Juncker’s Euro Army: A Weapon of Mass Distraction?

Commission President Juncker has advocated a European army in an interview with German newspaper Die Welt:

“"Eine solche Armee würde uns helfen, eine gemeinsame Außen- und Sicherheitspolitik zu gestalten und gemeinsam die Verantwortung Europas in der Welt wahrzunehmen", sagte Juncker. Mit einer eigenen Armee, so der Luxemburger weiter, könnte Europa glaubwürdig auf eine Bedrohung des Friedens in einem Mitgliedsland oder in einem EU-Nachbarland reagieren. So könne man Russland den Eindruck vermitteln, "dass wir es ernst meinen mit der Verteidigung der Werte der Europäischen Union".”

“”Such an army would help us to shape a common foreign and security policy and to take the common responsibility of Europe in the world seriously,” said Juncker.  With its own army, the Luxembourger continued, Europe could credibly react to threats to the peace in Member States or in the European Neighbourhood.  That way Russia would be given the impression “that we take the defence of EU values seriously.”” [Own Translation]

Given that the interview was mostly focused on the Eurozone crisis and economic questions, it was strange of Juncker to raise the issue of a European army, which isn’t exactly on anyone’s agenda at the moment. Member States already co-operate on defence to some degree through the European Battlegroups, and co-operate on common missions such as Operation Atalanta, which tackles piracy off the coast of Somalia.

Integrating defence is obviously a sensitive issue, and there is a lot that can be done in co-ordinating research, earmarking troops for joint battlegroups for peacekeeping missions, and a better division of labour. However, a Euro Army is a mad fantasy without a greater level of democratic coherence in the EU and a better consensus on how to act on foreign policy. I daresay everyone realises this, and Juncker knows this, so the EU army remark comes across as a silly distraction, even if it’s one that can effectively generate headlines.

Security without Liberty – the UK joins the Schengen Information System

A Fistful of Euros has discovered that the UK will join the new Schengen Information System II, which is designed to allow border control, customs and police authorities to share information. Under SIS II, information on suspects, potential illegal immigrants, missing persons and stolen property can be shared. Biometric data, such as fingerprints and photographs, and European Arrest Warrants can also be shared.

The fact that the UK is joining in on this aspect of European integration is not going to be trumpeted from the rooftops of Westminster in the current Europe-bashing climate. It does point to the fact that cross-border co-operation on crime and law enforcement is necessary in a globalised world – and in a common space like the EU in particular. However, UK citizens aren’t exactly getting the full benefits of the Schengen system. Passport controls are still an issue, and Britain loses out on potential tourism from countries such as Japan and China because they are not part of the common visa.

All the extra security and co-operation that the Schengen zone entails is meant not only to create better security for the sake of more security – rather, it is to help create more liberties and freedoms for citizens. Not for the first time, it seems that security is preferred over liberty in the UK, at least when it comes to “Europe”.

Taking out the Troika

The vilified Troika – the group consisting of the Commission, ECB and IMF that oversees the implementation of the bailout programmes – should be replaced, Juncker said in his election mission statement. The full quote was (PDF, page 8):

“In the future, we should be able to replace the ‘troika’ with a more democratically legitimate and more accountable structure, based around European institutions with enhanced parliamentary control both at European and at national level.”

The revival of this statement probably points to how Juncker feels the Greek negotiations should go. Debt forgiveness is too controversial and divisive (and Greece appears to be less fixed on it now), but a change in debt terms and a replacement of the Troika system would be a big win for Syriza that might be sellable to the rest of the Eurozone. Merkel has poured cold water on the idea of replacing the Troika, and Spain has also reiterated that solutions are in the gift of the Eurozone states acting together, not the EU institutions. Still, it could be an element to Eurozone negotiations if they successfully manage to attain a Europe-wide, as well as Greek, focus.

So what would replacing the Troika mean?

Replacing the Troika raises a lot of questions. First, the IMF is part of the Troika – if it’s replaced by the EU institutions in some form, then what happens to IMF support (and Member State contributions to it)? Would it be replaced by a Eurozone Monetary Fund which would in turn be part of the IMF system?

A bigger question is what greater democratic accountability would look like. Simply replacing the Troika with, say, a joint European Parliament and national parliament committee to review implementation or to hold the relevant EU official/commissioner to account would be problematic. If the budget and debt rules are already set and the allowances for public investment already built in, then what is it that MEPs and MPs would bring to the process? Decisions about implementation should remain with the national parliament, which would leave the EP little to do if the overall direction is already part of the rules.

Such democratic scrutiny would be helpful, however. By analysing the situation and flagging issues, it would make the process more responsive to the country’s needs. The European Parliament, which has voted through funds for crisis-hit countries for specific purposes, could better target such money as a result. But the money that the EU provides directly would be small. There would still be a sense of bilaterial contracts between creditor and debtor states and the sensitivity over implementing rules, loaning money and negotiations would remain. In this sense the German position – that the Troika is an instrument to help the Eurogroup assess programmes and decide how to proceed – has a point.

And this leaves out the power and influence of the ECB, which it gains from being the only European actor with the financial firepower and authority to act decisively – and ask for its conditions to be observed.

Replacing the Troika is not just about getting rid of some hate figures; it goes to the heart of how the Eurozone is run, including the unanswered question of fiscal union.

Commission Work Programme 2015

The Commission’s Work Programme for the year is just 5 pages (opposed to the usual 30 or so pages), due to the efforts of Commissioner Frans Timmermans to whittle down the amount of legislation to be and to focus on political priorities. The Programme covers 11 areas:

-          A New Boost for Jobs, Growth and Investment;

-          A Connected Digital Single Market;

-          A Resilient Energy Union with a Forward-Looking Climate Change Policy;

-          A Deeper and Fairer Internal Market with a Strengthened Industrial Base;

-          A Deeper and Fairer Economic and Monetary Union;

-          Trade: A Reasonable and Balanced Free Trade Agreement with the U.S.;

-          An Area of Justice and Fundamental Rights Based on Mutual Trust;

-          Towards a New Policy on Migration;

-          A Stronger Global Actor; and

-          A Union of Democratic Change.

These wordy headings consist of most of the document. While aiming to show the legislative and political priorities of the Commission, it empties the document of a lot of its traditional content (no anti-alien measures here). The priorities are pretty much what you would expect from a Union beset by crises (in fact and in political confidence) over immigration, energy security and the Eurozone. Interestingly, the internal market proposals include a capital markets union and a labour mobility package that references “abuse” of social security systems, which should please London.

The most interesting priorities from an institutional perspective are an inter-institutional agreement on law making (it appears that Timmermans is concerned over how many proposals are “pre-agreed” in triologue – and wants to have more transparency and debate over proposals) and a mandatory Transparency Register (very much a live issue).

Will Juncker’s Investment Fund really create 1.3 million jobs?

The Commissioner for Jobs and Growth, Jyrki Katainen, has claimed that the €315 billion European Strategic Investments Fund will create 1.3 million jobs. Katainen said the projects the Fund invests in in will be in line with EU policies – highlighting developing technologies and the EU’s digital networks programme.

While this all sounds very good, some in business and the media are skeptical that the €315 billion will even be raised. The main concern is that the public seed money for the Fund, which will take the first hit before any private investors, is simply too small to be leveraged by private investment to the magic €315 billion goal. Initial public investment of €21 billion is supposed to achieve a multiplier effect of 15 times to reach the target (PDF). Indeed, it’s hard to not to feel that the Commission’s chart, showing where the money is supposed to come from, is plagued by asterisks and fine print.

The truth is that there is very little money available for the Fund from the public sector in the first place. Germany refuses to put more money into it and the EU’s budget, itself being cut, cannot afford much more. This may be all that’s possible. How the funds will be targeted is still a big issue - despite Katainen's assurances that the decisions will be "non-political", there was a scheme for Member States to "buy" influence with the Fund if they contributed more to it. The Visegrad countries of Poland, Hungary, Slovakia and the Czech Republic are planning to lobby hard for a sizable share of the investment. Will this skew the focus of the Fund away from potentially more economically valuable or job-rich investments?

The Fund is recognised by all as being far from a magic bullet for the continent’s economic woes, but it could provide a much needed, if minor, economic boost. 1.3 million jobs is almost certainly over-optimistic, but until we know what the projects are, it’s hard to gauge how effective it will be - can it reach anywhere near that number?