The International Political Economy of the EU Sovereign Debt Crisis

The purpose of this thesis is to investigate the development of European integration in relation to the European sovereign debt crisis. The central question that the thesis seeks to answer is the following: to what extent and in which direction has the EU sovereign debt crisis influenced the progression of European integration? The thesis divides its subject matter into three relevant periods – specifically, the pre-sovereign debt crisis period (2001-2008), the period of the acute sovereign debt crisis (2008-2012), and the current period (2012-present). In order to achieve the stated purpose, the thesis is structured as follows: the first section outlines the theories through which the effects of the sovereign debt crisis on integration will be analyzed, both financial (financial cycle, debt socialization, risk-on risk-off episodes) and political (realism, liberalism, Liberal Intergovernmentalism, Neofunctionalism). The second section explores the architecture of relevant EU structures and their development. The third section examines the issue of excessive indebtedness and new challenges that the EU now faces. The thesis shows that while the sovereign debt crisis has forced Member States to cooperate and pursue some integration (especially at the Eurozone level) in order to keep the Union as whole as possible, it has had and continues to have a severely negative impact on the progression of European integration in general.