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An Unconventional Idea for the EU
Wall Street Journal Europe
An Unconventional Idea for the EU

By CARL-JOHAN WESTHOLM
March 26, 2002
The Convention on the Future of Europe seems to be looking at conventional solutions to Europe's problems. That could be better than nothing, not to say better than bad unconventional solutions. We could, however, end up with "more of the same," that is, a codification of recent practice.

Recent practice has been to concentrate on how to divide power, not to limit it. Classical constitutional reforms, however -- indeed, the conception of most constitutions -- have revolved around the latter. How to provide a system of checks and balances, is important, but it isn't the soul of the constitutional process. Individual freedom is gained by hacking away at state power, irrespective of how democratic its roots.

Trapped in Tension

Can the European Union, with its unique history and complex mechanism for decision-making, truly be changed by a constitutional convention? The EU and its institutions represent both national governments and individual citizens, so it is caught not only between the traditional tension between the state and the people, but also between different states and different peoples. Of course, one can say the same of nation states with powerful regions, such as Spain, Germany and the United States. But for the EU, as an "international" grouping, the whole issue is much more complicated.

Under these circumstances only by increasing the number of opt-outs is the EU assured of being able to go forward once it grows to 28 members. Those countries opting out should have the freedom to "get their money back" in those areas in which they're not happy to go along. Dissenters would therefore be able to go their own way very happily, and would not interfere with what nations X, Y or Z want to do.

But what about present, controversial policies? Some middling solution could be found. One perfect example is the Common Agricultural Policy. A minority of members, led by France, will not permit reform and will certainly not allow net payers to opt-out and withdraw their cash. If they did, Germany would abandon the process immediately and CAP would collapse.

There's a half-way house, however: if a government in a certain country does not like CAP and does not want its own farmers to be part of the system, they can always block the subsidy at the border. This is not done now because governments just reason that, since their taxpayers pay for the subsidies anyway, they might as well get something back. The alternative would seem to be a net loss.

To get around that, governments should be able to get a reduction of their contribution to the EU budget equal to the CAP subsidy that their countries were due to get. For example a member state, let's call it Freeland, should have the right to barter away EU subsidies of €1 billion to Freelandish farmers by having Freeland's fee to EU reduced by one billion euro.

Of course, for a government that wants to use not only its own taxes but also those of other nationals to subsidize their own citizens, there should be no difference. French leaders would not have to tell farmers in this election year that their dole would be cut off.

Subsidizing Other Countries

But a government that doesn't want special groups in its country becoming dependent should have the right to cut them off. Freeland thus would get back the right to become a subsidy-free zone. It would have to continue subsidizing other countries, of course. This is the logic of belonging to a super-national system.

This approach would be an improvement over the present system. First, no nation should be forced to accept a subsidy. Second, by refusing to play the game, the nations that abstained would lay bare how much they are net payers into a system with which they don't agree. Third, subsidy-prone nations might be dissuaded from the habit if their trade partners are not subsidized. It would be easier to convince farmers in, say, France, that they do not need such large subsidies if you can show that their equivalent numbers in Freeland are not on the dole. The French farmers would get fewer subsidized competitors in other countries.

In other words, this solution could start creating a virtuous cycle in the EU, for once increasing pressure to decrease subsidization.

Of course, the grand constitutional goal should be to have no subsidies at all. The reality however is that we are not there now. There are 8,000 lobbyists in Brussels; very few of them have any other way of measuring their work than whether their clients got every last euro they can take. Their work has created an unbalance between the powers of the state and individual rights -- just as their American counterparts have done in Washington. The present convention is a good place to start redressing that imbalance.