International Negotiations: Challenging Multiparty Negotiations Around the Euro

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A European Union summit held in late October failed to make much headway toward better coordination of economic policies, the Wall Street Journal reports. Facing resistance from Germany in particular, European officials are growing pessimistic regarding their odds of negotiating a deal over the next year to lay the foundation for a banking union for the 17 nations that use the euro. The proposed banking union would pool assets to allow the nations to engage in shared spending and borrowing, among other activities.

The plan for greater financial coordination was conceived at the height of the European financial crisis in 2012. As consensus grew that a shared currency with 17 different economic policies was unsustainable, the European Union began looking for ways to prevent future disasters.

Those who support greater integration are seeking a model similar to that of the American system of federalism, where budgets, bonds, and financial oversight of the 50 states occur at the federal level, according to Marcus Walker and Gabriele Steinhauser of the Wall Street Journal. In the summer of 2012, a Belgian politician, Herman Van Rompuy, was charged with shaping such a proposal for Europe. The working group negotiated plans to set up a central budget that would cushion countries hit by crisis—as Spain and Ireland had been—through measures such as funding the costs of unemployment benefits. The budget was to have been financed by bonds backed by the euro zone as a whole.

Yet as the financial crisis has subsided, Germany, Belgium, and France have begun to push back against proposals for greater financial unity within Europe. After initially supporting such a possibility, German Chancellor Angela Merkel began backing away from it as a short-term solution in the face of objections from her nation’s foreign minister and his counterparts in Finland and the Netherlands. French President Francois Hollande followed suit, refusing to back the proposal from Van Rompuy’s bloc.

Disagreement over whether a banking union is needed in Europe reflects a deep divide between more prosperous European nations, most notably Germany, and Southern European nations that have been struggling economically.

The conflict also reflects the difficult of forging multiparty agreements, particularly when no formal rules have been established to vote for or against such a deal. In negotiations among multiple parties, it is common for factions and coalitions to spring up to lobby in favor of or against proposed measures.

In business negotiations involving multiple parties, it is typically wise to spend time discussing up front how decisions will be made and agreed upon. By discussing the negotiation process and potential voting procedures ahead of time, parties may be able to ward off the likelihood that a powerful coalition will succeed in controlling the discussion.

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One Response to “International Negotiations: Challenging Multiparty Negotiations Around the Euro”

  • It looks as though there is need for a bit of ‘informal negotiation’ within the de facto group of northern members.
    UK in particular still feels it needs to behave like a worldwide power in part to keep its seat on the Security Counccil and is of course a possessor of nuclear weaponry. These are responsibilities which remain needed to be fulfilled but can increasingly be ill afforded economically now,especially because the needs for more intelligence monitoring and implementation are increasingly needed. Most of Western Europe is also facing an imminent serious decrease of population of working age.

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