This chapter will investigate the decision-making structure of the EU. The EU is organised around supranational political institutions (such as the Commission and the EP) and political institutions representing member state governments (such as the Council of Ministers and the European Council). Certainly, other institutions affect the decision-making process, such as the ECJ or the ECB. However, they are technical institutions, whose functioning and deliberations are determined by their intrinsic rules rather than by political considerations. There are several interpretations of the EU decision-making structure. Börzel (2016: 12) posits that ‘the EU’s governance has evolved over time developing different varieties of inter- and transgovernmental negotiation and regulatory competition in the shadow of supranational hierarchy’. Wallace and Reh (2015) identified five regularised policy-making patterns (Community method, regulatory method, distributional model, intense transgovernmentalism and policy coordination) used for dealing with the various policy realms of the EU. Research on interstitial policies detected additional policy micro-patterns, although temporally bounded. This variety is generally reduced to four distinct patterns of taking decisions in the EU: Community method, centralised regulation, policy coordination and intergovernmental method. This Chapter regroups the four patterns into two basic decision-making regimes as a heuristic device for identifying the fundamental decision-making differentiation institutionalised within the EU. They are defined as decision-making regimes because they constitute a stable (although flexible) combination of rules and actors. The chapter assumes that the EU, since 1992, has ended up consolidating two decision-making regimes: supranational (inclusive of the Community method and centralised regulation) and intergovernmental (inclusive of policy coordination and intergovernmental method) which are stable decision-making regimes and not only transitory forms of intergovernmental and transgovernmental governance patterns or micro-decision-making patterns changing over time.

The objective of social policy is to limit inequalities in resource distribution within societies. On the one hand, it consists in regulating markets and working conditions; on the other, it uses redistributive mechanisms (i.e. cash transfers and services) to offset contrast in income distribution and tackle poverty. The EU exhibits the lowest level of inequalities compared to countries around the globe, including the United States. However, recent studies also show that, in some respects, the EU falls short of its promise of welfare and social cohesion for all. While general levels of income have been rising continuously over the past decades, inequalities among individuals have only declined slowly. When looking at the Gini coefficient, the most common indicator for measuring inequalities, it appears that the decrease of inequalities has come to a stalemate in the EU-27, with the euro area even displaying an increase of the index since 2008 (while the US has known a sharper increase of inequalities, starting from a significantly higher level). Moreover, the catch-up process of the poorest regions in terms of living standards has not taken place to the expected extent. In some regions of Southern and Eastern Europe or the Baltic countries, the recession has meant a severe degradation of welfare for many people. Today, the EU still exhibits a clear contrast between a wealthy core of Continental and Northern countries versus the poorest peripheries in the south and east of the continent (see chapter 17).

Having an LoLR to the financial system and the state is one of the essential preconditions of economic stability (see Box 9.1). Since the late nineteenth century the LoLR function was played by national central banks acting as custodians of both national currencies and domestic monetary systems. Since central banks do not have to make profits and since they cannot have liquidity problems with their own money, they can create as much money as they want within their mandates to keep prices stable. In other words, they issue the ‘last’ money and are therefore uniquely well-positioned to address systemic liquidity problems. Moreover, even under normal conditions, financial institutions may need to borrow overnight from the central bank at a low ‘administered’ rate (the so-called discount window) whenever they experience short-term liquidity shortfalls and are in need of a quick cash infusion.

The nature of the EU has always been uncertain. Depending on the contexts, it has oscillated between a form of intergovernmental economic cooperation and a sui generis political supranational construction. While proponents of intergovernmentalism see the EU as an organisation that brings together nation states with the aim of increased economic cooperation, promoters of the EU as a polity conceive it as a union where the bonds between the peoples of Europe beyond the nation states are strengthened. These contrasting visions have shaped the integration process over time. This satisfied both federalists and intergovernmentalists as the outcomes of integration ‘proved to be compatible with analyses from each of these perspectives’ (Bellamy and Castiglione, 2000: 67). However, the issue of what the EU is and what can be expected from it remains a matter of heightened political debate and academic controversies. Today we know that the EU is more than an intergovernmental form of economic cooperation. However, despite the development of the political Union over time, the EU is not a state as it lacks a demos and a shared identity.

Since the very start, trade policy has been the showpiece of European integration. Together with agriculture and competition policy, it was one of the few policy domains that were transferred immediately to the supranational level by the Rome Treaties launching European integration. Thanks to the extraordinary European growth rates during the trentes glorieuses in the following decades and the consecutive enlargement rounds starting with the UK, Ireland and Denmark in 1973, the EU became the largest economy in the world by the beginning of the twenty-first century. Lacking ‘hard’ foreign policy and security competences, the ‘Common Commercial Policy’ allowed the EU to play a principal role on the world stage in, but also beyond, the trade sphere.

Cohesion and solidarity between member states are fundamental values of the EU, recognised in Article 3 of the Treaty on the Functioning of the EU (TFEU). The goal of cohesion is to reduce regional disparities across the EU. The main instruments of Cohesion Policy are the European Structural and Investment Funds (ESIF), comprising the European Regional Development Fund (ERDF), European Social Fund (ESF) and Cohesion Fund – as well as agriculture and fisheries funds. As the most direct expression of financial solidarity, Cohesion Policy accounts for around one-third of the total budget (around €370 billion) over the 2014–20 period and significant public investment in many less developed countries. Funding is highly concentrated on less developed EU countries and regions and invested in areas like transport infrastructure, business development, training and education to improve sustainable growth and quality of life.

This part examines the evolution of European regional integration since World War II, with a focus on the dramatic politics of the past ten years. The turmoil surrounding the 2010 eurozone crisis put the EU’s legitimacy at risk and created expectations for major policy and institutional change. Against this backdrop, it explains how recent crises have affected not only EU governance – that is, institutions and decision-making procedures – in practice but also the deeper theoretical understandings through controversies among scholars in the field.

Free movement of labour, migration and immigration have been hotly debated recently, notably during election campaigns, often with a particular focus on the migration of poorer people.1 What is free may not necessarily be fair, and this concern applies to trade as well as labour mobility. The freedom to move in the EU single market should help member states to higher economic performance and citizens to higher standards of living, but the legitimacy of open labour markets depends on the distribution of advantages and gains but also risks between various countries and other stakeholders.

Regional integration in Europe has never followed a clear path. Instead, it developed as a result of a succession of painful negotiations and compromises, followed at times by moments of political enthusiasm marking historic decisions. Over the last decades, the widening and deepening of integration has gone hand in hand, to varying degrees, with mounting popular discontent. Attempts to create unity and to make the EU more akin to a federal state have received little support or have failed. Rather than putting pressure on elites to transfer power to a higher level of governance, as predicted by neo-functionalists in the 1950s, from the 1990s onwards some political parties and citizens alike have called for ‘less Europe’. Mainstream as well as peripheral political parties have increasingly amplified criticism of the EU but have failed to undertake the pledged grand reforms of the Union, thus feeding discontent and claims to disintegration. This trend came to a dramatic climax when, on 23 June 2016, a majority of British people voted in favour of the United Kingdom’s exit from the EU.

Since its foundation in 1951, the EC (and later EU) have grown from six to currently twenty-eight member states.1 The six founding members were all advanced capitalist democracies, which had well developed and competitive industries, generous welfare states and comparatively high living standards. This changed with the successive enlargement rounds. With almost every enlargement, the EU also admitted economically less developed countries (see Box 17.1).

In the Great Recession, sovereign bailouts were deemed necessary to alleviate the stress of indebted countries. These bailouts contained some of the most contentious policies, including austerity, structural reforms, and privatizations that triggered sharp bursts of protest during the Great Recession. In this chapter, we examine the impact of those particular political events on protest within this period, aiming to assess their impact and explore the mechanisms through which they operate on protest behavior. We observe that bailouts had a strong effect on protest, but in a mostly regional pattern, as they were accompanied by massive and frequent demonstrations only in southern Europe but not in eastern Europe. We also try to see whether the effect of bailouts can be explained by a deterioration of economic sentiment, but we find that their effect on protest remains even when accounting for such a decline in prospects. The chapter then shows that bailouts, ceteris paribus, were also much more contested than non-supranational austerity packages. Overall, bailouts have a strong effect on protest, but the regional pattern suggests that this is stronger where possibilities of alternative institutional political representation were available, as in the case of Greece which is examined more closely.