home > by publication type > expert briefs > Crisis Brings Some Clarity to EU Policymaking
Email
| Authors: | James M. Goldgeier, Whitney Shepardson Senior Fellow for Transatlantic Relations Charles A. Kupchan, Senior Fellow for Europe Studies |
|---|
November 14, 2008
The onset of the financial crisis has given European leaders, particularly Britain's Prime Minister Gordon Brown and French President Nicolas Sarkozy, a chance to take a leadership role in forging an international response. Brown, who was chancellor of the exchequer under former Prime Minister Tony Blair, led his government's intervention into the banking sector in advance of the Bush administration's decision to do the same in the United States. And Sarkozy, whose country currently holds the rotating EU presidency, has prodded his European colleagues to forge a coordinated response to the crisis and pushed George W. Bush to hold a "Bretton Woods II" meeting to develop a new financial architecture to manage global economic challenges.
Bush followed Europe's lead. He adopted a bailout package that resembled the European model and agreed to convene an international summit in Washington on November 14-15. To prepare for that summit, EU leaders met on November 7 and called for greater regulation of the world economy as well as efforts to develop a consensus on a set of guiding principles. Notably, they argued that the International Monetary Fund (IMF) was the body most suited to preventing international crises, and called for providing the IMF with the resources and tools necessary to operate in today's world.
EU leaders suggested that world leaders agree on a 100-day period following the November 14-15 summit in which to draw up plans for implementing the principles they have enunciated. They declared that at the end of that period, they will propose another summit (presumably in Europe) to ensure implementation of the principles agreed to at the November 14-15 summit. This timetable would provide space for the incoming Obama administration to develop its own approach to reform of the international financial architecture.
The financial crisis is both an opportunity and a challenge for the European Union. Clearly, different countries are facing their own credit and housing problems. Hungary is in dire straits, and requires an IMF bailout. Denmark is revisiting its initial decision to stay out of the euro zone given the devaluation of its currency. Countries throughout the region have prepared their own individual bailout packages to shore up their national financial systems, in some instances creating political tensions among EU members.
But the European Union has also shown that it can galvanize the international community into action. Brown's plan to partially nationalize major British banks was initially dismissed in the United States, but then U.S. officials decided they had no choice but to follow suit with a similar plan. Sarkozy pushed Bush to hold the international summit. Now EU leaders have laid down a marker that they expect serious action within one hundred days and will seek to convene another international meeting to ensure follow-up. There has been plenty of bickering, and considerable ambiguity about the merits of national versus EU-wide policy responses. But the crisis has, on balance, demonstrated the need for EU-wide initiatives, and the European Union at least thus far, has met the challenge.
The European Union's coordinated response to the financial crisis represents a much-needed boost for the European project of political and economic integration. The failure of the constitution in 2005 and the more recent Irish rejection of the Lisbon Treaty represent serious setbacks. In combination with EU leadership during the war in Georgia, which included brokering a cease-fire agreement that has so far resulted in a partial pullback of Russian forces from contested territory in Georgia, recent developments augur well for a more coherent and responsible European role in global affairs. It remains unclear whether such coherence will continue after France hands over the EU presidency to the Czech Republic at the beginning of 2009. Not only is the Czech Republic much smaller than France, but like many other countries in Central Europe it has been reluctant to support a more centralized and collective EU.
Greater European coherence and capacity also holds out promise of strengthening transatlantic ties. The Obama administration is likely to turn to Europe for help on many different fronts--from Afghanistan, to Iran, to the global financial crisis. The more willing and able Europe is to team up with Washington on these and other issues, the more likely it is the Atlantic partnership can be repaired and renewed.
Weigh in on this issue by emailing CFR.org.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
The report of this bipartisan Task Force of distinguished leaders and experts represents a strong consensus on the importance of repairing America's immigration policy. It makes the case that maintaining America's political and economic leadership depends on attracting talented and hard-working immigrants, and on securing the country's borders in a smart, effective, and humane way.
This report finds that nuclear weapons will remain a fundamental element of U.S. national security in the near term, and makes recommendations on how to ensure the safety, security, and reliability of the U.S. deterrent nuclear force, prevent nuclear terrorism, and strengthen the nuclear nonproliferation regime.
About Independent Task Forces at CFR
Complete list of Task Force reports
Identifying international threats and acting on them may be the most difficult job for U.S. policymakers. This report
provides an actionable road map for managing international threats before they erupt into crises and makes a strong case that preventive action is not a luxury but a necessity.
For more than a decade, the United States has mostly watched from the sidelines as Asian countries organize themselves into an alphabet soup of new multilateral groups. In this report, the authors review the relationship between pan-Asian and trans-Pacific institutions and suggest policy guidelines for a new U.S. approach to this new Asian landscape.
Complete list of Council Special Reports
To request permission to reprint or reuse CFR material, please fill out this permissions request form (PDF), referring to the instructions on page 1.
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.