The principle merit of C. Randall Henning’s engaging new book is its treasure trove of detailed insight into the unfolding Eurozone crisis, understood in terms of complex interactions between—and indeed construction of new—international economic institutions and regimes. The dynamics of interactions among European institutions, the International Monetary Fund, and key member states are delineated in admirable depth and detail within seven Eurozone bailout case studies. The state-centric analytical framework, organized around the concept of international regime complexity, focuses on how powerful states (such as Germany) use and combine international institutions to address the problems they face. Scholars in the field owe the author a debt for his meticulous explanation of the sequence of events, dynamics within key meetings, and crucial disagreements behind the various twists and turns of the Eurozone crisis.
State strategy regarding the mix of institutions drives the explanation of the euro area’s evolving regime complex. Thus, member states’ dissatisfaction with the European Commission is identified as key to creating new institutions for European crisis response (p. 41). This dynamic also crucially explains Germany’s steadfast will to retain the IMF within all programs, despite stark and widening disagreements on important substantive issues between Germany and the Fund.
Henning’s important analytical contributions include specifying and delineating different manifestations of the “troika”—including narrow and broad interpretations, and charting the troika’s attempt to incorporate the European Stability Mechanism (ESM) later in the crisis. The book also shines a light on underappreciated variation (e.g., in terms of IMF financial contribution) in troika programs.
Key moments like the “Deauville mistake,”, whereby Angela Merkel and Nicolas Sarkozy sought to require “private sector involvement” in any future ESM financial assistance and skittish bond markets plummeted, punishing weaker European sovereigns, are ably captured. The significance and implications of this for the ongoing elaboration of Eurozone crisis responses (and approaches to “haircuts,” “bail-ins,” “moral hazard”) by the troika and other European actors is a theme throughout the book.
The difficult birth of the ESM—on intergovernmentalist principles—is very well documented, underlining how its governance is organized, and how this reflects and coheres with German preferences. The analysis incisively gets to the heart of key areas of dissonance and disagreement, not only within the troika but also between troika partners and national governments. These substantive differences include not just program design and program conditionality but also the shape, extent, and pace of fiscal consolidation: whether or not there would be private-sector involvement (haircuts) in financial rescues, but also the size of any financial safety net, euro-areawide policies, and Greek debt restructuring (p. 123).
The vast range of interviews conducted is impressive indeed, and the payoff comes through in the breadth and depth of empirical coverage, which casts fresh light on the already well-studied Eurozone crisis. I will certainly make Tangled Governance required reading for any students and doctoral researchers interested in the Eurozone crisis. What is less clear is how far the book succeeds as a contribution to wider regime complexity theorizing. The main body of the book is not really explicitly focused on the framework of “regime complexity.” Its concepts do not play an important role within what the author terms their “structured narrative” of the program cases and analysis of the landscape of the various institutions. While the book contains many valuable insights for understanding the particularities of the Eurozone crisis, the idea that this analysis tells us something more generalizable about “complex clusters of international institutions generally” (p. 3) is less compelling. Given how particular the troika is, does it makes sense to make “portable” claims on the back of analyzing it?
Theoretically, the book evinces a strong attachment to international relations realism, foregrounding state preferences. While notionally acknowledging the merits of more and less state-centric accounts of international organizations (IOs) and interactions, it is very clear where the author’s allegiances lie. Henning treats the IMF as primarily an agent of U.S. government interest, and argues of IOs that “member preferences provide the causal ‘juice’ that animates the institutions, [and] endows them with state and social purpose” (p. 20).
The author is interested in “state strategy,” but primarily as it pertains to ways to approach institutional interactions within regime complexity. Less in focus is state strategy in a broader sense: What are the governments’ wider national or European goals? Also, if such a state-centric view is to be taken—and the author makes a fair case for it—then could not more states (beyond the United States and Germany) come into sharper focus within the analysis? It seems that American and German “causal juice” crowds out most other national state preferences most of the time. Even in the case of program countries, we do not always come to know that much about the goals, priorities, and aspirations of embattled governments.
We get glimpses of differing views within the IMF (between the Research Department, Legal Department and MD/Senior Management over how hawkish a fiscal line to toe in the third Greek program, for example [p. 206]). Moving beyond a monolithic view of institutions like the IMF is clearly important, and generates a more nuanced understanding. It begs a question, though, whether a similar disaggregation of other key troika institutions, such as the European Central Bank, the European Commission and the ESM, would also be warranted. This happens rarely if at all in what is already admittedly a complex and rich commentary.
Henning decides to largely bracket out his views on, or indeed much discussion of, the underlying political economy issues at stake within troika disagreements. Perhaps the focus on whether to include the Fund, and the protocols that shape interaction between institutions, leads attention away from the political economy of the Eurozone crisis response and the politics of austerity. The analysis mentions in passing that the troika members “disagreed on program conditionality—the fiscal multiplier and glidepath for deficits, private bail-in in the banking sector and the payoff horizon for structural reforms, to name but a few elements” (p. 176). The author fleetingly notes disagreements on fiscal multipliers (pp. 107–8), and the evolution in IMF thinking regarding fiscal adjustment. The commentary also skates over the “historic” shift in the IMF’s position to be staunchly in favor of completion of the Economic and Monetary Union’s through-banking union, euro bonds, a fiscal backstop, and so on (pp. 164–65).
It would have been interesting to incorporate evaluation of the policy choices and program designs into the account of the interinstitutional dynamics of the construction of Eurozone crisis responses more fully. There is a mention of “the ongoing revision of austerity doctrine in which the IMF Research Department had made important contributions” (p. 203), but then the focus moves on very quickly. These fascinating battles of economic ideas are, it seems, not the object of interest for Tangled Governance. This feels like a bit of an opportunity missed: All the ingredients are here to integrate the “did it make sense?” themes with the “why did it play out in the way that it did?” consideration that take center stage. Nevertheless, this is a superbly informative account of how the troika and related European actors addressed and responded to successive twists and turns in the Eurozone crisis, and should be required reading for European politics scholars.
