By Clifton B. Parker

Europe is benefiting from tough, painful economic reforms in the wake of the 2008 downturn, according to the leader of the European Union.

"Europe had to evolve dramatically because reality forced it to," said José Manuel Barroso, president of the European Commission, in a May 1 talk on campus. "This change came about with the economic and financial crisis initiated with the collapse of the Lehman Brothers back in 2008, and that has caused me many sleepless nights."

The title of Barroso's presentation was "Global Europe, from the Atlantic to the Pacific." The event was co-sponsored by Stanford's Freeman Spogli Institute for International Studies, the Europe Center and the Center for Russia, East European and Eurasian Studies. The European Commission is the executive body of the European Union.

Barroso acknowledged that the financial meltdown hit Europe especially hard, given the "serious flaws" in the way some countries were running their economies, living beyond their means and lacking the competitiveness required in a globalized world.

The crisis revealed, he added, the "economic interdependence inside Europe," and the fact that the 28-member union did not have the capability to handle large-scale financial emergencies or prevent unsound policies on the part of member nations like Greece.

"So we had to adapt and reform as we have done many times in the European Union," Barroso said.

Economic reforms, regulations

And so, the European Union adopted a more extensive system of economic and budgetary governance to ensure member states stick to their financial commitments and become more competitive. Today, each country sends their national budget to the EU headquarters in Brussels before approving it at the national level, he said.

Barroso added that the EU created a "European stability mechanism," or safety net, worth about $1 trillion to help member states adopt key reforms and assist them in times of crisis. There are also more detailed banking regulations that give the EU more authority over national banks.

"Now the control is exercised at European level through the European Central Bank and there are common rules for banks so that we avoid having to use taxpayers' money to rescue them," he said.

Barroso dismissed criticism that the EU moves too slowly, saying that is inevitable in a system that depends on the will of national governments and citizens to work together rather than coercion.

Still, high unemployment persists in Europe, especially among the young, he said. But he is hopeful about Europe's prospects in the long run.

He added, "We have now returned to growth after some painful but necessary reforms."

Upheaval in Ukraine

With the situation in Ukraine worsening by the day, Barroso said that Europe "stands ready" to support that country in becoming a democratic, prosperous and independent country. He described the Ukrainian crisis as the "biggest threat to Europe's stability and security since the fall of the Berlin Wall."

He said the people of Ukraine expressed a "clear wish to take their future into their own hands and come closer to the European Union" through an agreement that would have given them political association and economic integration.

"Instead of accepting the sovereign choices of Ukraine, Russia decided to interfere, to destabilize and to occupy part of the territory of a neighboring country in a gesture that we hoped was long buried in history books," said Barroso.

He noted, "Europe cannot accept nor condone this type of behavior." Russia's aggression will carry political, diplomatic and economic costs, he said, adding that the issue looms larger than Europe, the United States or even the G7.

"It should concern the rest of the world as well, as it is a direct threat to international law and to international peace," he said.

Barroso served as the prime minister of Portugal from 2002 to 2004. He has been the president of the European Commission for the past 10 years.

The Europe Center serves as a research hub bringing together Stanford faculty members, students, and researchers conducting cutting-edge research on topics related to Europe.  Our faculty affiliates draw from the humanities, social sciences, and business and legal traditions, and are at the forefront of scholarly debates on Europe-focused themes.  The Center regularly highlights new research by faculty affiliates that is of interest to the broader community.  

David Laitin and his co-author Rafaela Dancygier’s forthcoming article in the Annual Review of Political Science, “Immigration into Europe: Economic Discrimination, Violence, and Public Policy,” investigates and reviews recent research on changing Western European demographic patterns, and its implications for labor-market discrimination, immigrant-state relations, and immigrant-native violence.  The authors “discuss some of the methodological challenges that scholars have not fully confronted in trying to identify the causes and consequences of discrimination and violence,” and propose pathways to resolve contradictory results in existing studies regarding the economic consequences of immigration policymaking.  Laitin is the James T. Watkins IV and Elise V. Watkins Professor of Political Science at Stanford University. 

Additional information about The Europe Center’s research program on migration can be found here.  Featured publications by affiliates of the Center can be found here.

The Europe Center recently initiated a distinguished annual lectureship named, The Europe Center Lectureship on Europe and the World.  The lectures are intended to promote awareness of Europe's lessons and experiences with a goal of enhancing our collective knowledge of both contemporary global affairs and Europe itself.  Each year, faculty affiliates at the Center select a renowned intellectual to deliver the lectureship on a topic of significant scholarly interest.  The Europe Center invites you to the inaugural annual lectures of this series by Adam Tooze, Barton M. Briggs Professor of History, Yale University.

“Making Peace in Europe 1917-1919: Brest-Litovsk and Versailles”

Date: Wednesday, Apr 30, 2014

Time: 4:00 - 5:30 pm

Location: Koret Taube Room, Gunn-SIEPR

“Hegemony: Europe, America and the Problem of Financial Reconstruction, 1916-1933”

Date: Thursday, May 1, 2014

Time: 4:00 - 5:30 pm

Location: Koret Taube Room, Gunn-SIEPR

“Unsettled Lands: The Interwar Crisis of Agrarian Europe”

Date: May 2, 2014

Time: 4:00 - 5:30 pm

Location: Bechtel Conference Center

Reception: 5:30 - 6:15 pm

RSVP by Apr 23, 2014

On the centenary of the outbreak of the First World War, Adam Tooze will deliver three lectures about the history of the transformation of the global power structure that followed from Imperial Germany’s decision to provoke America’s declaration of war in 1917.  Tooze advances a powerful explanation of why the First World War rearranged political and economic structures across Eurasia and the British Empire, sowed the seeds of revolution in Russia and China, and laid the foundations of a new global order that began to revolve around the United States and the Pacific.  These lectures will present an argument for why the fate of effectively the whole of civilization changed in 1917, and why the First World War’s legacy continues to shape our world today.

Tooze is the author of The Wages of Destruction: The Making and Breaking of the Nazi Economy (2006) and Statistics and the German State 1900-1945: The Making of Modern Economic Knowledge (2001), among numerous other scholarly articles on modern European history.

On February 10, 2014, Pascal Lamy, the former Director-General of the World Trade Organization, visited Stanford University as a special guest of The Europe Center and the Freeman Spogli Institute for International Studies.

During his two-term tenure at the helm of the WTO (from 2005 to 2013), Mr. Lamy successfully guided the organization through complex changes in the regulation of international trade. Among his many achievements, he oversaw the systematic integration of developing countries into positions of political leadership in the world economic order.

Prior to the WTO, Mr. Lamy served as the European Commissioner for Trade, the CEO of the French bank Crédit Lyonnais, and in the French civil service. 

Mr. Lamy has been decorated with medals of honor from countries ranging from France to Mexico, and has received honorary degrees from eight universities around the world. He has authored several books, including recently, The Geneva Consensus: Making Trade Work for All.

In his farewell statement as the Director-General, Mr. Lamy said in July 2013: “Together, we have strengthened the WTO as the global trade body, as a major pillar of global economic governance. Despite the heavy headwinds and the turmoil in the global economy as well as on the geo-political scene, together we have made this organization larger and stronger.”

Mr. Lamy drew on these experiences to offer insights related to the designing of global governance during his visit to Stanford.

He first participated in a lunchtime question and answer roundtable with undergraduate students. Stephen Stedman, Deputy Director of the Center for Democracy, Development, and the Rule of Law, moderated the event. Among other topics, Mr. Lamy spoke about the necessary mix of economic, social, and political policies that determine the efficacy of free trade as an engine of global economic growth. 

Mr. Lamy then delivered a public lecture, titled “World Trade and Global Governance,” before an audience of over a hundred members of the Stanford community.

In this talk, Mr. Lamy outlined a statement of his own thinking about the future of global governance and international trade, and described what remains to be done in addressing the challenges of globalization. Additionally, he reflected on the features of modern politics that create governance gridlock and thwart global oversight, and identified how progress can be made in overcoming impediments to policy action at the international level.

Mr. Lamy’s lecture focused on three overarching points. First, notwithstanding some setbacks, governments and international organizations have achieved major successes in regulating the liberalization of global trade. Tariffs are on average lower than ever before, and governments did not raise tariffs during the recent financial crisis as they did during the Great Depression.

The WTO has played a central role in facilitating regulatory convergence in international trade. Institutional features such as the organization’s dispute resolution mechanisms have deterred nations from enacting unilateral forms of protectionism. Additionally, by “naming and shaming” nations that raise tariffs during economic crises, the WTO has prevented reversals to autarky in the global economy.

These policies have had a salutary effect because free trade and open markets enhance economic competitiveness, generate growth, and raise welfare standards around the world.

Second, despite these successes in the governance of international trade, challenges remain. A new feature of the global economy is that protectionism based on economic objectives has been replaced by “precautionism” based on normative prerogatives. For example, competing national perspectives on product standards such as those related to safety or labor norms thwart efforts to achieve consensus on trade regulation.

Genetically modified foods represent one example of globally traded products that are held to different normative standards by different countries. Disputes over regulating the global production and distribution of these products are therefore less likely to be resolved by traditional negotiation mechanisms.

Third, in order to overcome this governance gridlock and achieve regulatory convergence, we need to bring together stakeholders from the public and private sector to build coalitions that jointly negotiate conflicts in matters of global governance.

For example, the “C20-C30-C40 Coalition of the Working” that comprises the 20 largest countries, the 30 largest companies, and the 40 largest cities in the world is currently striving to overcome regulatory gridlock on climate change. This coalition can define carbon emissions targets, supervise urban infrastructure projects, and evaluate progress on energy and environmental objectives.

Mr. Lamy reiterated that trade can only serve as an engine for economic development if governments and international institutions enact economic and social policies that reflect the preferences of a broad swath of global stakeholders. Only by adapting the governance structures of the twentieth century to respond to the challenges of the twenty-first century, can we overcome new forms of policy gridlock at the international level.