Merkel and Juncker Unite Against Europe's Dreamers

Brexit isn't helping European federalists.

Don't move.

Photographer: Chung Sung-Jun/Getty Images

It is increasingly clear that the European Union is about to waste the crisis brought on by the U.K.'s withdrawal vote. The leaders of the nation states have no stomach for any meaningful reform of EU institutions, the bureaucrats in Brussels are forced to take a back seat, and federalist dreamers are unceremoniously shunted aside.

The influential German weekly, Der Spiegel, recently described the EU's reaction to Brexit as a "raging power struggle" between German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker. Merkel, who had doubts about Juncker's appointment in 2014, is portrayed as trying to contain the damage from Brexit, play for time, let things calm down and maintain the EU as an intergovernmental forum rather than a supranational institution. Juncker, backed by European Parliament President Martin Schulz and Germany's Social Democratic Party, the junior partner in the country's ruling coalition, is squarely in the federalist camp seeking to re-establish the union, the magazine suggests.

The dynamics within the EU establishment, however, are constantly changing, and the current line-up looks different. Pragmatists, including both Merkel and Juncker, are facing off against idealists such as Schulz, some other European Parliament members and German Foreign Minister Frank-Walter Steinmeier. The pragmatists are gaining the upper hand -- or, rather, yielding to the centrifugal inertia that they believe makes any progress impossible right now.

The views of Schulz and Steinmeier are described in a position paper they recently co-authored. They want the EU to be "re-founded" with a functional government, an "economic Schengen" that would work as a single, barrier-free area for business purposes and adopt other attributes of a federal state including a common military and shared external borders. They suggest the European Parliament be the forum for this recasting, with heads of governments, national parliament members and civil society organizations all participating.

Despite his federalist convictions, Juncker doesn't want to re-found anything. He stated his position on Tuesday during a European Parliament meeting discussing the outcome of the post-Brexit meeting of national leaders. "I agree that we cannot go on as before, but I refuse to reconsider everything," he said. "This is not the time, not yet, for deep institutional reform. I agree with those who say this is not the time to revise the treaties." 

The people Juncker agrees with on this are the national leaders, and above all Merkel. Her chief of staff, Peter Altmaier, told Der Spiegel recently:

"There are very different notions about how Europe should continue. Many federalists want to take advantage of the situation to integrate Europe even further. Others would like to roll back the level of integration. But a change to the EU treaties, as some are demanding, stands no chance currently because they can only be agreed to in a unanimous vote."

Juncker is visibly irritated by Brexit. He spits venom at the British politicians who ran the secession campaign, and he frets at not being allowed to take a central role in negotiating the exit terms -- something Merkel clearly wants to deny him. Yet there's not much he can do: Unlike the elected national leaders, he lacks the legitimacy to play a truly independent role. That's why, at Tuesday's European Parliament session, he said the EU should just push on with its current programs such as establishing common digital, energy and capital markets, and ensuring they're better implemented.

This was an admission of defeat, acknowledging that the most important EU decisions require unanimity among its national leaders. Juncker's attempt to rebel by proposing recently that a major trade deal with Canada be enacted without ratification by national parliaments, he ran into Merkel's opposition, and is now expected to propose ratification by both national parliaments and the European Parliament. Juncker is aware that pursuing an independent line in today's climate of EU-fatigue will either render him irrelevant or get him fired.

That drives the federalist dreamers to despair. At Tuesday's European Parliament meeting, Guy Verhofstadt, the former Belgian prime minister and a fiery champion of a European superstate, couldn't contain his emotions as he railed against the national leaders' sway over the EU:

"The only thing I have heard from the Council is that we shouldn't change anything and we should just implement existing policies. I find this shocking. Let’s not be naive. A loose confederation of nation states based on the unanimity rule will never be able to deliver decisive results."

The federalists' argument is that while national leaders, with divergent agendas and a shared interest in blaming their own failures on Brussels, are required to make consensus decisions, all the EU will be able to do is precisely what ordinary people don't want from it. It'll regulate how much water toilets should flush and what a pack of cigarettes should look like, but it won't agree on a common refugee policy or set up a common economic area that would make European technology businesses more competitive with U.S. ones. Brexit makes that stasis worse.

There's a propensity among the national leaders to treat the EU as a chronically sick person in need of peace and quiet rather than strong medicine. Merkel's inclination is to turn chaos and discord into deals that gain acceptance but please no-one, kicking problems down the road and hoping solutions will suggest themselves. Juncker, despite his differences with Merkel, has the same trait. He may appear bristly, but he's also consensus-oriented. So, as in any recent European power struggle, the post-Brexit environment is business as usual.

Whatever grand dreams and designs have powered the EU in the past, they are now on hold. The organization survives as an often unwelcome regulator, but mostly as a forum for elected national leaders to try to agree on a limited number of watered-down common policies. Such a forum is undoubtedly useful; but it's a far cry from a European superstate, and could probably function with much less fuss and angst than the current EU arrangement.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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