What Political Legitimacy for a (Scientific Director EURO-CEFG) - - PowerPoint PPT Presentation

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What Political Legitimacy for a (Scientific Director EURO-CEFG) - - PowerPoint PPT Presentation

Apr 05, 2024 276 likes •498 views

European Research The Future of the Economic and Monetary Union Centre for Economic and Financial Governance euro-cefg.eu Priorities and Prospects for Reform Amsterdam, 8 December 2017 RESEARCH FELLOWS Fabian Amtenbrink Erasmus University

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European Research Centre for Economic and Financial Governance

euro-cefg.eu

RESEARCH FELLOWS

Fabian Amtenbrink

Erasmus University Rotterdam (Scientific Director EURO-CEFG)

Casper de Vries

Erasmus University Rotterdam

Stefaan van den Bogaert

Leiden University

Matthias Haentjens

Leiden University

Markus Haverland

Erasmus University Rotterdam

Klaus Heine

Erasmus University Rotterdam

Madeleine Hosli

Leiden University

Bram Klievink

Delft University of Technology

Alessio M. Pacces

Erasmus University Rotterdam

René Repasi

Erasmus University Rotterdam Scientific Coordinator EURO-CEFG)

The Future of the Economic and Monetary Union Priorities and Prospects for Reform

Amsterdam, 8 December 2017

What Political Legitimacy for a Reinforced EMU?

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Identifying the Legitimacy Gap of EMU

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Broad Economic Guidelines MTO ≤ 1.0% of GDP Annual Deficit ≤ 3% of GDP Debt ≤ 60% of GDP

Legitimacy of EMU before the crisis EMU

Economic Union National Governments National Parliaments Foundations of Accountability Instruments of Accountabiliy National Courts Review of Arbitrariness Full Review Convergent Economic Policies Sound Budgets Avoiding Excessive Deficits Monetary Union Price Stability ECB European Parliament & Council Foundations of Accountability CJEU Review of Arbitrariness

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Legitimacy of EMU before the crisis

  • Incapacity of EMU to address the economic interdependence
  • f national democracies created by economic globalisation

and EU integration

– National democratic decision-making takes decisions that affect many living outside of the borders of that nation-state; – National democratic decision-making cannot control many decision- making processes taking place outside of the borders of the nation- state that affect national polities but that; – National democratic decision-making is committed to the national interest and does, hence, not take the interests of other EU Member States into account.

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Legitimacy of EMU before the crisis

  • Incapacity of EMU to balance conflicting demands of EU law

– Specialising on the comparative advantage (internal market) but having resilient national economies in a situation of an asymmetric shock (affecting one economic sector) (monetary union) – Procyclical budgetary policies (budget control) but establishing shock-absorbers financed by national budgets to be activated in crisis times (monetary union) – Refinancing of public budgets on private financial markets (budget control) but no monetary policy instruments (monetary union) and not capital controls (internal market) in order to react to market failure and to the closure of market access

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Legitimacy of EMU before the crisis

  • Both incapacities have the potential of undermining national

democratic decision-making

– because national democracies cannot deliver what they promise (self- determined decision-making) – because the voters‘ voice might be overruled by

  • market reactions
  • decisions of other national legislators
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Legitimacy of EMU during and after the crisis EMU 2.0

Fiscal Stability ESM CJEU Review of the COM Secondary Objectives Monetary Union Price Stability ECB European Parliament & Council Foundations of Accountability CJEU Review of Arbitrariness Macroeconomic Imbalances Economic Union Convergent Economic Policies Sound Budgets National Governments National Parliaments Foundations of Accountability Instruments of Accountabiliy National Courts Review of Arbitrariness Full Review Avoiding Excessive Deficits European Parliament Foundations of Accountability National Parliaments ex ante control

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Legitimacy of EMU during and after the crisis

  • Crisis added to the legitimacy gap at the level of national

democracies a legitimacy gap at the level of the EU

– Soft law policy goals (economic policy coordination) turned de facto into hard law policy goals because of the threat of sovereign default and the need of financial assistance

  • democratic deficiencies in defining these policy goals turn into democratic

defaults

  • democratic deficiencies in supervising the enforcement of these policy goals

turn into democratic defaults

– Pursuit of secondary objectives in monetary policy led to a politicisation of the ECB that conflicts with its independence

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Legitimacy of EMU during and after the crisis

  • ‘Faces’ of the additional legitimacy gap

– national democracies cannot deliver what they promise (self- determined decision-making) – voters‘ voice appears to be overruled by

  • decisions of a ‘federalist executive’ (ECB, Commission, ESM [= Eurogroup]) that

relies on a European interest (protecting the Euro)

  • no parliamentary control of this ‘federalist executive’
  • limited judicial control of this ‘federalist executive’

– national democratic externalities transform from undermining national economic policy preferences into reducing national budgetary capacities (by the way the ESM is financed)

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Enhancing the Political Legitimacy of EMU

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Enhancing the Political Legitimacy of EMU

  • Creating capacities to address the interdependence of national

democracies

  • Creating capacities to balance the conflicting demands of EU law

– Allowing for larger national autonomy to address these demands? – Reforming Structural Funds (to allow for sustainable market transformation) – European Unemployment Benefits Scheme (to address asymmetric shocks) – Fiscal Capacity (to allow for capacity-building in ME and to address symmetric shocks) – Debt Mutualisation (to reduce market failure when refinancing government debt)

  • Establishing Parliamentary control of the ‘federalist executive’
  • Allowing for a fully-fledged judicial control of the ‘federalist

executive’

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Enhancing the Political Legitimacy of EMU

  • Establishing Parliamentary control of the ‘federalist executive’

– Which Parliament(s) should control?

  • Tentative reply: The Parliament that represents the interest an executive entitiy

invokes and/or relies upon

  • ‘Federalist Executive’ (in terms of EMU: ESM/EFSF/Troika) invokes a European

interest (protecting the Euro as the currency of the EU): European Parliament

  • ‘Federalist Executive’ relies upon national funds: National Parliaments
  • Dual-hatted Parliamentary control

– It should be noted that Parliamentary control is not in itself closing the legitimacy gap

  • Core question: Can the policy goals pursued by EMU be justified by reference to

the beliefs of citizens?

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Accountability of Executives in the EMU Economic Policy Coordination at EU level

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EP Step Legal act Policy Goal

Eurozone Governance Fiscal Stability Avoiding Excessive Deficits Sound Budgetary Policies Avoiding Macroeconomic Imbalances Convergent Economic Policies

Definition Compliance Definition Compliance Definition Compliance Definition Compliance Definition Compliance No EP Information EP Treaty & CNS Information EP COD & No EP Information EP COD Information EP NLE Information EP ESM/EFSF/EFSM Troika

  • Art. 126 TFEU &

Protocol (No. 12) Excessive Deficit Procedure

  • Reg. 1466/97 & TSCG

European Semester

  • Reg. 1176/2011

European Semester European Semester European Semester

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EP Legal act

No EP Information EP Treaty & CNS Information EP COD & No EP Information EP COD Information EP NLE Information EP ESM/EFSF/EFSM Troika

  • Art. 126 TFEU &

Protocol (No. 12) Excessive Deficit Procedure

  • Reg. 1466/97 & TSCG

European Semester

  • Reg. 1176/2011

European Semester European Semester European Semester

Reform

Transfer of ESM into EU law IIA on the European Semester IIA on the European Semester Transfer of TSCG into secondary law IIA on the European Semester IIA on the European Semester Convergence Code IIA on the European Semester

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EP Legal act

No EP Information EP Treaty & CNS Information EP COD & No EP Information EP COD Information EP NLE Information EP ESM/EFSF/EFSM Troika

  • Art. 126 TFEU &

Protocol (No. 12) Excessive Deficit Procedure

  • Reg. 1466/97 & TSCG

European Semester

  • Reg. 1176/2011

European Semester European Semester European Semester

Reform

Transfer of ESM into EU law IIA on the European Semester IIA on the European Semester Transfer of TSCG into secondary law IIA on the European Semester IIA on the European Semester Convergence Code IIA on the European Semester Transfer of ESM into EU law IIA on the European Semester IIA on the European Semester Transfer of TSCG into secondary law IIA on the European Semester IIA on the European Semester Convergence Code IIA on the European Semester Transfer of TSCG into secondary law

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Democratic Scrutiny

  • f the Eurogroup
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Democratic Scrutiny of the Eurogroup

  • More transparency: Including the Eurogroup into Regulation (EC)

No 1049/2001 on public access to documents

  • More personal accountability: Merging the president of the

Eurogroup and the president of the Board of Governors of the ESM with Commissioner for EMU

– President of the Eurogroup becomes personally accountable to the European Parliament as a member of the Commission – Maybe: Modifying the IIA with the Commission in order to oblige the president of the Commission to make use of his/her right to request resignation of single commissioners if the president of the Eurogroup is concerned (exception to the principle of collective responsibility)

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Quick Assessment of the Sinterklaas Package

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Sinterklaas Package

  • Transformation of the ESM into EMF

– Defintion of Policy Conditionality (Articles 12/13 of EMF-Statute): Synchronisation of MoU with Macroeconomic Adjustment Programme under the ‘Two Pack’ (= no approval by any Parliament) – Compliance: Only information obligations vis-à-vis Parliaments; no instruments of accountability – Transparency: Inclusion of EMF into Access to Documents regulation – Yet: It will be a Union body

  • Transformation of TSCG into EU law
  • European Finance Minister
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European Research Centre for Economic and Financial Governance

euro-cefg.eu

Thank you for your attention

  • Dr. René Repasi

European Research Centre for Economic and Financial Governance (EURO-CEFG)

E-Mail: repasi@law.eur.nl Phone: +49(0)1777511124 +31(0) 630770721

RESEARCH FELLOWS

Fabian Amtenbrink

Erasmus University Rotterdam (Scientific Director EURO-CEFG)

Casper de Vries

Erasmus University Rotterdam

Stefaan van den Bogaert

Leiden University

Matthias Haentjens

Leiden University

Markus Haverland

Erasmus University Rotterdam

Klaus Heine

Erasmus University Rotterdam

Madeleine Hosli

Leiden University

Bram Klievink

Delft University of Technology

Alessio M. Pacces

Erasmus University Rotterdam

René Repasi

Erasmus University Rotterdam Scientific Coordinator EURO-CEFG)