It is amazing how blind the EU leaders (German Chancellor, ECB, and some in the EU Commission) are to the political dangers involved in trying to force Greece to implement economic cuts that are bound to fail, that have already failed, and that will plunge the country deeper into misery….and anarchy! What EU leaders need to do now is to extend the Greeks an olive branch. Certainly hold them to the loan agreement, but give them time to repay and grow. This means that in exchange for holding the deficit where it is today, rather than insisting on continued radically rapid deficit reduction, that the Greeks promise to continue to reform—by tackling tax evasion, corruption, and structural reform. And make offer a new set of terms today. Don’t wait til the upcoming legislative elections!
Court official to be appointed Greek interim PM (Associated Press 5/16/12)
In recent months, more and more attention has been focused on the failure of the Eurozone leaders’ policies of fiscal consolidation, with growth presented as the alternative. The problems for the Eurozone stem not just from the policies, however. They also come from the governance processes and the politics—or lack thereof.
The main problem for EU democracy lies in decision-making processes that have increasingly combined excessive intergovernmentalism with technocracy. The European Council’s monopoly on Eurozone crisis decision-making has not just unbalanced the long-standing relationship among EU institutions. Its intergovernmental decision-making has also reduced itself largely to the Franco-German couple—or only to Germany. This has skewed the process toward the almost exclusive consideration of national interests, negotiating strength, or even momentary whimsy of two EU leaders—or only one. It also enhances the lack of transparency in decision-making, increases concerns about accountability, and further alienates European publics who wonder what has been going on behind the closed doors of the Council.
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The presidential elections in France, the legislative elections in Greece, and the regional elections in Germany together mark a turning point for the EU. The results make clear that, despite their differences, European voters all share a common view that current leaders are not delivering. In France and Greece, voters want an end to unending austerity that doesn’t work.
But whereas France’s second round of the Presidential elections brought into power a Socialist government that can govern, and govern to the center, Greece’s election put into place a legislature even more divided than the first. The presence of extremist parties on the right and the left also cast further doubts on the country’s governability. The German elections, with the rise of the Pirates party and the defeat of the Liberal Democrats, Merkel’s coalition partner, suggest that even voters in this country are fed up with policies that don’t work.
Let us hope that the new French President Hollande will be able to work sufficiently well with the continuing German Chancellor Merkel to produce new policies that will convince the markets that the Eurozone will finally do enough to promote growth, with all the backstops necessary, whatever happens with Greece.
Voter Anger Sweeps France (Wall Street Journal 5/7/12)
Jolyon Howorth and I were on “Sounds of Dissent” on WZBC 90.3 FM Boston on Saturday, May 5, 2012 discussing the run off elections in France.
[Link to program]
Here’s a comment I co-authored with Maxime Lefebvre for Le Monde online (in French).
David Brancaccio of American Public Media’s Marketplace Morning Report picks up on my remarks at Brown University’s Watson Institute conference on “The Failure of the Euro.” [Transcript]