Publication
Establishment of the European Stability Mechanism for the Eurozone
In this article, Madeleine O. Hosli and Wen Pan examine how intergovernmental dynamics shaped the European Stability Mechanism (ESM), using Liberal Intergovernmentalism to assess negotiation phases, the influence of major member states, and which theoretical assumptions hold or need qualification.
- Author
- Madeleine O. Hosli & Wen Pan
- Date
- 23 September 2025
- Links
- Read the full article here
The establishment of the ESM was largely shaped by the preferences and bargaining power of major Eurozone member states, notably Germany and France. Germany’s economic leverage and domestic pressures, alongside France’s concern for banking exposure, played a central role in determining the scope and design of the mechanism. The authors argue that interstate negotiations reflected asymmetrical interdependence, balancing the need for fiscal discipline with the provision of timely financial assistance. While Liberal Intergovernmentalism captures many of these dynamics, it is less effective at explaining evolving preferences, path dependence, and differentiated integration.
The ESM emerged as a Eurozone-specific institutional solution, reflecting both deliberate state choice and negotiated compromises. It strengthened the EU’s capacity for crisis management and laid the groundwork for further institutionalisation of economic and monetary governance. The findings highlight the importance of major member states, domestic political pressures, and intergovernmental bargaining in shaping EU crisis response mechanisms.