No abstract

In recent years, the pooling of authority among the member states of the euro area has intensified, expanding the remit of the Council, Commission and ECB. While it is commonly thought that large states dominate these institutions, a growing literature emphasizes the ability of small states to pursue their interests too. We explore whether the empowerment of euro area institutions was associated with relative net gains for small member states over large ones, and with relative losses during the euro crisis. We estimate the relationship between the relative amount of resources of different institutions, and the distribution of gains among members, throughout 1999-2016. We find that empowering the Council, the Commission or the ECB provides relative gains to small member states, although not against Germany.

This study is motivated by the puzzle of diminishing gains in the European Union budget bargaining for governments with a Eurosceptic domestic audience, even as Euroscepticism is increasingly represented in national legislatures. Engaging literature on fiscal federalism in the European Union and the institutionalist politics of its budgetary process, we argue that European integration diminishes the ability of member states’ governments to leverage Euroscepticism to extract concessions from the European Union budget. This is because Euroscepticism is becoming less exceptional, and greater differentiation in integration reduces the will to reward those seen as systematically less committed to integration. Running panel-corrected standard errors regressions on Operating Budgetary Balances since 1977, we find that in intergovernmental bargaining, domestic popular Euroscepticism is an advantage, but parliamentary Euroscepticism is not.