Towards a more United and Effective Europe: The Way Forward

The outcome of 2014 European elections is a call for change. New policies are necessary, a new strategy needs to be adopted.

On 25 May, 400 million European voters were called to polling stations to elect 751 members of the new European Parliament. This is the second most important democratic exercise on the planet, after the Indian elections. Beyond the figures, the 2014 European elections will be remembered as the first ever (they began in 1979) to offer voters the opportunity to have a say in the election of the President of the EU Commission, through their representatives in the European Parliament. They were also the first to show an increase – slight, but significant – in voter turnout, from 43% in 2009 to 43.09%.

In the central-eastern countries, Eurosceptic parties won a total of 45 seats (22% of the 199available) while in the ‘western’ countries they took 186 (33% of the 552 available).The media have emphasized gains of the so called eurosceptics across Europe, and it is undeniable that they have registered an increase of almost 10 percentage points, moving from 20% of the vote (156 seats) in 2009 to 30% (231 seats) this year. But I find that the key result in these elections – the first since the Eurozone economic crisis began – is that the four strongly pro-Europe pan-national parties (Christian Democrats, Socialists, Liberals and the Greens) successfully held their own. They have in fact secured 70% of the EU popular vote (520 seats). This is a clear sign that voters are opting for ‘more’, not ‘less’ Europe.

As underlined in the final report “Imaging Europe”, polarization, fragmentation and asymmetry have marked European dynamics causing an incomplete monetary union and a social-cultural and political division between northern and southern countries.

One of the most effective answers Europe gave to the crisis in the last years was the establishment of a European banking union, consisting of a single supervisory mechanism and a single resolution mechanism applying a single rulebook. After that (on 10 June) the 18 eurozone Member States reached a political understanding on the European Stability Mechanism’s (ESM) direct recapitalisation instrument – which is expected to be ready by November, i.e. when the European Central Bank takes on bank supervision – the completion of the Banking Union is closer. To complete this process, the setup of a European fiscal backstop – potentially in the form of a credit line from the ESM, which should be available to the Fund – is key. A European backstop is crucial to break the sovereign-bank toxic loop – which is one of the major goals of the banking union – and to strengthen the credibility of the whole banking union. In fact, what makes resolution authorities credible is the knowledge that, when private sector solutions do not suffice, they can draw on temporary public bridge financing, although as a last resort. This steadies expectations of markets and investors, and supports financial stability by showing the strong commitment of the banking union Member States against possible new crises.

The banking union is a giant leap, but it is not enough. Given the interdependence between the financial and the fiscal dimension, financial integration needs to be complemented by a further economic, fiscal and political integration. This would imply ambitious reforms leading to:

A truly fiscal Union, with the objective to complement the common currency and the European monetary policy with a European fiscal policy. A fiscal union implies a mutualisation of risks and responsibilities among the Member States and a further transfer of sovereignty at the centralised level. It is a ‘conditio sine qua non’ to make the eurozone able to use, in an effective and coordinated manner, the two instruments – the monetary and the fiscal one – which are necessary to effectively support the economy and to adequately face both crises and booms.

addressing the lack of representativeness and accountability of European institutions, as an answer to fill the gap which European citizens feel between them and the European institutions. Amongst others, important steps in this direction would be:

-at the eurozone level, having a more structured governance, starting from establishing a permanent full-time chairman of the Eurogroup;

-at the EU level, establishing a Minister of finances as well as a President of the EU – the dichotomy between the Presidency of the European Commission and Council Presidency has to be eliminated.

Integration is a keyword both for the eurozone and the EU. Even if the need for a stricter integration within a monetary union are more urgent and vital, integration should not become a keyword only for the eurozone. It is also the EU dimension which needs to be strengthened, mainly by boosting integration within the Single Market, in order to better exploit its potential. Moreover, it is very important that the two levels of integration – EU an eurozone – are not an obstacle to each other. To this aim, if EU countries have not hinder further and faster integration within the eurozone, integration within the EU should – at least in the long term – converge towards the same level of integration existing within the eurozone. This is the only way to ensure that the more integrated level does not marginalize the less integrated one and that no further borders are set up within Europe. This means, for example, that it is important that as many EU countries as possible beyond the euro area join the Banking Union soon.