A key element of economic governance in the European Union, the Stability and Growth Pact (Pact), underwent a major revision in March 2005. The many critics of this change claim that what was once a hard law institution for fiscal surveillance has now become so soft as to jeopardize its functioning. This Article examines, first, how exactly the fiscal rules have changed, using a framework which distinguishes hard law from soft law along a continuum in three dimensions of governance: obligation, delegation, and precision. Then it reviews the experience of the first round of surveillance after the revision which so far suggests that the revised Pact is more effectively constraining countries that are officially in “excessive deficit, ” contrary to expectations. Finally, the Article offers an interpretation of why the revised Pact may work more effectively. This interpretation suggests that the weakening of obligation has been compensated by changes in the other two dimensions, delegation and precision, casting a shadow of soft law on the operation of the Excessive Deficit Procedure. The argument is based on a theory of precautionary commitment by democratically elected governments that combine credibility with flexibility. Fiscal governance after the Pact revisions is now arguably better equipped to address major contingencies of fiscal policymaking
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