National power games and structural failures in the European macroeconomic governance

Abstract

The unfolding of the euro area crisis has revealed fundamental political, economic and legal shortcomings of the macroeconomic governance in the Union. This contribution first demonstrates that the original legal architecture of the EMU has proven conducive to accelerating imbalances produced by the political and economic dynamics of the euro. It then describes how the legal underpinnings of the EMU fell victim of the accelerating crisis and proceeds to discuss the legal countermeasures recently agreed at the EU level, from rescue funds to the six-pack reform and the Treaty on Stability, Coordination and Governance. The article argues that all those measures essentially follow the same intergovernmental governance paradigm which had previously proven entirely inefficient. The euro area falters, because it is - just as is the macroeconomic picture - not a real community, but an aggregate outcome of national policies exposed to substantially destabilizing forces of the monetary union. The text wraps up with a conclusion that only when the governance paradigm is entirely overhauled may the crisis be contained.