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Wolfgang Streeck: Zwischen Globalismus und Demokratie: Politische Ökonomie im ausgehenden Neoliberalismus. Berlin: Suhrkamp 2021. 978-3-518-42968-6

The literature on fifteen years of European crises leaves the reader with a puzzle. Prominent accounts of the longest crisis–that of the euro area (EA)–assert that the EA is deeply divided between North and South, with Central Eastern European (CEE) member states being ignored. This makes it hard to explain how the union has managed to reform since 2008 and especially during the Covid-19 pandemic. Scholars have started to talk of transnational coalitions, but they equate coalition-formation with bringing together the like-minded, typically over solidarity versus sovereignty and more or less integration. However, coalitions of the like-minded are typically too small to sustain reforms and compromise has to be sought with others who have different preferences. To establish empirically how stable or fluid transnational coalitions are, we exploit the EMU|Choices database (Wasserfallen, Leuffen, Kudrna, and Degner 2019) [Analysing European Union decision-making during the Eurozone crisis with new data. European Union Politics, 20 (1), 3–23] on EA reforms and our own original data on Covid-19 reforms. Our findings show a stable pattern but no geopolitical divide–coalitions have varying CEE members. These findings can provide a basis for developing a more plausible conceptualisation of transnational coalitions.

The EU is still fragile after its long decade of crises since 2008, and its durability remains an open question. New capacities were created during this time. But it is not clear how robust they are and whether developing them further will encounter insurmountable obstacles, including resentment by citizens. Over time, tensions and disagreements unleashed three foundational conflicts: conflicts over sovereignty (who decides), solidarity (who gets what when and why) and identity (who we are). The crisis politics that was deployed to deal with such tensions has often constrained policy responses in scope and effectiveness. Against the odds, however, the destructive spiral stopped short of driving the Union into self-destruction: a circumstance that calls for an explanation. We summarize empirical research that shows three ways in which this unexpected resilience can be explained: public rhetorical action, externalization strategies, and the paradoxical strengths of a weak centre in achieving polity maintenance.

Does the framing of a crisis change the willingness of citizens to provide support to neighbouring countries? Drawing on a new study, Waltraud Schelkle, Zbigniew Truchlewski and Federico Ferrara find a clear link between the way a crisis is framed and citizens’ support for solidarity.

Does the framing of crises shape public support for inter-state solidarity? We focus on three dimensions that have been salient in the characterisation of European Union crises and may affect public support for solidarity more generally: (a) how country-specific or common a crisis is; (b) whether policymakers are seen as responsible for the crisis or not; and (c) how existential or manageable the threat posed by a crisis appears. We employ a pre-registered factorial vignette experiment conducted in 15 European Union countries to assess how characterising a hypothetical crisis affects voter support for fiscal and financial solidarity. Our results show that exposure to different crises frames shapes public support for risk-sharing in the European Union. Changes in solidaristic attitudes vary significantly with the means of fiscal risk-sharing proposed.

The European Union presents a puzzle to political systems scholars: how can a developing polity, with all its attendant functional weaknesses, be rendered politically stable even through moments of a policy crisis? Building on insights from the literature on fiscal federalism, this article challenges much conventional wisdom on Europe’s incompleteness. This is based on the corollary of Jonathan Rodden’s concept of Hamilton’s Paradox: whereas a strong centre cannot resist exploitation by states because it has the means to rescue them, a weak centre’s lack of exploitable capacity may induce states to support, and even empower, it in a crisis. This article argues that in providing a contemporaneous stress-test, Covid-19 serves to expose both the pathologies of a strong-centred federation and the surprising resilience of a weak one. It highlights three polity features—powers, decision-making modes and integrity—and charts their political implications during an acute crisis. The article argues that in the EU these features incentivise cooperative ‘polity maintenance’ between polarised states, a feature absent in an American polity marked by rivalry between polarised parties. The article thus challenges notions that the EU’s incompleteness necessarily leads it to dysfunction or that it should strive to emulate established federations.

After a decade of crisis management, the democratic implications of emergency modes of governance in the European Union (EU) are under the spotlight. The prevailing analysis is critical. Scholars point to an emergent, distinctly European trend of transnational crisis exploitation where elite appeals to exceptional pressures serve asymmetric power and influence, overriding democratic norms and potentially fuelling Eurosceptic backlash. However, the literature does not ask whether citizens consider themselves disempowered by the EU’s emergency politics, with its alleged emphasis on urgency and technocratic problem-solving. The relative symmetry and simultaneity of the Covid-19 crisis across Europe offers an opportunity for an empirical examination of public opinion on traits of emergency politics. We juxtapose the implications of emergency politics for public opinion with the transnational cleavages literature and use survey data from 15 member states on EU- and national-level pandemic responses to examine the competing hypotheses. Our findings indicate perceptions of crisis management are largely determined by prior views on EU integration and democracy. More generally, the results suggest that the transnational cleavage remains overall a key driver and delimiter of Euroscepticism in crisis times. Though there is some variance between emergency politics dimensions, we do not detect a widespread perception of disillusionment motivated by EU emergency rule.

How does the inherent norm of integration, notably to share risks among its members in good faith, become a self-sustaining practice? I address this question generally and for a critical case of a divisive institution, i.e. the evolution of sovereign bailout funding in the Euro Area since 2010. Community building between states is a potential outcome of solidaristic practices, reinforced by positive feedback processes. Inspired by Deborah Stone’s [Stone, D. A. (1999). Beyond moral hazard: Insurance as moral opportunity. Connecticut Insurance Law Journal, 6(1), 12–46] work on insurance, I demonstrate that there are social mechanisms at play that favour the secular expansion of risk sharing between states.

Some have warned that EU crisis politics undermines democracy. But European policymaking during the early months of the pandemic reveals a different picture, argue Zbigniew Truchlewski, Waltraud Schelkle and Joe Ganderson (LSE).

Successive crises in the European Union have led critics to identify a pervasive tendency to emergency politics, where democratic deliberation gives way to policy decisions forced through by executive authority. By contrast, in this article it is argued that crises may stimulate deliberation and compromise, even when preceded by open conflict and an evident collective action failure. Drawing on a new dataset of 1759 policy-related actions covering the EU and its member states’ responses to COVID-19 between March and July 2020, the timing, sequencing and origins of policy claims and steps are traced. Both urgent epidemiological responses are found, where emergency measures were in evidence; and responses to anticipated economic challenges that had to overcome disagreement concerning necessary institutional reforms. The findings depict a multifaceted crisis response. The European Commission acted swiftly but also bought time for member state governments to deliberate. This casts doubt on the many-crises-one-script account of EU emergency politics.

This special issue leverages the variation across Europe to expand on the conceptualisation of and the empirical knowledge about finance and financialization. As we will show, focussing on Europe can offer a richer understanding of the reach of financialization than the prevalent focus on the Anglo-American world, with surprising insights that may be of more general relevance to other world regions. More specifically, a focus on Europe allows new insights on the reach of financialization, central actors that brought it about, and the choices and trade-offs that have shaped the process.

On 5 May, Germany’s Constitutional Court ruled that the European Central Bank’s Public Asset Purchasing Programme could be incompatible with the German Constitution. Waltraud Schelkle writes there is a deep sense of irony in the ruling: the German Court questions the legal foundations of the ECB’s independence but is actually prevented from succeeding by the constitutional fortifications of the ECB’s independence on which the German government always insisted.

This article asks whether the EU’s pension policy promotes and achieves financialisation of old age security. Financialisation in this context means financial market integration that, in conjunction with pension reforms in member states, creates a market-based mode of governance for old age security. After an overview of how significant private pension funds have become in the EU, the article takes a most-likely case study of financialisation, the Pan-European Pension Product (PEPP), to see how successful the EU’s pension policy proved to be in establishing the PEPP. The findings suggest that EU policymaking in pensions tries to instrumentalise financial market integration for pension provision but this does not necessarily lead to financialisation of old age security. Market integration is a multi-faceted process of creating, emulating and correcting markets that obstructs a single-minded policy thrust like financialisation.

The financial crisis has called our understanding of central bank independence (CBI) into question. Central banks were praised for bold interventions but simultaneously criticized for overreaching their mandates. Central bankers themselves have complained that they are ‘the only game in town’. We develop the second generation theory of CBI to understand how independence can turn into loneliness when a financial crisis calls for cooperation between fiscal authorities and the central bank. Central banks are protected from interference when there are multiple political veto-players, but the latter can also block cooperation. Furthermore, central banks in multi-veto-player systems operate under legal constraints on their financial stabilization actions. They can circumvent these constraints, but this invites criticism and retribution. More surprisingly, central banks have strategically invoked their constraints to gain cooperation from political authorities.

The European Central Bank was established 20 years ago today on 1 June 1998. To mark the anniversary, we asked five academics to give their views on the lessons learned from two decades of the ECB, and their predictions on what might lie in store for both the ECB and the euro over the next 20 years.

The euro is a unique experiment in monetary history: a group of rather different countries adopted voluntarily a common currency, and the supranational central bank is deliberately separated from national fiscal institutions. Every member state had good reasons to take the risk of joining this experiment of a monetary pool of diverse countries. However, the experiment has so far been rather disappointing. A political-economic paradox can explain why the member states could agree only on a dangerously limited form of fiscal risk sharing. These limitations materialised in the recent financial and euro area crisis, in which the rescue of insolvent banks remained a task for each member state even though financial market integration had contributed to making domestic banking systems too big for most of them. But the elements of insurance that have been institutionalised in the monetary union also came to the fore in the crisis: notably the cross-border payments system TARGET sustained the euro area as a trade and payments area. The banking union has made risk sharing in the common currency area more robust. But the risk of fiscal overstretch is still real and calls for further reforms.

The centrifugal tendencies of the EU make us aware that our theories of European integration were not formulated to explain disintegration. Furthermore, attempts to explain disintegration, notably the new intergovernmentalism, portray these tendencies as idiosyncratically European and dysfunctional. But we can observe disintegration and collective action failure elsewhere, and not all new institution-building is dysfunctional. This paper interprets recent EU institution-building and its limits in light of the concept of two-level games, both in its classic instrumental version of Putnam (1988) and in a more recent normative version developed by Bellamy and Weale (2015). Framing the new economic governance of the EU as the result of two-level games can help us see the specific collective action problems of an incomplete union and the general problems of international cooperation.

California is not Greece – but why not? The answer to this question seems simple. To be precise, there are two simple answers. First, California is not Greece because the U.S. state is a vastly successful economy, on its own among the ten biggest economies in the world, good at producing blockbusters, software and computer lifestyle products that cannot easily be replaced by cheaper providers in emerging markets. Unfortunately for California, the private riches goes with public poverty. A populist political system allows voters to act collectively like a schizophrenic person: hedonistic and lavish as regards their own private expenditure, prudish and insanely stingy when it comes to state expenditure for public goods. However well the private economy did before the crisis, it seemed to make Californians just more inclined to starve the beast that is their state government. It has forced the executive repeatedly to resort to creative accounting and outright forging of figures to pass a budget.

In its first session, last Friday, the LSE Commission on the Future of Britain in Europe deliberated on “EU Financial Integration & Protection for Eurozone “Outs”. A good part of the conversation was spent on whether the British financial sector is very distinctive and hence incompatible with its continental counterparts, or whether it is precisely its size and domestic prominence that necessitates stronger ties with the rest of the EU. Waltraud Schelkle, the convenor of the hearing, argues that since the UK has chosen to be an international financial centre, it is in Britain’s vital national interest to stay in the EU, because it needs to influence its decisions about financial regulation.

In the run-up to the referendum, the LSE arranged a series of expert hearings within its own Commission on the Future of Britain in Europe. The first four hearings dealt with important policy issues : migration, employment regulation, financial integration and, finally, higher education and research. A new series of articles in The Political Quarterly draws on these discussions that took place between November 2015 and January 2016. The authors were the conveners of the panels and have research interests in these areas. Research and Higher Education: UK as International Star and Closet European? by Anne Corbett Buying into Myths: Free Movement of People and Immigration by Eiko Thielemann and Daniel Schade Financial Centre and Monetary Outsider: How Precarious is the UK’s Position in the EU? by Waltraud Schelkle A Bonfire of the Regulations, Or Business as Usual? The UK Labour Market and the Political Economy of Brexit by Steve Coulter and Bob Hancké

Last week the IMF published a review of the financial assistance given to Greece during its debt crisis. One of the key limitations identified in the report was that debt relief for the country was provided far later than it should have been. Waltraud Schelkle writes on the fallout from the report, which generated angry responses from both the European Commission and the European Central Bank. She argues that while the second Greek rescue programme was undoubtedly late, it was also insufficient: amounting to a write-down of only around 33 per cent of Greece’s debt-to-GDP ratio. As a result Greece is likely to need a third rescue programme.

One of the most widespread arguments about the Eurozone crisis is that countries such as Greece, Spain and Italy have been hamstrung by their lack of monetary sovereignty and the ability to devalue their own currency. Deborah Mabbett and Waltraud Schelkle assess this perspective by comparing the experiences of Greece with Hungary, which does not use the euro, and Latvia, which previously pegged its currency to the euro before joining the single currency in 2014. They find that while there are real problems with the crisis management in the Euro area, monetary sovereignty is not the solution.

One of the arguments frequently made against the euro is that the Eurozone represents a ‘non-optimal’ currency area. This derives from the notion that the variations between regions within the Eurozone are simply too large for them to share a single currency without encountering problems. Waltraud Schelkle assesses this argument by comparing the experience of the Eurozone with that of the UK during the financial crisis. She argues that the criticisms levelled at the Eurozone are equally applicable to the UK and that if diverse regions are a reason to break up the Eurozone, then the same conclusion would also have to be drawn about Britain’s currency union.

The UK government has entered the final stages of its negotiations with the EU. The issues of immigration control and the refugee crisis seem to overshadow the debate. Yet, as Waltraud Schelkle points out, the “Dear Donald — Yours David” letter of Prime Minister Cameron to European Council President Tusk reveals that the other leading issue is financial integration in a European Union with “effectively two sorts of members”, those in the Eurozone and those outside.