other ministers reluctantly accepted Berlin’s position.

But why should the parliament have accepted it? Instead of challenging the council on this one important issue, it focused on the other, minor points of disagreement, such as who takes what decisions when and who is allowed take part in which meeting – all stuff that Brussels is obsessed with. When they won a few cosmetic concessions after 16 hours of negotiations, they declared victory. Several MEPs are now claiming that taxpayers no longer have to bail out banks. That is absolutely not true. For me, they lost their credibility at this moment.

And yet on paper, the parliament is becoming more important. One of the many changes agreed in the Lisbon Treaty of 2009 is parliament’s new right to vote for the next commission president. This is why the parties have appointed their Spitzenkandidaten – their candidates for the job. If the outcome would be a more focused and more forward-looking commission, then good.

I am just not sure that this will happen. My expectation is that ultimate power will remain with the council because of the political dynamics in the EU. I fear Mr Van Rompuy is right. Those European elections are sadly not all that important.

Copyright The Financial Times Limited 2014.