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Reconstructing the Tower of Babel: European Union Fiscal Policy
By Carys Johnson and Tobias Kuehne

Behold, the people is one … and now nothing will be restrained from them, which they have imagined to do. (Gen 11:6)

Millennia after the Babylonian Empire joined territories across Asia and Europe, another union joined nations across the European continent. Although the Babylonian Empire integrated regions through the use of a common tongue, modern Europe is unified through a common political and economic structure: the European Union. While the Babylonian Empire fell more than 3,000 years ago, the Eurozone, with its complex legal underpinning, strives to avoid a similar fate.

This article seeks to analyze the recent EU financial crisis, paying special attention to the emergency fund, also known as the Special Purpose Vehicle (SPV), that was created on May 10, 2010. The article gives a general outline of the EU’s legal framework and a chronology of events that led up to the financial crisis and the creation of the Special Purpose Vehicle. After an explanation of how the SPV functions, the article proceeds to investigate the SPV’s legal relationship to the EU core treaties and assesses its significance. Lastly, this article addresses the question of what were to happen in the worst case scenario of the SPV failing to save the Eurozone.

I. European Fiscal Crisis: An Overview
A. European Union Law: A Background

The most basic of European Union legal foundations is the Treaty on European Union. The treaty, more commonly known as the Maastricht Treaty, was ratified on February 7, 1992, formally converting the European Community into the European Union. The document’s main objective was the integration of Europe in both the political and economic spheres; it accomplished this objective by creating the three-pillar structure upon which the current European Union’s framework is based: the European Community pillar, the Common Foreign and Security Policy pillar, and the Justice and Home Affairs pillar.[1] The central pillar of the Maastricht Treaty, the European Community pillar, governs supranational organizations, including the European economy. This facet introduced two significant changes to European legal and fiscal policy. First, its “Citizenship of the Union” component granted European Union citizenship to a citizen of any of its member states; additionally, it instituted the Economic and Monetary Union (EMU), establishing a single European market. As part of the EMU, a common currency, the euro, was introduced. Initially, only 11 nations – Austria, Belgium, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain – introduced the euro; today, 16 nations make up the EMU, as Greece, Slovenia, Cyprus, Malta, and Slovakia have all adopted the euro as their sole currency. Thus, through the Maastricht Treaty, European Union member states encouraged their citizens to consider Europe as a society with a common currency and, by extension, a common identity.

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III. “Confounding the Language of All the Earth”: A Collapse of the European Union

Go to, let us go down, and there confound their language, that they may not understand one another’s speech. (Gen 11:7)

Since the euro was first introduced in 1999, scholars from many disparate fields and concentrations have been predicting its disintegration; ten years later, the advent of the current fiscal crisis across Europe has only served to fuel the fire with regard to discussions about the possibility of a collapsing Eurozone. What would the collapse of the European financial system mean for the unity of Europe – both for members of the European Union and for nations that are not members?

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