26 September 2022 | With its draft law for a “Single Market emergency instrument”, the EU Commission plans to obtain control over companies in any member state in the event of an unspecified crisis. The Commission wants the power to dictate to “crisis-relevant” companies what they have to produce and to whom they have to deliver it. Democracy and the market economy in Europe are at stake.
There are good reasons to cultivate more cooperation in crisis situations. Much of what the EU Commission has written in its draft for an “Single Market emergency instrument” (SMEI) makes sense in this light. However, it could only be considered harmless if and as long as one assumes the absence of the will to abuse the powers that the EU-Commission is seeking to obtain, even decades into the future.
The emergency instrument is an emergency law. And with emergency laws, the central issue is who decides to declare the state of emergency and how easy it is to activate the corresponding powers. Whoever can declare a state of emergency more or less at will has great power that they can abuse, even without actually declaring it. The planned SMEI-law gives more than enough cause for concern in this respect.
Reason to mistrust
During the euro crisis, Greece, Portugal, Spain and Italy painfully experienced that the EU is not so fond of democracy when elected governments of member states pursue policies that are not to their liking. At the moment, Poland and Hungary are in trouble with the EU Commission – if this is justified or not, I will not discuss here. The Commission has declared that Hungary is no longer a full democracy. Legal proceedings are underway that could lead to drastic cuts in EU funding. This is not without irony, since Ursula von der Leyen was declared Commission President after Europeans had supposedly been allowed to vote between two other candidates.
Prior to the general election on 25 September, Ms von der Leyen threatened the Italians with “tools”, similar to those used against Hungary and Poland, if they should elect a right-wing government critical of the EU to office. (They did so with a large margin, which probably was helped by Italians’ outrage about von der Leyen’s transgression.) At the University of Princeton, when asked if she was worried about the upcoming election in Italy, she said (s. video Youtube):
“We will see. If things go in a ‘difficult direction’ – I have spoken about Hungary and Poland – we have tools.”
Let us have a look at what new tools the emergency instrument would provide so that the Commission, with a majority of EU states, can force defiant governments to fall back into line.
Crisis can be anything, especially climate change
What constitutes a crisis threatening the Single Market is defined only very vaguely in Article 3 of the Proposal for a regulation:
“‘Crisis’ means an exceptional unexpected and sudden, natural or man-made event of extraordinary nature and scale that takes place inside or outside of the Union”
This can be more or less everything that does not occur every other day. Almost all other definitions in the draft law are similarly vague. This vagueness gives those who can declare a state of emergency great power in implementing it.
The Commission’s explanatory memorandum gives an idea of the variety of possibilities for states of emergency. In addition to actual or supposed pandemics such as Corona, the continuing effects of climate change, the natural disasters it causes, loss of biodiversity or economic and geopolitical instability are also mentioned. This sounds like a state of emergency as a potential new normal.
As the Commission itself emphasises climate change in its press release from 19 September and in more detail in the draft regulation itself, we will use a climate related emergency as our example of what could be done with the new instrument. Let’s assume that the Commission and enough member states will adopt the view of the Fridays for Future movement that climate change is a crisis that threatens humanity and must be tackled with radical measures, and thus declare a state of climate emergency. The point here is not whether this would be right, only what the EU Commission could do with the emergency powers it would get – probably quite permanently.
According to the draft regulation, the Commission together with a qualified majority in the EU Council (of governments) can declare a state of emergency. This is currently at least 15 member governments, which together represent at least 65% of the EU’s citizens. An unruly group of countries, such as Hungary, Poland and Italy, which might take the fight against climate change less seriously and the material well-being of their populations more seriously, could be outvoted.
The emergency can be declared for a maximum of six months. It can then be extended indefinitely by six months at a time.
Even before the emergency is declared, the EU Commission can already obtain emergency powers in a “surveillance mode”. According to Article 9, the Commission can declare the surveillance mode due to a looming crisis. It needs neither Parliament’s nor Council’s approval.
Direct control over member states’ economies
Already in the self-declared surveillance mode, the Commission can set targets for the stockpiling of crisis-relevant goods for the member states. If some member states do not (want to) achieve these targets, it can make the targets binding with the support of a simple majority of 14 member states, according to Article 12 . Thus, if there is no qualified majority in the Council to declare an emergency, the Commission and a simple majority in the Council can use the surveillance mode to drastically interfere with the member states.
One can think here of respiratory masks or iodine tablets. With our example of fighting a climate crisis, on ecan also think of everything that is deemed necessary for a speedy expansion of renewable energies or anything needed to prepare for possible power cuts and gas shortages or food shortages.
The powers that the Commission would obtain in surveillance mode include gathering information from companies in member states about supply chains, production plans and capacities of crisis-relevant goods.
Once the emergency has been declared and after issuing a corresponding implementing regulation, the Commission can bypass national governments and require companies to comply with “priority orders” of crisis-relevant goods and products sent to them by the Commission. The Commission can thus tell companies what they have to produce and to whom they have to deliver it (as a matter of priority). In case of non-compliance, it can impose fines (Art. 24-28).
In the event of a crisis, Article 19 requires governments to notify to the Commission any measures restricting the free movement of persons, goods, services or businesses in the EU, which then has ten days – or 30 days if it deems it necessary – to examine them before they are allowed to come into force.
Let’s imagine that there is a shortage of important food products because of a climate crisis or because of the measures against it. The Commission can make it impossible for governments to react to this independently because it can take control of the production and distribution of crisis-related goods as well as prohibit governments from banning exports.
The EU Commission would then have effectively taken over the government. As things stand, it can only do so with the support of a majority of governments. This is bad enough. If the governments have different ideas about the right course of action, the majority can impose its framework on the others.
This attempted power-grab by an unelected EU-institution needs wide publicity so that a storm of protest can rise.