From the outside looking in, it can seem impossible to fully understand the European Union. Here is a plain-English overview of how things work in the power bloc—which makes clear who is at the helm.
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“The whole is greater than the sum of its individual parts.” This phrase can be summarized in the term gestalt (pronounced ge-shtalt), which is borrowed from the German word for “figure, form or structure.”
Gestalt describes the European Union, which takes 28 disparate nations—some with deep problems—and creates an entity with the highest gross domestic product (GDP) on the globe. The World Bank lists it as having the largest economy on Earth, totaling around $16.7 trillion.
Think of it. Spain has 26 percent unemployment. Greece’s debt is 157 percent of its GDP. Germany is often maligned for being thrifty to a fault.
Geographically, the biggest single nation is Sweden, coming in at just 211,209 square miles—slightly larger than California. Together, all countries combined boast nearly two million square miles of territory. Apart, the most populous country is Germany at 81 million. Together, the EU is 500 million strong. If it were a nation, it would have the third-largest population on the globe.
Apart, each nation has its weaknesses. Together, they are strong. Of course, the EU has its problems, one of which is crippling bureaucracy. While the bloc carries tremendous importance and political weight, the complexities of its government make it difficult to understand.
Look at its governing bodies. There is the European Commission, the European Council, the Council of Ministers, the European Parliament, and so on. Keeping straight what each does can seem like an exercise in futility.
Perhaps most confusing is who is at the helm of Europe. While Brussels, Belgium, is the de facto EU capital, the news media and world leaders seem to look most often to Berlin, Germany.
Who is really calling the shots in the world’s largest economy?
For the full answer, one must take Europe apart and examine its individual parts. Once this is done, something becomes clear: a void in leadership is not an option.
With government offices headquartered in Brussels, the power bloc is a mixture of very old nations bound by a very young agreement. While it officially took on the name European Union nearly 21 years ago under the 1993 Maastricht Treaty, it first began shortly after World War II.
In 1951, the European Coal and Steel Community (ECSC) was established between the nations of Belgium, West Germany, Italy, Luxembourg, France and the Netherlands. These founding nations, known as the Inner Six, wanted to create a common market for coal and steel across their borders.
Choosing coal and steel was practical but also symbolic. Both are essential to warfare so integrating them created a deterrent to future military conflict. The ECSC was a success as the coal and steel trade for the Inner Six more than doubled within five years.
Economics soon emerged as a driving force for the alliance and led to an expanded agreement, called the European Economic Community in 1957. By 1986, less than 30 years later, six more nations joined the original six. This was followed by the Single European Act (SEA) of 1987, regarded as the most elaborate reform in the history of the agreement and what most led to today’s EU.
SEA summarized a plan for a true common market for members. It expanded trade beyond natural resources, calling for the removal of virtually all barriers to the movement of goods, services, capital and people between member nations.
Trade between nations also became more efficient. Citizens were then able to freely travel between member states, which led to expanded employment and educational opportunities. Businesses had larger customer bases and could save money through relaxed border controls. (Prior to open borders, drivers transporting goods spent nearly one third of their time idling at checkpoints waiting to clear customs.)
Even governments benefited by procuring goods and services from firms beyond their borders. This led to more competition and better service. Competition also led to lower food prices since farmers could freely trade with citizens and firms in other nations.
The last major step for true integration was the implementation of a common currency. This, along with the official name European Union, came with the passage of the Maastricht Treaty. By 2002, the euro became the official currency for much of Europe. The Lisbon Treaty, enacted in 2009, represents the most recent significant update to the EU and essentially completed the system seen today.
To implement the EU vision, a structure had to be developed. Numerous treaties, acts and agreements over the years led to its current form of governance. The bureaucratic structure is multifaceted (some would say convoluted), yet is a reflection of what some of the brightest political minds have to offer.
To ensure full member representation and proper oversight, the EU consists of seven separate institutions—most of them with headquarters or offices in Brussels. The following are the institutions most often discussed in the news.
European Council: This body was originally created in 1974 to provide a forum for the heads of state and/or governments of the member nations to convene. After the Lisbon Treaty, it is now viewed as the top political authority in the union. It can be described as a “collective head of state” for the power bloc.
The council is made up of the 28 individual heads of government (e.g., Chancellor of Germany, President of France, Prime Minister of Italy, etc.). Joining them is the president of the European Council—a position created with the Lisbon Treaty—and the president of the European Commission—a separate institution.
Members of the council appoint their own president and nominate the commission president. The council meets four times per year, twice every six months, and focuses on big-picture union matters. Mr. Herman Van Rompuy currently serves as council president and is in the second of two maximum terms.
European Commission: This governing body works along with the council to form what can be loosely compared to the executive branch of the U.S. government. If the council can, as a group, be seen as the American president, the commission, as a group, can be seen as cabinet members.
The commission is mainly in charge of daily EU affairs and running the government. It consists of 28 members known as commissioners. They are in charge of areas of the government such as energy, transportation and food safety, to name a few.
Each commissioner is appointed by his home nation, however, he represents the entire union. Members are assigned a position by the president of the commission. Mr. Jose Manuel Barroso currently serves as commission president.
The Lisbon Treaty allows for combining the roles of council president and commission president, which would result in a position of enormous political power. But this has not happened thus far.
Another notable position on the commission is vice-president, which is combined with the post of representative for foreign affairs and security policy, similar to the U.S. secretary of state. This office is seen as the foreign representative for the EU to outside nations. This post is currently held by Ms. Catherine Ashton.
European Parliament: This body of 751 members or seats represents the citizens in each member nation. Parliament forms half of the legislative arm of the EU with a role similar to the U.S. House of Representatives, though there are key differences. While members are directly selected by the citizens of member nations, the proportion of representation for each nation is determined by treaty negotiations and not purely by population.
Parliament members also formally elect the commission president after they are nominated by the European Council. Parliament members sit primarily according to political party instead of national affiliation.
Council of the European Union: Also known as the Council of Ministers, this group operates as the other half of the EU legislature.
The implementation of the Lisbon Treaty strengthened the power of the parliament, thereby somewhat diminishing the Council of Ministers’ influence. The treaty made it so that the head of the Council of Ministers is no longer allowed to lead the European Council. Despite these changes, the Council of Ministers still remains a powerful entity. It has 28 national ministers and maintains the most control over the intergovernmental functions of the EU. The chair of the Council of Ministers rotates between member nations every six months.
The remaining three bodies of the total seven EU institutions consist of the Court of Justice of the European Union—representing the judicial branch of the EU; the European Central Bank—tasked with implementing monetary policy for the power bloc; and the European Court of Auditors—in charge of auditing EU accounts to ensure legality. These all combine to make up the composite structure of the European Union.
Along with these institutions are scores of other offices, bureaus, agencies and sub-agencies that make up the inner workings of the immense EU power bloc. And this does not speak to all of the red tape within each individual member nation.
So many layers of government make efficient and effective politics and leadership nearly impossible.
One overarching reason for the EU’s dense governing structure is that it straddles the fence between two forms of government—confederation and federation. The difference between the two is relatively simple.
A confederation has its sovereignty or control held by its member states. In a confederation, the federal government is subject or accountable to member states. Its central authority is purposely weak, allowing members to maintain autonomy.
A confederate form of government was pursued by southern states during the U.S. Civil War. They sought to separate from the Union in search of their own individual forms of government—with the federal government having limited power.
A federation, alternatively, maintains central authority at the federal level. The federal government is generally strong with member states being subordinate and therefore accountable to the top. The current U.S. form of government is a classic example of a federation, as the states are ultimately accountable to federal law in most cases.
For Europe, the question of Brussels or Berlin is actually a metaphor for this struggle between two governments. On the one hand, the EU operates partly as a confederation—represented best by Brussels, the current—and neutral—host of the bloc’s main government. The country of Belgium also happens to have a confederate form of government, thereby strengthening the analogy.
Berlin, however, most represents the EU’s characteristics as a federation. Though “just another member” of the union, it has found itself suddenly thrust into the leadership spotlight. And Germany happens to have a federal form of government.
Fully committing to one of these forms of government has proven difficult. EU member states want the freedom of a confederation while enjoying the benefits of a federation.
Their identity as separate, sovereign nations is cherished and hard to abandon.
A report from the European Council on Foreign Relations described this reluctance to let go of this “Brussels” ideology: “It is true that a visitor from Chile or China arriving at Place Schuman in Brussels may feel like they are visiting the capital of the ‘United States of Europe.’ Yet after a day or two they will realise that the EU is composed of 27 states [as of February 2013] that come to Brussels to bargain over their respective national interests with only occasional regard for the common European purpose.”
That said, the rewards of federalist unity are equally enticing. Open borders, a single economic market, and a common currency all bring great gains yet require a powerful overarching authority. The EU’s current structure does not allow for this official leader. The power that does exist is spread among 28 woefully bureaucratic and competing nations.
But nature abhors a vacuum. The EU is too big and too important not to be directed by a strong leader.
Because of its success operating in the EU environment, Berlin is looked to as a central authority. The fact that Germany is not in charge of the EU in any formal way has not stopped others from looking to the nation for leadership.
An example of this is how the United States has interacted with the EU as a whole and Berlin in particular.
The EUobserver quoted Charles King Mallory IV, the head of American think tank Aspen Institute Germany as saying that the U.S. is “‘pragmatic’ enough to see where power resides in Europe.”
He continued, “We as Americans have a problem when we negotiate with Europe—there is the [European] Council, the commission, the parliament. It is very difficult. This is not meant to be a snub to Brussels, but Germany is the economic motor of Europe…”
In the same article, Carsten Brzeski, the chief economist at ING Bank, supported this belief: “Berlin is the centre of power in Europe.”
Part of Germany’s rise to prominence can be attributed to the environment born in the world financial crisis that began in 2008.
Finances, which were once seen as the major force behind the European Union’s surge in prosperity, eventually revealed multiple chinks in its proverbial armor. Economics went from EU asset to liability in less than a decade.
One problem created by separate nations coming together was the formation of a monetary union without the simultaneous creation of an equal, and just as detailed, fiscal union.
Fiscal policies bring financial discipline. EU member states view money differently. Their individual national economies have existed on their own for centuries. These differences have not disappeared because of the introduction of the euro.
Note that only 18 of the 28 member states actually have implemented the common currency. For example, Britain and Poland use the pound and zloty, respectively. The group of nations that does use the euro are known as the eurozone.
The euro’s introduction provided financial benefits, especially to those with smaller economies. But it also temporarily covered up the poor fiscal habits of some member nations.
The effects of these habits came to the fore with the 2008 crash. As with a person with a C or D credit rating benefiting from rates reserved for those with A1 credit, fiscal discipline is what was needed most. Low borrowing costs and little to no regulations led to reckless spending. Loan terms to all member nations were nearly the same regardless of the economic strength of individual nations.
As the world financial crisis continued, certain members such as Greece tried different tactics to battle slow growth. One strategy was to sharply inflate the public payroll to employ those who could not find work in the private sector. Its goal was to boost the economy, but without sufficient tax income from the private sector, the strategy led to huge government budget deficits.
A notable reason for such behavior was the assumption that, since everyone shares one currency, the European Union as a whole would not allow the nation to fail. One cannot help but picture a free-wheeling teenager with a brand new credit card, spending uncontrollably, knowing Mom and Dad will come to the rescue.
It is keenly understood that all EU nations stand to suffer if the euro fails. And what has made this more difficult to swallow, especially for those in nations like Germany, is the fact that stronger nations could suffer by no fault of their own.
Greece, which was eventually bailed out by the union, only represented the front end of an emerging problem as other nations also began feeling the full brunt of the world financial crisis. By 2011, Ireland and Portugal received bailouts. Spain and Cyprus followed in 2012.
An additional difficulty with addressing the crisis has been that everyone has wanted to have their say (think Brussels). The delay has led to even more fiscal damage.
It is out of this debacle that Berlin has asserted itself. No longer willing to stand idly by and become a victim of the process, Germany has begun to pave the way to a stronger leadership role.
The rationale of a united Europe seems to make the most sense. The benefits of coming together appear to far outweigh reasons to remain apart. To the east is a resource-rich yet increasingly volatile Middle East, a recently resurgent Russia, and a still powerful China. These are just a few motivators for Europe to present a unified front to the world.
Europe’s leaders know this and have been striving to unite for over 60 years. Yet despite sincere efforts, they have found the path to a sound and functioning union to be littered with obstacles.
As time has passed, instead of becoming closer, member states actually seem to be growing apart.
This amalgamation of very old and unique nation states can be compared to Frankenstein’s monster. The EU is a patchwork of nations—similar to body parts being sutured together to form a disjointed creation. You can almost picture a lumbering monster trying to keep its balance. This hardly compares to a body that starts young, grows up, and maintains its original parts.
Philosopher Andre Glucksmann articulated this idea in a Der Spiegel interview titled “A Dark Vision of the Future of Europe.” The interviewer, noting Europe’s mutual cultural qualities, asked whether there is a “European spirit.” Mr. Glucksmann replied: “European nations are not alike, which is why they can’t be merged together. What unites them is not a community but a societal model…”
Later he added, “Europe is a unity in its division or a division in its unity. Whichever way you put it, though, it’s clearly not a community in terms of religion, language or morals.”
When asked about the effects of nations pursuing individual interests to the detriment of the EU, Mr. Glucksmann continued: “[This is a] grim example of cacophony because it shows that the member states are no longer willing and able to form a united front against external threats and Europe’s challenges in the globalized world…And it makes things easy for Russia under (President Vladimir) Putin. Despite all the weakness of that giant of natural resources, its capacity to cause damage remains considerable and is something its president likes to use. Recklessness and forgetfulness create the conditions for new catastrophes in both the economy and politics.”
The “Brussels” model of leadership is an extension of deep-seated cultural differences. The natural proclivity for leaders to play politics and engage in self-preservation threatens the entire alliance.
As currently configured, the vast majority of EU nations can agree on a course of action but may then be stymied by the minority of remaining partners.
No superpower can continue to be “super” operating this way.
It would be catastrophic and some would argue virtually impossible to undo the current union. The idea of reverting back to old currencies, closing borders, deporting citizens with established lives back to their home nations, and dismantling political and business alliances is not viable. A divorce is unlikely.
So, despite what has been referred to as “union fatigue,” the nations of the EU must remain committed to staying together. Inaction with the hope that everything will take care of itself is unacceptable. The current realities demand a renewed approach.
A “nation” of the EU’s size and overall global impact must be led!
Enter Berlin. Initially, Germany was apprehensive about taking the lead, especially considering its track record of being at the center of two world wars. Also, as one of the original Inner Six nations that pushed for European unity, Berlin being the strongest voice fights the original purpose of a union. An article in The Economist reported, “Germany envisions a more integrated Europe, with more national powers passed to the European level.”
Yet the same article noted a shift in thinking: “Post-war Germany’s two strongest commitments have been to democracy and European integration. It was always assumed that these ideals could be pursued in harmony. Of late, however, concern has grown that the euro crisis demands measures that bring democracy and ‘Europe’ into conflict.”
The current brand of EU democracy often runs counter to the version Germany has in mind. German citizens do not like having little say over how their funds are used to bail out struggling nations.
Because of this, the rest of the continent must often give in to a corrupted version of the Golden Rule: “He who has the most gold makes the rules.”
How have the Germans been able to prosper? As a founding member of the coalition they clearly saw the advantages of tapping into the resources of their neighbors. For them, opening their borders never equated to dropping their high standards.
Germans are an industrious people. They are known for their precision, discipline and austerity. They do not exhibit these qualities in an effort to lead—it is just who they are.
An article in the Guardian spoke to Berlin’s history with finances: “With Europe slumped in an existential crisis, looking both desperately and fearfully to Germany to supply the leadership and the money to match its clout as the EU’s central power and biggest economy, it is often forgotten that Berlin is a past master at financial bailouts. Which is why it is also weary of them.”
In further describing the German mindset and their fatigue with financial rescue packages, the article continued: “‘Germans have piggy bank genes, they save like mad…The fear of hyperinflation is what makes the idea of printing money horrific to Germans.’ It also reinforces the allergy to bailouts and the growing disenchantment with the euro.”
For the most part, Berlin has tried to resist taking control.
“Germans are very, very reluctantly dealing with the idea that they are the default leaders of Europe, that we’re the ones that everyone’s looking to for salvation,” Constanze Stelzenmuller, of the German Marshall Fund in Berlin told the Guardian.
And some appreciate this reluctance: “I think it’s very good that Germany is hesitant to have a leading role,’ said Margot Kassmann, former head of a Protestant churches’ federation. ‘The history of the last century has proven that was usually the wrong path to go down’” (ibid.).
Yet due to constant prodding from others and the fact that their financial well-being is inextricably tied into the success of the EU, Berlin has begun to take a more assertive role.
Countries desperate for help are left with little choice. The shift of power from Brussels to Berlin is well underway. It is only a matter of time before it becomes official.
Those interested in world events must keep their eyes on Europe and Germany as they will play a crucial role in global politics. The Real Truth magazine—which is politically neutral—analyzes such news about the continent through the dual lenses of the Bible and history. It brings a perspective found nowhere else on Earth.