Political Economy Context of EU Crises, Ben Rosemond

Political Economy Context of EU Crises

  • European Integration (EI) as a polity-formation process:

    • Seen as an end goal or political project aimed at unifying European nations under a shared governance framework.

    • Central myths include the ‘progressive’ idea of EI, which emphasizes an optimistic view that integration leads to peace, stability, and economic prosperity.

    • The concept of ‘Crisis as opportunity’ suggests that crises can catalyze further integration, as evidenced by pivotal events like the conflict in Ukraine and the subsequent debates around defense cooperation.

Crises in EU History

  • Definition of Crisis:

    • In context, a crisis is defined as significant political and economic shocks that can emerge from internal dynamics or external pressures affecting the EU’s integrity and functionality.

    • Such crises are common occurrences throughout EU history; the process of European Integration is inherently crisis-prone, reflecting its complexities and the varying interests of member states.

  • 1960s Crises in EEC:

    • The crises of the 1960s were primarily endogenous, stemming from internal issues related to decision-making inefficiencies and the challenges posed by enlargement of the European Economic Community (EEC).

    • Opportunities for deeper integration during this period were severely limited due to conflicting national interests and lack of consensus among member states.

  • Responses to Economic Challenges:

    • The Single Market program and the Single European Act (SEA) were pivotal responses designed to overcome economic challenges and enhance trade within the EU, though these were not direct responses to specific crises.

    • The Maastricht Treaty emerged as a framework addressing several challenges, notably the ratification crises, which although reflective of growing pains rather than acute emergencies, nonetheless required significant reform and compromise among members.

Series of 1990s Crises

  • The 1990s featured multiple significant crises that tested EU cohesion:

    • Key events included the Yugoslav crisis that threatened regional stability, the BSE (mad cow) crisis impacting public health and consumer confidence, the resignation of the European Commission, the Austria crisis fueled by political parties' controversial alliances, and various treaty ratification crises affecting EU expansion.

    • The constitutional crisis in mid-2005 revealed deep-seated political issues in the EU, underscoring the challenges of voter engagement and the legitimacy of EU institutions.

  • Impact on CSDP:

    • The crises in Yugoslavia instigated discussions on deeper integration in Common Security and Defence Policy (CSDP), highlighting the EU’s need for a robust response mechanism to address security challenges within its borders. This prompted the establishment of a more cohesive defense policy structure to safeguard member states.

Shifting Perspectives on Crises

  • Current crises must be contextualized within the changing dynamics of European capitalist democracy, considering how political, economic, and social shifts influence EU stability and integration efforts.

  • Crisis politics are largely shaped by the erosion of political economy regimes that traditionally supported European Integration, challenging the perception of EI as merely a forward-looking process without regard for past political realities.

Historical Context of EU Formation

  • The EU as a product of post-WWII democratic capitalism:

    • The historical specificity of the EU’s formation highlights its origins in the post-WWII period, when member states sought to prevent further conflict and establish a cooperative economic framework that promotes mutual benefits.

    • Modern crises often relate to the unraveling of postwar democratic-capitalist compromises, as the initial agreements struggle to adapt to current globalization trends and internal divisions.

  • Key Features of Embedded Liberalism:

    • In this framework, limited international capital mobility, fixed exchange rates, and domestic macro-economic autonomy were foundational.

    • The approach aimed to balance the forces of the market within a context that respected principles of social democracy, ensuring that economic growth does not come at the expense of social welfare.

Dilemmas from Unraveling the Compact

  • Three Dilemmas of Integration:

    • Market Order: The conflict between market-making and maintaining social solidarity became particularly evident during the Eurozone crisis, when economic policies prioritizing financial stability clashed with social needs.

    • Constitutional Order: The tension between supranationality and democratic authorization raises concerns about the potential democratic legitimacy deficit, as citizens often feel disconnected from decision-making processes.

    • Social Order: The dichotomy between a cosmopolitan Europe and national communities reflects the collective identity deficit, which has been exacerbated by events like the migration crisis, creating tensions around national identity and EU integration.

  • The implications of Brexit intersect all these dilemmas, illustrating the challenges of reconciling national interests with collective European objectives.

Evolution from Growth to Austerity

  • The transition from economic growth to a climate of austerity:

    • The end of the post-war Golden Age and the rise of stagflation catalyzed a shift toward protectionism, as economic challenges led to hesitance about globalization and integration.

    • This shift significantly impacted the principles of the Keynesian state, leading to severe repercussions for welfare and long-term economic sustainability across the EU.

  • Integration Process Transformation:

    • The decision to adopt a Single Currency in the 1990s illustrated a commitment to deeper Economic Integration while simultaneously revealing dilemmas surrounding issues of sovereignty, economic alignment, and democratic accountability.

  • Welfare Nationalism:

    • The emergence of welfare nationalism reflects the response to increased intra-EU mobility, which threatens to undermine one of the four fundamental freedoms of the EU internal market, leading to rising populist sentiments and nationalist policies across member states.

Technocracy vs. Populism

  • The rise of technocracy alongside populism has become a key trend in contemporary governance, characterized by a clash between elite-driven policy-making and grassroots populist movements:

    • Populism represents societal demands that often contrast sharply with the governance of elites, leading to a growing divide between political representatives and the citizenry.

    • This widening gap between representative and responsible governance raises significant concerns about the future of democratic engagement within the EU structure.

  • Hollowing Democracy:

    • EU governance is increasingly characterized by technocratic and depoliticized economic policies that prioritize efficiency over representation.

    • Political parties have begun to function more as agents of technocracy, often sidelining the voices and needs of ordinary citizens, leading to disillusionment with the EU and its institutions.

Institutional Compromises in Maastricht

  • The introduction of multi-layered governance structures arose from the Maastricht Treaty:

    • This treaty established different decision-making regimes among EU pillars, complicating the governance of various policy areas and requiring negotiation across multiple levels of governance.

    • The separation between centralized monetary control and decentralized fiscal policies created a framework whereby economic policies are managed at different governance levels, often resulting in tensions between member states and EU institutions.

  • Lasting Consequences of Maastricht Compromises:

    • In response to crises, EU governance often relies on intergovernmental frameworks rather than moving toward deeper supranational integration, reflecting persistent nationalist sentiments among member states.

    • As a result, the balance of power remains predominantly with national governments, complicating the EU's ability to manage crises effectively amidst rising populist sentiments.

De-Constitutionalization with the Lisbon Treaty

  • Post-2005 events led to a significant shift in the EU’s constitutional approach:

    • The Lisbon Treaty marked a departure from the aspirational constitutional framework, adopting a more pragmatic governance structure that retains elements of both supranational and intergovernmental authority.

    • This shift reflects the EU's need to adapt to member states' concerns about sovereignty while still promoting a unified approach to EU governance.

  • Impact on National Sovereignty:

    • New clauses introduced in the Lisbon Treaty aim to respect national identities and establish checks on EU authority, causing tensions with national courts over jurisdiction and legislative supremacy.

    • Article 50, which grants member states the right to withdraw from the Union, serves as a significant reaffirmation of national sovereignty in an era of increasing EU centralization.

Conclusion

  • Erosion of the Post-War Compact:

    • The long-term challenges faced by the EU integration processes, particularly amidst populist reactions against globalization and integration, threaten the stability and unity of the EU.

    • The unresolved crises hint at a potential return to nationalism over interdependence, questioning the future viability of the European project and its foundational goals of integration and cooperation.