The euro area lacks a framework for sovereign debt restructuring and it lacks a common risk-free asset. Both issues are important in looking ahead to the prospect of any future crisis. Of the two, however, the creation of some kind of sovereign debt restructuring mechanism appears to attract the most political attention. This briefing note outlines the issues that would need to be addressed to bring greater stability to the euro area.
Month / May 2019
Europe’s Complicated Democracy
Europeans are heading to the polls now in one of the world’s largest and most complicated democratic experiments. Moreover, these European elections are probably the most consequential we have seen since Europeans started voting directly for members of the European Parliament in 1979. This is a good opportunity to think hard about how Europeans are represented, how they make their decisions about voting, and what kind of Europe is on offer. Three recent books suggest new and important lines of argument. Christina Schneider shows that much of the responsiveness of Europe to the voters actually takes place through the Council of the European Union; Jennifer Fitzgerald reveals how votes on the extremes are more likely to be local than national, even if they have an anti-European tinge to them; and Sergio Fabbrini argues that many of the tensions we see surrounding the European project could be resolved if we just changed the way we think about constitutional federalism. These arguments are challenging and sophisticated in ways that much of the commentary that surrounds the European elections tends not to be; they are also counterintuitive. Now that everyone is focused on Europe, it is a good time for some well-grounded, lateral thinking.
The Forces Behind the New Europe
The European Parliament that will be elected in 2019 will be different from the one it replaces. The two main political groups, the European People’s Party (EPP) and the Socialists and Democrats (S&D) will both lose seats. For the first time since the parliament began direct elections in 1979, those two groups will be unable to form a parliamentary majority together. They will have to enlist the support of the liberal democrats (ALDE) to control the legislature, perhaps with the support of Emmanuel Macron’s movement, but that grand coalition will leave significant representative gaps.