European Union: Legitimacy and the Euro Crisis Management

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Table of Contents

Main Actors in the Management of the Euro Crisis
Problems of Legitimacy of the Management During the Euro Crisis
Conclusion
References

Since the European Union is currently suffering from a variety of problems associated with such recent developments as Brexit, the financial crisis, and the migration crisis, researchers have extensively studied whether the Union’s legitimacy is under threat. It is important to study this issue for identifying whether the member-states of the European Union could overcome the crisis and restore its legitimacy.

Economic and political experts have re-examined the foundations of democratic legitimacy of Western countries. It has been mentioned that debates about the European democratic deficit did not reach consensus, which meant that there was a significant conflict of standards associated with the Union’s conformity to both republican and liberal standards. An important argument many researchers presented is associated with the idea that the current crisis has managed to destroy the capacity of democratic member-states of the European Union to exercise their key governing functions in the environment of political and economic conditions.

In this paper, the exploration of the topic of legitimacy in the European Union will be presented through the review of relevant literature. Chapters included in the paper will discuss such topics as sources of legitimacy in the EU, the Eurozone crisis, main actors that should participate in the management of the crisis, as well as problems of the legitimacy of the management during crisis.

Main Actors in the Management of the Euro Crisis

Solutions targeted at the management of the Euro Crisis vary depending on researchers approaches to the issue. For instance, Scharpf (2012) stated that an obvious solution was to “stop defending the euro, to acknowledge the common responsibility for having created a dysfunctional supranational regime, and to seek agreement […]” (p. 30). Therefore, key actors in the management of the crisis are expected to address the problems and prospects of legitimation. Member state governments are among the principal actors of mitigating the Euro Crisis and usually are more prone to considering whether processes of management abide by throughput aspects of legitimacy (Rhinard, 2016). The European Commission is another actor in the management of the crisis since it is considered the main governing body that is exposed to the majority of disasters of any character, whether financial or political (Schmidt, 2015). It is also important to mention the role that the European Council can play in crisis management; the organization has recently contributed to the development of a crisis management framework that included new instruments targeted at the improvement of economic governance of member-states as well as the effective supervision and resolution of crises (Anghel, Drachenberg, & de Finance, 2014). Such an overhaul of the economic governance framework has a potential to resolve the shortcomings of the existing financial processes to subsequently strengthen the coordination and integration of the euro-area.

In order to elevate the burden of the Euro crisis, key players such as member-states, the European Commission, and the European Council have to initiate reforms at the national level that can include fiscal governance reforms, a Macroeconomic Imbalances Procedure, macro-prudential policies, the establishment of the Financial market union and the Economic Union (Praet, 2012). The support of the European Union for a wider range of support and solution programs is essential for facilitating democratic experimentation (Youngs, 2013). Such experimentation should put a start to local-level initiatives that key actors can implement to strengthen the fiscal discipline of the region. It is important to mention that the dialogue about the management of the Euro crisis should imply a greater variety of social partners that can also contribute to the elimination of not only fiscal but also employment, ecological, and social protection problems (Youngs, 2013). This can be challenging because many EU agencies still struggle to open themselves to received formal civic consultation and participation, which can subsequently hinder the process of decision-making and limit the benefits of crisis-induced social movements (Youngs, 2013).

The greatest challenge of the mentioned solutions is keeping up the reform momentum even at times of the most severe manifestations of the Euro crisis that hinders market conditions and prevents nations from restoring the normal conditions in the market. In this case, the support of the European Central Bank (ECB) is necessary to resolve the crisis and preserve the purchasing power of the Euro currency through the establishment of secure environments within the Eurozone (Papasavvas, 2015). Overall, the main actors in managing the Euro crisis should unite for sustaining the reforms.

Problems of Legitimacy of the Management During the Euro Crisis

A well-functioning system of governmental crisis management is the one that has efficient governance capacity and legitimacy, as mentioned by Christensen, Legreid, and Rykkja (2016). The contribution of authorities can be significantly limited by the lack of legitimacy that will subsequently result in poor crisis management performance. To address issues of legitimacy during the process of the Euro crisis management, both cultural and structural contexts matter as well as the nature of the crisis itself (Christensen et al., 2016). It has been identified that problems of legitimacy could be addressed through the integration of adaptation and flexibility, which are significantly limited by “political, administrative, and situational context” (Christensen et al., 2016, p. 887). As mentioned by Youngs (2013) in the article “The EU beyond the crisis: The unavoidable challenge of legitimacy,” the management of the Euro crisis is substantially limited by the fact that the existing proposals of resolving the crisis are dated and lack the acknowledgement of a variety of social movements that contribute to the change of political dynamics. Also, the political reforms proposed by EU governing bodies cannot debate the existing tenets of European democracy and legitimize only the previously implemented strategies.

Considerations of variables of legitimacy, namely throughput and output are essential since they directly influence the appearance of challenges in the management of the crisis. Throughput variables imply the review of the existing decision-making process within the EU institutions while output variables are associated with the final results of the process (Demetriou, 2015). As mentioned previously, the existing solutions that the EU governing bodies have proposed lack focus on important social movements, which means that the throughput variable, which is associated with the process of overcoming the crisis, is significantly limited. With regards to the output variable, which is associated with the final results of the process of crisis management, the changes in the political and economic models have contributed to cooperation between member-states and have enhanced the confidence in the established changes. It is essential to mention that the process of dealing with the Euro crisis has led to the development of a political conundrum, which is greatly challenging for the Union. Researchers have advised governing bodies to reflect on the processes that went wrong during the European integration in the first place to determine what possible alternatives can be implemented to ensure the prosperous development of the EU (De Angelis, 2016).

It is essential to mention that the output and throughput variables of crisis management are also significantly undermined by limitations in capabilities and incentives of the political systems. It has been shown that the representative bodies of the EU associated their power with “capacity to overcome asymmetries of information that otherwise put them at a disadvantage to the very executive bodies they seek to control” (Lord, 625). This is difficult for national EU governments since they struggle with controlling the decisions made by key institutions and therefore need to address significant opportunity costs. In addition, decisions involved in the management of the Euro crisis contribute to problems with legitimacy due to the political inequality of member-states.

In the context of controlling EU-related matters, parliaments of countries are unequal in their power, which means that decisions made by powerful players are usually transferred to countries with lower power capacities (Fossum & Menendez, 2014). Lastly, collective action problems should also be mentioned in the discussion about legitimacy issues in overcoming the Euro crisis. Such problems are associated with the lack of financial coordination between member-states that make it easier for the monetary union to disturb the environment or take irresponsible risks. Therefore, it is strongly advised for the European Union to develop a well-managed macroeconomic framework, in which no governing body will be able to impose any negative regulations on any other body (Fossum & Menendez, 2014). When developed correctly, such a framework will not only contribute to the resolution of legitimacy problems but also will include both high- and low-power member states into the discussion about the most appropriate solutions of Euro crisis management.

Conclusion

Traditionally, evaluations of legitimacy have been discussed in the context of political systems as a whole (Wimmel, 2009). In the course of the exploration of processes involved in the management of the Euro crisis, the issue of legitimacy has been raised in order to determine how different EU institutions have contributed to the elimination of the problem and whether their attempts have been limited by legitimacy. It can be concluded that legitimacy can reflect the social and political agreements that guide relationships between EU citizens and their political leaders; when coercive governance is put in place or when welfare cannot be guaranteed to citizens, legitimacy can diminish, and public trust can reduce (Roth, Nowak-Lehmann, Otter, 2013).

The Eurozone crisis has been subjected to analysis within the context of legitimacy ideas because it triggered a series of political and economic changes that challenged the Union and weakened the economy. Fiscal imbalances and budget deficits in regions such as Greece needed the development of cohesive frameworks for crisis resolution. It has been identified that the lack of consensus between governments and citizens as well as power imbalances within the EU could hinder the process of crisis management. A stable macro-economic framework should be put in place in order to bring member-states together and overcome the crisis through the engagement of the public and the integration of innovative solutions instead of the recycling of old ideas that have hindered legitimacy in the first place.

References

Anghel, S., Drachenberg, R., & de Finance, S. (2016). The European Council and crisis management. Web.

Christensen, T., Legreid, P., & Rykkja, L. (2016). Organizing for crisis management: Building governance capacity and legitimacy. Public Administration Review, 76(6), 887-897.

De Angelis, G. (2016). Political legitimacy and the European crisis: Analysis of a faltering project. European Politics and Society, 18(3), 291-300.

Demetriou, K. (2015). The European Union in crisis. Explorations in representation and democratic legitimacy. London, UK: Springer.

Fossum, J., & Menendez, A. (2014). The European Union in crises or the European Union as crises? Web.

Papasavvas, C. (2015). Responsibility of the ECB in managing the European Debt Crisis: Towards a European Banking Union? Web.

Praet, P. (2012). Managing financial crises: The role of the ECB. Web.

Rhinard, M. (2016). The European Union’s legitimacy as a crisis manager. Web.

Roth, F., Nowak-Lehmann, F., Otter, T. (2013). Crisis and trust in the national and European governmental institutions. Web.

Scharpf, F. (2012). Legitimacy intermediation in the multilevel European polity and its collapse in the euro crisis. Web.

Schmidt, V. (2015).The Eurozone’s crisis of democratic legitimacy: Can the EU rebuild public trust and support for European economic integration? Web.

Wimmel, A. (2009). Theorizing the democratic legitimacy of European governance: A labyrinth with no exit? European Integration, 31(2), 181-199.

Youngs, R. (2013). The EU beyond the crisis. The unavoidable challenge of legitimacy. Web.

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European Union: Legitimacy and the Euro Crisis Management

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