An undemocratic economic governance?

European Parliament could still prevent unaccountable system of EU economic governance – but will it?

Criticism is growing of the Commission’s ‘Economic Governance Package’, six legislative proposals that would dramatically increase the Commission’s powers to control national economic policies. There is a high risk that the European Parliament will not counter these proposals. Instead, ahead of a crucial vote on the ‘six pack’ in the Economic Affairs Committee of the European Parliament, MEPs from the powerful Christian Democrat (EPP) and Liberal (ALDE) groups have tabled amendments to give the Commission even stronger powers than the Commission had foreseen for itself.

Giving the European Commission a central and dominant role in EU economic governance, without proper democratic control neither at the European nor at the national level, would be a dream-come-true for industry hardliners BusinessEurope, but a disaster for Europe.

Before the Commission presented its legislative proposals, BusinessEurope had insisted on “reinforcing the surveillance of national economic policies” (not just public finances) which “requires (…) a strong, credible and independent European Commission”. “Political horse trading in the Council should be prevented and sanctions decided with a certain degree of automaticity”1, the lobby group argued, displaying a deep contempt for elected governments.

After the Commission had presented its six legislative proposals on 29th September 2010, BusinessEurope expressed its satisfaction to see “a large number of (its) recommendations reflected” in the Commission’s proposals.2 These include the much stronger role for the Commission mentioned above. From this comfortable position BusinessEurope is now lobbying for even more. For example, when BusinessEurope met the MEPs responsible for drafting the Parliament’s positions (rapporteurs) on the ‘six pack’ on 2 February 2011, it stressed once more the “need to reduce political discretion in the Council and to give a prominent role to the Commission.”3

Many MEPs, including the coordinators on this dossier from the political groups of the Conservatives (Herbert Dorfmann, EPP) and the Liberals (Carl Haglund, ALDE), have tabled amendments that – if they pass – would give the Commission much more powers than envisaged in the Commission’s own proposals. This is particularly visible in the case of the two regulations regarding macroeconomic surveillance (one on the general framework for the 27 EU member states and the other one on the enforcement mechanisms in the Eurozone, which consists of 17 countries).

According to the Commission’s legislative proposals the Commission will make economic policy recommendations for member states and on the basis of this the Council will decide by qualified majority which of these measures it will transmit to the member states. The process proposed by the Commission would involve six steps before a member state can be sanctioned (among which prevention, declaration of the existence of a macroeconomic imbalance, definition of corrective action, assessment of its implementation).

Some leading Conservative and Liberal MEPs have proposed instead that (at all these six steps) the Commission makes a recommendation that the Council can only reject with a qualified majority within ten days. This is the infamous reversed qualified majority, which the Commission proposes to apply only at the stage of imposing sanctions to Eurozone countries both for excessive deficits and macroeconomic imbalances.

But, if the proposals from these MEPs would be adopted, the Commission would obtain effective control of the whole process from prevention, to the definition and implementation and corrective measures and to sanctions. For it will be very hard to build a blocking majority of over two thirds of the national governments in the Council within ten days. To put it differently, even if over half of all member states disagree with some recommendation of the Commission, the recommendation would still have to be implemented.

Amendments in this direction were tabled by a group of EPP members (Dorfmann (IT), Hubner (PL) and Ivanova (BG) joined in some cases also by Pallone and Mitchell (IRE)) and another group from ALDE (Klinz (DE), Balz (DE), Hokmark (SE) and Schmidt (SE)). Carl Haglund has individually tabled amendments in the same direction.4

Carl Haglund is also the rapporteur on the enforcement measures of macroeconomic surveillance in the Eurozone. He proposed changes in the legislative text that strengthen even further the powers of the Commission in the sanctioning phase, precisely where the reverse qualified majority was already suggested; in the original proposal a country should miss two deadlines before a fine can be imposed. Haglund proposes a ‘one strike you’re out’ system.

Some MEPs want to increase consultation rights for the European Parliament, but strangely enough, no one has tried to secure veto powers for the only directly elected EU institution, even when there are no obvious legal barriers to do so. On the other hand, MEPs are about to swallow the pill of reverse qualified majority in the Council, which sets up a decision making process that seems not in clear conformity with the Treaty. The European Trade Union Confederation (ETUC) has described this as: a manipulation of the text and spirit of the European Treaty which is stating that ‘qualified majority voting’ is the norm, not ‘silent minority voting’.”5

It is awkward to see MEPs fighting to increase the powers of the European Commission over EU economic governance instead of securing better control by parliamentary bodies. By supporting the Economic Governance package, MEPs are radically weakening the national parliaments by fundamentally limiting their role in economic policies: National economic programs in the EU member states will be submitted to national parliaments only after having being subject to recommendations from the European Commission. In case an excessive deficit or ‘imbalance’ has been identified – something highly probable given the current situation of many member states’ economies – national parliaments will risk a fine if they don’t adopt the Commission’s recommendations. This limitation of national democracy is happening without any increase of democracy at the EU level: the European Parliament will at best have just a consultative role on economic governance.

As the only directly elected EU institution, the European Parliament must stand up for democracy and block this transfer of crucial competences to an unaccountable, technocratic process.

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