European Identity and the Economic Crisis

By Silvia Merler, a former Economic Analyst in DG Economic and Financial Affairs of the European Commission (ECFIN). Originally published at Bruegel

What’s at stake: the EU prepares to mark the 60th anniversary of the Treaty of Rome, and the European Commission has presented a white paper “on the future of Europe”. However, some have argued that Europe is going through a serious identity crisis, whose roots are to be found in the economic crisis and whose implications could challenge further steps towards integration. We review the recent contributions to this debate.

Ferrera looks into what it means to be a European, and argues that integration proceeded so as to favour the emergence of a pan-European elite identity, while the inherited weight and inertia of national cultural frameworks prevented the emergence of a deeper sense of common citizenship across the EU. The ‘econo-cracy’ and austerity politics of the recent crisis years have eroded what little sense of solidarity there might have been, particularly the equality principle among nations in the EU.

Ferrera suggests two options for the way forward: (i) a both symbolic and institutional reaffirmation of political equality as a principle in EU governance; and (ii) a reaffirmation of the importance of national liberal-democratic welfare states as the underpinning to the ‘European Social Model’.

Risse takes issue with the “no demos” thesis about the European Union. Empirically speaking, a “demos” requires a sense of community among the citizens, on the one hand, and  lively public spheres in which political issues are debated on the other. Risse argues that first, a majority of European citizens has developed dual identities – to their nation-state and to Europe – and this Europeanisation of national identities is sufficient to sustain carefully crafted (re-)distributive policies on the European level. Second, the euro crisis has strongly increased the politicisation of national public spheres and has also led to their growing Europeanisation with regard to issue salience and to the actors represented.

Fligstein points out that until the financial crisis, European identities were stable, but the financial crisis shifted the sense that people in Europe are in this together. He argues that the reason why the sense of being European has decreased so much is linked to the “ugly” politics of the crisis, where there has been little or no sense of solidarity.

Citizens in the north cannot be faulted for not wanting to pay for the economic errors or misdeeds of the south: since the vast majority of them already view themselves as mostly having a national identity, they do not have a sense that they “owe” those in the south anything in the name of a shared European identity.

Duchesne argues that there’s no use looking for European identity for now. As they keep trying to scrutinise this shadow, social scientists fail to see what is happening between citizens and their rulers and to explain the gap and dislike growing between them, which might seriously endanger democracy in Europe.

Instead of longing for identity to secure European integration, it is time to acknowledge that the EU’s challenge is not to carry on: it is to win the capacity to control the economy and to provide people who live under its jurisdiction with fair means to live decently, democratic rights and hope for a good life. The rest is smoke and mirrors.

Ntampoudi argues that there are four distinct but interrelated ways of interpreting the current identity crisis of the EU. The first concerns the international standing of the EU as a proclaimed global agent of peace, democracy, welfare and prosperity, which is undermined by its inability to provide these goods to its own citizens.

The second kind of identity crisis relates to the EU’s qualitative direction, centred on the question of whether we now face a more technocratic EU, rather than a democratic and social one. In a third sense, the rise of nationalist sentiments and sharp divides between the north and the south have contributed to the reconfiguration of perceived prototypical meanings of both national and European identities.

Ultimately, all of the above culminates in the fourth dimension of identity crisis, related to the internal consistency and citizen support for continuous and further integration, legitimised through the notions of unity and solidarity.

Schaefer and Weber investigate how the compatibility of national and European identity in the EU member-states has been affected by the Eurocrisis and if there has been a “re-nationalisation” of identities, particularly looking at whether economic factors have gained more weight as explanatory variables. They find that the crisis has led to a decrease in European identity, but it also seems to have affected the determinants of it. Utilitarians have gained in strength and significance and it seems that the crisis has made such evaluations more salient and more important to Europeans, making them more influential on attitude formation.

However, distrust in EU institutions and dissatisfaction with EU democracy has more explanatory power. Specific economic discontent such as negative evaluations of the economy might have an indirect negative effect on European identity, since such discontent does translate into diffuse discontent with EU democracy and EU institutions. Moreover, the crisis did connect discontent with national economies to distrust with EU institutions, indicating that the institutions seem to be rather a part of the problem than a part of the solution in people’s heads.

Poliakova and Fligstein point out that one aspiration of the project of European integration has been to attempt creating European citizens, with the idea that over time, citizens would look towards Europe as their main national identity. While the political and economic integration projects are quite far along, the national identity project has lagged far behind.

The paper argues that the EU integration project has pushed citizens to value their national identities more and to look to their national governments to protect them. Poliakova and Fligstein examine the evidence for this in the context of the financial crisis and show that in countries most seriously hit by the crisis, national identities have increased dramatically and citizens with a national and European identity have decreased.

Serricchio et al. explore the link between the financial crisis and Euroscepticism at the level of public opinion, building on and developing further the literature on the impact of economic, identity and institutional factors on Euroscepticism. They argue that the economic crisis did not substantially bring economic factors back in as an important source of Euroscepticism, even though the most pronounced increase in Euroscepticism has taken place in the countries most affected by the crisis. By contrast, national identity and political institutions play an increasingly important role in explaining public Euroscepticism.

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  1. Anonymous2

    Thanks for this.

    On the general issue of EU coherence, I believe Johnson was recently making disparaging remarks to the effect that you could never expect a group of people with 28 different languages to work together successfully. I believe his interlocutor asked him what he thought the prospects were for India which has I think 28 languages and was of course established as a state by the British!

    Less light-heartedly though, it is surely clear that without major change, the Eurozone is heading for serious crisis one day.

    1. AbateMagicThinking but Not money

      I don’t think the British “set up” India as it is now. In the days of the Raj, it included what is now Pakistan and what became (after yet more bloodshed) Bangladesh. Perhaps India as it is now is not the best example to bring forth! Be careful what you wish for is the dictum that should have operated back at the time of partition.

      As to European Identity; the European Union in it earlier forms was the manifestation of the general agreement that there should be no more war between Europeans. As a Brit, I can identify with that and so can the rest of Europe (however you define it). The other aspects of the current European project are superfluous in comparison. However, the mismanagement of the ongoing migrant crisis in a divisive, piecemeal fashion, (perhaps more so than the economic crisis) has in my opinion put the whole project into question. If you cannot manage the tangible external borders, your chances of managing the intangible economy are slim. As the old border posts ramp up again, it is a sign that Europe’s elites no longer have the necessary mojo, cohesion, whatever. Perhaps it is a sign that the dwindling survivors of the world wars no longer have enough influence.

      1. Hemang

        What is this nonsensical conversation? The British ‘partitioned’ India in broad day light hiring a Freelance Lawyer to deliberately and arbitrarily draw a line between what is now called India and Pakistan-both nuclear POWERS by the way! That way of the vicious Anglo-Saxon deepest wishes to harm as much as possible the Sovereign Nations they were creating is encapsulated in the phrase of a British bureaucrat involved in the partition process along with Lord Mountbatten: DIVIDE AND QUIT. Also, please permit me a laughter on ‘Europe’, that non-entity or an entity given birth recently for all the PR and marketing it has got, it is a recent notion. The architecture of this delusional notion of ‘Europe’ was created by the building blocks of sweat, blood and tears of the extractive Capitalism operating in the Third World-the other. That other- the Third World defined what was Europe in the 19th century; it is the same Third World that defines ‘Europe’ at this very moment by being converted into a Trojan horse of the ‘other’.Never ever forget that what passes as industrial revolution was financed in large measure by the Third World.Now China has learnt your whoring tricks of Wall Street and ‘Finance’ and it has 500 billionaires.And as for the ‘identity’ politics of ‘Europe, the moment is just ripe for another Auschwitz of Muslims and Arabs and Blacks. Where are the trains pray? Where are the newly constructed gas chambers? String them up.

        1. AbateMagicThinking but Not money

          Ooo eee. Could Jinnah and Nehru have re-drawn the borders of divided British India themselves, or just cancelled the whole thing after Mountbatten scuttled back to blighty? Of course they could have, but they had other fish to fry. Would it have stopped the violence?

          I suppose you could say that prior to partition, Jinnah and Nehru were technically British. They probably spoke more cultured english than me and had a better english education than most Brits. Many Indians and Pakistanis were British passport holders long after the birth of their respective countries. So if you accept that line of thinking, you can say that the British set up India and Pakistan, nukes and all.

          Yes, the history of Europe (along with the rest of the world) is extremely evil and very human. Divide and Destroy seems to have been the dictum.

          Have you, or anyone you know, got any solutions that do not involve similar evils to be perpetated in revenge for the events of history and current situations?

          1. Hemang

            For my humble part, I congratulate both India and Pakistan staying free of violence on European scale at least for now 45 years. That is a good news. It is also quite civilized. Allow me to disagree with your assertion that “Both Jinha and Gandhi had other fish to fry”. Gandhi certainly did not- He wanted to die in Pakistan for starters despite being a pure Hindu (as Yours Truly is a Brahmin!) Gandhi was shot for wanting to send money to Pakistan from Indian treasury to help it with partition crisis. My central argument is that the British are deeply Evil people and they CREATED the Hindu Muslim problem-it just did not exist prior to the British State making in India. A colonial state created the problem to smooth its power and perpetuate it-Divide and Quit is the final evil solution of this historical process of State policy. Mountbatten was allowed to leave India without his throat being slit thanks to the civilized ethos of the Indian political leadership under Gandhi-His body was eventually shattered into pieces by the IRA-a poetic instance of justice?! Please understand that Britain is too small an economy and power today for India to even bother about it-India is world’s third largest economy. Never never ever try to hold Gandhi responsible for the deeply evil act of partitioning India-It was purely a British solution that had seeds of the Failed State of Pakistan within it. So many terrorists are from Pakistan-ask the FBI and CIA. And India is thriving under the leadership of Narendra Modi.

            1. AbateMagicThinking but Not money

              Was the Mughal empire Hindu? The British empire was evil – because they were human. Start looking at Ashoka and the rest through history, and you can only come to one definite conclusion: humans all.

              Looking back and blaming is pointless. Looking back and taking it all into consideration and responding moderately is the ideal.

              Unfortunately pre-partition India did not listen to Ghandi (British trained lawyer) – their great loss.

              Jammu & Khasmir, rice-farmer suicides – what are your solutions? What are your alternatives?

              No use complaining about the state of things if you don’t have alternatives. I hope you get a plan that does not become a brand, and that people will listen to your message Here’s hoping that you will either ‘get the numbers’ or ‘the ear’ of the people who do.

              I’ve come to the conclusion that politics is the gaming of legitimacy. No plan – no legitmacy, in my book, but who am I to enforce that? Good luck, and go forth with a clear head.

  2. Ignacio

    I don’t know in other countries but at least in Spain, the local government is more impopular that the EU institutions.

    All of these studies have interesting points. Particularly for me those that identify the EU technocracy vs social democracy are quite rigth. Yes we face a technocratic EU, out of real democratic control, that emanates rules on the basis of “competitivity” as the major driver instead of solidarity. When those rules are adopted and adapted individually in every country, local governments use de “EU-mandatory” expression as an excuse for implementing measures that are often impopular or face opposition where they are implemented. Not my fault, it comes from the Superior Authority of the EU. Lots of measures are accompanied with economic sanctions to be applied to countries not complying with mandatory rules. The European Comission acts as a kind of “Vigilantes”, ready to apply the sanctions. Sometimes it even looks like they enjoy it. Kind of sadism.Very frequently you read in the newspapers news like this “Brussels warns Spain (or whatever country) that if something is not accomplished, will have to pay daily whatever amount as a sanction”. The best known example is the fiscal compact accompanied with its correspondent economic sanctions, but there are lots of these. So the EU has turned to be a punitive supra-state permanently in search of fractious States ready to charge them with fines and sanctions on the name of some superior objectives.

    The only thing, in my opinion, that gives some legitimacy to the EU is that they rule on environmental policy. This gives the public a sense that the EU somehow has social worries. Environmental policy is social policy. This is true if we forget that after deploying the environmental rules to be implemented, you have to try to do it complying at the same time with fiscal rules that make it very difficult.

    Then, there is the euro artifact. But a lot of people like the artifact.

    Solidarity and social concerns have gone long ago.

    1. a different chris

      >that if something is not accomplished, will have to pay daily whatever amount as a sanction”

      Which is comical in a horrid fashion: the EU way is the best way without question! Therefore if you try some other way that you think is better or simply don’t change quickly enough we will punish you — yet if the the EU way is the best way, then shouldn’t doing something different fail all by itself therefore not requiring any punishment at all?

  3. Moneta

    A couple of thoughts… many adopted children despite having loving parents go looking for their birth parents in search of their identity. So it would seem that a social project based on creating one global identity goes against our nature.

    It also appears that wealthy people are more apt to adopt the global identity while the less wealthy realize that it’s those close to them who will support them in a time of need…

    Therefore, as social nets get cut we can only see an increase in local identities.

    1. Moneta

      Asymmetric trade and the lack of surplus recycling guarantee the growth of identity politics.

      The top 5% (comprised of our leaders) have bought into the global economic man identity, unable to understand how those with no clout could adopt other identities.

    2. Ignacio

      The first example does not apply. Genetically you cannot identify the country of origin. The second phrase has truth on it. What I have seen in fact is that less healthy people tend to have more social contact with non-EU immigrants and share with them workplaces, supermarkets, neighborhoods…

      1. Moneta

        My first example related to the issue that identity is not as trivial as the author makes it appear…

        As Sally commented below… perhaps there is no general identity crisis… maybe it’s that the leaders want everyone to forget their own identity and become economic man.

    3. Eustache de Saint Pierre

      You could see the EU as a family, but I would suggest it is a rather dysfunctional one. Greece being the really naughty child shut into the equivalent of the dark room under the stairs on bread & water, while other unhappy children look desperately for someone to save them from a faulty system that necessitates that they eat gruel, in order to keep the whole rotten show on the road.

      Still, the technocratic managers of this families finances will be well rewarded, as was the case with Olli Rehn, who since last October has been made very comfortable at the Bank of Finland.

      No doubt Dijjsselbloem will also be well rewarded.

      “The recent IMF report saying that Greece’s debt load is unsustainable was “unnecessarily pessimistic,” Eurogroup President Jeroen Dijsselbloem said on Tuesday.”

  4. Sound of the Suburbs

    It started going wrong straight away but the problems didn’t show up till later.

    The comedy of errors that is the Euro.

    How is the system supposed to work?

    Bankers are given the privilege of creating money out of nothing for loans which they can charge interest on.

    In reality it provides a mechanism for you to borrow your own money from the future and the interest you pay is the charge for this service. You pay the initial sum, plus the interest, back in the future and get to spend that money today on a house or a car or whatever.

    This mechanism has an interesting effect on the money supply as the money comes into the economy immediately and is only removed slowly by the repayments. Very slowly, in the case of long term mortgage debt.

    For large loans banks set the interest rate depending on the risk assessment of the loan.

    Loans to countries are large loans and the interest rate is set depending on the risk of default.
    Greece and many Club-Med nations used to have to pay high rates of interest as there was a higher risk of default.

    Then The Euro came along.

    The ECB was helping Germany get over its bust when the Neuer Markt collapsed by 97%.

    The financial sector made an assumption that everyone would be bailed out by Germany if they got into trouble.

    Interest rates were set at very low levels across the Euro-zone, due to the incorrect assumption of risk by the financial sector and the ECB’s efforts to help Germany.

    The Club-med and Ireland boomed, they had never seen interest rates like these, borrowing was so cheap.

    Interest rates in Greece used to be about 18% with the Drachma, it was time to party and stock up on German luxury goods like the Porsche Cayenne, a great favourite in Greece at the time. It was party time in the Club-Med nations and Ireland.

    Housing bubbles inflated in Spain, Ireland, Greece and Holland.

    Germany itself was in a state of shock after the bust, it didn’t borrow and tightened its belt becoming more competitive.

    All this new debt elsewhere, creates money which floods into these economies increasing the money supply, prices and wages. Their competitiveness is going down compared to Germany, but it doesn’t show up as they are consuming with debt that, in itself, creates money that is pouring into the economy.

    They thought the good times would never end, until they did.

    A hurricane blew out of Wall Street and laid low the once vibrant global economy. The Euro-zone nations had to load up on debt to bail out their banking sectors.

    The financial sector realised that Germany wasn’t going to be bailing everyone out and re-assessed the risks and raised interest rates accordingly. The sustainable debt became unsustainable and the housing booms turned to bust.

    The Euro-zone crisis was in full swing and things were allowed to run for quite a long time before the ECB swung into action and bought down interest rates at the periphery and a lot of damage had already been done.

    The EU took the debt off the private banks and placed it on EU taxpayers, they were still very concerned about the health of their banks after 2008.

    The vast majority of Greek bailouts just return to the EU as repayments on the debt and less than 10% goes to Greece.

    There is plenty of evidence to suggest austerity doesn’t work including the IMF’s own forecasts for Greek recovery with austerity.

    The IMF predicted Greek GDP would have recovered by 2015.

    By 2015 it was down 27% and still falling.

    There are many players in this comedy of errors but Greece and the Club-Med nations get the blame.

  5. David

    “a former Economic Analyst in DG Economic and Financial Affairs of the European Commission.”
    That says it all, I think, although some of the individual comments (e.g. Ferrera and Duchesne) do have some genuine insights.
    The main thing is that there is no real “European identity”, except for the identity of people like the author, living and working in the central institutions of the EU, sharing ideologies and cultural assumptions. But that’s an entirely artificial creation, and bears no relationship to the lived experience of most Europeans, who rarely leave their own countries (a significant proportion have never been abroad). What the better educated and travelled Europeans do have is the sense of belonging to an entity with slightly fuzzy borders that shares a common cultural and historical heritage, and whose frontiers have moved around quite a bit over the last century. (Indeed, until 1919 most Europeans lived in multi-ethnic empires – there’s nothing new about multiple identities).
    The problem is that this flexible sense of “European-ness” has been co-opted by the Brussels institutions, who identify Europe with the area immediately around the Place Schumann, and a European identity with following their dictates. It’s often been remarked that when the Euro banknotes were being designed, Brussels was unable to come up with any culturally significant designs for them, or even a name that meant anything. This draining of all cultural significance, and promotion of a grey porridge-like Euro-identity has produced exactly the reaction you might expect from a population which is far less “European” in practice than elites imagine.

    1. VK

      What happens, if/when an employer diverts from his original promises of fair work/life balance or fair pay and instead increases work pressure continually without remorse?
      The workers/employees react in the usual fashion: Rising times/cases of sick leaves, sabotage and ultimately strike, uproar and other forms of resistance more or less organized.

      Institutions like the European Commission, which lack true democratic legitimacy, are coopted by corporate interests (visible to the public e.g. by the revolving door effect) and act as enforcer of those interests. This leads to decrease in life quality for the many throughout Europe and increase of wealth and power only for the few.
      The european identity loses its appeal because of increasing fear and reality of poverty and material insecurity.

      In my eyes the recent ‘populist’ movements, with their promises of simple solutions, are so to speak equivalent to sick leaves and sabotage.
      Will a re-negotiation be possible, is it still possible in a civilzed way, to reform those institutions lacking democratic legitmacy or not?
      To me, the answer to this question will determine the future of the possibility of an european identity.
      Another step towards decreasing intra-european tensions should be the german government to renounce the policy of the “suebian housewife”.

  6. Sally

    I have no identity crises. I am British, and my country sits in Europe. As do many other individual European countries. They each have their own rich cultures, and histories. Many have their own different languages and customs. Their own food, and differnt likes and dislikes.

    The only people who have a European identity crises are those who wanted to throw all of this in the dustbin of history, and create a European super state with a top down legal system, currency and set of laws.

    Thankfully more and more Europeans are waking up, and want to regain their own counties and identity from the clutches of the unelected elites.

    1. b1daly

      Just curious, are you optimistic that the Brexit will address the aggregate desires of its supporters, on balance?

      1. Foppe

        Mind that it’s “their” desires as mediated through an intentionally stupid instrument, at a moment (and with a meaning) chosen by the ruling party. It makes no sense to me whatever to read more into this, even if it may well be that the propaganda is working, and people are starting to believe that this is what they actually want. But either way, this is on the Tories first, and Labour second, for not attempting to reframe the outcome. (Yes, EU sucks, but it isn’t the proximate cause of the suckiness of the lives of so many. National pols / parties choosing to adhere to the rules is the problem.)

  7. susan the other

    makes me think about the NC warning that financial time is real-time, here and now, whereas political time is a deliberative and plodding creature that can’t keep up… so it seems impossible to hurry-up political time because it just is what it is… and that leaves financial time – the EU and the rest of the world should be brave enough to slow down financial time… I don’t really know where this thought is taking me. never mind.

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