Repasi, R. (René)

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European Research Centre for Economic and Financial Governanceeuro-cefg.euRESEARCH FELLOWSFabian AmtenbrinkErasmus University Rotterdam (Scientific Director EURO-CEFG)Casper de VriesErasmus University RotterdamStefaan van den BogaertLeiden UniversityMatthias HaentjensLeiden UniversityMarkus HaverlandErasmus University RotterdamKlaus HeineErasmus University RotterdamMadeleine HosliLeiden UniversityBram KlievinkDelft University of TechnologyAlessio M. PaccesErasmus University RotterdamRené RepasiErasmus University Rotterdam Scientific Coordinator EURO-CEFG)The Future of the Economic and Monetary UnionPriorities and Prospects for ReformAmsterdam, 8 December 2017What Political Legitimacy for a Reinforced EMU?Identifying the Legitimacy Gap of EMUBroad Economic GuidelinesMTO ≤ 1.0% of GDPAnnual Deficit ≤ 3% of GDPDebt ≤ 60% of GDPLegitimacy of EMU before the crisisEMUEconomic Union National GovernmentsNational ParliamentsFoundations of AccountabilityInstruments of AccountabiliyNational CourtsReview of ArbitrarinessFull ReviewConvergent Economic PoliciesSound BudgetsAvoiding Excessive DeficitsMonetary Union Price Stability ECBEuropean Parliament & CouncilFoundations of AccountabilityCJEUReview of ArbitrarinessLegitimacy of EMU before the crisis Incapacity of EMU to address the economic interdependence of 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.Legitimacy of EMU before the crisis Incapacity of EMU to balance conflicting demands of EU law– Specialising on the comparative advantage (internal market) buthaving 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 accessLegitimacy 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 legislatorsLegitimacy of EMU during and after the crisisEMU 2.0Fiscal Stability ESMCJEU Review of the COMSecondary ObjectivesMonetary UnionPrice StabilityECBEuropean Parliament & CouncilFoundations of AccountabilityCJEUReview of ArbitrarinessMacroeconomic ImbalancesEconomic UnionConvergent Economic PoliciesSound BudgetsNational GovernmentsNational ParliamentsFoundations of AccountabilityInstruments of AccountabiliyNational CourtsReview of ArbitrarinessFull ReviewAvoiding Excessive DeficitsEuropean ParliamentFoundations of AccountabilityNational Parliaments ex ante controlLegitimacy 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 independenceLegitimacy 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)Enhancing the Political Legitimacy of EMUEnhancing 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’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?Accountability of Executivesin the EMU Economic Policy Coordination at EU levelEPStep Legal actPolicy GoalEurozone  GovernanceFiscal StabilityAvoiding Excessive DeficitsSound Budgetary PoliciesAvoiding Macroeconomic ImbalancesConvergent Economic PoliciesDefinitionComplianceDefinitionComplianceDefinitionComplianceDefinitionComplianceDefinitionComplianceNo EPInformation EPTreaty & CNSInformation EPCOD & No EPInformation EPCODInformation EPNLEInformation EPESM/EFSF/EFSMTroikaArt. 126 TFEU & Protocol (No. 12)Excessive Deficit ProcedureReg. 1466/97 & TSCGEuropean SemesterReg. 1176/2011European SemesterEuropean SemesterEuropean SemesterEPLegal actNo EPInformation EPTreaty & CNSInformation EPCOD & No EPInformation EPCODInformation EPNLEInformation EPESM/EFSF/EFSMTroikaArt. 126 TFEU & Protocol (No. 12)Excessive Deficit ProcedureReg. 1466/97 & TSCGEuropean SemesterReg. 1176/2011European SemesterEuropean SemesterEuropean SemesterReformTransfer of ESM into EU lawIIA on the European SemesterIIA on the European SemesterTransfer of TSCG into secondary lawIIA on the European SemesterIIA on the European SemesterConvergence CodeIIA on the European SemesterEPLegal actNo EPInformation EPTreaty & CNSInformation EPCOD & No EPInformation EPCODInformation EPNLEInformation EPESM/EFSF/EFSMTroikaArt. 126 TFEU & Protocol (No. 12)Excessive Deficit ProcedureReg. 1466/97 & TSCGEuropean SemesterReg. 1176/2011European SemesterEuropean SemesterEuropean SemesterReformTransfer of ESM into EU lawIIA on the European SemesterIIA on the European SemesterTransfer of TSCG into secondary lawIIA on the European SemesterIIA on the European SemesterConvergence CodeIIA on the European SemesterTransfer of ESM into EU lawIIA on the European SemesterConvergence CodeTransfer of TSCG into secondary lawDemocratic Scrutiny of the EurogroupDemocratic 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)Quick Assessment of the Sinterklaas PackageSinterklaas 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 MinisterEuropean Research Centre for Economic and Financial Governanceeuro-cefg.euThank you for your attentionDr. René RepasiEuropean Research Centre for Economic and Financial Governance (EURO-CEFG)E-Mail: repasi@law.eur.nlPhone: +49(0)1777511124+31(0) 630770721RESEARCH FELLOWSFabian AmtenbrinkErasmus University Rotterdam (Scientific Director EURO-CEFG)Casper de VriesErasmus University RotterdamStefaan van den BogaertLeiden UniversityMatthias HaentjensLeiden UniversityMarkus HaverlandErasmus University RotterdamKlaus HeineErasmus University RotterdamMadeleine HosliLeiden UniversityBram KlievinkDelft University of TechnologyAlessio M. PaccesErasmus University RotterdamRené RepasiErasmus University Rotterdam Scientific Coordinator EURO-CEFG)

What Political Legitimacy for a Reinforced EMU?

https://repub.eur.nl/pub/104301/Presentation-Political-Legitimacy-of-a-Reinforced-EMU-Repasi-08-12-2017.pdf

What Political Legitimacy for a Reinforced EMU?

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