Power behind the curtain: the Eurogroup’s role in the crisis and the value of informality in economic governance

ABSTRACT

During the crisis, the Eurogroup underwent a significant expansion of competences in the field of loan provision, fiscal surveillance and structural reform. Still, to that day, it remains an informal institution, largely avoiding codification and public sanctioning. Against this background, this paper asks how the Eurogroup works internally and which value its informal character has for its modus operandi. For this, institutions are conceptualised as structures which distribute institutional power between members. Using data of expert interviews and official documents, the conflict over the Greek reform programme in 2015 is analysed. It shows that selective communication and immediate interaction, both particular qualities of informality, had a significant impact on the solutions produced within the group. The northern European countries were able to pull outcomes closer to their preferred austerity-political course by using these qualities to divert and focus external pressure and react adaptably to resistance. The findings indicate that, at least in the case of strong conflict, the consensus logic of informal environments such as the Eurogroup makes way for the use of institutional power.

KEYWORDS:

• Economic and Monetary Union
• economic governance
• euro crisis
• informal institutions
• institutional power