P. Craig, The Eurogroup Legitimacy, Democratic Accountability and Decision Making

The Eurogroup: Legitimacy, Democratic Accountability and DecisionMaking

Professor P Craig

Legitimacy 1) It is clear that the Eurogroup plays a central role in decision-making relating to EMU in general and more particularly for those countries that have adopted the Euro. The nature of these responsibilities will be explored in more detail below, since it is only by doing so that one can make any judgments concerning its legitimacy and the democratic accountability of the decision-making process of which it forms one part. The following discussion will also include analysis of the Euro Summit, since this is intimately connected with the Eurogroup. 2) It is clear that the Eurogroup has formal legitimacy through Article 137 TFEU and Protocol 14 LT. The former provides that ‘arrangements for meetings between ministers of those Member States whose currency is the euro are laid down by the Protocol on the Euro Group’. Protocol 14, Article 1 states that ‘The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.’ Note that while Protocol 14 is couched in terms of the Eurogroup meeting 1

‘informally’, it is also framed in mandatory terms, the ministers ‘shall’ conduct such meetings when necessary. Protocol 14 also legitimates the position of President of the Eurogroup, providing in Article 2 that ‘The Ministers of the Member States whose currency is the euro shall elect a president for two and a half years, by a majority of those Member States’. 3) The formal legitimacy of the Euro summit is less straightforward. The issue of principle is clear and can be presented as follows. There is nothing to prevent the European Council acting within the confines of the LT from deciding to devote a particular meeting to Euro issues, nor is there anything constitutionally problematic about the European Council deciding within the confines of the LT that there should be regularized meetings devoted to Euro issues that would be attended by Member States whose currency is the Euro. The constitutional relevance of the Treaty on Stability, Coordination and Governance is far more problematic. The website for the European Council states that the TSCG ‘formalized the Euro summit and its President’. 4) This is indubitably true in descriptive terms. Article 12 TSCG does indeed formalize meetings of the Euro summit, providing for the regular holding of such meetings composed of countries that have the euro, plus President of the European Commission, with the President of the ECB being invited. The President of the EP may also be invited, and there is an obligation to report to it. The meetings must take place twice a year and may take place more often if necessary. There is provision for election of the President of the Euro Summit, and provision also for participation to some degree in such meetings by countries that do not have the euro, but which have ratified the TSCG. The Euro group helps in the preparation of the agenda for the Euro summits, and for the follow up to its meetings. The Eurogroup and the Euro summit

2

are in that sense joined at the hip. It is incumbent on the President of the Euro Summit to keep the Contracting Parties other than those whose currency is the euro and the other Member States of the European Union closely informed of the preparation and outcome of the Euro Summit meetings. 5) The constitutional and legal relevance of Article 12 TSCG is nonetheless problematic for the following reason. The TSCG was made outside the confines of the LT, signed and ratified by 25 Member States. It is clearly contrary to constitutional principle that a Treaty made outside of the confines of the LT can have a formal impact on the modus operandi of an EU institution. The fact that the EU institution was the European Council composed of Member States is irrelevant for these purposes. It is still an EU institution whose composition and mode of operation can only be determined by all Member States acting within the framework of the LT. If it were possible to make new provisions for the operation of the European Council in this manner, it would in principle be possible to make changes in the operation of the Commission or EP. This could not be done constitutionally irrespective of whether the Commission or EP were parties to such a Treaty made outside the confines of the LT, and irrespective of whether they consented to such changes. New binding rules relating to the operation of any EU institution can only be made in the manner specified in the constituent treaties. Article 12 TSCG might be subsequently legitimated by the European Council deciding, within the confines of normal operations under the LT, that it wished to adhere to the content of that Article. This would not be constitutionally problematic, since, as seen above, it has power under the LT to make provision for ad hoc or regular meetings of the Eurogroup. The legitimacy of such meetings would however then lie with the decision formalizing them made within the confines of the LT, and not with anything said in the TSCG.

3

Democracy and Decision-Making 6) Evaluation of the Eurogroup and the Euro summit in terms of decision-making and democracy is inherently contestable. A necessary condition for moving forward is an understanding of their respective and combined contributions to decision-making, viz, what they do. Putting it simply, it is clear that they do a great deal. The Euro summit orchestrates policy between heads of state for the Euro countries, with significant input from the Eurogroup in terms of preparation. The Eurogroup is then charged with follow up to these summits. The importance of the Eurogroup is moreover readily apparent from its policy document setting out its work programme for 2015, and from the centrality of its role in recent negotiations with Greece concerning renegotiation of its debt. There are two ways that the role of the Eurogroup might be conceptualized in terms of democracy and decision-making. 7) The Positive View: The positive argument in terms of the role of the Eurogroup and the Euro Summit would be framed as follows. The principal threat to the Euro post 2008 has arisen from a combination of national budgetary deficit and the banking crisis. While commentators disagree markedly as to the more precise causality as between these two factors, few doubt that both played a role in the subsequent pressure on the Euro. This then led to the plethora of measures enacted to strengthen the economic union dimension of EMU, some of which were made pursuant to the LT, such as the six-pack and the two-pack, some of which were made outside the LT, such as the TSCG and the ESM. The fact remains that EMU even as reinforced by these measures is cast in terms of surveillance. The EU does not possess its own fiscal capacity, which continues to reside with the Member States. The principal objective of the measures enacted post 2010 has been to tighten the surveillance of national 4

budgetary choices to prevent a repeat of the problems that beset Greece, Ireland and Portugal and which threatened Italy and Spain. 8) It would then be argued that surveillance of the kind now embodied in the TSCG, sixpack, and two-pack will inevitably fall to the ‘executive arm of government’. The legislation embodying the new measures should whenever possible be enacted through the ordinary legislative process, but the application of the legislative imperatives thereafter will inevitably fall to the executive. This is borne out by the centrality accorded to the Commission in the application of the new surveillance regime, whether derived from the six-pack plus two-pack, and the TSCG. Viewed from this perspective the Eurogroup and indeed the Euro Summit would be viewed as further extensions of the executive arm of government broadly conceived, with the twin objectives of assisting with surveillance in the Euro area, and operating as a forum through which the Member States that subscribe to the Euro would have ‘voice’. The Eurogroup would be conceptualized as de facto a specialist arm of the Council, a spin off from Ecofin, and a natural institutional response to differentiated integration, whereby the concerns of Member States that subscribe to the Euro are not identical to those that do not, and thus require a distinct institutional forum. 9) The Negative View: there is however a more negative view, which would take the following form. The Eurogroup has formal legitimacy derived from Article 137 TFEU and Protocol 14, but there is a mismatch between what is formally writ down in these provisions and the reality of the power exercised by the Eurogroup, more especially in tandem with the Euro Summit. A bare reading of the Treaty provisions, including the Protocol, would suggest that the Eurogroup was primarily a locus in which Member States that subscribed to the Euro could talk and address issues of common concern. This has been belied by the reality, which is that the Eurogroup has come to exercise

5

considerable substantive power de facto, shaping the agenda for the Euro Summit, and being the institution charged with the follow up to implement its dictates. There is little by way of formal accountability for the Eurogroup’s input into the Euro Summits, and equally little by way of accountability check as to how it implements Euro Summit policy, more especially when, as will commonly be the case, the conclusions from such Summits are couched in general terms that require interpretation and choice in the implementation. It seems clear that the President of the Eurogroup holding office for two and half years is especially powerful, as attested to by his role in shaping Eurogroup policy, representing it in international fora, and acting as its voice in negotiations such as those with Greece. His power is further enhanced by the fact that he is also Chair of the Board of Governors of the ESM. The concern then is an increase in executive power, where the locus of that power is situated in institutions, the Euro Summit and the Eurogroup, that are not subject to the accountability checks that exist when executive power is exercised by the Commission, or by the formal Council configurations. 10) The preceding concerns are further exacerbated for countries that are not part of the Euro. The fear is that discussions within the Eurogroup, and the Europact plus, will lead to ‘done deals’ that have a significant impact on non-Euro Member States. It is difficult to determine the reality of this fear. What is however clear is that the Eurogroup does address issues such as bolstering economic growth and job creation in the Euro area, and does review the impact of the six-pack and two-pack on Euro area Member States. Both are part of the Eurogroup’s 2015 programme. There is little doubt that the strategies devised for the former and the position taken on the latter may well have significant consequences, direct or indirect, for Member States outside the Eurozone.

6