Tuesday, March 9, 2010

WPR on EU

The excellent on-line journal World Politics Review has just published a special issue on the European Union. Well worth your attention, though it does cost money to subscribe.

Here is a sample, from Eloi Laurent's article on the EU's crisis management:

At the very core of the "Greek tragedy" thus lies a cooperation deficit. If Germany ends up bailing out Greece, it will in truth be paying the price of its own turpitudes, disguised as economic virtue. At present, the eurozone resembles a collection of small economies competing with each other, whereas it should be one large competitive economy fostering cohesion. The eurozone's difficulty in developing a consistent, coordinated and adequate response to the crisis can be read as a symptom of this non-cooperative pathology.

Once again under the pressure of circumstances, European countries now seem willing to help the Greek government, but their Feb. 11 statement starts with a renewed commitment to European toxic rules and ends with a brief mention of solidarity, while it should be the other way around: "All euro area members must conduct sound national policies in line with the agreed rules. They have a shared responsibility for the economic and financial stability in the area . . . Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole. The Greek government has not requested any financial support."

Even more shocking, European institutions have expressed relief at the counterproductive Greek shock therapy, which might end up hurting the Greek economy so badly that it could aggravate further public deficit and debt, not to mention the possibility of a civil and political breakdown. Political responsibility, it seems, is understood nowadays as the ability to inflict social pain at the worse conceivable moment. But so long as financial markets are happy, it is taken as a sign that something good is coming.

Contrast this with Hubert Védrine's comment in Judah Grunstein's interview with him:

The indebtedness wasn't the same, and the public financing wasn't the same, so we couldn't implement the same plan everywhere. The people who say, "It's shameful, there was a German response, a French response, an Italian response, and we needed a European plan," that's nonsense. It doesn't make economic sense.

Where we could have done better, perhaps, is if every country in Europe had come up with its own plan, and then gotten together to harmonize them, so that the plans reinforced each other. But I don't think we could have asked the commission to come up with a general plan, in the place of the governments. That would have been an economic error. We could have combined the two better, but there's no reason to be too critical. The response was good in the face of urgency.

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