ABSTRACT How did the European Union come to develop so many instruments of conditionality during the Eurozone debt crisis, despite the well-documented limitations of such measures in other contexts? This article argues that major EU actors – Council, Commission, and Central Bank – were influenced by their own recent and positive experiences with conditionality, especially in the EU’s enlargement in the early 2000s and the early phase of the global financial crisis. However, despite the promise of conditional instruments in these two earlier episodes, further EU reliance on conditional policies has not brought the positive outcomes the main European institutions had hoped for. As EU institutions turned to harder and harder forms of conditionality in the Euro crisis, they relearned many of the familiar negative lessons of conditionality and ultimately had to concede that the apparent success of its conditionality tools in the two earlier phases was exceptional. The article documents the evolution of conditionality over these periods, showing how EU conditionality instruments changed over time, beginning as a ‘lever’ to assist the accession of candidate states in the enlargement period, and evolving into a ‘club’ used to impose macroeconomic discipline in the late 2000s. It shows why this approach to the Euro crisis failed and was ultimately downgraded as Eurozone policy shifted in favour of monetary measures in which conditionality played only a marginal role.

This paper discusses epistemic aspects of populism – especially its link with radical uncertainty and the tribal construction of facts – that have so far received relatively little attention. We argue that populism is less a backward-looking phenomenon feeding off existing grievances than a narrative-based reaction to an increasingly unsettled future. Many economic factors isolated as causes of populism – especially rapid technological innovation, deregulation, and the globalisation of networks – entail a high degree of indeterminacy in social systems; and the corresponding uncertainty facing voters is a catalyst for many of the pathologies of populism isolated in the literature. In particular, uncertainty undermines the credibility of experts, while the disorientation and anxiety it induces increase reliance on simple narratives to structure expectations. The paper explores the role of narrative entrepreneurs, the relationship between narratives and power, and the dynamics of narrative coups designed to create alternative facts and perform a new reality.

This article privileges an institutional explanation rooted in the financial sector for the persistent German trade surpluses of the past 15 years. Specifically, it explains the disruptive consequences of a long-running stagnation in domestic investment in combination with rising German savings, particularly from corporate and government actors. It links these outcomes primarily to policy changes in the early and mid-2000s. The article also offers a constructivist explanation of how German elites have understood (and often misunderstood) the trade surplus. I characterise German elites as using a formula of 'normalise and apologise' to explain away worries about the surplus. The result is what one might call a 'political narrative of unbalanced growth.' The argument concludes with implications for the tense German-American economic relationship.

WSI-Mitteilungen , Seite 587 - 596

This article embeds the small state experiences in East Central Europe into the broader comparative political economy literature. These broader debates have developed three propositions one about the need for liberal orthodoxy in small, vulnerable states, a second about special forms of comparative advantage such small states might develop, and the third about the capacities of small states to adapt through consultation and 294

Are ‘grand coalitions’ – coalitions that include the two largest parties in a parliamentary system – good or bad for democracy? This article analyses that question in light of the recent rise of populist parties that large mainstream parties may try to exclude from government by forming grand coalitions with other large mainstream parties. I call this the ‘sterilization’ logic and note that mainstream parties’ ability to do this varies widely. Where parties have previously used grand coalitions primarily according to a ‘clientelistic’ logic – for example, Austria – mainstream parties may well be unable to rally the party system against insurgent populist challengers. Where mainstream parties have used grand coalitions exceptionally and for major institutional ‘renovations’ – for example, Germany – the grand coalition remains a viable option for responding to insurgent challenges, though this strategy is also quite risky. This article considers the implications for democracy by tracing recent developments in the context of the euro crisis and the European refugee situation. The major empirical referents are Austria and Germany – two countries with extensive experience and literature about grand coalitions – but the article draws out the implications of the analysis for other European parliamentary contexts.

Uncertainty is endemic to innovative economies and complex societies, but policymakers underestimate how damaging this is for many of their guiding assumptions. In particular, the discourse of best practice, “global solutions for global problems,” and regulatory harmonization becomes questionable when there is substantial uncertainty about the future. This uncertainty makes it impossible to know what best practice will be and increases the danger that harmonization will result in highly correlated errors and shared analytical blind spots. The transnational harmonization of regulation has well-known advantages, but – especially in technocratic policy areas – also creates vulnerability to unexpected challenges by constraining how we think as well as homogenizing how we act. Faced with uncertainty, policymakers should be wary of monocultures in regulation, analysis, and practice, and instead focus on managing policy diversity to limit its costs. This paper’s theoretical argument is grounded in philosophy, the history of ideas, and even biology. However, we also present empirical examples and consider some implications for political theory.

To what extent do Euroskeptic parties in Eastern and Central Europe have viable alternatives to the European Union and the broad basket of liberal policies promoted by the EU? In recent years, Hungarian Prime Minister Viktor Orbán has used his overwhelming parliamentary majorities to chart a partially new course, and this article inventories one aspect of this new course. The article asks whether Hungary can gain any potential benefits from closer links to China as a partial replacement for resources that might not be available (or that might be lost) from its more conventional European partners to the west. Orbán has often justified both radical constitutional change and economic nationalism as powerful medicines to push back against Hungary’s vulnerability at the hands of its foreign and domestic enemies. In this context, China emerged as both a potential source of new revenue and rhetorical trope that seemed to fit in a broader Fidesz discourse of an “Eastern opening.” This article makes a first attempt to separate rhetoric and reality. It first explores how the ongoing consolidation of illiberalism in Hungary has now also sparked a geopolitical repositioning through the “Eastern opening” during Fidesz’s second term. Second, it seeks to understand the theoretical proposition that new sources of external funding—including FDI and government bond purchases—can help enable a state to execute such a broad geopolitical shift. To do so, it develops empirical material from the fascinating Hungarian efforts to position themselves as a major beneficiary of Chinese engagement with Europe. The article concludes that Orbán’s policies have indeed been broadly consistent with his party’s new rhetoric, but it also concludes that the amount of Chinese investment is, in aggregate, still modest to date.

Scholars have long conceptualized unions and left parties as powerful and independent social actors within national systems of the political economy. Yet a unique survey of more than 2300 German Social Democratic Party (SPD) activists provides new insights into the relationship of two, in fact, deeply intertwined organizations. Factor analysis followed by multivariate regression of the survey results reveal two distinct dimensions of alienation that occur among party activists as they evaluate trade unions. ‘Content alienation’ picks up on differences in political goals among unions and the SPD. Meanwhile, ‘contact alienation’ builds on scepticism about union inclination or capacity. Novel data establish the magnitude and distribution of these two forms of alienation as measured by individual-level attitudes, which, in turn, have implications for debates on comparative political economy, political parties and corporatism. They suggest also sources of resilience and stability in German capitalism, notwithstanding important levels of alienation inside the party over trade union goals and methods.

Chinese investment in Central and Eastern Europe (CEE) is booming. As China’s investment pattern has emerged so far, it appears to have little to do with Chinese firms’ preferences for liberal policy regimes, tolerance for corruption, or reliance on communist-era networks. This article documents the current size and shape of Chinese firms’ efforts to internationalize in this economic space, demonstrating an important difference between Chinese investment behavior in CEE and in the EU-15, namely the region’s much more active use of greenfield activity (and lighter use of M&A and strategic alliances). Case studies of each mode (greenfield, M&A, and strategic alliances) reveal little evidence of a “China, Inc.” approach and much evidence that Chinese firms are more motivated by market access than by technology or management assistance.

This article describes the EU's impact on economic performance in the new Member States since the advent of membership. It first deals with the EU's role in promoting the economic boom that marked the region up to 2007, emphasizing the role of the single market and of the EU in anchoring and encouraging economic policy liberalization. The second section investigates the EU role in buffering the bust that occurred after 2007, looking at structural fund spending and financial sector instruments to enhance liquidity. I argue the EU had a (mostly unintentional) pro-cyclical effect that fuelled the boom and contributed to setting up the region for a very hard fall during the bust. I also show the EU efforts to buffer the hard times were far quicker in the area of structural fund spending compared to very slow and limited innovation in liquidity provision, especially for non-eurozone states.

Though still a small percentage of the total stock of Foreign Direct Investment (FDI) present in European countries, FDI coming from China has risen dramatically in the European Union (EU) since 2009. This introduction to the special issue on “The Politics of Hosting Chinese Investment in Europe” examines the political fears aroused by this recent surge and by the prospect of continued Chinese direct investment in European economies. After surveying patterns of Chinese investment in the EU, this introduction asks what is distinctive about the potential economic and political consequences of Chinese FDI and lays out the argument for and against treating Chinese FDI as sui generis.

How has the process of political representation changed in the era of globalization? The representation of interests is at the heart of democracy, but how is it that some interests secure a strong voice, while others do not? While each person has multiple interests linked to different dimensions of his or her identity, much of the existing academic literature assumes that interests are given prior to politics by a person's socioeconomic, institutional, or cultural situation. This book mounts a radical challenge to this view, arguing that interests are actively forged through processes of politics. The book develops an analytic framework for understanding how representation takes place - based on processes of identification, mobilization, and adjudication - and explores how these processes have evolved over time. Through a wide variety of case studies, the chapters explore how actors identify their interests, mobilize them into action, and resolve conflicts among them.

This article offers a corrective to the notion that German ordoliberal ideology is the key to understanding German policy behavior during the Eurocrisis and, by extension, to the contours of the electoral debate in fall 2013. First, it shows that ordoliberal thought underdetermines policy choices. That is, different actors clearly influenced by ordoliberal thinking and often stressing different aspects of the broader ordoliberal cannon are arguing for more or less diametrically opposed policy solutions. Second, the article provides evidence that this deep divide inside the ordoliberal policy community has contributed additional incentives to the tentative and inconclusive policy choices of the government throughout much of the Eurocrisis. Third, the article extends the analysis of this very cautious policymaking into the campaign phase and the subsequent coalition agreement. It explains why the two major German parties-including an SPD with a much thinner attachment than the CDU to ordoliberalism-sought to play down the Eurocrisis in their campaigns and in their subsequent coalition agreement. One implication is the low probability of German policy change despite ideological differences.

This paper speculates on the future of the euro. It uses Germany as a prism for the discussion about what might be done next to bolster the Euro. Researching the future—always a challenging task—is made harder when multiple state actors contend for prominence on the basis of shifting coalitions at home, all while interacting at an international level. That said, almost everyone accepts that German choices will play the central role in the path ultimately chosen. This paper thus foregrounds Germany’s role in shaping the way ahead, and it does so through an explicitly political framework focused primarily on the electoral implausibility of an alternative German policy course.

This introduction summarizes the findings of nine research articles that examine the consequences of the European Union's eastern enlargement ten years on. The volume reaches three surprising conclusions: since 2004, the EU's economic effects have been more far-reaching than its political effects; all of the new Member States (NMS) have had problems with democratic consolidation; and, despite four years of intense crisis in the eurozone, both the EU's enlargement and neighbourhood-shaping efforts have continued. We set these economic, political and institutional developments in the context of the long-standing east-west divide in Europe, and ask whether EU membership for post-communist countries upends the continent's traditionally persistent divisions. Notable achievements of EU enlargement notwithstanding, the volume points to the continuing important differences between east and west and highlights the issue areas in which the EU transcends but also reinforces the centuries-old partition.