Towards Monetary and Fiscal Union?

CEU eTD Collection ofGovernance:EconomicEuropeanTowards Paradox The In partial fulfilment of the requirements for the degree of Master of Ar In requirements for of of of Master the fulfilment degree the partial Department of International and Department Relations European Studies of Monetary and Union? Fiscal Monetary Supervisor: Professor László Csaba László Supervisor: Professor Central European University Word count: 14,649 count: Word Budapest, Hungary Marit Maidla Submitted to to Submitted 2012 By By

ts ts CEU eTD Collection rbes ih h Erpa eooi gvrac ta se fo t from stem that governance economic European the with problems

cnmc n pltcl no te nepa o Fac-emn u hv w have and shifted economic governanceinstitutions, intergovernmentalism. towards duo Franco-German of interplay the union political and economic ta than rather Paradoxically, union. closer a to led not delivered not overall the tha reforms of host despite the needed, is governance that economic centralised show will thesis The EMU. of functioning short fall developed being solutions the externalities, negative the int further and cooperation that clear become has it As outcomes. whic ECB, of policies the complement to union economic no is there thus, control the in been have policies fiscal the (ECB), Bank Central controlle are policies monetary the Although Union. Monetary and Economic

The most severe economic downturn since the Great Depression has re has Depression Great the since downturn economic severe most The Abstract ii ii

egration is needed to counteract to needed is egration of individual Member States, States, Member individual of of guaranteeing the efficient the guaranteeing of t have been introduced have have introduced been have t king the EU closer to an an to closer EU the king e nsa stp f the of setup unusual he agreement that more more that agreement vealed the underlying the vealed h leads to suboptimal suboptimal to leads h d by the European the by d eakened the EU EU the eakened CEU eTD Collection period. constant encouragement throughout my time at CEU, and especially during my and the especiallyconstant encouragement at CEU, time during my throughout

I would like to thank my supervisor, Professor László Csaba, for genero his supervisor,I thank my to would like László Professor Acknowledgements Acknowledgements iii

us guidanceus and sis writingsis CEU eTD Collection Bibliography Bibliography ...... 49 Chapter 3–Analysing ...... 36 ChapterReforms 2–Overview of ...... 16 Chapter 1–The Storytelling ...... 6 Introduction ...... 1 Patchwork of different traditions Patchwork traditions of different ...... 41 ProblemsPossible ...... 39 The move towards intergovernmentalism ...... 36 ...... 31 The and MonetaryCoordination Governance Treaty and Union the onStability, Economic in PackThe Six ...... 28 The Pact Euro Plus ...... 24 Mechanism The European Stability ...... 21 The European Semester ...... 18 the hypothesis Theoretical backgroundand ...... 13 Theand Eurogroup Gouvernement Économique ...... 10 The Pactand Stability Growth ...... 6

Table of Contents of Table iv iv

CEU eTD Collection http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?u inherently flawed from inception to deal with crises situations. A situations. crises with deal to inception from flawed inherently bei of Union the accuse to come have many crisis, drawn-out the of l with stability price delivering and euro the up setting at e States’ Member converging by stability monetary and economic theof question concept European into overall integration and of course calls s European e States’ Member EU destabilized governance, economic European bel undermined has crisis the Treaty, the of aspirations high the instab political increased and unrest civil sparked has deficits a advocated austerity fiscal area; euro the of disintegration cris the Greece, of insolvency the to solutions find to tries EU GreatDe the since severedownturn economic most the faced with is Europe”. of among the peoples creat and integration European advance economies, States’ Member 1 a financial and economic global the Therefore, turmoil. internal and bee has overall response EU’s the being, time the for markets temporar provided have may Greece, for packages rescue as such “The Treaty on European Union and the Treaty on th on theTreaty and Union European on Treaty “The Undoubtedly, the Economic and Monetary Union (EMU) that was founded in in founded was that (EMU) Union Monetary and Economic the Undoubtedly, The preamble to the Treaty of Lisbon states that the Europe the that states Lisbon of Treaty the to preamble The

1 Today, just three years after the Treaty entered into force, the EU the EU years force, enteredTreaty into after the three Today, just Introduction ri=OJ:C:2010:083:FULL:EN:PDF. ri=OJ:C:2010:083:FULL:EN:PDF. e Functioning of the European Union”, December 13, 13, December Union”, European the of Functioning e 1

ow inflation. However, over the course course the over However, inflation. ow s a response to the soaring government soaring the to response a s ility in the Member States. Despite States. Member the in ility is has led to speculations about the the about speculations to led has is an Union (EU) seeks to strengthen strengthen to seeks (EU) Union an n characterized by indecisiveness indecisiveness by characterized n conomies has been successful successful been has conomies tog the lthough alvain n cle the calmed and alleviation y pression of the 1930s. As theAs 1930s. the of pression s well as the unfolding crisis unfolding the as well s e i te fiiny f the of efficiency the in ief e “an ever closer union union closer ever “an e ng ill-equipped, or even even or ill-equipped, ng oois traes the threatens conomies, ad hocad order to deliver to order solutions, olidarity. olidarity. 2007, 2007, CEU eTD Collection y h Erpa Cmiso ad h Eooi ad iaca Affa Financial and Economic the and Commission European the by Second, as it became clearer over the years that at least m least at that years the over clearer became it as Second, add to ways situation. viable find to pressure increased under EU the put have therefore, the involvement of all euro area countries is essential. is oftherefore, euro all countries the area involvement c the stabilize unilaterally to capacity government’s individual by countered be cannot however, instability, This whole. a as union t can State Member one of policies fiscal irresponsible the leads This States. Memberother from emanating effectsover s that policies national the inefficient rendered has integration of health overall the on policies national of effects external proce integration The policies. fiscal one – stabilization only of of methods charge in governments the leaves which (ECB), Bank Central policy-making monetary the delegated have governments area euro use are policies macroeconomic and monetary which for systems, gua to is governments national of aim the general, In States. udlns o bde dfct ad oenet et Te G repre SGP The State Member the of monitoring debt. the on relies that method governance government and deficits budged Gr for and Stability guidelines the is there First, States. Member area economic and fiscal the of coordination of modes main two are There union. pr maintaining and achieving include goals main its and area, euro At the heart of the crisis lay both the independence and interde and independence the both lay crisis the of heart the At ihn h eitn faeok f h EU te C cnut te monet the conducts ECB the EMU, the of framework existing the Within 2 the single currency. At the same time, time, same the At currency. single the inimum macroeconomic coordination macroeconomic inimum hreaten the stability of the monetary the of stability the hreaten rantee the stability of their economic economic their of stability the rantee to a state of interdependence,state of awhere to wh at SP ta establishes that (SGP) Pact owth e t cutrc ngtv spill- negative counteract to eek ss in the EU has increased the the increased has EU the in ss rec uin s iie, and limited, is union urrency d. In the EMU, however, the however, EMU, the In d. pendence of the EU Member Member EU the of pendence to the independent European European independent the to ice stability in the currency the in stability ice s’ budgetary developments developments budgetary s’ irs Council (ECOFIN). (ECOFIN). Council irs n Mme Sae an State, Member one es h unsustainable the ress et a rules-based a sents policies of the euro euro the of policies ary policy for the the for policy ary of the possible possible the of CEU eTD Collection ulctospoiig urn cmetr wl b ue t alw f allow to used be will commentary current providing publications by the crisis, necessary. Furthermore, the economic integration economic the Furthermore, necessary. crisis, the by on be will 116. 2012): 1, (March 2 no. thesis the of 2 focus the Importantly, crisis. the and States Member the ways which in investigate and tracing as institutions EU various by published documents relevant other and gover economic in place taken have that transformations latest the a thesis the Therefore, itself. process integration the on had have implications the and governance economic European the in changes littl is there unfolding, still are crisis the of scenes new years thethe euro group rose the limelight first in after was into launched. was fina the of meeting informal an Originally created. was Eurogroup governance economic centralized formal but necessary, was U mois h eape ht crec uin s osbe wi bearguable sustainable run. the long in setup can if this possible is union currency a that example the embodies EU start usually which integration, of stage last the is currency increased centralization of fiscal policies on the EU level woul level EU the on policies fiscal of centralization increased th of complementarity the and externalities negative countering e standpoint, organizational an From policies. macroeconomic coherent complement be to ECB theby pursued monetarypolicies the allow Me area euro 17 all of policies budgetary the coordinate and monitor Iain Begg, “The EU’s Response to the Global Financ theGlobal to Response EU’s “The Begg, Iain Despite the outlined measures, the EU lacks a central suprana central a lacks EU the measures, outlined the Despite It has been noted that “a crisis often stimulates significant stimulates often crisis “a that noted been has It

ial Crisis and Sovereign Debt Crisis,” Crisis,” Debt Sovereign and Crisis ial 3 e academic analysis on the most recent most the on analysis academic e s with a political union. Although the Although union. political a with s governance developments”governance the heads of the EU have reacted to to reacted have EU the of heads the d be justified and, as exemplified as and, justified be d tional fiscal institution that could that institution fiscal tional theory would argue that shared shared that argue would theory e fiscal and monetary policies, policies, monetary and fiscal e ims to provide an overview of overview an provide to ims nce ministers of the euro zone, euro the of ministers nce ed, rather than undermined, by by undermined, ratherthan ed, the long-term effects and and effects long-term the hu a oiia uin i is it union, political a thout nance in the EU. Statements EU. the in nance or a comprehensive process process comprehensive a or that the numerous reforms reforms numerous the that oiial uval, the unviable, politically mber States, which would would which States, mber el s eeat media relevant as well pcal i trs of terms in specially Asia Europe Journal Europe Asia 2 and as and 9, CEU eTD Collection points of European economic governance, it is reasonable to exp to reasonable is it governance, economic European of points Journal of European Public Policy Public European of Journal the led finalizati to governance and prevent crisis, to mitigate failed the teste that crisis debt sovereign European the whether observed cr the to answer the as others, and Grauwe De by advocated been has the and character supranational its strengthening by crisis whe is thesis the in asked question fundamental The States. Member i that move a level, EU the to powers more delegate to governments Talani (Palgrave Macmillan, 2009), 9–28. 9–28. 2009), Macmillan, (Palgrave Talani these have changed the nature of European integration. thesechanged of have nature European integration. the t on be will emphasis the analysis, the in mentioned be will Fund, “advanced but incomplete stage of economic integration”. economic of stage incomplete but “advanced 4 mrvd oenne hog te opein f cnmc nerto – this – integration economic genuine achievement ofEU economic a level. at the union of completion the through governance improved 3 temporary archi institutional overall of for theseimplications developments the EU, can be solved with further integration and centralization.and integration further with solved be can EU, considerabl remained have which shocks, negative the counteract could that of lack governance, of problem the Thus, situation. unsustainable an to the – union political and economic genuine a creating by integration Paul De Grauwe, “Some Thoughts on Monetary and Pol and Monetary on Thoughts “Some Grauwe, De Paul If Union: What, Political “EMUand Hodson, Dermot h tei st a yohss ht tm fo te ai unders basic the from stems that hypothesis a sets thesis The Paul De Grauwe has argued that there is a pressing need to final to need pressing a is there that argued has Grauwe De Paul d hocad epne o h cii, uh s salsig h Erpa Fina European the establishing as such crisis, the to response 16, no. 4 (2009): 510. (2009): no. 4 16,

Anything, Have We Learned from the Euro’s First Dec First Euro’s fromthe Learned We Anything,Have itical Union,” in in Union,” itical 4 3 Since the crisis has revealed the week the revealed has crisis the Since Community method, something that that something method, Community The Future of EMU of Future The 4 This, of course, calls for national for calls course, of This, adpoe ta te economic the that proved and d ect that the solution would be an an be would solution the that ect he long-term solutions and how and solutions long-term he ther the EU has answered the the answered has EU the ther ize this process of economic economic of process this ize current setup has clearly led clearly has setup current adn ta te U s an is EU the that tanding tecture. Although the the Although tecture. on of economic union. isis. In addition, it will be will it addition, In isis. nt upre b many by supported not s centralized fiscal policy policy fiscal centralized y substantial in the in substantial y , ed. Leila Simona LeilaSimona ed. , ncial Stability Stability ncial en the means ade?,” ade?,” CEU eTD Collection

intergovernmental coordination of fiscal policies. of fiscalintergovernmentalcoordination policies. integrati Rather, stopped. not has process integration European the towards steps great taken not has EU the that fact the despite Nonethe traditions. traditions policy two the of patchwork a remain a been not has union economic or political closer France, and Germany that emergesthat governance. the economic changes in from e analysisand the to devoted chapteris third governance. The economic recent most the of some of overview an provides chapter following evoluti the on influences ideational different discussing authors on also mone the complement to union economic for need of topic the addressing Empha governance. economic European of field the in studies recent liaey te hss is o hw ht u t te iegn nationa diverging the to due that show to aims thesis the Ultimately, The thesis consists of three chapters.. The first chapter ai chapter first The chapters.. three of consists thesis The

5 ms to give an overview of the more more the of overview an give to ms closer economic and fiscal union, fiscal and economic closer on occurs through an increased increased an through occurs on less, it will be argued that that argued be will it less, xplanation of the paradox the of xplanation eom i te il of field the in reforms i i pt n literature on put is sis tary union. The focus is is focus The tary union. on of the EMU. The The EMU. the of on chieved, and reforms reforms and chieved, l policy traditions of of traditions policy l CEU eTD Collection provide an overview of the economic governance of the EU up to 2010. Nex 2010. to up EU the of governance economic the of overview an provide Desp union. monetary the of breaking the or making the be to prove which will allow the formulation of a allowwhich central hypothesis. the formulation will to way logical the be would which theories, the on eye an keeping monetary policy to the independent European Central Bank (ECB). At (ECB). Bank Central European independent the to policy monetary currency single the of adoption the to agreed States Member Union

making and decentralized fiscal policy-making can guaranteemaking fiscal the stabil policy-making and can decentralized centrali a setup, original the not or whether and go, should union economic integ the far how of topic the on produced been have libraries EMU, is it EU, the of that than shorter considerably is (EMU) Union history the Although crisis. of times in steps boldest and decisive ha EU the that progress said been the has it halted then, not surprisingly, Not have integration. these hindsight in endpoint, its reached when time in instances been and have there by that been, true is has it Although EU the of history the that said be can it Thus, inte most the of one become today by has trade, in interests common ih h ceto fte omn cnmc n Mntr Uin EU, eleve (EMU), Union Monetary and Economic common the of creation the With Pact and Growth The Stability h E, hc oc satd s h Erpa Ca ad te Communit Steel and Coal European the as started once which EU, The In order to understand the present, we must know the past. Therefore past. the know must wepresent, the understand to In order Chapter – 1 Storytelling The 6 facing today a crisis that may well well may that crisis a today facing of the Economic and Monetary Monetary and Economic the of it has seemed that the EU has has EU the that seemed has it , which meant delegating their their delegating meant which , respond to the current crisis, current the to respond ration in monetary as well as well as monetary in ration ag, n o integration. of one large, grated areas in the worlds. the in areas grated ity of theity currency union. md sm o is most its of some made s , the following will firstly will following the , ite the young age of the the of age young the ite the same time, the fiscal the time, same the zed monetary policy- monetary zed t, it will be explored, explored, be will it t, oad increased towards ta rle on relied that y n European European n CEU eTD Collection possible without far-reaching coordination of the economic policies policies economic the of coordination far-reaching without possible policy-making remained the duty of the national governments, which has has which governments, national the of duty the remainedpolicy-making former. latter the with Germany, and France were governance greatly economic that countries leading two the that argue Verdun Amy and use be P Growth should and Stability the steering of nature the for of analysis comprehensive methods which and snowball the steer to how competition”. of principle the with accordance in “act States Member the E the of Functioning the on Treatythe of 120 Article (now) adhere to p economic of implementation and course the on decide to liberty the http://www.consilium.europa.eu/media/4609/declarati 8 7 6 ie wt te itut f te Mme Sae, eae the became States, Member other of distrust the with mixed 109 and and 109b109 40. 2006), Press, University (Manchester 5 states”. belief the from stemmed policy, monetary and economic regarding

(Cambridge University Press, 2010). 2010). Press, University (Cambridge Growth Pact.Growth principles the to adhere to had that governments national of hands the policy economic that determined EMU, of three Stage the in coordination outlining when Council, European the 1997, In policies. fiscal fragmented Martin Heipertz and Amy Verdun, AmyVerdun, and Heipertz Martin Uwe Puetter, th on theTreaty and Union European on Treaty “The Resolution of the European Council on Economic Poli Economic on Council theEuropean of Resolution With the “birth” of EMU and the euro, a snowball effect had been s been had effect snowball a euro, the and EMU of “birth” the With 7 8

Heipertz and Verdun show in their study that the paradigm of sta of paradigm the that study their in show Verdun and Heipertz , Presidency Conclusions (Luxembourg: The European European The (Luxembourg: Conclusions , Presidency The Eurogroup: How a Secretive Circle of Finance Mi Finance Circleof Secretive a How Eurogroup: The 5 6 EMU foresaw the national governments as the decision-makers decision-makers the as governments national the foresaw EMU The nature of the Maastricht Treaty, which set up EMU’s inst EMU’s up set which Treaty, Maastricht the of nature The

Ruling Europe: The Politics of the Stability and Gr and Stability the Politics of The Europe: Ruling onsn00400.en97.annex1.pdf. onsn00400.en97.annex1.pdf. e Functioning of the European Union.” Union.” European the of Functioning e cy Co-ordination in Stage 3 of EMU and on Treaty Ar Treaty on and EMU 3 of in Stage Co-ordination cy 7 Council, December 12, 1997), 1997), 12, December Council, nisters Shape European Economic Governance Economic European nistersShape an open market economy with free with economy market open an leitmotif U (TFEU), which states that that states which (TFEU), U act (SGP), Martin Heipertz Martin (SGP), act ht mntr uin was union “monetary that oe oiaig hn the than dominating more set out in the Stability and and Stability the in out set tarted. The question arose arose question The tarted. f h ivle member involved the of influenced the shape of of shape the influenced owth Pact owth led to decentralized and decentralized to led lce a ln a they as long as olicies bility, -making will remain in remain will -making itutional architecture itutional of EMU. Despite Despite EMU. of economic policy policy economic Stabilitätskultur , 1st ed. 1st , who were given were who . n h most the In d. ticles ,

CEU eTD Collection provided a tough benchmark to meet, based on which of their domestic f domestic their of which on based meet, to benchmark tough a provided policies in the Euro zone. Consequently, Germany endorsed the idea of idea the endorsed Germany Consequently, zone. Euro the in policies own their ‘put should states that notion the to attachment German “a Thus States. Member other as well as Commission the by monitored 9 b or budget balanced a for aim should governments States’ Member t and GDP of cent per 60 exceed not could budgets national Treaty, tha ceiling GDP of cent per 3 the within remain to had deficits evident.inferring the became EU’s national sovereignty control without reconc to need the Nevertheless, another. of debts the pay to have other any (or Germany that ensure to bailout-clause, no the TFEU, le This intensified. deficit, budget high a run might that history rider ‘free possible over worries Germany’s 1999, in launched was afgovernanceEU economicsupport level,Germany’s reluctance onthe to maintain sound fiscal sound maintain positions. the outline which reports, stability yearly submit to States ‘prevent a or ‘surveillance’ and Deficit (EDP) Excessive Procedure ‘correc or ‘dissuasive’ a components: two of consisted has SGP The t or EU the within institutions new any moneta of creation the the requiring in stability and deficit budget low assure would that e and surveillance mutual provide budgets, on rules the clarify to Ibid., 6. Ibid., h Pc st u rls o e olwd fe Sae he o EM of three Stage after followed be to rules out set Pact The The Stability and Growth Pact (SGP) was proposed by the Ge the by proposed was (SGP) Pact Growth and Stability The

9

8 governments’ plans to achieve or or achieve to plans governments’ t was already set by the Maastrich Maastrich the by set already was t d to the notorious Article 125 of 125 Article notorious the to d rman Finance Minister in 1995, 1995, in Minister Finance rman he drawing up of a new treaty. treaty. new a of up drawing he stablish control over the fiscal fiscal the over control stablish ile economic coordination and coordination economic ile ive’ arm that requires Member requires that Member arm ive’ hat over the medium term the term medium the over hat s’, countries with poor fiscal fiscal poor with countries s’, udgetary surpluses. The SGP SGP The surpluses. udgetary . aey ntoa budget national Namely, U. tive’ arm, in the form of the of form the in arm, tive’ , the SGP came to represent to came SGP the , ry union, at the same not not same the at union, ry Member State) would not not would State) Member house in order’ before new new before order’ in house a rule-based framework framework rule-based a iscal policies would be would policies iscal ter Stage of three EMUter CEU eTD Collection been the advocate for automatic sanctions for non-compliance, toget non-compliance, for sanctions automatic for advocate the been marked which Council, the by suspended was SGP the when 2003 November t of inclusion the resisting opposition, the of leader the became prah ht ol hv alwd o mr ro fr iceinr poli discretionary for most the up gave who Germany room end, the In governments. more for allowed have would that approach whereas rules, SGP the with comply to failed states case procedure automatic an supported Germans The SGP. the in sanctions remained secondthe Commission rank institutions. ECOF the whereas powers, unparalleled with bank central the of system new the ECB”; the alongside acting “policeman mere SG the in reinforced was (ECOFIN) Council Affairs Financial and ihu Grays atcpto te M wud ae en impossib been have would EMU the participation Germany’s without over bargaining for position best the had economy, strongest the had as 13 12 11 Pact to deliver the stability and compliance that was hoped. Mo hoped. was that compliance and stability the deliver to Pact auster fiscal increased in resulting project German a as 10 Member enough lobbying By limit. deficit cent per 3 the meet e be not could sanctions that fact The sanctions. automatic guarantee however Remarkably, demands. its of majority the through push to managed built”.be could structures European sound (Oxford University Press, 2000), 789–790. 789–790. 2000), Press, University (Oxford Heipertz and Verdun, Verdun, and Heipertz Featherstone, Dyson and Verdun, and Heipertz Featherstone, Kevin and Dyson Kenneth n h cnet f h SP Gray mre a te ntao of initiator the as emerged Germany SGP, the of context the In Ruling EuropeRuling EuropeRuling The Road To Maastricht To Road The

, 21. , 56. , The Road To Maastricht: Negotiating Economic and Mo and Economic Negotiating Maastricht: To Road The , 790. 790. , 10 Not surprisingly then, in France the SGP was seen was SGP the France in then, surprisingly Not 9 12

ity. de factode 11 the French advocated a more lenient more a advocated French the Although the role of the Economic the of role the Although re importantly, Germany who had who Germany importantly, re IN, the European Parliament and and Parliament European the IN, economic governance endowed endowed governance economic he German-favoured automatic automatic German-favoured he monetary sovereignty as well as sovereignty monetary tts Fac ad Germany and France States, P, the ECOFIN came to be a be to came ECOFIN the P, her with France had failed to to failed had France with her the Pact, whereas France France whereas Pact, the for imposing sanctions in sanctions imposing for nforced, became clear in in clear became nforced, the rules of the SGP as SGP the of rules the le. , Germany failed to to failed Germany , 13 is o national for cies hs Germany Thus, the failure of the of failure the netary Unionnetary

CEU eTD Collection paradigms that are expressed on the EU level, has regrettabl has level, EU the on expressed are that paradigms Journal of European Public Policy Public European of Journal 15 743. 2011): (September 5 no. structural reforms are taken into account. account. structural into are reforms taken starting before objectives” “medium-term specific country 14 rule SGP the influence to weight political greater cent per 3 the to adhere to failed repeatedly had Germany that ec and political national the consideration into take would that rules preferenc the showed reform for proposals government’s French ambitions” cl was it Thus, Council. the by warning early avoided successfully i most two the whereas States, Member all of treatment equal Theand former a the framework accepted S Franco-German coalition. of had the betwee EU the of level the on opposition intergovernmental an to lead E the start to recommendation Commission’s the block to managed pl (minister sessions restricted in meet time to time from the debate, frank and open an stimulate to order “in and developments, sit economic States Member monitor should sessions Council ECOFIN EM of functioning smooth the for that stated 1997 in Conclusions Euro Presidency The euro. the of launch the before even convened first which Eurogroup, David J. Howarth, “Making and Breaking the Rules the Breaking and “Making Howarth, J. David Uni Monetary European of Crisis “The Issing, Otmar The analysis of the SGP by Heipertz and Verdun, who emphasise who Verdun, and Heipertz by SGP the of analysis The Économique Gouvernement and The Eurogroup 14 and needed to be revised. A deal on the SGP was reached in May 2005. A 2005. May in reached was SGP the on deal A revised. be to needed and 14, no. 7 (2007): 1067–1068. 1067–1068. (2007): no. 7 14,

: French Policy on EU ‘gouvernement Économique’,” Économique’,” ‘gouvernement EU on Policy French : on – Lessons to Be Drawn,” Be to Lessons – on 10 15 ad h rfre SP ae o include to came SGP reformed the and , us one), particularly when conducting conducting when particularly one), us h EP ugtr ipiain of implications budgetary EDP the y overlooked the emergence of the the of emergence the overlooked y nfluential countries in the EU had EU the in countries nfluential twrs oe lxbe SGP flexible more towards e eii ciein ae France gave criterion deficit DP. By late 2003, this had had this 2003, late By DP. the importance of national national of importance the Journal of Policy Modeling Policy of Journal onomic situation. The fact fact The situation. onomic a te G “ald n its in “failed SGP the ear ECOFIN Council should should Council ECOFIN n small Member States, States, Member small n uation and budgetary budgetary and uation GP and expected andGP expected U, the informal informal the U, pean Council Council pean gain, the gain, 33, 33, CEU eTD Collection body had a legal status. In 2000, when France was holding the presidency the holding was France when 2000, In status. legal a had body paradigms. The idea of economic governance, and its necessity in E in necessity its and governance, economic of idea The paradigms. was later changed to the Euro-XI, due to German protests that the that protests German to due Euro-XI, the to changed later was origina were sessions’ ‘restricted These states. Member zone Euro-XI was re-named the Eurogroup. the re-named was Euro-XI o strong a byencounteredhowever, were attempts, TheseEU. the of unpr or novel a means no by is French the by suggested cooperation Perspective,” in Perspective,” 19 18 17 2001), 114. 2001), f lts, ak f rnprny n dmcai accountability democratic Eurogroup. and transparency of lack elitism, of conflicts”. politica delicate stabilize “often which debates, unofficial 16 surveillance”. multilateral advocated SGP culture with that of the France favoured France the of that with culture SGP advocated 109 and and 109b109 Report (named after(named Report cnmc oenne n h E, n se h itrly f hs two these of interplay the see and EU, the in governance economic eie a a cnr o dcso fr cnmc oiy, o ae h l the policy”. take economic to policy’, economic for decision of ‘centre a as defined ins an “creating for called currency, single a of creation the We The 1980. by EMU the achieve to steps outline to designed was and Maria Green Cowles, “The Battle Between ECOFIN-11 ECOFIN-11 Between Battle “The Cowles, Green Maria Puetter, Po French Rules: the Breaking and “Making Howarth, Resolution of the European Council on Economic Poli Economic on Council theEuropean of Resolution ept te huh nlss f h SP Hiet ad edn fai Verdun and Heipertz SGP, the of analysis though the Despite The Eurogroup: How a Secretive Circle of Finance Mi Finance Circleof Secretive How a Eurogroup: The 18 . At the same time, the informality of the group has also contr also grouphas the ofinformality the time,same the At The State of the European Union: Risks, Reform, Res Reform, Risks, Union: European the of State The 19

hs te rpsl f cnmc oenne n getr macroeconomic greater and governance economic of proposal the Thus, Pierre Werner, Prime Minister of Luxembourg) that was publi was that Luxembourg) of Minister Prime Werner, Pierre 16 hs te uoru ws rae a a ifra meig f Euro of meeting informal an as created was Eurogroup the Thus,

17 The group served the function of providing a forum for forum a providing of function the served group The licy on EU ‘gouvernement Économique’,” 1071–1072. 1071–1072. Économique’,” ‘gouvernement EU licyon cy Co-ordination in Stage 3 of EMU and on Treaty Ar Treaty on and EMU 3 of in Stage Co-ordination cy 11 and the European Central Bank: A Strategic Interact A Strategic Bank: Central theEuropean and nisters Shape European Economic Governance Economic European Shape nisters istance, and Revival and istance, gouvernement économique gouvernement lly named the ‘Euro-Council’, which which ‘Euro-Council’, the named lly stain ad inter-institutional and situations l titutionalized coordination body, body, coordination titutionalized term ‘Council’ suggested the the suggested ‘Council’ term MU, goes back to the Werner Werner the to back goes MU, pposition by the ECB as well as ECB by the pposition ecedented idea in the history history the in idea ecedented ht mnt otie the outside emanate that l to connect the German German the connect to l ead in community-wide community-wide in ead ibuted to the accusationsthe to ibuted rner Report anticipated anticipated Report rner oiy rdtos and traditions policy (Oxford University Press, Press, University (Oxford of the Council, the the Council, the of shed in 1970 in shed ,

a body for body a ticles ion , 1. ,

CEU eTD Collection e eaae fo ec ohr ad h Fec hsoy a prove has history French the and other, each from separated be politicization of monetary policy in the euro zone and might even even might and zone euro the in policy monetary of politicization matter of political will and consensus building, not of institutiona of not building, consensus and will political of matter II.War World of end the since be ever economy German had stability price on focus and bank central the of independence t led has intergovernmentalist mode onthe ofgovernance EU economic level. Union the in possible as sovereignty much as retaining f sud mny o ntttoa idpnec a i hd en ih Bundesb with been had it as independence institutional to money ‘sound’ of Germany’ ECB, the to counterweight politica different a a from stemmed bank central the of independence as act could that level EU 24 23 22 21 always emphasised the intertwined nature of economic and monetar and economic of nature intertwined the emphasised always repub French The unemployment. reduce and growth economic achieve to Memb the between coordination policy fiscal mean to taken be should 20 the empowering the that feared that States Member other as question the Therefore, pressure. political encounter will ECB the f a as act cannot bank central the essence in that noted was it officials can maintain low inflation and a balanced budget.balanced a and inflation low maintain can officials 55–56. 55–56. of the ECB”. Dyson and Featherstone. Featherstone. Dyson and Puetter, th and ECOFIN-11 Between Battle “The Cowles, Green Po French Rules: the Breaking and “Making Howarth, Cohen, J. Benjamin Contrary to the French demands of increased intergovernmental ec intergovernmental increased of demands French the to Contrary Economic governance is often presented as a way to achieve an ‘ef an achieve to way a as presented often is governance Economic The Eurogroup: How a Secretive Circle of Finance Mi Finance Circleof Secretive How a Eurogroup: The 20

The Future of Global Currency: The Euro Versus the the Versus Euro The Currency: Global of Future The The Road To Maastricht, Maastricht, To Road The

785. 785. licy on EU ‘Gouvernement Économique’,” 1074. 1074. Économique’,” ‘Gouvernement EU licyon 12 e European Central Bank,” 116. 116. Bank,” Central European e nisters Shape European Economic Governance Economic European Shape nisters 23 23 France argued that price stability is “a is stability price that argued France 21 ully independent body – inevitably inevitably – body independent ully Furthermore, the Gaullist idea of idea Gaullist the Furthermore, Dollar l arrangements”. l uoru wud la t a to “lead would Eurogroup compromise the independence independence the compromise is where this pressure is acted acted is pressure this where is ta dmcaial elected democratically that n l tradition, which tied the idea the tied which tradition, l y policies, which should not not should which policies, y , 1st ed. (Routledge, 2011), 95. 2011), (Routledge, ed. 1st , er States and with the ECB the with and States er onomic governance on the the on governance onomic e rnh o upr an support to French he fective policy mix’ which which mix’ policy fective n h cresoe of cornerstones the en issec o the on insistence s lican tradition has has tradition lican 24 Furthermore, ank. 22 22 , , The CEU eTD Collection (CEPR, 2010), 30. 2010), (CEPR, 27 26 a against insurance some provide that transfers fiscal automatic t allow would union economic and political minimal a even as crisis, will union fiscal closer a of lack the that claimed has Grauwe 25 survived”. not have union embedded not were that unions “monetary out, pointed have authors many polit a into forward move to capacity its on critically depends scenes. Eurogroup, the example for setting, institutional some in – out monetary union needs to be complemented with some form of economic union. formbemonetary of union. complemented needs economic union some with to Member the level, EU the to delegated sovereignty little with this Although policies. fiscal coordinating and monitoring towards moved that signs clear are there time over level, EU the on governance s politicians.as b underlined was fact the and obvious, was shocks asymmetric against authority t central fiscal absenceevident. of The fiscal painfully union Ibid., 2. Ibid., Politica and Monetary on Thoughts “Some Grauwe, De Laeven, Luc and Gros, Daniel Baldwin, Richard ept te ifrn cnetaiain o wa cutd s desira as counted what of conceptualizations different the Despite hypothesis and the background Theoretical More recently, the onset of the crisis in Europe made the fact fact the made Europe in crisis the of onset the recently, More

utemr, oe ae oe s a a t asr ta “h Euroz “the that assert to as far as gone have some Furthermore, 27 lal, hs a be raie i te U n aog h Membe the among and EU the in realized been has this Clearly,

Completing the Eurozone Rescue: What More Needs to to Needs More What Rescue: Eurozone the Completing 13 l Union,” 10. 10. Union,” l ical union”.ical make it more difficult to exit the exit to difficult more it make States had realized that a strong a that realized had States that the EU is not a political and political a not is EU the that ymti shocks”. symmetric r et o ly u bhn the behind out play to left or the euro area Member States States Member area euro the hat could provide insurance provide insurance hat could y both academics as well well as academics both y o “organize systems of of systems “organize o 25 l fr o economic of form ble Furthermore, Paul De Paul Furthermore, was rules based and based rules was in a strong political strong a in one’s future future one’s 26 Be Done? Be n as And r

CEU eTD Collection Journal of European Integration European of Journal coordi to need a is there since Especially policies; economic 31 30 29 http://www.iadb.org/intal/intalcdi/PE/2010/06399.pd Pr Governance Global and Institutions International th to it transfer to and instrument policy corresponding the over decentraliz local, deprive to is action collective of emergence 28 be at gre might to the tacklebut too same steps to prove it time the crisis, a would policy monetary and fiscal of coordination greater EU, the externalities. wa possible only the as perceived is coordination for need the Thus, imba an to lead can which countries, dependent other from over spill cri The ECB. the by controlled firmly is policy-making monetary decentrali is policy-making fiscal the where case clear informal meetings. ne reforms, of number a witnessed have years past the – States level; decentralization, on the other hand, leads to suboptimal pol suboptimal to leads hand, other the on decentralization, level; d to need and cooperation for need further creates interdependence Memb all for result devastating a have can policies fiscal interde time same the at policies, fiscal uncoordinated largely exercis are Governments States. Member EU of interference Kathleen R. McNamara, McNamara, R. Kathleen Coo Policy Cats: Economic Herd to “How Le Cacheux, Ibid. Po Cats: Economic Herd to “How Le Cacheux, Jacques On the one hand, it has been argued that the nature of EMU will will EMU of nature the that argued been has it hand, one the On Paradoxically, at the heart of the current predicament lies b lies predicament current the of heart the at Paradoxically, 29 n epne fsa ter wud ru ta “h smls way simplest “the that argue would theory fiscal response, In The Eurocrisis and the Uncertain Future of Europea of Future Uncertain the and Eurocrisis The 32, no. 1 (2010): 43. 1 (2010): no. 32,

ogram (Council on Foreign Relations, September 2010 September Relations, Foreign on (Council ogram f. 14 licy Coordination in the Euro Zone in Tough Times,” in Tough Zone Euro in the Coordination licy rdination in the Euro Zone in Tough Times,” 44. 44. Times,” Tough Zonein Euro in the rdination zed in the hands of Member States and the the and States Member of hands the in zed er States. Thus, it can be claimed that claimed be can it Thus, States. er ed authorities from the competence the from authorities ed pendence means the unsustainable the means pendence ing their sovereignty by pursuing pursuing by sovereignty their ing nate fiscal and economic policies policies economic and fiscal nate gotiations, summit meetings, and meetings, summit gotiations, oth the independence as well as well as independence the oth e central government”. central e icy results.icy n n Integration elegate sovereignty to the EU EU the to sovereignty elegate sis can be seen as a negative a as seen be can sis inevitably lead to centralising centralising to lead inevitably lance throughout the Union. the throughout lance y to counter the (negative) the counter to y llow taking more decisive decisive more taking llow at of a leap. 28 , Working Paper, Working , Paper, The EU presents a presents EU The f nuig the ensuring of 31 31

30 ), 2, 2, ), Within

CEU eTD Collection between the ECB and euro area Member States. Member area euro and ECB the between g economic new would eventually that more binding andlead efficient more forms ec that expected is it policies, fiscal diverging by conditioned as addition, In union. economic an becoming EMU of result end the with fiscal of realm the in especially sovereignty, of transference t argued, been has it As shortcomings. the address best to as so Stat Member the and EU the evident, become defects and faults the 33 EU cooperation. level, increase to and institutionalized necessity centr a have to need the is there hand, other the On level. EU the de to states nation leads and integration more facilitates that 32 De Grauwe, “Some Thoughts on Monetary and Politica and Monetary on Thoughts “Some Grauwe, De Anythin If What, Union: Political “EMUand Hodson, Therefore, the underlying hypothesis of this thesis is that over that is thesis this of hypothesis underlying the Therefore,

g, Have We Learned from the Euro’s First Decade?,” Decade?,” First fromtheEuro’s Learned We g,Have 15 l Union,” 25. 25. Union,” l 32 Therefore, there is an innate quality to the EU the to quality innate an is there Therefore, policies, to the EU level, possibly possibly level, EU the to policies, legate their powers increasingly to to increasingly powers their legate nmc oenne a acquired has governance onomic 33

alized budget, more powers at powers more budget, alized the course of the crisis, when crisis, the of course the es would respond in a manner a in respond would es i mas eti aon of amount certain means his the crisis was largely largely was crisis the overnance. overnance. 510. CEU eTD Collection

economic governance. governance.economic of evidence provide nonetheless they States, Member by ratified or nor Treaty Compact Fiscal the Although TSGC. the of signing Member and institutions EU of interplay the follow to helps also the seeing allows This chronologically. on them of each introduce and changes,w recent starting thegive most overview of chapter an to aims economic efficient more achieve to as so prerogatives, national ntttos r epwrd s cneune wih ntttos n mode assume secondary role. and institutions which consequence, a natur as the empowered establish are to institutions as so at, looked ref be the will devising themselves in documents role important most the played institutions and h EB a tid o vi mrl aad eeoig mn E Membe EU among developing hazard moral avoid to tried has ECB the the on operating By markets. secondary on bought were bonds government Trea buy directly to prohibited is ECB the Treaty Lisbon the pr and public area’s euro the of purchase the foresaw conduct, effec ensure to aimed which Programme, The 2010. in Programme Markets decide Bank Central European the of Council Governing the collapse, As the previous chapter demonstrated, there is a need for closer coopera closer forneed a is demonstrated, there chapter As the previous Firstly, context will be provided for each of the reforms; it w it reforms; the of each for provided be will context Firstly, I te ih o te nrcdne tnin o te iaca mre, a market, financial the on tensions unprecedented the of light the n Chapter 2 – Overview of Reforms of Reforms ChapterOverview – 2 16 sury bonds from sovereign debtors, sovereign from bonds sury ivate debt securities. Since under under Since securities. debt ivate ill be analysed which countries which analysed be ill States. The cut-off point is the the is point cut-off The States. the changing nature of EU’s EU’s of nature changing the oenne n h E. This EU. the in governance ith the European Semester the European Semester ith d to initiate the Securities Securities the initiate to d evolution of reforms, but but reforms, of evolution h EM ae o been not have ESM the orms. Treaty and pact pact and Treaty orms.

tion and the pooling of pooling and the tion nd fearing a systemic systemic a fearing nd e of changes, which which changes, of e Sae governments. State r tive monetary policy policy monetary tive secondary markets, markets, secondary s of governance governance of s CEU eTD Collection policy, and not engage in fiscal activities. Despite the ECB the Despite activities. fiscal in engage not and policy, Intereconomics the ECB was transformed into a quasi-fiscal agent of the euro ar euro the of agent quasi-fiscal a into transformed was ECB the Council, March 25, 2010), http://www.consilium.euro 2010), 25, March Council, 37 Politics 36 35 ways to strengthen economic coordination.ways strengthen to economic t with meeting, 2010 March the at governance economic on force task a policies fiscal EU the in coordination of lack the remedy to needed fiscal, –monetary, wasdo what pol rather it allowwould designed than the ECB to to st to debt public of management the permit would that union fiscal pursue to ECB the to led what exactly was policies monetary the that is here paradox The debtors. sovereign and banks insolvent into forced was bank central the ECB, the of policy monetary the fiscal the lacks EMU the since that argued be can it time, ECB.the of actions the pres in role a played deficits, government the as well as politics and solvency sovereign over worries it under falling thereby and stability markets’ the guarantee 34 governance.economic bargaining reforms, possible the over negotiations bilateral in tha independence bank’s central the of importance the on insistence a constitutes sharp still it Treaty, up the by rules set breach not did the there and markets, secondary on conducted were activities the Although The European Council, “Statement by the Heads of S of theHeads by “Statement Council, European The th of Creation Contentious “The Schelkle, Waltraud 363. Ibid., Sovereig ECB Markets? the by “Driven Belke, Ansgar As the ECB’s activities could not prove to be sustainable, action action sustainable, be to prove not could activities ECB’s the As 32, no. 4 (juuli 2009): 829. 829. (juuli 2009): 4 no. 32, 45, no. 6 (2010): 357. (2010): no. 6 45,

37 At the same time, Germany and Francesamealready Germanyand time, were Atthe pa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.p e Regulatory State in Fiscal Surveillance.,” FiscalSurveillance.,” in State Regulatory e tate and Government of the Euro Area” (The European (The Area” Euro the of Government and tate n Bond Purchases and the Securities Markets Program Markets theSecurities and Purchases nBond 17 coordination necessary to complement to necessary coordination framing this move as one that would that one as move this framing 34 Thus, over the period of the crisis, the of period the over Thus, fnnil tblt competences, stability financial s fiscal activity. The existence of a of existence The activity. fiscal vr h ftr acietr of architecture future the over ea governments. ea . The European Council set up up set Council European The . on the EU’s part was clearly was part EU’s the on ue o setal bi out bail essentially to sure t should focus on monetary monetary on focus should t icl ciiis biig out bailing activities, fiscal departure from its previous its from departure abilize the monetary union union monetary the abilize eaain f icl and fiscal of separation fore, technically the ECB the technically fore, he purpose of finding finding of purpose he West European WestEuropean 35 At the same the At icy. 36 df. df.

me,” me,” CEU eTD Collection oiis ae rm h Cmiso n a 21, n ws ae sup later was and 2010, May in Commission the from came policies policies between Member States, and States, policies between 2011. first implemented in Member cnmc governance.economic Annua the issues Commission European the formulated: is area euro and Infirs semesters.the year two the into divides cycle coordination eve of process budgetary the on coordination policy economic enforce to the rectify to aims Semester the and EU, the by followed national reform strategies on the EU level; rather, the imple the rather, level; EU the on reformstrategies national Previously, States. Member 27 the of policies fiscal and economic Commission”.the of Ecfin DG of thinking “ar been had that something was Semester, European the under done nutial mcocnmc maacs Tepooa t rfr t reform to proposal The imbalances. macroeconomic unsustainable perceive is what and crisis the to response in government economic http://www.consilium.europa.eu/homepage/showfocus?l 40 39 http://www.consilium.europa.eu/uedocs/cms_Data/docs EconomicGovern on Force Task the of Meeting Second their approval in September. their approval September. in 38 Semester The European em cnmc rwh n am t spot h codnto o macroeconom of coordination the support to aims and growth economic term Council of the European Union, “The European Semes European “The Union, European the of Council C Financial theGlobal to Response EU’s “The Begg, Rompuy, Van Herman by “Remarks Rompuy, HermanVan The Semester (See Figure 2) is designed to work as a tool for tool a as work to designed is 2) Figure (See Semester The Enshrined in the Europe 2020 strategy, the European Semester was devi wasSemester European strategy,Europethe 2020 the in Enshrined h Erpa Smse cnttts n o te is mvs n h EU the on moves first the of one constitutes Semester European The 38 t a en oe ta te uvilne fpbi fnne as finances public of surveillance the that noted been has It

39 Following the proposal, the Member States gave States Member the proposal, the Following risis and Sovereign Debt Crisis,” 117. 117. Crisis,” Sovereign Debt and risis /pressdata/en/ec/114979.pdf. /pressdata/en/ec/114979.pdf. ang=en&focusID=66743 ang=en&focusID=66743 ance” (Brussels, June 7, 2010), 1, 2010), 7, June (Brussels, ance” ter - for a More Robust Economy”, September 9, 2010 9, September Economy”, Robust More a for - ter 18 President of the European Council, Following the Following Council, theofEuropean President discord. Essentially, this allows the EU EU the allows this Essentially, discord. mentation of new policies was policies new of mentation 40 t half, policy guidance to the EUthe to guidance policyhalf, t

preventive surveillance of the of surveillance preventive d as the cause of the crisis – crisis the of cause the as d e oriain f national of coordination he ite teto ws ad to paid was attention little ound for some time in the the in time some for ound otdb a akfre on force task a by ported l Growth Survey (AGS), (AGS), Survey Growth l sed to encouragelong- to sed ry Member State. The The State. Member ry s at o eom its reform to part ’s c n structural and ic it is now is it ex post ex , ,

CEU eTD Collection alaet, h qeto o dmcai ipt rises. input democratic of P question European the parliaments, the by input any foresee not does it since problem– parliaments are being circumvented, the Semester fails to t to fails Semester the circumvented, being are parliaments the implementation of the SGP more effective. At the same tim same the At effective. more SGP the of implementation the hoping done was This parliaments. national by discussed are they and projections budgetarytheir submitting requires Semester subm to had have States Member the although – (SCPs) Programmes european-semester-increasing-role-of-the-european-p http://www.bruegel.org/publications/publication-det Semester? Increasing Role of the European Parliamen European the of Role Increasing Semester? 42 http://europa.eu/rapid/pressReleasesAction.do?refer

41 wel followed. how assess will year following the in reports Commission’s adop to Council the leaving advice, policy country-specific issue the for basis the as serves strategies countries’ individual The Commission. the by strategy 2020 Europe the in set targets evaluated then are strategies the – place takes surveillance s the In States. Member other and Commission the to strategies medium their submit States Member the April, In year. coming setting for Council European the for basis a as serves report t at pursued be should that actions priority outlines that report a Benedicta Marzinotto, Guntram B. Wolff, and Mark H Mark and Wolff, B. Guntram Marzinotto, Benedicta theNew for Architecture New a Semester: “European n o te ot motn invtos a te umsin f h Stab the of submission the was innovations important most the of One 41

ence=MEMO/11/14. ence=MEMO/11/14. ail/publication/612-how-effective-and-legitimate-is arliament/. arliament/. t,” t,” EU Economic Governance – Q&A”, December 1, 2011, 2011, 1, December Q&A”, – Governance Economic EU allerberg, “How Effective and Legitimate Is the Eur the Is Legitimate and Effective “How allerberg, Bruegel Working Paper Working Bruegel 19 42 ic bt o te eortcly elected democratically the of both Since ake advantage of the possible ways of of ways possible the of advantage ake Council and the European Council to to Council European the and Council based on the rules of the SGP and the and SGP the of rules the on based plans for fiscal consolidation before consolidation fiscal for plans economic policy priorities for the the for priorities policy economic tr bdeay n economic and budgetary -term e, this innovation constitutes a a constitutes innovation this e, he national and EU level. The The level. EU and national he that these measures will make make will measures these that , no. 9 (September 2011), 2011), (September 9 no. , omsins seset of assessment Commission’s econd half, country specific specific country half, econd t the recommendations. The The recommendations. the t l the proposals have been been have proposals the l rimn (P o national or (EP) arliament it SCPs under the SGP, the SGP, the under SCPs it ility or Convergence Convergence or ility -the- opean opean CEU eTD Collection rsue a b cmlmne wt ta o ivsos tu leading thus investors, of that with complemented be may pressure means which information, gather to opportunity the use would markets bond t therefore, and, cooperate, to fail that countries for penalties country-specifi their in Council the by weakened and mitigated been Semester-contribution-to-EU2020.pdf; Semester-contribution-to-EU2020.pdf; (European Parliament, October 19, 2011), 8, http:// 8, 2011), 19, October Parliament, (European should it addition, In recommendations. its with complying into States l was Commission the that fact the to attributed be certainly a delivering of short fallen has expectations great with launched http://www.euractiv.com/euro/analysts-see-limited-v 46 45 44 6. 2011), towards consolidation. taken. and Treaty, the changing require would compliance more for States use be could that measures tougher time, same the At consultative. AGS. the of integrity the undermining http://www.euractiv.com/euro/european-semester-what 43 on budge put is attention asresearchenergy efficiency most and improving emplo in objectives 2020 Europe the meet to failed has Semester t of accusations the surveillance the EU. in to contributes only and legitimacy achieving Nicolaus Heinen, “The European Semester: What Does What Semester: European “The Heinen, Nicolaus Vetting,” Budget inEU Value Limited See “Analysts AnneTiedemann, and Derruine Olivier Fernandes, Sofia and Delors Jacques oee, y h ed f h frt uoen eetr i hs be has it Semester, European first the of end the by However, Commiss the that demonstrated have analyses several addition, In In the end, as the Commission lacks the ability to enforce its its enforce to ability the lacks Commission the as end, the In 45 Thus, the European Semester relies on peer pressure, with the pressure, with possible Semester on peer relies Thus,the European 46 43

The European Semester: Only a FirstStep a Only Semester: European The The First European Semester and Its Contribution to Contribution Its and Semester FirstEuropean The 44 utemr, t a bcm cer ht h European the that clear become has it Furthermore, www.sven-giegold.de/wp-content/uploads/2011/10/Euro alue-eu-budget-vetting-news-497701. alue-eu-budget-vetting-news-497701. -does-it-mean-analysis-498548. -does-it-mean-analysis-498548.

EurActiv.com 20 It Mean?,” Mean?,” It EurActiv.com , September 13, 2010, 2010, 13, September , he role of the Commission becomes Commission the of role he cig et i pesn Member pressing in teeth acking yment, expenditure increase on increase expenditure yment, decisions, there are no fines or fines no are there decisions, y agbe eut. hs can This results. tangible ny (Notre Europe, February 25, February 25, Europe, (Notre ion’s recommendations have have recommendations ion’s , June 10, 2011, 2011, , 10, June are therefore unlikely to be to unlikely therefore are come clear that what was was what that clear come not be forgotten that over that forgotten be not fr rsuig Member pressuring for d he lack of democratic democratic of lack he countries to take steps steps take to countries dcmns thereby documents, c tary surveillance. surveillance. tary side effect that the side effect that the ECOFIN peer ECOFIN the the EU2020 Strategy EU2020 the p.-

CEU eTD Collection Mechanism Stability The European importance the paid attention European to attributed and Semester. governance economic in stage centre the took Pact Plus Euro the goals, E the of advancement and implementation the on concentrating than Rather i Semester leaving thus the governance coordination, and further economic sought to see did EU the implemented, first was it when 2011 of course the hi pbi broig pritnl voaig uo oe ue w rules zone euro violating persistently borrowing, public their Member the in that foresaw also Treaty proposals her Lisbon unchallengeable”; the in anchored arrangeme be future would the mechanisms, that temporary adamant was Merkel Additionally, 2013. in end Me Stability Financial European the and (EFSF) European Facility the of tasks the over take would which mechanism, resolution the that agreed was it when month Preside same the and France, Deauville, Merkel Chancellor October, in meeting Council European Counci European the to force task government economic the of results V Herman President Council Firstly, alliance. Franco-German the crisis the tackling towards shift major a as considered be can me Council European the then Commission, the and ECB the by done were If by the second half of 2010 the steps taken to stabilize the ma the stabilize to taken steps the 2010 of half second the by If 21 chanism (EFSM) that were scheduled to to scheduled were that (EFSM) chanism by both the European Council and and Council European the both by tts ht al o u lmt on limits put to fail that States U ed a emnn crisis permanent a needs EU ould have their voting rights rights voting their have ould a number of new reforms that that reforms new of number a rkets and provide leadership leadership provide and rkets n opy umte the submitted Rompuy an l. However, before the the before However, l. teey esnn the lessening thereby , eting in October 2010 October in eting re t b “legally be to order nt Sarkozy met in in met Sarkozy nt Financial Stability Stability Financial uropean Semester Semester uropean t, nie the unlike nts, n their wake. wake. their n CEU eTD Collection rdcal Gray bt upiigy rne oh uhd o st for pushed both France surprisingly but Germany, predictably importa increasing the underlined announced and up drawn was proposal http://www.ft.com/intl/cms/s/0/5a5a68c6-e1d1-11df-b oten ebr ad netd southerners”. indebted and bet members northern and countries, large and small between resentments Rompuy Van “reopened with negotiations in were ministers finance the when http://www.ft.com/intl/cms/s/0/6ba8bfa8-e2ba-11df-8 51 http://euobserver.com/19/30124. 50 49 48 11df-9236-00144feabdc0.html#axzz1w5CIBF5t. 11df-9236-00144feabdc0.html#axzz1w5CIBF5t. 2010, http://www.ft.com/intl/cms/s/0/56984290-df96- 2010, the EU rules.EU the for penalties tougher for discussions force task the in consensus m had who Rompuy, Van to as well as measures, tougher on insisted had the (Sweden, countries northern smaller to surprise unwelcomed an as wasGermanythe the set upoutside EFSF Tre if the wouldsupport only mechanism 47 and the Governance EconomicTreaty in and Union. Monetary Coordination onStability, leaderstwo the by demandedwas that sanctions of downwatering is It States. Member EU other angered which France, and Germany the Pack t was that at being be formulated to included the Six in the Commission li zone’s euro the breaching of sanctions automatic the down water to revoked. Joshua Chaffin and Peter Spiegel, “Franco-German B Spiegel, “Franco-German Peter and Chaffin Joshua Need Agrees Force Task Rompuy “Van AndrewWillis, Governance,” “Eurozone Ta Poker Euro at Stakes the “Raising QuentinPeel, Change, Treaty EU on Insists “Merkel QuentinPeel, In exchange for the French support in this matter, Germanyagreed to matter,French In this support in exchange the for 47 This constituted a turn in the Chancellor’s attitude, as previously as attitude, Chancellor’s the in turn a constituted This 50 Furthermore, as the statement of the bilateral meeting pro meeting bilateral the of statement the as Furthermore, Financial Times Financial

, October 21, 2010, http://www.ft.com/intl/cms/s/3/ 2010, 21, October , ble,” ble,” a58-00144feabdc0.html#axzz1w5CIBF5t. a58-00144feabdc0.html#axzz1w5CIBF5t. 11df-bed9-00144feabdc0.html#axzz1w5CIBF5t. 11df-bed9-00144feabdc0.html#axzz1w5CIBF5t. 71e-00144feabdc0.html#axzz1w5CIBF5t. 71e-00144feabdc0.html#axzz1w5CIBF5t. ” ” ail-out Pact Divides EU,” EU,” Divides Pact ail-out Financial Times Financial 22 51 for Budgetary Sanctions” (EUobserver, May 21, 2010) 21, May (EUobserver, Sanctions” Budgetary for Financial Times Financial o srrsnl, h mne i wih the which in manner the surprisingly, Not , October 27, 2010, 27, October , , October 28, 2010, 2010, 28, October , countries that repeatedly break break repeatedly that countries was reversed a year later when when yearlater areversed was it ue o pnlis n the in penalties on rules rict Financial TimesFinancial Netherlands, Finland) who Finland) Netherlands, important to note that the that note to important by proposed were that mits en icly restrained fiscally ween back the French attempts the Frenchback attempts posals came at the time the at came posals and the task force, it it force, task the and anaged to shore up a a up shore to anaged nce and influence of of influence and nce she had insisted that insisted had she 94a44660-dd3e- ime. , October 24, 24, October , aty. 49 This came This 48

, , CEU eTD Collection 54 http://ec.europa.eu/economy_finance/articles/financ 53 uo ra U onre for countries EU area euro conditionality. strict to tied be would mechanism the from help and http://www.consilium.europa.eu/uedocs/cms_data/docs http://www.consilium.europa.eu/uedocs/cms_data/docs odce b te omsin IF n te ECB. the and IMF Commission, the str by conducted to subject be would assistance requiring States Member 52 chan Treaty limited the backed EP the framework, EU the within well as method, Community traditional more the from much too diverging (ESM), adding to Article 136 a third paragraph, stating the following: 136a(ESM), paragraph, third adding the following: stating Article to the up set to order in Treaty Lisbon the amending decision the meeti December the In Treaty. the in clause” bail-out “no the costl time been have would which ratifications, of round new a require t a on started were Council European the with negotiations Thereby, financial the maintain would that mechanism crisis permanent a of Mechan Stability European the “TreatyEstablishing European Council 24-25 March 2011 Conclusions 2011 March 24-25 Council European Conclusions 2010 December 16-17 Council European At the same time, it was confirmed that the ESM would involve all involve would ESM the that confirmed was it time, same the At Despite the division among the Member States, the European Counci European the States, Member the among division the Despite

will be madewill conditionality”. subject strict to under assistance financial required any of granting The whole. a as st the safeguard to indispensable if activated be to mechanism

“The member states whose currency is the euro may establish establish may euro the is currency whose states member “The

d hocad atcpto i fnnil sitne operations”. assistance financial in participation ial_operations/2011-07-11-esm-treaty_en.htm. ial_operations/2011-07-11-esm-treaty_en.htm. (Brussels, n.d.), n.d.), (Brussels, ism (ESM) Signed - European Commission”, n.d., n.d., Commission”, - European Signed (ESM) ism /pressdata/en/ec/120296.pdf. /pressdata/en/ec/120296.pdf. /pressdata/en/ec/118578.pdf. (Brussels: European Council, n.d.), n.d.), Council, European (Brussels: 23 52

54 lhuh ntal ciiiig h stp as setup the criticising initially Although ng, the European Council agreed on agreed Council European the ng, c srelac wih il be will which surveillance ict European Stability Mechanism Mechanism Stability European ge the same month, allowing it allowing month, same the ge ability of the euro area area euro the of ability The Treaty is “open to non- to “open is Treaty The reaty change that would not would that change reaty stability of the euro area. area. euro the of stability euro area Member States States Member area euro y, and would not infringe infringe not would and y, l agreed on the necessity necessity the on agreed l as for failing to work to failing for as the mechanism mechanism the stability a 53 Also, CEU eTD Collection been brought forward to July 2012. beenJuly brought 2012. forward to Luxembourg. l international under organisation intergovernmental an as established under assistance financial for apply can TSCG the ratified have T applied. is cross-conditionality and complementary, as seen are inst financial of recapitalisation the for loans provide and ECB) the (whereas markets secondary and primary on States Member 002-EN+DOC+XML+V0//EN&language=EN. 002-EN+DOC+XML+V0//EN&language=EN. http://www.europarl.europa.eu/sides/getDoc.do?pubRe Economic Government,” Government,” Economic 57 56 france-and-germany-split-over-plans-for-european-ec The Euro Plus Pact Pact Plus The Euro under way over how to strengthen political cooperation betweeneuro-area under cooperation political way howstrengthen to over pa were there duo, Franco-German and institutions EU the in on going fi 55 and macroeconomic st of outlined surveillance proposal as The well 2011. as February competitiveness in Brussels in leaders Union a Germany and France by made proposal a to back goes Euro, the was the clarified treaty. in States Member EU the of representatives the by signed be to Peter Müller and Michael Sauga, “Competing Visions “Competing Sauga, Michael and Müller Peter Mechan Stability European the “TreatyEstablishing S on Vote to MEPs Council: European for “Preparing Ipraty te ehns hs mn ohr ihs h tos o purc to tools the rights other among has mechanism the Importantly, At the time when negotiations over the needed Treaty change and the na the and change Treaty needed the over negotiations when time the At The origin of The Euro Plus Pact, also known as the Competitiveness P Competitiveness the as known also Pact, Plus Euro The of origin The 56 Although originally foreseen as entering into force in January 2013, thi 2013, January in force into entering as foreseen originally Although Der Spiegel Der 55

, March 1, 2011, http://www.spiegel.de/internationa 1, 2011, March , onomic-government-a-737423.html. onomic-government-a-737423.html. ism (ESM) Signed - European Commission.” Commission.” - European Signed (ESM) ism f=-//EP//TEXT+IM-PRESS+20110314NEW15456+ITEM- tability Mechanism”, n.d., n.d., Mechanism”, tability : France and Germany Split over Plans for European European for Plans over Split Germany and France : 24 after the role of the Commission Commission the of role the after latter has been done so far by the by far so done been has latter itutions. The ESM and the TSCG TSCG the and ESM The itutions. the ESM. The mechanism was mechanism The ESM. the his means that only those that that those only that means his t a meeting of the European the of meeting a t rallel discussions already discussions rallel members. l/europe/competing-visions- scal developments of of developments scal w n i lctd in located is and aw hase the bonds of the the of bonds the hase ture of the ESM were were ESM the of ture act, and the Pact for Pact the and act, eps to improve improve to eps 57

s date has date s CEU eTD Collection e odce i a itroenetl ehd teey utn ot h Com the out cutting thereby method, intergovernmental an in conducted be rks o te osiuinl ee, hc mroe te emn consti German the mirrored which level, constitutional the on brakes” euro the by followed be to reforms controversial rather proposed Competiti the oforiginaldraft the In participating Members. March 2, 2011, http://www.ft.com/intl/cms/s/0/3f8fc 2011, 2, March Lisbon Agenda that was based on the same means. same the on based was that Agenda Lisbon Franc ci failure, the to lead to of proven been had faults which method, intergovernmental the of one that argued Parliament, European Libe of Alliance the of Group the of leader the Verhofstadt, 61 http://www.euractiv.com/priorities/verhofstadt-tabl 60 59 http://www.euractiv.com/future-eu/meps-angered-fran the abandoning of the Community method. Community theabandoning ofthe t undercutting intergovernmentalism creeping “the over worry and refor Pack Six the undermine would proposal Franco-German the that “thrust upon” 743607.html. http://www.spiegel.de/international/europe/the-worl 58 i surveillance and cooperation fiscal to Europe commit to desire Ge to link the packages; rescue financing to purse the held economy, Germa and discussion, under was firepower EFSF’s when time the at lmntn srcua dfct y 2016. by deficit structural eliminating reti wages, tax, like issues on policies national of harmonization eur the in confidence boost to order In join. to wishing States Member “MEPs Angered by ‘Franco-German Approach’,” Approach’,” ‘Franco-German by Angered “MEPs P ‘Competitiveness Alternative Tables “Verhofstadt RomanoProdi, and Delors, Jacques Guy Verhofstadt, Germany’,” More Need Doesn’t “‘Europe Among the arguments against the Pact were concerns that the coor the that concerns were Pact the against arguments the Among 59 the European leaders was countered by a strong opposition in the EU. the European by leaders was in countered a strong opposition

Spiegel Online Spiegel 58 o srrsnl, h Fac-emn at ht was that pact Franco-German the surprisingly, Not es-alternative-competitiveness-pact-news-502739. es-alternative-competitiveness-pact-news-502739. 61 d-from-berlin-europe-doesn-t-need-more-germany-a- 472-450a-11e0-80e7-00144feab49a.html#axzz1vnEnOYe6. EurActiv.com However, as the Franco-German proposal was madewas proposal Franco-German the However,as co-german-approach-news-502231. co-german-approach-news-502231. act’,” act’,” “Europe Must Plan a Reform, Not a Pact,” Pact,” a Not Reform, a Must Plan “Europe 25 , April 2, 2011, 2011, , 2, April EurActiv.com 60 Furthermore, the Parliament expressed fears expressed Parliament the Furthermore, , February 17, 2011, 2011, February 17, , rals and Democrats for Europe in the in Europe for Democrats and rals veness Pact, theFranco-Germanplan Pact, veness , March 8, 2011, 2011, 8, March , rement age rement s unmistakable. Merkel made it it made Merkel unmistakable. s he EU legislative process” and process” legislative EU he zone and those non-euro area area non-euro those and zone dination of policies would policies of dination ms that were under work, under were that ms rmany’s commitment and commitment rmany’s o-German plan was the the was plan o-German ting the example of the of example the ting ny as Europe’s biggest biggest Europe’s as ny , h Pc frsw the foresaw Pact the o, s, s, uin ht is at aims that tution and adopting “debt “debt adopting and Financial Times Financial iso. Guy mission.

, , CEU eTD Collection persistent on making the Six Pack, and not the Euro Plus Pact, the foundation for econom Pact, the future foundation Pack, Plus and theSix Euro not persistent the onmaking participating Member States that would foster competitivene foster would that States Member participating http://www.euractiv.com/euro-finance/merkel-sarkozy competence. lacks EU the where areas in compliance voluntary compete national under fall that areas mostly covers Pact The http://www.euractiv.com/euro-finance/eu-leaders-boo http://www.ft.com/intl/cms/s/0/b9fe5320-4296-11e0-8 65 64 63 bi 250 from facility rescue EU's the increase to commitment governance. E the of Members the addition, In States. Member bigger towards 62 failed. as union, theCouncil head of this p a of basis the into Pact Plus Euro the carving of hopes French tactics”Berlin’s by “angered were States wa It Commission. the to left be would role supervisory the that suggesti controversial most the exclude to Rompuy Van and Commission, rules. Europe that public domestic the show to needed she that clear Erp 22, uoen eetr te G) n rqie seii c specific requires and SGP) the Semester, European 2020, (Europe alrea the on builds Pact, Competitiveness original the of version down Th EU. the in competitiveness enhance to as so integration economic se and Denmark, and Lithuania Latvia, Poland, Romania, Bulgaria, namely “EU Leaders Boost Bailout Fund, Agree on Euro Pact Euro on Agree Fund, Bailout Boost Leaders “EU S on Vote to MEPs Council: European for “Preparing Co Draft Presidents “EU in Spiegel Brussels, Peter Deal,” Eurozone Towards Inching Sarkozy “Merkel, olwn te gemn o te uo oe edr i ery ac 2011, March early in leaders zone euro the of agreement the Following The current version includes the euro area Member States plus States Member area euro the includes version current The 62 The Franco-German proposal was later revised by José Manuel José by revised later was proposal Franco-German The 64

63 to undercut the Commission and leverage the system the leverage and Commission the undercut to mpetitiveness Pact,” Pact,” mpetitiveness st-bailout-fund-agree-euro-pact-news-503043. st-bailout-fund-agree-euro-pact-news-503043. -inching-eurozone-deal-news-501895. -inching-eurozone-deal-news-501895. b34-00144feabdc0.html#axzz1vfzQqCSc. b34-00144feabdc0.html#axzz1vfzQqCSc. EurActiv.com tability Mechanism.” Mechanism.” tability ,” ,” 26 EurActiv.com , February 4, 2011, 2011, February 4, , , March 12, 2011, 2011, 12, March , ss and growth in the Member States. Member the in growth and ss Financial Times Financial ncies, and pushes for enhanced and and enhanced for pushes and ncies, was willing to commit to stringent to commit to willing was lo ers o 440bn. to euros llion s noted that the smaller Member Member smaller the that noted s The goals in themselves are not not are themselves in goals The olitical union and the European the and union olitical six non-euro area countries, area non-euro six e Euro Plus Pact, a watered a Pact, Plus Euro e rpa Primn were Parliament uropean Barroso, President of the of President Barroso, y xsig instruments existing dy ons, as well as to grant grant to as well as ons, , February 27, 2011, 2011, 27, February , mimns from ommitments Germany made a a made Germany k t encourage to eks 65 hs the Thus, ic CEU eTD Collection be met. Under the new arrangements, these commitments will be included in the be included will in commitments these arrangements, be the Under met. new predecessor – the Lisbon Agenda – if it does not learn from pas from learn not does it if – Agenda Lisbon the – predecessor competiti enhance to seeks that Pact the that criticism been http://www.euractiv.com/euro-finance/euro-plus-pact f rpr b te Commission. the by report a of annually of Heads State besetgoals scrutinized will the policyby comm the Semester, European the in out set Programmes the to link surveilla regular the areunder that Programmes Stabilityand p own its creates country each and States, Member the for goals the take to reluctant and reserved been had chancellor German the h it – governance economic European towards attitude Merkel’s in 68 http://www.consilium.europa.eu/uedocs/cms_data/docs 67 http://www.euractiv.com/innovation/competitiveness- 66 as adopt good thecurrency to single or the want future”.in pupils those for sense economic “makes it Pact, the of nature nonbinding gove economic overall the to value much adding not of risk a sets fact the time, same the At goals. the achieving and compliance t add possibly to allowing level, possible highest the to elevated Europ andAgenda Lisbon the of versions rehashed mere are theynew; down reforms that are not internalized anddown internalized are that reforms supported by public. not the “‘Euro-plus Pact’ Divides Non-eurozone Members,” Members,” Non-eurozone Divides Pact’ “‘Euro-plus 24-25 of Council theEuropean of Conclusions “The II?,” Agenda Lisbon Pact: “Competitiveness The process outlined by the Pact begins with the Heads of Sta of Heads the with begins Pact the by outlined process The Although the Pact was changed in the later stages, it nonetheless si nonetheless it stages, later the in changed was Pact the Although

67 EurActiv.com hrfr, h plc cmimns n flo-p are follow-up and commitments policy the Therefore, -divides-non-eurozone-members-news-503526. -divides-non-eurozone-members-news-503526. pact-lisbon-agenda-ii-analysis-502136. pact-lisbon-agenda-ii-analysis-502136. March 2011” (The European Council, March 20, 2011), 20, March Council, European (The 2011” March /pressdata/en/ec/120296.pdf. /pressdata/en/ec/120296.pdf. EurActiv.com 27 , February 14, 2011, 2011, 14, , February , March 25, 2011, 2011, 25, March , veness may face the same fate as its its as fate same the face may veness nce of the Commission. Throughthe Commission. the of nce that the Pact lacks sanctions still sanctions lacks Pact the that o the importance of discussions, discussions, of importance the o 68 olicy mix with specific goals to goals specific with mix olicy or Government on the basis basis onthe Government or t mistakes, and insists on top- on insists and mistakes, t te or Government establishing establishing Government or te 66

countries who want to be seen seen be to want who countries as been noted that previously previously that noted been as itments and progress towards towards progress and itments

gnifies a moment of change of moment a gnifies nne etn. ept the Despite setting. rnance e 2020 Strategy. There has has Strategy.There 2020 e lead. The proposed Pact, Pact, proposed The lead. National Reform

CEU eTD Collection gouvernement économique uoen oni truh h Pact. the through Council European but role the fill to institutions new any for need the see not did initi were States Member area euro the only Since government. to opportunity an as Competitiveness for Pact the saw France Government.” Government.” 71 70 transform-the-european-union-a-742565.html. transform-the-european-union-a-742565.html. http://www.spiegel.de/international/europe/an-econo government-entail-a-780832.html. government-entail-a-780832.html. http://www.spiegel.de/international/europ 2011, 17, Pack The Six to be the first step towards an economic government on the EU level EU the on government economic an towards step first the be to trans financial on tax pan-European a introduce and taxes harmonize 69 constitute may Pact the although Thus, out. set rules the with comply sanc any include it does nor harmonization, tax exclude not does Pact In everyone.for join to open is Pact the thus and States, Member betwee division strong a creating of idea the resisting in adamant Chance the of willingness the – transformation a signifies however, nece not did it tools, excising already reform to goa essentially the As arms. corrective and preventive SGP a the that strengthening Directive) one and Regulations (five measures different States Member 27 all to Applying Rompuy. Van by chaired force Stefan Kaiser, “The Price of the Pact: What Will a Will What theofPact: Price “The Kaiser, Stefan G and France Visions: “Competing Sauga, and Müller the Transform Could Plan “Merkel’s Staff, SPIEGEL The reforms that constitute the Six Pack were first authored b authored first were Pack Six the constitute that reforms The , this step was , this minor.

70 utemr, h atmt o uh hog te ln to plan the through push to attempt the Furthermore, e/the-price-of-the-pact-what-will-a-european-econom European Economic Govenrment Entail?,” Entail?,” Govenrment Economic European mic-government-for-the-euro-zone-merkel-s-plan-coul European Union,” Union,” European ermany Split over Plans for European Economic Economic European for Plans over Split ermany 28 push the idea of a tighter economic economic tighter a of idea the push stt Tet rvsos n i set is and revisions Treaty ssitate Spiegel Online Spiegel ally included in the Pact, Sarkozy Pact, the in included ally y the Commission, and the task- the and Commission, the y addition, the final version of the of version final the addition, n the non-euro and euro area euro and non-euro the n nta tid o moe the empower to tried instead e ie a rfrig and reforming at aimed re llor to take lead in Europe. in lead take to llor actions could be considered be could actions . , the Pack consists of six six of consists Pack the , 71 tions for those who fail to fail who those for tions o te euain was regulations the of l However, Germany was Germany However, h frt tp towards step first the , January 31, 2011, 2011, 31, January , Der SpiegelDer ic- d- ,August 69

CEU eTD Collection blocking of the Commission proposals more complicated. The Europea The complicated. more proposals Commission the of blocking Economic Governance Package Explained Package Governance Economic an retain to reforms the prefer would France voting. in change Ital and Germany by (backed France as Pack, Six the of adoption 74 73 http://www.europarl.europa.eu/news/en/headlines/con on-economic-governance-package-big-shock-for-Counci http://europa.eu/rapid/pressReleasesAction.do?refer and want to rule out the possible repetition of the 2003 situation. repetition ofand the want 2003 rule to the out possible o experience “do they that commented EP previous The decisions. Commission’s the overriding the to due decisions of automaticity the on 72 Thi Council. the in it against votes States Member of majority SG previous considered are proposals Commission’s the voting, the majority qualified Under targets. majorit qualified by ECOFIN set the by adopted the were recommendations with comply to fail that semi-automatic apply to Commission the for possible it makes entering force Dece surveillance in into framework and since macroeconomic diminishing. sufficiently not is or GDP, of 60% l be can (EDP) Procedure Deficit Excessive the now, – criterion s a ensures it 60%), the towards sufficiently diminish to has (or m debt public and GDP of 3% exceed not must deficit government when SGP the echoes Pack the Although law. EU existing within Commission - Economic Governance Economic - Commission “Economics Committee Chair on Economic Governance Governance Economic on Chair Committee “Economics Guide A Short Compact? Fiscal Two-pack? “Six-pack? EU Economic Governance “Six-Pack” Enters into Force into Enters “Six-Pack” Governance Economic EU The reverse qualified majority voting became a thorny subject subject thorny a became voting majority qualified reverse The motnl, h Sx ak ss ees qaiid aoiy votin majority qualified reverse uses Pack Six the Importantly,

, March 14, 2012. 2012. 14, March , , n.d., n.d., , ence=MEMO/11/898. ence=MEMO/11/898. tent/20110429FCS18371/7/html/Economics-Committee-ch l. l. 29 to the New EU Fiscal Governance,” Governance,” Fiscal EU theNew to Package: Big Shock for Council,” Council,” for Shock Big Package: (Europa, December 12, 2011), 2011), 12, December (Europa, 72 hrfr, h pc hs ihee fiscal tightened has pack the Therefore, s was done in hopes of making the making of hopes in done was s sanctions to those Member States Member those to sanctions aunched if the debt ratio is above above is ratio debt the if aunched 74 intergovernmental nature, where nature, intergovernmental

in the months leading up to the the to up leading months the in rce apiain f h debt the of application tricter fr ot sanctions. most for g ust not exceed 60% of GDP of 60% exceed not ust ) a srnl aant the against strongly was y) adopted unless a qualified a unless adopted n Parliament (EP) insisted (EP) Parliament n nitn ta te general the that insisting vtn. ne reverse Under voting. y Gray n France and Germany f not trust the Council” the trust not P, the Commission Commission the P, mber 2011. European Parliament: Parliament: European European European

73 This air- CEU eTD Collection rpsl dfiut Tu, h Cmiso i i te rvrs seat. driver’s the in is Commission the Thus, difficult. proposals response to Hungary’s failure to comply to response the rules. with Hungary’s failure to J (starting Funds Cohesion the suspended Council the and Commission the when fear of losing control over their fiscal sovereignty.fiscal their over control losing of fear power hand to reluctant be to proved States Member the Therefore, fis to commitment greater for asking future, the for visions their ( month following the in Rompuy Van Herman to letter joint a issued 78 77 76 784348.html. 784348.html. http://www.spiegel.de/international/europe/divide-a struggle-debt-vetting-news-506349. struggle-debt-vetting-news-506349. debt-rules-marred-political-tensions-news-507261. debt-rules-marred-political-tensions-news-507261. force. afte month a ther only comes This Spain, fines. applying not notably and accommodating economy, deteriorating face States Member of non-adoption the making by Commission) the supported strongly who battle” “institutional the economies, their remedy last the having in position its maintains still ECOFIN the though democratic the to contributing budgets, national review to technocrats 75 Sta Member the among made be would decisions and agreements the Times 00144feabdc0.html#axzz1vnEnOYe6. 00144feabdc0.html#axzz1vnEnOYe6. Joshua Chaffin in Brussels and Victor Mallet in Ma Mallet Victor and Brussels in Chaffin Joshua Vetting,” Debt over Struggle Power “EUin Tensions,” Political by Marred Rules “EUDebt LaysGro Berlin Rescue: and “Divide Staff, Spiegel Despite, or maybe as a reaction to the Six Pack reforms, Ang reforms, Pack Six the to reaction a as maybe or Despite, , February 1, 2012, http://www.ft.com/intl/cms/s/0/ 2012, 1, February , 78 t h sm tm, ugr bcm te is Mme State Member first the became Hungary time, same the At

EurActiv.com EurActiv.com nd-rescue-berlin-lays-groundwork-for-a-two-speed-eu drid, “Spain Poses Six-pack Rules Challenge,” Challenge,” Rules Six-pack Poses “Spain drid, undwork for a Two-Speed Europe,” Europe,” Two-Speed a for undwork ed753e7a-4cfa-11e1-8741- 30 , n.d., http://www.euractiv.com/euro-finance/eu-pow n.d., , 77 76 was won by the Commission (and the EP the (and Commission the by won was , n.d., http://www.euractiv.com/euro-finance/eu- n.d., , The Six Pack gives the right to unelected to right the gives Pack Six The ela Merkel and Nicolas Sarkozy Sarkozy Nicolas and Merkel ela word in how countries should should countries how in word cal supervision and austerity. austerity. and supervision cal over to the Commission, in Commission, the to over However, as a number of of number a as However, o ae h consequences, the face to ae led tls of talks already are e December 7, 2011), with with 2011), 7, December deficit of the EU. Even Even EU. the of deficit r the rules entered into into entered rules the r e iac ministers. finance te Der SpiegelDer h Commission’s the anuary 2013) in in 2013) anuary Financial Financial , May 9, 2011, 2011, May , 9, rope-a- er- 75

CEU eTD Collection primacy like the EU law does, the rules in TSCG are “less “less are TSCG in rules the does, law EU the like primacy oiin h TC otie h E lw tm fo te at that fact the from stems law EU the outside TSCG the position eu/friends-foes-eu-treaty-change-clash-duel-news-50 at a may Republic noted laterCzech it that the process stage. join uodnt t te U a. t a be ntd ht s h Fiscal the as that noted been has It law. EU the to subordinate positioned is that one although treaty, international as constructed 82 81 80 Law, 2012), 1,http://cadmus.eui.eu/bitstream/handl 2012), Law, eu/europes-new-treaty-multi-speed-union-linksdossie Monetary Union Union Monetary and Economic in the Governance and Coordination on Stability, The Treaty

79 de later sector, services financial its for concessions win to treaty the vetoed UK The Republic. Czech the and UK the except M in signed was Compact) Fiscal the or (TSCG, Treaty new the p on limits putting at aimed that treaty intergovernmental the State Member 17 the where meeting, Council European following rules national constitutions. in and ownership national stronger on insisted letter the Importantly, akz udrie te ed o a lsr icl no, oriain n the and coordination union, members. noncompliant sanctions for fiscal closer a for need the underlined Sarkozy Telegraph Union, Multi-speed a Towards Treaty: New “Europe’s Ni and Merkel Angela Discipline: Fiscal “Fostering Fir in Clash Change Treaty EU of Foes and “Friends Another Legal Monster? An EUI Debate on the Fiscal Fiscal the on Debate EUI An Monster? Legal Another t s motn t ke i mn ta te SG os o fl udr t under fall not does TSCG the that mind in keep to important is It In their letter sent to the President of the European Council, Cha Council, European the of President the to sent letter their In , December 7, 2011. 2011. 7, December ,

79 This is discussed is more This the section. depth following in in 80 The message sent by the two heads of state dominated the state dominated of heads two The sent the by message e/1814/21496/LAW_2012_09_Kocharov_ed.pdf?sequence=1 8331. 8331. r-509753. r-509753. colas Sarkozy’s Letter to Herman Van Rompuy in Full in Rompuy Van Herman to Letter Sarkozy’s colas st Duel,” stDuel,” ” ” COmpact Treaty COmpact 31 EurActiv.com EurActiv.com ciding to opt out of the Treaty.the of out opt to ciding , n.d., http://www.euractiv.com/future- n.d., , , EUI Working Paper (EUI Department of (EUI Paper Working EUI , ublic spending. The final version of version final The spending. ublic arch 2012 by all Member States, States, Member all by 2012 arch , n.d., http://www.euractiv.com/future- n.d., , enforceable”. at the December meeting so as so meeting December the at h E tet cag would change treaty EU the s agreed with the outlines of of outlines the with agreed s ncellor Merkel and President President and Merkel ncellor Compact does not have the the have not does Compact including balanced budget budget balanced including s optbe ih and with compatible as he EU law, but is is but law, EU he 82 h dcso to decision The osblt of possibility ,” ,” 81 The The The . CEU eTD Collection ugt eurmn i ntoa lw tee r jsiibe doubt justifiable are there law, national in requirement budget treaty-six-rounds-of-political-bargaining/. treaty-six-rounds-of-political-bargaining/. to force.to withi law EU into incorporated be will treaty international the neg to managed law, EU outside falling as designed was it since February 2012), 2, http://www.notre-europe.eu/en/ax 2, 2012), February signed?lang=en. signed?lang=en. http://www.european-council.europa.eu/home-page/hig 84 was proposal This (ECJ). Union European the of Justice of Court deficit the of breach in those that foresaw Merkel Chancellor Origina unspecified. left is mechanism correction the of form defi structural the with comply to fails country a if mechanism al Treaty The rule. budget balanced the is essentially, which, str limiting level, equivalent or constitutional a at legislation “deb that requires element Compact Fiscal The overall. governance ebr States.Member t ensure to likely is ESM the of form the in carrot the and force, r States’ Member area euro 12 only needs TSCG the Thus, ESM. the Treaty new the in participating States Member only – TSCG permanent the tying conditionality, of form a introduces Treaty rat the ensure to partly However, Treaty. the ratify to manage 83 St Member signatory the obliges Treaty whereas the Since vote, requirement. unanimous a taking States Member all necessitate Valentin Kreilinger, Kreilinger, Valentin Treaty on Stability, Coordination and Governance Si Governance and Coordination Stability, on Treaty h TC hs w mi fntos otiig icl oenne n de and governance fiscal outlining – functions main two has TSCG The 84

83 A te ae ie te P n te omsin ta opsd h tr the opposed that Commission, the and EP the time, same the At The Making of a New Treaty: Six Rounds of Political of Rounds Six a New Treaty: of Making The

es/visions-of-europe/works/publication/the-making-o gned hlights/treaty-on-stability,-coordination-and-gover 32 (The European Council, March 2, 2012), 2012), 2, Council, March European (The so envisages an automatic correctionautomatic an envisages so and debt rules could be taken to the the to taken be could rules debt and ification of the Fiscal Compact, the Compact, Fiscal the of ification will have the right to participate in participate to right the have will n five years after the Treaty comes Treaty the after years five n Bargaining uctural deficits to 0.5% of GDP, GDP, of 0.5% to deficits uctural lly, the framework proposed by by proposed framework the lly, not accepted and in the current current the in and accepted not cit limit. However, the precise precise the However, limit. cit ts o rnps te balanced the transpose to ates otiate a compromise by which by compromise a otiate s whether all Member States States Member all whether s he ratification in a number of number a in ratification he alu fn, h EM o the to ESM the fund, bailout t brakes” are set into national into set are brakes” t h TC hs o such no has TSCG the , Policy Brief (Notre Europe, Europe, (Notre , Brief Policy atification to enter into into enter to atification epening economic economic epening nance- ay s it as eaty f-a-new- CEU eTD Collection oiia saeet il ed rdblt t te omn fisca common the to credibility lend will statement political politica the in lies argued, been has as Treaty, the of purpose rpsd o ae h Cmiso’ pooas idn, lhuh om w room although binding, proposals Commission’s the make to proposed bring a case against other signatures of the Treaty to the the to Treaty the of signatures other against case a bring Fiscal Compact),” FiscalCompact),” 86 oenet f h er ae. h Er Smis r t cnee after convene to are Summits Euro The area. euro the of Government meeting informal – Summits Euro the of setup the is arrangement or fiscal towards step first the constituting of short falls the to deals rescue euro the sell to Merkel allows which States, 85 policy fiscal national of conduct the in interfere to right the have neit since implementation their not but States Member in level chan necessary the make to State Member a order can which ECJ, national their to rules such introduce to fail who those only version stability-coordination-and-governance-economic-and- qualified majority voting in the Eurogroup, in qualifiedthe planned majority under treaty. voting Europ the of President the to letter their in Already sanctions. oppose and Pack Six the down watering in France backed had discussions Merkel, Chancellor of position changed another signals This follow. Germ by proposed form the in especially Treaty, the and rules, on insistence strong and clear a is There insufficient. proven have fis in applied been have fines monetary as novelty a not is which incomplia the fine to ECJ the allow will comply to failure The Daniel Gros, “The Treaty on Stability, Coordinatio Stability, on Treaty “The Gros, Daniel Ni and Merkel Angela Discipline: Fiscal “Fostering Notably, the TSCG is concerned with setting up rules of fisca of rules up setting with concerned is TSCG the Notably, The Centre for European Policy Studies Policy European for Centre The

n and Governance in the Economic and Monetary Union Monetary and Economic the in Governance n and colas Sarkozy’s Letter to Herman Van Rompuy in Full in Rompuy Van Herman to Letter Sarkozy’s colas monetary-union-aka-fiscal-compact. monetary-union-aka-fiscal-compact. 33 , March 8, 2012, 2,http://www.ceps.eu/book/treaty- 2012, 8, March , ECJ, who fail to make correct changes. changes. correct make to fail who ECJ, political union, since the only lasting lasting only the since union, political l framework. However, the Treaty Treaty the However, framework. l ean Council, Merkel and Sarkozy and Merkel Council, ean any, seeks to ensure the rules are rules the ensure to seeks any, her the ECJ nor the Commission the nor ECJ the her German public. In addition, the addition, In public. German nt Member up to 0.1% of GDP, of 0.1% to up Member nt saeet f h E Member EU the of statement l cal governance previously, and and previously, governance cal l conduct on the constitutional the on conduct l 85 ges. The Member States can can States Member The ges. the compliance with the EU EU the with compliance the who earlier in the Deauville Deauville the in earlier who . of the Heads of States or or States of Heads the of law, may be brought to the to brought be may law,

86 osqety te main the Consequently, the European Council Council European the d the idea of automatic of idea the d as left for reverse reverse for left as .” .” (aka (aka CEU eTD Collection Financial Times Financial for preparatory work for the Euro Summit meetings.the Euro for Summit work preparatory for Eurogr the for role prominent more a to led also has Summit Euro A before. than difficult more is this proposals, Commission’s the retains ECOFIN the Although Procedure. Deficit Excessive the step another cem gives Treaty the thus voting, majority qualified reverse yet the and method, Community refor the of much echoes Treaty the Overall, traditional intergovernmentalism. the from away move and the President of the ECB area also invited to the informal mee informal the to invited also area ECB the of President the and P The area. euro the of Government or State of Heads the of meeting Mem zone euro by years half a and two for elected who, Summit Euro 00144feabdc0.html#axzz1rX28J8kn. 00144feabdc0.html#axzz1rX28J8kn. Europe”. leave “other non-euro countries on the outside looking in”looking outside the on countries non-euro “other leave http://blogs.ft.com/beyond-brics/2011/12/02/poland- 88 87 – meetings by well received been not has this surprisingly, Not meetings. alloca are States Member area join non-euro the Thus, appropriate. to invited be may and year, a once least at meetings these States Member zone Non-euro decisions. binding issue cannot therefore, if often more possibly but year, a twice least at meetings Spiegel, Peter, Buckley, Neil and Gerrit Wiesmann. Gerrit and Buckley,Neil Peter, Spiegel, Us Leave Brussels:Don’t to “Poland Cienski,Jan. Despite the fact that the TSCG has not yet entered into force, into yetentered not has TSCG the that fact the Despite In addition to the informal meetings, the treaty establishes the establishes treaty the meetings, informal the to addition In 88

a number of less integrated countries fear that a stronger and and stronger a that fear countries integrated less of number a , January 27, 2012. http://www.ft.com/intl/cms/s/0/ 2012. 27, January ,

to-brussels-dont-leave-us-out/. to-brussels-dont-leave-us-out/. Out.” Out.” “Poland Bristles at Idea of ‘invitation-only’ Summ ‘invitation-only’ of Idea at Bristles “Poland 34 Financial Times Financial 1bb059a6-4908-11e1-88f0- needed. The meetings are informal and, and, informal are meetings The needed. 87 and eventually lead to a “two-speed a to lead eventually and those left outside the Euro Summit Summit Euro the outside left those , December 2, 2011. 2011. 2, December , ted a secondary importance in the in importance secondary a ted ents the Commission’s powers in in powers Commission’s the ents the possibility of voting against against voting of possibility the position of the President of the of President the of position it does serve as an example of a of example an as serve does it t the same time, the role of the of role the time, same the t oup, which is now responsible responsible now is which oup, tings. ms of the Six Pack, including Pack, Six the of ms the meetings when deemed deemed when meetings the resident of the Commission the of resident

The formalization of the of formalization The tighter Euro-zone would Euro-zone tighter ber States, oversees the oversees States, ber are to participate in in participate to are its.” its.” towards towards CEU eTD Collection area States. Member as governing process the in left is Commission the role the about this Understandably, government. economic of direction general the govern The Europe. i two-speed moving are Summit Euro the and Eurogroup a the that tendencies towards and method, Community traditional more has Compact Fiscal the that remains matter the of fact the and often outcomes of dictated reforms. the tha traditions policy the to given be will Consideration union. monetary m a towards moved has EU the whether assess to tries and governance, 89 meeting. Summit report after the each EP to pres the obliges treaty the and limited, very remains EP 2, 2011, http://www.ft.com/intl/cms/s/0/020802c4-1d 2011, 2, Quentin Peel and Hugh Carnegy, “Clash of Styles in Styles of “Clash Carnegy, Hugh and QuentinPeel The following chapter will provide an analysis of the recent cha recent the of analysis an provide will chapter following The

Although Berlin has signalled uneasiness over the possibility of l of possibility the over uneasiness signalled has Berlin Although

07-11e1-a26a-00144feabdc0.html#axzz1vfzQqCSc. 07-11e1-a26a-00144feabdc0.html#axzz1vfzQqCSc. Race to Save Single Currency,” Currency,” SaveSingle to Race 35 ident of the Euro Summit to present a present to Summit Euro the of ident moved the EU further away from the from away further EU the moved well as the standing of non-euro non-euro of standingthe as well nto the limelight as the ones to to ones the as limelight the nto eaving some countries out,countries some eaving nges in European economic economic European in nges ore unified economic and economic unified ore t have shaped the process process the shaped have t Financial Times Financial ass questions raises e r clear are re , December December , 89

CEU eTD Collection powers of the Commission, whereas the latter were an amalgam an were latter the whereas Commission, the of powers and TSCG the Pact, Plus Euro the whereas Commission, the of part

h to edn cutis Gray n Fac. h fre streng former The France. and Germany countries, leading two the Semeste European the and Pack Six The EMU. of structure governance steps decisive took States Member EU the revealed, shortcomings The move towards intergovernmentalism intergovernmentalism towards move The source of problems. changes the of efficiency the evaluates reforms, recent the following the Therefore, union. monetary the complement could which union, the shift to managed have they if is question underlying important the renewed have reforms these Although level. EU the on coordination effici more for strive to been clearly has reforms these intergovernmental of favour the in scales the tipped and traditions the Commission’s recommendations on the budgets of the Member Stat Member the of budgets the on recommendations Commission’s the go its achieving of short fell reform the Nevertheless, intentions. States, Member EU of budgets the on surveillance exercise h eooi ad iaca cii hs ucind s srs tes stress a as functioned has crisis financial and economic The The European Semester, which can be seen as one of the first move first the of one as seen be can which Semester, European The Chapter – 3 of Reforms Analysis 36 ent and stronger governance and increased increased and governance stronger and ent made, and investigates the possible possible the investigates and made, may have been launched with good good with launched been have may als for it lacked tools to enforce to tools lacked it for als of German and French policy policy French and German of method. The motivation for motivation The method. , n a a epne o the to response a as and t, the ESM were initiated by initiated were ESM the EU towards an economic economic an towards EU s on the part of the EU to to EU the of part the on s es. Thus, the Commission Commission the Thus, es. hnd h supranational the thened to reform the economic economic the reform to r were introduced on the on introduced were r face of the EU, the more more the EU, the of face chapter analyses analyses chapter CEU eTD Collection problem as the SGP in its original form – the politicised dec politicised the – form original its in SGP the as problem policies are, in the end, controlled by the Council. At the same ti same the At Council. the by controlled end, the in are, policies influence Commission. of the can decisions the ECOFIN, the by adopted are recommendations the one-size- the abandoning of importance the realizing time same b of coordination the increasing for need the saw clearly Commission some trace to possible is it recommendations, specific country them watered sometimes has Council the that evidence is there and the incorporate to failing for sanctions no are there Although course. national of surveillance the that is however, Semester, European the of One reform. the through power meaningful any gain not did though, were thwarted by Germany and France. Therefore, even withi even Therefore, France. and Germany by thwarted were though, EU the strengthen and Lisbon, of Treaty the with keeping method o favour in scales the shift to trying were EP the and Commission althoug that signs clear are there Therefore, change. Treaty of support for exchange in former the backing was that Germany mist the encountered has States, Member the of policies fiscal insti supranational strong truly a become to potential the has pow gain and rules dictate to Commission the allow to automaticity, F especially States, Member the of reluctance the signals Agai Council. the to up left still are decisions final the end qualified reverse of inclusion the through influence gained Commission h lte ws ute srntee va h Sx ak reforms Pack Six the via strengthened further was latter The 37 n, the objection to automatic decisions automatic to objection the n, rance that was adamantly opposed to to opposed adamantly was that rance h the EU institutions, particularly the particularly institutions, EU the h ision-making process diminishes the diminishes process ision-making tution to coordinate economic and economic coordinate to tution rust of, above all, France, but also but France, all, above of, rust significant tendencies. Firstly, the Firstly, tendencies. significant fits-all approach. Secondly, since since Secondly, approach. fits-all budgets has strengthened in the in strengthened has budgets more controversial proposals of of proposals controversial more me, the Commission was left was Commission the me, . However, even though the the though even However, . interesting side effects of the the of effects side interesting f the traditional Community Community traditional the f prove to encounter the same same the encounter to prove er. The Commission, which Commission, The er. ntttos tee attempts, these institutions; Commission’s proposals, Commission’s n the Six Pack, economic Pack, Six the n down when adopting the the adopting when down deay oiis a the at policies, udgetary majority voting, in the in voting, majority CEU eTD Collection preparing the meetings, this role has become overly technical overly become has role this meetings, the preparing en rvnb Fec-emnbltrl edrhp resulti leadership, bilateral French-German by driven been as well as mechanism coordination policy a as functioned meetings and motne epcal truh h TC wee h group the where TSCG the through especially importance, gained http://www.cepii.org/anglaisgraph/communications/pd (The Challenges and Design EMU, in Policy Budgetary uo area”euro the made role to Council ofby proposals stamping rubber and the Merkel Sar m the had, once ECOFIN the influence the over taken respects many incre has importance r Council’s for European the plans though even own Thus, governance. their announced France and Germany when abruptly the governance, economic on force task a chair and up set to Rompuy t to tried Council European the Although law. EU the of outside fall are two former Importantly,the Pact. Plus Euro the and TSCG the saw that alliance Franco-German the of out born were governance 90 resulted a in stronginstitution governa European turneconomic in intergovernmental States Member the of reluctance the policies, monetary ECB’s to counterweight a as act therefore, and countries, EU independent coordi could that institution a as act to tried Commission the Although St Member on reporting and monitoring of role technical the with Jean Pisani-Ferry, Pisani-Ferry, Jean Another remarkable outcome is that the Eurogroup has not emerged as emerged not has Eurogroup the that is outcome remarkable Another and crisis the to responses important most the of some Undeniably, 90 s a be sgetd y ueos uhr. lhuh h Ergop may Eurogroup the Although authors. numerous by suggested been has as Fiscal Discipline and Policy Coordination in theEu in Coordination Policy and Discipline Fiscal

f/2002/211102/pisani-ferry.pdf. f/2002/211102/pisani-ferry.pdf. Dutch ministry of Finance, May 2002), 2002), May Finance, ministryof Dutch 38 g n h rdcin f h European the of reduction the in ng rozone: Assessment and Proposalsand Assessment rozone: . When previously the Eurogroup the previously When . o e a epwrd central empowered an see to intergovernmental treaties that that treaties intergovernmental the introduction of the ESM, ESM, the of introduction the ates’ economic performance. economic ates’ a political forum on a larger a on forum political a ore recent innovations have innovations recent ore ake the lead by asking Van Van asking by lead the ake a be gvn rl of role a given been has initiative was stifled quite stifled was initiative nate the fiscal policies of policies fiscal the nate h idpnec o the of independence the a “fiscal agency of the the of agency “fiscal a eom o economic of reforms kozy. kozy. eforming economic economic eforming ased and has in in has and ased nce. nce. , , have CEU eTD Collection atybcue f h fiue f h l sse o eooi gov economic of system old the of failure the of because partly Journal of European Public Policy Public European of Journal Possible Problems Possible Problems and when useful comescoordination. policy means it to the decisions, binding make to power the lacking summits informal sta grown has meetings informal for preference the as well l The Summits. Euro of view the in especially Council, European the have noted that an intergovernmental model and peer pressure have faile have pressure peer and model intergovernmental an that noted have previ since especially have, reforms these do value added of much re the as However, coordination. policy hard and soft of methods exhausted governance economic of reforms The questioned. be can reforms TSCG 92 91 about strict making is the Commission that reinforced as be proof should taken t of suspension the to led has rule the with noncompliance where Hungary, rep the of possibility the and political essentially remains m made beenhas recommendations Commission’s overriding TSCG the pas the in worked have fines that seem not does it time, same the for criticized heavily been has Pact is Plus Euro the and Semester that coordination soft The discourage. to sought it activities prevent to failed coordination hard based rules the showed, experience scale Verhofstadt, Delors, and Prodi, “Europe Must Plan Plan Must “Europe Prodi, and Delors, Verhofstadt, th of Role The Informally: “Governing Uwe Puetter, h oeal fetvns o te i Pc, uoen eetr E Semester, European Pack, Six the of effectiveness overall The 91 , this role has been diminished, and the position of the Eurogroup has be Eurogrouphasthe of position the and diminished, beenhas role this , 11, no. 5 (2004): 854–870. 854–870. (2004): no. 5 11,

a Reform, Not a Pact.” Pact.” a Not Reform, a e Eurogroup in EMU and the Stability and Growth Pac Growth and theStability and in EMU Eurogroup e 39 ein f 03 xss Te ae of case The exists. 2003 of letion rting from the Eurogroup. Despite Despite Eurogroup. the from rting its lack of enforcement tools. At tools. enforcement of lack its t. Although in the Six Pack and Pack Six the in Although t. ernance, it may be asked how asked be may it ernance, embodied in the European European the in embodied u Cmiso presidents Commission ous atter shows that the need as as need the that shows atter y nonetheless are powerful are nonetheless y r Pu Pc, S and ESM Pact, Plus uro ore difficult, the decision decision the difficult, ore the unsustainable fiscal unsustainable the d before. d forms were triggered triggered were forms he Cohesion Funds, Cohesion he rely heavily on the the on heavily rely use of all the tools theall tools of use come secondary tosecondary come 92 As the SGP the As t,” t,” CEU eTD Collection provided and the Council has backed their decisions. However, this is a case of a sma of a a is However, case this has Council backedprovided their decisions. and the break the rules. Thus, it can be expected that unless new rules new unless that expected be can it Thus, rules. the break Nevertheless, they stand outside the EU law and as such the intergove the such as and law EU the outside stand they Nevertheless,

State and the two largest members in 2003 that had more political political more had that 2003 in members largest two the and State intervention of the ECJ. intervention of the ECJ. failur the and law constitutional States’ Member area euro all balanc of rule golden the that TSCG the in insistence Merkel’s t realized had Germany Clearly, binding. more policies the make or EU the little is there States, Member the in supported and economic governance. governance.economic fi the helping than rather hampering up end may law international enter and law EU the of ground solid the leave to decision the end, the In the limiting and policies certain only for opting treaties, decided have States Member are non-euro of number a that fact the th of cross-conditionality the addition, In future. the in results grave within technically are that rules enforcing ECJ the of role the techno other and surveillance for Commission, the as such institutions, Therefore, process. decision-making complex already the to added linked closely and it, to subordinate as function to meant law, EU newThe TSCG. the and ESM the about true not is same theTreaty, the within fall Pact Plus Euro the and Pack Six the Semester, governanc economic to complexities of layer another add treaties In addition to the problematic nature of efficient coordination, it it coordination, efficient of nature problematic the to addition In 40 ir cooperation, leads to further confusion. further to leads cooperation, ir the Lisbon Treaty, may bring about about bring may Treaty, Lisbon the and policies are truly internalized internalized truly are policies and ed budget rules be introduced into into introduced be rules budget ed any international treaty can do to to do can treaty international any rvsos ae y h Lisbon the by made provisions t d ti wud lo the allow would this do to e weight who were the ones to ones the were who weight treaties are closely tied to the to tied areclosely treaties e ESM and TSCG as well as well as TSCG and ESM e can be argued that the new new the that argued be can e atr n ti explains this and latter he rnmental treaties have only have treaties rnmental e. Whereas the European European the Whereas e. a am f oe efficient more of aim nal h polm f sn EU using of problem the cratic purposes as well as well as purposes cratic o e nldd n these in included be to o U institutions. EU to ing the territory of of territory the ing ller Member CEU eTD Collection traditions different of Patchwork nitne on insistence t At prevalence. take to Commission the by embodied technocracy and preferred a rules defined clearly with law of rule the and setu Germa the made current level EU the to prerogatives more delegate the on out States’ played Member other of reluctance The intergovernmentalism. has different rather fact are The more. governance traditions political their fit to EU the develop oni, n a te ae ie aae t twr te ln o the of and plansautomaticity. independencebe influence can que Council Therefore, the of the the thwart to managed time same the at and Council, their push to managed two the Overall, law. EU the from separate setti in resulted int which TSCG, the the vetoed UK of the when especially pace slow the with frustrated were Sarkozy and Merkel It governance. economic European the shaping in lead the took that duo Ge periodmanagement crisis and crisis the ofcourse the over that ref for asking statements made and meetings bilateral numerous German by inefficient too deemed was this 2011, early in governance see that Germany, the more dominant of the two, has facilitated facilitated has two, the of dominant more the Germany, that see form any adopt not could such as and informal remained it formalized, meeting of form new a Although formed. being institution supranational n h rfrs rpsd n ngtae b te u, t eae ob became it duo, the by negotiated and proposed reforms the In lhuh h Erpa Cucl se Vn opy o om ts force task a form to Rompuy Van asked Council European the Although ovreet économique gouvernement loe fr nrae coeain ihu ay new any without cooperation increased for allowed 41 alternative to allowing the automaticity automaticity the allowing to alternative n insistence on intergovernmentalism on insistence n governments to pool powers and powers pool to governments orms on the EU level. It is clear clear is It level. EU the on orms rmany and France emerged as a Franceemergedas and rmany visions through the European European the through visions that their views on strong strong on views their that gu teFsa opc as Compact Fiscal the up ng France’s insistence on more more on insistence France’s vious that both wanted to to wanted both that vious al decisions. Thus, we can we Thus, decisions. al omsin o greater for Commission ergovernmental method, method, ergovernmental s, the Euro Summit, was Summit, Euro the s, y and France who held held who France and y he same time, French French time, same he may be argued that that argued be may o rls based rules of p stioned. stioned. for economic economic for CEU eTD Collection policy coordination and is close to German preferences. On the othe the On preferences. German to close is and coordination policy analy is Compact Fiscal the when clear especially becomes pan-Europeanculture’”. ‘stability ins has Germany which on rules of system elaborate “the pursue of support the Simultaneously, informal. meetings the leaving by 94 http://www.euractiv.com/euro-finance/governance-ref as Hodson has argued, does not have seemed to have worked in its favour. its in worked have to seemed have not does argued, has Hodson as c the However, has growing. be may Summits agenda of influence the therefore, the that signal to seen be can meetings Summit pr of task the given been have Group Working Eurogroup’s and Eurogroup Wha represented. being States Member area euro only with level, of Heads the on coordination and governance economic the meant always The Commission. the or EP the for role greater a envisioned ministeri the at represented are that States Member of asp French for victory a as seen be can meetings Summit Euro Compact Treaty a clear rules intergovernmental embodies system based to overcome their different policy traditions has clearly left a mark onEur mark a clearly left has policy different traditions overcometo their Euro M the two these that fact The ESM. the on Treaty the for negotiations overpower to managed duo the since especially unexplored, 93 w opinions honest and talk candid where forum meeting invaluable an as Summit, Euro of meetings regular the and governance economic coordinated See: Dermot Hodson, Hodson, Dermot See: theEuro’s Leave Reforms “Governance Whyte, Philip The role of Germany and France in shaping these new reforms new these shaping in France and Germany of role The Governing the Euro Area in Good Times and Bad Timesand Good in Area Euro the Governing

93

orms-leave-euros-flawed-structure-intact-analysis-5 Flawed Structure Intact,” Intact,” Structure Flawed 42 al level. After all, Sarkozy has never never has Sarkozy all, After level. al (Oxford University Press, USA, 2011). 2011). USA, Press, University (Oxford e. n h oe ad te Fiscal the hand, one the On sed. irations to have an exclusive club exclusive an have to irations France has allowed Germany to to Germany allowed Francehas isted is necessary to establish a establish to necessary is isted ovreet économiquegouvernement ember States have found a way way a found have States ember should not go unnoticed and and unnoticed go not should nieal sgiiac and significance onsiderable EurActiv.com formalization of Eurogroup, of formalization i mr, h fc ta the that fact the more, is t r hand, the formalization of formalization the hand, r that guarantees economic that opean governance. Thisgovernance. opean ere expressed has now has expressed ere 94 State or Government or State en oni i the in Council pean What once was seen was once What but also limited it limited also but eparing the Euro Euro the eparing , April 19, 2012, 2012, 19, April , 12268. 12268. has CEU eTD Collection part of Germany may stem from the fact that the meeting the that fact the from stem may Germany of part promises to rise in importance. rise importance. promises to in may this but Council, European the by over taken been has positions fo of position The technocrats. of meeting a as seen be to become 95 reveal impact. their re recent more the as limbo of state the in remains it end, the wi although hectic, been has process the Rather like. look should EU the st what of definition final no of is there institutions EU and process Germany a been has governance economic of state current t in like look will governance economic the how over struggle continuous a issues; this would allow France to exercise greater influence greater exercise to France allow would this issues; with aligned more are that countries the – Sweden and UK the Poland, Member States. One of the reasons for the unwillingness to pursue to unwillingness the for reasons the of One States. Member deep create to reluctant more proven has Merkel Europe, two-speed s Sarkozy whereas – interest Franco-German diverging of dimension member area euro of meeting close-knit a prefer would France lef are they (and treaties new the in States Member 27 all Germany when However, intergovernmentalism. toward inclination the and course the Over union. economic an by complemented be must ECB the of that advocated who those of reasoning the against gone ways many in has Staff, “Merkel’s Plan Could Transform theEuropean Transform Could Plan “Merkel’s Staff, The preferences of France and Germany meet in the reluctan the in meet Germany and France of preferences The Overall, the course of formulating a response to the crisis tha crisis the to response a formulating of course the Overall,

Union.” Union.” 43 of euro area members would exclude exclude would members area euro of oe fr o-uo ra countries), area non-euro for open t in the meetings.the in s. The latter goes to show another another show to goes latter The s. forms are yet come to force and force to come yet are forms t has crippled European markets markets European crippled has t ce to empower the Commission Commission the empower to ce the idea of a two-speed on the on two-speed a of idea the eoitos ewe France, between negotiations rong economic governance in governance economic rong change as the Euro Summit Summit Euro the as change upports the emergence of a a of emergence the upports rmulating guiding political political guiding rmulating iie wti te EU the within divides Germany on economic economic on Germany th clear players, but in in but players, clear th the monetary policies policies monetary the would like to include to like would of the crisis period, it period, crisis the of 95 Thus, there is still is there Thus, e uue A the As future. he CEU eTD Collection ovreet économiquegouvernement sover of notion the to close very as seen is that something policies, Me coordinating for responsibility the on take to body EU possible at cooperation, enhanced and integration deeper for need of juxtaposition coor economic strong have to need a is there that clear became rules). budget balance on insistence France s going to ratify the Fiscal Compact (he has (he Compact theFiscal ratify to going s France 96 States mayStates ratify to the treaties. fail t subject be may stability relative of situation this force, ratifie been not have compact Fiscal and SGP the as However, increase of elements with but policies, fiscal decentralised b union political and economic an to alternative an provide to managed wel as culture, stability based rules German both by influenced intergovernmental increased by solved been has union economic an lacking aimed are that Me the of reluctance The budgets. governments’ treaties the of surveillance international two signed have months eight euro-are the among especially this governance, intergovernmental opposi the taken have reforms recent the Rather, policies. economic was Eurogroup the though even emerged, institutions supranational no Thus, t delegated to reluctant increasingly be to proven have States Brus to sovereignty and prerogatives policy-making fiscal their i are members union’s the however, Paradoxically, level. EU the The elections in France that saw Francois Hollande Francois saw that in elections France The . At the moment, it seems that the Franco-German alliance alliance Franco-German the that seems it moment, the At .

96

signaled a possible renegotiation of the FiscalCo the of renegotiation possible a signaled come to power have already raised the question whe question the raised havealready power to come 44 o change, as fears rise that the Member the that rise fears as change, o d soft and hard forms of coordination. of forms hard and soft d he needed powers to the EU level. level. EU the to powers needed he dination and further integration on integration further and dination d and thus have not entered into entered not have thus and d ncreasingly reluctant to delegate delegate to reluctant ncreasingly a members who within the last the within who members a es Teeoe e ae the have we Therefore sels. mber States to give up fiscal up give to States mber iny ad h aao of paradox the and eignty, a te rnh da of idea French the as l te way and strengthened strengthened and way te br tts fsa and fiscal States’ mber the same time Member time same the t teghnn the strengthening at y opting to maintain maintain to opting y ism, which has been has which ism, proposed as a a as proposed mpact’s mpact’s ther ther has CEU eTD Collection by and large be seen as a repetition the rationale embodied in the original in repetitionbyembodied theas rationale a seen and be large

fines did not deter the Member States from breaking the rules. deterfines not did from States the the Member rules. breaking t in made mistakes same the replicate to prove may however, surveillancerelyandlaw the t as well onmutual as it, increasingly outside bette deliver to out set are that rules The budget. unified a have econo on emergence an been not has there addition, In Lisbon. of Treaty requirement inspect and up institutiona follow to the required be to may institutions contributed only have law EU the to tied closely two of introduction the seen has EU the that fact The confusing. and ha governance economic overall the and responsibilities The true. Rathe supranationalism. and cooperation closer towards EU the mover leading to a growingleadinga area the divide euro and to Summ area non-euro States. Member Euro the as such settings, informal in only happen to integration economic improved by complemented be to need not does that governance the Furthermore, method. Community the favoured usually have that States problems pose may governance economic intergovernmental on France and s the At States. Member biggest the by instigated are that order” which has been addressed through increased rules based gove based rules increased through addressed been has which order” Stat Member individual the on remains emphasis and focus the Instead, l not has reforms, numerous the of course the in improved be may that hs te yohss omltd a rftd te uoen sovereig European the – refuted was formulated hypothesis the Thus, What is more, increasingly it seems that EU institutions are institutions EU that seems it increasingly more, is What Paradoxically, then, the reasoning that economic crisis has reveale has crisis economic that reasoning the then, Paradoxically, 45 ame time, the insistence of Germany Germany of insistence the time, ame he SGP, where the mere threat of threat mere the where SGP, he used for conducting the policies the conducting for used r governance both within the EU the within both governance r s become increasingly muddled muddled increasingly become s international treaties that are that treaties international ta ae e u otie the outside up set are that s rnance, which can be seen as seen be can which rnance, d the weak points of EMU of points weak the d r the opposite has become has opposite the r SGP. SGP. es to get their “house in “house their get to es l intricacies. Now EU EU Now intricacies. l hreat This, of penalties. ed to economic union. union. economic to ed mic union that would that union mic n debt crisis has not not has crisis debt n belief in rules based rules in belief for smaller Member Member smaller for t a te ae time same the at it, union, has allowed allowed has union, CEU eTD Collection policy making to a supranational level, leaving it to the hands of of hands the to it leaving level, supranational a to making policy better by the fact that time is of the essence. European pol European essence. the of is time that fact the by better cris debt sovereign European the of beginning the With policies. repetition of the current crisis. repetition of the current crisis. t alleviate to institutions and policies better towards years has EU the crisis, the to response a As Union. the strengthening w only the that that and question the of out is itself) Union European eu the of dissolution the that signalled have Sarkozy, Nicolas and improved, with the view that first substantive steps towards ec towards steps substantive first that view coope the with improved, economic whether see to order in governance economic European in review at aimed thesis the Thus, revealed. were EMU and governance

difficult decisions must be made and complex problems tackled, t tackled, problems complex and made be must decisions difficult threatened is itself and t thecollapse Union destabilizes fear of of the the t where situation, unsustainable an to led has policies fiscal and over control their retained have states member time, same the ha countries zone euro The integration. further to led only has states, b shared now is and 2002, in circulation into introduced was that currency expectat the surpassed has that EU the within integration to led With the unfolding of the European sovereign debt crisis, the sho the crisis, debt sovereign European the of unfolding the With h cii hs et h mme sae o te uoen Union European the of states member the left has crisis The European the of components core the of one Union, Monetary and Economic The Conclusion Conclusion 46 itical leaders, including Angela Merkel Merkel Angela including leaders, itical he crisis as well as to avoid the the avoid to as well as crisis he onomic union may be taken over over taken be may union onomic he project of the European Union Union European the of project he taken decisive steps in the recent the in steps decisive taken is, this asymmetry in monetary monetary in asymmetry this is, the European Central Bank. At Bank. Central European the he circumstances are not made not are circumstances he t rsras stain where situation crossroads, at ro zone (and by extension the extension by (and zone ro national fiscal and economic economic and fiscal national ions of many. The common common The many. of ions ve delegated their monetary monetary their delegated ve ing the most recent reforms reforms recent most the ing rtcomings of the economic economic the of rtcomings he markets. he markets. ay forward would be to to be would forward ay y 17 EU member member EU 17 y ration had been been had ration Union, has has Union, CEU eTD Collection u i as oe t nner ae gvrmns Esnily h E the Essentially governments. area non-euro to open also is but reforms. ofevolution these policy to used was tracing Process analysed. and studied were Compact Stabi European the Pack, th Six Pact, Plus of Euro Semester, European policies monetary the balance to used be could that one union, the that surmised was it Furthermore, crisis. the of course the the functions, rights of EU institutions under the international law ar law international the under institutions EU of rights functions, the g ove the to adds area only Compact Fiscal euro The treaty. intergovernmental the to introduced was which launched, was Treaty Compact b Last questioned. be may added value its and coordination, for tool soft a f set have they goals policy he with comply not do who those enforce Howeve competences. EU the outside fell that policies coordinate economic governance through the Euro Plus Pact that was introduced to t to introduced was that was Pact Plus Euro the step through governance economic further A organization. intergovernmental an as up set Me Stability European the introduced together they when Germany time same the At recommendations. Commission’s circumventing from t as so introduce to wanted Commission the that automaticity the down Germany of backing the With prominent. more became Germany and ref Pack Sic the During Council. the of power the curbs that voting, re the as Commission, the of role the strengthened that reforms, institution The Semester. European the introduced that Commission The study showed that although the first step towards appeasing appeasing towards step first the although that showed study The 47 EU would witness a rise of a fiscal a of rise a witness would EU forms reverse qualified majority majority qualified reverse forms understand the dynamic and the the and dynamic the understand r, as it again lacks the tools to to tools the lacks again it as r, lity Mechanism and the Fiscal the and Mechanism lity e unclear. Further, the Treaty Treaty the Further, unclear. e rall economic governance as governance economic rall orm, the influence of France of influence the orm, chanism Treaty, which was was which Treaty, chanism or themselves, this becomes becomes this themselves, or later initiated the Six Pack Six the initiated later , France managed to water to managed France , taken towards reforming reforming towards taken r Pu Pc suh to sought Pact Plus uro France lent support to to support lent France e ECB. Therefore, the the Therefore, ECB. e o prevent the Council Council the prevent o he euro are Members, Members, are euro he ut not least, the Fiscal the least, not ut the crisis was the the was crisis the vrmns s an as overnments CEU eTD Collection part of the EU has not been a closer economic or political political or economic closer a been not has EU the of part intergovernmentalism. been has integration and cooperation for need grater Paradoxically, Europ the to answer the however, clear, is One meetings. Eurogroup exclusion and status members class zone second non-euro their and over area worried euro understandably of division stricter the to led has the reluctance of accept States balanced the Member rules strict b envisag originally had Merkel reforms the of many introduced that Overall, there is a clear tendency that the EU has moved towards moved has EU the that tendency clear a is there Overall, 48 udget in their constitutions. theirudgetin constitutions. ed n her letter, only reinforced only letter, her n ed facilitated through increased increased through facilitated union, rather the opposite. opposite. the rather union, intergovernmentalism. This This intergovernmentalism. ean sovereign crisis on the on crisis sovereign ean o Er Smi and Summit Euro for ih h latter the with CEU eTD Collection Another Legal Monster? An EUI Debate on the Fiscal COmpact Monster?Another Treaty Legal An EUI onthe Fiscal Debate Dyson, Kenneth, and Kevin Featherstone.Dyson,Kevin and Kenneth, Derruine,Olivier, Tiedemann. and Anne Cohen, Benjamin J. Cohen, Benjamin J. Delors, Fernandes. and Jacques, Sofia Chaffin, Joshua, andChaffin, Peter Joshua, “Franco-German Spiegel. Divides EU Bail-out Pact Brussels, Peter Spiegel in. “EU Presidents Draft Competitiveness Pact Brussels, “EU in. Presidents Competitiveness Draft Peter Spiegel Council of the European Union. “The European Semester - for a More Robust Economy of theCouncil EuropeanforUnion. “The Robust a - More European Semester LisbonII?” Agenda Pact: “Competitiveness Begg, Iain. “The EU’s Response to the Global Financial Crisis andBegg, theIain. Global to Soverei FinancialEU’s Crisis “The Response Le Cacheux, Jacques. “How to Herd Cats: Economic Policy the HerdLe Euro in to “How Jacques. Coordination Economic Zone Cats: in Cacheux, Belke, Ansgar. “Driven by the Markets? ECB SovereignBelke,“Driven theBond Se and Purchases theby Ansgar. Markets? Brussels, Joshua Chaffin in, and Victor Mallet in Madrid. and “Spain Six-pa in, Poses VictorBrussels, Chaffin Mallet in Joshua Limited EU“Analysts Vetting.” in Budget Value See Bibliography Baldwin, Richard, Daniel Gros, and Luc Gros,Baldwin,Laeven. andDaniel Richard, Monetary Union EU2020 Strategy Needs Be to Done? Europe Journal giegold.de/wp-content/uploads/2011/10/Europ.-Semester-contribution-to-EU2020. February 25, 2011. February 25,2011. 00144feabdc0.html#axzz1w5CIBF5t. Times http://www.consilium.europa.eu/homepage/showfocus?lang=en&focusID=66743. September 9,2010. 4cfa-11e1-8741-00144feabdc0.html#axzz1vnEnOYe6. 4cfa-11e1-8741-00144feabdc0.html#axzz1vnEnOYe6. Markets Programme.” 502136. http://www.euractiv.com/innovation/competitiveness-pact-lisbon-age Routledge, 2011. Tough Times.” 00144feabdc0.html#axzz1vfzQqCSc. 00144feabdc0.html#axzz1vfzQqCSc. February 27,2011.http://www.ft.com/intl/cms/s/0/b9fe5320-4296-11e0-8b34- Challenge.” 497701. http://www.euractiv.com/euro/analysts-see-limited-value-eu-budget uence=1. uence=1. http://cadmus.eui.eu/bitstream/handle/1814/21496/LAW_2012_09_Kocharov_ed.pdf? 2012. Law, EUI Department of , October http://www.ft.com/intl/cms/s/0/56984290-df96-11df-bed9- 24,2010. Financial TimesFinancial The Future of Global Currency: The Euro Versus the Dollar Currency: the Global The Future of The Versus Euro Journal of European IntegrationJournal of 9, no. 2 (March 1, 2012): 107–124. 9,no.2(March 1,2012): 107–124. . Oxford University 2000. Press, . Oxford . European Parliament, October 19, 2011.http://www.sven- . European Parliament, October CEPR, 2010. CEPR, Intereconomics , February 1,2012.http://www.ft.com/intl/cms/s/0/ed753e7a-, February The European Semester: StepOnlyEuropean a First The The First European Semester and Its Contribution to to the European Contribution SemesterIts and The First The Road To Maastricht: Negotiating Economic Maastricht: Negotiating and To The Road EurActiv.com 45, no. 6 (2010): 357–363. (2010): 45, no.6 49 Completing the Eurozone Rescue: What the EurozoneCompleting Rescue: More EurActiv.com 32,no.1(2010): 41–58. , February 14, 2011. 14,2011. , February , September 13,2010. , September .” . EUI Working . EUI Paper. Financial TimesFinancial gn Crisis.” Debt -vetting-news- nda-ii-analysis- ck Rules .” . 1st ed.. 1st Financial Financial . Notre Europe, curities ”, , pdf. pdf. Asia Asia seq CEU eTD Collection EU Economic Governance “Six-Pack” Enters into EUForce Economic Enters into “Six-Pack” Governance European Council 24-25European March Council 2011 Conclusions 16-17European December Council 2010Conclusions “Economics Chair for onEconomic Big Governance Committee Council.” Shock Package: “EUby Tensions.” Debt Marred Rules Political Gros, Daniel. “The Treaty on Stability, Coordination and the Governance Economic in Gros, and Daniel. Coordination on Stability, Treaty “The “‘EuropeMoreDoesn’t Germany’.” Need Leaders Fund,“EUBoostPact.” Bailout Agree onEuro “EU Power Debt in over Vetting.” Struggle “Europe’s New Treaty: Towards a Multi-speed Union.” “Europe’sNew Union.” a Towards Treaty: Multi-speed De Grauwe, Paul. “Some Thoughts on Monetary and Political Union.” In Union.” Political De Thoughts Grauwe, and onMonetary “Some Paul. “FriendsFirstTreatyand Duel.” of Foes EU Change in Clash “Eurozone Governance.” Non-eurozone“‘Euro-plus Divides Members.” Pact’ Newfor“European Architecture Governa New EU the Semester: Economic a “Fostering Fiscal Discipline: Angela Merkel and Nicolas Angela“FosteringFiscal Sarkozy’s and Merkel Discipline: Green Cowles, Maria. “The Battle Between ECOFIN-11 and the European Ce European Between BattleGreen and“The the ECOFIN-11 Cowles, Maria. European Package Parliament:Explained Governance Economic Resistance, and Revival onomics-Committee-chair-on-economic-governance-package-big-shock-for http://www.europarl.europa.eu/news/en/headlines/content/20110429FCS18371/7/html/E http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/ 507261. http://www.euractiv.com/euro-finance/eu-debt-rules-marred-polit Monetary Union (aka FiscalMonetary Compact).” Union (aka news-503043. news-503043. http://www.euractiv.com/euro-finance/eu-leaders-boost-bailout-fund finance/eu-power-struggle-debt-vetting-news-506349. http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/ December 1,2011. http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/e http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/e 509753. http://www.euractiv.com/future-eu/europes-new-treaty-multi-sp more-germany-a-743607.html. http://www.spiegel.de/international/europe/the-world-from-berl Rompuy Full.” in 508331. http://www.euractiv.com/future-eu/friends-foes-eu-treaty-change- news-503526. news-503526. http://www.euractiv.com/euro-finance/euro-plus-pact-divides-non-eur 00144feabdc0.html#axzz1w5CIBF5t. http://www.ft.com/intl/cms/s/3/94a44660-dd3e-11df-9236- Strategic InteractionInStrategic Perspective.” edited by Leila Simona Talani, 9–28. Palgrave Macmillan, 2009. edited Talani, Leilaby 9–28. Palgrave Simona Macmillan, The Telegraph Financial TimesFinancial , 110–137. Oxford University Press, 2001. University110–137. Oxford 2001. Press, , , December 7, 2011. , December 7,2011. , October 21,2010. Spiegel OnlineSpiegel EurActiv.com The State of the European Union: Risks, Reform, European Union: Risks, the of The State 50 EurActiv.com The Centre for European for Policy StudiesThe Centre . Brussels, n.d. EurActiv.com . Brussels: European Council, n.d. Council, . Brussels: European EurActiv.com EurActiv.com . Europa, December 12,2011. December . Europa, , April 2, 2011. , n.d.http://www.euractiv.com/euro- , n.d. EurActiv.com , March 25, 2011. , March Letter Hermanto Van , n.d. , March 12,2011. , March in-europe-doesn-t-need- eed-union-linksdossier- ical-tensions-news- clash-duel-news- , n.d. The Future of EMUFuture of The , n.d. -agree-euro-pact- 898. 898. 14. 14. ozone-members- c/118578.pdf. c/118578.pdf. c/120296.pdf. c/120296.pdf. nce – Q&A”,nce – ntral Bank: A -Council. -Council. , March , c CEU eTD Collection ——— Howarth, David J. “Making French ‘gouvernementHowarth, PolicyBreaking J. onEU the and Rules: David Peel, Quentin, and Hugh Carnegy. “Clash of Styles in Race in Carnegy.Peel,Currenc Save Quentin, to and Single “Clash Hugh of Styles Müller, Peter, and Michael Sauga. “Competing Visions: France Sauga.Visions: Müller, “Competing Peter, and and Germany Sp Michael Inching“Merkel, Sarkozy Eurozone Towards Deal.” Kreilinger, Valentin. Lessons of Be – Union EuropeanIssing, to “The Otmar. Draw Monetary Crisis Kaiser, Stefan. “The Price of the Pact: What Will Kaiser, “Thea Will of European Stefan. Economic the What Pact: Price Govenr Peel, Quentin. “Merkel Insists onEU TreatyInsists Peel, Quentin. “Merkel Change.” Hodson, Dermot. “EMU and Political Union: What, If What, Union: Hodson, Dermot.and Learned Political “EMUAnything, f We Have Heinen, Nicolaus. “The European Semester: What Does ItHeinen,European Does “The What Nicolaus. Semester: Mean?”

Heipertz, Martin, and Verdun. Amy McNamara, R. Kathleen Marzinotto, Benedicta,Marzinotto, B. a Hallerberg. and Guntram Wolff, Effective Mark “How “MEPs Angered by ‘Franco-German Approach’.” Angered“MEPs ‘Franco-German Approach’.” by Der Spiegel Pact Policy Modeling European Government.” Economic over-plans-for-european-economic-government-a-737423.html. http://www.spiegel.de/international/europe/competing-visions-franc 501895. http://www.euractiv.com/euro-finance/merkel-sarkozy-inching-eur the-pact-what-will-a-european-economic-government-entail-a-780832.ht Euro’s First Decade?” Euro’s First Decade?” . Économique’.” 00144feabdc0.html#axzz1vfzQqCSc. 00144feabdc0.html#axzz1vfzQqCSc. Times 00144feabdc0.html#axzz1w5CIBF5t. http://www.ft.com/intl/cms/s/0/5a5a68c6-e1d1-11df-b71e- http://www.euractiv.com/euro/european-semester-what-does-it-mea economic-and-monetary-union-aka-fiscal-compact. 8, 2012.http://www.ceps.eu/book/treaty-stability-coordination-and-governa http://www.euractiv.com/future-eu/meps-angered-franco-german-a and-legitimate-is-the-european-semester-increasing-role-of http://www.bruegel.org/publications/publication-detail/publi Working Paper Is the European Semester? Increasing IsEuropean Semester? of Role the the European Parliame europe/works/publication/the-making-of-a-new-treaty-six-rounds-of- FebruaryBrief.Notre 2012.http://www.notre-europe.eu/en/axes Europe, http://www.iadb.org/intal/intalcdi/PE/2010/06399.pdf. http://www.iadb.org/intal/intalcdi/PE/2010/06399.pdf. Foreign 2010. September Relations, Institutions CounciInternational GovernanceWorking and Paper. Global Program. Governing the Euro AreaGoverning Good and Bad Times in the Euro . 1st ed. Cambridge University ed. 2010. . 1st Cambridge Press, , December 2, 2011. http://www.ft.com/intl/cms/s/0/020802c4-1d07-11e1-a26a-, December 2,2011. , August 17, 2011. http://www.spiegel.de/international/europe/the-price-of- 17, , August The Making of a New Treaty: Six Rounds of Political BargainingThe Treaty:Making a New SixPolitical of of Rounds , no. 9 (September 2011)., no.9(September Journal of EuropeanJournal of Public Policy 33, no. 5 (September 2011): 33,no. 737–749. The Eurocrisis andthe UncertainThe Eurocrisis EuropeanFuture of Integration Journal of EuropeanJournal of Public Policy Ruling Europe: The Politics of the Stability and Growth andGrowth the Europe: Stability of Ruling The Politics Der SpiegelDer 51 EurActiv.com EurActiv.com Financial TimesFinancial , March 1,2011. , 14,no.7(2007): 1061–1078. . Oxford University Press, USA, 2011. University Press,. Oxford USA, 2011. , February 17, 2011. February , 16, no. 4 (2009): 508–526. 508–526. 16,no.4(2009): -the-european-parliament/. -the-european-parliament/. , February 4,2011. , EurActiv.com cation/612-how-effective- , October 27,2010. ozone-deal-news- pproach-news-502231. pproach-news-502231. n-analysis-498548. n-analysis-498548. e-and-germany-split- nt.” political-bargaining/. political-bargaining/. n.” ment Entail?” Entail?” ment ml. ml. /visions-of- Bruegel Bruegel lit over forlit Plans , June 10,2011. , June Journal of Journal of nd Legitimatend y.” nce- rom the . Policy Financial Financial l on l

. CEU eTD Collection Resolution of the European Council on Economic Policy Co-ordination in Stage 3 of StageEMU 3of in the and Policy on of EuropeanEconomic Co-ordination Resolution Council ——— ——— Puetter,a “GoverningInformally: the Uwe. EurogroupThe EMU of Role in “Preparing for European Council: MEPs to Vote to on MEPs Council: “Preparing Stability European Mechanism” for Van Rompuy, Herman. “Remarks by Herman Van Rompuy, EuropeVan Hermanby Van “Remarks President of Rompuy, the Herman. Pisani-Ferry, Jean. Spiegel Staff. “Divide and Rescue: Berlin LaysSpiegel Rescue:“Divide a Berlin and Staff. Groundwork Two-Spee for A Short FiscalGuide Two-pack? the to New Fis Compact? “Six-pack? EU Creation ofSchelkle, the Contentious Waltraud. “The Regulatory Fiscal in State Staff, SPIEGEL. “Merkel’s Plan Could Transform Could Plan Staff, the European“Merkel’s SPIEGEL.Union.”

“The Conclusions of the European“The March ofThe of the Conclusions March 24-25 Council European 2011”. Council, The European Council. “Statement by the Heads of State and Government of the Euroby and State A The Government “Statement European the Council. of Heads “The Treaty on European Union and the Treaty on the Functioning Unionand of “The the the European on Treaty Union”, onEuropean Treaty “Treaty Establishing the European Stability Mechanism (ESM) Sig European“Treaty the Mechanism Stability Establishing European Commission -European Economic Commission Governance Proposals Economic Governance berlin-lays-groundwork-for-a-two-speed-europe-a-784348.html. PRESS+20110314NEW15456+ITEM-002-EN+DOC+XML+V0//EN&language=EN. PRESS+20110314NEW15456+ITEM-002-EN+DOC+XML+V0//EN&language=EN. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT http://www.consilium.europa.eu/media/4609/declarationsn00400.en97.annex1.pdf. DecemberCouncil, 12,1997. on Treaty 109and109bArticles Growth Pact.” http://www.cepii.org/anglaisgraph/communications/pdf/2002/211102/pisani-fe Finance, May 2002. 00144feabdc0.html#axzz1w5CIBF5t. http://www.ft.com/intl/cms/s/0/6ba8bfa8-e2ba-11df-8a58- http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ 7,2010. June on EconomicForce Governance”,Following the Brussels, Task Meeting of the Second West European Politics . Spiegel . “Raising at Euro Poker the Table.” Stakes euro-zone-merkel-s-plan-could-transform-the-european-union-a-742565.html 31, 2011.http://www.spiegel.de/international/europe/an-economic-government- http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/e 20, 2011. http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/e 25,2010. European March Council, treaty_en.htm. treaty_en.htm. n.d. http://ec.europa.eu/economy_finance/articles/financial_operations lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:FULL:EN:PDF December 13,2007.http://eur- The Eurogroup: aSecretive How Finance Shape Ministers Euro of Circle , May 9,2011.http://www.spiegel.de/international/europe/divide-and-rescue- . Budgetary Policy in EMU, Design and Challenges.ministry. Budgetaryand Dutch EMU, in Design The of Policy Fiscal Discipline and Policy Coordination in the in Eurozone: and Discipline Policy Coordination AssessmentFiscal and Journal of EuropeanJournal of Public Policy . Manchester University Press, 2006. ManchesterUniversity Press, 2006. . 32, no. 4 (juuli 2009): 829–846. 32,no.4(juuli . Presidency Conclusions. Luxembourg: . Presidency European The Conclusions. 52 Financial TimesFinancial , March 14, 2012. March 14,2012. , 11, no.5(2004): 854–870. ned - European Commission”, ned - European Commission”, , October 28,2010. Spiegel OnlineSpiegel , n.d. , cal Governance.” nd the and Stability d Europe.” ec/114979.pdf. ec/114979.pdf. c/120296.pdf. c/120296.pdf. c/113563.pdf. c/113563.pdf. +IM- /2011-07-11-esm- Surveillance.” pean . an Council, . . rry.pdf. rry.pdf. for-the- Der , January , January rea”. The rea”. CEU eTD Collection andGovernance Coordination Treaty Signed onStability, Whyte, Philip. “Governance Reforms Leave the Euro’s Flawed Structure Inta “GovernanceWhyte, Leave Flawed Philip. Structure Euro’s Reforms the Pact’.”“Verhofstadt Tables ‘Competitiveness Alternative

Willis, Andrew.Willis, NeedForce Rompuy “Van Budgetary Task Agrees for Sanct Reform, “EuropeVerhofstadt, a Delors,Not a Plan P and Must Guy, Prodi. Romano Jacques Financial TimesFinancial news-502739. news-502739. http://www.euractiv.com/priorities/verhofstadt-tables-alternati 80e7-00144feab49a.html#axzz1vnEnOYe6. 80e7-00144feab49a.html#axzz1vnEnOYe6. May 21, 2010. http://euobserver.com/19/30124. May 21,2010.http://euobserver.com/19/30124. flawed-structure-intact-analysis-512268. April 19,2012.http://www.euractiv.com/euro-finance/governance-reforms-lea coordination-and-governance-signed?lang=en. 2012. http://www.european-council.europa.eu/home-page/highlights/treat , March 2, 2011.http://www.ft.com/intl/cms/s/0/3f8fc472-450a-11e0-, March 53 . The European Council, March. The 2, European Council, EurActiv.com ve-competitiveness-pact- , March 8,2011. , March ions”. EUobserver, ct.” y-on-stability,- EurActiv.com ve-euros- act.” ,