Yearly, around 1.6 million tourists, most of whom are young, white and from Western countries, go on holidays to volunteer in the Global South.[1] These so-called volunteer tourists, or voluntourists, book their trips through organizations that claim to promote the welfare of their host communities but are criticized by some as a form of white saviorism. What is white saviorism and how is applying the concept useful to the host communities of volunteer tourists in the Global South?

Scholars on white saviorism criticize volunteer tourism by alleging that the primary motivation of the practice is often for the tourist to construct a benevolent image of herself, while the actual effects of the volunteer activities are secondary or even harmful.[2] Thereby, volunteer tourists, who are mostly white, implicitly portray themselves as the developed saviors of the radicalized non-white people that supposedly need the help of the white volunteers to develop. This binary that contrasts active, Western volunteers against passive locals is apparent on some volunteer tourism organization’s websites. There, the locals are sometimes presented as “needy” and without agency of their own.[3] Some activities of volunteer tourism organizations further reinforce that binary. Andrea Freidus, who is an anthropologist at the University of North Carolina, found a particularly illustrative example in her research on a volunteer tourism project in Malawi. In the project, tourists oversee the distribution of food to poor locals, while the food is wholly paid for by local initiatives.[4] The problem with these acts is that they render locals as passive and allow voluntourists to believe that their external help is needed for local communities to develop.[5]

Can uncovering logics of white saviorism help those local communities? I argue that it can and that spreading awareness about white saviorism in volunteer tourism is helpful for several reasons. Firstly, when current and future volunteer tourists learn about the concept of white saviorism, they are forced to think about the historical origins of the idea of benevolent white saviors versus dependent communities in the Global South. For instance, European colonialism was partly justified based on the claim that non-Europeans were underdeveloped and needed to be educated and developed by the white rulers.[6] Furthermore, by questioning the dichotomy of the white helpers versus passive locals, white saviorism confronts voluntourists with their own biases. Questioning their stereotypes is needed for volunteer tourists to accept the locals as independent, active actors with whom together cross-cultural cooperation can occur.[7]

Once the stereotype of locals, who need Western help to develop, is questioned, a discussion on whether and how voluntourists really aid the locals can emerge. There is evidence that many voluntourism projects focus on the tourist’s desires before the needs and desires of the host community. Volunteer tourism projects are mostly run for-profit, which means that the customers’ interests are frequently prioritized before local needs.[8] For instance, studies show that many children in orphanages have living parents.[9] But instead of trying to support their parents, volunteer tourism projects incentivize families to send their children to orphanages, where volunteers pay to help the children. This is deeply problematic because voluntourists often have limited skills and only stay at the projects for a short time, which results in them hindering work progress and completing unsatisfactory work.[10] There are certainly many voluntourism projects that are well thought out and help local communities develop by providing additional resources and skills. But the concept of white saviorism is important by highlighting that volunteer tourist projects often focus primarily on the volunteers’ needs instead of the local’s needs. In that way, those projects can harm rather than help local communities.

To tackle the issue of white saviourism, it is crucial to pressure the volunteer tourism organisations to educate their participants about the history and contemporary issues in the host country. Andrea Freidus, for instance, argues that pre-departure workshops on the local society can go a long way in keeping volunteer tourists from reinforcing white saviour dynamics and help tourists find intercultural understanding. [11] The Global Brigades, a sustainable development organisation, already has such pre-departure information courses in place and requires its volunteers to read about white saviourism.[12] To ensure that their projects are helpful, volunteer organisations should also make sure to better match volunteers’ skills with the local community’s needs.[13]

In sum, this article is not meant to imply that volunteer tourism in general reinforces white saviourism. There are many organisations and volunteer tourists that help local communities develop and do so with the right intentions. Yet, there is considerable evidence that some organisations and volunteer tourists implicitly reinforce binaries of Western, white saviours and dependent communities in the Global South. It is crucial to uncover these implicit logics in order for volunteer tourists to recognise local communities in the Global South as independent actors. Hopefully, uncovering the logics will lead to better cross-cultural understanding and volunteer tourism projects that primarily serve the needs of the locals and not the volunteers.

Works Cited

Bandyopadhyay, R., & Patil, V. (2017). ‘The white woman’s burden’ – the racialized, gendered politics of volunteer tourism. Tourism Geographies, 19(4), 644-657.

Freidus, A. L. (2017). Unanticipated outcomes of voluntourism among Malawi’s orphans. Journal of Sustainable Tourism, 25(9), 1306-1321.

Guttentag, D. A. (2009). The possible negative impacts of volunteer tourism. International journal of tourism research, 11(6), 537-551.

Kawas, R. & Colbert, S. (2020). We Are Not The Saviors of This Story: Addressing White Saviorism Together. Retrieved from https://blog.globalbrigades.org/addressing-white-saviorism/

Rosenberg, T. (2018). The business of voluntourism: do western do-gooders actually do harm? The Guardian. Retrieved from https://www.theguardian.com/news/2018/sep/13/the-business-of-voluntourism-do-western-do-gooders-actually-do-harm

Wearing, S., Mostafanezhad, M., Nguyen, N., Nguyen, T., Than Nguyen, & McDonald, M. (2018). ‘Poor children on Tinder and their Barbie Saviours: towards a feminist political economy of volunteer tourism. Leisure Studies, 37(5), 500-514.

Zeddies, M., & Millei, Z. (2015). “It takes a global village”: Troubling discourses of global citizenship in United Planet’s voluntourism. Global Studies of Childhood, 5(1), 100- 111.

References

[1] Bandyopadhyay, Patil, “Volunteer tourism and ‘The White Man’s Burden’”, 645.

[2] Bandyopadhyay, Patil, “Volunteer tourism and ‘The White Man’s Burden’”, 650.

[3] Zeddies, Millei, “Troubling discourses in United Planet’s voluntourism”, 105.

[4] Freidus, “Unanticipated outcomes of voluntourism”, 1313.

[5] Wearing et al., “Towards a feminist political economy of volunteer tourism”, 503.

[6] Bandyopadhyay, Patil, “the racialized, gendered politics of volunteer tourism”, 650.

[7] Freidus, “Unanticipated outcomes of voluntourism”, 1319.

[8] Guttentag, “The possible negative impacts of volunteer tourism”, 541.

[9] Rosenberg, “The business of volunturism.”

[10] Guttentag, “The possible negative impacts of volunteer tourism”, 541.

[11] Freidus, “Unanticipated outcomes of voluntourism”, 1318-1319.

[12] Kawa, Colbert, “Addressing White Saviorism Together.”

[13] Guttentag, “The possible negative impacts of volunteer tourism”, 548.

The European Green Deal is a European Union (EU) project that seeks to radically transform Europe’s economic system to neutralise greenhouse gas emissions and mitigate climate change. But while the Green Deal is the EU’s self-proclaimed “man on the moon”[1] project, in its current form the plan does not provide a rocket sufficient to reach its destination.

The Green Deal aims to reduce European greenhouse gas emissions by 55% in 2030 relative to their 1990 levels and for Europe to become climate neutral by 2050.[2] It is crucial that these ambitions are finally legislated by the EU in order for Europe to fulfill its commitments to the Paris Agreement of 2015 and to play its part in keeping the global temperature rise below 2°C. Nonetheless, while the EU’s legal commitment is a right step to prevent catastrophic climate change, the Green New Deal falls short of offering sufficient tools to achieve its targets.

The Green Deal is likely to fail, for two reasons. First, its Green Deal Investment plan is too small, as the proposed green investment value is lower than the needed sum to transform its economy to achieve long-term greenhouse gas neutrality. In fact, the 1 trillion euros the EU wants to invest in the next 10 years to reach the 2030 emission target are partly just reshuffled from existing sustainability programs and far below the officially needed 3 trillion euros.[3]^,[4] Due to its limited budget, the EU is dependent on national states and other actors to provide the remaining investment sums. But not all governments are willing to provide these huge investments by themselves, which means that private actors will have to bear a large share of the costs.[5]

That leads to the second point: the deal gives private actors and local governments too limited a role to be able to achieve its goal of carbon-zero emissions by 2050. Both private actors and local governments have a wealth of knowledge on how a transformation to a greenhouse-gas free economy can occur and they can enact specific improvements. However, private companies often lack incentives to invest in long-term green innovations due to the considerable financial uncertainty of those projects and local governments rarely have enough funds to promote structural changes.[6]^,[7] Luckily, the EU can employ tested and effective mechanisms to better include private actors and local governments in the Green Deal and thereby secure reaching its emission targets.

One effective way of increasing private investments in the green transformation is for the EU to increase its public-private partnership programs. Public-private partnerships are interactions between public and private actors, which together try to provide a common good.[8] In Green Deal partnerships the EU can provide monetary support for the research and development of new green technologies and promise incentives such as subsidies for renewable energy production. An important advantage of public-private partnerships is that the EU must provide only a part of the funding for innovation, while the private sector chips in the rest and helps fund projects that it would otherwise probably not invest in.

An example where a public-private partnership could bring about considerable benefits are innovative electric car charging stations. Only a few companies are investing in quicker stations because the research costs are high and electric cars make up only a small portion of the European car market.[9] However, there is a large window of opportunity for the EU to provide extra funding for research and subsidise quick charging stations in the future, which will incentivize car manufacturers to innovate. Quicker charging stations would make electric cars more attractive to consumers and could thereby help the EU reach its emission targets. In the Green Deal, similar public-private partnerships are mentioned, yet the currently proposed sum is far too meagre to trigger private investment in green technologies in all sectors of the European economy.[10]

Furthermore, the Green Deal should involve and support local governments, such as municipalities, to bring about green change. Worldwide, cities account for 70% of greenhouse-gas emissions, with a similar share in Europe. For that reason, city initiatives can help significantly reduce emissions. To support cities, the EU can shift some of its funds to existing city networks, where municipalities collaborate on how to decrease greenhouse gas emissions.[11] Supporting city networks is promising because local administrations have limited financial means but vast knowledge of specific policies to be implemented and can share their experiences. Some of the city networks lack greenhouse gas emission targets and monitoring mechanisms but by tying its funds to mandatory objectives and monitoring systems, the EU can support and strengthen these existing networks.[12]

Therefore, the European Green Deal is flawed – it sets emission targets but lacks sufficient investments and does not involve private actors and local governments enough. But it does have silver linings. Private actors can be incentivised to do their part with public-private partnerships and local governments can be supported by funding and strengthening city networks. In that way, private actors and local governments can help the EU build its rocket to the moon and create a greenhouse gas neutral Europe.

Works Cited

Acuto, M. (2016). Give cities a seat at the top table. Nature. Retrieved from https://www.nature.com/news/give-cities-a-seat-at-the-top-table-1.20668

Bansard, J. S., Pattberg, P. H., & Widerberg, O. (2017). Cities to the rescue? Assessing the performance of transnational municipal networks in global climate governance. International Environmental Agreements: Politics, Law and Economics, 17(2), 229-246.

Claeys, G. & Tagliapietra, S. (2020). A trillion reasons to scrutinise the Green Deal Investment Plan. Bruegel. Retrieved from https://www.bruegel.org/2020/01/a-trillion-reasons-to-scrutinise-the-green-deal-investment-plan/

European Commission (2019). Press remarks by President von der Leyen on the occasion of the adoption of the European Green Deal Communication. Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/speech_19_6749

European Commission (2020a). Proposal for a regulation of the European parliament and of the council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law). Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1588581905912&uri=CELEX:52020PC0080

European Commission (2020b). The European Green Deal Investment Plan and Just Transition Mechanism explained. Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_24

Harvey, F. & Rankin, J. (2020). What is the European Green Deal and will it really cost €1tn? The Guardian. Retrieved from https://www.theguardian.com/world/2020/mar/09/what-is-the-european-green-deal-and-will-it-really-cost-1tn

Loschacoff, D. (2020). Europe’s Green Deal needs PPP thinking. World Bank Blogs. Retrieved from https://blogs.worldbank.org/ppps/europes-green-deal-needs-ppp-Thinking

Mazzucato, M. (2015). The green entrepreneurial state. The politics of green transformations, 134-152.

Oberhaus, D. (2020). Charge a Car Battery in 5 Minutes? That’s the Plan. WIRED. Retrieved from https://www.wired.com/story/charge-a-car-battery-in-5-minutes-thats-the-plan/

Schäferhoff, M., Campe, S., & Kaan, C. (2009). Transnational public-private partnerships in international relations: Making sense of concepts, research frameworks, and results. International Studies Review, 11(3), 451-474.

References

[1] European Commission, “Press remarks by President von der Leyen”.

[2] European Commission, “Proposal for a regulation achieving climate neutrality”.

[3] European Commission, “The European Green Deal Investment Plan explained”.

[4] Claeys, Tagliapietra, “A trillion reasons to scrutinise the Green Deal Investment Plan”.

[5] Harvey, Rankin, “What is the European Green Deal”.

[6] Mazzucato, “The green entrepreneurial state,” 4.

[7] Acuto, “Give cities a seat at the top table”.

[8] Schäferhoff, Campe, Kaan, „Transnational public-private partnerships in international relations,” 455.

[9] Oberhaus, “Charge a Car Battery in 5 Minutes?”

[10] Loschacoff, “Europe’s Green Deal needs PPP thinking”

[11] Acuto, “Give cities a seat at the top table”.

[12] Bansard, Pattberg, Widerberg, „Cities to the rescue?”, 242.

Thirty years after Germany’s reunification between East and West, the two parts of the country remain strikingly different. The origins of many of the differences lie in the contrasting living realities of the socialist Eastern German Democratic Republic and Western Germany before their reunification. For example, at the end of socialist rule in 1989, Eastern Germany’s GDP per capita was a mere 55% of Western Germany’s.[1] But importantly, today’s disparities are also due to the integration policies enacted by the German government since then.

The origins of Germany’s unification lie in the 1970s and 80s, but the open, clearly visible integration process began in 1989 when Eastern Germans protested against the socialist regime’s authoritarian practices and economic underperformance, which culminated in the fall of the Berlin Wall on November 9, 1989. After a short period of uncertainty, in East Germany’s first democratic elections in decades in 1990, Eastern Germans overwhelmingly voted for a conservative government, which then together with Western Germany’s government decided to first install a currency union and then quickly strive for reunification.[2] The currency union was intended to prepare the unification of both states, and policymakers decided on an exchange rate of one to one.[3] The currency union’s exchange rate, however, meant that labour costs in the East increased drastically, and many Eastern German companies suddenly found themselves unable to compete internationally. Their output decreased and East German unemployment rose rapidly.[4]

Shortly after the currency union, the East and West officially reunified in October 1990. This development was initially marked by euphoria on all sides, yet the following years proved to be difficult, especially for the Eastern companies that still suffered from the economic consequences of the currency union. Importantly, as a remnant of socialist rule, all large and most small Eastern companies were still state-owned. To deal with the East’s companies, the government decided to handle all 8000 large and 25,000 small state-owned enterprises with a trust agency called Treuhandanstalt, which oversaw a staggering 4 million employees.[5] The task of the Treuhandanstalt was to privatise, restructure and liquidate the East’s state-owned firms and it did so with immense speed. Four years later, in 1994, all previously state-owned East German companies were either closed or privatised.[6]

This rapid process also came with starkly increasing unemployment, as two and a half of the four million employees of the Treuhandanstalt’s managed companies lost their jobs and many workers protested the policies.[7] What added to the outrage of the protestors was that 80% of all privatised Eastern German companies were sold to Western German owners, and only 6% to Eastern Germans.[8] This dynamic is dubbed the ’sale of the East’ by some because it meant that Western Germans would largely profit from and control most of the East’s companies.

Nevertheless, reunification has also brought Eastern Germans many economic advantages. For example, they were incorporated into the social safety net of Western Germany, which was largely financed by Western German employees and companies. Furthermore, large-scale private and public investments in the East also led to strong GDP growth in the years after reunification and wages in the East saw strong growth.[9] Hence, a nuanced evaluation of the East’s development is complex. Many Eastern Germans lost their jobs following reunification and they were largely financially incapable of buying the newly privatised companies. But at the same time, Western Germany investments helped the East to improve its outdated infrastructure and led to economic growth and higher wages.

Eastern and Western Germany continue to experience the effects of reunification, and the two geographic regions remain quite different even today. For example, Eastern Germany’s GDP per capita is still 30% below Western Germany’s.[10] This is partly because since the privatisations in the 1990s nearly all large German companies and their suppliers are situated in Western states. And it has direct consequences on people’s wages: Eastern Germans with the same qualifications as their Western counterparts receive 17% lower wages because there are less high paying jobs in Eastern Germany.[11]

The main political fallout of this continuing economic divergence is that many in the East are disappointed about some of the processes of unification. While there is generally strong support for reunification, 70% of Eastern Germans believe that the privatisations in the 90s were mostly done for the benefit of Western Germans.[12] Especially Germany’s more radical parties, the left-populist Linke and the far-right populist Alternative für Deutschland, pick up these more contentious aspects of the German reunification and frequently claim that Eastern Germany has been disadvantaged.[13] According to election results, this strategy seems to work out as both the Linke and the Alternative für Deutschland are particularly strong in the East of the country.

What this analysis then shows is the current stark economic and political differences between Eastern and Western Germany can be traced back to their starting positions but crucially also to many of the enacted policies since their integration. In Germany, as in many countries worldwide, a look at the geographic disparities is worthwhile and indicates some crucial insights into the country’s economic and political situation.

Works Cited

[1] Busch, Kühn, Steinitz, “Entwicklung und Schrumpfung in Ostdeutschland,“ 17.

[2] Böick, ”economic transformation in Eastern Germany,” 148.

[3] Baum, “Als die D-Mark in die DDR kam“.

[4] Akerlof, Rose, Yellen, Hessenius, „East Germany: The Economic Aftermath of Currency Union,” 5.

[5] Bundeszentrale für politische Bildung, “Privatisierung durch die Treuhand“.

[6]  Böick, ”economic transformation in Eastern Germany,” 151.

[7] Bundeszentrale für politische Bildung, “Privatisierung durch die Treuhand“.

[8] Bundeszentrale für politische Bildung, “Privatisierung durch die Treuhand“.

[9] Statistische Ämter des Bundes und der Länder „25 Jahre Mauerfall,“ 34, 69.

[10] Schnabl, „Leeres Land“.

[11] Groll, „Ostdeutsche arbeiten immer noch mehr für weniger Geld“.

[12] Infratest dimap, „30 Jahre Mauerfall“

[13] Weiland, “Wahlkampf mit dem Treuhand-Ausschuss”

References

Akerlof, G. A., Rose, A. K., Yellen, J. L., Hessenius, H., Dornbusch, R., & Guitian, M. (1991). East Germany in from the cold: the economic aftermath of currency union. Brookings Papers on Economic Activity, 1991(1), 1-105.

Baum, A. (2015). Als die D-Mark in die DDR kam. Deutschlandfunk. Retrieved from https://www.deutschlandfunkkultur.de/waehrungsunion-vor-25-jahren-als-die-d-mark-in-die-ddr-kam.1001.de.html?dram:article_id=323928

Böick, M. (2020). In from the socialist “cold,” but burned by the capitalist “heat”? The dynamics of political revolution and economic transformation in Eastern Germany after 1990. Sustainability: Science, Practice and Policy, 16(1), 143-154.

Bundeszentrale für politische Bildung (2015). Das Vermögen der DDR und die Privatisierung durch die Treuhand. Retrieved from https://www.bpb.de/geschichte/deutsche-einheit/zahlen-und-fakten-zur-deutschen-einheit/211280/das-vermoegen-der-ddr-und-die-privatisierung-durch-die-treuhand

Busch, U., Kühn, W., & Steinitz, K. (2009). Entwicklung und Schrumpfung in Ostdeutschland. Aktuelle Probleme im 20. Jahr der Einheit. Hamburg: VSA-Verlag.

Groll, T. (2019). Ostdeutsche arbeiten immer noch mehr für weniger Geld. Zeit. Retrieved from https://www.zeit.de/wirtschaft/2019-10/gehaltsunterschiede-ost-west-lohn-arbeitnehmer-studie?utm_referrer=https%3A%2F%2Fwww.google.com%2F

infratest dimap (2019). 30 Jahre Mauerfall. Retrieved from https://www.infratest-dimap.de/umfragen-analysen/bundesweit/umfragen/aktuell/30-jahre-mauerfall/

Schnabl, G. (2018). Leeres Land. Zeit. Retrieved from https://www.zeit.de/2018/40/ostdeutschland-chemnitz-toleranz-wirtschaftskraft

Statistische Ämter des Bundes und der Länder (2015). 25 Jahre Deutsche Einheit. Wiesbaden: Statistisches Bundesamt.

Weiland, S. (2019). Wahlkampf mit dem Treuhand-Ausschuss. Spiegel. Retrieved from https://www.spiegel.de/politik/deutschland/afd-und-linke-wahlkampf-mit-dem-treuhand-ausschuss-a-1267438.html

Introduction

The coronavirus pandemic and its consequences have undoubtedly altered the lives of many worldwide in a brief but impactful timeframe, and it continues to pose immense challenges to multiple actors. In the European Union (EU) it quickly turned out that the economic fallout of the crisis would be massive, as businesses were forced to close and either fired or reduced the working hours of their employees. But, while the International Monetary Fund predicts 2020 to feature the biggest European recession since the great depression,^[1] governments are boosting their fiscal spending and indebting themselves to guarantee the survival of businesses and mitigate job losses.

In response to the situation,  EU institutions decided to provide loans to small and medium enterprises as well as member states in order to protect jobs.^[2] Additionally, new fiscal flexibility of the national budgets and European Stability Mechanism (ESM) credits for health-related government spending were approved.^[3] Meanwhile, the details of the new grant and loan-based EU budget-channelled recovery fund are still being drafted, but using the ESM or corona-bonds has already been precluded.^[4]

By letting the EU give out loans to companies and lending money to member states via the EU budget, ESM, and recovery fund, European states shift more of their power to the European Union. Thus, these steps reveal increased European integration, which was famously defined by Ernst Haas as the process of national actors shifting their political activities and loyalties toward another actor, “whose institutions possess or demand jurisdiction over national states”.^[5] When looking at these developments, the question emerges why and how exactly these and not other or no measures of further integration have been decided upon. Hence, this research paper aims to answer the question: What theory of European integration explains the European Union’s response to the economic fallout of the Covid-19 Pandemic?

The research attempts to enhance the existing academic literature on European integration and crises. Focusing on crises is especially relevant as the recent euro crisis and refugee crisis both marked what some call a European “decade of crises.”^[6] Moreover, a thorough application and comparison of the two furthest developed integration theories, namely neo-functionalism and liberal intergovernmentalism, yields some insights regarding the functioning of the EU. Finally, understanding the processes of the current actions allows scholars and policymakers alike to see how the next European economic crisis might be dealt with.

Theory

Neo-functionalism. The neo-functionalist theory of European integration was first developed by Ernst Haas and is marked by a focus on spillovers, elite socialisation, and supranational interest groups, which together explain political integration.^[7] According to neo-functionalists, states sometimes cooperate on specific issues, which they cannot solve themselves, and then realize that to solve the original issue, intensified collaboration and or cooperation in another area is required.^[8] This process of integration, called spillover, can occur as either a merely functional spillover done by the institutions themselves, as a political spillover decided upon by national politicians, or as a cultivated spillover in which supranational actors push the integration.^[9] Hence, neo-functionalism predicts that initial integration steps are frequently incomplete and in times of crisis integrative spillovers occur when there is some transnational interdependence and supranational capacity to solve the issue.^[10]

Additionally, the theory contends that European integration leads to the establishment of elite groups, which are loyal to the supranational institutions, and hence try to convince national leaders of the advantages of supranational cooperation.^[11] Interest groups are also important for integration outcomes and become more European over time, which together with the impact of the supranational elites means that international negotiations become less politicized.^[12] Hence, if neo-functionalism explains the EU’s response to the current economic crisis then one needs to confirm the following hypothesis:

Hypothesis 1: The EU’s response to the COVID-19 Pandemic’s economic fallout is shaped by spillover effects from existing integration measures and by European elite and supranational interest group preferences, which together lead to further supranational integration.

Liberal intergovernmentalism. This alternative theory of European integration takes a state-centric approach to integration processes and claims that states do not transfer their sovereignty to supranational institutions but instead pool or delegate it.^[13] Liberal intergovernmentalism (LI) sees the EU as an intergovernmental regime, whose actions follow the preferences of its member states. According to Andrew Moravcsik, domestic pressures, and interactions shape state interests, which then rationally and strategically bargain with other states.^[14] In this bargaining process, state power plays a crucial role, while supranational institutions play a negligible role. Finally, the actors delegate or pool part of their sovereignty to European institutions to make sure that the agreed outcomes will be committed to.^[15]

LI claims that in crises, just as in normal times, national preferences and relative power positions determine the outcome. The national preferences of a country depend on how hard it is hit by the crisis, by how much certain integration solutions would help it, and by domestic pressures.^[16] The power position of a state, however, depends on its economic and political importance for the bargaining partners and by how hard the country is both hit by the crisis and dependent on integration measures.^[17] Hence, a small country, which is deeply hit by a crisis and can gain a lot from integration is in the weakest bargaining position. If LI best explains the EU’s response to the coronavirus recession, then the following hypothesis needs to be confirmed:

Hypothesis 2: National interests and relative power positions shape intergovernmental bargaining on the EU’s response to the COVID-19 economic fallout and lead to an institutional mandate reflecting the bargaining outcome.

Literature review. Due to the ongoing character of the economic fallout of the coronavirus crisis, so far, no academic research on its integration aspect has been published. Recently the academic debate on European integration and crises has focused on explaining why the euro crisis led to more integrative measures, while there was no coherent response to the refugee crisis. Biermann et al. explain the different outcomes by pointing out that all states were affected by the threat of a eurozone break-up, whereas in the refugee crisis, certain states were non-affected.^[18] Contrarily, Schimmelfennig claims that the interest in preventing an      eurozone break-up was an endogenous spillover result of former integration processes and that thus neo-functionalism has superior explanatory power.^[19] Far from being resolved, these ongoing debates form the background of the following inquiry.

Analysis

In the next section, the validity of the mentioned neo-functional hypothesis regarding the EU’s response to the coronavirus recession will be assessed based on a qualitative analysis of the official measures taken by the EU and statements by leading politicians and actors. Thereafter, the LI hypothesis will be tested.

The neo-functional explanation and its limitations. The neo-functional explanation for the background to the 2020 economic crisis starts with the increased transnational trade in the EU’s predecessor, the Economic Community (EC). For neo-functionalists, the exchange rate fluctuations between EC members made the Economic and Monetary Union (EMU) a necessary functional spillover.^[20] The 2009 financial crisis then showed that the monetary union without fiscal inter-state coordination is problematic because eurozone countries cannot devalue their currency nor count on fiscal transfers. Following the euro crisis, the intergovernmental European Stability Mechanism (ESM) had been set up to provide lending to eurozone member states in financial distress. Hence, neo-functionalism explains the institutional background to the external coronavirus shock as a series of spillovers.

The coronavirus recession was caused by the spread of the virus in early 2020, which led governments to enforce rigid social distancing rules and heavily decreased demand. As many people lost their jobs and companies went bankrupt or needed loans, European governments received lower tax returns while indebting themselves to support the health sector, the unemployed, and businesses alike. Neo-functionalism hypothesizes that in such a crisis based on existing mechanisms such as the ESM, further integration occurs via spillovers. And indeed, eurozone countries have decided to use the ESM and allow for loans of 2% of a member state’s GDP for COVID-19 health-related spending.^[21] Because the states have pushed the plan, the ESM usage can be dubbed a political spillover, which was supported by the European elite while most interest groups remained silent.^[22]

The European Investment Bank’s (EIB) provision of 200 billion euros for small and medium-sized enterprises can be seen as a cultivated spillover, as the supranational institution itself promoted the idea of giving out loans Europe-wide.^[23] EU elites and some of the EU’s biggest interest groups have supported these plans, but crucially the business support became public only after the EIB decision.^[24]. Remarkably, the EU has also installed a temporary loan-based mechanism, the so-called SURE, with which it lends member states up to 100 billion euros to protect workers’ jobs during the pandemic.^[25] SURE was proposed by the EU Commission and despite being temporally limited, is a further cultivated spillover regarding counter unemployment measures.

So far, neo-functionalism can explain all adopted measures but crucially it must also be able to predict how member states are to finance the recovery of their economies. Neo-functionalists expect that such a recovery programme is a spillover and shaped by elite and interest group interests. Following the neo-functional logic, the existing institutions determine what exact spillover occurs. As such, using the existing ESM, which was installed to tackle dire situations in which eurozone governments face high interest rates, is the most likely spillover, because it merely would have to be extended. However, the European elites were extremely divided on the form of the recovery measures, with nine Southern governments arguing for corona bonds and Germany and the Netherlands favouring the ESM.^[26]

Instead of extending the ESM or issuing corona bonds, the eurozone governments finally agreed to let the Commission finance the recovery package for governments through borrowing on the capital markets with the EU budget.^[27] Ex-post, neo-functionalists would describe this as yet another spillover. But ex-ante, the theory would predict the ESM and not a budget channelled instrument to be used, because the ESM, unlike the budget lending mechanism, already existed and fulfils the same purpose. Neo-functionalism cannot explain why EU leaders decided to opt for a new and untested borrowing mechanism if the ESM would merely have to be intensified. Hence, the neo-functional Hypothesis 1 is rejected, because the EU’s response to the economic fallout was not a predictable spillover from the existing integration measures, nor were European interest groups or elites unified and clear in shaping their response.

In sum, neo-functionalism explains the lead-up to the need for a common fiscal response and a few of the measures taken but does not predict that the new EU budget fund, instead of the existing ESM, would be employed to finance member state debts.

  The liberal intergovernmentalist approach. LI explains the build-up of the EU and EMU as resulting from domestic interests and inter-state bargaining, which led to a monetary but not a fiscal union. The coronavirus recession is seen as an exogenous shock, by which EU governments were hit asymmetrically and with different pre-shock situations, which means that they had divergent state interests and bargaining positions on a few of the concrete measures.

But in general, all European states had a domestic interest in a joint European response to the coronavirus crisis, because they are dependent on strong demand, trade, and tourism between countries. Furthermore, within the eurozone, countries had an interest to ensure that no member state would be hit by overtly high interest rates, as a sovereign default of one member might lead to less trust and even higher interest rates for the others. Additionally, any country’s exit costs of leaving the eurozone were previously estimated to be 20-50 % of GDP per year.^[28] As all member states had an interest in quick and cheap ESM loans for health-related spending, as well as loans for their businesses from the EIB, these measures were adopted without much bargaining.^[29] Compared to the recovery fund, the amount of these two measures was relatively small, needed quickly, and not attached to conditionalities, which is why none of the states bothered to bargain much.

The third response pillar, SURE can equally be explained by all member states having an interest in getting cheap loans to protect the jobs of those workers, who would otherwise be laid off because of the crisis. Without unemployment reinsurance, some member states would be hit by high unemployment, which would decrease the inter-European demand, and additionally such a scheme is supported by most people in all member states.^[30] Thus, LI explains these steps by pointing out that all member states had an interest in the measures and therefore no hard bargaining was needed. The theory does not ignore that the EIB and Commission played a role in planning these steps but asserts that finally state interests determined the actual outcome.

The national interests mostly differed regarding the financing of the large European recovery plan. Italy, Greece, and Spain especially faced relatively high interest rates for their government bonds and were reluctant to be compelled to adhere to the strict conditionalities that would be attached to ESM loans for non-health related purposes.^[31] Because corona-bonds, unlike ESM loans, come without strict EU oversight over national spending and with low interest rates, nine eurozone governments including Italy, France, Greece, and Spain publicly pleaded for them.^[32] Germany, Austria, the Netherlands, and Finland, on the other hand, faced negative interest rates and would have to pay higher rates if they were to issue common corona bonds. Additionally, since the euro crisis, public opinion in Germany was overwhelmingly opposed to common bonds, as politicians and the media framed them as a bailout of the “southern sinners”.^[33] By referring to their uncertain legal basis and the dangers of mutual liability, Germany and the Netherlands rejected the corona-bonds.^[34]

Based on the member states’ interests and their bargaining positions, LI can explain why finally neither the ESM, nor corona-bonds were adopted, but the EU budget channelled recovery fund was. Because Germany and the Netherlands were less affected by the economic downturn and Germany’s power position as the biggest eurozone economy, they had a strong bargaining position to preclude corona-bonds. Nevertheless, because of the high exit costs of leaving the eurozone, they needed to help the most affected countries. The southern countries were hit hard by the crisis and, hence, were in favor of corona-bonds but lacked the power to force the northern countries to agree. What emerged then (e.g. the EU budget channelled recovery fund) is a compromise that fulfilled the southern countries’ need for cheap loans and grants as well as their aversion to the ESM, with the north’s distaste for corona-bonds with mutual liability and no conditionalities. Hence, Hypothesis 2, which claims that national interests and power positions shape intergovernmental bargaining and the European Union’s mandate regarding the coronavirus recession, is confirmed.

Limitations. The previous analysis is constrained by the fact that the coronavirus recession is still unfolding and hence the EU’s response might still alter in the next few years. Additionally, future research should include more profound data on the European interest groups’ preferences and further scrutinise the individual member states’ interests and power positions. Despite these limitations, the decisions taken so far already indicate that a purely neo-functional explanation could not have predicted the new EU recovery fund.

Conclusion

Overall, the analysis has shown that neo-functionalist spillovers, elite and interest group interests explain the broad processes leading to a monetary but not a fiscal union. The theory can also explain why, as response to the external coronavirus shock, the EU integrated further with the cultivated spillovers of EIB business loans and the SURE unemployment reinsurance loans. While ESM loans for health-related spending could be seen as political spillover, neo-functionalism cannot explain why European elites and interest groups had extremely divergent ideas regarding the funding for the economic recovery and why the existing ESM was not extended for non-health-related recovery spending.

Liberal intergovernmentalism has less explanatory beauty than neo-functionalism in merely explaining the monetary union as the outcome of several rounds of inter-state bargaining. The theory, though, does recognize the coronavirus recession as an exogenous shock and explains the limited debate on EIB loans, health-related ESM loans, and SURE as resulting from their relatively modest size and a coherent interest of all member states in the measures. Subsequent research should further examine interest group and member state preferences regarding them.

Finally, only LI can explain why neither nor the ESM, but instead the EU budget channelled recovery fund was devised as a compromise between southern and northern interests. Thus, overall liberal intergovernmentalism best explains the EU’s reaction to the coronavirus recession and highlights that in times of crisis not supranational spillovers but member state bargaining determines whether and in what form European integration results.

Works Cited

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Burchard, H., Karnitschig, M. & Tamma, P. (2020). Berlin and Paris pitch competing solutions to ‘corona bonds’ conundrum. Politico. Retrieved fromhttps://www.politico.eu/article/coronavirus-corona-bonds-berlin-and-paris-pitch-different-solutions-conundrum/

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McNamara, K. & Matthijs, M. (2020). Europe’s leaders meet this week to confront the coronavirus. The Washington Post. Retrieved fromhttps://www.washingtonpost.com/politics/2020/04/21/europes-leaders-meet-this-week-confront-coronavirus/

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References

^[1] Gopinath, “The Great Lockdown.“

^[2] Eurogroup, “Economic Response to Covid-19.”

^[3] Ibid.

^[4] European Council, “Conclusions of the President of the European Council.”

^[5] Haas, The uniting of Europe, 16.

^[6] Schimmelfennig, “European integration in times of crisis,” 969.

^[7] Strøby Jensen, “Neo-functionalism,” 56.

^[8] Schmitter, “Three neo-functional hypotheses,” 162.

^[9] Strøby Jensen, “Neo-functionalism,” 59.

^[10] Schimmelfennig, “European integration in times of crisis,” 974.

^[11] Strøby Jensen, “Neo-functionalism,” 62.

^[12] Ibid, 62.

^[13] Cini, “Intergovernmentalism,“ 70.

^[14] Moravcsik, “Liberal intergovernmentalist approach,” 482.

^[15] Ibid, 482.

^[16] Schimmelfennig, “European integration in times of crisis,” 973.

^[17] Ibid, 973.

^[18] Biermann et al., “Political (non-) reform in the euro crisis and the refugee crisis,” 261.

^[19] Schimmelfennig, “European integration in times of crisis,” 987.

^[20] Strøby Jensen, “Neo-functionalism,” 60.

^[21] Eurogroup, “Economic Response to Covid-19.”

^[22] Saeed, “Gentiloni: emergency finance has no strings attached.”

^[23] Eurogroup, “Economic Response to Covid-19.”

^[24] McHugh, “Business: get busy on stimulus.”

^[25] Eurogroup, “Economic Response to Covid-19.”

^[26] McNamara & Matthijs, “Europe’s leaders meet to confront coronavirus.”

^[27] Commission, “Speech by President von der Leyen on the new Recovery Plan.”

^[28] Schimmelfennig, “European integration in times of crisis,” 983.

^[29] Burchard, Karnitschig, and Tamma,“Berlin and Paris pitch solutions to ‘corona bonds.”

^[30] Vandenbroucke et al., “The European Commission’s SURE initiative,” 3.

^[31] Burchard, Karnitschig, and Tamma,“Berlin and Paris pitch solutions to ‘corona bonds.”

^[32] Wilmès et al., “Mister President, Dear Charles.”

^[33] Matthijs and McNamara, “The euro crisis’ effect: northern saints, southern sinners,” 243.

^[34] Smith-Meyer, “EU agrees on €500B of economic aid but no ‘corona bonds’.”