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The European Union in Crises Or the European Union As Crises?

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The European Union in Crises Or the European Union As Crises? The European Union in Crises or the European Union as Crises? John Erik Fossum and Agustín José Menéndez (eds) ARENA Report No 2/14 The European Union in crises or the European Union as crises? John Erik Fossum and Agustín José Menéndez (eds) Copyright ARENA and authors ISBN (print) 978-82-93137-46-7 ISBN (online) 978-82-93137-96-2 ARENA Report Series (print) | ISSN 0807-3139 ARENA Report Series (online) | ISSN 1504-8152 Printed at ARENA Centre for European Studies University of Oslo P.O. Box 1143, Blindern N-0318 Oslo, Norway Tel: + 47 22 85 87 00 Fax: + 47 22 85 87 10 E-mail: [email protected] http://www.arena.uio.no Oslo, May 2014 Cover picture: Rob Ryan, Achilles and the euro, http://robryanstudio.com/ Acknowledgements This report contains revised versions of the papers that were presented at the workshop ‘Europe in crisis, Europe as the crisis?’, that was held in Oslo on 14 and 15 March 2013, and was organized by ARENA Centre for European Studies. We are very pleased to be able to include chapters by Christian Joerges, Michelle Everson, and Hauke Brunkhorst in the report. We are also extremely grateful to Rob Ryan, for his kind permission to reproduce his wonderful illustration Achilles and the euro on the cover. The research that has gone into this report is part of the EuroDiv project, funded by the Norwegian Research Council’s Europe in Transition programme. The workshop took place under the auspices of the project The Norwegian Constitution in a Changing European Context (NORCONE). We would like to thank the programme Democracy as Idea and Practice at the University of Oslo and ARENA for additional financial support, especially towards the preparation of the report. We would like to thank in particular Kadri Miard, Veronica Thun, Helga Rognstad, Linn Hege Lauvset, Sindre Eikrem Hervig, Marit Eldholm and Geir Ove Kværk for their valuable contributions in turning the papers into another nice report from the ’Oslo factory’, to use a nice expression that Hauke Brunkhorst has used about ARENA as a publisher of reports. John Erik Fossum and Agustín José Menéndez Editors Table of contents Introduction Which crises? Whose crises? John Erik Fossum and Agustín José Menéndez .............................................. 1 Part I Does EMU really add up? Economics matters Chapter 1 Reversing the neoliberal deformation of Europe Jeremy Leaman .............................................................................................. 43 Chapter 2 Legitimacy intermediation in the multilevel European polity and its collapse in the eurocrisis Fritz W. Scharpf ............................................................................................ 93 Comment The eurocrisis as a victory of neoliberalism? Fritz W. Scharpf .......................................................................................... 143 Part II Looking back, looking forward History matters Chapter 3 When the peloton hit the mud Displacement struggles and the EU crisis Dennis Smith ............................................................................................... 157 Chapter 4 The EU crisis in historical perspective Mark F. Gilbert ............................................................................................ 187 Chapter 5 The general crisis of the European Union A genetic approach Giandomenico Majone ................................................................................. 211 Chapter 6 Crisis and change in Greece What price democracy? Asimina Michailidou ................................................................................... 245 Part III Disintegration through non-law? Law matters Chapter 7 Europe’s economic constitution in crisis And the emergence of a new constitutional constellation Christian Joerges ......................................................................................... 279 Chapter 8 The fault of (European) law in (political and social) economic crisis Michelle Everson ......................................................................................... 335 Chapter 9 Who is the guardian for constitutionalism in Europe after the financial crisis? Michelle Everson and Christian Joerges ..................................................... 369 Chapter 10 The European crises and the undoing of the social and democratic Rechtsstaat Agustín José Menéndez ............................................................................... 387 Chapter 11 From expert to politician and stakeholder? Constitutional drift in the role of the ECB Klaus Tuori .................................................................................................. 491 Chapter 12 Europeanising prudential banking supervision Legal foundations and implications for European integration Pedro Gustavo Teixeira ............................................................................... 527 Chapter 13 The beheading of the legislative power European constitutionalisation between capitalism and democracy Hauke Brunkhorst ....................................................................................... 585 Chapter 14 On the parliamentary control of a reformed monetary union? Christopher Lord ......................................................................................... 611 Part IV Political science matters Chapter 15 The crisis A challenge to representative democracy in the European Union? John Erik Fossum ........................................................................................ 637 Introduction Which crises? Whose crises? John Erik Fossum and Agustín José Menéndez ARENA Centre of European Studies, University of Oslo University of León and, ARENA Centre of European Studies, University of Oslo Introduction For more than six years we have been literally obsessed with crises. First it was American banks and other financial institutions that were in crisis. In late 2006, the floor fell out of the housing market. That market had previously been propelled by the growth of subprime mortgages, and the sudden turnaround hit banks and financial institutions. By the autumn of 2007 the waves of the American financial crisis hit the European shores. The bank run on Northern Rock was the first in Western Europe for seventy years. The collapse of Lehman Brothers in September 2008 rendered clear that this was more than a temporary financial setback. The global financial markets came close to meltdown. Collapse was avoided thanks to massive interventions by public institutions. Massive amounts of private debt (fictitious capital produced by financial institutions in the previous decade) were nationalised at a very high cost to exchequers. Radical neoliberals such as Bush II woke up and realised that they had become the biggest socialisers in history. Nationalisation was however resorted to not in order to transform society, but to preserve the value of financial assets. That did not do much to help the ‘real economy’ (the non-financial sector), and in late 2008 there was a drastic reduction of international trade that triggered a severe global 2 John Erik Fossum and Agustín José Menéndez recession. The worst was avoided due to massive public interventions (largely thanks to the much maligned welfare states). For a while, there was much (cheap) talk of reforming capitalism. Such proposals were quickly shelved as political sentiment turned upbeat again. By summer 2009, there was general talk of ‘green sprouts’, or what is the same as recovery. The peculiar theme of growth through austerity became dominant. Then Europe became the main crisis scenario. A change in government in Greece revealed an enormous hole in Hellenic public finances (a hole that in fact predated entry into the Euro, and had been benignly neglected by international and European institutions in the late 1990s and early 2000s). The financial crisis mutated (or better, seemed to mutate) into a fiscal crisis which dragged the whole eurozone and indeed the entire European Union down. By 2010 the hype was the ‘spread’, the difference between what the eurozone core (Germany, the Netherlands, Austria and to a certain extent, Finland) had to pay for issuing public debt and what the rest, especially Mediterranean countries (relabelled PIGS, PIIGS or more euphemistically GIPSI) had to pay. Just at the same time that European institutions and many scholars and pundits were celebrating the successful first decade of the Euro (which had allegedly sheltered Europe from the worst of a crisis ‘imported from America’, a claim that with the benefit of hindsight is cruelly humorous), the structural defects of European Monetary Union were exposed. The ideology that came hand in hand with the successful introduction of euro banknotes crumbled. The folly in the belief that monetary union had abolished economic crises was difficult to miss. Six years after a whole series of punctual policy decisions and a whole array of structural reforms, all presented at the time as the decisive move to end the European crises, the future of the euro and even of the European political project still hang in the balance. In the last months, calm has returned to European financial markets. General consensus points to the announcement of 6 September 2012 by the European Central Bank (ECB) to do ‘whatever it would take’ to save the euro as the game changer. That would include acquiring the debt of ailing states (under a European programme) in apparently unlimited amounts. It is true that since Draghi, modo Delfico, spoke, the ‘spread’ of all peripheral states of the
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