A Serene Republic of Europe (Schuman 2.0)

The contribution which an organized and living EU has brought over the last 68 years was indispensable to the maintenance of peaceful relations and social-economic development throughout the continent. However, the World (and Europe itself) has changed and the birth of the Serene Republic of Europe (SRE) is needed if we, as a continent, want to keep growing prosperous, with freedom and maintaining our liberal democracy alive.

The SRE is to put apart its internal grievances, unhealthy competitions, Brussels-blaming games and deliver what EU citizens expected of the EU, but it couldn’t deliver before.

As such, the SRE can only thrive if true citizenship is achieved, if all citizens, regardless of where in Europe they live, are granted the exact same civil, political, fiscal and social rights (and corresponding duties).

By pooling resources and by unifying all citizens under equal rights and duties, the SRE will lead to the realization of a true European confederation indispensable to the preservation of its peace, safety and liberal democracy.

In order to assure full equal rights among citizens, institutional reform must occur by having the Member-States remove themselves from the decision making of the process. The Council must make way for the creation of a Senate elected by the European citizens with the aim of representing their European provinces, metropolitan areas and special administrative regions (i.ei. the administrative units forming composing the SRE).

The Senate shall allocate the same number of Senators to each administrative unit. In a similar fashion, the Parliament is to be become the House of Representatives, where Representatives are elected by all citizens to represent them. Together, these two houses are to be known as the Serene Congress and become the exclusive legislative power of the confederation.

The Commission shall become the Serene Council and its role is to be the supreme executive and directorial authority of the confederation. It will act as the collective head of state and government and execute the legislation approved by the Serene Congress, coordinating its implementation with the states’ governments and legislatures.

The current European Council is to be extinct and in its place the joint session of both houses, shall take over most of its functions, namely, those related to "formal ratification of important documents" and "involvement in the negotiation of the treaty changes".

Last, but not least, the institutional reform shall not be a mere rebranding and restructuring of supranational institutions, new powers are to granted to the confederation, i.e.: a federal tax; social security, health and pension systems along with the complete federalization of security, defense and foreign affairs. The completion of the monetary union together with the social, defense and foreign affairs unions, are the last steps needed to ensure the belonging and ownership of the European project.

Solidarity within the SRE is established by setting a common high-standard political and social playing field, making it materially impossible for Europeans to engage in grievances that divide them, as all share the exact same rights and duties of a true European citizenship.

Notwithstanding the above, the SRE must also recognize the specificity of the current outermost regions and northern sparsely populated areas, by granting them status aparte as Special Administrative Regions (SARs).

Similar conditions to the ones set on article 349 of the TFEU, will ensure that SARs are granted, within the confederation, sufficient powers to develop specific economic and fiscal policies that will enable them to participate in the confederation’s single market and in the world’s global economy.

The current European Council will be charged of securing in the shortest possible time a draft of the New Treaty with the goal of setting up the goals above mentioned and ensuring that the SRE, comes to reality, while ensuring that the draft fully reflects the 3 new pillars.

To achieve these objectives, starting from the very different conditions in which the social and political rights and duties within Member-States are at present situated, it is proposed that specific transitional restructuring fund is set in place along with the necessary mechanisms to complete the monetary union and the harmonization of social and fiscal policies.

The setting up of this powerful political and social unit, open to all states and bound ultimately to provide all their citizens with the essential elements of citizenship, will lay a true foundation for their social and economic unification, by raising not only living standards and promoting peaceful and economic achievements, but also by strengthening each state’s democratic institutions and their accountability.

With increased awareness of its potential, the Serene Republic Europe will be able to pursue the achievement of one of its essential tasks, the development of a continent where all are granted the same opportunities to develop themselves to their full potential, while ensuring that all have the same safety nets and rights.

Taxation in a Federal Europe

A territory where the sun never sets 

Europe’s outermost regions (ORs) comprise six French overseas territories (French Guiana, Guadeloupe, Martinique, Mayotte, Réunion and Saint-Martin), two autonomous Portuguese regions (the Azores and Madeira) and one autonomous Spanish community (the Canary Islands). 

 

The OR status exists because the Union has, from an early age, recognized that these territories face a structural, social and economic situation that is “compounded by their remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, the permanence and combination of which severely restrain their development.”

 

The recognition of the lack of economic hinterland has led the Parliament, the Council and the Commission to adopt several specific measures, involving funding, taxation, transportation, specific customs policies and state-aid programs, designed to protect what Juncker recognizes as “places where the natural resources and human wealth of our Union are concentrated. It is in those regions, laboratories of excellence and guardians of biodiversity, that the future of Europe begins.” After all, these regions allow the Union to currently have a territory where the sun never sets.

 

Three of the above mentioned ORs, the Portuguese and Spanish ones, enjoy a degree of political autonomy and jurisdictional capacity from their respective EU-Member states. If, and when, the EU rapidly moves to a European Republic, how will these regions be integrated in this new political entity?

 

Bear in mind that most of this jurisdictional capacity was obtained through political struggle between “we the islanders” versus “them the mainlanders”, due to lack of interest and investment from generations of central government metropolitan decision makers over the centuries. And what binds them together is the fact that the vast majority of them are non-sovereign small island economies, where the sharing of their economical and political struggle is very much alive and present when defending their interests within the EU.

 

Given their special status within their countries and within the EU, a special constitutional status that other 22 EU Overseas Countries and Territories also enjoy, especially in those belonging to The Netherlands, Portugal and Spain, the EU cannot move into a Republic without recognizing such specificities and jurisdictional capacity of these jurisdictions.

 

Therefore, remote small island economies cannot become like the US Minor Outlying Islands where the US Federal Government refuses to provide for tools that allow these territories to rapidly adapt to economic shocks and attract foreign direct investment by the use of a combination of taxation, migration/borders and transportation policies.

 

In the advent of a European Republic, the harmonization of such policies on these small island economies must be done cautiously.

 

Derogations are needed for Outermost Regions

Unlike mainland economies, small island economies have a greater need to use their legislative capability to attract foreign direct investment. You can find examples of strong use of jurisdictional capacity in EU outermost and/or small island economies such as Madeira, the Azores and the Canary Island or outside the EU as it is the case of the British Overseas Territories and Crown Dependencies.

 

Take for example the case of the Autonomous Region of Madeira, where the low corporate tax rate of 5%, within its International Business Center, approved as state-aid by the Commission, is responsible for assuring 22% of the region’s tax revenue and employing, directly, at least 2% of the working population in the transactional services sector (not-including Tourism). The amount of tax revenue generated is almost the same amount that is transferred by the Portuguese Government and the EU to that outermost region, where, by constitutional law, all revenues generated belong to the Region’s government.

 

Although a monetary union requires, by economic definition, a highly harmonized, if not unified, taxation system, it is also important to mention that such market economies do need “capitalist escape valves”.

 

These escape valves consist of efficient and low taxation jurisdictions capable of acting as an interface between different economic systems and jurisdictions. At the same time, and through these tax regimes, small island economies ensure their international competitiveness and capture income for their populations, ensuring their quality of life and social and economic well-being.

 

For example, through their neutral taxation regime the British Virgin Islands, according to Capital Economics created, in 2015, an estimated 2.2 million jobs worldwide, 290,000 of which in the EU, and generated around 13.7 billion euros in taxes outside their territory. 

 

Balance Must be Achieved

 

In a future European Republic these escape valves need to be an integral part of the federal taxation system and be allocated to the outermost regions and small island economies of the republic. At the same, and by guaranteeing the existence of such “capitalistic escape valves”, the Republic would assure total compliance through high regulatory standards surrounding such taxation regimes. 

 

This taxation strategy would also allow the eventual Republic to decrease the subsidies allocated to infrastructure and social support in these regions and better gearing them to research and development in fields of specific interest, such as research and development.

 

As stated by Ulrike Guérot, founder of the European Democracy Lab, nationality [and, in this case, structural remoteness] as a tool of competition based on European citizens against each other - through social dumping, wage dumping, or taxation…[is] a race to the bottom". 

 

Nevertheless, neglecting instruments and tools that are proved allow these small island economies to tackle their unique structural social and economic situation, arising from their remoteness from the European mainland, cannot be an option within a European Republic.

 

P.S.: If the European Federalist and the Young European Federalists fail to compreehend the low taxation needs in outermost regions then they will be responsible to plant the seeds of independentism in one of Europe's greatest geopolitical asset, condenming these regions to be influenced by the new economic powers, who are not democracies.