I the Past and Future of European Institutional Integration

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I The Past and Future of European Institutional Integration 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 22 of 50 January 23, 2007 14:25 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 23 of 50 January 23, 2007 14:25

The European Constitutional Settlement

ANDREW MORAVCSIK

Over the past half-century the EU has successfully expanded its substantive mandate and institutional prerogatives to a level without parallel among international organizations. Today this process has reached what appears to be, barring large exogenous shocks, a stable constitutional equilibrium. The EU may expand geo- graphically, reform institutionally, and deepen substantively, but all this currently seems set to take place essentially within the contours of the existing European constitutional structure. The time has come to acknowledge the existence of the ‘European Constitutional Settlement’—a plateau in the process of European integration unlikely to be upset by medium-term trends.1 The EU’s constitutional evolution since the Treaty of Maastricht illustrates this phenomenon. The institutional balance has evolved only slowly. The powers of the Council and Parliament have increased slowly at the expense of the Commission, intergovernmental cooperation outside the core ‘ﬁrst pillar’ of EU institutions has been reinforced, adjustments have been made to voting weights, and the member- ship has enlarged to twenty-ﬁve members. The period has also been one of sub- stantial, perhaps unprecedented, achievements, with the ‘completion of the single market’, expansion of foreign, defense, immigration and internal security powers, the single currency, and enlargement. But all this was launched at Maastricht or before and completed with remarkably little further constitutional reform. From this perspective, the recent draft constitutional treaty, like Amsterdam and Nice before it, was a conservative document that consolidated rather than tran- scended the constitutional status quo. Its ambitions for substantive and institutional reform were modest. And there is no immediate reason to believe any of this will change. Yet most scholars and commentators do not see it this way and, as a result, writings on the EU reveal considerable tension between reality and rhetoric. On the one hand, they remain wedded to the goal of ‘ever closer union’, culminat- ing in a European federal superstate. Few explicitly acknowledge holding such a view, of course, but it is implied in the widespread tendency among those

1 I have referred to this previously as the ‘European Constitutional Compromise’ (2005a, 2005b). 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 24 of 50 January 23, 2007 14:25

24 The Past and Future of European Institutional Integration who study or support the EU to emphasize, even exaggerate, new steps toward integration. On the other hand, an equally prevalent tendency is to criticize the lack of substantive progress in the EU and a purportedly debilitating ‘democratic deficit’ in the EU, which is judged responsible for a crisis of legitimacy. Without fundamental reform, it is argued, the process of European integration may well falter or collapse. The EU is failing to achieve what it could with greater public legitimation. It must move forward, yet it is in crisis. This combination of ambition and alarm spawned the EU’s recent, ill-fated constitutional project. If one believes that the EU can and should move forcefully toward more centralized governance and that the major impediment is the lack of direct democratic legitimacy, a democratic constitution and a grand public debate over ‘finalité politique’ may seem an obvious recourse. Yet it is now clear that this effort to legitimate the EU through constitutional engineering failed—and did so for reasons that go far beyond a few mismanaged referenda. The decade of debate over the EU’s constitutional future—probably the broadest and deepest such debate in human history—failed from the start to create an attentive, informed and engaged public. It was dominated from the start by a handful of ‘symbolic extremists’ of a Euroenthusiastic or Euroskeptic persuasion. Both groups cast the debate as a vital one for the future of Europe—Euroenthusiasts because they aspire to much more, and Euroskeptics because they aspire to much less. The unhealthy ideological codependence between these groups fueled exaggerated and cloudy rhetoric about the purposes of European integration. Such views belie the modest content of the constitutional treaty, which reaffirmed rather than funda- mentally reformed the existing scope of European integration. The population in the center of the EU political spectrum, whose interests in integration are far more pragmatic, remained either apathetic or, for the few who paid attention, unsettled. There is little disagreement now that, had the reforms been sold as the conservative tinkering they were, surely less time would have been wasted and more achieved. Obscured in this debate has been a middle position, which the first part of this chapter sets forth. On this view, the EU is quite successful, and its existing constitutional settlement equilibrium is likely to endure, with incremental changes, for the foreseeable future, not least because it serves the interests of Europeans better than any feasible alternative. The constitution was, therefore, an unnecessary and risky political gambit. Throughout, my central thesis is that the stability of the current equilibrium, and its precise terms, follows from the best—by which I mean empirically the most strongly validated—social scientific understanding available about how the EU, and political institutions more generally, actually work. This chapter explores the substantive, institutional, and ideological dimensions of the European Constitutional Settlement. The first dimension is substantive. The primary motivations behind European integration have almost always been functional. The EU moves forward when formal policy coordination helps manage 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 25 of 50 January 23, 2007 14:25

The European Constitutional Settlement 25 cross-border policy externalities stemming from transnational interdependence. Today no functional ‘grand projet’ of this kind exists. European social policy is a chimera, while a stronger, yet viable, foreign and defense policy would not require constitutional change. The second dimension is institutional. The EU remains, despite a few federal elements, essentially a confederation of nation-states: the most ambitious and successful among international organizations, rather than a federation aiming to replicate and supplant European nation-states. Its limited ‘state capacity’, whether from a political, coercive, fiscal, or administrative perspective, appears a permanent structural characteristic impervious to all but an unforeseeably great exogenous shock. The third dimension is ideological. Because the EU handles issues of low salience, relative to national ones, publics are unlikely to mobilize in response to European issues, whether in spontaneous opposition or in response to official encouragement. The constitutional project failed to shake this ideational equilibrium by mobilizing greater popular support for the EU, because the basic premise on which it was based—namely that expand- ing institutional opportunities for public participation generates greater participation, deliberation, and legitimacy—is inconsistent with our best understanding of how modern democracies actually work. Bad social science makes bad policy. I conclude by briefly examining some ways in which scholars of political science, political philosophers, and legal academics have been complicit in propagating a view of the EU that is inaccurate, and the biases in the existing literature that have resulted—including insufficient attention to the existence of the European Constitutional Settlement.

The Substantive Dimension of the European Constitutional Settlement

Historically, the main impetus toward European integration has been functional. Major steps in the development of European institutions have rested on ‘grands projets’ such as the customs union, common agricultural policy (CAP), single market, single currency, or Eastern enlargement. In each case, historians increas- ingly agree, pressure to manage substantive policies stemming from new forms of socioeconomic interdependence motivated governments to undertake new institutional commitments. To be sure, ideological and geopolitical objectives—such as realizing European federalism, avoiding yet another Franco-German war, oppos- ing Communists abroad and at home—played an important subsidiary role, par- ticularly in deﬁning the institutional form integration took. Its substantive content was shaped primarily by functional imperatives (Moravcsik 1998). Most of those imperatives were those of a continent of relatively small but highly developed nations undergoing an unprecedented postwar economic boom, thereby creating the regional intra-industry ﬂows of trade and capital that rendered coordinated 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 26 of 50 January 23, 2007 14:25

26 The Past and Future of European Institutional Integration regulation attractive (Milward 1984, 1993, 2000). From the ‘relaunching’ of European integration after the failure of the European Defense Community and the ECSC, if not well before, even the most ambitious proponents of European integration concluded that integration without the functional imperatives was impossible—and little has changed since.2 This functional focus helps explain why individual governments have generally embraced European-level governance schemes only after exhausting domestic policy alternatives. The Coal and Steel Community was a response to a crisis in postwar French and German economic planning (Milward 1984). A decade later, the EEC was an instrument to shape multilateral trade liberalization that had come to be viewed as inevitable. France promoted the CAP in the 1960s and single market liberalization in the 1980s only after subsidized domestic alternatives had reached their fiscal limits. For decades, in the face of increased capital mobility and declining credibility of domestic macroeconomic management, governments resisted a single currency in favor of domestic policy alternatives (Moravcsik 1998).3 Decisions to accede to the EU, from that of Britain in the early 1960s to those by central and eastern European countries in the past, rested similarly on the widespread conviction that there is no unilateral alternative to integration. Individual governments weighed the benefits of coordinated policymaking against the costs imposed by adjusting diverse policies and social structures to common policies. Time and again, it was the uniquely high levels of socioeconomic interdependence among many European countries, and the corresponding negative externalities to uncoordinated policies, that outweighed the maintenance of distinctive national systems. The limited substantive mandate of the EU, which remains perhaps its most striking constitutional characteristic vis-à-vis national governments, reflects the unevenness of functional imperatives. Recent academic studies suggest that 15– 20 percent of European national laws stem from the EU—not much higher figures one often encounters (see Töller 2003). It could hardly be otherwise, given the narrowness of the EU’s formal legal mandate. To illustrate this, current European policymaking can usefully be divided into three categories. The first contains areas of centralized EU discretion or inflexible

2 Already in 1949–50, and even more clearly after 1954, Jean Monnet understood that integration could only be conducted by functional means. Yet even Monnet underestimated the dominance of functional market-driven forces. His firm belief was that functional integration would best take place within highly regulated sectors of the economy like nuclear and transport, and with strong central authority, rather than through markets. This is why he passionately opposed the formation of the plan for a European Economic Community, secretly begging German Chancellor Konrad Adenauer to kill it, until he finally bowed to a fait accompli imposed by German economic interests (Moravcsik 1998). 3 See McNamara (1997) for case of policies where material interests are less clearly defined, material interests may often be mediated by policy ideas. 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 27 of 50 January 23, 2007 14:25

The European Constitutional Settlement 27 EU rules, including monetary policy, antitrust policy, and restrictions on internal tariffs and quotas. The second contains areas of joint decision-making by EU member states within common institutions, as in external trade; industrial stand- ardization; agricultural pricing and export policy; a subset of regulatory issues in environment, consumer and other policies; fisheries policy, and certain rules regarding service provision. In many of these matters, the EU is now clearly the primary source of European law—though even in apparently integrated areas such as agriculture, the environment and other regulatory issues, the bulk of policy discretion may well still be national. A third category accounts for some 80 percent of legislation and rule-making that remain almost entirely outside the mandate of direct EU policymaking. Issues within this category include the power to set tax rates and fiscal priorities, police law and order, manage national defense, provide local and national infrastructure, set cultural goals and educational priorities, and, above all, and provide health care, pensions, labor market regulation, and social welfare. These functions, many of which focus on redistribution, are today the primary functions of the modern European nation-state. Yet the EU has almost no direct impact on such policies, except through light and sporadic EU regulation under unanimity rule or, in a small handful of cases, through indirect spillover from regulation in other areas. None of this appears to be changing. Indeed, perhaps the most striking characteristic of recent EU constitutional deliberations since Maastricht, as it was of Amsterdam and Nice, is how little substantive expansion has been seriously considered. The member states agreed upon incremental changes essentially within existing constitutional mandates, or sought to reinforce intergovernmental cooperation in areas such as defense, asylum, law and order, fiscal policy, social policy, or tax harmonization, outside the classic EU institutions. As the constitutional convention convened, the EU had just completed its most successful decade ever, counting among its recent achievements monetary union, two rounds of enlargement, greater transparency, more foreign policy coordination, movement toward EU policies on energy, services deregulation, and other issues. Entirely absent from the constitutional draft was any significant expansion of the EU’s substantive mandate. Even in the constitutional convention itself, a forum in which European federalists had a disproportionate influence, less than two days were devoted to consideration of proposals for new policies, during which few were considered and none adopted. What proposed changes were there could surely have been obtained through piecemeal implementation over the five years during which the unwieldy draft was debated. From a substantive perspective, the promulgation of a new constitution was, and remains, unnecessary. This situation appears stable. The truth is that today no plausible ‘grand projet’ for Europe can be found—nothing, at least, on the projects that powered major constitutional reform in the past, such as the CAP, the single market, the single 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 28 of 50 January 23, 2007 14:25

28 The Past and Future of European Institutional Integration currency, or the recent enlargement. Polls show that most Europeans are broadly satisﬁed with the current scope of the EU.4 Most of the proposals for inclusion of new issues are more style than substance. Consider, for example, the issue most commonly mentioned as a possible candi- date for future communitarization: social policy. The absence of a ‘social Europe’ today is not the happenstance consequence of short-sighted political decisions, but an inevitable result of the structure of national and social interests. No wonder the French and Dutch referenda, like the convention, were devoid of any serious discussion of what a concrete European social policy would look like. To see why European social policy is, and must remain, a chimera, consider four possible meanings for such a policy. None appears viable, and they contradict one another.

Transnational Transfers from Rich to Poor? Following the egalitarian rhetoric of European socialism, one might expect that a pan-European social policy should mandate resource transfers from rich to poor. This would mean, in the EU context, a system dominated by payments from taxpayers in richer member states, such as Germany and France, to the less advantaged citizens of Europe, most of whom are found in new member states such as Lithuania, Slovakia, and Cyprus. Or, if indirect means were favored, it might mean transfers via the suppression of any barriers to the free movement of workers, goods and services emanating from these countries. There are almost no concrete proposals for a Europe-wide social policy of this kind, and the governments of richer countries have made clear that they do not wish to increase transfer payments beyond current levels.5 Existing national systems remain sacrosanct. The absence of concrete proposals and political support for cross-national distribution is often attributed to a lack of a common transnational culture, language or sense of political identity (demos) among Europeans.6 A more fundamental reason is probably that redistribution is simply not in the material interest of citizens in the richer polities of Europe: Large

4 Poll data is difficult to interpret. Recent polling reveals that the issues where Europeans would most like to see more EU activity tend to be those where there is already action: terrorism, democracy promotion, law and order, R&D, the environment, and health and safety, whereas those where they would least like to see increased EU activity include unemployment, social rights, economic growth, and agriculture, even though the first three of these issues are consistently salient. It also reveals that whereas the new member states would favor social welfare harmonization, this is less popular in the old member states (see European Commission 2006d, 2006e). Foreign and defense policy have consistently rated high as well. 5 To be sure, it is often forgotten that existing EU transfers via structural funding and market liberalization involve a far greater commitment to transnational redistribution than any other advanced industrial democracy—notably the USA—is able to contemplate. 6 A comparison of European and German reunification—the former privileging national boundaries, while the latter ultimately granting East Germans social rights as nationals—does suggest that there may be some truth to this. 02-Meunier-c02 OUP038-Meunier (Typeset by spi publisher services, Delhi) 29 of 50 January 23, 2007 14:25

The European Constitutional Settlement 29 transfers would impose wrenching distributional shifts and threaten universal national systems that currently enjoy bro