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11. Economic Policy Coordination in the EMU: From Maastricht via SGP to the Fiscal Pact

Author:
Jørgen Mortensen
Publication Date:
08-2013
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The present paper first takes a step backwards with an attempt to situate the adoption of this Treaty in discussion of the SGP and the “Maastricht criteria” (the criteria for EMU membership fixed in the Maastricht Treaty) in a longer perspective of the sharing of competences for macroeconomic policy making within the EU from the initial Treaty to the Maastricht Treaty and the Stability and Growth Pact (SGP). It then presents the main features of the Fiscal Treaty and its relation to the SGP and draws some conclusions as regards the importance and relevance of this new step in the process of economic policy coordination. It concludes that the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union does not seem to offer a definitive solution to the problem of finding the appropriate budgetary-monetary policy mix in the EMU already well identified in the Delors report in 1989 and regularly emphasised ever since and now seriously aggravated due to the Crisis. Furthermore, the implementation of this Treaty may under certain circumstances contribute to an increase in the uncertainties as regards the distribution of the competences between the European Parliament.
Topic:
Globalization, Treaties and Agreements, Economic Growth, Macroeconomics, Eurozone, Trade, Economic Integration, and Economic Stability
Political Geography:
Europe

12. Fiscal or Bailout Union: Where Is the EU/EMU’s Fiscal Integration Heading?

Author:
Marek Dabrowski
Publication Date:
09-2013
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The European debt crisis triggered a debate on the lacking components of the EU and EMU integration architecture. Many believe that a common currency requires closer fiscal and political integration as a condition for its survival. This opinion is not necessarily supported by the experience of other monetary unions, especially those created by sovereign states. On the other hand, the current EU integration architecture already contains several elements of fiscal union. Furthermore, in several important policy areas such as financial supervision, defense, security, border protection, foreign policy, environmental protection, and climate change, the centralization of tasks and resources at the Union level could offer increasing returns to scale and a better chance to address pan-European externalities. This applies to the entire EU, not only to the Eurozone. Each variant of fiscal integration must be based on sound foundations of fiscal discipline. Market discipline, i.e., the danger of sovereign default, supplemented by clear and consistently enforced fiscal rules is the best solution to this problem. Unfortunately, since 2010, the ‘no bail out’ principle has been replaced by a policy of conditional bailout of governments in fiscal trouble. Some proposals, such as Eurobonds or the lender of last resort to governments, go even further in this direction, and threaten to build a dysfunctional fiscal union.
Topic:
Debt, European Union, Macroeconomics, Fiscal Policy, and Eurozone
Political Geography:
Europe

13. Where did all the Spartans Go?

Author:
Felix Imonti
Publication Date:
07-2012
Content Type:
Working Paper
Abstract:
Well, the Greeks voted on June 17th, but I am confused. What did the voters say? Before the election, polls revealed that 80 percent of the people supported membership in the European Union and the continued use of the Euro. When they voted, those same people cast 52 percent of their votes for parties opposed to the adoption of the austerity program that Greeks feel is being imposed upon them by the more powerful members of the EU—which translates into Germany. Accepting the economic program is an essential agreement in order to remain in the Eurozone. The New Democracy Party garnered the largest vote with nearly 30 percent. The leader of the conservative party, Antonis Samaras, pledged to keep Greece in the Eurozone and to negotiate modifications to the austerity package that Greece must accept in order to receive an additional 240 billion Euros. Somehow, people find the promises of Antonis Samaras unreliable. When the New Democracy Party was in opposition against the socialist PASOK Party—which had accepted the program imposed upon Greece—he rejected it. His reversal leaves his position in doubt among Greeks and the politicians outside with whom he has to negotiate. In short, is he for the austerity package or against it?
Topic:
Elections, European Union, Domestic Politics, and Eurozone
Political Geography:
Europe and Greece

14. The need for contingency planning: potential scenarios of Eurozone disintegration

Author:
Marek Dabrowski
Publication Date:
06-2012
Content Type:
Policy Brief
Institution:
Center for Social and Economic Research - CASE
Abstract:
Since the beginning of 2010, the common currency area in Europe found itself under serious strain as a consequence of the sovereign debt crisis in several member states. While a substantial political and financial effort has been made to avoid a collapse of the Euro project, its ultimate outcome remains uncertain due to continuous financial market pressures and political challenges faced by individual member states. Therefore, one cannot entirely rule out the possibility of either a partial or total breakup of the Eurozone, even if such a demise would bring about disastrous economic and political consequences for the entire EU and its external partners.
Topic:
Debt, European Union, Economic Policy, Macroeconomics, and Eurozone
Political Geography:
Europe