8 min read — Analysis | The EU at a Crossroads (series)
The EU's Core-Periphery Debate: The EU at a Crossroads (Part 3)
By Nathaniel Thomas Carrier
First published: 2020 | Electronically published: March 7, 2023 at 8:20
The EU at a Crossroads: The Core-periphery Debate in Light of Supranationalism, Intergovernmentalism, and Balance of Power
The core-periphery debate is one that exists in different forms around the world. The debate that occurs within the EU, however, is one that is torn between the different regions of Europe. With various organizations such as the Hanseatic League and the Visegrád Group (V4) at play, the Union is in the midst of an institutional crisis. This chapter, subsequently, will discuss the Eurozone as the core important feature to not only a fiscal union, but also a political one. Further, the chapter will analyse the role of the V4 and its effects on the balance of power within the Union and the sociological perceptions of European society.
2.1 – The Eurozone and State Sovereignty
It would be inadvisable to assume that states such as Poland, Hungary, and Czechia will not join the rest of the Union in completing the task of joining the Eurozone, as this is a legal requirement demanded by their ascension to the EU. Using these states as examples is necessary when these are three out of four Member States who make up the V4. However, the topic of adopting the Euro is one that illustrates which states are the laggards and which ones are the pioneers. Such distinctions are necessary to ensure economic cohesion of the single market, although, it is important to emphasize that the Eurozone is not just an economic union, but is what is needed to form a political one. While the Polish Złoty is a symbol of Polish independence, its volatility is dangerous in times of economic stress. Sixteen years after Poland’s ascension to the Union, the Polish government has still managed to hold on to this symbol, despite expectations from the EU Commission and other Member State leaders.
Despite that the EMU is not perfect, it is the start of warranting that the original intentions of the fiscal union are implemented and the single market has some sense of political and economic stability. Stability, though, is a term which needs to be further analysed, as it is paramount that stability within the Eurozone and those yet to enter, prevails. Scholarly suggestions do exist that could guarantee the cohesion and furthered integration of the single market, such as Agnès Bénassy-Quéré’s suggestion of turning the European Stability Mechanism (ESM) “…into a fully fledged treasury that would manage a crisis fund (the ESM itself) and possibly other funds (unemployment insurance, investment, refugees…).” While this would be an engagement reliant on the willingness of Member States, its implementation to certify “A larger ESM would mean issuing more federal bonds that would also provide stabilising ‘safe’ assets.” The controversy behind this, though, is one to do with sovereignty, yet again. A sensitive topic such as this requires to be handled with much care, although, it does not imply that criticisms are not deserved and credit is given where due.
In the introduction of this dissertation, the question, Does a single European currency maximise the potential of an integrated market?, is asked. To begin to answer this, it is essential to identify what poses as maximum potentiality. As there is no single definition of a fiscal union, one can use the example of other federal states, such as the United States of America. Under US federal law, “…fiscal stabilisation is assigned to the federal government and state governments are subject to individual deficit and debt limits.” However, this is under a federal union and one that is, most importantly, political. The EU is not a political union, yet. Though, its potential to become one is possible. The Eurozone is the core to the Union, but this also means that there are other Member States who are on the periphery.
Nevertheless, much like the deepening vs. widening debate, one cannot exist without the other. “In the Eurozone, however, it [fiscal stabilisation] is assigned to the national level and for this reason alone governments face a permanent trade-off between discipline and stabilisation.” It is here that it should be understood that the maximum potentiality of the EU single market, specifically, the Euro, is lacking. Without the centralisation of fiscal stabilisation, or least the amelioration of the ESM to a treasury, means that Member States will continue to sacrifice stabilisation for discipline or vice versa.
The debate of core-periphery is purely political, though, it is vital to be aware of the sociological implications that come with this. Namely in Hungary, the central European state led by Prime Minister Viktor Orban, has voiced particular favor of adopting the Euro as Hungary’s national currency in the past, but has recently shifted from this idea stating: “Hungary is aware that we live in Europe and we participate in the European market. At the same time, we have our own currency and our own national economy, but we cannot detach ourselves from what is happening around us”. This seems to come in opposition to the majority of Hungary’s population, where 52% of respondents in 2017 agreed with the following statement in a survey conducted by the European Commission: “A European economic and monetary union with one single currency, the euro”. Nevertheless, Hungary’s stance on the Eurozone has become a game of rejecting reality — a reality that all EU Member States are faced with that remains the same: the Euro and the single market is the absolute core to the Union. Not only is the Euro important as a symbol of the Union’s strength, but it is already of great importance to Central-Eastern Europe (CEE), as their economies are heavily reliant on EU trade and investment. However, it is easy to understand why some Member States may feel blindsided by the expectation to join the Eurozone, as these are the states that lie within the periphery of the Union. Member States such as the Western Balkans experienced “virtual stagnation” during and after the Eurozone crisis. Furthermore, the crisis commenced much debate in regards to the importance of joining the Eurozone, since Poland, the eastern-most state to lie outside the Eurozone, resisted much of the crisis because of the “…depreciation of the zloty (2008-2009)…” making “…export goods more competitive on the international markets which prevented Polish exports from declining”. While there exists a plethora of reasons for the success of Poland’s economy in the last 12 years, there are also many reasons why this success will not last.
Because of the serendipitous nature of this subsection, it is necessary to shortly sum it up: this subsection has outlined and analysed the general argument of the core-periphery debate, casting much speculation on the value of national sovereignty over lawful obligations.
Nevertheless, what has been displayed is the overall inaptness of the debate and adds further reasoning to the hypothesis of this thesis.
2.2 – The Visegrád Group: Laggards and Pioneers
The V4, being the largest regional intergovernmental organisation in the central-eastern European (CEE) area other than the EU, see themselves as the pioneers of the new Europe — a group dedicated to picking up where the EU is in deficit. Though, is the V4 a regional organisation for the promotion of the Unions’ values and ideas within its own region? Or is it a group that adds to the already existing cooperation struggles between Europe’s east and west? This subsection will analyse the role of the V4 in Europe, eventually determining whether this organisation is truly the new pioneers of Europe, or if they are another example of Europe’s laggards.
Poland, Hungary, Czechia, and Slovakia are mostly depicted as the EU’s success stories of CEE, however, it is important to emphasise that while the V4 may be in opposition to deeper integration, the V4 values much the cooperation of all Member States to work as a dignified union. This comes with much speculation, as since Poland’s change of government in 2015, euroscepticism has been on the rise. This, as a concerning module of a fragmenting Europe, must be viewed as a trivial part to the V4’s understanding of its position within Europe. Though, in Rafał Trzaskowski’s chapter in Towards A V4 Position On The Future Of Europe, he states the following in regards to the V4’s position in Europe:
The greatest challenge facing the Union today is the danger of permanent fragmentation. A “multi-speed” Europe is nothing new. However, up to now, when some Member States have decided to integrate even further, such processes have taken place within the same, integral institutional framework, with the undivided European Commission enjoying its exclusive right of initiative, and under the democratic scrutiny performed by the European Parliament (however imperfect it might be). The EU’s institutional setup has been based so far on the principle that everyone, i.e. all the Commissioners and certainly all the Members of the European Parliament (MEPs), are involved in the decision-making process, even when it concerns projects in which not all Member States are able or willing to take part (such as the euro, Schengen, and the European Patent).
It is interesting to see that while Poland, as the V4’s strongest economic and political player, was much in line with the EU’s institutional framework agenda, they still fear that CEE Member States will be left behind in the Union’s efforts of deeper integration. For example, the banking union, one that is still in discussion at the time of writing this dissertation, is considerably concerning to the V4. “The explanation of the willingness to adopt the euro…” or to even join a EU-wide banking union “…is based on the importance of the country’s collective identity because monetary affairs have always been closely related to issues of national identity and statehood”. Superficially, the aforementioned issues have little in common, although, their relationship with national sovereignty remains the same. It should be mentioned that national identity, statehood, and national sovereignty are separate entities existing on the same plane. Each of them are pillars of a state, but in the context of the EU, and what has already been discussed in the first chapter of this dissertation, a fair amount of national sovereignty must be transferred to the EU institutions upon accession to the Union.
Interestingly, Slovakia has played a vital role in the V4’s complicated identity and their ultimate agenda. While Poland may be acting to be a regional power, Slovakia has remained conscious of its role in Europe. To explain this, the words of former Slovak Prime Minister Fico are used from The Visegrad Group As An Ambitious Actor Of (Central-)European Foreign And Security Policy: “For Slovakia, the Visegrad Four does not represent an alternative to the EU. The V4 is not the living space that we imagine for our future. Our living space is in the EU”. Despite the V4’s best efforts to be seen as a united organisation, it seems from this statement that even within its own interior, the V4 is divided on their role in the future of Europe. This division, within itself and with the EU, has developed a “quasi-identity”.
Michal Kořan cited by Ladislav Cabada in The Visegrad Cooperation in the Context of other Central European Cooperation Formats, states that this identity, nevertheless, is directly “…rooted in the thinking of politicians, diplomats and other official representatives that engage in international policy” within the group. While identity in the context of regional cooperation is important, this identity has led state politicians to become blindsided to the ensuing goal of the EU: to form an ever closer Union.
This leads the debate to the same controversy: in what context does the Union grow closer without sacrificing the wishes of national governments? Much can be discussed in this matter, though, it is more important to emphasise that the core-periphery debate has arisen prominently because of the Eurozone crisis. Though, while the V4 has been seen to grow ever more divided on their position with Brussels, there are several reasons for this: first, the new governing Law and Justice party (PiS) in Warsaw has challenged the EU on the rule of law, making significant changes to domestic and foreign policy. Second, a referendum held in Hungary against the EU on their quota of distributing refugees, discussed by Milan Nič, author of The Visegrád Group in the EU: 2016 as a turning-point?, was Hungary’s newest move towards their “cultural counter-revolution”. Lastly, “Third, the centre–left governments in Prague and Bratislava are broader three-party coalitions, and their Social Democratic prime ministers do not want to be part of a conservative counter-revolution against the EU institutions”. Here it is seen that even within the internal ranks of the V4, Slovakia and Czechia are reluctant to take a stand against the EU. It is this reluctance that persuaded the aforementioned states to include Austria and Slovenia in V4 discussions, forming the Slavkov Doctrine.
In The core-periphery divide in the EU transformation crisis: challenges to the Visegrád Four, Attila Ágh states that “…the emergence of the Eurozone has drastically transformed the EU institutional system as a whole. It impacted upon non-euro member states both directly with its decisions and indirectly with its intergovernmental approach and policy of positive and negative spill-overs”. As a result, peripheral Eurozone Member States in the South and in the East received EU transfers “due to their illdesigned adjustment and/or in some cases to their immature Eurozone membership”. Further, Ágh describes the Schengen Zone as “incomplete”, increasing the core-periphery d ebate and furthering its divide due to the divergence of the V4 states from conventional “…EU political and socio-economic…” policy goals. Ágh takes a rather critical view of the V4, but likens it to that of the V4’s Member States who unambiguously yearn for an identity that is familiar — one that resides in CEE.
To be more specific in regards to the peripheral Member States within the Union, Will Bartlett and Ivana Prica in Interdependence between Core and Peripheries of the European Economy: Secular Stagnation and Growth in the Western Balkans, separates these countries into three categories: first, the “Inner Periphery” states. These are the Member States who reside in the Eurozone, but have suffered a deep recession as a result of the Eurozone Crisis. Second, the “Outer periphery” states — the “…countries that are within the EU but outside the Eurozone. They have also been drawn into the Eurozone crisis as a consequence of spillovers from the crisis”. And lastly, the “Super Periphery” Member States — the “…countries that are outside both the Eurozone and the EU, but which are nevertheless tied to the Eurozone
through a high level of euroisation of their economies”.
The core-periphery debate within the EU is not solely in regards to Member States, but rather all states who are in the same way economically tied to the Union. This is, based on the aforementioned text and research, a reason seen today as the cause for the divide not just within the V4, but also in the EU. Groups such as the V4 bring modernization to the forefront of the debate as well — pitting modernisation against stabilisation. This is a trade-off seen not only here, but is a recognisable pattern of trade-offs that exist even in the deepening vs. widening debate. Most notably, it all leads, once again, to the same controversy: the issue of identity.
As members of the EU, the V4 countries are in battles of their own. Some are attempting to handle migration crises, such as Poland and the influx of Ukranian refugees. Or Slovakia, however small and rather isolated, is dealing with a political crisis in direct relation to the global health pandemic that has altered geopolitics in a way that will not heal for years to come. Regardless of these events, it is most appropriate now to discuss the core-periphery debate in terms of sociological thought since this debate has led to the question of national and regional identity.
2.3 – Sociological Thought in Relation to the Core-Periphery Debate
This, a short, but necessary subsection of this chapter, will focus solely on the work of Hans-Jörg Trenz — Elements of a sociology of European integration — analysing the effects of a debate like the core-periphery debate o n European society. To begin, Trenz states the following: “Sociology starts with the insufficiencies of explaining European integration merely by reference to efficiency and functionality of governance”. Sociology of European integration, as a consequence, aims to relate to the ways in which European actors interact with each other. Most notably, it is the ways in which a non-state actor (the EU) and Member States interact with each other, but also how all Europeans interact with each other and their respective governments. Because the core-periphery debate is more complex rather than being as simple as black and white, it is crucial that Member States and other actors within the EU are in compliance with not just each other, but also with their constituents. Though, while the EU “…is committed to positive integration with the aim to guarantee the social cohesion and stability of the continent”, it is “…increasingly…” “…a constraint to the integrity of the national society”. This sheds light on the core-periphery debate as one that, just as much as the discussion of European integration, is not only helpful, but assuredly meaningful.
It should be known by now that the effects of the core-periphery debate lie hand-in-hand with the sociology of Europe. Just as the debate exposes the disparities between regional groups and the EU or the differences of various forms of peripheral states, so does the sociological thought of Europe. This debate, in a lack for better words, is the heart of the issue at hand within Europe herself and cannot be separated or disregarded as it is crucial to the stabilisation of the Union.
2.4 – Conclusion
Much like chapter one, various matters have been discussed in this chapter. It has exposed the core-periphery debate as one that consists of many factors — revealing the complexity of reality in its entirety. In the first subsection, with the discussion relating to the Eurozone and state sovereignty, it can be concluded that the core-periphery debate shows how the Eurozone is the absolute core to the Union. However, with this comes the division of Europe and the complexity of national sovereignty over lawful obligations and EU supremacy. This supremacy, although, is one that unearths how the national governments of core and peripheral Member States interact with each other, ultimately determining the future of the Union.
In the second subsection, The Visegrád Group: Laggards and Pioneers, the role of the V4 in the future of the EU is analysed. Through the works of various scholars, most particularly, those of V4 Member State nationalities, show that while the organisation is actively in pursuit of bettering CEE, it is through its internal divisiveness and most perplexing quasi-identity that it can be determined from here that the V4 Member States are the laggards of the Union. This is not to say that such other Member States do not exist, however, when faced with a large, regional organisation such as the V4, the divide between the east and the west is most prevalent. Despite the hardships of various EU crises and differences in identity compared with the rest of the EU, the V4 can emerge as a European actor that strives to implement mainstream EU policy goals and at the same time work within their own region to ensure the betterment of socio-economic impecuniousness. With this, Europe can overcome the struggle to maintain the balance of power that, left unchecked, will decimate geopolitical success.
Lastly, the third subsection Societal Thought in Relation to the Core-Periphery Debate, reveals the quintessence of the core-periphery debate. This debate exists as one that ties directly with the complex sociological nature of Europe through its ability to sow divisiveness, but at the same time divulge in the relationship between the importance of discussing such matters and the ultimate finalité of the Union.