European Monetary Union reform preferences of French and German parliamentarians
| Author | Sebastian Blesse,Anasuya Raj,Pierre C Boyer,Eckhard Janeba,Friedrich Heinemann |
| DOI | 10.1177/1465116519835947 |
| Published date | 01 September 2019 |
| Date | 01 September 2019 |
| Subject Matter | Articles |
Article
European Union Politics
European Monetary
2019, Vol. 20(3) 406–424
! The Author(s) 2019
Union reform
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DOI: 10.1177/1465116519835947
preferences of French
journals.sagepub.com/home/eup
and German
parliamentarians
Sebastian Blesse
Leibniz Centre for European Economic Research (ZEW),
Mannheim, Germany
Pierre C Boyer
Center for Research in Economics and Statistics (CREST),
E´cole Polytechnique, Palaiseau, France
Friedrich Heinemann
Leibniz Centre for European Economic Research (ZEW),
Mannheim, Germany
Eckhard Janeba
Department of Economics, University of Mannheim,
Mannheim, Germany
Anasuya Raj
Center for Research in Economics and Statistics (CREST),
E´cole Polytechnique, Palaiseau, France
Abstract
We analyze data from an author-conducted survey of members of the French and
German parliaments on European Monetary Union reform preferences. We consider
three potential drivers of preferences: nationality, ideology, and personal character-
istics. For European Monetary Union policies like Eurobonds, the Fiscal Compact,
Corresponding author:
Pierre C Boyer, CREST – E´cole Polytechnique, 91128 Palaiseau, France.
Email: pierre.boyer@polytechnique.edu
Blesse et al.
407
and the European Central Bank asset purchase program we find a robust difference
between parliamentarians of both countries if they belong to the same party family and
controlling for individual characteristics. Based on our estimates, however, we predict
agreement between German left-wingers and French conservatives even for ideological
differences that are smaller than the current difference between the left and the right
European party families. Our findings suggest that deeply-rooted national differences do
not impose a prohibitive obstacle to a German-French parliamentary consensus on
European Monetary Union policies.
Keywords
Comparative politics, European Monetary Union reforms, elite survey, members of
national parliament, policy preferences
Introduction
Since the outbreak of the euro area debt crisis in 2010, numerous reforms have
been undertaken to complete the institutional design of the euro area.1
Nevertheless, there is still the perception that the European Monetary Union
(EMU) resembles a ‘half-built house’ (Bergsten, 2012) and that more reforms
may be required. The space of possible reforms is constrained by the need to
reach a consensus among EMU members in general, and between France and
Germany in particular. From the start of the European integration process,
Germany and France have been seen as the ‘engine’ of integration (Krotz and
Schild, 2013). This holds in particular for monetary integration steps such as the
European Monetary System as of 1979, the EMU 20 years later (Marsh, 2010), and
during the management of the euro crisis between 2010 and 2012 (Degner and
Leuffen, 2019; Schoeller, 2018). From this perspective, a Franco-German agree-
ment can be regarded as necessary (albeit not sufficient) condition for any further
EMU reform. It is thus interesting to explore the extent of disagreements between
the French and the German, as well as their underlying causes.
The role of different economic policy traditions has received attention as a
potential reform obstacle. Alesina et al. (2017) show that the heterogeneity of
general norms (including the value of hard work or obedience) between
Northern and Southern Europe has increased over the last decades despite more
economic integration. Guiso et al. (2016) argue that cultural clashes aggravated the
Greek crisis. In this vein, politicians might be unable to agree on crisis manage-
ment because certain policy reforms may run against deeply rooted norms and
beliefs. On France and Germany, authors like Dyson (1999) and Brunnermeier
et al. (2016) diagnose a ‘Rhine-Divide’, a fundamental difference in economic
policy approaches between both countries. Compared to France, German ‘ordo-
liberalism’ stresses the importance of rules over discretion and principles of liability
408
European Union Politics 20(3)
over solidarity. Liquidity constraints tend to be seen as an outcome of fundamental
insolvency in Germany, whereas in France they are often viewed as part of
self-enforcing bad equilibria. Consistent with these assessments, French policy
prescriptions are often more Keynesian and demand-oriented, whereas German
approaches tend to emphasize the need for austerity and structural reforms in
order to deal with such crises.
Against that background, our analysis empirically assesses the French–German
cleavage in EMU-related reform preferences by the members of national
parliaments in both countries. We exploit an author-designed survey, which we
simultaneously conducted in 2016 among the German Bundestag and the two
French parliamentary chambers. Policy preferences of these parliamentarians are
important since several national parliaments in the euro area including the German
one are veto players on EMU reforms. While recent euro area reform decisions,
such as the establishment of the European Stability Mechanism (ESM) or the
Fiscal Compact, have been initiated by national governments, they are often con-
strained by the consent of national parliaments according to national constitu-
tions;2 hence, a systematic dissent between the German and French parliaments
would make future EMU reforms less likely.
We contribute to the understanding of a possible divide between French and
German parliamentarians on EMU reform issues. Our analysis disentangles three
different drivers of EMU-related reform preferences: (a) nationality; (b) political
leaning related to party family ideology; and (c) personal characteristics of mem-
bers of parliament (MPs). The first one—nationality—relates to the Rhine-Divide
hypothesis, i.e. a French–German dissent that is deeply rooted in economic policy
traditions of both countries. At the same time, the importance of nationality for
EMU reform preferences may also relate to MPs’ economic self-interest for their
respective country.
The relative importance of (a) versus (b) and (c) matters for assessing the future
chances of a parliamentary consent between both countries. If party ideology and/
or personal characteristics (age, gender, education, etc.) are the dominant drivers,
the reform space from a parliamentary perspective will change with future election
outcomes. By contrast, even changing parliamentary majorities matter little
if heterogeneity of reform preferences is primarily determined by nationality.
In this case, the Rhine-Divide constitutes a prohibitive obstacle to EMU reforms,
if it extends from parliaments to governments and other institutions which are
involved in reform decision making.
A further contribution lies in the analysis of various types of euro area reform
options. These cover appropriate national growth policies (more flexible labor
markets, higher investment spending), policy proposals triggered by the euro
crisis (European Central Bank (ECB) asset purchases, Fiscal Compact), and
EMU reform options in the current debate (tax centralization, European unem-
ployment insurance and Eurobonds). We show that inter-party family differences
are important for national economic policies, such as labor market deregulation or
Blesse et al.
409
investment spending, and nationality is not, while for EMU reform options
both matter.3
The results confirm key qualitative observations of Brunnermeier et al. (2016)
for EMU reform options. German MPs tend to be more supportive than their
French colleagues towards fiscal rules and more critical on activist ECB policies,
tax centralization, European unemployment insurance (EUI) and debt collectivi-
zation through Eurobonds. These differences are significant for French and
German parliamentarians even with similar personal characteristics and within
the same party family. However, for all these EMU topics, the impact of the
ideological variables is empirically more important.
For all EMU topics, the direction of the French dummy is identical to the
direction of the dummy indicating a left party. This implies the largest polarization
between German parliamentarians from the right and their French colleagues from
the left. Conversely, according to our estimates, the Rhine-Divide is closed for all
EMU reform options if a German left-winger would have to find an agreement
with a French conservative. Even though a significant difference in the economic
thinking of German and French parliamentarians exists, the gap is not so large
that it would make a parliamentary consent on EMU reforms impossible.
Our analysis complements recent work by political scientists, as summarized by
Frieden and Walter (2019), which describes work on the measurement of govern-
ments’ ideal points and bargaining strategies in the context of Euro zone institu-
tional design. The relative importance of nationality versus ideology has been
studied extensively for members of the European Parliament (e.g. Hix, 2001; Hix
et al., 2006; Hix and Noury, 2011; Scully et al., 2012). These studies also point to a
stronger role of ideology, relative to nationality, as a factor explaining political
positions and voting. Results for the European Parliament cannot be assumed to
readily hold for national parliaments, where a European mission and socialization
are absent. But it is interesting to note that even for members of the European
Parliament, nationality seems to be of strong importance for issues with significant
and asymmetric consequences for member states as shown by Hix and Noury
(2011) for budgetary votes,...
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