The transformation of the euro
On Wednesday 31 January, at 15.00 hrs, Vestert Borger will defend his dissertation entitled ‘The Transformation of the Euro: Law, Contract, Solidarity’ in the Great Auditorium of Leiden University. The dissertation has been written under the supervision of Professor Stefaan Van den Bogaert (supervisor) and Dr Jorrit Rijpma (co-supervisor).
In their fight against the debt crisis, especially during the period 2010-2012, the European Union and its member states took measures that have profoundly changed the euro. As a result, it now differs fundamentally from what it was when it was introduced in the early 1990s by the Treaty of Maastricht. Surprisingly, this change has come about with hardly any formal amendment to the Union’s ‘basic constitutional charter’, the Treaties. How, then, to understand this change?
The dissertation argues that the constitution of the Union has not been amended, but transformed. Constitutional transformation operates on the intersection between law and politics, between legality and power. It occurs when constitutions change shape without formal amendment. In the context of the Union one can distinguish between institutional and substantive transformations. The first kind of transformation concerns changes in the Union’s system of decision-making and institutions, the second relates to changes in the meaning and substance of the policies it has to implement.
During the crisis the Union witnessed a substantive transformation, characterized by a broadening of the currency union’s conception of stability. Whereas it used to grant overriding importance to price stability, it now also explicitly takes into account financial stability. Financial assistance operations for distressed member states and government bond purchases by the European Central Bank are the essential manifestations of this transformation.
The transformation was approved by the Court of Justice in Pringle and Gauweiler. The Court declared it compatible with the currency union’s legal set-up, in particular the no-bailout clause in Article 125 TFEU, the prohibition on monetary financing in Article 123 TFEU and the mandate of the Bank. What is more, the Court could not disapprove of the transformation; primacy did not lie with the judiciary, but with politics.
The dissertation studies the transformation through the lens of solidarity. It uses this lens to conceptualise the unity of the member states and to analyse how this unity was preserved during the crisis. It then goes on to show how this changed the legal set-up of the euro and why the Court could not turn against this change in Pringle and Gauweiler.
A better understanding of the Union
The euro crisis shook the European Union to its foundations. By studying the measures that were taken to rescue the euro, the dissertation clarifies the change that occurred in its legal set-up. Above all, it reveals that the Union possesses a strong transformative capacity and shows how politics and the judiciary relate to one another when this capacity is drawn upon during existential crises. In doing so, the dissertation not only contributes to a better understanding of the euro, but to that of the Union itself.