06 December 2013

Jean-Claude Piris: The five crises in Europe and the future of the EU

Writing for E!Sharp, Piris says it would be wise, both for political and for legal reasons, to consider how it would be possible to strengthen the legal and political foundations of the eurozone. He suggests two possible ways to do this.

The first way would be a revision of the EU Treaties, either by adopting a small targeted amendment through a simplified procedure, or by following the normal procedure.

Legally the most appropriate way would be a revision of the EU Treaties. Some people think that this could be done, in legal terms, by using the so-called 'simplified' procedure of revising the EU Treaties, provided for in article 48(6)TEU. A targeted amendment could aim, for example, at adding new provisions providing for more coordination of national budgetary and economic policies within the eurozone, at facilitating some aspects of the banking union and at providing a strengthened democratic legitimacy by conferring new rights to national Parliaments.

Such a procedure looks however doomed to fail:

• first, article 48(6) can be used only if the proposed amendment 'shall not increase the competences conferred on the Union in the Treaties', while this might be needed, even marginally, in this case;
• second, in any case, any amendment to the Treaties, even small, needs the agreement and the ratification (sometimes by referendum) of all Members. In order to get this agreement, concessions would have to be made to requests from other member States, including the United Kingdom. The scope of the amendment would consequently have to be enlarged. The European Parliament would then refuse its consent not to convene a Convention, a consent which is legally necessary. This will thus lead to the normal procedure of revision of the Treaties.

This normal procedure is heavy. It implies a review of the Treaties by a Convention composed of representatives of the Governments of the 28 Member States, of their parliaments and of the European Parliament and the Commission.

As a point of departure, the aims would be the same as those of a targeted amendment but be more ambitious. New provisions could be grouped in one Chapter or one Protocol, which could provide means for a better coordination of national budgets, and make economic policies subject to a convergence mechanism, which could be tighter for countries receiving financial help. Some Member States would be of the opinion that the existence of such a joint responsibility might also permit some form of solidarity between the  participating States, for example by establishing a European Fund. Finally, some might propose accompanying measures in tax or social matters.

In order to succeed, at least some of these requests should be supported by all eurozone Governments. However, this is in no way guaranteed, given not only the political climate in some of these countries, but also their divergences of opinions. What is, in contrast, absolutely certain, is that other proposals will be made. For example, the European Parliament has already prepared a number of those, among which the possibility to revise the EU Treaties with a majority of Member States.

For its part, the British Government would probably present its wishes to the Convention, such as either a 'repatriation of powers' from the EU to the Member states, or a special status for the UK. Both requests would be however as  difficult to sell to the other EU Members as the wishes from the European Parliament.

Actually, the truth is that any large revision of the Treaties looks implausible today, even if both the United Kingdom and the European Parliament, for opposite reasons, were to insist. My guess is that such requests would be opposed by some Member States, by fear of a divisive and difficult process. However, nobody should underestimate the leadership and power of conviction of Angela Merkel, if she were to decide to push for a Treaty revision.

The second way would be, for the current and would-be members of the eurozone, to sign an intergovernmental agreement, distinct from, but compatible with the EU Treaties.

It would be for the eurozone participants, and for other EU Members willing to join, to conclude a global intergovernmental agreement, additional to the EU Treaties. The EU Treaties would remain unchanged. As to the policies which could be subject to closer cooperation, the aim would be the same as those I just mentioned for a revision of the Treaties: to make the monetary union work better, by strengthening its economic component. However, the fact that this will be outside the Treaties would raise some issues.

The first issue would be to know if new institutions would be needed. Of course, it would be better and simpler to use the EU institutions when needed.

The use of EU institutions by an intergovernmental agreement was accepted by the Court of Justice, in the 1991 Bangladesh and 1993 Lomé cases. Recently, in its 2012 Pringle judgment, the Court confirmed that Member States could, in the European Stability Mechanism, give tasks both to the Commission and to the European Central Bank. The Court stressed that these tasks should however «not alter the essential character of the powers conferred on those institutions by the EU and FEU Treaties». In other words, tasks given to an institution must be «in line with» those conferred on that institution in the Treaties.

Another question is whether the consent of all Member States would be needed, if a group of them intend to use an institution. This has not been judged yet, as in all cases (Bangladesh, Lomé and ESM), all Member States were involved. Such a right of veto would present the risk that the group of participating States would create new institutions outside the EU. I do not believe that such a right of veto exists. Treaty rules, both on the eurozone and on enhanced cooperation, allow the use of the institutions by groups of States.

However, guaranteeing a strong legitimate democratic control in such an important domaine would be essential. It might be legally and politically difficult to give this control, either only to those Members of the European Parliament elected in the participating States, or to the entire EP. The political legitimacy offered by the EP is too weak, and the competences in this area do not belong to the EU and to the EP, but to the Member States and to their parliaments. One may therefore think about a new organ, where national parliaments would be represented, as well as possibly the EP (see art 9 Protocol on the role of national parliaments and art 13 Fiscal Compact).

As for the Commission, the participating States might accept the EU Commission with its 28 members. If they do not, they could decide to confer some limited tasks on a small political Authority, which, in order to avoid a new bureaucracy, could outsource the preparation of its decisions to the Commission. Another solution, much better according to me, would be to come back to a Commission composed of a smaller number of Commissioners.

The agreement would be legally similar in its shape to the 2012 Fiscal Compact, and it could enter into force after a given number of ratifications, for example 12, like for the Fiscal Compact.

In order not to endanger the cohesion of the European Union, a possible agreement of this kind should effectively protect other EU members’ rights and interests. It should do so by imposing some requirements, under the control of the EU Court of Justice, in particular to respect the EU Treaties’ primacy over the agreement, and the priority of the proposals of the Commission to legislate in the EU, to guarantee the integrity of the single market, to ensure openness and transparency of activities, and to give the right to participate in meetings (and maybe in decisions) for those able and willing to join the euro soon.

However, for the same reasons as a revision of the EU Treaties seems improbable in the present political climate, such a global agreement might not be feasible in the short term. In that case, interested Member States could try to reach their aims in smaller steps. Thus, they would continue to pursue the current policies. By «current policies», I also mean the possible conclusion of a specific intergovernmental agreement, if needed on an issue which would be impossible to solve through a revision of the EU Treaties.

There used to be a quarrel between the partisans of the 'Community method' on the one side, and those of the 'intergovernmental method' on the other. With three intergovernmental agreements, the European Financial Stability Fund, the European Stability Mechanism and the Fiscal Compact, I would say that the Member States, together with the EU institutions, have now created a new 'Union method', which is in-between: while intergovernmental in nature, it is closely linked to the EU and to its institutions.

This innovative and flexible method, imposed by the political difficulty to amend the Treaties, has allowed progress, however at a price of an increased complexity. In particular, these agreements are not always concluded by the same States, and their democratic accountability and control represents a big challenge. If this were to be continued, I would suggest that some improvements could be considered in the future, such as:

• fighting increased complexity and opacity, through the adoption of a medium or long-term Plan of Action, which could explain to the public what it is intended to do, why, and the expected results;
• providing better means of accountability, for instance specific rules about transparency and access to documents, as well as accepting that the action of the institutions under an agreement falls within the scope of application of the Charter of Fundamental Rights of the EU;
• allowing adequate democratic control and accountability, through national parliaments.

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