Ülo Ennuste Economics

papers and articles in wordpress

N. Jabko – put your money where your mouth is

Report review

Nicolas Jabko. 2011. Which Economic Governance

for the European Union? Facing up to the Problem of Divided Sovereignty

(SIEPS 2011:2 Report No. 2 March 2011 Publisher: Swedish Institute for European Policy Studies The report is available at http://www.sieps.se)

 From the Prefix: “… The current governance system exhibits clear

asymmetric features, with a common monetary policy at the EU-level

while economic policy is still in the hands of national governments.

In order for the EU to better tackle future crisis, European leaders now seems determined to reform the current system by strengthening the coordination concerning certain aspects of economic governance of the EMU which gives rise to a number of questions concerning, not least, sovereignty. … In this report, Professor Nicolas Jabko explores the critical issues of economic governance by tracing the origins of the problem and the quest for a stronger economic governance structure at the EU-level. The report highlights some of the key political obstacles that must be resolved. Derived from the current political discussion, the author considers three crucial problem areas for establishing stronger economic governance in the short term. …”

From Executive summary: “… The report begins by reviewing the existing literature on economic governance. Despite the fact that French politicians have talked about gouvernement économique for many years, there are few academic and policy papers fleshing out the notion in concrete terms. Some scholars have envisioned the problem of economic governance as a tractable problem that would be resolved over time. Others have considered economic

governance as a critical problem that could undermine the very existence

of the euro. The report highlights both the lessons and the shortcomings

of this literature. While the second interpretation has become more salient

over time and especially since 2008, the literature suggests no magic

formula to strengthen the European Union’s economic governance without

further encroaching on the economic sovereignty of its member states.

… The question now is whether member states are ready to continue moving

toward greater sovereignty at the EU level, or whether they will want to

reassert the national locus of sovereignty. Assuming that the member

states will not want to jettison the euro, the report concludes with policy

guidelines toward a more crisis-proof economic governance structure at the

EU level. … The challenge at this point is to shift toward an economic governance model that is realistic for the member states to adopt, yet bold enough to convince financial markets that the EU has found a credible development scenario for its Economic and Monetary Union.

The report considers three boundary conditions that dictate clear guidelines

for establishing stronger economic governance in the short term. First, the

member states are not willing to hear of any kind of transfer union. This

dictates that member states must find better ways to enlist the support

of financial markets for debt consolidation and fiscal discipline. Second,

the member states are reluctant to delegate more power to Brussels. This

implies that the debt consolidation framework must be externalized to

non-EU bodies or independent European agencies as much as possible.

Third, the member states are reluctant to see their autonomy curtailed. Any

new economic governance framework must therefore give as much say as

possible to governments in the decision-making process, in order to foster

ownership of potentially painful decisions by all euro-area governments.

… In the long run, a need to rebalance divided sovereignty within the EU is almost certain to emerge. If they want the euro itself to survive, the member states must be prepared to put their money where their mouth is.”

 NB: put your money where your mouth is – to do something rather than to just talk about it /”Congress needs to put its money where its mouth is and really support energy conservation”/ Cambridge Dictionary of American Idioms Copyright © Cambridge University Press 2006. Reproduced with permission)

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April 3, 2011 - Posted by | Uncategorized

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