The European Stability Mechanism and Domestic Preference Formation During the Eurocrisis: The Role of Non-Governmental Actors

Abstract

This article addresses a gap in the Eurocrisis literature by investigating the role of important socio-economic actors, such as representatives from organised business and labour, as well as parliamentarians in determining governmental preferences on the European Stability Mechanism during the Eurocrisis and in more recent discussions on the future of the European Stability Mechanism. It is argued that the study of the roles of key interest groups, parliaments and public opinion adds important weight to existing studies and frameworks. It speaks particularly of studies which suggest that governments enjoyed important leeway in forming their preferences on the European Stability Mechanism and were driven predominantly by internal technocratic advice and their integration into EU-level structures of bureaucratic cooperation. The findings show that initial governmental preferences were not challenged by important interest groups and that where they were challenged by parliamentary actors, concessions did not affect the original principles of the European Stability Mechanism design.

The Study of National Preference Formation in Times of the Euro Crisis and Beyond

“…The country sample includes three debtor countries, (Spain, Portugal, and Ireland), four creditor countries, (Austria, the Netherlands, Finland and Estonia), one small economy with a vulnerable banking sector (Slovenia) and Slovakia, a member state which had seen its government collapse on the issue of the ESM’s predecessor, the European Financial Stability Facility. Bojovic et al (this issue) suggest that in all these countries, governments had significant leeway in forming their preferences on the ESM and were driven predominantly by internal technocratic advice and their integration into EU-level structures of bureaucratic cooperation – findings that match the case studies on France and the United Kingdom. Moreover, Bojovic et al (this issue) show that initial governmental preferences were not challenged by important interest groups and that in those instances where parliamentary actors asserted themselves, the concessions they received did not affect the original principles of ESM design.…”

“…Fontan and Saurugger (this issue) examine preference formation during the euro crisis in France, Kassim et al (this issue) look at how preferences were formed in the United Kingdom, the largest non-euro zone EU member state, and Degner and Leuffen (2019) provide an in-depth analysis of preference formation in Germany, the largest euro zone member state. Taking a transnational approach, Bojovic et al (this issue) study the role of socio-economic interest groups and other non-executive actors in preference formation in nine euro zone countries in relation to the creation of the European Stability Mechanism (ESM). The contributions critically examine with varying emphasis whether or not national governments were insulated from or exposed to domestic politics, transnational processes and behavioural norms as they formed their preferences on crisis-induced EMU reform.…”

Executive power in European Union politics

“…Our analysis offers a comprehensive comparative investigation of all EU countries in preference formation and includes the inquiry of domestic and external actors. In terms of empirical coverage this goes beyond the existing literature, which provides country case studies (e.g., Fontan & Saurugger, 2020) or investigates exclusively external or domestic influence (Bojovic et al, 2020;Csehi & Puetter, 2021). Similar to Figure 1, Figure 2 ranks the countries according to their overall position-taking in EMU reform.…”

“…However, only little research has investigated the capacity of parliaments to actually shape the preferences of governments. Studies that looked at the actual influence of parliaments or other domestic groups found that parliaments had higher influence on policy positions than other domestic actors, but that all actors were relatively insignificant compared to governments (Bojovic et al., 2020). Our actor‐centered theoretical approach puts governments central stage and theorizes their incentives to involve additional actors.…”

The Covid-19 Pandemic and the Eurozone: A Reconnaissance of E.U. Financial Assistance to Counteract the Coronavirus’s Perfect Storm

“…The equity and debt capital of the ESM can be used either to directly provide "conditional" loans to the Eurozone Country requesting financial assistance, or to recapitalize banks and financial institutions residing in the Country (Smeets, Jaschke & Beach, 2019) The financial assistance granted by ESM to the Countries of the Eurozone is subject to a strict conditionality regime (Bojovic, Munta & Puetter, 2020) in order to avoid risks of moral hazard. The main conditions that must be met to qualify for financial assistance are: i) assessment of the extraordinary nature of the Country's crisis by the European Commission and the ECB, as well as verification of the existence of possible risks of contagion to other Countries of the Eurozone; ii) estimation of the Country's real financial requirement; iii) verification of the sustainability of the Country's public debt; iv) ratification of a memorandum of understanding between the beneficiary Country and the ESM, which lists the structural reforms in the fiscal and economic spheres that the Country undertakes to implement within pre-established deadlines in exchange for EU financial assistance; v) ratification of the European Fiscal Compact by which strict limits on public spending and debt are established.…”