The E.U.’s Borders Held Hostage by the State Veto

With E.U. states like Germany, Austria and Poland becoming increasingly active in patrolling their respective borders at the expense of the Schengen Agreement, it makes sense that the proposed E.U. budget announced in July, 2025 includes more money to protect the E.U.’s borders from illegal crossings. This is important because reinstituting controls on the borders of states contributes toward the visual of the E.U. coming apart geographically. Such a set-back may be worse for the E.U. than the secession of Britain was; in fact, letting that state go arguably strengthened the Union because the British government consistently refused to admit that the E.U. is more than a network of countries that the UK happened to belong to, which was the view of the former governor, David Cameron.

Out of the €74 billion in the proposed E.U. budget of President Von der Leyen “earmarked in the MFF to ‘make Europe safer and more secure,’ €26 billion” would “be dedicated to migration management, including issues related to reception of asylum seekers and other non-border related issues.”[1] In the existing 2021-2027 budget, €25 billion in total went to migration, with €14 billion for border management and €11 billion to asylum reception and integration.[2]

With the federal budgets covering so many years, reforms allowing for easier fast-tracking of proposals to augment a current budget may be advisable in the face of some states effectively shedding the open-state-borders Schengen Agreement. Additionally, the stipulation that any state government can veto a proposed federal budget could be revisited, as states differ on how serious infractions are at their respective borders and thus on the merit of increasing federal spending so the concerned states might pull back and revert to the Schengen Agreement, for claims of emergency by the activated state governments have been specious, and perhaps even outright lies.

That unanimity would be needed to pass the proposed federal budget, which in turn would hopefully strengthen the E.U.’s borders sufficiently that certain state governors could relax and withdraw their forces at their respective state borders ignores the political leverage that some state governors have exploited by using their respective vetoes at the federal level. A certain level of maturity all around is requisite to having the veto-mechanism with the understanding that it is to be used only when a state’s interests would likely be vitally impaired with the passage of a piece of legislation. Without such maturity, all kinds of dysfunctional politics and dogmatic obstacles can be expected in the European Council and the Council of the E.U. as the Commission and the Parliament look on in utter disbelief.

Perhaps it is an overstatement to say that a potential implosion of the E.U. from within could be allowed to run its course because of a refusal to exculpate the principle of unanimity, and thus the state veto, from the involvement of the state governments at the federal level. To exclaim, “The E.U. is NOT a federation!” as a kind of instinctual urge is not a retort; rather, it is the sort of stubborn oblique denial that pushes off reform that could save the Union. That some state governments subject to the Schengen Agreement were already using the emergency clause inappropriately when President Von der Leyen released the Commission’s upcoming budget for the E.U. is witness enough that the stubborn insistence by some governors to retain the state veto power at the federal (or Union) level has prevented the E.U. from being able to adequately enforce and fulfill its own competencies (i.e., enumerated powers). 

Is it not unethical to say, here is a power for you but we’re going to stop you along the way from being able to carry it out sufficiently even though it is your power? Is that not unfair, as well as counter-productive for the Union? Or are the circumscribed, petty interests of the parts greater than the interest of the whole where the benefits of collective action could otherwise be realized?

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1. Vincenzo Genovese and Eleonora Vasques, “Lion’s Share of Tripled EU Migration Budget Aimed at Border Management,” Euronews.com, July 18, 2025.
2, Ibid.

Contagion Beyond the Headlines in the E.U.

The E.U. states of Greece and Italy were grabbing headlines during the first two weeks of November 2011, given the dramatic resignations of Papandreou and Berlusconi. The only other state to get some attention was France. The Wall Street Journal noted on November 12^th that concerns had been quietly building about France. According to the paper,“French bond yields rose to four-month highs, one day after Standard & Poor's Ratings Services erroneously issued a message saying it had cut France's triple-A credit rating. The yield on France's benchmark 10-year bond climbed 0.02 percentage point to 3.46%. That was 1.66 percentage points over yields on comparable German government bonds. France now has the highest government bond yields among its triple-A-rated peers in the region.” However, it seems overly dramatic to say that a .02 percent increase evinces a climb. Moreover, 3.46% is well under 7 percent, which is the level that was presumed at the time to signify the need for a bailout. Relative to the changes in the Italian yield, those of the French bonds could be viewed as relatively moderate, The French yield was still closer to that of Germany. Although not a red herring, the concern over France masked some real sleepers that were poised to take a hit in 2012. 

Eclipsed by the headlines, Portugal’s expected GDP for 2012 was revised downward by the E.U.’s executive branch in November from the May estimates of around -1.8% to -3% with an expected unemployment rate of nearly 14 percent. The 2011 numbers were also revised downward, from about -1.9% to around -2.1 percent. Meanwhile, Portugal’s semi-sovereign 10-year bond yield was at just over 12 percent, well over Italy’s “point of no return” rate of 7.5 percent, which was hit for a day during the second week of November. With an expected contraction of 3% in 2012 and a 12% yield in November of 2011, Portugal could be expected to face stronger head-winds in being able to make its interest payments in 2012. I suspect that the press had become so captivated with the circus of personalities in Greece and Italy that the iceberg lying in front of Portugal was simply not seen.

Besides Portugal, some of the states in Eastern Europe faced icebergs of their own—though not necessarily of their own making. These too were receiving too little press coverage in November of 2011. Specifically, the state leaders of the “euro zone” had decided in October to give the “zone’s” major banks until the following summer to raise their capital reserves. With that amount of time, the banks could avoid issuing new stock (which would dilute the holdings of their existing stockholders) and get the added reserves together by cutting back on lending to Eastern E.U. state governments instead. Morgan Stanley figures that Poland, Romania, and Hungary are most vulnerable to a loss of “euro zone” bank lending. Roughly 1 trillion euros of “euro zone” bank assets were in Eastern Europe at the time of the change in governments in Greece and Italy. Hungary’s exposure was the largest, with loans held by the banks amounting to about 37% of GDP. According to the Wall Street Journal, any hit to the E.U.’s eastern states, whose economic growth had been powered the global recovery, would only worsen the E.U.’s economic outlook and its ability to service its debts. That is to say, enabling the “euro zone” banks to raise additional reserve capital by reducing lending rather than raising equity may have been in the banks’ interest, but choking the eastern states could already in November be expected to make it more difficult for Greece, Italy, and Portugal to service their respective debts from reduced economic output in 2012. 

It would have been wiser on the journalists’ part to put France in perspective and take a look at Portugal and Eastern Europe than to have fixated so much on the plights of Papandreou and Berlusconi as they struggled to maintain power only to ultimately lose it.

For more on this topic, see Essays on the E.U. Political Economy

Sources:

Matthew Dalton, “Europe Slashes Its Growth Forecast,” The Wall Street Journal, November 11, 2011. 

Kelly Evans, “Eastern Europe Vulnerable in Debt Crisis,” The Wall Street Journal, November 11, 2011. 

Neelabh Chaturvedi, Stelios Bouras, and Liam Moloney, “Europe Pulls Back From Brink,” The Wall Street Journal, November 12-13, 2011. 

The Unenforceable E.U. as Poland Legislates to End its Judiciary’s Independence

With a state government rapidly moving on legislation that would end the independence of that state’s judiciary, the E.U. Commission announced that it would invoke Article 7 against that state. An independent judiciary is a staple of democratic governance, and is thus required of a state (as well as at the federal level, in regard to the independence of the European Court of Justice from the other branches of the federal government).  If invoked, Article 7 of the E.U.’s basic (i.e., constitutional) law would deprive the state of Poland of its voting rights at the federal level. The independence of state courts is that important in the E.U., and yet for the article to go into effect, the European Council’s vote, excepting Poland, must be unanimous. Already, the governor of the state of Hungary had made clear that he would vote against invoking the article—that state having its own constitutional troubles with the E.U. Commission and being friendly with Poland.  In other words, two conflicts of interest came into play immediately, even as the Polish legislature was still voting on the proposed judicial reform.

The legislation “would force all the [state’s] top judges to resign, except those [the party in power] appointed.” In fact, the government would have “control over who can even be considered for a judgeship.”[1]  In response, Frans Timmermans, first vice president of the European Commission, said the legislation “would seriously erode the independence of the Polish judiciary” and in fact “abolish any remaining judicial independence and put the judiciary under full political control of the government.”[2] Such a condition would violate the basic principles of the European Union, which, like the United States, requires every state to have the republic form of government, which includes an independent judiciary to protect citizens from governmental tyranny at the expense of liberty.

Whereas it is easy to criticize the Polish legislature for its proposal to upend a vital element of a republic, the E.U. itself was culpable too. Specifically, to require that every state except the offending state agree before Article 7 can be enforced even on a matter as important as an independent judiciary in a state—in making it so difficult—the E.U. willfully makes itself vulnerable to its own defeat from a democratic standpoint. Common sense alone would say that very serious violations should not be subject to extremely high hurdles. Lest it be argued that unanimity can be expected if a violation is truly very serious, the Hungarian governor’s willingness to exploit conflicts of interest suggests that it is pure folly to pretend that alliances do not exist between states in a federal union. 

In general, such a union that permits itself to be hamstrung in enforcing its basic law is charity case befitting Nietzsche’s conception of weakness by abnegation. In other words, the E.U. looks pathetic in subjecting the enforcement of its basic law to such high hurdles that allow the exploitation of conflicts of interest to protect an unconstitutional state government. More generally, the self-inflicted wound in the federal enforcement powers—a wound stemming from still too much state sovereignty—blocks the check-and-balance benefit of federalism. In a healthy federal system, the federal level can provide a check on excesses on the state level, and vice versa. The “dual-sovereignty” in the system cannot be so unbalanced that one state can block federal enforcement against another state. If the E.U. state governments believe that the E.U.’s basic law is important to the Union in being able to function, let alone continue to exist, then those same governments should be willing to let go of unanimity in the enforcement of federal law. Put another way, the federal level should not have to rely so much on the state level—even one particular state—in being able to enforce federal basic law. Or is such law really not very important to the state government officials?

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[1] Rick Lyman, “In Poland, an Assault on the Courts Provokes Outrage,” The New York Times, July 19, 2017.

[2] Ibid.