Friday 19 July 2019

Dan O'Brien: 'What does this 'new EU' mean for Ireland?'

Europe is no closer to connecting with disengaged voters and its incoming leaders face trying times, writes Dan O'Brien

Ursula von der Leyen. Photo: REUTERS/Benoit Tessier
Ursula von der Leyen. Photo: REUTERS/Benoit Tessier

Mention the words 'European Union' and many people's eyes glaze over, or roll heavenwards. One reason for this is that EU politics tends to have less human drama than national politics. For all the criticism of the Punch and Judy carry-on in Leinster House, Westminster and other centres of power, it engages people more readily than the technocratic detail of Brussels.

Last week saw plenty of media coverage of the goings-on in the EU's capital, in large part because people rather than policies were involved. The bloc's top jobs were being doled out. There were spats among prime ministers and presidents in the process. There were winners and losers. All this meant there was plenty that was newsworthy.

But apart from the personalities, what do the appointments and the way in which they were made mean for Ireland and Europe?

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The fact that last week's summit of EU leaders went on for days says something significant. A club of 27 countries (Britain is formally still a member, but has checked out already for all intents and purposes) with growing divisions and resentments among members has become increasingly unwieldy. Deciding anything in the EU is becoming harder.

If that does not bode well for the bloc's efficiency, another development last week boded ill for hopes about its legitimacy in the eyes of voters. For the two decades and more that this writer has been involved in European affairs, there has been a recognition that "the EU needs to be brought closer to the citizen". In order to do something about that, EU leaders agreed informally earlier in the current decade to give the top job in the European Commission to the nominee of the party which won the most votes in the European Parliament elections.

The idea was that voters across the continent would see identifiable figures slug it out on the hustings, thereby connecting them to the candidates.

The whole process fell well short of a direct, US-style presidential election, but it was a step in that direction. And not a bad one at that - in theory, at least.

Five years ago the centre-right European People's Party came first in the parliament elections. Their anointed one was Jean-Claude Junker, the then prime minister of Luxembourg. He was duly crowned president of the Commission for a five-year term (with mixed results, as it happens).

Many EU leaders felt this way of choosing the eurocrat-in-chief curbed their influence and wanted the link between the parliament elections and the appointment of the Commission president broken. Despite this, the 'lead candidates' process went ahead again for last May's election. It proved to be a charade. The conservatives again came out ahead of the other groupings in the May election, but their candidate - German non-entity, Manfred Weber - was so unloved even by his own party that he was ditched in short order. So much for "bringing the EU closer to the citizen".

With those legitimacy and efficiency observations out of the way, what of the people appointed to the two most powerful jobs: the heads of the Commission and the European Central Bank?

Instead of Weber, another German conservative, Ursula von der Leyen, got the most powerful job in the EU system. Berlin's sitting defence minister will move back to Brussels where she grew up (her father worked in the Commission) to take over from Junker on November 1 - provided, of course, the European Parliament does not block her, as it has the power to do.

One aspect of von der Leyen's appointment that got attention in Ireland were her past calls for the EU to do more when it comes to defence and military matters. There is growing support for this across the continent, based on the powerful logic that in the era of Vladimir Putin and Donald Trump Europe needs to be able to stand up for itself and can longer outsource its security to a country on the other side of the Atlantic.

But von der Leyen's appointment to the Commission will have little if any influence over when and how that happens. The powers of the Commission and its president are often overstated. That is particularly the case in areas where the executive-cum-bureaucracy has not been granted a role by the member governments.

While there is a strong pro-integrationist mindset in the Commission, and it has rarely been known to turn down offers of new powers, it has little influence over the governments when it comes persuading them to give it more influence or input in any given area.

As such, no matter what von der Leyen believes about European defence, it will make no difference to how defence cooperation plays out. Those in Ireland who fetishise neutrality have no more reason to be worried this weekend than last.

If von der Leyen is little known in Ireland, the same cannot be said for the woman who got the second most important role doled out last week. Christine Lagarde led one leg of the Troika which bailed out Ireland for most of the time the three-year rescue package was in place.

As managing director of the International Monetary Fund in Washington DC since 2011, and the holder of ministerial office in France before that, she has long had a high profile.

But her appointment as president of the European Central Bank in Frankfurt has not been greeted with universal acclaim and has raised concerns among some in the world of central banking.

Before considering those concerns and Lagarde's skillset, consider first that world of central banking. Among its practitioners there is something of a cult. Central bankers view themselves as impartial economic technocrats and they can hardly help looking at politicians as grubby deal-makers and irresponsible populists who would play fast and loose with inflation and economic stability in the hope of a handful of votes if given half a chance.

The appointment of Lagarde has raised concerns not only because she comes from a political background, particularly following after the appointment of a Spanish politician as vice president last year, but also because she has no experience of central banking and is a lawyer, not an economist.

All this matters. That Lagarde is not an expert in the field will put her at a disadvantage when dealing with the other 24 people who form the bank's governing council (made up of the 19 heads of the national central banks which use the euro and the six people, including the president, who form the Frankfurt-based executive council).

One potential clash could be with the head of the German central bank, Jens Weidmann. He wanted the job Lagarde has secured. Over the past year or so, he had tempered his opposition to the ECB's emergency money-printing (designed to stimulate the economy when, with interest rates already as low as they could go, there was no alternative way of doing so). The suspicion exists that his less hostile stance will be reversed now that his ambitions have been thwarted.

But whatever concerns exists about Lagarde's experience and professional qualification, she has proven herself to be a calm and effective operator at the highest levels. These traits might end up being more important than technical expertise.

As the euro could well face an existential crisis (a much overused term, but appropriate here) over the next eight years, crisis-management skills may be more important than detailed knowledge of the minutiae of monetary economics.

In the event of Italy going Greek or some other event triggering a return of the euro crisis, Lagarde's strengths could outweigh her weaknesses.

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