A BUDGETARY CAPACITY FOR THE EUROZONE: A FEDERALIST VIEW
By DAVID GARCIA and PAOLO VACCA
This Policy Brief attempts to provide some answers from a federalist perspective to the comprehensive series of questions listed by rapporteurs Pervenche Berès MEP and Reimer Böge MEP ahead of the own initiative report on “a budgetary capacity for the Eurozone” in preparation by the Economic and Monetary Affairs Committee and the Budget Committee of the European Parliament. These questions and answers concern the structure, purpose and functioning of an eventual EMU fiscal capacity, as well as the ways to overcome the main political challenges that this sort of fiscal integration would entail. DOWNLOAD THE BRIEF
This policy brief takes five fundamental benchmarks of governance systems as main objectives (increased parliamentary legitimacy of decisions, streamlined decision-making processes, reinforced accountability of the executive, better implementation of decisions and clearer separation of the executive and the legislative powers). This framework is used to identify the possibilities offered by the Treaty of Lisbon allowing decision makers to address the institutional flaws, dysfunctions and practices that prevent the Union from working in a fully democratic and effective manner. At the same time, it points out actual limitations imposed by the Union’s current legal framework. At the same time, it points out actual limitations imposed by the Union’s current legal framework. The result of this research is a list of 20 proposals that, implemented as a package, could lead to considerable improvements in the functioning of the Union. DOWNLOAD THE BRIEF
By DAVID GARCIA and PAOLO VACCA
This policy brief analyses the possibilities that the Treaty of Lisbon offers in order to deepen and strengthen the Economic and Monetary Union and improve its democratic legitimacy and effectiveness. The democratic legitimacy of the EMU could be strengthened by a significant involvement of the European Parliament in the economic policy-making process, by a better division between the executive and legislative powers, and by the creation of an EMU Committee or Super-Committee within the European Parliament. The basis of a future economic and fiscal government of the euro area could be created by concentrating key prerogatives and capabilities on these matters and by merging the positions of President of the Eurogroup and Vice-President of the Commission into a de facto “EMU Finance Minister” responsible for the development and implementation of EMU economic and fiscal policy and democratically controlled and sanctioned by the European Parliament. An own budget for the Eurozone would allow the implementation of macroeconomic convergence and investment policies aimed at improving growth in the Euro area and to increase its resilience.
If the measures proposed here were implemented (and particularly if they were implemented as a package, or within a single roadmap), they could constitute a considerable improvement in the functioning of the EMU. While potentialities exist à traité constant, rallying the necessary political consensus among Member States (especially for the many measures that can only be implemented by unanimity of the Member States) represents a major challenge.
On the other hand, the limitations provided by the Treaties are also very clear. The potential degree of financial autonomy of the Union or the EMU is restricted by their lack of powers for tax collection or for issuance of sovereign debt and their limited spending powers. The inexistence of European political accountability when it comes to policies decided through the intergovernmental method is the major obstacle to democracy, effectiveness and enforceability. Sooner rather than later the Treaties would need to be revised to reach a definitive settlement in these areas and secure a sustainable future for the EMU. DOWNLOAD THE BRIEF