The European Commission published on December 6th, 2017, a set of proposals for the future architecture of the Euro-area, as a first step to a more comprehensive reform agenda to come.
As Young European Federalists [JEF Europe] we welcome the initiative and are glad that after long months of reflection on the back of the Commission’s White Paper on the Future of the EU [have a look at JEF Europe’s statement] and long years after the so-called 4- and 5-Presidents’ reports, we are finally moving forward again.
The main item of the December package is a legislative proposal for the transferral of the European Stability Mechanism (ESM) into the EU legal framework, as a European Monetary Fund (EMF). Due to mainly British opposition, Euro-area Member States were forced to create the ESM as an intergovernmental organisation outside of the EU treaties. The ESM currently provides financial assistance to Eurozone members under severe economic and financial distress and is a stability tool for the Euro-area. It is therefore only logical to move the ESM inside of the Euro-area architecture. JEF Europe has long called for this move.
The Commission also suggests that many decisions of the ESM/EMF, such as for example decisions on the payments of individual tranches in ongoing programmes, can be taken by qualified majority of 85% of the votes rather than by unanimity. JEF Europe supports this idea as a mean to increased efficiency of the ESM/EMF’s decision-making and a further step to genuinely supranational governance of the Euro-area.
However, one area that requires further attention is the democratic accountability of the ESM/EMF. Democratic oversight by the European Parliament should be strengthened by giving it a prominent role in the selection of Chair of the ESM/EMF as well as on senior management positions. The Chair of the ESM/EMF should also be directly accountable to the EP, i.a. by regularly engaging in dialogue with Parliament. JEF Europe also believes that the design of the principles of conditionality applicable to Member States requesting support from the ESM/EMF should be established according to the Community method, that is with the European Parliament as a co-legislator.
Beyond the ESM/EMF proposal, the Commission recommends that the role of VIce-President of the Commission for Economic Affairs and Chair of the Eurogroup be merged to create a new European Finance Minister. The Euro-area indeed needs, in the absence of a common fiscal policy, at least stronger coordination and central guidance of national economic policies. We regret, however, that the proposal for a European Finance Minister is left blurry by not bringing forward a legislative proposal. Worse, as the Commission stops short of suggesting the possibility of Treaty change, the proposal is but a kind invitation to Member States to nominate the Vice-President of the Commission as their Eurogroup Chair from 2020. Hopefully national Governments will still be feeling the Christmas spirit by then and oblige. Don’t hold your breath. Not least, we shouldn’t be oblivious to the fact that, for the future Finance Minister to carry out his duties effectively, the position entails a right to raise own resources for the Union’s budget and use this budget for economic stabilisation purposes. Lastly, we believe adjustments to the role of the Eurogroup Chair should must be made so as to ensure a proper separation between executive and legislative roles.
The Commission also suggested that the European budget could include additional programmes for the support of structural reforms, as well as for accelerating the convergence of Member States that are still to adopt the Euro as their currency. JEF Europe supports those initiatives, but it is our belief that those programmes should not be financed at the expense of regional and cohesion funds that support infrastructural projects in disadvantaged regions of Europe, support the convergence of living standards, and ensure the smooth functioning of the Single Market. For the European Union to deliver for all citizens, an overall larger budget is required. Any meaningful macroeconomic stabilisation function requires specific and adequately funded instruments, of a size of at least 1% GDP, thus effectively doubling the size of the current European budget.
Overall, this week’s proposals are neither revolutionary nor surprising, but they are a first step into the right direction. We welcome in particular that the Commission acknowledges that more substantial and comprehensive reform is needed to address the Eurozone’s woes and create a sustainable system for the future. So do citizens. It’s time European leaders listens to their own people, cease with the “business as usual” attitude of recent years and bring on radical reforms for Europe. JEF Europe will be their ally in this endeavour.