Ted Malloch: Remaking Europe

Guest post by Ted Malloch author of Common Sense Business

The most viable alternative that respects both sovereignty and cooperation is ripe for the moment: Europe should reform by returning to the original Treaty of Rome.

Going back to a model of confederation that was laudable decades ago remains so today. Uniting on essential matters only, such as mutual defense and a customs area would leave enough sovereignty to its various member states.

What would such complete reform of Europe entail?

Taking a step back in order to move ahead is a well-worn common sense strategy.

The European Union would do well to accept such an approach at this critical time of reflection. The thinning of the original pact of rights among an expanded number of member states can only subtract from the mission at hand.

We have witnessed euroscepticism spread and political parties arise that reject a political Union.

Even so, only the most radical propose to exit membership altogether. That is of course a democratic option, as Brexit has demonstrated.

It would be wise to remake the Union into a more feasible and pragmatic state to maintain the confederation of member states at this juncture. To this end, it would also be wise to listen closely to Brussels’ critics.

How best to do this is a legitimate question.

In business strategy we talk about SWOT analysis, competitive advantage by creating and sustaining superior performance around cost leadership, differentiation and focus.

In such models the five forces that shape industry are:
1. Competitive rivalry;
2. Bargaining power of suppliers;
3. Bargaining power of customers;
4. Threat of new entrants; and,
5. Threat of substitute products or services.11

We can adjust this analytic framework and ascertain if the European Union is competitive, sustainable, and adds value, and where it might need to adjust or modify its strategy and tactics.

Reform in the EU is not a new phenomenon.

From the very beginning there were debates about the extent and nature of cooperation, about criteria for membership (long since elasticated to serve political aims) and more recently about expansion, finance and institutionalization.

The European Commission itself outlined five scenarios for its own future in a 2017 white paper. The five varying scenarios are in the estimate of objective observers not very objective at all. They included: 1. Carry on; 2. Nothing but the single market; 3. Those who want to do more; 4. Doing less more efficiently; and, 5. Doing much more together.

The paper was intended to shape debate and influence the 27 member states remaining in the EU after Britain’s departure.

Somber in tone the white paper admits a crisis.

Reformists should take heart: the first step to recovery is to admit there is a problem.

The white paper also lists those problems as: Brexit, migration, and the euro. It is however not a neutral document and it makes its own preferences well known—a federalized more political Eurozone with stricter controls over national budgets and the creation of centralized EU bodies and duties.

It noticeably did not detail any scenario, which either saw the demise of the European project or defined it in more minimalist-skeptical terms.

When it comes to cost, by any measure, the EU is expensive and the member states are chafing at the exorbitant fees and the large bureaucracy and duplicative systems and meeting places that have come to define Brussels-Strasbourg.

With the UK departure this will leave an even bigger hole in future EU budgets – a fact unacknowledged by the proposed 2019-2026 budget, which papers over the absence of a British contribution (the second largest of the EU-28) by simply demanding more money from the other 27.

No conservative should remain passive at such a nonchalant disregard for national voices in the supranational purse.

The differentiation of what the EU does is complicated and bureaucratic.

A major criticism is that the regulatory apparatus is cumbersome, costly, and ineffectual. In that sense, the focus of the EU has over time and especially since the Treaty of Rome, become more diffuse and less focused.

European conservatives must strive to make it less so. It is often said the answer to every question in Brussels is simply: ‘More Europe.‘
This leads to frustration on the part of many member states, dissatisfaction among citizens and a sense that the European project is sick, if not terminally ill.

Looking at it through the framework of the ‘five factors’ shaping European supranational institutions, it is clear there is little competition – if only because truly international institutions remain paralyzed by an inability to resolve the very problems Brussels purports to paper over.

It alone has a monopoly on its single market. Other organizations overlap with its competencies only slightly and by design of concerted diplomatic efforts by European Union members’ states in forums that include the entire planet.

Some bodies remain smaller, regional in membership or nationally defined. The serious question the EU must resolve goes back to the principle of subsidiarity.

Is Brussels taking on too much that could be better handled at a national or local level? The Conservative response is an unflinching, yes. Increasingly, there appears to be an argument in this direction on a host of policies and decision-making.

The suppliers to the EU have little to no bargaining power – sucked into the maelstrom that is European regulation, most countries relent rather than negotiate. EU budgets and bureaucracy are thick and difficult to penetrate. A more competitive system would relent from enforcing European imperatives in favor of freedom for its partners.

The power of customers, in this case, European citizens, have been grossly undervalued.

Both in market and political decision-making, the European consumer/voter is unparalleled in decision-making power.

The notion that Brussels must impose values merits ridicule – as if Europeans could not vote with their wallets against what they despise. Past referenda have been undone – acts of unforgiving lack of faith in the European.

Until recently, little direct pressure by citizens on bodies was evidenced on the bodies considered distanced from their populations. Brussels, seen as elitist, undemocratic and removed from real life, has had a reality check from the most informed voter in the world. The unwavering, unelected Commission has only stonewalled parliamentary elections all over Europe. Conservatives must change this.

While other international organizations strive for recognition, from the OECD to UNECE, none purports by definition to be supranational in nature. 13Their unresolved question remains – what to do with third countries that can never be a part of Europe – and where the line is to be drawn.

With the fourth industrial revolution underway and technological advances on every front, a centralized, ossified EU will not be able to keep pace with developments. Europe will respond either too late or not at all. The EU cannot do everything and seems to respond slowly and inadequately to crises.

The EU now accounts for a smaller portion of world trade by the year – the power of the global economy and trade has shifted away from Europe and towards Asia and with a resurgent US. As Brexiteers celebrate, 95% of future global economic growth will come from outside the EU27.

The Conservative approach to the European project must not just assimilate this trend, it must actively work to counteract the truth in the charge: that Europe is a stagnant market.

Any conservative reform in the European Union needs to be based on a pragmatic agenda, economic and political facts, and citizen preferences, not on ideology, idealism or a fantasy dictated by Brussels elites.

What does this realistic reform look like and what might it entail?

Major reform based on Euro realism, decentralization of powers, more openness and transparency, a focus on supporting wealth creation, conservative principles, and economic growth is the place to begin.

But make no mistake there are serious obstacles to significant change in the EU.

Right off, and most importantly, there is no consensus. The entrenched forces are reluctant to reform and few people agree on the correct direction of change.

Some argue for more powers to the European Parliament. Others want more powers for the EU Council. Still others want to disband the Council altogether. Some want greater authority devolved back to national parliaments. There is an on-going debate about the use of EU referendums. Many would like to see the direct election of the EU president.

What is apparent is that no one agrees.

It is also obvious that the structures of the EU make meaningful change and deep reform very difficult, if not impossible, to engineer.

A Europe of sovereign nations, based on conservative common sense cooperation and grounded in policies of subsidiarity, is necessary and possible. But it will take political courage and institutional change to bring it to fruition – not to mention electoral success. Europeans need to decide by use of the ballot box.

This is the mission: to bring a viable alternative to the European electorate in the 2019 parliamentary elections across the continent.

Ted Malloch is an American author, consultant, and television producer. He was a professor at the Henley Business School of the University of Reading, England. He is Chairman and Chief Executive Officer of the family firm Global Fiduciary Governance and served as Chairman and CEO of The Roosevelt Group.

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