De facto differentiation in the EU’s economic and monetary union - A rationalist explanation

Although there are various legal tools to make European integration more flexible, the EU and its member states uphold long-term arrangements of de facto differentiation circumventing EU law. This article assesses their role in the EU’s system of differentiated integration. To that end, it advances a model based on rational choice theory, outlining the steps and conditions under which tolerated arrangements of de facto differentiation can emerge. This is illustrated in three case studies in Economic and Monetary Union (EMU): (1) Sweden’s de facto opt-out from EMU; (2) Kosovo’s adoption of the euro as sole legal tender, and (3) the Fiscal Compact. Data was gathered via document analysis and …