The political independence of the European Central Bank rests on three fictions. The first is that the ECB will make better policy over the longer-term than political considerations would dictate in the shorter-term. The second is that the costs of ECB monetary policy decisions will not fall consistently on the same groups. And the third is that disagreements within the ECB and its Governing Council are essentially technical and not political, meaning they are about how the economy really works and how it can best be managed, and not about who wins and who loses from one monetary policy decision to the next. These are fictions insofar as they rest on the assumptions that monetary policymakers are not politicians, that money is neutral over the longer-term, and that technical disagreements are somehow distinct (or distinguishable) from self-interest. The decision to appoint politicians to the top positions at the ECB because of their political skills challenges those assumptions. Along the way, such appointments necessarily bring the political independence of the ECB into question.
The European Parliament that will sit for the first time on 2 July 2019 is very different from the assemblies that came before it. More Europeans voted in the 2019 elections than ever before and with a higher rate of participation than we have seen since the 1990s. More votes were cast for parties outside the two main formations, the European People’s Party and the Socialists and Democrats. More new political parties have won representation, both from the right and from the left. And more uncertainty surrounds the group formation process and coalition building dynamics than we have seen since the first direct elections in 1979.
Small is beautiful, but also dangerous. That is the central insight in Darius Ornston’s 2018 book. Even good governance can go bad. Consensus makes it easier for a society to work together in facing the challenges presented by world markets. Backed by powerful social groups, political leaders can fend off adversity, compensate losers, agree on how to organize or reorganize machines and labor, and invest in the physical and human capital necessary for future prosperity. This insight will be obvious to anyone familiar with Peter Katzenstein’s classic works. What Ornston adds to Katzenstein’s argument is a cautionary note. The same consensus Katzenstein celebrated in his analysis of small states and world markets also makes it easier for political leaders to misallocate scarce resources and delude themselves and their followers into feeling safe when they are not. Finland’s embrace of Nokia and Iceland’s addiction to banking are good illustrations. Unfortunately, in both cases, the social requirement for conformism can drown out even the most constructive criticism or warning. Success and failure arise from the same dense networks that facilitate deliberation and reinforce trust.
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.
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 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.
As we look ahead to the culmination of Britain’s efforts to leave the European Union, it is also worth looking back on the process that brought us to this moment. This collection offers a series of short essays that were written as events unfolded alongside a clutch of articles that try to put Britain’s departure from the European Union in a wider theoretical and historical context.