Centrifugal forces in a hegemonic environment: the rise of small-state coalitions in the Economic and Monetary Union

Abstract

A hegemonic power can guarantee the status quo in an international economic system. However, domestic or international changes may unsettle a hegemon’s priorities. In such phases, smaller states benefiting from the existing system may fear that the hegemon will fail to keep the system stable. How do they react if they lose trust in the hegemon’s ability or will to maintain the status quo? This article argues that in such cases, free riding becomes less rewarding. Therefore, smaller states build publicly visible coalitions to ‘voice’ their preferences. Applying this argument to the role of small ‘creditor states’ in the Economic and Monetary Union (EMU), the article draws on original in-depth interviews to analyze the ‘New Hanseatic League’ as a strategy to defend the present euro regime and counterbalance the Franco–German tandem. By elaborating and tracing a fine-grained causal mechanism, the article thus explains the emergence of vocal small-state coalitions in a hegemonic environment.

Small State Strategy in Practice: The Formulation and Execution of Danish Theories of Success in the United Nations Security Council, 2005–2006

“…A niche shelter strategy in an international organization may be to use a relative advantage providing the state with specific competence or international recognition; this may be turned into norm-entrepreneurship or other forms of influence (Long, 2017, 184-185). Third, small states may build alliances among each other to gain bargaining power or to act as mediators among great powers (Deitelhoff & Wallbott, 2012;Bueger & Wivel, 2018;Schoeller, 2022). In fact, the small state may even be able to generate power through diplomatic interactions if its diplomats are considered competent by other diplomats in the international organization (Adler-Nissen, 2015).…”