Sunday

30th Apr 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.

Column / Brexit Briefing

May’s election juggernaut

The prime minister's Tories almost need not bother campaigning for the June election. There is no opposition worthy of the name.

Brexit is about Europe's future as well

Europe must learn the lessons of TTIP and ensure that the negotiations transparently address the broad interests of European citizens, including on climate change and the environment.

Column / Brexit Briefing

May's drive for one-party Brexit state

Snap election will kill off attempts to reopen debate on second referendum and inflict further damaged on confused opposition.

News in Brief

  1. Vote of no confidence prepared against Spanish PM
  2. Syria to buy Russian anti-missile system
  3. Germany seeks partial burka ban
  4. Libya has no plan to stop migration flows
  5. EU has no evidence of NGO-smuggler collusion in Libya
  6. Poland gets 'final warning' on logging in ancient forest
  7. Commission gives Italy final warning on air pollution
  8. Romania and Slovenia taken to court over environment policies

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  2. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  3. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act on Climate Change
  4. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  5. UNICEFRace Against Time to Save Millions of Lives in Yemen
  6. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  7. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  8. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  9. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  10. ACCAEconomic Confidence at Highest Since 2015
  11. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  12. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process

Latest News

  1. EU boasts unity on Brexit talks
  2. May’s election juggernaut
  3. EPP scolds Orban over university and NGO laws
  4. Oxford-Studie besorgt über 'Schrott' News in Frankreich
  5. Alte Freundschaft zwischen Le Pen und Putin
  6. EP chief faces questions after homophobic 'summit'
  7. EU signals Northern Ireland could join if united with Ireland
  8. One year later: EU right to open internet still virtual

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?
  2. European Free AllianceEFA MEPs Vote in Favor of European Parliament's Brexit Mandate
  3. Mission of China to the EUXinhua Insight: China to Open up Like Never Before
  4. World VisionViolence Becomes New Normal for Syrian Children
  5. International Partnership for Human RightsTime to Turn the Tide and End Repression of Central Asia's Civil Society
  6. European Free AllianceAutonomia to Normalnosc - Poland Urged to Re-Grant Autonomy to Silesia
  7. UNICEFHitting Rock Bottom - How 2016 Became the Worst Year for #ChildrenofSyria
  8. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  9. ACCAG20 Citizens Want 'Big Picture' Tax Policymaking, According to Global Survey
  10. Belgrade Security ForumCall for Papers: European Union as a Global Crisis Manager - Deadline 30 April
  11. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  12. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved