Yesterday, German foreign minister Heiko Maas urged the European Union to abolish national vetoes to agree foreign policy measures, claiming the EU should not be “held hostage” by this. This follows Hungary blocking an EU statement criticising China’s new security law in Hong Kong, refusing to ratify a new EU trade and development accord with African, Caribbean and Pacific countries, and declining to support an EU call for a ceasefire in violence between Israel and the Palestinians. With regards to the latter, Dalibor Rohac described Hungary on this website as “a broken clock [that] gets some things right on occasion”, adding:
“Those who wish to hear the EU to speak with one voice are correct that the principle of unanimity on foreign and security matters makes it impossible to arrive at clear-cut decisions in real time. Yet, they ought to be careful about what they wish for. Sometimes no voice at all, or a plethora of contradictory voices, might be preferable to a voice that would have been as blatantly wrong as in the present case if the dominant European narrative had its way.”
This nails it. Furthermore, foreign policy is also a sensitive matter that closely relates to the heart of national democracy, and where the EU’s 27 democracies may legitimately differ.
For example, Poland and Italy take different approaches to Russia. Is Poland wrong to be more wary, and is Italy right to be more accommodative? Absolutely not. Italy does not have the historical trauma of decades of Soviet occupation, and can be forgiven to see this more from the perspective of trade and business, whereas nobody should blame Poland for being very careful here.
Surely, there are many instances where common ground can be found, and then joint EU diplomatic action is a good idea, but when for whatever reason member states do not feel comfortable, they should be allowed to diverge and it is simply a terrible idea for big member states like Germany to suggest outvoting those unwilling to go with the majority view. That’s certainly the case, given the poor track record of the EU’s foreign service.
The statements by Heiko Maas are yet more evidence that the EU may be losing the plot after Brexit. Clearly, now that the adults have left the room, all kinds of aggressive new EU initiatives are being undertaken that are bound to backfire and ultimately also threaten popular support for the European Union.
Scrapping national vetoes on taxation
Angela Merkel’s calls for Treaty change to scrap national vetoes on taxation are another example of that. Just like foreign policy, taxation is a contentious issue that requires solid democratic consent – as in “no taxation without representation”. To outvote a minority of EU democracies on the question of how high taxes should be – especially if combined with ever greater EU transfers – is bound to backfire somehow.
The Irish government – the staunchest defender of tax sovereignty in the EU – is already wavering, at least on whether Treaty change should be an option, having lost the United Kingdom as a powerful ally. However, bullying a small democracy into giving up its freedom to set taxes will not serve the EU’s image well in Ireland.
The crusade against tax rulings
The same can be said for the crusade by European Competition Commissioner Vestager against tax rulings Ireland and the Benelux have agreed with big companies. Even if the ECJ has been mostly rejecting her claims that this would amount to unfair state aid, it is evident for all to see that the “tax lady” is mostly inspired by increasing the EU’s grip on national taxation – certainly when she does not go out of her way to fight blatant examples of state aid.
Timmermans
The EU’s changed approach after Brexit is also visible when looking at Frans Timmermans, the second man in charge at the European Commission. Back in 2014, in the run-up to the UK referendum, he was responsible for “better regulation”, in an attempt to address concerns of EU overregulation. Now, the Dutchman is European Commissioner for “Climate Action”, responsible to implement the European Green Deal, a plethora of new regulations, restrictions and top-down EU control of business activity, which may cost many jobs. From better regulation to ever more regulation: Timmermans embodies how the EU is changing.
New joint borrowing and spending schemes, despite deep-seated corruption
Perhaps the most visible evidence of how the EU has taken the wrong turn after Brexit is the agreement last year of the EU’s new joint borrowing and spending schemes– from the 800 billion “recovery fund” over the 100 billion euro “Support to mitigate Unemployment Risks in an Emergency” (SURE) fund to the 17.5 billion euro “green transition fund”. Never mind the complete lack of reform to the EU’s ordinary 1100 billion euro multiannual budget. Opposition by the so-called “frugal four” – or was it five – amounted to nothing. The leader of the group, Dutch PM Mark Rutte, simply waved the white flag. Clearly, if the United Kingdom would still have been a member state, it is very unlikely that any of this would have been approved.
Apart from a close vote in Finland, mainstream parties across the EU rubberstamped the recovery fund in national parliaments without much of a fuzz. This all happened while Bulgaria, a hotbed of corruption, will become the biggest recipient of recovery fund cash. It can now expect not less than 35% of its GDP in various kinds of EU transfers. This was decided as Bulgarian were bravely protesting against corruption in their country – which is often tied to EU funds – leading to the incumbent government suffering a big election defeat. Last week, just when the EU happily announced it was going to start borrowing the cash for the recovery fund, the United States cracked down on Bulgarian cronyism by sanctioning three Bulgarians for corruption in Bulgaria, as well as their networks encompassing 64 entities. A real “embarrassment for the EU”, as also Politico points out.
Declining foreign trade success
Even on foreign trade, an area where the EU has been securing some success during the last two decades, things are going South. The recently agreed EU trade deal with Mercosur is facing opposition even in trade-friendly nations like Ireland and the Netherlands, but of course also in France. Earlier this year, the European Commission actively pushed for vaccine protectionism, despite having warned for months against it, while suddenly advocating the possible need for a hard border in Ireland, a mistake that was thankfully swiftly corrected. Perhaps the UK managing to join the pacific trade deal or CPTPP, which removes 95% of tariffs between Japan, Canada, Australia, Vietnam, New Zealand, Singapore, Mexico, Peru, Brunei, Chile and Malaysia will serve as a wake-up call in Brussels.
Because of its obsession to impose its regulatory reach onto its trade partners, trade ties with the EU’s immediate neighbours are strained. Swiss-EU negotiations over a new framework agreement just collapsed over the EU’s attempts to put its own top court as the arbiter of the agreement, while EU-UK tensions are increasing over the EU’s rigid insistence that the UK should simply take over the EU’s agricultural standards – something that would allow intra-UK checks between Great Britain and Northern Ireland to be minimal – instead of recognizing UK standards as equivalent, perhaps with some kind of annual review mechanism. Despite the fact that only 1% of containers arriving to the EU’s big entry ports Rotterdam and Antwerp are being checked, the EU continues to present trade via Northern Ireland, where trade flows are minimal, as some dangerous backdoor into its single market.
A hampered single market
Also when it comes to opening up trade within the EU, things are not rosy, and not just because there hasn’t been any progress on further opening up the services market, despite the massive opportunities this offers in today’s ever more services-oriented economy. Belgian MEP Geert Bourgeois, a former Prime Minister of Flanders, which accounts for 80% of Belgian exports, just complained:
“In big member states, retailers are increasingly only selling domestic products, forcing .. companies to move production there, something which comes down to protectionism. This is destroying our crown jewel, the internal market”.
An increasingly hostile approach to innovation
Last but not least, there is of course the EU’s increasingly hostile approach to innovation. This despite, as The Economist puts it, “of the 19 firms created in the past 25 years that are now worth over $100bn, nine are in America and eight in China. Europe has none.”
Even if the EU still supports vaccine patents – despite EU Commission’s President von der Leyen ambiguous stance – it is rolling out all kinds of measures to go after “big tech”. There’s again Ms. Vestager using her powers to do what she can, and there are the EU’s proposed Digital Services Act (DSA) and Digital Markets Act (DMA Both are aimed at regulating digital platforms, and include tricky restrictions telling tech platforms how to behave, something which may result in upload filters and restrict free speech and innovation. German MEP Axel Voss, a member of Angela Merkel’s ruling party, now warns that the EU’s GDPR rules – once hailed by the EU’s mainstream politicians – are “seriously hampering the EU’s capacity to develop new technology and desperately needed digital solutions, for instance in the realm of e-governance and health.” A majority in the European Parliament however rejected his view.
The loss of the United Kingdom as a member state should not lead the EU to abandon its principles which are fundamentally based on pursuing open trade and scrapping trade barriers. As Friedrich August von Hayek said: “Whoever betrays his principles, will go to hell”.
