Recently, I was awarded a research fellowship by the European Commission, Directorate General of Economic and Financial Affairs (DG ECFIN). It involves my producing a paper entitled “The Political Economy of the European Monetary Union: Rebuilding Trust and Support for Economic Integration.” The fellowship program itself encompasses approximately ten fellows, all economists except for me (a political scientist). In addition to writing a very long research paper for publication in DG ECFIN’s paper series, I am to participate in three workshops over the course of a year (june 2014-June 2015), plus be available for 30 hours of consultations. The fellowship program was established in view of the seating of the newly European Parliament and the newly appointed Commission President and Commissioner head of DG ECFIN. We are to provide advice to the new Commissioner with regard to current and future policy. In my own case, I will be considering not just how to rebuild trust and support for economic integration but the problems with the current policies that make rebuilding trust very difficult.
In my research, I will be examining not just problems with the economic policy performance (often termed output legitimacy in EU studies ) and the increasingly volatile politics resulting from citizens’ view of the EU as unresponsive to their concerns (input legitimacy) but also the quality of the governance processes (which I term ‘throughput’ legitimacy). I will be interviewing of EU officials to get a fuller sense of the political dynamics of crisis resolution, as EU institutional actors have sought to get beyond the rigidities of the initial crisis response to economic governance that established a set of numbers-targeting rules focused on austerity and structural reform that have not worked. I will be considering how EU officials in different EU institutions may go about informally reinterpreting such rules as well as how they legitimate any such reinterpretations.
While in Rome last week, I was interviewed by Lorenzo Salvia for Corriere della Serra. The interview appeared in the print version of the paper on November 26, 2013. [interview Schmidt corriere della sera 26 nov 2013]
During a European Seminar entitled “Europe in Crisis, Citizens in Protest” (4-7 July, 2013, Nafplion, Greece), I gave a video recorded interview for the Crisis Observatory/ELIAMEP.
In it, I discuss why the Eurozone has not been able to exit the crisis and problems with current approaches to the crisis among other things. The interview was transcribed and can be read on line in English here.
Vivien Schmidt’s comment on Mathew Dalton’s September 19 Wall Street Journal article, “Austerity Seen Easing with Change to EU Budget Policy,” was picked up by AP reporter Juergen Baetz. Comment and links to both articles below.
Easing austerity through change to EU budget policy is a very significant move. If agreed by EU finance officials, changing the calculation of the ‘structural deficit’ could go a long way to easing the economic problems—and thereby the political ones–of the Southern European countries as well as Ireland. It is also a silent acknowledgement of the fact that the radical deficit cutting programs of the past three years have failed to address growth. It may not be possible to reverse the financial stability rules and numerical targets of the various Eurozone pacts, but it is possible to reinterpret them. And by reinterpreting them, the worst aspects of those rules, the growth destroying aspects, may be set aside. What we are seeing is the beginning of a process of re-evaluation of the economic policies that have kept growth down while increasing debt-to-GDP ratios, and thereby keeping the Eurozone from exiting the crisis. It is about time.
Austerity Seen Easing With Change to EU Budget Policy – Change Would Have Big Impact on Spain, Significantly Reduce Estimates of Government’s ‘Structural Deficit’ by Mathew Dalton (Wall Street Journal 9/19/13)
EU to Change Budget Calculation to Ease Austerity by Juergen Baetz (Associated Press 9/19/13)
I was a keynote speaker, along with Iain Begg, at a plenary on “The Future of the Eurozone” at the Sheffield Political Economy Research Institute annual conference Beyond Austerity vs Growth: The Future of the European Political Economy at the University of Sheffield on 1-3 July 2013. Participants included leading academics, policy makers and journalists from across the globe. You can view a video of the session on YouTube. (My talk begins at 39:13minutes.)
I travelled to Europe twice in February to discuss problems related to the Eurozone Crisis. The first time was to participate in an expert panel on how to develop democracy in the European Union for the meeting of Social-Democratic leaders, ‘Renaissance for Europe: Peace, Prosperity, Progress,’ on February 8-9, who gathered in Turin, Italy, to support the social-democratic leader, Pier-Luigi Bersani, in the upcoming elections. Attendees included sitting Prime Ministers of Belgium, Romania, and Croatia along with opposition leaders from a number of other countries. The second trip was to give a talk on “The Eurozone Crisis seen from the US” at the French National Assembly on February 21 for the conference on Trans-Atlantic Relations sponsored by the Foreign Affairs Committee.
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.
Continue reading in Social Europe Journal>>
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)
Here’s a comment I co-authored with Maxime Lefebvre for Le Monde online (in French).