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Integration and Disintegration: Two-Level Games in the EU

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Diverging Capitalisms

Abstract

The centrifugal tendencies of the EU make us aware that our theories of European integration were not formulated to explain disintegration. Furthermore, attempts to explain disintegration, notably the new intergovernmentalism, portray these tendencies as idiosyncratically European and dysfunctional. But we can observe disintegration and collective action failure elsewhere, and not all new institution-building is dysfunctional. This chapter interprets recent EU institution-building and its limits in light of the concept of two-level games , both in its classic instrumental version of Putnam (1988) and in a more recent normative version developed by Bellamy and Weale (2015). Framing the new economic governance of the EU as the result of two-level games can help us see the specific collective action problems of an incomplete union and the general problems of international cooperation.

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Notes

  1. 1.

    For references and a critique of this Whig history, see Parsons and Matthijs (2015).

  2. 2.

    Although, to be fair, neo-functionalism has tried to overcome this theorising of one case early on (Rosamund 2000: 68–72).

  3. 3.

    For details on the latter see Lucia Quaglia’s chapter.

  4. 4.

    It was published as the Four Presidents report (Van Rompuy et al. 2012) and quickly shelved by the European Council; its successor, the Five Presidents report (Juncker et al. 2015), fared no better.

  5. 5.

    The key word for these demands was ‘flexibility’, meaning that Cameron wanted the freedom to both slap higher (sic) capital requirements on UK-resident banks and to exempt banks from tighter bonus rules of the EU (see below on the banking union).

  6. 6.

    Thompson (2017) argues that, in a longer time horizon, the beginning of the end for British membership came with the creation of the euro. This conclusion does not necessarily contradict my analysis although the two-level game framework has inherently more space for contingencies than her structural analysis.

  7. 7.

    One can legitimately doubt that deterrence in fiscal surveillance works, not because incentives for moral hazard are so powerful, but because a fiscally unsustainable situation may not be due to reckless behaviour of governments. When a private sector boom ends, no democratically elected government can let households, firms and banks simply go bust; it will have to come to their rescue, irrespective of who is to blame (Rodrik and Zeckhauser 1988).

  8. 8.

    There was also the real threat of a domino effect among vulnerable economies: for instance Spanish banks were the largest creditors of Portugal (€77bn). Data is from BIS (2010: 18–19), US $ amounts converted at a historical (interbank) exchange rate of 0.7 $/€.

  9. 9.

    It stands to reason whether the guarantors could have asked banks to share more in the pain, given that domestic opinion was favourably disposed towards seeing bankers ‘bashed’. While even the Obama administration urged the Council of heads of state to bail out Greece (Barber 2010), an orderly write-down of Greek debt , as the IMF recommended, could have bailed-in banks earlier (Mabbett and Schelkle 2015: 524–528).

  10. 10.

    Source: IMF data on total credit outstanding and on historical SDR rates, accessed October 15, 2016.

  11. 11.

    The Commission fund EFSM contributed €22.5bn, the IMF €22.5bn; the predecessor to the ESM, the EFSF €17.7bn; the Irish Treasury and Pension Fund €17.5bn; UK €3.8bn, Sweden €0.6bn, Denmark €0.4bn.

  12. 12.

    The ECB (2015: 88) includes in this category the five programme countries, Italy and Slovenia.

  13. 13.

    This strategy floundered when Theresa May lost her majority in the House of Parliament after the June 2017 elections.

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Authors and Affiliations

  1. European Institute, London School of Economics, London, UK

    Waltraud Schelkle

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  1. Waltraud Schelkle
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Correspondence to Waltraud Schelkle .

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  1. Centre Etudes Europeennes, Universites Science Politique, Paris, France

    Colin Hay

  2. Political Economy Centre, University of Manchester, Manchester, UK

    Daniel Bailey

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Schelkle, W. (2019). Integration and Disintegration: Two-Level Games in the EU. In: Hay, C., Bailey, D. (eds) Diverging Capitalisms. Building a Sustainable Political Economy: SPERI Research & Policy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03415-3_6

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