Unhappy Union: How the Euro Crisis- and Europe - Can Be Fixed

The recent result of the UK referendum on exiting the European Union (EU) is the more visible sign of the shortcomings and fragmentation of the Union’s political, institutional and policy framework. The present policy brief, which was written months before the UK referendum and draws from earlier works (Tonveronachi 2014, 2015, 2016), proposes to revise the monetary operations of the European central bank, the euro area’s fiscal rules and the financial regulatory approach in order to overcome some of the main inconsistencies and fragilities of the current design. Thought of as requiring no treaty changes and a minimum of political convergence with respect to alternative proposals, if successfully implemented the new design would contribute to give a viable perspective to the Economic and Monetary Union, capable of attracting the EU non-euro area countries that consider the mismanagement of the recent crisis as reason enough for resisting further losses of sovereignty.

2011

The European Union has been, and still remains one of the most amazing phenomena that has been witnessed in the 21st century. It is an epic story of different countries getting past their differences and trying to move forward in order to create a system of one economic currency and having the ability to transact globally with all nations through the world that will not only work for themselves economically and socially, but will also have the ability to usher the Union into the new world order and be recognized in the modern era of Globalization in the eyes of all world governments. However, past issues that have taken affect with respect to the past 15 years since its founding have plagued the Union making its future questionable to those not only within the Union itself and each other, but also in the eyes of other nations, such as the United States, China, Japan, and England, all of whom are a part of the new Global Economic Movement. However, in order for one to fully understand the significance of the problems, one must go back to the earlier times of Europe before it became known as the European Union. In this paper, I will take you through a historical journey that shows you the early origins of the first attempts not only to bring about the European Union, but also to point out the problems then and now that continue to plague it up to its modern existence.

De Gruyter eBooks, 2023

Policy-making in the European Union has been shaped-if not dominated-by aw ide variety of different types of crises in recent years. Accordingly, much political activity by the EU and related actors has had ac ertain urgency,occurred under intense economic and societalstrain, and required responses in policy areas wherethe EU traditionallyonlyholds fragmented competencies. Shifting priorities, short-term policyr esponses,a nd adapted implementation schedules showcase that EU governance now most often occurs in reaction to unforeseen events, rather than following mid-to long-term planning as originallyf oreseen by its foundational actors and the underlying institutional setup in calmer times. Building on ac oncise overviewofs ome of the most impactful recent crises from an EU perspective,t his introductory chapter provides ac onceptual framework for the analysis of European crisis governance. While the chapter catalogues and categorizes avariety of different crises, it conceptualises crisisgovernance not as an exception to the regular functioning of the EU'spolitical system, but instead as aregular feature of how the EU works nowadays.Insodoing,itoffers aconceptual basis for thefollowing chapters of this volume, as well as for further empirical studieso nthei mpact of crises on EU policies and politics more generally. Following these considerations, the chapter outlinesand explainsthe volume'sstructure which considers (1) crises related to the legal and democratic foundations of the EU;(2) the EU'sr ole and behaviour as an international actor in ac hanging world; and (3) the origins and impacts of crises in various EU policy areas. Setting the scene: Crisis as the new normal in the EU? When EU member states signed the Treaty of Lisbonin2007, they did not anticipate the manifold crises that would ensueo vert he course of the following years. Instead of the intended consolidation of aUnion which had just gone through its biggest round of enlargements, the EU faced the financial and economic crises of 2007-2008,the European debt crisis of the early2010s, the Arab Springand ensuing Acknowledgments: The authorswould like to express their profound gratitude to Julia Simon forher most constructiveand helpful feedback on this chapter,and to Jamie L. Kaup forh er excellent work in proofreading all chapters of this volume.

This paper investigates the political challenges behind the implementation of structural reforms in the Eurozone crisis. Governments that pursue the avenue of internal adjustments to regain competitiveness tend to pay the toll of unpopularity and face the threat of populist parties. As a result, the stability of the Eurozone and support for the European project are at risk. The analysis of the literature in political economy and political psychology suggests that policymakers should foster the growth of a social identity as Europeans and restore trust in E.U. institutions. Further, an empirical analysis on four Eurobarometer waves reveals that trust in the E.U. is predicted by concrete interests in sustaining the stability of the common currency (holding a mortgage or owning assets in a foreign currency). In particular, trust in the E.C.B. depends on the stability of the exchange rate. In sum, the E.U. should pursue a three-leg strategy based on protecting financial credibility through reforms, restoring trust in its institutions, and fostering cultural unity through the emergence of a European identity.

Since revelations of the Greek fiscal deficit in the fall of 2009, the breakup of the Economic and Monetary Union (EMU) has moved from unthinkable to plausible. The debate over the future of the EMU has become increasingly relevant, as numerous efforts to solve the Greek crisis have not been successful. Neither have basic competitiveness differences between countries in the core and periphery of the European Union been eliminated. Proposed solutions include development of a banking union, regulatory measures to monitor trade and capital imbalances, fiscal reforms on the part of countries in trouble, and centralized fiscal capacity on the part of the EMU itself to offset the liabilities of the indebted states. While the crisis seems to be contained, it is by no means solved. This leads to the question: " Will the euro survive? " We answer this question in the affirmative, but in doing so we argue that continuation of the EMU is different from the question of whether the EMU should have been created in the first place. Some reasons for continuation of the EMU were present at its creation; others have developed in a path‐dependent way as the Eurozone has evolved.

A joint Chatham House, Elcano Royal Institute and AREL report, 2014

The euro was launched 15 years ago through the Maastricht Treaty, and was expected to make Europe stronger economically and more integrated. Although the Delors report in 1989 correctly identified many of the structures needed to make EMU work, the Maastricht design underplayed the importance of labour and product flexibility, and of divergences in competitiveness. For most of its first decade the euro area grew quickly, coinciding with a period of very rapid world growth. However, the global economic and financial crisis that started in 2007 hit Europe hard, exposing serious flaws in its original design. Although the crisis began in the United States, Europe ended up being the worst-affected region. At one point, markets and commentators began to ask serious questions about whether the single currency could survive. Important measures were taken to save the euro, and since 2012 markets have become calmer, as European leaders and policy-makers signalled they were prepared to take tough decisions. In particular, the president of the European Central Bank (ECB), Mario Draghi, promised to do ‘whatever it takes’ to protect the euro. This report examines why the economic and monetary union (EMU) was so badly affected by the crisis, and assesses whether further changes need to be made to the structure of economic governance that underpins it.

JCMS: Journal of Common Market Studies, 2015

European integration, as George Ross noted in his study of the European Union (EU) and its crises, 'has never been an easy process' and the EU in particular has been especially 'crisis-prone' (Ross, 2011, p. 1 and 7). With first the financial crisis of 2008 and then recession and the near fracturing of the eurozone, much of last decade has seen the EU faced with its most sustained and testing period of crisis. Not only has the future of monetary union and the euro been put in serious doubt but commentators and politicians have seriously questioned whether the EU would actually survive this latest set of crises. For many, the last five years have seen the EU, or at least the eurozone, fighting for its survival. Not since the eurosclerosis and europessimism of the 1970s has there been such a sustained mood of undoubted and, for some, existential crisis. The seemingly relentless sense and reality of crisis appeared to begin to abate in 2014. References to the euro's imminent demise and the eurozone's impending break-up no longer fed media headlines, even if doubts soon intensified about whether Greece under the Syriza-led government that took office in January 2015 would remain part of it. EU leaders ceased invoking notions of an existential crisis and scaled back their calls for closer integration of at least the eurozone. Bold steps to establish banking union, fiscal union and economic union to save the eurozone and the EU seemed for many observers to be no longer necessary. The apparent, yet qualified, success of responses to the crisis

Euro-area Governance Reform The Unfinished Agenda, 2018

The resilience of the single currency has improved considerably since the debt crisis of 2010–2012. Important reforms to the euro area’s architecture have been introduced to end the crisis that threatened the existence of the euro itself. Yet significant challenges remain to be tackled. Gaps remain in the euro-area architecture; limited progress has been made in establishing CMU and the banking union remains incomplete. The ongoing Brexit negotiations make it all the more urgent to build a CMU among the remaining 27 EU members (known as the EU27), including stronger central oversight to avoid regulatory arbitrage as some financial services migrate to the continent. The bank-sovereign doom loop is not completely broken, as deposit insurance remains national and banks still hold a considerable amount of bonds of their own sovereigns. Public debt has stabilized at relatively high levels, posing significant risks, and the fiscal framework requires reform. Unemployment has declined but remains high in crisis-hit countries, in particular among young people, and income inequality within many countries has increased. Voters in richer countries are increasingly reluctant to bail out the countries hit by crisis. Coupled with the massive flow of refugees and migrants from the Middle East and Africa, these trends gave rise to Euroscepticism and the emergence of populist and nationalist governments in several EU countries.

Chapter in: Hien, J and Joerges, C (eds.) Responses of European Economic Cultures to Europe’s Crisis Politics: The Example of German-Italian Discrepancies. Proceedings from the Villa Vigoni Conference. Robert Schumann Center, EUI: Florence., 2018

The very existence of the European Union is today under attack by an increasingly virulent Euroscepticism. In our view, the prime root of this "deep" political crisis is the sharp misalignment between the new nature of the EU after the establishment of EMU, its authority structure, and the normative order which underpins cooperation and the "sharing code" among the member states.

The result of the UK referendum on exiting the EU is only the most visible sign of the shortcomings and fragmentation of the Union’s political, institutional and policy frameworks and of the need to reform them. In the economic field, the process of harmonisation of rules directed at creating a single internal market has added increasing constraints and rigidity to member countries in the context of an unchanged political-institutional design. The perception that the convergence on the current set of rules is not capable of producing convergence on results, or anyway generally better results, has increased the socio-political fragmentation inside the Union. The result has been an increasing demand for a partial re-nationalisation of sovereign powers, whose physiology comes from the necessity of higher national flexibility. Having to exclude the path towards significant levels of federal governance as unrealistic, the reality of a union made up of sovereign countries competing under common rules imposes a reflection on how feasible changes in the current set of rules could accommodate the increased demand of national flexibility. Focusing on the euro area, the paper proposes to revise the monetary operations of the European Central Bank, current fiscal rules and the financial regulatory approach in order to tackle some of the main inconsistencies, rigidities and fragilities in the current design. The new design is thought out to require no changes in the Treaty on the Functioning of the European Union, but at least a minimum political convergence. If successfully implemented, it would contribute to give a viable perspective to the design of the Economic and Monetary Union, capable of attracting those EU non-euro area countries that consider the mismanagement of the recent crisis and of its after-effects reason enough for resisting further losses of sovereignty.

2012

International Relations, Luiss Guido Carli in Rome. The views expressed are those of the author writing in a personal capacity and do not represent those of EuropEos or CEPS. Contributors to this series of Commentaries are members of EuropEos, a multidisciplinary group of jurists, economists, political scientists and journalists set up in 2002 with the aim of creating an ongoing forum for the discussion of European policy and institutional issues. It has published two books and numerous commentaries and essays on the negotiations leading to the Lisbon Treaty. Successful collaboration between its members and CEPS has led to this dedicated series of EuropEos Commentaries. For more information on EuropEos, please visit: http://www.europeos.it/EuropeosWEB.

The European Union (EU) has experienced an unprecedented economic and financial crisis since 2007, the effects of which form the object of analysis in this Special Issue. In particular, it addresses the questions of whether and how the crisis has served as an obstacle or an opportunity for further integration. It concentrates on two broad types of implications for the EU that are central elements of theories on integration and policy and public opinion change. First, the crisis has triggered events of proposed and actual change of policies and institutions. Second, the crisis and the EU’s response to it have had an impact on how citizens perceive the EU and its democratic legitimacy. Based on the contributions by scholars of European integration, this Special Issue concludes that, at least in the short run, the crisis has (overall) created an opportunity structure for European integration rather than an obstacle. At the same time, the contributions show the need for further research on the nexus of public opinion and politicization on the one side and institutional and policy change on the other.