A Global Perspective on the European Crisis
A Global Perspective on the European Crisis
CONFERENCE SEPTEMBER 18-20, 2014
UNIVERSITY ROOM, HYDE HALL
UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL
On November 7-9, 2013, at the University of Trento in Italy, a group of economists, political scientists, historians, sociologists, and public policy officials met to discuss “Economic and Political Crisis in Europe and the United States: Prospects for Policy Cooperation.” The focal points of this discussion were the divergent conditions in various EU countries, the inability of EU institutions to respond effectively to the crisis, and considerations of how to move forward, with special attention to Germany’s role as a reluctant but de facto leader in Europe. Some attention was paid to the larger global economic context in which the EU is operating and to the potential for coordinated efforts between the EU and the United States to improve the relative positions of each. In particular, there was disagreement about whether the possible trade agreement (TTIP) between the EU and the US could make an appreciable difference going forward. Primarily, however, the focus of the discussion was on issues internal to Europe. The proceedings for this first conference are currently being assembled into a book.
PURPOSE OF THE CHAPEL HILL CONFERENCE
We would now like to turn our attention to a more global perspective on the European crisis and consider critically two fundamental questions. First: did the true meaning of European integration change following the crisis? European integration was driven by two fundamental goals: to overcome the long-standing animosities, particularly between Germany and France, and to enable European economic prosperity, first to overcome the devastation of World War II, subsequently to maintain prosperity in the new globalized economy post-1970. For almost sixty years (1950—2008), the process of integration created a win-win situation that put in motion successful cooperative collective action, thus easing or solving problems that previously appeared intractable. National goals, which had underwritten the continent’s tragic history from 1914 to 1945, were drastically revised as governments agreed to renounce important parts of their sovereignty in favor of supranational institutions. A major accomplishment was the creation of a single currency for many, although not all, of the member nations in the European Union. The euro was seen for years as the best device for creating an irreversible push to further political integration, even as it provided immediate economic advantages. For this reason, the economic crisis of 2008 inevitably became a political crisis. Is the EU model, which has so successfully brought peace to Europe, sustainable? To what extent can national sovereignty be yielded to supranational agreements and institutions? Or are we doomed to the supremacy of the nation-state?
The second question concerns the viability of a European economic model vis a vis the United States and the emerging economies (the so-called BRICS). In the press in the United States but also in publications such as The Economist this is often framed as Social Europe vs. (neo) Liberal America. In truth, the European economic and welfare state models are highly diverse. The high wage, high skill economies of Northern Europe (Germany, Switzerland, Austria, Benelux, and the Nordic countries) have always been very competitive in export markets while the Southern European countries and the UK, along with the United States, have generally run trade deficits. On the other hand, most of the continental European countries have a poor record in producing employment compared to the US, the Nordic countries, the Netherlands, and Switzerland. In terms of economic growth from the mid-1990s up to the Great Recession, we again find heterogeneity, with Iberia, Ireland, Greece, the United Kingdom, and the United States performing very well due (we know in retrospect) to unsustainable housing and real estate booms. The Nordic countries also performed well due to a (sustainable) ICT led boom, while the rest of the European countries, including Germany, languished. By contrast, during the Great Recession, the German economy was a bright spot in relative terms with the economy growing at 0.9% per capita per annum. Austria, Sweden, and Switzerland also registered positive growth rates. Though the US economy shrank by 0.7% per annum, this was better that most of the remaining European countries, particularly the crisis countries of the European periphery.
The crisis seems to reveal the flaws of the integration process and the integration architecture, while raising the question of the feasibility of the Euro. Indeed, the heterogeneity of the European economies outlined in the previous paragraph is one of the key sources of the weakness in the design of the Euro. The crisis, moreover, has generated multiple and contradictory actions within the EU. There has been an increase of unilateral, uncooperative moves made by national states. But there has also been the reaffirmation of certain EU powers and structures. Thus, it remains entirely possible that the crisis will in the end strengthen the integration process. But the present situation could be the first stage of a disruptive process, fed with growing inter-European distrust, that dooms the EU, or at least the eurozone as it is presently constituted. Can Europe fix the problems simply by completing its institutional architecture and strengthening political will? Or should the European integration be re-established on sounder bases, such as creating political integration to make a common currency, or other forms of economic integration, workable? Or is the eurozone facing an inevitable break-up and reconfiguration and only likely to produce further strains on inter-European relations? Perhaps most important to the rest of the world, can other countries and international organizations do anything to foster and support a positive outcome of the present European difficulties? And if so, what can they do?
How participants answer those questions necessarily influences their understanding of what Europe should be doing and what the future prospects are for the euro-zone and the European Union. Thus, whereas our Trento conference mostly gathered experts on Europe, we aim to bring to Chapel Hill experts on international trade and relations in order to consider policies adopted toward Europe by non-European nations. And we will put these experts into dialogue with people more focused on Europe itself. What are the prospects for European recovery and progress (both economic and political) if we take into consideration how other nations are positioning themselves in relation to Europe? What role will the IMF and other international organizations play in shaping Europe’s future? What can Europe do internally—or by way of international agreements—to better its position? As in our first conference, we want to attend to all factors—economic, historical, political, diplomatic, and institutional—that impact Europe’s ability to act effectively and to control its destiny. To that end, we will once again invite a wide array of scholars and policy makers, especially taking advantage of Chapel Hill’s proximity to Washington DC.
SPECIFIC TOPICS ADDRESSED
The conference is organized into two keynote speeches, five panels (on the topics listed above), and a concluding round-table discussion. Overall, we plan to have 12 speakers (two for each panel, and the two keynote speakers), plus five discussants (one for each panel). We will also need to have five chairs for the sessions, plus two chairs for the keynote sessions, and one for the closing roundtable.
The first keynote presentation will consider Europe’s problems in the light of collective action theory. The second will discuss whether Europe is becoming an economically and politically destabilizing factor.2014 Conference Agenda
The conference was free and open to the public but pre-registration was required. To request a password to view the working papers, please contact John Stephens, director of CES at UNC.