Why does Italy like the idea of federation so much, but not Britain?

The European Parliament in Strasbourg IN AN interview on July 26th with the Financial Times, Italy’s finance minister, Pier Carlo Padoan, said his country supports a decisive move towards European "political union". The euro crisis and the recent bitter negotiations over a rescue programme for Greece have prompted many such calls for more European integration, often employing the same phrase, "political union"; in other quarters, the crisis has led to furious resistance to the idea of "political union". All of this raises the question: when Europeans refer to "political union", what do they mean? Isn’t the European Union already a political union? Isn’t that rather the point of the whole project?

Not exactly. Some of the EU’s founders—and even that early advocate of European confederation, Winston Churchill—wanted to create a United States of Europe, with a central federal government. But the series of treaties that have brought the EU into being over the past six decades have left it with a hybrid structure: in many ways it remains an international organisation, in which the constituent states are the main decision-makers; in others it resembles a federal system. Euro-enthusiasts hope that, over time, the commitment to “ever-closer union” written into the EU's founding treaty will bring less United Nations and more United States.

Euro-enthusiasts see the existing EU structures as the embryo of a federal state. The European Commission, with a commissioner from each member state and a bureaucracy of 20,000 people, is the would-be executive branch. The European Parliament is the lower house, and the Council of Ministers (composed of ministers from each member-state government) is the future senate. The European Court of Justice can already over-rule national courts. Jean-Claude Juncker, the president of the commission, was indirectly elected by the European Parliament in an attempt to elevate him as a sort of prime minister.



But in reality, most of the power resides with member-states. So alongside Mr Juncker there is another “president”: Donald Tusk, the president of the European Council, which consists of the member-states' leaders. European legislation is proposed by the commission, but has to be approved by both the parliament and the Council of Ministers. The most important decisions, such as whether to bail out Greece or share asylum-seekers, are taken collectively by national leaders at the European Council. In this sense, the EU is less United States and more United Nations.

What about all the money the EU spends? And the regulations it writes?

The EU spends a lot. In 2015 its budget amounts to €141 billion ($155 billion). But this is the equivalent of only about 1% of European GDP, compared with the 40-50% of GDP spent by most national governments. The largest single planned expenditure over the next five years, 38% of the total, is for agriculture subsidies. Almost all of the EU’s spending on infrastructure and other projects is disbursed as grants to national governments. The biggest-ticket items for most governments, social benefits like unemployment insurance and health care, are still in the hands of the member-states.

The EU’s greatest integrated power lies in its regulatory authority over the single market. But when European regulators deploy such authority, citizens and politicians across Europe often grumble about the tyranny of unelected bureaucrats in Brussels. The creation of the euro, now encompassing 19 members, was the most ambitious project.

The European Court of Justice (ECJ) and the European Central Bank (ECB), responsible for the euro zone's monetary policy, are also integrated, independent institutions. But as non-democratic bodies, they cannot help redress what many feel is the EU's greatest weakness, its “democratic deficit”.

But doesn’t the EU have its own parliament?

Yes, but the European Parliament’s members (MEPs) are elected on a national basis, as members of national political parties. Within the European Parliament, these parties’ MEPs then align into loose “groups”: the German Christian Democrats, the French Republicans, Italy's Forza italia and the Dutch Christian Democrats are all members of the centre-right “European People's Party” (EPP) group. But these groups tend to lack clear programmes of their own, and may fail to reflect the way that their underlying national politics work. For example, Germany’s Christian Democratic chancellor, Angela Merkel, and the Netherlands’ Liberal prime minister, Mark Rutte, have been close allies throughout the euro crisis. But in the European Parliament, Mrs Merkel’s Christian Democrats are grouped in the EPP with the Dutch Christian Democrats, who sharply oppose Mr Rutte’s Liberals back home.

The parliament has gained increasing power, especially since 2009. But polls show that most European voters do not know who their MEPs are, or understand how the parliament or the EU in general work. You might say that while the EU is to some extent politically integrated, the integrated parts (such as the European Commission and the ECB) are not very political, and the political parts (such as the European Council and the parliament) are not very integrated.

So what would European "political union" entail?

The call for more political integration stems mainly from the demand to make the monetary union function more efficiently. One idea would be to issue joint European debt instruments, or "Eurobonds". Another frequent suggestion is to create a euro-zone budget to include the kinds of infrastructure projects and social benefits that are now reserved for the member states. Letting the EU spend on these would both show citizens how they benefit from Europe and force them into a unified political conversation. As Mr Padoan puts it, “to have a full-fledged economic and monetary union, you need a fiscal union and you need a fiscal policy.” He suggests a common unemployment-insurance programme.

A report in late June (issued by Mr Juncker, Mr Tusk, and the presidents of the ECB, the European Parliament and the Eurogroup of euro-zone finance ministers) recommended establishing an EU-wide bank deposit insurance system and a common European treasury. A working group is reportedly exploring new proposals for direct EU taxation to bankroll the expanded budget. If the European Parliament were debating unemployment benefit levels rather than regulatory arcana, the enthusiasts argue, European citizens would start to pay more attention, and might resist the temptation to opt for protest parties.

Critics argue that there is no European demos or sense of common political destiny, so European-level democracy cannot work. Nonetheless, shared economic risks, from Eurobonds or from a common European budget, demand more political accountability. Mr Hollande and Mr Padoan have backed setting up a new euro-zone parliament.

But you just said European citizens don’t even know who their MEPs are. Why would setting up yet another parliament create more democratic legitimacy?

Good question. We suggest you ask Mr Padoan.