By John Weeks

[More in Chapter 9 of my new book, Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy Anthem, $18]

The Starting Point

If you suffer from insomnia the following introduction to the mis-governance of the European Union could be your salvation.  Why, you might ask, should someone in the United States be concerned with the arcane detail of the European Union when we encounter so many more important and pressing matters (such as the start of the baseball season)?

The simple answer to this question is “Germany”.  You probably think that China had the world’s largest trade balance in 2013.  No so, it was Germany, at $270 billion compared to China’s 260 billion, though the former is sensitive to the euro-dollar exchange rate you use.  That the German government, or the Bundesbank (the central bank) dominates economic policy in the European Union is no secret.

The economic policies promoted by the German government at home and for the euro zone represent the major obstacle to full recovery of the world economy (more on this later).  What happens in the EU elections both reflects and influences German policies..  So, Americans should concern themselves with these elections because they track the emergence of an economic superpower as rival to both the United States and to China.  By comparison to Germany (with the fourth largest economy in the world), Japan (the third largest) is relatively passive.

To move on to the dull stuff, over the four days 22-25 May millions of Europeans will elect a new parliament to sit in Strasbourg (which is the capital of the French region Alsace).  The current parliament has 768 seats, apportioned by national population (Germans elected 99, about 13% of the total seats).

How They Line Up

On the face of it, the role of the European parliament seems limited.  No major change in EU economic policy is possible without unanimous consent by the governments of all 26 countries.  The EU Parliament does formally decide on the common budget, but this budget represents a barely one percent of the combined national income of the 26 members.  Considerably more power is held by the European Commission, the administrative arm of the EU.  Each member government points one commissioner.  The collection of 26 Commissioners includes but one progressive.

So what is this election about?  To get one’s head around the answer to this question, we need to begin with the current composition of the Parliament.   Moving across the political spectrum, on the Left we have the Social Democratic parties, Greens and other progressive groups that account for 286 members (the Progressive Alliance of Socialists and Democrats, Green-European Free Alliance, and the European United Left-Nordic Green Left).  With 274 parliamentarians, the center-right European People’s Party (EPP, mostly Christian Democrats) alone has almost as many as the combined Left.  Further to the respectable Right is the Alliance for Liberals and Democrats for Europe (ALDE).

The 85 members of the ALDE plus the EPP bring the respectable Right close to a parliamentary majority.  And that, I regret to relate, is the good news.  “Respectability” in this context means supportive of EU institutions and not overtly racist.  The same cannot be written for the remaining 119 parliamentarians, ranging from aggressively reactionary to troglodyte fascistic.  These are the European Conservatives and Reformists (56), the Europe of Freedom and Democracy (35), and the “Non-inscrits” (30, not allied with any of the groups).

Most in this collection of 119 conservatives, reactionaries and proto-fascists advocate either looser integration or national withdrawal from the European Union.  In addition to the Left-Right division over the future of the European Union is the division between parliamentarians from the 18 euro zone countries and the 8 countries that retain a national currency (Bulgaria, Croatia, Czech Republic, Denmark, Poland, Romania, Sweden, and the United Kingdom).

The unconditional supporters of European integration across all parties and countries, or simply “Unconditionals”, currently claim a majority of the members of the European Parliament.  For them the solution to all EU problems and crises is further integration, most importantly a common fiscal policy.  This, they content, is necessary because monetary union via the European Central Bank managing the common currency is not viable without “fiscal union”.

The unconditional advocates of closer integration are not always specific in what they mean by fiscal union.  They cannot mean the replacement of national budgets by an EU budget.  Nor can they mean a US-type arrangement in which national (state) budgets remain but the EU (federal) budget is the far larger and more important.  No party of importance in any of the 26 member countries supports the first (a centralized European government).  Because there is no common taxation agreement and no consensus on social provision, the second, if practical at all, lies far in the future.

In practice “fiscal union” means strengthening the power of the European Commission to force national governments to limit severely their budget deficits and reduce their public debts.  Under current EU legislation the European Commission has the authority to assess whether national budgets comply with the rules set by the so-called Stability and Growth Pact.

New “integrating” legislation would increase the sanctions that could be applied to governments breaking the fiscal rules (e.g., no overall budget deficit in excess of 3% of GDP).  In effect, the changes sought by the integration advocates of both the Left and the Right would make an countercyclical fiscal policy by a national government illegal.  The pro-EU but anti-integration advocates — I consider myself one — oppose any and all rules that restrict the scope for an active fiscal policy.  We could be called the conditional supporters of further integration or, simply, the Conditionals.

The Real Issue

The unconditional supporters of further integration frequently accuse the conditional supporters of being right-wing nationalists.  This is inaccurate because most of the opposition to strengthening EU fiscal rules comes from progressives who view those rules as part of a conversion of the European Union from social democracy to neoliberalism, a conversion well on its way to success.

The right-wingers opposed to European integration care little about fiscal rules.  If pressed many if not most would heartily endorse balanced budgets, low public debts and minimalist social provision.  Their objection to European integration is much simpler and straight-forward — opposition to immigration and aggressive chauvinism.

The opposition to immigration manifests itself most clearly in the more developed, western European members of the EU.  Opposition to immigrants from the poorer EU countries is the obsession far right parties in Britain (the United Kingdom Independence Party), Belgium (Vlaams Blok), Denmark (Danish People’s Party), France (National Front), Finland (True Finns Party), Italy (Northern League), Netherlands (Party for Freedom), and  Sweden (Swedish Democrats).  To varying degrees these parties embrace authoritarian policies to limit immigration and create an ethnically homogenous society that ever existed.

To these right wingers can be added the overtly fascist New Dawn Movement in Greece.  Fidesz, the government party in Hungary, is only a marginal improvement on the overtly racist and fascist the Jobbik Party.  And the list goes on — Slovakia, Estonia, Latvia and Lithuania all offer fertile ground for hate-based politics.  With very few exceptions among the 26 members polemics against immigrants and national minorities sell well in Europe.

If the Unconditionals think (or hope) that the upcoming election debate will focus on deeper integration of EU countries they suffer from a dangerous illusion.  As I shall show in the rest of my articles, from Kuruna in Sweden above the Arctic Circle to the Greek island of Gavdos at the extreme southern reach of Europe (ignoring the Canary Islands), the fight will be about foreigners, chauvinism and xenophobia.

The Unconditionals in current parliament in Salzburg can claim an absolute majority, and on a good day perhaps as many as 400 supporters.  The proto, neo and paleo fascists struggle to hit 100.  I can confidently predict – and I am not alone in this – that after 25 May the Unconditionals should consider themselves lucky to count up to 350, while the racists and xenophobes pick up what the Unconditionals lose.

To put it simply and starkly, the fight is not about deeper integration — it will fail for lack of parliamentary votes.  In Europe today the fight is between the democrats and authoritarians.  Which is, I again regret to report, a familiar conflict of long standing.

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John Weeks is Professor Emeritus and Senior Researcher at the Centre for Development Policy and Research, and Research on Money and Finance Group at the School of Oriental & African Studies at the University of London.