Monday

23rd Jan 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

Opinion

The 89ers and the battle against populism

It falls to the Europeans who were born around 1989 and grew up in a peaceful Europe to build a fresh new vision for the EU that transcends the ideological, educational and national cleavages of the past.

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey

Stakeholders' Highlights

  1. Zero Waste EuropePublic Support Needed to Promote Zero Waste in More Municipalities
  2. Belgrade Security ForumEU Cannot Afford to Ignore the Western Balkans as Populism Surges
  3. Dialogue PlatformFethullah Gulen Calls for an Investigation on the Assassination of Russian Ambassador to Turkey
  4. World VisionAmid EU Talks on Migration, Children on the Move Remain Forgotten and Unprotected
  5. Centre Maurits CoppietersAlex Salmond Receives Coppieters Award for His Service to Scotland and Europe
  6. International Partnership for Human RightsStrong Support for Hamburg Declaration on Human Rights Defenders
  7. Swedish EnterprisesHow to Use Bioenergy Coming From Forests in a Sustainable Way?
  8. Counter BalanceReport Reveals Corrupt but Legal Practices in Development Finance
  9. Swedish EnterprisesMEPs and Business Representatives Debate on the Future of the EU at Winter Mingle
  10. ACCAFifty Key Factors in the Public Sector Accountants Need to Prepare for
  11. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  12. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election