Unravelling the European Community of Debt

Author:Sabine Frerichs
DOI:http://doi.org/10.1111/eulj.12224
Publication Date:01 Nov 2016
Unravelling the European Community of
Debt
Sabine Frerichs*
I Introduction
Europe is built on debt. Cre dit and debt integrate so cieties, both within and ac ross
national borders. Debt relations are constitutive of the European polity, and critical for
its success or failure.
1
In this sense, the Europea n Union has long been not only a
community of fateand a comm unity of law, but also a community of debt,inwhich
manifold bonds connect states and peo ples. Solidarity between Member States as w ell
as their citizenries has been one of the major inspirations of the European project. The
recent nancial crisis has put this solidarity to the test, raising difcult questions about
who owes what to w hom in todaysEurope.
The aim of this specialissue is to unravel the European community of debtby retracing
the processes through wh ich debt and solidarity have b ecome transnationalis ed and
Europeanised.
2
Putting European law in its context, which is the mission of this journal,
3
we seek to illuminate legal, economic, political, historical and cultural aspects of existing
networks of debt and solidarity, which havebrought Member States, market participants
and Europeancitizens closer to each otherbut also increased the potentialfor conicts and
crises. In turn, the Eurozone crisis offers an en try point into studying the multifaceted
bonds of obligation, which condition and shape the European polity, and whose nature
and extent has now become a matter of co ntestation. This special issu e thus also
contributes tocontextualising the ongoing crisisand exploring its normative implications,
* Professorof Economic Sociology, Vienna Universityof Economics and Business,Austria.
1
K. Dyson, States, Debt, and Power: Sa intsand Sinnersin European Histo ry and Integration (Oxford
University Press, 2014). While Dysons bookfocuses on public debt, it also makes clear that the prevalence
of public debt,understood as sovereign debt(in the narrow sense) or as the balanceof liabilities and assets of
the publicsector (in the broadersense), is affected,and may eventually bedriven, by the nancialcommitments
of the privatesector, includingcorporations as well ashouseholds, within thedomestic context as wellas in the
cross-bordercontext of capital mobilityand nancial integration;see ibid.,at5052.
2
This special issue draws on contributions to the Special Issue Workshop of the European Law Journal
Community of Debt? The Transnationalisation of Debt and Soli darity in Europe, which was held at the
European UniversityInstitute (EUI), Florence, 1920 November 2015. We gratefullyacknowledge nancial
support by Wiley-Blackwellin preparing this special issue and exceptional commitment by the editorof this
journalto make it as informative andinspiring as possible.The workshop was organisedby the research project
European Bonds: The Moral Economy of Debt(201317), which receives funding from the Academy of
Finland and the Universityof Helsinki. It was hosted by the European Research Council project European
Regulatory Private Law(201115 ) at the EUI, which was funded under the European UnionsSeventh
Framework Programme (FP/200720 13)/ERC Grant Agreement n [269722], and al so supported by the
Finnish Academy project The Many Con stitutions of Europe(201015) . We would like to thank all
contributors,commentators, and chairs for theirvaluable inputs to this workshop and forengaging in a very
productive interdisciplinary discussion. Specialthanks go to Agustín Menéndez, Hans Micklitz and Kaarlo
Tuori.
3
F. Snyder, Editorial, (1995)1 European Law J ournal,14.
European La w Journal, Vol. 22, No. 6 , November 2016, pp. 7 20742.
© 2017 John Wiley & SonsLtd. 9600 Garsington Road, Oxford,OX4 2DQ, UK
and 350 Main Street, Malden,MA 02148, USA
which has been a particul ar interest of this journal.
4
To get a grasp of the overall
constitution of the European community of debt, we will start from its key constituents:
(1) integrated capital markets,
5
(2) interdependent welfare states,
6
and (3) the reformed
monetary union.
7
The proliferationof transnational debt relationswithin and beyond Europe is the result
of processes of nancial andmonetary integration by means of law and governance. The
major turning point in this proc ess was the liberalisation of capit al movements, which
complemented the free movem ent of goods and services, labo ur and enterprise, and
changed theconditions for coordinationof monetary policies at the Europeanlevel. It thus
had an effect on both layersof the European economic consti tution.
8
While the
microeconomic constitution of the internal market came to spur the transnationalisation
of private debt, the macr oeconomic constitutio n was set for monetary union , which
furthered the transnationalisation of public debt.
At the same time, national welfare regimes became increasingly interlinked, although
less so by way of building a Europeanwelfare statethrough EU level socialpolicies than
through developments both in the micro- and macroeconomic constitution.
9
Whereas the
free movement of capitaland establishment affects the capacity of Member States to raise
taxes (tax base mobility), the right to free movement for workers and persons is
increasingly being discussed in its effects on public spending (welfare migration). At the
same time, Member State budgets are restricted by the requirements of monetary union,
4
See, for example, I. Bantekas andV. Renaud, On the Odiousness of Greek Debt, (2016) 22 European Law
Journal, 539565; D. Adamski, Economic Policy Co ordination as a Game Involving Economic Stability
and National Sovereignty, (2016) 22 EuropeanLaw Journal,180203; U. Šadl and M.R. Madsen, Did the
Financial Crisis ChangeEuropean Citizenship Law? An Analysis of Citizenship Rights AdjudicationBefore
andAfter the Financial Crisis,(2016)22EuropeanLaw Journal,4060; A. Johnston,R egulating Hedge Fun ds
for Systemic Stability: The EUsApproach, (2015) 21 European Law Journal,758786; N. Dorn, Legal
Elasticityand Sidesteppingin EuropeanCrisis Management of Financial Markets,(2015)21European
Law Journal,787802; F.W. Scharpf, After the Crash: A Perspective on MultilevelEuropean Democracy,
(2015) 21 European Law Journal, 384405; M.A. Wilkinson, Authoritarian Liberalism in the European
Constitutional Imagination: Second Time as Farce?, (2015) 21 European Law Journal,313339; A. Somek,
Delegation and Authority: Authoritarian Liberalism Today,(2015)21Europe an Law Journal,340360;
D. Wilsher, Law and the Financial Cris is: Searching for Europes New Gold St andard, (2014) 20
European Law Journal, 241283; A.J. Men éndez, Editorial: A European Unio n in Constitutional
Mutation?, (2014) 20 European Law Journal,127141; C. Offe, Europe Entrapped,(2013)19European
Law Journal, 595611; N. Scicluna, EU Constitutionalism in Flux: Is the Eurozone Crisis Precipitating
Centralisation or Diffusion?,(2012)18European Law J ournal,489503; R. Colliat, A Critical Genealogy
of European Macroeconomic Governanc e, (2012) 18 European Law Journal,623; S. Pagliari, Who
Governs Finance? The Shifting PublicPrivate Divide in the Regulation of Derivatives, Rating Agencies
and Hedge Funds, (2012) 18 European Law Journal,4461; P.D. Amri and B.M. Kocher, The Political
Economy of Financial Sector Sup ervision and Banking Crises: A Cros s-Country Analysis, (2012) 18
European Law Journal,2443; and M. Ojo, The Changing Rol e of Central Banks and the Role of
Competition in Financial Regulation during (and in the Aftermath of) the Financial Crisis, (2011) 17
European Law Journal,513533.
5
J. Snell, Free Movement of Capital: Evolutionas a Non-Linear Process, in P. Craigand G. de Búrca (eds.),
The Evolutionof EU Law, 2nd edn (Oxford UniversityPress, 2011), 547574.
6
Cf. D.M. Trubekand L.G. Trubek, Hard andSoft Law in the Constructionof Social Europe:The Role of the
Open Method of Co-ordination,(2005) 11 European Law Journal,343364, at 345346.
7
Cf. F. Scharpf, Monetary Union, FiscalCrisis and the Preemption of Democracy,(2011)MPIfG Discussion
Paper 11/11,available at: http://www.mpifg.de/pu/mpifg_dp/dp11-11.pdf, at 34.
8
For the distinction between micro-and macroeconomic layersof the European economic constitution, see K.
Tuori and K. Tuori, The Eurozone Crisis:A Constitutional Analysis(Cambridge UniversityPress, 2014).
9
C. Hayand D. Wincott, The PoliticalEconomy of EuropeanWelfare Capitalism(Palgrave Macmillan,2012), at
132133.
European Law Journal Volume 22
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