On Saturday January 26, public debating space De Balie hosted Michael Ignatieff, a Canadian academic and former leader of the Liberal Party. Ignatieff is the president of Hungary’s Central European University, an institution continually at loggerheads with Orbán’s government.
It was the best of times, it was the worst of times. One could imagine the opening line to Dickens’s A Tale of Two Cities working just as well in a book entitled A Tale of Democracy, except that with democracy, the best of times and the worst of times often coincide. Democracy is unstable by nature; it is a system designed to be ever-changing and full of conflict. These are democracy’s great strengths but also its weaknesses. A gaze across the political map of Europe doesn’t make for extremely happy reading at the moment: Orbán in Hungary, Kaczy?ski in Poland; Erdo?an in Turkey, and of course the ever-looming Putin in Russia. But for many in Western Europe the biggest threat to democracy is the EU itself.
One highlight of Ignatieff’s extensive discussion was his analysis of the current political situation with the EU. Ignatieff frames the problem as a divide between a Europe of interests (economic Europe) and a Europe of values (political Europe). He argued that the unity of the EU27 during the Brexit negotiations was evidence that Europe was united economically, in terms of what it wants and how that manifests itself in policy and trade. However, there is not this same unity with regards to values. There does seem to be some truth to this: can we really say there are European beliefs? Probably not. And whilst the EU is more of a political bloc now than ever, it is still an EU27, consisting of 27 seperate national states – well, 28 including the UK.
But to what extent is the frame a useful one through which to view Europe’s struggles? Well, it underlies a fundamental problem of the EU’s current structure: the dichotomy of having a standardized currency (Ignatieff’s Europe of interests) while individual states set fiscal policy (his Europe of values). The monetary union, along with the single market, has brought about a deeply economically integrated EU, but political integration has lagged behind, as the lack of a European Fiscal Union shows. Fiscal policy, in contrast to other kinds of economic policy, requires a far more politicized decision making process, as it is directly controlled by governments. The current situation, with this discrepancy between fiscal and monetary, has led to countries in Southern Europe having grossly overvalued currencies, damaging their trade and suffocating their economies. Meanwhile, the EU prevents these countries from being able to alter monetary policies to match the needs of each individual state. The IMF has called for closer fiscal integration, arguing that the Euro is still vulnerable to shocks whilst this inconsistency exists. So far the Eurozone has just about managed to sustain its macroeconomic imbalances without a federal structure for collection and expenditure, but this position seems untenable in the long term.
Yet despite all this, a European Fiscal Union does not seem to be in the pipeline. Why? Precisely because Europe does not have united values. Having a fiscal union alongside the current monetary one amounts to something pretty similar to a United States of Europe (USE) and when asked about the possibility of a USE, Ignatieff was doubtful. He argued that Northern Europe doesn’t want to have to pay for Southern Europe’s profligacy through fiscal redistribution. No individual country, he posited, especially France and Germany, wants to relinquish control over their financial and budgetary responsibility. These explanations may seem more practical, but underneath them is exactly the problem Ignatieff’s framework is trying to highlight: Europe is just not whole enough, not united enough in a sociological way, to ever become the USE. To be willing to sacrifice something, you have to help others. There have to be a sense of loyalty and a shared belonging, sentiments that don’t appear to be strong enough in Europe. Europe is divided, but nations need history and tradition that binds them together, powerful myths and common values that people buy into. Think of the USA, with its constitution, its independence, its freedom and an array of other beliefs Americans hold that join them as one. Yes, Europe has a long history and tradition – but this mostly involves the separate countries trying either to kill each other or join forces to kill someone else.
Ignatieff provided a line of thought that illuminates much of what Europe is struggling with currently. The USE is a controversial idea; for those most vehemently opposed, this difference between interests and values is good and natural. That may be the case, but this difference is also a major threat to Europe, for two reasons. Firstly, it is an underlying cause of instability, both with the euro and the institutions and operations of the EU on a wider scale. Secondly, it’s not clear how to begin solving this problem. History is fundamental to the values of a region and history is not on Europe’s side. Today, there is a deep economic integration between separate countries with separate cultures and political systems. In 15 years time, who knows? Ignatieff himself found it hard to work this out. Despite his previous insight, when asked about the impact of this interest-values conflict Ignatieff seemed unable to give a clear path to follow.
James Creedy Smith is a PPLE Student at the University of Amsterdam. The views expressed here are not necessarily those of The Amsterdammer.