Is the euro weakening democracy in Europe?
After tense and bitter negotiations, Greece and the other euro zone countries (countries that share the common currency of the euro) have concluded a tentative deal on yet another bailout. Greece will get money — but only in return for harsh conditions and intensive supervision of its economic affairs, which is in many ways worse than the deal that Greece already rejected in a national referendum.
Many describe the deal as anti-democratic, saying that the European Union is ignoring the decision of the Greek people. Others argue that the democratic preferences of voters in the European countries that will have to pay for a bailout should be respected. These preferences would suggest that either the Greeks get money on very harsh terms, or they get no money at all.
All euro zone states are facing rigid rules on spending. Greece’s are just the most extreme.
The current controversy reflects past decisions over how democratic states would create a common currency.
When the euro was created, Germany succeeded in ensuring that the new currency would reflect German preferences for economic stability (read: low inflation) over efforts to promote economic growth. Germany also pushed for strong rules (which it then went on to break) intended to ensure that states within the common currency would not run big budget deficits. However, as Rutgers political scientist Daniel Kelemen notes, these rules were incomplete, failing for example to specify how to supervise banks and support them in economic crises, or how to use fiscal spending to balance out shocks that hit one part of the euro zone harder than others.
In the wake of the economic crisis, Germany, together with other European member states and the European Commission (the bureaucratic agenda setter of the European Union) have pushed for rules in some of these areas but not others. For instance, there is still no system for making fiscal transfers from parts of the European Union that are doing well to parts of the European Union that are doing poorly. In fact, that level of fiscal union is ruled out.
Read the full piece at The Washington Post.
- Publication Type:Other Writing
- Publication Date:07/13/2015