Christian Schweiger

Differentiated Integration and Cleavage in the EU under Crisis Conditions

Abstract This special issue, which is published on behalf of the UACES Collaborative Research Network The EU Single Market in the Global Economy and supported by the Fritz Thyssen Foundation, addresses the various aspects of the emerging centre–periphery cleavages in the European Union (EU) which result from unprecedented conditions of the 2008–09 global financial crisis and the subsequent eurozone sovereign debt crisis. The multiple layers of policy coordination which emerged in response to the crisis have initiated a process where the EU is increasingly internally divided in terms of the level of vertical integration between the eurozone core group and differentiated peripheries amongst the outsiders. At the same time the sovereign debt crisis has created a periphery group of predominantly Southern European countries within the eurozone that became dependent on external financial support from the other member states. The contributions in the special issue critically examine various aspects of the emerging internal post-crisis constellation of the EU. The main focus lies on national and supranational governance issues, as well as national perspectives and dynamics in the eurozone-18 core and the outside periphery.

The ‘Reluctant Hegemon’: Germany in the EU’s Post-Crisis Constellation

The financial crisis and the subsequent sovereign debt crisis in the eurozone has caused a fundamental shift in the EU’s internal power balance. The economic weakness of France and the other two larger Eurozone countries Italy and Spain has pushed Germany as the largest Eurozone member state with the strongest economic performance into a dominant position as agenda-setter. The German chancellor Angela Merkel has been reluctant to accept her country’s new unintended position as a hegemon in the EU. Under her leadership the EU has responded to the crisis by creating a new complex policy framework with multiple levels of responsibility. The new setup poses substantial risks for Germany’s future position in the EU. Germany’s insistence on putting fiscal austerity at the heart of the EU’s emerging post-crisis agenda has alienated many member states, particularly those who face grave social consequences as a result of the crisis. Moreover, the German ambition to push the eurozone towards full political integration risks dividing the EU’s membership base into a core euro insider vs. a periphery outsider group. The strengthening of the supervisory powers of EU’s institutional level has as of yet unpredictable consequences for sovereign national policy-making. This chapter argues that the post-crisis internal setup in the EU poses the substantial risk of long-term political isolation for Germany if its leaders fail to present a broader vision for the future of the EU. At the same time Germany’s good relations with countries in Central and Eastern Europe present an opportunity for the country to form new leadership alliances and to counter renewed fears of a ‘German Europe’.

British-German relations in the European Union after the war on Iraq.

In spite of a traditionally different approach towards European integration in Britain and Germany, under New Labour and the red–green coalition British and German European policy positions have moved closer than ever before. In a European Union which is increasingly characterised by a multiplicity of shifting alliances, a British–German working partnership could potentially provide leadership on a number of issues. The British governments failure to balance European and American interests over Iraq has, however, seriously damaged the basis for future British–German co-operation. Tony Blairs choice to sacrifice the domestic political campaign on the euro and to focus instead on supporting the Bush administration over Iraq has once again pushed Britain to the sidelines in the EU. The result is a renewed dominance of the Franco-German duo, with an economically weakened Germany once again diminished to a junior role alongside France.

The EU-25 Fiscal Compact: Differentiated Spillover Effects under Crisis Conditions

Abstract This article analyses the intergovernmental Fiscal Compact, which represents the latest layer in the emerging new governance framework European Union (EU) governments have adopted in response to the sovereign debt crisis in the eurozone. The crisis has initiated a new wave of selective functionalist spillover towards noticeably different levels of policy coordination between the eurozone-18 core and the remaining EU member states, who are divided into a semi-periphery and an outer periphery group. As an intergovernmental contract with currently 25 EU member states the Fiscal Compact signifies the decline of the traditional community method of universal supranational integration in favour of a more differentiated form of intergovernmental policy coordination between groups of member states.

The EU and the Global Financial Crisis

This authoritative book offers a complete breakdown of the EU’s political economy in the wake of the global financial crisis and will therefore appeal to students of European politics, international political economy and European studies, as well as policy-makers and other stakeholders.

Poland, Variable Geometry and the Enlarged European Union

This article examines the role of Poland in the European Union, where the traditional Franco-German leadership axis has been replaced by a new ‘variable geometry’ of leadership constellations across a variety of policy areas. In this setting Poland has the potential to move from maintaining an initially passive role as a policy-taker towards becoming an agenda-setter alongside other larger and more traditionally dominant member states, especially Germany. However, Polands success in this matter and subsequent influence on a variety of European Union policy areas, particularly the single market and the European Unions external relations, will substantially depend on the extent of its economic recovery from the effects of the global economic recession and wider developments in the European Unions debt crisis as well as its willingness to engage in constellations of member states that go beyond its traditional partners.

The Role of the Modell Deutschland in the Enlarged European Union

Germany’s influence in Europe since the end of the Second World War has strongly depended on its economic performance. The success of the West German socio-economic model of a social market economy, often characterised as Rhineland capitalism, contributed immensely to Germany’s leading position within the emerging integrated European framework. Under the restrictions enforced by the Allied Powers over ‘‘Germany as a whole’’, West Germany’s strong economic performance helped make up for its limited national sovereignty over its internal and external affairs. 1 The Modell Deutschland enabled Germany to exercise what Simon Bulmer calls ‘‘unintentional power’’ (75). This refers to its ability to exercise profound influence in the European Union (EU) through its economic strength and a rigid policy of monetary stability exercised by the Bundesbank. Until the end of the Kohl era in 1998, Germany was able to take a leading role in shaping the direction of the political and economic integration of Europe by combining the ‘‘soft power’’ approach in the EU with the unintentional, but still tolerated ‘‘hard power’’. The resources of German influence in Europe were consequently based on a combination of the ‘‘soft’’ power of Germany’s paymaster role as the biggest contributor to the EU budget, and the ‘‘hard power’’ Bundesbank stability policy. The latter strongly influenced the direction of economic integration in Europe, especially on European Monetary Union (Bulmer, Jeffery and Paterson 41). The combination of ‘‘budgetary power’’ and ‘‘institutionalised monetarism’’ (Paterson 208–9) allowed Germany to exercise ‘‘economic primacy’’ over the rest of Europe (Cole 92). On the basis of its role as

The Global Financial Crisis and the Euro Crisis as Contentious Issues in German-American Relations

This article examines the impact of the 2008–09 global financial crisis on the dynamics of transatlantic relations. The financial crisis has revealed systemic weaknesses in the governance of the eurozone and fundamental divisions between national governments in the EU on how these should be addressed. In the context of German domestic politics the financial crisis has resulted in increasing scepticism towards US-style liberal market capitalism. Germany managed to maintain its strong economic standing under the adverse circumstances of the financial crisis. Domestically the post-crisis political consensus has hence emphasised the strengths of Germany’s coordinated market economy in contrast to the liberal model of the US. This article offers a comparative analysis of how the crisis was perceived and how it has been addressed in Germany and the US. It argues that the financial crisis has significantly changed the parameters of the bilateral relations between Germany and the US in the context of wider EU–US transatlantic relations.

Introduction: Britain and Germany in the European Union of the Twenty-First Century

The European Union (EU) is a unique organisation in which fifteen member states pool parts of their national sovereignty in order to co-operate within a framework of supranational institutions and policies. Initially, the pooling of sovereignty was limited to specific areas, such as coal and steel (European Coal and Steel Community, founded in 1951), and nuclear energy research and development (Euratom, founded in 1957) However, over the years the development of European integration has resulted in the creation of an ever more complex institutional and procedural framework which provides for the implementation and maintenance of common policies across a broad variety of industrial, political and economic areas.

Areas for British-German Co-Operation

In an EU of growing multiplicity, where shifting leadership coalitions determine the outcome of decisions on central strategic issues, it has become more and more important to look beyond the Franco-German partnership and consider corresponding interests between all member states. In this respect, possible areas for co-operation between Britain and Germany will be of particular significance for the future of the EU. As shown in Chapters 2 and 3, both countries are in a process of redefining their position in Europe. Germany remains the central player in the EU of 25 and it has made major steps towards the ‘normalisation’ of its foreign policy. As one of the main promoters of enlargement, it has adopted a bridge function towards the new CEE member states, including the future applicant countries in South-Eastern Europe. Britain, on the other hand, has adopted a more positive stance towards the integration process under the New Labour administration. It has therefore been able to take on a leadership role on a number of issues, such as defence and economic liberalisation.