Should Iceland Be a State in the E.U.?

Is a state’s strategic interest simply the sum total of political and economic expediency? In the case of Iceland becoming a state in the E.U., the suspension by the Icelandic government of talks that began after Iceland’s banking sector took a major hit in 2008 may have been a political means of countering the “tough competition” from parties that have been skeptical about the sovereign state joining the Union. With parliamentary elections coming up, the parties in the government did not want to be found wanting on the unpopular side of a major question.

The complete essay is at Essays on Two Federal Empires.

German Conservatives Ease Up on Greece

During the summer of 2012, it was all too easy, especially for financial analysts (whose expertise is on finance rather than politics), to summarily conclude that the E.U. was not capable of keeping the states of Greece and Spain from default. Perhaps the human brain has an innate proclivity to think in bipolar terms in the sense that something (or someone) is presumed either “good” or “bad.” Empirically, social organization, which includes politics and finance, is typically more gray than “black and white.” This is undoubtedly the case concerning the political risk analysis that goes into assessments of systemic risk, especially where uncertainty is salient. In general terms, I would say that as of 2012 the anticipated demise of the euro (and even the E.U.) was much exaggerated. Somehow or other, European policy-makers were able to hold the federal ship-of-state together in spite of its vulnerabilities.

The full essay is at Essays on the E.U. Political Economy, available at Amazon.

Anti-Austerity in Greek Government

The Socialists and then the New Democracy Party told Greeks that sacrifices were necessary to avert default on the state’s debt. This position came at a high political cost on May 6, 2012, when both parties lost seats in the state’s legislative election. “The established parties collapsed — they had too much pressure from Berlin and Brussels and the I.M.F.,” said Nikos Xydakis, an newspaper editor and a political commentator, referring to Greece’s foreign lenders.[1] In other words, the leaders of the two mainstream Greek parties sold out their compatriots, having caved in to ultimatums from Merkel operating at the E.U. level. “In a meeting with President Karolos Papoulias, the leader of the leftist party, Alexis Tsipras, ridiculed the leaders of the two main parties whose coalition lost its majority in the parliamentary elections.”[2] Tsipras added that his party would not be forming a government with either party. The New Democracy Party had been unable to form a government in the wake of the election, so it was then Tsipras’ turn to try.

  

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

1. Rachel Donadio and Niki Kitsantonis, “Greek Leftists Rule Out Coalition with Incumbents,” The New York Times, May 8, 2012.
2. Ibid.

Angela Merkel: Leading Germany in the E.U.

In the E.U. state of Germany, Angela Merkel had her work cut out for her in getting her coalition to carry the German House, or Bundestag. In vesting the debt bailout fund with powers had been at the state level. Conservatives feared the deal would “open to the door to relinquishing more sovereignty to the European Union.”[1] Also, the legislators in her Free/Christian Democrat coalition were having trouble justifying the increased cost to their constituents of the expanded fund even though it is geared to keeping the E.U. debt-loads at the state level from spinning out of control—meaning at the expense of the German economy. Economically, it can be argued that expanding the E.U.’s bailout fun is in the economic interest of the state of Germany and its residents.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

1. Vanessa Fuhrmans, “Merkel Faces Test OverBailout Fund,” The Wall Street Journal, August 30, 2011.