Ton van den Brink, Associate Professor, University of Utrecht
The ‘Five Presidents’ Report’ proposes significant changes to the EU’s Economic and Monetary Union (EMU), aiming to deepen its integration. These proposals have substantial implications for national parliaments. A more democratic EMU requires giving these parliaments more authority, going beyond the suggested increased “dialogues.”
The report advocates for a “system of further sovereignty sharing within common institutions,” impacting national parliaments by centralizing economic policy coordination within the EU. This push for economic convergence within the Euro area would restructure the European Semester and create ‘Competitiveness Authorities’ in member states. Proposals for a Fiscal Union include establishing an advisory European Fiscal Board and a common macroeconomic stabilization function to handle shocks that are beyond the capacity of individual nations. This aligns with the concept of a tax authority proposed by Germany and France to further integrate the Eurozone. However, the relationship between a potential European treasury and national treasuries remains unclear.
Many uncertainties make it challenging to assess the precise impact on national parliaments. For instance, the European Fiscal Board would only have an advisory role. The overarching theme is nonetheless clear: EU institutions would gain more control over national policies, leading to further Europeanization of economic policy-making. This is accompanied by increased technocratic decision-making, driven by “rule-based cooperation” and the mandates of the new bodies.
Europeanization and technocratization pose challenges for national parliaments that the report fails to address, despite emphasizing democratic legitimacy and accountability as cornerstones of the EMU. The report’s proposals offer little beyond existing arrangements and merely suggest “streamlining” procedures and strengthening “dialogues.”
The European Parliament alone cannot address these challenges. While the shift towards executive federalism in economic policies necessitates a stronger European Parliament, it cannot replace national parliaments in economic policy-making. Firstly, the role of the European Parliament, representing all 28 Member States, in decisions affecting only the Euro area is complex. Secondly, much of economic policy-making remains country-specific, despite proposals to strengthen the Euro area-wide dimension. National parliaments are best positioned to oversee this country-specific aspect. Lastly, the proposals directly impact national parliaments’ constitutional rights, making a stronger role crucial for safeguarding those rights.
Taxation and budget rights are fundamental constitutional rights at stake for national parliaments. Budget autonomy, exemplified by the right to decide on national budgets, is crucial. The German Constitutional Court, in its decision on the ESM Treaty, highlighted this, stating that budgetary control is “a fundamental part of the ability of a constitutional state to democratically shape itself.”
Therefore, relinquishing national budget rights entirely would be unacceptable under the German constitution, and many others. While the German Constitutional Court allows for limitations to national budget autonomy, even significant ones, suspending it for an extended period would be deemed unconstitutional. Creating a Macroeconomic Stability Function must pass this constitutional test. Moreover, the Court emphasized the discretion of the German legislature in determining acceptable limits to budgetary control.
The right to decide on taxation, closely linked to budget rights, carries significant constitutional weight and sensitivity concerning national sovereignty. This has prevented the implementation of supranational taxes thus far, raising doubts about the feasibility of a Euro area-wide treasury, regardless of its structure.
National parliaments’ authority is also at stake when it comes to macroeconomic policies with redistributive effects. While specific constitutional guarantees are generally absent in this domain, Europeanizing these policies is problematic. Unlike “rule-based” fiscal policies, macroeconomic policies are inherently political decisions concerning labor market reforms, pension systems, and investment climates.
The Five Presidents’ Report offers insufficient provisions for national parliaments to ensure proper democratic oversight. If implemented, these proposals would restrict national parliaments’ decision-making power in fiscal and economic policies. This limitation necessitates adequate accountability mechanisms. Simply organizing plenary debates between the European Parliament and the Commission or streamlining interactions between institutions is inadequate.
Strengthening national parliaments’ position begins with their relationship with the Commission. While EU Commissioners can discuss country-specific recommendations with national parliaments, this lacks weight without enforcement mechanisms. Rules established for EU legislative procedures, particularly regarding subsidiarity scrutiny, could provide a framework. For example, national parliaments could have the right to object to country-specific recommendations, compelling the Commission to reconsider. Existing mechanisms for cooperation between national parliaments in subsidiarity scrutiny could be applied to the macroeconomic stabilization function, potentially linked to the right of assent for a qualified majority of national parliaments.
Defining the specifics of national parliaments’ rights is secondary. The primary requirement for a truly democratic EMU is acknowledging that national parliaments need more than just the right to be informed and participate in economic dialogues.
Barnard & Peers: chapter 19
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