Pearls and Irritations

A group of progressive Europeans led by the economist and author Thomas Piketty has drawn up a bold new blueprint for a fairer Europe to address the division, disenchantment, inequality and rightwing populism sweeping the continent.

The plan, crafted by more than 50 economists, historians and former politicians from half a dozen countries, includes huge levies on multinationals, millionaires and carbon emissions to generate funds to tackle the most urgent issues of the day, including poverty, migration, climate change and the EU’s so-called democratic deficit.

Published as the British parliament is set for a climactic Brexit vote, the “manifesto for the democratisation of Europe” says EU institutions are stuck in “a technocratic impasse” that benefits the rich.

“Following Brexit and the election of anti-European governments at the head of several member countries, it is no longer possible to continue as before,” says the document.

“We cannot simply wait for the next departures or further dismantling without making fundamental changes to present-day Europe.”

The move underlines the gulf between the preoccupations of the UK and those across the Channel. While the UK is consumed by its tortuous EU exit process, Europe’s pro-EU political forces are concerned with avoiding losses to anti-European populists in next May’s European elections.

The left-leaning authors criticise movements dedicated to “hunting down foreigners and refugees”, but also parties espousing what they call “hardcore liberalism and the spread of competition to all”.

 Signatories include Pablo Iglesias, the leader of Spain’s anti-austerity Podemos party, Italy’s former prime minister Massimo D’Alema and the Belgian political scientist and socialist mayor of Charleroi, Paul Magnette. Michael Jacobs, who advised the UK’s former prime minister Gordon Brown, is also a signatory.

At the heart of the manifesto is a call for a European assembly that would have a budget of up to €800bn a year, financed by taxing corporate profits more effectively, as well as income and wealth.

The EU has been accused of failing to address the manifest unfairness of huge multinationals such as Apple, Google and Amazon channeling profits through member states where taxes are lowest.

The budget would be worth 4% of the EU’s GDP – four times the current budget. Funds would be raised from four sources: an extra 15% levy on corporate profits, tax increases on individuals earning more than €100,000, a wealth tax on personal fortunes above €1m, and a tax on carbon emissions.

Half of the proceeds would be returned to member state governments. A quarter would go to research, innovation and education. A fund to better manage migration and a fund to make agriculture and industry greener would also benefit.

Insisting they do not want a “transfer payments Europe”, countries would see only a 0.1% difference in what they collect and get in return – a big difference from proposals for a eurozone budget that many economists see as a long-term necessity for the 19-country bloc.

The money would be overseen by a new European assembly consisting mostly of national politicians and some MEPs. While the assembly would be in touch with EU institutions, it would sit outside EU treaties and have the final word on spending.

The public are invited to comment and improve the proposals, which the authors said were “not perfect, but … do have the merit of existing”.

Guntram Wolff, director of the Bruegel thinktank, who did not sign the letter, questioned the need for a continent-wide project. “If the cross-border transfer element is only 0.1%, why do the whole thing at EU level?” he asked.

“Anything we would do at the euro-area level would mean doing something less at the national level and that is politically why it doesn’t happen,” he said, pointing to failed attempts to create pan-European national insurance schemes.

Richard Corbett, Labour’s leader in the European parliament, said the manifesto appeared to reinvent the wheel. “Instead of using the already existing EU budget and the already existing directly-elected Parliament, and building upon them, it suggests that the member states of the EU would all agree to set up a brand new hybrid Parliament and give it a budget in which it alone would decide on spending four times the size of the existing budget.

They’d do better to lend their support to proposals that can actually be achieved.”

There have been a series of failed and faltering attempts at voluntary collaboration on economic policy. After the French president, Emmanuel Macron, came to power on a mandate of “a Europe that protects”, Paris and Berlin renewed their vows on Franco-German cooperation, opening talks on corporate tax harmonisation as well as a common position on an EU digital tax.

With Angela Merkel hamstrung by coalition difficulties and in the twilight of her time as German chancellor, the agenda has stuttered, causing frustration in Paris.

The limits of voluntary cooperation were also exposed in Europe’s search for a financial transaction tax. In 2014 a coalition of 10 willing EU member states embarked on plans for the so-called Robin Hood tax on shares and derivatives, but five years later that agreement remains elusive and some countries have dropped out.

Meanwhile, European diplomats bemoan the lack of leadership from capitals that hampers the EU reform agenda, from strengthening the eurozone to overhauling asylum policy.

Wolff said the eurozone debate had been “basically stuck” for at least five years. “It remains very, very small steps if at all. We will see only a change when the next big crisis happens; then decisions will be taken. But in the absence of a serious crisis, there is no leadership across Europe to agree.”

* The manifesto is published on Monday by the Guardian, Le Monde, Der Spiegel, La Vanguardia, Gazeta Wyborcza, La Repubblica and Politiken

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