By Gérard Vespierre, Le Monde Décrypté – Rule of Law in the heart of Europe: the microstates of Andorra, Liechtenstein and Monaco and EU values.

15 December 2022 – Gérard Vespierre, editor of geopolitics journal Le Monde Décrypté, published a new report, identifying serious threats to the rule of law in Europe from three microstates: Andorra, Liechtenstein and Monaco, the conclusions of which he had presented on 30th November at the Brussels Press Club in a Euractiv panel discussion that gathered Vespierre, Niels Fuglsang -Danish member of parliament-, and Dick Roche -former Irish Minister for European Affairs and member of parliament.

Gérard Vespierre, author of the report said: “In the difficult economic and geopolitical times we are in, where the rule of law, the very heart of our democracies, is at stake in our rivalry with aggressive authoritarian states, we must take all measures to protect this core value. A failure to do so in any respect, be it constitutional, human rights, or financial, will negatively impact and weaken our democracies. The financial failures stressed in this report must be addressed to protect our core value, the rule of law, for all European citizens. EU institutions and member states must have an absolute stand on this.”

No pariahs, but working together at bringing transparency into proximity

In an OpEd in La Tribune, the author recalls Micro-States in Europe should therefore “by no means be considered pariahs. They carry with them a common characteristic, their size. This structural aspect is far from trivial, because it “systemically” carries with it a consequence: the natural proximity (or even the juxtaposition of roles) of those responsible for the three political, judicial and economic pillars. If you know the phrase “small is beautiful”, you should add “smaller is closer”. The very reduced size creates a structural and permanent proximity.”

Systemic conclusions of this panel and report are that:

– whilst not being EU members, these low-tax and lightly regulated microstates have had an outsized influence on the EU’s financial markets. These three countries have also served as the setting for some of Europe’s most damaging banking and political scandals,

– the size effect, intrinsic to their existence, reduces both the possibilities of competition, and increases the probabilities of consanguinity, between the institutions of political power, justice, and the economy. Vespierre approaches here the notion of secrecy, more easily cultivated and kept within the framework of closed institutions,

– there is therefore a dual need to have rules and practices adopted that constitute systemic counter-fires to situations of proximity and juxtaposition of functions.

The report argues that the EU should take an active role in supporting these nations, including: 

• Encouraging them to sign the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,  
• Extending the Supervisory Integration/Cooperation with EU member states; and
• Promoting and protecting whistleblowers.

Strenghthening current progresses

Monaco and Andorra have been in discussions with the European Union since 2015 regarding further integration. There is an opportunity here for Spain, which will take over the Presidency of the Council of the EU from next July, to formalize substantial progress, or even new formal agreements for rapprochement or harmonization with these 2 principalities, in the financial, fiscal and judicial fields.

Apart from this existing framework, France has proposed a “European political community” which can also be a framework for reflection vis-à-vis these three European Principalities.

Still in the European context, it is also necessary to mention the strengthening of cross-agreements between each Principality and the closest European countries, France and Austria in this case.

Avoiding breaches authoritarians regimes might use

The generic relevance of this study lies with the current context of collectively preventing breaches in Europe by aggressive authoritarian non-European states that, using these breaches, may as well destabilise the Micro-States and the EU.

European Micro-States and the EU have a joint interest in together finding ways to keep a balance between financial specialisation with financial stability, of getting this balance aligned with values, and of .

Read in French the full original report published on Le Monde Décrypté on 13th December and the English version now available.