Erik Jones

The New European Community : decisionmaking and institutional change

* Institutional Change in Europe in the 1980s Robert O. Keohane and Stanley Hoffmann. * Negotiating the Single European Act Andrew Moravcsik. * The European Commission Peter Ludlow. * The EC Council: The Communitys Decisionmaking Center Wolfgang Wessels. * Sovereignty and Accountability in the European Community Shirley Williams. * The Making of a Constitution for Europe G. Federico Mancini.

Output Legitimacy and the Global Financial Crisis: Perceptions Matter

The global economic crisis has sapped support for the euro and lowered trust in the European Central Bank (ECB). In doing so, it has also exposed a weakness in the ‘output-oriented legitimation’ of Europes economic and monetary union. The common monetary policy and single currency have to be perceived as working if they are to maintain popular acceptance. Whether they actually work is less important than this perception. This raises the prospect that no matter how successful the ECB is in responding to moments of crisis, public opinion may begin to reflect the perception that it has failed. Indeed, the greater the uncertainty experienced during the crisis, the more likely it is that such negative perceptions will predominate. Worse, there is very little that the ECB can do to change popular perceptions or to create new channels for input-oriented legitimation without jeopardizing the credibility of its commitment to price stability or its reputation for political independence.

Failing Forward? The Euro Crisis and the Incomplete Nature of European Integration

The European Union (EU) project of combining a single market with a common currency was incomplete from its inception. This article shows that the incompleteness of the governance architecture of Europe’s Economic and Monetary Union (EMU) was both a cause of the euro crisis and a characteristic pattern of the policy responses to the crisis. We develop a “failing forward” argument to explain the dynamics of European integration using recent experience in the eurozone as an illustration: Intergovernmental bargaining leads to incompleteness because it forces states with diverse preferences to settle on lowest common denominator solutions. Incompleteness then unleashes forces that lead to crisis. Member states respond by again agreeing to lowest common denominator solutions, which address the crisis and lead to deeper integration. To date, this sequential cycle of piecemeal reform, followed by policy failure, followed by further reform, has managed to sustain both the European project and the common currency. However, this approach entails clear risks. Economically, the policy failures engendered by this incremental approach to the construction of EMU have been catastrophic for the citizens of many crisis-plagued member states. Politically, the perception that the EU is constantly in crisis and in need of reforms to salvage the union is undermining popular support for European integration.

Public opinion and enlargement - A gravity approach

This paper examines European Union (EU) member state attitudes toward enlargement. We use Eurobarometer data for aggregate national support from 1996 to 2002 for the accession of each of 13 candidate countries—the 10 that will join the EU in 2004 plus Bulgaria, Romania, and Turkey. Analyzing our cross-section time series, we find, first, that the level of support correlates positively with the share of the candidate country in the total exports of the member state and negatively with the distance between the capitals of the member state and the candidate country. This finding supports the hypothesis that common identity, or ‘we-feeling,’ grows with interaction (Deutsch et al., 1957). Second, support correlates negatively with the relative importance of agriculture in domestic employment. Since agriculture triggers EU financial flows, this finding supports the view that attitudes toward integration are policy related (Gabel, 1998b, 1998c). Third, support is lower when both the member state and the candidate country are predominantly Catholic. This suggests that, although Catholics may desire a deeper Europe (Nelsen et al., 2001), they oppose a wider Europe.

Economic Adjustment and Political Transformation in Small States

The smaller countries of Western Europe have a reputation for being more successful than their larger neighbours. They are wealthier per capita, they are more stable politically, and they are more flexible economically. The secret to this success lies in their consensual style of politics and their corporatist style of decision-making. Unfortunately, however, that may be about to change. A political transformation underway in small states is undermining the politics of consensus and breakdown the effectiveness of corporatist institutions. Small countries are becoming increasingly vulnerable to the vicissitudes of world markets as a result. Belgium and the Netherlands offer clear examples of the problem at hand. The political societies of both countries were tightly organized to avoid conflict and to promote consensus. Over time, however, this tight organization has broken down, politicians have opted for conflict over consensus, and elections have become more volatile as a result. In turn, this political transformation of Belgium and the Netherlands has undermined their traditional approach to economic policymaking and economic adjustment. Belgium and the Netherlands are now more vulnerable to world market forces than at any time since the end of the 1970s. Their relative economic and political success can no longer be taken for granted. The relative success of other small states should be brought into question as well.

Merkel’s Folly

German Chancellor Angela Merkels policy toward Greeces fiscal crisis, as it developed from late 2009 to April 2010, was folly in many senses of the term. It failed to anticipate the speed with which, and the extent to which, the crisis would spread. It cost much more than immediate support to Greece through its painful fiscal consolidation would have cost. And it reinforced stereotypes and prejudices that obscure the true weakness at the heart of the European Union and its single currency. But while the measures taken in early May may calm the markets temporarily they will not solve the underlying problem. So long as countries in the eurozone can borrow without market sanction, politicians will find a way to dig themselves unsustainably into debt. Threatening them with sanction is no solution either. The best way forward is to place restrictions on access to credit rather than trying to control the build-up of debt.

Populism in Europe

Populists are making headway across Europe and from all points on the political spectrum. Their success is symptomatic of the weakness of European political parties and party systems. Some of these populists seek to reinvigorate European democracy and yet most—with their xenophobic, anti-immigrant rhetoric—seem intent on making matters worse. The challenge in Europe is to reconstitute national party systems as effective institutions for representing the popular interest. Such a challenge can be met only over the long term. For now, Europeans must deal with those populists who emerge at the national level. Some of these can be dealt with safely and others cannot. So far Europeans have succeeded in keeping the most unsavory populists from power. However, such success is not guaranteed. Indeed, failure to restrain European populism may be just a matter of time.

Italy's Sovereign Debt Crisis

The Italian story shows what happens when changes in market confidence outpace politics. Unless market participants will benefit more by staying in the game, what happened to Italy will happen elsewhere.

They Have No Idea . . . Decision-Making and Policy Change in the Global Financial Crisis

Crisis: . . . 3. A vitally important or decisive stage in the progress of anything; a turning point; also, a state of affairs in which a decisive change for better or worse is imminent; now applied esp. in times of difficulty, insecurity, and suspense in politics or commerce. Oxford English Dictionary (1971: 1178)Is the identification of a situation as one of crisis an objective, analytical, or even empirical claim or does it necessarily imply a subjective and hence normative judgement? Should we define crisis in terms of objective factors such as the ‘weight’ of contradictions within a given system or in more subjective terms such as the perception of the need for rapid and decisive intervention in the context of widely experienced political and economic contradiction? Colin Hay (2001: 203)

Liberalized capital markets, state autonomy, and European monetary union

The conventional wisdom is that capital market integration and now monetary union have limited the options available to macroeconomic policy makers in Europe. The question considered here, therefore, is why many prominent Europeans insist that mone- tary union is a rational response to capital market integration. Monetary union eliminates exchange rate volatility - but only at a cost in terms of tightening the constraints on macro- economic policy. Using a combination of macroeconomic theory and (descriptive) statisti- cal analysis of European performance, I find that: capital market integration has increased macroeconomic flexibility through a mitigation of the current account constraint; European states have combined macroeconomic policies in a manner that has taken advantage of greater flexibility on the current account; the cost of such flexibility in terms of the impact of financial volatility on the real economy manifests differently in different countries; and monetary union both enhances flexibility on the current account and mitigates financial volatility.