Institutional Knots and EU Economic Governance

The EU has always made decisions by a complex mix of “community method” and intergovernmentalism. It is arguable, however, that there has been a substantial shift toward intergovernmentalism since Maastricht started to expand the EU’s involvement in national lives. EU decisions in the Great Recession and the Eurozone crisis have been made predominantly by intergovernmental methods, but in two very different ways. Immediately after Lehman Brothers there was a moment of “coordinated” intergovernmentalism, when EU members together agreed on broad internationally defined goals about bailouts, stimulus plans, and financial sector reforms, after which each then pursued these goals in the specific ways that its national government deemed appropriate. The Eurozone crisis has been different, however. It has involved “cooperative” intergovernmentalism in which Eurozone and EU members have had to make new decisions through multilateral bargaining that then were on each and all. “Cooperative intergovernmentalist” processes have contributed to slow decision-making and, sometimes, faulty decisions, in which the preferences of more powerful member states were imposed on others. The results, at least in the short term, have been harmful to the EU’s legitimacy.