A Eurorealist view of the EU

By Vaclav Klause, The European Journal.

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A Eurorealist view of the EU’s futureBy Václav Klaus,The European Journal, Both in the United States and in Europe, the past 50 years of the European integration process is usually considered to be a success. To express a different view is politically incorrect, but – I am more than convinced – we must be ''correct politically“.

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The way of looking at the European integration process must be sharper and more serious than before, especially now, when we are at the crossroad and have to interrupt the creeping unification, socialization and bureaucratization of the European continent.

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Recent developments need a change. By accepting ten new Member States, mostly former communis countries in Central and Eastern Europe, the EU has been considerably enlarged. This increased the economic disparities and the transaction costs of the EU functioning, ruling and decision-making, as well thedifficulty of complying with unnecessarily “harmonized” rules and decisions in many countries. It also increased the EU’s democratic deficit.

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At the same time the EU has continued – at an accelerated speed – to expand the number of pages of its legislation, which now deals with almost every aspect of human life and human activities. In one of the recent issues of the European Journal I was informed that of the 22,000 pieces of legislation in the EU, about12,000 were introduced between 1997 and 2005, compared to 10,000 during the 40 years from 1957 to 1997. Massive increase of legislation means less personal freedom as well as the fact that the role of Member States and of national mparliaments has been radically diminished.There is no end to it.

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The ambitious attempt to accelerate the unification and de-democratization process by the European Union Constitutional Treaty has been – to my great satisfaction – rejected, but creepin unification goes on as if nothing happened.

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The economic stagnation (or very sluggish economic growth) persists. The European common currency – the euro – was successfully launched but I do not agree with the interpretation that the launching itself was convincing proof of the positive contribution of this monetary arrangement to the economic development and to – however defined – social welfare in the Euro-area. The costs – demonstrated by the statistically visible economic growth slowdown since its introduction – have not been recognised. It has been unacceptable to even suggest such a link.I have many doubts about that development and disagree with the fashionable intention to solve the existing problems by creating an “ever-closer Europe”. I am against the adjective “ever-closer” as well as against the noun “Europe”. We should not speak about Europe, criticise Europe, build Europe or expand Europe,because Europe existed, exists and will exist independently of our ambitions to organise ourselves within it, to unite or divide ourselves or to make friends or enemies within it.

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The Czech Republic recently entered not Europe, but the European Union.The political project – to do certain things together – regardless of the existing historical, political, economic, cultural or religious differences was a rational idea. But it must be rationally implemented. The question is, whatdoes it mean to do certain things together?

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When I look back at the last half a century, I see two different integration models in Europe. The first one can be called the liberalisation model. It was characterised by inter-European opening-up, by the overall liberalisation of human activities, by the removal of barriers at the borders of countries as regards the movement of goods and services, of labour and capital, and of ideas and cultural patterns. Its main feature was the removal of barriers and its basis was intergovernmentalism.

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The second stage, which I call the interventionist and harmonisation model, is characterised by centralisation, regulation, harmonisation of all kinds of “parameters” of political, economic and social systems, by standardisation of conditions of production and consumption, by homogenization of human life. Its main features are regulation and harmonisation orchestrated from above, and the birth of supranationalism.

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I am – as is well known – in favour of the first model, not of the second. I am convinced that the unification of decision-making at the EU level and the overall harmonisation of societal “parameters” went much further than was necessary and more than is rational and economically advantageous. As an economist, I am aware of “externalities”, of “spillover effects” and of “continental-wide public goods”. These phenomena undoubtedly existed and exist and should be properly reflected in European institutions and legislation. However, they do not dominate.

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The second stage of the European integration process has been based on the false idea that they do dominate. I consider it wrong. I suggest, therefore, redefining the whole concept of the European Union, not just to make cosmetic changes. I suggest going back to the intergovernmental model of European integration.

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I suggest going back to the original concept of attempting to remove all kinds of barriers, going back to the consistent liberalisation and opening-up of all markets (not just economic ones). I suggest minimising political intervention in human activities and where intervention is inevitable it should be done close to the citizens (which meansat the level of municipalities, regions and states), not in Brussels.Europe must be free, democratic and prosperous. It will not be achieved by democratic deficit supranationalism, etatism, or an increase in legislating, monitoring, and regulating.

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Europe needs a system of ideas which must be based on freedom, personal responsibility, individualism, natural caring for others and a genuinely moral conduct of life.

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Europe needs a political system which must not be destroyed by a postmodern interpretation of human rights (with its emphasis on positive rights, with its dominance of group rights and entitlements over individual rights and responsibilities and with its denationalisation of citizenship), by weakening of democratic institutions which have irreplaceable roots exclusively in the territory of the states, by the “multiculturally” brought about loss of a needed coherence inside countries, and by the continental-wide rent-seeking of various NGOs.

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Europe needs an economic system which must not be damaged by excessivegovernment regulation, by fiscal deficits, by heavy bureaucratic control, byattempts to perfect markets by means of constructing “optimal” marketstructures, by huge subsidies to privileged or protected industries and firms,and by heavy labour market legislation.

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Europe needs a social system which must not be wrecked by all imaginable kinds of disincentives, by more than generous welfare payments, by large-scale income redistribution, by all other forms of government paternalism.

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Europe needs a system of relations and relationships of individual countries which must not be based on false internationalism, on supranational organisations and on a misunderstanding of globalisation and of externalities, but on the good neighbourliness of free, sovereign countries and on international pacts and agreements.