Jan 31 2014

The EU’s new economic governance is blurring the boundaries between European competences and domestic sovereignty

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As part of the LSE EUROPP series on the Dahrendorf Symposium.


logoThe financial crisis has brought about a number of new European initiatives designed to coordinate national economic policies in the name of stability and growth. Alexander Ruser assesses one such initiative: the issuing of country-specific policy recommendations to EU states. Using a qualitative data analysis of the content of these reports, he writes that governments are being urged to follow policy advice that seriously interferes with national sovereignty in order to demonstrate solidarity with their fellow members of the Eurozone.

In my previous EUROPP article, I wondered whether the European Union is losing political influence in international environment negotiations. I argued that because of changing international relations, the EU may become less important as a normative power on the global scale. But what about the EU’s normative basis itself? Have the challenges of recent years affected its core values, such as ‘solidarity’ and ‘equality’?

Political reaction to the global financial crisis, and in particular to the sovereign debt crisis, has focused on making European economic governance more efficient. In addition to immediate emergency action like rescues and bail-out packages, the most important structural reform was the approval of the ‘European Semester’. Its implementation marked a paradigmatic shift in economic governance. Budget surveillance and control mechanisms have replaced voluntary initiatives such as benchmarking and intergovernmental cooperation like the ‘Open Method of Coordination’ (OMC).

This new framework for economic governance provides important roles for the Council of the European Union and the European Council, while the European Parliament finds itself reduced to an advisory function. It clearly favours intergovernmental decision-making over democratic legitimation at the European level. As a reaction to global financial turmoil, recent government reform in Europe has been driven by a desire to fix the flaws of monetary union, encourage financial sustainability and increase its efficiency and reliability.

Unlike more future-oriented reforms of the past, the new economic governance seems to lack political vision. Instead, it tinkers with the symptoms of the crisis and indicates the EU’s adoption of a more technocratic approach, stressing agreement upon what is ‘necessary’ to save the euro and restore stability. The provision of annual, country-specific policy recommendations is among the most important governance innovations to reach this goal.

Aiming at providing a blueprint of the respective requirements, these reports (which are proposed by the European Commission but are adopted and finalised by the European Council in July of each year) differ considerably from soft law mechanisms like the OMC. As a result of intergovernmental deliberation, the European Semester seeks to increase national responsibility for action. Part of this process is the blurring of European competences and domestic sovereignty. An examination of the county-specific policy recommendations from the past two years reveals that policy coordination under the new governance framework is far from limited to fields of clear European competence.

Qualitative data analysis of the 2012 policy recommendations shows that elected bodies in 15 countries were advised to make significant changes to their pension systems (especially to raise the statutory retirement age). Six governments were advised to reform national healthcare and almost a third were called on to encourage ‘productivity responsive wage-setting’ which could mean substantial changes to collective bargaining traditions. In contrast to policy fields closely affiliated with Brussels (like trade and research politics), policy recommendations on social policy and domestic taxation indicate a de facto reduction of domestic political manoeuvrability.

Table: Policy advice in the 2012 country-specific Council Recommendation

Note: Author’s own calculations, QDA Miner

 These findings may mark the beginning of revolutionary. but consensual changes to the normative basis of the EU. National governments are being urged to follow policy advice that seriously interferes with national sovereignty in order to demonstrate their solidarity with their fellow members of the Eurozone. At the same time, the strong position of intergovernmental institutions under this governance framework makes sure that the creditor Member States can influence specific policy recommendations. Further harmonisation of domestic politics could also make its way in, with national governments lacking the power to resist.

On the European level, insisting on maintaining national sovereignty displays a lack of solidarity. At home, policy recommendations claim the technocratic appeal of being necessary in order to regain economic stability not only within a particular country, but for the Eurozone as a whole. This may lead to a substantial redefinition of the boundaries between domestic and European politics. When national governments are urged to reform social security, collective bargaining or taxation because of a necessity to do so defined elsewhere, the question of the legitimacy of European politics – especially given the limited influence of the European Parliament – has to be addressed again.

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Jan 22 2014

‘A Strategy for Southern Europe’: Lisbon Launch

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By Dr Rui Lopes, Associate at LSE IDEAS and researcher at Instituto de História Contemporânea (IHC).

2013_11_22_Portugal_WEBThe Portuguese launch of the LSE IDEAS Special Report ‘A Strategy for Southern Europe’ – released by the Southern Europe International Affairs Programme at LSE IDEAS – took place on 23 November 2013, at the Teatro Nacional Dona Maria II, in Lisbon. The event was organised in collaboration with the Instituto de História Contemporânea (IHC), based at the Universidade Nova de Lisboa. After being introduced by high-profile academics, the report served as starting point for a roundtable where renowned Portuguese analysts discussed the specific situation of Portugal regarding the themes addressed in the report.

The first panel presented the Special Report and commented on its context and potential.  The session began with a brief introduction by the head of the national theatre, Carlos Vargas, followed by Professor José Maria Brandão de Brito, representing the IHC, who highlighted the overall contribution of the report for public debate

Professor Nuno Severiano Teixeira, speaking both as Vice-Rector of Universidade Nova de Lisboa and as one of the  contributors to the report, emphasised that while the present crisis in Southern Europe partially derives from endogenous factors, some responsibility should also be attributed at a European level. Financial austerity, although necessary, is an insufficient response, as clearly demonstrated in the case of Portugal, where salaries and pensions have been cut and taxes increased, resulting not only in economic recession and higher unemployment but also in a rise of public deficit and debt. According to Severiano Teixeira, these points, illustrated in the report, need to be taken into account in the narrative about the crisis and a new discourse – rooted in serious academic research such as this – should promote political and diplomatic alliances within the EU.

Professor Arne Westad, director of LSE IDEAS, stated that all of Europe is now in a fundamental crisis in terms of direction – not just economically and structurally, but in terms of values such as pluralistic decision-making and respect for sovereignty within a cooperative framework. Westad shares with the report the conviction that, despite enormous differences between the countries of Southern Europe, their situation has enough in common that comparisons can be drawn and solutions worked out beyond a national level.

The second panel was a roundtable discussion entitled ‘Portugal and the Crisis in Southern Europe’, chaired by journalist Nicolau Santos, from the newspaper Expresso.

Ambassador Francisco Seixas da Costa, Executive Director of the North-South Centre of the Council of Europe, outlined that in Portugal’s historical geostrategic triangle – based on strong relations with America, Africa and Europe – the European corner has been privileged since the decolonisation of the Portuguese empire, which explains the current frustration with the EU’s lack of solution for the crisis. Seixas da Costa acknowledged the value of working closely with the rest of Southern Europe – as well as with northern Africa – but expressed scepticism over the report’s proposal for a regional alliance, at least in the short-term. The answer, for Seixas da Costa, can still be found above all in the EU institutions, hence the need for a serious debate preceding the European parliamentary elections in April 2014.

Professor José Reis, from the economics department of the Coimbra University, postulated that Southern European countries are undergoing the institutionalisation of a new social and political European model that places them at the negative pole of an increasingly asymmetrical EU. The first stage of Europeanisation, which sought to temper a liberal approach towards the market with investment in a strong welfare state, was interrupted in the mid-1990s, creating serious problems of competitiveness in Greece, Portugal and Spain. This produced a surplus of financial capital in the founding members and a deficit in the countries that had joined the EU more recently, with the former channelling their surplus into the credit boom that became the main basis of Southern European economic growth. Now the new model for Southern Europe has become an austerity-based political economy that targets the region’s welfare state and labour costs. Reis criticised this option, pointing out in particular that the alleged need to adjust labour costs is a profound fallacy, as in practice the region’s economic evolution has not been limited or pressured by the weight of salaries.

Dr António Costa Silva, of Partex Oil and Gas, focused on the topic of energy, claiming that Southern Europe will not be able to overcome the present crisis without reducing expenses and supporting sectors that can generate wealth.  He explained that Portugal is spending considerably less on the import of oil, gas and coal than it did 10 years ago, as a result of both its investment on renewable energies since 2005 and the crisis’s effect in declining consumption. Nevertheless, according to Costa Silva, the country is still paying an unsustainable energy bill, particularly in the field of transportation, which accounts for 36% of national energy consumption due to the lack of meaningful public transport policies and the exponential expansion of private car ownership since the early 1990s. Professor João Peixoto, based at the economics and management institute ISEG, began by supporting the report’s conclusions regarding migration towards Southern Europe. Focusing on the Portuguese case, Peixoto called attention to the fact that emigration levels have surpassed those of the 1960s – when political and socio-economic conditions drove away 1 million Portuguese – and that for the first time the number of people emigrating is larger than the number of births, thus enhancing the country’s already existing demographic crisis to new extremes. He explained that for Portuguese migrants, as for Spaniards and Greeks, the main destinations are EU countries above the Pyrenees – particularly in the case of the more qualified youth. While Southern Europe loses experts needed to jump-start its economy, host countries benefit from migrants that help solve their demographic problems and relative lack of qualified labour, with the added advantage that in northern European societies there is less xenophobic resistance to Southern European migrants than to other population groups. The process therefore reinforces the stark regional asymmetries within the EU, leading Peixoto to conclude that the current trend needs to be offset, namely through investment in Southern Europe.

Professor Brandão de Brito, based at ISEG and IHC, focused on the failure of the austerity programme as applied to Portugal, where despite the government’s public refutation preparations are already underway for the possibility of a second bailout. Although the programme was scrupulously undertaken – earning nine positive evaluations by the Troika – public finances and the deficit have not come under control. Unemployment and poverty remain at unsustainable levels as a result of the violent economic contraction imposed by the memorandum negotiated with the Troika behind closed doors. Besides Lisbon’s passive acceptance of the memorandum’s ultra-liberal approach, Brandão de Brito denounced the document’s punitive dimension. Under the notion that Portugal lived above its means, a policy of harsh impoverishment is being followed. Brandão de Brito also expressed concern over the off-hand and obscurely negotiated privatisation of valuable and strategic assets like energy companies, airports and the postal serviceThe situation is aggravated by the lack of understanding regarding the need to pursuit an alternative path – the only options put on the table are either a second bailout or a precautionary programme along the same lines, which would mean turning austerity into the norm and further postponing economic growth. Besides endorsing the Special Report’s proposal, Brandão de Brito suggested the creation of a European financial union, as well as an internal rescue mechanism that could replace the IMF and stay closer to the rules and spirit of the European treaties. He stressed that he does not demand the debt be pardoned, but asks for time to recover and to establish a framework of shared economic sovereignty more suited to the dignity and self-esteem of all European countries.

A Strategy for Southern Europe was launched on the Monday 14th October at The EU in the Eye of the Storm.

For more information about this report please contact Zoi Koustoumpardi here.

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Jan 21 2014

Egypt: Towards an Algerian Scenario

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By Dalia Ghanem-Yazbeck, research analyst at the Carnegie Middle East Center.


343110_Egypt-demonstrationsIt is hard to watch the events unfolding in Egypt today without drawing a parallel with the Algerian situation in 1990. The images of demonstrations and clashes between Egyptian security forces and the Muslim Brotherhood are eerily reminiscent of those carried out by the Algerian People’s National Army (APNA) against the Islamists and supporters of the Islamic Salvation Front (FIS). Will history repeat itself, in Egypt this time?

The armed conflict that took place in Algeria in the 1990s has root causes dating back to the 1980s, and even further, to the Algerian independence in 1962. During the 1980s, Algeria lived the “Berber Spring” (1980), followed by riots in Constantine (1986) and finally the riots of October 5, 1988. During these riots, the people expressed their discontent with the political and socio-economic situation, as have the peoples fuelling the so-called “Arab Spring” since December 2010. Indeed, how can one not be reminded of the Algerian youth of October 5 1988  in the streets of Didouche Mourad and la Grande Poste when seeing young Egyptians in Tahrir Square? Both yesterday’s “hittists” (from the Arabic word for wall “hit”, colloquial term describing young unemployed Algerians who lean against walls all day) or today’s Egyptian “aawatliya” (unemployed), chose any representation of the government as their main target. Both groups expressed their dissatisfaction, their social and cultural suffocation, and their “mistrust” of leaders which they saw as “profiteers of the system” whose policies generated poverty, corruption and cronyism.

In Algeria, the events of October 1988 led to economic and political reforms, the most notable one being the adoption of a multiparty system in the Constitution of 23 February 1989. Egypt’s January 25 revolution led to the removal of Hosni Mubarak and the victory a year later of the Islamist Mohamed Morsi.

It goes without saying that Algeria is not Egypt. The Egyptian situation differs from that of Algeria in the 1990s in that the army’s removal of Morsi followed massive popular protests that accused the elected president of highjacking Egypt’s revolution. In Algeria, the disruption of the electoral process did not enjoy the same legitimacy given that the Islamic Salvation Front (FIS) wasn’t in power and was seen as the “saviour” who would put an end to more than thirty years of National Liberation Front (FLN) rule.

However, these differences do not mean that there isn’t a chance that the Egyptian situation could evolve similarly to the Algerian scenario of the 1990s: indeed, as was in Algeria, there is a “rupture” between the Army and the Islamist movement. The situation is especially concerning in Egypt because the Muslim Brotherhood had won the election fairly. Consequently, they consider that they are within their political rights and deem it their duty to fight for the power that was taken away from them.

The removal of the legitimately elected President Morsi is now deemed a catalyst of sustained violence. Hardliners within the Muslim Brotherhood are violently reclaiming what was forcefully taken away. It is important to recall that in Algeria, the disruption of the electoral process allowed the radical wing of the Islamist movement to strengthen its deep conviction that the only possible solution was to take up arms. In their eyes, a peaceful political process with the “taghout” [apostate] and “moustabid” [tyrant] would prove vain. The imposed end of the Algerian electoral process generated deep disappointment, resulted in a proliferation of armed jihadi groups, among them the GIA (Armed Islamic Group), and a conflict lasting over 10 years ensued, accounting for 150,000 deaths and some 6000 missing.

The similarities between Algeria and Egypt don’t stop there: the two armies’ strategies in dealing with Islamists follow a similar pattern. Additionally, with the introduction of a curfew and the restoration of the emergency rule, one notes a particular choice of terminology. Egyptian authorities speak in the manner of their Algerian counterparts, by describing the protestors as “terrorists”. In Algeria, the military spoke of an ‘anti-terrorist’ struggle and ‘total war against terrorism’; in Egypt, the army headed by General Al-Sissi speaks of a ‘strong answer’ in its ‘fight against terrorism’. The Algerian national public television network and part of the mass media, repeated the slogans “we will defeat terrorism” or “all together against terrorism” both in Arabic and in French. Currently in Egypt, private and public television channels depict a permanent banner reading “Egypt fighting terrorism” in English and Arabic. This terminology was institutionalized on December 25, 2013 when the Egyptian government through his vice-Prime Minister, Hossam Eissa, declared the Muslim Brotherhood and its political showcase FJP (Freedom and Justice Party) a “terrorist organization”. This indicates that members of the Muslim brotherhood are now under the anti-terrorist law promulgated in 1992 that can lead to the death penalty.

The repression of Egyptian security forces as well as the arbitrary executions and torture of prisoners are playing a key role in the escalation of violence in Egypt. By dint of intimidation and harassment, a significant number of Muslim brotherhood members and members of the Islamist movement in general, will be inclined to establish or join armed groups to satiate their thirst for vengeance. Sinai is witnessing the birth of various armed groups that are launching waves of attacks against security forces. That was the case on October 7 2013, in the town of El-Tor where a Police headquarters was attacked, killing 4 people and injuring more than 50. On the same day, an army convoy was attacked in Ismailiya (East of Cairo), killing 6 soldiers. The latest attack targeted the Police Headquarters of Daqahleya (Mansoura)  and led to the death of 15 people and injured more than a hundred.

A further similarity between the Egyptian and Algerian armies is illustrated by the fact that both demonstrated an underlying common political strategy. This consists of decimating the Muslim Brotherhood leadership, as proven by the arrest of the supreme guide, Mohamed Badie. As in Algeria where FIS leaders such as Hachani, Madani and Belhadj were arrested, decimation of the Egyptian leadership implies a strengthening of party hardliners and Salafi groups already established in the Sinai desert, essentially harming those who are in favor of negotiations. Decimation of the leadership means creating an acephalous organization whilst eliminating the possibility of negotiating. With the dangerous presence of Al Qaeda in the Maghreb in general and in Egypt in particular (with its branches Ansar al-Jiha and Ansar Beit al-Maqdis in Sinai), the Muslim Brotherhood’s dissolution and its criminalization as a “terrorist group” is offering the most radical members a viable reason to go underground and engage in jihadism.

One thing is certain, by killing the “first” 800 Islamists in Rabia’a Adawiya encampment in 19 August 2013, the Egyptian army offered the Muslim Brotherhood their first martyrs. It is difficult to foresee what will happen in the near future. The need to avoid a total radicalization of the Islamist Movement in Egypt and a unification of armed jihadi groups under one umbrella reminiscent of the GIA in Algeria in the 1990s seems crucial. The political actors need to find a peaceful and workable solution that can respect the will of all segments of Egyptian society including the Muslim Brotherhood. An “eradicative” solution as suggested by General Amr: “We are 90 million Egyptians an there is only 3 million of Muslim Brothers. We need six months to liquidate or imprison all of them. This is not a problem; we have already done in the 1990s” is inconceivable. It will lead to a civil war and Egypt, like Algeria, would live its “black decade”. A clean break with the past will prove difficult but by ending waves of arrests and violent repression, releasing President Morsi, decriminalizing the Muslim Brotherhood and giving it a legal and clear status, negotiations between the two parties could be conceivable.


Dalia Ghanem-Yazbeck is a research analyst at the Carnegie Middle East Center. She is a political scientist with expertise in jihadism, political violence, extremist violence, and terrorism, with a focus on Algeria.

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