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Useful Crisis: European Union Looking at New Emergency Powers by Sven R. Larson

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Useful Crisis: European Union Looking at New Emergency Powers

Photo: Twitter page of Ursula von der Leyen @vonderleyen.

On December 28th, American news site Breitbart reported that the European Union is working on emergency powers that would allow “seizure of private property.” As we recently explained, this story originates in comments by EU Commissioner Thierry Breton. In a New Year’s staff message, Breton suggested that the European Union must develop new methods for crisis management. 

There is a big rhetorical difference between the Breitbart article and Mr. Breton’s more muted language, suggesting that Breitbart may have blown proverbial hot air into the issue. 

However, a closer look at the subject matter of Commissioner Breton’s comments reveals a different story. The EU Commission is indeed working on a piece of legislation that could give the EU government significant emergency powers. Based on comments from the Commission, it is entirely possible that those powers could reach far enough to merit the strong language in Breitbart‘s article. 

According to Commissioner Breton, the government of the European Union currently does not have the authority to properly address a crisis like the COVID pandemic. Speaking generally, Breton explained that there are events that could cause economic disruptions of such a nature that only government could restore social and economic stability. 

To provide an adequate crisis response, Breton wants “a toolbox of measures” by means of which the EU government could “ensure security of supply during a crisis.” Those measures would also aim to “address structural strategic dependencies” and “increase EU industrial capacities.”

The French EU Commissioner is not the first high-ranking official to float the idea of new emergency powers. Already in February, Commission President Ursula von der Leyen explained the importance of this toolbox. Referring to it as the Single Market Emergency Instrument, she did not give any real details on how it would work or under what circumstances it could be used.

On May 5th, another member of the Commission, Margrethe Vestager, added more details to von der Leyen’s comments. The Single Market Emergency Instrument, she said, would allow the European Union to “react more quickly in the event of future crises.” Vestager specified that the Emergency Instrument would be a solution to future supply-chain disruptions and mentioned that the EU has a list of “137 products where the EU can be considered dependent on imports from third countries.”

Superficially, the comments from members of the EU Commission appear to suggest that the Single Market Emergency Instrument is nothing more than a formalization of tools to respond to a pandemic of the kind the world has just experienced. However, a closer look suggests that the Instrument could be significantly more than just a pandemic response mechanism. 

To begin with, Commissioner Breton explains in his New Year’s message that the Emergency Instrument would be applicable to a new crisis “whatever its nature.” This indicates that the ambition behind the Instrument is to apply it to a variety of crises, not just future pandemics. 

Furthermore, Breton explains—in vague terms—that the Emergency Instrument toolbox would be used against “major shocks in demand or supply” that could potentially “fragment” the single European market. Many different events can cause “major shocks” to economic activity; in fact, the very concept of “major shock” invites wide interpretations. Breton’s lack of specificity as to what constitutes a crisis merits asking if a serious economic downturn could be a qualifying event. In other words, might the Great Recession of 2008-2010 and the ensuing austerity crisis have constituted a “major shock” to the economy? 

It would certainly seem so, given its impact on the European economy. Greece alone lost about one quarter of its economy during that crisis. 

Commissioner Vestager offers a similarly vague definition of the Emergency Instrument. It must, the Commissioner says, be put in place to address “future crises” without giving any idea of how “crisis” is to be defined. 

As if to further highlight the open-ended nature of the initiative, EU Commission spokesperson Johannes Bahrke explains that the EU needs to give itself more authority to intervene in the “single market.” This term refers to the entirety of the EU economy, which in turn implies that the powers in the Emergency Instrument would supersede those of EU member states. Bahrke also suggests that current EU law is not sufficiently adapted “to crises and emergencies.”

The vague language from the Commission is cause for concern. They have been developing the Emergency Instrument for at least a year (the Commission president commented on it already in February 2021) and they intend to present a proposal in the spring. It is reasonable to assume that by now, their proposal is substantive, with a well-defined range of powers and applicability. Therefore, whenever the Commission speaks about the initiative, we can expect their comments to be strongly indicative of its nature.

A limited response mechanism, modeled to address the recent pandemic, would be limited accordingly. The emergency powers would be concentrated on central planning of the markets for health care products. This would be to prevent incidents like when the French government seized transportations of face masks, or when Germany banned exports of protective gear for use in health care. 

Defined accordingly, the Instrumenbt could also be extended to the allocation of vaccines. Commission President von der Leyen hinted at this when criticizing AstraZeneca for exporting coronavirus vaccines outside the EU. The company had at the time been accused of not honoring its vaccine delivery promises. Therefore, von der Leyen explained, they “must ‘catch up’ on deliveries to the EU before exporting doses elsewhere.”

Even if the Instrument were limited to health-care products, it would still constitute a serious incursion into private property. Nevertheless, the breach would be strictly limited in scope (and presumably in time), thus containing its negative impact on property rights. At the same time, such limited application would still require the EU Commission to make its case for those powers. As we noted in a recent analysis of vaccine mandates, the moral burden of proof for extraordinary government powers is always on government. If government cannot make its case, by default they do not deserve those powers.

Beyond the moral argument for its powers, the EU Commission has a problem in its apparent lack of interest in limiting its Emergency Instrument. The language used in reference to the Instrument is broad, almost generic, with mentions of “crises” and “emergencies” and, to again quote Commissioner Breton, a crisis “whatever its nature.” 

Pointedly, the EU Commission must explain:

  • Is it aiming for broad, loosely defined emergency powers?
  • Does it want the authority to define the crises for when those powers can be applied?

To start with the first question, there is definitely cause for concern that the Emergency Instrument is a usurpation tool. Regarding the comments made by Commissioner Vestager on supply chains for a long list of products, and by Commissioner Breton on “industrial capacities,” the Commission clearly seems to want the authority to take control over privately owned and operated production capacity. 

By definition, this would mean the seizure of private property. The Breitbart alarm bell would have rung for a good reason. At the same time, it is also important to recognize the other option, one with notably less drastic implications. The final version of the Single Market Emergency Instrument could be similar in nature to the American Defense Production Act, DPA. 

Passed into law in 1950, the DPA was originally written to allow the president of the United States to direct the nation’s industrial capacity toward the support of war efforts. It was a modified version of the War Powers Act of World War II and was first applied during the Korean War.

Since then, the DPA has since been reauthorized by Congress numerous times. It has also been expanded over time, which brings us to the second question above, namely the scope of application of an Emergency Instrument under the EU Commission. 

In an analysis of the Defense Production Act, the Heritage Foundation highlights three main parts of the Act, all of which limit the scope of its applicability to industrial production for the purposes of national defense. 

The first main part, Title I, gives the president the authority to prioritize among existing defense programs and to reallocate appropriated funds accordingly. The president can, as the Heritage Foundation puts it, “redistribute materials, equipment, and industrial facilities” for the purposes of specific defense-related production.

The second main part, Title III, authorizes the president to fund investments in defense-critical industries. At the president’s disposal are financial incentives including government loans and subsidies. This part limits the president’s powers, listing several criteria that must be met for the Act to be applicable. 

In Title VII, the third main part of the DPA, the president is given broad latitude to negotiate defense contracts with the private industry. This Title also put reasonable restrictions on the powers granted to the president. 

However, the Heritage report notes that several modifications to the DPA over the decades have made it stray “from its original intent.” Congress has gradually expanded the definition of “national defense,” Heritage explains, resulting in “numerous instances” for the DPA to be exploited for “non-defense-related projects.”

Specifically, under the law that defines “national defense,” the concept has been extended to encompass “homeland security” and “critical infrastructure.” The latter term includes “national economic security and national public health or safety.”

In other words, the Defense Production Act started its life as a tool by which the president of the United States could enlist the nation’s industrial capacity in the nation’s effort to fight a war. Undoubtedly, a war is an emergency of a kind that, to use the language of the EU Commissioners, disrupts the regular flow of supply and demand in the economy. 

Since then, the Act has morphed into an increasingly general authority for the president to procure goods and services from private producers for purposes that extend as far away from war as “national economic security.” This term is a good example of how easily government powers can break enumerated boundaries. There is no coherent definition of “national economic security” in the academic literature on economics, meaning that there is no coherent foundation for the legal profession to define the term. This, in turn, indicates that it is practically impossible for, say, the U.S. Congress or even the judicial branch of the federal government to enumerate the president’s powers under the DPA.

With some exaggeration, it could be said that the limitations on the president’s use of the Defense Production Act are at the discretion of the very person who holds the office. However, this is only an exaggeration, though not inaccurate in itself. While there has been no systematic abuse of the DPA to date, this does not ease the concerns raised by the Act’s increasingly broad applicability. As we recently noted regarding the outcome of the Chilean presidential election, the weaker a legal framework is in limiting government powers, the greater the risk that those powers will actually be abused. 

If the EU Commission gets its Single Market Emergency Instrument, and if it turns out to be strictly limited to responses to future pandemics, then the people of the European Union have no immediate reason to worry about runaway government powers. However, as the American example suggests, emergency-powers legislation that starts out within strict limitations can easily expand over time and breach its initial confinements. 

One of the fundamental laws of government powers is that they always invite mission-creep expansion. Laws that begin their lives as benevolent instruments for the common good can easily morph into tools of power for the sake of power itself. As the EU Commission finalizes its proposal for a Single Market Emergency Instrument, the citizens of the EU are well advised to keep themselves informed of that proposal.

Sven R. Larson is a political economist and author. He received a Ph.D. in Economics from Roskilde University, Denmark. Originally from Sweden, he lives in America where for the past 16 years he has worked in politics and public policy. He has written several books, including Democracy or Socialism: The Fateful Question for America in 2024.

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