Paper presented at the Conference “New economic concepts in the current European crises“.
Abstract: From the paper: The euro, a result of the political project to consolidate peace in Europe, has now created new divisions between the peoples it was meant to unite. Countries with surpluses in their trade balances rule over the economic policies of those with deficits: and the decision-making process of the European Stability Mechanism even excludes those with overdue repayments. These unforeseen tensions bring along new and unpredictable risks, which will have to be addressed urgently.
Social unrest in the euro zone is a result of the limitations of democratic ways of dealing with problem debt. The hands of national governments are tied and foreign creditors decide on national economic policies. This paper argues that the setting can be derived to the international institutional framework, and to mend this deficiency, it proposes introducing an independent panel to arbitrate sovereign debt. Countries experiencing societal restlessness due to high levels of unemployment and sharp cuts in their basic societal infrastructure find themselves in a legal vacuum; there is no independent institution or mechanism to turn to; the separate roles of the judge, the juror and the executioner familiar from national market economy jurisdictions do not apply internationally.