What Does Europe Want?
The decisions facing Europe’s leaders and institutions in 2012 are nothing less than colossal. Attempts at the end of last year to cobble together a “comprehensive solution” culminated in the December 8-9, 2011 European Council summit started a process that will consume the continent for most of 2012. But questions remain as to the true nature of the crisis, how the EU can prevent a potential slide in the value of the euro and shore up Greece, and if a lumbering treaty-ratification process can get ahead of market’s expectations and fears. French and German leaders have stated repeatedly that a new treaty is a major step towards fiscal union. However, a sober analysis of the proposed measures in the treaty indicates that many of them came into existence by way of crisis-management policy in 2010 and early 2011.
This piece attempts to dissect the anatomy of the eurozone’s diffuse and often vexing decision-making process to determine:
What does Europe want?
The paper’s first section provides an analytical snapshot of the four main players in crisis decision-making: Germany,
the European Central Bank (ECB), France and the European Commission. These four actors are and will be essential for
the passage and implementation of policy instruments intended to pull Europe out of the crisis. This section is not a
comprehensive analysis of all actors – governmental or private – that can impact political outcomes in the EU. It is rather an attempt to capture players and policies that stand out in the debate on the eurozone’s short- and long-term future. The first part begins with an examination of Germany, the country at the heart of the eurozone, and the dynamics that drive the reluctant hegemon’s actions. It then looks at the ECB, the EU’s only credibly independent institution, which continues to be the only player with the latent power to bring immediate relief single-handedly. But the bank is plagued by treaty restrictions and internal ideological conflicts that impair its ability to act. The third part of this section delves into France’s role in bridging the gap between Europe’s two ideological factions while managing its own internal debate. A fourth and final part considers the Commission, which entered the crisis as a weakened institution but retains a role as the nucleus of some of the central questions about the future of fiscal and economic union. As such, the Commission has staked out stronger positions in the past two years.
The second section examines policy proposals that have emerged or are under consideration by eurozone leaders. These
options range from short-term instruments, such as re-capitalizing banks, to the longer-term re-wiring of the EU’s basic
economic governance. Other policies under review include the depth of European integration and the possible introduction of mutualized eurozone debt. Debates on all these issues could involve new agreements or treaty revisions.
This publication was assembled by the Bertelsmann Foundation North America based on interviews and research conducted in Europe and Washington, DC. This text was originally released on the eve of the December 2011 EU summit in Brussels and has since been updated to reflect the outcome of that gathering. Readers should note that events surrounding the eurozone crisis are changing rapidly.
This text is primarily meant as a primer for a US audience looking for better understanding and greater transparency of a
highly complex, fast-moving issue that has become the most important challenge on America’s foreign-policy agenda.
What Does Europe Want?
THE WHO AND HOW OF RESOLVING THE EURO CRISIS
Project Manager, Transatlantic Relations
Director, Transatlantic Relations
Program Associate, Transatlantic Relations