EU - Page 2

Jacques Sapir komentuje revoluci na Ukrajině

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Tento týden byla média opět plná komentářů, které se jedním nebo druhým způsobem dotýkaly Ruska a Ukrajiny. Možná i kvůli oslavám 17. listopadu a zahraniční návštěvě Bohuslava Sobotky do Spojených států (zlé jazyky by řekly,  že český premiér se jednoduše vydal skládat účty našim imperiálním vládcům), se ale tradiční anti-putinovské články objevovaly s ještě větší frekvencí, než je obvyklé. Naši trpěliví novináři čtenářům pravidelně opakovali, že demonstrace proti Milošovi Zemanovi jsou v zahraničí vnímány jako důsledek odklonu od “světové”, lidskoprávní politiky Václava Havla, a že politici napříč Amerikou roní slzy nad opětovným příklonem České republiky k Rusku. Tuto hitparádu špatné novinařiny pak zřejmě korunoval rozhovor s Carlem Gershmanem, prezidentem National Endowment for Democracy (která je známá spíše jako “nevládní” odnož CIA), publikovaným v Hospodářských novinách. Keep Reading

Press Briefing: Common language for the EU, Populists in Europe & Eurasian century

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German AfD candidate: ‘The EU is upside down’ (EurActiv, 25th May ’14)

Germany’s leading eurosceptic party, Alternative für Deutschland (AfD), received 7 percent of the vote in their country and will be sending 7 MEPs to the European Parliament. While AfD opposes the euro currency and would like that Germany reintroduces Deutsche Mark, it has been claiming that it does not oppose the European Union as such.

Keep Reading

Lingua Latina: single language for the EU?

The article of Fritz Sturm, ‘Lingua Latina fundamentum et salue Europae‘ is a rare piece that promotes the use of Latin language as the common administrative language of the EU.

It starts by considering the EU’s current policy of multilingualism, which it rejects as practically and economically problematic. What is more, in effect it is English that is gaining more and more ground as the working language of the EU institutions. Notably the European Commission’s calls for tenders are published in English or French, so those not speaking these languages are disadvantaged. Keep Reading

Embargo on Iranian oil: A move to save the US Dollar hegemony

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US Dollar Hegemony pictured as a harvester with uncle Sam sitting behind the driving wheel that is on the way to run over the escaping globe @ Dollar Hegemony by Luojie, China Daily, China from www.caglecartoons.com # 85448Acting through its ambassadors, the European Union has announced the imposition of an oil embargo on Iran from July 2012 on as well as placement of sanctions against Iran’s Central Bank, which aim to disrupt the funding of the country’s nuclear programme. But will that suffice? Will it have any effect? Or will it rather be importers bearing the costs? In response to the declaration of the embargo, the Brent price of oil skyrocketed between 23rd and 29th January to $111 per barrel.1 Iran is the second largest producing country in OPEC that supplies 2.5 million barrels per day, out of which 450 thousand are sent to EU countries. If the stoppage of the Iranian supply is not substituted by some alternative source, the embargo on the trading of Iranian oil can significantly harm European economies.

The Oil from Saudi Arabia

Speaking through its Commissioner for Energy Günther Oettinger, the European Union boldly announced that imports from Saudi Arabia will cover the Union’s consumption needs. A difficulty lies in the fact that relying on the oil reserve capacity of Saudi Arabia, which has always played the role of a safety measure, is becoming increasingly problematic. Even a short disruption of the drilling of oil in Algeria, and in Libya during the recent civil war, were sufficient to deplete Saudi reserve capacities.

When Wikileaks published diplomatic cables in 2010, what many analysts had been claiming for some time became public: Saudi Arabia has been lying about its oil reserves. They are lower than it officially claims. As everything indicates, it won’t be in the position to extract more than 12 million barrels a day. Given that the whole world experiences increasing demand, this will push up the prices of black gold to yet unprecedented heights. Oil will keep flowing even without Iran, but then we should not be surprised when the price will jump to somewhere between $120 to $150 per barrel during the summer.

Let’s look at the issue from a different angle. Who can lose out on the disruption of Iranian oil supply is obvious. It won’t be Russia, China, India, nor Turkey, but the European Union. (Allegedly, Japan will only decrease the level of supply.) Iran will now have to sell to these countries for a lower price. Higher prices will be especially beneficial to Saudi Arabia, which needs expensive oil in order to have sufficient funds for bribing its inhabitans, whose uprising would cause a true Arab spring and large problems to the United States, which are publicly supported by the Saudi regime that also allows them to build strategic military bases on its soil.

What really bothers the Americans

According to the treaty between the US and Saudi Arabia from the early 70s, the trading in oil with OPEC is concluded exclusively in US dollars (the famous term „petrodollars“ emerged as the result of the treaty). It is quite simple, really: if you ensure that oil will be traded in US dollars only, the countries needing oil for their economy’s development will be forced to obtain your currency. And this is exactly the reason why the American FED can today print dollar banknotes on big scale.

In the 30 years of functioning of the petrodollar system, the US has run a semi-monetarist trade regime, which has in practice entailed that in exchange for its goods, a country in question has received printed dollars. Besides being highly profitable to the US, the country’s foreign trade could prioritise import over export, leading to a decreased demand for the production of export goods.

This model could predominate only as long as the international political standing of the United States was unshakeable. But as the importance of new seats of power of the East and South increases, the appetite for a new, more just global ordering grows too. Emerging economies that have huge consumption of oil suddenly feel that dollar is detrimental to their growth and want to get rid of it. On the other hand, for the US a breakthrough of euro, juan or yen as the means of exchange would entail that they would have to quickly balance out their trade deficit – and for the largest economic entity in the world this would mean a several years long, painful transition.

When mentioning Iran it is useful to remember the fate of its Iraqi neighbour (indeed, among other countries). Since it is highly interesting that the accusation that Iraq own weapons of mass destruction came few months after Saddam Hussein announced that he will sell oil exclusively in euro. The bizarre leader of Libya, Muammar Kaddafi, was on friendly terms with Western politicians for years and no one was concerned too much by repressions against opposition – not until the moment when he announced the plan to create a pan-African oil trading regime, which hoped to force out the US dollar by creating the “African denari”.

In the past, Iran tried to weaken the dollar’s influence on trade and minimise the dollar transactions made for its oil, and at the end of 2008 it completely succeeded thanks to the founding of the Iranian oil commodity exchange. Japan pays for oil in yens, while others in euro.

To facilitate transactions for oil exports to India, Iran recently concluded a treaty with two important Indian banks. And in order to avoid any disputes with the US, Iran has chosen banks that have no direct engagement with the United States. Russian Gazprombank is expected to play the role of an intermediary. Latest information so far indicate that India has  agreed to this unprecedented deal and thus became the first recipeint of Iranian oil who will pay for the supply in gold instead of by dollar.

If joined by China, this initiative will have yet unforeseeable consequences. Gold once again starts to fulfill the role of currency and the United States watch this development with unease. Since more than by the alleged Iranian nuclear programme, they are threatened by a collapse of the dollar’s hegemony. The explanation for the present war drumming and dispatching of flotillas to the Persian Gulf can thus also be an effort to get rid of the weakest link on the ‘anti-dollar front’ that would send to Russia and China a first, but resounding warning signal.

 

* Translated from Czech by Stanislav Maselnik. Originally published on Revue Politika.

Show 1 footnote

  1. Brent is a trading classification of a kind of crude oil sourced from the North Sea that serves as a major benchmark for petroleum production from Europe, Africa and the Middle East.

The Neoliberal Union: EU and its model of economic integration

The following analysis can be also downloaded as a pdf file by clicking on this link. Given the article’s extent (about 18 pages), it should make the content more readable.

EUTo accuse the European Union (EU) of supporting of unfettered rule of market forces in the form of neoliberal policies is increasingly common under the fiscal and economic crisis that engulfs Greece and the eurozone. But the connection made between the Europe’s transnational union and this strand of economic thought is far from being new. The French voters rejected the draft Constitutional Treaty in the national referendum in the spring of 2005, because they perceived its silence on social policy as a threat to the French social model.1 According to the French left-leaning monthly Le Monde diplomatique, the recent Lisbon Treaty only refurbished the same neoliberal principles that were already once rejected by the French people, but now without giving them the possibility of rejecting them again.2 A thorough discussion of the principles behind the current form of European integration is therefore crucial for understanding the future prospects of the European project, especially since commentators from both the political left and right agree that further integration would be possible only when it would be backed by the support of the European public.3 Furthermore, if the presence of neoliberal policies in the European foundational treaties is confirmed, this might also engender debates on the fundamental principles of constitution-making: would it be legitimate if any future European constitution or constitutional treaty also clearly specified the principles (neoliberal or other) according to which its policies must be developed?4

In order to further this debate, this essay discusses the institutional structure and policies of the EU and, agreeing with some other commentators that discussed the same topic, it argues that the EU promotes a specific model of capitalism that can be best understood as ‘embedded neoliberalism’.5 In doing so, the approach of this work is following. First, it develops a model of neoliberal economics. Second, it continues by giving a brief historical overview of how this model competed for influence with other alternative models of capitalism at the EU level and states the reasons for its victory in the 1990s. And thirdly, it discusses the institutionalization of neoliberalism and overviews the major EU policies that can be associated with it.

The Political and Economic Principles of Neoliberalism

As even many authors that are critical of neoliberal policies acknowledge, the term ‘neoliberalism’ is eminently vague.6 It is often used pejoratively to describe the global spread of market economy and consumerist lifestyle at the expense of the traditional welfare state, thus avoiding rigorous analysis of the phenomenon.7 Thorsen and Lie, who manage to provide a very thorough overview of the concept, observed that the main problem when approaching the available literature is that ‘there does not seem to be anyone who has written about neoliberalism from a sympathetic or even neutral point of view.’8 Notwithstanding such problems inherent to the debate, for the purposes of this essay it suffices if neoliberalism is defined in terms of the core policies that are associated with it. Apart from Thorsen and Lie’s critical study, it is David Harvey’s A Brief History of Neoliberalism that provides a dispassionate introduction to the topic. He defines neoliberalism as being

in the first instance a theory of political economic practices that proposes that human  well-being can best be advanced by liberating individual entrepreneurial freedoms and skills  within an institutional framework characterized by strong private property rights, free markets and free trade.9

Consequently, the role of the state is minimised to that of the preserver of the institutional framework appropriate to the free market economy. However, this does not entail that the state loses any of its political authority. Quite the contrary, as could be seen during the Reagan and Thatcher administrations in the US and UK respectively, ‘a more authoritative state must now concentrate on providing the conditions under which individual entrepreneurship, self-government, freedom and responsibility can be possible.’10 In other words, although its nominal sphere of influence is to be reduced, the state has to first roll back the ‘nanny’ welfare state and thus secure the legal framework for the inhibited running of markets. In this way, it also ensures the inviolability of the private property, or guarantees the defence and policing of the country. Furthermore, the state is put in charge of the privatisation of state-owned companies and of public utilities that aims at extending the domain of the market economy by creating new markets. The tight fiscal and monetary discipline, the liberalisation of trade and capital markets and the ‘flexibilisation’ of labour market are thus natural steps to be taken by the state when following the neoliberal principles.  On the international scale, neoliberalism is associated with the promotion of reducing trade barriers and enhancing capital mobility and ‘together with the application of new information-based technologies, [it] facilitate[s] the emergence of less constrained multinational corporations able to negotiate the very favourable terms of investment with national governments’.11 Obviously, neoliberalism could be also studied from the perspective of its underlying political philosophy, where the most important conclusion is that in putting the political emphasis on the individual, the differences between liberalism and neoliberalism are only slight.12

Foundation of the EU and Neofunctionalism

The European Union began as a project of economic, not of political integration. Jean Monnet, a key architect of the ECSC, explicitly based his views of the future of European integration on neofunctionalism.13 The neofunctional theory of regional integration was first developed by the American political scientist Ernst Haas, who argued that establishing economic interdependence between several countries will give the process its own internal dynamics, thus leading to the political integration through a series of ‘functional spillovers’.14 The 1985 White Paper of the European Commission on the creation of a single market in this way claimed that ‘just as the Customs Union had to precede Economic Integration, so Economic Integration has to precede European Unity,’ thus confirming that the neofunctionalist approach to the integration persisted as the dominant model throughout the Union’s whole history. The neofunctionalist approach can be criticised for giving excessive predominance to economy at the expense of politics or culture, as indeed many authors have done,15 but it is not directly connected to neoliberal policies. Similarly, the idea of economic integration has no necessary connection to (neo)liberalism as it is entirely possible to conceive an integrated economic system that would have upheld more social democratic values, protected its members against the negative effects of economic globalisation, and/or integrated only certain sectors of economy while supporting the local producers against large transnational corporations.16 While the idea of a common market is therefore not (neo)liberal per se, this work argues that the actual economic integration of the EU has been made according to fundamentally liberal principles, which consequently provided it with the institutional basis for the political shift to ‘embedded neoliberalism’ by the early 1990s. In order to analyse whether the EU contained neoliberal policies since its foundation, it is now necessary to turn to concrete policies that were behind such abstract phrases as ‘economic integration’.

The Development of the Economic Integration: Neoliberalism, Neo-Mercantilism, and Social Democracy

The European Coal and Steel Community was created as the first supranational institution in 1951 to encourage the expansion of iron and steel production and of heavy industry and, more generally, with the aim of preventing any future wars between France and Germany. As Christoph Hermann notes, it was ‘inspired by the notion of coordination and cooperation rather than market-mediated competition.’17 It was only the establishment of the European Economic Community (EEC) in 1957 that took the first steps to a free trade zone by creating a customs union with a common external tariff. Thus, in Article 3 of the Treaty of Rome, one can read that member states subscribe to a gradual development of a ‘common market free from distortions to competition’ – an idea with clearly liberal roots. At this point, thus distinguishing it from later neoliberal policies, the common market meant only free circulation of goods – free movement of labour, capital, and services were only institutionalised with the signing of the Single European Act (SEA) in 1986. The single European market of SEA was considered the last-resort response to the economic crisis Europe underwent in the early 1980s, when individual national therapies failed. Its aim was to create a ‘healthy’ pan-European competitive environment, with flexible capital and labour markets that would make it easier for the firms to carry structural readjustments that were until then hampered by the welfare regimes of individual member states.18 As Stephen Gill remarked, SEA marked a key shift in the European community’s policies towards a form of neoliberalism, for at that point ‘scientists, journalists and politicians succeeded in presenting the Single Market as the breaking-up  of  incrusted  and  rigid  structures  of  European  labour  and  social regulations.’19 Hermann observes that a key part of SEA was the principle of mutual recognition for those goods and services for which the EU did not regulate.20 This principle had an inherently liberalizing tendency, since as no overarching regulation, supervisory procedures or common standards on goods were established, it has allowed the use of the lowest standards to be found among the contemporary 27 member states. This leads Hermann to conclude that the common market ‘has thus become a neoliberal market characterized by weak regulations or even deregulation.’21 This also amounted to a de facto liberalisation of the external trade policies, as the principle of mutual recognition has also applied to them.22 Furthermore, as Fritz Scharpf observes,

it required the liberalization of hitherto protected, highly regulated and often state-owned service-public industries and infrastructure functions, including financial services, air, road and rail transport, telecommunications and energy; and it extended the reach of European competition law to all national polices that could be regarded as distortions of free competition.23

As described by Bastiaan van Apeldoorn, the establishment of the single market coincided with the creation of an elite forum of Europe’s emergent transnational capitalist class – the European Round Table of Industrialists (ERT). Founded in 1983, this lobby currently unites 50 CEOs of ‘of major multinational companies of European parentage covering a wide range of industry and technology’.24 Apeldoorn’s analysis tries to show that the ideological development of ERT can be considered a microcosmos of the EU as a whole. In the early 1980s, ERT was dominated by European industrial capital, which had the major interest in protecting the European market from the global competition. Apeldoorn calls the model of capitalism to which they subscribed ‘neo-mercantilism,’ characterizing it as promoting defensive regionalisation as against globalisation.25 At the same time, neo-mercantilism was largely compatible with the social-democratic strand of capitalism to which at least nominally subscribed Jacques Delors and his three Commissions (1985-94).26 Delors’ support for the ‘European champions’ was a direct correlate of the neo-mercantilist arguments of ERT, but European industry was also willing to concede a further point to social democracy by supporting a certain level of social partnership with European labour.27 The social democratic model also supported the ‘European social model’ of mixed economy that would complement ‘negative’ market integration, would strengthen supranational institutions, or ensure high levels of social protection for workers.28 Nevertheless, the neo-mercantilist project, gradually faded into background when ERT, since the late 1980s fully controlled by globalised sections of European capital, shifted its support to ‘embedded neoliberalism’. The lobbying of ERT in support of neoliberal policies consequently played a vital part in undermining the social-democratic plans of Delors.29 Furthermore, Andy Storey concludes that the support for neoliberal policies within European companies is likely to become even more entrenched as their sales outside Europe grow when compared to European markets.30 Thus, he notes, between 1987 and 2000, the top nineteen companies of the European parentage increased their non-European sales from 34% of turnover to 46.2%, while within the EU their sales almost did not increase at all.31 Apeldoorn thus describes the embedded neoliberalism as a hegemonic project of ‘a class-conscious transnational business elite’.32 The difference between the embedded and ‘pure’ liberalism is in this way marginal: the difference lies in the former’s effort to co-opt other social forces such as trade unions by incorporating into the neoliberal discourse certain aspects of social policy. The social policy at the EU level thus acquires the ‘market enabling’ at the expense of traditional social policy instruments such as social protection or income redistribution. When compared to national welfare state models, the remit of the market remains unrestricted and the social policy itself acquires the character of facilitating the workers’ participation in the labour market (e.g. for instance through training or requalification). On the other hand, all efforts that would have provided for a substantive EU social policy and that would have balanced out the fiscal constraints imposed on the member states by the treaties, EMU and SGP so far failed.33 A clear example of market-enabling social policy is present in the Europe 2020 strategy recently put forward by the Commission. Although it claims that it sets out a vision of ‘Europe’s social market economy,’ it stresses that the European economy must be restarted by privileging an economy ‘based on knowledge and innovation’, ‘fostering high-employment’, and ‘modernis[ing] labour markets and empower[ing] people by developing their of [sic] skills throughout the lifecycle with a view to increase labour participation’.34 When it comes to the social dialogue and partnership that the European founding treaties refer to (Arts. 152 & 153 of the Treaty on the Functioning of the European Union), the most of the commentators argue that trade unions have at best a mixed record when engaging with the EU politics.35 In this way, Andy Storey then adds that that ‘engagement there has been has tended towards the containment of the unions within corporatist structures rather than seriously challenging neoliberal policies.’36

In criticising this lack of a full-fledged social policy at the EU level, it must be noted that the authors such as Scharpf argued that an option of having a traditional welfare state at the EU level is in practice foreclosed by the diversity of European welfare state models and that only an intergovernmental co-operation based on the strengthened Open Method of Co-operation is in practice feasible.37 In this model of strengthened co-operation of Scharpf, or Iain Begg and Jos Berghman, a common approach to social policy would be adopted and be enforceable at the EU level, while its implementation would still remain national, with sufficiently extensive provision for national differences.38 If such option is open, it should be concluded that there is clearly no other reason than the member states’ and the EU’s commitment to neoliberalism that would explain the lack of political will in implementing such European model of social policy provision.

Economic and Monetary Union and Stability and Growth Pact

A crucial further step in the process of ‘neoliberalisation’ of the EU has been the Economic and Monetary Union of the EU (EMU) that was completed in three stages between 1990 and 1999, with the Euro as the common currency being adopted in 2002.39 For purely pragmatic political reasons (it was perceived as a crucial step in the long-term development of the economic integration), the EMU was backed in the late 1980s even by the ‘Europeanist’ part of ERT.40 The EMU is administered by the independent European Central Bank (ECB) that is endowed with an explicit anti-inflationary mandate, maintaining high interest rates to this end. Commenting on the latter, Scharpf thus observes that the monetary union has not only deprived the member states of the capacity to control exchange rates according to local economic exigencies, but also of the the ability to control interest rates.41 This entails that the interest rates set by the ECB to correspond to average conditions in the Eurozone ‘will be too high for economies with below-average rates of economic growth and inflation and too low for countries above the average. Hence they will further impede the recovery of sluggish economies and add to inflationary pressures in countries with high growth rates’.42 Indeed, the disparities between different regions are a problem in any larger state, but then they are solved by national redistribution policies, which are, as was stated above, unavailable to the EU.

The Stability and Growth Pact (SGP), which was as a part of EMU adopted in 1997, adds further neoliberal constraints on the fiscal policy of the member states. Its purpose is to monitor the fiscal discipline of the EU member states and potentially sanction the offending members. Although its efficiency was recently doubted,43 for the purposes of this essay it suffices to say that the criteria it officially sets are clearly neoliberal. Thus, according to the SGP, the annual budget deficit of the member states should not be higher than 3% of their national GDP and their national debt should be lower than 60% of their GDP. These rules were softened in 2005 (budgetary objectives are now reviewed every fourth year and countries with a low public debt and a potential for high growth are allowed a budgetary deficit of 1% of GDP in the medium term), but their fundamental neoliberal nature remains unchanged.44 By the SGP and other above stated measures related to the EMU, the European law thus effectively bans the use of those national macroeconomic (Keynesian) instruments that could positively influence national growth.

European Treaties

The presence of neoliberal policies is the most fully developed in the European founding treaties themselves. They will be discussed by referring to the last, post-Lisbon consolidated version of Treaty on European Union (TEU) and Treaty on the Functioning of the European Union (TFEU).45 The Art. 26 of TFEU, which outlines the principles of the internal market, thus states that it ‘shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties’. The Art. 119.1 of TFEU expands this by confirming that the adoption of an economic policy will be ‘conducted in accordance with the principle of an open market economy with free competition’. The third point of the same article further adds that the guiding principles of economic and monetary policy will be ‘stable prices, sound public finances and monetary conditions and a sustainable balance of payments’. The only exceptions to the free running of the markets that are mentioned in the treaties are in the Arts. 27 and 144. The first of these states that the Commission can decide on temporary derogation from the principles of free market for the ‘economies showing differences in development’, however, such provisions ‘must be of a temporary nature and must cause the least possible disturbance to the functioning of the internal market’. The Art. 144 contains a similar clause that allows the governments to take precautionary protective measures in case of a sudden crisis in the balance of payments. The Art. 21.2e of TEU also mentions that in its foreign policy, the EU shall ‘encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade’. This clear adherence to the neoliberal project is further expanded in the Art. 206 of TFEU, which states that the Union will contribute ‘to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers’. Finally, if the member states adopt measures that distort competition and the principles of free market as laid down in the treaties, the Arts. 258, 259 and 348 of TFEU allow the Commission or any member state to bring that matter before the European Court of Justice. The Art. 260 of TFEU then stipulates that the Court’s decisions are binding and the member states that fail to comply are liable to fine specified by the Commission.

Notwithstanding the presence of these neoliberal provisions in the EU treaties, some authors such as Laurent Pech argued that the leading critics of neoliberalism ‘are mysteriously selective in their reading’.46 Pech therefore points out that TEU and TFEU also contain what he considers an ‘extensive set of social objectives’.47 Is it possible to confront such charge? Indeed, Pech is right when he notes that the present treaties explicitly mention a number of social commitments. One should thus recall the Art. 3.3 of TEU that states that the Union shall establish ‘a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment’ (it should be noted that some authors would certainly see argue a contradiction between ‘highly competitive’ and ‘full employment and social progress’). Similarly, the Art. 153 of TFEU recounts an extensive list of the objectives that ‘the Union shall support and complement’ to the activities of the member states. They range from the commitment to the improvement of working conditions (a) and working environment (b), to the combating of social exclusion (j).

Nevertheless, in the light of the actual institutionalisation of the EU treaties as recounted higher above, one should question the seriousness of these commitments. Surely, if that commitment carried more than rhetorical weight, the EU would not subsume social policy under that general neoliberal framework, which was analysed over the course of this essay. The goal of combating social exclusion, or building a truly social market economy is certainly not compatible with the weak institutionalisation of the social dialogue with the employees, absence of substantive social policy, weakly regulated common market that favours ‘high competitiveness’, or the policies of fiscal austerity promoted by the EMU and SGP. It is rather the case, as Apeldoorn pointed out, that such subscription to social policy goals is characteristic for the political project of embedded neoliberalism with its effort to co-opt the other social strata to what still remains essentially a neoliberal project. In the end, however, such support for social values does not go beyond mere rhetorical commitment.

Conclusion

As Douglass North suggested already in 1991, the structure of the EU, including both its constitutive treaties and its actual policies, is ‘not politically innocent, but rather facilitates or hinders the adoption of specific political programs’.48 In this essay it was argued that the model of capitalism promoted by the EU can be best described as embedded neoliberalism. To this end, a general model of neoliberalism was developed and consequently applied when analysing the development of the EU’s economic integration from Jean Monnet to the last amendment of the constituting treaties by the Treaty of Lisbon. Firstly, the claim that the neofunctionalist project of economic and political integration was inherently (neo)liberal was dismissed. Secondly, it was shown that in the 1980s the project of embedded neoliberalism, supported by the European Round Table of Industrialists, won over other two competing models of capitalism: neo-mercantilism and social democracy. The subsequent development in the EU, as best perceived in the establishment of Economic and Monetary Union and fiscal constraints imposed by the Stability and Growth Pact, then proceeded along the lines of embedded liberalism, with a limited commitment to social policy, which acquired market-enabling character. Finally, the neoliberal character of the European economic integration was confirmed by analysing the essential principles of the Treaty on European Union and Treaty on the Functioning of the European Union.

* I have written this paper in 2010 as a part of completing my MA European Studies at King’s College London. This version has a slightly reworked introduction that sets it in the context of the eurozone’s fiscal crisis.

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Mitzman, A. (2005), ‘Beyond the EU Constitution: Agenda for a sustainable Europe’, Counter Punch, 26 May.

Pech, Laurent (2007), ‘The European Project: Neither Neo-Liberal, Nor Socialist – A Reply to Andy Storey’, The Irish Review, Vol. 36, pp. 95-110.

Pollack, Mark A. (1998), ‘Beyond Left and Right? Neoliberalism and Regulated Capitalism in the Treaty of Amsterdam’, Working Paper Series in European Studies, Vol. 2, No. 2, pp. 1-43.

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Show 48 footnotes

  1. Hainsworth (2006), p. 104.
  2. Cassen (2007), p. 8.
  3. E.g. for the position from the right see Strafford (2009); and from the left Tsoukalis (2008).
  4. Indeed, the majority of constitutional theorists argue that a constitution should outline only the most general principles of the political unity with which the whole polity can identify. Cf. Schmitt (2008), pp. 59-74. This would leave the determination of concrete political norms, which have always more transient nature than the constitution, to the actual, democratically elected parliamentary majority.
  5. Cf. Apeldoorn (2002); Bonefeld (2002); Storey (2008). But consider Pech (2007), who disagrees with Storey and argues that the EU project also contains a substantial social dimension.
  6. Saad-Filho and Johnston (2005), pp. 1, 3.
  7. Cf. Bourdieu (1998); Chomsky (1999); Touraine (2001); or Saad-Filho and Johnston (2005).
  8. Thorsen and Lie (2000), p. 2.
  9. Harvey (2005), p. 2.
  10. Kendall (2003), p. 6.
  11. Hermann (2007), p. 62.
  12. Kendall (2003), p. 6.
  13. Mitrany (1994).
  14. Haas (1958); Gillingham (2003), p. 28.
  15. Cf. Benoist (2008).
  16. Blackburn (2005); Grieve Smith (2005); Mitzman (2005); or Storey (2008), pp. 76-77.
  17. Hermann (2007), p. 69.
  18. Eichengreen (2007).
  19. Quoted in Hermann (2007), p. 70. The original source is Gill (2003), p. 63.
  20. Hermann (2007), p. 71.
  21. Ibid.
  22. Hanson (1998).
  23. Scharpf (2002), pp. 647-648.
  24. European Round Table of Industrialists website.
  25. Apeldoorn (2002), pp. 78-82.
  26. Ibid., pp. 171-173.
  27. Ibid., pp. 78-82.
  28. Ibid.
  29. Apeldoorn (2002), pp. 158-89; Kol and Winters (2003).
  30. Storey (2008), p. 70.
  31. Ibid., p. 71.
  32. Apeldoorn (2002), p. 185.
  33. Scharpf (2002), pp. 645-670.
  34. European Commission (2010).
  35. Cf. Bieler (2007); Taylor and Mathers (2002), pp. 39.-60.
  36. Storey (2008), p. 71.
  37. Scharpf (2002), pp. 645-670.
  38. Begg and Bergman (2002).
  39. European Central Bank website.
  40. Apeldoorn (2002), pp. 162-170.
  41. Scharpf (2002), p. 648.
  42. Ibid.
  43. Talani (2008).
  44. Kesner-Škreb (2008), pp 84-85).
  45. European Council (2008).
  46. Pech (2007), p. 5.
  47. Pech (2007), p. 6.
  48. Quoted in Pollack (1998), p. 5.

Althusius: A Thinker of European Federalism

Johannes Althusius
Johannes Althusius

As the ‘F-word’ is increasingly discussed in the intellectual and political circles as a viable solution to the Eurozone crisis, it is useful to remind ourselves that there is more to federalism than the well-known model of the United States. In fact, there is an older strand of federal thought that is peculiar to Europe. And this unknown thinker whom I would like to present on the following lines can be rightly called its father. Readers will shortly discover that Althusius’s federalism is easily distinguishable from its American counterpart by its extension of the federal principles onto the society as a whole. The federation is not simply a kind of a nation-state that distributes political prerogatives between the institutions at the state and federal levels. Althusius’s European federalism goes much further below. It is already families, firms, towns and other socio-economic entities that are perceived as rightful holders of political and other rights, and who need to have a say in the decision-making of higher strata of society that contains them. This, indeed, might be precisely what is needed in building a functioning polity in such a complex social reality as we have in Europe.

Let us first briefly start with the life of Johannes Althusius (1557-1638) himself. Besides being a jurist and prolific Calvinist political thinker, Althusius was engaged in active politics of the city of Emden. As a syndic of that city, he had become the main instigator of the arrest of the city’s provincial lord, count of Eastern Frisia, by Emden’s city councillors that transpired on 7 December 1618. Althusius vigorously defended the councillors’ decision as a ‘legitimate act of self-defence and resistance’ against the provincial lord’s infringements on the city’s rights, considering it an ultimate resolve ‘warranted under every natural and secular law’.[1] As will become apparent with the discussion of his work, the right of resistance to tyranny of a government that does not respect the rule of law is a key part of his federal thought.[2] His most famous work Politica Methodice Digesta (Politics Methodically Digested, first published in 1603), which will be taken here as the main source of Althusius’s federal thought, in a similar vein justifies the right of the Dutch provinces to secede from the crown lands of the Spanish ruler.

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