The bailout is here. Recent events made it predictable, but we are still a little incredulous. It is a psychological blow, and a landmark in our relations with the EU. In a country where the feeling of collective self-esteem has always run parallel with achievements in the European ambit, we fail see how it has come to this.
Certain underlying reasons made the bailout inevitable. First, it is clear that the Spanish banking system requires an injection of funds far superior to what Spain might manage by itself. Second, the instability of the debt markets is apparent in the continuing rise of the risk premium, which was becoming unsustainable. Third, the dim prospects of employment and growth, which make it hard for Spain to comply with deficit-reduction objectives, which would lead to a new round of cutbacks and structural reforms.
The government’s poor management of financial
Last week ECFR’s annual Council meeting took place in Berlin where around 100 council members discussed solutions to the euro crisis and a range of foreign policy challenges. Here is a blog post by Hans Kundnani summarising the main issues of the meeting (hint: euro crisis, role of Germany)
At the same time, speculations about a Spanish bailout have dominated the political agenda this week. José Ignacio Torreblanca analyses the Spanish situation and makes the case that focusing on national interests will not get us out of the crisis.
In another blog post, José Ignacio Torreblanca argues that the current crisis is in fact a crisis of democracy and that our democratic systems are in need of reform:
“The crisis is largely due to the incompleteness and defects of the EU. But it also shows up the defects of our democracy: the weakness of the state, vulnerable to hijacking
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There was a sense of urgency as ECFR’s Council gathered in Berlin last Thursday for its annual meeting. In the weeks leading up to the meeting there seemed to be increasing pessimism about the euro crisis and predictions of a break-up of the euro. In the week of the meeting, the ECB rejected the Spanish government’s plan to recapitalise Bankia, which led to a further increase in Spanish borrowing costs and speculation about an imminent bailout.
Meanwhile there was increasing criticism of Germany, on which, Martin Wolf wrote in the Financial Times the day before the Council meeting began, “the fate of Europe” now hung. On the day of the meeting, Ireland voted in a referendum on the fiscal compact.
Around 80 Council members from 20 European countries were in Berlin for the meeting. On Wednesday evening before the meeting began, we also held a public event on the future of Europe
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On 31 May 2012, the Irish people voted yes to the Fiscal Stability Treaty by a resounding margin of 60.3% to 39.7%. Voter turnout, at 50.6%, was on the low side, though higher than in some previous EU referendums. About 20% of the total eligible voters cast a no vote. A majority of voters in thirty-eight of the forty-three constituencies around the country opted to accept the Treaty.
Ireland becomes one of nine EU Member States, and one of four Eurozone countries, to ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. The Treaty will enter into force once it has been ratified by twelve Eurozone countries. The Institute of International and European Affairs (IIEA) in Dublin is tracking the ratification process across the EU in a frequently updated map. Ireland was the only country to hold a referendum on the issue.
The Irish vote breaks
Since the crisis broke, we have been hearing about cutbacks and reforms every day. But there is a reform we need urgently, and it is not even on the agenda: the reform of our democratic system. True, the crisis is very largely due to the incompleteness and defects of the EU. But it also shows up the defects of our democracy: the weakness of the state, vulnerable to hijacking by sectorial interests — private, or grouped around political parties.
Disconcerted by the speed of events, we fail to see that the viability of our economic reforms requires not only better institutions of EU governance, but also an in-depth revision of the functioning of our own political system. We thought that Spain had been profoundly Europeanized; but we now see how much fiction there was surrounding this process.
Just as the northern EU countries are still light-years ahead of Spain in terms of their
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On the nature of the reform agenda.