Suchergebnisse

AbstractThis article examines national parliamentarians' approval of the increased budgetary capacity of theEuropeanFinancialStabilityFacility (EFSF) in autumn 2011. Following the analysis of vote outcome and plenary debates in 11 euro states, it is found that the financial position of a state (creditors versus debtors) does not explain the patterns of support and opposition. Rather, two other factors account for these differences: Euroscepticism, and the government and opposition cleavage. In particular, whereas EuroscepticMPsvoted and argued against theEFSF, the parliamentary majorities supported it. Surprisingly, although the legal basis of theEFSFdraws on solidarity among the European Union Member States, the supporters of theEFSFdid not refer to this principle in their speeches but rather to pragmatic considerations such as national economic interests.

636Economics, trade and finance — European Financial Stability Facility — European Monetary Union — Fiscal sovereignty — Conditionally — Public debt — Bailout — Fiscal transfers — Guarantees — Debt restructuring — European Union — International Monetary FundState — Self-determination — Sovereignty — Irreducible minimum of sovereignty — Control over budget — Constitutional limitations on the transfer of budgetary powerTreaties — Constitutional limitations on treaty-making power — Transfer of powers by States to intergovernmental and other transnational authorities — Whether compatible with constitutional prerogatives of national parliament — The law of Germany

This working paper examines the institutional reaction to the sovereign debt crisis in Europe. The response has so far consisted of three new financial mechanisms: the European Financial Stabilisation Mechanism, the European Financial Stability Facility, and the European Stability Mechanism. These have each a different legal basis and a specific regime. They display a varying degree of compatibility with EU law. The institutional quick fix employed by Eurozone countries was essentially a resort to private law and traditional international law techniques. This constitutes a setback from the evolution of the EU, at the expense mainly of the European Parliament and the Court of Justice.

This article analyses the development of financial assistance in the Eurozone since 2010. It argues that reforms to instruments and bodies, notably the European Financial Stability Facility, the European Stability Mechanism, and the current Covid-19 recovery fund, are best explained by a re-occurring pattern of negotiations between potential creditors and debtors based on common Eurozone interests and national cost-benefit considerations. Building on a liberal intergovernmentalist approach, this article shows how this pattern influenced the step-by-step reform of financial assistance in the Eurozone. The threat to Eurozone stability served as a constant factor encouraging member states to expand and deepen the assistance formula. Creditors' cost-benefit considerations were key for retaining disincentives, a limited liability for common debt, and intermediary borrowing and lending within the financing design. However, on the back of common Eurozone interests, debtors were able to push for an increase in assistance, an expansion of assistance into areas of banking sector support, and a softening of moral hazard elements in the more recent Covid-19 pandemic. Due to creditors' continuous insistence on safeguards and limited burden-sharing, reform outcomes were repeatedly unable to resolve the difficulties at hand.

The debt crisis and the escalation of Greece's fiscal problems in 2010 forced European leaders to set up new institutions to rescue ailing eurozone countries. The European Commission endorsed a German proposal for establishing an International Monetary Fund-style rescue fund, the European Monetary Fund (EMF). As a result the European Financial Stability Facility (EFSF) created in May 2010 is to be transformed into a permanent rescue fund, the European Stability Mechanism (ESM) from 2013 on. Although these steps seem to have been necessary to deal with sovereign debt, several questions emerge concerning efficacy, feasibility, and moral hazard. There is strong opposition to the permanent rescue fund mainly among economists of the Northern European countries who argue that certain (Greece and some Southern European) countries' irresponsible spending and the profligacy of their governments have resulted in the government debt crisis. According to them these countries deserve strict punishment because their insolvency is due to their own mistakes, and financial assistance would be just adding fuel to the flames. This analysis lacks understanding or ignores the fact that the problem lies much deeper: in the fundamental problems of a monetary union. These problems and all their implications will hold until the European Monetary Union (EMU) has been transformed into a political union. The long-term stability of the eurozone, however, depends a lot on the attitude of the members, which would derive intrinsically from the nature of the union after transition. It is not the severity of the punishment that really matters. Keywords: debt crisis, European Monetary Fund, European Stability Mechanism, European Financial Stability Facility, moral hazard

This article analyses the development of financial assistance in the Eurozone since 2010. It argues that reforms to instruments and bodies, notably the European Financial Stability Facility, the European Stability Mechanism, and the current Covid-19 recovery fund, are best explained by a re-occurring pattern of negotiations between potential creditors and debtors based on common Eurozone interests and national cost-benefit considerations. Building on a liberal intergovernmentalist approach, this article shows how this pattern influenced the step-by-step reform of financial assistance in the Eurozone. The threat to Eurozone stability served as a constant factor encouraging member states to expand and deepen the assistance formula. Creditors' cost-benefit considerations were key for retaining disincentives, a limited liability for common debt, and intermediary borrowing and lending within the financing design. However, on the back of common Eurozone interests, debtors were able to push for an increase in assistance, an expansion of assistance into areas of banking sector support, and a softening of moral hazard elements in the more recent Covid-19 pandemic. Due to creditors' continuous insistence on safeguards and limited burden-sharing, reform outcomes were repeatedly unable to resolve the difficulties at hand.