Jan. 30 (Bloomberg) -- David Cameron’s recent speech on Britain and the European Union went down pretty well with his party at home but was coolly received across the Channel. The U.K. prime minister called for a “new settlement” to include repatriation of some powers ceded to the center in previous treaties. At this, most other EU leaders rolled their eyes.
Constant moaning and foot-dragging aren’t what you want in a partner. The trouble is, Britain has a point -- one that other EU states should weigh carefully, not for Britain’s sake but for their own.
Cameron’s partners need to understand that he’s sincerely pro-European. He wants Britain to remain a member of the EU, but he recognizes that the country can’t get on with a one-size-fits-all EU. Britain may be uniquely truculent, and no doubt uniquely annoying as well, but its citizens aren’t alone in their reservations about the EU’s blithe commitment to “ever-closer union.” If Britain wasn’t voicing these doubts, somebody else would be.
The reaction to Cameron’s speech expressed a remarkable degree of complacency alongside the justified irritation. Europe’s drive to economic and political integration hasn’t exactly been an unalloyed success.
The EU’s biggest innovation of late -- the creation of the euro -- is a disaster for many member states. Countries such as Spain and Italy surrendered their monetary sovereignty, and with that the ability to stimulate their economies with lower interest rates and a depreciated currency. They are no longer free to use a spell of inflation to promote employment or reduce debt burdens.
They tied their hands in that way knowing that complementary aspects of policy integration weren’t yet in place. Less monetary flexibility made it vital to allow for enhanced fiscal flexibility. They should have strengthened their public finances so that they could safely run big budget deficits if the need arose. They gestured in that direction but didn’t do enough. They should have made their automatic fiscal stabilizers more potent. They didn’t. Above all, they should have designed a collective fiscal response, so that intra-EU fiscal flows would help to offset asymmetric economic shocks. They didn’t do that, either.
The subsequent crisis was both predictable and widely predicted. Britain had the good sense to opt out of the arrangement. Inattention to the danger in the rest of the EU was entirely characteristic.
EU leaders have taken a perverse pride in management-by-emergency. Half-baked plans for integration cause problems; the problems call forth half-baked cooperative solutions; the cycle repeats. In this way, the EU iterates toward ever-closer union, and governments call it progress. The endpoint, whatever it may be, is never examined let alone justified to citizens. Meanwhile the transitional costs, like those the EU is enduring at the moment, run out of control.
Under these circumstances, why not call for a moment of deliberation about where the EU is headed? The discussion that Britain wants is in everybody’s interests.
Among EU members, Sweden is more apt than most to sympathize with Britain’s point of view. Yet as Bloomberg View’s Tim Judah reported last week, Carl Bildt, Sweden’s foreign minister, tweeted mild disapproval of Cameron’s speech: “Flexibility sounds fine, but if you open up to a 28-speed Europe, at the end of the day there is no Europe at all. Just a mess.” (He said 28 and not 27 because Croatia is expected to join soon.)
That’s an odd response, first because Cameron isn’t calling for a 28-speed Europe, and second because Sweden also opted out of the euro, just as Britain did. Ten of the EU’s present 27 members retain their own currencies. In that key respect, Europe is already a two-speed enterprise. In light of experience, it’s far from unreasonable to advocate this as an indefinite arrangement and to explore the implications.
One such implication is that some powers already transferred to the EU center can be brought back. That topic shouldn’t be unmentionable. After all, the EU formally recognizes the principle of subsidiarity -- which says that decisions are best made as close to the people they affect as possible. There’s no sensible rationale for the view that decisions on integration and subsidiarity, once made, can never be reversed.
Euro-area countries do need to strengthen their arrangements for fiscal cooperation. Actually, this needn’t require a major new surrender of national sovereignty -- use of conditional joint euro bonds might suffice. But moves to full political union make good sense if that’s what the citizens of France, Germany and other core countries really want. Non-euro countries, on the other hand, have less need of fiscal pooling and needn’t participate if their voters don’t wish to.
If countries such as Britain and Sweden are content with their second-tier status, why should that be a problem? The mutual gains from this kind of associate membership are still enormous. In a one-size-fits-all Europe, the only way for countries that don’t want full political union to stand aside from that venture is to block it for everybody else as well. Why not let the core countries pursue their ambition while staying on terms of close friendship and intimate economic cooperation with partners that wish to remain sovereign nations?
The one-speed approach is a formula for endless friction and recrimination. A deliberately institutionalized core-and-periphery Europe starts by recognizing that views on this subject differ and will continue to. That’s a threat to European prosperity only if Europe makes it one. The point is, so long as the subject isn’t ruled off-limits, the differences can be accommodated. That’s better, surely, for skeptics and integrators alike.
(Clive Crook is a Bloomberg View columnist. The opinions expressed are his own.)
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