Negotiating the Fiscal Compact: EU Institutional Reform and the New Intergovernmentalism

The euro crisis has triggered a range of institutional reform processes. Yet, rather than being concentrated in a single substantive act of treaty change institutional adjustment occurred in a series of events between 2010 and 2014. These incremental changes reflected the complex interplay that arose between functional pressures at the European level and the resistance towards competence transfers to the supranational level within the EU’s domestic arenas. This paper uses the analytical framework of new intergovernmentalism to run an in-depth case study on one of the episodes that impacted on the European Union’s economic governance framework: the Treaty on Stability, Coordination and Governance (TSCG or Fiscal Compact). It aims to understand the practical mechanisms of the new intergovernmentalism at a moment of major institutional reform. The study covers the time period that starts with the October, 2011 European Council meeting and concludes with the coming into force of the TSCG in January, 2013. It demonstrates how the interplay between individual member states, the European Council, the Eurogroup, and the Eurogroup Working Group influenced major decisions regarding the future roles of the EU’s main supranational and intergovernmental institutions, the participation of non-euro area member states in Euro Summits and the process of economic policy coordination. It interprets the Fiscal Compact as a case of attempted treaty reform which heavily relied on the steering role of the European Council president and euro area technocratic elites while the Commission only played a limited role in proposing alternative institutional options.