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Europe and the Future of International Relations

Europe and the Future of International Relations

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Published by Rodrigo C. Serrano

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Published by: Rodrigo C. Serrano on Oct 22, 2012
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Europe and the Future of International Relations
Rodrigo C. SerranoNew York, NYDirect 305-510-0181Email Uformula.rcs@gmail.comWebsites:http://rcsinvestments.wordpress.comhttp://rationalcapitalistspeculator.tumblr.comhttp://www.linkedin.com/pub/rodrigogserrano
October 22, 2012Since 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 and political 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 world’s 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 towards liberalism 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 Sinkkink’s 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 commensurate with 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 economic prosperity, converged in the mid-to-late 1990s to create the European Monetary Union(EMU). Ironically, the bloc’s 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 today’s 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 as
 Los 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 calls
The New Foreign Policy Frontier
. “But [Hillary] Clinton herself insists that 21
st
-centurydiplomacy must not only be government to government, but also government to society andsociety 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 in ways that once only governments could.” (Slaughter 2011, p.1-2). The aforementionedgroups are having an increasing effect on German and European Union (EU) policy, withGermany’s Christian Social Union party leader Horst Seehofer recently softening his stanceon Greek austerity and Angela Merkel appearing more receptive toward Spain requesting aid without further conditionalities.Moreover, the conflict of these norms increases the threat of internal war, which adds another layer of complexity to the tenuous balance of power between sovereign states versus thesupranational organization that is the EU. “As such, free trade that jeopardizes a state’s keyindustries or allows potential adversaries to become
 relatively
stronger may not be in a state’sinterest 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 most prudent, 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 of  the 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 (if he 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 of  the economically strong. State control, whether in the form of protective legislation or o protective 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 in tandem with a significant reduction in the perceived power of a panoply of liberal-styleinstitutions 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 in
 Power 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 a worsened 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 a political and fiscal union, the chronic competitive divide between European core countries and their 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 country’s “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 Waltz’s 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 bank’s founding treaty. WhileMario Draghi continues to reassure that the bank will under no circumstance begin printingmoney to buy government debt without strict conditionalities from Eurozone governments, it would be naïve to confidently think that they would simply stand by if the survival of theEurozone solely depended on committing to cap government bond yields. While there’s asignificant probability that, if faced with extinction, the ECB would resort to monetaryfinancing, would Germany, haunted by its past experience with Weimer hyperinflation (due to printing money), acquiesce to such a policy?

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