Note: These notes go into far more detail than we had time to in class, so if you don't recognize some of the material, that's why!
Hegemonic Stability Theory
This claims that the United States is a hegemon, who has the power to cajole other states into going along with the system. Hegemony is different than empire because the US rules by example, and by making it in the interest of other states to go along.
Argument: states will not want to cooperate in a realist world of anarchy, so you need a big state to assure that no one will take advantage of the system, and that it is safe to be interdependent. When there is no hegemon, realist multi-polar relations tend towards protectionism and distrust. A hegemon can help enforce a stable, free-trade regime. (Some: the move towards WTO represents a recognition by the US that it could lose its relative strength, or domestic politics in the US could move towards protectionism, and an institution like the WTO would strengthen the norms of free trade liberalism).
Problem -- hegemony may not be as benevolent as some say; it could be that the US uses its power to reinforce its own economic interests, arguing that this helps others too. Especially the third world, as we’ll see, claim these benefits go mostly to the US and some first world economies. Others say more directly this flows to corporations and big banks in the first world.
Capital Concentration Theory
Others argue that what’s happening is more fundamental. MNCs and big banks are now able to control economic flows and the nature of economic relations because their international status puts them above the law. They are benefitting the most, and gaining power that is not democratic, but oligarchic. This is a favorite theory of both the Marxist left and the far right in America (Pat Buchanan). Here corporations are moving into the territory created by increased trade and capital flows, territory that has no laws. National laws don’t touch them since they are able to skip across borders, avoid taxes, and avoid regulations. But international law does not apply to corporations, only to states. Some: their power helps them even control politicians and world leaders. There is certainly some truth to this theory, though it probably isn’t as organized and malicious as the extremists think. But if its true it creates a problem: what does this say about democracy and modern politics?
Globalization:
First: what is globalization?
Since the mid-eighties the world has witnessed an unbelievable explosion of international investment and power for multinational enterprises (MNEs). MNEs have been around for a long time, but in the past two decades their power has expanded dramatically; between 1985 and 1993 foreign direct investment world wide tripled to $4.2 trillion per year. Ford Motors now has over 300,000 employees in 30 countries, and dozens of MNEs have more assets and production than half the countries of the world. Much of this is directly due to the computer and telecommunications revolution of the last few years. The increase has been augmented by equity investment in world stock markets as old barriers that made global investment a rarity disappeared.
In 1950 world trade involved 8% of world GDP (gross domestic product); by 1998 that ballooned to 26.4%. When one considers that, adjusted for inflation, total world GDP is six times what it was in 1950, trade now accounts for more production than the total for the world fifty years ago. The change going on in the world due to the technology revolution is real, and it can’t help but have an impact on international relations.
Liberalism
Liberalism as a perspective embraced originally the political ideas of John Locke, and the economic ideas of Adam Smith and later David Ricardo. It evolved from a rather libertarian form of minimalist government involvement to a belief that markets can usually provide the best outcome due to the way they function, but due to complexity, lack of perfect information by the actors, and potential market malfunctions you need some regulation to assure that it markets do not fall apart.
From realist to liberal/neo-liberal
In the 1960s liberal economic theory dominated, but realist international relations theory dominated talk about super power politics and the like. Diplomacy and realism was "high politics," while economics was "low politics." You could get trade and cooperation in the West, according to realists, because with the Cold War the dominate theme, economics just wasn’t important enough to really take seriously.
Liberals disagreed, and noted that what was happening was revolutionary in a way – the institutions like GATT, the IMF, World Bank, etc., were unprecedented in their scope – but they weren’t a threat to sovereignty, and didn’t seem to impact the international system fundamentally.
In 1976 Keohane and Nye publish a book "Power and Interdependence," where
they lay out their theory of complex interdependence, arguing that: a) realism
is becoming obsolete; b) liberalism is a better approach; and c) this has
ramifications for how we approach international relations. This argument
modified traditional liberalism by emphasizing international institutions as
facilitated global free trade and cooperation – this approach has been labeled
neo-liberalism.
They weren’t explicitly anti-realist in their book. Rather, they said that
realists need to come to grips with the impact of economics and especially
economic interdependence on power relations. If two countries are
interdependent, then the traditional way to look at competition as a zero-sum
game is obsolete. Moreover, they argued that war and military conflict would be
even MORE costly since it wouldn’t only destroy people and things, but would
damage the entire economic systems of both or all states involved. This makes
military power less important than the past, and economic links a stronger
variable.
1980’s: From Complex Interdependence to Globalization
Globalization slowly started to be used instead of complex interdependence, as it reflects both that interdependence, and the growing variety of ramifications from it.
At base neo-liberals agree with realists that state interests (again, think of game theory) can stymie what interdependence should bring about – free trade and the collective good of all. Unlike realists, they are relatively optimistic that the development of strong and stable international institutions can prevent this from happening.
REGIMES: One thing they point to is the importance of shared norms and principles in the international system. Realists assume a self-interested negative human nature, liberals see self-interest and rationality in human nature. They are more confident that states and leaders can use their reason to see the benefits of a liberal approach and, if confident that they won’t be played for the sucker, they’ll gladly engage in building institutions that will enforce fair cooperation and better outcomes for all. If some states try to go against the rules, other states can "punish" them in a way.
Liberalism is really strong in describing the industrialized north, but has a severe weaknes when applied to the south. Also note the critique that even in the north neo-liberalism emphasizes business and financial interests at the neglect of workers.
Radical school of thought: based on Marxism. We’ll discuss this much more in the next unit, as it is the basis for some of the theories we’ll get into, but the key ideas are:
1. The importance of structure; social relations are structured, and liberal theory ignores that, by just looking at choices.
2. Emphasis on economics and exploitation.
3. Strongest in looking at the third world, while liberalism is strongest in considering first world.
Constructivist:
Constructivist theory is an approach that can be traced to a number of authors, in sociology to Peter Berger and Thomas Luckmann with their classic "The Social Construction of Reality" and to Anthony Giddens’ work on structurationism.
(Social) reality as a social construction: The biggest difference between social science and natural science (in constructivist thought) is the nature of the subject matter. In natural science you deal with physical matter and energy in various forms which you can isolate, run controlled experiments upon, and whose properties and ways of interaction do not change – they follow physical laws. You may get different reactions to a chemical if you mix it with different substances, but under the same conditions it will act the same way.
Social reality is different. Social reality refers to the cultures, modes of interaction, political systems, social set ups, that define the context of human life. These things are human constructs. The problem with other forms of social theory, according to constructivists, is that they place too much emphasis on human behavior being guided by a set human nature. There is a human nature, but constructivists see it as limited to basic functions like trying to survive, taking care of biological functions, needing social interaction, and a few others. Beyond that, we build worlds. We build cultures. Then we get programmed by those cultural worlds to think certain ways and see the world we built as natural.
How is a world built? Through the development of shared norms and understandings; cultural beliefs about what society and life is all about. A society is a group that not only shares these norms and understandings (though not all are shared – many can be contested – but enough are shared to make for a basic set of stable social interactions), but also has a common identity they recognize. Identity involves subjectivity and difference: subjectivity is how the self is defined, difference is how others are defined as separate from the self. A society is where people see a fundamental commonality between others and self, a common subjectivity (we are Americans), difference is how that common identity is differentiated from those outside that identity (they are foreigners).
Societies tend to reproduce the social reality they are born into, as they learn it is normal and proper. It is usually reinforced by religion, tradition, philosophy, cultural, and other systems of thought which developed over time. The point for constructivists is that even though a set of social norms, or social reality, is usually reproduced, it can also be transformed. Social reality is not a ‘natural’ result of basic human nature at play, but a contingent result of human choice and belief.
Transformation: for constructivists, transformation is not easy. It requires not only a change in thinking on the part of individuals, but it requires that change to become so prevalent that it changes the norms and understandings of a society. That usually is a generational matter at best, as people’s ideals tend to be set at a young age.
Ramifications: 1) theories that treat the world that is as the world that must be, and are not critical, are actually acting as self-fulfilling prophecies, reinforcing an existing social reality. 2) this makes theorizing and social science something that cannot be separated from the subject of study; our theories either reinforce or aid the transformation of social reality, they are not value neutral. 3) It is important to investigate cultural and shared norms as well as patterns of behavior. Behavior results from people acting on the basis of the meaning of acts, and that meaning is defined by beliefs and understandings about reality. 4) critical theory reflects on the existing shared norms and understandings and criticizes them or offers alternatives. 5) constructivism does not DENY other social scientific endeavors, but says they need to consider the contingent nature of a given social reality and be critical – using traditional social science as part of the constructivist program.
The State:What is it, and how do we conceptualize it?
The sovereign state is the central unit of international relations. The book notes different conceptions of the state. Note the difference between nation and state; and how this can create some difficulties.
Liberal view of the state: process, competing interests, various voices, not a unified actor. Liberals will see international relations more in terms of interests (esp. economic) with cooperation and peace likely if institutions can be built to allow states to act in self-interest without fear of being taken advantage of. More on that Friday when we go over liberal theory with more detail. Liberalism is in essence a modern form of idealism, where cooperation and peace is possible, but not because of rule from above through an international organization, but self-interest from below, economic trade.
Realist view of the state: We discussed that last week; realism sees the state as autonomous, sovereign, in anarchy, focused on objective national interest defined as power, in a balance of power system.
Radical: The state represents the interest of big money, and acts to maximize those profits, rather than general interests of the state. Differs from liberalism in their view of capitalism. For liberals, it is a just market system that rewards effort and ultimately can be good for everyone if people act in rational self-interest. Radicals think capitalism exploitive, and due to structure creates classes whereby the interests of one take precedence (big money) while average folk are less important.
Power: The issue of power is complex, the book goes over a rather dry explanation of different sources of power. A few points I’d make:
1. Diplomacy as a source of power is controversial. Good diplomacy makes a difference, it’s debated how much. Think: The US in Iraq? Was Bush a poor diplomat, or were the differences between states real, and the US could not have expected more help in any event?
2. Projection of power: often much more difficult than realized.
3. Liberals: tend to see economic power as more important now than military power, though some mix liberalism with a more realist view of power, creating a belief that you need to use military power to expand liberalism. This is against the general liberal belief that military power doesn’t work as well as economic, and is against realism as it is designed to disrupt the status quo. Often called: neo-conservative.
Are states rational actors?
Do states act rationally, or not? Rational action means maximizing expected utility. E = U x prob of U.
(In class I’ll explain his, using an example of how a person makes a decision, say, to go to a party or study for an exam).
Game theory:
Coop Def
Coop -1,-1 -10,0
Def 0,-10 -8,-8
Bounded rationality: people like perfect information and thus engage in biased searches and satisficing.
More of this if you take American foreign policy: suffice it to say, just as the nature of the state is uncertain, the nature of decision making and foreign policy is unclear.
Realists: state should act rationally with diplomacy
Neo-realists: assume states act rationally
Liberals: see varied interests interacting, thus no unitary rational action
Radicals: states act in interest of big money, thus general rationality assumption misleading
Constructivists: state’s interests and way of acting socially constructed, not clearly rational, though a kind of rationality can be constructed.
Is this the way to the future? (Note: what does this say about state sovereignty?) This is the most common theory. Its claims are simple:
1. States are not the primary actors any more, rather, governments, corporations, international organizations, and even individuals act in the international system. Realist assumptions about states as fiction people are wrong.
2. We don’t have anarchy, we have a set of norms and shared agreements on behavior that create an international society. We can build trust, overcome the security dilemma, and work towards peaceful resolution of conflict via organizations like the UN, WTO, EU, NATO, etc.
Argument: this has been a result of self-interest as people realize free trade and liberalism brings economic growth. They want to avoid the security dilemma, so they build institutions to achieve this goal.
3. War is less likely between countries that are democratic and trade freely with each other. In fact, there has never been a war between countries thus described (though the "n" in this -- the sample size -- remains small).
4. Economic prosperity is the new goal of states, not just interest defined as power. States also are affected by internal interests (business, bureaucrats) making compromise across borders more likely.
International Regimes: Emerge when shared interests and principles create a common set of actions by states. This can include specific organizations, like the EU, or can simply be a standard set of norms that guide behavior and maybe even affect state interests. Much like how norms of behavior on a campus may affect how students act, so can norms developed between states.
Possible problems with this theory:
1. Interdependence can mean more conflict as well; historically states fight against those they have a lot of contact with, and don’t have wars with states far and distant.
2. Some argue the EU is an exception, because the US used its immense power, its promise to protect Europe, and the fear of the Soviet Union, to push them together. (This is known as hegemonic stability theory, which says that states will only overcome their mistrust if a powerful state makes it necessary. Such a theory says that now that the Cold War is over, and the US has lost relative clout, the cooperation in the EU may decline; it is a more realist approach).
3. Ignores impact of culture and politics. This kind of neo-idealism to the extreme: POST-SOVEREIGNTY THEORY.
This says essentially that sovereignty is out of date. Sovereignty may always exist in a legal sense. States still are the primary actors in international law, they can leave or join organizations, they can do what they want. But in a practical sense, that power isn’t real. The legal right to do something doesn’t mean you have the practical ability to do it! This power has been given up voluntarily, due to economic incentives of cooperation, but once gone it isn’t easy to get back without paying a heavy price.
But what happens when sovereignty no longer rules as the fundamental principle of international relations? Isn’t that the basis of the Westphalian system? Does democracy even work any more, if the decisions are made by corporations or international organizations over which people don’t have direct control? Simply: such a development is a fundamental challenge to the nature of the international system, similar to the challenge caused by the wars of reformation. The technology revolution and weapons of mass destruction add to this. The post-sovereignty theory suggests we’re going into a time of real transformation in the system, led by the increased connections and interdependence between states. Unlike neo-idealists, they believe the change may be more profound than simply having more international organizations to make sure economic benefits continue, they believe the whole structure of the system might change, since now realist and neo-idealist ideals co-exist, sometimes in a rather odd way.
International organizations -- the path?
Two types of international organizations: IGO’s (Intergovernmental Organizations) and NGO’s (Non-governmental organizations). IGO’s include the United Nations, European Union, World Trade Organization, and other places where government treaties and agreements form organizations. NGO’s can be private citizens, corporations, cooperative ventures. These range from MNC’s (Multinational corporations) to the Catholic Church or groups like Amnesty International.
Earlier, it was tough for NGO’s to get going because individuals and only the most wealthy corporations could organize across borders. The Catholic Church, Amnesty International, Greenpeace, and the International Chamber of Commerce were some of the early ones. In 1960 there were 1000 NGO’s -- rather impressive. That mushroomed to 6000 by 1990, the first time I taught a course on international relations. I said the increase of six times in thirty years showed just how dramatic interdependence had become. Now: about 30,000 NGO’s and growing fast! That shows just what is happening -- borders are no longer barriers to communication and cooperation, and nation states are not the only international actors out there. Does this mean the era of sovereignty is dead? Let’s look more closely at one example, the World Trade Organization.
World Trade Organization
This emerged as an outgrowth of GATT, designed to codify rules of free trade and overcome loopholes in the GATT agreement. GATT still is in force, but the WTO contains over 60 countries from GATT, showing more of a commitment to the new more stringent rules.
Problem: GATT’s rules were porous and contained numerous exceptions. Furthermore, states could issue findings that a country was violating provisions of GATT, and though GATT had the ability to investigate and issue opinions, they were not binding. Ultimately, states had to settle disputes themselves, often leading to near trade wars and fears that economic difficulties could render the GATT regime fragile. In 1986 the Uruguay Round of GATT negotiations began, an arduous long set of negotiations that finally yielded an agreement and the WTO Treaty in 1993. The main components include:
Anti-Dumping provisions: Dumping involves the selling of products at below cost in foreign countries. This often is done to eliminate local competition (destroy competition, and then raise prices), or to compete when there are subsidies in ones’ own markets. WTO is designed to control this more strictly than any agreement before. States can charge countervailing duties in response to dumping, which have to simply make up for the difference in production and sales costs.
Tariffs. GATT was built on the MFN (Most Favored Nation) principle to standardize and reduce tariffs between countries. The goal here was to reduce tariffs on 85% of the world’s trade. Tariffs are any tax on goods being imported.
Intellectual Property. This has been in the news a lot, and was a major concern for countries like the US -- to prevent pirating of especially software, music, movies, etc. This has been hard to enforce, even within a country (Napster within the US). This is likely to become more difficult over time.
Textiles. First world countries have severely limited textile imports from third world states in order to protect jobs at home. This is to be phased out over ten years, designed to benefit third world countries who can produce textiles more cheaply.
Foodstuff. Most countries give large subsidies to their agriculture sectors, which often have significant political clout. This is to be cut by almost 40% on average.
Goods, Services, and Finances: GATT was limited in its application to trade of goods -- stuff to buy and sell. The WTO expands its scope to encompass financial laws (international investment), services, etc.
The WTO is a profound treaty in that it creates its own judicial branch, and states voluntarily give it the power to settle disputes. Unlike the ICJ, states cannot opt out. (Note: this is not literally a true sacrifice of sovereignty as states have agreed to this; however, the power associated with sovereignty has been voluntarily surrendered in order to gain the benefits of the treaty). Also the WTO is potentially the path towards creating effective international law restraining MNCs, NGOs and other non-state actors. If states give power to an extra-state legal authority to govern trade and finance relations between states, states effectively have allowed this authority to adjudicate cases involving domestic actors normally covered by state law alone (WTO has the ‘power’ of state law). Potentially, down the line, a WTO style system could be a way to solve some of the difficulties of how to deal with non-state international actors.
So far, of course, the WTO doesn’t try anything so ambitious. However, it does mandate a mechanism for resolving disputes, something quite different than the GATT. To simplify the process: once a complaint is lodged, an initial panel consults and there are attempts to try to Get the two parties to agree to settle. If that doesn’t work, a panel is established to judge the facts and make a ruling. In most international organizations, the process would end there; a ruling by a panel would be final. However, since states are giving up sovereign powers and potentially could be ordered to change practices or compensate, it was deemed practical to allow states the chance to appeal, and create an appellate process.
That this has been agreed to by powerful industrial states shows:
* the importance of international trade and investment; nationalist reactions and trade wars could call into jeopardy first world prosperity, trade is so important, they want it governed and protected by an outside agency;
* the recognition that alternatives to pure statist sovereignty need to be developed. This can only happen with agreement from sovereign states, however, so it has to be slow and assure that no state will simply have the process used against them in a discriminatory manner.
MFN: remains in place (except for free trade areas, customs unions, and other regional trading blocs).
It is clear why smaller states would support such a move. They need free trade, cannot punish other states easily as they are vulnerable, and such standard rules will benefit them. There is little value in holding on to sovereignty at all costs for small states. Is this becoming true for large states as well? Can or should large states voluntarily surrender sovereign powers to international organizations? (Note: this doesn’t mean they give up sovereignty; most treaties allow states to potentially leave; but, practically, it enhances interdependence and might render sovereignty less important).
The European Union
Remember: the state a contingent entity, that could be changing in Europe due to integration.
Following post-sovereignty theory, the sovereign state, the central facet of political life and major geographical unit in terms of social organization, may be becoming obsolete, replaced by supranational federalism which is decentralized at most levels, while centralizing some major policy choices. It could be a model for the future of political life -- after all, the sovereign state was a human creation back around 1648, based on sovereignty, a legal invention. No reason to expect that form of organization to last forever.
But first to the nitty gritty:
Jean Monnet, "father of Europe." In the wine business, and firmly believed in comparative advantage and the idea everyone would be well off if only they cooperated. He worked with De Gaulle on a plan to unify Britain and France before WWII (the Germans attacked and won too quickly for that), and in both wars was involved in coordinating allied efforts at supply and production. He saw bringing people together as his goal in life.
In concentration camps: Different groups put aside disagreements to think about unifying Europe, making sovereignty a thing of the past. Thus, after the distruction of caused by the war, the idea of Europe was the most prominent post-war ideology.
To make a long story short: Political integration was an early goal, but it wasn't achieved. Initial success with the ECSC (late forties) led to the attempt to create the EDC, European Defense Community.
ECSC: European Coal and Steel Community, put together the coal and steel capacities of Italy, Germany, France and Benelux (Belgium, Netherlands, Luxembourg). Idea: if these important capacities are combined it’ll be easier to rebuild, and war will be less likely. It was a way to keep German production under supranational control. It was effective.
EDC: The same countries wanted a common defense force. If that had worked, armies would have been united, which could have been a major step towards political union. Also, at that early date, traditions of post-war political systems not so set into pace. A time where major change could happen, but the window of opportunity for that sort of change, after a complete disruption in the system, is not long.
EDC failed: French plan, got others to go along with it; it could have allowed German re-armament within a European army, thwarted US attempts to create a strong West German contribution to European defense. (The reason was French Indo-china. The gov’t of Pierre Mendes-France knew France had to pull out of Indochina, but conservatives didn’t want that or the EDC. He had to choose, so to get approval to leave Indo-China he basically sacrificed the EDC, which had been a French plan).
The loss of the EDC was a blow; the first step backwards. Integrationists and Europeanists feared their window of opportunity was closing, and that sovereignty and anti-communism were becoming stronger ideologies than europeanism. So, they decided to modify their goals. Rather than pursuing quick political integration, they settled on a plan for long term economic integration leading to political integration in time.
Main theory: neo-functionalism.
Idea: Based on economic logic. Once advantages of integration and cooperation are felt, then people would demand more. So more integration would occur. This was termed the spillover effect, and integration would in time spillover from economic to political realms.
So: new key, focus on the economic aspects of integration first. Look at BENELUX cooperation as a guideline, building on the ECSC.
Discussions in Brussels in 1956 led to the signing of the Treaties of Rome on 25 March 1957, with 1958 to be the first steps towards the economic integration of Europe. Original six: France, Germany, Italy, Benelux. The goal was to have outside tariffs standardized and no internal tariffs by 1967; that goal was achieved ahead of schedule. Through 1966, the EC performed better than anticipated. People saw growth and exports increased, and there were demands for further integration. The strategy shifted to intergovernmentalism in the seventies, something which at first seemed to contradict neo-functional theory. But ultimately it worked, countries negotiated a supranational path with real results.
Expanded to 9, in 1973: UK, Ireland, Denmark
To 10 in 1981: Greece
To 12 in 1986: Spain and Portugal
To 15 in 1995: Sweden, Finland, Austria
To 25 in 2004: Poland, Hungary, Czech Republic, Slovakia, Latvia, Lithuania, Slovenia, Estonia, Cyprus, and Malta.
RESULTS AMAZING SO FAR, however: not only is there no war between the former enemies, but they are coming together in a way that in the seventies would have seemed unbelievable:
Single market
-- Europe without frontiers, achieved on 31 December 1992, though not complete. Commission came up with a list of over 300 laws that needed adjusting to create common standards and remove border checks; this grew to over 1000 laws. Very difficult, still some laws haven't been changed. Exceptions, etc., exist, but the change is noticeable, esp. to travelers. Schengen agreement means that in most of the EU you don’t even need to show a passport to travel between countries.
-- stronger external borders. Some states, like Germany, France, and esp. Great Britain, worry about easy access of "undesirables" into states like those of Eastern Europe. British keep border checks on channel crossings...
-- Movement of capital enhanced, more and more large European conglomerates able to compete. This ties into the capital concentration theory
-- Freer labor movements, fear of cheap labor coming north. But also a fear of business moving south. Idea that with both processes, an efficient equilibrium will be reached, more winners than losers.
Maastricht Agreement: December 1991
Main goal: Economic Union. One currency with a European central bank. Other goals include a common foreign policy (CFSP - Common Foreign and Security Policy) and Political Union. These are harder to achieve than monetary union, but work is being done. Officially three ‘pillars’ – JHA (Justice and Home Affairs), CFSP, and EMU - monetary union:
Stage 1. Started on July 1 1990, this stage deals with full liberalization of capital movements and closer monetary and macroeconomic cooperation between the members and their central banks.
Stage 2. On January 1st 1994 the treaty came into force. This stage prepared the ground for the establishment of the single currency. Result: countries coordinated policies and lowered inflation, debt and interest rates. All but Greece qualified by 1999, Britain, Sweden and Denmark choose to stay out of stage 3. Currently Greece has been accepted, and Denmark is likely to have a referendum. Sweden is also thinking of joining, and would be more likely to if Denmark did. Norway, out of the community, might even reconsider.
Stage 3. At the beginning of this stage, Jan 1, 1999, member countries moved to "irrevocably locked" exchange rates and the national currencies have been replaced by the single European currency - the euro in theory. In practice, they still used the old currency until Jan. 2002, but business accounting and official business was done in Euros. On January 1, 2002 they made the switch, surprisingly easily without major difficulties. The European System of Central Banks (ESCB) is responsible for the implementation of monetary policy, exchange rate and reserve management, and the maintenance of a properly functioning payment system.
The beginning of Stage Three depended on the progress of the Member States towards achieving strict convergence criteria which was designed to ensure the transition to EMU would not cause a sudden monetary shock to the participating countries. The criteria are/were as follows:
1. Price stability: an average inflation rate not exceeding by more than 1.5% that of the three best-performing member states;
2. Budgetary discipline: a budget deficit of less than 3% of GDP and a public debt ratio not exceeding 60% of GDP. Once in EMU, countries should keep the budget deficit below 3% limit, otherwise they would be fined. The fines might be calculated at the ratio of 0.2% of GDP plus another 0.1% for every percentage point by which the deficit exceeded 3% Of GDP. A deficit of 6% would attract the maximum fine of 0.5% of GDP.
3. Currency stability: respect for normal fluctuation margins (2.5%) of the ERM "without severe tensions" for a least two years with no devaluations;
4. Interest rate convergence: an average nominal long-term interest rate not exceeding by more than 2% that of the best-performing member states.
They have weakened some of these rules, due to economic problems making it hard to keep budgets in line. This worries some, but probably was necessary. As Commission President Romano Prodi said, strict adherence to these rules would be "stupid."
Also: former French President Valery Giscard d’Estaing recently headed a group to form constitution for all of Europe. That, if accomplished (one possible name would be: "United Europe") would further distinguish the EU from just another organization, but what it is, remains uncertain, and there was too much disagreement about the draft constitution, preventing it from moving forward as planned. Still, the possibility is out there. With or without this constitution, it’s clear the EU is more than just an IO, but less than a state. . Maastricht officially proclaims subsidiarity a principle – power should be exercised closest to the individual as possible, moving up to supranational control only as necessary to deal with problems. But what that means in practice remains unclear.
Is the EU proof that complex interdependence works -- is it the future of politics? A new model of the future? Regions more important than states, economic and perhaps social programs governed supranationally, while more regional autonomy. Single currency, but less bureaucratic rule from the center?
* Nationalism decreasing in Europe; ties to state decreasing
* people more "effective" personally - info revolution, communication
* transnational capital knows no border
* problems don’t stick within borders
Could be a revolution; maps of our kind might be obsolete...though this’ll take awhile, probably not a process that will run its course quickly, maybe a century. But changes are taking place.
(If time: class discussion on the changing nature of international politics: is the nation state and sovereignty in danger?)
1: Is sovereignty becoming obsolete? It was a creation of the Europeans back in the Treaty of Westphalia to deal with changing realities in the international system. Recall, that change was caused by technology revolutions, with gun powder and the printing press helping bring down the old order. Now with a new technology revolution, growing interdependence, information being spread more quickly across space and time, state or national sovereignty needs to give way to international organizations and concerns for human rights. What do you think? Should America be willing to give up any sovereignty? Why or why not? How do you think globalization will impact America’s development?
2: What do you think the long term impact of the technological changes taking place in the world will have (class discussion will go into these issues with more depth).
3. Do you think that NGO’s will play a greater role in putting pressure on IGO’s, perhaps moving a lot of political action from the national to the transnational level? How would that work? Since governments are usually seen to reflect the interests of the wealthy/business elite, many activists are shifting towards using technology and the communications revolution – globalization – to be able to play a major role in pressuring both governments and IGO’s. This has been evident in both protests but also cooperative ventures. This is one of the most exciting aspects of politics moving into the 21st century.