Piet Eeckhout on The Greek Crisis (and New EU Blog)

New network member Piet Eeckhout (UCL), who will be a Senior Emile Noël Fellow at the Jean Monnet Center at NYU in the fall, has asked us to announce his new blog on EU matters: London-Brussels One Way or Return.  His most recent post is entitled The Greek Crisis and the Dysfunctional European Political Space, which is cross-posted below.  In the post, Piet argues that in the debates surrounding the Greek crisis we may be witnessing the creation of a truly European political space, and that this development underscores the importance -- and the controversial nature -- of EU institutional reform.  The blog is available here.

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It has been sad to see the Greek crisis gathering pace, culminating in a Eurozone summit which, on condition of deep and intrusive reforms, allows Greece to remain in the Eurozone, and offers the perspective of another bailout.  But no one is under any illusions that the crisis is resolved.  It is clear that European integration has reached a very low point, judging by the acrimonious debates at all levels: official, media, and social media.

This post does not comment on substance but on process.  If there is a silver lining to the crisis it is, in my view, the birth of a European political space.  The long-living mantra that the EU suffers from a democratic deficit is well known.  It is coupled with a profound scepsis about the potential for ever narrowing, let alone removing, that deficit: there is no European demos, only demoi.  Democracy continues to be embedded in the nation-State, a conception most extensively articulated by the Bundesverfassungsgericht (German Constitutional Court) in its Maastricht and Lisbon judgments.  To put it in less elevated terms: all politics are local.  The EU’s main top-down attempt at instituting democracy at the EU level is tentative and has not worked well: the directly elected European Parliament is not a full sovereign parliament and its elections do not manage to transcend the local nature of State politics.  The democracy sceptics consider that all this is evidence that there can be no real EU-wide political space. Notwithstanding decades of – one would almost forget – largely successful European integration, we all continue to live in countries which are too diverse to enable us all to engage in genuine European political debate.  There is no European political space.

Or is there?  For anyone who has followed the Greek crisis (and has not nearly everyone, to some degree?) it is difficult to deny that we have seen and are seeing a genuine European debate.  It is a moral debate, about who is right and who is wrong; it is an economic debate, about the merits and flaws of the euro-project and of austerity policies; it is a social debate, about protection of people and solidarity; and it is a hard-core politics debate, on left and right, and on power structures.  That is not to say that there is no national dimension to the debate.  Views are clearly very different between creditor States and bail-out States, or, to simplify, between North and South.  Indeed, the debate is way too nationalist in many ways. But a European debate it nonetheless is.

How come?  The most immediate answer could be that the Greek crisis is so deep, grave and awful that people take an – perhaps unusual – interest in European politics.  If that is the case, this European debate is unlikely to continue beyond this crisis.  The European political space would be contingent and not enduring. But there may be a deeper reason.  It is becoming ever clearer that the Eurozone sovereign debt crisis has given birth to a European politics of redistribution. That is a historical shift.  European integration and its politics have never been about redistribution at the levels we now witness.  Yes, the internal market project may have some redistributive effects.  Yes, the EU has tried to develop something of a social policy, but it is limited and contested.  Yes, the expansion of the EU has some redistributive goals and effects.  But none of this is in the same league as the issues raised by the Greek crisis.  And when I say “issues raised” I do not refer to any objective academic assessment of the actual effects of bailouts and their financing, but to political perceptions and claims.  Responsible Germans financing spend-thrift Greeks.  Creditors bailing out German and French banks rather than the Greek people.  The euro project being to the benefit of the North (or Germany) at the expense of the South.  Right-wing eurozone politicians imposing austerity to the benefit of capital.  Etc etc.  And of course it cannot be denied that the Greek people are intensely suffering, that Germany and others are doing well, that we are speaking about a lot of money (even if Greece accounts for only 2% of the eurozone economy), that a default would constitute a transfer from the creditors to Greece, and that full repayment of the Greek debt requires further austerity, if either is at all possible.  All this is inherent in the euro project in times of crisis.  The idea, endorsed by the creators of EMU, that solidarity could be avoided by continuing to have each eurozone State responsible for its own fate has proven illusory.  The euro has created a politics of redistribution, and the crisis a European political space.

However, it is a political space which in institutional terms is dysfunctional.  For the politics of redistribution to work one needs a political system which crystallises debates, and enables, at some point, effective majority decision-making.  By majority I do not mean, in the eurozone context, a majority of Member States.  There is such a majority: the creditors are united in the conditions they impose – in fact Greece has accepted and its parliament has adopted legislation, so there is a consensus.  But it is not a consensus emanating from the European political debate.  It is a creditors’ consensus, and it is mostly determined by national political interests and debates.  For example, the governments of other Southern eurozone countries are resisting a good deal for Syriza, because of the political ammunition it would supply to anti-austerity parties, mostly on the left.  It is also a politically weak consensus, in the sense that it builds on established policies, institutions, and rules.  Once the EU has set on a political course, it is very hard to change it.  In part, that explains the failure of the negotiations since Syriza came to power: how many times have we heard that the new government had to stick to the rules and to what was previously agreed?

By contrast, it is no accident that at one level the eurozone has been able to evolve and respond: ECB policy.  This is an organisation which is capable of crystallising debates and making decisions.  It has a President who is able to say that the ECB will defend the euro, whatever it takes, as Draghi did in 2012 when announcing the OMT policy.  But of course the politics cannot be left to the ECB, because it is independent, hardly accountable, and not subject to the politics of democracy.

The analysis of the dysfunctionality of Europe’s political space is easy enough; which reforms to suggest is much harder.  The “federalists” of course have a straightforward solution.  We need to establish EU-wide political institutions with real decision-making powers, also in terms of redistributive politics.  To simplify: the Commission needs to become a European government, with a majority in the EP, and with a budget which allows for redistribution.  But it is pretty clear that the peoples of Europe (these are the “peoples”, plural, referred to in the EU Treaties’ preamble) are at this stage pretty reluctant to endorse such a federalisation – not sure they are aspiring to “ever closer union”!  Nor am I convinced that this is what European integration was originally aimed at: transcending nationalism is not the same as building a European nation.  So I think Europe again has to find what Weiler has called its Sonderweg to create a more functional European political space.