To Tie Each Other Hands: Explaining the Preferences of Member States to Increase the National Ownership of European Fiscal Rules in the Period 2010-2013

In my paper, I will inquire an important part of the negotiations of the reform of the Economic and Monetary Union after the eurozone crisis: the bargain occurred between the period 2010-2013 in which Member States decided to increase the national ownership of European fiscal rules. As a matter of fact, through the Six-Pack, the Fiscal Compact, and the Two-Pack, Member States agreed to implement institutional or legal instruments in their national legal systems to make the European requirements on national budgetary policy self-enforcing. These agreements required Member States to create Independent Fiscal Institutions (IFIs) at the national level, to enshrine in national law – preferably at the constitutional level – the debt brake, i.e. the equilibrium of national budgets, and to implement national automatic correction mechanisms to reduce the deviations from Medium Term Objectives. But which factors were most crucial in influencing the preferences of member states on these issues? Did interdependence play a major role, rather than path dependency with domestic institutions, pressures from the sovereign bond market, or the attitude of public opinion? To give an answer to my question, I will look at how national preferences were formed in the eurozone Member States by selecting case studies which are characterised by strongly different independent variables. By conducting personal interviews to the main characters of this process and analysing publicly available minutes and press releases, it will be possible to shed light on a crucial phase of the evolution of the Economic and Monetary Union. To account for the role of domestic actors in the phase of preference formation, I will use a theoretical framework modelled after Moravcsik’s Liberal Intergovernmentalism and Putnam’s “two-level games”. Understanding why member states decided to increase the national ownership of the European fiscal rules is extremely relevant, as these provisions reduced the role of national politicians in budgetary policies and helped to enforce the highly contested provisions on austerity which bolstered the electoral success of anti-EU populist parties. This paper will try to contribute to the literature on European Integration after the eurozone crisis by inquiring a specific case which had a relevant impact on how democracy works at the national level.