Intergovernmentalism and the crisis of the Euro

AlShammaryThis blog post is the fifth in a series of posts that come from students of our 2nd year undergraduate “Politics of the EU” course. As part of the course, students were asked to write about an issue pertaining to EU politics. The best blog posts have been selected to provide an opportunity to exceptional young scholars at UCD to contribute to the debate on the future of the EU, and to promote the insightful scholarship being undertaken at UCD to a wider public audience.

The recent sovereign debt crisis witnessed during a tumultuous period of financial recession in Europe raises critical questions about the management of its seemingly multi-faceted system of economic governance. There is no doubt that the integration of economic systems at the supranational level comes with faults that end up affecting this economic union as a whole. This essay focuses in particular on the Greek crisis in order to explore the limitations of intergovernmentalism in addressing crises within the framework of regional integration. Further, it contends that structural challenges demean the current intergovernmental approach to solving existential problems related to regional integration.

Schimmelfennig (2015, p. 178) explained that European integration is a manifestation of intergovernmentalism, paying particular attention to the drawing together of economic interests from different member states. Bargaining becomes a vital tool for the achievement of binding agreements on financial matters. However, an analysis of the Eurozone crisis shows that intergovernmentalism does not always translate to the possibility of a collective action to individual challenges (ibid).

As a supranational body that operates at the highest level of regional integration, the European Union has an institutionalised constitution that guides the development and enforcement of economic and financial policies across the region. The fundamental principle that guides this integrative structure is that economic development of the members of the union takes place through cooperation. However, the crisis in the Eurozone, especially the financial turmoil seen in Greece, has been a defining moment in the collective decision-making of the European Union (Hinarejos 2015, pp. 85-88).

The current events in Greece depict a new intergovernmentalism in the sense that internal politics have collided with supranational interests. An understanding of the negotiations initiated by European Union member countries through established institutions was that a shouldering of its sovereign debt crisis by all members was the best way to save Greece’s economy. The European Council spearheaded the collective efforts to stabilise the European economies amidst the Eurozone crisis. An example is the European Stabilization Mechanism, which enabled the release of 13 billion euros to Greece in order to assist the Greek government in meeting its debt obligations. The intention of the decision was evident; it was to make sure that Greece pays its debts, and also to inject life into the financial sector of Greece so that the country could regain a healthy economy. Nevertheless, the interplay of politics within Greece raises serious concerns about the actual support and benefits of the bailout program initiated by the European Council. A look at the political environment of Greece reveals that a political standoff over the bail-out programme shows a disconnection between the leading political figures of the country (Bickerton 2015).

Despite efforts to achieve supranational integration through the spearheading of a collective voice, such as support for an incremental bail-out to Greece, party politics in states across the European Union remain a significant hindrance. Domestic politics that are evident in their variety of preferences expressed about policies on the political economy make it impossible to aggregate interests on matters that require the attention of international players. The aim of the integration process of the European Union is to suppress deep-seated domestic interests exemplified through party politics in order to ensure the greater good of all countries. However, the contest between Syriza and the Troika in Greece about the effectiveness of the bailout programme launched by the EU proves that integration in the European Union suffers as a result of domestic politics (ibid).

Fabbrini (2013, p. 1) critiques the intergovernmental constitution developed by the EU by arguing that the magnitude of the legislative agenda does not serve the core interest of cooperation for economic prosperity. Some of the radical measures crafted at the peak of Greek crisis (2010-2012) included critical legislative processes concerning the management of financial systems. Just as highlighted earlier, the fundamental challenge has been the possibility of bypassing domestic systems when implementing agreements reached at the supranational level. The conclusion seems to be that there are serious structural obstacles that make collective action impossible when it comes to addressing problems that exist in internationalised economic regimes (Cini & Pérez-Solórzano 2016, p. 384).

For instance, Schimmelfennig (2015, pp. 179-181) criticises realist intergovernmentalism through the observation that states do not abandon strategic interests developed domestically, even when pursuing geopolitical strategies. Some countries, for example Germany, have shown their opposition to the bailout program for Greece, supporting their opposition with the argument that it does not fit with their strategic economic policies.

Crum (2013, p. 614) suggested that the Eurozone crisis is a manifestation of the difficulties encountered when trying to attain a balance between economic integration, nation-state interests, and the politics of democracy. For Greece, it is easy to cite the attributes of democracy at a national level, which thereby allows for a political contest over the best solutions to be suggested at the supranational level. In other words, intergovernmentalism faces a trilemma when it comes to matters of economic governance and integration. The value of self-governance dominates over the implementation of principles and agreements reached the international level. This could also be considered the cost of promoting democracy within the confines of regional integration (Crum 2013, p. 614).

According to Danielsson (2015, p. 1), ‘’it would only cost the EU two percent of its Gross Domestic Product to offer Greece a complete bailout’’. Nonetheless, the policy responses to the crisis suffer from domestic principle syndrome which thus affects the input of individual EU members.

In conclusion, there is evidence that the European Union has the critical tools necessary for cooperation to ensure economic gains of all of its members. The argument lies, however, in the fact that, even in the wake of economic integration, traditional centres of power in international politics still affect the ability of states to pursue collective liberal policies.

Eman Alshammary is an international student in University College Dublin. 

Reference List

Bickerton, C. (2016).’The new intergovernmentalism and the Greek crises’. Oxford University Press’s. Available at: http://blog.oup.com/2015/08/greek-%5BAccessed 22Feb.2016].

Cini, M, and Pérez-Solórzano, BN. (2016) European Union politics, Oxford Univ. Press, Oxford.

Crum, B. (2013) ‘Saving the Euro at the Cost of Democracy?’, JCMS: Journal of Common Market Studies, vol. 51 no. 4, pp. 614-630.

Danielsson, J. (2012). European leaders have let their own hubris dominate their response to the Greek crisis. A total bailout of Greece would only cost the European Union 2 per cent of its GDP. LSE European Politics and Policy. Available at: http://eprints.lse.ac.uk/42976/ [Accessed 22 Feb. 2016].

Fabbrini, S. (2013) ‘Intergovernmentalism and its limits assessing the European Union’s answer to the Euro crisis’ Comparative Political Studies, doi: 10.1177/0010414013489502.

Hinarejos, A. (2015) The Euro area crisis in constitutional perspective, Oxford University Press, Oxford.

Schimmelfennig, F. (2015) ‘Liberal intergovernmentalism and the euro area crisis’, Journal of European Public Policy, vol. 22 no. 2, pp. 177-195.

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