Eurozone Crisis and European Integration: Functional Spillover, Political Spillback?

This paper analyzes the decisions taken since the start of the financial and economic crisis in the European Union and assesses them in the light of the traditional debates of integration theories. It discusses the key characteristics of the process of responding to the crisis since 2008–2009 when the problems of Greece have been increasingly publicized, the main actors involved, and provides an interpretation of the key decisions dealing with the crisis and their implications in terms of further European integration. First assessing these events in the light of the neofunctionalist and liberal intergovernmentalist debate, it then presents a framework linking the accounts of the integration process with a domestic politics approach. In this respect it contributes to the literature on European integration as well as the changing nature of EU polity, policy-specific effects of politics and how politics in member states constrains decisions on the further deepening of the Economic and Monetary Union and efforts to move towards transfer union. The incremental process of centralizing redistributive policies accompanied by the debates about financial transfers from some EMU countries to the others have altered popular ‘permissive consensus’ about the process of European integration and exposed territorial cleavages which became a key constraint in responding to the crisis and pressures for further integration.