Tuesday, February 7, 2012

Gaining a Common Good through Relinquishing Sovereignty

In the first decades after World War II the Aussenpolitik (foreign policy) from the Federal Republic of Germany (FRG) was embossed by the strategy of gain of sovereignty through a relinquishment of sovereignty: By integrating itself more into the West through concessions to the West-Allies and abandoning thereby national options, the FRG gained more scope for negotiations and an opening via the East. The gained scope used for contacts and negotiations with the Soviet Union finally led to the reunion of Germany.

When one looks at the problems of the European Union (EU) of today in general (e.g. migration, democracy deficit) and the debt crisis in particular the question of relinquishing sovereignty for gaining scope and options is at least as actual as it was in the mentioned decades. The potential gain of today would be a common good in the form of more stable, elaborate and sustainable (financial) institutions in the EU.

The text of the fiscal compact of the EU which has been completed on 30.01.12 was a step in this direction. It requires participating countries to implement a debt brake on the national level to achieve budgets that are generally in balance or surplus. In case of non-compliance sanctions are scheduled. Hence, the aim of the compact is to achieve more fiscal discipline in the participating countries. But the financial compact is often criticized referring its enforceability as well as altogether being to less to solve the debt issue sustainably.

Therefore, it is often stated, a transfer union would be necessary. Overall, this would mean that EU member-states launch common state bonds (Eurobonds) and that transfer payments from countries with balanced budgets to such with imbalanced ones have to be established. But if this really would be a more sustainable solution, why then aren’t Germany as well as other countries not willing to do this by now?

Probably because of the risks that relatively solid EU member-states would be liable for the debts of such threatened by insolvency? Maybe yes, but – and this is decisive – the problem behind the scene is deeper: Ideas like the transfer union – as well as potentially sustainable solutions in other policy fields (e.g. security policy, democracy deficit) – require a transfer of sovereignty from the single EU member-states to Brussels. The single countries are enormous struggling with that. This is understandable: Nobody likes to relinquish scope, power and independence in decision-making. But the gain of the transfer could be a common good in the form of an appropriate institutional design that guarantees stable finances and a healthy European currency. Both are preconditions and set up options for a prosperous European economy. In the picture of the well known prisoner’s dilemma this public good would be the collective optimum, the best solution for all states together. In contrast, preserving and/or even maximizing the available sovereignty for a single EU member-state would mean maximizing the individual gain on the cost of the collective one.

The example of the young FRG showed that shifting some scope from a less important field (crusty national options) to a more important one let one achieve even visionary aims. The only option for Europe today is a deeper integration and coordination what demands relinquishing national sovereignty. This does not at all mean that EU member-states have to give up all their sovereignty. But, solely by relinquishing the hurting, yet necessary part, can Europe come to inner stability. The single EU member-states would have gained the scope and institutional design they need for a prosperous national economy in an interdependent Europe and a globalised world.

Claude Meier

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