Guest post by Jaap Hoeksma*
The EU has been weathering severe crises over the past decade. So far, the political and financial troubles have been analysed in isolation. When they are studied in their mutual interdependence, however, a common cause can be identified. In this perspective the rejection of the Constitution for Europe by the French and the Dutch voters in 2005 has paved the way for the evolution of the EU towards a new kind of international organisation with a distinct form of democracy.
The euphoria over the introduction of the euro in a number of member states was followed by the consternation concerning the failure of the Constitution in 2005. In a similar way as the Danish electorate had done in 1992 on the occasion of the referendum about the Maastricht Treaty, the French and the Dutch voters expressed their opposition to the creation of a sovereign State of Europe. Having been rebuffed twice by the citizens, the European Council decided this time to take their objections seriously. The 2007 Lisbon Treaty construes the EU as a democracy without, however, turning the Union into a state. This is a revolutionary breakthrough in the pattern of international organisation, which is not feasible within the limits of the prevailing paradigm. The organisation of the United Nations is built on the (Westphalian) presumption that sovereignty is one and indivisible. Within this paradigm, the principles of democracy and the rule of law may only come to fruition in the context of a sovereign state.
The end of the political problems was hardly in sight or the financial troubles erupted. This global crisis, triggered by the fall of the Lehman Bank in 2008, hit the euro area in particular. The reason for this unforeseen development lay in the fundamental distrust towards the euro, which the financial markets and the hedge funds suddenly demonstrated. They started to perceive the euro as a currency without a state and unleashed a ferocious attack. The question was not whether the euro would fall, but rather when that momentous event was to happen. The mood was neatly captured by Chancellor Merkel in her famous speech of 2010 in the German parliament: 'Fails the euro, so falls the EU'.
A specific, but often overlooked reason why the battle for the euro has been fought so vehemently, is that it was in essence a clash of paradigms. In line with the premises of the UN-model of international relations, the financial markets were convinced that each currency has to be backed by a state. In that view, a currency without a state is doomed to fail. The member states of the EMU, however, were prepared and willing to pool so much exercise of sovereignty, that the assault on their common currency could be resisted. By constructing a line of defence, by introducing the European Semester and finally by creating a banking union, the member states and the EU established themselves as the joint sovereign behind the euro.
Ten years after the rejection of the Constitution for Europe, the EU may be described in positive terms as a Union of citizens and member states, which functions as a common democracy. The EU-model of governance is based upon a flexible interpretation of the concept of sovereignty. The distinctive hallmarks of the European template in relation to the UN-system are that a) the conduct of war as a means of the solution of conflicts between member states has been excluded; b) states can share the exercise of sovereignty without losing statehood and c) states can enjoy the benefits of a single currency without having to merge into a federal state. These hallmarks provide sufficient evidence for the submission that the EU has evolved into a new kind of polity in international law.
This conclusion may shed fresh light on the forthcoming referendum about the British membership of the EU. The choice is no longer between a sovereign state of Europe and a Europe of sovereign states, but rather between the EU as an area of free trade and the EU as a democratic polity of citizens and member states.
*Jaap Hoeksma is Philosopher of Law, Director of Euroknow and Creator of the Boardgame Eurocracy. The present blog is an abbreviated version of the DSF Policy Paper: EU & EMU: Beyond the 2005 - 2014 Crises Decade