A significant birthday is a good time for a reality check. As the Maastricht Treaty turns 30, it’s time for the European Union to rethink its fiscal priorities and face up to the planetary emergency.
Thirty years ago, on 7 February 1992, European leaders signed the Maastricht Treaty, turning the European Communities into the European Union. But how relevant is the Maastricht spirit for today’s world?
For many Europeans, the early 90s were a time of rare optimism and togetherness. The eastern half of the continent was emerging from communist dictatorship, leading some to proclaim the end of history. The feelings of that decade seem alien in the midst of growing geopolitical tensions, a global pandemic, and with millions of people battling floods, wildfires and other spiralling consequences of the breakdown of our climate and nature.
Despite some growing pains, the Maastricht Treaty did bring Europe closer together. It consolidated the world’s largest trading bloc and laid the foundation for a common currency. It gave the EU new powers in the fields of consumer protection, social policy, the environment, industrial policy, fiscal policy, home affairs, freedom of movement, foreign policy, migration and more.
But the Europe of 1992 is not the Europe of 2022. Governments and the European Commission are now calling into question the strict debt rules established by the Maastricht Treaty.
Since the pandemic hit, the EU has suspended the rules to free up resources to respond to the economic crisis triggered by the health emergency. As a result, average eurozone public debt has risen to close to 100% of GDP. But imagine the distress if governments had not intervened to prevent a total collapse of the economy!
By next year, countries could again be required to limit annual national deficits to 3% of GDP, with the aim of reducing total debt to 60% of GDP. But the cat is out of the bag.
The austerity that followed the 2008 financial markets crash and the 2010 euro crisis is clear evidence that following the rules blindly can mutilate employment and drive poverty, while continuing to destroy the climate and nature in the name of profit. The question now is whether fiscal policies should be an end in themselves, or whether they are merely a flexible means to improve our lives and the environment we depend on.
Investing in the future
Of course, for many European leaders at the time of the Maastricht Treaty, the fiscal dogma was immutable. Everything else came second. And yet, only a few months after the signing of the treaty, the leaders of the newly formed EU headed to Rio de Janeiro for what became known as the Earth summit. The Rio summit was a first global attempt to address the impact that humans were having on the planet’s life-sustaining systems, against a backdrop of mounting evidence of a climate crisis.
Thirty years on, reality has caught up with history and time is running out for Europe to take decisive action against the gravest crisis humanity has ever faced. So far, the EU’s attempts to tackle the rise in greenhouse gases and the destruction of the living environments we depend on have been too little, too slow and too uneven to halt the planetary emergency.
Since the Maastricht Treaty, the EU’s gigantic ecological footprint has continued to consume nature and choke our global environment, from the oceans to the upper atmosphere.
Three decades of boom and bust, austerity, and throwing money at fossil fuels and industrial farming haven’t helped. We’re in a hole and the EU won’t stop digging until it recognises that it’s time to do “whatever it takes” to put Europe on a sustainable pathway. Fundamentally, this means accepting that a fiscal policy that does not support action to halt the climate and nature crisis is a death sentence. In fact, recent polls show Europeans want the EU to act to safeguard their future.
By investing in renewable energy, home insulation, zero-waste communities, electrified public transport, and ecological farming that protects workers and nature, governments can lighten our environmental footprint, create millions of jobs, and increase the resilience of national economies against resource scarcity and price shocks, like we’re seeing now for gas. Many of these investments, like home insulation, will particularly benefit the poorest and most marginalised people, helping address the world’s growing inequality.
The cost of failure
Economists can estimate the cost of many things, but the consequences for future generations of failing to mobilise these resources is unimaginable. Today already, people across Europe are feeling the force of unprecedented floods, heat waves and wildfires, losing their homes, their livelihoods and even their lives. The evidence shows these will only become more common, and that our atmosphere, our oceans and our forests are losing the ability to shield the planet’s biosphere from these cataclysmic events.
If eighty years ago governments transformed their economies and achieved full employment to fight a war, then why shouldn’t that be possible to tackle the climate and nature crisis? But this isn’t just about employment, government intervention and spending taxpayers’ money. It’s about genuine commitment.
Declaring a climate emergency, flaunting a European green deal and setting a net-zero climate target thirty years down the line just won’t cut it. European governments won’t end planetary collapse by continuing to bankroll fossil fuels, bail out polluting airlines, or pursue environmentally disastrous trade deals.
In the most recent example of how the EU’s declared intentions are easily subverted by powerful interests, the European Commission has backed a controversial plan to label fossil gas and nuclear energy as sustainable under the EU’s taxonomy regulation, making them eligible for billions in funding, at the expense of renewables.
But not all hope is lost. Over the last couple of years, the Covid crisis has shown that, given some wiggle room and a reasonable dose of political resolve, governments and public authorities are able to roll out employment schemes, support for companies, the reallocation of public space, or incentives to use public transport. Sure, it’s far from perfect, but it shows what’s possible.
At 30, the EU is old enough to learn from its mistakes and recognise it can and must do better.
Markus Trilling
Greenpeace EU economic adviser