Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-848d4c4894-75dct Total loading time: 0 Render date: 2024-06-09T13:32:39.689Z Has data issue: false hasContentIssue false

19 - The Politics of Fiscal Integration in Eurozone Reforms and Next Generation EU

from Part III - The Economic and Fiscal Dimensions

Published online by Cambridge University Press:  28 September 2023

By
Fabio Wasserfallen
Edited by
Dariusz Adamski ,
Fabian Amtenbrink  and
Jakob de Haan
Dariusz Adamski
Affiliation:
University of Wroclaw
Fabian Amtenbrink
Affiliation:
Erasmus Universiteit Rotterdam
Jakob de Haan
Affiliation:
University of Groningen
Get access

Summary

Since the introduction of the Economic and Monetary Union at the Maastricht summit in 1991, the framework of fiscal integration is a controversial topic. More recently, the eurozone and COVID-19 crises triggered reforms, which were accompanied by strong political conflicts. Drawing on political science research, this chapter analyses these recent reforms with a focus on the political conflicts among the Member States of the European Union. The findings show that, in the politics of fiscal integration, the lines of conflict among Member States are rather stable, while the success of reform proposals depends on the German–French integration partnership and the influence of the Commission. The more in-depth comparison between the fiscal reforms to the COVID-19 and eurozone crises points to both continuity and incremental change. A major shift is that the more recent fiscal programme in reaction to the COVID-19 crisis includes joint borrowing on a large scale. On a more general level, a defining feature of fiscal integration is the varying extents to which Member States are fiscally integrated within the eurozone and the EU. The final section of the chapter discusses the literature on differentiated integration related to fiscal integration by emphasizing the challenges for democratic legitimacy.

Type
Chapter
Information
The Cambridge Handbook of European Monetary, Economic and Financial Integration , pp. 349 - 362
Publisher: Cambridge University Press
Print publication year: 2023

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alesina, A., and Wacziarg, R. (1999). Is Europe going too far? Carnegie-Rochester Conference Series on Public Policy 51(1), 1–42.CrossRefGoogle Scholar
Armingeon, K., and Cranmer, S. (2018). Position-taking in the euro crisis. Journal of European Public Policy 25(4), 546–566.Google Scholar
Armingeon, K., Guthmann, K., and Weisstanner, D. (2016). How the euro divides the Union: The effect of economic adjustment on support for democracy in Europe. Socio-Economic Review 14(1), 1–26.Google Scholar
Armingeon, K., de la Porte, C., Heins, E., and Sacchi, S. (2022). Voices from the past: Economic and political vulnerabilities in the making of next generation EU. Comparative European Politics 20, 144–165.Google Scholar
Auer, S., and Scicluna, N. (2021). The impossibility of constitutionalizing emergency Europe. Journal of Common Market Studies 59(1), 20–31.Google Scholar
Baccaro, L., Bremer, B., and Neimanns, E. (2021). Till austerity do us part? A survey experiment on support for the euro in Italy. European Union Politics 22(3), 401–423.Google Scholar
Bachrach, P., and Baratz, M. S. (1962). Two faces of power. American Political Science Review 56(4), 947–952.Google Scholar
Beukers, T. (2013). The eurozone crisis and the legitimacy of differentiated integration. EUI Working Paper, Max Weber Programme 2013/36.Google Scholar
Bordo, M. D., Jonung, L., and Markiewicz, A. (2013). A fiscal union for the euro: Some lessons from history. CESifo Economic Studies 59(3), 449–488.Google Scholar
Brunnermeier, M. K., James, H., and Landau, J.-P. (2016). The Euro and the Battle of Ideas. Princeton, NJ: Princeton University Press.Google Scholar
Bulmer, S. (2014). Germany and the eurozone crisis: Between hegemony and domestic politics. West European Politics 37(6), 1244–1263.Google Scholar
Carstensen, M. B., and Schmidt, V. A. (2021). Between power and powerlessness in the euro zone crisis and thereafter. Journal of European Public Policy 28(6), 922–929.CrossRefGoogle Scholar
Copelovitch, M., Frieden, J., and Walter, S. (2016). The political economy of the euro crisis. Comparative Political Studies 49(7), 811–840.CrossRefGoogle Scholar
Csehi, R., and Puetter, U. (2021). Who determined what governments really wanted? Preference formation and the euro crisis. West European Politics 44(3), 463–484.CrossRefGoogle Scholar
De Grauwe, P., and Ji, Y. (2014). The future of the eurozone. The Manchester School 82(S1), 15–34.Google Scholar
De Vries, C. E. (2018). Euroscepticism and the Future of European Integration. Oxford: Oxford University Press.Google Scholar
Degner, H., and Leuffen, D. (2019). Franco-German cooperation and the rescuing of the eurozone. European Union Politics 20(1), 89–108.CrossRefGoogle Scholar
Dolls, M., Fuest, C., Neumann, D., and Peichl, A. (2018). An unemployment insurance scheme for the euro area? A comparison of different alternatives using microdata. International Tax and Public Finance 25(1), 273–309.Google Scholar
European Commission (2017). White Paper on the Future of Europe: Reflections and Scenarios for the EU27 by 2025. COM(2017) 2025. Brussels: European Commission.Google Scholar
European Commission (2021). Communication from the Commission to the European Parliament and the Council: On a New Funding Strategy to Finance Next Generation EU. COM(2021) 250 final. Brussels: European Commission.Google Scholar
Fabbrini, S. (2019). Europe’s Future: Decoupling and Reforming. Cambridge: Cambridge University Press.Google Scholar
Featherstone, K. (2016). Conditionality, democracy and institutional weakness: the euro-crisis trilemma. Journal of Common Market Studies 54(1), 48–64.Google Scholar
Feldstein, M. (2012). The failure of the euro: The little currency that couldn’t. Foreign Affairs 91(1), 105–116.Google Scholar
Follesdal, A., and Hix, S. (2006). Why there is a democratic deficit in the EU: A response to Majone and Moravcsik. Journal of Common Market Studies 44(3), 533–562.Google Scholar
Franchino, F., and Segatti, P. (2019). Public opinion on the eurozone fiscal union: Evidence from survey experiments in Italy. Journal of European Public Policy 26(1), 126–148.Google Scholar
Frieden, J., and Walter, S. (2017). Understanding the political economy of the eurozone crisis. Annual Review of Political Science 20(1), 371–390.Google Scholar
Genschel, P., and Jachtenfuchs, M. (2018). From market integration to core state powers: The eurozone crisis, the refugee crisis and integration theory. Journal of Common Market Studies 56(1), 178–196.Google Scholar
Griller, S., and Lentsch, E. (2021). EMU Integration and Member States’ Constitutions. Oxford: Hart Publishing.Google Scholar
Hall, P. A. (2018). Varieties of capitalism in light of the euro crisis. Journal of European Public Policy 25(1), 7–30.Google Scholar
Hix, S. (2008). What’s Wrong with the European Union and How to Fix It. Cambridge: Polity Press.Google Scholar
Howarth, D., and Quaglia, L. (2016). The Political Economy of European Banking Union. Oxford: Oxford University Press.Google Scholar
Ioannou, D., Leblond, P., and Niemann, A. (2015). European integration and the crisis: Practice and theory. Journal of European Public Policy 22(2), 155–176.Google Scholar
Jones, E., Kelemen, D. R., and Meunier, S. (2021). Failing forward? Crises and patterns of European integration. Journal of European Public Policy 28(10), 1519–1536.CrossRefGoogle Scholar
Jurado, I., Walter, S., Konstantinidis, N., and Dinas, E. (2020). Keeping the euro at any cost? Explaining attitudes toward the euro–austerity trade-off in Greece. European Union Politics 21(3), 383–405.Google Scholar
Kassim, H., Saurugger, S., and Puetter, U. (2020). The study of national preference formation in times of the euro crisis and beyond. Political Studies Review 18(4), 463–474.Google Scholar
Krugman, P. (2013). Revenge of the optimum currency area. National Bureau of Economic Research Macroeconomics Annual 27(1), 439–448.Google Scholar
Kudrna, Z., and Puntscher Riekmann, S. (2021). Eurozone politics and its implications for further reforms. In Zdenek, K., Puntscher Riekmann, S., and Wasserfallen, F. (eds.), The Politics of Eurozone Reforms. Colchester: Rowman and Littlefield, pp. 123–152.Google Scholar
Kudrna, Z., and Wasserfallen, F. (2021). Conflict among Member States and the influence of the Commission in EMU politics. Journal of European Public Policy 28(6), 902–913.Google Scholar
Lehner, T., and Wasserfallen, F. (2019). Political conflict in the reform of the eurozone. European Union Politics 20(1), 45–64.Google Scholar
Leuffen, D., Rittberger, B., and Schimmelfennig, F. (2013). Differentiated Integration: Explaining Variation in the European Union. London: Palgrave Macmillan.Google Scholar
Lundgren, M., Bailer, S., Dellmuth, L. M., Tallberg, J., and Târlea, S. (2019). Bargaining success in the reform of the eurozone. European Union Politics 20(1), 65–88.Google Scholar
Lundgren, M., Tallberg, J., and Wasserfallen, F. (forthcoming). Differentiated influence by supranational instititutions: Evidence from the European Union. European Journal of Political Research.Google Scholar
Majone, G. (1998). Europe’s ‘democratic deficit’: The question of standards. European Law Journal 4(1), 5–28.Google Scholar
Matthijs, M. (2017). Integration at what price? The erosion of national democracy in the euro periphery. Government and Opposition 52(2), 266–294.Google Scholar
Matthijs, M., and McNamara, K. R. (2015). The ‘euro crisis’ theory effect: Northern saints, southern sinners, and the demise of the Eurobond. Journal of European Integration 37(2), 229–245.Google Scholar
McNamara, K. R. (1998). The Currency of Ideas: Monetary Politics in the European Union. Ithaca, NY: Cornell University Press.Google Scholar
Moravcsik, A. (2002). In defense of the ‘democratic deficit’: Reassessing legitimacy in the European Union. Journal of Common Market Studies 40(4), 603–634.Google Scholar
Morlino, L., and Sottilotta, C. E. (2019). The Politics of the Eurozone Crisis in Southern Europe: A Comparative Reappraisal. London: Palgrave Macmillan.Google Scholar
Mundell, R. A. (1961). A theory of optimum currency areas. American Economic Review 51(4), 657–665.Google Scholar
Obstfeld, M., Alesina, A., and Cooper, R. N. (1997). Europe’s gamble. Brookings Papers on Economic Activity 1997(2), 241–317.Google Scholar
Puntscher Riekmann, S., and Wydra, D. (2013). Representation in the European state of emergency: Parliaments against governments? Journal of European Integration 35(5), 565–582.Google Scholar
Sala-i-Martin, X., and Sachs, J. (1991). Fiscal federalism and optimum currency areas: Evidence for Europe from the United States. NBER Working Paper No. 3855.Google Scholar
Scharpf, F. W. (2011). Monetary Union, fiscal crisis and the pre-emption of democracy. Zeitschrift für Staats- und Europawissenschaften (ZSE)/Journal for Comparative Government and European Policy 9(2), 163–198.Google Scholar
Schelkle, W. (2017). The Political Economy of Monetary Solidarity: Understanding the Euro Experiment. Oxford: Oxford University Press.Google Scholar
Schelkle, W. (2021). Fiscal integration in an experimental union: How path-breaking was the EU’s response to the COVID-19 pandemic? Journal of Common Market Studies 59(S1), 44–55.Google Scholar
Schild, J. (2013). Leadership in hard times: Germany, France, and the management of the eurozone crisis. German Politics and Society 31(1), 24–47.Google Scholar
Schimmelfennig, F., and Winzen, T. (2020). Ever Looser Union? Differentiated European Integration. Oxford: Oxford University Press.Google Scholar
Schimmelfennig, F., Leuffen, D., and Rittberger, B. (2015). The European Union as a system of differentiated integration: Interdependence, politicization and differentiation. Journal of European Public Policy 22(6), 764–782.Google Scholar
Schraff, D., and Schimmelfennig, F. (2019). Eurozone bailouts and national democracy: Detachment or resilience. European Union Politics 20(3), 361–383.Google Scholar
Sinn, H.-W. (2014). The Euro Trap: On Bursting Bubbles, Budgets and Beliefs. Oxford: Oxford University Press.CrossRefGoogle Scholar
Smeets, S., and Beach, D. (2021). Political and instrumental leadership in major EU reforms. The role and influence of the EU institutions in setting-up the fiscal compact. Journal of European Public Policy 27(1), 63–81.Google Scholar
Stiglitz, J. E. (2016). The Euro: How a Common Currency Threatens the Future of Europe. New York: W. W. Norton.Google Scholar
Târlea, S., Kudrna, Z., Bailer, S., and Wasserfallen, F. (2023). Executive power in European Union politics. Governance, Early View, 1–18. https://doi.org/10.1111/gove.12761Google Scholar
Wasserfallen, F. (2014). Political and economic integration in the EU: The case of failed tax harmonization. Journal of Common Market Studies 52(2), 420–435.Google Scholar
Wasserfallen, F., Leuffen, D., Kudrna, Z., and Degner, H. (2019). Analysing European Union decision-making during the eurozone crisis with new data. European Union Politics 20(1), 3–23.Google Scholar
Winzen, T. (2022). The institutional position of national parliaments in the European Union: Developments, explanations, effects. Journal of European Public Policy 29(6), 994–1008.Google Scholar
Woolley, J. T. (1994). Linking political and monetary union: The Maastricht agenda and German domestic politics. In Eichengreen, B. and Frieden, J. (eds.), The Political Economy of European Monetary Unification. Boulder, CO: Westview Press, pp. 67–86.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×