As part of ECFR's 'Reinvention of Europe' project, we are running a series of responses from leading thinkers and academics to Mark Leonard's recent paper,'Four scenarios for the reinvention of Europe'. The paper outlined four possible routes towards solving Europe's current crisis, and argued that Europe's main challenge was to solve the acute euro crisis without exacerbating the chronic crisis of declining European power. In the fifth in this series of responses, we hear from Georg Sørensen of Aarhus University.
Mark Leonard’s stimulating analysis points to four possible roads that are open to European cooperation, given the present crisis. I want to add a few items which I think can help put the debate in a larger perspective.
First, a substantial part of the present euro crisis has less to do with European cooperation and more to do with member states that are fragile, ineffective, have serious corruption problems, weak capacities for adopting and implementing rules and regulations, and are excessively dominated by vested interests that have been successful in taking care of themselves on behalf of the state. Eurozone membership handed such states an almost unlimited access to cheap credit. The results, when ample funds flowed into fragile states, ought to have been predictably disastrous. In that sense, the problems begin at home, not in Brussels. Solutions, then, also begin at home by creating stronger, more effective, more responsive, and more democratic states. There has not been much focus on this aspect of the crisis. Better leadership is direly needed. And such leaders must be able to explain to people why close European cooperation is absolutely necessary in a globalised world; and how cooperation substantially strengthens the ability of states to handle all kinds of cross-border challenges.
Second, Germany is not merely part of the solution; it is also part of the problem. Germany helped set up weak euro rules which it then undermined; the “one-size-fits-all” interest policy which suited Germany but not several other euro countries has not been helpful; and a de-facto German devaluation of 20-30% compared to the euro zone periphery undermined the competitiveness of the periphery. Consequently, reform in the periphery is only one part of the solution; Germany, and other “euro winners” such as the Netherlands and Finland, have to chip in, in order to create a more symmetrical system with better prospects for economic growth, not least in the periphery. The system must have something to offer ordinary people in the fragile member states, or suffer a further dramatic loss of legitimacy.
Third, the euro crisis is part of a larger financial and economic crisis in the globalised world economy. This crisis not merely pits “globalisers” against “nationalists”. It is a crisis for the neoliberal, de-regulation oriented model of economic globalisation itself. This model did not present a coherent answer to the problems faced by different groups of countries. In fragile states, economic liberalisation did not have the desired effects; in emerging markets in Latin America and Asia, there came capital outflow instead of inflow, and the selling of local companies to outsiders at fire sale prices. In Russia, the shock therapy helped create a class of super-rich oligarchs. Then came the financial crisis, pushed by deregulation which created opaque speculation and solvency and liquidity balances which could not be absorbed by market adjustments. There was no robust multilateral framework in place to face the problems. They had to be handled through national reactions by means of country-specific rescue packages. Piecemeal reform has been the order of the day. Long terms solutions to the problems have not been found: the financial and economic crisis can break out again at any time. Following the maxim “never let a good crisis go to waste”, the EU should lead the way in helping to create a more robust and less speculative model of capitalism which has more to offer the large majorities of the populations.
Finally, there are no simple institutional solutions to the EU’s problems of legitimacy and “democratic deficit”. The only way forward is to formulate practical solutions to common economic, social, and political problems, preferably combined with a more coherent foreign policy towards the other great powers of the world. I strongly support Mark Leonard’s call for European governments to “set out a radical vision for rethinking Europe which deals with the efficiency and the legitimacy crises at the same time”.
Also in this series:
Harold James - 'The more Europe suffers, the more its people will see that a reform agenda that is just an exercise in incrementalism is also nothing more than an exercise in futility'.
Richard Rosecrance - 'if Greece or Spain did not exist, they would have to be invented. Their participation in the euro keeps the value of the currency down from $1.80 to $1.20 or $1.30 or so, thereby ensuring the success of German exports to the rest of the world.'
Brigid Laffan - 'as the Union intrudes more and more into domestic budgetary and public finance choices, can party politics in Europe adapt to a very different governance regime?'
Charles S. Maier - 'The British can imagine that their banks will suffice, the Germans their autos, but such comparative advantage can dissipate quickly. I’d as soon wager on Greek beaches.'
Chris J. Bickerton - 'Populism, after all, is politics without policies; technocracy is policy without politics.'
Carlos Gaspar - 'In an enlarged “Euroland”, Germany’s pre-eminence could be balanced by a Catholic coalition led by France, Italy and Poland.'
Dimitri A. Sotiropoulos – 'we still live in an era in which the nationalist project is more seductive than any project of integration among nations'
Pawel Swieboda'no-one dares to ask the question if the euro is still a political project, as its founders tended to believe, or if it is today about nothing else than damage control'.
Claus Offe - 'Europe is not just needed as a defensive mechanism to prevent the weak being overpowered by the strong, who first administer an austerity cure without then providing the requisite support for recovery.'
Mario Teló - 'what is abusively decried by populist voices as a “German Europe” might in fact look a lot like the broadly endorsed “EU2020 strategy”. Input legitimacy may complement output legitimacy.'
Josep M. Colomer - 'For democracy to survive and retrieve in Europe, responsiveness and accountability of rulers should be moving from the state level to the EU level, where so many crucial decisions are already being made'
Marco de Andreis - 'a critical mass has been already assembled to make of Europe’s integration a possibility rather than an impossibility. And to at least consider the United States of Europe a fifth scenario for the reinvention of Europe.'
Miguel Maduro - 'the creation of European politics must go hand in hand with a change in the character of politics. For that, changes in policies may be even more important than changes in institutions.'
Narcís Serra - “If we wish to favour economic growth in European countries we must address income redistribution. This must not be done through fiscal measures alone but also by dealing with the heart of the productive structure itself.”
Brendan Simms: 'In 2020, President Radek Sikorski of the Democratic Union could long back at a turbulent, but successful first term in office...'
Christine Ockrent: 'In all the countries where people struggle with the economic crisis and fear for their children’s future, Europe has more than ever become the scapegoat'
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