The EU Favours Stability Over Democracy

The European Union is trying to tackle the economic crisis with means that are distressing the democratic processes of its member states. In addition, these means may result in more economic damage. For example, there’s The Fiscal Compact that is now open for ratification and that could enter into force in the beginning of 2013.

Finnish professor of World Politics and a Chair of Attac Finland, Heikki Patomäki has argued in his report for Finnish Parliament that if EU itself were to seek EU membership it would not be accepted because of its disdain for the democratic processes and the rule of law.

Photo by Panoramas on Flickr. (CC BY-ND 2.0)

He points that the Fiscal Compact resembles the sort of legislation used in states of emergency. The assumption behind the Compact is that member states can rule their own budgets in usual parliamentary manner, as long as the maximum deficit limit of 0.5 percent of GDP is not exceeded. If state deficits come close to or exceed that threshold, a state of exception will enter into effect, and the European Commission is then automatically empowered to take control of the indebted state’s budget.

The exceptional provisions allowed under the terms of the Fiscal Compact are hostile to the basic principles of democracy, as is the fact that the Compact gives rise to legal norms which override EU member states’ own constitutions, and which cannot be changed by democratic means. In a democracy no rule or principle can ever be set in stone, but must always be adapted to the possibilities and constraints at hand. From this perspective, Merkel’s idea of unending budgetary discipline is anti-democratic. Patomäki

As a legal document, the Fiscal Compact is peculiar in many ways, Patomäki argues. It isn’t part of EU legislation but instead stands as a separate international agreement. The official aim of European Union is to incorporate it into EU law within five years of its entry into force.

In contrast to standard procedures for making contracts and treaties, the Fiscal Compact contains no article to allow for its termination or for signatories to depart from it. The Compact does however contain the demand that it be made a permanent part of the domestic legislation of all the states that are party to it, and that preferably it should be incorporated into their constitutions.

Patomäki is doubtful that the fiscal discipline could even help the overall economy. Actually he’s afraid it would do the exact opposite. The measures that states take to control spending have knock-on effects. For example, if a state is heavily indebted, it is bound to attempt to save by cutting public expenses and by increasing taxes.

Such measures lead to an erosion of overall demand within the economic system. When an economy is in recession, tax revenues drop, while on the other hand, other state expenses, such as unemployment payments, increase. Thus the goal of saving in order to pay off debt can easily become self-defeating. What is more, debts can mount regardless of savings, and in some cases, precisely because of state savings. Patomäki

The Fiscal Compact is formally called Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.

Heikki Patomäki‘s report The Fiscal Compact on European Budget Discipline to the Finnish Parliamentary Committee is available by Transnational Institute. In Finnish: Suomeksi Patomäen kotisivuilla.

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