EPSC

Ownership and Accountability

Ownership and Accountability
Background Note
2 March 2016
Download PDF
How Can Democratic Legitimacy of Policies Be Reinforced?

Starting Point

‘Greater responsibility and integration at EU and euro area level should go hand in hand with greater democratic accountability, legitimacy and institutional strengthening. This is both a condition for success and a natural consequence of the increasing interdependence within EMU. It also means better sharing of new powers and greater transparency about who decides what and when. Ultimately, this means and requires more dialogue, greater mutual trust and a stronger capacity to act collectively.’ —The Five Presidents’ Report

Disclaimer This background note is produced by the European Political Strategy Centre (EPSC), the European Commission’s in-house think tank. Its aim is to support discussions and debates related to the Five Presidents’ Report on ‘Completing Europe’s Economic and Monetary Union’. The views expressed here are those of the authors and do not necessarily correspond to those of the European Commission.

Context

According to the basic legal Treaties of the European Union, the European principle of democracy is based on the concept of dual legitimacy. On the one hand, citizens are directly represented at EU level in the European Parliament. On the other hand, they are indirectly represented by their Heads of State or Government and their governments in the European Council and in the Council, respectively. Notably, Heads of State or Government and governments are themselves democratically accountable either to their national parliaments or to their citizens. This layer of representation adds to the direct role that national parliaments already play at European level.

The implementation of the EU’s economic governance framework is organised around the European Semester, which brings the coordination of budgetary policies, structural reforms and the prevention of excessive macroeconomic imbalances into one structured process. Given the closer economic ties among the euro area countries, parts of the economic governance framework – for example the euro area level assessment of the draft budgetary plans – only apply to those Member States whose currency is the euro. While all regulatory decisions are taken in the EU institutions, where all Member States are represented, some euro area-specific issues are also discussed in, for example, the Euro Summit or Eurogroup.

The reforms of the economic governance framework which are required to achieve a well-functioning Economic and Monetary Union ought to take into account the fundamental principles of democracy. The European Parliament as well as national parliaments are involved in the implementation of the European Semester, the Stability and Growth Pact (SGP) and the Treaty on Stability, Coordination and Growth (TSCG).

The increasingly interlinked responsibilities of the European Parliament, national parliaments and various representative bodies bear the fundamental question of how they can work together to guarantee the democratic legitimacy of decisions taken in the context of the Economic and Monetary Union. The second key question is how to ensure that citizens in the euro area Member States feel that they and their democratically elected representatives can participate in and influence the decisions taken in the context of the Economic and Monetary Union. In other words democratic ownership.

Questions for Debate

What should be the role of rules and institutions for economic governance?

The present architecture of the Economic and Monetary Union relies on decentralised national fiscal and economic policies under a rules-based framework of coordination and control. The existing and mainly rules-based system of economic policy coordination could evolve into a system where more decision-making competences are transferred to common euro area institutions, including a possible euro area Treasury. In parallel, the role of market-based discipline could be reconsidered and reinforced. This would support national responsibility, and contribute to avoiding an excessive centralisation of decisions.

The main questions related to the features of those proposed institutions are: What should be the balance of responsibilities between new institutions and the existing Treaty-based rules and frameworks? More generally, what should be done at euro area level and what should remain at the level of the Member States?

How to ensure more effective accountability of the institutions governing the EMU? In this context, what roles are there for the European Parliament and for national parliaments?

As a rule, accountability takes place at the level where the decision-making competence is. The European Parliament and national parliaments are involved at the level of their competences.

As part of the European Semester, economic dialogues between the European Parliament and the Council, the Commission and the Eurogroup, already take place in line with the provisions of the Six-Pack and Two-Pack legislation. The Five Presidents’ Report proposes to enhance these dialogues by agreeing on dedicated sessions at key moments of the Semester cycle. Moreover, the Report suggests that the European Parliament could become more directly involved in the choice and discussion of the multiannual economic policy priorities of the Union. With regard to the European Parliament‘s role in the European Semester, the Commission engages with the European Parliament at a plenary debate before the Annual Growth Survey (AGS) is presented.

New forms of inter-parliamentary cooperation have already been established within the European Parliamentary Week, organised by the European Parliament in cooperation with national parliaments, which engages representatives of national parliaments in thorough discussions on policy priorities. The level of cooperation between the European and national parliaments could be further increased to reinforce mutual understanding and increase democratic ownership.

Inter-parliamentary cooperation as such, however, does not necessarily ensure the democratic legitimacy of euro area decisions, which may require a different type of parliamentary involvement. In general, the European Parliament should function as the exclusive assembly for the EU and hence for the euro area. The Five Presidents’ Report proposes that the Commission makes its interaction with national parliaments more efficient. Such interaction could apply to national parliamentary debates, for example, both on the Country-Specific Recommendations and within the annual budgetary procedure. Thus, as already provided for by the “Two-Pack” legislation, a Commissioner can be invited to the national parliament to represent the Commission’s opinion on the draft budgetary plan of that euro area Member State. In general, to further increase ownership, national parliaments could be closely involved in the adoption of National Reform and Stability Programmes, in countries where this is not yet the case.

In the longer term, the evolution of the role of national parliaments into some type of integrated multi-level parliamentarism could also be envisaged. Another possibility could be to reflect on the example set by the existing right of national parliaments to raise subsidiarity concerns. In addition, the role of stakeholders such as social partners in economic governance could be reinforced.

How to ensure ownership and democratic legitimacy as the institutional or governance framework of the Economic and Monetary Union evolves?

Deeper integration within the Economic and Monetary Union (EMU), as proposed in the Five Presidents’ Report, may entail the creation of new instruments or entities at the level of the euro area, such as a fiscal stabilisation function for the euro area or a euro area Treasury. At the same time, closer coordination among euro area Member States on those economic policies which remain of national competence may be required. Any reforms in these sensitive policy fields should take into account the need to ensure parliamentary control and ownership by euro area Member States and citizens. How this could be achieved in practice is a matter of discussion. For instance, democratic scrutiny of the euro area Treasury as proposed by the Five Presidents’ Report would have to be ensured and designed according to its specific institutional setup.