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Verhofstadt: “The European Union needs to be deeply reformed as fast as possible”

By The Asian Banker Live

Guy Verhofstadt, former prime minister of Belgium, admits that the European Union is still a weak organisation. And in a future that heralds a “world of empires”, it is necessary for the EU to abandon the unanimity rule and move forward with federalism, which holds the key to the survival of Europe in the modern world. As the chief European Parliament coordinator in the Brexit negotiations, he considers Brexit as a failure of the EU and believes that Europeans are stronger when they work together.

Guy Verhofstadt, leader of the Alliance of Liberals and Democrats for Europe, is front and center amidst the Brexit issue and has been actively using his strong social media presence to update his followers on the most recent development in the negotiations. He has been an outspoken critic of Brexit and the consequent no-deal Brexit, wherein the United Kingdom would leave the European Union (EU) on 31 October 2019 with or without an agreement as stated by UK Prime Minister Boris Johnson.

Steeped in politics for most of his life, the 66-year-old Belgian, nevertheless, is the first to admit that the European Union is lacking in several fronts and needs severe reformation in order to be beneficial to its member states. In this exclusive interview conducted by The Asian Banker chairman Emmanuel Daniel, Verhofstadt point to the unanimity rule – which requires all EU member states to agree on every proposal presented before the Council in order to be adopted – as the Union’s weakest link. The progressive solution to this inherent weakness, he insists, is federalism.

Described as a Europhile, Verhofstadt strongly believes that minor differences between member states of the EU can be overcome to present a united Europe.

 

Emmanuel Daniel (ED): I’m very pleased to be able to speak with Guy Verhofstadt. A three time-prime minister of Belgium and then a leader in the European Parliament and the original negotiator for the Brexit phenomenon, I would say.

Guy Verhofstadt (GV): I’m coordinating, in fact, in the European Parliament, the negotiations for Brexit. But it’s not finished, as you know. We still continue because we are now waiting for the team of the new prime minister. We will see what will happen.

ED: Actually, when I think about Brexit, we know a lot about, you know, what the British have put on the table and then taken away and put on the table. What we don’t know is the coordinated view of the European Parliament of the EU. How would you describe it? You know, what’s the sentiment?

GV: I think for once, there was a coordinated view. And so what is not a given, and what is not so easy when you have 28 member states and three institutions, because that’s what we have. Twenty-seven, in fact, member states plus the three institutions, commission council and the Parliament. And there is a common vision. The common vision is that we deplore, first of all, the Brexit, because we think that we are stronger together, that Britain and the European Union are stronger when they are together in the union than with the Brexit.

Secondly, we want an orderly Brexit. An orderly Brexit means without disruption for UK and for the EU. And three, we don’t want to have Brexit that creates troubles for the single market. The single market is an enormous achievement of the European Union, and we want to keep this single market alive. And we don’t want to give in on the principles of the single market. The principles of the single market are what we call the four freedoms: the freedom of movement of goods, of services, of capital, and of people.

ED: And I would add another goal that you might want to be thinking about, which is the conditions in which Brexit even became possible in the first place.

GV: I see Brexit as a failure. The fact that Brexit is happening is a failure of the Union. It’s difficult to say, “Oh, the British are going out of the Union. Fantastic!” Absolutely not. It’s a failure of the Union.

It’s mainly the European Union is still a weak organisation. Let’s be honest. And why? Because it’s not a real union. It’s still a confederation of nation states, of 28 nation states governed, managed by the principle of unanimity. And you know unanimity is weakening an organisation because everybody has to vote before you can act. So the main description that you can give about union is that it is a union that’s always acting too little, too late. And that’s because of this institutional weakness. And this institutional weakness is in fact still the unanimity rule. So the fact that Brexit could happen is also a proof of the fact that this European Union needs to be reformed as fast as possible and very deeply reformed. For example, the abolishment of the unanimity rule, to give only one example.

 

What federalism can bring to the EU

ED: Do you have to be a liberal to believe in the European Union? You know, if you were a conservative, you would take more than you give to the Union, which is where the forces are now today.

GV: No. It’s not necessary to be a liberal, but you need to have a federal view on the future of Europe. Federalism’s important. I think that federalism is an enormous step in mankind because it’s the possibility to govern with different cultures, with different languages, with different nations, a territory on this planet.

ED: Is the World Trade Organization a form of federalism that has failed?

GV: No. World Trade Organization is not federalism. India is a federal state. United States of America is a federal state. Germany is a federal state. Canada is a federal state.

I give the example of India. Why? Because there you have 2,000 nations. You have 20 different languages that are used. And you have four religions that are practiced. So you cannot say that’s a nation. That’s a continent. It’s the biggest democracy, and at the same time, you have all these religions, languages and ethnicities that you can govern such a continent, big continent, with one organisation, with one federal organisation, that I think, is a huge step forward in mankind.

Because what federalism is doing, it’s not centralism. It’s not giving all power to the capital. It is saying, “Look, we’re going to do it together. What we can do better together, we do together. What we cannot better do together, we do it on the lowest level possible in the local communities.”

ED: So, what is in your view an achievable goal in federalism? An achievable shared goal in federalism that we should all aspire to.

GV: On the European level, for example, take defense. The way we do our military defense in Europe is a waste of money and with the lack of collective security because we are duplicating everything 28 times, for the moment. And the consequence of it, that we have the second biggest military budget worldwide in Europe.

We spent more or less 40-45% of the Americans’ on military. But we are only capable to do 10 to 15% of the military operations of the American army. I’m a lawyer, so I’m not a mathematician, but even I know that it means that we are three times less effective than the Americans. Why? Because we are not putting all this together in one European defense community. So federalism means put it in a shared European defense community. And if you do that, you will have not only the second biggest budget of the world, you will also be the second most effective one.

ED: But there you’re going closer to a unitarism.

GV: No. It’s sharing sovereignty. You know, everybody is talking about, “Ah, in the federal state, the European federal state, I will lose my sovereignty.” But that’s bullshit. Sorry that I am using that word. Why is it bullshit? Because sovereignty, what does it mean, sovereignty in the modern world if you are not capable to decide yourself?

For example, on military, when there is something happening in our neighborhood, in Syria, and there is a peace conference, well, Americans and Russians are coming together. We’re in Europe in Vienna to decide on it without any European around the table. Why? Because we are simply dividing all our efforts.

ED: So at which point does an individual European state has the right or the pleasure of going off on its own? You know, beyond China.

GV: They have a lot, in the European Union, in federalism in general, the basic principle’s subsidiarity. And subsidiarity means that everything that you can do on the local level, you do on the local level. Everything that you need to do on the state level, you do it on the provincial on the state level. And only when you have an added value on the European level, that you will do on the European level.

ED: Right. So, when you have a country like Italy, you know, unilaterally signing up to Belt and Road, for example. That makes all of the other European states quite, uncomfortable.

GV: Yes, but that’s the point. The point is that we are talking about European Union, but in fact there is not a lot of European Union. Like the budget, for example, is a small budget. It’s a budget of 1% of the European GDP. One percent of the European GDP is nothing at all. The American budget is more or less 25% of the American GDP. Even a confederation like Switzerland has a budget of 15% of its GDP. And we in Europe have 1%. So to talk about, to point a finger to the big European Union, it’s nonsense. It doesn’t make any sense because their budget is only 1%.

ED: Right. But then, you know, the perception. If you look at the Greek crisis or the Italian crisis, as a percentage of the whole European economy, it’s six percent.

GV: It’s small, certainly, when we talk about Greece. Greece was a historical debt in total of a little bit more than $329.17 billion (EUR 300 billion). But the GDP of Europe every year is $16.46 trillion (EUR 15 trillion). So when you come to China and somebody’s asking you to explain the Greek crisis, it’s impossible to explain. Because you say, yes, the historical debt is $329.17 billion (EUR 300 billion), and the annual wealth that we create in the European Union is $16.46 trillion (EUR 15 trillion). So an American, a Chinese economist would say, “What’s the problem?”

ED: Yes. So, that being the reality of the numbers when the Europeans come together, what’s the defining fear? What’s the defining perception issue that they’re dealing with?

GV: You know, nationalism has been created by Europeans, it’s nation states and nationalists more so. Not only nation states have been created. Also, nationalism has been created and it has been even nearly destroyed the European Continent, nationalism in two world wars. In 1914-1918 and in 1940-1945, the Second World War. Nationalism destroyed nearly all of Europe. And so, still in Europe, there are many people still believing that the best way to organize the modern world is a small nation state.

And we all know that the future of this world will be a world of empires and not a world of nation states. An empire like China, an empire like India, an empire like the US, like the Western Federation. And the only thing that we have to hope is that it becomes empires of the good and not empires of the bad.

But too many people still in Europe believe that the European Union cannot work because there’s a difference of languages. There is difference in culture. But it’s nonsense because federalism is just combining the strengths of every language, culture into an organisation that is absolutely key for the survival of Europe in the modern world. Who will defend our way of life? Who will defend our standards worldwide if it is not done by the Europeans? And proof of that is the fact the field in which we are the most successful, Europeans are most successful, is where we are combining our forces.

Airbus, for example. The typical example of a corporation, European corporation is successful. And without that corporation, there should be no industry airplane in Europe.

 

For the people: Setting up standards and regulations

ED: You’re covering a lot of ground, Mr. Verhofstadt. When you started your political career, you came across as a, well, you were called at one point a “mini-Thatcher.”

GV: That I was a libertarian.

ED: But we’re also talking about big business today. You know, because of technology, you know, businesses are immediately in our cross-cultural, in our cross-border. You know, they scale very quickly. Here we are looking at, you know, companies which are 500 million customers as large as Europe and so on. Have you changed in your orientation of how big governments should be or can be in order to control some of these?

GV: I think that the minimum regulation is absolutely key and necessary.

ED: Or should government be a player themselves, be platforms themselves?

GV: No! I don’t think so. I don’t think that public authorities have the good intention or even the means to start with the platform. What we need to do on the government level, certainly Europe, is to establish the standards. So a minimum of regulation. Standards, minimum regulation, for example, also protecting the privacy of people.

Because all the data we are talking about in the modern world, these data are in fact the ownership of individual people. It’s all your data, it’s all my data. And the problem today is that these data without your consent are used massively by a number of big platforms who are making huge profits with it. Nevertheless, it continues to be our data.

So, I’m very much in favor to find a way to monetise this for ordinary people. Why can’t ordinary people simply say, “Look, it’s my data. If you want to use my data, you have to pay it for me” instead of the system that we have today. And maybe that’s possible in the future with blockchain and tokenisation, with the new technologies that are emerging so that people are still responsible for their own life.

ED: Being a member of the European Parliament, now you have a federal view of your counterparties in other parts of the world. You have the Americans. You have, well, potentially, you have the British. You have China. You have potentially India, Africa. What is your sense of what you’re dealing when you deal with all of these different counterparties? Are they essentially different types of counterparties, or when you think of China, how are they fundamentally different from America? What are the issues that come up and onto the table?

GV: Well, there’s a difference. China is a big economic player, but it is not a democracy. By the other hand, the US is a big democracy, but now, going into a direction of more protectionism under the leadership of Donald Trump. The Russian Federation, to give another example, is going in a totally different direction. It’s more and more becoming a liberal type of society.

India is the biggest democracy, and at the same time, also an economic heavyweight. So what is common in all this is that we have to deal with what I call empires, and if we want to really have good agreements with them, we need to do that together, to be strong together, first of all.

And proof of that is the trade policy. I think that’s one of the most successful policies to date of the European Union. We have reached trade agreements with Canada, with Japan, with Mercosur, it’s the South America. We are now for the moment starting to negotiate trade deals with India, with Mexico, with Australia, with New Zealand. So, there we see in a very clear way that if we are a real union as Europeans, we can make good agreements if we do it together.

And that’s in my opinion, the mistake of the UK to think that they can do it separately.

 

Abolishing the Unanimity Rule

ED: In making that unified platform or unified position, you’re only as good as your weakest link. And what would you describe to be the weakest link in the European Union?

GV: By the weakest link, it is our unanimity rule, still on a number of issues because then you need also the approval of the most reluctant of your members. That’s the reason why the Americans in the 18th century, they started as a confederation in 1776 and they became in 1785 a federation. Why? To avoid unanimity rule.

And the rule in America is that you need the majority of nine and 13. Why nine and 13? Because it started like that. There were nine states who wanted to make a confederation of it, and four states were against it. And these four states had the possibility to cooperate and to accept the new rule of majority ruling or to leave. And nobody left. They continued. They became the United States of America. But in effect a federation based on majority decision-making. And that is, in my opinion, still the weakest element in the European Union. That, for example, to rescue Greece, to give that example, from the beginning of our interview, you need to have the approval of everybody. Even of the smallest political party in government in the smallest member state.

ED: Is that a desirable goal to move the European Union towards less unanimity?

GV: It’s not a desirable goal. It’s a necessary goal. If we don’t do it Europe will disappear at the end because it creates a weakness internally.

ED: And do you think it’s an achievable goal?

GV: It’s an achievable goal. For example, the new president of the commission, Mrs. von der Leyen, who has been now, elected by the European Parliament as the new head of the European Commission, said in her statement very clearly that in a progressive way, she wants to abolish unanimity rule, even in foreign affairs. And in foreign affairs, you know, it’s always difficult because every member states think that they need to continue to have their say in these matters.

ED: So just to end this interview and maybe to bring it back to where we are today, the European Parliament vowed to block Boris Johnson’s plan to ditch the Irish backstop.

GV: Yesterday, we published an official statement on the Brexit steering group in the name of the European Parliament very clearly saying that we want to stick to the withdrawal of the agreement, including the backstop for Ireland. And there is certainly room to maneuver to negotiate, but that’s merely in the political declaration that will describe the future relationship between UK and EU.

ED: How much of that is personality and how much of that is something you can get around?

GV: It is negotiations. It’s always a mixer. Politics is a mix between institutions and personalities.

ED: Thank you very much for this time with me. Excellent.


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