How not to improve European parliamentary scrutiny for the Euro

Posted by andrewduff on 17/12/12

Martin Schulz, President of the European Parliament, is among those who want to improve Parliamentary scrutiny of what goes on in the eurozone and suggests we could do this by removing British MEPs. He’s right on the first point but wrong on the second ‑ and risks having his Parliament sued in the European Court of Justice. Here’s why.

As fiscal integration deepens, there is a strong case for improving the way the European Parliament scrutinises budgetary, financial and economic affairs especially across the eurozone. The eurozone is the core feature of Economic and Monetary Union and as such deserves special treatment at the level of parliaments just as its gets from governments. In particular, the European Parliament needs to have a close, regular and systematic watch over the troika programmes and the activities of the Eurogroup.

Special treatment for the eurozone should be seen as a supplement to and not a substitute for broader parliamentary scrutiny of the issues affecting EMU, such as the monetary dialogue, the single supervisory mechanism for the banking union, the work of the other supervisory bodies in financial services, and issues affecting the integrity of the single market.

Another important challenge is how the European Parliament proceeds to track the implementation of the Fiscal Compact Treaty, and itself to manage the implementation of Article 13 which requires there to be interparliamentary cooperation between the European Parliament and the national parliaments of the 25 signatory states.

A Sub-Committee on the Euro

The ECON Committee is undoubtedly over-stretched at the moment by the weight of complex legislation. The proposal to form a sub-committee of ECON to help manage the workload is not a new one, and makes a lot of sense in theory. Membership could be drawn more widely from across Parliament than from the ECON committee alone (BUDG and EMPL, for example). In practice, however, it will be difficult to find the time and personnel (both MEPs and staff) to hold many extra meetings. In due course, however, once the workload of ECON eases off, the sub-committee should be a useful extra forum for specialist eurozone work.

It makes no sense whatsoever to try to form a completely new main committee of the Parliament carving out some formal competences of ECON. Indeed, there is every risk that such a new committee would fracture Parliament’s work on Economic and Monetary Union as a whole, resulting in the very incoherence and inconsistency that we have criticised in other bodies.

The most difficult decision concerns the division of responsibilities between ECON on the one hand and the Sub-Committee on the Euro, on the other. Whatever happens, it would be important to avoid more time-wasting squabbles between the two chairs: some flexibility should therefore be built into the new arrangement to enable the Sub-Committee to take on special tasks as and when the need arises. One suggestion which may work is to keep the monetary dialogue and supervision policy with ECON, and to delegate the Eurogroup and the European semester to the Sub-Committee. The Sub-Committee can be prepared to take on other aspects of economic governance, like the EU treasury, which have yet to emerge. In any case, it should be made clear that the sub-committee reports to the main committee and that any legislative decision is reserved, as now, for the plenary.

Cohesion between euro and non-euro MEPs

Were the ECON sub-committee to be formed, the question arises whether it is either possible or desirable to limit the participation in any enhanced scrutiny procedures of MEPs elected from states which are not members of the eurozone. The non-euro states divide into at least four different categories, as follows:

  • Six states (plus Croatia) which intend and are trying to join the euro in their own time;
  • Sweden and the Czech Republic which should be trying to join the euro but are not;
  • Denmark which has a treaty-based exemption from the euro until it adopts a referendum (Protocol No 16);
  • The UK which has a treaty-based derogation from the euro unless and until it changes its mind (Protocol No 15).

It is important to recall that the euro is the currency of the Union (Article 3 TEU) and that the Parliament is the parliament of the Union (Article 14). The special treatment of member states with a derogation (the ‘pre-ins’) is strictly delineated in Article 139 TFEU under the title ‘Transitional Provisions’. Once the worst of the crisis is past, one can expect the eurozone to expand its membership again.

Even the UK is not immune from the integrative dynamic of EMU. The UK is part of the European System of Central Banks, and alongside all other member states is committed to regarding its economic policies as a matter of common concern and to coordinating them within the Council according to broad guidelines (Article 121 TFEU). The British have participated in the EFSM bail-out for Portugal, have given bilateral aid to Ireland, and continue to contribute via the IMF to the troika programmes.

At the level of the Council and European Council, where member states are formally represented, arrangements have been made for eurozone governments to meet on their own (Eurogroup and euro summits). However, such differentiation is not applied or permitted by the authors of the Treaties to the European Commission, European Parliament or European Court of Justice, where member states as such are not formally represented. The integrity of EU law, its effective and uniform implementation across the Union as a whole, and the guarantee that the Treaties are respected, would seem to require unitary or collegiate action by Parliament, Commission and Court.

According to the Treaty, MEPs do not represent their states but are ‘representatives of the Union’s citizens’ (Article 14 TEU). Article 13 TEU establishes the institutional framework of the Union for the Union as a whole and stresses the need to ensure ‘consistency, effectiveness and continuity’ of policies and actions. Article 9 TEU lays down that: ‘In all its activities, the Union shall observe the principle of the equality of its citizens, who shall receive equal attention from its institutions, bodies, offices and agencies’. Article 10 TEU reminds us that citizens are ‘directly represented at Union level in the European Parliament’, and, moreover, that ‘every citizen shall have the right to participate in the democratic life of the Union’. Article 18 TFEU and Article 21 of the Charter of Fundamental Rights prohibit discrimination on the grounds of nationality, while Article 4 TEU says that the Union shall ‘respect the equality of Member States before the Treaties’.

While Parliament is organised in different groups and committees, all those bodies are always open to all Members, and all Members have the legal right to vote. The mandate of Members is not divisible or segmented according to or on behalf of the policies of the member states in which they are elected. No differentiation is possible in other sectors of policy: Bavarian MEPs vote on maritime policy, for example, just as Baltic MEPs vote on policy for the Mediterranean. Under the enhanced cooperation rules (Articles 20 TEU & 329 TFEU), all MEPs vote both on the consent to establish the core group and thereafter on legislative proposals which may emerge from that group. According to the Protocol on Privileges and Immunities and the 1976 Act introducing direct elections, and in accordance with Rule 1 of Parliament’s Rules of Procedure, each MEP has an equal, individual and independent mandate. In short, there is no precedent for excluding MEPs elected in any one state from participation in all Parliamentary activities, and any move to do so would certainly be challenged on firm grounds in the European Court of Justice.

Changing the Treaties

Looking further ahead, should a full fiscal union and federal economic government emerge from the present discussions, there will be the prospect that the Eurogroup is formalised at the level of the Council and that taxes are imposed directly by the EU on the citizen-taxpayers of the eurozone. That being the case, it may very well be necessary to allow for a special formation of Members elected from those states directly affected as the first legislative chamber of the Eurogroup. But such an institutional adjustment to the deepening of federal union requires treaty change – and treaty change requires further reflection.

In any case, a Convention is envisaged to open in spring 2015. The internal disposition of the European Parliament, as well as its mode of election, will be an important item on the agenda of that Convention ‑ not least if one or other member state opts for associate membership. Other items which will require institutional adjustment include the incorporation of the Fiscal Compact Treaty and European Stability Mechanism in the EU framework.

 

@Andrew_Duff_MEP

 

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