European Federalism 2.0: A Fix for Europe?

09/20/2013 02:34 pm ET | Updated Nov 20, 2013

Co-written by Thanos Papaïoannou

Unemployment, intra-national strife, and political and economic stasis are ravaging Europe at the moment. What is there to do? How should we pull out of the morass? Messieurs Daniel Cohn-Bendit and Felix Marquardt, co-founders of the federalist Europeans Now movement, recently suggested bypassing the instruments of European nation states and concentrating political power in the hands of pan-European institutions. Down with national governments, they demand, and up with a "transfer of power to truly European institutions." Increased federalism and direct democracy, the principles behind their proposal, are key for Europe's long-term prosperity and success.

The central question for Europe's long-term future is: Should we change the influence of the nation states at the EU level? There are three possible directions the European Union could take: decrease the power of nation states at the EU level (federalism); increase it (dissolution), or keep it constant (stasis).

The good people of Europe have enjoyed stasis for quite some time now, and it has been failing them. Europe has been suffering a prolonged economic crisis, her parliaments full of alleged frauds and far-right radicals. The malaise appears tied not only to the global financial circumstance, but to the intrinsic financial and political structure of Europe, and to the common features of the European nations' economic policies: agricultural protectionism, expansive social states, and rule by Brusselian committee. There is hardly a glimmer of hope that the situation would improve on its own in the short or long term. This rules out stasis. We would like to argue for a long-term move towards federalism over long-term dissolution.

A shift toward federalism would help Europe move out of the current crisis and protect her against future ones. For the recipient nations, federalism would allow for structural financial support and cheaper credit, but with central political control over how it's spent. For example, federalism requires a banking union, which would give healthy companies in debt-burdened countries access to credit despite their sovereigns' ill health. The current situation is hurtful and nonsensical, as it would be to deny credit to a Silicon-Valley startup because of California's horrifying state finances. For the contributing nations, federalism would mean even more open markets for products and labor, and unhindered competition. Of the European nations, Germany and her exporting machine would stand to benefit the most; indeed, Germany's dominating the common European market with her products has contributed to her sustained growth since the beginning of the European experiment. Combined with the direct democracy envisioned by Cohn-Bendit and Marquardt, Germany would reap multiple benefits. It is hard to imagine a similar path if we moved to dissolve the European Union in the long term.

Federalism would dispatch with the old guard in Europe. They have brought us to this standstill; why should they be trusted to pull us out? In fact, in each of the recipient nations -- especially Greece and Spain -- the role of the EU in national politics can be likened to a spigot of money, around which the political old guard have crusted firm. They allow subsidies and sinecures to flow through to supporters in exchange for influence and power. Direct, pan-European democracy would break the crust off. As for the contributing nations, direct democracy would mean direct power, commensurate with population size. No longer would unelected Brussellian bureaucrats have the political whipping hand, no longer would Europe remain as opaquely undemocratic. It is the more flamboyant wings of the euroskeptics that bring up the lack of democracy in Europe most often, but their complaint is very valid nonetheless.

Naturally, introducing full direct democracy in the short term would likely be self-defeating for the purposes of the unification: The voters themselves might even vote the Union into dissolution, since Europe's financial situation has bred sharp intra-national antipathies. Besides, no amount of supra-national committees could change the fact that Europe consists of different nations with different interests and cultures. Nonetheless, European politics is rapidly converging. In fact, today we can observe what was difficult to even conceive in 1995: ordinary voters in one corner of Europe inspired by politicians from a different one -- take Cohn-Bendit and his pan-European appeal. Also, macroeconomic thinking comes to the favor of a tighter Union. Conglomerate states appear more economically efficient than their parts, and are becoming easier to manage and sustain as technology progresses. Even at present, it is conglomerate countries that are dominating the international scene: The USA, China, Russia, India, the UK, even Germany and Italy, are products of successive, often painful conglomerations. No European nation would be able to stand up on its own to the world superpowers, but a true European Federation would carry enough weight to matter on the world stage. The strength of our cultures, of our ingenuity, the glory of our civilizations deserves an equally grand and material edifice.

Thanos and Luka are researchers at Harvard University. They tweet at @lukaoreskovic and @TDPapaioannou.