Wednesday, September 23, 2015

Mandatory Migrant Quotas in the New Europe

Yesterday, the Member States of the EU voted to force the relocation of migrants streaming in from Africa and the Middle East across EU member states. This happened despite the fierce opposition of Slovakia, Romania, Hungary and the Czech Republic. How could this happen?

The EU is a messy international organization that has gradually moved from requiring unanimity among the Member States to pass legislation and policy to adopting some of its decisions by supermajorities--called qualified majority voting, or QMV. The threshold is 55 percent of the 28 Member States representing 65 percent or more of the population. Resorting to QMV is something of a nuclear option, a filibuster-busting move when consensus can't be reached.

But until this point, QMV had never been used in such a sensitive area as asylum and migration. So how could it happen? Three components came together--two legal, and one political. Legally, the EU agreed in the 2001 Nice Treaty to open up the possibility of QMV in asylum matters in the future. At that future date, the Member States would first have to agree unanimously to allow QMV in the future. That happened when the Dublin Regulation was agreed two years later. That Regulation was designed to prevent migrants landing in Southern Europe from travelling onward to the richer countries of the North. But it also opened up the possibility of using QMV in the future to regulate the finer details of its application. After that point in 2003, changes could be made without unanimity.

While those legal changes were in place, there was no political impetus to consider a change in the rules. Europe could have maintained that the Dublin Regulation be applied. However, German insistence that refugees be relocated forced the issue of upending the Regulation. In the Old Europe, Member States would not have been cornered and overruled this way. But Germany's capacity to steer European events in the New Europe is once more on display.

From a humanitarian perspective, this simply had to happen. But the way that it was done signals that German power matters  in ways that traditional thinking on the international relations of Europe has yet to internalize.

Sunday, July 12, 2015

Hanging together and hanging separately in Europe

Greece, the euro and Europe

We can bang on all we want about what should have been. The narratives are well known by now. The orthodox rules for euro membership should have been strictly applied from the beginning. The orthodox rules for euro membership should have been accompanied by the stabilizing effects of a fiscal union as in other large currency areas (meaning countries). The orthodoxy itself was a mistake that has brought the euro zone to its knees in a lasting depression since 2008. Or that despite the failure to do one of those things originally, better late than never: Europe can still get it right once the tensions build up and the internal contradictions of the euro start hurting the citizens it was supposed to benefit. The current proponents of one path over the other now reflect the same divisions as 20 years ago, when the Stability and Growth Pact was fought over and adopted.

But those choices are an illusion. Europe cannot retroactively enforce orthodoxy on Greece now without destroying the country, its citizens and democracy. And it cannot force Greece out of the euro without destroying the EU and its reason for existing. Either the other critics of orthodoxy will follow suit and the euro will become a repeat of  Bismarck's kleindeutsche Loesung, or the eurogroup will set about suppressing democracy in other states as it has in Greece to keep the voters in line. The kind of gold standard European order that the eurogroup leadership is now trying to retroactively impose on its members has never been attempted before, and no democracy has ever survived the downward spiral that the imposition of such hardhip entails. The long persistence of the historical gold standard was only possible because regular people could not vote. We can't go back there, and so that path is a road to nowhere, at least for Greece. If the remaining members follow Germany, Finland, the Netherlands and Slovakia down that path, it will damage European democracy extensively. The old saying will become reality, that if it were possible to vote to change the system, it would be illegal.

If Europe had any smarts, it would find the courage to introduce a  fiscal union that would help keep the currency union together without the debilitating demise of the euro zone periphery, both economically and politically. It needn't be that big a transfer. But it would soften the internal divisions of a continent sufficiently to keep it together and prevent a far worse future.

As Franklin once said, we all hang together, or we all hang separately.

Europe was once about promoting and protecting democracy on the continent by supporting 

Sunday, April 26, 2015

Grexit, Grimbo, Brexit and Kicking Countries out of International Organizations

The European Union is in trouble. One of its most confrontational and egotistical member states has finally isolated itself so badly inside the euro zone and the EU that the relationship with its fellow member states has been damaged beyond repair. Although it might reasonably be argued, as the Tsipras government does, that the rules of membership in the euro zone are unreasonable and require revision, it is another matter to expect that Greece can continue to remain a member and refuse to abide by the rules. Euro zone membership involves relinquishing a good deal of sovereignty. Greece refuses to accept this, and its unwillingness to accept the price of cooperation is not only a problem for the Greeks, but for the euro zone, and the EU as a whole. Current thinking has moved on from Grexit, in which Greece would either leave the single currency voluntarily (which it won't) or be forced out (for which there is no legal precedent) to Grimbo, in which Greece defaults on debt and membership obligations without leaving the organization.

Europe can escape this trap by developing the equivalent of divorce in international relations. Like divorce,  it should neither bring up the topic nor take action lightly, but divorce for actors who have grown apart is a legitimate and helpful alternative to stalemate and the prospect of never-ending conflict. For all of the negative connotations, and despite the fact that one party often does not want it to happen, divorce opens the door to each of the parties making its own choices, making its own mistakes, and learning its own lessons. Europe can and should discuss whether it should eject a member state from the euro zone, and (apart from the euro zone aspect) from the EU entirely. It should not be only up to one partner to decide whether they want to end the relationship. True self-actualization, for good or for bad, requires the power to choose for oneself. That is as true for an individual state as it is for a group of them that want to pursue something special.

Those who oppose the idea might have two arguments--that there is no legal basis for international divorce, and that the alternative is anarchy, which is far worse than committing the members of an organization to a future of unending conflict. But these arguments are misguided. The power of international organizations to do things is claimed as much as inherited by precedent. Yes, the euro zone ejecting Greece, or the EU ejecting the UK, or the UN ejecting a rogue state breaks with tradition. But tradition does not a good life make, and traditions were once decisions. True power over one's own destiny lies in taking those decisions, in acting to shape one's future.

The argument that international divorce promotes anarchy is also misguided and incomplete. It assumes that the status quo is institutionalized relations between consenting states in the absence of outright coercion. But institutions need to adjust to the realities of those they are designed to serve, or anarchy takes over anyway. The reality of the euro zone are that it increasingly reflects the dominance of one state over the others, based on a particular view of right and wrong, of what the organization and its member states are there to do, and what it takes to be a member in good standing. It also uses international agreements outside the EU to buttress the demands of its most powerful member. Greece disagrees, and continued membership serves no one well. So it will find ways to further undermine the institutional order of the euro zone, as discussions of a new drachma alongside the euro and defiance against EMU budget rules underline. The euro zone, and the EU as a whole will suffer more damage to their integrity and waste more of their respective futures if this happens. 

Monday, January 5, 2015

Banking Union and Greece: a European firewall

Europe can now afford to let Greece collapse and exit the euro. Although this is not the scenario anyone would prefer, it is now not only thinkable but feasible and an active part of strategic thinking in European capitals. Greece's most recent elections demonstrate further unwillingness to take further measures to cut spending, raise taxes and restructure the economy, and even the German Chancellory doesn't rule out the possibility. Preparing this next phase of the euro zone crisis has been made possible by selective construction of banking union--the ECB supervises the biggest EU banks, but national supervisors are responsible for the rest, and they can and do insist that all banks reduce their exposure to foreign investments. Balance sheets have been renationalized. National authorities also remain responsible for dealing with insolvent banks, whether bailing them out, insuring deposits or outright closing them down, some moves to coordinate at the Europeaan level for the biggest banks. The resources of the European Stability Mechanism, a kind of European IMF, are in place for Europe's creditor states to prevent one country's collapse from spreading throughout the euro zone.

Neither side, Europe nor Greece, actually prefers a Grexit. But in this year of political chicken, Europe has the tools to blink last and to use a Greek failure as an example to any others.