Monday

26th Jun 2017

Opinion

Eurobonds and democracy must go together

  • "Eurobonds risk pulling economic decision making even further out of the hands of citizens" (Photo: EdMadrid)

Economists are increasingly in agreement that some form of Eurobonds will be necessary to overcome the sovereign debt crisis in Europe. Eurobonds would ensure liquidity in the Eurozone and create a unified European bond market large enough to stop speculative sovereign debt attacks.

But leaders and decision-makers should know that the economic problems will not be resolved without ultimately resolving the democratic problems as well. Eurobonds must be set up not with the perspective of appeasing the markets alone, but with the perspective of restoring control over the markets both by politics and by European citizens.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Most of the policy-orientated debate about how to resolve the economic and financial crisis focuses narrowly on economic and financial issues, without taking into account wider questions of citizenship and democracy.

The rising resentment among Europeans at having economic policies dictated to them, either by market conditions, by the European Central Bank and IMF, or by other countries, risks becoming extreme and undermining any ‘purely economic’ measures taken to restore market confidence in the Eurozone. Such problems are already holding up the totally insufficient measures to shore up Greece’s economy.

Eurobonds would be the concretisation of the common good of the European economy, and the symbolic acknowledgement of mutual dependence between euro member states. This symbol would be important not only for the markets but also, and just as importantly, for the people of Europe.

It is precisely this symbolic charge which is causing such resistance in many countries. Good leadership is required to overcome this resistance by explaining that the status quo is not only untenable but also unjust and undemocratic.

Three problems

The current institutional set-up has at least three problems:

It gives too much power to the economically powerful EU countries, which are able to play the role of paymaster in times of crisis and impose their economic policies on other countries in the name of respecting the rules of the free market (which continues of course to preserve all their competitive advantages).

It provides little accountability of European governments to other European citizens for their fiscal policies. The threat of sanctions by the European institutions is weak, and that leaves no other means of accountability except for creditor countries ‘punishing’ the citizens of deviant countries through austerity measures or higher levels of interest on loans.

Too much power is in the hands of financial speculators, banks and rating agencies, which are able to effectively dictate policies to democratically elected governments.

At least two of these problems go together. There cannot be effective governance of the European economic area without those countries that currently benefit from the unfettered rule of the market giving up their advantage. But those countries will not give up their advantage so long as other countries benefitting from the common good of the European economy are not held accountable for their policies.

For this, Eurobonds must be set up in a way that forces the member states that jointly guarantee them to work together in the general interest of Europeans, and not to be held hostage to the most economically powerful member states (this promotes deviant behaviour in some states which try to get an economic advantage by not obeying the rules).

Currently the European Council is on course for the least preferable outcome for the vast majority of European citizens: one in which strict budgetary rules are defined by the most economically powerful European countries, with more rigorous enforcement and sanctions by European institutions for countries which deviate from these rules.

This solution turns citizens outside the most economically powerful countries into second-class citizens.

And as far as accountability goes, it is only the accountability of the economically less powerful to the economically more powerful.

Two class Europe

Eurobonds must be established in order to restore control over the financial markets, and this control must be given to citizens through democratic institutions which are responsible to all European citizens.

Without accompanying measures to ensure democratic decision-making, the introduction of Eurobonds risks pulling economic decision making even further out of the hands of citizens.

The rebellion of the second-class citizens, or their governments, would then be impossible to rule out.

For this reason, the European Council cannot be allowed to usurp all economic decision-making from the European Commission which ensures the general European interest.

And economic decision-making cannot be excluded from the ‘ordinary legislative procedure’ introduced in the Lisbon treaty, which gives as much weight to the European Parliament as to the governments in decisions that affect all Europeans.

We must call for Eurobonds in order to have European democracy.

The author is co-president of European Alternatives

Rehn questions political appetite for eurobonds

EU monetary affairs commissioner Olli Rehn has questioned whether euro countries are really prepared to accept the loss of national fiscal power that would come with the introduction of eurobonds - deemed by many as the principle means of exiting the eurozone debt crisis.

A positive agreement for Greece

The outcome of the Eurogroup meeting this week leaves a positive footprint, setting the basis for the Greek economy to exit the vicious circle of austerity and debt.

Britain preparing to jump off a cliff

Following the poor performance of Theresa May's Conservatives in the recent UK general election, her prospects of negotiating a good Brexit deal have gone from bad to worse.

Forcing refugees on Poland will do more harm than good

While the principle behind the EU's decision to take action against Poland for rejecting its refugee quota is understandable, the move could have damaging long-term consequences while bringing absolutely no benefit at all.

Column / Brexit Briefing

May loses election bet

The British prime minister called the election to strengthen her grip on power ahead of Brexit talks. Her gamble could not have backfired more spectacularly.

Are MEPs too 'free' to be accountable?

The European Parliament is currently fine-tuning its negotiating position on the Commission's proposal from September 2016 for a mandatory transparency register. Sadly, so far it seems to prefer empty statements to bold action.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit

Stakeholders' Highlights

  1. European Social Services ConferenceDriving Innovation in the Social Sector I 26-28 June
  2. Dialogue PlatformMuslims Have Unique Responsibility to Fight Terror: Opinon From Fethullah Gülen
  3. EUSEW17Check out This Useful Infographic on How to Stay Sustainable and Energy Efficient.
  4. Counter BalanceEuropean Parliament Criticises the Juncker Plan's Implementation
  5. The Idealist QuarterlyDoes Europe Really Still Need Feminism? After-Work Chat on 22 June
  6. EUSEW17Create an Energy Day Event Before the End of June. Join the Call for Clean Energy
  7. UNICEF1 in 5 Children in Rich Countries Lives in Relative Income Poverty, 1 in 8 Faces Food Insecurity
  8. International Partnership for Human Rights26 NGOs Call on Interpol Not to Intervene Versus Azerbaijani Human Rights Defenders
  9. Malta EU 2017Significant Boost in Financing for SMEs and Entrepreneurs Under New Agreement
  10. World VisionYoung People Rise up as EU Signs Consensus for Development at EU Development Days
  11. ILGA-EuropeLGBTI Activists and Businesses Fighting Inequality Together
  12. Nordic Council of MinistersNordic Prime Ministers Respond to Trump on Paris Agreement