EU’s functionalist contradictions begin to catch up with it

EU’s functionalist contradictions begin to catch up with it

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Emmanuel Macron and Angela Merkel announce their historic €500bn EU recovery plan at a videoconference on May 18th. (Getty Images)

As I wrote in this column a month ago, the EU, in an effort to square the circle of its many structural contradictions, has proceeded throughout its history in a very consistent manner. Its guiding ideology, functionalism, is a policy strategy pushing for seemingly insignificant, technocratic, agreements — devoid of politics — that are easy to reach, precisely because they seem technical and uncontroversial, even though the direction of travel is always toward greater EU central control. Over time, the “Monnet method” is supposed to lead, step by tiny step, toward a confederated European state without having to weather a real political debate over whether such a political course is wise or necessary.
The functionalist project met with the greatest of success over the almost half-century from the 1950s to 2000 as a broadly united Europe emerged, all without ever raising (let alone answering) the basic question of what sort of political construct was truly being created. While this seemed clever, in actuality, functionalism’s chickens have been coming home to roost since the Great Recession of 2008, as the anti-democratic contradiction in the method has never been faced up to: The founders of the EU wanted a powerful political Brussels without ever having to engage in politics.
This brings us nicely to Europe’s present inability to prove itself fit for purpose in dealing with the coronavirus (COVID-19) crisis. For the German Federal Constitutional Court just caused plans for the next functionalist jump forward to come to a screeching halt. The popular, powerful court ruled that the European Central Bank’s (ECB) $2 trillion bond-buying program of the past five years contravenes German law, as it is a disproportionate policy response, given the national powers and oversight surrendered.
Beyond the specifics of the ruling, the German court is suspicious that the ECB program violates EU law itself, as it is presently forbidden for one euro zone member to subsidize the debts of another — a law that the functionalist EU has long been dancing around. In essence, the court has said functionalism as a process has its limits: That such a major surrendering of sovereignty is not technocratic, but requires a true political discussion and greater political oversight.
The court’s ruling is momentous on many levels. First, this amounts to the first time a national court declared a judgment of the European Court of Justice (ECJ) — which in 2018 upheld the ECB’s bond-buying program — itself illegal. The judges are calling the powers of the ECJ, always the functionalist champion, into basic question.
Second, given the ruling, there will surely be another German legal challenge to the even looser rules surrounding the recent ECB plan to buy a further $750 billion-worth of bonds, mitigating the worst of the coronavirus’s immediate effects on a devastated continent. It is likely the German court will rule against this as well, thereby throwing the entire European rescue operation into chaos.
Third, the obvious and pressing need for even further post-crisis stimulus, desperately necessary in rebuilding a continent on its knees from the worst economic crisis since the Great Depression, will be met with the greatest uncertainty. And the notion of a “coronabond” — common lending backed by the more stable finances of Northern European states as well as the south, and which an increasingly desperate Southern Europe has called for — would seem to be off the table.
But the European elite’s attachment to the functionalist creed has always been greatly underrated, just as has been the elite’s (rather than their public’s) dream of a European superstate. And, sure enough, both French and German political leaders decided this past week to do what functionalists always do: Sidle around facts that do not correspond to their utopian view of reality.
Firmly believing that the court’s ruling has hamstrung an already failing EU — either Germany is alienated or the euro itself is placed in peril — French President Emmanuel Macron and German Chancellor Angela Merkel have decided to act in a predictably functionalist way. Getting around what they collectively see as the court’s efforts to scupper Macron’s stated goal of introducing coronabonds, Berlin and Paris unveiled a “one-off” program (to placate Germany) of €500 billion ($547 billion) in grants and not loans from the common EU budget for the hard-pressed south. In essence, this amounts to coronabonds by the back door.

Such a major surrendering of sovereignty is not technocratic, but requires a true political discussion and greater political oversight.

Dr. John C. Hulsman

But, at last, Europe’s functionalist contradiction has hit the hard wall of real-world politics. For the Franco-German stitch-up assumes the rest of the European states would meekly go along with such a ruse, as they traditionally have in the past. Initially, at least, this emphatically does not seem to be the case, as the governments of Austria, the Netherlands, Denmark and Sweden are refusing to meekly follow the Franco-German lead and accept a greater degree of European political centralization. Late in the week, “the frugal four,” in complete contradiction to the Franco-German plan, called for a rescue package based on loans rather than grants, and with conditionality (of responsible economic behavior) placed on the aid.
Instead of ignoring the German court’s ruling and indeed skirting the will of their own people, far better for Merkel and Macron to ditch their outmoded, shifty, functionalist modus operandi and instead engage in a far-too-long-overdue political discussion with their peoples about where the European project ought to be headed. For contradictions eventually need resolving.

  • Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via www.chartwellspeakers.com.
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