Written by Angelos Delivorias and Marcin Grajewski
As the euro area prepares to launch the second phase of the overhaul of its economic governance system, the European Parliamentary Research Service and the European University Institute organised a joint policy roundtable to discuss the progress so far and challenges ahead. The aim was to present to EU legislators some of the most recent academic thinking on a subject that is crucial for the future of Europe, as well as to take stock of the often difficult debate on the matter in the European Parliament.
The event, entitled ‘Economic Governance in the EU’, was held on 11 May simultaneously in the EUI in Fiesole, Italy and the European Parliament’s Library Reading Room in Brussels with the help of a video-link. It brought together leading researchers and Pervenche Berès, the European Parliament’s rapporteur on the review of the economic governance framework. It was the second EPRS-EUI policy roundtable organised under their partnership agreement.
The speakers acknowledged that euro area governance has undergone profound changes since the sovereign debt crisis hit, following the collapse of Lehman Brothers in 2008. It has established three authorities to better supervise financial markets, improved mechanisms to oversee and coordinate fiscal policies, created procedures to correct economic imbalances, and launched a Banking Union. The euro-area countries created rescue funds for countries in economic trouble. But although the worst seems to be over for the euro area’s economy, these reforms may not be enough to ward off another crisis, lower high unemployment and boost growth. There are also doubts regarding the democratic accountability of euro-area decision-makers.
The conference came weeks before the planned publication of a report being drafted by the five presidents of EU institutions – the European Commission, European Parliament, Euro Summit, Eurogroup and European Central Bank – on the changes needed, and the June European Council that is due to set the course for reforms. The European Parliament is due to put forward its own report on the issue to ensure that the voice of the EU’s only directly elected institution is heard.
As the key note speaker at the event, Pervenche Berès provided insight into the ongoing debate in the Committee on Economic and Monetary Affairs. She said that although the vote in the committee on the report was scheduled for 26 May, there were still many divisions. For example, whether the continued economic divergences among the euro area countries are due to reform fatigue or result from the very construction of the euro, and on the lack of effectiveness of the macroeconomic imbalances procedure.
Listen to the speech by MEP Pervenche Berès
In any case, Ms Berès said, the report will stress the need for any new governance system to be democratically accountable and to be overseen by the European Parliament, which is the legislature not only for the European Union but also for the euro area. ‘We want to send a strong signal to the five presidents’, said the MEP. She added that euro area countries should have ‘convergence guidance’, a kind of five-year development plan that would aim to narrow the economic gaps among them. Those countries that pursue agreed reforms could receive, as an incentive, special euro-area funds, which could be the beginnings of the euro area’s own budget. In a more distant future, the budget could evolve into a ‘European Monetary Fund’, which could contain funds that would serve as buffers for countries against external shocks.
The two sessions of the roundtable were devoted, respectively, to the governance of the euro area and the new balance achieved in economic governance. They were chaired by Professor Adrienne Heritier, former chair in the Social and Political Sciences Department, and Brigid Laffan, Director of the Robert Schuman Centre for Advanced Studies.
Presenting the role of the European Union in Global Economic Governance, Dirk Verbeken, researcher in the EP’s Directorate-General for Internal Policies (IPOL), emphasised that EU economic governance should not be seen in isolation, since many aspects of the current framework reflect the consensus approach adopted in a global context. Given the complexity and the lack of transparency of the current framework, the European Parliament is currently examining how to enhance its credibility and improve parliamentary oversight and democratic legitimacy, he added. In this context, nine studies are being prepared, and will be published soon by the Policy Department on the initiative of the Committee on Economic and Monetary Affairs.
EUI PhD researcher Marijn van der Sluis, the second speaker, pondered to what extent the new European Economic Governance Framework was a set of iron-clad rules or a form of political game.
Another EUI researcher, Pierre Schloser analysed the negotiations on the Six-Pack and the Two-Pack. He shed light on the context under which they were adopted, with the first taking place in a highly politicised context where there was a need for a swift and credible policy response, while the second took place in a context less politicised, but characterised by ‘reform fatigue’.
The EPRS’s Angelos Delivorias outlined the debate surrounding the democratic legitimacy of the current economic governance framework and summarised a few proposals for reform from the academic world, as well as recent political initiatives from the European Parliament.
Summing up, EPRS Director, Etienne Bassot said the conference showed there was still a lot to be done in the area of economic governance and there was no room for complacency despite the signs of economic recovery. He closed his remarks by presenting the calendar of parliamentary activities in the field for the coming months.