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The State of the European Union : the Failure of Austerity

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The State of the European Union : the Failure of Austerity ISBN 978-84-92848-56-0 Fundación Alternativas Created in 1997 to serve as a channel for political, social and 9788492848560 cultural research and advocacy in Spain and Europe, the Fun- dación Alternativas has become a vital forum for the exchange of ideas and policy development. The foundation addresses a broad range of issues through its Laboratory, Observatory on Culture and Communication, Progress Research programme and Observatory on Foreign Policy (OPEX), which focuses on foreign policy at both The EU27 economic indicators for the end of 2012 therefore painted a bleak picture: European and international arenas. soaring unemployment (10.8 per cent of the active population), a slip back into re- The core objective of this organisation, which works hand in hand cession (–0.3 per cent GDP) and a growing public debt ratio (85 per cent). The THE STATE OF THE www.falternativas.org with the most innovative and forward-looking thinkers in Spanish scenario for the Eurozone was worse and even more so for countries such as Italy, society today, has always been, and continues to be, rigorous Portugal and Spain. This drama, furthermore, was unfolding in a rather fragile inter- EUROPEAN UNION analysis and the development of new ideas for today’s increas- national context; nonetheless, since the overall global situation was generally posi- ingly globalised world. Through its programmes that focus on pub- tive, we cannot lay the blame there. lic policy issues from European and international viewpoints as well as a domestic perspective, the foundation offers ideas for The inference to be drawn is that the one-dimensional policy of austerity and deep The failure of austerity decision-makers in every sphere of society, from government lead- cuts in welfare spending decreed by the EU, combined with the avoidance of any ers and political parties to a wide range of other economic and stimulus measure, has proved to be an outright failure. No signs on the horizon en- social stakeholders. courage any optimism that the austerity policy, if continued, will improve matters. The professional policy analysts and academics who collaborate This is hardly surprising, as to a large extent, this very policy is the root cause of the through the Foundación Alternativas are commited to making a negative figures. solid and lasting contribution to social, economic, cultural and political progress in Spain and Europe. Friedrich-Ebert-Stiftung www.fes-madrid.org The Friedrich-Ebert-Stiftung (FES) is an independent non-govern- mental organisation, founded in 1925 and named after the first president of democratic Germany. Following in the footsteps of the early struggle for democracy in Germany, FES has continued its mission to fight social and political injustice in a spirit of pluralism and participatory democracy. With offices and activities in more than 100 countries, FES is dedicated to promoting the values of social democracy. FES en- THE STATE OF THE EUROPEAN UNION 2012 THE STATE gages in education programmes to promote popular democratic engagement. FES coordinates a large research network and is a major publisher in the fields of politics, history and social affairs. In this connection, FES strives to contribute to the development of progressive ideas and scholarly analysis of central policy areas. FES is part of a worldwide network of German non-profit, political foundations. In cooperation with an extensive network of partners, FES offers one of the biggest non-governmental global infrastruc- tures for democracy promotion and international dialogue on cen- tral topics of international politics. 2012 The State of the European Union The Failure of Austerity The State of the European Union The Failure of Austerity Director: Diego López Garrido Co-directors: Nicolás Sartorius and Lothar Witte Coordinators: José Luis Escario, Vicente Palacio and María Pallares FUNDACIÓN ALTERNATIVAS AND FRIEDRICH-EBERT-STIFTUNG © The authors © Fundación Alternativas and Friedrich-Ebert-Stiftung Original title: El estado de la Unión Europea: el fracaso de la austeridad Translation by Tim Gutteridge, Jenni Lukac, Ailish Maher, Carmen Plaza and Richard Preston Editing by James Patterson Designed and printed by Exlibris Ediciones, S.L. Infanta Mercedes, 92, bajo - 28020 Madrid 91 571 69 13 www.exlibrisediciones.com Cover designed by Exlibris Ediciones, S.L. ISBN: 978-84-92848-57-7 Legal deposit: M-10997-2013 All rights reserved. According to the law, you may not copy, modify, reproduce, republish or circulate in any way the content from this publication. Any other uses require the prior written permission of the owners of the Copyright. Table of contents 9 Presentation Nicolás Sartorius, Lothar Witte 13 Introduction: Twelve Months of Economic Despair Diego López Garrido I. The European Institutional Architecture 23 Intergovernmentalism as a Previous Step to ‘Community Method’ Carlos Closa II. European Citizenship and Welfare State 39 The Political Repercussions of the Crisis . Democratic Legitimacy in Europe Enrique Ayala 51 Under Pressure: The European Social Model in Times of Austerity Klaus Busch III. The Economic and Debt Crises 67 A New European Economic Governance Structure with Major Shortcomings Björn Hacker 79 Economic Policy in the Eurozone: Austerity versus Growth and Solutions for the Crisis Manuel de la Rocha Vázquez, Miguel Ángel García, Domènec Ruiz Devesa 95 The European Central Bank in 2012 Domènec Ruiz Devesa 103 The Financial System: Crisis and Reform Ángel Bergés, Emilio Ontiveros THE STATE OF THE EUROPEAN UNION IV. Technology, Competitiveness and Sustainability in Europe 117 Innovation and Competitiveness: Two Sides of the Same Coin Regino Moranchel 129 The Common Agricultural Policy in 2012 Raúl Compés López, José M.ª García Álvarez-Coque 135 Energy in Europe in 2012. On the Threshold of a New Era Pedro Moraleda 145 2012: A Year of Environmental Constraints and the Collapse of the Carbon Market Teresa Ribera V. The Common Foreign Security and Defence Policy 155 The External Action of the EU in 2012: Progress on Instruments (EEAS), Political Slowdown Francisco Aldecoa, Vicente Palacio 171 The Economic Crisis and the EU’s Security and Defence Policy Jordi Marsal 181 The Challenges of the EU in a Changing World Niels Annen 191 The European Neighbourhood Policy: A Policy for the EU’s Southern and Eastern Neighbours José Manuel Albares, Carlos Carnero 205 Recommendations European Affairs Council of the Fundación Alternativas 213 Biographies 219 Acronyms 8 Presentation This Report on the State of the European Union analyses a decisive year in the project for Europe. In the midst of a tough economic crisis the very viability of the euro has come in question and thus the very existence of the European Union. At the same time, adjustment policies have impaired social conditions and have inspired a growing distrust of institutions among European citizens. In this report, produced by Fundación Alternativas and Friedrich-Ebert- Stiftung, we present the results of a rigorous analysis of key European Union events of 2012, performed, in a critical and constructive spirit, by a group of leading experts. The health of the European Union is scrutinised and a series of proposals and recommendations are made, aimed at in- forming decision-making by political, social and economic stakeholders. The report will also, we hope, make a key contribution to the debate on the future of the European Union. In these pages, the reader will encounter an accurate description of events in the European Union in 2012 and an assessment of their impact on citizens’ lives. Carlos Closa analyses institutional changes, the tensions between intergovernmentalism and federalism and the roles of the Euro- pean Council, Commission and Parliament – in a word, he assesses wheth- er member states or European Commission/Parliament roles have expand- ed. Enrique Ayala addresses the issue of democratic legitimacy, the political impact of the crisis on this legitimacy, the risks to democracy and the de- gree of citizen interest in or indifference to the European project – in short, he analyses the democratic health of the European Union. Klaus Busch discusses austerity policies and the European social model, dissecting how far and in what direction cuts have affected the welfare state. The section on economic crisis and debt contains four chapters. Björn Hacker discusses economic governance, whether the instruments launched in 2012 have been sufficient, whether economic policy directions have been right or wrong, Germany’s role and the socioeconomic impact of policies in a number of countries and in the European Union as a whole. Manuel de la Rocha and Miguel Angel García Vázquez discuss current economic policies, the austerity/growth binomial and possible solutions to the crisis, while highlighting the effects of the recession in Europe. 9 THE STATE OF THE EUROPEAN UNION Domènec Ruiz Devesa focuses on the decisive role played by the European Central Bank during the crisis, the scope of its various decisions and the place it should occupy in the future. Finally, Angel Berges and Emilio On- tiveros analyse the European financial system as a whole, the origins and unfolding of the crisis and successive reforms and their results. The section on European competitiveness also contains four chapters. Regino Moranchel addresses the crucial issue of European R+D+I policies and initiatives, the relative position of the European Union in relation to other economic blocks and European strengths and weaknesses in regard to the new technologies. Raul Compés and J.M. García Álvarez-Coque address the current situation with regard to the Common Agricultural Policy with special reference to measures adopted in 2012 and to a future ruled by new financial perspectives. Teresa Ribera squarely tackles Euro- pean environmental policy and climate change, which is of crucial impor- tance to globalisation and the future of humanity, and not an area in which the European Union has had its best year. Finally, Pedro Moraleda considers an issue crucial for the European Union, energy, bearing in mind its energy dependence and its lack of a single energy market.
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