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The IMF, the Eurozone Crisis and the EU: Lessons Not Learned?

European Union
Institutions
Constructivism
IMF
Eurozone
Dimitris Tsarouhas
Virginia Tech
Dimitris Tsarouhas
Virginia Tech

Abstract

The EU/IMF cooperation in the form of the Troika to support struggling Eurozone economies is a defining feature of the Eurozone crisis, but its consequences are far-reaching. The role and function of the two organizations has been changing over the last few years in multiple directions: • The EU now accepts the Fund in its “internal matters”; • The IMF has re-emerged as a powerful international actor with an authoritative voice on (not merely monetary but also) economic policy-making These, in turn, lead to a series of key research questions: • Has policy diffusion been practiced through the EU/IMF partnership in Europe, and towards which direction? • Has the EU gained (or lost) leverage through its partnership with the IMF in terms of technical capacity and assistance development? The innovative nature of this paper lies in examining the EU/IMF relationship by assessing diffusion practices between major international organizations (Broome 2013). Utilizing an approach that brings together comparative political economy, international relations and public policy, this paper enquires as to the extent to which diffusion practices have been generated, and then implemented, through the interactions of these two organizations. International Organizations, Policy Diffusion and the Role of Norms There are broadly two schools of thought regarding the role of IOs, associated with rationalist and constructivist approached respectively. The former sees IOs as subject to near-total control by their powerful member states. IOs can only influence policy outcomes to the extent that their members agree to delegate authority to them and/or profit from such delegation (Pollack 1997; Hawkins et al., 2006; Vaubel 2006). Constructivist scholarship argues that IOs, far from being passive recipients of orders from principals, can have an influential say in policy formation (Barnett and Finnemore 2004; Broome and Seabrooke 2012). One of the ways through which such influence is exercised is through policy diffusion (Elkins and Simmons 2005; Braun and Gilardi 2006). The EU-IMF relationship and its aftermath: a fresh approach Relatively few scholars have sought to explicitly examine the EU/IMF partnership in the crisis context (but see Seitz and Jost 2012; Rodgers 2012; Lütz and Kranke 2014; Schwarzer 2015; Hodson 2015). I adopt a constructivist institutional (CI) approach (Clift 2018) that places policy ideas and their diffusion among key actors at the heart of the analysis. The paper relies on both primary and secondary sources, document and textual analyses complemented by semi-structured interviews conducted primarily with IMF staff involved, directly or indirectly, with the EU financial assistance programs.