A Shining City upon the Hill?

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The EU does not quite match the American sense of mission. Even when the European heads of state give their history-laden speeches, they do not cast Brussels as the shining city upon the hill. Nonetheless, the EU likes to glorify itself as a model for the world: It is a living example of how supranational cooperation can bring peace, democracy and prosperity to a region, and how the pooling of resources can enhance political influence on the world stage. EU dignitaries also cite the organization’s institutional innovations of multi-level governance with civil society participation and the discursive quest for win-win solutions as major achievements.

The EU’s predilection for its sui generis status—transcending the traditional division into nation states and international organizations—does not keep it from promoting regional integration beyond its borders. It accomplishes this with development aid and technical assistance. And it attempts to negotiate trade-and-cooperation agreements with groups of partner countries, such as the GCC—assuming that collective representation vis-à-vis the EU will help these countries to establish a common identity.

But how is European integration itself faring? How appealing is the example that Europeans want to sell to the world? Against the backdrop of its war-torn past and the shambles of 1945, its success is undeniable. A closer look at its performance in the new millennium is, however, more sobering.

The EU has been losing public support. Voter turnout has decreased in every election for the European Parliament, reaching a meager 43 percent in 2009. Otherwise, citizens are rarely asked to vote on EU affairs, but for good reason, since they have the dangerous inclination to say no. The much-touted EU constitution was rejected by the French and Dutch in referenda in 2005. EU leaders scrapped the constitutional trappings, such as the Ode to Joy anthem, and repackaged what was left into the Lisbon Treaty. This time, only the Irish government went for a referendum, securing support in a re-run after promises and threats had tamed the popular resistance that had carried the day in the first round.

Does this disenchantment reflect tough policy choices, painful today yet promoting competition and structural change for long-term economic growth? By no means. The grand strategy, decided upon in 2000, of transforming the EU, within a decade, into the most competitive and dynamic knowledge-based economy in the world, failed spectacularly. The explanation behind such a disappointing outcome is that the removal of barriers to the single market has slowed down. A serious attempt at liberalization was undertaken in services. Member states would have been allowed to maintain only non-discriminatory, objectively justified and proportionate regulation of service industries; and service providers could have adhered to the regulation of their home country while temporarily working anywhere in the EU. This was too much economic freedom for the European Parliament, which watered the legislation down beyond recognition.

Moreover, the EU budget remains a relic shaped by successive rounds of political bartering. Remarkably, the EU pays out about €55 billion (40 percent of its budget) in farm subsidies every year, dwarfing the €11 billion dedicated to “competitiveness for growth and employment,” a budget line covering research and innovation, education and training, and energy and transport networks.

These setbacks might have been severe enough for member states to conclude that the time for strong leadership had come. Instead, they picked an obedient crew to steer EU institutions. Herman Van Rompuy, who had proven his capacity as an able conciliator in Belgium but was little known by the European public, became the first permanent president of the European Council. The even lesser-known Catherine Ashton, who has never been elected to a public office, was given responsibility for the EU’s foreign policy. The ever-smiling and compromising Manuel Barroso, meanwhile, was allowed to stay at the helm of the European Commission for another term.

Conditions in the European and Arab world differ in fundamental ways, and so do EU and GCC institutions. Nevertheless, some general lessons may be drawn from the EU experience, which may help the GCC to avoid certain dangers of regional integration. First, avoid the short-term boost of pathetic prose and grandiose goals. Praising an ever-closer union as a panacea for all ills breeds disappointment. A business mentality—sticking to clear objectives with a timeline—pays off in the long run.

Second, don’t get distracted over a social agenda. Strengthening cultural exchange and human rights are worthy ambitions of regional integration—directly tackling poverty and unemployment less so. The contribution of regional integration lies not in social policy but in economic liberalization, through the removal of internal and external barriers to trade and a forceful aggressive competition policy.

Third, proceed carefully on shared spending. At any time and place, subsidies have shown enormous staying power. If several governments have to agree on their removal, subsidies become virtually immutable. Finally, entrust the shared institutions with a mechanism to monitor the quality of members’ policies. Enhanced transparency of policy measures and outcomes, with hard data that is comparable across members, can be a major benefit of regional integration. This should be accompanied by independent evaluation, or, to put it more bluntly, naming and shaming. The EU is groping in this direction. Any new regional formation with a lighter institutional baggage, such as the GCC, might move more resolutely and serve as a role model on transparency and smart cooperation some years down the road.

Valentin Zahrnt  - Research Associate at the European Centre for International Political Economy (ECIPE) and Editor of www.reformthecap.eu.


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