Governing informally: the role of the Eurogroup in EMU and the Stability and Growth Pact

Abstract:

Comprising the finance ministers of the euro area, the informal Eurogroup plays a central role in the economic governance set-up, albeit one widely unnoticed in the literature on economic and monetary union (EMU). The group not only pre-agrees all critical Council decisions with relevance for the euro area Member States, it also functions as a forum where ministers decide on the overall orientation of economic governance in the euro area and establish common interpretations of EMU's core policy instruments. This might seem surprising given that the group is not mentioned by the Treaty and does not have any formal decision-making competences.

This article responds to the lack of more detailed empirical information on the functioning of the Eurogroup. In theoretical terms the analysis is based on legal approaches to EU comitology, the literature on policy learning and research on the role of arguing and deliberation in international negotiations. The main argument is that the Eurogroup's informal working method creates a negotiation environment which is particularly suited for the conduct of a close policy dialogue among the euro area's key decision-makers. This dialogue supplements EMU's formal co-ordination instruments - the Broad Economic Policy Guidelines and the Stability and Growth Pact. The Eurogroup's emphasis on consensus formation through informal discussion is of particular importance in EMU's decentralized policy framework which lacks any significant concentration of political authority at the supranational level and relies on the voluntary commitment of individual Member States to commonly agreed policy objectives.