On May 18, 2020, with the E.U.
Commission having been no match for the states’ own interests in their own
health and economic crises, the governors of France and Germany announced that
they would support a recovery fund to help the states most in need. The €500 billion fund of grants (not loans) would be
raised on the capital markets and guaranteed by the state governments. It would
be part of the federal budget.[1]
I submit that the imbalance in that federal system is evident; here again, the
power of the state governments relative to the federal Commission shows the
weakness of the latter.
Not coincidentally,
the governors’ joint announcement fit nicely with the proposal yet to be
unveiled by the European Commission. Because the fund would be part of the federal
budget, a federal institution (i.e., the Commission) should arguably have made
its announcement prior to that of the two state executives. That the
state-level took the lead on a federal program suggests that the federal level
was itself relatively weak. It is telling that had the Commission gone first,
the state governments would likely have ignored the proposal.
Yet to rely on the
largest states to act de facto as the
federal level makes the Union vulnerable to the common interests being subject
to the particular interests of the most powerful states. It is no accident that
the Commission would use “the argument that the fund is an exercise in common
self-interest.”[2] The other states would
rightly have been suspicious had France and Germany used that argument. So we
have the pertinent argument to be made by the Commission only in retrospect.
This in itself may point to how important the common interest actually has been
in a Union whose legitimacy is based precisely on common interest.
To be viable in the
long-term, a federal system must maintain a balance of power between the
federal and state levels. Too much federal power and the system consolidates;
too much state power and the risk is dissolution of the federal system. Short
of dissolution, a state-heavy federal system pays too much heed to the
particular interests of states and can even be dominated by the most powerful
state (or states). Throughout its entire history as of 2020, the E.U. suffered
from this imbalance. The want of federal power to provide a check on excessive
state power over federal institutions and the Union itself was evident, for
example, as rich Northern states were able to thwart federal efforts to
mitigate the austerity of heavily indebted states such as Greece and Spain
after the financial crisis of 2008.
Efforts to minimize
redistribution within a federal system, moreover, reflect a minimal notion of
the common interest. While such a view is consistent with a confederation in
which all of the sovereignty resides with the states, the minimal approach can
stifle a federal government’s use of its portion (or competencies) of
sovereignty, which in turn should match the common interests with which the
federation is tasked. Having a federal currency, for instance, implies the need
for monetary and even fiscal policy for stabilization purposes. Hence the
Commission was set to argue that the Eurozone itself could be destabilized if an
uneven economic recovery were to occur after the coronavirus pandemic. Hence
the need for the redistributive recovery fund. To have established the common
currency and yet insist on a minimal notion of common interest is
self-contradictory because having such a currency expands the common interest.
In other words, to give federal governmental institutions competencies geared
to protecting or furthering the common interest and then narrowing it to bind
the federal use of the competencies essentially ties the federal level in knots.
While this strategy may be in the immediate interests of the states (especially
the most powerful) in holding back any possible federal encroachment, the
federal system itself suffers from the want of federal power, given its
competencies.
[1]
Katya Adler, “Politics
and PR: Behind the Scenes of Franco-German Recovery Fund,” BBC.com, May 18,
2020.
[2]
Ibid.
