The Future of the Eurozone

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.)

 

Schmidt Publishes Resilient Liberalism in Europe’s Political Economy

Vivien Schmidt’s co-edited contribution to Cambridge University Press’s Contemporary European Politics series has been released in the UK and will be available in the US by the end of the month. The book – Resilient Liberalism in European Political Economy – explains why neoliberal economic ideas have not just survived, but thrived since the 1980s – taking Europe from boom to bust.

Abstract

Why have neo-liberal economic ideas been so resilient since the 1980s, despite major intellectual challenges, crippling financial and political crises, and failure to deliver on their promises? Why do they repeatedly return, not only to survive but to thrive? This groundbreaking book proposes five lines of analysis to explain the dynamics of both continuity and change in neo-liberal ideas: the flexibility of neo-liberalism’s core principles; the gaps between neo-liberal rhetoric and reality; the strength of neo-liberal discourse in debates; the power of interests in the strategic use of ideas; and the force of institutions in the embedding of neo-liberal ideas. The book’s highly distinguished group of authors shows how these possible explanations apply across the most important domains – fiscal policy, the role of the state, welfare and labour markets, regulation of competition and financial markets, management of the Euro, and corporate governance – in the European Union and across European countries.

About the editors

Vivien A. Schmidt is Jean Monnet Professor of European Integration and Professor of International Relations and Political Science at Boston University and Founding Director of Boston University’s Center for the Study of Europe.

Mark Thatcher is Professor in Comparative and International Politics in the Department of Government at the London School of Economics and Political Science.

About the series

Contemporary European Politics presents the latest scholarship on the most important subjects in European politics. The world’s leading scholars provide accessible, state-of-the-art surveys of the major issues which face Europe now and in the future. Examining Europe as a whole and taking a broad view of its politics, these volumes will appeal to scholars and to undergraduate and graduate students of politics and European studies.

Exploring the Eurozone Crisis

In this three-part series of interviews, Vivien Schmidt, Jean Monnet Professor of European Integration and Director of the Center for the Study of Europe, discusses the ongoing Eurozone Crisis, problems of leadership and democracy in the EU, and the effect and applications her research is finding overseas.

The Eurozone Crisis, Part 1: Origins and Effects of the Eurozone Crisis

The Eurozone Crisis, Part 2: How Ideas and Discourse Shape History

The Eurozone Crisis, Part 3: Pushing the Dialogue Forward

Recent Travels

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.

With Pierre Vimont at European Conference Harvard: Europe 2.0 Taking the Next Step

Interview in Correio Braziliense

I was recently interviewed by Gabriela Freire Valente of Brazil’s Correio Braziliense on David Cameron’s proposed referendum on the UK’s European Union membership before 2017, signaling the possibility of a UK exit from the EU. [Download article (in Portuguese)]

 

The Eurozone Crisis Challenge to Democracy: Which Way Forward?

Does the euro crisis ring the death knell for European citizens’ influence in the EU decision-making process?

During the eurozone crisis, decision-making has become more and more remote from the citizens, as EU member-state leaders in the Council have taken most of the initiatives. This has altered the EU’s ‘democratic’ settlement (which expects a relative balance among major EU institutional actors), by sidelining the European Parliament (EP) and turning the EU Commission into little more than a secretariat tasked with technocratic oversight of automatic rules coming from more and more stringent pacts for fiscal consolidation. Moreover, national parliaments have had little role other than to rubber stamp intergovernmental treaties at the risk, if they failed to do so, either of sanctions from the markets or, for countries under IMF or eurozone loan bailout strictures, a loss of access to further financing.

European leaders engaged in intergovernmental decision-making, whether in the European Council, in the Council of Ministers, in Summits, or in negotiating Treaties, often tout themselves as most legitimate because they indirectly represent their citizens. What they fail to recognize is that however crucial intergovernmentalism may appear in the heat of the crisis, it is actually the least democratic of processes because it gives those leaders with the greatest bargaining power an undemocratic advantage in the closed door negotiating sessions of the Council. That ‘ordo-liberal’ (neo-liberalism with rules) austerity policies focused on a ‘Culture of Stability’ dominate the eurozone, and remain predominant even as eurozone countries have slid into recession and worse, is testimony in no small measure to the power of one country in the intergovernmental decision-making process.

Such increasing intergovernmentalism, added to the hesitant EU leadership that has failed to solve the crisis, only further fuels citizens’ disaffection from the EU as well as disillusionment with their leaders. Citizens find themselves increasingly unable to influence decision-making, whether as voters who express their dissatisfaction by throwing their governments out of office with increasing frequency – only to find the subsequent government implementing the same policies – or as protesters in the streets. Is there any wonder, therefore, that we see the rise of extremist parties on the right and the left, ready to jettison the euro and, possibly, the EU?

The illegitimacy of the European nation state

The legitimacy crisis, then, is not a problem just for the EU but also for national polities. At the national level, we increasingly find ‘politics without policy’ in domains of EU competence, as more and more policy decisions have moved to the EU level while leaving the political debates of the left and right to the national arena. At the same time, the EU level appears to be ‘policy without politics,’ as member-state leaders in the Council eschew the language of the left or the right when speaking of their national interests, the EU Commission uses the language of technocracy, and the EP, if not left out of the game entirely, uses the language of the public interest .[1] But while the language may be apolitical, the policies in response to the crisis are in fact highly political – and largely conservative and ordo-liberal. But they have not been subject to the kind of political debate at the EU level that citizens would normally expect, and which at the national level traditionally serves to legitimize policy.

The question therefore is: should one politicize EU institutions in order to legitimize its policies? If the answer is yes – how? Through an elected European President – of the Council or the Commission? By shifting the balance toward the European Parliament? By allowing more discretion to the Commission?

The election of the Council President via universal suffrage, suggested by German Finance Minister Wolfgang Schäuble among others, would certainly appear to confer the greatest representative legitimacy on the Council while bringing the EU closer to the people. But it is premature. The danger in the short term is that in the absence of a mature European citizenry with a common sense of identity as a ‘demos’, the election becomes a plebiscite, with the winning candidate the one with the greatest name recognition – a pop star, a football hero – who would win over less colourful but more competent and seasoned politicians. (In a recent essay [8] for the German Marshall Fund’s Eurofuture series on alternative scenarios for EU in 2020, I jokingly suggest that in a future dystopiEU the winning candidate would be David Beckham.)

Moreover, without any thought to the powers the Council President would exercise, having the legitimacy of popular election would either remain largely symbolic, leaving that person too little power if nothing were altered in the job description, or it might radically alter the EU institutional balance by appearing to confer too much power to that person, to the detriment of member-state leaders in the Council and possibly the EP.

By contrast, the election of the Commission President via European Parliamentary elections – the preference of major EP party groupings for the EP 2014 elections – might work to the advantage of all institutions. In the scenario envisaged, each main European party grouping would name its candidate for Commission President, set out a party platform, and then campaign in member state after member state, debating with the candidates from other European parties about their visions for how to solve the crisis.
This could be enhanced were national parties to name potential Commission candidates to head their party lists, thereby enabling national electorates to put a national face on the EU campaign, and get the chance to elect their Commissioner. It would have the added value of encouraging top national politicians to run for the EP, and then to serve as Commissioners.

This alternative would help rebalance the EU system by giving the Parliament along with the Commission President greater representative legitimacy, at the same time that it would make the Commission more accountable to the EP as well as better able to legitimately exercise administrative discretion when implementing Council policies, by orienting them to the political preferences of the EP majority. But most importantly, the elections themselves would help bring real (left/right) political debate back into the EU policymaking process, in principle spurring citizen interest and serving to legitimize policy.

One caveat, though, in the line of ‘be careful what you wish for.’ The EP elections of the Commission President could themselves become a losing gamble were they to remain what they have long been, second-order affairs of little interest to citizens, and if the different parties in the elections fail to come up with clearer visions and better narratives to legitimize ‘more Europe’ to the citizens.

The gamble would be lost entirely, however, were the only interest to come from the political extremes, leaving the EP with a thinning centre hemmed in by extremists of the right and left. Under these circumstances, such elections would politicize only to delegitimize the Commission and the EP. To ensure against this eventuality, along with increasing national political volatility, best solve the eurozone crisis before 2014.

Vivien A. Schmidt is Jean Monnet Professor of European Integration and Director of the Center for the Study of Europe at Boston University. She is the author of Democracy in Europe: The EU and National Polities [Oxford 2006].

© Copyright 2012 openDemocracy Ltd

Vivien Schmidt quoted in Harvard Political Review

Vivien Schmidt was quoted recently in the Harvard Political Review in article by Krister Koskelo entitled “Europe: Between Technocracy and Democracy.”

Vivien Schmidt testimony before the European Parliament

On October 4, 2012, Vivien gave testimony to the European Parliament’s Constitutional Affairs Committee, which held an all-day inquiry into European Governance and the Future of Europe. Her policy brief – EU Differentiated Integration and the Role of the EU Political Economy [download pdf] – addressed specifically “Multi-tier Governance and EU Political Economy.” On October 24, she gave a keynote speech to the European Parliament’s party grouping of social democrats, the second largest party in the EP, at a special session on “The Future of Europe.”

[Video recording of the October 4 afternoon session - Panel III & IV: Legitimacy, future prospects]

To start, put the recording time start at A 9:16:00 end B 12.35:00 and for the afternoon session A 15:10:30 B 18.27:00. Vivien Schmidt’s intervention begins at around 17h.

[Participants' outlines]

The workshop took place as part of an initiative of the European Parliament to report on the “Constitutional problems of a multitier governance in the European Union.” The report’s objective is to formulate a broad reflection on the state of EU governance in the “post fiscal pact” Union and to develop a strategy that will incorporate, in the medium term, economic governance into the Union system, improve the institutional set up of the Union and strengthen its democratic legitimacy while maintaining the consistency and dynamism of the European construction.

EU Austerity Measures: Why The Nobel Peace Prize Matters

By Vivien Schmidt and Cornel Ban

In receiving the Nobel Peace Prize, the leaders of the European Union should not only take a moment to feel justifiable pride in the recognition of the EU’s past accomplishments, but they should also take a moment to reflect on what they’re doing today in the midst of the Eurozone crisis that may undermine that very achievement.

The Nobel Committee justifiably gave the award based on the Union’s contributions to peace, human rights and democracy. Since the 1950s the economic, political and cultural integration of Europe has made inter-state war unthinkable. The suggestion that Germany could go to war with France, Britain or Greece would extract from no more than a good laugh from today’s average European. Other dangerous tensions, such as those between Romania and Hungary, are now relegated to the history books; and this too is in large part due to European integration.

Continue reading on WBUR.org “Cognoscenti” 10/18/12