The Single Currency and European Citizenship: Unveiling the Other Side of The Coin 9781623560232, 9781623566845, 9781501300820, 9781623560959

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The ­Single ­Currency and European ­Citizenship

ii

The Single Currency and European Citizenship Unveiling the Other Side of The Coin Edited by Giovanni Moro

N E W YOR K • LON DON • N E W DE L H I • SY DN EY

Bloomsbury Academic An imprint of Bloomsbury Publishing Plc

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50 Bedford Square London WC1B 3DP UK

www.bloomsbury.com First published 2013 © FONDACA, 2013 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. No responsibility for loss caused to any individual or organization acting on or refraining from action as a result of the material in this publication can be accepted by Bloomsbury Academic or the author. Library of Congress Cataloging-in-Publication Data Giovanni Moro The Single Currency and European Citizenship /Giovanni Moro p.cm Includes bibliographic references and index. ISBN 9781623560232 (hardcover) ISBN 9781623566845 (paperback)



ISBN: HB: 978-1-6235-6023-2 PB: 978-1-6235-6684-5 PDF: 978-1-6235-6095-9 ePub: 978-1-6235-6299-1

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CONTENTS

Acknowledgments  vii List of Figures and Tables  viii

Introduction  Giovanni Moro  1

Part One  Multiple Links between Single Currency and European Citizenship  5   1 Building citizenship in the post-modern Era: Dimensions of the other side of the coin  Giovanni Moro  7   2 Imaginary Europe: The euro as a symbol and practice  Kathleen R. McNamara  22   3 The only wealth are human beings: Currency between economy and citizenship  Thierry Vissol  36   4 Trust in the euro: The single currency as social construction of an institutional fact  Matthias Kaelberer  53   5 Forgotten dimensions: The euro in scientific and policy literature  Lucia Mazzuca and Roberto Ranucci  67

Part two  The Single Currency and the Construction of European Identity  95   6 The unintended “Litmus Test”: The euro as a factor of center-formation, trust enhancement, and identity building  Daniela Piana  97

vi

CONTENTS

  7 Two sides of the same coin? The euro and Europeanization of collective identities  Thomas Risse  111   8 Why money can’t buy democracy: On the detachment of the euro from EU citizenship  Eva G. Heidbreder  123   9 Representation of identity: Euro and dollar as identity builders  Arianna Montanari  137

Part three  European Citizenship in the Euro Turmoil  151 10 In the light and shadow of the Single Currency: European identity and citizenship  Vivien A. Schmidt  153 11 Divided by a common currency: The euro crisis and European citizenship  Cris Shore  168 12 Between natural and moral order of things: The euro and the problem of agency Víctor Pérez-Díaz  182 13 Between illusion and disillusion: Public opinion facing the euro crisis  Nando Pagnoncelli  196 14 Back to the future? The euro and the EU silent constitution building  Dario Castiglione  218 Conclusions: The way forward  Giovanni Moro  232 Bibliography  235 Index  253

Acknowledgments

The volume is published with the support of UniCredit Group as main partner of the program “The Other Side of The Coin. The Single Currency and European Citizenship” and the European Commission “Europe for Citizens” program.

List of Figures and Tables

Figure 1.1 Figure 1.2

Figure 1.3 Figure 3.1 Figure 5.1 Figure 5.2 Figure 5.3 Figure 5.4 Figure 5.5 Figure 5.6 Figure 5.7

Map of the Eurozone  13 The euro and national currencies as mental benchmarks for exceptional and ordinary purchases, 2003–10  16 Actual and perceived inflation in the euro area, 1995–2004  17 EU membership versus the euro  38 No. of items produced by each subject (universe: 302 items)  74 The institutions’ focus rate on the other side of the euro’s dimensions  79 The scientific community’s focus rate on the other side of the euro’s dimensions  80 The media’s focus rate on the other side of the euro’s dimensions  81 The banks’ focus rate on the other side of the euro’s dimensions  82 The level of diffusion of the attention toward the cultural dimension  83 The level of diffusion of the attention toward the everyday life economy dimension  84

LIST OF FIGURES AND TABLES

Figure 5.8 Figure 5.9

The level of diffusion of the attention toward the social dimension  85 The level of diffusion of the attention toward the political dimension  86

Figure 5.10 The level of diffusion of the attention toward the context and development of the euro project’s aspects  86 Figure 5.11 Diffusion and depth levels of the other side of the coin’s dimensions  88 Figure 6. 1 Distribution of the positive stance taken by European citizens toward the euro  103 Figure 10.1 Percentage of people who support the euro  161 Figure 13.1 Support to the euro 1998 vs. 2002  198 Figure 13.2 The support to the euro in Italy  199 Figure 13.3 2001–02 average inflation rate  200 Figure 13.4 Support to EU membership  203 Figure 13.5 Benefits of EU Membership  204 Figure 13.6 The meaning of the EU  207 Figure 13.7 Negative meanings of the EU 2003–11  209 Figure 13.8 Consensus to the euro 2007–10  211 Figure 13.9 Consensus to the euro in 2010  212 Table 1.1 Dimensions of “The Other Side of the Coin” and their observables  10 Table 1.2 References of euro coin and banknote symbols to Civic/Cultural and Cooperative/ Integrative Dimensions  12 Table 5.1 Subjects and sources utilized in the research  70 Table 5.2 Time criteria used in the research  71 Table 5.3 The universe of the identified items  73

ix

x

Table 5.4 Table 5.5 Table 5.6 Table 5.7

List of Figures and Tables

No. of items detected by the sources linked to institutions and banks  75 Index of the diffusion of the attention to the other side of the coin’s dimensions  75

The ratio of Occurrences/Items  76 Occurrences of dimensions found for each subject considered in the research  77 Table 5.8 Index of depth for the other side of the coin’s dimensions  87 Table 5.9 Shares of diffusion and index of depth to the other side of the coin’s dimensions  88 Table 13.1 Meanings of the EU 2004–11  208

Introduction Giovanni Moro

The project of this book rests on a paradox that is worth recalling. It can be defined as follows: while the purpose of building European citizenship is the very rationale for the project of the single currency, the policy community and the scholars have mostly underestimated if not neglected this relation, in terms of public policy making and discourse as well as of interpretation and forecasting. As a consequence, while the euro has strongly shaped European citizenship, especially from the moment of the changeover, it seems that few have noticed on it. Thus, the main cornerstone of European citizenship has remained almost unknown or at least unrecognized. To explain this paradox, it is possible to mention some of the factors that, prima facie, conspired to give rise to this blackout. As for the policy community, when planning the implementation of the changeover, European institutions decided to focus the euro communication policy on the practical benefits of the single currency for the consumer citizens, rather than on its citizenship-building effects. It is worth noticing that, on the contrary, the actual motivation for the great citizens’ support for this shift was “to enter Europe.” Nevertheless, the public message was “it is useful,” and so it remained throughout the ten euro years, even when the single currency began to seem anything but a good idea. Moreover, the rough path of the Economic and Monetary Union has led to focusing attention pretty exclusively on macro-economic and global finance issues, to the detriment of citizenship-related topics. It happened well before the explosion of the financial markets’ crisis in 2008. Indeed, it dates back at least to the phase (2003) in which France and Germany brought the Growth and Stability Pact under discussion. This would not be relevant here, had it not led to the focusing of the attention and concerns of the public arena on macro-economic and public finance aspects of the coin. As for the scientific community, the preponderance of economy in the research and scientific debate on the topics related to the single currency must be noted. The economists’ efforts, moreover, have been concentrated mostly on macro-economic and financial dynamics rather than, say, on

2

The Single Currency and European Citizenship

everyday life economy, affecting citizens in the flesh. Political scientists too have paid attention above all to the question of EU economic governance, strengthening the underestimation of the other side of the coin. Another element to be mentioned is that the single currency, as a citizenship-related topic, is trans-disciplinary. That is, it does not clearly belong to the realm of a specific social science discipline, but is rather a shared field of research. Since no one is its owner, it is easy for it to be forgotten or not considered. Of course, this is a quite common situation in social sciences. Nevertheless, in the case of the relation between the single currency and European citizenship, it has had a strong negative influence. Two other widespread factors should be taken into consideration. The first is that the common discourse on European citizenship is characterized by a strong normative approach, or even by an idealized view of citizenship, leading to its consideration as being an abstract model rather than an empirical phenomenon. In this standard view, there is little or no room for something, so to say, as low as a currency. Obviously, money cannot have any meaningful relation to the model of a “good European citizen,” as it is portrayed in many political science essays as well as in the European Union documents and in policy actors’ papers and positions. The second general factor is that the introduction of the single currency has usually been considered as a top-down operation only, in which the citizens’ task was just to accept and use the euro, adapting their habits to a radically new situation. Of course, something such as a change in currency is definitely an elite-driven decision and process. What has been missed in this vision, however, is that citizens are not passive recipients of such a change and what they actually do with a currency can make a big difference. As a consequence of all of that, the other side of the coin happened to remain hidden, poorly considered and almost not thematized, in spite of the strong relation between currency and citizenship, in the European case as well as in general. Looking at the scientific community, this blackout is even more striking, since, as someone said, the changeover has been “a huge applied social sciences experiment”: a deep and sudden change, involving hundreds of millions of people, and implying both a cognitive and an operational switch. This switch should have required more than the 15 books, 2 book chapters, 22 scientific journal articles, and 70 scholars’ papers that have been found and classified in a recent FONDACA research. Though of unquestionable quality and value, these materials do not appear proportionate to the major event European institutions and citizens have faced during the life of the EU. Since something like “another side of the coin” does not exist in itself, it emerges as a scientific problem generated by this lack of consideration. It can be defined as the need for a positive definition and thematization of the nonmacroeconomic and nonfinance dimensions that link the single currency to the building of European citizenship. These dimensions cannot indeed be defined only in negative terms—as “non-something”—and this is another way to highlight the problem. All the texts published in this book contribute

3

INTRODUCTION

to addressing this problem, shedding more light on this phenomenon. It should be added that their purpose, which is the same as of the book as a whole, is to promote a debate able to deal with the issue in greater depth and breadth. Though it is no time for conclusive statements, a serious and well-grounded beginning cannot be further delayed. Rome, June 2012 This book is one of the products of the program “The Other Side of the Coin,” which FONDACA has been carrying out since 2009. It is a research and dialogue program that has involved a network of European and American scholars and experts. The program has included various activities:  The

workshop “The Single Currency and European Citizenship: an Assessment,” held in Pisa on 3 June 2009 in collaboration with the Sant’Anna School of Advanced Studies;

 The

workshop “The Other Side of the Coin: the Single European Currency and Citizenship,” held in Berlin on 11 October 2010 in collaboration with the Free University of Berlin;

 A

bibliographic and documentary research and a database containing the collected materials and open to the public;

 The

book La moneta della discordia (“The Currency of Discord”), written by Giovanni Moro with the collaboration of Lucia Mazzuca and Roberto Ranucci, intended to facilitate and enrich the public debate in Italy on the occasion of the tenth anniversary of the changeover (Cooper publisher, Rome 2011).

More information on these activities and outputs, as well as on the further steps of the program, can be found on the website www.theothersideofthecoin.eu. Several scholars and experts have taken part in the program activities. They are Daniel Barbu (Bucharest University); Christian Calliess (Free University of Berlin), Dario Castiglione (University of Exeter); Stefan Collignon (Sant’Anna School for Advanced Studies of Pisa); Pier Virgilio Dastoli (a Director at the European Commission); Marco Frey (Sant’Anna School for Advanced Studies of Pisa); Anna Hechinger and Eva Heidbreder (Hertie School of Governance of Berlin); Hugo Kaufmann (City University of New York); Arianna Montanari (La Sapienza University of Rome); Nando Pagnoncelli (IPSOS); Daniela Piana (University of Bologna); Cesare Pinelli (La Sapienza University of Rome); Thomas Risse (Free University of Berlin); Vivien A. Schmidt (Boston University); Arndt Sorge and Michael Zurn (Social Science Research Center of Berlin). The program was supported by UniCredit Group as the main partner and by a European Commission grant that FONDACA has received as a European think tank in the framework of the “Europe for Citizens” program.

4

Pa r t o n e

Multiple Links between Single Currency and European Citizenship

6

c h a pte r 1

Building citizenship in the post-modern Era: Dimensions of the other side of the coin1 Giovanni Moro

Introduction The other side of the coin beyond metaphor In 1992–3, European citizenship was established in the Maastricht Treaty. Ten years later, as an implementation of another provision of the same Treaty, the euro was introduced into 12 countries, becoming the currency of nearly 300 million citizens of the European Union. At first sight, no relevant correlation between these two events can be detected, if not for the obvious fact that both regard individuals who are nationals of one of the EU countries. Therefore, “The Other Side of the Coin” formula could be just a vague metaphor for the “human side” of the single currency and (especially) of the problems affecting common people in Europe. In this case, there would not be any need for a scientific community engagement, and good media coverage of the experiences, feelings, and concerns of the people carrying the euro in their pockets would be enough. What is needed, on the contrary, is an effort aimed at unveiling the multiple relations that link the two processes of building citizenship of the Union as an individual, social, institutional, and community phenomenon, on the one hand, and the establishment of the euro as the currency of the majority of Europeans, on the other.

8

The Single Currency and European Citizenship

To this end, I will try to identify and define those inner dimensions of the single currency that can be presumed to be connecting it to the European citizenship-building process. It is a basic but a necessary exercise. Before that, some founding elements of European citizenship intended as a process will be highlighted. After that, some reflections on the more general meaning of the relation between the single currency and European citizenship will be advanced. The rationale for this exercise lies on a phenomenological, rather than normative, approach, which in this case has two main implications. The first one is to view the European Union as a “democratic experiment,” that is, an attempt to build a polity and a political community not being a (good or bad) copy of a nation state, thus overcoming any “methodological nationalism” (Beck and Grande 2007, 17–8). The second implication is to consider citizenship as a phenomenon in which people not only benefit from institutional decisions, but also take part in the construction of citizenship itself, being involved in and creating social meanings and relations. The introduction of the single currency can be considered to be a top down operation (and this is true), but it cannot be forgotten how citizens have dealt with the euro—in a sense, the most interesting part of the story, which is the one of a top down and a bottom up process.

European citizenship at stake The definition exercise of this chapter, however, must not only take into account that the hidden dimensions of the single currency have to be identified, but also that European citizenship itself is “a puzzle” (Bellamy and Warleigh 2001). In other words, it is not clear as to precisely what the single currency would be in relation to. Addressing this puzzle in a synthetic way is therefore a necessary task.2 First of all, European citizenship can not only be intended as a fixed juridical status, but also as a process of redefining and increasing the content and extension of citizenship itself. Moreover, it goes well beyond its juridical content, covering social, cultural, economic, and political dimensions. All of that can be easily detected if citizenship of the Union is observed not only in the Treaties, but also in the whole Community Acquis and in citizenship practices. This exercise allows us to view European citizenship without being tied to its two opposite conventional representations: the first, coming from the federal perspective, of an empty box, and the second, reflecting the confederal approach, of a threat to national sovereignty. It can therefore be considered as a nonstandard form although it does contain the founding elements of citizenship in general. These elements can be summarized in terms of rights, belonging, and ­participation. As for rights, they include not only those established in the

BUILDING CITIZENSHIP IN THE POST-MODERN ERA

9

Treaties (with the addition of the Charter of Fundamental Rights), but also those coming, for example, from the European Court of Justice ­decisions and from the continuous redefinition of the balance of responsibilities between the EU and national states due to the action of social, political, and civic movements, as in the case of patients’ rights. As for belonging, a sense of identity linked to Europe in its civic dimension, not opposed to, but integrated with other identity components (the national one foremost), has emerged in the majority of EU citizens. As for participation, political participation through the vote (local elections included) and civic participation in EU policy making (consultation on decisions, support to implementation), up to the recent right of citizens to propose new EU legislation, are part of the Community participatory dimension. In sum, after twenty years, the content and extension of Community citizenship have definitely increased, and it remains an ongoing process. Regardless of how these developments are evaluated, there is no doubt that we are dealing with an incremental phenomenon. This phenomenon can be viewed today, including the following ­elements, for a definition: European citizenship as the membership of citizens of the EU countries to a larger political “civic” community and of a polity ­operating as a multilevel and polycentric governance system, based on a set of rights established in the Treaties, and increased over the years by the Community Acquis and citizenship practices, on a principle of multiple and difference-based identity, and on people participation both in the ­construction of ­representative institutions and in the public policy making on a daily basis. Having said that about one of the terms of the relation we are dealing with in this chapter, attention can now be devoted to the other term, that is, the single currency with its hidden dimensions.

Defining the dimensions of the other side of the coin Moving to the other side of the coin, four dimensions linking the single currency to European citizenship can be identified as autonomous although they are closely related components of the phenomenon:  a

cultural dimension

 a

social dimension

 an  a

everyday life economy dimension

political dimension

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The Single Currency and European Citizenship

Table 1.1  Dimensions of “The Other Side of the Coin” and their observables Dimension

Observables

Cultural

• Currency as a symbol • Symbols of coins • Symbols of banknotes

Social

• Euro as language • Eurozone territory • System of communication relations

Everyday life economy

• Euro as calculation benchmark • As a tool of exchange • As a repository of value

Political

• Institution-building • Public sphere • Citizenship practices

Each of these dimensions can be better identified by focusing on certain elements. For the sake of being rigorous, these elements should be considered as observables of those dimensions, or at least as places where the euro citizenship-building effects can be detected, rather than as systematic components of the phenomenon. They are summarized in Table 1.1.

Cultural dimension The cultural dimension of the single currency can be defined as the set of values, representations, and cultural patterns that are referred to by the currency as a repository of symbols. It is the context in which the European identity of individuals using the euro is built (Berezin  2003; Delanty and Rumford 2005; Risse 2010). The single currency as a medium for the raising of a collective identity can be observed, considering it both as a symbol in itself and in the sets of symbols represented in coins and banknotes. As a symbol in itself, the meaning of the single currency is related to the traditional link between currency and state sovereignty. In this sense, the euro can be considered as referring to a new political community. This ­community, however, is detached from the national one: not One Nation, One Money, but rather, One Money, Many Nations (Kaelberer 2004). As for euro coins and banknotes, it is well known that they have been conceived as a repository of symbols (Delanty and Rumford 2005, 100; Kaelberer 2004; Shore 2000, 87–122; Vissol n.d.), both general (as the

BUILDING CITIZENSHIP IN THE POST-MODERN ERA

11

12-star flag) and specific for the new currency. The choice was to put both European and national symbols on the coins, with the aim of representing the EU identity as a mix of national and Community elements, while at the same time it was decided to put images coming from the main architectural traditions shared by Europeans on the banknotes, but with no reference to any real object or place (see also Hymans 2004). So, on the one face, coins show images and symbols related to national traditions, while on the other they display various representations of Europe: as part of the global world; as a set of countries with their own boundaries; as a continent without frontiers. As for the banknotes, the images portrayed are gates, arches, windows, and, more importantly, bridges. It could be stated that these imaginary objects represent the EU well as an example of imagined community (McNamara, Risse in this book). In any case, it has been correctly said that the euro allows people to carry Europe in their pocket. What is the set of meanings represented by the euro as a repository of symbols? As could be expected due to the nature of European identity, a plurality of them does emerge. They can be grouped into six categories in each case with Europe as:  a

union of national states

 a

set of national traditions

 a

common cultural heritage

 a

system of democratic institutions

 a

continent without borders

 a

bridge toward space and time

To better catch the relation of these meanings with the building of European identity, it may be worthwhile recalling the distinction proposed by Michael Bruter (2005, 11–7; 85–7) with regard to symbols of European identity in general. The distinction is between two pairs of concepts. The first pair distinguishes between the cultural and the civic dimensions of European identity, the first being related to values, traditions, culture, and linked to Europe without borders (from Atlantic to Urals); and the second concerning political institutions, rights, rules of a political community—the European Union. The second pair of concepts refers to a cooperative versus integrative dimension: the cooperative one is related to a variety of states and nations that get together in a union preserving their differences; the integrative one regards the fact that these entities merge in a unique entity, supranational or supra-state. Using these conceptual pairs, the sets of meanings represented in coins and banknotes of the single currency can be structured as follows.

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The Single Currency and European Citizenship

Table 1.2  References of euro coin and banknote symbols to Civic/ Cultural and Cooperative/Integrative Dimensions Dimensions/Symbols

Civic/Cultural Dimensions

Cooperative/Integrative Dimensions

Union of National States

Civic

Cooperative

Set of National Traditions

Cultural

Cooperative

Common Cultural Heritage

Cultural

Integrative

System of Democratic Institutions

Civic

Integrative

Continent Without Borders

Cultural

Integrative

Bridge Toward Space and Time

Civic/Cultural

Integrative/Cooperative

Source: Moro 2011, 42.

It is worth noting that the impact of euro symbols on the European identity of individuals takes place also in the case—widespread nowadays—in which the single currency is considered with anger, due to its real or  supposed responsibility for the present problems affecting Eurozone citizens (the finger-and-moon question). In other words, the money does not need to be loved in order to reach its identity effects (Kaelberer 2007).

Social dimension The social dimension of the single currency can be defined as the set of interactions, representations, institutions, and communication and exchange relations that give rise to a social environment in which people using the single currency live and belong to. From this perspective, the euro can be considered as a communication tool linking people together. This dimension of the euro can be observed in various elements, three of which seem to have a relevant standing. The first one is the single currency as a language. In a Union characterized by the “polygamy of languages” (Beck and Grande 2007, 103; see also Berezin  2003, 16), the euro is the only existent common language. Of course, the euro is not the same as the 23 languages spoken by Europeans. Nevertheless, like other nonnatural languages, it is a system of signs asso­ ciated with meanings, which works as a communication tool. As highlighted below, these meanings cannot be restricted to a purely economic range. However, from this point of view, it could be said that those belonging to the Eurozone are “Euro-speaking” countries.

BUILDING CITIZENSHIP IN THE POST-MODERN ERA

13

The second element is that the euro has given rise to a new territory. It can be easily observed in the following map of Europe (Figure 1.1). Looking at this map, some features can be noticed. First, the Eurozone does not coincide with the territory of the European Union. Before the introduction of the single currency this territory simply did not exist. Second,

Eurozone countries EU countries that have opted out EU countries that have not yet adopted the euro Non-EU countries using the euro as national currency

Figure 1.1  Map of the Eurozone. Source:  Moro 2011, 54.

14

The Single Currency and European Citizenship

the borders are not clean: there are countries that use the single currency, countries that have opted out though participating in the EMU, countries that are supposed to be going to adopt the single currency, countries that use the euro without being members of the European Union (such as Montenegro and Kosovo). Third, there are countries belonging to this territory that are not adjoining (e.g., Finland and Estonia), so it is not easy to consider the Eurozone as similar to a national territory; but at the same time it is difficult not to recognize it as a specific one. It may be noted (Amico n.d.; Risse 2010, 56–7; Schmidt in this book) that—as in the analogous case of the Schengen area—the euro represents an example of “variable geometry Europe.” The paradox of a currency conceived to unite the EU citizens that has produced the opposite effect, that is, to divide them, can also be noted. In any case, in terms of identification of the social dimension of the single currency, it is enough to maintain that it has given rise to an environment materialized in a territory. A third element that can be observed as part of the social dimension of the single currency is the system of relations of communication and exchange the euro has favored (see Berezin  2000; Helleiner 2001). “Communication” and “exchange” in this case would not be considered in an abstract or metaphoric sense, but rather in a fairly material way. This has been observed while studying the phenomenon of the migration of coins from one country to another. For example, a study on the “Euro Invasion of France” by German, Spanish, and Belgian coins (Jacobs 2007) showed that between June and September 2002 foreign euro in France almost doubled (from 4.7% to 9.2%). In June, 20 percent of the French had at least one foreign coin in their pocket, while in September there were 48 percent of them, with relevant differences related to regions and areas (e.g., borders or holiday places). Generally speaking, in the long run it is expected that in each Eurozone country half of the coins used will come from abroad (Moro 2011, 58). It should be added that this matter relates to banknotes as well: in March 2011 only 39.6 percent of banknotes circulating in Italy had been issued there (ibidem). Linked to the social dimension is the most distinguishing character of European citizenship, namely freedom of movement. According to recent data, in 2010 almost half (49%) of Eurozone citizens traveled at least once in another Eurozone country; 64 percent of them maintained that the euro had made it easier to compare prices, 48 percent said that it made it easier and cheaper to travel (European Commission 2010c). Data on e-commerce support the relevance of freedom of movement: according to a 2007 EIAA research, in that year 80 percent of the European internet users had purchased goods or a service online, with an increase of 100 percent from 2004, and the first two types of goods purchased were travel tickets and package holidays (Moro 2011, 59). Also from the point of view of “feeling” European, in 2010, 45 percent of Eurozone citizens identified freedom of movement as the most important

BUILDING CITIZENSHIP IN THE POST-MODERN ERA

15

meaning of the EU (European Commission 2010d). It was second only to the euro itself, which resulted as the main meaning associated with the EU for 49 percent. In general, freedom of movement and the single currency result as being the two main meanings of what it is to be a European (respectively, for 45% and 40% of all Europeans). As for the relation between “being” and “feeling” European, it is worth mentioning that, according to the same 2010 poll, the percentage of individuals declaring to feel European citizens was 66 percent in the Eurozone and 54 percent in the non-euro EU countries (ibidem).

Everyday life economy dimension The third dimension can be defined as the one in which the single currency operates as an agent giving rise to a market, which is one of the founding elements of the EU and Community citizenship. This dimension is in fact strictly related to consumption. The link between consumption and citizenship is, among those focused on in this chapter, the only actually contested, both by the scientific community (the “market citizenship” argument—see Downes 2001) and by the social and political actors (“We are citizens, not consumers”). However, information coming from anthropological (Douglas and Isherwood 2001) and historical (Hilton and Daunton 2001) research shows a dense mesh of relations between consumption—and, in general, material culture—and citizenship. Four factors of special importance emerge: the definition of relevant moralities (the boundary between necessity and luxury); the establishment of consumers’ constituency in the interplay between active consumers, commercial and political interests, and discourses based on consumer-related knowledge and expertise; the definition of the economic system by which goods are brought to consumers; the relationship between the consumer, citizenship, and the state (that is, the relation between state intervention in consumption issues and consumers’ participation in the political process) (Hilton and Daunton 2001, 3–5). Therefore, the citizenship profile alters from time to time also due to changes in consumer patterns and dynamics. In this framework, it could be said that the concept of the everyday life economy dimension of the single currency could be grasped considering the euro with regard to three roles. The first one concerns the euro as a unit of measurement or tool of calculation. A simple but very relevant example of this is the data on the extent to which the single currency has become consumers’ reference point for calculating the value of goods and services. This is evident observing both exceptional purchases, such as buying a house and ordinary purchases, as shown by the following pair of graphs (Figure 1.2).

16

The Single Currency and European Citizenship

60 50 40 30 20 10 0

80

Mental benchmarks for exceptional purchases euro only euro and national national only Nov ’03

Sept ’10

Mental benchmarks for ordinary purchases euro only

60 40

euro and national

20

national only

0

Nov ’03

Sept ’10

Figure 1.2  The euro and national currencies as mental benchmarks for exceptional and ordinary purchases, 2003–10. Source:  Adapted from European Commission 2010c.

These data should not be underestimated, not only in themselves, but also because of its less intuitive meaning. That is, the euro as a unit of measurement works to evaluate not only what is expensive and what is cheap, but also what is right and what is wrong, what is fair and what is unfair, and so on. In other words, the role of the single currency as a unit of measurement goes well beyond the mere evaluation of the price of goods and services; it is rather a general benchmark tool shared by the Eurozone citizens, enabling them to assess, for example, the real accessibility of welfare services, or the value of salaries and then of jobs. The single currency as an everyday life economy dimension is therefore a unit of measurement for several social facts and relations; or, in other words, is “a medium of meaning” (Berezin 2000). Another role that can be identified by focusing on everyday life economy dimension of the single currency is that of an exchange tool. The empirical aspect of this is self-evident: it lies in commerce, jobs, and enterprises, which have risen in the Eurozone intended as a market. It is relevant, from this point of view, that the single currency has eliminated exchange costs, has lowered the costs of bank transfers, and has leveled the burden of accessing credit for individuals and enterprises, also acting as an enabling factor. Prices of bank transfers, for example, have dramatically decreased: from

BUILDING CITIZENSHIP IN THE POST-MODERN ERA

17

17.3 to 2.4 euro for transferring 100 euro (Moro 2011, 58–9). Although it is a critical matter nowadays, the reduction of inflation (around 2% for many years) should also be mentioned as well as the leveling of credit costs to about 4 percent. To sum up, as an exchange tool, the single currency has connected people living or operating in 17 countries, putting them in the position of being actors of a common market. Of course, it is well known that the European Union itself has been, from its very beginning, a market evolving in a nonstandard democratic institutional system. Nevertheless, until the changeover, this was a matter of fact for financial institutions, big companies, central banks, and national governments, although not for common citizens. With the changeover, Europe as a common market became real for the first time for everyone living in a Eurozone country. A third role of the single currency that can be identified in the dimension of everyday life economy is of repository of value. What kind of value are we referring to in this case? An obvious but not less important answer to this question is that the value is about goods and services. In this framework, the well-known phenomenon of perceived inflation occurred, especially in the first two years after the changeover (Figure 1.3). In the first years after the changeover, people felt that the value of their money dramatically decreased, due to the increasing prices of goods and services. Regardless of the fact that this phenomenon considered mostly proximity and everyday life purchases; or that it was related to global trends

5 Perceived inflation 4

Actual price inflation HICP

3

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95

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99

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Figure 1.3  Actual and perceived inflation in the euro area, 1995–2004. Source:  European Commission 2006c.

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(e.g., the increase in oil or house prices due to 9/11); or that, while prices of some goods increased, in other cases they decreased (e.g., electronics— Moro 2011, 68–97; see also European Central Bank 2007), the manner in which the changeover was designed and implemented gave rise to an attribution of value to the currency by the citizens themselves. As a direct effect (the euro being, in this case, the moon and not the finger), there was a self-reduction in consumption, which has been one of the factors of the scant economic growth of the Eurozone. In other words, independent of the value that institutions (and the market) attach to the single currency, citizens do it by themselves.

Political dimension The political dimension of the single currency can be defined as the one in which the euro acts as a vector for the construction of European polity and political community. Three observable elements can be noticed here: institution-building, European public sphere, and citizenship practices. As regards institution-building process, the euro can be observed as an agent—perhaps the most important one—of European integration. Borrowing one of Kenneth Dyson’s thematizations regarding EMU (Dyson 2002), it can be said that the single currency has shaped the integration process since it has prescribed a new policy paradigm: one of a “sound” money and finance. With reference to this paradigm, priorities have been defined, policies have been designed, institutions and procedures have been established, and public discourse and agenda have been shaped. This paradigm has also given rise to an institutional model, the Eurozone centered on the European Central Bank. Technical-oriented leaderships (or technocrats) have then prevailed over political leaderships, both at Community and at national levels, although with concerns for nonfinancial issues such as economic growth, social rights, and fiscal policy (as shown by the case of the Europe 2020 strategy). Related to the European integration process, the single currency has been the main reference point for the Europeanization of national polities and arenas, where political leaderships have lined up in different ways toward the paradigm of sound money and finance. This happened on the side of both public discourse, with different motivations and thematizations for the introduction of the single currency (internalization of the external economic imperatives of globalization; dissolution of national identities and sovereignty; means of resistance to the external dependence due to US globalization; and strategy to reconciling the European social model to globalization); and public policies aimed at addressing the new constraints and challenges coming from the euro (accommodation; transformation; inertia; retrenchment - Dyson 2002, 1 ff.; see also Risse 2010, 177–203).

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A second component of the political dimension of the single currency is the European public sphere, which in the past ten years—and in particular starting from the 2008 global financial crisis affecting the Eurozone—has clearly been shaped by the single currency itself (see Risse 2010, 122–3; 173–4). There is no doubt that the single currency is by far the most debated topic at national and Community levels. Not only political leaderships, public opinion, and media, but also citizens and social forces have centered their attention, discourse, and mobilization around the single currency. No matter here if the euro is the “finger” or the “moon” (probably both); what is really important is that the single currency has caused a dramatic growth of the European public sphere, in the sense of a common space where citizens have taken the floor—literally or metaphorically—dealing with their common fate depending on the single currency, perhaps in a deliberative manner. A third component of the political dimension of the single currency can be noticed in citizenship practices, intended as the dynamic relations of citizens with the polity (Wiener 1998), one of the building blocks of citizenship in general. Of course, citizenship practices do not regard the political dimension alone. As we have already noticed, freedom of movement is undoubtedly such a practice. Nevertheless, in the political dimension, specific practices take place and their value should not be underestimated. The most visible practices, nowadays, are the various forms of public and political participation in the Eurozone turmoil, ranging from the efforts of civic organizations to represent constituencies that are the targets of public spending reduction policies but have no voice in decision making, such as young unemployed, immigrants, deprived communities, to social movements, such as the Spanish Indignados. But voting is probably the most important citizenship practice related to the single currency. In this regard, it could be said that a relevant connection between institution-building, public sphere, and citizenship practices with reference to the single currency can be observed by focusing on citizens’ participation in elections that took place in the first half of 2012, from the French presidential elections to the double vote in Greece, from the North Rhine– Westphalia Land elections in Germany to local elections in Italy. In all these cases the euro—which was strongly (though not necessarily in depth) debated in the European public sphere as a matter of common, though conflicting, interests—has become the real stake of elections, and the citizens’ choices have pushed for a change in the euro institutional paradigm, which is currently on the table of European leaders. In this way, the single currency, which has become at the same time a policy issue and a political stake, could affect that “divorce” between policy and politics that has been till now a distinguishing element of the EU in comparison with the member states (the EU as “policy without politics,” and vice versa for the member states—see Schmidt 2006, 22 ff.).

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Conclusions The euro citizenship effect, and vice versa Having defined the dimensions linking the single currency to European citizenship through their observables, an attempt to formulate some hypotheses on the ways in which this link operates can be made. In addition, some reflections on the reverse relation, that is, the citizenship–euro effect, will be reported as well. What can be said, then, on the ways in which the single currency shapes European citizenship? Multiple answers can be put on the table. One kind of answer to this question is that the single currency operates as a citizenship agent in three ways. It acts as a constraint, in the sense that it sets the perimeter and limits into which citizenship is built and can be practiced. Then, it acts as a paradigm, since it establishes the ways in which citizenship can work. Finally, it acts as a cognitive and operational space, where individuals are socialized as European citizens and relate with each other and with their polity. A second kind of answer is that the single currency has an impact on the fundamental components of citizenship. From the point of view of rights, it prioritizes citizens’ rights and establishes the material conditions for their exercise. From that of identity, it builds and reinforces the sense of belonging to the European community, in terms of both “feeling” and “being” European. And from the point of view of participation, it is the stake at which the debate in the European public sphere and both conventional and unconventional political struggles take place. A third kind of answer is that the single currency shapes the content of European citizenship itself. To highlight this point it is sufficient to go back to some of the elements we have dealt with previously. As a cultural agent, the single currency has defined European identity as a multiple phenomenon, including national and Community as well as civic and cultural elements. As a social agent, the single currency has reinforced the European citizens’ common environment, based on freedom of movement. As an everyday life economy agent, it has materialized the EU as a common market, where citizen consumers not only exchange goods and services, but also interact to build material and nonmaterial value. As a political agent, it has catalyzed the Eurozone as a political community and a common—although in trouble—polity. With regard to the reverse relation, from citizenship to currency, the most important point to be considered is that European citizenship is a trust agent in favor of the single currency. It means that citizenship has produced the link of common culture and interdependence among individuals, which is necessary to make the single currency work (Kaelberer in this book; see also Servet 1999; Delanty and Rumford 2005, 80–81). Without trust among their users, no currency could function; and this is of crucial importance in the case of the euro: it could be indeed said that, even if the single currency is money without a state, it is not without citizens.

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Recent polls (Pew Research Centre 2012) confirm that while citizens (especially those living in the countries that are at the center of the storm) do not love the single currency, they do not want to revert to their national currencies. A currency—and especially the euro—does not need to be popular to function as a citizenship-building agent.

Building citizenship in the postmodern era Concluding this chapter, we should focus on the more general meaning—or heuristic value—that the research on the link between the single currency and European citizenship could have. Traditional, nation state-based citizenship is built through a set of institutions, social facts, and social relations that individuals and commu­ nities are involved in, from language to territory, from (civil) religion to social capital, from civil society associations to political parties and institutions, from military service to primary schools, and so on. All these elements are citizenship building blocks in their fundamental dimensions of rights, belonging, and participation, since they socialize individuals to citizenship. However, in the postmodern era, and especially in the context of globalization, most of these institutions, social facts, and social relations have lost their function, or are no longer shared by the people, even when they live together, or at worst no longer exist (see Delanty 2000; Isin 2000; Taylor 2010). This new situation, while it somehow explains the weakening of traditional forms of citizenship, establishes new conditions (or constraints) for citizenship building in the postmodern era. In this framework, money appears as one of the few social facts still operating toward linking people together in a nonpurely market way. Citizenship of the European Union is probably the first attempt (or experiment) of building a citizenship in postmodern era, precisely because it lacks the most part of the above-mentioned building blocks, with the only exception of money. Therefore, observing the relation between the single currency and the European citizenship-building process is in some way an extraordinary opportunity to study and further define how citizenship is built in the postmodern era. Finally, we could consider this relation as a field experiment, which is able to offer new information on one of the most challenging phenomena of contemporary societies.

Notes 1 I am grateful to those colleagues who have given substantial insights for this chapter: Marina Calloni, Sergio Fabbrini, Paolo Graziano, Daniela Piana, Francesco Raniolo, Vivien Schmidt, Michele Sorice, Ennio Triggiani, and Ugo Villani. A special thanks to Lucia Mazzuca and Roberto Ranucci, my FONDACA fellows in “The Other Side of the Coin” program. 2 For a broader treatment of this subject, see Moro 2012, 35–51.

c h a pte r 2

Imaginary Europe: The euro as a symbol and practice Kathleen R. McNamara

Introduction What is the relationship, if any, between currency and citizenship? This question is not merely of academic interest. Instead, it is critically important for the real-world challenges that the European Union is facing today. The euro reached its tenth birthday only to be engulfed in a European sovereign debt crisis that has riled national bond markets and eroded confidence in the entire European project. Understanding the ways in which currency may shape citizenship is important to grasping the impact of the crisis, and the potential paths forward for Europe. Historically, currencies and citizenship have moved in perfect lockstep with each other, as the nation-states of the nineteenth century created single currencies, consolidating different monies into one, as part of often brutal state and nation-building projects (McNamara 2011, 2010b). A single currency arose as a tool of the newly centralized, bureaucratized modern nation-state, allowing for a range of activities, such as revenue raising, spending, and borrowing, that extended the state’s administrative reach. Such currencies encouraged the deepening of an integrated single market and gave political elites the ability to fight wars, solidifying the boundaries and political capacities of the states themselves. If currency helps make the nation-state, then it logically makes sense that currency makes citizenship, as part of the process of creating a nation. Things are never that simple, of course. Citizens do not automatically appear in the process of nation-state building, and the evolution of the levers

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of power and administrative capacity to the center of a defined political unit do not always create feelings of trust and identity among the people involved. There is a complex process that must occur for political authority to be genuinely transferred to the center of a political unit, and it is not a foregone conclusion that it will happen smoothly or end successfully. There are multiple ways for this process to occur, and this project, “The Other Side of the Coin,” usefully explores many of them. To contribute to this exploration, I frame the relationship between citizenship and the single currency in terms of the need for political authorities to create an “imagined community” of Europeans. I argue that it is this “imaginary Europe” that provides the necessary raw cultural material for meaningful European Union citizenship. The euro, as both symbol and practice, can contribute to the construction of this imagined community, even as the euro’s own success depends in part on the sturdiness of that very construction. But the EU is uniquely hampered, perhaps fatally, in its efforts to use symbols and practices to create community. Because the EU is a historical innovation in governance that continues to coexist with its political predecessors, it cannot build the cultural foundation for its political authority in the same way as nation-states have. In the long sweep of history, successful political forms such as the nation-state have always eventually displaced the previous forms, be they Italian city-states, the Hanseatic League, or the Holy Roman Empire. In contrast, the EU must coexist, coordinate, and celebrate existing nation-states, along with their traditions and political authority, both symbolic and material. Although clever strategies have been used by EU officials to try to navigate these dilemmas, the cultural infrastructure for integration remains fragile. This chapter begins with a discussion of the concept of imagined communities and their linkages to citizenship. I then turn to the mechanisms of community construction, focusing on the role of symbols and practices in constructing the “social fact” of European political authority, and the potential of symbols and practices to engender a sense of belonging to an “imaginary Europe.” I tease out some of the specific ways that the euro is symbolically constructed through images and representation, then turn to the ways in which practices reinforce that construction. Throughout, I highlight the contradictions and tensions in this political process of meaning construction in the EU. The chapter concludes with my thoughts on the implications of this research for the future of the euro and Europe as a whole.

Imagined communities and European citizenship Political authority is a necessary part of governing. Getting people to obey your edicts, laws, rules, and norms is much easier and less costly if you

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do not have to employ coercion but rather are viewed as legitimate. One underpinning for that authority is a sense of collective identity on the part of those being led. If a community perceives some shared, communal ties binding them together, the work of a governing polity is much more easily accomplished. This is particularly true in times of transformation and change, when uncertainty or competing authorities may shake up expectations and loyalties. The invention of the nation-state presented particular challenges for political elites, as it scaled up the organization of political rule to encompass larger geographical territories and often, different ethnic, tribal, religious, or cultural groups. Whereas the Holy Roman Empire might create ties based on the shared Catholic identity of its members, the nation-state had to create a new sense of political identity that would reorient its citizens toward the new central authority of the state. Notably, in contrast to earlier political forms, the nation-state demanded exclusive, sovereign, territorially limited political identities, not the overlapping loyalties and overlapping patchwork geography of medieval rule (Ruggie 1993). Benedict Anderson’s (1993) concept of an “imagined community,” well captures this notion of a constructed sense of belonging.1 An imagined community is one in which citizens have a shared conception of an embodied political space, where people have a sense of belonging together despite never knowing each other personally. Whereas in early forms of political organization, such as the village, or tribe, it was possible for all to have some personal connection to each other, if not directly, then indirectly through a cousin or other clansman or neighbor, as the larger-scale nation-state developed, this personal connection became impossible. Therefore, some new ways of creating the bonds of community had to be forged to hold together the newly enlarged national polity by creating a sense of belonging among its citizens. Today, given the scaling up of political authority that has occurred in the twenty-seven member state EU, the task of creating such a community in Europe is even more daunting. Most important for thinking about the EU’s challenges, however, is that the device for creating this new national-level bond rests in our imaginations. The most powerful way of understanding the dynamics of the cultural construction at work is to see how images and representations, as well as practice, are key to creating meaning in a specific cultural setting (Wedeen 2002). For example, because the political relationship someone in Cornwall might share with any given family in Oxford cannot be directly and personally experienced, it has to be filtered through a common set of ideas and experiences of being English. This relationship, being abstract and not personal, requires imagining, and therefore has to be represented symbolically. This symbolic representation is strengthened when it is undergirded through shared practices, so that “thinking” is reinforced by “doing.” Rituals, be they very clearly linked to political identities or more banal, provide a way to put into action shared symbols, even though they are experienced in parallel rather than interactively. So the family in Cornwall might sing the “God

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Save the Queen” while watching the wedding of Prince William and Kate Middleton, while a couple in Oxford does the same, putting the symbol (the national anthem) into practice (singing at a virtually shared event). Although national identities are largely taken for granted today in the West, the feeling of belonging to a distinct sovereign nation of people is a cultural artifact, one created, not organic or primordial. Whereas some argue that centuries old hatreds or identities are intrinsic and unchanging and thus to blame for outcomes of conflict, the sociological view insists that these identities are malleable and created through social interactions over time, rather than fixed and genetic. Ambitious empirical work across a variety of European cases has emphatically made this point. Historian Eugen Weber in his monumental book Peasants into Frenchmen (1976) traces out how a plethora of state policies in education, new national holidays, intensive language training, and other measures were necessary to corral a fragmented country into the French nation that up until beyond the nineteenth century had only a tenuous sense of being French. An astonishing study of the development of Scottish national sentiments based on the notion of the Highland Traditions has likewise traced many of the purportedly “ancient” Hibernian traditions (Scottish clans with distinct tartans made up into kilts and so on), to a combination of creative hucksters writing in the early nineteenth century and romantic leanings on the part of various members of Scottish society (Trevor-Roper 1983). These accounts of the rise of the nation emphasize the particular political tools, symbols, and technologies intentionally welded by motivated actors, alongside broader structural changes that provided fertile ground for reorganization of political identities. They should therefore make us wary of assuming the “intrinsic” or essential nature of member-state nationalism as a bar to any such development at the European level, while also not seeing that nationalism as easily malleable or replaceable. The obstacles to a European imagined community may be plentiful and real, but, to understand the potential and the challenge, we need to turn our attention to the question of the actual processes by which such imagined communities arise, or fall apart—a critical one for our exploration of the ways in which the euro may link to citizenship. The current Eurozone crisis indicates the pitfalls of attempting to govern over a polity that does not necessarily identify itself as one. Although seemingly robust nation-states with strong imagined communities also can fall prey to divisive and potentially self-destructive political divisions in times of economic crisis, the EU seems particularly challenged in this regard. The reasons for this special level of challenge to creating a sense of European citizenship in an imagined community are clear. While many important governance functions have been transferred to the EU level in Brussels, Frankfurt, Luxembourg, and elsewhere, the nation-state still is the overwhelming primary locus of authority for member state citizens. The euro exemplifies this. The euro was created in  1999 as part of the EU’s

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Economic and Monetary Union (EMU), with a European Central Bank (ECB) at the center of EMU to govern over it. But EMU was disembedded from the larger governing structures that support currencies nationally in every existing nation-state. Most importantly, no broader economic governance capacity was created at the EU level to oversee fiscal and financial regulatory issues or a eurobond type debt instrument. Decision making was left at the national level, with the euro and the ECB floating out alone at the European level, disconnected and ultimately in conflict with the national-level institutions and authorities. The designers of EMU believed that Europe was not ready for an explicit transfer of taxing, spending, and debt to the EU level, because of the pull of national sovereignty and the lack of a sense of common European identity. For the euro to succeed, such a larger economic governance structure must be built, but it must occur hand in hand with a process of broader authority construction at the European level to legitimate and democratize the EU. The following section explores the ways in which the euro project creates social representations and practices that provide some foundation for a sense of European citizenship in an imagined community. But the euro’s particular construction, on top of robust national identities, also highlights the ways in which the EU is severely hampered in these efforts, producing a weak sense of imagined community as it tries to situate Europe as complementary to, not a replacement for, national citizenship.

Navigating the nation-state: Localizing Europe The euro as a symbol Political actors, be they states or EU, have to be reified before they can be actors and sites of legitimate authority. In other words, they must be represented through images and symbols, and experienced in practice. If successful, this process makes the EU into a taken-for-granted “social fact.” Social facts are shared ideas so obvious that most people think of them as objective facts, forgetting that these facts are dependent on shared, intersubjective understandings for their existence. Paper currency is a nice example. A piece of paper with a euro symbol on it takes on the status of money because we all act “as if” the paper is money, rather than merely a representation of value. If one person stops believing that a 5 euro bill is worth less than a 50 euro bill, it will have no impact on its status as a social fact. However, if there is a widespread rejection of the value of the 5 versus 50 symbol on the euro, the social fact will break down in the midst of hyperinflation. Durkheim describes social facts as ways of thinking and acting, collective beliefs and practices, that derive from membership in particular societies, or substratum of societies, and, over time through repetition, come to constitute

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a reality in their own right, quite distinct from the individuals that produce them (Durkheim 1939, 7). He emphasizes the coercive, if subtle, power that these social facts exert. These taken-for-granted things, which we “know” without consciously thinking, and act within, come to have, in Durkheim’s words, a “constraining” effect on actors. In the case of the EU, if it is taken for granted as a social fact, its fundamental existence as a political actor is not contested, although its policies and programs may be (McNamara 2010a; Cram 2012). What are some of the symbolic dynamics at work with the euro, and how do they relate to European citizenship? The creation of EMU, with the euro and the ECB at its center, brought the EU both a powerful economic policy tool and a way to symbolically represent Europe as a bounded political entity (Risse 2003; Kaelberer 2004; Manners 2011). It also provided an avenue for new sets of experiences that reshaped the logic of practice for participants in Euroland. The very fact of a physical object like the euro signals the presence of the EU and makes it real for citizens. EMU is rife with such symbols: in its physical currency of paper and coins, in the ECB tower, in the value of the euro as an exchange rate traded on world markets, in the generation of economic data that uses Europe, not national economies, as its frame of reference. All of these elements of EMU underpin the EU as a social fact, symbolizing the centralization of authority to the European level, and the creation of an imagined community of Europe. Their particular content and form also can tell us quite a bit about the specific contours of what that community is and the values associated with it, as well as giving us clues about where points of contestation will rise, and the likely forms of citizenship we might expect. Most strikingly, the EU’s imagined community rests on symbols that seek to carefully navigate the preexisting loyalties and identities of the (ever robust) European nation-states while establishing a separate European sphere. Processes of standardization, on the one hand, and localization, on the other, are being used to symbolically navigate the symbolic terrain of monetary integration. Standardization uses abstraction and de-localization to invoke a unifying universality, while localization processes have attempted to resituate preexisting loyalties, symbols, and authorities within a larger European sphere. A single currency shapes political communities through processes of symbolic standardization and replacement: at the most general level, as euros replace francs, symbolic forms shift and become universalized rather than localized. Likewise, the reframing and re-categorization of economic data into “European” inflation, or the ECB’s announcement of a universal EMU interest rate involves a conceptual standardization and melding into one of “like” things. The iconography of the paper currency of the euro is similarly standardized across all twelve participating member states. All of the paper currency denomination have the same shaded map of Europe, with no distinct states but rather a single geography. The currency features

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designs of vaguely European architecture without specificity, not anchored in any particular place or actual physical structure. The images feature bridges and windows, with the lowest denominations showing older, more historic images (Romanesque arches), moving through time up to modern architecture for the higher denominations. As Jacques Hymans (2004, 2006) has argued, this particular iconography reflects the desire of European officials to highlight the openness and open-endedness of the integration project. Indeed, these images were chosen in a very carefully orchestrated and a carefully considered design competition and process of choosing the physical representations on both paper currency and coins (Barker-Aguilar 2003; Shore 2000). The euro’s iconography is also emblematic of the careful balancing of national and European symbols. The euro’s paper currency is standardized and uses European symbols, maps, or nonspecific images exclusively. However, each participating member state issues its own coins with standard European imagery on the one side and national symbols and portraits on the other. The iconography of the euro also is interesting for its content, and what it implies about the type of imagined community being built. EU has often relied on seemingly deracinated, technocratic, and somewhat emotionally superficial symbols and practices, rather than attempting to mine the deeper, more emotional roots of national identities. The paper currency of the euro provides a nice illustration: while it redraws the lines of Euroland, the pictorial representation of the EU draws on abstract images rather than historical figures or scenes that might have specific referents. The imagery suggests a community that is simultaneously inclusive and undefined as to its borders or specificity, which is omni-present and yet nowhere in particular (Hymans 2004). However, the paper currency presents a deracinated, abstracted set of universal architectural images. It is a paper currency without specific referents, no particular historical figures. The actual symbol of the euro has come to signal EU as a sort of logo, recognizable from afar, and universally readable in any language. Very few currencies in circulation have their own widely recognized graphic symbol or currency sign. The British pound (£), Japanese yen (¥), and US dollar ($), and now the euro (€) are the world’s most commonly used currency signs. The euro’s glyph or graphic representation is a shorthand that comes to signal Europe. Oddly, the euro symbol does not appear on the paper currency, only on the coins, but does appear on every price tag in Euroland, on shoppers’ receipts, in currency exchange bureaus in airports, on computer keyboards, and in the business section of the newspaper. The euro exchange rate value has become another standardized, numerical focal point representing Europe, offering an external face of a standardized, consolidated Europe to the world. With the rise in the value of the euro over its decade of existence, and stability even through perilous economic stress in the Eurozone crisis, the European currency’s appreciation may act as a source of symbolic strength. It also allowed euro holders to go on spending sprees on trips

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to the US, giving those travelers a sense of superiority in Apple stores and the Gap, even as it makes EU products less competitive in world markets. Extensive commentary prior to the recent crisis about the euro displacing the dollar as the international reserve currency of choice constitutes a status marker for Europeans as well. More recently, however, as bonds within the participating states are now denominated in euros, even as they are tied to the national economies (as in Spanish eurobonds or French eurobonds), the precipitous decline of certain European economies has meant vastly negative associations with those Greek euro-denominated bonds, even as the German eurobonds are a source of stability. For our discussion, the negative and positive both add up to symbolic representations. Even as they may have normatively different content, they both signify the EU’s presence in EU citizens’ lives, for good or ill, just as the burning of the EU flag in a Greek square asserts the EU as an authoritative, if despised in the moment, actor. The EMU and the euro are not only about standardization, but also about engaging in processes of localization that are happening in ways different from the more monolithic consolidation of national currencies in the nineteenth century. In many instances, the symbols of EMU contextualize Europe explicitly within the extant nation-states rather than attempting to displace national identities. As such, the implicit message is that the various member-state nationalities can be understood as embedded within Europe, complementary to and situating what is local or national within a broader European setting. This is most evident in the iconography of the euro coins in their iconography construct a complementary and simultaneous Europe that coexists with the national political entities, many of which do use traditional figurative symbols deeply rooted in national culture (as with Queen Beatrix on Dutch coins). That the euro coins have both a standardized EU side and a nationally specific design on the other side neatly reflects the potential for the EU to allow for a “marble cake” identity of complementary and coexisting political allegiances, where the adoption of one can occur without the exclusion of the other but rather simultaneously (Risse 2010; Raento et al. 2004). The iconography materially and symbolically situates the member-state nations within the EU, rather than placing them in opposition. The symbols on the euro are also carefully constructed in terms of the representations of the literal mapping of Europe. In contrast to the standardized and indistinct map on the paper currency, the coins offer a richer array of geographic expressions of what Europe is: a unified image of a community of Europe with no borders appears on the most valuable coins (1 and 2 euros); of a group of sovereign and distinct states on lower value coins (on 10, 20, and 50 cent coins); and as a region in a global context on the least valuable coins (on 1 and 5 cent coins). This telescoping out from the most to least valuable representations of Europe places an emphasis on the heart of Europe (although still with blurred boundaries) with reference both

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to the sovereign states that make it up, and to the broader world in which it is located. Interestingly, the representations in the maps vary slightly in terms of where EU starts and stops, with the paper currency more inclusive and open to gray boundary areas toward Russia and the hinterlands. Along with the iconography, the creation of physical representation of governance with the birth of the European Central Bank, sitting at the center of the European System of Central Banks (composed of the national central banks), has also engaged symbolic representations that also seem to carefully balance between the processes of standardization and localization. More generally, capital cities and national buildings have long been understood to be part of nation-building (Van Der Wusten 2004). Once again, we see that the EU has shied away from brazen attempts to compete with the monumental and mythmaking architecture of other European capital cites (think of Garibaldi in Rome or Haussmann in Paris). Various agencies and institutions have instead been spread around the EU to promote a sense of inclusiveness and transparency, rather than concentrating all governance activity in Brussels (Kelemen 2005). The ECB’s location in Frankfurt was carefully thought out as well, as part of an effort to reassure the Germans and other Northern Europeans that the new bank would be as sober as the gray Frankfurt sky. At its founding, the ECB was housed in a downtown office building renamed the Eurotower, but it has been carefully moving forward with the construction of a new building, one which was chosen after an elaborate design competition, because, according to the ECB, it embodied the values of “transparency and unity” (Papademos 2005). The ECB buildings thus support one central purpose of a capital city, which is to represent and symbolize state power and national unity even though the national central banks, now part of the larger ESCB system, are geographically dispersed, woven throughout Europe, navigating preexisting nation-states and their symbols and structures. In addition to the bricks and mortar of the ECB, a more human focal point for governance has also been created with the appointment of a president of the ECB, who himself serves as the symbolic embodiment of both the euro and the EU. Testifying at the European Parliament, and appearing at summits, the president (currently Mario Draghi) gives the EU a face, one of a neutral, purportedly apolitical and supranational, not national (Italian in his case), central banker. In sum, the creation of the euro and EMU has contributed to the symbolic infrastructure that builds an imaginary community. Both territorial reframing and the contextualizing of member-state nationalism within a broader European setting are occurring across a range of areas. Particularly striking is the ways in which the forms and political technologies of the nation-state, namely those related to a consolidated national currency, have been appropriated for use in the EU case. But the particular content of those political symbols and practices have been fashioned to navigate those very preexisting nation-states even as they accrue power and authority to Brussels (and Frankfurt). In the monetary area, as in many others in the EU,

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the imagined community that is being built is one that must be engaged in gingerly and yet, placed in the long history of development of different unified political forms, is remarkable in its reorienting of political authority, and perhaps, citizenship.

The euro as practice The EU’s ontological status as an invented reality does not mean it is not felt: in many instances, the EU symbols are experienced in practice as well and it is in these cases that the social construction of Europe has the most potential. The symbolic representation of the EU that occurs when national passports are reissued with EU symbols on their covers is reinforced in practice, when “EU Nationals” breeze through the passport control lines at the airport. In such moments, Europeaness is reframed symbolically and experienced materially, even if those travelers have no knowledge of the Schengen agreements or laws that produce that experience (McNamara 2010a). Symbolic representation constructs reality, but practice is what can solidify and make real those constructions on a daily basis as symbols become fact through these social processes. Social theory in international relations has taken a “practical turn” recently, which can provide a very helpful set of mechanisms for understanding the construction of the EU as a social fact (Adler and Pouliot 2011; Neumann 2002; Mitzen 2006). These authors caution that has too much focus is placed on symbolic representation, at the expense of understanding the role of practical logic in human experience, particularly in political life (Pouliot 2008, 2010). Instead of only studying what agents think about, be they narrowly strategic as in more rational materialist accounts, or how they are socially conditioned in their cognition, as in most constructivist accounts, Pouliot and others argue that we should also consider what they think from. Drawing on Pierre Bourdieu’s idea of practical reasoning (Bourdieu 1998) can provide a way to understand the processes of construction of the EU as an imagined community by highlighting the commonsense and inarticulate grounds for action in lieu of studying only how reality is represented. Humans reason in multiple ways, simultaneously, and to fully understand the evolution of the processes undergirding the development of the EU, we would do well to incorporate this “practical turn” in sociology into any account of how the EU is created as a social fact. What practices do Europeans today engage in that have shifted due to the newly integrated EU? How have their experiences of daily life, their routines, their engagement with each other, and their personal, professional, or social worlds changed over time? For example, how does increasing EU support for reimbursed cross-border healthcare and the ability to go anywhere in the EU for medical procedures subtly shift the way citizens experience their own welfare systems? How does the ability to move freely without any barriers

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across the border between Hendaye, France and Fuenterrabia, Spain, change people’s experience of space and place? Focusing our empirical attention and methods closer to the ground, understanding from the bottom up how the daily lives of those in the EU may have changed, or not, and how they make sense of their experiences is one way in which the practical turn in the sociology of culture can fill in gaps in our understanding of the meaning of EU integration, and more specifically, the ways in which the euro is shaping the imaginary Europe. How might practices around the euro help create Europe as a social fact, and provide the cultural underpinnings for European imagined community of citizens? When symbols become concretized and have physical expressions, in the process that some scholars call “entitativity” (Risse 2003), such cultural underpinnings are built. Here, symbols—and the ideas, values, and emotions contained within them—become physical objects that actors interact with in practice. Symbols are made “real” by being embodied in objects that actually become part of peoples’ lives in a practical way. The euro is one of the most dramatic examples of the process of entitativity, as the single currency makes concrete the imagined community it constructs, and opens the possibility for the construction of citizens within it (Risse 2003; Castano 2004; Herrmann et  al. 2004; Kaelberer 2004). From this viewpoint, as the euro rests in people’s hands, pockets, wallets, and purses it becomes a physical expression of the new governing authority of the EU. European Commission officials were well aware of these processes; for example, Prodi (2002): To millions of European citizens, the euro notes and coins in their pockets are a concrete sign of the great political undertaking of building a united Europe . . . So the euro is becoming a key element in people’s sense of shared European identity and common destiny. Just as with the symbols discussed, we can understand this process as one of standardization and localization. As the euro circulates, it embeds in practice “Europe” in relation to national polities, not in conflict, but in concert with them. In practice, the symbol of Cervantes emblazoned on Spanish euro coins becomes European, as the coin circulates throughout the member states, mixing with images of the Celtic harp and the Brandenburg gate in pockets and purses. In so doing, the euro personifies the notion of different nationalities naturally embedded within Europe, in a complementary way, not competing. As with the National System of Central Banks, this makes the euro project all part of the construction of a complementary and simultaneous Europe that coexists with the national political entities rather than overtly seeking to displace them. Within the ECB itself, a host of new practices have come into being with the establishment of EMU that further contributes to this cultural shift. European wide economic frames are being generated as statistics are

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collected in the member states and put together in spreadsheets and reports on the “European economy,” legitimizing the category of Europe and redrawing in numbers what the euro represents with its map. For European policymakers, integration into the ECB has created standardization in their policy practices. English has become by far the dominant language within European central banking circles, along with standardization of employment requirements, modes of analysis, and other professional practices. European central bankers and finance ministries even have referred to their zone of governance as “Euroland” in their daily speech implying the consolidation of the euro, and the replacement of national currencies has produced a territorial reframing in imagined community terms. Outside of the ECB, Eurostat, the EU’s statistical agency, and Euroba­ rometer, the polling agency, marshal statistics and ask about attitudes toward the euro. Statistics have long been a key political technology developed by the nation-state as a lever of power (Scott 1998), but in many areas, the practice of statistical gathering is now in the hands of Brussels and oriented toward a Europe-wide frame. A number of standardizing strategies are used, such as the counting of intra-EU trade as internal, even as important national reporting practices and agencies continue to coexist. In the broader social arena, the creation of EMU and the ECB has also created new communities of practice that engage with the central bank. The European Parliament was legally empowered to routinely bring the head of the ECB to testify in front of the Monetary and Financial Affairs Committee, creating new sets of interactions that embed the ECB, albeit weakly and incompletely, within the broader democratic structures of the EU and Europe. Social groups throughout the Eurozone have reoriented their public claims toward the new focal point of the ECB and the EU’s fledgling economic governance systems. EMU is thus creating new communities of citizenship practice beyond the technocratic corridors of Brussels and Frankfurt, although the insulated nature of the hyper-independent ECB means this process is always a thin and contested one.

Is it enough? The future of European integration Has the establishment of the single currency fostered or weakened the EU citizenship-building process? How has the Eurozone crisis affected the relationship between the single currency and citizenship of the Union? Despite the incomplete and halting nature of this process, it is my contention that the European Union, like earlier political forms before it, has been and is being constructed not only through economic and political dynamics but also, culturally, through social dynamics that are creating an “imagined political community” of Europe and Europeans. However, that this community exists

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The Single Currency and European Citizenship

does not mean it is perfect, or complete, or all-encompassing, or permanent. The current Eurozone crisis is severely testing the EU’s legitimacy, even as large parts of the EU remain deeply, if often invisibly, integrated. The Single Market and the European Court of Justice have built an extensive European legal system that stretches across all areas of daily life, the national bureaucracies of the EU states have been merged together through the EU policy system, and the EU has become an international actor on the world stage. An imagined community supports these developments, but it is a very particular version of one, blending elements of the political communities that preceded the nation-state, more modern state-like dynamics, and some truly new postmodern characteristics. Unlike the emergence of the nation-state in the second half of the nineteenth century, the EU cannot draw upon that exclusive narrative of political identity, but rather must coexist alongside its national members, with their own well-developed political communities and symbolic apparatus. The EU must somehow navigate these preexisting and robust identities to succeed. Europe’s imagined community could not be constructed simply by having the EU reproduce itself squarely on top of the nation as in Anderson’s original account. Policymakers must instead find other ways to fit within the existing cultural context of the modern era of the nation-state, appropriating and reinventing national symbols, juxtaposing rather than confronting them. The EU and traditional national symbols coexist, but crafty policymakers have attempted to frame them so as to not to be in direct competition with each other, their effect additive and positive sum, not zero sum. The strategy that has been followed, I argue, is one that uses symbols and practices to create a localized Europe that is rooted in relatively uncontested, seemingly trivial layering of images and experiences, where the EU is framed as complementary to, not in contest with, the nation-states. The sober central bankers in their Eurotower, the abstracted arches of the euro’s paper currency, the language of “Eurozone interest rates” has subtly reframed the reference points of citizenship in the EU by creating an imagined community supported by particular symbols and practices. This has contributed to the broader cultural infrastructure that has allowed the EU to develop as it has, and even in the midst of a catastrophic bond market crisis, to collectively pool funds of 1 trillion euros (and counting) to try to keep the Eurozone intact. Yet while the imagined community of European citizens, as described earlier, may have been adequate to get us to the astounding historical innovation in political organization, that is, the EU, it is not likely to be enough to sustain the deep integration needed. For the EU to not to end up a spectacular failure of imagination, there must be a move forward in the collective commitment of European leaders, as well as their publics, to deeper and more democratically meaningful governance at the EU level. The contestation around the Eurozone crisis, ironically, is a step forward

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in engaging in vigorous debate over the depth and shape of Europe. Only time, and the creativity and leadership of Europe’s leaders and its citizens, will determine the fate of “imaginary Europe” and the political order it embodies.

Note 1 See Cram 2001, 2009, 2012 for valuable analyses that also uses the imagined community concept to investigate the EU’s development.

C h a pte r 3

The only wealth are human beings: Currency between economy and citizenship Thierry Vissol

Difficult to fall in love with a currency even if unique —Emma Bonino1

The title of this chapter raises two main questions. First: what is a currency? Second, deriving from the first: can a currency be a citizens’ currency? In the case of the euro, the answer to the second question will be blurred by the present “euro crisis.” This EU crisis (and not only considering the United States and Japan’s public debt situation) is more a mix of insufficient political governance; mismanagement of public finance; defaults of  reporting, of monitoring, and perverted economics based on credit; than a crisis of the euro. As the European Central Bank (ECB) claims, the European Commission and the European Council require that elementary rules of sane public finance management be observed. And, they are right. Observing the euro exchange rates against USD may offer proof: during the first years of the international euro’s life (1999–2001) the euro and the dollar were more or less at par. In 2002, when notes and coins were introduced, the euro was under par. It went up to 1.4 USD per euro in 2005 and has fluctuated between 1.2 and 1.5 since then. That is not specifically a sign of crisis. There is and there will be a strong demand for the euro, not only because the EU remains, all in all,

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a strong and competitive economy as a whole, but also because there is not much alternative as world currencies, if not those of the two other public-debt-sick-countries: the USD and the yen. The Chinese money, the Yuan, is not yet able to compete. But, they are also wrong. The international money and financial markets are so disproportionate as compared to the real economy they are supposed to fuel; banks and financial operators are so intricately involved with each other that nobody knows what the explosion of the enormous bubble of short-term risks and pseudo anti-risks instruments could produce. A financial tsunami is not to be excluded although operators may, at one point, understand that self-destroying their own market may not be their best move. But the history of financial panic and crashes show that the worse cannot be excluded. Keeping the gains and socializing the losses have always been part of the financial game and, up to now, it has worked: states and citizens are paying for the markets and public finance mismanagements. The problem is that the public and private debt level in the world is globally so high that this game may not be able to go on any longer. Nevertheless, efforts to redress critical debt situations in Europe are, as always, primarily affecting the less-protected citizens, creating discontent that can be easily used by demagogues. Therefore, the euro is undoubtedly associated with negative aspects of the EU construction, that is, to say, to the loss of national sovereignties and for many with the dilution of national identities. By a strange paradox, European citizens seem to be aware that only a reinforcement of the EU can cope with the global risks, which are environment and climate change, terrorism, immigration, and so forth, and should exert a strong leadership in world affairs together with the United States, but, they do not understand that the euro is the key to that leadership. In other words, they see the euro as an external element imposed on them to curve down wages, pensions, and social benefits. This paradox is clearly evidenced by a study of the German Marshall Fund in September 2010, confirmed by the results of September 2011.2 The poll indicates that although a majority of EU respondents (63% in 2010, 67% in 2011) agreed that being a member of the EU has been a good thing for their country’s economy, only 38 percent in 2010 and 40 percent in 2011 consider that the euro is a good thing for their economy (see Figure 3.1). Such results are not really surprising as, since 2008 and the subprime crisis, hundreds of billions of euro have been injected by governments to support banks and big firms, pushing up the public debt ratio to the GDP by nearly 20 percentage points, without any apparent benefit for the populations. The public debt crisis of several of the Eurozone members and the specific Greece crisis came on top of this. Viewed by noneconomists, it appears that the same people who benefitted from public money are now speculating on the debt markets and claiming for more public support to ease their potential losses. Rating agencies seem to rule the game and impose

The Single Currency and European Citizenship

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Figure 3.1  EU membership versus the euro. Source:  Adapted from German Marshall Fund 2010.

their path on governments, while the role of the ECB (and of the IMF) is far from understandable for “normal citizens.” Even worse, the ECB is viewed as an ally to the IMF and market operators in imposing restrictive policies on budgets, therefore on public services and social benefits, on weak member states. This “externality” of the ECB, the patron of the euro, and the absence of a political counterpart at EU level, strongly highlighted by the disagreements among the EU member states and by their procrastination to take decisions, makes of the ECB and of the euro, in the mind of many, a social enemy, the perfect scapegoat. Obviously, very few people remember the 1929–1933 crisis and its consequences due to an absence of policies’ coordination and central banks errors to counteract market panic and bank crisis. From the point of view of a monetary economy historian, although chaotic and slow to decide, measures taken or envisaged by the EU leaders and the ECB have permitted, at least up to now, to overcome a major world economy crash. But, it is hard to persuade people who look at the precariousness of their jobs, their low wages, their reduced social benefits, and increasing

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tax pressure, which result from these rescue policies, that all this has been done for the commonwealth, from which they feel to be (and are de facto) excluded. Getting out of the euro, expelling some of its members are therefore becoming political arguments. One key explanation of this paradox may be found in the fact that the euro and the EU monetary construction were thought of and created by economists who did not take the noneconomic dimensions of money into account, simply because they do not enter in their field of competence, or in their econometric models. Therefore, two aspects necessary, but not sufficient to create citizens’ confidence, have been focused on: counterfeiting and price stability. They have built a system where the euro is an economic variable to be neutralized. The problem is that money is not only an economic variable, but also a public good at the right center of social and political bonds that make the complex mechanics of a society work. The first part shows that monetary theory is ignoring the social, political, and identity dimension of money and focuses on its macro-economic dimension. The second part describes the various noneconomic dimensions of money and the third part illustrates how and why these dimensions have not been taken into account, failing to create a euro citizenship that would have contributed to European citizenship building.

Money as economic variable: A short review of literature With the dominant “scientific” approach to economy that eradicated political economy, the human factor is ignored: models and sophisticated mathematical theories cannot integrate social and psychological factors. This produces a purely instrumental approach to money. But the fault is not only theirs: psycho-sociological aspects of money have rarely been discussed in the main economic literature.3 Monetary theory has been and continues to focus on the role and the functioning of money mechanisms either in a state economy or in a free market economy. Reviewing the economic literature, the social and political dimension of money in a defined geographical area— what can be called “monetary identity”—is only considered “en passant.” The “top down” instrumental approach to money aims toward the public good, but the technical “detour” to achieve this aim has a tendency to become the aim. Rulers who decide simply expect that public consensus will follow, not that it has to be built.

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Let us start with Aristotle. In its “Ethic to Nicomaque” he states that: Money has been created following an agreement or a convention between humans. It is why it is called money (“nomisma” in Greek deriving from “nomos” which means “convention” or “law”), because it does not receive its price, neither its value from nature, but from the law and from a decision of man. And the later is able to modify its price and modify its value . . . Money will therefore represent the will of those who decide by law to create that money, and who give it a value. Obviously the nature of that will, the basis of the ruler’s sovereignty, can be discussed. If sovereignty results from the divine origin or from the strength of the Prince or of the elite, the will shall be that of this power figure, whatever it is. It is not sure that people falling under the law of the Prince or of the oligarchy or of the political power will find their will and their identity represented by that money. On the contrary, if sovereignty comes from the multitude or from citizens as a whole (as Aristotle discusses it) it will be up to them to elaborate the law defining their money. Therefore, they may well recognize themselves and their own sovereignty in that money, which will be the expression of their power, of their vision of common wealth and wealth repartition. But apart from Thomas Aquinas and David Hume, economists did not discuss these aspects any more. Many thinkers and political advisers during the Roman Empire and the middle ages discussed or suggested monetary reforms to stabilize money and reduce public debt (the problem is far from new). But problems were discussed from the rulers’ point of view whose power was put at risk by economic and financial crisis. Money became a subject of discussion “per se” among scholars after the discovery of America with the first academic works on inflation produced by the economists of Salamanca (sixteenth– seventeenth centuries). They urged the Prince to control the amount of money in circulation. From these works derived harsh discussions during the seventeenth and eighteenth centuries like the famous controversy between Jean Bodin and De Malestroit (1568), which was pursued by the debate between mercantilist and mechanist economists. On the one side, mercantilists privileged a statist approach of money (with state intervention to control the flows of money). For mercantilists, sovereignty was that of the Prince who had to act in economic and monetary terms in the same way that he was acting in international relations: with the strength to defend his interests, which were supposed to be that of the people under his rule. Mercantilists did not try to fight against the Prince, but only to convince him to use his power to defend the interests of the merchants. In this sense, they privileged the statist approach of money and it could be derived that the money is that of the sovereign, not necessarily that of the people. The monetary identity would be linked to the level of fidelity to, legitimacy and recognition of, the Prince, (but only . . . if it is a “good” one4), and not to the boundaries of the ruled territories or to the citizens using it.

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On the other side, two schools of thought fought against the mercantilists: the “mechanists” and the “naturalists” who privileged free trade and free flows of money.5  The “mechanists” followed

the rational approach developed by Galileo and Descartes. They believed and tried to demonstrate that universal mechanical economic laws exist, for example, David Hume (1711–1776) and Anne-Robert Turgot (1727–1781).

 The “naturalists,” following

the theological approach of Thomas Aquinas, argued that there is a universal natural order—defined by God—for example, Isaac Gervaise (1720) and the Physiocrats school.6

Both schools of thought considered that the best sovereign’s action (whoever he was) was not to act, so as to let equilibrium naturally occur. Both approaches are in fact similar in their economic consequences but not in political terms. “Naturalists” would favor the Prince’s sovereignty whose power is given by God; “mechanists” would favor sovereignty of the people. They gave rise to Smith’s theory of the “invisible hand” at the roots of monetary theory and monetarist approaches (Milton Friedman and others). Their approach, called by Hume the “price specie flow mechanism,” which later led to the “monetary approach of the balance of payment” (and to the Optimal Currency Areas Theory of Robert Mundell, Marcus Fleming [1911–1976] and others) considers that economic laws do exist, which ensure automatic equilibrium mechanisms at world level. But, money is only an “intermediate of exchange” facilitating trade, but cannot and must not be a tool of power of any sovereign. Money must be neutral; therefore, the action of the sovereign and, from the ninteenth century of the central bank, must only ensure that neutrality. Their vision is also cosmopolitan. As a consequence, money has nothing to do with identity or with any sociological or anthropological approach. In the end this would plead for one unique world’s money.7 Such a proposal was defended by Robert Triffin (1911–1993), and is still that of the 1999 Nobel Prize winner Robert Mundell (1932–)8. The French Revolution, besides having a temptation of universalism, gave rise to the concept of “Nation” giving to sovereignty a geographical and citizens’ dimension. Sovereignty is the expression of the people, but inside a specific territory. Even if there were disputes between the Jacobin for who the state had to decide for all (deriving from the Leviathan approach of Thomas Hobbes, 1588–1679) and the Girondin’s more liberal and cosmopolitan one, it is the Jacobin approach that dominated during the nineteenth century’s creation of new states, which all wanted to create their national currency. This was particularly the case for Germany with the development of the “historical school” whose main exponents were Friedrich List (1789–1846)

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and Adam Müller (1779–1829)9 and on monetary aspects, Georg Friedrich Knapp (1842–1926).10 In their view, universal economic laws were impossible. Such laws threatened the statist policies that the group favored. In Knapp’s view (very close to Aristotle’s), the “institution of money was essentially an invention of the state; and it is the state which determines which commodity is to serve as money” (p. 134). Obviously, this leads to state interventionism (price controls, etc.). Finally, John Maynard Keynes (1883–1946) can be considered as a “follower” of Knapp, even if with a different approach (the liquidity trap), because he still believes that economies (or state) are rather closed where money has to serve as counter-cycle tool. Clearly, the consequence of such an approach11 is to make money a tool serving the state, whose sovereignty is defined partly by its capacity to master its money. State interventionism by contributing to the common wealth will therefore contribute to create a monetary identity and, as a consequence, serve the citizens. It remains to be asserted whether or not the state’s citizens recognize themselves in the state money. The extreme liberal approach of Friedrich A. Hayek (1976) is intermediate between the two discussed above. Starting from the statist conception of money, he considers that it does not work. He therefore suggests that private banks should issue money, and those monies would compete as goods on a free market of monies. There again this destroys any kind of idea of a monetary identity, that is, its role as a social and political bond in its issuing and circulation area. The concept of the neutrality of money has been the basis of the European Monetary Union, without much consideration about the social and identity approach of money. It has certainly been and still is a success. The euro is a European currency in every aspect. It has gained broad credibility on international monetary markets; inflation in the Eurozone has been mastered. Nevertheless, the euro monetary policy has been totally disconnected from the political powers that remain independent from one another. No institution has been created at European level to ensure a political and fiscal counterpart that could make European citizens feel as if they belong to a commonwealth area and not only to a currency area. Only its instrumental aspects, its technicalities have been taken into account, postulating that it would contribute to the public welfare in such a way that the citizens would appreciate its obvious benefits. The EU leaders have forgotten the precept of the father of monetary economics, Nicolas Oresme (1325–1382): “money does not belong to the Prince, but to the community that use it.”12

The socio-anthropological aspects of money Plato and Thomas More, writing about the ideal city almost twenty centuries apart, both explain, in opposite ways, the importance of money in urban

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societies based on the division of labor. Although an indispensable tool for the social cohesion, individual welfare, and organization of the city, money, if used or managed badly by the rulers, also contains the seeds of its own destruction. If that is true, it is no small thing for a state to change its currency, both for the order of the “city” as a whole and for the individuals living in it, specifically if, as was the case of the euro, the new money is no longer controlled by the national state or by a federation or a confederation. Yet this “economic” or geopolitical view of money, whatever its use in justifying the creation of a single European currency, is extremely narrow, as economic and monetary history demonstrate. Monetary instruments appeared at more or less the same time as the division of labor and the advent of societies organized around a political power in an urban structure. The history of money shows its close link with the development of knowledge, in the context of urbanized societies. Contrary to the received wisdom, and sometimes to scientific studies ever since Aristotle, which is unfortunately still universally taught, urban societies did not switch suddenly, as it is assumed, from bartering to using round, minted, metallic coins introduced by the Lydian and the Greeks seven centuries before our era.13 The concept of using a means of exchange accepted by a society, that which we call money, did not arise by spontaneous generation to spread around the Mediterranean world within a few decades. Rather, it was the result of the accumulation of knowledge and abstraction, a process related to the development of organized societies and, based on the development of technology, of justice and law. Recent archeological findings suggest that money was probably invented before writing. Some scholars go even further, claiming that the existence of monetary instruments and exchange caused writing to arise as a response to the need to keep accounts in order to manage the distribution of wealth, even in palatial societies. The history of money is therefore both the history of our civilization and a mirror of the chaos that has marked its development. It reflects the history of kings and gods, the conflict between dictatorship and democracy, and between domination and justice. The origin of money is related to both power and religion. Means of payment, units of account, and stores of value in many different forms (strands of precious metal, grain, bars of salt, the stands of sacrificial cauldrons, precious objects, symbolic axes, knives, symbolic shells, abstract units, etc.) before minted coins came into general use were vital for longdistance trade flows, for the fairness of exchanges, the payment of taxes, the administration, and distribution of private and public wealth or for religious rites. Seals, writing, scales, and monetary instruments all contribute to the same intellectual process and express the source and legitimacy of power to ensure the smooth functioning and longevity of complex societies, as long as it is embedded in a juridical framework. Very early on, monetary units were used to establish a hierarchy of crimes and punishments.14 This hierarchy is firmly anchored in our civil and criminal law and forms the very basis of the insurance system (see the Section “The sociological dimensions of money”).

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So ever since people started to live in societies, monetary instruments have been linked to what is known as: “public order.” But beyond its political and religious importance, money also plays many psychological and social roles. It is a language deeply rooted in the individual and collective unconscious. It is also a strong social bond between the individuals who use it and between individuals and the state, via numerous connections established by taxation (or a religious offering), as old as public power itself, and its corollary, redistribution, whether religious or secular. This social reference point establishes a link between the members of a society and its institutions, its juridical order, and this bond helps to foster confidence in its officials. The various and complex dimensions of money should have been sought out and taken into account in order to envisage the consequences of deep troubles that the change over from national currencies to the euro would have created in social and psychological habits, in the fiscal and political reference point (the change of issuing authority) for the general public and democracy.

Psychological dimensions of money The definition of money as a “means of exchange,” in the broad sense, is pregnant with meaning. In fact, the verb “to exchange” applies to both the commercial and the noncommercial worlds: we exchange not only goods and services, but also ideas, friendship, love, glances, handshakes, caresses, blows, good and bad turns, and so on. It implies the presence of at least two protagonists, with each gaining an impression of the other and of him- or herself through the exchange. The exchange of money is the example par excellence of this. Freudian theory has shown that, in essence, the two pillars of psychology are sex and money. A person’s relationship with money is therefore the expression of the individual’s psychology. In fact, three psychological levels of relationship can be determined in monetary exchange. They apply from infancy, from the moment when the infant becomes conscious of his or her external environment. These three levels are:  Relationship

to him- or herself. Children, like adults, build their self-image through their ability to assert themselves vis-à-vis other people. A person’s economic circumstances, reflected in his or her spending behavior, play an essential role in his or her self-image;15

 Relationship

with others. The ongoing and ever increasing role of money in social relationships determines the image that an individual builds—or tries to build—in the eyes of others. People know that, in a certain way, their spending behavior is “judged,” consciously or otherwise, explicitly or otherwise, by others. Clearly, in our

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consumer societies, most people’s social status, indeed their social esteem, is often closely linked to their level of income. It could even be said that salary levels reflect not only a social hierarchy but also and above all a social consensus (not always accepted voluntarily by individuals or sectors) about the importance attributed to particular jobs or occupations that are remunerated accordingly.  Relationship

with institutions. Money reflects a whole series of relationships between people and institutions: their relationship with the state, of course, which issues and guarantees the value of money, takes and redistributes money through taxation and social benefits; their relationship with the bank, which manages flows of money; and with their employer, who pays a salary, most people’s main source of income. This relationship with institutions, based on reciprocal trust between the parties, determines whether or not people feel they belong to a particular society. If people cannot integrate or be integrated into such relationships of reciprocal trust, they will start to feel excluded from society.

This last point is obviously crucial. Although the EU is the main ruler, issuing a large majority of laws that do apply to any citizen of the Union, for most citizens, their national institutions and government remain the real perceived rulers of their life. When an external power (the ECB, the EU, the IMF) managing money in which people do not recognize their identity imposes rules to defend that money (whatever may be their economic longterm rationale), rules that contribute to the disruption of existing social bonds, it is the money and not the national government mismanagements that will serve as a scapegoat.

The sociological dimensions of money: Political power and social cohesion Money together with weights and measures have been designed to be—and still are—among the supreme instruments of social justice, creating social bonds between the population to which they serve.16 Ever since ancient times, legislators have realized this. In 1750 BC, the Mesopotamian monarch Hammurabi codified the prices of products and the level of fines for civil and criminal offenses. The Bible took up this codification (see Deuteronomy 19–25). Sacred texts, such as the Bible and the Koran, heap opprobrium on falsifiers of weights and measures: Bible: “Do not use dishonest standards when measuring length, weight or quantity. Use honest scales and honest weights, an honest ephah and an honest hin.”17

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Koran: “Woe to the defrauders”18, “And give full measure when you measure out, and weigh with a true balance; this is fair and better in the end.”19 Why? Because the prerequisite for society is that certain social conventions are acknowledged and accepted (though not necessarily approved of) by everyone. The punishments imposed on counterfeiters (death penalty), throughout history and in  all civilizations, testify to the importance of money’s social role and the guarantee of stability given by the issuer, indispensable elements of social cohesion. The European institutions, well aware of the need to protect currencies, have drawn up legislation designed to combat fraud, counterfeiting, and organized crime. No society can last very long without a consensus—be it tacit, explicit, or democratic—created by the political or religious authorities, or a combination of the two main conventions based on the existence and acceptance of distribution mechanisms, whether egalitarian or not. For example, consider wage levels based on collective agreements, taxes, and allowances. The keys to this distribution depend on the hierarchy of the society in question. Once an agreement is established, respect for the rules becomes synonymous with justice or injustice and helps justify the existence of this hierarchy related to the common values of the society in question. This means that such agreements can develop and differ over time and space. For distribution, read numeration and valuation. For valuation, read standard unit of account in order to draw up rules concerning the equivalence of the different goods and services. Acceptance of the unit of account implies confidence in its invariability and rules of use, which explains the laws governing weights and measures, against fraud and counterfeiting, whether temporal or religious. This helps explain the iconography and inscriptions used on coins, themselves derived from the glyptic customs of many millennia. From the fourth millennium before our era onward, seals were produced depicting the monarch or potentate usually acting as an intermediary with a god, in conjunction with inscriptions recalling the monarch/potentate’s filiation with or submission to a divinity. Such symbolism is a constant feature of the history of money and is still found to this day.20 The monarch’s divine filiation and/or the assurance that God’s or civil laws would be respected by the monarch or by the democratically elected authorities consolidate the temporal and the spiritual powers and cement the contract with and confidence in the state. This is why most member states were strongly opposed to euro coins with their two sides identical in  all member states and decided that one side would still have to bear national references. Nowadays, currencies no longer have any intrinsic value, but the need to maintain the issuer’s legitimacy and the value of the currency persist. It is therefore no surprise that the objective of price stability was introduced into the Treaty as the main mission of the ECB. But, this has been at the

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cost of the disappearance of any possibility of democratic control over the European monetary policy. The need to maintain justice and social cohesion via stable purchasing power takes precedence over any short-term needs and the political temptation to adopt inflationary measures to satisfy them.

Money as a language Money is also a language, an abstract process like writing, for quantifying, storing, producing, and transmitting wealth, just as writing is used to communicate, produce, accumulate, and transmit knowledge. Users of money need to be numerate and understand the rules of arithmetic. This language is based on a certain number of mechanisms that, once learned, become automatic. It is essential for autonomous decision making, to allow everyone to move around in the modern world, to safeguard his or her dayto-day survival and the future of his or her children. Basically, there are three mechanisms (from the most general to the most specific):  The

ability to draw up scales of value, in other words to look at incomings and outgoings, set priorities, and to determine their relative importance: What can I afford to spend on my rent, food, clothes, leisure pursuits, etc.? Can I afford to spend €50 on a pair of shoes?

 The

memory of prices. Everyone, according to taste and habit, buys a certain number of products regularly and therefore knows the price. These prices serve as reference points to value other products and select retail outlets. In fact, our first reflex action on entering a new shop is to seek out—even unconsciously—the prices of known products. By comparing these with the reference prices in our memory, we can form our idea (possibly a wrong one) of the pricing policy of the shop in question. It is this automatic mechanism that determines the large retail chains’ pricing policies and promotion policies.

 The

ability to understand a monetary amount and to judge price differences. This ability to consider the value expressed by prices and money face-values, to picture it in one’s mind (“prices talk”) allows us to appreciate price differences. Faced with a series of similar products, we can interpret and rationalize the differences in price between them and choose the one that best matches our spending power or our desire to be different. This is why professionals place so much emphasis on “psychological pricing.”

Learning the new language of the euro and its fifteen tangible manifestations (eight coins and seven notes) has been (and still remains—10 years after

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its introduction—a difficulty for a significant minority) the most difficult problem for a majority of people to overcome and has revealed their worries and fears, conscious or unconscious, about the other aspects of the currency.

Scientific and technical aspects Money also has technical and scientific aspects. Technical in the sense that the production of money requires a significant accumulation of knowledge of various kinds: mineralogy, to recognize the metals; mining, to extract them; metallurgy, to process them; art, to decorate the coins; mechanics, to mint them. Scientific in the sense that issuing and managing money supply and value are governed by complex sciences: economic theory and political economy.

Conclusions The purely technical aspect of money is rather marginal compared to all the other factors, which is why the adoption of the euro had and still has significance far beyond the technical and economic aspects. It constitutes a need for a European citizenship—in the broadest sense—not replacing the national one, but based on it. This has always been and remains the missing part of the European monetary construction. The EMU was built on an economic and technical basis before any political Union. This has been the consequence of a great debate between France and Germany. For Germans, the monetary union should have been at the end of the European integration process, the “cherry on the cake.” For the French, it was a way to force political union provided for in many official and legal texts approved by the European Council on this matter. The French approach won. It should have been completed at a later stage by strong progress toward political union that failed to be accomplished in the later Treaties (Single Act, Amsterdam, Nizza and Lisbon). Moreover, from 1992 onward, the various financial, economic, and political crises, and the enlargement of the EU to 27 members produced various negative effects on the capacity of the states to respect their Treaty obligation or on the speed of the political integration and on the citizens’ desire for more Europe. These changes contributed to a certain re-nationalization of policies and nationalist behaviors blocking the perspective of a political union in the medium term. This “re-nationalization” process loosened the bonds painfully created between citizens and the European institutions during the past two decades of the twentieth century. It contributed to creating a European democratic gap.

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This difficult context, as well as the limits imposed by the juridical basis, inscribed in the Treaty, has limited the capacity of the Institutions, first, to act on citizens’ expectations and, second, to appear as the legitimate ruler. Two main examples, during the preparatory phase of the changeover to the euro can be proposed to illustrate this point. The changeover to the euro needed to prepare, inform, and train the users as well as prepare them to the change of monetary sovereignty. Two options were possible: let the European Institution (mainly the Commission) deal with that challenge or “subsidiaries” it, that is, leave it under the member states’ competence. The first option that would have permitted the necessary psychological transfer was excluded and the decision taken that member states would take care of this information/training process. The role of the Commission was limited to coordination and to the exchange of good practices. Nevertheless, the Commission was active, insisting on the need to inform and train the most vulnerable people (disabled people, people in difficult social and economic situations), organizing studies, pilot operations, and creating in collaboration with the concerned populations and NGO’s training methodologies and tools, as well as training people to work in the field, the so-called “Euro made-easy” project. However, member states had no obligation to follow. Some did, such as Spain, Luxemburg, and Belgium; others left it to the goodwill of regions such as Italy and Germany, and others decided to “nationalize” the operation, such as France, Ireland, and the Netherlands, trying to remove any reference to the work of the European Commission while using its tools and methodology. Moreover, all member states waited until the last minute to act, a few weeks before the changeover, while the Commission had insisted on the necessity of a longterm preparation. Many used national political arguments to justify their position. In the meantime, the ECB focused on its credibility in the international financial and monetary markets. For a new Institution, without references, this was a sine qua non condition for the success of the whole operation. Nevertheless, this should not have led to the underestimation: first, the citizens’ need to build their confidence in the Institution and, second, that social bonds had to be created with the EU citizens. Confidence is a bilateral process. The ECB believed that insuring price stability, avoiding counterfeiting of the euro note, and communicating on these arguments would have been sufficient to create citizens’ confidence. But while doing so, the ECB excluded citizens and NGOs from the secret preparation of the euro notes. There was some consultation at the end of the process on the notes dimension, but the ECB refused up to the last minute to produce training material. When it did, it provided fake one-sided notes, which were useless for training. On the contrary, Mint Directors produced tokens similar to the euro-coins, although without the design. Clearly, counterfeiting was a risk, but losing the opportunity to create citizens’ confidence, ignoring their need

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to create social bonds with the ECB proved to be a greater risk: euro fakes currently exist, and citizens’ confidence in the euro and the ECB is still to be built. It is useless to redevelop the weakest part of the European monetary construction: the lack of a European political and economical/fiscal union, or even the lack of a confidence-building process toward the European institutions on the part of the member states. Too often, European institutions are presented as an external constraint on national policies that force toward restrictive policies, if not as a scapegoat. At the same time, as we can see from the beginning of the “Greek Crisis,” several destroying processes are in action: contempt for the European members in difficulty: the “PIGS” (Portugal Ireland and Italy, Greece and Spain); national egoisms or diffidence (refusal to support the others) that do not take into account that the “sinners” are also the source of the wealth of the “virtuous” (too often self-defined as such). The interlinks between European economic, banking, and financial markets are such that no one can expect to get out, alone, from what is a global crisis and maybe a systemic crisis. Economics is not a “moral” science. In economics, there is no such thing as “vice” or “virtue,” only disequilibrium that compensate for each other. Stated in other terms, the balance of payment surplus of one country reflects the deficit of another and vice versa. In a pure liberal economy, this should generate compensatory flows, for instance, an increase in the wages of the countries in surplus. The whole EU construction is put at risk by the absence of a consensus to implement a political union, or, as a second best, a true economic, fiscal, and monetary EU government that would permit the building of direct social bonds between citizens and the institutions that manage the euro. The calls of Chancellor Merkel in favor of a European economic government are certainly welcomed. But, first, this has to be accepted by the other members; second, it needs time (years more than months); and third, it should not be a simple redressing of what already exists in terms of economic cooperation. And if it becomes a condition to act practically in a matter where urgent actions are required, this economic government may arrive when the game is already over. The only immediate action to save both the citizens’ and the markets’ confidence toward the euro—even if the ECB could play the role of last resort lender—would be to create eurobonds, that is, financial securities that provide liquidity and funds to member states and not only to those states that do not have access anymore to markets to finance their debt at reasonable prices. There are different formulas; but whatever is chosen, this would be the only way to avoid panic and crashes.21 In pooling the European public debts and financing them through European bonds backed by all member states, European leaders would finally demonstrate that the EU exists, not only for economic reasons but also for the citizens’ direct and palpable benefit. It would be the first step, even if not sufficient, to transmute the euro from a European currency to a citizens’ currency. Obviously, this would

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require coping with the risks of moral hazard and creating a new European fiscal policy framework, which, in any case, is an absolute long-term survival necessity. The debate remains open, but it is not sure that market forces and citizens will wait very long, neither that the “Fiscal Compact” and its golden rule will convince all of them of the EU capacity to create growth and jobs and protect our commonwealth.

Notes 1 Public Conference in European Space, Rome, June 9, 2001. 2 See German Marshall Fund 2010; 2011, 18–9 (charts 16–17). 3 Discussions about the social aspects of money, linked to the concept of “monetary identity” have been analyzed in the works of socio-philosophical thinkers such as Thorstein Veblen, Karl Polanyi, etc. 4 See the Gresham Law: “the bad money chases the good one.” The popularity of “good monies” albeit foreign against the national ones obliged many Princes to legislate to forbid their use on their territories—without much success . . . 5 See Vissol 1985. 6 Mainly François Quesnay (1694–1774) and Pierre Samuel Dupont de Nemours (1739–1817). Turgot cannot be considered as a physiocrat (See the letter from Turgot to Dupont de Nemours refusing to be included among the physiocrats). 7 See Gervaise 1996; Hume 1752; Turgot 1914; Letiche 1952; Vissol 1982; 1987. The debate on money between mercantilists and the other schools is described in Viner 1975, ch. 2, 58–118. 8 See, for instance, Mundell 2003. 9 See “Theory of state Finance,” 1812. 10 “The State theory of Money” 1975. (Original edition: “Staatlische Theorie des Geldes”, 1905). 11 Discussions about Knapp’s view of money can be found in Gordon 2001; Wray 1998. 12 See Galbraith and Mynors 1956. 13 It should be noted that, at the same time, minted metallic coins known as “karshapanas” appeared in northern India (now Pakistan), and the Chinese had been casting bronze coins to imitate cowries shells, used as money for several centuries. 14 For instance, the Hammurabi code, 1750 BC, see below. 15 A qualitative study carried out by the European Commission to analyze the public’s fears associated with the transition to the euro clearly showed that many people would be afraid to use a calculator to work out prices in euro because they would be embarrassed to show that they had not yet mastered the new currency. See European Commission 1999a, 44 ff.

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16 It is interesting to note that ancient civilizations with absolutely no contact between them used symbolic cutting tools as “monetary instruments”: Armorican axes with sockets, between 1000 and 300 BC, metal axes in South America before the arrival of the Europeans, knives and spades as currency in China earlier than 300 BC, lances, knives, etc., in central Africa up until the twentieth century. In all these civilizations, debt was seen as a social bond, symbolized by a rope. The monetary instrument used to repay the debt therefore had to symbolize a way of breaking the debt, without cutting the social bond. This is why none of these blunt instruments were sharpened or given a handle, so they could not be used as real cutting tools. 17 Leviticus 19: 35–6 and Deuteronomy 25:13–6 [New International Version]. 18 Koran LXXXIII, 1. 19 Koran XVII, 35 and XXVI, 182. 20 For example, the inscription “In God we trust” on American coins and notes has this very function. 21 The injection of liquidity done by the ECB has allowed disaster to be avoided, but these are short-term actions that do not solve the problem.

C HA P T E R 4

Trust in the euro: The single currency as social construction of an institutional fact Matthias Kaelberer

In our daily life, we take money often as given. We are simply used to treating particular pieces of paper or metal and certain electronic blips as something valuable in a transaction, and we are able to distinguish them from other pieces of paper or metal and electronic blips that do not function as money. Human beings use these different forms of money without having to spend much thought on why they function in this way. Behind this daily experience, however, lurks a fundamental puzzle of human existence: Why would anyone exchange real goods and services for a piece of paper, a metallic token, or an electronic blip? Money has no intrinsic value. We do not cherish a dollar bill or a euro coin for the material value of its paper or metal, the artistic value of the images displayed on currency, or the production costs of printing or minting it. Rather, that bill or coin stands for something else. It is a symbolic token that the community generally accepts as something that has value in an exchange. The key ingredient that allows a community to create such general acceptance of symbolic items is trust. Market participants accept money in an exchange based on the trust that others will do exactly the same. Money is an implicit guarantee given by the respective community that a particular symbol is acceptable as a means to settle accounts. Thus, money is money not because of its physical characteristics, but because we believe it is money. In other words, money is not an economic “thing.” Rather, money is a social construction.

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The introduction of the euro as a common currency for as of now 17 member states of the European Union represents a unique opportunity to examine money as a social construction and to investigate the political ramifications that follow from the constructed nature of money. Such an assessment is warranted because the prevailing literature on European Monetary Union often treats the euro implicitly as a “thing,” and not as a social construction. It considers money as given and shies away from investigating the deeper social meaning of the euro. This chapter argues that money represents a form of trust that is socially constructed. To distinguish my approach to money as a form of socially constructed trust, I will briefly address first some of the prevailing constructivist approaches to European monetary cooperation. There is a bit of an irony in the fact that constructivist research on European monetary integration has not yet treated money itself as a social construction. Rather, constructivist scholars have been primarily interested in the development of policy ideas and collective identities. Such a research focus can coexist easily with conventional notions of money as a “thing.” In the second section, I examine money as a social construction. Utilizing John Searle’s theory of the construction of social reality, I emphasize how society creates institutional facts by imposing specific functions on particular symbolic items. The third section examines the explicitly social aspect of money. In contrast to rationalist conceptions, money is not the product of individual pursuit of self-interest; rather, it represents a social relation—a bond between the members of a particular community. The fourth section of this chapter examines the formation of trust in light of the constructed nature of the euro. Conceptualizing the euro as a social construction allows us to tie together and draw connections between themes that are usually treated separately. Most importantly, our discussion of the social construction of money clarifies that money is an institutional fact. In modern society people put their trust in institutions, and less in personal trust of other human beings. This means that trust in money does not depend on deep and affective ties among the members of a society, but rather in the functioning and effectiveness of the institutions that issue money. In this respect, the euro does not suffer from a trust deficit. To the contrary, I argue that the construction of the European Monetary Union has produced a number of advantages over the previously existing national monetary arrangements in Europe for the formation of trust.

Social construction and the literature on European monetary integration The interpretation of the euro as a social construction stands in contrast to the treatment of Europe’s single currency in the prevailing literature as

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a “thing.” Obviously, rationalist approaches do not see any problem in assuming that money is just a “thing.” Rationalists can take money as given and concentrate on other variables that interest them, such as monetary bargaining power or monetary policy interests. However, surprisingly, the growing constructivist literature on European monetary integration subscribes to that viewpoint of money as a “thing” as well. Constructivist research differs from rationalist research mainly by an emphasis on different causal variables—and not by a different conceptualization of money itself. My analysis presents an alternative not only to rationalist accounts but also to the prevailing constructivist story lines for three main reasons: first, because I highlight the constructed nature of money itself; second, because I go beyond the usual focus on elites; and third, because I conceptualize the issues at stake in terms of reciprocal relationships and not as linear causal connections. The first contrast this chapter offers is its emphasis on the constructed nature of money itself. Previous constructivist research has highlighted the role ideas play in the monetary policy-making process. To a lesser extent, some constructivist research has paid attention to the way collective identities influence the formation of state interests on European monetary integration. However, this kind of research on ideas and identities does not make the constructed nature of money per se an issue. It does not challenge the notion that money is a “thing.” Ideas and identity are obviously important subjects at stake. However, neither ideas nor identities address directly the essential quality of money as a form of trust that is socially constructed. The prevailing constructivist literature has treated ideas and identities largely as alternative causes to the emphasis in rationalist approaches on material interests, power, and institutions. In other words, constructivist approaches conceive of ideas and identities mainly as explanatory devices that are supposed to account for the formation of state interests on monetary policy. On the contrary, the central claim of this chapter is that not only ideas and identities are socially constructed; but, rather, money itself represents a social construction. Thus, money raises very fundamental questions about the nature of political community and trust that go beyond ideas and identities. The most common subject of the constructivist literature on European monetary integration has been that of ideas.1 McNamara (1998), for example, views the policy ideas developed by monetary policy makers—in particular central bankers—as the cause for monetary policy convergence among the members of the EU during the 1970s and 1980s. Former highinflation countries, such as France and Italy, gradually accepted the German preference for low inflation during that period. This ideational consensus on principles of neo-liberal macroeconomic policy led to increasing exchange rate stability in Europe during the 1980s and laid the foundation for successful agreement on the rules for monetary union in the Maastricht Treaty.

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In addition to the focus on ideas, there has been an emerging literature on questions of collective identity and the euro.2 The focus of the identity literature so far has been on the national and European self-understanding of political elites. Risse et  al. (1999), for example, use identity to explain differential elite attitudes toward the single currency. Simply said, the German political elite boasts a much more Europeanized identity than the more nationally oriented British elite. That difference would in turn help to explain Germany’s support for the euro and the British decision against joining European Monetary Union. The second major point of distinction between this chapter and the prevailing constructivist literature concerns the role of elites. The very point of the ideas literature has been the investigation of elite thinking on monetary policy issues. According to McNamara (1998), Marcussen (2000) as well as Collignon and Schwarzer (2003), economic ideas influence the thinking of policy-making elites, which in turn helps to explain policy outcomes. Within the ideas literature, elites are the crucial players to determine policy outcomes. The contemporary identity literature on European monetary integration for the most part shows a similar elite orientation. For Risse et al. (1999) the key constituencies are elites. It is the feeling of belonging among members of the elite that explains a government’s attitudes and policies toward European integration and the euro. This chapter argues for a broader perspective. While elites are very crucial to monetary governance, it is important to add a more extensive macrosocial and macro-historical element to the analysis. I do not conceptualize this as an approach to replace research on ideas and elites, but rather as an opportunity to contextualize ideas and elite identities. It is important to use a more holistic approach and explore money as a fundamental element of human social existence. In addition to considering money itself as a social construction and to broadening the perspective beyond elites, this chapter features a third element that distinguishes it from the prevailing constructivist literature. Both the ideas and the identity literature subscribe to more or less linear causal models. Ideas and identities influence the preferences of elite policy makers, and those preferences in turn explain policy outcomes. In contrast, I stress reciprocal relationships and feedback mechanisms in the social construction of the euro. It is simply impossible to identify a linear causal relationship between the different themes I emphasize. For example, the legitimacy of the monetary order is obviously a very important element for the development of trust in the community’s money. At the same time, if institutions produce desired policy outcomes and can prove that they are trustworthy they can enhance their own legitimacy. Thus, trust and legitimacy stand in a reciprocal relationship to each other. Or to use another example, the successful functioning of the euro may require some kind of common identity or a feeling of belonging together among its users. Simultaneously, the introduction of the euro also provides feedback by facilitating precisely such

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a greater sense of European identity. In other words, there exist reciprocal relationships among community, identity, legitimacy, trust, and money.

Money as a social construction Money represents a social construction. This section invokes John Searle’s The Construction of Social Reality (1995) to elaborate this assertion. At the basis of Searle’s theory of social construction is the distinction between institutional facts and brute facts. Brute facts do not require human institutions for their existence. Material things are simply “there,” whether we are conscious of them or not. A tree would still be there, even if no human beings were around to see it or to name that physical entity “tree.” Institutional facts, however, are constructed. They do not exist because of their underlying material basis, but because human beings endow them with functions. Human beings create social reality through “the collective intentional imposition of function on entities that cannot perform those functions without that imposition” (Searle 1995, 41). Money is a perfect example of such a construction. Like other social facts, such as marriage, government, or property, money exists because we believe it to exist. This statement should not be confused with a radical postmodern position that denies the existence of social reality altogether. To the contrary, social facts are “real,” even if they are creations of the human mind. Indeed, money’s existence as a social fact is not a matter of my individual preferences or my personal convictions. I am free to disagree that a particular piece of paper represents money; however, my disagreement does not make a banknote any less money, as long as most people believe that that piece of paper represents money. They will simply continue their exchange of money without my participation. The flip side of arguing that money is a social construction is that money ceases to function as such when people stop believing that it is money. Of course, times of severe financial crisis and high inflation are periods when people most likely lose their trust in particular forms of money. For example, people start replacing the highly inflationary domestic money issued by the national government with foreign currency. Or, if foreign currency is in limited supply they may revert to barter exchange or the use of certain material goods as quasi-money in economic exchanges. Most famously, cigarettes have often acquired the status of currency in times of financial turmoil. Thus, the core ingredient of money as a social fact is a mutual understanding among the members of a community as to what constitutes money. Money is money as long as we think it is money.3 In other words, money comes into existence because human beings assign the function of money to certain entities. It is this assignment of a function that creates a new social fact. This description of the social construction of money may appear quite intentional and deliberate at this point in our discussion. It may sound like

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a story in which human beings at some point sat down and invented money by  design. However, human beings rarely participate actively and selfconsciously in the creation of social facts. A significant part of creating social facts may occur “without the participants being conscious that it is happening” (ibidem, 47). Moreover, we simply take most of the social facts that surround us for granted. We often do not need to think hard about the foundations of social facts. Rather, we are socialized into our institutions—a fact that allows us to use them almost instinctively. In our daily use, for example, we do not need to reflect on the banknotes and coins or our electronic means of payments. We simply need to recognize money as money and use it appropriately. Individuals would not “need to know the rules of the institution and to follow them in order to conform to the rules” (ibidem, 144). For example, most people do not know the connections between interest rates, inflation rates, exchange rates, and money supply, nor do they really care about a bank’s reserve requirements. They follow the rules not because they know them but because they are socialized into them. Daily life has given us an almost “unconscious disposition” (ibidem) to act according to the rules without being explicitly aware of them. Moreover, the more often we use money the more we lend credibility and support to that institution: “Individual dollar bills wear out. But the institution of paper currency is reinforced by its continual use”(ibidem, 57). In that sense, the daily use and the institutional rules reinforce each other. Money is a symbol. It stands for something else beyond its mere material form. Searle speaks in this context of deontic powers. We impose, “by collective intentionality, new status-functions on things that cannot perform those functions without that collective imposition” (ibidem, 81). A banknote by itself has no inherent user function. It is only the assigned function and the common trust among its users that makes a banknote or any other form of money useful. By imposing these new functions, deontic powers are able to create new rights and obligations. For example, the stipulation that “John has one thousand dollars in the bank”—to use one of Searle’s (ibidem, 101) examples—assigns to John the right to buy things and the obligation to pay taxes. In other words, money establishes a bond between the individual and society. It is important to acknowledge that rights and obligations are mutual here between individual and society. Society owes something to “John” in exchange for his holding “one thousand dollars in the bank.” The money in the bank account represents a claim on society. Society is obligated to keep its promise to “John” that his money has value in a future exchange. Simultaneously, society is obligated to continue producing goods and services that allow “John” to make good on his right vis-à-vis society. The problems in this mutual bond are most visible in times of high inflation and financial crisis. During a crisis, society does not live up to its obligation of allowing “John” to exercise his right of purchasing something with his money.

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Financial crises underscore the constructedness of money even further. Obviously, money is inherently fragile. In some sense, money asks people to suspend their critical thinking and simply believe that someone (e.g., a government or a central bank) can turn paper into something valuable. This makes the very existence of money dependent on the continued trust of the community. Distrust leads to the collapse of a currency. Over the course of history, financial crises have repeatedly led to the breakdown of monetary order. This phenomenon is intrinsically related to the constructed nature of money. As argued earlier, it is collective assignment of status functions that creates a social institution. However, people can withdraw the acceptance of this assignment. Social institutions can suddenly collapse (Searle 1998, 131–2). These considerations about money as a social construction should not be misunderstood as a particular historical interpretation of the origins of money. Among the historians of money, there has been a long-standing debate as to whether money is the spontaneous product of market exchanges—the so-called “metallist” school—or as to whether it is based on the power of political authority—the “chartalist” school.4 Metallists argue for a very straight-forward causal relationship: money emerged as a market-based solution to the inefficiencies of a barter economy. In contrast, chartalists argue for the role of the state in the evolution of money. According to their line of thinking, certain items simply became money because of governmental decree. As one of the founding fathers of the “chartalist” school, Georg Friedrich Knapp [1905] (1924, 1) argued: “Money is the creature of law.” Some of the means governments used to create money were the requirement to pay taxes in specified units of account and in the efforts to standardize measuring instruments for tradable goods.5 The historical origins of money predate written human history. It is, therefore, impossible to settle the metallist–chartalist debate through definitive historical documents. However, this chapter’s assertion that money is a social construction is compatible with both interpretations of the history of money. We do not have to take sides in the metallist–chartalist debate and decide the question as to whether money emerged gradually in economic transactions to replace barter trade or whether it is the result of a deliberate political decision. Both historical readings can coexist with the view that money represents a social construction because the key to money’s constructed nature is collective intentionality. As Searle (1995, 126) points out, it is not the case that one fine day we all decided to count bits of paper as money; rather, the form that the collective intentionality takes is that we begin to accept such promissory notes as media of exchange, and we continue collectively to accept them. In other words, human beings construct money, but the process of construction can happen through both market mechanisms and political means. Regardless of whether money originated along the metallist or the chartalist path, it represents a social construction in either case.

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This is also a good opportunity to clarify a second aspect of monetary history that my assertion about the constructed nature of money may obfuscate. Money represented a social construction even in times when it was tied to a metal standard, such as gold or silver. The classical gold standard was as much a social construction as the fiat monetary system in the post-Bretton Woods era. The “hard fact” of gold did not contradict the constructed nature of money. The constructedness is visible, first of all, in simple practical considerations. In earlier historical periods it would have been too difficult to measure the exact material content of pieces of metal during daily cash transactions. From a practical standpoint, an exchange of a particular good or service for a simple piece of metal would not have been much different from ordinary barter exchange. Negotiations and measuring problems made these transactions relatively inefficient exchanges. Instead, governments for a long time have played a significant role in monetary affairs. They vouch for the value of metallic pieces by minting their insignia on them. In other words, the social institution of government backed the pieces of metal exchanged in markets. Thus, even the exchange of metallic coins depended on the trust people had in the issuing institution and the continued willingness of the community accepting these coins. The second reason that historical instances of metallic standards were social institutions rather than “hard facts” is that the value of gold and silver itself is a social construction. Gold and silver are valuable simply because we think so. Gold, in particular, has virtually no practical value as a material substance and is basically worthless for industrial production. The value we attach to gold is a social construction.

Money as a social relation The argument that money is a social construction implies by necessity that money is not purely an “economic” thing; it is—as the term “social construction” implies—also “social.” The previous section elaborated the constructed nature of money. This section analyzes more closely the social nature of money.6 Money is by definition social. Unlike material goods, money is meaningless if restricted to one individual. There exists a difference between the pursuit of material goods and the exchange of money in a transaction. Material goods can have purposes outside of specific social contexts. For example, the acquisition and possession of material goods may facilitate my survival or may contribute to my enjoyment. These material goods do this for me independent of what others do. In contrast, accepting money in an economic exchange makes no sense for an individual without a social context. This fact contrasts with the assumptions made by rationalist approaches about economic exchanges. According to rationalists, individuals make

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cost–benefit calculations in pursuing their own interests, while the market with its invisible hand establishes equilibrium between supply and demand through the price mechanism. Individuals act rationally in response to the price signals. However, unlike material goods, the acquisition and possession of money is individually irrational, unless we know that society will accept that money in exchange for other goods. Again the difference to material goods is simple. Money is useful for me only if it is valuable for others as well. Money reflects functional interdependence and marks the embeddedness of individuals in society. While the possession of material goods merely requires one individual, any economic exchange involves more than one person. Exchange is, by definition, already social. This is true even for the simplest barter trade. Barter trade requires at least two people. However, money adds an additional dimension to the nature of exchange. Monetized exchange involves even more than two participants. Whereas barter can be conceived of in purely bilateral terms, a monetary exchange is trilateral. This may not appear all that obvious on the surface. After all, in a simple monetized exchange the buyer merely hands over money to the seller in exchange for a particular good or service. Thus, there seem to be only two parties directly involved in the exchange. However, this exchange could not take place if society were not part of it. Money will change hands in an exchange only if the actors believe that society will continue to accept money in future exchanges. The key to monetized exchange as opposed to barter is the common relationship that the exchange partners have to society as a whole. There are several reasons for the role of society as the third player in any monetized exchange. The first concerns, of course, the very constructedness of money examined in the previous section. The community must share the belief that certain symbols represent money. Society, in other words, must be literate enough to understand the abstract language of symbols that represent money. Despite the relative high level of abstraction, though, this hurdle appears daunting only from the perspective of premonetary societies. Understanding the language of money at least for its day-to-day use does not require a deep conceptual understanding. Socialization is usually quite sufficient to allow individual participation in daily monetary transactions. However, it should be noted that without some basic understanding among the members of a community, monetized exchange would not take place. The second reason for the role of society as a third player in monetized exchange is money’s function as credit. Money does not gain acceptance because of some inherent value of money, but rather because money represents credit, guaranteed by a “socially constructed ‘promise to pay’” (Ingham 2000, 22). In other words, money is a sign for the issuing agency’s promise to pay. As the last resort, money represents a promise by society as a whole to back up its value. Simmel’s [1900] (1978, 177) famous dictum adequately describes the situation: “Money appears, so to speak, as a bill of exchange from which the name of the drawee is lacking.”

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The fact that the “name of the drawee is lacking” illustrates nicely that money represents an abstract guarantee by society. Credit by definition is a social relation. Premodern markets often functioned on the basis of credits and debts, long before coins or paper money became popular instruments of clearing mutual obligations (Wray 2000). In this sense, money evolved more as an indicator of debt than as an explicit medium of exchange. Even in its modern form, money maintains its characteristics as a credit relationship. Until the most recent series of new banknotes, U.S. dollar notes still pronounced the credit relationship explicitly: “This note is legal tender for all debts, public and private.” Even though most modern currency does not print such a statement anymore, it is implicit in the understanding of what money truly represents. Money is a collective promise. Those holding money possess a claim on future goods and services. Without such trust the “promise to pay” is worthless, and economic agents will seek substitutions. The third feature that makes money social is the fact that using money is to engage in a social network with others who do the same. Money as a social relation means that the users of a particular form of money recognize each other as part of a community. There is no reason to assume that this monetary community would have to overlap with a specific political entity, such as the nation-state. Indeed, users of credit cards may have more in common with other users of the same tools in other countries than with their fellow nationals who are unable to own them because they cannot qualify for them. Again, the key issue here is that the users of a particular form of money recognize each other as participants in the same monetary space. In fact, the monetary homogeneity established by the introduction of national currencies in the late nineteenth century is now breaking apart even within nation-states. One strong indicator of the disintegration of national monetary spaces is the development of what Weatherford (1997) calls “cash ghettos.” Prior to the creation of national currencies, the poor had problems participating in monetized exchange, because they were not in position to use valuable gold or silver coins or bank-issued certificates of deposit. The introduction of national currencies during the second half of the nineteenth century led to the integration of the poor into the national economy (Helleiner 2003). The denomination of coins and bills was now low enough for the poor to engage in monetary transactions. The development toward a “cashless society” with its emphasis on monetary instruments such as checking accounts, credit cards, or electronic money subsequently has led to a greater exclusion of the poor from the money network. Since they do not qualify for bank accounts or credit cards, the poor still have to rely on cash to participate in monetized exchanges. As a result, the check-cashing businesses and pay-day loan services that characterize poor neighborhoods in the bigger American cities become the transmission belt between the separated monetary communities of affluent and poorer members of society. Several aspects of money’s historical evolution underscore the fact that money is a social relation. Historically, money evolved in part out of social

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practices. One such source of money was the practice of wergild. Rules specified exactly how much compensation someone needed to pay to a victim or a victim’s family, say, for the loss of an arm or for death. In some sense, wergild sets nominal “exchange rates” for bodily injury. Another historical origin of money was the practice of dowries (or bridal money). Dowries functioned as a means to specify value—in this case the economic value of the bride. In other words, this social practice served as an early predecessor of the “unit of account” function of money. In terms of its historical origins, money fulfilled much more a social function—that of serving as a standard of reference—rather than an economic function as a “means of exchange.” A fourth feature that makes money distinctly “social” rather than “economic” comes from the cultural connotation of the valuation process. All value assessments are social processes. Even a completely commoditybased monetary system is established on a cultural basis. The values of precious metals such as gold or silver are social constructions. The value of gold comes from its (social) use as jewelry and its close connection to religious beliefs and practices. Its closeness to the color of the sun has influenced the religious associations of gods with gold and the use of gold in religious ceremonies.7 Again, these assessments point to the constructed nature of the value of gold. There is simply no economically objective reason why gold should be valuable at all. With regard to modern money, there exist very interesting differences between societies in terms of cultural connotations of different types of money. Jacques Hyman’s (2004) research, for example, reveals the connections between currency iconography and cultural attitudes. Governments have been careful to fashion their currency iconography in response to some of the prevailing cultural trends in order to enhance trust in their currency. They need to make their currency acceptable for their people.8 There is also plenty of evidence for the careful planning that the European authorities used in selecting the euro’s iconography. They chose images of abstract bridges, windows, and gateways explicitly to make the euro acceptable among a population that needed to replace its national currency with a supranational currency. The new money was not supposed to offend any national feelings in order to make the formation of trust in the new currency easier.

Trust In the preceding sections, I established that money is a social construction. What are the implications of that argument for the euro? The most important conclusion is that money represents a form of trust among the members of the community that uses that money. For the euro that raises an obvious question: How can trust exist between the members of a community, whose membership and territorial borders are very much in flux and whose governance one can best describe as supranational? Conventional

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thinking would suggest that the formation of trust would be easier within a nation than among a group of countries in a supranational union. After all, a common political culture and identity as well as an established set of political institutions would facilitate trust among the members of that nation. In other words, the supranational character of the euro appears to pose higher constraints on the successful formation of trust than is the case with conventional national settings. However, I argue that this situation is far less worrisome for the development of trust in the euro than one might think at first sight. The underlying problem here is that our conventional thinking associates trust often with deep personal ties between individual human beings or with profound emotional feelings of belonging. This kind of thinking often leads us to believe that we need a deep sense of community or affective common identity to facilitate trust. However, this overlooks the fact that trust in modern society is often abstract. We do not trust individual human beings per se, but rather trust institutions. As our discussion of money as a social construction revealed, money is an institutional fact. That means trust in money by definition is abstract. Trust does not depend on whether we personally know the other individual human beings we engage in transactions with or whether we share deep feelings of belonging with them. Instead, we must be convinced that the social agreement that creates money is trustworthy. That puts emphasis on the sound institutional construction of the euro. In this respect, the euro actually provides a more advantageous basis for the formation of trust than many previous national arrangements. First of all, among the weak-currency countries in the EU, trust in the national currency was low. For many Italians, for example, the euro provided a far more trustworthy currency than the lira. Moreover, EU institutions often have higher levels of trust among citizens than the institutions of national governments in countries like Italy where citizens distrust their own government. In addition, the institutional structure and policies of the European Central Bank feature some advantages over the previous national central banks that are conducive for the formation of trust. While the previous monetary arrangement in Europe—the European Monetary System— forced all members to follow German monetary policy, European Monetary Union now allows all members a voice in the policy formation process. This contributes to a higher democratic legitimacy of the ECB compared to its national predecessors—who lacked any real decision-making autonomy. The same can be said about the actual communication policy of the European Central Bank. The European Central Bank is engaged in a much more open communication policy with the public than its predecessor national central banks were before monetary unification. The ECB president holds press conferences after each meeting to discuss the decisions taken by the ECB. The German Bundesbank used to issue merely a press communiqué

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65

about its policy decisions after each meeting. The other national central banks were even in less need for public communication, since they simply followed the German policy decisions for the most part. In addition, the ECB president regularly appears in hearings at the European Parliament— while such hearings were unknown for the German central bank. Clearly, German central bank presidents would have been offended if they had been forced into press conferences or parliamentary hearings. In this sense, the ECB has created greater transparency of its decision making and thus contributed to greater legitimacy. The greater legitimacy, in turn, facilitates trust in the institution. Viewed from this perspective, then, trust and identity can have exactly the opposite relationship to the one that is often implied in conventional depictions. Instead of identity and sense of community serving as the basis for the formation of trust, trustworthy and successful institutions can be the basis for the development of a sense of community and common identity. Money does not require a deep, affective feeling of belonging. Efficiency considerations and contractual obligations are a sufficient basis for the formation of a common identity. Conceptualizing money as a social construction and as an institutionalized form of trust allows for a more complex understanding of the relationship between trust and identity. The current crisis within the Eurozone—in particular, the issue of Greece’s debt—does not directly challenge the conclusions reached in this chapter. Ultimately, the Greek crisis is not directly about trust in the euro—at least not at the time of writing. The euro can draw on a large pool of trust among the European. Ironically, the first thing that would most likely happen if the Greek government actually entertained the idea of abandoning the euro would be a capital flight from Greece into the euro in order to avoid the lesstrustworthy new Greek currency. In this sense, the current debates in Europe are really about the rules of euro membership, which, if successful, would actually strengthen the institutionalization of the euro and presumably create greater trust.

Notes 1 Well-known studies along those lines are: Collignon and Schwarzer (2003); Marcussen (2000) and McNamara (1998). Exemplary for the constructivist self-understanding of this literature is the subtitle to Martin Marcussen’s book Ideas and Elites: The Social Construction of Economic and Monetary Union. For some background on the topic of ideas and European monetary integration see also Kaelberer 2002. 2 There has been no book-length study on the euro and European identity yet. However, a number of articles have addressed the topic. Most important here are: Risse et al. 1999; Risse 2006 in Fishman and Messina. See also Hymans 2004; Kaelberer 2004.

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3 This is not a circular statement. It is quite possible to substitute any of the conventional economic definitions of money—such as money as a medium of exchange, as a store of value, or as a unit of account—for the term money here. 4 For an overview see Goodhart 1998 as well as Bell and Nell 2003. 5 On this story line, see, for example, Spruyt 1994. On the history of money in general, see Weatherford 1997. 6 This section is strongly influenced by Georg Simmel’s (1900) Philosophy of Money. Simmel’s work has seen a significant resurgence among economic sociologists; see, for example, Beilharz 1996, Dodd 1994, Ingham 1996. 7 On the religious origins of money, see Mauss 1970. 8 The example also illustrates that governments cannot simply force their interpretations of national identity and national history on their people. They must stay within the bounds of what is acceptable to the population.

C HA P T E R 5

Forgotten dimensions: The euro in scientific and policy literature Lucia Mazzuca and Roberto Ranucci

Investigating the noneconomic side of the euro Since before its introduction, the euro, the European Union common currency and the only one for the 17 member states currently participating in the EMU, has been and is, today more than ever, the focus of an intense debate in which different voices and varied positions are interwoven. The considerable attention paid to the euro is related to the evidence (or the failure) of the European project on the single currency, but essentially considered from a macro-economic perspective: the lion’s share in the debate is played, indeed, by the sizeable amount of analysis, studies, statements about the economic and financial implications that the adoption of the euro has led to and will lead to for the member states, the EU, and at wider international context levels. As observed in the Introduction (see Moro in this book), a similar level of attention is found with greater difficulty, when going beyond the purely macro-economic dimension and, thus, observing the single currency from a political, cultural, everyday life economy, and a social standpoint. In the scientific discourse, the lack of a systematic investigation of the single currency, and, more generally, of money’s noneconomic aspects has been highlighted by diverse, though not numerous, authors (e.g., Helleiner and Gilbert 1999; Moro in this book; Zelizer 1989). As the latter noted,

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sociologists produced various empirical settings on the symbolic and social meanings of money but only in an ad hoc, nonsystematic way, money being “confined primarily to the economists intellectual domain” (Zelizer 1989, 343).1 Following in the same vein, Helleiner and Gilbert posed the need to examine money “not just as an economic phenomenon, but also in terms of its geographical, political, social and cultural dynamics” (1999, 1–2), shedding light on the fact that “while economists have often been wary of examining the non economic dimensions of money, scholars outside economics have often steered their attention away from the study of money” (ibidem, xiii). Referring to Moro’s conceptualization (in this book, see the Introduction) on the reasons explaining such little attention toward the “other” meanings of money, it could be assumed that in the case of the euro, the knowledge gap on the noneconomic dimensions of the coin, reflected and, reasonably, affected the scant thematization on the relationship between the single currency and the building process of European citizenship, found on the part of both the scientific and the policy communities, thus embodying the paradox described by the author. From a cognitive point of view, it could be maintained that such a paradoxical blackout has clouded the role of the “other side of the coin’s dimensions” in the broader understanding of a phenomenon—the birth and use of a single supranational currency—that in the words of Fishman (Fishman and Messina 2006, 2) “stands as a watershed event posing important questions and confronting long-cherished theories and assumptions with a wealth of new evidence,” to which the sole economic approach would result as not being sufficient to give account. To increase the knowledge about how and, more specifically, to what extent the noneconomic aspects related to the single currency have been taken into consideration in the academic and in the policy discourse as well, as part of the program “The Other Side of The Coin. The Single Currency and European Citizenship,” between 2010 and 20112 FONDACA carried out a documentary research aimed at mapping the existing academic and policy thematizations about the “forgotten dimensions” of the single currency, identified with the political, cultural, everyday life economy, and social factors connected to its introduction and use. After a brief description of the research features, the chapter focuses on the quantitative and qualitative findings emerging from it and concludes with some proposals regarding further lines of investigation for the future.

The implementation of the research3 The research aimed at investigating the level of knowledge about the features characterizing the relationship linking the euro to the building of European citizenship, as considered and thematized in the existing literature, both

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theoretical and empirical, and in the policy programs, already implemented or to be defined. To this end, the research activities consisted of the gathering of various kinds  of documents (books, research papers, newspaper articles, commu­ nication materials, official acts, etc.) produced from different subjects (see Table 5.1), which were useful in:  Identifying

and analyzing the extent to which the cultural, everyday life economy, political and social dimensions, are considered in the public and academic discourses;

 Shedding

light on the main noneconomic themes addressed in the debate on the single currency;

 Creating

an online database in which the collected material has been categorized and systematized.

Two main steps were followed to carry out the survey:

1 Gathering of the documentation produced by the sources illustrated

in Table 5.1, and of that detected through the survey on Google search engine;

2 Analysis and categorization of the collected documents.

As for the first step, the sources selected for the gathering of the documen­ tation refer to various subjects involved in the broad process of introducing the single currency, playing different roles:

a Institutions (specifically national governments and EU institutions);



b Banks (in detail: European Central Bank, national central banks,

and private banks);

c Consumers’ organizations;



d The media;



e The scientific community;



f Think tanks.

The research operations were carried out on the websites4 of some specified sources linked to the subjects presented above, excluding those that were not in English,5 as shown in Table 5.1. To define the boundaries of the universe of the available documentation, the time criteria used to drive the collecting activities differed depending on the actor considered, as shown by Table 5.2.

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Table 5.1  Subjects and sources utilized in the research Subjects

Sources

a. Institutions - National Governments

• Governments’ websites of the 12 Member States introducing the euro in 2002 • UK Government website • Slovenia Government website

- EU Institutions

• • • • •

European Commission � Presidency website � DG EcFin website � Public Opinion website European Council site European Parliament site Economic and Social Committee site Committee of the Regions site

b. Banks - European Central Bank

• ECB website

- Central Banks

• Websites of CBs belonging to the country adopting the euro in 2002 • Bank of England • Bank of Slovenia

- Private Banks

• Websites of the top 10 private banks in Europe

c. Consumers’ organizations

• ANEC’s website • BEUC’s website • Website of organizations active in the Countries introducing the euro in 2002

d. Media

• Press Europe • Internazionale

e. Scientific community

• Google Scholar search engine • European Commission’s Central Library’s website

f. European Think Tanks

• Think Tank Directory Europe’s list

Concerning the second step, it should be primarily observed that, among the documents and materials (hereinafter items) gathered through the research activities, those dealing with the euro mainly from a macro-economic or finance perspective were not included in the universe on which the analysis and categorization activities were conducted. Indeed, such inclusion was

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71

Table 5.2  Time criteria used in the research Subjects

Reference time

Media

• 2001–2003 • September 2008–September 2011

Institutions Scientific community Think tanks Banks Consumers’ organizations

• 1990–2011

performed through the reading of the item’s title and/or abstract/synthesis, if available, verifying the presence of at least one or more references to “other side of the coin” dimensions. Such dimensions were utilized as the classification criteria of the items composing the universe, operationally conceived as specified below (see Moro in this book):  Cultural

Dimension: the set of values, representations, and cultural patterns that are referred to by the currency as a repository of symbols.

 Social

Dimension: the set of interactions, representations, institutions, and communication and exchange relations that give rise to a social environment that people using the single currency live in and belong to.

 Everyday

Life Economy Dimension: the place in which the single currency acts as a unit of measurement, exchange tool, and stock value giving rise to a market.

 Political

Dimension: the place where the single currency acts as a vector for the political community-building process.

The research operations led to add a further category focused on the general aspects concerning the context and developments of the euro project (mainly referred to the EMU and euro history and legal framework, to the changeover, and to the design of the coins and banknotes), since they have been quite often taken into account in dealing with the dimensions of the other side of the coins. The item’s classification6 was functional to “weigh” the presence, or rather, the diffusion of the attention toward each dimension in the policy and academic discourse involving the subjects considered in the research, by counting the number of occurrences found in the documentation composing the study’s

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universe. In the framework of the research, the term occurrence was adopted meaning the presence, in the required item, of a more or less specific reference to one or more dimensions, among those explored by the present survey. Finally, an Index of the Depth for the Other Side of the Coin’s Dimensions7 was calculated, in order to elaborate more specific data on the level of attention registered for each of the dimensions, as the object of discussion specifically in:  books;  journal

articles;

 scientific

papers;

 research

reports.

Since the counting of the occurrences did not take into account the “weight” of the different types of items found through the research, the elaboration of such an index allowed us, instead, to measure the extent to which each dimension was handled in an in-depth and detailed manner, by considering the above-mentioned categories.

Main results The universe of the identified items The research operations led to a universe of 302 items, referring to the bibliographical categories illustrated in Table 5.3. Looking at the composition of the universe of the identified items, what first catches the eye is that it is made up of much more “gray literature”— mainly constituted by the 70 scientific papers and the 22 scientific journal articles—than of books (15 in total). Such data could be interpreted as a predictable indicator showing that the “other dimensions” of the European single currency do not already lie on consolidated knowledge, this still being “under construction.” Moreover, official acts cover a small share of the total number of items (just 17, little over 5%): such data could be read as a signal of the fact that the strategy of the public institutions was definitely not focused on the euro’s hidden dimensions. Nevertheless, the significant share of Eurobarometer reports focused on the issues covered by the present survey (47 in total, more than 15% of the universe) sheds light on the European Commission’s interest in investigating the citizens’ opinions about the noneconomic aspects related to the introduction and use of the new currency.

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FORGOTTEN DIMENSIONS

Table 5.3  The universe of the identified items Bibliographical categories Books

No. of items

Percentage

15

4.96%

2

0.66%

Online (Newspaper) Articles

33

10.92%

Scientific Papers

70

23.17%

Reasearch Reports

16

5.29%

Eurobarometer’s Reports

47

15.56%

Commentaries

3

0.99%

Policy Documents

4

1.32%

Speeches

24

7.94%

Interviews

4

1.32%

Press Releases

4

1.32%

Booklets

15

4.96%

Periodical Articles

21

6.95%

Official Acts

17

5.62%

Scientific Journal Articles

22

7.28%

Conference Workshop’s Reports

2

0.66%

Other (ppt presentations and newsletter)

3

0.99%

302

100.00%

Book’s Chapter

Total

Furthermore, a fairly significant share of items is seen to be related to media documentation (online and periodical articles), covering around 18 percent of the universe. Almost a third of the total items identified (102 out of 302) have been produced by institutions, 79 by the scientific community, 52 by the media, 36 by banks,8 20 by European think tanks, and 10 by consumers’ organizations. Three items have been produced by other subjects (see Figure 5.1). In general, what primarily emerges is the relatively low number of items of consumers’ associations and think tanks, if considered in light of their field of interest, which is assumed to be largely focused on the nonfinancial aspects derived from the introduction of the single currency.

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20

10 3

102

36

Institutions (102) Scientific community (79) Media (52) Banks (36) Think tanks (20)

52

Consumers’ organisations (10) Other (3)

79

Figure 5.1  No. of items produced by each subject (universe: 302 items).

Table 5.4  No. of items detected by the sources linked to institutions and banks Institution (no. of items)

Bank (no. of items)

• European Commission (77)

• European Central Bank (19)

• European Parliament (5)

• Bank of Italy (7)

• European Economic and Social Committee (4)

• Bundesbank (3)

• Committee of the Regions (3)

• Bank of Portugal (2)

• European Council (1)

• Bank of Austria (1)

• English Government (1)

• Bank of Luxembourg (1)

• Italian Government (4)

• Bank of Estonia (1)

• German Government (1)

• Bank of France (1)

• French Government (1)

• Union Bank of Switzerland (1)

• Italian Parliament (1) • English Parliament (2) • OECD (1) • International Monetary Fund (1) Total items: 102

Total items: 36

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FORGOTTEN DIMENSIONS

An opposite consideration could arise taking into account the significant number of items (36) detected for banks: such data could testify to an unexpected interest, more or less explicit, in the other dimensions of the euro, beyond their “natural” focus on macro-economic and financial variables. As for institutions and the scientific community, the research operations found quite a large number of items (respectively, 102 and 79), even though in the case of the latter subject it could be expected to be much higher, thus further highlighting the already cited “blackout” on the other meanings of the euro. Finally, the data concerning the media (52 items found) could be read as being in line with their focus on the general process of the introduction of the single currency, considered from a broader perspective, including the related noneconomic factors. Concerning the items produced by institutions and banks, Table 5.4 displays the quite predictable interest in the other side of the euro by the European Commission and the European Central Bank, two subjects that, for obvious reasons, are at the core of the European project on the single currency.

From items to occurrences As previously mentioned, the items that make up the universe are those containing a more or less explicit reference to the political, social, everyday life economy, and cultural aspects connected to the introduction and the use of the euro. Given that each item could make reference to one or more dimensions, Table 5.5 displays the total number of occurrences (and the value in percentage) recorded for each of them, which could be interpreted as

Table 5.5  Index of the diffusion of the attention to the other side of the coin’s dimensions No. of occurrences in the universe

Share of diffusion (% of occurrences out of the total)

Cultural

74

16.7

Social

87

19.6

Everyday life economy

114

25.7

Political

125

28.1

44

9.9

444

100

Dimension

Context and development of the Euro project Total

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The Single Currency and European Citizenship

Table 5.6  The ratio of Occurrences/Items No. Occurrences

444

Items

302

Ratio

1.47

an Index of the Diffusion of the Attention paid to the dimensions. Referring to the definition given in the methodological section, within the framework of this survey, “occurrence” means the presence, in the required item, of a more or less specific reference to a certain dimension, among the four explored by the present survey. Leaving out the context and development of the euro project category, it appears clear that the political dimension results as the most recurring, covering 28.1 percent of the total occurrences, while the cultural one is the least present, in the extent of 16.7 percent. The everyday life economy and the social dimensions cover, respectively, 25.7 percent and 19.6 percent of the total occurrences. Interesting data are given by the ratio between the total number of the occurrences and the number of items, which make up the universe (see Table 5.6). This simple calculation highlights the tendency found in the policy and academic literature to focus on one single dimension, thus linking the discourse on the noneconomic aspects of the euro to the analysis of the political, or cultural, or social, or everyday life economy aspects, considered separately.

Occurrences of dimensions In Table 5.7, the occurrences of dimensions are presented. These data have been analyzed by taking into account:

a the subjects considered in the research. We analyzed in detail the

percentage of occurrences per dimension found in the specific documentation produced by each subject (in other words, their “focus rate” on the four dimensions, plus the category on the context and development of the euro project);

b the dimensions, namely the level of diffusion of the attention

toward the single dimensions paid by those subjects.

46

38

25

Everyday life economy

Political

Context and development

185

48

Social

Total

28

Cultural

100

13.5

20.5

24.9

25.9

15.2

Institutions

Subject/Dimension

48

7

14

17

4

6

100

14.6

29.1

35.4

8.3

12.5

Banks

65

2

28

17

10

8

100

3.1

43.1

26.1

15.4

12.3

Media

106

9

30

18

19

30

100

8.5

28.3

17

17.9

28.3

Scientific Comm.

26

0

14

5

5

2

100

0

53.9

19.2

19.2

7.7

Think tanks

10

 0

 0

10

 0

 0

100

0

0

100

0

0

Consumers org.

Table 5.7  Occurrences of dimensions found for each subject considered in the research

4

1

1

1

1

0

Other

444

44

125

114

87

74

Total

FORGOTTEN DIMENSIONS 77

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a. Subject’s focus rate on the other side of the coin’s dimensions Figures 5.2–5.5 display the focus rate on the other side of the euro’s dimensions found for those subjects for which a higher number of occurrences was detected. They are in the following order: institutions, scientific community, the media, and banks. The occurrence analysis (calculated as a percentage of the total occurrences found in the items produced by each subject) brings up some general considerations: despite their underlying connection with political issues, institutions focused their attention on the social and the everyday life economy dimensions, which together cover more than half (50.8%) of the occurrences counted in the items produced by this subject—to a greater extent with respect to the political one, which covers 20.5 percent. Without drawing any general implications, such data suggest that institutions were significantly interested in the impact of the single currency’s introduction into citizens’ lives, as, for example, the fairly high number of Eurobarometer reports focused on euro attitude can testify. Almost 60 percent of the occurrences found for the scientific community concerned the cultural and political dimensions, which registered the same percentage (see Figure 5.3). If greater attention could have been expected to a certain extent for the first one, it is nevertheless meaningful to note that the academic debate aimed at exploring the consumers’ issue related to the introduction of the single currency registers to an extent that could be considered beyond what may be expected (covering the everyday life economy dimension 17% of the total occurrences, a percentage close to that pertaining to the social dimension). In the case of the media, the findings highlight a significant interest in the political dimension (which is present in almost half of their documentation), while the everyday life economy has been dealt with to a lower extent (26.1%) than might have been expected, considering the media’s “natural” target: the citizenry. In any case, it could be assumed that their focalization on the political roots and implications of the European project on the single currency, allowed the general public to build up a greater consciousness about such a dimension. As could be expected, banks focused most of their attention on the everyday-life-economy aspects of the euro, which covers 35.4 percent of the total occurrences found in the documentation produced by this subject. Similar to the media’s case, a less obvious result is connected to their significant interest in the political meanings of the introduction of the single currency (almost one-third of the total occurrences). Such data could be associated with the key role that central bank subjects have played during the whole period preceding and subsequent to the formalization and entry into circulation of the new currency, which led them to face questions related

Cultural

Social

Everyday life economy

Political

Context and development

0

5

10

15

15.2

13.5

20

185 total occurrences found for institutions

25.9

24.9

25 30 Occurrences (%)

20.5

Figure 5.2  The institutions’ focus rate on the other side of the euro’s dimensions.

Dimension

Institutions

35

40

45

50

FORGOTTEN DIMENSIONS 79

0

5

10

8.5

15

20

17.9

17

Occurrences (%)

25

30

28.3

28.3

Scientific community

106 total occurrences found for the scientific community

Figure 5.3  The scientific community’s focus rate on the other side of the euro’s dimensions.

Cultural

Social

Everyday life economy

Political

Context and development

Dimension

35

40

45

50

80

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Cultural

Social

Everyday life economy

Political

0

5

3.1

10

15

12.3

15.4

20

65 total occurrences found for the media

25

26.1

Occurrences (%)

Figure 5.4  The media’s focus rate on the other side of the euro’s dimensions.

Dimension

Context and development

Media

30

35

40

45

43.1

50

FORGOTTEN DIMENSIONS 81

Cultural

Social

Everyday life economy

Political

Context and development

0

5

10

8.3

15

12.5

14.6

20

48 total occurrences found for banks

Banks

29.1

25 30 Occurrences (%)

Figure 5.5  The banks’ focus rate on the other side of the euro’s dimensions.

Dimension

35

35.4

40

45

50

82

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83

FORGOTTEN DIMENSIONS

to their legitimacy and their positions in the democratic architecture of the European Union, as well as the more political meaning of issuing the single currency. Predictably, the occurrences found for consumers’ organizations (10) all referred to the everyday life economy dimension, while those counted for think tanks (26 in total) concerned the political dimension in more than half of the cases.

b. The level of diffusion of the attention toward the other side of the coin’s dimensions In the second part of our analysis, the findings will be treated as focusing on the level of diffusion of the attention paid to each of the four dimensions covered by the research, also including the context and development of the euro project’s category. Figure 5.6 displays the degree of diffusion of the attention paid to the cultural dimension. It can be easily noted that the scientific community and institutions are the subjects that focused the most on the cultural aspects related to the introduction of the euro, having produced, respectively, 40.5 percent and 37.8 percent of the total occurrences found for the dimension in question. In contrast, consumers’ organizations and think tanks seem to ascribe none or very few meanings referring to the cultural sphere to the euro’s discourse. Cultural dimension 40.5

Occurrences (%)

37.8

8.1

10.8 2.7 0

Institutions

Banks

Media

Scientific community

Think tanks

Consumers’ organizations

Figure 5.6  The level of diffusion of the attention toward the cultural dimension. 74 occurrences in total regarding the cultural dimension

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As for the everyday life economy dimension, institutions show a remarkably high interest in analyzing the impact of the introduction of the single currency on consumers, covering 40.4 percent of the total occurrences detected for such a dimension (see Figure 5.7). It could even be added that given the direct (and quite evident) correlation between the birth of the euro and the dimension in question, a higher level of thematization on the latter would have been expected by the media and consumers’ organizations,9 but, in particular, by banks.10 Moreover, it seems appropriate to note that the very significant attention paid to the everyday life economy dimension by institutions did not completely avoid the gap between the perceived and real inflation registered after the introduction of the single currency (see Moro 2011). Concerning the social aspects related to the introduction of the euro, if the 87 occurrences counted could be in line with the “not clearly evident” topics related to it, a less nonobvious data concern the high level of attention paid by institutions, which produced more than half of the total occurrences found for the dimension in question, if compared with the quantity produced by the scientific community (21.8%), which could be considered below the expected (see Figure 5.8). The level of diffusion of the attention toward the political dimension registered relevant data considering institutions, which produced 30.4 percent of the total occurrences found for the dimension in question, as well as the scientific community11 and the media, which produced 24 percent and 22.4 percent, respectively. Everyday life economy dimension

Occurrences (%)

40.4

14.9

14.9

15.8 8.8 4.4

Institutions

Banks

Media

Scientific community

Think tanks

Consumers’ organizations

Figure 5.7  The level of diffusion of the attention toward the everyday life economy dimension. 114 occurrences in total regarding the everyday life economy dimension

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Social dimension

Occurrences (%)

55.2

21.8 11.5 5.7

4.6

0 Institutions

Banks

Media

Scientific community

Think tanks

Consumers’ organizations

Figure 5.8  The level of diffusion of the attention toward the social dimension. 87 occurrences in total regarding the social dimension

Political dimension 30.4

Occurrences (%)

22.4

24

11.2

11.2

0 Institutions

Banks

Media

Scientific community

Think tanks

Consumers’ organizations

Figure 5.9  The level of diffusion of the attention toward the political dimension. 125 occurrences in total regarding the political dimension

Also, in this case, consumers’ organizations come out as not being focused on the political issues implied in the process of introduction of the single currency, while think tanks and central banks considered these aspects in significant percentages (in both cases, 11.2% of the total occurrences), even if they are not so high (Figure 5.9).

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Context and development of the euro project

Occurrences (%)

56.8

20.5 15.9 4 Institutions

Banks

Media

Scientific community

0

0

Think tanks

Consumers’ organizations

Figure 5.10  The level of diffusion of the attention toward the context and development of the euro project’s aspects. 44 occurrences in total regarding the context and development of the euro project’s aspects

Finally, concerning the general aspects related to the context and development of the euro’s project it could be found that institutions paid great attention to such topics, covering 56.8 percent of the occurrences found for this dimension, as displayed by Figure 5.10. Specifically considering European institutions, these data could be read, to a certain extent, as an indicator of the presence of a European policy mainly addressing issues related to the euro changeover. In this case, think tanks and consumers’ organizations prove not to be concerned with these aspects, while central banks and the scientific community show a significant interest toward them, covering, respectively, 15.9 percent and 20.5 percent of the total occurrences.

The Index of Depth for the other side of the coin’s dimensions The data analyzed in the previous paragraph, obtained through the counting of occurrences, provide information about “the extent” to which the dimensions have been taken into account—in other words their diffusion— in the policy and academic discourse. In order to have more detailed information on the level of thematization and the degree of going into depth registered for the single dimensions, we have elaborated an Index of Depth for the Other Side of the Coin’s Dimensions, which aims at measuring the degree of going into depth with which the dimensions have been treated. The components chosen for elaborating the Index are in this order: books,

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FORGOTTEN DIMENSIONS

Table 5.8  Index of depth for the other side of the coin’s dimensions. Dimension

Books

Journal Articles

Scientific Papers

Research Reports

INDEX

Political

25

7.7

6

0.1

38.8

Cultural

6

3.0

9.2

0

18.2

Everyday life economy

2.1

3.0

8.8

3.6

17.5

Social

1.4

4.0

3.6

0.1

9.1

Context and development

6

0.3

1.6

0.05

7.95

Books- Score: min 0 max 37.5 Journal articles- Score: min 0 max 22 Scientific papers- Score: min 0 max 56 Research reports -Score: min 0 max 4.8 Index- Score: min 0 max 120.3

journal articles, scientific papers, and research reports, assuming that these categories are associated with a broader and more in-depth thematization on the dimension or dimensions treated. The Index score has been calculated by assigning different coefficients depending on the component considered, and taking into account the related number of items produced for each dimension (see Table 5.8).12 Even though not directly comparable, the results emerging from the Index of Depth and the Index of Diffusion (see Table 5.9, and also Figure 5.11) allow for some general considerations about the attention paid to the other side of coin’s dimensions. If the high score calculated for the political dimension (38.8) reflects the broad presence of such a dimension found in the bibliographical material covered by the research, it could further testify to a significant level of knowledge about the political factors implied in the introduction of the single currency, which is much higher than the other dimensions. In general, it could be assumed that the creation of the new currency as the result of a political plan, as well as a major step in the EU institution-building process, have been the clearest and most deeply discussed factors in the public and academic debate since the formalization of the Maastricht Treaty in 1992, thus implying the fairly large interest shown by institutions, the scientific community, and the media. A divergence between the general and specific levels of attention (114 total occurrences compared to the 17.5 Index of Depth’s score) to the everyday life economy dimension is apparent (Figure 5.11). In general, the research findings suggest that the impact of the introduction of the euro on consumers’ pockets constituted one of the most tangible aspects toward which

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Table 5.9  Shares of diffusion and index of depth to the other side of the coin’s dimensions Dimension

Share of Diffusion

Index of Depth

Political

28.1

38.8

Cultural

16.7

18.2

Everyday life economy

25.7

17.5

Social

19.6

9.1

Context and development

9.9

7.95

9.9 19.6

Index of diffusion

25.7 16.7 28.1

7.95 9.1 17.5

Index of depth

18.2 38.8 0

5

10

15

Context and development Cultural

20

25 Social

30

35

40

45

Everyday life economy

Political

Figure 5.11  Diffusion and depth levels of the other side of the coin’s dimensions. it was possible to direct multiple studies, recommendations, and comments (thus explaining the large interest in such an issue detected for institutions, especially the European Commission), even though such knowledge has not been translated into a more comprehensive understanding of the dimension, it being confined to ad hoc studies mainly produced by central banks. As for the social dimension, the not very large percentage of diffusion (19.6% of occurrences out of the total) is accompanied by the lowest score (9.1) related to the level of depth toward the four dimensions, as simply highlighted by the score concerning the books (1.4), the lowest also than that pertaining to the context and development’s category. What has emerged could imply a rather “short-sighted” knowledge about the social aspects

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89

implied in the creation and use of the single currency, which have mostly been dealt with in the European Commission’s Eurobarometer reports on public attitudes toward the euro. As already observed, the low level of attention registered by the Index could be, in part, associated with the absence of a more comprehensive discussion developed by the scientific community. Despite the lowest percentage of diffusion (16.7%) than that pertaining to the other dimensions, the cultural dimension registered a significant level of going into depth (18.2), being the matter second most profoundly dealt, according to the Index of Depth. This divergence is, in some respects, opposite if compared to that found for the everyday life economy dimension: the emphasis and relevance attributed to the euro as vector of identity and symbolic meanings have been not associated with a large share of bibliographical material, even though we could assume that they have been objects of a more in-depth and structured analysis focused on the cultural issues implied in the use of the single currency.

The emerging themes Bearing in mind that the research activities did not envisage an in-depth analysis of the content of each item composing the universe, in this paragraph the main themes emerging from the reading of the title and of the documents’ abstract or synthesis (where present) will be presented taking into account the dimension they referred to, on the basis of the definitions given in the methodological section. As for the Cultural Dimension, the research’s operations highlighted the following topics:  the

euro’s role in shaping the European and national identities;

 coins

as visceral emblems of the national identity;

 studies

on the euro’s impact on national and European identities;

 the

euro as a symbol of European identity;

 the

euro as having no influence in making citizens feel more European;

 the

attachment to the national currencies.

The topics related to the Social Dimension were:  the

euro as a means of communication, assimilated into the language;

 the

existence of social mechanisms that enabled the creation of the EMU;

 the

support of the single currency;

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90

 the

trust in the euro;

 the

euro coins flow/diffusion in European countries.

As for the Everyday life economy Dimension, the main themes addressed were:  the

relation between the perceived and real inflation after the introduction of the single currency;

 the

difficulties in using euro banknotes and coins;

 research

papers and studies on price monitoring;

 implications  the

of the euro changeover for consumers;

memory of prices;

 advantages

and benefits for consumers.

Concerning the Political Dimension:  the

political reasons and implications of the UK’s opting out;

 correlation

between the adoption of the euro and the European integration process;

 the

euro seen from the “others’” (i.e., USA, China, and India) perspective;

 the

political choices for the single currency project;

 political

implications of abandoning the euro;

 the “currency  the

without a state”;

international role of the euro;

 the

euro’s function in highlighting the importance to rethink and reinforce the EU governance structure;

 the

euro seen from the perspective of the countries that are going to adopt it.

Moreover, the results emerging from this operation shed light on five topics, which can be ascribed to more than one dimension. They are:  the

correlation between the support of the euro and the identity policies in Europe ® cultural and social dimensions; level of knowledge of the euro ® social and everyday life economy dimensions;

 citizens’

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91

advantages for tourists after the introduction of the euro ® social and everyday life economy dimensions;

 the  the

“euro natives” ® social and cultural dimensions;

relation between rising prices and the support of the euro ® everyday life economy and social dimensions.

 the

In sum, the above findings suggest that each dimension emerges with its own cluster of topics but, at the same time, as phenomenon linked by more or less strong and evident relations to the others (as the five themes just cited, could testify). From this point of view, we could assume that the other side of the coin is characterized by a “fluid nature”: dimensions are not intended to be categories with clear and sharp boundaries, since they could be enriched with new topics arising from the public and academic debate, as well as possibly referring to issues “contained” in one or more of them.

Concluding remarks In light of the findings emerging from the survey, but not forgetting its nature and limits, it is possible, finally, to focus on what has been done in this field of research and what, from our point of view, could be sought in the future to broaden the knowledge about the other side of the coin. The present research has shown that many of the analyzed subjects focused their attention not just on their “natural” field of interest concerning the euro: the banks have produced documents on the political dimension, the scientific community on the everyday life economy aspects, the institutions on the cultural connections to the introduction of the euro. This can be interpreted as a signal of the interest created by “the other side of the coin.” Nevertheless, as we have seen, the universe of identified documents was made up much more of “gray literature,” which indicates a lack of consolidation of the knowledge of the “other dimensions” and it is also clear that none of the subjects identified all the dimensions as components of an “other side” of the euro, to be considered as complementary to its macroeconomic aspects. As a consequence, concentrating our attention on the single dimensions, we can conclude trying to suggest some further lines of research for the future:  the

significant level of attention about the political factors implied in the introduction of the single currency demonstrates a consciousness of the close linkage with the EU institution-building process. The euro can be considered to be the most powerful symbol of

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the Europe unification experiment; a political plan with its own characteristics and procedures, which has no Parliament at the center of the mechanism but does have economic institutions and financial regulations. Therefore, we believe that it could be interesting to make further investigations into the level of trust of European citizens of the European Central Bank and its strategies about monetary policies. This line of research could make the citizens’ support of the system of governance of the euro much clearer;  as

far as the cultural dimension is concerned, and in particular the role of the euro as an identity marker, we suggest the implementation of further analysis of different types of identity that the introduction of the single currency created inside Europe as a whole. It is clear that European citizens belonging to the Eurozone have developed a stronger sense of European identity with respect to non-Eurozone citizens (i.e., English, Danish, and Swedish people). This is the cultural aspect of the “two-speed Europe” created by the euro, into which it would be interesting to produce deeper investigations. And why not extend this analysis to those countries in line as candidates to belong to the Eurozone in the near future? Are we in the presence of a “three-speed” Europe?

 During

the research phase, we were surprised not to have found detailed analysis about the variation in European citizens’ traveling around the Eurozone, specifically as a result of the introduction of the single currency. It would be interesting, from our point of view, to further the knowledge on how the possibility to move from one Eurozone country to another without any exchange costs have increased or not, and how much people travel within Eurozone boundaries (not considering other contextual factors, e.g., low-cost flights);

 As

for the everyday life economy dimension, we suggest focusing attention on the differences of the consumption styles between the citizens belonging to the Eurozone member countries and those citizens who do not. This would be very interesting especially in light of the economic crisis, in order to clarify what kind of impact the euro has in the reduction of consumptions.

To conclude, we suggest focusing future public opinion polls on those particular types of European citizens who were born close to the introduction of the single currency. These “euro-native” citizens have only ever had the euro as their currency, so they have experienced the “other side of the coin” in a different way from most European citizens and, therefore, represent a meaningful standpoint on all the matters and dimensions presented in the current research. Just to give an example, it would be very interesting to carry

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93

out a poll on the euro-exit on this particular sample of European citizens, in order to make comparisons with Europeans who experienced their national currency before the advent of the euro.

Notes 1 It could be significant to mention that, at the time of the above-cited study, Zelizer found that the International Encyclopedia of the Social Sciences devoted over 30 pages to money but not one to its social features. 2 The research’s operations started in August 2010 and concluded in September 2011. 3 We recommend the consultation of the research report “The other side of the coin: a framework research” (Mazzuca and Ranucci 2012), available on www.fondaca.org, for a more detailed analysis on the methodology utilized to conduct the research. 4 The key tools utilized were the search engines found in each website, if present. In such cases, the main strings entered were: “single currency European citizenship”; “euro European citizenship”; “EU currency”; “single European currency”. This operation was carried out on Google search engine, utilizing it as a further source of documentation by consulting the first 40 pages of results for each of the above-presented strings. 5 Except for Italian websites and documentation. 6 The systematization of the documentations was realized through the creation of an ad hoc online database (the € - Database) in which each item has been classified taking into account the dimension/s to which it referred to. It is available online at: www.theothersideofthecoin.eu. 7 For the methodology utilized to build the Index see Mazzuca and Ranucci 2012. 8 The research’s operations carried out on the private banks’ websites included in the sample did not produce any relevant results concerning the four dimensions. Only one item produced by a private bank, resulting from the survey carried out on Google search engine, was included in the universe, being therefore the “banks” subject predominantly constituted by national central banks and the ECB. 9 It should be mentioned, however, that the data on consumers’ organizations are also connected to the disparity of the number of items found for this subject with respect to the others. 10 It is useful to remember that the “banks” subject predominantly referred to national central banks and the ECB (only one private bank is included in this category). 11 The data pertaining to the scientific community could be considered in line with the specific focus on institutions and society in Brussels found in the research on the European Union (see Moro 2012). 12 See Mazzuca and Ranucci 2012.

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C HA P T E R 6

The unintended “Litmus Test”: The euro as a factor of centerformation, trust enhancement, and identity building1 Daniela Piana

Introduction The experience of a single currency issued by a supranational authority looks like a promising litmus test to disentangle the different components whose interaction within the European Union results in a sociopolitical macro phenomenon. On 3 November 2011, Cannes was hosting the G20 meeting. Both the European Commission and the European Parliament presidents announced that they expected the Eurozone debt crisis to be in the spotlight during the meeting. At the same time, David Cameron, UK prime minister, warned the European leaders about the possibility of the Eurozone coming to an end in the very near future. The top headings of the daily newspapers in every country in the world were reporting on the European crisis and warning their readers about the prospect of cascade effects in non-European countries. As apocalyptic as it might sound, it is not fully unrealistic to wonder whether the euro will be still alive in the years to come. In such a dramatic situation, which has been labeled as the worst crisis experienced by the European Union ever, it might sound naïve to praise the existence of the European single currency. However, whereas the financial system and European

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banks are mobilizing all their resources to regain stability, European citizens are getting on with their lives, taking the euro for granted. To phrase the whole story in a nutshell, this does not seem to be the right time to celebrate the glorious destiny of the European currency, but it is certainly the right moment to argue that the euro has become a given for all EU residents. The changeover, which happened in 2002 when the national currencies were replaced by the euro, needs to be considered as the most ambitious step ever undertaken in the direction of deepening European integration (Verdun et al. 2006). If that is so, there is a truthful meaning in saying that the Eurozone builders were supranational visionaries. What went wrong, then, if anything? This chapter wants to distance itself from some very critical stances taken against the euro and to tell the reader a different story or, rather, it wants to tell a well-known story in different—and arguably more nuanced—terms. The basic intuition that led to this analysis can be phrased as follows: “in a sociopolitical system the currency is performing several different functions, which should be assessed separately.” Multiple functionality is a complex feature to be analyzed. This is the reason the pages here offered to the reader should be considered as a preliminary investigation, promising to set a new research agenda rather than to solve once and for all complex intellectual puzzles. I shall start with breaking down the multiple functionality of the single currency assuming that in a sociopolitical system it provides evidence of:

1 a process of center formation;



2 a process of trust enhancement;



3 a process of identity building.

This said, the analysis of the functions performed by a currency in a sociopolitical system needs to also consider the consequences that the use of the currency has for the three processes mentioned above: center-formation. trust enhancement, and identity building. A comprehensive appraisal of this multiple functionality should cover all these aspects. Having this as a background, the chapter is going to unfold the argument in three steps. First of all, it will sketch out a general overview of the role played by the European single currency in the creation of the center in the European political system.2 A second step will be made in the direction of describing the bond that links the use of the single currency and trust enhancement. Here the concept of “trust” should be understood as the trust citizens are ready to grant to both other citizens and to the European institutions. It might be argued that the successful story of the euro as a language to express the value of goods and services is linked to the new lifestyle that has come to dominate European culture (Sassen 2006).3 The process of trust enhancement is revealed by the use—rather than by the adoption—of the

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single currency. In the European Union, citizens are using the euro to design their own paths in their own lives having in mind a much larger set of possibilities of jobs, services, and goods, which might be easily compared because their prices are expressed in the same scale. Third, the relation between identity and legitimacy is discussed. This will take the argument directly to the final—but open—conclusive remarks in which I argue that whereas the financial crisis has, beyond any reasonable doubt, undermined the legitimacy of the European sociopolitical system with regard to its capacity to face unexpected emergencies (I will speak in this respect of output legitimacy), this crisis will destroy the “substantial legitimacy” of the European Union only to the extent the public discourse (in the media) describes the euro as the most dangerous causal mechanism responsible for leading to the Eurozone crisis. This is to say that the financial crisis of the Eurozone will undermine the substantial legitimacy only if it is represented by the national public discourse as a zero-sum game, played to the detriment of the European identity.

Center, individuals, and currency As a matter of fact, state-building processes are instantiations of a more general type of process, which is defined as “center-formation”: this is linked to the emergence of a political structuring process that fixes the institutions that are going to perform fundamental functions for the maintenance of a political system (Bartolini 2005, 53). In political systems, the creation of the center goes together with several other subprocesses, which are all instrumental to the first one. The most important of all is the functional differentiation. Each institution reaches a level of stability due to its autonomy from the external environment and to the endowment of resources available. The formation and the persistence of the center do not only belong to the realm of the objective reality. As we know, politics depends on the way things are, but also on the way things are perceived. Therefore, the center formation is not only about an objective situation. It requires the existence of a relation between the individual and the political community. The community’s members are those individuals governed by the legal rules issued by the political authority whose jurisdiction is co-extensive with the community itself. Individuals expect that all other individuals recognize the center’s authority as a rule maker and as a rule enforcer. The very act of creating a center in a political space is a revolutionary achievement of modernity. One of the consequences entailed by this is that the whole architecture of the legal and political order is conceived as a hierarchically organized space in which the most extensive and deepest knowledge of the art of governing is handled by the center. Therefore, to sum up, there is a deep and strong bond between the way social life and social

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order are conceived in modernity. This bond can be broken down into the following components:  The

political order has one center;

 The

center is able to provide the units of the system—that is, the individuals—with means with which they can assign a value to things and that they can enter into predictable and reliable interactions;

 These

means are the currency, the law, and the language.

This brief description makes sense of the strict relation that exists between the modern state and the act of issuing a single currency. If the social order homogeneity is crucial not only to enable individuals to move in an increasingly complex reticulate of interactions and exchanges, but it is also crucial to enable the center to effectively control the enforcement of rules, the way exchanges are made, and to ensure the flow of goods and services is ordered and uniform. Therefore, in the process of center-formation, several acts of institutional engineering are accomplished by the central authority.4 A common currency makes both the collection of taxes to pay for common goods and services and the exchange of goods and services among the ruled and between public institutions and private actors possible. These examples differ enormously and also share some important characteristics. They establish a procedure, a grammar, by means of which acts accomplished by different individuals and having different subjective values can be compared and translated into a common language. It is not trivial to be reminded about the tricky and complex cognitive operation that stands at the basis of the exchange via monetary payment. The same object  or the same action, situated in two different cultural and historical contexts, can have most dissimilar subjective values. In order to make goods and services predictable and transferable in a large space, a precondition should be fulfilled. This is to have a shared way of assigning an objective value to goods and services. Such a value is made objective by the very existence of a market in which it is exchanged and by the very existence of a standard, the currency, which works as a translator. The value of object x is translated into the currency-based value. As such it can be exchanged. Not very dissimilarly from the law and the language, the existence of a single currency in a political space is intimately related to the existence of a sufficient level of social trust. Trust is here granted to both the authority that issues the currency—similarly to the authority that is issuing the legal norms—and to the anonymous “other” that belongs to the same community. Under a single currency regime, we trust that our exchange will be successful to the extent that the “other”—about whom we do not know anything else

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except that she/he belongs to our community—is acting according to the same rules we do, paying with the same coin. Institutions responsible for their creation and maintenance should ensure both the objective functioning of the language and the subjective perception of the language as a legitimate instrument of social coordination. Any artificial order, such as the codes, the money, and the electoral procedure, whose emergence strictly depends on the creative, intentional, and goaloriented act of a political entity (namely an entity who is entitled to use the power) is accepted as part of the normative social order under specific conditions:  the

people under rule should be positively affected by the artificial order, at least initially (output legitimacy);

 the

rulers should be perceived by those ruled as being competent institutions in handling norms and enforcement mechanisms (substantial legitimacy);

 the

people under rule should perceive in the long run that such an order has a value per se (normative legitimacy).

As scholars have repeatedly pointed out the process of center formation, which seems to characterize the development of most of the modern political system, takes on a peculiar shape in the case of the European Union. It is still being contended whether or not the European political system might be considered as a political space where the process of center formation has been fully achieved. In Bartolini (2005, 117) it is argued that “the typical centrebuilding features of territorial expansion, legal centralization, integration of the national and supra-national techno-bureaucratic infrastructure, and competence accretion have developed together with a persisting weak territoriality, an unclear competence attribution in vertical and horizontal senses, a partial constitutional empowerment of the subjects qua economic agents, and uncertain legitimacy sources.” If assessed under this premise, the European political system fits perfectly with the center-formation analytical framework in three different respects: the single currency, the treaties, and the regulative policies governing the single market. It is not fully achieved, though, because the center-formation process did not transform the resources’ allocation in other policy fields, which remained under the headings of the national governmental actions. These latter are the labor policies, social policies, education policies, and judicial policies—deeply influenced by the legal codes and the national judicial jurisdictions. Therefore, one may safely argue that the issue of a single currency represents an effort accomplished by the European institutions to fix a center into the system and to set up a common code to describe the market value of goods and services, as well as the market values of the salaries and all benefits associated with the workplace.

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In search of trust Social trust is intimately related to the use of a currency (Kaelberer 1997). This occurs in two directions.5 The first is horizontally, as it goes from individual to individual. European citizens living in the Eurozone can take it for granted that the way they would describe the market value of whatever goods or service will be to the equal to the way used to describe the same goods by any other citizen if she or he refers to the euro-based scale (Moro 2011). A common code has been established. This facilitates negotiations and reduces complexity and redundancy in economic and financial transactions, regardless of the physical closeness of the persons involved in it. Moreover, for many European citizens—and surely for all inhabitants of those countries that have embarked on the European Monetary Union EMU—the feeling of traveling, buying, and exchanging goods and services with euros in their pockets is now a common experience. One may even dare to say that this experience has become part of our daily life in such a pervasive and fundamental way that we do not even think about it anymore. We turn on our PC, then Google the website of any kind of providers of travel, flights, and accommodation services, and easily compare prices that we are going to pay in different European countries for the same item. Psychologists and sociologists have largely investigated the cognitive implications of that. It is their common understanding that the adaptation to the euro has obliged customers to adjust the mental representations of their economic preferences and consequently of their economic choices. The second direction is vertical as trust goes from each individual to the authority that issues the currency. This is related to the process of center formation, but on a different level than the one mentioned in the previous paragraph. Here we are speaking about the subjective dimension of the political system, that is, the perception citizens have about the capacity and the reliability of the center in handling difficult situations and in facing and responding effectively to an emergency. Whereas the introduction of a single currency reveals one face of social trust lying at the basis of the order created by the coin, a currency can function properly as a medium in a highly intensive system of exchange if each individual believes that the coin represents the same value independently from the space and the time where the coin is exchanged for the goods or the services it is used to pay for. Such trust mostly depends on the trust granted to the authority that issues the currency. The concept of “trust” is referring to the belief that the coin is going to perform effectively for the purpose it is used. Therefore, this dimension of trust does not necessarily entail any common identity. It does not entail the existence of an “us.” There is a form of trust European citizens are ready to grant to any other European when they act on the market. When they behave as consumers

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of goods and services they believe—and this belief has been largely and steadily confirmed—that they do not need to refer to a system of communication based on the national currency. In this respect, the openness of European citizens to endorse such a language and take a positive stance toward the introduction of the euro has been influenced by their trust in their former national currency. A survey conducted in 1995 showed that European citizens’ trust spanned from a maximum level of trust granted by Italians—68 percent – to a minimum level of trust—in Austrians, 23 percent. In between, countries with highly identifying currencies, such as Germany, felt relatively cold about the replacement of the Deutsche mark with the euro (Figure 6.1).6 Supplementary evidence to this comes from the same survey when the people interviewed were asked about the expected effects of the single currency. They anticipated that the most tangible effects of the euro would be a decrease of barriers to mobility across the EU national borders (84%), the possibility to compare prices in different EU countries (80%), and the elimination of charges and duties in currency exchanges from one country to the other (77%). Fewer people interviewed were ready to argue that the single currency would lead to a decrease in the cost of living in the member states (59%) and a lower percentage of interviewees believed that the single currency would help tackle the unemployment rate (30%). If these data are to be interpreted from the point of view of the trust associated with the single currency, one may safely argue that European citizens—at least to the extent in which they are represented by the

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Figure 6.1  Distribution of the positive stance taken by European citizens toward the euro. Source: Adapted from European Commission 1996a.

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interviewed sample—endorse feelings of trust when it comes to bilateral interactions on the market, but this does not mean that they do equally trust the system as such. In other words, the trust—if conceived as a firm belief based on objectively rational expectations about the prospective behavior of a possible “other”—should be granted to the stability and the reliability of the economic interactions. The single currency is (psychologically speaking) associated with more mobility and lesser barriers. This means that in a society where mobility would be less desirable than the one in which we are currently living, one can reasonably expect that the single currency would be less praised or at least less welcome. Unlike the trust in the effects assessed at micro level, the belief in the capacity of the European single currency to effectively face the political and economic challenges faced by all advanced economies nowadays is much less strong. For it seems that European citizens do not equally trust the systemic adaptation to a challenging environment. The fact that the single currency has been adopted does not in fact implicate the capacity of the European Monetary Union to boost economic development nor to solve the most serious problem the European governments are confronted with: the unemployment rate. Here the distrust is not toward the coin itself. It is mostly related to the governance of the currency, namely to the monetary governance of the Eurozone. If something is to be said about the psychological effects of the euro, one should at least mention the two “sides of the coin.” The first con­ sists of cognitive simplification in a world where individuals are increasingly asked to shape and build their own lives alongside trajectories that are to be designed less and less with the support of common standards or behavioral models. Comparison emerges more easily in the European Union not only for elementary goods but also for more sophisticated options, such as work opportunities. Salaries can be compared in a monetarily homogeneous area. The second side consists of the cognitive inertia coming from the lack of monetary barriers to mobility. The more citizens move and enact the same cognitive routines regardless of which country they are in—for instance, they do not need to mentally convert the value of the money they have in their pocket into the “local currency”—the more they are inclined to move around and to feel free in a supranational area—which is the Eurozone. But the gap still exists from this cognitive effect to the effect of trust in the capacity of the political system to properly and effectively govern the monetary union. And this gap emerges dramatically in cases of crisis. The current financial crisis has undermined the systemic part of citizens’ trust. Distrust is not so much addressed to the euro as a medium of thinking in common terms when options of choice are to be compared. Distrust is much more related to the European Union as a system of governance—at least in the realm of the monetary union. One can expect that the trust of citizens has been put under pressure since they have experienced a shortage of public expenditure in order to deal with the crisis. The financial crisis obliged the heads of states to recognize

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that a trade-off exists between the maintenance of the Eurozone and the maintenance of public expenditure, in particular, in those countries in which virtuous policies aiming at limiting the public budget have not been adopted or have not been properly implemented. This trade-off has been uploaded onto the European political agenda in a compelling way. For the first time citizens have experienced the consequences they need to face and to accept in a monetary union where different public expenditure schemes coexist. We have understood that a single currency is a matter of trust. Trust in the “other” as far as he or she is going to use the same coin and therefore she or he may be engaged in a simplified reasoning of negotiation. Trust in the authority to the extent that the authority is well functioning.

We can’t help being European? Identity and legitimacy at stake The introduction of a single currency might be considered as a sociopolitical experiment. It casts new light on the relation that links identity and legitimacy in a political system. European legitimacy gained the center of the European scholarly agenda after the Amsterdam Treaty entered into force in  1997. The combination of European enlargement and the efforts devoted to renew European governance went hand in hand for a few years covering the year 2000—when the Charter of Rights was adopted—until the year 2004— when the failure of the European Convention to adopt a Treaty establishing a European Constitution made the European policy makers question the political nature of the EU. The quest of legitimacy is the conundrum of all liberal—democratic political authority. In fact, political authority consists of the capacity of issuing rules and norms under conditions of having a diffuse consensus. A process of center formation needs to run parallel to a process of legitimization, which guarantees widespread support to the system where the center is performing as governing power. Legitimacy granted to the center is instrumental to the stability and consolidation of the system. In fact, only if the center can rely on a “stock” of “diffuse legitimacy” can it issue rules and distribute resources by means of an authoritative allocation of values with the reasonable expectation that the rules will be respected and the distribution of resources accepted. From the point of view of those ruled, however, the compliance to the norms adopted by the center is necessarily associated with a widespread trust granted to the political community. This is the belief that other people, under the same rule, will be compliant as well. This belief becomes trust when it is confirmed over time. Intuitively, this way of reasoning leads to an argument that a political system performs better if the center of government relies on a high level of social trust and diffuse legitimacy; this latter being influenced by the former.

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This is one of the most common wisdoms, on the basis of which scholars claim the positive effects of a common political identity for the stability of a political system. In the case analyzed here, the introduction of a single currency, it is reasonable to say that the single currency performs a mechanism of identity building into a political system. A single currency unifies the way people negotiate, exchange goods, and conceive in their own mind the market values of goods and services. Furthermore, the issue of coins is an act of center formation that goes in the direction of concentrating the competence of handling the coins, ensuring the convertibility of the coins and the notes put out on the market, and checking the healthy functioning of the monetary system. A single currency creates a monopoly in a political system from the point of view of the power of issuing the coins and the banknotes. In other terms, the introduction of a single currency says something about the will of the center to affirm its power and its hegemony within the boundaries of the political system. Why is this related to legitimacy and identity? According to a widely accepted scholarship, legitimacy can be conceived as a double-sided concept made of two parts: input legitimacy and output legitimacy. European scholars raised a few questions about the systemic legitimacy of the European political system. First they introduced the distinction between input and output legitimacies with specific reference to the European governance (Scharpf 1999). This is largely related to the fact that European policy making turns out to be a complex and multilayered process of redistribution of resources coming from local communities as readdressed to the entire EU polity as a whole. Input legitimacy is requested by a liberal approach to politics as far as it represents the lymph of a safe and healthy method to authoritatively allocate values. Input legitimacy depends on the capacity and the will of people to get involved in the making of norms and rules as well as in making policies and collective actions. Here legitimacy comes from the fact that citizens are ready to participate in policy making even if they dissent from the specific content or the specific orientation of one political action. This goes as far as they are ready to support the system of political authority. Despite the fact that it is still being contended (1) what threshold needs to be reached in order to achieve an acceptable level of citizens’ participation in a legitimized political system and (2) what threshold should be reached for the input legitimacy, it might be argued without going too far that because of its complexity and its multilayered nature the European political system proves very difficult for laypeople to understand and participate in. Political legitimacy coming from the participation and the citizens’ involvement in European policy making has always been considered to be the weak point in the system. By contrast, the output legitimacy is considered as the core of the European political system legitimacy. As argued by Scharpf, the European

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institutions are there and are accepted because they are performing and they serve fundamental needs and aspirations of the citizens, such as the possibility to take full benefit of a single market or, for the local authorities, the opportunity to draw resources—and political legitimacy—from the allocation of the regional funds. In other words, ordinary policy making turns out to be legitimate because of its instrumental value. This view can be easily accepted. After all, why should we act as European other than for instrumental and strategic reasons, such as the simple fact that the European Union seems to work? Having this premise in mind, it emerges that the legitimacy of the political authority—in this case the institutions of the monetary union, which do not overlap perfectly with the institutions of the EU—that issues the coins and regulates the European monetary policy depends on the fact that our quality of life is ensured by the very existence of a well-functioning and reliable system of currency. Of course, this comes to terms with the conundrum of the attachment European citizens have for the euro. However, a currency is not only a medium to effectively perform exchanges. It also represents a system of communication, an instrument allowing us to say something about ourselves and to “others”—here considered as the “others” that do not use the same currency. In this respect, the single currency has been put in place with an entire strategy of communication and identity building. As I have already said there is an intrinsic relation between identity and politics. At the most elementary level identity has something to do with the self-image one has in relationship to others (Waldzus and Mummendey 2004). In fact, identity is related to the way people build up their common system of signification and communication. This does not necessarily lead to having a high level of mutual trust in the community, but it does lead to deeply trusting the system of norms and values by means of which the individuals are going to interact with the community. A common identity is a reducer of complexity. It creates a meta-level of trust. It increases selfconfidence in the personal capacity to predict, and detect the behaviors of others. Therefore, to come back to identity, identity is strongly needed in politics. There would be no political community without some sort of common identity. But this does not yet entail the existence of a political identity. To say that we conceive ourselves as part of a community does not necessarily mean that we feel that we are part of a political community, that is, a community oriented to pursue common goals by means of common resources or individual resources collected and allocated into a common stock. Mutatis mutandis, this is very close to the expected consequence that a center may want to create with the introduction of the single currency. A predictable order, that is, a social order in which the behavior of the individuals can be understood—and therefore governed—through the lenses of the language—the language set up by the scale of the currency.

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Is this the whole story we need to tell about the relationship between identity, legitimacy, and the single currency? I think that this is not the case. To this point I consider the position of Cerutti (Cerutti and Lucarelli 2008, 10): legitimacy cannot be reduced to output legitimacy, nor input legitimacy easily replaced with the latter; properly said, legitimacy does not comprise two equal and exchangeable components, because output legitimacy is the set of conditions for legitimacy to be able to work rather than a second type of legitimacy; there is a deeper, Weberian layer in the notion of legitimacy which goes beyond input legitimacy itself as based on “what the people will.” The other side of the three-sided coin, which is legitimacy, is substantial legitimacy. Substantial legitimacy thus contains as a core condition the political identity or rather self-identification of the people involved. Only institution building or policy-making perceived as legitimate by a public that feels it is one actor can create meaning for the recognition of the new polity, meaning being the scarcest resource in the post-modern globalized world as well as a powerful basis of allegiance and participation (ibidem, 13–14). Risse (2010) argues that social identities are collectively shared constructions linking individuals, which are the subject of identification, to social groups as the identification objects (p. 3). Social identities are about a “me” belonging to a “we,” which is a social group and or a community. Mutual knowledge about sharing an identity is significant for the conceptualization of social identities (p. 22). Therefore, the third dimension of legitimacy is directly related to the perception of a common identity. In other words, in order to be substantially legitimated, a system needs to be perceived by the individuals who belong to it as something they have in common and constitutively create their “us” (Kohli 2000, 120). The European Monetary Union suffers from a main shortcoming in the input legitimacy, which has been heavily criticized because of a lack of democratic participation and transparency. It has come to a critical point in which it proves lacking also from the side of the output legitimacy, at least to the extent that the European monetary institutions do not so far manage to keep the overflowing of the financial crisis and the disruptive effects this latter had on the national public budgets under control. But this does not exhaust the entire amount of legitimacy that comes from the single currency. If the point raised above is acceptable and reasonable, one may argue that a currency draws legitimacy mostly from the output side as far as the short term is considered. But this is a very short-sighted view of the euro. The substantial

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legitimacy that comes from the fact that Europeans are now used to thinking of themselves as individuals capable of moving inside a single market with a very simplified approach to the comparison of prices, costs and marginal benefits in the buying of goods and services. There is also more to this point. The euro has set up an entire system of signification, symbols, and communication mechanisms that foster the social identity as “social construction,” that is, as the outcome of the no. +1 mental representations of “I” as part of a “we.” This being part of does not mean that European citizens feel strongly linked to the political community—the European polity as a whole. It does mean, however, that they think along the basis of a common core of beliefs and ways of thinking that is going to come closer and closer to the extent that people are increasingly moving, communicating, and getting in touch with each other. Therefore, the experience of the single currency has given an empirical support to the idea that people coordinate and behave on the basis of common ways of thinking when there are common linkages in the reality that they refer to. The euro and the single currency represent such a linkage.

Back to the center, in case we need it I started my questioning about the evidence provided by the single currency with regard to three points raised in the EU scholarship. The first is the statelike nature of the EU, not only from the descriptive point of view—whether the EU might be studied as quasi-state—but also from a prescriptive point of view—whether the EU should act as quasi-state. The second point is the link between social trust and the single currency. The last concerns the tie between legitimacy and identity in a supranational political system. The portrait sketched out in the pages above does not solve the dilemmas. It simply offers a better way to question and to search for solutions to them. As it comes to the state-like nature of the EU, I have argued that the center formation, which is a fundamental step into the establishment and consolidation of a bounded political system, proves to be problematic in the EU (Bartolini 2005). Nevertheless, the issue of a single currency represents a step in the direction of fixing a center into the system, by means of which the existence and the reliability of the single currency are ensured. This goes to reinforce the idea that the single currency creates conditions of social trust and enhances the capacity of European citizens to think with the same “referential” in mind, as far as ordinary life is based on a system of communication whose grammar is centered on the euro. This does not solve the conundrum of European political identity as a precondition to the input legitimacy of the system, but seems to cast new light on the importance of the substantial legitimacy—depending on the way people mentally build their “we”—in maintaining the European sociopolitical system. The euro

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is a highly ambitious undertaking of institutional engineering. It belongs to the realm of the “construction of reality.” As such it belongs to the circuit of the substantial legitimacy much more than to the realm of the output legitimacy. If this is true, a differential set of standards and principles should be used to assess, on the one hand, the EMU and, on the other hand, the euro. Whereas the first belongs—as a mechanism of governance—to both realms of input and output legitimacies, the second has much more to do with the way we represent ourselves within the European Union and as Europeans in the world. Stepping back from the single currency because the EMU has shortcomings in functional and instrumental terms sounds, accordingly, as  being a very self-destructive choice in terms of the little amount of cognitive and symbolic capital we dispose of in the EU.

Notes 1 This work has been enriched by the collaboration with colleagues and students. I owe inspiring ideas and insights to Giovanni Moro and Vanessa Thurner. Responsibility remains with the author. 2 I have drawn inspiration from Bartolini 2005. 3 Mobility, self-management, individualism, and modularity in social life are strongly interconnected with the existence of a new set of opportunities and a new way of self-reflecting our personal identity in the collective sphere (Bauman 2000; Beck 1996). The need of a common language to indicate the same thing in different contexts has become a marker of our era. Increasing mobility both of persons and capital is a global phenomenon that affects many different social fields, among them technology, law, language, etc. 4 One may add a few more examples: a common, formalized, and codified legal system; administrative procedures; electoral procedures; levies, etc. 5 Kaelberer speaks of mimesis in the case of horizontal trust. 6 See European Commission 1996a.

C HA P T E R 7

Two sides of the same coin? The euro and Europeanization of collective identities Thomas Risse

We will never abandon the euro. Never! Euro spells Europe, the euro is Europe. Europe has meant 60 years of peace on our continent. We will never abandon that. —former French president ­Nicolas Sarkozy1

The euro is much more than just a currency. It is the ­foundation of our common economic success and a symbol of our ­continent’s political unity. —German Chancellor Angela Merkel2

These quotes by the two important policy-makers when it comes to getting Europe and the EU out of the euro crisis sum it up nicely: the euro and European identity are intertwined. Discussing the single currency in solely economic terms misses the mark by far. It is a political currency and it is also a strong symbol of European identity. Take Greece: if we want to understand why Greece has been accepted into the single currency in 2001, an economic analysis makes no sense, since Greece fudged the convergence criteria. It was a political decision: How could one deny Greece—the birthplace of European democracy—entry into the Eurozone?

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However, the relationship between the euro and European identity is complex, to say the least. I argue in the following, first, that we cannot understand the origins of the single currency as well as the current fight to rescue the euro if we ignore questions of European identity. Identity-related arguments and motivations are part and parcel of the story how the euro came about and why it is that policy-makers are currently prepared to go a very long way to rescue it. Second, the single currency has an effect on identification processes with Europe, since it represents an identity marker.3

European identity and the introduction of the euro The introduction of the euro marks a major step in the process of European integration following the decision toward the single market (see Risse et al. 1999; Risse 2003 for the following). The 1992 Maastricht Treaty established the Economic and Monetary Union (EMU), which went into force in 1999 followed by the introduction of euro bills and coins in 2002. Germany and France were at the forefront of those promoting a single currency ever since the Single European Act had come into force, while Great Britain remained on the sidelines and opted out of the EMU at the Maastricht Treaty negotiations (Moravcsik 1998, ch. 6; McNamara 1998; Verdun 2000). How is this difference in attitudes to be explained? A first-cut answer points to economic reasons. The single currency was viewed as the logical follow-up to the European single market allowing for the free movement of goods, capital, labor, and services. The euro would stop excessive currency fluctuations and protectionist pressures, which could jeopardize the single market. It would eliminate transaction costs and might lead to increased investment. In sum, the euro was supposed to be the answer to the increased economic interdependence among the EU member states and to the challenges of globalization. Yet, this reasoning cannot account for the variation in elite attitudes toward the single currency in Britain, France, and Germany. In particular, why did Britain choose not to participate in the single currency, even though its economy is as integrated with the Continental European economies as anybody? Take the British government’s “five economic tests” issued in 1997, for example. These tests deal with the compatibility of business cycles and economic structures, labor market flexibility, investments in Britain, the UK’s financial services industry, and with growth, stability, and an increase in jobs. The British government’s 2003 assessment of these “tests” indicates the political rather than economic nature of a decision to join the single currency. It even argues that the UK meets the EMU convergence criteria and that the “UK now exhibits a greater degree of cyclical convergence than some EMU members demonstrated in the run-up to the start of EMU in 1999 and remains more convergent than a number of EMU countries today”4

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A second explanation points to geopolitical and security reasons. The end of the Cold War brought the German problem back on the European agenda. The EMU can be regarded as an effort to contain German power in Europe in the aftermath of unification by firmly binding the Federal Republic to Western institutions and by preventing a German Sonderweg (Grieco 1995). Moreover, the single currency and the European Central Bank (ECB) effectively ended the quasi-hegemony of the German Bundesbank over monetary policies in Europe. However, if it was in the geopolitical interest of Germany’s neighbors to opt for “binding” through institutional arrangements, then it was also in the German interest to retain as much national sovereignty as possible. In other words, why should the Germans have given up their cherished Deutsche mark if it allowed them economic hegemony in Europe?5 There are as many good economic or geopolitical reasons in favor of the euro as there are against it. In particular, perceived instrumental interests of actors as such do not explain the considerable variation in attitudes. Rather, actors’ perception of their material and instrumental interests with regard to the euro were deeply influenced by their visions of European political order. Differences in the construction of collective elite identities pertaining to the nation-state and to Europe explain the controversies among the political elites in the three countries as well as the variation in attitudes. In the case of Germany, its government had agreed to the EMU early on and stubbornly supported the euro throughout the 1990s. The majority of the German political elite never wavered in its support for the single currency. Even more surprising was the lack of public controversy about the euro, despite the fact that a majority of German mass public opinion rejected giving up the cherished Deutsche mark. General elite support for the single currency was based on the German post-World War II European identity, which was to overcome the German nationalist and militarist past once and for all (EngelmannMartin 2002). Chancellor Kohl, in particular, wanted to be remembered as the one who pushed through the EMU and hence made a closer European Union inevitable, thus preventing a return to nationalism in Europe (Banchoff 1997, 61–3). Kohl framed the single currency as the symbol of European integration, and he deeply identified his political fate with the realization of the euro. He also labeled 1997—the year of reference for the fulfillment of the convergence criteria—as “key year of Europe,” as existential for further integration. He even argued that the success of EMU was a “question of war and peace.”6 In essence, Chancellor Kohl framed the issue in the German political discourse by constructing a powerful equation linking the euro to German identity: Support for the euro  support for European integration  good Europeanness  good Germanness  rejection of the German militarist and nationalist past. This framing of the issue served as a silencing mechanism of the political discourse on the EMU. It was no longer possible to argue about the pros and cons of a single currency and to weigh the policy alternatives in a neutral

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manner. Opponents of a single currency had to make sure that they could not be regarded as “bad Germans,” that is, proponents of German nationalism. As a result, German opponents of the euro almost never declared their opposition openly, but rather demanded a postponement of the euro. They went at great length to show that one could be a “good German European” and still remain skeptical vis-à-vis a single currency.7 Even those opposed to the EMU did not dare to touch the German consensus on European integration, but framed their criticism in terms of asking for a delay and/or demanding a strict application of the convergence criteria. They had to make sure that support for the Deutsche mark could not be constructed as an alternative to German Europeanness. In this case then, the Europeanization of German identity largely shaped the definition of economically defined interests. In contrast, the French approach toward the EMU followed an interestdriven reorientation of French economic and monetary policies in conjunction with a change in French approaches to European order. These changes led to a re-construction and Europeanization of French collective identities that the end of the Cold War exacerbated and accelerated. The most important transformation of French attitudes toward both economic policies and European political order occurred among the French left in the early 1980s (see Roscher 2003). When President Mitterrand’s initial attempt at leftist Keynesianism bitterly failed in  1983, he had no other choice than to change course dramatically if he wanted to remain in power. Instrumental interests such as the desire to preserve political power led to a reconstruction of the political program of French Socialists and subsequently to a transformation and Europeanization of their collective identity. This new identity explains why the Parti Socialiste consistently supported EMU. President Mitterrand set the trend and his party followed. Similar changes in the prevailing visions of European order combined with reconstructions of French nation-state identity took place on the French right in conjunction with the end of the Cold War. The gaullist Rassemblement pour la République (RPR) had adopted the neoliberal discourse and monetarism (Baudouin 1990), but was divided over the EMU, with one faction leading the referendum campaign against the single currency and President Chirac. These divisions had little to do with the differences over economic policies, but with a split about what European integration meant. The divisions within the RPR over the single currency centered on understandings of what constituted sovereignty and how much supranationalism was compatible with it. It is not surprising that competing visions about European order held by RPR policy-makers corresponded to differing views of Frenchness. President Jacques Chirac expressed similar ideas about the Europeanization of French distinctiveness as their counterparts among the French left: The European Community is also a question of identity. If we want to preserve our values, our way of life, our standard of living, our capacity to count in the world, to defend our interests, to remain carriers of a

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humanistic message, we are certainly bound to build a united and solid bloc . . . If France says yes [to the Treaty of Maastricht], she can better reaffirm in what I believe: French exceptionalism.8 This identity construction Europeanizes the gaullist vision of the French nation-state by transferring its properties onto Europe. Support for and opposition against the EMU in the French debate centered on competing understandings of national sovereignty and of “Frenchness.” While a majority of French political elites gradually embraced a Europeanization of French distinctiveness, a minority stuck to the old concepts of French grandeur and indépendence. This group mobilized again more than ten years later during the referendum on the Constitutional Treaty in 2005. The British attitude toward the single currency remained the same over two decades. At the Maastricht summit, the British government reserved the right to decide for itself whether or not the United Kingdom would join the EMU in 1999. The Labour government under Tony Blair confirmed this position and decided that Britain would continue the “wait and see” attitude of its predecessor based on the “five economic tests” quoted above. While the few British proponents of the euro used interest-based arguments to support their claims, conservative eurosceptics routinely used identity-related statements to justify their opposition to EMU: “. . . European monetary union will remove all characteristics of sovereignty which characterize a proud and independent nation”. “. . . abolish the pound and you abolish Britain9”. The British debate on EMU and the continuing reluctance toward joining the single currency must be understood with reference to a stable national identity collectively shared by the political elites (Knopf 2003). The dominant discourse strengthened the opponents of the single currency who regularly used identity arguments to make their point. They feared that Britain would lose the ability to govern itself and argued against any further losses of national sovereignty. The political discourse centered around whether to join later or never, in sharp contrast with the debates in Germany that concentrated on joining now or later. In sum, the discourse on the euro in the three countries was framed to a large degree in terms of identity politics and political visions of European order. Supporters of the project joined a common vision of European integration as a modernization project overcoming the historical divisions of the continent (Jachtenfuchs 2002; Jachtenfuchs et al. 1998). They used the single currency as a means to get closer to this political vision. The euro symbolized a collective European identity, while the Deutsche mark, the franc, and the pound sterling were constructed as symbolic remnants of a nationalist past. However, the three discourses represent different combinations of the way in which identities and material interests are linked. With regard to

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both the British and the German cases, collective identities—Englishness as non-Europeanness, on the one hand, German Europeanness, on the other hand—largely influenced how political elites came to see their economic interests with regard to European integration in general and EMU in particular. In  these two cases, collective identities—whether national or Europeanized—do quite some causal work in explaining the particular ways in which the elites in both countries came to view British and German interests. In these two cases, the identities were rather clear, while the “national interests” remained vague and ambiguous. As a result, collective identities defined the range of (economic and political) choices available to actors. In the French case, however, the causal arrow runs from interests to identities. Two “critical junctures”—the failure of Mitterrand’s economic policies in 1983 and the end of the Cold War in the late 1980s—profoundly challenged the perceived instrumental as well as political and economic interests of the political elites. Policy failures triggered a reconstruction of political interests—in the mid-1980s for the French Socialists and in the early 1990s for the French gaullists. Majorities in both parties then adjusted their collective identities accordingly and Europeanized their understandings of French distinctiveness, even though this Europeanization remains fragile, unstable, and contested until today. This connection between Europeanized elite identities and the euro remains fairly stable until today, as the two quotes by Nicolas Sarkozy and Angela Merkel at the beginning of this chapter indicate. The euro crisis, once again, constitutes an important instance, which we can use to analyze the identity-related aspects of the euro. First, economic arguments alone are insufficient to explain why EU leaders agreed on a multi-billion euro rescue package to stabilize countries facing a sovereign debt crisis in the Eurozone. As far as I can tell, there are as many good arguments in favor of the various components of the rescue package as there are against it. Economists disagree fiercely among themselves whether or not Greece and other countries should be allowed to default on their debts or to leave the Eurozone altogether. “To defend the euro whatever it takes” (EU Commissioner Olli Rehn) is not the obvious solution to the euro crisis, neither in economic nor in political terms. With regard to the latter, there is widespread public skepticism with regard to the various rescue packages for Greece, Portugal, and others—a skepticism that has already translated into electoral support for populist right-wing parties such as the True Fins in Finland.10 So, why should policy-makers in Western or Northern Europe display solidarity with the Eurozone countries in trouble, if it only serves to undermine their electoral support? I claim that we must take identityrelated arguments into account to explain why German, French, and other policy-makers have so far stood extremely firm toward defending the single currency “whatever it takes.”

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Effects of the euro on the Europeanization of identities So far, I have mainly addressed the question how identification with Europe and the EU—particularly among political elites—helps to understand policymakers’ attitudes and support for the euro, given that economic arguments are rather indeterminate. I now turn the argument around and ask what the euro contributes to the Europeanization of collective identities. My starting point is imagined communities such as the EU have to become “real” in people’s minds (Castano 2004). Nation-states employ many mechanisms to remind their citizens that they belong to a national community. There are symbols such as the national flag, the national anthem, the currency, the passport, and particular national holidays to commemorate historical moments in the nation’s history. These symbols serve as identity markers. Moreover, national elites use various narratives to reify the nation-state, to celebrate historical moments, and to delineate what is so special about France, Britain, Italy, or Poland. Last but not least, powerful socialization efforts are being made in educational institutions to instill a sense of belonging to a national community in the children. This is where the EU’s troubles as an imagined community begin. While the EU is “real” for “the Europeans,” in particular, the “Eurostars,” who have to deal with it in their daily lives, it is more remote for the average citizens. First, there is no glorious European history to be proud of in the same way as British and French histories are narrated in a triumphant way. On the contrary, the identity of modern political Europe is being constructed against the European past of wars, nationalism, and militarism as the EU’s “other.” Second, the blame-game of national policy-makers vis-à-vis Brussels is not particularly suitable to increase people’s sense of a European community. In the national discourses, the EU and a “faceless European bureaucracy” is often blamed for tough and costly decisions (“Brussels made me do it”), while policy-makers tend to claim the more beneficial decisions for themselves. This results in negative attributions of responsibility to EU institutions in national media. A study of German media reporting on the EU showed, for example, that roughly two-thirds of all attributions in which EU institutions were made responsible for particular policies, were framed in negative terms, even though the overall number of such attributions was rather low (Gerhards et al. 2007). Fortunately, the situation is not as bleak as many scholars have painted it. Since the 1990s, the EU and its institutions have made a conscious effort to develop their own symbols and identity markers. The European flag with the 12 yellow stars against a dark blue background is now ubiquitous in Europe. The same holds true for the burgundy red European passport, for

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the European drivers’ license as well as license plates with the EU symbol on it. Europe has its own anthem, Beethoven’s “Ode of joy.” Then, of course, there is the European money, the euro. For each of these identity markers, the message conveyed to the citizens is the same: Europe and the EU are not constructed in opposition to, but complementary to national identities. When Europeans see the EU flag on their evening news, it usually flies alongside the respective national flags. The European passport has both the inscription “European Union” and the respective nation-state including a national symbol on its cover. Even the euro contains a conscious effort to construct dual identities. While the euro bills all look alike across the Eurozone, the euro coins are janus-faced: one side is common to everybody and inscribes the value of the money; the other side is distinctly national. Members of the Eurozone were allowed to pick national symbols of their own. The Germans put the Brandenburg gate on the backside of all their coins, while the Italians were more innovative and picked the Colosseum, Botticelli’s Venus, Leonardo da Vinci’s “Vitruvanian Man,” and other national icons. What are the effects of these conscious efforts at building a European community as a secondary identity? The answer varies quite a bit. As to the European flag, roughly 95 percent of the Europeans are now aware of it and can correctly identify it, the numbers have remained high throughout the 2000s (see European Commission 2007a, 79–80). Even two-thirds of the Turkish respondents recognized the European flag. Eighty-five percent consider the flag a “good symbol for Europe,” while half of the respondents (54%) even identify with it. In other words, the European flag has achieved its standard as an identity marker. The same holds true for the euro, but this is mainly confined to “Euroland,” that is, EU member states, which have adopted the single currency (Risse 2003): between 50 percent and 60 percent of the respondents in the EU members states, which have adopted the euro, claim that the single currency represents the EU for them. These numbers are substantially higher than the numbers in the non-euro countries, except—interestingly enough, for three Southern European member states (Italy, Portugal, Spain, see European Commission 2007a, 91). In sum, symbols of European integration have moderate effects on identification, as Michael Bruter confirms in an experimental design (Bruter 2005, 128–9). Yet, there is no straight line from the euro in people’s pockets to greater identification with Europe and the European Union. While the euro makes the EU more visible and increases its “psychological existence” as an imagined community, this is only a necessary, but not a sufficient condition for increased European identity or the Europeanization of national identities.11 It crucially depends on how the euro is framed in the public sphere. With regard to media reporting and the use of symbols, Michael Bruter’s analysis supports various hypotheses put forward by cognitive and social psychology. He conducted various experiments with French, British, and Dutch students concluding that European identity has a civic/political and

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a cultural component. His regression analyses demonstrate that both media reporting and the use of symbols such as the European flag strongly affect peoples’ identification levels with Europe, in both their political and cultural components (Bruter 2005, ch. 6). “Good news” as opposed to “bad news” about Europe increases the political component of European identity by more than 20 percent, while the use of symbols has an equally strong effect on identification with Europe as a cultural entity. Bruter concludes that media reporting affects political identity more strongly than cultural identity, while the opposite is the case with regard to symbols (ibidem, 127–8). If we apply these findings to the euro and its contribution (or lack thereof) to the Europeanization of identities, framing of the debate by policy-makers appears to be the key. One can debate, for example, whether the single currency  is in the best German interest and whether, therefore, Germany should give up its cherished Deutsche mark. One can discuss whether it suits German economic or political interests to defend the euro and to agree to the various rescue packages. But one can also discuss the same question from a common European perspective: To what extent does a single currency help the European economy in an era of globalization? If the EU were to give up the euro, what would happen to the project of European integration? Can we have monetary integration in Europe without economic policy coordination? The latter type of questions constructs the problem in common European terms thereby creating a community of communication and a collective identity. Actively engaging in a discourse on issues of common concern can lead to collective identification processes and creates a community of communication rather than presupposing it. This line of thought means that “debating Europe” actually builds the community of fate in a European public sphere. It constitutes Europeans as Europeans who no longer remain neutral observers, but have to take a stance in a community of communication. This argument further implies that controversies about European policies and the subsequent politicization of the EU are good, not bad for the sense of community and for construction of a European polity. To repeat myself, a common European perspective does not and cannot mean that speakers in a transnational public sphere adopt a neutral position above partisanship or that they agree on the issues at stake. Polarization and contestation are intrinsic to a lively public debate. “Common European perspective,” therefore, means that issues are addressed as concerning “us as a community of Europeans” so that the relevant community is Europe rather than individual member states or other particular groups. In other words, the “we” in whose name speakers articulate themselves in the public sphere then refers to Europe or the EU as the relevant community rather than any other particular group. In debating a particular problem as an issue of common European concern, speakers construct a European community of communication, thereby contributing to a collective European identity. In sum, to the extent then that the euro is presented and debated as a common European project, it contributes to the Europeanization of collective

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identities. Take the current euro crisis as an example: it does not matter in this context whether contributors to the debate agree or not with the EU (and IMF) rescue packages or not, as long as they debate the issue as one of common European concern. The more the latter framing takes place, the more it should positively contribute to the Europeanization of national identities. I do not have strong empirical data to prove my point. But there is a rather strong correlation between three empirical findings (see Risse 2010 for details): first, the Continental Western and Southern EU member states not only encompass the six founding members, but also countries that have fully embraced the various integration steps. They all share the single market, they have all adopted the euro, and they all participate in “Schengenland” of borderless travel. In contrast, Great Britain has opted out of both the single currency and the Schengen acquis, while Sweden and Denmark have not (yet) adopted the euro. The new Central Eastern European members have only started to “opt in” to the euro or Schengenland, except for Slovenia and Slovakia. The EU, its institutions, and its norms and rules affect western and southern member states on the continent more strongly than Great Britain, Scandinavia, and the new Central Eastern European members, even though the latters’ exposure is changing rapidly and might even accelerate as the result of the world economic and financial crisis. Second, the EU is more visible in the public spheres of Continental Europe than the United Kingdom. The Europeanization of public spheres is way more pronounced in Continental Europe than in the UK and in Scandinavia, the more eurosceptical countries. The rejection of further integration by British political elites is reflected by a more nationalist discourse in the British media, which only serves to re-enforce the “semi-detachment.” By the same token, the active engagement of German (or French or Italian) elites for European integration is reflected in the media leading to a (Continental) European community of communication. Third, Continental Europeans also exhibit a rather strong degree of Europeanized identities. The data show in this context that the main dividing line in mass public opinion is between those who exclusively identify with their nation-state, on the one hand, and those who hold Europe as a secondary identity next to their national one, on the other hand. The percentage of those with dual identities is particularly strong in Continental Europe. Moreover, it can also be demonstrated empirically that those identifying with Europe as a secondary identity exhibit much higher support for European integration (including the euro) than those identifying exclusively with their nationstate (Hooghe and Marks 2005).

Conclusions I have argued in this short piece that the euro and European identities are the two sides of the same coin. Not only can we not explain the emergence

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of the single currency including the contemporary attempts at rescuing the Eurozone from the sovereign debt crises of some members without taking the Europeanization of elite identities into account. There are also good reasons to assume that the euro and its framing as an issue of common European concern in the various public spheres contribute positively to increased identification with Europe and the EU. If my argument is correct, then there is hope in the current euro crisis. Not only have policy-makers started to frame the crisis as an issue of common European concern rather one affecting individual nation-states (see the quotes at the beginning of this chapter). A majority of public opinion in countries, such as Germany on whose policy-makers the success of the euro rescue will ultimately depend, actually supports further European integration rather than less, even though the same publics are deeply skeptical of the current efforts.12 In other words, not all is lost in public opinion with regard to the euro (at least not among the wealthy EU countries, which have to agree to transfer substantial degrees of tax payers’ money to the weaker economies). This situation represents an opportunity for policy-makers to make a much stronger effort at swaying public opinion toward support for the rescue efforts. Silencing the debate will only lead to more euroscepticism.  If policy-makers such as Merkel are convinced that they need to defend the euro “whatever it takes,” they must engage in a communicative discourse with the public (Schmidt 2008) in order to make their case much more forcefully.

Notes 1 At the World Economic Forum in Davos, January 27. 2 Speech in Magdeburg, August 24. 3 The following analysis is largely based on Risse 2010. I thank Cornell University Press for permission to reprint parts of various chapters. 4 See HM Treasury 2003. 5 A widespread narrative of the history of the EMU holds that the German government under Chancellor Kohl had agreed to the single currency as the political price to be paid for French (and others) support for German unification. This interpretation overlooks that Germany had agreed to the EMU in principle long before German unification was negotiated in 1990. For details on this point see Moravcsik 1998, 437–8. 6 See Kohl 1994. 7 E.g., Schröder 1997; Stoiber 1993, 1997; Süddeutsche Zeitung 1997. 8 Jacques Chirac 1992, Liberation, September 2011. 9 The first quote is from Peter Tapsell, Conservative, House of Commons (HoC), March 24, 1993, 967–8. The second quote is from Redwood 1997, 19.

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10 According to a public opinion poll in late August 2011 in Germany, 55 percent of the Germans reject eurobonds, while 66 percent support a “no” vote by the German parliament on the latest rescue package. See http://www.tagesschau. de/multimedia/bilder/crbilderstrecke274.html (September 3, 2011). 11 The latter is the more appropriate term, since European identity should not be conceptualized as above and beyond national identities. Rather, people hold multiple identities, they identify with their nation-state as well as with Europe and the EU. For details see Risse 2010. 12 The German opinion poll quoted in footnote 10 shows, for example, that almost two-thirds of the Germans support “more common European policies” rather than “going it alone,” even though a majority rejects a “United States of Europe.” See http://www.tagesschau.de/multimedia/bilder/crbilderstrecke274_ mtb-1_pos-13.html#colsStructure (September 3, 2011).

C HA P T E R 8

Why money can’t buy democracy: On the detachment of the euro from EU citizenship1 Eva G. Heidbreder

I don’t care too much for money, money can’t buy me love —The Beatles

Apparently deplorable shortcomings in satisfying democratic credentials are a chief concern of the public and academic debate on the European Union (EU). A widely accepted characteristic of the EU’s policy-making is its strength in producing output, but weakness in granting input legitimacy (Scharpf 1999). Looking at the EU’s output balance, the introduction of a single currency, the euro, represents clearly the icing on the cake of the successful creation of the internal European market, the world’s largest integrated economic area. But why has this landmark output from the outset remained detached from the debates about EU democracy and citizenship? Notably, during the first years of its rather successful existence, political decision makers across Europe did not promote a discourse that presented the euro as a vehicle for EU output democracy. This initial lack of positive linkage has made way for predominantly negative associations between the euro and democracy since the escalation of the sovereign debt crisis. The perceived failure of democratic control by national bodies has become a vital matter of concern. Pressure for quick fiscal policy reactions on the EU level constrain central national powers, above all parliamentary budgetary

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authority that lies at the heart of democratic sovereignty. Not surprisingly, voices arguing that the euro has been a milestone in establishing democratic governance and a landmark for EU citizenship are basically absent. To trace the connection, or rather the detachment, of the euro and citizenship, I will raise three questions. What democracy-related expectations were put into the euro? To what extent have these expectations been fulfilled or disappointed? And why has the dominant strategy of political leaders been not to couple notions of output legitimacy with the single currency as endpoint of market integration? The central answer to these queries lies in the multilevel nature of the EU political system. Famously depicted as “less than a federation but more than a regime” (Wallace 1983), the EU mixes state-like and inter-state logics to legitimate its policy making. In other words, the EU is both supranational and intergovernmental. In part, it works practically like a state proper but, at the same time, it is formally an association of sovereign states. In consequence, national political actors need to constantly balance two competing logics: the justification of joint EU policy decisions and the integration process at large, and basic interests to secure their individual political survival in the domestic arena. These prerogatives compete when it comes to locating ultimate political authority and legitimacy, which prevented rational national policy makers from linking the euro with notions of EU legitimacy or even European identity in  2001. Although the detachment of the euro and citizenship was a rational decision initially, this strategy created a path-dependency that started to backfire once the euro got under pressure, and trans-EU solidarity to sustain the single currency was demanded from nationally split constituencies. This notwithstanding, there is evidence that despite the increasing perception of a democracy-undermining effect of the euro, on a mere economic calculation it still produces sufficient output legitimacy for certain states and citizens to join the Euro area in the midst of crisis, as Slovakia and Estonia did in 2008 and 2011. The discrepancy between a credible potential to enhance EU output legitimacy and the evident lack of positive association of the euro with EU democracy and citizenship hence persist. The argument will be presented in four steps. First, the current state of debate on democracy will be outlined. Second, sociological analyses on the relationship between market integration, identity, and citizenship more generally will be presented to shed light on the main dynamics between citizenship and EU integration. Third, public opinion data on knowledge and attitudes on the euro will be summarized because these figures reflect more concretely the disentanglement of political action, economic realities, and public perceptions. On the basis of the empirical and conceptual analyses, I will draw conclusions about why especially the political “supply side” does not promote any “demand” for linking EU citizenship to a positive narrative of the single currency. Finally, I will turn to selected aspects of the post-crisis

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debates to depict how the findings of the first sections are reinforced during the period of the “euro crisis.” The conclusions wrap up the overall argument and attempt to offer some tentative evaluations and an outlook.

The democratic deficit and the Treaty of Lisbon The political struggles over the ratification of the Treaty establishing a Constitution for Europe (2004–2007) and the eventual enforcement of the Treaty of Lisbon (2009) provide an ideal case to illustrate the main argument behind the EU’s lack of democracy. Although some scholars have marked the democratic deficit a myth (Majone 1998; Moravcsik 2002) and while the majority of citizens seems to care less than little about their democratic rights in electing the European Parliament,2 the key incentive for initiating a constitutional reform was that “the European institutions must be brought closer to its citizens” and that citizens “feel that deals are all too often cut out of their sight and they want better democratic scrutiny” (European Council 2001). The reform process that ensued the mandate to render the Union “more democratic, more transparent and more efficient” (European Council 2001) was finally enacted with the Treaty of Lisbon. Notably, with the Treaty of Lisbon, the debate on a democratic deficit of the EU has moved beyond questions about possible democratic deficiencies of institutional architecture to the de facto behavior of institutional actors, in particular, the European Court of Justice (Scharpf 2010). Recent critics either stress the illegitimate expansion of supranational powers, or take the opposite view acclaiming a lack of political leadership to invigorate existing democratic principles already enshrined in the EU’s legal order. The matter has hence become how policies in the EU are actually done. Critics on the one side deplore that real practice goes too far beyond the limits of the founding Treaties, others lament contrarily that existing political opportunities are not sufficiently embraced due to a lack of EU-supportive leadership. How to manage economic coordination rather than the EU’s institutional design has moved to the center of attention. Accordingly, whether the EU is still delivering the output legitimacy it was acclaimed to rest on has become the preeminent question. The further, in the course of the intended democratic reform process motivating the new Treaty, the debate shifted increasingly toward pragmatic policies and away from symbolic signifiers. In line with the “de-constitutionalisation” of essentially the same text, the major change from the constitutional to the Treaty of Lisbon was the elimination of all references to flag and anthem and the renaming from the “constitutional” to a Treaty on the EU and, to be as unemotional and a-political as possible, “the functioning of the Union.”

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The emphasis on policy deliveries the EU produces for its citizens replaced symbolic and identity-creating items3 and the value of ruling for rather than by the people was pushed to the forefront. In a nutshell, the debate that led from the draft constitutional Treaty to agreement on the Treaty of Lisbon was accompanied with a radical rhetorical shift away from constitutional, identity-creating symbols toward official talk emphasizing a purely pragmatic, policy output-oriented image of the EU. Especially the mandate that leveled the ground for the Lisbon Treaty highlights overly hands on policy results (European Council 2007). The message is clearly that the EU’s legitimacy is based on effective policy delivery for citizens and that these practical results render EU citizenship worthwhile. The thrust of this strongly output-oriented attempt to increase public support for the Treaty of Lisbon reinforces the question why the success of the euro was hardly exploited to “bring the EU closer to its citizens.” To better understand this disconnection, I will now turn to recent sociological research to get better grip on the notions of citizenship in relation to the building up of democratic and economic governance in the EU.

The link between democracy and citizenship In autumn 2010, “democracy” together with “human rights” (both 38%) ranked in top position of the values EU citizens associate with the EU while asked what the EU meant to them, the euro ranked second (40%) after the “the freedom to travel, study and work anywhere in the EU” (45%) and before “waste of money” (25%) and “peace” (24%) (European Commission 2011b, 33–4). While the market freedoms scored highest in the states that have not yet joined the single currency, “[t]he euro was the most frequently mentioned item in the euro zone countries (49%), where the highest scores were recorded in Austria (68%, +6 since spring 2010), Greece (62%, +10), Slovakia (62%), Belgium (59%), Germany and Finland (54% in both countries), the Netherlands and Slovenia (53% in both countries)” (ibidem, 35). Although the euro has obviously become a symbol for the EU, these data do not reveal the connotation attached to the euro. If the euro is what first comes to mind when thinking about the EU, does that mean people feel more or less as European citizens? So far, this chapter has drawn the attention mainly to democracy because the EU’s democratic credibility is a key element of European citizenship. Formally, EU citizenship legally derives from citizenship granted by one of the Union’s member states. The much more subtle question behind this legal definition is, however, in how far the rights linked to an EU passport gain a more tangible meaning. Although some have argued that a European “telos” rests on a multiplicity of “dmoi” (Weiler 1995; Nicolaïdis 2004), legal and

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political scientific scholars alike consider some form of shared identity as relevant (see, in particular, the controversy between Habermas 1995 and; Grimm 1995). The link between identity, citizenship, democracy, and the single currency touches on central topics of sociological research and recent sociological findings provide insightful explanations for the dynamics under perspective. I first draw on studies on identity to then review the most relevant insights provided by economic sociology. Identity and a layering of European identity, besides national and subnational identities, are important for the discussion on “the other side of the coin” because it is one of the obvious candidates that, following the story of nation-state building, could (or as some might argue ought) hold the two sides together. On the basis of the earlier discussions, it can be expected to do so by making the euro directly symbol for European identity. However, neither a substantial degree of EU identity can be measured, nor have behavioral patterns changed to a degree that would indicate a reidentification of business and individuals’ core identification from the national to the EU realm. Summarizing the findings of a “developing literature on European identity of relevance,” Díez Medrano points out that: [a]ll of these studies argue that the extent to which individuals see themselves as Europeans depends on how Europe has been constructed in their respective countries, which reverts back to national political culture and historical developments (Díez Medrano 2011, 36). Hence, the Europeanization of economy, law and political behaviour, and the expected Europeanization of the behaviour and experience of citizens, have thus far failed to translate into a commensurate emergence of a shared sense of identification with Europe (ibidem). Applied to the topic of this edited volume, this basically means: people pay with the euro but do not feel more European. But that is not the whole story. Even though there is no full-blown change of identity, for certain groups that make about 10 percent of the EU population, an increase in “feeling European” is observable and the fact that more than half of those Europeans express some form of identification with Europe, even if usually secondary to the national or regional identifications, reveals the early development of a protoEuropean society layered over national and sub-national societies. Whether it actualizes as a fully-fledged society or not remains to be seen (ibidem, 37).

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This leads to the conclusion that [t]heoretical perspectives on identification might expect the European middle classes to represent the forerunners of European Society. . . . The empirical evidence clearly suggests that it is too early to speak of a European middle class in this sense. . . . Even more sobering is the fact that despite all the transformations that have occurred in Europe in the last twenty years, the percentage of people who identify as Europeans has hardly changed during this time period (ibidem). Hence, Dìez Medrano’s message is clearly that EU integration has not led to a EU-wide stratification of society, let alone a shift of identity from the nation-state to the European polity. The introduction of the euro has not had any statistically significant effect on the aggregate level; it is actually not even expected to produce any such effect. Citizenship is hardly linked to identity, with or without the single currency. Furthermore, sociological economy captures accurately the relationship between economic integration and societal changes. Neil Fligstein raises the key questions about de facto economic changes in the EU versus their perceived effects. Who benefits from Europeanization? Corporations have successfully pursued new strategies as part of European market integration. Has this been a good or bad thing for average Europeans? A sociological approach to the European market ought to also say something about this fundamental question. Contemporary political rhetoric across Europe suggests voting publics are most fearful of globalization, neoliberalism, and immigration. All of these fears are tied up with European perceptions that national economies are being buffeted by new sources of competition pressures that will not be mediated by government action (Fligstein 2011, 120). He illustrates the image of globalization paralyzing governments and states that this interpretation “is wrong. The market integration project in Europe has been entirely the work of freely elected European governments who have democratically decided to cooperate on a large number of issues in order to produce economic growth and jobs across Europe” and “the main reason that governments have cooperated and expanded their cooperation was their perception that the integration of the European economy had basically positive results” (ibidem). This point is of high relevance to understand how the euro remained detached from notions of democracy and identity. First, as for market integration at large, the introduction of a single currency was a fee and democratically backed decision of the participating governmental actors. Second, the overall effects have been positive. Why then is there a missing

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link? Fligstein’s answer is that although the real economic order inside the EU has changed, the underpinning perceptions have not. Governments and firms have profoundly changed the way the economy works in Europe . . . . European citizens who see globalization and neoliberalism as the cause of their anxieties miss the real transformation brought about by governments and corporations that have increased their standards of living substantially. This positive story is not widely known outside scholarly circles. It is ironic that the governments which have signed on to these policies rarely explain what has happened to their publics (ibidem, 121–2). The question why this positive story is widely unknown rephrases the starting point of the present discussion, namely the questions why the euro has not been presented as a main achievement of EU output. Fligstein adds another significant angle to the debate: the mismatch between widely held perceptions that globalization and neoliberalism change people’s lives, which he proves factually wrong. But “if it is not globalization and neo-liberalism that are driving the transformation of the European welfare state driven economy, what is going on?” His reply is that member state governments of the European Union have been engaged in a fifty-year-long market opening project that has allowed firms and corporations to create new markets, implement new technologies, and expand on a Europe-wide basis. . . . European governments have proved quite willing to push their former national champions to transform themselves into larger players who would try and sell products across Europe, given shifts in technology and opportunities for new business (ibidem, 122). Yet, despite this material creation of a single market “national firm identities were preserved” (ibidem, 123). In other words, the economy is Europeanized but firm identities remained national. Footing on these analyses, it is tempting to simply draw an analogy between individual citizens who have exchanged their legal tender but remain nonetheless nationally attached. Taking Fligstein’s arguments  seriously adds yet another angle to the debate. Persistent national identification plus the projection of economic threats of globalization that challenge European welfare states create real new cleavages between winners and losers (see, in particular, Kriesi et  al. 2008). In this scenario in which conscious political decisions to Europeanize are lumped together with uncontrollable effects of globalization, the euro becomes rather a symbol of less political control, a loss of identity, and unwanted effects of overly dominant market forces. Simultaneously, such a public perception blurs the possible identification of political responsibility for unwanted effects.

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A consistent public expression of this image of the single currency is the common claim that the euro has brought nothing but inflation for the average consumer.

Public expectations versus public opinions on the euro The sociological analyses demonstrate clearly an inversion of the real, in great part beneficial, effects of economic integration from absent political presentation and negative citizens’ perceptions. They do not, however, sufficiently explain how the disconnection between our two sides of the coin, citizenship and the euro, take effect. A critical moment for linking issues of the single currency and EU citizenship is the actual moment of adopting the euro because it is at this point in time that the policy has to be legitimized and politically justified. Especially insightful is therefore data on the introduction of the euro in the new member states that has been consistently collected on a semi-annual basis since 2004. The most telling findings of the respective Eurobarometer surveys regard citizens’ self-perception of being informed, and what kind of information is further demanded from whom. Generally, citizens feel badly informed about the euro and expect more information in particular from their national and EU institutions (central banks 77; EU institutions 71%); a slim majority would trust information on the euro introduction from governments, national and regional authorities, or tax and fiscal administrations (both 53%), whereas least confidence is put in information by journalists (38%) (European Commission 2010b). The issues citizens would like to be more informed about are all of economic and of practical nature, ranging from “the value of the euro” (92%) to “what notes and coins look like” (77%). In essence, this reflects the above analysis about the internal market creation more generally. It is, however, ever more striking that even in the run-up to enter the euro citizens seem to fell insufficiently informed. The fact that information is predominantly demanded from “experts,” for instance, banks and EU institutions, reflects further the rather economic and technical than political reasoning people attribute to the introduction of the euro. About half the respondents of the eight states that were at the time of the study lining up to join the euro expect that “the euro would make them feel more European. Since September 2009, this proportion has dropped by five percentage points to 50%: the lowest value recorded since September 2005” while the overwhelming majority (up to 90%) expect the euro to make traveling and shopping in the Euro area easier (ibidem, 6). “Feeling European” is the only identity question/reply that features in the survey. Neither the functional link between a successful policy output and EU legitimacy, nor the link between the euro as a privilege and the acquisition of

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EU citizenship is considered in the survey. This is reiterated by the perceived information gap and the demand for information especially by expert bodies (central banks) and on technical matters that range from currency stability to practical issues such as how to recognize a true euro. How do public opinions change due to the real experience of using the euro? Comparing public opinion on the euro across all member states shows that citizens in states that have adopted the euro show genuinely more positive attitudes toward it (67% in favor) than those in states not yet participating (46%) (European Commission 2010a, 229). However, in contrast to the expected effect on “feeling European” through adoption of the euro, “approximately three-quarters of citizens from Euro area countries declare that nothing has changed in terms of their identity due to the euro (77%)” (European Commission 2008a, 9). The only item that could be linked to an emotional citizenship notion accordingly does not play out significantly. Even in those states that have last joined the single currency and held higher expectations, actual estimations dropped after changeover.4 Finally, the introduction of the euro has not led to establish perceived links between economic well-being and the success of a currency, as was, for instance, the case for the Deutsche mark as the symbol for the “Wirtschaftswunder” economic recovery of post-war Germany. Instead, “the relative majority of citizens said reforms did not affect them personally” (ibidem, 44). In essence, citizens who support the introduction of the euro do so on technical or practical grounds; they do not associate the euro to major economic reforms and improvements of their personal well-being. Existing expectations regarding an effect on EU identity have in fact been disappointed.

Balancing stakes of national political survival against the political capacity to act If, at best, citizens’ identity-shaping expectations on the euro have been disappointed and, at worst, citizens associate the euro with effects of globalization that threaten European welfare systems: why have political actors not more actively argued against these perceptions by nurturing the image of the single currency as a beneficial and EU-legitimizing output? The answer is that it is, in effect, a plausible strategic decision to frame the euro as merely a practical and technical gain, rather than an impressive policy integration output that raises the democratic legitimacy of the EU, or even represents an emotionally binding symbol for a shared European identity. Both functional and symbolic reasons make the detachment a viable political strategy. Functionally, the EU lacks important policy means to visibly link economic success with the single currency. Most importantly, precisely those policies that citizens care most about—namely taxation, social and welfare policies—remain subject to national political control. Even if, as Fligstein

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argues, the decisions of national governments to pool policies on the EU level have had overall positive effects on welfare across the highly heterogeneous Eurozone, for reasons of limited EU competences, it is difficult to establish a direct association between the euro and a “Euro-Wirtschafswunder” that improves people’s lives to a felt degree. Being an EU citizen may bring the euro; the degree of welfare provided, instead, depends on being a Swedish or Rumanian, or even a Bavarian or Catalan citizenship. To establish a stable functional link between the single currency and the notion of a shared EU citizenship, decisive competences in redistributive policies would have to be directly linked to the EU—depriving national politicians of one of their few remaining political strongholds. To establish minimal functional link, at least the redistributive and welfare effects that are evidently already produced through EU integration would need to be presented less univocally as EU rather than national achievements, which brings us to the symbolic strategic challenge that is just as demanding. For national policy makers, the strategic choice to present the introduction of the euro as more than a matter of technical and practical day-to-day conveniences entails the danger of an eventual shift of loyalties to the EU level. In last consequence, it appeals directly to identity issues and questions about “feeling European,” at least as an additional layer of personal identity constructions, as pointed out by Díez Medrano. Accordingly, framing the euro symbolically as a remarkable common success that each citizen participates in, instead of evoking and satisfying demands about practicalities and reduced transaction costs, carries the danger of promoting common EU loyalties rather than sustaining faith the state authorities. Precisely because of the symbolic potential of the euro beyond its practical value-added it may appear as a threat to national political elites that claim their political sovereignty and depend on their electorates’ trust to guarantee professional survival. The euro does not represent a distinguishing feature of EU citizenship. If it did, it might indeed raise both the meaning of genuine EU citizenship and the vigor citizens attach to the single currency connected to being an individual member of the Union. Both developments would draw political attention and loyalties from the state to the supranational arena. In this way, the remarkable policy output the euro can be taken as, and the single currency’s potential to raise the democratic legitimacy of the EU, appear to be precisely the reasons for which political elites who legitimize themselves within national boundaries ought to be wary of overrating the euro.

Have alternative strategies become inevitable—or are the Estonians crazy? A critical reader may intervene and bring up an appalling case that seemingly disconfirms the explanation about political stakes that lead strategically

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minded national politicians to actively decouple the euro from notions of democracy and citizenship: the entry of Estonia to the Eurozone on 1 January, 2011. What went on in the minds of the Estonian government to join a currency area in crisis and agreeing to “buy into” guarantees for Greece, Ireland, and Portugal as a precondition to join the euro? First, the government based its decision on a sound cost–benefit analysis —concluding that it is still beneficial to join the euro. The facts presented are straightforward: raising confidence of business, investors, and the Estonian people in the economy (expected effects on the real economy); the de facto already existing pegging of the kroon to first the mark and now the euro (myth of an independent currency); and the strong embeddedness of the Estonian economy into the internal market (advantages for inner-EU trade).5 Second, the disconnection between economic facts, governmental representation, and citizens’ perceptions was turned around in order to create positive links among the different fields. The Estonian governmental decision was accordingly linked to an open and comprehensive “euro communication” aiming at creating public support: The aim of the euro-changeover communication strategy was to make sure that everybody in Estonia is sufficiently informed of the effects and practical changes accompanying the introduction of the euro. The objective of the Communications Working Group has been to increase overall support for the euro by raising popular awareness. One of the principles of the strategy was to pay special attention to non-Estonian speaking communities. Recent opinion polls have confirmed that these goals have been met. In January 2011, 96% of the population was aware of the practical aspects of the euro changeover, beating the target of 90%, and 60% of the population and 65% of Estonian citizens supported the changeover, meeting the target of 65%. This goal was achieved despite the economic events in the Euro Area, which have had an adverse effect on the attitude of the Estonian population.6 This strategy reads roughly like the opposite of the general trends captured by the Eurobarometer surveys referred to earlier. So, what is the difference in this case? Was the strategic reasoning changed? Or are Estonians simply lunatics? Participation in the Eurozone has almost become a guarantee for governments to face national debates on having to pass financial aid packages for euro partners in severe debt. Since 2008, governments in Greece, Spain, Portugal, Italy, Ireland, Slovakia, and the Netherlands lost office due to internal disputes over how to handle the European sovereign debt crisis. Participation in the euro creates obvious challenges for political survival of national governments. Circumventing these political challenges, the Estonian government stressed facts about wider economic gains: the explanation about economic and trade benefits, plus the illustration of de facto dependencies of the Estonian kroon that are operational in any case. This turns the euro,

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from the start, into a national matter of concern. It is basically treated as an internal policy. The Estonian case indicates that political stakes of failing to create a positive link between the euro and citizenship can become higher than the danger of losing political clout in the domestic arena. In other words, the political consequences of sustaining purely nationally imagined identities of companies and parliaments are apparently more costly due to possible economic consequences than giving up the monopoly on legitimizing policies and national identity. But is Estonia just a single case, or can we expect a wider trend in shifting legitimizing strategies on the euro? The widespread skepticism on the euro, resulting in part from the initial framing of the single currency, creates real risks and makes a strategic shift for the euro-members much more difficult than for new entrants because it implies the need to defend new claims that contradict the implicit message of earlier talk. Having established a solid national discourse that acclaims basically the opposite, that is, the notion of the democratic and identity-granting states to keep in check EU governance that is blamed to be incapable of both, a reversal of these views carries the danger for individual politicians to lose their personal credibility. Still, we see an increasing number of political leaders turning into this direction. Moreover, for a real strategic political shift to be successful, arguments need to be strong enough to indeed couple economic facts, political presentation, and public perceptions in a consistent way. Generalizing statements such as “dies the euro, dies the EU, this is bad for all of us” cannot do this job. From this point of view, the Estonian example is insightful. It illustrates how solid arguments on economic and trade gains were linked to demystifying political expectations on the euro and, above all, it depicts an alternative legitimizing communication strategy.

The rationality of decoupling and the threatening irrationality of failing to recouple the two sides of the coin This chapter does not claim that the present turmoil around euro and democracy in the EU could have been prevented had just the euro been established as a cornerstone of European citizenship. First, such a claim would be all too general in the face of the complexity of democratic legitimization and identity-formation processes. However, building on arguments of output legitimacy, the link between the euro and democracy can be made. Moreover, to justify the single currency, such a link may be necessary to justify the political decision behind introducing the euro in the first place. The euro was not an uncontrollable effect of globalized or neoliberal forces but a conscious political decision of governmental representatives. Without

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conveying the rationale behind this decision, it is hard to convince citizens of later decisions to sustain the euro. Second, the fact that the euro was introduced without backing it with any substantive democratic discourse makes sense out of a strategic political calculation by national political elites. On the one hand, the multilevel system offers the chance for decoupling the creation of policy solutions on the EU level and political legitimization in the national realm (Heidbreder 2012). The structure of the EU polity offers the opportunity to refer to mainly technical necessities and rational choices behind EU policies while politics and identification remain predominantly national (Schmidt 2006). On the other hand, and more importantly, the multilevel system also implies the danger for national political leaders to lose real power. The euro is in this sense a significant test case. Indeed, to “safe the single currency” not only needs real powers to be coordinated on the EU level. To maintain scope for political action, citizens need to be taken on board and need to be convinced of genuinely European politics that also carry this name. If systematically decoupling positive economic effects of EU policies from nationally based politics, public opinion will become a blockage for needed political action on the EU level. Hence, the current crisis does not only reveal earlier (reasonable) political strategies of national governments, but it also produces strong pressure to revise these strategies despite the high political stakes for the mid- and long-term survival of national political elites in their long-established democratic state-bound contexts. Third, we can trace popular expectations that put hope in the euro to boost EU democracy and European identity. Yet, where such expectations existed, they have been widely disappointed. Statistical data on the states that entered the single currency after 2001 are telling. Not the physical use of the same legal tender but only the creation of meaning around it can construct a link between citizenship and the euro and thus render the acclaimed two sides in really two sides of the same coin. Money alone cannot buy democracy. Only embedded into a wider debate on democracy as binding element among identity, citizenship, and tangible policy outputs can the euro develop a symbolic meaning that positively associates money with citizenship. So far, political stakes for nationally legitimated governments that are in the driving seat of the legitimating processes have been too high to really redirect political strategies into this direction. However, this might not be the last word in the evolution of the euro as common currency and, beyond this, as symbol of European identification. In fact, for Europeans who use the euro on a daily basis, it is already the most notable expression of the EU, but not necessarily an expression of the positive output of joint EU policy making. Rather, on the contrary, the global financial crisis has worsened the image of the euro—for some it symbolizes the very cause and incarnation of “euro crisis.” But in this situation of impasse, occasional shifts in the strategic argumentation of political leaders have already occurred. The need to regain credibility and room to react to

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current challenges may lead to a recalculation of political stakes away from the so-far-dominant state-focused strategies. It remains to be seen if this will change the discourse around the single currency.

Notes 1 The chapter results in parts from research conducted at the KollegForschergruppe The Transformative Power of Europe (Freie Universität Berlin, funded by the German Research Foundation), www.transformeurope.eu. 2 Despite the substantively increased powers of the European Parliament that was coupled with an internal politicization of parliamentary processes (Hix and Noury 2009; Hix, Noury et al. 2007), the electoral turnout has constantly dropped since the first direct elections in 1979 (66.9%) to the last elections in 2009 (43%). See EP website: http://www.europarl.europa.eu/parliament/ archive/elections2009/en/turnout_en.html. 3 Ironically, other less world-shaking policy outputs were explicitly referred to justify and explain the relaunch of the reform process after the no-votes on the Constitutional Treaty in France and the Netherlands. The first page of the decisive mandate by the European Council (leading directly to the Lisbon Treaty) is almost exclusively listing policy deliveries for which the reform Treaty is considered indispensable, starting with the appraisal: “The most recent positive results include the Roaming Regulation which reduces the cost of modern communication in Europe, the creation of the European payment area which makes travelling and living together easier in the EU and the constant improvement of consumer rights which guarantee citizens the same high standards across the entire European Union” (European Council 2007, 2). 4 On the question “Could you tell me for each of the following statements if you agree or disagree. (e) The usage of the euro instead of the (NATIONAL CURRENCY) will probably make us feel more European than now” 55% of Cypriots replied positively but in 2008, 82% answered nothing had changed at all in terms of identity; replies to the same questions on expected and effectively perceived change in EU identity for Slovenia (2004: 70%/2008: 69%) and Malta (2004: 59%/2008: 64%) show the same trend (European Commission 2004b, tables p. 15; European Commission 2008a, 10). 5 See: “Changeover to the euro in Estonia from 1 January 2011”, Information sheet by the Estonian government, at: http://estonia.eu/about-estonia/economya-it/euro.html. 6 See http://euro.eesti.ee/EU/Prod/Euroveeb/Main_Page/left_menu/Euro_ communication/index.html.

C HA P T E R 9

Representation of identity: Euro and dollar as identity builders Arianna Montanari

The euro has been in place for almost ten years. It ranks as the world’s second reserve currency and—boasting a circulation in excess of 800bn as of June 2010—its monetary circulation exceeds the dollar’s circulation. Despite such undeniable success, the financial market crisis, in its current form, impinges on the euro to the extent of threatening its very survival. The sovereign debt crisis has even led to speculation that certain members may have to abandon the common currency, with skeptics pointing the finger at partners’ disparate policies and differing economic outlooks as the root cause of the Eurozone’s unsustainability. If speculation were to deepen the crisis to the point where economically embattled members, such as Greece, for instance, are forced to abandon the common currency, the future of the European Union—not just the Eurozone’s—would be up for discussion; and not just on economic or political grounds. In fact, every aspect of human behavior, undeniably, is also driven by psychological, emotional, and sentimental factors; such factors drive individuals and communities alike, exceeding the scope of cut-and-dried numbers and calculations. Currencies are no exception. Currencies fulfill and represent human needs, both material—in the sense that they offer a rational means of trading and pricing goods, and otherwise—state backing, for example, makes for safe trade environments, protects purchasing power, and, hence, fosters confidence. On a historical note, ancient Athens and Rome’s transition from the barter system to the monetary system took place on the establishment of the Polis and of the Respubblica—currency producers and backers, all

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in one. Likewise, crucial to development on the scale witnessed during modern Europe’s Industrial Revolution was the establishment of states, whose sovereign rulers limited the autonomy—and, often, the discretional powers—of princes and feudatories. The latter transition marked a shift away from multiple currency and customs systems toward single currencies in single states—the franc in France and the florin in Florence, for instance. The shift expedited domestic trade and established safeguards for international trade. Monetary unification follows in the footsteps of broader standardization processes that accompanied modernization. The eighteenth and nineteenth centuries set the scene for a flurry of standard measures, based on a single model, applicable across the board. In ancient times and during the Ancient Régime, there were multiple weight and measurement systems; the methods by which measurements were carried out differed; units and subunits could even vary within the same state or city. Industrialization established a need for standards, applicable to space, as maps were revised and updated; to physical quantities, such as temperature and weight; and to industry, as in the case of standard units for power. The advent of capitalism engendered the consequent need to maximize both production and trade, gradually expanding the role of the state as the enforcer of a society-wide overhaul. From a regulatory and, especially, symbolic standpoint, it is true to say that currencies are the foremost representation of the state. Whether they are on ancient coins or modern paper money, the symbols minted or printed on a currency have always been carefully chosen. Trade was and is based on more than just a piece of metal’s fitting a set weight and dimensional standards, or a piece of paper’s standard size and color. Coins and paper money require the backing of appropriate institutions; such backing is conveyed in their relief or print details. Underpinning collective union, the symbols attached to currencies have to provide a direct and effective representation of the broader community. In that respect, currencies play a major role in identity-building, tapping into the self-representation processes that underlie the development of any identity construct, whether individual or collective; such constructs draw on a wealth of symbols and emotional markers and come to represent the world at large, the perception of the self and others.

Representations and symbolisms within collective and national identities The concept of identity, per se, is a relatively recent one; one that strictly relates to the advent of modernization. Ancient philosophers thought of man as a univocal being, albeit comprising body and soul. As opposed to I, identity requires a representation of the self: for an individual to be oneself

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and not I questions the individual’s uniqueness, establishing a divide between the being and perceptions thereof; between existence and appearance. Freud offered a radical critique of the concept of uniqueness, positing the existence of a tripartite Id, Ego, and Superego, marking a shift away from univocal representations of being to a more complex structure—in which the Id inwardly interacts with the subconscious and outwardly interacts with others (their behavior and emotions), constantly building the self (Freud 1971). In other words, an individual possesses what could be defined as an open identity; one whose multiple facets reflect the degree of complexity of the surrounding universe. A hallmark of the modern age is the increasing diversification of social relationships, which has issued in a proliferation of symbolic forms of intercourse based on generalizations and “labels” that allow for condensed, direct definitions of traits, roles, and behaviors that in day-to-day life people will perceive and use to treat people based on typification structures (Berger and Luckmann 1969). Such typecasting clearly affects interpersonal relationships, in that, direct relations will be modeled according to the chosen behavioral stereotypes; that will hold true until their validity is disproved by behaviors not matching those expected. The latter circumstances lead to changes in typecast as well as in subsequent behaviors and expectations with respect to the typecast individual. Intercourse between persons with differing social backgrounds also tend to be regulated by way of generalizations on background, which necessarily involve attributing behavioral traits based on social stereotypes going beyond individuals’ specific characteristics. Interaction through stereotypes can be seen to occur beyond the bounds of local community, district, or city relations, also characterizing international relations, extending to relations between different peoples and whole states. There is a tendency for each to refer to the other via a system of broad generalizations, each indicating a set of characteristics and expectations that effectively determine mutual behaviors. Owing to our anthropocentric approach to knowledge and to choices of identity—at both individual and collective levels—based on our differentiation from others, strangers or foreigners are typically defined by our understanding of how they differ rather than by how we may liken them to ourselves. Hence, a foreigner’s cultural habits are not just perceived as different, but as strange, or dangerous or primitive. Generally speaking, disparaging stereotypes are directed at the people geographically closest to, rather than farthest from us. The people of Lombardy, for example, are likelier to conjure up ugly definitions of the Swiss and of Sicilians rather than of Hawaiians. The latter are more likely to be stereotyped as exotic, to the extent that they may actually be deemed to be so far removed and different as to evoke the imagining of an ideal society. Such types of interrelation mechanisms are increasingly common within industrialized societies, acting within them—due to increased levels of social

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intercourse—and outside them—due to globalization, trade, migration, cultural developments, and the internet. Stereotyping has even more far-reaching consequences in global finance, which is dominated by expectations at the expense of fundamentals. Italy’s stereotyping as unreliable, which has weighed heavily on Rome’s international relations and on the country’s overall reputation, takes on even more detrimental connotations in light of the country’s dependence on global finance. Stereotyping is among the factors that have contributed to ramping up the spread between Italian and German treasury bonds and to downgrading by international agencies—despite solid fundamentals, conspicuous private savings, and worsening prospects elsewhere—of Italy’s sovereign debt rating. Applied to finance and economics, the imaginary, as a driver of stereotypes and collective identities, plays a significant role, especially when it shortcircuits objective assessments. How creditors and money movers construe reputation impinges on a financial entity’s access to credit. The more reliable a debtor appears to be, the more favorable the credit terms granted and the extent of investments. In keeping with the previous assessments, one can say that collective identity is established in much the same way as individual identities are. The above also holds true when it comes to affirming identity through conflict, generally speaking, involving those closest to us and who stood as previous models for us. As with individuals’ coming of age—when adulthood is attained by challenging and overcoming parental figureheads—new communities establish themselves by critically appraising and shunning any such entities whose rule or power they wish to escape. The latter phenomena lie at the heart of revolutions, as in the American settler uprisings against the British motherland, and of wars, as in the former Yugoslavia, and are prerequisite to establishing new independent states, to breaking with the past and to asserting diversity. Such phenomena inevitably entail challenging others, their values, and customs; the same applies to the independence movements of Cataluña and Lombardy, which have foregone violence and settled for varying degrees of self-government. Italy’s Lega Nord Padania (LNP) and its activists have sought to underscore their Lombard identity by attacking Rome and its corruption, the Italian state as a whole, the national flag, and even the national anthem—forcing the Office of the President of the Republic to constantly take remedial action. In so doing, the LNP party also resorted to heroes such as Alberto da Giussano, the “Carroccio” war wagon; symbols of the Lombard League’s battles against the Empire, such systematic opposition sought to establish behavioral models based on myth and tradition, and to provide inspiration for a new collective identity based on the invention of traditions and on the creation of public ceremonies (Hobsbawm and Ranger 1987). In fact, the latent function of national anniversaries, jubilees, and

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public holidays is and was to establish collective rituals that substantiate the civil religion on which social solidarity is built. Steeped in ritual, secular national religiosity requires symbols as the allegorical figure Marianne in France. As a symbol of the French Republic, Marianne also featured on the franc—similar figures featured on the currencies of other nation-states at the time of their establishment. Hymans describes the latter as state iconography, namely depictions eliciting direct identification with the state and its symbols, and may include a monarch or ruler’s effigy, as in the case of Elizabeth II on contemporary English coins and banknotes or of George Washington on the one dollar bill. State iconography can also feature mythical figures such as the goddess Athena, or the allegorical figure Marianne; in both instances, the indeterminacy of such symbols allow them to encompass the communities they stand for. In Italy, for example, the fascist years witnessed the revival of the Roma elmata, a helmet-clad woman donning classical robes, depicted on banknotes. The radical overhaul witnessed by the nations of the West during the nineteenth century, via the affirmation of national identities, and in the twentieth century, through the masses claiming a stake in government state via the establishment of political parties and unions, affected all layers of society and government. Such changes had an immediate impact on the imagery chosen for coins and banknotes. Sovereigns, divinities, and other national symbols were replaced by symbols of labor, industry, and trade, by workers and farmers and even by portrayals of daily life, featuring men, women, and children alike. With public sentiment favoring new forms of liberalism built around a newfound individualism, the West’s states, political organizations, and unions witnessed a decline in appeal and, hence, power during the last decades of the twentieth century. The latter shift was, yet again, reflected by the appearance of outstanding personalities on banknotes and coins, among them, composers Verdi and Strauss in Italy and Austria, writers such as Swift in Ireland, scientists such as Newton in the UK. The state, as such, ceased to be the vessel for national identity, replaced by more durable—Italy providing proof to that effect—yet more tenuous cultural icons. Hymans highlights the fact that representations of the state have become increasingly rare on European banknotes; featured on 77 percent of banknotes at the turn of the twentieth century, their presence dwindled to 2 percent at the turn of the twenty-first century. Over the same timeframe, depictions of art and science greats rose from 6 percent to 53 percent (Hymans 2004).

Representations of identity and the euro At the time of the common currency’s launch, European institutions were well aware of the symbolic importance attached to the choice of images on euro coins and banknotes. As submitted by Vissol, from logo to image, every coin and banknote detail was subject to lengthy and somewhat

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laborious European Council discussion. As the EU’s highest ranking body, the European Commission ensured that Council deliberations sidelined national traits, underscoring any aspects consistent with a single European identity. The Commission explained the choice of the “€” logo as inspired by the Greek letter epsilon “in reference to the cradle of European civilisation and the first letter of the word Europe” (Vissol n.d.). To secure a balance between unifying representations of Europe and diverse national identities, it was agreed that coins should feature the map of Europe on the one side, and freely chosen images specific to each country on the other. The common reverse side, however, varies:  1,

2, and 5 euro cent coins feature a globe with Europe featuring prominently in the foreground, emphasizing Europe’s openness to the rest of the world rather than its monetary entrenchment;

 10,

20, and 50 cent coins feature a map of Europe with clear demarcation lines along national borders, conveying Europe as an ensemble of states;

 1

and 2 euro coins feature a borderless continent, portraying Europe as a hypothetical single future entity.

The obverse side’s design was left for member governments to decide. A majority of Eurozone members opted for state iconography:

1 monarchs in Belgium, Luxembourg, and the Netherlands;



2 national symbols in Ireland (Celtic harp), Portugal (royal seals),

France (Marianne), Germany (oak twig), etc. Greece and Italy made an altogether different choice, with the former opting for patriots and the latter choosing cultural icons. Banknotes were subject to an altogether different treatment, with their stylized images carrying no specific reference to any one nation. Advised by experts comprising European Central Bank artists and draftsmen, the Council and the Commission agreed to do away with historical figures or real-life locations and instead to resort to symbols of European culture as embodied by the continent’s architecture. The styles chosen ranged from Romanic to Gothic, Renaissance, Baroque, Rococo, and contemporary. The five to five hundred euro banknotes each feature one of the latter styles, with doors and windows on the one side and bridges on the other, thus symbolizing both a world outlook and a connection among European nations. In many ways, the latter choice has sought to convey a new vision, not just for the currency but also for the European Union itself. A vision in which the Union neither is a new state in its own right nor is it the sum total of European states (whose

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single identities and symbols are entirely sidelined, except for their broader, shared cultural heritage). The above vision ranks among the European construct’s inherent contradictions, whose extent and complexity have been made all the more apparent by recent euro stability issues. During the early fifties, when the prospect of a union of states was anything but the foremost concern, European nations understood that establishing a common trade area would kindle economic development and create mutual safety nets, averting the prospect of repeat wars. With the World War II just behind them, the Common Market’s constituent members—France, Germany, Italy, Belgium, the Netherlands, and Luxembourg—were almost entirely dependent on the United States for financing and resources. America dominated Europe both on a military footing, with bases, troops and its NATO leadership, and on a financial and economic footing—via the Bank for International Settlements (which during the fifties managed the European Payment Union funds), via the Organization for Economic Cooperation and Development, the General Agreement on Trade and Tariffs, the International Monetary Fund, and the World Bank. Holding 90 percent of the world’s postwar gold reserves and with the dollar traded on par with gold, world finance was dominated by the United States. According to Vissol, though begrudging their predicament, Europeans gratefully adapted to American supremacy and politics. In that respect, in the early days of the Common Market, Europe’s first moves toward monetary emancipation were more the consequence of poor American monetary policy than a quest for monetary autonomy. In fact, European governments only acted on the need for economic and financial policy coordination (via the Committee of Governors of Central Banks) during the dollar’s 1961 convertibility crisis and the subsequent establishment of the London Gold Pool (which European central banks joined alongside the UK). The end of the London Gold Pool and Nixon’s unilateral declaration of the dollar’s nonconvertibility to gold in 1971 pushed Common Market governments to set up the so-called European Snake to minimize currency fluctuations. Following America’s decision to float the dollar, the war in Vietnam, and recurrent oil crises, in  1979 European governments—led by German chancellor Helmut Schmidt and French president Giscard d’Estaing—agreed to the establishment of the European Monetary Union (EMU) and the European Currency Union (ECU), setting the premises for a future common currency. The system was built around the German mark and the stability and antiinflation policies governing it. Though Germany’s domestic interest rate policies were geared to a narrow rates corridor, spreads gradually increased during the late eighties, destabilizing exchange rates. September 1992’s speculative attacks bred an EMU crisis, which led to the UK and Italy abandoning the Union. Attacks on the French franc the

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following year led to the so-called Brussels Compromise, in August, which set the rates corridor at 15 percent. Neither EMU members’ departure nor subsequent corrective maneuvers bred the kind of monetary stability that Common Market members sought. First discussed two decades earlier, the adoption of a common currency became European governments’ top priority. Far from being just a requirement dictated by circumstance—or the lesser of two evils, as portrayed by sectors of the German and Scandinavian financial communities—the common currency was perceived by a sizeable proportion of European public opinion as a valuable goal accompanying the European unification process. In Italy and in several other countries, especially in southern and Eastern Europe, euro membership was viewed as a success, testifying to economic progress and growth; as granting a status on par with Europe’s big players. Certain governments, including Italy’s, urged and obtained extraordinary efforts from their citizens in order to attain membership. Other governments, as is now all too apparent, tampered with their budgets and public finance reports. In that respect, the euro was not just a monetary agreement; it was viewed as a key to accessing a new society and a new lifestyle, effectively taking on symbolic connotations of identity. The euro, however, not only catered to the continent’s needs and ambitions, but it also, once more, coincided with the strategic and economic needs of the United States. The US and the UK traditionally opposed the establishment of common European political entity, which, given its potential size and power, threatened Anglo-Saxon supremacy. The collapse of the West’s Soviet enemy during the early nineties and the rise of new powers and new challenges elsewhere in the world sparked the Clinton administration’s resolve to strengthen European allies’ political, economic, and even monetary standing. In his essay The United States and Europe: from Primacy to Partnership? Daalder submits that Clinton believed that Europe’s markets, economies, security forces, and democracies united could best serve the United States’ interests. The reasons for this line of thought were essentially twofold:  a

united, democratic Europe would not have triggered new wars or instability, as had been the case for most the twentieth century, with the US forced to intervene at great human and economic cost;

 a

strong, pacified Europe would rank as a loyal partner, supporting the US in its efforts to address worldwide changes and opportunities, serving the interests of the continent as well as those of the US.

European nations were being asked to take on a more substantial role within NATO, to promote its brand of postwar pacification and democratization throughout the rest of Europe, take on a bigger share of the military and economic onus in the world’s hot spots—such as in the Balkans and the Middle East (Daalder 2002).

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In other words, economic unification, which the common currency stood to represent, was endorsed by Washington with a view to harness European support for America’s interests and policies. Clinton’s hopes of an understanding with Europe on a political and ideal footing, based on the broader democratization of a united, allied Europe, were soon thwarted. In several major policy areas, including the environment, nuclear proliferation, and human rights, Europe and the US were at loggerheads. Opposition turned to entrenchment, breeding frustration, and, ultimately, unilateralism, in the US and a growing drive for autonomy— issuing in the successful launch of the common currency—and identity in Europe. The latter process intensified under the Bush administration. While the 9/11 attacks may have initially established a common Western and anti-Islamic ground, along the clash of civilizations lines, as described by Huntington, with Europe naturally espousing the American agenda, the Bush administration’s military intervention in Iraq proved hugely divisive. While breeding a cultural divide between “Old Europe” and the United States and spawning a debate on European identity (or lack thereof), the Iraq issue also led to economic diversification and, ultimately, monetary competition— dimming the common currency’s actual standing in respect of the dollar. Under the George W. Bush administration, the Gulf states—for years staunch allies of the US—responded to warmongering Middle East policies by downsizing their contribution to supporting American debt and by diversifying toward the euro. Such monetary policy moves were matched by the Chinese, who also contributed to the euro’s decade-long appreciation against the dollar. In Jeffrey Frankel’s words The euro, however, was a credible challenger: Euroland is roughly as big as the United States, and the euro has shown itself a better store of value than the dollar. . . . In  2005, when Menzie Chinn and I used historical data on central bank holdings of foreign exchange reserves to estimate the determinants, even our pessimistic scenarios did not have the euro overtaking the dollar until 2022. Thus we could not have asserted that the dollar would be dethroned ten years from now (Chinn and Frankel 2008).

The creation of a European identity In an article published by Italy’s La Repubblica in 2003, Ralf Darhendorf submitted that it is hard to define European identity and harder still to distinguish it from Western identity, since both share common values, grounded in the Enlightenment, foremost among them freedom. Dahrendorf was to later acknowledge strong cultural differences between Americans and Europeans, putting Bush’s electoral success down to the

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so-called 3Gs: guns, gays e God. The first of the 3Gs underscores a value system and a culture defined by the right to bear arms (at home and abroad), when access to and use of firearms is held in low regard in Europe. The second of the 3Gs underscores Europe’s greater tolerance, especially in northern and central Europe, than the US staunch objection to gay culture. The third of the 3Gs stands for God, and the importance of religion in the United States. According to Darhendorf, however, “religion is unlikely to take political centre-stage in Europe; surveys show that the attendance of religious functions is among the factors distinguishing America and Europe” (Dahrendorf 2005). Picking up on Darhendorf’s analysis, European and American views on reality, values, and society widely differ. It bears stressing that there are several issues, which, on both sides of the Atlantic, are perceived as defining Europe as a unique entity unto itself. The building of a European identity is already underway and is, in fact, gaining strength due to divisions with the United States concerning such issues as international policy, the environment, international justice, and preemptive warfare. Undeniably, at the turn of the new Millennium, European public opinion, especially in Italy, the UK, and Spain, heavily opposed America’s Middle East policies. At odds with the public’s opposition, governments chose to support America’s plans for Iraq, sparking mass demonstrations throughout Europe. The latter developments questioned perceptions of Western identity, breeding a differentiation between those of Europe and the US. The years witnessing Middle East conflict and the birth of the euro also witnessed a radical shift in perceptions concerning Americans. To the extent that according to one survey (Eurisko 2003), 57.1 percent of Italians did not view the United States as a model for freedom and democracy. Furthermore, 59.9 percent viewed American ideals and the American model as a threat to Italy’s culture and traditions. American foreign policy began to be no longer perceived as breeding security, but, failing to account for other nations’ interests and as the root cause of worldwide wealth disparities, as a threat. America and the characterization of Americans along these lines vary from country to country. It is weakest in East Europe and strongest in France— significantly, one publication accuses French academics and textbooks of a grossly distorted portrayal of the US, ranking Islamic terrorism as arising in response to American hegemony and laying the blame for all manner of planetary ills on America’s doorstep (Lefebvre and Bonnivard 2005). Recent developments have also failed to improve America’s image. The subprime crisis spawned in the US had knock-on effects on Europe and fed the idea that unfettered ultra-liberalism required reining in via strict regulatory frameworks. Likewise, American observers sought to characterize Europe as being too conservative, chained down by overregulation, and too cautious.

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In light of Darhendorf’s assessments, such outright opposition arises in response to perceptions that would have the United States’ actions threaten the  values and ideals previously thought of as part of a shared Western heritage. Opposition to military intervention in Iraq arises from the understanding that “war is always wrong.” The very idea of preemptive warfare, as outlined by the Bush administration, clashed with the very principles of peaceful international coexistence—as aspired to by the West via the establishment of the Society of Nations (also thanks to President Wilson) and the United Nations. Domestic and international democracy is based on shared rules and respect for human rights. The 9/11 attacks, however, bred a fear of Muslim terrorists in the US for many years, which took precedence over democratic legitimacy—Guantanamo detentions without charge or public trial offering just one example. During the early years of the third millennium, the United States came to be perceived as aggressive, imperialist, arrogant, and violent; perceptions far removed from the view held of the US at the close of World War II as the warden of democracy, freedom, and justice. Summing up our previous considerations, it bears noting that identitybuilding processes rest on a common set of processes, issuing in:  symbol

systems, allowing for a people’s direct identification, including flags, national anthems, and currencies;

 collective

rituals, ceremonies, public holidays, etc., underscoring historical events to which a symbolic importance has been attached;

 behavioral

codes of conduct and values inspired by mythical societies of forefathers (as inspired by historical accounts), providing a template for a future society.

Is Europe merely an expanded economic bloc built on entrenched autonomies, or is a new collective identity emerging? With reference to common symbols,  Europe boasts all the apparel of identity, namely it has a flag, anthem, motto, and currency. The latter, as proved by the dollar, is especially important: the dollar is a symbol of US power and a means for Washington to project its influence worldwide; the dollar’s relevance in the collective European imagination is indeed a founding element of the American myth. World War II had left Europe’s peoples impoverished, fighting inflation, and tackling devaluation, and their circumstances were changed by massive American investments. Hence the dollar’s exceptional connotations, its portrayal as an instrument and go-between for wealth and power. The dollar’s myth-making connotations were also reinforced during the sixties by the likes of Andy Warhol, whose Marilyn Monroe and Coca Cola paintings feature a dollar symbol; a choice which, in numbers, adds strength to several of his later, serial works.

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The euro cannot compete with the dollar when it comes to image and myth. Despite its undeniable merits, the common currency is deemed more fragile than the dollar, as confirmed by several studies conducted on the image of Europe and the common currency carried out in 2005 in China, the US, and India. “The euro, per se, is not fully taken seriously since there is no denying that it does not yet represent a credible alternative to the dollar.” Further enlargement of the Eurozone, however, might change this. Some Indian officials highlight the fact that “the euro has enabled the European Union to define for itself a distinct characteristic which, through expansion over the next twenty years or so, should mean we will be dealing with a unified bloc.” Critical to this, however, would be the UK’s joining. “Only then, a stronger Eurozone, reinforced by Britain’s participation, will appear truly internationally credible” (Lisbonne-de Vergeron 2006, 33). Although Indian commentators suggest that actual governmental union is a long way off, there are signs, as testified by common anniversaries and festivities, indicating a strengthening of the common identity. As of 1985, Europe has also celebrated the May 9 anniversary, marking French foreign minister Schuman’s announcement of proposals to underwrite industrial, economic, and political cooperation agreements with Germany (and other European countries) designed to avert future wars. As much as the popularity and importance of the May 9 anniversary may not be remotely comparable to that of national anniversaries such Bastille Day in France, other types of European events are starting to take hold from the bottom up. White Night art festivals, for example, kicked off in Berlin and were subsequently staged in Paris, Rome, Madrid, Riga, Brussels, and Bucharest; another example is offered by Museum Nights, held on May 14 every year. The latter events seek to establish a common identity by leveraging Europe’s culture and heritage, its monuments, and museums, and by seeking to inform the broader public of Europe’s track record in the areas of arts, humanities, and science—spanning its millennial history, from Ancient Greece to Rome, from the Middle Ages to the Renaissance, right up to the present day. Such events seek to underscore the very essence of European identity, the very brand of European heritage that euro banknotes symbolically convey. As with any one society, Europe’s culture goes beyond the arts, the humanities, and science spilling over into its institutions, behavioral models, rules, and value systems. As previously noted, national identities draw on a historical past, on former models for society, and on behavioral models underlying the latter. A survey into leading European personalities (Jeanneney and Joutard 2003), both historical and contemporary, carried out in six European countries—France, Spain, Germany, the United Kingdom, Italy, and Poland—offers an interesting perspective. Interviewees were asked to choose the personalities “best representing European identity” from a list of 14 “greats.” The highest number of preferences fell with Leonardo da Vinci, followed by Christopher Columbus and Martin Luther. They each emerged

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during the Renaissance, a time of extraordinary change that ultimately established the value systems and ideals on which Western democracies are based to this day: freedom of religion, pursuit of new worlds, scientific innovation, excellence in the arts, as well as capitalism.

Conclusions The above perceptions of European and American identities are confirmed by Chinese surveys. The authors of surveys underscore the perception of Europe as a peace-loving nation, which lacks a specific drive to engage in military conflict. According to one interviewee “Europe, I think, is more at peace. It is different to the United States; they appear to be busy intervening everywhere, every day” (Zheng et al. 2003, 74). Other interviewees assign Europe a role in containing US power in both the economic and geopolitical arenas. The Chinese public opinion of Europe as a balancing world force is accompanied by a perception of Europe as “synonymous to human progress, external openness, concern for the broader general interest, economic and military cooperation” (ibidem, 72–3). The latter views combine with a marked anti-US prejudice, with Americans characterized as despicable and warmongering: I think the European Union has a tough 10 or even 20 years ahead of it. But things will improve after that. The United States will challenge its establishment any way they can. The press have said that the United States attacked Yugoslavia to create tensions within the European Union and stifle the euro (ibidem, 75). As much as they are either rooted in fantasy or unreliable, such negative assessments offer a glimpse of the fact that identity is a process and, as such, subject to change. Until only a few decades ago, views of the US on par with those above would have been unheard of; likewise, Chinese public opinion would have lacked a reference framework through which to define a European identity. Today, however, Parag Khanna ranks the EU as being among three world-shaping Great Empires, alongside China and the US. In his view the EU is by far the most willingly accepted and successful empire in history, since instead of dominating it educates. Incentives towards Europeanisation—Brussels’ subsidies, unfettered mobility, the common currency - carry far too many advantages to be ignored. The European Union is expanding not in virtue of its might but thanks to the attraction it exerts on its neighbors, placing membership requirements based on “the assimilation of EU rules and regulations” (Khanna 2009, 40).

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While viewing Europe’s chances of competing outright with the US on an economic footing, Indian commentators think of the European Union as a model in its own right. Some of the mechanisms Europeans have used to create their internal economic area and shape the relationship between political and economic government are very relevant for us”. In particular, there is considerable official interest in EU competition law and the management of structural funds. “Again, Europe’s achievement is in using economic integration as the means to overcome political animosities and insecurities (Lisbonne-de Vergeron 2006, 29). It bears stressing, however, that a European state is not a thing of the present. International speculation and sovereign debt crises in southern Europe are proving, once more, that a common identity and a single currency are weak if lacking a legislative and governance structure. In response to the need for effective economic and monetary governance, European public opinion’s demand for a political merger between Eurozone countries has gained in strength. As evidenced by Eurobarometer surveys, such demands are not just privy to editorials and televised debates, with a majority of interviewees— percentages ranging between 70 and 80 percent—pointing to the need for greater economic policy coordination within the Eurozone, tighter international oversight with respect to major financial operators, tighter control over banks bailed out with public money, and the EU’s adoption of a leading role in regulating financial markets (European Commission 2011b). European public opinion appears to tend to lead governments on the issue of European integration—at least as far as economic integration is concerned, with the euro perceived as the true driver of EU unity. Lorenzo Bini Smaghi (2011) states: My main thesis is that monetary union entails in itself a much greater degree of political union than many commentators, politicians, academics and even the public ever thought. This is due to the fact that, in a monetary union, decisions taken in some parts affect other parts, in a very direct and sometimes dramatic way. The reason for that is that “we already have a political union.” What is required is a proper system of governance, in order to forego any further ambiguity. Europe can no longer forego addressing the demands placed on the Union by current developments. Despite domestic resistance and short-sighted national concerns, what we are witnessing are small hesitant steps toward the only valid requirement: the euro needs to be protected as it is now a symbol of European identity. The euro is forcing European countries to replace coordination and embrace common governance. Markets will not hold off and the time available to do so is scant.

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C HA P T E R 10

In the light and shadow of the Single Currency: European identity and citizenship Vivien A. Schmidt

The single currency was hailed as a crowning achievement for the European Union when it first started. Many claimed that it would serve to enhance European citizens’ sense of European identity, as they began to use the currency of the Union rather than that of their member state. Others also saw the establishment of the institutions of the single currency—with the European Central Bank in particular—as taking the EU to a higher level of integration, and thereby as testimony of the EU’s move toward greater federalism and political citizenship. Yet others were sure that the single currency would serve to protect social citizenship, by shielding memberstates’ welfare states against the inroads of globalization while promoting a greater EU-wide sense of social solidarity, itself also contingent on citizen’s deeper sense of EU identity. And for the first decade of the single currency, the positive light shed on it by supporters appeared well founded. Even at its inception, however, there were those who expressed concerns about the potential shadows cast by the single currency on identity and citizenship, political as well as social, national as well as European. They wondered whether EU identity would really grow substantially as a result of the existence of the euro while they worried that the European Monetary Union might serve to undermine not only political citizenship, by reducing citizens’ ability to have an influence on decisions about the economy, but also social citizenship, by weakening the social solidarity embodied in national welfare states without building any significant EU solidarity.

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These concerns about the shadows cast by the single currency have resurfaced with renewed vigor during the economic crisis, but not so much at its inception in 2008 as during the Eurozone sovereign debt crisis beginning in 2010. This is when the EU came to face what could be seen as an existential crisis, as the financial markets fearful of sovereign debt default attacked one member state after another, beginning with Greece then Ireland and Portugal, requiring loan bailouts and guarantees to protect them from default, to keep the contagion from engulfing Spain and Italy, and to ensure the Eurozone as a whole against explosion. As the Eurozone crisis roiled on and on, with leaders for the most part backing into greater integration, the earlier questions returned in full force. These include whether Europe’s citizens have sufficient European identity and, thereby, feel enough solidarity to support remedies involving costly loan bailouts and guarantees; whether those remedies, which impose more and more EU-level technocratic oversight over national budgets while dictating austerity policies, are reconcilable with European political citizenship; and whether such remedies also negatively affect social citizenship, by undermining national welfare state commitments and social solidarity. This chapter seeks to answer both the earlier set of questions posed at the time of the single currency’s inception as well as the more recent ones coming out of the Eurozone crisis by considering the positive and negative effects of the euro on identity and citizenship in the European Union and its member states. The chapter begins with a short history of the single currency’s economic performance and political governance, suggesting that an initial decade of bright lights was followed by the dark shadows of the Eurozone crisis. It then focuses on citizen identity and the euro, proposing that identity is inextricably linked to citizenship because a sense of being (identity) depends not only on doing (political participation) but also on saying (public communication) what citizens are doing so as to reinforce their sense of being. Here, the chapter argues that the national level generally trumps the EU on identity building, but that the single currency has had the potential to have an independent identity-building effect. It demonstrates this by charting the practical effects of the single currency on EU and national identity generally. The next section links citizenship to democracy, considering that the nature and quality of political participation is fundamental to all definitions of democratic legitimacy. Importantly, however, in particular when one considers multilevel democracy, legitimacy depends not just on input (political participation by and of the people) but also on output (political and social policy outcomes for the people) and what I call “throughput” (governance with the people). Here, the chapter contends that the EU level generally trumps the national, because the EU consists of policy output and governance throughput, making for “policy without politics,” leaving only input to the national level making for “politics without policy.” Although this interaction may not be a problem for citizenship when bright lights shine

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on the euro, giving it output legitimacy, it is likely to be a problem when the shadows lengthen, when not only the output but also the throughput legitimacy is questioned in the absence of national-level citizen input. The chapter concludes that the jury is still out with regard to the single currency’s impact on identity and citizenship, in particular, given continuing weak EU identity along with the strong input reducing effects of the crisis, in favor of output and throughput democracy.

Bright lights and dark shadows of the single currency For the first decade of European Monetary Union (dating from 1999 with the introduction of the euro for financial transactions), bright sunlight seemed to shine on the euro. The EU economy was growing at a reasonable pace, with some economists’ warning about the structural dangers of having a monetary union without an economic union seeming to have been exaggerated. Moreover, the prelaunch debates about asymmetrical shocks caused by a single monetary authority setting interest rates for all—leading to inflation in some countries, deflation in others—were forgotten. This is despite the fact that asymmetry was in fact a problem for some countries. For example, Ireland early in the 2000s suffered from excessive inflation while Germany, having come into the euro at too high a level, was close to deflationary. Also, the low interest rates for public and private debts, as markets priced the debt of Southern European countries at the same level of risk as the Northern, enabled some countries to increase their public spending massively, as in the case of Greece, others to go overboard on private debt, with housing booms in Spain as well as in Ireland. Moreover, the introduction of the currency in  2002 went smoothly— against dire predictions of disaster. The overnight conversion to the euro was accompanied by widespread acceptance of the new money, and none of the glitches the naysayers had predicted, such as distribution and supply problems. What was not anticipated, however, was the fact that shopkeepers in some countries used the conversion as an excuse to inflate their prices—as in Italy—or that national publics blamed the euro for inflation, whatever the reason, as in the Netherlands, with this as a factor in the country’s negative vote on the Constitutional Treaty. In addition, the Stability and Growth Pact (SGP) appeared to work for the most part, with the “open method of coordination” among finance ministers used to ensure that Eurozone members held to the generally agreed upon criteria. This said, there was a major hiccup in the mid-2000s as Germany and France forced a relaxing of the criteria related to the inflation target, much to the anger of the Dutch especially, who had tightened their belts to meet the more rigid criteria. But France and Germany, as the economic

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motors of Europe, won the day, arguing that, in a recession, higher deficits should not be reduced too quickly, so as to avoid a growth-destroying contraction of the economy. Resistance to the EU Commission more closely investigating member-states’ accounts on grounds of national sovereignty also stymied any investigation of suspicions that the Greeks were cooking their books, which came up already in 2004. Finally, the European Central Bank (ECB) was setting interest rates in ways to maintain its mandate for stability while building credibility with the financial markets as well as its central bank counterparts around the globe. Especially after the change in leadership from Wim Duisenberg to Jean-Claude Trichet, the ECB gained a reputation for solidity even as it maintained its autonomy. Moreover, it seemed to have learned how to “speak to the markets” with a reassuring “voice.” Equally importantly, as member state economies prospered, many remaining shadows lightened: fears in some countries about the loss of the national currency—most pronounced in Germany—subsided while concerns in other countries about the inflationary effects of the euro—most acute in Italy and the Netherlands, as noted above—dissipated. This said, on the extremes of the right, the euro remained negatively associated with the loss of national sovereignty and identity; on the extremes of the left, with neoliberal onslaughts against labor rights and the welfare state. These views helped fuel the intense debates about political citizenship that focalized around the Constitutional Treaty—helping its defeat in referenda in France and the Netherlands—although the euro per se was largely peripheral to the institutional focus of those debates. Finally, even at the inception of the European economic crisis in  2008, the euro was not in question while the European Central Bank gained high points for its swift response in coordinated actions with other major central banks. The Eurozone’s sovereign debt crisis beginning in  2010, however, was another matter. The debt crisis has brought all the aforementioned questions about the single currency and its impact on identity and citizenship back onto center stage. For citizen identity, the central question is whether there is sufficient EU-wide identity to support the solidarity necessary to provide major loan bail-outs to Eurozone member states, let alone to pool Eurozone members’ debts or to have the ECB as lender of last resort. For political citizenship, the main concern is whether there is adequate citizen representation and political participation. Intergovernmental decision making in the Council seems to predominate, with only two countries, Germany and France, perceived as exercising leadership, or maybe even only one, Germany. And there is little leadership from the Commission or involvement from the European Parliament (EP), let  alone national parliaments, while social movements have no impact whatsoever, however much they protest. What leadership there has been during the crisis, moreover, has been inadequate. Eurozone leaders were slow to respond, making for delays that only made the crisis worse, while they were quick to demand punishing

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austerity measures. In exchange, they offered a loan guarantee fund that turned out to be insufficient to bail out the larger southern European Eurozone members at risk and a bailout for the Greeks that proved too small, requiring a second bailout the following year. And social citizenship more generally has been in short supply, at least as regards social solidarity, given national publics in many member states openly hostile to loan bailouts to Southern Europe, especially in Northern Europe. Equally problematic has been the fact that the solidarity mechanisms of the Commission, whether through the long-standing structural funds or the recently established Globalization Adjustment Fund, have barely been mobilized. All of this has been grist for the mill for parties on the political extremes, in particular on the right. Since the Eurozone crisis, these parties have added an anti-euro discourse to their long-standing anti-immigrant discourse to great effect, whether in the Netherlands, as Geert Wilders’ Freedom Party became the country’s second largest party in 2011, in Finland as the True Finns grew from 4.1 percent to close to 19.1 percent in the 2011 election on opposition to the loan guarantee to Portugal, or as the Slovakian far right’s opposition to the second bailout of Greece actually brought the coalition government down. But we could also mention Marine Le Pen, head of France’s National Front, who came in third in the first round of the presidential elections, or in the UK, the Tory backbenchers’ revolt in November 2011 that probably influenced Prime Minister David Cameron’s grand-standing veto of the “Fiscal Compact.” Assessments of the impact of the single currency on European Union identity and citizenship, political and social, in short, depend in part on whether one looks at the current crisis or at the period before. Such assessments also, of course, depend a lot on how identity and citizenship are defined, as well as how they are reinforced by mechanisms of democratic legitimacy.

The euro and identity In this chapter, we take the largest, and arguably loosest, possible definition of identity in both the nation-state and the EU, and see it as inextricably related to citizenship (for the many different ways of defining identity and citizenship in the EU, see Lucarelli et  al. 2010; Risse 2010). EU citizen identity is a complement to nation-state identity, as well as a complicating factor for it. This section first theorizes the nature of national identity and its relationship to EU identity before considering the euro and its relationship to European identity building in practice.

Theorizing identity Building nation-state identity is a complex process in which a sense of identification with the nation-state derives not only from a sense of common

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values, culture, or ethnicity (being). It also results from citizens’ active participation in a political community (doing) (Howorth 2000) along with public deliberation and elite communication (saying) about what citizens are doing in order to reinforce their sense of being citizens (Schmidt 2010). Habermas (1996, 495) makes essentially this point when he insists that political community need not be based primarily on ethno-cultural identity, or being, but rather on “the practices of citizens who exercise their rights to participation and communication,” that is, on doing and saying. Citizens’ identity, in other words, depends not just on their sense of belonging to a community but also on their active political citizenship, which itself entails not just participating in politics, for example, through the process of voting, but also deliberating about what they are and should be doing. Identity building involves an additional role for political elites specifically: that of articulating what identity means in the nation-state and how citizens can and do participate in constituting a political community. Note that the state has always played a major role in constructing a sense of national identity or “imagined political community” (Anderson 1991). State-centered elites have done this directly, disseminating ideas about identity through their communicative discourse to the public, or indirectly, through the institutionalization of identity by creating institutions, symbols, myths, “institutionalized memories” (Lebow et  al. 2006), and monuments as “realms of memory” (Nora 1997). Although never easy, this process has been complicated in contemporary times as politicians compete for attention with a wide range of “authoritative” voices now heard through the mass media, which have also sometimes taken control of the message (Foret 2010). It follows from this that the building of EU identity is necessarily a doubly complex process in which EU member-state identity must be built alongside of nation-state identity. This requires more citizen engagement in EU-related activity (doing) and deliberation (saying) about the EU as well as political elites communicating (saying) what member states are doing in Europe more generally in order to help develop a sense of citizen identification as (being) European. The problem for the EU is that a sense of being European has been slow to build, in large measure because citizens have not been doing much in Europe—given that this has long been an elite project—while political elites have not said much about what the EU has been doing. This is in contrast to how much political elites have been saying about what the nation-state has been doing, in order to increase citizens’ sense of national being. And it is also in contrast with how much citizens themselves have been doing at the national level that increases their sense of being—through national political and social citizenship (Schmidt 2006, 2010). Instead, in the EU, national citizens have little opportunity for political participation or public deliberation, given that the most they do is vote in European Parliament elections that are second-order affairs at best (note the record low level of turnout in the 2009 EP election, of 43%), in which the campaign tends to

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be more nationally than EU focused (Mair 2006; Franklin and van der Eijk 2007). Moreover, the social groups and networks of which they are a part remain deeply national, despite the increasing importance of the EU and the Europeanization of the member states (Medrano 2003). And so is the mass media. The lack of a common European language, a European media, or a European public opinion ensures that the “communicative discourse” comes largely by way of national political actors speaking to national publics in national languages reported by national media and considered by national opinion. As a result, despite evidence of the slow rise of a “transnational community of communication” in a European public sphere, in which national publics by means of the media increasingly debate the same issues at the same time using the same frames of reference (Risse 2010, chs 5–7, and this book), there is nothing to guarantee that those debates will build citizens’ sense of EU identity. Political elites, by comparison, have been doing and saying a lot in the EU as part of a coordinative discourse of policy construction with other EU-level actors, and thereby increasing their own sense of EU identity. Political elites’ “communicative discourse” to the public, however, does not generally make clear what they are doing in the EU. Instead, they tend to downplay the EU’s role on the popular policies, by taking the credit, and to downgrade it on the unpopular ones, by blaming the EU because “the EU makes us do it” without admitting their own role in the joint policy-making process (Schmidt 2006, 37–43).

Charting the single currency’s impact on identity It is in this context that the euro has had great potential to help build EU identity. This is because the citizen’s relationship to the euro is direct, rather than mainly mediated by elites. But its impact can be seen in positive light or negative shadows. The single currency has its greatest potential identity-building impact as a material object, the euro, acting as a symbol of common identity, unifying countries. The coins in particular help create a common sense of belonging without denying national identity, with unity, represented by one side of the coin, in diversity, represented by the second side of the coin, with its national symbols. The disembodied bridges on banknotes, by contrast, avoid all semblance of identity-building by deliberately not doing what nation-states do, that is, reproducing the pictures of political, intellectual, or artistic leaders found on national banknotes. This was certainly a sound decision, since it avoided any long drawn out identity-focused competition among member states to have their own leaders on the notes—and what if some countries didn’t have any prominent enough? But not including identity-building symbols on the banknotes was nonetheless a lost opportunity in terms of the identity-building institutionalization of EU memories.

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There are other ways that the euro could be seen as constructing identity by enhancing a sense of belonging to a European community. These can involve practical matters, such as traveling through Eurozone countries without having to change money. But they can also be economic ones, as with the Eurozone’s protection from the vagaries of the international currency markets. This was an unspoken reality through much of the 2000s, but really came home in the early phase of the economic crisis, when the ECB’s actions in conjunction with other central banks helped avert a worldwide liquidity crisis. By the same token, however, the Eurozone crisis beginning in 2010 could be seen as destructive of EU identity building. And of course, the introduction of the euro itself can have been experienced as a loss of national identity— whether or not there is a gain in European identity. Moreover, the fact that the EU is now divided into Eurozone and non-Eurozone countries can be destructive of a common European identity. This came home at the beginning of the economic crisis in  2008, when the Central and Eastern European countries (CEECs) whose economies had collapsed were told to go to the IMF for help, whereas Greece was immediately declared the responsibility of Eurozone countries (not that this turned out any better). Most telling was the Hungarian prime minister’s cri du coeur asking European leaders not to erect an “economic iron curtain” between the CEECs and the other member states, which went unheeded. Eurobarometer studies suggest that the euro has indeed had some influence on building identity among the citizens of Eurozone countries. Although these polls show that a large majority of citizens did not feel more European as a result of having the euro, a minority of citizens did. In response to the question: “Does the euro make you personally feel more European than before or would you say that your feeling of being European has not changed?” approximately one in five citizens (22%) responded that they felt more European while three-quarters (77%) responded that nothing had changed. The Dutch were the most likely to feel little change (85%) while the Slovenes, Irish, and Maltese were most likely to feel more European (34–7%) (European Commission 2010c). Interestingly enough, by comparison with citizens in Eurozone countries, citizens in the new member states who anticipated joining the Eurozone were much more likely to believe that it would increase their feeling of being European, and this despite the economic crisis. Eurobarometer polls in 2011 (European Commission 2011a) found a little difference from 2007. Almost half agreed that introducing the euro would “make them feel more European” (49%, −6 since September 2007). Moreover, a majority (53%) did not believe that the adoption of the euro would mean that their country would lose a great deal of its national identity (−1 since September 2007), while those who thought that it would increase slightly (4% over 2007, to 37%). Even in the run-up to the inception of the euro, not all member states’ citizens were enthusiastic (see Figure 10.1).

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Support for Euro 100 90 % who support

80 70 60 50 40 30 20 10

19 96 S 19 96 19 F 97 S 19 97 19 F 98 S 19 98 19 F 99 S 19 99 20 F 00 S 20 00 20 F 01 S 20 01 20 F 02 S 20 02 20 F 03 S 20 03 20 F 04 S

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Figure 10.1  Percentage of people who support the euro. Source: European Commission 1996–2004 (Eurobarometer results). Question reads: “What is your opinion on the following statement? Please tell me whether you are for it or against it: A European Monetary Union with one single currency, the Euro”. [For, against, don’t know]; and Schmidt 2006, 198.

Among the four biggest member states of the EU, while Italians were the most enthusiastically in support of membership—in keeping with their generally very high positive identification with the EU—the British were the most negative, in keeping with their view of the EU itself. The French, in great contrast with the British, maintained a high level of support, above the EU15 average, although not nearly as high as the Italians. But Germany was the most interesting case, since despite its high level of German-as-European identity the public was extremely negative about the euro. German citizens only came up to the EU15 average in 2002, once the euro came into regular use. For the average German citizen, the loss of the Deutsche mark was more than just a replacement of a currency. Rather, it represented the loss of a foundation stone of national identity, given the role of the Deutsche mark as a symbol of national sovereignty and a sign of economic strength and stability. This can help explain the German public’s negative attitudes toward Greece during the Eurozone crisis, in particular, when the German press, echoed by German leaders, constantly contrasted “Germans who save” with the “lazy Greeks.” This was problematic not just for maintaining a common European identity but also for getting the public on board in view of engineering a bailout to solve the crisis, in particular, when Merkel reversed her position on the bailout and changed her communicative discourse to insisting that this was about “saving the euro” or even “saving Europe.”

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The euro and citizenship Just as the definition of identity was all bound up with the nature of citizenship at national and EU levels, so is the definition of citizenship bound up with the nature of democratic legitimacy at national and EU levels. Identity has a somewhat tangential relationship to legitimacy, with citizenship the linkage between the two. This section first theorizes these interrelationships before considering the euro and its impact on citizens’ views of EU and national legitimacy in practice.

Theorizing citizenship Citizenship and identity are interlinked, in particular, since citizen doing and saying what they are doing tends to increase their sense of being citizens. That being said, the two constitute separate processes of political construction. Whereas processes of identity construction involve the development of citizens’ shared sense of constituting a political community, processes of citizenship construction relate to citizens’ involvement with the political and social institutions of that community, along with their sense  that the decisions emanating from it conform to accepted and acceptable standards. This means that democratic legitimacy is intimately tied to notions of citizenship in ways in which identity is not. That citizenship is not just political, however, as in the legitimacy-building processes of voting, joining citizen associations, deliberating, and contesting decisions. It is also social, in the processes involved, for example, in pay-as-you go pensions, health and welfare systems, poverty alleviation, emergency relief, and other kinds of programs resulting from redistributive taxation. These processes, in building social solidarity, also reinforce democratic legitimacy. In the EU, identity and citizenship construction are also often interlinked, as each may have an impact on the other. But they are not always interrelated, since it is possible to build citizens’ sense of a European identity without enhancing their sense of citizenship as part of a legitimate EU polity and vice versa. Moreover, although a lack of European identity can certainly have an impact on EU legitimacy, EU legitimacy does not entirely depend on European citizens having a sense of European identity. Rather, legitimacy also derives from separate perceptions of the democratic nature of the processes and outcomes of European Union level governance. Thus, even though it is the case that member-state elites and citizens do not have much self-identification as Europeans, they nevertheless generally accept EU-level processes and outcomes as politically legitimate. And they may even do so where these raise specific legitimacy problems for their own member state, as when EU decisions strike down national rules (Schmidt 2011a). Democratic legitimacy in the EU is often theorized in terms of two legitimizing mechanisms derived from systems theory: input, judged in terms

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of the EU’s responsiveness to citizen concerns as a result of participation “by the people,” and output, judged in terms of the effectiveness of the EU’s policy outcomes “for the people” (Scharpf 1970, 1999). Input is concerned with citizen’s active participation and deliberation in EU political processes and the representativeness of EU institutions. Output relates legitimacy primarily to policy outcomes, that is, to the effectiveness of EU solutions to problems. Debates about EU legitimacy have tended to divide between those who argue that the EU can be legitimated on output alone, because the policies produced by independent regulators in multiple veto systems intrinsically serve the general interest (Majone 1998; Moravcsik 2002), and those who insist that input politics are necessary and insufficient in the EU (e.g., Mair 2006; Hix 2008). What is generally missed in this dichotomous formulation of EU legit­ imacy is a third legitimizing mechanism, also derived from systems theory, that focuses on what goes on in the “black box” of governance between input and output, which I term “throughput” (Schmidt 2012; see also Zürn 2000; Benz and Papadopoulos 2006). Throughput focuses on EU governance processes with the people, analyzed in terms of the efficacy of the decisionmaking processes (Scharpf 1988), the accountability of those engaged in making the decisions (Harlow and Rawlins 2007), the transparency of the information (Héritier 1999), and the processes’ inclusiveness and openness to consultation with the interest groups of “civil society” (e.g., Coen and Richardson 2009). The quality of the governance processes, then, and not just the effectiveness of the outcomes or the participation and representation of the citizenry, is an important criterion for the evaluating EU legitimacy. It has long been among the central ways in which EU institutional players have sought to counter claims about the poverty of the EU’s input legitimacy and to reinforce claims to its output legitimacy. In so doing, they have operated under the assumption that good throughput may serve as a kind of “cordon sanitaire” for the EU, ensuring the trustworthiness of the processes and serving, thereby, as a kind of reinforcement or, better, reassurance, of the legitimacy of EU-level governance. As for the interaction effects of the three, whereas input politics and output policy can involve trade-offs, in which more of the one makes up for less of the other, throughput does not interact with output and input in the same way. Although throughput is also an important component of the EU’s democratic legitimacy, better-quality throughput does not offset bad policy output or minimal input participation. But bad throughput—consisting of oppressive, incompetent, corrupt, or biased governance practices— undermines public perceptions of the legitimacy of EU governance, and it can even throw input and output into question by seeming to skew representative politics or taint policy solutions (Schmidt 2012). The multilevel nature of the EU system further complicates matters, since these legitimizing mechanisms are largely split between the EU and national levels. Because the EU lacks the input of a directly elected government, its

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democratic legitimacy rests largely on the throughput processes and output policies of the EU level and on the input politics of the national. This makes for national “politics without policy,” as policy processes and solutions have moved to the EU level while leaving the politics of the left and right to the national level; and for EU “policy without politics,” since the main politics is the politics of national interests in the Council, the politics of the public interest in the European Parliament, and the politics of organized interests in the EU Commission (Schmidt 2006, 21–9). And yet, and here is the rub, the actual content of the policies can be very political. The economic policies in response to the Eurozone crisis in particular are highly conservative, following neoliberal and ordo-liberal (read German) ideas about the need for radical deficit reduction and harsh austerity policies to deal with high deficits and debts, even during times of economic recession. But they are presented as technocratic solutions to which, TINA, “there is no alternative” (echoing Thatcher’s famous phrase). The crisis has also only exacerbated the EU’s “policy without politics.” This is because decisions on the rules to be applied to Eurozone countries have been made largely absent EU-level input via parliamentary involvement while the rules themselves tend to make recourse to automatic rules and technocratic throughput oversight in implementing the economic policies.

Charting the single currency’s legitimacy in a time of economic crisis The economic crisis has put tremendous pressure on the Eurozone, shining the searchlight not only on the legitimacy of the solutions to the crisis (output) but also on the representative nature of the decisions taken (input) and of the processes by which those decisions have been taken (throughput). Here, too, however, just as before the crisis, the impact of the euro can be seen in positive light or negative shadows. Prior to the Eurozone crisis, the legitimacy of the euro was largely founded on its policy output. This was generally seen as positive because the euro protected Eurozone countries from major currency fluctuations as it maintained credibility as an international currency. The ECB, as a nonmajoritarian institution with great independence from political authority, was given high points for the efficacy of its management of the currency, and thus also gained throughput legitimacy. In this precrisis period, however, the ECB’s independence was occasionally challenged, in particular, by French leaders, when its inflation focus led to interest rate hikes that had negative effects on unemployment and growth. Moreover, when the Stability and Growth Pact was first defied by France and Germany, then altered to meet their concerns, questions were raised about the quality of the throughput governance of the Eurozone. But leaving this aside, the lack of input politics was largely seen as legitimate up until the Eurozone crisis.

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Once the crisis hit, and in particular once some member states had to go to the IMF and the EU for loan guarantees and bailouts while most EU member states agreed to EU oversight of their budgets, the democratic legitimacy of technocracy—or output and throughput versus input—became the main issue. With regard to the ECB, the main question has remained: How good is its output or efficacious its throughput, given its very narrow interpretation of its already narrow mandate. It has largely refused to do what central banks do, which is save their currencies by acting as a lender of last resort or, more simply, by quantitative easing (printing money). This is because its mandate as established by the treaties does not allow it to buy government debt on the primary markets, and emphasizes maintaining price stability as its primary objective. And yet, it did buy member-state debt on the secondary markets, beginning in May 2010, in order to help stop the contagion from the Greek crisis spreading to the other vulnerable countries, and at the end of 2011 and again in early 2012 it provided banks with lowcost three-year loans as a kind of backdoor quantitative easting. Ensuring the stability of the monetary system is also part of its mandate. And here, technocratic (throughput) governance may finally have produced effective (output) policies. The EU policymaking process suffers from another set of problems, involving trade-offs between different kinds of input legitimacy as well as throughput legitimacy. By prioritizing decision making through EU Summits, the European Council, and the Council of Ministers, EU memberstate leaders have shifted the institutional balance increasingly toward the intergovernmental—acting as the indirect (input) representatives of their countries. They have not done this well in terms of throughput efficacy, given the delays and hesitant solutions that repeatedly have failed to calm the markets. The Council’s suboptimal throughput, moreover, is accompanied by little input participation by the European Parliament, the only directly elected body in the EU, and less throughput involvement by the EU Commission, now tasked with technocratic oversight of national budgets. This lack of involvement by the EP raises further legitimacy questions, since EU-based democratic input derives not just from citizens’ indirect representation through the Council–EU leaders’ justification for calling all the shots—but also from citizens’ direct representation in the European Parliament. The political leaders do not seem to acknowledge this, in particular as they have moved toward assuming that an intergovernmental Europe is the best way to govern. Note Sarkozy’s (2011b) statement in his Toulon speech on the Eurozone crisis, in which he states that “Europe needs more democracy” and defines a more democratic Europe as “a Europe in which its political leaders decide.” But even were intergovernmental governance to be perceived as sufficiently legitimizing as (indirect) input, problems stem from the fact that it is the Franco–German couple—or perhaps only Germany—in control.

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The EU Commission’s technocratic (throughput) function involving the vetting of national budgets, moreover, is also problematic with regard to the input legitimacy that the EP would normally provide. The fact that the European Parliament has largely been sidelined in Eurozone decision making means that it cannot deliberate or contest the decisions of Eurozone leaders with regard to the criteria for technocratic oversight, let  alone revise the criteria—which are largely those of the Stability and Growth Pact, reinforced in the “Six Pack” voted in summer 2011, or the “Fiscal Compact” in the Treaty of 25 (following the UK veto in December 2011, with the addition of the Czech Republic’s opt-out). Even more importantly, the Commission’s power to vet national budgets before governments submit them to national parliaments undermines one of the main pillars of national parliaments’ representative power—control over national budgets. The fact that the EU Commission’s mandate is not just to vet national budgets but also to sanction governments that do not mend their ways only adds insult to injury with regard to national parliaments’ input legitimacy. As for the input legitimation of technocratic governance itself, this becomes an issue once we recognize that most of it operates without much democratic input control. It is not just that the EU Commission’s oversight role takes precedence over national parliaments and is outside the reach of the EP. It is also that the ECB operates in its highly independent “nonmajoritarian” role without any government or parliamentary control, unlike its national-level equivalents, that always operate in the shadow of national politics (Schmidt 2012). And the IMF only increases the weight of the nonmajoritarian, when it comes to the loan bailouts and loan guarantee mechanisms for EU member states in need of rescue. Policy output is also in question. There has been little public debate over the recipe for economic reform—austerity for all, across the board—which has largely been imposed by Germany in exchange for agreeing to loan bailouts and guarantees. But it is not working, as seen from the deepening crises in Southern Europe and the slowdown in European economies generally, including Germany. And the “Fiscal Compact” agreed on 9 December 2011, which intends to rigidify the criteria agreed but not enforced in the Stability and Growth Pact and set them in stone—meaning the Treaties—is likely only to make matters worse economically. This is because even if the debt crisis is resolved, hiding behind it is a growth crisis for the member states generally, and a competitiveness crisis for the Southern Europeans (Schmidt 2011b; see also 2010). The throughput processes pose yet another problem for democratic legitimacy. The implementation of the austerity rules tends to be automatic, with technocratic oversight. The assumption here is that good technocratic throughput by the Commission—as opposed to political input by the Council and EP—will serve as the “cordon sanitaire” ensuring the trustworthiness of the processes and, thereby, their legitimacy. But if the rules appear oppressive—as they do for the Southern European countries—or biased,

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because they benefit export-oriented Northern European countries with corporatist wage-bargaining systems and penalize the South—then the legitimacy of both the input and the output will be questioned. Further questions related to democracy versus technocracy must be raised for the EU member states. These are highlighted in particular by the resignations of Papandreou in Greece and Berlusconi in Italy, replaced by technocratic governments, which, however legitimate they may appear in throughput and output terms, raise serious questions for input legitimacy (see Schmidt 2011c). And such questions only intensify when we add the EU Commission’s increasing powers of surveillance of member states’ national budgets—crowned by the “fiscal union” agreed on 9 December, 2010—not to mention the powers of the Troika (IMF, European Central Bank, and EU Commission) when it comes to Eurozone member states that have had recourse to loan bailouts (Greece) or to the European Financial Stability Facility (EFSF) (Ireland and Portugal).

Conclusions In the final analysis, the Eurozone crisis poses major problems for democratic legitimacy at the EU and national levels with regard to input politics. Only the biggest countries can throw their weight around like Germany or France. For most member states, and in particular for those caught by the Eurozone crisis, their elected governments do not have a choice, which also means that the people’s choice does not matter. This has engendered a massive loss of trust in national governments (as shown by Eurobarometer studies conducted in 2010) and crises of legitimacy. If the Eurozone crisis resolves itself very soon, and the austerity measures actually work, then we might be able to argue that the trade-off was worth it between reducing input politics in favor of output policy solutions, governed by throughput technocracy. But the likelihood that the debt crisis will be resolved soon is low. In this context, EU and national government legitimacy is certain to be questioned, putting strains on political citizenship, increasing political volatility with a rise in the extremes on the right and the left, and undermining the positive European euro-related identities that had been built up in the first decade of the single currency.

C HA P T E R 11

Divided by a common currency: The euro crisis and European citizenship Cris Shore

The euro 2001—11: Celebration of commemoration? On 30 August 2001 the European Central Bank (ECB) held a lavish ceremony at the Frankfurt Opera to premier the new banknotes and coins that would enter into circulation four months later on 1 January 2002. To mark the occasion, two-storey euro banknote banners were unfurled halfway up the ECB’s Eurotower headquarters. At its unveiling ceremony, the European Central Bank’s president Wim Duisenberg christened the new euro surrounded by two dozen school children and winners of the ECB’s “Euro Super-Star competition.” Showcasing the impressive multitude of anticounterfeit measures in its bills, Duisenberg (2001) hailed the euro as the “symbol of the future integration of 300 million people” and prophezied a collective psychological jolt that would fan a new sense of identity as Europeans discovered that their countries were already merged symbolically. He told the assembled dignitaries that the birth of the single currency would mark “the end of currency volatility” and create a “genuinely integrated market.” It would also “change the way in which we think about one another as Europeans” as with the euro, “Europeans will realize that they are at home throughout Europe.” The euro, he proclaimed, “is much more

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than just a currency: it is a symbol of European integration in every sense of the word” (Duisenberg 2001). The debut of the euro banknotes marked the culmination of a six-year campaign by the European Commission to promote public acceptance of the new currency despite lingering doubts among European citizens. As heavily guarded convoys began rolling across Europe, accompanied by the military and the police, to begin deliveries of the new coins—“enough to build twenty-four Eiffel towers and enough banknotes to go to the moon five times and back” (Schmid 2001, 6), television commercials began broadcasting throughout the Eurozone to brace Europeans for the change. The European Commission also unleashed a raft of measures, from glossy brochures, newsletters, leaflets, and radio programs, advertising jingles and promotional videos, to promote acceptance of the euro and reassure consumers, businesses, and trade unions that they would not suffer from the changeover. In Brussels, Commission officials had previously trialled 28 alternative campaign messages to promote the euro in the different EU member states. The main campaign themes were that monetary union was “historically inevitable” and a logical extension of the single market: the euro would bring “strength” and “stability” to the Eurozone economies;” guarantee price transparency” for consumers, savers, and pensioners; provide Europeans with a new basis for solidarity; and become “a symbol for peace and prosperity” (Shore 2000, 97–9). European political leaders made even bolder claims. EU Commissioner for Economic and Financial Affairs, Yves de Silguy, called the introduction of the single currency “the most important event since the Second World War” and predicted that it would foster a “real culture of stability” (1998, 2). Germany’s Chancellor Helmut Kohl described economic and monetary union as “the most decisive process for this and the next century,” while for Commission president Jacques Santer, it symbolized the EU’s emerging role as a truly global actor. The euro, he wrote: is also a powerful factor in forging a European identity. Countries which share a common currency are countries ready to unite their destinies as part of an integrated community. The Euro will bring citizens closer together, and will provide a physical manifestation of the growing rapprochement between European citizens which has been taking place for the past forty year or more (Santer 1998, 8). During the ensuing decade these claims were vindicated as, first, Greece (2001), then Slovenia (2007), Malta and Cyprus (2008), and Slovakia (2009) joined the euro and as Denmark, Latvia, Estonia, and Lithuania brought their currencies and monetary policy into line in preparation for joining. The euro did appear to make the single market work more efficiently and deliver higher growth and lower prices: trade volumes increased by some 50 percent, overall

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GDP growth was on a par with that of the USA, and inflation was kept below 2 percent, which had been the ECB’s main priority. Fears that a one-size-fitsall monetary policy would benefit only the Eurozone core countries seemed unfounded. But all that changed after 2009. Taking advantage of the low Eurozone interest rates and cheap credit, many of the peripheral economies witnessed unprecedented growth, much of it debt-driven and fuelled by booming but unsustainable property markets. Following the Dubai sovereign debt crisis of November 2009, serious concerns began to surface about some EU member states’ debts. In December, the Greek government admitted that its debts had reached 300 billion euros, a debt-to-GDP ratio of 150 percent— one of the highest in European postwar economic history. As one Belgian ambassador candidly admitted, “we knew from day one that Greece had problems, but we had no idea of the size of the debts” (Renault 2011). By August 2011, despite massive IMF and EU bailouts for Ireland, Portugal, and Greece, fears that the debt crisis “contagion” would spread to Spain and Italy were mounting. The ECB’s response to the solvency crisis was initially slow and piecemeal. Critics accused it of “dither, discord and delay” and “incompetence” (Beattie 2011), although responsibility for finding solutions lay with European heads of state, not with the ECB. Yet, even as late as June 2011 the ECB’s president Jean-Claude Trichet (2011) was insisting “[t]here is no ‘crisis of the euro’.” With rioters on the streets of Athens and London protesting against government austerity measures and politicians suggesting that Greece could default on its sovereign debt and be forced to leave the Eurozone, the euro crisis has raised fundamental questions about the future of economic and monetary union and the social costs and benefits of the single currency. It also raises deeper theoretical questions about the nature of money and its relationship to social identity.

Money and social solidarity: The euro’s role in European construction The EU project for economic and monetary union presents scholars with two paradoxes. The first concerns conventional theoretical understandings of the relationship between money and social cohesion. According to Marx, Simmel, Weber, and other classical theorists of Western money, the introduction of modern money has historically been associated with the erosion or destruction of traditional forms of social solidarity, or “community” understood in the sense of what Tönnies termed “Gemeinschaft.” As Maurer (2006, 28) sums it up: Late Victorians and early twentieth century modernists certainly thought that modern money, freed from the constraints of rank, reputation and material reality in specie, was destroying social solidarity and epistemological certainty.

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That modernist view was based on arguments about the amoral nature of modern money and its ability to render everything quantifiable according to a singular scalar value such that persons, objects, and activities can be reconfigured as universal commodities (Taussig 1980). According to this understanding, modern capitalist money is a socially disembodied unit of exchange whose primary function is to render things quantifiable and thus alienable. By contrast, the introduction of the euro was intended to achieve the opposite outcome, its main rationale being to advance political integration and socioeconomic cohesion. As the preamble to the EU’s founding Treaty declares, the aim was “to create, by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflict” (European Commission 1983, 115). Political union was the goal: money was the instrument for its attainment. The risks inherent in that “one-size-fits-all” monetary strategy, although well documented at the time and vocally expressed by many leading economists and political commentators, were largely ignored. So too were the historical experiences of previous single currency unions. In the nineteenth century, the “Latin Union” brought together France, Belgium, Switzerland, and Italy, and the Scandinavian Monetary Union (1873–1905) fixed the exchange rates between Sweden, Denmark, and Norway. Twentieth-century examples include the Central, East African, and Caribbean Federations, Maphilindo, comprising Malaya, Indonesia, and the Philippines, and the Soviet Union. All of these currency unions, without exception, subsequently broke up or were dissolved. The second paradox is that most scholarly debates over the EMU are still dominated by technical and financial considerations as if the euro were merely a commodity: a unit of commercial value whose sociocultural and symbolic significance is of little consequence to the “real” business of banking, finance, and economic governance. This is particularly curious given the emphasis that EU leaders have always placed on the euro’s symbolic role as a vehicle for promoting European citizenship and social cohesion (see Trichet 2011). Research has emphasized the close nexus between the introduction of the euro and the construction of European identity. This was powerfully illustrated in Germany where, after World War II, the Deutsche mark became the basis for an alternative national identity based on what Jürgen Habermas (1992) famously termed “Deutsche mark nationalism.” Adopting the euro was seen as a key marker of Germany’s support for the EU project and all that the EU symbolized, most notably European cosmopolitanism and peace as opposed to nationalism, xenophobia, and war. If the euro became a central element in the construction of a new, Europeanized, German identity, it also played a similar role in other Eurozone countries. As the EU’s Eurobarometer polls showed, the euro quickly became a key symbol of European integration, thanks to its economic success and strength in international currency markets. Yet despite their awareness of the positive

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social and psychological “spillover effects” arising from monetary union, EU leaders were extraordinarily ill-prepared for dealing with the negative social and psychological effects arising from the currency’s instability. With the specter of the sovereign debt crisis haunting Europe, it is timely to reflect on the euro’s anthropological implications and ask, “is the euro still a key European symbol today and if so, what does it signify for Europeans?” To answer these questions I examine two interrelated themes. The first concerns the dualistic character of currencies and the multiple meanings of money as a symbolic entity. The second concerns the identity-endowing effects of the euro, the semiotics of its coins and banknotes, and its role in shaping social solidarity. Finally, I consider the implications of these developments for the future of the European integration project itself.

The other side(s) of the coin It has long been recognized that money has a dual character, one part associated with the power of the state (traditionally symbolized by the head of the monarch or emperor on one of the coin’s two faces), the other a technical medium of exchange that lends precision to trade and brings commensurability to things that would otherwise be incommensurate, or as Marx (1844, 10) wrote, “makes impossibilities fraternize.” As Kenneth Dyson (1994, 3) put it, money has an essentially “Janus-faced” nature; “an economic and technical face and a cultural and political face” that expresses nationhood and identity; Currencies like the French franc, the pound sterling and the US dollar possess an emotional and psychological power. They are “stores of value” in more than an economic sense, with coins often representing elaborate national mythologies. Correspondingly, a single European currency is evocative of a claim to “statehood” and “common culture”: a claim that was always bound to be disputed, but a dispute for which EU policy makers - blinkered by the technical economics of EMU and the technocratic policy style of the EC Commission - were unprepared (ibidem, 5). Since Karl Polanyi (1944, 193–4), the argument that money represents both a token of state authority and a commodity made by markets has been a familiar theme in monetary theory. As Keith Hart (1986, 2011) notes, one of the problems with Western monetary theory has been its tendency to separate these two dimensions and to treat them as oppositional or mutually exclusive (“heads or tails”) rather than closely interdependent (“heads and tails”). Currencies are both culturally embedded artifacts (symbolic markers) and instruments of economic exchange. However, this overlap creates problems when financial issues become politicized, or politics

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become financialized. This is particularly problematic for the EU, which, despite its emphasis on ever-closer union, rejects the idea that integration is leading toward European statehood (Shore 2005, 2006). Dyson’s arguments that currencies evoke a “claim to statehood” and common culture illustrates precisely why the EMU is so problematic. Architects of the single currency saw it as the next great initiative for advancing the European project. Just as museums, maps, novels, and newspapers were key technologies that made it possible for individuals to imagine themselves as members of a national community (Anderson 1991), so the euro was expected to play a similar role in constructing European subjects. Even today, this remains a paramount rationale. According to the ECB president Jean-Claude Trichet (2011), these unique monetary arrangements “fulfill the vision of centuries of great European thinkers,” from Erasmus, William Penn, and Immanuel Kant to Victor Hugo and Robert Schuman. In his view, “the cultural unity of Europe is at the root of the European endeavor” and “EMU is the area where Europe has progressed furthest.” The question is what kind of Europe has the EMU progressed.

The euro as a symbol: Anthropological perspectives Anthropological analyses of money have highlighted three themes of relevance to debates about the euro and European citizenship. The first concerns the symbolic work that currencies perform in marking the boundaries of community. Both Cohen (1985) and Anderson (1991) have demonstrated the critical role that symbols play in constructing peoples’ sense of identity and community. As anthropologists have long argued, symbols do not simply passively reflect people’s social and political realities; they actively constitute those realities. Santer and Duisemberg’s statement about the euro’s psychological impact on European consciousness suggests this point was not lost on the architects of the EMU either. Second, money is a marker of sovereign authority (Hart 1986). Ever since the first coins bearing the profile of emperors and king, minting coins has always been closely linked to state formation and state sovereignty. Until the creation of the European single currency, there was virtually no currency that was not controlled by a state, and no country of significant size that did not control its own currency. Modern currencies symbolize both state sovereignty and national self-government. In this respect, notwithstanding the hybrid nature of the EU’s “multilevel system of government,” the euro is a symbolic claim to European statehood (Shore 2006). Third, as symbols that mark community boundaries and denote state power, banknotes and coins have also traditionally been associated with the idea of economic citizenship (Bendix 1964). The invention of European

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The Single Currency and European Citizenship

Citizenship as a legal category was a significant political technology for making concrete the idea of a “people’s Europe.” In similar vein, the euro can be conceptualized as a “technology of citizenship” (Cruikshank 1999): an instrument for “manufacturing citizens” (Bénéï 2005) and constructing European subjects through techniques of the self that are geared toward what Ian Hacking (2006) calls “making up people.”

Symbolizing Europe: The semiotics of the single currency revisited From the outset, the single currency was a top-down initiative to further the project of “European construction” by promoting a common sense of European identity, or what Jacques Delors termed giving Europe a “human face” (Shore 2000). This idea has a long pedigree. Half a century ago, German MEP Hans Dichgans highlighted the symbolic power of a single currency: “when everyone is holding in their hand a European coin showing a shapely lady riding on a bull,” he prophesized, “the graphicness of this coin [will] provide an impetus to strengthening the idea of Europe” (cited in Issing 1996, 17). The semiotics of the euro coins and banknotes highlight the visionary intent that was implicit in the single currency project from the outset. The design for the new currency featured architectural styles from different periods in the history of European architecture. When it launched the competition for the design of the new notes and coins, the Commission insisted that any imagery must be nonspecific; there would be no individual heroes, to avoid offending national sensibilities, and no real places, or people or building. Rather, the designs on the currency would be generic evocations of pan-European art and architecture. As the European Central Bank (2011b) explains: The banknotes show windows and gateways. They symbolize the Euro­ pean spirit of openness and cooperation. The 12 stars of the European Union (EU) represent the dynamism and harmony of contemporary Europe. The bridges on the back symbolize communication between the people of Europe and between Europe and the rest of the world. Each note depicts a different period in European art, starting with the Classical (€5) and Romanesque (€10), moving toward the Gothic (€20), Renaissance, (€50), and Baroque and rococo (€100), and culminating in the “age of iron and glass” (€200) and the Modern (€500). Each design also features abstract windows, arches, and doorways, symbolizing openings, possibility, and light. For Robert Kalina, the engraver at the Austrian National Bank who won the 1996 competition to design the euro, the aim

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was to find a symbol that would “not only inspire idealism about the future” but also “draw Europeans together” to “create a feeling of commonality, of belonging” (cited in FONDACA 2009, 7). According to an EU declaration, the horizontal parallel lines across the ‘€’ in the euro symbol “represent the stability of the euro” (Wolters 2001, 11). From the very outset, the euro was thus imbued with substantial symbolic capital as well as high expectations. Inventing new symbols, however, is a hazardous and unpredictable process. As anthropologists have often demonstrated, one of the key characteristics of symbols—as opposed to signs or icons—is that they have multiple, fluid, contested, and often contradictory meanings. As Victor Turner (1967) classically observed, symbols “work” by bringing together three elements: “condensation,” “multivocality,” and “ambiguity.” Condensation refers to the way that individual symbols represent and unify a rich set of meanings that become associated in the mind of the individual and interact together (for example, an eagle can represent spirituality, Christian salvation, or the Great Seal of the United States). Multivocality refers to the fact that a symbol can have not one but a whole spectrum of different meanings attached to it; that is, the same symbol may be understood differently by different people. And ambiguity reflects the fact that a symbol has no single or precise meaning. These three qualities of condensation, multivocality, and ambiguity explain why symbols can be such powerful cognitive and emotional devices, or “snares for thought,” that create webs of meaning for people (Kertzer 1988). If we apply this analytical framework to the euro, the symbolism of its banknotes and coins takes on a more complex and ambiguous set of meanings. While officials in the European Commission and the European Central Bank may perceive Romanesque portals, gothic windows, and classical arches as symbols of Europe’s strong foundations and proud classical heritage—linking the euro to the themes of “progress,” “reason,” and other core Enlightenment values—these symbols may be interpreted in other ways. With their disembodied bridges and buildings, the banknotes could also signify sterile landscapes without people or recognizable places; the vision not of a “people’s Europe” but a “bankers’ Europe.” These darker aspects of the euro could equally symbolize the loss of national identity, the domination of modern bureaucracy, and its dehumanizing impulse toward ever-greater rationalization and control (what Max Weber [1958] famously termed the “iron cage”), and the disconnections and divisions that exist both within the Eurozone as and between Eurozone and non-Eurozone countries. In the wake of the debt crisis, the themes of “rapprochement” and “shared destiny” that were supposedly etched into the euro banknote designs increasingly appear to reflect a bygone era in the history of European integration. As one veteran EU analyst and political journalist observed, “where they used to talk of ‘ever-closer union’ in the commission press conferences, the phrase is now rarely, if ever, heard except when referring to

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history” (Helm 2011). This does not mark a shift in the “telos” of European integration on the part of EU officials and leaders themselves. But what it does indicate is a growing loss of confidence in the euro among European citizens.

The euro crisis and European identity In many respects, the EMU project continues to have identity-endowing effects, only now they have become more negative. The tensions of EMU have generated growing public distrust with the EU and its institutions. The autumn 2010 Eurobarometer survey showed for the first time that overall distrust of the EU now outstrips trust, even in France and Germany, and that ever-fewer countries regard EU membership as a good thing (European Commission 2011b, 44–5). The politics of “euroscepticism” is fusing along old historical lines with the Protestant countries of northern Europe increasingly unhappy about the massive cross-border fiscal transfers going to the counter-Reformation south. German guilt, which once drove the European project, no longer inspires young Germans to think about Europe as providing a necessary alternative to national identity in the way that their parents did. As the EU’s original raison d’ être has waned, Germans have become increasingly reluctant to be Europe’s unquestioning paymaster. There is also growing nostalgia for the old currency; in the Christmas markets there are stands that now take Deutsche marks (Jenkins 2011). As the BBC’s Berlin correspondent wrote, that “soft yearning for the old is hardening” among German citizens as doubts about the future of the euro increase (Evans 2010). Even in  2008 opinion polls were showing that 34 percent of German respondents wanted a return to the Deutsche mark.1 According to a survey conducted two years later by Infratest Dimap, 57 percent of Germans polled thought they would have been better off had they never adopted the euro (Nienhaus 2010). The difficulty for German politicians is that voters were assured that the new currency would be as strong and as stable as the Deutsche mark and were persuaded to sign up for the euro for the sake of Europe. Now many see EMU as a “transfer union” where money is transferred from the supposedly prudent and self-disciplined northern European countries to the profligate “Club Med” southern Europeans (Evans 2010). When the government of West  Germany called on its citizens to work in order to restructure the damaged economy of the former East, it did so by appealing to a sense of national duty. Sharing a legal status as European citizens, it seems, is not enough to generate a comparable sense of European duty. One effect of the Eurozone crisis has been the increased negative stereotyping within the EU countries, with growing resentment among German taxpayers at having to bail out their Greek neighbors. Many ask rhetorically, “why should we have to work until we are 69 so that Greek

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public sectors workers can retire at 55?” The national media has also fuelled the popular stereotype of Greece as a country whose workforce is overpaid and underemployed. Anecdotes about Greek cleaners who earn as much as ministers and the whole country working half a week reinforce the (false) image that Greeks are lazy and unproductive compared with Germans.2 Meanwhile, European leaders blame Greece’s economic problems on a combination of “chronic corruption, publican finance incontinence, a culture of tax evasion, and a powerful narrow self-reinforcing political elite” (Beattie 2011). Since 2011, reports about the systemic corruption and tax evasion in Greece have become regular features of the European media, and even Greek politicians have acknowledged the scale of the problem. As former Pasok party finance minister George Papaconstantinou (cited in Borger 2012, 4) summed it up: Other European countries have a social contract in which I pay taxes and you, the government, provide services . . . We have a warped social contract in which I vote for you and you promise to hire my kids in the public sector and don’t make me pay taxes. What we are seeing is the breakdown of that clientelist system. Voters in the northern countries were promised tough new conditions would be imposed on the “irresponsible south.” Instead, they have seen some 350 billion euros transferred to the periphery to avoid social breakdown. Under pressure from their electorates, the governments of Germany, Finland, and the Netherlands have urged increasing austerity. Yet for Greek citizens, these bailouts are not grants but loans bearing exceptionally high interest  that Greece will be unable to pay back for decades. The austerity packages imposed upon them is seen as an attack on the legal and political integrity of the country: a “new type of colonialism” in which “the Brussels elite treat the European south as undeserving poor or colonial subject to be reformed and civilised” (Douzinas and Papaconstantinou 2011). The currency designed to unify Europe and smooth out economic differences appears to be having the opposite effect. Rightly or wrongly, the euro now carries much of the blame for the Eurozone’s debt problems. Yet none of this should come as a surprise. The risks of trying to construct monetary union without economic and political union were identified long ago by leading economists (Feldstein  1997), including the ECB’s former Chief Economist (Issing 1996). European Commissioner Ralf Dahrendorf (1998, 33) warned that “EMU will disunite Europe like no other act since the end of the war,” a view shared even by the European Commission’s own head of unit responsible for Economic and Monetary Union, Bernard Connolly (1995). For many critics, the Eurozone’s crisis is not an accident; it is inherent in the EMU system itself. Much of the euro’s problems stem from its symbolic nature. EMU was always an assemblage of two very different rationalities. One was political,

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drew inspiration from the grand narrative of war and peace in Europe, and was grounded in a neo-Keynesian vision of growth, employment, and security. It conceptualized the euro as a mobilizing symbol, or “technology of citizenship,” that could be used to foster social cohesion. The other was economic, predicated on neoliberalism and the ideals of an independent central bank whose goal was to guarantee price stability, control inflation, and ensure a smooth passage toward an integrated single market. These two rationalities have always existed in tension with each other, particularly following the 1992 Maastricht Treaty when the EU took a more neoliberal turn. But they also reflect different conceptions of citizenship: the former reminiscent of Marshall’s (1950) vision of full “social citizenship”; the latter reflecting a narrower, more individualistic conception of citizenship defined in terms of consumer rights. The global financial crisis has increased pressure on member states’ economies and exacerbated these contradictions. However, the twin logics that underpin EMU have created another dilemma; having convinced themselves that the EU and the single currency are the same project, EU elites believe failure in one domain will precipitate collapse in the other. Another problem is that short-term political imperatives have always trumped longer-term economic and social considerations. EMU was designed as a one-size-fits-all policy for economies that were sufficiently similar, or in step, to be able to live within a common framework. The Maastricht convergence criteria tests were supposed to show whether the necessary levels of convergence had been reached. But those tests were neither stringent nor comprehensive and were circumvented by several countries with serious budgetary problems. As Elliott (2011, 24) writes: The Maastricht criteria were really economic window-dressing for a politically motivated concept, and politics decreed that there should be as many members of the Eurozone as possible. Perhaps five or six countries were in a fit state to cope with the rigours of the euro; eleven—including Greece, Portugal, Italy, Ireland and Spain—were founder members Instead of promoting convergence, the single currency has intensified existing differences and aggravated the Eurozone’s economic downturn. For Greece, bailouts are unlikely to solve the debt problem as the austerity measures demanded—including wholesale sell-offs of public assets, sharp tax increases, and massive cuts in public spending—exacerbate the problems that resulted in the failure of earlier bailouts. To date, European leaders have ruled out Greece defaulting on its debt. That would mean leaving the Eurozone, which would effectively signal the end of EMU. Default would also inflict heavy financial losses on those governments and banks exposed to Greek debt, which many fear could trigger another banking crisis similar to that of 2008. Devaluation is not an option either, since the single currency deprives member states of the two traditional tools

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of macroeconomic policy—control over the exchange rate and the interest rate. That leaves austerity measures as the only option, but austerity risks deepening Greece’s financial problems, inflicting further hardship on a country already reeling from the dislocating effects of recession. For Greece, the euro has become a straightjacket (Krugman 2011).

Future of the Eurozone: Breakup or closer federation? Despite these dilemmas, predictions about the collapse of the euro are premature. Indeed, one paradoxical effect of the Eurozone crisis is that it may actually be accelerating the deepening of economic governance and political federation. As Anatole Kaletsky (2011) put it, “the choice between a full-scale political union and the disintegration of the euro is becoming impossible to postpone much longer.” Many EU leaders see little alternative but to move toward a more unified EU fiscal policy backed by more rapid progress toward a federal political union. This is a view also shared by many within the European Central Bank. In June 2011, ECB president JeanClaude Trichet made a radical proposal for advancing European economic governance. Speaking in Aachen in Germany, where he was awarded the Charlemagne prize for contributions to European unity, he called for a future European Union that would be “a confederation of sovereign states of an entirely new type” that would include a “ministry of finance of the Union” (Trichet  2011). While acknowledging that his plan fell short of a pan-European finance ministry with tax-raising powers, he nevertheless conceded that this was the logical next step in order to impose discipline on countries that failed to keep their public finances in order. “Strengthening the rules to prevent unsound policies,” he declared, had become “an urgent priority” (ibidem). Germany’s economy minister Philipp Rösler subsequently proposed the creation of a “Euro Stability Council” with powers to impose automatic sanctions on profligate countries that failed to adhere to rigid budgetary discipline and pro-business labor policies (Siebold and Rinke 2011). These proposals make perfect sense from the perspective of central bankers— whose mandate is to keep inflation low, guarantee price stability, and ensure the proper functioning of the single market—but they have worrying implications for democracy and citizenship in the EU. While austerity measures may calm the markets, they have also fuelled growing public disenchantment at the loss of democratic accountability in Europe. The ECB’s instructions to Italy on exactly which austerity measures it should implement, led Italy’s prime minister Silvio Berlusconi to complain that his administration had been made to look like “an occupied government.” The German government’s proposal in January 2012 for a “budget commissioner”

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with power to veto Greek tax and spending decision elicited an angry rejection from former Greek finance minister Evangelos Venizelos. The shift of decision-making power toward unelected institutions like the ECB has provoked growing concern about the future of European democracy (Sen 2011). Even some MEPs argue that EU proposals for “economic government” are about “undermining democracy in order to impose a European shock doctrine” (Phillips 2011, 18). Meanwhile, the ECB blames European political leaders for failing to monitor or sanction those countries with excessive debt. Defending the role of the markets and rating agencies, ECB board member Lorenzo Bini Smaghi points to wider problems of accountability in the EU. People in Europe now want to know why surveillance was not sufficiently robust before the crisis and why certain countries were admitted without having a sufficiently strong institutional framework that could prevent a build-up of excessive debt, public or private. These questions need to be answered if the mistakes of the past are not to be repeated. The attempt by certain politicians to shift the responsibility for monitoring and disciplining other countries’ policies to the financial markets betrays the spirit of the union, which is based on strong budgetary rules to be implemented and monitored by the member states. As we know, markets often react late, tend to over-react and to be pro-cyclical, behave as a herd and follow acritically rating agencies. Policy makers cannot complain about this behaviour - occasionally even threaten market participants with coercive actions - and at the same time delegate to these same markets the fate of their economies (Bini Smaghi 2011). Bini Smaghi even blames European voters for not holding their elected representatives sufficiently “accountable for their domestic policies and for how they act.” On 6 May 2012, Greek voters did call their politicians to account, inflicting a heavy electoral defeat on the ruling Pan-Hellenic Socialist Movement and other parties seen to be in favor of austerity. In Athens, former ministers from Pasok and New Democracy were apparently “unable to venture into the streets without being cursed a pelted with yogurt, a peculiarly Greek form of political assault” (Borger 2012, 4). However, the outcome of that election was inconclusive, raising fears that Greece’s antiausterity parties might seek to renegotiate the terms of its loans from the EU and IMF or worse, freeze loan repayments to its creditors. More worrying for many, however, was the meteoric rise of the previously tiny neo-Nazi “Golden Dawn” party, which won 7 percent of the vote—and 21 seats in parliament—compared with a negligible 0.3 percent in 2009. Blaming the voters who elected their incompetent political leaders adds a curious twist to the question of who is responsible for the Eurozone’s crisis. There may be some merit in the arguments made by ECB board members about the culpability of national politicians for creating the conditions that

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precipitated the current crisis. However, as members of the same European political elite whose livelihoods revolve around the institutional spaces created by EMU, EU policy makers and bankers share that responsibility. As George Soros (2012) sums it up: The authorities didn’t understand the nature of the euro crisis; they thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness. And they applied the wrong remedy: you cannot reduce the debt burden by shrinking the economy, only by growing your way out of it. That raises perhaps the thorniest question of all. If the Eurozone’s problems are institutional and systemic, strengthening that institutional framework by ceding further fiscal sovereignty to pan-European institutions may make matters worse. Given the political as well as economic stakes involved, Germany is likely to do whatever is required to prevent the break-up of the euro. But the result, as Soros argues, will be “a Eurozone dominated by Germany” where the widening gap between creditor and debtor countries would turn Europe’s periphery into permanently depressed areas in need of constant payment transfers. That, according to Soros, would turn the European Union into “a German empire with the periphery as the hinterland.” Ten years ago it was considered heresy among EU leaders and supporters to question the assumption that monetary union was a necessary and inevitable path to European unification. Now it seems the instrument designed to unite Europeans and foster a shared citizenship has come to symbolize division and disorder in Europe and the growing inequality between Europe’s core and periphery. One positive outcome from all this is that the received wisdom of past economic orthodoxies and uncritical acceptance of the grand narrative of European integration are increasingly being challenged. Perhaps that skepticism is a necessary precondition for the accountability and active citizenship that Bini Smaghi and others now call for.

Notes 1 Spiegel Online, 5 February 2008, http://www.spiegel.de/international/ germany/0,1518,551043,00.html. 2 The reality is much different. According to the Organization for Economic Co-operation and Development (OECD), the average Greek worked 2,119 hours for $27,460 while the average German worked 1,390 hours for $36,716. See http://stats.oecd.org/Index.aspx?DataSetCodeANHRS.

C HA P T E R 12

Between natural and moral order of things: The euro and the problem of agency Víctor Pérez-Díaz

A complex economic, political, and cultural crisis In the last few years, and increasingly so in recent months, an extraordinary amount of attention has been paid to the problems of the euro and the prospects of the Eurozone, which indicates grave doubts about maintaining the common currency and about the credibility of the European project. As problems have accumulated, Europe has reached a point in which crucial decisions must be taken in order to escape a future such as defined first by the motto “EU’s future: no war, but no growth” (Vinocur 2011), and then, by the even more disquieting motto “no future,” at all. In order to put current problems in context and perspective, we may start by looking at some major, interrelated issues such as the economic crisis, a set of broad geo-strategic readjustments on a world scale, the crisis of governance implicit in the relations between the political class and civil society, and a sense a profound malaise surrounding a vaguely defined culture of modernity. Taken together, these four issues radically affect the course of today’s Europe, and of each and every one of the member states. For any particular country to solve all these problems on its own would be impossible; by contrast, every individual country has much to gain from enlarging the horizon of its local public debate, politics, and policy to encompass the whole European situation, seeing itself as a dynamic part of it.1

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First, the economy. Europe’s economic crisis seems related to problems of growth and solvency that seem minor in Germany and the Nordic countries, more important in France and several others, and very much so in Euro–Mediterranean countries. These last countries are not very competitive, have deficient systems of innovation and education and rigid labor markets; also, fiscal imbalances and excessive private debt have given rise to serious problems of cash flow and of solvency in parts of their financial systems, leading to sovereign risks. In turn, the architecture of the public decision-making process in the Eurozone has hindered an efficient handling of the crisis, even though, step by step, mechanisms (such as the European Financial Stability Facility) are being developed to this effect. However, these mechanisms have limited effects unless backed by political decisions such as, for instance, constitutional norms in every country to limit its public deficit and debt and sanctions to countries exceeding such limits, as well as making external financial help conditional on a variety of structural reforms. If needed, institutional settings should be adjusted to take measures aimed at both growth (and employment) and fiscal consolidation. However, institutions and public policy decisions are not enough. The actual working of the institutions and the contents of the policy finally implemented depend on a mix of vision, energy, and social trust, in short, of culture. Second, the economic crisis unfolds in an uncertain geo-strategic context. A change is taking place in the balance of political and economic power between Europe and Asia. Asian nations as a whole tend toward the creation of large military–industrial complexes, with a basic strategic commitment to an ever-more-extensive air and naval capacity. These countries put an emphasis on military power in order to serve strategies of expansion, economic penetration, and cultural presence. Nationalism is on the rise in such countries, and governments appeal to the nationalist sentiments of the population with success (Gat 2012). They are willing to play at realpolitik and to redefine the balance of power between nations, ready to take advantage of their adversaries’ moments of weakness to change that balance, even though past experience shows the hegemonic dangers and temptations intrinsic to the game, a quasi-Hobbesian game of nation states, intermixed with that of complex international regimes, in a manner which is, by the way, reminiscent of what went on between European states in the seventeenth and eighteenth centuries (Hont 2005). Among Western countries, the positions of the United States and Europe show considerable variation. For several generations, the United States has been investing an extraordinary amount of resources in their foreign and defense policy; by contrast, when we look at Europe we do not see much in terms of European foreign and defense policies (Joffe 2012). European defense budgets are declining, and European governments seem generally incapable of persuading their citizens to go to war. For Europe, dependency on the United States was evident from the 1940s and has continued ever since, as if Europe had decided to live under America’s supervision

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and in a complementary capacity to it (Aron 1974). Playing the game of international relations seems to exceed the strategic understanding of the political establishment of the European states, the game becoming ever more complicated as it is placed in a larger cultural and institutional context; it also challenges their capacity to mobilize social support, as the interventions in Bosnia, Kosovo, Iraq, or Afghanistan show (Hassner 2012). Third, governance and civil society. Both economic and foreign policies require, in the long run, a wide-reaching debate and long-lasting agreements in the political community and society at large. The key to obtaining this consensus lies in the relations between an open political class and a civil society with a well-developed civic spirit. In this regard, the diversity of Europe can be seen as an opportunity to imitate or draw inspiration from other experiences, for reciprocal learning; the point is to steer the governance of each country and the European system of governance, in a direction in which politicians and civil society share responsibility for common affairs and public choices. This may not be easy, as the example of Italy in the past decades shows (Salvati 2012) the difficulty of engaging in a process of reforms when the situation is blocked by political polarization resting on the disposition of a public, which is distrustful of the political class and relatively passive where public affairs are concerned, partly because it lacks confidence in its own civic capacity. Finally, culture. All the above lead to the matter of culture, a set of understandings, values and rules embodied in actual human practices. Finding solutions to the aforementioned problems may require Europe to re-examine the cognitive and normative bases of its culture by broadening the spatial–temporal context of the discussion: by extending its field of attention beyond modernity to reach back to an earlier tradition, and by confronting the world’s multiple modernities (Eisenstadt 2002). The Western European tradition has usually emphasized the importance of human agency, that is, a view of the world being to a large extent a result of human purposeful making and doing; this implies an emphasis on a process of reflexivity whereby the agents’ reasons become the causes of their actions (Archer 2007). But here we face a complex evolution. On the one hand, reflexivity has tended to extend its scope as well as its frequency or intensity, and its modalities have also changed; this includes a reinforcement of the tendency toward meta-reflexivity, that is, conversations that critically evaluate their own premises and open up to a normative debate. On the other hand, the increasing complexity of situations (and, we should add, sheer human fallibility) has also induced a fractured reflexivity leading to disorientation, thereby inhibiting or frustrating action. The fact is that the culture of modernity has not succeeded in matching the development of instrumental rationality with the development of an axiological rationality. Whether there has been a general development of reflexivity cum axiological rationality to guide our Western mix of a market economy, a liberal polity, and a plural social fabric2 toward a good society is very much a wide open question.

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Answering the last question may require the development of two debates. The first regards considering the possibility that the Western world may be adrift because it is letting itself be carried away by the very logic of modernity. It finds it difficult or impossible to incorporate a set of religious and moral Axial Age traditions (back to the first millennium before Christ: Jaspers 1953), with their crucial contributions to a new experience of reflexivity, the universalism that potentially embraces the entire human race and the transcendence of the experience of the here and now (Madsen 2012). At the same time, in a paradoxical way, the very process of globalization has brought with it an opportunity to a return of sorts to the Axial Age, through the coming together of various forms of modernity in different parts of the world. As the West meets the rest of a world, the rest of the world observes the West in conditions of parity. From today’s perspective, modern Western hegemony can be rethought of as an episode of the past 200 years, and not as a herald of the future for all humanity. This updating of different traditions may eventually give rise to various approaches for solving today’s problems, that include attempts at a moralization of sorts of the economy, geo-strategic relations, and domestic politics. The second debate may start with a critical reading of advanced modern society Western style that suggests the closeness of this type of society to the oligarchical city of the classical tradition (Pérez-Díaz 2012b). Were this the case, liberal democracy and markets would be distorted by the interweaving of political parties, media and economic elites, and the resulting degeneration and passivity of civil society. To the extent societies move in this direction, this suggests an increase not in reason but in a mix of reason and unreason; or, in other words, of autonomous and fractured reflexivity, and of instrumental rationality coupled with axiological irrationality. This uneven cultural development may be compatible with a broad, ubiquitous, and permanent, educational process, which, in fact, would spread both information and noise. It would expand noise by providing people with poorly contextualized and poorly reasoned information, and with a cultural milieu that disguises imitation by dressing it up as permanent innovation. Thus, what appears to be a dynamic order would partially obscure a process of growing entropy. This chaotic trend may, of course, be counteracted by processes of reform in the economy, politics, civil society, and cultural life. But the point is: Who is the historical agent that is going to engage in this process of reform?

The problem of agency of a European political leadership and a European demos Handling Europe’s problems regarding the economy, geo-strategics, governance and culture, raises fundamental questions of agency, which, if left

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unanswered, make it impossible to map out a course. No meaningful projects can be outlined if there is no clear identity of the agent in question, and no identity can be recognized if there is no narrative behind it. Otherwise, we may be in the sort of highly complex social system (such as the one described by Luhmann 1982) wherein the people and/or institutional domains involved in it are, at the same time, so independent of and so interdependent on each other that the very idea of society as an agent or a subject loses its meaning. There would be no room, then, for a Europe that decides and acts. Rather, within Europe, things would be decided and acted out, while the individual agents (and their organizations) would adjust to these impersonal decisions/ activities the best they could. They would formulate desires, nurture expectations, and generate them in others, defend themselves against the inevitable disappointments, and move on; all the while, they might hope that some combination of leadership and society would appear as a subject of this process, even though the suspicion would remain that whatever appeared in this guise would be a mirage. The alternative is to envision a collective agent engaged in a process analogous to that of the classical times whereby independent polei, this time, nation-states, pool their resources together, and, as in a variant of Alexander’s dream, build up a sort of Great Hellas to meet Asia (Bénoist-Méchin 2009). This would be the most difficult task that requires human agency in the form of political leadership and a demo of sorts. But here is where things look problematical for today’s Europeans. Let me outline a set of problems related to political elites, cultural elite, and ordinary citizens, as components of this collective agency. First, regarding the national political elites, some people think that, in the end, the big countries those elites are expected to represent, make the decisive moves for the rest to follow, so that, right from the start, Europe has been pulled forward by an alliance between France and Germany. But, notwithstanding the fact that these countries do lead events now and then, to talk of their joint leadership as the key to strengthening Europe’s grand strategy seems rather far-fetched. The very master narrative of the EU makes sense only if there is a considerable diffusion of power among all countries, big and small; and, by the way, the eventual hegemonic claims of France and Germany could hardly be justified by resorting to the lessons of history, in particular of modern history. True, they have played a pivotal role in the contemporary European process, but they work at their best as a laboratory of useful European compromises. They have been crucially influential, so far, as the self-appointed core of a crisis management system of the Eurozone (Guérot and Klau 2012), but only with the assent of the other member states. Further steps along the path of ever greater unity of Europe will only make the involvement of other partners ever more necessary: steps such as just holding the Eurozone together, not to speak of finessing the mechanisms for easing cross-border labor mobility, homogenizing administrative procedures, electing key European political leaders, or increasing the national

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Parliaments’ involvement in European policy. Restricting the inclusion in a core directory to a few countries will not do; the resort, for instance, to an eventual co-leadership of the United Kingdom sounds implausible, since its history, regarding the EU, is one of sustained reluctance to full engagement. Those limits to coordinated, forceful political leadership in the EU have not prevented the political elites of all nations, big and small, from attending to common matters that gradually increase in number and importance; neither do they prevent the comings and goings associated with these matters from generating mutual understanding, trust, and reciprocal esteem, to the extent that people stick to the rules and are truthful and responsible. All this moves the process forward. What matters is understanding how it advances. It does not advance through visionary leadership, but through the continual interaction of politicians and civil servants both of the national governments and of the European Commission and other EU institutions. It moves thanks to the competence of people who comply with rules and procedures, and discuss and negotiate taking into account the many viewpoints on what are complex matters. Their field of action is broadened by proceeding with caution, not by forcing things or imposing a constitution or even a preliminary constitution. This is the way progress is actually made. Thus, Europe has an establishment, or network, of politicians and civil servants with a shared cultural institutional idiom, managing an on-going process of muddling through by means of either intergovernmental mechanisms or common institutions or both (Ludlow 1998; de Schoutheete 1997). But the individuals and groupings that compose this political estab­ lishment can go that far only if they are assisted by a larger society that surrounds and understands them, and shares in the adventure. The problem is that very method of muddling through implies that professional politicians reconstruct the European political experience as their own, local, experience: one that is confined to insiders in the play of European institutions and takes place at a distance from national electorates, de facto outsiders. It does not help to breach the distance between insiders and outsiders that the rhetoric of such political leadership tends to be either a technocratic rhetoric or a voluntaristic and futurist idiom, all about “political will” and “projects with an eye to the future” and “visions for a Europe still to come,” which fails to impress ordinary people’s imagination (Pérez-Díaz 1998a, 2000). All the same, there is another reason why it is hard for national, political, and cultural elites to develop a persuasive European political language. The fact is that they have a vested interest in keeping people’s attention focused on domestic politics and the national culture, and they usually behave as gatekeepers between the outside world and the nation, and as filters of foreign political and cultural influence. The European process has barely changed this traditional disposition of the national elites. This translates in their limited contribution to articulate a shared narrative for the European process, beyond the obvious reference to avoiding a European war and enjoying the twin benefits of open markets and liberal democratic procedures. Certainly,

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these are extremely worthy goals to achieve, and to enjoy. But there is little that is European-specific about them. If that is the ultimate meaning of the European process, there is no reason why Europe’s frontiers should not expand to the Pacific Ocean, the Indian Ocean, and the Antarctic. “No war, open markets, and liberal democracy” sounds like a motto fitting the entire world system. Now, the problem with making a European narrative to give specific contents to a European identity and agenda is that we have to go beyond the past 70 years and start, say, one or two millennia ago. Then we face an even more serious problem, which lies in the complicated, distorted character of the European memory. For some people the problem to anchor their identity in a narrative may be a lack of memory, but for others, it may be an excess of memory; if this is the case, people may feel lost. Laín Entralgo (2011) has reminded us of how people in antiquity saw the life cycle of society as a way of pointing to a climacterium historicum virile, whereby Europe may consider itself heir to a past so rich and so complex that it would be unable to understand it. This inability is due not so much to the complexity of the past as to the fact that Europe has lost the key to its understanding, and needs an exercise of anamnesis, or an Ariadne’s thread to find a way out of its own labyrinth. This is why it so often happens with Europeans that remembering and evoking their historical memory leads them to lose their sense of identity even more. Modernity, at least their modernity, does not provide the key. Little is achieved by the Europeans brooding over their national narratives, that tend to be incompatible with each other, while they try to accommodate themselves to the topoi of advanced modernity that dominate their social imagination. It is difficult to insulate the idea of a modern, enlightened Europe from the rivalries between the bureaucratic and military apparatuses of the emerging nation-states from the late Middle Ages onward and the state and religious wars of the sixteenth and seventeenth centuries that preceded it. As it is difficult to separate that idea from its legacy, from 1700 onward, of conflicts of power, trade wars, social tensions, and ideological passions that led to three centuries of military warfare and political violence. Finally, there are also limits to the ordinary citizens’ shared experiences and  to their civic virtue, which reduce their capacity to engage in the European political decision process. To begin with, the propensity of domestic politicians to base their claims to power on their ability to deliver social services has encouraged them to maintain invisible barriers to a genuine European social space; labor market regulations and welfare system provisions are fragmented, and have remained so for too long. This, in turn, has impeded the growth of a critical mass of citizens with crucial pan-European life experiences, even though a gradual increase in the use of English as a lingua franca has made for a spontaneous, bottom-up development favoring social exchanges. At the same time, a deficit of civic virtue on the part of ordinary citizens (Pérez-Díaz 1998b) contributes to the weakness of the European agency.

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That deficit is rooted in experiences, dating back to the nineteenth and twentieth centuries, of authoritarian and totalitarian regimes all over continental Europe. A habit of mitigated involvement in communal affairs has been created, draining European citizenship of half of its fundamental core, the one related not to claiming civil rights but to exercising civic duties, to begin with, the duty of defending the city and its freedom. There has been little effort to foster the development of a European civic conscience focused on the Europeans’ civic duties toward Europe. Rather, European citizenship has been defined as a citizenship of rights: the rights of each person to have access to a pool of goods, services, or legal protections, for his/her own benefit; and as a consequence, Europeans are poorly motivated to think in terms of a common European good, this helping to explain the scant popular interest in a European foreign and defense policy.

A view from below: Reasons and sentiments behind the Spaniards’ attachment to the euro Against the background of such weakness of agency, the current economic crisis looks even more daunting. But we may also think that when a weak collective subject faces up to an enormous challenge, the very enormity of the problem obliges politicians and citizens to fight and do their best to survive. The current crisis provides a reality check to the vagaries of the European’s projects or half-projects, and by putting pressure on them, creates a mix of incentives and opportunities to make amendments and to go forward. This affects both political leaders and the public; now, I suggest we focus our attention on the public’s understanding of what’s at issue here. As we know, the crisis affects the solidity of the common currency as much as it does the continuance of the Eurozone, and questions a collective experiment that seems a crucial step toward the goal of an ever greater European unity. The formation of the European Monetary Union (EMU) can be interpreted as an anticipation of the future; if successful, it could expand and become generalized. So far, it has brought together three types of countries: big countries such as Germany and France hoping to exert greater influence; medium-sized countries (like those of the Benelux, Finland, and Austria) that have a dynamic and competitive business fabric, good systems of education, and innovation and a relatively high level of social capital; and the Euro-Mediterranean countries on the periphery, such as Italy and Spain, Portugal and Greece, to which Ireland and other countries can be added, which rest on relatively weaker foundations. Given this diversity, it is obvious that the attitudes of the public of any of these countries cannot be generalized. At a time, as of today, when fears of a sudden collapse of the euro combine with a perspective of stagnation, the attitudes of the Europeans, in general, toward the euro have been described

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as if “a gap of enthusiasm (existed) between the EU’s common currency and its citizens,” who, “in the words of a Brussels official, would look at the euro as a (mere) “convenience” rather than as a necessity” (Vinocur 2011). These “words” I challenge, as I suggest we focus on a set of views, and the underlying sentiments and reasoning, of a segment of Europeans that point just in the opposite direction, and indicate that, for them, the euro is certainly more than a “convenience.” Furthermore, I would argue that if people from a particular country in a comparatively weak and critical position in Spain, stand up and stick to the basic tenets of a grand strategy of preserving the Eurozone and remaining in it, we could infer that other countries in a less weak and critical position are likely to take a similar attitude the more they become aware of, and touched by, the crisis. If so, then, there is some basis to consider the crisis as an opportunity to move forward with a qualified support of the public, provided the public’s reasons and feelings on the matter are well understood. In contrast, if conditions of weakness and crisis in a country deteriorate, they may cross a threshold beyond which the previous argument, as it stands, could not apply. Keeping in mind these conditions, I shall consider some empirical evidence concerning the public’s attitudes in Spain. I show that people in this country have a special feeling for the euro and for being part of the Eurozone. I shall go from this feeling to the underlying reasoning that links interests, values and a sense of one’s own identity, ultimately leading them to a practical conclusion, in this case, a commitment to stay in the Eurozone, as if this belonged in the natural, and moral, order of things so that, for them, being forced to leave would result in a deep sense of disappointment. This sentiment was present right from the start, when the crucial decisions related to the formation of the Eurozone were made. In  1997, Analistas Socio-Políticos, a Spanish research center, carried out two public opinion surveys on the euro, whose responses showed a fairly positive attitude to the entry of Spain in the Eurozone.3 In a nutshell, the data show rather large majorities supporting the idea that the euro opened the door to Europe for Spain (60%), that it enhanced the value of being European (45% versus 21%), that it was the strong currency needed for the twenty-first century (53%), that it made Spain stronger (48% versus 25%), and that it linked Spain to a prosperous Europe (61%). A series of group interviews carried out by Analistas Socio-Políticos in 1997 helps us to understand the arguments and feelings behind the survey responses at the time (Rodríguez and Álvarez-Miranda 1998). Applying a projective play technique, the EU was imagined to be like a common house: an apartment block housing a community of neighbors: some of them wealthy, some less well off, some in spacious flats, others in smaller flats, some on the upper floors, others lower down, with a certain hierarchy but all living together and sharing important common interests, such as the upkeep of the building, each one responsible for his/her own house, but all subjected to rules of good neighborliness and mutual aid.

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At the time, those participating in the groups were optimistic about the future and, in particular, about the introduction of the euro. It was assumed that people would easily get used to it, in much the same way they got used to the currencies of different countries when traveling abroad. The loss of the local currency, the peseta, was seen as a tolerable experience. It meant leaving behind the symbol of an economy that had undergone mixed fortunes without raising much enthusiasm. Banks, companies, and the commercial services would have little trouble adapting to the new currency. The problems for young people and future generations would be minimal. After a short while, the euro would become a fact of nature, all the more so when people began to realize that adaptation went hand in hand with changes in most people’s financial culture. No longer would they be limited to using a current account or a savings account; they would extend their dealings to financial assets, investment, and pension funds; fluctuating interest rates; shares; and investment in property. With the euro came an opportunity to benefit from a more united economic Europe, in which the common market was frequently confused with the Eurozone in its strict sense. This greater economic unification had several advantages, for foreign trade and tourism, for people taking up work in other countries, especially young people. It was also assumed that there would be lower inflation, monetary stability, and liberalization of the markets. Although some mentioned the risk of an intensification of Spain’s de-industrialization, topics such as competitiveness, productivity, exports, flexibility of the labor market, education, and innovation were conspicuously absent from public debate, as reflected in these interviews. Mostly, talk was about inflation and stability, public deficit and public debt, as if the participants imitated the macroeconomic rhetoric of the experts and politicians that had dominated the debate on economic policies since the mid-seventies, and had learned a lesson from them. Thus, one could be proud of having been a good pupil and having done one’s homework on time, even reminding others (in this case, supposedly, the Italians) that what had to be done was to fulfill these fiscal and financial requirements without delay and not play at trying to get a last minute moratorium (an allusion to what was, supposedly, José María Aznar’s message to Romano Prodi in 1996). Beyond these economic advantages, other more complex ones could be made out as it was assumed the euro would help the Spaniards to get used to greater compliance with the rules of the game. This involved a certain process of disciplining the customs of some of them, who were looked on by the participants in the group meetings with some suspicion, as people who were tempted or accustomed to flouting the rules. The institutions of the EMU therefore seemed conducive to civilizing people. Likewise, by joining the EMU it was assumed that there would be less dependency on and subordination to Spanish politicians, who were seen as somewhat corrupt, extravagant, opportunistic, or incompetent. The EMU would create the conditions for improving the quality of these politicians,

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increasing the degree of transparency, and obliging them to account for their actions, both at home and abroad. It was also hoped that reciprocal knowledge between the different peoples of Europe would be intensified in order to learn from the experiences of others by imitating their success and avoiding their mistakes. The Spaniards’ disposition to declaring themselves ready to abide by the rules and eager to learn from others suggests a range of interpretations. An extreme view would portray the Spaniards willing to imitating Ulysses’ strategy of tying himself up to the mast; a more tempered view could just confine itself to portray the Spaniards as people ready to imitate the best practices around and to be led in the right direction. Finally, there was probably another more forceful reason to account for the Spaniards’ pro-euro attitude, a kind of existential advantage. A point seems to have been reached where these Spaniards could not imagine themselves as not being part of a stronger European economic union. If we go back to the projective game of the apartment block (see above), being outside the EMU was like being homeless and living on the street. Their house was Europe. To use another metaphor: once out of the European boat “the country would sink.” If it were no longer possible to tread common ground, “we would fall deeper into the abyss.” It was cold outside. Outside, there was no life. Being inside had become part of the natural order of things. It is no accident that these Spaniards uttered such categorical expressions. They reflected deep feelings about a way of life that seemed inevitable (a destiny), yearned for (a decision) and essential (a need); hence, being part of Europe looked like being part of the natural, and moral, order of things. A destiny, a decision, a need: there was no substantial difference in the way those words, or their equivalents, were repeated between people on different economic levels or in different regions. The situation was also similar regarding the supporters of different political parties, for example, voters of the Socialist Party (PSOE) or the People’s Party (PP). Of course,  party differences emerged if a single, straightforward question was asked, phrased in the plain terms generally used in opinion polls, such as “Who (by this meaning, which party) should take more credit for joining the EMU?” However, in conversations, these differences were drastically diluted and the tendency was even reversed; it was no longer a question of approving of some parties more than others, or at the expense of others, but of being fair and recognizing the merits of all parties, in the context of a sequence over time of opportunities that have been taken by each party in its turn, that is, the signing of the Act of Adhesion to the EU in 1985 (PSOE), the steps taken toward tax consolidation (first the PSOE and then the PP) and finally the adjustment of policies to fit the EMU entry criteria (PP). In this respect, it appeared as if what the politicians had done in order to join the EMU had been done relatively well; they did what they had to do and could not really have done it any other way. In fact, the path they were on went back a long way, not only to the transition to democracy in

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the seventies, but also to the changes that had taken place in the fifties and sixties (and even before) such as Spanish emigration to Europe, European tourists visiting Spain, and growing economic and cultural exchanges. The entire master narrative of the Spaniards regarding their experience during the last half a century fitted in with adopting the euro and entering the Eurozone. It was the proper finale for a complicated story leading to a Europeanization cum modernization, and a solution to an unresolved and half finished task attempted by Spain so many times, which now seemed to be reaching its culmination. People did not mind losing some sovereignty over local affairs in exchange for the expectation that they would eventually have more say on European matters, which would come, in time. This sense of anticipation was boosted, afterwards, by the fact that, in  1998, when Spain entered the Eurozone, it did what had appeared to be impossible to do a few years before. Dire predictions like “we’ll never join” became things of the past. This fin de siècle was time to look to the future with greater optimism.

Fourteen years later: A major crisis, and a chastened but resilient, faithful public Let us see how things stand now, 14  years later, in a context of deep economic crisis. A recent survey of Analistas Socio-Políticos shows that similar questions elicited rather similar answers, and that the positions in favor of the euro we observed in  1997 have changed relatively little.4 In 2011, the majority still agree with the statement that the euro enhances the value of being European (50% versus 37%) and believe it is the strong currency needed for the twenty-first century (49% versus 37%). True, feelings are mixed in regard to thinking that thanks to the euro we are in a more prosperous and competitive Europe (45% versus 44%), and we are referring to an opinion in flux, in the middle of a very disquieting economic situation. Yet the favorable attitude to the euro seems clear, and has been further corroborated by other surveys. Thus, a recent poll (fieldwork done in March, 2012) shows a majority of people in the Eurozone in favor of keeping the euro as their currency: 66 percent in Spain, but also 71 percent in Greece and 52 percent in Italy (versus 40%), 69 percent in Germany and 60 percent in France (Pew Research Center 2012). It is worth noticing that the Spaniards’ responses in the 2011 survey by Analistas Socio-Políticos come hand in hand with a remarkable readiness of the Spaniards to abide by the game rules of the EU. Thus, 60 percent agreed to the implementation of a constitutional reform that commits the Spanish state to fiscal austerity in regard to the public deficit, and 59 percent (versus 34%) would apply the same rule to the public debt. In addition, 59 percent (versus 36%) agreed with the scope and urgency of such measure, which,

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in fact, was passed by Parliament in September 2011. Furthermore, broad majorities considered that countries that did not behave according to those norms should be subject to sanctions: the EU should control their budgets (81%), and they should see their voting rights curtailed (56% versus 39.5%). The corollary of this attitude is a strong disposition to accept a strong system of European governance that would control the budget policies of the national governments in order to save the euro (77%). That said, people are aware that political ideals may differ from political practice. Sticking to Europe’ rules comes hand in hand with giving a cold look to the performance of the European leaders. Spaniards want more European governance, in general, but are skeptical regarding the capacity of current European authorities to implement an effective policy vis-a-vis the economic crisis. A large majority think the present European system of governance has demonstrated neither effectiveness (78%) nor solidarity (61%) in the way it has handled the crisis. At the same time, however, when taking a long view into the future, many Spaniards believe that in the next twenty years European institutions will have more weight than national governments (44%), rather than thinking that the current equilibrium between the European authorities and national governments will stay (19%), or that there will be some devolution of power to national governments (24%). Things being this way both in normative terms (the way things should go: Spaniards should abide by the EU/EMU rules) and in empirical terms (the way things will go anyway: to more European governance), the conclusion follows that Spaniards consider being “in the house of the euro” like being, for them, in a natural, and moral, order of things. Thus, it would be both undesirable and unlikely, and possibly, indeed, unthinkable, that Spain will not be part of that order. The fact is that 85.5 percent of Spaniards think it is totally or very unlikely Spain will get out of the euro. Such responses suggest a remarkable continuity in the Spaniards’ attachment to the euro between 1997 and 2011, but also, quite probably, in their reasoning and their feelings behind those answers. If this is the case, then we may have a glimpse of the basic disposition of the Spanish people, that frame their understanding of, and reactions to, the current crisis. That understanding is made up of both normative and descriptive components. In the face of a hugely complex, indeterminate, and unpredict­ able system of factors, people may resort to a variant of what Luhmann (1982) calls a normative, regulatory mechanism, or predictor, aimed at compensating for the inevitable disappointments that derive from such a system. Instead of acknowledging how little is really known, and making the best of it, a course of events is prescribed and orders are issued about “what should be done” in order that “what should happen” happens. But here, the Spaniards’ existential decision to stay with the euro seems to rest on a fair dose of realism, and a no-nonsense narrative of why and how events have led to the current situation. Their understanding may be limited, but

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still people are aware, for instance, of the financial problems linked to the housing market bubble, and know that the general rule that one cannot live beyond one’s means applies to governments that exceed their revenue, to banks whose accounts conceal the devaluation of their assets, and to house purchasers who take out excessive mortgages; indeed, they do know this rule applies to the Spanish government, the Spanish banks, and the Spanish consumers (Pérez-Díaz and Rodríguez 2010). Some observers tend to think very complex situations are beyond the capacity of ordinary people to grasp, leading them to be overly sensitive to demagogic or populist policies. However, the above discussion on the reasoning and sentiments underlying the Spaniards’ joining the euro and their resilience to abandoning it, as well as, more in general, managing the crisis, suggests otherwise. It points to the possibility of gathering popular support for sensible and decisive public action in the face of a crisis, provided an effort is made to explain and take into account the reasoning and feelings of the public, country after country. Now, let me shortly conclude pulling together the various strands of my argument. Today’s mix of deep, intricate, and acute problems challenges Europe’s capacity to solve them. Still, even if we look into one of the weakest links in the system of European agents, namely, ordinary people in a fairly vulnerable European country such as Spain, we may observe that they have a sensible measure both of understanding and of a civic commitment to the European project. These findings could probably be generalized, and to the extent they are, they should, I think, provide some basis for a guarded optimism regarding the ability of the EU to handle the challenges it faces; particularly if the elites’ good sense and civic virtue matches those of the citizens, and both, knowing their limits, help each other to accomplish their common tasks.

Notes 1 In this section, I am indebted to the discussions having taken place at a series of International Colloquia, sponsored by the Faes Foundation, Madrid; see Pérez-Díaz 2012a. 2 This societal mix emerged in the transition from early to late modernity in the West and roughly corresponds to the original, broad conception of civil society (Pérez-Díaz 2011). 3 These surveys were carried out in November and December 1997, to samples (1,500 people each) representative of the Spanish population 16 years old and over. 4 The computer-assisted telephone survey was carried out in September 2011, on a 1,400 individuals sample representative of the Spanish population 18 years of age and over; the questions on the euro were only asked to different halves of the sample. For an extended discussion of the results see Pérez-Díaz, Mezo and Rodríguez 2012.

C HA P T E R 13

Between illusion and disillusion: Public opinion facing the euro crisis Nando Pagnoncelli

Introduction On 1 January, 2002, the euro entered into circulation in  12 countries of the EU: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, and Spain started the process of monetary unification. Seventeen states have now adopted the single currency (the initial 12 countries were subsequently joined by Cyprus, Estonia, Malta, Slovakia, and Slovenia). The history of the current European Union has its roots in the second postwar period, with the creation of the European Coal and Steel Community, which then, in 1957, became the European Economic Community (EEC) with the signing of the Treaty of Rome. The EEC was offspring of the desire for a long-lasting peace, which would be founded on the political and economic cooperation of the European nations. This was the birth of the concept of “single market” founded on the free trade and on the free circulation of goods. The process of removing all of the barriers to trade has of course been going on for decades: in 1968 all customs duties between the member countries were abolished, the Single European Act (signed in Luxembourg in  1986) launched a six-year program aimed at reducing the differences in the national legislations and at securing genuine liberalization of trade. At the end of the six years, in 1992, the Treaty of Maastricht ratified and regulated the four pillars underpinning what then became the EU: freedom

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of movement of goods, people, services, and capital. The process of introduction of the “single currency,” the euro, was specifically defined. But the process of integration did not end here: with the agreement of Schengen signed in 1995 the citizens of the member countries were at long last able to move freely within a frontier-free Union. Despite the failure of the project of a European Constitution, with the extension of the Union to 27 states and with the signing of the Treaty of Lisbon (2009) the EU is trying to assume bigger and bigger political, economic, and social responsibilities to promote the fair and harmonious development of the member countries. What the founding fathers1 saw as a “need” dictated by centuries of wars and rivalries, is for us today a reality that we almost take for granted and we sometimes forget how radically Europe and the way of thinking of its inhabitants has changed in little more than 50 years. The purpose of this chapter is to describe European citizens’ attitudes to the euro, highlighting the differences between states and the changes in public opinion from the introduction of the single currency up until today. How has the adoption of the euro been greeted? Have the expectations that accompanied the introduction been matched or, on the contrary, unfulfilled? How have people’s convictions changed over the course of time? Has the extension of the Union’s frontiers to new member countries altered the positions of the citizenship? What has been the effect of the economic and financial crisis that broke out in 2008? In short, what is the euro for the Europeans today and what will its future role be? There are many people who think that the EU coincides with the single currency. But can this single currency on its own be enough? Is it able to bear such a heavy load of expectations?

Before monetary unification It was the Treaty of Maastricht in  1992 that lay the foundations for the introduction of the single currency. This unification was endorsed from “above” by the European élites, rather than by a spontaneous process that started out from “below.” At the same time, it is evident that without the favor of the citizens of the member countries it would not have been possible to lay the bases for real integration. Before the introduction, the public opinion of some countries viewed the euro with skepticism. The national currencies were a symbol of identity and people’s attachment to them went beyond merely economic evaluations. The United Kingdom has always been the emblem of reluctance to adopt the new currency: the large majority of the population agreed to keep the pound (see Figure 13.1). At the start of monetary unification, not all the countries had the same trust in it. The biggest supporters of the euro were, on the one hand, states such as Italy and France, which had high public debts and needed a strong currency

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that would allow them to pay less interests, on the other, the smallest countries (the Netherlands, Belgium, and Luxembourg) who were in favor of it because of the opportunity it offered them to increase their purchasing power. Despite some perplexities, but with a general consensus, in  2002 the European citizens found themselves dealing with a new currency. The Eurobarometer surveys of May 2002 (see Figure 13.1) showed that the fears and the uncertainties of those citizens involved in the currency switch (new banknotes and new exchange rates) subsided in the months leading up to the entry of the euro. The favor for the newly adopted currency grew notably, touching levels never reached before. The success that was obtained in the Eurozone considered as a whole was surprising: at least two citizens out of three in each of the states declared themselves favorable. Italy is a very interesting example of how the opinions on the single currency have evolved over time. In the nineties, Italy was going through a serious political crisis and had a fragile economy: “Tangentopoli” was in full swing and there was a deep crisis in the public accounts. In that period Italians looked upon Europe and euro as a mean of salvation. Favor for the single currency—before and immediately after its introduction—was shared by the very large majority of the population, with figures very much higher than the European average (Figure 13.2). At a certain point, in the first six months of 2003, after people had actually experienced the effects of the new condition, the attitude changed: there was a sharp trend reversal and the decrease in those favorable toward the single currency reached an all-time low in 2008 with the explosion of the crisis, though remaining in line with the European mean, and rising back up immediately afterwards. 0.9

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As we have seen for Italy, also other countries experienced a fall in their support for euro in the aftermath of its introduction. The main drawback of the “handover” between the old national currencies and the new currency was the perceived high level of inflation. Right from the beginning of 2002, the citizens of the Eurozone reported an unchecked growth in the prices of consumer goods. The perceived increase was markedly higher than that recorded by official statistics and surveys: in  2002 annual inflation in the EU was estimated at 2.1 percent, in line with the previous year (Figure 13.3). According to public opinion, the single currency and the laxity of the controlling authorities were the cause of the worrying phenomenon. It appears important to point out that the official figures are based on a “shopping basket” of goods that does not necessarily reflect the consumption habits of all the citizens. What is more, supposing that people’s perceptions with regard to inflation tend to be affected more by price increases than by price falls and that these increases mainly concern frequently purchased items, it is easy to explain how the figures estimated by the statistical institutes could differ from the perceptions of the man in the street. Furthermore, it is HICP - all items - annual average inflation rate Annual average rate of change in Harmonized indices of Consumer Prices (HICPs) 5.0

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Figure 13.3  2001–02 average inflation rate. Source: Eurostat http://epp.eurostat.ec.europa.eu/tgm/graph.do?pcodetsieb060& languageen.

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important to remember another fact explaining the two-fold interpretation: in 2004 Del Giovane and Sabbatini of the Bank of Italy wrote that the media have devoted exceptional attention to the trend in prices and to the contrast between consumers’ perceptions and the official statistics . . .; sharp increases in the perceptions have coincided with unprecedented peaks in the number of articles in which key words closely connected with this debate appear. This suggests that the link of reciprocal influence between the perceptions of inflation and the media coverage of the phenomenon can have played an important role. In any case, the price issue influenced and still, and notably, influences the stances taken by the citizens toward the euro. At the same time, one argument given less emphasis by politicians and the mass media has been the positive influence of the euro on the costs of debt.

European public opinion between 2003 and 2011 In the foregoing pages we have briefly described the consensus that, at the dawn of the introduction of the single currency, hallmarked Europe and, in particular, Italy. The project of European integration engendered a great deal of expectations for the future. We shall now proceed by analyzing the trend in European public opinion from 2003 to the present day, paying special attention to two specific moments: the years that immediately followed the introduction of the euro and the more recent time, marked by the decline, albeit provisional, of the European Constitution following its rejection at the Dutch referendum, and by the international economic crisis. On the basis of the data supplied by the Eurobarometer periodical survey, we shall try and describe more analytically and in greater detail the trend in public opinion, paying special attention to the following themes:  the

sense of belonging to the EU

 what

Europe means to its citizens and the relationship between euro and European identity

 the

euro and the economic crisis

We shall also offer some thoughts on the Italian case. In the past 20 years, in fact, Italy has gone from being one of the most pro-European countries and one with great expectations from the euro to taking up, in the past few years, the positions of the “eurosceptic” countries.

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The sense of belonging to the European Union The sense of belonging to the EU has fallen drastically over the course of the past 20 years (see Figure 13.4): if in 1991, 71 percent of the European citizens considered it a good thing for their country to form part of the European Community and only 7 percent deemed it a bad thing, in June of 2010 this percentage had fallen to just below 50 percent whereas 18 percent considered it negative. As the graph printed below shows, this figure fell sharply in the nineties, reaching two negative peaks in 1996 and at the beginning of 2001 (pre-euro). Responding to the need for a European identity, the introduction of the single currency had the effect of driving this figure upward, although still a bit up and down, right up to October 2007. From April 2008, when the economic crisis started to affect the Eurozone too more severely, the sense of usefulness of belonging to the EU fell once again, dropping by 9 percentage points in three years (from October 2007 to June 2010). This trend is probably due to two political factors: on the one hand, the economic crisis has in part put the acceptance of the free movement of labor (Schengen) into question, leading eurosceptic and nationalist movements to have much more say precisely because of people’s fears of losing their job; on the other hand, the national governments have increasingly used the EU as a “scapegoat” for unpopular choices of internal economic policy, thereby contributing to decreasing their citizens’ sense of belonging. On top of all this has been a general reduction in the political desire of many European countries for a process of integration that will go beyond a common monetary policy and that will, as a result, oblige them to give up part of their national sovereignty. This aspect has become particularly evident in the process of adoption of the European Constitution, which after having been rejected in a referendum held also in France in May 2005, has provisionally been set aside and replaced by a Treaty that has much less symbolical value for public opinion. As already mentioned, Italy represents an example of how the investment, in both symbolical and practical terms, of the national politics drastically influences public opinion. The percentage of Italians who consider the belonging to Europe to be a good thing has fallen, over the last ten years, by 19 percentage points (Figure 13.5). For this reason we consider it to be particularly interesting to explore the national dynamics that have brought about to this decrease. In Italy, the introduction of the euro had the backing of all of the parties in the political spectrum (except for just a few, like Lega Nord) and of the media, which supported the introduction of the euro. The communication strategy place more emphasis on the symbolical and emotional aspects than on the rational ones. In particular, the fact of being to belong to the leading group was a challenge for the country’s national pride and something to leverage on in preparing the way for an improvement in the public accounts. What is more, the fact that Italy’s unification had taken place more recently

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Source: Adapted from European Commission 1991–2010 (Eurobarometer results).

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Figure 13.4  Support to EU membership.

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Generally speaking do you think that (your country’s) membership of the EU is ...?

A bad thing

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Source: Adapted from European Commission 2001–11 (Eurobarometer results).

Figure 13.5  Benefits of EU Membership.

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compared with other European countries did not act as a “brake” on the process of European integration. At the same time, some elements had already emerged that were strongly critical of the euro: the fear of unjustified price increases; the sense of inadequacy of the Italians in relation to the country’s need for “outside constraints” to enable it to initiate any deep changes; the projections of the perceived advantages for entities remote from the ordinary citizen (large banks, big companies, freelance professionals, the large retailers, etc.); and of penalization for workers on fixed incomes, pensioners, artisans, traders, and small businesses. These fears, not correctly managed politically and accompanied by the above-mentioned phenomenon at European level (decrease of international political investment in the process of European integration, fears with regard to the extension to include the East European countries) led, between 2002 and 2008, to a steady fall in the perception of belonging to Europe as being a good thing for Italy. In the first year that followed the introduction of the euro, the fall was probably caused by the already mentioned distorted perception of the effects of the euro on inflation, compared with the official statistics at least. Looking then at a more recent period, it is interesting to note that in 2008 (coinciding with the electoral victory of the center-right) only 38 percent of the Italians considered it an advantage to belong to the EU and probably in part influenced precisely by the national electoral campaign, whereas following the first signs of economic crisis the figure starts to move up again. The similar trend of Italy and the European average from 2008 onward can be linked back to the progress of the economic crisis: although Europe seemed to be initially less affected by the crisis than the United States or Japan and so its citizens viewed it as a stable “rock of salvation,” when in 2009 the effects of the crisis started to make themselves felt more noticeably in the Eurozone too, the perception of being protected by their country’s belonging to the EU drops drastically. Some factors also emerge that reduce the credibility of “economic Europe”: the problems of solvency of the Irish banks, the approximation of Greece’s debt, and public accounts. The analysis of the historical series of the opinions of Europeans and Italians highlights how, in the absence of any European integration that goes beyond the common currency, the sense of belonging to the EU becomes more and more linked to market fluctuations rather than to political, cultural, or idealistic convictions.

What Europe means to its citizens Further points for thought on the relationship between euro, Europe, and citizenship, are offered by an analysis of the meanings attributed to the term “Europe.”

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First of all, Europe means “freedom of movement within the extended frontiers for travel, study, or work” (45%), then “euro” (38%). These figures are constant over time, so much so that freedom of movement has been in first place and the euro in second place since 2004. Free circulation is mentioned, in particular, by the countries of the North (66% Sweden, 65% Finland, 58% Denmark) and by the Baltic states (63% Latvia, 62% Estonia, 61% Lithuania), as well as by Luxemburg (63%), Slovakia (61%), Slovenia (60%), and Bulgaria (59%), and is in general more important for the new member states (54%) than for those belonging to the EU15 (42%). The euro is, on the contrary, more mentioned in the countries belonging to the Eurozone, where it is the first aspect mentioned (47% against the 45% for free circulation), whereas it occupies third place in the countries that do not belong to the Eurozone (21%) (see Figure 13.6). Euro and Schengen area catalyze therefore the attention of the Europeans, for a large part of whom they signify Europe. Although, on the one hand, this fact confirms the idea that the introduction of the single currency has served to not only achieve economic objectives but also, on the symbolical level, to act as vehicle of belonging to the EU, on the other it highlights the lack of a European culture that is capable of going beyond free circulation and the single currency. It is as if the process of European integration had stopped at the bursts of enthusiasm of the nineties. It is in fact interesting to note that all the elements that can be linked back to an idea of political or social Europe, seem to be much less associated than the single currency: only one European out of five associates with the EU concepts such as “a strong say in the world,” “democracy,” “peace,” “cultural difference,” and only 9 percent “social protection.” At the same time, mention is also made of some of the arguments usually used by the “eurosceptics”: for 24 percent Europe signifies “a waste of money,” for 21 percent it means “bureaucracy,” for 18 percent “insufficient control of the external frontiers,” whereas less frequent reference is made to “unemployment” (14%) and “loss of cultural identity” (11%). A historical analysis of the question on the meaning of the EU also reveals decreases over time for all of the elements associated with the idea of political and social Europe, indication of a weakening of the European culture and of an idea of Europe that goes beyond the more purely economic aspects: between October 2004 and May 2011 the idea of free movement has fallen by 8 percentage points, democracy by 5 points, and Europe’s role in international politics (“a strong say in the world”) falls by 10 points, the same decrease being recorded by cultural diversity too, as displayed by Table 13.1. A further confirmation of how citizens have moved away from the idea of Europe as a political entity is the high level of abstention at the last European elections (2009): the average turnout of voters was 43 percent, the lowest figure ever recorded. The most disappointing aspects was the

0%

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Source: Adapted from European Commission 2011c.

Figure 13.6  The meaning of the EU.

Other

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What does the EU mean to you personally? - Multiple answer

45%

45%

50%

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Table 13.1  Meanings of the EU 2004–11 What does the EU mean to you personally? Political/Social Europe

Oct-04

May-11

∆ 2011–2004

Freedom to travel/ study/ work anywhere (EU)

53%

45%

−8%

Stronger say in the world

31%

21%

−10%

Democracy

25%

20%

−5%

Social protection

12%

9%

−3%

Cultural diversity

30%

20%

−10%

Peace

36%

22%

−14%

Source:  Adapted from European Commission 2004–2011 (Eurobarometer results).

participation of the citizens of the “new Europe,” with Slovakia recording the lowest turnout (19.6%) Things went no better in Lithuania, Rumania, Poland, the Czech Republic, and Slovenia (below 30%). Turnout was low, too, in Hungary, the Netherlands, and Portugal (36%). Less than one elector out of two went to vote in France (40.6%), Germania (42.5%), and Spain (44.9%). In Italy too, turnout falls to a figure of 66.5 percent, still higher than the European mean, but 6 percentage points less than the 2004 elections, when the turnout had been 72.9 percent. The high abstentionism confirms the vision of public opinion—albeit with specific differences from country to country—that increasingly sees Europe more as technocratic, purely economic, and remote from the needs of the ordinary citizens. The Parliament, the body that represents the citizens, looks more and more to be in difficulty, not having a central role in the complex system of institutional balances that regulate the working of the EU. While the sense of cultural and political belonging to the idea of Europe is decreasing, the last few years have seen an increase instead in euroscepticism. As already pointed out, following the economic crisis that affected many European countries, ultranationalist and openly eurosceptic movements have been gaining ground. The year 2009 saw the arrival into the European parliament of a group called “The Europe of Freedom and Democracy Group” (EFD) (which also includes the Italian Lega Nord party), whose goal is the defense of the special qualities of the nation-states and which openly opposes greater European integration. There is no doubt, however, that the Eurobarometer figures seem to confirm that the eurosceptic ideas hold greater appeal for Europeans, above all from 2008 onward (Figure 13.7). Looking at the trend in the more

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The meaning of ‘European Union’: negative attributes - Multiple answer

Figure 13.7  Negative meanings of the EU 2003–11.

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negative meanings attributed to Europe we can, in fact, see a fall in the mentions on all of the items between 2003 and 2008, followed by a new upward trend from 2008 up until today.

The euro and the economic crisis After its creation, the consensus for the European Monetary Union and the single currency has continued to remain more or less stable, with 60–65 percent of the European population favorable. The financial crisis seems to have changed the attitude of public opinion. Although initially the euro had been regarded as a “life-jacket,” its stability and performance in respect of the other currencies—of the dollar in particular—being evaluated positively, when the effects of the crisis fully manifested themselves in Europe too, there were many who missed the “freedom of manoeuvre” that national monetary markets would have allowed. In the Eurozone, in fact, from 2007 to 2010, a drop of 5 points (from 72% to 67%) was observed in the percentage of those who considered the adoption of the euro a good choice for Europe (Figures 13.8 and 13.9). From the sociodemographic point of view, in 2010 (last Eurobarometer surveys), the biggest supporters of the euro as positive opportunity for Europe, despite the crisis, are still the men (71.9%), the young people (72.8% of the under 25), those with a university education (76.7%), those who live in metropolitan areas (70.9%), white-collar workers (72.2%), and self-employed workers (71.7%). The elderly, the less well educated, and those employed in unskilled jobs have more difficulty in grasping the benefits of economic integration with Europe, especially since they are the ones most affected by the crisis (those in favor are less than 64% in each category). At the moment therefore, although it still enjoys “good health” in terms of public opinion, the euro seems to have exhausted its symbolical effect of driving people to feel a greater sense of belonging to Europe and of spreading a common culture, so much so that only 22 percent of the citizens of the member countries consider that the euro makes them feel more European (Eurobarometer datum stable from 2007 to 2010). It can rightfully be stated that the slow-down in the process of European integration that should have followed the adoption of the single currency, has brought public opinion to consider Europe more and more as a purely economic and technocratic institution, distant from the citizens and with the sole purpose of imposing constraints on the national sovereignties, constraints regarded more and more as “annoying” and unjustifiably coercive.

0.67

Sept 2010 (EU 16)

Source: Adapted from European Commission 2007–10 (Eurobarometer results).

Figure 13.8  Consensus to the euro 2007–10.

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Figure 13.9  Consensus to the euro in 2010.

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Generally speaking, do you think that having the Euro is a good or bad thing for Europe?

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Europe and euro between illusion and disillusion There is no doubt that Europe is going through a deep crisis. The current difficulties involve both the economic and the political dimensions of the Institution and have direct effects on the citizens’ perceptions: after just under a decade of convinced support, the public opinion of vast areas of the Old Continent is viewing the EU with skepticism. An analysis of the state of the art cannot ignore the current economic situation in the Western world: the financial crisis that exploded in 2008 and the consequent recession of the real economy have drastically conditioned the way the European countries act. Nor can we omit to mention the epochal change in the relations of strength between the global economic powers – a phenomenon that predates the collapse that started three years ago and has not yet ended –, which marks the loss of wealth of the opulent countries (above all North America, Europe, Canada, Australia), to the advantage of the emerging ones (first of all the so-called BRICS countries: Brazil, Russia, India, China, and South Africa). This trend is confirmed, and this is not a recent phenomenon, by all the parameters used to measure an economy and a society: GDP, investments and their efficiency rate, employment and unemployment rates, poverty, birth and death rates, industrialization, migration from the country areas to the cities, working conditions, the price of goods, the presence of a middle-class with purchasing power. Albeit with different (in some cases opposing: we only need to think about the Indian pluralist democracy and about the People’s Republic of China) approaches, these countries continue to improve their own standards of well-being and are shortly destined to match the Western levels. They are evolving at an intensity such that, at a time of great fears for the public debt of the Eurozone and for the single currency, the BRICS have declared that they will meet in Washington to discuss the situation and evaluate ways in which they can offer support to the EU (statement by Guido Mantega, Brazilian finance minister, 13 September, 2011). The historical significance of the news appears evident. In such a difficult and complex situation, Europe displays uncertainty. In the eyes of its citizens it appears to be groping its way along without having a clear idea of its destination and, even less so, the routes to follow in order to reach it. In the presence of dynamic competitors, determined to assume a primary role on the world’s chessboard, the EU is twisting itself around its own problems. The model of society that the member countries have always referred to, characterized by the compromise between equality and freedom, by a strong and articulated social state, by the ideal of equal opportunities at the outset, by the crucial role of culture and of scientific research, is being questioned. The risk for some countries (first of all Italy, less for Northern Europe) is that the gap between the social classes gets wider and wider and the system of re-distribution between the moneyed classes and the middle and

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poor classes becomes less effective—with the result that paradoxically the rich would get richer and the poor poorer. Eurostat data about EU15 countries2 indicate that, although relevant differences among countries, on the average income inequality (decreased between 1995 and 2000: the ratio between the richest quintile and the poorest one has fallen from 5.1 to 4) have been increasing in recent years. In  2009, the richest-to-poorest quintiles reached 4.9, with a constant growth rate independent from the crisis (4.7 in 2006). In the Old Continent the crisis of the real economy is one of demand rather than supply: the main problem is not a deficit in production capacity and therefore a lack of goods, but instead the decrease in purchasing power, consumption, and investments. The levels of productive activity are lower than what could have been reached making full use of all the factors available, more out of fear of seeing the products left unsold than due to any shortage of raw materials and means of transformation. People often do not have the means they need to satisfy their own needs. In particular, the younger generations in many European countries are struggling to fulfill their aspirations. As the Eurostat figures highlight, the European average rate of unemployment among 15- to 24-year-olds has increased by more than 5 percentage points in just four years, touching 21 percent in 2010; in particular almost 42 percent of the young people in Spain cannot find work (in 2007 the figure was 18%). In this context, it is easy to imagine why young people, relegated to the margins of society at the very time of their lives when they probably have the most energy to burn (the Spanish phenomenon of the indignados is emblematic), stop pursuing their dreams and find themselves excluded from the circuit of training of work. According to recent Istat (the Italian National Institute of Statistics) surveys the phenomenon of the 15- to 29-year-old NEET (Not in Education, Employment, or Training) is steadily increasing throughout Europe, and in Italy in particular (in this country, in  2010, 22.1 percent of the young people in the 15–29 age group were NEET). The EU is felt to lack a policy capable of pursuing the common good, unblocking the situation of stalemate, and triggering a virtuous circuit. The economies of more and more of the 17 states that comprise the Euro area are at risk: Ireland, Greece, and Portugal have all gone very close to bankruptcy before being bailed out by European and international organisms; Spain (which registers the highest rate of unemployment) and Italy (which “boasts” the largest public debt) have lost credibility in the eyes of the institutional investors, requiring the ECB to intervene by buying state bonds. The risk of some of them leaving the euro and of the single currency coming to an end is a realistic prospect. These criticalities have highlighted how much the EU lacks a strong political leadership and how, when political decisions are made, the interests of the community are still subordinated to those of the individual states. As a result the decision-making processes are often slow and unsuitable. One example is the previously mentioned case of the initial resistances of Germany (the largest economy of the Old Continent) to help Greece, due also to reasons of internal policy, including the loss of

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consensus of the governing coalition and the diffidence of its electors toward Europe and in particular of some countries in the Euro area. The questions are licit: in the face of the difficulties (from which no social system is immune), why does part of the public opinion, but also the ruling class of some countries, react by questioning the EU instead of clinging to it? Why is it often a scapegoat? Why is it understood by many as an obstacle to the well-being of its peoples? In the writer’s opinion, the benefits that the institution brings are not shared for two types of reason: one more theoretical, the other more practical and technical. With regard to the first group of reasons, it is considered that people’s growing diffidence stems from the lack of a real and proper supranational debate that, based on a comparison between different points of view, will retrace the process of unification and explain the reasons and the end-purposes of the founding fathers. The conviction is that a gap in communication exists between those who led and still lead the construction of the EU and those who “live” it by being citizens of it. The sharp variations that, over the course of the last few years, have characterized the sentiment of the European population vis-à-vis integration are typical of unstable opinions, dependent on the circumstances, rather than fruit of reflections that have evolved into deeply felt convictions. The cornerstones of the long journey, from the Ventotene Manifesto of Rossi and Spinelli, passing through the Treaty of Rome, the agreements of Schengen and the Treaty of Maastricht, and ending with the Treaty of Lisbon, are not shared because perhaps little known. It could be useful to clearly emphasize the common history, the so many aspects that brought the peoples of this geographical area together, to stop them being questioned any more. Completing the reconstruction of Europe after the two world wars by eliminating the possibility of fresh conflicts between the nations and laying the bases for a prosperous future was not the crack-brained idea of a visionary but instead a need. The Customs Union and the free circulation of goods and people did not place the security of the states at risk but instead aided their economies and fostered trade between them, promoted the diffusion of knowledge and increased the cultural wealth of the citizens. The adoption of the single currency aimed to further increase economic interdependence and trade between member states (this latter being historically a cause of economic growth), price uniformity and limitation of inflation. In the perspective of a changeover from a bipolar system to a multipolar system of large planetary powers, following the path of political and military integration guaranteed greater defense of the EU’s own interests and afforded significant geo-political “clout.” The more pragmatic and technical reasons depart from one essential presupposition: the benefits of belonging to the EU are not perceived by the public opinion because often, the result of an excessively technocratic system, they are partial and, in some cases, totally disappointing. The economic crisis that we are still going through has highlighted even more the inability

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to react with harmony and efficacy: the EU (in theory a political entity sui generis of a supranational and intergovernmental character, to whose institutions the member states should delegate part of their own national sovereignty, whose competencies would concern very many aspects, which include defense, economic policy, foreign affairs, social policy, agriculture, trade, and the environment) is in effect an entity founded on its currency. The currency risks being the only real, familiar, and symbolical element of the Union. The fetish that catalyzes expectations and criticisms. Although initiated, economic integration has not yet been completed. The economic policy is formed of complex and closely connected actions. There are many aspects it leverages on: fiscal, monetary, “industrial,” energy-related, scientific (research and development). In Europe, on the other hand, economic policy seems to coincide with monetary policy. The citizens often perceive the currency as the only tool available to the Union for regulating the economy at community level. The other dimensions of economic policy are negotiated with the individual national bodies, which act according to their own needs. There is no centralized coordination with regard, for example, to taxation or public investments, or to the labor market. The dangers for the general stability of the area that heterogeneity in satisfying common parameters and asynchronous economic cycles bring with them are plain for all to see. In this situation, it is no surprise if the ECB should appear as the current sole guarantor of a European style of thinking, a guarantor, moreover, that is severe, not empathetic and that does not have the powers that other central banks (such as the Federal Reserve (FED)) have. Its main purpose is to keep inflation under control, by managing the monetary base and fixing the shortterm interest rates. The ECB is not concerned with maximum usage and growth is not one of its tasks. The very recent purchase itself of the Italian and Spanish state bonds constitutes a new departure. In times of difficulty, without complete integration the currency is the only life-saver, but on its own it is not enough. The boat floats but is at the mercy of the current. Europe runs the risk of being perceived as a stepmother that brings public  accounts to order, giving decreasing benefits in exchange (and yet, as previously illustrated, those associated with the continental dimension are many). Political integration is stuck at the “thumbs down” given to the Constitution. Despite numerous requests and attempts, the European Parliament  (representative organ of the EU citizens), does not succeed in increasing its power vis-à-vis other institutions such as the European Council and the European Commission (put simply, the Europe of the Governments and the technicians). Integration in foreign affairs and military defense is nonexistent and the places where the decisions are taken are very much elsewhere. Some authoritative people (including Jacques Delors) believe that the euro and Europe are “on the brink” and that, to save themselves, the only alternative is to strengthen political and economic cooperation. Without undermining competition as stimulus to growth, it appears clear that greater solidarity between states is an absolute must.

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Europe should not be viewed solely as a need to face up to the global challenges but also as an opportunity for remedying the failures of the national policies. The economic supersession of the nation-states in favor of Europe, the changeover from a national to a continental dimension, is, however, first of all a cultural factor. A historical turning-point is that it will only be possible to achieve when it is shared by the majority of the European people. Moreover, many problems that afflict us today already have a continental character: not only the economic problems, but also immigration, social protection, the issues relating to security, and to foreign policy. Continental problems require a common European political response in order to be solved. Undoubtedly steps forward have been made from the postwar period up to today. There is, however, still a very long way to go: the policy of European integration has concerned for the moment the monetary policy, whereas the efforts to achieve political and social unification have still not been enough. No real relationship exists between the Europeans and Europe, something that can only be achieved by giving the European institution real political autonomy from the states that go to form it. Many have responded to the fear, both economic and social, by closing themselves off: a defensive withdrawal into the national or even regional dimension. The premises exist for the resumption of a “profitable dialogue” between institutions and citizens. As has been repeated several times, despite the support for the EU, the estimation of its benefits and the consensus for the single currency are falling. It is worthwhile emphasizing that the “capital of trust” in the EU is still present: more than half of the population is still trustful and positive when the discussion turns to Europe and the euro. However, difficult and complicated the current situation is, the citizens still look with optimism in particular to the future of Europe (optimism on the future of Europe: EU27 58%), especially the younger ones: in the 15–24 age group the figure reaches 68 percent. Never as in this case, is the hope for the future entrusted to the new generations, who, in fact, regard Europe and the euro more as an opportunity than as a threat. Today the idea of European citizenship already finds greater support among precisely these young people. Thanks to improving standards of education and greater ease of movement, it is precisely this age group who feel to a large extent European.

Notes 1 The reference here is to Konrad Adenauer, Winston Churchill, Alcide De Gasperi, Walter Hallstein, Jean Monnet, Robert Schumann, Paul Henri Spaak, Altiero Spinelli. For more information visit: http://europa.eu/about-eu/euhistory/1945–1959/index_it.htm. 2 Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden, the United Kingdom.

C HA P T E R 14

Back to the future? The euro and the EU silent constitution building Dario Castiglione

Introduction For the first time in more than 20  years it has perhaps become possible to imagine a breakup of the European Union (EU) and the collapse of its experiment in supranational governance. The crisis of the euro and the difficulties in finding a generally agreed solution to the sovereign debts issue have posed once again the question about fundamentals: what is the EU, and what is it for? The issue of definition has troubled EU politics for some time. The “what is?” question seems a necessary presupposition for both political understanding and political organization. In order to understand the way in which the EU works and is organized, there must be “something” that we take the EU to be. For a while, the obvious answer to this question was that the EU (or the various communities that have lead to it) was an international organization, which emerged piecemeal from a series of treaties and various agreements between an expanding number of countries in Europe. Its main object was the solution of problems of economic coordination and cooperation, while its underlying purpose was to prevent economic competition from becoming the ground for power politics between European nation states, whose destructive results were evident from the experience of the first half of the twentieth century. The

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growing importance of the phenomena and inner dynamics of economic integration challenged that perception and made the “what is” question more problematic. Famously, Jacques Delors once called the European Community “un object politique non-identifié.” This formulation signals a division between those who wish to treat the EU as a distinctive, almost unique, object of political research, situated in the middle between a “state” and an “international organization”; and those that dismiss with impatience such vague formulas, for they regard talk of exceptionalism as a way of obfuscating rather than illuminating political reality. As it often happens with the emergence of new phenomena, we are witnessing a battle between different approaches, different theories, and different political projects, with the likely result that both our knowledge and practice of politics will be affected by such disputes over what the EU “is,” or is “becoming.” The dispute over the nature of the EU has been complicated by two dynamic aspects of European integration, which have made the EU an even more elusive target. Both the geographical reach of the Union and its shared competences have progressively increased, without a clear sense of where the limits to such expansive processes lie. These dynamics, and their surrounding uncertainties, have generated a number of theoretical questions, which are not only concerned with what the EU is, but with what it ought to be. In particular, legal and political theorists have started asking questions regarding the legitimacy upon which the body of EU laws rests, and on the EU’s own specific identity. These questions came to the political boil, so to speak, at the start of last decade, and materialized around the debate on whether the EU needed a Constitution, for this was taken to define the empirical character of the Union as well as its values and aspirations. In the eyes of its supporters, the EU Constitution would have defined the finalité of the Union itself, while sanctioning once and for all its aspirations to be a fully political, even a state-like, entity. As everyone knows, that debate concluded with the political defeat of the constitutional gambit. And yet, it may be worth starting our discussion of the present financial and monetary crisis of the EU by reflecting on what happened, and what did not happen during the constitutional phase that opened more than ten years ago. The reason for doing this is that, as I shall try to suggest in the remainder of this chapter, the European constitutional debate was a missed opportunity, not so much because it did not produce a Constitution, but because it failed to clarify the terms of the constitutional issue. The focus of that debate was too much on institutional and symbolic issues, whose relevance is undisputed, but which ended up diverting the general attention from other, and more informal, aspects of the EU Constitution, which, if anything, have even more relevance to how the Union works and to its significance in the life of its citizens. Accordingly, in this chapter, I wish first to go over what the European constitutional debate of the last decade missed, and then look at how the EU silent Constitution, which mainly escaped public debate a decade ago, is now firmly at the center

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of the present crisis. Unless the EU and its citizens deal with these silent, but ever more visible, aspects of the EU constitutional fabric, the exit from the present crisis risks leading either to a political impasse or to increasing, and possibly dramatic, tensions within the Union itself.

A mistaken constitutional moment? When, at the beginning of the new millennium, the European institutions and the member states put in place the process to draft a European Constitution, the debate that ensued was as much about the substance of the constitutional document as the significance of the constitutional moment itself. Nonetheless, some important aspects of European constitution making were missed in that debate, or at least not enough attention was paid to those who raised them. One such aspect concerns the relationship between constitutional and normal politics, and how this also relates to the interplay between institution building and framework policies. It is worthwhile to return to such a discussion to better understand the nature of the present financial crisis as part of an on-going constitution-making process in Europe. One of the reasons given in support of a European Constitution, eventually named a “Constitutional Treaty,” and which, after the failure of the ratifi­ cation process, resulted in the Lisbon Treaty, was that the very making of the constitution would contribute to the legitimacy of the European integration process. Such a position was based on the idea that there exists a categorical distinction between constitutional and normal politics, and that the former has particular normative and legitimating properties. This, however, was an issue of contention in the debate of the time. Some commentators questioned whether constitutional politics, focusing discussion on the EU institutional framework, and on what the EU is, was the best ground on which to build consensus at a European level. Andrew Moravcsik, for instance, maintained that talks on the constitution, far from consolidating the integration process, had opened up a Pandora’s box, risking destabilizing the “constitutional settlement” reached throughout the 1990s (Moravcsik 2002, 2005). Moravcsik’s position, however, denied that the EU suffered of a crisis of legitimacy, assuming instead that its de facto supranational constitutional order needed no explicit normative basis, for this ultimately rested on the democratic legitimacy of the member states. But even allowing for Moravcsik’s point on political prudence, it would seem difficult to maintain that the emergence of an explicit constitutional discourse in Europe was a manufactured event, particularly when one considers that it developed within the context of an unprecedented process of enlargement, and following from a phase of profound changes in the nature and extent of the economic integration process. If anything, the constitutional debate testified to the need for finding a new balance between the EU institutional structure and its policy-making ambitions. From such a

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perspective, Europe’s constitutional moment should not be identified with the specific process, which started with the Laeken declaration, and took shape through the Constitutional Convention, of writing a documentary constitution, but with the overall phase of political integration that started years earlier at Maastricht (Weiler 1999, 3–4). From such a perspective, the Convention and the proposed (but not ratified) Constitutional Treaty look more like the concluding acts of a protracted constitutional moment, whose fundamental features are not those enshrined in the articles of the constitutional text, but more momentous political decisions, such as enlargement and the introduction of a common currency taken across a period of years. The ironic fact, as it will be discussed later, is that such decisions were not regarded as “constitutional,” and that they were taken with very little popular involvement, without a Europeanwide discussion (Weiler 2002). In spite of this, as the ratification crisis of 2005 eventually showed, in the eyes of the European public there was very little difference between what the EU is and what it does, so that when the moment of ratification came, many voters found it problematic to distinguish between what the Constitution said (i.e., what was in the actual text of the Constitution) and what, in their view, it stood for (i.e., how they considered the EU and its impact upon their everyday lives). It is not surprising, therefore, that issues such as enlargement, immigration, and social and economic policies – all issues that were not affected by the introduction of the Constitutional Treaty – played such an important part in the way in which people voted in the French and Dutch referenda, which eventually determined the fate of the Constitutional Treaty. This is a clear sign that constitutional politics cannot be limited to institutional matters, but that inevitably involves some important policy issues, which are usually associated with normal politics. This entanglement of institutions and policies and of constitutional and normal politics raises two general questions. One is the question of the relevance of the issues that at the time were at the center of the constitutional process, and the other is the precise impact that constitutional politics makes when compared with ordinary politics. On the issue of relevance, as Joseph Weiler (2002) said at the time, constitutional mobilization had the perverse effect of diverting attention from the really momentous changes that, as already noted, had occurred in the EU, and which had instead been managed either pragmatically or by taking decisions by default, thus excluding the citizens from debating and deciding on such issues. On the really hard choices confronting Europe the formal constitutional process made little or no impact. This argument on the “irrelevance” of the European constitutional debate can lead to two different conclusions. One, of more local consequence, is that there was a failure in the European political class to decide which issues to place at the center of the public debate. The other, of more general relevance, suggests that there is no real difference between constitutional and ordinary

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politics, or at most it is strategic rather than categorical. In a broader sense, constitutional politics is the kind of action that a series of favorable circumstances converge to create by offering a “window of opportunity” within which it is possible to operate so as to determine the character of a polity and of its regime for a relatively long period of time. From this perspective, constitutional politics can only be judged consequentially, by looking at the effects it produces. But there are a number of other important elements following from this “strategic” sense of constitutional politics that should also be noticed. First, constitutional politics is not tantamount to producing a formal constitution, a document, that is, that has the formal qualities of constitutional law, distinct from ordinary legislation. The object of constitutional politics is more often the interconnection between the political (the more substantive organization of power) and the formal constitution. At times, it may concern changes in the “material” constitution, by which one should understand important pieces of legislation or of organization of the state, which do not need to be part of the formal constitution itself. In view of this, it is impossible to define the province of constitutional politics in a way that excludes ordinary politics. Secondly, because of its partly consequentialist character, constitutional politics finds its validation in the way in which ordinary politics makes it its own point of reference. In relation to the more “intrinsic” properties of constitutional politics, these can be seen as a possible effect of the ‘window of opportunity’ contingency and of the capacity of both leaders and citizens to operate in such a way to exploit the moment by organizing political attention and activating mechanisms of broader acceptance and allegiance within the community (Olsen 1997, 217–20; Castiglione 1995). In the modern conditions of democratic societies, sustained public debate and the mediation of “strong publics” make an important contribution to the emergence of broad forms of principled and strategic agreement, and practical convergence, at least in the long term (Eriksen and Fossum, 2002). But all this does not necessarily require a higher level of consensus, which is almost impossible to achieve even between reasonable citizens, in view of their diversity of values, interests, and empirical assessments, besides considerations on the complexities of social choice and its subject matter. Agreements in constitutional politics, as in ordinary politics, are points of equilibrium often reached through a variety of considerations and strategies, involving arguments, bargaining and negotiating processes, compromises, incomplete theorizations, and strategic arguments. What is sometimes considered as the binding character of constitutional consensus is at its origins—even when it emerges from truly exceptional moments of collective crisis and mobilization, which are indeed rare—the product of a number of more or less principled compromises. At first, these compromises result in a modus vivendi. Over time and by the effect of common and continuous engagement both in the business of ordinary politics and in

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ongoing deliberative and decision-making experiences, such a modus vivendi may consolidate in a shared framework, always open, however, to different interpretations or to sudden collapse—as the experience of constitutional democracies amply testifies. To conclude on this point, if constitutional and ordinary politics cannot be clearly and categorically distinguished from each other on either their substance or because of their properties, and if nonetheless there is a more strategic sense in which such a distinction can occasionally become operative, there is no simple way of saying whether constitutions, and their normative appeal, are either the product of extended processes or decisive events. Indeed, it is probably safer to assume that both aspects tend to contribute to the making of a constitution. There is, however, another side of the idea that the normative character of constitutional politics needs a constitutional moment, something that breaks the routine of normal politics. This is connected with the importance of symbolism as part of constitutional politics. During the constitutional debate, this point was made forcefully by Jürgen Habermas, when he maintained that “as a political collectivity, Europe cannot take hold in the consciousness of its citizens simply in the shape of a common currency. The  intergovernmental arrangement at Maastricht lacks that power of symbolic crystallization that only a political act of foundation can give” (2001, 6). According to Habermas, the constitution should have acted as a catalytic point in the “circular creation” of Europe as a political community, coming as the constitution normally does at the end of an already advanced process of social, economic, and political integration, and, in turn, helping to put in motion the construction of a European-wide civil society, a common public sphere, and a shared political culture (ibidem, 16–21). Underpinning this operation there is what Habermas has called “constitutional patriotism,” a form of allegiance to the political community, which rests on abstract and universal principles of a civic kind. Indeed, at the time and since, a lively debate has developed around this idea and whether it may rightfully become part of a European identity, but from Habermas’ perspective the main question was whether the focus on the constitution could help fostering such an allegiance. In other words, whether the writing of the constitution would be part of a constitutional project aimed at enlarging our circle of solidarity at a European level and at creating the conditions for a “federation of nation-states” (ibidem, 15). In Habermas’ and other supporters’ view of the need for a constitution, as a strong normative and symbolic statement, the constitution was part of a constructivist gambit intended as the beginning of the process of construction of a political demos in Europe. But, as Neil Walker argued at the time (2004, 2005), the way in which the Constitutional Treaty took shape did not reflect a single project or conception of the EU Constitution and European constitutionalism, but different ones. Indeed, as Walker argued, a number of very different influences shaped both the text and the form taken by the drafting process of the Constitutional Treaty, comprising

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positions expressing various shades of skepticism against constructive and documentary constitutionalism, and even extending to those who were in principle hostile to it. From such a perspective, the Constitutional Treaty was a compromise between different views, thus being open to future political and intellectual battles. Indeed, the fact that the text of the Constitutional Treaty was eventually rescued by more or less ratifying it in the form of the Lisbon Treaty, even if it was politically defeated in the French and Dutch referenda, shows that the documentary text itself, and the kind of consensus that it reflected, was not of decisive importance. Of greater importance was whether the halting of the constitutional moment determined by the ratification crisis, should be interpreted as a temporary retreat of the broadly federalist project, or whether it was the beginning of a reversion process of the kind of constitutional agenda that was put in motion at Maastricht. In a way, this dilemma is exactly the same as the one posed by the current monetary and financial crisis—though perhaps in reverse: whereas the ratification crisis could be seen as a temporary retreat, the current crisis may demand a leap forward, if one wishes to avoid the unraveling of the integration project as a whole. But there are other aspects of the constitutional phase that may be useful to consider before coming to the current crisis. One thing that emerged from the ratification crisis is that throughout the constitutional phase public debate was never fully engaged. Whatever popular participation and public debate eventually emerged, they were rather the effect of growing opposition to the Constitutional Treaty than a positive campaign on the merits of the constitution. Low levels of popular mobilization and lack of debate are often explained as the consequence of a lack of salience of institutional and constitutional issues in the lives of European citizens. This argument often complements the one already mentioned, according to which the French and Dutch electorates rightly voted on issues of policy rather than on the text of the Constitutional Treaty. Enlargement and monetary union were substantive policy decisions with considerable constitutional implications, though they were treated as part of “normal” politics with no real public discussion encouraged. In those instances where public debate surfaced at the national level, as in the British case about the euro, it was more for the presence of a strong opposition rather than for a genuine desire to engage in a well-informed public debate. It is therefore hardly surprising, and certainly not unexpected, that once a popular debate emerged over the Constitutional Treaty as part of the ratification process, this was focused as much on the main policy changes that have shaped the EU since Maastricht as on the Constitution itself. For this reason, one should look at the constitutional moment in a broader historical–political context. The more immediate and most obvious aspect of such a context is given by the process of enlargement, which, in spite of being protracted through time, and conceived as the preserve of the European political elites, has become a dominating political issue, posing

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numerous political and institutional challenges to the EU and its current member states (from agriculture to redistribution policies across countries, from minority rights to internal migrations and border control). A second context within which to see the emergence of the constitutional agenda is the social question. This had become more evident since the late 1990s, during the period when there was a return of social-democratic parties to government in many European countries after a long phase of neo-liberal governments and policies. Although the season of third-waygovernments (most of them in ideological and electoral retreat as soon as they were elected) was short, and although there was no concerted attempt to move toward a more “social Europe,” it nonetheless contributed to the shift of popular perception from a market-based to a more welfare- and rights-based vision of Europe. So far, this shift of emphasis has produced no real shift in policies, but the relevance of such a theme during the ratification debate cannot be easily dismissed. If anything, the current crisis has made the social issue even more relevant; indeed, how Europe will deal with the social dimension as economic integration progresses and internal mobility increases is a question with profound constitutional ramifications. Third, and as I shall discuss more in detail in the next section, part of the political context for the constitutional debate was clearly determined by monetary unification. Although this was at the time presented as the natural completion of the single market, it can be construed as the beginning of a more ambitious integration process, involving fiscal and other macro-economic decision-making processes that may need more careful coordination, greater flexibility, and responsiveness in order to be managed in relation to the economic cycle. The need for a different institutional setting for economic management at the European level has since become more apparent due also to the slowing down of economic development in the EU area. In conclusion, the constitutional phase should not be seen as completely separate from normal politics. On the contrary, it was the expression of the EU coming to terms with the changes and challenges posed by the transformed political context produced by increasing integration. From such a perspective, one can more easily make sense of the “ratification crisis” as the expression of a wider malaise and dissatisfaction, reflecting a crisis of legitimacy: a sign that the increasing powers and functions of the EU needed more definite support from European citizens. The Constitutional phase tried to bring to conclusion what had been started at Maastricht. In a way, it was the moment when European citizens and European peoples were asked whether Europe had a “common future.” The problem was that the question was put too generally and in the wrong way, without explaining what such a common future entailed in terms of both benefits and sacrifices. This is what the present monetary and financial crisis has finally disclosed, by showing the centrality that the “economic” constitution has for the future of Europe, even though this was a question that was firmly out of the agenda of the constitutional debate during the last decade.

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The constitutional importance of monetary unification I have argued so far that the present financial crisis should be seen in broad constitutional terms, and that indeed the monetary system introduced by the euro, and the implicit restructuring of the European financial architecture that followed from it, are part of the (silent) EU constitution, even though they were hardly discussed during the constitutional phase that never was. I have also implicitly argued that the present crisis should be considered as a continuation of the protracted “constitutional moment” that started at Maastricht. I now want to make clear the particular sense in which the establishment of the euro has constitutional relevance, but, at the same time, that such a constitutional status does not exclude the principles of monetary policy to be discussed politically and democratically. This partly follows from the way in which I have set up the relationship between constitutional and normal politics in the previous section, but also from the way in which we should understand the principle of democratic legitimacy as operating at the European level. In the present context, the latter argument will only be developed in a compressed form. In order to discuss the impact that the introduction of the euro has had on the EU constitutional fabric, it is probably best to start from a number of basic statements, which are obvious, but nonetheless often forgotten, and that therefore risk confusing the argument. First, when we assess the importance of the introduction of the euro from both a political, social, but also symbolic perspective, it is vital to remember that the euro does not stand in isolation, but is part of an international monetary and financial system. This, as we shall readily see, has important consequences, also because it makes more difficult to compare the role and place of the euro in comparison with other currencies at different historical periods, thus making the usual rhetorical move of a comparison between the euro and previous national currencies (in particular the German mark) rather untenable. From a more practical and symbolic perspective, the introduction of the euro in the strict sense of this being a currency for exchange is far less important than, say, the introduction of credit cards and new electronic forms of payment. The latter have truly revolutionized our social and imaginary relationship with money and with the credit system as whole. Looked at from this more broadly social and anthropological perspective, the impact of the euro, and of the way in which it may affect our daily dealings as either consumers or citizens, is slight, and should not be overstated. Indeed, when we consider the way in which the euro may affect our citizenship status and our citizenship practices, or may have a constitutional impact, it is important to distinguish between the various meanings in which we may refer to the euro. Roughly speaking, there are three general senses: as a monetary entity (as part of a credit system); as a particular currency

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(within a practical system of exchange); and as coinage, including banknotes (as a material token). The relationship between citizens and the euro is distinctively different, depending on which one of these senses it is meant. This is something that gets confused when, for instance, evidence gathered through opinion surveys is brought to bear on discussions about the impact or public acceptance of the euro. These tend to overstate the way in which the “currency” sense is more directly perceived by people in terms of their attachment, or identification, with a particular material representation of a monetary and credit system whose work is more difficult to perceive physically, if not through very indirect economic processes, which may ultimately affect one individual or family in terms of income or purchasing powers. Even though the symbolic and practical issues in connection to coinage (or the printing of paper money) have some social relevance; and in spite of the practical policy issues that may arise from the sense connected to the currency function of the euro; the most important constitutional dimension of the introduction of the euro is linked to its broad monetary function as part of an international monetary system, and as a means of exchange within an economic area cutting across countries that still maintain separate political and legal systems. Notice that the introduction of the euro, in this more specific sense, has an effect not just on the member states that have adopted the new currency, but also on those who belong to the EU, but have decided to stay outside the Eurozone. Indeed, as the interconnection of the financial crisis has showed recently, the presence of the euro is of relevance for the whole international monetary system, and its role within such system is of far greater significance than the one the individual national currencies had in the past, for no other reason than the magnitude of the economic area that the euro covers in comparison to each individual national currencies in the past. In its broader monetary sense, the introduction of the euro has meant the establishment not just of a new currency, but also of a new network of institutions, and of the altering of the previous financial and monetary relations between large areas of the EU. The systemic nature of this change, with effects, as I have already remarked, both within individual countries and on the international monetary and financial system as a whole, makes its management extremely difficult, particularly in a situation where political power is still dispersed. One of the arguments often made in relation to the establishment of a common European currency within a more globalized economy is that this is more resilient to the pressures that come from external powers and from the markets in general. However, this is true only in so far as it is possible to have some unified management of some of the financial, credit, and monetary levers that affect the performance and stability of a monetary system. Although some of these have been unified under the control of the ECB, most of them are still in the hands of national governments, and therefore the overall effect on the management of the currency is not necessarily of greater empowerment vis-à-vis external and market forces.

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Moreover, and from a constitutional perspective this is of even greater significance, the introduction of the euro has by and large meant the abandonment of previous practices and institutions through which the monetary system was both regulated and linked to the political system. It is often forgotten that, whatever form they took, monetary institutions were embedded in both political and economic national contexts, which, whether fairly or unfairly, efficiently or inefficiently, provided a set of rules and practices through which economic and broadly social interests were represented in the process of decision-making that resulted in various aspect of monetary policy. The introduction of the euro does not simply pose the question of whether new institutions of a supranational character have taken the place of national institutions and actors, but whether and how the new institutions perform not only simply the technical functions of monetary decision, but also those of social intermediation. This issue is of particular relevance because the introduction of the euro has created an institutional network for monetary policy that is very different from the structure that operated at national levels, giving greater autonomy to the ECB, when compared with its national counterparts (Crouch 2000). From a democratic perspective, the changes in the institutional network that determines monetary policy, and therefore important aspects of macroeconomic management, have significant consequences and pose two main questions. The first one, as already mentioned, concerns the embeddedness of this institutional network within democratic practices and institutions, guaranteeing broad representativeness, public scrutiny, and operational transparency, so that the policy outcome has sufficient legitimacy to gain acceptance. The second one is whether the main policy objectives that have been fixed as regulating principles of the activity of increasingly independent monetary authority at the EU level, can be regarded as socially neutral, and the policy process responsive enough to other paramount considerations that need to regulate the living within a democratic community. Given the constitutional and democratic relevance of introducing the euro and the particular institutional architecture that was established for its system of governance, it is paradoxical, as mentioned in the previous section, that no serious debate took place about these issues during the constitutional phase. The broad terms of the already established EU economic constitution were never discussed because regarded as being outside the political agenda. But the reverse is true. From a political economy perspective, the introduction of the euro was part of a political project, which we can characterize through the two central mechanisms for monetary governance. The first is the high degree of autonomy given to the ECB in deciding monetary policy. The second is the introduction of the “Stability Pact,” aimed to control prices (keeping inflation low), and to control the public deficit, while excluding its structural use. In a way, both these issues represent the answers to the two democratic questions I referred above. The greater autonomy given to the ECB is directly related to the question of democratic representativeness and

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social embeddedness; while the “structural” policies that the Bank is meant to pursue pose the problem of the social scope of such policies. With respect to the question of the autonomy of the ECB, this is normally justified in terms of credibility, and argued in the language of the principal– agent theory. From the perspective of principal–agent theory, democratic representation and regulatory delegation look rather similar, since they can both be nested in an overall chain of “delegation of powers” from citizens to nonmajoritarian institutions, passing through legislative and executive bodies, and occasionally public bureaucracies (Braun and Gilardi 2006, 4–11). However, as the literature on regulatory delegation shows, at a more substantive level some of the operations, as well as the mechanisms of roleformation and agent’s motivation, are distinctive, following dynamics of their own, which are not entirely reducible to political, or even bureaucratic, forms of representation. Majone (2005, 64–7) characterizes the reasons for delegation as being primarily of two kinds: the reduction of decision-making costs, and the enhancement of commitment and long-term credibility. These two reasons align the principal’s and agent’s preferences in different ways to produce two divergent accounts of delegation. Delegating to reduce decisionmaking costs assumes that principal and agent share similar preferences. Indeed, the main problem for this kind of delegation is to ensure there are no “agency losses.” As a result, principals need to design selection procedures and postdelegation mechanisms that avoid dangers such as “shirking” (when agents follow their own preferences irrespective of their principals’), “slippage” (perverse institutional mechanisms that make agents’ preferences diverge from their principals’), and “capture” (when agents collude with the actors whose behavior they are meant to regulate) (Cohen and Thatcher 2005). This form of delegatory representation parallels that of mandated political representatives, for whom electoral mechanisms serve to guard against these risks. However, it is unclear that appointed, nonmajoritarian bodies have anything as effective as electoral accountability to keep them on their toes. Indeed, their main representative claim rests on the second reason, which by contrast requires that delegates be insulated against the need for undue responsiveness to their principals’ preferences. This is indeed what is normally advocated in the case of central banks. The rationale for delegation to guarantee market credibility and maintain commitments assumes principals suffer from akrasia and act for short-term personal advantages at the expense of long-term collective benefits, even if they ultimately stand to gain from them. Principals can avoid this dilemma by adopting a precommitment strategy, and selecting agents whose incentive structure coincides with the long-term commitments required by markets rather than the short-term popularity politicians (or governments in the European case) typically need to court. One consequence of this de-alignment of preferences between principal and agent is to increase agents’ discretion and relax considerably, if not completely, the accountability and control conditions to which they are subjected. Agents no longer “represent” their

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principals own short-term understanding of their interests and preferences, but rather respond to their principals’ supposed second order preference. This involves their agents acting according to their own “independent” judgment as to where their principals’ first order interests and preferences lie in the long term so as to produce the commitment and credibility required by the market. Thus, when the ECB acts as a nonmajoritarian regulatory agent in monetary matters, it does not directly represent the governments of the member states, or the EU legislative bodies, but rather “represents” the long-term interests of the EU and of its member states, even if its reading of these interests and preferences diverges from how the other institutional actors perceive them. Whether one agrees or not with this representation of regulatory delegation is besides the point in our context. Indeed, a number of democratic objections could be raised against such a justification for the Bank’s independence. However, in the case of the ECB, the way in which this has been set-up has created a situation in which its credibility seems to depend entirely from it only pursuing inflexible and overcautious policies, precisely because it lacks the kind of flexibility that other central banks (the FED in the US, for instance) have by the fact that they are not entirely impermeable to political pressure (Fitoussi 2002). The Bank’s inflexibility in trying to be seen as “credible” is further aggravated by the fact that monetary policy at the EU level is isolated from fiscal policy, and can only be conducted in a pro-cyclical fashion, thus drastically reducing the mix and variety of policy tools that it is at its disposal. The comparison often made between the ECB and the Deutsche Bundesbank in terms of prestige and policies is extremely deceiving from many points of view. First, the policies of the Bundesbank were conducted in a very different economic, monetary, and financial context, and in relation to particular political, cultural, and economic conditions of West Germany. Second, the institutional context in which the Bundesbank operated was very different, and so the mix of interests that it was trying to serve, which were far more homogenous that those that the ECB needs to attend. Third, the size of the economy of West Germany, even if relatively large in international terms, it was far smaller than the one of the EU economic zone nowadays, so that this also offered greater latitude of action. In short, to use the Bundesbank as a model for the ECB is both wrong and deceptive. From a more policy perspective, the pro-cycle, anti-inflationary policies linked to the ECB, besides reflecting a certain neo-liberal ideological perspective, it has also meant a rigidity in policies, which has resulted either in the inability to adopt efficient policies quickly, or in a less transparent modus operandi, since the monetary and fiscal authorities cannot readily justify policies that they may regard appropriate, but which seem to contradict the guiding principles of European monetary policy. This has also resulted in a certain slowness to adapt to the economic and financial contingencies; and also a high degree of inflexibility in adapting to either

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territorial or social diversity within the Eurozone, thus making policies less, and not more legitimate, in the eyes of the European citizens. In conclusion, the introduction of the euro, and the (silent) constitutionalization of both monetary policy institutional architecture and objectives suffer from important democratic deficits, and can hardly be regarded as socially neutral. Although this was evident from the start, the debate on the Constitution that dominated EU politics during the past decade failed to engage with the problems that the euro posed for the democratic governance and legitimacy of the EU. The recent financial and economic crisis has, however, exposed these very problems. If Europe is our common future, and if a single monetary system is part of it, we need to have a more democratic, representative, and legitimate way to run it and to establish its principles and objectives. We are back to one of the central constitutional issue for the EU, but this time with vengeance. Hic Rhodus, hic salta.

Conclusions: The way forward Giovanni Moro

Though nowadays it is really not easy to speak of a way forward for the single currency, the standpoint of this book allows us to run this risk. In other words, if it is true that there is a doubt as to whether the tenth anniversary of the changeover is to be a celebration or a commemoration, the crucial point is that it is not yet clear what is going to be celebrated or commemorated. The aim of this book is precisely to identify the reality of the single currency as well as can be done and its relation to the European project and in particular to Community citizenship. Within the limits of this purpose, some remarks on lessons learned, possible research tracks, and public policy changes can be formulated.

Lessons learned The first and most important lesson is that, as soon as we consider the single currency not only as a macro-economic and finance object and European citizenship not only as a fixed juridical status, we can also identify several relations linking them to each other. In particular, we can detect a sort of shaping effect the single currency has had on Community citizenship. It regards the content, the context, and the constraints of citizenship of the EU and of its constituent elements of rights, belonging and participation. This shaping effect has not been contradicted, but on the contrary made more visible, by the present Eurozone crisis. It is indeed in the euro turmoil and with reference to the single currency that the European public sphere has grown, the citizens’ power to be heard has been exercised and their vote in elections has pushed political leaderships to a further step in the European integration process. The euro has clearly become the common environment and landscape of citizens of the Eurozone, as it is clearly shown by the results of the polls in countries such as Greece and Italy, according to which people do not love the euro, but do not intend to go back to their national currencies either.

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Of course, the single currency has had both positive and negative impacts on European citizenship, being at the same time an opportunity and a threat. However, on the one hand, also from this point of view, it may be noted that it is difficult to observe the developments of European citizenship without referring to the single currency. On the other hand, it would be very difficult to conceive of something like a single currency for Europeans without presupposing a common citizenship. As a currency without a state, the euro is indeed mainly based on citizens’ trust. Without trust (intended as a “bet” on the future behavior of the others) between its users no currency could work, but trust is built and fed by a social environment, where people share relations, values, and social norms. That is shown by the crisis of the Eurozone: without people’s trust, the euro would have already become ineffective.

Research tracks The thematizations of the relation between the single currency and European citizenship presented in this book also suggest elements for the establishment of a research agenda on this topic. Some points can be reported here, as examples taken from the several questions raised by this book that would deserve further research. The first is the relation between European citizenship and what could be named “€-citizenship.” It is a matter of fact that people living in the Eurozone (whether it be a lucky or unlucky condition) are citizens of the EU in a way that is different from that of their fellow citizens of noneuro EU countries. Possible further differentiation between these two citizenships could be observed and analyzed. The second question regards the relations between the identity and practices of citizenship. When, as in the case of European citizenship, a sense of identity (feeling European) is relatively weak if compared with the standard model of national identities, practices (being European) should be taken into consideration as the place where identity is built, reinforced, and transmitted. The third question is the one of the relation between material culture and citizenship in the EU. Because of its nonstandard and “banal” character, the citizenship-effects of material culture has not been taken into consideration much till now. The case of consumer issues is of special importance, but it is not the only one. The fourth question relates to the role of the citizenry in the EU-building process at large. Too often, citizens have been considered as being passive targets or beneficiaries of what other actors do, whether they may be public institutions or market forces. Phenomena detected in this book tell a different story, which scholars could carefully consider.

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Policy measures As for policy making, it is quite clear that the rationale for establishing the single currency was to strengthen the sense of belonging and the multiple links and relations between citizens of the EU countries. In spite of this ambitious purpose, a European policy on the relation between the single currency and European citizenship was never actually set up. It is a matter of fact that the only public policy on the relation between the single currency and European citizens (rather than citizenship) was the one designed and implemented on the occasion of the changeover. This policy, moreover, was conceived and implemented in a top-down, one-size-fits-all way, poorly taking into account the citizens in the flesh. Surprisingly, at the very end the changeover worked, while unsurprisingly the rise of perceived inflation testified the deficits of the EU policy style on the citizens’ side. Lessons learned suggest the setting up and implementation of a new EU policy, aimed not at creating or strengthening citizenship through the single currency, but rather at consciously managing the already existing correlation between the euro and Community citizenship. There are a number of measures that could be taken within the framework of an EU policy. For example, introducing 1 and 2 euro banknotes instead of coins (better late than never) to thwart inflation; or establishing instruments and procedures for the full transparency of the ECB as a measure to assure and increase the “vertical trust” in the single currency; or even creating and putting at the public’s disposal full, analytic and comparable data and information on the situation of citizens’ rights in the Eurozone countries, so that not only data on, say, public deficit, but also on social rights or access to education would be available. However, a major action that could have multiple meanings and effects would be the promotion of a European poll or (better) referendum, aimed at substituting the imaginary gates, arches, windows, and bridges that are portrayed in banknotes and are supposed to represent the under-construction future Europe, with real objects, chosen by the citizens as those better representing their actual and present belonging to the European political community. In a time marked by the tenth anniversary of the changeover (2012) and the twentieth anniversary of the establishment of European citizenship (2013), such a measure would not be underestimated.

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Index

agency  185–6 “agency losses”  229 akrasia  229 Anderson, B.  24, 34, 158, 173 Aristotle  40 Bini Smaghi, L.  180 Bourdieu, P.  31 brute facts  57 Bruter, M.  11, 118–19 Bundesbank  230 Bush, G. W.  145 “capture”  229 center formation  99–101 Cerutti, F.  108 chartalist school  59 Chirac, F.  114–15 citizenship economic  173 €-citizenship  233 market  15 political  158 practices  19 Clinton, B.  144–5 constitutional debate  220–1, 223 constitutional and normal politics  220, 222 Constitutional Treaty  221, 224 common European perspective  119 communicative discourse  159 currency as representation of the state  138 as symbol  173 Dahrendorf, R.  145–6, 177 delegation  229 Delors, J.  174, 216, 219 Díez Medrano, J.  127–8

distrust  104 dollar  147 Duisemberg, W.  168–9 Durkheim, E.  27–8 ECB see European Central Bank (ECB) EFD see Europe of Freedom and Democracy Group (EFD) Elliot, L.  178 EMU see European Monetary Union (EMU) entitativity  32 Estonia  133–4 Euro as language  12 as practice  31–3 as symbol  11, 26–31 as unit of measurement  15–16 banknotes  142 changeover  49, 98, 155 European Commission campaign for  169 coins  142 constitutional dimension of  227 crisis  156–7, 170, 177, 183, 213–14 expected effects of  103 iconography  10–11, 28–30, 63, 142 introduction of  227–8 public attitudes in Spain toward  190–5 public opinion on  130–1 semiotics  174–6 support to  197–9, 210 “Euro Invasion of France”  14 “Euro made-easy”  49 “euro-native”  92 Euroland see Eurozone Europe Indian image of  148

254

INDEX

Europe of Freedom and Democracy Group (EFD)  208 European Central Bank (ECB)  33, 38, 49, 64–5, 164, 170, 216 autonomy of  229 credibility of  230 European citizenship  8–9, 21, 126–7, 189 and the euro  20–1, 132 European Constitution  220 European flag  118 European identity  11–12, 127, 158 European integration  18, 112–13, 150, 210, 217, 232 future of  33–5 European Monetary Union (EMU)  26–7, 112–13, 177–8, 189 British approach toward  112, 115–16 French approach toward  114–16 German approach toward  113–14, 116 European public sphere  19, 119 European Union as a “democratic experiment”  8 benefits of membership  202, 204 democratic deficit  125 history  196–7 meanings  126, 206 sense of belonging to  202 technocratic  210 Euroscepticism  176, 206, 208 Eurozone  13 future of  179–81 Fligstein, N.  128–9 freedom of movement  14–15, 206 grammar  100 “gray literature”  72 Habermas, J.  223 “constitutional patriotism”  223 “historical school”  41–2 human agency  184 Hymans, J.  28, 63, 141 identity (ies)  107, 138–9, 157–8 building  105, 147, 158 collective  116 Europeanization of  117–20

markers  117–18 monetary  39–40, 42 imagined community  24–8 European Union as  32–4, 117–18 inflation actual and perceived  17–18, 200 institutional facts See social facts Knapp, F.  42, 59 Kohl, H.  113 legitimacy input  106, 154 normative  101 output  101, 106–7, 154 substantial  101, 108 throughput  154 Lisbon Treaty  125–6 Litmus test  97 May 9th anniversary  148 “mechanists”  41 mercantilists  40 metallist school  59 money as credit  61 as economic variable  39–42 as a language  47–8 as a “means of exchange”  44 as a social construction  57–60 as a social relation  60–3 constructivist approach  55–6 “Janus-faced” nature of  172 psychological dimension of  44–5 rationalist approach  55 socio-anthropological aspects of  42–3 sociological dimensions of  45–7 Moravcsik, A.  220 “naturalists” 40 other side of the coin dimension(s) of  9–10 cultural  10–12, 83 everyday life economy  15–18, 84 focus rate on  78–83 index of depth for  86–9

INDEX level of the diffusion toward  83–6 observables  10 occurrences  76 political  18–19, 84–5 social  12–15, 84–5 political authority  23–4 political elites  56, 117, 135, 158–9, 186–7 Prodi, R.  32 ratification crisis  224 reflexivity  184 Searle, J.  57–9 deontic powers  58 “shirking”  229 Simmel, G.  61 single currency see Euro “slippage”  229 social facts  25–6, 57 social question  225 Soros, G.  181 “Stability Pact”  228

state building  99 iconography  141 stereotypes  139–40 symbols ambiguity  175 condensation  175 multivocality  175 Treaty of Lisbon See Lisbon Treaty Trichet, J. C.  170, 179 trust  53, 63–5, 104 enhancement  98 horizontal  102 social  100–3 vertical  102 unemployment European average rate  214 Walker, N.  223 Weber, E.  25 Wergild  63

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