Europe Today: A Twenty-First Century Introduction, Sixth Edition [6 ed.] 153811092X, 9781538110928

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Europe Today

Europe Today A Twenty-First Century Introduction

Sixth Edition Edited by Erik Jones and Masha Hedberg

ROWMAN & LITTLEFIELD Lanham • Boulder • New York • London

Published by Rowman & Littlefield An imprint of The Rowman & Littlefield Publishing Group, Inc. 4501 Forbes Boulevard, Suite 200, Lanham, Maryland 20706 www​.rowman​.com 86-90 Paul Street, London EC2A 4NE, United Kingdom Copyright © 2023 by The Rowman & Littlefield Publishing Group, Inc. All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the publisher, except by a reviewer who may quote passages in a review. British Library Cataloguing in Publication Information Available Library of Congress Cataloging-in-Publication Data Names: Jones, Erik, author. | Hedberg, Masha, 1975– author. Title: Europe today : a twenty-first century introduction / [Erik Jones and Masha Hedberg]. Description: Sixth Edition. | Lanham, Maryland : Rowman & Littlefield, [2023] | Includes bibliographical references and index. | Summary: “Coverage of developments in major European countries and across the region. Thoroughly revised and updated-including new chapters on Russia and Turkey to address their growing influence—this work offers a sustained and unified set of both country case studies and thematic chapters on the European Union. Written by leading scholars from Europe and North America, the book builds on a foundation of basic political information and explanation to develop distinctive and thought-provoking analyses of current debates”— Provided by publisher. Identifiers: LCCN 2022056506 (print) | LCCN 2022056507 (ebook) | ISBN 9781538110928 (Cloth : acid-free paper) | ISBN 9781538110935 (Paperback : acid-free paper) | ISBN 9781538110942 (epub) Subjects: LCSH: European Union countries—Politics and government—21st century. | Europe—Politics and government—21st century. | Europe—Forecasting. Classification: LCC JN30 .E82478 2023 (print) | LCC JN30 (ebook) | DDC 320.94—dc23/ eng/20230109 LC record available at https://lccn.loc.gov/2022056506 LC ebook record available at https://lccn.loc.gov/2022056507 ∞ ™ The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/ NISO Z39.48-1992.

Contents

Prefacevii Timeline of Events Leading to the Current State of the European Union

ix

List of Common Acronyms

xiv

List of Illustrations

xvi

Introductionxviii PART ONE: COUNTRY STUDIES Chapter 1: United Kingdom Chapter 2: France Chapter 3: Germany Chapter 4: Italy Chapter 5: Scandinavia Chapter 6: Spain Chapter 7: Poland Chapter 8: Russia Chapter 9: Turkey PART TWO: THEMATIC CHAPTERS Chapter 10: European Integration in an Age of Crisis Chapter 11: Economic Governance Chapter 12: Varieties of Capitalism and Financial Regimes Chapter 13: Migration and Islam Chapter 14: Europe’s Troubled Neighborhoods Chapter 15: Turmoil and Tension in Transatlantic Relations

1 3 30 60 92 123 162 192 221 248 271 273 301 325 352 382 408

v i   C O N T E N T S

Conclusion440 Glossary445 Index453 About the Contributors

480

Preface

T

his sixth edition of Europe Today took many years to pull together. The world changed dramatically in the meantime. The last edition focused on the global economic and financial crisis, the turmoil in the Middle East and North Africa following the Arab Spring, and the growing tension between Russia and NATO both in Georgia and in Ukraine. What we could not foresee is that Europe would never have the chance to complete its recovery from the crisis before facing a global pandemic. We did not realize that Europe would experience a historic surge in migration across the Mediterranean, that conflict would grind on in Libya and Syria, that Turkey would become so estranged from the European Union, or that Russia would pose such a threat for Ukraine. This new edition tries to fill in the gaps in our understanding of how Europe works that emerged as a result of these events, where “Europe” should be understood as a collection of individual countries, as an economic and political union, and as an essential partner in a transatlantic relationship. The structure is very similar to previous editions. We start with a selection of individual countries—which includes Russia and, new to this edition, Turkey—to underscore that “Europe” and the European Union are not one and the same. Then we introduce the European project and the many challenges it must face in promoting political unity, managing economic diversity, adapting to demographic change, promoting security, and working in partnership with the United States. This sequence is not necessary for teaching or reading across the many countries and issues. The chapters can be read independently or in any order. Moreover, the collection as a whole is not comprehensive. We do not have a chapter on health policy, for example. We decided to replace the chapter on law and politics with one focusing on Europe’s troubled neighborhoods. Finally, we have left a close study of climate politics to future editions. Such editorial choices are both difficult and unavoidable. The goal is to provide an introduction and not a handbook. We hope this collection will encourage students to dig deeper into European politics, economics, society, secu-

v iii   P R E F A C E

rity, and integration. Looking ahead, we would welcome any suggestions about how we might do that better. This volume would not have been possible without the dedication of our contributors. The pandemic and the war are part of our lived experience and not just historical events. For our contributors, the combination of European crises posed personal as well as analytical challenges. Keeping everyone on the same timeline was difficult; our contributors responded to the inevitable requests for updates and revisions with a mixture of patience and grace. Lucas Schramm provided invaluable assistance in holding everything together. Although we brought him on initially as a research assistant, he has become in many ways a contributing editor. Susan McEachern at Rowman & Littlefield was also a constant source of support, as has been Susan’s successor, Katelyn Turner. Seeing Susan hand over the reins of this project was bittersweet. It was Katelyn’s firm guidance that brought us finally to completion. All we can say is thanks! Erik Jones and Masha Hedberg December 2022

Timeline of Events Leading to the Current State of the European Union

May 1945 June 1945 June 1947 April 1948

World War II ends in Europe. The United Nations is founded. The Marshall Plan (European Recovery Program) is launched. The Organization for European Economic Cooperation (OEEC) is established. April 1949 The North-Atlantic Treaty, which establishes the North Atlantic Treaty Organization (NATO), is signed. May 1949 The Council of Europe is founded. April 1951 The Treaty of Paris is signed, which establishes the European Coal and Steel Community (ECSC) with six founding members (see EEC and Euratom). March 1957 The Treaties of Rome are signed, which establish the European Atomic Energy Community (Euratom) and the European Economic Community (EEC). Initial members of the EEC are Belgium, France, Italy, Luxembourg, the Netherlands, and (West) Germany. February 1958 The Benelux Economic Union is founded. July 1958 The Common Agricultural Policy (CAP) is proposed. December 1960 The OEEC is reorganized into the Organization for Economic Cooperation and Development (OECD). August 1961 Denmark, Ireland, and the UK apply for EEC membership. (President Charles de Gaulle of France vetoes the British application twice, in January 1963 and November 1967.) April 1962 Norway applies for EEC membership.

x    T I M E L I N E O F E V E N T S

April 1965

The Merger Treaty is signed, which consolidates the institutions created by the Treaty of Paris and the Treaties of Rome. July 1968 The EEC Customs Union is finalized, and the CAP is enacted. April 1970 The Treaty amending certain budgetary provisions (the “first Budget Treaty”) is signed, marking the (partial) transition from member state contributions to an autonomous system of Community financing. The second Budget Treaty, in July 1975, will strengthen the European Parliament’s budgetary powers. January 1972 EEC negotiations are concluded with UK, Denmark, Ireland, and Norway. September 1972 A national referendum in Norway goes against its membership in the EEC. January 1973 UK, Denmark, and Ireland join the EEC. January 1974 The European Social Fund is created. December 1974 The European Council is created. January 1975 The European Regional Development Fund is created. June 1975 Greece applies for EEC membership. March 1977 Portugal applies for EEC membership. July 1977 Spain applies for EEC membership. March 1979 The European Monetary System (EMS) is established. June 1979 First direct elections of the European Parliament (EP) take place. January 1981 Greece joins the EEC. January 1986 Spain and Portugal join the EEC. February 1986 The Single European Act is signed in Luxembourg, removing most of the remaining physical, fiscal, and technical barriers to the formation of a European common market. The EEC is now referred to as the European Community (EC). June 1987 Turkey applies for EC membership. July 1989 Austria applies for EC membership. December 1989 Turkey’s membership application is rejected. July 1990 Malta and Cyprus apply for EC membership. October 1990 German reunification brings the former East Germany into the EC. July 1991 Sweden applies for EC membership. February 1992 Treaty on European Union (Maastricht Treaty) is signed, which expands the process of European integration and creates a timetable for the European Monetary Union (EMU). The EC becomes the European Union (EU). March 1992 Finland applies for EU membership. June 1992 Danish voters reject the Maastricht Treaty. May 1993 Danish voters approve the Maastricht Treaty after certain compromises and national “opt-outs” are inserted into the treaty. January 1995 Austria, Sweden, and Finland join the EU after their respective national referenda favor membership. A national referendum in Norway rejects EU membership.

T I M E L I N E O F E V E N T S    xi

October 1997

The Treaty of Amsterdam is signed, which aims, among other things, to equalize tax structures among members of the EU in preparation for the upcoming monetary union. January 1999 EMU goes into effect. The eleven EU member states participating are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. December 1999 A European Council meeting in Helsinki decides to open accession negotiations with Bulgaria, Latvia, Lithuania, Malta, Romania, and the Slovak Republic and to recognize Turkey as a candidate country. December 2000 The European Council agrees on the Treaty of Nice (to be ratified by all member states). EU leaders formally proclaim the charter of Fundamental Rights of the European Union. January 2001 Greece joins the euro zone. February 2001 Regulation is adopted establishing the Rapid Reaction Force. June 2001 Irish citizens reject the Nice Treaty in a referendum. They approve the Nice Treaty in a second referendum in October 2002. January–February 2002 The euro becomes legal tender and permanently replaces national currencies in EMU countries. December 2002 The Copenhagen European Council declares that Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia will become EU members by May 1, 2004. February 2003 The Treaty of Nice enters into force. April 2003 The Treaty of Accession is signed in Athens. May 2004 Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia become EU member states. October 2004 EU leaders sign the treaty establishing a constitution for Europe. May 2005 The French electorate rejects the European Constitution in a national referendum. June 2005 The Dutch electorate rejects the European Constitution in a national referendum. The European Council starts a “reflection period.” October 2005 European accession negotiations open with Croatia and Turkey. January 2007 Bulgaria and Romania become EU member states; Slovenia joins the euro zone. June 2007 The German EU presidency ends the “reflection period” and relaunches negotiations for a new treaty.

x ii   T I M E L I N E O F E V E N T S

December 2007 January 2008 June 2008 July 2008 January 2009 December 2009 December 2009 May 2010 January 2011 February 2011 March 2012

March 2012 July 2012 August 2012 January 2013 March 2013 July 2013 January 2014 February 2014 January 2015 May 2015

The Lisbon Treaty, a slimmed-down alternative to the European Constitution, is signed by the EU heads of state or government. Only Ireland is obliged to ratify by referendum. Cyprus and Malta join the euro zone. The first Irish referendum is held on the Lisbon Treaty; the treaty is rejected. A second Irish referendum in October 2009 approves the Lisbon Treaty. At the Paris Summit, French President Nicolas Sarkozy launches the Union for the Mediterranean, aimed at revitalizing the EuroMediterranean Partnership. Slovakia joins the euro zone. The Lisbon Treaty enters into force, thereby amending the Maastricht Treaty (TEU). The Greek sovereign debt crisis escalates, leading to a crisis in the euro zone. Member states agree on the setup of a European Financial Stability Facility (EFSF) to help weaker euro-zone members remain financially stable. Estonia joins the euro zone. Euro-zone finance ministers agree to create the European Stability Mechanism (ESM), a permanent bailout fund for euro-zone member states in financial difficulty. All EU member states besides the UK and Czech Republic sign the Treaty on Stability, Coordination, and Governance (TSCG), which creates stricter deficit limits and strengthens oversight of national budgets by the European Commission and politically independent domestic bodies. Serbia granted the status of candidate for EU membership. ECB President Mario Draghi declares the ECB will do “whatever it takes to preserve the euro.” ECB announces a program to buy bonds of most indebted countries on secondary markets (Outright Monetary Transactions, or OMT). UK Prime Minister David Cameron promises British voters an in-or-out referendum on EU membership by 2017. Depositors in Cyprus forced to help pay bailout costs in first ever “bail-in”; Cyprus invokes emergency capital controls. Croatia becomes an EU member state. Latvia joins the euro zone. Russia annexes the Ukraine peninsula Crimea. Lithuania joins the euro zone. European Commission presents European Agenda on Migration to deal with increasing numbers of refugees and migrants coming to Europe, including a relocation mechanism among member states.

T I M E L I N E O F E V E N T S    xiii

September 2015 Council of the EU adopts relocation mechanism for refugees by qualified majority and against opposition of several member states; over the next two years, planned relocation numbers are not achieved. June 2016 Majority of UK citizens vote to leave the European Union in a referendum. March 2017 The UK officially announces its intention to leave the European Union; withdrawal negotiations begin. May 2019 European Parliament elections take place. For the first time, the two largest party groups, the European People’s Party (EPP) and the Socialists and Democrats (S&D), do not obtain a joint absolute majority. Later, Ursula von der Leyen (EPP) becomes president of the European Commission. January 2020 After several extension periods, the UK leaves EU (as well as its single market and customs union). March 2020 The COVID-19 pandemic starts spreading rapidly across Europe. July 2020 The European Council agrees to fund a COVID-19 recovery and resilience program called Next Generation EU with common debt. December 2020 The EU and UK agree on a trade and cooperation agreement. October 2021 The Polish constitutional tribunal declares parts of the EU treaties incompatible with the Polish constitution. February 2022 Russia invades Ukraine. June 2022 European Council grants Ukraine and Moldova membership candidate status and potential candidate status to Georgia. September 2022 European Parliament report says that Hungary can no longer be considered a full democracy. December 2022 European Parliament becomes embroiled in a corruption scandal dubbed “Qatargate” in the media. European Council grants candidate status to Bosnia and Herzegovina.

Common Acronyms

AFSJ CAP CEEC CFSP CJEU CSDP EBRD EC ECB ECSC ECU EDA EDC EEA EEC EFSF EFTA EIB EMS EMU ENP EP EPC ERM ESDP ESM FDI GFC IGC

Area of Freedom, Security and Justice Common Agricultural Policy Central and Eastern European Countries Common Foreign and Security Policy Court of Justice of the European Union Common Security and Defence Policy European Bank for Reconstruction and Development European Community European Central Bank European Coal and Steel Community European Currency Union European Defence Agency European Defence Community European Economic Area European Economic Community European Financial Stability Facility European Free Trade Association European Investment Bank European Monetary System Economic and Monetary Union European Neighborhood Policy European Parliament European Political Cooperation Exchange Rate Mechanism European Security and Defense Policy European Stability Mechanism Foreign Direct Investment Global Financial Crisis Intergovernmental Conference

C ommon A cron y ms    xv

IMF JHA LTRO MIP NATO OCA OECD OEEC OMT OSCE PCAs QE SEA SGP SMP SRM SSM TEU TSCG TTIP UN USSR VoC WTO

International Monetary Fund Justice and Home Affairs Long-Term Refinancing Operations Macroeconomic Imbalance Procedure North Atlantic Treaty Organization Optimum Currency Area Organization for Economic Cooperation and Development Organization for European Economic Cooperation Outright Monetary Transactions Organization for Security and Cooperation in Europe Partnership and Cooperation Agreements Quantitative Easing Single European Act Stability and Growth Pact Securities Market Program Single Resolution Mechanism Single Supervisory Mechanism Treaty on European Union Treaty on Stability, Coordination and Governance Transatlantic Trade and Investment Partnership United Nations Union of Soviet Socialist Republics Varieties of Capitalism World Trade Organization

List of Illustrations

Boxes 1.0  United Kingdom 2.0 France 3.0 Germany 4.0 Italy 5.0 Scandinavia 5.1  Why Do the Scandinavian Welfare States Survive? 5.2  Cartoons and Immigrants: No Laughing Matter 6.0 Spain 7.0 Poland 7.1  Major Personalities 8.0 Russia 9.0 Turkey 10.0  European Union

4 31 61 93 124 145 148 163 193 196 222 249 274

Figures 8.1 Approval of Vladimir Putin as the President or Prime Minister of Russia232 8.2  Percentage Change in Russian Real Gross Domestic Product 237 11.1  Timeline for Macroeconomic Governance Reform 302 11.2 Expansion of Euro-Area Membership beyond the Original Twelve (including Greece) 302 11.3  The Vicious Circle of Weak Banks and Sovereigns 315 12.1  Real GDP Growth, 2000–2020 (Percentage Change) 326 12.2  Real GDP Growth, 2020–2023 (Percentage Change) 327

L ist of I llustrations    xvii

12.3  12.4  13.1  15.1  15.2 

Average Overall Fiscal Balance from 2008 to 2010 (Percent GDP) Fiscal Response to the COVID-19 Pandemic (Percent GDP) Muslim Share of Population by Country (Percent) NATO’s Eastern Flank: Stronger Defence and Deterrence EU-USA Trade in Goods, 1999–2021

337 339 357 414 423

Tables 2.1  Political Leadership of the French Fifth Republic 34 4.1  Coalition Governance and Governments in Italy (1948–2022) 101 4.2 Results of Italian Elections (1994–2022): Percentages of Votes (Chamber of Deputies) and Seats (Chamber of Deputies and Senate) 104 4.3  Electoral Laws and Party System Indicators (Chamber of Deputies) 110 5.1 Comparative Prosperity (Gross National Income in Purchasing Power Parity) 157 5.2  Parliamentary Party Strength in November 2022 158 6.1  The Boom Years in Spain 167 6.2  The Economic Crisis in Spain 171 6.3  The Economic Recovery in Spain 174 6.4  Spanish General Elections, 2011–2019 178 7.1 Genealogy and Ideology of Major Political Parties/Electoral Coalitions202 12.1  Varieties of Capitalism and Financial Regimes under EMU 344 13.1  Politically Significant Ethnonational Minorities in Europe 360

Introduction Erik Jones

T

he challenge with introducing Europe Today is to identify the broad themes that can be used to frame the conversation. For much of the world, Europe exists only as a collection of stereotypes. It is old and decadent, imperialist and self-obsessed, irresponsible and yet still privileged. Such stereotypes have an air of truth to them, to be sure. The problem is that they do not shed much light on what we can learn from European experience. It is undoubtedly true that Europe dominated the globe in the nineteenth and early twentieth centuries, only to collapse in an orgy of self-destruction once the twentieth century got underway. Both the period of dominance and the period of destruction have left important legacies inside and beyond the European continent. It is also true that in the latter half of the twentieth century, Europe was divided between an “East,” dominated by the Soviet Union, and a “West,” led by the United States. But a tight focus on the “Iron Curtain” covers up the fact that much of Europe retained agency (Rothschild and Wingfield 2000). Individual countries pursued their national interests, often pushing back against the hegemony of the two superpowers. Groups of countries banded together to create new forms of governance in both camps. Those efforts have also had a lasting impact. Then the Cold War ended, and Europe entered a new phase in its evolution. This new phase did not break away from Europe’s legacy of dominance and destruction, nor did it escape the influence of European divisions or its experiments with integration. Instead, the new Europe emerged as a synthesis of remembered “greatness” and forced division (Ther 2016). This new Europe also revealed far greater variety of lived experience than most widely held stereotypes would admit. In that sense, there is more to learn from what conventional stereotypes obscure or overlook than from the obvious truths upon which they are grounded.

I ntroduction    xix

Young and Dynamic Not all parts of Europe are equally “old,” for example. Some countries are new or at least newly independent. Just look at the Western Balkans and then across Central and Eastern Europe. The point is not to deny the legitimacy of the boundaries we clearly see on maps but to underscore that many of those boundaries are relatively new, or “young,” and some are still hotly contested—as are the identities of the people who live within them. Moreover, this contestation is not limited to Eastern Europe. It is real and important in countries like Spain, Ireland, Great Britain, and Belgium. Greece and Cyprus are also affected. So is France, when you consider Corsica, Brittany, and perhaps also the Basque region. Italy has important interregional tensions as well, not just in terms of North and South but also at the more local (or granular) level. And many Germans still think in terms of East and West. Because it plays out in the political uses of historical memory, such contestation is tied to the relative “age” of different parts of Europe. Non-Europeans may treat the old age and decadence of Europe as “facts,” but Europeans themselves are constantly revising their history in an effort to redefine who they are, how they should be organized, and who has the right to govern (Clark 2019; Kirchick 2017). The imagination of a historical Celtic nation centered on the Po River valley in Northern Italy has effectively reshaped the politics of that country. Narratives about the dismemberment of the Austro-Hungarian Empire after the First World War are potentially transformative as well. This retelling of European history is a dynamic process capable of unleashing huge amounts of energy, often in the form of violence. The wars that broke out during the collapse of Yugoslavia were hardly an exception; they were and are a cautionary tale (Silber and Little 1997). The same potential for violence could be seen in Catalonia’s 2017 referendum on independence, in the tensions that have arisen over the impact of the United Kingdom’s departure from the European Union on Northern Ireland, and in the diplomatic standoff between Greece, Cyprus, and Turkey over drilling rights in the eastern Mediterranean. This is not a statement of moral equivalence, beyond the blanket rejection of political violence. Rather, it is a claim that Europeans can never afford to be complacent about the peace they have accomplished (Jones and Menon 2019). A French-language television station in Belgium once played a spoof broadcast—something like Orson Welles’ radio play about the War of the Worlds—where the northern region of Flanders suddenly broke from the federation; that joke almost caused a panic among the inattentive Walloons who saw it. The Belgian illustration sounds farcical, and in many ways it was. But it sets one end of the spectrum. Russia’s invasion of Ukraine is on the other end. That invasion was preceded by years of denial on the part of Russia’s ruling elite that Ukraine has any right to exist as a country (Herd 2022). Western observers downplayed that rewriting of history as a form of Russian propaganda without realizing that war is part of an extreme (and extremely brutal) form of narrative contestation. What the Russian invasion of Ukraine reminds us is that European “decadence” is an illusion. Peace in Europe has not only been hard won but is also very difficult to maintain (Jones and Menon 2019). Europeans must be constantly vigilant in guarding

x x    Introduction

against the potential for violent conflict. They must be disciplined in accepting nonviolent solutions and in ignoring the opportunities for gain that the use of violence—or, perhaps better, the threat of violence which could start a logic of escalation—might present. Hungary’s reconciliation with the existence of significant Hungarian minorities in Slovakia, Romania, and Serbia was not a foregone conclusion. Neither was Germany’s recognition of its borders with Poland after the fall of communism. Relations in the Western Balkans are still a work in progress, particularly within Bosnia and between the Serbian capital in Belgrade and the capital of Kosovo in Pristina. Of course, nobody in Europe wants violent conflict; such conflict arises because there are many things Europeans want even less. Losing their identity and finding themselves subject to “foreign” authority are high on the list of worse outcomes. More than anything else, that fear of loss explains why the European Union—which won the Nobel Peace Prize in 2012 for its role in the “advancement of peace and reconciliation, democracy and human rights in Europe”—rests on a principle of unity with diversity.

Oppressed and Self-Assertive Russia’s invasion of Ukraine also reminds us that not all parts of Europe were or are equally “imperialist”; many parts of Europe were also subjugated. If European imperialism has left lasting legacies across the globe—and it has—then it is worth thinking about what it has done to so many Europeans. The experience of Poland, which was dismantled and then reassembled from different parts of the European continent, is one illustration. The slaughter of ethnic Poles in this process was immense, particularly as undertaken by the Soviet Union (Snyder 2015). When combined with the Holocaust, in which millions of Polish Jews were massacred, it is easier to understand why contemporary Polish governments might be self-assertive with respect to larger neighbors both eastern and western. The legacy of empire does a lot to explain the tensions we see in the United Kingdom and between the Great Britain and the Republic of Ireland (Keating 2021). The Scottish National Party has a very different understanding of the 1706 “Treaty of Union” than either the Labour Party or the Conservatives do. In a similar vein, Irish Catholics look for ways to create distance from British influence, whether in the five northern provinces that make up Northern Ireland or in the Republic that the Irish created to assert their independence. This desire explains not only the violent conflict between Catholics and Protestants that ran from the 1960s through the mid-1990s but also the eagerness with which the Republic of Ireland pursued ever deeper participation in the European project and the importance of that project for the 1998 Good Friday Agreement that brought the “troubles” in Northern Ireland to an end (Murphy 2018). The experience of empire also sheds light on French politics. Here it is worth distinguishing between two imperial projects: one to transform peasants who spoke Basque, Breton, Flemish, German, Italian, Corsican, or distant dialects of the French language into “French” people, through the educational system (Weber 1976), and the other to incorporate Algerian territory on the other side of the Mediterranean into

I ntroduction    xxi

the metropolitan center of France. These projects explain the dominance of Paris over the rest of the country; they also explain much of the difficulty that France has dealing with immigration and Islam, even down to collecting statistics about the ethnicity and religion of the people who live in the country (Laurence and Vaisse 2006). The argument here is too subtle to unpack in a paragraph; the punch line is that you cannot understand French politics without first looking at the legacy of empire within France, particularly as that legacy plays out in the self-assertiveness of groups that feel they have been treated unjustly. The legacy of empire can be felt everywhere in Europe. The Norwegians still talk about their rough treatment—maybe “neglect” is a better term—by the Swedes and the Danes. The Finns remember their escape from Russia (and their family connections in Karelia, across the border, who were unable to leave). The Belgians recall their relatively brief experience as part of the Kingdom of the Netherlands and, somewhat more fondly, their close connection to Charles the Great and the Hapsburg Empire. The Austrians remember how their imperial greatness gave way to the ignominy of Anschluss. These stories are woven into narratives about national identity and about the reason why the nation is important. And this is perhaps the greatest expression of how European oppression transformed into self-assertiveness. Because nationalism, as an ideology, emerged out of the rejection of empire (Appiah 2018). This rejection of empire took positive and negative forms. The positive form came in the historic ambitions for national integration. Germany and Italy are two big illustrations; these countries only exist because of the success of political projects to create them. Those projects had many victims because both countries, much like France, had to create Germans and Italians; both countries also sought to absorb people in other territories. Nevertheless, the projects were successful in convincing the world that Germany and Italy deserve to exist as political entities. The measure of that success can be seen in the huge efforts European and American politicians made at the end of the Cold War to reunify Germany and to prevent Italy from fragmenting (Zelikow and Rice 1997; Anderson 1999). The more negative form of nationalism is best illustrated by the experience of Central and Eastern Europe. There nationalism has centered less on integration than on pushing out groups that do not belong to the national community (Connelly 2020). This is another argument that is too subtle to unpack in a single paragraph. Fair rendering of the argument would also necessarily blunt the distinction between Eastern Europe and Western Europe, because the two places are more similar than different in most respects, apart from historical timing. But the punch line is worth delivering without the nuance, because it explains why nationalism has—and deserves—such a bad reputation in the twenty-first century. The rejection of empire through the promotion of exclusive “national” identities is often xenophobic and racist. This is particularly true when the nationalists can point to a real history of oppression to justify the strength of their self-assertiveness. If there is a common thread that runs through right-wing extremism in Europe, it is that the “true people” of the nation—whoever they may be—are defined in many ways through their victimhood (Rasmussen 2022).

x x ii   Introduction

Responsible and Disadvantaged Somehow, against the odds, Europeans seem to have tamed the worst of nationalist excesses. The wars that broke up Yugoslavia were brutal. Russian violence against Chechens, South Ossetians, Georgians, and Ukrainians suggests that no part of Europe can be considered wholly “safe.” Nevertheless, the progress is significant when the peace of the past seventy-five years is compared with the violence that preceded it (Mazower 1998). The nationalism that created Italy and Germany, and that energized metropolitan, imperial powers like Great Britain and France, was enormously destructive—as made obvious by the First and Second World Wars. It is worth asking, therefore, how Europeans have avoided further disaster. The answer lies in the creation of international organizations to encourage self-restraint and to promote the peaceful reconciliation of conflict (Cooper 2004). These arrangements were not obvious; they were innovative. And to the extent to which they ran against the grain of nationalism, they showed just how responsible Europeans could be. Consider the North Atlantic Treaty Organization (NATO). That alliance was created at the end of the 1940s to bolster a Brussels Treaty Organization that united a small number of West European countries against the threat that Germany might once again resort to violence. It relied on the continuous involvement of the United States not only to protect against the Soviet Union but also to sustain the peace between Germany and the rest of Europe. It evolved institutionally in the mid-1950s to promote a gradual and limited German rearmament, even as the United States, France, and Great Britain continued to occupy West Germany. And it implicated the United States in virtually every major decision about European security in the 1960s, 1970s, and 1980s. This was not an act of irresponsibility on the part of Europe; it was an acceptance that only a powerful third party like the United States could create the conditions necessary for reconciliation among European countries (DePorte 1986). When you consider that the United States was founded on a principle of avoiding entangling alliances, European success in promoting and sustaining NATO is nothing short of miraculous (Allin and Jones 2012). And NATO is a success. It was crucial to maintaining security during the Cold War, to supporting Soviet and then Russian withdrawal from Central and Eastern Europe, to fostering German unification and widening European integration, to stabilizing the Western Balkans, and to containing Russian violence against its neighboring countries. That success was not always easy for Europeans. The history of NATO is one of periodic tensions across the Atlantic (Sloan 2018). But Europeans have remained loyal to the alliance, and its membership has increased rather than diminished. Even France, which withdrew from the integrated military command structures in 1966, never tried to leave the alliance. Indeed, the French have been some of NATO’s most active participants (and they re-joined the integrated military command structure in 2009). The European Union is another illustration. The origins of the EU lie in a coal and steel community to foster Franco-German reconciliation (Willis 1968). Its development extends through the creation of separate communities for atomic energy and economic integration. Ultimately, the economic community proved to be the most

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important, because it created a framework for Europeans to negotiate with one another and with the United States. This economic community absorbed those activities related to coal and steel and atomic energy. It also expanded into areas related to foreign policy, monetary stability, and migration. Along the way, the European Community increased its membership to include both wealthy countries that originally sought to remain outside and poorer countries that desperately needed assistance in their economic development. The transformation from community to union took place after the end of the Cold War and in the shadow of German unification. This evolution required significant commitment to cooperation across a wide range of policy domains. That commitment was not easy to make. Often it involved compromises that touched deeply on questions of national independence and even identity. As the European Union has continued to broaden the scope of its activities while at the same time expanding its membership, the compromises have become even more challenging. Nevertheless, most Europeans accept that this commitment is necessary if they are to protect and assert their interests in a rapidly changing global environment (Tsoukalis 2005). Not everyone agreed. The United Kingdom’s decision to leave the European Union demonstrates just how difficult and controversial membership can be, even if many would argue that leaving is even more painful (Jones 2018/2019). The point to underscore here is that participation in Europe today is an almost unprecedented act of responsibility. If we stop and take stock at the present moment, we see that no other countries elsewhere in the world have accepted such a binding institutional arrangement to foster their collective peace and prosperity. Other regional arrangements offer considerable advantages, but none demands so much compromise on the part of its member states. The Organization for Security and Cooperation in Europe (OSCE) is a third illustration. This institution was created during the Cold War to help lower the tensions between East and West. The two main sets of issues agreed by the United States and the Soviet Union were diplomatic and economic. The superpowers believed that by sharing information and engaging in cross-border trade and investment, they could build mutual confidence and thereby strengthen security. The Europeans added into the mix a third set of issues focused on human rights, arguing that diplomacy and commerce cannot succeed in fostering a lasting peace without some agreement on the nature of shared values and the importance of protecting them. Although underappreciated at the time, this commitment to the protection of human rights was a powerful display of European responsibility. By setting the agenda this way, Europeans not only changed how they viewed capitalism and communism but also how they should promote democracy and international development. The impact was immediately felt in terms of opposition to communism in Central and Eastern Europe (Thomas 2001). And it has had lasting consequences for European engagement since the fall of communism. The OSCE has played a leading role in postconflict reconciliation and in election monitoring. The results have been far from perfect, both in promoting peaceful reconciliation and in avoiding conflict. But having an organization like the OSCE is far better than the alternative of ignoring shared values and embracing the logic of great power politics.

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If Europeans have been responsible, it is because they have made a virtue out of necessity. Put another way, and despite their many privileges, Europeans have had few options but to innovate. The continent they share is too small for them to engage in endless conflict. The resources and markets they have are too limited to compete globally. And the logic of great power politics will always be driven by greater powers outside Europe so long as Europeans cannot unite internally. If Europeans promote shared values, commit to shared decision making, and continue to partner with the United States, it is because they find themselves in a very challenging situation. Moreover, when we look at global politics, demographics, climate change, and the energy transition, those challenges will only increase rather than diminish.

Looking Ahead Europe Today is hard to introduce because Europe has so many features that most people outside Europe find hard to imagine. Its political institutions are younger than they look, and many are still experimental. Europe’s history is long, but it is contested and prone to manipulation. Therefore, Europeans must fight hard to protect the gains they have made, and they have to reconcile voices that complain about the costs of progress and those that suggest progress is somehow inevitable. The chapters in this volume show the many dimensions of how Europeans continue to struggle—both nationally and on an issue-by-issue basis—in dealing with each other and with the outside world. We should underscore the difficulty involved. Few can look at Europe today and imagine that the situation is easy. Obviously, those countries that have to deal with the legacies of European imperialism are uniquely disadvantaged. Europeans must struggle with their responsibility for that as well, just as they must struggle to help those countries still in the process of economic development find a new road to prosperity that does not rely on doing so much damage to the environment. The point to underscore is that Europeans can only play that role if they continue to behave responsibly; to defend their core values related to the protection of human rights, the promotion of democracy, and the preservation of civil liberties; and to find new ways to make virtue out of necessity. The question for people looking at Europe Today is multifaceted: It is whether Europeans will be able to break out of those stereotypes about European decadence and privilege so widely held abroad without descending into conflict. It is also whether Europeans will agree on the importance of playing a constructive role in tackling problems at the global level. And it is about how ready Europeans are to face the prospect that they might lose American support or, what might be even more troubling, that they will need to focus on lending their own efforts to shore up shared values and peaceful reconciliation across the Atlantic. What we should learn from European experience is just how difficult it is to maintain peace and prosperity. We should also learn that failure is always a possibility and yet should be rejected as an option. People who embrace violence over peaceful reconciliation should look to European history. What they will learn is how quickly global dominance can be lost and how much greater are the compromises, sacrifices, and efforts that need to be made to protect national cultures as a consequence.

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Suggested Readings Allen, John R., Frederick Ben Hodges, and Julian Lindley-French. Future War and the Defence of Europe. Oxford: Oxford University Press, 2021. Armour, Ian D. A History of Eastern Europe, 1918 to the Present: Modernisation, Ideology and Nationality. London: Bloomsbury, 2021. Lemke, Christine, and Helge Welsh. Germany Today: Politics and Policies in a Changing World. Lanham, MD: Rowman & Littlefield, 2017. Thomas, Daniel C. The Limits of Europe: Membership Norms and the Contestation of Regional Integration. Oxford: Oxford University Press, 2021. Van Oudenaren, John. Crisis and Renewal: An Introduction to the European Union. Lanham, MD: Rowman & Littlefield, 2021.

References Allin, Dana H., and Erik Jones. 2012. Weary Policeman: American Power in an Age of Austerity. London: Routledge. Anderson, Jeffrey. 1999. German Unification and the Union of Europe. Cambridge: Cambridge University Press. Appiah, Kwame Anthony. 2018. The Lies That Bind: Rethinking Identity. New York: Liveright Publishing Corporation. Clark, Christopher. 2019. Time and Power: Visions of History in German Politics, from the Thirty Years’ War to the Third Reich. Princeton, NJ: Princeton University Press. Connelly, John. 2020. From Peoples into Nations: A History of Eastern Europe. Princeton, NJ: Princeton University Press. Cooper, Robert. 2004. The Breaking of Nations: Order and Chaos in the Twenty-First Century. London: Grove Press. DePorte, A. W. 1986. Europe between the Superpowers: The Enduring Balance. 2nd ed. New Haven, CT: Yale University Press. Herd, Graeme P. 2022. Understanding Russian Strategic Behavior: Imperial Strategic Culture and Putin’s Operational Code. London: Routledge. Jones, Erik. 2018/2019. “Four Things We Should Learn from Brexit.” Survival 60 (6): 35–44. Jones, Erik, and Anand Menon. 2019. “Europe: Between Dream and Reality?” International Affairs 95 (1): 161–80. Keating, Michael. 2021. State and Nation in the United Kingdom: The Fractured Union. Oxford: Oxford University Press. Kirchick, James. 2017. The End of Europe: Dictators, Demagogues, and the Coming Dark Age. New Haven, CT: Yale University Press. Laurence, Jonathan, and Justin Vaisse. 2006. Integrating Islam: Political and Religious Challenges in Contemporary France. Washington, DC: Brookings Institution Press. Mazower, Mark. 1998. Dark Continent: Europe’s Twentieth Century. London: Penguin. Murphy, Mary C. 2018. Europe and Northern Ireland’s Future: Negotiating Brexit’s Unique Case. London: Agenda Publishing. Rasmussen, Mikkel Bolt. 2022. Late Capitalist Fascism. London: Verso. Rothschild, Joseph, and Nancy M. Wingfield. 2000. Return to Diversity: A Political History of East Central Europe since World War II. 3rd ed. Oxford: Oxford University Press. Silber, Laura, and Allan Little. 1997. Yugoslavia: Death of a Nation. New York: Penguin.

x x v i   Introduction Sloan, Stanley R. 2018. Transatlantic Traumas. Manchester: Manchester University Press. Snyder, Timothy. 2015. Blood Lands: Europe between Hitler and Stalin. London: Vintage. Ther, Philipp. 2016. Europe since 1989: A History. Princeton, NJ: Princeton University Press. Thomas, Daniel C. 2001. The Helsinki Effect: International Norms, Human Rights, and the Demise of Communism. Princeton, NJ: Princeton University Press. Tsoukalis, Loukas. 2005. What Kind of Europe? Updated and expanded ed. Oxford: Oxford University Press. Weber, Eugen. 1976. Peasants in Frenchmen: The Modernization of Rural France, 1870–1914. Stanford, CA: Stanford University Press. Willis, F. Roy. 1968. France, Germany, and the New Europe: 1945–1967. Revised and expanded ed. New York: Oxford University Press. Zelikow, Philip, and Condoleezza Rice. 1997. Germany Unified and Europe Transformed: A Study in Statecraft. Cambridge, MA: Harvard University Press.

PART 1

COUNTRY STUDIES

CHAPTER 1

United Kingdom THE UNITED KINGDOM AND ITS DISUNITED PEOPLE David Jeffery

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United Kingdom Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU: Left EU:

67.2 94,525 700 $2,708 $40,406 January 1, 1973 February 1, 2020

Performance of Key Political Parties in Parliamentary Elections of ­December 2019 Brexit Party: Conservative and Unionist Party: Democratic Unionist Party (DUP): Greens: Labour Party: Liberal Democrats: Party of Wales (Plaid Cymru): Scottish National Party (SNP): Sinn Fein:

Main Officeholders • Prime Minister: Rishi Sunak, Conservative (2022) • Head of State: King Charles III (2022)

2.0% (0 seats) 43.6% (365 seats) 0.8% (8 seats) 2.7% (1 seats) 32.2% (203 seats) 11.5% (11 seats) 0.5% (4 seats) 3.9% (48 seats) 0.6% (7 seats)

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T

he UK once prized itself on its relative stability following the Second World War—as France transitioned from the third, then the fourth, then the fifth republic, Germany was coming to grips with a new role in the world, and Italy cycled through prime ministers (ten changes between 1946 and 1960), the UK saw itself as a beacon of stability even as its empire was disbanded. Today, however, the picture is different: British politics is undergoing a realignment, accelerated by Brexit but echoing changes seen in other advanced Western democracies. The foundations of the UK seem to be under increased threat, with separatists from within Scotland and Northern Ireland on the ascendancy, and even some evidence of increased support for independence within Wales. This chapter will explore these changes.

British Politics Since 1945: Consensus, Breakdown, Consensus The postwar history of the UK can be divided in a number of ways: by prime ministers, the ruling party in government, or the state of the economy, among others. This section will examine Britain’s postwar history through the lens of ideas, specifically, ideas held by political elites within the two major parties in Westminster: the Conservative Party and the Labour Party. British political history has been one of consensus, then breakdown, which then gave rise to a new consensus. The first of these is the postwar consensus, rooted in Keynesian social democracy, which lasted until 1979—although cracks in the ideology itself, as well as the consensus around it, began to show earlier than that. The second “big idea” emerged as a critique of the postwar consensus: Thatcherism. This was the British variant of New Right thinking which prioritized free markets, a smaller state, and a moralistic social conservatism. Thatcherism did face challenges at the time by the New Left—which the opposition Labour Party was captured by—but after successive electoral defeats, Labour underwent a process of modernization, which culminated in New Labour under Tony Blair. New Labour combined higher spending and social liberalism but accepted some key elements of Thatcherism: low taxes, no nationalization of key industry, and a limited redistribution of income (in the early years of New Labour, one key figure stated the party was “intensely relaxed about people getting filthy rich as long as they pay their taxes”). The global financial crisis added austerity to the consensus. This consensus broke down following the 2015 general election—Labour’s loss led to the election of socialist Jeremy Corbyn as leader on an anti-austerity platform, while the vote to leave the EU was interpreted by Conservative figures such as Theresa May and Boris Johnson as a rejection of globalization and neoliberalism. May declared, “Austerity is over” and that the state could play a positive role in society, while Johnson spoke of using the state to “level up” regions of the UK. The rest of this section will explore these ideas in more detail.

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THE POSTWAR CONSENSUS The postwar consensus is best understood as a form of Keynesian social democracy, which saw the state play an active role in the social and economic life of the nation. Of course, there were disagreements between parties on key issues and specific topics during this period, and there is little evidence that the politicians themselves thought they were part of a specific consensus. The core tenets of the postwar consensus included the mixed economy, the goal of full employment, working with a strong trade union sector, a cradle-to-grave welfare state, interventionist microeconomic policies, and an active foreign policy alongside the winding down of the empire. The increase in state intervention in the economy and society, anathema to the Liberals and Conservatives of the interwar years, could now be justified given its success during the war. Perhaps the most famous aspect of the postwar consensus was the establishment of a comprehensive welfare state, which aimed to provide protection to citizens from cradle to grave. This welfare state had its roots in the Beveridge Report, which was written by the Liberal economist William Beveridge and was published by the wartime government in November 1942. The report identified five “giants” which the UK needed to tackle: disease, want, ignorance, squalor, and idleness. Disease would be tackled by the new National Health Service, which remains popular to this day. Both Labour and the Conservatives supported a version of healthcare provision which was free at the point of use, funded through general taxation, but differed in how it should be run. Labour thought it should be run by central government to ensure equality of standards across the country, while Conservatives argued local authorities would be better placed to respond to local needs. The second key element of the welfare state was reform of National Insurance, which had been around since 1911. The National Insurance Act of 1946 brought together existing strands of welfare into a comprehensive system covering unemployment, sickness, maternity, guardianship, retirement, and death. Both individuals of working age and their employers had to make weekly contributions to the scheme, and general taxation would make up the rest. Some on the Left of the Labour Party thought some elements of the scheme didn’t go far enough. Elements of the welfare state were introduced by the Conservatives. Universal, state-funded education up to the age of fifteen was introduced in 1944 by Conservative minister R. A. Butler, and child benefit was provided in 1945, in the dying days of the Conservative government. Akin to the process of developing the welfare state, prior to 1945, nationalization was a tool used by both parties when it was felt necessary—the Conservatives nationalized the British Broadcasting Company in 1926—but if the practice of nationalization was not new, the scale and pace of it under the Labour government was. Industries included coal, rail, utilities, civil aviation—around 20 percent was under state ownership, covering 10 percent of workers. While workers themselves typically saw improved conditions and pay, voters typically did not notice much change in newly nationalized industries: remote private management was replaced with remote public management.

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While the Conservative Party was not wholly opposed to greater state involvement in key industries, it often stopped short of full-scale nationalization. It promised in 1950 to denationalize wherever possible but accepted that in some cases, it would be best to leave some of Labour’s nationalized industries under state control—although they were to become “more human, less centralized and more efficient.” The Conservatives were returned to office in 1951 (although Labour won more votes), and under Churchill—and his Conservative successors as prime minister, Anthony Eden, Harold Macmillan, and Sir Alec Douglas-Home—the postwar consensus was maintained. These Conservative governments were largely committed to a “one-nation” ideology. Within the Conservative tradition, one-nation ideology sought social stability, balance, and moderation, underpinned by a desire to govern for the country as a whole rather than for a specific class or social group. Under these one-nation Conservatives, there was no major challenge to trade unions’ collective bargaining freedoms, and few major strikes. The welfare state was maintained and targeting full employment, though Keynesian demand management, remained the flavor of the day. The similarity of the Conservative and Labour approaches to economic management led The Economist to create the phrase “Butskellism,” a portmanteau of two successive chancellors of the exchequer, Labour’s Hugh Gaitskell (1950–1951) and Conservative R. A. Butler (1951–1955). One final element of the postwar consensus was an active foreign policy and the winding down of the British Empire. There was limited will in the UK to maintain foreign possessions by force or to cover their increasing costs. Under the 1945–1951 Labour governments, Britain started the process of independence for key colonies. Between 1947 and 1949, India, Pakistan, Burma (Myanmar), and Ceylon (Sri Lanka) were granted self-government. In 1949, the British Commonwealth became the Commonwealth of Nations, which most former colonies have joined. The pace of decolonization slowed under the Conservatives, but in 1960, Conservative Prime Minister Harold Macmillan gave a speech in South Africa, saying, “The wind of change is blowing through this continent. Whether we like it or not, this growth of national consciousness is a political fact.” Macmillan did not want the UK dragged into a colonial war akin to the ongoing conflict between France and Algeria; between 1945 and 1965, the number of people under British rule outside the UK itself fell from seven hundred million to five million, three million of whom were in Hong Kong. The politics of empire declined—Macmillan fought the 1959 general election on domestic prosperity with the slogan “You’ve never had it so good”—and Britain’s international role was seen to be through membership in organizations like the North Atlantic Treaty Organization (NATO), the European Free Trade Association (EFTA—and later the European Economic Community, EEC), and, especially important as the Cold War heated up, as a bridge between Europe and the United States, rooted in the pseudomythical “special relationship” with the United States. The 1964 general election saw Labour win under the charismatic Harold Wilson, who continued to govern in the postwar consensus tradition. However, he lost the 1970 general election to the Europhile Conservative Edward Heath, who stood on a free market, small-state manifesto which prioritized curbing inflation over unemployment, alongside trade union reform.

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History books call this a precursor to Thatcherism; however, when unemployment surpassed one million in 1972, Heath lost his nerve and returned to Keynesianism. An oil crisis alongside strikes by coal miners (who wanted a 35% wage increase) led to the introduction of a three-day week to conserve electricity. Heath called an early election under the slogan “Who Governs Britain?” and although he won the most votes, Labour’s Wilson won the most seats—but neither party had a majority. A second election in October of that year gave Wilson a majority of three, and he once again governed within the framework of the postwar consensus. Wilson resigned suddenly in 1976 due to ill health and was replaced by his Foreign Secretary James Callaghan, who inherited a minority government. The winter of 1978 saw the economy tank as unions engaged in a series of hugely damaging strikes, and the period became known as the Winter of Discontent and seemingly confirmed the UK’s position as the “Sick Man of Europe.” Britain seemed ungovernable, and Keynesianism policy no longer seemed able to deliver prosperity. In March 1979, the Callaghan government was defeated on a motion of no confidence, by 311 votes to 310. A general election was called and was won by the Conservatives led by Margaret Thatcher. The postwar consensus was truly over. THATCHERISM AND THE FORGING OF A NEW CONSENSUS The ideology of Thatcherism would have existed in the UK without Thatcher herself; free-market policies were increasingly back in vogue as the cure for economic malaise both at home and abroad. Out was Keynesian economics and control of unemployment, government regulation and planning of the economy, nationalization, and universal welfare, and in came control of the supply of money to target inflation (not unemployment), a push for deregulation and privatization, lower taxes, and a smaller public sector. Homeownership was encouraged, and by the end of 1987, two-thirds of Britons owned their own home. For Thatcherites the national economy was like the household economy—sound money and living within your means were Thatcherite slogans which chimed with people’s everyday experiences. Limited government, however, was not synonymous with weak government; the government should interfere in fewer areas of public and economic life, but where it was involved, it should be able to act effectively and purposefully, especially around law and order. Andrew Gamble described Thatcherite ideology as “the free economy and the strong state” in place of “a weak state and a fettered economy” (Gamble 1988, 104). When it came to social policy, Thatcherism was generally socially conservative and emphasized traditional morality: a tough stance on crime, immigration, and family breakdown, coupled with an emphasis on personal responsibility which was designed to appeal to the average “commonsense” voter. Despite Thatcher herself voting to legalize abortion and homosexuality (one of the few Conservative MPs to vote for it) in the 1960s, her government voted to prevent the “promotion” of homosexuality by local councils in the infamous Section 28 of the Local Government Act 1988. Thus, Thatcherism is often described as “authoritarian populism.”

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Not only did Thatcher challenge the postwar consensus policy framework but she also challenged the postwar consensus on how to do politics. Thatcher rejected compromise, instead portraying herself as a conviction politician, who would not back down from a fight (although in some situations she was willing to make a tactical retreat in order to come back in a stronger position). This applied to both the unions and the one-nation “wets” in her own party, who wanted the party to continue the postwar consensus approach. Thatcher’s downfall in 1990—a mix of Conservative Party splits on Europe, anger at Thatcher’s domineering approach to party/cabinet management, and mounting public opposition to local government finance reform—led to Chancellor John Major becoming both party leader and prime minister in 1990. Major was seen as a safe—if boring—pair of hands. He was less of a conviction politician, but he did continue the Thatcherite revolution and in some areas was even more Thatcherite than Thatcher— especially privatizing new areas of the economy and linking welfare to attempting to find employment. This led to one journalist describing the Major administrations as “Thatcherism pursued by non-Thatcherite means” (Young 1994, 23). By the 1997 general election, the Conservative Party was a mess. Its reputation for economic competence was destroyed by the September 1992 foreign exchange rate crisis called Black Wednesday, when the UK was forced to withdraw sterling from the Exchange Rate Mechanism (see below). The party had been riven on the issue of European integration, and although the economy was in a much stronger position by 1997, the party’s reputation for good governance was ruined by a series of scandals. The Conservatives as a whole looked tired, especially compared to New Labour and its young, dynamic leader Tony Blair. NEW LABOUR: SOCIAL DEMOCRACY IN A THATCHERITE FRAMEWORK Following the 1979 defeat, the Labour Party took a lurch to the left, under new leader Michael Foot, and produced a manifesto for the 1983 general election which was described as “the longest suicide note in history” by Labour MP Gerald Kaufman. A group of right-wing Labour MPs left the party, protesting the direction in which it was heading and the power of the trade unions within it, and formed the Social Democratic Party. In the 1983 general election, the SDP, in alliance with the Liberal Party, won 25.4 percent of the vote to Labour’s 27.6 percent, but due to the effects of the first-past-the-vote electoral system, they won just 23 seats (4.5%) to Labour’s 209 seats. Following this election, Foot was replaced with Neil Kinnock, who was associated with the Soft Left of the Labour Party. He began a long process of modernization, which included distancing Labour from radical Hard Left elements within the unions and his own party, in some cases even expelling Hard Left members and councillors. Labour was trounced by the Conservatives in 1987 and lost again in 1992, following which Kinnock resigned and was replaced by John Smith, who died in office in 1994 and was replaced by Tony Blair.

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New Labour was heavily influenced by the work of Antony Giddens, especially his work The Third Way, which inspired other leaders such as Bill Clinton. At its core was the recognition that the structure of the economy had changed: it was more globalized and interdependent and much more service oriented rather than manufacturing based. Thus traditional methods of achieving left-wing goals required updating. The traditional prescriptions—nationalization, higher taxes, and more spending on welfare—were not well suited to this new status quo: if tax rates were too high, big businesses would leave the country and take their jobs with them. To that end, Blair removed Labour’s commitment to common ownership of the means of production and replaced it with one which recognized Labour as a democratic socialist party, reconceptualizing socialism as a set of values to be achieved or an ethical framework to guide behavior. (Interestingly this focus on ends, not means, had already been argued for by Anthony Crosland in The Future of Socialism in 1956.) To achieve these ends, New Labour followed a “market socialism”: the state should still be a powerful force but not deliver services directly. Instead, legislation should guarantee minimum standards and harness the efficiency of the market to deliver them, and capitalism could be tamed and taxed to fund social-democratic policies. When it came to a view of society, New Labour emphasized the mantra of “no rights without responsibilities”—for example, the state should have a role in providing education and skills, but individuals have a responsibility to find work as a result and to be productive citizens. Blair stood down as prime minister in June 2007, under intense pressure from Chancellor Gordon Brown, who believed it was his turn to lead the country. Brown’s first months in office went well, and Labour regained its lead in the polls. However, he appeared to flip-flop over the calling of a general election in October 2007 when faced with unfavorable polling, and the introduction of an unpopular increase in the amount of income tax paid by low-income voters in April 2008 led to senior Labour MPs calling for him to resign in the summer of 2008, which ultimately went nowhere. By the 2010 general election in May, Labour had not led in a poll since January 2008, and the party’s hard-won reputation for economic competency was damaged by the 2008 financial crisis. The 2010 general election campaign did not go well: Brown was seen to perform poorly in the televised leadership debates, and Labour seemed out of touch with its traditional voter base, epitomized by Brown being caught on microphone calling a lifelong Labour-voting pensioner a “bigoted woman” after she expressed concern over migrants receiving welfare at the expense of locals. After thirteen years in office, New Labour did not seem so new, and it lost the election to David Cameron’s Conservatives. Overall, New Labour tried to deliver left-wing goals within a Thatcherite framework; it rejected centralized state planning, preferring targets; nationalization, preferring market forces; universal welfare, preferring conditionality; heavy income redistribution, preferring a milder form with opportunity redistribution; and close links to the trade unions, seeing links to the media and businesses as more helpful. It is perhaps no surprise that, when asked what her greatest achievement was, Thatcher replied, “Tony Blair and New Labour. We forced our opponents to change their minds.”

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AUSTERITY, BREXIT, AND A POLITICAL REALIGNMENT The Conservative defeat in 1997 was wholesale. It went from 49.8 percent of the seats at the start of the election to just 25 percent after the election. The party was to remain in opposition for thirteen years. The 1997–2005 period was one of ideological staleness; the party was even more Thatcherite as new Tory MPs entered who had been inspired by Thatcher in office. The party went through no postmortem of the 1997 defeat. Instead, it told itself it was only a matter of time until New Labour was found out and that the voters would come back home to the natural party of government. They didn’t. In the eight years from 1997 to 2005 the Conservatives had had four leaders: Major, William Hague, Iain Duncan-Smith, and Michael Howard. Now they would have a fifth. In the end, David Cameron comfortably defeated his rival David Davis—a more traditional Thatcherite—in a ballot of the party’s membership. Cameron’s pitch was twofold: firstly, he seemed more prime ministerial and more personable than his rival; secondly, he was the only candidate who recognized that the Conservative Party had to change, that it needed to “decontaminate” its brand. The party was out of step with modern Britain, and the public did not think the party had their best interests at heart. Cameron was also willing to talk about issues the Conservatives typically ignored, such as the environment, social justice, and public services. Cameron claimed that he was “not a deeply ideological person—I’m a practical person,” but he also labeled himself a “liberal Conservative,” an ideology that mixed various elements of previous Tory traditions: it “is economically neo-liberal, espouses a one nation approach to social policy, is eurosceptic in a Thatcherite fashion and Tory in his or her regard for tradition and social institutions. In other words, Cameronite Conservatism is a mixed bag of centre-right ideas and values but distinctly and recognisably Conservative” (Beech 2009). Thus Cameron rejected the Europhilia of the one-nation tradition and the social conservatism of the Thatcherite tradition; indeed, his government introduced same-sex marriage although a majority of his own MPs voted against. On the international level, liberal conservatism is interventionist, but as part of a multilateral movement, and emphasizes national sovereignty and rejects moral relativism: human rights are universal. Thus in the same way New Labour took from Thatcherism, Cameron took from New Labour the key idea that twenty-first-century politics was about combining economic efficiency with social justice—or, crudely, right-wing economics with left-wing social values, with an added dose of anti-European sentiment (or Euro-skepticism). New Labour was much more willing to expand the role of the state, of which Conservatives still held a healthy distrust. The 2010 general election resulted in the Conservatives coming first but without enough seats to form a government. In the end, the Conservatives entered into coalition with the third-placed Liberal Democrats, giving the government a comfortable majority of 78. The Conservative-Liberal Democrat coalition was initially justified by both parties through the concept of the “national interest”—the need to cut the deficit and steer the country through austerity following the great financial crisis—and through shared values between the party of individual freedom and personal respon-

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sibility. The 2015 general election returned a Conservative majority government (the first since 1992) and allowed Cameron to fulfill his manifesto pledge of a referendum on membership of the European Union, as per the party’s 2015 manifesto. Following Cameron’s resignation after losing the EU referendum (see below for more), Theresa May became leader of the Conservative Party in 2016, until she was replaced by Boris Johnson in 2019. Despite their vastly different personalities and styles, both argued that the vote to leave the EU represented a public cry of anger against a political and economic system which was stacked against the ordinary person, where individuals do not feel valued. Mayism emphasized a belief in “the good that government could do,” in both the social and economic spheres. In the social, she argued that the free market had limited value in tackling the long-term causes of poverty and addressing “burning injustices” in society, but she also supported a robust and tough migration system. In addition, she advocated a more collectivist economic system with a greater role for the state—for example, developing an industrial strategy, a greater say for workers on company boards, and caps on the maximum price of energy bills. This was a return to a more one-nation approach, albeit without the pro-European sentiment commonly held by postwar one-nation Conservatives, and was certainly a rejection of Thatcherite individualism. Some commentators labeled May a “Red Tory,” and Labour leader Ed Miliband joked that May was enacting his 2015 manifesto. Her successor as prime minister, Johnson, was in office for three years and fortyfive days. His first five months were taken up with trying to get his Brexit legislation through with a minority government. Following his victory in the December 2019 snap general election, the coronavirus crisis hit. In many ways, Johnson took May’s political program and added a sprinkle of political charisma and a more affable persona; Johnsonism also supported more interventionist economic policies to “level up” parts of the UK which have not shared in the economic growth flowing from globalization. He was brought down by his own party due to various scandals rather than by any major disagreements over policy. Liz Truss succeeded Johnson as leader of the Conservative Party and thus as prime minister. Truss was a self-described Thatcherite, and sought to unleash economic growth through a tax-cutting economic agenda. This, however, spooked markets and led to her rapid removal from office by her parliamentary colleagues: she was prime minister for just fifty days. She was replaced by Rishi Sunak, the first British Asian and the first Hindu prime minister, who quickly restored economic stability through policies announced in the 2022 Autumn Statement but which led the director of the Institute for Fiscal Studies to say the UK had entered “a new era of higher taxation, higher spending (as a fraction of national income) and a bigger state” (Johnson, 2022). The era of Thatcherite Conservatism seems to be over. LABOUR IN OPPOSITION DURING AN AGE OF AUSTERITY Following Labour’s defeat in the 2010 general election, Ed Miliband unexpectedly won the leadership election, defeating four other challenges (including his own

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brother, former Foreign Secretary David Miliband). Ed Miliband was seen to be on the Left of the party—he was labeled “Red Ed” by the press—and sought to move on from the New Labour period. He pursued a more explicitly social democratic policy program, rejecting the close relationship between New Labour and finance and presenting a more critical approach toward capitalism. However, Miliband failed to distance the party from a policy of austerity—often the party’s pitch sounded like it was offering a better form of austerity—and the fact he didn’t look or sound like a prime-minister-in-waiting hurt him. After the 2015 general election, Jeremy Corbyn was elected as Labour leader. Corbyn was a socialist, the most left-wing leader since Michael Foot in the early 1980s, and represented the Bennite tradition of left-Keynesianism, anti-austerity economic policies, and democratizing the Labour Party. Rhetorically, Corbynism was a wholesale rejection of New Labour, although the 2017 and 2019 election manifestos failed to live up to the radicalism of the rhetoric: Bassett describes Corbynism as social democracy with radical rhetoric (Bassett 2019). In the international sphere, the party was pro–nuclear disarmament, anti-NATO, and anti-imperialist (although this was often just anti-Western— little was said about Russian or Chinese adventures abroad). Corbynite critiques of Israel and support for Palestine were often thinly veiled anti-Semitism which went far beyond criticism of the Israeli government. Anti-Semitism led to the shame of Labour being investigated by the Equality and Human Rights Commission. Following the 2019 general election defeat, Corbyn stood down and was replaced by Sir Keir Starmer, who defeated the Corbynite candidate Rebecca Long-Bailey. Starmer has struggled to define himself ideologically, but he is seen as being on the Soft Left of the party. He has spent much of his time removing the influence of Corbynites and the Hard Left from the party: his shadow cabinet choices rewarded the Soft Left, with figures on the Right of the party given junior roles and Corbynites squeezed out—including Long-Bailey, for tweeting an article containing anti-Semitic tropes. Labour’s current (2022–2023) lead in the polls reflects anger at the Conservative Party, the sleaze under Johnson, and the economic chaos under Liz Truss rather than any deep affection for Labour or Starmer. CONVERGENCE? Parties change, and their ideology evolves. Since World War II, the UK has gone from a broadly social democratic consensus to a broadly neoliberal consensus. Now both parties have moved to the Left when it comes to economics, as a response to Brexit and voter dissatisfaction with income and wealth inequality. The important divide now is along the social dimension, although this is more complex. On what might be termed “traditional social liberalism”—abortion, gay marriage, and so on—the parties are broadly united and in favor. On what might be termed “woke social liberalism”— identity politics and issues such as trans rights—the parties are divided, with Labour more in favor and the Conservatives more opposed. It is too early to say, but there are signs that the coronavirus crisis will lead to a new consensus around increased spending but with clear dividing lines over issues of identity politics.

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Brexit: Symptom, Not Cause On June 23, 2016, voters in the UK went to the polls to have their say on whether the country should remain a member of the European Union; many were shocked when the public voted to leave by 51.9 percent to 48.1 percent on a turnout of 72.2 percent. This decision was not a bolt from the blue, shaped solely by the referendum campaign. The UK had never had an easy relationship with the EU, and membership had never been an issue of consensus. The postwar era saw drastic changes to Britain’s position in the world. It ended the war with an empire which was slowly unwinding as the global mood shifted against formal imperial policies, and the UK by and large decided to throw its lot in with the United States. At the same time, a new project was building steam on the European content, which with the UK—and both the Conservative and Labour parties—would have a strained relationship. GETTING IN In 1946, as leader of the opposition, Winston Churchill gave a speech in Zurich on the future of Europe. He spoke of creating a unified Europe—a United States of Europe— to prevent the horrors of the previous six years from recurring. For Churchill, however, the UK should play no role in this. The UK was still a global superpower, the head of a large empire, tested in war, and liberator of Europe. It stood shoulder-to-shoulder with the United States and the Soviet Union (USSR) and was no equal to the defeated, war-torn states of Europe. The first step in European integration came in 1951 with the establishment of the European Coal and Steel Community (ECSC). This brought together the French, West German, Italian, Luxembourgish, Dutch, and Belgian coal and steel industries— vital for war—under a joint supranational body. Clement Attlee’s Labour government refused to be involved, because “We could not accept . . . the principle that the most vital economic forces of this country should be handed over to an authority which is not responsible to Governments” (HC Deb 1952, c472). The Conservatives opposed it on both imperial grounds—the UK’s interests lay with its empire—and constitutional grounds—a supranational organization would be able to bind Parliament, which goes against a key element of the British constitution: parliamentary sovereignty. The ECSC was followed by the EEC, created by the Treaty of Rome in 1957, which aimed to further integrate the economies of the six countries of the ECSC. The Conservative government refused to even enter discussions; instead, in 1960, it helped to found EFTA alongside Austria, Denmark, Norway, Sweden, Switzerland, and Portugal. EFTA was a traditional intergovernmental organization rather supranational and focused solely on trade rather than economic integration. However, calls for the UK to join the EEC were increasing. The economies of EEC members were doing well compared to the UK’s relatively poor performance. The Treasury saw EEC membership as a way to boost economic competitiveness via discipline and competition, while the Foreign Office saw the EEC as an area where

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Britain could project influence following the rapid decline of its empire. There was no romantic attachment to the idea of European unification but rather a technocratic, economic argument—and there certainly was no bottom-up democratic demand. When Harold Macmillan’s Conservative government put in its first bid to join the EEC in August 1961, there was barely any attempt to sell the EEC to the public, nor was there much public interest in the idea anyway. Labour leader Hugh Gaitskell spoke for many when he opposed membership, speaking of “the end of a thousand years of history” on the basis that it would mean a loss of sovereignty, that it would harm the Commonwealth, and that the technocratic approach of the EEC was anathema to the democratic tradition of the British political system—all ideas which resurfaced on both sides of the 2016 referendum campaign. Regardless, in January 1963, French President Charles de Gaulle announced he would veto the UK’s application; he feared the UK would challenge France’s dominant position within the EEC, that Commonwealth countries or British colonies would get access to the benefits of the EEC, and that UK membership would increase American influence over the bloc. Despite this rebuff, the British establishment was not too upset. In the 1966 general election, the issue of Europe was a minor one. The victorious Harold Wilson put in a second application, and this was rejected by de Gaulle for generally the same reasons. In the parliamentary vote on the application, thirty-five Labour MPs voted against, and around fifty abstained. The UK would only get into the EEC following de Gaulle’s resignation as president of France. Conservative Prime Minister Edward Heath was an ardent proEuropean and saw EEC entry as “something to get us going again.” So desperate was Heath to get the UK into the EEC that he didn’t even request that English be an official language—that was left to Ireland, who joined at the same time. A majority of voters disapproved of the British applying for EEC membership, and opposition united voices on both the Right—like Enoch Powell—and the Left—such as Tony Benn—who argued membership of the EEC would undermine British sovereignty and the British constitutional system. When the UK became a formal member of the EEC on January 1, 1973, the Union Jack was flown outside the European Council in Brussels—but it was upside down. Labour was more split on the issue of membership. Many on the Left saw the EEC as a capitalist club for bankers and bosses. In the February 1974 general election, Labour’s Harold Wilson promised a renegotiation of the UK’s membership, followed by an advisory referendum, which took place in 1975. Collective cabinet responsibility was paused to allow for Labour ministers, typically those on the Left, to campaign against membership. Labour as a party took no official position. The Conservative Party also had splits, but the party—under the leadership of Margaret Thatcher— campaigned for a yes vote. The Scottish National Party campaigned against EEC membership, while all major newspapers advocated for continued membership. The result was 67 percent in favor of continued membership on a turnout of 65 percent; 43 percent of those eligible to vote voted in favor of continued membership. The strength of the result forced the left-wing of the Labour Party to accept European membership, albeit temporarily, and the trade union movement to embed itself into European institutions.

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There was, however, no great warmth for the European project. Opinion polls showed the public were still hostile to membership in the EEC, and the press enjoyed linking the Common Market with higher food prices or wasteful practices, such as butter mountains and wine lakes. The British were reluctant Europeans; they saw the EEC as a tool for addressing economic woes (inflation, unemployment, low productivity) and took their voting cues from the large political consensus on the matter. Despite this, the question of Britain’s place in Europe seemed to be settled. GETTING DOUBTS Despite her reputation as an ardent Euro-skeptic, Margaret Thatcher oversaw a deepening of European integration while in office. In order to create the Single European Market—and re-create “Thatcherism on a European scale”—Thatcher had to consent to direct elections to the European Parliament, which granted the body democratic legitimacy, and to agree in principle to monetary union and that the UK would enter the Exchange Rate Mechanism (ERM) of the European Monetary System: the first steps on the road to a common currency. Thatcher also accepted “qualified majority voting” in areas related to the single market, which meant that individual countries could not block decisions. This made sense for the single market but would spread to other areas of European cooperation at the expense of national government decision-making ability. In rushing to secure “Thatcherism on a European scale,” the Thatcher government set in motion a growth in strength of the European project and provided fuel for future fears that British sovereignty was being eroded. Following the passage of the Single European Act, the pace of European integration increased; things were not helped by the president of the European Commission, Jacques Delors, declaring in July 1988 that “in ten years, 80% of economic legislation, perhaps even tax and social policy, will come from the [European Community]” (Grant 1994, 88). Euro-skeptics realized their mistake, and Thatcher’s approach to Europe changed, epitomized by her 1988 speech at the European College in Bruges (Roe-Crines and Heppell 2020). She articulated the constitutionalist critique that future integration would undermine the British constitution, stating integration had gone too far and powers should be returned to nation-states. Out of office, Thatcher fostered Euro-skepticism from the backbenches of the House of Lords. As Thatcher’s successor, John Major aimed to take a more active approach to Europe, securing opt-outs where necessary. Unfortunately for Major, Euro-skeptics in the Conservative Party became much better organized, and as the EEC became the European Union (EU), with widened competencies, Euro-skeptic voices increased. With Major’s majority reduced to twenty-one following the 1992 general election, the Euro-skeptic rebels in the Conservative Party could also now defeat the government; they had to be listened to. Thus prior to the 1997 general election, Major also promised a referendum on membership of the EU. Euro-skepticism within the Conservative Party increased after what became known as Black Wednesday, when the UK was forced to withdraw sterling from the

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ERM in September 1992. This not only damaged the Conservative’s reputation for good economic management for a generation and humiliated the nation but also added to the idea that European “partners” had not provided enough help to the UK—especially when they enacted reforms a few months later which would have helped the UK. British views toward a common currency also hardened as a result, and calls for a referendum on membership of the euro increased. Under Thatcher and Major, the Conservative Party as a whole became much more Euro-skeptic, although unlike the arguments of Churchill and Eden, Euro-skepticism was rooted in fears about British sovereignty rather than about the Empire or the Commonwealth. Following the 1992, 1997, and 2001 general elections, the percentage of MPs who were both Euro-skeptics and who wanted the UK to withdraw from the European Union increased. This hostility was also shared in the media. During the first referendum on Europe, the newspapers were on the side of remaining; but over the 1990s many papers, especially on the Right, became more Euro-skeptic. It was a media pastime to highlight how decisions made by the EEC/EU would impact on everyday life, regardless of the accuracy of those claims, and on the whole, Euro-skeptics wrote with more passion than those supportive of further integration. THE LABOUR PARTY During the 1980s, the Labour Party also underwent drastic changes vis-à-vis its position on Europe. Following its defeat in 1979, the party took a leftward shift, electing Euro-skeptic Michael Foot as leader. During the 1980 Labour Party Conference, delegates voted by five million to two million to withdraw from the EEC, and the policy was duly included in their 1983 manifesto. The EEC and (later) the Single Market were seen as a bankers’ club of capitalists, entrenching capitalism and preventing democratically elected left-wing governments from delivering left-wing economic policies such as public ownership, import controls, or state planning. However, following the disastrous defeat in 1983, the party began a long process of modernization under Neil Kinnock, John Smith, and Tony Blair. Euro-skepticism became tied up with modernization and was sidelined by the leadership, as Euroskeptics lost control of key positions to the modernizers. Kinnock shifted the party’s position in 1984 to consider withdrawal if the EEC could not be reformed, and by 1989, the position was that it would actively engage with the European Community. The election of Blair as party leader in 1994 secured the pro-Europe, pro-engagement policy. A survey of Labour MPs in the mid-1990s found that only 3 percent advocated withdrawal and only 20 percent agreed that Britain should never permit its monetary policy to be determined by a European Central Bank, compared to 26 percent and 66 percent, respectively, for the Conservatives (Forster 2002, 112). Euro-skeptic values were boosted when in 2004, ten Eastern European countries joined the EU, followed by two more in 2007. Unlike most other members, Blair did not introduce a transition period which would restrict freedom of movement from these countries for several years, resulting in significant migratory pressure from these

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countries on the UK, of around three million people between 2004 and 2010. This inflow of people from Eastern Europe reconfigured many communities, and the effects on local populations varied; working-class voters saw increased competition for jobs, sudden changes to their localities, and increased demand for local public services and housing, while companies and middle-class voters in big cities benefited from cheap labor. The increased competition for employment helped to fuel working-class Euroskepticism in the long-run. One final area which caused issues for New Labour was the draft EU constitution. During the 2005 general election campaign, Blair promised a referendum before ratification. Blair quietly shelved that promise after France and the Netherlands rejected the constitution in their own referenda in May and June of that year, and the European constitutional treaty was replaced with the Treaty of Lisbon. The Lisbon Treaty incorporated around 95 percent of the constitutional treaty but lacked its rhetorical flair. Gordon Brown, now prime minister, argued that the treaty was sufficiently different that the promise of a referendum was no longer necessary. David Cameron, Conservative leader, also promised a referendum on the Lisbon Treaty but, once it had been ratified by all member states, rightfully claimed it would be pointless to hold a referendum on it. Instead, Cameron promised that if he were elected to power in 2010, any substantial transfers of power from the British government to the EU would have to pass a popular referendum. GETTING OUT Cameron was not alone in making that pledge. At the 2010 general election, both the Conservatives and Liberal Democrats offered a referendum on any further transfer of powers to the EU, while Labour offered a referendum only on whether to adopt the euro as the UK’s currency. Thus the Conservative–Liberal Democrat coalition agreement included pledges to prevent further transfers of power to the EU without a referendum and that Britain would not join—nor even prepare to join—the euro. Despite this, a series of events continued to put pressure on Cameron to go harder on EU membership. In 2011, eighty-one Conservative MPs and nineteen Labour MPs opposed their parties’ whips and voted for a motion calling for a referendum on EU membership. Conservative MPs were increasingly worried that the right-wing United Kingdom Independence Party (UKIP) would split its vote and thus lose them their seats. In 2010, UKIP won nearly one million votes but no seats; the 2013 local elections suggested UKIP would win a national vote share of 22 percent, and it came first in the 2014 European Parliament election with 27 percent of the vote, to Labour’s 24 percent and the Conservatives’ 23 percent. In 2014, two Conservative MPs defected to UKIP and successfully defended their seats in by-elections. This pressure led to David Cameron promising in 2013 that if the Conservatives won a majority in the next election, they would legislate for an in-out referendum on EU membership. This referendum would follow an attempted renegotiation of the terms of membership, similar to Wilson’s approach in the early 1970s. When Cameron won his majority in 2015, he duly legislated for the referendum.

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Despite getting the EU to secure a reinterpretation of Article 1 of the Treaty on European Union—that “ever closer union of the peoples of Europe” was a commitment, not a legal obligation—Cameron’s renegotiation was largely seen as a distraction and was quickly forgotten during the referendum campaign. During that campaign, the Conservative Party was officially neutral, and collective cabinet responsibility was paused. All other major parties except UKIP and the Northern Irish DUP supported “Remain.” The Electoral Commission designated Britain Stronger in Europe as the official Remain campaign, which was composed of figures from across the political spectrum, while Vote Leave was given the official designation as the “Leave” campaign. There were also a number of other Leave-backing groups, with different approaches—for example, Leave.EU was more right-wing and hard-line on topics such as immigration. The two campaigns approached the referendum in different ways: the Remain side focused on the economic and security costs of leaving, with a deluge of facts, figures, and statistics—claiming they could predict the loss to the UK’s GDP in ten years’ time to two decimal places!—but failed to explain why remaining a member of the EU was good in and of itself. The political, cultural, and economic elites lining up to warn of the dangers of voting to leave often gave the impression of a complete lack of national pride and the belief that the EU was the only good thing about the UK. The message was, membership in the EU was not great, but the alternative was worse. Additionally, Labour’s Remain campaign was muted. Labour leader Jeremy Corbyn, who voted against membership of the EEC in 1975, would not share a platform with Conservatives and was criticized for a lukewarm referendum campaign. Given that cues from politicians matter, a more active campaign from Corbyn might have helped shift the balance of votes toward Remain. In contrast, the different Leave campaigns spoke to emotion and intuition and focused on sovereignty and migration. Vote Leave’s slogan “Take Back Control” spoke to a sense of political disillusionment felt by many voters, who felt powerless and that whether they voted Labour, Conservative, or Liberal Democrat was irrelevant, since all three parties would act the same. The word “back” made voting Leave seem less risky: it was no longer a leap into the unknown but a return to the pre-EEC era, and it conjured up a sense of undoing a mistake. Vote Leave’s most memorable message was that the UK sent £350 million per week to the EU, and that money could be spent on the NHS instead. The Remain side claimed this figure was false and that the figure was closer to £180 million. However, every time Vote Leave was challenged in the media, it repeated its core message: £350 or £180 million, both are a lot of money, and if we leave the EU, we can spend it on what we want. Vote Leave was helped by the decision of Boris Johnson, the widely popular former mayor of London and now London MP, to join their side. As such, Johnson was well known as a politician and had an appeal that reached beyond the traditional Conservative voter base; he was often labeled the Heineken Tory, in that he could reach parts of the electorate other Conservatives could not, a play on the lager brand’s famous slogan that Heineken “refreshes the parts other beers cannot reach.” He presented an optimistic case for leaving the European Union and, alongside Tory

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heavyweight Michael Gove, published a post-Brexit manifesto “[that] far exceeded the limits of what Cameron might have had in mind when he lifted cabinet collective responsibility for the referendum campaign.” Leave’s overall message was that the UK could prosper outside of Europe, while Remain “had to implicitly concede that Britain could no longer prosper without being chaperoned by Brussels” (Adam 2020, 99). Meanwhile, Leave.EU hammered home the message of controlling immigration, arguably the most important issue in the Euro-skeptic arsenal. Helpfully for Leave, less than a month before the referendum, official statistics for migration into the UK for the previous year were released. Net migration was at 332,000, far beyond the “tens of thousands” Cameron pledged in 2010. Half of this came from EU countries. Cameron’s Conservatives had lost voters’ trust when it came to immigration, and many felt like UKIP leader Nigel Farage was saying what mainstream politicians would not. A week before the vote, Farage released a much-criticized poster of a large number of refugees queuing, with the caption “Breaking Point.” The referendum result was 17.4 million votes for Leave against 16.1 million votes for Remain—51.9 percent to 48.1 percent, with a 72 percent turnout—higher than turnouts in any general election held since 1992. Scotland, Northern Ireland, Gibraltar, and London all voted to remain, while the rest of England and Wales voted to leave. Within England, outside of London, it was typically cities with universities that bucked the trend and voted Remain. Those who were younger, graduates, middleclass, or ethnic minorities were more likely to vote Remain, whereas homeowners, manual workers, the working classes, older people, and residents of low-turnout areas were more likely to vote Leave. There was a range of reasons why people might vote to leave the EU, but the most important drivers were based on a cost-benefit analysis of the EU as an organization. Had membership delivered economic prosperity, controlled migration, or other perceived benefits? (Clarke, Goodwin, and Whiteley 2017). Survey data shows that people thought that while leaving the EU would be economically damaging, it would also help to reduce immigration and allow for the UK to regain control over its own laws—that is, restore sovereignty. Thus voters who saw immigration as a salient issue and who thought leaving the EU would help address high levels of immigration were very likely to vote to leave. Similarly, those who felt (rather than those who actually were) left behind economically were more likely to see leaving the EU as less risky—that is, they felt they had less to lose—and thus were more likely to vote to leave (Norris and Inglehart 2019, 387). Unsurprisingly, those who thought the EU provided more benefits than costs were more likely to vote Remain, and vice versa. However, this view was itself influenced by a range of factors. If you had positive views of Cameron and Corbyn, you would be more likely to see Leave as costly and thus more likely to vote Remain. The reverse was true for Farage and Johnson: the more voters liked either of those politicians, the more likely they were to vote for Leave. The probability of voting Leave among those who most disliked Johnson was 9 percent; for those who most liked him, it was 93 percent. Given that over half the population had at least a lukewarm view of Johnson, it is not hard to see that if he were campaigning for the Remain side, Remain might just have won. Clarke, Goodwin, and Whiteley summarize that “by having both Johnson and

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Farage as leaders of two different Leave campaigns the Leavers were able to maximize their support among different groups of Eurosceptic voters” (2017, 164–65). Pippa Norris and Ronald Inglehart also indicate that voters who held more socially authoritarian and populist values were much more likely to vote to leave: of those who measure the lowest scores on the populism scale, under 10 percent voted to leave, while those with the highest scores on the populism scale reported nearly 80 percent voting Leave. This pattern was true across all parties—the Leave voters of every party were more populist and more authoritarian than the Remain voters of each party. And reflecting the historic divides between the two main parties on the issue of Europe covered above, the traditional Left-Right ideological scale did not map onto support for Leave in a statistically significant way (Norris and Inglehart 2019). The UK formally left the EU on January 31, 2020, and following a brief “transition period,” the new rules regarding the relationship between the EU and the UK came into force on January 1, 2021. The referendum to leave the EU bucked the trend of what is known as “LeDuc’s law,” whereby people often move from the risky option to the status quo in high-stakes referenda. In this case, however, continued membership of the EU was presented as a risky option: a lack of control over future levels of inward migration from Europe and unknown prospects for increased control of UK law by Brussels, whereas leaving the EU was presented as, in some respects, going back to the pre-1973 status quo.

Governing Britain: Challenges to the Westminster Model Brexit, alongside devolution to Scotland, Wales, and Northern Ireland—but not England—has challenged traditional conceptions of how the British state is organized. The Westminster Model refers to the type of majoritarian parliamentary system which originated in England and was subsequently used in most former colonies of the British Empire, as well as Japan and Israel, and stands in contrast to other forms of parliamentary democracy, such as the more consensual Germany system, and presidential and semipresidential systems (such as the United States and France, respectively). At the core of the notion of the Westminster Model is parliamentary democracy—that is, the executive (the government) is drawn from the legislature and can be dismissed by the legislature in a vote of no confidence. The head of government (the prime minister) is typically different from the head of state (the monarch or, in a republic, a broadly ceremonial president). This is in contrast to presidential systems, where the executive (the president) is directly elected by the people and typically cannot be dismissed by the legislature except in specific cases of criminal wrongdoing. Parliament (or, more accurately, the Crown-in-Parliament) is sovereign—that is, Parliament cannot be bound by any higher power and it can make or repeal any law it wishes. Thus the Westminster Model is characterized by a unitary, centralized state insofar as other levels of government, such as local government, are not constitutionally protected; they are created by legislation and can be unmade by legislation. This

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stands in contrast to countries like the United States or Germany, where state governments are constitutionally protected and thus cannot be abolished or modified by the federal government. Parliamentary sovereignty leads to certain consequences. The first is constitutional flexibility. The UK has what is called an “uncodified” constitution, sometimes described as “unwritten,” because it does not exist as a single document. The UK’s constitution is a mix of statute law (legislation), common law (custom and judicial conventions), conventions (e.g., collective cabinet responsibility and individual ministerial responsibility), and what are known as “works of authority,” essentially legal textbooks which have “persuasive authority” when making constitutionally important decisions (Norton 2018, 312). Since Parliament is unconstrained, it follows that there is nothing to stop Parliament changing any element of the British constitution. The second consequence is an absence of meaningful judicial review; since no piece of legislation can be unconstitutional, due to parliamentary sovereignty, all judges can do is point out inconsistencies or incompatibilities with other agreements or treaties. Judges, or the Supreme Court, cannot change, nullify, or repeal legislation. However, the UK’s use of case law means how judges interpret a piece of legislation, and the precedent that interpretation sets, matters. The Westminster Model typically uses a majoritarian electoral system like first past the post, which often delivers single-party governments and typically excludes the opposition from meaningful power. The use of first past the post also leads to a two-party system and a winner-takes-all approach to government formation. In a pure majoritarian system, the legislature is typically unicameral—that is, there is just one legislative house (as in Israel and New Zealand). The UK deviates from this somewhat due to the historic evolution of Parliament, but the House of Commons is the predominant chamber, having been able to overrule the House of Lords since the Parliament Acts of 1911 and 1949. Nowadays Lords is primarily an advisory chamber and can only delay legislation for one year. A combination of single-party governments and strong party loyalty among MPs means that the cabinet (the government) dominates the legislature and the legislative process—so while, formally, the House of Commons can pass a vote of no confidence in the government, majority government typically means some MPs from the governing party would have to go against their party, and party loyalty (and the prospects of reelection) means that this is unlikely—for example, Euro-skeptic rebels voted for John Major’s legislation when he made it a vote of confidence in his government. The dominance of the cabinet over the legislature led former cabinet minister Lord Hailsham to call the British system of government an “elective dictatorship.” In order to promote effective government, there is a concept of “collective cabinet responsibility,” which states that while a minister may disagree privately with government policy, in public the minister must either support the policy or resign. This is often referred to as the payroll vote: those who hold paid ministerial office (and in the case of parliamentary private secretaries, unpaid office) must vote with the government or resign. Collective cabinet responsibility also means that if the government is defeated on a vote of no confidence, the whole cabinet has to resign. Related to this is the concept of individual ministerial responsibility, whereby ministers are responsible

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for the decisions and actions taken by their departments rather than the civil servants within the department. CHALLENGES TO THE WESTMINSTER MODEL Even a cursory glance at the above sketch of the Westminster Model should show that the theory does not quite survive contact with reality. In terms of parliamentary sovereignty, the European Communities Act of 1972 was typically seen as placing a limit on Parliament’s sovereignty, as Parliament could not legislate contra to European law. Similarly, the UK has been a signatory of the European Convention on Human Rights since 1951 and, in 1966, allowed individuals to petition the European Court of Human Rights, which can review and invalidate legislation. However, in both cases, the UK Parliament chose to bind itself in this way, and, as seen with the European Union (Withdrawal) Act of 2018, these choices can be reversed. Perhaps a more serious threat to the concept of parliamentary sovereignty is the increased use of referenda to settle constitutional questions. Critics argue that referenda replace parliamentary sovereignty with popular sovereignty (e.g., “the will of the people”). However, constitutionally the referenda are always advisory (unless legislation, passed by Parliament, deems otherwise). Thus the decision to follow the referendum result is a political, not constitutional, one; hence the concept of parliamentary sovereignty is not actually challenged. Relatedly, the idea of a unitary, centralized state has been challenged by devolution. Firstly, as Arend Lijphart notes, Northern Ireland had its own parliament, cabinet, and prime minister “with a high degree of autonomy—more than what most states in federal systems have” from 1921 until direct rule was imposed in 1972 (Lijphart 2012, 17). Secondly, with the establishment of the Northern Irish and Welsh assemblies and the Scottish Parliament in 1998 and 1999, there now exist powerful subnational bodies. However, it is important to distinguish between the constitutional and the political position of these bodies. Although constitutionally these bodies could be repealed by Parliament through a simple act of Parliament, politically this would be impossible. The notion of the UK being a majoritarian democracy with single-party majority governments is also under challenge from a number of areas. Firstly, nonmajoritarian electoral systems are now used across the UK, including in local and devolved elections in Scotland and Northern Ireland and in devolved elections in Wales, and were used for European Parliament elections, while the preferential “supplementary vote” system is used to elect mayors and police and crime commissioners. The UK has also experienced coalition and minority governments within the 2010s, although the general election of 2019 saw somewhat of a reversion to the mean, with the Conservatives winning a majority of eighty seats and the Conservatives and Labour winning 75.7 percent of the vote and 87 percent of the available seats. Interestingly, the Institute for Government found that the coalition government actually increased the role of the cabinet compared to single-party governments: “The role of formal Cabinet decision making was greater” than under the previous single-

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party governments; “the parties mostly held to a shared line, ensuring the effective functioning of the government” (Nice and Paun 2019, 8). There has been no real weakening of collective cabinet responsibility either; it is the norm for it to be suspended for political reasons for certain decisions. Both Wilson and Cameron did so over Europe, and as far back as the 1930s, it was suspended to allow Liberals to oppose tariffs. Similarly, some issues are seen as issues of conscience, known as “free votes,” where MPs are not whipped to vote a certain way and thus members of the cabinet can vote in different ways. Thus the policy of collective cabinet responsibility has always been flexible. Finally, individual ministerial responsibility has also historically been a fluid concept; often if individual ministers in question had enough political capital or the public failed to take interest in the issue, they could ride out many issues over which other ministers would have to resign. As Rhodes, Wanna, and Weller state, “Ministerial accountability today applies, except when it doesn’t. Collective responsibility applies, unless decreed to the contrary” (2009, 153). A MYTH TO GUIDE ACTION No country perfectly fits the classic description of the Westminster Model, and as we have seen, that includes the United Kingdom. However, the concept of the Westminster Model still remains useful. For political operators, it provides precedents or frameworks from within which to justify their own actions and to perpetuate a constitutional arrangement which is more conducive to executive action than consensual parliamentary systems. It does not matter if the model is challenged by any given reform; rather, the model itself provides a common myth or assumption which allows actors to act in a certain way. For political scientists, it allows for broad classification of countries with similar systems and a source of historical understanding of why countries have the types of systems they have today.

The Disunited Kingdom As noted above, the EU referendum highlighted vast differences between England and Wales, on the one hand, and Scotland and Northern Ireland, on the other. Since the 1960s, there have been political forces pulling the UK apart. This section will outline the causes and trends of these forces. SCOTLAND The Scottish National Party (SNP), formed from a merger in 1934 of the left-wing National Party of Scotland and the right-wing Scottish Party, won its first seat in a by-election in 1945 but quickly lost it at the general election three months later. Their second seat came in 1967 and, along with the Welsh nationalist Plaid Cymru winning

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a seat in 1966, led to Harold Wilson setting up the Crowther Commission. This led to the passing of the Scotland Act of 1978 and the Wales Act of 1978, both of which required the approval of a referendum before being enacted. Wales rejected devolution, while the legislation required 40 percent of the whole electorate to vote yes in the Scotland Act, and while yes won with 51.6 percent of the vote, turnout levels meant that only 32.9 percent of the electorate approved. The Labour government repealed both pieces of legislation, and in a few months’ time, the SNP would side with the opposition in a vote of no confidence in Callaghan’s Labour government, thus ushering in eighteen years of Conservative rule. Under Thatcher and Major, the Conservatives were increasingly an English party; by the 1997 general election, the party had no MPs in Scotland or Wales. Thatcher was not interested in devolution, but Tony Blair’s New Labour was. The New Labour government quickly held a referendum on establishing a Scottish Parliament. 74.3 percent voted in favor (on turnout of 60.2%, meaning 44.9% of the electorate voted in favor). The Parliament was to be elected by proportional representation. New Labour hoped this would dampen the debate over Scottish independence. It did not. The SNP pledged in its 2007 Scottish Parliament election manifesto that it would hold a referendum on independence, but despite coming first, it could only form a minority government and thus could not pass the legislation. In 2011, however, it formed a majority administration. The Cameron government gave the Scottish Parliament the legal powers to hold a “fair, legal, and decisive” referendum. It was claimed that this was a “once-in-a-generation” referendum. During the course of the campaign, due to the tightening polls, the leaders of the three main Westminster parties pledged greater powers to Scotland in the case of a no vote. In the end, 55 percent voted against independence on a turnout of 84.5 percent, and the SNP accepted the result. One side effect of the referendum was to crystallize Scottish politics into a unionist-nationalist divide, with the SNP obviously benefiting from nationalist votes, while the unionist side was split between the Conservatives, Labour, and the Liberal Democrats. In a first-past-the-post system, this can be deadly. Thus in 2015, the SNP could win 95 percent of seats with 50 percent of the vote, while Labour, Conservatives, and Liberal Democrats won 5 percent of seats on 46.7 percent of the vote. For those who voted for independence, 86 percent were voting for the SNP, compared to 16 percent who voted to remain in the UK. However, the decision to leave the EU in 2016 created a constitutional headache for unionists: Scotland as a whole voted to remain in the EU, with only 38 percent voting to leave. After the 2019 general election, when the SNP came first in Scotland (although unionist parties won the most votes collectively), Nicola Sturgeon, the SNP leader, asked Boris Johnson for the legal powers to hold a referendum. Johnson refused, citing the SNP’s promise that the 2014 referendum was a “once in a generation” vote. Polling at this point showed that opinion was split in Scotland: 45 percent of the population were for independence and 45 percent were in favor of remaining in the UK. Following Brexit and during the coronavirus crisis, polls regularly showed a lead for independence—at some points as high as 13 percent—but the first three polls of

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2022 have given remaining in the UK a slight lead. Thus nearly eight years after the referendum, Scotland remains fundamentally split on the question of independence. NORTHERN IRELAND The second threat to the United Kingdom’s integrity comes from Northern Ireland. Since the Good Friday Agreement in 1998, which largely brought the “Troubles,” the violent conflict in Northern Ireland between Catholics and Protestants, to an end, both the British and Irish governments have agreed that Northern Ireland was part of the United Kingdom but that the people of Northern Ireland may choose to vote to join a united Ireland. Although the Good Friday Agreement does not require either party to be a member of the European Union, Brexit has thrown up important questions for Northern Ireland’s constitutional and economic position within the UK. Voting behavior in Northern Ireland is largely based on sectarianism; Protestants are, as a whole, more unionist while Catholics are more nationalist. Polling from 2020 shows that 59 percent of Catholics describe themselves as nationalist, while 67 percent of Protestants describe themselves as unionist. Polling in February 2020 shows that 52 percent of voters oppose a united Ireland, compared to 29 percent in favor; however, this has increased by 2 percent in three years, which would mean that within two decades, support for a united Ireland would outweigh opposition. This is driven by population change in Northern Ireland; younger voters are more likely to be Catholic than Protestant, and Catholics are more likely to support Irish unification. WALES The threats to the Union from Wales are less serious than those from Scotland and Northern Ireland; support for devolution in Wales was never as strong as that in Scotland, and the Welsh nationalist party Plaid Cymru has performed less strongly than the SNP. In the 1997 referendum on Welsh devolution, the devolution side won with 50.3 percent of the vote—a lead of just 6,721 votes. Following the vote to leave the EU—which a majority of Welsh voters supported—it is not uncommon to see the Conservatives leading in the polls in Wales, which is a significant shift from the historic dominance of the Labour Party. This has not lasted, however, and during the coronavirus pandemic, Labour has regained—and extended—its historic lead. Indeed, in Wales there is strong opposition to independence. In the latest polling, 53 percent were opposed to independence, while 21 percent were in favor. When more options are given, support for independence is lower: 14 percent supported independence, 35 percent supported more powers for the Welsh Parliament, and 27 percent supported the status quo; 3 percent supported fewer powers, and 15 percent supported the abolition of the Welsh Parliament. There is also a party named Abolish the Welsh Assembly (which may update its name now that the Assembly has become a Parliament), although in the 2021 Welsh Parliament elections, it won just 3.7 percent of the regional vote and no seats. The Brexit Party—which later became Reform UK—has

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also supported abolishing the Welsh Parliament, but it only managed 1.1 percent of the regional vote. ENGLAND England is not immune from providing tensions within the Union. The onset of devolution gave rise to what became known as the West Lothian question, named after Tam Dalyell, the MP for West Lothian in Scotland, who raised the issue repeatedly in the House of Commons. At the heart of the West Lothian question is that, without devolution to England, MPs from Scotland, Wales, and Northern Ireland can vote on issues in the House of Commons which affect England only, while English MPs cannot vote on the same issues which affect the other constituent nations of the UK. In order to address this, the concept of “English Votes for English Laws” was introduced in 2015, whereby decisions which affect England (or England and Wales only) required a majority of English MPs (or English and Welsh MPs) to vote in favor of laws affecting these areas. However, this has not stopped some calling for an English Parliament, either within the UK or without the UK. Polling on this is quite sporadic, reflecting the low salience of the issue, but the British Election Study found that between April and May 2016, 16 percent of English voters wanted an English Parliament within the UK and 4.3 percent wanted an English Parliament and English independence. In 2020, a poll found that 27 percent of voters would support English independence, while 51 percent would support the status quo—and interestingly, the bulk of those who supported English independence voted for the Conservative Party in 2020—or to give it its full name, the Conservative and Unionist Party.

Conclusion The UK has faced a number of challenges since 1945. What is its role on the world stage? For some, the UK should settle for being a second-tier power within the European family of nations—an active part of the EU, NATO, and the UN, working in concert with other nations. However, the UK is still one of the few nuclear powers, it has a permanent seat on the UN Security Council, it is the sixth-largest economy in terms of nominal GDP, and it has significant soft power due to London being a global financial hub and English being the global lingua franca. Britannia can still roar. To many observers, the UK is having somewhat of an identity crisis. However, Brexit is simply a very clear consequence of a trend happening across advanced Western democracies: the rise of a cultural and identity cleavage which is superseding, or in some cases superimposed over, traditional Left-Right cleavages. This chapter is not the place to explore these trends, but it is obviously happening: in France; both the 2017 and 2022 presidential elections were between the globalist Emmanuel Macron and the nationalist Marine Le Pen, the latter of whom faced a challenge to her right from the even more nationalist, nativist, and culturally conservative candidate Éric

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Zemmour. In Germany, the success of the populist radical Right, Alternative for Deutschland, is mirrored by the success of the Green Party, parties on opposite sides of the globalist-nationalist divide. The pattern is neither even nor linear, but it is there, and the UK is no exception. Brexit was partly caused by this realignment, alongside higher-than-average levels of Euro-skepticism and dissatisfaction with the political status quo. So what does the future hold for the UK? Scotland is the most obvious threat. The SNP’s nationalist grievance politics will never be satisfied with any level of devolution, so Unionists need to keep restating the case for the Union. They should learn from the EU referendum campaign: facts are important, but so are emotions. Neither should the case be made just to Scotland. There are mumblings about the Union in Northern Ireland, Wales, and even England. The UK has lasted for so long because it has been flexible and because the ties that bind the nation together are stronger than those pulling it apart. If the UK is to survive until the end of the next century, it needs to rediscover and strengthen those ties.

Suggested Readings Clarke, Harold D., Matthew Goodwin, and Paul Whiteley. Brexit: Why Britain Voted to Leave the European Union. Cambridge: Cambridge University Press, 2017. Ford, Robert, Tim Bale, Will Jennings, and Paul Surridge. The British General Election of 2019. Cham, Switzerland: Palgrave Macmillan, 2021. Marr, Andrew. A History of Modern Britain. London: Pan Books, 2017. Mattinson, Deborah. Beyond the Red Wall: Why Labour Lost, How the Conservatives Won and What Will Happen Next? London: Biteback Publishing, 2020. Sobolewska, Maria, and Robert Ford. Brexitland: Identity, Diversity and the Reshaping of British Politics. Cambridge: Cambridge University Press, 2020.

References Adam, Rudolf G. 2020. Brexit: Causes and Consequences. Cham, Switzerland: Springer. Bassett, Lewis. 2019. “Corbynism: Social Democracy in a New Left Garb.” Political Quarterly 90 (4): 777–84. https://doi​.org​/10​.1111​/1467​-923X​.12735. Beech, Matt. 2009. “Cameron and Conservative Ideology.” In The Conservatives under David Cameron, edited by Simon Lee and Matt Beech, 18–30. London: Palgrave Macmillan. Clarke, Harold D., Matthew Goodwin, and Paul Whiteley. 2017. Brexit: Why Britain Voted to Leave the European Union. Cambridge: Cambridge University Press. Forster, Antony. 2002. Euroscepticism in Contemporary British Politics. London: Routledge. Gamble, Andrew. 1988. The Free Economy and the Strong State. Basingstoke, UK: Palgrave Macmillan. Grant, Charles. 1994. Delors: Inside the House that Jacques Built. London: Nicholas Brealey. HC Deb 477, col. 472, July 5, 1952. https://api​.parliament​.uk​/historic​-hansard​/commons​ /1950​/jul​/05​/schuman​-plan​-ministers​-speech.

U nited K ingdom    29 Johnson, Paul. 2022. Autumn Statement 2022: IFS Analysis. London: Institute for Fiscal Studies. https://ifs​.org​.uk​/sites​/default​/files​/2022​-11​/Autumn​-Statement​-2022​-IFS​-Analysis​ -Opening​-Remarks​.pdf. Lijphart, Arend. 2012. Patterns of Democracy. New Haven, CT, and London: Yale University Press. Nice, Alex, and Akash Paun. 2019. Coalition government at Westminster. London: Institute for Government. Norris, Pippa, and Ronald Inglehart. 2019. Cultural Backlash: Trump, Brexit, and Authoritarian Populism. Cambridge: Cambridge University Press. Norton, Philip. 2018. “The Changing Constitution.” In Politics UK, edited by Bill Jones and Philip Norton, 310–34. London: Routledge. Rhodes, R. A. W., John Wanna, and Patrick Weller. 2009. Comparing Westminster. Oxford: Oxford University Press. Roe-Crines, Andrew, and Tim Heppell. 2020. “Legitimising Euroscepticism? The Construction, Delivery and Significance of the Bruges Speech.” Contemporary British History 34 (2): 204–27. https://doi​.org​/10​.1080​/13619462​.2019​.1669019. Young, Hugo. 1994. “The Prime Minister.” In The Major Effect, edited by Dennis Kavanagh and Anthony Seldon, 18–28. London: Macmillan.

CHAPTER 2

France THE MACRON PRESIDENCY: TRANSFORMATION, REGRESSION OR STASIS? Gabriel Goodliffe

30

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France Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2013): Joined EC/EU:

67.4 211,208 309 $2,603 $38,625 January 1, 1958

Performance of Key Political Parties in Parliamentary Elections of June 2022 (Second Round) Ensemble (“Together”): New Ecologic and Social People’s Union: National Rally: Union of the Right and Center: Main Officeholders • President: Emmanuel Macron, Ensemble (2017) • Prime Minister: Elisabeth Borne, Ensemble (2022)

38.6% 31.6% 17.3% 7.3%

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E

mmanuel Macron’s election as eighth president of France’s Fifth Republic in May 2017 was a political earthquake. No presidential election since François Mitterrand’s victory in 1981 was as groundbreaking in political, economic, societal, and even cultural terms. The 2017 national elections marked the first time in the Fifth Republic’s history that a candidate not issuing from the traditional governing parties was elected president and that a new formation constituted around that candidate won a majority in the ensuing parliamentary election. Domestically, Macron’s victory rekindled hopes in certain quarters that he would be able to transform the nation’s economy and update its welfare system so as to return the country to full employment and, in so doing, restore political comity and quell the threat of populism. In this sense, his political project perforce intervened in and reinflamed long-standing ideological and policy debates underlying the country’s politics. The purpose of the present chapter is to assess whether Macron’s presidency has lived up to these expectations and to flesh out the departures and continuities it pre­ sents within the longer run of French political development. It will evaluate Macron’s leadership and policies against those of his immediate predecessors, Nicolas Sarkozy and François Hollande, with a specifically domestic focus on the economic and sociopolitical arenas. Space limitations combined with the eventfulness of Macron’s first term in office unfortunately mean that discussion of Macron’s European and foreign policy will have to be left for another time.

The Economic Challenge Since the mid-1970s, unemployment in France has hovered at around 8 percent, and it frequently topped 10 percent from the mid-1980s on. These figures worsened with the 2008–2009 global economic and 2010–2012 European debt crises. Certain groups were particularly affected, with youth joblessness plateauing at around 20 percent since the mid-1980s. By the same token, a substantial proportion of extant jobs were government subsidized. This persistent unemployment was attributable in part to the unresponsiveness of the French labor market to changing economic circumstances and labor laws that focused on protecting existing jobs rather than spurring economic growth. In addition, non-wage labor costs (NWLCs) imposed on French firms to finance the welfare and social security systems made it more expensive for them to hire new workers, while a high minimum wage reduced the availability of minimum wage jobs. Finally, labor market rigidities were exacerbated by French people’s resistance to moving to a new city or region for work or to switching professions midcareer, as well as the incompatibility between the technical skills increasingly demanded by companies and those imparted by the general university system. Labor laws protecting employees from dismissal, wage growth to stimulate consumption, generous welfare and social security regimes, as well as the statist-corporatist arrangements overseeing these institutions were introduced during the Trente Glorieuses, when France was a relatively self-enclosed economy shielded from international competition. They were ill adapted to an increasingly global economy subject to intensifying trade competition and international capital flows. Accordingly, as French

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firms became less competitive and were forced to lay off more workers, the economy was divided between a shrinking core of “insiders”—workers whose jobs remained protected and who continued to benefit from the Fordist welfare state—and a growing mass of “outsiders”—those, particularly among the young and unskilled, who were excluded from the system. ENDING STATE PLANNING AND REFORMING THE WELFARE STATE The economic challenge posed by globalization can be traced back to the 1970s, when postwar France experienced mass unemployment for the first time combined with spiraling inflation. The causes resided in the dual oil price shocks and surge of unregulated international capital flows. The Socialist-Communist coalition that came to power following Mitterrand’s election in 1981 attempted to overcome economic stagnation by stimulating consumption through a strategy of reflation and statist economic management. (See table 2.1 for a list of political leaders of the Fifth Republic.) During Mitterrand’s first two years in office, the Socialist-Communist government pursued a sweeping reflationary program that amounted to a 12 percent increase in government spending. This stimulus was accompanied by the most comprehensive nationalization campaign since the Liberation and the resumption of industrial policies that included setting production targets as well as fusing SMEs (small and medium enterprises) into large, state-controlled firms. This return to state-directed economic management or dirigisme was accompanied by unemployment-reduction measures that subsequently became a staple of French economic policy, including reducing the workweek from forty to thirty-nine hours, extending paid vacations from four to five weeks, lowering the retirement age, and subsidizing youth hires. In addition, a slew of policies were promulgated to placate the Socialist-Communist coalition’s base of industrial workers and civil servants, including reinforcing collective bargaining rights and redistributive policies targeting the poor as well as the burgeoning retired population. To pay for these measures, the government raised taxes on capital owners and businesses, instituting the highest capital gains tax in the industrialized world. The failure of reflation and nationalization to return the economy to a path of growth forced the Socialist government to reappraise its policies, however. In a radical turnabout, it embarked on a more comprehensive liberalization program than had hitherto ever been attempted. The proximate causes for this shift were spiraling inflation and yawning budget and trade deficits generated by the increase in government spending, combined with the contraction of demand for French exports due to the global economic slowdown. These conditions wrought unsustainable pressure on the French franc, jeopardizing its participation in the European Monetary System (EMS). In March 1983, the government introduced a harsh austerity program to rein in inflation and relieve pressure on the franc. A series of strict price and wage controls, compulsory savings measures, and painful spending cuts were enacted to stabilize the public deficit. These measures intensified with the abandonment of wage indexation and elimination of price controls. As a corollary to austerity, the government, headed by Pierre Mauroy, also introduced the franc fort policy which, by maintaining the franc

3 4    G abriel G oodliffe Table 2.1  Political Leadership of the French Fifth Republic President

Prime Minister

Charles de Gaulle (I)* (1959–1966)

Michel Debré (1959–1962) Georges Pompidou (1962–1966)

Charles de Gaulle (II)** (1966–1969)

Georges Pompidou (1966–1968) Maurice Couve de Murville (1968–1969)

Georges Pompidou (1969–1974)

Jacques Chaban-Delmas (1969–1972) Pierre Messmer (1972–1974)

Valéry Giscard d’Estaing (1974–1981)

Jacques Chirac (I) (1974–1976) Raymond Barre (1976–1981)

François Mitterrand (I) (1981–1988)

Pierre Mauroy (1981–1984) Laurent Fabius (1984–1986) Jacques Chirac (II)*** (1986–1988)

François Mitterrand (II) (1988–1995)

Michel Rocard (1988–1991) Édith Cresson (1991–1992) Pierre Bérégovoy (1992–1993) Édouard Balladur*** (1993–1995)

Jacques Chirac (I) (1995–2002)

Alain Juppé (1995–1997) Lionel Jospin*** (1997–2002)

Jacques Chirac (II) (2002–2007)****

Jean-Pierre Raffarin (2002–2005) Dominique de Villepin (2005–2007) (continued)

F rance    35 Table 2.1  (Continued) President

Prime Minister

Nicolas Sarkozy (2007–2012)

François Fillon (2007–2012)

Francois Hollande (2012–2017)

Jean-Marc Ayrault (2012–2014) Manuel Valls (2014–2016) Bernard Cazeneuve (2016–2017)

Emmanuel Macron (I) (2017–2022)

Édouard Philippe (2017–2020) Jean Castex (2020–2022)

Emmanuel Macron (II) (2022–?)

Elizabeth Borne (2022–?)

*Elected by members of Parliament to a seven-year mandate; **first directly elected mandate; ***cohabitation: prime minister and president are from different parties; ****first five-year presidential mandate.

at a high exchange parity with the German currency, the deutschmark, forced French firms to lower their costs to remain internationally competitive. Such “competitive disinflation” implied tightening the money supply and raising interest rates in order to buttress the franc and reduce inflation by curbing investment. This combination of budgetary austerity and monetary rigueur allowed France to achieve one of the lowest inflation rates in Western Europe and to right its trade balance. However, by choking investment and depressing demand, the new policy strangled growth, and unemployment shot up to 10 percent. Under the government led by Laurent Fabius, these restrictive macroeconomic policies were accompanied by microeconomic reforms that disengaged the state from the market. Such déplanification (de-planning) eliminated state outlays to nationalized industries, exposed public enterprises to market competition, and lifted state restrictions on closures and layoffs. Meanwhile, the state abandoned planning targets in the private sector, while restrictions on firing workers and raising capital were lifted in exchange for abrogating government assistance. Lastly, price controls were lifted to force public and private firms to become more economically competitive. The déplanification campaign launched by the Fabius government was expanded by Jacques Chirac’s government of 1986–1988 and finalized by governments of both the Left and the Right in the early 1990s. These governments reversed the nationalizations undertaken between 1982 and 1984 and returned most public firms to private ownership. In addition, they introduced a raft of measures to promote the growth of SMEs as agents of the country’s economic revival. These microeconomic reforms did much to liberalize the French economy. The elimination of subsidies to public and private enterprises resulted in numerous bank-

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ruptcies, financial deregulation spurred firm reliance on financial markets, and labor market deregulation enhanced wage flexibility and reduced production costs. However, the retreat from dirigisme did not spell the end of state intervention but instead marked its displacement to the social policy realm. Despite the abandonment of planning and decline of state intervention, overall government spending continued to increase. The end of the neo-Keynesian experiment in the early 1980s and ensuing process of déplanification saw the share of public expenditure rise from 42.6 percent of GDP in 1983 to 46 percent in 1999. This upsurge was attributable to the growth of welfare spending to attenuate the social dislocations caused by the retreat from dirigisme and economic liberalization, principally in the form of early retirement programs. In turn, successive Socialist and center-right governments supplemented early retirement programs with various work subsidies and tax incentives to encourage low-wage hires among the young. These were followed by further initiatives introduced by the Jospin government, including youth hiring subsidies for nonprofit and public sector organizations and, most famously, the Aubry Law, reducing the work week from thirty-nine to thirty-five hours. The number of workers affected by these labor-reduction measures increased from 1.2 million in 1984 to 3 million in 1999. If we add the roughly 2 million unemployed, by the close of the twentieth century, France had one of the lowest labor-force participation rates in the industrialized world. Accordingly, by the end of the 1990s, retrenching the welfare state became an increasingly urgent priority. Domestically, the burgeoning social security obligations imposed on French firms to fund this welfare expansion hurt their cost competitiveness and impeded their ability to hire workers. Externally, the growth in welfare spending threatened France’s position within the Stability and Growth Pact (SGP), which is the European Union’s framework for macroeconomic policy coordination across member states. In 2003, the country was placed on notice by the European Commission when it exceeded the 3 percent limit on government deficits as a ratio of gross domestic product (GDP) for the first time, and political elites accepted the necessity of shrinking the French welfare state. Beginning with Lionel Jospin’s government and especially under the succeeding governments led by Jean-Pierre Raffarin and Dominique de Villepin, there were concerted attempts to reduce welfare expenditures and firms’ tax obligations. These measures were accompanied by cost-cutting reforms of the health system and corporate and income tax reductions in order to encourage savings and investment. Through the early and mid-2000s, inheritance taxes were also reduced, while the burden of social security taxes shifted from firms onto employees. Finally, the cost burden attaching to welfare financing was further diminished through the decentralization of income supports to the poor in 2004 and replacement of the Revenu Mensuel d’Insertion (Monthly Integration Benefit) that had been introduced in 1988 to protect the long-term unemployed from falling into poverty with the Revenu de Solidarité Active (Professional Solidarity Benefit) which was designed to complement poorly paid short-term or part-time work. These retrenchment measures were accompanied by various labor activation measures, notably targeting the young, exempting firms from paying social security taxes on certain jobs.

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SARKOZY’S ECONOMIC RUPTURE, HOLLANDE’S STABILIZATION, AND MACRON’S LIBERALIZATION These retrenchment strategies were expanded following Nicolas Sarkozy’s election in 2007. The new government, led by François Fillon, moved toward standardizing civil service and private sector pensions by making a full pension for workers in both categories contingent upon paying forty-one years into the social security system. Likewise, after attempting to shrink the public sector through natural attrition, it proposed to cut the public sector by thirty thousand posts in 2008 and again in 2010. The impetus behind these cuts intensified in the wake of the 2008 financial crisis and ensuing economic recession, which saw a dramatic increase in the budget deficit. In turn, the Fillon government tried to diminish the economic costs attaching to the welfare state while enacting substantial cuts in social spending. First, it shifted the burden of social security financing away from firms toward consumers by offsetting a reduction in the share of the payroll tax levied on employers with an increase in the value-added tax—the so-called TVA sociale. Second, it increased individual health-care liabilities as well as reducing unemployment benefits for those who refused to take a job. Finally, the government sought to stimulate saving and encourage people to work more by exempting employers and employees from social security taxes on overtime work, further reducing corporate and income tax rates, and cutting the “wealth tax.” The 2008–2009 financial crash and European sovereign debt crisis failed to deflect the course of these policies. After the passage of timid stimulus packages at the end of 2008 and in 2009, the Sarkozy administration resumed its course of public sector and welfare state retrenchment. This strategy gained particular urgency in the midst of the European debt crisis, as financial markets lost confidence in France’s ability to service its debt, culminating in the downgrading of its AAA credit rating in January 2012. Despite its 2012 presidential campaign pledge to engage a reflationary program to kick-start growth and reduce unemployment, the successor Hollande administration persisted in Sarkozy’s supply-side economic course. After a first year of contradictory policies that attempted to square a tepid spending expansion with the deflationary requirements of the EU’s new Fiscal Compact, Holland opted for his own Mitterrandesque U-turn, embracing a pro-market, supply-side approach along with fiscal “consolidation.” His aim was to improve the investment climate to stimulate job growth while resorbing the country’s debt. These priorities were reflected in four signature initiatives: the November 2013 Growth, Competitiveness and Employment Pact (Pacte de compétitivité); the July 2014 Responsibility and Solidarity Pact (Pacte de responsabilité); the August 2015 Law for Economic Growth, Activity and Equality of Opportunity (or Macron Law, since Emmanuel Macron was Hollande’s minister of the economy at the time); and the August 2016 Law Relative to Work, Modernization of Social Dialogue and Professional Advancement (or El-Khomri Law). The first two measures sought to improve French firms’ competitiveness by lightening the regulatory and fiscal burdens on them. Through the competitiveness pact, the government reduced corporate taxes by €20 billion by introducing various tax credits while facilitating firms’ access to financing through the creation of a public investment bank. Further provisions, such as additional tax subsidies for research and

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development and the lightening of administrative rules facing firms, were added to enhance their flexibility and reduce their costs. These provisions were strengthened under the Responsibility Pact, which lightened firms’ social security contributions by another €10 billion, streamlined corporate taxes, and simplified regulatory standards and procedures. In turn, the Macron Law promulgated a host of supply-side proposals to address the “three evils” of “distrust, complexity, and corporatism” that purportedly hampered the French economy. These included initiatives to facilitate Sunday and night work; open the “regulated” professions (notaries, pharmacists, etc.) to greater competition; eliminate the state-owned railroad SNCF’s terrestrial transport monopoly by allowing private bus lines; authorize €10 billion worth of stock issues in mixed and state-owned enterprises to help pay the interest on the national debt; transfer ownership and maintenance of armaments to private firms for rental by the armed forces, and expand urban construction by 30 percent. However, it was the El-Khomri Law, which expanded firms’ flexibility to set their production schedules and adjust their workforces according to economic circumstances, that represented the most ambitious structural reform of Hollande’s quinquennat.1 It pursued these aims by legislating in three broad areas. First, the law did away with the thirty-five-hour workweek by allowing overtime pay reductions by collective agreement, introduced the legal primacy of firm over branch-level collective bargaining, and granted firms the ability to extend the workweek to a maximum of sixty hours but within a stipulated legal average of forty-four weekly hours over twelve weeks (or forty-six by collective agreement). Second, the law broadened the conditions under which firms were allowed to downsize, including declining orders and revenue losses over a certain time period, deteriorating firm finances, technological change and automation, and reorganization of production. Finally, the El-Khomri law redefined the legal basis of collective bargaining, opening up formerly “closed shops” to employee referendums on renegotiating previous collective agreements as well as affirming the juridical primacy of branch- or firm-level collective agreements over the Labor Code. Macron doubled down on these supply-side policies, combining budgetary retrenchment with structural reforms. In the first place, the Macron administration’s budgetary proposals have been marked by a clear intent to reduce state expenditures supported by tax cuts (as opposed to maintaining expenditure levels and balancing the budget and reducing the debt through tax increases). On the spending side, these tax reductions were to result in the suppression of 120,000 civil servant (fonctionnaires) posts—50,000 in the state administration and 70,000 in local government—over the quinquennat. In turn, the pro-business motives behind these proposals were highlighted by the regressive tax policies set out in the successive budgets passed by the government. The FY 2018 budget was thus marked by the suppression of the “wealth tax” (impôt de solidarité sur la fortune, or ISF) and its replacement by a tax on real estate holdings exempting liquid or financial assets; the imposition of a 30 percent “flat tax” on capital gains (versus progressive taxation of the latter); the reduction of housing subsidies for students and the poor by five euros a month, and the freezing of lowwage government-subsidized work contracts for the young. These measures were only

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partially offset by the reduction by one-third of the housing tax (taxe d’habitation) on homeowners or renters that went to financing local government, the first step toward its total elimination for 80 percent of French households by 2020 and for 100 percent by 2021. These measures stirred considerable popular disquiet and earned Macron the sobriquet of “president of the rich.” This regressive fiscal policy was further reinforced by the government’s budget for FY 2019. Its core provisions included reducing the housing tax by another third, amounting to a €3 billion tax cut for the bottom 80 percent of households; automatically deducting income taxes from paychecks to combat tax evasion; lowering the corporate tax rate from 33.3 percent to 31 percent, a first step toward reducing the latter by 25 percent by 2022; and increasing the “carbon” taxes on gasoline, diesel, and heating fuel. This last measure crystallized the socioeconomic resentments of those left behind by Macron’s supply-side economic agenda, triggering the gilets jaunes protests against his administration. The scope of these protests and the public support they attracted forced the government to moderate the pro-business tenor of its fiscal policy in its FY 2020 budget. The latter featured €9.3 billion in tax cuts on French households, while the carbon taxes were suspended. However, though less regressive than its predecessors, the 2020 budget did not alter the supply-side orientation of the government’s fiscal policy, preserving the government’s pro-business reputation. Over the first three years of the quinquennat, the administration’s spending reductions by and large kept up with or even exceeded the fall in government revenues occasioned by the tax cuts underpinning the budgets for 2018 through 2020. The budget deficit fell from 3.5 percent of GDP in 2016 to 2.8 percent in 2017 and then to 2.5 percent in 2018. However, the aggregate debt level increased to 98.4 percent of GDP in 2017 and 2018 (from 98.0% in 2016), before settling at 97.6 percent in 2019, the first time it had not risen in a decade. However, the emergency spending measures introduced in order to appease the gilets jaunes and a slower-than-anticipated rate of functionary attrition reduced the economizing impact of the 2019 budget, with the deficit for the year rising to 3.1 percent. The situation was dramatically reversed with the outbreak of the COVID-19 pandemic in March 2020, signaling the government’s abandonment of fiscal retrenchment in the face of the sharp economic downturn that it occasioned. The emergency stimulus package that was passed in April 2020, including €45 billion to pay 80 percent of furloughed workers’ salaries and €300 billion in state-guaranteed loans to help companies stay afloat, meant that the government’s return to budgetary equilibrium in 2017 and 2018 was short lived. By the end of 2020, the renewal of financial support to firms and workers—evaluated by the government at €70.7 billion—had caused the national debt and budget deficit to jump to 115.7 percent and 9.2 percent of GDP, respectively. A further €90.2 billion in financial support and fiscal stimulus brought the national debt to 115.3 percent and the budget deficit to 8.5 percent for 2021—the increase in spending offset by rising tax receipts attributable to the economy’s return to growth during that year (Le Monde 2021; Tonnelier 2022). If the Macron administration’s commitment to budgetary retrenchment has diminished in the face of social resistance and been temporarily reversed following the

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COVID-19 outbreak, its resolve to push through structural reforms has remained unaltered. Viewed as indispensable for reducing structural unemployment, attracting investment, and closing the country’s trade deficit, these reforms were portrayed as vital for transforming France into la start-up nation heralded by Macron during the 2017 campaign. Borrowing elements from the Nordic flexi-security model that paired high employment turnover with slimmed-down social safety nets, the government introduced employment activation measures, and orthodox policies to reduce firms’ NWLCs and eliminate labor market rigidities in strategic public employment sectors. Four substantial structural reforms were thus enacted during Macron’s first term, often through executive decree (ordonnances) or through the recourse to constitutional Article 49.3 enabling a law’s passage by the majority without debate. The first, the reform of the Labor Code, served to build on the labor market reforms that were enacted during the final year of Hollande’s quinquennat and was promulgated in summer and fall 2017 through five executive orders. These liberalized French labor law in four principal respects. First, the reform decentralized collective bargaining by granting juridical priority to firm-level collective agreements over branch-level agreements, overturning a half century of labor jurisprudence. Second, it entitled nonunion delegates to negotiate collective agreements within SMEs, conditional on approval by employee referendum. Third, the reform merged the different instances of worker representation within the firm into a single representative Social and Economic Council to simplify employee-management dialogue within firms. Finally, it facilitated firms’ capacity to fire workers by capping the severance payouts that labor arbitration tribunals could require them to make to workers laid off for “economic reasons.” The second major structural reform of Macron’s presidency was the reform of the SNCF, passed in June 2018. Its crux was the abrogation of the special status accorded to cheminots (railroad workers) for new hires, who would be subjected to the same working conditions, benefits, and retirement plan as other fonctionnaires.2 Correlatively, the SNCF was changed from a state-owned enterprise into a limited liability corporation with shares owned by the state, opening the door to the prospective entry of minority share purchases by the public as well as other private economic actors. In order to comply with the European services directive, starting in 2019, local and regional train lines were opened to competition from private carriers, a measure that was extended to long-distance TGVs in December 2020. These reforms were designed to prepare the opening of the French rail network to open competition starting in 2021. Third, in July 2019, the government issued an executive order to reform the unemployment benefit system. Building on previous reforms such as the 2007 Law in Favor of Work, Employment and Purchasing Power, the decree toughened the conditions for accessing unemployment insurance benefits while diminishing their real value and shortening their duration. Thus the government hoped to reduce the NWLCs on firms by €3.4 billion from November 2019 through the end of 2021. And by introducing stricter eligibility requirements that forced the unemployed to more actively seek work and accept any employment in order to keep receiving benefits, the reform served as a labor activation measure to reincorporate the jobless into the workforce as quickly as possible.

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Finally, the fourth structural reform envisaged by Macron concerned the most cherished pillar of the French welfare state: the pension system. Tabled in November 2019, Macron’s proposal aimed to merge the byzantine mix of forty-two public and private sector retirement schemes into a universal system covering all workers. By the same token, the government proposed to raise the minimum retirement age from sixty-two to sixty-four and to extend the duration of social security contributions in order to preserve the system’s solvency. Retirement benefits would be calculated on the basis of a universal points-based system modulated according to certain criteria such as the duress of profession and the revalorization of the smallest pensions. Predictably, the measure generated fierce opposition from the unions as well as the broader public (see below), while the COVID-19 outbreak in 2020 definitively stalled the pension reform’s progress through Parliament. It remained dormant until March 2022, when Macron pledged that if reelected he would resurrect the reform in amended guise—notably calling for raising the retirement age to sixty-five as well as further simplifying the points-based system on which the new universal system would be based. As the foregoing has shown, France has substantially liberalized its economy since the mid-1980s. Though such liberalization has unfolded slowly and in piecemeal fashion, this was perhaps the best outcome that could be expected in a country so prone to social conflict and upheaval. Yet it is important not to minimize the social costs attaching to this liberalizing process. Even if it was required to make the French economy more competitive, the toll exacted in terms of unemployment, inequality, and declining living standards fueled a general rejection of globalization, stoking existing social divisions and creating new ones within the French body politic.

Politics and Society Income inequality has increased markedly in France, and the living standards of certain groups—notably industrial workers and service sector employees—have eroded substantially since the 1980s. Correspondingly, the corporative and partisan organizations that traditionally defended these groups, notably, the trade unions and Communist Party (PCF), have collapsed over this period. This has often been blamed on a US- and EU-led process of neoliberal globalization that sought to maximize returns to multinational corporations and the holders of capital at the expense of wage earners and stakeholders. According to such critiques, advanced social democracies like France are being forced to dismantle their welfare states to satiate the greed of increasingly mobile financial and corporate actors who have been empowered by this process, generating worsening sectoral, socioeconomic, and cultural divisions within the country. In turn, the socioeconomic fears linked to the decline of formerly dominant producer groups dovetail with broader anxieties that globalization is causing France to lose its cultural distinctiveness and identity, eroding the structural and symbolic foundations of what it means to be French.

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PERIPHERAL FRANCE VERSUS LA FRANCE D’EN HAUT The first of these foundations is the notion of la France profonde and the conception of rural rootedness that subtend the country’s collective identity. Despite experiencing rapid urbanization after World War II, the French remain strongly attached to their country’s rural past. Predicated on the concept of terroir, which refers to the distinctive rural microregions that compose it, this rural identity is subtended by the richness and diversity of the French countryside, the country’s craft and culinary cultures, and its folk traditions and historical memory. Politically, this attachment to the countryside (or terroir) is traceable to the Jacobin belief, born at the Revolution and disseminated under the Third Republic (1875–1940), in the universal accession of the people to small-scale property in the form of a farm, shop, or artisanal business as the key to preserving the Republican order. This accounts for the sectoral dominance of the agricultural and small-business sectors during the Third and Fourth Republics and explains why France still boasts more artisans and shopkeepers as a proportion of its population than most other advanced industrial countries. These local and craft identities have fueled a strong reaction against the transformations wrought by globalization in France. The antiglobalization movement has been particularly prominent in the country, which houses the international headquarters of ATTAC, arguably the most prominent organizational exponent of the movement since the 1990s, and which provided, in José Bové, one of its best-known public faces. Both were long-standing presences at antiglobalization protests against institutions like the IMF or the WTO as well as at the “alter-globalization” meetings organized each year to coincide with the World Economic Forum in Davos, Switzerland. What is interesting is that figures such as Bové continue to strike a chord among the French even though farmers now represent a negligible proportion of the country’s demographic and productive base. While fewer than 4 percent of the population today earns a living from the land as opposed to 20 percent in 1970, French people continue to defend their economic interests, notably in the form of the EU’s Common Agricultural Policy (CAP). This appeal is reflected in the disproportionate power that continues to be wielded by the rural sector within the country’s political institutions and among its political leaders. The history of the CAP highlights the extent to which the French state is willing to play the protectionist card and interfere in the internal management of firms if this is deemed in the national interest. This protectionist impulse intensified in the wake of the 2008 global financial crisis and ensuing global economic downturn, with the Sarkozy administration announcing a €26 billion stimulus package in December 2008 to support the banking, auto, and construction sectors as well as calling for the adoption of EU-level trade protections. Similarly, during his term in office, Hollande perpetuated his predecessor’s interventionism and protectionism. With a number of major French manufacturers, including PSA-Peugeot-Citroën, Arcelor-Mittal, Sanofi, Doux, Goodyear, and Air France announcing major layoffs as well as plans to reduce their operations in response to the 2008–2009 crisis, his administration sought to prevent closures and find French or foreign buyers for at-risk plants.

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Last, but not least, despite Macron’s commitment to liberal economic principles, he has also played the protectionist card when politically expedient. One of the first measures he took as president was to hold up the acquisition of the Chantiers Navals de Saint-Nazaire, the French subsidiary of the South Korean giant STX and country’s largest commercial shipyard, by the Italian Fincantieri, Europe’s biggest shipbuilder, in July 2017. After temporarily nationalizing the Chantiers Navals to block the sale, Macron modified the terms of the acquisition in order to maintain greater French control over the firm’s operations following its passage into Italian hands and to prevent its future liquidation by Fincantieri. The foregoing testifies to the principally externally oriented measures that have been pursued by successive administrations in order to moderate the effects of globalization. Yet these effects, combined with the neoliberal policies embraced by successive governments since the 1980s, have generated deep fault lines that have degraded the social climate and polarized political debate within the country. First and foremost, socioeconomic inequalities, notably the divide between the France d’en haut (“France of the top”) and France d’en bas (“France of the bottom”) have markedly increased since the 1980s, with a notable acceleration of inequality since the 2000s. At the level of wealth inequality, after declining for much of the twentieth century, since the mid-1980s and the first wave of structural reforms—privatizations and financial liberalization undertaken during Mitterrand’s presidency—the proportion of wealth in the form of liquid (stocks and bonds) and illiquid (real estate) assets owned by the top decile and especially the top 1 percent of the income scale began to grow again. Specifically, whereas the top decile in terms of total holdings (income plus assets) accounted for 50 percent of total assets in the mid-1980s, this percentage peaked at 56 percent in 2010 before stabilizing at 55 percent in 2014. Conversely, the proportion of assets held by median class groups constituting the sixth through the ninth deciles remained steady at 41 percent from the mid-1980s until 2014. A similar trend is evident in terms of income inequality, reflecting the shift of capital earnings toward the top of the social ladder, as noted above. After declining from 38 percent in 1968 to less than 30 percent in the early 1980s due to increases in the minimum wage, the percent of income going to the top 10 percent increased from the mid-1980s on. In particular, the share held by the top 1 percent rose from 7 percent in 1983 to 11 percent in 2014—a 57 percent increase (Garbinti and Goupille-Lebret 2019, 75 and 79). The pro-business and pro-capital measures introduced by Macron during his first year in office reinforced these trends. According to the INSEE, the ratio between the income held by the top 20 percent of the income scale and the bottom 80 percent rose from 4.3 to 4.4 between 2017 and 2018, while that between the top and the bottom deciles rose from 3.4 to 3.5. Accordingly, the poverty rate rose from 14.1 percent in 2017 to 14.7 percent in 2018, accounting for roughly 9.3 million people and exceeding the previous peak of 14.6 percent in 2011. Overall, the Gini coefficient rose from 0.289 to 0.294 from 2017 to 2018, the steepest rise over two successive years since 2000 (Cornuet and Sisic 2019, 2). In turn, these socioeconomic inequalities have assumed a distinctly spatial dimension opposing urban France to rural and semirural France. As in other advanced coun-

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tries, France’s cities have become the preserves of the highest income groups, notably, wealthy capital owners as well as upper-middle-class segments linked to sectors, such as finance and information technologies, that have most benefited from globalization. Real estate prices and living costs have skyrocketed in the city centers, placing the possibility of raising a family in the latter beyond reach for the median French household. Though it has been emerging for a while, this divide between France’s “haves” and “have-nots” and its manifestation in an increasingly marked distinction between the country’s cities and rural and semirural periphery was particularly crystallized during Macron’s quinquennat. His supply-side fiscal policy agenda elevated this divide into a key sociopolitical fulcrum of opposition, fueling the emergence of two national protest movements against his presidency. The first was the gilets jaunes movement that erupted in November 2018 and persisted through the winter and early spring of 2019. Initially mobilized against the carbon taxes that were introduced in the 2019 budget and that hit rural commuters the hardest, the gilets jaunes strikingly captured France’s rural-urban divide. Protesters, clad in the fluorescent yellow vests French drivers are required to wear in case of breakdown or accident, left their provincial villages and towns to converge upon Paris and other large cities to stage weekly protests, while setting up roadblocks at roundabouts around the country in opposition to the government’s fiscal policies and its broader pro-wealthy, pro-business agenda. Reaching a crescendo in December 2018, the movement descended into the worst urban rioting to be seen in Paris since May 1968. Widely viewed as a popular uprising against Macron and his government, the gilets jaunes contributed to the image of a government cut off from the country’s rural heartland, unconcerned about the economic hardships facing the France d’en bas. Some observers went so far as to liken the movement to a modern day jacquerie, a medieval term signifying a peasant revolt against royal and aristocratic authority. Taken aback by the scale and duration of the movement, the government quickly moved to repeal the carbon tax that had set off the protests, and it promised a host of tax cuts and other measures to benefit lower earners and to safeguard public services in rural areas. To counter his image of aloofness and high-handedness, Macron called for the organization of a “great national debate” in the form of public meetings and online consultations to better address average people’s concerns in future policy deliberations. Promising new forms of deliberative democracy, the purpose of this initiative was to blunt the sociopolitical alienation driving the gilets jaunes by providing new fora and instruments—such as online and local cahiers de doléances (grievance registers)—that would enable common citizens to enumerate their frustrations to public authorities. Rather than staunch popular discontent, however, these fiscal and political responses only served to put it into hibernation until the next round of controversial reforms was announced by the administration. A new wave of mobilization erupted with the strike movement that broke out in early December 2019 against the government’s pension reform. Crystallizing nearly a year to the day after the gilets jaunes protests peaked, the movement reached its apogee on December 5, when over eight hundred thousand people marched in cities across the country as railroad workers, teachers, and hospital staff staged the biggest public sector work stoppage in decades against the administration’s plan to overhaul the pension system. At issue once again was the fair-

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ness of the reform, which was widely decried as an attempt to undo the crown jewel of France’s postwar social security system on the backdrop of the pro-business fiscal and structural reforms that had been rammed through earlier in Macron’s term. The growing division between the France d’en bas, composed of the sectoral and class losers of globalization, and the France d’en haut, representing its winners, was exacerbated by the unprecedented economic crisis occasioned by the COVID-19 pandemic. As in other countries, in 2020 France’s GDP fell by 7.9 percent, the steepest drop since World War II. Despite the numerous forms of assistance that were introduced by the government to help firms and workers and a projected recovery of 7 percent in 2021, the costs of crisis were unevenly distributed, with those disposing of the least financial, social, and cultural resources being the hardest hit. The upshot is that the social conflicts that have emerged between the winners and losers of globalization are not about to go away. As the victory of the National Rally (former National Front) in the 2019 European Elections combined with the disappointing results of Macron’s La République en Marche (LREM—Onward the Republic) in the 2020 municipal and 2021 regional elections attest, such conflicts grew more salient over the course of his term and structured French politics to a heretofore unprecedented degree. IMMIGRATION AND IDENTITY IN THE AGE OF GLOBALIZATION If the economic and cultural transformations occasioned by globalization provide the general context fueling fears over the loss of France’s cultural identity and specificity, no single issue has more vividly crystallized these fears than immigration. This is understandable, since the debate over immigration brings into play a second great pillar of French identity and self-definition: the republican model of citizenship constructed around the twin principles of laïcité (“secularness”) and equality under the law. Inherited from the Revolution and shaped by the Catholic-versus-Republican culture wars that overshadowed the initial decades of the Third Republic, this model strives in theory to assimilate foreigners and their French-born children into the national community, no matter what their country of origin or their ethnic or religious background, in the name of civic equality. The growth of a non-European immigrant population in France has sorely tested the limits of this republican model and is increasingly seen in some quarters as posing a threat to the civic identity of the nation. These shortcomings are highlighted by the negative indicators reflecting the exclusion of these immigrants from the country’s economic and social life. These are especially dire for immigrants from North and subSaharan Africa, who suffer from high unemployment, poverty, and educational failure. Members of these groups are often concentrated in government-subsidized housing projects (cités), situated on the fringes of French cities and towns and bereft of public services, civil society organizations, and economic opportunity. Such conditions contribute to periodic explosions of unrest in these areas—the most spectacular of which was the monthlong wave of rioting that swept the country in November 2005—which serve to further criminalize immigrants in the eyes of their co-citizens.

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These developments have raised doubts about the viability of the republican model. There are those who argue that the latter has failed to live up to its ideal of equality for all, condemning certain categories of immigrants to de facto underclass status within French society. For these critics, official appeals to republicanism have become a pretext for inaction that releases politicians and the broader society from the obligation to address the profound structural inequities and social injustices that are faced by immigrants in France. Conversely, there are those who argue that the predominantly Islamic faith of France’s immigrant population places an unmanageable strain on the capacity of the republican model to integrate what they consider to be an irreducibly alien religious minority. According to these critics, the hegemonic political as well as spiritual ambitions of Islam, combined with the inability of its practitioners to distinguish between the public and private spheres, render the republican model inoperable. This question regarding the cultural intractability of Islam and the incapacity of the republican model to integrate its practitioners first emerged with the debate over the wearing of the headscarf in public schools during the late 1980s, which periodically resurfaced through the 1990s and up until 2004, when a law was passed which banned the wearing of overt religious symbols including headscarves, yarmulkes, and large crosses in state schools. This debate over religious symbols in public places was reignited in the summer of 2010, when the Sarkozy administration passed a law banning the wearing of the burqa—a robe-like garment covering a woman’s eyes and hands in use in Afghanistan—and niqab—the burqa’s equivalent in the Arab world—in any public space, whether official or not. Despite the fact that this ban concerned only 1,900 out of 1.5 million to 2 million Muslim women living in France, the law’s advocates saw it as necessary to defend the principle of laïcité against the encroachments of fundamentalist Islam on a secular society. Beyond the Sturm und Drang of this culture war pitting laïcité against religious freedom, the French situation was not so dire. In the first place, the republican model functioned much better than its critics gave it credit for, given the size of the immigrant communities concerned and the relatively short time frame the society has had to integrate them. A few basic indicators showed that integration of these immigrants was progressing, like the daily use of the French language, the increasing rate of interfaith marriages, and the internalization of republican values. At the same time, private actors such as firms and grandes écoles like Sciences Po have reached out to minorities to diversify their workforces and student bodies. The most explicit moves in this direction were the creation of the High Authority for the Struggle against Discrimination and for Equality (HALDE) in 2004 and the promulgation of the Charter on the Equality of Chances in 2005 in order to improve the access of at-risk youth to higher education. However, despite these advances, impediments to integrating French Muslims into the broader society remain numerous. First and foremost, integration efforts were hindered by sociostructural factors that have grown more pronounced in recent years. The long recession that began in 2009 and the ensuing rise in unemployment hit immigrant youth in the banlieues hardest, while cuts in social services disproportionately affected the residents of the latter. According to a government observatory, in 2018, 42.6 percent of the population of the 1,400 poorest urban neighborhoods lived under

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the poverty line. These neighborhoods accounted for nearly a quarter (23%) of the country’s total poor, though their populations represented only 8 percent of the national whole (Centre d’observation de la société 2018). IMMIGRATION POLICY SINCE THE 2000S French politics in the new millennium has been particularly attuned to the immigration question, with successive administrations actively promoting integrative policies that recognized the need for affirmative action to improve the situation for immigrant youth. Nicolas Sarkozy did so by naming ministers from immigrant backgrounds to his cabinet, pushing for more diversity in the civil service and television sectors, and seeking to broaden affirmative action mechanisms by facilitating the access of members of poor minorities to better schooling and higher education. In turn, reflecting the Left’s tradition of cultural tolerance, François Hollande put in place welfarist and pro-employment policies in order to improve the living conditions of immigrants in the banlieues, while seeking to relax the stricter naturalization criteria that had been introduced when Sarkozy was president. However, electoral considerations in combination with extraneous developments, notably the rise of Islamic terrorism on French territory, brought both administrations to adopt a tougher line on immigration and cultural-religious issues. Since his election in 2007 had depended on siphoning off votes from the National Front (FN), Sarkozy sought to exploit the immigration issue and pander to public xenophobia for political gain. Notably, his plans to establish a Ministry of Immigration and National Identity, institute DNA testing as a precondition for reuniting immigrant families, and encourage “selective” immigration were viewed as racist by immigrant groups. Likewise, the “debate on national identity” he launched in 2008 regarding the status of immigrants in French society and to specify policies to facilitate their integration radicalized those who opposed regularizing the situation of Muslim immigrants in French society while provoking a communitarian and religious backlash among many French Muslims. For its part, the Hollande administration acted more ambiguously regarding the issues of immigration and integration than his supporters would have liked. For one thing, it failed to repeal the law prohibiting the burqa in public spaces, the most controversial piece of legislation enacted under Sarkozy’s term. Similarly, the Socialist-led governments of Jean-Marc Ayrault and particularly Manuel Valls sought to perpetuate the “tough on crime” image cultivated by the latter in the name of shoring up “republican authority.” This repressive course was given new impetus by the terrorist attacks of 2015 and 2016 that crystallized the connection between immigration, crime, Islam, and the cultural and martial threats these represented to France’s social order and republican identity. The attacks marked a radical escalation of Islamic terrorism in France and dramatically elevated its perception as a threat among the public. They began with the January 7, 2015, siege by Islamic gunmen on the satirical magazine Charlie Hebdo and on a Paris kosher supermarket that left seventeen dead; these were followed by sporadic individual attacks that culminated in a coordinated series of shootings and suicide

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bombings at different points across Paris on the evening of November 13, 2015, in which 130 people were killed, 90 of them at the Bataclan concert hall. Another series of attacks ensued, most notably the March 22, 2016, suicide bombings at the Brussels airport and Malbeek subway station that killed 35, before a new outrage transpired in Nice on the night of July 14, 2016, France’s national holiday, when a terrorist used a truck to run over people who had gathered to watch the Bastille Day fireworks display, killing 84. Claimed by the Islamic State of Iraq and Syria (ISIS), these attacks were either the work of “lone wolves” acting out of solidarity with these groups or of individuals who had fought in Syria before returning to France. Most troubling about the attacks was that they were often the work of nativeborn French citizens of immigrant parents or grandparents who had endured troubled upbringings in the banlieues, raising the possibility that the suburbs were evolving into seedbeds for Islamic terrorism. By the same token, these homegrown terrorists brought to the fore the related questions of immigration, criminality, Muslim integration, and Islamic fundamentalism, provoking a debate over the causes of Islamic radicalization and recruitment in the country. In response, the former interior minister and, from April 2014, Prime Minister Manuel Valls sought to reassert the republican authority of the state against the terrorist threat and, by implication, the immigrant communities from whence it originated. From May 2012, Valls husbanded the passage of a series of anti-terrorism and domestic surveillance laws as well as the expansion of security budgets and personnel earmarked for fighting terrorism. This rehabilitation of republican authority in a martial anti-Islamic guise intensified dramatically following the January and, especially, November 2015 attacks. A state of emergency was immediately declared after the attacks that granted sweeping powers to the security forces to detain suspects and search properties without a judge’s authorization. Valls’ hardening of the state’s repressive capacity was accompanied by an increasingly anti-Islamic discourse, which surreptitiously slipped from portraying Islamic fundamentalism as incompatible with the values of the Republic to condemning Islam tout court. Most emblematic of this slippage was the government’s proposal of a constitutional amendment in the wake of the November attacks that would strip French nationals holding dual citizenship of their French nationality should they be convicted of terrorist offenses. Since such cases principally involved the children of Muslim immigrants who were born in France, critics of the amendment argued that it would effectively create two categories of citizenship. Because holders of the single French nationality could not be stripped of their French nationality without being rendered stateless, the amendment violated the fundamental constitutional provision of equality because it could only be applied to dual nationals. The government remained undeterred by these criticisms and attempted to force the amendment through. However, it failed to garner the three-fifths of deputies and senators required to pass and was shelved in March 2016. Despite this setback, Valls and his supporters continued to target Islam as incompatible with the Republic’s values and to cast Muslims as potential enemies within it. Replicating a proposal first mooted by Sarkozy in 2013, Valls advocated in April 2016 that headscarves be banned by law from universities, adding that most French people felt Islam was incompatible with the values of the Republic. He also weighed in

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on the controversy surrounding the mayoral bans prohibiting the burkini—a version of the burqa that devout Muslim women use for swimming—in some thirty coastal towns in the wake of the July 14, 2016, attack in Nice. By hardening his anti-Islamic stance in the name of upholding the Republican principle of laïcité while reinforcing the state’s repressive capacities in targeting petty criminals and Islamic terrorists alike in the banlieues, Valls, like Sarkozy before him, adopted the rhetorical arsenal that had first been crafted by the FN in the 1980s which explicitly links the themes of immigration, insecurity, and Islam. More broadly, this strategy fueled growing public fears with respect to immigration, particularly from extra-European shores, which had assumed a new salience with the 2015 migrant crisis that overtook the EU as unprecedented waves of migrants, fleeing war zones across the Middle East, Libya, and the Sahel, flooded into the continent, notably through Greece and Italy. These migrant flows, roughly coinciding with the terrorist attacks unfolding in France, served to even more tightly imbricate the challenges of controlling immigration control and integrating Muslims in the public mind while rendering more difficult policies commensurate with addressing the different challenges they posed. Upon his election as president, Emmanuel Macron sought to defuse these mounting sociopolitical tensions surrounding immigration and Islam in France. On the one hand, while acknowledging the Islamic terrorist threat in the country’s midst, he distinguished both the French Muslim community generally and organized Islam specifically from Islamic fundamentalism and jihadism. On the other hand, Macron also affirmed the 1905 law stipulating the separation of church and state, asserting that the principle of laïcité remained compatible with French Muslims’ freedom to practice their religion and therefore required no further revision when it came to stipulating the legal status and institutional representation of organized Islam in France. Lastly, while taking pains to acknowledge mounting social unease regarding heightened extraEuropean migration, Macron affirmed that France would fulfill its legal obligations in welcoming legitimate asylum seekers while moving to address the socioeconomic blights disproportionately affecting immigrant populations in the banlieues. To this end, he commissioned Chirac’s former minister for urban affairs, Jean-Louis Borloo, to report on conditions within the latter and to set out a strategy for addressing them. Extraneous developments and political considerations quickly outstripped this measured approach, however. As the stream of illegal migrants crossing from Italy into France resumed in the spring and summer of 2017 and 2018, the Macron administration was forced to confront the immigration challenge head on. On the one hand, it acted to crack down on illegal migrants, working to shut down crossing points along the Franco-Italian border and expel illegals more expeditiously. On the other, the government sought to introduce a clearer and more efficient system for processing asylum applications, to expand facilities to temporarily house migrants, and to facilitate the repatriation of those denied asylum to their countries of origin. These provisions were reflected in the Law on Asylum and Immigration, which was passed in August 2018 and proved much more divisive than the government had anticipated, causing ructions even unto the president’s parliamentary majority.

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Similar divisions also emerged regarding the place of Islam and status of Muslims in France, gradually pulling Macron away from his initial evenhandedness in addressing the issue and forcing him onto the terrain of identity politics. In November 2018, Macron pledged to update the 1905 law to give Islam—now the country’s second most important religion—the same associative status and civil society protections that had been afforded the Catholic Church and Protestant and Judaic faiths in 1905. In keeping with the principle of laïcité, these provisions were to go hand in hand with an organizational recasting of Islam that would aim to keep it a “private” faith practiced by individuals rather than a communitarian doctrine infusing the public realm and assuming a political vocation. To this end, upon being elected, Macron had called upon the Conseil Français du Culte Musulman (CFCM) (French Council of the Muslim Faith), an organ established in 2003, to serve as an official intermediary between organized instances of the Islamic faith, namely, mosques and religious associations, and the French state to lead this process of state-sanctioned institutionalization on four fronts: the training and recruitment of imams, oversight of financing of mosques, democratization of the official organs representing Islam, and the fight against radicalization. In each of these instances, the goal was to reduce the influence of foreign states and organizations in the funding and staffing of French mosques, with an eye to rooting out Islamic fundamentalists within the country’s Muslim community. This attempt to forge a distinctively “French Islam” and equip it with a clear institutional structure and juridical status has proven extraordinarily difficult to achieve in practice, however. First of all, the unstructured and informal character of Islamic practice in France, which features an unspecified number of unregistered mosques and other Islamic institutions (clubs, associations, etc.), has rendered its subordination to a single representative organ like the CFCM nearly impossible. By the same token, the dearth of native imams, let alone lack of official organizations to train them and financing to pay them, continue to make many French mosques dependent on outside personnel and funding, rendering them susceptible to fundamentalist infiltration. The resulting fragmented practice of Islam in the country has exposed it to the charge of communautarisme (communitarianism)—that is, of building de facto ethnoreligious enclaves inimical to the universal rights and duties of republican citizenship—from its political enemies as well as those who wish to regularize it. The danger is that this charge will contribute to a growing license to discriminate against all Muslims on the basis of the fundamentalist practices embraced by a small minority among them, paradoxically impelling the very separatist behaviors—and in extreme cases, radicalization—that official warnings against communautarisme are meant to guard against. This sense of being marginalized within their native or adoptive country has in turn been intensified for many French Muslims by the Macron administration’s failure to deliver on its third policy pledge to advance their integration: the provision of the financial and policy means to improve their day-to-day existence in the banlieues. This disappointment was even more pronounced for the fact that Macron had promised to make addressing the situation in the banlieues a key priority of his administration, reinforcing the impression that once he won office, it was indefinitely put off. The moth-

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balling of the April 2018 Borloo Report, which offered the most detailed diagnosis to date of the economic, social, and educational challenges confronting the banlieues and outlined a comprehensive strategy and the budgetary means for overcoming them, was particularly illustrative in this regard. This generated considerable frustration among local government and civil society actors who had believed Macron’s campaign promise to pursue a forceful and comprehensive renovation strategy for the banlieues. FRENCH POLITICS IN THE AGE OF GLOBALIZATION The challenges posed by globalization and immigration, and the state’s difficulties in dealing with them, highlight the incapacity of the French political establishment to address the principal issues of concern to French voters. The result is an increasingly fragmented party system, on the one hand, and governmental blockage or one-party rule, on the other. This fragmentation can be seen in the erosion of the bipolar pattern of party competition that had developed in the 1970s opposing an alliance of the Socialist PS and Communist PCF on the Left to the Union for French Democracy (UDF) and Rally for the Republic (RPR) on the Right. The most obvious beneficiary of this trend has been the Far Right National Front (FN), but this splintering occurred on the Left as well, with the emergence of smaller parties to the left of the PS which occupied the space opened up by the collapse of the Communist Party. These included the Greens, the Revolutionary Communist League, the New Anticapitalist Party, Workers Struggle, the Left Party, and most recently, France Unbowed (LFI). This fragmentation first peaked in the first round of the 2002 presidential election. With the electoral field dispersed among a record sixteen candidates, enough votes were siphoned off from PS candidate Lionel Jospin to cause his elimination and the accession of the FN’s Jean-Marie Le Pen to the second-round runoff. The Fifth Republic’s hybrid presidential-parliamentary system has proven increasingly dysfunctional in the age of globalization. This system reinforces the power of the executive at the expense of the legislature, where, except on the most controversial pieces of legislation, the opposition essentially fulfills a ceremonial function. When the prime minister comes from the same party as the president, the National Assembly’s role is to rubber-stamp the president’s initiatives with little debate or amendment. At the same time, as voters grew increasingly dissatisfied with the policy records of sitting governments, instances of cohabitation, where the president and prime minister came from different parties grew more frequent beginning in the 1980s (see table 2.1). Characterized by intense policy rivalry between the two, these periods of cohabitation resulted in stalemate and paralysis, contributing to delegitimizing the country’s political institutions and leadership. Accordingly, in 2007, the synchronization of presidential and legislative elections was introduced and regular midterm legislative elections abrogated in order to drastically reduce the possibility of cohabitation. In turn, these institutional failings were coupled in the public mind with the staleness and mediocrity of the nation’s political elite. Until Sarkozy’s election, France’s political leaders, notably, Chirac and Mitterrand, had begun their careers at least a half century earlier, and those who served under them represented an equally long-standing clique

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of professional politicians and party notables. The sense of permanence attaching to the political class was reinforced by their exclusive backgrounds, reflecting the fact that the country’s political and economic elites almost all issued from highly selective schools (grandes écoles) such as the École Polytechnique and the École Nationale d’Administration (ENA). In preparing for the task of guiding the state bureaucracy and the country’s leading firms, these future leaders developed tight-knit social and professional networks that facilitated their movement between the highest posts of the public and private sectors. To French voters, this exclusive and incestuous elite appeared out of touch, if not corrupt. This impression has been reinforced by the numerous political and financial scandals that have embroiled leading French politicians over the years. The country has seen a former minister of the interior, Charles Pasqua, jailed for his role in facilitating illegal arms sales to Angola in 1995 and the charging of former President Jacques Chirac with corruption during his tenure as mayor of Paris during the 1980s and ’90s. The Sarkozy and Hollande presidencies were also far from scandal-free. The most damaging scandal of Sarkozy’s term was the one linking his aide and cabinet minister Eric Woerth to the Bettencourt Affair, the dynastic court case surrounding Liliane Bettencourt, France’s richest woman and heiress to the L’Oréal cosmetics empire, in an illegal party financing scheme during the 2007 presidential campaign. A subsequent wiretap of Sarkozy and his lawyer that was commissioned by the prosecutorial judge investigating the illegal financing of his 2007 campaign by the Gaddafi regime revealed that in 2014, he had illegally influenced an appeals court magistrate in ruling against the turning over of the files regarding the Bettencourt case to the judge leading that investigation. As a result, in March 2021, Sarkozy was sentenced to three years in prison—two of them suspended—for “corruption and influence trafficking.” In turn, Sarkozy was also investigated for breaking campaign financing rules during his 2012 presidential election campaign in the context of the Bygmalion affair. He was accused along with UMP party leaders and his campaign manager of employing the Bygmalion communications agency as a front to illegally channel funds exceeding the legal limit by €20 million. In September 2021, Sarkozy was found guilty of “illegal campaign financing” and given a one-year unsuspended sentence. Thus he became the first president of the Fifth Republic to be sentenced for criminal acts committed while exercising office. He has appealed both sentences, and decisions by the national appeals court (the Court de Cassation) are pending. Meanwhile, the investigation into the financing of his 2007 campaign by the Libyan regime continues. Similarly, despite his commitment to end the wheeling and dealing that had characterized Sarkozy’s term, Hollande’s presidency was also plagued by scandal following the admission by his budget minister, Jerôme Cahuzac, that he had deposited some €15 million in secret foreign accounts. Cahuzac was charged and sentenced to four years in prison (two of them suspended) for tax fraud and money laundering as well as a fine of €300,000 and five years of electoral ineligibility. Among lower-class voters in particular, the scandal confirmed the hypocrisy of a government of the Left that cared less for their concerns than with feathering its own nest, let alone cleaning up French politics. Given this distrust of the political establishment, it is not surprising that significant protest parties have emerged on both the Far Right and the Far Left since

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the 1980s, the most significant being the National Front (FN). Bringing together former Vichy sympathizers, neo-fascists, Catholic fundamentalists, and dissidents from the mainstream Right, the FN broke onto the national scene in the mid-1980s and then went from strength to strength, its charismatic leader Jean-Marie Le Pen reaching the second round of the 2002 presidential election and winning 18 percent of the vote. The manifestation of an exclusivist nationalist and authoritarian tradition whose roots reach back to the end of the nineteenth century, the FN has made the fight against immigration the cornerstone of its political message. For many observers, the 2007 presidential election marked a critical setback for the FN, the party’s poor score—10.4 percent, its worst result since its electoral breakthrough in the mid1980s—combined with its lack of a clear successor to Le Pen perhaps auguring its definitive decline. However, the FN’s strong performance in the March 2010 regional elections and local elections a year later, combined with the appointment of Marine Le Pen as her father’s successor, laid the foundations for the party’s resurrection. Recasting the FN’s anti-immigrant and anti-EU message as part of a broader critique of globalization that resonated with voters on both the Right and the Left, and particularly among the industrial and clerical working classes, Le Pen steered her party from electoral success to electoral success, establishing herself as the new kingmaker of French politics. This was confirmed in the 2012 presidential election, in which her party won a record number of votes and garnered 17.9 percent in the first round of voting—breaking the record set by her father a decade before. Le Pen continued this pattern in the May 2014 European election which marked the FN’s first victory in a national election, garnering 25.4 percent of the vote (versus 21% for the UMP and 14.5% for the PS) and securing twenty-four of the seventy-four French MEP seats (compared to three in 2009.) This strong showing was in turn replicated in the December 2015 regional elections, in which the FN came first in six out of thirteen metropolitan regions in the first round, winning a vote-topping 27.7 percent of the ballots cast. Though it did not end up winning a single region in the second round, as the principal parties came together in a “republican front” to block its victory, the FN still garnered its highest-ever total of regional council seats, surpassing the PS, which had withdrawn its candidates in the key regions of Nord-Pas-de-Calais and ProvenceAlpes-Côte d’Azur to prevent the FN list from winning. Having already asserted itself as the driving force in shaping the French political debate, with its message recalibrated to harnessing the anxieties of the victims of the ongoing economic crisis as well as cultural fears linked to immigration, the FN under Marine Le Pen has emerged into a legitimate contender for political power. The disenchantment with the governing parties and political elite, on the one hand, and mounting populist backlash against them, on the other, crystallized into an electoral perfect storm in the 2017 presidential election. For the first time in the Fifth Republic’s history, the candidates from the governing parties of the center-right Les Républicains (LR)—former RPR/UMP—and center-left PS failed to reach the second-round runoff, paving the way for a face-off between the political neophyte Emmanuel Macron and the FN’s Le Pen—marking the second time in the party’s history that it acceded to this stage of a presidential election. In the case of LR, following a bruising primary that opposed the Right’s culturally authoritarian wing against

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its more socially liberal faction, the party’s candidate, the conservative Gaullist and former Prime Minister François Fillon, was undone by an emoluments scandal that broke in January 2017 in which it emerged that he had used public funds to pay his wife to serve as his parliamentary assistant without having her do any work.3 In the PS’s case, the nomination of a candidate issuing from the party’s social democratic left-wing faction in the person of Benoît Hamon at the expense of the PS’s centrist social liberal wing brought many supporters of the latter to abandon the Socialists’ official candidate in the election. Accordingly, cultural liberals formerly affiliated with the Right and economic liberals previously affiliated with the Left came together in support of Macron’s candidacy. Based on these defections of former Républicains and Socialist voters, Macron came first in the first round with 24.01 percent of the vote, followed by Le Pen with 21.3 percent. In the second round, Macron was able to harness fears of the Far Right acceding to power to marshal two-thirds of the vote (66.1%) in a landslide victory over Le Pen (33.9%.) The outcome was calamitous for the governing parties, with Fillon coming third with only 20.01 percent in the first round versus only 6.36 percent for the official Socialist candidate Benoît Hamon, who arrived a distant fifth behind Jean-Luc Mélenchon, the populist Far Left LFI candidate, who claimed 19.58 percent of the vote. For the first time in Fifth Republic history, the candidates of the Gaullist Right and Socialist Left together failed to break the 30 percent threshold, suggesting a fundamental recasting of the dynamics of political competition in the country.4 In effect, the 2017 presidential elections highlighted the emergence of a new political cleavage between the economic and cultural winners from globalization, who were broadly harnessed by Macron, and its economic and cultural losers, who were divided among the populist Left and populist Right, with a dominant fraction of the latter choosing in favor of Le Pen in the second round. Whereas Macron garnered strong pluralities among the most upwardly mobile and highly educated socioprofessional categories, winning 37 percent of upper management executives and members of the intellectual professions in the first round of the 2017 presidential election (versus only 15% of blue-collar workers), Le Pen and Mélenchon, respectively, secured the greatest pluralities among white- and blue-collar workers (34% and 24%) and, in the FN’s case, the least educated (31%). In turn, mapping the spatial divisions that we saw above, Macron attained the greatest number of votes in the first round in the Paris metropolitan region (27%), a vote that declined as one moved to provincial cities (25%) and then to rural communes (22%). Conversely, Le Pen won the greatest plurality of votes in rural communes (27%) in the first round while seeing her support erode in provincial towns (21%) and the Paris region (14%) (IFOP 2017, 20). In short, the economic and cultural pressures wrought by globalization have irretrievably transformed the character of democratic competition in France, displacing the domestic axes of the Left-Right policy debate with a new, transnational axis opposing the representatives of the beneficiaries versus the losers of globalization. From this standpoint, the new partisan battle lines drawn between Macron and La République en March (LREM), on the one hand, versus the national populist FN—rechristened National Rally (RN) in 2018—and, to a lesser degree, the populist Left since 2017, on the other, will not go away anytime soon. This hypothesis was lent further credence

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by the August 2019 European elections which saw the FN/RN repeat its victorious performance of 2015 with 23.3 percent of the vote, with Macron’s LREM coming in second with 22.4 percent. Meanwhile, LR fell to only 8.48 percent of the vote—nearly a 12 percent decline from Fillon’s score in 2017—while the PS held relatively steady at 6.19 percent. These outcomes suggest that one of the great questions regarding the future of French politics concerns the prospective ability of the erstwhile governing parties of the Right and Left to adapt to this new pro- versus anti-globalization cleavage and the policy programs and electoral strategies they seek to pursue as a consequence. The 2022 national elections have provided a resounding answer to this question. These confirmed the entrenchment of this new cleavage and affirmed the hegemonic status of the principal party organizations, namely, LREM and the RN, through which this new cleavage is expressed as the newly dominant articulation of the French democratic debate (see below). REASSERTING THE “JUPITERIAN” PRESIDENCY The tumultuous progression of Macron’s quinquennat has been exacerbated by the imperious governing style that he has cultivated as president. Adopting a Jupiterian disposition according to which the president’s imprint was to be felt across a broad range of policy areas and in which his decision brooked no contestation, Macron explicitly modeled his presidency on the regal exercise of power that was cultivated by General de Gaulle upon his accession to the presidency in January 1959. At a first level, this Jupiterian approach derived from the young president’s temperament, reflecting his energy, intellectual acumen, and experience of meritocratic overachievement. Yet it was also a function of political necessity. In the first place, it reflected the strategic calculus to distinguish himself from the shiftless “normalcy” cultivated by his predecessor, François Hollande, in response to the agitation and aboutfaces of the Sarkozy presidency. This aura of “normalcy” quickly became synonymous for Hollande’s critics with policy immobilism and vacuity, exposing him to charges of fecklessness not only from the opposition but among Socialist party members and voters. Consequently, Hollande concluded his term with the lowest approval rating of any sitting president in the history of the Fifth Republic and was forced to abandon his reelection plans—a fate Macron had endeavored to avoid by adopting a dynamic and assertive governing style throughout his quinquennat. Functionally speaking, Macron’s cultivation of this hierarchical conception of power also derives from his insurgent status as well as the absence of an established party, composed of local representatives and activist networks, to give organizational heft to his political project. Absent these partisan organizational foundations, Macron had little choice but to dictate from the top down—a style reflected in his administration’s repeated resort to Article 49.3 in order to push his reforms through the National Assembly. The danger of such a vertical exercise of power is that it is easily exposed as lacking in legitimacy and liable to provoke a backlash against the government’s program gener-

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ally and the figure of the president specifically. Such a dynamic emerged during the gilets jaunes uprising of 2018–2019 as well as the public sector strikes of 2019–2020, during which Macron himself crystallized the protesters’ anger—the latter often brandishing placards comparing him to King Louis XVI, who was guillotined during the French Revolution. More ominously for him, discontent with his haughty style has also seeped into broader popular opinion. Aware of these potential dangers, the government has sought to introduce certain consultative and deliberative mechanisms, such as the great national debate organized in response to the gilets jaunes, in order to provide the semblance of greater exchange between the executive and the electorate and hence dispel the impression that Macron remains oblivious to the preoccupations of the average Frenchman. Despite these attempts to attenuate his vertical exercise of power, Macron has been unable to shake his reputation as an out-of-touch elitist who thinks he knows what is best for the people despite neither understanding nor sympathizing with their concerns. As a result, he continues to not only be attacked by the populist Left and Right but also began hemorrhaging support from within LREM, which then won an absolute majority in the 2017 legislative elections. Since these elections, the size of LREM’s parliamentary group has progressively dwindled, as those dissatisfied with the government’s proposals—particularly cultural liberals dismayed by the latter’s increasingly hard line on immigration as well as deputies frustrated by its inaction on the environmental front—have either deserted or been expelled from its ranks. Thus from June 2017 to March 2022, the LREM party group has seen its membership fall from 313 to 267 in the National Assembly. Though the government’s legislative agenda was not compromised, because it could continue to rely on the fifty-seven deputies from the centrist Democratic Movement (MoDem) party, LREM effectively lost its absolute parliamentary majority. Finally, the Macron administration has also not been scandal-free, notably in the form of the Benalla Affair. Coined after Alexandre Benalla, a twenty-eight-year-old former Macron bodyguard who was promoted to security chief of the Elysée Palace, this scandal—or series of scandals—erupted following the public release of a video in May 2018 that showed Benalla beating a May Day protester. The fact that the Elysée had been made aware of the incident upon its occurrence but failed to fire Benalla raised questions about his role within the president’s entourage. A parliamentary inquiry ensued, which uncovered that Macron’s interior minister Gérard Collomb had been informed of the incident two months prior to the video’s release, suggesting a cover-up at the highest levels of government. Collomb duly resigned, while the inquiry discovered that Benalla had leveraged his access to the presidency for financial advantage, establishing that he had obtained a diplomatic passport under false pretenses in order to conduct business trips abroad touting his experience as Macron’s security chief after having been dismissed in July 2018. A corruption investigation was immediately launched by the Senate, prompting further departures from the executive, including Elysée chief of staff Patrick Strzoda and Macron’s close associate Ismael Emelien, magnifying suspicions regarding Benalla’s true relationship to Macron. The scandal precipitated a steep fall in the president’s poll numbers during the summer of 2018 while undermining confidence in his judgment within the LREM

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majority. More lastingly, the Benalla Affair eroded Macron’s allure of competence and transparency by discrediting his campaign pledge to break with the self-dealing of the past.

Conclusion The core question attending any assessment of Macron’s presidency is whether his domestic accomplishments have been commensurate with his ambitions. Viewed in these terms, Macron necessarily stands out compared to his predecessors. One needs to return to Mitterrand’s program of “socialism in one country” to find an equally pathbreaking precedent. That said, it is also possible to seize glimpses of his predecessors in Macron’s leadership style and approach. At one level, his domineering volunteerism, at times veering into impetuousness, recalls the frenetic activism of the early years of Sarkozy’s term. Like Sarkozy, Macron frontloaded his quinquennat with his most ambitious reforms in the hope that the latter would bolster his reelection prospects by boosting employment. Yet in contrast to Sarkozy, whose temperament and governing style grew increasingly erratic in the face of mounting opposition and scandal, Macron has also shown himself capable of cool strategic calculation. In this sense, he is stylistically much closer to the phlegmatic Hollande, although the latter lacked the programmatic vision that has animated Macron from the start. This hybrid character is also discernible with respect to Macron’s policy approach. Since his election campaign, it has been characterized by advisers and critics alike as hewing to the dictum of en même temps (“at the same time”), an ambivalent strategy geared toward enacting reform with an eye to minimizing backlash by cultivating alternative policy facets appealing to different segments of the electorate. Thus his embrace of globalization and free trade is complemented by the advocacy of protectionism and industrial policy, while fiscal reforms have been accompanied by measures to assist their losers. Likewise, his denunciations of Islamism are paired with injunctions against stigmatizing Muslims, while on immigration, he brandishes France’s humanistic values in treating asylum seekers while cracking down on illegal immigration. It remains to be seen whether the ambiguity of these reforms will facilitate their implementation or instead render them unintelligible to legislator and public alike. The COVID-19 pandemic, which as of September 2022 had claimed 151,000 lives and wrought unprecedented economic damage in France, has significantly disrupted Macron’s reformist agenda. The administration’s commitment to cover the payrolls of furloughed workers as well as extend financial support to the worst-hit sectors (tourism, aviation, automobiles, etc.) exploded the budget deficits Macron had spent the first half of his term trying to rectify. Similarly, the crisis forced the government to postpone some of its flagship structural reforms, such as the pension overhaul introduced in fall 2019. However, in keeping with the dictum that the political opportunities afforded by a crisis should not go to waste, the pandemic has also opened up reform possibilities that were previously closed off. This is particularly the case at the European level, where Germany has effectively reversed four decades of ordoliberal economic governance to support Macron’s proposal to provide jointly financed as-

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sistance to the hardest hit euro-zone countries. In this sense, the crisis appears to have moved Macron’s federalizing agenda forward, although it is still too early to determine to what end. Macron appeared to enter the 2022 presidential election in strengthened position, notably due to his handling of the COVID-19 pandemic followed by the heightening of his presidential stature as a result of the Russian invasion of Ukraine in February 2022. These extraneous events seemed to comfort Macron in his strategy of restoring, to the sovereignist and nativist radical Right and Left, the political competition dynamic that opposes him and his party, who are pro-globalization and pro-European avatars of economic and cultural liberalism. Though he was convincingly reelected with 58.5 percent of the vote in the secondround presidential runoff—versus 41.5 percent for Marine Le Pen—in May 2022, Macron’s party, rechristened Renaissance! failed to replicate its 2017 performance and win an outright majority in the succeeding legislative elections in June 2022. Accordingly, the government’s legislative agenda is bound to be contested in the National Assembly by an unexpectedly strong left-wing coalition formed by the Greens, the PCF, and the PS around Jean-Luc Mélenchon’s LFI, on the one hand, and the RN, which with 89 deputies elected to the Assembly now constitutes the second-largest stand-alone party group within the lower house after Renaissance! (at 172 deputies) and well ahead of the mainstream Right LR, with only 62 deputies, on the other. This raises the consideration of whether the former governing parties of the Left and the Right, not to mention the populist Left, will be able to reinsert themselves into the parliamentary game and disrupt the new dynamic of political competition opposing the defenders of a cosmopolitan and economically liberal France and Europe versus the advocates of national cultural and economic sovereignism that was first called forth by France’s young president in 2017. In this sense, the 2022 elections are sure to be as consequential for the trajectory of French and by extension European politics as were those of 2017.

Notes 1. The term quinquennat, which designates the French president’s five-year term, came into use following the Constitutional Reform of June 2000 that was approved by popular referendum in September of the same year, which shortened the duration of a presidential term from seven to five years. Jacques Chirac’s second term (2002–2007) was the first to fall under the new law. 2. Before 2016, the retirement age for SNCF office and maintenance workers had been set at fifty-five and at fifty for train drivers and controllers. These were increased to fifty-seven and fifty-two, respectively, after 2016, still well below the retirement age of sixty-two for other fonctionnaires. 3. In June 2020, Fillon was found guilty of embezzling public funds and sentenced to five years in prison, three of them suspended, a €375,000 fine, and ten years of ineligibility for public office. His appeal is pending.

F rance    59 4. Even the 2002 presidential election saw the Gaullist Party (plus its UDF allies) and the PS candidates account for 43 percent of the vote, a far cry from the 26.4 percent garnered by the LR and PS candidates in 2017.

Suggested Readings Chapman, Herrick. France’s Long Reconstruction: In Search of the Modern Republic. Cambridge, MA: Harvard University Press, 2018. Goodliffe, Gabriel. The Resurgence of the Radical Right in France: From Boulangisme to the Front National. New York: Cambridge University Press, 2012. Guilluy, Christophe. The Twilight of the Elites: Prosperity, the Periphery, and the Future of France. Trans. M. DeBevoise. New Haven, CT: Yale University Press, 2019. Lawrence, Jonathan, and Justin Vaïsse. Integrating Islam: Political and Religious Challenges in Contemporary France. Washington DC: Brookings Institution, 2006. Vail, Mark. Recasting Welfare Capitalism: Economic Adjustment in France and Germany. Philadelphia: Temple University Press, 2009.

References Centre d’observation de la société. 2018. “42% de pauvres dans les quartiers prioritaires.” July 2, 2018. https://www​.observationsociete​.fr​/revenus​/part​-pauvres​-quartiers​-prioritaires. Cornuet, Flore, and Michaël Sisic. 2019. “Estimation avancée du taux de pauvreté et des indicateurs d’inégalités: En 2018, les inégalités et le taux de pauvreté augmenteraient.” Insee Analyses, no. 49 (October): 1–4. Garbinti, Bertrand, and Jonathan Goupille-Lebret. 2019. “Inégalités de revenue et de richesse en France: évolutions et liens sur longue période.” Economie et Statistique, no. 510–512, 69–87. IFOP. 2017. “Le profil des électeurs et les clefs du premier tour de l’élection présidentielle.” Election Présidentielle, April 23 and May 7, 2017, 1–109. Le Monde. 2021. “La dette publique a atteint ‘son niveau le plus élevé depuis 1949.’” March 26, 2021. https://www​.lemonde​.fr​/economie​/article​/2021​/03​/26​/la​-dette​-publique​-de​-la​-france​ -a​-atteint​-115​-7​-du​-pib​-en​-2020​-le​-niveau​-le​-plus​-eleve​-depuis​-1949​_6074521​_3234​.html. Tonnelier, Audrey. 2022. “La Cour des comptes juge ‘incertaine’ la trajectoire de redressement budgétaire du gouvernement.” Le Monde, February 16, 2022. https://www​.lemonde​.fr​ /politique​/article​/2022​/02​/16​/cour​-des​-comptes​-l​-avertissement​-a​-macron​-pour​-un​-second​ -quinquennat​_6113881​_823448​.html.

CHAPTER 3

Germany THE SEARCH FOR A NEW COMPASS Hartmut Mayer

60

G erman y     61

Germany Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per capita (Purchasing Power Parity, 2013): Joined EC/EU:

83.24 137,847 623 $3,806 $45,724 January 1, 1958

Performance of Key Political Parties in Parliamentary Elections of September 2021 Alternative for Germany (AfD): Christian Democratic Union (CDU): Christian Social Union (CSU): Free Democratic Party (FDP): Alliance 90/The Greens: Social Democratic Party (SPD): The Left (Die Linke): Main Officeholders • President: Frank-Walter Steinmeier, SPD (2017) • Chancellor: Olaf Scholz, SPD (2021)

10.3% 18.9% 5.2% 11.5% 14.8% 25.7% 4.9%

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I

n his official ceremony speech marking the thirtieth anniversary of German Unification in October 2020, Federal President of Germany Frank-Walter Steinmeier referred to British historian Timothy Garton Ash, who had recently written in The Guardian that the last thirty years were the best in Germany’s “long and complicated history” (Garton Ash 2020; Steinmeier 2020). This long-term assessment not only resonated with Germany’s president but also captured the general mood of the nation: a unified and democratic country, reassured rather than proud and at peace with itself and its neighbors for the first time in its 150-year existence since Bismarck’s unification in 1871. Germany seemed to have reached a comfortable position, respected and often admired. The nation that had brought horrors to humanity in its first 75 years as a unified country and, on the whole, common good in the second 75 years, had found its settled place in the international system in friendship with all neighbors—firmly tied into the Western alliance under US leadership and a strong European Union. Considering the turbulences, excesses, and failures of German political history in the first half of the twentieth century, the most remarkable achievement of the Federal Republic of Germany since its foundation in 1949 had indeed been its unique stability. In over seventy years, democratic Germany has seen only nine different chancellors, and reunited Germany in its first thirty years only four. The long reign of the country’s first female chancellor, Angela Merkel, that ended in 2021 after sixteen years pays tribute to both the exceptional political skill of an extraordinary leader as well as the unique centrist stability of the entire German political system. Riding on popular clichés, one cannot imagine France without a sense of grandeur, Britain without its imperial traditions, Italy without the dolce vita, and Germany without an old dieselengine-like reliability and steadiness. This trademark stability had served Germany well so far. The multiple crises in Europe since 2008—the financial crisis, the sovereign debt crisis, the vulnerability of the banking sector, the Russian annexation of Crimea, the refugee crisis of 2015– 2016, the challenge to democratic governance through illiberal populism, Brexit, the rise of China, and the COVID-19 pandemic—have shaken all of Europe. In relative terms, Germany had stayed remarkably unchanged and confident during the reign of Chancellor Angela Merkel. Despite being written off several times, the old chancellor survived it all and remained the most popular politician in Germany until the end of her tenure in the autumn of 2021. What a stark difference from where Germany and Merkel’s successor, Olaf Scholz, find themselves today. What President Steinmeier did not mention in his celebration remarks was the second part of Garton Ash’s analysis: the next thirty years will be much harder and the “national and regional challenges that Germany has faced over the last 30 years pale in comparison with the global ones it will face over the next 30” (Garton Ash 2020; Steinmeier 2020). Different from most European nations post-1945, Germany never really faced a truly serious economic crisis that would call into question the foundations of its long-term political success: its tradition of functioning coalition government, a federal system that aimed at and (on the whole) provided more or less similar living standards across the country, and an economic model that provided solid, export-led growth by a very competitive and world-class industry. Combined

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with a generous welfare system underpinned by a broad ideological consensus coined “social-market economy” was the recipe for sustained success. Nevertheless, the new, three-party SPD-Green-FDP coalition under Chancellor Scholz faces unprecedented international and domestic challenges that question most of the traditional core assumptions of the Merkel era. Vladimir Putin’s invasion of Ukraine in February 2022 and the resulting, security, energy, and cost-of-living crises in Europe exposed the deeper weaknesses of the German model that had provided stability and prosperity. The unexpected war in Ukraine was a strong catalyst for what Scholz (2022) called the Zeitenwende—or “turning point”—in his key foreign policy speech to the Bundestag immediately after the Russian invasion. Germany would have to change fundamentally to adapt. This chapter aims to analyze the uncertainties facing post-Merkel Germany, using the country’s recent past as a guide. The chapter has two broad sections. The first deals with new domestic uncertainties that emerged during the Merkel years and include party politics, social trends, and the general state of the German economy. The second broad section looks at new foreign policy challenges in a fluid global order. The conclusion reflects on the wider implications. Considering the position of Germany on the continent, Berlin’s ability to adjust to a fundamentally different environment will have a huge impact on the development of Europe today.

The Paradoxes of the Merkel Era and the Resulting Domestic Uncertainties When retrospectively assessing the sixteen years of four different Merkel governments since 2005, an older verdict by political scientists Reimut Zohlnhöfer and Thomas Saalfeld on Merkel’s third term in office still seems valid. They characterized Merkel as a politician who was generally reluctant toward any real change while at the same time being capable of radical policy U-turns only as a response to real crisis management. At the end of the Merkel years, Germany remained somewhat stuck between stagnation and overdue reforms—even though the sudden crisis management changes in energy policy and refugee policy most prominently defined Merkel’s era (Zohlnhöfer and Saalfeld 2019). Germany’s new situation post Merkel makes a final historical assessment difficult. Considering what might follow, Germany under Merkel might be judged by future historians as a rather happy belle époque despite the many crises that defined the period. Whether Merkel responded prudently through measured means or whether her alleged lack of decisiveness actually enhanced the problems will remain as much debated in the future as it has been during her time. Merkel’s handling of the euro crisis after 2008 was often criticized “as too little too late,” avoiding necessary bold European steps for domestic electoral calculation to the detriment of the continent. On the other hand, Merkel also stood for “too much too fast”: the most significant domestic policy turns of her career—the decision to phase out nuclear energy as a response to the Fukushima incident in 2011 and her welcoming of more than a million refugees to Germany during the peak of the migration crisis

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in 2015–2016—are the two key examples. “Too little too late” came at the expense of Europe; “too much too fast” was at the expense of Germany itself. It is a remarkable paradox of the Merkel era that she was always, at the same time, hugely admired and viewed with suspicion by both her opponents and her supporters. While Merkel’s international standing grew steadily over time, her domestic approval remained more ambivalent. Her multiple reelections owed as much to her undeniable strength and political pragmatism as to the real weakness of opposition parties. The last Merkel government, between 2017 and 2021, was no exception. Leading just another Grand Coalition with the SPD that few people had envisaged, Merkel was written off from the beginning. Ever since she had reluctantly passed on the leadership of her party, the Christian Democratic Union, in December 2018 as a response to a string of disappointing results for the CDU in regional elections, the long-lasting era of Germany’s first female chancellor was bound to come to a disappointing and possibly premature end. Merkel was seen by many as merely a lame duck leader best to be replaced sooner rather than later. The reluctant renewal of yet another Grand Coalition with the SPD after the 2017 election contributed to a great sense of stagnation in a country in much need for modernization. A carefully orchestrated plan to replace Merkel with her favored successor, Annegret Kramp-Karrenbauer, who was elected party leader in December 2018 while Merkel remained chancellor, failed miserably. Kramp-Karrenbauer, for complicated inner party reasons after regional elections in Thuringia in February 2020, stepped down just before the COVID-19 crisis hit. The pandemic became the moment of the executive, and hence Merkel was back at center stage and enhanced her personal approval rates to new highs. With a country in lockdown and the CDU in turmoil, it took another year before Armin Laschet, a close ally of Merkel, was finally elected as new CDU leader in January 2021. With solid backing from the party apparatus and establishment, Laschet beat two formidable rivals, Friedrich Merz and Norbert Röttgen. Each stood for a clearer break from the centrist, slow, and cautious reform policy of the Merkel era. Laschet personified continuity. Merz, a lifelong bitter rival of Merkel ever since she had ousted and replaced him as CDU parliamentary leader in 2002, symbolized a return to conservative values and a liberal, business-focused policy agenda. Former environment minister and foreign affairs expert Röttgen, also pushed out of his ministerial post by Merkel in 2012, stood for a rapid modernization of the party toward a new centrist coalition with the Greens. Laschet’s victory send the message that the status quo seemed to prevail. Meanwhile, the COVID-19 year 2020 had not only elevated Merkel to yet another peak in domestic popularity but also confirmed her extraordinary international standing. Holding the EU Council presidency during the global pandemic and brokering a huge €750 billion rescue package for crisis-ridden Europe served as a reminder of how important German leadership was for Europe as a whole. Having to work closely with French President Macron and against some domestic resistance showed how much this depended on Merkel as a person. Domestically, she once again overshadowed all other politicians by such a margin that the long-drawn-out leadership contest in her own party only confirmed the size of the vacuum that Merkel would leave in German politics.

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Nevertheless, the handling of the COVID-19 crisis in 2020–2021 displayed the full range of crisis management capacity, successful responses, and perceived failures. In 2020, Germany was seen as a model for others and praised for handling the crisis well. COVID infections and death rates were comparatively low, and hospital capacities proved to be superior compared to most European countries. In 2021, however, severe difficulties with regard to vaccination implementation strategies and confusing policy inconsistencies within the central government and between Berlin and the sixteen federal states altered the picture. As the Financial Times quoted an observer in April 2021, “We are a laughing stock” (Chazan 2021). The pandemic also revealed the extent to which the very significant larger social, economic, and geostrategic trends that had been long brewing during the Merkel era could no longer be ignored. Some of the underlying trends and reform necessities were more than obvious but constantly deferred in the final years of the Merkel era. During the 2021 election campaign, all parties recognized the urgent need for a full modernization of German society. The sense that Germany’s societal cohesion was regressing and that its economy was generally falling behind in global competition was widespread. Most worryingly, but in line with wider phenomena in Western societies, popular trust in the political system and its leaders went down significantly at the end of the Merkel years. Nearly half of the population had no confidence in any of the of the three 2021 Chancellor candidates, Armin Laschet (CDU), Olaf Scholz (SPD), and Annalena Baerbock (Greens), considering them all ill-suited for leading the county into the new decade. Serious questions about the foundations of Germany’s success became a strong undercurrent in what superficially looked like a hectic battle over marginal personality differences within a wide mainstream of political consensus. These trends also concern a substantial realignment of the party system, old and new societal divides across the various regions of Germany, and a fundamental challenge to Germany’s economic model, which is in serious danger of losing global competitiveness due to a lack of innovation in key industries. The biggest shift is needed in the country’s foreign policy outlook. At the 2022 German-American Conference of Atlantik-Brücke and the American Council on Germany in June 2022, which the author attended, there was widespread consensus that about 90 percent of German politicians and business leaders across the party spectrum had been proven wrong in their basic assumptions about Russia and China. Hence the 2020s will be a more decisive decade for Germany than any period since unification. Times are likely to become much tougher as the country faces fundamental challenges on many fronts. What looked so stable during Merkel’s era has potential for a sudden political and economic erosion. A severe period of public discontent might lie ahead for Germany in the years to come. THE REALIGNMENT OF THE GERMAN PARTY SYSTEM Let us consider Germany’s traditional domestic political stability, general election trends, and the fate of traditional political parties first. The somewhat unusual election campaign in 2021 more than anything else symbolized the new realities. Since

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Germany’s political system does not restrict the tenure of its chief executive, it was in fact the first time in the country’s post–Second World War history that an incumbent did not seek reelection. As mentioned above, it was clear almost from the start of her fourth mandate that Merkel would step down in 2021. Many at the time believed it was inevitable for her to do so way in advance, to allow any CDU successor to settle into office before seeking reelection. It turned out differently. Merkel stayed on; the CDU failed to appoint a natural successor and revealed deep rifts within the party instead. Germany subsequently saw a unique roller coaster election period with unprecedented levels of uncertainty and volatility. Until the spring of 2021, opinion polls suggested a clear victory (between 30% and 40% support at times) for the CDU/ CSU regardless of its chancellor candidate, with the Green party heading for a strong second place (18%–25%). The Social Democrats were in free fall, suggesting results between 12 percent and 15 percent. It looked most plausible that a two-party coalition between the CDU and the Greens would finally emerge. Within a few months, the pendulum swung dramatically. Rifts between the CDU (running in fifteen of Germany’s sixteen federal states) and its Bavarian sister party, the CSU (Christian Social Union), showed how split the CDU/CSU was with regard to policy and personnel. After CDU leader Laschet clinched the nomination for chancellor in April 2021 over his more popular CSU rival, Bavarian Prime Minister Markus Söder, and after the Greens nominated forty-year-old Annalena Baerbock as their chancellor candidate, opinion polls shifted with unprecedented speed. May 2021 saw Baerbock in the lead, feeding speculation of a first Green chancellor. By late August, both Laschet and Baerbock were in sharp decline. Opinion polls suggested suddenly that the SPD was back in the lead, with 24 percent making it possible for the underrated Finance Minister Scholz to suddenly win and succeed Merkel. Most concerning, however, was the fact that 40 percent of the electorate remained undecided three weeks before the election and that nearly 50 percent did not trust any of the three candidates to address the country’s urgent needs. It became obvious that the stability of the Merkel era mainly could mainly be attributed to Merkel herself but that the entire political class and the established parties had somewhat lost the electorate. National politics revealed the same volatility and diversity that had defined the politics at the regional level for many years before. During the sixteen-year-long Merkel era, the German political system saw a general shift toward election volatility and from stable party affiliation to the politics of personality and protest. In 2021, according to a study of the Konrad Adenauer Foundation (Neu and Pokorny 2021), only 25 percent of voters were loyal to a single party, while three-quarters were now switch voters. In general terms, the national breakthrough of the right-wing AfD (Alternative für Deutschland) in 2017, the sharp rise of the Green party as a modern centrist and progressive force, and the general decline of Germany’s traditional larger catch-all parties were noticed with different degrees of alarm internationally. The later years of the Merkel era intensified a long-standing trend toward a fundamental realignment of the German party system. What had been a stable and balanced three-party system in the Bonn Republic, consisting of the Christian Democratic Union (CDU/CSU, a center-right party), the Social Democratic Party (SPD, center-

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left), and the Free Democratic Party (FDP, liberal centrist party) between 1949 and 1983, saw the emergence of the then left-wing Greens in the 1980s. On the centerright, there was a historic anomaly, with the CDU and CSU becoming “sister parties” in national elections forming a joint parliamentary group while formally being two separate parties. The CDU never ran in Bavaria, while the CSU did not run outside. There have always been tensions between the two parties, as the CSU traditionally was a more conservative force with high approval rates in Bavaria. Both parties benefited from the alliance, as they were much stronger electorally in this partnership. After unification, the system accommodated the Far Left Party of Democratic Socialism (PDS), later Die Linke. The party had developed as the democratic and reformed successor of the former communist Socialist Unity Party (SED), which was the dominant force in East Germany (GDR). Even though Die Linke never became a force in national politics, it played an important role historically as a regional identity party in the former East that absorbed the frustration of the marginalized and thereby contributed to an overall smooth transition to democracy for all parts of unified Germany. On the whole, since unification in 1990, a relatively balanced and clear Left-Right divide (with SPD, Greens, PDS/Die Linke vs. the Right CDU/CSU, FDP) party system has by now turned into a complex, six-party system with very flexible alliances and coalitions. The Merkel years contributed decisively toward this trend. When she took office in 2005 in a Grand Coalition with the SPD, the former SPD Chancellor Gerhard Schröder, in his Agenda 2010 had already adopted economic reform policies that could have been expected from a center-right CDU-FDP coalition rather than his Red-Green alliance. There was a new pro-business and competitiveness agenda that had moved the SPD economically to the right while the party had moved socially toward the postmodern identity politics that had always defined the Greens. Significant liberalization of migration policy, better integration through a reform of German citizenship laws, improvement for LGBTQ+ rights, and significant environmental legislation—including the long-term phaseout of nuclear energy—were achievements of the 1998–2005 Schröder coalition with Green Party leader Joschka Fischer. In foreign policy, the approval of out-of-area deployment of German troops for the first time during the western Kosovo campaign in 1999 blurred traditional dividing lines, as the Greens had suddenly departed from their strictly pacifist and anti-NATO roots. They now endorsed policies in government that they would have fought vigorously against while in opposition. The 2005 Grand Coalition was then formed after Merkel had narrowly beaten Schröder, but neither party secured a majority strong enough to allow for a traditional two-party coalition. The SPD entered the first Merkel government in 2005 with several pragmatic post-Schröder politicians who, in retrospect, stayed at the center of German politics much longer than anyone could have anticipated. Among them were Frank-Walter Steinmeier as foreign minister and vice chancellor in 2005, who today (2022) serves as federal president; Olaf Scholz as labour and social affairs minister in 2005, who became finance minister in Merkel’s fourth cabinet and finally succeeded her as chancellor in 2021; and Sigmar Gabriel, who served in three of her four cabinets. The close professional bonds between Merkel and senior SPD colleagues and

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their mutual respect for each other contributed to the stability of the Merkel eras but also to the widespread impression that there is no longer any real alternative to the centrist consensus symbolized by the Grand Coalition that, in theory, was meant to be an exception but became an accepted longer-term reality. The two main parties and two very flexible smaller parties willing to enter pragmatic government agreements have led to the impression that Germany is essentially run by TINA (“there is no alternative”), who governed with very slow prospect for real change. Merkel’s exceptional durability owes much to this pragmatic centrism. Across the sixteen Länder (or regional governments), we find all sorts of coalitions unified primarily by very pragmatic considerations of the four mainstream parties (CDU/CSU, SPD, Greens, and FDP) against the Far Right AfD. The Left party, while unacceptable for the CDU, is a welcome partner to SPD and Greens if necessary. In 2022, coalitions led by the CDU/CSU existed with the Greens (NorthRhine Westphalia, Hesse, and Schleswig-Holstein), with the SPD (in Saarland until March 2022 before the SPD won a landslide absolute majority), with the Free Voters (Bavaria), and with the SPD and the Greens (Saxony-Anhalt and Saxony). The SPD, on the other hand, led coalitions with the CDU (Lower Saxony and MecklenburgVorpommern), with the Greens (Hamburg), with the Greens and the Left Party (Berlin and Bremen), with the Greens and the FDP (Rhineland-Pfalz), and with the CDU and the Greens (Brandenburg). The Greens headed a coalition with the CDU in Baden-Wuerttemberg, while the Left Party governed in Thuringia in a coalition with the SPD and the Greens. Most elections in Germany are now decided primarily by the personal approval ratings of political leaders rather than programs and by regional considerations and traditions. While the flexibility of all mainstream political parties has been a key factor in keeping the extremes of Left and Right out of government, it has had two severe side effects. First, voters who feel marginalized might be driven further apart from the assumed consensus. Second, most parties have somewhat compromised their core identities and have seen internal crises and debates over their general direction as a result. Some of these trends reflect broader developments in Europe, but most have specific German features. Most noticed internationally has been the worrying rise of the Far Right AfD. The party was originally founded in 2013 as a Euro-skeptic party by Hamburg-based economics professor Bernd Lucke, who had been a CDU member but was deeply skeptical of the euro as a common currency for Europe. Soon afterward, the party transformed into a right-wing populist party with increasingly radical tendencies and blurred lines between the party and neo-Nazi groups outside the party structure. The AfD’s national electoral breakthrough in the Bundestag election in 2017, largely a result of protest against Merkel’s refugee policy in 2015–2016, sent shock waves both across Germany and abroad. For the first time since 1949, a distinct rightwing party has by now established itself and is likely to remain a permanent feature of the German party system. Considering Germany’s historical past, alarm bells always ring louder. Nevertheless, as with previous right-wing parties in Germany—that is, the NPD in the 1960s and the Republikaner and the Deutsche Volksunion (DVU; German People’s Union) in the 1980s and 1990s—the AfD seems to have fallen into

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the same bitter internal battles that might lead to its longer-term decline. Furious disagreements between right-wing extremists with links to neo-Nazi groupings and very conservative but democratic factions have traditionally limited the electoral appeal of such parties soon after their arrival. Different from previous decades, the reelection result of the AfD in 2021 suggests that the party has endurance nationally. It had already established itself as a persistent force in regional politics, in particular in the East. It remains open whether the AfD has peaked and faces long-term decline or whether there is fertile ground for further expansion. However, what seems certain is that the party is discredited enough not to make it into any form of government for a long time. The right wing of the party is currently winning the internal battles, driving the more moderate members more and more out. The potential as a protest party continues to be strong, but the likelihood of entering into government at any level has vanished further. To some extent, Germany has therefore reached a more normal state of affairs in European politics, where populists unfortunately have emerged in all modern democracies but have not yet dominated it over a long term. In 2022, it was the AfD and Die Linke that expressed reservations against the Western consensus vis-à-vis Russian aggression against Ukraine. The AfD, in all probability partially funded by Russian resources, had criticized the Western responses, and some of its members defended some of Putin’s rationale on similar lines of argument as had been put forward by Viktor Orbán in Hungary. The party convention in Saxony in June 2022 was abruptly broken up over a dispute on foreign policy, as the party could not agree on how critical it should be about Russia’s war in Ukraine. A formal paper called “Rethinking Europe,” tabled by Björn Höcke, the party’s most influential Far Right voice, advocated closer ties with Moscow and avoided calling Russia’s invasion a war with a clear aggressor by describing it in more neutral terms as merely a “conflict.” The foreign policy worldview expressed referred to a fundamental battle between “globalists” and “nation-states” in which the party was clearly on the side of nations (Deutsche Welle 2022). While such foreign policy positions led to further decline of the party in the former West, the AfD remains strong in former communist East Germany, where views on Russia still tend to be more positive in general. The second most significant development has been the decline of the two traditional people’s parties, more severely that of the SPD. The crisis of social democracy in general has been a longer-term trend in Europe and is well researched and documented. Standard accounts point to series of long-term processes since the 1970s, the last golden age of social democracy. In broad economic theory terms, the neoliberal/ supply-side paradigm also came to dominate a new social democratic thinking in the 1990s. Depending on one’s ideological point of departure, this move has become a dilemma for the SPD or an inspiration for renewal. At a time when new forms of globalization eroded traditional manufacturing in many European countries and broader narratives of liberalism launched an attack on existing welfare states, social democratic leaders all over Europe gradually embraced such changes. In policy terms, they began to restrict traditional mechanisms for social transformation and redistribution. The German SPD, the oldest and proudest party in Germany, had been no exception. Under Schröder, it generally championed ideas of “a third way” and “Neue

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Mitte.” While it resonated with new middle-class constituencies at the time, the SPD gradually lost its traditional working-class votes. Ever since Schröder’s end of office in 2005, the vote share of the SPD declined sharply, from about 40 percent in 1998 to around 20 percent in 2021. Apart from larger trends in society that have eroded the traditional SPD voter base of organized industrial labor, working-class identity, and a new core of progressive and urban public sector reformers, there is a unique German element to the story. In a comprehensive analysis of the SPD’s decline, Liam Byrne (2020) argued that the SPD had essentially “lost the future” by losing the ability of “future imagining,” that is, of offering an alternative vision for progressive change. The pivotal turning points for the fate of the SPD were the Agenda 2010 labor market and social security reforms introduced by Chancellor Schröder between 2003 and 2005, which have haunted the SPD ever since. While the introduction of more flexibility in the labor market helped to reform an outdated German business model, it was criticized by the traditional party faithful and union leaders as giving in to the perceived “neoliberal” consensus represented by the CDU and FDP. As a result, a substantial chunk of the SPD left the party to join with the PDS to form the more left-wing Die Linke in 2007. Ever since those reforms, the SPD has found itself in a difficult electoral position—made worse by the need to form repeated grand coalitions with the CDU to form a government. Traditional SPD supporters blame the party for essentially endorsing CDU policies, even though the SPD shaped coalition policies more than it is credited for. Outflanked by Die Linke on welfare promises (which that more extremist party never needs to deliver) and overshadowed by the Greens on new identity issues that appeal to wealthy, urban, and educated middle classes who used to vote for the SPD, the Social Democrats found themselves in an impossible position. The pragmatic centrism that characterized politics at the national level created considerable turmoil within the SPD itself. The rapid turnover of key personnel and the foul party atmosphere that resulted from permanent change added to the malaise. For example, during the eighteen years of Merkel as CDU leader (2000–2018), the SPD had roughly ten different party heads. Since 2017, the SPD have ousted foreign minister Gabriel and labour minister Andrea Nahles from the party leadership, both respected widely in German society. It then elected in 2019 the formerly unknown backbencher, Saskia Esken, and Norbert Walter-Borjans, a former regional finance minister from North-Rhine Westphalia (2010–2017), as new, joint party leaders. Both were voices from the left wing who had generally opposed the SPD’s centrist positions and its role in Merkel’s governments. Instead, they preferred and advocated for a complete renewal in opposition. Both were also clear opponents to finance minister Scholz, already the most prominent and proven leader in his party. In 2019, the duo also had the support of the rising leader of the young socialists, Kevin Kühnert, a talented and influential left-winger from Berlin who was a sharp critic of Scholz. Later in 2021, Kühnert became party secretary general while Lars Klingbeil, an ally of Scholz and a centrist politician from the old circle around former Chancellor Schroeder, became co–party leader, replacing Walter-Borjans.

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Against this background of an ideologically divided party in general decline, the election victory of Olaf Scholz as chancellor in 2021 was unexpected. When the SPD nominated him as candidate in 2020, opinion polls predicted a clear CDU victory. The new SPD generation around Kühnert and the left-wing around Esken recognized the electoral potential of Scholz but also speculated that the most likely election defeat would finish him and his centrist positions forever, thereby leaving the future to a more left-leaning and much younger party leadership. History proved them wrong. The Scholz victory, however, does not constitute a major turnaround for Social Democracy. In fact, it provided evidence for the new volatility and the personalitydriven elections in Germany. The results in September 2021 were predominantly a vote against CDU/CSU contender Laschet in comparison with the experienced SPD finance minister Scholz. It is hard to imagine any different SPD candidate winning against any different conservative contender in 2021. The cultural tension in the party—between the old SPD mainly concerned with social justice, social mobility, high wages, and safe pensions and the young, new, postmodern SPD that looks very close to the Greens—remains a difficult project. While the relative decline of the SPD is well understood, the future fate of the CDU/CSU is more complex. On the one hand, the conservatives remain the central party in Germany. They have been in power for more than fifty of the roughly seventy years of democratic Germany and have defined the state and its core values more than any other party. In particular, its trademark “Social Market Economy” and the Western orientation in foreign policy with NATO and the EU as indispensable pillars of Germany’s foreign policy role have become part of Germany’s essential and irremovable DNA. Merkel prudently managed to reposition the CDU from a conservative outlook of the Kohl era into a centrist-pragmatic umbrella that embraces conservatives, liberals, and pragmatists across all social classes, faiths, and regions. However, the CDU has lost appeal among modern urban voters and relies disproportionately on old voters over sixty. This dependence on elderly voters is an obvious time bomb that will hit the CDU in the future. Obvious internal division in defining its core strategy in a post-Merkel era became evident in the above-described succession struggle ever since Merkel gave up the CDU leadership in 2018. The conservative wing of the party wished to return to traditional values and compete with the AfD over the right-wing spectrum in the electorate while the liberal wing wanted to modernize very speedily to represent a new center in society. After the national election defeat against Scholz in 2021, entirely due to Laschet’s weakness as CDU/CSU chancellor candidate, the power struggle between conservative traditionalists, centrist Merkel-supporters, and new intellectual modernizers was not settled at all. In December 2021, after a change of internal party rules, the roughly four hundred thousand party members elected sixty-six-year-old Merz as the new leader with a convincing 62 percent majority against rivals Helge Braun (a close Merkel loyalist and former head of the chancellor’s office) and foreign policy expert and former environment minister Röttgen, who represented the liberal CDU wing with stated sympathy for a Conservative-Green alliance as the new centrist mainstream in modern Germany. Merz was confirmed by the party convention in January 2022 and thereby

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became the third CDU leader after Merkel in only three years. Merz, an old Merkel rival, represents the conservative and business wing of the CDU and has significantly less appeal in the general electorate than in his own party. The electoral space opened by the decline of the two big catchall parties has been partially filled by a reformed Green Party that for the first time expresses the ambition to become Germany’s new leading political force. Founded in 1980 as an umbrella for a wide spectrum of new social movements of the 1970s, it has seen many transformations over the last forty years. It is one of the most successful Green parties in Europe. The original division between left-wing “fundamentalists,” who positioned themselves against the mainstream of Germany politics, and the “pragmatist-realist” wing, who embraced the existing social market economy and the democratic system rooted in “pax-Americana” and NATO, is long over. The pragmatists led by Fischer won a decisive and lasting victory during their time in government with the SPD from 1998 to 2005. The Green core issues remain environmental protection and climate change, feminism, gender and sexual identity, human rights, immigration and cultural diversity, and the transformation of the German economy into sustainable green growth. Most remarkable has been the transformation of the Green outlook on foreign policy. Originally born as a pacifist, anti-NATO party in the 1980s, it has now become a strong defender of Western liberal democracy and close transatlantic cooperation with a strong European pillar. Among all German parties, it has been most critical about Putin’s Russia and Xi’s China. Electorally less concerned about pleasing German industry, the Greens put human rights over commercial interests in their political rhetoric. Furthermore, the party is most open to further deepening of European integration and steps toward Europeanization of fiscal and social policies. French President Macron’s bold plans for a new European moment received lukewarm responses from the Merkel government but were welcomed by the Greens. All in all, the Green party will certainly become a more decisive political force in the next decade ahead. Judging by the first year in government, the Greens have done remarkably well in the Scholz coalition. Economics Minister Robert Habeck and Foreign Minister Baerbock have outperformed expectations and quickly gained high personal approval ratings. They have achieved this by challenging some old Green assumptions and displaying a sense of pragmatist responsibility which is expected of governing parties. In particular, Baerbock, a suboptimal election campaigner in 2021, has become a strong foreign minister with clearly expressed positions against authoritarian regimes in Russia, China, and Turkey. She is a reliable transatlantic and pro-EU voice. She is less tainted by past compromises with the Putin regime that have become such a burden for the SPD and large parts of the Merkel-CDU. The SPD in particular is traumatized by its strong pro-Russian past that proved to be such an illusion after the February 2022 Russian invasion of Ukraine. In contrast, the Green Party very quickly became the main voice for a reaffirmation of the Western alliance and a strong supporter of providing weapons for Ukraine. While the Greens are bound to rise further as a leading voice and force, the fate of Die Linke seems to head in the opposite direction. The historical importance of Die Linke is usually underestimated due to its complete absence in national government.

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It has played a crucial role in Germany’s postunification political transformation during the last thirty years by providing a political home for marginalized voices from the former East and by binding previous representatives of the GDR to some extent into the new democratic system. This role, however, is fading for demographic reasons. Today’s Die Linke is the least cohesive of parties, with deep tensions over policy and personality. While still relevant as a regional force in the Eastern states, it is increasingly insignificant nationally. For the first time in history, it has more members who originated in the former West than in the East, thereby losing its role as an Eastern identity party. Many of these new members, a significant proportion of which are former SPD members and trade unionists, had joined in 2007 as protest against the Agenda 2010 reforms mentioned above. Most prominent among them was former SPD leader Oskar Lafontaine. A further influx came from the radical peace movement of the 1980s who no longer had a political home in the Green party. Some of the more radical members of the Left nowadays are from the West, while pragmatist former Easterners such as Thuringia’s successful Prime Minister Bodo Ramelow very much represent the political mainstream. The biggest obstacle for the Left Party in entering national government remains its foreign policy. The party has a traditional and unusual fixation with Russian security needs and interests. Prior to the 2022 Russian war against Ukraine, the Left Party called for closer ties with Moscow and advocated replacing NATO with a pan-European security system that binds Russia into collective European security. It also wants to dissolve parts of the German intelligence agencies, contemplates nationalization of private companies under certain circumstances, and proposes much stricter national rent control policies. Putin’s invasion of Ukraine exposed the weakness of these positions. Several of its leaders, while condemning violence in general, still defended Putin by putting the blame on Western policies of the last thirty years. During the summer of 2022, prominent Die Linke politicians criticized the Western sanctions against Russia as ineffective and called for a cease-fire agreement where all parties, in particular Ukraine, would have to accept compromises. As a result, the party’s electoral support went far below the 5 percent hurdle, and long-term survival of the party is in doubt. For all these reasons, Die Linke remains an unlikely coalition partner for any national government. The fate of the liberal, pro-business FDP is quite the opposite. In essence, it has returned to its traditional role as kingmaker by being able and willing to form coalitions with either conservatives or SPD-Green progressives. The key dates for an understanding of its current national role are the federal elections of 2013 and 2017. Having unexpectedly failed to enter the Bundestag in 2013 after being in a coalition government with the CDU in Merkel’s second term (2009–2013), the FDP faced the danger of extinction. Under the new leadership of Christian Lindner, it then returned to the Bundestag in 2017 but refused to form a possible coalition with the CDU and the Greens for fear of being squeezed out into irrelevance again. By leaving the promising coalition talks at the last minute, the FDP forced the CDU/CSU and the SPD into yet another Grand Coalition. The internal perception was that the FDP would strengthen itself by adhering to its core values rather than entering government with compromises for the

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sake of governing. However, FDP voters elect the party in order that it govern and provide a pro-business voice in any coalition. Hence, in 2021, the FDP had to govern to stay relevant and was therefore bound form the three-party coalition under Scholz. With Lindner becoming finance minister, the party plays a key role as a voice for solid public finances and pro-business policies while balancing some of the SPD and Green preferences for wider social spending. The party is well positioned nationally but still vulnerable at the regional level. The core voter base is limited around 6 percent and the FDP disproportionally relies on tactical voting. However, it has regained a clear ideological profile of financial conservatism, neoliberal economic policies, and social liberalism, a profile that is an indispensable part of Germany’s party-political spectrum. THE CONTINUED EAST-WEST DIVIDE On the whole, the dramatic shifts in party politics during the Merkel era are also linked to wider societal trends that will shape the decade ahead. Thirty years after unification, the obvious question remains as to whether the mental and material gap between former East and West has been overcome. The short and somewhat disappointing answer is that despite all the remarkable achievements over the last three decades, fundamental differences in the political and economic outlook of people remain. The contrast is not as stark as in the 1990s, but the nation has not yet grown together as easily as was envisaged and hoped for immediately after the end of the Cold War. As indicated above, voting patterns differ significantly. The former East seems more vulnerable to populist promises and propaganda. The AfD has its strongest base in Saxony, reaching nearly a third of the electorate there. In contrast, the party has much less support in the western Länder. Generally speaking, East Germans who stayed in the home region still have a much higher sense of marginalization in society. Long-standing psychological stereotypes such as, for example, arrogant Westerners (“Wessis”) and inadequate Easterners (“Ossis”) have survived—particularly among those over sixty, which is a highly relevant demographic group for elections. Younger people seem less attached to such identities. What is important to emphasize, however, is the now much more diverse map of social and economic inequality in Germany. Poverty levels are highest in some former western areas such as Duisburg and Gelsenkirchen in North-Rhine Westphalia and parts of Saarland and Bremen. As a consequence, policies to address poverty need to be targeted more locally. This raises questions about the continuing relevance of broad East-West redistribution policies and schemes introduced in the 1990s and prolonged until today. In fact, the five new Eastern Länder are now more differentiated and divided with pockets of wealth and innovation in cities such as Leipzig and Dresden next to large areas of steep rural decline. Despite this differentiation, general levels of satisfaction with economic and social condition, that is, psychological and cultural factors that affect political voting behavior, remain much lower in the former East.

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NEW SOCIOECONOMIC AND DEMOGRAPHIC REALITIES Apart from prolonged mentality differences in the formerly divided country, the essential root cause for Germany’s societal challenges is its alarming demography. Germany is among the fastest-aging societies in a rapidly aging world. As Ian Goldin (2022) points out, for the first time in history, there are more people worldwide over sixty-five than under five, and pensioners outnumber children in many countries in Europe and Japan. Germany is a prime example, as the second-oldest society after Japan globally. It has been known for a long time that the aging society requires a shift in social provisions and a complete overhaul of the pension and elderly care systems. Since the 1990s, successive governments have shied away from reforming social security systems to an extent that would be needed. The state-financed pension system remains an obvious time bomb. Designed originally in the 1950s, the German state pension system is financed through a transfer from currently employed contributors to current pensions. It is additionally subsidized by a significant proportion of the annual state budget. While in the 1960s, six contributing people financed one pensioner, the ratio has declined ever since. In 1992, 2.7 contributors financed one pensioner; in 2020 it was down to 1.8. Currently, about 39 million employees cover roughly 18.5 million pensioners. With the baby boomer generation (in Germany people born between 1955 and 1970) approaching retirement and birth rates remaining low, the huge challenges of a declining population with an increase in pensioners are clearly visible. It is predicted that by 2030, 1.5 contributors will pay for one pensioner while the prediction for 2050 is 1.3. The resources for the older generation are obviously insufficient, and traditional intergenerational justice no longer seems to work. However, one-third of German voters are over sixty, and roughly 50 percent of them vote for the CDU/CSU. The SPD also has high support from people over sixty. It is no surprise that the Grand Coalitions under Merkel delayed the problem. Policies favor those age groups and are structurally conservative at the expense of opportunities for the younger generations. Kicking the demographic can farther down the road will be tempting for the new German government, as it has been for many of its predecessors. However, it is shortsighted, with uncertain consequences for the future. There is one glimmer of hope. One-quarter of the population in 2020 Germany by now have a migrant background. Migration is the only feasible strategy to offset the demographic challenge. It has partly done so, but roughly four hundred thousand net migrants would be needed annually to mitigate the problem. Attitudes toward migrants have improved significantly in a country that used to treat them as “guest workers,” assuming that labor migration was temporary while, in fact, most migrants recruited since the 1960s stayed. Integration has worked reasonably well apart from overdramatized social problems in bigger cities. There are areas of isolation and nonintegration for migrants and real structural ceilings for social mobility. They need to be addressed. However, general attitudes toward migration and integration of migrants have improved in today’s Germany compared to the standard decades ago.

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HOUSING In most Western nations, the general state of the housing market and question of affordable homes have been a central theme for political disputes for decades. Quite remarkably, Germany had been an outlier among rich countries for its regulated housing market and its high-proportion long-term rentals within a largely private housing market. For a long time, the model seemed successful, as it provided secure and affordable housing for long-term tenants. In fact, Germany was, in international comparison, a nation of tenants. For several years now, a crisis of affordable housing, both for tenants and potential homeowners, has become political dynamite. The underlying problems have been low real-wage growth and a lack of new house building. Low interest rates for almost a decade and growing international investor interest in a formerly undervalued property market have led to a dramatic explosion of house prices, in particular in major metropolitan area such as Berlin, Munich, Hamburg, Frankfurt, Stuttgart, and Cologne, as well as in attractive university cities such as Heidelberg, Freiburg, or Muenster. Legal rent control policies (national rent brake) have been in place for many years in major cities, including Hamburg, Berlin, Stuttgart, and Munich. While politically popular with sitting tenants (a majority of voters!), they have been less successful in actually solving the problem for house seekers. Landlords have found ways of circumventing them. Politically, these policies have divided the spectrum of Left (SPD, Die Linke, Greens) and Right (CDU, FDP) and have been a political football for several years. Most prominently, the Senate of Berlin (Berliner Senat) brought in its own rent control policy in 2020, which froze and, in some cases, slashed existing rents. However, the law was then struck down by the Constitutional Court, which ruled that the Berlin regional (or Land) government had no right to override the legal guidelines of the national rent brake. Such decisions undermined public confidence in lawmakers, while house and rent prices continued to rise in Berlin. Furthermore, new energy efficiency laws have further driven up the cost of building homes. The COVID-19 crisis led to a surge in demand for green belt properties as people started to embrace working from home and began to flee overpriced and cramped urban housing markets. Finally, the sudden rise in living cost as a result of energy price hikes in 2022, rising interest rates, severe labor shortages, and supply chain problems for most building materials have heightened the crisis. Lack of affordable housing is seen as the widest-ranging social problem as it bridges across all classes and age groups other than the over fifty-fives, who either own property or are in protected long-term lease agreements. Germany’s housing problem is severe and difficult to fix. It will be on top of the political agenda for many years. THE NEED FOR A MODERNIZATION OF “DEUTSCHLAND AG” High among the paradoxes of the Merkel era and her ambivalent legacy are questions about the future strength of the German economy. On the one hand, Merkel presided

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over a decade of growth and a remarkable expansion of German economic power in Europe. Germany’s legendary global trade surplus remains a source of pride and a symbol of industrial strength domestically, even though it created real economic challenges elsewhere. Partly aided by Schröder’s Agenda 2010 reforms, Germany bounced back from the 2008 global crisis with record numbers of employment and sustained, export-led growth. By 2017, Germany had the second-lowest unemployment rate in Europe. However, in a sharp break from the past, it also had the highest percentage of low-wage sector workers (22.5%). In addition, precarious employment contracts and sustained long-term internships for recent graduates and low-skilled workers grew exponentially. The rates of temporary workers in manufacturing enterprises are now normally between 10 percent and 20 percent (Dribbusch and Birke 2019). Precarious workers—that is, those without defined working hours or those without stable employment contracts while working for a sole employer—became precarious voters. For example, in the 2017 elections, 22 percent of people on precarious employment voted AfD against 23 percent for the SPD. There is protest brewing in sectors of society that used to be well integrated into the trademark social market economy, the backbone of Germany’s stability. As in other European societies, the COVID years 2020 and 2021 changed the landscape in the German labor market. Labor shortages in key sectors had been a longterm trend in German society, but COVID accelerated it to an alarming extent. The pictures of chaotic travel conditions in most airport hubs across Europe were symbolic of severe labor shortages in the low-paid sector. Germany’s economic success was traditionally built on big global champions but also on the strength of a highly skilled industrial labor force employed in small- and medium-size companies. The high standard of professional skills in manual labor and the widely admired apprenticeship schemes build the foundation for an efficient industrial economy, with high wages for skilled labor. As a second leg for Germany’s success, there was a highly efficient and attractive public sector with stable and well-paid jobs at the local, regional, and national levels. The public education and public health sector provided very high standards and were traditionally a source of national pride. Since the early 2000s, some of these foundations have been rapidly eroding. In 2022, Der Spiegel magazine ran a special edition devoted to the severe problems of Germany’s labor market shortages (Der Spiegel 2022). There was a new historic record of 1.7 million open positions in the first quarter of 2022, with a majority in low-end jobs in restaurants, transport, tourism, and recreation sectors. However, more significantly, there are long-term structural shortages that have the potential to undermine traditional areas of strength. Due to the demographic changes mentioned above, Germany faces the danger of a permanent shortage of about one million people in the public sector by 2030, in particular in education (there is a severe shortage of teachers), health care, and care for the growing number of elderly people. Furthermore, to implement the government’s ambitious climate change plans, which require new housing and energy efficient refurbishment of existing stock, at least four hundred thousand new specialized technicians are needed by 2025. In 2022, there is already a

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severe shortage in the sector, which makes reaching the climate change goals unlikely even though funds and tax incentives are available. There is also a general societal trend away from traditional apprenticeships to academic qualifications. For example, in 1995, 579,000 young people began an apprenticeship, while 262,000 started a university degree. In 2020, 490,000 entered university, while only 466,000 began a professional training scheme. This shift represents a 20 percent decline in traditional professions. While this trend toward higher education is generally positive, it has at the same time eroded the traditional backbone of Germany’s economic model with highly skilled, high-earning vocational labor at its core. As a result, throughout the country, 34 percent of all open positions in 2021 could not be filled with adequate personnel at all. There is also great regional variation with 60 percent–plus of openings unfilled in rural areas, both in the former East and West. In these regions, it is higher-paying industry that attracts all available labor—leaving small firms and the public sector in these areas fully depleted of a sufficiently competent workforce. This has led to a formerly unknown decline in standards in public service provision, including closures of public libraries and sports and swimming facilities, shortages of medical provisions, shortages of doctors, and some closures of hospitals. Public transport services in rural areas have been reduced already. Labor market and demographic projections suggest the need for an annual net migration of four hundred thousand people per year just to fill the current level of employment. Otherwise, the current workforce of about forty million will sharply decline, with unforeseen social and economic consequences. The contraction of the labor force will be an average of 1 percent per year, with bigger peaks as older baby boomer workers retire in larger numbers at the same time. Politically most sensitive is the shortage of teachers. At the beginning of the school year 2022–2023, about forty thousand teachers were missing nationwide. Canceled classes and a perceived decline in the traditionally high standard of state education are a problem for the political class, as demographic data was available and forward planning should have addressed the problem. In addition, 150,000 school children arrived from the Ukraine in 2022, and places and integration courses needed to be found. It seems that the teacher crisis is likely to last for about ten years as newly qualified personnel are not yet trained (Die Welt 2022). Closely connected to the past success of the German model of capitalism or, in other terms, “Deutschland AG,” was the global competitiveness of its big companies. Their relative weight in the global economy has declined because of global competition and lack of innovation. Germany remains competitive in key manufacturing and chemical industries for the moment, but severe challenges are on the horizon. However, several well-publicized corporate scandals (Volkswagen, Wirecard), poor management decisions, lack of innovation in the digital age, and surprising failure in public infrastructure projects, most famously the new Berlin Airport, have undermined confidence in the previously successful German business model. The inefficient banking sector and the alarming dependency on only a few export-led key industries raise questions about the long-term viability of the entire German economic model.

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Germany’s arguably most well-known company, Volkswagen, is the leading example of some of the country’s industrial shortcomings in recent years. The company, intertwined with twentieth-century German history like no other, has been making motor vehicles for nearly a century and represents a uniquely “German way”: ownership structure with a combination of original family shareholders, openly traded shares, the State of Lower Saxony, and the country’s biggest trade union, IG Metall. The Volkswagen car production empire that includes the brands of Audi, Porsche, Skoda, Seat, Bentley, Lamborghini, Cupra, and motorcycle manufacturer Ducati employs about three hundred thousand people in Germany alone and delivered 8.9 million vehicles in 2021. Tesla, by contrast, produced only 936,000 vehicles, but its market capitalization of about $850 billion dwarfs the Volks­ wagen value of about $83 billion. Roughly ten times the value with a tenth of the output: the popular comparison between the future (Tesla) and the perceived past (Volkswagen) speaks volumes (Arlidge and Yeomans 2022). The symbolic decision to build a new Tesla factory just outside Berlin sent shock waves through the German car industry, which is still the anchor of the German economy. The perceived need to move away from combustion engines, a trademark of German engineering, and to have much slimmer production facilities altogether provides a real challenge for Germany’s car producers. At Volkswagen, a tenth of the workforce seems already expendable, but implementing change at the costs of employees is particularly sensitive with the state and the trade unions as important co-owners. The fate of the German car industry altogether is neither secured nor doomed, but the 2020s will decide whether the country’s premier industry is adaptable enough to survive. It is certainly overexposed to China—both as a market for sales as well as a production side for key components in an integrated global car production chain. This dependency on China provides a particular hurdle for a geopolitical and geo-economic Germany that made, in retrospect, the Merkel era too lenient toward political leadership in Beijing. Combined with the dependency of the large pharmaceutical industry on China for production and on Russia for cheap energy, this indicates the storms on the horizon for the key players of the German economy.

Global Uncertainties and a Search for Germany’s New Geopolitical Compass The domestic uncertainties analyzed above are fully intertwined with sea changes in the international arena. When the new coalition government took office in the fall of 2021, it responded to the lack of strategic thinking during the Merkel era by promising the German public the first-ever formal National Security Strategy, to be completed in 2022. They could not have expected how big the actual task would become. Even though reducing strategic economic dependencies on China by working closer with the United States and like-minded democracies to protect international law and human rights while securing existing economic value chains was a stated goal, the coalition remained vague on, for example, Russia and Turkey, where positions differed among the three partners. What difference did the following few months make?

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Apart from the direct parties to the war in Ukraine and its immediate geographical neighbors, very few European countries were more affected by the shifts in the global and geostrategic order than Germany. Each European nation as well as the continent as a whole now need to reconsider their place in a fluid global environment. However, Germany is most exposed due to its one-sided energy dependency on Russia. German industry has deeply integrated production chains with and full market sales dependency on China. The factors that have historically led to long-term stability in Germany’s foreign affairs had already eroded in the last decade but will continue to see unprecedented rapid change in light of Russia’s war of aggression. Previous fundamentals included first and foremost a functioning transatlantic partnership and alliance manifested through NATO. Secondly, economic stability and prosperity seemed to work best for Germany through an ever closer European Union. Thirdly, a constructive and close accommodation of Russia, a long-term policy desired by Germany that turned out to be a complete misreading of reality, was meant to be assured through energy and business interdependence, general traditions of détente, and respectful and reasonable dialogue between Berlin and Moscow. Fourthly, an open multilateral trade regime, guaranteed by a functioning World Trade Organization, and region-to-region trade agreement provided the framework for an export-oriented business model than generated stable wealth through global trade. For a long time, constructive relations with China through regulated trade and market access and through various multilayered dialogues provided hope that China would gradually see domestic liberalization emerge naturally from integration to the global liberal order. Finally, close cooperation within the UN for wider global governance on peace, health, human rights, and climate change seemed to open the possibility of greater German involvement in UN leadership, with persistent hopes of possibly achieving a permanent seat in the Security Council. What looked possible and stable at the beginning of the Merkel era seemed to have evaporated at the end of it. All of the previous pillars became less certain and reliable for a variety of reasons. Some changed beyond recognition. The emergence of new authoritarian regimes globally, the rogue behavior of Putin’s Russia, the peculiar volatility of US foreign policy under President Trump, the “Wolf-Diplomacy” of China, the enhanced instability in the Middle East, and growing migration pressure from Asia and Africa have significantly altered the global landscape. While these fundamental shifts in Germany’s foreign policy environment remain hard to handle, there has nevertheless been an unprecedented new demand for German leadership. Germany is seen as the vital power in Europe and as a most prominent global voice for a rules-based order and for efficient and effective multilateralism. The new expectations in light of Putin’s war seem to overwhelm the Berlin Republic and its foreign policy establishment. The decade-old remark by Polish Foreign Minister Radek Sikorski that he feared German power less than Germany’s inactivity has been amplified in recent years, both in Europe and beyond. Ever since the election of President Trump in the United States in 2016 and the resulting gap in global leadership, German Chancellor Merkel had been dubbed the most important leader of the West and the remaining voice of reason in international affairs. However, neither Merkel’s foreign policy record nor her geopolitical vision ever justified such an elevation to a global reference point as the “last woman standing.”

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In fact, the Merkel years represented, possibly even more than in the domestic sphere, a real foreign policy inertia. The essentials of Merkel’s foreign policy outlook remained stable and did not reflect the necessities for change despite the fact that public debates about German foreign and defense policy gained new momentum. Ever since 2014, partially but not exclusively motivated by Russia’s annexation of Crimea, there has been an innovative debate in the rapidly growing German think tank community on the much-desired change in Germany’s general foreign policy. The need to assume a much greater global responsibility was widely acknowledged but did not translate into sufficient actual change. The Munich Security Conference as the most visible forum in Germany on global strategy gained a significant higher profile, and German voices in transatlantic and European think tanks are increasingly important. However, until Russia’s attack on Ukraine in 2022, the electorate and the political elite remained reluctant to allocate material and human resources to hard security in a way that would have reflected Germany’s global weight. Different from other nations, Germany always defined its strategic interests through multilateral lenses and saw its interests inseparably interwoven with those of its allies (Szewczyk 2021). Deep conceptual divisions within Merkel’s respective coalitions, within the CDU-SPD Grand Coalitions and the CDU-FDP government (2009–2013), and the mood in the electorate always favored restraint and modesty in foreign affairs. This fed foreign policy inertia. The chancellor herself, as Jana Puglierin (2021) summarized, remained “notably absent over the years” from debates on geostrategic visions. The unique commitment to multilateralism was the trademark of German foreign policy and was supported by a wide range of players. For example, the new “Alliance for Multilateralism” (Alliance 2020), initiated by the German government in tandem with France and supported by about seventy nations, recognized that the existing liberal order was in danger but took a strong stance in defending multilateralism as the only sustainable strategy for global governance and the rules-based order. There is a historical tradition for German foreign policy in promoting multilateralism as a response to Germany’s failure when going alone. As Willy Brandt once put it, “Multilateralism is our form of patriotism.” But how long could one defend such a traditional perception of the benefits of liberal cooperation when key actors (China, Russia, United States) advocate and act upon very different conceptions? America First, Russia First, and China First each have different notions of world order, but they all have clearly hegemonic ambitions. Prior to the tectonic shift through Putin’s war of aggression, Germany’s foreign policy had always been the art of balancing many conflicting strategic interests. Being caught between an ever more demanding internal European context and Europe trying to redefine its position vis-à-vis the United States and China, the need for a fundamental rethink of German foreign policy and its actual implementation was obvious. This essential dilemma will exist beyond the immediate crisis management of the Ukrainian War. This must guide long-term thinking in Berlin despite the fact that the current moment is clearly fully overshadowed by the Russian war.

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GERMANY IN THE EUROPEAN UNION The debate about Germany’s role in the European Union is as old as the European integration process itself. Germany’s centuries-old historical dilemma of being Europe’s central power, which is too strong and dominant for neighbors to bear, had been mediated by its full integration into the EU. Whether Germany has now become Europe’s hegemon, its “reluctant hegemon” (Paterson 2011), or remains still a central copartner in the Franco-German axis that acted as the engine of European progress seems somewhat academic. How much German leadership is best for Europe entertains the scholarly debates. However, what is undisputed is that more and more decision authority shifted toward Berlin during the Merkel era, requiring true German leadership. Berlin became the most important national decision-making center in the European Union, in particular after Brexit. Competing visions of the future of the European project depend on Germany’s willingness to support it politically, financially, and strategically. As Eckhard Lübkemeier (2021) summarized it, within the EU’s power hierarchy, Germany has moved to the top, but the political class has not fully understood or embraced its new role. Since the notion of a German leadership is historically contaminated, Germany is called upon to lead but only in a way that suits all European partners. Keeping everyone happy is a desired foreign policy goal for Berlin, but it is practically impossible. Germany needs to stop avoiding hard choices, and its unique leadership dilemma must be attenuated. The Merkel era lacked decisiveness and was a period of more or less pragmatic crisis management throughout, but it never provided the jump start for the next level of European integration beyond the Lisbon Treaty. The past management of the financial and refugee crisis should not be underestimated, but the decade ahead will increase the demand for crisis management and for a further deepening of the European institutions. When French President Macron started his first term in 2017, he developed an ambitious vision for Europe that still requires a full German response. Merkel never replied. The Scholz government’s central objective in the coalition agreement with regard to the EU was to build “more strategic sovereignty for the European Union,” thereby sending positive signals to France and other countries that had embraced the idea of “open strategic autonomy” for Europe for many years. Scholz singled out France as a key partner for Europe’s ambition to become a sovereign actor hoping to build an EU less “dependent and vulnerable” in sectors such as health, raw materials, energy, and digital technologies and artificial intelligence (Dinkel 2021). These were warm ambitions in 2021, soon to be overshadowed by the events and new realities of 2022. Some very important strategic decisions underlying the European project will need to be made in Berlin. Old tensions and disagreements on how deep European integration should go in the years ahead remain at the heart of the three-party government. The devil on all necessary reform projects for the EU remains in the details. The Greens are inclined to push forward with more Europeanization in fiscal and social affairs, while the FDP finance minister, Lindner, continues to be very skeptical about moves toward “transfer union.” The chancellor himself, who as finance

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minister in the Merkel government had called the 2020 European COVID-19 rescue fund a “Hamiltonian moment” for Europe, has made foreign policy a “chancellor prerogative” but has so far displayed Merkel-style caution when it comes to deepening the European project. Time will tell whether the crisis management agreements of the COVID-19 pandemic in 2020 will pave the way for a more permanent European fiscal union as the next step toward deeper integration. The German approval of the Next Generation €750 billion fund was a German-Franco deal but the longer vision behind the agreement remains controversial. In December 2021, French President Emanuel Macron together with Italian Prime Minister Mario Draghi argued in a joint initiative that large-scale European investments in defense and industry required EU fiscal rules to evolve. Germany remained silent on all those plans. In a major European speech in Prague in August 2022, Scholz advocated for institutional reform by introducing majority voting in affairs and laid out a vision for further enlargement (mainly Western Balkan completion, which is an old German demand) but remained silent on deepening of fiscal union. Generally speaking, as Peter Becker summarizes, the response of the Scholz government “will be decisive in determining whether and how the efforts to achieve lasting fiscal stabilization in the EU are implemented and in which direction the European integration process will develop in the medium term” (Becker 2021, 25). Two facts are obvious. First, Germany will have to play its role as the main broker between the austerity-minded Northern European countries and the Southern crisis-ridden debtor states calling for permanent solidarity and common risk sharing. Secondly, under no circumstances will a return to the pre-COVID and pre–Ukrainian War era be an option for Germany. The status quo ante is gone forever, while the new European normalcy is not yet defined. The European energy crisis that emerged from the war in Ukraine in 2022 exposed Germany more than most European nations, as its dependency on Russian gas was disproportionate. On several occasions during the summer of 2022, Russia delivered a hammer blow to Germany and Europe by switching off gas supplies via Nord Stream 1 completely, formally for necessary maintenance work but, in reality, for clearly politically motivated blackmail. Similar to the COVID-19 crisis, the new European resilience and necessary energy transition adjustments depend on broad European solidarity and on a Europe-wide energy policy. A common fund that mitigates the costof-living crisis and addresses energy poverty for the whole of Europe could become the next necessary step toward further Europeanization of key policy areas. Considering the vulnerable state Germany finds itself in with regard to energy, it could help to overcome some of the electorate’s opposition to more European policies financed through common fiscal instruments. TRANSATLANTIC TIES AFTER TRUMP AND MERKEL Never in post–Second World War history were political and economic relations between the United States and Germany worse than during the era of Donald Trump. Without analyzing the continuous tensions in detail, the political style of the

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American president and the German chancellor and their general outlook on world order could not have been more different. It is therefore easy to dismiss the Trump era as a historical anomaly and to hope for a return to the traditional partnership for the Biden-Scholz tandem. However, this a very misleading temptation. Germany had realized already under President Obama that the traditional transatlantic community would never be the same again and that a new transatlantic consensus needed to be found. After the election of Biden and prior to Putin’s invasion of Ukraine, Germany and the United States made an effort to define a new transatlantic agenda where both sides could reinvigorate cooperation while managing remaining differences over how to handle Russia and China in a fluid geostrategic environment. The agenda included overcoming the mental frame of mind which James Shapiro once had summarized as a “toxic interplay of American arrogance and European incompetence” (Thimm 2021, 112). Most importantly, both sides, Biden and Scholz, emphasize the need to work much closer together based on similar values despite disagreements on concrete policies. The oldest and most persistent partisan US criticism had been that Germany was free riding on US security guarantees, underpaid for NATO, and underestimated the threat posed by Russia and China. It is a sad truth that Putin’s war certainly reunited the West and has, on the whole, brought Germany much closer to US convictions and policies on global order and has by now made an unprecedented pledge to defense spending in the new era. As will be described below, Berlin had to reconsider some of its previous core assumptions. Only the future will tell whether these drastic adjustments are permanent or a mere crisis response. At least, the historian Jussi Hanhimäki (2021) has made the case for a new “Pax Transatlantica” in the twenty-first century, a vision in which, if realized, Germany would remain a key European pillar of the liberal world order anchored in transatlantic strength. Apart from security, some hope stems from the establishment of a new transatlantic Trade and Technology Council that potentially offers an opportunity to overcome divisions with regard to the regulation of the internet and ethical attitudes toward artificial intelligence. In the light of the rise and threat of China, a truly common transatlantic understanding on striking the right balance between freedom and regulation and between protecting the rights of consumers and citizens and protecting the rights of business is much needed. Germany certainly endorses the role of the EU as a regulator standing up to US tech giants whose business models rely on exploiting user data and manipulating consumption habits to an extent that is deemed unacceptable in Europe. While big data seem to belong to the state in China and to business in the United States, the German understanding remains that such data belong to individuals and citizens. Germany, based on its historical experience with two dictatorships, will continue to defend the virtue of its approach and should have the confidence to reject US narratives that sometimes dismiss legitimate criticism of the unchecked power of US tech monopolies as a sign of anti-Americanism. A fruitful dialogue will continue on the matter as well as on climate change and global governance, including the reform of the WTO. The newly enforced unity of the West will not bridge all the gaps in these areas, but the urgency to work much closer together again will be more than obvious on both sides of the Atlantic.

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GERMANY AND RUSSIA The most traumatic U-turn for German foreign policy naturally concerned the relations with Russia. Ever since unification, Germany had developed a unique policy vis-à-vis Moscow, characterized by economic interdependence and hopes for change through engagement. Based on perceived successes dating back to the origins of Ostpolitik since the late 1960s, a special German approach to Russia that emphasized cooperation, interdependence, and understanding of Russian needs became one of the main and consistent pillars of German foreign policy. For most of the three decades since 1990, Germany believed Russia to be a somehow reliable partner in a two-way process of mutual benefit. Germany would import cheap energy for itself and Europe and offer a stable and comfortable market for Russian oil and gas to Moscow. It was hoped that Europe would gradually export good governance to Moscow that could ultimately transform the Russian system in a way that EU and NATO membership had done in Eastern Europe. It was also believed that Russia, although difficult, would always need to be accommodated in the wider European security architecture, even though it firmly rested on NATO and the EU. Enlargement of these Western organizations to the former East could only become stabilizing for Europe as a whole if it was accompanied by constant political reassurances for Russia. Germany continued to promote dialogue with Russia against all odds until 2022. However, it is fair to say that relations had gradually deteriorated ever since 2007, when Putin gave a belligerent speech at the Munich Security Conference. The Russian-Georgian War in 2008, Putin’s annexation of Crimea in 2014, Russia’s constant support for Germany’s Far Right parties, the 2015 Russian hacking of Bundestag servers, the murder of a Chechen political refugee in the center of Berlin in 2019, or the attempted murder of Russian opposition politician, Alexei Navalny, in 2020 gave ample opportunity for Germany to fundamentally reassess its thinking about dealing with Putin’s regime. It led to significant reactions and adjustments that looked appropriate at the time but that were, in hindsight, certainly not far reaching enough. Berlin formally terminated its so-called strategic relationship with Russia after the annexation of Crimea in 2014, and Merkel was crucial in organizing and maintaining the European sanction regime in various rounds that followed the first invasion of Ukraine. Between 2014 and 2022, Germany established a task force for Ukraine and sent several billion euro to Kyiv for support. Berlin also condemned Russian killings in the UK, Germany, and elsewhere (Stelzenmüller 2022b). However, key economic and energy policies remain unchanged, and Germany was the main advocate for Russia’s participation in new multilateral dialogue fora such as the Normandy and Minsk formats. Most importantly and most painfully, Germany ignored international criticism of German-Russian energy relations and of the Nord Stream 2 pipeline project in particular. The Gazprom Nord Stream 2 pipeline was intended to bring Russian gas directly to Germany, circumventing Ukrainian and Polish transit routes, which was a clear symbol of Berlin’s outdated and naïve strategy vis-à-vis Russia. It was only two days before the actual Russian invasion of Ukraine that Chancellor Scholz finally suspended the highly controversial pipeline. If Merkel was about too little too late on many occasions, her successor was not the fastest reformer either.

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When reality hit on February 24, 2022, all the fundamental assumptions of the German approach to Russia evaporated. More importantly, relations with Eastern European countries will be difficult to repair as Germany acted against their interests and their better judgment in an arrogant and self-interested way for years before realizing its mistake. Relations with neighbor Poland are the worst they have been for many decades. The Polish government, under the right-wing Law and Justice Party, had played domestically on widespread anti-German sentiments for many years. It then felt vindicated internationally as it had a better understanding of Russian intentions in the region and gained global praise for showing strong solidarity with the Ukrainian people throughout the conflict. It was in that context that Poland in 2022 publicly demanded the equivalent of some $1.3 trillion in reparations from Germany for the Nazi invasion and occupation of the country. That demand was a symbol of how much credit Germany has lost in Eastern Europe due to the special relationship that Germany maintained with Moscow for far too long and against better US and Eastern European advice and pressure. Combined with historical legacies, this puts Berlin in an awkward position. As Constanze Stelzenmüller (2022a) stated succinctly, Germany therefore had “a special responsibility to stop Putin’s evil.” Senior political figures such as President Steinmeier and former foreign minister Gabriel apologized publicly for past mistakes. Chancellor Scholz gave a remarkable speech in the Bundestag four days after the invasion and pledged €100 billion for defense. Nevertheless, even throughout 2022, Germany followed Western policies in the Ukraine crisis instead of leading them. Germany was constantly criticized by the Ukrainian president for not doing enough. The political debate in Germany, while in line with NATO policies, remained somewhat restrained. The foreign policy establishment on the whole seemed to be committed to the idea that the war had to be stopped and that any long-term solution in a post-Putin Russia had to somehow bind Russia back into new multilateral arrangements for European security. The old historical conviction that Russia will always be the irremovable European power and must be accommodated in order to be tamed still strongly shapes German thinking about European and wider global order. INCREASING TENSIONS WITH CHINA One of the greatest uncertainties for Germany in the years ahead will be its future position vis-à-vis China. While the U-turn required in German policy is likely to be less sharp than in the case of Russia, a fundamental departure from the Merkel era is clearly necessary. Merkel generally prioritized German economic interests and tried to find a balanced, middle-ground position with regard to rising US-Chinese tensions. It seems that post-Merkel Germany is now prepared for a significant break with its tradition. As an export-oriented and open economy largely dependent on the Chinese market, and as an influential industrial player in the EU, Berlin was always the central agent for defining the EU responses to the rise of illiberal China. The strategic dilemma for Germany was most severe during the rapidly rising China-US competition under Trump and Xi. Berlin found itself between a rock and a hard place. Pressure increased

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from Washington on Berlin to be less ambivalent, less interest driven, and less accommodating toward a China that became increasingly antagonistic toward anything that the West represented. Ever since the European Parliament Report on China in March 2019, the German domestic debate on fundamentally redefining Germany’s approach to China has intensified. The final conclusion of the EU-China investment treaty in the last days of the German EU Council presidency in 2020 (which has not been fully ratified by the European Parliament yet) was likely the symbolic turning point, ending a German strategy that was largely defined by the preferences and policies of Chancellor Merkel herself. As is true for many Western leaders of Merkel’s time, engagement with China was based on the basic belief that economic relations would lead to liberalization and democratization and that China would ultimately be integrated into the existing liberal order. This was clearly an illusion. Secondly, it was also based on the conviction that China, whatever its domestic system, would always be too big and too important for global economics and global governance for it not to be accommodated. Expectations and demands of economic “decoupling” were rejected. The verdict is still out on Germany’s future relationship with China, and the new government needs to find its position. The level of dependency on rare earths from China for all of Europe’s ambitious technical innovation plans and the integrated production chains of most German industry fully dependent on components from China are one truth. However, the other truth is that Germany needs to introduce new measures to ensure that European businesses, consumers, governments, and citizens are protected against the new aggressive forms of Chinese incursions, widespread espionage in German industry, and political online media campaigns included. All German universities are, for example, asked to reassess cooperation with Chinese counterparts for fears of technological security and intellectual property protection. Everyone in Germany with any political antenna has suddenly woken up to the challenge while not yet having found all the answers. There are clearly winds of change in German industry as well with regard to economic engagement with China. German companies, still successful in the Chinese market, have started taking measures to reduce their dependency on the Chinese sales market and as a location for manufacturing. Germany certainly will also politically toughen up on China (Rühlig 2021). Most symbolically, Economics Minister Habeck in 2022 stopped a long-planned Chinese investment into Hamburg harbor to prevent key infrastructure exposure to Chinese influence. However, Germany is far behind what US government observers would expect and hope for. Apart from the still huge influence of industry lobbies, the second fundamental factor in constraining a shift toward a much harder approach for Germany vis-à-vis China is domestic public opinion. It remains remarkable how detached German domestic audiences are from geopolitical and geo-economic thinking. In an opinion poll published by German daily Die Welt in January 2021, 77 percent favored a neutral position of Germany in case of rising trade conflicts between the United States and China. Only 17 percent would support a full backing of the long-term ally, the United States, while 1 percent even advocated shifting toward China altogether (Welt am Sonntag 2021).

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Whatever the direction of Germany’s China policy will be, closer coordination within the EU and the transatlantic alliance will be needed. It is only through the EU and the United States that Germany will reshape its China policy in the future.

Conclusion As the discussion above has shown, the Merkel era, successful as it has been, is best described as decades of crisis management and prudent muddling-through providing a stability that no longer exists. Some of the underlying trends and reform necessities were more than obvious but constantly deferred in the final years of the Merkel era. During the 2021 election campaign, the urgent need for a full modernization of German society was advocated by all parties. The sense that Germany’s societal cohesion was regressing and that its economy was generally falling behind in global competition was widespread. Most worryingly but in line with wider phenomena in Western societies, the trust in the political system and its leaders went down significantly at the end of the Merkel years. Nearly half of the population had no confidence in any of the 2021 chancellor candidates, considering them all ill-suited for leading the country into the new decade. Serious questions about the foundations of Germany’s success became a strong undercurrent in what superficially looked like a hectic battle over marginal personality differences within a wide mainstream of political consensus. What if suddenly any of the fundamentals of Germany’s past-winning formula—that is, a functional Western security alliance guaranteed by the United States and NATO, a prosperous and a politically ever closer EU, an open world economy governed by common multilateral rules, a stable political system based on a broad societal consensus, and a globally highly competitive German industry—would finally disappear? What if all those pillars saw serious erosion at the same time? What if new societal cleavages added to existing divisions between East and West and deeply fractured urban and rural communities, immigrants and nonimmigrants, young and old, digital natives and digitally challenged, homeowners and tenants, precarious workers and those with quality permanent employment? What if the postwar promise of meritocracy finally faded and social mobility decreased even further? What if there was a general perception that real life chances were defined by birth and wealth inequality based essentially on inheritance rather than on personal achievement? And what, finally, if identity politics and cancel culture would reach unprecedented levels, pitching old and new progressives, liberal elites, and the rest of the populations against one another and pulling them into deep and permanent societal divisions? Would Germany’s characteristic stability rapidly transform into a new and exaggerated Angst, and what would a volatile Germany mean for Europe as a whole? It is eye-opening that all these questions were asked in the 2021 campaign election just a few months before the unforeseen Russian aggression and that the huge political and economic consequences of the war brought all of these issues to the forefront of German politics. The new German government under Chancellor Scholz seems to have more than a mountain to climb. While coalition governments have been the

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norm in its postwar history, the Federal Republic has never been ruled by a three-party coalition. Structurally speaking, the coalition is a relatively weak one. The chancellor needs to balance his own divided party (the SPD remains conflicted in particular in foreign policy) with two confident partners, the Greens and the FDP, who often pull in different directions. While the constitution stipulates Richtlinienkompetenz (general policy direction authority) to the chancellor, the individual parties and the respective ministries have significant control over their individual policy portfolio. The coalition agreement in the autumn of 2021 was a decent compromise that united the three parties behind an ambitious modernization agenda while recognizing each other’s red lines. A new “decade of modernization,” originally promoted by the CDU/CSU election campaign, precisely defined the task for the Scholz government. It needs to oversee and manage a political, economic, and geostrategic jump start in Germany under completely new parameters internationally. Much of what was agreed by the coalition in 2021 became outdated in 2022, in particular with regard to a greening of Germany’s economy and the ambitious energy transition. The ambition remains intact, but the global circumstances limit Germany’s options. The emerging 2020s will be a decade of the most fundamental political and economic transformation in Europe and its central power, Germany. The potential for a successful adjustment to a swiftly shifting world order seems, at this moment, as likely as a severe failure in and of Europe. For obvious reasons, the Scholz era can no longer postpone a complete rethink of Germany’s foreign policy. Hard choices which were traditionally avoided now become pressingly urgent. They concern Germany’s role within Europe, in the transatlantic community, and globally with relations vis-à-vis Russia and China, first and foremost. All in all, the pace for further deepening of EU integration will most likely not be set by Germany. France remains ahead in this regard, having defined and adjusted the previous Macron vision to the new circumstances by calling, once again, one might say, for Europe to become a true global actor. This would require a “defence Europe,” a “Europe of industrial sovereignty,” a “Europe of Democracy,” and a “Europe as a geopolitical power” (Boone 2022). While Berlin would subscribe to such labels, major differences remain about what concrete measures and institutional steps are needed for Europe and what is accepted in the German electorate. The new government under Scholz needs to quickly adjust to the new geostrategic and geo-economic realities that make the Merkel years look like a bad dream from a far bygone era. Challenging knowns and unknowns present at least one certainty: the prudent and measured modesty and stability of the Merkel era will be greatly missed and, in hindsight, potentially be judged as a golden era for Germany and Europe as a whole.

Suggested Readings Bulmer, Simon, and William Paterson. Germany and the European Union: Europe’s Reluctant Hegemon? London: Red Globe, 2019.

9 0    H artmut M a y er Colvin, Sarah. The Routledge Handbook of German Politics & Culture. London: Routledge, 2017. Ischinger, Wolfgang. World in Danger: Germany and Europe in an Uncertain Time. Washington, DC: Brookings Institution, 2020. Langenbacher, Eric, ed. Twilight of the Merkel Era: Power and Politics after the 2017 Bundestag Election. New York: Berghahn Books, 2019. Langenbacher, Eric. The German Polity. 12th ed. Lanham, MD: Rowman & Littlefield, 2021. Roberts, Geoffrey K. German Politics Today. 3rd ed. Manchester: Manchester University Press, 2016.

References Alliance for Multilateralism. 2020. “Declaration of Principles, September 25, 2020.” https:// multilateralism​.org​/wp​-content​/uploads​/2021​/02​/Alliance​-for​-Multilateralism​-Declaration​ -of​-principles​.pdf. Arlidge, John, and Jon Yeomans, 2022. “What Next for VW as Elon Musk’s ‘Frenemy’ Herbert Diess Is Ousted.” Sunday Times, July 24, 2022. Becker, Peter. 2021. “The EU on the Way to a Fiscal Union.” In German Foreign Policy in Transition, edited by Günther Maihold, Stefan Mair, Melanie Müller, Judith Vorrath, and Christian Wagner. SWP research paper (December): 25–28. Boone, Laurence. 2022. “Europe Must Become a Global Political Actor.” Financial Times, August 25, 2022. Byrne, Liam. 2020. “How the SPD Lost the Future: The Party’s Crisis as a Loss of FutureImagining.” German Politics 30 (4): 523–40. Chazan, Guy. 2021. “We Are a Laughing Stock.” Financial Times, April 1, 2021. Der Spiegel. 2022. “Wo sind sie nur alle hin? Wie der Mangel an Arbeit das Land lahmlegt.” July 29, 2022. Deutsche Welle. 2022. “Germany: Far-Right AfD Conference Halted amid Ukraine War Infighting.” June 19, 2022. Die Welt. 2022. “Bis zu 40.000 Lehrkräfte fehlen zu Schuljahresbeginn.” August 30, 2022. Dinkel, Serafine. 2021. “More Ambition for the EU’s Capacity to Act.” In A New Foreign Policy for Germany? edited by Christian Mölling, Tyson Barker, Tim Rühlig, Kira Vinke, Serafine Dinkel, and Leonie Stamm. DGAP Online Comment, November 25, 2021. Dribbusch, Heiner, and Peter Birke. 2019. “Trade Unions in Germany: Challenges in a Time of Transition.” Friedrich-Ebert Foundation study, April 2019. Garton Ash, Timothy. 2020. “Since Reunification, Germany Has Had Its Best 30 Years. The Next 30 Will Be Harder.” The Guardian, September 28, 2020. Goldin, Ian. 2022. “Demography Is Not Destiny.” Financial Times, August 9, 2022. Hanhimäki, Jussi M. 2021. Pax Transatlantica: American and Europe in the Post-Cold War Era. Oxford: Oxford University Press. Lübkemeier, Eckard. 2021. “Germany Matters: Berlin Must Take the Lead in Creating a Europe of Global Stature.” In German Foreign Policy in Transition, edited by Günther Maihold, Stefan Mair, Melanie Müller, Judith Vorrath, and Christian Wagner. SWP research paper (December): 17–20. Neu, Viola, and Sabine Pokorny. 2021. “Bundestagswahl in Deutschland am 26. September 2021.” Berlin: Konrad-Adenauer-Foundation.

G erman y     91 Paterson, William E. 2011. “The Reluctant Hegemon? Germany Moves Centre Stage in the European Union.” Journal for Common Market Studies 49 (51): 57–75. Puglierin, Jana. 2021. “After Merkel Why Germany Must End Its Inertia on Defence and Security.” ECFR Note from Berlin, January 15, 2021. Rühlig, Tim. 2021. “Germany Toughens Up on China.” In A New Foreign Policy for Germany? edited by Christian Mölling, Tyson Barker, Tim Rühlig, Kira Vinke, Serafine Dinkel, and Leonie Stamm. DGAP Online Comment, November 25, 2021. Scholz, Olaf. 2022. Regierungserklärung von Bundeskanzler Olaf Scholz am 27. Februar 2022. Steinmeier, Frank-Walter. 2020. Rede von Bundespräsident Frank-Walter Steinmeier beim Festakt zum Tag der Deutschen Einheit am 3. Oktober 2020. Stelzenmüller, Constanze. 2022a. “Germany Has a Special Responsibility to Stop Putin’s Evil.” Brookings, April 26, 2022. Stelzenmüller, Constanze. 2022b. “Putin’s War and European Energy Security: A German Perspective on Decoupling from Russian Fossil Fuels.” Brookings, June 7, 2022. Szewczyk, Bart M. J. 2021. Europe’s Grand Strategy: Navigating a New World Order. Cham, Switzerland: Springer. Thimm, Johannes. 2021. “German Policy towards the United States: More Self-Confidence and More Independence Needed.” In German Foreign Policy in Transition, edited by Günther Maihold, Stefan Mair, Melanie Müller, Judith Vorrath, and Christian Wagner. SWP research paper (December): 112–15. Welt am Sonntag. 2021. “Wunsch nach Neutralität: Nur 17 Prozent der Deutschen für Unterstützung der USA bei Konflikt mit China,” January 10, 2021. Zohlnhöfer, Reimut, and Thomas Saalfeld, eds. 2019. Zwischen Stillstand, Politikwandel und Krisenmanagement. Eine Bilanz der Regierung Merkel 2013-2017. Wiesbaden, Germany: Springer.

CHAPTER 4

Italy WHEN OLD MEETS NEW Gianfranco Baldini and Filippo Tronconi

92

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Italy Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU:

59.55 116,350 533 $1,886 $31,676 January 1, 1958

Performance of Key Political Parties in Parliamentary Elections of September 2022 Alliance of Greens and the Left: Azione—Italia Viva: Brothers of Italy: Democratic Party (PD): +Europa: Five Star Movement: Forza Italia: Lega:

3.6% 7.8% 26.0% 19.1% 2.8% 15.4% 8.1% 8.8% Main Officeholders

• President of the Republic, Sergio Mattarella, PD (2022) • Prime Minister: Giorgia Meloni, Brothers of Italy (2022)

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S

een from the United States, Italian politics has always been problematic. Government instability, corruption, Mafia, scandals, lack of trust (or “amoral familism”), high public debt—these are among the words most frequently associated with Italian politics during the so-called First Republic (1946–1992). Things did not change much after 1992, despite the collapse of the old party system. Starting in 1994, a new pattern of “fragmented bipolarism” marked Italian politics for almost two decades, with the controversial figure of Silvio Berlusconi on the center-right of the political spectrum, and his several adversaries succeeding at the helm of center-left coalitions. Italy finally experienced alternation in government, but many dysfunctionalities remained. Then, as the global recession hit the country particularly hard, beginning in 2011, the political system was shaken by a peculiar blend of economic, cultural (i.e., immigration-driven), and political crises, which contributed to the success of populist and anti-establishment parties, the Five-Star movement (henceforth M5S, or Movimento Cinque Stelle) and the rightist League, led by Matteo Salvini. After peaking in the 2018 general election, these two parties formed an “all-populist” coalition. Led by Giuseppe Conte, the coalition, however, only lasted fifteen months before the League was replaced with the Democratic Party (Pd) and other small, center-left parties, again under Conte’s leadership. In February 2021, in the midst of the global pandemic crisis, Conte was replaced by Mario Draghi in the office of prime minister. The new government was supported by a wide and anomalous parliamentary coalition ranging from the Far Right to the Left and led by a technocrat, a former president of the Bank of Italy and of the European Central Bank. As we will see, this was not the first time Italy resorted to a technocrat-led cabinet in order to solve the problems its politicians seemed unable to face. However, as happened to Mario Monti ten years before, in the summer of 2022, Draghi’s technocratic government was also dissolved a few months before the legislature’s natural termination. And yet, differently from 2013, the ensuing early elections brought a more conclusive result, with the clear win of the right-wing coalition and, inside it, of Giorgia Meloni’s party, Brothers of Italy (henceforth FdI, Fratelli d’Italia). At the end of 2022, Italy looks like an old and noble edifice which has undergone several attempts of restoration, many of which, however, look problematic at best. New protagonist and party churn coexist with old practices, cultural heritages, and deep political and territorial divisions. Indeed, Italy has often been treated as a “special case” of liberal democracy, thereby emphasizing the political system’s many anomalies (Cavazza and Graubard 1974; Padoa Schioppa and Graubard 2001). This chapter explains why Italy has been a “troubled democracy” ever since its birth as a republic in 1946 and, to some extent, a problematic polity ever since the foundation of the modern Italian state in 1861. As debates on Italian politics are still dominated by discussions about a transition to a new republic, this chapter will take a somewhat longer historical view than the other country studies in this volume.

The Weight of the Past The most important thing to understand about modern Italy is how much baggage it carries from the past 160 years. Certain influences have emerged at each of the many stages of its development. And like country houses or furniture, they have been passed

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down from one generation to the next. The following are particularly important: weak governments, unstable majorities, clientelism, low perceptions of legitimacy, poor social capital, and a ubiquitous North-South dichotomy. Italy was born as a state in 1861, after the Kingdom of Sardinia (but based in Piedmont) managed to unify a territory which had been plagued by rivalries and fragmentation for centuries. The Savoy monarchy led an elitist annexation of the ten existing kingdoms. The result was unsuccessful in centralizing authority, and Italian governments have been weak ever since state unification. The Italian state inherited its basic institutional structure from the Kingdom of Sardinia: the Albertine Statute (1848) set up a parliamentary monarchy which was replaced exactly a century later by the Italian Constitution (1948). Prime ministers were constrained on the one side by the powers of the monarchy (the king alone could appoint and dismiss ministers) and on the other side by scrutiny provided by Parliament. At the parliamentary level, political affiliations were weak. As a result, many deputies of both Left and Right used to switch sides to pave the way for the succession of the different governments. This practice—called trasformismo—meant that coalitions were unstable, and yet no real political alternation took place. In other words, governments were weak, but political leaders were also unaccountable to the electorate. This practice had enduring consequences for the development of the political system. At the societal level, relations between political elites and the electorate were mainly conducted on the basis of clientelistic exchanges, meaning that “deputies were bribed into supporting the government by the uninhibited use of patronage, both for themselves (honors, cabinet posts) and for their constituencies (railways, bridges, government contracts). It required delicate balancing of personal and local interests, and it led to numerous changes of government as cabinets were reshuffled and new interests satisfied” (Hine 1993, 15). In such a context, “Left” and “Right” were empty labels. Meanwhile, elected officials tended to develop unhealthy relationships with the civil servants who controlled access to state resources. For example, various Liberal notables managed to control their own constituencies thanks to the help they got from the prefects, the “local guardians” of the state power. Italy was very fragmented, poor, illiterate, and its political institutions were mainly framed to govern a backward society from the center: more local government autonomy would have probably meant the breakup of the polity. Moreover, Italy’s early politicians were well aware of the fragile nature of the Italian state. Hence, they incorporated the use of prefects (or state-appointed civil servants responsible for the management of specific territorial units) to extend the power of central government and so bind the country together in administrative terms. In effect, they inadvertently created the institutions for centralized patronage as well. If elites were aware of the fragility of the state, the masses were aware of its intrusiveness. The process of state building never managed to gain full popular consent— let alone mass enthusiasm. In fact, the masses often saw unification as an imposition: the Risorgimento (or, more colloquially, the process of Italian unification) was never a popular phenomenon and was viewed with suspicion by both Catholics and Socialists—who constituted the two most important political groups until the collapse of the First Republic in 1992. This skepticism was linked to conflicting loyalties vis-à-vis

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the new Italian polity, mainly coming from the Catholic electorate and the Southern regions. When Italy was born as a state, the papacy (based in the Vatican, in Rome) did not want to give up its powers; the non expedit (1868), meant that Catholics should not take part in politics (being “neither elector nor elected”). Although it was progressively relaxed, the non expedit was finally abrogated only in 1919, the year in which the first Catholic party, Don Luigi Sturzo’s Italian Popular Party (PPI), came into being. This process was particularly problematic in the South, where higher levels of religious practice were complemented by a violent struggle (brigandage) against the state-building process. In such a context, it is not surprising that the democratization process was both contested and only partially successful. Although Massimo D’Azeglio’s famous phrase, “We have made Italy, now we must make Italians,” has become one of the most cited clichés about Italy, the saying bears more than a grain of truth: Making Italians proved to be much more complicated than making Italian institutions. Social inequality and fragmentation were extensive. By the turn of the nineteenth century, Italy had the highest rates of illiteracy in Western Europe and the second-highest percentage of employees in the primary (or agricultural) sector; almost forty years after unification, truancy among school-age children still reached 80 percent in some Southern areas (Bartolini 2000, 132 and 195).1 Moreover, late extension of the franchise (near universal voting rights, or “suffrage,” for men was introduced only in 1913) meant that all main political parties were weak and had extraparliamentary origins. The Catholics were an obvious example because of their roots in the institutions of the Church, but this was true also for nonreligious ideological groups such as the Socialists and the Republicans. The extraparliamentary origins of the major political parties had important implications for the post–World War I period. The Liberals, who had always governed during the late nineteenth and early twentieth centuries, lacked a strong institutional structure. The other main political parties were marginally better organized and yet gained access to seats in Parliament when proportional representation (PR) was introduced in 1919. After PR was introduced, the other parties gained more influence over Parliament. However, contrary to the experience in many other West European countries, this change did not lead to democratization as expressed in terms of an abiding and widespread commitment of the electorate to the maintenance of democratic principles. Just a few years after incorporating the masses into the political process through the extension of voting rights, the Italian democratic system was still unprepared to face the combined pressures of a deep economic crisis, revanchist sentiments coming out of the First World War, and a radical mobilization of the workforce.2 Weak and divided parties were unable to govern such convulsive processes, and their divisions gave way to the rise of fascism. The actual experience of fascism is less important to our understanding of the current situation than the impact this experience had on Italian political attitudes and economic institutions. The Fascist regime left crucial legacies to the (second and more successful) democratization process which took place in the years that surrounded the birth of Italy as a republic in 1946. On the political side, the main legacy was to be

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found in the peculiar path that led to the fall of fascism and the subsequent armistice. Indeed, the final two years of the war affected “the whole organism of the Italian state, almost causing—in reality and, most importantly, in the imagination—its virtual disappearance” (Galli della Loggia 1996, 4–5). The parties that emerged at the end of the Second World War did not share a common idea of the Italian nation; rather, what bound them together was their opposition to fascism. By implication, popular perceptions of the legitimacy of the Italian state remained weak, and the points of difference both between and within the political parties remained significant. For example, the left-wing Resistance movement that emerged during the Second World War was affected by deep ideological divisions between its predominant radical component (led by the Italian Communist Party, PCI) and a minority moderate one. The different visions held by the political parties involved in building a new post–World War II Italy—coupled with the enduring weakness of state legitimacy—meant that Italian democratization was difficult, even when compared to those other Southern European countries which also experienced authoritarian regimes. As far as the economy is concerned, Italy inherited from fascism the second-largest public sector in Europe after the Soviet Union (USSR). Large, publicly owned holding companies created in the 1930s, such as IRI (the Industrial Reconstruction Institute) for industry, or IMI (Istituto Mobiliare Italiano) for banking, were not dismantled after the war. Such institutions constituted a whole new arena for unhealthy relations to develop between elected officials and appointed civil servants, soon becoming critical targets for partisan control. Finally, it is important to consider the structure of life outside the Italian state— or what is called “civil society.” Social institutions and the way they function exert a powerful influence on the attitudes and behavior of ordinary people. Some institutions have a very positive influence; others are more negative. Italy had both sorts. As a consequence, social capital, defined by Robert Putnam (1993, 167) as “the features of social organization, such as trust, norms, and networks, that can improve the efficiency of society by facilitating coordinated actions,” developed very differently in Northern and Southern Italy. In his study of Italian democracy, Putnam contends that different levels of social capital in different parts of the country gave rise to very different sorts of political outcomes. Though controversial, Robert Putnam’s thesis underlines the deep-rooted historical reasons for the difference between North and South. Putnam’s overarching thesis is disputed, and yet few doubt but that there are a wide array of social attitudes and structures that are necessary to explain the NorthSouth divide. Underdeveloped, opposed to unification, resistant to what they perceived as the invaders coming from the North, the South was to provide the greatest socioeconomic challenges to the Italian political and economic system throughout its 160-year existence. As of 2022, some Southern regions still display record-high levels of unemployment and poverty, also as a consequence of an ineffective use of European structural funds. Moreover, the South never completely reconciled with state authority: hence the great success of monarchical parties for as long as two decades after the birth of the Republic, and the success of criminal organizations that still hamper the legitimacy of state institutions in vast areas of the country. The fact that the South has

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become, after the political crisis of the 1990s, the most volatile area when election time comes, adds further significance to this question.

The Many Pathologies of the Italian First Republic The defining characteristics of the Italian state during the first decades after unification were the distinguishing features of the First Italian Republic as well. Between the birth of the Republic (1946) and the fall of the Berlin Wall (1989), Italian politics was marked by significant continuities with the prewar regimes. Little or no alternation between Left and Right took place. Governments were weak because they were affected by many constraints aimed at avoiding the resurgence of fascism. Consensual rules were built to tame radicalization. All this, together with the legacies of trasformismo and the increasing public resources available with the “economic miracle” of the 1960s, meant that the pathologies mentioned at the outset of this chapter came to affect Italian politics even more pervasively once democratization finally got hold. Changes in government were limited to a restricted alternation between partners of the predominant Christian party (Christian Democrats, henceforth DC), which was always in government and, until 1981, always selected the (many) prime ministers from among its ranks. Despite losing votes after its massive success (48.5%) in the landmark 1948 election, the DC remained the plurality party throughout the First Republic. Meanwhile, the political system included antisystem parties ranging from the PCI on the Left to the neo-Fascist Italian Social Movement (MSI) on the extreme Right. The DC faced opposition on both sides of the Left-Right political spectrum, which sought to challenge its hegemonic control over the center. This twofold opposition meant that the ideological distance (or polarization) between Left and Right was great and that competition for votes was centrifugal and so kept the ideologies apart. Italy was a textbook case of what Italian political scientist Giovanni Sartori (2005) described as “polarized pluralism”—pluralist because of the many political movements it included and yet polarized because these movements actively opposed each other as well as the governing majority and so resisted consensus. The polarization worked within as well as between the Left and Right of the political spectrum. The left camp was divided between the Socialists (PSI, Italian Socialist party) and the PCI. Until it condemned USSR’s invasion of Hungary in 1956, the PSI was still an orthodox Marxist party. On the extreme Right, the neo-Fascist MSI had to contend—until the late 1960s—with the Monarchists. Finally, there was the overarching context of the Cold War. These opposition groups rarely if ever had to assume the responsibility of holding power. After Prime Minister Alcide De Gasperi’s visit to the United States in 1947, the PCI was permanently excluded from government—a pattern only partly mitigated by the party’s presence in the local government of important towns in the so-called Red Area (such as Florence and Bologna) and, after the late birth of regional institutions in 1970, at the leadership of regional governments in this same area. This Cold War dimension quickly permeated the whole structure of political competition with

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the result that a communist/anticommunist cleavage soon overshadowed the more traditional Left-Right dimension (the clearest manifestation of this pattern being the 1948 elections). The institutions of the First Republic took shape before this freezing of political alternatives. As mentioned earlier, the consensus underpinning these new institutions was dominated by (and limited to) the fear of fascism and the desire to prevent the reemergence of a tyrant like Benito Mussolini. Hence the Constitution of the Italian Republic includes a panoply of liberal mechanisms (such as a broad array of entrenched civil and social rights, a president of the Republic with significant powers, an independent judiciary) aimed at constraining the executive in favor of strengthening the role of Parliament. Similar checks and balances operated within the Parliament as well as in the form of three broad procedural principles. First, the Parliament provided a “parity norm” protecting the relative positions of all political actors based on both their proportional representation of the electorate and very consensual rules of procedure. Second, the Parliament placed both the upper and lower chambers (the Senate and the Chamber of Deputies) on equal footing in a form of balanced bicameralism that remains unique among parliamentary democracies. Third, the parliamentary structures were built on a broader logic of “institutional polycentrism” which creates many different and at times even countervailing positions of power and influence. As a result, the PCI was able to play an active role in Italian political life at the national level despite the fact that it was perpetually excluded from participation in the government (Cotta and Verzichelli 2007, 144–49). The combination of anti-fascism and bitter polarization explains why the institutions created during the democratization process became so entrenched. Institutions designed to prevent the emergence of a single, powerful political force made it easy for multiple competing parties to protect themselves and so resist destruction. This was particularly the case for the electoral system—a very inclusive form of proportional representation—which, despite being written in statute and so not being part of the actual constitution, soon became part and parcel with the Italian First Republic. Of course, the DC had an interest in changing this situation, given its hegemonic control of the political center. A more majoritarian formula for translating votes at the ballot box into seats in Parliament—like the first-past-the-post system used in Anglo-Saxon countries—would have given the DC uncontested authority. The problem was that it did not have the power to do so acting alone. Once the DC failed to nail down its parliamentary majority with a change in the electoral formula in the 1953 elections,3 all political parties developed vested interests in maintaining PR as the status quo. Indeed, PR soon developed as the best guarantee for sharing the spoils in government—which all of the main parties but the PCI and MSI were to enter—as well as gaining access to seats in Parliament and control over regional or local executives for the PCI. The DC may have failed to reshape the electoral arena to ensure a permanent majority, but it nevertheless managed to get a strong hold on the economy. This colonization of state resources operated first through the holding companies left over from fascism and then reached its peak in the 1950s, with the creation of ENI (Ente Nazionale Idrocarburi, the state-controlled energy conglomerate), the Cassa per il Mez-

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zogiorno (a development aid agency for the South), and the Ministry of State participation, which the party always kept for itself until the 1980s. Political parties controlled the institutions of the First Republic, and they also managed to dominate civil society (Morlino 1998). In part this was due to the role of the parties as agents of political socialization. In their polarized and clientelistic competition with one another, the parties failed to play any integrative role across society as a whole and thus jeopardized the development of social capital and the recognition of civic responsibilities (March and Olsen 1989; for an application to Italy, see Cartocci 2007). Party system stability—and the “unstable stability” format which came to be associated with Italian governments more generally—was also built on very stable patterns of electoral behavior whose determinants were not easily captured by traditional cleavages such as class or religion (see table 4.1). In fact, territory was very important at least for two of the three categories of voting identified in the mid-1970s as the bases for linking political parties to their supporters: belonging, exchange, and opinion (Parisi and Pasquino 1979). In some parts of the country, for example, partisan identification was socially embedded in regional subcultures. This social embeddedness was most obvious in the areas where the two main parties—DC and PCI—managed to aggregate and mediate interests by exploiting cooperative social networks and high levels of social capital. The DC predominated in the Northeast with Trentino, Friuli-Venezia Giulia, and Veneto; the PCI controlled the Center-North with Emilia-Romagna, Tuscany, and Umbria, as well as the northern provinces of Marche. In this way, a “vote of belonging” to the subculture of the region also reflected the voter’s long-standing affective loyalty to the party concerned (estimated to be typical of a majority of voters still at the end of the 1980s). Elsewhere in the country, local ties hindered the politicization of the centerperiphery cleavage. This was particularly important in Sicily and across the South. Hence the few existing regionalist parties developed in the rich Northern areas of Valle d’Aosta or South Tyrol and in Sardinia, even though Sardinian nationalism had never formed a problem. Meanwhile, the South developed as a crucial basin for the DC vote as well as an area where “exchange” voting—meaning votes cast in return for the satisfaction of a need or in return for the meeting of a particular interest—was more developed. By contrast, “opinion” voting, where voters cast their ballots based on a pragmatic evaluation of the competing party platforms, was much less in evidence. The postelectoral nature of Italian governments was broadly consistent with these patterns of electoral choice. Instead of being determined by results at the polls, the composition of Italian governments soon came to be dictated by factional agreements within the DC or between the DC and its allies. This factional dominance over government composition was only reinforced once PR was introduced as the internal rule in DC party congresses in the early 1960s. The result was a degenerative pathology of spoils divisions among the different capi-corrente (chiefs of factions), who numbered twelve at the peak of the factionalization process in the early 1980s (Baldini 2015). With a system frozen along stable partisan lines and the PCI permanently excluded from power, the first unanticipated election only took place in 1972. Despite Italy’s reputation for weak and changeable governments, all previous Parliaments had been

Centrism (New Crisis). Preparation of Center-Left Center-Left (Golden Age: PSI Enters) Center-Left (Crisis and New Stabilization) Center-Left (Final Crisis) National Solidarity Preparation of Five-Party Formula (DC, PSI, PRI, PSDI, PLI) Five-Party (Golden Age) Five-Party (Renegotiation, New Stabilization, and New Crisis) End of Five-Party Formula and Technocratic Government Center-Right Attempt and Technocratic Government Center-Left Center-Right Center-Left Center-Right and Technocratic Government Grand Coalition; Center-Left “Populist”—FSM, League; Center-Left—FSM, PD, and Other Center-Left Minor Parties; “National Unity”—FSM, League, PD, Go Italy, and Others Center-Right

III (1958–1963) IV (1963–1968) V (1968–1972) VI (1972–1976) VII (1976–1979) VIII (1979–1983) IX (1983–1987) X (1987–1992) XI (1992–1994) XII (1994–1996) XIII (1996–2001) XIV (2001–2006) XV (2006–2008) XVI (2008–2013) XVII (2013–2018) XVIII (2018–2022)

* Until 1992: All DC members unless otherwise indicated. Source: Adapted and updated from Cotta and Verzichelli 2007, 111–12.

XIX (2022–?)

Centrism (Golden Age) DC, PSDI, PLI, PRI Centrism (Crisis, New Stabilization)

Types/Phases of Coalition

I (1948–1953) II (1953–1958)

Legislative Term

Table 4.1  Coalition Governance and Governments in Italy (1948–2022)

?

5 4 6 5 3 6 3 4 2 2 4 2 1 2 3 3

3 6

Number of Governments

?

341 431 204 256 308 203 429 405 280 311 450 1,092 722 842 616 501

613 278

Average Duration of Governments (Days)

Meloni

De Gasperi De Gasperi, Pella, Fanfani, Scelba, Segni, Zoli Fanfani, Segni, Tambroni, Fanfani Leone, Moro Leone, Rumor. Colombo, Andreotti Andreotti, Rumor, Moro Andreotti Cossiga, Forlani, Spadolini (PRI), Fanfani Craxi (PSI), Fanfani Goria, De Mita, Andreotti Amato (PSI), Ciampi (technocrat) Berlusconi, Dini (technocrat) Prodi, D’Alema, Amato Berlusconi Prodi Berlusconi, Monti (technocrat) Letta, Renzi, Gentiloni Conte (I, II), Draghi (technocrat)

Prime Ministers*

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able to complete their full legislative terms. In short, the First Republic was a dysfunctional system. Political parties dominated the public sphere by exploiting the weakness of the state to their own benefit. This colonization of state institutions by political parties had particularly negative consequences in the South, where distrust vis-à-vis the state was traditionally higher, and where clienteles were built upon statedependent beneficiaries like public officials and state-subsidized business, to such an extent that borders between local control of the “exchange vote” and highly successful criminal organizations such as the Sicilian Mafia, Campania’s Camorra, and Calabria’s 'Ndrangheta became more and more blurred. Lack of alternation meant also that parties did not compete on substantive programmatic issues. This, combined with the factionalized control over government composition—and therefore to the substantial lack of direct accountability to the voter—meant that parties in government could use public resources without restraint, thus fueling public debt (which reached 100% of the GDP in 1990). Rather, competition was often centered on micropolicies such as those linked to patronage and the control of preference voting. Indeed, while preference voting gave the appearance of creating more direct popular influence on the political process, it actually became the main mechanism through which party factions could prosper and cultivate their slice of the cake.

The Difficult Transition between the First and the Second Republic In the early 1990s, Italy underwent one of the most dramatic transitions that any Western European democracy has experienced in the last sixty years, with the exception of France in 1958. Indeed, at its height, there was speculation as to whether Italian democracy had the capacity to survive. In just two years, the whole party system in place since 1948 was replaced by a new one. In Italian political jargon, this is often referred to as a transition from the First to the Second Republic, although transition from the first to the second party system of the Republic would probably be a better expression. In order to understand such an unprecedented event, we must take a step back. During the 1950s and the 1960s (the years of the so-called economic miracle), the economy grew at rates higher than 5 percent per year, allowing Italy to join the group of the seven most advanced economies in the world. Within a few decades, a poor rural country, devastated by a lost war, became a global industrial power. Social transformations were impressive too. The economic growth rapidly transformed Italian society into a mass consumption society and contributed to its modernization. Traditionally one of the most Catholic countries, Italy was affected by the social movements affecting the Western world during the 1960s and 1970s. At the end of the 1980s, Italy was a secular country, with divorce and abortion being legalized through overwhelming victories in popular referenda, and impacted by the sexual revolution similarly to other European countries in the same period and thus assigning a new and empowered

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role to women. In the same years, the environmental issue made its way, too, in the political agenda. Against this fast-changing society, the political scenario appeared to be motionless. A unique case among Western European countries, at the beginning of the 1990s, Italy had not experienced any alternation in power since World War II. The Christian Democrats still dominated the party system, while the main opposition party, the PCI, was still considered as an unviable alternative due to its loyalty to the Soviet bloc, although such loyalty had started to fade some years before. Not only was the party system one of the most stable of Western Europe but during the 1980s, the five-party government coalition (pentapartito) saw the extension of partitocrazia (or party dominance over state institutions and resources) to its greatest extent, with a corollary of clientelism and widespread corruption.4 This gap between a modernizing society and a stagnant political scenario helps explain the “earthquake” Italy faced in 1992–1993. The epicenter was in Milan, where in February 1992, a local politician of the Socialist Party was arrested on charges of corruption: it was the first of a long series of arrests in the judicial investigations of Mani pulite (clean hands) which would soon decapitate the governing parties. Two years later, at the 1994 snap elections, all of them had disappeared. The most voted party was Berlusconi’s Forza Italia (Go Italy!), founded a few months before; the Christian Democrats, renamed the Partito Popolare, got only 11 percent of the votes; the Socialists failed to elect a single representative (see table 4.2). An astonishing 71 percent of deputies were elected for the first time. In the meantime, a new electoral system was adopted after a popular referendum held in 1993, abandoning the proportional system for a mixed-member majoritarian one. With no previous political experience, Berlusconi was appointed prime minister of a rightist coalition after the 1994 elections and remained the most important Italian politician for the following two decades. Berlusconi’s personal fortune includes assets in the fields of television, newspapers, publishing, cinema, finance, banking, insurance, and sport. Indeed, he became known to the public in the 1980s when he took over AC Milan, making it one of the most successful football teams in Europe. In particular, he was, and still is, the owner of Mediaset, the largest private media company in the country. As he took office, he also ran into countless judicial problems, including a number of inquiries on embezzlement, tax evasion, false accounting, bribery of judges, and corruption. Some trials were dropped because of time limits; for other crimes he was acquitted. In 2013, Berlusconi’s conviction on a charge of tax evasion was upheld by the highest Italian court, and so he was forced to relinquish his seat in the Italian Senate. He was subsequently rehabilitated after serving a ten-month public service at a center for Alzheimer’s patients and was reelected to public office as a member of the European Parliament in 2019, while never relinquishing his leadership of Forza Italia. The Mani pulite investigations were certainly the proximate cause of the 1992– 1993 downfall of the Italian First Republic, but what is the remote cause? In other words, how is it possible that a judicial investigation, however pervasive, could tear an established party system apart? The above-mentioned inability of political institutions to renew themselves in front of a changing society certainly plays a part. Political elites underestimated the signs of disaffection visible during the 1980s: first, a decreasing electoral turnout, signaling the difficulty of political parties to mobilize their respec-

3.1 0.0 | 0.0 2.3 0.0 | 0.0 4.5 2.2 | 1.3 1.4 0.0 | 0.0

8.6 5.6 | 3.2 5.0 1.7 | 1.3

3.6

3.2

10.2

3.8

2.5

8.8

Left / Greens

CenterLeft

20.4 5.2 33.8 | 38.7 21.1 11.2 45.2 | 49.8 16.6 14.5 39.2 |39.7 31.3 6.3 55.2 | 50.2 33.2 4.4 39.2 | 41.9 25.4 0.5 54.8 | 39.0 18.8 3.7 19.4 | 19.0 19.1 3.4 20.5 | 20.6

Left Democrats / Democratic Party

5.6 5.7 | 1.0 10.6 7.5 | 6.0

6.3 0.0 | 1.0

15.8 7.3 | 9.8

Center

25.6 17.3 | 17.1 32.7 36.0 | 35.2 15.4 7.8 5.4 | 4.8 13.1 | 14.8

FSM

0.9

1.3

1.1

7.5

4.2

5.8

CenterRight 13.5 58.1 | 49.5 15.7

20.6 39.0 | 36.8 29.4 12.0 58.4 | 55.9 23.7 13.6 44.6 | 49.5 37.4 54.6 | 55.2 21.6 2.0 37.1 | 42.1 14.0 4.4 42.1 | 43.5 8.1 26.0 60.1 | 59.2

21.0

8.8

17.4

4.1

8.3

4.6

10.1 9.4 | 8.6 3.9

8.4

1.0 0.0 | 0.0 1.9 0.0 | 0.0

2.4 0.0 | 0.0

0.9 0.0 | 0.3 0.4

Go Italy / National Right People of Alliance / (Northern) (Outside Freedom Brothers of Italy League Coalition)

7.1 0.8 | 1.9 3.7 0.8 | 1.3 4.8 0.6 | 2.2 9.6 0.2 | 0.3 4.5 0.5 | 1.9 4.9 0.6 | 0.6 2.4 0.3 | 1.0 5.6 0.2 | 0.4

Others

Notes: For each election, percentages of votes (first row) and seats (second row) are reported. Percentages of votes refer to the Chamber of Deputies; percentages of seats refer to the Chamber of Deputies (C) and Senate (S). Source: Italian Ministry of Interior Affairs (https://elezionistorico​.interno​.gov​.it).

1994 Seats C|S 1996 Seats C|S 2001 Seats C|S 2006 Seats C|S 2008 Seats C|S 2013 Seats C|S 2018 Seats C|S 2022 Seats C|S

Left (outside coalition)

Table 4.2  Results of Italian Elections (1994–2022): Percentages of Votes (Chamber of Deputies) and Seats (Chamber of Deputies and Senate)

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tive supporters and, symmetrically, a growing perception that parties were not able to channel the changing demands of citizens into state institutions; second, the rise of new political actors who had been making their way into Parliament since the 1970s. The Radicals and the Greens had limited electoral support but were important in championing issues ignored by mainstream parties: women and minority rights, and the environment. A less visible newcomer in the Italian party system will later have a prominent role. A small autonomist movement, the Liga Veneta, was born in Veneto—a traditional stronghold of the Christian Democrats—and reached parliamentary representation in 1983. Although the Liga Veneta would soon implode as a consequence of many internal disagreements, it was the first expression of the “northern disease” (Diamanti 1996), that soon spread in other regions. The most prominent of these movements, Umberto Bossi’s Lega Autonomista Lombarda, was born in 1984. A few years later, these experiences will be the constituent parts of the Lega Nord, one of the main protagonists of the Italian political scenario in the Second Republic, as we will see. The autonomist (and, at times, secessionist) demands of this party were mixed with xenophobic rhetoric and a populist attitude toward the central state, which paved the way for a further widening of the rift between citizens and institutions. Two international events delivered a decisive blow to Italian parties. The fall of the Berlin Wall in 1989 was the first one. The end of the Cold War meant that the international positioning of Italy (the stronghold of the NATO on the frontier between Western and Eastern Europe) was about to change forever. And this was reflected in the internal frontier dividing the strongest communist party of Western Europe from the Christian Democrats (the symbol of which was, meaningfully, a shield). With the end of the Soviet Empire, the international reference of the PCI crumbled, leading the party to a long-delayed redefinition of its identity and organization. Moreover, it made the Christian Democratic shield useless after having been a guarantee of stability and loyalty to the Western camp for decades. The second decisive event was the signing of the Maastricht Treaty in February 1992, establishing the road map to the common European currency. With that treaty, Italy forced itself to line up to the stringent financial rules needed to be accepted by Northern European countries in the Euro club. That meant passing from the strong deficits of the eighties to a severe financial discipline; in other words, this was the sudden end of easy public money for the pork-barrel politics that were widely practiced in the previous decades. These two events, almost contemporary, eroded the two pillars on which the long-term legitimacy of the party system rested: the “metapolitical” one, that is, the international anchoring of the two main parties, and the “micropolitical” one, that is, the distribution of public resources to a plethora of tiny interest groups in exchange for electoral support (cf. Cotta and Isernia 1996). The First Republic was blown over by a collapse of legitimacy of the old ruling class, but the Second Republic did not grow up healthy. Berlusconi’s success was a consequence of the populist mood spreading in the electorate in the previous decade. At the same time, his rhetoric of the self-made man forced to abandon his business to rescue Italy from a delegitimized political class added

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further fuel to the populist fire—something other political actors would be ready to thrive on when Berlusconi’s star would decline twenty years later. The never-ending conflict between politics and the judiciary was another legacy of the 1992–1993 years. Once the trials started to be televised and some prosecutors made exaggerated use of instruments such as preventive incarceration, the stage was set for the activity of the magistrates to be politicized even further by a master of communication like the media magnate Berlusconi. After entering politics by firmly supporting the judges’ initiatives, Berlusconi was able to denounce these judicial actions as politically motivated once his own media empire was made the subject of judicial inquiries. Of course, Berlusconi was not the author of this whole state of affairs. The politicization of the judiciary and the spread of corruption after the fall of the First Republic were also consequences of a lack of intervention by successive governments, which did nothing to shore up the very precarious state of the Italian justice system.

Foreign Policy: The Least of the Great Powers The combination of polarization and an absence of Left-Right alternation affected Italy’s international status as well as its political performance throughout the First Republic. Italy has traditionally been described as the “least of the great powers” or the “largest of the smaller powers” (cf. Santoro 1991; Andreatta 2008). This reputation is not for wont of ambition. Because of its geographical location, Italy always cultivated a Mediterranean vocation. Italy also laid claim to an early Atlantic affiliation and was among the six founding members of the European Economic Community. Nevertheless, the fact that Italy was always changing its alliances during the wars, that the Iron Curtain had its southwesternmost border in Trieste (where Italy contended with Yugoslavia), and that Italy hosted the largest communist party in Western Europe all meant that the United States never regarded Italy as an easy or reliable ally. Moreover, any American suspicion of Italy was more than reciprocated by Italians looking at the United States. Anti-Americanism was not just strong inside the two antisystem forces, PCI and MSI, but also in the PSI—at least until Hungary’s invasion in 1956—and, throughout the First Republic, inside a sizable component of the Catholic world, including the (more left-wing) leadership of the DC itself. Italy was among the founding signatory countries of both NATO and EEC treaties (the latter having been launched in Messina in 1955 and signed in Rome in 1957). However, neither choice was uncontentious. In the 1950s, some DC leaders, such as Giuseppe Dossetti and Giorgio La Pira, were hostile to NATO membership (and President of the Republic Giovanni Gronchi arguably cultivated “micro-Gaullist” aspirations at the turn of the 1960s), not to mention the more natural hostility displayed by the PCI until the 1970s. Indeed, when PCI party leader Enrico Berlinguer, on the eve of his party’s best-ever electoral result, declared that he felt safe under the NATO umbrella (1976), hostility within the PCI toward Europe had already been significantly reduced.

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Of course, European integration was somewhat easier to accept than NATO because of the spread of Euro-communism in the 1970s—not to mention the fact that one of Europe’s founding fathers, Altiero Spinelli, was elected as an independent on the PCI ticket in the first European elections of 1979. Outside the domain of the communists, attitudes toward Europe were also mixed. De Gasperi was a convinced Europeanist, as were most of the members of his centrist governments. For its part, public opinion was distant but positive about EEC membership. Nevertheless, much of the political class was only lukewarm. Despite the mixed emotions shared between Italy and the United States, Italy has long been an American semiprotectorate. The country was protected in its strategic affiliation with NATO during the Cold War but was also a democracy that enjoyed full sovereignty (and that despite frequent claims that Italian sovereignty was actually still limited) (Caracciolo 1999). So if protection meant interference in domestic affairs, this did not affect day-to-day politics in the Italo-American relationship. Indeed, both sides were quickly able to overcome significant moments of tension. Hence US administrations accepted the PSI’s entry into government in the early 1960s. By the same token, the Sigonella incident (1985), when PSI party leader and Prime Minister Bettino Craxi refused the request of US President Ronald Reagan to extradite the hijackers of the cruise ship Achille Lauro should not be read as a sign of anti-Americanism. Rather, it was part of an attempt to raise Italian international status above its low profile. This episode, at the same time, was just part of a patchwork of Italian ambiguities—from Enrico Mattei’s ENI Middle East policy in the late 1950s to the convention that saw for many years the cohabitation of pro-Israel and proPalestine politicians balancing Italian foreign policy in the Ministry of Foreign Affairs and the Ministry of Defense or vice versa. Therefore, one can argue that during the Cold War, Italy was at the same time firmly located on the Western side and perceived as a kind of unfaithful ally, to be watched carefully both for its delicate geopolitical position—the underlying strength of anti-American sentiments inside both predominant Italian political cultures (Catholic and Marxist)—and for some recurrent anomalies such as those mentioned above. After the end of the Cold War, and especially after the terrorist attacks of 9/11, elements of continuity are increasingly mixed with adaptations to a shifting geopolitical environment. The traditional “three circles” in which Italy tries to exert its foreign influence have remained unaltered: the Atlantic connection with the United States, the European Union, and the Mediterranean. However, Italy’s position in each circle has undergone significant reshaping (Brighi 2006; Felsen 2018). With the United States partially refocusing its foreign policy toward other geographical areas, the Pacific Rim in first place, Italy’s position has lost much of the pivotal character it used to have during the Cold War. Consequently, the “special relationship” between Italy and the United States has rested on personal affinities between leaders (for instance Silvio Berlusconi and George W. Bush) in certain occasions but has also been affected by moments of tension (for instance, when Italy endorsed the Chinese “Belt and Road Initiative” in 2019). The other two “circles” have undergone more significant changes.

1 0 8    G ianfranco B aldini and F ilippo T ronconi

Within the European Union, Italy endorsed the Maastricht Treaty in 1992 and was then among the countries that adopted the Euro currency from the beginning. After significant efforts to bring its macroeconomic parameters in line with the thresholds fixed at European level, Italy managed to be admitted as a founding member of the “euro zone” in 1997. The enthusiastic adoption of the euro was probably the height of Italy’s support for the European project. Indeed, many perceived the European Union, and the euro in particular, as the entity that could “save” Italy from its long-standing economic problems (Dyson and Featherstone 1996). By and large, this came to an end with the financial crisis crushing Europe, and most severely Southern Europe, after 2008. Right or wrong, many sectors of Italian public opinion blamed Europe for not doing enough to rescue the most vulnerable member countries from recession, or they even blamed the common currency for being a straitjacket, making it hard for the Italian economy to recover. In short, though they were among the more enthusiastic supporters of European integration, Italians are now among the most skeptical populaces (Lucarelli 2015). The turn in the mood of public opinion is reflected also in the way Italian institutions deal with the European counterpart, which has become increasingly confrontational, especially in the fields of economy and immigration. In the Mediterranean, the third foreign policy “circle,” Italy has historic ties and economic interests. In first place, North Africa is a preferred source of energy supplies. Libya, in particular, is a former colony and one of Italy’s main suppliers of oil and natural gas. Italy has also traditionally enjoyed friendly relationships with the Arab countries of the region, as the above-mentioned Sigonella episode shows. The Italian influence and prestige in this area, though, suffered a blow in 2011, when the Libyan leader Muammar Gaddafi was removed from power with a decisive NATO military intervention where Italy was at best marginalized. In the following years, Libya underwent, and is still undergoing, a period of severe instability, which has put Italian interests in danger not only in the energy sector but also as far as migration is concerned, Libya being the main gateway to Europe for African migrants, and Southern Italian shores the nearest point of arrival for the Mediterranean route of migration. Since 2011, migrants’ departures have systematically been used by Libyan militias as an effective weapon for blackmailing Italy. Italy’s diminished influence in the area together with the lack of a legitimate Libyan state authority have certainly contributed to undermine Italy’s ability to control migration flows and to transform migration into one of the main concerns of Italian public opinion in the last decade. In 2022, when Russia invaded Ukraine, Italy sided with the Western allies. The broad coalition supporting the Draghi government, however, was not exempt from divisions on this issue. Especially the rightist parties of Forza Italia and the League, whose leaders had cultivated strong relations with President Putin, occasionally expressed equivocal positions, censuring the Russian invasion and opposing the shipping of weapons to support Ukrainian resistance at the same time. Giorgia Meloni, the main winner of the 2022 general elections, had also expressed a sympathy for the Russian government in the past. However, she was quick to distance herself from the other rightist leaders soon after the invasion, and she unequivocally supported Ukraine.

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Party System Change, Electoral and Institutional Reforms Italy is the only European democracy to have voted with four significantly different electoral systems since the end of the Cold War. Yet discussions on electoral reform are a hardy perennial in Italian political debate. Why is this the case? The answer can be found in a combination of ineffective reforms and the absence of instruments that can complement electoral laws in the crucial parliamentary arena, specifically the rules regarding parliamentary group formation, which were left untouched throughout the last thirty years. Three electoral reforms took place, in 1993, 2005, and 2017 (on which see next section). At the time of the first reform, political parties were experiencing the harshest moments of the judicial investigations, as we saw. They also faced the outcome of a popular referendum in April 1993 on the abolition of PR which showed a huge support for such a change. Nevertheless, they managed not to lose complete control of the electoral reform process. Instead of moving toward a single-round first-past-the-post system like that used in the United Kingdom, or a two-round plurality system like that used in France, they set up a mixed-member majoritarian system (MMM, the Mattarella Law), which worked through various and very intricate devices to mitigate the majoritarian effect of the single-member districts. The choice was not obvious. Arguably, either a first-past-the-post system or a two-round plurality system would have done away with the country’s tradition for polarized pluralism by forcing the parties into a more clearly bipolar Left-Right division. Not only would this simplify choices for the voters but it would ensure some alternation between government and opposition as well. A mixed-member majoritarian system had no such clear-cut implications. Berlusconi’s first victory in 1994 was built on heterogeneous alliances in different parts of the country. In the North, Berlusconi relied on the Northern League; in the South, he depended upon the MSI (later rebranded as National Alliance). Indeed, his dependence upon the support of these groups was such that the government he formed lasted less than seven months, as a consequence of the Northern League’s defection. In turn, this made it possible for the center-left to achieve victory in the following 1996 elections, with Romano Prodi’s Olive Tree coalition. Once again, however, the coalition depended upon the goodwill of smaller parties and, as a consequence, the Prodi government lasted only two years. At the end of the Prodi government, the Italian political system moved even further from the majoritarian bipolar ideal, as a new executive was formed mainly thanks to the defections of some centrist MPs elected in 1996 as part of the center-right. Massimo D’Alema became prime minister in a new PDS (Partito democratico di sinistra, Democratic Party of the Left, the new name the old PCI adopted in 1991) that dominated government not as an expression of alternation but in a new form of trasformismo for a new age. Therefore, the first two elections with the new system saw the repetition of patterns commonly associated with the First Republic: average cabinet duration was only slightly longer (see table 4.3), trasformismo continued to be practiced, and the party

PR MMM, mixed-member majoritarian PR with majority bonus PR with majority bonus MMM MMM

1976–1992 (5) 1994–2001 (3) 2006–2008 (2) 2013 2018 2022

2.6 8.3 4.6 17.3 4.5 7.3

Disproportionality (Gallagher index) 89.8 83.5 80.8 75.2 72.9 63.9

Turnout (%) 9.1 25.4 9.6 36.7 26.7 31.8

Volatility (% net vote change)

4.6 6.9 4.6 5.3 5.1 6.6

Effective number of electoral parties

61.1 42.6 63.0 50.1 51.5 45.1

Two-party vote (%)

Note: though technically Mixed-Member Majoritarian, the 2018–2022 electoral system foresees a majority of seats allocated through proportional representation (see text for details).

Electoral law

Period (number of elections)

Table 4.3  Electoral Laws and Party System Indicators (Chamber of Deputies)

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system remained fragmented. The idea spread in the following years that electoral reform had failed in rationalizing the political system along a pattern of party system simplification and bipolar alternation, while many began to hope to switch back to PR. This is essentially what happened in the electoral reform of 2005—although, this being Italy, it happened in a very peculiar way. Before briefly sketching out the many faults of the 2005 electoral law, it is important to explain how the mixed-member majoritarian system diluted the pressure to create a simplified bipolar party system. From a strict majoritarian perspective, this system clearly had many flaws. Among them the use of cross-party endorsements of candidacies within coalitions inside the single-member districts had the effect of fostering, instead of curbing, a fragmentation of the party system, in a pattern captured by the category of “fragmented bipolarism” (D’Alimonte 2005). Moreover, this new, fragmented bipolar system behaved somewhat differently from the polarized pluralism of the First Republic, during which each party made up its own parliamentary group. Hence, while parties forged coalitions before elections, they operated as free agents once in Parliament. This effectively created two different party systems: one operating at the electoral level, which could appear simplified at first sight, but a different one, much more fragmented, operating in Parliament. The 2005 reform, in its turn, did not affect these dynamics. The Calderoli law extended the principle of an “adjusted-bonus” form of proportional representation to the national level (55% of seats to the first list or coalition). This principle already operated at all the lower territorial levels of government (meaning for the election of the regional, provincial, and municipal councils) to provide a seat-bonus to the winning list or coalition (subject to complicated thresholds) so that the winning group received a workable majority. The main effect was to drain the center of the political spectrum, creating two “catch-all coalitions,” with the narrow victory of Prodi at the helm of a very broad camp in 2006. In order to understand the broader context of the alternation between the two coalitions, it is important to stress that while parties repeatedly played with the electoral rules, a broader consensus on how to reform the overall architecture of the political system has so far proved impossible to achieve. Unless a two-thirds majority in Parliament agrees on a reform, the electorate can be involved in the constitutional reform process. This has happened four times since 2000 (2001, 2006, 2016, 2020), and only in the first and fourth instances—when voters confirmed the strengthening of regional powers vis-à-vis the central state and then the reduction of the size of the assemblies of Parliament (from 620 to 400 for the Chamber of Deputies and from 315 to 200 for the Senate)—did it not frustrate the reformers’ attempt. In different ways, Berlusconi in 2006 and especially Matteo Renzi in 2016 (see below) invested a significant amount of their political capital in trying to achieve a more majoritarian (and in Berlusconi’s case, also more federal) institutional structure. In this respect, leaving aside the fact that both projects of constitutional reforms proposed by Berlusconi and Renzi suffered from a number of oddities, the point to note here is that the institutional architecture of the First Republic has managed to entrench a significant number of vested interests: the many veto points explicitly or implicitly

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favored by the functioning of the political system proved very resistant to an overall process of institutional change. But agency can sometimes work better by exploiting conditions for change without first changing institutional rules. This is what happened in 2007, when the need to tame fragmentation inside the two coalitions became impelling. First, the initiative of the former mayor of Rome, Walter Veltroni, brought about the Democratic Party (PD), to which both the DS (formerly PDS) and the more centrist Daisy (La Margherita) adhered. This triggered an analogous streamlining process among the parties of the center-right, which led to the formation of the People of Freedom by Berlusconi (merging Forza Italia and the National Alliance, but leaving out the Northern League) and ultimately led to his return in government after the 2008 general election, precipitated by yet another early fall of Prodi’s center-left coalition, like ten years before. However, on November 2011, the worsening of public finances and internal divisions within the center-right coalition led to Berlusconi’s resignation. This experience was different from that of other countries. While in 2011–2012, the economic crisis triggered early elections in Greece, Spain, and Portugal, Italy faced government turnover without elections. This unelected turnover was made possible by the constitution: given the presence of a new parliamentary majority, in November 2011, President Napolitano strongly supported Berlusconi’s replacement as prime minister by Mario Monti, a former European commissioner. Although Monti could enjoy a substantial cross-party majority in Parliament (with the exception of the Northern League), his mandate was mainly focused on structural reforms (and particularly on pensions), as prescribed by European institutions and particularly by the European Central Bank (Jones 2011). Monti’s attempt to rescue Italy was only partly successful. He established both economic and policy credibility abroad, but he failed to restore confidence at home in a discredited political elite (Hopkin 2012). The damage to popular confidence was considerable. The Italian political class had been hit by frequent scandals relating to both abuses of power and excessive privilege. As a result, they were widely depicted as a “caste” (Rizzo and Stella 2007), or a closed circle of self-serving elites. When Italy went to the polls in 2013, the reservoir of hostility to the political establishment proved to be a key factor for another important party system realignment.

After 2013: Antiestablishment Populism and the Curious Mix of Old and New For a long time, during the First Republic, Italian elections had many winners and no loser. The combination of a proportional electoral law and the Cold War cleavage meant that the decisiveness of elections in bringing about government turnover was very low. Then, from 1994 to 2008, the two main coalitions alternated, although government turnover was not always determined by electoral results. Since 2013, Italy has experienced yet another format of political competition, with a tripolar dynamic

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whereby the two hitherto existing coalitions were first affected (then shaken in 2018) by the massive success of M5S. The antiestablishment climate which dominated Italian politics in 2011–2012 with many political scandals and a general dissatisfaction toward Monti’s reforms also led to the pyrrhic victory for the Democratic Party (PD). The point to underline here is the continuing relevance of the figure of the president of the Republic, especially in phases in which political parties are weak when—according to the metaphor provided by twice former prime minister and currently (2022) member of the Constitutional Court Giuliano Amato—presidents can play their accordion to its full extension. The deadlock which followed the 2013 election—with the M5S refusing to compromise with the PD for the formation of a coalition—was only solved after the reluctant agreement of President Napolitano to accept (albeit for a limited time) the cross-party request to stand for a second term, an option not ruled out by the constitution but never tried before. It is worth noticing here that Napolitano’s successor, Sergio Mattarella, was also reelected after completing his first mandate in 2022. Thus the reelection of the president of the republic has turned from an exception to a rule, or at least a concrete possibility for any incumbent in the future. Napolitano was also Berlusconi’s favorite candidate, and his accordion played the expected tune: a grand coalition which would provide the political stability necessary to implement long-awaited institutional reforms, starting with a new electoral law but also including a redesign of the two houses of the Italian Parliament and a speeding up of the parliamentary process. If this was the solution agreed to by the political establishment, the political price of a bipartisan agreement in continuing times of crisis would soon appear very high. Bipolarism has not been much affected by a centripetal challenge, but by a “beyond Left and Right” discourse, skillfully manipulated by Beppe Grillo. The M5S success deserves further explanation. The former comedian played a key role in the 2013 campaign (and beyond). Although not himself a candidate, for months Grillo imposed his agenda by being omnipresent on TV discussions while refusing to take part in any debate. Rather, he toured the country (visiting seventyseven cities) with his “Tsunami Tour,” a name which sums up very effectively the tone and aims of his initiative, culminating in the end-of-campaign meeting in Rome with the “surrender” cry to politicians in the palazzo: “Surrender! Give yourselves up! You are surrounded!” The M5S’s success has many components (Tronconi 2015): some are common to other European countries; some are more peculiarly Italian. Matthew Flinders underlines some important challenges that democracies are facing today (Flinders 2012). These result from a complex interplay between the spread of consumerism in politics, the fears which the media stoke, the emphasis on the rights to the detriment of the duties of citizens, and the obsessive monitoring of the private lives of politicians. All this has contributed to widen the gap between citizens’ expectations and what politics—especially in a democracy—can actually deliver. What other European country better exemplifies these dynamics than Italy? To be fair, the Italian political class’s discredit is greatly self-inflicted, and the number of scandals make any elaboration on this point superfluous.

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However, what is more interesting to see is how the M5S’s success is built on the channeling of a reservoir of political anger and antiestablishment attitudes that spreads across all of Italy. In such a context, it is not surprising that the physiological gap between expectations and achievements (in a country that wanted to reform politics with a judges’ revolution at the start of the 1990s and ranks among the most corrupted EU countries, according to Transparency International) is subject to periodical outbursts. The M5S builds its discourse on the combination of elements which were present in the previous three big waves of Italian antiestablishment movements. The first inspiration for the party’s repertoire comes from Guglielmo Giannini’s Uomo Qualunque (“Common Man”), a flash populist-libertarian movement which attracted many votes—especially in the South—in the late 1940s. This movement depicted all parties as equal, and fascism and democracy as alike, all aiming at squeezing the poor citizen inside a vise (which became the party’s symbol). He oversimplified politics, claiming a good ragioniere (an accountant) should ideally be in charge. Giannini’s language was as irreverent as Beppe Grillo’s. His movement was short lived, but many of the attitudes that inspired it have never disappeared. Many of the social movements of the 1960s and 1970s created problems for the more mainstream Italian political parties, problems that have never been fully addressed. As different as they were, Marxist, anarcho-libertarian, and dissenting Catholic groups shared a key challenge to the process of political (and trade union) delegation. Contrary to what happened in other European countries, only a few tiny movements got institutionalized, while some others chose violent means, so much so that the 1970s for Italy meant a decade of violence (on a dynamic which, again, had no parallels in Europe). The continuing challenge to the mainstream was evident in the political crisis of the early 1990s. The collapse of the First Republic and the rise of Berlusconi rested in large measure on a widespread disgust with the ruling class. That sentiment has not dissipated as a result of Berlusconi’s political leadership, and he continues to rail against the traditional elites of the Left. The difference for Grillo is that he can point fingers at all parts of the political spectrum. The expectations gap analyzed by Flinders (2012) has reached in Italy yet another moment of explosion, and possibly the most dramatic one. The M5S voters share, in different combinations, distrust and dissatisfaction toward politics, but, also, the hyperpolitical attitudes of the social movements of the 1960s and 1970s, with their refusal of political delegation, their love for deliberative democracy procedures, and their postmaterialist baggage (the environment and fights against high-speed train lines and waste incinerators are key local battles in which the movement got hold) all mix up in a rather complex blend. While most other parties are postideological, the M5S also speaks to a nostalgic electorate, or to the alienated citizens grown up in a postideological Second Republic only seen in its failures (of which indeed there are many) and along the almost predominant pro-/anti-Berlusconi cleavage. When the two main alternatives are the heirs of the PCI and DC (from which the core of the PD leadership comes) and an entrepreneur who famously “descended” into politics with the promise of a Thatcher-style revolution (while achieving almost nothing of this, raising taxes, and mainly looking

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after his business), is it really surprising to find dissatisfied voters of both camps joining a new movement, self-proclaimed a nonparty just to mark its distance from those who have governed so far? The rejection of political delegation in favor of direct democracy (and “monitory democracy”) and distrust vis-à-vis the political system complement each other, providing mobilization resources and a convenient channeling for protest voting (Keane 2011). But there is also a critical element in the M5S’s success, which is the combination of an external—and therefore unaccountable—charismatic leadership and the use of the internet not just as a means of political action but almost as the only veritable source of political legitimation. The 2013 election—and the M5S’s success, more specifically—created the conditions for the emergence of two new leaderships, respectively, in the form of an “insider challenge”: that of Florence’s mayor Matteo Renzi as the new PD leader and, on the Right, of Matteo Salvini (Northern League). The “two Matteos” had more differences than similarities, the latter being mainly related to age, communication skills, and a vocal call for change, albeit through different means and aims. While Salvini had to work through a rebranding of his party—renamed Lega (League) at the end of 2017 to broaden its geographical appeal to the South—and to wait for the 2018 elections to gain a significant position as minister of home affairs and deputy prime minister in the Conte I government, Renzi’s surge was as sudden as short lived (though he is still [2022] a senator, according to opinion polls, his popularity has declined dramatically since 2018). Renzi’s political experience summarizes some of the living ambiguities of Italian politics. He first became very popular with a radical program of renovation for his party and the political system, more in general, referring to himself as a “scrapper” (il rottamatore), then replacing his party fellow Enrico Letta as prime minister in February 2014. However, probably overconfident after winning the 2014 European election (with an amazing 40%), Renzi ignored the lesson of his famous fellow citizen, Niccolò Machiavelli, when the other “Florentine” (another nickname for Renzi) prescribed that a “good prince” should never underestimate the troubles in renovating a democratic order by himself, that is, without building a coalition. Renzi’s coalition collapsed as he bet his personal reputation on being able to win a popular majority for an ambitious series of constitutional reforms to strengthen the Italian executive relative to the elected members of Parliament. Having lost the constitutional referendum, Renzi was able to cling to the party leadership, influence the nomination of his successor (Paolo Gentiloni) and his government, and resurrect part of his electoral reform design, struck down by the Constitutional Court in early 2017. Hence the third electoral reform—as of 2022—meant that in 2018, Italians voted with the fourth different electoral law since 1994. The Rosato Law (2017) resurrected the single-member constituencies and is formally an MMM formula, though this time proportional seats cover as many as 63 percent of the MPs. Renzi showed great ambition: he managed to introduce some significant reforms (attracting great interest also from abroad) but was ultimately unable to capitalize on his popularity. Yet the return of the proportional logic of the electoral system might mean that he was not out of the game yet. In September 2019, he left the PD to create

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“Italia Viva,” a party that showed little attractiveness to voters according to opinion polls, but was in control of an influential group of legislators. The 2018 general election has been alternatively described as a turning point or as yet another chapter in the never-ending Italian transition (Pinto 2020). The clearest winner was the M5S, which rose to 32.7 percent (strengthening its vote especially in the South, where the “dominant coalition” of the party comes from, starting from Luigi Di Maio, elected as party leader in 2017). The analysis of vote flows shows that these additional votes came both from the Left and from the Right, confirming the “catch-all” nature of this party. Salvini’s Lega could also claim victory, with 17.4 percent (up from 4.1% in 2013), which meant becoming the first party of the centerright. When Salvini took over the party, many deemed it to be on a dead track. Yet after rebranding it, he transformed its identity and strategy from a regionalist party, aiming to transform Italy into a federal country, to a radical Right, “pro-sovereignty” or “sovereigntist” party. On the basis of this new platform, he was able to get votes also in the South, something that was unconceivable just a few years before. The losers of the 2018 were instead the two parties that had dominated Italian politics in the previous decade: the PD and Forza Italia.5 They were both facing the decline of their respective leaders. In the case of Forza Italia, the decline inevitably followed the sunset of its founder and unchallenged master. In the case of the PD, the difficulties derived from the collapse of Renzi’s leadership (see again table 4.2). After the elections, a coalition government had to be formed, since no single party obtained an absolute majority of seats. Two months of exhausting negotiations led to the birth of an M5S-Lega government chaired by Giuseppe Conte, a fifty-fouryear-old lawyer with no previous political experience. Such an unusual choice seemed functional to reach an equilibrium between the two parties and their respective leaders, Luigi Di Maio and Matteo Salvini, who were both designated as vice prime ministers and who appeared to be the real key players within the cabinet. As a vague coalition agreement shows, the policy foundations of the coalition were rather shaky. The M5S and League agreed on a confrontational style of negotiations with the EU institutions, especially with regard to the restrictive budgetary policy to which Italy is limited by its precarious public finances. On many other issues, on the contrary, the two coalition members had different views. The environmentalist stances of the M5S were not agreed upon by the League, as they were perceived as disadvantageous to the interests of the industrial North, one of the core constituencies of Salvini’s party. On fiscal policy, the League insisted on tax cuts, while the M5S supported expanded state intervention and increased welfare services. A sort of informal division of labor was thus envisaged within the coalition, according to which each party took care of its own policy priorities. Under the leadership of Di Maio (who was the minister of labor and social policies), the M5S managed to implement a guaranteed minimum income program, which was its flagship proposal in the 2018 campaign. On the other hand, Salvini, the minister of home affairs, launched a number of restrictive measures on immigration and security. This mutual nonaggression pact was not enough to keep the government alive more than fifteen months. In the summer of 2019, Salvini announced his party would withdraw from the coalition and seek early elections. This happened shortly after the European

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Parliament elections took place (May 2019), making it clear that the troubled life of the populist government was advantageous only for one of its components. While the League doubled its votes when compared to 2018 (rising to 34.3%), the M5S lost half of its supporters (down to 17.1%). While some expected the president of the republic to dissolve the Parliament and call for early elections (and the League to dominate the following legislative term, as foreseen by opinion polls), things took a surprising turn. The PD and the M5S—fierce adversaries until a few weeks before—reached an agreement for a new coalition government to be formed, with Conte acting again as the prime minister and Renzi as main player behind the shifting geography of the incoming coalition, which, however, did not appear to be much more cohesive than the outgoing one. The will to avoid elections that would have arguably harmed both parties seemed to be the first and foremost incentive to join the coalition, while policy divergences were not less evident than in the previous coalition. It was the Conte II government to handle the first months of the COVID pandemic that severely hit Italy in 2020. Italy’s reaction to the coronavirus was initially praised as a positive example for other countries (Horowitz 2020). However, in January 2021, after weeks of disagreements over the handling of the EU postpandemic economic recovery package, Renzi’s party (Italia Viva) left the government coalition, thus bringing down the Conte II government. As he did after the resignation of the Conte I government, President Mattarella decided not to dissolve the legislature, selecting Mario Draghi as the new prime minister. Draghi, former president of the Italian and then of the European Central Bank, one of the most reputed Italian technocrats abroad, had never held a political office before. Once again, in a moment of difficulty, Italian politics had to resort to a technocratic-led government, for the fourth time since 1993, something unparalleled in European countries. Draghi’s government was supported by a large parliamentary coalition, ranging from the Far Right Lega to the leftist Partito Democratico, as a confirmation of its anomaly and also of the will of most parties to have a say in the allocation of the conspicuous resources pouring into Italy from Europe as a response to the pandemic crisis. But how can we interpret the last two general elections on a longer time perspective? The indicators of table 4.3 (see above) point to a return of a very uncertain and volatile party system. In 2013, the jump in disproportionality (as measured by the Gallagher index) was due to the very close race between the two main coalitions and the M5S. In 2018, as mentioned above, proportionality comes back. The rise of an antipolitical climate can also be seen by the fact that well over a quarter (even more than a third in 2022!) of the Italian electorate now seems uninterested in the political game, with a significant increase on the previous periods (see column on turnout). The last two columns are consistent with this picture of fluidity: both the effective number of electoral parties—an index on fragmentation—and the two-party vote tell us that the change from 2008 has been important. Writing in the immediate aftermath of the 2022 general election, one might be tempted to conclude that bipolarity has come back. As a matter of fact, a clear rightwing majority emerged from the ballots, while the main challenger to the bipolar pattern of competition—the M5S, led since 2022 by Conte—has lost more than half

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of its votes compared to 2018. However, once again stability might turn out to be complicated to achieve. Within the majority coalition, FdI is now the party that received the most votes, and its leader, Giorgia Meloni, is the designated prime minister, while both Salvini’s League and Berlusconi’s Forza Italia declined to the role of junior partners. Born at the end of 2012 as a splinter from the People of Freedom, FdI is the heir of neo-Fascist and post-Fascist Italian tradition, and many of its current leaders started their political careers within the MSI (see above). While the Fascist roots have never been explicitly recanted, the party has also expressed more moderate and conservative positions both on fiscal and on foreign policies (despite a frequently reiterated support for the illiberal governments of Hungary and Poland). Last but not least, given the lack of experience of Meloni (who was just appointed minister of youth in 2008–2011 and also leads a party lacking in personnel with previous ministerial experience), several uncertainties lie ahead (Baldini, Tronconi, and Angelucci 2023). The state of the oppositions looks uncertain too. While confirming its position as the party with the second-highest number of votes, the PD appears to be squeezed between a centrist challenger—the coalition of Carlo Calenda and Matteo Renzi—and the M5S, which has lost half of its votes when compared to 2018 but has succeeded in avoiding a complete electoral meltdown that looked likely until a few months before the 2022 elections. Part of the explanation for the recovery of the M5S lies in betting on its flagship policy—a guaranteed minimum income program, introduced in 2019—particularly benefiting the Southern electorate. At the systemic level, the most recent elections were marked, yet again, by high volatility, as happened frequently in Southern Europe in the last decade. But while in most countries, more stable patterns normally emerge after a very volatile election, this has not occurred in Italy. Indeed, Italy has now experienced three elections in a row with an index of volatility above 25, like no other European country since 1945 (see again table 4.3). All this suggests that further turbulences might still lie ahead.

Conclusion: When Old Meets New As in many other countries, Italian changes and continuities blend in an inextricable way. Governments tend to be stronger, although still affected by difficult coalition patterns and incessant parliamentary maneuvering. Italy’s political crisis of the early 1990s reflected a cultural failure to develop institutions resting on universalistic values, above all, those of efficiency and transparency in public life. The disintegration of this system has brought about new protagonists but also a rather peculiar blend of old problems (a weak identification in the institutions, a weak civic culture, the enduring strength of the North-South divide) and new divisions, to the extent that today the political transition that started almost thirty years ago still remains incomplete. The elections of 2013 and 2018 have brought big changes to the political landscape and spread hopes of renewal and fears of illiberal turns in equal measure. The cyclic earthquakes affecting the political system, however, can be seen more as the symptoms of a chronic illness, persisting at least since the beginning of the nineties, than as an effective therapy.

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Over the past three decades, Italy has struggled to find viable solutions to its long-lasting problems: a stagnating economy, loss of ground in the competitiveness race with advanced and emerging countries, an inefficient public sector, the persistent gap between North and South. The economic crisis begun in 2008 has exacerbated these problems: Italy has been hit by the crisis more violently than other European countries and, as of 2019, has not fully recovered yet to previous levels of GDP and employment. The COVID crisis of 2020 has also been particularly severe in Italy, and its economic consequences will certainly be difficult to deal with. A significant difference between the two crises, however, is the European response. While the EU reacted to the 2008 recession requesting austerity measures, in 2021, it promoted an unprecedented economic recovery package (Next Generation EU). This represents an opportunity for the relaunch of Italy’s economy but also a challenge for a public administration that has often proved ineffective in handling European funds. The management of a multicultural society is adding complexity to the old and recent economic concerns. This is something Italy is experiencing for the first time, after the massive migrations of the last years have brought the number of resident foreigners up to over five million people (8.5% of the total population, from 2.2% in 2001). The responses of the political system to these challenges have been weak. Much energy has been devoted to an inconclusive debate over institutional reforms. Many problems have been faced with a short-term attitude or aiming to the protection of particularistic interests. The fight against organized crime has achieved important results—in first place, the arrest of several top-level bosses—but has not been able to avoid the diffusion of dirty cash into the rich Northern economic system (and all over Europe). On an international level, Italy’s prestige and influence have certainly declined. This is in part an inevitable effect of the rise of non-Western global powers, like China and India, but in part a consequence of the lack of a clear strategy after the end of the Cold War, especially in the Mediterranean neighborhood. In the last years, two opposite strategies have been pursued to compensate for the inadequacy of traditional political actors. The technocratic solution, especially evident in the Monti and Draghi governments (2011–2012 and 2021–2022) put politics aside, in a sense, to impose hard solutions that could not be postponed to reluctant parties. The populist solution, especially evident in the Conte I government (2018–2019), tried to frame its measures as the translation of the “will of the people” into policy decisions (Caramani 2017). Both experiences were short lived and did not move Italy closer to the solution of its long-term challenges. The 2022 general elections have certainly brought party politics back in full speed. At the time of writing, whether the new legislature will be a stable one or the usual governmental instability will once again prevail, however, is simply impossible to predict.

Notes 1. Italy also displayed a high level of economic inequality (and still does to this day), a factor often considered critical in democratization processes. 2. In other words, and borrowing Stein Rokkan’s terminology, the threshold of representation was significantly lowered too soon after the threshold of incorporation (i.e., extension of suffrage) had been passed, thus decisively jeopardizing the democratization process.

1 2 0    G ianfranco B aldini and F ilippo T ronconi 3. The reform was aimed at fostering DC’s governing coalitions and soon was dubbed a “swindle” (legge truffa) by the main oppositions, as it prescribed a consistent majority bonus (64.4% of the seats in the Chamber of Deputies to be assigned to the party/coalition securing 50% of the vote). The Left’s campaign was successful, as it played on the memories of the 1923 Acerbo law, which gave 60 percent of the seats to the Fascist party. That device, however, was different, as the seat bonus was awarded to the list gaining a plurality of votes. Cf. Baldini (2011). 4. The problem of corruption has not vanished since. According to Transparency International, Italy in 2019 had a “perceived score of public sector corruption” of 53 (where 100 indicates a very clean and 0 a highly corrupt country), the same as Malaysia and Saudi Arabia. In comparison, Germany had a score of 80, the UK 77, and France 69. See https://www​ .transparency​.org​/en​/cpi. 5. In 2014, Silvio Berlusconi decided to readopt the name originally given to the party in 1994.

Suggested Readings Brighi, Elisabetta. Foreign Policy, Domestic Politics and International Relations: The Case of Italy. London: Routledge, 2013. Ceccarini, Luigi, and James Newell. The Italian General Election of 2018. London: Springer, 2019. Cotta, Maurizio, and Luca Verzichelli. Political Institutions in Italy. Oxford: Oxford University Press, 2007. Jones, Erik, and Gianfranco Pasquino, eds. The Oxford Handbook of Italian Politics. Oxford: Oxford University Press, 2015. Shin, Michael E., and John A. Agnew. Berlusconi’s Italy: Mapping Contemporary Italian Politics. Philadelphia: Temple University Press, 2008.

References Andreatta, Filippo. 2008. “Italian Foreign Policy: Domestic Politics, International Requirements and the European Dimension.” In The Future of European Foreign Policy, edited by Erik Jones and Saskia van Genugten. Journal of European Integration (special issue) 30 (1): 169–81. Baldini, Gianfranco. 2011. “The Different Trajectories of Italian Electoral Reforms.” West European Politics 34 (3–4): 644–63. Baldini, Gianfranco. 2015. “Christian Democracy: The Italian Party.” In Oxford Handbook of Italian Politics, edited by Erik Jones and Gianfranco Pasquino, 173–83. Oxford: Oxford University Press. Baldini, Gianfranco, Filippo Tronconi, and Davide Angelucci. 2023. “Yet Another Italian Populism? Understanding the Rise of Brothers of Italy.” South European Society and Politics, forthcoming. Bartolini, Stefano. 2000. The Political Mobilization of the European Left, 1860–1980. Cambridge: Cambridge University Press. Brighi, Elisabetta. 2006. “‘One Man Alone’? A Longue Durée Approach to Italy’s Foreign Policy under Berlusconi.” Government and Opposition 41 (2): 278–97.

I tal y     121 Caracciolo, Lucio. 1999. “L’Italia alla ricerca di se stessa.” In Storia d’Italia, vol. 6: L’Italia contemporanea, edited by Giovanni Sabbatucci and Vittorio Vidotto, 541–604. Rome: Laterza. Caramani, Daniele. 2017. “Will vs. Reason: The Populist and Technocratic Forms of Political Representation and Their Critique to Party Government.” American Political Science Review 111 (1): 54–67. Cartocci, Roberto. 2007. Mappe del Tesoro: Atlante del Capitale sociale in Italia. Bologna: Il Mulino. Cavazza, Luca, and Stephen R. Graubard, eds. 1974. Il caso italiano. Milan: Rizzoli. Cotta, Maurizio, and Luca Verzichelli. 2007. Political Institutions in Italy. Oxford: Oxford University Press. Cotta, Maurizio, and Pierangelo Isernia, eds. 1996. Il gigante dai piedi di argilla. Bologna: Il Mulino. D’Alimonte, Roberto. 2005. “Italy: A Case of Fragmented Bipolarism.” In The Politics of Electoral Systems, edited by Michael Gallagher and Paul Mitchell, 253–77. Oxford: Oxford University Press. Diamanti, Ilvo. 1996. Il male del nord: Lega, localismo, secessione. Rome: Donzelli. Dyson, Kenneth, and Kevin Featherstone. 1996. “Italy and EMU as a ‘Vincolo Esterno’: Empowering the Technocrats, Transforming the State.” South European Society and Politics 1 (2): 272–99. Felsen, David. 2018. “Italian Foreign Policy under the Gentiloni Government: Do the ‘Three Circles’ Hold in 2017?” Contemporary Italian Politics 10 (4): 363–76. Flinders, Matthew. 2012. Defending Politics: Why Democracy Matters in the XXIst Century. Oxford: Oxford University Press. Galli della Loggia, Ernesto. 1996. La morte della patria. Rome: Laterza. Hine, David. 1993. Governing Italy: The Politics of Bargained Pluralism. Oxford: Oxford University Press. Hopkin, Jonathan. 2012. “A Slow Fuse: Italy and the EU Debt Crisis.” International Spectator 47 (4): 35–48. Horowitz, Jason. 2020. “How Italy Turned Around Its Coronavirus Calamity.” New York Times, July 31, 2020. Jones, Erik. 2011. “The Berlusconi Government and the Sovereign Debt Crisis.” Italian Politics 27 (1): 172–90. Keane, John. 2011. “Monitory Democracy?” In The Future of Representative Politics, edited by Sonia Alonso, John Keane, and Wolfgang Merkel, 212–35. Cambridge: Cambridge University Press. Lucarelli, Sonia. 2015. “Italy and the EU: From True Love to Disenchantment?” Journal of Common Market Studies 53 (1): 40–60. March, James G., and Johan P. Olsen. 1989. Rediscovering Institutions: The Organizational Basis of Politics. New York: Free Press. Morlino, Leonardo. 1998. Democracy between Consolidation and Crisis: Parties, Groups, and Citizens in Southern Europe. Oxford: Oxford University Press. Padoa Schioppa, Tommaso, and Stephen R. Graubard, eds. 2001. Il caso italiano 2: Dove sta andando il nostro paese? Milan: Rizzoli. Parisi, Arturo, and Gianfranco Pasquino. 1979. “Changes in Italian Electoral Behaviour: The Relationships between Parties and Voters.” West European Politics 2 (3): 6–30. Pinto, Luca. 2020. “The 2018 Italian General Election: A ‘New Italy’ or a ‘Dead End’?” Italian Political Science Review 50 (3): 298–303. Putnam, Robert D. 1993. Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press.

1 2 2    G ianfranco B aldini and F ilippo T ronconi Rizzo, Sergio, and Gian Antonio Stella. 2007. La Casta: Come i politici italiani sono diventati intoccabili. Milan: Rizzoli. Santoro, Carlo Maria. 1991. La politica estera di una media Potenza. Bologna: Il Mulino. Sartori, Giovanni. 2005. Parties and Party Systems. Colchester, UK: ECPR Press. Tronconi, Filippo, ed. 2015. Beppe Grillo’s Five Star Movement: Organization, Communication, and Ideology. Farnham, UK: Ashgate.

CHAPTER 5

Scandinavia STILL THE MIDDLE WAY?* Eric S. Einhorn

*  This chapter draws heavily on earlier versions that were written with the late Professor John A. Logue of Kent State University, with whom I was privileged to collaborate for forty years until his untimely death in December 2009.

123

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Scandinavia Denmark Denmark Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020):

Finland 5.83 Population (million): 16,584 Area in Square Miles: 354 Population Density in Square Miles: $356 GDP (in billions of dollars, 2021): $60,909 GDP per Capita (PPP, 2021):

GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU: January 1, Joined EC/EU 1973

5.5 130,560 41 $297.3 $53,655 January 1, 1995

Performance of Key Political Parties in Parliamentary Elections of November 2022 (%)

Performance of Key Political Parties in Parliamentary Elections of April 2019

Social Democrats: *

27.5

Christian Democrats (KD):

Venstre (conservative-liberal): *

13.3

Finnish Centre [agrarian] Party (Kesk)*:

13.8

3.9

Danish People’s Party (DPP):

2.6

Finnish Social Democratic Party (SDP)*:

17.7

Social Liberals:

3.8

Green Party (Vihr)*:

11.5

Green Left (SF):

8.3

Left Wing Alliance (Vas)*:

Red-Green (ecosocialist):

5.1

National Coalition Party (NCP):

Conservatives:

5.5

Swedish People’s Party (RKP/ SFP)*:

Denmark Democrats (populist right):

8.1

Finns Party (PS):

Liberal Alliance:

7.9

Movement:

New Right:

3.7

Moderates: *

9.3

Alternative:

3.3

8.2 17.0 4.5 17.5 2.3

Main Officeholders

Main Officeholders

Prime Minister: Mette Frederiksen, Social Democrats (2019)

President: Sauli Niinistö, NCP (2018)

Head of State: Queen Margrethe II (1972)

Prime Minister: Sanna Marin, SDP (2019)

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Norway

Sweden

Population (million):

5.38

Population (million):

10.35

Area in Square Miles:

148,729

Area in Square Miles:

204,035

Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020):

38 $482 $89,203

Population Density in Square Miles: GDP (in billion dollars, 2020):

$541

GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU:

Performance of Key Political Parties in Parliamentary Elections of September 2021 (%)

64

$61,838 January 1, 1995

Performance of Key Political Parties in Parliamentary Elections of September 2022 (%)

Labour*:

26.3

Social Democratic Party:

30.3

Conservative:

20.4

Sweden Democrats (nationalist):

20.5

Centre*:

13.5

Moderate Party (liberalconservative)*:

19.1

Progress:

11.6

Left Party:

6.7

Socialist Left:

7.6

Centre Party:

6.7

Green:

3.9

Christian Democrats:*

5.3

Christian Democrats:

3.8

Green Party:

5.1

Reds (socialist):

4.7

Liberals:*

4.6

Liberals:

4.6

Other:

0.2

Main Officeholders

Main Officeholders

Prime Minister: Jonas Gahr Støre, Labour (2021)

Prime Minister: Ulf Kristersson, Moderate Party (2022)

Head of State: King Harald V (1991)

Head of State: King Carl XVI Gustaf (1973) * = in government January 2023

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T

he Scandinavian “middle way” first attracted international attention in the 1930s at the depths of the Great Depression, coinciding with an era when the fragile foundations of democracy were crumbling across Europe. Industrial capitalism based on “free markets,” as well as the still-shallow roots of political democracy, was threatened by a rising fascist tide on the Right and a brutal but, for many on the Left, attractive communist model in the Soviet Union. President Franklin D. Roosevelt’s 1933 perception of “a third of the nation, ill-clothed, ill-fed, and ill-housed” described most of the industrialized world. Out of this chaos came a unique welfare-state model in Denmark, Norway, and Sweden, offering a “middle way” between these extremes. It developed over time and out of an accumulation of experience. But if you have to pick a “birthday,” January 30, 1933, is our choice: Copenhagen was cold and foggy in its midwinter gloom. The political and economic situation was as bleak as the weather. Fully 40 percent of Danish wage earners—two out of five—were out of work in this gray third winter of the Great Depression. (Danmarks Statistik, 2009)

The Danish Employers Federation had announced that it would lock out all union members still working on February 1 to enforce its demand on the unions for a 20 percent wage reduction. Farm mortgage foreclosures, following a general collapse of agricultural prices, cast a long shadow in the countryside. The Danish Social Democratic prime minister, Thorvald Stauning—a former cigar worker who had led the government briefly in the 1920s and formed another government with the centerleft Radical Liberals in 1929 on the eve of the Depression—called an extraordinary Sunday-morning parliamentary session. The agenda was legislation to extend the national labor contract under which the unions worked, thus to stave off economic disaster. Behind closed doors, the government negotiated with the Agrarians and Radical Liberals to provide the necessary votes on the bill’s third reading the following day. When an acceptable compromise could not be reached, Prime Minister Stauning invited the negotiators home for what turned out to be a historic bargaining session. The agreement that emerged in the predawn hours of January 30 in Stauning’s modest apartment in a city-owned housing block on Kanslergade called for four major actions: 1.  An extension of the existing labor agreements without wage reductions 2.  A massive public works program to put the unemployed back to work and to provide winter relief for their families 3.  A devaluation of the currency to stimulate farm exports and agricultural price supports to stabilize farm incomes 4.  A fundamental restructuring of the Danish patchwork of social insurance and poverty relief measures into a comprehensive program The exhausted cabinet members and Agrarian Liberal Party leadership announced the agreement to parliament and struggled through Monday evening to finish putting the deal together. Without realizing it, these Danish politicians were founding what would become known as the Scandinavian middle way.

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This was, however, not the only portentous political event of January 30, 1933. South of the Danish border that same Monday, the German president, Paul von Hindenburg, facing the Weimar Republic’s collapse into economic depression and political extremism, summoned a controversial, untried party leader to form a new government. The recipient of von Hindenburg’s confidence was Adolf Hitler.

The Meaning of the Middle Way Hitler’s Third Reich engulfed Europe in flames during the next decade, but it finally collapsed under its own aggressive and self-destructive impulses. The hard-won Danish “Kanslergade Compromise,” by contrast, set the pattern for the modern Scandinavian welfare states that have far outlasted Nazism and Stalinist communism. As Western countries struggle with the protracted “Great Recession” after 2008 and the economic, political, and health issues of our own time, it is useful to recall these events. The Kanslergade Compromise called for wide-ranging state intervention to manage the market economy. The government became involved in setting wages and agricultural prices, establishing credit and exchange policy, and putting the unemployed back to work. It created a comprehensive economic security net for the unemployed and for all those out of the labor market. And as a compromise between Social Democrats, Radical Liberals, and Agrarians, it broadened and cemented the center of the political spectrum. In a way, events in Germany that day changed the very complexion of democratic politics in Scandinavia. Before Hitler’s assumption of power, the Scandinavian Social Democrats—by far the largest party in Denmark, Norway, and Sweden—could reasonably strive to win a majority on their own to enact a socialist program, with the political polarization that would ensue. In Finland, the Social Democrats had emerged from a civil war in a tie with the Agrarians for the largest percentage of the vote. But with Hitler’s rise to power in the Weimar Republic, the handwriting was on the wall: compromise among democratic parties was vital. As Hitler consolidated his power by crushing the German Social Democrats, the Communist Party, and the independent trade unions, in Sweden a new Social Democratic government quickly followed the Danish example by agreeing with center parties on minimum farm prices and a public works program to create jobs for the unemployed. The Norwegian Labor Party struck a similar deal with its Agrarian Party in 1935. A compromise across the dividing line between socialist and “bourgeois” parties was initially a kind of defeat for the Scandinavian socialist and Social Democratic parties because it postponed indefinitely the achievement of true socialism. But cooperation did solidify democratic politics in a situation that threatened the very existence of social democracy. Thereafter, Scandinavian compromise became much more than a tactic; it became a virtue in itself, because it solidified a broad national consensus around an inclusive democratic society. The Social Democratic welfare state, interventionist and protective of the people, became a surrogate for socialism. Its principle was to achieve redistribu-

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tion and broadly shared prosperity through compromises acceptable to the nonsocialist center parties. Moreover, compromise worked: state intervention in the collapsing market economy began to stabilize farm income, put the unemployed back to work, reduced conflict in the labor market, and offered hope to the Scandinavian peoples in despair over the Depression and the threat of German aggression. Over the ensuing decades, such compromises would become the hallmark of effective parliamentary democracy throughout much of Europe and beyond. Right and Left faced off despite the Nazi threat in countries such as France. But in Scandinavia, a “national democratic compromise” started building what Swedish Social Democratic Prime Minister Per Albin Hansson called “the people’s home”: a society that took care of all its citizens. This Scandinavian model—an interventionist state managing the market economy toward a combination of growth, full employment, and large-scale welfare programs supported by agreement between employers and unions—was widely followed subsequently in Western Europe. In fact, it was the precursor of the Western European “postwar Keynesian consensus” after World War II. In the 1930s, the US journalist Marquis Childs (Sweden: The Middle Way, 1936) dubbed the Scandinavian accord “the middle way,” meaning a middle or third way between “savage” capitalism—that is, the failed capitalism of the Depression era in the West—and Stalinist communism, the totalitarian regime then reigning in Russia. After World War II, the Scandinavian democracies continued to constitute a middle way in the Cold War ideological and geopolitical conflict, in both domestic and foreign policy terms. For many in the West (including the United States), the Scandinavian middle way was extremely attractive. THE NORDIC MODEL In domestic policy, Denmark, Finland, Norway, and Sweden built advanced capitalist market economies in which the state played both a regulatory and a redistributive role. While the details differ among the Scandinavian states, by the 1970s, a “Nordic Model” emerged. Its key points can be summarized as follows: 1.  An activist and interventionist state, relying mainly on regulation and transfer payments; it is a high tax/high benefit system (revenue and expenditure around 50% of GDP). 2.  It provides universal transfer payments to support the elderly, disabled, unemployed, and families with numerous children and low market incomes. 3.  It provides universal, mostly non-means-tested, social services for health and education, childcare, services for the elderly, and the like. 4.  It uses macroeconomic and educational policies to achieve high rates of labor-force participation and full employment on the national level. 5.  It integrates major interest groups in making and implementing national policies (rather than the capture of the state structure by a single group of interests, or state capture by interest organizations).

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6.  It possesses a strong civil society with encompassing and democratic organization of interests, but particularly the strong organizations of those otherwise weakest in capitalist society: family farmers and urban workers. 7.  It is underpinned by a set of values around empiricism and social trust; in particular, solidarity and reciprocal responsibility are crucial concepts in the development of public policy. During the Cold War, the Scandinavians sought a middle way in foreign policy as well. Although strong supporters of the United Nations, they quickly recognized its limitations. Efforts to fashion a Scandinavian defense union that would provide a viable military foundation for neutrality broke down in 1949, and on Scandinavia’s western fringes, Denmark, Norway, and Iceland joined the North Atlantic Treaty Organization (NATO), although they often seemed reluctant members. Finland, which had fought World War II on the German side, signed a separate peace agreement with the Soviet Union in 1944; its neutrality was guaranteed by treaty. Sweden continued to pursue a neutrality policy that had kept it out of war since 1815. Defense strategists wrote of a “Nordic balance,” in which Swedish neutrality between NATO in the West and the Soviet bloc in the East guaranteed Finnish neutrality and independence vis-à-vis the Soviet Union and permitted Denmark and Norway to pursue a strategy of lowering tensions on the northern flank of NATO by refusing to allow foreign troops or nuclear weapons on their territory. In international economic affairs, there was balance as well. Denmark reluctantly joined the European Community (now the European Union [EU]) when Britain did in 1973; the Norwegians, even more disinclined, voted narrowly against joining Europe. Sweden and Finland held that joining the European Community would compromise their neutrality. All four distinguished themselves by supporting international cooperation that reached across the dividing lines between East and West and between north and south. Finland developed differently between World War I and World War II, primarily because of the bitter civil war between the “Whites” and the “Reds” in 1917–1918 that the conservative Whites won. Yet in the post–World War II period, Finland came increasingly to resemble the rest of the Scandinavian area in the realm of domestic politics, as it caught up in terms of industrialization, welfare, and living standards. Even its peculiar international position gradually assumed a more Scandinavian “balance.” All this changed at the end of the 1980s. With the end of Soviet dominance of Eastern Europe and the collapse of the USSR itself in 1991, the Scandinavian countries found their middle way questioned anew. What was it a middle way between? The middle way that had served the Scandinavian countries so well domestically and internationally from the 1930s into the 1980s became confused amid economic crises and globalization, along with political discord at home. Sweden and Finland opted for EU membership and closer ties to Europe in 1995. The middle way’s extensive public services, high taxes, and state regulation of the market economy were challenged as well by international economic integration and the growing predominance of free-market thinking. New interest groups and social changes, including new roles for

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women, an aging population, and significant non-European immigration, challenged the consensus. Then came the economic turmoil of the global crisis. The rest of this chapter analyzes the rise and fall of the Scandinavian model in domestic politics, in European integration policy, and in foreign policy generally. A SOCIAL LABORATORY The Nordic countries are idiosyncratic in many ways. They are small in terms of population (see the data on this chapter’s opening page). With the exception of Iceland (which has 370,000 inhabitants), they are roughly comparable to medium-sized US states. When compared to other EU member states, they rank roughly in the middle. Denmark, Iceland, Norway, and Sweden share common roots ethnically, linguistically, and culturally; and Finland, despite its distinct ethnic and linguistic origins, shares a common Nordic history and religion with them. Until recently they were distinguished by remarkable internal ethnic, racial, religious, and linguistic homogeneity. This aspect of Scandinavian societies, more than any other, made the development of the solidaristic Scandinavian model possible. Until they began to receive a substantial flow of immigrants in the 1960s, more than 90 percent of the population of each country shared the same cultural, linguistic, and racial roots. About 95 percent of the population was Lutheran and belonged to the state church. As a consequence, politics and policy in all three countries focused for decades to a unique degree on economic and class issues rather than the religious, linguistic, and ethnic conflicts that often dominate other societies. However, two generations of immigration, much of it from non-European countries, has literally changed the face of the Nordic countries. Today, between 10 percent and 20 percent of the Scandinavian populations were born abroad. A similar number are second- or third-generation ethnically non-Scandinavian. For the first time in more than a century, “ethnic” and immigration issues have become a source of political conflict. Historically, Finland has been substantially more divided domestically than its Scandinavian neighbors. The legacy of Swedish settlement and rule until 1809 and of Russian rule from 1809 to 1917 left a significant Swedish-speaking population on the southwest coast of Finland and a small Russian Orthodox religious minority. Moreover, as mentioned, Finland was torn by a bitter civil war in 1917–1918 between the Reds and Whites. The former were radical socialists who sought to emulate Lenin’s Bolshevik Revolution; the latter were a coalition of primarily antiradical nationalists. The Finnish Whites, backed by German troops, won the war and interned their opponents in concentration camps for a number of years. Half a century later, the way Finns voted in national elections was still closely tied to which side of the civil war their grandfathers had fought on. Unlike Denmark, Norway, and Sweden—where the communists played a major role only immediately after World War I and World War II—the Finnish labor movement was split down the middle between communists and Social Democrats, by the civil war and its aftermath. This division prevented the Social

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Democratic dominance in Finland that Denmark, Norway, and Sweden witnessed in the 1930s. Geopolitical proximity to “big brother” Russia shaped the Finns’ national political agenda. Finland by itself fought a brave but doomed war against Russia in the winter of 1939–1940. Then, after Germany invaded the Soviet Union in June 1941, Finland reentered the war on the German side, exiting with a separate peace treaty in 1944. Russia held a major naval base on Finnish soil, covering the approaches to Helsinki until 1956. In the postwar period, the decline in the Swedish minority through assimilation and emigration to Sweden has diminished traditional ethnic and linguistic divisions, and memories of the Finnish civil war have faded. Migration into Finland has been much less than that seen in most Western European countries. And, of course, Finland’s dangerous situation vis-à-vis Russia changed dramatically with the Soviet Union’s collapse, but by the 2020s, many of those concerns returned. In the last forty years, Finnish politics has converged increasingly with the general Scandinavian Social Democratic model (Derry 1979; Hilson 2008; Nordstrom 2000).

Domestic Politics: How Different Is Scandinavia? Their location on the geographical fringe of Europe has meant that the Scandinavian countries have escaped some European developments entirely while lagging behind on others. Throughout most of the nineteenth century, the Scandinavians trailed Western Europe in both industrial and political development. Industrialization came late, beginning only in about 1855 in Denmark, 1890 in Sweden, and 1905 in Norway—a full century after England, Germany, Belgium, and France. Viewing nineteenthcentury European political development in terms of three central themes—constitutionalism, nationalism, and democracy—the Scandinavians lagged behind in all but the first, with Sweden’s strong state and well-established constitutional traditions and Norway’s 1814 Constitution remaining the oldest written European constitution still in force. Nationalism first became a major impulse in Denmark, following its confrontations with German nationalism along its southern boundary after 1848 and the loss of Denmark’s German duchies in 1864.1 Norway enjoyed a national cultural revival in the nineteenth century, and its confrontation with Sweden over full independence in 1905 sharpened national feelings in both countries. Political democracy (parliamentary supremacy) came even more slowly: in 1884 in Norway, 1901 in Denmark, and 1917 in Sweden and Finland. Late development in these spheres meant that the economic basis for liberalism developed late. The agrarian and labor movements, which began in Scandinavia as elsewhere in Europe in the latter half of the nineteenth century, swept through the countryside and the new industrial towns like a prairie fire. Organizing in a virtual vacuum, the “popular movements” of family farmers and industrial workers built their own economic and political organizations, which claimed the high ground of an egalitarian response to industrialization and political democracy. Thanks to the high literacy levels encouraged by Lutheranism and state educational policies in the

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eighteenth and early nineteenth centuries, the democratic popular movements were led from below, and the tie between the leaders and the led remains close even today.2 Even as the Scandinavians lagged behind Europe in many areas in the eighteenth and nineteenth centuries, they led in one: the strong state. The Swedes developed in the sixteenth and seventeenth centuries what was probably the most modern state in Europe in terms of its capacity to govern, and Swedish military prowess from the Thirty Years’ War through Charles XII’s misadventures in Russia reflected both the state’s strength and the success of state-sponsored development of military industries. By the time of the establishment of modern political organizations and democratic institutions in the last part of the nineteenth century, the Scandinavians had a wellestablished tradition of a strong state and a professional civil service. The Right saw the strong state as good in itself; the Left, as a tool for reform. These three factors—relative isolation, powerful popular movements, and a strong state—created the conditions for the Scandinavian middle way in the twentieth century. SOCIAL DEMOCRACY AND EUROPEAN DEVELOPMENT: SUCCESS, THEN CRISIS More than any other single factor, what set Scandinavian politics and policy apart was the predominant role played by the “popular movements”—farmers and labor—that represented the economically disenfranchised. In addition to the creation of the agrarian and labor parties, which came to be the great bearers of the democratic tradition, these movements created an immense economic and cultural infrastructure, including producer and consumer cooperatives, colleges, sports clubs, newspapers and publishing houses, theaters, and much else. Both agrarian and labor movements shared certain central values. These included egalitarianism, a belief in democracy, and a strong commitment to building their own institutions. Allied in the struggle for political democracy, farmers and workers had much that united them even when ideology—private property versus socialization of the means of production—divided them. It is not inconsequential that the Danish Social Democrats adopted land reform and support for small farmers as their agrarian policy in the 1890s, much to the chagrin of the more orthodox German Social Democrats who were otherwise the Danes’ mentors. This massive political organization preceded the establishment of parliamentary democracy everywhere except Norway, where it coincided with the democratic breakthrough. Because numbers had not counted previously in politics, the conservatives had never taken the trouble to organize. Consequently, they found themselves playing catch-up after the agrarian radicals’ and labor movement’s ideas had already won adherents from their tenants in the countryside and servants in the cities. Scandinavian popular movements were most remarkable in the degree to which they drew their leadership from the ranks of the movement itself rather than from the educated elite. The liberal agrarian parties were led predominantly by farmers, and the labor parties by workers—not lawyers, teachers, civil servants, or priests.3 This kept

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them honest. Government for the people works best when it is by the people and of the people. The combination of democracy from below—of leaders sprung from and tied to the organizations of those they lead—with relative ethnic and religious homogeneity, overarching agreement on basic values, and relatively small communities, offers powerful drivers for a cohesive, solidaristic welfare state based, as one turn-of-the-twentiethcentury trade union tract put it, on the principle of “reciprocal obligation or mutual responsibility.” Despite such advantages, nineteenth-century Scandinavia was a poor, classridden, and static region, as reflected in the waves of immigration to North America that also contributed to rapid social changes. Millions of Swedes and Norwegians, as well as many Danes and Finns, simply left for new opportunities. At first, this removed considerable political and economic pressure, but later it stimulated interest in social, economic, and political reforms even among national conservatives. Knowledge of better economic opportunities abroad and the success of democratic government in North America and later Britain encouraged domestic reformers in both the labor and agrarian movements. Nationalists recoiled at the loss of youthful and energetic citizens. Out of these conflicts emerged a civil society of the strongest sort. Citizens in the popular movements connected in a myriad of voluntary associations that mediated between them and the state and also provided direct economic, cultural, and social benefits. Organizing successfully around these associations, popular movements ultimately captured state power. In the last fifty years, the welfare, educational, and regulatory functions of the popular-movement organizations were transferred to public administration, and many of the social and cultural functions previously provided by the popular-movement organizations were taken over by local and national government and provided by public employees instead of movement members. This generalized those social services to all the people, but it removed them from control from below. It also left the popular movements—especially the Social Democratic labor movement—dependent on control of the state to achieve their objectives. The existence of a strong state and the tradition of an honest and professional civil service offered the mechanism for building a more egalitarian society. Principles of Keynesian economics advocating job-creating public programs were independently developed by Scandinavian economists during the Depression. Cautiously applied, they offered a route to use the state to improve the performance of capitalist market economies. The combination of the two provided the means to solve the classic problem of industrial capitalism—great and pervasive poverty amid great wealth—without revolution, by a lasting commitment to spread growth more equally than the existing distribution of wealth and income. That commitment lay at the core of the Kanslergade Compromise and the subsequent, similar national compromises in Norway and Sweden. It was driven forward politically by the Social Democrats with what proved to be a virtually unparalleled grasp on power in democratic elections. Within the lifetime of a single generation, this commitment transformed Scandinavia from a region of great poverty—characterized by the immigrants’ “flight to America”—into societies of widely shared affluence. The image of the “fortified poorhouse,” as the title of Zeth Höglund’s book characterized Sweden in 1913, gave way

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to Per Albin Hansson’s view of Sweden as the “people’s home” (Folkhemmet) in the 1930s, as class struggle gave way to national construction under Social Democratic–led government. By the 1960s, Sweden and Norway, which had been among the poorest European countries some fifty years earlier, were among the most affluent. The slums and poverty were gone. The Scandinavian success relied on the use of the state to achieve broad economic goals, and that rested on the assumption that the nation-state was the relevant unit for economic policy. That certainly was true following the collapse of the international trading system in the 1930s, which was anomalous given Scandinavia’s long global trading history. It was equally true in the reconstruction after World War II. But by the 1960s and 1970s, as growing national affluence transformed the lives of the working class, the Scandinavian countries once again became fully enmeshed in an interdependent global trading system. This development accelerated prosperity but brought vulnerability to the oil crises of the 1970s and the ever more invasive global business cycles after 1990 (Keohane and Nye 2012; Katzenstein 1985). To remain competitive, the Nordic states rapidly expanded their investments in research, technology, and, not least, postsecondary education. POLITICAL DEMOCRACY SCANDINAVIAN STYLE Denmark, Norway, and Sweden share a great deal in terms of political structures and political actors. Finland is different historically, but it has converged on the other three countries in the postwar period (Einhorn and Logue 2003, 2010; Petersson 1994). Much of what they have in common stems from their similarities in terms of cohesion, as discussed earlier. Some of it stems from their close ties in the Nordic Council and various European organizations, which facilitate the diffusion of political ideas. The Scandinavian labor movements and the Social Democratic parties have interacted especially closely over the years. All four countries are parliamentary democracies based on proportional representation. All are clearly democratic in the sense that regular competitive elections determine who holds political office and what policies are made. All are parliamentary systems in the sense that the legislative body is the most important branch of government. Denmark, Norway, and Sweden are pure parliamentary systems. The legislative majority selects the executive (the prime minister and the cabinet) and can force the executive out by a “vote of no confidence.” In both cases, parliament is the ultimate arbiter of the constitutionality of its own legislation, although a variety of checks are imposed on parliamentary abuses of power, as we will discuss in this chapter. Courts rarely review the constitutionality of parliamentary legislation, as the US Supreme Court does, but their membership in the EU or EAEU has injected substantial portions of EU law into national legal systems with increasing controversy. EU courts review national legislation and policies, and national courts enforce EU laws. Other international conventions such as the European Convention on Human Rights, with its court, can also affect national policies. Norway is unique in Europe, as its constitu-

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tion, dating back to 1814, prevents calling early elections, which is otherwise a standard characteristic of parliamentary government. Finland has a mixed presidential-parliamentary form of government, not unlike that of France in the Fifth Republic. The president, who heads the executive branch, is directly elected by a popular vote (prior to 1994, Finnish law provided for indirect election) for a six-year term. The president directs foreign policy, commands the armed forces, and can dissolve parliament. A new constitution entered into force in 2000, clarifying and strengthening the primacy of the prime minister and the cabinet, which are selected by parliament. Together, the executive cabinet, led by the prime minister, and parliament share primary responsibility for domestic and EU affairs. Parliament can force the cabinet from office by a vote of no confidence. In practice, this division has made the prime minister the most important actor of the executive branch in terms of policymaking, but there certainly were times during the Cold War when the president’s role overshadowed that of the prime minister. There is no national judicial review of the constitutionality of legislation, but, again, national courts frequently enforce the supremacy of EU law. Despite the multiparty system—today, seven to ten or more parties are represented in the national parliaments—and the rarity of single-party majorities, the Scandinavians have had stable and effective governments because they practice what Dankwart Rustow (1955) called “the politics of compromise” in his 1955 classic study of that name. Scandinavian government is coalition government, sometimes through multiparty governments and at other times through bargains worked out in parliament between a minority government and other parties whose agreement has been attained on an issue-by-issue basis. Although Denmark and Sweden maintained an upper house of parliament until 1953 and 1970, respectively, all four now elect a unicameral—single-house—parliament. Until 2009, the Norwegian parliament (Stortinget) divided into two bodies to consider certain types of legislation, but now all proceedings take place in a single chamber. In all parliaments, much of the detailed legislative and oversight work and most of the necessary multiparty compromises are worked out in standing committees. There are usually parliamentary committees for each governmental ministry, plus some with special competency (constitutional affairs or relations with the EU). Parties are represented on committees in proportion to their overall strength, but coalitions are usually required for any significant actions. Many committee proceedings are closed, precisely to encourage interparty compromises, but public hearings have become more common. Thanks to the internet and TV, parliamentary processes now enjoy much greater media coverage. Like the famous 1933 Kanslersgade agreement discussed above, parties constituting a coalition government or supporting a minority government announce a set of principles and policy priorities upon taking office or initiating major reforms. In all four countries, a proportional representation system is used for electing parliament as well as local councils. Thus all parties of significant size are represented in parliament with approximately the same proportion of seats as they have support among voters. Although proportional representation was introduced in an existing multiparty system and stabilized it for a number of decades, as new lines of division—including those over the EU, the environment, and immigration—have come

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to the fore in recent years, this election system has permitted growing fragmentation in parliament. Denmark, Norway, and Sweden remain constitutional monarchies. Scandinavian monarchs took office within constitutional limits (Karl Johan in Sweden in 1809 and Norway in 1815; and Haakon VII in Norway in 1905) or accepted these limits with relative grace (Frederik VII in Denmark in 1849). They proved more resistant to yielding the power to choose the prime minister to the elected parliamentary majority (1884 in Norway, 1901 in Denmark, and 1917 in Sweden), but here, too, they bowed to the winds of change. Although their governmental power is virtually nil today, the Scandinavian monarchs remain important symbols of national unity, above the lines of party or division by interest. In times of crisis, their symbolic role has had real political significance. In Finland, the president has the symbolic role played by the monarchs, as well as a more practical role in foreign policy. Although elected with a partisan affiliation, the Finnish president stands above party lines while in office. For more than fifty years (1939–1991), the presidents assumed a special role in managing relations with the Soviet Union. This also enhanced presidential internal political powers. All four countries have unitary, rather than federal, governments in the sense that all sovereignty resides in the national government, and the powers of the provinces and other subunits of government are derived from the national government. However, Finland provides far-reaching local autonomy for the Swedish-speaking Åland Islands, and Denmark provides even greater autonomy for Greenland and the Faeroe Islands, which have been granted the status of near independence. The Faeroes never joined the European Community, and Greenland, which acquired autonomy in 1979, quickly used its independence to withdraw from the European Community. In the past decade, both have grown increasingly impatient with their ties to Denmark, but with no substitute in sight for the large budgetary subsidies that are sent from Copenhagen, the status quo will continue for a while longer. Although power is clearly concentrated in the hands of the national government, many governmental services have been delegated to municipal and county government. Thus most social services, including education, medical care, hospitals, and services for children, families, and the elderly, are provided by municipalities. Indeed, a higher proportion of governmental spending occurs at the local level in Scandinavia than at the state and local levels in the United States. Thus, within unitary states, the Scandinavians have thoroughly decentralized the provision of governmental services. In order to make this decentralization effective, Denmark, Norway, and Sweden undertook similar consolidations of local government in the late 1960s and early 1970s. The consequence was to cut the number of local governments by half in Norway, three-fourths in Sweden, and four-fifths in Denmark. Denmark further consolidated local and regional government in 2007. In Finland, a similar consolidation was blocked, and the number of local administrations was reduced only by about one-sixth in this period. Generally speaking, these reforms were successful in establishing the capacity to expand social services in smaller towns and rural areas, but they undercut the relationship between citizens and their government in rural districts. Although access to elected officials remains high in Scandinavia by comparison to most other democracies, it is much diminished in comparison to the past.

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Local and regional governments enjoy substantial taxing powers, but their dependence on budgetary transfers from the central government and the standardization of social, educational, and other local services have constrained their autonomy. In Denmark, for example, fourteen counties were consolidated into five “regions,” with responsibility primarily limited to health care, but a similar proposal in Norway was withdrawn. One striking aspect of Scandinavian politics is the degree to which government and the civil service are seen as national resources. This is a result of a convergence of causes. Scandinavian conservatives have traditionally supported a strong state as an instrument of national development. Popular movements, including especially the Social Democratic labor movement, have seen the government as a mechanism for extending their egalitarian goals to the entire society. Significant antigovernment or antistate movements have always been few. Despite some libertarians on the Right and anarchists on the Left, the distrust of government seen across the political spectrum in the United States has generally been absent in Scandinavia. Furthermore, Scandinavian public administration generally has been deserving of citizen respect: its bureaucrats have been professional, efficient, and honest. However, that popular belief in the benevolence of public administration does not extend to the transnational public policy dimension. The EU’s multitudinous rules and regulations frequently strike most Scandinavians as downright arcane. For example, the EU promulgated measures regulating the size of strawberries and the curvature of cucumbers shortly before the 1992 Danish referendum on the Maastricht Treaty; an effort to harmonize the dimensions of condoms, however, foundered on Italian opposition. One acerbic Danish placard during this referendum put it succinctly: “If you think there are already enough idiots running your life, vote no!” As EU regulations become targets for public ridicule and additional policy responsibilities shift from national capitals to distant EU institutions, the problem of the “democratic deficit” will become more acute. POLITICAL ACTORS Scandinavian democracy historically has been based on strong, disciplined massmembership parties which organize hundreds of thousands of voters as dues-paying party members. Parties had structured political competition at the local as well as the national levels. They provided channels for recruiting political leaders; the career pattern was to start by running for the local municipal council. Municipal office or parliament followed for those who proved themselves. Regular local party meetings ensured close contacts between the elected officials and their party constituency. Because the parties offered different policy choices in the election campaigns, they allowed citizens a means to control not just the people in government but also the policies of government. Problematic for democratic participation has been an accelerating decline in party memberships. Social Democratic parties, which no longer automatically enroll union members, account for much of this decline, but all traditional parties have been hit.

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The parties have been complemented by equally strong interest groups that organize workers, farmers, and employers. These groups, which we will look at, have typically been closely linked to individual parties. The unions have traditionally been Social Democratic (except in Finland, where they were hotly contested by the Communists), the farmer organizations have been the mainstays of the agrarian parties, and the employers have typically had a looser association with the Conservatives. Unlike many Western countries, Scandinavian labor unions have maintained their remarkably high memberships (often over 70% of blue- and white-collar employees). While most are rather passive members, organized labor remains a strong political actor. Women became full voting citizens in Scandinavia just over a century ago. In recent decades, their political roles have dramatically expanded. Women now constitute nearly half of all elected officials, including cabinet ministers, mayors, and others. In the past decade, four out of the five Nordic prime ministers have been women. PARTIES AND PARTY SYSTEMS From the origins of parliamentary democracy at the turn of the twentieth century to the 1970s, the predominant pattern in all four countries was the five- or six-party system. On the Right was the Conservative Party, which had been late to organize a mass base because it had wielded the levers of power on behalf of the elites and propertied classes before the democratic breakthrough. In the center were the nineteenth-century proponents of democracy: the Liberals and the Agrarians. To the left of center were the Social Democrats, their junior allies in the nineteenth-century push for democracy. The Social Democrats outgrew the coalition by the mid-1920s and typically polled about 40 to 45 percent of the vote from the 1930s through the 1970s. On the extreme Left were the radical socialists—Communists from the 1920s through the late 1950s—and the Socialist People’s Parties, which displaced the Communists in the late 1950s and early 1960s in Denmark and Norway. The remaining communists in Sweden and Finland became increasingly independent of the Soviet Union after 1960 and evolved into “radical socialist” parties by the 1980s. Environmentalism and cultural radicalism increasingly characterized the left wing in place of collective ownership of industry. There were also some variants on this general theme, especially in the center of the political spectrum. The accommodating proportional representation system allowed small parties to gain parliamentary seats on issues such as prohibition, land taxation, and cultural distinctions. The Finns had a Swedish People’s Party to represent the Swedishspeaking minority. The Norwegians supported a strong Christian People’s Party, which was culturally and religiously conservative but centrist in economic terms. It gradually grew into a major force in Norwegian politics. Over the past forty years, similar parties have appeared in the other Nordic countries, but ascendant secularism has significantly reduced their strength. Since the 1920s, voters have been roughly split between the parties of the Right and center (the “bourgeois parties”), on the one hand, and the Left (the “labor” or “socialist” parties), on the other. Until recently, those with bourgeois leanings divided their votes among three or four parties of approximately equal size, while the

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Social Democrats typically captured the lion’s share of the labor vote—40 to 45 percent of the total—with the Communists/Socialist People’s Party getting 5 to 10 percent. Numerically, this gave the Social Democrats an obvious edge. Furthermore, because of the deep historical division during the struggle for parliamentary democracy between the Conservatives, on the one hand, and the Agrarians and Liberals, on the other, through the 1930s, the Social Democrats were able to form coalitions with the parties of the center once they put state socialism on the back burner after 1933. Thus the Social Democrats achieved a degree of hegemony in Denmark, Norway, and Sweden that was unparalleled in democratic elections. Social Democrats led the government of Denmark from 1929 to 1968, with only two breaks totaling four years (and two more during the German occupation); of Norway from 1935 to 1965, with a break of two weeks in 1963 and of five years during the German occupation; and of Sweden from 1932 to 1976, with a break of only a couple of months in the summer of 1936. They were able to use these extraordinary periods in government to reshape society by building an exceptionally strong public sector. Finland constituted something of an exception. The Finnish labor vote (and trade unions as well) was roughly evenly split between the Communist Party and the Social Democrats, and they were direct political competitors. Consequently, the fulcrum of Finnish party politics was in the center, especially with the well-led agrarian Center Party. After 1960, the Communist-led electoral alliance vote declined, and it has taken a course similar to that of the radical socialists in the other countries and has been integrated into the parliamentary give-and-take. The culmination of this period of Social Democratic construction of the Scandinavian welfare state was the reforms of the late 1960s and early 1970s, which expanded social services into rural areas and raised income replacement rates for the unemployed, sick, injured, and disabled from 40 to 50 percent of their market income to 70 to 90 percent of the average wage. These reforms came on line just about the time when the oil price shock of 1973–1974 set off a period of economic adjustment and economic globalization throughout the West. Social Democratic ideas and their carefully constructed tools of public economic management, as we will discuss, offered fewer answers in a global economy. This relatively stable party system changed dramatically in the 1970s and 1980s. New protest parties arose on the Right in protest against high taxes, growing immigrant populations, and the fact that the bourgeois parties that finally took governmental power in the late 1960s and 1970s administered the Social Democratic system rather than abolishing it; these were the so-called Progress Parties in Denmark and Norway and the short-lived New Democracy Party and later the Sweden Democrats in Sweden. Finland had somewhat similar but until recently weaker protest parties, including the Rural Party (now known as the “True Finns”). There was further subdivision in the center. Denmark saw the development of a Christian People’s Party and a Center Democrat split from the right wing of the Social Democrats, but both declined in the 1990s. In Sweden, the Christian Democrats also broke into parliament. Environmentalist parties won seats in both Sweden and Finland, and the Danes and Norwegians both sent a few members to parliament from groups to the left of the Socialist People’s Parties.

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The consequence was that the relatively stable five- or six-party model of the 1920–1970 period has given way to an eight- to ten-party model in which several center parties and a protest party on the Right seem to be a permanent part of the parliamentary constellation today. The Scandinavian Christian Democrats have more of a “Sermon on the Mount” orientation than the rightist orientation of US fundamentalists. Although socially conservative (especially on the issues of abortion, drugs, pornography, and alcohol), they are strong supporters of the welfare state, foreign aid, and restrained materialism. They show a remarkable streak of religious tolerance as well: although Christian Democratic voters are overwhelmingly devout, evangelical Lutherans, the Danish party was led for some years by a Catholic, and the Swedish party included a prominent immigrant Jewish physician among its leaders and members of parliament. (They have not, however, taken ecumenicalism to the point of inclusion of Muslims.) Consequently, they have accommodated themselves easily to the give-and-take of parliamentary compromise. The protest parties of the populist Right have been less accommodating, and they were initially kept outside the patterns of parliamentary coalitions. Driven originally by opposition to taxes and bureaucracy, they have in recent years become increasingly strident in their opposition to immigrants, particularly those racially or culturally distinguishable, such as Africans, Asians, and Muslims. For a long time, they were “heard” but not “listened to.” This began to change in the late 1990s, as their electoral advances made them too large to be ignored. Nonsocialist governments in Norway and most recently in Denmark have counted on parliamentary votes from the “New Right.” In local government, the pattern is similar; once radical parties draw 10 percent to 20 percent of the vote, their political influence grows. The rise of the Sweden Democrats and the True Finns since 2000 continues the trend. All of these parties are “populist-nationalist” on immigration, cultural, and European issues but are strong supporters of the Nordic welfare states. Although the division of the voters between the blocs long remained relatively even, there has been an increasing tilt to the right, especially when the rightist protest parties gained a growing share of working-class votes. Further, the Social Democrats were weakened by seepage of voters to their left, especially over the issue of European Community membership in the 1970s in Denmark and Norway and EU membership in 1994 in Sweden. The cumulative loss of Social Democratic votes since the 1980s has been five to twenty percentage points compared to the 1940s–1970s; even with proportional representation, this produces a significant shift in the parliamentary balance. The half century of Social Democratic hegemony that began during the 1930s Depression has ended. However, despite increased party fragmentation, the loss of part of their voting base, and a certain poverty of ideas, the Social Democrats remained the largest party in parliament in Denmark (until 2001), Norway, and Sweden. The Finnish Social Democrats have also been the largest parliamentary party for most of the post-1945 period. The Social Democrats have ceased to be the normal party of government, but they are perfectly capable of savaging governments of the Right that try to cut the welfare state. Just as the nonsocialist parties have largely accepted the universal welfare state, Social Democrats have followed many neoliberal (free market) doctrines over the

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past quarter century, not always to their advantage. Likewise, they have become more restrictive of non-European immigration. One of the major consequences of the fragmented party system and declining Social Democratic hegemony has been the growing prevalence of minority cabinets. If we split the post–World War II period at the 1972 mark—the Danish and Norwegian European Community referenda—the Danes managed majority governments for 25 percent of the period prior to 1972 and 2 percent of the period since. The Norwegians had majority governments for 80 percent of the pre-1972 period and 18 percent of the period since. The Swedes mustered majority governments for 40 percent of the first period and only 13 percent of the most recent period. Finland remains committed to broad majority coalitions, which have accounted for nearly all its governments over the past thirty years. While one might think that this would produce political paralysis, the governments seem to function about as effectively as in the past. There are three reasons for this. The first is the value, already discussed, placed on compromise, which makes minority government much less frustrating than it otherwise would be. The second is that various “radical” and “protest” parties on the political Left and, more tentatively, on the Right have become substantially less radical and more interested in participating in shaping legislation through compromise; Social Democratic minority governments can turn to their left as well as to the center for votes, while nonsocialists mainly look to their right. The third is that, by and large, Scandinavian governments of the last twenty years have only undertaken major domestic reforms with broad parliamentary support extending well beyond the governing coalition. INTEREST GROUPS The Scandinavian countries are the most thoroughly organized in the world. Practically everybody belongs to an economic interest organization. Manufacturers, shopkeepers, renters, farmers, workers, and students are all organized. Around two-thirds of all wage and salaried workers are union members, and farmer and employer organizational percentages are equally impressive.4 Schoolchildren, university students, priests, and military personnel each have their usually well-ordered group. As this list suggests, Scandinavian interest organizations are divided primarily along economic lines. This mirrors the lines of political division in these societies. Moreover, the larger of the interest organizations, including both the trade union federation and the employers’ organization, are sufficiently inclusive that they have to take broader societal interests into consideration. Furthermore, until the 1980s, they were highly centralized: labor agreements were negotiated nationally between the national employers’ organization and the national trade union organization. Recently, collective bargaining has been decentralized by economic sector (e.g., the metal industry and public sector employees). In practice, unions and employers keep a close eye across the labor market, and contract provisions tend to move across it in similar directions. Thus areas of conflict and cooperation spread across the economy and have immediate societal consequences.

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As a result, the Scandinavian countries remain models of a peculiar kind of Social Democratic corporatism, in which interest organizations as a matter of course are integrated in making and implementing public policy. Some prefer to call the process “the negotiated economy.” Interest organizations have highly professional staff and are constantly involved in governmental commissions for designing policy, including the Swedish “remiss” system of formal consultation on major initiatives with all relevant interest organizations. It remains a process of interest representation very different from Washington lobbying, but such consultations have declined over the past two decades and informal lobbying has increased. Governments are now more inclined to take initiatives without corporatist negotiation. Terms like “spin” (media relations) and “spin doctors” (media consultants) are now part of daily Scandinavian politics. Not only are Scandinavian interest organizations involved in drafting policy but they also implement it. Consider the national labor agreement, for example, in the years that a single overarching national contract for the private sector is negotiated: the unions and the employers, with the government as a third party, hammer out the contract, since the contract essentially determines wage formation for the period. The primary aim of the government, in terms of management of the economy, is to ensure that wage increases are noninflationary. The practice of corporatism is eased by the small scale of the national political class in the Scandinavian countries. One faces the same people across the table. Working together becomes second nature. Economic globalization, neoliberalism, and perhaps European integration have created stress for this cozy but flexible structure. Structural economic changes, the relative decline of the industrial sector, and the rise in small enterprises also challenge the Scandinavian corporatist model. However, the current international interest in the Scandinavian “flexicurity” (flexible labor markets, active public retraining, and generous social security systems) shows that corporatism has not been static. RESTRAINING THE GOVERNORS The concentration of power in unicameral parliaments and the presence of strong, disciplined parties not only permit effective and responsive policymaking but also raise the specter of majority tyranny. What prevents a unified parliamentary majority from running roughshod over all opposition? What prevents systematic abuses of citizen rights? In the United States, the system of government has been carefully designed to avert majority tyranny by the division of powers between the three branches of government—legislative, executive, and judicial—and between the federal and state governments. The court system is engaged in a continual review of governmental acts. The Scandinavians do not have those mechanical checks and balances built into their government institutions. They have developed a different set of checks on abuse of power and majority tyranny. First, the ombudsman—a Scandinavian concept that has entered the English language and US practice—serves as a standing, independent check on abuses of executive power. This position was created in the Swedish Constitution of 1809 as a parliamentary restraint on abuse of royal executive power; today, it serves as a

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more general check on abuses throughout the executive branch. The Swedish ombudsman is elected by parliament for a four-year term and is empowered both to respond to formal citizen complaints and to initiate investigations on, for example, the basis of press reports. In recent years, the Swedish ombudsman has handled about three thousand cases a year; about 90 percent are citizen initiated. Less prominent but even older is the institution of the chancellor of justice (Justitiekanslern), created in 1713 by King Charles XII. Criticism from these agencies have occasionally forced ministers to resign. The modern media are also watchdogs: many investigations are in response to news reports. The Finns added an ombudsman and chancellor of justice, based on the Swedish model, in 1919 at the birth of the republic. The Danes added a parliamentary ombudsman in the Constitution of 1953, and the Norwegians established a similar office in 1962, as did Iceland in 1988. The formal powers of ombudsmen are amplified by a strong tradition of parliamentary inquiry (both questions to the government and committee hearings) and investigative journalism. Second, voter referenda have increasingly checked parliamentary majorities. This is most formalized in Denmark, which has held twenty-one referenda since 1915; Denmark is second only to Switzerland in direct citizen votes on key legislation, but there are no “initiatives” (citizen-proposed legislation). All constitutional changes go to a citizen vote (after having been approved by two sessions of parliament with an intervening election), any legislation except finance and tax measures can be sent to a vote by one-third of parliament, and any surrender of national sovereignty can be sent to a vote by one-sixth of parliament. Such provisions strengthen the hands of the minority vis-à-vis the majority, but they have been used only once, in 1963. While Finland and Norway lack a constitutional sanction for binding referenda (and Sweden limits it to constitutional changes), governments have always abided by voter decision except in the case of the Swedish referendum concerning which side of the road they should drive on (in 1955, despite the government’s recommendation and common sense, Swedes voted to continue driving on the left; in 1967, the government shifted without a referendum). Increasingly, highly divisive issues such as nuclear power (Sweden, 1980); European Community and EU membership (Denmark, 1972; Norway, 1972 and 1994; and Sweden and Finland, 1994); and further EU integration (Denmark, 1986, 1992, 1993, 1998, 2000, 2014, 2015, and 2022; and Sweden, 2003) have been decided by the people directly. Third, two aspects of Scandinavian political culture tend to check parliamentary majorities. One is that facts count in Scandinavian politics. The policy debate, in both the media and the parliament, is couched in empirical terms. Demagoguery discredits the user, except, possibly, on the immigration issue. The other is that a value is placed on broader compromise. All recent governments have been formal or informal coalitions. Moreover, parties involved in compromises will not reverse the policy when they are in government. But another part is the concept that legislation passed by narrow majorities is less legitimate than that passed by broad majorities. Thus there is a tendency to seek broader majorities than are necessary simply to pass legislation. Finally, as mentioned earlier, Scandinavian corporatism provides an open door in policymaking. Major legislative initiatives are generally preceded by governmental

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commissions that involve not only the political parties but also all the relevant interest groups. Trade unions, employers, and farmers’ organizations are involved in practically all of these, and more specialized interest organizations take part in commissions in their spheres of interest. Such political transparency is reinforced by an active and diverse media and is supplemented nowadays by the internet. If, however, Scandinavian corporatism continues to recede, for example, in response to EU directives, these democratic safeguards will weaken.

The Welfare State and Economic Stability The Scandinavian responses to the economic crises of the 1930s marked a sea change in the role of the state. The old “night watchman state” provided national defense, justice, police protection, roads, and elementary education. The new “welfare state” was to regulate the market economy to ensure full employment and growth and to provide social and economic security for those out of the labor market because of old age, sickness, unemployment, and disability and for families whose market income was small and number of children large (Einhorn and Logue 2003, chapters 6–10). This is what political scientists have come to call the “postwar consensus,” but in Scandinavia it started before World War II, driven primarily by the predominant popular movements with more of an egalitarian perspective. Scandinavian welfare states, like those in Europe generally, are not for the poor alone. They are a method of providing universal social services and economic security for the middle class as well as the working class and the marginalized poor. Despite the recent increases in using private providers, practically all social welfare expenses are in the public sector. This includes family allowances, day care and after-school care, unemployment, health care, maternity and sick pay, pensions, disability, housing subsidies, and social assistance. In the United States, by contrast, a number of these, including medical and dental care, maternity and sick pay, and the bulk of our pensions, are handled privately through employers. Unlike the US provision of these services, which varies tremendously between occupational groups and among employers, Scandinavians universally receive about the same benefits. (See box 5.1.) In the postwar period, Scandinavian governments worked to achieve broadly shared affluence by two mechanisms. First, they sought to manage the economy to limit cyclical unemployment and to bring up the standards of the worst off in the labor market by channeling capital investment and labor from the least efficient firms to the most efficient firms. The trade unions’ “solidaristic wage policy” was the most effective mechanism for this purpose. Over time, it raised the wages of the unskilled relative to the skilled and of women relative to men at the same time as it increased the overall efficiency of the economy. Second, they sought to spread the dividends of economic growth more equitably than the existing market system distributed income and wealth. Those outside the labor market or in low-income groups gained, but no one lost absolutely. As a result, the policy enjoyed widespread political support, and social expenditures expanded rapidly.

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Box 5.1  Why Do the Scandinavian Welfare States Survive? One mystery to Americans is how political support for the Scandinavian welfare states survives when ordinary working people have to pay 50 to 60 percent of their earnings in income and other taxes. When their taxes come due, why don’t they rise up in anger and overthrow the government? After all, American taxpayers have rebelled at far lower rates. The answer is, first, that the Scandinavian welfare states rest on the principle of solidarity. By contrast, welfare programs in the United States rest on the principle of social insurance (e.g., Social Security, Medicare, workers’ compensation, and unemployment insurance) or altruism (charity to the poor). The limit of social insurance is that we agree to insure ourselves against only those risks that we cannot afford, and altruism is even more circumscribed, limited to keeping the bodies and souls of the poor together. But solidarity—defined as “reciprocal responsibility and mutual obligation”—has permitted the Scandinavians to build far more elaborate structures of mutual support on a consensual basis. Second, Scandinavian welfare measures are generally universal in scope, rather than means tested. Thus both transfer payments (such as pensions, sick pay, maternity pay, and family allowances) and social services (such as medical and dental care, home assistance for the elderly, free education through college, and day care and after-school care for children) are available to everyone in the category, whether they are poor, working class, or middle class. Transfer payments are usually taxed, so that wealthier recipients keep a smaller share than the truly needy. Fees for some social services, such as day care, also rise with income. But generally speaking, everyone is in the same system and receives the same benefits. Every year, almost every family receives some benefits. As a witty phrase describes the situation, “The richest 90 percent help support the poorest 90 percent.” Such universal programs are costly. Scandinavian public spending on social security transfer payments is often higher than elsewhere in Europe and much higher than in the United States. Rising take-up rates for social services such as day care and after-school care have continued to push up social welfare spending despite the financial constraints on public sector spending. More disturbing, the self-restraint of the older generation about utilizing the welfare net is giving way to a culture of “entitlement” among the younger generation. Thus, in Denmark, for example, statistics indicate that the young are sicker than the old, even taking into account legitimate reasons, such as taking care of ill children. Sweden, one of the healthiest nations in the world, had more people on sick leave than most wealthy countries until recent reforms. Still, universal public provision of social services generally provides a higher standard and is cheaper than provision through employer-funded, private insurance schemes. The classic case is medical care, which is both far more costly (by about 70%) in the United States as a proportion of gross domestic product and less adequately distributed than in Scandinavia. Consequently, the Scandinavian countries’ health statistics (infant mortality, life span, etc.) beat the United States by a wide margin. Likewise, the “top 1 percent” in Scandinavia earn three or four times the median income and not ten or more times, as in the United States. Typical middle-class living standards are very similar to the American level, while low-income groups in Scandinavia have a substantially higher living standard than in the United States: after-tax, after-benefit poverty rates in Scandinavia are only about a quarter of the American rate. Everyone pays, but everyone also benefits. Source: Accounting definitions make exact comparison difficult. Overall social expenditures in Germany, Belgium, and the Netherlands are roughly comparable to those in Scandinavia, with France not far behind. In the United States, private health and social expenditures (often as “fringe benefits”) are much higher than in Western Europe. See William Adema and Maxime Ladaique, “How Expensive Is the Welfare State? Gross and Net Indicators in the OECD Social Expenditure Database (SOCX),” OECD Social, Employment and Migration Working Papers, no. 92 (Paris: OECD, 2009).

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Between 1960 and 1974, social spending as a share of GDP nearly doubled in the Scandinavian countries. The growth really was a product of substantial improvements in the social security net that included raising income replacement ratios for the unemployed and the disabled, raising pension levels, and expanding some social services from urban areas to include rural areas. With unemployment at a minimal 2 percent level, it cost little to raise the income replacement ratio to 80 percent or even 90 percent of market wages. All this occurred during a period of prolonged economic growth and, generally speaking, shared the affluence of those in the labor market with those outside and those in the labor market who had low-income families and numerous children. By contrast, the decades after 1974 were characterized by the two oil crises, the unpredicted combination of economic stagnation and inflation (“stagflation”), recurring financial crises, and the new challenges of globalization in Scandinavia as in most Western economies. In Denmark, new social expenditures from the end of the good years finished coming on line, and there was also a rapid expansion of countercyclical social expenditures because of the bad times that saw unemployment rise from the frictional level of about 2 percent to 8 percent. Sweden continued to grow the national economy and hold down unemployment by expanding the public sector; this kept unemployment at 3 percent and restrained social spending for countercyclical programs, but it pushed some economic problems forward. Norway, blessed with North Sea oil, initially escaped the hard times. Finland’s economy benefited from continuing modernization and substantial trade with Soviet Russia and other Eastern European states until 1990. Rising social expenditures in a low-growth economy began to squeeze the tax base, private consumption, and capital investment. Increasingly since the 1970s, the Scandinavian countries have struggled with maintaining economic balance. Generous unemployment benefits protected living standards when the economy turned bad, but how long can you sustain using 4 percent to 5 percent of GDP for that purpose? Denmark did so for two decades (1975–1995), but the cost forced unemployment policy reforms that, like Sweden’s long-standing policy, emphasized “activation”—emergency employment or training—rather than passive support. Rising income tax levels yielded increasing tax avoidance strategies until tax reform broadened the tax base by reducing deductions and bringing down marginal rates in the 1980s and early 1990s. All Scandinavians except the oil-rich Norwegians repeatedly sought to trim welfare programs at the margins. But despite their best efforts to hold down costs, the secular trends pushing costs up, combined with growth in unemployment (particularly long-term unemployment), continued to push spending and taxes up. Governmental expenditures rose roughly 15 percent of GDP between 1974 and 1996 in all Nordic countries except Norway (unchanged thanks to petroleum-fueled prosperity). Structural economic changes finally reversed this negative trend after 1995, and social expenditures declined as unemployment fell and economic growth accelerated until the onset of the global economic crisis in 2008. A decade later, recovery was well underway when the coronavirus pandemic and renewed international economic turmoil threatened. The Scandinavian states once again face the challenge of effective adjustment to the global economy. While the welfare state was being constructed—from the 1930s through the early 1970s—increased expenditures were closely correlated with real gains in living standards. Unemployment compensation was enhanced, maternity and paternity leaves

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were introduced, pensions went up, housing was improved, day-care centers were built, and so on. In recent years, however, expenditures have continued to rise without such clear improvements in general welfare. Shortages and waiting lists for services and facilities have also become common. Today, the cost of social programs is being pushed up in Scandinavia by three other forces: demography, technology, and rising take-up rates. Aging populations— Scandinavians top the list internationally in terms of life expectancy—require longer pensions and more services. To deal with the former, national pension-funding reforms have raised pension savings and cut unfunded liabilities. The latter is more troublesome. Improved (and expensive) medical technology continues to drive the costs of the health-care system higher; despite the comprehensive and efficient national health systems in the four countries, a health-care cost crisis looms. Obtaining qualified medical professionals is also a challenge. And take-up rates for social programs have continued to rise among the young, who shape their behavior to conform to the mold of the social-benefit system. The result is that increasing expenditures do not necessarily increase welfare. Medical technology certainly extends life, but many of the costs of that new technology are incurred in the last few months of life, when the quality of life is low. The costs of Scandinavian social programs burden national economic competitiveness, but strong public sectors can also be a competitive advantage. Global capital mobility means that investment in high-wage areas, such as the Nordic countries, will lag unless productivity (and applied research), or currency devaluations, maintain competitiveness. Fortunately, innovative firms, rising education levels and labor force skills, and cost containment in both the public and private sectors have been successful over the past decade. Some Scandinavian policies, such as the active labor market policy and the solidaristic wage policy, address the competitiveness issue directly. Others, such as national health insurance, spread medical costs generally across society, rather than burdening particular employers.5 The economic protections provided to families through the social welfare system encourage employees to accept technological innovation. The term “flexicurity”—a flexible economy resting on a secure social security system—still describes twenty-first-century Scandinavia. A different—and troubling—issue in Scandinavia is the rapid increase in a noticeable immigrant population. Today, about 14 percent to 20 percent of the population of Denmark, Norway, and Sweden are of foreign origin, about one-third non-Western. In Finland, the figure is 8 percent of the population.6 They and their immediate descendants are now citizens, but integration into the social mainstream has been very uneven. Non-Western immigrants make up a substantial share (30% to 40%) of the population of some large cities. To a considerable extent, support for the solidaristic social welfare system rested on the fact that those who benefited and those who paid were very similar. They spoke the same language, worshipped in the same church (at least at Christmas), shared the same culture, and looked very much alike. Under these circumstances, solidarity was easy. It is far from clear that the same solidarity will pertain as immigrant populations grow. Successful integration of non-Western European immigrants has so far challenged the Nordic countries. The result has been higher social costs and the rise of explicitly anti-immigration parties throughout Scandinavia. (See box 5.2.)

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Box 5.2  Cartoons and Immigrants: No Laughing Matter Early in 2006, Denmark faced one of its worst foreign policy crises since World War II. The country’s largest newspaper, the liberal Jyllands-Posten, published the previous September a dozen caricatures of the Prophet Muhammad or other drawings about contemporary Danish perceptions of Islam. For some religious Muslims, any portrayal of their holiest prophet is sacrilegious, and the humorous, derogatory, or satirical drawings offended many, including some non-Muslims. The editors and Danish politicians failed to understand the potential for harm. Initial reactions were slow, but several radical Islamist activists were not content to let the issue fade. Traveling through the Middle East, they complained to several Arab governments about the intolerable insult directed at their faith. To embellish the case, several especially insulting pictures—neither drawn nor published in Denmark—were added to the “collection.” Within days, Arab and foreign media spread the “news,” and riots erupted in dozens of cities throughout the Muslim world. Danish embassies were attacked and in some cases destroyed (usually with the passive assistance of the “protecting” local government). Danish firms and products faced widespread boycotts. Other Scandinavian and European papers published the caricatures in support of the right to publish freely. Soon talk of a “clash of civilizations” and the threats to freedom filled the debate. Recurring threats to the cartoonists and publishers have continued. Underlying this crisis is the challenge of integrating tens of thousands of recent immigrants into the once homogeneous Scandinavian countries. Accommodating differences has always been a challenge to societies, even when the migrants came from distant Scandinavian regions: Finns moving to Sweden in 1950s and 1960s or Greenlanders moving to Denmark a decade later often received less than enthusiastic welcomes. The real challenge was adjusting to non-European immigrants who were a trickle in the 1960s but became the majority of immigrants twenty years later. Now even Scandinavian-born children of the immigrants face significant lags in educational and vocational progress. Some social housing estates have largely immigrant populations, with “natives” fleeing the surrounding areas and schools. Violence and crime have compounded the problem, including the recurring urban riots in several Swedish cities. Sweden and Iceland have relied on the labor market supplemented by language and other support to promote integration. The goal has been accommodation in a multicultural society. When immigrants work and become self-supporting, they are more likely to adjust to the culture. Although Denmark initially supported the new residents through generous social benefits, it was not a successful program toward the goal of integration. For the past fifteen years, the Danish emphasis has been on rapid movement into the labor market, compulsory language and cultural instruction, and reduced social benefits. Following the surge of migrants to Europe in 2015–2016, restrictions have been tightened even in Sweden. A surge (30,000–50,000) in Ukrainian refugees in 2022 has been accommodated more easily. Norway and Finland have tended more toward the Danish model. In Norway and Denmark and more recently Finland and Sweden, xenophobic populist parties have attracted growing political support from voters who fear and distrust the new multiethnic society in which they live. Such parties are also anti–European Union (EU), not least because of the EU’s free migration provisions. In response, the mainstream political parties have shed their reluctance to discuss the problem and have reaffirmed the supremacy of traditional Scandinavian values, particularly against violence and in favor of women’s rights. More positively, moderates among the immigrant groups have entered the political process through the traditional political parties and are represented from city councils to national parliaments and government cabinets. A willingness to discuss the problems openly but respectfully may have received a boost from the “cartoon crisis,” but the immigration and cultural diversity issues will figure prominently in Scandinavian politics for many years to come. Source: For a scholarly and balanced study of the “cartoon crisis,” see Jytte Klausen, The Cartoons That Shook the World (New Haven, CT: Yale University Press, 2009). On migration and multicultural issues, see Eric Einhorn, Sherrill Harbison, and Markus Huss, eds., Migration and Multiculturalism in Scandinavia (Madison: University of Wisconsin Press, 2022).

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In the long run, Scandinavian prosperity in the global economy depends on sustaining the currently successful pattern of high wages and high performance. That requires action in larger EU countries, where full employment has been uneven. It also requires both anchoring domestic and attracting foreign capital. Pension and tax reforms have encouraged a high rate of savings, bringing mass private investment (under professional management) even to Sweden, which in the past has prospered with perhaps the most concentrated ownership of any capitalist country under Social Democratic economic management. The past thirty years have been a watershed. The great Social Democratic project—the comprehensive welfare state supported by state economic intervention to manage the market economy—was completed some forty years ago and enjoyed broad consensus. Various governments of the center-right and center-left could administer this system, but there was no new, equivalent central thrust for reform as the postwar consensus came under increasing pressure. Accelerating demographic changes—an aging and increasingly “multicultural” population—as well as relentless changes in the EU and in the global economy ensure that the pressure will continue. Damage from the 2008 “Great Recession” was initially less severe in the Scandinavian countries (except Iceland) than elsewhere in Europe, but it took several years to overcome the prolonged period of economic stagnation in Europe (and beyond). Then came the COVID pandemic and war in Ukraine. Few in Scandinavia fault the welfare state for the latest crisis, but social policy must adjust to the new realities. The current challenge is whether and how the Scandinavian model can continue to adjust to domestic change and economic globalization while retaining its comprehensive, solidaristic, and humane structure.

The Roads to Europe Europe, including Scandinavia, faced four vital questions in the wake of World War II. Two continental conflicts within a quarter century had threatened to extinguish European civilization. Armed struggle for control of Europe could not be allowed to occur again. At issue was, first, whether cooperation should be regional or global. A closely related second question was whether states should seek to build intensive integrated communities with like-minded states or whether cooperation should be restrained so as to include the largest number of participating countries (so-called depth-versusbreadth or deepening-versus-widening arguments). Third, should collaboration focus narrowly on specific economic or other policy problems (i.e., functional issues), or should it seek broad federal arrangements in which states would yield sovereignty over a range of policy matters? Finally, should this new international regime reinforce intergovernmental cooperation, or should it carefully construct new international organizations with supranational responsibilities? Seventy-five years later, these questions still loom. The Scandinavian states responded individually to these questions but with some commonalities. Isolation had failed between 1939 and 1945. The collapse of world trade in the 1930s had hurt their economies. Sweden had narrowly preserved its tra-

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ditional neutrality during World War II but only by accommodating the dominant belligerents. Denmark, Norway, and Finland had been invaded and found traditional nonalignment and neutrality largely discredited at the end of war. All had supported the League of Nations after World War I, only to see ruthless power politics and fanatical nationalism return. After 1945, they hoped that the emerging United Nations organization would allow them to preserve their independence while participating in the global community and a revitalized collective security system. Scandinavia sought security and prosperity through broad European cooperation. All wished to avoid new divisions despite the obvious differences between the Western democracies and Stalin’s Soviet Union. The term applied to this policy of reconciliation and constructive diplomacy was “bridge building.” Bridges are built over chasms; the Scandinavian states recognized the fundamental conflicts that threatened the postwar order. It is useful to view Scandinavian foreign policies from four perspectives: Nordic, European, Atlantic, and global. Such geopolitical shorthand is, admittedly, not precise, especially given the many changes since the Cold War. The Nordic perspective reflects history and culture, but it also implies deliberate choices. We have mentioned the common roots of the Scandinavian states, which are traceable to a loose dynastic entity known as the Kalmar Union (1397–1523).7 The next four hundred years saw frequent and often bitter rivalry in the Nordic region until the current five independent states emerged in the twentieth century. Sweden and Denmark competed for hegemony throughout the Baltic: first against the Hanseatic League and later against the emerging Slavic powers of Poland-Lithuania and finally Russia. The dominance of Russia from the eighteenth century onward, and later the growth of German power, forced the Scandinavians into an increasingly defensive position. The collapse of the Soviet Union in 1991 gave northern Europe and the Baltic region a quarter century of security and cooperation, but the reemergence of increasingly authoritarian and revanchist Russia after 2014 revived security concerns. Such concerns increased even further after Russia’s invasion of Ukraine. Yet even as nationalism was shaping five distinct sovereign countries, there were calls for regional cooperation. These calls followed two lines: a romantic “panScandinavianism” that argued for a federation of the increasingly democratic societies of the north, and pragmatic functional proposals covering a range of public policies common to the industrializing economies of the five states. Although Scandinavianism ended historic rivalries, it did not prevent the further division of the region into the five modern nations. The practical policy approach proved most fruitful, starting with a monetary union at the end of the nineteenth century (which collapsed during World War I), an “interparliamentary union” in 1907, and regular meetings between political leaders. After World War II, the more ambitious goals of advocates for Nordic integration repeatedly ran into two obstacles. First, the interests of the Scandinavian countries were often different and not infrequently competitive. This strengthened historical and nationalist desires in Norway, Finland, and Iceland to maintain full independence from the older Scandinavian states. Second, outside political and economic ties outweighed Scandinavian alternatives. This would be seen most dramatically in security

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policy after 1948, when Denmark, Norway, and Iceland chose the Atlantic alliance led by the United States; Finland accommodated its foreign relations within the narrow limits demanded by the Soviet Union; and Sweden reaffirmed its historical and successful nonalignment. Later, economic cooperation followed a similar path, with broader European opportunities outweighing the potential of narrower Nordic proposals. Although intraScandinavian trade expanded significantly after 1950, access to European and global markets remained the higher priority. Despite these setbacks, in 1952 the Nordic countries established the Nordic Council—essentially an extension of the interparliamentary union—that would coordinate legislation and encourage Nordic initiatives whenever consensus could be reached. Underlying the development of Nordic policy cooperation was the primacy of Social Democratic and Labor parties during much of the period from 1945 to 1975. Even in Iceland and Finland, where this was not the case, centrist governments adopted much of the Social Democratic agenda on labor, social, and economic issues. This paved the way for regional cooperation. Nordic cooperation continues on three levels—parliamentary, ministerial, and nongovernmental—but most efforts are now channeled through larger regional entities, especially the EU. The annual meetings of parliamentary delegations from the five countries (plus the three autonomous regions: Åland, Greenland, and the Faeroes) encourage pragmatic cooperation and foster personal contacts across the region as well as a comparative perspective on policy issues. Ministerial contacts are more intense and continuous. In addition, there are regular ministerial “summits”—routinized since 1971 through the Nordic Council of Ministers—which bring together the top political and administrative people for detailed discussions and planning. A common Nordic political culture that emphasizes consensus, fact finding, pragmatism, and responsibility helps this process. Common positions on European and international questions can multiply the weight of these small states. Finally, there are the various nongovernmental organizations in the educational, cultural, and scientific area that bring Scandinavians together on specific projects and interests. Again, this invigorates Nordic cooperation at the grass roots but also mobilizes important interests in support of these activities. “Europe” in the form of “Western Europe” was at first a Cold War concept, but it increasingly gained real political and economic significance. The Nordic countries chose not to be part of the evolving European community that started with the Brussels Pact of 1948, the Schuman Plan of 1950 for a coal and steel community, and especially the Treaty of Rome in 1957, which sparked the development of a European common market. Yet all but Finland participated in the European Recovery Program (the Marshall Plan) and became part of looser institutional structures that were also favored by Great Britain. Likewise, Denmark and Norway found that NATO membership brought them closer to the Western European democracies and expedited reconciliation with the Federal Republic of Germany. By the 1960s, relationships with expanding Western European institutions (notably the Common Market) became a permanent issue on the Scandinavian political agenda. The Atlantic dimension overlaps considerably with the European, but it has three distinctive facets. After 1940, the Scandinavian states developed sustained and inten-

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sive relations with the United States (and to a lesser extent Canada), with which they had previously had important ethnic ties but no intensive diplomatic history. Further, the Atlantic dimension brought the three Scandinavian NATO members particularly into a much wider community in Europe (especially with the Mediterranean NATO members). Finally, it evolved into a broader Western community exemplified by the Organization for Economic Cooperation and Development (OECD), which emerged in 1960 out of the narrower Marshall Plan structure. Even since the end of the Cold War, the Scandinavian states have sought to keep the United States immersed in European affairs and have encouraged NATO’s enlargement eastward. Although initially, neither Sweden nor Finland sought NATO membership after 1990 and focused on the EU, both cooperated with the United States and other NATO countries in security actions in the Balkans, the Middle East and North Africa, and Afghanistan. Following the Russian invasion of Ukraine in 2022, they applied for membership in NATO. The “Partnership for Peace” (PfP) initiative launched in 1994 sought to build a larger European security system that would include Russia. As relations between NATO and Russia deteriorated, however, the PfP became inoperative in Europe. Since 1990, Scandinavia’s post–Cold War relations with Eastern Europe have become far more complex. First, the renewed independence of the Baltic states of Estonia, Latvia, and Lithuania were strongly supported by the Scandinavian countries with sustained economic and political involvement. Second, Russia’s instability and unsuccessful transition toward democracy represent a continuing challenge for the Nordic states. The norm had been an authoritarian, powerful, but often conservative Russia. Since the 2010s, as Russia has resumed its pursuit of hegemony in Eastern Europe, security policy of the expanded EU and NATO has played a central role for the Nordic states. The 2022 decision of Sweden and Finland to join NATO is a major reorientation. Finally, there is a global perspective that includes Scandinavia’s historic commitment to the United Nations and other forms of international cooperation. Scandinavian military units have played a role in many UN peacekeeping missions. The Nordic countries have global economic interests and collectively represent substantial global economic power. They are among the most generous and steadfast contributors to international economic assistance efforts and often champion the less developed countries in international organizations. Yet they are far from major actors whose decisions can affect global affairs. Here, too, a strategy of bridge building can be constructive, as illustrated by the role of Norway and its late foreign minister, Johann Jørgen Holst, in facilitating the 1993 Israeli-Palestinian Oslo Accords. Scandinavian diplomats continue to pursue “peacemaking,” despite frequent frustration. NORDIC BALANCE After 1945, the Nordic countries placed their trust initially in the new United Nations and its promise of “collective security” and broad global cooperation. The disappointments of the 1930s were balanced by the lessons of appeasement and the leadership promised by the United States, along with hopes for Soviet cooperation in the postwar order. As a defeated

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power, Finland was initially denied membership in the United Nations until 1955, but the other four Nordic nations were in from the start. Scandinavians could see that their best foreign policy option was continuing great-power cooperation in the United Nations, and it was here that bridge-building efforts between the emerging Cold War blocs were focused. The appointment of Norwegian statesman Trygve Lie as the first secretary general of the United Nations (1946–1953) augured well for Scandinavian engagement, and he was followed by Swedish diplomat Dag Hammarskjöld (1953–1961), who expanded the writ of the secretary general. Swedish diplomat Folke Bernadotte pursued peace in the Middle East until his assassination in 1948. Although the Scandinavian states were reluctant to give up on their bridgebuilding role, they recognized that by 1948, the East-West divide was a reality. Isolated neutrality had failed in 1940, but for Finland, normalizing relations with the Soviet Union was the highest priority. An Agreement of Friendship, Cooperation and Mutual Assistance was negotiated and became the basis of the next forty years of Finnish-Soviet relations. It required Finland to obtain Moscow’s approval for political and economic ties with the West and basically gave Moscow a socalled droit de regard (veto right) to scrutinize Finnish foreign policy and practice for more than twenty years and Soviet veto power over certain Finnish politicians. Crucially, however, it did not end Finland’s recovering parliamentary democracy and capitalist economy. Neither the United States nor Great Britain focused on Scandinavia after 1945. The United States had northern strategic concerns, but these were mainly the air bases in Iceland and, to a lesser extent, Greenland. Both were essential for US military operations in Europe, and their strategic importance would grow significantly during the Cold War. While Finnish options were sharply limited, the other Scandinavian states agreed to reassess their collective security in 1948–1949. Isolated neutrality was discredited in Denmark and Norway, and even the Swedes seemed willing to consider a regional security arrangement. The effort to create a nonaligned Scandinavian Defense Union failed, basically because Norway sought closer ties with the emerging Western defense alliance that evolved into NATO. As one Norwegian politician put it, “We want to be defended, not liberated.” After Norway’s choice, Sweden was uninterested in a bilateral arrangement, and Denmark followed Norway into NATO in April 1949. Sweden would preserve its nonalignment in peace and hope for neutrality in war. Iceland also joined NATO; it had no formal military but provided crucial airbases for US and NATO forces. For the next forty years, this arrangement prevailed, with only marginal adjustments. Norway initially became the most enthusiastic Scandinavian NATO member, although the Norwegians adopted a policy of nonprovocation toward the Soviet Union, with which they shared a border in the far north. Denmark also refused to allow permanent foreign bases on its territory in time of peace, although NATO staff and periodic military exercises were accommodated. Denmark also accepted US bases in Greenland without inquiring too closely about their military activities. Norway made a substantial effort to build up its armed forces; in Denmark, defense expenditures were controversial. Nevertheless, both countries developed and maintained military forces and alliance ties that were without historical precedent.

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Sweden’s nonalignment initially stimulated a considerable defense effort. Swedes believed that their successful neutrality during World War II came from achieving enough military strength to make invasion too costly. That became their defense policy in the Cold War, although we now know that Sweden cooperated secretly with NATO in the 1950s and 1960s in coordinating a defense against the Soviet Union. By the 1960s, Nordic foreign policies had established patterns that, with occasional variations, were maintained until the end of the Cold War in 1990. Each Nordic country had, of course, its own interests and priorities, but there was an implicit understanding that each country would assess the impact its foreign policy might have on an overall “Nordic balance.” Nordic balance remained deliberately vague and flexible throughout the Cold War. All sought to reinforce the reality that northern Europe was not the main axis of East-West tensions. While successfully restraining most Cold War tensions in their region, the Nordic countries never succeeded in creating a region truly distinct from the larger European context. In the security sphere, they had insufficient power; in economic matters, their ties to Europe remained supreme. SCANDINAVIA AND THE EU By 1961, however, the dynamic Common Market was a serious issue in Scandinavia. West Germany had become again a vital market for the Scandinavian states, soon surpassing Britain. As security issues waned, economic questions demanded difficult choices: first between competing blocs and models (the European Economic Community [EEC] versus the looser European Free Trade Association [EFTA]) and then over the extent of integration and its political consequences. In 1989–1991, Scandinavians, along with Europeans and Americans, watched with amazement as forty years of East-West competition ended, a dozen MarxistLeninist regimes collapsed, and the Soviet Union split into its component republics. More proactively, the Nordic states gave diplomatic and economic support to the emerging independence movements in the Baltic republics (Estonia, Latvia, and Lithuania), which had been forcibly annexed by the Soviet Union fifty years earlier. As in 1918–1920 and 1945–1949, Nordic leaders had to rethink their international position and foreign policy priorities. The challenge would be to balance traditional interests and perspectives with the new opportunities and threats of a changed world. The Nordic balance soon became the “Northern Dimension” to the EU (Hilson 2008; Ingebritsen 2006). Scandinavia, as noted earlier, remained on the periphery of the European integration project for nearly twenty-five years after World War II. Three factors have repeatedly deterred the Scandinavian states from aggressively pursuing European integration and unity. First was the alternative attraction of Nordic economic cooperation. Although initial attempts to form a Nordic customs union in the 1950s failed, the project was resurrected in new versions until 1970, when Denmark and Norway declared definitively for the European alternative. However, only Denmark joined the EEC in 1973, while Norwegian voters rejected membership, and Sweden and Finland did not apply until twenty years later. Second, the ultimate goal of a united Europe

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enjoyed only modest support among the political leadership and the public in these small states, historically unaligned and mistrustful of larger neighbors. Third, with broader free-trade ambitions, the Nordic countries resisted having to choose sides in economic communities. The Scandinavian states favored European cooperation over unity. Cooperation aimed at removing barriers to free trade and investment as well as policy collaboration in areas of common concerns (e.g., the environment, refugees, human rights, and defense) have come to be regarded as “Europe à la carte.” States can pick and choose the collection of projects in which they will participate. The alternative they resisted was more grandiose: a “United States of Europe” with genuinely federal institutions that would move significant portions of public policy into a European entity. National governments would still have residual powers through the principle of “subsidiarity,” but like other federal systems, the whole would be more than the sum of its parts. Ancient cultures and states would be unlikely to disappear or become mere provinces, but the forty-year tradition of state sovereignty largely would be ended in principle as well as in practice. This second vision has little support in Scandinavia and has met much vigorous resistance. RELUCTANT EUROPEANS? There would be four Scandinavian roads to Europe, with Denmark’s entry into the EEC/EU in 1973, Sweden and Finland in 1995, and Norway’s two failed entry attempts in 1972 and 1994. Just to complicate matters, the two Danish autonomous North Atlantic territories of Greenland and the Faeroe Islands remained outside of the EEC, with Greenland actually withdrawing in 1982. Following its severe financial crisis in 2008–2009, Iceland commenced negotiations for entry into the EU, but by 2013, progress had stalled. It is notable that joining Europe has been a divisive issue in domestic politics everywhere, even including Finland, where the EU seemed to offer guarantees against renewed Russian pressure in the future. After fifty years of Danish membership and more than twenty-five for Finland and Sweden, Scandinavia’s EU relations seem stable. Norway and Iceland have partial access to the EU through the European Economic Area treaty. Major EU policies have been subject to popular referenda, with Norway rejecting membership twice, and Sweden and Finland voting to approve membership in 1994. There have been nine Danish referenda on EU issues. General opposition to the EU comes mostly from extreme left-wing and right-wing parties, but popular skepticism is broader. The European integration project has evolved significantly over the past thirty years, from the Maastricht Treaty of 1991 (as amended first in Edinburgh [1992] and further in Amsterdam [1997] and Nice [2001]) and the unsuccessful constitutional treaty (2004) to the Lisbon Treaty (2007), but the Nordic countries remain skeptical participants. The expansion of the EU after 2003 has been supported by the three Scandinavian members. Denmark and Sweden have maintained “opt-outs,” or reservations. Both have rejected monetary union, although their economies are among the strongest in the

1 5 6    E ric S . E inhorn

EU. Denmark’s currency has been closely tied to the German mark and now the euro since 1982. They have been cautious about harmonization of police and judicial affairs and participation in elements of foreign and security policy. This changed in 2022, when Danes voted to participate in the EU’s Common Foreign and Security Policy. Although domestic opponents of the EU have railed against opening the union to hordes of poor Eastern Europeans, others see the expansion as postponing “federalism” for an indefinite period. Anti-EU parties (mainly on the extreme Right and Left) are well represented in parliament, and until 2019, nearly half of the delegates elected by the Danes to the European Parliament were EU skeptics. Norway has debated the EU issue for more than fifty years but, like Iceland, seems content with association through the European Economic Area arrangements. Although the 1972 rejection predated Norway’s current petroleum-fueled prosperity, the continuing boost of oil and gas exports has shielded the country from most of the economic strains of the past forty years. Most oil revenues are now shunted into a massive “Government Pension Fund-International,” which invests globally and whose assets exceed $1 trillion. Protection of Iceland’s and Norway’s heavily subsidized agricultural sector and regionally significant coastal fisheries has also been a factor weighing against membership. Both benefit from the EEA and Schengen free-border travel agreements but have little direct effect on EU policy. Today, the Scandinavian countries still see the EU mainly in pragmatic economic terms but increasingly support cooperation in a wide range of public policy fields. All Nordic countries supported the US response to the terrorist attack of 9/11. Danish, Finnish, Norwegian, and Swedish troops served with the UN-sanctioned but NATOled International Security Assistance Force in Afghanistan. Indeed, Denmark has suffered significant casualties in relation to its size and military contribution to the Afghan campaigns. The center-right Danish government gave wholehearted support in 2003 to military action against the Saddam Hussein regime in Iraq and provided a military contingent for the occupation, while the Swedes, Finns, and Norwegians were critical of the US and British response. It was yet another reminder of the different national perspectives across Scandinavia. The differences were not purely governmental; public opinion throughout Scandinavia became increasingly critical of the Bush administration’s unilateral interventions. Likewise, the election of Barack Obama in 2008 improved the image of the United States throughout Scandinavia. This was reflected by President Obama’s Nobel Peace Prize in 2009, which was awarded by the Norwegian Nobel Committee (with some debate across the region and beyond and furious denunciations by American rightists). This positive view of the United States was quickly reversed after Donald Trump became president in 2017. Cautious optimism returned in 2021 with President Joseph Biden, but growing illiberalism and instability in the United States remain worrisome. Then Russia’s 2022 renewed aggression against Ukraine shook the continent, including the Scandinavians. Finland and Sweden ended their lengthy policy of nonalignment (for Sweden, a policy of more than two hundred years) and applied to join NATO. For the Scandinavian Social Democrats in particular, the EU and economic globalization more generally pose some ironic dilemmas. Although they have always been rhetorically internationalist—and have lived up to the rhetoric in development aid and

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in direct support for foreign trade unions and labor parties in developing countries and Eastern Europe—their success at home has been premised on the relevance of the nation-state as the unit for making economic policy. The generous and humane provisions of the social democratic welfare states in Scandinavia yielded a truly decent society for all, but they were dependent on strong, carefully managed economies and full employment. It is far from clear that a EU of twenty-seven member states plus associated states can focus on the same goals. However, the ambitious welfare state is now the rule rather than exception in the EU. Of course, it is most developed in the wealthier member states but pursued by all with varying determination. If the welfare state was the surrogate for socialism for the Scandinavian Social Democrats from the 1930s through the 1980s, what is to be the surrogate for the welfare state? How viable are the Nordic welfare states?

Volatile Times The so-called Great Recession following the financial crisis of 2008–2009 and the coronavirus pandemic have challenged the Scandinavian “model” yet again. The impact of the crisis varied from quite mild in petro-Norway to more severe in Sweden and Denmark and harsh in Finland and Iceland. Compared to southern Europe, the Scandinavian economies, except Iceland, avoided disasters because of cautious fiscal policies during the good years and successful interventions to shore up financial and export sectors. Unemployment rose sharply after 2008, but by 2020 it had fallen as economic growth resumed. In fact, the Nordic countries remain among the most prosperous in the world—despite immigration, high social expenditures, and taxes (see table 5.1). Then, of course, came the coronavirus pandemic with its economic and health challenges. Scandinavian public health responses varied from passive in Sweden to more rigorous in Norway. As that challenge has abated, the economic uncertainties resulting from Russia’s attack on Ukraine loom large. Once again, the social policies together with countercyclical economic policies have protected average citizens and mitigated the decline. The fact remains that the export-oriented Nordic economies are now deeply embedded with the European and global economy. Recovery depends Table 5.1  Comparative Prosperity (Gross National Income in Purchasing Power Parity)

Denmark Finland Norway Sweden United States EU (average)*

1996

2006

2016

2021

Percent change 1996–2021

$23,275 $19,629 $26,516 $23,292 $29,830 NA

$37,389 $34,768 $54,198 $38,709 $47,073 $29,171

$53,244 $45,139 $61,501 $50,721 $58,855 $40,610

$66,752 $55,940 $82,848 $61,079 $64,475 $48,303

288 285 312 262 216 165

* EU average refers to the period 2006–2021. Source: OECD

1 5 8    E ric S . E inhorn Table 5.2  Parliamentary Party Strength in November 2022 Country/Parties

Seats

% Vote, Last Election

Percent women

DENMARK Social Democrats* Liberals* Danish People’s Conservatives Socialist People’s Social Liberals Liberal Alliance Leftist (Unity List) New Rightist Alternative Moderates* Greenland & Faroe Is.

179 50 23 5 10 15 7 14 9 6 6 16 4

84.2 (2022 turnout) 27.5 13.3 2.6 5.5 8.3 3.8 7.9 5.1 3.7 3.3 9.3

39.1

FINLAND Social Democrats* Center* Conservatives* Left Alliance* Swedish People’s* Greens* Christian Democrats Finns (populist Right) Movement

200 40 31 38 16 9 5 5 39 1

68.7 (2019 turnout) 17.7 13.8 17.0 8.2 4.5 11.5 3.9 17.5 2.3

46.5

NORWAY Labor (Social Democrats)* Conservatives Center* Progress (populist Right) Socialist Left Christian People’s Liberals Greens Red (radical socialist) Other

169 48 36 28 21 13 3 8 3 8 1

77.1 (2021 turnout) 26.3 20.4 13.5 11.6 7.6 3.8 4.6 3.9 4.7 0.2

45.0

SWEDEN Social Democrats Moderates (conservative)*

349 107 68

84.2 (2022 turnout) 30.3 19.1

46.1

(continued)

S candinavia    159 Table 5.2  (Continued) Country/Parties Liberals* Christian Democrats* Leftists Center Greens Sweden Democrats (Right)

Seats

% Vote, Last Election

16 19 24 24 18 73

4.6 5.3 6.7 6.7 5.1 20.5

Percent women

*In government as of January 2023

in large part on the actions of other countries. Interdependence is not new in Scandinavia. ​The habits of nonalignment and independence of all Nordic states, along with their still vigorous sense of nationhood and self-confidence, color their view of Europe and the world. They are also a factor in the continuing debate about non-European immigration and the challenges of multiculturalism. Once again, a Nordic “middle way” has emerged toward the regional and global challenges of the new century. Scandinavians are pragmatic skeptics, seeking “just enough Europeanization” to respond to economic, social, and political challenges. As successful states and just societies, they see no need to bury themselves in a federal Europe. The successful reform and reinvigoration of the “Scandinavian” or “Nordic” model after 1990 gave them renewed confidence at home and relevance for larger EU countries seeking new ideas. But they are not isolationists; the past century taught them that their fates are intimately tied to their continent and to global developments. The Nordic EU bloc of three is likely to support a reformed “social Europe” in which the principles of “subsidiarity” and pragmatism will make the Scandinavians more comfortable in the European home. Maintaining domestic economic and social solidarity during hard times remains a common priority, but commitments to the ever-wider EU are tougher. Through reforms and innovation—such as “flexicurity”—emphasizing labor market and business flexibility and personal security—and welfare state “recalibration”—the Scandinavian countries still challenge their European neighbors and the wider world to do better.

Notes 1. Until the war of 1864, the German-speaking duchies of Schleswig, Holstein, and Lauenburg were part of the Danish realm under an exceedingly complex constitutional arrangement. Schleswig had a substantial Danish population that was denied rights under German rule between 1864 and 1918. Following the German defeat in 1918, the Allies supervised a referendum that returned the northern third of Schleswig (Slesvig) to Denmark. Since 1920, the Danish-German border has been fixed, and since the 1950s, the two nationalities have seen greatly improved local relations. 2. Denmark and Norway were under the same monarch from 1380 to 1814. Starting in 1737 in rural Norway, the country was the first in the world to institute universal, compulsory

1 6 0    E ric S . E inhorn education, culminating in the Danish Education Act of 1814. Sweden followed with a similar law in 1842. By the second half of the nineteenth century, literacy was nearly universal in Scandinavia, and secondary and adult education was advanced by the “folk colleges” and workers’ education movements. 3. An exception was K. Hjalmar Branting (1860–1925), one of the founders of the Swedish Social Democratic Workers Party. Branting was of middle-class, academic background and university educated, and he was a school chum of the future king. A tireless reformer, he set the Swedish Social Democrats on a moderate path to power. In 1920, he became Europe’s first democratically elected Social Democratic prime minister. 4. The 2019 labor union membership was 50.4.5 percent in Norway, 65.2 percent in Sweden, 67 percent in Denmark, and 58.4 percent in Finland, as contrasted with 10 percent in the United States. Two decades earlier, union membership approached 90 percent in Scandinavia. See Organisation for Economic Co-Operation and Development, “StatExtracts: Trade Union Density,” http://stats​.oecd​.org​/Index​.aspx​?DataSetCode​=TUD, January 15, 2014. 5. Economic policy issues in the Nordic countries are discussed in detail in the economic surveys published every year or two by the Organization for Economic Cooperation and Development as Economic Surveys: Denmark, to name one source. Sweden’s economic problems and especially its welfare have received much international attention in the 1990s. Both the Financial Times and The Economist regularly survey the Nordic economies.. 6. The Nordic countries vary in how they define “immigrants.” The inclusion of naturalized citizens and second-generation populations inflates the numbers (to about 14%–18% of the population in Denmark and Norway in 2010), but it does reflect the socioeconomic challenges of migration. These numbers include Nordic and Western European immigrants, who are generally not controversial. 7. At the end of the fourteenth century, all three Scandinavian crowns passed to Danish Queen Margrethe I. In 1397, this union was formalized by a treaty drafted in Kalmar, Sweden. Although the Kalmar Union survived until 1523, it was constantly challenged. Norway remained united with Denmark until 1814 and then with Sweden until 1905. Iceland was part of the Danish realm until 1944. The Swedish province of Finland became a Russian Grand Duchy in 1809 and declared its independence in 1917.

Suggested Readings Brochmann, Grete, and Anniken Hagelund, eds. Immigration Policy and the Scandinavian Welfare State 1945–2010. New York: Palgrave Macmillan, 2012. Einhorn, Eric S., and John Logue. Modern Welfare States: Scandinavian Politics and Policy in the Global Age. New York: Praeger, 2003. Einhorn, Eric S., Sherrill Harbison, and Markus Huss, eds. Migration and Multiculturalism in Scandinavia. Madison, WI: University of Wisconsin Press, 2022. Hilson, Mary. The Nordic Model: Scandinavia since 1945. London: Reaktion Books, 2008. Ingebritsen, Christine. Scandinavia in World Politics. Boulder, CO: Rowman & Littlefield, 2006. Sejersted, Francis. The Age of Social Democracy; Norway and Sweden in the Twentieth Century. Princeton, NJ: Princeton University Press, 2011.

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References Danmarks Statistik. 2009. “Fundamentet til Velfærdsstaten Blev Støbt.” https://www​.dst​.dk​/da​ /Statistik​/nyheder​-analyser​-publ​/bagtal​/2009​/2009​-01​-12​-Aarbogsarkiv04. Derry, Thomas K. 1979. A History of Scandinavia: Norway, Sweden, Denmark, Finland, and Iceland. Minneapolis: University of Minnesota Press. Einhorn, Eric S., and John Logue. 2003. Modern Welfare States: Scandinavian Politics and Policy in the Global Age. New York: Praeger. Einhorn, Eric S., and John Logue. 2010. “Can Welfare States Be Sustained in a Global Economy? Lessons from Scandinavia.” Political Science Quarterly 125 (1): 1–29. https://doi​.org​ /10​.1002​/j​.1538​-165X​.2010​.tb00666​.x. Hilson, Mary. 2008. The Nordic Model: Scandinavia since 1945. London: Reaktion Books. Ingebritsen, Christine. 2006. Scandinavia in World Politics. Boulder, CO: Rowman & Littlefield. Katzenstein, Peter J. 1985. Small States in World Markets: Industrial Policy in Europe. Ithaca, NY: Cornell University Press. Keohane, Robert O., and Joseph S. Nye. 2012. Power and Interdependence. 4th ed. New York: Pearson. Nordstrom, Byron J. 2000. Scandinavia since 1500. Minneapolis: University of Minnesota Press. Petersson, Olof. 1994. The Government and Politics of the Nordic Countries. Stockholm: Fritzes. Rustow, Dankwart. 1955. The Politics of Compromise: A Study of Parties and Cabinet Government in Sweden. Princeton, NJ: Princeton University Press.

CHAPTER 6

Spain THE PAIN AND THE STRAIN Sebastián Royo

162

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Spain Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU:

47.35 195,360 229 $1,281 $27,057 January 1, 1986

Performance of Key Political Parties in Parliamentary Elections of November 2019 Basque Nationalist Party: Citizens—Party of the Citizenry: People’s Party (PP): Republican Left of Catalonia–Sovereigntists: Spanish Socialist Workers’ Party (PSOE): Unidas Podemos (democratic-socialist): Vox (national-conservative): Main Officeholders • Prime Minister: Pedro Sánchez, PSOE (2018) • Head of State: King Felipe VI (2014)

1.6% 6.8% 20.8% 3.6% 28.0% 12.9% 15.1%

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S

panish modern political history has been marked by much instability. The country suffered forty-three coup d’états between 1814 and 1923 and a horrendous civil war between 1936 and 1939, followed by thirty-six years of dictatorship under Generalísimo Francisco Franco. A negotiated transition period in the 1970s, which has been labeled as a model for other countries, paved the way for the elaboration of a new constitution, followed by the first free elections in almost forty years. These developments were followed by the progressive return of Spain to the international arena. The following decade also witnessed the Socialist Party being elected to actual power in 1982, bringing a new aura of modernity to the country. The 1980s also witnessed Spain’s integration into NATO (1982) and the European Community (1986). The following two and a half decades were a period of phenomenal growth and modernization for the country. Indeed, before the global crisis that hit Spain in the spring of 2008, the country had become one of Europe’s most successful economies. While other European countries had been stuck in the mud, Spain performed much better at reforming its welfare systems and labor markets as well as improving flexibility and lowering unemployment. Over the decade and a half that preceded the 2008 global financial crisis, the Spanish economy was able to break with the historical pattern of boom and bust, and the country’s economic performance was nothing short of remarkable. Yet all this came to a halt when the 2008 global financial crisis struck. As a result, Spain suffered one of its worst experiences since the 1940s. The country’s four-decades-old democracy has achieved much, but the crisis triggered a prolonged slump that has tested the social and political structures of the country and caused a crisis in the governance of representative democracy (The Economist 2019). The impact of that crisis was shattering for the country. From an economic standpoint, the Spanish people witnessed the erosion of decades of economic and social gains. From a political standpoint, a political system that has been marked by great stability and relative seamless transitions of power between center-right and center-left parties following the transition to democracy has been deeply tested by the erosion of the traditional parties and the emergence of new parties on the Left and the Right. Furthermore, the conflict over constitutional arrangements and institutional checks and balances has also intensified. Democratic institutions in Spain, already battered in the decade that preceded the Great Recession, became even more dysfunctional, and even the territorial integrity of the country came into question, as exemplified by the referendum on Catalan independence. Indeed, following the transition to democracy and the country’s accession to the European Community (now Union), Spain was, prior to the 2008 crisis, a model country. But then the dream shattered, and the country’s economy imploded. How did this happen and what have been the consequences? Policy choices and the structure of decision making, the role of organized interest rates, the structure of the state, and institutional degeneration all played important roles in explaining the severity of the economic crisis in Spain. Since 2008, Spain has faced a quadruple crisis: financial, fiscal, competitive, and political. While the country was able to some degree to address the first three, political instability has only intensified since 2010. And the 2020 COVID-19 crisis is having devastating consequences in the country, such that a resurgence of those crises is a real threat.

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This chapter seeks to provide an overview of the country’s evolution in the twenty-first century with a particular focus on the period that led and followed the 2008 crisis. It reflects on the long political crisis in the country and the tenuous resolution that emerged after 2018 with the arrival of the Socialists to power. It explores the extent to which Spain was able successfully to emerge from the financial crisis and the extent to which it remains damaged both economically and socially by the consequences of that shock, particularly in light of the 2020 COVID-19 crisis. The first section of the chapter briefly introduces the country’s evolution since the transition to democracy and its European integration. The second section describes the main causes of the 2008 crises and analyzes the triple crisis in financial, fiscal, and competitive performance. The third section examines the consequences of the crisis. The fourth looks at the impact of the 2020 COVID-19 crisis. The chapter closes with an analysis of where the country stands in 2022.

From the Democratic Transition to the Great Recession (1975–2008) Spain had remained under the rule of Francisco Franco, the dictator, for about forty years (1936–1975).1 He kept control of the political machinery almost unchallenged. On November 22, 1975, two days after Generalísimo Franco passed away, Juan Carlos de Borbon, the designated successor, was proclaimed king. This development initiated the democratization process. The foundations for real democracy were laid through legal reform. The existence of solid institutions permitted the regime to initiate political reform from within as well as to accommodate pressures from below and from the international community. The first electoral contest, which took place in 1977, clarified the political spectrum. From 1972 until late 1982, the party system was dominated by two moderate political parties—the conservative Unión de Centro Democrático (UCD, or the Democratic Center Union), and the socialist Partido Socialista Obrero Español (PSOE, or the Spanish Socialist Party). The UCD won the 1977 elections with 34 percent of the vote, and the PSOE finished second, with 29 percent of the popular vote. Other political parties such as the rightist Alianza Popular (AP, or the Popular Alliance), and the communist, Partido Comunista Español (PCE, or the Spanish Communist Party), gained seats in Parliament. The regional nationalist parties, the Partido Democrático de Cataluña (PDC, or the Catalan Democrats), later Convergencia i Unió (CiU, or the Union and Convergence), and the Partido Nacionalista Vasco (PNV, or the Basque Nationalist Party) also achieved representation. The newly elected Parliament wrote a new constitution, which was approved in a popular referendum in December 1978. In the 1979 general elections, the UCD won again with 35.1 percent of the votes, and the PSOE finished second with 30.5 percent. In 1982, the PSOE won the general elections with almost ten million votes (48.4%) and achieved an overwhelming majority in Parliament. These elections signaled the restructuring of the party system. The UCD disappeared because of internal

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struggles that culminated in a disastrous electoral performance, and the rightist AP (later named Partido Popular, PP, or the Popular Party) emerged as the main opposition party. The Socialists remained in power for the next thirteen years, winning three further elections in 1986, 1989, and 1993. The PP won the 1996 and 2000 general elections, and the PSOE was returned to power in 2004 and was reelected in 2008. The success of the democratic transitions in the second half of the 1970s paved the way for full membership in the European Community.2 For Spain and its European Community (EC) partners, this momentous and long-awaited development had profound consequences and set in motion complex processes of adjustment.3 Entry to the EC also brought many economic advantages to Spain, which has benefited extensively from the EU’s “structural and cohesion funds,” which have been used to improve the physical infrastructure and capital stock of the country. These funds have contributed significantly to reducing regional disparities and fostering convergence within the European Union. At the same time, they have played a prominent role in developing the factors that improve the competitiveness and determine the potential growth of the least developed regions. Finally, Spanish trade with the Community has expanded dramatically over the last two decades, and foreign investment has flooded into the country. The culmination of Spain’s accession to the European Union was the (largely unexpected) participation of the country as an original founder of the euro as a single currency in 1999. On balance, Spain has benefited immensely from EU membership. Since the last century, the obsession of Spanish reformists has been to make up the lost ground with modernized Europe. EU membership has been a critical step in this direction (cf. Royo and Manuel 2003). Indeed, European integration was instrumental in the modernization of the country.4 Before the global crisis that hit Spain in the spring of 2008, the country had become one of Europe’s most successful economies (see table 6.1). Propped up by low interest rates, Spain was (in 2008) in its fourteenth year of uninterrupted growth, and was from the longest cycle of continuing expansion of the Spanish economy in modern history (only Ireland in the euro zone has a better record), which contributed to the narrowing of per capita GDP with the EU. Indeed, in twenty years, per capita income grew twenty points, one point per year, to reach close to 90 percent of the EU15 average. With the EU25, Spain already reached the average in 2008. The country grew on average 1.4 percentage points more than the EU since 1996. The country’s transformation was social as well as economic. The Spanish people became more optimistic and self-confident (i.e., a Harris poll showed that they were more confident of their economic future than their European and American counterparts were, and a poll by the Center for Sociological Analysis showed that 80 percent were satisfied or very satisfied with their economic situation). Spain became “different” again, and according to public opinion polls, it had become the most popular country to work in for Europeans.5 In that sense, immigration also propped up the country’s economic performance. Between 2000 and 2007, some 5 million immigrants (645,000 in 2004 and 500,000 in 2006) settled in Spain (8.7% of the population, compared with 3.7% in the EU15), making the country the biggest recipient of new residents in the EU (they represent 10% of the contributors to the social security system). This was a radical departure for a country that used to be a net exporter of

546.9 5.1 13.6 1.9 2.2 3.5 13.9 16.4 −6.2 −1.0 −4.0

566.8 3.7 13.9 1.5 2.2 2.8 10.6 16.9 −4.4 −0.6 −3.9

2001 582.2 2.7 14.1 0.3 2.2 3.6 11.5 17.3 −3.3 −0.5 −3.3

2002

Source: IMF

*Share of world GDP is in purchasing power parity; current account is percent GDP.

Real GDP (€ billion) Real GDP (% change) Real GDP p/c (€ thousand) Output gap (% GDP) Share of world GDP* CPI inflation (% change) Unemployment (%) Employment (million) Fiscal balance (€ billion) Fiscal balance (% GDP) Current account (% GDP)*

2000

Table 6.1  The Boom Years in Spain

600.2 3.1 14.3 0.1 2.2 3.1 11.5 17.9 −1.6 −0.2 −3.5

2003 619.8 3.3 14.5 0.5 2.1 3.1 11.0 18.5 −2.9 −0.3 −5.3

2004 642.2 3.6 14.8 1.4 2.1 3.4 9.2 19.3 8.8 1.0 −7.4

2005 668.0 4.0 15.2 2.9 2.1 3.6 8.5 20.0 19.9 2.0 −9.0

2006

691.8 3.6 15.4 3.9 2.1 2.8 8.3 20.6 23.3 2.2 −10.0

2007

697.7 0.9 15.3 3.1 2.0 4.1 11.3 20.5 −41.9 −3.8 −9.6

2008

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people, more so because it has been able to absorb these immigrants without falling prey (at least so far) to the social tensions that have plagued other European countries (although there have been isolated incidents of racial violence) (cf. Calavita 2005). THE REASONS FOR THE SUCCESS What made this transformation possible? The modernization of the Spanish economy in those decades was intimately connected to the country’s integration in the European Union. Indeed, European integration was a catalyst for Spain’s final conversion into a modern, Western-type economy. Yet membership was not the only reason for this development. The economic liberalization, trade integration, and modernization of the Spanish economy started in the 1950s and 1960s, and Spain became increasingly prosperous over the two decades prior to EU accession. One of the key consequences of its entry into Europe was that it consolidated and deepened that development process, and it accelerated the modernization of the country’s economy. EU membership facilitated the micro- and macroeconomic reforms that successive Spanish governments undertook throughout the 1980s and 1990s. As mentioned, Spain has also benefited extensively from European funds: approximately €150,000 million from agricultural, regional development, training, and cohesion programs. Moreover, European Monetary Union (EMU) membership was also very positive: participation in the euro contributed to macroeconomic stability, it imposed fiscal discipline and central bank independence, and it lowered dramatically the cost of capital. One of the key benefits was the dramatic reduction in short-term and long-term nominal interest rates: from 13.3 percent and 11.7 percent in 1992 to 3.0 percent and 4.7 percent in 1999 and 2.2 percent and 3.4 percent in 2005. The lower costs of capital led to an important surge in investment from families (in housing and consumer goods) and businesses (in employment and capital goods). Indeed, euro membership (and participation in the Growth and Stability Pact, the European Union’s framework for cross-country macroeconomic policy coordination) has provided Spain with unprecedented stability, because it has forced successive governments to consolidate responsible economic policies, leading to greater credibility and the improvement in the ratings of the country’s public debt (and consequently to lower financing costs). Another important factor to account for Spain’s economic success was the remarkable economic policy stability that followed the economic crisis of 1992–1993. Indeed, there have been few economic policy shifts throughout the 1990s and early 2000s, and this despite changes in government. Between 1993 and 2009 there were only two ministers of finance: Pedro Solbes (1993–1996 and 2004–2009) and Rodrigo Rato (1996–2004); and the country only had three prime ministers (Felipe González, José María Aznar, and José Luís Rodríguez Zapatero). This continuity in leadership fostered continuity in policy choices. Moreover, this pattern was further reinforced by the ideological cohesiveness of the political parties in government and the strong control that party leaders exercise over the members of the cabinet and the parliament deputies.

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In addition, this stability was reinforced by the shared (and rare) agreement among Conservative and Socialist leaders regarding fiscal consolidation (the balancedbudget objective was established by law by the Popular Party) as well as the need to hold firm in the application of restrictive fiscal policies and the achievement of budgetary surpluses: as a result, a 7 percent budget deficit in 1993 became a 2.2 percent surplus in 2007, and public debt decreased from 68 percent of GDP in 1998 to 36.2 percent in 2007. Policy choices were not solely responsible for Spanish success. Other factors that contributed include limited corruption and the fact that politics were fairly clean and relatively open; that Spain had a flexible economy; and that Spanish multinationals were successful: there were eight firms in the Financial Times list of the world’s largest multinationals in 2000 and fourteen in 2008.6 In other words, Spain also benefited from good institutional arrangements. However, this economic success was marred by some glaring deficiencies that came to the fore in 2008 when the global financial crisis hit the country, because the success was largely a “miracle” based on bricks and mortar.7 The foundations of economic growth were fragile because the country had low productivity growth (productivity contributed only 0.5 percentage points to potential GDP between 1998 and 2006) and deteriorating external competitiveness (Financial Times 2006). Indeed, over the decade that preceded the 2008 crisis, Spain did not address its fundamental challenge: its declining productivity, which only grew an average of 0.3 percent during that decade (0.7% in 2006), one whole point below the EU average, placing Spain at the bottom of the EU and ahead of only Italy and Greece (the productivity of a Spanish worker is the equivalent of 75% of a US one). The most productive activities (energy, industry, and financial services) contribute only 11 percent of GDP growth (El País 2006). Moreover, growth was largely based on low-intensity economic sectors, such as construction and services, which are not exposed to international competition. In 2006, most of the new jobs were created in these sectors: construction (33%), services associated with housing, such as sales and rentals (15%), and tourism and domestic service (30%). These sectors also represented 75 percent of all the new jobs created in Spain in 2006 (new manufacturing jobs, in contrast, represented only 5%). In addition, two of the traditional structural economic problems of the Spanish economy persisted: First, the labor temporary rate reached 33.3 percent in 2007, and it remained a significant challenge with implications for productivity and innovation. Second, inflation continued as a recurrent problem: it closed 2006 with a 2.7 percent increase, and as a result, the inflation differential with the EU (almost 1 point) did not decrease, which reduced the competitiveness of Spanish products abroad (and consequently Spanish companies continued losing market share abroad) (Laborda 2007). Growth also rested on borrowing. Family indebtedness reached a record 115 percent of disposable income in 2006, and the construction and housing sectors accounted for 18.5 percent of GDP (twice the euro-zone average). House prices rose by 150 percent since 1998, and the average price of a square meter of residential property went up from €700 in 1997 to €2,000 at the end of 2006, even though the housing stock had doubled. Many wondered whether this house-price bubble

1 7 0    S ebastián R o y o

was sustainable (Münchau 2007, Financial Times 2007a). The crisis that started in 2008 confirmed the worst of their fears. The increase in borrowing necessarily pushed consumption and investment beyond what the economy was producing. As a result, the current account deficit reached 8.9 percent of GDP in 2006, over 10 percent in 2007. These numbers made Spain the country with the largest deficit in absolute terms (€86,026 million), behind only the United States; imports were 25 percent higher than exports and Spanish companies were losing market share in the world. And the pattern continued: the trade deficit reached 9.5 percent of GDP in 2008 (El País 2007a). Finally, Spain needed to improve its education system and to invest in research and development (R&D) to lift productivity—as well as modernize the public sector—and make the labor market more stable (i.e., reduce the temporary rate) and flexible. Unfortunately, the government did not take the necessary actions to address these problems. Spain spent only half of what the Organization of European Cooperation and Development (OECD) spent on average on education; it lagged behind most of Europe on investment in R&D; and it was ranked twenty-ninth by the UNCTAD (United Nations Conference on Trade and Development) as an attractive location for R&D. Finally, observers note that Spain failed to do more to integrate its immigrant population into society, and social divisions were emerging as a result (Financial Times 2007b). By the summer of 2008, the effects of the crisis were evident, and since then the country suffered one of the worst recessions in history, with unemployment reaching over 27 percent in 2012, leaving more than six million people unemployed. This collapse was not wholly unexpected. The global liquidity freezes and the surge in commodities, food, and energy prices that followed the 2008 Great Recession brought to the fore the imbalances in the Spanish economy: the record current account deficit, persistent inflation, low productivity growth, dwindling competitiveness, increasing unit labor costs (meaning declining competitiveness), excess consumption, and low savings had all formed the basis for a devastating economic crisis (see Royo 2013). In just a few months, the “debt-fired dream of endless consumption” turned into a nightmare. By the summer of 2013, Spain faced the worst economic recession in a half century (see table 6.2). According to government statistics, 2009 was, prior to the COVID pandemic, the worst year since there has been reliable data: GDP fell 3.7 percent, unemployment reached over four million people, and the public deficit reached a record 11.4 percent of GDP (up from 3.4% in 2008). Consumer confidence was shattered, the implosion of the housing sector reached historic proportions and threatened to extend for several years, and the manufacturing sector was also suffering. THE MAIN CAUSES OF THE CRISIS Spain’s economic crisis was mainly due to a mismanaged financial sector, which by lending freely to property developers and mortgages contributed to a property bubble. This bubble hid the fundamental structural problems of the Spanish economy outlined in the previous section by justifying huge increases in credit to households and firms.

S pain    171 Table 6.2  The Economic Crisis in Spain

Real GDP (% change) Output gap (% GDP) Total investment (% GDP) CPI inflation (% change) Unemployment (%) Structural balance (% GDP)* Government debt (% GDP) Current account (% GDP)

2007

2008

2009

2010

2011

2012

2013

3.5 3.8 31.0

0.9 2.3 29.1

−3.8 −2.8 24.0

−0.3 −3.4 22.8

0.4 −3.2 21.5

−1.4 −4.5 19.6

−1.6 −5.4 18.1

2.8

4.1

−0.2

2.0

3.1

2.4

1.9

8.3 −1.1

11.3 −5.4

18 −9.5

20.1 −8.0

21.7 −7.8

25 −5.7

27 −4.5

26.7

30.8

42.5

49.8

57.5

71.9

79.1

−1.0

−9.6

−4.8

−4.5

−3.7

−1.1

1.1

Note: Structural balance is for general government accounts. Source: IMF

It also had an effect in policy choices, because no government was willing to burst the bubble and risk suffering the wrath of voters. Furthermore, cheap credit also had inflationary effects that contributed to competitiveness losses and record balance of payment deficits. Therefore, three dimensions of the crisis (financial, fiscal, and competitive) are interlinked in their origins. When it struck, however, the crisis exposed the underbelly of the financial sector and showed that many banks (particularly the savings and loans [cajas]) were not just suffering liquidity problems but also risked insolvency, which led to the EU financial bailout of June 2012. The bailout had onerous conditions attached, and it limited national economic autonomy (Dellepiane and Hardiman 2011). Now we turn to the elements of domestic policy that underline the triple crisis in financial, fiscal, and competitive performance.8 One of the most common misinterpretations regarding the crisis in southern Europe is attributing it to mismanaged public finances. In Spain, the crisis did not originate with sovereign debt. On the contrary, by 2011, Spain’s debt ratio was still well below the average for countries that adopted the euro as a common currency: while Spain stood at less than 60 percent of GDP, Greece stood at 160.8 percent, Italy at 120 percent, Portugal at 106.8 percent, Ireland at 105 percent, Belgium at 98.5 percent, and France at 86 percent. Spain ran a budget surplus in 2005, 2006, and 2007. It was only when the crisis hit the country and the real estate market collapsed that the fiscal position deteriorated markedly and the country experienced significant deficits. The problem in Spain was the giant inflow of capital from the rest of Europe; the consequence was rapid growth and price inflation. In fact, the fiscal deficit was a result, not a cause, of Spain’s problems: when the global financial crisis hit Spain and the real estate bubble burst, unemployment soared, and the budget went into deep

1 7 2    S ebastián R o y o

deficit, caused partly by depressed revenues and partly by emergency spending to limit human costs. The government responded to the crisis with a massive €8 billion public works stimulus. This decision, combined with a dramatic fall in revenue, blew a hole in government accounts as expenditures greatly outpaced revenues. The conditions for the crisis in Spain were created by the excessive lending and borrowing by the private sector rather than by the government. In other words, Spain experienced a problem of ever-growing private sector indebtedness, which was compounded by the reckless investments and loans of banks (including the overleveraged ones) and aggravated by competitiveness and current account imbalances. In Spain, the debt of private sector (households and nonfinancial corporations) was 227.3 percent of GDP at the end of 2010; total debt increased from 337 percent of GDP in 2008 to 363 percent in mid-2011. When those private sector borrowers got into trouble, the state (and the public sector) stepped in to rescue them. Furthermore, adoption of the euro as a common currency fostered a false sense of security among private investors. During the years of euphoria following the start of Europe’s economic and monetary union and prior to the onset of the financial crisis, private capital flowed freely into Spain, and as a result, the country ran current account deficits of close to 10 percent of GDP. At the same time, the economic boom also generated large losses in external competitiveness that Spain failed to address. A third problem had to do with the banks. This problem was slow to develop. Between 2008 and 2010, the Spanish financial system, despite all its problems, was still one of the least affected by the crisis in Europe—particularly with reference to the larger institutions, which were among the most conservative in Europe. Spanish regulators had put in place regulatory and supervisory frameworks that required higher provisioning, which initially shielded the Spanish financial system from the direct effects of the global financial crisis. Nevertheless, this success proved short lived. Although the larger institutions were sound, the smaller ones were not. In the summer of 2012, many of the smaller Spanish financial institutions seemed to be on the brink of collapse. The fact that the Spanish government had cobbled these institutions together into a smaller number of failing banks did not help the situation, and the crisis of the sector forced the European Union in June (2012) to devise an emergency €100 billion rescue plan for the Spanish banking sector. The deteriorating performance of the Spanish banks after 2009 was a direct effect of the economic crisis. The deep recession and record-high unemployment triggered successive waves of loan losses in the Spanish mortgage market coupled with a rising share of nonperforming loans. The Bank of Spain classified €180 billion as troubled assets at the end of 2011. Moreover, as mentioned before, the crisis in Spain did not originate with mismanaged public finances. The crisis was largely a problem of evergrowing private sector debt, compounded by reckless bank investments and loans, particularly from the savings and loans, as well as aggravated by competitiveness and current account imbalances. Spanish banks also suffered the consequences of their dependence on international wholesale financing, as 40 percent of their balance depended on funding from international markets. Finally, the crisis also exposed weaknesses in the policy and regulatory framework as well as in the actions (and inactions) of the Bank of Spain, which often

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chose the path of least resistance: alerting about the risks but failing to act decisively (see Royo 2020c).

The Consequences of the 2008 Crisis Since the end of the recession in mid-2013 and prior to the 2020 COVID-19 crisis, the Spanish economy experienced a remarkable recovery, although in terms of employment and inequality, as noted below, this convergence has been far less advanced (see table 6.3).9 The 2008 crisis made it necessary for Spanish policymakers to focus on increasing the competitiveness of their economy, which compelled the country (under Brussels’ insistence) to deregulate its labor market, welfare systems, and industrial relations. These reforms were designed not only to lower unit labor costs and make its markets in products or labor more intensely competitive but also to reduce the role of the state in the economy. It is fair to conclude that one of the outcomes of the crisis was the transformation of the Spanish economy into a more liberal market economy, in which inequality is higher and the overall role of the state and welfare policies is lower. At the same time, although the new growth model seems more based on exports, it remains to be seen if current account surpluses can be sustained over time, especially once wages and oil prices start to increase (see Royo and Steinberg 2020). The reasons for the successful recovery of the Spanish economy are both internal and external, endogenous and exogenous. The country clearly benefited from the fall in oil prices in 2015–2017, which boosted real incomes and lowered production costs (with estimated savings equivalent to two points in GDP); from the lower euro exchange rate (the euro fell 21% vis-à-vis the US dollar in that period), which helped exports; and from the loose monetary policies of the European Central Bank, with interest rates close to zero, which lowered the cost to finance the debt. However, some of these were temporary factors that eventually started to wind down. At the same time, the economic recovery prior to the pandemic was also the result of the structural reforms implemented in those years, notably the labor market reform, the recapitalization and reform of the banking system, and the tax reforms, which lowered corporate tax from 30 percent in 2015 to 25 percent in 2016. These reforms boosted Spain’s competitiveness and brought about a recovery in domestic confidence that has been instrumental in the economic recovery. Yet while the overall performance of the Spanish economy improved significantly during and after the 2014 recovery, and unemployment, inequality, and the risk of falling under the poverty line declined, progress was both slow and uneven. Unemployment fell sharply from a high 5.04 million unemployed in February of 2013 to 3.16 million in June 2018, the lowest level since December 2008. According to data from the Ministry of Labor, in September 2008, the social security system had 19.02 million affiliates, and it took ten years to reach this level again in June 2018 (the lowest level of affiliates during that decade was 16.17 million in January 2014). However, the quality of jobs deteriorated, and the vicious start-and-stop cycle of bad jobs, one of the country’s most chronic economic dilemmas, remained a problem unresolved by its postcrisis boom: It has one of the lowest rates of mobility, which means Spaniards

Source: IMF.

* Indicates estimates.

Real GDP (% change) Nominal GDP p/c ($ thousand) Output gap (% GDP) CPI inflation (% change) Unemployment (%) Fiscal balance (% GDP) Government debt (% GDP) Current account (% GDP)

1.4 29.6 −7.8 −0.1 24.4 −5.9 85.2 1.7

2014

Table 6.3  The Economic Recovery in Spain

3.8 25.8 −4.9 −0.5 22.1 −5.2 84.9 2.0

2015 3.0 26.5 −2.8 −0.2 19.6 −4.3 86.1 3.2

2016 3.0 28.2 −1.1 2.00 17.2 −3.0 85.1 2.8

2017 2.3 30.4 −0.0 1.7 15.3 −2.5 83.7 1.9

2018 2.1 29.6 0.5 0.7 14.1 −2.9 82.3 2.1

2019 −10.8 27.0 −8.5 −0.3 15.5 −11.0 103.0 0.8

2020

5.1 30.1 −5.2 3.1 14.8 −7.0 103.0 0.9

2021*

4.8 30.1 −1.9 5.3 13.4 −5.3 101.7 0.3

2022*

1 7 4    S ebastián R o y o

S pain    175

often stay in cities with few job opportunities, and consequently, the unemployment rate varies sharply among regions (e.g., in February 2020, it was 10% in Madrid or Barcelona and close to 25% in other southern provinces like Cadiz or Badajoz); the highest rate of high school dropouts in the EU (according to April 2020 data from Eurostat, 17.3% of Spanish young people between eighteen and twenty-four years of age did not continue training after finishing high school in 2019); and among the highest proportion of low-skilled workers (according to the data from the European Labour Force Survey, 42.1% of the Spanish population between twenty-five and fortynine years of age can be defined as low-qualified people, whereas this figure goes up to 67.6% among people in the age range of fifty to sixty-four years). At the same time, the global economic and financial crisis left a legacy of longterm unemployment: Spain was ranked next to last in the EU in long-term unemployment as a percentage of active population. Finally, the unemployment rate among women was still higher: 18 percent versus 15 percent for men in 2017. Women still suffer from a significant pay gap (in 2016, women earned on average €414 less per month than men did), they are more likely than men to be in temporary contracts, and, as a result, their wages tend to be lower and they are also more likely to work part-time (El País 2018b). This economic cycle reaffirmed the roller-coaster pattern from previous crises of the 1980s and 1990s: the Spanish economy has a strong tendency to destroy employment very rapidly during periods of recession, and it creates employment at a very fast rate during periods of growth. The cost of this model, however, is significant: for instance, there is evidence that the use of temporary contracts has a negative impact on productivity growth (already a challenge for the Spanish economy), particularly in skilled sectors (Lisi and Malo 2017). Breaking out of this negative equilibrium remains a key challenge for the Spanish economy. Furthermore, despite an increase in the number of permanent contracts since the labor reform of 2021 (which introduced new restrictions to temporary contracts), precariousness and employment instability remain two important structural weaknesses of the country’s labor market: according to the OECD, in 2021, the country still had the EU’s highest rate of precarious temporary contracts, 24.1 percent (the next one is Poland at 18.6%). However, the 2021 labor reform has already increased significantly the number of indefinite contracts: according to the Labor Ministry, in January 2022, the number of indefinite contracts reached 238,672, up 37 percent from December 2021 (and up 92% from January 2021); and 15 percent of all new contracts were indefinite (compared with a historical average of 9%). In addition, despite increases to the minimum wage (according to data from the Ministry of Labor, the minimum monthly wage grew by about 66% from 2008 to 2021, with salaries increasing from €600 a month to €1,000 a month in 202210), salaries have also stagnated, and purchasing capacity has barely improved: wage growth in Spain averaged 1.52 percent per year from 1978 until 2021.11 In sum, despite strong employment growth prior to the pandemic, the quality and stability of employment remain a problem and exacerbate inequality. This problem of wage stagnation and precarity of employment is particularly acute for younger workers: while it has declined from a high 55.5 percent, accord-

1 7 6    S ebastián R o y o

ing to Eurostat data, Spain still had in 2022 the second-highest (after Greece) youth unemployment rate of the EU, at 29.4. In addition, according to EU data, in spite of improving labor conditions, more than 70 percent of young workers in Spain are likely to be employed under nonstandard and atypical forms of employment, including temporary jobs, involuntary part-time work, and lower wage jobs. Finally, their salaries are very low: the average youth worker’s gross salary in Spain is €30.500 or an equivalent hourly rate of €15, and an entry-level youth worker (one to three years of experience) earns an average salary of €22.176.12 Another negative consequence of the 2008 economic and financial crisis was the increasing levels of income inequality, which rose above the OECD average. According to an EU employment report, while in the EU, the richest 20 percent of households received an income share that was 5.2 times that of the poorest 20 percent, in Spain that proportion was a little over 6.5 times (European Commission 2018). Moreover, according to the European Commission, Spain was one of the most unequal countries in the EU in 2019: if we take the disposable income ratio between the richest and poorest 20 percent of the population (S80/S20 index), Spain was the fourth most unequal country, after Romania, Bulgaria, and Greece. Indeed, despite the notable employment progress described above, the country has not yet reestablished the levels of income equality that it had prior to the economic crisis, and the benefits of the economic recovery have not been equitably distributed among the different segments of the population. And the COVID-19 pandemic has increased income inequality, because young, less educated, and low skilled workers as well as women have been the most affected by the COVID-19 shock in terms of job loss rates (Lariau and Liu 2022). Finally, although Spain made a steady recovery from the 2008 recession, poverty rates in the country remained high: the United Nations reported in February 2020 that in 2008, 26.1 percent of Spanish people and 29.5 percent of children were at risk of poverty or social exclusion in 2018, among the highest rates in Europe. Yet while corporate tax rates were first cut in 2007, Spain’s spending on education has decreased significantly, and the country spent just 16.6 percent of its GDP on social protection, more than two points below the EU average. The minimum pensioner earned €392 ($439.31) per month, which is little more than a third of the minimum wage (McMurtry 2020). According to the European Commission, despite improvements in the Gini coefficient, which descended in 2016 from 34.5 to 34.1 points in just one year (as a point of reference, before the crisis the Gini coefficient was 32.4 and the average in the EU was 30), the economic recovery for people with low income was too slow and did not helped to reduce inequalities between the top and bottom 20 percent of earners (European Commission 2018). At the same time, according to EU data, the depth and persistence of poverty remain high: the relative median at-risk-of-poverty gap was close to 30 percent. Moreover, while the proportion of people at risk of poverty or social exclusion has improved, it remains high, at close to 23 percent, and the impact of social policies reducing poverty has been limited: monetary poverty is only reduced by 25 percent after all social transfers, far away from the 50 percent in the Nordic countries. In addition, the rate of quasi-joblessness remained a worrisome high at 14.9

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percent, and the in-work at-risk-of-poverty rate is still one of the highest in the EU, at 13.1 percent.

Political Consequences Initially, Spain followed the patterns of other countries that severely punished the parties in government when the Great Recession started. The PSOE suffered a humbling defeat in the November 2011 election and lost fifty-nine seats in Parliament (from 169 in 2008 to 110 in 2011), while the PP obtained an absolute majority with 10.8 million votes (or 44.5%) and 186 seats in Parliament (up from 154). This election, however, was instrumental in the process that has led to the growing fragmentation of the Spanish political system (see table 6.4). Indeed, from a political standpoint, one of the most important consequences of the 2008 crisis has been the rupture of the two-party system that had characterized the country’s political system since the 1990s, in which the Socialist Party and the Conservative Popular Party (PP) had been alternating in power. The pain caused by the crisis, the endemic corruption in which largely all traditional parties (both national and regional) were implicated to different degrees, and internal divisions within the traditional parties (notably the PSOE) all fueled a wave of discontent that led to the erosion of support for the traditional national parties (PSOE and PP) and the emergence of new political parties, notably the leftist-populist Podemos and the centrist Ciudadanos, which have led to the fragmentation of the political system. This fragmentation started in 2011: in 2008, the PP and the PSOE controlled 92 percent of the seats in Parliament and after the 2011 election, “only” 84.5 percent; and it crystallized in the December 2015 election in which both Podemos (with 69 seats) and Ciudadanos (with 40) entered the Spanish Parliament. In that election the PP lost 63 seats (from 186 to 123) and the PSOE 20 (from 110 to 90). The PP suffered the consequences of the economic pain caused by the recession, at a time in which the benefits of the reforms were not yet fully evident, and of the anger over the growing corruption scandals that the party was involved in, and the PSOE was punished by the voters for its internal divisions and inability to present a clear alternative to the PP. Voters looking for alternatives to the traditional parties flocked to the new parties, Podemos and Ciudadanos. These electoral results introduced a new political landscape characterized by increasing fragmentation, volatility, unpredictability, and the need for parliamentary agreements to form a government. This new scenario led to paralysis when none of the parties was able to build a sufficient majority to form a government, which led to a new general election in June 2016. The 2016 election produced a similar result: the PP got 137 seats, the PSOE (ravaged by internal divisions) 85, Podemos 71, and Ciudadanos 32. However, this time, the PP was able to negotiate an investiture agreement with Ciudadanos and other smaller parties, and Rajoy was reelected as prime minister with the abstention of the PSOE, which led a rupture within the party and a painful leadership election process that brought back its leader, Pedro Sánchez. Following a short period of stability, the PP government was marred by growing corruption scandals involving the party, and

Partido Popular (PP) Partido Socialista Obrero Español (PSOE) Convergència i Unió (CiU) La Izquierda Plural (IU-LV) Amaiur (AMAIUR) Unión Progreso y Democracia (UPyD) Partido Nacionalista Vasco (EAJPNV) Esquerra Republicana de Catalunya Bloque Nacionalista Galego (BNG) Coalición Canaria-Nueva Canarias (CC-NC-PNC) Bloc-Iniciativa-Verds-EquoCoalició Compromís Foro de Ciudadanos (FAC) Geroa Bai (GBAI) Podemos* Ciudadanos Democràcia i Llibertat (DL) Euskal Herria Bildu (EH Bildu)

Seats

Votes

%

June 2016 Seats

Votes

%

April 2019

4.2 6.9 1.4 4.7 1.3 1.1 0.8 0.6 0.5 0.4 0.2

1,015,691 1,686,040 334,498 1,143,225

324,317

256,985

184,037

143,881

125,306

99,473 42,415

1 1

1

2

2

3

5

16 11 7 5

5,212,711 3,514,528 567,253 219,125

81,917

601,782

302,316

926,783

20.7 13.9 2.2 0.9

0.3

2.4

1.2

3.7

69 40 8 2

1

9

6

2

5,087,538 3,141,570 184,713 483,488

78,253

632,234

287,014

21.2 13.1 0.8 2.0

0.3

2.6

1.2

71 32 2 8

1

9

5

4

1.0

259,647

2

15

6

42 57

0.5

3.9

1.5

Votes

%

Seats

November 2019

0.5

0.5

3.6

1.6

277,621

5

35 10

2

1

13

6

(continued)

1.1

3,119,364 12.9 1,650,318 6.8

124,289

120,456

880,734

379,002

66 5,047,040 20.8 89 123 6,792,199 28.0 120

Seats

3,751,145 14.3 4,155,665 15.9

137,664

1,024,628

395,884

10,866,566 44.6 186 7,236,965 28.7 123 7,941,236 33.0 137 4,373,653 16.7 7,003,511 28.8 110 5,545,315 22.0 90 5,443,846 22.6 85 7,513,142 28.7

%

Votes

Seats

Votes

%

December 2015

November 2011

Table 6.4  Spanish General Elections, 2011–2019

1 7 8    S ebastián R o y o

Source: Central Electoral Commission

%

Seats

December 2015

Seats

Votes

%

November 2011

Votes

* In coalition with IU and others after 2015.

Convergència Democràtica de Catalunya (CDC) Vox Junts per Catalunya (JxCATJUNTS) Navarra Suma (NA+) Compromís: Bloc-IniciativaVerdsEquo Partido Regionalista de Cantabria (PRC) Más País-Equo (MÁS PAÍSEQUO) Candidatura d’Unitat PopularPer la Ruptura Terual Existe

Table 6.4  (Continued) %

June 2016 Votes

Seats

7 2

1.9 0.4 0.7 0.2

500,787 107,619 173,821 52,266

1 1

24

Seats

2,688,092 10.3

%

April 2019 Votes

0.3 2.4 1.0 0.1

68,830 582,306 246,971 19,761

3,656,979 15.1 530,225 2.2

%

1

2

3

1

52 8

Seats

November 2019 Votes

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a judicial sentence that confirmed the party’s involvement in a corruption scheme. Some of its leaders were sentenced to long-term prison, precipitating a motion of no-confidence in June 2018 that led to the defeat of the Rajoy government and the unexpected election of the PSOE’s leader, Pedro Sánchez, as prime minister with the support of other smaller regional parties and Podemos. This despite the PSOE’s relatively small parliamentary representation, with eighty-five seats. Initially Sánchez was able to build support from Podemos and other regional parties to pass his parliamentary initiatives. Yet while Sánchez tried to plow through despite his slender majority, the failure to approve a new budget precipitated a new general election in April 2019. That election, which was won by the Socialists with a relative majority, resulted again in a fragmented Parliament that made the formation of government very difficult and led to a new general election in November 2019, which was won by the Socialists again and led to the formation of a new minority coalition government (the first since the transition to democracy) between the Socialists and Unidas Podemos in January 2020. In the end, the economic crisis has ushered a new era in Spanish politics that will likely be characterized by the continuing erosion of the two-party system, increasing polarization, enduring fragmentation, and hence, more instability. Another consequence of the 2008 crisis has been the emergence on the far-right side of the political spectrum of Vox, a nationalist party founded in 2013 by former members of the PP who were disenchanted with the centrist stance of the Rajoy government and unhappy with its unwillingness to follow more socially conservative and economically liberal policies. For a long while, it was remarkable that despite the increases in unemployment and the rise in inequality and immigration, there was no right-wing, anti-EU party in Spain comparable to the Golden Dawn in Greece, the National Front in France, or the Brothers of Italy. However, the electoral success of the far-right Vox in the 2018 regional elections in Andalusia (and the subsequent general, European, and local/regional elections in 2019) represented a turning point in Spanish politics that further aligned it with its European neighbors. Vox is a “nationalpopulist” party that has focused on issues of sovereignty, security, and the economy. Vox supports the anti-immigrant and xenophobic fare typical of European far-right parties. They champion nativist fears of lost national identity and rally against the establishment for selling people out. Their proposals include the erection of walls (in Ceuta and Melilla in northern Africa); and bans on mosque building and the teaching of Islam in state schools. Vox advocates for Spain’s return to fully centralized government—the revocation of the 2007 Law of Historical Memory, which extended reparations to the victims of the Spanish Civil War and the Franco dictatorship; Vox also supports state protection for hunting and bullfighting, and lower taxes. In the November 2019 elections, Vox became the third-largest bloc in Parliament, with 15 percent of the votes (and 52 seats). Indeed, in the last four elections, the main parties (the Socialists and the Popular Party) have been hobbled by the rise of smaller, more radical groups, and the trajectory of the country’s politics shows that centrist parties have lost ground to more extreme factions, “which often pursue their particular interests at the expense of democratic norms and institutions.” This has led Freedom House to include Spain in a list of twenty-five out of forty-one established democracies that have suffered over the past

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fourteen years overall declines in the functioning of government, freedom of expression and belief, and rule of law (Freedom House 2020, 10).

The Impact of the COVID-19 Pandemic The Spanish economy was recovering from the 2008 crisis, and then the pandemic struck with devastating effects. The lethality of the coronavirus and its high death toll are the first elements that stand out in the Spanish case. As of May 3, 2020, Spain had the second-highest death rate (10.1% of the people who were infected with the virus), behind Italy (13.7%), and well ahead of the United States (5.8%), as well as the thirdhighest number of deaths in Europe, with 26,299 (behind Italy, with 29,070 deaths, and the United Kingdom, with 28,809). Spain did better in later waves, yet by March 2022, the country had experienced 11.6 million cases and over 103,000 deaths (or 2,178 deaths per million) (Royo 2021). Several factors have been given to account for this grim outcome. First, Spain has a significant old population vulnerable to the disease: 19.1 percent of the total population are sixty-five years old or older, yet it is worth noting that that figure is well below Portugal and Greece (both at 21.8%), Germany (21.4%), or France (20.3%), all with significantly fewer deaths than Spain. Second, the country is well known for its particularly sociable way of life; often two and three generations of the same families live in the same household, and socializing among people has been a major source of infections in Spain. Third, the country’s health-care system had been weakened by a decade-long financial crisis. Finally, a central reason for the pandemic’s devastating outcomes was the relatively poor governance of the crisis as manifested by the country’s lack of preparedness and its slow and delayed response. While Spain was not the only country that responded too late or was woefully unprepared to deal with the crisis, the lack of preparedness and the delayed response were not inevitable, and many other countries were far better prepared and responded earlier to the pandemic with much better outcomes. A new coalition government, the polarization of Spanish politics, and the politization of the crisis all combined with the decentralized nature of the Spanish state hampered the government’s response (Royo 2020b). The consequences of the crisis for the Spanish economy were also devastating, particularly for a country that was just emerging from the effects of the 2008 global financial crisis (as we have seen, unemployment was already 14 percent before the COVID-19 crisis started and total debt was hovering around 100 percent of GDP, thus limiting the country’s ability to take on more debt) (Financial Times 2020c). GDP declined 11 percent in 2020, which was among the worst decrease in GDP of all the European nations (e.g., for comparison, Italy had an 8.9% decrease), and the most drastic decrease in GDP since the country’s civil war from 1936 to 1939. Nearly 1.1 million people lost their jobs in 2020’s second quarter alone. In response to the crisis the government announced on March 17, 2020, a plan to inject the equivalent of 20 percent of GDP into the economy to combat the looming economic crisis, authorizing more that €4bn in funds to fight the disease.

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One of the main reasons for this brutal shock was that Spain is very dependent on tourism, which represented 14.3 percent of GDP, and the pandemic most severely affected countries that rely on tourism. Moreover, the country held the world’s second-highest death toll early in the pandemic, which forced Spain to impose some of the heaviest restrictions in the world, with major economic effects (Financial Times 2020b). Not surprisingly, the Spanish government was very active at the European level seeking help and urging EU leaders for the mutualization of debt and the issuing of coronabonds. In the end, in addition to the three safety nets of €540 billion already put in place by the EU to support workers, businesses and countries, EU leaders agreed on July 21, 2020, on an overall budget of €1.824 trillion for 2021–2027 to help the EU to rebuild after the COVID-19 pandemic that includes €390 billion in grants and €360 billion in loans, As a result, Spain will benefit from €140bn of the EU’s €750bn coronavirus recovery fund. According to the Bank of Spain, the Spanish economy was expected to experience an outstanding recovery in the midterm: In the best-case scenario, GDP could grow 8.6 percent and 4.8 percent in 2021 and 2022, respectively (this was before the war in Ukraine). Still, prospects are dire. As we have seen, even with the end of the lockdowns, the Spanish economy remains very vulnerable given the importance of the tourism sector (which represents 12% of GDP), which in 2022 is still hampered by COVID-related uncertainties, as well as other traditional weaknesses that we have examined: like a dysfunctional labor market with a quarter of workers on temporary contracts, youth unemployment that stood at 40 percent even before the pandemic, low productivity growth, and the structure of a business sector largely comprised of small and medium-size enterprises that often lack the resources and access to capital to withstand a long-term and severe downturn (Financial Times 2020a). Yet the country will benefit from very significant European support. Indeed, in response to the crisis caused by the coronavirus pandemic, EU leaders agreed on an overall budget of €1.824 trillion for 2021–2027 to help the EU to rebuild after the COVID-19 pandemic, which includes €390 billion in grants and €360 billion in loans. Under the Recovery and Resilience Facility (RRF), Spain was allocated €69.5 billion, which represented 9.6 percent of the entire RRF or 5.6 percent of the country’s gross domestic product (GDP) in 2019. This amount was revised upward to €77.2 billion (+11.1%) in 2022. In addition, these funds will be supplemented by the structural funds set out in the 2021–2027 Multiannual Financial Framework and by the REACT-EU funds, designed mainly for investment in health and education. Spain will receive in total €14.5 billion under REACT-EU to boost Spain’s recovery and to facilitate investments in the green and digital transition to support the economic recovery of Spanish regions, help workers and jobseekers acquire skills necessary for the digital and green transition, and improve the access to and functioning of social systems. In response, the Spanish government has drafted a National Recovery and Resilience Plan (NRRP) that includes 112 investments and 102 reforms that will help Spain become more sustainable, resilient, and better prepared for the challenges and opportunities of the green and digital transitions. This is an extraordinary amount of money that, if used appropriately, will be potentially instrumental to transforming the Spanish economy. Spain still needs to manage these European funds effectively, ensure

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that stimuli are not withdrawn prematurely; and design a medium-term fiscal plan that generates confidence. Unfortunately, the war in Ukraine will make matters more challenging. While there are no major Russian or Ukrainian investments in Spain, and the country does not have a high degree of exposure to Russia in terms of energy dependency (the country only imports 11% of its oil and 6% of its gas from Russia); it imports 38 percent of its maize, 25 percent of its barley, and two-thirds of its sunflower oil, as well as 10 percent of its wheat from Ukraine. Moreover, the main impact will be caused by increases in the prices of fuel and food that will push inflation up (in a country that already had an inflationary differential with the European core), which will lead to higher interest rates, thus making the financing of the huge debt even more expensive: the difference between ten-year Spanish debt and German bonds has already leapt from 72 to 100 basis points between the beginning of January 2022 and the end of February 2022 (Féas 2022). Moreover, from a political standpoint, in contrast with other European countries like Portugal, Germany, Italy, France, or the Netherlands, in which the pandemic brought together the main parties and reduced the level of political confrontation, in Spain the polarization and lack of cooperation between the government and the main opposition party made the response to the crisis even harder. The lack of dialogue (the Spanish prime minister spent two weeks early in the crisis without reaching out to the leader of the opposition) rooted in the polarization that has characterized Spanish politics in the last few years was another unfortunate feature of the response to the crisis. One of the main consequences of all this has been the further erosion of the public trust in government. Indeed, the pandemic has already affected Spaniards’ views on politics, society, and Europe’s place in the world. According to a June 2020 poll from the European Council on Foreign Relations (ECFR 2020), 58 percent of Spanish voters have less confidence in the power of government than they previously did, and they believe that their government performed poorly (only the French government, with 61%, fared worse among the nine countries polled) (Royo 2020b).

Conclusion The years 2009 through 2022 in Spain’s history have been a roller-coaster period, with brutal lows during one of its worst economic crises in modern history, some impressive highs as the country emerged from it, and a subsequent sharp fall during the pandemic.13 Those who still argue that the 2008 economic crisis in Spain was caused by the EMU’s institutional deficiencies, the subprime crisis in the United States, neoliberal policies, or deregulation fail to consider the domestic institutional dimension. As we have seen, the crisis exposed an unsustainable economic model that had no long-term prospects. The emperor had no clothes. While Spaniards were rightly outraged by the actions of bankers and politicians, and by the amorality of the whole situation and the complete disregard from the majority of the country’s elite for the impact that their actions could have on people, most people had a sense of what had

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been going on and tolerated it. There seemed to be a complete disconnect between actions and consequences. The Spanish ruling class largely remains a community interwoven by personal and/or financial connections that have worked to its advantage, often at the expense of regular citizens. That interweaving generated clientelistic networks that have provided protection and a safety net that did not let them fall. Elites became complacent; they had been coasting for a long time, and they could not grasp the unsustainability of their course of action. Their own success skewed them in an optimistic direction and kept them from seeing what was happening around them. For them, actions and consequences did not apply. They did not seem to appreciate that their actions could make any difference or that they had responsibilities for the consequences of their actions (New York Times 2013). When the crisis hit the country, they were out of answers. Their complacency took the place of serious thinking about the country’s future. Spanish citizens still demand answers. As we have seen, the 2008 economic crisis was followed by a political crisis that has made it harder to act: The country has experienced four general elections in four years between 2015 and 2019. And regional tensions have intensified as a result of the crisis in Catalonia, where divisions over the illegal independence push in 2017, and the nationalist backlash that it triggered in the rest of the country, have intensified the effects of political fragmentation and polarization. Not surprisingly, Spanish citizens are still upset about corruption and impunity, the consequences of severe budget cuts, taxes, the dramatic increase in unemployment, and the pessimism and desperation that have spread across the country following the crisis. But it would be too easy just to blame the political and economic elites. That account leaves aside the responsibility of people who were not part of the political elite but also invested into the property pyramid scheme the fueled the bubble. They also seemed to forget that their actions had consequences. Indeed, a central challenge has been the lack of accountability: in the years prior to the crisis, there was (in Spain and many other countries) a feeling of impunity that came from nonpunishment. As of 2022, the list of those who have been sent to jail for their part in the housing bubble and all that followed it is remarkably thin, and just a handful of corruption cases have resulted in convictions or reached any conclusion to date. Certainly, if there is nothing criminal in the conduct of the managers—or the regulators—it must be because criminal law is defective in that area. The aftermath of the COVID-19 pandemic is also showing that these behaviors persisted during the worst crisis the country has experienced in its modern history, as several individuals, many of them well connected with people in power, are being investigated for supply contracts and commissions that they extracted at the height of the crisis (U.S. News & World Report 2022). It is essential for the culture of impunity that characterized the last two decades to change. In this regard, one of the few positive outcomes of the two crises seems to be that Spanish society has become less tolerant of corruption. This is crucial to prevent future crisis: bankers and politicians must know that if they break the rules, they can go to prison. The country needs simple rules, timely judicial decisions, and strong enforcement, and accountability must also extend to politicians. Yet while Rajoy’s

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government was toppled in 2018 over the corruption of the PP, trials still take way too long, few people are convicted, and the prison terms or financial penalties are not always severe or come too late. For instance, the former Bankia CEO, Rodrigo Rato, and dozens of other former bank directors and executives were sentenced to “only” four and a half years in prison for misusing the bank’s funds: over a decade, they unlawfully used the company’s credit cards to make purchases totaling €12.5 million to make their own lavish purchases. Spain seems to conform to Mancur Olson’s institutional sclerosis thesis (1982), according to which all political systems, over time, succumb to rent-seeking activities by organized interest groups, which leads to cronyism and corruption and thus an erosion in the rule of law. The solution, therefore, must come from civil society. Indeed, civil society needs to be strengthened. Historically, Spaniards (as other continental Europeans) have preferred equality to liberty, which led to the development of strong states but, conversely, weak civil society. We need a better balance. Furthermore, deep-seated structural weaknesses are still holding back growth in Spain and weighing on market assessment: overregulated product and labor markets, poor productivity, and low education achievement in international tests. Spain still has much ground to cover vis-à-vis its wealthiest European counterparts. In the absence of devaluations, Spain still needs further structural reforms to improve productivity and move toward a higher value-added model. The 2008 crisis has also shown that “internal devaluations” through a decrease in prices and salaries are not politically sustainable in the long term and are too costly socially. Indeed, while Spain regained competitiveness after the 2008 crisis, it did so at enormous social cost. And the crisis was particularly brutal for young people, who have not yet fully recovered; in the fall of 2021, the government put together a plan to give people between eighteen and thirty-five years of age with an annual income of less than €23,725 ($26,900)—roughly ​​€1,977 ($2,285) a month—€250 ($290) a month to put toward their rent so they could leave their parents’ homes. But governments have other options to regain competitiveness, including the reduction of social security contributions and/or the increase of the Value Added Tax, the reduction of other nonsalary costs such as those for energy and infrastructure, and the increase in productivity and labor quality. In January 2020, a leftist government coalition between the Socialist Party and the leftist populist Unidas Podemos that emerged from the November 2019 election came to power with a progressive agenda that, while committed to fiscal discipline, seeks significant tax increases for the wealthy, higher corporate taxes, and a labor reform to eliminate some of the more neoliberal provisions of Rajoy’s 2012 labor reform. This is the first coalition government and the first time in which the Communist Party is part of a coalition government since the 1930s. It came to power with a very slim majority (it won the tightest of investiture votes in history: 167 vs.165) and at a time in which the country slipped back to the polarization and personal animosity that had characterized other dark periods of Spanish modern history. The pandemic has only made things worse. Rather than unifying Spaniards in pursuit of a common goal, it only intensified polarization. All this speaks to a growing loss of trust and confidence. The crisis has also laid bare the weakening of the country’s

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civic strength, and the social compact seems to be broken. For a political community to acquire and sustain legitimacy over time requires a common purpose. The growing polarization and the conflict with and within Catalonia were already symptoms of the erosion of that common purpose. The pandemic seems to have accelerated it further. The COVID-19 crisis has shown us, yet again, that in order to regain public trust and legitimacy, our governments must produce satisfactory outcomes (our source of legitimacy after all comes from outputs: “What have you done for me lately?”) while providing appropriate voices to our citizens in decision making. At the same time, the COVID crisis has intensified the economic challenges: unemployment remains stubbornly high at 15 percent (still about half the rate of the peak of the 2008 crisis), job security is still an issue with more than a quarter of employees on temporary contracts, the quality of many jobs and the level of some wages leave much to be desired, and the country was already experiencing lower rates of growth before the pandemic hit the country. The economy was no longer expanding at the 3 percent rate of 2015–2016, which had already slowed down job creation from an annual rate of 3.2 percent earlier in 2019 (596,900 new additional jobs) to 1.7 percent by the end of that year (346,300 jobs). Still, the main concern is still the dysfunctional state of the country’s politics: the dispute between Catalan separatists and the rest of the country remains tense, and four elections in four years have produced inconclusive results and weak governments that have not lasted long. Political fragmentation seems entrenched: the fourth general election in as many years that resulted, yet again, in an inconclusive result in November 2019 made the formation of a stable government even more difficult and was expected to make it difficult to pass legislation or approve the budgets. Yet the coalition government has been remarkably successful in forging majorities in Parliament to advance its legislative agenda and approve successive budgets with the support of Catalan and Basque pro-independence parties, which has only contributed to intensify polarization and political acrimony. The year 2022 ended with the continuing “erosion of the institutions” (in the words of the head of state, Philip IV, during his annual Christmas message to the country), and it was marked by an unprecedented institutional crisis caused by the decision of the Constitutional Court to suspend a vote in Parliament to reform the penal code. Moreover, even before the pandemic, the Spanish economy still faced significant challenges, and the negative consequences of the Great Recession were still felt across the country. The country still needs to increase its potential growth, reduce inequality, reform its welfare system, address its demographic challenges, and raise its productivity level. The 2008 crisis provided an important reminder that in the context of a monetary union, countries only control fiscal policies and relative labor costs. Spain did not take advantage of the boom years to implement the structural reforms that would have diminished the vulnerabilities of the country’s economy (notably its low productivity growth and its high dependence on the construction sector) and that would have placed it in a stronger ground to confront the inevitable downturn. The 2008 crisis, however, provided the impetus, often marshaled from Brussels, to implement the structural reforms that had been previously hindered by domestic political constraints. Still, there are good reasons for optimism (Financial Times 2019). Following the 2008 crisis and before the pandemic hit the country, Spain was moving away from

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an economy that was overly dependent on residential constructions, and it adjusted magnificently to an export-oriented economy. Indeed, despite political uncertainty, innovation and exports were flourishing, and the country was experiencing an expansionary cycle with a positive current account cycle (something quite exceptional in recent history as Spain, as we have seen, experienced current account deficits of over 10% prior to the crisis). Indeed, Spain was still benefiting from its extensive connections abroad, particularly in the EU and Latin America, and it was capitalizing from cost advantages compared to other Western European countries as well as from an impressive infrastructure network that includes the EU’s most extensive high-speed train, motorway, and fiber-optic networks. In addition, the 2008 crisis led a massive deleveraging of the private sector, and the reforms that followed the crisis (including a labor reform that further liberalized the labor market and shifted away from sectoral wage bargaining) resulted in competitiveness gains driven by lower costs and wages (labor costs were between 20% and 40% below France, Germany, and the UK, the outcome of a brutal internal devaluation), which led to a surge of exports (cars, chemicals, industrial equipment, food products) between 2009 and 2019: from 22 percent of GDP to 35 percent. While Spanish workers bore the brunt of the crisis, salaries were finally growing again: In 2019, salaries negotiated in collective bargaining agreements grew 2.3 percent, public salaries also increased 2.5 percent, and the government increased the minimum wage 22.3 percent to €900 (the highest increase since the establishment of democracy in the country). All this led to an average wage increase of approximately 2 percent. Yet the aftermath of the COVID-19 crisis has led to renewed inflationary pressures that only intensified in the first half of 2022 with the Russian invasion of Ukraine. As a result, the country faces a three-decade high in inflation: According to the National Statistics Institute (INE), Spain’s annual inflation accelerated to 9.8 percent in March 2022, from 7.6 percent in February and well above market expectations of 8 percent. The government responded with a call for incomes policy to dodge a wage-price spiral, and at the time of writing (April 2022), employers and unions were negotiating a compromise: gradual salary increases in the coming years in return for companies limiting dividend payouts refraining from large price hikes. The leftist coalition government has been in unchartered territory, as the country has never had a coalition government since the transition to democracy more than four decades ago, plus it does not have enough votes in Parliament and needs support from other parties to pass legislation. This has led to ad hoc coalitions with minority parties (in the words of the opposition “Frankenstein coalitions”) to pass legislation and approve the national budget. The two parties have passed legislation and approved higher taxes, swifter reductions in carbon emissions, and a return to sector-level collective bargaining (from firm-level wage bargaining) and more restrictions to temporary contracts. The government has been engaged in dialogue with the pro-independence Catalan leaders (in exchange for abstention in the investiture vote by the most pragmatic of Catalonia’s secessionist parties, Esquerra Republicana de Catalunya) to try to ease tensions and mend divisions (for which it has been accused of treachery by the conservative parties). Yet there are still concerns that these policies are denying Spanish companies the ability to adapt swiftly to new market conditions and opportunities and

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that raising corporate taxes of bigger groups may deter the investment that the country desperately needs to raise productivity. Finally, the government faces significant fiscal constraints, as public debt was hovering at around 100 percent of GDP before the pandemic, but it reached 120 percent in 2020 and 118.7 percent in 2021 as the government used stimulus to try to limit the damage from the COVID crisis. The war in Ukraine is raising further challenges for a country that is totally dependent on oil imports. At the end of 2022, the coalition government approved a new set of measures to try to limit the impact of inflation and the effect of the war in Ukraine that included €10 billion for economic relief from rising prices and help for the most vulnerable, in addition to the previous €3 billion that it had already approved earlier that year. Indeed, there are no reasons for complacency. In spite of its vigorous, pre-pandemic economic performance, the country still needs to address its high level of debt (over 118% of GDP in 2021) and the impact on public finances of population aging, as well as the high structural and youth unemployment rates, and to find ways to stimulate productivity. If anything, the COVID-19 crisis has revealed the urgent need for actions and reforms. Spain needs to strengthen the central services of the Ministry of Health, develop much better data management, and reorient the joint decisionmaking mechanism. At the same time, the country needs to diversify its economy and rely less on tourism: indeed, Spain’s position at the bottom of European countries in terms of GDP decline is explained by its extremely high dependence on the tourism sector, which was the epicenter of the crisis. Furthermore, the country needs to address its endemic structural problems: a dysfunctional labor market with a very high proportion of temporary contracts, low productivity, the structure of a business sector largely comprised of small and medium-sized enterprises, and the sustainability of the pension system with a fragile contribution base. To do so, it needs to consolidate a different model of economic growth that is not just based on low cost and low value added and instead deepen its competitive capacity with knowledge-based investment that will contribute to faster productivity growth and will help address the persistent labor precariousness and social inequalities. If used wisely, the €77.2 billion that the country is receiving from the EU to help it to rebuild after the COVID-19 pandemic will be instrumental in accelerating this transition and preparing the country for the challenges and opportunities of the green and digital transitions. Even more importantly, the pandemic has exposed the absence of a national purpose. At a time in which all hands should be on deck to fight the virus and deal with its dramatic consequences, the crisis has intensified the search for scapegoats and has only worsened the country’s political divide. That alone does not bode well for the future.

Notes 1. This section borrows from Royo (2000). 2. This section borrows from Royo and Manuel (2003). 3. The terms the “European Community” (EC) or the “European Union” (EU) are used indistinctly to refer to the European integration process and institutions throughout the chapter. Similarly, “Europe” is here always used to refer to the countries that are members of the European Union, either before or after the Maastricht Treaty.

S pain    189 4. This section borrows from Royo (2008). 5. Of those polled, 17 percent selected Spain as the country where they would prefer to work ahead of the United Kingdom (15%) and France (11%). Cf. El País (2007b). 6. According to the data (2021) from the World Bank Governance Indicators (https://info​ .worldbank​.org​/governance​/wgi​/Home​/Reports), Spain is ranked in the seventy-fifth to one hundredth percentile in control of corruption, government effectiveness, regulatory quality, rule of law, and voice and accountability, but the country has declined in all these variables since 2011. 7. According to Martinez-Mongay and Maza Lasierra (2009, 34), “The outstanding economic performance of Spain in EMU would be the result of a series of lucky shocks, including a large and persistent credit impulse and strong immigration, underpinned by some right policy choices. In the absence of new positive shocks, the resilience of the Spanish economy to the financial crisis might be weaker than that exhibited in the early 2000s. The credit impulse has ended, fiscal consolidation has stopped, and the competitiveness gains of the nineties have gone long ago.” 8. This section borrows from Royo (2013). 9. This section borrows from Royo (2020a). 10. The Socialist government passed a decree in 2019 increasing the minimum wage by €164, thus reaching €900 per month, the largest increase to date. 11. For instance, while the accumulated inflation between 2007 and 2017 was 14.20 percent, salaries only increased 15.13 percent for managers and 16.36 percent for regular workers during the same period. Cf. El País (2018a). 12. According to a study from PeopleMatters, the entry salaries for young people with university degrees range between €21,000 and €32,000 a year, but the most typical average is €21,000. Cf. El País (2018a). 13. This section borrows from Royo (2020c).

Suggested Readings Baccaro, Lucio, and Fabio Bulfone. “Growth and Stagnation in Southern Europe: The Italian and Spanish Growth Models Compared.” In Diminishing Returns: The New Politics of Growth and Stagnation, edited by Marc Blyth, Jonas Pontusson, and Lucio Baccaro, 293–322. New York: Oxford University Press, 2022. Burroni, Luigi, Emmanuele Pavolini, and Marino Regini. Mediterranean Capitalism Revisited: One Model, Different Trajectories. New York: Cornell Studies in Political Economy, 2022. Calvo-Gonzalez, Oscar. Unexpected Prosperity: How Spain Escaped the Middle-Income Trap. New York: Oxford University Press, 2021. Carr, Raymond. Spain: A History. New York: Oxford University Press, 2001. Elliott, John H. Scots and Catalans: Union and Disunion. New Haven, CT: Yale University Press, 2020. Muro, Diego, and Ignacio Lago, eds. The Oxford Handbook of Spanish Politics. New York: Oxford University Press, 2020. Royo, Sebastián. Lessons from the Economic Crisis in Spain. New York: Palgrave Macmillan, 2013. Tremlett, Giles. Ghosts of Spain: Travels through Spain and Its Silent Past. London: Bloomsbury, 2008.

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References Calavita, Kitty. 2005. Immigrants at the Margins. New York: Cambridge University Press. Dellepiane, Sebastian, and Niamh Hardiman. 2011. “Governing the Irish Economy.” UCD Geary Institute Discussion Series Papers, Geary WP2011/03, February 2011. Dublin: University College Dublin. The Economist. 2019. “The Strain in Spain.” Special report, July 28, 2019. El País. 2006. “Los expertos piden cambios en la política de I+D.” December 18, 2006. El País. 2007a. “La Comisión Europea advierte a España de los riesgos de su baja competitividad.” February 4, 2007. El País. 2007b. “España vuelve a ser diferente.” February 19, 2007. El País. 2018a. “Los salarios ganan solo dos puntos a la inflación en los últimos diez años.” January 13, 2018. El País. 2018b. “Menos recuperación para ellas.” December 25, 2018. European Commission. 2018. Joint Employment Report 2018. Adopted by the EPSCO Council, March 15, 2018. Feás, Enrique. 2022. “The Effects of the Invasion of Ukraine on the Spanish Economy.” Real Instituto Elcano, March 11, 2022. Financial Times. 2006. “Fears of Recession as Spain Basks in Economic Bonanza.” June 8, 2006. Financial Times. 2007a. “Spain Shudders as Ill Winds Batter US Mortgages.” March 21, 2007. Financial Times. 2007b. “Zapatero Accentuates Positives in Economy, but Spain Has Other Problems.” April 16, 2007. Financial Times. 2019. “How Spanish Business Rides Out Political Turbulence.” December 10, 2019. Financial Times. 2020a. “Europe’s Drive to Save Jobs Risks Fuelling North-South Inequality.” April 13, 2020. Financial Times. 2020b. “Spain on Course to Be Worst-Hit EU Economy.” April 13, 2020. Financial Times. 2020c. “Bank of Spain Warns of Covid Drag on Economy.” September16, 2020. Freedom House. 2020. Freedom in the World 2020: A Leaderless Struggle for Democracy. Washington, DC: Freedom House. Laborda, Angel. 2007. “El comercio en 2006.” El País, March 11, 2007, 20. Lariau, Ana, and Liu, Lucy Qian. 2022. “Inequality in the Spanish Labor Market during the COVID-19 Crisis.” IMF Working Paper, WP/22/18. Lisi, Domenico, and Miguel A. Malo. 2017. “The Impact of Temporary Employment on Productivity.” Journal for Labour Market Research 50:91–112. https://doi​.org​/10​.1007​/s12651​ -017​-0222​-8. Martinez-Mongay, Carlos, and Luis A. Maza Lasierra. 2009. “Competitiveness and Growth in the EU.” European Commission: Economic and Financial Affairs. Economic Papers 355 (January): 1–42. McMurtry, Alyssa. 2020, February 7. “Spain’s Poverty Rate ‘Appallingly High’: UN Expert.” Anadolu Agency. Münchau, Wolfgang. 2007. “Spain, Ireland and Threats to the Property Boom.” Financial Times, March 19, 2007. New York Times. 2013. “The Psychology of an Irish Meltdown.” July 27, 2013. Royo, Sebastián. 2000. From Social Democracy to Neoliberalism. New York: St. Martin’s Press. Royo, Sebastián. 2008. Varieties of Capitalism in Spain. New York: Palgrave Macmillan.

S pain    191 Royo, Sebastián. 2013. Lessons from the Economic Crisis in Spain. New York: Palgrave Macmillan. Royo, Sebastián. 2020a. “The Causes and Legacy of the Great Recession in Spain.” In Oxford Handbook of Spanish Politics, edited by Diego Munro and Ignacio Lago, 116–31. New York: Oxford University Press. https://doi​.org​/10​.1093​/oxfordhb​/9780198826934​.013​.8. Royo, Sebastián. 2020b. “Responding to COVID-19: The Case of Spain.” European Policy Analysis 6 (2): 180–90. https://doi​.org​/10​.1002​/epa2​.1099. Royo, Sebastián. 2020c. Why Banks Fail: The Political Roots of Banking Crises in Spain. New York: Palgrave Macmillan. Royo, Sebastián. 2021. “COVID-19 in Spain: The Consequences of Faulty Governance and Delays.” Paper presented at the 2021 Annual Meeting of the American Political Science Association, Seattle, September 29–October 3. Royo, Sebastián. 2022. “Handling the COVID-19 Crisis in Spain: Policy Failures in a Decentralized State.” Paper presented at the 2022 Annual Meeting of the American Political Science Association, Montreal, September 15–18. Royo, Sebastián, and Federico Steinberg. 2020. “Using a Sectoral Bailout to Make Wide Reforms: The Case of Spain.” In The Political Economy of Adjustment Throughout and Beyond the Eurozone Crisis: What Have We Learnt? edited by Michelle Chang and Federico Steinberg, 157–80. New York: Routledge. Royo, Sebastián, and Paul C. Manuel. 2003. Spain and Portugal in the European Union. London: Frank Cass. U.S. News & World Report. 2022. “Spain to Probe Socialite’s Multi-Million Euro COVID Supply Contracts.” April 7, 2022.

CHAPTER 7

Poland THE DECONSOLIDATION OF DEMOCRACY Ben Stanley

192

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Poland Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Joined EC/EU

37.9 120,421 320 $594.2 $15,656 May 1, 2004

Performance of Key Political Parties in Parliamentary Elections of October 2019 Civic Platform: Confederation Alliance: Democratic Left Alliance: German Minority (MN): Law and Justice (PiS): Polish People’s Party (PSL):

27.4% 6.8% 12.6% 0.2% 43.6% 8.6%

Main Officeholders • President: Andrzej Duda, PiS (2015) • Prime Minister: Mateusz Morawiecki, PiS (2017)

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T

hree decades after the momentous events of 1989, Poland remains in thrall to the politics of transition. In the first decade, Polish party politics initially reflected the divide between reformist elements of the communist regime and the dissidents who had forced them to the negotiating table. However, the second decade saw a realignment of political competition around a distinction between the “winners” and “losers” of transition, and between moderation and radicalism. In the latter half of the third decade, Poland underwent an illiberal turn that took it away from the path of democratization and toward a novel form of political regime that retained the processes of electoral democracy but subordinated independent institutions of scrutiny and control to the executive. This chapter argues that Polish politics remains dominated by the “metapolitical foundations” of the democratic transition. The persistent and intense polarization between supporters of Poland’s liberal-democratic settlement and those who contested it continues to reflect unresolved questions about the legitimacy both of decisions taken in the early years of transition and the political elites who made those decisions (Bill and Stanley 2020). Yet, more policy-adjacent ideological distinctions also mattered. Economically and culturally, the political class was bisected by a “transition divide” that reflected the effects of economic and social reforms (Millard 2006, 1007). Politically, the illiberal turn reflected a broad reorientation of European politics around the twin poles of “integration”—participation in the broadening and deepening of forms of political and economic cooperation at the European level—and “demarcation”— the rejection of that model (Kriesi et al. 2006, 922). In the Polish case, this protocleavage was also rooted in the persistence of political actors from the early 1990s, in the maintenance of the arcane webs of loyalty and enmity that sustained their relationships, and in contestation of the legitimacy of the post-1989 political settlement. A blandly technocratic liberal democracy in Poland proved unequal to a cleverly sequenced and relentless populist assault. Independent institutions were unable to hold out for long against a coordinated and remorseless strategy of executive aggrandizement. Liberal democrats in theory, many Poles proved indifferent in practice to the violation of norms of pluralism. In the absence of those channels of institutionalized disagreement through which pluralistic politics runs (Sawczuk 2018, 181), Poland’s political elites mostly fought not over the merits of policy ideas but over the legitimacy of political actors (Bill and Stanley 2020).

Liberalism after Communism The ideology of liberalism inspired Poland’s postcommunist reform after 1989, but liberals themselves were initially in short supply. Liberal ideas only began to take root during communism, when the opposition movements of the 1970s pursued the development of a pluralistic civil society upholding human and civil rights (Szacki 1995, 100). These intellectual currents fed into the demands for autonomy and selforganization advanced by the Solidarity movement, which in 1980–1981 numbered some ten million members. The suppression of Solidarity through the imposition

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of martial law in 1981 underlined the bankruptcy of communist legitimacy and the exhaustion of zeal for orthodox solutions. Yet the outlawing of the organization and internment of leading dissidents demonstrated that the coercive powers of the state remained insuperable. During the repressive years of the mid-1980s, many opposition intellectuals turned away from civic, political freedoms and toward notions of freedom through economic liberalization. In the new context of transition to democracy, the robust individualism advocated by enthusiasts of capitalism assumed a wider relevance. If the “proven model” of market capitalism seemed a panacea for economic problems, the key postulates of liberalism promised remedies for the pathologies of political and cultural existence under communism. Liberalism appeared as “inverted Marxism,” offering the opposite of all that was hated in the previous order (Ackerman, cited in Szacki 1995, 6). As well as establishing a fully functioning capitalist economy, democracy had to be entrenched in accordance with liberal constitutionalist principles. The role of the state was to act as guarantor of the rights and freedoms of the individual and to ensure an open civil society in which free individuals could participate. This required legal protections for individual and minority rights and the decrease of direct state control over areas such as the media and the education system. Openness in the domestic sphere was complemented by an open, nonantagonistic foreign policy, with an emphasis on cooperation with and membership in international organizations. Most scholars assumed that postcommunist politics would revolve around a key economic division between pro-market and anti-market parties. This was supplemented by a variety of “cultural” divides such as “religiosity versus secularism,” “liberalism versus cosmopolitanism,” and “traditionalism versus libertarianism,” all of which were in essence about differences between individualist and collectivist conceptions of society (Kostelecký 2002, 171–72). However, early political developments demonstrated an even more complex ideological configuration underlying the regime divide, which continues to afflict present-day politics. In the Polish case, a “triangle of values” was evident at an early stage: a group of liberal parties (UD and the Liberal-Democratic Congress [KLD]) advocated civic rights and rejected socioeconomic rights, the Social Democratic Left (SLD and the Labour Union [UP]) supported both civic and socioeconomic rights, and the conservative nationalist Right (most prominently, ZChN) supported socioeconomic rights but argued for the primacy of the family and the nation over the individual (Kurczewski 2009, 85–88).

Whose Poland Is It to Be? From the Breakthrough of Democracy to the “War at the Top” The semidemocratic elections of June 1989 equipped Poland with a set of bootstraps by which it would haul itself into democracy. The elections took part largely in an atmosphere of optimism and goodwill on the part of both political elites and voters. In September, Solidarity intellectual Tadeusz Mazowiecki became prime minister of a Grand Coalition, dominated by Solidarity but involving ministers from all parties,

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including the former communists. (See box 7.1 for a list of major personalities.) The rapid fall of communist regimes elsewhere turned thoughts from the selective application of remedial market reforms to the wholesale transformation of the economic system. The Balcerowicz Plan (named after Leszek Balcerowicz, Mazowiecki’s finance minister), an economic package that came into force on January 1, 1990, simultaneously enacted “shock therapy” on the economy and laid the foundations of the new economic order. Yet the resentment of radical opposition groups who had rejected all negotiation with the communists was exacerbated by the technocratic

Box 7.1  Major Personalities Leszek Balcerowicz: Academic economist. Finance minister in the Mazowiecki government and architect of Poland’s “shock therapy” economic reforms; leader of UW from 1995 to 2000. Andrzej Duda: Lawyer and politician, president of Poland since 2015. Formerly a member of parliament and member of the European Parliament for PiS. Wójciech Jaruzelski: Army general and last communist leader of Poland; introduced martial law in December 1981 to suppress the Solidarity movement. First president of the Third Republic of Poland, from 1989 to 1990. Jarosław Kaczyński: Cofounder of PC and PiS. Member of parliament since 1991, except 1993– 1997. Prime minister of the PiS-SRP-LPR government; currently (2022) leader of PiS and chief opposition figure. Lech Kaczyński: President from 2005 until his death in the 2010 Smolensk tragedy. Previously a senator, member of parliament, president of the Supreme Chamber of Control, and mayor of Warsaw. Cofounded PiS with his twin brother, Jarosław. Aleksander Kwaśniewski: Reformist member of the PZPR and participant in the Round Table talks. Cofounder of SdPR and member of parliament from 1991 to 1995. President from 1995 to 2005. Andrzej Lepper: Farmer, and founder and unquestioned leader of SRP. Led controversial campaigns of direct action during the 1990s. Member of parliament between 2001 and 2007; agriculture minister and deputy prime minister in the PiS-SRP-LPR government. Tadeusz Mazowiecki: Catholic intellectual, author, journalist, and member of parliament from 1961 to 1972 for Znak, a group representing Catholics. Subsequently a prominent Solidarity intellectual and key participant in the Round Table talks. First noncommunist prime minister, serving from 1989 to 1990. Member of parliament from 1991 to 2001, and leader of UD/UW from 1990 to 1995. Mateusz Morawiecki: Economist and politician, prime minister of Poland since 2017. An anticommunist activist in his youth, he had a career in banking before entering politics. Jan Olszewski: Lawyer and Solidarity activist, first prime minister of the first fully democratically elected Sejm from 1991 to 1992. Member of parliament from 1991 to 1993 and from 1997 to 2005. Founder and leader of ROP from 1997 to 2001. Tadeusz Rydzyk: Redemptorist Catholic priest, proprietor of Radio Maryja, and associated Catholic-fundamentalist media outlets. Beata Szydło: Member of the European Parliament for PiS, she was prime minister of Poland from 2015 to 2017 and deputy prime minister from 2017 to 2019. Donald Tusk: Solidarity activist and cofounder of KLD. Member of parliament for KLD and subsequently UW from 1991 to 2001. Left UW to found PO; leader of PO since 2003. Currently prime minister of the PO-PSL government. Lech Wałęsa: Shipyard worker who spearheaded the Solidarity movement. President of Poland from 1990 to 1995.

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political style of the Mazowiecki government and its determination to avoid policies of revenge. The absence of public debate and the strict oversight of parliamentary discussion of the Balcerowicz Plan were easily construed as symptomatic of the unwillingness of the new elite to participate in a dialogue with society. The deepening of democracy saw the deepening of the rift. Lech Wałęsa supported the drive for “acceleration” of democratic reform, insisting on early presidential elections in which he would run as the Solidarity candidate. Solidarity liberals perceived this stance as a threat to the gradual accretion of democratic gains, and they supported Mazowiecki’s candidacy. The resulting “war at the top” destroyed the unity of Solidarity in the bitter and destructive election campaign of November–December 1990. Liberal fears about the propensity of the electorate to be swayed by demagogic promises were compounded by the success of surprise candidate Stan Tymiński, a conspiracy theory–toting Polish émigré to Canada who attracted a quarter of the vote in the first round, pushing Mazowiecki into third place. Wałęsa’s victory sharpened the appetite for accelerated parliamentary elections, which took place in October 1991. With twenty-nine parties—many of which barely warranted the name—entering the Sejm, the first democratic parliament was incoherent. The two largest parties were the liberal Democratic Union (UD), built around Mazowiecki’s milieu, and the successor to the Communist PZPR, the Democratic Left Alliance (SLD). Neither was able to form a coalition government: the SLD was politically untouchable, and the UD bore responsibility for Poland’s shock therapy. Eventually, a minority government was patched together with the support of the conservative Civic Accord (PC) and the Catholicnationalist Christian-National Union (ZChN). As the first government of a fully democratic Poland, this coalition, under the Solidarity lawyer Jan Olszewski, regarded itself as mandated to accelerate transition. It argued that “lustration” (the exposure of individuals’ past collaboration with the communist secret police) was necessary to identify and remove the continuing influence of communists. The coalition’s tenure was short and controversial, and its zeal for lustration led to its downfall after a clumsy attempt by interior minister Antoni Macierewicz to expose collaborators among the political elite, including Wałęsa. In his outgoing speech, Olszewski (1992) posed a question that would resonate in the years to come: From today onwards the stake in this game is not simply the question of which government will be able to execute the budget to the end of the year; at stake is something more, a certain image of Poland: what sort of Poland it is to be. To put it another way, whose Poland is it to be?

Democratic in Form, Christian in Content? Constituting the New Poland The early years of transition saw a piecemeal approach to institutional reforms which brought fundamental ideological differences into conflict. Initially, it seemed that the

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presidency would remain strong: the “Little Constitution” of 1992 formalized the president’s influence, with prime ministers obliged to consult the president over the appointment of the foreign minister, defense minister, and interior minister. The idea of a strong president appealed to some political elites, for whom a powerful nonparliamentary executive could push through necessary reforms despite the sectional interests of political parties (Dzwończyk 2000, 82). However, the experience of the Wałęsa presidency gradually encouraged a mainstream consensus on a presidency set further apart from the day-to-day business of government. The eventual promulgation of the 1997 Constitution resolved the issue of executive authority by diminishing the powers of the president, who would no longer be able to interfere in ministerial appointments but would be “guarantor of the continuity of state power” (Art. 126.1), with the prime minister and the cabinet charged with “carry[ing] out the domestic and foreign policies of the Polish Republic” (Art. 146). Overall, the Constitution increased the powers of the prime minister, notably with respect to government formation (Kallas 2005, 372). The structure of the dual executive rested most firmly on the parliamentary pillar. However, the president remained an important political player and far from the largely ceremonial figure preferred by some advocates of the parliamentary model. The ability to veto legislation and delay the countersigning of important documents, as well as wide-ranging competences to make appointments to important state posts, ensured that successive governments would have to take account of presidential opinion. Judicial reform entailed the almost wholesale revision of existing legislation and the promulgation of new laws. The Little Constitution restored the principle of the division of executive, legislative, and judicial powers: the Sejm was no longer the supreme organ of state power (Kallas 2005, 363). The Constitutional Tribunal, which had been in operation since 1985, became genuinely independent during the first years of transition. The Constitution widened the competences of the Tribunal and, most significantly, removed the ability of the Sejm to overturn its rulings. The Constitution provided for independent and apolitical judges protected from political interference and established a judicial system of courts and tribunals with a clear division of competences. A number of institutions of oversight and control were transformed from their communist-era precursors or brought into being, and their scope and competences outlined in and assured by constitutional articles. Unsurprisingly, given its close association with Solidarity and the strong identification of most Poles with Catholicism, the years after 1989 saw the reemergence of the Catholic Church as a political actor. Against the civic individualistic vision espoused by the liberals and social democrats, the Church—and its political allies in the conservative-nationalist bloc—offered a comprehensive collectivist ethical model embracing personal morality, education, gender relations, minority rights, and attitudes to capitalism and Westernization. The easy assumption of moral authority by the Church quickly came up against the anticlerical stance of the postcommunists and the determination of liberals to protect individual rights. Education and the media were prominent sites of

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conflict. Successive ombudsmen complained about violations of the separation of church and state, objecting to prayers and crucifixes in schools, and the insensitivity shown toward religious minorities and nonbelievers during the reintroduction of religious education. The Church left a clear imprint on the 1992 Broadcasting Law, with a clause requiring broadcasters to “respect the Christian value system,” and at times enjoyed the indulgence of Catholic politicians in attempts to make media laws more restrictive. In debates over the Constitution, clerical input was substantial. The Church demanded that the preamble to the Constitution appeal to God and the principles of natural law and constitute “the Polish Nation”; it also rejected the principle of the separation of church and state and demanded the right to life “from conception to natural death.” The eventual text attempted to accommodate these sentiments without thwarting the liberal character of the Constitution. The “separation” of church and state was not explicitly articulated, with the state bound instead by “impartiality.” The preamble was a masterpiece of pick-and-mix fudging, with “law, justice, good and beauty” hailed as universal values whether derived from God or elsewhere, acknowledgment of the common culture of Poles “rooted in the Christian heritage of the nation and universal human values,” and an invocation of “the Polish Nation—all citizens of the republic . . . responsible to God or to our own conscience.” No explicit protection was extended to life “from conception to natural death.” Instead, the Constitution referred to the “inborn and inalienable dignity of the individual” (Art. 30), which the Polish Republic was bound to defend by legal means (Art. 38). The parliamentary draft document met with strong criticism from those representing the “Solidarity draft,” who echoed the views of other conservative, nationalist, and clerical critics in averring that the final version was “cut off from the values by which the Polish nation abides.” In failing to pay tribute to God, legislating for a civic nationalism, and permitting the emergence of an extreme moral relativism, it spurned the “inheritance of history” and “Polish identity” (Grześkowiak 1997). These sentiments reflected a substantial current in public attitudes which would become more politically salient in the following decade (OBOP 1997, tables 4 and 5).

A Poland Richer But Less Happy The Polish economy was the first to emerge from recession in postcommunist Europe and was regarded as one of the more successful examples of economic transition. GDP was 35 percent higher in 2005 than in 1989, a significantly greater increase than in neighboring countries (Otto 2006, 236). In 2005, 37 percent of households declared that their regular income was insufficient to satisfy current needs, compared to a figure of 70.6 percent in 1992 (Panek, Czapiński, and Kotowska 2006, 48). However, such positive trends contrasted with the frequent observation that the average Pole was “richer, but unhappy” (Otto 2006).

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Economic policy presented parties with a dilemma. The average Pole was relatively supportive of a strong role for the state in the economy. However, serious deviations from macroeconomic orthodoxy risked the wrath of the European Union and the suspicion of foreign investors. References to “positive” rights such as full employment and public health care were included in the Constitution at the insistence of the SLD, but these articles were essentially aspirational, with much of the substance relegated to ordinary statute. The coalition government formed after the 1997 election, under the premiership of Jerzy Buzek, faced substantial challenges in the sphere of the economy. If Poland’s jump into the market was a swift technocratic exercise, the “deep reforms” of privatization, the restructuring of industries, agricultural reform, and the reforms of health care, pensions, and welfare proceeded unevenly. At first, restructuring of the relationship between the state and the individual was more a tale of cuts, with reductions in initially generous unemployment and housing benefits and tightening of eligibility rules, increases in prescription charges, and pensions capped (Millard 1999, 150). As part of its program of “four reforms” (which also included education and the aforementioned changes to local government), the Buzek government attempted to enact significant structural changes to the systems of health care and social security provision, with the intention to inject an ethos of individual responsibility and choice into both systems. The changes brought about by economic transition had a profound effect on a society hitherto accustomed to egalitarian ideals. Inequality was relatively low by the standards of Central and Eastern Europe but significant enough in its own right. Educational capital was an increasingly important predictor of income (Domański 2005, 23), and new mechanisms of distribution introduced an inegalitarian logic, with the cutting of subsidies having a differential effect on particular groups and the growth of the private sector seeing greater wage differentiation (Kołodko 2000, 208). The liquidation of state-owned farms and factories, the decline of heavy industries, and knock-on effects led to long-term structural unemployment; increased inequality and unemployment brought poverty to the fore, concentrated in rural and small-town areas, former state farming collectives, and also in enclaves of the old centers of industrial cities (Tarkowska 2006, 352). Reaction to the Buzek government’s health-care and social security reforms reflected a persistent concern among Poles about the general direction in which Poland was heading, a concern found even among those who perceived that their own circumstances were improving. People found it more difficult to gain access to a general practitioner, and confusion over the changes led to well-publicized incidents where individuals were refused medical aid (Dudek 2016, 391). Public opinion was strongly negative: in 2001, 62 percent of Poles viewed the health-care system as functioning worse than prior to the reforms, with only 13 percent asserting that improvements had been made. The coalition, whose structure had lacked integrity from the outset, was shaken apart by these debacles. While economic differences were not the only reason why the coalition and its constituent parties disintegrated, the failure of the post-Solidarity parties to cohere on this dimension had implications whose nature would gradually become apparent over the course of the next decade.

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Poland’s Political Earthquake: The Return of Transition Anxieties The September 2001 election was an “unexpected political earthquake” (Szczerbiak 2002), but one of the tectonic plates remained stable. The victory of the SLD-UP electoral coalition, which gained a hitherto unprecedented 41.04 percent of the vote, was widely expected for many months prior to the election, and a postcommunist government coalition was formed with the PSL under the premiership of Leszek Miller. However, on the opposition side, all other parties entered parliament for the first time. Not all of them were entirely new, and table 7.1 provides a genealogy of the major political parties. The liberal Civic Platform (PO) was formed in large part by those who had deserted the Freedom Union (UW) in the previous term. The core of Law and Justice (PiS), which capitalized on the popularity of hardline justice minister Lech Kaczyński, consisted of politicians who had cut their teeth in the Olszewski administration. The populist Self-Defence (SRP), and in particular its leader, Andrzej Lepper, achieved increasing notoriety throughout the 1990s for protest actions and had competed without success in every election from 1991. The League of Polish Families (LPR) represented the recrudescence of Catholic nationalists like ZChN, with whom it shared some personnel. The success of SRP and LPR was the epicenter of this seismic activity. Both parties offered abusive critiques of the politics of transition. The LPR gave parliamentary presence to the fundamentalist Catholic social movement centered around Radio Maryja and its charismatic proprietor, Father Tadeusz Rydzyk, whose tirades against atheist “Judeo-communism” implicated all transition elites in a conspiracy against Catholicism and the Polish nation. SRP, initially formed as an agrarian protest movement against the effects of economic reforms on small farmers, broadened its appeal to embrace small-town and urban “transition losers.” The radicalism of these parties reflected increasing uncertainty among sections of Polish society. The fraught public mood of the early years of transition gave way to a more optimistic attitude on several fronts during the middle years of the decade, but around the beginning of 1999, it clearly began to turn negative again. In mid2001, with elections looming, some 75 percent considered the “overall situation of the country” as bad (Centrum Badania Opinii Społecznej 2020). While successive majorities remained “convinced of the superiority of the system of democracy over other forms of government,” contentment with the way that democracy operated in Poland fluctuated in a 20 percent to 40 percent band. Persistent minorities remained skeptical of the significance of democracy in their own lives, with around 40 percent of respondents assenting to the statements, “Sometimes non-democratic governments can be more desirable than democratic ones” and “For people like me, it has no real meaning whether governments are democratic or non-democratic” (Centrum Badania Opinii Społecznej 2007, tables 1, 3, 4). Although dissatisfaction with transition reforms and the democratic system was increasingly widespread in society, there was some evidence that these sentiments were increasingly concentrated in constituencies of “transition losers,” whose economic and

PO Civic Platform

PiS Law and Justice

PC/POC Centre Accord

AWS Solidarity Election Action KLD Liberal-Democratic Congress KPN Confederation for an Independent Poland LiD Left and Democrats LPR League of Polish Families

Name

1990–1993

Post-Solidarity intellectuals and pro-market pioneers

Post-Solidarity

UW, KLD, elements of AWS 2001–present

Post-Solidarity

Post-Solidarity

1990–1993

Originally very pro-market, more moderately so in recent years

Increasingly statist and antiprivatization

Critical

Mixed: both liberal and Positive, although conservative elements initially critical of transition elites

Originally conservative; Initially critical, increasingly nationalist then negative and clerical

Moderately conservative

Negative

Strongly nationalist and clerical; moral traditionalism

Mixed: some promarket elements but highly protectionist and autarchic Mixed—ostensibly pro-market but critical of reforms

Neither

Positive

Critical

Positive

Broadly positive

Attitude to transition

Liberal

Centrist

Mixed

Conservative, with Catholic-nationalist elements Liberal

Cultural

Mixed: increasingly Nationalist anti-market

Mixed: both antiand pro-market elements Strongly pro-market

Economic

Anti-Communist

Post-Solidarity

Post-Solidarity

Regime divide

2001–present

Christian Democratic/ conservative Solidarity activists grouped around Jarosław Kaczyński PC, elements of AWS

Non-Solidarity, 1989–1997 anticommunist movement (founded in 1979) Coalition of SLD, SdPL, UP, 2006–2008 PD Elements of ZChN, 2001–2007 extraparliamentary, Catholicnationalist parties

1996–2001

Period of significance

Coalition of approximately 40 post-Solidarity parties

Origins

Table 7.1  Genealogy and Ideology of Major Political Parties/Electoral Coalitions

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UD Democratic Union

SRP Self-Defence Post-Solidarity

Neither

Post-Communist

Successor to the communist 1990–present PZPR. Originally a coalition based around Social Democrats of the Polish Republic (SdPR), formally constituted as a party in 1999. Agrarian movement of the 1992–2007 early 1990s; constituted as a party in 1992 Liberal Solidarity intellectuals 1990–1994

Split from SLD

SdPL Polish Social Democrats SLD Democratic Left Alliance

Neither

Liberal, anticlerical

Liberal, anticlerical

Strongly anticlerical and liberal

Positive

Positive

(continued)

Indifferent, tends to focus more on the politics of the present

Moderately Positive conservative Conservative-nationalist Negative

Anti-market Ambiguous Negative (especially privatization) Strongly pro-market Liberal, but with a Positive significant conservative faction

Moderately antimarket

Mixed: ostensibly pro-market but in practice interventionist Originally promarket and small-state but increasingly leftwing since mid2011 Moderately antimarket

Post-Solidarity

Post-Communist

Predominantly new; some 2011–present former PO and SLD members and assorted left-wing activists

RP The Palikot Movement

Centrist

Post-Communist

2003–present

ZSL (communist-era satellite 1989–present party) Assorted conservative1997–2001 nationalist, post-Solidarity parties

PSL Polish Peasant Party ROP Movement for the Rebuilding of Poland

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Socialist groups from Solidarity; elements of reformist wing of PZPR Clerical and nationalist elements of Solidarity

UP Labour Union 1989–2001

1994–2004 (UW) 2005–present (PD) 1992–present

Period of significance

In 1991, ZChN ran as the main party in Catholic Election Action [WAK].

In 1991, PC ran as the main party of the Civic Center Accord [POC].

ZChN Christian National Union

Formed from the merger of UD and KLD

Origins

UW/PD Freedom Union/ Democratic Party

Name

Table 7.1  (Continued)

Post-Solidarity

Ambiguous

Strongly nationalist and clerical; moral traditionalism

Liberal, anticlerical

Moderately antimarket

Mixed

Cultural

Strongly pro-market Liberal, with conservative elements

Economic

Post-Solidarity

Regime divide

Initially positive although increasingly critical

Positive

Positive

Attitude to transition

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social position rendered them less able to take advantage of new opportunities and who were more likely to be disturbed by the pace of change and the rise of challenges to traditional values. On the question of whether post-1989 reforms had succeeded or failed, a higher proportion of the following groups gave a negative answer: the old, those living in small towns and villages, those of lower educational attainment, those in the lower income quartile, the unemployed, the retired, and those receiving invalidity benefits. These patterns were repeated on the question of whether transition had made a positive impact on the life of the respondent, with these groups more likely to indicate that it had not (Czapiński 2006). Transition losers were also more likely to adopt more negative attitudes to democracy (Paczynska 2005). The SRP and LPR swiftly exploited their newfound prominence to engage in bouts of direct action both within the Sejm and without. They were particularly active in their attacks on the process of Poland’s accession to the European Union. While no serious domestic opposition was raised to Poland’s accession to NATO in 1999, EU accession proved more troublesome. Nearly ten years of hard negotiation and diminishing patience passed between formal submission to join the union and eventual accession in May 2004. The comprehensive system of monitoring and reporting that characterized the accession process dampened the pro-European ardor of some politicians and heightened fears of the effects that accession might have on Poland’s agricultural sector and areas of industry such as mining and shipbuilding. Support for European integration always outweighed opposition, but from a high point of 80 percent in 1996, it declined to the mid-50s by the middle of 1999, rising fitfully and moderately to approximately 65 percent just prior to accession (Centrum Badania Opinii Społecznej 2020). SPR and LPR remorselessly attacked the SLD-UP-PSL coalition for allegedly weak negotiation in areas such as the foreign purchase of Polish land and the level of agricultural subsidies offered to Polish farmers, and they more generally deplored the loss of sovereignty occasioned by accession. These parties’ blanket criticisms of the transition period drew upon other prominent areas of discontent, from SRP’s focus on irregularities in the privatization process to LPR’s renewal of the assault on cultural liberalism. However, while SRP and LPR caused substantial problems for the ruling parties throughout the parliamentary term, the real challenge to the Third Republic was to emerge from a different source. In late 2002, Polish politics experienced another earthquake in the form of the Rywingate scandal, which centered around allegations that the government had attempted to extract a bribe from the owners of the prominent newspaper Gazeta Wyborcza in return for potentially lucrative amendments to a media bill. A controversial opposition report that suggested the existence of a shadowy, extragovernmental “group holding power” and implicated Prime Minister Miller in the conspiracy was accepted by parliament as the official version of events. This and subsequent Sejm investigative commissions on other allegations of corruption, nourished the narrative of “transition gone wrong.” The Miller administration never recovered from the blow, and Miller resigned in May 2004. His successor, phlegmatic social-liberal technocrat Marek Belka, attempted

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to drain a little of the color from politics. Yet the facts and rumors around Rywingate were conducive to the revival of arguments about the “afterlife” of communism. Law and Justice (PiS) was particularly active in this regard. The party’s leader, Jarosław Kaczyński, had long advanced a theory of transition in which real power was held by a network composed of the old communist apparatus—the nomenklatura—and liberal elements of Solidarity. Having negotiated transition in protection of their mutual interests, these actors engaged in covert cooperation to ensure the stability of the new arrangement, systematically excluding patriotic and traditional values and seeking to delegitimize alternative political actors (Kaczyński 2006).

The Short “Fourth Republic”: Poland’s Populist Moment Although EU accession in many respects marked the end of the “launch stage” of Polish transition and the economy began to return to health, the long campaign for the September 2005 elections was dominated by the question of whether there was not something seriously amiss with Polish democracy. The decline of the SLD over its term in office was precipitous, and it entered the dual presidential-parliamentary election campaign of September–October 2005 in a disoriented state, lacking experienced leadership and a clear political appeal. In contrast, both PiS and PO appeared to be credible advocates of the drive to clean up politics and were expected to form a coalition government, the only question being which would be the major partner. The concurrent presidential race was less clear-cut, and the manner in which its shifting dynamics intertwined with those of the parliamentary election had a strong influence on subsequent developments. With PiS’ Lech Kaczyński and PO leader Donald Tusk emerging as the main contenders, PiS moved to recast both elections as a choice between the “liberal” ethos of PO and PiS’ more “social” or “solidaristic” leanings. This socially sensitive rhetoric fed into a wider appeal to the losers of transition, and it sharpened PiS’ electoral appeal against the background of all other parties at a crucial moment in the campaign. In the parliamentary election, PiS gained marginally more votes than PO. Both SRP and LPR improved only slightly on their previous performance, and the SLD was humiliated. PiS’ victory cast a shadow over the ongoing presidential campaign. With Tusk having a slight advantage in the first round, both sides escalated their rhetoric and with it their enmity. After the narrow victory of Lech Kaczyński in the second round, the PO-PiS coalition talks collapsed amid mutual distrust, with PiS left to form a minority government led by the largely unknown Kazimierz Marcinkiewicz. This left PiS with a problem: they had clear ideas about what needed to be done and a president who would support them, but opportunities to effect substantial changes would be inhibited by minority rule. The divide between PO and PiS apparently insuperable, PiS cast around for different solutions. After tentative attempts at informal and then more formal cooperation, PiS invited SRP and LPR to form a coalition government in May 2006. It was widely assumed that an unwritten taboo existed

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against coalition partnerships with these radicals, and the liberal elite were horrified at this “exotic threesome” (Paradowska 2006). PiS depicted the coalition as a regrettable by-product of legislative mathematics, yet the short and turbulent period that followed saw the party absorb many of the features of its partners. The term “Fourth Republic” was at first largely a metaphor for decommunization, but it swiftly assumed a more literal meaning. The overriding priority of PiS was the removal of the “network” from institutions it considered to be particularly afflicted by the blight of informal connections and corruption: the justice system, the civil service, military intelligence, and public media. The first major legislative act of the Marcinkiewicz government altered the powers, responsibilities, and personnel of the National Council of Radio and Television (KRRiT), transforming it from an institution in which the parliamentary opposition had representation into one that was peopled entirely by candidates of the ruling coalition. PiS vigorously pursued a new law on lustration that would significantly widen its scope. Justice minister (and simultaneously prosecutor general) Zbigniew Ziobro introduced a raft of reforms, increasing his oversight of the prosecution service and judges and attempting to break open the corporate structures of the legal profession. A Central Anticorruption Bureau (CBA) was set up with the specific remit of fighting corruption and with extensive, if ill defined, powers to detain and search. Foreign policy was informed by deep-seated grievances about Poland’s maltreatment by major European powers during the twentieth century. This stance resulted in tension between Poland and other EU member states and the Polish use or threat of the veto on several occasions, most notably over negotiations over the European Reform Treaty, later called the Lisbon Treaty. A vital part of PiS’ agenda, and one that chimed deeply with LPR’s concerns, was the cultivation of a “politics of history” in which the state took a leading role in the dissemination of national, patriotic, and state traditions, with schools a particular site for the inculcation of such values. The chief outcome of the period was not reform of the Third Republic but realignment of the terms of political competition.1 PiS’ increasing radicalism saw it adopt and even transcend the populist rhetoric of its coalition partners. The language of political discourse reached new heights of aggression, with PiS surpassing its coalition partners in the art of the damning epithet. Poland became a country in which “mendacious elites” and “pseudo-intellectuals” were arrayed against “ordinary” or “real” Poles. Politics was increasingly defined not as the clash of competing interests but as a battle of good versus evil. This conflict came to a head in the tense and emotional public debate over the lustration law in the spring of 2007. The Constitutional Tribunal dealt a crushing verdict on the lustration law, ruling many of its provisions unconstitutional and rendering it inoperable. PiS viewed the outraged reaction of the Tribunal and its supporters as evidence that the “network” was defending itself and as justification for redoubling the assault. This pattern was repeated in similar conflicts, such as that over PiS’ confrontational approach to foreign policy, which at one point led all hitherto serving foreign ministers of the Third Republic to sign a public letter of rebuke. Political satire and media polemic flourished, but the most vivid expressions of the polarization of

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public life were the multiple acts of public protest—both against and in support of the government. The turbulent internal life of the coalition increasingly militated against coordinated political action. SRP’s political and personal indiscipline was a persistent irritation to PiS, culminating in a “sex for jobs” scandal that seriously compromised the already shaky credibility of the coalition’s claim to be engaged in “moral revolution.” Attempting to regain lost ground on the radical Right, LPR made virulent homophobia an ever more prominent feature of the party’s public face. After a bizarre series of events involving attempted entrapment of SRP leader Lepper, the coalition crumbled over the summer of 2007. The election of October 2007 was “a plebiscite on a polarising government” (Szczerbiak 2008, 416). This was as much a result of PiS’ determination to defend its record as it was of the attacks conducted by the opposition. In contrast to 2005, PO found the appropriate response. Rowing back from its economic liberalism, it secured the support of many of those public sector workers that PiS had alienated and landed effective blows on PiS’ style of government. With a high—by Polish standards—turnout of 53.8 percent, both major parties benefited. Exit poll figures showed that PO and PiS captured comparable percentages of newly mobilized voters as a proportion of their overall vote share (Markowski 2008, figure 1). However, PO’s overall gains substantially exceeded those of PiS, and it won in convincing style, forming a coalition with the PSL, now firmly established as a centrist party that is available for any kind of coalition government.

Warm Water in the Tap: The Liberal Interregnum After the parliamentary elections of 2007, politics took place in a much less frenetic register. Government strategists advocated the adoption of a “polarization and diffusion” model of growth, by which the development of Poland’s metropolitan centers would result in associated benefits for the peripheral regions, and they stressed the need for more thoroughgoing reforms to the social security system and the rationalization of agriculture as elements of a comprehensive reform of public finances (Board of Strategic Advisers 2009, 30, 35). During the coalition’s first term in office, this agenda was stymied by cohabitation with President Kaczyński, who served as an alternative locus of opposition to the government, helping to keep the radical principles of the Fourth Republic reform program in the public eye. The clash of perspectives and priorities returned in a tragic echo eighteen months later. Exploiting the divisions between President Kaczyński and Prime Minister Tusk, Russian premier Vladimir Putin invited Tusk to a ceremony to commemorate the thousands of Polish nationals murdered in the Katyń massacre sixty years previously. In response to this snub, President Kaczyński organized his own delegation to Katyń, comprising the presidential couple and scores of military, political, and state dignitaries, along with representatives of the descendants of the victims of Katyń. On April 10, 2010, the entire delegation perished when the presidential plane crashed at the Smoleńsk airbase en route to the commemoration.

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In the immediate aftermath of this disaster, the aggressive and antagonistic character of Polish political culture was briefly set aside. Yet the tragedy soon became a focal point for unresolved conflicts over the relationship between church and state, between Polishness and Catholicism, and between supporters of PO and supporters of PiS. These conflicts played into the early presidential election of June–July 2010, in which Jarosław Kaczyński ran against acting President Bronisław Komorowski. The Smoleńsk tragedy soon became a key feature of PiS’ political appeal, with Kaczyński explicitly connecting PiS’ strategy for the 2011 parliamentary elections to the need to uncover “the truth” about the crash (Stankiewicz and Śmiłowicz 2010). The official Russian report and the PO-PSL government’s own investigation merely accelerated PiS’ embracing of a conspiracy-theory version of events according to which the tragedy was an assassination rather than an accident. If cohabitation with President Kaczyński had given the PO-PSL government an excuse for modest progress, the election of President Komorowski removed the argument for inaction. In 2009, the Tusk administration set out an ambitious long-term policy strategy dubbed “Poland 2030,” which placed particular emphasis on significant reforms to the social security system and the rationalization of Poland’s agricultural sector (Board of Strategic Advisers 2009). These reforms risked significant shortterm political costs, and agriculture was a particularly sensitive topic for the agrarian PSL. Yet while PO sympathizers in the media and business sector grew increasingly impatient with “government by small steps,” Poland’s relatively buoyant economic performance against a backdrop of European economic crisis commended the politics of caution to the electorate. In keeping with the lack of appetite for radical change, the campaign for the October 2011 parliamentary elections was a muted affair. Despite their earlier intentions, PiS avoided making the Smoleńsk disaster central to its campaign, and Kaczyński’s refusal to meet Tusk in debate ensured that the campaign would not be defined by the confrontation between the main party leaders. With the SLD still moribund, a new party, the Palikot Movement (RP), came to the fore. This party, founded and led by former PO deputy Janusz Palikot, stood out ideologically for its mixture of economic liberalism, cultural libertarianism, and anticlericalism. Unexpectedly, RP gathered 10.02 percent of the vote and became the third-largest party in parliament. If the main locus of political competition was preserved, the success of RP served as a reminder of the volatility that wracked Polish party politics during the first decade and a half of postcommunist democracy. Sensing this, a victorious PO opted to renew the coalition with PSL, preferring a stable and relatively predictable partner. At the start of the new parliamentary term, the PO-PSL government set out a number of proposals for reform, including cuts to tax relief, the raising of the retirement age, the phasing-in of full taxation on agricultural incomes, and the liquidation of retirement privileges for certain professions (Tusk 2011). These reforms were ambitious and likely to arouse controversy, particularly the proposed raising of the retirement age to sixty-seven (for both sexes). The political costs of the latter would prove immediate and substantial. At the beginning of 2012, the proportion of Poles opposing the government exceeded the proportion supporting it for the first time since PO-PSL took office in 2007.

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Tusk’s experience of opposition during the radical 2005–2007 period and his exposure to the dilemmas of governing thereafter had bred in him a preference for cautious managerialism that his critics described as the “warm water in the taps” (ciepła woda w kranie) approach to governing. While this approach initially came as a refreshing contrast to the frenetic and polarizing operational mode of the PiS-SRP-LPR government, it proved increasingly ill-suited to the more febrile social mood as the 2015 elections approached. Having sought the center ground, PO-PSL increasingly found itself squeezed there. While more Poles felt themselves individually better off, PO-PSL did not succeed in gaining credit for this or for dispelling the accompanying sense of stagnation. PiS adroitly latched onto this dissatisfaction, portraying the government as incompetent and complacent and concerned more with maintaining itself in office than in dealing with pressing economic and social problems. From the other side, economic liberals who had previously supported PO vented their frustration at a government that they perceived as unwilling to pursue necessary but electorally unpopular reforms. Public support for PiS had fluctuated since 2011 instead of rising steadily, but by the midpoint of the PO-PSL government’s second term, support for the two main parties converged as PO’s ratings fell. Two elections in 2014 provided a first test of party strengths. In the May 2014 elections to the European Parliament, less than a percentage point separated PO’s and PiS’ share of the vote, and both parties received the same number of seats in parliament. In local elections later that year, PiS edged ahead of PO in the share of regional votes, but PiS’ lack of coalitionability meant it could only control one of the sixteen regional assemblies. These results should have sounded alarm bells for PO, particularly considering PO’s more pro-EU orientation in a country with a persistently high level of support for European integration. However, the extent to which power had bred in PO a misplaced confidence about the future was brutally exposed by Bronisław Komorowski’s shock defeat in the May 2015 presidential election. Although Komorowski’s popularity as president crossed Poland’s bitter party-political divide and augured for a potential first-round victory, he conducted “a weak and complacent campaign that appeared to be based on the assumption that his popularity would translate automatically into electoral support” (Szczerbiak 2016, 409). His second-round defeat to the relatively inexperienced MEP Andrzej Duda was a turning point in the political dynamic, reestablishing PiS as a party capable of achieving electoral success. The surprisingly good showing of rock star Paweł Kukiz, who came third in the first round, also injected a new dose of antisystem sentiment to replace that of RP, whose appeal had rapidly faded. Kukiz immediately parlayed his success into the creation of a new social movement, Kukiz’15, whose nativist, populist, and economically nationalist agenda chimed with a febrile mood amid the migrant crisis of the summer of 2015 (Stanley 2019c, 177–78). The warm water in the tap became a cold shower for PO, whose vague catchall ideological appeal failed to resonate in comparison with PiS’ more sharply defined offering to the electorate. Although PiS did not return to the language of its “Fourth Republic” project, it resurrected the project’s essential arguments about institutional incapacity and “imitative modernisation” (Krasnodębski 2006) while placing greater emphasis than before on socioeconomic issues, framing its election campaign around

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two eye-catching promises: the relowering of the retirement age and a universal monthly child benefit of 500 złoty for each child from the second onward. The latter move enabled PiS to sideline Poland’s left-wing parties, which remained in a state of organizational and ideological disarray. Although the new leftwing party Together (Razem) rejected the social-liberal inclinations of the established center-left in favor of a more trenchantly expressed opposition to capitalism that might have resonated with some of PiS’ voters, its cultural progressivism was never likely to find wide favor with an electorate in which feelings of economic exclusion were more commonly associated with conservative social views. On the other hand, PO faced a serious threat from the new Modern (Nowoczesna) party, which was established in the wake of the presidential elections by economic liberals who had lost patience with PO’s turn to the center. The results of the October 2015 parliamentary election reflected the abrupt shift in the dynamic. PiS’ electoral list2 became the first since 1989 to secure a majority of seats in the Sejm without needing a coalition partner, and the party also won a majority in the Senat. PO remained in second place but lost heavily, its share of the vote declining by 15 percentage points. Kukiz’15 and Modern entered parliament as minor parties, but the decision of the SLD to run as the main party in an electoral coalition backfired, with the United Left (UL) falling just short of the 8 percent threshold for coalitions. This miscalculation had a crucial impact on the outcome of the election: the “wasting” of 16.6 percent of the votes on formations that did not enter parliament gave PiS a majority it would not otherwise have obtained, and created the impression of a landslide victory it did not in fact achieve (Markowski 2016, 1314–15).

“Positive Change”: The Illiberal Counterrevolution In 2015, Poland was firmly established as a member of the comity of liberal democratic states. Its economy had weathered the economic crisis better than many of its European contemporaries. While it still faced significant problems with corruption and the efficiency of the state, its basic institutional infrastructure was robust and had coped with the democratic “stress-test” of the 2005–2007 period. A mere four years later, Poland had become a semi-pariah on the European stage, experiencing “a rapid descent on all measures of democracy” that “reflect[ed] not only the political capture of key democratic institutions, but also the functional hollowing out of those institutions via the abandonment of the norm of pluralism” (Stanley 2019a, 349). There is no single trajectory to the quality of democracy in several Central and Eastern European countries over the last few years. Some countries have experienced a clear decline as measured by robust comparative indicators, but others have seen little or no change, while yet others have apparently stagnated at lower levels of democratic development (Stanley 2019a). In Poland’s case, there was nothing inevitable about the backlash against liberal democracy. It might be tempting to assume that the sharp change in direction Poland took after 2015 was attributable to significant illiberal and antidemocratic currents among the Polish electorate, particularly since PiS voters were on average more populist in their

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views than PO voters and populism was an important variable in shaping political preferences (Stanley 2019b, 40). However, at the time of the 2015 election, “there was no evidence of deep dissatisfaction and desire for radical change among Poles” (Markowski 2016, 1320). Neither did supply-side factors entirely anticipate what followed: while memories of the 2005–2007 period remained fresh in many observers’ minds, during the 2015 election campaign, more controversial figures within the party were hidden away, and Jarosław Kaczyński, conscious of his divisiveness as a candidate, selected the relatively unknown Beata Szydło as candidate for prime minister. The election was not won on a prospectus of radical change. Radical change is nevertheless what followed. PiS was able to exploit two legacies of the “imitative liberal consensus” that had governed the political mainstream since the beginning of transition (Bill and Stanley 2020, 5). The first was the depoliticization of substantial areas of policy, as embodied in the “can’t-do” ethos of the warmwater-in-the-tap approach to politics. The second was the gap between the willingness of most Poles to endorse the abstract principles of liberal democracy and the willingness of only a minority to defend the integrity of its manifest norms and institutions. PiS’ actions after assuming power in November 2015 were rooted in the same critique of Poland’s constitutional settlement that Kaczyński had articulated during PiS’ previous term in office. In the meantime, the party had more clearly delineated the economic and cultural elements of its political appeal. Economically, PiS emphasized family-oriented redistribution and ambitious increases to the minimum wage, and a growth model that did not simply rely on prosperity trickling down to the periphery (Bill and Stanley 2020, 8–9). While popular notions of a “Poland ‘A’ versus Poland ‘B’” divide exaggerated matters, the resonance of this appeal in rural and small-town Poland and among more sociodemographically vulnerable strata of the electorate was clearly evident in analyses of voting behavior at successive elections (Markowski 2006, 826–29; Markowski 2008, 1065). Culturally, PiS was largely successful in marginalizing radical right fringe parties by absorbing their nativist rhetoric (Stanley, Markowski, and Cześnik 2019). By connecting these elements to a more widely resonant Pole-Catholic (Polakkatolik) identity and a historical discourse of suffering and redemption (Kotwas and Kubik 2019, 460; Stanley 2016, 119), PiS was able to forge a compelling appeal to the Polish “heartland” that offered an alternative, more inclusive, and more authentic model of Polish development, and a redistribution of prestige away from the privileged urban centers. The Smoleńsk disaster proved a vital symbolic resource (Nizynska 2010, 478) that tied the economic and cultural aspects of PiS’ appeal more firmly to its political critique of the incapacities of the postcommunist Polish state. During the election campaign, PiS had presented its agenda as a “positive change” (dobra zmiana) in comparison with the “Poland in ruins” (Polska w ruinie) it claimed it would inherit from its predecessors. PiS immediately set about implementing this agenda in ways that, while politically effective, were fundamentally at odds with the rule of law. From prior experience, PiS knew that successful implementation of its plans depended on the neutering of all independent institutions. There were three main strands to the system of executive decisionism that facilitated PiS’ rule. The first was the paralyzing and then capturing of the Constitutional Tribunal through the illegal

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appointment of “quasi-judges” in the place of legally elected judges, the illegal imposition of a politically loyal Tribunal president, and the abusive exploitation of legislative acts to prevent the Tribunal resisting these changes (Sadurski 2019, 64–66). PiS also sought to increase its control over the judicial system by purging the Supreme Court and creating mechanisms for indirect executive influence over judicial appointments and the disciplining of judges. The second element of this system was the hollowing out of parliament, with the opposition entirely marginalized and legislative scrutiny of bills—regardless of their substantive importance—reduced to the barest procedural minimum, often facilitated by straightforward violation of parliamentary procedure (Sadurski 2019, 133–34). Third, by setting up a parallel institution for the appointment of members of supervisory and management boards, PiS was able to exert a level of influence over the content of public media that, if not unprecedented in its possibilities, was certainly unprecedented in its effects, with public broadcasters abandoning their statutory duty to exercise impartiality (Organization for Security and Co-Operation in Europe 2020) and degenerating into crude instruments of executive propaganda. In the sphere of economic policy, PiS focused above all on delivering its redistributive promises. The “500+” child benefit policy was implemented swiftly and efficiently and has become part of the policy landscape to an extent that, by the 2019 parliamentary election, none of the major parties dared advocate its repeal. Measures such as the raising of the minimum wage, elimination of income tax for workers under the age of twenty-six, and the lowering of the retirement age also bolstered PiS’ claims to be governing on behalf of the more economically vulnerable strata of Polish society. Qualitative and quantitative research into economic experiences and political attitudes confirmed that PiS’ policies not only met with popular approval but increased voters’ sense of personal empowerment (Gduła 2017; Sadura and Sierakowski 2019). While liberals criticized the hidden forms of “taxation” imposed on Poles through the de facto privatization of areas of public provision (Pawłowski 2020, 14), these costs evidently remained hidden to the electorate. The implementation of cultural change was less evident in specific policy initiatives and more discursive in character. While ultraconservative social organizations were courted by PiS, they often found themselves frustrated at the government’s legislative cautiousness in areas such as abortion, where social attitudes were somewhat more moderate. PiS’ engagement with such movements was also influenced by its general mistrust of organizations over which it did not exercise direct oversight. One of the main instruments for disciplining civil society was the disbursement of state grants via a newly founded National Institute of Freedom under the auspices of the Ministry of Culture. Organizations concerned with protecting the rights of women, refugees, and asylum seekers found themselves overlooked in the distribution of funds, as did many state-subsidized publications and think tanks of a politically uncongenial nature. The informal alliance between PiS and the Catholic Church also provided a reciprocal mechanism for the articulation of a socially conservative narrative. The Church benefited from the privileged role PiS attributed to it as a source of moral values for Polish society, while the Church lent PiS access to the high moral authority

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the Church had accumulated as a defender of the nation (Grzymala-Busse 2015) and also—in a literal sense—a pulpit for the articulation of PiS’ moral message. This was particularly in evidence in the area of family values, where PiS’ concern for the material prosperity of “ordinary Poles” was reinforced by its depiction of “alien” Western social values as a threat to the spiritual integrity of the family unit. PiS and the Church joined forces in opposing so-called LGBT and gender ideologies, depicting equality policies as a cover for the interests of a “network of corrupt global elites” whose neocolonial interests were served by the dissolution of natural social bonds (Korolczuk and Graff 2018, 815). PiS’ implementation of its illiberal counterrevolution was abetted by several factors. First, its governing majority was, at least for the first few years in of PiS’ term in power, extraordinarily disciplined. Despite the existence of several strong personalities within the government, Jarosław Kaczyński’s behind-the-scenes leadership remained unquestioned, and the party operated with ruthless efficiency in executing his will. Second, despite formally being entrusted with the role of guardian of the constitution, President Duda offered very little resistance to plainly unconstitutional actions on the part of the government. Third, the Polish opposition was made to look weak by PiS’ short-circuiting of parliament and lacked a convincing counteroffer to the electorate that did not simply replicate the essence of the pre-2015 policy paradigm. Fourth, the European Union’s ability to discipline Poland for backsliding was stymied by a pact between Poland and Hungary to veto any action against the other that might lead to sanctions, and by the competition that frequently emerged between the shining imperative of protecting the rule of law and the dirty reality of intra-EU politics. Although the European Court of Justice repeatedly ruled against a number of the government’s actions, particularly with respect to the independence of the judiciary, the European Commission remained reluctant to use instruments at its disposal to address systematic breaches of the rule of law, caught as it was between judicial and political considerations (Kelemen 2022). The case of the release of funding under the post-COVID recovery plan for Europe exemplified the tentative approach of the Commission. Initially, it seemed that the Commission’s determination to use rule-of-law conditionality to delay the approval of Poland’s recovery plan reflected a tougher approach that prioritized liberal-democratic norms and values. However, the flow of more than two million refugees to Poland following the outbreak of the war in Ukraine handed the Polish government a strong—if somewhat hypocritically expressed—political argument for financial solidarity from the EU. Negotiations between the Polish government and the Commission duly accelerated, resulting in the passage of a bill by the Polish parliament that ostensibly reversed some of the key elements of Poland’s politicization of the judiciary. Critics of the agreement argued that the bill was little more than a cynical pretense of compliance, whose provisions would have mere cosmetic effect, and that the Commission had surrendered its most potent instrument of leverage over the rule-of-law issue for an agreement which ignored many of the systematic elements of Poland’s democratic backsliding. Despite this

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criticism, the Commission pressed ahead, offering assurances that Poland would not receive funding under the recovery plan until all conditions had been met but failing to specify how that would be determined. Despite the radical character of PiS’ government during this period, party politics remained remarkably stable. Having learned from their mistakes in 2015, left-wing parties returned to parliament in 2019 on a common electoral list. Partly as a result of the revival of the Left and the commensurate decline in “wasted” votes, and also because of the breakthrough of the radical Right party Confederation, PiS did not increase its majority despite having a higher share of the vote. PiS was also disappointed to lose control of the Senat, whose powers of scrutiny could now be used by the opposition to slow the pace of legislative activity. The emergence of the COVID-19 crisis in March 2020 threatened to disrupt the forward march of PiS’ plans, throwing into doubt the possibility of holding a new presidential election in auspicious circumstances. The loss of the Senat was inconvenient but manageable; the loss of the presidency would have serious consequences for PiS’ second-term agenda, requiring them as it would to find a three-fifths majority to overturn presidential vetoes. Presidential elections are always polarizing affairs, but the June 2020 elections in particular reflected the divisive nature of Polish politics as Poland entered its fourth decade since the downfall of communism. After a closely fought race, Duda held on for a second term only by the slimmest of margins, despite the advantages conferred by incumbency, the endorsement of a newly elected government, and a grotesquely biased state media. Yet while KO-endorsed candidate Rafał Trzaskowski ran a very close race with Duda, his result did not reflect a concerted prodemocratic fighting back on the part of opposition parties; for many of those who voted for him, he was the lesser evil. The opposition remained uncertain of how to respond to PiS’ continued hegemony. While Poland’s electoral system is proportional, it uses the D’Hondt method to translate votes into seats, which tends to work to the benefit of larger parties. On that basis, some—Tusk chief among them—argued that the opposition parties should acknowledge the overriding force of mathematical reality and run as a unified bloc, thereby increasing their chances of removing PiS from office. While advocates of this approach acknowledged that a coalition running the gamut from the conservative wing of PO to the socialists of the Together party would have great difficulty governing, they argued that a more important objective in the short term was to remove PiS from office, thereby preventing any further shift away from a pluralistic liberal democracy. However, representatives of other parties—particularly those on the Left—were critical of this idea. Some were mistrustful of what they saw as an attempt to exploit the politics of anti-PiS, to the detriment of smaller opposition parties. Others argued that there was no guarantee that an umbrella coalition would galvanize rather than demobilize opposition voters, pointing to the poor showing of the unified Hungarian opposition in the April 2022 election as a case of where mixed messages could lead. Still others argued against the paradoxical gesture of abandoning pluralism to save pluralism.

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While this debate remained unresolved, the fact that it was occurring at all was a sign of a certain revival of the political in Polish politics. If liberal democracy was declining as a mode of governance, party competition was thriving. Turnout in the elections of 2019 and 2020 was significantly higher than in previous years. A steep rise in inflation and the botched rollout of a major tax reform in early 2022 dented PiS’ aura of invulnerability, and the intensification of mistrust between PiS and its minor coalition partners made it more difficult for the government to ensure disciplined legislative majorities. Compared with the ideological quietude of the PO-PSL years, pluralism had returned to political life, even as the government of the day attempted to impose a monistic conception of political and social order. This was the paradoxical legacy of PiS’ positive change.

Conclusion Temporally speaking, a generation has passed since Poland began its transition to democracy. Politically, Poland has still not shaken off the legacy of the early years of transition. While the party system remains open to the emergence of new formations, for the last decade and a half, the conflict between PO and PiS has remained the central fact of Polish political life. At the level of policy, this conflict maps—imperfectly, but legibly—onto the distinction between those who have benefited from Poland’s transition to democracy and those who have not, or who at least can be persuaded to believe that they have not. While the notion of “Poland A versus Poland B” exaggerates the extent of the divide between the major parties’ electorates, it nevertheless rests on some clear and apparently persistent sociodemographic and ideological differences. Moreover, these differences are strongly redolent of political trends elsewhere in Europe, where some polities have seen traditional cleavages giving way to a new divide between the economic and cultural beneficiaries of globalization processes and those who have allegedly been left behind by these changes. While entrenched interests and institutions have impeded this shift in countries of Western Europe, the countries of Central and Eastern Europe, whose “inherited” cleavage structures are comparatively weaker, are likely to be in the vanguard of these new cleavage alignments. However, in the specific case of Poland, the divide goes beyond matters of policy to a higher level of abstraction. Despite the emergence of genuinely new parties and the rise of a cohort of politicians without any firsthand experience of the early years of transition, the programmatic and strategic priorities of parties and governments are still largely defined by the first generation of postcommunist politicians: those whose political experiences and personal rivalries were forged in the context of the exit from communism. Both major parties remain unable to shake themselves free of the influence of their founders. The return of Donald Tusk as PO leader in mid-2021 marked the end of a five-year experiment during which different factions of the party vied for preeminence under a series of leaders who failed to inspire the party faithful to any greater degree than they inspired the public. At the same time, PiS remained

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entirely dominated by Jarosław Kaczyński and his inner circle. If one of the hallmarks of a genuine political cleavage is its independence from particular political actors, the test of Poland’s transition divide must come from a generational change in political elites. Yet as recent events have amply demonstrated, over three decades after transition from communism Poland is still ruled by the metapolitics of transition to democracy, with the most fundamental divide in Polish politics concerning not whose policies are best for Poland but which political actors have the moral legitimacy to govern Poland at all.

Notes 1. Two-thirds of the legislative proposals of the coalition agreement were not realized, either as the result of the failure of the coalition to address these policies in the time available or because legislation had been struck down by the Constitutional Tribunal. See Burnetko and Janicki (2007). 2. PiS’ electoral list also contained representatives of the United Poland (Solidarna Polska, SP) Party, set up by former PiS justice minister Zbigniew Ziobro, and the Poland Together (Polska Razem, PR) Party, set up by former PO justice minister Jarosław Gowin.

Suggested Readings Bill, Stanley, and Ben Stanley. “Whose Poland Is It to Be? PiS and the Struggle between Monism and Pluralism.” East European Politics 36, no. 3 (2020): 378–94. https://doi​.org​/10​ .1080​/21599165​.2020​.1787161. Grzymala-Busse, Anna. Nations under God: How Churches Use Moral Authority to Influence Policy. Princeton, NJ: Princeton University Press, 2015. Kemp-Welch, Anthony. Poland under Communism. A Cold War History. Cambridge: Cambridge University Press, 2008. Millard, Frances. Polish Politics and Society. London and New York: Routledge, 1999. Sadurski, Wojciech. Poland’s Constitutional Breakdown. Oxford: Oxford University Press, 2019.

References Bill, Stanley, and Ben Stanley. 2020. “Whose Poland Is It to Be? PiS and the Struggle between Monism and Pluralism.” East European Politics 36 (3): 378–94. Board of Strategic Advisers to the Prime Minister of Poland. 2009. Polska 2030: Development Challenges. Introduction and Final Recommendations. Warsaw: Office of the Prime Minister. Burnetko, Krzysztof, and Mariusz Janicki. 2007. “Raport specjalny: Duże wierzby, małe gruszki, czyli rozliczamy PiS z jego obietnic.” Polityka 42 (2625): 102–15. Centrum Badania Opinii Społecznej. 2007. Krytyczni demokraci: akceptacja demokracji a ocena jej funkcjonowania w Polsce. https://www​.cbos​.pl​/SPISKOM​.POL​/2007​/K​_007​_07​.PDF. Centrum Badania Opinii Społecznej. 2020. Trendy. https://www​.cbos​.pl​/PL​/trendy​/trendy​ .php.

2 1 8    B en S tanle y Czapiński, Janusz. 2006. “Stosunek do przemian systemowych i ocena ich wpływu na życie badanych.” In Diagnoza Społeczna 2005: Warunki i jakość życia Polaków, edited by Janusz Czapiński and Tomasz Panek, 82–89. Warszawa/Warsaw: Wyższa Szkoła Finansów i Zarządzania w Warszawie. Domański, Henryk. 2005. “Jedna struktura społeczna.” In Polska jedna czy wiele? Warsaw: Wydawnictwo TRIO. Dudek, Antoni. 2016. Historia polityczna Polski, 1989–2015. Kraków: Wydawnictwo Znak Horyzont. Dzwończyk, Joanna. 2000. Populistyczne tendencje w społeczeństwie postsocjalistycznym (na przykładzie Polski). Toruń, Poland: Wydawnictwo Adam Marszałek. Gduła, Maciej. 2017. Dobra zmiana w Miastku. Neoautorytaryzm w polskiej polityce z perspektywy małego miasta. Warszawa/Warsaw: Stowarzyszenie in. Stanisława Brzozowskiego. Grześkowiak, Alicja. 1997. Stenographic transcript from the session of the National Assembly, February 24, 1997. http://orka2​.sejm​.gov​.pl. Grzymala-Busse, Anna. 2015. Nations under God: How Churches Use Moral Authority to Influence Policy. Princeton, NJ: Princeton University Press. Kaczyński, Jarosław. 2006. The Fall of Post-Communism: Transformation in Central and Eastern Europe. Speech delivered at the Heritage Foundation, September 14, 2006. Kallas, Marian. 2005. Historia ustroju Polski. Warsaw: Wydawnictwo Naukowe PWN. Kelemen, R. Daniel. 2022. “Appeasement, ad Infinitum.” Maastricht Journal of European and Comparative Law, editorial, May 11, 2022. Kołodko, Grzegorz. 2000. From Shock to Therapy: The Political Economy of Postsocialist Transformation. Oxford: Oxford University Press. Korolczuk, Elżbieta, and Agnieszka Graff. 2018. “Gender as ‘Ebola from Brussels’: The Anticolonial Frame and the Rise of Illiberal Populism.” Signs: Journal of Women in Culture and Society 43 (4): 797–821. Kostelecký, Tomáš. 2002. Political Parties after Communism. Baltimore, MD: Johns Hopkins University Press. Kotwas, Marta, and Jan Kubik. 2019. “Symbolic Thickening of Public Culture and the Rise of Right-Wing Populism in Poland.” East European Politics and Societies 33 (2): 435–71. Krasnodębski, Zdzisław. 2006. “Modernizacja po polsku.” In Drogi do nowoczesności. Idea modernizacji w polskiej myśli politycznej, edited by Jacek Kloczkowski and Michał Szułdrzyński. Kraków: Ośrodek Myśli Politycznej. Kriesi, Hanspeter, Edgar Grande, Romain Lachat, Martin Dolezal, Simon Bornschier, and Timotheos Frey. 2006. “Globalization and the Transformation of the National Political Space: Six European Countries Compared.” European Journal of Political Research 45 (6): 921–56. Kurczewski, Jacek. 2009. Ścieżki emancypacji: Osobista teoria transformacji ustrojowej w Polsce. Warsaw: Trio. Markowski, Radosław. 2006. “The Polish Elections of 2005: Pure Chaos or a Restructuring of the Party System?” West European Politics 29 (4): 814–32. Markowski, Radosław. 2008. “The 2007 Polish Parliamentary Election: Some Structuring, Still a Lot of Chaos.” West European Politics 31 (5): 1055–68. Markowski, Radosław. 2016. “The Polish Parliamentary Election of 2015: A Free and Fair Election That Results in Unfair Political Consequences.” West European Politics 39 (6): 1311–22. Millard, Frances. 1999. Polish Politics and Society. London and New York: Routledge. Millard, Frances. 2006. “Poland’s Politics and the Travails of Transition after 2001: The 2005 Elections.” Europe-Asia Studies 58 (7): 1007–31.

P oland    219 Nizynska, Joanna. 2010. “The Politics of Mourning and the Crisis of Poland’s Symbolic Language after April 10.” East European Politics & Societies 24 (4): 467–79. OBOP. 1997. Treść przyszłej konstytucji w opinii Polaków. http://www​.obop​.com​.pl. Olszewski, Jan. 1992. Stenographic transcript from the session of the Sejm, June 4, 1992. http://orka2​.sejm​.gov​.pl. Organization for Security and Co-Operation in Europe. 2020. Poland, Presidential Election, 12 July 2020: Statement of Preliminary Findings and Conclusions. https://www​.osce​.org​/odihr​ /elections​/poland​/457210. Otto, Justyna G. 2006. “Polak bogatszy, ale nieszczęśliwy—portret obywatela RP po 16 latach transformacji.” Studia Politologiczne 10:233–51. Paczynska, Agnieszka. 2005. “Inequality, Political Participation, and Democratic Deepening in Poland.” East European Politics & Societies 19 (4): 573–613. https://doi​.org​/10​.1177​ /0888325405274929. Panek, Tomasz, Janusz Czapiński, and Irena E. Kotowska. 2006. “Strategie radzenia sobie z trudnościami finansowymi, pomoc społeczna i dopłaty bezpośrednie dla rolników.” In Diagnoza Społeczna 2005: Warunki i jakość życia Polaków, edited by Janusz Czapiński and Tomasz Panek, 46–51. Warszawa/Warsaw: Wyższa Szkoła Finansów i Zarządzania w Warszawie. Paradowska, Janina. 2006. “Tercet egzotyczny.” Polityka 19 (2553), 24. Pawłowski, Łukasz. 2020. Druga fala prywatyzacji. Niezamierzone skutki rządów PiS. Warsaw: Fundacja Kultura Liberalna. Sadura, Przemysław, and Sławomir Sierakowski. 2019. Polityczny cynizm Polaków. Warszawa/ Warsaw: Stowarzyszenie im. Stanisława Brzozowskiego, Fundacja Pole Dialogu i Autorzy. Sadurski, Wojciech. 2019. Poland’s Constitutional Breakdown. Oxford: Oxford University Press. Sawczuk, Tomasz. 2018. Nowy liberalizm. Jak zrozumieć i wykorzystać kryzys III RP. Warszawa: Fundacja Kultura Liberalna. Stankiewicz, Andrzej, and Piotr Śmiłowicz. 2010. “Chcę być premierem [interview with Jarosław Kaczyński].” Newsweek, September 20, 2010. https://www​.newsweek​.pl​/polska​/ chce​-byc​-premierem​/rpxd8qz. Stanley, Ben. 2016. “Defenders of the Cross.” In Saving the People: How Populists Hijack Religion, edited by Nadia Marzouki, Duncan McDonnell, and Olivier Roy, 109–28. London: Hurst Publishers. Stanley, Ben. 2019a. “Backsliding Away? The Quality of Democracy in Central and Eastern Europe.” Journal of Contemporary European Research 15 (4): 343–53. Stanley, Ben. 2019b. “A New Populist Divide? Correspondences of Supply and Demand in the 2015 Polish Parliamentary Elections.” East European Politics and Societies 33 (1): 17–43. Stanley, Ben. 2019c. “Working in the Gaps Left Behind: Radical Right Movements in a Consolidating Party System.” In Radical Right “Movement Parties,” edited by Manuela Caiani and Ondrej Cisar, 168–83. London and New York: Routledge. Stanley, Ben, Radosław Markowski, and Mikołaj Cześnik. 2019. “Marginalization, Not Mainstreaming: Explaining the Failure of Fringe Parties in Poland.” Available in Party Politics 27 (1): 46–57; first published August 5, 2019. Szacki, Jerzy. 1995. Liberalism after Communism. Budapest, Hungary: Central European University Press. Szczerbiak, Aleks. 2002. “Poland’s Unexpected Political Earthquake: The September 2001 Parliamentary Election.” Journal of Communist Studies and Transition Politics 18 (3): 41–76. Szczerbiak, Aleks. 2008. “The Birth of a Bipolar Party System or a Referendum on a Polarizing Government? The October 2007 Polish Parliamentary Election.” Journal of Communist Studies and Transition Politics 24 (3): 415–43.

2 2 0    B en S tanle y Szczerbiak, Aleks. 2016. “An Anti-Establishment Backlash That Shook Up the Party System? The October 2015 Polish Parliamentary Election.” European Politics and Society 18 (4): 404–27. Tarkowska, Elżbieta. 2006. “Ubóstwo i wykluczenie społeczne. Koncepcje i polskie problem.” In Współczesne społeczeństwo polskie: Dynamika zmian, edited by Jacek Wasilewski. Warsaw: Wydawnictwo Naukowe Scholar. Tusk, Donald. 2011. Stenographic transcript from the session of the National Assembly, November 18, 2011. http://orka2​.sejm​.gov​.pl.

CHAPTER 8

Russia BACK TO AUTHORITARIANISM Masha Hedberg

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Russia Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020):

144.1 6,601,665 22 $1,483 $10,115

Performance of Key Political Parties in Parliamentary Elections of September 2021 United Russia: Communist Party: A Just Russia: Liberal Democratic Party: New People: All Russian (Rodina):

49.8% 18.9% 7.4% 7.5% 5.3% 0.8% Main Officeholders

• President: Vladimir Putin (2012; already 2000–2008) • Prime Minister: Mikhail Mishustin (2020)

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O

n February 24, 2022, Russia’s President Vladimir Putin ordered a military invasion of neighboring Ukraine, unleashing arguably the worst security and humanitarian crisis in Europe since the Second World War. Within a matter of days, Russia morphed from a mistrusted but accepted major power to a global pariah, condemned for its aggression by many foreign governments, international organizations, and the public the world over. In the process, it overtook the likes of North Korea, Iran, and Syria in the dubious honor of being the most sanctioned nation in the world. While the Russian economy, though battered, withstood the initial shock, the loss of long-standing trade partners and economic ties has come with significant costs. Multinational companies and brands—from McDonald’s to IKEA to Starbucks—everyday emblems of Russia’s global integration, fled the country in droves.1 The barrage of economic sanctions also cut off many of Russia’s major banks and companies from Western financing and curtailed the country’s access to products and technologies Russia needs to sustain not just its military capabilities but a range of key industrial sectors, including energy. The question that now looms over Russia’s political landscape is whether or how well the social and political pillars that undergird the current political regime can withstand the turmoil unleashed by Putin’s decision to launch what the government insists on calling a “special military operation” against Ukraine. Russia’s contemporary political system has, in essence, been built on and maintained by a series of trade-offs and bargains with both elites and society that have required the constant balancing not just of competing interests but seemingly contradictory principles as well. Putin’s first decade in power, broadly speaking, saw the rise and consolidation of a hybrid regime, aptly described by Russia’s one-time éminence grise, Vladislav Surkov, as a political system that seeks to combine “enough freedom and enough order” (Foy 2021). In the eyes of the Russian public, the Kremlin’s gradual curtailment of civil liberties and political rights during the 2000s was offset by its promise of economic prosperity and steadily rising living standards, a bargain most Russians appeared willing to accept. During Putin’s second decade at the helm, the maintenance of political order required further adjustments to the social bargain. In the face of an economy that could no longer match the oil-fueled boom times of the 2000s, the government turned to stoking nationalist sentiments and feeding grievances against the West, convincing the average Russian that even if the economy had lost some of its luster, Putin could deliver on a different, perhaps even grander, promise: that of reclaiming Russia’s “rightful” status as a force to be reckoned with on the global stage. Whether Russia’s governing authorities can continue to rally a public deprived of many of the material rewards it has come to value and to ensure the continued loyalty of elites already feeling the heat of asset freezes and sanctions is now the million-ruble question. While the Kremlin has often proved capable of deftly threading the needle in the past, the current situation will need to be managed with even greater care. Many average Russians have embraced Putin because of what they saw as his rationality and astute risk management. A key to Putin’s popularity has been his ability to project an aura of sober statesman capable of both managing Russia’s post-Soviet rise and ensuring the country’s political and economic stability. That image could be shattered by what happens in Ukraine. Russia’s political and business elites, too, have cause for

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concern. Putin’s ability to act as the guarantor of their wealth and privilege has bound these elites to him. As Russia becomes more economically isolated from the global business community, the prospect of elite disaffection, if not outright defection, could grow. In order to make better sense of the turbulent present, this chapter offers an overview of Russia’s political trajectory since Putin came to power in 1999. The goal of the chapter is to examine how the main political institutions and social bargains that underpin regime stability have developed over the course of the past two decades and to evaluate the extent to which they have become entrenched in Russian society. As the invasion of Ukraine has amply demonstrated, Putin governs with no effective checks and balances, and this chapter explains how that came to be. The first section examines Putin’s first two terms in office (2000–2008) and offers an analysis of how the central political institutions began to be transformed under his leadership. The second section considers the means and methods the Kremlin has used since 2012 to both consolidate the regime and to ensure its stability in the face of growing domestic and international challenges. The third section turns to Russia’s increasingly acrimonious relations with the West and the sources of Russia’s foreign policy choices and international leverage. The final section concludes with reflections on what the confrontation between Russia and Ukraine signifies for the present and future of Russian politics.

Putin’s Rise to Power Vladimir Putin has been prime minister or president of Russia since 1999, likely the entire lifespan of many who are reading these pages. It may seem unthinkable now, but Putin’s ascent to the Russian presidency in 2000 was greeted by many in the international community as a welcome change from the chaotic administration of his predecessor, Boris Yeltsin, Russia’s first democratically elected president. In fact, much of the world community seemed to share then US President Bill Clinton’s view when he said, “Based on what I have seen so far, I think that the United States can do business with [Putin]. I think he is obviously highly intelligent, he is highly motivated, he has strong views. We don’t agree with him on everything. But what I have seen of him so far indicates to me that he is capable of being a very strong and effective and straightforward leader” (Csongos 2000). While Putin’s KGB past, as well as the scandals that loosely clung to him from his years serving in the St. Petersburg’s mayor’s office in the early 1990s, made some observers wary, many more seemed eager to believe that with the coming to power of the sober and seemingly sober-minded, forty-seven-year-old Putin, Russia was finally starting to put the tumult of its first post-Soviet decade behind it. The first election that Putin contested, held in March 2000, was heralded by the OSCE, one of the world’s most respected election observers, as “represent[ing] a benchmark in the ongoing evolution of the Russian Federation’s emergence as a representative democracy.”2

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THE PAINFUL 1990S Looking back, it is not too hard to understand why those inside and outside Russia chose to see the hopeful side to the changeover in power from Yeltsin to Putin. While Russia’s first post-Soviet decade and Yeltsin himself can be credited with some positive achievements—from the emergence of a vibrant independent media, genuine if oft flawed political competition, and lawmakers unafraid to speak, or even yell, their mind—for many Russians the decade brought devastating economic hardship, an explosion of crime, a mortality crisis largely unseen in peaceful times, and a deep sense of loss and disorientation from the collapse of the Soviet Union. The Union of Soviet Socialist Republics legally ceased to exist on December 31, 1991. Its successor, the Russian Federation, began the daunting transition to democracy and capitalism without any concrete plan or even clear sense of how to build either. While people hoped and politicians promised that the “leap” to a new society would be quick and the pain of transformation short lived, most average Russian citizens saw their early hopes for a freer, more prosperous future dashed as the country was battered by crisis after crisis. The 1990s began and ended with an economic crisis. Between 1991, when Yeltsin announced the start of market reforms, and 1998, Russian GDP contracted by an estimated 40 percent. At its peak, inflation reached a staggering 2,550 percent. Unemployment and poverty soared. Life expectancy, particularly for men, plunged precipitously, a casualty of rising violence, homicide, suicide, alcoholism, and drug use, along with poor health and the dilapidation of the state health sector. The frequent eruption of political crises only added to the people’s sense of uncertainty and bewilderment. Chief among these was the protracted struggle between Yeltsin and Russia’s first popularly elected legislature, the Congress of People’s Deputies.3 The long-simmering feud between Yeltsin and the Congress that began to unfold in 1992 was settled by Yeltsin’s resort to force in October 1993. After a group of deputies refused to accede to the president’s decree dissolving the chamber, Yeltsin ordered troops to shell and storm the White House, then the seat of parliament (McFaul 2015). The following year, the first Chechen War began. The war—which at the start was also labeled a “special operation” (Hiatt 1995)—lasted a grueling two years before an uneasy ceasefire was reached in 1996. While Russia’s defense minister at the time, Pavel Grachev, initially predicted that Russia could gain control of Chechnya with “one paratroop regiment in a couple of hours” (Higgins 2019), the conflict resulted in thousands, and possibly tens of thousands, of military deaths on each side, close to fifty thousand civilian deaths, some half a million refugees, and the complete destruction of the Chechen capital of Grozny and many other cities and villages (Zurcher 2007, 99). The government’s repeated attempts to mislead the nation about successes in the field—despite the images of death and destruction flooding Russian television screens—in many cases generated more cynicism than the war itself did. As the decade wore on, many Russians began to believe that the country was not just being governed poorly by the president but might not be governed by him at all. As Yeltsin’s health continued to decline and his public appearances dwindled, rumors

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about Russia being run by “the family,” a murky clique of Yeltsin’s actual family members, close associates, and government officials, took hold of the public imagination (Blasi, Kroumova, and Kruse 2018). But Yeltsin’s aloof and erratic governance was not the only thing blamed for the sorry state of affairs. The liberal and promarket policies and reforms, including privatization and financial and trade liberalization, that he and his team of so-called young reformers had championed were also seen as causing Russia’s many problems. Yeltsin’s early rhetoric about all the good that capitalism would quickly bring to the average citizen had set expectations that could not be met. Russia’s “voucher privatization” program, launched in 1992, is just one example. In announcing the reform, Yeltsin famously promised that privatization would lead to the creation of “millions of owners, not a handful of millionaires.” Privatization, however, brought about—or more importantly, was perceived to bring about—the exact opposite. While most Russians either did not take part in voucher privatization or saw barely any gains at all, a handful of savvy entrepreneurs made out like bandits (Goldberg 1992). The “loans for shares” program, in which oligarch-owned banks lent money to the Russian government in exchange for shares in some of the country’s most valuable companies, served to further tarnish the economic reform effort. While many economists would argue that, in economic terms at least, the program was a success, the opaque manner in which ownership of these companies passed into private hands created lingering doubts about the legitimacy of privatization. In the eyes of the public, the new economic elites who emerged during the 1990s did not deserve their wealth, having derived much of it from bribery, corruption, and political connections if not outright theft. Economic pain was compounded by an acute identity crisis and sense of dislocation that followed the collapse of the USSR. Many still felt pride in the Soviet Union, which had long been one of the two most powerful states in the world. Now the superpower was reduced to beggar status, neither feared nor consulted on the international stage. RUSSIA’S SECOND PRESIDENT Putin’s rise from little-known Kremlin functionary to Yeltsin’s handpicked successor was nothing if not meteoric. After St. Petersburg mayor Anatoly Sobchak lost reelection in 1996, his faithful deputy, Vladimir Putin, moved to Moscow to assume the post of deputy chief of the Presidential Property Management Department, an important but hardly high-profile job. The young Putin flourished in a patronage system that appreciated competence and intelligence but valued loyalty above all else. “What is clear is that he was able to win the confidence of leading officials,” writes Peter Rutland, a prominent scholar of Russian politics. “He was selected as a trustworthy aide by officials at ever-higher levels of responsibility. Patron-client relations were central to cadre policy in the Soviet era, and paradoxically became even more dominant as a vehicle for elite recruitment during the Yeltsin years” (Rutland 2000, 319). Each subsequent year brought a new promotion. In March 1997, Yeltsin appointed Putin deputy chief of staff and chief of the Main Control Directorate, an agency tasked

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with uncovering corruption within the government. In July 1998, he was elevated anew, this time to head the Federal Security Service (one of the successor agencies to the KGB), a position he kept until August 1999, when Yeltsin named Putin prime minister, making him Russia’s fifth premier in fewer than eighteen months. On the same day that Yeltsin chose Putin to head his government, he also announced that he wanted Putin to eventually succeed him as president. Vladimir Putin was just forty-seven years old when first elected Russian president in March 2000. In the run-up to the election, Putin and his advisers sought to put distance between the young acting president and his predecessor.4 Putin was presented to the electorate as a pragmatic and energetic man of action who also was above the political fray. While voters knew very little about what Putin stood for in terms of policy, they knew that he didn’t drink, didn’t smoke, was healthy and fit, and was a good husband and the father of young children. Just as critically, he was portrayed to be an outsider to Moscow’s unsavory politics, untainted by the scandals of the 1990s that had tarnished the reputations of many other politicians prominent at the time. While Putin eschewed running a formal campaign, chose not to participate in televised debates with other presidential contenders, and never articulated a policy platform, he traveled widely around Russia, presenting himself as an honest “everyman” aware of and sensitive to the problems faced by ordinary Russians. News programs largely showed only favorable coverage of Putin simply going about his job, surrounded by supporters, and listening to their concerns. To reinforce the image that he was not an ordinary politician but an honest person who cared deeply about Russia, Putin published an open letter to voters outlining Russia’s vexing problems. The letter, while intentionally vague on concrete solutions, promised voters that he would put an end to decay and disorganization of society and restore Russia’s former greatness. Putin handily won the March 2000 election, beating his nearest competitor, the Communist Gennady Zyuganov, by some 24 percentage points. Grigory Yavlinsky, a liberal candidate closely associated with Yeltsin’s promarket reforms, garnered a paltry 6 percent of the vote (Wines 2000). Upon coming to power, the young Putin quickly moved on his promise to restore order inside the country. His “law and order” rhetoric, while sounding alarms in some circles, was well received by a public weary of seemingly endless political and economic crises, the rise of criminality and corruption, and the enfeeblement of the state and its agencies. SUPER-PRESIDENTIALISM Vladimir Putin’s agenda from the start was clear, and it started up with remarkable speed. Drawing upon his burgeoning popularity as well as strong support in the State Duma, the lower house of parliament, the new president was able to pass legislation that gave rise to and strengthened the key institutions that underpin the political regime to this day. Russia’s political order is dominated by the president and his supporters within formal institutions, such as the State Duma, and informal networks made up of political and economic elites with close personal ties to the president. During his first two terms in office, from 2000 to 2008, Putin concentrated power in

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the executive and the federal government, laid the groundwork for the emergence of United Russia as the dominant party, drastically curtailed the political clout of many Yeltsin-era oligarchs, and drew thousands of state-security officers into senior political positions. The changes to the political rules of the game were drastic and consequential. At the time, however, many saw these institutional changes as a necessary correction that would strengthen political stability without entirely undoing the democratic gains the country had made in the preceding years. One of the most important aspects of contemporary Russian politics is the office of the presidency, which is endowed with expansive formal powers and buttressed by a vast array of informal practices. Formally, the powers of the presidency derive from the 1993 Constitution, adopted in the wake of Yeltsin’s “victory” over the Russian parliament. Having shelled the White House and disbanded the legislature in October 1993, Yeltsin had a free hand in shaping the scope of presidential powers. The Constitution, which was approved by popular vote in December 1993, formally created a semipresidential system composed of a popularly elected president and an appointed prime minister who, again formally, is responsible to the legislature. In practice, however, the system put in place has been called super-presidential because it gives the president vast prerogatives, including the power to dissolve the State Duma, to unilaterally appoint all ministers other than the prime minister, and to issue decrees that have the same weight as laws passed by the legislature (Colton and Skach 2005). However, while Yeltsin had laid the foundation for a strong executive, he himself never fully utilized all the powers under his command. His successor most certainly did. Right out of the gate, Putin took advantage of popular perceptions that Russia needed a “decisive” president to concentrate power in the hands of the executive branch. Efforts to buttress the commanding authority of the president and the federal government came hand in hand with measures to reduce the power of other political actors, particularly the regional governors, many of whom had bucked central authority under Yeltsin. In May 2000, Putin issued a decree that fundamentally changed the relationship between the federal center and the regions. The decree divided Russia into seven federal districts—an eighth federal district was added in 2010—with each district overseen by an “authorized representative” (polpred in Russian) appointed by and responsible to the president. While in principle, the president’s representatives are tasked with supervising the work of federal agencies in the region, in practice they have significant influence and control over the regional governments (Hyde 2001). Another decree issued in May 2000 took away the right of regional governors and leaders of regional assemblies to sit ex officio in the Federation Council, Russia’s upper house of parliament, further eroding the political clout of regional governments as well as lessening the power and independence of the upper house. Other federal reforms gave the president the right to dismiss regional leaders, giving Putin another lever for keeping these political actors in line. In 2004, the president further increased his leverage over regional governors by doing away entirely with direct gubernatorial elections. Instead, the president acquired the right to appoint the governors. And while formally, the president’s proposed candidate must be confirmed by the regional legislature, in practice, Putin’s recommendations have never been rejected.

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MANAGED DEMOCRACY Putin’s early years in office also saw the inception and the swift transformation of United Russia (UR) into the “party of power” or “dominant party,” defined as a “party that has the leading role in determining access to most political offices” (Reuter and Remington 2009). Formed in 2001 after the merger of Unity, a political party that was briskly cobbled together in September 1999 to contest the December 1999 parliamentary election, and Fatherland-All Russia, a party that Unity had beat out in the December contest, United Russia quickly grew into an electoral juggernaut that has buttressed the regime ever since. United Russia’s close ties to Putin, as well as its control over financial flows and the media, have been the linchpins of its electoral success. While Putin has eschewed becoming a member of the party, he has always made it clear that the party exists to support his policy agenda. Piggybacking on Putin’s lofty approval ratings, United Russia notched a decisive win in the 2003 parliamentary election. Even though it fell short of securing an outright majority in Russia’s 450-member parliament, the commanding presence of UR deputies combined with support from other pro-Kremlin parties created a legislature that could be counted on to enact whatever legislation the president might propose. By the time of the 2007 parliamentary elections, most of Russia’s governors, regional legislators, formerly independent Duma deputies, and other political elites had joined the party’s ranks. Indeed, United Russia won those elections by whopping margins, securing 315 seats in parliament. Since 2007, UR’s size and cohesion have provided the president and government with a guaranteed bloc of voting support in the State Duma (Remington 2008). Moreover, because United Russia is virtually guaranteed to win both national and subnational elections, it has the power to influence politics at every level of government, from the federal to the regional to the municipal. The party’s dominant position was further cemented through changes to electoral rules. In 2003, Russia switched from a mixed system, which combined proportional representation with single-member districts, to a fully proportional system. At the same time, the election threshold—the minimum share of votes that a party must win to gain seats in the legislature—was raised from 5 percent to 7 percent. Both reforms favored the larger existing parties at the expense of small or newly aspiring ones. The overweening success of United Russia led to the gradual decline in the number of political parties that can credibly vie for power. As United Russia grew, party competition evaporated. The liberal political parties with roots in the 1990s, such as Yabloko and the Union of Rightist Forces (SPS), began to disappear from the political stage. For instance, while Yabloko and SPS were able to win four and three seats, respectively, in Russia’s fourth Duma (2003–2007), both failed to garner even one seat in the fifth Duma (2007–2011). Since the early 2000s, all political parties in Russia have effectively been controlled by the Kremlin. Even the Communist Party and the Liberal Democratic Party of Russia, two formerly major parties that during Yeltsin’s tenure were stalwart opponents of the government, have fallen in line and can now be counted as a “loyal opposition.” During Putin’s second term in office, the Kremlin also strove to augment the

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ranks of pro-regime political parties by spurring the creation of what have been called “parastatal parties” (March 2009), which provide limited competition to the “party of power” without ever seriously threatening its dominance in either the electoral or legislative arenas. One of the four main parliamentary parties, Just Russia (sometimes also translated as Fair Russia) was formed at the Kremlin’s behest in 2006 through the merger of three small left-leaning parties—Motherland, the Russian Party of Life, and the Russian Pensioners’ Party. THE RISE OF A NEW POLITICAL CLASS Another hallmark of the early Putin years was the rise of new political and business elites, made up of Putin’s friends and former colleagues from St. Petersburg, fellow KGB veterans, and other members of the state security and law enforcement agencies and the armed services. Known collectively as the siloviki, a term that is derived from the Russian phrase silovye struktury or “power structures,” this network of government officials and businessmen came to replace the Yeltsin era oligarchs and have served as the backbone of the Putin regime. One of Putin’s stated goals upon becoming president was to bring down the oligarchs, the Russian tycoons who appeared to dominate the political scene under Yeltsin. His background as an outsider to Moscow politics, plus his tough reputation as a former officer of the FSB (the successor to the KGB) led many Russians to hope that the new president would follow through on his promise to “eliminate the oligarchs as a class.” And—at least initially—the young, new president did. Within a few months of winning the 2000 election, Putin summoned twenty-one of the country’s wealthiest men to the Kremlin, where he made them an offer they could not refuse. Those in attendance were told that, in return for their staying out of politics, the new government would not revisit the issue of privatization. In other words, the wealthy would keep their wealth, provided, of course, that they kept their word to remain politically quiet and pliant. Putin followed up by threatening two prominent oligarchs, Boris Berezovsky and Vladimir Gusinsky—whose political clout derived not only from their wealth but also the media companies they controlled— with prosecution, forcing both into exile. To hammer the point home, in 2003, the government orchestrated the prosecution and imprisonment of oil magnate and Russia’s wealthiest man, Mikhail Khodorkosvky. His financial and industrial empire, too, was quickly swallowed up by another state-owned company, Rosneft (Goldman 2008). Not surprisingly, most of the other original oligarchs accepted the new “social compact,” either quietly leaving Russia or pledging loyalty to the new ruler and his rules. The moves against individual oligarchs were followed by a wave of renationalization, which put the state back firmly in control of many companies, especially in strategically important sectors such as energy, aviation, and telecommunications. For the rest of the business community, however, Putin promised a more stable and predictable economic environment. During his first three years in office, Putin pushed through a series of economic reforms. In 2001, Russia adopted a flat income

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tax of 13 percent. Corporate taxes were lowered to 24 percent from 35 percent. Smallscale tax violations were decriminalized, while regulations governing the registration and licensing of small and medium-sized enterprises were simplified and streamlined. LESS FREE BUT HAPPIER? Meanwhile, the surge in global oil prices quickly lifted the Russian economy, raising household incomes and allowing the government to implement a slew of popular measures, including the raising of pensions and state-sector salaries. Notably, when Yeltsin named Putin as his prime minister in August 1999, the price of oil hovered just under $18 a barrel. Toward the end of Putin’s second term in office in 2008, it had reached close to $150 a barrel. While scholars debate the extent to which Russia’s economic rebound is attributable to Putin’s early economic reforms or is simply the lucky result of a jump in world oil prices, there is no disagreement about the political consequences of the recovery. Putin’s star not just rose but soared. The state’s renewed capacity to ensure a reasonable quality of life for the population did much to increase the public’s trust in and support for the new president. According to public opinion surveys by the Levada Center, a respected independent polling group and research center still operating in Russia, Putin’s approval rating climbed from a low of 61 percent in June 2000 to a vertiginous 86 percent in December 2003, that is, four years after he had first become acting president (figure 8.1). Putin’s ability to deliver on his initial promise of stability and prosperity help to explain why the slow erosion of many of the political rights and civil liberties that Russians had gained in the 1990s was accepted by a large swath of the public with more or less a shrug. Putin’s second term in office from 2004 to 2008 was characterized by the government’s increasing encroachment into the public sphere, including curbs on media freedoms, attempts to control the NGO sector, and stricter measures against protest activities. The early assault on the media moguls of the 1990s in many ways presaged the more hands-on and coercive approach toward civil society that the Russian government would take after Putin’s reelection in March 2004. In taking down Vladimir Gusinsky’s Media Most empire, which included the NTV and TNT television channels as well as the Seven Days Publishing House and Itogi magazine, Putin also silenced some of the most independent journalistic voices in postcommunist Russia. But the government’s turn to more repressive measures can largely be attributed to the fear generated within Russia’s ruling circles by the so-called color revolutions, the peaceful mass protests against reigning incumbents that broke out in Georgia in 2003, Ukraine in 2004, and Kyrgyzstan in 2005. The unexpected political awakening on the part of society in neighboring countries seemed to have shaken the Kremlin to the core. In response, Putin launched what Robert Horvath (2011) eloquently dubbed as a “preventive counter-revolution,” squarely aimed at warding off similar threats to the regime from emerging on Russian soil. The clearest indication of the state’s determination to tighten its grip over the public sphere came in 2006 with the law “On Introducing Amendments into Certain

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Figure 8.1  Approval of Vladimir Putin as the President or Prime Minister of Russia

Legislative Acts of the Russian Federation,” known colloquially as the NGO Law. The law required that domestic and foreign NGOs report all foreign donations to the government, share personal information about each member and founder with the state, and allow state representatives to attend NGO meetings, among other provisions that significantly enhanced the government’s ability to scrutinize NGO activities (Crotty, Hall, and Ljubownikow 2014). In other ways, however, Putin stuck with the social bargain. While more and more constraints were placed on any political activity that was aimed directly against the authorities, there was tolerance when it came to other things, including culture, religion, and other forms of less overt political expression. Moreover, while the government often did its best to intimidate journalists, it took a hands-off approach to the internet and did not seek to stem the flow of information to its citizens from international news sources. During this time, at least, the existing powers seemed to understand that society needed to be given some room to breathe in order for the political system to run smoothly. Moreover, Putin’s second term ended on a seemingly hopeful note. Despite rampant speculation that he would not relinquish the presidency, Putin chose to abide, at least de jure, by the Russian constitution, which limits presidents to serving no more than two consecutive terms in office. Instead, he passed the mantle to his own prime minister, Dmitry Medvedev, who, upon winning the 2008 presidential election, chose Putin to become his prime minister.

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Despite its ersatz nature, the transfer of power upped expectations, at least among some circles, that Russia’s political system could yet change. The younger, seemingly more Western Medvedev peppered his public pronouncements with promises of reform, paeans to the “rule of law,” and pledges to fight corruption and modernize the economy. On the international front, he presided over the “reset” with the United States, which, at least in the short term, helped to improve relations between the two powers. While Medvedev was president, the United States and Russia negotiated a new arms control treaty, reached an agreement to approve tough UN sanctions on Iran, and paved the way for Russia to join the World Trade Organization. In retrospect, however, the Medvedev-led changes were largely cosmetic. Real power in Russia continued to lie with Putin. As M. Steven Fish (2017), an eminent scholar of Russia, once quipped, “if Putin chose to become minister of transport, the minister of transport would rule Russia.”

From Managed Democracy to Rule by Strongman In stark contrast to the halcyon days of his first two elections, Putin returned to the presidency in 2012 amid a torrent of protests that had begun the previous December. Galvanized to action by perceptions that the United Russia party had rigged its way to another victory, the protesters demanded not just a recount but also far wider political changes, including new democratic elections and the registration of opposition parties that had been barred from competing. At their peak, the mass demonstration saw as many as a hundred thousand or more people take to the streets in Moscow alone, the largest number seen since the waning days of the Soviet Union under Gorbachev (Bratersky and Krainova 2011). A further round of demonstrations took place in February 2012. This time, the demonstrators took aim directly at Putin, protesting against his decision to return to the presidency and criticizing his failure to modernize the Russian economy as well as the political system. The protests continued into the following March as Putin campaigned for reelection. Notably, though Putin’s victory was all but assured, he garnered just under 65 percent of the vote, down significantly from the close to 72 percent support that he had received in 2004. Disaffection with Putin and the political system, at least among Russia’s more educated and urban population, did not cease with his election. On May 6, 2012, as Putin was sworn in for his third, now six-year term as president,5 tens of thousands of demonstrators gathered in Moscow’s Bolotnaya Square. In contrast to its handling of the previous demonstrations, Russian police used extensive force during this so-called March of Millions, injuring dozens and detaining some four hundred demonstrators (Barry and Schwirtz 2012). Returning to power amid protests, rather than welcoming cheers, is likely not what Putin had expected. Even though Putin was able to reclaim the presidency, he had been dealt a blow. For a time at least, it seemed that Russia’s long-dormant civil society and opposition had awakened and that the dominant party system and Putin’s own personal authority were under significant stress. Moreover, elite fears of political destabilization were likely compounded by the fact that 2011 saw the violent downfall

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of two other long-serving leaders: Hosni Mubarak in Egypt and Muammar Gaddafi in Libya. CONTROLLING THE PUBLIC SPHERE In many respects, the 2011–2012 protests can be seen as a turning point when Russia’s previously “competitive authoritarian” regime lurched in the distinctly authoritarian direction. During Putin’s third term, a raft of increasingly repressive legislation criminalized many protest activities, censored the free press, shut down human rights organizations, further raised the costs for independent parties and candidates to contest elections, and led to the imprisonment of prominent critics of the regime. In addition to cracking down on dissent and actively preventing the rise of any organized opposition, the government also turned to patriotic mobilization, “encouraging national pride, commemorating past military victories and promoting a vision of Russia as a reborn global power” (International Crisis Group 2018). Putin’s embrace of a more overtly authoritarian rule was presaged by events that accompanied his return to the presidency. In February 2012, Pussy Riot, a feminist punk rock group, staged a protest performance in Moscow’s Christ the Savior Cathedral against Putin’s rule and the authorities’ relationship with the Russian Orthodox Church. For this performance, called “Our Lady, Chase Putin Out!” three young members of the group were tried and convicted of “hooliganism” and inciting “religious hatred” and sentenced to three years in a labor camp after a highly politicized and biased trial. The crackdown on dissent accelerated over the next several years. During his first month back at the helm, Putin signed a harsh new anti-protest law that significantly upped the financial costs of protesting for ordinary Russians. An individual could be fined as much as 300,000 rubles (around $9,000 at the time) just for taking part in an “unsanctioned” protest, while individual organizers and organizations supporting such events were threatened with penalties as high as 600,000 rubles and 1 million rubles, respectively. The law, as intended, had a chilling event on protest activity. The government followed up its assault on the freedom of assembly with further legislation that made the work of NGOs even more difficult. In July 2012, the Duma adopted a law that required all NGOs that engage in “political activity” and receive funding from international sources to register as a “foreign agent,” a term that during Soviet times was synonymous with “foreign spy.” To further curtail civil society’s room for maneuver, a few years later, the Duma passed the nebulously written “undesirable organizations” law, which targeted foreign NGOs. Any foreign organization that was deemed by the government to be a “threat to Russian security” was banned from operating in Russia and providing funding to local NGOs (Bogdanova, Cook, and Kulmala 2018). Notably, the US-based National Endowment for Democracy was the first organization to be placed on the undesirable list. Local organizations were also prohibited from accepting funds from such banned sources. Political authorities also turned their attention to the remaining independent media. In several cases, such as Lenta​.r​u, the Kremlin replaced independent editors

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and reporters by people far more loyal and reliant on the regime. In other cases, it turned once again to the legislation to financially cripple independent journalism. For instance, a 2014 law barred foreign investors from holding more than a 20 percent stake in Russian media outlets. As a result of this 2014 law, the Russian state has largely succeeded in establishing firm control over what information Russian people are allowed to see and hear. NATIONALISM AND POPULAR MOBILIZATION The most striking difference in Putin’s approach to shoring up public support was the government’s new articulation of its “raison d’être.” During his first decade in power, when Russia was regularly posting annual growth rates of 5 percent to 8 percent, Putin’s appeals to the public were couched in terms of stability and prosperity. But when economic growth began to stall in the wake of the global recession of 2008–2009, the Kremlin began to put forth a new national idea—or rather, several interrelated ideas—to legitimate the regime and its leader. The first was the notion of Russia as a defender of “traditional values,” a bulwark against the alien and decadent liberalism supposedly being foisted on the world by the culturally hegemonic West. Aligning itself closely with the country’s conservative Orthodox Church, political authorities more and more began to speak of Russia’s cultural exceptionalism and its unique civilization (Pomerantsev 2012). The second prong of the new ideational strategy was the portrayal of Russia as besieged by foreign enemies, desperately seeking to bring the country down. For example, in February 2012, while campaigning for the presidency, Putin riled up a rally by telling those assembled that they were waging “a battle for Russia.” Referencing Napoleon’s 1812 invasion, he warned that unnamed others “seek to impose their will upon us.” “Let us die near Moscow, as our brothers died,” said Putin, quoting from Lermontov’s famous poem, “Borodino.” He then declared, “the battle for Russia continues. Victory will be ours!”6 The pro-Putin rally itself was held on Defender of the Fatherland Day, a national holiday that replaced the Soviet-era Red Army Day. Relatedly, the government doubled down on the narrative of Russia as an inherently great power able to withstand whatever the hostile West could throw at it. On Russia’s state media, more and more “experts” began to extol the might of the Russian military and its long history of great deeds and glorious victories. While the Putin regime lacks the kind of powerful ideology that underpinned the Soviet system, starting in the early 2010s the Kremlin’s propagandists tried to forge something akin to a state dogma—loosely revolving around patriotism, nationalism, and religion, or, at least, Russia’s unique “spiritual values”—that can be used to mobilize the population. In many respects, Russia’s audacious annexation of Crimea—which had been part of Ukraine since 1954—was representative of Russia’s increasingly selfaggrandizing militarism and nationalism. Taking advantage of the political tumult in Ukraine that erupted with the Euromaidan protests in November 2013, the Russian military seized the peninsula in a short and bloodless operation in late February 2014. Shortly thereafter, on March 21, Putin signed a law formally integrating Crimea into

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Russia. While analysts and scholars have put forth differing explanations for Russia’s land grab, the Kremlin has repeatedly justified its action by invoking the idea of “Russia as defender” (Treisman 2016). Russia’s intervention, it claimed, was necessary in order to protect Crimea’s Russian population from Ukrainian nationals as well as to prevent hostile NATO from swallowing Ukraine and creeping ever closer to Russia’s borders. In order to further destabilize its neighbor and forcefully keep it out of NATO’s orbit, Russia threw its support firmly behind the separatist movement in the eastern Donbas region of Ukraine. Putin’s Crimea gambit, while economically costly, worked well politically. Even though the country plunged into a recession at least partly because of the sanctions levied against it by the West and allied nations, the annexation was hailed as a great victory, unleashing a tide of patriotic sentiments among the public as well as a deluge of pro-Putin propaganda in the media. Notably, Putin’s approval ratings, which had fallen to a relative low of 61 percent a few months before Crimea, skyrocketed to 80 percent immediately after. Moreover, the international sanctions and condemnation fed into the government’s Russia as a “besieged fortress” storyline. POWER AND PLUNDER While the Kremlin has been able to use crowd-pleasing geopolitical “victories” to strengthen the public’s support for the regime, Putin has always needed to buy elite loyalty. Despite the president’s early anticorruption rhetoric, corruption has noticeably grown on his watch. Many scholars now describe Russia as a kleptocracy, a system where the government enables and abets elite enrichment and corruption in order to sustain its own rule (Lanskoy and Myles-Primakoff 2018). The kind of economic order that has emerged in Russia over the past twenty years is far different from the liberal market economy that Putin seemed to favor his first term. In essence, “crony capitalism” helps keep elites happy as well as bound to the regime. Favored officials and loyal businessmen are rewarded for their political obedience with a de facto license to steal public funds for their own private gain, whether through bribes, kickbacks, lucrative government contracts, or, in extreme cases, even the privilege of seizing attractive companies from their original owners, a phenomenon that has come to be known as reyderstvo (“corporate raiding”) (Rochlitz 2014). Even as the Russian economy has stagnated in recent years, Russian officials and oligarchs have managed to fund extravagant lifestyles both at home and in the most expensive cities of the world. But while the government seemingly turns a blind eye to the various forms of legal and illegal enrichment, it also keeps close tabs on those doing the enriching. Corruption, in other words, can be used by the Kremlin as both a carrot and a stick. Anecdotal accounts suggest that the government holds evidence of misdeeds against most, if not all, high-level officials, bureaucrats, and firms and can use it to punish anyone who fails to toe the line. Simply put, greed and fear pervade the system, reducing both the incentives and the will for change. For all the credit that he has been given within Russia for reviving the country’s fortunes, outside analyses suggest that Putin has been a rather lackluster steward of the coun-

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try’s wealth, at least during his third and fourth presidential stints. One recent study has estimated that the total assets held abroad by Russian citizens almost equals the total assets held within Russia (Novokmet, Piketty, and Zucman 2018). Meanwhile, state ownership of the economy has continued to grow. In 2015, close to 55 percent of the economy was in state hands, with the government directly employing some twenty million workers, close to 30 percent of the total workforce (Aven 2015). As can be seen in figure 8.2, the Russian economy has grown on average by 1 percent a year since 2010, lagging noticeably behind the 2.4 percent global average. Concomitantly, real disposable incomes declined every year from 2014 through 2018, before rebounding slightly in 2019, according to data published by the Russian Federal State Statistics Service. The Russian economy is beset with structural problems, many of which are related to the government’s overreliance on revenue from the energy sector. While Putin and other top government officials frequently talk about the need to diversify the economy away from hydrocarbons, the Kremlin has largely failed to act on many of its own proposals. Particularly during good times, plentiful revenues from the extractive industries make it possible to mask the deficiencies and inefficiencies in other economic sectors. The state’s control over the energy sector—exercised both indirectly through legislation and taxation, and directly through giant corporations such as Gazprom and Rosneft—has enabled political authorities to achieve many of their objectives, both at home and abroad. “Petrodollars” have allowed the government to pay off its debt to foreign creditors, sock away billions in “rainy day” funds that have helped Russia weather economic downturns, and fund myriad public infrastructure projects, all the while boosting the incomes of ordinary Russians and the fortunes of politically loyal elites. In other words, whatever economic benefits might come from cardinally reforming the economy, in the Kremlin’s eyes, the political costs to the regime are much too high.

Figure 8.2  Percentage Change in Russian Real Gross Domestic Product

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THE GATHERING CLOUDS In February 2018, when Putin coasted to his fourth term in office with some 77 percent of the vote, few would have predicted that he was about to embark on his most turbulent term in office. If during Putin’s first two terms, it could still be credibly argued that Russia was a hybrid regime, comingling authoritarian and democratic elements, the government’s actions since 2018 seem to demonstrate that autocratic elements have decidedly overwhelmed democratic ones. The years since Putin’s reelection saw the Kremlin embroiled in an international scandal over the poisoning of opposition leader Alexei Navalny and his subsequent arrest and trial, the outbreak of the global pandemic which sorely tested the government’s ability to respond and walloped the Russian economy, the eruption of antiregime protests first in Belarus and then in Kazakhstan, two of Russia’s fellow authoritarian neighbors, and, finally, Russia’s invasion of Ukraine. The government’s increasing reliance on blunt repression is epitomized by its handling of Alexei Navalny, a prominent and vocal critic of the regime. While Navalny has been a thorn in Putin’s side since he first gained visibility in 2008, until 2020 the government had shown some caution when dealing with its most vociferous detractor. Navalny had been put on trial and convicted for embezzlement in 2013. Nevertheless, he was released the day after he was sentenced—undoubtedly on the Kremlin’s orders—and allowed to challenge the Kremlin-backed candidate in Moscow’s mayoral election. In 2020, however, the government took off the kid gloves. Though the Kremlin denies the accusations, several independent investigations have concluded that the government was squarely behind the poisoning of Navalny.7 Upon Navalny’s return to Russia in January 2021, he was immediately arrested and sentenced to two and a half years in prison, technically because of parole violations stemming from his 2014 trial.8 Not content to stop there, political authorities also banned three organizations with links to Navalny, availing themselves of the “anti-extremism” legislation that Putin had signed into law just a few weeks earlier. If the Russian government has become deft at suppressing political threats, its capacity for effectively handling a public health emergency seems less assured, as the outbreak of the global pandemic demonstrated. Russia was hit hard by COVID-19, registering one of the highest mortality rates among countries in Europe. Ironically, Russia was the first country to develop a vaccine, Sputnik V—named in honor of the world’s first artificial Earth satellite launched by the Soviet Union in 1957, with “V” added for “Victory.”9 Its rollout, however, showed that the Kremlin was far more interested in scoring political points than in managing the health crisis. Rather than inspiring public confidence in either the drug or the government, the vaccine’s quick appearance on the market engendered skepticism and mistrust about its safety and efficacy. Putin’s strategy for handling the pandemic, particularly during its early months, was to delegate the most difficult decisions to regional governments and local authorities, many of whom lacked either the resources or the competence to adequately address the crisis. If political authorities hoped that keeping Putin away from spearhead-

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ing unpopular measures would protect his popularity, their game plan did not succeed. As the coronavirus swept through the country and Russia went into lockdown, Putin’s approval rating fell to a historic low of 59 percent, according to the Levada Center. The precipitous drop sent off alarms in the Kremlin, because Putin’s own popularity serves as the linchpin for the entire political system. Signs that the public is souring on its leader are always taken seriously by the government, but even more seriously when discontent at home coincides with popular revolts abroad. Notably, 2020–2021 witnessed the outbreak of mass antiregime demonstrations in Belarus, Russia’s authoritarian neighbor that since 1994 has been ruled by President Alexander Lukashenko. The year 2022 saw further eruptions of popular anger, this time in Kazakhstan, another former Soviet republic. While the protests in Kazakhstan were triggered by the doubling of gas prices, long-simmering grievances against government corruption, growing income inequality, and closed politics also played a role. The turmoil in both Belarus and Kazakhstan exposed the vulnerability of strongman rulers, hinting at the potential for destabilization in Russia itself.

Russia Leaves the West Russia’s backsliding toward more and more oppressive rule at home has gone hand in hand with its increasingly antagonistic behavior on the world stage. As chaotic as they were, the 1990s were both the peak of Russian democracy as well as the heyday of amicable relations between Russia and the West, especially the United States. While tensions over NATO strained US-Russia relations even during Yeltsin’s term, the first Russian president largely pursued a pro-Western policy direction, seeking to build “strategic partnerships” on both sides of the Atlantic. During his first years in office, Putin did not change the country’s foreign policy course significantly. Judging from his early pronouncements, Putin believed that Russia’s revival required improved relations and enhanced economic cooperation with the United States and Europe. Even though the new leader at times complained that Russia was not being given its due as a major power, Putin made it clear that he saw Russia as belonging to the West (Rankin 2021). He was one of the first foreign leaders to offer Washington his full support in the wake of the 9/11 terrorist attacks on American soil. He then followed with concrete policies that significantly enhanced cooperation between the two countries. US-Russia rapprochement, however, did not last long. By the end of Putin’s second term, the Kremlin had become unambiguously critical of the West, and the United States in particular. As the Russian economy rebounded in the 2000s, so did the leadership’s self-confidence and desire to reassert itself on the global stage. Several considerations are key to understanding Russia’s foreign policy behavior. First, the government’s deep-seated antipathy toward NATO has fueled many of its actions abroad. Second, the political class and citizens alike remain firmly convinced that Russia is, and always will be, a great power that must be treated as an equal on the world stage. The revival of the great power myth has in fact been a staple of the Putin years, helping to at least partially explain the Kremlin’s visceral rejection of US

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hegemony and its conviction that it has an innate right to control the political fate of the countries it deems as falling within its sphere of influence. Third, Russia’s domestic politics and its foreign policy are intertwined. Moscow’s suspicion that both the United States and the EU want to see a regime change in Moscow have long complicated relations between it and the West. The collapse of the USSR left the new Russian Federation in an anomalous position. On the one hand, it remained a nuclear power, having inherited the Soviet nuclear arsenal. It also retained the Soviet Union’s seat on the United Nation’s Security Council, as well as its self-conception as a great power. On the other hand, in terms of the size of its economy, territory, and population, it was a shadow of the former USSR. Russian political elites and citizens alike found the country’s diminished status difficult to swallow, making it all that much harder to accept the emerging US-led post–Cold War world order. THE QUESTION OF NATO Russia’s opposition to NATO enlargement long antedate Putin’s ascent to power. Even during the Yeltsin era, political elites firmly believed that NATO, an organization built to contain the now defunct USSR and the Warsaw Pact, had simply outlived its purpose. To many, it seemed as if the Western powers, and the United States especially, were intentionally and disdainfully taking advantage of Russia’s temporary weakness to push through security arrangements that were inherently disadvantageous to it. Anti-NATO sentiment was further hardened by the belief that Russia had been deceived. To this day, most Russians remain convinced that the United States had broken its word and reneged on an explicit promise that had been made to Gorbachev that NATO would never expand into Central and Eastern Europe. NATO’s decision in 1997 to extend membership to Poland, the Czech Republic, and Hungary was seen as a clear breach of trust. Subsequent developments in the late 1990s hardened Russia’s distrust of NATO and, by extension, US intentions. The emblematic action, which continues to be referenced by Putin and other top political advisers over twenty years later, was the bombing of Belgrade (Gutterman 2014). In March 1999, NATO, led by the United States, launched an aerial bombing campaign against Yugoslavia, Russia’s traditional ally. Yevgeny Primakov, the Russian prime minister at the time, was flying to the United States on the day that the air strikes began and called then Vice President Al Gore, imploring him to change course. Gore told him that Moscow had no say in the matter. In response, the reportedly furious Primakov ordered his plane to turn around, and he abruptly returned to Moscow. For many in Russia, this episode served to confirm their worst suspicions of NATO and its willingness to disregard Russia’s input and interests. It also reinforced the Kremlin’s misgivings that NATO could use its military might to effect political change.10 At the same time, Russia’s weak economic position in the 1990s tied the government’s hands and limited it to making diplomatic pleas and protestations. But as the country’s financial position changed, so did its tone. The Kremlin’s earlier

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disquiet about NATO and American hegemony hardened into visceral opposition, which found its full voice during Putin’s high-profile speech at the Munich Security Conference in 2007. Putin (2007) used the gathering to denounce the United States for creating a world order “in which there is one master, one sovereign,” calling such unipolarity both “unacceptable” and “dangerous.” Drawing from the reservoir of resentment that first opened up in the 1990s, Putin continued: I think it is obvious that NATO expansion does not have any relation with the modernisation of the Alliance itself or with ensuring security in Europe. On the contrary, it represents a serious provocation that reduces the level of mutual trust. And we have the right to ask: against whom is this expansion intended? And what happened to the assurances our western partners made after the dissolution of the Warsaw Pact? Where are those declarations today? No one even remembers them.

While adamantly defending Russia’s domestic political track record and its behavior on the world stage, Putin laid the world’s problems squarely at the feet of the United States and its allies, signaling that Russia was no longer interested in either embracing or conforming to the American-led liberal security order. Since that time, many— though certainly not all—of Russia’s most notable foreign interventions, from the war with Georgia in 2008 to the annexation of Crimea in 2014 to its military engagement in Syria since 2015 in support for the Assad regime, have demonstrated that Putin very much meant what he said in Munich. ENERGY DIPLOMACY Its nuclear arsenal, vast standing army, and, on occasion, deft diplomacy have made Russia hard to ignore in world affairs. But the biggest reason for its international status relates to fossil fuels. Russia’s vast energy resources are a mainstay of its foreign policy and the primary source of its international clout. Without its energy riches, Russia would not have the status it has today, and it would not have the same influence in Europe or command nearly the same amount of attention on the global stage. Russia has the world’s largest natural gas reserves and sixth-largest oil reserves. It is the biggest exporter of natural gas and has periodically even overtaken Saudi Arabia as the world’s top oil producer. Ever since the energy boom of the 2000s lifted Russia’s economic fortunes, the Kremlin has shown considerable skill in leveraging energy relations into political influence. Russia’s energy strategy has taken two main directions. First, there is Europe’s energy dependence, which has strengthened Russia’s position vis-à-vis many EU member states. Russia supplies much of the energy that powers European factories and heats European homes. For example, in 2021, around 25 percent of EU oil imports and some 40 percent of its natural gas came from Russia. Differential rates of dependence on energy supplies from Russia among EU member states have enhanced the Kremlin’s ability to wield its energy weapon. Second, Russia has been highly attractive to a number of leading international energy companies, which have invested heavily in

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the Russian energy sector. Western companies’ financial interests, in turn, have frequently influenced their governments’ approach to Russia. For instance, Germany’s E.oN Ruhrgas and BASF/Wintershall have developed close relationships with Russia’s Gazprom, as has Italy’s state-owned energy company ENI (Abdelal 2013). In some respects, the EU’s difficulty in finding a “single voice” on Russia-related energy issues is perhaps Moscow’s main diplomatic achievement. EU member states have historically differed in their views about how to best deal with their enormous neighbor. Some have strongly favored what has been called the “change through trade” approach—the conviction that economic interdependence would moderate and eventually alter Russia’s behavior for the better. On this view, the more Russia was integrated economically into the West, the safer Europe would be. At least before relations deteriorated significantly in the wake of Russia’s Crimea annexation, Germany, Austria, and Italy, among others, advocated that the security architecture of Europe should somehow include Russia or, at least, take Russian interests into account. For others, building bridges to Russia was always seen as a dangerous pipe dream. This conviction has been commonly shared among the countries that had for decades been locked behind the Iron Curtain. Russia was, and will always be, an imperialist and revanchist power, they argued, whose energy weapon should be feared rather than welcomed. Economic interdependence, however, cuts both ways. Russia, too, is heavily reliant on European trade and investment. In 2020, the EU was Russia’s biggest trade partner, accounting for 37.3 percent of the country’s total trade in goods with the world. After being hit by punitive Western sanctions over its annexation of Crimea, the Russian government embarked on an aggressive campaign of import substitution in order to preventively insulate the Russian economy. In addition to strategically deploying countersanctions that blocked the import of many European agricultural goods, it also launched, in 2015, initiatives that aimed to replace over two thousand foreign products and technologies with domestic counterparts across nineteen branches of the economy (Hedberg 2018). The country’s drive toward self-sufficiency, however, has been only partially successful. While Russia made some strides in low-tech sectors, such as the domestic production of pipe, it has faced significant obstacles in developing domestic analogues for high-tech items and advanced equipment (Shagina 2020). As a result, the country’s commercial, manufacturing, and even military sectors still rely heavily on foreign parts, technology, and expertise, rendering it vulnerable to sanctions despite the Kremlin’s frequent assertions that its policies have effectively “sanction-proofed” Russia. Over the years, Russia also has attempted other means of influencing European politics. Moscow has developed ties with Europe’s Far Right and Euro-Skeptic parties, both in order to demonstrate that the principles and ideas espoused by Putin hold sway not just in Russia and in order to bolster these parties’ electoral fortunes (Shekhovtsov 2017). Since 2014, it has increasingly turned to cyberattacks and online disinformation campaigns. Allegations of Russian meddling in European elections, while difficult to prove, are even more difficult to dismiss. However, whatever clout it may have gained through such maneuvers, it pales in comparison to the leverage Russia has enjoyed because of its energy weapons.

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Conclusion At the start of his third decade as Russia’s leader, President Vladimir Putin’s power appeared unassailable. He faced no genuine political rivals, his approval ratings, while down from previous Olympian heights, remained robust, and the constitutional amendments that sailed through parliament in 2020 effectively removed term limits to his tenure in office, in principle allowing him to stay in office through 2036. The political system that emerged in Russia on Putin’s watch seemed well entrenched, too, having shown itself capable of absorbing the occasional political shocks, like the mass demonstrations that galvanized parts of Russian society following the allegedly fraudulent 2011 parliamentary elections. United Russia, the “party of power” built by and for Putin, once again dominated the September 2021 parliamentary elections. The so-called systemic opposition—the Communist Party, the nationalist Rodina, and the “neither liberal nor democratic” Liberal Democratic Party—continued to attract just enough electoral support to preserve the veneer of political pluralism without ever seriously questioning, much less challenging, the Kremlin. The biggest question that seemed to loom over the Russian political landscape was whether Putin, as he neared his seventieth birthday, would begin a search for a successor or once again run for the presidency in 2024. Russia’s invasion of Ukraine, however, has upended easy calculations about the long-term future of Russian politics. In the short term, the political configuration of power that Putin has built seems strong enough to hold. At the start of the conflict, thousands of Russians took to the streets in protest. According to OVD-Info, an independent human rights organization, over fifteen thousand people were arrested in connection with the antiwar demonstrations.11 Large-scale protest activity, however, quickly petered out.12 Instead, Russians rallied behind the flag, as indicated by Putin’s soaring approval ratings. According to VTsIOM, a state-run polling firm, the proportion of Russians who trust President Vladimir Putin rose from 67.2 to 81.6 percent after the invasion.13 Other politicians and government institutions, including the Duma, also enjoyed a surge in popular support.14 The Kremlin seems to have bet that some combination of incessant propaganda and strong-arm tactics against vocal dissenters, peppered with liberal spending on politically important social groups, will keep the majority of the population on the government’s side. It helps, of course, that the vast majority of the Russian public continues to get its information from state-owned media, where the narrative of Russia “besieged” has been spun for well over a decade. Russian television has stridently pushed the twin narratives that, on the one hand, re-unification with Russia is for Ukraine’s own good, both longed for and supported by the Ukrainian people, and that, on the other hand, Russia is in fact fighting for its own survival, threatened as it is by a US-led coalition of Western states dead set on the country’s destruction (Troianovski 2022).15 Russia’s political and business elites likewise have proved to be either reliable or reliably silent. Initial expectations that costly economic sanctions on oligarchs and other Kremlin insiders would fracture the political class failed to materialize.

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However, at the time of this writing, there is some question as to how deep the public’s prowar sentiment actually is and whether the same level of elite loyalty can be maintained long term and in the face of a deteriorating economy. Even though the Russian economy managed to withstand the barrage of punitive sanctions, international financial organizations, including the IMF and the World Bank, forecast a more precarious road ahead. The longer the conflict lasts, the more likely it is that Russia’s isolation from international capital markets, trade, and Western supply chains will translate into a prolonged economic downturn and falling living standards. Much depends on whether Russia can secure anything resembling a victory in Ukraine and reorient its economy in order to survive a drawn-out rupture with the West. At the time of writing, the “special operation” launched in Ukraine looks more and more likely to become a protracted and brutal war of attrition. Vladimir Putin’s history makes it hard to envision an easy diplomatic end to the conflict. Putin views Ukraine not just as a prize that cannot fall to NATO but also as a natural part of greater Russia, a territory that, in Putin’s eyes at least, matters more to him than to the rest of the world. But regardless of what happens on the ground in Ukraine, it appears likely that a more repressive, militantly nationalistic, isolated, and unpredictable Russia will be a force in international politics for the foreseeable future and that great care will be needed in dealing with it.

Notes 1. For a full list of foreign companies that have curtailed their operations or left the Russian market entirely, see https://som​.yale​.edu​/story​/2022​/almost​-1000​-companies​-have​-curtailed​ -operations​-russia​-some​-remain. 2. Office for Democratic Institutions and Human Rights, “Russian Federation Presidential Election 26 March 2000: Final Report,” https://www​.osce​.org​/files​/f​/documents​/3​/9​/16275​ .pdf. 3. Both Yeltsin and the Congress had been popularly elected when the Soviet Union still existed and before the actual formation of post–Soviet Russia as a legally recognized state. 4. Putin became acting president when Boris Yeltsin resigned from office on December 31, 1999. Yeltsin’s decision to step down early allowed the scheduled presidential election to be moved up from June 2000 to March 2000, as stipulated in the Russian Constitution, and it allowed Putin to run as an incumbent. 5. Constitutional amendments passed in 2008 extended the Duma terms from four to five years and the presidential terms from four to six years. 6. “Путин призвал сторонников ‘не заглядывать за бугор,” BBC News, February 23, 2012, https://www​.bbc​.com​/russian​/russia​/2012​/02​/120223​_luzhniki​_rally​_preview. 7. While he was on a flight to Moscow from Siberia in August 2020, Navalny was poisoned with the extremely toxic chemical Novichok, which was developed by Soviet scientists in the Cold War. 8. Navalny was tried again in February 2022 and sentenced to nine years in a penal colony. 9. “Глава РФПИ объяснил значение буквы ‘V’ в названии ‘Спутника V,’” RIA Novosti, December 24, 2020, https://ria​.ru​/20201224​/vaktsina​-1590791699​.html.

R ussia    245 10. In addition to military targets, NATO hit government buildings and infrastructure in an attempt to destabilize the Milosevic regime. 11. For a continuously updated tally of arrests, see OVD-Info, https://en.ovdinfo​.org. 12. Small-scale, often highly creative protests have continued, though at grave costs to the dissenters. For example, the Russian artist Aleksandra Skochilenko was detained and charged under the recent law that criminalizes the spreading of information perceived as “discrediting” Russian troops. See https://www​.theguardian​.com​/world​/2022​/apr​/13​/russian​-artist​-faces​-jail​ -over​-peace​-protest​-using​-supermarket​-price​-labels. 13. Russian Public Opinion Research Center (VCIOM), https://wciom​.com​/our​-news​/ratings ​/trust​-in​-politicians. 14. Levada Center, https://www​.levada​.ru​/2022​/03​/30​/odobrenie​-institutov​-rejtingi​-partij​-i​ -politikov. 15. In March 2022, the State Duma passed legislation making the dissemination of “fake” news—that is, information that runs counter to the Kremlin’s preferred storyline—punishable by up to fifteen years in prison.

Suggested Readings Åslund, Anders. Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed. Washington, DC: Peterson Institute for International Economics, 2007. Colton, Timothy J. Russia: What Everyone Needs to Know. Oxford: Oxford University Press, 2016. Forsberg, Tuomas, and Hiski Haukkala. The European Union and Russia. London: Bloomsbury, 2016. Frye, Timothy. Weak Strongman: The Limits of Power in Putin’s Russia. Princeton, NJ: Princeton University Press, 2022. Robertson, Graeme B. The Politics of Protest in Hybrid Regimes: Managing Dissent in PostCommunist Russia. Cambridge: Cambridge University Press, 2010.

References Abdelal, Rawi. 2013. “The Profits of Power: Commerce and Realpolitik in Eurasia.” Review of International Political Economy 20 (3): 421–56. Aven, Petr. 2015. “Back to the USSR?” World Today 71 (3): 37–38. Barry, Ellen, and Michael Schwirtz. 2012. “Arrests and Violence at Overflowing Rally in Moscow.” New York Times, May 6, 2012. https://www​.nytimes​.com​/2012​/05​/07​/world​/europe​/ at​-moscow​-rally​-arrests​-and​-violence​.html. Blasi, Joseph R., Maya Kroumova, and Douglas Kruse. 2018. Kremlin Capitalism: Privatizing the Russian Economy. Ithaca, NY: Cornell University Press. Bogdanova, Elena, Linda J. Cook, and Meri Kulmala. 2018. “The Carrot or the Stick? Constraints and Opportunities of Russia’s CSO Policy.” Europe-Asia Studies 70 (4): 501–13. Bratersky, Alexander, and Natalya Krainova. 2011. “Saturday Rally Suggests Protest Mood Is Growing.” Moscow Times, December 24, 2011. https://web​ .archive​ .org​ /web​ /20140427082848​/http:​/www​.themoscowtimes​.com​/news​/article​/saturday​-rally​-suggests​ -protest​-mood​-is​-growing​/450414​.html.

2 4 6    M asha H edberg Colton, Timothy, and Cindy Skach. 2005. “A Fresh Look at Semipresidentialism: The Russian Predicament.” Journal of Democracy 16 (3): 113–26. Crotty, Jo, Sarah Marie Hall, and Sergej Ljubownikow. 2014. “Post-Soviet Civil Society Development in the Russian Federation: The Impact of the NGO Law.” Europe-Asia Studies 66 (8): 1253–69. Csongos, Frank. 2000. “Russia: Clinton Says Can Do Business with Putin.” RFE/RL, February 2, 2000. https://www​.rferl​.org​/a​/1093295​.html. Fish, M. Steven. 2017. “The Kremlin Emboldened: What Is Putinism?” Journal of Democracy 28 (4): 61–75. Foy, Henry. 2021. “Vladislav Surkov: ‘An Overdose of Freedom Is Lethal to the State.’” Financial Times, June 18, 2021. https://www​.ft​.com​/content​/1324acbb​-f475​-47ab​-a914​ -4a96a9d14bac. Goldberg, Cary. 1992. “Yeltsin Report Tames Lawmakers.” Los Angeles Times, April 8, 1992. https://www​.latimes​.com​/archives​/la​-xpm​-1992​-04​-08​-mn​-624​-story​.html. Goldman, Marshall I. 2008. Petrostate: Putin, Power, and the New Russia. Oxford: Oxford University Press. Gutterman, Steve. 2014. “Russia Uses 1999 NATO Bombing in Media War over Crimea.” Reuters, March 24, 2014. https://www​.reuters​.com​/article​/us​-ukraine​-crisis​-russia​-kosovo​ /russia​-uses​-1999​-nato​-bombing​-in​-media​-war​-over​-crimea​-idU​SBRE​A2N0​SC20​140324. Hedberg, Masha. 2018. “The Target Strikes Back: Explaining Countersanctions and Russia’s Strategy of Differentiated Retaliation.” Post-Soviet Affairs 34 (1): 35–54. Hiatt, Fred. 1995. “Truth of Chechen War Derails Russian Propaganda Machine.” Washington Post, January 29, 1995. https://www​.washingtonpost​.com​/archive​/politics​/1995​/01​ /29​/truth​-of​-chechen​-war​-derails​-russian​-propaganda​-machine​/62c813f3​-9f8d​-47e1​-bed1​ -254443ab3d69. Higgins, Andrew. 2019. “The War That Continues to Shape Russia, 25 Years Later.” New York Times, December 10. https://www​.nytimes​.com​/2019​/12​/10​/world​/europe​/photos​-chechen​ -war​-russia​.html. Horvath, Robert. 2011. “Putin’s ‘Preventive Counter-Revolution’: Post-Soviet Authoritarianism and the Spectre of Velvet Revolution.” Europe-Asia Studies 63 (1): 1–25. Hyde, Matthew. 2001. “Putin’s Federal Reforms and Their Implications for Presidential Power in Russia.” Europe-Asia Studies 53 (5): 719–43. International Crisis Group. 2018. “Patriotic Mobilisation in Russia.” Europe Report, no. 251, July 4, 2018. https://www​.crisisgroup​.org​/europe​-central​-asia​/caucasus​/russianorth​-caucasus​ /251​-patriotic​-mobilisation​-russia. Lanskoy, Miriam, and Dylan Myles-Primakoff. 2018. “The Rise of Kleptocracy: Power and Plunder in Putin’s Russia.” Journal of Democracy 29 (1): 76–85. March, Luke. 2009. “Managing Opposition in a Hybrid Regime: Just Russia and Parastatal Opposition.” Slavic Review 68 (3): 504–27. McFaul, Michael. 2015. Russia’s Unfinished Revolution. Ithaca, NY: Cornell University Press. Novokmet, Filip, Thomas Piketty, and Gabriel Zucman. 2018. “From Soviets to Oligarchs: Inequality and Property in Russia, 1905–2016.” Journal of Economic Inequality 16 (2): 189–223. Pomerantsev, Peter. 2012. “Putin’s God Squad: The Orthodox Church and Russian Politics.” Newsweek, September 10, 2012. https://www​.newsweek​.com​/putins​-god​-squad​-orthodox​ -church​-and​-russian​-politics​-64649. Putin, Vladimir. 2007. Speech and the Following Discussion at the Munich Conference on Security Policy, February 10, 2007. http://en​.kremlin​.ru​/events​/president​/transcripts​/24034.

R ussia    247 Rankin, Jennifer. 2021. “Ex-Nato Head Says Putin Wanted to Join Alliance Early On in His Rule.” The Guardian, November 4, 2021. https://www​.theguardian​.com​/world​/2021​/nov​ /04​/ex​-nato​-head​-says​-putin​-wanted​-to​-join​-alliance​-early​-on​-in​-his​-rule. Remington, Thomas F. 2008. “Patronage and the Party of Power: President–Parliament Relations under Vladimir Putin.” Europe-Asia Studies 60 (6): 959–87. Reuter, Ora John, and Thomas F. Remington. 2009. “Dominant Party Regimes and the Commitment Problem: The Case of United Russia.” Comparative Political Studies 42 (4): 501–26. Rochlitz, Michael. 2014. “Corporate Raiding and the Role of the State in Russia.” Post-Soviet Affairs 30 (2–3): 89–114. Rutland, Peter. 2000. “Putin’s Path to Power.” Post-Soviet Affairs 16 (4): 313–54. Shagina, Maria. 2020. “Drifting East: Russia’s Import Substitution and Its Pivot to Asia.” University of Zurich Center for Eastern European Studies, Working Paper no. 3, April. Shekhovtsov, Anton. 2017. Russia and the Western Far Right: Tango Noir. London: Routledge. Treisman, Daniel. 2016. “Why Putin Took Crimea: The Gambler in the Kremlin.” Foreign Affairs 95 (3): 38–46. Troianovski, Anton. 2022. “Putin Assails Russians Who Back the West, Signaling More Repression.” New York Times, March 16, 2022. https://www​.nytimes​.com​/2022​/03​/16​/world​/ europe​/putin​-russia​-ukraine​-protests​.html. Wines, Michael. 2000. “Election in Russia: The Overview.” New York Times, March 27, 2000. https://www​.nytimes​.com​/2000​/03​/27​/world​/election​-russia​-overview​-putin​-wins​-russia ​ -vote​-first​-round​-but​-his​-majority​.html. Zurcher, Christoph. 2007. The Post-Soviet Wars: Rebellion, Ethnic Wars, and Nationhood in the Caucasus. New York: New York University Press.

CHAPTER 9

Turkey THE EUROPEAN DREAM Omer Taspinar

248

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Turkey Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in billion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Candidate for EU membership:

84.3 302,455 284 $720.1 $8,538 Since December 12, 1999

Performance of Key Political Parties in Parliamentary Elections of June 2018 Justice and Development (AKP): Republican People’s Party (CHP): Peoples’ Democratic Party (HDP): National Movement (MHP): Good Party (Kemalist, iYi):

42.6% 22.7% 11.7% 5.6% 4.99% Main Officeholder

• President: Recep Tayyip Erdoğan, AKP (2014)

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I

s Turkey part of Europe? The answer to this contentious and largely inconclusive question has major implications for both the country and the continent. The debate is polarizing for understandable reasons. History, religious identity, and current political dynamics are not conducive to a calm consensus. At the civilizational level, no country challenges Europe’s Christian heritage the way Turkey does. And as far as Turkey is concerned, no challenge is more daunting than European Union membership for its fragile democracy and insecure national identity. There was a time in the not-so-distant past when the matter could have been settled by prioritizing geostrategic imperatives. During most of the Cold War, the presence of the Soviet Union and the threat of communist expansion placed Turkey firmly in the Western camp. As the southern bastion of NATO against the Soviet Union, Turkey’s Western credentials went undisputed. In a world dominated by nuclear threats and a delicate balance of power, thorny questions concerning Turkey’s military interventions, human rights standards, and Muslim identity were rarely raised. Simply put, Cold War realpolitik dictated Turkey’s inclusion in the West. After the Leninist extinction, both ethnic nationalism and identity politics rapidly gained ground, as bipolar geostrategic imperatives and ideological competition faded. The fact that Turkey opened the 1980s with a military coup complicated its relations with Europe. The anticommunist generals embraced both nationalism and religion in crushing left-wing and Kurdish dissent. Their Turkish-Islamic vision exacerbated Turkey’s democratic deficits. And things went from bad to worse in the 1990s as the Kurdish conflict turned into full-blown insurgency and an Islamist prime minister came to power in 1996. Having realized their mistake in supporting religion against the Left, the generals took matters once again in their own hands when this time they ousted the Islamist-led coalition government in 1997. Finally, the global geostrategic context changed considerably in 2001, with jihadist terrorism targeting the West and the ensuing chaos in the Middle East. Islam reemerged as a powerful force both at the global level and in Turkish domestic politics. As a corollary, Turkey’s quest for membership in the European Union turned into a particularly contentious civilizational litmus test. Nativist, xenophobic, and Islamophobic European political parties gained enormous ground in debates on Turkey. Progressive Europeans often resist the notion of turning Islam itself into a problem. Yet there is no such hesitation in the conservative camp. What is beyond doubt is that religion complicates Turkey’s membership to the European Union in the eyes of the European public. In a continent fearful of Islam and Muslim immigration, Turkish membership is often associated with both. The European Union itself is certainly not to blame for this situation. After all, it is unfair to expect the EU to solve cultural questions with deep historic and religious roots. Bureaucrats in Brussels are the first to recognize that EU membership is conditional on fulfillment of clear legal and political obligations, not identity debates centered on religion. Yet, in the eyes of French, German, Austrian, or Dutch politicians, Turkish membership is neither a political process nor a technical issue defined by clear metrics. Turkey is simply a “special case,” wide open to populist manipulation. Heavyweights within the European Union, such as France and Germany, often speak of Turkish membership in ambiguous terms. Even after 2005, when accession

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negotiations officially began and optimism was in the air, Germany favored “openended” negotiations with Turkey (Fraser 2013). Similarly, France soon followed by expressing its preference for “privileged partnership” rather than full membership (France 24 2018). Some European countries, such as Austria, were much more explicit in their objection, demanding a referendum to make sure their citizens are consulted before a final decision (Euractiv 2008). And all this was before the autocratic turn in Turkey beginning in 2010, under the leadership of a former reformist, Recep Tayyip Erdoğan. Erdoğan’s projection of Islamic revival in search of lost Ottoman grandeur and glory provided only further ammunition to Europe’s skepticism. In short, with its large population of eightyfive million, growing democratic deficit, worsening Kurdish conflict, crisis-prone economy, unstable Middle Eastern borders, and weaponization of millions of Syrian refugees in relations with the European Union, Turkey today represents a daunting challenge more than a strategic opportunity for Brussels. And as if all these gloomy dynamics were not enough, after Brexit, Turkey lost its most influential supporter in the European Union. Under these circumstances, no one will be surprised if Turkey’s EU membership remains elusive. Yet neither Ankara nor Brussels wants to call it quits. Proponents of pro-EU democratic reforms in Turkey believe the journey toward is much more important than the final destination. They only want Europe to keep its doors open, and they believe their country will reap the benefits of this Western anchor. And progressive Europeans still hope there will be a way to embrace such a strategically valuable candidate to their unfinished project of democratic governance and shared sovereignty. The states appear to be only higher in the aftermath of the Russian invasion of Ukraine and the return of a Cold War between the West and an autocratic Sino-Russian bloc. For now, however, it looks like Turkey will continue to remain firmly anchored in civilizational uncertainty between Europe and Asia. In the meantime, if history is any guide, it will be critical to learn from it.

A Complex Past and Present A complex civilizational identity, or being perceived as a “torn country,” using Samuel Huntington’s (1996, 74) terminology, is nothing new in Turkish history. Indeed, the difficulty of assigning Turkey to a specific geographical region or to a wider civilization derives from the fact that it has always been a frontier country. A glance at the map shows why Turkey does not fit into any of the clear-cut geographical categories which Western scholars have formulated to study a complex world. The country straddles the geographical and cultural borders between Europe and Asia, without really belonging to either. Such an “in between” Turkish identity is made even more complicated by several historical factors rooted in the Turkic journey from Central Asia to Europe. The history of the Turkish people goes back to pre-Islamic Central Asia, where shamanism defined the Turkic religious context. The Turks’ conversion to Islam came in the ninth and tenth centuries as a result of westward territorial expansion. The new religion played a crucial role in consolidating state authority, mainly by legitimizing

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sultanic rule in the name of protecting and expanding the Islamic realm. Among the new Muslim-Turkic states, the Seljuks rapidly stood out with their territorial expansion into Persia and further west. In 1071, they defeated the Byzantine armies in the eastern Anatolian province of Manzikert. This historic victory opened the gates of Anatolia to the Turks. With their new capital in Konya, the Seljuks conquered a large swath of Anatolia, where they established a great civilization, and the Ottoman Turks emerged from the Seljuks after their demise. The Ottomans continued the tradition of westward territorial expansion. Their spectacular rise from a small principality to a growing empire took less than two centuries. After taking Constantinople in 1453, they conquered the Balkans and most of Eastern Europe, and by the mid-sixteenth century, Ottoman armies had reached the gates of Vienna. During these centuries, the image of the “terrible Turk” symbolized a sort of religious “other,” consolidating Europe’s own Christian identity. The Ottomans, in that sense, were an intimate enemy representing, in religious and military terms, the “other” for an evolving European Christianity. The fifteenth and sixteenth centuries of Ottoman splendor and glory came to an end in the late seventeenth century as Europe gained the upper hand in military, economic, and cultural terms. Having suffered a series of humiliating defeats at the hands of European armies and having grudgingly recognized the superiority of Western military technique, the Ottoman military was the first institution to modernize. Its troops adopted European weapons and its academies Western sciences and educational methods. Its top cadres became Europe’s greatest emulators. Since modernization, first in military and then in legal and political terms, was pragmatically identified with Europe, the Ottomans faced major difficulties in adapting to the new paradigm without compromising self-esteem and Islamic pride. Throughout the nineteenth century, the result was often a chaotic coexistence of traditional and modernized institutions. This situation did not change until the radicalization of the modernization project during the first half of the twentieth century, first under the leadership of the Young Turks and later under their Kemalist successors, when Mustafa Kemal Atatürk founded the modern Turkish republic in 1923 (Zurcher 2017). In the 1920s and 1930s, the Kemalists, mostly military men who had been exposed to Western-style positivist education in Ottoman military academies, adopted a top-down project of radical modernization for the new Turkey. In an ambitious drive to import European civilization wholesale, the republic disposed of the caliphate, the Arabic alphabet, Islamic education, and the Sufi brotherhoods. It adopted Western legal codes from Germany, Italy, and Switzerland, together with the Latin alphabet and the Western calendar, Western holidays, and Western measuring systems. The country’s official history and language were reworked. A new education system glorified pre-Islamic Turkic civilizations at the expense of the country’s more recent Ottoman past, and many Arabic and Persian words were purged to create an “authentically” Turkish vocabulary. In the name of secularism, even the Arabic azan, the Islamic call to prayer, was translated into modern Turkish. The traditional Ottoman headgear, known as a fez, was banned. Women were prohibited from wearing the Islamic veil in public. And Western clothing became the new compulsory dress code for men.

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Despite such ambitious reforms, however, Kemalist secularism barely infiltrated Turkish society at large. The rural and pious masses of Anatolia remained largely unaffected by the cultural reengineering taking place in Ankara; it was the military, the government bureaucracy, and the urban bourgeoisie who adapted most readily to Kemalism’s thorough Westernization. Winning hearts and minds in the countryside would have required the use of traditional and religious symbols, but those were anathema to the Turkish republic’s founding fathers. In short order, the cultural gap between the Kemalist center and the Anatolian periphery had become insurmountable. As a CHP slogan from the 1920s put it, the Turkish government seemed to rule “For the People, Despite the People” (Ahmad 2003, 24). Partly as a result, Kemalism promoted two ideologies that continue to divide Turkish society today. The first was radical secularism. The Kemalists’ “civilizing mission,” as it might be called, was strongly influenced by the French Revolution, its Jacobin leanings, and especially the French anticlerical tradition of laïcité, an assertive form of state-enforced secularism. In both France and Turkey, religion became a symbol of counterrevolution and opposition to the republic. Militantly committed to assuming progressive roles against reactionary enemies, the proponents of both French laïcité and its Kemalist equivalent, laiklik, were keen on taking religion out of the public sphere. For them, laiklik was the dividing line between enlightened and obscurantist, progressive and conservative, modern and traditional. It is in this context that Turkish secularism became more about “freedom from religion” rather than “freedom of religion.” Laiklik readily grafted itself onto a long-standing tradition of state hegemony over religion, a legacy of the Ottoman Empire. Ottoman sultans had often enacted laws outside the realm of Islamic sharia, based on political rather than religious principles. When Islam and the Ottoman Empire’s raison d’état clashed, the sultans favored the state (Mardin 1988, 26–30). Likewise, the Kemalists maintained firm control over Islam because they saw religion as a political threat and Islam, in particular, as a cause of social, cultural, political, and economic decline. Having realized, however, that eradicating Islam altogether was not a realistic option, they tried to promote a “civilized” version of it. Instead of formally separating state and religion (as France did in 1905), modern Turkey monopolized religious functions and incorporated religious personnel into the state bureaucracy. To this day, the government-controlled Directorate of Religious Affairs supervises and regulates Islam throughout Turkey, appoints and pays the country’s imams, and issues standardized sermons to be read out in thousands of mosques each Friday. The second divisive ideology promoted by Kemalism was assimilationist nationalism. Modern Turkey pursued an active policy of assimilation of its Muslim minorities. “Turkishness” came to be defined as a common national, linguistic, and territorial identity. Taking France as its model again, the Kemalist regime rejected the concept of multiculturalism; no communal structure would stand between the republic and its citizens. Unlike the Ottoman elites, the Kemalists rejected multiethnic and multinational cosmopolitanism and banned Armenians, Greeks, and Jews from holding government jobs. Thus, ironically, the “secular” Turkish republic turned out to be less

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tolerant toward its non-Muslim minorities than the “Islamic” Ottoman Empire had been, partly because Turkishness was associated with being Muslim. Predictably, assimilationist nationalism faced violent opposition from religious conservatives and ethnic Kurds, especially in the semiautonomous Kurdish provinces of southeastern Turkey, which had had little exposure to centralization even during Ottoman times. In fact, Kemalist supremacy was finally established only after the military suppressed more than a dozen Kurdish and Islamic uprisings in the 1920s. These major rebellions traumatized the young republic’s military leaders and created their suspicion of all things Kurdish, which abides to this day. They also convinced the generals that from then on, they would have to act as the custodians of secularism and nationalism.

The Cold War: Democracy and Military Guardianship After Atatürk’s death, in 1938, Ismet Inonu, another military hero turned statesman, assumed the presidency. He kept Turkey out of World War II, but soon after the conflict ended, the Soviet Union’s territorial ambitions became clear, and Turkey urgently wanted to join the free world. Before long, Turkey had become NATO’s southern bulwark against the Soviet Union, and its credentials as an ally of the West were undisputed. In a Cold War world dominated by nuclear threats and a delicate balance of power, thorny questions concerning Turkey’s military interventions, human rights standards, and Muslim identity were rarely raised. Turkey fell neatly into the bipolar configuration of the Cold War; realpolitik dictated its inclusion in “the West” (cf. Robins 2003). On the other hand, the Cold War also forced Turkey to enter the age of democracy. The prospect of joining NATO and qualifying for US assistance under the Marshall Plan encouraged President İnönü to hold multiparty elections. Furthermore, as communism emerged as the new major threat, Kemalist secularism and nationalism slowly lost their political relevance. So did Islam and Kurdish nationalism, the twin threats of the 1930s, at least on the surface. The new fault line dividing Turkey seemed to be ideological—an opposition between the Right and the Left—rather than religious or ethnic. Kurdish and Muslim dissent did not fully vanish, of course, but it was transformed. Kurdish discontent was redefined in terms of a class struggle, and it found a home in Turkey’s fledgling socialist movement; political Islam joined forces with conservative anticommunist political parties. During most of the Cold War, Turkish politics witnessed ideological polarization and political instability. Closely associated with the Kemalist ideology, the military remained the most powerful and trusted institution in the country. In many ways, the military bureaucracy identified itself with the deeply rooted state tradition of Turkey. The generals favored a praetorian system and did not hesitate to intervene in politics almost every decade—in 1960, 1971, 1980–1983, and 1997. Yet they also made sure not to stay in power for any prolonged period of time, with the exception of three years

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after the 1980 coup. There was to be no Turkish equivalent of a military leader like Franco, Salazar, Pinochet, Suharto, Nasser, Assad, or Musharraf. In other words, no Turkish general stayed in power for decades by establishing a dictatorship. The Turkish General Staff (TGS) never wanted to govern openly and directly because it saw itself above politics, as the protector of the state and the guardian of the Kemalist system. Having played a major role in drafting the 1961 and 1982 constitutions, the top brass believed each intervention had constitutional legitimacy in terms of safeguarding the Turkish republic. The TGS’s role was to make sure that the “realm of the state” would not be harmed by the political and ideological competition in “the realm of politics.” Such duty-bound professionalism and reluctance to stay in power differed Turkish military interventions from their Latin American, Middle Eastern, African, Pakistani, East Asian, and Southern European equivalents. Despite the military’s reluctance to exert direct rule, this system of guardianship naturally failed to turn Turkey into a liberal democracy. Individual rights and liberties, effective institutional checks and balances, the independence of the judicial system, and freedoms of speech and assembly remained either absent or at their infancy. The system, instead of protecting the citizens from a powerful state, was designed to protect the state from its citizens. Despite its illiberal imperfections, Turkey was still considered an electoral democracy. The will of the people came to be represented in power by competing political parties. Elections regularly took place, and governments changed regularly within the realm of politics. In fact, during the 1960s and 1970s, the country witnessed considerable instability and ideological polarization thanks to such democratic politics. The bipolar configuration of world affairs and the competition between left-wing and right-wing camps colored Turkish politics as it did in the rest of democratic world. The 1960 coup ousted the Democrat Party, a conservative movement representing the Anatolian periphery that had easily won all the free elections held between 1950 and 1960. The deposed prime minister, Adnan Menderes, was sentenced to death for “subversion against the constitutional order” (cf. Seal 2021). The interventions of 1971 and 1980, for their part, had strong antileftist tendencies, and that of 1980, in particular, brutally crushed Kurdish and leftist dissent—with counterproductive results. Instances of torture and killings in the Diyarbakir military prison between 1980 and 1983 helped plant the seeds of Kurdish ethnic separatism in Turkey’s southeastern region. In 1984, a formerly Maoist Kurdish movement with a strong regional following, the PKK (Kurdistan Workers’ Party), launched a separatist terrorist insurgency. Instead of ending Kurdish dissent, the military ended up inflaming it with its brutal suppression. This antileft leaning of the generals and their willingness to use religion against socialism also backfired. To depoliticize the left-leaning youth, the generals encouraged the practice of state-controlled Islam: they expanded the budget of the Directorate of Religious Affairs, increased the number of Islamic high schools throughout the country, and introduced compulsory courses on religion in primary and middle schools. To create a united Turkish-Islamic front against communism, the generals granted more room to religion in the education system. But

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by doing so, the military inadvertently boosted the number of youths sympathetic to political Islam—and these young Islamists began to express their views openly when the Cold War ended (Toprak 1990). The Turkish military thus ended up shooting itself in the foot not once but twice, against both the Kurds and Islamists. The crackdown on both Kurdish activism and communism backfired. As Turkey returned to electoral democracy by the mid-1980s, social and political forces the military could no longer control gained unprecedented momentum. By the 1990s Turkey was face to face with a full-blown Kurdish insurgency and the rise of political Islam. It seemed as if the Turkish republic was back in the 1920s and 1930s, once again facing the twin challenges of Kurdish and Islamic dissent that had defined its founding years. Of the two, Kurdish nationalism was by far a more daunting security challenge. A quick look at Kurdish demographics can help us understand the nature of the challenge for Turkey. Numbering around fifteen to twenty million, the Kurds represent about 25 percent of Turkey’s population. And of the approximately thirty-five million Kurds in the Middle East, about half live in Turkey (cf. McDowall 2017). Despite such demographic weight, it took until the late 1980s for Turkey to officially acknowledge the sheer existence of the “Kurdish reality” in the country. Turkey’s illiberal and nationalist state tradition is in great part to blame for this anomaly, which to this day stands in the way of a peaceful and democratic solution. The Turkish military’s conflict with the Kurds cost the country dearly. Between 1984 and 1999, the internal struggle killed forty thousand people and consumed, in military expenditures alone, an estimated $120 billion (Bilgel and Karahasan 2017). It seemed to quash all hope that the country might democratize soon. Also, to Ankara’s dismay, the EU saw the conflict as the legitimate rebellion of an ethnic group whose cultural and political rights were being denied by an authoritarian regime. Turkey wasted many windows of opportunity on the Kurdish front. One of the most important ones presented itself under the leadership of Turgut Özal, who served as prime minister between 1983 and 1989 and as president from 1989 to 1993. was a reformist on the Kurdish front and pushed for a political solution to the conflict with an open mind. Yet the military and nationalist circles resisted any kind of compromise. Despite the deterioration of the security situation in the Kurdish southeast, the 1980s were also a decade of economic liberalization for Turkey under Özal’s leadership. A US-educated, pragmatic technocrat, Özal believed in market economics and neoliberalism inspired by the World Bank and IMF’s “Washington Consensus.” His center-right Motherland Party closed the chapter of public sector protectionism and import substitution industrialization. The privatization of state-owned enterprises, deregulation, export-led growth, and the liberalization of the financial and trade regime were all part of the Özal agenda. Turkey’s convergence with global trends of Reaganomics and Thatcherism created room for more political and social opening as well. Özal was a strong believer that economic freedom would pave the road for more political freedom. His pro-Western foreign policy was characterized by an unabashed support for the United States in the first Gulf War and Turkey’s renewed application to the European Union for full membership in 1987.

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Perhaps the most important legacy of the Özal era has been the rise of an entrepreneurial conservative Turkish bourgeoisie—which came to be known as “Anatolian tigers.” These export-oriented small and medium-sized companies created their own financial networks and in time challenged the supremacy of the large industrial conglomerates based in Istanbul. This new business community was globally integrated but socially and culturally more insular and pious than the elites in Istanbul and Ankara. It comprised the same conservative economic groups that would support Recep Tayyip Erdoğan and his Justice and Development Party (AKP) by 2002, after the lost decade of the 1990s. In fact, the backing of the Anatolian tigers proved crucial in helping the AKP shed its Islamist past and rebrand itself as a promarket and pro-Western conservative democratic party. But economic and political dynamics turned much worse during the 1990s before they got better under Erdoğan.

The Lost Decade After the death of Turgut Özal in 1993, Turkey’s political instability gained a chronic dimension. Nine different coalition governments ruled the county during the 1990s. The worsening dynamics on the Kurdish front during this lost decade undermined the Turkish economy, which suffered from high inflation, growing budget deficits, public debt, and systemic corruption. As the Kurdish insurgency reached critical dimensions, Ankara’s response remained uncompromisingly nationalistic and authoritarian. Without the ideological cover of left-wing versus right-wing politics, Turkey’s identity problems—Kurdish nationalism and Islam—were now out in the open. And the military had no willingness to show flexibility for any cultural or political compromise with Kurdish nationalists or Islamist politicians. While the Kurdish problem was clearly the driver of political and security concerns during the 1990s, the military soon realized it also had to deal with the rise of political Islam. In 1994, at the height of both an acute financial crisis and military struggle against Kurdish separatists, the Islamist victory in local elections shocked the secularist establishment. Under the leadership of Necmettin Erbakan, the Welfare Party captured Turkey’s two largest metropolitan areas, Istanbul and Ankara. A year later, another Welfare Party victory, this time in parliamentary elections, put an Islamist-led coalition in charge of the entire country. The secularist establishment began to worry that the new Islamist-led government would adopt an overtly Islamic agenda and authoritarian manners. They feared it would suppress the secularist opposition, lift the headscarf ban, and challenge Turkey’s alliances with Western states. In fact, the Welfare Party and Prime Minister Necmettin Erbakan hardly broke from mainstream Turkish political practices. The party did try to plant its sympathizers in the ministries it controlled, but so had many previous governments. Still, the secularist press rang the alarm, warning of an imminent Islamist revolution. On February 28, 1997, the military—in a concerted effort with civil-society organizations and the secularist press—forced Erbakan and his party out of power. This bloodless coup had major, if unintended, consequences. It paved the way for serious soul-searching among Turkey’s Islamists, eventually causing a generational and

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ideological rift within their movement. The Welfare Party’s pragmatic young leaders, such as Recep Tayyip Erdoğan and Abdullah Gul, recognized the red lines of Turkish secularism. (Erdoğan, then the mayor of Istanbul, learned the lesson the hard way: he spent four months in jail in 1999 for reciting a poem with Islamic undertones.) And the secularist backlash against the Welfare Party further convinced moderate Islamist politicians of the benefits of liberal democracy. After having participated in democratic politics for over three decades, they had already learned to temper their views to gain electoral legitimacy; by the late 1990s, political Islam was well integrated into the mainstream political system. When, in 2001, Erdoğan created the AKP from the ashes of the recently dissolved Welfare Party, it was as a moderate-conservative party. Erdoğan was a lucky man because the country was ripe for radical change on the security, economic, and political front by 2001. In 1999, the military campaign against the Kurdish insurgency had a major victory with the arrest of Abdullah Ocalan, the leader of the PKK. There was, therefore, finally some room for political reforms. By 2001, the economy was in shambles after the worst financial crisis in the history of the republic. The voters were ready for a new start and a new political party. The IMF came to rescue of the country with credits and loans contingent on fiscal belttightening. This economic crisis was the culmination of the lost decade of the 1990s. It also came shortly after the devastating earthquake of 1999 near Istanbul which caused a death toll of more than twenty thousand. These developments proved to be the last nails in the coffin of political parties that governed Turkey during the 1990s. On the foreign policy front, the AKP proved as fortunate as in the domestic context. By the time the party was formed, both the European Union and the United States were ready for good relations with Turkey. In 1997, shortly after the soft coup, the EU had declared that Turkey was no longer part of the enlargement process. But things rapidly changed in 1998 when center-left German leadership under Chancellor Gerhard Schroder replaced the Christian Democrat Helmut Kohl. This new government played a critical role in reviving Turkey’s moribund EU candidacy. By 1999, European leaders declared at the EU’s Helsinki Summit that Turkey’s eventual membership should not be ruled out, as Ankara was put back on track for the enlargement process. This important decision proved critical for Turkey’s orientation, since EU membership appeared within reach for the first time since the end of the Cold War. By 2001, shortly after the 9/11 terrorist attacks, Washington also wanted strong relations with Ankara. Turkey’s Muslim and Western identity and its place in NATO suddenly gained much higher relevance in a climate where the clash of civilizations turned from a gloomy prediction into a self-fulfilling prophecy. All these dynamics on the Western front favored the AKP. With Turkey’s EU candidacy back on the agenda, Erdoğan correctly sensed that adopting a pro-Western reformist platform would achieve two crucial objectives: it would win the support of Turkey’s business community, liberal intellectuals, and pragmatic middle class, and perhaps more importantly, it would provide much-needed political cover against the skeptical military establishment. Europe, after all, had always been the ultimate prize in Atatürk’s vision of a truly Westernized Turkey. By distancing itself from political Islam and embracing the West, the AKP was ideologically disarming the generals—at least for a while. Combined with an anticorruption and

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progrowth economic agenda that appealed to the lower-middle classes, the AKP’s political strategy proved highly successful. The party won the first parliamentary elections it entered in 2002, only a year after its formation.

The AKP Era: What Went Right? Before analyzing Erdoğan’s first decade in power and what he did right, it is important to correct a critical misperception in the West. Today, given Erdoğan’s dismal image as an Islamist autocrat destroying Turkey’s democracy, one can detect a sense nostalgia for what existed before his hegemony. According to this common narrative, Turkey had a liberal and secular past under Kemalism. As we saw in our historical overview earlier, the problem with this account of Turkish politics is twofold. First, it is based on the false assumption of a golden age of liberal democracy in Turkish political history. In fact, Turkish politics has always been illiberal, and Turkish politicians have always been patriarchal figures functioning in the shadow of an intrusive military. The republic the military protected was based neither on separation of religion and state nor on freedom of religion. Instead, it was inspired by French Jacobin laicism and the anticlerical spirit of “freedom from religion.” The second problem with the current perception of Erdoğan as an Islamist autocrat that destroyed Turkish democracy is that it tends to overlook the achievements of the AKP between 2002 and 2012. It is indeed very hard to deny the success of the AKP during its first decade in power. For a while, it looked like Erdoğan would truly transform Turkey into a more liberal and democratic country. Soon after coming to power in 2002, the AKP passed an impressive series of reforms to harmonize Turkey’s judicial system, civil-military relations, and human rights practices with European norms. The EU began accession negotiations with Erdoğan’s Turkey in 2005, rewarding AKP’s democratic reforms and Ankara’s constructive approach to Cyprus, where the Turkish minority of the island voted for unification in 2004 while the Greek majority rejected the United Nations plan but was still awarded with EU membership. The AKP efforts were not confined to democratization. Following the guidelines from an IMF stabilization program adopted after the 2001 financial meltdown, the AKP reaped the economic benefits of belt-tightening and structural reforms. It pursued fiscal discipline, lowered a very high inflation rate to single digits, and prioritized good governance and social services in areas of health care, housing, and urban infrastructure. Between 2002 and 2008, the Turkish economy grew by an average of 7.5 percent. Lower inflation and lower interest rates helped fuel domestic consumption. Thanks to good relations with the EU and a disciplined privatization program, the Turkish economy began to attract unprecedented amounts of foreign direct investment. The average per capita income nearly tripled, from $2,800 in 2001 to around $8,500 in 2010, exceeding those of some new EU members (Ucer 2014). With its ever-expanding grassroots network and thanks to an improved economic climate, the AKP understood that the key to gaining even more political support was to target Turkey’s large lower-middle class. Therefore, in addition to distributing food, subsidizing coal, and improving basic infrastructure in poor urban districts, the

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AKP governments prioritized upward economic mobility with housing credits for first-time home buyers and increased grants for students, favorable loans to the business community, and new public investment projects helping small and medium-sized companies—the aforementioned Anatolian tigers. Thanks to higher productivity and production, Turkish manufacturing and agricultural firms took off. Turkish exports to the Middle East, Africa, Central Asia, and, of course, Europe—which remained the largest market for Turkish goods—increased fivefold between 2003 and 2010. Erdoğan’s AKP proved equally adept in foreign policy. Thanks to good governance, democratic reforms, and the promotion of minority rights for Kurds and nonMuslims, the AKP’s Islamic image faded. At least in the eyes of progressive European political parties, Turkey seemed to embody a rare compatibility between Islamic tradition, secularism, and good governance. Washington also admired and supported Erdoğan’s brand of “moderate Islam.” Turkey’s mediation efforts between Israel and Syria received high praise. Despite its disappointment with Ankara’s lack of support for the invasion of Iraq, the Bush administration still considered Turkey a model for the “freedom agenda” it supported in the Middle East. And as late as in 2012, President Obama named Erdoğan as a friend with whom he established a regular line of communication about developments in the region (Rogin 2012). By 2009, after having won two consecutive elections (2002 and 2007), Erdoğan took positive steps toward tackling Turkey’s most daunting democratic challenge: the Kurdish question. Secret negotiations with the PKK and the organization’s jailed leader, Abdullah Ocalan, began despite the objections from nationalist circles and the military. These were bold initiatives that no other Turkish political party dared to take in the long history of this ethnic conflict. Civil-military relations were also revamped under Erdoğan. AKP’s de facto coalition with a movement led by an influential cleric, Fetullah Gülen, whose followers had gained critical positions within the intelligence, security (police), and judiciary bureaucracy, played a major role in this endeavor. Although they came from ideologically different Islamic backgrounds, both Erdoğan and Gülen shared a common enemy: the ultrasecularist generals. They therefore established a marriage of convenience. Erdoğan and Gülen had legitimate reasons to fear the powerful Turkish military. They both had served short prison sentences— Gülen in the 1970s and Erdoğan in the 1990s—in the wake of military interventions. And both men were suspect in the eyes of the top brass for nurturing hidden Islamist agendas behind their moderate façade. The Kemalists were dismayed by the fact that both Erdoğan and Gülen seemed to fool naïve Westerners in search of democratic models in the Islamic world. A nationalist and secularist sense of anger began to build up among Kemalist circles against the United States and the European Union. Some within the military even voiced the need to forge a new, alternative strategic orientation for Turkey by building alliances with Russia and China. This “Eurasian” vision of Turkey’s future was also in clear reaction to Washington’s support for Kurds in post–Saddam Hussein Iraq. The fact that by the time the AKP came to power, Gülen already lived in selfimposed exile in the United States did not help to fight the conspiracy theory that he was “controlled by the West.” Gülen had become infamous, after the soft coup of 1997, because of a leaked sermon where he encouraged his followers to quietly pursue

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careers in government “until the time is ripe” (Filkins 2012). By the time he left for Pennsylvania in 1999, he was the most powerful and influential cleric in Turkey. His religious movement was known for having invested in education, interfaith dialogue, the media, and private economic enterprise since the late 1970s. Gülen had established hundreds of schools in Turkey and encouraged his graduates to serve in the government bureaucracy as well as in all the educational, social, media, and economic sectors where his movement was active. His self-imposed exile was a clear indication that he feared prosecution by the military’s anti-Islamic campaign. In the eyes of the staunchly secularist army, Erdoğan and Gülen were made from the same Islamic cloth. They tried to appear moderate but shared the same long-term objective: to topple the secular regime founded by Atatürk. And in 1999, the year Gülen left Turkey, Erdoğan began his four-month sentence in prison. Erdoğan and Gülen openly supported each other between 2002 and 2012. They had a mutually beneficial coalition. The Gülen movement traditionally maintained good relations with centrist parties and kept a safe distance from Islamist politicians. This is why Fetullah Gülen stayed away from the Welfare Party’s Necmettin Erbakan. When the AKP entered the Turkish political scene as a center-right party that repudiated its Islamist past, the Gülen movement became its natural ally. Erdoğan needed civil servants he could work with in the government, since there was mutual distrust between the secular bureaucracy and AKP. The Gülen movement proved more than ready to help. Gülen had been investing in education, and his graduates had been acquiring midlevel positions within the bureaucracy since the early 1980s. The relationship Gülen forged with the AKP was also strategic and highly useful for his movement. Gülen needed a powerful governing political party to support his movement’s educational, media, and business investments in Turkey and beyond. In return, he was happy to provide the human capital AKP needed to run the bureaucracy with Gülen school graduates and loyalists. In any case, these civil servants were already working in a wide array of governmental institutions, ranging from the Ministry of Education to the police department. Now they were to gain upward mobility and much more influence. Moreover, the AKP’s brand of “moderate Islam” was in perfect harmony with Gülen’s positivist Islamism and the kind of ethnoreligious “soft power” the Gülen brand represented. By the 2000s, Gülen schools were mushrooming all over the world and had a strong reputation for excellence thanks to dedicated, missionarylike teachers. In time, the biggest loser from this “coalition of the pious” proved to be the common enemy of Erdoğan and Gülen: the Turkish military. The generals knew that they had to act against this alliance and took a risky step in that direction in April 2007, when the Turkish General Staff issued a thinly veiled threat to the AKP not to nominate AKP cofounder Abdullah Gul to the presidency. The generals appeared ready once again to take matters into their own hands. The presidency, a symbolic and ceremonial position in Turkey’s parliamentary system, was traditionally associated with the secular establishment. Feeling strong in great part thanks to the popularity of his economic and social policies, Erdoğan did not bow to the intimidating tactics of the military. Instead he pushed back, called early elections, and won the July 2007 general elections in a land-

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slide. Soon after this victory, a jubilant Erdoğan and AKP-dominated Turkish parliament once again designated Gul for the presidency. Shortly after Gul’s ascendance to the presidency, the military establishment once again challenged Erdoğan, this time by using Kemalist allies in the judiciary branch. The AKP was charged by a staunchly Kemalist prosecutor for promoting an Islamist agenda. The matter came before the Constitutional Court, a bastion of Kemalism, as a case for closure of the AKP on the grounds of anticonstitutional activities. The AKP narrowly survived this potential “judicial coup” in 2008 only by a couple of votes. Shortly after the judicial coup failed, the AKP-Gülen alliance launched a widespread investigation aiming to prosecute activist generals and other alleged coup plotters within the state bureaucracy. Between 2009 and 2011, the Ergenekon investigation emasculated Turkey’s powerful military, in great part thanks to the leading role of Gülenist prosecutors and informants within the security and judicial establishment (Filkins 2012). Although some of the evidence against military officers appeared to be fabricated, Erdoğan and Gülen now had the upper hand against the Kemalist establishment. With the military sidelined and a Kurdish peace process with the PKK underway, the road seemed wide open for a new liberal and democratic constitution that would consolidate the political reforms in a post-Kemalist Turkey.

What Went Wrong? In retrospect, the events that unfolded in 2013 proved a major turning point in AKP’s democratic journey. The brutal suppression of young environmentalist protesters at Istanbul’s Gezi Park and subsequent cycles of violence against protesters across the country unveiled the fragile nature of civil liberties in Erdoğan’s new Turkey. The crackdown on protests and the suppression of freedom of speech and assembly also revealed the absence of rule of law in the country. The same year, the clash between Erdoğan and the Gülen movement turned the political climate from bad to worse. The absence of an independent judiciary became obvious when Erdoğan sacked the Gülenist prosecutors who launched a major corruption investigation against him. There was clear and undeniable corruption within the AKP ranks. Erdoğan’s clientelist patronage distributed government contracts and big infrastructure projects to cronies. Yet the AKP government managed project the corruption investigation against him as a coup attempt orchestrated by Fetullah Gülen. By 2013, two additional developments, this time on the foreign policy front, had tremendous negative impact on Turkey’s democratic journey. The first was the Arab Spring of 2011, which led to an Islamist hubris both at home and in foreign policy. Having just sidelined the Kemalist military, Erdoğan’s AKP could not resist the Islamist temptation of embracing the Muslim Brotherhood in the Middle East. This Islamist dream of Erdoğan would turn into a nightmare in Syria and in Egypt and destabilize Ankara’s relations in the Middle East. The second detrimental development in foreign policy came with the deterioration of relations with Europe. The French and German reluctance to embrace what they rightly perceived as an increasingly Islamist and autocratic Erdoğan left Turkey without the European Union as a strategic anchor

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that had done wonders for the Turkish good governance and economic performance during AKP’s first decade in power. By 2015, Turkey and Erdoğan were in disarray. The economy was underperforming, the Kurdish conflict was back, more than two million Syrian refugees had already crossed the Turkish border, the EU had turned its back to Turkey, Ankara was supporting jihadist groups in Syria, and Washington was fighting ISIS with the help of the Syrian wing of the PKK. It was under these circumstances that Erdoğan forged a new partnership, this time with the ultranationalist and Eurasianists within the Kemalist military—two groups that were fully sidelined only a few years earlier. The military was, of course, more than happy to see the Gülenist-AKP alliance crumble. Soon after the corruption investigation in December 2013, Erdoğan declared an open war against all Gülenist groups within Turkish bureaucracy—starting with the judiciary and law enforcement—labeling them a “parallel state” within the state. Once their shared enemy—the military—was politically sidelined, the AKPGülen alliance rapidly turned into a debilitating competition for power. Erdoğan went after the education network of the Gülen movement, and Gülenist prosecutors came after Erdoğan’s corrupt network of patronage in a system of crony capitalism. Erdoğan responded to the corruption investigation by launching an all-out war against the Gülen movement. His policies included sacking the prosecutors involved in the corruption investigation, reassigning hundreds of police chiefs, and rewriting laws in ways that would allow government control over the judiciary and corruption probes. After the resignation of four implicated ministers, Erdoğan reshuffled half of his cabinet. In addition to the total number of ninety-six prosecutors and judges who were replaced, the government decided to push through draconian new laws, giving it more control over the judiciary and tightening the monitoring of telephones and the internet. The new legislation also enhanced government control over the High Council of Judges and Prosecutors, which is responsible for judicial functions and the appointments of judges, and thus severely undermined the separation between the executive and judiciary branches. Nothing much was left in the name of the rule of law in Turkey as Erdoğan began to call all the shots. As the corruption probe swirled around his government and his family, Erdoğan also returned to the familiar tactic of blaming his problems on a vast international conspiracy, as part of an orchestrated effort to weaken Turkey. Partly because Gülen lives in the United States and has been critical of Turkey’s confrontations with Israel, Erdoğan hinted that corruption allegations were the result of attempts by Israel and the United States to frame his government. By 2013, Turkey’s relations with Israel were severely strained due to Turkey’s support of Hamas. Erdoğan even threatened to expel the US ambassador on the grounds that he held meetings with opposition figures. The way the AKP handled the corruption investigation clearly exposed Erdoğan’s authoritarian leadership and, more importantly, the absence of checks and balances when they were most desperately needed. The clearest evidence of Erdoğan’s Machiavellian skills came when his top political adviser suggested that the military was framed by the same Gülenist prosecutors who launched the corruption probe against the AKP. This statement called into question the whole legitimacy of the Ergenekon trial. By 2014, almost all the officers implicated in coup plotting were quickly released. Such a development paved the road for

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a return of the generals as powerful actors in search of retribution. Although another military intervention in Turkey seemed far-fetched, the country looked increasingly unstable and polarized. It was no longer possible to rule out a scenario in which the generals would make their presence felt against Erdoğan and the AKP. Yet no one really predicted what unfolded in July 2016: a failed coup against Erdoğan allegedly orchestrated by Gülenist forces within the military (cf. Filkins 2016). Erdoğan blamed Gülenists within the military for this botched affair that cost the lives of 250 people. Gülen denied any involvement in the coup and countered that Erdoğan was the only one benefiting from all these developments. At the end of the day, the narrative of a Gülenist coup attempt became the official line in Turkey, and massive waves of arrests followed. The failed coup of July 2016 exacerbated Turkey’s illiberal and autocratic turn and ended up consolidating the anti-Western coalition between AKP and ultranationalists and secularists who always hated Gülen and the United States. The reluctance of the United States to extradite Gülen fueled the nationalist conspiracy that Washington was complicit in this coup, one that was allegedly orchestrated from Pennsylvania. Erdoğan used the coup as an excuse to go after all his opponents with a giant purge of government institutions, civil society organizations, academia, and even the private sector. The Gülen movement, a crucial ally of AKP for almost all of its existence, was now declared a terrorist organization that needed to be annihilated. In the meantime, Turkey’s already strained relations with Washington went from bad to worse. The fact that Washington continued to support Syrian Kurds despite Turkey’s warnings created even more anti-American, nationalist resentment in Turkey. Shortly after the failed coup in 2016 and again in the summer of 2017, Turkey launched two major military incursions in northern Syria, bringing it close to a potential confrontation with American forces. In the eyes of Turkey, America had partnered with the Syrian wing of the PKK, failed to take serious military action against Damascus, and paid scant attention to Turkey’s troubles in absorbing four million Syrian refugees. Washington, for its part, believed Turkey supported al-Qaeda–linked jihadists in Syria and prioritized good relations with Moscow and Tehran in its diplomatic efforts. All these problems on the Turkish-American front were music to the ears of anti-American ultranationalists in Erdoğan’s new coalition.

The Kurdish Unraveling and Erdoğan’s Turn to Kemalism If Erdoğan’s war with Fetullah Gülen was the primary reason he had to make peace with the old, illiberal order of Turkey, the return of armed conflict with the PKK was the second one. Already by 2015, there was no sign left of the Kurdish peace process in the country. The cumulative effect of Gezi Park unrest and the corruption investigations fueled a deep sense of insecurity in the conspiratorial eyes of Erdoğan. He saw external forces behind both events. Feeling increasingly insecure despite his electoral victories, Erdoğan turned even more autocratic and illiberal after assuming the presidency in 2014 with 51.7 percent of the votes. This was the first time the president came to be elected by the people and was a big step toward the presidential system

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Erdoğan so coveted. Rather than staying above politics, as Turkey’s parliamentary system and constitution required from the president of the republic, Erdoğan was determined to change Turkey’s political system in his favor. The illiberal dynamics of Turkish politics and Erdoğan’s sense of insecurity went from bad to worse when the AKP lost its parliamentary majority in the June 2015 elections. The result came as a shock to Erdoğan and to the Turkish nationalist establishment. Erdoğan was denied a parliamentary majority because Turkey’s Kurdish political movement managed to win 13.1 percent of the votes and gained eighty seats that would normally go to the AKP. This was a watershed moment for Turkish politics, because a Kurdish party had passed the 10 percent requirement for parliamentary representation for the first time. The victory of the Peoples’ Democracy Party (HDP) and its charismatic young leader, Selahattin Demirtas, dismayed the ultranationalist MHP (Nationalist Action Party) and large segments of the Turkey’s nationalist voters who were concerned about close links between the HDP and the PKK. With its eighty seats in parliament, the HDP had a larger presence in the legislative body than the MHP did. Not surprisingly, this Kurdish victory terrified the MHP leader, Devlet Bahceli, who declared on the eve of the polls that he would never support any attempts by the anti-AKP opposition parties—the CHP and the HDP—to form a government. MHP’s hatred of the Kurds thus blocked any hope of an anti-AKP coalition. Turkish nationalism within the Kemalist CHP also precluded an open alliance with Kurdish nationalists. The result was a deadlock in parliament, since Erdoğan also vehemently opposed a grand coalition between the AKP and CHP. Soon it became clear that the HDP’s electoral victory was moving Turkey toward a nationalist realignment. Bahceli’s refusal to form a government with the CHP lay the foundation for a nationalist alliance between the MHP and the AKP. Bahceli’s support to Erdoğan has been conditional on only one demand: to crush Turkey’s emboldened Kurdish movement. Erdoğan happily delivered. He had an axe to grind with the HDP for not supporting his presidential agenda despite his overtures to Turkey’s Kurds by granting them more cultural rights than any previous Turkish government had done. Erdoğan had assumed his peace process with the Kurds would generate the critical political support he needed for changing Turkey’s political system from a parliamentary regime to a presidential one. Yet the HDP leader Demirtas refused to support Erdoğan in the June 2015 elections, on the grounds that the Kurds should not support an autocratic presidential agenda in return for a cosmetic peace process. Erdoğan did not forgive Demirtas for this “betrayal.” After the AKP lost its parliamentary majority in June 2015, Erdoğan called snap elections in November to undo the stalemate in the parliament. As the country was heading to polls once again, he quickly launched a vicious military campaign in the Kurdish southeast. A growing number of ISIS and PKK terrorist attacks also rocked the country during the summer. Growing signs of distress in the economy, and the return of warlike dynamics in the southeast naturally worried Turkish public opinion, accustomed to stability and growth under AKP governments. In November the AKP won easily and regained a strong parliamentary majority. To the dismay of extreme

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nationalists, the HDP still managed to win 10.76 percent of the votes and to gain more parliamentary seats than the MHP. By 2016, the set was now fully staged for a de facto nationalist conservative coalition between the AKP and MHP that turned Turkish politics into a militaristic direction against the Kurds. In July of the same year, the failed coup attempt destroyed the last vestiges of democracy in Turkey. Erdoğan now had everything he needed to purge all his enemies. He started with Gülenists, but by November 2016, Selahattin Demirtas, the HDP leader, was also behind bars. Turkey’s downward spiral kept taking new turns after the failed coup of July 2016. The war against Fetullah Gülen and Kurdish nationalism at home and across the border in Syria fueled dynamics of protofascism, as tens of thousands were arrested. Foreign policy was not exempt from Erdoğan’s nationalist turn against the West. American military support for Kurds associated with the PKK in Syria gave him the excuse he needed for moving closer toward Moscow (Bipartisan Policy Center 2016). Amid growing problems with both the EU and Washington and a deteriorating economic and security situation at home, Erdoğan presented himself as the only man strong enough to fight Turkey’s growing problems on all fronts. To do that, however, he needed a strong presidential system. Having established a draconian emergency rule after the failed coup of July 2016 together with Erdoğan’s nationalist populism and new alliance with the MHP paid off. In April 2017, he narrowly won a national referendum that changed the Turkish political system from a parliamentary regime to an “imperial” presidency with no checks and balances. By the summer of 2018, Erdoğan was elected president under this new system, with close to 52 percent of the votes. Erdoğan’s presidency came to symbolize the culmination of illiberal democracy in Turkey and failed to solve the country’s structural economic and political problems. The deterioration of living standards and purchasing power combined with systemic corruption caused an electoral setback for the AKP when the opposition won municipal election in 2019 in almost all large cities of Turkey, including Istanbul and Ankara. Yet despite a deteriorating financial situation, Erdoğan remains firmly in charge at the presidency, and his party still has a majority in the parliament. His nationalist coalition with the MHP and the military is as strong as ever. The war against the PKK and Gülen is continuing unabated. Turkey has also purchased a Russian missile defense systems, and there is a growing tendency in the EU, NATO, and Washington to see Turkey as a strategic problem rather than a strategic ally. The Russian invasion of Ukraine in early 2022 has only changed this reality slightly. Despite attempts to mediate between Ukraine and Russia and some success in delivering a grain deal, as of early 2023, Ankara has refused to ratify Sweden and Finland’s NATO membership, and it is not abiding by Western sanctions against Russia.

Conclusion: A Gaullist Turkey? In his almost twenty years of power, Erdoğan proved to be a master of Machiavellian alliances and populism. His turn to autocratic politics since 2013 has certainly damaged his global reputation as a reformer. Today, like most repressive

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leaders, he controls the media, silences critics, rewards sycophants, and distributes economic favors to cronies. Yet Turkey remains a country where elections are still held and strongly contested, with a high turnout. The municipal election results in 2019 showed that Erdoğan and the AKP remained vulnerable. The main issue that has the power to create problems for Erdoğan is the economy and particularly the meltdown of Turkey’s currency. Erdoğan’s vulnerability will be tested in 2023, during the centennial of the republic, when presidential and parliamentary elections are likely to take place. At the end of the day, instead of political Islam, an analysis of governance and economic performance combined with a much closer look at Turkish nationalism will be a much more accurate predictor of Erdoğan’s political future. To be sure, Islam plays a role in Erdoğan’s politics, but the real driver of his strategic vision is nationalism, an ideology that in fact appeals to all Turks—secularists, conservatives, progressives, and Islamists alike. In fact, a more accurate way of understanding contemporary Turkey would be to recognize the similarities between the populist strongman of Turkey and France’s Charles de Gaulle, whose anti-Americanism and nationalism drove France into, among other things, leaving NATO’s integrated military command structure in 1966. No comparison is perfect, of course. France is a country with much deeper democratic traditions than Turkey, and Erdoğan is no de Gaulle when it comes to their respective intellectual and political backgrounds. Yet Erdoğan’s vision for Turkey, much like de Gaulle’s for France, is motivated by a “certain idea of Turkey,” to restate the Gaullist dictum, based on independence, sovereignty, and imperial grandeur. Erdoğan may be a much more autocratic version of the French leader but shares with him an ambitious vision of strategic autonomy and urge to monopolize the national will. While France managed to balance the dangerous aspects of Gaullism with institutional checks and balances, Erdoğan’s Turkey is free of such obstacles to the tyranny of populism. This is why, today, the real threat to Turkey’s Western and democratic orientation is no longer Islamization but a broad-based Turkish nationalism and its frustration with liberalism and pluralism. Turkey’s military offensives in northern Syria, its growing anti-Americanism, its rapprochement with Russia and Iran, its frustration with the EU, and its war against the PKK are all factors that contribute to the growth of Turkish Gaullism. If current trends continue, what will emerge is not an Islamist polity but a Turkey with a strategic orientation that is much more defiant, independent, self-confident and selfcentered—in short, a Turkish variant of Gaullism. The West, obsessed with Islam, ignores this Gaullist trend in Turkey at its own peril. As in the case of Charles de Gaulle’s anti-American and anti-NATO policies in the 1960s, a Gaullist Turkey is already resentful of American policies and feels insulted by the European Union’s cold shoulder. In search of full independence, full sovereignty, strategic leverage, and, most importantly, “Turkish glory and grandeur,” Turkey may end up opting for its own “force de frappe”—a nuclear deterrent—and its own realpolitik engagement with countries such as China, India, and Russia. Finally, this potential turn to Eurasianism in Turkey is also the sad tale of TurkeyEU relations. Turkey’s lost decade between 2012 and 2022 is in great part a product

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of deteriorating relations between Ankara and Brussels. Instead of productive cooperation and accession negotiations, there is now mutual frustration over issues such as Ankara’s weaponization of Syrian refugees as a form of blackmail against the EU and Turkish resentment over failed promises of custom-union modernization and visa-free travel. Making matters worse, these problems dovetail maritime tensions and energy disputes in the eastern Mediterranean that feature Turkish claims against Greek, Cypriot, and French positions. Once again, the absence of a solution to the division of Cyprus is at the heart of the matter. A major opportunity to unite the north and south of the island was lost in 2004. Today, with an internationally unrecognized Turkish north and a globally recognized Greek south, the Republic of Cyprus is the official roadblock to Turkey’s dream of European Union membership. Yet Cyprus is only a small part of a much more daunting picture characterized by Turkey’s autocratic turn, anti-Muslim European public opinion, and the rise of populist nativism across the board. Sadly, these dynamics leave no optimism for a journey that could have changed Turkey into a liberal democracy.

Suggested Readings Ozerdem, Alpasland, and Matthew Whiting, eds. The Routledge Handbook of Turkish Politics. London: Routledge, 2020. Philliou, Christine M. Turkey: A Past against History. Oakland: University of California Press, 2021. Taspinar, Omer. What the West Is Getting Wrong about the Middle East: Why Islam Is Not the Problem. London: Tauris, 2020. Tol, Gönül. Erdoğan’s War: A Strongman’s Struggle at Home and in Syria. New York. Oxford University Press, 2023. Zurcher, Erik J. Turkey: A Modern History. 4th ed. London: Bloomsbury, 2017.

References Ahmad, Feroz. 2003. Turkey: The Quest for Identity. Oxford: One World. Bilgel, Fırat, and Burhan Can Karahasan. 2017. “The Economic Costs of Separatist Terrorism in Turkey.” Journal of Conflict Resolution 61 (2): 457–79. Bipartisan Policy Center. 2016. Beyond the Myth of Partnership: Rethinking U.S. Policy toward Turkey. December 2016. https://bipartisanpolicy​.org​/wp​-content​/uploads​/2019​/03​/BPC​ -Turkey​-Partnership​-Myth​.pdf. Euractiv. 2008. “Austria Signals Referendum on Turkey’s EU Accession.” August 25, 2008. https://www​.euractiv​.com​/section​/enlargement​/news​/austria​-signals​-referendum​-on​-turkey​ -s​-eu​-accession. Filkins, Dexter. 2012. “The Deep State.” New Yorker, March 4, 2012. https://www​.newyorker​ .com​/magazine​/2012​/03​/12​/the​-deep​-state. Filkins, Dexter. 2016. “The Thirty-Year Coup.” New Yorker, October 17, 2016. https://www​ .newyorker​.com​/magazine​/2016​/10​/17​/turkeys​-thirty​-year​-coup.

T urke y     269 France 24. 2018. “Macron Suggests ‘Partnership’ with EU for Turkey, Not Membership.” May 1, 2018. https://www​.france24​.com​/en​/20180105​-french​-president​-macron​-suggests​ -partnership​-deal​-turkey​-eu​-not​-membership​-erdogan. Fraser, Suzan. 2013. “Merkel Backs ‘Open-Ended’ Turkey-EU Talks.” February 25, 2013. https://news​.yahoo​.com​/merkel​-backs​-open​-ended​-turkeys​-160751026​.html. Huntington, Samuel. 1996. The Clash of Civilizations and the Remaking of the World Order. New York: Simon & Schuster. Mardin, Serif. 1988. “Freedom in an Ottoman Perspective.” In State, Democracy and the Military: Turkey in the 1980s, edited by Metin Heper and Ahmet Evin. Berlin and New York: De Gruyter. McDowall, David. 2017. A Modern History of the Kurds. London: Tauris. Robins, Philip. 2003. Suits and Uniforms: Turkish Foreign Policy since the Cold War. Seattle: University of Washington Press. Rogin, Josh. 2012. “Obama Names His World Leader Best Buddies!” Foreign Policy, January 19, 2012. https://foreignpolicy​.com​/2012​/01​/19​/obama​-names​-his​-world​-leader​-best​-buddies. Seal, Jeremy. 2021. A Coup in Turkey: A Tale of Democracy, Despotism & Vengeance in a Divided Land. London: Chatto & Windus. Toprak, Binnaz. 1990. “Religion as State Ideology in a Secular Setting: The Turkish-Islamic Synthesis.” In Aspects of Religion in Secular Turkey, edited by Malcolm Wagstaff, 10–15 Durham, NC: Duke University Press. Ucer, Murat. 2014. “Turkey’s Economy: Now for the Hard Part.” Foreign Policy, August 12, 2014. https://foreignpolicy​.com​/2014​/08​/12​/turkeys​-economy​-now​-for​-the​-hard​-part. Zurcher, Erik J. 2017. Turkey: A Modern History. 4th ed. London: Bloomsbury.

PART 2

THEMATIC CHAPTERS

CHAPTER 10

European Integration in an Age of Crisis John Van Oudenaren

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European Union Population (million): Area in Square Miles: Population Density in Square Miles: GDP (in trillion dollars, 2020): GDP per Capita (Purchasing Power Parity, 2020): Founded as European Economic Community: Renamed as European Union:

447.7 1,634,469 87 $15.28 $34,375 March 25, 1957 November 1, 1993

Performance of Political Party Groups in European Parliamentary Elections of May 2019 (%) European People’s Party (EPP): Progressive Alliance of Socialists and Democrats (S&D): Renew Europe (liberal group): Greens/European Free Alliance: Identity and Democracy (nationalist, right-populist): European Conservatives and Reformists (soft Euroskeptic, antifederal): European United Left/Nordic Green Left:

21.0 (187 seats) 18.5 (147 seats) 13.0 (98 seats) 11.7 (67 seats) 10.8 (76 seats) 8.2 (62 seats) 6.5 (39 seats)

Main Officeholders • President of the European Parliament: Davide Sassoli (Italy, S&D, 2019–2022); Roberta Metsola (Malta, EPP, since 2022) • President of the European Commission: Ursula von der Leyen (Germany, EPP, since 2019) • President of the European Council: Charles Michel (Belgium, Renew Europe, since 2019) • High Representative for the CFSP: Josep Borrell (Spain, S&D, since 2019)

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I

n 2020–2022, the European Union (EU) was hit with two major crises: the coronavirus pandemic that emerged in China in late 2019 and spread to Europe in early 2020, and the Russian invasion of Ukraine that began on February 24, 2022, and rapidly grew into the largest military conflict in Europe since World War II. How the EU responded and continues to respond to these crises will shape its evolution for years to come. The coronavirus pandemic was, as Chancellor Angela Merkel of Germany said in regard to her own country, Europe’s gravest crisis since World War II. Prime Minister Pedro Sánchez of Spain called it the most difficult moment for the EU since its foundation. The pandemic was first and foremost a health and human crisis, one that killed more than a million people in Europe and many more worldwide. It was an economic crisis that slashed growth, increased unemployment, destroyed businesses, and inflicted hardship on millions of people. For the EU, it was also a political crisis, one that tested and, in some cases, shattered norms and patterns of cooperation that had been built over years. France and Germany initially banned the export of masks and other medical equipment to other EU countries, in defiance of internal market rules. The Schengen system, establishing the free movement of people within the Union, briefly collapsed, as national authorities closed borders in efforts to protect their citizens. Solidarity was in short supply, as EU member states had little capacity to assist fellow members hit hardest by the virus. The debate over economic stimulus and “Corona bonds” to help countries in financial trouble reopened old wounds from the euro-zone crisis of the previous decade that had not fully healed. Anti-EU and Euro-skeptic political leaders seized upon the pandemic to reinforce their message that open borders and policies made in Brussels were inimical to national interests and that European integration should be reversed. Prime Minister Viktor Orbán of Hungary took advantage of the crisis to wrest from the Hungarian parliament antidemocratic powers that ran counter to EU values and law, leading to calls by some to expel Hungary from the bloc, even though the founding treaties of the Union contain no mechanism for expulsion of a member state. The EU’s initial response to the pandemic was slow and erratic. Early in the crisis, Italy asked that the Union activate its civil protection mechanism for the supply of medical equipment to hard-pressed hospitals in northern Italy, but not a single EU country responded to its request (Massari 2020). China and Russia did send equipment and personnel in what clearly were propagandistic moves to divide the Europeans from each other and, in China’s case, to cover up its own culpability in causing the pandemic. The European Central Bank (ECB) made an early misstep, seeming to repeat the mistakes of the euro-zone crisis of the 2010s, when its responses were often too little too late. Bank president Christine Lagarde appeared to dismiss a major role in the crisis for the ECB, stating that it was a matter of fiscal policy for the states, even though the US Federal Reserve and the Bank of England had already acted on a very large scale to bolster the US and British economies. Gradually, however, the EU found its footing. It imposed a ban on travel with the rest of the world and began taking stricter measures to contain the spread of the

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virus. The ECB clarified Lagarde’s remarks and quickly put together a plan to purchase €750 billion worth of government and corporate bonds to support the EU economy. The European Commission announced that it was relaxing controls on state aids to industry by member states (in normal times closely policed to prevent distortions of the internal market) and easing EU limits on government borrowing. It helped to get transport moving, especially trucks carrying food and medical supplies that had been subject to waits of up to thirty hours at intra-EU borders. The Commission also pressured France, Germany, and other member states to drop their bans on the export of medical supplies to fellow EU countries by threatening legal action, and, in a riposte to the aid sent by Russia and China, set up an emergency fund to purchase medical supplies for places in the Union where they were most needed. By early April, EU finance ministers had reached agreement in principle on a €540 billion economic assistance package to address the economic effects of the crisis. This initial package was chiefly in the form of loans by the European Investment Bank and the European Stability Mechanism (set up in the 2010s to deal with the euro-zone crisis). By July, it had been supplemented by the more ambitious Next Generation EU plan, which made available €500 billion in grants and €250 billion in loans for pandemic relief, coupled with structural transformation, particularly in the areas of digitization and the transformation of the European economy to a carbon-neutral status. Notwithstanding a slow start and some bureaucratic hitches, the EU vaccination program ramped up in the first half of 2021, resulting in the gradual decline in the number of hospitalizations and deaths caused by the disease. The EU and its member states had no sooner begun to implement the Next Generation EU plan than the second crisis hit. Ukraine is not an EU member state, but it has aspirations to join the Union. Kyiv had developed especially close relations with the EU since 2014, following Russia’s seizure of the Crimea and the outbreak of a proxy war between Ukraine and Russian-backed separatists in Ukraine’s eastern provinces. In 2021, Russia began threatening Ukraine with a massive buildup of military forces along the latter’s borders, but many observers did not believe that Russian President Vladimir Putin would give the order to invade. When he did, it was clear that the implications for the EU would be huge. Within weeks, more than three million Ukrainian refugees had fled their country, the majority to the EU member states that border Ukraine (Poland, Hungary, Slovakia, and Romania). In addition to meeting the needs of the refugees and providing economic and military assistance to Ukraine, the EU joined the United States and other countries in imposing massive economic sanctions on Russia. Two weeks into the war, the European Council—the heads of state and government of the member states—met in extraordinary session in Versailles, France, and declared that “Russia’s war of aggression constitutes a tectonic shift in European history” (European Council 2022). The meeting’s host, President Emmanuel Macron of France, stated that “war in Ukraine is an immense trauma,” one that required the EU and its member states “to completely redesign the architecture of our Europe” (Walker 2022). The leaders went on to set three major objectives for the coming years: bolstering the EU’s defense capabilities, reducing energy dependencies (including the phasing out of dependency on Russian gas, oil, and coal imports “as soon as possible”), and

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building a more robust economic base. Pursuit of the third objective was to include stockpiling and finding alternative sources of critical raw materials, increasing European production of semiconductors to lower dependence on imports from Asia, and redoubling efforts begun already during the pandemic to expand European production of medicines and vaccines. The objectives set in Versailles were to be pursued in addition to and not in place of the goals of pandemic recovery and digital and green transformation already established in Next Generation EU and other EU decisions of recent years.

Origins The EU that was pursuing these ambitious goals in response to these unprecedented challenges traces its beginnings to the period after World War II, when European political leaders began looking to integration as a way to speed recovery from the material and spiritual devastation wrought by the war. The primary interest of leaders was, as the British historian Alan Milward has shown, the “rescue” of the historic nation-state, but cooperation in Europe was seen as a way of assisting this process and lowering its costs. In January 1948, Belgium, the Netherlands, and Luxembourg formed the Benelux customs union. In March 1948, France, Britain, and the three Benelux countries concluded the Treaty of Brussels in which they established the Western Union and pledged to come to each other’s defense in the event of external attack, hold regular consultations among their foreign ministers, and cooperate in the economic, social, and cultural spheres. In April 1948, sixteen European states founded the Organization for European Economic Cooperation (OEEC) to administer aid provided by the United States under the Marshall Plan. Two other early postwar developments were the signing of the treaty establishing the Atlantic alliance in April 1949 and, the following month, of the Treaty of London establishing the Council of Europe. The Atlantic alliance, given institutional form as the North Atlantic Treaty Organization (NATO), brought together the United States, Canada, and nine West European states that pledged to come to each other’s aid in the event of external attack. The Council of Europe was a group of ten West European countries that agreed to work together to harmonize laws and promote human rights. All of the organizations formed in 1948 and 1949 were essentially intergovernmental; they consisted of groupings of European (in the case of NATO, European and North American) countries that agreed to cooperate to pursue specific objectives, without surrendering any aspect of their sovereignty. Decision making was by unanimity, and no country could be compelled to take action that its government did not approve.

The European Coal and Steel Community The direct precursor to today’s EU, the European Coal and Steel Community (ECSC), was established some years later and went beyond these initial efforts by putting into

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effect for the first time the principle of supranationalism—the idea that nation-states should permanently give up part of their sovereignty to a new entity, the community, which in limited spheres then could issue orders and pass legislation applying to those states. The ECSC was the brainchild of Jean Monnet, a French businessman and international civil servant who had devoted much thought to the problem of European unity. Monnet was convinced that integration had to go beyond the traditional methods in which governments did little more than agree by treaty to cooperate. Governments could easily renege on such commitments and return to old patterns of mutual hostility. The way to start a process of supranational integration, Monnet believed, was to achieve concrete results in specific sectors, establish permanent institutions to consolidate those results, and then achieve new results that would generate additional political support for further integration. As a first step, he conceived a plan for France and West Germany to combine their coal and steel industries under a joint authority. This authority was to be independent of the governments of the two countries and would guarantee each country full and equal access to a common pool of resources. The significance of this proposal was both political and economic. With the production of coal and steel—the very sinews of modern military capability—subject to a joint authority, war between these two traditional enemies would become unthinkable. Monnet sold his plan to French foreign minister Robert Schuman, who on May 9, 1950, formally proposed the plan to and obtained the endorsement of the French cabinet. France, West Germany, Belgium, Luxembourg, the Netherlands, and Italy ultimately agreed to join the proposed community, which was established under the terms of a treaty signed in Paris in April 1951. The ECSC created a common market in which all tariff barriers and restrictions on trade in coal and steel among the member countries were banned. The treaty provided for the establishment of four institutions with extensive legal and administrative powers: a High Authority, the Council of Ministers, a Common Assembly, and a Court of Justice. These institutions are the direct ancestors of those that today run the EU. The High Authority was established as a nine-member commission with executive powers to administer the market in coal and steel. The members of the authority (two each from France, Germany, and Italy; one each from Belgium, Luxembourg, and the Netherlands) were to be “completely independent in the performance of their duties.” They were to decide what was best for the ECSC as a whole rather than represent the views of their respective countries. The High Authority was empowered to issue decisions, recommendations, and opinions prohibiting subsidies and aids to industry that distorted trade, to block mergers and acquisitions, and under certain circumstances, to control prices. It could impose fines to ensure compliance with its decisions. Monnet was named the first head of the High Authority. The Council of Ministers consisted of ministers from the member state governments, with each state represented by one minister. For some policy actions, the Council of Ministers had to endorse the decisions of the High Authority. Some decisions were taken by unanimity, others by majority voting. The Common Assembly introduced an element of legislative participation in the ECSC. Its members were not

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directly elected but were chosen by national legislatures. Its role, moreover, was to advise rather than to pass legislation. Still, the principle of parliamentary participation was established, and the powers of what later was to become the European Parliament were to expand greatly in subsequent decades. A European Court of Justice (ECJ) was set up to settle conflicts between member states of the Community or between member states and the ECSC itself.

The European Community The ECSC’s scope of activity was by definition quite limited. Seeking to build upon the successes of the ECSC, the six member states began looking for ways to broaden the scope of integration. They turned initially to defense. In May 1952, the six ECSC countries signed a treaty establishing a European Defense Community (EDC) in which decisions over defense and a jointly commanded European army were to be made by supranational institutions patterned on those of the ECSC. However, in August 1954, the French National Assembly rejected the EDC treaty. Whereas national governments and parliaments were willing to surrender sovereignty in some key economic areas, the EDC experience showed that defense was too sensitive—too close to core issues of national sovereignty—to be treated the same way. Following the EDC setback, the foreign ministers of the ECSC states met in Messina, Italy, in June 1955 to consider ways to energize the integration process. Two courses of action were discussed: a further stage of sectoral integration based on a proposed atomic energy community, and a plan for market integration through the elimination of barriers to trade and the eventual creation of a common market. The ministers agreed to establish a committee to study these options and to formulate proposals. The Spaak Committee (named for its chairman, Belgian foreign minister Paul-Henri Spaak) presented its report to the May 1956 Venice meeting of foreign ministers. It struck a balance between the two approaches to integration and proposed that the ECSC states create both a European Atomic Energy Community (Euratom) and a European Economic Community (EEC). Following arduous negotiations, the leaders of the Six met in Rome on March 25, 1957, to sign two treaties creating these new entities. Of the two institutions created in 1957, the EEC—or Common Market as it was widely called—was by far the more important and came to be known simply as the European Community (EC). The agreement establishing the Community, known as the Treaty of Rome, remains, in much amended form, one of the two core constitutional documents of today’s EU (the other being the Treaty on European Union signed in 1992). The basic objective of the EC was simple in principle but sweeping in its implications: to create an internal market characterized by the free movement of goods, services, persons, and capital. The treaty provided for the phasing out, in stages, of all tariffs and quantitative restrictions on trade among the member states. The members of the Community adopted a common commercial policy based on a common external tariff and agreed to act as a unit in international trade negotiations.

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The Treaty of Rome used the basic institutional framework established for the ECSC. The European Commission, analogous to the High Authority, was endowed with executive powers, including the sole right to initiate Community legislation. The member states were responsible for selecting the commissioners, who were chosen for four-year terms (five years since 1979). The Commission president, also selected by the member states, soon emerged as the most visible champion of and spokesperson for the Community. A Council of Ministers was to be the main decision-making body of the EC, in which representatives of the member states would vote on proposals put forward by the Commission. Votes could be made on the basis of unanimity or by qualified majority—a weighted system that assigns votes in rough proportion to the population sizes of the member states and that requires a certain critical mass of votes to pass a measure. France, Italy, and West Germany each had four votes, Belgium and the Netherlands two, and Luxembourg one. Twelve of the seventeen votes were considered a qualified majority. In practice, qualified majority voting was disliked by some political leaders, especially in France, as too supranational and was little used until the 1980s. The chairmanship of the Council rotated, with each member state serving as Council president for a six-month period. In addition, the member states agreed that Euratom and the EC would share the same Common Assembly and ECJ established for the ECSC. The ECSC High Authority remained in Luxembourg, but the new European Commission was established in Brussels, which became the de facto capital of uniting Europe. The Common Assembly was situated in Strasbourg, France. As originally constituted, the EC reflected a mix of supranational and intergovernmental elements. Supranationalism was seen in the Commission and the ECJ, intergovernmentalism in the large role still accorded to the member states in the Council. The successor to the EC, the EU, remains a blend of these two modes of governance, which have become increasingly intertwined, as bodies such as the Council have adopted a more European outlook (sometimes called transgovernmentalism) and as the member states have continued to exert influence on the Union through its various institutions. While the focus of the EC was on the creation of a common market through the elimination of barriers, the Treaty of Rome also provided for the establishment of certain common policies. Agriculture was the most important, but others included transport, competition (antitrust), and policies toward former European colonies in Africa and the Caribbean. Over time, the EC was to assume a role in a growing range of policy areas, some closely linked to the common market, but others, such as the environment, broader in scope. Completion of the common market for goods took place between 1958 and 1968, a period of rapid economic growth and rising prosperity. The Common Agricultural Policy (CAP) was established in 1962, based on a system of subsidies and protective tariffs designed to benefit European farmers. This system worked in sustaining farm incomes and ensuring stability of supplies, but it also led to higher food prices for consumers, overproduction, and disputes with trading partners that were progressively squeezed out of the protected EC market. Despite its initial successes, the EC went through a crisis in the mid-1960s. President Charles de Gaulle of France was suspicious of what he saw as a power grab by

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unelected bureaucrats in Brussels that threatened French sovereignty. He thus resisted efforts to strengthen the Community’s central institutions and insisted that all decisions be made on the basis of unanimity among the member states, even though this was not the intent of the Treaty of Rome. De Gaulle also vetoed Britain’s application to join the Community. Britain had been a founding member of the OEEC, NATO, and the Council of Europe, but it had declined to join the ECSC and the EC, which British leaders believed went too far in limiting Britain’s sovereignty. Britain retained strong links with its colonies, the Commonwealth, and the United States, with which it had a “special relationship” growing out of World War II. It was unwilling to surrender sovereignty to a fledgling enterprise based in Brussels. By the 1960s, however, the empire was dissolving and Britain’s ties with the Commonwealth and the United States were diminishing in importance. British economic growth was lagging that in continental Europe, where British industry saw new and growing markets. Thus in the summer of 1961, Britain, joined by Denmark and Ireland, applied to become an EC member (Moravcsik 2007). The British government received a rude shock when de Gaulle announced in January 1963 that he would veto Britain’s application, a decision rooted in de Gaulle’s distrust of the “Anglo-Saxon powers” and his view that Britain would be a stalking horse for the United States, whose influence in Europe he wanted to diminish. Despite these problems, by the end of the 1960s, the Common Market was largely complete, and the economic results were positive. Franco-German reconciliation was a reality. De Gaulle relinquished his post in April 1969 to his successor, Georges Pompidou, who was more open to European integration. Pompidou announced, in July 1969, that France no longer would oppose Britain’s admission to the Community. At the Hague summit in December 1969, the leaders of the Six agreed to explore ways to strengthen the EC’s institutions, to establish an economic and monetary union (EMU) by 1980, and to begin cooperation in the foreign policy sphere. The 1970s saw a number of milestones in European integration. Cooperation in foreign policy, or European Political Cooperation (EPC), was launched in 1970. The member states agreed to “consult on all questions of foreign policy” and where possible to undertake “common actions” on international problems. On January 1, 1973, the first enlargement of the Community took place, as Denmark, Ireland, and Britain became members. At the December 1974 Paris summit, the leaders of the member states agreed to hold summit meetings three times (later changed to twice) each year. These regular gatherings constituted a new institution, the European Council, which was to operate as a forum in which leaders could gather behind closed doors for discussion and bargaining, and to launch new initiatives relating to the future of the Community. In 1976–1979, the Community also began accession negotiations with three Mediterranean countries: Greece, Portugal, and Spain. These countries were poorer than the EC average, and all were emerging from authoritarian rule and in the process of establishing democratic systems. While many in Europe questioned whether the Community could afford to absorb these applicants, political leaders saw an overriding political imperative for Mediterranean enlargement. Membership was achieved for Greece in 1981 and for Portugal and Spain in 1986.

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The first direct elections to the European Parliament (EP, as the Common Assembly had been renamed) took place in June 1979, bringing to Strasbourg a popularly elected body of men and women who could claim to speak for Europe on behalf of the electorate. Owing to turbulent global economic conditions, little progress had been made toward the goal of establishing EMU by 1980. But in March 1979, the Community took its first major step in this direction with the establishment of the European Monetary System (EMS), a system of fixed but adjustable currency rates built around a central unit of account, the European Currency Unit (ECU). The latter was an artificial currency whose value was set by a weighted basket of EC member country currencies. In the EMS, each national currency had a fixed rate against the ECU. The central rates in ECUs then were used to establish a grid of bilateral exchange rates. Countries were responsible for ensuring that this rate fluctuated by no more than 2.25 percent (6% in the case of Italy). The EMS provided a high degree of intra-European monetary stability and paved the way for the launch of the common currency at the end of the 1990s.

The Single European Act Under the terms of the Treaty of Rome, the EC was supposed to be an internal market that guaranteed the free flow of goods, services, persons, and capital. As a practical matter, only a free market in goods had been established, and even this was riddled with exceptions. Differing national standards and technical regulations hindered trade in products among EC countries. Paperwork at the borders and disparate national policies on taxation, health and safety, company law, and subsidies to industry all fragmented the market. Businesses had limited ability to compete across borders in industries such as banking, insurance, and construction. Governments and central banks retained controls on capital, making it difficult, for example, for savers to deposit funds in banks outside their country of residence. Citizens of one EC country seeking to work in another were hampered by rules on residency and work permits and by national pension and insurance schemes. Upon becoming Commission president on January 1, 1985, Jacques Delors, a former French minister of finance, launched an ambitious program to complete the single market. Creation of a market that went beyond goods was seen as economically valuable, a step that would spur economic dynamism at a time of lagging economic growth. It was also a political project, aimed at rekindling enthusiasm for integration after a period in which the Community had drifted without highly visible accomplishments. The Commission drafted a detailed plan containing approximately three hundred proposals to be turned into Community law to complete the internal market. Each proposal was assigned a target date so that the whole program would be implemented by December 31, 1992. The report identified physical, technical, and fiscal barriers to the internal market, all of which it proposed to dismantle. Physical barriers included customs posts and paperwork and inspections at borders. Technical barriers included national standards and regulations that impeded commerce among

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member states. Fiscal barriers included types and levels of taxation that varied from one EC country to another. Delors realized that many of the plan’s specific measures would be difficult to turn into law. Much Community legislation takes the form of directives, which lay out general guidelines as to the “result to be achieved” but leave it to the member states to enact appropriate national legislation. With each of several hundred proposed measures requiring unanimous approval by twelve governments, there was little chance that the ambitious single-market program could be implemented. Thus institutional reform, meaning change in the way the Community made decisions, was needed. At its session in Milan in June 1985, the European Council endorsed the Commission’s plan for the single market and agreed, by a vote of 7–3 (with the UK, Denmark, and Greece opposed) to convene an Intergovernmental Conference (IGC) among the member states that would consider ways to strengthen the Community, including through treaty reform. The IGC began in September 1985 and culminated at the December 1985 Luxembourg summit. The result was a new treaty, the Single European Act (SEA), formally signed on February 17, 1986, and which came into effect on July 1, 1987. The SEA broadened the Community’s areas of responsibility and made changes in Community decision-making processes. New policy areas added to Community competence included environment, research and technology, and “economic and social cohesion” (meaning regional policy aimed at narrowing income disparities between different parts of the Community). The SEA inserted a new article in the Treaty of Rome that mandated completion of the internal market by the end of 1992 and specified that for certain policy areas, the Council was empowered to take decisions by qualified majority vote. These areas included some social policy matters, implementation of decisions relating to regional funds and Community research and development programs, and, most importantly, measures “which have as their object the establishment and functioning of the internal market.” This last amendment was the crucial change that allowed the completion of the single-market program by the deadline. The act also increased the power of the EP. Whereas the Treaty of Rome required only that the parliament be consulted on legislation before its adoption or rejection by the Council of Ministers, the SEA introduced a cooperation procedure under which the parliament could demand from the Council an explanation as to why its proposed amendments had not been adopted. The treaty also introduced an assent procedure under which the parliament was required to approve certain legislative actions, including the Community budget and association agreements with countries outside the EC. Finally, the SEA introduced an important change in the foreign policy sphere. Since its establishment in 1970, EPC had been conducted by political agreement among the member states, outside the Community. The SEA created a legal basis for EPC. The member states henceforth were bound by treaty, rather than just a political commitment, to consult and cooperate with each other in foreign policy. However, the EPC itself was not (unlike, for example, such new policy areas as environment or regional policy) incorporated into the Treaty of Rome. There was no such thing as a Community foreign policy but only an agreement among the member states

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to cooperate in making a common foreign policy. EPC would remain a matter for intergovernmental cooperation rather than supranational coordination. Community institutions such as the Commission would not have a role in EPC, and foreign policy decisions would not be subject to the jurisdiction of the ECJ. The SEA was a compromise between those in Europe who wanted progress toward political union and those, like the British and the Danes, who preferred a community with more limited responsibilities, focused mainly on the single market. It introduced important reforms in the Community’s founding treaty and demonstrated that the member states could use the mechanism of an IGC to push the integration process forward. Above all, it elevated to the level of a legal principle the key goal—a single market by the end of 1992—that was to become synonymous with the “relaunch” that Delors had sought to achieve.

The Community Becomes a Union The SEA was followed within a few years by an even more ambitious agreement, the Treaty on European Union (TEU), signed in the Dutch city of Maastricht in early 1992. The Maastricht Treaty, as it was commonly known, did three main things: (1) it transformed the European Community into a European Union, with expansive political responsibilities and ambitions; (2) it made the common currency—later called the euro—a centerpiece of the Union and established a process whereby the member states (with a few exceptions) were to surrender their national currencies and adopt the new EU money; and (3) it extended European competence to a range of new policy areas, for example, social policy and citizenship, as would befit a political union rather than a purely economic bloc. The push for EMU was in some respects a logical outgrowth of the single market program. The EMS had been operating for nearly a decade, and had succeeded in its original goal of insulating intra-European trade from turbulence in global currency markets. A number of economists and political leaders argued that Europe should take the next logical step and move to EMU. At the June 1988 Hanover summit, the European Council agreed to establish, under the chairmanship of Delors, a committee to propose steps leading to monetary union. Composed mainly of the central bank heads from the member states, the Delors Committee developed a detailed, three-stage plan aimed at accomplishing this goal. It proposed that exchange rate parities in stage three be “irrevocably fixed” and full authority for determining economic and monetary policy be transferred to EC institutions. At the June 1989 summit, the European Council approved the Delors Committee’s approach and declared that stage one of EMU should begin on July 1, 1990, with the closer coordination of member state economic policies and completion of plans to free the movement of capital. European leaders further agreed that another IGC would be held to consider moving to stages two and three, which unlike stage one required amendment of the Treaty of Rome. EMU most likely would have gone ahead in any case, but developments in Eastern Europe lent new urgency to this project. The fall of the Berlin Wall in November

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1989 led to the collapse of the East German communist regime and a fast-moving set of negotiations involving the governments of the two German states, along with the Soviet Union, Britain, France, and the United States (the four victor powers of World War II), that resulted in the reunification of Germany in October 1990. The five states of the former East Germany, with some sixteen million inhabitants, automatically became part of the Community. Leaders such as President François Mitterrand of France were concerned that the creation of a larger and more eastward-oriented Germany could damage the process of European integration. Mitterrand was determined to push forward with plans to “deepen” the Community and thereby ensure that the new Germany remained firmly anchored in the West. He was supported in this by Chancellor Helmut Kohl of Germany. In April 1990, Kohl and Mitterrand jointly called for steps to realize the aspirations toward political union expressed in the SEA. The Kohl-Mitterrand proposal set the agenda for an extraordinary session of the European Council in Dublin in April 1990, at which the twelve leaders reaffirmed their commitment to political union. Meeting in the same city two months later, the European Council agreed to convene an IGC on political union to begin at the same time as the IGC on EMU and to run in parallel with it. Both IGCs formally opened at the Rome summit in December 1990. The negotiations lasted a year and concluded at the December 1991 European Council with agreement on the TEU, which was finalized after last-minute negotiations in which Britain and Denmark secured the right to opt out of certain of the treaty’s provisions.

The Treaty of Maastricht As its official name indicated, the treaty brought into being a new entity called the European Union—a complicated structure of three “pillars” dealing with different policy areas using different decision-making processes. The first pillar consisted of the EC, in which the member states pooled sovereignty and transferred decision-making powers to the Commission, the Council of Ministers, the EP, and the ECJ, with a powerful guiding role assigned to the European Council. EMU and the new institution on which it was based, the ECB, were located in the first pillar. The second pillar, the Common Foreign and Security Policy (CFSP), replaced and was based upon EPC. Decisions in the second pillar were to remain largely intergovernmental, with a limited role for Community institutions. The Maastricht Treaty specified certain foreign policy goals that were to be pursued under CFSP, such as safeguarding the common values, fundamental interests, and independence of the EU, strengthening its security, and promoting peace and respect for human rights. These objectives were to be pursued through “common positions” and “joint actions” by the member states, with decisions taken primarily by unanimity. CFSP also provided for the “eventual framing of a common defense policy.” The third pillar consisted of cooperation in the fields of Justice and Home Affairs (JHA), including asylum policy, control of external borders and immigration from outside the EU, and combating drug addiction and international crime. The

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completion of the single European market and the abolition of controls on the movement of people and capital had made EU-level cooperation on cross-border problems increasingly necessary, but the member states with their different legal traditions and approaches to such sensitive internal matters were reluctant to surrender sovereignty in these areas. The Twelve thus agreed to establish the third pillar on an intergovernmental basis, with decision-making procedures similar to those used in CFSP. The treaty also established a European citizenship, to supplement rather than replace national citizenship, and which brings with it certain rights, such as the right of an EU citizen to be represented by the consulate of another member state while overseas or to vote in local elections while resident in another member state. The Maastricht Treaty strengthened the EP by adding a new procedure, codecision, under which the parliament for the first time achieved coequal status with the Council of Ministers in what was evolving into a genuinely bicameral legislative system, with the Council representing the member states and the EP directly elected by the voters. Co-decision was prescribed only for a limited number of policy areas, although one of these—the internal market—was quite important. The parliament was also given a say in the appointment of the Commission and the Commission president, hitherto a matter of exclusive concern for the Council of Ministers. The treaty also established a new institution, the Committee of the Regions, to provide a means whereby regional entities in Europe (the provinces) can give direct input to policymaking in Brussels. The most significant achievement of the Maastricht Treaty was EMU. Building on the Delors Committee report and the experience of EMS, the treaty established a detailed timetable and institutional provisions for the phasing out of national currencies and the introduction of European money, initially called the ECU (or European Currency Unit) and later renamed the euro. Stage two of EMU was to begin on January 1, 1994. The member states were to meet certain economic convergence criteria (relating to inflation, national debt and deficits, currency stability, and longterm interest rates) to ensure that the economies entering the economic and monetary union would have broadly similar performance. Stage three would begin no later than January 1, 1999, and would entail the “irrevocable locking” of the value of the national currencies against each other and their phasing out by July 2002. The treaty provided for the establishment of the ECB and a European System of Central Banks responsible for conducting monetary policy at the EU level. Britain and Denmark, both traditional skeptics of EMU, were not required to surrender their national currencies if they chose not to.

Enlargement, the Euro, and Institutional Reform For the remainder of the 1990s and into the early 2000s, the EU focused on three main tasks: enlargement, preparations for the launch of the euro, and further institutional reforms to prepare for enlargement and to improve the management and clarify the goals of the new policies launched in the Maastricht Treaty.

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On January 1, 1995, the membership of the EU expanded to fifteen, with the accession of Austria, Finland, and Sweden. This was a mere prelude to the more extensive enlargement that had been placed on the agenda following the collapse of communism in Central and Eastern Europe in 1989–1990. The leaders of these newly democratic countries pressed for admission to the EU and NATO. Many in Western Europe had doubts about the feasibility of absorbing a relatively poor region with over a hundred million inhabitants, but EU leaders soon concluded that they had little choice but to welcome these new democracies into the fold (Schimmelfennig and Sedelmeier 2005). At the June 1993 Copenhagen summit, the European Council agreed that these countries could become members provided they met certain criteria with regard to democracy and the rule of law and the reform of their economies. Ten countries in the region, along with the Mediterranean island states of Cyprus and Malta, were accepted as candidates for membership. Preparations for the euro went forward with the start of stage two of EMU. Many economists were skeptical that more than a few countries would meet the convergence criteria stipulated in the Maastricht Treaty. The most difficult of these criteria was the one concerning budget deficits, which was set at 3 percent or below of GDP. At the beginning of stage two, only three countries—Germany, Ireland, and Luxembourg— fulfilled this condition. Over the course of the next several years, however, most member states did better than expected in converging toward the standard. By 1997—the year on which the European Council was to base its decisions regarding participation in stage three—every member state except Greece had met the deficit criterion. The euro was introduced as scheduled on January 1, 1999, with eleven EU members (all but the United Kingdom, Denmark, Sweden, and Greece) adopting the common currency and forming their own grouping of economic and financial ministers to coordinate euro-related policy matters. The technical switchover to the euro over the long New Year’s holiday went surprisingly well, without computer crashes or increased volatility in financial markets. Euro notes and coins came into circulation in January 2002, successfully completing the transition to EMU and giving the EU the most tangible proof to date of its ability to accomplish ambitious, long-term goals. With generous financial assistance from the EU, the candidate countries made progress on meeting the so-called Copenhagen criteria for admission to the Union. Negotiations on a treaty of accession with six leading candidate countries began in March 1998. At Helsinki in December 1999, the European Council declared that another six candidate countries were ready to begin accession negotiations. On May 1, 2004, ten new member states—the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia—were admitted to the EU. Bulgaria and Romania were making slower progress in meeting the criteria for membership, and their accession was put off to 2007. In 1996, the member states convened another IGC, which resulted in the conclusion of the Treaty of Amsterdam, signed in that city in June 1997. The treaty strengthened CFSP by creating the new post of High Representative for CFSP (in effect, an EU foreign minister) and by introducing the mechanism of “common strategies” toward non-EU countries and regions. It also tightened EU cooperation in third-pillar mat-

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ters such as immigration and asylum policies, largely through a phased shift of these responsibilities from the third to the first pillar, and by proclaiming the establishment of an EU Area of Freedom, Security and Justice (AFSJ). The powers of the EP were expanded with the extension of co-decision to new policy areas. What Amsterdam did not do, however, was resolve the question of how the institutions would function in a much-expanded Union. Preoccupied with preparations for the euro and other matters, the member states kicked this can down the road. This decision to put off reforming the institutions necessitated the convening of yet another IGC in early 2000, the fourth to take place in a decade. The overriding need was to ensure that an organization with an institutional setup originally designed for six relatively homogeneous members could function with a more diverse membership of twenty-five or more members. It was necessary to decide the relative weight—in terms of votes in the Council of Ministers, representatives in the EP, and so forth—of each member state in the enlarged union. These matters were resolved with the signing in December 2000 of the Treaty of Nice. The Nice Treaty was in many ways an unsatisfactory agreement. The member states were bitterly divided over such issues as the relative power of large versus small states in an enlarged Union and had been forced to adopt certain complex compromises, notably a new “triple majority” system under which decisions by the Council would require (as in the past) a qualified majority of votes based on the relative weightings of the member countries, but also support by an absolute majority of member states and by countries representing at least 62 percent of the total EU population. This was hardly the simplification and streamlining of decision making that many European commentators thought was essential. However, by resolving all the questions relating to the size and composition of the institutions, Nice cleared the way for the “big bang” enlargement of 2004–2007.

The Twenty-First Century: Triumph, Crisis, Recovery As the EU marked the fiftieth anniversary of the integration process begun in the early 1950s by Monnet and Schuman, it could point to an impressive record of achievement. The basic trajectory was clear: from coal and steel to common market, from common market to single market, and from single market to EMU and political union. Political union was, of course, something of an exaggeration, as the EU in fact contained only elements of such a Union and fell far short of a full-fledged federal state—a United States of Europe—such as some in Europe advocated and which Monnet saw as the endpoint of the integration process. Nor did success mean a lack of crises and setbacks, of which there had been many. In 1965, de Gaulle was so incensed at the prospective transfer of powers to Brussels that he temporarily suspended France’s participation in the Council of Ministers. In the early 1980s, UK Prime Minister Margaret Thatcher had paralyzed decision

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making while she demanded a rebate from the EU budget. In 1992, the Treaty of Maastricht was voted down in a national referendum in Denmark, and in 2001, the Treaty of Nice had been rejected by voters in Ireland. There also had been periods of stagnation that saw little visible movement toward the “ever closer union” proclaimed in the Treaty of Rome. However, there had been no movement backward: no loss of members, no breakdown of institutions, and no return of policy responsibilities from the Union to the member states. The record was one of steady if at times slow advancement. Even in this period of relative optimism, however, there were unresolved issues that in retrospect can be seen to have been harbingers of crisis in the next decade. One set of issues concerned reform of the institutions and the EU’s so-called democratic deficit. As has been seen, the Union had been engaged since 1990 in an almost continuous process of reform that had produced three successive treaties. These treaties established new and reformed existing institutions. They also aimed to increase citizen participation in and support for the Union. In both respects, the results were mixed. European leaders were less than thrilled with the institutional and decision-making procedures that came out of Nice, and there was continued concern about the level of popular support for European integration. As the Union gained extensive new powers in an ever-wider array of policy areas, political and opinion leaders in Europe worried that it was insufficiently subject to democratic control and accountability to citizens and their representatives. Power was shifting from national parliaments to the EU level, without democratic controls being replicated at or transferred to that level. The increased power of the EP was intended to address this problem, but limited turnout in EP elections and the fact that electorates mainly still voted along national lines rather than on genuinely European issues raised doubts about its effectiveness as an instrument of democratic control. Others argued that the problem of the democratic deficit was exaggerated. One leading scholar claimed that it, in fact, no longer existed—that the Union had arrived at a constitutional settlement in which the level of democratic control had reached or exceeded that in individual member states. European integration in this view benefited from a “permissive consensus” in which voters were not necessarily heavily engaged in EU affairs but, rather, passively supported integration and trusted their national governments to pursue their interests at the European level (Moravcsik 2007). This was not, however, the view of leading political figures in Europe. In 2002 the EU embarked on yet one more ambitious effort at reform: the convening of a Convention on the Future of Europe that was to draft an EU constitution. The idea was to break the cycle of incremental reform that had been underway since 1990 by producing an authoritative document that would get institutional reform done “once and for all”—much as the founding fathers of the United States had done at Philadelphia in 1787 by drawing up the US Constitution. European leaders hoped that the convention would engage the interest of the public, kindling enthusiasm for the European project and putting to rest concerns about a democratic deficit.

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The attempt was a disaster. The convention drew up an impressive document that the EU governments reworked in yet another IGC and adopted as their own. However, in national referendums in the spring of 2005, voters in France and the Netherlands rejected the constitution by substantial margins, effectively killing off the effort. The rejection came as a shock to political leaders across the continent. It reflected the degree to which public perceptions of the European project had diverged from the views of the pro-integration elites. Whereas elites saw a larger and more cohesive EU as the key to enhancing Europe’s role in the world and to solving the economic and political challenges raised by globalization, the people in many countries were no longer so sure about the benefits that integration offered to the average citizen. Following the earlier votes against EU treaties in Denmark and Ireland, these votes were indicative of a growing disaffection with integration in parts of the electorate that would become more pronounced in the next decade. A second set of issues concerned the effectiveness and durability of the ambitious new policies launched over the course of the preceding ten to fifteen years. Because these policies often involved compromises among member states that differed in how far they wanted to go in transferring responsibilities to the Union level, they were uneven, characterized by different levels of integration in closely related areas. The monetary and financial sides of EMU, for example, differed in their levels of Europeanization. Euro-zone monetary policy was uniform and administered by a single, quasi-federal institution, the ECB, whereas economic policy involved a much looser set of arrangements in which the governments of the member states took the lead. The EU was not a true economic union, a factor later seen as a major contributor to the euro-zone crisis that started in 2008–2009. Much the same applied with regard to the AFSJ, where the crossing of borders within the Schengen Area was a right uniformly guaranteed by the EU, whereas the policing of external borders and the movement of people into the Schengen Area was almost exclusively the responsibility of the individual member states. As in the case of EMU, this unevenness contributed to the migration crisis of 2015–2016. Some scholars noted that EU policies were launched in the relatively benign economic and geopolitical conditions of the 1990s and early 2000s, designed for fair weather. Whether they would stand up under more difficult conditions—a major global recession or a return of Cold War–type international tensions—was unclear. Other policies were simply too ambitious. In March 2000, for example, the European Council had adopted a strategy to make the EU “the most competitive and dynamic knowledge-based economy in the world” by the year 2010 (European Council 2000). There was no chance of this grandiose objective being met, and by the end of the decade, it was abandoned for a more realistic set of goals. Similarly, in 2003, the EU adopted its Neighborhood Policy, aimed at developing a “zone of prosperity and a friendly neighborhood—a ‘ring of friends’—with whom the EU enjoys close, peaceful and co-operative relations” (European Commission 2003). By the next decade, “the ring of friends” had become a ring of wars, with conflicts raging in Libya, Syria, and Ukraine. Certain events—the financial crash that began on Wall Street in 2007–2008 and the destabilizing Arab Spring that erupted in the Middle East in 2011—were out-

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side the control of the Union. But the setting of overly ambitious objectives and the resulting loss of faith in the Union’s ability to deliver on these objectives were things that the EU could have kept in check. At the dawn of the twenty-first century, however, such concerns were still mostly in the future. The first decade of the new century ended on something of a high point, with the entry into force on December 1, 2009, of the Treaty of Lisbon. Following the defeat by the voters of France and the Netherlands, the member states abandoned plans to adopt an EU constitution. Instead, they took the less controversial path of making incremental changes to the existing treaties while preserving the institutional changes that had been agreed in the constitutional treaty. The new treaty—called the Lisbon Treaty—avoided the inflammatory word “constitution,” which had angered Euro-skeptics worried about the centralization of power in Brussels, and it eliminated other provisions that suggested an ambition to transform the EU into a European superstate. Plans to relabel the “CFSP High Representative” as the “EU Foreign Minister” were dropped, as was a controversial article titled “The Symbols of the Union,” which had designated an EU flag, anthem, motto, and holiday, all traditional trappings of the nation-state. The Lisbon Treaty is actually two treaties, the Treaty on European Union, a muchamended version of the original TEU signed at Maastricht, and the Treaty on the Functioning of the European Union, essentially an even more extensively amended version of the original Treaty of Rome. These treaties are in force today. Running to about four hundred pages, they are, in effect, the EU’s constitution. They retain much of the substance of the document voted down in 2005, especially many provisions relating to the functioning of the institutions. The Nice triple majority system has been replaced by a much simpler mechanism. Successful votes in the Council now require the support of at least 55 percent of the member states representing 65 percent of the EU’s population. This means that in the post-Brexit EU of twenty-seven member states, fifteen member states accounting for a combined population of around 290 million people are needed to pass a proposal. Alone, the 65 percent population requirement would mean that the five largest states (Germany, France, Italy, Spain, and Poland) could outvote the other twenty-two members. Conversely, the 55 percent member state requirement alone would mean that thirteen small states accounting for less than 10 percent of the EU’s population could prevail against the wishes of governments representing the majority of the Union’s population. Separately the criteria make no sense, but together they preserve the kind of balance that tends to be observed in federal and quasi-federal political systems—that of respect for both the “one person-one vote” principle based on population and the autonomous political units that make up the federation. The Lisbon Treaty further expanded the powers of the EP. Co-decision, now renamed the “ordinary legislative procedure,” has been extended to almost all legislation except that relating to CFSP and a few other sensitive matters such as taxation and social policy, all but transforming the Union legislature into a genuinely bicameral system, with the EP and the Council constituting two equal chambers. Other reforms included provisions for greater involvement by national parliaments in EU affairs and

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the establishment of a new post, that of a permanent president of the European Council, to be elected to a two-and-a-half-year term.

The Crisis Decade The high point represented by the Lisbon Treaty did not last. Starting in the late 2000s, the EU was hit by a series of internal and external crises that it is still working to overcome, even as it deals with the aftermath of the coronavirus pandemic. First was the crisis of the euro zone, which began in March 2008 when it was revealed that Greece, which had adopted the euro as its currency in 2001, had been systematically falsifying its economic statistics for years, was more deeply indebted than international bankers had been led to believe, and was in grave danger of defaulting on its debts. Ireland had been experiencing financial turmoil since 2007, the result of risky lending by Irish banks. Conditions worsened in 2008, as fallout from the US financial crisis spread to Europe. The euro-zone crisis soon became what the writer Timothy Garton Ash (2012, 3) called “an existential crisis of the whole post-1945 project of European unification.” Financial turmoil soon spread to Spain, Portugal, and Cyprus. The exit of Greece (“Grexit”) and possibly other countries from the euro-zone was widely discussed at the time, raising fears that the euro and the entire EMU project might collapse. Assistance from the ECB, the International Monetary Fund, and the other euro-zone countries ultimately enabled these countries to avoid default and to remain in the euro zone, but the crisis severely dampened growth, caused widespread economic hardship, and raised questions about the durability of what had been the EU’s most ambitious achievement to date. The second crisis began in February 2014, as reports surfaced in the media about “little green men”—Russian-speaking soldiers in uniform but without insignia—taking up strategic positions in the Ukrainian region of Crimea. Moscow initially denied involvement, but it soon became apparent that Russia had seized the peninsula. Moscow also instigated a proxy war in eastern Ukraine to weaken the government in Kyiv and possibly, it was feared, as a prelude to further seizures of Ukrainian territory. For the EU, the crisis went beyond the annexation of a relatively small piece of territory from a neighboring country that was not even an EU member. Nothing as blatant as the outright seizure of a chunk of another country’s territory had occurred in Europe since the end of the Cold War, indeed, since the end of World War II. Russia’s actions posed a grave threat to a European security order that political leaders and foreign policy experts had assumed was stable. The third crisis was the refugee crisis. Migration pressures had been building along the EU’s southern periphery for years, driven by unrest in the Middle East, the civil war that began in Syria in 2011, and poverty and civil strife in countries in sub-Saharan Africa. In the peak year of 2015, more than a million migrants and asylum seekers arrived in Europe. In August 2015, Chancellor Merkel, acting out of humanitarian impulses, announced that all Syrian asylum seekers that were in Germany could apply for asylum there and would not be returned (as stipulated under EU regulations) to the country where they had first entered the EU. Merkel then began working with French President François Hollande on a

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proposal for a system whereby the refugees would be distributed throughout Europe under a quota system devised by the European Commission. Merkel’s uncharacteristically impulsive decisions were extremely unpopular in other European countries and cost her political support in Germany as well. As the EU tried to implement a policy of distributing asylum seekers around the Union, most states refused to accept people that Merkel had agreed, with very limited consultation with her EU partners, to be let into the Union. The fourth major crisis to hit the EU was Brexit, the vote by the British electorate in a national referendum of June 23, 2016, for the United Kingdom to exit the Union. The other twenty-seven EU member states quickly reaffirmed their commitment to the Union and to further integration, but there was no disguising the magnitude of the blow the EU had suffered. Since 1973, twenty-two countries had joined the Union, but no country had ever left. The EU now was losing a member, and not just any member. The UK had the second-largest economy in the Union after Germany and was its most formidable military power. Another crisis, closely related to Brexit, was the rise of populist, anti-EU parties in many countries or what some scholars have called the “illiberalism crisis” (Rupnik 2016). Skepticism about the EU had been growing in parts of the European electorate for the last quarter century and had been seen in referendums in Denmark, Ireland, France, and the Netherlands, in which voters had rejected treaties intended to increase the powers of the Union, as well as in the rise of the UK Independence Party that had spearheaded the drive for Brexit. Anti-EU sentiment was now a factor in virtually all countries of the EU, fueled by opposition to EU policies on immigration and the euro. Populism reached a high point in the 2014 elections to the EP, in which Euro-skeptic parties won nearly 30 percent of the seats. Coming in rapid succession, these crises threatened to overwhelm the EU. Supporters and critics of the EU alike began to speculate about the failure of the Union and its possible breakup. Scholars used terms such as “polycrisis,” “age of crisis,” and crisis as the “new normal” to analyze what was happening. In his After Europe, the Bulgarian scholar Ivan Krastev identified 2017 as the peak year of the crisis decade, the moment “when what was until now unthinkable—the disintegration of the union— begins to be perceived as inevitable” (Krastev 2017, emphasis in original). In the end, however, the direst of outcomes failed to materialize. The EU stabilized, showing a certain resiliency that its critics and even some of its strongest supporters thought it did not possess. Chiefly under the leadership of the European Council, but with the support of the Union’s supranational institutions, the Commission in particular, the Union improvised responses to all of these crises. It took the better part of a decade, but the euro-zone crisis gradually was surmounted. The single currency did not collapse, and no country abandoned the euro. Russia remained in possession of Crimea, and a low-grade conflict continued in eastern Ukraine, but the EU maintained a tough and unified stance toward Russia, imposing political and economic sanctions intended to deter additional Russian land grabs. As became clear with the second and much larger Russian invasion of Ukraine in early 2022, the threat of Western sanctions proved insufficient in the long run to deter Putin from another attack. But this was not apparent at the time. In 2014, the EU stepped up its cooperation with Ukraine, notably by conclusion of a Deep and Comprehensive Free Trade

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Agreement, while European countries led by France and Germany sought to find a negotiated end to the proxy conflict in eastern Ukraine. The flow of refugees from the Middle East and North Africa into Europe largely ceased, owing to an agreement with Turkey regarding the management of its borders with Syria and to stepped-up enforcement in the Mediterranean aided by a new European Border and Coast Guard Agency. Brexit remained a loss for the EU, but its fallout was contained. No other member state followed the UK’s lead in leaving the Union. Not least, national and European elections suggested that the wave of anti-EU populism may have peaked. In the EP elections of May 2019, about two-thirds of all seats were won by pro-EU parties, ensuring that the anti-Union parties of the Right and the Left would be too small to paralyze the Union by blocking all legislation, as many had feared would happen before the elections.

Recovery The election of Donald J. Trump to the presidency of the United States in November 2016 delivered another shock to the EU and was in some respects yet another crisis. The Dutch historian and political philosopher Luuk van Middelaar, an adviser to then European Council President Herman Van Rompuy, lumped Brexit and the Trump election together into what he called “the Atlantic crisis” (van Middelaar 2019). Trump was the first American president to be overtly hostile to the EU. He believed the Union had taken advantage of the United States through unfair trade deals and an undervalued currency. He charged that European countries were not paying their fair share for defense in NATO. He shocked European leaders by threatening to impose massive tariffs on imports from Europe and to abrogate the US commitment under the NATO treaty to come to Europe’s defense in the event of external attack. He welcomed the UK’s impending exit from the EU and suggested that other countries follow its lead. The Trump phenomenon cut two ways, however. Along with Brexit, Trump’s rhetoric encouraged EU leaders to close ranks and draw up new goals for the future. As van Middelaar observed, the Union learned much from its “Brexit-&Trump moment of truth. . . . [I]t displayed a peculiar combination of frailty and firmness, resentment and determination, panic and bravura—signs of a new will to live. It is showing a new awareness of the need to protect itself and its citizens” (van Middelaar 2019, 136). At a series of summits in Malta, Italy, Romania, and Brussels, EU leaders reaffirmed their support for the Union, set ambitious new goals, and settled on a unified line to take with the UK, one intended to make it pay an economic price for leaving the Union, thereby deterring other states from following the Brexit lead. As the difficult decade neared its close, some of the old optimism about the Union came back. Already in his State of the Union speech in 2017, Commission President Jean Claude Juncker declared, perhaps a bit prematurely, that the “wind is back in Europe’s sails.” Following the 2019 elections to the EP, new leadership took over the EU institutions, including Ursula von der Leyen, a former German

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defense minister who became the first woman to head the European Commission, and Christine Lagarde, the first woman to head the ECB. With support from the European Council, the new team set out to complete the recovery from the crises of the previous decade and reinvigorate itself by launching an ambitious new policy agenda. Under the motto “A Union that strives for more,” von der Leyen put forward a long list of initiatives that she hoped to accomplish during her 2019–2024 term. The EU would implement a Green Deal aimed at making Europe the first climate-neutral continent by 2050. It would revitalize Europe’s economy by deepening economic and monetary union, implementing a new industrial policy, creating a new digital economy, and becoming a global leader in emerging technologies such as artificial intelligence. It would implement the European Pillar of Social Rights to achieve “equality for all and equality in all of its senses.” It would bolster its position as an international actor by taking in new members in the Western Balkans, creating a genuine European Defense Union, and forming a new partnership with Africa. It would assert Europe’s economic and technological sovereignty, enabling the EU to compete with China and the United States in what some commentators had begun to characterize as a “G3” world (see, e.g., Khanna and Leonard 2011).

The Pandemic and Its Aftermath How von der Leyen and her fellow leaders would have done in meeting these ambitious objectives under “normal” circumstances will never be known, as the EU, like the rest of the world, soon was plunged into the coronavirus crisis. As noted, the EU’s response to the pandemic included loans from the European Investment Bank and the European Stability Mechanism, short-term aid from the EU budget, the temporary suspension of rules on state aids, an EU-level program to procure vaccines, and, most significantly, Next Generation EU. The agreement by the European Council in July 2020 to establish Next Generation EU did not mean that everything was clear sailing. It took months of debate in the European Parliament and among the member states before the legislation enacting the plan was passed. A key sticking point was whether the European Commission would have the power to withhold funds from member states judged to be in violation of EU norms. Hungary and Poland, which were already subject to legal action for infringement of certain EU rules, insisted that such conditionality was inadmissible under EU law. The European Parliament and the other member states argued that strict conditions regarding rule of law and respect for the rights of citizens had to apply, as it was unreasonable to expect the Union to fund governments that were flaunting EU values. A compromise was worked out that left somewhat ambiguous whether aid could or could not be withheld, but in February 2022, the Court of Justice of the European Union ruled that the EU might withhold the disbursement of funds to a member state if it was in violation of the rule of law. This mechanism was not immediately used, however. In the meantime, the member states submitted for approval by the Commis-

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sion detailed national plans for how they intended to use the Next Generation funds. The first disbursement of funds to the member states was made in December 2021. By this point it was clear that, contrary to what many expected two years earlier, the pandemic had on balance strengthened the EU and reinforced its will to collective action. This was most apparent in the Next Generation EU plan, under which the EU was authorized to borrow €750 billion that would be used to provide loans and grants to member states. The Union itself would be responsible for repaying the loans. This was an unprecedented step toward the fiscal federalism that EMU had always lacked and that was part of the uneven policy environment that had caused the euro crisis of the 2010s. The Union also took on new responsibilities in health policy—for example, by procuring vaccines and funding new research programs on the coronavirus and related diseases. As had been the case in the early stages of the coronavirus pandemic, the Ukraine crisis in 2021 and early 2022 once again gave rise to fears that the EU might be paralyzed by divisions and unable to react. The member states had different outlooks and interests with regard to Russia. Poland and the Baltic states were the most sympathetic to Ukraine and saw themselves as potentially next on Putin’s list of targets. They wanted the EU to take a hard line in response to Russian aggression. Other member states, including Germany, were seen as favoring a less forceful response, both because they depended on Russia for energy supplies and because their companies had extensive investments and export markets in Russia. Germany intended to go ahead with its Nord Stream 2 pipeline, even though it would increase Germany’s gas dependence on Russia. In a few EU countries (especially Orbán’s Hungary), governments harbored pro-Russian sentiments. Such sentiments were held to varying degrees by Far Left and Far Right parties in virtually all member states. In the end, however, the scale and brutality of the Russian invasion served to unify the EU around a forceful response. The EU joined the United States and other countries in imposing strong sanctions, including the cutting off of certain Russian banks from the SWIFT network that manages interbank transactions. Germany announced that it was suspending work on Nord Stream 2 and that it would dramatically increase its defense budget. These initial steps were followed by the European Council’s adoption at Versailles of a new set of goals in response to the invasion. EU support for Ukraine was for the most part maintained as the war dragged on into 2023, despite differences of interest and outlook among the member states and the mounting costs to Europe of the war (more expensive energy, lost trade with Russia, direct financial and in-kind aid to Ukraine, etc.). The EU maintained a tough sanctions regime against Russia, switched to new sources of energy from different parts of the world, and, along with the United States and the UK, provided substantial economic and military aid to the embattled regime in Kyiv. Most importantly, in June 2022, the European Council granted Ukraine (along with Moldova) EU candidate country status. For the time being, however, this was mainly a symbolic and morale-building step, as it will be many years, if ever, before Ukraine is ready to join the Union. The EU’s responses to both the pandemic and the Russian invasion do not mean that the Union is not facing serious challenges. The experience of the pandemic, in

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particular, pointed to a number of unresolved issues and underlying problems left over from the previous decade. These include the north-south and west-east regional divides and the continued unevenness of the policy environment. During the euro-zone crisis of the 2010s, the countries of northern Europe were forced to bail out the more indebted south in order to save the euro. The tabloid press of the north painted a picture of indolent Greeks retiring early on generous pensions funded by the hardworking taxpayers of the north, while the Greeks and others, suffering real economic misery, accused the north of lacking solidarity and imposing conditions that made economic recovery all but impossible. The pandemic threatened to reignite the policy controversies and bitter feelings of the previous decade. When the virus hit Italy and Spain especially hard, leaders in these countries demanded greater solidarity from the north in the form of grants or loans backed by the EU as a whole rather than loans that would be piled onto the mountains of debt these countries already owed. Politicians in the north questioned why governments in the south were not better prepared for challenging times and resisted turning the EU into what the Germans rejected as a “transfer union.” The north-south split was complicated by the east-west divide. For more than a decade Poland and especially Hungary had been drifting toward authoritarian norms. Although hit less hard by the virus, the countries of Central and Eastern Europe were still, on a per capita basis, less well off than countries such as Italy and Spain. They resisted moves to transfer EU funds from the east to the south or to have their taxpayers underwrite loans or grants for the Mediterranean countries. For their part, the net payers into the EU budget from northern Europe increasingly questioned why they should allocate funds to countries in the east that spurned EU values and law. The North-South and East-West divides were readily apparent in the negotiations over Next Generation EU and its implementation. The crisis also pointed up the persisting unevenness of the policy environment. The euro-zone countries had made progress during the crisis of the 2010s in creating stronger and more uniform policies to manage EMU—for example, by erecting new legal safeguards against deficit spending and by establishing EU agencies to regulate banks and other financial institutions, but economic conditions still differed widely among the member states. This became especially apparent as governments began bailing out their economies in the spring of 2020. While Germany accounted for about 25 percent of EU GDP, with its robust financial health and ability to borrow, it soon accounted for more than 50 percent of the aid provided by member state governments to their own firms, a disparity that threatened to widen still further the economic divides in the Union. Scholars have developed a variety of theoretical perspectives that are used to understand European integration and to predict the future evolution of the Union— including how these various intra-Union divides might over time be resolved. These theoretical approaches—intergovernmentalism, neofunctionalism, liberal internationalism, constructivism, institutionalism, neorealism, and others—contribute in different ways to understanding the Union; none has a monopoly on insight. Fundamentally, however, these theories all grapple with the same issue, namely, whether

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European integration is essentially an intergovernmental process—that is, a particularly complex form of bargaining among nation-states that has resulted in a certain delegation of powers to supranational institutions but in which, in the final analysis, those states call the shots (and could even withdraw from those institutions, as Brexit had shown)—or whether integration is a process by which supranational institutions take on a life of their own, one that increasingly shapes how governments acted and interact with each other. Europe’s responses to the pandemic crisis provide evidence for both theoretical perspectives. Initial actions—the closing of borders, the hoarding and emergency procurement of supplies, and the emergency economic measures—were largely national and seemed to confirm the intergovernmentalist view that the nation-state remained the decisive actor, the place where citizens looked for help in an emergency. To the degree that the EU did act, it did so based on intergovernmental bargaining, most notably in late May, when Merkel of Germany and Macron of France worked out an agreement on a joint proposal for €500 billion in EU grants to member states hit by the virus. This became the basis for the Next Generation EU plan, which combined this level of grant aid with an additional €250 billion in loans proposed by the European Commission. There was also, however, evidence to support the view that the EU was continuing to evolve into a more supranational entity—not quite a federation but a good deal more than a confederation or a traditional international organization— in which the nation-states were being irrevocably combined into something new. Some in Europe argued that to survive, the EU must move toward a more federal model—to become a “more perfect union” on the model of the United States with its Constitution of 1787. Such was the argument of former Belgian Prime Minister Guy Verhofstadt, leader of the Alliance of Liberals and Democrats for Europe in the EP from 2009 to 2019, in his book Europe’s Last Chance (Verhofstadt 2017). At the other end of the spectrum were a variety of populists and Euro-skeptics who argued that the EU should move decisively in the other direction by devolving powers to the member states, abandoning the euro, and dropping the aspirations to political union embodied in the TEU. At least in the medium term, it does not seem likely that either of these extremes will prevail. A more likely outcome is that the EU will continue to tread a path between these extremes. Most experts and political leaders agree that the EU is not moving toward a United States of Europe, but this does not mean, Brexit notwithstanding, that it is in danger of fragmenting into little more than a collection of nation-states. In the crises of the 2010s and again in the coronavirus crisis of 2020, European leaders had managed to improvise responses that involved a mix of intergovernmental cooperation and action by the Union’s central institutions, often in innovative ways. Much the same was true in the Ukraine crisis, which involved a great deal of intergovernmental bargaining among the member states in the EU context and independent actions by member states (e.g., the German decision to increase defense expenditures) but also some notable increases in the Union’s ability to take actions through its supranational institutions—for example, the adoption of legally binding sanctions at

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the EU level, provision of aid to Ukraine from the Union’s European Peace Facility, and, at least potentially, new borrowing such as was used in Next Generation EU to support postwar relief and reconstruction efforts. Although easy to dismiss as “muddling through,” for the moment, the mix of intergovernmental bargaining and selective strengthening of the Union’s central institutions seems to promise greater success and fewer risks than any of the alternatives on offer. It is thus the one most likely to prevail as Europe’s citizens, governments, and the EU itself move into a more uncertain era.

Suggested Reading Dinan, Desmond. Europe Recast: A History of the European Union. 2nd ed. Boulder, CO: Lynne Rienner, 2014. Gilbert, Mark. European Integration: A Concise History. Lanham, MD: Rowman & Littlefield, 2012. Monnet, Jean. Memoirs. Garden City, NY: Doubleday, 1978. Van Middelaar, Luuk. The Passage to Europe: How a Continent Became a Union. New Haven, CT: Yale University Press, 2013. Van Middelaar, Luuk. Alarums and Excursions: Improving Politics on the European Stage. London: Agenda Publishing, 2019. Van Oudenaren, John. Crisis and Renewal: An Introduction to the European Union. Lanham, MD: Rowman & Littlefield, 2022.

References European Commission. 2003. “Communication from the Commission: Wider Europe— Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours.” COM(2003) 104 final, March 11, 2003. European Council. 2000. “Presidency Conclusions: Lisbon European Council, 23 and 24 March 2000.” European Council. 2022. “Informal Meeting of the Heads of State or Government, Versailles, 10–11 March 2022.” Garton Ash, Timothy. 2012. “The Crisis of Europe.” Foreign Affairs 91 (5): 2–15. Khanna, Parag, and Mark Leonard. 2011. “Why China Wants a G-3 World.” New York Times, September 7, 2011. Krastev, Ivan. 2017. After Europe. Philadelphia: University of Pennsylvania Press. Massari, Maurizio. 2020. “Italian Ambassador to EU: ‘Italy needs Europe’s help.’” Politico, March 10, 2020. Moravcsik, Andrew. 2007. “The European Constitutional Settlement.” In Making History: European Integration and Institutional Change at Fifty, edited by Sophie Meunier and Kathleen R. McNamara, 23–50. New York: Oxford University Press. Rupnik, Jacques. 2016. “The Specter Haunting Europe: Surging Illiberalism in the East.” Journal of Democracy 27 (4): 77–87.

3 0 0    J ohn V an O udenaren Schimmelfennig, Frank, and Ulrich Sedelmeier. 2005. The Europeanization of Central and Eastern Europe. Ithaca, NY: Cornell University Press. Van Middelaar, Luuk. 2019. Alarums and Excursions: Improving Politics on the European Stage. New York: Agenda. Verhofstadt, Guy. 2017. Europe’s Last Chance: Why the European States Must Form a More Perfect Union. New York: Basic Books. Walker, Marcus. 2022. “War Presents Touch Choices for Europe.” Wall Street Journal, March 17, 2022.

CHAPTER 11

Economic Governance Michele Chang

This contribution on EU economic governance considers the difficulty of managing interdependence in a globalized economy. It first looks at the euro area comprising twenty member states of the European Union. The euro-area governance system developed in the 1993 Treaty on European Union proved insufficient as the 2008 global financial crisis reached Europe and was followed quickly by the euro crisis exposing numerous weaknesses that threatened the collapse of the single currency. Numerous reforms enacted between 2010 and 2015 solidified the euro area’s architecture (see figure 11.1). Nevertheless, much remains to be done. The subsequent section deals with the EU single market, particularly in relation to financial integration and state aid. The next section considers the primary economic response to the COVID-19 pandemic: the Next Generation EU budget, which simultaneously enacted some of the measures the EU was reluctant to adopt during the euro crisis while blurring the lines between countries in and out of the euro area. The final section concludes.

Establishing the Euro The single currency launched on January 1, 1999, with eleven of the fifteen EU member states, with the understanding that Greece would join two years later. Successive enlargements brought the total euro area countries to twenty of the twenty-seven EU member states, as seen in figure 11.2. The 1993 Treaty on European Union, also known as the Maastricht Treaty, created a single currency among the participants that had a single monetary policy but retained different national fiscal policies. Moreover, national supervisors and regulators governed the respective European financial systems, a situation that one famous work referred to as a “battle of the systems” (Story and Walter 1997). The Economic and Monetary Union (EMU) therefore had a very centralized “monetary” component in the European Central Bank (ECB), which set monetary policy for the entire euro area. In contrast to ideas found in the economics literature, the euro area possessed neither the level economic integration nor the institutional capacity to be considered 301

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Figure 11.1  Timeline for Macroeconomic Governance Reform

an optimum currency area. Instead of developing instruments for risk sharing, like greater financial integration or a fiscal capacity that could perform a stabilization function to make EMU more robust, EMU’s institutional architecture relied on ordoliberal principles that prized price stability and fiscal rectitude. One can therefore imagine EMU as an edifice with four pillars with varying degrees of centralization: monetary, financial, fiscal, and economic. Whereas the monetary pillar could be considered supranational, the other pillars relied on cooperation between national authorities. German economic orthodoxy along with concerns over moral hazard minimized the possibility of risk sharing among EMU participants. This was underlined by: the Maastricht Treaty’s convergence criteria on interest rates, inflation rates, government debt and deficit levels, and exchange rate stability to ensure adequate convergence prior to adopting the euro; the no-bailout clause (Article 125 TFEU) that prohibited the EU and its member states from assuming the liabilities and commitments of an EU member state; and the provision against monetary financing (Article 123) forbidding the ECB from using its monetary policy instruments to finance public authorities. EU member states that aspired to be part of the euro area were asked to comply with a set of convergence criteria that hopefully would ensure that participants’ economic conditions would not have negative spillover effects on

Figure 11.2  Expansion of Euro-Area Membership beyond the Original Twelve (including Greece)

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the rest of the euro area. High inflation levels, for example, could require the ECB to raise interest rates, or ballooning debt levels could increase pressure for a bailout from its partners. The no-bailout clause, a prohibition against monetary financing, and the convergence criteria were designed to ensure member states would keep their own house in order and therefore not require external assistance. Whereas countries like Germany would benefit from price stability and greater exchange rate stability that would boost the competitiveness of exports on international markets, France and countries in the south and periphery of Europe would enjoy enhanced market credibility and access to credit. There was also the assumption that euro area membership would lead to greater economic convergence between countries in the core (like Germany, the Netherlands, Austria, and Belgium) and those in the periphery. The financial pillar was part of the single market, and until the introduction of the banking union, its governance was not considered as a cause for concern for the euro area in particular. Member states retained most responsibility for financial regulation and supervision but cooperated in the framework of the Lamfalussy process, named after the Belgian economist and central banker Alexandre Lamfalussy, who chaired the committee responsible for its development. In addition to the regular legislative procedure of a Commission proposal followed by the European Parliament and relevant Council of the European Union, the Lamfalussy process also involves national regulators and supervisors in developing financial legislation. The origins of fiscal policy cooperation come from the Maastricht Treaty’s convergence criterion on deficit levels. The German government proposed a Stability Pact that would enshrine the Maastricht Treaty’s target of governments not exceeding the recommended government deficit target of 3 percent of gross domestic product (GDP) or facing sanctions. The rationale behind such limits rests on the possibility of spillover in a monetary union—if one country ran unsustainable deficits, this could negatively impact the credibility (and therefore interest rates) of the euro area as a whole. Moreover, it could trigger the expectation that an insolvent country would be bailed out, despite the no-bailout clause. The EU member states finally agreed to the creation of the Stability and Growth Pact (SGP), though no provisions were made to stimulate growth. Fiscal policy remained a national competence, so governments retained sovereignty over the content of its spending, and no common budget emerged. In 2003, the SGP’s reforms actually loosened some of the restrictions on member states’ fiscal policy in an effort to improve a system plagued by a lack of “credibility and ownership” (European Commission 2004). Indeed, the inability of France and Germany to abide by SGP’s rules in 2003 and the lack of consequences for either led to criticism of the SGP’s effectiveness and politicization in that it was seemingly unable to hold larger member states to account. Economic policy cooperation became a concern with the introduction of the euro, but it also remained a national competence. The EU developed a system of monitoring EU member states and issuing recommendations under the framework of the Broad Economic Policy Guidelines and the Lisbon Strategy. Unlike the SGP, which was based on hard law and had the possibility of sanctions, economic policy coordination rested on soft law and the open method of coordination in which benchmarks are established, countries discuss best practices, and those deviating could be “named and shamed.” No sanctions were envisioned, however.

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From the Global Financial Crisis to the Euro Crisis The euro enjoyed a rather uneventful first decade. The ECB, one of the most independent central banks in the world, largely fulfilled its objective of price stability in the euro area. In line with Germany’s ordoliberal interests, the Maastricht Treaty unequivocally established the primacy of the pursuit of price stability for the ECB. Other possible functions enjoyed by central banks such as financial supervision or lender of last resort were not delegated to the ECB. Although cross-border financial transactions rapidly grew during EMU’s first decade, supervision remained national and EU-level regulation limited. The SGP that was intended to enshrine the fiscal discipline demanded by the Maastricht Treaty convergence criteria did not have the expected effect of improving the fiscal sustainability of EU member states. Even Germany breached the SGP rules against fiscal deficits not exceeding 3 percent of GDP. In 2005, the euro area reformed the SGP to make it more flexible, a nod to the political reality of the difficulty of controlling sovereign nations through rules. Economic cooperation was even more loosely governed under soft law in measures such as the Broad Economic Policy Guidelines and the 2000 Lisbon Strategy. After the September 2008 failure of Lehman Brothers in the United States, the so-called subprime crisis (due to the role of the securitization of subprime mortgages) went global. European financial centers were heavily hit by the ensuing credit crunch that resulted in the biggest economic downturn since the Great Depression. While the United States recovered relatively rapidly from the crisis, doubts about the fiscal sustainability of Greece snowballed into a crisis that engulfed the euro area and necessitated assistance for Greece (2010, 2012, and 2015), Ireland (2010), Portugal (2011), Spain (2012), and Cyprus (2013). Concerns that a larger bailout for Spain or even Italy prompted concerns over redenomination risks—that is, the possibility that euro area liabilities in certain member states would be paid back in national currencies instead of the euro. The EU became engulfed in a crisis with multiple roots that impacted countries differently. Firstly, the 2008 global financial crisis exposed weaknesses in the EU financial system as countries like Ireland, the Netherlands, Belgium, and Germany suffered heavy losses. Nevertheless, the idea of integrated financial supervision for the EU or the euro area failed to garner support during the immediate aftermath of the crisis. Instead, the existing system of cooperation between national financial supervisors received a bit of an upgrade under the new European System of Financial Supervision that combined old elements (the European Supervisory Agencies consisted of the same national regulators and supervisors participating in the precrisis coordination committees) and new ones (the European Systemic Risk Board oversaw the stability of Europe as a whole). Nevertheless, this constituted an incremental change over the existing framework. Second, the diverging fiscal paths of euro area member states were exacerbated by the global financial crisis. Some countries (such as Greece) had long been running up public debt due to fiscal mismanagement. Some countries (like Belgium and Italy) had large debt levels dating back to well before the introduction of the euro, and efforts to bring it down were thwarted by the demands placed on governments to stabilize their

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economies and banks after the global financial crisis. Some countries (like Ireland and Spain) enjoyed strong public finances prior to the crisis but were wiped out as a result of protecting the financial system (Ireland) and the economic downturn that followed the crisis (Spain). Third, a competitiveness crisis emerged in which countries in the euro area periphery saw declining competitiveness during the first decade of the euro area. The loose monetary policy enabled the private sector to take advantage of cheap credit. While this did not play out identically in the euro area periphery, this cheap credit encouraged borrowing by governments, businesses, and households and fueled a consumption boom. While the northern economies supplied the credit and the goods to fuel the boom, the southern economies became mired in public debt in some cases and private debt in others. Some, particularly in northern Europe, viewed increasing competitiveness in southern Europe through structural reforms as a key component to resolve the crisis. Increasing competitiveness presumably would promote exports and economic growth, enabling countries to pay down their debt burdens more easily than they would through painful austerity measures. Often both austerity and structural reforms were expected by creditors, albeit to different degrees. Fourth, a credibility crisis arose in which market doubts over the integrity of the euro area fueled speculation and widened bond yields between German government debt (which is considered among the safest in the world) and those of the euro area periphery. While concerns over the economic fundamentals contributed to market instability, other economies like the UK and the United States faced similar challenges but were not subject to the same speculation. Speculation over a possible Grexit, in which Greece would leave the euro area, or some other euro area breakup kept the pressure on the euro area from 2010 to 2012.

Preventing a New Euro Crisis: Fiscal and Economic Reforms Numerous reforms contributed to quelling market pressure, some more effective than others. Given that many—particularly in Germany—identified the origins of the crisis in Greece and the sorry state of its public finances, the crisis originally was considered a sovereign debt crisis. Not only had the Greek government fudged its way into the euro area in 2001 but it failed systematically to collect accurate data about its public finances: Greece’s deficit figures were several times the figures originally provided by its government (European Commission 2010). THE SIX-PACK The immediate crisis response of the EU was to reform the SGP again, only this time to make the framework for macroeconomic policy coordination more rigid: the March 2010 European Council requested proposals from the Commission and a special intergovernmental task force to strengthen euro-zone coordination in light of

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the challenges (European Council 2010). The results were announced in September 2010 with the six-pack of five regulations and one directive that strengthened fiscal and economic policy governance through measures including • the introduction of the reverse qualified majority voting procedure in which a Commission recommendation to sanction a member state would automatically result in a financial sanction unless a qualified majority of member states votes against it. This would presumably allow the EU to avoid another episode like the aforementioned 2003 case of France and Germany, in which both escaped sanctioning despite breaking the SGP rules • the placement of debt on the same footing as deficits in triggering sanctions • the creation of a country-specific expenditure benchmark known as the mediumterm budgetary objective to improve budgetary planning and sustainability In addition, the six-pack introduced the Macroeconomic Imbalances Procedure (MIP) designed to improve competitiveness through a new surveillance procedure with an enforcement mechanism. An alert system based on the results of a scoreboard of indicators of macroeconomic imbalances could trigger in-depth studies to determine if the imbalances posed a threat to the euro area economy. The failure to comply could result in fines, though this has never occurred. It differs from the previous economic coordination measures in that it is rooted in hard law and includes the possibility of sanctioning. THE FISCAL COMPACT AND TWO-PACK In early 2012, as the euro crisis raged on, the EU undertook further measures to calm market pressure. Still focusing on the sovereign debt element of the euro crisis, a fiscal compact was adopted in February 2012 as part of the Treaty on Stability, Coordination and Governance (TSCG). The fiscal compact strengthened further the budgetary targets set by the SGP’s medium-term objectives in addition to underpinning the corrective elements designed to bring down a country’s debt and deficits. The TSCG also included the expectation that the heads of state and government of the euro area would meet at least twice a year, immediately after the European Council meetings. In order to circumvent the UK’s attempt to link the fiscal compact’s ratification with the financial reform, it took the form of an intergovernmental treaty rather than as part of the Community method, which would have taken longer, involved additional actors like the European Parliament, and demanded unanimity. The TSCG was signed by all EU member states except for the UK and the Czech Republic. Euro area countries needed to be a signatory to the Treaty in order to be eligible for loans from the European Stability Mechanism (ESM), discussed below. The two-pack refers to two regulations that were adopted in 2013 in order to bring elements of the TSCG under community law. Regulation 472/2013 strengthened the economic and budgetary surveillance of euro area member states that were (potentially) threatened with financial instability or under a bailout program. Regula-

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tion 473/2013 concerned the monitoring and assessing of draft budgetary plans of euro area member states, thereby ensuring the correction of excessive deficits. THE EUROPEAN SEMESTER The reporting of fiscal and economic policy cooperation occurs within the framework of the European Semester. From 2011, the European Semester brought together the procedures of the revised SGP, the MIP, and the procedures for economic policy coordination under the Broad Economic Policy Guidelines and the EU’s economic growth strategy (Lisbon Strategy, Europe 2020 Strategy, and currently [2022] the European Green Deal). The overarching objectives of the European Semester include the sustainability of public finances, prevention of macroeconomic imbalances, promotion of structural reforms, and increasing investment (European Commission 2020b). The EU’s current growth strategy, the European Green Deal, added the objective of achieving climate neutrality. While the revised SGP and the MIP could be viewed as steps toward fiscal and economic union, they are at best incremental steps rather than third-order changes reflecting shifts in the goals and priorities of the member states (Chang 2016b; Laffan and Schlosser 2016). The revised SGP strengthens the existing tools and is designed to reinforce fiscal rules. The fiscal reforms undertaken during the euro crisis did nothing to bring the euro area closer to a centralized fiscal union or an optimum currency area that would allow for significant redistribution. Member states retain their fiscal sovereignty (except for those undergoing a bailout). Instead, a rather unstable quasi-fiscal union has been cobbled together from the patchwork of new rules and procedures that include fiscal surveillance along with new roles played by the ECB and the European Stability Mechanism (Schlosser 2019), which are covered in the next section. The effectiveness of the European Semester has been questioned, particularly its high degree of complexity (Darvas, Martin, and Ragot 2018; Deroose et al. 2018), the potential for it to be procyclical (Prammer and Reiss 2016), and the nonuse of any of the sanctioning mechanisms available under the SGP or the MIP (Savage and Howarth 2018). Prior to the euro crisis, the intergovernmental nature of the SGP led some to question whether the sanctions would ever be used, given the ease with which the larger member states blocked it (Chang 2006). Although the revised SGP was supposed to remove politics from the SGP’s enforcement by making the Commission’s recommendations to sanction member states automatic unless a qualified majority of the Ecofin council voted against sanctioning, political considerations remained paramount. First, the reform of the SGP reflected the interests of Germany, the euro area’s largest member state, and was viewed as part of the imposition of German hegemony across the euro area (Chang 2013). From this perspective, the greater automaticity of sanctions in the revised SGP under the six-pack and two-pack increased the incentives for member states to follow sound budgetary policies and potentially prevent another crisis like the one of Greece. Second, the implementation of the SGP and the MIP rested on Commission recommendations that were not forthcoming. In 2015, Jean-Claude Juncker became

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the president of what he termed a “political” Commission: “The Commission is political. And I want it to be more political. Indeed, it will be highly political” (Juncker 2014, 14). Indeed, under the Juncker presidency, the SGP rules were interpreted with marked flexibility, even entrepreneurship (Schön-Quinlivan and Scipioni 2017). Although much has been made of the different legal bases of aspects of the European Semester and some elements being based on soft law rather than hard law, it is unclear if it makes a difference when there is such a strong reluctance to make use of hard law. Third, the efficacy of both the rules underlying the European Semester and the ideas on which they are based (Franchino 2020) remains doubtful. As previously noted, the rules originate in the ordoliberal economic preferences of Germany that emphasize price stability and fiscal sustainability. While these rules have not been replaced in euro-area governance, there have been questions about the logic of austerity and the assumptions behind expansionary fiscal contractions. Even the International Monetary Fund questioned estimates made regarding the impact of fiscal consolidation on economic growth in the case of Greece, sparking a “battle of the boxes” with the replies in defense of the Greek program from the European Commission and the ECB (Chang 2016a).

Saving the System The original design of economic and monetary union ruled out the possibility of the bailout of a member state by the EU (no-bailout clause) or the ECB (prohibition against monetary financing) to satisfy German concerns over moral hazard. Sharing a currency involved the possibility of becoming liable for the debts of other member states, which Germany hoped to avoid by making bailouts illegal and incentivizing sustainable deficit levels through the rules governing the Stability and Growth Pact. As the euro crisis raged on, the limitations of the euro area governance structure became apparent in the inability of member states to calm market speculation. These rules designed to prohibit moral hazard and unwanted spillovers across borders instead destabilized markets facing a sovereign debt crisis on the heels of a major financial crisis. Three actors, two existing and one newly created, rose to the challenge of holding together the euro area during the crisis: the European Central Bank, the European Stability Mechanism, and the Eurogroup. THE EUROPEAN CENTRAL BANK Located in Frankfurt, Germany, the ECB serves as the central bank for the twenty members of the euro area. It handles the euro area’s monetary policy and, since November 4, 2014, also supervises its banks as the Single Supervisory Mechanism (SSM). The “imperative to break the vicious circle between banks and sovereigns” (European Council 2012) that was perpetuating speculation against some euro-area member states convinced member states of the necessity to create a banking union, beginning with the designation of the ECB as the SSM.

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The ECB is one of the most independent central banks in the world; most central banks were granted independence in the 1980s and 1990s due to the economic and political consensus that had developed regarding the superior performance of independent central banks in pursuing price stability. The ECB’s independence, however, has quasi-constitutional status in that its independence is embedded in the EU Treaties and would require a unanimous decision among all EU member states to alter. In return for its high degree of independence, the ECB has a single primary mandate, the pursuit of price stability. In contrast, the US Federal Reserve has a dual mandate to pursue stable prices in addition to maximum employment. While the ECB’s objective is specified in the Treaties, the definition of price stability has been set by the ECB itself as a symmetric target of 2 percent of increase in the Harmonized Index of Consumer Prices over the medium term. During the global financial crisis, central banks became the “only game in town,” thanks to their ability to marshal resources and react to markets quickly. In particular, central banks like the US Federal Reserve and the Bank of England embarked on unconventional monetary policy such as quantitative easing in which they purchased government bonds (and other assets) in order to flush the financial system with cash and encourage lending. The ECB, however, did not launch a similar program until 2015, in order to avoid falling foul of its prohibition against monetary financing (discussed further below). While the global financial crisis did not compel the ECB to engage in heavy amounts of unconventional monetary policy like other major central banks, the euro crisis led to the ECB playing a key role in euro-area governance due to three factors: its unconventional monetary policy, its advice to government, and its supervision of euro-area banks from 2014 onward. The first two aspects will be covered in this section, and the third appears in the subsequent section on the banking union. The ECB’s Unconventional Monetary Policy Monetary policy refers to central bank decisions that impact the price and availability of money. The ECB’s primary monetary policy instrument is the setting of interest rates. While this “conventional” monetary policy sufficed prior to the global financial crisis, during the crisis, central banks around the world made ample use of unconventional monetary policy, including the purchase of assets. In November 2008, the US Federal Reserve launched its first round of quantitative easing (QE) in which it made large-scale asset purchases, as its conventional monetary policy tools had reached their limits. US interest rates had been falling sharply and stood at less than 1 percent at the start of 2009. The Federal Reserve began purchasing assets such as asset-backed securities, government bonds, and corporate bonds to combat the Great Recession. The Bank of England began its QE in March 2009. The ECB was reluctant to engage in QE as a response to the global financial crisis. First, the euro area’s financial system relied heavily on banks rather than on capital markets, making bond purchases a less effective policy instrument than in the UK or the United States. Second, QE raised the specter of the ECB engaging in monetary financing by purchasing government debt in bond markets, which was prohibited by the Treaties.

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During the euro crisis, the ECB unleashed its own version of unconventional monetary policy to ease pressure on euro-area governments and allow them time to develop more durable solutions (Yiangou, O’Keeffe, and Glöckler 2013). This section highlights several of the more prominent policies, but it is not exhaustive. On May 10, 2010 (the same day as the announcement of the creation of the European Financial Stability Facility; see below), the ECB launched the Securities Market Program (SMP) in which it purchased limited amounts of debt securities on secondary markets and then sterilized the purchases. The stated purpose of the SMP was to restore the monetary transmission mechanism that had been impaired by the crisis, meaning that the ECB’s interest rate decisions were not influencing market expectations and price developments throughout the euro area. The SMP also had the effect of easing pressure on governments like Greece, Ireland, Portugal, Spain, and Italy that were having difficulty finding buyers for their sovereign bonds. From an economic perspective, the SMP had a limited short-term effect in lowering interest rates as well as volatility (Manganelli 2012). From a political perspective, the SMP marked a decisive step away from the ECB’s focus on the pursuit of price stability and led to the resignation of the German member of the ECB Executive Board Jürgen Stark. As one analyst argued, “the ECB crossed the threshold into the realm of the overtly political” (Henning 2017, 93). Despite measures like the SMP and aforementioned six-pack legislation, the euro crisis raged on to include Greece, Ireland, and Portugal among the ranks of euro-area member states in need of a bailout. Mario Draghi took over the helm of the ECB in November 2011, and a month later, the ECB announced its long-term refinancing operations (LTROs) in which the ECB provided unlimited loans to banks at the rate of 1 percent for a period of three years. Governments encouraged their banks to take advantage of these rates and use the money to purchase more government debt. The official explanation was to provide liquidity for euro-area banks (Draghi 2011). Nevertheless, the LTROs were used mainly by countries in the periphery, like Spain and Italy, which fueled claims that the ECB was illegally acting as a lender of last resort (Buiter and Rahbari 2012). In June 2012, the crisis reached its high point, as the threat of a euro-area breakup drove bond yields in countries like Greece, Italy, and Spain to unsustainable levels. In July, ECB President Mario Draghi delivered his famous pledge to do “whatever it takes” to save the euro (Draghi 2012). This ushered in the Outright Monetary Transactions, in which the ECB vowed to purchase unlimited amounts of sovereign debt for a government undertaking a conditionality program with the European Stability Mechanism. This move has been credited with saving the euro but also attracted the ire of German actors; Bundesbank president Jens Weidmann found himself isolated in the Governing Council on the OMT, and the German Constitutional Court questioned the legality of OMT (the Court of Justice of the European Union ruled in its favor in 2015). While in 2009, embarking on quantitative easing could not be justified according to its mandate, by 2015, the threat of deflation provided the ECB with the political cover to purchase government debt as part of its Public Sector Purchase Program (PSPP), an expansion of the existing Asset Purchase Program. The back-to-back crises had left the euro-area economies in a weakened state with inflation reaching historic

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lows. This also had the effect of pushing down interest rates on government bond yields, making it easier for them to finance debt. The ECB made efforts not to invite charges that the PSPP constituted monetary financing, including voluntarily limiting the purchase of assets to no more than one-third of a country’s eligible debt, and the amount would be in proportion to the size of the ECB’s capital key (a proxy for economic size) so as to emphasize that the measure is euro zone–wide and not simply additional financial support for certain member states. The PSPP provoked criticism in some corners, particularly German ones. Bundesbank President Jens Weidmann opposed the introduction (and prolongation) of QE to the euro area due to concerns that it could stoke inflation. The German Constitutional Court in 2015 launched another case against the ECB on the grounds that its QE program constituted monetary financing. The case was referred to the Court of Justice of the European Union, and in 2018, it ruled in the ECB’s favor. In May 2020, however, the German Constitutional Court sent shock waves by dismissing the court’s ruling and demanding that a proportionality assessment be done to ensure that the QE program did not overstep the ECB’s mandate. Indeed, many suspected that the ECB’s support had less to do with the price stability and more to do with supporting weakening demand for the debt of certain euro-area member states. QE provided a large market for government debt and propped up demand that might have been lacking if left solely to market forces. In 2020, the ECB once again made use of its balance sheet in order to battle a new threat to the euro area, the economic fallout from the COVID-19 crisis. Under the Pandemic Emergency Purchase Program, the ECB would purchase up to €1,850 billion of assets allowed under the Asset Purchase Program (that included government bonds) until March 2022. The ECB explicitly called for flexibility in the allocation of purchases across jurisdiction, unlike what it did in the QE program, as concerns over inflation and monetary financing had given way to expectations of a strong response to fight the economic crisis caused by the pandemic. Despite the periodic legal threats, the ECB has emerged as a key crisis actor. The ECB’s Political Role While the ECB’s independence means that it eschews monetary policy advice from other actors, the Treaties (Article 127.4 TFEU) grant it an advisory role to EU and national actors. In some instances, this was done informally; ECB President JeanClaude Trichet wrote letters to the governments of Ireland, Italy, and Spain during the euro crisis (Chang 2018). This advice, particularly in the case of Ireland, pushed the government into pursuing an unwanted bailout (Houses of Oireachtas 2016). The ECB also played an advisory role in the troika, which refers to the representatives from the ECB, the European Commission, and the International Monetary Fund that were involved in the development and monitoring of financial assistance programs for euro-area member states that requested a bailout from the European Financial Stability Facility and its successor, the European Stability Mechanism. While much of the ECB’s contribution to such discussions focused on matters relating to the country’s monetary and financial stability (Lütz, Hilgers, and Schneider 2019; Merler,

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Pisani-Ferry, and Wolff 2012), its participation in the troika faced criticism. First, the ECB’s retains its independence in this realm despite venturing outside of monetary issues, which is legally problematic (Dermine 2019). Second, the ECB’s involvement could be considered a conflict of interest (Karas and Ngoc 2014; Pisani-Ferry, Sapir, and Wolff 2013). Finally, a general lack of transparency regarding the troika has exacerbated accusations of insufficient accountability. In summary, the ECB has evolved from a highly independent institution focused on the pursuit of price stability to a key actor in euro-area governance, with a prominent role with clear redistributive elements that exceed a traditional interpretation of its mandate, as seen from the unsuccessful legal action in Germany. This transition has been necessary and unsettling, though not unique to the euro area (Tucker 2018). Nevertheless, not all actors agree with this development, and its legal framework had been developed for a different type of institution. Pressure has been mounting for the ECB’s role and accountability structure to be updated, but the high political hurdles to make the necessary treaty change makes this an unlikely option. THE EUROPEAN STABILITY MECHANISM The European Stability Mechanism (ESM) is an intergovernmental institution with a lending capacity of €500 billion that provides financial assistance to euro-area countries in difficulty as part of a macroeconomic adjustment program. Its predecessor, the European Financial Stability Facility, had been created in June 2010 as a temporary solution to the emerging euro crisis. As member states saw the need for a permanent solution, the ESM was set up in October 2012 to act as a backstop for countries unable to access markets. From 2010 to 2016, the combined disbursements of the EFSF and ESM amounted to €254.6 billion to five countries (Ireland, Portugal, Greece, Spain, and Cyprus). In March 2020, the ESM’s Pandemic Crisis Support was announced, in which euro-area member states could access credit up to 2 percent of the member state’s GDP without a macroeconomic adjustment program to support expenditures related to the COVID-19 crisis. That program has not been accessed as of this writing (2022). The ESM marks a departure from the so-called community method in which EU programs were embedded within the EU legal framework, thus involving certain procedures and institutions to ensure policy coherence and accountability. In contrast, the ESM arose in the context of a crisis that had been described as relying largely on intergovernmental institutions (like the Eurogoup) and de novo institutions that are more autonomous (Bickerton, Hodson, and Puetter 2015). The German constitutional court challenged the legality of the EFSF and the ESM on the grounds that it may conflict with budgetary autonomy, which remains a national competence. The legality of both the EFSF (BVerfG 2011) and the ESM (BVerfG 2014), however, ultimately were upheld. The ESM’s main decision-making body is the Board of Governors, consisting of the finance ministers of the twenty ESM member states. The composition of the ESM Board of Governors therefore matches that of the Eurogroup. Despite having a legal and organizational structure similar to the International Monetary Fund, its embeddedness in the Eurogroup makes its accountability structure idiosyncratic (Howarth

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and Spendzharova 2019) and its legitimacy inadequate (Crum and Merlo 2020). For example, approval of ESM loans differs across euro-area member states and causes asymmetries due to the different standards of parliamentary control. About half of the member states require the approval of national parliaments, whereas the other half allows the minister of finance to commit to the disbursement of loans or guarantees on the minister’s own accord (Kreilinger 2015). Nevertheless, the ESM may be less intergovernmental than it initially appears, particularly as negotiations to boost its size and scope saw greater institutional leadership from the bottom-up (Smeets, Jaschke, and Beach 2019). Proposals to embed the ESM within the EU legal framework (European Commission 2017) met strong opposition from the “New Hanseatic League” countries (Schillerová et al. 2018) and the idea was abandoned. Nevertheless, on January 27 and February 8, 2021, the ESM member states signed an agreement to amend the ESM Treaty that would broaden its mandate to include contributing to enhancing financial stability by allowing providing a backstop to the Single Resolution Fund (see the Banking Union section below). The revised Treaty also envisions a stronger role for the institution outside of adjustment programs as well as inside the preparation and monitoring of future programs. THE EUROGROUP The Eurogroup consists of the finance ministers of the euro-area countries and is a subset of the Economic and Financial Affairs Council configuration (Ecofin). Originally an informal group that met prior to Ecofin meetings to discuss matters of common interest related to the single currency (Puetter 2004), the Eurogroup increasingly became more formal (with a permanent president since 2005) and more powerful. The euro crisis saw the rise of intergovernmentalism that tended to pit creditor member states against debtor member states where “hierarchical relations between national governments have finally substituted consensus with domination” in intergovernmental bodies like the Eurogroup (Fabbrini 2016). Questions arose on the rationale for its increased power and its accountability (Craig 2017; Braun 2019) as it gained competences in the granting of loans to other euro-area member states (the Eurogoup de facto decides on bailout programs done by the ESM, as its members sit on the ESM Board of Governors) and in the enhanced fiscal and economic surveillance programs under the European Semester. In short, the European Central Bank, the European Stability Mechanism, and the Eurogroup played key roles in restoring calm to the euro area during the euro crisis by enacting programs that previously had been considered unthinkable. While they may have saved the euro, they did so at a price of potentially going beyond their competence (for the ECB) and generating criticism for their accountability and lack of transparency (for all three). Their rise rested on a crisis context that demanded solutions more rapid than could be taken by the regular EU policymaking process. Indeed, national actors like those in the Eurogroup seized upon the need for rapid intergovernmental solutions in the short term as a way to entrench their preferences in institutions like the ESM to the extent possible.

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Banking Union as a Gateway to Further Integration Although the introduction of the euro ushered in a period of rising cross-border financial transactions, the supervision and regulation of banks remained mostly national until the introduction of a banking union. Member states were loath to surrender their sovereignty over an area that had such strong financial, fiscal, and political implications. The creation of a banking union elicited uncomfortable questions regarding the fiscal implications of a banking failure and the disruption of relationships between banks and local governments. The EU’s initial response to the global financial crisis moved integration forward at only an incremental level. While a case could have been made that the lack of Europe-wide supervision contributed to the crisis, instead of a single supervisor, the EU created the European Systemic Risk Board in 2010 that would provide macroprudential oversight but no authority to penalize or shut down banks. While the ESRB was an improvement from the status quo, power remained with national supervisors and regulators that met regularly as under the European Supervisory Authorities framework, grouping together the national supervisors and regulators into three different configurations: European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority. The issue of a single banking supervisor rose in prominence in 2012 in what was termed the “vicious circle” between weak banks and their sovereigns. Weak banks reduced lending, which both threatened public intervention and weakened public finances through the reduced tax revenues. Moreover, high levels of public debt (that would rise further in case of a bank bailout) raised the specter of a default, which made bank balance sheets riskier, as they held large quantities of sovereign debt. This furthered the bank’s decline. The process is outlined in figure 11.3. The recognition of this vicious circle contributed to the June 29, 2012, agreement to create a banking union. On the one hand, countries like Spain and Italy were under heavy market pressure in the spring and summer of 2012; the Spanish government sought EU assistance for its weak banks, preferably a direct recapitalization rather than channeling it through the government and impacting its public finances further. On the other hand, the German government would not accept direct bank recapitalization without integrated banking supervision. The June 2012 Euro Area Summit statement began thus: “We affirm that it is imperative to break the vicious circle between banks and sovereigns” (Euro Area 2012). This would be done through the creation of a single supervisory mechanism involving the ECB (see above), after which the ESM could directly recapitalize banks with an appropriate conditionality program. STATE OF PLAY The European Union’s banking union consists of three elements. First, the single rulebook, which antedates the banking union (2009) but became more comprehensive under the European Banking Authority, incorporates a single set of harmonized

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Figure 11.3  The Vicious Circle of Weak Banks and Sovereigns

prudential rules to ensure a unified regulatory framework for the EU’s financial system. This applies to all EU member states, not just the euro area. Second, the SSM directly supervises the largest and systemically important banks in the euro area and works with national supervisors. Although national supervisors continue to directly supervise the “less significant” institutions, they work in close cooperation with the ECB, and the latter can decide to assume direct supervision at any time. Third, the Single Resolution Mechanism deals with the restructuring of failing banks and is managed by the Single Resolution Board, which is financed by contributions from the banking sector to the Single Resolution Fund. In the event that the Single Resolution Fund runs out of money, the ESM could lend funds and act as a backstop through a credit line from the ESM that would give a safety net for bank resolutions within the banking union. This scenario would be possible upon the completion of the national ratifications of the reforms to the ESM Treaty. Finally, since November 2015, a Commission proposal for a European deposit insurance scheme has languished due to the unwillingness of member states with well-financed national deposit insurance schemes to risk a possible transfer of resources across borders. This fourth element is still missing. The banking union has garnered its share of critics. It reflects the asymmetric power structure of the EU that favors German interests (Quaglia 2019; Schild 2020) and those of large banks (Culpepper and Tesche 2021). The banking union remains incomplete thanks to the success of German banks in blocking the deposit insurance scheme (Mitchell 2020). Although the banking union disrupted traditional coalition

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dynamics in the Italian banking sector (Moschella and Quaglia 2019), for example, national supervisors continue to exercise substantial discretion (Donnelly and Asimakopoulos 2020). All euro-area member states are part of the banking union, and EU member states not using the euro as their currency can participate through “close cooperation.” The further hiving off of the euro area from the rest of the EU through the banking union and the ESM, however, potentially threatens the integrity of the single market (Howarth and Quaglia 2020). CAPITAL MARKETS UNION AND COMPETITION POLICY Prior to the development of the banking union, EU financial regulation had been done in the framework of the single market rather than as part of monetary union. The single rulebook applies to all EU member states, whereas the SSM and SRM only apply to euro-area countries (and EU countries that would join the banking union through close cooperation). Indeed, financial integration aside from the banking union is part of the EU’s single market, which guarantees the free movement of goods, capital, services, and labor (the “four freedoms”) across the EU. The single market is the most developed when it comes to the free movement of goods, as is the case in international trade more generally. Two years after launching the banking union, the EU announced plans for developing a capital markets union. Unlike the banking union, the capital markets union is part of the single market and therefore involves all EU member states. The capital markets union aims to deepen and integrate Europe’s capital markets to reduce the dependence of firms on bank lending for credit and to provide business with greater access to capital, particularly small and medium-sized enterprises. The capital markets union, therefore, is a bottom-up process of linking the different capital markets within Europe rather than one focused on centralized governance, as was the case for the banking union (Quaglia, Howarth, and Liebe 2016). In September 2015, the Commission adopted an action plan of over thirty measures to integrate capital markets. Progress since then has been slow (Sapir, Veron, and Wolff 2018). While some have emphasized the economic shift that the capital markets union represents (Epstein and Rhodes 2018), others criticize the increased role of financial markets in EU economic governance (Braun, Gabor, and Hübner 2018). The Commission has employed different narratives to frame the capital markets union as a positive-sum game (Quaglia and Howarth 2018), but the biggest champions for the creation of a capital markets union stand to be its biggest beneficiaries. Indeed, Luxembourg, Sweden, Ireland, and the Netherlands already have relatively developed capital markets that would benefit from a capital markets union (Quaglia, Howarth, and Liebe 2016). COMPETITION POLICY AND STATE AID Underpinning the single market is the EU’s competition policy, which monitors and reviews potential nontariff barriers that impede the functioning of the single market:

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anticompetition practices, mergers, and state aid. The Commission enjoys exclusive competence over competition policy. Some posit that competition policy’s origins, like many aspects of EU economic governance, can be traced to German ordoliberal ideas; it has been referred to as the “most supranational of all European policies” (Karagiannis 2013, 777). The role of the Commission, in particular, has been emphasized in state aid policy, as ambiguities in the Treaties and divergent preferences between member states have allowed it to become a supranational entrepreneur (Blauberger 2009). During the global financial crisis, in addition to protecting the single market’s integrity, the Commission “also pursued a number of regulatory objectives . . . such as financial stability, moral hazard, or the return to long-term viability of financial institutions” (Piernas López 2015, 222). Indeed, no EU-level mechanisms existed with regard to rescuing banks. This put the single market at risk because, if governments could offer their banks more state aid than other governments, this would upset the competitiveness of national financial systems. The only instrument the EU could use was controlling state aid for the rescuing and restructuring of banks. In the context of the crisis, “the Commission changed its priorities and goals in the enforcement of State aid control” (Botta 2016, 272). For example, on September 30, 2008, the Irish government announced that all deposits and debts of six Irish banks and their subsidiaries would be guaranteed by the government. This led savers to shift money to these banks, threatening non-Irish competitors and the single market. The Commission reacted to the communication, citing Article 87.3b TEU (Article 107.3b TFEU) to treat the financial sector as special in regard to state aid rules due to the “exceptional circumstances” of the crisis that “may allow State aid ‘to remedy a serious disturbance in the economy of a Member State’” (European Commission 2008). Prior to the crisis, the Commission rarely used this as the legal basis (Botta 2016, 273). The Commission accepted nearly all crisis-related state aid cases in return for the agreement to postcrisis rescue and restructuring during this first period. But by mid-2009 the Commission’s Guidelines grew stricter on state aid policy and required banks receiving state aid to be restructured. The euro crisis prompted the extension of the Commission’s framework until the July 2013 communication institutionalized it (European Commission 2013). Similar principles appeared in the Bank Resolution and Recovery Directive (part of the single rulebook), particularly that of burden sharing (Botta 2016, 275) that made the bail-in principle (writing down debt owed by a bank to its creditors or converting the debt into equity) the default option. In this way, bank rescues occur only when the resolution authority decides that this would be in the public interest. Moreover, state aid can only be given to a bank that is put in resolution, which the exception of a “precautionary recapitalization” that allows for banks to receive state aid outside of resolution in a limited set of circumstances. As in the global financial crisis, the Commission indicated considerable flexibility in its state aid rules when the global pandemic hit Europe in 2020. Under Article 107(2) (b) TFEU, COVID-19 constitutes an “exceptional occurrence” allowing for “aid to make good the damage caused by natural disasters or exceptional occurrences.” The Commission announced a temporary framework on March 20 allowing for compensation for areas hit hard by the pandemic, including transport, tourism, culture, hospitality and retail, and

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organizers of canceled events (European Commission 2020a). The temporary framework was amended six times and extended until June 30, 2022. Additional temporary state aid measures were also identified, in accordance with Article 107(3)(b), “to remedy a serious disturbance in the economy of a Member State.” Nevertheless, the use of state aid has not been uniform across the EU, reinforcing some inequalities as some countries have more fiscal space to be generous in state aid than others. The Commission promotes EU rules on state aid to third countries through bilateral agreements and even at the WTO level, when agreement can be found with the United States (Blauberger and Krämer 2013). The EU clashed with the UK in the initial round of Brexit talks over state aid. The EU’s opening gambit insisted that EU state aid rules would constitute a “reference point” for the UK with the Court of Justice of the European Union (CJEU) the sole arbiter (Council of the European Union 2020). In contrast, the UK proposed using the World Trade Organization Agreement on Subsidies and Countervailing Measures and each side notifying each other about subsidies every two years (HM Government 2020). Moreover, one of Brexit’s rallying cries was freedom from EU institutions, not being subject to CJEU rulings. TYING IT ALTOGETHER In short, the single market constitutes all EU member states, not only euro-area members. While financial integration began as a single market issue, increased interdependence between euro-area countries necessitated tighter cooperation through the banking union. On the other hand, financial integration within the single market nevertheless progressed. First, the application of state aid rules during the global financial crisis played an important role in one of the main pillars of banking union, specifically the single rulebook. In addition, the development of a capital markets union, which could enhance capital access across the EU, and its competition policy, particularly related to state aid, have played important roles in EU economic governance.

New Crisis, New Solutions Perhaps the most surprising response to the pandemic-induced economic crisis was the Next Generation EU (NGEU) budget that included the Recovery and Resilience Facility (RRF). The NGEU, along with the EU’s long-term budget negotiated every seven years (the multiannual financial framework), represents the EU’s biggest stimulus package ever. The NGEU is a temporary recovery instrument to promote economic growth that also contributes to the EU’s ambitions in climate change and the digital transformation. At the centerpiece of the NGEU is the RRF, which offers €723.8 billion in grants and loans to support economic reforms and investment by EU member states. EU member states submit national recovery and resilience plans to the European Commission that incorporate pillars identified in the RRF regulation that include the green transition, digital transformation, social and territorial cohesion, and smart, sustainable, and inclusive economic growth. Funding for the NGEU comes

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from borrowing on the markets by the European Commission, which can obtain better rates than many member states, and then redistribute the money. Next Generation EU represents a departure from the previous crisis in several respects. First, the scope of the EU stimulus is unprecedented. Indeed, it diverges sharply from the austerity rhetoric and concerns over moral hazard that dominated the euro crisis. Second, the willingness to borrow on financial markets contrasts with earlier discussions on Eurobonds that went nowhere (though the bonds issued for NGEU are more limited as to their implications for member states than the proposed Eurobonds would have been, as the bonds issued for NGEU do not mutualize outstanding debt). German finance minister Olaf Scholz famously termed the original Franco-German agreement to raise money through issuing common debt that formed the basis of the NGEU as a “Hamiltonian moment,” referencing US Treasury Secretary Alexander Hamilton’s plan for the US federal government to assume state debts incurred during the Revolutionary War. Next Generation EU potentially sows the seeds for a common asset for the EU as well as a budget capable of performing a stabilization function. Both are long-standing elements that many economists would cite as missing elements of monetary union. They were even cited in the internal EU reflections on the future of EMU, though no political will existed to pursue them. Moreover, the NGEU is temporary in nature, so making these elements permanent would require further solidarity and trust between EU member states than currently exist. It is too early to judge the impact of innovations like the NGEU and RRF. Now that the Commission has the carrot of releasing RRF funds to member states reaching milestones embedded within the European Semester, many are confident that EU economic governance has changed permanently or at least has the potential to do so. Finally, the Next Generation EU represents a watershed in EU economic governance in that it blurred the lines between euro-area member states and EU member states. The institutional innovations outlined above relating to institutions like the ECB, the ESM, and the Eurogroup and concomitant policies like the banking union were based on the assumption that the countries participating in monetary union would benefit from more institutional integration than would countries outside of the euro area. With the withdrawal of the UK from the EU, the relevance of the distinction between euro ins and euro outs is less significant, owing to the loss of the largest euro out with the most extreme views. The Eurogroup had already begun to meet in “inclusive format” prior to the pandemic during discussions on creating a euro-area budget, meaning non-euro-area member states had participated in Eurogroup meetings as well. That Next Generation EU included many elements of the euro-area budget that had already been discussed but was much larger in size and open to all EU member states further weakened the case for a separate euro-area budget.

Conclusion: Healing Divisions The complexity of European economic governance reflects the difficulty of managing interdependence in a globalized economy. Since 2008, the EU has been buffeted by

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economic shocks, both external and internal. On the one hand, much of the EU’s response has increased intergovernmentalism in EU governance. Rising populism and difficult economic times tend to make international cooperation harder to sell to voters. On the other hand, the EU has also responded with more flexibility than one might have expected, particularly the willingness to reinterpret its legal structure in a way that allowed for the creation of the ESM and the expansion of the ECB. Nevertheless, the emergence of winners and losers after the euro crisis was reinforced by the COVID-19 crisis. Italy and Spain suffered mightily during the crisis, and they were among the first and hardest hit during the early days of the pandemic. Despite the vastly different nature of the crises, the euro crisis left its mark both economically and politically. The austerity incurred during the crisis left some countries less equipped to deal with the economic consequences of the lockdowns imposed across Europe. Although the SGP rules were not imposed, soaring health-care costs on top of economies not long out of recession made it difficult for national governments to come to the rescue of economy. While the EU institutions responded relatively quickly, not all countries are willing to make full use of what is on offer: the stigma attached to the ESM due to the euro crisis, for example, made it politically difficult for governments to access its new enhanced credit lines to deal with the crisis. Again, the money the ESM made available was never used. The global pandemic also reinforced existing tendencies in euro-area governance. Despite several legal challenges to its more active role, the ECB reacted forcefully to the most recent crisis in 2020, as ECB President Christine Lagarde tweeted that there would be “no limits to our commitment to the euro” (March 18, 2020). When the Commission proposed an ambitious €560 billion Recovery and Resilience Facility as part of its Next Generation EU budgetary proposal, the “frugal four” countries (Netherlands, Sweden, Denmark, and Austria) that opposed greater risk sharing during the euro crisis had similar concerns over the size of the proposal, the use of grants as well as loans, and possible moral hazard implications. Moreover, the Commission used its latitude in the application of competition policy’s state aid rules to allow more government support for ailing companies and institutions, just as it had during the global financial crisis. Therefore, the supranationalism and intergovernmentalism crafted during the euro crisis once again played similar roles despite the very different nature of the crisis.

Suggested Readings Chang, Michele. Economic and Monetary Union. London: Palgrave Macmillan, 2016. Crum, Ben, and Stefano Merlo. “Democratic Legitimacy in the Post-Crisis EMU.” Journal of European Integration 42, no. 3 (2020): 399–413. Henning, C. Randall. Tangled Governance: International Regime Complexity, the Troika, and the Euro Crisis. Oxford: Oxford University Press, 2017. Quaglia, Lucia. “The Politics of an ‘Incomplete’ Banking Union and Its ‘Asymmetric’ Effects.” Journal of European Integration 41, no. 8 (2019): 955–69. Schlosser, Pierre. Europe’s New Fiscal Union. London: Palgrave Macmillan, 2019.

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3 2 2    M ichele C hang Donnelly, Shawn, and Ioannis G. Asimakopoulos. 2020. “Bending and Breaking the Single Resolution Mechanism: The Case of Italy.” JCMS: Journal of Common Market Studies 58 (4): 856–71. Draghi, Mario. 2011. “Introductory Statement to the Press Conference.” Frankfurt am Main, December 8. Available at https://www​.ecb​.europa​.eu​/press​/pressconf​/2011​/html​/is111208​ .en​.html. Draghi, Mario. 2012. “Speech by Mario Draghi, President of the European Central Bank at the Global Investment Conference in London, 26 July 2012.” Epstein, Rachel, and Martin Rhodes. 2018. “From Governance to Government: Banking Union, Capital Markets Union and the New EU.” Competition & Change 22 (1): 205–24. Euro Area. 2012. “Euro Area Summit Statement.” June 29. European Commission. 2004. “Strengthening Economic Governance and Clarifying the Implementation of the Stability and Growth Pact.” COM(2004), 581. European Commission. 2008. “The Application of State Aid Rules to Measures Taken in Relation to Financial Institutions in the Context of the Current Global Financial Crisis.” OJ C 270 (25.10.2008): 8–14. European Commission. 2010. “Report on Greek Government Deficit and Debt Statistics.” European Commission. 2013. “Communication from the Commission on the Application, from 1 August 2013, of State Aid Rules to Support Measures in Favour of Banks in the Context of the Financial Crisis (‘Banking Communication’).” OJ C 216 (30.7.2013): 1–15. European Commission. 2017. “Reflection Paper on the Deepening of the Economic and Monetary Union.” Brussels, May 31, 2017. European Commission. 2020a. “Communication from the Commission Temporary Framework for State Aid Measures to Support the Economy in the Current COVID-19 Outbreak 2020/C 91 I/01.” OJ C 91I (20.3.2020): 1–9. European Commission. 2020b. “The European Semester: Why and How.” https://ec​ . europa​.eu​/eurostat​/documents​/4187653​/6404656​/COM​_2010​_report​_greek​/c8523cfa​ -d3c1​-4954​-8ea1​-64bb11e59b3a. European Council. 2010. “Conclusions European Council 25–26 March.” European Council. 2012. “Euro Area Summit Statement.” Brussels, June 29, 2012. Fabbrini, Sergio. 2016. “From Consensus to Domination: The Intergovernmental Union in a Crisis Situation.” Journal of European Integration 38 (5): 587–99. Franchino, Fabio. 2020. “In Search of the Ideational Foundations of EU Fiscal Governance: Standard Ideas, Imperfect Rules.” Journal of European Integration 42 (2): 179–94. Henning, C. Randall. 2017. Tangled Governance: International Regime Complexity, the Troika, and the Euro Crisis. Oxford: Oxford University Press. HM Government. 2020. “The Future Relationship with the EU: The UK’s Approach to Negotiations.” Presented to Parliament by the Prime Minister by Command of Her Majesty 20 February. Houses of the Oireachtas. 2016. REPORT of the Joint Committee of Inquiry into the Banking Crisis. Dublin. Howarth, David, and Lucia Quaglia. 2020. “One Money, Two Markets? EMU at Twenty and European Financial Market Integration.” Journal of European Integration 42 (3): 433–48. Howarth, David, and Aneta Spendzharova. 2019. “Accountability in Post-Crisis Eurozone Governance: The Tricky Case of the European Stability Mechanism.” JCMS: Journal of Common Market Studies 57 (4): 894–911. Juncker, Jean-Claude. 2014. “A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change.” Opening Statement in the European Parliament Plenary Session, Strasbourg, July 15, 2014.

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CHAPTER 12

Varieties of Capitalism and Financial Regimes Benedicta Marzinotto

T

he process of recovery from the Global Financial Crisis (GFC) and from the height of the pandemic was different on the two sides of the Atlantic. In the United States, economic activity recovered earlier than in Europe, and economic growth remained stronger on average between crises (figure 12.1). The differentiated response across the two regions partly reflects the fact that the United States and Europe represent different varieties of capitalism defined as “ways of organizing a market economy.” The United States falls under the category of a liberal market economy (LME) where product, labor, and financial markets are weakly regulated and can more quickly respond to cyclical factors in a stabilizing fashion. Moreover, the macroeconomic regime is relatively flexible. The Federal Reserve (FED) runs monetary policy with the primary objective of sustaining economic growth promptly—in a politically integrated area—and fiscal policy is not subject to rigid rules that limit its stabilization function. Flexible markets together with the generous response of the FED and of the federal government explain why the recovery from the financial crisis set in relatively soon. By contrast, most European countries, and specifically those that have adopted the euro as a common currency, are closer to the archetypes of either a coordinated market economy (CME) (Hall and Soskice 2001) or of a mixed market economy (MME) with generally regulated markets (Molina and Rhodes 2007) that limit the scope for market-based correction. Monetary policy is run by a common authority, the European Central Bank (ECB), operating in a conservative manner with the ultimate objective of preserving price stability above all. At the same time, national fiscal policies are subjected to a balanced-budget rule that is binding for all members of the European Monetary Union (EMU) and that limit their capacity to stimulate the domestic economy in a recession. While relatively rigid markets shifted the burden of adjustment onto public authorities, the initial conventional response of the ECB to the GFC was delayed relatively to that of the FED and the overall euro-area fiscal stance during the recession of 2009 generally less expansionary than the one in the United States. The same features seem to explain the response to the COVID crisis and the early the postcrisis recovery. The so-called Great Lockdown generated a much larger surge in unemployment in the United States than in Europe. Flexible, deregulated labor 325

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Figure 12.1  Real GDP Growth, 2000–2020 (Percentage Change)

markets explain this outcome. Low employment protection accounts for the fact that US employers react to bad times by laying off workers; not only are exit costs minimal due to soft dismissal rules but also a flexible labor market and strong interstate labor mobility ensure that recruitment processes are efficient once the recovery set in. By contrast, in the pandemic, most European countries have adopted retention policies for which firms have received subsidies for the temporary reduction in the number of hours worked per employee. These short-time work schemes explain why unemployment dynamics have been relatively under control. The overreaction of the US labor market became but an asset in good times. In 2021, the United States fully rebounded from the 2020 fall in production, while Europe recovered a mere 80 percent of the previous year’s output losses. Just like in the aftermath of the GFC and the Great Recession that followed, flexible markets together with the size of discretionary fiscal measures introduced by the US federal government lie behind the size of the postpandemic recovery (figure 12.2). However, it should not be ignored that neither Europe itself nor the EMU specifically is a homogenous set of countries; economic performance and policy initiatives vary significantly from one country to the other. Different varieties of capitalism coexist under the same macroeconomic umbrella, which is an aspect that explains why, in Europe, the recovery from the GFC has been diversified and so were the economic conditions in place when the coronavirus pandemic hit the region. Because a common macroeconomic regime should guarantee relatively similar demand conditions across countries, the current divergence inside Europe is mostly of a supply-side nature,

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Figure 12.2  Real GDP Growth, 2020–2023 (Percentage Change)

having to do with the way in which economic systems are organized.1 Differences in production regimes are not only important per se but they also explain why European countries responded differently to the very same macroeconomic regime.2 This condition raises the issue of the potential costs associated with such divergence, posing ultimately the question of the political viability of the European project altogether, would such heterogeneity persist. The purpose of this chapter is to analyze the performance of EMU members after the GFC through to the pandemic from the perspective of the varieties-of-capitalism (VoC) literature as pioneered by Hall and Soskice (2001). It does so, firstly, by juxtaposing the European region to the United States as a way of shedding light on variation in adjustment mechanisms across different models of capitalism. Yet the bulk of attention is on divergence inside Europe itself. The introduction of a single currency, the devolution of monetary policy to the supranational ECB, and the tight coordination of national fiscal policies via the imposition of top-down rules have forged some macroeconomic convergence, with countries having more similar fiscal positions and inflation and long-term interest dynamics than before the introduction of the euro. The new common macroeconomic regime was not geared to create similar production regimes on the supply side. The euro area remains divided between a continental Europe (i.e., Austria, Belgium, Germany, Finland, and the Netherlands) and a periphery (i.e., Greece, Spain, Portugal, and Italy). The former belongs to the archetype of a CME with a strong export performance. The latter variety of capitalism is captured by the residual category of a MME, alluding to the fact that these economic systems are in fact neither CMEs nor LMEs, such as the United States, and suffer from competitiveness problems that limit their capacity to sell their goods and

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services on international markets and need thus to rely on domestic demand to sustain economic growth. In drawing a distinction across European models of capitalism, this chapter uses insights from a research strand that runs parallel to the VoC approach, which has shifted the focus of attention from the supply side, and hence the characterization of production regimes, to the demand side by looking at the key growth drivers across different varieties of capitalism (Baccaro and Pontusson 2016; Johnston and Regan 2016).3 The heterogeneity inside the EMU can be explained by building on both approaches. Continental, or core euro-area, countries consist of CMEs. In comparison to LMEs, they have regulated markets with monopolistic competition on product markets, stringent employment protection legislation, and collective wage bargaining. Yet rather than creating rigidities, this setup produces efficient outcomes because all the relevant agents coordinate their action. So, for example, sectoral collective bargaining does not lead to wage dynamics that are truly diversified across sectors and potentially inflationary, because a parallel system of wage bargaining coordination implies that all sectors follow the lead of the exposed manufacturing sector, where wage moderation is seen by employees themselves as an instrument to preserve competitiveness and thus employment to the extent that it ensures strong export growth (Hancké 2013). All of these features on the supply side also determine the demand side, or, to put it differently, they contribute isolating the component of aggregate demand that drives economic growth the most. CMEs are export-led economies that rely on wage moderation in the tradable sector and where incremental innovation supports the continued improvement in productivity, further strengthening their competitive position on international markets. Peripheral euro-area countries are MMEs, where markets are regulated but possibly in ways that differentiate them from CMEs, including the fact that all markets often foresee a much stronger public presence. Labor markets are dual, with strong protection for permanent workers but soft dismissal rules on fixed-term contracts, a situation that leaves the labor market fragmented into high-skill/high-wage sectors, on the one hand, and low-skill/low-wage sectors, on the other. Wage setting is centralized, taking place mostly at the sectoral level, but it does not benefit from the lead of the exposed manufacturing sector, with the result that wage settlements are often inflationary. These rather dysfunctional production regimes lag behind CMEs in the capacity to generate productivity-enhancing innovation. They are a consumption-led growth model, where both public and private consumption drive economic growth. Ireland is equally classified as a consumption-led economy even if it belongs to the archetype of a LME with more flexible product markets than either CMEs or MMEs, radical as opposed to incremental innovation, and where wage bargaining is both centralized and coordinated and hence capable of delivering competitive wages just like in CMEs, even if the coordination is not voluntary but imposed upon private agents by the state. Market integration achieved with the introduction of the euro benefited economies that were fit enough to take full advantage of a larger integrated product market such as export-led economies CMEs. Along the way, the integration of financial markets and improved access to international credit after the elimination of capital

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controls in 1990 allowed consumption-led economies such as MMEs and Ireland to preserve their growth model, because agents could easily access credit to finance current spending, albeit at the cost of rising private indebtedness. At the same time, market integration did not provide them with the incentive to innovate so as to beat the competition and enjoy some more export-led growth, indeed because debt allowed these countries to maintain their original model even against the background of stronger international competition (Fernández-Villaverde, Garicano, and Santos 2013). The coexistence of these two opposing growth models has also been reflected in the fact that, since the introduction of the euro, export-led economies accumulated important current account surpluses while consumption-driven economies were plagued with deficits, signaling that consumption exceeded domestic production and the gap had to be compensated with imports from abroad. The financing of imports as well as of domestic investment in an environment in which the total level of domestic savings was subdued required that these countries borrowed from those where, instead, savings were abundant. The monetary union and the intense capital market liberalization associated with it created the conditions for the persistence of these two opposing growth models, in which each party’s behavior reinforced that of the other (Hope and Soskice 2016). Peripheral euro-area countries imported capital to finance domestic activities at relatively low cost, and core countries found new destination markets where they could invest their abundant capital against the implicit promise that the common macroeconomic regime would have prevented excessive inflation in the periphery and, with it, the erosion of real returns to investment. The political process that led to the euro had possibly underappreciated the implications of capital mobility and financial integration more generally. There was strong emphasis on the fact that EMU members would lose the capacity to manage their economic systems by means of exchange rate and monetary policies, but there was little research and hence political attention to the effects of intra-EU capital mobility and the completion of the single market for financial services. Before the euro, there were quantitative restrictions to capital movements across European borders, and European banks remained strongly attached to their home country. Barriers to capital mobility were lifted in 1990, and successive EU legislation in the early 1990s allowed each European bank to open branches abroad. Capital could flow from north to south because it was supported by a euro-area-wide financial infrastructure that operated smoothly thanks to the elimination of exchange rate risks and the establishment of an international payment system known as Target II. While the new financial architecture of the euro area created the conditions for the accumulation of current account imbalances, the specific behavior of domestic banks is likely to have played a role too. To be fair, that finance relates strongly to real economic outcomes was recognized both in the older comparative-capitalism literature and in the relatively more recent VoC approach. Following Zysman (1983), financial systems are typically divided into two polar categories. LMEs have market-based financial systems where firms obtain credit out of equities sold directly to the market, often alongside bank credit. As markets are populated by risk takers, firms in LMEs are able to engage in radical innovation, which tends to generate significant productivity gains against a relatively short time horizon. CMEs have bank-based financial systems in which firms finance

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their investment activities using bank credit. Banks provide “patient” capital and support therewith incremental innovation with modest productivity gains that are but sustained over time (Hall and Soskice 2001). Yet this characterization of financial systems is simplistic as it does not capture one important dimension of bank-based financial systems, namely, that banks themselves use the market to finance their lending activities. Rather than simply providing loans out of deposits, commercial banks have since the 1980s borrowed from other banks on the interbank market as well as issued equities to accumulate capital that is used to support often aggressive lending operations (Hardie and Howarth 2013). All euroarea countries have bank-based systems, but this is as far as the analogy goes. Banks in the core remained attached and in fact strengthened traditional funding sources under EMU, as their loans were mostly financed by abundant deposits, arguably a consequence of high saving rates. By contrast, banks in the periphery explored alternative sources of funding and could access the reserves of banks in the core via the interbank market, thereby being able to extend a volume of credit to the domestic real economy that was well beyond the size of deposits. Peripheral banks did not limit themselves to transferring resources from domestic savers to domestic borrowers, as it happens in the traditional banking business model, but used foreign resources to extend lending to agents that would have not gained access to credit markets in the absence of such an abundant supply of funds on the new European monetary market. When the GFC hit and the Great Recession set in, private debt that accumulated in the South of Europe became a liability as it triggered actual or potential defaults, forcing European governments to rescue the banks that had lent aggressively by means of public money. That the volume of credit grew exponentially in the periphery bears an important message about the nature of the EMU macroeconomic regime. The expectation was that the unification of monetary policy under an inflation-averse, common central bank would impose discipline on MMEs; and yet the abundant credit supply made the EMU regime much more accommodative for them than it looked at first sight (Marzinotto 2019). This observation lends support to the so-called credit view of monetary policy, for which commercial banks contribute to determining monetary conditions up to the point where the “sign” of their lending policy—whether accommodative or stringent—is disconnected from the monetary stance adopted by the reference central bank. The discussion that follows builds on three contentions. First, the United States and Europe certainly represent two distinct models of capitalism. They mainly differ in the level of competition on products, labor, and financial markets. In the recovery from the GFC, it was but in particular fiscal and monetary policy regimes that made a difference. The United States is a federation with a strong central government and benefits from a central bank that can act as a lender of last resort in the face of markets. In Europe, fiscal policies remain national, and there is not a central fiscal capacity that can act as a stabilizer for the euro area as a whole. Moreover, the ECB is an independent central bank that may well provide abundant liquidity to euro-area commercial banks but can only stand indirectly behind the public debt of individual countries. In other words, the institutional dimension of economic policy plays an important role: a true federation is better apt to respond to a large negative shock than a semifederation like the EU.

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Second, cross-country variation in Europe is of a special nature and goes beyond the differences that exist between states in the United States. While in the latter, states vary because of a different concentration of economic activities, whether it is about geographical or sectoral concentration, Europe accommodates opposing varieties of capitalism or growth models. The available comparative-capitalism literature has identified an export-led growth model in continental European countries and a consumption-led growth model in the periphery. Unsurprisingly, export-led economies seem to have been better able to exploit the benefits from market integration after the introduction of the euro than consumption-driven economies in the periphery could, maximizing proceeds from exports as trade intensified following the elimination of exchange rate risks. This explains why they were better off when the GFC hit and were quicker in getting out of what was a milder recession and, similarly, why they were in better starting conditions at the onset of the pandemic. Third, finance played an important role in the dynamics that led to the GFC and in the postcrisis adjustment. The VoC approach has not been insensitive to the role of financial systems. But the simple distinction between market- and bank-based financial systems carries the assumption that euro-area financial systems are homogenous because they are all bank based. Yet banks in one area may have a different business strategy than banks in another area, either supporting or restraining the accumulation of private debt.4 The specific behavior of banks explains why private debt accumulated more in the periphery than in the core together with structural features of each variety of capitalism, as the higher share of low-income agents in the South implied that a larger share of the population than in the North could eventually access credit following capital market liberalization, after having being credit-constrained in the preceding period. This chapter has five sections. The first sketches the relationship between the VoC approach and economic theory, in particular the so-called Optimum Currency Area (OCA) theory. That juxtaposition is a good starting point for shedding light on the interconnectedness of macroeconomic regimes and the operation of an economic system or, to put it differently, of markets. The second section describes key institutional differences between an LME, as epitomized by the United States, and the European continental model of capitalism, explaining the extent to which differences in micro- and macro-institutional settings between these two regions have led to differences in economic performance after the GFC. The third probes more deeply into the VoC approach and the growth models that have been identified in the literature. The fourth sheds light on the much-neglected implications from financial integration and explains why two opposing growth models have so far coexisted under the same macroeconomic umbrella. The fifth indulges in a brief description of the European reaction to the COVID-19 crisis and draws possible governance scenarios for the postpandemic, not overseeing the potential effects of the Russian invasion of Ukraine on the future of European capitalism.

Varieties of Capitalism and Optimal Currency Areas The juxtaposition of the United States and Europe has often taken up a normative dimension mostly because the (nonnormative/descriptive) VoC literature developed

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at the same time as the economics profession was recognizing the limited adjustment capacity of economic systems that are plagued with frictions (or inefficiencies) in product, labor, and financial markets. The general idea was that in the presence of large external shocks, flexible economic systems such as the United States would be better off than more rigid regimes like many European countries, because the United States could rely on well-functioning markets to deliver adjustment. So, for example, in deep recessions, competitive product markets deliver a fall in prices that help support demand, thereby limiting the duration of the recession. Price adjustment would be stronger where also labor markets are flexible, because this induces a fall in nominal wages that leaves additional room for firms to lower output prices without an excessive contraction of profit margins. The same is not true of most European countries, where product markets tend be highly regulated and wages sluggish because they are set through a process of collective bargaining between labor unions and employers’ representatives over a predetermined contract length. Under these conditions, marketbased adjustment takes longer, leaving scars on these countries’ potential growth. In the euro area, the single currency was built on the premise that the inability for each individual euro-area country to use the exchange rate to induce a market-based adjustment would require making all other markets flexible enough to facilitate the response to negative external shocks. So, for example, outside a monetary union, a country in recession can devalue its own currency to boost exports or, in a flexible exchange rate regime, it can put in place a monetary expansion that may well come with exchange rate depreciation and stronger export growth. Devaluation or expansionary monetary policies that in one way or another reduce the international value of one’s currency mimic the behavior of a flexible market economy even in the presence of price rigidities of other kind. The same is not possible in a monetary-union context, where member countries do not have control over the external and the internal value of their currency in the sense that national central banks cannot decide their own exchange rate and monetary policy. Such a conceptual framework dominated the negotiations that led to the creation of the euro and derives directly from the OCA theory developed by Canadian economist Robert Mundell (Mundell 1961). OCA theory establishes the conditions under which a currency area may be considered optimal, because the costs of losing the exchange rate as a policy instrument are either minimized or reversed by some other conditions being in place. The first condition regards the extent to which member countries tend to find themselves in different positions of the business cycle, with one country booming and another going through a recession, a situation typically described as an asymmetric shock. Such an asymmetry increases the costs associated with the impossibility for the country in recession to devalue the domestic currency to boost exports. The success of devaluations in a stand-alone country is attached to the presence of asymmetric shocks, because the fact that another neighboring country is booming is per se guarantee that there will be demand for the goods of the country that has decided to devalue. In other words, according to OCA theory, the more frequent the asymmetric shocks, the more costly it is to lose the exchange rate as a policy instrument. Against this background, the belief was that Europe’s economic and monetary union should be regarded as an area in which demand-side asymmetric shocks were

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deemed to fade with time. There are various reasons for that. One is that European countries were intensively trading with each other, exchanging goods and services not only across industries but also within industries. The fact that European trade was considered mostly an intra-industry type implies that sector-specific shocks are transmitted in the same way across partner countries without producing any asymmetry. The other reason is that euro-area countries would find themselves in the same macroeconomic regime with a single monetary policy and national fiscal policies tightly coordinated by means of common top-down fiscal rules. By implication, demand shocks coming from monetary and fiscal policy were bound to be very similar from one country to another, reducing the probability of asymmetry.5 Beyond trade and macroeconomic policies, finance is an additional potential source of economic disturbance to which economic research devoted relatively less attention, as it relied on a naïve understanding of the implications from capital mobility. Monetary unification was preceded by the elimination of capital controls. This implied that capital could move across borders in search of the highest possible risk-free return as measured by the marginal productivity of capital. Because returns tend be larger in countries that are “catching up” in terms of productive technology, the process of financial integration that accompanied the introduction of the single currency was expected to foster economic convergence across the board, thereby minimizing the risk of asymmetric shocks. The first years of the euro seemed to confirm this and give support to the hypothesis that financial integration might actually improve the optimality of the currency union. Inside the euro area, capital was flowing downhill from continental high-income countries to peripheral low-income countries and was used in the latter to finance domestic investment (Blanchard and Giavazzi 2002). At the same time, peripheral countries suffered from current account deficits with imports exceeding exports, reflecting the fact that they were high-consumption countries whose demand had to be satisfied by foreign producers. Current account deficits and capital inflows were reinforcing each other as these countries’ consumption-driven growth model implied that they were not able to generate savings sufficient to finance desired investment, which created the need to access foreign capital. The situation was reversed in core countries. The current account was in surplus, signaling that most national income was generated by exports and that consumption of foreign goods remained subdued. Low aggregate consumption allowed these countries to accumulate significant savings that in the end flew out in search of the highest possible return. This downhill flow of capital was considered by many a virtuous process, because it was expected to allow low-income countries to catch up with their richer neighbors and, generally, to create a level playing field against which asymmetric shocks would become less frequent. The benign interpretation of euro-area current account imbalances faded in the GFC. Because the initial 2007–2008 banking crisis hit all European countries equally, creditor countries in continental Europe recalled capital invested in the periphery, leaving the latter unable to rollover existing debt.6 The so-called Sudden Stops refer specifically to the abrupt interruption in the inflow of capital to debtor countries, whose consequence was an equally abrupt fall in consumption as resources were put aside to self-finance accumulated

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debt. Being prima facie an opportunity, financial integration turned into a liability once the perception of risk changed. Beyond the frequency of asymmetric shocks, the second set of conditions that is relevant for judging whether a currency area is optimal is the existence of adjustment tools alternative to the exchange rate. Should an asymmetric shock nonetheless occur, union members would at least have instruments that either mimic the effects from devaluations or, generally, allow them to cushion the consequences from the shock. Wage and price flexibility is one such instrument, because the system in recession would be able to export if prices fell enough to stimulate external demand, everything else equal.7 This piece of theory explains repeated calls by the EU for member states to make product and labor markets more flexible through structural reforms. Examples of reform include new rules to support firm entry into product markets and generally strengthen competition as well as measures to take wage bargaining closer to the firm level so as to allow a better alignment of wage to productivity developments. In the background was the idea that LMEs such as the United States and the UK, with their weakly regulated markets, were successful in achieving relative price adjustments and that Europe should somehow reinforce the role of the market to make its own economic systems more resilient. To be fair, the VoC literature established that CMEs could achieve equally efficient relative price movements through non-market-based coordination across different agents and institutions. So, for example, centralized wage bargaining could deliver wage restraint if reference monetary authorities were conservative enough to threaten a rise in the interest rate and hence higher unemployment, should wage bargains be excessively high. An institutional complementarity of this kind is a functional equivalent to market-based adjustment (Iversen and Soskice 1998; Hall and Soskice 2001; Soskice 2007; Hancké 2013). The comparative-capitalism literature assumed implicitly that CMEs would perform better than MMEs in a monetary union exactly because of their capacity to coordinate a nationwide response. With that also came the idea that one variety of capitalism might be superior to another. This is reflected in the fact that policy recommendations to member states often allude to the need to align wage and productivity developments so as to improve cost competitiveness in the same way export-led economies have been able to do over the previous decades. While allowing for the creation of level-playing field that may have in theory prevented the incidence of asymmetric shocks, capital mobility was perceived as innocuous also because it was at the same time a potential adjustment tool in the face of (nonfinancial) asymmetric shocks. Under integrated markets, the free movement of capital, whether intermediated by banks or just by the market, offers another mechanism that agents can use to insure against negative domestic shocks when these are country-specific. So, for example, agents in country A could buy government bonds of country B and be able to preserve their financial wealth even when country A is hit by a financial crisis that decreases the value of domestic bonds. The capital that moves may simply take the form of bank deposits rather than financial investment. The elimination of capital controls in Europe was accompanied by provisions that allowed for the free movement of financial services, which implied

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that any European bank could open up branches in another European country and citizens could open bank accounts in any European country even when it was not their country of residence. Again, where bank deposits are interest-bearing, a financial crisis only in the country of residence forcing domestic banks to cut interests paid on deposits would spare agents that have deposited their savings elsewhere, de facto providing an adjustment mechanism in the face of an asymmetric shock. Unfortunately, the role of financial integration as a shock absorber has not developed in the way theory would have predicted, with the main reason being that European financial markets are incomplete: opacity and asymmetry of information make agents biased in favor of domestic financial intermediaries. That is to say that European citizens mostly bought government bonds of their own country and mostly deposited savings (and borrowed) with banks situated in their country of residence, even if the EU-wide regulatory environment would have allowed them to do differently. This had an important impact on the way in which the GFC unfolded. The initial banking crisis of 2007–2008 was followed by a debt crisis in 2010. As the value of the government bonds of the periphery fell while that of the core rose, investors in the periphery suffered from a contraction in their financial wealth that ended up strengthening the fragmentation between a robust core and a weak periphery. But there was an additional policy-induced distortion that came with the fundamental neglect of the centrality of finance. Monetary unification was not accompanied by the Europeanization of financial regulation and supervision. While sharing a single currency, euro-area countries kept individual responsibility for supervising domestic banks. This came with at least two implications. First, domestic banks reacted differently to the creation of a Europe-wide credit market because of different starting conditions, including aspects such as bank ownership, levels of bank capitalization, and the like. So, for example, banks in MMEs went through privatization in the 1990s, which prompted them to adopt an aggressive lending behavior, because they felt they had to catch up with the more liberal neighbors, where private bank ownership was the norm. Second, as of the early 1990s, banking services were free to move across borders but branches abroad were subject to the regulation of the home country. That is to say that a Spanish bank operating in, say, Germany would be subject to Spanish financial regulation and vice versa. This created a mismatch between the business cycle and the sign of the regulatory environment: a booming country could host foreign banks with a very aggressive lending behavior just because the home country was at the same time going through a recession and authorities had decided in turn to relax regulation on lending conditions. The risk associated with such a mismatch was that, in the booming country, credit to the real economy would grow up to unsustainable levels, leaving the country hostage to boom-bust cycles.8 If anything, the OCA theory reminds us of the interconnectedness of macroeconomic regimes, on the demand side, and the operation of product, labor, and financial markets, on the supply side. Where economic theory has failed was in understanding the bright and dark side of financial integration.

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The United States and Europe Compared The faster recovery from the GFC of the United States relative to Europe would have been predictable on the premise that flexible markets react more promptly to shocks than rigid markets. While this is a supply-side explanation of the differentiated speed of recovery, there is certainly a demand-side dimension to it that pertains to the conduct of macroeconomic policies—that is, monetary and fiscal policy. The United States has reacted earlier and more intensively than Europe despite the fact that the 2009 recession hit the US economy less powerfully than it hit Europe. The FED reduced interest rates early on and launched three rounds of quantitative easing (QE), in 2008, 2010, and 2012. At the same time, the federal government injected a significant fiscal stimulus with the public deficit increasing to 13.2 percent of GDP in 2009 from 2.9 percent in 2007, just prior to the financial crisis. The increase in the public deficit was due both to a generous discretionary fiscal stimulus and to the activation of automatic stabilizers in the recession (e.g., unemployment benefit expenditures). By contrast, the ECB was less prompt in lowering official interest rates because of the uncertainty about inflation dynamics. The Statute of the ECB makes price stability—which, after 2003, the ECB defined as an expected rate of inflation that is below but close to 2 percent per annum over the medium term—the first most important objective of monetary policy. In 2009, output fell significantly, but average price growth did not decelerate as much, at least initially; moreover, inflation rates continued to vary from one country to another. The slow reaction of prices to the recession and the strong heterogeneity that existed inside the monetary union may well explain why the ECB was less prompt than the FED in reacting to the Great Recession and waited before lowering the key policy rate. It is here argued that the juxtaposition of a single monetary authority to multiple states explains the initial delay in adjusting policy rates downward but also the delayed response in initiating QE later on.9 As prices eventually started to react to cyclical factors, the postcrisis period was characterized by a significant deceleration in price growth, raising the risk of deflation. The ECB launched QE in 2015 indeed to avert deflation risks and, with them, the rise in real interest rate and their recessionary impact on the European economy. Just like the FED had been buying US governments to inject liquidity into the market, the ECB started buying government bonds of all euro-area countries on the secondary market. Yet it was an awkward type of QE. In principle, with the purchase of large quantities of government bonds (on top of some preselected corporate bonds), the ECB would be exposed to individual countries’ default risks, with costs potentially distributed across all members. Countries with low public-debt levels were resistant to the idea of bearing the costs of default by weaker high-debt countries. This political-economy constraint was overcome because the European QE relied on an innovative governance framework. The ECB indicated the amounts of government bonds that had to be bought for each country based on the share of ECB capital each member state owned, but most government bonds would rest with national central banks so that the costs of a possible default would be borne by the country itself.

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As to fiscal policy, the European effort was again not comparable to that of the US federal government. At the same time, it would be but too simplistic to say that the reason why European countries had a more conservative fiscal behavior than the United States had to do with the fact that they were subjected to stringent EU fiscal rules. In the 2009 recession, the European Commission did open the excessive deficit procedure for almost all euro-area countries but allowed at the same time a longer period for the correction of excessive deficits and debts. It is more about the management of the situation in the post–emergency period. When the recovery kicked in and after a transition period, the rule-based fiscal framework was back in place and reinforced following the approval of a package of reforms known as the Six-Pack (see chapter 11). While granting leeway in crisis times, the EU took it back in normal times. It is only a speculation, but the expected tightening of fiscal rules may have well prevented member states from implementing the right amount of fiscal stabilization against the fear that this would require an excessively severe consolidation in normal times. Moreover, EU member states relied significantly on the operation of relatively generous preexisting automatic stabilizers and much more so than the United States (figure 12.3), whose welfare state is certainly less developed. This went hand in hand with a much more limited use of discretionary fiscal measures, those on which the European Commission exercises its scrutiny the most. The variation in macroeconomic performance regimes across the two sides of the Atlantic reflects differences in the design of the political institutions that are responsible for managing aggregate demand. The United States is a federal state with an active central bank that is mainly concerned with economic growth and less so

Figure 12.3  Average Overall Fiscal Balance from 2008 to 2010 (Percent GDP)

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with inflation and that can function as a lender of last resort, monetizing federal debt. Moreover, the US federal government makes politically legitimate decisions on key spending and taxing programs, generously supporting the national economy by means of discretionary fiscal measures that accompany monetary expansion in crisis times. By contrast, the euro area is not a proper federation. The ECB is by statute constrained in its capacity to act as lender of last resort because it cannot directly monetize the public debt of member countries.10 EMU has an asymmetric governance structure. While monetary policy is unified, fiscal policy remains a national responsibility, albeit under restrictions on outcomes. The asymmetry makes the coordination between monetary and fiscal policy much less synchronized and efficient than it is in the United States. The difference in macroeconomic regimes can be explained building on the spirit of the VoC approach. The original literature put the firm at the center of analysis to then classify economic systems based on the operation of production regimes covering aspects such as skill regimes, wage-setting, how firms enacted innovation, and what funding sources they used the most. More recently, the same literature has expanded to cover the demand side and has identified institutional complementarities between types of production systems and macroeconomic regimes. Soskice (2007) explains convincingly that LMEs such as the United States that tend to provide general skills, rely on flexible wages, and deliver radical innovation financed by the market are characterized by flexible aggregate demand management regimes (ADMRs), which indicates that monetary policy is supportive of economic growth and fiscal policy not subject to rules that limit its stabilization function. A flexible ADMR is possible in LMEs because markets are “atomistic” and cannot collude in ways that would turn the macroeconomic stimulus into mere inflation. By contrast, CMEs—where sector-specific skills prevail, wages are set through collective bargaining mostly at the sectoral level, and banks finance incremental innovation— feature rigid macroeconomic regimes with an independent central bank fixing a predetermined amount of money, independently of fundamentals, and with fiscal policy constrained by rules that normally impose a balanced budget. A conservative ADMR is a guarantee that the few setters who have the power to set wages for the entire economy would exercise self-restraint, as excessive wage and price growth reduces real consumption and prompts a rise in unemployment (Iversen and Soskice 1998). There is indeed empirical evidence showing that, in LMEs like the United States, Canada, Australia, and the UK, national central banks have been proactive in lowering interest rates during recessions and the central government has been bold in pursuing deficit spending. This is a historical record that repeated itself in the GFC. By contrast, CMEs like Germany but also Austria and to some extent the Netherlands and Finland had historically rigid macroeconomic regimes with an independent central bank often operating with an inflation target and national fiscal policy subjected to self-imposed deficit limits. The EMU regime was specifically designed to mimic this type of rigidity. The nature of the measures undertaken in response to COVID-19 would offer additional support to the idea that macroeconomic policy decisions are embedded in each variety of capitalism. In relative terms, the United States preferred direct revenue and spending measures to counter the health crisis and the consequences from the Great Lockdown. The same is true of other LMEs such as Australia and Canada. The response

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of some European countries, most notably Germany and Italy, was larger in size, but it consisted mainly of loans, equity injections, and guarantees that would preserve the size of national budgets, being thus a more conservative form of intervention (figure 12.4). Before the introduction of the single currency, Europe was divided into rigid national macroeconomic regimes such as those of Austria and Germany, a relatively flexible one in Ireland, and a third category in the South of Europe, where the regime was de facto flexible but in a dysfunctional manner. As a matter of fact, countries such as Greece, Italy, Spain, and Portugal had made extensive use of devaluation to get out of recessions before joining the monetary union. A rather active exchange rate policy went hand in hand with a relaxed monetary policy that paved the way to high inflation rates. Fiscal policy was suboptimal, because vested interests interfered with the budget process possibly in a more systematic fashion than elsewhere. This capture of fiscal policy by vested interests resulted in excessive public deficits and debts that were often monetized by the reference central bank, thereby further contribution to further strong price growth.

Figure 12.4  Fiscal Response to the COVID-19 Pandemic (Percent GDP)

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Mimicking the governance structures of CMEs and of Germany in particular, the euro area was built as a rigid regime with a conservative common central bank and downward convergence in fiscal deficits and debts. For its part, the ECB was given a narrow focus on price stability. The objective was to deliver to all the same macroeconomic success achieved in the past by continental European countries, one based on price stability and sustained economic growth. This has, in fact, not occurred. Countries of the periphery had all been going through a boom after the introduction of the single currency, characterized by inflation and GDP growth rates above those of the core. Inevitably, this turned into a bust when all of Europe was concerned by a banking crisis in 2007–2008 and a deep recession in 2009. This excessive cyclical volatility runs counter to the prospect of securing for these countries renewed stability in the monetary union. The reason why the rigid EMU regime did not impose macroeconomic stability across the board has to do with the role of finance. Following the elimination of capital controls, money started flowing from the core to the periphery and was typically intermediated by domestic banks that had the possibility of lending extensively to the real economy simply following national regulatory standards. The steep rise in private credit to GDP resulted in a large cohort of indebted agents, both households and firms. Abundant private credit delivered a regime in the South of Europe that can be hardly considered rigid. Freely operating financial markets overcame the constraints coming from rigid public institutions. As the GFC hit and capital stopped flowing into the periphery, indebted households and firms did not have the resources necessary to roll over existing debts. Booms thus turned into busts, with the result that the Great Recession of 2009 was more severe in the periphery than in the core, even if the initial financial problems of 2007 and 2008 had concerned all European countries equally.

Europe: Two Opposing Growth Models The stark contrast between the United States and the European variety of capitalism builds on the simplifying assumption that Europe can be treated as the simple average of a couple of different varieties of capitalism. The heterogeneity inside Europe is mostly puzzling and a potential limit to further political integration inside the EMU. So, for example, Germany is close to the ideal type of a CME. Government regulation imposes important barriers to entry on product markets; unions negotiate wages with their employers for the entire sector they belong to, with the result that there is limited differentiation across types of workers and almost no differentiation across firms in the same sector; firms rely on patient (i.e., long-term) bank credit and are less dependent on equities and the external pressures about their short-run sales and profits performance. Peripheral countries are more likely to look like MMEs, in which the market operates alongside the government; product markets are fragmented with sectoral competitive markets populated by micro firms and less competitive markets where large, often publicly owned, companies set conditions for all; wage negotiations are centralized like in CMEs, but there is no coordination across sectors (Flanagan, Soskice, and Ulman 1983; Hall and Soskice 2001). Ireland is the only EU member

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country that is traditionally classified as a LME; but even here, there are peculiarities. In particular, the country adopted a relatively centralized wage bargaining system that aimed at controlling inflation and that runs counter to the principle of mostly individual wage setting seen in the United States.11 Countries that have adopted the single currency have subjected themselves to the same macroeconomic regime—that is, a single currency, a one-size-fits-all monetary policy and common fiscal rules—but preserved their original production regime. Absent the option of getting out of recession via a domestically engineered devaluation and a self-engineered monetary-fiscal expansion, CMEs and their efficient nonmarket coordination were deemed to perform better than MMEs did. The operation of labor markets represents the lion’s share of this efficient form of coordination. Carlin (2013) argues, for example, that German centralized collective bargaining guarantees that the few agents who have the power to set wages would do so by internalizing the need to preserve cost competitiveness, and would exercise wage moderation. The same is not true of most MMEs, where wage bargaining is centralized but wage negotiations are not dominated by exposed sectors, an aspect that may well explain why wages have been growing above productivity, leaving these countries unable to beat the competition on international markets and, in turn, largely reliant on domestic demand. The fundamental idea here is that each variety of capitalism relies on a different growth driver. The point was made by Baccaro and Pontusson (2016), who argued that the standard VoC approach fails to recognize the role of growth drivers and of income distribution. Shifting the focus away from the supply side, this more recent growth-model literature supports the view that Europe is “populated” by two opposing growth models. Export-led economies such as Germany and the other CMEs grow thanks to strong exports. On the other side of the spectrum are countries that belong to the euro-area periphery, Ireland among them, which are consumption-driven economies, in which demand-driven inflationary pressures and poor productivity developments account for deteriorating cost competitiveness and a modest aggregate export performance. To be fair, the contrast to the VoC is only a matter of perspective. Export-led economies belong to the archetype of a CME. That exports are their main growth driver is consistent with the VoC characterization of economic systems in which the few wage setters on the labor market decide in favor of restraint, following the lead of the manufacturing sector. At the same time, management can devote itself to incremental innovation to boost productivity, thanks to the long-term support from bank credit. The end result is falling unit labor costs, making these economies highly competitive on international markets. Consumption-led economies are either MMEs, such as Greece, Italy, Spain, and Portugal, or LMEs, like Ireland. In the former, strong public intervention on product markets reduces the incentive to innovate, as testified by laggard productivity developments, while the outcomes from wage bargaining rounds are importantly affected by claims from the untraded public sector. Cost competitiveness lags behind but strong wage growth supports consumption. In Ireland, the state has a minor presence in the economic system, but very relaxed prudential policies have allowed consumers to access credit easily to finance both consumption and residential investment.

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The second aspect the “growth-model” research has brought to the forefront revolves around the origins and implications from income inequality. Core export-led CMEs tend to have a relatively equal distribution of income not least thanks to collective wage bargaining, which is reducing within- and across-sector wage disparities.12 Peripheral MMEs have been historically plagued with a rather unequal income distribution, and a high share of the population is at risk of poverty, mostly because of dysfunctional welfare states. Interestingly, Baccaro and Pontusson (2016) argue that distributional shifts away from labor toward capital since the 1980s have strengthened the polarization in growth models: the shift generated stagnation in wage-led economies, to which export-oriented countries responded by leveraging on external demand to compensate for insufficient domestic demand, whereas consumption-led economies favored access to credit to allow the high share of low-income agents to borrow so as to finance desired consumption. Along similar lines, Hall (2012) suggests that the coexistence in Europe of these two opposing growth models lies behind the emergence of macroeconomic imbalances in the euro area and is fundamentally a threat to the survival of the euro. These two models have grown progressively incompatible under EMU, because consumptiondriven economies have lost the capacity of regaining competitiveness through devaluation while export-led economies could de facto continue pursuing old policies (Johnston and Regan 2016). As indicated, the opposing nature of growth models is reflected in particular in one aspect of their macroeconomic performance: the current account balance broadly overlapping the difference between exports and imports. Competitive, export-led economies tend to have a current account surplus, signaling that their exports exceed imports and export proceeds are invested outside. By contrast, uncompetitive, consumption-led economies in the euro-area periphery accumulated significant current account deficits; the value of their imports exceeded that of exports, and the excess was indeed financed with capital flowing in from export-led economies in the core of the euro area. Iversen and Soskice (2012) argue that the characterization of the opposing growth model does not signal an incompatibility but is itself an explanation of why the monetary-union project was politically feasible. Export-led countries were guaranteed that others would not opt for beggar-yourneighbor devaluation, while MMEs finally enjoyed access to international credit markets at low interest rates, which created significant opportunities to finance domestic consumption and investment. Others juxtapose to the “growth-model” explanation of macroeconomic imbalances a “financial” explanation. Jones (2015) was among the first to focus on the role of capital flows inside the euro area. Fuller (2015; 2017) expands on this approach by arguing that the inception of EMU gave birth to a new financial asset market in which greedy consumers in the periphery could easily borrow from the core where the propensity to save is high. Debtors and savers were thus joined at the hip in a “perverse compatibility” that fueled the accumulation of macroeconomic imbalances. Under this framework, imbalances do not reflect differences in export capabilities across country groupings but are driven by a different consumption behavior. Such an account of current account imbalances is not necessarily at odds with the “growth-model” views, because there are interactions between capital flows, price growth, and ultimately cost

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competitiveness. So, for example, Schelkle (2017) argues that it was capital inflows that accelerated inflation in MMEs and Ireland, thereby deteriorating cost competitiveness. No matter how one looks at macroeconomic imbalances, it is certainly true that EMU architects ignored or underestimated the interplay between monetary unification, financial integration, and the real economy.

The Role of Financial Regimes The GFC has unveiled the centrality of financial systems in shaping countries’ economic performance. Financial systems may well be considered institutions representing the infrastructures channeling capital from savers to borrowers. The comparativecapitalism literature has traditionally relied on the distinction between bank-based and market-based financial systems (Zysman 1983; Hall and Soskice 2001). In the former, agents deposit their savings with the banking system, which uses these reserves to provide long-term loans to households and firms. Banks specializes in such transactions. They often represent the ultimate source of funding to the real economy, because they can offer credit at relatively low rates thanks to large-scale operations and accumulated expertise in lending procedures. In market-based systems, funding is mostly provided by the market in the sense that firms issue securities and thereby collect capital directly from private investors at interest rates that are generally higher than those on bank loans for small firms and either higher or lower—conditional on current and expected performance—in the case of large firms. European countries tend to have bank-based financial systems where firms receive patient capital from banks and engage mostly in incremental innovation fed by a stable, long-run relationship with credit institutions that support and supervise long-term investment projects. By contrast, the United States has well-developed market-based systems where firms have the option of issuing equities, including to finance shortterm radical innovation, offering above-normal returns to investors provided they are willing to take the risk (Hall and Soskice 2001). This standard characterization of financial systems has been recently questioned in that it overlooks the fact that banking systems have evolved from traditional bank lending to market-based lending, because they use the market themselves either to issue securities or to contract debt with other banks (Hardie and Howard 2013). This comes with important implications. First, banks are taking up risks as much as other market participants do, and the risk is higher, the larger the financing gap—that is, the difference between deposits from and loans to the nonfinancial private sector. Second, euro-area banks become independent from each other when their alternative source of funding is the wholesale market, in which they can obtain unsecured loans from other banks. Third, an active interbank market has made them partially less dependent on the ECB’s standard monetary policy decisions during normal times. When looking at the performance of the periphery relative to the core, it is striking how, under EMU, the funding gap has been rising in the former more than in other countries and falling in the core, even if the more liberal and privately owned financial systems in continental Europe had entered the monetary union with a higher

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average funding gap than the periphery had. One possible explanation is that banks in the periphery felt the urge to catch up with their liberal neighboring partners (Abiad and Mody 2005) once capital controls were eliminated and the free movement of financial services created the conditions for a generally more competitive banking sector. While engaging in financial innovation, banks in peripheral countries had the option of supplying loans by setting lending conditions—most notably relating to interest rates—that were not necessarily consistent with the evolution of the policy rate set by the ECB (Altunbas, Gambacorta, and Marques-Ibanez 2012). In other words, the behavior of financial intermediaries shielded households and firms from EMU’s nonaccommodating macroeconomic regime (Marzinotto 2019). The operation of domestic financial intermediaries is somehow consistent with the type of households that populate the domestic economy. It is implicit to the VoC approach that households in CMEs are patient (risk-averse) savers who mostly invest in conservative private pension schemes (Vitols 2001). Accumulated savings could flow out in search for the highest possible return after the elimination of capital controls. Moreover, a country such as Germany, representing about onethird of euro-area GDP, experienced a succession of reforms in the early years of the euro that increased uncertainty and hence precautionary saving (Carlin and Soskice 2008).13 By contrast, in MMEs, there is more variation across households, ranging from risk-averse savers to the extreme of hand-to-mouth consumers, a separation that seems to reflect the duality of most MMEs’ labor market (Crouch 2012). Financial liberalization in these financially repressed peripheral countries created an environment where savers could afford to be less risk-averse and hand-to-mouth consumers heavily indebted (table 12.1). There is, in fact, a relationship between financial liberalization, types of households, and macroeconomic imbalances. EMU-induced financial liberalization consisted of a relaxation of liquidity constraints for previously credit-constrained agents, such as low-income groups, whose share typically rises in levels of income inequality. Table 12.1  Varieties of Capitalism and Financial Regimes under EMU CMEs Type of financial Bank-based system Bank funding sources Interbank market (primarily) and deposits Capital controls Low Domestic credit Low market regulation Type of households Majority of risk-averse savers; more risk-averse savers

LMEs

MMEs

Market-based

Bank-based

Market

Deposits (primarily) and interbank market High, but decreasing High, but decreasing

Low Low

Majority of riskMajority of risk-averse takers and hand-to- savers and hand-to-mouth mouth consumers consumers; less risk-averse savers and indebted handto-mouth consumers

Source: Author’s elaboration; boldface and italics used to highlight regime change.

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With easy access to credit, the latter started to engage in debt-financed consumption, which resulted in high current account deficits signaling net capital inflows. By contrast, financial liberalization had a limited impact on the consumption behavior of households in the relatively equal societies of the euro-area core, as here the initial portion of the (low-income) household sector that was credit-constrained was relatively small to start with. There was no need for importing capital from abroad to finance the need of a very small cohort, whose demand for funds could be, in fact, easily accommodated by the much larger cohort of prudent savers (Marzinotto 2017). All in all, the presence of financial frictions in an economic system, such as limited access to credit for some categories of agents, explains why the patchy process of financial liberalization in Europe could not deliver greater convergence among countries, as neoclassical economic theory would suggest, but in fact triggered more divergence inside the euro area as a function of the size and nature of the existing financial frictions in each and every country.

Europe after COVID-19 The experience of European countries during the health emergency associated with COVID-19 and the period of the Great Lockdown sheds additional light on the extent to which the euro area might be exposed to asymmetric shocks of a different kind than those initially forecast. The EMU architects at Maastricht seemed confident about the fact that the demand side would not be a source of shocks. The threat would mostly come from the supply side, that is, the operation of production regimes. This belief was accompanied by the realization that all euro-area members should equally aim for market deregulation as a way of allowing synchronized responses when the shock was of a supply-side nature. It was not recognized that the relatively more successful export-led model could flourish only in a context in which the other half of the union would rely on a consumption-led growth model and that, while inefficient for the purpose of keeping euro-area members tied together, structural homogeneity is also an unrealistic policy goal. Equally, the architects of Europe’s single currency did not imagine that an extreme supply-side shock such as the 2020 pandemic could trigger diversified containment measures that ultimately created very different conditions for consumption. The common COVID-19-shock went hand in hand with diversified demand conditions that left the monetary union fragmented. To be fair, the EU tried to resist fragmentation and was relatively quick in coming up with innovative policy solutions that would accommodate for the fact that, yet again, the euro area displayed strong heterogeneity on the demand side. The policy measures concerned both monetary and fiscal policy. On the monetary front, the ECB devised the Pandemic Emergency Purchase Program (PEPP), a bond purchase program that privileged in particular government over private-sector bonds and that was devised—more or less consciously—in a manner that would favor the countries that had been the hardest hit—for example, Italy. As a matter of fact, the PEPP operated alongside the continuation of QE but differed from the latter in that purchases were conducted in a flexible manner because the ECB accepted giving up the respect

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of the so-called capital key at each point in time. Purchases did not have to reflect, in each and every month, a country’s share in the ECB’s capital but were concentrated in countries that registered the largest output losses and where funding costs were clearly on the rise. The objective of the PEPP was that of increasing the value of certain government bonds to achieve a fall in funding costs and to support expensive national income support schemes in favor of households and firms. With the support to public finances came also indirect support to commercial banks, which continued to hold large numbers of government bonds. Additionally, the ECB renewed preexisting unconventional measures that directly benefited commercial banks, whereby the central bank lent them credit even at negative interest rates, provided such credit was extended to the real economy to finance consumption and productive investment. On the fiscal front, the response of the EU was articulated. Early on, at the beginning of the pandemic, the European Commission applied a condition in the Growth and Stability Pact (SGP) for which all fiscal rules were suspended until the end of the emergency. The so-called General Escape Clause (GEC) gave leeway to governments, allowing them to generate public deficits above 3 percent of GDP and to abandon the short-term objective of reducing the public debt level every year. More significantly, the EU accepted using the common EU budget to finance the recovery from COVID-19 and the strengthening of the European economies in the face of future challenges. The package of measures known as Next Generation EU includes an instrument of €750 billion named the Recovery and Resilience Facility (RRF). RRF funds are collected by the European Commission on capital markets against common EU budget guarantee and then distributed to EU countries based on their size, the initial GDP per capita, their labor market performance just before the pandemic, and the size of output losses during the pandemic. About half of the RRF consists of grants that will be repaid over time through the EU budget, while the other half consists of loans that are repaid by the countries that have decided to access such a facility. Differently from the initiatives around the Stability Pact, which concerns the degree and nature of fiscal policy coordination, the RRF is a common fiscal instrument that might constitute the backbone of a future fiscal union. Along the way, the recovery from COVID-19 was slowed down by the Russian invasion of Ukraine in February 2022, which has come with far-reaching implications for European public policies. European leaders agreed straight away on a first package of sanctions on Russia, followed by successive measures against the aggressor over the course of 2022. The most prominent sanctions included restrictions on trade and investments in specific sectors (i.e., arms, dual-use goods, tourism services) and an export ban on certain goods and technologies (i.e., arms, dual-use goods, and the aviation and space industry). Yet, beyond sector-specific measures, additional financial restrictions affected all sectors at once. Most significantly, Russian financial entities were excluded from SWIFT, the international payment system, limiting the scope for all kinds of transactions, and part of the international reserves of the Central Bank of Russia were frozen. The measures were followed by a steep fall in the value of the ruble, as the Central Bank of Russia was left with limited resources to intervene on foreign exchange markets in the attempt to limit the free fall of the national currency. The tension did not abate, as the Russian establishment threatened it would accept

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only rubles as payment for gas exported to Europe, in order to force European financial institutions to keep an open door for the Russian financial system on the risk of isolation. The strong dependence on energy imports continued to affect the balance of power between the EU and Russia up to December 2022, when the majority of EU leaders made the decision to impose a cap on the price of gas imported from Russia, after lengthy negotiations and with the opposition of Hungary and the abstention of Austria and the Netherlands. Looking ahead, the EU is exposed to multiple challenges. On the demand side, the EU is called to rethink the EU fiscal framework. The outbreak of the conflict between Russia and Ukraine induced the European Commission to announce an extension of the GEC beyond 2023, the date that was initially identified. Going back to the old rules once the emergency is over—as implied by the letter of the SGP—is unfeasible, as it would require a fiscal effort that is not politically viable. The EU fiscal framework is likely to be significantly revised over the next few years. There are different proposals on the table that remain matters of dispute. The most prominent one goes in the direction of eliminating predetermined quantitative budget outcomes, such as the 3 percent deficit target and the 60 percent debt target, and of substituting them with a more sensible call for a sustainable public debt level in each country. Some others advocate the creation of a proper EU debt agency that issues government bonds to finance large EU investment plans (D’Amico et al. 2022). The question is whether such an EU debt agency will be better, equal, or worse than making the exceptional RRF a permanent EU tool. Differently from what happened during and in the aftermath of the GFC, all the pressure is on fiscal policy, as the ECB is unequivocally signaling the intention to retreat from government bond markets and initiate the normalization of monetary policy to counter mounting inflationary pressures. The EU’s supply-side challenges are relatively complex, and outcomes are hard to predict. The conflict between Russia and Ukraine has created the need to reduce dependence from energy imported from Russia. This foreign policy objective may require resorting to fossils in the short term, which is in conflict with the RRF’s longterm objective of supporting climate neutrality and the green transition. The EU’s medium-term energy policy is likely to be a hybrid one, characterized by the use of traditional nongreen energy sources in the initial phase, while RRF funds are used to create the infrastructures that would support a later green transition. Fighting accelerating inflation remains the primary objective of the ECB in the immediate postpandemic. The slow return to normality in 2021 has been associated with soaring energy prices. Intense discussions unfolded as to whether the large overshooting of the ECB’s 2 percent inflation target is of a transitory or permanent nature. The green transition funded by means of RRF funds is likely to put pressure on prices, as demand for renewable energy may rise faster than the time needed to organize new supply platforms. The ECB was the only game in town during the GFC, but the period ahead will come with a downsizing of its role as long as inflation remains a supply-side problem. The ECB will probably continue fighting in the rear, making sure inflation expectations are not deanchored and supply-side inflation does not turn into a permanent demand-side phenomenon.

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Notes 1. As it is shown in the remainder of the chapter, this is an oversimplification, because they are strong synergies between the demand and the supply side such that it remains hard to distinguish between the two in practice. 2. So, for example, the macroeconomic shock represented by rising energy prices has been felt differently across European countries because of different degrees of dependence from energy imports, which is part of each country’s production regime on the supply side. 3. There is an emerging comparative-capitalism literature juxtaposing growth models to varieties of capitalism. The rationale developed, for example, in Baccaro and Pontusson (2016) is that the “growth model perspective” is better apt at capturing differences in the composition of aggregate demand—whether export-led or consumption-led—and is more attentive to income distribution and how it impacts on aggregate consumption. Yet because the classification into country groupings is in the end not dramatically dissimilar across the two perspectives, we use “growth models” and “varieties of capitalism” interchangeably. 4. The relevance of private indebtedness in the unfolding of the GFC forced European Institutions to side fiscal rules with recommendations about the desirable growth rate of credit to the private sector, now captured in a new procedure known as the Macroeconomic Imbalance Procedure (MIP). 5. The threat of an asymmetric shock would mostly come from the supply side and thus hinge on the way in which domestic production systems would react to the shock. In this respect, it should not surprise that the euro project was accompanied by calls on national governments to implement structural reforms on the supply side so as to strengthen each country’s capacity to respond to negative supply shocks. 6. This was possible because of the specific nature of capital mobility in the euro area. Flows took mostly the form of debt rather than foreign direct investment (FDI)—for which foreign savings buy a domestic business; this made such capital flows reversible in real time, exposing the region to sudden stops and thus de facto causing an asymmetric shock. 7. The reference literature generally recognizes the role of labor mobility and fiscal transfers on top of price flexibility for addressing asymmetric shocks in a monetary union. 8. The so-called European Banking Union aims to address this problem. At present, it consists of two operational pillars: (1) the Single Supervisory Mechanism (SSM), and (2) the Single Resolution Mechanism (SRM). The third pillar concerning the creation of a European Deposit Insurance Scheme (EDIS) is still under discussion. The first pillar, the SSM, consists of the devolution of financial supervision to the ECB, which is now responsible for supervising the large systemic banks and guarantees a level playing field when it comes to the sign of regulatory measures imposed on banks. The second pillar, the SRM, ensures an orderly resolution of failing banks via access to a common bank-financed resolution fund. 9. This is not to say that the ECB’s action was unsupportive, but the timing of some measures was delayed compared with that of the FED, for reasons that have to do with the governance structure of the monetary union. To be fair, the ECB was extremely accommodative starting with 2011. After having reduced policy interest rates, it launched various unconventional policy initiatives. In 2011 and 2012, the ECB made it possible for euro-area commercial banks to borrow central bank’s liquidity for an exceptionally long period of three years. In 2014, 2016, and 2019, these special Long-Term Refinancing Operations (LTROs) were substituted with Targeted Long-Term Refinancing Operations (TLTROs), where (unlimited) liquidity was offered to banks at minimal or even negative interest rates provided it was lent to the real economy. Before the formal approval in 2015, both LTROs and TLTROs mimicked a sort of

V arieties of C apitalism and F inancial R egimes   349 QE that allowed banks to access all the liquidity they needed without expanding the central bank’s balance sheet. 10. The ECB can only buy euro-area government bonds on secondary markets. 11. Outside the euro area, Central and Eastern European countries constitute yet another hybrid model. These countries went through privatization that transformed them into economies that were market led yet characterized by strong government intervention in some sectors more than in others, while being also importantly dependent upon foreign direct investment from continental Europe, and that is specialized upon the assembly of complex products thanks to a skilled albeit comparatively cheap labor force. 12. Confirming such interpretation is the fact that the recent large use of derogations from collectively agreed wage rules (i.e., so-called opening clauses) has resulted into a more unequal distribution of income (Dustmann et al. 2014). 13. The reforms included labor market deregulation and some wage decentralization.

Suggested Readings Baccaro, Lucio, and Jonas Pontusson. “Rethinking Comparative Political Economy: The Growth Model Perspective.” Politics and Society 44, no. 2 (2016): 175–207. Fuller, Gregory. “Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances.” New Political Economy 23, no. 2 (2017): 174–91. Hall, Peter A. “The Economics and Politics of the Euro Crisis.” German Politics 21, no. 4 (2012): 355–71. Hall, Peter A., and David Soskice, eds. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press, 2001. Marzinotto, Benedicta. “Varieties of Capitalism before and after the Crisis: Unity in Diversity?” In The Political Economy of Adjustment Throughout and Beyond the Eurozone Crisis: What Have We Learnt? edited by Michele Chang, Federico Steinberg, and Francisco Torres, 207–28. London: Routledge.

References Abiad, Abdul, and Ashoka Mody. 2005. “Financial Reform: What Shakes It? What Shapes It?” American Economic Review 95 (1): 66–88. Altunbas, Yener, Leonardo Gambacorta, and David Marques-Ibanez. 2009. “Securitisation and the Bank Lending Channel.” European Economic Review 53 (8): 996–1009. https://doi​.org​ /10​.1016​/j​.euroecorev​.2009​.03​.004. Baccaro, Lucio, and Jonas Pontusson. 2016. “Rethinking Comparative Political Economy: The Growth Model Perspective.” Politics and Society 44 (2): 175–207. Blanchard, Olivier, and Francesco Giavazzi. 2002. “Current Account Deficits in the Euro Area: The End of the Feldstein-Horioka Puzzle?” Brookings Papers on Economic Activity 2:147–86. Carlin, Wendy. 2013. “Real Exchange Rate Adjustment, Wage-Setting Institutions, and Fiscal Stabilization Policy: Lessons of the Eurozone’s First Decade.” CESifo Economic Studies 59 (3): 489–519. Carlin, Wendy, and David Soskice. 2008. “Reforms Macroeconomic Policy and Economic Performance in Germany.” In Economic Policy Proposals for Germany and Europe, edited by Ronald Schettkat and Jochen Langkau, 72–118. Abingdon, UK: Routledge.

3 5 0    B enedicta M arzinotto Crouch, Colin. 2012. “Employment, Consumption, Debt, and European Industrial Relations Systems.” Industrial Relations 51 (s1): 389–412. D’Amico, Leonardo, Francesco Giavazzi, Veronica Guerrieri, Guido Lorenzoni, and CharlesHenri Weymuller. 2022. “Revising the European Fiscal Framework, Part 2: Debt Management.” VoxEU, January 15, 2022. Dustmann, Christian, Bernd Fitzenberger, Uta Schönberg, and Alexandra Spitz-Oener. 2014. “From Sick Man of Europe to Economic Superstar: Germany’s Resurgent Economy.” Journal of Economic Perspectives 28 (1): 167–88. Fernández-Villaverde, Jesus, Luis Garicano, and Tano Santos. 2013. “Political Credit Cycles: The Case of the Euro Zone.” Journal of Economic Perspectives 27 (3): 1–44. Flanagan, Robert J., David W. Soskice, and Lloyd Ulman. 1983. Unionism, Economic Stabilization and Incomes Policies: European Experience. Washington, DC: Brookings Institution Press. Fuller, Gregory. 2015. “Who’s Borrowing? Credit Encouragement vs. Credit Mitigation in National Financial Systems.” Politics & Society 43 (2): 241–68. Fuller, Gregory. 2017. “Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances.” New Political Economy 23 (2): 174–91. Hall, Peter A. 2012. “The Economics and Politics of the Euro Crisis.” German Politics 21 (4): 355–71. Hall, Peter A., and David Soskice, eds. 2001. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press. Hancké, Bob. 2013. Unions, Central Banks, and EMU: Labor Market Institutions and Monetary Integration in Europe. Oxford: Oxford University Press. Hardie, Iain, and David Howarth. 2013. Marked-Based Banking and the International Financial Crisis. Oxford: Oxford University Press. Hope, David, and David Soskice. 2016. “Growth Models, Varieties of Capitalism, and Macroeconomics.” Politics & Society 44 (2): 209–26. Iversen, Torben, and David Soskice. 1998. “Multiple Wage Bargaining Systems in the Single European Currency Area.” Oxford Review of Economic Policy 14 (3): 110–24. Iversen, Torben, and David Soskice. 2012. “Modern Capitalism and the Advanced Nation State: Understanding the Causes of the Crisis.” In Coping with the Crisis: Government Reactions to the Great Recession, edited by Nancy Bermeo and Jonas Pontusson, 35–64. New York: Russell Sage. Johnston, Alison, and Aidan Regan. 2016. “European Monetary Integration and the Incompatibility of National Varieties of Capitalism.” Journal of Common Market Studies 54 (2): 318–36. Jones, Erik. 2015. “Forgotten Financial Union.” In The Future of the Euro, edited by Matthias Matthijs and Mark Blyth, 44–69. Oxford: Oxford University Press. Marzinotto, Benedicta. 2017. “Euro Area Macroeconomic Imbalances and Their Asymmetric Reversal: The Link between Financial Integration and Income Inequality.” Economia Politica: Journal of Analytical and Institutional Economics 34 (1): 83–104. Marzinotto, Benedicta. 2019. “Varieties of Capitalism before and after the Crisis: Unity in Diversity?” In The Political Economy of Adjustment Throughout and Beyond the Eurozone Crisis: What Have We Learnt? edited by Michele Chang, Federico Steinberg, and Francisco Torres, 207–28. London: Routledge. Molina, Óscar, and Martin Rhodes. 2007. “The Political Economy of Adjustment in Mixed Market Economies: A Study of Spain and Italy.” In Beyond Varieties of Capitalism: Conflict, Contradictions and Complementarities in the European Economy, edited by Bob Hancké, Mark Thatcher, and Martin Rhodes, 223–52. Oxford: Oxford University Press.

V arieties of C apitalism and F inancial R egimes   351 Mundell, Robert. 1961. “A Theory of Optimum Currency Areas.” American Economic Review 51 (4): 657–65. Schelkle, Waltraud. 2017. The Political Economy of Monetary Solidarity: Understanding the Euro Experiment. Oxford: Oxford University Press. Soskice, David. 2007. “Macroeconomics and Varieties of Capitalism.” In Beyond Varieties of Capitalism: Conflict, Contradictions and Complementarities in the European Economy, edited by Bob Hancké, Mark Thatcher, and Martin Rhodes, 89–121. Oxford: Oxford University Press. Vitols, Sigurt. 2001. “The Origins of Bank-Based and Market-Based Financial Systems: Japan, Germany, and the US.” In The Origins of Nonliberal Capitalism: Germany and Japan in Comparison, edited by Wolfgang Streeck and Kozo Yamamura. Ithaca, NY: Cornell University Press. Zysman, John. 1983. Governments, Markets and Growth: Financial Systems and the Politics of Industrial Change. Ithaca, NY: Cornell University Press.

CHAPTER 13

Migration and Islam Ruxandra Paul

O

n January 7, 2015, French writer Michel Houellebecq published a book titled Soumission (Submission). Mixing fiction with real political figures, the novel imagines France in the year 2022, when, after years of national decline, the Islamist party wins the presidency. The takeover happens because mainstream parties (the Socialists and center-right) support the Muslim Brotherhood Party candidate to prevent the right-wing populist National Front’s candidate Marine Le Pen from winning. The new government adopts Sharia law, encourages women to leave their jobs, normalizes veils, and legalizes polygamy. Universities must teach the Koran. As the novel ends, its protagonist, a middle-aged literature professor at Paris III University, is set to convert to Islam and return to teaching in a prestigious job at the Islamicized Sorbonne, lured by a pay increase and the prospect of having several wives. As might be expected, Houellebecq’s book—an instant bestseller in France, Germany, and Italy—caused outrage. It’s not the first attempt to stir controversy by writing books that fuel Islamophobia. French right-wing journalist Eric Zemmour paved the way with the hugely successful Le Suicide Français (The French Suicide), which discussed France’s moral collapse in the face of newly confident Islam (BBC 2015). Zemmour recently founded his own party called Reconquete! (“Reconquest!”) and battled Marine Le Pen—unsuccessfully—for the far-right votes in the 2022 presidential election. He received only 7.07 percent of the vote (Johannès 2022). Houellebecq, who was acquitted in 2002 of the charges of inciting racial hatred after referring to Islam as the “stupidest religion,” denied any desire to be provocative. He told journalists that he had tried to put himself in the shoes of a Muslim living in France: conservative Muslims do not feel represented by the progressive Left, especially after socialists supported gay marriage, but had nowhere to turn to politically at election time because center-right parties reject Islam. On the same day that the French publishing house Flammarion released Houellebecq’s novel, two French citizens (born in Paris to Algerian immigrant parents), brothers Saïd and Chérif Kouachi, entered the offices of the French satirical antireligious magazine Charlie Hebdo in Paris, France. Armed with rifles, they burst into the office where the first editorial meeting of the year was taking place. In an attack that lasted ten minutes, they shot and killed editors and cartoonists. Twelve people died, and eleven were injured. The gunmen identified themselves as belonging to the Islamic 352

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terrorist group al-Qaeda in the Arabian Peninsula, which took responsibility for the attack. The Kouachi brothers chose Charlie Hebdo as a target because of the magazine’s long record of publishing offensive cartoons featuring the prophet Muhammad and insulting portrayals of Islam. The fervently antireligious publication routinely mocks and offends Catholicism and Judaism alongside Islam. Terrorists had also firebombed the newspaper’s offices in November 2011 after it published an issue titled Charia Hebdo (Sharia Weekly) featuring on the cover a cartoon of “editor-in-chief” Muhammad saying “100 lashes if you don’t die of laughter.” Five months later, in May 2015, the French police officers who had chased after two boys (Bouna Traoré, 15, and Zyed Benna, 17) on October 27, 2005, in the Parisian suburb Clichy-sous-Bois were acquitted of charges of failing to assist someone in danger. The police had been called to investigate a possible break-in at a construction site nearby. The two boys (of Mauritanian and Tunisian origin, respectively) tried to hide from the police in the transformer of a high-voltage electrical power facility where they were electrocuted and died. The electrocution was so powerful that it left the entire neighborhood in a blackout. Traoré’s and Benna’s deaths ignited a threeweek uprising across France, the largest riots the country had witnessed in forty years. Security forces clashed violently with protesters, thousands of vehicles and numerous public buildings were burned, and close to three thousand people were arrested. The government declared a state of emergency. Protesters accused authorities of racial profiling, discrimination, abuse, violence, and use of deadly force against France’s visible minorities, and, in particular, citizens of immigrant descent. The events above are just three of the high-visibility episodes in the recent history of fear, exclusion, violence, radicalization, and stigmatization that characterizes how Islam gets politicized in Europe. The radicalization of homegrown Muslim youth that happens in mosques, prisons, online, or while traveling abroad has raised questions about Europe’s capacity to integrate its Muslim citizens. Terrorist attacks in France, Spain, Belgium, and the UK, among other countries, have caused alarm and frustration at the governments’ inability to maintain national security and protect values like free speech, secularism, and multiculturalism. What is going on? And who is to blame? Citizens and policymakers—in Europe and around the world—have been asking themselves these questions for decades. Are such events evidence of a clash of civilizations that cannot peacefully coexist in a democratic society? Are they a result of failed government policies? Do they signal that democracies are unable to keep their promises equally to all citizens regardless of ethnicity, migratory background, religion, education, and socioeconomic status? What enables transnational terrorist networks to infiltrate and radicalize Muslims in the West, turning them against their own countries? This chapter considers one of the most debated topics in migration politics: Islam in Europe. Muslims are the largest religious minority in Europe, and Islam is the continent’s fastest growing religion (Pew Research Center 2015). In 2016, close to twenty-six million Muslims lived in Europe (defined as the twenty-seven European Union member states plus the United Kingdom, Norway, and Switzerland). These statistics underestimate total numbers because they exclude parts of Europe (like the Balkans: Albania, Bosnia and Herzegovina, and Kosovo, and former Soviet republics)

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that have majority-Muslim populations. Transcontinental countries like Turkey, Azerbaijan, and Kazakhstan also have Muslim majorities (90% to 97% in Turkey). Between 2010 and 2016, 53 percent of all migrants entering Europe were Muslim (circa 3.7 million people). Recent Muslim migrants came primarily from Morocco, Turkey, Pakistan, and Bangladesh, and refugees come from Syria, Afghanistan, and Iraq (Pew Research Center 2017). Many European Muslims are children of immigrants who came to Europe for work or education in the last half century. Others are members of national historic minorities that have lived in Europe for centuries (like Turks and Tatars in Romania). While historic minorities have not been linked to terrorism, more recent, predominantly Muslim migratory waves have stirred concerns about religious fundamentalism and terrorist networks (Pepine 2015). Public opinion shows increasing fear and opposition to recently arrived Muslims, who are “perceived as a threat to national identity, domestic security and the social fabric” (Khader 2016). Demographers point out that Muslims are on average younger than the ensemble of the non-Muslim European population: people under thirty represented 50 percent of the Muslim population in 2015, compared to 33 percent among non-Muslims (Khader 2016). Muslim women have more children, marry in larger numbers and at younger ages, and divorce less than non-Muslim women. Based on these statistics, many politicians have fueled “demographic replacement” fears among voters. Some researchers have blamed the size of Muslim immigrant populations for the alleged fall from grace of multiculturalism (and a group rights model of incorporation) in Europe. In the United States, Canada, Australia, and New Zealand, the argument goes, multiculturalism survives because there are fewer Muslim immigrants and because Muslim communities refrain from pushing for controversial religious rights (Koopmans 2013). Still, recent surveys show that, overall, Western societies are broadly accepting toward Muslims but remain divided on whether Islam is compatible with their countries’ culture and values. In 2017, most non-Muslims in Western Europe and the United States said they would be willing to accept Muslims as neighbors and family members (Pew Research Center 2017). In 2000, the European Union (EU) adopted “Unity in diversity” as its official motto. It reflects both the reality of Europe as a continent, where different cultures, traditions, languages, ethnicities, races, religions, and histories coexist, and the goal of overcoming the tensions that appear when so many groups live and govern themselves together through democratic institutions after centuries of conflict. However, there is a lot that this slogan also seeks to leave behind. Diversity in Europe developed in part as a result of military invasions and colonial exploitation. Postcolonial or neocolonial relations have often been equally exploitative. Recent reactions to increasing diversity and migration signal deep divides about migration management and immigrant integration among and within countries. Many European countries were (and are) in denial about their transition from migrant-sending to migrant-receiving societies. It took until 1999 for Germany to recognize people of immigrant descent as citizens. Before 1999, the acquisition of German citizenship was solely based on the principle of descent (jus sanguinis, or “law of the blood”) with no provisions for birthright citizenship. Germany considered “foreigner” generations of children born and raised in Germany to nonethnic-German (Turkish) parents (Anil 2005).

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Has Europe lived up to the promise of unity in diversity? This chapter shows the tensions between acceptance and rejection in European politics related to Muslim communities. It demonstrates that, despite EU attempts to harmonize policy (especially during the Mediterranean migration crisis), European countries still use different strategies of incorporation. Some focus on individual rights and seek to reduce diversity by encouraging assimilation (immigrants should strive to fit in). Others follow the multicultural strategy of integrating immigrants as minority-group members, which requires governments to extend group rights and create special channels for minority representation in politics, society, and the economy. Most European countries combine assimilationist and multicultural policies, but the combinations retain distinctive national profiles (e.g., assimilationist France, and multicultural Britain and the Netherlands). The chapter reflects the different histories and trajectories of European Muslims, addressing questions about old versus new minorities, colonialism and postcolonialism, assimilation versus multiculturalism, securitization, identity, and belonging. The chapter starts with a short history of Muslim presence in Europe and shows how Muslim communities established themselves across the continent over time. Then I examine the different ways in which national governments and supranational entities have controlled and managed this presence, through assimilationist and multicultural policies as well as recent attempts to revive the former as civic integrationism. Next, the chapter summarizes the politicizing of Muslim presence and the connections between political discourses on European Muslims, public opinion, and the politics of fear. At the supranational level, the chapter examines Turkey’s attempt to join the European Union. The conclusion points out the ways in which Europe has fallen short on its promise of “unity in diversity” when it comes to European Muslims and considers available policy options for the future.

European Muslims: A Brief History of Migration Migration has threatened the existence of many European states or empires. As early as 374–568 CE, the so-called migration period caused the decline of the western Roman Empire. The barbarian invasions eroded the Roman Empire and Byzantine Empire. Germanic tribes (Goths, Vandals, Anglo-Saxons, Franks, Alemanni) and other invaders (Huns, Avars, Slavs) crossed the continent, looting and imposing their rule. The Huns came from Asia in 375. The Visigoths and Franks founded Francia, a predecessor of modern France and Germany. Later invasions included the Vikings, Normans, Hungarians, Moors, Mongols, and Turks (Ottoman Empire). The Moors (Arabs and Berbers) invaded Europe through the Gibraltar Strait in 711, conquering the Iberian Peninsula (present-day Spain and Portugal) from the Visigoths. Muslims dominated northern Mediterranean shores and set up caliphates and emirates. The Moors’ rule lasted seven centuries and ended with the fall of the Emirate of Granada in 1492. During the Byzantine-Arab Wars, Arab armies tried to invade southeast Europe through Asia Minor but were defeated at the siege of Constantinople (717–718). The Byzantine Empire collapsed after Ottoman armies conquered Constantinople

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in 1453. Constantinople became Istanbul and the capital of the Ottoman Empire. The Ottoman Empire led three centuries of military campaigns to conquer Europe and destroy Rome. It conquered the Balkans, where many states endured exploitation and tributes, including the “child tax” or “blood tax”—a practice through which Ottoman officials forcibly converted the children of Eastern Europe Christian subjects to Islam and recruited soldiers and bureaucrats from among their numbers as well. As a result, in Europe’s history, Muslims were often portrayed as a threatening “Other,” relentlessly attacking Christianity, undermining European values, and raiding communities. Eastern European countries remained under various degrees of Ottoman subjugation until the Empire’s collapse at the end of World War I. European leaders sought to resist Muslim invasions and liberate Constantinople for centuries. The Inquisition targeted Muslims, Sephardic Jews, and converted Spaniards (Khader 2016). European powers pursued campaigns abroad to conquer and exploit. Beginning in the fifteenth century, Europe’s colonial period saw many countries (France, England, Spain, Portugal, the Netherlands, Belgium, Italy, Denmark, and Sweden) establish and maintain empires in the Americas, Asia, and Africa. Many Muslims migrated during the colonial period as imperial subjects: British (Pakistanis and Bangladeshis), Dutch (Indonesian and Surinamese), French (from North Africa–Maghreb). French imperial subjects from Algeria, Morocco, and Tunisia, among others, did not require visas to enter France. Take the example of Algeria and the migration of colonized Arab-Berbers from Algeria to mainland France, which was the largest and earliest of all colonial migrations to Western Europe before the 1960s. This migration began in the late nineteenth century and grew as France hired Algerians in French factories and enlisted them in the French army during World War I. So many were migrating after the end of World War I that economic lobbies in Algeria, who feared losing too many colonial workers to mainland France, launched and supported hostile press campaigns in mainland France portraying Algerian workers as criminal and sexually aggressive (stereotypes that survive to this day). Still, Algerian men continued to migrate to France to work in coal mining, iron, steel, and car industries. Their presence was concentrated in and around big cities like Paris, Marseilles, Lyon, Lille, and Strasbourg. After the Second World War, colonial empires collapsed, but postcolonial legacies and neocolonial relations continue to drive current migrations. For example, migrants from North Africa travel to France, while Pakistanis, Nigerians, and Indians still emigrate in large numbers to the UK. The Statute of Algeria (1947) granted Algerian men French citizenship and instituted free movement between Algeria and France. ArabBerber Algerians were officially referred to as “French-Algerian Muslims” (Françaismusulmans d’Algérie), a category of second-class citizens ethnically identified from the rest. Unsurprisingly, Algerians resented this label (Shepard 2006).

Who Are the Muslims in Europe Today? Muslims are the largest religious minority in Europe. Islam is the continent’s fastest growing religion. As figure 13.1. shows, France, Germany, the United Kingdom,

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Spain Italy, the Netherlands, Belgium, Sweden, Norway, and Finland all have numerous Muslim communities. Most come from the Middle East, Africa, Asia, and Turkey. Turks represent the largest ethnic minority group in Austria, Denmark, Germany, and the Netherlands. Most link their presence to Western European colonial legacies and the immigration policies of the 1950s and 1960s. During the immediate post–Second World War period, many Western and southern European countries brought in temporary workers from their former colonies or made agreements with labor-rich countries in North Africa and the Middle East. Hundreds of thousands of Moroccans, Tunisians, and Algerians immigrated to France. Holland relied on workers from Indonesia and Suriname. The United King-

Figure 13.1  Muslim Share of Population by Country (Percent)

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dom welcomed migrants from Pakistan and Bangladesh. West Germany recruited guest workers from Turkey. These workers contributed to rebuilding infrastructure and relaunching the continent’s economy. Europe did not complain about a “migration problem” or a “Muslim problem” while the economic boom lasted. “Guest workers were viewed as the robotic labor inputs that underlie the argument that immigration, like trade, generates a net economic benefit for the receiving country” (Borjas 2018, 330). This perspective shifted when, after Germany ended guest worker programs in the late 1970s, migrants assumed to be temporary not only decided to stay but also brought their families to their host countries. Similar patterns occurred across Western Europe. Reflecting on temporary workers after World War II, Swiss writer Max Frisch remarked, “We wanted workers, but we got people instead” (Borjas 2018, 330). Family reunification and a feminization of migration marked the shift to permanence in receiving societies. Migrant communities expanded. In the last thirty years, marriage immigration has also increased, as first- and second-generation Muslim young men entered the “marriage market.” Between 1995 and 2003, marriage immigration from Turkey was about four thousand per year, while Moroccan marriage immigration peaked at three thousand annually (Khader 2016). Now many European Muslims are second-generation migrants, born in Europe to migrant parents, and—as a result—completely removed from attempts to tackle the “Muslim problem” by restricting immigration. Many European Muslims have never lived in a country outside Europe. Attitudes toward migrants changed as the Muslim population in Europe became more deeply embedded. When economic recession hit in the 1980s, politicians started portraying Muslim migrants as culturally different and as “a problem.” Antiimmigration parties like Jean-Marie Le Pen’s Front National blended nativism with Islamophobia in their rhetoric. Muslims began to be portrayed as a homogenous, threatening group, as if their religious identity trumped all other attachments and loyalties. Muslims come from different countries and are divided in their faith, ethnicity, extent of religious practice, and socialization experiences. Highly educated, rich Muslims in Western Europe live alongside white majorities in cities like London and Paris; poorer, working-class Muslims struggle against segregation and marginalization in urban peripheries. Recently, Europe has faced record numbers of migrants arriving from majorityMuslim countries. Asylum seekers and refugees displaced by conflict in North Africa and the Middle East have poured into Europe, leading many scholars, politicians, and journalists to talk about a Mediterranean migration crisis. The onset of civil war in Syria in 2011, political instability following the Arab Spring movements of 2011 that brought down authoritarian regimes like those of Zine el-Abidine Ben Ali in Tunisia and Hosni Mubarak in Egypt, regime collapse in Afghanistan, the situation in Iraq, and other global crises displaced over one million asylum seekers from North Africa and the Middle East. In 2015–2016, over 1.8 million irregular border crossings into the EU challenged migration management and disrupted free movement in the EU. Member states reinstituted border checks along internal borders. Italy issued temporary permits to Tunisian migrants to allow them to transit the country on their way to France. This deci-

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sion clashed with the EU’s Dublin II Regulation (and its framework for asylum-seeker processing), which requires migrants to file their asylum applications in the country that serves as their first point of entry on EU territory and makes it possible for other member states to return undocumented migrants to the country that served as point of entry. France invoked Dublin II to deny Tunisian migrants entry, and Germany scolded Italy for not living up to its responsibility (Buonanno 2017, 104). German Chancellor Angela Merkel declared that Germany would welcome refugees “with open arms.” Wir schaffen das! “We can do this!” Merkel famously responded on August 31, 2015, to Germans worried that the country’s institutions, and its welfare system in particular, would be overwhelmed (Matthijs and Kelemen 2021). While Merkel advocated tirelessly for a joint EU response, she failed to persuade other European leaders, faced opposition at home and within her political party, and drew criticism from an increasingly skeptic electorate. In 2019, only 11 percent of Germans were in favor of accepting more refugees than before. Public trust in Merkel’s policy declined in the five years following the migration crisis and never fully recovered (Hille 2020). The EU sought to develop common strategies for tackling the crisis. To ease the pressures on countries at the EU’s southern border, the European Commission proposed a burden-sharing system and argued that each country should accept a Commission-determined number of refugees (the infamous “refugee quota”) from other countries. The migration crisis “became a test of the EU’s area of freedom, security, and justice (AFSJ)” because sky-high numbers of migrants made it impossible for border authorities to properly investigate who was crossing and to prevent criminals or terrorists from taking advantage of unsecured borders (Buonanno 2017, 106). Securitization became more widespread when authorities confirmed that some of the attackers responsible for the Paris attacks (November 2015: more than 130 dead, over 350 wounded) and Brussels bombings (March 2016: 32 dead, 340 injured) were ISIS terrorists who had crossed the border in Greece. In Germany, support for Merkel’s open-arms policy dropped after the 2015–2016 New Year’s Eve sexual assaults, when over 1,200 women reported being raped or assaulted by Middle Eastern men. IMMIGRATION, NEW ETHNIC MINORITIES, AND INTEGRATION POLICIES Migration is not the only source of diversity in Europe. Many European countries contain ethnic, linguistic, religious, and national minorities (see table 13.1). Europeans often hold multiple, cross-cutting attachments, loyalties, and characteristics. Several countries include politically significant historic ethnonational minorities (Bale 2017). Nevertheless, migration has increased diversity in important ways. Since the 1950s and 1960s, migration has fostered increasing cultural diversity throughout Europe. New ethnic groups and diasporas formed in many countries. Some communities are “visible minorities”: they look different from majorities in their receiving countries, speak different languages, have different traditions, and create different associations and business networks. Ethnonational, racial, and religious minorities (and new arrivals from non-European countries in particular) generate considerable anxiety in many

3 6 0    R uxandra P aul Table 13.1  Politically Significant Ethnonational Minorities in Europe

Country

Ethnonational Minority Groups

Belgium

60 percent Dutch-speaking Flemish in the North; 30 percent French-speaking Walloons in the South; great tensions between the two communities Bulgaria 10 percent Turkish; 8.5 percent Roma Cyprus 12 percent Turkish minority, living in an officially unrecognized independent state Czech Republic 2 percent Roma Estonia Former Soviet Republic; 25 percent Russian; 3 percent Ukrainian and Belarusian Finland 6 percent Swedish France Sizable ethnic and racial minorities from former African colonies, many of whom are of Arab descent and practicing Muslims Germany Some regional identity in former East Germany and Bavaria. Large immigrant community, made up of various European groups and Turks, 2.5 percent Hungary 4.5 percent Roma, 2.5 percent German, 2 percent Serb, 1 percent Slovakian Italy Two small linguistic minorities (German and French); significant North-South divide; large recent inflows of work migrants from Eastern Europe (Romania, Albania, Ukraine, Poland, etc.) and North Africa (Morocco, Tunisia, etc.) Latvia Former Soviet Republic; 28 percent Russian, 6 percent Ukrainian and Belarusian Romania Small minorities from surrounding states; historic ethnic and linguistic minorities (German, Turk, Tartar, Greek); 7 percent Hungarian (concentrated in Transylvania); 6.5 percent Roma Slovakia 10 percent Hungarian; 9.5 percent Roma Spain Several regions with pronounced political identities, two of which (Catalonia and the Basque Country) see themselves as separate nations; large recent inflows of work migrants from Eastern Europe (Romania, Bulgaria, Albania, etc.) and North Africa Switzerland Linguistic divides—64 percent German-speaking; 20 percent French-speaking; 7 percent Italian-speaking—but no political separatism United Kingdom Nonviolent separatism associated with sizable national minorities in Scotland and Wales; recent history of violent separatism in Northern Ireland, where many identify with the Republic of Ireland; significant ethnic minorities from former colonies, including India, 2.5 percent, Pakistan, 1.9 percent, and Bangladesh, 0.7 percent Sources: Bale (2017, 34); Istat; UK Census Data.

European countries (Bale 2017, 327). While some minorities enjoy broad acceptance in some countries, others regularly face discrimination and exclusion. Much of this discrimination is based in policy and not just attitudes. Obstacles affect settlement, labor market access, residential patterns, and community formation. No society is completely immune to racism and discrimination. What varies, however, is the way in which policies and attitudes come together (De Haas, Castles, and Miller 2020, 297). Governments struggle to control national territory, manage

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migration, consolidate rule of law, offer fairness to all citizens regardless of immigration background, and create solidarity and political community across ethnic, racial, and religious lines. European countries use different approaches to integrate migrant populations. These strategies reflect different public philosophies or policy paradigms known as “national models of integration and citizenship” (Bertossi 2011). Immigration and integration policies vary across European countries. Some, like France, the Netherlands, and the UK, historically extended preferential treatment to immigrants coming from former colonies or their descendants. For colonial subjects, permanent immigration and family reunification are usually permitted. Other countries, like Germany, Austria, Belgium, and Switzerland, adopted a “guest-worker” model: migrants are assumed to be temporary, so the strategy limits family reunification, does not grant resident status, and has restrictive naturalization rules. Some countries do not fit neatly in these categories: the Netherlands and Belgium both recruited guest workers and received immigrants from former colonies. France restricted family reunification until the 1970s (De Haas, Castles, and Miller 2020, 297–98). Until the 1970s, migrants from the Middle East and North Africa (MENA) region were identified by their nationality as Algerian, Tunisian, Moroccan, Turkish, and so forth, and not by their religion. They were seen as vital for economic reconstruction. Germany hired massive numbers of guest workers from Turkey after World War II. When the oil shocks of the late 1970s hit the German economy, the German government put a sudden end to guest-worker migration programs to protect the national labor market and respond to rising anti-immigrant sentiment. To everyone’s surprise, instead of putting an end to migration, the decision had the opposite effect: migration from Turkey rose to unprecedented levels as migrant workers decided to settle down in Germany and reunite their families there. Similar policies across Western Europe resulted in a large increase in migrant presence in the late 1970s and early 1980s. In the 1980s, these migrants started being perceived as Muslims rather than as citizens of their countries of origin, and politicians in receiving countries increasingly framed Islam as a problem (Khader 2016). Whereas temporary workers accepted worshipping in hidden “basement mosques” (les mosques des caves), immigrants asked for mosques and minarets (Khader 2016: 6). Their requests caused debates and faced opposition. In Switzerland, a referendum in November 2009 asked voters to approve a constitutional amendment banning the construction of new minarets. The amendment was approved by 57.5 percent of participating voters, despite opposition from the Swiss government, the United Nations (High Commissioner for Human Rights), and international organizations like Human Rights Watch, and despite its encroachment of the right to manifest one’s religion in public, which is a central aspect of the right to religious freedom guaranteed by international human rights treaties like the International Covenant on Civil and Political Rights and the European Convention on Human Rights, both of which Switzerland has ratified (Human Rights Watch 2009). As Muslims’ visibility in the public spaces increased, so did debates surrounding veiled women and women’s rights. In 2004, France passed a law on secularity that banned the use of conspicuous religious symbols in public schools, which effectively outlawed the wearing of Islamic veils and headscarves in schools. In 2009, President

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Nicolas Sarkozy declared that religious face veils were not welcome in France. In April 2011, France became the first European country to ban full-face veils in public areas. The law faced challenges before the European Court of Human Rights, but the ECHR upheld the French law in 2014, accepting the French government’s argument that the ban was proportionate to, and the least restrictive means of achieving, the state interest in promoting the conditions for “living together” in a democratic society (International Justice Resource Center 2018). In 2021, as a part of President Emmanuel Macron’s program to combat terrorism, the French parliament adopted a law against “separatism” in French society. The bill mandates neutrality in organizations that collaborate with public services, gives the government more control over charities and NGOs, requires authorization for home schooling, and outlaws “virginity certificates.” Its critics on the Left denounce it as “anti-Muslim” (France 24 2021) and an attack on civil liberties, while its critics on the Right deem it insufficient due to its omission of the term “communitarianism” or its failure to ban veil wearing in public spaces for minors (Khemilat 2021). Bans on facial coverings were debated in Belgium, the Netherlands, Spain, Italy, and Austria. In France and Turkey, bans on Islamic dress apply in state institutions (courts, civil service, etc.) to reflect secularism. Law court staff in the Netherlands also cannot wear Islamic headscarves, a measure meant to guarantee state neutrality. Austria banned full-face veils (niqabs and burkas) in courts and schools in 2017. In Belgium, several municipalities rely on bylaws on face-covering clothing to ban public wearing of the niqab and burka. In 2016, Bulgaria adopted a legal ban on Islamic face-covering clothing. Denmark banned the public wearing of niqabs and burkas in 2018. In terms of linguistic rights, while some countries have policies of bilingualism or multilingualism, these usually concern only founding languages of historic minorities and do not recognize immigrant languages. For example, Switzerland recognizes German, French, Italian, and Romansh as official languages but does not include the languages of recent ethnic minorities in its multicultural policy. Monolingualism is the principle applied to immigrants in France, the UK, Germany, and the Netherlands (De Haas, Castles, and Miller 2020). In the context of European integration and EU enlargement toward Central and Eastern Europe, many have noted that while countries that aspire to join the EU are required to demonstrate respect for minority rights (including education in the mother tongue) before accession, old member states are under no obligation to extend such rights to their minorities (Johns 2003). Double standards are common: in the Netherlands, expats who speak English exclusively do not face any discrimination even though they do not speak Dutch, while migrant workers and refugees who don’t speak Dutch face suspicions of refusing to integrate (De Haas, Castles, and Miller 2020, 323). Citizenship policies have also varied widely. Most countries in Europe allow dual citizenship and do not require immigrants to renounce their previous nationality. There are some notable exceptions: the Netherlands introduced the right to dual citizenship in 1991 but then withdrew it in 1997 under pressures against multiculturalism; Germany bans dual citizenship (De Haas, Castles, and Miller 2020). For the second generation, being born to foreign parents on national territory and having lived in the country for some time and fulfilled other conditions allows the children of mi-

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grants to obtain citizenship in France, Belgium, the Netherlands, Germany, Italy, and Spain. In Austria and Switzerland, children of immigrants who have been born and raised in the country can still be denied national identity, because access to citizenship requires being born to parents who are nationals. ECONOMIC CONSEQUENCES Across the board, unemployment rates among migrants remain very high when compared to those of natives. The most disadvantaged migrant groups across European labor markets (Maghrebins in France, Turks in Germany, Pakistanis in the UK) come from majority-Islamic countries of origin (Connor and Koenig 2015). Across Europe, Muslims generally have lower rates of labor force participation, employment, and occupational attainment (Bisin et al. 2011; Cheung 2014; Connor and Koenig 2013; Lessard-Phillips, Fibbi, and Wanner 2012). While many Muslims arrived as temporary workers, after the mid-1970s economic crisis, they found themselves unemployed and struggled to stay employed. In the UK, multiple studies show evidence of a “Muslim penalty” (regardless of ethnicity) and a British labor market hierarchized by ethnicity and religion (Khattab and Modood 2015; Sweida-Metwally 2022). When labor force participation among migrants is higher, as is the case for the UK, migrants remain concentrated in precarious, low-paid jobs that do not offer opportunities for upward mobility. In France, recent correspondence tests showed the existence of “Muslim penalties”: candidates who signaled their affiliation to Islam in job applications were at a severe disadvantage compared to equally qualified candidates of other religions (Adida, Laitin, and Valfort 2010; Pierné 2013; Valfort 2017). A study in which researchers sent fictitious applications in five European countries (Germany, the Netherlands, Norway, Spain, and the UK) found that applicants from countries with a sizable Muslim population faced strong discrimination, and the effect was larger if the applicant mentioned closeness to Islam in the job application. Men from Africa and the Middle East faced the largest levels of discrimination (Di Stasio et al. 2021). A 2017 survey showed that nearly 40 percent of Muslim respondents felt discriminated against when looking for a job: 17 percent reported feeling excluded on religious grounds and 27 percent on ethnic grounds (European Union Agency for Fundamental Rights 2017). In Germany, the proportion of Muslims in the labor force is equal to that of the general population. In France, Muslims’ unemployment rate is 14 percent, much higher than the 8 percent average for non-Muslims. Devout Muslims were likely to be less well-educated, less likely to have a job, and earning less than other Muslims (European Union Agency for Fundamental Rights 2017). In Europe, Muslims were less likely to have a job than non-Muslims in 2009, while they were more likely than non-Muslims to be employed in the United States (Nowrasteh 2016). Labor market regulations make it costly for firms to hire new workers and incentivize employers to hire familiar workers. Since immigrants are among the most unfamiliar workers in any labor market, regulations in Europe result in lower employment rates for Muslim

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migrants (Nowrasteh 2016). In 2016, a British Parliament report warned that Muslim women are the most economically disadvantaged group in the UK: they are three times more likely to be unemployed and looking for jobs. The MPs report argued that Muslim women in the UK face a “triple penalty” for being women, belonging to an ethnic minority, and being Muslim. Some countries, such as the UK and Sweden, have policies aimed to improve the labor market position of immigrants and minorities. These include language courses, basic education, vocational training, but also antidiscrimination laws (De Haas, Castles, and Miller 2020, 301). Denmark implemented a work-first policy to accelerate the labor market integration of refugees: the policy requires refugees to actively search for jobs (any jobs) and participate in on-the-job training immediately upon arrival in Denmark (Arendt 2022). Access to benefits and services is conditional on refugees seeking and holding jobs regardless of potential mismatch: many end up in low-skill jobs that don’t correspond to their education and professional qualifications. Other countries (from the guest-worker category) maintain restriction on labor market rights while introducing measures for educating and training foreign workers. Migrants, Muslim or not, face discrimination. In 2017, the Organization for Economic Cooperation and Development (OECD) concluded that European countries are missing a chance to strengthen their economies by failing to better integrate migrants into their labor markets. “One in two migrants is either inactive, unemployed or overqualified,” according to OECD migration expert Jean-Christophe Dumont (Galvin 2017). In 2016, in the twenty-eight European countries surveyed, the foreign-born unemployment rate was 14.1 percent, six percentage points higher than the unemployment rate for native-born workers. In 2008, the immigrant unemployment rate was 9.3 percent, and the gap between immigrants and natives was three percentage points.

Has Multiculturalism Failed? In a 2011 speech, then British Prime Minister David Cameron said, “Under the doctrine of state multiculturalism, we have encouraged different cultures to live separate lives, apart from each other and apart from the mainstream. We’ve failed to provide a vision of society to which they [young Muslims] feel they want to belong” (Song 2020). Claims that multiculturalism undermines social cohesion and national cultural values have increased the popularity and visibility of radical right-wing groups like Geert Wilders’ Freedom Party in the Netherlands, the Sweden Democrats Party, the True Finns Party in Finland, the Danish People’s Party, and the Progress Party in Norway. In July 2011, right-wing extremist Anders Breivik killed seventy-seven people in a bombing and gun rampage attack motivated by his hatred of Islam and opposition to multiculturalism. In some arenas, multiculturalism “has become synonymous with the demographic and social changes that stem from migration, resulting in the conflation of multiculturalism with immigration policy” (Bloemraad 2011).

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THE MEANING OF MULTICULTURALISM What is multiculturalism? What is its relationship with diversity, from a conceptual point of view? And is it true that multiculturalism has failed, especially when it comes to integrating Muslims in European societies? When used descriptively, the term multiculturalism can refer to “the fact of diversity in a society” (Song 2020). However, in contemporary debates and policymaking, it generally represents a model of political incorporation (public policy) and a normative ideal (a political philosophy of how democratic societies ought to manage diversity). As a political philosophy, multiculturalism highlights the need to extend individual rights guaranteed in liberal democracies to include group rights for minorities (Koopmans 2013, 148). Multiculturalism stands in contrast with the folk or ethnic model, on the one hand, and the republican or assimilationist model, on the other. The ethnic model of citizenship links belonging to common descent, ethnicity, language, and culture. Individuals qualify if their parents are nationals. This excludes minorities and migrants from the nation (until the 2000s, Germany illustrated this category, together with Japan and Turkey). The republican model defines the nation as a political community based on a constitution, laws, principles, and values, making it possible to admit newcomers on condition they are willing to renounce other loyalties, adopt the national culture, and assimilate or blend in completely. The ideal of the “melting pot” (typically associated with countries like France or the United States) places the burden of adjustment on the individual; it is the immigrant’s duty to fit in, and the immigrant must prioritize national identity over other attachments, memberships, and loyalties. Assimilationists claim that being a citizen gives everyone equal opportunities to succeed, when the state treats everyone the same. This model prioritizes individualism and the citizen’s personal link to the state. France, for example, does not confer recognition or benefits to any racial or ethnic groups. For a long time, the French government collected no census data on the race, ethnicity, or religion of its citizens, claiming that this supported its universalist and secular philosophy. Multiculturalism embraces a communitarian view of the world. It rejects assimilationism and points out that nonnational identities always shape the way institutions, organizations, and people treat citizens. The multicultural model involves a society in which members of minority groups maintain their distinctive cultures, retain their collective identities and practices, as long as they do not contradict national law. Group identities become channels through which individuals get incorporated into society. In other words, group identities and national identities can and should coexist, because they are compatible and mutually supportive. While some argue that freedom from state interference and tolerance of difference offers sufficient space for minorities to engage with the state on their own terms, others point out that mere toleration results in indifference and ignorance. Instead, managing difference requires recognition and positive accommodation through “group-differentiated rights” (Kymlicka 1995), which allow individual members of minority groups special exemptions (e.g., religious), assistance such as education and voting in their language, representation of minorities in government bodies (e.g., ethnic quotas for party lists or reserved seats in parliaments etc.), limited self-government rights, and so on (Song 2020). The burden

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of responsibility for fitting in thus shifts away from the individual toward the state: it is the government’s duty to figure out which minority groups are disadvantaged and what positive accommodations they are owed, to create a level playing field for all. Multiculturalism acknowledges pluralism in a society and institutionalizes it. It requires government institutions to produce public policy that supports pluralism. School curricula might, for example, include literary texts from authors of different backgrounds or emphasize the contributions of ethnic, cultural, or religious groups to national culture. Governments might provide public funding for separate schools for racial, ethnic, religious, and linguistic minorities, and special accommodations for cultural and religious practices might seek to make it easier for minority groups to maintain their traditions. Governments seek to accommodate the cultural needs of groups as a way of enhancing social equality—for example, if a legislature mandates that businesses be closed one day a week so that workers can rest, the government might allow business owners to choose the day rather than impose Sunday in line with Christian traditions (Bloemraad 2011). In North America, calls for cultural recognition in schools and colleges started with the mobilization of US-born African Americans, Asian Americans, Latinos, and Native Americans in the 1960s. Canada followed, launching multiculturalism as a federal policy in 1971. In Europe, Sweden and the Netherlands were early adopters of multicultural policies in the 1970s and 1980s. How do we recognize and measure multiculturalism? Scholars generally take into account policies that signal an official affirmation of cultural rights, pluralism, and religious diversity: multiculturalism in the school curriculum, ethnic representation and/or sensitivity in public media and licensing, exemptions from dress codes, dual citizenship, public funding of organizations and cultural activities, affirmative action for immigrant groups, and the like. Will Kymlicka and Keith Banting (2006) quantified multiculturalism in a multidimensional policy index they applied to twenty-one Western countries. They found that Germany, France, Denmark, Norway, and Switzerland are among the least multicultural Western countries, much less multicultural than Belgium, the UK, and the United States. (The countries with the highest levels of multiculturalism are Canada and Australia.) SUCCESS AND FAILURE What determines whether people see multiculturalism as successful or legitimate? Ruud Koopmans argues that “the degree and forms of demographic diversity can have important repercussions for the legitimacy and endurance of multicultural policies” (Koopmans 2013, 149). In particular, Koopmans claims some types and levels of diversity put more pressure on multicultural arrangements than others do, because, while all immigrants seek and benefit from individual citizenship rights and equal treatment, “not all groups are equally prone to making claims for cultural rights.” Some cultural rights are universal (e.g., providing education in the immigrant’s native language in schools). Other cultural rights claims, however, are group specific and come from “groups with a religion that deviates from that of the host society. Religious rights claims tend to be more difficult to accommodate than ethnic claims because they

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are not just about customs but are often seen as sacred duties that cannot be compromised” (Koopmans 2013, 150–51). Koopmans compares the number of claims for religious rights to conclude that Muslims make exceptionally high numbers of claims, many more so than other religions. Since Muslims are the immigrant group most likely to make claims for multicultural rights, and since their presence is much greater in European countries as a share of the population (3% in Norway; 7.5% in France), multiculturalism comes under more pressure in Europe than in classical immigrantreceiving countries like the United States or Canada, where Muslims make up a smaller percentage of the population (0.8% in the United States and 2.8% in Canada). Multiculturalism has come under criticism from various sources. Some claim the multicultural model institutionalizes difference and perpetuates oppressive traditional practices that clash with cosmopolitanism, democracy, and individual rights and freedoms. Others argue the state should not get involved in identity engineering by forcing migrants to identify with a group and should instead prioritize individual rights. The state should protect individual autonomy and create channels for personal emancipation from the “tyranny of cousins” (Gellner 1994): minority members often struggle against in-group traditional hierarchies of power coupled with internal discrimination against and oppression of vulnerable categories (the so-called minorities within minorities, or internal minorities, like children and women). Group-based rights and representation exacerbate instead of disrupt these forms of in-group oppression. Descriptive representation of migrant-background politicians also has created a crisis for Left and center-left political parties that have ideological commitments like universalism and gender equality. What kind of representation do parties seek to offer when they select candidates from migrant communities? In some cases, this may be symbolic inclusion, nominating “safe” minority candidates that support the party’s platform (and whose inclusion on the ballot will not alienate core constituencies). In other cases, parties will nominate candidates based on perceived ability to mobilize votes from the minority community to which they belong. Spatial segregation and ethnic enclaves in or around large cities make it likely that the parties nominate candidates with traditional views because they will bring the most votes from their respective communities, regardless of whether their agendas are in synch with those of the party (Dancygier 2017). In terms of civic and political integration, studies show evidence of positive effects especially when it comes to individual rights and equal opportunity policies. Immigrants identify more strongly with their countries of residence and participate more in public debates in countries where they can become citizens (Koopmans et al. 2005). Immigrants living in countries that adopt multicultural policies are more likely to engage in nonviolent political activities, more likely to trust their government, more likely to acquire citizenship, and less likely to report discrimination based on their membership in a group (Bloemraad 2011). A study of claims made by Muslims for religious rights between 1999 and 2008 shows variation in the strength of the Muslim voice: about 20 percent in Germany and Switzerland, 40 percent in the UK, and 46 percent in France (Carol and Koopmans 2013). The same study shows that the rights being debated vary across countries. While in Germany, Switzerland, France, and Belgium, over 90 percent of claims concern

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mainstream Muslim practices like mosque construction, Islamic burial, halal slaughter, and headscarves, in the Netherlands and the UK, most claims are demands by orthodox minorities within Islam for practices like sharia rules, abstention from interaction with the opposite sex, demands to ban and persecute depictions of the Prophet Mohammed or the Qur’an, and full-face covering (Koopmans 2013; Carol and Koopmans 2013). Countries that have already granted mainstream religious and cultural rights are later faced with more radical demands coming from factions representing less widespread practices within the faith. Studies find little effect of multicultural policies on socioeconomic integration, some positive effects on political integration, and negative impacts on sociocultural integration (Koopmans 2013). Some argue that multiculturalism results in ethnic closure, creating ethnoreligious enclaves in which people live without having to interact with the rest of society. Others point out that labor market policies, educational institutions, social policy, and other measures focused on individual rights (rather than group-based rights) affect outcomes much more than multicultural policies do (Bloemraad 2011). Meanwhile, in economic terms, claiming that the state treats everyone the same is simply untrue. Ethnic, racial, linguistic identities and immigrant background shape people’s lives. France may well insist that its institutions are “color-blind,” but reality shows otherwise. Visible minorities face significant exclusion, marginalization, discrimination, segregation, humiliation, and violence. Immigrants and citizens of immigrant descent from former French colonies in North and western Africa live concentrated on the peripheries of the country’s largest cities, in neighborhoods known as the banlieues, where poverty, unemployment, and crime are high and opportunities for upward socioeconomic mobility do not exist (De Haas, Castles, and Miller 2020). From this perspective, multicultural policies have not produced better results when it comes to minority incorporation (Joppke 2004). STRIKING THE BALANCE Are policymakers retreating from multiculturalism? Brubaker (2001) thought so and announced “the return of assimilation.” Several European governments adopted policies that mandated integration. Civic integrationism uses coercive state power and claims to protect liberal democracies from illiberal infiltrators who seek to destabilize them from within. It includes measures like mandatory language and civic culture courses, citizenship tests to determine whether individuals seeking naturalization have absorbed national values, as well as laws banning religious attire in the name of protecting women’s rights and secularism (Triadafilopoulos 2011). Nevertheless, civic integrationism does not mean that governments have abandoned multiculturalism; instead, old and new policies coexist (Joppke 2007). In comparative perspective, Germany, Denmark, Austria, the Netherlands, and the UK have the most stringent requirements when it comes to civic integration, while Belgium and Sweden are at the other end of the spectrum, with almost none (Goodman 2010). In contrast, some scholars claim multiculturalism is actually on the rise: European countries have implemented increasing numbers of antidiscrimination measures, multicultural education

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policies, and exemptions for minority religious practices in countries like the UK, Germany, Sweden, Spain, and Portugal (Bloemraad 2011). Multiculturalism need not advance or retreat uniformly across all policies. While migration management might have become more assimilationist, preexisting multicultural policies and institutions may remain unaffected. Simple binary categorizations of countries as either assimilationist or multiculturalist obscure a much more complex political reality. For example, France, a country historically associated with assimilationism, has recently been developing strategies to engage with Muslim communities and organizations, and taking steps toward establishing a “French Islam” liberated from radicalizing foreign influences. In 2018, a six-hundred-page report titled “The Fabric of Islam,” published by the liberal Institut Montaigne, presented a comprehensive plan for bringing Islamic institutions under the aegis of the state to better integrate Muslims and combat extremism (Young 2018). The Netherlands applied multiculturalism since the late 1970s and early 1980s. It reflected a pragmatic approach to diversity management: migrants find it easier to integrate in society and the economy if their sociocultural identities are promoted. Starting in the 1990s, integration policies were recentered around labor market participation and individual equality. At the same time, Islam became politicized (a central theme for liberal parliamentary leader Frits Bolkenstein from 1991 onward). Since the 2000s, Dutch policy shifted toward assimilationism (Bertossi 2011). In multicultural UK, colonial and postcolonial migrations involved assimilationist policies. In the 1950s and 1960s, new Commonwealth migrants from the Caribbean, India, Pakistan, and Bangladesh dominated migrant flows to Britain and were citizens upon arrival on British soil. Integrating them focused on the fight against discrimination and good intergroup relations (Bleich 2003; Bertossi 2011). While groups initially were categorized along ethnic lines, starting in the late 1990s, religion became a central category. Interfaith dialogue has become the backbone of public interventions on integration. Muslim groups have demanded the recognition of religious categories in antidiscrimination legislation (Bertossi 2011, 1569).

Migration, Public Opinion, and the Politics of Fear Far Right parties have launched anti-Muslim campaigns, and their rhetoric routinely informs mainstream public dialogue, to the frustration of Muslim leaders who report hearing references to the “menace of foreign cultures and the threat posed by immigrants in general, and Muslims in particular, to social solidarity and cultural homogeneity” (Klausen 2005, 123). In France, the government and public opinion routinely blame citizens of North African immigrant descent for failure to integrate, confusing France’s “institutional responsibility to integrate immigrants with immigrants’ personal failure to integrate into society” (Laborde 2008, 208). In the last decade, Europe has registered the highest influx of asylum seekers, those displaced as a result of conflicts in Syria and other predominantly Muslim countries from North Africa

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and the Middle East. This unprecedented wave of Muslim migrants has prompted debate about immigration, security, national identity, religion, cultural tradition, and whether European liberal democracies have the capacity to cope with diversity at such high levels. Yet surveys show that solid majorities of people in the United Kingdom, France, the Netherlands, Germany, and Sweden hold positive views of Muslims in their country (Pew Research Center 2019). The same surveys show that, since 2016, unfavorable opinions of Muslims have become less common across Europe. At the same time, European Muslims and non-Muslims share a strong concern about radicalization: European Muslims worry about extremism among Muslims (65% of French Muslims, 70% of British Muslims). And it is worth highlighting that Muslim immigrants have views of their own: for example, 39 percent of French Muslims think many or most Europeans are hostile toward Muslims, as do 51 percent of Muslims in Germany. Such immigrant attitudes extend to questions about compatibility and assimilation. Seventy-two percent of French Muslims perceive no conflict between being a devout Muslim and living in a modern society, whereas in the UK, Muslims are evenly split between those who do see such a conflict and those who do not. Seventy-eight percent of French Muslims say they want to adopt French customs (Rosentiel 2006). In some countries, Muslims—many descendants of ethnic minorities with long traditions of peaceful cohabitation with other groups—do not face the Islamophobia their counterparts elsewhere experience. Romanian Muslims report harmonious coexistence and holding leadership positions in the local administration for both ethnic Turk and ethnic Tartar communities, which have lived in Romania since the late fifteenth century (Edwards 2019). Clearly, though, tensions do exist. Muslims, along with Roma and Jews, represent one of the key targets of European racism. In 1990s Germany, neo-Nazi groups attacked refugee hostels and foreigners. German skinheads set fire to the houses where large Turkish and other migrant families lived. After the terrorist attacks of September 11, 2001, people of Muslim background often reported being the targets of antiimmigrant and anti-Muslim sentiment. Extremist nativist groups routinely engage in anti-immigrant, anti-Muslim violence. In 2012, a neo-Nazi gang murdered nine people of Turkish and Greek descent, together with a German policewoman, and attacked Turkish fast-food stalls. At first, German authorities investigating the killings publicly blamed Turkish criminals for the attack. That same year, a study found that Turkish immigrants in Germany lost much of their trust in the German state and feared further killings (Witte 2012). In 2017, the Germany government recorded over 950 Islamophobic incidents, including the vandalization of mosques, physical attacks, online bullying, and more (De Haas, Castles, and Miller 2020, 235). As visible minorities, European Muslims have been stigmatized and targeted along with other groups of recent immigrants and migrants. Anti-immigration violence in southern European countries like Spain and Italy has targeted Moroccans, Nigerians, Roma, and Albanians; Eastern European workers are often beaten and abused. In 2018, while Matteo Salvini, the leader of the anti-immigrant Lega party, served as interior minister, several vicious attacks on migrants and visible minorities occurred in Italy. In Palermo, Sicily, a group of young Italians beat up a nineteen-year-old from

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Senegal while yelling racial slurs. A thirteen-month-old Roma baby ended up in an intensive care unit after an Italian man shot her from his balcony (Ryšavý 2018). In 2015, a thirty-three-year-old construction worker from Romania was attacked by three young Italian men as he was having morning coffee at a bar. The assailants shouted “dirty Romanian, we don’t want you here,” and “we [Italians] come first” (Bacchi 2015). A Pew Research Center survey found that 86 percent of Italians have an unfavorable attitude toward Roma (the highest percentage in Europe), and 61 percent said they had negative views of Muslims (Bacchi 2015). Growing fears of Islamic fundamentalism and homegrown terrorist radicalization have contributed to the tensions between European Muslims and non-Muslims. In 1989, Ayatollah Khomeini, the leader of the 1979 Islamic revolution and head of the Iranian state, issued a fatwa ordering Muslims to kill Salman Rushdie, a British Indian novelist, for having written blasphemous passages in his book The Satanic Verses. In the UK and other Western European countries, Muslim migrants responded by organizing street protests and book burnings. In August 2022, Rushdie was attacked and stabbed multiple times onstage while speaking at an event in New York State. The actions became fuel for framing Islam as a threat to liberal democracy and the European way of life. September 11 and the numerous terrorist attacks that followed made it easier for politicians to frame immigration as a fundamental threat to the West and to call for securitizing migration policy. Counterterrorism often involves discussions of immigration policy and of migration from majority-Muslim countries. While terrorist attacks are generally perpetrated by members of a small minority of homebred terrorists of Muslim background, anti-immigration discourses blame all European Muslims and accuse them of seeking to undermine through Islamization the European societies in which they live. The transnational dimension of the phenomenon allows for politicization and generates fear. Despite restrictive visa regimes, externalized control of migration, and detention camps, migration has continued and increased (in particular, that of undocumented, irregular migrants). There are over one million Muslims in Spain and another million in Italy. The exodus of asylum seekers from countries devastated by violent conflict, poverty, persecution, terrorism, and environmental change—including Syria, Iraq, Afghanistan, and Eritrea—made politicians declare a migration crisis in the Mediterranean. Muslim migrants in Europe are a two- to four-hour flight from the countries where they or their families emigrated. Unlike US Muslims, who are geographically scattered, ethnically fragmented, and usually affluent, Muslim immigrants in Europe remain concentrated in marginalized neighborhoods, have much lower mixed marriage rates, and suffer from lack of opportunity, poverty, deficient access to education, high rates of incarceration, racial profiling, and police brutality. The fraying of societal fabric also comes from the realization that anti-immigration policies that focus on reinforcing the external border have little to no effect on citizens of immigrant descent, who are second generation, born and raised as insiders of European democratic societies. Some estimate that three-quarters of European Muslims are already European citizens by naturalization or birth. More than two million are recent migrants who came to Europe illegally and have not yet transitioned to documented status (Khader 2016).

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Public opinion surveys show increasing fear and opposition—perceptions of Islam as a threat to national identity domestic security and social fabric. Many right-wing politicians cultivate public anxieties about the Islamization of Europe. Many Muslims think European non-Muslims reject them and vilify or caricaturize their religion (Khader 2016). Such alarmist discourses have proliferated despite the fact that studies have repeatedly shown that large majorities of Muslims do not support radical Islam (Esposito and Mogahed 2007; Kepel 2002; Pargeter 2008), that Muslims do support and respect European democracy (Boswell and Geddes 2011), and that over time, Muslim migrants absorb the culture of their receiving country (Norris and Inglehart 2012).

Knocking on Europe’s Door The securitization of migration has international as well as domestic implications. Turkey stands out as a majority-Muslim country that, while part of the Western bloc for geostrategic reasons, has often generated anxiety. In 1987, both Morocco and Turkey officially applied for membership in the European Union. The European Commission turned down Morocco’s application on the grounds that it wasn’t a European country but accepted Turkey’s. Turkey was a Marshall Plan beneficiary and a member of the Organization for Economic Cooperation and Development, the Council of Europe, and NATO (Lippert 2021). In December 2004, the EU officially opened membership negotiations with Turkey. Ten years later, both candidates running for Commission president vowed that Turkey would never join the EU under their leadership because Turkey had turned its back on European democratic values. Turkey retains and, arguably, has increased its value as a strategic partner for the EU (especially in migration management under the framework of the EU-Turkey Statement on irregular migration of March 2016), but the country has failed to satisfy the political and economic criteria for EU membership. Is Turkey “European” enough? While the European Community claimed so during the Cold War, the government in Ankara changed over time in ways that confirmed doubts about its credentials as a European democracy. The country turned away from secularism, embracing religious conservative political platforms. The government disregarded separation of power, rule of law, human rights, minority rights. Turkey underwent five military coups or attempted coups between 1960 and 2016 (Lippert 2021). Since the 2016 failed coup, Turkey has distanced itself so much from the criteria for EU membership that the European Parliament and several memberstate governments asked the EU to formally interrupt accession negotiations. Most Europeans oppose Turkey’s accession because they see the country as “too big, too poor, with too dangerous borders and insufficiently ‘European’ to join the Union” (Euractiv 2004). Turkey is demographically a large country. If it joined, it would add over eighty-two million people to the EU’s population. Estimates claim that by 2025 Turkey will surpass Germany in terms of population; if it were to join, that would make it the largest EU member state (eighty-seven million people). Youth unemployment and exceptionally low employment for women (25.5%) set the country

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apart. While Turkey has a secular constitution, the country’s most prominent imam also serves as a civil servant and heads the Religious Affairs Directorate (Diyanet). Almost 90 percent of Turks identify as Muslim. Turkey would be the only majorityMuslim country to join the EU. Countries like Germany, Austria, France, Denmark, Sweden, and Finland strongly oppose Turkish EU membership, while countries like Romania support it (pro 66%). The EU-Turkey deal has increased Ankara’s leverage in negotiations with Europe, causing unease among policymakers at the national and European level. Even while the deal was discussed, Turkish President Recep Tayyip Erdogan made it clear that he had no qualms about blackmailing the EU into getting the most advantageous terms rather than trying to cultivate friendly, cooperative relations. “We can open the doors to Greece and Bulgaria anytime and we can put the refugees on buses. So how will you deal with refugees if you don’t get a deal? Kill the refugees?” (Reuters 2016). The agreement included three points: 1.  Turkey would take any measures necessary to stop people traveling irregularly from Turkey to the Greek islands. 2.  Anyone arriving to the Greek islands irregularly from Turkey can be returned there. 3.  For every Syrian asylum seeker returned from the islands, EU member states would accept one Syrian refugee currently living in Turkey. In exchange, Turkey received €6 billion and visa-free travel to Europe for Turkish nationals. The European Commission celebrated the arrangement as a huge success and credited it with solving the migration crisis. The deal’s critics point out that no mass returns have been made from Greece to Turkey. Only 2,140 people have been returned, in part because Greek courts ruled in many cases that Turkey is not a safe country to which asylum seekers could be returned (International Rescue Committee 2022). The deal remains a source of contention. The Turkish foreign minister Mevlut Cavusoglu has threatened to suspend the deal unless the EU grants visa-free access to Schengen countries (Schengen Visa News 2019). This debate about Turkey and the European Union opens up a wider conversation about the relationship between religion and cross-border migration. Should governments take faith into account when making immigration policy? Should borders be selectively porous based on religious considerations? Such questions are never far from the surface. Public debate surrounding migration (and migration restrictionism) has opposed those who regard borders as unjust, violent, and ineffective to those who find restrictive immigration policies legitimate. In the first camp, global egalitarians and libertarians support dismantling the closed border regime. Joseph Carens (1987) famously compared the current system of highly unequal citizenships to a modern form of feudal privilege, claiming that both are equally unjustifiable and morally unacceptable. Reece Jones (2017) claims that borders themselves create violence; to increase human security, we must dismantle them. These arguments do not differentiate between kinds of migrants based on country of origin, faith, demographic or socioeconomic characteristics, and culture. They focus on individuals and their rights and reject differential treatment. While the EU

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guarantees free movement of people for European citizens, the Union’s external border has been reinforced to prevent the passage of people from outside the EU (thirdcountry nationals, or TCNs). “Fortress Europe” allows EU countries to benefit from intra-EU essential workers (Paul 2020) while seeking to keep unwanted non-European migrants out. While this strategy does not involve an explicitly religious component, it de facto creates a barrier between countries that have relatively small numbers of Muslims and majority-Muslim countries like Turkey. In the second camp, those who express concerns about migration focus on the challenge diversity allegedly poses in economic, political, religious, or cultural terms. Cultural nationalists see immigration as a threat to national identity. Samuel Huntington argued that in the post–Cold War era, civilizations would clash because of the incompatibility of Western and non-Western attitudes, values, and worldviews (Huntington 1993). High-level politicians and academics often voice the claim that Islam in particular is incompatible with liberal democracy. In February 2020, for instance, French President Emmanuel Macron said, “We must never accept that the laws of religion can be superior to those of the Republic. . . . Islamist separatism is incompatible with freedom and equality, incompatible with the indivisibility of the Republic and the necessary unity of the nation” (Vidino 2020). These remarks echoed earlier rhetoric during President Sarkozy’s administration (2007–2012) that used anti-immigrant measures as an electoral tool, including public claims about the incompatibility of Islam and French identity. Political restrictionists note that collective self-determination can occur only when political communities benefit from closure, and political communities have special obligations to provide security, social protection, and solidarity (Waltzer 1983). Economic nationalists and left-wing politicians justify immigration restrictions as necessary to protect domestic workers from excessive or unfair competition. Miller (2016, 26) argues that nations have a right to self-determination, and their citizens share a “broadly similar set of cultural values and a sense of belonging.” Immigration changes national culture by increasing racial, ethnic, religious, linguistic, and cultural diversity; when immigration is high, “there is no time for a process of mutual adjustment to occur. . . . In such cases the education system and other such mechanisms of integration may be stretched beyond their capacity” (Miller 2016, 128). Miller also argues that immigration may reduce social trust, public support for social welfare, and trust in democratic institutions.

The Way Forward: Ideas for a Better Integration of Islam in the European Future Has Europe delivered on its promise of “Unity in diversity” for European Muslims? In some ways, Europe has made a lot of progress in including ethnic, religious, linguistic, and cultural minorities. Multiculturalism has promoted respect for diversity and provided representation channels for ethnic and religious groups. Toleration and equality inform national and EU policy, at least on paper. Protection of minority

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and human rights is one of the political criteria that candidate countries must fulfill in order to join the European Union. In other ways, Europe has fallen short: the political criteria for EU membership that apply to candidate countries do not apply to member states. Multiculturalism has come under attack, especially with the recent rise in inflows of non-European migrants and refugees, a majority of which come from majority-Muslim countries. Many governments have adopted integrationist policies which they justify as necessary to protect liberal democracy from internal and external enemies. Since the late 1990s, civic integration has dominated immigrant integration policy in Europe (Joppke 2017). While national models persist, there appears to be convergence on policy goals and institutional instruments that seek to limit difference. Civic integrationism coexists with multiculturalism. “The introduction of language and society knowledge requirements has been among the most visible if not the most significant of the policy changes for addressing the aggregate impact of mass immigration” (Goodman 2012). Europe finds itself torn between contemporary ideals of universal tolerance and the historical legacies of institutions predicated on national ethnic-based identities, between the desire to portray itself as inclusive and the challenges associated with political instability and transnational terrorism. The European Union seeks to harmonize policies, but national governments insist on maintaining sovereignty and control. In concluding the chapter, let’s consider the complicated question of what can be concretely done to foster a harmonious coexistence and integration of all groups in European liberal democratic societies. Encouragingly, research on Islamophobia shows that citizens’ negative views of Muslim immigration come from a rejection of religious fundamentalism rather than of Islam per se (Helbling and Traunmüller 2020). Research on public attitudes toward immigration (from a political economy and political psychology lens) shows that people’s views about immigration do not depend on personal economic circumstances and economic self-interest but, rather, come from people’s perceptions of the cultural (and to a lesser extent, economic) impact on the nation as a whole (Hainmueller and Hopkins 2014). As long as intercultural and interfaith dialogues continue, they should in theory bridge the knowledge gap between different religious groups, allowing everyone to see that majorities of Muslims living in Europe denounce religious fundamentalism and worry about terrorism. Presenting Islam as a threat to national identity reinforces stereotyping and prejudice. Most Europeans hugely overestimate the number of migrants and the proportion of Muslims among those migrants. Surveys of Muslims’ attitudes show that they are loyal to their European homelands and desire political, economic, and social integration. Mass media, politicians, and schools have an important role in presenting correct information, pushing back against fake news, and educating the public about Muslim communities and their contributions to European societies. Promoting education and labor market access appear to be more effective integration policies than spatial social engineering projects such as the promotion of mixed neighborhoods (Musterd and Ostendorf 2009; De Haas, Castles, and Miller 2020). Governments should focus on living up to the liberal democratic promise of equal rights, rule of law, and pluralism while developing institutions promoting national

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solidarity among all citizens. Ethnic discrimination in hiring decisions remains widespread. While citizens of immigrant descent tend to have higher employment levels than immigrants do, they still encounter considerable barriers. In several experimental studies, researchers have sent pairs of identical résumés in response to job postings, the only difference being that one résumé had a name that suggested the candidate came from an immigrant Muslim or African family while the other suggested the candidate was white. Applications from candidates who had Middle Eastern or African names were much less likely to advance to the next stage of the job search. Equally qualified minority candidates needed to send around 50 percent more applications to be invited for an interview (De Haas, Castles, and Miller 2020, 285). In the UK, lawmakers urged a new, name-blind application to limit the underemployment of British Muslims in the economy and in top civil service jobs. Public policy supporting civic and political integration produces positive incorporation outcomes, allowing immigrants and citizens of immigrant descent to gain access to citizenship, make their voices heard, and contribute to politics in their country. In matters of citizenship acquisition, Europe has witnessed a convergence: in the 1990s, governments extended access to naturalization, and countries like Germany, Belgium, Finland, Sweden, and Luxembourg remain relatively less restrictive. The 2000s brought about a shift toward more restrictive naturalization policies in countries like France, Denmark, Greece, the Netherlands, the UK, and Austria (De Haas, Castles, and Miller 2020, 316). Southern European countries like Italy and Spain, in granting residence and citizenship, allow people who can demonstrate descent from a national of the country, and countries like Germany, Hungary, Turkey, Israel, and Russia offer instant citizenship to coethnics living abroad. Countries like Switzerland and Austria still impose long waiting periods and complicated bureaucratic processes that place a considerable burden on individuals seeking to acquire citizenship. Governments and local authorities should incorporate and communicate with Muslim communities in developing ways to address prejudice, exclusion, misunderstandings, religious fundamentalism, and radicalization, giving Muslims agency in policymaking on these important and controversial issues. Solutions that do not engage Muslim communities—both established diasporas and newer arrivals—are bound to fail. Overall, while much progress has been made, European Muslims still face substantial obstacles. Reforms that facilitate access to education, jobs, and access to citizenship would help address some of these patterns of systemic inequality. Education can help eliminate misconceptions that European non-Muslims and European Muslims have about each other. Ultimately, “Unity in Diversity” seems the only way forward for a cosmopolitan, economically, and politically powerful Europe.

Suggested Readings Bleich, Erik. Race Politics in Britain and France: Ideas and Policymaking since the 1960s. Cambridge: Cambridge University Press, 2003. Dancygier, Rafaela. Dilemmas of Inclusion: Muslims in European Politics. Princeton, NJ: Princeton University Press, 2017.

M igration and I slam    377 Goodman, Sarah Wallace. Immigration and Membership Politics in Western Europe. Cambridge: Cambridge University Press, 2014. Klausen, Jytte. The Islamic Challenge: Politics and Religion in Western Europe. Oxford: Oxford University Press, 2005. Koopmans, Ruud, Paul Statham, Marco Giugni, and Florence Passy. Contested Citizenship: Immigration and Cultural Diversity in Europe. Minneapolis: University of Minnesota Press, 2005.

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3 7 8    R uxandra P aul Cheung, Sin Yi. 2014. “Ethno-Religious Minorities and Labour Market Integration: Generational Advancement or Decline?” Ethnic and Racial Studies 37 (1): 140–60. Connor, Phillip, and Matthias Koenig. 2013. “Bridges and Barriers: Religion and Immigrant Occupational Attainment across Integration Contexts.” International Migration Review 47 (1): 3–38. Connor, Philip, and Matthias Koenig. 2015. “Explaining the Muslim Employment Gap in Western Europe: Individual-Level Effects and Ethno-Religious Penalties.” Social Science Research 49: 191–201. Dancygier, Rafaela. 2017. Dilemmas of Inclusion: Muslims in European Politics. Dilemmas of Inclusion. Princeton, NJ: Princeton University Press. De Haas, Hein, Stephen Castles, and Mark J. Miller. 2020. The Age of Migration: International Population Movements in the Modern World. 6th ed. London: Red Globe. Di Stasio, Valentina, Bram Lancee, Susanne Veit, and Ruta Yemane. 2021. “Muslim by Default or Religious Discrimination? Results from a Cross-National Field Experiment on Hiring Discrimination.” Journal of Ethnic and Migration Studies 47 (6): 1305–26. Edwards, Maxim. 2019, August 20. “Romania, a Beacon of Coexistence for Muslims in Eastern Europe.” Al Jazeera. https://www​.aljazeera​.com​/features​/2019​/8​/20​/romania​-a​-beacon​-of​ -coexistence​-for​-muslims​-in​-eastern​-europe. Esposito, John L., and Dalia Mogahed. 2007. “Battle for Muslims’ Hearts and Minds: The Road Not (Yet) Taken.” Middle East Policy 14 (1): 27–41. Euractiv. 2004. “Turkey and the European Union: Just Another Enlargement?” Euractiv, June 18, 2004. https://www​.euractiv​.com​/section​/enlargement​/opinion​/turkey​-and​-the​-european​ -union​-just​-another​-enlargement. European Union Agency for Fundamental Rights. 2017. “Fundamental Rights Report 2017.” May 30, 2017. Luxembourg: Publications Office of the European Union. France 24. 2021. “France’s Lower House Approves Anti-Separatism Bill to Battle Islamist Extremism.” July 23, 2021. https://www​.france24​.com​/en​/live​-news​/20210723​-france​-s​-lower​ -house​-approves​-separatism​-law​-to​-battle​-islamist​-extremism. Galvin, Gaby. 2017. “Europe’s Out-of-Step Workforce.” U.S. News, June 30, 2017. https:// www​.usnews​.com​/news​/best​-countries​/articles​/2017​-06​-30​/in​-europe​-unemployment​divides​-native​-and​-foreign​-born. Gellner, Ernest. 1994. Conditions of Liberty: Civil Society and Its Rivals. New York: Allen Lane/ Penguin. Goodman, Sara Wallace. 2010. “Integration Requirements for Integration’s Sake? Identifying, Categorising and Comparing Civic Integration Policies.” Journal of Ethnic and Migration Studies 36 (5): 753–72. Goodman, Sara Wallace. 2012. “Fortifying Citizenship: Policy Strategies for Civic Integration in Western Europe.” World Politics 64 (4): 659–98. Hainmueller, Jens, and Daniel J. Hopkins. 2014. “Public Attitudes toward Immigration.” Annual Review of Political Science 17 (1): 225–49. Helbling, Marc, and Richard Traunmüller. 2020. “What Is Islamophobia? Disentangling Citizens’ Feelings toward Ethnicity, Religion and Religiosity Using a Survey Experiment.” British Journal of Political Science 50 (3): 811–28. Hille, Peter. 2020. “‘We Can Do This!’—Merkel’s Famous Words Five Years On after Refugee Influx to Germany.” Deutsche Welle, August 31, 2020. https://www​.dw​.com​/en​/merkel​ -germany​-refugees​/a​-54769229. Human Rights Watch. 2009. “Switzerland: Minaret Ban Violates Rights.” December 4, 2009. https://www​.hrw​.org​/news​/2009​/12​/04​/switzerland​-minaret​-ban​-violates​-rights.

M igration and I slam    379 Huntington, Samuel P. 1993. “The Clash of Civilizations?” Foreign Affairs 72 (3): 22–49. International Justice Resource Center. 2018. “UN Human Rights Committee Condemns ‘Burqa Ban,’ Countering European Court.” November 14, 2018. https://ijrcenter​.org​/2018​ /11​/14​/un​-human​-rights​-committee​-condemns​-burqa​-ban​-countering​-european​-court. International Rescue Committee. 2022. “What Is the EU-Turkey Deal?” March 18, 2022. https://eu​.rescue​.org​/article​/what​-eu​-turkey​-deal. Johannès, Franck. 2022. “2022 Presidential Election Results: The Failed Bet of Eric Zemmour.” Le Monde, April 11, 2022. https://www​.lemonde​.fr​/en​/politics​/article​/2022​/04​/11​ /2022​-presidential​-election​-results​-the​-failed​-bet​-of​-eric​-zemmour​-who​-missed​-a​-campaign​ -in​-which​-he​-imposed​-his​-topics​_5980284​_5​.html. Johns, Michael. 2003. “‘Do as I Say, Not as I Do’: The European Union, Eastern Europe and Minority Rights.” East European Politics and Societies 17 (4): 682–99. Jones, Reece. 2017. Violent Borders: Refugees and the Right to Move. London and New York: Verso. Joppke, Christian. 2004. “The Retreat of Multiculturalism in the Liberal State: Theory and Policy.” British Journal of Sociology 55 (2): 237–57. Joppke, Christian. 2007. “Transformation of Citizenship: Status, Rights, Identity.” Citizenship Studies 11 (1): 37–48. Joppke, Christian. 2017. “Civic Integration in Western Europe: Three Debates.” West European Politics 40 (6): 1153–76. Kepel, Gilles. 2002. Jihad: The Trail of Political Islam. Cambridge, MA: Harvard University Press. Khader, Bichara. 2016. “Muslims in Europe: The Construction of a ‘Problem.’” In The Search for Europe: Contrasting Approaches. Madrid: BBVA Foundation. https://www​.bbvaopenmind​ .com​/en​/articles​/muslims​-in​-europe​-the​-construction​-of​-a​-problem. Khattab, Nabil, and Tariq Modood. 2015. “Both Ethnic and Religious: Explaining Employment Penalties across 14 Ethno-Religious Groups in the United Kingdom.” Journal for the Scientific Study of Religion 54 (3): 501–22. Khemilat, Fatima. 2021. “France’s New ‘Separatism’ Law Stigmatises Minorities and Could Backfire Badly.” The Conversation, August 15, 2021. https://theconversation​.com​/frances​ -new​-separatism​-law​-stigmatises​-minorities​-and​-could​-backfire​-badly​-162705. Klausen, Jytte. 2005. The Islamic Challenge: Politics and Religion in Western Europe. Oxford: Oxford University Press. Koopmans, Ruud. 2013. “Multiculturalism and Immigration: A Contested Field in CrossNational Comparison.” Annual Review of Sociology 39 (1): 147–69. Koopmans, Ruud, Paul Statham, Marco Giugni, and Florence Passy. 2005. Contested Citizenship: Immigration and Cultural Diversity in Europe. Minneapolis: University of Minnesota Press. Kymlicka, Will. 1995. Multicultural Citizenship: A Liberal Theory of Minority Rights. Oxford: Oxford University Press. Kymlicka, Will, and Keith Banting. 2006. “Immigration, Multiculturalism, and the Welfare State.” Ethics and International Affairs 20 (3): 281–304. Laborde, Cécile. 2008. Critical Republicanism: The Hijab Controversy and Political Philosophy. Oxford: Oxford University Press. Lessard-Phillips, Laurence, Rosita Fibbi, and Philippe Wanner. 2012. “Assessing the Labour Market Position and Its Determinants for the Second Generation.” In The European Second Generation Compared: Does the Integration Context Matter? edited by Maurice Crul, Jens Schneider, and Frans Lelie, 165–224. Amsterdam: Amsterdam University Press.

3 8 0    R uxandra P aul Lippert, Barbara. 2021. “Turkey as a Special and (Almost) Dead Case of EU Enlargement Policy.” In EU-Turkey Relations: Theories, Institutions, and Policies, edited by Wulf Reiners and Ebru Turhan, 267–93. Cham, Switzerland: Springer. Matthijs, Matthias, and R. Daniel Kelemen. 2021. “The Other Side of Angela Merkel.” Foreign Policy, July 9, 2021. https://foreignpolicy​.com​/2021​/07​/09​/angela​-merkel​-german​-chancellor ​-europe​-trade​-euro​-refugees​-crisis. Miller, David. 2016. Strangers in Our Midst: The Political Philosophy of Immigration. Cambridge, MA: Harvard University Press. Musterd, Sako, and Wim Ostendorf. 2009. “Residential Segregation and Integration in the Netherlands.” Journal of Ethnic and Migration Studies 35 (9): 1515–32. Norris, Pippa, and Ronald F. Inglehart. 2012. “Muslim Integration into Western Cultures: Between Origins and Destinations.” Political Studies 60 (2): 228–51. Nowrasteh, Alex. 2016. “Muslim Immigration and Integration in the United States and Western Europe.” Cato Institute, October 31, 2016. https://www​.cato​.org​/blog​/muslim​-immigration ​-integration​-united​-states​-western​-europe. Pargeter, Alison. 2008. The New Frontiers of Jihad: Radical Islam in Europe. Philadelphia: University of Pennsylvania Press. Paul, Ruxandra. 2020. “Europe’s Essential Workers: Migration and Pandemic Politics in Central and Eastern Europe during COVID-19.” European Policy Analysis 6 (2): 238–63. Pepine, Horatiu. 2015. “Vechiul si noul islam in Romania.” Deutsche Welle Romania, January 19, 2015. https://www​.dw​.com​/ro​/vechiul-​%C5​%9Fi​-noul​-islam-​%C3​%AEn​-rom​%C3​ %A2nia​/a​-18200102. Pew Research Center. 2015. “Religious Composition by Country, 2010–2050.” April 2, 2015. https://www​.pewresearch​.org​/religion​/2015​/04​/02​/religious​-projection​-table. Pew Research Center. 2017. “Europe’s Growing Muslim Population.” November 29, 2017. https://www​.pewforum​.org​/2017​/11​/29​/europes​-growing​-muslim​-population. Pew Research Center. 2019. “European Public Opinion Three Decades after the Fall of Communism.” October 14, 2019. https://www​.pewresearch​.org​/global​/2019​/10​/14​/minority​ -groups. Pierné, Guillaume. 2013. “Hiring Discrimination Based on National Origin and Religious Closeness: Results from a Field Experiment in the Paris Area.” IZA Journal of Labor Economics 2 (1): 4. Reuters. 2016. “Turkey’s Erdogan Threatened to Flood Europe with Migrants: Greek Website.” February 8, 2016. https://www​.reuters​.com​/article​/us​-europe​-migrants​-eu​-turkey​ -idUSKCN0VH1R0. Rosentiel, Tom. 2006. “The French-Muslim Connection.” Pew Research Center, August 17, 2006. https://www​.pewresearch​.org​/2006​/08​/17​/the​-frenchmuslim​-connection. Ryšavý, Zdeněk. 2018. “Italy: Moroccan Beaten to Death, Athlete of Nigerian Origin Attacked as Fascists in the Govt Spread Racism.” Romea, August 1, 2018. https://www​.romea​.cz​/en​ /news​/world​/italy​-moroccan​-beaten​-to​-death​-athlete​-of​-nigerian​-origin​-attacked​-as​-fascists​ -in​-the​-govt​-spread​-racism. Schengen Visa News. 2019. “Turkey Threatens to Suspend EU Migrant Deal Due to Lack of Visa-free Travel to EU.” July 25, 2019. https://www​.schengenvisainfo​.com​/news​/turkey​ -threatens​-to​-suspend​-eu​-migrant​-deal​-due​-to​-lack​-of​-visa​-free​-travel​-to​-eu. Shepard, Todd. 2006. The Invention of Decolonization The Algerian War and the Remaking of France. Ithaca, NY, and London: Cornell University Press. Song, Sarah. 2020. “Multiculturalism.” In The Stanford Encyclopedia of Philosophy, edited by Edward N. Zalta. https://plato​.stanford​.edu​/archives​/fall2020​/entries​/multiculturalism.

M igration and I slam    381 Sweida-Metwally, Samir. 2022. “Does the Muslim Penalty in the British Labour Market Dissipate after Accounting for So-Called ‘Sociocultural Attitudes’?” Ethnic and Racial Studies 45 (16): 359–88. Triadafilopoulos, Triadafilos. 2011. “Illiberal Means to Liberal Ends? Understanding Recent Immigrant Integration Policies in Europe.” Journal of Ethnic and Migration Studies 37 (6): 861–80. Valfort, Marie-Anne. 2017. “Has France a Problem with Muslims? Evidence from a Field Experiment in the Labour Market.” IZA/CREST/OECD Workshop: Recent Advances in the Economics of Discrimination, Paris, OECD Conference Center, July 6–7, 2017. Vidino, Lorenzo. 2020. “Emmanuel Macron’s War on Islamism Is Europe’s Future.” Foreign Policy, February 24, 2020. https://foreignpolicy​.com​/2020​/02​/24​/emmanuel​-macrons​-war​ -on​-islamism​-is​-europes​-future. Waltzer, Michael. 1983. Spheres of Justice: A Defense of Pluralism and Equality. New York: Basic Books. Witte, Floris de. 2012. “Transnational Solidarity and the Mediation of Conflicts of Justice in Europe.” European Law Journal 18 (5): 694–710. Young, Zachary. 2018. “Macron to Review Report Calling for Reform of Islam in France.” Politico, September 10, 2018. https://www​.politico​.eu​/article​/macron​-islam​-france​-muslim​ -review​-report​-calling​-for​-reform.

CHAPTER 14

Europe’s Troubled Neighborhoods Laure Delcour and Irina Petrova

T

he European Union (EU) is usually regarded as the most advanced form of regional integration, one of the largest trading blocs, or a community of values. Ultimately, it is also an actor in the making: “A vast, composite and ever-expanding entity with ‘fuzzy’ borders” (Del Sarto 2015). Indeed, the history of European integration is a process of vertical and horizontal expansion, respectively deepening integration and broadening its geographical scope. This has important implications as to how the EU perceives itself and its neighborhood. In a way, the neighborhood is seen as a system of concentric circles whereby the states situated closer to the EU are considered similar to the EU and are therefore expected to share its norms and values (e.g., the Balkan states, Ukraine), while there is less expectation of approximation toward the EU from the states situated farther away (e.g., Central Asia). In this context, the EU has long seen itself as a force for good and a strong transformative power for the modernization and democratization of its neighbors. This self-perception of the EU as a transformative power has been profoundly challenged in the past years by a range of internal and external crises: sovereign debt crisis, migration crisis, Brexit, rise of populism, Russia’s invasion of Ukraine, crisis of transatlantic relations, and assertiveness of Russia and China as alternative order providers, to name just a few. Crucially, the neighborhood policy launched by the EU after the 2004 enlargement has proved ineffective in stabilizing the EU’s fringes. As a result, the EU has found itself encircled by zones of instability and conflict, threatening to spill over into the European Union itself. This chapter will discuss why the EU’s neighborhood policy was created, how it has changed over time, what the major threats in the region are, and why the EU has not been successful in dealing with these threats. The EU faced multiple challenges in the region over the past two decades, including the Russian war in Ukraine and unsatisfactory results in democracy promotion and maintaining stability, as well as dealing with migration and local conflicts. Responding to these challenges proved difficult due to a complex combination of reasons, including, inter alia, the unique nature of the EU and its complicated decision-making system, domestic power structures in the neighborhood states and the role of other regional powers, such as Russia, Turkey, and China. The chapter will 382

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also examine the revisions of the neighborhood policy and discuss the lessons learned by the EU in its relations with its partners.

The EU and Its Neighborhood: From Terrae Incognitae to a Ring of Friends or a Ring of Fire? The EU’s current relations with its neighbors find their roots in a series of events that unfolded in the late 1980s and early 1990s across Europe. This period witnessed contrasted dynamics of integration and disintegration developing in the western and eastern parts of the continent, respectively. To the east, the bloc formed in the late 1940s under the Soviet rule unexpectedly collapsed. The breakdown of the communist system in Central and Eastern Europe in 1988–1990 paved the way for the dismantlement of the key organizations that had hitherto united the Eastern bloc, namely the Warsaw Pact and COMECON. This was followed by the demise of the Soviet Union in late 1991. By contrast, in Western Europe, political and economic integration received a major impetus with the signature of the Maastricht Treaty (1992), which turned the European Community into a European Union with much broader competencies and a substantially enhanced global standing. As a result of these contrasted dynamics, the new EU emerged as the major pole of attraction on the continent. For many in the West, the collapse of communism enabled the reunification of Europe through the return of former communist countries to their natural geopolitical location and to the sphere of influence to which they historically belong. Crucially, the reunification of the continent was predominantly interpreted as a consecration of Western values and not just of the political and economic system (Delcour 2010). Among EU policymakers, the transformation of Central and Eastern European countries was seen as a process of catching up. In this context, Western European elites believed their principal task was to guide former communist states along the path of market democracy and to provide them with a suitable institutional framework for their return to Europe (Delcour 2010, 139). However, from its outset, the EU’s emergence as a pole of attraction—and therefore its capacity to structure the continent—has been fraught with inconsistencies and challenges. Whereas the EU “invested” massively—whether in terms of time, ideas, or money—in preparing its enlargement to Central and Eastern Europe, it paid less attention to other regions of the former Eastern bloc. In the early 1990s, the disintegration of the former Yugoslavia in bloody wars (1991–1995) glaringly illustrated the weaknesses of the newly created Common Foreign and Security Policy (CFSP). Similarly, the former Soviet space, which also witnessed the eruption of conflicts in the early 1990s, did not rank high among key EU foreign policy priorities. The EU’s policy in the region was initially embryonic and developed gradually around two pillars: a new contractual framework in the form of Partnership and Cooperation Agreements (PCAs)—based on a similar model for all former Soviet republics, but varying in the scope of cooperation, with the densest cooperation foreseen with Russia—and

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a technical assistance program to support political and economic transformations in all twelve newly independent states (TACIS, or Technical Assistance to the Commonwealth of Independent States).1 In contrast to the eastern part of the continent, the EU’s relations with the southern Mediterranean developed smoothly throughout the 1990s. A few years before, the European Community’s enlargement to Spain and Portugal, effective in 1987, had contributed to shifting attention to North Africa. Progress toward a settlement of the Israel-Palestine conflict on the basis of the Oslo Accords signed in 1993 and 1995 was critical to giving an additional impetus to Euro-Mediterranean relations. In 1995, the EU and its southern Mediterranean partners2 launched the Euro-Mediterranean Partnership (EMP, also called the Barcelona Process), which, in the words of Chris Patten, former commissioner for external relations, was meant to “turn the Mediterranean basin into an area of dialogue, exchange and cooperation guaranteeing peace, stability and prosperity” (European Commission 2000, 3). This vision was operationalized in an intensified cooperation around three major issue areas: political and security partnership, as part of which the EU sought to forge new bilateral Euro-Mediterranean association agreements; economic and financial partnership, including EU assistance as part of the MEDA program; and partnership in social and cultural affairs. By establishing a strong multilateral dimension to complement the bilateral dimension, the EMP also emerged as a “truly regional policy” (European Commission 2000, 7). With the “Big-Bang enlargement” drawing near,3 in the late 1990s, the EU had to rethink its relations with the geographical areas with which it would share a border by land or sea after 2004. Both the growing interdependences with, and increasing threats from, future neighbors prompted the EU to prioritize its vicinity in its still nascent foreign policy. This is clearly evidenced by the first Common Strategies prepared in 1999,4 which were dedicated to Russia, Ukraine, the southern Mediterranean, and the Western Balkans, respectively. All four strategies highlighted the multifaceted security risks emanating from these regions which could, in turn, threaten the EU. Within the EU, concern also grew that enlargement could act as a destabilizing factor, which would further deteriorate security at the EU’s periphery. Therefore, in the few years that preceded EU enlargement, increased attention to its vicinity gave rise to a number of initiatives and bargains involving both EU and external players. As the accession of Central European countries became imminent, the Union received increasing numbers of requests from its future neighbors to review its policies. In the view of some EU member states and candidate countries, the upheavals caused by enlargement called for considering a more ambitious policy than had been hitherto implemented. Sweden, Poland, and, to a lesser extent, the UK were key actors in moving the issue onto the EU’s agenda. The emergence of the “neighborhood” as a referent object in the EU’s discourse coincided with the accession of Eastern and southern European countries to the EU. Despite growing prominence on the EU’s agenda, the concept of “neighborhood” was only defined incrementally. The initial proposals focused on Ukraine, Moldova, Belarus, and Russia as the main targets of the future proximity policy. The document drafted jointly by Commissioner Patten and High Representative Solana questioned the geographical coverage of the future proximity policy and proposed to differentiate

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between the Western Balkans, Russia, eastern neighbors, and the southern Mediterranean based upon the prospect of EU accession (Patten and Solana 2002). Eventual membership was explicitly foreseen for the Western Balkans, excluded for southern Mediterranean partners and left open for eastern neighbors. The proximity policy was implicitly meant to target the eastern neighbors, which were expected to be the most directly affected by the enlargement of the European Union to the countries of Central and Eastern Europe. Although it clearly advocated for a new neighborhood policy toward the future eastern periphery, the joint letter left open the issue of Russia’s participation. The proposed geographical definition of the neighborhood was further refined in 2003 as a result of Russia’s refusal to be part of the new policy due to the asymmetric relations it implied (European Commission 2003). Instead of following the model laid out by the EU, Moscow expressed its interest to move toward a relationship of equals through the creation of four common spaces and to build a strategic partnership on reciprocal terms rather than unilateral rule transfer from the EU. At the same time, southern EU member states (France, Italy, and Spain) pressured the EU to include the Mediterranean neighbors, and the European Parliament and the Council advocated that three Caucasus countries—Armenia, Georgia, and Azerbaijan—be included in 2004 into the new neighborhood policy, whereas they were not part of the Commission’s 2003 proposal. While also responding to local political developments (e.g., the Rose Revolution in Georgia in 2003), the inclusion of the Mediterranean and the South Caucasus countries stemmed primarily from the EU’s security concerns, as indicated in the EU’s 2003 Security Strategy: Even in an era of globalisation, geography is still important. It is in the European interest that countries on our borders are well-governed. Neighbours who are engaged in violent conflict, weak states where organised crime flourishes, dysfunctional societies or exploding population growth on its borders all pose problems for Europe. (Council of the EU 2003)

Launched in 2004, the European Neighborhood Policy (ENP) was intended both to avoid “new dividing lines” across the continent and to develop a positive interdependence between the enlarged EU and its new neighbors (European Commission 2003). With the ENP, the EU offered a “stake in the EU’s Internal Market” and increased assistance to its neighbors in exchange for their commitment to reforms and shared values (European Commission 2004, 3). To foster political and economic transformations at its periphery, the EU relied upon the toolbox used for enlargement policy, which was then regarded as “the most successful EU foreign policy tool” (European Commission 2003). However, both the EU’s offer and the mechanisms underpinning the ENP quickly proved ineffective to induce far-reaching transformations in the neighborhood. Indeed, the ENP excluded a membership perspective and, overall, offered few tangible incentives for neighbors to reform in the short term. As commitments made by EU neighbors were of a political rather than legal nature, the policy also lacked effective mechanisms for monitoring and conditionality. Importantly, the ENP failed to address one of the core factors that prompted its creation, namely, security issues

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and conflicts. Therefore, as early as the mid-2000s, the European Commission (2006) agreed that the policy needed to be strengthened. This reinforcement came in the form of subregional initiatives introduced by EU member states for the southern Mediterranean and eastern partners in 2008 and 2009, respectively. Whereas both initiatives complemented the ENP in their specific geographical areas, they differed in terms of both their institutional framework and operating mode. In 2007, then French President Nicolas Sarkozy, together with Italian and Spanish leaders Romano Prodi and José Luis Zapatero, called for creating a Union for the Mediterranean (UfM) in order to overcome the stalemate of the EuroMed partnership (resulting from the deteriorating regional security situation and the lingering conflict between Israel and Palestine) and give a new impetus to the relations with southern Mediterranean countries. The Union was officially launched in July 2008 as a multilateral initiative gathering forty-three countries in the EU and around the Mediterranean Sea. The UfM was designed to serve as a forum for discussing regional issues on an equal footing. This was done through introducing a new institutional framework (a system of copresidency and a secretariat) premised on the principles of shared ownership and shared decision making. The UfM also acted as a platform supporting flagship projects of common interest to both shores of the Mediterranean, in areas such as the construction of highways and sea routes, pollution reduction, the development of solar energy, and investment in small and medium enterprises (Présidence de la république française 2008). In contrast to the UfM, the Eastern Partnership (EaP) launched in 2009 on the basis of a Polish-Swedish initiative did not create common institutions. It rather reflected a hub-and-spoke pattern of relations, with the EU being placed at the center of a two-track policy: a predominant bilateral track and a newly introduced multilateral track meant to foster links between the EU and its six post-Soviet neighbors (Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine), as well as among the neighbors themselves. As part of the bilateral track, the EU substantially reinforced its offer to EaP countries with four new pillars: an upgraded contractual framework in the form of association agreements (AA), deep and comprehensive free-trade agreements (DCFTA), visa liberalization (i.e., the elimination of the obligation of Schengen visas, which are required to enter the Schengen Area), and enhanced sectoral cooperation (European Commission 2008). Therefore, ultimately, the EU’s offer would bring eastern neighbors closer to Europe by offering a sustained political dialogue, market access, easier mobility, and closer cooperation in areas such as energy, transport, or environment. Deeper integration with the EU was expected to be premised upon approximation with its body of law, the acquis communautaire, flanked with sectorspecific conditionality and monitoring of reforms by the EU. Therefore, in contrast to the UfM, the EaP continuously relied upon the model of enlargement, despite the lack of a membership perspective for the partner countries. For all their differences, both subregional initiatives reflected limited sensitivity to local needs. The gap between EU policies and local contexts was especially glaring in the economic area. In the south, the UfM was criticized for failing to offer a tangible perspective to southern neighbors in terms of access to the EU market. In the east, the

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DCFTAs required wholesale and costly reforms for adopting and implementing EU trade-related rules, which were initially designed for countries with a much higher level of socioeconomic development compared to the post-Soviet states. Crucially, neither the UfM nor the EaP provided a robust policy framework to address the challenges that developed in the EU’s neighborhood in the early 2010s. In the south, the EU was caught unprepared by the wave of political protests that erupted in Tunisia in late 2010 and gained momentum in other North African and Middle East countries in 2011. This is because the EU had predominantly relied upon a dialogue with governments at the expense of societies in its relations with the southern Mediterranean countries. Yet many of the (authoritarian) leaders with whom the EU was used to interacting (e.g., Tunisia’s Ben Ali and Egypt’s Mubarak) were overthrown during the so-called Arab Spring. The EU initially responded with caution and some delay to the protests in North Africa and the Middle East. However, the scope of political changes in the region prompted the Union to review its strategy in the region. With the “Partnership for Democracy and Shared Prosperity” released in March 2011, the EU sought to advance the relations between the EU and its southern neighbors by prioritizing democratic transformations, support to civil society, and inclusive economic growth (European Commission/High Representative of the EU for Foreign Affairs and Security Policy 2011b). In the wake of political changes in its southern neighborhood, the EU published a first comprehensive review of the ENP (European Commission/High Representative of the EU for Foreign Affairs and Security Policy 2011a). As part of its new strategy, it emphasized the principle of differentiation among neighbors and promoted a “morefor-more approach” based on partner countries’ commitments to “deep democracy,” defined as “the kind that lasts because the right to vote is accompanied by rights to exercise free speech, form competing political parties, receive impartial justice from independent judges, security from accountable police and army forces, access to a competent and non-corrupt civil service” (European Commission/High Representative of the EU for Foreign Affairs and Security Policy 2011a, 1). In the east, in the early 2010s, Russia increasingly challenged the EU’s policies in the region. The inability of the EU and Russia to build a true strategic partnership (see chapter 8 for further details) resulted in a growing competition that eventually led to political instability and proliferation of security threats in the region. Between 2003 and 2013, the EU and Russia came to a deadlock in many areas of bilateral cooperation. The negotiations on creating a Common Economic Space stalled. More importantly, Russian security concerns regarding the expansion of NATO and plans for rebuilding a truly inclusive security architecture in Europe were not addressed by the EU. Against this backdrop, Russian political elites increasingly perceived the EU’s democratization policy as an unwelcome interference into Russian domestic affairs. Since the mid-2010s, Russia reinforced its policy vis-à-vis the post-Soviet states by offering economic, security, and normative alternatives to the EU’s policies. In terms of economic integration, Russia (together with Belarus and Kazakhstan) launched in 2010 the Eurasian Customs Union (ECU), which was upgraded in 2015 to a Eurasian Economic Union (EAEU). By offering a higher level of economic integration than the EU with the DCFTAs, Russia rendered both offers incompatible.

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This is because participation in a Customs Union entails the delegation of sovereignty to a supranational institution, thereby excluding the conclusion of free-trade agreements with third countries. The emergence of two deep economic integration projects, combined with Russia’s pressure over EaP countries for full membership in the ECU/ EAEU, paved the way for a chain of interactions and clashes between the EU’s and Russia’s policies, which culminated initially in the 2014 crisis in Ukraine. Over the years, Russia also developed a normative model for its neighborhood, which has served as an alternative to the EU’s normative power focusing on democratization and human rights. Russia’s emergent normative model built on the ideas of sovereign democracy and noninterference into domestic affairs along with a range of conservative norms emphasizing the role of the Orthodox Church, morality, family, patriotism, and other traditional values. Russian conservative soft power has resonated among some groups of the population in the ENP states, thus challenging the EU’s normative hegemony (Casier 2016; Haukkala 2017). The increasing rivalry in economic, security, and normative spheres resulted in a profound crisis in EU-Russia relations, a tug-of-war in Ukraine, suspension of cooperation in many areas, mutual sanctions (see section on security below), and the revival of Cold War rhetoric. All things considered, the EU’s neighborhood did not become a “ring of friends” as was expected when the ENP was launched. Instead, in just a few years, it turned into a “ring of fire.” The scale of geopolitical upheavals at the EU’s borders (including the wars in Syria and Libya), next to a range of internal crises (debt crisis, rise of populism) and an increasingly challenging international environment (crisis of transatlantic relations, assertiveness of China, Russia, and other international actors) led to a paradigm shift in the ENP. The 2015 ENP review and the “Eastern Partnership Policy beyond 2020” strategy moved away from the EU-centric approach, which focused on the EU’s own experience and policies (first and foremost enlargement). The new EU paradigm aims to place countries’ aspirations and needs at the core of the revised ENP and thereby reinforces the principles of differentiation and joint ownership (European Commission/High Representative of the EU for Foreign Affairs and Security Policy 2011c). To do so, the EU decoupled the single template for relations with the neighborhood states to better accommodate partners’ priorities via tailor-made framework agreements (e.g., Association Agreements, Comprehensive and Enhanced Partnership Agreement and Partnership Priorities). The EU also adjusted its internal procedures to reflect the different cooperation agendas with the ENP states. For instance, whereas previously, policy evaluations were conducted simultaneously for all partnerships, the monitoring process now reflects the scope of cooperation, taking place annually or once in several years depending on the bilateral agenda. In terms of joint ownership, the EU expanded the scope of cooperation from local decision makers to civil society organizations, and later on to other groups (business, youth, ethnic, and religious minorities) to ensure wider resonance and legitimacy of its policy. In essence, instability and conflicts in the neighborhood also served as a reality check for the EU. With the 2015 ENP review, the Union scaled down its ambitions and shifted toward greater pragmatism in the region. In what follows, we examine the challenges the EU faces in two key areas of its neighborhood policy, namely, political transformations and security.

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Instability and Conflict in the EU’s Neighborhood Security was a core rationale behind the creation of the ENP. This is because the EU’s 2004 enlargement entailed both increased security and new threats for the Union: “The integration of acceding states increases [the EU’s] security but also brings the EU closer to troubled areas” (Council of the EU 2003). As a result of blurred boundaries between internal and external security, the Union’s capacity to provide security to its own citizens became increasingly entangled with its cooperation with neighbors (European Commission 2003, 3). Yet in the EU’s view, enhanced interdependence was not (only) a source of threats. It could “itself be a means to promote stability, security and sustainable development” (European Commission 2003, 4). The creation of the ENP can thus be regarded as an attempt by the EU to foster a “nascent security community” (Adler and Barnett 1998), with the Union at its core. With the ENP, the EU intended to take over responsibility for creating an area of stability, security, and well-being. However, closer scrutiny of EU engagement in the neighborhood reveals a glaring gap between the EU’s self-image as a motor of security and its weak contribution to the resolution of conflicts, defined as a major threat in the 2003 EU’s security strategy. POLITICAL INSTABILITY: THE DEMOCRACY VERSUS STABILITY DILEMMA To prevent the spillover of political instability and authoritarianism from the neighborhood region into the EU, the ENP sought to ensure the well-being, prosperity, and stability of the region. Democratization was a cornerstone objective of the ENP strategy, grounded in the belief that democratic states are more stable and resilient as compared to other political regimes. Hence, it was expected that in the long term, democratization would result in increased stability and security in the region. This conviction has been deeply entrenched in the EU’s foreign policy and is based on several grounds, including democratic peace theory, modernization theory, and, ultimately, the EU’s own experience of facilitating peace in Europe in the second half of the twentieth century, as well as the transformation of a number of authoritarian regimes via EU membership (e.g., Spain, Portugal, and the Central and Eastern European EU member states). Building on this experience, the first ENP strategy (2004) prepared a blueprint for the democratization and stabilization of neighboring states through their integration with the EU. The 2004 ENP strategy stated: The European Neighbourhood Policy’s vision involves a ring of countries, sharing the EU’s fundamental values and objectives, drawn into an increasingly close relationship, going beyond co-operation to involve a significant measure of economic and political integration. This will bring enormous gains to all involved in terms of increased stability, security and well-being. (European Commission 2004, 5)

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However, expectations ran ahead of results. Not only has democratization proven shallow in some cases and absent or easily reversible in other cases but the policy of promoting democracy has been at odds with the objective of stability, at least in the short and medium terms. Policies toward the MENA region (Pace 2009), the EaP (Börzel and Lebanidze 2017), and Western Balkan states (Richter 2012), as well as Russia, faced the same vexing conflict between democratization and stability, whereby external support for democratization can provoke political instability, but weak pressure for democratization allows for the stabilization and consolidation of authoritarian regimes. This phenomenon is widely referred to in the literature as the “democracy/ stability dilemma” (Jünemann 2004). Although the EU initially hoped to accomplish both objectives, it soon became clear that in practice, these conflicting goals cannot be achieved simultaneously. Political regimes in the neighborhood states vary from authoritarianism to hybrid and flawed democracies. Over the past three decades, most of them have experienced turbulent times, swinging between democratic dynamics, often accompanied by mass protests and casualties, and the return of authoritarian powers and their concomitant violations of democratic freedoms. While maintaining a rhetoric of democracy and human rights, the EU in practice adopted different approaches toward the countries in the region. In some cases, the EU used strong leverage to pressure neighboring governments to continue with democratic reforms. In others, it sought to avoid political instability at almost any cost, even at the expense of democratization. What explains this variation in the EU’s approach toward the neighborhood region? Tanja Börzel and Bidzina Lebanidze (2017) argue that the EU prioritizes stability over democracy when the following two criteria are present: (1) the threats of potential destabilization in the neighborhood region are large-scale and can directly affect the EU; (2) there is an absence of a strong democratic coalition in a target state. By contrast, if no serious threats could spill over to the EU and if a state had a strong democratic coalition, Brussels has tended to prioritize democratization over security. Several other important factors should be added, such as (3) the presence or absence of the EU’s vital economic interests in a country, (4) potential actions of other regional powers, and (5) learning from past policy cycles and unintended consequences. We discuss the democracy/stability dilemma more in detail below. In the EaP, four hybrid regimes—Armenia, Georgia, Moldova, and Ukraine— opted for democratization at different stages of their independence. Particularly illustrative are the cases of Georgia and Ukraine, where in the course of the so-called color revolutions (the Rose Revolution in 2003 and the Orange Revolution in 2004, also referred to as “Maidan”), people took to the streets and forced the incumbents to give way to the pro-democratic forces promising large-scale democratic reforms. The EU strongly supported these regime changes due to the following strategic calculations: as perceived by Brussels, these protests and the subsequent democratization, although temporarily destabilizing the political situation in Georgia and Ukraine, would pose neither direct military or humanitarian threats nor significant economic losses to the EU. Furthermore, these states had consolidated democratic coalitions: the “United National Movement” headed by Mikheil Saakashvili in Georgia and the coalition “Force of the People,” including Viktor Yushchenko’s party “Our Ukraine”

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and Yulia Tymoshenko’s “Bloc.” The EU-inspired democratic reforms agenda also enjoyed substantial popular support up to the articulated EU membership aspirations. Finally, Russia, another important regional actor, did not threaten to intervene on the ground immediately, even as it vocally condemned the color revolutions and the EU’s “interference” into the domestic affairs of the post-Soviet states. The color revolutions gave a new impetus to bilateral cooperation with the EU. In the aftermath of the Rose revolution, Georgia launched a range of democratic reforms and made substantial progress in fighting petty corruption, state building, and democratic freedoms, engendering the image of “an oasis of democracy” in the region (Ishiyama, Mezvrishvili, and Zhgenti 2018). Although subsequent developments raised questions about the sustainability of these reforms (Delcour and Wolczuk 2015, 462), the EU continued to pursue its democratization agenda in Georgia. In the case of Ukraine, democratization progress after the Orange Revolution was more modest. The reforms stalled as a result of internal resistance of political and economic elites and rivalry between the former allies Yushchenko and Tymoshenko. Lack of progress and popular disappointment, in turn, led the political opponent of the Orange Revolution, Viktor Yanukovych, supported by the Party of Regions, to get elected as president in 2010. His presidency ushered in further democratic backsliding, with corruption mounting to an unprecedented level. Yanukovych’s decision not to sign the Association Agreement with the EU in November 2013 became the last straw and ignited a new wave of mass protests. Maidan Nezalezhnosti (Independence Square in Kyiv, which gave the name “Euromaidan” to the protests) was occupied by thousands of people until February 2014, when President Yanukovych fled to Russia and the provisional government consisting of the opposition leaders got power. The EU strongly supported the opposition and protesters, welcomed the transfer of power, and promised wide support for democratization reforms. However, unlike in 2004, Russia expressed its strong support for President Yanukovych and interpreted the protests as a coup d’état, which, according to the Russian narrative, made the new government illegitimate. Russia backed the referendum on secession from Ukraine in Crimea (a Ukrainian peninsula, with the majority of the population consisting of ethnic Russians) on March 16, 2014. Given the overwhelming support for the option of joining Russia, on March 18, 2014, Moscow formally annexed Crimea. In the southeast of Ukraine (the Donbas region), also historically part of the Russian Empire and populated by a substantial share of ethnic Russians and Russian-speaking population (Kulyk 2019), the opposition to the new Kyiv government proclaimed the separatist Donetsk and Luhansk People’s Republics with the strong support of Moscow. The crisis in Ukraine has profoundly destabilized the country and the region around it. The war in Donbas between the separatist republics and the Kyiv government resulted in over eleven thousand killed and three times more wounded among the military staff on both sides, as well as over three thousand conflict-related civilian deaths (United Nations 2020). Around 1.5 million became internally displaced persons from the beginning of the conflict (United Nations High Commissioner for Refugees 2020). Over a million people fled abroad, mainly to Russia, Belarus, and some EU member states (Rimpiläinen 2020). The conflict’s high toll well captures the EU’s democracy/security dilemma. To a degree, the chaos was an unintended con-

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sequence of the EU’s democratization policy (Casier 2019), when the EU’s interests collided with Russia’s in the region that is their shared neighborhood. In the Middle East and North Africa (MENA) region, the democracy/stability dilemma unfolded differently due to substantially different background conditions. First and foremost, as discussed above, the primary condition for the prioritization of democratization over stability is the absence of serious threats emanating from the region. In contrast to the eastern neighbors, the Middle East and North Africa have been perceived as sources of political instability, organized crime, irregular migration, and, particularly since September 11, 2001, the hotbed of terrorist movements. The sheer scale of potential threats to the EU, in case of destabilization, has therefore been much broader than in the case of the eastern neighbors. Second, no strong prodemocratization forces consolidated in the region (with the exception of Tunisia), hence making democracy promotion even more challenging for the EU. The promise of the Arab Spring was not fulfilled, as will be discussed below. Third, the EU has vital economic interests in the region, with a substantial share of its exports going to MENA. Although the trade agreements with Algeria, Egypt, Israel, Jordan, Morocco, Lebanon, and Tunisia are usually evaluated as providing insufficient adaptation to the EU standards and not realizing the full potential of regional trade, they did contribute to the liberalization of trade regimes and intensification of trade (Abdelaaziz et al. 2019). In the democracy/stability dilemma, vital economic ties usually lead to opting for stability over democracy. Fourth, being just one of several regional players, along with Iran, Saudi Arabia, Turkey, and others, the EU had to carefully balance its democracy and stability preferences to avoid destabilization of the entire region. The objective of democratization was included into the Barcelona Process, launched in 1995, “simply because it is the narrative at the core of the EU construction itself. . . . [According to this narrative,] a genuine security community in the Euro-Mediterranean can only be built on democratic building blocks” (Nicolaïdis and Nicolaïdis 2006). Hence, in the 1990s and 2000s, the objectives of democratization and stabilization in the region went hand in hand with the EU’s policy design. However, assessing the EU’s transformative power in the region, most analysts agree that no tangible progress had been achieved in terms of democratization, and the situation even deteriorated in some countries (Gillespie 2006, 84). This lack of progress is often explained by the EU’s de facto prioritization of stability over democracy in the region. Cooperation with the autocratic regimes to prevent the expansion of regional threats worked at the expense of the democratization objective. The Arab Spring, the democratization movement that swept across the region in 2011 and 2012, opened a window of opportunity for the EU to boost its democracy promotion. The bottom-up democratization push was truly a “peoplehood moment” (Sadiki 2016), mobilizing pro-democratic forces of the region. The EU’s initially ambiguous actions became more decisive with the proliferation of revolts. In 2011, French President Sarkozy stated that France and Europe must support democracy in the MENA region and “stability can no longer be the alpha and omega of French diplomacy” (Youngs 2014, 62). The EU adopted a new strategy, “A Partnership for Democracy and Shared Prosperity in the Southern Mediterranean,” which offered a range of incentives for democratic reforms, including visa liberalization, potential

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talks on DCFTAs, and financial assistance via the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). Financial aid was also provided by several EU member states. The EU’s approach was reinforced by the intention to use conditionality more strictly, foreseeing more support to the states demonstrating tangible progress in democratic reforms and vice versa. However, the next few years put the EU’s upgraded policy to a serious test. The democratic trends stagnated or deteriorated in almost all states, with the partial exception of Tunisia. As the front-runner of democratization, Tunisia benefited from enlarged financial aid. Also, the EU proposed the Privileged Partnership format for bilateral relations. Yet the privileged partnership was perceived as an insufficient incentive, given that this format was already proposed to the oppressive Ben Ali regime. The cases of Algeria, Egypt, Jordan, and Morocco further highlighted the EU’s inability to either provide substantial incentives for democratic reforms or apply the principle of conditionality consistently. These states continued receiving financial aid and rhetorical support, despite their deteriorating democratic performance. Crucially, political contestation and unrest that developed in 2011 triggered a tough crackdown in some MENA countries and eventually escalated to conflicts in Libya and Syria. Whereas in Syria the Asad regime regained ground (with Russia’s support) and stayed in power, in Libya the authorities were forced to accept a ceasefire following the intervention of international forces under UN and NATO auspices, and rebel forces eventually captured and killed Colonel Gaddafi. Despite their different outcomes in terms of regime change, the long conflicts in Libya and Syria have similarly left the two countries devastated. In both cases, the EU played little role (if any) in conflict resolution attempts. Since 2014 with the spread of ISIS, as well as the wars in Libya and Syria and the concomitant threats of terrorism, mass migration, and human trafficking, security entrenched itself at the top of EU priorities in the region. Experts on the region widely agree that “in strong continuity with its policies of cooperation with authoritarian regimes prior to the Arab uprisings, the EU approach has remained anchored to a security-driven logic aimed at ensuring stability in the region and EU economic profit” (Roccu and Voltolini 2018, 183). The EU has frequently faced a tough choice between the often contradictory objectives of democratization and maintaining stability in the neighborhood states. As shown above, while clearly prioritizing stability in the MENA region, the EU acted more as a normative power in the eastern neighborhood. Tangible political progress has so far been limited, and the intensification of democratization policy eventually spurred instability by provoking the unexpected reaction of Russia, a rival power in the region. We discuss some of the explanatory factors behind such policy results below. (IN-)SECURITY AND CONFLICT ZONES IN THE EU’S NEIGHBORHOOD This subsection analyzes how the ENP has addressed migration flows and conflict resolution, which were defined as security threats to the EU in its strategic documents (Council of the EU 2003; 2009). The EU’s action in its neighborhood appears

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constrained in both policy areas, although to a much bigger extent in conflict resolution. The section points to internal EU tensions (between various EU actors and between different—and sometimes contradictory—policy objectives) as the key obstacles affecting the EU’s action. Migration While the EU pursues its migration policy worldwide, it places a particular emphasis on its neighborhood. This is because neighbors play a key role in migration flows to the EU, either as countries of origin or transit countries. The EU has developed a wide array of migration tools under the ENP, including migration dialogues, visa facilitation and readmission agreements, visa liberalization dialogues, and mobility partnerships. Most of these instruments have been designed specifically for neighboring countries. The EU’s neighborhood has clearly emerged as a buffer zone playing a crucial role in keeping irregular migrants outside the EU’s borders.5 The provisions related to migration under EU-neighbors’ agreements and policy documents “externalize migration control functions” and reflect “an extension of the EU migration regime outside of the Union” (Lavenex and Uçarer 2002, 216). In practice, the EU assigns three roles to its neighborhood in its migration policy. These functions are therefore externalized, as they are no longer fulfilled by the EU itself (Bilgic 2011). First, the role of filter: cooperation between the EU and neighboring countries enables the EU to stop migrants either before their attempt to enter the EU’s territory or during their migration trip to the Union. The EU has sought to monitor and control legal migration flows to its neighborhood by exporting a series of conditions on migration management in exchange for increased mobility of neighbors’ citizens to the EU. For instance, the EU has required that EaP countries (as well as the Western Balkans) monitor migration flows and establish bodies responsible for collecting and analyzing data on migration stocks and flows. The EU also expects from partner countries clearcut visa categories, for example, different categories for tourists, workers, and so on. Such requirements have contributed to introducing more restrictive migration policies in EaP countries as well as in the Western Balkans. Besides migration management, border management tools are prominent instruments to stop migrants on their way to the EU. As pointed out by Sarah Wolff (2008, 261), the EU has increasingly sought “joint ventures” with neighbors (primarily southern Mediterranean partners) in patrolling maritime borders. It has also institutionalized border management as part of its cooperation with EaP partners, even though some countries were initially reluctant to cooperate. For instance, the EU had strived to launch border management cooperation with Morocco since 1998, but it had to wait until 2005, when the country became increasingly concerned by unregulated migration flows and first agreed to establish cooperation with Spain (Wunderlich 2012, 1422). Yet EU-Moroccan cooperation on border management remained to a significant extent shaped by Moroccan priorities, for example, over the disputed western Sahara Territory, while the Commission was apparently unable to monitor the use of the money allocated to Morocco for border management (Wunderlich 2012, 1425).

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The EU’s capacity to influence migration and border management processes in the neighborhood thus appears constrained by two factors: the importance of neighbors as countries of transit or origin in migration flows to the EU, which provides them with a leverage in interacting with the Union, and their expectations regarding their future relations with the EU (e.g., eastern partners seeking to join the Union have a limited capacity to negotiate EU norms and policies). Moreover, the EU’s demand that neighbors perform the role of “filter” raises ethical questions since it involves exporting surveillance and identification technologies to countries lacking vibrant civil societies, democratic structures, and oversight (Wolff 2008, 266). Second, neighbors serve a selection function for asylum seekers, since these governments determine whether asylum seekers will be returned to their country of origin or, conversely, be allowed to reach the EU. The building of asylum systems in the EU’s periphery as part of EU-neighbors cooperation indeed suggests that member states “offload asylum responsibility” to the neighborhood (Bilgic 2011, 8). Neighbors are given a crucial role in identifying “genuine refugees outside the EU borders” (ibid.). This role rests upon the underlying assumption that neighbors “offer sufficient protection” for those seeking international protection (ibid.). Yet, this assumption is at odds with neighbors’ views on asylum, their practices, and the overall weakness, or lack of, asylum systems in the EU’s periphery. Third, the neighborhood appears as “a dumping area of the EU” (Bilgic 2011, 9), or a region to which member states extradite illegal migrants who have crossed the EU’s borders. This function is underpinned by readmission agreements, which are part of the EU’s policy to return illegal migrants. Readmission agreements set out clear obligations and procedures for the authorities of partner countries as to when and how to take back people who are illegally residing on EU territory. These agreements are a powerful instrument for the Union to engage neighboring countries in combating irregular migration. This is because of two factors. First, the scope of these agreements is very broad, as neighboring countries commit themselves to readmit not only their own nationals but also third-country nationals and stateless persons who transited through their territory to enter the EU. Such a broad scope has actually hampered cooperation in readmission, even when such cooperation has been explicitly included in Association agreements, as was the case with Tunisia and Jordan (Billet 2010, 50). Southern Mediterranean countries are reluctant to conclude readmission agreements with the EU because of their role as transit countries to the EU. Signing a readmission agreement obliges them “to accept illegal immigrants independently of their nationality if they transited through their territory” (Wunderlich 2012, 1422). However, the EU has been more successful in developing cooperation on readmission with the EaP because of these countries’ strong expectations vis-à-vis the EU. The EU’s efforts to widen the network of readmission agreements also highlight its readiness to cooperate with authoritarian regimes, as is the case with Belarus. The EU has frozen its relations with the country since its shift toward authoritarianism in the middle of the 1990s. However, in February 2011, just three months after the Belarus government cracked down on political opposition in the wake of the presidential elections, the Council of the EU authorized the European Commission to open talks for a visa facilitation and readmission agreement. While presented by the EU as

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part of a strategy to increase people-to-people contacts with Belarus, this decision was undoubtedly also driven by the desire to fill in a gap and conclude a readmission agreement with the only eastern partner that had not opened negotiations with the EU in this respect. The negotiations were once again frozen as a reaction to the crackdown of the opposition and peaceful protests after the August 2020 presidential elections in Belarus. The EU’s approach to migration in the neighborhood also sheds light on the contradiction between the EU’s security and normative agendas. Conflict Resolution With the launch of the ENP, the EU has stepped up its profile in conflict resolution in Eastern Europe, the southern Caucasus, and the southern Mediterranean. The EU’s involvement, though, has reflected its distinctive approach to security, whereby conflicts are not primarily analyzed in military terms but are placed in a broader political and socioeconomic context. Such a comprehensive approach to security finds its roots in the EU’s own history. The European integration process succeeded in building peace in a war-torn continent, yet it did so by fostering economic links among its members and consolidating democracy and prosperity. From the outset until the 1990s, the EU had no military capacity that could help maintain peace. The EU’s toolbox for conflict resolution in the neighborhood mirrors the specificities of its integration process. Since the mid-2000s, the EU has strengthened its role in conflict prevention and resolution by using civilian instruments. The European Security and Defense Policy (ESDP), the appointment of Special Representatives as well as assistance to conflict-ridden areas (including postconflict reconstruction and support to internally displaced persons), have emerged as the major instruments used by the EU. The core component of the EU approach to conflict resolution, though, is premised upon the democratization and modernization of neighboring countries, as well as support for regional links and cooperation. In other words, the EU intends to become a regional security actor in its neighborhood by projecting its own rules (Rieker 2014). However, as an “instrument for security community building” (ibid.), the ENP has faced major challenges both in the southern and in the eastern neighborhoods. This is because of two interwoven factors. First, the EU’s transformative power—its capacity to trigger domestic change in neighboring countries—has proven to be limited. As a result of a series of factors (including weak capacities, costs of EU-demanded change, and the existence of multiple veto players), domestic reforms within neighboring countries have been selective and/or shallow. Overall, progress toward democratization and modernization has been scattered at best, and deep integration with the EU is on the table only for a handful of neighboring countries, including Tunisia and Morocco in the south, and Georgia, Moldova, and Ukraine in the east. Therefore, the much hoped for and anticipated ring of well-governed countries with closer ties both to the EU and among themselves, the key to the EU’s capacity to act as a security actor in the region, has not (yet) materialized. Second, the EU’s use of its toolbox for conflict prevention/resolution in the neighborhood has highlighted blatant weaknesses. The EU has de facto not engaged in

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some of the conflicts affecting its periphery, for instance, western Sahara in the south (Fernández-Molina 2017) and Nagorno-Karabakh in the east.6 In these conflicts, the EU has limited itself to supporting existing negotiation mechanisms, initiatives of its member states, and calling both sides to restraint when hostilities flare up. In other conflicts, the EU has taken a back-seat role and has been outplayed by other international players. This is the case with the Israel-Palestine conflict, where the EU’s continuous calls for the two-state solution have had very limited, if any, resonance in a context marked by Israel’s increasingly assertive claims to territories occupied in war and US moves to support these claims (Wermenbol 2019). In fact, not only did the EU fail to have any influence over Israeli-Palestinian relations but the EU’s own policy has been also heavily affected by the conflict. Both the Euro-Med Partnership and the UfM included Israel, the Palestinian Authority, and other Arab countries in the hope that EU-driven initiatives would serve as confidence-building platforms. Instead, the Arab-Israeli conflict has resulted in politicizing the UfM and disrupting its agenda (Bicchi 2011). While the EU’s role during and after the Georgian-Russian conflict has been more prominent, it, too, has been fraught with major challenges. In August 2008, the French Presidency of the Council of Ministers (acting on behalf of the EU) was instrumental in brokering a ceasefire (known as the Six-Points Plan) between Georgia and Russia; however, a few weeks later, in a blatant blow to this plan, Russia recognized the independence of the two breakaway regions of Abkhazia and South Ossetia. The EU deployed a monitoring mission tasked with ensuring that there would be no return to hostilities, especially around the administrative border lines; yet this mission was denied access to the territories of the breakaway regions. Together with the United Nations and the Organization for Security and Cooperation in Europe (OSCE), the EU cochairs the Geneva International Discussions, which were launched in October 2008 as a platform bringing together the sides of the conflict. Importantly, in the wake of the 2008 conflict, the EU also designed a specific policy of “engagement without recognition” for the breakaway region of Abkhazia. However, both the Geneva talks and the EU’s policy are perceived with skepticism in the breakaway regions, which regard the EU as biased in favor of Georgia. These perceptions undermine both the EU’s specific initiatives for conflict resolution and the whole logic underpinning its policy in the region. The EU’s action in the conflict indeed developed in a context of an enhanced offer of integration with Georgia as part of the EaP. This offer, the EU hoped, would strengthen Georgia’s attractiveness in the eyes of Abkhazian and South Ossetian citizens. Instead, the two breakaway regions strengthened their economic and military links with Russia,7 thereby seriously eroding any hope of a rapprochement in a foreseeable future. The most recent conflict that erupted in the EU’s vicinity, namely, the war in Ukraine, points to similar weaknesses in the EU’s response. The EU was caught unprepared by both Russia’s annexation of Crimea in March 2014 and its subsequent support for hybrid warfare in Donbas. In response to Russia’s moves, the EU has gradually introduced a package of sanctions including diplomatic measures (e.g., the cancellation of high-level summits with Russian authorities), asset freeze, and travel

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restrictions for individuals and entities that undermined Ukraine’s territorial integrity, restrictions on economic relations with Crimea, and, from the summer 2014, economic sanctions targeting Russia in specific sectors (e.g., bans on trade in arms, limited access to EU capital markets). Russia, in turn, responded with countersanctions that severely affected the agricultural exports of some EU member states. Following the Russian invasion of Ukraine on February 24, 2022, the EU rapidly adopted several sanction packages targeting top Russian officials, Russia’s financial system (including the Central Bank), its energy and transportation sectors (ban on coal imports, on airlines’ access to EU airspace, etc.), as well as banning its state-sponsored media outlets (RT and Sputnik). These measures are unprecedented to the extent that they have been imposed on a major economy. In the first two months of the war, the EU implemented a support package consisting of humanitarian aid to help migrants, offer material and logistical assistance to manage refugee flows, provide macrofinancial support to the Ukrainian government, and so forth. The EU’s response highlighted simultaneously its united strategic approach, as well as internal divisions over key issues, particularly regarding provision of weaponry to the Ukrainian army, and the timeline to wean the European energy market off imports from Russia. While the EU has thus far succeeded in preserving a rather high degree of unity, regularly extending its sanctions against Russia, the bloc’s unity remains fragile, especially as decisions over sanctions require unanimity among EU member states. Conflict settlement mechanisms also reflect the involvement of a few member states at the expenses of the EU itself. For instance, the OSCE Minsk Group (in charge of finding a peaceful solution to the Nagorno-Karabakh conflict) includes France but not the EU. Likewise, the Normandy format, whose aim is to advance the resolution of the war in Donbas, involves Germany and France together with Russia and Ukraine, yet the EU as such is absent. These examples do not necessarily illustrate tensions between the EU and the member states involved in these groups, though. They rather mirror the weakness of the bloc as a foreign policy and defense actor. This is because member states retain a key role in these policy areas, as provided for in the EU treaties. However, the EU has recently stepped up its role in conflict resolution. For instance, since late 2021, it has acted as a mediator between Armenia and Azerbaijan. This is in sharp contrast to the EU’s previously low-key involvement in this conflict. Importantly, tripartite mediation meetings have taken place at the highest political level (under the auspices of the president of the European Council, Charles Michel), thereby signaling a strong degree of engagement from the EU. Crucially, Russia’s aggression against Ukraine prompted the EU to make decisions that seemed hitherto unthinkable, given that they touch at the core of the member states’ sovereignty. These include, for instance, the delivery of lethal weapons to Ukraine (the first time ever to a non-EU country). Overall, the specificities of the European integration process (the initial failure to establish a defense community in the 1950s, the weak EU capacities in this policy field, and the predominant role of the member states) bear considerable weight in explaining the EU’s limited role in conflict resolution and its weaknesses compared to other international players.

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EU’s Neighborhood Policy (In-)Effectiveness: Explaining Factors Whereas Brussels intended to create a ring of friends around the borders of the European Union in early 2000s, it rather found itself surrounded by a ring of fire a decade later. What factors help explain why the EU has not been successful in preventing these challenges in its neighborhood? Broadly speaking, three groups of factors are at play: (1) internal EU factors, (2) domestic factors in the neighboring states, and (3) external factors. INTERNAL FACTORS Composite Policymaking The EU is a sui generis actor with some features of a state and some of an international organization. With the Maastricht Treaty, the EU launched a common foreign policy, which has been gradually strengthened ever since. Yet working out and implementing a common foreign policy remains challenging, given that decisions are made by all member states. This often results in the search for the lowest common denominator, making the EU’s foreign policy less ambitious. Additionally, the need to first work out an internal agreement often leads to the EU’s ambiguous and somewhat delayed response, as illustrated, for instance, by the Arab Spring. Policy Coherence and Consistency As shown by the example of the democracy/stability dilemma, EU policies can be contradictory. The objective of supporting democratization in Ukraine eventually led to an unprecedented crisis and destabilization of the eastern neighborhood, while the objective of democratization was sacrificed for the sake of maintaining stability in the southern Mediterranean. Another example is the opposition between the EU’s normative power and trade policy (Poletti and Sicurelli 2018), whereby EU trade preferences may result in less persistent promotion of democracy in certain states, as was the case with Azerbaijan, where the EU’s economic interests prevailed over its commitment to democracy. These contradictions may undermine the EU’s foreign policy coherence and consistency, resulting in failure to achieve policy objectives. Bureaucracies and Decision Making Relations with the neighborhood since the establishment of the ENP have demonstrated the EU’s technical, rather than political, approach (Korosteleva 2017). The one-size-fits-all template was offered to all neighbors irrespective of substantial differences among them. Assem Dandashly and Gergana Noutcheva argue that “the

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EU bureaucracy seems to have committed an error of judgement by relying on a policy toolkit conceived of and developed for the enlargement context and by applying it with marginal adjustments to a new environment that called for a radically different approach” (Dandashly and Noutcheva 2019, 111). Strong path dependence and bounded rationality (Moga 2017) clearly undermined the outcomes of the ENP. Limited Foreign Policy Resources While the EU is one of the major trade actors and norm entrepreneurs globally, its foreign policy resources are limited. Firstly, from the outset, the EU positioned itself as a civilian (Duchêne 1972) and normative (Manners 2002) power. This is because the EU does not have a common army and cannot exercise hard power. As such, it has to rely on persuasion rather than more coercive forms of power. Secondly, in terms of persuasion, the EU’s bargaining power is also limited. The enlargement policy has been Brussels’ most successful policy to date because it could offer membership incentives to the potential candidates. As the ENP has demonstrated, however, when EU membership is off the table, the range of incentives the EU can offer (e.g., in the case of the neighborhood states: market access, visa liberalization, people-to-people contacts) are not strong enough to induce substantial change. Thirdly, in the past few years, the EU policy resources diminished as a result of a number of internal crises the EU has been facing, such as the sovereign debt crisis, Brexit, the rise of populism, migration, and regional disparities, among others, making EU relations with the neighbors more difficult. DOMESTIC FACTORS IN THE NEIGHBORING STATES Political Regime and Foreign Policy Priorities Domestic political regimes in the neighboring states have affected the EU’s ability to exercise its foreign policy in the ENP states. Democratic (even if flawed democracy) regimes demonstrated more willingness to cooperate, whereas autocratic regimes pursued a strictly pragmatic agenda, welcoming economic and sectoral cooperation with the EU but rejecting any normative demands. Furthermore, the neighboring states vary in their foreign policy priorities, with many seeing the EU as just one of many partners, while others (e.g., Georgia, Moldova, Ukraine) unquestionably prioritize relations with the EU, aspire to membership, and hence pursue more cooperative relations. Informal State Structures and Institutions Beside domestic political regimes, official state institutions can be undermined or even overridden by informal state structures, which can be the site of actual decision making. For example, many countries in the post-Soviet space feature neopatrimonial

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systems characterized by social hierarchies of patrons (usually presidents) and clients (usually oligarchs), who offer political loyalty in exchange for profit guarantees from a patron. As a result, these shadow power structures can be seen as actual sites of power, perpetuating corrupt governance practices and preventing democratic and good governance reforms, which may significantly affect cooperation with the EU. Domestic Cost-Benefit Calculations The incentives offered by the EU are subject to cost-benefit calculations by domestic political elites, where incentives are weighted against adaptation costs. The incentives and costs vary across the region; as a rule, the higher the incentives and the lower the costs, the more likely a neighboring state is willing to deepen its cooperation with the EU. However, the costs of adaptation remain rather high for all states, whereas the EU has so far failed to replace the main incentive for domestic reform—namely, EU membership perspective—which was the main drive of change in the case of the enlargement states. Insufficient incentives and high adaptation costs explain why the EU has not been successful in fulfilling its policy objectives in the neighborhood. Identity and Resonance of the EU’s Values among the Population Elements of shared identity and resonance with the EU’s values among neighboring countries general public play an important role in the receptiveness of the EU-induced domestic reforms. This factor, to a degree, explains why EaP states (with the exception of Belarus and Azerbaijan), which see themselves as an inherent part of European civilization, have been more interested in closer integration with the EU and welcomed the EU’s transformative power. Whereas the general public is usually thought to play an indirect role in a country’s cooperation with the EU, Euromaidan proved that people can be a strong driving force in changing a government’s policy toward the EU. EXTERNAL FACTORS Evolution of the International System The triumph of the liberal world order in the early 1990s faded in three subsequent decades. Many observers now talk of the deep crisis of the liberal order, undermined both from inside and outside. Competing political and economic models have emerged and increasingly challenge the EU as a provider of an internal order and sole pole of attraction in its neighborhood. Whereas this trend affects the EU foreign policy in general, as signified by a pragmatic approach adopted in the EU Global Strategy (2016), it has also had a profound impact on the EU relations with the neighborhood, where the EU is increasingly competing with the emerging Russian and Chinese orders.

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Other Global/Regional Actors Russia’s response to Euromaidan, as well as the tug-of-war between the EU and Russia over their shared neighborhood, has vividly demonstrated that underestimating other regional actors can lead to dramatic unintended consequences.

Conclusion The way the EU deals with its neighborhood has important implications not only for the partner states but also for the Union itself. The EU’s inability to achieve peace and prosperity in its neighborhood affected the Union’s self-perception and EU’s ability to achieve its foreign policy goals. Confronted with multiple and diverse crises in the neighborhood, the EU has sought to draw lessons and adapt to the increasingly challenging environment. In terms of self-perception and development strategy, failures in the ENP have drawn attention to three core questions: What should the future of the EU look like? How should the EU institutions adapt to be more efficient? How (dis)united are EU member states in foreign policy-making? Regarding the future of the EU, for some time there was a consensus among the member states that the EU should not expand beyond the Balkans (four states are currently candidates to join the EU). Yet, with the vocal EU membership requests from Georgia, Moldova, and Ukraine, particularly during the war in Ukraine and these states’ application to join the EU in February–March 2022, the question of further enlargement returned to public discussions. Despite the vast sympathy toward Ukraine among the EU officials and citizens, as well as the bloc’s unanimous decision to grant Ukraine and Moldova the status of candidate countries, further progress toward accession is complicated by the EU’s internal enlargement fatigue from the previous rounds in 2004, 2007, and 2013. A telling example is the Dutch referendum on the Association Agreement with Ukraine in 2016, where the majority of Dutch citizens rejected the Association Agreement because of fears of subsequent enlargement. On the question of institutional adaptation, the ENP highlighted the emergence and empowerment of the European External Action Service (EEAS), a new institution established in 2010 to function as a partial equivalent of national foreign affairs ministries. Essentially, Brussels was able to streamline its ENP policy exercised by the European Commission (Directorate-General for Neighborhood and Enlargement Negotiations, DG NEAR), to avoid institutional competition and duplication with the EEAS activities. A successful case of institutional flexibility is the launch of the Support Group for Ukraine—a special unit created in the aftermath of the Ukraine crisis to gather expertise across the European Commission and the EEAS and to develop a coordinated day-to-day policy. The ENP also raised the question of Europe’s actual unity and solidarity. The past two decades of relations with the neighborhood saw both failures and successes in this regard. The migration crisis became a test case for European unity, and the delayed response of EU institutions in support of Italy and Greece demonstrated the lack of

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solidarity. On the other hand, the very notion of the ENP and the definition of the region reveals the EU’s ability to compromise and act together. Another case, highly praised by the EU itself, is the unity shown in implementing restrictive measures against Russia. The bloc has hung together, even though the introduction of sanctions against Russia and Russia’s countersanctions have proved more economically damaging to some member states than others. The track record of cooperation with the neighborhood also had a profound impact on the EU’s capacity to act on the global stage. First and foremost, recent challenges shook up the EU’s international identity. Emerging since the early 1990s as a leading transformative and normative power, the EU had to bitterly reassess its ability to promote norms beyond its borders. This reassessment has resulted in a more pragmatic and less normative approach toward its neighboring states. The scope of cooperation was narrowed down from a broad reform agenda to a range of concrete deliverables, and a wide-ranging democratization policy gave way to more technical sectoral cooperation. This, in turn, led the EU to recognize the heterogeneity of the neighborhood region, not merely in rhetoric, as was done previously, but also in the EU’s policymaking. Differentiation was long demanded by the ENP states, and the 2015 ENP revision took a big step forward in tailoring the cooperation agenda to the preferences of the EU’s partners and abandoning the initial one-size-fits-all approach. Moreover, the entire context in which the EU foreign policy takes place was rethought: it was recognized that we live in a time of complexity, which is characterized by a degree of unpredictability and, therefore, uncontrollability. In this context, the EU cannot act by predetermined policy templates whereby a certain action leads to a clearly defined result. The objective now is to ensure local ownership and resilience of the ENP states, building on their own inner strengths and capacities rather than applying the same policy template to all partner states. All these changes make the EU more adaptable and fit to the new reality of the multipolar world. The revised ENP is already being put to a test, and it remains to be seen whether it will bear fruit in a few years’ time.

Notes 1. From the collapse of the Soviet Union, the three Baltic countries became part of the EU’s policy vis-à-vis Central and Eastern Europe. Like Poland, Hungary, and other Central and Eastern European countries, they signed association agreements and were given an EU membership perspective in the first half of the 1990s. 2. With the exception of Libya. 3. The 2004 EU enlargement is frequently referred to as the “Big Bang enlargement” because it included an unprecedented number of candidates countries (two countries from Southern Europe and eight countries from Central and Eastern Europe), whose previous trajectories had drastically differed from the political and economic path followed by Western European members of the EU. 4. In 1999, the Amsterdam Treaty introduced common strategies as a CFSP new instrument to be implemented in areas where EU member states have important interests in common.

4 0 4    L aure D elcour and I rina P etrova 5. This subsection is based on Delcour (2013). 6. The EU is not part of the Minsk Group, the settlement mechanism for the NagornoKarabakh conflict, which includes the United States, Russia, and France. 7. In 2014, South Ossetia signed a Treaty of Integration and Strategic Partnership with Russia; Abkhazia concluded a Treaty of Alliance and Strategic Partnership.

Suggested Readings Casier, Tom. “The Unintended Consequences of a European Neighbourhood Policy without Russia.” International Spectator 54, no. 1 (2019): 76–88. Dandashly, Assem, and Gergana Noutcheva. “Unintended Consequences of EU Democracy Support in the European Neighbourhood.” International Spectator 54, no. 1 (2019): 105–20. Delcour, Laure, and Kataryna Wolczuk. “Spoiler or Facilitator of Democratization? Russia’s Role in Georgia and Ukraine.” Democratization 22, no. 3 (2015): 459–78. Fernández-Molina, Irene. “The EU, the European Neighbourhood Policy and the Western Sahara Conflict: Executive Continuity and Parliamentary Detours.” In The Revised European Neighbourhood Policy: Continuity and Change in EU Foreign Policy, edited by Dimitris Bouris and Tobias Schumacher, 219–38. Basingstoke, UK: Palgrave Macmillan, 2017. Roccu, Roberto, and Benedetta Voltolini. “Security and Stability Reframed, Selective Engagement Maintained? The EU in the Mediterranean after the Arab Uprisings.” Mediterranean Politics 23, no. 1 (2018): 182–95.

References Abdelaaziz, Ait Ali, Uri Dadush, Yassine Msadfa, Yana Myachenkova, and Simone Tagliapietra. 2019. Towards EU-MENA Shared Prosperity. Bruegel Policy Report. https://www​.bruegel​ .org​/wp​-content​/uploads​/2019​/03​/Policy​-Report​-3​-Towards​-EU​-MENA​-Shared​-Prosperity​ .pdf. Adler, Emanuel, and Michael Barnett. 1998. Security Communities. Cambridge: Cambridge University Press. Bicchi, Federica. 2011. “The Union for the Mediterranean, or the Changing Context of EuroMediterranean Relations.” Mediterranean Politics 16 (1): 3–19. Bilgic, Ali. 2011. Is the EU Offloading Future Migration Issues to the “Southern Neighbourhood”? Thinking Environmental Migration in Relation to Externalisation. London: Government Office for Science. Billet, Carole. 2010. “EC Readmission Agreements: A Prime Instrument of the External Dimension of the EU’s Fight against Irregular Immigration. An Assessment after Ten Years of Practice.” European Journal of Migration and Law 12:45–79. Börzel, Tanja A., and Bidzina Lebanidze. 2017. “‘The Transformative Power of Europe’ beyond Enlargement: The EU’s Performance in Promoting Democracy in Its Neighbourhood.” East European Politics 33 (1): 17–35. Casier, Tom. 2016. “From Logic of Competition to Conflict: Understanding the Dynamics of EU-Russia Relations.” Contemporary Politics 22 (3): 376–94. Casier, Tom. 2019. “The Unintended Consequences of a European Neighbourhood Policy without Russia.” International Spectator 54 (1): 76–88.

E urope ’ s T roubled N eighborhoods    405 Council of the EU. 2003. A Secure Europe in a Better World. European Security Strategy, December 12. Brussels. Council of the EU. 2009. Providing Security in a Changing World. Report on the Implementation of the Security Strategy. Brussels. Dandashly, Assem, and Gergana Noutcheva. 2019. “Unintended Consequences of EU Democracy Support in the European Neighbourhood.” International Spectator 54 (1): 105–20. Delcour, Laure. 2010. “Towards a Global Europe?” In The Global 1989: Continuity and Change in World Politics 1989–2009, edited by George Lawson, Chris Armbruster, and Michael Cox, 135–56. Cambridge: Cambridge University Press. Delcour, Laure. 2013. “The EU: Shaping Migration Patterns in Its Neighbourhood and Beyond.” In The European Union’s Shaping of the Legal International Order, edited by Dmitry Kochenov and Fabian Amtenbrink, 261–82. Cambridge: Cambridge University Press. Delcour, Laure, and Kataryna Wolczuk. 2015. “Spoiler or Facilitator of Democratization? Russia’s Role in Georgia and Ukraine.” Democratization 22 (3): 459–78. Del Sarto, Raffaella. 2015. “Normative Empire Europe: The European Union, Its Borderlands, and the ‘Arab Spring.’” Journal of Common Market Studies 54 (2): 215–32. Duchêne, François. 1972. “Europe’s Role in World Peace.” In Europe Tomorrow: Sixteen Europeans Look Ahead, edited by Richard Mayne. London: Fontana. European Commission. 2000. Euro-Mediterranean Partnership, The Barcelona Process: Five Years On. Brussels. European Commission. 2003. Wider Europe Neighbourhood. A New Framework for Relations with our Eastern and Southern Neighbours. COM(2003) 104 final, March 11, 2003. Brussels. European Commission. 2004. Europe Neighbourhood Policy. Strategy Paper. COM(2004) 373 final, May 12, 2004. Brussels. European Commission. 2006. Strengthening the European Neighbourhood Policy. COM(2006) 726 final, December 4, 2006. Brussels. European Commission. 2008. Eastern Partnership. COM(2008) 823 final, December 3, 2008. Brussels. European Commission/High Representative of the EU for Foreign Affairs and Security Policy. 2011a. A New Response to a Changing Neighbourhood. COM (2011) 303 final, May 25, 2011. Brussels. European Commission/High Representative of the EU for Foreign Affairs and Security Policy. 2011b. A Partnership for Democracy and Shared Prosperity with the Southern Mediterranean. COM (2011) 200 final, March 8, 2011. Brussels. European Commission/High Representative of the EU for Foreign Affairs and Security Policy. 2011c. Review of the European Neighbourhood Policy. JOIN(2015) 500 final, November 18, 2011. Brussels. Fernández-Molina, Irene. 2017. “The EU, the European Neighbourhood Policy and the Western Sahara Conflict: Executive Continuity and Parliamentary Detours.” In The Revised European Neighbourhood Policy: Continuity and Change in EU Foreign Policy, edited by Dimitris Bouris and Tobias Schumacher, 219–38. Basingstoke, UK: Palgrave Macmillan. Gillespie, Richard. 2006. “A Political Agenda for Region-Building? The Euro-Mediterranean Partnership and Democracy Promotion in North Africa.” In The Convergence of Civilizations: Constructing a Mediterranean Region, edited by Emanuel Adler, Federica Bicchi, Raffaella Del Sarto, and Beverly Crawford, 83–108. Toronto: University of Toronto Press. Haukkala, Hiski. 2017. “The EU’s Regional Normative Hegemony Encounters Hard Realities: The Revised European Neighbourhood Policy and the Ring of Fire.” In The Revised European Neighbourhood Policy, edited by Dimitris Bouris and Tobias Schumacher, 77–94. Basingstoke, UK: Palgrave Macmillan.

4 0 6    L aure D elcour and I rina P etrova Ishiyama, John, Lia Mezvrishvili, and Nina Zhgenti. 2018. “An Oasis of Democracy in an Authoritarian Sea? Civil Society, Social, and Institutional Trust in Georgia.” Communist and Post-Communist Studies 51 (1): 19–26. Jünemann, Annette, ed. 2004. Euro-Mediterranean Relations after September 11: International, Regional, and Domestic Dynamics. London: Frank Cass. Korosteleva, Elena. 2017. “Eastern Partnership: Bringing ‘the Political’ Back In.” East European Politics 33 (3): 321–37. Kulyk, Volodymyr. 2019. “Identity in Transformation: Russian-Speakers in Post-Soviet Ukraine.” Europe-Asia Studies 71 (1): 156–78. Lavenex, Sandra, and Emek Uçarer. 2002. Migration and the Externalities of European Integration. Oxford: Lexington Books. Manners, Ian. 2002. “Normative Power Europe: A Contradiction in Terms?” Journal of Common Market Studies 40 (2): 235–58. Moga, Teodor Lucian. 2017. “The Role of Bounded Rationality in Explaining the European Neighbourhood Policy: The Eastern Dimension.” In Theorizing the European Neighbourhood Policy, edited by Sieglinde Gstöhl and Simon Schunz, 105–23. Abingdon, UK: Routledge. Nicolaïdis, Kalypso, and Dimitris Nicolaïdis. 2006. “The EuroMed beyond Civilizational Paradigms.” In The Convergence of Civilizations: Constructing a Mediterranean Region, edited by Emanuel Adler, Federica Bicchi, Raffaella Del Sarto, and Beverly Crawford, 337–78. Toronto: University of Toronto Press. Pace, Michelle. 2009. “Paradoxes and Contradictions in EU Democracy Promotion in the Mediterranean: The Limits of EU Normative Power.” Democratization 16 (1): 39–58. Patten, Chris, and Javier Solana. 2002. Joint Letter. Wider Europe, August 7, 2002. Brussels. Poletti, Arlo, and Daniela Sicurelli. 2018. “The EU as a ‘Normative’ or Traditional ‘Market’ Trade Power.” In The Political Economy of Normative Trade Power Europe, edited by Arlo Poletti and Daniela Sicurelli, 15–45. Cham, Switzerland: Springer. Présidence de la république française. 2008. Déclaration Commune du Sommet de Paris pour la Méditerranée. Paris, July 13, 2008. https://www​.diplomatie​.gouv​.fr​/IMG​/pdf​/Declaration​ _commune​_UPM​_bis​.pdf. Richter, Solveig. 2012. “Two at One Blow? The EU and Its Quest for Security and Democracy by Political Conditionality in the Western Balkans.” Democratization 19 (3): 507–34. Rieker, Pernille. 2014. The European Neighbourhood Policy. An Instrument for Security Community Building. NUPI working papers no. 832. Rimpiläinen, Emma. 2020. “Victims, Villains, or Geopolitical Tools? Representations of Donbas Displacement in Ukrainian and Russian Government Media.” Europe-Asia Studies 72 (3): 481–504. Roccu, Roberto, and Benedetta Voltolini. 2018. “Security and Stability Reframed, Selective Engagement Maintained? The EU in the Mediterranean after the Arab Uprisings.” Mediterranean Politics 23 (1): 182–95. Sadiki, Larbi. 2016. “The Arab Spring: The ‘People’ in International Relations.” In International Relations of the Middle East, edited by Louise Fawcett, 325–54. Oxford: Oxford University Press. United Nations. 2020. Conflict-Related Civilian Casualties in Ukraine. March 2020. https:// reliefweb​.int​/report​/ukraine​/conflict​-related​-civilian​-casualties​-ukraine​-march​-2020. United Nations High Commissioner for Refugees. 2020. Internally Displaced Persons (IDP). https://www​.unhcr​.org​/ua​/en​/internally​-displaced​-persons. Wermenbol, Grace. 2019. The EU and the Israeli-Palestinian Peace Process in a Post-Mogherini Era. Carnegie Endowment for International Peace. https://carnegieendowment​ .org​ /sada​ /79985.

E urope ’ s T roubled N eighborhoods    407 Wolff, Sarah. 2008. “Border Management in the Mediterranean: Internal, External and Ethical Challenges.” Cambridge Review of International Affairs 21 (2): 253–71. Wunderlich, Daniel. 2012. “The Limits of External Governance: Implementing EU External Migration Policy.” Journal of European Public Policy 19 (9): 1414–33. Youngs, Richard. 2014. Europe in the New Middle East: Opportunity or Exclusion? Oxford: Oxford University Press.

CHAPTER 15

Turmoil and Tension in Transatlantic Relations Andrew T. Wolff

G

erman Chancellor Angela Merkel declared during a May 2018 speech that Europeans can no longer depend on the United States to protect Europe from conflict. She added that “Europeans must take its destiny in their own hands” (Merkel 2018). In a similar vein, French President Emmanuel Macron asserted at an ambassadorial meeting that “Europe can no longer entrust its security to the United States alone” (Young 2018). After the United States abandoned the Iran nuclear deal in 2018, European Council President Donald Tusk declared, “With friends like Trump, who needs enemies” (Baczynska 2018). Finally, US President Donald Trump stated in an interview, “I think the European Union is a foe. . . . In a trade sense, they’ve taken advantage of us and many of those countries are in NATO and they weren’t paying their bills” (Glor 2018). These statements reflect the damaged condition of transatlantic relations in recent years. America and Europe are at odds with one another in numerous policy areas, and the transatlantic partnership, one of the pillars of the modern liberal international order, has been in turmoil. Europe and the United States of America have one of the most significant interregional relationships in the world. The ties that make up the “Atlantic Community” include constant political dialogue, hundreds of billions of dollars of yearly economic exchange, intense security cooperation primarily through the North Atlantic Treaty Organization (NATO), and a history of shared values and societal connections. For Europeans, maintaining a mutually productive relationship with the United States is a high priority. America has been the main guarantor of peace on the European continent since World War II, and Europeans have looked to America to provide leadership to manage international challenges. For America, European countries are an important partner not just for addressing European security issues but also for dealing with political and security problems around the world. Europeans contribute administrative and military personnel, financial and material resources, political support, and moral backing so that the United States is not managing global challenges alone. Unfortunately, it has been increasingly difficult for Europe and the United States to recognize mutual problems and cooperate on finding ways to manage these problems. The presidency of Donald J. Trump exacerbated transatlantic tensions to their highest level in memory, and his administration created doubts in the minds of Europeans about 408

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the reliability of the United States as a partner. Since coming into office in 2021, the Biden administration has made progress in repairing the damage done by the Trump administration, but many problems between America and Europe existed prior to the Trump administration and have long-stemming, structural roots. What is the nature of the turmoil between the United States and Europe? For a partnership that has worked well for over seven decades, why has it sunk to a decrepit state? Is this a temporary phenomenon or a deep breach which may permanently realign US-European affairs? This chapter addresses these questions by dissecting the transatlantic relationship in three major areas: security cooperation, economic exchange, and sociopolitical relations. The most important of these three areas is the security sector, where Europe and the United States have depended on each other for over a century. Whether fighting against Imperial Germany in World War I, defeating fascism in World War II, deterring the communist menace during the Cold War, or combating international terrorism after the September 11, 2001, attacks, the transatlantic security partnership has endured by finding cooperative and creative solutions to mutual threats. The second component of the Atlantic Community is trade and economic ties, which fuel a significant portion of global economic activity and the promulgation of Western-based international trade rules. Finally, sociopolitical relations encompass common values, political associations, public perceptions, and a shared societal heritage that further binds the United States and Europe together. The three areas of the transatlantic relationship are intermingled and difficult to compartmentalize. Political leaders frequently lump together trade policy, security relations, and diplomacy, which means that what happens in the security sector influences economic and political interests, and vice versa. Moreover, this chapter highlights historic patterns of interactions between Europe and America and illuminates current challenges confronting the Atlantic Community to show that the transatlantic partnership has been on a downward trajectory. There have been long-running disputes over burden sharing in security policy, accusations of unfair trade practices, and clashing political and strategic perceptions. The chapter also discusses the broader implications of a malfunctioning transatlantic relationship and what is required to repair the relationship. Although there have always been conflicting interests between America and European countries, driven by local political and economic preferences, recent tensions in the transatlantic partnership have been heightened by changes to the structure of the international system. An increasingly multipolar world signifies the relative erosion of power and influence of the West. In this shifting geopolitical landscape, European and American politicians confront tougher choices about allocating economic, diplomatic, and military resources. This new international environment sharpens differences of strategic perspectives that underlie US-Europe tensions, and the new geopolitical environment creates socioeconomic stresses within the West as economic power transfers to Asia. Lastly, the Atlantic Community has yet to find a new raison d’être that galvanizes America and Europe with a coherent mission and subsequently spawn more effective collaboration for dealing with the myriad of challenges of the twenty-first-century international system.

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Tensions within Transatlantic Security NATO primarily embodies the security arrangements between twenty-eight European nations, the United States, and Canada. Established in 1949 to deter the Soviet Union, NATO is commonly referred to as the most successful military alliance in history. Part of NATO’s success has been its Article V mutual defense clause, which commits member states to come to the aid of an ally under attack. NATO’s strength is also rooted in two other functions: serving as a political forum, where member states can discuss and coordinate common security policies, and being a security community that defends and upholds shared Western values. Lastly, what sets NATO apart from other alliances is the fact that member states’ military forces are continually training under a unified military command. NATO is not a paper tiger. It is an active alliance with real-world capabilities. Central to NATO is the intricate relationship between the United States and its European allies. This is a two-way relationship that binds the United States directly to the defense of European countries and enables European countries to have regular dialogue with the United States about how best to guarantee the security of the European continent. America brings to the table the strongest military force in the world, which lends capability and credibility to the alliance. America stationing military units in Europe is another expression of its pivotal role in NATO. As of March 2022, the United States has sixty-five thousand military personnel permanently deployed in Europe and an additional thirty-five thousand deployed on a rotational basis (Vandiver 2022). Also, the top military commander of NATO-designated forces has always been an American military officer who concurrently commands all American forces in Europe. Although the Americans dominate NATO militarily, Europeans have substantial political influence within the alliance. NATO’s military and political headquarters are located in Belgium, and a European has always been selected to serve as NATO’s secretary-general. In terms of decision making within the North Atlantic Council, the alliance’s main deliberative body, every member state has an equal vote, and decisions are made by consensus. European allies combined have a strong voice in the alliance, and America must pay attention to their collective views. NATO’S POST–COLD WAR TRANSFORMATIONS The alliance has been adept at refashioning itself to meet the evolving security needs of its member states (Ivanov 2011). When the Warsaw Pact collapsed in 1990, NATO no longer had an enemy to defend against. In response to criticism that it served little purpose in the new strategic environment of a postcommunist Europe and to calls for the alliance to disband, NATO retooled itself into an organization that provides stability to former communist countries. It initiated a program of outreach through a variety of institutional instruments. One instrument of outreach was the Partnership for Peace (PfP) of 1994, a program that initially created cooperative relations with twenty-nine non-NATO countries, including Armenia, Ireland, Switzerland, Sweden, Russia, and Uzbekistan. Another outreach instrument was NATO enlarging its membership

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eastward. Since the end of the Cold War, NATO has almost doubled its membership. In 1991, NATO had sixteen member states. In March 2020, it welcomed its thirtieth member, the Republic of North Macedonia. Another element of NATO’s transformation was that the alliance became active in providing out-of-area security services, beginning in the Balkan region. With Operation Deny Flight in 1993, NATO enforced the UN no-fly zone over BosniaHerzegovina. In the wake of the shelling of the Sarajevo market in August 1995, NATO used its air power to bomb Bosnian Serb positions in Operation Deliberate Force. After the Dayton Peace Accords were signed in December 1995, NATO deployed sixty thousand troops to the former Yugoslavia in its first peacekeeping operation. In March 1999, NATO launched a military intervention against Serbia to stop ethnic cleansing in Kosovo. After the war ended, NATO led an international stability force (KFOR) in Kosovo. These operations were the first instances of NATO using force, and they demonstrated that the transatlantic security partnership had transformed into an alliance that could operate outside its territorial limits. Although outreach to Eastern Europe and its military operations in the Balkans gave NATO a new sense of purpose, it also spawned transatlantic tensions. For example, the United States was dissatisfied with European allies’ lack of operational compatibility with American military forces during the Kosovo war and complained about the tedious nature of conducting a military campaign via a committee of allies. Conversely, Europeans were dismayed with America’s refusal to commit ground forces either during the Bosnian war or the Kosovo war. As NATO moved to operating “out of area,” intra-alliance disputes about the use of force, operational capabilities and coordination, and questions of equitable burden sharing came to the forefront. Further changes in NATO’s strategic mandate occurred in reaction to the September 11, 2001, terrorist attacks on the United States. NATO members responded by invoking Article V for the first and only time in the organization’s existence. NATO became a transatlantic conduit for coordinating a global war against terror, and at the behest of the United Nations, it assumed leadership of a multinational security assistance force in Afghanistan (ISAF) in 2003. NATO’s operation in Afghanistan was a jarring and costly experience for many member states. Originally billed as a state-building and security operation, the mission embroiled NATO in a widespread insurgency and terrorist campaign. At its peak, NATO commanded 130,000 troops in Afghanistan, and during the entire eleven-year operation, NATO and its coalition partners suffered 3,600 fatalities. The casualties NATO’s ISAF mission suffered raised questions about equity in burden sharing among participating nations. For example, Canadian and Danish forces disproportionately suffered more casualties on a per capita basis than Germany, France, and the United States did (Bogers, Beeres, and Lubberman-Schrotenboer 2012). Moreover, restrictions on how national forces could be used in Afghanistan spurred tensions between the United States and some European partners. These national caveats limited when, where, and how national forces could be deployed. Caveats included limitations on operations at night, restricting forces to operate only in predetermined areas, and prohibitions against counternarcotic activities. These limitations imposed by national political leaders complicated coalition coordination and frustrated United States political and military leaders (Saideman and

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Auerswald 2012). In January 2015, NATO authorized a training mission to Afghanistan composed of 16,500 personnel called Operation Resolute Support. This mission ended in September 2021, after the Taliban took control of the central government in Kabul. The hasty withdrawal from Afghanistan in the summer of 2021 caused many European leaders to question America’s effectiveness in leading an alliance intervention. The failure of NATO operations to achieve long-lasting stability in Afghanistan has made European partners reluctant to conduct sustained military operations for the foreseeable future. In addition to extending its geographic reach, in the 2000s, the transatlantic alliance expanded the kinds of operations it was willing to undertake. For example, NATO initiated a military training program in Iraq in 2004, conducted humanitarian relief operations in Pakistan in 2005, and began protecting shipping lanes against pirates off the coast of Somalia in 2008. As missions proliferated, in November 2002, NATO decided it needed to establish the NATO Response Force (NRF) with dedicated military units that could be quickly deployed for peacekeeping and stability operations. One major operation, Unified Protector, launched in March 2011, enforced a UN-mandated nofly zone in Libya, and used its airpower to help rebel groups depose Libyan President Muammar Gaddafi. NATO also created formal associations with North African and Middle Eastern states (Mediterranean Dialogue), Persian Gulf states (Istanbul Cooperation Initiative), and Asia-Pacific and Latin American states (Global Partners). Although NATO’s humanitarian and training operations were relatively uncontroversial, its military operation in Libya created transatlantic divisions about burden sharing. In the 2011 Libya intervention, there was a distinct lack of political cohesion, because the majority of NATO members did not contribute military assets to the operation (Michaels 2014). America also declared a “lead from behind” policy and wanted European partners to take charge of the campaign. For the United States, this was an unusual policy, because it amounted to abdicating America’s traditional leadership role in the alliance. Moreover, the “lead from behind” mantra ringed hollow, because the United States provided the bulk of reconnaissance and surveillance data for targeting, the most refueling aircraft, and all armed drones operating in Libya during the seven-month war (Daalder and Stavros 2012). This Libya intervention illustrates how NATO’s new, multifaceted, and global reach exposed latent tensions across the Atlantic about the proper role of United States in the alliance and about European allies’ inability or unwillingness to contribute to NATO’s expansive, out-of-area operations. THE TRANSATLANTIC RESPONSE TO RUSSIAN REVANCHISM Another major shift in transatlantic security policy began in 2014 in response to Russia’s illegal annexation of Crimea and its fomenting of rebellion in Ukraine’s eastern province of Donbas. Russia’s hostile acts and aggressive posture in Eastern Europe galvanized NATO to establish a permanent military presence in the Baltic states and Poland, to create a spearhead force (Very High Readiness Joint Task Force), and to focus on defending the territorial integrity of its eastern members. The most visible response to Russian aggression is NATO’s Enhanced Forward Presence, which

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established four multinational battle groups totaling five thousand men, led by Canada, the United Kingdom, Germany, and the United States (NATO SHAPE 2019). NATO intensified its training schedule and focused joint exercises on defending Eastern allies. For example, it conducted the largest military exercise since the end of the Cold War with Trident Venture 18 in Norway in the fall of 2018. NATO also sought new associations to help defend against potential Russian aggression. Sweden and Finland joined NATO’s Enhanced Opportunities Partners program, making it easier for them to participate in NATO exercises and planning while allowing NATO to use their territory for training purposes. The United States committed an additional one thousand noncombat personnel to Poland in September 2019, and the Polish government offered to build a military base to permanently host American troops, dubbed “Fort Trump” (Sonne and Gearan 2018). During the Obama and Trump administrations, efforts to bolster allies along NATO’s eastern border with Russia exposed tensions within the alliance. The two biggest points of contention revolved around maintaining economic sanctions on Russia and the question of arming the Ukrainian government. On the first point, sentiment about maintaining economic sanctions on Russia wavered in Hungary, Italy, Bulgaria, and Spain, while it remained quite strong in the Baltic states, Poland, and the United States (Kanter 2015; Portela et al. 2021). President Trump and Eastern European countries criticized Germany for cooperating with Russia in building the Nord Stream 2 natural gas pipeline, and in December 2019, the United States imposed economic sanctions on companies and individuals financing the project (Keating 2019). Conversely, during Donald Trump’s tenure, there was fear in Europe that the United States would unilaterally lift sanctions, especially since Trump seemed to revere Russian President Vladimir Putin. The second point of tension, arming the Ukrainian government with lethal weaponry, divided Europeans as well as the United States from allies hesitating to support the government in Kyiv. The overwhelming majority of European states offered only humanitarian and nonlethal military aid to Ukraine, arguing that arming Ukraine with lethal weapons would only escalate tensions with Russia (Gordon, Smale, and Erlanger 2015). The United States was among this group until the Trump administration decided in 2017 to provide Ukraine with defensive weaponry, including Javelin antitank missiles. However, most European allies did not respond in kind to America’s shift in policy, and this disjointed approach amounted to tepid support for Ukraine’s efforts to counter Russia militarily. The contentious debates of whether Western allies would maintain sanctions on Russia and would they increase arms shipments to Ukraine ended in the winter of 2022 with Russia’s full-scale invasion of Ukraine. America and European countries faced a new strategic reality of an extremely aggressive Russia that directly threatened European countries and America with its brutality toward Ukraine and with its rhetoric accusing the West of conspiring against Russia. American and European leaders interpreted Putin’s revanchist pronouncements as a desire to overturn the European security order, and the war sparked a revolution in European security. First, Europe and America imposed stiff financial and economic sanctions on Russia, including cutting off select Russian banks from access to the SWIFT financial messaging network and restricting the central bank of Russia’s ability to access reserves (Nolsoe and Pop 2022). Western

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Figure 15.1  NATO’s Eastern Flank: Stronger Defence and Deterrence. Source: North Atlantic Treaty Organization (2022).

governments seized assets of Russian oligarchs that supported Putin. Second, countries that had been reluctant to provide Ukraine with arms, such as Germany and Sweden, were now shipping shoulder-fired antitank and antiaircraft weapons to Ukraine. By the summer of 2022, the United States began to provide offensive weaponry such as mobile rocket launcher systems (HIMARS). For the first time in its history, the European Union purchased and provided arms to another country, Ukraine (De la Baume and Barigazzi 2022). Third, NATO members increased their military deterrent in the Baltic states, Central Europe, Romania, and Bulgaria by setting up four new battle groups in Slovakia, Hungary, Romania, and Bulgaria (Gramer and Detsch 2022). Furthermore, within a month of the outbreak of war, NATO tripled the force levels of Enhanced Forward Presence operation in Poland and the Baltic states. NATO members deployed patriot missile systems to Poland and Slovakia (Youssef 2022; Reuters 2022). ​ Fourth, European governments started to reconceptualize their security needs. For instance, Germany created an emergency fund of €100 billion to boost defense spending to above 2 percent of GDP (Connolly 2022). Appalled by blatant Russian aggression, Finland and Sweden decided to apply for NATO membership in May 2022, and NATO member states accepted their membership application at the Madrid Summit in June 2022. Denmark voted in a public referendum to join the EU’s common security and defense policy, also known as CSDP, in June 2022 (Henley 2022). The transatlantic partnership reacted in a strong and coordinated fashion to the conflict, yet it is uncertain how long this unity of purpose will remain. THE ONGOING BURDEN-SHARING DISPUTE Despite strengthened alliance cohesion due to the outbreak of the war in Ukraine, tensions about burden sharing in the transatlantic security relationship persist. Since

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the 1950s, the United States has shouldered a disproportionately large share of defense spending within the alliance. After the Cold War ended, US proportionate share of defense spending increased. In 1995 the United States accounted for 59 percent of total defense spending within NATO. By 2021, that figure had risen to 69 percent (North Atlantic Treaty Organization 2021). American officials have consistently complained about European unwillingness to allocate sufficient resources to fund their defense. In 2011, US Secretary of Defense Robert Gates warned that the burdensharing problem was so acute that NATO was approaching “collective military irrelevance” (Gates 2011). Since the end of the Cold War, NATO has urged every member state to allocate at least 2 percent of its national GDP to defense expenditures. For two decades, European countries collectively underspent on defense to the point that their military capabilities deteriorated. Over that time, the majority of NATO members failed to meet the 2 percent of GDP spending guideline, with only five to eight European countries typically meeting this mark annually. At the NATO summit in 2017, Trump chastised European allies for not spending enough on defense (Trump 2017). At the 2018 NATO summit, he went further by suggesting that allies should spend at least 4 percent of GDP on defense (Reuters 2018). “So we’re [the United States] paying 4 to 4.3 percent, when Germany is paying 1 to 1.2 percent—at max, 1.2 percent—of a much smaller GDP. That’s not fair,” he stated in 2019 (Trump 2019). Such pleas from the United States produced only marginal increases in European defense spending. By 2019, only nine out of twenty-nine NATO members met the recommended 2 percent threshold. The main culprits in this military neglect are Germany, Italy, and Spain. The German example is illustrative of how underspending creates a hollow military force. In the last ten years, Germany spent on average 1.25 percent of its GDP on defense. In 2018, the Luftwaffe had only 4 out of its 128 Eurofighters combat ready (Huggler and Foster 2018). Less than 50 percent of German tanks, ships, and aircraft are available to be deployed because of a lack of maintenance and spare parts. German troops participating in NATO’s Operation Resolute Support were flown on US C-17 aircraft because the German military had no troop transports available (German Bundestag Commissioner for the Armed Forces 2018). Because they were not outfitted with machine guns for a 2014 NATO exercise, German units used spray-painted broomsticks as “weapons” (Noack 2015). If Germany had met NATO’s 2 percent spending guide, it would have spent an additional $270 billion on defense over the last ten years. The result of a decade of unwillingness to spend on defense is that many European forces are less deployable, less capable, and less interoperable with their allies. For American policymakers, it is distressing to have partners that cannot contribute in a reliable and robust fashion to alliance missions. European governments retort that the 2 percent guideline is too restrictive and does not include other expenditures that contribute to alliance security. They insist that a broader accounting of defense spending, including categories such as foreign aid, civilian missions, and troop deployment in non-NATO operations, would show a more equitable burden sharing (Kunertova 2017). These counterarguments are frustrating for the United States because they evade the main issue of whether European countries have adequate capabilities to conduct joint military operations. In the wake of the Ukraine war of 2022,

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defense spending is likely to increase among European states, but these increases may not be permanent. Even with its €100 billion defense fund created in response to Russia’s invasion of Ukraine, Germany will continue to fall short of NATO’s 2 percent spending goal, and the defense fund will evaporate within five years (Martuscelli 2022). The quarreling over burden sharing will only end once the United States feels that most of its European partners, particularly Germany, have acquired functional and sustainable capabilities that can conduct joint security tasks in Europe and abroad. Another transatlantic dispute that touches upon burden sharing is one that centers on America’s shifting strategic priorities. In this dispute, Europeans are disgruntled that America is diminishing its security focus on Europe. This shift began with President Barack Obama’s announcement of the “Pivot to Asia” policy, which was intended to bolster allies in the Asia-Pacific region through greater political, military, and economic investment (Clinton 2011). The Obama administration opened military bases in Australia and the Philippines, deployed more naval assets to the Pacific, and negotiated a free trade agreement, the Trans-Pacific Partnership (TPP). Although never explicitly stated, Pivot to Asia was about balancing the rise of China and dampening its growing influence in the region. While Trump canceled US participation in the TPP upon assuming office, he continued the basic premise of the pivot policy by directing America’s security focus to Asia and asking European powers to provide more for their own defense so as to free up US military assets (McKay 2019). The US plan to reduce its military forces in Germany by 25 percent by the end of 2020—part of a longterm process of the United States redistributing military resources away from Europe toward Asia—also upset Europeans (Cullen and Delfts 2020). Likewise, the Biden administration has continued to pursue the pivot policy by urging European allies and NATO to develop plans to counter China’s rise (Baer 2021). Russia’s 2022 invasion of Ukraine has disrupted America’s strategic refocus toward Asia, but it remains to be seen how long this disruption will last. More worryingly, Trump’s discourse on NATO raised alarm bells in European capitals about the reliability of America as an ally. For example, Trump exhibited a reluctance to affirm that the United States would uphold the Article V guarantee (Gray 2017). When NATO formally invited Montenegro to join the alliance in 2018, Trump stated in a TV interview that he wondered why Americans should defend Montenegro (Sullivan 2018). Such statements by an American president were jarring because they signaled that the United States may no longer be willing to protect its European allies. President Biden’s pro-NATO policies have been reassuring to European partners, but doubts remain about America’s commitment to Europe, especially considering its underlying desire to prioritize the Asia-Pacific region. THE EUROPEAN UNION SEEKS MORE SECURITY AUTONOMY Meanwhile, the European Union (EU) has sought a new strategic position in the world that requires greater autonomy in security affairs. The EU’s desire to acquire its own defense and security structures has further exacerbated tensions within the transatlantic partnership. The process of moving into security affairs formally began in

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1999 with the creation of the European Security and Defense Policy, renamed Common Security and Defense Policy (CSDP) in 2009 with the passage of the Treaty of Lisbon. CSDP provided the EU with a mechanism to plan, authorize, and oversee its own military operations. Since its first missions in Congo and Macedonia in 2003, CSDP has undertaken more than a dozen military operations in Europe, Africa, and the Middle East. Most of these operations have been small in scale and limited in duration, but a few have been sizable and intense. For instance, the EUFOR Chad/ CAR operation in 2008–2009 deployed 3,700 soldiers to protect Darfur refugee camps. The EU has continued to express greater aspirations in the security field with its 2016 global strategy. This document called for a stronger Europe capable of protecting its member states and asserting its shared values and interests abroad. In terms of balancing relations with America while gaining more control over its own security, the Global Strategy states: European security and defense efforts should enable the EU to act autonomously while also contributing to and undertaking actions in cooperation with NATO. A more credible European defense is essential also for the sake of a healthy transatlantic partnership with the United States. (European Union 2016)

Despite these EU affirmations of continued cooperation with America, multiple administrations since Bill Clinton’s have taken a skeptical view of the EU’s CSDP. The United States and pro-Atlantic partners, such as the United Kingdom, Denmark, and Poland, fear that CSDP will duplicate NATO assets, decouple Europe from America, and discriminate against non-EU NATO members such as Turkey and Norway. Part of the process of gaining more strategic autonomy is to integrate and economize the way European countries develop and procure military capabilities. Activated in 2017, Permanent Structured Cooperation (PESCO) pools billions of euros to plug European military gaps (Biscop 2018). As of March 2022, there were sixty cooperative projects being developed in PESCO ranging from training, developing new naval and aircraft platforms, creating cyber defense systems, and developing joint command and control mechanisms. The primary fiscal instrument for PESCO is the European Defense Fund (EDF), which is projected to allocate more than €1 billion a year from 2020 to 2027 toward PESCO projects. If this spending projection holds, the EDF will increase total European defense procurement by 15 percent. The US reaction to PESCO has been a mixture of support and reluctance. Although the United States has demanded that Europe increase military spending, in the case of the European Defense Fund, it primarily fears being left out of defense projects. Although there has been much activity revolving around PESCO, initiatives for greater security independence have been underwhelming and have not made a significant impact on increasing European military capabilities. More worrying for the transatlantic partnership are French and German proposals to create an EU army that would be independent of NATO and the United States (Rankin 2018). This is not the first time that Europeans have proposed merging their military structures. In the 1950s, the European Defense Community, or the Pleven

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Plan, sought to combine West European military units under the direction of a European defense minister and accountable to European community structures. The United States supported the EDC treaty, but the French National Assembly rejected this proposal in 1954 because it feared the EDC would reduce French sovereignty. The 2018 EU army proposal, while not fully fleshed out, necessitates creating a substantial command structure, a European version of the Pentagon. If this were to happen, the United States would likely view an EU army as duplicative of existing NATO structures and as undermining NATO as the lead security organization in Europe. Former NATO Supreme Allied Commander James Stravidis responded to the proposal by stating, “If you think we’re [the United States] having trouble now getting Europe to participate in various NATO operations—Afghanistan, the Balkans, in counter-piracy operations—just wait until they have an independent armed force for Europe” (Brown 2018). Subsequently, the EU Army proposal stalled because some EU states were wary of the EU creating robust security structures. They, too, worry about the detrimental effect it will have on NATO and America’s commitment to European security. However, after Russia’s invasion of Ukraine, the EU announced the creation of a rapid deployment capability (RDC) of five thousand soldiers to be operational by 2025. This force will conduct live fire exercises to ensure operational readiness and will have its own command and control. Although EU High Representative for Foreign Affairs Josep Borrell declared that this capability would be complementary with NATO, it is uncertain how exactly this new force will relate to NATO (Borrell 2022). It is too early to tell if this new security force amounts to a proto-EU army, but it does indicate that European Union officials are serious about having unified military assets independent of US or NATO influence. And it is clear that US officials say they want to fix the burden-sharing problem; however, they also want to retain their influence by being Europe’s indispensable military force. DIFFICULTIES IN COOPERATIVE CRISIS MANAGEMENT Besides disputes over burden sharing and the dilemmas of European security independence, the transatlantic partnership has had difficulties responding to unfolding crises around the globe, with the Syrian civil war serving as a primary example. Western leaders quickly denounced the oppressive and brutal policies of Syrian President Bashar al-Assad during the Arab Spring uprisings. European and American officials asked the UN Security Council to impose sanctions on Syria, but these requests were vetoed by Russia and China. In August 2011, Obama demanded Assad that step down as president of Syria. Two years later, it looked like the United States and its European allies were going to bomb Syrian military positions after the Syrian government used chemical weapons on civilians in a rebel-controlled suburb of Damascus. However, President Obama abruptly shifted his position by deciding against authorizing the use of force to punish Syria. Obama was partly swayed by the British Parliament’s vote rejecting the use of force against the Assad regime. The American reversal granted Russian foreign minister Sergei Lavrov the opportunity to offer a diplomatic solution of pressuring Syria to

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destroy its chemical weapons stocks under the supervision of the Organization for the Prohibition of Chemical Weapons. After this episode, America and Europe increased the arming and training of anti-Assad rebel troops. Unfortunately, the “red line crisis” demoralized rebel groups and regional allies who had hoped Western air power would topple the Assad regime as had been done in Libya. The crisis in Syria continued to evolve with the emergence of the Islamic State in Iraq and Syria (ISIS). After ISIS massacred the Yazidis in northern Iraq in August 2014, the United States and Europe organized a coalition to fight ISIS in both Iraq and Syria. The Atlantic Community began conducting daily air strikes in eastern Syria. The strategic situation in Syria changed again when Russia decided to militarily intervene in September 2015. The focus of the West became not only pressuring the Assad regime and defeating ISIS but now avoiding a larger conflict with Russia. In the summer of 2015, a wave of Syrian refugees swamped the European Union, causing political disarray. German Chancellor Merkel’s policy of welcoming a million Syrian refuges was divisive and spurred the rise of right-wing populist political parties throughout Europe. ISIS also struck back at the West by conducting a deadly, multipronged terrorist attack in Paris in November 2015. The Syrian civil war was spiraling out of control, causing greater instability throughout the region and spreading into Europe. The transatlantic alliance had only difficult choices to try to end the fighting. When Donald Trump became president, he committed more ground troops to the battle against ISIS and was willing to punish the Assad regime for using chemical weapons. In 2017 and 2018, the United States, United Kingdom, and France lobbed cruise missiles against Syrian military targets in response to Assad’s use of chemical weapons. Unfortunately, these missile strikes did not change Assad’s behavior nor weaken his grip on power. Moreover, not all European allies shared similar enthusiasm for punishing Assad or in fighting against ISIS. For instance, Germany refused to participate in the retaliatory military strikes and would not deploy troops to fight ISIS. As in previous conflicts, the transatlantic partnerships had trouble presenting a united front. After Western-backed forces captured the ISIS capital of Raqqa, President Trump caused consternation within the Atlantic Community by abruptly ending American participation in the anti-ISIS coalition. First, he declared a withdrawal in 2018, but then he delayed this unilateral decision in order to consult with European partners. Next, he pleaded for European forces to replace American troops, but to no avail. Facing an impending Turkish invasion of the Kurdish-controlled areas of Eastern Syria, Trump ordered the troop withdrawal in October 2019 (Barnes and Schmitt 2019). This chaotic and uncoordinated departure is another example of US actions sowing distrust in the transatlantic partnership. The story of the Syrian civil war is a sordid tale of miscalculation, policy reversals, and a lack of transatlantic coordination. European allies have been divided on how to proceed on ending the conflict in Syria. Italy, Poland, Austria, and Hungary reportedly desire a reengagement policy with the Assad government (Vohra 2019). The inability of transatlantic allies to create a unified and well-thought-out strategy for Syria has led to the West not achieving many of its goals in the region. ISIS was defeated in Syria, but President Assad will likely win the war, and Russia and Iran have gained greater influence in the region.

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DETERIORATING RELATIONS WITH TURKEY Relations with Turkey has been another issue of contention within the transatlantic partnership. Turkey has been a key ally in NATO due to its large military—the second largest in the alliance—and its strategic location straddling Europe, the Caucasus region, and the Middle East. Additionally, Turkey is an important economic partner for the European Union in terms of being a hub of cheap manufacturing, a provider of agricultural goods to Europe, a labor pool for European industry, and as an energy transit route. Historically, Turkey has sought closer economic and political ties with the European Union and first applied for EU membership in 1987. After many delays, EU accession negotiations with Turkey began in 2005. For Turkey, obtaining EU membership would signify it has completed its process of becoming a full-fledged member of the West. Unfortunately, relations with the United States and the European Union began to sour in the early 2000s. The downward turn in relations began with the United States and some European allies deciding to invade Iraq. On March 1, 2003, the Turkish parliament voted against allowing its military bases to be used by American forces for the invasion of Iraq. Later that year, the arrest of eleven Turkish military personnel in northern Iraq by the US military further fueled ill will in Turkey toward America. Turkish authorities were critical of the Iraq war because of the instability it created on its southern border and the negative impact a semiautonomous Kurdistan in northern Iraq had on the Kurdish uprising inside Turkey. Relations between the United States and Turkey further worsened due to the Arab Spring and the Syrian civil war. Turkey initially opposed NATO’s intervention in Libya and predicted that a military campaign would have dangerous consequences. In Syria, Turkey supported ethnic Turks who rebelled against Assad and loathed Western hesitancy to engineer a robust intervention against the Syrian regime, similar to NATO’s operation in Libya. Although NATO deployed patriot missile batteries in 2012 to defend Turkish airspace, Western states have been critical of Turkish military operations in Syria. For instance, the United States and major European allies were dismayed that Turkish military units watched passively as ISIS forces attacked Kurdish positions in the village of Kobani in 2015 (Park 2015). The attempted coup d’état in Turkey in July 2016 and the subsequent purge by President Recep Tayyip Erdoğan deepened the rift between the West and Turkey. This event severely hampered EU-Turkish relations and solidified an impasse in the drawn-out EU accession negotiations. Turks were upset that their Western allies did not stand behind the besieged Erdoğan government during the crisis, and there were conspiracy theories that the United States was behind the failed coup (Arango and Yeginsu 2016). In 2017, President Erdoğan threatened to withdraw from the EU accession process because of the lack of progress in negotiations (Euractiv 2017). Conversely, American and European officials denounced the Turkish government for conducting mass arrests, perpetrating human rights abuses, and targeting journalists (Kingsley and Rankin 2016). Relations deteriorated to the point that at NATO’s seventieth anniversary celebration in Washington, U.S. Vice President Mike Pence (2019) declared:

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This statement illustrates the worry that Turkey is in danger of turning its back on the transatlantic partnership. Two other issues fueling division between NATO and Turkey are: Turkey’s purchase of the Russian-made S-400 anti-aircraft system and Turkish intervention in Libya. Turkey has wanted to upgrade its surface-to-air defenses and in September 2013 announced it would buy a Chinese anti-aircraft system. Two years later, Turkey canceled the $3.4 billion Chinese contract, because the United States threatened to put economic and armament sanctions on Turkey due to the Chinese system’s data integration problems. After reopening the bidding process, in September 2017, Turkey awarded a $2.5 billion air defense contract to Russia (Gall and Higgins 2017). Russia’s S-400 has an advanced, interconnected radar system that has the ability to pinpoint America’s F-35 stealth fighters. Also, Turkey’s purchase of advanced Russian weaponry sparked fears in Western allies that Turkey was drifting into the strategic orbit of Russia. For these reasons, NATO allies demanded that Turkey cancel the Russian contract, and the United States threatened to impose economic sanctions as well as expel Turkey from participation in the production program of the F-35 (Tirpak 2020). Turkey did not comply with NATO member state demands, and it has indicated a willingness to purchase more Russian armaments in the future (Bekdil 2021). In the Libyan civil war, Turkey chose to intervene in January 2020 by sending a contingent of troops to support the UN-backed Tripoli government of Prime Minister Faiez Serraj. The Turkish government feared that the rival faction led by General Khalifa Haftar, which was backed by Russian mercenaries, would defeat the Tripoli government. Most Europeans and Americans were critical of direct Turkish intervention even though they officially supported the Tripoli government. Western powers were concerned that Turkey’s intervention would escalate the violence in Libya and spur another wave of mass migration to Europe (Manson, Pitel, and Saleh 2020). They were also concerned about the agreement Turkey signed with the Serraj government which carved out a maritime bridge in the Mediterranean. This agreement extended Turkey’s exclusive economic zone to Libyan waters and conflicted with Greek and Cypriot territorial claims. Also, Turkey has protested the validity of the EU’s naval operation Irini, which enforces an arms embargo on Libya. In November 2020, Ankara blocked a German frigate from inspecting a Turkish cargo vessel headed for Libya (Holroyd 2020). Both the S-400 purchase and the Libyan intervention are examples of how the West is losing Turkey. Turkey has long been an important geopolitical ally, and if it falls away from the transatlantic security partnership, there will be severe repercussions on Western policies in the Middle East. In reviewing the state of transatlantic security relations, it is apparent that many of the tensions between America and European states stem from the number of security issues they must collectively manage. The multiplicity of crises and strategic concerns—such as a changing geopolitical environment, the rise of Chinese power,

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an aggressive Russia, warfare in Ukraine, failed states in Libya and Syria, the threat of international terrorism, ethnic violence in the Balkans, and a testy Turkish ally— tends to overload the transatlantic partnership and to create political rifts between America and the European states. There are disagreements on which threats and on which theaters attention must be prioritized. There are disagreements stemming from differences in risk perception. There are arguments about unequal burden sharing and America’s dedication to its European partners. There is deep desire among some Europeans to exercise greater independence from the United States in the security realm. Some of these rifts are systemic—for example, the burden-sharing issue—and have been present in transatlantic relations for decades. However, the sheer volume and complexity of contemporary security relations is a novel phenomenon that greatly taxes resources and shortens political focus. The emergence of Russia as a common adversary, especially after its invasion of Ukraine in 2022, may alleviate the impact of these rifts by providing the focus needed to create more coordinated and effective joint policies. However, transatlantic security tensions will likely persist, because debates over European strategic dependency or America’s desire to turn its attention to China will not easily fade nor be solved by the emergence of a common Russian enemy.

Economic Relations in Distress A significant aspect of the transatlantic relationship is the intense economic ties between the United States and Europe. Their economic relationship is on more of an equal footing than their security relationship: in 2019, the GDP of the United States was $21.4 trillion, and the GDP of the EU was $23.7 trillion (OECD 2020). The volume of trade between Europe and the United States is large, accounting for 46.4 percent of total global merchandise exports (World Trade Organization 2019). The United States and the EU are each other’s biggest regional trade partner. In 2019, European markets were the destination for 23 percent of total US exports of goods (US Census Bureau 2020). Conversely, the United States was the destination for 22 percent of the EU28’s external trade in goods (Eurostat 2020). In combined exports and imports, the value of goods traded annually between the United States and Europe is more than $850 billion. Furthermore, the majority of US and European foreign direct investment is with each other. Europe received 58 percent of US research and development investment outside of America, and Europeans invest heavily in the United States, constituting 70 percent of all foreign R&D spending inside America (Hamilton and Quinlan 2020). In terms of tourism, Americans are the number one visitors from outside the EU, accounting for 18 percent of visitations, and Americans are the second-highest tourist spenders in Europe at $123 billion in 2016 (European Commission 2017). Conversely, nearly fifteen million Europeans visited the United States in 2016, spending an estimated $206 billion (US International Trade Administration 2019). In many aspects, the two economies have become entwined with one another, and there is strong interdependence within the transatlantic region. Although these macroeconomic indicators reveal a vigorous level of economic exchange across the Atlantic, there are signs of distress in the transatlantic economic relationship.

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The source of this distress stems chiefly from the rise of political figures in America and Europe advocating for protectionist economic policies. Protectionist sentiments are not new in US-European trade relations. In the early 1950s, French politicians sought to ban Coca-Cola out of fear of the Americanization of French culture (Kuisel 1991). In the 1960s, the United States and the European Community were embroiled in a tariff war over US chicken exports to Europe (Talbot 1978). The EU and the United States waged a heated seventeen-year trade dispute over state subsidies to their respective aerospace champions, Airbus and Boeing, that ended in June 2021 (Nardelli, Chrysoloras, and Jacobs 2021). What is different about current transatlantic economic tensions is the heightened willingness of politicians on both sides of the Atlantic to protect national industry from perceived unfair business practices. The penultimate example of the recent phenomenon of rising transatlantic economic tensions was the administration of Donald Trump, which was averse to pursuing closer economic association with Europe. Europe was one of President Trump’s favorite targets to voice economic grievances. Trump asserted that “European nations were set up to take advantage of the United States. . . . Europe treats us worse than China” (Dallison 2019). The growing trade deficit with the EU, primarily with Germany but also with France and Italy, raised the Trump administration’s ire. In 2009, the trade deficit with the EU was $61 billion. Ten years later, the deficit had grown to $178 billion (US Census Bureau 2022). America’s trade deficit with the EU is second only to China’s. (See Figure 15.2).​

Figure 15.2  EU-USA Trade in Goods, 1999–2021. Source: U.S. Census Bureau (2022).

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Trump started his attack on transatlantic trade early in his administration, when he withdrew from the Transatlantic Trade and Investment Partnership (TTIP) negotiations, which had begun under the Obama administration in 2013. Arguably, negotiations had bogged down by 2016 on seemingly intractable issues such as agriculture and public procurement rules. Plus Britain’s vote for Brexit in 2016 meant that one of the most pro-Atlanticist member states in the EU was no longer present for TTIP negotiations (Sims and Stone 2016). Next, President Trump directed Commerce Secretary Wilbur Ross to find ways to protect the American aluminum and steel industries. Secretary Ross recommended that the president activate Section 232 of the Trade Expansion Act of 1962 to classify the steel and aluminum industries as strategic sectors, important for national security. In March 2018, President Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. The European Union retaliated by imposing 25 percent tariffs on several iconic American goods such as Levi blue jeans, Harley-Davidson motorcycles, and Kentucky bourbon. The EU retaliatory tariffs totaled more than $3 billion worth of goods. The Trump tariffs were not the first time that the United States used trade policy to protect beleaguered industries. President George W. Bush imposed tariffs on steel imports in March 2002. The EU immediately filed a complaint with the WTO once the Bush tariffs took effect in June 2002. Bush lifted the trade barriers in December 2003 after the WTO ruled against the United States, and the EU threatened retaliatory tariffs. The difference between the Bush tariffs and the Trump tariffs is that President Bush envisioned the tariffs as a temporary measure, and his administration responded to pressure from international organizations. The Trump tariffs, on the other hand, were a more permanent fixture of his political goals, and he did not lift tariffs in response to international pressure. In other industrial sectors, President Trump attempted to use the threat of tariffs to wring more favorable trade terms from European countries. Trump threatened to protect the US automobile industry by using the powers of Section 232. The Commerce Department started a national security investigation in May 2018 and reported its findings in February 2019. However, Trump did not act on these findings, because he was placated by promises from German and Japanese auto executives that they would invest more in their US production facilities. German automobile executives pledged to create twenty-five thousand new factory jobs in the United States (Ewing and Swanson 2019). In late 2019, President Trump threatened to impose 100 percent tariffs on French wine in response to a French proposal to collect a 3 percent digital sales tax from American tech giants such as Amazon, Apple, and Google. In January 2020, France agreed to pause the imposition of the digital sales tax to allow the OECD to negotiate a global standard for digital taxation (Scott and Braun 2020). Under Trump’s leadership, the United States weaponized trade barriers at the expense of its European partners. President Trump also pursued an aggressive and divisive economic negotiating strategy when it came to dealing with Europe. For instance, he cheered on Brexit in 2016 and dangled the prospect of a free trade deal with the United Kingdom if it successfully concluded Brexit negotiations. In July 2019, British Prime Minister Boris

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Johnson and President Trump agreed to begin negotiations on a US-UK free trade agreement. Both sides held five negotiation sessions in 2020, but negotiations stalled under the Biden administration over concerns that the UK’s lack of adherence to its Brexit deal with the EU threatened the Good Friday peace agreements in Northern Ireland (Faulconbridge and Pitas 2021). In another diplomatic instance, Trump offered to purchase Greenland from Denmark in August 2019 to acquire rare earth minerals and block Chinese investment in the Arctic Circle (Pengelly 2019). Greenlanders and the Danish public were offended by this offer, which revealed the transactional nature of transatlantic relationship in the Trump era. One area of trade that the Trump administration supported was selling American liquefied natural gas (LNG) to Europe to counterbalance Russia energy exports. The goal was to prevent Poland from being cut off from energy supplies and offer an alternative to Russian gas supplied via the Nord Stream pipeline to Germany. These plans never came to fruition until Russia’s invasion of Ukraine. During a visit to Brussels in late March 2022, Biden announced an agreement with the EU to reduce European dependence on Russia natural gas imports (Krauss 2022). The United States committed to providing Europe with an additional amount of LNG by the end of 2022 that would replace approximately 10 percent of Europe’s Russian gas imports. By November, the United States surpassed this goal by more than doubling its LNG exports to Europe; however, the United States lacks the capacity and infrastructure to completely replace the loss of Russian natural gas to Europe (Maguire 2022). Nevertheless, strategic necessities and economic incentives are pushing the transatlantic relationship toward this objective. The United States has also created transatlantic tensions in the World Trade Organization. Created in 1995, the WTO is the culmination of a Bretton Woods dream to have a world trade court. But under its operation, the court has often ruled against the United States, which is one of the main targets of other nations’ formal complaints. For example, 40 percent of the European Union’s WTO complaints are against America. The Obama administration decided to block the renewal of Appellate Body judge Jennifer Hillman in 2011 out of displeasure with her rulings in the WTO’s dispute settlement mechanism. Soon after, the United States blocked all nonAmerican nominees. President Trump, for his part, increased pressure on the WTO by blocking all nominees to its Appellate Body. By the end of 2019, this Appellate Body could no longer function, because there were no judges available to serve (Swanson 2019). Trump’s policy of stalemating the WTO threatened the judicial independence of the WTO’s trade dispute resolution system. In response, the EU created a temporary appeals court to bypass the blocked WTO. What is worrying for the future of transatlantic relations is that US actions in the WTO have stymied an important leg of postwar international governance. With the election of Joe Biden as president in 2020, the United States pursued a more cooperative economic relationship with Europe; however, remnants of hostile economic policies remained. The Biden administration lifted Trump’s steel and aluminum tariffs on European producers, but to achieve this policy, European leaders had to agree to voluntary export quotas to manage the flow of steel and aluminum to America (Brown and Russ 2021). Furthermore, during President Biden’s first week in office, he

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issued Executive Order 14005, which directs federal procurement policies to support American manufacturing, and in April 2021, Biden established the Made in America office to coordinate and monitor federal procurement decisions for the benefit of American-made goods and services. In the fall of 2022, the Biden administration angered European officials with protectionist “Buy American” clauses for electric vehicles in the Inflation Reduction Act. French president Emmanuel Macron responded to the US legislation by stating, “We need a ‘Buy European Act’ like the Americans” (Financial Times 2022), Biden’s executive orders and legislative initiatives are not a sign that America has returned to free trade principles when dealing with Europe. In terms of economic relations across the Atlantic, a theme has surfaced in America that it is getting an unfair deal from its European partners. Under the Trump administration, the United States had no qualms treating its closest regional partners poorly by imposing economic sanctions and berating European leaders. The Biden administration has backed away from these harsh policies, but the underlying complaint of uneven or unfair trade relations remains. These tendencies to reconfigure trade relations with European countries are symptomatic of the relative decline of American economic influence in the world. The United States is no longer trading with European and Asian economies from a position of strength. What is also a factor is that a more unified Europe, embodied in the European Union, has been able to flex its regulatory and trade might in numerous ways. Europe is on equal footing with the United States and can withstand periodic protectionist policies from America. Unfortunately, the United States’ protectionist tendencies damage transatlantic relations and reduce trust across the Atlantic.

Growing Political and Social Cleavages The Atlantic Community rests on shared values of democracy, free markets, human rights, and the rule of law. Both sides of the Atlantic worked together to build international structures in the aftermath of World War II that reflect these values. These structures include the Bretton Woods institutions and the United Nations system. In subsequent years, Western powers created additional institutional arrangements such as the Conference on Security and Cooperation in Europe (CSCE) and the G7 to solidify and deepen regional and international governance along Western lines. After the collapse of Soviet communism, Europe and the United States engaged in spreading democratic rule in Central and Eastern Europe as well as bolstering the United Nations to provide greater international stability. However, the triumphal period of the globalization of Western norms did not last (Diamond 2020). The transatlantic value system rests upon the power and prestige of the United States. Starting in the early twenty-first century, American power and prestige has waned. Russia, China, and Iran began to rise and offer alternatives to Western values. Russia promoted sovereign democracy as a rival to transatlantic ideals, and China successfully fused hypercapitalism with Communist Party rule that other countries sought to mimic. Iran started to exert more influence in the Middle East and seeks to become a nuclear power. Meanwhile, the United States became bogged down with

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costly and contentious interventions in Iraq and Afghanistan (Ikenberry 2018). US politics became more insular and nationalistic. All of this meant that America’s ability to promote transatlantic values abroad has diminished. Over the past two decades, there have been many signs of America abdicating its leadership of the West. The unilateralism of the George W. Bush presidency provoked consternation in European circles. President Bush pulled the United States out of the Kyoto Protocols, withdrew from the Anti-Ballistic Missile Treaty, and initiated the invasion of Iraq, which caused a long-lasting rift with European allies. European allies such as Germany and France were distraught that the United States pushed forward with the Iraq war without explicit authorization from the United Nations Security Council. At the end of the Bush administration, Russia flexed its geostrategic muscles by invading Georgia in August 2008, and China mesmerized the world as the host of the Beijing summer Olympics. US influence in the world appeared shakier than ever before. Under the Obama administration, US political influence continued its decline. Despite Obama being more popular internationally than George W. Bush, his policies aggravated transatlantic tensions. In July 2009, Central and Eastern European leaders issued a letter voicing their mutual concerns that the region was being abandoned by the United States and called to “renew the transatlantic partnership” (RadioFreeEurope/RadioLiberty 2009). President Obama pursued a lead-from-behind policy during the Libya war in 2011, urging European countries to pick up the mantle of leadership within NATO for resolving the conflict in Libya. In 2013, the Snowden leaks revealed that National Security Agency surveillance programs had targeted European allies, and this behavior sowed mistrust among US partners in Europe (Anderson 2018). In particular, Germans were upset that America had spied on its leadership and had even tapped Chancellor Merkel’s private telephone. The Obama administration took steps to improve relations with Europe in its second term by starting negotiations on a free trade agreement with the European Union and by organizing NATO’s response to Russian aggression in Ukraine. However, this mini revival in transatlantic relations did not last long. The Trump administration severely tested the notion that the Atlantic Community had shared values and interests. The underlying premise of the Trump’s “America First” policy was an anti-immigrant, protectionist, and transactional vision of American foreign policy. It is anathema to the traditional understanding of the transatlantic relationship that hinged on the United States acting as a benevolent benefactor supporting and encouraging political, security, and economic cooperation within Europe. Led by Trump’s America First policy, the United States no longer effectively played this role. Moreover, Trump’s hostile attitude toward multilateral cooperation put at risk the entire liberal international order. Since 2017, the United States has abrogated several international agreements that had been the basis for post–Cold War security and political structures in Europe. First, the Trump administration withdrew from the Paris Climate Accords in 2017 (Dennis 2017). To the disappointment of European allies, the United States withdrew from the Joint Comprehensive Plan of Action, otherwise known as the Iran nuclear deal, in May 2018 (Landler 2018). In August 2019, President Trump withdrew from the Intermediate Nuclear Force treaty that restricted medium-range

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nuclear missiles and conventional force levels in Europe since 1990 (Pompeo 2019). In May 2020, the United States withdrew from the Open Skies treaty of 1992, which promoted trust through aerial surveillance over America and Russia (Sanger 2020). After last-minute foot dragging by the Trump administration, in February 2021, the Biden administration extended the START nuclear treaty with Russia until 2026 (Shinkman 2020). However, in light of Russia’s invasion of Ukraine in 2022, it is highly unlikely that the Biden administration will seek to renew or create new security agreements with Russia. The Trump administration was also suspicious of international governance structures. America withdrew from the United Nations Educational, Scientific, and Cultural Organization (UNESCO) in 2017, complaining about its anti-Israel bias. Next, America quit participating in the UN Human Rights Council in 2018, stating that it “has become an exercise in shameless hypocrisy . . . [it] is a council that covers for human rights abuses” (Pompeo and Haley 2018). In May 2020, the United States withdrew support for the World Health Organization in reaction to alleged Chinese obstruction and perceived organization ineffectiveness in responding to the coronavirus pandemic (Ehley and Ollstein 2020). The impact of these actions is the piecemeal dismantlement of institutional arrangements that constitute the liberal international order created in conjunction with European partners. In addition to transatlantic political cleavages, there is a divergence in public attitudes in America and European countries that injects tensions into the transatlantic relationship. According to a 2019 Pew public survey (Poushter 2020), Europeans have a wide range of opinions about the United States. The United States remains a pole of attraction in a number of European nations, such as Poland (79% favorability), Lithuania (70% favorability), and Italy (62% favorability), even as negative views of the United States are pervasive in other countries, such as France (48% favorability), Sweden (45% favorability), and Germany (39% favorability). A 2018 Gallup poll revealed that Europeans view the job performance of the Chinese leadership more positively than America’s. It also showed that America and Russia have equal levels of disapproval among Europeans (Gallup 2019). And, shockingly, a 2018 Pew survey revealed that half of Germans viewed the United States as a major threat (Gramlich and Devlin 2019). Public views about NATO in member states are generally positive, but there is weak support for NATO in select states. A majority of Greek and Turkish citizens hold a negative view of NATO, and most member states surveyed exhibited a reluctance to defend an ally if it were to be attacked by Russia (Fagan and Poushter 2020). Americans hold more favorable views of Europe than Europeans hold of America. For example, 75 percent of Americans say relations with Germany are good, whereas only 34 percent of Germans would say the same (Poushter and Mordecai 2020). However, Germans rank the United States as their second most important partner behind France, while only 13 percent of Americans rank Germany as an important partner. This mismatch of perceptions reveals different political incentives and outlooks between the voters of the United States and of European countries. These public views influence politicians and make political cooperation across the Atlantic more difficult. President Biden’s Democracy Summit of December 2021 was an admission

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that Western democratic systems and norms were not being as effective as in the past (Wagner 2021). Biden’s initiative to revive democracy is a long-term project that starts by strengthening democracy within the transatlantic community. In the short term, it appears that Russia’s invasion of Ukraine may push together differing public perceptions in America and Europe, but the durability of more aligned public sentiments will depend on the behavior of transatlantic states and the effectiveness of their joint policies in countering Russia.

Repairing the Atlantic Community? The overview of security, economic, and sociopolitical relations presented in this chapter reveals multiple points of contention within the transatlantic partnership. However, crisis is not an uncommon condition in the Atlantic Community. There have been other difficult periods of internal strife within the transatlantic partnership. For instance, in the 1960s, the United States changed its defense strategy in an effort to move away from the policy of launching a total retaliatory nuclear strike if the Soviets attacked a European ally. This proposal created doubts about America’s commitment to defend Europe at all costs. In 1966, French President de Gaulle announced France’s withdrawal from NATO’s military command structure (Haftendorn 1996). In the 1970s, economic disputes rocked the transatlantic relationship as the United States moved off the Bretton Woods dollar-gold exchange rate system. In the early 1980s, there were large protests in Europe against America’s placement of Pershing II medium-range nuclear cruise missiles in Germany. In 2003, the debate on attacking Iraq bitterly divided European countries and America. Yet in all these cases, Europe and America eventually found a way to return to productive political and economic dialogue. Is the current divisiveness in transatlantic affairs a temporary condition, or is the partnership on a long-term spiral toward obsolescence? The historical record of transatlantic crises suggests that the rancor in the partnership will subside. The two sides’ shared heritage, intense economic interactions, and espousal of common values indicate that they will continue to have close relations. A more hostile international environment, as demonstrated by Russia’s invasion of Ukraine, may drive together Europe and America. Nevertheless, it is possible that the world is witnessing a more permanent breakdown in traditional transatlantic relations. First, it will take time to overcome the damage done by President Trump’s blunt rhetoric, imposition of protectionist tariffs, questioning of NATO’s existence, and withdrawing from international agreements. Second, Europe’s desire for more strategic autonomy is a durable phenomenon. Put simply, Europe no longer wants to be a junior partner in an America-dominated NATO. And the aforementioned Russia-Ukraine war may propel European states to acquire more independence from America in the security policy. The incentive is to take more of a lead in managing threats to Europe and for Europeans to shape their neighborhood without relying upon the United States’ assets and political input. The only question about Europe’s desire to have more independence from the United States is whether it can commit political capital and fiscal resources to make its dream

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a reality. Third, political extremism on both sides of the Atlantic will continue to impact transatlantic relations long after Trump. Populist politics have been on the rise for at least twenty years in Europe. Their proliferation is a reaction to the difficulties of European societies and businesses in adjusting to globalization and modernization. Populist parties will continue to challenge the internationalist orthodoxy in Europe and hinder cooperation with America. On the American side, populism is no longer an obscure political stance, and the temptation to focus inward and shun traditional responsibilities will remain. Finally, the faltering willingness of the United States to lead the transatlantic alliance has been an ongoing phenomenon for over a decade. It is doubtful that this weariness will disappear, especially with America’s exploding budget deficits and a more hostile international environment. What might a decrepit and malfunctioning transatlantic relationship look like? In this scenario, NATO would probably continue to exist, but it would not do much. Europeans would lose faith in the assurance that America would defend Europe from external threats. Europeans would no longer follow America’s lead when it comes to matters of international security. On the other hand, America could not count on Europeans to be reliable partners in peacekeeping and stability operations, nor would Americans share similar strategic perspectives with Europeans. Transatlantic cooperation on setting global economic rules would devolve into hostile competition where the United States and Europe would seek to impose their own nationalistic standards on the world. Western unity within international forums such as the OSCE, the UN, WTO, and G7 would falter. The lack of transatlantic coordination in international governance would empower and embolden non-Western states in international institutions. It is possible that Europe might fall under the geopolitical sway of Russia or China. The external forces aligned against transatlantic cooperation, such as Russia, Iran, and China, would intensify and more frequently exploit divisions between America and Europe. Unless changes are adopted, Europe and the United States might not escape reaching a nadir in their relationship and would be resigned to navigating the international environment on a more solitary basis. What actions are necessary to repair transatlantic relations to avoid this worst-case scenario? To fix the transatlantic partnership would require leadership committed to the Atlantic Community, decisive steps to enhance policy coordination, and the existence of a common adversary to concentrate transatlantic attention. Leadership is necessary to coalesce political will on identifying common problems, breaking down barriers to cooperation, and forging creative, mutually beneficial solutions. In the early 2020s, signs of reinvigorated leadership on both sides of the Atlantic are weak. Biden has partially resuscitated US-European relations after the tumultuous years of Donald Trump, but his administration appears hamstrung by a fractious political climate in America and a desire to focus on countering China. European capitals likewise lack in inspirational transatlantic leadership. French President Macron prioritizes building EU structures rather than turning to the transatlantic partnership for managing issues and crises. German Chan-

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cellor Olaf Scholz has yet to display bold leadership in the Atlantic Community and seems to be pursuing a tepid transatlantic policy. With the United Kingdom completing its exit from the EU, the UK has less influence in Europe and, subsequently, less ability to mobilize the transatlantic community. For the transatlantic partnership to remain relevant in the twenty-first century, there must be leaders on both sides of the Atlantic that reflexively consult, coordinate, and support their transatlantic counterparts and espouse a compelling vision of the Atlantic Community that inspires other countries to follow. To revive transatlanticism, there must also be new projects of enhanced cooperation. There are many policy areas where greater pooling of resources and joint prioritization could benefit both sides of the Atlantic. Whether it be fusing European and American arms industries into a single market, concluding a free trade agreement across the Atlantic, setting global standards for the ethical use of cyber capabilities and electronic surveillance, or creating common technical platforms and financial incentives for the cooperative exploitation of outer space, the possibilities for enhanced cooperation are boundless. In a sense, the Atlantic Community needs a new overarching logic for existing. Americans and Europeans must find a shared vision that will motivate each other to develop creative solutions to mutually recognized problems of the twenty-first century. Without such a singular vision, the transatlantic partnership will be more akin to a hodgepodge list of unconnected policies. The old tasks of deterring communism or spreading democratic ideals eastward are no longer adequate visions to guide the alliance in the future. Europeans and Americans must agree on a new vision which will fuel their interactions and provide renewed purpose. Related to the need for a new raison d’être is the fact that the international climate is becoming more hostile. The geopolitical sands are shifting toward Asia. Agreeing upon a common adversary would have the benefit of energizing the transatlantic partnership. This adversary, however, cannot be concocted and must be perceived by all as a legitimate threat to the Atlantic Community. This adversary also does not have to be a country or hostile regime. In the 1990s, NATO leaders reshaped the alliance to fight instability in Europe and, after the 9/11 terrorist attacks, it retooled again to fight transnational terrorism. In the 2020s, it is possible that either a fight to save the planet’s atmosphere or, alternatively, a grand project for stabilizing the Middle East and North Africa may be well suited for the Atlantic Community. However, it is more realistic that Russia will become a unifying force for the West because of its belligerent behavior in Ukraine. Russia’s invasion of Ukraine highlights the importance of having a robust transatlantic partnership, a more capable joint military, and coordinated economic and political messaging. Russian aggression has pushed together America and European countries and prodded the historically nonaligned countries of Sweden and Finland to join NATO. Russian hostility has actually broadened and deepened the Atlantic Community. Yet it is uncertain how long Russia’s galvanizing influence will last. The transatlantic community continues to be divided on how to approach Russia. Several European countries are dependent on Russian oil and natural gas, and

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transitioning away from Russian fossil fuels will be an expensive and lengthy process. Some European countries would prefer to reestablish better relations with Russia at the earliest opportunity, while others, particularly in Eastern Europe, will display deep animosity toward Russia for years to come. Alternatively, China appears to be a more formidable adversary for the transatlantic partnership to balance against. There is plenty of opportunity for Europe and America to coordinate their international policies on limiting the growth of Chinese influence in the world. However, the problem with having China as a unifying adversary of the Atlantic Community is that both Europe and America are economically embedded into the Chinese export-led trade system. China’s Belt and Road Initiative seeks to transform the Eurasian continent into a more tightly knit web of economic relations. In March 2019, Italy became the first major European economy to sign a Belt and Road investment agreement with China (Zeneli 2019). Europeans also have contracted China’s Huawei to deploy high-speed 5G mobile phone networks. There may be a need for crafting a common policy on China, especially in the realm of economic and trade policies; however, business and financial interests on both sides of the Atlantic will make this a difficult prospect. Additionally, convincing European partners to prioritize Asian security will be difficult, especially with so many economic, political, and security crises along Europe’s eastern border, in the Balkans, and along the Mediterranean. In other words, it is doubtful that America can persuade Europeans to focus on China as a primary threat when so many problems from Russia, the Middle East, and North Africa directly impact the lives of European citizens. Can the transatlantic partnership be repaired? Returning the transatlantic partnership to its supposed former glory is an unlikely prospect. Instead, the partnership should adapt and innovate to demonstrate a new political, economic, and social relevance to the United States and European countries. Both sides of the Atlantic have the ability to forge a new purpose and create new types of cooperative policies, but the task will not be easy and will require political compromises. The consequences of allowing the Atlantic Community to slowly fade away outweigh the costs and efforts required to reconstitute the partnership on a new footing. Failure to undertake this project of renewal means that both America and Europe will not have a dependable partner to confront the multiple challenges of the twentyfirst century.

Suggested Readings Alcaro, Riccardo, John Peterson, and Ettore Greco, eds. The West and the Global Power Shift: Transatlantic Relations and Global Governance. London: Palgrave Macmillan, 2016. Friedrichs, Gordon, Sebastian Harnisch, and Cameron G. Thies, eds. The Politics of Resilience and Transatlantic Order: Enduring Crisis? London: Routledge, 2019. Kirişci, Kemal. Turkey and the West: Fault Lines in a Troubled Alliance. Washington, DC: Brookings Institution Press, 2017.

T urmoil and T ension in T ransatlantic R elations   433 Simoni, Serena. Understanding Transatlantic Relations: Whither the West? New York: Routledge, 2013. Sloan, Stanley R. Defense of the West: NATO, the European Union and the Transatlantic Bargain. Manchester, UK: Manchester University Press, 2016.

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T urmoil and T ension in T ransatlantic R elations   439 .com​/politics​/biden​-democracy​-summit​-backward​-slide​/2021​/12​/09​/fe451bb4​-58eb​-11ec​-9a18​ -a506cf3aa31d​_story​.html. World Trade Organization. 2019. World Trade Statistical Review 2019. Table A.4. https://www​ .wto​.org​/english​/res​_e​/statis​_e​/wts2019​_e​/wts2019​_e​.pdf. Young, Zachary. 2018. “Macron: Europe Can’t Depend on US for Security.” Politico, August 27, 2018. https://www​.politico​.eu​/article​/europe​-defense​-macron​-cant​-depend​-on​-us​-for​-security. Youssef, Nancy A. 2022. “U.S. to Send Patriot Missile Systems to Poland.” Wall Street Journal, March 9, 2022. https://www​.wsj​.com​/livecoverage​/russia​-ukraine​-latest​-news​-2022​-03​-09​/ card​/u​-s​-to​-send​-patriot​-missile​-systems​-to​-poland​-Jb2​ydLP​C30H​kBQ9jSvOm. Zeneli, Valbona. 2019. “Italy Signs on to Belt and Road Initiative: EU-China Relations at Crossroads?” The Diplomat, April 3, 2019. https://thediplomat​.com​/2019​/04​/italy​-signs​-on​ -to​-belt​-and​-road​-initiative​-eu​-china​-relations​-at​-crossroads.

Conclusion THE AGE OF PERPETUAL CRISIS? Masha Hedberg

A

s the chapters of this volume have shown, the 2010s in Europe often felt like an     age of perpetual crises, which sorely tested the European Union’s (EU’s) resilience, solidarity, and cohesion. The decade that began in the wake of a global financial crisis ended with the onset of a worldwide pandemic whose effects have continued to be felt. In between, Europe experienced crises of the economy, democracy, migration, integration, populism, and international relations. Some of these challenges had roots in unsolved problems of the past; others were unprecedented in nature. Early in the decade, Europe reeled from the shock of the 2008 financial crisis, which shattered the prosperity and relative political stability that had largely characterized the previous two decades. The road to economic recovery was long and uneven, with some nations mired in recession for longer than others. The era of austerity unleashed by the financial crisis, and the concomitant public spending cuts, job losses, and poor wage growth, pitted northern member states against southern ones and fueled public anger at Brussels and the European institutions responsible for devising Europe’s exit strategy from the economic crisis. Just as economic recovery finally seemed on the horizon, the bloc’s solidarity was tested again. In the middle of the decade, a surge of migration mainly from the Middle East and Africa unleashed heated disagreements over the reception of refugees and their distribution across member states, laying bare a deep East-West divide over migration policy. As a result, the EU’s response to the crisis was muddled and confused, leaving nation-states most affected to fend for themselves. The closing of borders and the raising of fences also challenged Europe’s commitment to open borders and the free movement of people—principles at the heart of the European project. The migration crisis, coming as it did at a time of lingering economic malaise, also strengthened the voice of populist, Euroskeptic parties, whose anti-globalization, anti-immigrant, and anti-Muslim message found a receptive audience among segments of the population who had lost faith in mainstream national politicians and EU institutions. The second half of the decade proved no less disruptive than the first. The United Kingdom’s 2016 vote to exit the European Union as well as the election of Donald J. Trump to the American presidency sent shock waves through Europe. Brexit bred 440

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concerns that the loss of the UK would diminish the EU’s economic, political, and diplomatic power, since the economic heft of the EU27 would be significantly smaller than that of the EU28. It also raised alarms that a French “Frexit,” a Dutch “Nexit,” and so on could be next. The new US president added fuel to the fire by criticizing the EU, calling into question America’s commitment to European security and urging other nations to follow Britain’s example and leave the Union. Yet the European Union not only muddled through a decade of trials and tribulations but has arguably emerged stronger from them. While many saw in Brexit the unraveling of the EU, the opposite has, in fact, proved true. For many Europeans, Brexit served as a reminder of the value of the Union, with most polls now suggesting that fewer and fewer EU citizens support the idea of leaving the EU. More generally, populist parties seem to have lost some of their bite and the centrality in European political life they appeared to have in 2016. While the 2022 rise to power of Giorgia Meloni, the leader of the far-right Brothers of Italy, the reversal of fortunes for the nationalist Sweden Democrats in Sweden, and the closely contested presidential election between Emmanuel Macron and National Rally’s Marine Le Pen in France attest to the mainstreaming of the populist Right, populist politicians these days appear more restrained in their attacks on the European project. To stay in power, they need to tread a fine line between nationalist and Euroskeptic appeals and the benefits and constraints of being an EU member. The pandemic, too, has shown that Europe can come together when the chips are down. Like every region in the world, the EU at first struggled in its response to COVID-19, which threatened to hit poor countries harder than the richer ones. This time around, however, solidarity trumped the “everyone for themselves” attitudes that characterized the European response to the migration crisis. Germany and others set aside their past intransigence to issuing common EU debt, enabling the European Commission to organize joint vaccine purchases and a €750 billion recovery and resilience fund to help all member states weather the storm. In the wake of the pandemic, trust in the European Union rose, according to the Summer 2022 Eurobarometer, reaching its highest level since Spring 2008. The same EU-wide public opinion survey also found that optimism in the future of the EU stood at its second-highest level since 2009 (European Commission 2022).

The Uncertain Road Ahead Now European unity and strength are being tested anew. Russia’s 2022 invasion of Ukraine has simultaneously shown the power of an EU that can speak with one voice and the difficulty of forging and maintaining a common course of action. Europe’s spirited embrace of Ukrainian refugees stands in sharp contrast to its response to the 2015 migration crisis, when then German Chancellor Angela Merkel’s decision to admit refugees split the EU. This time around, all twenty-seven member states agreed to take in those displaced by the conflict. Acting with speed and authority, which at times defied expectations, the EU moved to offer significant military aid to Ukraine,

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and it imposed enormous sanctions on Russia. The economic penalties levied by the EU against Russia have been far tougher than those the bloc was able to muster in the wake of Russia’s 2014 annexation of Crimea. But the fallout from the war now threatens Europe with perhaps the most challenging economic and financial crisis in decades. Russia’s invasion of Ukraine and the lingering effects of the pandemic have caused the steepest rise in energy prices, the highest level of inflation, and the biggest risk of recession that Europe has seen since the late 2000s. The challenges that lie ahead are numerous. In retaliation for the bloc’s staunch backing of Ukraine, Russia has drastically reduced the supply of natural gas to most of the European Union, leaving the continent to scramble for alternatives. Prior to the invasion, Russia accounted for some 45 percent of the EU’s natural gas imports. Soaring natural gas prices present a historic threat to Europe’s industrial might and living standards, raising the prospect that shuttered businesses, freezing homes, and falling incomes will lead to mounting social tensions. Putin’s goal, experts say, is to split the Western coalition that has united against him by ratcheting up the economic pain felt by the average citizen and turning public opinion against continued support for Ukraine. In response, European economies moved quickly to diversify away from Russian energy, with the European Union embarking on a complex and expensive—€210 billion—plan to cut Moscow out of the EU’s energy mix entirely by 2027. Energy policy, however, has long caused frictions among the member states, and old fissures appeared anew. Southern European governments, like Spain, Portugal, and Greece, which are far less dependent on Russian energy, were quick to point out that they were being asked to pay for the foolhardy choices made by countries like Germany, whose vulnerability to supply disruptions is directly related to the energy policies it pursued for decades. Others accused Germany of “egoism” for rescuing its own firms instead of focusing on a collective approach to the crisis. At the same time, Europe’s current energy predicament has once again underscored the continent’s inherent interdependence. Ultimately, the EU will need to find a common solution to the energy crunch, despite its uneven effects, because if one large economy deeply contracts, the ripple effects would be felt through the bloc. To cushion the economic pain for households and businesses, governments across Europe have announced sweeping and costly relief programs and forged ahead with direct interventions in markets in the form of caps on electricity prices, windfall taxes on energy firms, and subsidies to utilities to save them from bankruptcy. But while European governments see little choice but to unleash more public spending to deal with the energy crisis, such measures come with a steep price tag that may be hard to sustain. Moreover, they may signal an end to some of the EU’s long-standing fiscal rules. Prior to the pandemic, the EU normally sought to rein in member states whose deficits exceeded 3 percent of gross domestic product (GDP) and whose debt load was above 60 percent of GDP. Those rules were temporarily suspended during the pandemic, such that average deficits of EU countries have grown to more than twice the permitted limit and average debt has approached 90 percent of GDP. Now some top European policymakers have called for the rules to be revised for

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good, a policy sea change that, if enacted, will have major repercussions for European economies, politics, and society down the road.

Looming Questions Longer term, the Union will need to find consensus on questions that have no easy answers. Perhaps first among these is the question of what the EU may owe Ukraine, which has been vocal in its desire to join the Union. Given prevailing beliefs that Ukraine is literally fighting for Europe, the moral answer may be obvious: “They are one of us and we want them in,” European Commission President Ursula von der Leyen has said (McMahon 2022). But the practical answers are more complicated, and a unified front may be hard to achieve. Even entering into accession talks with Ukraine is a nettlesome issue, since Georgia and Moldova, two other former Soviet republics, also applied for membership. Moreover, other countries have been stuck in the process for decades. Turkey applied in 1987, North Macedonia in 2004, Montenegro in 2008, Albania and Serbia in 2009, and Bosnia-Herzegovina in 2016. And yet there has been no EU enlargement since Croatia’s entry in 2013 both because of the difficulties of integrating new members and of the arduous criteria for joining. Fast tracking Ukraine risks further alienating the earlier applicants, who are already disillusioned by the slow pace of the accession process. Even if current member states agreed to open the European Union to all aspirants, tough decisions would follow. Fundamentally, an EU of thirty-five or more members would not be able to function in the same way as in the past. To be successful, another “big bang” enlargement, even if desired, would necessitate serious institutional reform and treaty change to work. If formal enlargement is not in the cards, the Union will need to be creative. Finding ways to build closer partnerships, which nonetheless fall short of full membership, with nations on the eastern and southern edges of the EU will not be an easy task. In his speech to the European Parliament on “Europe Day” (May 9), French President Macron called for Europe to “to rethink our geography and the organization of our continent,” proposing a new European Political Community that would connect forty-four countries, including existing EU members, aspiring nations in the Balkans and Eastern Europe, and Turkey and Britain (Cook 2022). Whether an arrangement where an outer circle of European states linked to the Union—but ultimately not part of it—can satisfy the hopes and desires of nations that aspire to more, is far from certain. Regardless, the EU will require new ideas about how it can support vulnerable neighbors without creating more security risks for all down the road. Once again, Europeans need to make a virtue out of necessity. Relatedly, Europe in the next decade will need to decide how to best ensure its own security. While President Biden has recommitted America to Europe’s defense, the Trump years should not be forgotten. The polarization of American politics suggests that US policy vis-à-vis Europe could radically change again. For now, a reenergized NATO stands as a bulwark against Russia, but whether Europe relies too much

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on the United States for its defense remains an open question. The conflict in Ukraine has forced a day of reconning and, in some cases, profound reversals of long-held views about military budgets. This is most visible in Germany, which has committed to spending €100 billion more on defense, a change so great that it’s been labeled as Zeitenwende, or “turning point.” Bleak recent experiences with critical dependencies on Russian energy have also led to questions about Europe’s economic vulnerability to a more globally assertive China. For the time being, opinion as to whether China is a “threat” remains divided, but a consensus is slowly growing that the EU will need to adopt a more critical approach to its biggest trading partner. Europe’s long emphasis on and hopes for Wandel durch Handel—or “change through trade”—now seems like a relic of a by-gone era. But the thorniest issues of all may concern Europe’s longer-term relations with Russia. For better or worse, history has shown that Europe’s fate is intertwined with Russia’s and that Russia can neither be forgotten nor neglected forever. Even if Russia comes out of the conflict weaker than before, it will remain a massive country with natural resources and a large nuclear arsenal that casts a long shadow over Europe’s borders. If current frictions over the Russia question are any indication, consensus on this issue will be hard to reach whenever, and however, the war in Ukraine ends. Even while fighting rages in Ukraine, some countries, such as France and Germany, have held out hope that a negotiated settlement to end the conflict might still be reached. In contrast, Poland, the Baltic states, and others seem most unlikely to accept a peace until Russia is properly punished. Such major differences in threat perceptions have long divided EU member states and will likely complicate Europe’s longer-term policy vis-à-vis its biggest and most unpredictable neighbor. Regardless of how the conflict in Ukraine ends, deep distrust of Russia in the West will linger, and it may even be impossible to normalize relations until power changes hands in Moscow. No matter how difficult it will be to find adequate solutions to all the pressing problems, Europe has no choice but to find answers, and these answers will define the next era in the continent’s history.

References Cook, Lorne. 2022. “As Europe’s Leaders Meet, Some Fear for EU Membership Hopes.” Associated Press, October 5, 2022. https://apnews​.com​/article​/russia​-ukraine​-middle​-east​ -business​-prague​-macron​-720​8390​03c9​1787​9e09​8e92​68e255185. European Commission. 2022. Standard Eurobarometer 97. Eurobarometer Surveys. https:// europa​.eu​/eurobarometer​/surveys​/detail​/2693. McMahon, Meabh. 2022. “Ukraine Is One of Us and We Want Them in EU, Ursula von der Leyen Tells Euronews.” Euronews, May 19, 2022. https://www​.euronews​.com​/2022​/02​/27​/ ukraine​-is​-one​-of​-us​-and​-we​-want​-them​-in​-eu​-ursula​-von​-der​-leyen​-tells​-euronews.

Glossary

acquis communautaire:  A French term denoting the sum total of EU treaties, regulations, and legislative acts developed since the 1950s; must be accepted by new member states as it exists at the time of accession. Barcelona Process:  The initial framework to manage bilateral and regional relations between the EU member states and fourteen partners in the greater Middle East. Its key goals are to establish an area of peace and security in the Mediterranean, to implement a free-trade agreement, and to bolster institutional contacts between the EU and Middle Eastern countries. It was negotiated in 1995, is currently known as the Euro-Mediterranean Partnership, and was relaunched as the Union for the Mediterranean in 2008. See also European Neighborhood Policy. Bretton Woods System:  The international monetary system created at the end of World War II in Bretton Woods, New Hampshire. It was designed to establish international management of the global economy and to provide for the crossconvertibility of national currencies through a fixed exchange rate with gold or with currencies backed by gold (such as the US dollar at that time). The exchange rate system was terminated in 1973, but other key foundations remained in place: the General Agreement on Tariffs and Trade, the International Monetary Fund, and the International Bank for Reconstruction and Development, which in 1956 had merged with other institutions to form the World Bank. Common Agricultural Policy (CAP):  A controversial subsidy and price-support system established under the Treaty of Rome to increase agricultural productivity and sustain farm incomes in the European (Economic) Community. It long represented more than half of the EU budget. That share has declined through successive revisions, so that in the 2021–2027 period, the CAP accounts for 31 percent of the EU budget. The main criticism is that such outlays benefit wealthy European farmers and damages developing countries’ agricultural exports. Common Assembly:  The parliamentary arm of the European Coal and Steel Community (ECSC). It was the precursor to the European Parliament and existed between 1952 and 1958. Common Foreign and Security Policy (CFSP):  From the Maastricht Treaty to the Lisbon Treaty, this is the “second pillar” of the European Union. In 1991, it 445

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replaced the European Political Cooperation. It establishes the broad foreign policy objectives of the EU and requires member states and EU institutions to cooperate in promoting these objectives. The Lisbon Treaty created a High Representative of the Union for Foreign Affairs and Security Policy as well as an EU diplomatic corps, the European External Action Service. Although the Lisbon Treaty formally abolished the pillar structure, the CFSP still exhibits strong intergovernmental features for decision making. Common Security and Defence Policy (CSDP):  Since the Lisbon Treaty, the successor of the European Security and Defence Policy (ESDP) and part of the Common Foreign and Security Policy. See also European Security and Defense Identity (ESDI). Conference on Security and Cooperation in Europe (CSCE):  A process designed to promote European cooperation on trade and human rights. Its members include the United States, Canada, Russia, the former Soviet republics, and all of Europe— adding up to fifty-six member states. It was renamed the Organization for Security and Cooperation in Europe (OSCE) in 1995. constitutional monarchy:  A monarchy in which the sovereign accepts limits on power as imposed by a constitution, often keeping mainly ceremonial roles and retaining a safety net for when national politics break down entirely. consumer price inflation:  The rate of increase of the prices for goods and services weighted according to their share in a standard consumption bundle. Copenhagen criteria:  The rules that define whether a nation is eligible to join the European Union. The criteria require a state to have the institutions to preserve democratic governance and human rights, to have a functioning market economy, and to accept the acquis communautaire (see acquis communautaire). These membership criteria were laid down at the June 1993 European Council in Copenhagen, Denmark. corporatism:  Corporatism provides for the representation of organized economic interest groups in the policymaking process. Most often, such interests include business, labor, agriculture, and the like. In practice, representation may be formal, such as in the European Economic and Social Committee and in many national commissions (health, environmental protection, etc.), but most often it is informal through lobby groups that have access to the policymaking process. Council for Mutual Economic Assistance (CMEA):  The CMEA is an economic organization established by the Soviet Union in 1949 to coordinate trade among the communist countries of Central and Eastern Europe. It was disbanded in 1991 after the breakup of the Soviet Union. Council of Europe:  Organization established in 1949 to promote European stability through democracy, human rights, and the rule of law. It currently has fortyseven members, operates the European Court of Human Rights, and is located in Strasbourg. It should not be confused with the European Council. See European Council. Council of Ministers:  The decision-making institution of the EU, comprising ministerial-level representatives from each of the member states. Its composition differs according to policy field. In cooperation with the European Parliament, the

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Council of Ministers has the power to adopt or reject EU legislation, but it remains subordinate to the European Council’s (Heads of State or Government) overall authority. Court of Justice of the European Union (CJEU):  The judicial arm of the European Union, which may decide cases brought by EU member states, institutions, companies, and, in some cases, individuals. It ensures uniform interpretation of EU law by decisions that are binding upon the member states. debt-to-GDP ratio:  The ratio of gross public debt to gross domestic product (GDP) across all levels of government. The EU threshold for sustainability is formally put at 60 percent and as such is incorporated in the Stability and Growth Pact. euro:  The single European currency that was introduced in financial market accounting in 1999. Coins and banknotes replaced national currencies in circulation on January 1, 2002. EUROCORPS:  A multinational military corps composed of troops from Belgium, France, Germany, Italy, and Spain. It operated within the framework of the Western European Union (see Western European Union) and now serves both the EU and NATO. Eurogroup:  The ministers of finance of those EU member states that have adopted the euro as a common currency. European Atomic Energy Agency (Euratom):  One of the three European communities set up in the 1950s, established simultaneously with the European Economic Community (EEC) in 1958 to promote the peaceful use of atomic energy. After 1967, Euratom shared common institutions with the EEC and the European Coal and Steel Community. European Bank for Reconstruction and Development (EBRD):  A London-based international development bank established in 1991 to promote economic development and political reform in Central and Eastern Europe. Its main shareholders are the EU member states and the EU institutions, along with the United States and Japan. European Central Bank (ECB):  The ECB is located in Frankfurt, Germany, and is responsible for control over—and the stability of—the euro. It sets the interstate monetary policy for the whole of Europe’s Economic and Monetary Union, though it has, different from the US Federal Reserve, no outspoken mandate for economic targets other than currency stability. European Coal and Steel Community (ECSC):  The first institution created as part of the European integration process. It was established under the 1951 Treaty of Paris and entered into effect the year after. The ECSC existed as a common pool for coal and steel products and strong institutions to regulate the coal and steel industries on a supranational basis, especially to make Germany’s and France’s economies more interdependent. It expired, as had been scheduled, in 2002. European Commission:  The executive body of the European Union. It initiates legislation, executes EU policies, negotiates on behalf of the EU in international trade forums, and monitors compliance with EU law and treaties by member states. European Community (EC):  Term used informally before 1993 for what the Maastricht Treaty named the European Union (EU). Formally, before Maastricht,

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three European communities existed, namely the ECSC, the EEC, and Euratom. The term “European Community” primarily applied to the EEC. European Constitution:  Also known as the Treaty Establishing a Constitution for Europe; was agreed by the European Council in October 2004. It was designed to provide a constitution for the EU that would allow the organization to function effectively with twenty-seven members following the enlargement that included Central and Eastern European countries. The treaty was rejected by the French and Dutch electorates in national referenda held in 2005. In 2007, negotiations were relaunched and resulted in the adoption of the Lisbon Treaty, the text of which was only slightly different from the planned constitution. European Convention:  Also known as the Convention on the Future of Europe. The body was established by the European Council in December 2001 following the Laeken Declaration. Headed by Valéry Giscard d’Estaing, it produced a draft EU constitution. The Convention finished its work in July 2003. The draft treaty, establishing a constitution for Europe, later failed ratification. European Council:  The EU institution comprising the heads of state or governments of the member states, the (permanent) president of the European Council, the president of the European Commission, and the high representative of the Union for Foreign Affairs and Security Policy. It meets at least four times each year and sets broad guidelines and directions for the development of the EU, which are then implemented by the Council of Ministers. The Lisbon Treaty provided the European Council with a permanent presidency (a 2.5-year mandate, renewable once). This position exists next to the rotating EU Council presidency. European Currency Unit (ECU):  Artificial unit of account established to operate the exchange rate mechanism of the European Monetary System; consisted of a basket of member states’ currencies. The ECU was replaced by the euro on January 1, 1999. European Economic Area (EEA):  Members of the EEA have full access to the European Union’s single market in most areas of trade (agriculture and fisheries are exceptions) but do not have influence on the policy decisions of the European Union. The EEA comprises the EU countries and Iceland, Norway, and Liechtenstein. European Economic Community (EEC):  The most important of the original European communities, set up under the 1957 Treaty of Rome to promote an “ever closer union” among the peoples of Europe through the development of a common market, a common external tariff, and common policies in agriculture, transport, and other fields. It was renamed the European Community (EC) in the Maastricht Treaty and embedded into the EU as its first “pillar.” European External Action Service (EEAS): The corps diplomatique of the European Union. It was created by the Lisbon Treaty and reports to the high representative of the Union for Foreign Affairs and Security Policy. Its staff comes from the European Commission, the Council of the EU (formerly Council of Ministers), and the national diplomatic corps. European Free Trade Association (EFTA):  Organization formed in 1960 under British leadership to promote economic cooperation among European states not wishing to become members of the EC. Unlike the EC, it did not have strong su-

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pranational institutions or a mandate to promote political union. It lost importance as most of its members decided to join the EC. European Monetary System (EMS):  Exchange rate regime, established in 1979, to limit currency fluctuations within the EC. Operated an exchange rate mechanism (ERM) under which member states were required to maintain the value of their currencies relative to those of other member states. It laid the groundwork for monetary union and the single currency (euro), established in January 1999. European Neighborhood Policy (ENP):  Policy aimed at providing Europe with stable and peaceful borders and neighbors. The vision is that of a ring of countries drawn into further integration but without necessarily becoming full members of the European Union. The policy was first outlined by the European Commission in March 2003 and adopted in 2004. The countries covered include the Mediterranean coastal states of Africa and Asia as well as the European members of the Commonwealth of Independent States (with the exception of Russia and Kazakhstan) in the Caucasus and Eastern Europe. European Political Cooperation (EPC):  Foreign policy cooperation among the member states of the European Economic Community, established in 1970 and conducted on an intergovernmental basis by foreign ministries. It was officially included in the Single European Act (1986) and replaced by the Common Foreign and Security Policy in the Maastricht Treaty. European Rapid Reaction Force (ERRF):  A transnational military force of sixty thousand soldiers available to EU missions. Formal agreement to establish the ERRF was reached in November 2004. European Security and Defense Identity (ESDI):  The ESDI was first established by the Western European Union as a means of creating a European pillar within NATO that could fulfill the “Petersberg tasks”: rescue and relief, peacekeeping, and peacemaking. Following the Anglo-French meeting at St. Malo in December 1998, responsibility for ESDI was transferred to the EU, and it was renamed the ESDP. With the Lisbon Treaty, it was renamed once again to Common Security and Defence Policy (CSDP). It is supported by a number of institutional bodies, including the Political and Security Committee (PSC) of the Council, an EU Military Committee (EUMC), an EU Military Staff (EUMS), and a European Defence Agency (EDA). European Security Strategy (ESS):  Titled “A Secure Europe in a Better World,” the ESS was drafted by Javier Solana in response to the controversial 2002 National Security Strategy of the United States. Approved by the European Council in December 2003, the ESS identifies a string of key threats that Europe needs to deal with: terrorism, the proliferation of weapons of mass destruction, regional conflict, failed states, and organized crime. The 2008 report “Providing Security in a Changing World” reinforces the ESS. European Stability Mechanism (ESM):  Created in 2012, the ESM is an organization comprising all states that use the euro to provide conditional loan assistance to financially distressed countries and banks in the euro zone. Direct proportional contributions from the member states provide the collateral for the ESM to borrow money from financial markets.

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euro zone:  The group of countries having adopted the euro; also known as the “euro area.” exchange rate mechanism (ERM):  A multilateral framework for the joint management of exchange rate movements between participating countries within set tolerance margins. federalism:  a political system in which the power to govern is shared between national and subnational governments. In the European/EU context, it means an ideology that describes and promotes the uniting of states within an overarching European political system. General Agreement on Tariffs and Trade (GATT):  Multilateral trade treaty signed in 1947 and establishing rules for international trade. It was a forum for eight rounds of tariff reductions, culminating in the 1994 Uruguay Round agreements and the establishment of the World Trade Organization (WTO) as successor to the GATT. High Authority:  The executive body of the European Coal and Steel Community (ECSC). It ceased to exist in July 1967, when the merger treaty establishing a single commission for the ECSC, Euratom, and the European Economic Community went into effect. Lisbon strategy:  Also known as the Lisbon agenda, this is an EU action and development plan adopted for a ten-year period in 2000 in Lisbon, Portugal, by the European Council. The Lisbon strategy intended to deal with the low productivity and stagnation of economic growth in the EU through the formulation of various policy initiatives to be taken by all EU member states. The long-term goal was to make the EU “the world’s most dynamic and competitive knowledge-based economy” by 2010. In June 2010, the strategy was replaced by the Europe 2020 strategy. Lisbon Treaty:  Treaty signed in December 2007 but, due to a difficult ratification process, entered into force only in December 2009. Lisbon became the “Plan B” after the Constitutional Treaty had failed ratification in 2005. Lisbon provides, among other things, for a permanent European Council president, a diplomatic corps, and a “High Representative of the Union for Foreign Affairs and Security Policy.” It also boosted the European Parliament with more powers and emphasized the practice of subsidiarity. Maastricht Treaty:  The Treaty on European Union (TEU), known as the Maastricht Treaty, was signed at Maastricht, the Netherlands, in February 1992. It constituted by far the most sweeping revision of European Community treaties ever attempted. The TEU created the entity called the European Union (EU), a structure of three pillars profoundly redefining European economic and political governance and the start of a more organized, common foreign policy as well as cooperation in justice and home affairs. Marshall Plan:  Officially known as the European Recovery Program, this plan was proposed in 1947 by US Secretary of State George C. Marshall to foster postwar European economic revival through extensive US aid. It is seen as the economic arm of the Truman doctrine, which pledged US support for (European) democracies against authoritarian threats.

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NextGenerationEU (NGEU):  A temporary, €800 billion European recovery instrument to help member states repair the economic and social damage brought about by the coronavirus pandemic. Agreed upon in July 2020, it is to expire in 2026. The common debt, however, will not have to be paid back until 2058. North Atlantic Cooperation Council (NACC):  Created by NATO at the Rome summit in November 1991. A US initiative, the NACC was a new institutional relationship of consultation and cooperation on political and security issues open to all of the former, newly independent members of the Warsaw Pact. In July 1997, it was replaced by the Euro-Atlantic Partnership Council (EAPC). North Atlantic Council:  NATO’s decision-making body. North Atlantic Treaty Organization (NATO):  A political-military institution founded in 1949 for the collective defense of its member states, which included the United States, Canada, and fourteen European countries. Initially designed against the Soviet threat, the end of the Cold War made NATO enlarge to include Central and Eastern European countries and to redefine its mission. Today (2022), NATO has thirty members. Organization for Economic Cooperation and Development (OECD):  An international organization established in 1961 and comprising mainly the industrialized market economy countries of North America, Western Europe, Japan, Australia, and New Zealand. It is the successor to the OEEC and is based in Paris. Organization for European Economic Cooperation (OEEC):  Organization of European Marshall Plan aid recipients, created at the behest of the United States to administer the aid and serve as a forum to negotiate reductions in intra-European barriers to trade. Organization for Security and Cooperation in Europe (OSCE):  See Conference on Security and Cooperation in Europe. parliamentary democracy:  The form of democracy in which the composition of the executive branch is determined by the legislative majority, which may also dismiss the executive. The legislative branch of government is elected by the people. Partnership for Peace (PFP):  Framework agreements for non-NATO states to have a military relationship with the alliance. Schengen Agreement:  The 1985 Schengen Agreement is an agreement among (initially five Western) European states for the purpose of removing internal border controls. It further harmonizes visa requirements and external border controls. Originally an intergovernmental treaty, the Schengen Agreement was incorporated into the 1997 Amsterdam Treaty. It includes twenty-four EU member states and the non-EU members Iceland, Norway, Switzerland, and Liechtenstein. Single European Act (SEA):  First major revision of the founding (Rome) treaties of the European Communities; went into effect in 1987. The SEA increased the powers of the European Parliament, broadened the policy responsibilities of the European Community, and, above all, scheduled the completion of a single economic market by December 31, 1992, as a member state treaty commitment. Stability and Growth Pact (SGP):  Adopted in 1997; with this pact, member states promised to maintain certain fiscal statistics so as to support the stability of the

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euro zone. These include limits to inflation differentials, budget deficits, and debtto-GDP ratios. Stability Pact for South-Eastern Europe:  The Stability Pact was created by the EU in June 1999 to provide a comprehensive, long-term conflict prevention and peacebuilding strategy for the Balkans. The Stability Pact is not an organization itself; rather, it offers a political commitment and a framework agreement to develop a shared international approach to enhance stability and growth in the region. subsidiarity:  The practice of handling and deciding issues at the lowest administrative/political level possible. Through applying subsidiarity, a clearer division of labor between the European and the national levels is envisioned. Treaty on European Union (TEU):  See Maastricht Treaty. Treaty on Stability, Coordination, and Governance (TSCG):  Adopted in 2012 by twenty-five of the twenty-seven member states at the time, the TSCG reduced the level of acceptable structural deficits, required the adoption of a fiscal “golden rule” in national law, and strengthened the oversight of national budgets by the European Commission and independent national bodies. unicameral parliament:  A legislative body consisting of a single house. unitary government:  The form of government in which the national government is the only repository of sovereign power and in which the powers of subordinate levels of government are determined by the national government. Warsaw Pact:  A military alliance founded by the Soviet Union in 1955 in response to West Germany’s entry into NATO. Its membership included the USSR and the countries of Central and Eastern Europe. Western European Union (WEU):  An exclusively Western European mutual defense organization established in 1954. It was moribund through much of the Cold War, was revived in 1984 as a vehicle to develop European defense cooperation, and was designated the defense arm of the EU in the Maastricht Treaty. In 2011, the WEU was officially declared defunct.

Index

AA (Association Agreements), 283, 384, 386, 388, 391, 395, 402, 403n1 Abkhazia, 397, 404n7 Abolish the Welsh Assembly, 26 abortion, 8, 13, 102, 213 Acerbo law (1923), Italy, 120n3 Achille Lauro (cruise ship), 107 ADMRs (aggregate demand management regimes), 338 AfD (Alternative für Deutschland), Germany, 28, 66, 68–69, 71, 74, 77 Afghanistan, 152, 156, 371, 411–12, 418, 427 Africa, 260, 280, 295, 440 AFSJ (Area of Freedom, Security and Justice), EU, 288, 290, 359 After Europe (Krastev), 293 aggregate demand management regimes (ADMRs), 338 agrarian movement, Scandinavia, 131–33, 144, 156 Agrarian Party (Scandinavia), 126–27, 132– 33, 138–39 AKP (Justice and Development Party), Turkey, 257–67 Åland Islands, 136 Albania, 443 Albertine Statute (1848), 95 Algeria, xx–xxi, 7, 356, 357, 361, 392, 393 Alianza Popular (AP, Popular Alliance), Spain, 165, 166 Alliance 90/The Greens, Germany. See Green Party

“Alliance for Multilateralism,” 81 All Russian (Rodina), 243 Alternative für Deutschland (AfD), Germany, 28, 66, 68–69, 71, 74, 77 Amato, Giuliano, 113 “America First” policy, 81, 427 American Council on Germany (2022), 65 Amsterdam Treaty (1997), 287, 288, 403n4 Anatolian tigers (Turkey), 257, 260 Angola, 52 antidiscrimination laws, 364 antiestablishment populism, Italy, 112–18 antiglobalization movement, 42, 440 AP (Alianza Popular, Popular Alliance), Spain, 165, 166 apprenticeships, 77, 78 Arab Spring (2011), 262, 290, 358, 387, 392, 399, 418, 420 Area of Freedom, Security and Justice (AFSJ), EU, 288, 290, 359 Armenia, 385, 398, 410 al-Assad, Bashar, 241, 418–19, 420 Asset Purchase Program, 310, 311 Association Agreements (AA), 283, 384, 386, 388, 391, 395, 402, 403n1 asylum seekers, 49, 57, 213, 358, 371, 373, 395 asymmetric shock, economy and, 332–35, 345, 348nn5–7 Atatürk, Mustafa Kemal, 252, 254, 258, 261 Atlantic alliance (1949), 151, 277

4 5 4    Index Atlantic Community (EU, NATO, US): burden-sharing dispute, 414–16; crisis management difficulties, 418–19; economic relations, 422–26; with EU security autonomy, 416–18; political and social rifts, 426–29; repairing relations, 429–32; with Russian threat, 412–14, 414; tensions within, 408–22; Turkey and, 420–22 ATTAC, 42 Attlee, Clement, 14 Aubry Law (France), 36 austerity, 12–13, 33, 35, 319–20, 442; economic governance and, 305, 308; with GFC, 5, 11, 119, 305, 440 Australia, 338, 354, 416 Austria, xxi, 14, 242, 251, 338–39, 347, 368; citizenship in, 363; with EU, 287, 373; with migration and Islam, 361, 362, 376; Syria and, 419 Austro-Hungarian Empire, xix automobile industry, 79, 424, 426 Ayrault, Jean-Marc, 47 Azerbaijan, 354, 385, 386, 398, 399 Baccaro, Lucio, 341, 342, 348n3 Baerbock, Annalena, 65, 66, 72 Bahceli, Devlet, 265 Balcerowicz, Leszek, 196 Balcerowicz Plan (Poland), 196, 197 Balkans, 252, 356, 402, 422, 432, 443; NATO and, 152, 411, 418; western, xix, xx, xxii, 295, 384–85, 390, 394 Baltic states, 152, 296, 403n1, 412, 413, 414, 444 Bangladesh, 354, 358, 369 Bankia, 185 banking union, 303, 308–9, 314–19, 315, 348n8 Bank of England, 275, 309 Bank of Spain, 172–73, 182 Bank Resolution and Recovery Directive, 317 Banting, Keith, 366 Barcelona Process (Euro-Mediterranean Partnership, EMP), 384, 392 BASF/Wintershall (Germany), 242 Basque country, xix, xx, 165, 186 Basque Nationalist Party (Partido Nacionalista Vasco, PNV), Spain, 165, 186

Bassett, Lewis, 13 Bataclan concert hall, Paris, 48 Becker, Peter, 83 Belarus, 239, 384, 395–96 Belgium, xix, xxi, 131, 171, 277, 280, 363; ECSC and, 14, 278; with EU, 298; GFC, 304; with migration and Islam, 361, 362, 376; multiculturalism in, 366, 367, 368 Belgrade, bombing of, 240, 245n10 Belka, Marek, 205–6 Ben Ali, Zine el-Abidine, 358, 393 Benalla, Alexander, 52 Benalla Affair, France, 56–57 Benelux customs union, 277 Benn, Tony, 15 Benna, Zyed, 353 Berezovsky, Boris, 230 Berlinguer, Enrico, 106 Berlin Wall (1989), fall of, 98, 105, 284–85 Berlusconi, Silvio, 94, 103, 105–6, 109, 111–13, 118, 120n5 Bernadotte, Folke, 153 Bettencourt, Liliane, 52 Bettencourt Affair, France, 52 Beveridge, William, 6 Beveridge Report, 6 Biden, Joe, 84, 156, 409, 416, 425–26, 428, 429, 430, 443 “Big-Bang” enlargement, EU, 288, 348, 403n3, 443 Black Wednesday, UK, 9, 16–17 Blair, Tony, 5, 9, 10, 17–18, 25 Borloo, Jean-Louis, 49 Borloo Report (2018), 51 “Borodino” (Lermontov), 235 Borrell, Josep, 418 Börzel, Tanja, 390 Bosnia, xx, 353, 411 Bosnia-Herzegovina, 411, 443 Bossi, Umberto, 105 Bové, José, 42 Brandt, Willy, 81 Branting, K. Hjalmar (1860–1925), 160n3 Braun, Helge, 71 Breivik, Anders, 364 Bretton Woods System, 425, 426, 429 Brexit, xix, xxiii, 11–12, 25–26, 294; doubts with, 16–17, 440–41; getting in, 14–16; getting out, 18–21, 293

I ndex     455 Brexit Party (Reform UK), 26–27 Britain. See United Kingdom British Election Study, 27 Broadcasting Law (1992), Poland, 199 Broad Economic Policy Guidelines, 303, 304, 307 Brothers of Italy (Fratelli d’Italia, FdI), 94, 118, 180, 441 Brown, Gordon, 10, 18 Brubaker, Rogers, 368 Brussels Treaty Organization, xxii. See also Treaty of Brussels Bulgaria, 176, 287, 362, 373, 413, 414 Bundestag servers, Russian hacking of, 85 burka (burqa) ban, 46–47, 49, 362 burkini, 49 Bush, George W., 156, 260, 424, 427 Butler, R. A. (1951–1955), 6, 7 Buzek, Jerzy, 200 Bygmalion affair, France, 52 Byrne, Liam, 70 Byzantine Empire, 355–56 Cahuzac, Jerôme, 52 Calderoli law (Italy), 111 Calenda, Carlo, 118 Callaghan, James, 8, 25 Cameron, David, 10, 11–12, 18–19, 20, 24, 25, 364 Canada, 197, 277, 338, 354, 366, 367, 410, 413 CAP (Common Agricultural Policy), 42, 280 capitalism, 310, 326, 327, 348n9; with EU after COVID-19 pandemic, 345–47; EU with two opposing growth models, 340–43, 348n3; financial regimes and, 343–45, 344; US compared with EU, 325–32, 336–40, 337, 339, 343; VoC, 327–29, 331–35, 338, 341, 344 capital markets union, 316, 318 carbon taxes, 39, 44 Carens, Joseph, 373 Carlin, Wendy, 341 Catalan Democrats (Partido Democrático de Cataluña, PDC), Spain, 165 Catalonia, xix, 164, 165, 184, 186, 187–88 Catholic Church, xx, 26; Italy and, 95–96, 106, 114; Poland and, 198–99, 201, 209, 212–14

CBA (Central Anticorruption Bureau), Poland, 207 CDU (Christian Democratic Union), 64–68, 70–73, 75–76, 81, 89 CEEC (Central and Eastern Europe Countries), 211, 216, 297, 349n11, 383, 385, 403n1 censorship, media, 230, 231, 232, 234–35, 243, 245n15, 267 Central and Eastern Europe, xix, xxi–xxiii, 200, 240, 287, 362, 426–27 Central and Eastern Europe Countries (CEEC), 211, 216, 297, 349n11, 383, 385, 403n1 Central Anticorruption Bureau (CBA), Poland, 207 Central Bank of Russia, 346–47, 413 CFCM (Conseil Français du Culte Musulman, French Council of the Muslim Faith), 50 CFSP (Common Foreign and Security Policy), 156, 285–86, 287, 291, 383, 403n4 Chantiers Navals de Saint-Nazaire, 43 Charles XII (King of Sweden), 132, 143 Charlie Hebdo (magazine), 47, 352–53 Charter on the Equality of Chances, 46 Chechens, xxii, 85, 225 chemical weapons, Syria with, 418–19 children, 75, 78, 96, 148, 211, 213; citizenship and, 362–63; Muslims, 48, 353, 354 Childs, Marquis, 128 China, 65, 72, 84, 119, 382, 401, 418; COVID-19 pandemic, 275, 276, 428; EU and, 87, 295, 444; Germany and, 79, 80, 86–88, 89; rise of, 416, 421, 426, 430, 432; trade deficit, 423; Turkey and, 260, 421 Chirac, Jacques, 35, 49, 51, 52, 58n1 CHP (Republican People’s Party), Turkey, 253, 265 Christian Democratic Union (CDU), 64–68, 70–73, 75–76, 81, 89 Christian Democrats (Scandinavia), 139, 140 Christian Democrats (DC, Partito Popolare), Italy, 98–100, 103, 106, 114, 120n3 Christianity, 138–40, 197–99, 250, 252, 258, 356, 366

4 5 6    Index Christian-National Union (ZChN), Poland, 197, 201 Christian People’s Party (Denmark), 139 Christian People’s Party (Norway), 138 Christian Social Union (CSU), 66–68, 71, 73, 75, 89 Churchill, Winston, 7, 14, 17 citizenship, 284, 286, 354; dual, 48, 362–63, 366; naturalization and, 47, 361, 368, 371, 376 CiU (Convergencia i Unió, Union and Convergence), Spain, 165 Ciudadanos (Spain), 177 Civic Accord (PC), Poland, 197 civic integrationism, 355, 368, 375 Civic Platform (PO), Poland, 196, 201, 206, 208–12, 215, 216, 217n2 civil liberties, xxiv, 223, 230–32, 234–35, 262, 362 civil society, 97, 100, 129 CJEU (Court of Justice of the European Union), 295, 311, 318 Clarke, Harold D., 20–21 climate change, xxiv, 72, 77–78, 80, 84, 318 climate neutral, with Green Deal, 295 Clinton, Bill, 10, 224, 417 CME (coordinated market economy), 325, 327–29, 334, 338, 340–42, 344 coal, 8, 14, 259, 277–81, 288 cohabitation, in politics, 35, 51, 107, 208, 209 Cold War, xviii, xxi, xxii, xxiii, 7, 151; Italy and, 98–99, 105, 107, 112, 119; NATO and transformations after, 410–22; Scandinavia and, 128, 129, 135; Turkey, 250, 254–57 collective cabinet responsibility, UK with, 15, 19, 22, 24 Collomb, Gérard, 56 color revolution protests, 231, 390–91 COMECON, 383 Committee of the Regions, EU, 286 Common Agricultural Policy (CAP), 42, 280 Common Assembly, 278–79, 280 Common Foreign and Security Policy (CFSP), 156, 285–86, 287, 291, 383, 403n4 “Common Man” (Uomo Qualunque) movement, Italy, 114

common market: ECSC, 278, 279, 288; EEC, 14–17, 19, 106–7, 151, 154–55, 279–81 Common Security and Defence Policy (CSDP), 414, 417 Commonwealth of Nations, 7 communautarisme (communitarianism), 50, 362 Communist Party (Russia), 227, 229, 243 Communist Party (PCF), France, 41, 51, 58 Communists/Socialist People’s Party (Scandinavia), 139 communitarianism (communautarisme), 50, 362 competition policy, economic governance, 316–18, 320 Conference on Security and Cooperation in Europe (CSCE), 426 Conseil Français du Culte Musulman (CFCM, French Council of the Muslim Faith), 50 Conservative and Unionist Party (UK), xx, 5–7, 9–13, 15–19, 23, 25, 27 Conservatives (Scandinavia), 138, 139 Constitutional Court (Germany), 310–12 constitutional monarchy, 136 Constitutional Tribunal (Poland), 198, 207, 212–13, 217n1 Conte, Giuseppe, 94, 115, 116, 117–19 Convention on the Future of Europe, 289–90 Convergencia i Unió (CiU, Union and Convergence), Spain, 165 coordinated market economy (CME), 325, 327–29, 334, 338, 340–42, 344 Corbyn, Jeremy, 5, 13, 19, 20 “corporate raiding” (reyderstvo), 236 corporatism, 38, 142–44 corruption, political: France, 52, 54, 56–57, 58n3, 120n4; Italy, 103, 106, 120n4; Poland, 205, 206, 207, 208; Russia, 226–27, 230, 233, 236; Spain, 177, 180, 184–85, 189n6; Turkey, 262, 263 Council of Europe (1949), 277, 281, 372 Council of Ministers, 151, 278, 280, 283, 285–86, 288, 397 coup d’états, 164, 255, 257, 262, 263, 264, 372, 391, 420 Court of Justice of the European Union (CJEU), 295, 311, 318

I ndex     457 COVID-19 pandemic, 62, 149, 157, 215, 312, 428; crime with, 184; death rates, 181; ECB and, 275–76, 311, 345–46; EU, 64, 181–82, 214, 275–76, 295–99, 345–47, 441, 442–43; European Commission and, 276, 317–18, 441; fiscal response to, 339; France, 39, 40, 41, 45, 57–58, 183, 275; Germany, 64–65, 77, 83, 183, 275, 339, 441; Great Lockdown, 325–26, 338, 345; Italy, 117, 119, 181, 183, 275, 297, 320, 339, 345; NGEU, 83, 119, 276–77, 295– 99, 301, 318–20, 346; RRF, 182, 318–20, 346–47; Russia, 238–39, 275, 276; Spain, 164, 165, 170, 181–83, 185–88, 297, 320 Craxi, Bettino, 107 Crimea, Russian annexation of, 62, 85, 235– 36, 241–42, 276, 292–93, 391, 397–98, 412, 442 Crowther Commission, 25 CSCE (Conference on Security and Cooperation in Europe), 426 CSDP (Common Security and Defence Policy), 414, 417 CSU (Christian Social Union), 66–68, 71, 73, 75, 89 Cyprus, xix, 259, 268, 287, 304, 421 Czech Republic, 240, 287 Daisy (La Margherita), Italy, 112 D’Alema, Massimo, 109 Dalyell, Tam, 27 Dandashly, Assem, 399–400 Danish Education Act (1814), 159n2 Danish Employers Federation, 126 Danish People’s Party (DPP), Denmark, 364 Darfur refugee camps, 188 Davis, David, 11 Dayton Peace Accords (1995), 411 D’Azeglio, Massimo, 96 DC (Christian Democrats, Partito Popolare), Italy, 98–100, 103, 106, 114, 120n3 DCFTAs (deep and comprehensive freetrade agreements), 293–94, 386, 387–88, 393 debt crisis, European (2010–2012), 32, 37, 62, 171–72, 305 deep and comprehensive free-trade agreements (DCFTAs), 293–94, 386, 387–88, 393

De Gasperi, Alcide, 98, 107 de Gaulle, Charles, 15, 55, 266–68, 280–81, 288, 429 Delors, Jacques, 16, 282–83, 284 Delors Committee, 284, 286 Demirtas, Selahattin, 265, 266 “democracy/stability dilemma,” 390, 392, 399 Democratic Center Union (Unión de Centro Democrático, UCD), Spain, 165–66 Democratic Left Alliance (Social Democratic Left, SLD), Poland, 195, 197, 200–201, 205–6, 209, 211 Democratic Movement (MoDem) party, France, 56 Democratic Party (PD), Italy, 94, 112–13, 115–18 Democratic Party of the Left (PDS, Partito democratico di sinistra), Italy, 109, 112 Democratic Union (UD), Poland, 196, 197 Democratic Unionist Party (DUP), UK, 19 democratization process, 96, 99, 119nn1–2, 165 Denmark, xxi, 14, 154, 159n2, 160n4, 284–85, 425; COVID-19 pandemic, 157; cultural, linguistic and racial roots of, 130; with EC, 129, 141, 281; with EU, 134, 155, 156, 290, 293, 373, 417; Germany and, 131, 159n1; governance, 143; immigration, 133, 147, 148; Kalmar Union and, 150, 160n7; Maastricht Treaty and, 137, 289; multiculturalism in, 366, 368; with NATO, 129, 151, 152, 153, 411, 414; political democracy, 131, 134, 135, 136, 137; political parties, 126, 127, 131, 132, 138–40, 364; welfare state, 145, 146 déplanification (de-planning) campaign, France, 35, 36 Deutsche Volksunion, Germany, 68 “Deutschland AG,” modernization of, 76–79 De Villepin, Dominique, 36 Di Maio, Luigi, 116 dirigisme (state-directed economic management), France, 33, 36 Douglas-Home, Alec, 7 DPP (Danish People’s Party), Denmark, 364 Draghi, Mario, 83, 94, 108, 117, 119, 310 Dublin II Regulation, 359

4 5 8    Index Duda, Andrzej, 196, 210, 214, 215 Duncan-Smith, Iain, 11 DUP (Democratic Unionist Party), UK, 19 EAEU (Eurasian Economic Union), 134, 387, 388 EaP (Eastern Partnership), 386–88, 390, 394–95, 397, 401 earthquake of 1999 (Turkey), 258 Eastern Partnership (EaP), 386–88, 390, 394–95, 397, 401 East Germany (GDR), 67, 69, 73, 74, 78, 88, 285 EBRD (European Bank for Reconstruction and Development), 393 EC. See European Community ECB. See European Central Bank ECFR (European Council on Foreign Relations), 183 ECHR (European Court of Human Rights), 23, 361, 362 ECJ (European Court of Justice), 214, 278– 79, 280, 284–85 Ecofin (Economic and Financial Affairs Council configuration), 307, 313 École Nationale d’Administration (ENA), 52 École Polytechnique, 52 Economic and Financial Affairs Council configuration (Ecofin), 307, 313 economic governance, EU: austerity and, 305, 308; banking union and, 303, 308–9, 314–19, 315, 348n8; competition policy, 316–18, 320; ECB and, 308–11; EMU and, 301, 302, 304; ESM, 306–8, 310–16, 319–20; euro and, 301–3; euro area membership expansion, 302; Eurogroup and, 308, 312, 313, 319; European Semester, 307–8; fiscal compact and two-pack, 306–7; from GFC to euro crisis, 304–5, 310, 311; new crisis and solutions, 318–19; reforms, 305–8; Six-Pack, 305–6, 307, 310, 337; timeline for macroeconomic reform, 302 Economic Surveys (OECD), 160n5 The Economist (newspaper), 7, 160n5 economy: asymmetric shock and, 332–35, 345, 348nn5–7; Atlantic Community, 422–26; Belgium, 171; CME, 325, 327–29, 334, 338, 340–42, 344; debt

crisis, 32, 37, 62, 171–72, 305; EAEU, 387, 388; Ecofin, 307, 313; EEA, 155, 156; EFSF, 310, 311, 312; EMS, 16, 33, 282, 284, 286; euro-zone crisis, 275–276, 290, 292, 293, 297; France, 32–45, 171, 424; Germany, 63, 71, 72, 77–79, 87, 340, 344; Gini coefficient, 43, 176; Greece, 171, 292, 297, 308, 339, 341; IMF, 42, 244, 256, 258, 259, 292, 308, 311–12; INSEE, 43; Ireland, 171, 292, 328–29, 340–41; Italy, 97, 171, 339, 341; Keynesian, 5–8, 13, 36, 128, 133; LME, 173, 236, 325, 327–29, 331, 334, 338–39, 341; LTROs, 310, 348n9; with migration and Islam, 363–64; MME, 325, 327–30, 334–35, 340–44; NGEU and, 83, 119, 276–77, 295–99, 301, 318–20, 346; OECD, 152, 160n5, 170, 175, 176, 364, 372, 422, 424; OEEC, 277, 281; Poland, 199–200; Portugal, 171, 339, 341; poverty, 43, 46–47, 74, 145, 173, 176–77, 225; Russia, 223–26, 230–31, 236–37, 240–41, 244n1; Scandinavia, 126–27, 141–42, 144–49, 145, 155–56, 157, 160n5; SMEs, 33, 35, 40, 77, 182, 188, 231, 257, 260, 316, 386; Spain, 166, 168–77, 171, 181–88, 189n7, 189nn11–12, 339, 341; sudden stops, 333–34, 348n6; Thatcherism, 5, 8–12, 16, 256; TLTROs, 348n9; Turkey, 257, 258, 259, 260, 263, 267; wealth inequality, 13, 39, 43–45, 56, 88, 119n1, 133, 176; World Economic Forum, 42. See also capitalism; COVID-19 pandemic; European Monetary Union; global financial crisis; Great Recession ECSC (European Coal and Steel Community), 14, 277–81, 288 ECU (Eurasian Customs Union), 387–88 ECU (European Currency Unit), 282, 286 EDC (European Defense Community), 279, 417–18 Eden, Anthony, 7, 17 EDF (European Defense Fund), 417 EDIS (European Deposit Insurance Scheme), 315, 348n8 education: Germany, 77, 78; Islam and, 180, 252, 255–56; Italy, 96; multiculturalism in, 366, 368–69; Poland, 198–99;

I ndex     459 Scandinavia, 128, 136, 159n2; Spain, 170, 175, 185 EEA (European Economic Area), 155, 156 EEAS (European External Action Service), 402 EEC (European Economic Community, Common Market), 14–17, 19, 106–7, 151, 154–55, 279–81. See also European Community EFSF (European Financial Stability Facility), 310, 311, 312 EFTA (European Free Trade Association), 7, 14, 154 Egypt, 234, 262, 358, 392, 393 EIB (European Investment Bank), 276, 295, 393 Emelien, Ismael, 56 EMP (Euro-Mediterranean Partnership, Barcelona Process), 384, 392 EMS (European Monetary System), 16, 33, 282, 284, 286 EMU. See European Monetary Union ENA (École Nationale d’Administration), 52 energy: coal, 8, 14, 259, 277–81, 288; diplomacy, 241–42; efficiency laws, 76; ENI, 99, 107, 242; EU and dependence on, 241; North Africa and, 108; nuclear, 67, 143, 240, 241; oil, 8, 146, 156, 173, 188, 231, 241, 361, 431–32; poverty, 83; prices, 348n2. See also gas England, 20, 21, 24, 27, 28, 131. See also United Kingdom Enhanced Forward Presence, NATO, 412– 13, 414 ENI (Ente Nazionale Idrocarburi), Italy, 99, 107, 242 ENP. See European Neighborhood Policy Ente Nazionale Idrocarburi (ENI), Italy, 99, 107, 242 E.oN Ruhrgas (Germany), 242 EP. See European Parliament EPC (European Political Cooperation), 281, 283–85, 443 Equality and Human Rights Commission (UK), 13 Erbakan, Necmettin, 257, 261 Erdoğan, Recep Tayyip, 251, 257, 258–63, 267, 373, 420 Ergenekon investigations (Turkey), 262, 263

ERM (Exchange Rate Mechanism), 9, 16–17 ESDP (European Security and Defense Policy), 396, 417 Esken, Saskia, 70, 71 ESM (European Stability Mechanism), 276, 295, 306–8, 310–16, 319–20 ESRB (European Systemic Risk Board), 314 EU. See European Union EUFOR Chad/CAR operation, 417 Eurasian Customs Union (ECU), 387–88 Eurasian Economic Union (EAEU), 387, 388 Euratom (European Atomic Energy Agency), 279, 280 euro, 284, 286–88, 292, 297, 302; crisis and GFC, 304–5, 310, 311; crisis prevention, 305–8; establishing, 301–3 Euro Area Summit statement (2012), 314 Eurobarometer, 441 Eurogroup, 308, 312, 313, 319 Euromaidan protests (Ukraine), 235, 391, 401, 402 Euro-Mediterranean Partnership (EMP, Barcelona Process), 384, 392 European Atomic Energy Agency (Euratom), 279, 280 European Bank for Reconstruction and Development (EBRD), 393 European Banking Authority, 314–15 European Banking Union, 348n8 European Border and Coast Guard Agency, 294 European Central Bank (ECB), 17, 94, 112, 117, 290; capitalism and, 325, 327, 330, 336, 338, 340, 343–47, 348n9, 349n10; COVID-19 pandemic, 275–76, 311, 345–46; economic governance and, 301, 304, 307, 308–15, 319, 320; Maastricht Treaty and, 285, 286, 302, 304; monetary policy of, 173, 309–11; as SSM, 308 European Coal and Steel Community (ECSC), 14, 277–81, 288 European Commission: COVID-19 pandemic, 276, 317–18, 441; creation of, 280; Delors on, 16; ECB, IMF and, 311–12; economic governance and, 305–8, 311, 315–20; France and, 36; GEC and, 346, 347; with migration and

4 6 0    Index Islam, 359, 372; with Poland and rule of law breaches, 214–15; REACT-EU funds, 182; RRF, 182, 318–20, 346–47; on wealth inequality, 176 European Communities Act (1972), 23 European Community (EC): Common Assembly, 280; Council of Ministers, 280, 283, 285, 286, 288; EEC and, 14–17, 19, 106–7, 151, 154–55, 279–81; EU and, 166, 188n3, 279–82, 284; Maastricht Treaty and, 285; membership, 129, 136, 141, 143, 164, 166, 280, 281. See also European Union European Convention on Human Rights, 23, 134 European Council, 15, 276, 281, 293, 296, 408; economic governance and, 305–6; EMU and, 284; IGC and, 283–85, 287– 88, 290; Next Generation EU and, 295; term limits for president of, 292 European Council on Foreign Relations (ECFR), 183 European Court of Human Rights (ECHR), 23, 361, 362 European Court of Justice (ECJ), 214, 278– 79, 280, 284–85 European Currency Unit (ECU), 282, 286 European Defense Community (EDC), 279, 417–18 European Defense Fund (EDF), 417 European Deposit Insurance Scheme (EDIS), 315, 348n8 European Economic Area (EEA), 155, 156 European Economic Community (EEC, Common Market), 14–17, 19, 106–7, 151, 154–55, 279–81. See also European Community European External Action Service (EEAS), 402 European Financial Stability Facility (EFSF), 310, 311, 312 European Free Trade Association (EFTA), 7, 14, 154 European Insurance and Occupational Pensions Authority, 314 European Investment Bank (EIB), 276, 295, 393 European Monetary System (EMS), 16, 33, 282, 284, 286

European Monetary Union (EMU): capitalism and, 325–30, 338, 340, 342–45; capitalism and financial regimes under, 344; creation of, 281, 282, 284, 285; economic governance and, 301, 302, 304; EU and, 288, 290, 296, 297, 329; GFC and, 292; Great Recession and, 183; Maastricht Treaty and, 285, 286, 287; membership, 168, 169, 189n7, 325 European Neighborhood Policy (ENP), 290, 382–83, 385–88, 396; domestic factors, 400–401; external factors, 401–2; internal factors, 399–400; other global/regional actors, 402; strategy, 389. See also European Union, and neighborhood European Parliament (EP), 87, 279, 303, 306, 372; with Armenia, Georgia and Azerbaijan, 385; elections, 16, 18, 23, 103, 210, 282, 289, 293, 294; expanded powers of, 288; Lisbon Treaty and, 291; Maastricht Treaty and, 285, 286; Macron with speech to, 443; members, 156, 196, 298; with Next Generation EU, 295; SEA and, 283 European Parliament Report on China (2019), 87 European Pillar of Social Rights, 295 European Political Cooperation (EPC), 281, 283–85, 443 European Recovery Program (Marshall Plan), 151, 152, 254, 277, 372 European Reform Treaty. See Lisbon Treaty European Securities and Markets Authority, 314 European Security and Defense Policy (ESDP), 396, 417 European Security Strategy (2003), 385 European Semester, economic governance, 307–8 European Stability Mechanism (ESM), 276, 295, 306–8, 310–16, 319–20 European Supervisory Authorities, 314 European Systemic Risk Board (ESRB), 314 European System of Central Banks, 286 European System of Financial Supervision, 304 European Union (EU), 273–74; anti-, 148, 156, 275, 293; austerity and, 119, 319; with breaches of rule of law, 214, 295,

I ndex     461 306; with capitalism and opposing growth models, 340–43, 348n3; capitalism in US compared with, 325–32, 336–40, 337, 339, 343; CFSP, 156, 285–86, 287, 291, 383, 403n4; China and, 87, 295, 444; citizenship, 284, 286; constitution, 18, 289–90, 291; council, 64; COVID-19 pandemic, 64, 181–82, 214, 275–76, 295–99, 345–47, 441, 442–43; crisis decade, 292–94; disciplinary action, 214; EC and, 166, 188n3, 279–82, 284; ECSC and, 14, 277–81, 288; employment report, 176; EMU and, 288, 290, 296, 297, 329; energy dependence, 241, 442; enlargement, euro and reform, 286–88; Euromaidan protests and, 235, 391, 401, 402; evolution of, xxii–xxiii; fiscal compact, 37, 306–7; GFC and, 172, 314; Kurdish conflict and, 256; labor market, 328, 332, 334, 341, 344, 346, 349n13; membership, xxiii, 12, 17–20, 71, 80, 82–83, 88, 107–8, 129, 134–35, 140, 143, 151–52, 155–56, 166, 168, 205, 250–51, 256, 258–59, 262–63, 266, 275–76, 287–88, 290–91, 293–97, 301, 303, 306–8, 314–17, 348, 355, 372–74, 384–85, 391, 398, 402, 403n1, 403n3, 417–18, 420, 423–24, 428–29, 441, 443–44; with migration and Islam, 372–74; NATO and, 410; NGEU, 83, 119, 276–77, 295–99, 301, 318–20, 346; Nordic balance and, 154; Northern Ireland and, 19, 28; origins, 277; political parties, 274; questions, 443–44; recovery, 294–95; Russia and, 85, 240, 347, 384– 85, 387, 388; Scandinavia and, 129, 134, 135, 137, 149–57; SEA, 16, 282–84, 285; with security autonomy, 416–18; SMEs, 316; triumph, crisis and recovery, 288–92; Turkey and, 250–51, 256, 258, 262–63, 266–68, 355, 372–74, 420–21, 443; with uncertainty ahead, 440–43; US and, 294, 295, 408–9, 422–26, 423, 427–32, 443–44; welfare state and, 157. See also Atlantic Community; economic governance, EU; Maastricht Treaty European Union (EU), and neighborhood: conflict zones in, 393–98; ENP, 290, 382–83, 385–89, 396, 399–402; with

integration, 382; political instability in, 389–93; relationships today, 383–88 European Union (Withdrawal) Act (2018), 23 Europe’s Last Chance (Verhofstadt), 298 Eurostat, 175, 176 euro-zone crisis, 275–76, 290, 292, 293, 297 Exchange Rate Mechanism (ERM), 9, 16–17 “exchange” voting, 100 Fabius, Laurent, 35 “The Fabric of Islam” (Institut Montaigne), 369 Faeroe Islands, 136, 155 Fair Russia (Just Russia), 230 Farage, Nigel, 20, 21 fascism, 53, 96–100, 114, 118, 120n3, 126, 266, 409 Fatherland-All Russia, 229 FdI (Brothers of Italy, Fratelli d’Italia), 94, 118, 180, 441 FDI (foreign direct investment), 259, 348n6, 349n11, 422 FDP (Free Democratic Party), Germany, 63, 67–68, 70, 73–74, 81, 82, 89 FED (Federal Reserve), US, 275, 309, 325, 336, 348n9 Federal Security Service (Russia), 227, 230 Federal State Statistics Service (Russia), 237 Fifth Republic, France, 5, 32, 33, 34–35, 51–55, 135 Fillon, François, 37, 54, 55, 58n3 financial regimes, 343–45, 344 Financial Times (newspaper), 65, 160n5, 169 Fincantieri (Italy), 43 Finland, xxi, 128, 143, 150, 157, 160n4, 160n7, 338, 376; civil war, 1917–1918, 129, 130; EEC and, 154; with EU, 129, 135, 152, 155, 287, 373; immigration, 133, 147, 148; NATO and, 152, 156, 266, 413, 414, 431; political democracy, 134, 135, 136; political parties, 127, 129–31, 138–40, 151, 364; USSR and, 129, 136, 146, 151, 153 First Republic (1946–1992), Italy, 94, 95, 98–106, 111–12, 114 fiscal compact, EU, 37, 306–7 Fischer, Joschka, 67, 72 Fish, M. Steven, 233

4 6 2    Index Five-Star movement (M5S), Italy, 94, 113–18 Flammarion, 352 “flexicurity,” Scandinavia, 142, 147, 159 Flinders, Matthew, 113, 114 FN/National Front. See National Rally Foot, Michael, 9, 13, 17 foreign direct investment (FDI), 259, 348n6, 349n11, 422 Forza Italia (Go Italy!), 103, 108, 112, 116, 118 Fourth Republic, Poland, 206–8, 210 France, 15, 30–31, 131, 277, 280, 404n6, 419; Algeria and, xx–xxi, 7, 356; borders, xix; burqa ban in, 46–47, 49; corruption in, 52, 54, 56–57, 58n3, 120n4; COVID-19 pandemic, 39, 40, 41, 45, 57–58, 183, 275; economy, 32–45, 171, 424; ECSC and, 14, 278, 279; elections, 27–28, 53–54; with EU, 18, 250, 251, 262, 276, 288, 290, 291, 293, 294, 303, 306, 373, 417–18, 423, 428, 429, 441, 444; Fifth Republic, 5, 32, 33, 34–35, 51–55, 135; la France d’en haut versus, 42–45; French Revolution, 56, 253; Gaullist Party, 59n4; Germany and, 33, 35, 57–58, 64, 72, 81, 82, 83, 281, 285, 292–93, 298; globalization and, 33, 45–47, 51–55; identity and, 42, 45–47; with immigration, xxi, 45–51, 53, 57; Italy and, 49, 83; “Jupiterian” presidency and, 55–57; with migration and Islam, 359, 361, 362, 363, 370, 376; multiculturalism in, 365, 366, 367, 368, 369; with NATO, xxii, 267; Nazis, 128; political parties, 41, 45, 47, 49, 51, 53–56, 58, 59n4, 180, 352, 358, 441; politics and society, xx–xxi, 41–57; protests, 39, 44–45, 56, 353; RN, 45, 47, 49, 51, 53–55, 58, 180, 352, 441; senior population in, 181; Third Republic, 42, 45; Turkey and, 253, 259, 268 la France profonde, 42 France Unbowed (LFI), France, 51, 58 franc fort policy, France, 33–34 Franco, Francisco, 164, 165, 180 Fratelli d’Italia (Brothers of Italy, FdI), 94, 118, 180, 441

Free Democratic Party (FDP), Germany, 63, 67–68, 70, 73–74, 81, 82, 89 Freedom House, 180–81 Freedom Party (Netherlands), 364 Freedom Union (UW), Poland, 196, 201 Free Voters, Germany, 68 French Council of the Muslim Faith (CFCM, Conseil Français du Culte Musulman), 50 French Revolution, 56, 253 The French Suicide (Le Suicide Français) (Zemmour), 352 Frisch, Max, 358 Fukushima incident (2011), 63 Gabriel, Sigmar, 67, 70, 86 Gaddafi, Muammar, 52, 108, 234, 393, 412 Gaitskell, Hugh (1950–1951), 7, 15 Gallup poll, 428 Gamble, Andrew, 8 Garton Ash, Timothy, 62 gas: Russian, 83, 85, 183, 237, 241, 242, 296, 347, 413, 425, 431–32, 442, 444; US with LNG, 425 Gates, Robert, 415 Gaullist Party (France), 59n4 Gazeta Wyborcza (newspaper), 205 Gazprom (Russia), 85, 237, 242 GDR (East Germany), 67, 69, 73, 74, 78, 88, 285 General Escape Clause (GEC), 346, 347 Georgia, xxii, 231, 241, 385, 390–91, 396, 397, 402, 427, 443 German-American Conference of AtlantikBrücke (2022), 65 Germany, 22, 60–61, 129, 130, 252, 338, 442; Berlin Wall, 98, 105, 284–85; borders, xix, xx; China and, 79, 80, 86–88, 89; Constitutional Court, 310–12; corruption in, 120n4; COVID19 pandemic, 64–65, 77, 83, 183, 275, 339, 441; Denmark and, 131, 159n1; “Deutschland AG” and modernization, 76–79; East, 67, 69, 73, 74, 78, 88, 285; economy, 63, 71, 72, 77–79, 87, 340, 344; with EU, 71, 80, 82–83, 88, 250–51, 258, 262, 276, 287, 294, 296, 297, 303, 306, 307–8, 314, 315, 373, 417, 423, 424, 428, 444; France and,

I ndex     463 33, 35, 57–58, 64, 72, 81, 82, 83, 281, 285, 292–93, 298; GFC, 304, 305; global uncertainties and geopolitical compass, 79–88; Merkel era and domestic uncertainties, 63–79; with migrants, 75, 441; with migration and Islam, 354, 359, 361, 362, 363, 370, 376; military, 415– 16; multiculturalism in, 366, 367, 368, 369; with NATO, 71, 72, 80, 84, 86, 413, 414; with parliamentary democracy, 21; party system realignment, 65–74; political parties, 28, 63–64, 66–77, 81– 82, 89, 127, 132, 242; Russia and, 80, 83, 85–86, 89, 242; senior population in, 181; with Syrian refugees, 62, 63–64, 68, 82, 292–93, 419; transatlantic ties after Trump and Merkel, 83–84; unification, xxii, xxiii, 62; US and, 79, 83–84, 86, 88, 285, 416, 427, 428, 429; West, xxii, 14, 62, 74, 78, 88, 151, 154, 278, 280, 358 Gezi Park protests (Turkey), 262, 264 GFC. See global financial crisis Giannini, Guglielmo, 114 Giddens, Antony, 10 gilets jaunes protests (2018–2019), France, 39, 44–45, 56 Gini coefficient, 43, 176 global financial crisis (GFC), 10, 32, 37, 62; austerity with, 5, 11, 119, 305, 440; banks in, 172–73, 292, 309, 317; EMU and, 292; EU and, 172, 314; euro crisis and, 304–5, 310, 311; Great Depression, 126, 128, 133, 149, 304; Greece, 112, 304, 305, 310; influence of, 46; Italy, 94, 112, 310; Portugal, 112, 304, 310; recovery, 325, 331; Spain, 112, 164, 166, 169–77, 171, 304, 310 globalization, 129, 216; antiglobalization movement, 42, 440; France and, 33, 45– 47, 51–55; neoliberal, 41; Scandinavia, 146 Global Strategy, EU (2016), 401, 417 Go Italy! (Forza Italia), 103, 108, 112, 116, 118 Golden Dawn (Greece), 180 Goldin, Ian, 75 Good Friday Agreement (1998), xx, 26, 425 Good Party (Kemalist, iYi), Turkey, 252– 555

Goodwin, Matthew, 20–21 Gorbachev, Mikhail, 233 Gore, Al, 240 Gove, Michael, 20 governance: governors in Scandinavia, 142– 44; Italy, 94–98, 101; TSCG, 306; UK with Westminster Model, 21–24; World Bank Governance Indicators, 189n6. See also economic governance, EU; politics Gowin, Jarosław, 217n2 Grachev, Pavel, 225 Great Britain, xix, xx, xxii, 151, 153, 281. See also England; Scotland; Wales Great Depression, 126, 128, 133, 149, 304 Great Lockdown, 325–26, 338, 345 Great Recession (2008), 127, 149, 157, 290, 309, 330, 340; austerity with, 440; corruption and, 184, 185; ECB and, 336; recovery, 326, 327; Spain and, 164–81, 183–84, 186–87; subprime crisis and, 183, 184, 292, 304. See also global financial crisis Greece, 281, 359, 376, 421, 442; with drilling rights, xix; economy, 171, 292, 297, 308, 339, 341; with EU, 169, 259, 287, 301, 308, 402; GFC, 112, 304, 305, 310; political parties, 180; senior population in, 181; Turkey and, 268, 373 Green Deal, 295 Greenland, 136, 148, 153, 155, 425 Green Party (Alliance 90), Germany, 28, 63, 64, 66–68, 70–74, 82, 89 the Greens (France), 51, 58 the Greens (Italy), 105 Grillo, Beppe, 113, 114 Growth, Competitiveness and Employment Pact (Pacte de compétitivité) (2014), France, 37 The Guardian (newspaper), 62 guest workers, migrants, 75, 358, 361 Gul, Abdullah, 258, 261–62 Gülen, Fetullah, 260–62, 263–64, 266 Gulf War (1990–1991), 256 Gusinsky, Vladimir, 230, 231 Habeck, Robert, 72, 87 Haftar, Khalifa, 421 Hague, William, 11

4 6 4    Index HALDE (High Authority for the Struggle against Discrimination and for Equality), 46 Hall, Peter A., 327, 342 Hamilton, Alexander, 319 Hammarskjöld, Dag, 153 Hamon, Benoît, 54 Hanhimäki, Jussi, 84 Hanover summit (1988), 284 Hansson, Per Albin, 128, 134 Harmonized Index of Consumer Prices, 309 HDP (Peoples’ Democratic Party), Turkey, 265–66 headscarves, ban on, 46, 48, 257, 361 health care: Germany, 77; Poland, 200; Russia, 225; Scandinavia, 128, 136, 137, 145, 147; Spain, 181, 188; UK, 6; US, 144, 145; WHO, 428 Heath, Edward, 7–8, 15 High Authority, ECSC, 278, 280 High Authority for the Struggle against Discrimination and for Equality (HALDE), 46 High Representative for CFSP, 287, 291 Hillman, Jennifer, 425 Hindenburg, Paul von, 127 Hitler, Adolf, 127 Höcke, Björn, 69 Höglund, Zeth, 133 Holland, 37, 357 Hollande, François, 47, 55, 57, 292; with corruption, 52; economy and, 32, 37, 38, 40, 42 Holocaust, xx Holst, Johann Jørgen, 152 homophobia, 208 homosexuality, 8 Hong Kong, 7 Horvath, Robert, 231 Houellebecq, Michel, 352 housing: Germany, 76; Poland, 200; real estate, 38, 43, 44, 76, 169–72; Spain, 169–70; subprime crisis, 183, 184, 292, 304; tax, 39; Turkey, 260 Howard, Michael, 11 Huawei (China), 432 human rights, 428; ECHR, 23, 361, 362; Equality and Human Rights Commission, 13; European Convention

on Human Rights, 23, 134; OVD-Info, 243, 245n11 Human Rights Watch, 361 Hungary, xx, 69, 419; with EU, 214, 275, 287, 295, 297, 347, 403n1; with migration and Islam, 376; with NATO, 240, 413, 414; USSR with invasion of, 98, 106 Huntington, Samuel, 251 Hussein, Saddam, 156, 260 Iceland, 129–30, 143, 148, 150–53, 155–57, 160n7 IGC (Intergovernmental Conference), 283– 85, 287–88, 290 IMF (International Monetary Fund), 42, 244, 256, 258, 259, 292, 308, 311–12 IMI (Istituto Mobiliare Italiano), 97 immigration: anti-immigration violence, 370–71; burqa ban, 46–47, 49, 362; citizenship and, 354; EU membership and, 17–18; France and, xxi, 45–51, 53, 57; marriage, 358; Muslims, 250; riots, 45; Scandinavia, 130, 131, 133, 147, 148, 160n6; Spain, 166, 168. See also migrants income inequality, 13, 41, 43, 175–76, 239, 342, 344, 349n12 India, 7, 119, 369 Industrial Reconstruction Institute (IRI), 97 INE (National Statistics Institute), 187 Inglehart, Ronald, 21 İnönü, Ismet, 254 INSEE (National Institute of Statistics and Economic Studies), 43 Intergovernmental Conference (IGC), 283– 85, 287–88, 290 Intermediate Nuclear Force treaty, 427–28 International Covenant on Civil and Political Rights, 361 International Monetary Fund (IMF), 42, 244, 256, 258, 259, 292, 308, 311–12 Iran, 223, 233, 267, 392, 408, 419, 426, 427 Iraq, 260, 371, 412, 427, 429; ISIS, 48, 263, 265, 359, 393, 419 Ireland, 15, 281, 289, 304, 310, 311, 410; economy, 171, 292, 328–29, 340–41; with EU, 287, 290, 293, 316, 317;

I ndex     465 Northern Ireland, xix, xx, 5, 19, 20, 21, 23, 24, 26, 27, 28, 425; Republic of Ireland, xx IRI (Industrial Reconstruction Institute), 97 ISIS (Islamic State of Iraq and Syria), 48, 263, 265, 359, 393, 419, 420 Islam, xxi, 50, 57, 148, 180, 369; headscarves, 46, 48, 257, 361; terrorism and, 47–49, 250, 353, 371; Turkey and, 250–62, 267. See also migration, Islam and; Muslims Islamic State of Iraq and Syria (ISIS), 48, 263, 265, 359, 393, 419, 420 Islamization, 267, 371, 372 Islamophobia, 250, 352–53, 358, 364, 370, 375 Israel, 21, 260, 263, 392; with migration and Islam, 376; Palestine and, 13, 107, 108, 152, 384, 397 Istituto Mobiliare Italiano (IMI), 97 Italian Communist Party (PCI), 98, 99, 100, 103, 105–7, 109, 114 Italian Constitution (1948), 95 Italian Popular Party (PPI), 96 Italian Socialist Party (PSI), 98, 106, 107 Italian Social Movement (MSI), 98, 99, 106, 109, 118 Italia Viva (Italy), 116 Italy, xix, 43, 92–93, 119n1, 252, 280, 310, 363, 432; antiestablishment populism, 112–18; Catholic Church and, 95–96, 106, 114; Cold War and, 98–99, 105, 107, 112, 119; corruption in, 103, 106, 120n4; COVID-19 pandemic, 117, 119, 181, 183, 275, 297, 320, 339, 345; economy, 97, 171, 339, 341; ECSC and, 14, 278, 279; election results, 1994–2022, 104; electoral laws and party system indicators, 110; with EU, 107, 108, 169, 294, 314, 316, 402, 423, 428; fascism in, 96–100, 114, 118, 120n3; First Republic, 1946–1992, 94, 95, 98– 106, 111–12, 114; France and, 49, 83; governance, 94–98, 101; with migration and Islam, 362, 370, 371, 376; military, 415; nationalism and, xxi, xxii; with NATO, 106–7, 413; organized crime, 94, 97, 102, 119; party system change, electoral and institutional reforms, 109–

12; political parties, 94, 96, 98–100, 103, 105–9, 112–18, 120n3, 180, 242, 370, 441; Second Republic, 102–6, 114; Syria and, 419; US and, 98, 106, 107 Iversen, Torben, 342 iYi (Kemalist, Good Party), Turkey, 252–55, 260, 262–63, 265 Japan, 21, 75, 424 Jaruzelski, Wójciech, 196 Jews, xx, 253, 356, 370 JHA (Justice and Home Affairs), 285 Johnson, Boris, 5, 12, 13, 19–21, 25, 424–25 Jones, Erik, 342 Jones, Reece, 373 Jordan, 392, 393, 395 Jospin, Lionel, 36, 51 Juan Carlos I (King of Spain), 165 Juncker, Jean-Claude, 294, 307–8 Justice and Development Party (AKP), Turkey, 257–67 Justice and Home Affairs (JHA), 285 Just Russia (Fair Russia), 230 Jyllands-Poste (newspaper), 148 Kaczyński, Jarosław, 196, 206, 209, 212, 214, 217 Kaczyński, Lech, 196, 201, 206, 208, 209 Kalmar Union (1397–1523), 150, 160n7 Kanslergade Compromise (1933), Denmark, 127, 133, 135 Katyń massacre, by USSR, 208 Kaufman, Gerald, 9 Kazakhstan, protests in, 239 Kemalism, 253, 259, 262, 264–66 Kemalist (iYi, Good Party), Turkey, 252–55, 260, 262–65 Keynesian economics, 5–8, 13, 36, 128, 133 Khodorkosvky, Mikhail, 230 Khomeini (Ayatollah), 371 El-Khomri Law (Law Relative to Work, Modernization of Social Dialogue and Professional Advancement) (2016), France, 37, 38 Kinnock, Neil, 9, 17 KLD (Liberal-Democratic Congress), Poland, 196 kleptocracy, Russia as, 236

4 6 6    Index Klingbeil, Lars, 70 Kohl, Helmut, 71, 258, 285 Komorowski, Bronisław, 209, 210 Konrad Adenauer Foundation, 66 Koopmans, Ruud, 366–67 KO party (Poland), 215 Kosovo, xx, 67, 353, 411 Kouachi, Chérif, 352–53 Kouachi, Saïd, 352–53 Kramp-Karrenbauer, Annegret, 64 Krastev, Ian, 293 KRRiT (National Council of Radio and Television), Poland, 207 Kühnert, Kevin, 70, 71 Kukiz, Paweł, 210 Kurdish conflict, 250, 251, 256, 257, 263, 264 Kurdistan Workers’ Party (PKK), 255, 265 Kurds, 253–54, 256–57, 260, 264–66, 420 Kwaśniewski, Aleksander, 196 Kymlicka, Will, 366 Kyoto Protocols, 427 Kyrgyzstan, 231 labor: apprenticeships, 77, 78; income inequality, 13, 41, 43, 175–76, 239, 342, 344, 349n12; markets, 32, 36, 40, 70, 77–79, 127–28, 141, 144, 146–48, 159, 164, 170, 173, 175, 182, 185, 187–88, 326, 328, 332, 334, 341, 344–46, 349n13, 357–58, 360, 361, 363–64, 368, 369, 375; minimum wage, 32, 43, 175, 176, 187, 189n10, 212, 213; movement in Scandinavia, 126, 130, 131, 132, 133, 134, 137, 160n4; protests, 8, 39, 44–45, 56; racism and, 376; salaries, 189nn11–12; Spain, 169, 170, 175–76, 185, 189n5, 189nn11–12; unions, 8, 9, 41, 126, 128, 138, 141, 142, 160n4, 187, 332, 340. See also unemployment labor laws, France, 32, 36, 37, 38, 40 Labor Party (Scandinavia), 127, 132–33, 151, 157 Labour Party (UK), xx, 5–13, 15, 17–18, 23, 25–26 Labour Union (UP), Poland, 195, 201, 205 Lafontaine, Oskar, 73 Lagarde, Christine, 275, 276, 295, 320 laïcité (“secularness”), 45–46, 49, 50, 253, 259

Lamfalussy, Alexandre, 303 Laschet, Armin, 64, 65, 66, 71 Latvia, 152, 287 Lavrov, Sergei, 418–19 Law and Justice (PiS), Poland, 86, 196, 201, 206–17, 217n2 Law for Economic Growth, Activity and Equality of Opportunity (Macron Law) (2015), France, 37, 38 Law in Favor of Work, Employment and Purchasing Power (2007), France, 40 Law of Historical Memory (2007), Spain, 180 Law on Asylum and Immigration (2015), France, 49 Law Relative to Work, Modernization of Social Dialogue and Professional Advancement (El-Khomri Law) (2016), France, 37, 38 “lead from behind” policy, US with, 412, 427 League of Nations, 150 League of Polish Families (LPR), 196, 201, 205–8, 210 Lebanidze, Bidzina, 390 “LeDuc’s law,” 21 Left Party (France), 51 Lega (Italy), 105, 115, 116, 117, 370 Lega Autonomista Lombarda (Italy), 105 Lega Nord (Italy), 105 Lehman Brothers (US), 304 Lenta​.r​u, 234–35 Le Pen, Jean-Marie, 51, 53, 358 Le Pen, Marine, 27, 53–54, 58, 352, 441 Lepper, Andrzej, 196, 201, 208 Lermontov, Mikhail, 235 Les Républicains (LR), France, 53–54, 55, 59n4 Letta, Enrico, 115 Levada Center (Russia), 231, 239 LFI (France Unbowed), France, 51, 58 LGBTQ+, 67, 214 Liberal-Democratic Congress (KLD), Poland, 196 Liberal Democratic Party (Russia), 229, 243 Liberal Democrats (UK), 11–12, 18, 25 liberalism: after communism in Poland, 194–95; social, 5, 13, 74 liberal market economy (LME), 173, 236, 325, 327–29, 331, 334, 338–39, 341

I ndex     467 Liberal Party (UK), 9 Liberals (Scandinavia), 138, 139 Libya, 52, 234, 403n2, 419, 422; conflict in, 290, 393, 412, 420, 421, 427; migrants from, 49, 108 Lie, Trygve, 153 Liga Veneta (Italy), 105 Lijphart, Arend, 23 Lindner, Christian, 73, 82–83 Die Linke (Party of Democratic Socialism, PDS), Germany, 67, 69, 70, 72–73, 76 liquefied natural gas (LNG), 425 Lisbon Strategy (2000), 303, 304 Lisbon Treaty (2009), 18, 82, 155, 207, 291–92, 417 Lithuania, 150, 152, 287, 428 LME (liberal market economy), 173, 236, 325, 327–29, 331, 334, 338–39, 341 LNG (liquefied natural gas), 425 Local Government Act (1998), UK, 8 Long-Bailey, Rebecca, 13 long-term refinancing operations (LTROs), 310, 348n9 Louis XVI (King of France), 56 LPR (League of Polish Families), 196, 201, 205–8, 210 LR (Les Républicains), France, 53–54, 55, 59n4 LREM—Onward the Republic (La République en Marche), France, 45, 54–57 LTROs (long-term refinancing operations), 310, 348n9 Lübkemeier, Eckhard, 82 Lucke, Bernd, 68 Lukashenko, Alexander, 239 Lutheran Church, 130, 131, 140 Luxembourg, 14, 277, 278, 280, 287, 316, 376 M5S (Five-Star movement), Italy, 94, 113–18 Maastricht Treaty (Treaty on European Union, TEU) (1992), 155, 188n3, 291, 298, 345; Denmark and, 137, 289; EMU and, 285, 286, 287; euro and, 301–4; Italy and, 105, 108, 137; purpose of, 19, 284, 317, 383, 399 Machiavelli, Niccolò, 115

Macierewicz, Antoni, 197 Macmillan, Harold, 7, 15 Macroeconomic Imbalances Procedure (MIP), 306, 307, 348n4 Macron, Emmanuel, 27, 32, 83, 89, 408, 426; economy and, 37–41, 43–45; with immigration, 49–51; “Jupiterian” presidency and, 55–57; Le Pen, Marine, and, 53–54, 58, 441; Merkel and, 72, 82, 298; on migration and Islam, 374; quinquennat, 38, 39, 44, 55, 57; with speech to EP, 443; terrorism and, 362; on Ukraine, 276 Macron Law (Law for Economic Growth, Activity and Equality of Opportunity) (2015), France, 37, 38 Made in America office (US), 426 Major, John, 9, 16–17, 22, 25 Malaysia, corruption in, 120n4 Malbeek subway station, suicide bombing, 48 Malta, 287, 294 March of Millions protest (Russia), 233 Marcinkiewicz, Kazimierz, 206, 207 La Margherita (Daisy), Italy, 112 Margrethe I (Queen of Denmark, Norway, Sweden), 160n7 marriage, same-sex, 11, 13 marriage immigration, 358 Marshall Plan (European Recovery Program), 151, 152, 254, 277, 372 Martinez-Mongay, Carlos, 189n7 Mattarella, Sergio, 113, 117 Mattei, Enrico, 107 Mauroy, Pierre, 33–34 May, Theresa, 5, 12 Maza Lasierra, Luis A., 189n7 Mazowiecki, Tadeusz, 195, 196, 197 MEDA program, 384 media, 6, 17, 19, 87, 106, 113, 135; censorship, 230, 231, 232, 234–35, 243, 245n15, 267, 421; fake news, 245n15, 375 Media Most empire (Russia), 231 Mediaset, 103 Mediterranean, 107, 108, 385, 386, 421 Medvedev, Dmitry, 232–33 Mélenchon, Jean-Luc, 54, 58 Meloni, Giorgia, 94, 108, 118, 441

4 6 8    Index MENA (Middle East and North Africa) region, 294, 361, 369–70, 390, 392–93 Menderes, Adnan, 255 Merkel, Angela, 62, 80–81, 88–89, 275, 292–93, 427, 441; with China, 86–87; domestic uncertainties with era of, 63–79; Macron and, 72, 82, 298; with migration, 359; with Russia, 85; transatlantic ties after Trump and, 83–84; on US and EU, 408 Merz, Friedrich, 64, 71–72 MHP (National Movement, Nationalist Action Party), Turkey, 265–66 Middle East, 49, 148, 152, 260, 417, 421, 426, 440; Arab Spring, 262, 290, 358, 387, 392, 399, 418, 420; instability in, 80, 153, 156, 250, 251, 431 Middle East and North Africa (MENA) region, 294, 361, 369–70, 390, 392–93 middle way, Scandinavia and, 126, 127–31, 159 migrants, 108, 119, 133; asylum seekers, 49, 57, 213, 358, 371, 373, 395; crisis, 421, 440; EU and neighborhood, 394–96; integration of, 75, 359–63, 360, 374–76, 441; labor market, 357–58, 360, 361, 363–64, 368, 369, 375; with unemployment, 363, 364, 368. See also immigration; refugees migration, Islam and: economic consequences, 363–64; EU and, 372–74; history of, 355–56; integration, 359–63, 360, 374–76; Islamophobia, 352–53, 358, 364, 370, 375; multiculturalism and, 354, 364–69, 374–75; Muslims in Europe today, 356–64, 357, 360; public opinion and politics of fear, 369–72 Miliband, Ed “Red Ed,” 12–13 military, 153, 296, 416; NATO exercises, 413, 415; Scandinavia, 132, 156; Turkey, 254–57, 260–64. See also North Atlantic Treaty Organization Miller, David, 374 Miller, Leszek, 201, 205 Milosevic, Slobodan, 245n10 Milward, Alan, 277 minimum wage, 32, 43, 175, 176, 187, 189n10, 212, 213 minorities: migration, Islam and ethnic, 359–63, 360; rights, 260, 374–75;

Scandinavia and ethnic, 140; visible, 353, 359, 368, 370. See also Muslims Minsk format, 85, 398, 404n6 MIP (Macroeconomic Imbalances Procedure), 306, 307, 348n4 Mitterrand, François, 32, 33, 37, 43, 51, 285 mixed market economy (MME), 325, 327– 30, 334–35, 340–44 MoDem (Democratic Movement) party, France, 56 Modern (Nowoczesna), Poland, 211 Moldova, 384, 396, 402, 443 Monnet, Jean, 278, 288 Montenegro, 416, 443 Monthly Integration Benefit (Revenu Mensuel d’Insertion), 36 Monti, Mario, 94, 112, 113, 119 Morawiecki, Mateusz, 196 Morocco, 358, 361, 372, 392, 393, 394 mosques, 50, 180, 253, 353, 361, 368, 370 Motherland Party (Russia), 230 Motherland Party (Turkey), 256 MSI (Italian Social Movement), 98, 99, 106, 109, 118 Mubarak, Hosni, 234, 358 Multiannual Financial Framework, 182 multiculturalism, with migration and Islam, 354, 364–69, 374–75 Mundell, Robert, 332 Munich Security Conference, 81, 85, 241 murder, xx, 208, 364, 370 murder attempt, on Navalny, 85, 238, 244n7 Muslim Brotherhood, 262, 352 Muslims, 140, 253, 368, 370; CFCM, 50; children, 48, 353, 354; in Europe today, 356–64, 357, 360; Islam, xxi, 46, 48, 50, 57, 148, 180, 250–62, 267, 361, 369; population, 353–54, 356–57, 357, 367, 371; women, 46–47, 49, 252, 354, 361– 62, 364. See also migration, Islam and Mussolini, Benito, 99 Nagorno-Karabakh, 397, 404n6 Nahles, Andrea, 70 Napolitano, Giorgio, 112, 113 National Council of Radio and Television (KRRiT), Poland, 207

I ndex     469 National Endowment for Democracy (US), 234 National Front/FN. See National Rally National Health Service (UK), 6 National Institute of Freedom (Poland), 213 National Institute of Statistics and Economic Studies (INSEE), 43 National Insurance Act (1946), UK, 6 nationalism, xxi, xxii; Kurdish, 254, 256–57, 265–66; Russia, 235–36; Scandinavia, 131, 150; supranationalism, 278, 280, 298–99, 320; Turkey and, 267 Nationalist Action Party (National Movement, MHP), Turkey, 265–66 nationalization, 5–8, 10, 33, 35, 73, 230 National Movement (MHP, Nationalist Action Party), Turkey, 265–66 National Party of Scotland, 24 National Rally (FN/RN, National Front), France, 45, 47, 49, 51, 180, 352, 441; growth of, 54–55, 58; on immigration, 53; Islamophobia and, 358 National Recovery and Resilience Plan (NRRP), Spain, 182 National Security Strategy, Germany, 79 National Statistics Institute (INE), 187 NATO. See North Atlantic Treaty Organization NATO Response Force (NRF), 412 naturalization, 47, 361, 368, 371, 376 Navalny, Alexei, 85, 238, 244nn7–8 Nazis, 68–69, 86, 128, 370 neo-Nazi groups, 68–69, 370 Netherlands, xxi, 183, 277, 304, 338, 347, 402; citizenship in, 363; with EC, 280; ECSC and, 14, 278; with EU, 18, 290, 291, 293, 316; with migration and Islam, 361, 362, 370, 376; multiculturalism in, 366, 368, 369; political parties, 364 New Anticapitalist Party (France), 51 New Labour (UK). See Labour Party New Right (Scandinavia), 140 Next Generation EU (NGEU), 83, 119, 276–77, 295–99, 301, 318–20, 346 Nezalezhnosti, Maidan, 391 NGEU (Next Generation EU), 83, 119, 276–77, 295–99, 301, 318–20, 346 NGO Law (Russia), 231–32 NGOs, 231, 232, 234, 362

9/11, terrorism, 107, 156, 239, 258, 370, 371, 392, 409, 411, 431 niqabs, 46, 362 Nobel Peace Prize, xx, 156 non expedit, Catholics and, 96 non-wage labor costs (NWLCs), France, 32, 40 Nordic balance, Scandinavia, 152–54 Nordic Council, 134, 151 Nordic Council of Ministers, 151 “Nordic” model, Scandinavia, 128–30 Nord Stream 1, 83, 425 Nord Stream 2, 85, 296, 413 Normandy format, 85, 398 Norris, Pippa, 21 North Africa, 45, 108, 152, 356, 357, 358, 368, 387; MENA region, 361, 390, 392– 93; refugees from, 294, 369–70 North Atlantic Treaty Organization (NATO): anti-, 67, 72, 267; eastern flank, 414; evolution of, xxii; Germany and, 71, 72, 80, 84, 86, 413, 414; membership, xxii, 7, 27, 106–7, 129, 151–53, 156, 164, 205, 236, 240–41, 244, 254, 258, 266–67, 281, 287, 294, 372, 410–22, 427, 431; military exercises, 413, 414; operations, 108, 152, 154, 156, 240, 245n10, 411–15, 418, 420; PfP initiative, 152, 410; post-Cold War transformations, 410–22; Russia and, 85, 152, 239, 240–41, 387, 413, 443; Ukraine and, 236, 244, 413–14. See also Atlantic Community Northern Ireland, xix, xx, 5, 19–21, 23–24, 26–28, 425. See also United Kingdom North Korea, 223 North Macedonia, 411, 443 Norway, xxi, 126, 130, 132, 141, 143, 146, 156–57; education, 159n2; EFTA and, 14; immigration, 133, 147, 148; Kalmar Union and, 150, 160n7; labor unions, 160n4; multiculturalism in, 366; with NATO, 129, 151, 152, 153, 413; “Nordic” model and, 128; political democracy, 131, 134, 135, 136, 137; political parties, 127, 131, 133, 138–40, 151, 364 Noutcheva, Gergana, 399–400 Nowoczesna (Modern), Poland, 211

4 7 0    Index NPD (Germany), 68 NRF (NATO Response Force), 412 NRRP (National Recovery and Resilience Plan), Spain, 182 nuclear deal, Iran, 408, 427 nuclear energy, 67, 143, 240, 241 NWLCs (non-wage labor costs), France, 32, 40 Obama, Barack, 84, 156, 260, 413, 416, 418–19, 424, 425, 427 Ocalan, Abdullah, 258, 260 OCAs (Optimum Currency Areas), 331–35 OECD. See Organization for Economic Cooperation and Development OEEC (Organization for European Economic Cooperation), 277, 281 oil: crisis, 8, 146; Norway and, 146, 156; prices, 173, 231, 361; Russian, 241, 431–32; Ukraine and, 188 oligarchs, Russian, 226, 228, 230, 231, 236, 243, 414 Olive Tree coalition, Italy, 109 Olson, Mancur, 185 Olszewski, Jan, 196, 197, 201 ombudsman, Scandinavia, 142–43 OMT (Outright Monetary Transactions), 310 Open Skies treaty (1992), 428 Optimum Currency Areas (OCAs), 331–35 Orange Revolution (Ukraine), 390, 391 Orbán, Viktor, 69, 275 Organization for Economic Cooperation and Development (OECD), 152, 160n5, 170, 175, 176, 364, 422; membership, 372; taxation, 424 Organization for European Economic Cooperation (OEEC), 277, 281 Organization for Security and Cooperation in Europe (OSCE), xxiii, 224, 397, 398, 430 organized crime, Italy, 94, 97, 102, 119 OSCE (Organization for Security and Cooperation in Europe), xxiii, 224, 397, 398, 430 Oslo Accords, Israeli-Palestinian, 152, 384 Ottoman Empire, 251–54, 355–56 Outright Monetary Transactions (OMT), 310

OVD-Info, 243, 245n11 Özal, Turgut, 256–57 Pacte de compétitivité (Growth, Competitiveness and Employment Pact) (2014), France, 37 Pacte de responsabilité (Responsibility and Solidarity Pact) (2014), France, 37, 38 Pakistan, 7, 369, 412 Palestine, 13, 107, 108, 152, 384, 397 Palikot, Janusz, 209 Palikot Movement (RP), Poland, 209, 210 Pandemic Crisis Support, ESM, 312 Pandemic Emergency Purchase Program (PEPP), 311, 345–46 “parastatal parties” (Russia), 230 Paris Climate Accords (2017), 427 Parliament Acts (1911, 1949), UK, 22 Partido Comunista Español (PCE, Spanish Communist Party), Spain, 165, 185 Partido Democrático de Cataluña (PDC, Catalan Democrats), Spain, 165 Partido Nacionalista Vasco (PNV, Basque Nationalist Party), Spain, 165, 186 Partido Socialista Obrero Español (PSOE, Spanish Socialist Party), Spain, 164, 165–66, 177, 180 Partito democratico di sinistra (PDS, Democratic Party of the Left), Italy, 109, 112 Partito Popolare (DC, Christian Democrats), Italy, 98–100, 103, 106, 114, 120n3 Partnership and Cooperation Agreements (PCAs), 383 “Partnership for Democracy and Shared Prosperity” (EU), 387 “Partnership for Peace” (PfP) initiative, 152, 410 Party of Democratic Socialism (PDS, Die Linke), Germany, 67, 69, 70, 72–73, 76 Party of Wales (Plaid Cymru), UK, 24–25, 26 party systems, political: Germany and realignment of, 65–74; Italy with changes in, 109–12, 110; Scandinavia, 138–41; Spain, 165. See also specific parties Pasqua, Charles, 52 Patten, Chris, 384 “Pax Transatlantica,” 84

I ndex     471 PC (Civic Accord), Poland, 197 PCAs (Partnership and Cooperation Agreements), 383 PCE (Partido Comunista Español, Spanish Communist Party), Spain, 165, 185 PCF (Communist Party), France, 41, 51, 58 PCI (Italian Communist Party), 98, 99, 100, 103, 105–7, 109, 114 PD (Democratic Party), Italy, 94, 112–13, 115–18 PDC (Partido Democrático de Cataluña, Catalan Democrats), Spain, 165 PDS (Democratic Party of the Left, Partito democratico di sinistra), Italy, 109, 112 PDS (Party of Democratic Socialism, Die Linke), Germany, 67, 69, 70, 72–73, 76 Pence, Mike, 420–21 pensioners. See seniors pension system, Germany, 75 PeopleMatters, 189n12 People of Freedom (Italy), 112, 118 Peoples’ Democratic Party (HDP), Turkey, 265–66 People’s Party (PP), Spain, 166, 177, 180, 185 PEPP (Pandemic Emergency Purchase Program), 311, 345–46 Permanent Structured Cooperation (PESCO), 417 Pew Research Center, 371, 428 PfP (“Partnership for Peace”) initiative, 152, 410 PiS (Law and Justice), Poland, 86, 196, 201, 206–17, 217n2 “Pivot to Asia” policy, US, 416 PKK (Kurdistan Workers’ Party), 255, 265 Plaid Cymru (Party of Wales), UK, 24–25, 26 PNV (Partido Nacionalista Vasco, Basque Nationalist Party), Spain, 165, 186 PO (Civic Platform), Poland, 196, 201, 206, 208–12, 215, 216, 217n2 Poland, xx, 150, 192–93, 386, 419, 425; Catholic Church and, 198–99, 201, 209, 212–14; Constitution, 197–99; Constitutional Tribunal, 198, 207, 212–13, 217n1; democracy and “war at the top,” 195–97; with EU, 205, 214, 287, 295, 296, 297, 384, 403n1,

417, 428, 444; Fourth Republic and populist moment, 206–8, 210; illiberal counterrevolution, 211–16; liberal interregnum, 208–11; liberalism after communism, 194–95; with NATO, 412, 413, 414; political parties, 86, 194–97, 200–217, 217n2; Smoleńsk tragedy, 196, 208–9, 212; Solidarity movement, 194– 200, 206; Third Republic, 196, 205, 207 Poland Together (Polska Razem, PR), 211, 215, 217n2 Polish People’s Party (PSL), 196, 201, 205, 208–10, 216 politics: actors, 137–38, 196; with Atlantic Community and social rifts, 426–29; cohabitation in, 35, 51, 107, 208, 209; ECB and role in, 311–12; EPC, 281, 283–85; European Political Community, 443; of fear with migration and Islam, 369–72; France with society and, xx–xxi, 41–57; Germany with global uncertainties and geopolitical compass, 79–88; identity, 13, 50, 67, 88, 250; instability in EU and neighborhood, 389–93; International Covenant on Civil and Political Rights, 361; party systems, 65–74, 109–12, 110, 138–41, 165; Poland, 196, 201–17; protests, 231, 233, 234, 235, 243, 245nn11–12, 262, 264, 290, 353, 358, 387, 390–91, 392, 399, 401, 402, 418, 420; Russia, 230–31, 239–42; Scandinavia and domestic, 131–44; Spain and consequences of Great Recession, 177–81, 184. See also corruption, political; governance; specific parties Polska Razem (PR, Poland Together), 211, 215, 217n2 Pompidou, Georges, 281 Pontusson, Jonas, 341, 342, 348n3 Popular Alliance (Alianza Popular, AP), Spain, 165, 166 Portugal, 14, 181, 183, 281, 369, 384, 442; economy, 171, 339, 341; GFC, 112, 304, 310 Powell, Enoch, 15 “power structures” (silovye struktur), Russia, 230 PP (People’s Party), Spain, 166, 177, 180, 185

4 7 2    Index PPI (Italian Popular Party), 96 PR (Poland Together, Polska Razem), 211, 215, 217n2 PR (proportional representation), 25, 96, 99, 111, 134–36, 138, 140, 229 Primakov, Yevgeny, 240 Prodi, Romano, 109, 111, 112, 386 Professional Solidarity Benefit (Revenu de Solidarité Active), 36 Progress Parties (Scandinavia), 139, 364 proportional representation (PR), 25, 96, 99, 111, 134–36, 138, 140, 229 Protestants, Catholics and, xx, 26 protests: Arab Spring, 262, 290, 358, 387, 392, 399, 418, 420; Belarus, 239; color revolutions, 231, 390–91; France, 39, 44–45, 56, 353; Kazakhstan, 239; Russia, 231, 233, 234, 235, 243, 245nn11–12, 402; Turkey, 262, 264; UK, 8; Ukraine and Euromaidan, 235, 391, 401, 402 protest voting, 115 PS (Socialist Party), France, 51, 53, 54, 55, 58, 59n4 PSI (Italian Socialist Party), 98, 106, 107 PSL (Polish People’s Party), 196, 201, 205, 208–10, 216 PSOE (Partido Socialista Obrero Español, Spanish Socialist Party), Spain, 164, 165–66, 177, 180 Public Sector Purchase Program (PSPP), 310–11 public sector strikes (2019–2020), France, 56 Puglierin, Jana, 81 Pussy Riot (band), 234 Putin, Vladimir, 63, 69, 72, 208, 241, 244n8, 245n15, 245nn11–12, 276, 413; with managed democracy, 229–30; with murder attempt of Navalny, 85, 238, 244n7; popularity, 86, 223, 227, 231, 233–34, 236, 238–39, 243–44; power, plunder and, 236–37; public sphere controlled by, 234–35; rise to power, 223, 224–33, 232, 244n4; rule as strongman, 230, 233–39; as second president, 226–28 Putnam, Robert, 97 PZPR (Poland), 196, 197 al-Qaeda, 264, 352–53

quantitative easing (QE), 309, 310, 311, 336, 345, 348n9 quinquennat, 38, 39, 40, 44, 55, 57, 58n1 racism, xxi, 13, 47, 253–54, 360, 370, 376 Radical Liberals (Scandinavia), 126, 127 Raffarin, Jean-Pierre, 36 Rajoy, Mariano, 180, 184–85 Rally for the Republic (RPR), France, 51 Ramelow, Bodo, 73 rapid deployment capability (RDC), 418 Rato, Rodrigo, 168, 185 RDC (rapid deployment capability), 418 REACT-EU funds, 182 Reagan, Ronald, 107 real estate, 38, 43, 44, 76, 169–72. See also housing Reconquete! (“Reconquest!”), France, 352 Recovery and Resilience Facility (RRF), 182, 318–20, 346–47 Red-Green alliance (Germany), 67 Reform UK (Brexit Party), 26–27 refugees: Darfur, 417; Erdoğan on, 373; labor market integration of, 364; from MENA region, 294, 369–70; Syrian, 62, 63–64, 68, 82, 251, 263, 292–93, 371, 419; Ukrainian, 78, 214, 276, 391 Renaissance! (France), 58 Renzi, Matteo, 111, 115–16, 117, 118 reparations, 86, 180 Republican People’s Party (CHP), Turkey, 253, 265 Republic of Ireland, xx Republikaner, Germany, 68 La République en Marche (LREM—Onward the Republic), France, 45, 54–57 Responsibility and Solidarity Pact (Pacte de responsabilité) (2014), France, 37, 38 “Rethinking Europe” (Höcke), 69 Revenu de Solidarité Active (Professional Solidarity Benefit), 36 Revenu Mensuel d’Insertion (Monthly Integration Benefit), 36 Revolutionary Communist League (France), 51 reyderstvo (“corporate raiding”), 236 Rhodes, R. A. W., 24 RN. See National Rally Rodina (All Russian), 243

I ndex     473 Rokkan, Stein, 119n2 Romania, xx, 287, 294, 370, 371, 373, 414 Roosevelt, Franklin D., 126 Rosato Law (2017), Italy, 115 Rosneft (Russia), 230, 237 Ross, Wilbur, 424 Röttgen, Norbert, 64, 71 RP (Palikot Movement), Poland, 209, 210 RPR (Rally for the Republic), France, 51 RRF (Recovery and Resilience Facility), 182, 318–20, 346–47 Rural Party (True Finns Party), Finland, 139, 140, 364 Rushdie, Salman, 371 Russia, xxi, 65, 79, 150, 221–22, 229, 376, 410; with civil liberties curtailed, 223, 230, 231–32, 234–35; Constitution, 228, 244n4, 244n5; corruption in, 226–27, 230, 233, 236; COVID-19 pandemic, 238–39, 275, 276; Crimea annexed by, 62, 85, 235–36, 241–42, 276, 292–93, 391, 397–98, 412, 442; economy, 223– 26, 230–31, 236–37, 240–41, 244n1; EU and, 85, 240, 347, 384–85, 387, 388; Finland and, 131, 160n7; gas, 83, 85, 183, 237, 241, 242, 296, 347, 413, 425, 431–32, 442, 444; Germany and, 80, 83, 85–86, 89, 242; media censorship in, 230, 231, 232, 234–35, 243, 245n15; nationalism and popular mobilization, 235–36; NATO and, 85, 152, 239, 240– 41, 387, 413, 443; new political class in, 230–31; oligarchs, 226, 228, 230, 231, 236, 243, 414; painful 1990s, 225–26; percentage change real GDP, 237; Poland and, 208, 209; political parties, 227–30, 233, 243; politics, 230, 239–42; protests, 231, 233, 234, 235, 243, 245nn11–12, 402; Putin and rise to power, 223, 224–33, 232, 244n4; Putin as strongman, 230, 233–39; sanctions on, 85, 223, 242, 243, 266, 276, 293, 296, 298–99, 347, 397–98, 413–14, 442; South Ossetia and, 404n7; Sweden and, 130, 132; Syria and, 418, 419, 420; as threat, 412–14, 414, 422, 427; Turkey and, 260, 267, 421; Ukraine invaded by, xix, xx, xxii, 58, 63, 69, 72, 73, 80, 81, 83, 84, 85, 86, 108, 149, 152, 156, 157, 183, 187, 188, 223,

224, 243–44, 251, 266, 275, 296, 346, 347, 382, 398, 412, 416, 418, 425, 428, 429, 431, 441–42, 444; US and, 224, 233, 234, 239–41, 243, 276, 404n6, 428. See also Soviet Union Russian-Georgian War (2008), 85 Russian Orthodox Church, 234, 235, 388 Russian Party of Life, 230 Russian Pensioners’ Party, 230 Rustow, Dankwart, 135 Rutland, Peter, 226 Rydzyk, Tadeusz, 196, 201 Rywingate scandal (Poland), 205, 206 Saakashvili, Mikheil, 390 Saalfeld, Thomas, 63 the Sahel, migrants from, 49 Salvini, Matteo, 94, 115, 116, 118, 370 same-sex marriage, 11, 13 Sánchez, Pedro, 177, 180, 275 sanctions: on Iran, 233; on Russia, 85, 223, 242, 243, 266, 276, 293, 296, 298–99, 347, 397–98, 413–14, 442 Sarkozy, Nicolas, 51, 55, 57, 362, 374, 386, 392; with burqa ban, 46; corruption by, 52; economy and, 32, 37, 42; with immigration, 47, 48, 49 Sartori, Giovanni, 98 The Satanic Verses (Rushdie), 371 Saudi Arabia, 120n4, 241, 392 Savoy monarchy, Italy and, 95 Scandinavia, 123–25, 145, 160nn5–6, 183, 402; Åland Islands, 136; domestic politics, 131–44; EU and, 129, 134, 135, 137, 149–57; Faeroe Islands, 136, 155; Greenland, 136, 148, 153, 155, 425; Iceland, 129–30, 143, 148, 150–53, 155–57, 160n7; labor market, 127–28, 141, 144, 146–48, 159; parliamentary party strength, November 2022, 158–59; political parties, 126–28, 130–34, 137– 42, 149, 151, 156–57, 160n3, 364. See also Denmark; Finland; Norway; Sweden Scandinavian Defense Union, 153 Scandinavianism, 150 Schelkle, Waltraud, 343 Scholz, Olaf, 62–63, 65–67, 70–71, 74, 319, 431; EU and, 82, 83; with foreign policy, 88–89; Russia and, 85, 86; US and, 84

4 7 4    Index Schröder, Gerhard, 67, 69–70, 77, 258 Schuman, Robert, 278, 288 Schuman Plan (1950), 151 Sciences Po, 46 Scotland, 5, 20, 21, 23, 24–26, 27, 28. See also United Kingdom Scotland Act (1978), 25 Scottish National Party (SNP), UK, xx, 15, 24–25, 26, 28 Scottish Party, 24 SDP (Social Democratic Party), UK, 9 SEA (Single European Act), 16, 282–84, 285 Second Republic, Italy, 102–6, 114 “secularness” (laïcité), 45–46, 49, 50, 253 Securities Market Program (SMP), 310 security: in Afghanistan, 156; AFSJ, 288, 290, 359; autonomy of EU, 416–18; CFSP, 156, 285–86, 287, 291, 383, 403n4; CSCE, 426; CSDP, 414, 417; ESDP, 396, 417; European Security Strategy, 385; Germany and National Security Strategy, 79; Munich Security Conference, 81, 85, 241; OSCE, xxiii, 224, 397, 398, 430; risks, 384, 443; Russia with Federal Security Service, 227, 230; UN Security Council, 27, 240, 418, 427. See also European Neighborhood Policy; North Atlantic Treaty Organization SED (Socialist Unity Party), Germany, 67 Self-Defence (SO), Poland, 196, 210 Self-Defence (SRP), Poland, 201, 205–6, 208 Seljuk Empire, 251–52 seniors (pensioners), 75, 128, 130, 136, 147, 181 Sephardic Jews, 356 Serbia, xx, 411, 443 Serraj, Faiez, 421 sexual assaults, 359 sexual revolution, 102–3 SGP (Stability and Growth Pact), 36, 303–8, 320, 346, 347 Shapiro, James, 84 Sigonella incident (1985), 107, 108 Sikorski, Radek, 80 silovye struktur (“power structures”), Russia, 230 Single European Act (SEA), 16, 282–84, 285

single European market, 16–17, 282–88, 301, 303, 316–18, 329, 431 Single Resolution Board, 315 Single Resolution Fund, ESM, 313, 315 Single Resolution Mechanism (SRM), 315, 316, 348n8 Single Supervisory Mechanism (SSM), 308, 314, 315, 316, 348n8 Six-Pack, economic governance, 305–6, 307, 310, 337 Skochilenko, Aleksandra, 245n12 SLD (Democratic Left Alliance, Social Democratic Left), Poland, 195, 197, 200–201, 205–6, 209, 211 Slovakia, xx, 287, 414 Slovenia, 287 small and medium enterprises (SMEs): EU, 316; France, 33, 35, 40; Germany, 77; Russia, 231; Spain, 182, 188; Turkey, 257, 260; UfM and, 386 Smith, John, 9, 17 Smoleńsk tragedy (Poland), 196, 208–9, 212 SMP (Securities Market Program), 310 SNCF (Société nationale des chemins de fer français), 38, 40, 58n2 SNP (Scottish National Party), UK, xx, 15, 24–25, 26, 28 SO (Self-Defence), Poland, 196, 210 Sobchak, Anatoly, 226 social democracy, Scandinavia, 132–34 Social Democratic Left (Democratic Left Alliance, SLD), Poland, 195, 197, 200– 201, 205–6, 209, 211 Social Democratic Party (Scandinavia), 126– 28, 130–34, 137–42, 149, 151, 156–57, 160n3 Social Democratic Party (SDP), UK, 9 Social Democratic Party (SPD), Germany, 63, 64, 66–77, 81, 89, 127, 132 Socialist Party (PS), France, 51, 53, 54, 55, 58, 59n4 Socialist Unity Party (SED), Germany, 67 social liberalism, 5, 13, 74 social market economy, Germany, 63, 71, 72, 77 social policy, EU and, 284 Société nationale des chemins de fer français (SNCF), 38, 40, 58n2

I ndex     475 society: with Atlantic Community and political rifts, 426–29; France with politics and, xx–xxi, 41–57 Söder, Markus, 66 Solana, Javier, 384–85 Solbes, Pedro, 168 Solidarity movement, Poland, 194–200, 206 Somalia, 412 Soskice, David, 327, 338, 342 Soumission (Submission) (Houellebecq), 352 South Africa, 7 South Korea, 43 South Ossetia, xxii, 397, 404n7 Soviet Union (USSR), xx, xxiii, 14, 97, 126, 208, 254; collapse, 105, 129, 131, 150, 154, 225, 240, 383, 403n1; Finland and, 129, 136, 146, 151, 153; Germany and, 131, 285; Hungary invaded by, 98, 106; NATO and, xxii, 154 Spaak Committee, 279 Spain, xix, 163, 172, 281, 311, 363, 369, 415, 442; boom years, 167, 168–70; civil war, 164, 180; corruption in, 177, 180, 184–85, 189n6; COVID19 pandemic, 164, 165, 170, 181–83, 185–88, 297, 320; from democratic transition to Great Recession, 1975– 2008, 165–73; economy, 166, 168–77, 171, 181–88, 189n7, 189nn11–12, 339, 341; education, 170, 175, 185; in EMU, 168, 189n7; with EU, 166, 168, 169, 314, 384; general elections, 2011–2019, 178–79; GFC, 112, 164, 166, 169–77, 171, 304, 310; Great Recession and consequences for, 173–77, 186–87; labor, 169, 170, 175–76, 185, 189n5, 189nn11–12; labor market, 164, 170, 173, 175, 182, 185, 187–88; with migration, 362, 370, 376, 394; minimum wage in, 175, 176, 187, 189n10; with NATO, 164, 413; political consequences of Great Recession, 177–81, 183–84; political parties, 164–66, 177, 180, 185, 186; tourism, 169, 182, 188; 2008 crisis and consequences, 173–77, 186–87; unemployment, 164, 170, 171, 173, 175–76, 181, 186, 188 Spanish Civil War, 180

Spanish Communist Party (Partido Comunista Español, PCE), Spain, 165, 185 Spanish Socialist Party (PSOE, Partido Socialista Obrero Español), Spain, 164, 165–66, 177, 180 SPD (Social Democratic Party), Germany, 63, 64, 66–77, 81, 89, 127, 132 Der Spiegel (magazine), 77 Spinelli, Altiero, 107 SPS (Union of Rightist Forces), Russia, 229 Sputnik V vaccine (Russia), 238 SRM (Single Resolution Mechanism), 315, 316, 348n8 SRP (Self-Defence), Poland, 201, 205–6, 208 SSM (Single Supervisory Mechanism), 308, 314, 315, 316, 348n8 Stability and Growth Pact (SGP), 36, 303–8, 320, 346, 347 Stark, Jürgen, 310 Starmer, Keir, 13 START nuclear treaty, 428 state-directed economic management (dirigisme), France, 33, 36 state planning, 10, 17, 32, 33–36 Stauning, Thorvald, 126 Steinmeier, Frank-Walter, 62, 67, 86 Stelzenmüller, Constanze, 86 stereotypes, xviii, xxiv, 74, 356 Stravidis, James, 418 Strzoda, Patrick, 56 Sturgeon, Nicola, 25 Sturzo, Don Luigi, 96 STX, 43 Submission (Soumission) (Houellebecq), 352 subprime crisis, US and, 183, 184, 292, 304 sub-Saharan Africa, 45, 292 sudden stops, economy, 333–34, 348n6 Sufi brotherhoods, 252 Le Suicide Français (The French Suicide) (Zemmour), 352 Sunak, Rishi, 12 supranationalism, 278, 280, 298–99, 320 Supreme Court, US, 134 Surkov, Vladislav, 223 Sweden, 14, 126, 130, 135–36, 145–46, 157, 160nn4–5; with EU, 129, 134, 152, 155, 156, 287, 316, 373, 384, 428;

4 7 6    Index governance, 142–43; immigration, 133, 147, 148; with migration and Islam, 370, 376; multiculturalism in, 366, 368, 369; NATO and, 152, 154, 156, 266, 413, 414, 431; with neutrality policy, 129, 149–51, 153–54; Poland and, 386; political parties, 127, 128, 131, 133–34, 138–40, 149, 160n3, 364, 441 Sweden Democrats, 139–40, 364, 441 Swedish People’s Party (Finland), 138 SWIFT network, 296, 346, 413 Switzerland, 14, 252, 361, 363, 367, 376, 410 Syria, 223, 241, 260, 262, 290; with chemical weapons, 418–19; ISIS, 48, 263, 265, 359, 393, 419, 420; refugees from, 62, 63–64, 68, 82, 251, 263, 292–93, 371, 419; Turkey and, 264, 266, 267, 294, 420 Szydło, Beata, 196, 212 TACIS (Technical Assistance to the Commonwealth of Independent States), 384 Taliban, 412 Targeted Long-Term Refinancing Operations (TLTROs), 348n9 Target II, 329 taxes, 129, 139, 143, 283; carbon, 39, 44; cuts, 12, 38, 39, 44, 116, 180, 213, 231; housing, 39; reforms, 173, 185, 188; with trade, 423, 424; value-added, 37, 185; wealth, 37, 38; welfare state and, 145, 146 Technical Assistance to the Commonwealth of Independent States (TACIS), 384 technology, 84–85, 87, 147, 295, 424 terrorism, 264, 354, 362, 375, 393, 422; ISIS and, 359, 419; Islamic, 47–49, 250, 353, 371; 9/11, 107, 156, 239, 258, 370, 371, 392, 409, 411, 431; PKK, 255, 265; al-Qaeda, 352–53 Tesla, 79 TEU. See Maastricht Treaty TGS (Turkish General Staff), 255 Thatcher, Margaret, 8–9, 15, 16–17, 25, 288–89 Thatcherism, 5, 8–12, 16, 256 “there is no alternative” (TINA), 68

Third Republic, Poland, 196, 205, 207 Third Republic (1875–1940), France, 42, 45 The Third Way (Giddens), 10 Thuringia, 64, 68, 73 TINA (“there is no alternative”), 68 TLTROs (Targeted Long-Term Refinancing Operations), 348n9 torture, 255 tourism, 77, 169, 182, 188, 317, 422 TPP (Trans-Pacific Partnership), 416 trade: DCFTAs, 293–94, 386, 387–88, 393; deficit, 33, 40, 170, 423–24; EFTA, 7, 14, 154; EU and, 444; EU and US, 423, 423–26; Great Depression and world, 149; sanctions on Russia, 242; TTIP, 424; UNCTAD, 170; unions, 7, 9, 10, 41, 79, 127, 144, 157; WTO, 42, 80, 84, 233, 318, 424, 425, 430. See also European Union Trade and Technology Council, 84 Transatlantic Trade and Investment Partnership (TTIP), 424 Trans-Pacific Partnership (TPP), 416 Transparency International, on corruption, 120n4 Traoré, Bouna, 353 trasformismo, Italy and, 95, 98, 109–10 Treaty of Brussels (1948), xxii, 151, 275, 277 Treaty of Friendship, Cooperation and Mutual Assistance (Finland and USSR), 153 Treaty of London (1949), 277 Treaty of Nice (2000), 288, 289 Treaty of Rome (1957), 14, 151, 279–81, 282, 283–84, 289, 291 “Treaty of Union,” Great Britain and (1706), xx Treaty of Warsaw (Warsaw Pact), 240, 241, 383, 410 Treaty on European Union. See Maastricht Treaty Treaty on Stability, Coordination and Governance (TSCG), 306 Treaty on the Functioning of the European Union. See Lisbon Treaty Trente Glorieuses, 32 Trichet, Jean-Claude, 311 True Finns Party (Rural Party), Finland, 139, 140, 364

I ndex     477 Trump, Donald, 80, 156, 294, 419, 426, 428–30, 440, 443; “America First” policy and, 427; Germany and transatlantic ties after Merkel and, 83–84; NATO and, 408–9, 413, 415, 416; with trade, 423–25; Xi Jinping and, 86 Truss, Liz, 12, 13 Trzaskowski, Rafał, 215 TSCG (Treaty on Stability, Coordination and Governance), 306 TTIP (Transatlantic Trade and Investment Partnership), 424 Tunisia, 358, 361, 387, 392, 393, 395, 396 Turkey, 72, 79, 248–49, 382, 392; Atlantic Community and, 420–22; China and, 260, 421; with complex past and present, 251–54; corruption in, 262, 263; deteriorating relations with, 420– 22; with drilling rights, xix; earthquake of 1999, 258; economy, 257, 258, 259, 260, 263, 267; Ergenekon investigations, 262, 263; EU and, 250–51, 256, 258, 262–63, 266–68, 355, 372–74, 420–21, 443; France and, 253, 259, 268; Gaullist, 266–68; Greece and, 268, 373; Islam and, 250–62, 267; with Kurds and Kemalism, 264–66; lost decade, 257–59, 267–68; marriage immigration and, 358; media censorship in, 267, 421; migration and, 361, 362, 376; military, 254–57, 260–64; with NATO, 254, 258, 266, 372; political parties, 252–67; protests, 262, 264; Russia and, 260, 267, 421; Syria and, 264, 266, 267, 294, 420; US and, 258, 260, 263, 264, 266, 420–21 Turkish General Staff (TGS), 255 Tusk, Donald, 196, 206, 208, 209–10, 215, 216, 408 TVA sociale, France, 37 two-pack, fiscal compact and, 306–7 Tymiński, Stan, 197 Tymoshenko, Yulia, 391 UCD (Unión de Centro Democrático, Democratic Center Union), Spain, 165–66 UD (Democratic Union), Poland, 196, 197 UDF (Union for French Democracy), 51

UfM (Union for the Mediterranean), 386– 87, 397 UK. See United Kingdom UK Independence Party, 293 UKIP (United Kingdom Independence Party), 18, 19, 20 Ukraine, 78, 214, 231, 390, 396, 401; Crimea and, 62, 85, 235–36, 241–42, 276, 292–93, 391, 397–98, 412, 442; EU and, 276, 293–94, 298–99, 384, 402, 443; NATO and, 236, 244, 413–15; oil and, 188; Russia with invasion of, xix, xx, xxii, 58, 63, 69, 72, 73, 80, 81, 83, 84, 85, 86, 108, 149, 152, 156, 157, 183, 187, 188, 223, 224, 243–44, 251, 266, 275, 296, 346, 347, 382, 398, 412, 416, 418, 425, 428, 429, 431, 441–42, 444 UL (United Left), Poland, 211 UMP (Union for a Popular Movement), France, 52, 53 UN. See United Nations UNCTAD (United Nations Conference on Trade and Development), 170 unemployment, 6, 7, 8, 77, 97, 128, 146, 157, 200, 225; COVID-19 pandemic with, 325–26; France, 32, 33, 37, 40, 42, 45, 46; migrants with, 363, 364, 368; Spain, 164, 170, 171, 173, 175–76, 181, 186, 188; Turkey, 372–73; women and, 175, 372 UNESCO (United Nations Educational, Scientific, and Cultural Organization), 428 Unidas Podemos (Spain), 177, 180, 185 Union and Convergence (Convergencia i Unió, CiU), Spain, 165 Unión de Centro Democrático (UCD, Democratic Center Union), Spain, 165–66 Union for a Popular Movement (UMP), France, 52, 53 Union for French Democracy (UDF), 51 Union for the Mediterranean (UfM), 386– 87, 397 Union of Rightist Forces (SPS), Russia, 229 United Kingdom (UK), 3–4, 120n4, 277, 285, 338, 364, 413, 417, 419, 443; with collective cabinet responsibility, 15, 19, 22, 24; England, 20, 21, 24, 27, 28,

4 7 8    Index 131; with migration and Islam, 361, 370, 376; multiculturalism in, 366, 368, 369; Northern Ireland, xix, xx, 5, 19–21, 23–24, 26–28, 425; political parties, xx, 5–13, 15–19, 23–28, 293; Scotland, 5, 20, 21, 23, 24–26, 27, 28; US and, 14, 281, 424–25; Wales, 5, 20, 21, 23, 24, 25, 26–27, 28; Westminster Model and governing Britain, 21–24. See also Brexit United Kingdom Independence Party (UKIP), 18, 19, 20 United Left (UL), Poland, 211 United Nations (UN), 129, 150, 152–53, 233, 361, 426, 428; membership, 27, 80; NATO and, 156, 411; Security Council, 27, 240, 418, 427 United Nations Conference on Trade and Development (UNCTAD), 170 United Nations Educational, Scientific, and Cultural Organization (UNESCO), 428 United Russia (UR), 228, 229, 233, 243 United States (US), xxiii, 7, 22, 87, 142, 160n4, 181, 326, 441; capitalism in EU compared with, 325–32, 336–40, 337, 339, 343; Constitution, 289, 298; EU and, 294, 295, 408–9, 422–26, 423, 427–32, 443–44; FED, 275, 309, 325, 336, 348n9; foreign policy, 81, 412, 427–28; Germany and, 79, 83–84, 86, 88, 285, 416, 427, 428, 429; Iraq and, 420, 427, 429; Italy and, 98, 106, 107; multiculturalism in, 366, 367; with NATO, xxii, 151, 240–41, 294, 408–16, 427; 9/11 and, 107, 156, 239, 258, 370, 371, 392, 409, 411, 431; Russia and, 224, 233, 234, 239–41, 243, 276, 404n6, 428; Scandinavia and, 152, 153; subprime crisis and, 183, 184, 292, 304; Supreme Court, 134; Syria and, 419; Turkey and, 258, 260, 263, 264, 266, 420–21; UK and, 14, 281, 424–25; welfare programs, 144, 145. See also Atlantic Community Uomo Qualunque (“Common Man”) movement, Italy, 114 UP (Labour Union), Poland, 195, 201, 205 UR (United Russia), 228, 229, 233, 243 US. See United States USSR. See Soviet Union UW (Freedom Union), Poland, 196, 201

Valls, Manuel, 47, 48–49 value-added tax, 37, 185 Van Middelaar, Luuk, 294 Van Rompuy, Herman, 294 varieties of capitalism (VoC), 327–29, 331– 35, 338, 341, 344 veil, Islamic, 252, 361–62 Veltroni, Walter, 112 Verhofstadt, Guy, 298 VoC (varieties of capitalism), 327–29, 331– 35, 338, 341, 344 Volkswagen, 79 von der Leyen, Ursula, 294–95, 443 Vox (Spain), 180 VTsIOM (Russia), 243 Wales, 5, 20, 21, 23, 24, 25, 26–27, 28. See also United Kingdom Wałęsa, Lech, 196, 197, 198 Wales Act (1978), 25 Walter-Borjans, Norbert, 70 Wanna, John, 24 Warsaw Pact (Treaty of Warsaw), 240, 241, 383, 410 Weidmann, Jens, 311 Welfare Party (Turkey), 257–58, 261 welfare programs, US, 144, 145 welfare state, 6, 7, 8, 10, 63; France and, 32, 33–36, 41; Scandinavia, 126–27, 128, 144–49, 145, 157 Weller, Patrick, 24 Die Welt (newspaper), 87 Western Balkans, xix, xx, xxii, 295, 384–85, 390, 394 West Germany, xxii, 14, 62, 74, 78, 88, 151, 154, 278, 280, 358 Westminster Model, governing Britain and, 21–24 Whiteley, Paul, 20–21 WHO (World Health Organization), 428 Wilders, Geert, 364 Wilson, Harold, 7, 8, 15, 18, 24, 25 Woerth, Eric, 52 Wolff, Sarah, 394 women, 130, 138, 213, 234, 359; Muslims, 46–47, 49, 252, 354, 361–62, 364; sexual revolution, 102–3; unemployment and, 175, 372 Workers Struggle (France), 51

I ndex     479 World Bank, 244, 256 World Bank Governance Indicators, 189n6 World Economic Forum, 42 World Health Organization (WHO), 428 World Trade Organization (WTO), 42, 80, 84, 233, 318, 424, 425, 430 World War I, xix, xxii, 96, 409 World War II, xx, xxii, 42, 129, 149–50, 254, 281, 409 WTO (World Trade Organization), 42, 80, 84, 233, 318, 424, 425, 430 xenophobia, xxi, 47, 148, 250 Xi Jinping, 72, 86 Yabloko (Russia), 229

Yanukovych, Viktor, 391 Yavlinsky, Grigory, 227 Yeltsin, Boris, 224, 225–28, 230, 231, 239, 240, 244nn3–4 Yugoslavia, xix, xxii, 240, 383, 411 Yushchenko, Viktor, 390, 391 Zapatero, José Luis, 386 ZChN (Christian-National Union), Poland, 197, 201 Zemmour, Eric, 27–28, 352 Ziobro, Zbigniew, 207, 217n2 Zohlnhöfer, Reimut, 63 Zysman, John, 329 Zyuganov, Gennady, 227

About the Contributors

Gianfranco Baldini is associate professor of political science at the University of Bologna. Michele Chang is director of transatlantic affairs and professor of European political and governance studies at the College of Europe (Bruges campus). Laure Delcour is associate professor in international relations and EU studies at the University Sorbonne Nouvelle. Eric S. Einhorn is professor emeritus in political science at the University of Massachusetts, Amherst. Gabriel Goodliffe is associate professor of international relations at the Instituto Tecnológico Autónomo de México. Masha Hedberg is assistant professor of political science at Colgate University. David Jeffery is lecturer in British politics at the University of Liverpool. Erik Jones is director of the Robert Schuman Centre of the European University Institute. Benedicta Marzinotto is assistant professor of economic policy at the University of Udine. Hartmut Mayer is adjunct professor of European and Eurasian studies at Johns Hopkins University, SAIS Europe, Bologna. Ruxandra Paul is assistant professor of political science at Amherst College.

A bout the C ontributors    481

Irina Petrova is assistant professor of the politics of Eurasia at the School of Slavonic and East European Studies, University College London. Sebastián Royo is provost and vice president for academic affairs and professor of political science at Clark University. Ben Stanley is associate professor at the Centre for the Study of Democracy, SWPS University, Warsaw. Omer Taspinar is professor of national security strategy at the National War College in Washington, DC. Filippo Tronconi is professor of political science at the University of Bologna. John Van Oudenaren is a global fellow at the Wilson Center in Washington, DC. Andrew T. Wolff is associate professor of political science and international studies at Dickinson College, Pennsylvania.