The Crisis of European Integration in Historical Perspective
- LAST REVIEWED: 09 December 2015
- LAST MODIFIED: 26 May 2016
- DOI: 10.1093/obo/9780199756223-0125
- LAST REVIEWED: 09 December 2015
- LAST MODIFIED: 26 May 2016
- DOI: 10.1093/obo/9780199756223-0125
EU leaders have repeatedly congratulated themselves that crises—often caused by differences among EU members facing new challenges—have led to collective creativity and greater integration. In recent years this has not been the case, however. The European Union muddled through a decade of damaging debate about the institutional reforms needed to enlarge postcommunist Central and Eastern European countries, failed at establishing the ambitious foreign policy it had solemnly pledged to create, faced problems of low economic growth and high unemployment, and faced a drop in public support. Nothing has been as dramatic as the early-21st-century’s eurozone crisis, however. European Monetary Union (EMU), meant as a great leap forward in integration, brought a new single currency and a new European Central Bank (ECB) designed to prevent inflation and promote economic convergence among members (to date, nineteen of twenty-eight EU member countries). The experiment ran into stormy weather with the collapse of the global financial sector in 2008. Like the United States, eurozone countries, many having already indulged in unwise debt-fueled development strategies, then pursued expensive bailouts and stimulus plans to stave off the worst. Crisis induced lower growth, higher unemployment, and greater government spending, and then exposed them to further indebtedness. In 2009, after Greece confessed to lying about its deficits and debts, financial markets raised the country’s interest rates, pointing Greece toward national default and indirectly threatening the entire eurozone. After considerable confusion, richer EMU countries granted conditional loans to Greece (which to date has received over €320 billion), Ireland, Portugal, and Cyprus, and supported Spain’s faltering banks. Much was done by a hastily improvised European Financial Stability Fund (EFSF), succeeded by a permanent European Stability Mechanism (ESM), plus help from the International Monetary Fund (IMF). The loans obliged recipients to harsh austerity and structural reforms that further reduced growth, raised unemployment, and cut budgets. In the crisis years, the ECB has also stretched its legal prerogatives toward serving as the eurozone’s lender of last resort. EMU economic governance has been changed to address some of its founding flaws. Originally a single-currency area with few controls over its members beyond rules, there are now serious constraints on national budgetary practices, a new Banking Union, and a considerably reregulated financial sector. The eurozone crisis will eventually end, leaving a legacy of lower growth, higher unemployment, and other unpleasantness. In retrospect, however, crisis decision making has been slow and prone to mistakes, with outcomes most often dominated by economically more-powerful member states, and with Germany in the lead. Such things, plus the harshness of crisis loans, have hurt the European Union’s legitimacy, particularly in poorer, more peripheral, countries. Tighter economic governance systems have also accentuated differences between EMU “ins” and “outs.”
The best discussion of the beginnings of the eurozone crisis is Batastin 2012. Featherstone 2011 provides a subtle portrait of the Greek situation and its implications. Dullien and Guérot 2012 discusses the German “ordoliberal” economic approaches that shaped crisis responses. De Grauwe 2013 engages key economic arguments. Matthijs and Blyth 2015 is a state-of-the-art collection of crisis analyses. Dolvik and Martin 2014 is a useful comparative historical companion. Schäfer and Streeck 2013 provides sharply argued political economy critiques. Bickerton, et al. 2015 places crisis decision making in a broader context of the new intergovernmentalism emerging in the European Union’s post-Maastricht era. Among the rapidly multiplying library of crisis postmortems from EU specialists, Copsey 2015 stands out.
Batastin, Carlo. Saving Europe: How National Policies Destroyed the Euro. Washington, DC: Brookings Institution, 2012.
A close review of the early crisis’s economic and political causes.
Bickerton, Christopher J., Dermot Hodson, and Uwe Puetter, eds. The New Intergovernmentalism. Oxford and New York: Oxford University Press, 2015.
Theoretical essays and case studies about changes in EU institutions and decision making after the Maastricht Treaty that have shaped crisis responses.
Copsey, Nathaniel. Rethinking the European Union. London: Palgrave, 2015.
A strong effort to reflect anew on the dilemmas the European Union must resolve to move forward after the crisis.
de Grauwe, Paul. “The Political Economy of the Euro.” Annual Review of Political Science 16 (2013): 153–170.
Excellent introduction to the EMU system.
Dolvik, Jon-Erik, and Andrew Martin, eds. European Social Models from Crisis to Crisis: Employment and Inequality in the Era of Monetary Integration. Oxford and New York: Oxford University Press, 2014.
Comparative essays on EMU’s consequences over time for key European countries.
Dullien, Sebastian, and Ulrike Guérot. The Long Shadow of Ordoliberalism: Germany’s Approach to the Euro Crisis. London: European Council on Foreign Relations, 2012.
Germany has shaped most of the choices taken in the crisis. This article explains the theoretical origins of, and reasons for, these choices.
Featherstone, Kevin. “The Greek Sovereign Debt Crisis and EMU: A Failing State in a Skewed Regime.” Journal of Common Market Studies 49.2 (2011): 193–217.
Essential, concise understanding of Greece’s debt problems.
Matthijs, Matthias, and Mark Blyth, eds. The Future of the Euro. New York: Oxford University Press, 2015.
Superb collection analyzing the background and likely futures of the euro, with pertinent case studies.
Schäfer, Armin, and Wolfgang Streeck, eds. Politics in the Age of Austerity. Cambridge, UK: Polity, 2013.
Provocative papers on the evolution of European democracies around the crisis.
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