Europe’s institutional dilemma

In the last chap­ter of his 1983 essay on The Cru­sades as seen by the Arabs, Amin Maalouf, the French-Lebanese au­thor, pro­vided a beau­ti­fully suc­cinct il­lus­tra­tion of in­sti­tu­tions’ eco­nomic role. He quoted me­dieval trav­ellers ex­plain­ing how the cru­saders, de­spite their bar­barous ways, had es­tab­lished a sys­tem of checks and bal­ances against their rulers’ whims and so the Mus­lim farm­ers in their lands, pro­tected as they were from the ar­bi­trari­ness that af­flicted those under the rule of neigh­bour­ing sul­tans, had more in­cen­tives to pro­duce and thrive. Maalouf thus showed, long be­fore it be­came fash­ion­able among econ­o­mists, how in­sti­tu­tional qual­ity leads to pros­per­ity whereas despo­tism un­der­mines it.

The low-qual­ity in­sti­tu­tions of some mem­ber coun­tries have al­ways been known to pose a lethal threat to the EU – hence the ex­act­ing ac­ces­sion re­quire­ments re­gard­ing de­mo­c­ra­tic cre­den­tials and sound eco­nomic man­age­ment im­posed on new mem­bers, as well as the em­pha­sis placed on the in­de­pen­dence of the Union’s core in­sti­tu­tions. Un­for­tu­nately, these con­trols have proven in­suf­fi­cient. The Eu­ro­zone cri­sis is a case in point: the down­turn was gen­er­ally worse for all coun­tries in the Eu­ro­pean pe­riph­ery but, while some (e.g. Ire­land and Fin­land) swal­lowed the bit­ter pills as pre­scribed and came out with fly­ing colours, oth­ers (no­tably those un­flat­ter­ingly known as PIGS i.e. Por­tu­gal, Italy, Greece and Spain) dragged their feet and now ex­pe­ri­ence a frag­ile re­cov­ery that largely de­pends on the ECB’s free credit hand­outs. Mean­while, the Sta­bil­ity & Growth Pact has been wa­tered down so many times that no mem­ber coun­try is today in full com­pli­ance (nor would it need to be, given the ECB’s ultra-ex­pan­sive mon­e­tary pol­icy), the com­mon refugee pol­icy has be­come a sad joke, cor­rup­tion in South­ern and East­ern Eu­rope re­mains as ram­pant as ever, and de­mo­c­ra­tic guar­an­tees are in­creas­ingly flouted in Hun­gary, Poland and, most egre­giously, Spain, where bru­tal­ity by riot po­lice, show tri­als and po­lit­i­cally-dri­ven sen­tences have be­come com­mon­place.

When EU rules are bent, they risk los­ing their shape for­ever as non­com­pli­ance spreads across mem­ber coun­tries. Hence, Spain’s re­pres­sion against Cata­lan in­de­pen­den­tists pulls Eu­ro­pean in­sti­tu­tions into a cru­cial bat­tle they must fight and win. The issue hits the Union at its core be­cause it chal­lenges cit­i­zens’ fun­da­men­tal rights, and these, today as in the cru­saders’ days, are key to long-term pros­per­ity. For bet­ter or worse, there­fore, when the Eu­ro­pean Court of Jus­tice up­held the par­lia­men­tary im­mu­nity as a Eu­ro­pean MP of Oriol Jun­queras, one of the Cata­lan lead­ers un­fairly jailed in Spain (and thus also im­plic­itly that of Car­les Puigde­mont and Toni Comín, both ex­iled Cata­lan lead­ers and also Eu­ro­pean MPs), a bat­tle­field was cho­sen. Sadly, given the prece­dents, it is still un­clear whether, and how, EU in­sti­tu­tions will en­force this (and also other pos­si­ble fu­ture rul­ings) while Span­ish au­thor­i­ties refuse to com­ply and even step up re­pres­sion.

Whether the EU wins, loses or chooses not to fight at all, the con­se­quences will mark the EU’s fu­ture for decades to come – par­tic­u­larly as the EU has al­ready lost too many bat­tles of this na­ture with­out a fight. That Boris John­son’s elec­tion vic­tory in De­cem­ber 2019, which sealed Britain’s course to­wards Brexit, led the British Pound to ex­pe­ri­ence one of its most re­mark­able hikes since WWII should make every­one won­der what the EU may be doing wrong for the mar­kets so boldly to en­dorse Great Britain’s sep­a­ra­tion.