This blog is hosted on Ideas on EuropeIdeas on Europe Avatar


Change of mood on the Euro. Even at EUSA 2017!

Early this month I had the fortune to attend the biannual conference of the European Studies Association (EUSA) in Miami. As always, and as it could not be otherwise, I attended as many panels on the European Monetary Union as I could. I also discussed the future of the Euro with a number of colleagues over dinners, lunches and breakfasts. Yes, I admit it, I am a Euro freak. But there are not so many opportunities to discuss this topic with American or America-based scholars, so one needs to make the most of it.

Euro-CroissantOne of the things that I noticed from the previous EUSA conference two years ago in Boston is that the mood on the Euro has changed.

Our Anglo-American colleagues are less gloomy on the single currency, although they are still quite sceptical. Matthias Matthijs is one of them. He showed figures indicating how trust in the democratic system has collapsed over the past years in the Mediterranean countries and claimed that this was due to the Euro straightjacket and the imposition of austerity by Brussels.

Those who follow my publications (or my Twitter account) know that this causality does not convince me. Rather, my sense is that disenchantment with democracy in these countries has more to do with internal factors, mainly corruption and the lack of meritocracy and job opportunities for the young. This is at least the case in Spain, and it is likely to be valid also for Portugal and Greece. In Italy the story might be closer to what Matthijs describes. But yet again, here I believe this is more due to the fact that Italian leaders blame the Euro, Germany and Brussels for Italy’s ills instead of tackling the real problems of their country.

As a matter of fact, the comparison between Italy and Spain demonstrates that the Euro is not an anti-growth device, as sometimes argued. The external circumstances are roughly the same for both countries. Both are in the monetary union and both are told by Brussels that they need to reduce their deficits to shrink their public debt. Both have benefited from the ultra-loose monetary policy of the European Central Bank and the drop of oil prices. But Spain is growing for the third year in a row at more than 3%, while Italy is stuck below 1%. This in itself shows that the Euro does not impede high growth rates. The Baltic countries and Ireland are other examples that contradict this thesis.

Not many have noticed but the fact is that in 2016 the Eurozone had a higher growth rate than the US! This explains why the overall sentiment in the Old Continent, but also in the US has shifted. Those US based scholars that predicted a Euro break-up at the previous EUSA conference in Boston in 2015, admit now that they had underestimated the political will prevalent both in the South and the North of the monetary union to stick together. A sentiment that has only increased after the Brexit vote and the arrival of Donald Trump to the White House.

As Daniela Schwarzer from the German foreign-policy think-tank DGAP explained in a roundtable we had on why the Euro is still so popular, if one looks at the economic side of EMU, one can flirt with the idea of a break-up, but once you analyse the historical and political trajectory of the single currency, then the possibility of an implosion becomes less likely.

Waltraud Schelke, Matthias Matthijs, Vivien Schmidt, Kathleen McNamara and Erik Jones in a panel on the legitimacy deficit of the EU.

Waltraud Schelke, Matthias Matthijs, Vivien Schmidt, Kathleen McNamara and Erik Jones in a panel on the legitimacy deficit of the EU.

However, this does not mean that the Euro is a robust and consolidated construction yet. The good thing about the EUSA conferences is that there are always representatives from the European Central Bank and this year there were some from the ESM (the European Stability Mechanism). Some of them (certainly not all) were complacent, saying that EMU only needs a couple of minor reforms to be sustainably. This is too overoptimistic. There is a reason why Emmanuel Macron is asking for a Eurozone budget to increase investments, a finance minister, and a Eurozone parliament. As I have explained elsewhere, monetary unions do not survive without political unions to underpin them and the earlier European leaders understand that, the better.

Of course, this also means that the analysis on the future of the euro at EUSA conferences will continue to be divided between those who believe that fiscal and political integration is feasible, and likely, and those who don’t. And it happens that the former tend to live and work inside the Eurozone , and the latter look at it from the outside. Only time will tell whether the “insiders” base their analysis on wishful thinking or whether they are closer to the truth than the “outsiders”.

Comments Off

Recent Articles

Economics as a social science

Published on by | Comments Off

Has there been, since the outbreak of the economic and financial crisis in 2008, one single op-ed piece in major international newspapers that did not, in one way or another, refer to Keynes, Keynesian theory and recipes, or Keynesianism as a kind of handbook or roadmap for political leaders dealing with failing banks, sluggish growth, […]

Northern Ireland: A Casualty of Brexit?

Published on by | Comments Off
Hard border

As if things were not already complicated enough in Northern Ireland, recent events have even added to the general feeling of instability and uncertainty. Both the assembly elections and the unfolding of Brexit – with increasing disagreements between London and Edinburgh – have not been particularly encouraging. The Assembly elections The 2017 Northern Ireland Assembly […]

What makes the Dutch Dutch? A constitutional perspective.

Published on by | Comments Off
The hilarious 'Netherlands Second!' clip (click on the picture). Is self-mocking irony typically Dutch?

Ever since the rise of the Christian Democrats (CDA) in the beginning of the 2000′s, the issue of ‘Normen en Waarden’ has been a topic in the elections. Jan Peter Balkenende was the first to frame the problems in Dutch society as the result of individualistic attitudes propagated by the preceding cabinets. As with a lot of […]

Whatever happened to the Dutch Left?

Published on by | Comments Off

Third post in our series on the Dutch general elections. Questions on the vital statistics of ‘The Left’ are rising everywhere in the Western World. At least in the Netherlands, it is too early to organise a wake. We may be well known for our liberal and permissive attitude to society (which is not the […]

Can the populist far-right win the elections in the Netherlands?

Published on by | Comments Off
Good colleagues in the EP.

Second post on our series on the Dutch general elections. On Wednesday 15 March, Dutch voters will head to the polls to elect a new parliament and prime minister. And for once, the rest of Europe is very interested, as the question looms whether the leader of the far-right populist Party for Freedom (PVV) Geert […]

Dutch coalition politics and the 2017 general elections

Published on by | Comments Off

The year 2017 is widely seen as hugely important for European politics, with general elections in key European Union member states Germany and the Netherlands – and perhaps even in Italy – and presidential elections in France. Following the United Kingdom’s Brexit vote and the election of President Donald Trump in the United States, populist […]

Europessimism’s finest clothes

Published on by | Comments Off
Illusion cover

Taking Tony Judt’s A Grand Illusion? out of the shelf again. Revisiting a book on the general state and mid-term prospects of the European Union that was only written twenty years ago may turn out to be a very useful exercise. It puts into perspective the achievements and failures of what is a slow and […]

Take-aways on federation and sovereignty

Published on by | Comments Off
Julien Barroche and Olivier Beaud, welcomed by Arnauld Leclerc from the Chair of European Philosophy.

Ask not whether the European Union is a federation or not, ask what Europe can teach us about the very concept of federation! In a nutshell, this is one of my major take-homes from a particularly enriching seminar held in Nantes on 17 February at the Chair of European Philosophy of Alliance Europa. Olivier Beaud, […]

Semester grades for Theresa May

Published on by | Comments Off
Transcript of records (final)

To whom it may concern This is to certify that Ms Theresa May successfully passed the admission exam of the ‘Higher Management and Governance’ executive education programme, generally known as ‘HMG’, in July 2013. At the end of her first semester, during which her performance was evaluated through continuous assessment, she has now submitted her […]

EU external migration policy: the need for overcoming hypocrisy and adopting a holistic approach

Published on by and | Comments Off
Malta summit 1

The Malta Declaration, on the external dimension of migration, was adopted by the members of the European Council at an informal EU Summit in Valetta on Friday 3 February 2017. Its adoption represents the continuation of a ‘one-eyed’ security-oriented strategy which impedes a more holistic vision of EU migration law and policy. A silver bullet? […]

UACES and Ideas on Europe do not take responsibility for opinions expressed in articles on blogs hosted on Ideas on Europe. All opinions are those of the contributing authors.