There are many definitions of the modern economic sovereignty in an ever globalizing world. In a European region which is especially characterised by a vivid and ever growing multivectoral integrational processes, the economic national sovereignty is crucial to determine the level of cooperation with the supranational economic and financial institutions, as well as the position of the every single Member State within the European political system.
Interdependence sovereignty is defined as the capacity and willingness to control flows of people, goods and capital into and out of a country. On the other hand, the domestic sovereignty is the capacity of a state to choose and implement policies within its territory.
The UK`s position is especially specific. It is not that foreign ownership is in itself a bad thing but to argue that Brexit will permit the UK to re-establish economic sovereignty is simply a chimera. The UK is a very open economy with a ratio of Imports and exports to GDP of 61% and rising (51% in 2003). This is one of the highest ratios of any of the G8 countries. How is it possible for an economy so dependent on trade in goods and services to recover its economic sovereignty given this extremely high dependence on imports both for consumption and for production? One result of joining the EU has been greater specialisation in production and further integration in industry with obvious benefits in terms of efficiency (and in prices and quality). The import content of UK exports is extremely high (23%) – a further indicator of dependence on trade for both output and employment. EU membership gives the UK greater control in these circumstances over imports since it participates in all regulatory bodies.
The four European freedoms (capital, people, goods, and services) is a sensitive topic, as the core of the uniqueness of the European idea, posit the solid background in a mosaic across the economic interdependence and national economic sovereignty. Every single Member State especially the new ones, negotiate separate conditions under which the further relations in economy and financial affairs shall be grounded once the candidate country enters the Union.
The crisis of sovereignty manifests itself as a crisis of legitimacy of the state, because the confidence of voters in their elected representatives decreases constantly. That is, voters no longer have confidence in their representatives’ ability to perform the original function they were elected for and which was created through the classical concept of constitutionalism. There is no doubt that the democratic gap has widened. Many authors in the past decade drew attention to the fact that capitalism, in its corporative and globalization power, not only leads to the erosion of sovereignty, but also endangers democracy.
It is obvious that the reduction of sovereignty of nation-state, in the aspect we discuss here, is not a reversible process. Although the state remains an important factor on the global economic stage, control of resources through nation-state sovereignty is under attack of various formal and informal factors. The state is forced to implement multiple transfers of sovereignty: to supranational formations and international institutions such as the IMF, WB, WTO, but also in accordance with requirements of the corporate world. In principle, sovereignty of the individual and the nation is not affected by the processes of globalization. Citizens still have a formal de iure possibility to control the government’s work. On the other hand, the government may be revoked only by the people (i.e. by its elected representatives), not by foreign centres. The state remains the dominant source of “legitimate” power. Formally and legally, states have not lost their self-control. Also, TNCs have remained at the level of legal entities and, as such, they enter standard voluntary bilateral contract relationships with states and/or individuals within the states.
What about the Westphalian national economic sovereignty destiny?
Although the Westphalian system developed in early modern Europe, its staunchest defenders can now be found in the non-Western world. The presidents of China and Russia issued a joint statement in 2001 vowing to “counter attempts to undermine the fundamental norms of the international law with the help of concepts such as ‘humanitarian intervention’ and ‘limited sovereignty'”. China and Russia have used their United Nations Security Council veto power to block what they see as American violations of state sovereignty in Syria. Russia was left out of the original Westphalian system in 1648, but post-Soviet Russia has seen Westphalian sovereignty as a means to balance American power by encouraging a multi polar world order. What will be the destiny of the European countries is a one million Euros question, but what is doubtless is the tendency to supranationalize all the monetary and economic issues among the EU Member states.