In this rather concise book, German sociologist Claus Offe offers a lucid description of the trap the European policymakers have constructed for themselves due to the long-term neglect of the EU’s democratic deficit and the EMU’s institutional shortcomings, as well as the short-term effects of the sovereign debt crisis. Departing, however, from more pessimistic accounts (in the first place Wolfgang Streeck’s), Offe does not advocate a break-up of the Eurozone as a viable solution. Instead, he proposes a set of policy solutions that may repoliticize the European Union, reduce its democratic deficit (which lies at the base of the declining public appreciation), and restart growth. Moreover, Offe—at least indirectly—hints at who the most suitable political agent to bring the point home may be. This book provides a refreshing and, in Colin Crouch’s words, heart-warming reading: a rare constructive voice amid a sea of Cassandras.
An economic and institutional trap
The premise of the book is that by devising an incomplete monetary union, the EU as a whole is now in a paradoxical situation in which: “[t]he Euro, in short, is a mistake the undoing of which would be an even greater mistake, as seen by all participants” (p. 55). Offe lucidly analyses the EMU, thereby summarizing its agony as deriving from two major flaws:
it is built in the ‘wrong’, at least by far sub-optimal currency area of a highly inhomogeneous economic space the divergence of which it further propels; and it is institutionally deficient as its policy making capacity is severely limited in the areas of fiscal, economic, and social policies (pp. 24-25).
Hence, he neatly divides the problem into two. On the economic side, the divergence between winners (the hardworking, spendthrift core) and losers (the slacking, profligate periphery) is widening. In particular, the periphery now chronically suffers from having accumulated too much public debt to save systemic too-big-to-fail banks. This debt, through its servicing costs, chokes other productive investments, which are key for a sustainable recovery. On the institutional side, setting aside the democratic deficit of European institutions, Offe notes that the EU is so ill-equipped to deal with emergencies that it cannot even legally coerce member states to comply with its debt rules, which many governments in turn need to violate to prevent an even greater socioeconomic disaster.
The time for neofunctionalist, piecemeal, spillover-driven European integration is over.
Yet, as stated in the preface, Offe’s book is not just about analysing the current state of affairs á la, say, Jean Pisani-Ferry. His contribution copiously dwells upon the problem of “political agency”, that is of the actors—and policies—that may liberate Europe and its citizens from the trap they have entered. The author is so concerned about it because Europe is in need of a proper political shock. After having been “abused” by the European Commission, the Court of Justice of the EU and the European Central Bank for decades, the time for neofunctionalist, piecemeal, spillover-driven European integration is over. The watershed happened, as Romano Prodi suggested, when the French and the Dutch rejected the Constitutional Treaty through referenda back in 2005.
The author first analyses political agency in terms of the capacity of various EU actors to form alliances capable of moving in one or the other direction to exit the impasse. He starts by presenting the division of political forces proposed by Jürgen Habermas, who distinguishes between the left/right and national/supranational divides. This yields the following positions: left nationalists favour a renationalization of class conflict, as opposed to their supranational peers who support positive integration in the area of social Europe. The nationalist right, on the other hand, is dominated by anti-integrationist populism, which neatly contrasts with the supranationalist counterparts, who champion neoliberal negative integration. In sum,
[t]he overall picture indicates that political dispositions for action concerning the Euro zone and the further course of European integration are highly fragmented and deeply divided along the left/right, national/supranational and creditor/debtor country axes. The result is a pervasive paralysis of agency (p.89).
Who may, and who may not solve Europe’s problems
Despite this gloomy consideration, he then continues to consider the most likely agents that may lead Europe at this moment in time: Germany, the European institutions and, in passing, Southern European countries, possibly with Italy at the helm.
Starting with “Madame No”, the title of the chapter says it all: “Germany’s Leadership Role for Europe: A Non-Starter”. It seems that Germany and other creditor countries are not normatively committed to EU-wide solidarity. The deep-ingrained debt aversion of the Eurozone’s core imposes structural reforms as a necessary bitter pill to southern “fiscal sinners”. Nor does the core attach much importance to prudential reasons to do “whatever it takes” to preserve enfeebled states from exiting and, as a result, disintegrating the Eurozone. This would be a sensible thing to do, given the opportunity costs (e.g. the sharp revaluation of a new Deutschmark) and direct costs emanating from the European Stability Mechanism (of whose bill Germany immediately foots roughly 25%). Nevertheless, the stance of the third Merkel government remains surprisingly non-committal vis-à-vis the common currency.
With regards to the European institutions, drawing on the classical distinction between negative and positive integration, developed by Fritz Scharpf, Offe admits that market-correcting policies may be put in place at the EU level. This, however, would require the EU to become “a supranational democracy, complete with mechanisms of territorial and functional representation, elected legislative bodies and accountable supranational governing agencies” (p. 119). In sum, another “non-starter”, at least in the short and medium terms.
Given its potentially strong bargaining position, the periphery should convince the core to find adequate redistributive and institutional solutions to the ongoing crisis.
Finally, but only in passing, Offe wonders why the southern debtor countries, which have disproportionally suffered from the crisis, have not yet formed an alliance forcing the northern creditors to put in place the institutional mechanisms that would allow the survival of the Eurozone. Offe’s discourse chimes with Wolfgang Streeck’s analysis that Italy is becoming a key actor in the salvation of the EMU. In fact, the author proposes an analogy between systemic banks that were too big to fail during the crisis and the systemic position of peripheral member states, which would bring the house down should they go bankrupt. Given its potentially strong bargaining position, the periphery should convince the core to find adequate redistributive and institutional solutions to the ongoing crisis. Regrettably the author neither devotes to this crucial issue a stand-alone chapter nor provides a fuller answer elsewhere. This may be singled out as one of the few shortcomings of Offe’s remarkable “manifesto”.
A common social policy to re-politicize the EU
The last chapter of the book is on the type of policies that may renew the primacy of politics, thereby offering the European citizens a shared vision of Europe’s future identity. Offe elects social, that is, redistributive policies across social classes and member states that may improve collective social security, promote EU-wide solidarity and increase the level of social justice. Of course, a EU-wide unemployment insurance scheme or a shared social assistance facility squarely falls within this definition. In his opinion, European social policies pass a triple test allowing them to have the potential to politicize the EU: first, they already are in the EU’s domain of responsibilities; second, they have the potential to mobilize political agency; third, they effectively address the economic crisis. Indeed, social policies have the capacity to redeem the ambition of having a European social dimension, to address the concerns of a growing share of European citizens beset by poverty and precariousness and, finally, to enhance effective demand, thereby boosting employment and fiscal revenues. According to Offe, a decisive move in this direction is perhaps the only glimpse of hope to help Europe exit the trap it got so entangled in.
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