Driving Informal Institutional Change: The European Parliament and the Reform of Economic and Monetary Union

The Lisbon Treaty for the first time introduced co-decision rights for the European Parliament (EP) in the area of economic governance. At the same time, the outbreak of the Eurozone crisis and its management led to the adoption of various legislative acts and intergovernmental agreements to reform the Economic and Monetary Union (EMU). These measures were agreed under different institutional rules giving the EP more or less formal decision-making power. Drawing on a bargaining theory of institutional change, we analyse which strategies the EP has used in EMU reform to reach an informal institutional empowerment going beyond the provisions of the Lisbon treaty. Moreover, we identify the conditions under which the EP was successful or failed in trying to bring about informal institutional change to its benefit. Based on original interview material, we examine not only positive cases of EP empowerment, but also negative ones in which the EP failed to obtain further informal rights. Empirically we focus on the most important measures when dealing with the Eurozone crisis, namely the “Six-pack” legislation, the European Stability Mechanism, the Fiscal Compact and the Banking Union. As a result, we argue that the urgency of decision-making and its distributional consequences influence the EP’s chances of success in driving informal institutional change. While urgency plays a crucial role in times of crisis, distributional consequences come to bear in policies where core state powers are at stake, such as economic governance.