Competition and “constitutionalization”

There has been much discussion of the role of ordoliberalism in Germany’s approach to the euro crisis (see for example this paper by two former colleagues at the European Council on Foreign Relations and this paper by my former Transatlantic Academy colleague Wade Jacoby). But of course the story of how German ideas have influenced the European Union does not begin with the Greek crisis in 2010. It is well known that the European Central Bank (ECB) reflects the values of the Bundesbank. (Actually, it in some way doubles down on them – the ECB is even more independent, and has an even tighter focus on price stability, than the Bundesbank.) Less well known, though, is the way German ideas on competition policy that go back to ordoliberalism have shaped European integration since its beginnings in the 1950s. You might almost say that competition policy is the missing link between histories of ordoliberalism and the EU.

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On rules

There seems to be a lot of discussion about rules these days. In particular, among foreign policy analysts, rules come up both in discussions about the liberal international order and in discussions about the eurozone. But it is striking to me how disconnected the two discussions are – and how differently rules are seen in each case. In discussions about the liberal international order, rules are widely seen as a good thing because they are thought of as an alternative to relations between states based simply on power. But in discussions about the eurozone, rules are seen by many as being much more problematic. In particular, critics of the German view, which emphasises rules over discretion (see Brunnermeier, James and Landau on this), see them as essentially post-democratic. So are rules a good or bad thing?

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Germany, the east and the south

I can still remember how, in a late-night discussion at the Brussels Forum in March 2013, Estonian President Toomas Ilves urged the audience to read an article entitled “Why Poland is the new France for Germany” that had been published a few months earlier by my former ECFR colleagues Ulrike Guérot and Konstanty Gebert. The Civic Platform government of Donald Tusk – which the article said was “committed to joining the Euro around 2016” – had put behind it the fraught relationship that had existed between the two countries while Jarosław Kaczyński was prime minister between 2006 and 2007. As a result, the article suggested, some in Germany – which, in the context of the euro crisis, was increasingly frustrated with France’s perceived failure to reform its economy – increasingly saw Poland as its closest and most important partner in the European Union.

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International relations in Europe

Since my book, The Paradox of German Power, came out, I’ve had some interesting discussions about the implicit assumptions about the nature of international relations in Europe on which it is based. In particular, especially in Germany, some have questioned whether the concepts I use make sense in the context of the European Union. The EU, they argue, has transformed international politics into domestic politics. So does it make sense to use concepts like hegemony in this context? Thus discussion of the “German question” – a phrase that implies continuity with pre-World War II Europe – inevitably raises broader questions about how to understand the way in which international politics in Europe has changed. How exactly has European integration transformed relations between European states?

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Schäuble and Greece

Over the last few weeks, as Greece has edged closer to leaving the European single currency, there has been much speculation about the different positions of German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble. Schäuble, who is generally thought to be more “pro-European” than Merkel but has paradoxically taken a tougher line towards Greece, is usually said to believe the single currency can only succeed if everyone abides by the rules. Merkel, on the hand, is said to worry about more the geopolitical costs of “Grexit”, particularly in the context of Russian revisionism since the annexation of Crimea in 2014. Others speculate that the difference between the positions of Merkel and Schäuble is merely tactical: a good cop/bad cop routine in order to extract concessions from Greece.

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A “normal” creditor country?

At a discussion I had with Stephen Green and Quentin Peel at Chatham House recently, a member of the audience put it to me that German policy in Europe was normal for a creditor country in a debt crisis. In particular, he suggested that it was playing in a similar role in the euro crisis as the United States did in the Latin American debt crisis in the 1980s. “The thinking in Berlin is no different from the thinking in Washington during the Latin American debt crisis”, he said. It was an interesting point, which prompted me to think more about the similarities and differences between the two crises and between the role of Germany in Europe and creditor countries in other debt crises. It is also relevant to the question of the relationship between ordoliberalism and neo-liberalism, which I discussed in my previous post.

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Ordoliberalism and Ostpolitik

At a recent discussion with Simon Tilford of the Centre for European Reform about my new book, The Paradox of German Power, I was asked about the role of ordoliberalism in Germany’s response to the euro crisis. A couple of years ago, my colleagues Sebastian Dullien and Ulrike Guérot wrote an excellent brief for ECFR in which they argued that ordoliberalism – an economic theory that goes back to the so-called Freiburg School in the 1930s but is little known outside Germany – cast a “long shadow” over current German economic thinking. I think they’re right, but I wasn’t really able to give a good answer about exactly what role ordoliberalism plays in the German economic policy process. The more I thought about it after the discussion, however, the more it struck me that there is a parallel with the role of Ostpolitik in the German foreign policy process.

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