Chapter 2 moves from the constitutional foundations of the European legal order to the architecture of fiscal federalism constructed atop them. It investigates where the constitutional principles identified in Chapter 1 inhere in the legal architecture of EMU, and explains the basic principles of economics inscribed for their attainment. The principles of fiscal sovereignty, price stability, and fiscal discipline are shown to penetrate three levels of investigation: The travaux préparatoires and the mandate for EMU (Article 119 TFEU); the allocation of competences in economic policy (Articles 2(3) and 5(1) TFEU); and the technical architecture governing public finance itself (Articles 121-126 TFEU). By those provisions, EU fiscal federalism rests on two principles: (1) Fiscal sovereignty – member state economic/fiscal competences remain outside the EU legal order altogether; and (2) market discipline –member states are exposed to ‘hard budget constraints’ and ‘market discipline’ to ensure fiscal discipline.

Chapter 1 describes the path that brought to the current European Economic and Monetary Union (EMU). In contrast to a common tradition and culture, based on largely similar philosophical and religious foundations, Europe has a history of fierce opposition and wars among national states that culminated in World War II. An important impulse to some kind of European cooperation came exactly from the attempt to counter this tradition of conflicts, even if the past was still weighing. This largely explains the long process through which European institutions have reached their current state as well as their “incompleteness.” The cooperation evolved from the European Coal and Steel Community (1951), having a limited coverage, but active inter-country coordination and cooperation and limits to free market, to the European Economic Community (1957), with a larger coverage, but a free-market orientation in all fields. This partially changed with the Maastricht Treaty (originating the European Union(EU) and the EMU), with the introduction of common monetary policy and some constraints on national fiscal policies (1992). The former now gathers 28 countries. The latter had only 11 members when it started in 1999 and has now enlarged to 19.

The book’s Epilogue briefly sketches developments since the Maastricht Treaty. Moreover, it draws the lessons from the history of European integration since the 1950s. Among other things it argues that for a long time there was not just one Project Europe, but many – most of them conceived as alternatives to nationalistic forms of politics. It was by no means inevitable that the European Community would come to be the dominant forum of cooperation and integration in Cold War Western Europe. Not until the 1960s were there growing signs that the EC was on the way to becoming a different class of actor than, for example, the OECD. And even in the early 1980s its status was anything but certain. Rather than proceeding as the implementation of a masterplan, today’s EU appeared in fits and starts. Above the level of detail it set out to make the future more predictable. It was this hope that shines through all the treaties and directives, summits and compromises, plans and proposals. While many saw precisely that as a value in its own right, the idea of Project Europe as an attempt to contain the future is less certain again today.