The ways in which Europe’s economy and the Eurozone are governed have changed fundamentally over the course of the Eurozone crisis. The resulting constitutional constellation is nothing less than a deep transformation of the European project. Christian Joerges, Professor of Law and Society at the Hertie School of Governance in Berlin, looks at how the project of a European economic constitution has been abandoned, and instead replaced by entirely new modes of European economic governance.
The transformation of European economic and political governance patterns (the EU’s constitutional constellation) occurred step by step through what the European University Institute in Florence has named the ‘Euro Crisis Law‘. The German court had asked whether the European Central Bank had overstepped its monetary policy competence with the Outright Monetary Transactions programme (OMT), and interfered with the powers of the Member States in the sphere of economic policy. On 16 June 2015, the Court of Justice of the EU (CJEU) found the ECB’s programme to be legal. Continue reading
Two of the currently most popular hashtags on Twitter reflect Britain’s debate on whether to leave the EU (#Brexit) and the possibility of Greece leaving the euro (#Grexit). But although they differ only by their first letter, those two topics are by no means the same. In this post, Filipa Figueira, Teaching Fellow in Economics at UCL, explores how the two are nonetheless closely linked and how addressing one may help resolve the other.
A decision on being part of the European Union is very different from a decision on being part of a common currency. Although the word ‘euro’ makes the common currency sound like a core aspect of ‘Europeanness’, it is in fact only one of the EU’s many policies. And, as the British example shows, it is perfectly possible to be an EU member without participating in the euro currency.
Yet confusion reigns. When, in early July, a Greek exit of the euro seemed possible, many jumped to the conclusion that the country would need to leave the European Union too. This included, for example, the President of the European Parliament Martin Schulz – who really should know better, as that would of course not have been the case.
Geoffrey Hosking, Emeritus Professor of Russian History at UCL’s School of Slavonic and East European Studies, gives his view of what went wrong before and during the Greek crisis, and of the challenges that now lie ahead. To him the problem is centrally one of a lack of trust.
The Greek crisis goes back a long way, and at several stages demonstrated the dangers of a loss of trust.
The epic began with the creation of the euro, which was set up without several of the trust-generating stabilisers of national currencies: a common fiscal policy, a central ministry of finance and a central bank empowered to act as a lender of last resort. Without these essentials, the euro lacked the full and credible commitment of all its members, an essential prerequisite of mutual trust. A member nation could no longer cope with serious crises by devaluing its currency, yet no provision was made for a solidarity fund (the euro equivalent of the IMF) to deal with crises collectively.