Only a decade ago, slow growth and high unemployment plagued Germany, but the "sick man of Europe" has now moved to outperform the Eurozone average growth since the second quarter of 2010. This confirms Germany's recovery and its status as the growth engine of the continent. This surely is a success story. While Germany (also Austria and the Netherlands) is prospering, the peripheral countries in the Eurozone are confronted with a severe sovereign debt crisis. Starting in Greece, it soon spread to countries such as Ireland, Portugal, and Spain. In the course of the debate, Germany was blamed for the imbalances in Europe. In short, German export performance and the sustained pressure for moderate wage increases have provided German exporters with the competitive advantage to dominate trade and capital flows within the Eurozone. Thus, Germany is seen as the main beneficiary of the EURO. This argument, however, is vehemently disputed within Germany. Many economists and political leaders reject this argument and point to the flagrant lack of fiscal discipline in many of the peripheral countries. Some prominent economists, such as Hans-Werner Sinn, even disputes that Germany was the main beneficiary of the Eurozone. The paper analyzes the two sides of the controversy, and asks whether we are witnessing a more inwardlooking and Euroskeptic Germany. These issues will be analyzed by first focusing on the role of Germany in resolving the sovereign debt crisis in Greece, and the European Union negotiations for a permanent rescue mechanism. We conclude by discussing some possible explanations for Germany's more assertive and more Euroskeptic position during these negotiations.
Brigitte Young and Willi Semmler
The financial woes experienced by the Monte dei Paschi di Siena (MPS) and by a handful of other Italian banks in which foundations have played a prominent role offer an opportunity to reflect on three interrelated topics. The first issue is the evolution of the Italian banking system and banking legislation over the past decades to explain the rather distinctive governance structure of these banks. The second issue is the unfolding of the sovereign debt crisis in the euro area, which set the broader context in which the MPS scandal and the subsequent financial troubles of other banks took place. The third issue is the main response of the European Union and euro area to the sovereign debt crisis, namely, the proposal to create an EU banking union, which in turn triggered strong supervisory actions by the Bank of Italy in preparation for the handover of banking supervision to the European Central Bank.
The bond markets turned on Italy during the first weekend of July 2011
as part of a wider loss of confidence in European efforts to manage the
sovereign debt crisis. On Friday, 1 July, the difference—or “spread”—
between Italian and German 10-year government bond yields was 178
basis points or 1.78 percent. The following Monday, 4 July, it was up
to 183 basis points and rising. By Friday, 8 July, the spread was 237
basis points. It remained above that level to the end of the year.1 The
center-right government led by Silvio Berlusconi attempted to head
off this change in sentiment by pushing through successive reform
packages to promote fiscal consolidation and stimulate growth. Bond
traders consistently shrugged off these actions as too little, too late.
Ultimately, the pressure became so great that the center-right coalition
fractured and President Giorgio Napolitano replaced Berlusconi’s
Cabinet with a technocratic government headed by Mario Monti. Even
this, however, was not enough to appease the markets, and the year
ended with Italian bond yields again rising..
Throughout the past decade, the European Union has witnessed substantial and multiple crises. The 2008 global financial crisis was followed by the triple banking, economic, and sovereign debt crisis in selected Eurozone (and non
This chapter investigates the reforms of some important and distinctive sectors of the Italian financial system: the banche popolari and the fondazioni bancarie. These reforms are particularly relevant in the list of events that have marked the year 2015 because they are inextricably intertwined with revisions in the EU supervisory and regulatory architecture and because they are an integral part of the broader government plan to revive economic growth after the fiscal crisis. In particular, the chapter analyzes the long- and short-term factors that set the stage for the reforms to take place. These include transformations in the large cooperative banks and the inaction of key parts of the domestic financial sector with regard to legislative and structural changes; competitive pressures deriving from the buildup of European financial integration; and the backing of domestic and international regulators such as the Bank of Italy, the IMF, and the EU Commission, among others.
This chapter deals with two momentous structural reforms introduced by the Monti government in the social policy field: the pension reform approved in late 2011 and the labor market reform passed in July 2012. Alongside discussing the content of these two reforms and their plausible policy impact, the chapter places them in the context of the Italian sovereign debt crisis and shows how they were introduced due to pressures exerted by international and supra-national actors. The analysis focuses in particular on the policy-making process of the labor market reform, reconstructing the various stages it went through. All this took place in the context of a new policy style by the Monti government, which forced decisions in the shadow of hierarchy and even took unilateral action, pursuing its policy objectives under the legitimacy provided by the international actors and the sense of urgency stemming from the sovereign debt crisis.
Andrea Pedrazzani and Luca Pinto
In November 2011, when the Italian sovereign debt crisis reached its peak, the Berlusconi IV government was replaced by a “caretaker” cabinet headed by Mario Monti. Composed exclusively of non-partisan ministers, the Monti government represents a clear deviation from how parliamentary democracies are generally expected to work. This chapter analyzes the activity and functioning of the Italian Parliament during the 13 months in which Monti remained in office. Compared to the previous government, we find that, quantitatively, the legislative production between the two executives is not significantly different, although the legislative process during the Monti government appears to have been faster. Not surprisingly, from the qualitative point of view, the bills passed during the caretaker government focused mainly on economic topics. Our findings suggest that the apparent broad consensus on Monti's agenda masked important differences between the main parties that supported the government.
The European Union has been in its biggest ever crisis since the onset of the Greek sovereign debt crisis in 2010. Beyond the political and economic dimensions, the crisis has also sparked discussions about Germany's European identity. Some scholars have argued that Germany's behavior in the crisis signals a continuation of the process of “normalization” of its European identity toward a stronger articulation of national identity and interests, that it has “fallen out of love” with Europe. This article will seek to reassess these claims, drawing on detailed analysis of political and media discourse in Germany—from political speeches through to both broadsheet and tabloid newspapers. It will argue that the crisis is understood broadly as a European crisis in Germany, where the original values of European integration are at stake. Furthermore, the crisis is debated through the lens of European solidarity, albeit with a particular German flavor of solidarity that draws on the economic tradition of ordoliberalism. Rather than strengthening expressions of national identity, this has resulted in the emergence of a new northern European identity in contrast to Greece or “southern Europe.”
Ireneusz Pawel Karolewski, Julian Pänke, and Jochen Roose
“outsider” from the “inside.” This special issue opens with two articles specifically exploring perceptions of Germany's handling of the Euro crisis. The sovereign debt crisis initiated an intense academic debate about Berlin's “move to center stage” in
An Examination of European Protest Activity, 2008–2012
Many scholars have cited the social unrest stemming from the European sovereign debt crisis as a prime example of a protest wave ( della Porta and Mattoni 2014 ; Flesher Fominaya 2015 ; Gerbaudo 2013 ). Protest is an accepted form of