Economic and political challenges for a more convergent €-zone

Call for papers

In the framework of its research activities, the Centre international de formation européenne (CIFE) will organise a conference on the topic of economic and political challenges for a more convergent €-Zone. This conference will take place in Brussels on 21 and 22 September 2017.

Presentation

It is a fact that the crisis has not yet been overcome, that unemployment continues, that growth is still weak, that poverty does not recede, that nationalist attitudes spread out as well as protectionist temptations, that cleavages multiply, in particular with regard to the migration issue, and this in the context of the Brexit.

In the meantime, whether this is welcome or not, ongoing globalisation reminds us that the centre of gravity shifts toward Asia, in the economic field (China and India are supposed to become the leading economies in the world), in terms of demography (both countries will represent more than 40% of the world’s population). Other countries emerge, too, and Africa is the next region which will experience a tremendous economic and demographic growth – Europe and the €-Zone in particular can simply not ignore these profound changes.

There must be a serious quest for solutions, which ensure a more prosperous European future, marked by more solidarity, and opposed to any closure of borders or minds. The current growth rate is not sufficient neither to solve the macroeconomic problems, nor the migration crisis. Rethink the governance of the €-Zone is urgently needed, on the basis of the existing treaties, analysing what works well and what is blocking, in order to find solutions, which are more favourable for more people.

In the economic field, it is possible to accompany the common monetary policy of the €-Zone by a more decisive budgetary discipline, a banking union, the creation of a budget for the €-Zone, a common mechanism to cope with public debts, an enhanced convergence.

Proposals for a contribution to our conference should fit in one of the nine topics lined out here:

Outline of the conference

The economic perspective

Topic 1: A more goal-oriented budgetary discipline

Only European institutions can initiate such a discipline, no individual member state. Without any dogmatic stance, budgetary discipline is more promising than laisser-faire, and that is why an enhanced European framing of national budgetary policies is needed. This applies to public debts, and especially to their evolution, to (stricter) procedures, to (more credible) sanctions – recent decisions mark indeed a progress. However, this progress is insufficient. Harmonisation or convergence of budgetary policies would be an important step; things would even more improve if they would trigger harmonisation of fiscal and social policies.

Topic 2: Enhancing the Banking Union

The European Council decided to implement the Banking Union on 14 December 2012, in the wake of the financial crisis of the years 2007-2008, against the background of the lax behaviour of certain banks and in the face of a considerable increase of systemic risks. Which are the assets and challenges for such a Union?

Topic 3: A budget for the €-Zone

Budgetary discipline and the Banking Union call for a budget of the €-Zone, if only to help absorb asymmetric shocks. Such a decision would allow for a convergence, or at least a more harmonious evolution of budgetary resources (i.e. fiscal income) and expenditures. There is no future conceivable without budget, be it on the EU level or on the €-Zone level; there is no budget without fiscal policy. It is vain to maintain a common currency as long as fiscal policies still fall under the sovereignty of the member states.

Topic 4: Dealing collectively with public debt

The budgetary challenge cannot be isolated from the problem of public debt. A tricky question indeed, because it is intimately connected to the issue of sovereignty. However, as soon as states have decided to join their currencies into a single, common one, there is no way to imagine that one of them could endanger the survival of the common currency because of high-level debt, difficult to finance or to repay. It is urgent to control government debts and apply solidarity among the member states of the €-Zone. What are the stakes of a limited and temporary mutualisation of public debt?

Topic 5: Toward economic convergence

The new architecture of the €-Zone should rely on economic convergence. One of the reasonable criticisms with regard to the €-Zone is the fact that a monetary union (and even more a common currency) can only be successful if the rhythms of growth and the levels of productivity converge. Otherwise, cleavages will deepen and asymmetrical positions of national economies, which use the same currency, will create increasing imbalances. Furthermore, economic convergence would allow to cushion cyclical shocks in coherence with the harmonisation of budgetary and fiscal policies.

The political (institutional, constitutional) perspective

Topic 6: Institutions adapted to an enhanced Monetary Union

In order to implement the improvements outlined under the economic angle, the €-Zone needs a correspondingly enhanced institutional setting. The need for a Ministry of Finance has already been underlined, several years ago, by Jean-Claude Trichet, former President of the European Central Bank. Only such a political authority invested with some degree of governmental power (that is what “Ministry” means), can assure the implementation of measures needed to maintain the €-Zone alive and successful, in a world marked by the rise of other powerful regions. This Minister must dispose of a budget, which is independent from the (volatile) goodwill of the member states, i.e. a European fiscal instrument. How could such a Ministry be created, how would it fit in the European Treaties, how to launch and implement a European fiscal capacity?

Topic 7: An increased legitimacy of the €-Zone

Under the premises of democracy, a Finance Minister who is in charge of a budget aimed at serving a policy of solidarity, must necessarily be controlled by a parliament – otherwise, the political decisions of that Minister, disposing of a part of the European fiscal capacity, would be illegitimate. That is why a parliament of the €-Zone, different from the European Parliament, is needed, a parliament congruent with the responsibility it has to assume. How should such a parliament come into existence, how should it be elected, what would be its mandate, how to distinguish it from the Parliament of the European Union?

Topic 8: Relations between an enhanced €-Zone and other policies of the EU

Strengthening the €-Zone has consequences for other common policies of the European Union. How should this relationship between the €-Zone and other policies be conceived, ranging from competition to agriculture, from regional and cohesion policy to investment (EFSI) and energy? Is a federalized €-Zone conceivable without parallel efforts in other fields, like security, defence, foreign relations? Projects aiming at a renewal of the project of a European Defence Community (or Union) – are they concerned, linked, endangered by an enhanced €-Zone? Would there be a “spill-over” effect between the €-Zone and other common policies, existing or future ones?

Topic 9: Relationship between the €-Zone and the EU on the whole

Finally, a strengthened €-Zone has to be systematically localised within the framework of the European Union on the whole. Currently, 19 EU members are members of the €-Zone. Would the measures aiming at strengthening the €-Zone be accepted by all the 19? Or would some member states prefer to withdraw from the €-Zone in case of its institutional federalisation? How to prevent the €-Zone from isolating itself from the other member states of the Union? How assure that the €-Zone still stays (or becomes) attractive, open, dynamic – a centre of gravity, a vanguard more than a “hard core”? How could the European Commission, composed of Commissioners from all EU member states, assume responsibility for the €-Zone?

Scientific committee:

Laurent Baechler (CIFE, Istanbul), András Inotai (Institute for World Economy, Budapest, Hungary), Finn Laursen (University of Southern Denmark, Odense), Jacques Le Cacheux (Université de Pau), Hartmut Marhold (CIFE, Berlin), Ingrid Shikova (Sofia University "St. Kliment Ohridski"), Funda Tekin (CIFE, Berlin), Jean-Claude Vérez (LEAD, Université de Toulon), Matthias Waechter (CIFE, Nice)

Timeline: Interested authors may submit a preliminary version or a draft of at least 2 pages (key words included) until April 15 at the latest to the following address: eurozone-governance@cife.eu

Papers must be originals and not yet published elsewhere. The scientific committee will deliver its opinion until May 15. The ultimate date for handing in the final papers and confirm participation is August 15.

Publication: After the conference, the most innovative papers are selected and submitted to a peer review, and finally published in two scientific reviews (one of them will be a special edition of CIFE’s quarterly “L’Europe en formation”, in 2018) and a collective book in the series “Denkart Europa” (NOMOS Verlag)

Participation fees: 150€ (students: 50€)

Organisation committee (CIFE Berlin et Brussels): Hartmut Marhold, Berlin, & Bruno Boissière, Brussels

Submission form This form must be sent in until April 15 to eurozone-governance@cife.eu