EU: A Federal or Confederal Future

The EU was originally scheduled to launch in May a three-year Conference on the Future of Europe. The start now looks likely to happen in the autumn instead. The EU faces challenges on many fronts. Divisions laid bare by the coronavirus pandemic have made the need to revitalise the Union even more urgent. The purpose of the Conference is to shape both a policy response and an institutional response to the challenges. This blog looks at the institutional strand. 
 
For some, the Conference is an opportunity to define steps towards a fully federal future Popular opinion however could support moves in the other direction towards a more confederal future. This blog compares the two agendas.

The current ‘dualism’
 
Currently the EU has what is sometimes called a ‘dualist’ structure. Member States call the shots in the sense that they ratify, revise and amend the EU’s Treaty framework according to their own procedures, confer on the EU its powers, decide on its strategic priorities and must agree its budget unanimously. At the same time, the EU has its own exclusive powers, can apply measures directly, its institutions such as the Court of Justice, Commission, Parliament and agencies have supra-national features, and the EU has its ‘own resources’ for financing part of the budget. 
 
In the eyes of those who want the EU to move to a fully federal future these supra-national features need to be strengthened. In the eyes of those who favour a confederal future, a more decentralised structure would provide a more resilient and democratic framework, less likely to provoke the kind of populist discontents we have seen..
 
The federal agenda
 
The federal agenda focuses on institutional changes that would reduce the role of member states and ‘intergovernmentalism’ in favour of strengthening the EU-wide dimension.
 
A more supranational Commission
 
A key component of the federal agenda is to strengthen the supranational features of the Commission. At present it is an unwieldy body with one commissioner drawn from each member state in a discrete negotiation between the President of the Commission and the country concerned. The Parliament (EP) must approve both the President and the team members. 
 
Reforms to strengthen the supranational features of the Commission would involve reducing its size to a number more suited to a managerial Board (already envisaged in the Lisbon Treaty). This would mean that not all member states would be represented. 
 
In addition, reforms would ensure that the President of the Commission represents the choice of majority party in the EP rather than the choice of the member states – thus diluting further the role of member states in shaping the Commission. In the jargon of the EU this is referred to as the ‘lead candidate’ system. It is referred to in the communications on the Conference by both the Commission and EP.
 
A more supranational council of ministers
 
The ability of the European Council, composed of the Heads of State and government of the member states, to speak for the EU as a whole has been strengthened by their appointment of a President who serves a four-year term. However, the work of the Council of Ministers, with a shifting departmental composition reflecting the specific policy area, is vital in order to carry through the strategic objectives set by the European Council. The Council of Ministers carries out much of the detailed negotiation and horse trading between member states on policy formulation.
 
The Council of Ministers is chaired on a 6-month rotating basis by different member states in turn. In order to better ensure continuity of focus and effort, the federal agenda would bring the rotating presidency to an end. 
 
An EU wide electorate for some MEPs
 
The EP is only a weakly representative body. Amongst other factors, the need for each member state to have a minimum contingent of MEPs, results in a highly disproportionate system of representation. The supranational corrective, also already referred to by the Commission and EP, would involve the introduction of transnational lists for a part of the EP. 
 
A larger federal budget and the power to tax
 
Under current arrangements the size of the EU budget is set by the member states and, in particular, requires the support of those making a net contribution. Although the EU has its ‘own resources’ such as tariff revenues, the small size of the budget (around 1%) of EU GDP is a source of deep frustration for those who want a federal future. The proposed fund to aid recovery from the COVID 19 crisis would lay the basis for a much larger budget. However, the main long term remedy would involve providing the EU with explicit powers to tax in new areas (for example to levy a carbon border tax).
 
The confederal agenda
 
The role of national parliaments
 
Under a confederal agenda the weakly representative nature of the EP would find its corrective in a so-called ‘red card’ system. This would mean that a qualified minority of national parliaments of the member states could block any measures proposed by ‘Brussels’ on the grounds that they were unnecessary or disproportionate. National parliaments would coordinate their actions on an ad hoc basis, or by their own representatives meeting as a chamber. 
 
Transfer of the Commission’s right of initiative
 
The confederal agenda would remove the Commission’s so-called ‘right of initiative’ which would be transferred to the Council of Ministers. The Commission would play a conventional civil service role, acting as an impartial and neutral source of advice and executive support for the Council.
 
Placing ECJ powers within limits
 
Supporters of a confederal agenda have long seen the European Court of Justice as playing a political role, with its judgements consistently favouring EU centralisation in order to achieve 'integration through the law'. A possible confederal reform would involve assigning all adjudication where the powers of the EU were at issue to a specially convened tribunal. The tribunal would be composed of justices from the supreme courts of (say) 5 member states, not parties to the dispute, under a chair drawn from a supreme court from outside the EU.
 
In addition, the ‘preliminary reference’ system, under which national court systems are encouraged to refer cases involving uncertainty about the interpretation of EU law, that is also seen as favouring the growth of EU powers through adjudication, would be ended. The supreme courts of member states themselves could adopt practices of cooperation to avoid conflicting interpretations.
 
The Euro as a parallel currency
 
The Euro is a huge convenience for consumers within the eurozone. It is not however a tool that can address the structural imbalances between say Germany and Southern Europe reflected in high youth unemployment rates and a need for public debt write-offs. The confederal agenda would see the re-introduction of national currencies alongside the Euro, as an alternative to the development of a system of federal fiscal transfers out of an expanded EU budget or the 'mutualisation' of debt.. 
 
Satisfy both visions – flexibility
 
There is very little, if any, common ground between these two agendas. They reflect two very different visions for the long-term destination of EU as a polity – one union with the attributes of a ‘sovereign’ state, the other union built around a comity of European states. Those supporting the federal agenda wish to see a future where the EU becomes and behaves more like a unitary state, such as the USA. Those supporting a confederal future see strength in Europe’s  cultural and historical diversity. They fear a Brussels led ‘command and control’ polity that will lead to an illiberal EU and stimulate an equally illiberal backlash in the member states.
 
One way of addressing these differences is through arrangements for ‘flexibility’. What is meant by flexibility in this context is to allow for different member states to choose for themselves the cluster of policies which they wish to pursue in common with other member states, and to retain responsibility for those they wish to keep to themselves. Some would choose to combine in a federal structure. Others would opt for confederal relationships.
 
The Conference on the Future of Europe will need to look at how far ‘flexibility’ and clustering is feasible and what it would entail.
 
Three options
 
Overshadowing the work of the Conference are questions about the state of public opinion in Europe. Brexit provides a warning about what happens when elites talk only among themselves and keep important issues away from public opinion for too long a time. Therefore, the EP and Commission have emphasised in convening the conference the participation of citizens and NGOs. The Commission refers to it as a ‘bottom up’ exercise built around various forms of citizen dialogues and deliberative, or Town Hall, forums.
 
The claim to be representative of citizens will however be weak if the agenda is biased towards the federal prescriptions and towards civil society organisations that receive financial or status support from the EU, or, represent only those groups that want the EU to do ‘more’. The Town Hall model of reasoned discussion is also artificial and unrepresentative of the way people communicate in politics. The difficulty of getting a representative participation is a familiar problem in public consultations and one with no easy answers. Against this background the Conference faces three strategic choices.
 
Making the case for treaty change
 
The first option involves accepting the need to change the existing Treaty base.  Many member states will see a need to hold referendums on any substantial Treaty changes. The Conference can lay the ground for this later effort, preparing and making the case for change in front of public opinion.
 
International law now; treaty change later
 
The second option would involve the Conference in exploring changes to existing EU arrangements that would take the form of agreements valid under international law. They would be brought within the treaty base at a later stage when public opinion had had a chance to see them in operation. Arrangements for ‘flexibility’ might possibly be suited to this treatment. 
 
Full use of existing provisions
 
The third option would involve the Conference in identifying areas for a fuller use of existing EU provisions and trying to avoid further Treaty change. For example, following the federal agenda, the size of the Commission could be reduced. Following the confederal agenda, the European Council could in practice assign a ‘red card’ role to their own parliaments.
 
The fallback: ‘neofunctionalism’
 
If, over the next three years, the prospects for the public endorsement of institutional change in the EU appear really uncertain, the outcome of the Conference could simply be noted and parked, to be taken up later at a more propitious moment. In this case the EU would fallback on what is called ‘neofunctionalism’. This means the Conference would identify and flesh out an ambitious public policy agenda and let the institutional consequences follow on later. For this reason, some observers may feel that the more important work of the Conference will take place in developing the policy agenda in areas such as COVID 19 recovery, environment, foreign and security policy.