Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum
Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum
But even so, the depth and intensity of the cooperation among EU, and especially euro area, governments in designing the measures outlined in the Paris declaration, and the recognition of the necessity of a common response and the willingness to achieve agreement testify to a new quality of cooperation in the EU. As the financial crisis deepened and broadened and affected the real economy, the cooperation mode that had its start with the Paris Declaration continued, even if the immediate stress level and crisis management context abated. In their efforts to deal with the fall-out of the crisis, in designing policy measures tailored to national needs and domestic financial institutions (e.g. in the form of government guarantees, recapitalisations or asset relief schemes), and in spending their own taxpayers’ money, the member states accepted a considerable limitation of their national sovereignty. In other words, the interdependence created by the financial markets, especially during the period of turmoil, has created a demand for a new level of economic policy coordination thus far not seen in the EU, which – lest governments were willing to risk a financial meltdown – needed to be met by a new quality of economic governance in the euro area and the EU. Beyond the crisis response: permanently deepened integration or back to “business as usual”? Is this unprecedented level of cooperation and coordination across euro area countries in dealing with the fall-out of the crisis a step change in European integration, leading to a permanently higher level of integration and policy interconnectedness? Or is it merely a flash-in-the-pan, a crisisinduced peak in intergovernmental cooperation, after which levels of EU interaction will fall back to more “normal” levels? After all, as Lord Turner lucidly exposed, the answer to the challenges thrown up by the crisis is “either less Europe, or more Europe”. 15 Why “more Europe” could be here to stay The arguments in favour of “more Europe”, i.e. that the new level of EU integration is here to stay, can be supported, inter alia, by six reasons related to the demand for, and supply of, more integrated policy outcomes. On the demand side, various factors call for coordinated EU responses: It isn’t over yet It is premature to speak of a crisis-related peak in EU economic integration, because the crisis is not over; and, in all likelihood, will not be over for a considerable period of time. Recently, in fact, the heightened 52 After the crisis: A new socio-economic settlement for the EU
intensification of the crisis in the wake of additional massive losses by banks, which led to the design of asset relief schemes (e.g. “bad banks”) with large budgetary repercussions, has led to further coordination on how to design such a scheme. Markets call for a coordinated macro-response The financial markets continue to call for a pan-European response to economic and market developments. The co-movement of share prices and interconnectedness of financial sectors as well as the synchronisation of business cycles are evident facts which lead market participants, analysts, observers, and the media to view purely national solutions as suboptimal, and pan-European policy responses as superior outcomes. After the announcement of the Paulson Plan in the US, the markets called for a “European” rescue plan, thereby de facto treating the EU – or, at any rate, at least the euro area – from the perspective of market expectations, as a political entity that should be capable of decisive and unified action in ways comparable to a nation-state. Crisis resolution measures require further coordination The follow-up to the coordinated response to the crisis – notably the measures necessary to implement the decisions of the Paris Summit, require a similarly coordinated response at the EU level to sustain a level playing field. Certain aspects of the national rescue packages, like the pricing of government guarantees for banks’ new debt issuance or the features – and especially the pricing – of national governments’ recapitalisation measures for their own troubled institutions call at least for common guiding principles in order to avoid distortions to competition or other detrimental effects on financial stability which are easily felt across national borders. At the same time, there seems to be a permanently increased willingness to supply coordinated responses. Acceptance of the joint management of the consequences of the crisis It could be argued that the acceptance of the purely functional argument about exchanging more information concerning the economic and financial situation in the various Member States – in view of their manifest or expected cross-border impact – has created a new culture of cooperation, in which certain ideas for common action which previously would have been complete taboos, like a EU-wide fiscal stimulus package, or summit meetings of euro area Heads of State or Government, increasingly become acceptable, or at least joined the mainstream discourse about economic Chapter 3 – Gabriel Glöckler 53
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But even so, the depth and intensity of the cooperation among EU, and<br />
especially euro area, governments in designing the measures outlined in<br />
the Paris declaration, and the recognition of the necessity of a common<br />
response and the willingness to achieve agreement testify to a new quality<br />
of cooperation in the EU.<br />
As the financial crisis deepened and broadened and affected the real<br />
economy, the cooperation mode that had its start with the Paris Declaration<br />
continued, even if the immediate stress level and crisis management<br />
context abated. In their efforts to deal with the fall-out of the crisis, in<br />
designing policy measures tailored to national needs and domestic financial<br />
institutions (e.g. in the form of government guarantees, recapitalisations<br />
or asset relief schemes), and in spending their own taxpayers’ money,<br />
the member states accepted a considerable limitation of their national<br />
sovereignty. In other words, the interdependence created by the financial<br />
markets, especially during the period of turmoil, has created a demand<br />
for a new level of economic policy coordination thus far not seen in the<br />
EU, which – lest governments were willing to risk a financial meltdown<br />
– needed to be met by a new quality of economic governance in the euro<br />
area and the EU.<br />
Beyond the crisis response: permanently deepened<br />
integration or back to “business as usual”?<br />
Is this unprecedented level of cooperation and coordination across euro<br />
area countries in dealing with the fall-out of the crisis a step change in<br />
European integration, leading to a permanently higher level of integration<br />
and policy interconnectedness? Or is it merely a flash-in-the-pan, a crisisinduced<br />
peak in intergovernmental cooperation, after which levels of EU<br />
interaction will fall back to more “normal” levels? After all, as Lord Turner<br />
lucidly exposed, the answer to the challenges thrown up by the crisis is<br />
“either less Europe, or more Europe”. 15<br />
Why “more Europe” could be here to stay<br />
<strong>The</strong> arguments in favour of “more Europe”, i.e. that the new level of EU<br />
integration is here to stay, can be supported, inter alia, by six reasons<br />
related to the demand for, and supply of, more integrated policy outcomes.<br />
On the demand side, various factors call for coordinated EU responses:<br />
It isn’t over yet<br />
It is premature to speak of a crisis-related peak in EU economic<br />
integration, because the crisis is not over; and, in all likelihood, will not<br />
be over for a considerable period of time. Recently, in fact, the heightened<br />
52<br />
After the crisis: A new socio-economic settlement for the EU