Laszlo Bruszt: The EU confederal regime weakens vulnerable member states

In this interview Laszlo Bruszt, Co-Director of the CEU Democracy Institute and Editor-in-Chief of RevDem, explains the inspiration behind the CEU Democracy Institute and RevDem, how East-West and North-South divisions define Europe, and why the EU confederal regime weakens vulnerable member states.

Michal Matlak: Today we have a great pleasure to host or, more accurately to be hosted by, the Co-Director of the CEU Democracy Institute and Editor-in-Chief of the Review of Democracy, Professor Laszlo Bruszt*. I would like to start our conversation with a question about RevDem. Where did this idea come from?

Laszlo Bruszt: The Democracy Institute is a very special place because it’s not just a pure research institute, a sort of an ivory tower of research, but it’s a frontline organization. It’s based in one of the two Central European countries, which are most exposed to anti-democratic tendencies, and it’s our role and our duty to be part of the global dialogue on issues of de-democratization and re-democratization.

The idea behind RevDem is that while we do research, we should also use the opportunities given by new technologies and enter a global dialogue.

You were involved in various editorial projects already in the 80s and in the 90s. Could you tell us something about these projects and about the differences between these projects and its continuation, RevDem?

In the 1980s, we didn’t have this kind of lively samizdat culture that you had in Poland, but the Hungarian democratic opposition also had its periodicals. We created with some friends a semi-legal journal called Beardance (Medvetanc). It played a similar role to RevDem, in the smaller Hungarian setting, serving as a platform for debates on the social and economic issues in Hungary. Besides providing a platform for scholarly dialogue, it tried to create a bridge between the Hungarian emigrees, who left the country in 1956, and various groups within the country who were critical of the regime, from economic reformers to sociologists and philosophers. After the regime change, these journals ceased to exist, but there were similar initiatives in Hungary and one of them was also based at the CEU. This was the East European Constitutional Review edited by Stephen Holmes and actually, when we were first thinking about RevDem, we took some of the ideas from it.

The East European Constitutional Review was published in the US, right?

It was a joint initiative of the University of Chicago and the CEU. So, when I was acting Rector in the mid-90s, I was also involved in the linking of the East European Constitutional Review to CEU.

It was a journal that was primarily concerned with the political and economic transformation of Eastern Europe.

That was a broad platform. Its geographic focus was the post-communist world in Eurasia. It was interested in the transformation of the legal and the constitutional sphere, namely how the Rule of Law and institutions of liberal democracy were created in these countries or not. How that worked or failed in various post-communist countries. The Review offered a high-quality analysis, but also book reviews and debates. We have all these genres at RevDem – the East European Constitutional Review was among the inspirations. That was still before the digital era, so the East European Constitutional Review couldn’t have the kind of live online debates which RevDem now has.

One of the intellectual tensions within RevDem I’m struggling with is the tension between our Central European location and our interest in global affairs. Do you have a vision how to connect both?

We are 7 months old. So, it’s still a very early phase but one of the reasons we have the cross-regional dialogue section is that CEU, since the beginning was very much interested in global affairs and the use of cross-regional dialogue for better understanding the specificity of our own region. The first Rector of CEU was Alfred Stepan whose field was comparative political sciences with the focus on Latin America and East Central Europe. Numerous CEU researchers already in the 90s wrote books that compared the different experiences in the different world regions. Before coming to CEU, I taught democratization at the Kellogg Institute at Notre Dame University where Guillermo O’Donnell (one of the founding fathers of the field of comparative democratization) was my boss. When we wrote a book with David Stark on post-socialist pathways, we often used Latin American comparative material. Democracy is luckily a global phenomenon, so that debate should be global. Our editors and assistant editors come from four continents including Latin America and Asia – that’s how the dialogue on democracy should be carried out.

RevDem was created at the CEU Democracy Institute, which is in itself a very young institution. What’s the idea behind it?

The idea comes from the period when Lex CEU was passed in Hungary and it became clear that we cannot teach anymore here.

We thought that it’s very important to keep part of the original mission and the spirit of CEU in Budapest and it was obvious that it needs to deal with democracy.

We had several ideas in mind. In the first draft, the institute was called the Altiero Spinelli Institute of Transnational and National Democracy, but then we decided with Zsolt Enyedi, at that time a prorector of CEU who embraced the idea, that we should create an institution with a broader focus. It slowly became clear that it will be a platform of doing research in a frontline environment on issues of democratization. Not in the spirit of the traditional political science of democracy or study of democracy, but something that establishes dialogue among different disciplines. It was amazing to discover how rich the resources we at CEU have are. We are working with medievalists, experts in network sciences, gender studies, environmental studies, besides just political scientists or sociologists.

One goal was to have this kind of dialogue between disciplines, the other one was to provide a platform for others who are not from CEU and come from other countries and regions.

One of your academic interests is the relationship between core and peripheries in Europe, in other words, the East-West and North-South divisions. How are they defining Europe?

The European Union is an integration regime that brings together economies and societies at very different levels of development and that results in tensions – I look at them mostly from the perspective of the economic governance of the EU. What we do with several colleagues of mine is to explore these tensions from the perspective of comparative federalism, the field of studying shared sovereignty regimes. Integration can have negative consequences for the less developed member states, but there are techniques and strategies to manage these tensions.

The North-South and the East-West tensions are, so to say, variations of the same topic, that is of tensions within the integration regimes, in which you have to apply exactly the same rules across the board in all countries, but the effects of these uniform rules and policies in different places are very different.

For the South, this primary problem is that it has less room for maneuver: the EU economic regime imposes on them limitations of what they can do with their economies, how far they can go with experimentation within the framework of democratic politics. The limitations imposed on the Eastern countries are smaller – these countries are in better economic conditions and they can manage it much better. We are just finishing a paper for a special issue that compares the East-South tensions, and our key idea is that populists and Eurosceptics are again very strong in the East, in Hungary and Poland primarily, because they can afford it. The problem of the South is that even Salvinis, the left- or right-wing populists realized that they have no room for much Euroscepticism, that they have to live with the EU economic regime in order not to cause a total collapse of their economies.

The South has less room because they are members of the Eurozone or because their economy is structured in a way that is has not given them room to maneuver?

Both. The Monetary Union imposes much stricter intervention on the economic life and after 2008 it forced on them uniform economic and monetary policies that gave them very little room.

The problem for the Southern periphery is that any kind of political and economic alternative to the “market conforming democracy” imposed by the EU would have been even worse. That is the reason why the Greek, Portuguese, Spanish and other populists got moderated: they realized that the alternative to playing by the rules dictated by the technocratic management of the Monetary Union is even worse.

In Poland or Hungary the economic room is bigger. These countries get much more from being part of the single market. They are outside the Monetary Union and because of the way their economies are integrated to the European production chains, their room to maneuver is much larger. They can both resist and experiment in economics and politics. Even more: It’s not just that the room to maneuver is much bigger, but it’s exploration via unorthodox policies is actually rewarding in domestic politics.

The cohesion funds were designed as a tool to diminish the differences between the peripheries and the center. How have these funds worked in the Eastern and Southern peripheries? What are the similarities and differences between the two peripheries?

The similarities are more important. The EU spent, in some of these countries, more than the Marshall Fund in the whole of Western Europe. Poland and Greece for example received much more than the whole of Western Europe in the 1940s.

The problem is what economists call “moral hazard”. If you transfer money from the EU bureaucracy to these governments, it actually might decrease the incentives of the governments to care about development. They might have actually very strong incentives to use this money on strengthening their political basis for shorter-term political purposes instead of caring about development.

If you can get for free 3 or 4% of your GDP from outside, why would you care about increasing the economic basis of your democracy? You can use it for other purposes. It’s a very dangerous phenomenon and it’s a strong deviation from the original idea of the Delors Commission which created these policies.

The idea of Delors was that the EU should compensate the poorer countries for opening up their markets because the weaker economies lose (or gain much less than the most developed ones) on such a liberalization. Am I right?

There are two readings. One reading is that the cohesion funds are a side payment for opening up the markets. The other, the more benign reading of the Delors Commission, is that this was a third road idea, characteristic for the 1980s. That is, they knew that there are countries and regions which benefited much less from the economic opening, or they might even be exposed to new types of vulnerabilities. It was the third way idea of the 1980s: to increase the market power of these countries and economic players within these countries, so to say, to give them the capacity to benefit from the extended market. We know now that the empowering effect of these cohesion funds is actually very weak.

Since the extension of European markets and then the Monetary Union, there were several other European policies that aimed at managing the disparities, decreasing the inequalities between economies. Unfortunately, most of them either don’t work or strengthen the strongest economies. If you look at, for example, the Covid crisis management: after lengthy negotiations, the EU distributed around 670 billion Euros to alleviate the problems caused by the crisis in the 27 countries, but it also relaxed immediately the internal rules of the Monetary Union and the ones related to the state aid, which benefited primarily those countries who have resources. While the 27 countries could spend around 700 billion Euros, Germany distributed more than 1 trillion in state aid.

We have in Europe a situation of a confederal system of decision making in which only the states are represented in Brussels, but actually the common interest of the European Union is not represented.

The competition policies, state aid regulation, or the system of investment banks in Europe, these are all parts of reproducing or even increasing divisions in Europe.

You are saying that the confederal system is increasing these discrepancies. Do you think that there is a way of a more federal system that would go in the other direction? Can we think of a possible institutional translation of this federal idea of diminishing?

Now you see why we wanted initially to name our institute the Altiero Spinelli Institute. The confederal regime which tried to defend the idea of state sovereignty is not good for running a very complex system that is based on shared sovereignty. It distributes the costs and benefits of integration unevenly. It fragments the single market, reproduces pre-existing cross-territorial divisions, hinders the coming about of continent-wide developmental alliances by allowing richer member states to provide disproportionally bigger opportunities to their economic actors and, as the management of the post-2008 crisis has shown, it allows for imposing policies on the weaker Member States that limits their sovereignty in economic matters.

From the perspective of a system that is based on shared sovereignty, it is very important to have mechanisms that guarantee that all countries benefit from integration and that there are mechanisms to decrease the danger of outcomes that could lead to disintegration. The first step in that direction could be to give representation also to the common interests of the Europeans, as a counterweight to the already existing representation of the separate interests of the Member States, an idea that was included in the program of the new German governing coalition.

Several other academics discussed federal solutions before, from Jürgen Habermas to Simon Hix, from Tanja Börzel to Claus Offe. There are lots of people who deal with comparative federalism, and they show that a confederal system is one of the major hindrances to manage the challenges of integration, to making it a positive sum game. In the US federal system, the member states have much bigger room for economic regulation within the framework of the US single market, and the range of federal level market correcting policies is way larger. You can get win-win solutions. Canada, the US, or Switzerland demonstrated that there are several federal systems which have the techniques of managing these kinds of problems. We should learn from them.

The transcript has been slightly modified

In collaboration with Hannah Vos

*Laszlo Bruszt is co-director of the CEU Democracy Institute, he is also a professor of sociology at the CEU. During the regime change in 1989, he served as the national secretary of the newly formed independent Trade Unions and has represented them at the roundtable negotiations. He started to teach at CEU in 1992, one year after its creation and has served as acting rector and president in 1996 and 1997. Between 2004 and 2016, he was a Professor at the European University Institute in Florence. His publications focus on issues of regime change and economic transformation. His more recent studies deal with the politics of economic integration of Eastern and Southern Peripheries of Europe.

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