A European Federation: Still Foreseeable

By: Kenan Kabbani

As an American glancing from across the shivering cold waters of the Atlantic Ocean, the European dream seems all but exhausted. The Ideas of liberalism, the free movement of people and goods, and the European identity/citizenship have been shaken by the Euro Crisis, migrant waves, and internal dissatisfaction in the form of Euroscepticism, Brexit, and a far-right revival. The cohesion of the European Union seems from the outside to be in jeopardy. Several internal and external actors believe that this historic endeavor and joining of previously hostile nations should be abandoned. In their minds, it has failed, and the only clean way forward is to either severely weaken the Union’s role and influence in European societies and politics or to dismember it all together. While the relationship between the European Union and its member states must change in order to maintain the integrity of the Union, disintegration is not the answer but rather further integration. One cannot help but draw parallels between current European endeavors and the American experience under the Articles of Confederation that preceded the Federalization of the United States. If the American experience is to be considered here, then further integration is the key to preserving the monumental political, social, and economic achievement that is the EU and is the single best path forward.

The EU is not only a symbolic union of European states around shared principles but also an experiment in economic, political, and social integration. It has had an immeasurable impact on preventing violence and armed conflict between its member nations. It has served as a bastion of liberal-democratic principles and influence in the old world. This experiment’s accomplishments in the economic sector, although tainted by the stain of the Eurozone Crisis, are nonetheless astounding. The EU has helped many member nations increase their economic development and growth, and it has provided the foundation for many states to improve the quality of life seen by their citizens, as can be seen by successes of countries such as Poland and Czechia. The success and continued survival of this experiment will serve as inspiration for similar projects, such as the integration of the African Union, the Arab League, of ASEAN, or Mercosur (the southern common market). Imagine the impact such integrations would have, not only on economic growth and prosperity but also on regional stability and political liberalization. 

With these stakes in mind, how would a federalized, more integrated Europe better tackle the issues facing the European Union than a confederated, nominally integrated Europe, as some have suggested? The answer lies in the balance a federal system can provide between the member states and centralized authority. While a confederation preserves much of the sovereignty of the member states, a federation forfeits several essential aspects of sovereignty and rights of the member states to empower a central authority, which can then use that sovereignty to enact uniform policy for all actors. 

In its current form, the European Union exists in a quasi transitional phase that is closer to a confederation rather than a federation. The member states retain significant sovereignty in several key policy areas: foreign affairs (sans trade), defense affairs, and fiscal affairs (but not monetary affairs if the member state is part of the Eurozone). Although there is often cooperation between member states in these areas, member states are still free to act independently when pursuing policy in these areas. As such, the EU behaves more like 28 loosely associated individuals as opposed to a unified ‘team’ of 28 players. This lack of coordination on shared issues, such as the Migrant and Euro Crises, is the underlying reason for the EU’s inability to act on and solve these issues. It does not represent a flaw of the Union’s mission or impracticality of its goal but rather a limitation of its capabilities based on the sovereignty allocated to it by member nations. Other nations were not paralyzed by similar crises because their central authorities possessed sufficient sovereignty to coordinate an effective policy response. The United States has, in the past, experienced large swells of immigration. However, the response of the US federal government was effective, swift, and enacted in unison, unlike that of its quasi confederated EU counterpart. Additionally, many nations weathered the 2009 global economic recession better than the EU due to their central authority’s ability to coordinate fiscal and monetary policy across the entire nation. Modern crises like the ones experienced by the EU require a unified and coordinated response that is only possible via the kinds of concentration sovereignty provided by an integrated political system. 

With a federalized system, many of the critical aspects of sovereignty would be transferred to the central authority of the EU ( the Parliament and Commission in Strasbourg and Brussels, respectively). By allowing a centralized authority to represent the member states as one unit, the Union can exert more considerable influence on the world stage than any single member state could. Small states stand to gain the most from this. However, the benefits imparted on larger states should not be understated. A unified defense policy, for example, could streamline military administration, reduce overall costs, standardize equipment and training standards across all member nations, and allow the Union to exert far more military influence on the global arena than even the most influential members of the Union could on their own.

Similarly, unified immigration and foreign policy would allow the Union to respond to issues like migration swells quickly and effectively. A unified immigration policy would lessen the burden any one member state experiences and would prevent the chaotic circumstances seen during the Migrant Crisis. Lastly, a unified fiscal and monetary policy would allow the central EU authority to offset the individual member nation’s inability to control monetary policy via extensive fiscal support. Federalized systems, such as the United States and Canada, already perform such redistributive measures to counteract the lack of monetary policy control their states and provinces have. They accomplish this by funneling aid and development from more developed and prosperous regions to those that are struggling. Though the aforementioned integration, a crisis such as the Greek recession that started in 2014 could be avoided, or at the very least, reduced in its severity.

As trade barriers are lifted, and goods and people move across borders freely, economic policies no longer affect only those citizens of the state that enacts them. A policy decision made in Berlin or Madrid is no longer confined within the borders of Germany and Spain, respectively; it too moves over borders. Policy, subsequently, has a ripple effect, reverberating across the Union. These policy decisions are made by electorates and policymakers who might not consider or even be in a position to understand the transnational effects of their decisions. A more integrated state is capable of redistributing losses and gains that result from policy decisions more efficiently. If the US Congress ratifies a trade agreement that will, in effect, benefit Wyoming but harm Alabama, the Federal government can redistribute the gains made in Wyoming in the form of grants, federal projects, and welfare. Currently, the EU has the European Investment Bank, but that is limited in its abilities to redistribute economic gains and can not substitute an EU welfare policy or other redistribute mechanisms used by integrated states. An integrated EU would be able to redistribute and more efficiently close the gap between its most and least prosperous members. 

Perhaps the most important argument for a federalized Union would be the increased economic leverage it could wield. The Union is already a conglomerate of the world’s most prosperous nations; however, with further political integration, it could wield enormous influence via a unified economic policy. The Union, in its current form, has already demonstrated glimpses of the kind of economic power it could wield. In today’s globalized world, multinational corporations are becoming increasingly immune to national policy and regulation. This can be seen in the US’s struggle to rein in its own multinational corporations and prevent them from fleeing or moving their capital to tax havens. National governments, even those of large states, are increasingly unable to pin down multinational corporations and hold them accountable and regulate them. However, whereas other countries have been unable to wrangle with international corporations, the EU has. Recently this year, 2019, the EU not only pinned down Google to its regulations but also was able to fine it almost 1.5 Billion Euros (1.7 Billion USD). This is the third time the EU has managed to fine the corporation for an amount exceeding 1 Billion USD since 2017 for its anti-competitive practices, with the total fines in the realm of 9 Billion USD. Had a smaller nation, such as Croatia or Portugal, fined the internet giant such an amount, Google could have abandoned ship and exited the small market or leveed its enormous economic power to change or moderate the fine. However, with a market as large as the EU’s, which encompasses over 400 Million individuals and a combined GDP of approximately 19 Trillion USD, those options are not viable for Google or any other large multinational corporation. Volkswagen’s experience with the EU’s emission standards regulation shows a similar story: 1.8 Billion USD in fines in one of Volkswagen’s most prosperous and vital markets. As a large federation that represents such a large single market, the EU stands uniquely as one of the few sovereignties capable of wrestling with multinational corporations. Corporations are unable to exert significant influence to change or circumvent its rules and are unable to pull out of it without forgoing significant loses. 

Other large markets have used this leverage to wield similar influence over corporations; most notorious among them is China. While China may use their economic strength to strong-arm corporations into self-censorship and nominally aid the CCP in maintaining its stranglehold over Chinese political freedoms, this same type of economic leverage could also be wielded by an integrated and federalized EU to more effectively exert positive influences in the world. The EU already does this on a smaller scale: promoting transparency, liberal democratic values, human rights, and fighting corruption. However, with more integration, this process could be put into overdrive, perhaps to even rival that of China’s influence in regions of critical strategic importance such as the emerging markets of Africa. 

To summarize, the problems and issues facing the EU are not solvable via the disintegration of the Union. Such a reduction in centralized sovereignty would only hurt the member nations. Conversely, further integration is the Union’s best chance of solving many of its current problems. So long as the EU exists in this quasi-federated/quasi-confederated state, it will be dominated by inaction, conflicting policy by its members, and plagued by deadlock. To solve issues of inequality, economic stagnation, Euro instability, and immigration concerns, Europe must unite. Not as a confederation or association of states, as the UN or other trading blocs, but rather as a Federation: A United States of Europe. 

Image Credit: Matt May

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