Understanding the Role of Ideas in Policy- Making: The Case of Germany’s Domestic Policy Formation on European Monetary Affairs Lukas Hermanus Molthof Thesis submitted for the degree of PhD Department of Politics and International Relations Royal Holloway, University of London September 2016 1 Declaration of Authorship I, Lukas Hermanus Molthof, hereby declare that this thesis and the work presented in it is entirely my own. Where I have consulted the work of others, this is always clearly stated. Signed: ______________________ Date: ________________________ 2 Abstract This research aims to provide a better understanding of the role of ideas in the policy process by not only examining whether, how, and to what extent ideas inform policy outcomes but also by examining how ideas might simultaneously be used by political actors as strategic discursive resources. Traditionally, the literature has treated ideas – be it implicitly or explicitly – either as beliefs, internal to the individual and therefore without instrumental value, or as rhetorical weapons, with little independent causal influence on the policy process. In this research it is suggested that ideas exist as both cognitive and discursive constructs and that ideas simultaneously play a causal and instrumental role. Through a process tracing analysis of Germany’s policy on European monetary affairs in the period between 1988 and 2015, the research investigates how policymakers are influenced by and make use of ideas. Using five longitudinal sub-case studies, the research demonstrates how ordoliberal, (new- )Keynesian, and pro-integrationist ideas have importantly shaped the trajectory of Germany’s policy on European monetary affairs and have simultaneously been used by policymakers to advance strategic interests. By empirically examining the dual and simultaneous role ideas play in the policy process, and by demonstrating that agents are both informed by and make use of their ideational environment, this research aims to make an original contribution to the literature and to strengthen the basis for a promising ‘strategic constructivist’ research agenda. 3 Acknowledgements Over the course of my research, I have received support, assistance, and help from many individuals and organizations, some of whom I would like to acknowledge here. First and foremost, I would like to thank my supervisor, Dr Alister Miskimmon, for his invaluable advice and mentorship. I could not have asked for a more enthusiastic and involved Doktorvater and I count myself very lucky indeed. I would also like to thank my advisors, Dr. Tom Dyson and Dr. James Sloam, for taking a special interest in my research and for always being available for feedback and guidance. A special thanks goes out to the examiners, Dr. Femke van Esch and Dr. Isabelle Hertner, for their useful comments on the thesis and their helpful suggestions for turning the dissertation into a publication. I also owe particular gratitude to the interviewees that took part in this study for taking the time to speak with me and for sharing with me their knowledge and insights. I received a number of scholarships, awards, and grants from Royal Holloway, the University of London, and the Deutsche Akademische Austauschdienst (DAAD), for which I am extremely grateful. I would also like to extend my thanks to the NFG research group at the Free University Berlin, and Dr. May-Britt U. Stumbaum in particular, for hosting me during the Spring of 2014. Likewise, I would like to thank the Deutsche Gesellschaft für Auswärtige Politik (DGAP) for providing me with a workplace during the Spring and Summer of 2015. Finally, I would like to especially thank my girlfriend, Tina Miedtank, for her confidence in me and for keeping me sane during my most stressful hours, my parents, Ineke Horstink and Jos Molthof, for encouraging me to pursue my interests, and my sister, Mieke Molthof, for looking over my drafts and for providing me with rigorous yet ever so encouraging feedback. 4 Table of Contents DECLARATION OF AUTHORSHIP ........................................................................................ 2 ABSTRACT ........................................................................................................................ 3 ACKNOWLEDGEMENTS ..................................................................................................... 4 LIST OF ABBREVIATIONS ................................................................................................... 8 LIST OF TABLES AND FIGURES ........................................................................................... 9 INTRODUCTION .............................................................................................................. 12 THESIS STATEMENT ................................................................................................................ 12 RESEARCH DESIGN ................................................................................................................. 12 CONTRIBUTION ..................................................................................................................... 13 CHAPTER PLAN ..................................................................................................................... 14 CHAPTER 1: A REVIEW OF THE IDEATIONAL LITERATURE IN POLITICAL SCIENCE AND THE STUDY OF GERMAN EUROPEAN MONETARY POLICY ....................................................... 16 THE ROLE OF IDEAS IN POLITICS: A REVIEW OF THE LITERATURE ...................................................... 16 THE ROLE OF IDEAS IN GERMANY’S POLICY ON EUROPEAN MONETARY AFFAIRS: A REVIEW OF THE LITERATURE .......................................................................................................................... 28 CONCLUSION ........................................................................................................................ 32 CHAPTER 2: RESEARCH DESIGN AND METHODS .............................................................. 33 A CASE STUDY ANALYSIS OF THE ROLE OF IDEAS IN THE POLICY PROCESS ........................................... 33 TRACING THE ROLE OF IDEAS IN THE POLICY PROCESS ................................................................... 35 DATA COLLECTION AND ANALYSIS ............................................................................................. 39 THE CODING FRAME ............................................................................................................... 43 CONCLUSION ........................................................................................................................ 52 CHAPTER 3: THE DUAL ROLE OF IDEAS IN THE RECENT HISTORY OF GERMANY’S EUROPEAN MONETARY POLICY. ..................................................................................... 56 CASE STUDY 1: GERMANY, MAASTRICHT, AND THE COMMON CURRENCY ....................................... 57 CASE STUDY 2: GERMANY AND THE THIRD STAGE OF EMU ........................................................... 82 CASE STUDY 3: GERMANY AND THE 2005 REFORM OF THE STABILITY AND GROWTH PACT ............... 104 CONCLUSION ...................................................................................................................... 123 CHAPTER 4: GERMANY, GREECE, AND THE FIRST BAILOUT PACKAGE ............................ 125 BRIEF BACKGROUND TO THE GREEK DEBT CRISIS AND THE 2010 BAILOUT ...................................... 126 5 THE CAUSAL ROLE OF IDEAS AND THE GERMAN DECISION TO CONTRIBUTE TO THE 2010 GREEK BAILOUT ........................................................................................................................................ 128 THE STRATEGIC ROLE OF IDEAS AND THE GERMAN DECISION TO CONTRIBUTE TO THE 2010 GREEK BAILOUT ............................................................................................................................. 156 CONCLUSION ...................................................................................................................... 160 CHAPTER 5: GERMANY, GREECE, AND THE THIRD BAILOUT PACKAGE. .......................... 162 BRIEF BACKGROUND TO THE 2015 GREEK BAILOUT DECISION ...................................................... 164 THE CAUSAL ROLE OF IDEAS AND THE GERMAN DECISION TO CONTRIBUTE TO THE 2015 GREEK BAILOUT ........................................................................................................................................ 165 THE STRATEGIC ROLE OF IDEAS AND THE GERMAN DECISION TO CONTRIBUTE TO THE 2015 GREEK BAILOUT ............................................................................................................................. 194 CONCLUSION ...................................................................................................................... 198 CHAPTER 6: CONCLUSION ............................................................................................. 200 A SUMMARY OF THE RESEARCH FINDINGS ................................................................................ 200 THE IMPLICATIONS ............................................................................................................... 204 LIMITATIONS AND AVENUES FOR FUTURE RESEARCH ................................................................... 209 CONCLUSION ...................................................................................................................... 210 LIST OF REFERENCES CITED 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