Let’s Not Forget the Good News: Croatia Joins the EU

With the ongoing conflict in Syria, Southern Europe’s financial difficulties, growing social unrest in Turkey and Egypt, and much else, it seems that “good news” often gets too little attention. Less than two decades after the end of some the most violent and brutal fighting in human history, Croatia just became the 28th member of the European Union. This is a triumph of the Croatian people’s will, international mediation, post-conflict institution building, and international organizations (though not all would agree with the latter assessment). Indeed, Croatia’s accession is merely another step in the rebuilding of the former Yugoslavia: the previous step was Slovenia’s accession and adoption of the Euro, the next steps will include the membership of Serbia, Macedonia, and Montenegro. Bosnia and Herzegovina and Kosovo, those “irredeemable” hotbeds of violence from the 90s, have remained free of fighting for over a decade, without any indication that conflict will recur.

But, for now, this is Croatia’s moment alone. The failures of post-conflict institution-building  in Afghanistan and Iraq loom large over the international community’s collective conscience, as well they should. However, these experiences shouldn’t cloud the massive successes elsewhere. This week, we celebrate one of these success as Croatia joins the EU and cements its status as a 21st century liberal democracy. A remarkable trajectory for a country sadly often known solely for its achievements in strife rather than liberty. Congratulations, Croatia, and welcome to the European Union.

For more of his thoughts on the role of international actors in post-conflict societies, follow William on Twitter.


David Cameron and Centrifugal Crises

British Prime Minister David Cameron made waves in late January when he announced plans to hold a referendum on the U.K.’s continued membership in the European Union. Should the Conservatives win elections in 2015, Cameron promised a simple “in or out” referendum on E.U. membership by 2017.  The move seems to have roots in domestic politics. Cameron faces considerable pressure from the Eurosceptic wing of his own party as well as a challenge from the UK Independence Party, which has been surging along the Conservatives’ political flank.

This all raises the prospect that, absent Conservative defeat or a Europhilic turn on the part of the British public, one of the core members (and key funders) of the E.U. could make an ungraceful exit in the coming years. In the long term, this could prove a greater threat to the viability of the European project than the economic woes of more peripheral members like Greece and Spain.

Labour leader Ed Miliband sharply criticized the proposal and hardened his own opposition to such a step (though support from some of his backbenchers may be shaky). Nick Clegg, whose Liberal Democrats are members of the Conservative governing coalition, dissented sharply as well. Heads of state in Europe did not react warmly to the news, nor to the strong-arm tactics it represents. Former Prime Minister Tony Blair said Cameron’s brinksmanship could backfire: “It reminds me a bit of the Mel Brooks comedy Blazing Saddles where the sheriff says at one point as he holds a gun to his own head: ‘If you don’t do what I want I’ll blow my brains out.’ You want to watch out that one of the 26 [other EU member states] doesn’t just say: ‘OK, go ahead.'”

Extra points for the Mel Brooks reference, and for having the good sense not to repeat the quote verbatim.

Cameron’s move seems risky, but makes sense in light of both domestic and international factors. In addition to shoring up cracks in his governing coalition, his announcement seems designed to increase his leverage in upcoming negotiations over the E.U. budget. Cameron himself is not a hard Eurosceptic, but his support for a pro-Europe vote in any future referendum has now been made implicitly contingent on his receiving an acceptable offer from his counterparts on the continent. By publicly committing to a referendum, Cameron presents Paris, Berlin and Brussels with the choice of either buying British support for a “yes” vote or hoping that the Conservatives lose the next election. How palatable they’ll find either option remains an open question.

That being said, Brian Taylor points out that the Tories may be undermining their position on the question of Scottish sovereignty:

They have said that the [Scottish National Party] cannot guarantee Scottish membership of the EU, post independence.

The Nationalists have, of course, contested that vigorously but, at the very least, the issue gained some traction.

Now what do the Tories say on this topic?

Reject the SNP, stick with the UK – and we will offer you the prospect that a vote across the whole of these islands may take you out of the EU, perhaps in contradistinction to opinion in Scotland.

In a bid to reassert the economic and political autonomy of Britain, then, the Tories could end up actually weakening the British state.

Whatever the outcome, this episode highlights the contradictory and self-undermining nature of elite responses to the ongoing economic crisis in Europe. Years of austerity, some of it imposed at the encouragement or insistence of Brussels, have made the financial burdens of European integration heavier for the continent’s economic core. At the same time they have constricted recovery and led to anemic growth, high unemployment, and prolonged economic misery.

It would be naive to say that say that such conditions “cause” nationalist or parochial backlash, but the economic crisis does seem to be having centrifugal effects on multiple fronts.

On the one hand, it puts sustained pressure on the political and economic bargains that make the E.U. viable. Though not a member of the Eurozone, Britain is a major net donor to the E.U. (see chart from Le Monde, below) and the third largest economy in Europe. Its departure would represent a major shock to the institution.

EU Contributions; Le Monde

On the other hand, the crisis has intensified sub-national fissures in a number of member states. Separatist and nationalist movements in Scotland, Catalonia and Flanders have all seen their fortunes improve since the onset of the crisis. They present an interesting twist on what Frederick Solt calls “new-nations” theories of economic distress and nationalism (see Brown, Hechter and Brass). In their simplest forms, such theories predict sub-national mobilization by groups that are materially deprived relative to society at large. Relative deprivation is key.  Here, though, nationalist grievances have coalesced around a different narrative. Separatist elites have made hay over the uneven financial burdens imposed by ‘society at large’ on local prosperity. As movements, they seek to protect the fruits of relative affluence rather than overcome relative deprivation.

Recent developments in the U.K. suggest how these super-national and sub-national crises of legitimacy could become mutually reinforcing. The specter of an E.U. exit undermines confidence in the national state’s position as a point of access to European markets and institutions. This in turn raises the stakes of regional separatist politics by sharpening the distinction between national and European alignment.

Cameron may well be able to balance these competing interests for the moment. Acute though the current crisis may be, the institutional roots of both the E.U. and the United Kingdom run deep, and continue to reflect considerable elite and popular consensus. That said, centrifugal pressures across the region seem unlikely to abate until Europe can return to robust and broadly shared growth, something which the broader policies of recent years have done much to forestall.

Eight Observations from the Greek Election (Part 2)

The Euro Strikes Back!

The Euro Strikes Back!

I devoted the first part of this post (the first four observations) to a discussion of the election results. In this second part, I explore the consequences of the electoral results. The immediate outcome was, of course, the formation of a pro-Euro coalition government between plurality winning center-right New Democracy and two center-left parties, Pasok and the Democratic Left. But what will this mean for Greece, Europe, and the global economy moving forward? On the eve of Antonis Samaras officially taking the reigns as Prime Minister and the “Troika” (the International Monetary Fund, European Central Bank, and the European Union) visiting Greece to assess its financial progress, I thought it would be appropriate to take a second post-election pulse of the nation.

5.) Greeks accept the euro but reject the terms of the bailout

Despite the electoral defeat of Alexis Tsipras’s anti-bailout Syriza party, the pervasiveness of anti-bailout sentiment in Greece is manifest. Over half the votes from the June 17th elections went to parties opposed wholesale to the terms of the 130 billion euro bailout. Greek and European leaders took notice. Although medical ailments prevented him from personally attending the EU summit in Brussels last week, new Greek Prime Minister Antonis Samaras sent a letter to European leaders asking for revised terms to the bailout. The letter was short on detail but contained guarantees that Greece would work hard at political reforms.

As the Troika descends upon Athens once again, it appears that the letter previewed a larger effort by the coalition government to negotiate more lenient terms. The current terms have made successive receipt of rescue funds contingent on Greece meeting a set of “fiscal targets” and enacting a series of austerity cuts, making this  deal wildly unpopular in Greece. While the government still hopes to meet the fiscal targets set by the Troika, they are expected to ask for greater leeway in the means by which they will meet them. That is, less forced austerity. Seeing as the current “austerity for growth” program has the Greek economy contracting a projected 6.7% in 2012, the Greeks may have a point.

At first, it appeared that Germany Europe would remain steadfast in its refusal to alter the terms of the original bailout. However, pressure from Spanish Prime Minister Mariano Rajoy and Italian Prime Minister Mario Monti for a new approach to dealing with the Eurozone crisis has left Greek observers hopeful that some terms may be renegotiated.  In the words of Deputy Finance Minister Christos Staikouras before meeting with the Troika,

The climate is becoming more favorable to changes and adjustments provided we meet our commitments and work towards implementing targets.

We will soon find out if he is right or not.

6.) International organizations affect domestic politics and domestic politics affect international organizations

In November 2011, then Prime Minister George Papandreou, of Pasok, proposed holding a public referendum on the newly renegotiated debt deal. As the June 17th elections showed, such a referendum would likely have failed. Sensing this outcome, European leaders summoned Papandreou to Cannes where he was “reproached” before an upcoming G-20 meeting.  Papandreou returned to Athens and promptly cancelled the referendum. Within weeks, his government had collapsed. Within months, his party had been reduced to its lowest vote share in decades. The impact of EU leaders on the Greek polity seem shocking, even months later. Not only did these international actors “convince” Papandreou to change domestic policy but they also effectively ended his premiership.

The aftermath of the June 17th election have demonstrated that the causal arrow can run in the other direction as well. As detailed above, the success of anti-bailout parties like Syriza has forced the Samaras government and, by extension, the European Union to rethink their approach to the bailout deal. The results of the upcoming negotiations of the terms may even shape how the EU deals with future states asking for aid. Finally, as I discuss below, these electoral results may even lead to structural change in the European Union itself.

7.) The EU finally suffers from its democratic deficit

For decades, the European Union has suffered from what critics have called a “democratic deficit.” With a few exceptions, EU integration has progressed without the approval of domestic majorities. However, up until very recently, the problems with the democratic deficit have been primarily theoretical.  To use a famous example, after the Dutch and French rejected the European Constitution, most of it was repackaged as the Treaty of Lisbon and approved in both countries.

This approach has more or less worked because the EU has provided member states with a plethora of tangible and intangible benefits without asking for much in return. Although states would lose national sovereignty, the loss was rarely so great that it would become objectionable to democratic majorities. Then came the euro.

The euro represented the greatest single sacrifice of national sovereignty in the history of the EU. However, it also held great promise, again, both in tangible and intangible ways, for the member states. In many ways, it reflected the “high risk, high reward” mindset endemic to the 1990s and early 2000s. Although domestic opposition was more pronounced, majorities either favored or began to favor the adoption of the euro, as they had with past measures of EU integration.

In 2012, however, the euro is in crisis. And, as these Greek elections show, support for the euro in individual member states is dropping. For Europeans, the only way to save the euro may be to proceed even further with EU integration. In this past week’s EU summit, European leaders agreed to permit the direct transfer of rescue funds to domestic banks from the ECB’s central bailout fund in exchange for direct supervision of the banks by the ECB. The deal essentially eliminates member state governments as the middlemen. Moreover, European leaders are discussing similar agreements that would establish debt pooling and Eurobonds (sold on the basis of German credit) in exchange for further central supervision of member state finances. In brief, European leaders have recognized that the only way to save the Eurozone, counter-intuitively, may be deeper fiscal integration.

However, European publics take erosion of national sovereignty quite seriously. In the past, they have been willing to accept it because of its gradual nature. However, the current Eurozone crisis requires swift action that may force European governments into deeper integration. While the anti-bailout parties were defeated in this election in Greece, a push for deeper integration with the EU by the Samaras government may spur a backlash that ultimately brings to power anti-EU parties. In this regard, Greece could be the harbinger for the idea that for the first time, the EU may finally suffer the consequences of its democratic deficit.

8.) The coalition government does not inspire confidence

The coalition government, meant at first to be a unity government of all major parties, is a coalition in name only. For all intents and purposes, it is a New Democracy government. Syriza refused to partake in the government altogether, preferring to be in opposition. New Democracy’s coalition partners, Pasok and the Democratic Left, refused to take cabinet positions. Syriza’s motivations are clear: they oppose the bailout wholesale and will not be minority partners in any coalition that accedes to the bailout terms. The motivations of the leftist coalition partners are less clear. It appears, however, that after failed negotiations for high cabinet positions, these parties are merely insulating themselves from the inevitable political damage that comes from enacting austerity protocols.

In an interview with the Guardian immediately following the elections, Dimitris Keridis, professor of political science at Panteion University in Athens said that

The secret to this government surviving will be trust among the three partners. If they fragment, the only beneficiary will be Syriza. It won’t be easy in a political culture that is, anyway, not used to coalitions and in a country that faces such tough decisions.

Almost on cue, the leftist parties refused cabinet positions and proceeded to distance themselves from the coalition government. While such behavior befits Syriza, an opposition party, it is befuddling from New Democracy’s coalition partners. Indeed, these developments do not bode well for the success of the coalition government. At any point, it seems, New Democracy could lose the parliamentary majority it possess thanks to the coalition. This will make tough political reforms very difficult to enact. New Democracy, fearing backlash, will be reticent to push for policies that would make it easy for their coalition partners to abandon them. Unfortunately, many of those policies might be the ones necessary to reform Greece and spur economic growth.

For more of his musings on politics, follow William on Twitter.