Europe’s reforms need more than a new rule book

By Tony Barber

A camel is, the proverb has it, a horse designed by a committee. Creatures no less unsightly are being born out of the attempts of European nations to reshape their constitutionally enshrined systems of government. Two cases in point are

Ireland and Italy. The changes afoot are intended to raise the quality of political life. But the results will be more meagre than the supporters of change contend. In the very different case of Hungary, the motives behind the reforms are less public-spirited and will do more harm than good.

Political leaders in Dublin and Rome see a connection between constitutional reform and the battle to overcome the national economic crises of the eurozone era. The Irish government proposes to abolish the Senate, the upper legislative chamber. By the end of this year a referendum is likely. Given the contempt in which Irish voters hold their politicians for presiding over one of history’s most spectacular financial crashes, it will be no surprise if they kill off the Senate and dance for a week on its grave.

Italy’s left-right coalition plans to rewrite the electoral law and get rid of an entire tier of government – the 86 provinces that nestle lazily between Italy’s 20 regions and 8,000 municipalities. The government also wants to shrink parliament and end the system, dating from 1948 and unique in Europe, in which the upper and lower houses have exactly the same legislative powers. The deadline for adopting these changes is late 2014 but, if the coalition were to collapse, the reforms might go up in a puff of smoke.

Enda Kenny and Enrico Letta, the Irish and Italian prime ministers, defend their proposals with the argument that modernised political institutions will strengthen democracy, produce better laws and so contribute, directly and indirectly, to prosperity and economic stability. They also say their austerity-afflicted societies are justified in expecting that politicians should spend less on themselves and their institutions.

In this spirit, Mr Kenny’s government estimates that getting rid of the Senate would save Irish taxpayers €20m a year. The savings from abolishing Italy’s provinces, and from cutting the number of parliamentarians in Rome, would be even larger – hundreds of millions of euros a year. Mr Letta deserves credit for recognising that the cost of politics has been outrageously high in Italy since the 1960s, thanks to the incurable instinct of the political classes to feather their nests at public expense. But in accounting for Italy’s poor economic performance since eurozone entry in 1999, one would not start with the provinces. In an economic policy context, the provinces are bit players at most.

Equally, the Irish Senate was hardly responsible for the financial disasters of the euro era. Blame instead the politicians who were in cahoots with the construction industry and property developers. Perhaps the Senate could have questioned more forcefully the former government’s decision in 2008 to extend a blanket guarantee to Ireland’s bust banks. But the reality is that the Senate has few powers over financial policy. In Ireland’s revamped constitutional order, nothing would stop a government, or a unicameral legislature, or bevies of feckless bankers, from committing new blunders – though, one should hope, not on the scale of 2008.

Most useful in Italy would be a reformed political party system that stopped sending to parliament, one election after another, hundreds of lawyers and other representatives of vested professional interests. These legislators are remote from the voters who elect them, but they are amazingly skilled at extracting the substance of liberalisation from bills designed to advance economic reform and competition.

Revising the electoral system, and amending the powers of parliament’s two chambers, may result in somewhat more stable governments. But such changes are unlikely to scatter the privileged saboteurs of reform who resist economic renewal in Italy. Without fresh winds blowing through the nation’s political culture, the proposed constitutional reforms – if ever they get passed – may simply concentrate an anti-reformist bloc in the newly strengthened lower house.

The most egregious instance of badly conceived constitutional reform is, however, to be found in Budapest. Hungary dumped communism in 1989-90 but, unlike its neighbours, found it hard for 20 years to replace its communist-era constitution. It joined the EU in 2004 but fell into financial trouble and required an International Monetary Fund-led rescue in 2008. Sweeping constitutional changes since 2011 have not been inspired by a desire to improve Hungarian democracy or the quality of laws on economic policy.

Rather, they reflect the efforts of the ruling Fidesz party to entrench its political supremacy. One route to this goal is an electoral reform, already passed, that will slash the seats in Hungary’s next parliament, to be elected in 2014, to 199 from 386. The cut will surely limit the ability of parties smaller than Fidesz to participate in legislative work.

In Ireland and Italy the proposed changes are probably worth trying – but they will be no miracle cure for political cultures long steeped in selfishness and financial misbehaviour. In Hungary, Fidesz is confusing constitutional reform with party political advantage.

 Copyright The Financial Times Limited 2013.