How to untie EU's hands

EU will suffer UN's fate of irrelevance unless decision-making processes are reformed (Source: here)

Europe faces numerous quite serious challenges. Russia threatens from the east. The NATO alliance is in tatters. Oil prices are killing the economy. Nationalism is on the rise in several countries. Immigration is turning Europeans into little Nazis.

While the European Union (EU) has all the trappings of a government, its institutions have almost no teeth, because extreme tribalism prevents individual EU member states from ceding power to the centre. EU therefore sits on top of member states like an ineffective blancmange, without common fiscal policy, without a common bond market, and without common foreign and defence policies. Meanwhile, beneath EU's cloying embrace each of the 27 member states replicate each other's institutions from finance ministries through line ministries, from regulatory agencies to legislative bodies and judiciaries, making Europe's tiered system of government the most inefficient on the planet.

Given the long list of problems, which issue should EU tackle first? Where should European leaders place their main focus? On Ukraine? On energy? On immigration? On rolling back nationalism? On improving efficiency?

Actually, it should do none of the above.

Instead, EU should first and foremost focus on fixing its dysfunctional decision-making processes. What is the point of expending tons of political capital trying (and likely failing) to fix a bunch of problems one-by-one if they can all be solved very quickly by first removing EU's crippling unanimity rules? Reform of the unanimity rules should be Europe's absolute top priority. Once solved, EU will be able to address its other problems with relative speed and ease.

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At present, EU requires unanimity to approve reforms in certain key areas. Unanimity means that all 27 EU member states must vote in favour for anything to be passed. Given European tribalism, the requirement of unanimity makes decision-taking a bit like herding cats. It is almost impossible to get anything done as long as merely a single dissenting vote can derail the entire project, even when the project is supported by the other 26 member states.

In recent years, Hungary's Prime Minister Viktor Orbán, a Russian agent, has played the role of party pooper by blocking EU aid to Ukraine. Before Hungary assumed this unwelcome role, it was the Poland's conservative government under the Law and Justice (PiS) party that held Europe hostage. It will not stop here. One can easily imagine future corrupt far-right governments taking a leaf out of Poland's and Hungary's books, leading to potential sustained paralysis.

That is not to say that paralysis is always a bad thing. EU can still carry out its statutory functions when politics is paralysed. Only legislative changes are blocked, but even that can be a good thing if it means that a lot of bad decisions are not being made. As the United States reminds us daily that, under Trump, executive power can be very dangerous, especially when the Chief Executive is a convicted rapist and corrupt egomaniac pedophile fascist. Until recently, the silver-lining on EU's inability to make decisions was that EU could be relied upon suddenly to invade other countries or make other such moronic decisions.

Unfortunately, EU's inability to act has now become a real problem as geopolitical tensions have surged. A war is raging on EU's eastern border and the United States recently threatened to invade Greenland. It is absolutely critical at a time such as these that EU can act decisively, if only to protect itself.

Granted, Europe pulled together to confront Trump over Greenland, making enough of an effort to get Trump to turn tail, but Trump could easily have exposed Europe's lack properly embedded institutional defences had he not been such pussy.

Besides, EU's unanimity rules are just plain unfair. They give far too much power to a tiny troublesome minority. It is morally wrong that a nutcase like Viktor Orbán can hold up key decisions on something as vital as Europe's defences.

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It is for these reasons that the single most important reform Europe could undertake right now would be to eliminate unanimity voting rules in favour the qualified majority voting system for all decisions.

Qualified majority voting is a 'double majority' voting system, where approval requires the support of 15 of the 27 member states (55%) plus at least 65% of EU's total population. This is still quite a high hurdle, but it is far better than unanimity, because it eliminates the worst cases of abuse, such as we see regularly from Hungary.

There is ground for some optimism that unanimity rules can one day be rolled back. EU successfully scaled back unanimity rules in the Treaty of Lisbon, which extended qualified majority voting to a range of important areas, including police and judiciary, internal market and economic policies, energy and environmental policies, trade policy, and others.

The areas that still require unanimity are:

·      Foreign & Security Policy: As a result of unanimity rules, EU still has no common foreign policy, no common defence policy, and no common approach to applying sanctions.

·      Taxation: The requirement for unanimity means that EU has no common fiscal policy.

·      EU Finances: Due to unanimity rules, EU has no common bond issuance. Despite being a bigger economy than the United States, EU is stuck with its many tiny and illiquid government bond markets, which simply cannot compete with the huge and liquid US treasury market. In practice, the lack of a large bond market means that Europe can borrow less than the US, pays more to borrow than the US, and is more at risk from market volatility during crises than the US.

In addition to these three areas, EU also still requires unanimity for admitting new members and in certain areas of social policy. Unanimity (with the exception of the erroring party) is also required when Article 7 procedures are activated to defend fundamental European values, such as democracy, rule of law, and human rights. Poland and Hungary have both been subjected to disciplinary action under Article 7 in the past.

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Constrained by its unanimity rules, EU has sought to circumvent the problem by resorting to so-called Passerelle Clauses, which are mechanisms under Article 31(3) of the Treaty on the European Union or Article 48(7) of the Treaty on the Functioning of the European Union that allow certain decisions to be shifted from unanimity to qualified majority voting. However, Passerelle Clauses can usually only be activated after a unanimous vote, so that only shifts the problem to a different location.

Another way forward has been to rely on so-called Constructive Abstention. Article 31(1) of the Treaty of the European Union allows members to abstain from a vote, but not blocking it, thereby enabling other member states to adopt the decision unanimously.

Both methods are problematic, though. For one, the bar for passing legislation is still too high, so not enough reforms are being approved. Also, the system is ad hoc and wide-open to corruption as members states opposed to legislation try to extract payment from other members in exchange for support (or abstention).

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The right way forward is for EU to have another go at formal treaty revision to get rid of the remaining unanimity requirements. The Articles of the Treaty on European Union (TEU) and/or the Treaty on the Functioning of the EU (TFEU) must be altered.

Clearly, this will also be very challenging, because treaty revisions require a convention followed by an intergovernmental conference followed by ratification by all members followed, in some countries, by national referendums.

On the other hand, once the treaties are revised the changes become permanent. The way to overcome the obstacles is for EU leaders to focus on the issue well in advance and to make sure everything is prepared and ready. Then, when conditions are just right, say, at a minimum, after Viktor Orbán is kicked out of office, they can put the reforms forward and act decisively and with speed.

Failing to get rid of EU's unanimity rules will raise new issues. Status quo puts EU on a path similar to that of the United Nations (UN). The UN is another institution, which has been rendered impotent and irrelevant by its own rules, particularly the veto powers assigned to the five permanent members of the Security Council. The EU will share UN's fate unless it finds a way to break the impasse.

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