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ABSTRACT
Interpretations of the nature of integration since the outbreak of the euro crisis differ greatly. Either observers see a full restoration of national control or they find a substantial upgrade of supranational autonomy. In light of these contradicting perspectives, this article searches for general patterns of crisis-driven integration. To this end, it analyses the key institutions of the reformed European economic governance. The findings show that control over risk-reducing and market-making institutions have been delegated to supranational institutions whereas control over all risk-sharing and market-correcting institutions has remained in the hands of the member states. This pattern of pooling and delegation of competences reflects the superior bargaining power of creditor states during the crisis. As a consequence, crisis-driven integration has deepened the structural asymmetry between market-making and market-correcting of European integration.
Acknowledgments
I thank Leo Bieling, Miriam Hartlapp, Andreas Hofmann, Marina Hübner, Fabian Lindner and Fritz Scharpf for helpful comments. I also like to thank the two anonymous reviewers for their extremely constructive feedback.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1. Lefkofridi and Schmitter (Citation2015) argue that this spillover differs from the original neofunctionalist scenario because central theoretical expectations have not been fulfilled. Therefore, the crisis is not the ‘revenge of neofunctionalism’.
2. Matthjis and McNamara (Citation2015) show how these preferences were socially constructed. In fact, more risk-sharing would reduce risks since a joint-liability for public debt would calm financial markets. Therefore, more risk-sharing would also be in the creditor states’ interest. However, the socially constructed German fixation on orthodox economic theory and on moral hazard prevented the introduction of risk-sharing instruments such as Eurobonds.
3. See www.esm.europa.eu/sites/default/files/20170725esmfactsheet.pdf; last access: 24.11.2017.
4. Regulation 407/2010.
5. Article 3 (2) Regulation 407/2010.
6. Recital No. 4 Regulation 2015/1360.
7. Annex IEFSF Framework Agreement.
8. Article 10 (1) EFSF Framework Agreement.
9. Articles 3 (1) and 10 (5) EFSF Framework Agreement.
10. Article 5(6) ESM-Treaty.
11. Article 5 (1) ESM-Treaty.
12. Article 4 (4) ESM-Treaty.
13. Article 7 (7) ESM-Treaty.
14. See Annex I ESM-Treaty.
15. Article 136 (3) TFEU.
16. Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG).
17. Article 7 TSCG.
18. Regulation 1024/2013.
19. Directive 2014/59/EU and Regulations 1093/2010 and 648/2012.
20. European Treaty law excludes economic policy from the domain of the ECB (Sciciluna Citation2017, 5–6).
21. OMT guarantees buyers of state bonds that the ECB purchases their assets in case of sovereign default. Thus, it has the effect of a free-of-charge credit loss insurance for buyers of state bonds (Hans-Werner Sinn in FAZ from 18.08.2017: ‘Am Limit’).
22. Deutschlandfunk (01.08.2018): ‚Bundesfinanzminister Wolfgang Schäuble: „Wir haben große Aufgaben vor uns”‘, www.deutschlandfunk.de/bundesfinanzminister-wolfgang-schaeuble-wir-haben-grosse.868.de.html?dram:article_id=390043.
23. There are two possible reasons for the consistency between the ECB’s agency and creditor states’ interests. First, the strategic agency and the genuinely political interventions of the ECB show that the ECB has a strong preference for fiscal discipline which is in line with the interests of creditor states. Second, the ECB is indirectly affected by a constraining dissensus in the creditor states whose support the ECB may not risk to lose. Therefore, even though the market-correcting effects of the ECB’s interventions are closer to the interests of debtor states, the overall conditions and design of the ECB’s interventions correspond to the creditor states’ preferences for risk-reduction. This Janus-faced structure can be explained by a post-functional perspective (Hooghe and Marks Citation2009): Panic on markets put pressure on governments to share fiscal risks but this was unpopular with the electorates of creditor countries. In consequence, member states avoided consulting electorates and diverted the market pressures onto the ECB, publicly criticising but tacitly approving the extension of the ECB’s quasi-fiscal functions (Schelkle Citation2014, 120).