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Article

Baldur Thorhallsson

Iceland’s European policy is a puzzle. Iceland is deeply embedded in the European project despite its non-EU membership status. Iceland is a member of the European Free Trade Area (EFTA) (1970), the European Economic Area (EEA) (1994), and Schengen (2001). Moreover, Iceland applied for membership in the European Union (EU) in 2009. Nonetheless, the Icelandic political elite have been reluctant to partake in the European integration process. They have hesitated to take any moves toward closer engagement with Europe unless such a move is seen as necessary to deal with a crisis situation. Decisions to engage with the European project have not been made based on outright economic and political preferences. They have primarily been based on economic or political necessity at times when the country has faced a deep economic downturn or its close neighboring states have decided to take part in European integration. The country has essentially been forced to take part in the project in order to prevent crises from emerging or to cope with a current crisis situation. For instance, in 2009, Iceland unexpectedly applied for membership in the EU after the collapse of its economy nine months earlier. However, four years later, after a swift economic recovery and after Iceland having been “betrayed” by the EU in the so-called Ice-save dispute with the United Kingdom and the Netherlands, the accession process was put on hold. The EU was no longer seen as an economic and political savior. Iceland’s close relationships with its powerful neighboring states, the United States and the United Kingdom, have also had considerable influence on the country’s European policy. Iceland’s membership in the EFTA, the EEA, and Schengen was largely dictated by the Nordic states’ decisions to join the organizations and because of crisis situations their lack of membership would have meant for Iceland were it to be left out. Moreover, the decision by the United Kingdom to leave the Union has firmly frozen Iceland’s accession process and contributed to increased criticism of the transfer of autonomy from Reykjavik to Brussels that takes place with the EEA Agreement. Furthermore, many at the right of center in Icelandic politics do not see any security reasons for joining the EU, as Iceland’s defense is guaranteed by a bilateral defense treaty with the United States and membership in the North Atlantic Treaty Organization (NATO). European debates about partial and full participation in the European project have led to harsh opposition in Althingi (the National Parliament), deep divisions in society at large, and public protests. Opposition has been driven by an overwhelming focus on sovereignty concerns. The political discourse on sovereignty and self-determination prevails except when the country is faced with a crisis situation. To prevent a crisis from emerging or to deal with a current crisis, Icelandic politicians reluctantly decide to take partial part in the European project. They are determined to keep autonomy over sectors of primary political importance, sectors that are close to the heart of the nation, those of agriculture and fisheries.

Article

The Economic and Monetary Union (EMU) is one of the most important policy areas of the European Union (EU). Academic research on EMU in political science is well established and ever-evolving, like EMU itself. There are three main “waves” of research on EMU, which have mostly proceeded in a chronological order. The first wave of scholarly work has focused on the “road” to EMU, from the setting up of the European Monetary System in 1979 to the third and final stage of EMU in 1999. This literature has explained why and how EMU was set up and took the “asymmetric” shape it did, that is to say, a full “monetary union,” whereby monetary policy was conducted by a single monetary authority, the European Central Bank (ECB), but “economic union” was not fully fledged. The second wave of research has discussed the functioning of EMU in the 2000s, its effects and defects. EMU brought about significant changes in the member states of the euro area, even though these effects varied across macroeconomic policies and across countries. The third wave of research on EMU has concerned the establishment of Banking Union from 2012 onward. This literature has explained why and how Banking Union was set up and took the “asymmetric” shape it did, whereby banking supervision was transferred to the ECB, but banking resolution partly remained at the national level, while other components of Banking Union, namely a common deposit guarantee scheme and a common fiscal backstop, were not set up. Subsequently, the research has begun to explore the functioning of Banking Union and its effects on the participating member states.

Article

Lucia Quaglia

The banking union is considered to be one of the main steps in economic integration in the European Union. Given the rather recent establishment of this policy, academic research on the banking union does not have a long lineage, yet it is an area of bourgeoning academic enquiry. There are three main “waves” of research on the banking union in political science, which have mostly proceeded in a chronological order. The first wave of scholarly work focused on the “road” to banking union, from the breaking out of the sovereign debt crisis in the euro area in 2010 to the agreement on the blueprint for the banking union in 2012, explaining why it was set up. The second wave of literature explained how the banking union was set up and took an “asymmetric” shape, whereby banking supervision was transferred to the European Central Bank (ECB); however, banking resolution partly remained at the national level, whereas other components of the banking union, namely, a common deposit guarantee scheme and a common fiscal backstop, were not set up. The third wave of research discussed the functioning of the banking union, its effects and defects. The banking union has slowly brought about significant changes in the banking systems of the member states of the euro area and in government–business relations in the banking sector, even though these effects have varied considerably across countries.