|Bernard Conollys i FT om att EMU måste efterlikna
Timbro-rapport (2/96): Inte en enda valuta
Mer av Johan Hakelius
criticism of EU
BLASPHEMY TO MOCK EUROPE
Let the whistle blow
Until Europe enjoys true democracy, the brave are right to speak out
In 1995, Bernard Connolly, a senior European civil servant, took a leave of absence from his job as head of the European Commission's monetary affairs department, to write a polemical book. The product of his working holiday, The Rotten Heart of Europe, still stands as the most intellectually persuasive, economically coherent and politically prescient account yet published of the development of European institutions in the 1990s.
The book argued that the single currency project would be used to generate an irresistible momentum for fullscale political union in Europe, dominated by an implicit power-sharing agreement between the German and French political elites. This was a political project which had to be pursued by stealth because neither the peoples nor the parliaments of major European nations had ever been willing to support it when it was presented openly as an explicit aim.
Mr Connolly was promptly sacked by the Commission. Yesterday he was finally given the chance to challenge his dismissal before the European Court in Luxembourg. Mr Connolly claims that everything he said and did was consistent with his contract of employment, since he revealed no confidential information connected with his duties and wrote the book entirely in his spare time. This case raises two broader issues, ranging well beyond Mr Connolly's contract, on which newspaper commentators - and indeed all European citizens - emphatically can and should have views.
The first is about the hidden agendas which always play some part in politics, but which seem to be much more dominant in the politics of the European Union than in the politics of any other democratic state or institution. The second issue seems more technical and bureaucratic, but is equally far-reaching in its implications for democracy in Europe. It can be summed up in a simple question. Whom is a civil servant supposed to serve?
The search for hidden agendas in Europe has never been difficult. Many European politicians have never felt much inclined to hide their desire to create a United States of Europe, especially when talking among themselves and outside an election period. Reading the speeches and position papers put out by successive German and French Governments and by community institutions, it is clear that the single currency project is designed to constitute a big and irrevocable step topwards the ultimate goal of political union in Europe. For Tony Blair to deny this, as he does when he states that membership of EMU is not primarily a constitutional issue, is to commit a political perjury far more serious than any of which President Clinton has been accused.
The steady accretion of power by European institutions has been guided by the "functionalist" theory of Jean Monnet, the founding father of the "modern Europe". This concept, lucidly described in Bernard Connolly's book, maintains that the unification of the previously hostile nations of Europe will never be achieved by the normal methods of political democracy; but political unification can be brought about almost imperceptibly by transferring more and more governmental functions from national to European administrations.
Monnet argued forcefully and presciently in the period of preparation for the 1956 treaties that these functional transfers of power, implying as they would the gradual unification of functional bureaucratic elites across Europe, would create an unstoppable momentum for fullscale political union, provided two main conditions were met. The transfers of power would have to start with relatively non-controversial economic functions, such as agriculture and steelmaking, so as to minimise concerns about the erosion of national sovereignty. And the functional transfers must be made irreversible, a condition guaranteed by the treaty doctrine of acquis communautaire, which asserts that all powers transferred to community institutions are permanently subject to European law and are therefore taken out of the ambit of national legislation.
For the four decades since their creation in the Treaty of Rome of 1956, the European institutions have been guided by the famous bicycle metaphor. Europe is like a bicycle - it must keep moving forward or it will fall down. The astonishing popularity of this metaphor among European politicians and officials has never been diminished by the standard riposte invented by the British Foreign Office: a bicycle does not fall over when it stops moving, as long as the rider puts his feet firmly on the ground.
More recently, as European unification accelerated beyond bicycle pace with the single currency project, another homely metaphor was popularised by Helmut Kohl: that of European "construction". The purpose of EMU was to build a "common home" for the peoples of Europe. My counter-argument to this has always been that a common political house is unlikely to be very stable if the constuction starts with a monetary roof and then moves downwards, with the democratic and constitutional foundations left until last.
This observation leads to the second, apparently technical, issue raised by the Connolly case - about the public responsibilities of European civil servants. This question is also at the heart of the second much more publicised controversy over "whistle blowing" in Brussels, which almost led to the removal of two European Commissioners, Edith Cresson and Manuel Marín and the resignation of Jacques Santer, the EU President, last month. That case centred on the allegations of widespread corruption in the overseas aid department presented by Paul van Buitenen, an audit official who was promptly suspended for making his allegations public after he was discouraged from digging too deep. But the fundamental issue was the same: Should they answer solely to their immediate superiors and commissioners or can they claim, as does Mr Connolly, a wider loyalty to the European public at large?
In normal constitutional democracies, even though whistle-blowing controversies still happen, such questions are relatively easy to answer. Different countries have different laws governing the rights of civil servants to speak out, but ultimately there is a legal line of accountability leading up to an elected official, whose constitutional status is clearly defined. In Britain, civil servants may be muzzled, but at least ministerial responsibility to the public is defined clearly, if rather erratically enforced.
In the new Europe, by contrast, power and responsibility seem largely to be divorced. Even when there is public accountability, this is not legally codified and arises more or less by chance. The European Central Bank, for example, claims to be the world's "most transparent central bank", because it issues a detailed press communiqué after each council meeting. But even if this comical claim were taken at face value, the bank's accountability is not enshrined in law - it is simply a policy the bank has chosen to adopt for its convenience and the time being.
The public responsibility of the Commission is equally undefined. Commissioners, who head the European bureaucracy and determine what people such as Mr Connolly and Mr van Buitenen are allowed to say in public, are very different from either ministers or senior civil servants in national governments. They are unelected, yet in contrast to the heads of Civil Service departments, they are not responsible to individual ministers and they cannot be dismissed. The lack of accountability, also known as the "democratic deficit", is hardly surprising in a European Union deliberately created by functionalist accretion in the absence of popular support.
Until Europe has a proper democratic constitution, it will be impossible to claim that the interests of voters are represented by commissioners, central bankers and other senior officials. In the absence of democracy, let us hope that some of their underlings continue to find the courage to speak up.
Bernard Connolly i WSJ 97-06-05 Kohl's Compromise Won't Satisfy French Demands
German Chancellor Helmut Kohl has dug himself into a deep hole with his plan to force the Bundesbank to revalue Germany's gold reserves. Tuesday's compromise--whereby the gold "profits" will be transferred to the Treasury in 1998 rather than 1997--means he is still digging, and the hole may turn out to be his political grave.
The key miscalculation seems to have been Mr. Kohl's reliance on blind loyalty from Bundesbank President Hans Tietmeyer. Mr. Tietmeyer, himself a long-time supporter of monetary union, is politically very close to Mr. Kohl, and is reported to have said that he would never betray the chancellor on the EMU question. He has believed monetary union to be necessary to cement the Franco- German rapprochement and tie Germany into Western Europe.
Yet for several weeks before Frankfurt's devastatingly negative comments on the gold revaluation plan, the usually loquacious Bundesbank president had said virtually nothing in public, a sign perhaps of a deep inner struggle. It seems likely that Mr. Tietmeyer, while strongly supporting the principle of monetary union, has reluctantly concluded that the Maastricht version is not going to work, or at least not as the Bundesbank believes it would have to work if it is going to serve its underlying political purpose.
Mr. Tietmeyer was responsible for the deeply felt rhetoric with which the Bundesbank greeted the Maastricht Treaty: monetary union required "the degree of solidarity characteristic of a nation," it represented "a sworn confraternity, all for one and one for all," and it implied "an irrevocable binding-together of the destinies of countries," it said. Acceptance of the true meaning of monetary union, it thought, would be signaled by the embrace of a Bundesbank philosophy of fiscal virtue and monetary stability. The most important sign of all would be the complete freedom of the European Central Bank from national political interference.
Predictably, though unfortunately for Mr. Tietmeyer's vision, recent events suggest that these conditions for a politically and economically successful EMU can never be met. For starters, France and most other EU countries objected to the stability pact proposed by Germany.
A breakdown on the issue at the Dublin summit in December was averted only when Mr. Kohl gave into French President Jacques Chirac's frantic one-on-one pleadings. Mr. Kohl's agreement meant it was going to be nearly impossible for countries to be fined for running excessive deficits. (Instead of virtually automatic sanctions, it will now require two-thirds of the weighted votes of EMU countries--excluding the country considered--to impose fines.)
France doubled up its stability pact victory by demanding political oversight of the ECB in the form of a "stability council," and a direct political role in monetary policy through defining exchange-rate guidelines for the euro.
Worse, when the Maastricht criteria fudge factory went into production last autumn, practically every country except Germany showed itself an eager consumer. In response, the markets started placing very big bets on the entry of Spain, Portugal and Italy -- countries that Mr. Tietmeyer would definitely be unhappy to see in EMU.
Judging from the falling mark and rising lira, the market thinks a soft, wide EMU is now very probable. It is underestimating the chance of delay. But the real blow to the Bundesbank came when, after a long struggle to neutralize central bank chief Jean-Claude Trichet, the Chirac-Juppe team effectively regained control over the Banque de France.
So whereas in the first three years of the European Monetary Institute's existence its council had been a Bundesbank fief, for the past six months it has become a forum in which national central banks fight over national positions at least partly determined by national governments. This left the Bundesbank chief disheartened.
France's insistence on political control of the ECB and on the immediate EMU entry of the southern countries indicated that it intended to carry on playing the games of coalition-building, jostling for national advantage, and double-dealing that had characterized all players in the ERM, as well as other areas of EU life. If that happened, EMU would not unite France and Germany in common cause but instead create a deep rift between a French-led politics-driven bloc and a Bundesbank-led club of central-bank philosopher-kings.
Among Mr. Tietmeyer's last substantial public comments before he withdrew into purdah was his minatory utterance the day after the French Socialists issued their list of conditions for EMU. Yes, said Mr. Tietmeyer, there should be monetary union. But he then rebutted the Socialist EMU program, without naming it explicitly, point by point (a performance that did not go unnoticed on the French left).
Shortly afterwards, Mr. Kohl and Finance Minister Theo Waigel dropped their gold-revaluation bombshell, a move that was applauded by many in France and by at least one European Commission official as demonstrating Germany's political commitment to EMU and its willingness to fudge the criteria out of existence.
What the Bundesbank really could not stomach was the notion that the government, faced with a hole in its budget, should force the central bank to effectively print money. It marked a blatant disregard of previous promises not to fudge Germany's performance on the Maastricht criteria, thus making it much harder to hold the line against French demands on EMU membership and operation.
The gold revaluation plan was followed 10 days later by the clear signal from the first round of the French elections that more budgetary austerity was as politically impossible in France as it was in Germany. And the vain attempts by the French right to steal the Socialists' clothes on EMU preconditions had to be seen in Frankfurt as further proof that Mr. Tietmeyer's warnings had been disregarded. It was just too much for the Bundesbank to take.
Yesterday's compromise belies the idea that Bundesbank can huff and puff but that it cannot blow Mr. Kohl's EMU house down. Yet the gold issue was a relatively minor one compared to the much bigger conflicts between the Bundesbank vision of an acceptable EMU and what the new French government -- in almost gleeful defiance of Mr. Tietmeyer's comments a month ago -- is now demanding: even further emasculation of the stability pact, the guaranteed inclusion of Italy, and the creation of an "economic government" clearly intended to influence the ECB.
Judging from the falling mark and rising lira, the market thinks a soft, wide EMU is now very probable. It is underestimating the chance of delay. If Mr. Kohl is there when the EMU decision is made, he will give in to France and Italy, as he always has in past showdowns (such as setting a fixed date for EMU at Maastricht).
But the combination of the French demands with Mr. Kohl's lost authority is a potent one. The Bundesbank is out of tune with the German political, financial and industrial elite on France's demands. But it is very much in tune with public opinion. Mr. Kohl is now being squeezed hard between France and the German political establishment, on one side, and the Bundesbank and the German public, on the other.
Mr. Kohl must know that Edmund Stoiber (the CSU state premier of Bavaria), Kurt Biedenkopf (the CDU state premier of Saxony) and popular opposition figure Gerhard Schroeder may seize the opportunity to call for a Kohl-less grand coalition as a way of tackling Germany's domestic problems free from the additional burden of a rushed EMU. Ironically, if Mr. Kohl keeps his job for the time being, he may owe thanks to opposition leader Oskar Lafontaine, who would surely rather face Mr. Kohl in an election than be outflanked by the waiting triumvirate.
French politicians, left and right, are already lining up to voice support for Mr. Kohl against the Bundesbank (something that will only add to the chancellor's woes) and to declare that there is "now" no threat to EMU from France. They almost seem to be getting ready to blame the Bundesbank for an EMU delay. In these circumstances, one could well imagine that Mr. Tietmeyer, though still hoping for a narrow, hard EMU, would opt for advocating a joint Franco-German initiative on delay as the course least likely to lead to damaging recriminations.
Diplomats report that before Easter France quietly asked the Dutch EU presidency to propose a delay. Mr. Kohl quashed that idea; early French elections were the result of his "nein." Mr. Chirac has now paid a heavy price for Kohl's decision.
Mr. Kohl could yet pay even more heavily.
Mr. Connolly is managing director, international economics, of AIG International. He was formerly head of the European Commission unit responsible for the European Monetary System.
Bernard Connollys kritik av den europeiska valutaunionen En av de hetaste inläggen i debatten om den europeiska valutaunionen är den brittiske ekonomen och EU-tjänstemannen Bernard Connollys bok "The rotten heart of Europe: the dirty war for Europe´s money".
Boken diskuteras i denna rapport av Johan Hakelius, ledarskribent på Svenska Dagbladet.
EMU handlar mer om makt och politik än om rationellt ekonomiskt tänkande. Det är en av lärdomarna av den mest kontroversiella och samtidigt mest initierade bok om den monetära unionen och Europasamarbetet som utkommit på många år. De fyrahundra sidorna dryper bildligt talat av blod, skriver Hakelius.