Business, Economics and Jobs

European federalism still a bad word in Brussels


Protesters in Spain. Despite their anger, there's still no will for a comprehensive solution to the euro crisis.


Pierre-Philippe Marcou

BRUSSELS, Belgium — This city is becoming more and more like Washington, DC, albeit without the heat and humidity and with no real monuments.

When you come out of the metro downtown, you could just as well be exiting DC’s Foggy Bottom station near the State Department. You see banal six- and seven-story buildings, construction everywhere, the same self-absorbed pedestrian traffic of earnest wonks and sinecured administrators heading to meetings, miraculously unscathed after crossing streets while staring at their Blackberries and iPhones (Samsung Galaxies have failed to make a dent here).

Like Washington, Brussels also hosts a massive, well-funded think-tank industry. Last week, the European Policy Centre, or EPC, held a conference titled “A Federal Europe: the only way to save the euro and the EU?”

Which raises an important dissimilarity between the two cities. Although the Belgian capital is also the seat of European government, railed against by all and sundry, that government is not a federal one — at least not yet. But since the euro zone crisis went from simmer to overheated exactly a year ago, the F-word has become the most common term in the European debate.

I attended the EPC’s session to hear new ideas about federalism with a European face and how to make it a reality. Soon. There is a crisis going on. But although I found some of the ideas interesting, they came with little urgency.

Is there a federal future for Europe? Not realistic, said the EPC's Janis Emmanoulidis. "Reactive, ambitious, muddling through" is the best short-term response we can hope for.

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Gaetane Ricard-Nihoul, a political analyst for the European Commission, disagreed, qualifying his answer by saying it depends on the definition of federalism, which she described as "unity and diversity reconciled."

All well and good, but how does that translate into creating structures to fight off bond markets in New York and London breathing down sovereign governments’ necks?

Not well, said Open Europe’s Pieter Cleppe, who doesn't think the future is federal because it can't address the euro’s main fundamental flaw: a one-size-fits-all interest rate set by a central bank for 17 countries with divergent economies. "Ten years ago, Germany was in trouble and Spain and Ireland were riding high,” he explained. “Spain and Ireland needed high interest rates to cool their economies down. Today the situation is reversed."

He and the other young European intellectuals I met believe federalism’s mission to be protecting cultural differences. Perhaps because they are all products of diverse political systems. Ricard-Nihoul’s native Belgium is a federal linking of two very different cultures: French and Flemish. Cleppe, who is Dutch, was proud of his country's early leadership in history in creating a unitary republican state from several diverse provinces by rebelling against the rule of a foreign monarch. Emmanoulidis is a genetic embodiment of the current crisis, thanks to his Greek father and German mother.

The one matter on which they all agreed was the problem of language for building a more federal Europe. Not the fact that people speak different languages, but that each country defines federalism differently. That means when you use the f-word in Europe, you sow confusion.

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Ricard-Nihoul was happy to talk about a European federation, but not a federal Europe. What's the difference? "’Federation’ is the entity, ‘federalism’ is the process," she explained. I was sure her Oxford D. Phil in politics enabled her to understand the difference. I think I get it. But I’m not certain the semantic distinction would persuade ordinary voters in a PR campaign for a federal solution to the euro crisis.

"I have a problem with the word ‘federal’ because it has so many meanings and connotations,” Emmanoulidis said. “So if I use the word with someone from the United States, he would have a different understanding than someone from the UK or Germany."

Besides, “saying we have to become federal will not lead us to what we want, which is to overcome the crisis,” he added. “We should talk in more concrete functional terms."

I partly agree. Even if politicians find a way to calm bond markets and cool the euro zone’s fever with more piecemeal policymaking, surely a moment will arrive in which European leaders will have to level with their voters and say, "Look, we can no longer keep this thing going with gradual crisis management. The only way to prevent a re-run of the crisis is to give up some of our sovereignty. The only alternative is breaking up the euro."

I didn't hear anything like that in Brussels, which is another way the city is like Washington. In the real world, people are losing their jobs and living standards are plummeting. But matters don't look too bad in the European capital. Government is a recession-proof industry. Think-tanks have their funding, the European Commission and parliament have spanking new offices.

The urgency the situation requires seems to be absent.

I didn't hear a definitive answer to the day's question in Brussels: is a federal Europe the only way to save the euro and the EU? More worrying was that no one on the panel or in the audience seemed in any hurry to find the answer — or any answer that would solve the crisis and ensure something similar doesn't happen in future.