Germany's Institutional Power and the EMU Regime after the Crisis: Towards a Germanized Euro Area?

Abstract

In this article we examine the constraints on Germany's influence over reforms of the Economic and Monetary Union's (EMU) macroeconomic governance regime. Drawing on the insights of historical institutionalism, we show that the German government's control over the process is constrained by the increased sunk costs of European monetary integration and the unintended negative spillovers from its management of the eurozone crisis. While the German government attempted to promote the domestic societal interests underpinning its creditor preferences by deflecting the burden of macroeconomic and institutional adjustment onto the debtor countries, negative feedback loops linked to the pursuit of these preferences induced it to accept a less orthodox and increasingly accommodative central bank to make the EMU sustainable.

The politics of (de-)politicization and venue choice: A scoping review and research agenda on EU financial regulation and economic governance

“…Due to a growing distrust between Northern and Southern member states, EMU has ended up as a highly centralized policy regime where the creditor member states have come to play a domineering role with regard to debtor member states (Fabbrini 2016). Moreover, the dominance of certain member states, most notably Germany, has significantly shaped decision-making processes throughout the crisis (Saurugger and Terpan 2016;Steinberg and Vermeiren 2016). Institutional pressures from the EU have pushed the political economies of Southern European member states towards a (German-inspired) stability oriented approach to macroeconomic policy and a (Anglo-Saxon-inspired) market-friendly approach to the regulation of financial services Van der Pijl et al 2011).…”

(Un)limited influence of Germany in Eurozone: Survival of common currency from the perspective of historical institutionalism

“…58 Moguće, ključni uvid teorije istorijskog institucionalizma u krizu u Evrozoni je da se akteri (države članice), suočeni sa izmenjenim strukturalnim uslovima, opredeljuju da delaju na osnovu evaluacije troškova i koristi prilagođavanja novonastalim okolnostima, u prvom koraku, i njihovim poređenjem sa troškovima i koristima u slučaju gubitka onoga što su uložili u pređašnji aranžman, u drugom koraku. 59 Ove troškove i koristi ne bi trebalo tumačiti u striktno ekonomskom smislu i poistovećivati sa računicom (procenom) koliko bi koštao odustanak od monetarne unije. Više od šest decenija evropske nacionalne države ne znaju za drugi put, osim za deljenje političkog i ekonomskog prostora odlučivanja sa zajedničkim evropskim institucijama.…”

The paradoxes of legitimate EU leadership. An analysis of the multi-level leadership of Angela Merkel and Alexis Tsipras during the euro crisis

“…This identification and the passions it stirs obscure the fact that Merkel was often the most conciliatory German voice and has met her partners halfway on some crisis measures like the bailout funds, measures that fly in the face of ordoliberal thought (Schoeller 2016;Steinberg and Vermeiren 2016;Van Esch 2014). Even more devastating for her pan-European legitimacy, however, are the associations of Merkel's crisis leadership with WWII, that were fuelled by the Greek leader Alexis Tsipras in particular (see below).…”