The EU isn't too big to fail, but it is too important to

Contrary to Nigel Lawson, the EU is not a monstrous bureaucracy, but the policy mix of austerity and reform is failing.

I spoke at the Annual European University Institute "State of the Union" conference yesterday. It takes place in the Palazzo Vecchio in Florence, adorned with 500 year old frescoes commemorating the first Florentine Republic after the expulsion of the Medicis – a good reminder that the process of European integration has deep roots.

There was a lot of realism – about the continuing challenge of the euro crisis, about the long-term nature of structural reform, about the gulf between too many citizens and European governance. But there was also a deep determination to preserve the gains of the past – for example in President Barroso’s speech – and wherever I went, a desire to see Britain as part of the European future. In my contribution, in the session on governance and institutions, I made five points.

First, that the debate about legitimacy and efficiency/delivery is happening all over the world. The Chinese are thinking about it; the Americans are debating it in the discussion of 'gridlock'; it is part of the debate in the Arab world as governments elected after the revolutions of 2011 are faced with real economic and social choice. In Europe, legitimacy has two elements – the 'one nation one vote' principle embodied in the European Council, and the 'one person one vote' principle in the European Parliament. The danger for the EU – as elsewhere – is whether legitimacy AND efficiency is missing.

Second, the protest politics in Britain, Italy and elsewhere, is not just (or primarily) about frustration with the EU; it speaks fundamentally to frustration with the traditional politics of centre-right and centre-left, and the desire for a new political alternative. For me, that is about rejuvenating social democracy, but there is no point in hiding that a traditional social democratic offer of social justice through state redistribution is not going to work or sell.

Third, the EU’s biggest problem is its delivery deficit, not its democratic deficit. This is not a new tune of mine, but while some of the EU’s work is very good indeed – I have just spent two days in Brussels preparing for my International Rescue Committee role and learning about some outstanding European development work in crisis-hit places – the policy mix in response to the economic crisis is still some way from bringing closer the light at the end of the tunnel. I don’t buy the Nigel Lawson argument that the EU is a monstrous and marauding bureaucracy, but the policy mix of austerity and reform is out of kilter with the economic needs in a balance sheet recession.

Fourth, there is a pressing and outstanding agenda for Europe’s soon to be 28 members, beyond the euro crisis. I won’t rehearse again what this covers, but the sense that there is traction on youth unemployment and migration is encouraging.

Finally, the twin narratives of Europe’s development so far – peace on the continent, and reunification after the fall of the Berlin Wall - need to be supplemented by a clarion call that Europe’s purpose is to help its citizens achieve prosperity and security in a 21st century marked by shifts in global power. This cannot be done at national level alone, nor by ad-hoc alliances around the globe to take forward trade promotion or security cooperation.

I don’t buy the argument that Europe is 'too big to fail'. But I do buy the case that it is too important to fail.

David Miliband is the incoming President and CEO of the International Rescue Committee

This piece originally appeared on his blog

The EU flag flies in front of the European Parliament in Strasbourg. Photograph: Getty Images.

David Miliband is the  President and CEO of the International Rescue Committee
He was foreign secretary from 2007 until 2010 and MP for South Shields from 2001 until this year. 

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Arsène Wenger: how can an intelligent manager preside over such a hollowed-out team?

The Arsenal manager faces a frustrating legacy.

Sport is obviously not all about winning, but it is about justified hope. That ­distinction has provided, until recently, a serious defence of Arsène Wenger’s Act II – the losing part. Arsenal haven’t won anything big for 13 years. But they have been close enough (and this is a personal view) to sustain the experience of investing emotionally in the story. Hope turning to disappointment is fine. It’s when the hope goes, that’s the problem.

Defeat takes many forms. In both 2010 and 2011, Arsenal lost over two legs to Barcelona in the Champions League. Yet these were rich and rewarding sporting experiences. In the two London fixtures of those ties, Arsenal drew 2-2 and won 2-1 against the most dazzling team in the world. Those nights reinvigorated my pride in sport. The Emirates Stadium had the best show in town. Defeat, when it arrived in Barcelona, was softened by gratitude. We’d been entertained, more than entertained.

Arsenal’s 5-1 surrender to Bayern Munich on 15 February was very different. In this capitulation by instalments, the fascination was macabre rather than dramatic. Having long given up on discerning signs of life, we began the post-mortem mid-match. As we pored over the entrails, the curiosity lay in the extent of the malady that had brought down the body. The same question, over and over: how could such an intelligent, deep-thinking manager preside over a hollowed-out team? How could failings so obvious to outsiders, the absence of steel and resilience, evade the judgement of the boss?

There is a saying in rugby union that forwards (the hard men) determine who wins, and the backs (the glamour boys) decide by how much. Here is a footballing equivalent: midfielders define matches, attacking players adorn them and defenders get the blame. Yet Arsenal’s players as good as vacated the midfield. It is hard to judge how well Bayern’s playmakers performed because they were operating in a vacuum; it looked like a morale-boosting training-ground drill, free from the annoying presence of opponents.

I have always been suspicious of the ­default English critique which posits that mentally fragile teams can be turned around by licensed on-field violence – a good kicking, basically. Sporting “character” takes many forms; physical assertiveness is only one dimension.

Still, it remains baffling, Wenger’s blind spot. He indulges artistry, especially the mercurial Mesut Özil, beyond the point where it serves the player. Yet he won’t protect the magicians by surrounding them with effective but down-to-earth talents. It has become a diet of collapsing soufflés.

What held back Wenger from buying the linchpin midfielder he has lacked for many years? Money is only part of the explanation. All added up, Arsenal do spend: their collective wage bill is the fourth-highest in the League. But Wenger has always been reluctant to lavish cash on a single star player, let alone a steely one. Rather two nice players than one great one.

The power of habit has become debilitating. Like a wealthy but conservative shopper who keeps going back to the same clothes shop, Wenger habituates the same strata of the transfer market. When he can’t get what he needs, he’s happy to come back home with something he’s already got, ­usually an elegant midfielder, tidy passer, gets bounced in big games, prone to going missing. Another button-down blue shirt for a drawer that is well stuffed.

It is almost universally accepted that, as a business, Arsenal are England’s leading club. Where their rivals rely on bailouts from oligarchs or highly leveraged debt, Arsenal took tough choices early and now appear financially secure – helped by their manager’s ability to engineer qualification for the Champions League every season while avoiding excessive transfer costs. Does that count for anything?

After the financial crisis, I had a revealing conversation with the owner of a private bank that had sailed through the turmoil. Being cautious and Swiss, he explained, he had always kept more capital reserves than the norm. As a result, the bank had made less money in boom years. “If I’d been a normal chief executive, I’d have been fired by the board,” he said. Instead, when the economic winds turned, he was much better placed than more bullish rivals. As a competitive strategy, his winning hand was only laid bare by the arrival of harder times.

In football, however, the crash never came. We all wrote that football’s insane spending couldn’t go on but the pace has only quickened. Even the Premier League’s bosses confessed to being surprised by the last extravagant round of television deals – the cash that eventually flows into the hands of managers and then the pockets of players and their agents.

By refusing to splash out on the players he needed, whatever the cost, Wenger was hedged for a downturn that never arrived.

What an irony it would be if football’s bust comes after he has departed. Imagine the scenario. The oligarchs move on, finding fresh ways of achieving fame, respectability and the protection achieved by entering the English establishment. The clubs loaded with debt are forced to cut their spending. Arsenal, benefiting from their solid business model, sail into an outright lead, mopping up star talent and trophies all round.

It’s often said that Wenger – early to invest in data analytics and worldwide scouts; a pioneer of player fitness and lifestyle – was overtaken by imitators. There is a second dimension to the question of time and circumstance. He helped to create and build Arsenal’s off-field robustness, even though football’s crazy economics haven’t yet proved its underlying value.

If the wind turns, Arsène Wenger may face a frustrating legacy: yesterday’s man and yet twice ahead of his time. 

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 24 February 2017 issue of the New Statesman, The world after Brexit