Saturday, 7 July 2012

Banking Union - unintended consequences and path dependency

I kept silent for 6 months or so.... Was I too busy? Or my personal computer went down which forced me to use the older, crappy one. Anyway, my previsions for steps to federation during last December proved overly optimistic and a bit too early. But the unfolding of events looks like there is a new great bargain approaching.
I can bet by December 2012 we shall start a real next step in the european integration. Will it be called Banking Union (sounds like Ban-Ki-Moon...... :), or Fiscal integrated management..... or The Union (do not mistake with The Facebook :))..... the name can be sorted later. But the financial and economic crisis is posing an existential threat to the Union as we know it and it will require a substantial readjustement of the whole structure. When I wrote about the last Convention in 2005 I did not think we shall have another one that quickly. But from what Andrew Duff says and I believe THIS TIME he might be right..... we might face a new one in the beginning of 2015. What is the logic?
1. European Council will come up at the end with Treaty proposals that will substantially alter the distribution of power and competences in the European Union. Depending on the British position we shall have a new Maastrich type treaty (for all 28 Member states).
2. The economic governance reforms will be created in a piecemeal approach. They will not be perfect, rather short-term fixes like EFSF, ESM..... Ok, 6-pack was not short term... but what I try to say is that we shall have many pieces of a structure but the new architecture shall be missing.
3. The European Parliament elections will be tough for the traditional ruling blocks of Socialist and European Peoples Party. The new power structure and new entrants will show the disenchantement of the population with the behind the scenes tractations at European summits.
4. A legitimation effort shall be needed, and maybe this will even be the claim of main parties that a Convention looks  at the new picture and tries to bring clarity to the new status quo.

So let's see and wait if this time my prognosis will be proved right. I expect a bumpy second part of 2012 but the framework presented by Van Rompuy for the June summit seems like a vision document (but without the dates).....

Summing up, It is a very good time to be passionately interested in European politics. Watch the new union unfold. As to discussions if this should be a federation, confederation, union or community..... I vote for 'EUROPA'. We do not need to abide by what is there in the political science. We create an entity that will defy the existing categorisations. New ones will need to depict the new reality. Enjoy the show!