Slow Train to Brussels
Reactions to last week's European Union summit, where leaders struggled with a host of political and economic problems, tended toward the critical. But the EU is a work in progress, constantly trying to find a happy medium between expanding the limits of sovereignty and protecting national identities. The results of the EU summit bear out this balancing act.
Europe may face some very real challenges. But the United States wastes time chiding the EU for not acting like a proper nation-state. The EU is something brand new, craftily scavenged out of forms and parts from the junkyard of political systems past. The problem for the union is that it may be the next step in a line of political forms that stretches from Italian city states, the Hanseatic League and the Holy Roman Empire to today's territorial nation-states. But it is without precedent. And the challenge of figuring out what kind of actor it is and what it wants to be will partly be determined by how others view it.
The progress that the EU has made in institutionalizing governance at the European level across a wide range of areas-the euro, the European Central Bank, the single market, the Common European Foreign and Security Policy-has lulled many journalists, academics and policy makers into believing the EU will act decisively and cohesively in responding to crises, like the economic one we face now. A stream of articles and op-eds over the past months have chastised the EU for not coming up with a coordinated fiscal response along the lines of the American stimulus package and bank bailout packages. A recent New York Times piece expressed surprise and consternation that European ". . . countries have worked to bail out their own banks and rescue national factories of global automobile companies" and were shocked at persistent national cleavages over who would pay for what in the joint European response. Paradoxically, observers in the United States and elsewhere are paying an astonishing compliment to the EU in bashing it for not reacting in unified and harmonious ways, a compliment that would have been unthinkable a few decades ago.
But the EU is a creature that will never fit neatly into the dominant nation-state standard. The EU is a unique structure that overlays, and fits between, the member states as best it can, seeking to navigate the existing national politics and institutions while improving upon them. Just as the euro symbolically embraces both the symbols of the new union on one side of its coins, while preserving national symbols such as King Juan Carlos or the Celtic harp on the other, the history of the EU has been one of compromise within innovation, stretching the bounds of sovereignty while always trying to coexist with national identities and traditions.
During the recent summit, European leaders directed the European Commission to develop legislative proposals to create a host of new institutions to regulate and oversee financial markets and increase systemic risk surveillance and coordination in crises. While action has been limited on the bailout side due to the lack of EU fiscal capacity, these regulatory reforms represent a dramatic shift toward more robust cross-border financial regulation-a significant move, previously off the table. The proposed European System of Financial Supervisors creates "supervisory colleges" that do not replace but rather network into the existing national authorities while developing a single European rule book for financial regulation.
This type of institutional networking, overlaying and formalizing on top of national authorities is common in the EU, and has proven effective in areas such as data-privacy regulation. It also is politically palatable and over time often results in more power being moved to Brussels than anticipated. Another new body, the European Systemic Risk Board, looks to be more explicitly supranational, as the well regarded European Central Bank will have a role in its staffing. Overall, these proposals fit the slow, incremental balancing act that is the EU's habit.
The reality of the EU may finally catch up to the expectations of American administration officials, journalists and pundits. In the end, the financial crisis is likely to spur more, not less, European-governance building. Addressing deeply sensitive areas like fiscal policy may come to bridge the fissures in between the EU and the member states' authority. Of course it will not be the United States of Europe that emerges, but rather a new and innovative hybrid political form for which we don't yet have the conceptual apparatus, or language, to fully describe. We would do well to keep this in mind as we seek to work with our European allies to fix the global financial system.
Kathleen R. McNamara is an associate professor and international relations field chair at Georgetown University.