Search

The 'post-functionalist' view that growing politicisation constrains further integration ('constraining dissensus') occupies a prominent place in contemporary European studies. However, in the case of the euro crisis, we observe a rise in contentious politics concomitant with a deepening of EU integration, namely in the areas of economic governance. This paper argues that the intervention of the 'Troika' in the struggles over the framing of the southern European crises is a key to this puzzle. The analysis of over 1200 public declarations produced by the three institutions from 2009 to 2016 shows that the Troika actively 'responded' to processes of heightened politicisation, reproducing the dominant crisis narrative of the southern European periphery and making the case for the adequacy and inevitability of austerity. The Troika's success in framing the euro crisis as a result of domestic failure and moral hazard contributed to the legitimation of further integration of European economic governance. [ABSTRACT FROM AUTHOR]

The handling of the 2008 financial crisis has reinforced the conviction that the European Union (EU) is undemocratic and that member states are forced to delegate overwhelming power to a supranational technocracy. However, European countries have engaged with this alleged power drift differently, with only a few member states demanding more parliamentary scrutiny of EU institutions. This article develops a political economy explanation for why only some states have enforced mechanisms to monitor the EU more closely. Our theory focuses on the role of the crisis and the impact of fiscal autonomy in countries outside and inside currency arrangements such as the European Economic and Monetary Union (EMU). We argue that, in the aftermath of a severe economic shock, member states outside the EMU possess more monetary and fiscal resources to handle the crisis. These would then demand oversight of EU decision-making if their fiscal sustainability depends on the Union. By contrast, Eurozone states that need policy changes cannot address the crisis independently or initiate reforms to scrutinize the EU. Hence, we argue that during the heated moments of severe economic downturns, parliaments in Eurozone countries discuss supranational supervision rarely. As these legislatures have nevertheless to give in to the popular demand for EU control, they express support for more EU supervision in the infrequent times of debate. We provide evidence for our theory with a cross-national analysis of EU oversight institutions, and a new original dataset of parliamentary debates during the Eurozone crisis. Our findings highlight the political consequences that financial nosedives have across the diverse membership of a supranational organization. [ABSTRACT FROM AUTHOR]

The objective of this article is to analyse the costs of responsible governance on the national political establishment of the Eurozone in the aftermath of the 2008 global financial crisis. Our analysis tests two main hypotheses. First, we argue that financial crises like the one unleashed by the global financial meltdown of 2008 have an asymmetric impact on the electoral records of establishment parties depending on whether the countries affected by the financial crisis were financially intervened in or not. Our second hypothesis states that externally imposed austerity affects Left and Right national establishment parties differently. By choosing to act responsibly, that is, assuming the conditions of the intervention, the establishment Left pays a much larger electoral price than the one paid by the establishment Right under the same circumstances. To test our argument, we use a panel data set of 12 countries from the Eurozone in the period between 1999 (stage III of the monetary union) and 2015 that contains 54 country-election-year observations. Our findings show strong support for our two hypotheses. [ABSTRACT FROM AUTHOR]

At the start of Economic and Monetary Union (EMU), the ECB's sui generis nature as one of the most independent central banks of an entity lacking political union evoked concerns that it would be both too constrained (limited mandate) and enjoy too much discretion (limited ex-post accountability) in comparison to central banks like the US Federal Reserve. Were these concerns justified? Using a principal-agent framework, this contribution contrasts the ECB with the Federal Reserve in their reactions to the global financial crisis and how the available accountability mechanisms were used. Early concerns that the ECB would pursue only price stability at the expense of other economic objectives were exaggerated, though criticism about its accountability proved prescient. [ABSTRACT FROM AUTHOR]

Previous research has identified the frames and metaphors used in the reporting on the Euro crisis. War and disease turned out to be the two most frequently used metaphorical frames. Since coverage of the current financial crisis may have a tangible effect on public opinion, research into the effects of metaphorical frames on attitudes is needed. By employing two survey experiments, a student sample (N = 259) and a nonstudent sample (N = 507), this article traces the effects of both metaphorical frames. Our results show that individuals take over the metaphorical frame elements in their evaluation of the Euro crisis. Participants in the war conditions significantly more often referred to war when answering the open questions. Alternatively, when the Euro crisis was framed as a disease, participants were more likely to use words and sentences containing disease frame elements. [ABSTRACT FROM AUTHOR]

This paper1 scrutinizes the transformation of the European economic governance. This is a framework conceived by European Union decision-makers to establish institutions and processes - coordination and harmonisation of economic policies - in order to achieve economic and social development for the European Union and its citizens. Prior to the global financial crisis, the European economic governance was incomplete, poorly coordinated and in certain macroeconomic areas insufficient. The international financial crisis and the "Euro crisis" compelled a much deeper and more comprehensive governance structure from the decision-makers of the European Union. Despite the rapid emergence of Community-level crisis management mechanisms, ad hoc responses and processes prevailed till the turning point of the "Euro crisis" in 2012. Since then, the transformation the European economic governance continued in a heavily institutionalized and coordinated form, providing a long-term vision for the European Union and the Eurozone. European economic governance has been substantially expanded, institutional arrangements cover fiscal policy, monetary policy, the supervision of the financial system, policies related to structural and competitiveness issues. Moreover, comprehensive and coordinated reform strategies were launched, based on the European Commission's priorities. In this paper, we carry out a simple analysis to detect whether the new European economic governance has corrected the precrisis country-specific risks and institutional flaws. [ABSTRACT FROM AUTHOR]

The following is the transcript of a debate, entitled 'Pensare un'alternativa' (Thinking of an Alternative), between Olivier Blanchard, former Chief Economist of the International Monetary Fund and a leading exponent of mainstream macroeconomics, and Emiliano Brancaccio, author of the book Anti-Blanchard and advocate of 'The Economists' Warning' against European deflationary policies. The debate examines, from two different theoretical perspectives, the global great recession, the Eurozone crisis, the effects of austerity and deflation, increased social inequality, and political conflict. It took place at the Giangiacomo Feltrinelli Foundation in Milan, Italy, on 19 December 2018, and was moderated by the journalist Pietro Raitano. [ABSTRACT FROM AUTHOR]

This article examines the metaphoric frames in the coverage of the Euro crisis in newspapers across five EU countries. Our quantitative frame analysis identified five dominant frames: war, construction, disease, natural disaster, and game. In all five countries, the Euro crisis as war turned out to be the most prominent news frame. Such framing uses martial, aggressive language to describe the European public sphere. This finding is not without importance, as newspapers play a key role in shaping the general public’s perception of the Euro crisis and by extension the European Union’s institutional elite and its (in)ability to cope with crisis. [ABSTRACT FROM AUTHOR]

Having a European identity is expected to influence citizens’ attitudes and behaviour towards the EU community. European identity is indeed positively related to support for EU integration, but are citizens with a stronger European identity also willing to pay a price for this identification, and to what extent? The contribution provides an answer to these questions by performing multilevel analyses on the EES 2014 data. The analyses show that citizens with a stronger European identity are more supportive of financial solidarity with member states in economic crisis. This explanation for support for solidarity is stronger than explanations provided by self-interest and economic ideological position. Citizens are thus willing to pay a price for their European identity. However, one can only expect so much from European identity as significant interaction effects show that the positive relationship between European identity and support for solidarity is mitigated by experiencing economic hardship. [ABSTRACT FROM AUTHOR]

In 2008, the European Union was hit by the most severe financial downturn since the Great Recession of the 1930s. One of the major consequences of this phenomenon was the deterioration in the enjoyment of human rights, in particular economic and social rights. While it is indisputable that the crisis itself was directly correlated to the erosion of such rights, the conditions attached to the loan agreements between defaulting countries and the three lending institutions, namely the International Monetary Fund (IMF), the European Central Bank and the European Commission, have negatively affected the rights under consideration. Loans came with strict austerity measures, such as public expenditure cuts in the realm of, inter alia, public services, benefits and social security. This article considers the deterioration in the enjoyment of economic and social rights by Union inhabitants and particularly the anti-crisis strategy adopted by the European Union, which, as will be demonstrated, directly contributed to this deterioration. The stance of the three institutions was facilitated by the less than proactive, but improving, positioning of the Court of Justice of the European Union in case law, which will be assessed. It must be noted that it is not the three institutions acting alone in this process; the Member States are the ones who agree to the loans and their conditions and implement austerity measures on the ground. However, as will be reflected, the practical role and actual input of the countries themselves in this procedure is limited. The central theoretical tenet of the article is that the European Union is re-shifting its direction to the almost absolute adoption of an economic constitution, with little regard to its social counterpart. Within the aforementioned framework, this article seeks to assess the status of economic and social rights in a crisis-hit Union, provide a theoretical explanation for this occurrence and put forth possibilities for positive change, placing the protection and promotion of economic and social rights at the heart of any responses to crisis as a method to ensure their sustainable protection effectively. [ABSTRACT FROM AUTHOR]

Abstract: Preserving the trust of bond markets is crucial for the world's many indebted countries, but it is still unclear when and how national or international actors can contribute to this goal. We present a set of arguments addressing this question and test them on the case of the eurozone debt crisis. Distinguishing between actors' capacity and willingness to avoid defaults, we argue that the crisis was marked by a lack of capacity at the national level, and limited or uncertain willingness at the European level. Accordingly, we find that European‐level efforts to reassure markets had considerably stronger effects than similar efforts at the national level. Furthermore, national efforts appear to have mattered the least in countries with the least capacity. These findings are based on a comprehensive new dataset of political events and relevant news, and they hold across a number of robustness checks and placebo tests. [ABSTRACT FROM AUTHOR]

In mid-November 2011, Prime Minister Silvio Berlusconi tendered his formal resignation to President Giorgio Napolitano. It was a humiliating ‘political exit’ for the controversial Italian leader who had been the dominant figure in Italian politics since the mid-1990s. With Italy in the throes of an unprecedented financial crisis, Berlusconi’s squabbling centre-right coalition had appeared increasingly incapable of dealing with the economic emergency engulfing the country. To restore credibility, Napolitano appointed Mario Monti who quickly put together an emergency government. Since then, the downfall of Italy’s longest-serving post-war prime minister has generated a good deal of controversy. Allegations that Berlusconi was pushed out of power by a cabal of domestic and international detractors have been rife both inside and outside Italy. But how plausible are these claims? Was Berlusconi brought down by a conspiracy orchestrated by Napolitano and instigated by Italy’s EU partners? This article will address these questions and, to do so, it will chart the dramatic events that led to his downfall and examine the international and domestic contexts in which these events took place. [ABSTRACT FROM AUTHOR]

We examine the transmission of financial shocks among the euro-periphery (Portugal, Ireland, Italy, Greece, Spain), the euro-core (Germany, France, the Netherlands, Finland, Belgium), and the major European Union (but not euro) countries (Sweden, the United Kingdom, Poland, the Czech Republic, Denmark). Using extreme returns on daily stock market data from 2004 until 2013, we find transmission effects for the tails of the returns distributions for the pre-crisis, US crisis and euro crisis periods from the euro-periphery to the non-euro and euro-core groups. During the crises, the shocks transmitted were more substantial, indicating significantly higher losses on extreme return days. [ABSTRACT FROM AUTHOR]

In recent years, Europe has been facing the Euro crisis, questioning the whole process of European integration. However, scholars argue that this crisis also presents an opportunity for the Europeanization of national public spheres as public attention regarding Europe has increased. Therefore, this study examines the media discourse on the crisis and the possible convergence of the national public spheres of Germany and Spain. It investigates how the issue is framed and who participates in the discourse during the crisis between 2010 and 2014 in German and Spanish online quality newspapers. Based on a content analysis of 7,256 statements in 961 articles, frames were identified in a data-driven approach. Results show that German and Spanish media have Europeanized their framing during the crisis and mainly support Europe's policy. This convergence has occurred despite a slight renationalization of discourse participants, indicating that Europeanization has been increasingly sustained by national actors. [ABSTRACT FROM AUTHOR]

This article highlights the renaissance of the essentialist topos of the ‘lazy and irrational’ ‘Südländer’ (Southerner, Southern countries, South) in the German political and media discourses during the ‘Euro crisis’. It argues that it served to legitimate the political and economic measures taken in Southern European countries that pushed them into still more peripheral positions within the European Union (EU) and deepened the cleavage between North and South. Culture, or better culturalism and racism as its political ideological version, thus were used as a trap, as an intellectual battleground for justifying extremely complex economic and political decisions in a simplistic fashion throughout a crucial period of European history. The article furthermore demonstrates how a postcolonial reading may productively decode the processes ofOtheringtaking place within Europe itself, especially between the so-called core and peripheral countries. [ABSTRACT FROM PUBLISHER]

This article reviews Johnston (2016) and supplements it with theoretically based empirical research. The European Economic and Monetary Union (EMU) set up circumstances that economically were good for its low-inflation northwest European countries. The euro crisis is an integrated issue that is reliant on how the pre-crisis economic performance of the EMU North, reinforced by its repressive wage-setting entities, influenced that in the EMU South. Upon joining the monetary union, EMU's member economies left behind their domestic exchange rates as adjustment mechanisms for current and capital account discrepancies, and such deficits increased relentlessly over time. [ABSTRACT FROM AUTHOR]

This article analyses the impact of the economic crisis on the Constitutional Court's role in the Italian legal order, particularly focussing on the paradox of a Court that is at the same time subject to the Rule of Law and guardian of the Rule of Law. This article argues that this paradox emerges in a clear manner when the Court is called to rule on austerity measures. To do this, the article analyses the main, unprecedented developments that affected the 'unwritten constitution' during the times of euro-crisis. The article illustrates a first season of the Constitutional Court's case law on the crisis legislation (2011-2014), characterized by a cautious and partly ambiguous approach. Subsequently, the article illustrates the latest developments in the Court's case law. The article goes into the details of three recent and notable judgements, revealing a new approach of the Court to the crisis legislation. This article argues that unlike a wide perception, the economic crisis affected the Constitutional Court' role in a very significant manner. More specifically, this paper argues that the Court's recent decisions to overrule its settled case law with regard to the temporal effects of its judgements raise serious concern with regard to the adherence to the Rule of Law. [ABSTRACT FROM AUTHOR]

The Euro crisis has transformed the European political and economic landscape. Amidst lingering political uncertainties, austerity, high unemployment, and diminished levels of trust in the European project, how has the Euro crisis affected the institution of citizenship within the European Union? While the development of EU citizenship and the number of rights and freedoms attached to it since the 1990s has progressively reduced the incentive of intra-EU migrants to acquire citizenship in other member states, I argue that the Euro crisis and its political and economic consequences have reinvigorated the perceived value of national citizenship. In its wake, many intra-EU migrants, and especially those from the most crisis-stricken countries, may have a renewed incentive naturalise in other member states. Using data collected for 14 Western European countries from 2000 to 2013, I demonstrate how a growing lack of trust in political institutions and economic hardship since the Euro crisis has inspired surprising new naturalisation trends across Europe. Rather than perpetuate a further decline of national citizenship in Europe, the Euro crisis appears to have rendered national citizenship once again politically consequential. [ABSTRACT FROM PUBLISHER]

This article studies the impact of right and left moderate political orientation of newspapers on the levels of plurality in the news coverage of the Euro Crisis in 20 newspapers from 10 European countries through a methodology based on Simpson’s D index. The expectation of finding distinct patterns of coverage leading to high levels of plurality was not fully supported and the results have shown that national frames influence levels of overall plurality more than political ideology. [ABSTRACT FROM AUTHOR]

We examine the relationship between credit ratings and bond yield spreads of peripheral countries in the euro area (Greece, Ireland, Italy, Portugal and Spain) for the period 1995–2014. Since 2012, bond spreads of those countries have come down very fast, whereas credit ratings have hardly changed. Our results suggest that credit rating agencies have become more cautious and have changed their approach to assess credit risk of sovereigns, and that the impact of sovereign credit risk ratings on sovereign bond spreads has changed. [ABSTRACT FROM AUTHOR]

The euro crisis and a new debate about immigration in Europe have undermined support for the EU while the unsolved Greek debt problems as well as the ECB's quantitative easing policy have raised new crucial policy issues. It is necessary to identify the key issues of Eurozone stabilization and to clarify the economic benefits from monetary integration. As regards the economic welfare analysis of the euro, the new model presented shows the benefits of the euro's reserve currency position, namely in the framework of a neoclassical growth model with seigniorage based on international reserve holdings. Discounted benefits are about 10,000 € per capita in a stable Euro area. Thus the benefits are bigger than often considered, at the same time one may raise the question of whether the existing institutional setting of the Eurozone is sufficient for achieving long-term stability and prosperity. As regards the envisaged third rescue package for Greece it is emphasized that a haircut of public creditors along with adoption of a Greek capital levy plus privatization efforts are required to achieve debt sustainability and growth. The traditional interpretation of subsidiarity in the EU is found to be misleading and the vertical division of politics is destabilizing. [ABSTRACT FROM AUTHOR]

This empirical study investigates whether people's concerns about the Euro currency affect their life satisfaction. A minority of very concerned individuals appear to be unhappy, which cannot be explained by personality or other observable factors typically affecting well-being. As a novelty, this investigation exploits exogenous variation in reported concerns by using the intensity of media coverage on the euro crisis with its extraordinary events throughout the year 2011 as an instrument. Results from the application of several empirical approaches confirm that there is an effect from being concerned about the euro on people's satisfaction with life. A potential explanation is that political beliefs and euro-skeptic attitudes are at play and may trigger unhappiness as a consequence of a perceived lack of representation in German politics. In line with this argument, a regional analysis links the variation in unhappiness among concerned citizens to the actual votes for Germany's first major anti-euro party in the subsequent federal elections. [ABSTRACT FROM AUTHOR]

The European crisis has many causes. Worse, the different causes are mutually reinforcing. National economies lost competitiveness within the single currency, governments and households lived beyond their means, banks and other financial firms moved capital across borders and then called it back home again in a fit of panic. Europe is suffering as a consequence. European policy-making is suffering as well. With so many ‘causes’, politicians are dividing their attention across different and at times competing remedies. Europe appears to be ‘muddling through’ rather than acting decisively as a result. This paper argues that European policymakers should focus their attention on financial causal mechanisms. Although there is some truth to claims about lost competitiveness and excessive borrowing, a close focus on financial markets promises to offer the greatest leverage over the largest number of national economies. A close focus on finance also offers a clear choice between competing policy agendas: Europe's politicians must choose either to accept a renationalization of finance or they must embrace reforms necessary to stabilize international financial market integration. Only once that choice is made, and the necessary policy agendas are put in place, should politicians again turn their focus to issues of second-order (if still significant) importance related to market structural reform, fiscal consolidation, or asset market regulation. [ABSTRACT FROM AUTHOR]

Early critics of the euro’s design pointed to the disruptive potential — both political and economic — of country-specific shocks in a monetary union that is a far cry from an optimal currency area. The euro crisis has confirmed the risks associated with a ‘one-size-fits-all’ monetary policy, decentralized financial supervision, and inadequate fiscal backstops. This article examines how the active use of national fiscal policies and macroprudential policies can mitigate these risks. Cross-border coordination of macroprudential policies is essential to ensure their effectiveness. In addition, area-wide reforms are necessary including a more complete banking union with a well-funded common backstop. [ABSTRACT FROM AUTHOR]

Coming on the heels of the global financial crisis, the Euro crisis was first an issue of banking solvency, then an issue of sovereign indebtedness, and then an issue of the stability and integrity of the Eurozone and its currency. Market agents take bets on the future of the Euro, how it might be saved (or not), and the likely interventions (or not) of leading politicians and their governments as well as the European Central Bank. The integrity, powers and governance structure of the ECB are fundamental issues for the Eurozone, its members and the stability of global financial markets. Just as important are the geographical manifestations of the Euro crisis, since the national and urban and regional effects of the crisis often translate directly into political movements that question the legitimacy of the European project. This special issue brings together a set of papers that provide an overarching perspective on the Euro crisis and maps the uneven spatial effects of the crisis across countries, cities and regions. [ABSTRACT FROM AUTHOR]

The Euro crisis is mainly a consequence of the international financial crisis of 2008. Thereby, the term Euro crisis is misleading as there is no currency crisis. First, the article shows some of the birth defects of the Euro. Second, it shows that the increase in public debt was caused by rescue measures for banks and anti-cyclical fiscal policy. Third, we argue that the Euro crisis is not just one crisis (a sovereign debt crisis) but it is a combination of several macroeconomic crises including a growth crisis, a labour market crisis, a public debt crisis, and a current account crisis. [ABSTRACT FROM AUTHOR]

Until very recently, European employers and political leaders denied the need for any coordination in industrial relations at EU level. In 2011, however, the European Parliament and the Council adopted a new European economic governance regime that makes EU member states' labor policies subject to multilateral surveillance procedures. This paper analyzes this ‘silent revolution’ from above and assesses organized labor's responses to this challenge. It shows that the EU's new governance regime does not follow the classical model of a federal state, but rather the governance structures of multinational corporations that control their local subsidiaries through the use of whipsawing tactics and coercive comparisons. European trade unions' and social movements' difficulties in politicizing European economic governance are thus best explained by the ability of the new supranational EU regime to nationalize social conflicts. [ABSTRACT FROM PUBLISHER]

For many political economists, the loss of monetary sovereignty is the major reason why the Southern periphery fared so badly in the Euro area crisis. Monetary sovereignty here means the ability of the central bank to devalue the exchange rate or to buy government debt by printing the domestic currency. We explore this diagnosis by comparing three countries – Hungary, Latvia and Greece – that received considerable amounts of external assistance under different monetary regimes. The evidence does not suggest that monetary sovereignty helped Hungary and Latvia to stabilize their economies. Rather, cooperation and external assistance made foreign banks share in the costs of stabilization. By contrast, the provision of liquidity by the European Central Bank inadvertently facilitated the reduction of foreign banks’ exposure to Greece which left the Greek sovereign even more exposed. By viewing the Euro area as a monetary system rather than an incomplete state, we see that what is needed for Euro area stabilization is cooperation over banking union, rather than a fully-fledged federal budget. [ABSTRACT FROM PUBLISHER]

Europe’s woes mark a new chapter in the longstanding theory/history nexus in European studies. The euro crisis has brought integration theory back onto the scholarly agenda and highlighted the value of neo-functionalism – and more precisely its key ‘spillover’ mechanism – as a framework for interpreting current politico-institutional dynamics in the European Union. We are, however, at a particular point of the neo-functionalist narration, in which the transition from low to high political integration has opened a phase of political fluidity that makes ideas and political leadership crucial in determining the future course of integration. In this phase, the positive scheme of neo-functionalism and the normative one of federalism come together, bringing the intellectual trajectory begun after WWII to full circle. Whether this new encounter will result in further integration depends primarily on the content of new federalist ideas, the emergence of an effective European leadership, and the presence of a favourable international environment. For all three factors, the record so far has been mixed at best. [ABSTRACT FROM PUBLISHER]

This article examines the relationship between European states and the informal American empire following the Second World War. Building on neo-Marxist theory, it argues that any attempt to understand the political response to the ongoing euro crisis has to consider the deeper determinations of the trajectories of the states of North America and Western Europe through the course of the making of global capitalism since 1945. This involves, in particular, taking seriously the leading responsibility that the American state has had, and still has, for securing the conditions for capital accumulation internationally, even while other capitalist states retain their ‘relative autonomy’ within the informal American empire. [ABSTRACT FROM AUTHOR]

The crisis of the euro area has severely tested the political authority of the European Union (EU). The crisis raises questions of normative legitimacy both because the EU is a normative order and because the construction of economic and monetary union (EMU) rested upon a theory that stressed the normative value of the depoliticization of money. However, this theory neglected the normative logic of the two-level game implicit in EMU. It also neglected the need for an impartial and publically acceptable constitutional order to acknowledge reasonable disagreements. By contrast, we contend that any reconstruction of the EU's economic constitution has to pay attention to reconciling a European monetary order with the legitimacy of member state governance. The EU requires a two-level contract to meet this standard. Member states must treat each other as equals and be representative of and accountable to their citizens on an equitable basis. These criteria entail that the EU's political legitimacy requires a form ofdemoicracy that we call ‘republican intergovernmentalism’. Only rules that could be acceptable as the product of a political constitution among the peoples of Europe can ultimately meet the required standards of political legitimacy. Such a political constitution could be brought about through empowering national parliaments in EU decision-making. [ABSTRACT FROM PUBLISHER]

Of the multiple narratives EU policymakers could have chosen at the onset of the euro crisis, why did austerity and structural reform win out over other plausible cures for member states’ problems? Arguably, sovereign debt pooling or more federalized economic governance would have been a solution to member states’ national deficits and competitiveness woes. To understand this puzzle, we draw on the sociology of knowledge literature. We argue that the response to the euro crisis was heavily informed by broader social logics that constructed the problem and the solution heavily toward ordoliberal and neoliberal ideas. Mapping the fate of the Eurobond proposals allows us to trace the complex entanglement of economic policy-making and parse out the ways in which social realities are shaped to make particular policy choices seem inevitable, even as they are themselves the product of social processes. [ABSTRACT FROM AUTHOR]

The crisis in the European currency area is not yet over. Although the situation in the financial markets is currently relatively calm, the economic crisis appears to be bottoming out in most countries. Nevertheless, there are still fundamental design flaws in the Monetary Union. If these are not fully addressed, it will only be a matter of time before a new crisis hits, and a partial or complete breakup of the Monetary Union cannot be ruled out. The economic consequences would be devastating, not least for Germany. To ensure the survival of the European Monetary Union, fundamental reform is required in three problem areas: the financial markets, public finances, and the real economy. In order to give the Monetary Union a stable foundation, all problem areas must be tackled equally; otherwise, due to interactions between these fields, success in one area might be canceled out by a flare-up of the crisis elsewhere. The present article outlines the elements of such a strategy for the institutional restructuring of the Monetary Union. Other articles in this and the next issue of DIW Economic Bulletin focus on the role of the ECB as the lender of last resort, the banking union and bank regulation, Community bonds, a European investment agenda, migration within the EU, a European unemployment insurance scheme, options for fiscal devaluation, and mechanisms for sovereign bankruptcies. [ABSTRACT FROM AUTHOR]

The fundamental idea we discuss in this paper is that the failure of Europe to deal with the international crisis is due, first and foremost, to the deepening of a more specific crisis that affected the very process of European integration and developed through two main channels: one, broader, linked to the erosion of the original driving forces underpinning integration in Europe; another, more circumscribed, linked to the malfunctioning of the euro as an internal adjustment mechanism of the currency zone. To deal with these structural dimensions of the crisis, we put forward a model of a Global Europe against the model of Continental Europe that has dominated the integration process until now and in this alternative framework we discuss the potential role of Portugal and of the Community of Portuguese Speaking Countries. [ABSTRACT FROM AUTHOR]

Since the beginning of the Euro crisis in 2009 a succession of one ‘last chance’ meeting after another has exposed deep rifts over the policies to implement in order to ensure the permanence of the Euro. From austerity measures to curb swelling public deficits put forward by Germany to European growth plans and solidarity mechanisms suggested by France, there have been serious disagreements and widespread infighting. The agreement of a new European Treaty creating a tight fiscal pact, at the European Summit on 7 December 2011, brought these tensions to the fore, leading to a barrage of criticisms in France against Germany imposing its austerity agenda on the whole Eurozone. This article seeks to analyse how Germany has been portrayed in the French political discourse by focusing on the vast array of reactions to this new treaty. It will show a discursive struggle between three discourse types representing Germany as an evil force intent on dominating Europe, a virtuous ant unwittingly dominating Europe and an economic giant but a political dwarf. These discourses will show how Germany is trapped into past representations and how these reveal far more about France's self-image in relation to its neighbour than about Germany itself. [ABSTRACT FROM AUTHOR]

Our article focuses on a question that is at the core of comparative capitalisms (CC) scholarship and historical materialist state theory: What is an appropriate theory of institutions in capitalism? How can we conceptualise institutions in relation to the fundamental contradictions and power relations of capitalism? Starting from the social foundations of institutions, the aim of this article is to show how institutional complementarity and institutional change can be explained through analysing shifting relationships of social forces. With our newly developed method of a ‘historical materialist policy analysis’, in which we have integrated insights of CC approaches, we seek to show how an empirical investigation of relationships of forces can be operationalised. This is briefly illustrated in an analysis of the constellation of forces in the current Euro crisis. [ABSTRACT FROM PUBLISHER]

The Euro area is experiencing a severe and highly complex crisis. It comprises three problem areas: the difficulties of some highly indebted European sovereigns to ascertain funding at palatable cost, the disconcerting fragility of the European banking system and disappointing growth prospects in the Euro area periphery. To make matters even worse, these problems have developed into a systemic crisis of the European Monetary Union (EMU), since observers have apparently developed fundamental doubts over its integrity. To overcome this systemic crisis, it would not be sufficient, if only the stronger Euro area economies provided more solidarity, nor would it be sufficient, if only all of Europe adhered to ironclad budgetary discipline from now on. A European Redemption Pact could be a strong political commitment to the EMU and offer a bridge between the proponents of fiscal discipline and structural reform and those governments advocating more support. This pact would entail two indispensable aspects, the codification of a credible and coherent reform path and a temporary and limited instrument for joint refinancing. [ABSTRACT FROM AUTHOR]

France and Germany played a highly visible leadership role during the management of the Euro crisis and the efforts to design a reform governance framework for the Euro area. This article provides a conceptualization of this bilateral leadership, which is then applied to trace the process of Franco-German leadership during the ongoing crisis of the Euro area. Franco-German leadership grew ever more important as the crisis deepened. After the French presidential election of 2012, however, the divergences between the two core states of the Euro area deepened and made the exercise of joint leadership more difficult to achieve. I consider this leadership role to be based on a compromise by proxy logic in which France and Germany, starting from divergent positions, strike bilateral compromises acceptable to other member states that feel their own interests are represented by either France or Germany. Their common capacity to find suitable remedies to cope with crisis, however, is not beyond doubt. The Franco-German approach followed an additive logic, combining the temporary and permanent financial support schemes-a French preference-with a concomitant strengthening of fiscal rules advocated by Germany. In the end, the two governments did not develop a common comprehensive strategy based on a shared conceptual framework. [ABSTRACT FROM AUTHOR]

Do the Japanese see the EU as a global power? How do they see the causes of the financial crisis in the euro zone, and are they changing their perception of the EU because of the Euro crisis? Regulatory power is defined as a country's or an international organization's power to set up its national or regional rules and standards as global rules and standards. Do the Japanese see the EU's 'regulatory power' as strong, and do they think the EU's 'regulatory power' declined because of the financial crisis in the euro zone? This paper presents the results of an analysis of questionnaire data as well as an investigation of newspaper articles in order to examine the Japanese perception of the EU empirically, and it also discusses academic works that relate to the result of the empirical analysis. The October 2012 questionnaire results show that the Japanese public has an impression that the EU is a global power rather than a regional power. In Japan, both business elites and university students generally think that the EU has strong power in the area of economics. However, the Japanese business elites feel that the EU's power is declining because of the financial crisis. The Euro crisis has thus negatively affected the EU's regulatory power. Even so, as the October 2012 questionnaire results show, more than 40% of Japanese business elites believe that the regulatory power of the EU has not declined even after the beginning of the Euro crisis. However, Japanese business elites continue to be anxious about the EU's regulatory power. [ABSTRACT FROM AUTHOR]

The Euro Zone (EZ)'s economies are under great stress since last decade's financial crisis. Diverging interest rates, high debt burdens and sluggish growth in several member countries led to various rescue activities. Nevertheless, financial markets have still not calmed and the break-up of the EZ is discussed openly. Contrary to the popular belief I show that the Euro itself has been a success story so far but that the EZ suffers under a debt crisis and huge economic imbalances. An overhaul of the EZ's institutional framework is necessary. [ABSTRACT FROM AUTHOR]

The financial crisis that erupted in 2007 and the subsequent crisis of the euro have received enormous attention both in the media and in specialized journals. One of the features of the recent literature is that the relation between Marx's law of the tendential fall in the rate of profit and the earthquake that has stricken the euro zone has been, with a few exceptions, overlooked. The basic reason for this failure is that it has become almost a matter of common sense to regard Marx's law as internally inconsistent and empirically disproved. What follows submits empirical material supporting the validity of the law. It then proceeds to sketch the basic lines of Marx's analysis of crises. Finally, it relates this analysis to the present financial turmoil and to the euro crisis [ABSTRACT FROM AUTHOR]

Proponents of Asian monetary integration have always looked to Europe for inspiration. This paper reconsiders the cas in light of the eurozone crisis. I ask what aspects of the earlier consensus remain intact in the wake of the crisis and what aspects must now be rethought. Is there a danger of "throwing out the baby with the bathwater" - a danger, in other words, that Europe's negative experience since 2009 will cause Asia to turn away too quickly and completely from monetary integration? Or is it in fact appropriate to "throw out the baby" - to conclude in light of Europe's example that Asian monetary integration is not an appropriate and desirable goal? [ABSTRACT FROM AUTHOR]

This article reviews the major events in the unfolding of what is conveniently and somehow mistakenly labeled as the Euro Crisis. The main idea underpinning the interpretation of these events is that while there is absolute agreement that the Euro Crisis is an existential test for the European Union, no similar agreement can be found regarding the roots of the crisis. Two largely divergent, even clashing views on these roots are the catalyst for the countless discussions in this regard: "Europe is to blame" vs. "markets are to blame." The stakes of this clash have to do with the fact that the prevailing interpretation influences the policy responses for crisis resolution and, even more importantly, will influence the future direction of the EU. The topic of the EU public sphere as the battleground where the battle over interpretations takes place is brought in, together with the role of the most important actors in the public sphere--mass media and the elites. The conclusion is that the prevailing interpretation regarding the roots of the crisis, the solutions and the model for the EU springing from this prevailing interpretation will be the historical legacy that the EU media and EU elites will leave to future generations. [ABSTRACT FROM AUTHOR]

Ten years after its introduction, the Euro is in an existential crisis. The crisis is the outcome of economic policies that have aimed at labour market flexibility and financial integration. This paper argues, firstly, that the aggregate demand regime in the Euro area is wage led. While an increase in wages (other things equal) does have a negative effect on investment and on net exports, it does have a positive effect on consumption. As the Euro area is a relatively closed economy, the consumption effect overpowers the investment effect and the export effect. Secondly, we argue that in the Euro area two growth models have emerged: a credit-led and an export-led model. These have given rise to the imbalances that are at the heart of the Euro crisis. Wage flexibility has proven insufficient to prevent these imbalances. Thirdly, we advocate a system of coordinated wage bargaining that aims at wages rising in line with productivity growth and a substantially upward-revised inflation target. If the project of European economic integration is to survive, it needs a drastic change in direction. An important building block of this redirection is a rethinking of the role of wage policy. [ABSTRACT FROM AUTHOR]

This article considers the likely impact of the global crisis on the prospects for the European project. First, it considers the nature of the current crisis. It argues that it is comparable, in terms of its deep structural character, to the one in the 1930s. The crisis manifested itself first in the financial sector, but was caused by underlying problems of overaccumulation, which explains the succession of speculative booms and busts from the 1980s onward. The article then analyses how the financial crisis transmuted into the current sovereign debt crisis in Europe. It identifies a number of interdependent factors responsible for this: the bailouts of banks following the credit crisis; the stimulus programmes necessitated by the danger of a deep economic recession; the structural problems of the European Monetary Union leading to the accumulation of debt in the peripheral members; and finally the catalytic action of speculation in the financial markets. Finally, the article discusses responses to the debt crisis, outlining the contours of two alternatives (muddling through and Europeanisation), their implications, and some of the conditions for success. The conclusion is rather pessimistic: chances that an effective, timely and sustainable solution will be realised do not seem high. [ABSTRACT FROM PUBLISHER]

With the parallel to the negative effect of the global crisis on the world economy, the economies in the EU started to give negative signals. The member countries such as Greece, Ireland, Portugal and Spain seeing the first negative effects of the global crisis are located in the periphery of the continent. Among these countries, Greece is more important with respect to the depth of its ongoing crisis, its observed effects and being an initial example. This is the biggest financial crisis since the EU accepted the euro as a single currency and Greece involved in the Euro Region in 2001. Like some of the other member countries in EU, Greece has a huge amount of sovereign debts and budget deficit. The most sovereign debts in Greece were taken from financial institutions located in central countries such as Germany, France and Belgium. It is possible that the problems caused by the Greek non-performance issue could spread over Euro Region and that risk could affect directly currency union at first, then economic and political structure of the EU and create some problems for maintaining of its single currency, namely the euro and also the ECB. Called recently as a "naughty boy" or a "sick man" in the EU, Greece has created an important test atmosphere with regard to the integration and control of EU countries' monetary and economic policies and the creation of common policies against global crisis. It became a laboratory country for the Union. Taking into consideration the process, the ongoing problems in the EU currency system after global crisis will be debated around the notion of "Greek Crisis" in our work. [ABSTRACT FROM AUTHOR]