Abstract:
Following 10 years in operation, the European Monetary Union (EMU) has
been shaken by the global financial crisis and some peripheral states have
experienced significant economic shock. The pitfalls of currency unions have
been well documented in the literature of International Political Economy
(IPE), so the situation that these states find themselves in cannot come as a
surprise to any member country. Without highly synchronised economies,
some states will suffer significantly in the event of an exogenous shock. This
begs the question why a country would make an "irrational" choice to join the
monetary union to begin with. The predominant IPE theories on how the EMU
was formed are explained using rational choice with material interests as the
focus for interstate bargaining. By arguing that they really have no choice to
begin with, rational choice theory renders small states impotent. Unsatisfied
with this reductionist answer, this body of work explores the participation of
one of the states currently in trouble by introducing a constructivist theory of
economic identity politics. Exploring the historical record of Ireland in the
period of 1978 and 1992, this work reveals that Ireland in fact had choices,
and the "irrational" choices it made were significantly influenced by Irish
identity politics. However Ireland's "irrational" motivation can only be
understood by including economic identity politics into the analysis. It will
reveal that the supranational institutions of the European Union can serve as
economic instruments to further nationalist goals. In the process the
institution can become embedded in the nation such a country like Ireland is
now a hybrid - highly European monetarily while it still remains distinctively
Irish. As small states now make up the majority of the European Union this
thesis adds to our understanding of small state participation in its most
ambitious institution thus far.
