Oh no, the Lisbon Treaty again

On 12 June 2008 the Irish voted no to the Lisbon Treaty and threw the European Union into yet another political crisis. Already the next day my co-blogger Philip Lane discussed some reasons for the no vote. The big question mark hanging over the Irish EU referendum is whether the voters have actually decided on the referendum question or whether they have taken the opportunity to voice their protest over various domestic issues.

The trouble is that citizens in different EU countries have so often voted no to new EU initiatives, when they have been given a change. This was precisely what the French and Dutch voters did when they voted no to EU Constitution in 2005, which again was the reason why the Constitution was repacked as the Lisbon Treaty, and why all countries, except Ireland, decided to skip national referendums and instead ratify the Treaty in their parliaments.

The Lisbon Treaty has not much to do with economic policy-making per se. The Treaty is essentially meant to streamline decision-making within the EU and to give the Union more clout internationally. Among the many changes to that end are the introduction of an EU president (“President of the European Council”) and foreign minister (“High Representative of the Union for Foreign Affairs and Security Policy”). The number of commissioners is slated to be cut and, as a consequence, countries will only send commissioners to Brussels on a rotating basis.

I have never liked the idea of an EU president, and I am afraid that the public engagement in EU matters will fade further when each country ceases sending a commissioner to Brussels at all times. The president will be elected for a two-and-a-half year term by the members of the European Council, i.e. by the prime ministers of all EU countries. The president will not have to be approved by the European Parliament.

The introduction of a strong president with limited accountability to directly elected politicians is not in line with West European traditions. Western Europe has a tradition for parliamentarian systems, where the head of government is elected or approved by parliament. Political science research shows that parliamentarian systems only stay democratic if subjected to elaborate systems of checks-and-balances. Looking for a minute at my own part of Europe, it is noticeable that basically all the countries that introduced parliamentarian rule after the break-down of communism are now democratic, whereas most countries that introduced presidential systems are undemocratic.

There are, however, also economic arguments for being worried about the organisational setup of the Lisbon Treaty. In a recent paper, Antonio Fatas and Ilian Mihov show that countries with presidential systems and with limited checks-and-balances exhibit particularly frequent and/or large government spending shocks. The more erratic fiscal policies subsequently lead to more macroeconomic instability – and to lower growth. In other words, a strong and unconstrained leader in front may reduce political conflicts and simplify decision-making, but it is the wrong decisions that are being made! My conjecture is that this result applies not only to fiscal policy.

I would hope that the Irish no to the Lisbon Treaty would be used to rethink the organisational changes of the EU and its decision-making bodies. A flatter and more inclusive EU would not only enhance democracy in Europe, but possibly also economic performance.

Reference: Fatas & Mihov (2003): “The Case for Restricting Fiscal Policy Discretion”, Quarterly Journal of Economics, vol. 118, no. 4, pp. 1419-1447.

3 Responses to "Oh no, the Lisbon Treaty again"

  1. Mary Stokes   June 19, 2008 at 1:52 am

    You bring up some interesting points. After reading your post, a quote from former US Speaker of the House Tip O’ Neil came to mind: ‘All politics is local’. This seems to apply to Europe too, as domestic issues seemed to trump more abstract EU institutional issues, as you point out, in the Irish vote. As for your point about parliamentarianism being generally preferable to presidentialism, this essentially opens a can of worms in terms of the almost two decade-long debate on this subject begun by Linz, who shared your distaste of presidential systems. Nevertheless, a whole pile of academics wrote papers countering Linz and showed parliamentary systems could be as weak and illegitimate as presidential ones and that a host of other factors need to be taken into account. Take the interwar Weimar Republic, for example.And as to the economic argument that presidential systems lead to more erratic fiscal policies, I would point out that there are plenty of countries with parliamentary systems that have regularly poor fiscal management. There are frequent stories about governing coalitions in countries with proportional representation, parliamentarian systems having to hand out goodies (i.e. increase government spending) in order to keep their coalitions together.Does your argument that presidentialism is bad for the EU then extend to it being bad for the rest of the world?

  2. Karsten Staehr   June 20, 2008 at 5:46 am

    To Mary Stokes: Thanks for bringing up these important points. Indeed, there are no perfect democracies and different systems have advantages and disadvantages, both along the political and economic dimension. The paper by Fatas and Mihov, which I refer to, employs a large cross-section of countries and the authors show that the main results are independent of the whether one considers high-income countries or low-income countries.What concerns me is that the EU Constitution / the Lisbon Treaty initiates a process towards a semi-presidential system in order to give the EU more clout internationally, but without giving much thought to the longer-term consequences. I see the main problem of the EU as a lack of popular participation as epitomised by the many no votes in referendums and the low turn outs in elections to the European parliament. I am not sure that a strong man or woman in front of the EU is a cure to this fundamental problem. In fact, I would be very interested in ideas on how the popular and democratic legitimacy of the EU could be raised.

  3. Mary Stokes   June 20, 2008 at 5:37 pm

    Thanks for your response! I do see your point. You’re saying the EU would be that much stronger as an institution if it had greater popular support and that the lack thereof suggests disenchantment with the EU and hence the ‘no’ vote in Ireland. I generally agree with you, but I don’t think the presidency is the crux of the issue. Rather, the major problem is a feeling of lack of representation, which makes the cut in the # of commissioners particularly concerning. On a related issue, I found a paper by Eriksen and Fossum of the University of Oslo, who suggest one reason for lack of public engagement in EU matters may relate to the weakly developed intermediary bodies such as true EU-wide parties, which can serve to mobilize and convey public sentiments into the EU system.