In contrast to the economic field, political scholars are in accordance that the structural weaknesses of the EMU have caused the euro crisis and the majority of scholars within the political sphere view the euro crisis more optimistically. However, there is a minority who view EU crises and the euro crisis in particular, as a potential threat to the survival of the EU19. Elvert (2009) analyses EU crises through a critical, historic evaluation to
identify the role of crises within the EI process and the wider implications for the EU. He analyses from the premise that crises have a destructive effect on EI. Curiously, he defines the term ‘crisis’ on the premise of its original usage in a medical context to mean a “very decisive moment” where a bifurcation occurs between a patient surviving or dying, which he equally applies to institutions (2009: 50). Hence, for Elvert, ‘crisis’ in his analysis means “to identify “a severe or existential crisis,” threatening the EEC’s, EC’s or EU’s very existence.” (ibid).
He claims that “the idea that crises reinforced integration should better be considered a rather provocative working hypothesis” (2009: 51) on the premise that the EU process is an “intellectual construction” (ibid). His historical analysis of EU crises proceeds with the purpose to test this theory. Within the analysis he identifies three phases and crises within each of these phases which are subjected to his test namely, ‘implementation’, ‘reconciliation’ and ‘Europeanization’ with each comprising of a different outcome for the development of EI (2009: 54-56). For Elvert Europeanization is defined as the following;
“a significant fusion of national and European politics, which did not replace the traditional nation state by a European federation but has created a mixture of national and European resources, competences, and responsibilities, set up in a multilevel system of growing complexity and opacity” (2009: 53).
78 In spite of where his analysis begins, on the premise of crises being a negative occurrence, Elvert concludes the opposite stating a crisis can alter the direction of EI, for the betterment of the EU project (2009: 59-60).
Quaglia et al. (2009), argue that the euro crisis has highlighted the intrinsic weakness of EU policy co-ordination between member states. For them the core of the problem is with weak European institutions which fail to adequately incite EU co-operation, or as they term it the “semi-public good” (2009: 84). Quaglia et al. perceive the crisis spilling over in a mechanical fashion, spreading from one policy area to another. For instance, they claim it is spill-over from the international domain which led to the liquidity crisis in Europe. In turn, the crisis of liquidity led to a solvency crisis within the European financial system whereby banks sold illiquid assets to rebuild liquidity but a decline in asset prices diminished the capital of banks.
Quaglia et al. claim “co-operation between national governments, central banks and financial supervisors” (2009: 71) is and ought to be most important to the EU and that suitable policy making is possible when a shared framework is in place. However, crisis prevention and crisis management are divided between the national and EU governance levels making co- operation between member states at a time of crisis highly challenging (Quaglia et al., 2009: 70-73). In the EU, crisis prevention is divided between the multiple levels of governance, namely, financial regulation is performed at the EU level and financial supervision is executed at the national level (Quaglia et al., 2009: 70).
It is this divide which is implicitly highlighted by Quaglia et al. as causing problems in the EU’s financial responsibilities, as nation states are responsible to their national authorities rather than their European counterparts. Compounding such weaknesses, the EU has the foundations for crisis management through a series of “vague and non-mandatory” (Quaglia et al., 2009: 72-73) Memorandum of Understandings. The absence of united action is what is allowing the crisis to become a threat to the EU. Hence, it is the internal response to the crisis causing a threat to the EU rather than the economic crisis itself. Ultimately, they claim the EU’s response to the euro crisis demonstrates how the union is able to “respond quickly and collectively, but not necessarily adequately, to an unexpected crisis” (2009: 84). Arguably, Quaglia et al. are suggesting a bigger crisis is needed for the EU to learn how to adequately form a unified EU crisis response. Their analysis is suggestive that the ongoing euro crisis is not existential as perceived and conveyed as there has been latitude for a muddled crisis response from the EU that has, so far, successfully staved off disaster.
79 In accordance, Schuknecht et al. (2011) view both the ambiguous framework in which member states operate and inadequate reforms as the dual weaknesses that are prohibiting the defence of the EU system. Similar to economists Buti and Carnot (2012), Schuknecht et al. view the EU as being unprepared for the euro crisis. They claim the first years of the Eurozone to 2007 are “best characterised as “wasted good times” during which the foundations were laid for the present crisis in EMU” as “almost as soon as the euro had been introduced, consolidation fatigue set in” (2011: 10). For Schuknecht et al. this has resulted in the Eurozone fiscal policy today being “at a crossroads” (2011: 17).
They maintain what is necessary to take the correct road is a “quantum leap” (2011: 5) within the framework for EU fiscal governance. They make recommendations themselves as well as analysing those reforms already suggested. In regard to those suggested reforms they conclude, “it is questionable whether the revised governance framework will be implemented in a rigorous manner” (2011: 16) leaving great uncertainty around the stability of EU finances (ibid), and a pathway for history to repeat itself. The one positive Schuknecht et al. identifies is that the euro crisis forced Eurozone member states to support crisis countries “at considerable political cost at the domestic level” (2011: 15). Respectively, for Schuknecht et al. this crisis experience has the potential to “encourage national governments to exercise more peer pressure” (2011: 16), which was only tentatively applied in the early years of the Eurozone (2011: 11). Thus, aligned with the economists previously reviewed, for Schuknecht et al. the mistakes of the past could be rectified in the future through this crisis.
Hall (2012) poses the same question as this thesis, “Will the crisis ultimately advance the process of political integration in the European Union or impede that process?” (2012: 355). For him, the euro crisis “is the most serious crisis the EU has faced since its inception, with the potential to open up durable fissures among its member states” (2012: 370). Hall argues that in order to guarantee the EU’s survival “more intensive fiscal co-ordination in the Eurozone will be required” (2012: 369). For him, the euro crisis has had a negative impact on EI whereby, despite fiscal co-ordination increasing, rather than accelerating the integration process “the crisis has exposed its fault lines” (2012: 368).
The common political support for EI has also been undermined by the crisis rhetoric which places the origins of the euro crisis at the national rather than EU level (ibid). As such, the euro’s survival is “a matter of doubt” (2012, 369) for Hall, with the potential for political will to keep it afloat (ibid). However, Hall is one of the few progressionists to also acknowledge the ability of the EU to foster integration in crisis times concluding, “the capacity of the
80 European states to turn a crisis into a crucible for further integration, as the Single European Act did, should not be underestimated” (2012: 370).
Hall (2014) maintains that the euro crisis has spilled over from economics into politics threatening the legitimacy of national governments and the EU (2014: 1238), consequently placing the EU at “a crossroads” (2014: 1239). This necessitates a re-think of the raison d’être
for the EU. Hall believes the national consensus of ‘more Europe’ in the crisis is a “rhetorical fig leaf” (2014: 1238) which is masking the deep-seated disagreement over its meaning in actuality and “a more profound legitimacy crisis that calls into question what the EU can expect to achieve in the coming years” (ibid). He claims the increase in Euroscepticism and the declining support for free movement exemplifies this legitimacy crisis as “a sauve-qui-peut20
strain” infiltrates“into its politics at both the national and transnational levels” (2014: 1239).
There is an innate paradox in the EU at this crisis time with the EU needing institutional capacity to distribute resources in such a way to ensure EU prosperity (this is what ‘more Europe’ is for Hall), at a time when political support for increasing the EU’s capacity is declining (ibid). Hall believes that for the EU to survive it needs to embrace its diversity rather than fostering a convergence through a one-size-fits-all approach. He claims, “the motto of the EU is not ‘uniformity’ but, rather, ‘unity in diversity’”21 (2014: 1239), with the future of EI determined by the EU’s capacity to deliver on this. Hall concludes, “the political precondition for progress is the development of a new vision for Europe, specifying what interdependence requires and what collective action can deliver” (ibid).
There is infrequent examination of social policy within the euro crisis literature due to a dominant academic focus on the core crisis policy area of economic policy, with the exception of the following scholars22. In concurrence with Hall (2014), Busch et al. (2013)
claims the euro crisis has spilled over from economics into politics. For them the crisis is spreading mechanically, threatening both the ESM and the national welfare state (2013: 29), as a result of the domineering austerity policies (2013: 25-27)23. Busch et al. argue that the social aspects of EI have “increasingly been sidelined in the EU” (2013: 26), subsequently
20 Disorder, panic.
21Fabbrini (2014) similarly concludes that a ‘one-size-fits-all’ approach is no longer feasible stating “the
euro crisis has falsified the dominant paradigm of the unitary nature of the process of integration” (2014: 17).
22 Also see, Intereconomics Forum (2012) for an in-depth examination of the opportunities and
challenges to the welfare state and ESM. Of particular note, see contributions from Hemerijck and Vandenbroucke; Anderson; as well as Pochet and Degryse’s.
81 placing a question mark over the future of the ESM (2013: 27). For them, the fate of the Eurozone is intrinsically connected to the prospects of the ESM (dis)integrating. They propose three possible paths for the Eurozone namely, ‘muddling through’, ‘collapse of the Eurozone’, and ‘a paradigm change’ (2013: 28-29).
They lean towards the destruction of the Eurozone stating, “for a number of reasons the Eurozone could collapse in the coming months” (2013: 29). For them, this is “not scare- mongering” but an increasing reality “whose likelihood has increased month by month since spring 2012” (ibid). However, they concede that the latter scenario “cannot be ruled out entirely” (ibid). For them, the escalation of the euro crisis and exponentially growing threat to the EU and Eurozone has induced “something of a learning process” in “regard to the dominant policy and what hitherto has been unthinkable is getting onto the European Council’s policy agenda” (2013: 30-31). Hence, there is anticipation that total disintegration can be avoided and a revival of the EU can be fostered.
Busch et al. contend that, “only in this way could the economic and social crises in Europe be overcome and the project of the European Social Model revived with new prospects” (2013: 31). This thesis will analyse two distinct areas of social policy to substantiate such comments. Degryse et al. (2013) similarly claim that the ESM is under attack due to the euro crisis. Social reforms for them are unrelated to the current economic context rather “they are actually aimed at reconfiguring whole areas of the European Social Model” (2013: 37). The euro crisis has seemingly bolstered the hand of economic actors (2013: 39) and consigned social policy to the new means of currency devaluation, despite its “efficacious in the crisis for avoiding a serious deterioration of the situation within the economy and on the labour market” (2013: 38). Pochet and Degryse’s (2013) analysis echo these arguments.
Degryse et al., in concurrence with Busch et al (2013), maintain the only means to reverse such a demotion of social policy is “to put social issues back onto the political agenda at both the national and European levels” (2013: 39), complete the EMU and reform economic policies towards “sustainable and shared prosperity” (ibid). The evidence that suggests citizens’ political support is economically contingent is also interpreted as threatening the future of the EU in its entirety (Braun and Tausendpfund, 2014). However, Kuhn and Stoeckel’s (2014) analysis contradicts such conclusions, finding that the public are generally supportive of economic governance which is contradictory to public support for EI (2014: 636).
Consequently, they conclude that this irregularity could be exploited to increase the EU’s democratic legitimacy namely, “by assuming an active role as effective crisis manager,
82 the EU could achieve output-legitimacy” rather than leaving this role for member states (2014: 637). The only caveat to their findings is that for citizens to be supportive of economic governance, they need to weakly identify with the European identity as those possessing a strong national identity were not supportive of economic governance (2014: 634).