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This article looks critically at the explanation provided by the so‐called ‘normalisation’
literature for Germany’s apparent reluctance and closefisted approach to the Eurozone crisis.
In contrast to the ‘normalisation’ argument which attributes the handling of the crisis to a more self‐interested and assertive stance in Germany’s European policy, this paper emphasizes the role of economic ideas as an explanatory factor. Based on the economic school of ordoliberalism in Germany, the crisis is perceived of as a debt and institutional crisis rather than a financial crisis, as suggested by ‘normalisation’ proponents. Consequently, a profound long‐term solution is thought to require policies of debt reduction and supply‐side reform as well as amendments to Eurozone institutions. In addition, unconditional financial bail‐outs are deemed inadequate to fight the source of the crisis. While the ‘normalisation’ literature stresses change in Germany’s approach to European integration relative to the early 1990s, the view outlined here suggests that there is a significant degree of continuity with the founding period of the European Economic and Monetary Union. Both then and now, Germany is primarily concerned with sound money, fiscal discipline and the institutional set‐up of the Eurozone, all based on principles derived from ordoliberal economic thinking.
The two Bretton Woods Sisters – International Monetary Fund (IMF) and World Bank – have been key actors in the international political economy since their inception in 1944. While the IMF was established to support national economies during rather short-term, macroeconomic crises, the World Bank has had a more long-term focus on development and economic growth. In pursuit of their goals, both institutions’ instrumental repertoire includes the provision of information, surveillance, technical assistance and training, policy advice, and – arguably most importantly – lending to those countries that have limited or no access to private capital markets. In this paper, I critically analyse the Bretton Woods sisters’ institutional set-up, their objectives and instruments. Further, various criticisms and challenges of the multilateral system are discussed, including the economic policy conditions imposed on borrowing countries, the Western-dominated governance structure and the under-representation of major emerging economies such as China and India.
