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Article

The Treaties of Rome  

Kiran Klaus Patel

Together with the Treaty of Paris (1951), which established the European Coal and Steel Community (ECSC), the two Treaties of Rome (1957) were the founding treaties of today’s European Union. Of the two Rome treaties, the more influential proved to be that which created the European Economic Community (EEC), although many contemporaries expected the European Atomic Energy Community (Euratom) to acquire that role. As during all major treaty negotiations in the history of European integration, there were divisions of opinion among the six ECSC member states (Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands) along and within national lines. In the end, however, their governments were able to agree on a complex package deal with various components. To reach this result, the work of two preparatory bodies, the so-called Spaak Committee and an intergovernmental conference set up by the foreign ministers of the six ECSC states, proved crucial. In addition, transnational actors and networks had a considerable impact on the Treaties. The ultimate treaty texts reflected this trajectory of negotiations and the wider political context of the time. The Treaties of Rome were less supranational than the Treaty of Paris, and the three resultant communities were characterized by their hybrid nature: until the Merger Treaty of 1967, they shared some common institutions, such as the Parliamentary Assembly and the Court of Justice, while they had three independent executive bodies. Euratom, which focused on cooperation in the sphere of nuclear power, soon experienced institutional crises, and the same holds true for the ECSC. The EEC, in contrast, possessed greater powers and unleashed more significant dynamics and thus became the core of European integration. On the basis of the Treaties of Rome, the European Communities incrementally turned into the foremost forum of international cooperation and integration in (Western) Europe. That, however, was quite unclear in 1957, as reflected in opinion polls at the time. Moreover, there were important contenders for this role. By the end of the Cold War, the EC had outpaced them all, for three main reasons: its focus on market integration, its greater legal integration in comparison to organizations such as the Organisation for Economic Co-operation and Development (OECD) and the Council of Europe and, finally, its financial resources. In sum, one needs to know about the Treaties of Rome and the integration dynamics they unleashed in order to understand the enormous importance that today’s EU has acquired.

Article

From Elections to Democracy in Hard Times  

Anna M. Meyerrose, Thomas Edward Flores, and Irfan Nooruddin

The end of the Cold War, heralded as the ideological triumph of (Western) liberal democracy, was accompanied by an electoral boom and historically high levels of economic development. More recently, however, democratic progress has stalled, populism has been on the rise, and a number of democracies around the world are either backsliding or failing entirely. What explains this contemporary crisis of democracy despite conditions theorized to promote democratic success? Research on democratization and democracy promotion tends to focus predominantly on elections. Although necessary for democracy, free and fair elections are more effective at promoting democratic progress when they are held in states with strong institutions, such as those that can guarantee the rule of law and constraints on executive power. However, increased globalization and international economic integration have stunted the development of these institutions by limiting states’ economic policy options, and, as a result, their fiscal policy space. When a state’s fiscal policy space—or, its ability to collect and spend revenue—is limited, governments are less able to provide public goods to citizens, politicians rely on populist rather than ideological appeals to win votes, and elections lose their democratizing potential. Additional research from a political–economic framework that incorporates insights from studies on state building and institutions with recent approaches to democratization and democracy promotion, which focus predominantly on elections, is needed. Such a framework provides avenues for additional research on the institutional aspects of ongoing democratization and democratic backsliding.

Article

Bulgaria and the European Union  

Dimitar Bechev

Bulgaria joined the EU in 2007, yet neither its road to membership nor its time in the Union have been easy. In the 1990s and 2000s, the accession process provided an impetus for political and economic reforms, but the EU’s famed transformative power worked unevenly. Bulgaria started its journey later than other countries in post-communist Europe, and had to deal with worse domestic and external political and economic impediments, and thus failed to close the gap with the wave of nations entering the EU in 2004. The sense of unfinished business paved the way to a post-accession conditionality regime, subjecting Bulgaria and Romania to special monitoring and regimenting them into a special category apart from other members. Despite efforts by successive governments in Sofia, the country has not made it into either the Schengen area or the eurozone’s antechamber, the Exchange Rate Mechanism (ERM-2). The limited progress in reforming the judiciary and combatting high-level corruption and organized crime has prevented Bulgaria from continuing its journey to the core of Europe, unlike some of the 2004 entrants from Central and Eastern Europe. Being part of the Union has not made a profound difference when it comes to deep ingrained ills such as state capture, and the lack of accountability and transparency in policymaking. Some critical areas have witnessed serious backsliding—notably the national media, where the EU has few formal competences or levers of influence. Yet, Bulgaria’s EU membership should not be written off as a failure. On the contrary, it has delivered enormous economic benefits: increased growth, expanded safety nets in times of recession (especially after 2008), improved economic competitiveness, new opportunities for entrepreneurship, cross-border labor and educational mobility, and transfer of knowledge and skills. As a result, EU membership continues to enjoy high levels of public support, irrespective of the multiple crises it has gone through during the 2010s. Political parties by and large back integration, though soft Euroscepticism has made inroads into society and politics. While the EU has had, caveats aside, a significant domestic impact, Bulgaria’s imprint on common institutions and policies is limited. It lacks the resources and political clout to advance its interests in Brussels. That generates risk in light of the growing divide between a closely integrated core and a loose periphery, likely to expand in the wake of Brexit. Bulgaria is affected by decisions in the eurozone but has little say over them. The absence of leverage is particularly striking in external affairs. Despite its geographic location, next to the Western Balkans and Turkey and in proximity to Russia and Ukraine, Bulgaria has rarely, if ever, been on the forefront of major decisions or policies to do with the EU’s turbulent neighborhood. At the same time, Bulgaria has been exposed to a series of crises affecting the Union, notably the antagonistic turn in relations with Russia after the 2014 annexation of Crimea and the influx of asylum seekers from the Middle East.

Article

Development Trajectories in Africa  

Richard E. Mshomba

Since independence, African states have been striving for economic development, but relatively few countries have achieved their goal. Between 1970 and 2016, real GDP per capita in sub-Saharan Africa grew by an annual average of just 0.48%. However, there was a wide range of economic performance across different countries, as well as clear variation in growth rates over time. Countries such as the Central African Republic, Democratic Republic of Congo, Liberia, and Madagascar had, on average, a negative growth rate in terms of real GDP per capita. Meanwhile, countries such as Botswana, Lesotho, Mauritius, Seychelles, and Swaziland had positive average annual growth rates of at least 3%. The differences in economic growth rates reflect the diversity of economic structures, governance, and political stability across African states. Although deeper economic integration among African countries may work to reduce the large disparities in economic development, any projections must nonetheless recognize that countries will differ in their economic trajectories. Variation over time is also important. The dominant patterns of economic development in sub-Saharan Africa in the 1980s and 1990s on the one hand, and the 1970s and past the 1990s on the other, were quite different, reflecting a long business cycle. If we look solely at economic growth statistics, the 1980s and 1990s can be described as lost decades. On average, real GDP per capita on the continent declined annually by 1.54% and 0.62% in the 1980s and 1990s, respectively. By contrast, between 2000 and 2016, real GDP per capita increased by an annual average of 2.13%. One important debate has focused on whether these shifts are primarily the result of domestic or international factors. Structural adjustment programs (SAPs) imposed by the International Monetary Fund (IMF) and the World Bank have been blamed for the decline in the economic fortunes of African countries in the 1980s. At the same time, they are praised for pulling many countries out of unsustainable macroeconomic policies. Moreover, a balanced overview of Africa’s development trajectory must conclude that even without major policy shifts such as those brought forth by the SAPs, many countries would still have remained highly dependent on one or just a few commodities, and would therefore have continued to experience wild swings in their business cycles in the absence of international intervention. The lack of economic diversification of many economies on the continent means that the future is hard to predict. However, the prerequisites for a prosperous Africa are not a mystery—they include good governance, economic diversity, and genuine economic integration.

Article

The Lisbon Strategy and Europe 2020  

Annette Bongardt and Francisco Torres

The Lisbon (2000–2010) and its successor, the Europe 2020 strategy (2011–2020), denote EU-wide exercises in economic policy coordination for economic and institutional modernization. They set an ample reform agenda with common targets to transform a host of common challenges facing the EU and its members (as varied as globalization, the paradigm shift to a knowledge economy, demographic aging, or climate change) into economic opportunities and quality growth. The economic and political economy arguments for EU-level coordination rested on positive spillovers from trade and peer pressure, respectively. The Europe 2020 strategy, a revised Lisbon rather than a new strategy, set a renewed vision of a European social market economy that also plays an important role in the global context (the 2030 Agenda for Sustainable Development). Built on the Lisbon strategy’s governance framework, Europe 2020 inherited a problem-laden legacy with respect to governance and ownership of reforms and in addition faced the impact of large negative transnational spillovers, which put in sharp focus that there was an as-yet-unaccounted-for euro-area dimension to the reform agendas. The sovereign debt crisis (2010–2014) added urgency to dealing with the EU’s structural weaknesses and economic governance building. The European Semester was set up as the chief instrument to help overcome compliance and implementation problems, inserted within broadened economic policy coordination, of which structural reforms under the Europe 2020 strategy constitute one of three blocks. The OMC method affords member states the possibility of finding their own consensual path toward agreed economic reform targets within the strategy’s adequate, 10-year timeframe. The central idea continues to be the promotion of reforms tailored to member states’ heterogeneous situations and preferences and that so are also politically sustainable. Without being framed and perceived in terms of desirable reforms in line with socioeconomic objectives and preferences, reforms carry potential for a political backlash. The Europe 2020 strategy also captures the fundamental and long-term issues for economic development and competitiveness, notably institution building, and outlines a forward-looking model of society with social and environmental dimensions. The European Commission came to base its assessment of the implementation of structural reforms on the broader objectives of the Europe 2020 strategy and also included the respect for the European social pillar in the European Semester. Nonetheless, Europe 2020 results have been mixed. The OMC does not feature sanctions for non-compliance. The sovereign crisis context added compliance-enhancing mechanisms that were absent before (market and peer pressure, conditionality in countries subject to adjustment programs) although those came essentially to a halt when financial market pressure subsided, and ECB actions had the side effect of relieving pressure. Efforts undertaken to improve implementation include a structural reform support program to make country-specific recommendations more effective. Yet, close to the end of its term the Europe 2020 strategy continues to be held back by member states taking insufficient ownership of reforms and not prioritizing the relevant ones from an EU point of view, a lack of visibility and ultimately, governance (the unanimity requirement).

Article

Serbia and the European Union  

Matteo Bonomi and Milica Uvalic

Serbia is negotiating European Union (EU) membership, a process that started in 2014 after the Brussels-mediated agreement between Kosovo and Serbia was signed in April 2013. Although the Federal Republic (FR) of Yugoslavia (Serbia and Montenegro) was officially included into the EU’s Stabilization and Association Process soon after the fall of the Milošević regime in October 2000, complex political issues have prevented its faster progress toward the EU. EU measures after 2001 in the areas of financial assistance, trade, and legal harmonization have sustained in a major way the country’s political and economic reforms, facilitating fast economic integration with the EU economy, financial and banking integration, the adoption of many laws in conformity with the acquis communuataire, new business opportunities, and increasing foreign direct investment. However, the Serbia–EU integration process has also been accompanied by strict political conditionality that has greatly delayed the establishment of contractual relations. Despite major efforts of various governments to comply with EU conditions, it was only in late April 2008 that Serbia concluded a Stabilization and Association Agreement with the EU, which has paved the way for obtaining candidate status in 2012 and the opening of EU accession negotiations in 2014. In the meantime, EU’s enlargement negotiations framework has been strengthened further, making the negotiation talks much more complex and demanding. In addition to Serbia’s insufficient compliance with accession criteria, particularly reforms of the judiciary and public administration, the contested issue of Kosovo’s independence continues to pose a major threat to Serbia’s entry into the EU. Despite the absence of a common position on the part of the EU, given that Kosovo has still not been recognized by five EU member states, the limited progress in the Belgrade–Priština EU-facilitated dialogue represents one of the major obstacles for Serbia’s EU membership. Serbia’s entry into the EU, which could possibly take place in 2025, is likely to bring many benefits to the country and its population, but also to the EU, as this is a region of not only risks but also opportunities.

Article

The Economic and Monetary Union (EMU)  

Lucia Quaglia

The Economic and Monetary Union (EMU) is one of the most important policy areas of the European Union (EU). Academic research on EMU in political science is well established and ever-evolving, like EMU itself. There are three main “waves” of research on EMU, which have mostly proceeded in a chronological order. The first wave of scholarly work has focused on the “road” to EMU, from the setting up of the European Monetary System in 1979 to the third and final stage of EMU in 1999. This literature has explained why and how EMU was set up and took the “asymmetric” shape it did, that is to say, a full “monetary union,” whereby monetary policy was conducted by a single monetary authority, the European Central Bank (ECB), but “economic union” was not fully fledged. The second wave of research has discussed the functioning of EMU in the 2000s, its effects and defects. EMU brought about significant changes in the member states of the euro area, even though these effects varied across macroeconomic policies and across countries. The third wave of research on EMU has concerned the establishment of Banking Union from 2012 onward. This literature has explained why and how Banking Union was set up and took the “asymmetric” shape it did, whereby banking supervision was transferred to the ECB, but banking resolution partly remained at the national level, while other components of Banking Union, namely a common deposit guarantee scheme and a common fiscal backstop, were not set up. Subsequently, the research has begun to explore the functioning of Banking Union and its effects on the participating member states.

Article

The Banking Union in Europe  

Lucia Quaglia

The banking union is considered to be one of the main steps in economic integration in the European Union. Given the rather recent establishment of this policy, academic research on the banking union does not have a long lineage, yet it is an area of bourgeoning academic enquiry. There are three main “waves” of research on the banking union in political science, which have mostly proceeded in a chronological order. The first wave of scholarly work focused on the “road” to banking union, from the breaking out of the sovereign debt crisis in the euro area in 2010 to the agreement on the blueprint for the banking union in 2012, explaining why it was set up. The second wave of literature explained how the banking union was set up and took an “asymmetric” shape, whereby banking supervision was transferred to the European Central Bank (ECB); however, banking resolution partly remained at the national level, whereas other components of the banking union, namely, a common deposit guarantee scheme and a common fiscal backstop, were not set up. The third wave of research discussed the functioning of the banking union, its effects and defects. The banking union has slowly brought about significant changes in the banking systems of the member states of the euro area and in government–business relations in the banking sector, even though these effects have varied considerably across countries.

Article

The International Political Economy of Regionalism  

Tanja A. Börzel and Soo Yeon Kim

Economic regionalism has been dominated by preferential trade agreements (PTAs). Not only have their numbers surged since the end of the Cold War but also different varieties of PTAs have emerged. First, long-standing PTAs have evolved into deeper forms of economic regionalism, such as customs unions, common markets, or currency unions. Second, PTAs increasingly involve “behind-the-border” trade liberalization, such as the coordination of domestic trade-related regulatory standards. Third, many of the PTAs that were established during the past 25 years no longer only involve countries of the Global North but are formed by developing and developed countries (“North–South” PTAs) and between developing countries (“South–South” PTAs). Finally, a most recent development in economic regionalism concerns the building of so-called mega-PTAs, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), the Regional Comprehensive Economic Partnership (RCEP) agreement, and the African Continental Free Trade Agreement, which combine the many pre-existing PTAs among its members. In order to explain the formation, proliferation, and evolution of these varieties of PTAs, existing international political economy (IPE) approaches have to give more credit to political factors, such as the locking-in of domestic reforms or the preservation of regional stability. Moreover, IPE scholarship should engage more systematically with diffusion research, particularly to account for the spate of deeper regionalism. Finally, “rising powers” and “emerging markets” constitute an exciting new research area for IPE. These new players differ with regard to the importance they attribute to regionalism and the ways in which they have sought to use and shape it. Identifying and explaining variations in the link between rising powers and regionalism is a key challenge for future research.