|The Deep Deformation of Europe. The Legitimacy of the European Union after the Euro Crisis by Elli Louka|
The Deep Deformation of Europe. The Legitimacy of the European Union after the Euro Crisis by Elli Louka
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The Deep Deformation of Europe
The Legitimacy of the European Union after the Euro Crisis by Elli Louka*
Romantics are people who, instead of resolving a conflict, imagine an alternative reality in which conflict does not exist. Political romantics in Europe believed that the perpetual conflict among European states could be stopped if Europe was transformed into a European Union (EU). Such metamorphosis would stem from the ‘spillover effect’: economic integration was to spill over to other policies and gradually lead to a political union — something akin to a United States of Europe. Despite these high hopes, seventy years after World War II erupted, the euro crisis took on the dimension of conflict between creditor states and debtor states. Europe has not been transformed into a Union. The successive transformations have only led, instead, to a deep deformation: an asymmetric conflict through the instrument of economic power. Political romantics who had visualized Europe as a United States of Europe are now staring reality in the face: the European Union as an archetype of the coercion dynamics in international politics.
1. EU Legitimacy: A Citizen’s Perspective
We view institutions as legitimate if one or two conditions are satisfied: control and/or like. We view an institution as legitimate if we have some control over it or like it (because of its utility). Control has to do with how much say we have on how the institution is run. If we do not control an institution, we tend to view it as legitimate only if we like it. There are many gradients between like and dislike. In old times, people did not control their queen, but, at least in some cases, they did not dislike her.
Figure 1 depicts the legitimacy of institutions based on the two variables of ‘control’ and ‘like’ and gives examples of institutions expressing legitimate/illegitimate options. When we control and like an institution that institution enjoys a high level of legitimacy. In those cases, the institution is more like a club where we socialize with like-minded equals.
When we control an institution, but we dislike it, the institution can enjoy legitimacy because we still have control over it and we perceive that we can possibly change it to our liking. However, there are cases that even if we have control over an institution, we cannot change it significantly either because there is not enough consensus for change or because a consensus exists that the institution is the best of all possible worlds. Today, some people feel this way about Western representative democracy. Some do not like representative democracy and prefer more direct democratic models that make possible active citizen participation in political affairs. At the same time, most agree that, due to increasing populations and unenviable alternatives, representative democracy with some tweaks is the optimum. When we dislike an institution but maintain some control over it, we have two options: to exit or to exercise our control to try to change the institution to our liking. A minimum amount of control can be exercised through dialogue and voting or even loud protests and threats. In Western democratic states, exit is rarely contemplated by the citizenry as it leads to forfeiting significant rights and benefits. In principle, however, citizens are not afraid to exercise control by voting governments out of power, protesting and striking.
When we do not control an institution and we dislike it, an obvious case being that of a bad queen, the institution is illegitimate. We cannot leave without risking serious repercussions and we cannot voice our dissatisfaction. Revolution, with the ensuing social chaos, is available when the situation becomes unbearable.
Finally, there are institutions that we like but we cannot control. An example is that of a good queen, who uses her power for the benefit of her constituents. These are the queens who are effective at bringing peace and prosperity and they are liked even if they lack democratic credentials. The legitimacy of the European Union, like that of a good queen, was not based on its democratic credentials. On the contrary, Europeans liked the EU because it was useful to them. The EU was effective at bringing peace and prosperity in a divided continent that had suffered many wars. Greece joined the European Union shortly after it restored democracy, as it saw in the EU membership the bulwark against foreign-engineered dictatorship. Eastern European countries joined the Union to shield themselves against Russian imperialism. Most Europeans accepted the euro because it seemed to bring clear benefits or, at least, do no harm. Once things started to go wrong Europeans started to protest. Only their protests had the wrong audience. They could throw out their governments (and they did so) based on the democratic principles of the nation state, but they could not disband European institutions or sack the governments of other eurozone countries. Yet it was the European institutions and creditor states that dictated the economic conditions in the periphery. Vis-à-vis these core Eurozone governments, the citizens of the periphery were disenfranchised.
Because of the coercive relationship between creditors and debtors, the EU has been deformed into an illegitimate establishment. Europeans had willy-nilly convinced themselves that their delegation of powers to the European Union, through their national government, was enough to satisfy their appetite for democracy in the Union. Now that they are confronted by an entity they neither control nor like, they regret the surrender of control. The discontent is palpable in debtor countries. In creditor countries also, despite the fact that they have won, there is backlash against the ‘reckless periphery’ and intra-European migration.
2. EU Legitimacy: Creditor States versus Debtor States
An institution is unlikely to listen to those who cannot convincingly articulate a threat of countermeasures if their voices are not heard. During the euro crisis when Europe-periphery was voicing dissatisfaction, it did not have any threats at its disposal to make that dissatisfaction heard in the circles of Europe-core. The relationship between creditors and debtors is a power-relationship —by definition asymmetrical as creditors have the upper hand. The peripheral/debtor states have invested their financial and political future in the euro membership and the penalties for exiting the euro are tremendous. In organizations where entry is expensive or requires severe initiation, like the eurozone, threats of exit sound hollow.  If exit is accompanied by further sanctions, such as financial isolation, the very idea of exit is unthinkable. Organizations that deprive their members of both exit and voice are like dictators or the bad queen. Exit from such organizations, if ever attempted, is equivalent to suicide-bombing.
Monetary policy is a public good because it regulates the economic breathing space for citizens and states. Today the global monetary policy is set by the United States Federal Reserve, which prints the reserve currency of the world. States that challenge the United States monetary supremacy must find some way to exist in a self-sufficient manner running their own economy isolated from the world. Not many states can achieve that. Today Germany is an informal empire because nothing really can be accomplished in Europe without its consent and the periphery states have become third world countries indebted in a currency they do not control. States of the European South have no control over the currency and the printing press the way emerging states do not have such control when they issue debt denominated in a foreign currency. Moreover, the loss of sovereignty over monetary policy has led to the loss of sovereignty over fiscal policy. The PIIGS (Portugal, Ireland, Italty, Greece, Spain) are now the exemplification of the periphery but they do not have the advantages of the classic periphery: they cannot devalue their currency, they cannot impose capital controls — unless they are told to do so — they do not control fiscal policy.
In the eurozone, the ECB, in which the German Central Bank holds an effective veto, dictates monetary conditions. The rest of the states can keep nagging or exit at their peril. Certainly constant nagging can irk some officials, but it is not effective voice. Core states knew well that the debt and deficits of the periphery were not the cause of the crisis. Europe-core was willing to overlook these problems of the periphery before the crisis because supposedly the political priority of European Unity was more important than economic disparities. When the crisis erupted, Germany understood quite well that the repayment of debt could not be guaranteed given the condition of the periphery. It insisted, however, on unmitigated conditionality in the midst of a recession as it pursued single-mindedly the export of its economic policies.
It has been said that if one strikes us on the right cheek, we must turn to offer her the left. Today the name of the game is to stop the first strike preemptively, by blowing off the hand that is about to inflict it. If that is not feasible, one must be able to effectively administer a second strike. Certainly we must not convince ourselves that we are in a Union with states that are relentless at inflicting strikes. The primordial understanding of ‘who’s the enemy’ is the cornerstone for the survival of states. When an economic war is taking place, sovereign is the state that can insulate itself as much as possible from economic crises. By surrendering monetary sovereignty, the peripheral states have deprived themselves of the little independence they had. Now the citizens of these states are at the mercy of the governments of other states. These governments, by definition, cannot be enamored with the well-being of citizens who do not vote for them.
Assuming that exit is excluded as an option, the European Union is faced with the following choice:
(1) Political union; or
(2) an abiding German hegemony.
Only a real political union (like that of the United States or Switzerland) would make it unnecessary for a single member state to remain a hegemon. For Germany and many other states the idea of a real political union is the founding myth of the European Union. It is a distant myth that has absolutely no bearing on the experienced reality.
The European identity is a pretend identity. Europeans endorsed this manufactured identity, believing that it would grant them powers they have never had before. The idea of the European Union was based on the equality of sovereign member states that emerged equally scarred from many wars.  As these states grew and diverged in policies and growth paths, the European identity kept them together, even if clearly some of them grew more powerful and more prosperous than others did. After the euro crisis turned into economic conflict, which divided Europe into creditor states and debtor states, the European identity has crumbled. The trumpeted equality of member states, the foundation of European integration, has been unmasked as a sham. The EU can punish weak states, like Greece and Cyprus, but it is powerless against the dominant member states that define the rules and the exceptions to the rules — the real sovereigns. The periphery, as a result, has been grabbed by old fashioned nationalists who believe they have a duty to defend it. Good luck — they need it. The Leviathan is being ‘Made in Germany.’
* Elli Louka is the founder of Alphabetics (www.alphabetics.info), a consulting company based in Princeton, New Jersey, and has worked with countries and companies on international law issues. Louka has been a Marie Curie Fellow, a Ford Foundation Fellow and Senior Fellow at Orville H. Schell, Jr. Center for International Human Rights at Yale Law School. Publications include: Nuclear Weapons, Justice and the Law; Water Law and Policy: Governance Without Frontiers and International Environmental Law: Fairness, Effectiveness and World Order.
 See Carl Schmitt, Political Romanticism (translation Guy Oakes, 1986).
 See, e.g., Elli Louka: Water Law and Policy: Governance Without Frontiers (2008) (analyzing how water policy has been oriented towards building a Europe without frontiers).
 See Elli Louka, Conflicting Integration:the Environmental Law of the European Union 5 (2004).
 See Treaty Establishing the European Economic Community (EEC Treaty or Treaty of Rome), Mar. 25, 1957, reprinted in 298 U.T.S. 3. The EEC Treaty was followed by the Single European Act, Feb. 17, 1986; the Treaty on European Union (Maastricht Treaty), Feb. 7, 1992; the Treaty of Amsterdam, Oct. 2, 1997; the Treaty of Nice, Feb. 26, 2001; the Treaty of Lisbon, Dec. 13, 2007. These treaties have been consolidated. See Consolidated Versions of the Treaty on European Union (EU Treaty) and the Treaty on the Functioning of the European Union (TFEU), OJ C 326/1, 26.10.2012.
 On the coercive use of economic power, see Myres S. McDougal, The Impact of International Law upon National Law: A Policy-Oriented Perspective, 4 South Dakota Law Review 25, at 47-48 (1959).
 See, e.g., W. Michael Reisman, Coercion and Self-Determination: Construing Article 2(4), 78 American Journal of International Law 642 (1984).
 See Albert O. Hirschman, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States 4-5 (1970).
 See Elli Louka, Water Law and Policy: Governance Without Frontiers 205-43 (2008) (analyzing models of participatory democracy).
 See, e.g., Hirschman, supra note 7, at 66.
 See Lawrence LeDuc et al., The Electoral Impact of the 2008 Economic Crisis in Europe 87, in Economic Crisis in Europe: What It Means for the EU and Russia (Joan DeBardeleben et al., eds., 2013).
 'Now Europe Is Speaking German:' Merkel Ally Demands that Britain 'Contribute' to EU Success, Spiegel, Nov. 15, 2011 available online http://www.spiegel.de/international/europe/now-europe-is-speaking-german-merkel-ally-demands-that-britain-contribute-to-eu-success-a-798009.html.
 See Anna Myunghee Kim , Foreign Labour Migration and the Economic Crisis in the EU: Ongoing and Remaining Issues of the Migrant Workforce in Germany, IZA Discussion Paper No. 5134, Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) (2010).
 Hirschman, supra note 7, at 96.
 For example, Iran, Syria, North Korea. See Elli Louka, Nuclear Weapons, Justice and the Law (2011) (on the economic isolation of states that are allegedly manufacturing nuclear weapons and are not the internationally recognized nuclear powers).
 Paul De Grauwe, Governance of a Fragile Eurozone, at 3, CEPS Working Document, No. 346, Centre for European Policy Studies, 2011. See also Barry Eichengreen et al., The Pain of Original Sin 13, in Other People’s Money: Debt Denomination and Financial Instability in Emerging Market Economies (Barry Eichengreen et al., eds. 2005).
 See generally Sebastian Dullien et al., The Long Shadow of Ordoliberalism: Germany’s Approach to the Euro Crisis, European Council of Foreign Relations Policy Brief No. 49 (2012).
 See Elli Louka, Precautionary Self-Defense and the Future of Preemption in International Law 951, in Looking to the Future: Essays on International Law in Honor of W. Michael Reisman (M. H. Arsanjani et al., eds., 2011).
 See generally Carl Schmitt, The Concept of the Political 26 (foreword by Tracy B. Strong, 2007).
 States that have had the most successful ammunition against economic crises include Switzerland and China.
 See, e.g., Henri Cartier-Bresson, Europeans (1955).
 This type of economic conflict is not new. Before World War II, the League of Nations emphasized the importance of economic disarmament. See Herbert Samuel, The World Economic Conference, 12 International Affairs 439 (1933). For the economic foreign policy of the United States before World War II, see Jeff Frieden, Sectoral Conflict and Foreign Economic Policy 1914-1940, 42 International Organization 59 (1988).
 See Carl Schmitt, Political Theology: Four Chapters on the Concept of Sovereignty 5-6 (translation George Schwab, 1985). See also Bodin, On Sovereignty 1 (defining sovereignty as the ‘absolute and perpetual power,’ what the Greeks call akra exousia) (Julian H. Franklin ed., 1992). According to Bodin, the sovereign can never become the underdog. The sovereign ‘cannot tie his hands even if he wished to do so.’ See id. at 13.
 See Timothy Garton Ash, 2014 is not 1914, but Europe is Getting Increasingly Angry and Nationalist, Guardian, Nov.17, 2013.
 Thomas Hobbes, Leviathan or The Matter, Forme and Power of a Common Wealth Ecclesiastical and Civil 251-61 (C.B. Macpherson, ed., 1971) (analyzing the commonwealth by acquisition).