Last Wednesday 16 September the European Economic and Social Committee, an authentic representative of the European organized civil society, adopted an opinion aimed at improving the democratic function and the accountability of the EU decision-making bodies. The EESC acted at the request of the European Parliament. Actually, the Lisbon Treaty contains untapped potential to bring “positive changes to bridge the gap between the EU and its citizens”. The existing Treaties provide untapped opportunities and the EESC notes that they “could be grasped to improve policies and strengthen the EU both internally and externally. Whether exploring deeper policy action or improving implementation, there is a wealth of policy areas and technical instruments which could be tapped”.
In its opinion adopted at the plenary session, the EESC also stressed that democracy and accountability are fundamental to European citizenship and that this dimension of the Lisbon Treaty must be fully and systematically implemented. The EESC underlines that “in future it will be necessary (i) to extend the competences of the European Parliament, for instance through an increased role in European economic governance and the European Semester, and (ii) to put in place a more balanced share of responsibilities and inter-institutional cooperation between the institutions with a view to consolidate the community method”. The EESC reference to the ‘community method’ is a clear hint to what happened in the enactment of the European Banking Union, which has been structured by a multinational agreement only remotely connected with the EU institutions. Let’s dig into that.
New un-European bodies
There is a fresh crop of EU institutions like the Single Resolution Board, the key decision-making body of the European Banking Union. Along those lines the latest arrival is the Advisory Fiscal Board, just proposed by the Commission. This new Board will dictate economic policy to member states. Invariably, all those novel bodies lack any democratic legitimacy and accountability. This is an old story in the workings of the European Union with the notorious ‘democratic deficit’, which was only partially covered by the amplified powers of the European Parliament under the Treaty of Lisbon.
Unfortunately, this gap has started to widen again with the European Monetary Union and more precisely with the European Banking Union. In the context of the Banking Union, the European Central Bank has hosted the Single Supervisory Mechanism under its roof which oversees the euro area banks. This mechanism works as a complete autonomous structure accountable to practically no EU democratic institution. In fact, the entire infrastructure on which the European Banking Union is based has been constructed outside the normal working procedures of the Union, by default banning the implication of the European Parliament. The heads of those new bodies appear before the legislators only to get a benediction while being appointed.
The European Parliament reacts
Those developments have sounded the alarms to the democratic EU bodies which are the European Parliament and the European Economic and Social Committee, which authentically represent the peoples of the European Union. The question of democratic legitimacy and accountability has been posed very loudly since the EU created the euro and the euro area under the historic project of the Economic and Monetary Union.
This edifice proved completely incapable to make sure that the EMU can also promote the economic and social cohesion of the participating member states. The cases of Greece, Ireland, Portugal, Spain, Italy and Cyprus proved that beyond reasonable doubt. The EMU decisively secured the recapitalization of negligent banks in those countries and also saved the imprudent lenders in Germany and France. However, it completely failed to protect the taxpayers and the entire society from the harsh consequences of this exercise.
The creation of more unaccountable institutions is now bound to widen with the latest Fiscal Councils. The European Sting noted this last week in a statement by the Commission Vice President, Valdis Dombrovskis, after the ECOFIN council. He proposed to “set up an Advisory Fiscal Board which would coordinate the work of National Fiscal Councils and also, as the Minister has outlined, the more effective use of the Macroeconomic Imbalances Procedure”.
It is exactly the same method used to enact the Banking Union, namely by drawing up international agreements ratified directly by the member states bypassing the EU structures. Obviously, the Advisory Fiscal Board will also be created outside the ‘acquis communautaire’ (EU legislation) and its executives will be accountable only to their national governments, swiftly bypassing the European Parliament and the Commission. It should be underlined that, today the Commission is the competent body to check the macroeconomic imbalances of the 28 EU member states. This arrangement will change with the advent of the Fiscal Councils. It seems that the Commission is not any more to the liking of Germany. Incidentally, Wolfgang Schäuble, the German Federal Minister for Finance has just proposed that the fiscal deficit controls be bestowed to a private auditing firm, immune to ‘political influence’ and…obeying only to Berlin.
The legislators oppose that
That’s why the European Parliament asked the EESC to find ways and means to improve democracy and accountability in the workings of the EU’s ‘Economic Governance’ and the EMU. On 18 September the EESC responded with a document entitled “Participatory democracy to the rescue of the EU project “. The very title reveals the EESC’s fears that the EU plan is now in real danger. To save it the Committee demands to reinforce “the Eurozone’s (proper) governing structures and completing Economic and Monetary Union (EMU) will speed up real European economic governance and ensure deeper integration. This should be based on four pillars: a monetary and financial pillar, an economic pillar, a social pillar and a political pillar”.
If the different ‘Boards’ continue unaccountable to the EU political pillar, which is the European Parliament and go on neglecting the social factors, the EU will end up as one more international organization. The real job will be done by those ‘Boards’ outside the EU structures as being directly controlled by the member states, of course under the watchful eye of Berlin.