by Lisa Mittendrein and Etienne Schneider

The left and social movements have been criticising the neoliberal character of the EU for decades. As the EU moved further and further in the wrong direction, they advocated for a “different” and, above all, a “more social” EU. But with the authoritarian coup against the Greek left-wing government in 2015, this changed. A growing section of the left is now seeking a break with the euro and the EU, a so-called “left exit”. While this has certainly given momentum to the left-wing debate on Europe, it has also – regrettably – reduced it to one of “reform or withdrawal”. As leftists and movement activists, we have unnecessarily narrowed our options and left ourselves somewhat hamstrung.

In order to change the EU for the good of the many, strong progressive forces would need to act in a coordinated manner in several member states – including in the most powerful countries of Germany and France. As desirable as this might be, it is highly unlikely for the foreseeable future due to the current balance of power and the unequal development in Europe as a whole. If we don’t want to wait for a miracle, we need other options – including but not only at the level of government policy.

Under the current neoliberal EU rules and regulations, the space for political action by left-wing governments is severely limited. At the same time, for many member states, exiting is not currently a plausible option – because the majority of the population rejects it, for example, or because the economic links are too close or the consequences deemed too drastic. Yet even if a left-wing government decides against leaving in the short term, they do not need to submit completely to EU policies and rules. Instead, they can use strategic disobedience to implement a range of progressive projects.

What is strategic disobedience?

Throughout history, the left and social movements have repeatedly called for breaks with unjust laws and regulations. This option could also be pursued in our dealings with the EU. Strategic disobedience describes the strategy of remaining in the EU or the euro and, at the same time, deliberately breaking the rules that contradict left-wing policies. What might such steps might look like in practice? We will illustrate this in the next two sections using the examples of budgetary and industrial policy.

Generally, strategic disobedience can take two forms. Silent strategic disobedience is limited to non-compliance with certain EU rules. In places, this is already happening: governments are refusing or only reluctantly conforming with the European Commission’s austerity targets. Silent strategic disobedience deliberately extends the principle of non-compliance to increase the scope for emancipatory politics. The extent to which this scope is increased depends, above all, on the willingness and ability of EU institutions to crack down and impose effective sanctions. As such, silent strategic disobedience can expand our options for action, but does not explicitly call into question the ideology behind the EU rulebook.

Offensive strategic disobedience, on the other hand, provokes open conflict with the EU. One example could be that a government presents a project aimed at publicly managing the provision of energy and declares that it will break EU law in order to do so. As such, offensive strategic disobedience uses specific political projects to politicise the neoliberal principles and beliefs enshrined in EU rules. As a result, criticism of the EU that would otherwise have appeared abstract becomes tangible and relevant in the context of particular issues. Criticising the EU is no longer merely an end in itself, but is connected to and grounded in specific issues. Such confrontations also have the power to gradually build support for radical alternatives requiring stronger ruptures with the EU – including in the eyes of those for whom the EU still symbolises peace and openness, despite its policies of militarisation and isolation. The flip side is that offensive strategic disobedience also makes sanctions more likely. In order to survive confrontations with powerful interests and keep sanctions at bay, a left-wing government requires strong support from broad sections of the population and social movements, preferably also on an international level. Finally, strategic disobedience opens up new leeway for social movements. Instead of appealing to the EU for change without any prospect of success, these movements can put pressure on domestic politicians and demand that they break the rules.

Strategic disobedience on budgetary policy

The member states of the EU are subject to strict budgetary rules that limit their financial autonomy. The Maastricht Treaty of 1992 set an upper limit of three percent of gross domestic product for the annual budget deficit and sixty percent for debt. As part of the post-2008 crisis policies, these rules were tightened via so-called “EU economic governance”, in particular via the Fiscal Compact. Today, governments must submit their budgets to the EU Commission almost a year before they submit them to national parliaments. The Commission can propose fines if countries do not meet their requirements. In addition, a so-called “debt brake” has been established and stipulates that strict austerity rules must be adhered to if the deficit is too high.

From both an economic and political perspective, the budget rules are highly problematic. They are unilaterally targeted towards deficit and debt reduction. They limit government spending in times of crisis, which in turn means that they weaken demand, prevent investment and exacerbate the downturn. As if that wasn’t enough, these technocratic rules have priority over democratic policy making and democratically elected parliaments.

Politically, the budget rules are powerful because they work on two levels. First, they directly restrict the budgetary policies of the member states. Those who violate them are denounced, threatened with sanctions or punished indirectly by bad ratings. Secondly, they have the effect of shaping public discourse. The dogma of a balanced state budget and austerity as an absolute necessity is now firmly anchored in public debate. “Additional costs” are often cited as an argument against progressive proposals – and are accepted by the public. If we want to attack the power of the budget rules, we must do so on both levels.

Governments already have a range of options for dealing with the budget rules. One of these is using exceptions that allow certain expenditures to be left out of the deficit, e.g. for natural disasters, bank bailouts or refugee provisions. In addition, member states can adopt progressive policies to increase public funds, such as higher wealth or corporate taxes. There is a record of EU interventions against such moves – via the Commission’s country-specific recommendations, for example – but they are not binding.

There are three options open to states wishing to practise strategic disobedience in the area of budget policy. However, only the third option, offensive rule breaking, constitutes a real confrontation.

As a first option, governments can work to achieve additional exemptions, one example of this being is the “golden rule” for investments. A number of trade unions are currently advocating for this option. If they are successful, member states will gain more financial leeway, but the basic idea and enforceability of the budget rules will remain intact. As a second option, governments can silently violate the rules by simply ceasing to comply with them on specific occasions. This has already been seen in France and Italy, albeit that the governments of these countries continue to recognise the rules’ general validity. Though this strategy creates policy space and erodes the rules’ enforceability in the long-term, the rules themselves – and their power to influence public debate – remain essentially intact.

As a third option, governments can resort to offensive rule breaking, the strongest form of strategic disobedience. A left-wing government can openly announce its intention to break the budget rules in order to finance an important political project, such as extending a railway network or financing the energy transition. In doing so, they reveal the problem inherent within the technocratic rule and are able to gain support for a confrontation with the EU. This has the combined effect of creating political leeway, delegitimising the budget rules and introducing alternatives into the public debate. However, those who pursue this approach must be prepared for possible sanctions and conflicts with the rest of the EU.

Strategic disobedience on industrial policy

Industrial policy – and the restriction of this policy as a result of the EU’s regulatory framework – has only rarely been a topic of discussion for the left and social movements. This is perhaps because industrial policy provokes an image of smoking chimneys rather than of progressive, ecological change.

Essentially, however, industrial policy is nothing more than targeted public intervention in specific sectors. This intervention comes in the form of state aid, tax relief or cheap credit and has the aim of modifying the economic structure as a whole. It can be driven by wide a variety of political intentions, from the profit-making interests of large corporations to the socioecological transformation of production in conjunction with a democratic public investment policy.

For a long time, industrial policy played an integral role in economic policy. With the rise of neoliberalism, this changed. According to the neoliberal doctrine, the market ensures the “most efficient” allocation of resources, while governmental industrial policy interventions lead to “market distortions”.

Over the course of the neoliberal shift in the EU, the scope for traditional industrial policy has been further restricted by means of a simple tool: EU competition law. The key lever in this regard is Article 107 of the Treaty on the Functioning of the EU:

“Save as otherwise provided in the Treaties, any aid granted by a member state or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market.”

In plain language, this means that an active industrial policy – one that promotes particular production segments and pursues a goal of socioecological transformation – stands in contradiction with the internal market and is therefore prohibited. It is on this basis that the EU Commission has been successfully advocating the large-scale dismantling of state aid from the late 1980s onwards.

The disappearance of industrial policy and trade policy instruments in the European single market has had a drastic impact on many of the weaker economies in Southern and Eastern Europe. Many sectors have been exposed to competition and takeover by European and international corporations. Deindustrialisation and import dependency were the result, and have been one of the main, if not the main cause of the euro crisis. In order to overcome the crisis, it is essential that we recover and expand scope for industrial policy.

Although this scope is limited by competition law, there are some derogations that can be used to our advantage, such as public aid for the development of economically weak regions or the promotion of “projects of common European interest” (Article 107(3)(b)). Environmental protection falls in this latter category. The so-called “General Block Exemption Regulation” allows for even further derogations, for example for small and medium-sized enterprises or public aid for services that lie in the general economic interest but are not commercially viable for private enterprises. Public procurement, too, has regained increased room for manoeuvre in recent years, since social and environmental criteria are now required to be taken into account in addition to cost efficiency.

Despite these loopholes, EU competition law continues to hamper progressive industrial policy. This was illustrated clearly by the (ultimately unsuccessful) petition of the initiative “Berliner Energietisch” for a referendum on re-municipalisation: the establishment of a public utility company that supplied Berlin with electricity from its own renewable energy sources on socially staggered tariffs would likely have come up against EU competition law. The unlimited liability of the State of Berlin would have afforded the public utility company an “unlawful competitive advantage” over private providers.

Still, in light of the fact that EU competition law and its interpretation are highly complex, there are certain legal grey areas that are open to exploitation. In cases in which EU rules are explicitly binding, silent strategic disobedience can be exploited in regard to industrial policy – by granting non-compliant public funding without informing the Commission, for example. But the potential for this silent breach of rules quickly reaches its limits. As soon as private companies start to be disadvantaged, they will complain to the Commission, which will then impose sanctions and request the return of the non-compliant funding. The upshot of this is that at some point, an offensive strategic disobedience strategy becomes inevitable. While open confrontation with the EU – for example, through a public company that uses state aid to manufacture and develop low-cost medicines in competition with private competitors – does carry the risk of sanctions, it also offers the opportunity to publicise and politicise the discrepancy between EU competition law and progressive projects, just as in the budget policy example.

Strategic disobedience in other policy areas

Strategic disobedience is particularly well-suited for political projects that have strong popular support and which would require core rules of the EU to be broken. The reversal of the liberalisation of public services would be an interesting field for experimentation. In this context, a left-wing government that renationalised postal and parcel services would, in so doing, call the neoliberal foundations of the EU into question.

Another jumping-off point could be trade policy, particularly the import of goods and services, which – according to single market rules – must currently be given equal standing with those produced within a particular country. This can threaten the environment, lead to the erosion of social standards and hinder economic recovery. In cases such as this, a left-wing government could impose tariffs or taxes on certain imports. In doing so, it would break EU law and would need to be prepared for hostile reactions. Strategic disobedience could also be used to control imports from outside the EU based on environmental and social criteria. Just because the EU concludes a trade agreement with the US or Canada, this does not mean that every future government has to respect it.

Summary: The opportunities and limits of strategic disobedience

By introducing the idea of strategic disobedience, we seek to usher in new perspectives to the deadlocked EU debate. It is a way of fighting for alternative policies and, at the same time, rupturing the fabric of the neoliberal EU. A left-wing government can make targeted use of strategic disobedience to implement important projects, mobilise the population behind a common goal and make tangible the problems of neoliberal European integration.

Does this reduce us to the level of the right wing forces that are currently breaking EU law in Poland and Hungary? On the contrary: rather than jumping to the defence of neoliberal EU rules solely because they are broken by our opponents, we are seeking to develop tangible alternatives in the here and now that differ fundamentally from the values and visions of the extreme right. In this way, we deny them the opportunity to appropriate the dissatisfaction and anger of the population for their own ends.

Yet strategic disobedience also has clear boundaries. A blackmail situation like the one in Greece in 2015 leaves little scope for targeted breaks with EU rules. The size and financial stability of a country is pivotal in determining the extent to which any left-wing government project will be able to use opportunities for strategic disobedience.

While strategic disobedience is, first and foremost, a way of implementing left-wing government projects, social movements can also leverage its power. If EU policy obstructs particular goals, we must build pressure against it – at the level of countries, regions and municipalities. Too often, our governments invoke the EU as an excuse when they fail to meet the people’s demands. It’s time we begin asking them to break EU law – especially when we consider that they are supposedly on our side.

While strategic disobedience does not solve the question regarding the future of the EU, it does open up possibilities for action in the here and now. It weakens the enforceability of current EU rules and helps to shift the balance of power. This is where it reaches its limits – but a lot can be achieved before this happens.

Three lessons

  1. We must not allow ourselves to be paralysed by the discussion of “reform or exit”, but explore options for action in the here and now.
  2. We must stop being dutiful and sticking to rules for the sake of rules. Where EU rules stand in the way of emancipatory politics, we should break them and reclaim our power to make political choices.
  3. We must not fight the rules and institutions of the EU in and of themselves. Instead, we need to engage in inspiring and ground-breaking political projects while simultaneously delegitimising the EU rules that hinder us from turning them into reality.

Literature

Buch-Hansen, Hubert and Wigger, Angela (2011) The Politics of European Competition Regulation: A Critical Political Economy Perspective. RIPE Series in Global Political Economy. Routledge.

Eder, Julia and Schneider, Etienne (2018) Progressive industrial policy – A remedy for Europe? In: Austrian Journal of Development Studies 3/2018, forthcoming.

 

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