Economic and Financial Affairs

Conference on Stability, Economic Coordination and Governance in the European Union – Debate on parliamentary scrutiny and the democratic deficit during the second panel

09-11-2015 / 10-11-2015

Alex Bodry and Yves Mersch at the TSCG conference on 9 November 2015
© Chambre des députés
Under the Luxembourg Presidency of the Council of the European Union, the Chamber of Deputies held an Interparliamentary Conference on Stability, Economic Coordination and Governance within the European Union in Luxembourg on 9 and 10 November 2015. The conference was organised pursuant to Article 13 of the Treaty on Stability, Coordination and Governance (TSCG). The first meeting was held in Vilnius in October 2013.

The second panel focused on parliamentary scrutiny of European economic governance, which had been strengthened in response to the eurozone crisis and, in particular, on the democratic deficit.

In his opening speech, Alex Bodry, Vice-President of the Committee on Finance and Budget at the Luxembourg Chamber of Deputies, referred to a 'genuine democratic deficit', whilst pointing out that the Lisbon Treaty is often described as the 'Treaty of Parliaments' but that, in reality, it is far from it. Although economic governance has been boosted in response to the crisis, the new intergovernmental structure set up as a matter of urgency 'reduces flexibility' of national parliaments in terms of budget, he stated.

The Member of Parliament (MP) laments the fact that the European Parliament is a co-legislator only in three out of twelve legislative processes involving Economic and Monetary Union (EMU). This is the case despite it being 'the principal instrument of democratic scrutiny and political accountability within the EU framework', and it has become the co-legislator in respect of legislation on multilateral surveillance under the Lisbon Treaty. So far as the adoption of more sensitive measures is concerned, the European Parliament is 'consulted, or even just informed', he stated. Given that the EMU is subject to the principle of democracy, the direct representatives of citizens must be associated with the adoption and scrutiny of all public policies with no exceptions, stressed Alex Bodry.

With regard to the Five Presidents’ Report which seeks to deepen EMU and to enhance parliamentary involvement and scrutiny, the MP expressed his concern about the implementation of 'new independent structures composed of appointed experts', referring in particular to the European Advisory Committee on Budget which was recently set up by the European Commission and to national competitiveness councils, put forward by the Council. 'We must not fool ourselves. This serves to further risk undermining the political sovereignty of elected representatives and fails to strengthen democratic legitimacy', claimed Alex Bodry.

The MP then referred to the urgency of strengthening interparliamentary cooperation. He believes that the crisis has 'clearly highlighted the inevitable need to strengthen the coordination of economic policy between Member States and to increase cooperation between national parliaments and the European Parliament'. Alex Bodry is of the opinion that the additional value of interparliamentary conferences is 'evident', as they do not seek to restrict powers and they can help to 'compensate for a lack of scrutiny and make concrete contributions'. He stressed the need to align national time frames with European time frames, so parliaments 'are not merely there for rubber stamping' and they can 'influence content and policy choices'.

By contrast, Alex Bodry welcomed the fact that the European Central Bank (ECB) and the European Parliament have set up a 'dialogue on monetary policy'.

With regard to the European Stability Mechanism (ESM), which entered into force in 2012, the MP regrets that the adjustment and intervention plans of the ESM are decided only by the Ministers for Finance of the eurozone and that the European Parliament has no say on this matter, while only opinions of national parliaments are canvassed.  

Yves Mersch, Member of the ECB's Executive Board, held that implementation of the Maastricht Treaty was a failure, and that ensuring necessary scrutiny and sanctions in the areas of national responsibility of Member States where there is no interference from the EU did not work. The response to the crisis has therefore been to set stricter rules in terms of budgetary and fiscal policy and to establish the Banking Union, concluded Yves Mersch. The process was carried out without a 'large debate', from which national Parliaments have largely been excluded, even if some decisions impinge on their prerogatives.

The Member of the ECB's Executive Board also stressed the fact that the responsibility of national parliaments lies in the field of taxation. In order to transfer such powers to European level, it will be necessary to amend the Treaties, something which governments are not prepared to do for fear of an electoral backlash. "That is why we are not changing the Treaties, but rather trying to introduce amendments through the back door, something which European citizens do not accept", he claimed.

Yves Mersch also highlighted the need for more 'legibility' and information for the public, for whom the role of the ECB in terms of surveillance 'is not clear'. For Yves Mersch, there remains a certain 'fuzziness' and 'great confusion' among European citizens with regard to the accountability of European decision-making.

Ralf Jansen, General Counsel of the European Stability Mechanism (ESM), stated that the ESM is not a European institution, but rather an intergovernmental institution between the 19 Member States of the eurozone. He stressed the fact that national parliaments are closely involved with ESM decision-making and that Ministers for Finance, who form the Governing Council of the ESM, must be accountable to national parliaments. An informal dialogue has been set up with the European Parliament.

Kai Jan Krainer, Vice-Chairman of the Committee on Finances of the Austrian Nationalrat, considered that the budgetary sovereignty of national parliaments is affected by new budgetary rules. He believes that the European Semester is distrustful of national decision-making. So far as taxation is concerned, he insists that it should be harmonised at European level so as to prevent tax evasion, even if that means a change to the Treaties.

  • Updated 11-11-2015