print

Make-up of fiscal integration in the European Union

Strezhneva M.V.,

Primakov National Research Institute of World Economy and International Relations (IMEMO), Russian Academy of Sciences, Moscow, Russia, m.strezhneva@imemo.ru

elibrary_id: 251783 | ORCID: 0000-0002-6561-4367 | RESEARCHER_ID: K-5421-2013

Article received: 2023.11.07. Accepted: 2024.01.09


DOI: 10.17976/jpps/2024.02.11
EDN: XOXAMT

Rubric: Orbis terrarum

For citation:

Strezhneva M.V. Make-up of fiscal integration in the European Union . – Polis. Political Studies. 2024. No. 2. P. 151-164. (In Russ.). https://doi.org/10.17976/jpps/2024.02.11. EDN: XOXAMT

Abstract

The present article aims to expose current trends in fiscal integration in the EU. Its milestones are brought forward, with particular attention being paid to the “NextGenerationEU” recovery plan, the latter constituting Brussels' key response to the socio-economic crisis caused by the COVID-19 pandemic. The article evaluates whether this program is going to remain a temporary phenomenon and to what extent it can define the “new normal” for the Economic and Monetary Union. Due to the Ukrainian crisis, the suggestions are spelled out more insistently to provide Brussels with “fiscal capacity” or permanent fiscal mechanisms that could repel emerging challenges and threats. The question that is considered here is whether we can expect such perpetual tools to become future elements of a full-scale fiscal union, bringing the euro area closer to the contours of an optimum currency area. The influence of European institutions as initiators of the integration process and the involvement of non-governmental players in it have received wider coverage in the specialized literature. Thus, in this case the role played in the process of fiscal integration by national governments is explored in more detail. For this purpose, the theory of multilevel governance and, in particular, its “dynamic” version are applied. It proves useful for identifying cases and ways in which governments can maintain control over decisions made within the integration system. The analysis confirmed that the Union has no plans to increase the issuance of the EU debt in order to replace national borrowing, or to transfer taxes from the national to the supranational level. It can be expected that in the future more active EU borrowing in financial markets will be accompanied by the measure of institutional flexibility which has now been achieved due to an intergovernmental compromise. At the same time temporary tools like NGEU and SURE are unlikely to lead to the fiscal union being completely federalized.

Keywords

fiscal integration, fiscal union, multilevel governance, optimum currency area, federalization, European stability mechanism, Recovery and Resilience Facility, the EU's own resources .

Bilbiie, F., Monacelli, T., & Perotti, R. (2021). Fiscal policy in Europe: controversies over rules, mutual insurance, and centralization. Journal of Economic Perspectives, 25(2), 77-100. https://doi.org/10.1257/jep.35.2.77

Buti, M., & Messori, M. (2022). The role of central fiscal capacity in connecting the EU's domestic and global agendas. STG Policy Papers, 2022/13. https://cadmus.eui.eu/bitstream/handle/1814/74593/ PA_2022_13_STG.pdf?sequence=5&isAllowed=y

Dermine, P. (2020). The EU's response to the COVID-19 crisis and the trajectory of fiscal integration in Europe: between continuity and rupture. Legal Issues of Economic Integration, 47, 338-341. https://doi.org/10.54648/leie2020020

Fasone, С. (2023). EU Budget and Spending Powers. In Hinarejos, A., & Schutze, R. (Ed.), EU Fiscal Federalism: Past, Present, Future (pp. 233-262). Oxford: Oxford University Press. https://doi.org/10.1093/oso/9780198833284.003.0010

Hodson, D. & Howarth, D. (2023). The EU's recovery and resilience facility: an exceptional borrowing instrument? Journal of European Integration, 46(1) 69-87. https://doi.org/10.1080/07036337.2023.2243378

Hooghe, L. & Marks, G. (2001). Multi-level governance and European integration. Boulder: Rowman & Littlefield.

Howarth, D. & Quaglia, L. (2021). Failing forward in economic and monetary union: explaining weak eurozone financial support mechanisms. Journal of European Public Policy, 28(10), 1555-1572. https://doi.org/10.1080/13501763.2021.1954060

Jachtenfuchs, M. (2010). The institutional framework of the European Union. In Enderlein, H., Walti, S., & Zurn, M. (Ed.), Handbook on Multi-level Governance (pp. 203-213). Cheltenham: Edward Elgar. https://doi.org/10.4337/9781849809047.00020

Jones, E. (2021). Next generation EU: Solidarity, opportunity and confidence. Sieps. https://www.sieps.se/en/publications/2021/next-generation-eu-solidarity-opportunity-and-confidence/

Jordan, A. (2001). The European Union: an evolving system of multi-level governance... or government? Policy & Politics, 29(2), 193-208. https://doi.org/10.1332/0305573012501305

Kennen, P. (1969). The theory of optimum currency areas: an eclectic view. In Mundell, R., & Swoboda, A. (Ed.), Monetary Problems of the International Economy (pp. 41-60). Chicago: The University of Chicago Press.

Littoz-Monnet, A. (2010). Dynamic multi-level governance - bringing the study of multi-level interactions into the theorising of European integration. European Integration Online Papers (EIoP), 14, 01. http://eiop.or.at/eiop/texte/2010-001a.htm

McKinnon, R.I. (1963). Optimum currency areas. The American Economic Review, 53(4), 717-725. https://www.experimentalforschung.econ.uni-muenchen.de/studium/veranstaltungsarchiv/sq2/mckinnon_aer1963.pdf

Moravcsik, A. (1993). Preferences and power in the European community: a liberal intergovernmentalist approach. Journal of Common Market Studies, 31(4), 473-524. https://doi.org/10.1111/j.1468-5965.1993.tb00477.x

Truchlewski, Z., Schelkle, W., & Ganderson, J. (2021). Buying time for democracies? European Union emergency politics in the time of COVID-19. West European Politics, 44(5-6), 1353-1375. https://doi.org/1 0.1080/01402382.2021.1916723

Wozniakowski, T.P. (2016). Towards fiscalization of the European Union? The US and EU Fiscal unions in a comparative historical perspective. Berkeley: Institute of European Studies. https://escholarship.org/uc/item/667699tw

Zgaga, T. (2023). The fiscal sovereignty of the European Union after the COVID-19 pandemic and the war in Ukraine. Journal of European Integration, 45(4), 703-709. https://doi.org/10.1257/jep.35.2.77

Busygina, I.M., & Filippov, M.G. (2020). Changing incentives and strategies of national governments in multilevel governance across the European Union. Polis. Political Studies, 5, 148-163. (In Russ.) https://doi.org/10.17976/jpps/2020.05.11

Butorina, O.V. (2013). European Union after the crisis: decline or renaissance? MGIMO Review of International Relations, 4(31), 71-81. (In Russ.) https://doi.org/10.24833/2071-8160-2013-4-31-71-81

Fursov, A.A. (2009). The evolution of the scientific realism. Proceedings of the Voronezh State University, Series: Philosophy, 1, 109-129. (In Russ.)

Grigoriev, I.S., Dekalchuk, A.A., & Gubaydullina, S.Sh. (2021). Multilevel governance and resource exchange: votes, budgets, information. Polis. Political Studies, 1, 169-181. (In Russ.) https://doi.org/10.17976/jpps/2021.01.12

Kaploun, V. (2019). Stop understanding “power” through the “state”: gouvernementalitd, governmentality studies, and the fate of Michel Foucault's analytics of power in Russian translations. Logos, 29(2), 179-220. (In Russ.) https://doi.org/10.22394/0869-5377-2019-2-179-218

Mihaylov, D.Yu. (2023). Nicolas Sarkozy and the Eurozone crisis: federalisation of the EU budget and finance sector. Contemporary Europe, 5, 72-83. (In Russ.) https://doi.org/10.31857/S0201708323050066

Sidorova, E.A. (2021). Fiskal'naya integratsiya v Evropeiskom soyuze [Fiscal integration in the European Union]. Moscow: IMEMO RAN, Ves' Mir. (In Russ.)

See also: