The European Union has gone through major crises of its two flagship integration projects of the 1990s: the euro and Schengen. Both crises had structurally similar causes and beginnings: exogenous shocks exposed the functional shortcomings of both integration projects and produced sharp distributional conflict among governments, as well as an unprecedented politicization of European integration in member state societies. Yet they have resulted in significantly different outcomes: whereas the euro crisis has brought about a major deepening of integration, the Schengen crisis has not. I put forward a neofunctionalist explanation of these different outcomes, which emphasizes variation in transnational interdependence and supranational capacity across the two policy areas.
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