Tuesday, September 18, 2012

The Eurozone Crisis and International Relations

The Eurozone Crisis and International Relations
Posted by: Bartholomew Watson, Visiting Assistant Professor, Department of Political Science

One of the most interesting parts of the ongoing global economic downturn for IR scholars has been the corresponding Eurozone crisis. Part cause and part result of the broader global downturn, the Eurozone crisis has resulted from the ongoing and escalating debt trouble of a number of Eurozone countries, primarily in Southern Europe. (See the NY Times topic page on the crisis for more information and a wealth of statistics on debt, deficits, and bond yields: http://topics.nytimes.com/top/reference/timestopics/subjects/e/european_sovereign_debt_crisis/index.html)

The political negotiations over how to solve this crisis have exposed deeper national disagreements over the proper political and economic governance of Europe. On one side are lender countries like Germany that want to see more fiscal discipline and want to see any financial assistance tied to reforms in government spending. On the other are the debtors, such as Greece and Spain, who see austerity as a straightjacket that prevents the flexibility needed to jumpstart economic growth. Neither side has showed much willingness to move forward on solutions without assurances that their concerns will be met.

Although the Eurozone countries represent only a sub-set of the European Union countries, this stasis has threatened the forward momentum of the European project and the emergence of a unified “Europe” in international politics. (See http://www.southerncenter.org/EU_L2_A3_teacher_resource_2_6_p111.pdf for a good summary of the overlapping European organizations). Both economically and politically, the European Union has been a more active political actor on the international stage in recent years, but the Eurozone crisis, and subsequent political conflict, has threatened this growing international coordination between European countries.

Nevertheless, all is not lost for those who would like to see Europe as a more unified political actor in international relations. Two events in the past week suggest that the European project may be back on track and that solutions to the Eurozone crisis can indeed be found through collective action.

The first was a favorable ruling by the German Constitutional Court. The Court was ruling on whether Germany’s participation in the European Stability Mechanism (ESM) was legal under Germany’s constitution. The ESM is a plan by the European Central Bank (ECB) to build a bailout fund to purchase government bonds of failing EU economies. Without Germany, the deal was certain to unravel, being unable to provide financial markets the assurances that the ESM was designed to provide. The ruling was not universally positive for supporters of Europe (the court placed limits on Germany’s role and the lending process), but the court ruled that the basic structure of Germany’s participation in the ESM was legal, clearing a path for Germany to participate in the ESM.

The second positive sign was political. In the Netherlands (also a Eurozone country), Dutch voters reversed an anti-European electoral trend and elected a pro-Europe coalition led by the Liberal (VVD) party. Placed amidst the Eurozone crisis, it appears that voters (at least in the small, export-reliant Netherlands) still see benefits from European membership.


Party
Seats
Change
VVD (Liberals)
41
+10
PvdA (Labor)
38
+8
Freedom Party
15
-9
Socialist
15
0
Christian Democratic Appeal
13
-8
Democrats 66
12
+2
Christian Union
5
0
Green Left
4
-6
Reformed Political Party
3
+1
50 plus
2
+2
Party for the Animals
2
0



Just as important for European politics was the declining appeal of the Freedom Party, one of a number of nationalist, anti-immigration, far-right parties that have thrived in the last decade across Europe. Other examples include the French National Front, the Swiss People’s Party, and the Italian Northern League. Although these parties vary in their specific party platforms, they typically share a uniform, anti-EU rhetoric. Although the Freedom Party started the campaign with a strong position in the polls, it steadily faded over the course of the campaign to the benefit of more pro-Europe parties.

The European political roller-coaster will certainly have more twists and turns in the coming years. More evidence will emerge slowly, however, and national elections in Germany and Italy (both tentatively scheduled for 2013) will begin to show whether this week marked the turning point toward greater cooperation and coordination among European countries or was merely a blip in the fracture of the Eurozone.

** Professor Watson will be teaching a class on the European Union in the Spring 2013 semester.

2 comments:

  1. The Euro crisis had affected several countries that are outside Europe, China and US are some of the countries that are quite affected because of their import relations with European countries.

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