The deal reached between British Prime Minister David Cameron and his colleagues on the European Council last week was supposed to transform the relationship between the United Kingdom and the European Union on four dimensions – economic governance, competitiveness, sovereignty and immigration. Three of these issues are largely symbolic. No declaration or agreement is going to ensure ‘better regulation’ either in Brussels or in Westminster; British sovereignty was never seriously under threat from the vague aspiration to achieve an ‘ever closer union’; and while immigration is a vital issue, few experts on cross-border labour imagine it turns on access to ‘in-work benefits’ or can be deterred by the indexation of child support. By contrast, economic governance is a vital national interest both for the British people and for the City of London. The question is whether Cameron has managed to improve that aspect of Britain’s relationship with the rest of Europe.
Britain’s New Relationship with Europe
The European Council has delivered an agreement on Britain’s new relationship with the European Union. The agreement acknowledges that the British government has no obligation to engage in further political integration, it recognizes that not every country will adopt the euro as a common currency, it strikes a balance between the need for common rules and the desire for national autonomy in the area of financial market supervision, it stresses the importance of effective regulation for competitiveness, and it introduces a mechanism to phase in the benefits that accrue to workers who move from one member state to the next. These concessions become effective once the British government informs the European Council of the United Kingdom’s commitment ‘to remain a member of the European Union’. The challenge now is for British Prime Minister David Cameron to win the ‘yes’ campaign. At least, that is what it says in the post-summit script. The agreement may just be enough for the British people to play along.
Democracy without Solidarity
‘There will never be a good a solid constitution unless the law reigns over the hearts of the citizens; as long as the power of legislation is insufficient to accomplish this, laws will always be evaded.’ Jean-Jacques Rousseau (1772)
You can have the best political institutions in the world but if the people who live within them do not want to use them properly, then those institutions will not work. The challenge is to make people want to use common institutions properly and to agree on what constitutes proper use. This is the challenge that Jean-Jacques Rousseau tackled in his ‘considerations on the government of Poland and on its proposed reformation.’ It is the same challenge advanced industrial democracies face today – at all levels of government. Moreover, better institutions or ‘structural reforms’ were not the answer for Rousseau and they are not the answer now: ‘Although it is easy, if you wish, to make better laws, it is impossible to make them such that the passions of men will not abuse them as they abused the laws that preceded them.’
We Don’t Give Up
Mario Draghi reassured the markets at the 21 January press conference of the European Central Bank (ECB) by making it clear that the Governing Council is unanimous in its desire to reassess economic conditions at the upcoming March meetings and to reconsider its policy stance if necessary. He stressed that there is no limit to the action that the ECB can undertake to achieve its mandate. And he reiterated that whatever the actual policy decision in March, the ECB is already working to resolve any technical issues that might prevent it from using the full range of instruments at its disposal. The response in the markets was immediate. Bonds and equities rallied while the euro moved lower against the dollar – all good things from the ECB’s perspective. ECB watchers were cautiously optimistic. A few voices noted that the ECB had promised in October of last year only to under-deliver in December; this time actions should speak louder than words. So should results. Draghi has reiterated his July 2012 promise to do ‘whatever it takes’. What he did not say is that ‘it will be enough’. Instead, he insisted: ‘We don’t give up.’
More than Just debt
Europe’s Orphan: The Future of the Euro and the Politics of Debt. By Martin Sandbu. Princeton: Princeton University Press, 2015. 313 pp. $29.95. ISBN: 978-0-691-16830-2 (cloth).
The euro did not cause Europe’s economic crisis; policymakers did. By focusing too much attention on debt, by demanding that existing obligations be met in full (and creditors made whole), and by doing so against a backdrop of coordinated macroeconomic tightening, Europe’s policymakers ensured that the downturn in European macroeconomic performance would be deep, long, and destructive. These same policymakers only narrowly avoided disaster when they began to loosen monetary policy and to accept the need for some debt restructuring. Nevertheless, these efforts did not come soon enough, they were no comprehensive enough, and they were not applied consistently enough to prevent Europe from coming to the edge of disaster as elite macroeconomic ideology finally collided with the requirements for democratic legitimacy in Greece (and Germany) during the summer of 2015. This is the diagnosis Martin Sandbu offers to explain what went wrong.
Partnership and Solidarity: Obama’s Last State of the Union
Leadership through partnership works; democracy without solidarity does not. These are two of the central arguments Barack Obama makes in his eighth and final ‘State of the Union’ address as President of the United States. The first argument builds on the premise that the United States cannot lead by trying to do everything itself; it has to make sure ‘other countries pull their own weight’. The second rests on the idea that ‘democracy does require the basic bonds of trust between its citizens.’ Isolated like this, these claims seem self-evident. In the context of a U.S. presidential election, they are controversial. Indeed, American presidential candidates have been fighting over these issues at least since Barack Obama rose to prominence. This explains in large measure why the United States is so conflicted over the conduct of its foreign policy and so polarized in its domestic political discourse.
Austerity and Anti-Politics
Italian Prime Minister Matteo Renzi gave an interview to the Financial Times shortly before Christmas to criticize the impact that successive waves of austerity are having on political stability in southern Europe. The interview had particular resonance in the aftermath of the Spanish national elections. Spanish Prime Minister Mariano Rajoy was in many ways Europe’s ‘best’ student in terms of economic policymaking. Rajoy not only narrowly escaped the doom loop that tied the fate of the Spanish government to the solvency of its banks, but he also avoided the indignity of falling under official European economic tutelage. He has not always does as told by his European counterparts but his government is often held us as a model of successful macroeconomic adjustment and fiscal consolidation in the face of crisis. His ‘reward’ has been a splintering of the Spanish electorate and a hung parliament. For Renzi, the fate of his ‘friend Mariano’ is an inevitable consequence of Europe’s obsession with austerity.
Lessons from Greece? Individuals Matter
European integration is a process that derives from broad social movements. We look for its origins in the terrifying experience of the twenty years’ crisis, bookended by two cataclysmic world wars. ‘Europe’ is not necessarily a rejection of the nation state, but it is an attempt to rescue the nation state from its inherent limitations and vices. It is a forum within which France and Germany can reconcile their differences; Britain can adapt to its relative decline; Southern Europe can find a bulwark for democracy; and Eastern Europe can emerge from communism.
But Europe is made by people and sometimes individuals can play a decisive role. The events of the past summer are a good example. There are many prominent scholars who have tried to cast the Greek crisis as some kind of clash of economic cultures or institutional path dependence gone wrong. Those arguments have merit. But they do not capture the essence of what happened; they fail to explain how Europe came so close to disaster; and they make it harder to anticipate what could still go wrong.
Europe’s Banking Union: ‘Failing Forward’?
Between the euro crisis, the refugee crisis, tensions within the single market, and anti-European political extremism, the European Union appears on the surface to be failing. This isn’t quite true though. Every time Europe faces a setback, it tends to make progress in response. This progress is usually only partial (or incomplete), but it is enough to lay the foundations for more comprehensive solutions to emerge in the future. What looks like failure is actually ‘failing forward’, a dynamic that Dan Kelemen, Sophie Meunier and I examined in a recent article in Comparative Political Studies. The latest incarnation of this concept is the recent developments – or lack thereof – at the December 2015 European Council summit, which was supposed to shore up European financial markets by pushing ahead with the construction of common institutions to safeguard European banks.
Europe’s Controversial Single Market
When critics want to explain why the European Union (EU) is in crisis, they usually point to the euro or the Schengen Agreement. These are areas of vital national sovereignty, they argue. A government without a currency cannot preserve its national competitiveness and has no status as a lender of last resort. A government that cannot monitor its borders cannot stem the flow of illegal workers, criminals, and terrorists. There is merit to both of these arguments but they miss the deeper point. Europe’s problems do not originate in money or migrants; they stem from the single market.
Erik Jones 