Abstract
This chapter contextualises the Eurozone sovereign debt crisis and examines current challenges of EU governance in an era of mixed sovereignty. The chapter focuses on the relationship between the crisis and the EU’s long-standing legitimacy challenges. It examines key debates representing the range of views and perspectives on the genesis of the crisis. Driven by domestic attitudes and political imperatives, the crisis debates are demonstrating the highly contested nature of EU policy prescriptions to overcome the crisis. Social tensions and old prejudices, both within and between states, are resurfacing, testing long-standing assumptions about European integration. At the same time, political leaders in the EU and in some member states are rapidly losing the trust of their people as economic hardship and a concomitant rise in populism harden the citizens’ feelings towards them. Fiscal deficits and enduring deficits of democracy and legitimacy are conflating with emerging deficits of solidarity, growth and social justice to present a potentially damning vision of European integration. Renewed faith in the European Union as a politico-economic endeavour with a focus on solidarity, participation and equality is essential if Europe is to avoid disintegration and decline.
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- 1.
The EU itself does not have a significant capacity for redistribution or taxation and spending (Börzel and Risse 2000). Instead it is subject to significant budgetary restrictions (Nugent 2006, 430; von Beyme 2000, 82) and spending limits. The EU budget is funded chiefly from the EU’s own resources (mainly customs duties on imports from outside the EU and sugar levies, value added tax (VAT) and a percentage levied on gross national income (GNI)) and supplemented by other sources of revenue. http://ec.europa.eu/budget/explained/budg_system/financing/fin_en.cfm
See also European Parliament resolution of 3 July 2013 on the political agreement on the Multiannual Financial Framework 2014-2020 (2012/2799 (RSP) which highlights new arrangements relating to revision of the MFF, flexibility, own resources, and the unity and transparency of the budget.
- 2.
Eurobarometer 78, Public Opinion in the European Union, indicates that Europeans have lost their confidence in the EU and in national governments and parliaments. Trust in the European Union has fallen from 50% in Autumn 2004 to 33% in Autumn 2012.
- 3.
The ECB’s OMT or bond-buying programme was announced by Mario Draghi in September 2012. Under the programme the ECB would offer to purchase Eurozone countries’ short-term bonds in the secondary market, to drive down the market interest rates of countries such as Spain and Italy, whose borrowing costs were becoming unsustainable. See Financial Times Lexicon http://lexicon.ft.com/Term?term = outright-monetary-transactions-OMT
- 4.
For instance, the German Constitutional Court has made it clear that the transfer of sovereign powers to EU institutions in certain areas including finance is circumscribed. See, for example, the Maastricht Treaty Case (12 October 1993, BVerfGE 89, 155), the judgment regarding the European Stability Mechanism (ESM) - the EU’s permanent bailout fund (12 September 2012, 2BvR 1390/12, 2BvR 1421/12, 2BvR 1438/12, 2BvR 1439/12, 2BvR 1440/12, 2BvE 6/12) - and its most recent decision of 7 February 2014 on the legality of the ECB’s OMT programme.
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Murray, P., Longo, M. (2015). The Crisis-Legitimacy Nexus in the European Union. In: Demetriou, K. (eds) The European Union in Crisis. Springer, Cham. https://doi.org/10.1007/978-3-319-08774-0_4
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