Vivien Schmidt in El Español on ”The Seven Challenges Facing Europe”

Spanish readers: Here is the link to an article on “The Seven Challenges Facing Europe,” for which I was interviewed along with Christopher Bickerton, published yesterday in El Español: http://www.elespanol.com/mundo/20160504/122237835_0.html. I gave this interview in conjunction with a talk on the impact of European integration on national democracies for the BBVA Foundation in Madrid on May 5, 2016.

British Journal of Politics and International Relations Prize

I was awarded a prize for best paper published in BJPIR (the British Journal of Politics and International Relations) 2013, for my paper entitled, “Speaking to the Markets or to the People? A Discursive Institutionalist Analysis of the EU’s Sovereign Debt Crisis.”   The prize was announced at the Political Studies Association Annual International Conference, at the conference dinner on the evening of March 31st, 2015 in Sheffield, UK.

The paper argues that the EU’s sovereign debt crisis is not just economic; it is also political, resulting from the failure of EU leaders to offer solutions that calm the markets and convince the people. These failures stem from problems with EU leaders’ ideas about how to solve the crisis as well as their communication about them. That communication encompasses not just EU leaders talking to one another in negotiations of crisis solutions but also speaking to “the markets’ and to ‘the people’ about those solutions, all of which may interact in perverse ways. My article uses the analytic framework of “discursive institutionalism” to consider the different forms, types, levels, rates and mechanisms of change in ideas followed by the EU leaders’ discursive interactions in the “coordinative” discourse and their “communicative discourse” to the global markets and European publics. It uses a range of country cases, but in particular Germany and France, in illustration.

Saving Social Europe: Going Beyond The EU’s “Governing By The Rules And Ruling By The Numbers”

Please see my recent op-ed for Social Europe Journal“Saving Social Europe: Going Beyond Governing by the Rules and Ruling by the Numbers” – on the continued travails of the Eurozone crisis, with suggestions on how to move beyond the austerity policies enacted since 2008 that have wreaked havoc on European social policies, in particular in countries in the periphery.

During the euro’s sovereign debt crisis, European leaders have been obsessed with rules, numbers, and pacts, including the so-called ‘Six-Pack,’ the ‘Two-Pack,’ and the ‘Fiscal Compact,’ each more stringent on the nature of the rules, more restrictive with regard to the numbers, and more punitive for member-states that failed to meet the requirements. In the absence of any deeper political or economic integration, the EU ended up with ‘governing by the rules’ and ‘ruling by the numbers’ in the Eurozone. Austerity policies focused on rapid deficit reduction along with pressures for structural reform – often shorthand for reducing labor rights and protections – have wreaked havoc on ‘Social Europe,’ in particular in countries in the periphery.

Slowly but surely, however, under pressure from deteriorating economies and increasing political volatility, EU leaders have been changing the rules by which they have been governing the economy. But they have not done this formally. Instead, EU leaders have been informally and incrementally reinterpreting the rules without admitting it in their discourse to the public. This has helped to slow the economic crisis but not to end it.

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Why Are Neoliberal Ideas So Resilient?

Given the abject failure of the neo-liberal policy offer, why has it persisted as the dominant approach to European policymaking and is there any way out? Vivien Schmidt and Mark Thatcher address this question in an opinion piece for the online think-tank Policy Network. The piece builds on their argument in their co-edited book, Resilient Liberalism in Europe’s Political Economy.

Despite the economic crisis that hit the US and Europe full force in 2008, political leaders have made little attempt to rethink the neo-liberal ideas that are in large part responsible for the boom and bust, let alone to come to terms with how immoderate the ‘Great Moderation’ really was. Much the contrary, neo-liberal ideas continue to be the only ideas available.  In the financial markets, where the crisis began, reregulation remains woefully inadequate, while the only ideas in play are neo-liberal, either for more ‘market-enhancing’ regulation or in favor of greater laissez-faire. The biggest puzzle, however, is the response to the crisis by Eurozone countries that have embraced ‘market discipline’ through austerity and, in so doing, have condemned themselves to slow or no growth.   This is in contrast to the US, which has posted better economic results, despite being torn between Republican fundamentalists advocating austerity and a more pragmatic leadership focused on growth.

Our question, then, is:  How do we explain the resilience of neo-liberal economic ideas?

Continue reading at policy-network.net>>

 

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 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

Can the EU Bicycle Turn into a Jet Plane by 2020?

As part of the EuroFuture paper series, the German Marshall Fund of the United States (GMF) is releasing a paper “Can the EU Bicycle Turn into a Jet Plane by 2020?,“ by Vivien A. Schmidt, the Jean Monnet Chair of European Integration at Boston University.

Schmidt explains that the theory goes that the EU only moves forward in a crisis, and that it must do so for the “bicycle” (that the EU is seen to be) not to fall. But in order for the EU to continue to move forward, its leaders need to turn that bicycle into an airplane, to give flight to their imaginations about what the EU could and should be and do. Rather than mechanics as its means of locomotion, the EU needs aerodynamics to make its increasingly complex interdependence work successfully. She proposes two scenarios, based on the assumption that the eurozone will move towards closer economic and political integration:

Deep economic and political integration that produces a flourishing EUtopia; or shallow economic and political integration that produces a stagnating dystopiEU.

The EuroFuture paper series features strategists from around the world who will analyze how their country or region will position itself vis-à-vis a changed Europe. GMF in-house experts will also explore the implications of the crisis through different national and regional prisms.

For more information about the EuroFuture paper series, please contact Thomas Kleine-Brockhoff or Javid Ahmad.

Eurozone Crisis Reveals Lack of Clear Leadership

Most of the attention to the eurozone crisis in the business pages of US newspapers is on economics. Will eurozone countries default on their debt? Are the spreads on debt too high to be sustainable? Are the banks the real risk? Will the euro break up with a Greek exit? Or will it be Germany?

All good questions, but they miss the point. The real problems for the EU are political, and speak to a crisis of leadership.

The eurozone is one of the biggest economies in the world. Its economic fundamentals, taken as a whole, are arguably better than those of the United States. And its prospects are no worse than those of the United States over the long term — so long as it manages the short term effectively.

What it lacks are the institutions, mechanisms, and resources that the US government has at its disposal to stabilize the economy.

EU leaders recognize the political limits to the eurozone, but have done little to remedy them. They have at various junctures discussed, but rejected, allowing the European Central Bank to act as a lender of last resort, like the Federal Reserve; sharing responsibility for debt through some form of eurobonds, akin to Treasury bills; and creating a European Monetary Fund with serious resources, akin to a regional IMF.

Instead, they have only agreed to small steps, such as creating a Banking Resolution Facility, a fund to bail out banks, and a deposit insurance program, similar to the US Federal Deposit Insurance Corp. At the same time, European leaders have held onto counterproductive pacts, including the “Fiscal Compact,” which sets targets for debt and deficits and demands rapid and radical deficit reduction. These have only pushed Portugal, Spain, Italy, and certainly Greece deeper into recession and made it more difficult for them to repay their debt

The problem for the EU is that it has lacked the common political will to do what is necessary. Germany in particular has been a stumbling block.

Germany is the country most insistent on the need for more “political union” but it has suggested little to achieve it beyond rapid, radical deficit reduction. The moves to authoritarian extremes on the right in Hungary and on the left in ­Romania — which stem from similar, harsh austerity programs begun in 2008 — should be an object lesson on the problems with such policies.

But will the EU take all, or at least some, of the economic measures mentioned above? So far, there are few signs of this. Such steps would require real leadership and a lot of trust among eurozone member-states and their citizens.

It might be useful to remind Europeans, and Germans in particular, that bad things happen in bad economic times. (See World War II.) Even if rescuing member states from bad times might cost a lot today, it would be infinitely less costly than allowing economic problems to fester. Although a eurozone breakup is still a remote possibility today, who knows about tomorrow, particularly if leaders fail to take the bold measures necessary.

This article appeared in the Boston Globe on Sunday, July 22, 2012. [Link to article]

Copyright 2012 The New York Times Company

Democratizing the Eurozone

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>>