Economic development as segmentation?
Will crisis reforms in the monetary union lead to a more segmented political order?
Reforms in the design of the monetary union have been implemented in the wake of the crisis. If this leads to segmentation, what does such a development imply for the sustainability of responses to the crisis? What does it entail for Norway’s position in the European economic and political order?
‘Economic development as segmentation?’ is one of four EuroDiv sub-projects (Integration and division: Towards a segmented Europe?). The investigation covers three important changes in the design of monetary union: changes to fiscal coordination; banking union; and the interpretation of the rules for joining both the single currency and for being eligible to join it through EU membership.
The changes and their implications are addressed through the following studies:
The crisis might result in the euro area developing into a qualitatively different polity within the Union’s polity, based on its own ‘community of fate’, its own governance structures, its own obligations and its own treaties. To test how far changes to monetary union increases segmentation of the EU’s political order the project studies epistemic communities, permanent structures of functional and territorial differentiation and authority structures, as well as democratic processes and management of decisions.
Is the changed form of monetary union that is emerging from the crisis sufficiently legitimate to be sustainable? To help answer that question the sub-project will reconstruct key decisions taken at critical junctures in the redesign of monetary union to establish how far those decisions were shaped by normative questions of democratic control and justice.
Implications for Norway
What are the implications for Norway of changes at the European level? Since 1999, monetary union has posed the problem of how to coordinate the management of the Norwegian economic cycle with that of the euro zone in a manner that allows Norway sufficient monetary autonomy to avoid harms to its domestic economy. The sub-project therefore investigates how far closer coordination and centralisation within the euro zone affects the options available to Norway in deciding how to structure its own relations with the overall political economy of the EU.