europe and the future of international relations

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Europe and the Future of International Relations

Rodrigo C. SerranoNew York, NY

Direct 305-510-0181Email [email protected]

Websites:http://rcsinvestments.wordpress.com

http://rationalcapitalistspeculator.tumblr.comhttp://www.linkedin.com/pub/rodrigogserrano

October 22, 2012

Since the 2008 financial crisis the foundations of the global economy have been in repair,translating into a prolonged period of economic frailty. Against this backdrop, social andpolitical tensions have increased between citizens and government, international institutionsand governments, and individual nation states. This murky political environment is fertileground for international relations theory to: produce a better understanding of the forcesaffecting these developments, as well as offer potential solutions to these increasingly apparentconflicts.

The European debt crisis remains the largest challenge facing the global economy. A negativeresolution emanating from the worlds largest economic bloc would cause harmful rippleeffects worldwide in global trade flows. More importantly, it could also mark a paradigm shiftin international relations, dealing a critical blow to what has been a relentless trend towardsliberalism since the end of World War II, while providing fecund ground for a resurgence inrealist ideology. Interestingly though, constructivism may be at the forefront in explaining thecurrent dilemma between the European core and its periphery. It is therefore important forofficials and institutions in leadership positions to analyze the situation through aconstructivist lens.

Given the fast-paced nature of the political situation in the Eurozone, it is important to invokea constructive approach when analyzing the competing forces affecting the region. Presently,we are witnessing a clash between long-standing and embedded regulative norms versusrelatively recent constitutive norms. Both classes are best defined in Margaret Keck andKathryn Sinkkinks article:International Norm Dynamics and Political Change. Scholars acrossdisciplines have recognized different types of categories of norms. The most commondistinction is between regulative norms, which order and constrain behavior, and constitutivenorms, which create new actors, interests, or categories of action (Keck and Sikkink 1998,p.891).

In peripheral nations such as Spain, Greece, and Italy, long-standing social welfare systemshave served to entrench a cohesive array of regulative norms among society commensuratewith a distinctive and generous standard of living. Meanwhile constitutive norms, such as thedesire to erase the horrid memories of World War II along with the desire for economicprosperity, converged in the mid-to-late 1990s to create the European Monetary Union(EMU). Ironically, the blocs defining characteristic, the Euro, is now the impetus of thecurrent conflict between these norms.


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Whereas Germany, still staggering under the financial burden of reunification, impressivelymassaged down its labor costs, trimmed its welfare spending, and became competitive again,many of the peripheral countries allowed their unit labor costs to soar (Garton Ash Sept/Oct2012, p. 3). In order to resolve the crisis, labor productivity must improve and labor costs

lowered throughout the periphery to better compete in todays demanding global marketplace.This means that social welfare systems in these countries will need to be substantiallycurtailed. In essence, for regulative norms throughout the periphery, the Euro and kryptoniteare akin.

The discordance of these two powerful sets of norms has given rise to political activist groupssuch asLos Indignados in Spain and anti-Euro protesters in Greece, respectably demanding asoftening of austerity measures and in the extreme case, advocating an exit from the EMUaltogether. Like the Arab Spring, these groups bring to light what Ann-Marie Slaughter callsThe New Foreign Policy Frontier. But [Hillary] Clinton herself insists that 21st-centurydiplomacy must not only be government to government, but also government to society and

society to society, a process facilitated and legitimated by government. That much broaderconcept opens the door to a do-it-yourself foreign policy, in which individuals and groups caninvent and execute an idea -- for good or ill that can affect their own and other countries inways that once only governments could. (Slaughter 2011, p.1-2). The aforementionedgroups are having an increasing effect on German and European Union (EU) policy, withGermanys Christian Social Union party leader Horst Seehofer recently softening his stanceon Greek austerity and Angela Merkel appearing more receptive toward Spain requesting aidwithout further conditionalities.

Moreover, the conflict of these norms increases the threat of internal war, which adds anotherlayer of complexity to the tenuous balance of power between sovereign states versus the

supranational organization that is the EU. As such, free trade that jeopardizes a states keyindustries or allows potential adversaries to becomerelatively stronger may not be in a statesinterest even if the economy of the state gains in an absolute sense. Better to subsidize aninefficient group of producers than face the threat of a violent challenge to the regime (David1998, p. 89). In simple terms, core countries demanding further austerity from an alreadyrecession-wracked periphery should tone down their rhetoric and give these countries a muchneeded breather or risk an anti-Euro political faction upending all progress up to date.

While examining the current situation in Europe through a constructive viewpoint seems mostprudent, it does not significantly discount realism as a viable alternative when analyzing thecurrent state of affairs. On the contrary, realism remains an underlying force in the current

precarious condition between the core and periphery nations. The economic expert,dominated in the main by laissez-faire doctrine, considers the hypothetical economic interest ofthe world as a whole, and is content to assume that this is identical with the interests of eachindividual country. The politician pursues the concrete interest of his country, and assumes (ifhe makes any assumptions at all) that the interest of the world as a whole is identical with it

Laissez-faire, in international relations as in those between labor and capital, is the paradise ofthe economically strong. State control, whether in the form of protective legislation or ofprotective tariffs, is the weapon of self-defense invoked by the economically weak (Carr


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2008, p. 74). Furthermore, beneath the veneer of constructivist analysis and potentialsolutions that such analysis may provide, lies the specter of a powerful resurgence of cruderealist ideology. A negative settlement within Europe could lead to a fragmenting EMU intandem with a significant reduction in the perceived power of a panoply of liberal-style

institutions such as the European Commission, the European Parliament, the EuropeanCentral Bank (ECB), and the International Monetary Fund (IMF); dealing a critical blow toa bedrock of Institutional Liberalism, one espoused by Robert O Keohane: Collapse isavoided because as Joseph Nye and I wrote inPower and Interdependence, a set of networks,norms and institutions, once established, will be difficult either to eradicate or drasticallyrearrange (Keohane 2012, p. 136). Additionally, the likely subsequent global economicdownturn would create an effective incubator for a renaissance of realism not only in Europe,as discarded ex-EMU nations are once again left to fend for themselves, but abroad, as aworsened economic climate leads to declining trust and an increased focus on individualinterests.

While liberals may point to the importance of economic interdependence as well as aneventual climatic repeat of the Monnet method as key factors in the ultimate creation of apolitical and fiscal union, the chronic competitive divide between European core countries andtheir peripheral counterparts increases the likelihood that austerity will continue, furtherfueling the popularity of nascent nationalistic political parties, such as the Golden Dawn inGreece, the 5 Star Movement in Italy, and both the Basque Nationalist Party and EH Bildu inSpain. At some point, one of these parties will assume power setting the stage for arepudiation of the countrys odious debt. As Dani Rodrik stated in The Globalization Paradox,When globalization collides with domestic politics, the smart money bets on politics (Rodrik2011, p. 188).

From a realist point of view, Kenneth Waltzs thoughts on the security of organizationsdeserve intense introspection. Organizations have at least two aims: to get something doneand to maintain themselves as organizations. Many of their activities are directed toward thesecond purpose In making political decisions, the first and most important concern is not toachieve the aims the members of an organization may have but to secure the continuity andhealth of the organization itself (Waltz 1979, p. 111 cf. Diesing 1962, p. 198-204; Downs1967, p. 262-70). Indeed, to ensure its own survival an institution is likely to break the rules.An ongoing and increasingly appropriate example of this behavior is the ECB and its recentannouncement of Outright Monetary Transactions (OMT), a policy that seemed unthinkableonly a year ago. This policy ventures into the gray area with regards to monetizinggovernment debt, which is illegal as per Article 123 of the banks founding treaty. While

Mario Draghi continues to reassure that the bank will under no circumstance begin printingmoney to buy government debt without strict conditionalities from Eurozone governments, itwould be nave to confidently think that they would simply stand by if the survival of theEurozone solely depended on committing to cap government bond yields. While theres asignificant probability that, if faced with extinction, the ECB would resort to monetaryfinancing, would Germany, haunted by its past experience with Weimer hyperinflation (dueto printing money), acquiesce to such a policy?


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In the face of such significant and critical challenges facing the global economy and politicalorder, what can be done? Using a constructivist approach, one must be cognizant of thestrengthening trend of nationalistic sentiment and possible development of ensuing norms inperiphery countries. It is of great import that these trends are arrested by implementing

various targeted, profound, and didactic educational campaigns throughout Europe, mostimportantly in core countries, so as to encourage continued cooperation (fiscal stimulus?) inexchange for sustained efforts on the part of periphery countries to reconstruct their labormarkets. Nations under intense economic hardship need to feel that core countriesunderstand their dilemma and that they are committed to their long-term prosperity.Demanding continued austerity without some sort of relief risks a breakdown of trust

between both poles. Additionally, award-winning Czech journalist Jan Machek, speaking atColumbias School of International and Public Affairs on October 4th, advocated educatingEuropean citizens about the constitutional structure of Federalism and the fact that it is notcentralism. Perhaps these educational policies will lead to the socio-dynamic version ofcritical mass. All in all, these strategies require immense patience from all parties. An

alternative policy may also lie in the realization that we have a tension between nationaldemocracy and global markets that is extremely close to its breaking point. From DaniRodriks The Globalization Paradox: How do we manage the tension between nationaldemocracy and global markets? We have three options. We can restrict democracy in theinterest of minimizing international transaction costs, disregarding the economic and socialwhiplash that the global economy occasionally produces. We can limit globalization, in the hopeof building democratic legitimacy at home. Or we can globalize democracy, at the cost ofnational sovereignty The menu captures the fundamental political trilemma of the worldeconomy: we cannot have hyperglobalization, democracy, and national self-determination allthat once We cannot fudge the role of nation states and proceed on the assumption that weare witnessing the birth of a global political community Hyperglobalization cannot be

achieved, and we should not pretend that it can (Rodrik 2011, p. 200). Perhaps it would bemore sensible to pare back visions of supranational governance in exchange for increasedflexibility within the current political order.

The financial crisis in 2008 has resulted in a protracted period of economic frailty, which hastested the resiliency of todays global political order. Increased tensions, not only in Europebut also throughout the world, must be diligently analyzed to determine their causes in orderto present effective and sustainable solutions to ameliorate their negative effects.

In a theoretical sense, liberalism helps little to solve the current dilemma in Europe. In fact,one could say that the region is experiencing an overdose, as institutions such as the European

Parliament, European Commission, IMF, G-8, OECD have thus far failed to resolve thecrisis. Todays circumstances require thinking outside the box and embracing constructivismas a tool to both evaluate the brisk-paced nature of the Eurozone debt crisis as well asproduce potential solutions that focus on educating the citizens of Europe on the intricacies ofa currency union and constitutional federalism. It would also be wise to ponder the idea ofwhether a supranational government could exist. Proceeding down a path with a likely dead-end would consume precious resources and lead to widespread suffering among every daycitizens.


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References

1.Martha Finnemore and Kathryn Sikkink, International NormDynamics and Political Change (International Organization,

Vol. 52 No. 4, International Organization and Fifty:Exploration and Contestation in the Study of World

Politics; MIT Press; Autumn, 1998) pp. 887-917.

2.Anne-Marie Slaughter, The New Foreign PolicyFrontier, The Atlantic(July 2011)

3.Kenneth Waltz, Theory of International Politics (Reading:Addison-Wesley 1979) pp.102-128.

4.Edward Hallett Carr, Realism and Idealism in Richard K.Betts, ed.Conflict After the Cold War: Arguments on Causes

of War and Peace, Third Edition (New York: Pearson-Longman2008)

5.Steven R. David, The Primacy of Internal Warin StephanieNeuman, ed., International Relations Theory and the Third

World(New York: St. Martin's Press 1998) pp.77-102.

6.Robert Keohane, Twenty Years of InstitutionalLiberalism, International Relations Volume 22, Issue 2

(June 2012)

7.Timothy Garton Ash, The Crisis of Europe, ForeignAffairs (September-October 2012)8.Dani Rodrik, TheGlobalization Paradox: Democracy and the

Future of the World Economy(New York: W.W Norton 2011)

pp.184-233.

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