The EU: A Model for Economic Governance?


The idea that political differences between two or more actors can be improved through economic means is at the heart of the study of the International Political Economy (IPE). This notion, which is rooted in the Liberal school of thought, sets the foundations for one of the most long lasting supra-national institutions in the post-World War II era, the European Union (EU).

Indeed, following World War II, European policy makers and leaders began building a narrative of economic cohesion in order to ensure peace and stability on the continent. The famous Schuman Declaration on May 9, 1950, made by the then French Foreign Minister and founder of the EU as we know it today, Robert Schuman, emphatically proposed that the rivalry between France and German be eradicated by pooling the means of production and placing the administration of these means ‘under a common High Authority’, i.e. the EU. As a result, this economic community would create a sense of unity in terms of solidarity and cohesion in a production sense. Consequently, Schuman prophesised that such unity ‘will make it plain that any war between France and Germany becomes not merely unthinkable, but materially impossible’. Schuman’s ideal was then realised under the 1951 Paris Treaty establishing the European Coal and Steel Community (ECSC), the EU in its first guise if you will. Since then, the supra-national institution has evolved following an agenda which has seen its member states become increasingly economically aligned, through the 1993 Monetary Union and the 1999 birth of the Eurozone. This concept of economic cohesion and integration has concurrently been applied to the EU’s foreign policy endeavours.

Further, the EU policy has seen varying levels of success internally, in the sense that there has been an increasingly closer economic and financial union between the member states, in spite contemporary concerns over Greek debt and bailout conditions. Indeed, when concerned with the Greek debt crisis, the EU (alongside the IMF) has thus far have commissioned just over €290 billion in debt relief to Athens. Politically, the decision making process has revealed that the EU states are at odds with one another when it comes to identifying not just whether to continue to support Greece, but also how to support their fellow member. As a result, the crisis has demonstrated how the interests of the actors concerned, in this case the non-Greek member states, can influence the performance of economic governance within the EU.

Additionally, a look at this economic form of governance when concerned with extra-EU states depicts an almost equally less than rosy picture. Indeed, the EU’s foreign economic policy operates under the same Schuman-espoused conditions: economic cohesion can ameliorate conflict. That being said, this notion is not always applicable for a number of reasons, namely that the policy does not take into account the environment or context in which it is implemented. This is something which I argue, in the context of the EU’s foreign policy towards two countries in the Middle East, in my book titled: The Political Economy of EU Ties with Iraq and Iran. Using the examples of Iraq and Iran, I demonstrate, like in the case of the Greek Debt crisis described above, how the interests of the pen-holding actors ultimately led to a failure of the EU policy in these two instances. As a result, I argue that the notion of achieving political goals through economic means must be cognisant of the fact that the policy is not acting within a vacuum. There are forces, actors and interests which must be taken into account.

Thus, when posed with the question whether the EU economic governance experiment has been positive or successful, the answer is twofold. From an internal EU perspective, the Greek debt crisis has revealed that no matter how much EU member states are integrated economically, political and cultural differences are prevalent. Whilst on the one hand, the EU has remained in tact, and therefore it can be considered a conditional success. On the other hand, the lack of unity of the EU members politically and economically points to a failure, in spite of over 60 years of trying to do so. Looking further afield, the EU’s foreign economic policy has fared even less favourably. Indeed, whilst the EU’s economic footprint in Iraq and Iran has been larger than that of any other actor in the international system, it has still failed to ameliorate concerns over conflict and instability.

Resultantly, the EU’s model for economic governance suffers from barriers and inefficiencies on a structural and practical level. This inefficiency applies to both the internal and external functioning of the Brussels based institution. It is therefore clear that either the policy or the structure of the EU must reform if it is to achieve its stated goals of peace and stability, when concerned with internally and external ventures.

Image: Robert Schuman 10 Franc coin, courtesy of Yricordel on Wikimedia Commons.

4 thoughts on “The EU: A Model for Economic Governance?

  1. Good reading. I would agree with the Writer. However, towards the end, desired objective to facilitate Greek in economic recession has been achieved.


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