From Lever to Club?: conditionality in the European Union during the financial crisis

How did the European Union come to develop so many instruments of conditionality during the Eurozone debt crisis, despite the well-documented limitations of such measures in other contexts? This article argues that major EU actors–Council, Commission, and Central Bank–were influenced by their own recent and positive experiences with conditionality, especially in the EU’s enlargement in the early 2000s and the early phase of the global financial crisis. However, despite the promise of conditional instruments in these two earlier episodes, further EU reliance on conditional policies has not brought the positive outcomes the main European institutions had hoped for. As EU institutions turned to harder and harder forms of conditionality in the Euro crisis, they relearned many of the familiar negative lessons of conditionality and ultimately had to concede that the apparent success of its conditionality tools in the two earlier phases was exceptional. The article documents the evolution of conditionality over these periods, showing how EU conditionality instruments changed over time, beginning as a ‘lever’ to assist the accession of candidate states in the enlargement period, and evolving into a ‘club’ used to impose macroeconomic discipline in the late 2000s. It shows why this approach to the Euro crisis failed and was ultimately downgraded as Eurozone policy shifted in favour of monetary measures in which conditionality played only a marginal role