Economic, monetary and financial market integration has come at the expense of legitimacy building in the European Union (e.g. Cafruny and Ryner). The European Union is going through a double dip recession as the result of having entered into a vicious circle where recession, rising interest rates on the public debt, austerity measures, unemployment, poverty and banking crisis nurture each other. Indeed, policy responses in the crisis highlights Fritz Scharpf’s claim that the EU’s embrace of market liberalising “negative integration” has rendered the European Union incapable of making policy choices that further positive integration. But established theories fail to stipulate the origins, and therefore the power, of this bias.
Crisis management confounds established explanations of power dynamics within the EU. The policy response of austerity policies combined with selective financial market reregulation emerged out of a heady discourse of defiance against the disciplinary powers of US-led global finance. Yet, the same core member states have pushed for a policy mix of austerity and selective financial market reregulation that acquiesces to such powers. At the same time, the policy response has led to a reinforcement of the powers of European institutions (ECB, European Council and the Commission) on economic matters including banking supervision, competition policy, budgetary and fiscal policies, labor market regulation and privatization policy, which should be put into the context of a sense of a growing democratic deficit of the EU. The corollary of this accelerated shift of competencies is thus a significant reduction of the power of national political bodies in the member states, and those in the Eurozone in particular. This is particularly striking in countries submitted to financial assistance programs as they experience the principle: “sovereignty ends, where solvency ends”. The panel identifies the blind spots in the dominant perspectives seeking to make sense of this riddle.
The deleterious effects of crisis management on social benefits, public services, wages and employment have unleashed a wave of popular mobilization not seen in decades in the continent. In Greece where the economic involution has gone the furthest, mass demonstrations, strikes, civil disobedience and public unrests went to a point of quasi insurrection during the autumn 2011. Polls this year have seen a surge in the votes in favor of the radical left Syryza and the affirmation of in the elections and in the streets of Golden Dawn, a neo-nazi organization. In Spain and Portugal and, to a lesser extent, in Italy and France, there has been huge street demonstrations, occupations and strikes. The comeback of socio-political conflictuality is potentially an epoch-making process that demands theories of European integration that can account for a dramatically different, indeed disintegrating, Europe.
