Policy-Making in EMU: The Long Shadow of German Hegemony

This paper aims to exploring the impact of German hegemony on EMU governance. Recent literature has characterized Germany as hegemon in the EU, but little has been written about how this role changes the governance of EMU. This paper attempts to fill this gap by exploring both the underpinnings of German preferences and their impact on EMU policy-making. The two case studies in the paper are the EU banking union and the Greek bailout negotiations. The paper establishes a two-sided argument. On the one hand, the normalization of Germany affects policy-making in EMU. The government is willing to engage in hard bargaining what changes the consensual nature of EMU policy-making. At the same time German preferences remain distinct. German preferences match the material interests arising from its export-dominated economic structure and the dominance of ordoliberal ideas. As the two case studies reveal, this configuration of interests and ideas leads to preferences which are shared by few other member states. Policy-making in EMU is therefore complicated by a German hegemon who has both normalized in its readiness for hard bargaining, but remains distinct in its policy positions.