Today’s #euco discussions on the #eubudget and #NextGenerationEU fund show that Europe needs a Madisonian moment to go with its (not-quite) Hamiltonian one.
Case number 1: @MinPres Mark Rutte saying that the Dutch government wants guarantees about the effectiveness of reforms in “southern” countries.
Case number 2: Victor Orban’s parliament insisting that there should be no conditionality on rule of law, and that the Article 7 procedure against Hungary should be dropped in return for a budget deal.
There are obviously lots of competing demands in the #eubudget process – but these are the two that clarify the problem. In both cases a member state is trying to push its own view of the world on others, with the budget process as a tool.
Why does this matter? Because the #NextGenerationEU COVID recovery fund means the EU will be borrowing as a Union, and the proposals on how the money gets paid back may mean more EU-level taxes. That’s what’s been called the “Hamiltonian moment” for EU finances.
(It isn’t quite, because Hamilton took on the existing debts of the states, this is just creating new common debt, but you can see how one might gradually lead to another).
However, Rutte and Orban show that common financing won’t work if the politics of EU finance stay stuck in “what I pay and what I get” mode. Rutte is quite right that the Dutch public deserve democratic oversight of the money they are spending
but quite wrong that this oversight should pass through him. It should go through the Parliament and the executive at EU level – particularly if they are also raising the money to pay for it.
This isn’t just a EU issue, it’s about accountability and efficiency. If the EU institutions have power to raise funds, but national governments get the blame, it’s an invitation to wasteful spending on boondoggles and pet projects.
Similarly, if Orban or other autocratic governments can hold budgetary processes hostage for their antidemocratic crusades, illiberal cronyism will run rampant.
“Treaty Change” is the longest four letter word in Brussels, but it’s time for a serious conversation about how democracy and accountability need to go alongside new debt raising and tax raising powers. (end)
Originally posted as a thread of 11 tweets on Twitter on 17 July 2020. View the original thread.