EU Fiscal Federalism - A legitimate crisis solution
Montesquieu Institute Den Haag – Masterclass Programme – Final Paper
31 Mai 2012
EU Fiscal Federalism – A Legitimate Crisis Solution
Jonas Hirschnitz
Maastricht University, B.A. European Studies candidate
For: Montesquieu Institute, Den Haag
J.Hirschnitz@student.maastrichtuniversity.nl
Final Version: 31.05.2012
1
Montesquieu Institute Den Haag – Masterclass Programme – Final Paper
31 Mai 2012
Introduction
1. What is the Euro-Crisis? – Finding the gist
2. Does an “Optimal Solution” Exist?
3. EU Initiatives and Shortcomings
4. A Fiscal Federalist Solution?
a. Fiscal Federalism
b. Fiscal Federalist Structures as Remedy Facilitator & the Legitimacy
Nexus
5. The Legitimacy Question
Conclusion
2
Montesquieu Institute Den Haag – Masterclass Programme – Final Paper
31 Mai 2012
Introduction
It has already been four and a half years since the financial crisis broke out in the United
States and triggered what today we refer to as the “Eurocrisis”. Since then, the EU has found itself in countless struggles, where at times even its further existence seemed questionable. If one thing had become clear, it was that the EU was even less able to govern than it had appeared in the previous years. When on May 1, 2010 the first rescue package for Greece was adopted, the country had already been in turmoil for half a year. The downgrading of its credit rating made loans much more expensive, leading to an exacerbation of the situation. As the rescue measures were rather ex post remedies - which on top of this were drafted in a minimalist way – insecurity in the markets was not effectively calmed down.
Since the first measures have been decided upon, the EU has excelled in governing with an unprecedented speed and efficiency. It has extended the original bail-out fund EFSF and even created a permanent mechanism, the ESM. Furthermore, the Fiscal Compact Treaty has extended the competences of the EU, particularly the Commission’s, and
31 Mai 2012
EU Fiscal Federalism – A Legitimate Crisis Solution
Jonas Hirschnitz
Maastricht University, B.A. European Studies candidate
For: Montesquieu Institute, Den Haag
J.Hirschnitz@student.maastrichtuniversity.nl
Final Version: 31.05.2012
1
Montesquieu Institute Den Haag – Masterclass Programme – Final Paper
31 Mai 2012
Introduction
1. What is the Euro-Crisis? – Finding the gist
2. Does an “Optimal Solution” Exist?
3. EU Initiatives and Shortcomings
4. A Fiscal Federalist Solution?
a. Fiscal Federalism
b. Fiscal Federalist Structures as Remedy Facilitator & the Legitimacy
Nexus
5. The Legitimacy Question
Conclusion
2
Montesquieu Institute Den Haag – Masterclass Programme – Final Paper
31 Mai 2012
Introduction
It has already been four and a half years since the financial crisis broke out in the United
States and triggered what today we refer to as the “Eurocrisis”. Since then, the EU has found itself in countless struggles, where at times even its further existence seemed questionable. If one thing had become clear, it was that the EU was even less able to govern than it had appeared in the previous years. When on May 1, 2010 the first rescue package for Greece was adopted, the country had already been in turmoil for half a year. The downgrading of its credit rating made loans much more expensive, leading to an exacerbation of the situation. As the rescue measures were rather ex post remedies - which on top of this were drafted in a minimalist way – insecurity in the markets was not effectively calmed down.
Since the first measures have been decided upon, the EU has excelled in governing with an unprecedented speed and efficiency. It has extended the original bail-out fund EFSF and even created a permanent mechanism, the ESM. Furthermore, the Fiscal Compact Treaty has extended the competences of the EU, particularly the Commission’s, and
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