In order to tackle the fundamental questions regarding the Union’s institutions, it is important to look at the situation that the European Union is in today, which is one of multiple challenges, many of which are interconnected.

First and foremost, there is the economic one. The economic crisis that has been ongoing since 2008 and, now turning into perpetual stagnation at best, has taken a toll on the European project at large. With economic growth being negative in 2013 in ten member states, and below one per cent in nine others, as well as projections often being corrected downwards, we have entered a phase where the official tenor is not one of optimistic recovery, but rather one of ‘next year it will be better’.

Because of extensive and unsustainable welfare states in place in practically most EU countries, the focus on responses to the crisis has been on mitigating the negative consequences of the downturn on entitlement financing, in a way that austerity has been interpreted as balancing the budget, but often through raising taxes, rather than sustainably improve competitiveness through lowering them. Record unemployment, especially youth unemployment, is symptomatic of that.

Competitiveness is crucial, as the goals of the Lisbon Strategy have clearly not been met and seem more out of reach than ever. The EU budget still reflects the priorities of 1962 (the year the CAP was introduced) rather than todays, and its institutions still resemble rigid French centralised statism rather than dynamic policy-making.

Besides the problems Europe is facing when it comes to competitiveness and the welfare state, the most critical and dangerous one is that of cohesion, including social cohesion. The response to the Eurozone crisis has alienated the people of Europe from each other, as, for instance, many Greeks and Spaniards have started to blame the Germans for their situation. Even more so, Europe has put in question some of its most fundamental achievements, for instance through attempts to curtail some of the Schengen privileges, and has slowed the vital enlargement process.

It is no surprise that in this environment, Anti-European sentiments in various shades and colours are hampering decision-making at the European level. In Germany, the new anti-Euro party AfD celebrated a succès d’estime by almost entering the Bundestag and drawing enough votes from the liberal FDP to bring the outgoing government to fall. In the United Kingdom, the UKIP spearheaded by Nigel Farage and his poisonous rhetoric has increased its popularity, which was amongst other things certainly a factor in David Cameron’s decision to call a referendum on Britain’s membership in the Union. Not to mention the rise of extremists such as the Golden Dawn party in Greece. These examples are plentiful, and are all symbolic of one thing; that there is a growing sentiment amongst voters in member states to believe that decisions are made in Brussels without them having a real say in the process.

It is also no surprise that in such an environment it is all too easy for the debate to be hijacked by those who advocate a simplified black and white approach, i.e. more or less Europe. More or less Europe is a dangerous response to the ongoing challenges, as a question itself, and even more so as an answer. This is the penultimate crisis that needs to be mentioned here, it is a crisis in the philosophical discourse, where space for constructive visions apart from the more-or-less debate has been shrinking.

A liberal Europe needs to be built on values, but we should not forget that Europe in itself is not a value, nor is the idea of more Europe or less Europe. So the question needs to be raised what are, from a liberal point of view, these essential ideas, and how can they be implemented. Taking all this into account, it is self-evident that we cannot rethink EU institutions in a liberal way without rethinking its values and tasks.

Thankfully, as will be shown below, we do not reinvent the wheel. The liberal response that should be taken can be summarised in two points:

1. Commit to the four freedoms and rethink subsidiarity

The four freedoms are the quintessence of the treaties and, more than that, they are a liberal call to action. They are the fundamental representation of liberal principles, including openness, free trade and prosperity through common markets, and voluntary cooperation. Indeed, the economic integration that has started with the ECSC led to a period of unprecedented peace, prosperity, and unity in Europe. Whereas a lot has been achieved, the single market remains far from completion, as for instance the fields of services, energy, transport, and the social sector clearly show. In recent years, progress has been slow. It is also an issue of political capital being used for ineffective ventures rather than these core tasks.

This is where subsidiarity plays a role, as it is key when it comes to implementing the four freedoms. It is not just a legal concept, but, more importantly a philosophical one. The idea of decentralisation, that the lowest level of governance capable of efficiently managing a task, should also have the competence to do so, is crucial. In the same manner, the reverse conclusion, that a higher level is only charged with tasks that cannot be effectively managed on a local level, is maybe even more important when talking about the EU.

It is thus self-evident that from a liberal perspective many EU policies have failed because the subsidiarity principle has been undermined. Key examples here are the fields of agriculture and fisheries, where large differences between member states are often ignored, leading to a situation whereby the market for agriculture and fishery products is not a true common free market, but rather a forced construct of central planning. Ending such policies should not be a taboo. At the same time, with the common market, the example of a common customs union is one where the task is rightfully on the European level. In other areas, with Europe being increasingly interconnected, some competencies should even be strengthened on the European level, such as strengthening the protection of human rights, property rights and the rule of law.

We need to realise that competitiveness in both member states and the Union as a whole can only be increased if competition between member states is healthy and alive. This means that the EU needs to resist tendencies towards a fiscal union and more centralised economic policies. Regions and member states need to be able to respond to their respective competitive advantages and disadvantages and economic developments. Such competition incentivises every region and every member state to be more competitive, to lower taxes, to address the challenges of unsustainable welfare states, and ultimately resulting in freer markets and more prosperity. Even in the area of monetary politics, the Eurozone crisis could be mitigated through permitting parallel, competing currencies and free banking as a market-oriented alternative to a potentially disastrous Eurozone breakup.

Ralf Dahrendorf has warned of too centralised policies and alerts to the following: “The question – how to create wealth and social cohesion in free societies – may be the same everywhere (…) The answers, however, are manifold. (…) Diversity is not an optional byproduct of high culture; it is at the very heart of a world that has abandoned the need for closed, encompassing systems.”

When determining the EU’s future, this should be taken to heart. It is the Union’s fundamental identity as a confederation that is where its strength lies, and it should therefore be wary of more centralisation for centralisation’s sake. Subsidiarity, therefore, is crucial because it is a celebration of both Europe’s unity and diversity, as well as the guarantor of competitiveness through competition.

2. Eliminate the democratic disconnect between citizens, member states, and the supranational level

In the late 1990s, Ralf Dahrendorf critisised EU decision-making as “dangerous” and analysed: “In the moment in which a subject is dealt with at the European level, it is no longer part of the normal democratic process. The majority of decisions are made by the Council without discussion, they are the product of bureaucratic committees beyond any checks and balances.” Certainly, through Nice and Lisbon some improvements were made, but it remains a fact that these treaties were mere evolutions of a system that has outlived itself.

In order to address this disconnect, the direct right to legislative initiative needs to no longer be a monopoly of the Commission, but also be in the hands of democratic institutions. The most viable way would be to replace the Council of Ministers and the current EP with a bicameral European Parliament, where both chambers are equipped with this right.

The first chamber should be elected by European voters in a single constituency to which European rather than national representatives are elected in European party lists, and in which every vote in every member state has the same weight. Such a ‘true European Parliament’ would likely lead to a scenario whereby European issues would be in the foreground in EP elections, and those elections would no longer be downgraded to referenda on the domestic performances of parties as it is the case in most member states these days. Furthermore, it would strengthen the perception of voters to have direct influence in EU matters.

This elected chamber should be complemented by a second chamber, a parliamentary assembly with twenty seats for each member state, which reflects the composition of national parliaments. This body would replace the Council of Ministers. Representatives in this body should also be allowed to be members of their own national legislature. In such a scenario, politicians in member states would no longer be able to blame Brussels for decisions made there.

Through the Union’s enlargement, the number of Commissioners has increased drastically, beyond the point where competencies can be divided efficiently. One of the reasons why the system of one commissioner per country has prevailed is certainly because this is the only area where smaller countries are able to get the same share as larger ones. With member states being equally represented in the second chamber of the EP, this would no longer be true. The number of Commissioners can thus be lowered, which would significantly reduce bureaucracy.

This bicameral European Parliament would be a strong response to those citizens who feel that there is a disconnect with Brussels on the one hand, and … on the other, because through the parliamentary assembly the legislature is given back to those who, in principle, should hold it.