Establishment of the European Stability Mechanism for the Eurozone

Abstract We explore intergovernmental dynamics that led to the establishment of the European Stability Mechanism ( esm ) as an important institutionalized response to the Eurozone crisis. Using Liberal Intergovernmentalism ( il ) as a theoretical lens, we formulate expectations that are then explored based on documents, media reports and literature on the various negotiation phases. We demonstrate how the esm was set up as a Eurozone agreement and how preferences of large member states have influenced its contents. Based on our set of li indicators, we find several assumptions to be valid, while others need to be qualified (notably those related to endogenously and exogenously determined government preference changes in the different negotiation stages).