To Tie Each Other’s Hands: Italy Negotiating the Introduction of Constitutional Balanced Budget Rules and Independent Fiscal Institutions (2010-2013)

This article presents an in-depth qualitative case study on the negotiations underlying the introduction of an Independent Fiscal Institution and a Constitutional Balanced Budget Rule in Italy. The article looks at the interests of the relevant actors in the negotiation process of the Six Pack, Euro Plus Pact, Treaty on Stability, Coordination and Governance, and Two Pack by conducting interviews with the negotiators and analyses of parliamentary records and press declarations. The article demonstrates that functional mechanisms explain the outcome of such negotiations better than the consolidated literature of Liberal Intergovernmentalism, which expects that the preferences of the constellation of national actors are the key drivers of EU grand bargains impacting on member states’ core state powers. As a matter of fact, Italian negotiators decided to accept the introduction of such instruments because they were potentially helpful in reducing macroeconomic risks both domestically and in other EU member states without having particular political costs, and not because domestic actors showcased clear preferences in favour of them. The results contribute to the academic debate on the integration of the Economic and Monetary Union by testing hypotheses deriving from traditional EU integration and International Relations literature and paves the way for future research allowing for a greater generalisation.