- Record: found
- Abstract: found
- Article: found
The European Debt Crisis: Incremental Reform, Austerity, and Institutional Failure
Abstract
This article focuses on the way a crisis needs an institutional actor and champion. Through painfully slow intervention and muddling through, the European Central Bank (ECB) created new policy space for a European financial and banking system that was on the point of collapse. However, the institutional commitment to austerity and deep cuts to state spending have pushed the goal of a stronger federal union farther away than ever. This article examines the strengths and limitations of institutional “ad hocery” of making policy on the go. It also has a comparative examination of the Canadian experience with policy ad hocery during Canada's long-running constitutional wars between 1960 and 2000. In the end, Ottawa's strategy left the Canadian federal union decentralized and much more fragile. It makes the case that despite the accomplishment of keeping European capitalism afloat with massive and repeated bailouts of public money, the worst-case scenario facing the Eurozone of some kind of collapse in the near future is still on the table.
Content
Author and article information
Notes
This article was originally given as comments at the International Studies Association (ISA) annual convention for a panel organized by Magnus Ryner, Kings College London, entitled “The IPE of the Euro Crisis—Managing the Crisis?,” San Francisco, USA, April 3–6, 2013. Presenters included Benjamin Braun (2013), Vicki Birchfield and Jarrod Hayes (2013), Joachim Becker, Johannes Jager, and Rudy Weissenbacher (2013), Daniela Gabor (2013), and Henk Overbeek (2013). Special thanks to Magnus Ryner, Terry Sullivan, Enrico Wolleb, Arthur Donner, and Pascal Petit for their different kinds of support, feedback, and suggestions.
The downgrade of 2013 growth projections by the International Monetary Fund (IMF)—the fourth downward revision in so many years—again highlights the depth of the feeble recovery and the dangers of fiscal tightening (Giles 2013c). It is not clear that the EU can claw its way out of this crisis with the Eurozone contracting 0.3 percent in 2013 and projected to grow only 1.4 percent in 2014.
The UK Independence Party success in local elections has given a renewed sense of purpose to the conservative back bench. Cameron's Anglo-American variety of capitalism with its attack on the welfare state, the public sector, and unregulated labor markets looks to the unjaundiced eye as a continuation of Thatcherism's principal idea, in her words that “there is no such thing as society” (Brittan 2013). More than 100 backbenchers are demanding Cameron accelerate his referendum plans. Even Obama has intervened and warned Cameron that exiting the EU would lead to a loss of British influence on the world stage. None of these warnings are likely to matter since the choice of staying or leaving is, in the final analysis, a domestic matter for the British public.