A Faustian bargain in the EU



By Josep Colomer.



The tragicomedy of threats and negotiations between Greece and Brussels shows the big paradox of the European Union. On the one hand, the EU is blamed for not doing much for the victims of the crisis. On the other hand, it is derided for enacting excessive bans, restrictions and regulations. Actually the two blames are two sides of the same coin.

Europe is overregulated precisely because the EU suffers from insufficient own resources (the EU’s annual budget amounts to about 1% of the Gross European Product, while the average member state spends about 48 % of its GDP).

In the absence of a solid Europe-wide fiscal system, the EU substitutes overregulation of states’ fiscal policy for its own financial resources. The states retain the bulk of the money, but it is largely used to implement legislation directly or indirectly originated in Brussels.

If the states wanted the EU to do more for the European citizens, they should accept transferring significant fiscal resources to the Union. With stronger finances, Brussels would be able to develop Europe-wide policies and it would need less interference over the policy areas reserved to the states.

The EU’s fiscal strength would be the price for the states to reduce EU’s overregulation and to regain some of their lost autonomy. The states could develop their own policies on the issues on which they would choose to be different, up to the point to be responsible for their own finances: they should have the liberty to default and not expect to be rescued by the EU at the expense of the tax-payers of other member-states.

In other words, let’s render to Caesar the things that are Caesar’s, and to the states the things that are theirs. If, conversely, the European states want to keep the bulk of public spending, they shouldn’t blame the EU for interferences and regulations, as, in absence of Brussels fiscal strength, these are the only ways by which the Union can try to provide European public goods and to do something for the European citizens.
Longer version in Spanish in the daily El Pais  CLICK


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