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States’ Equality v States’ Power: the Euro-crisis, Inter-state Relations and the Paradox of Domination

Published online by Cambridge University Press:  03 March 2015

Federico FABBRINI
Federico FABBRINI*
Affiliation:
Faculty of Law, University of Copenhagen
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Abstract

This article examines how the Euro-crisis and responses to it have affected the horizontal relations of power between the EU Member States. It is argued that, whereas the EU institutional system had been designed since its foundation to strike a balance between state equality and state power, the Euro-crisis and the responses to it have increasingly upset this balance. A dynamic of inter-state domination is evidenced by the intergovernmental modes of governance within the European Council, as well as by the legal reforms in salient areas such as economic assistance, financial stabilisation and banking resolution, which have entrenched asymmetries between the states. In this article, it is argued that this dynamic constitutes a worrying development, given the anti-hegemonic nature of the EU integration project, and shows how intergovernmentalism paradoxically caters for powerful Member States. The article ends by considering options for institutional reforms, cautioning against the proposal to parliamentarise the EU and emphasising the potential of a new separation-of-powers system to restore a proper balance between the Member States.

Keywords

Euro-crisisequalitypowerconstitutional balanceinstitutional design
Type
Articles
Information
Cambridge Yearbook of European Legal Studies , Volume 17 , December 2015 , pp. 3 - 35
Copyright
© Centre for European Legal Studies, Faculty of Law, University of Cambridge 

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Footnotes

*

Earlier versions of this paper were presented at the Conference on ‘What Form of Government for the European Union and the Eurozone?’ organised at Tilburg Law School on 5–6 June 2014, and at the workshop on ‘Constitutions and Financial Crises’ held at the World Congress of the International Association of Constitutional Law (IACL) in Oslo on 18 June 2014. I am grateful for comments received at both of these events, and for those of the editors and reviewer of CYELS.

References

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24 Article 10(2) Statute of the ECB.

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32 Article 14(2) TEU.

33 Article 16(4) TEU.

34 Article 16(9) TEU.

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37 Editorial Comments, ‘An Ever Mighty European Council – Some Recent Institutional Developments’ (2009) 46 Common Market Law Review 1383.

38 Article 15 TEU.

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42 Article 15(4) TEU.

43 Article 16(9) TEU.

44 European Council, press release, 19 November 2009.

45 See note 4 above, p 265.

46 European Council, press release, 1 March 2012, EUCO 37/12.

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59 See eg Declaration by France and Germany at Deauville Summit, 18 October 2010 (requiring that budgetary surveillance and economic policy coordination procedures should be strengthened and accelerated) and European Council Conclusions, 28–29 October 2010, EUCO 25/1/10 (endorsing reform to strengthen budgetary constraints and enhance economic governance).

60 See eg Conference of press by Germany, France, Italy and Spain at Rome Summit, 22 June 2012 (agreeing to adopt measures in favour of growth) and European Council Conclusions, 28–29 June 2012, EUCO 76/12 (endorsing a compact for growth and jobs).

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62 The promotion of the Fiscal Compact and related policies of fiscal consolidation (ie austerity) as the main strategy to tackle the crisis is the most emblematic example of this. See Editorial, ‘The Fiscal Compact and the European Constitutions: “Europe Speaking German”’ (2012) 8 European Constitutional Law Review 1. Nevertheless, the argument advanced here should not be reversed: not all German economic preferences have been incorporated into EU economic policy. For instance, Germany strongly promoted the proposal of ‘contractual arrangements’, which aimed to bind EU Member States in fragile economic conditions to a detailed program of structural reforms in exchange for financial assistance by wealthier Member States – and the European Commission followed up on it. See Commission Communication, ‘The Introduction of Convergence and Competitiveness Instrument’, 20 March 2013, COM (2013) 165 final. But opposition by virtually every other EU Member State made the proposal moot. See Government of the Netherlands, press release, ‘Contractual Arrangements with EU Member States Not Binding, Says Rutte’, 20 December 2013, available at: http://www.government.nl/news/2013/12/20/contractual-arrangements-with-eu-member-states-not-binding-says-rutte.html [last accessed 7 August 2014] (reporting opinion of Dutch Prime Minister Mark Rutte against binding contractual arrangements imposed by the EU).

63 See note 14 above, p 40.

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67 See note 2 above.

68 See note 1 above.

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70 See also European Parliament resolution of 13 March 2014 on the enquiry on the role and operations of the Troika (ECB, Commission and IMF) with regard to the euro area programme countries, P7_TA(2014)0239 (criticising the invasive role of the Troika in the EU Member States subject to an economic adjustment programme).

71 L Papadopoulou, ‘Can Constitutional Rules, even if ‘Golden’, Tame Greek Public Debt?’ in F Fabbrini et al (eds), The Constitutionalization of European Budgetary Constraints (Hart Publishing, 2014) 223, p 230.

72 See generally also Chalmers, D, ‘The European Redistributive State and a European Law of Struggle’ (2012) 18 European Law Journal 667 CrossRefGoogle Scholar (emphasizing capacity of the EU institutions to dictate to Member States policy reforms in a broad range of fields) and K Bush et al, ‘Euro Crisis, Austerity Policy and the European Social Model: How Crisis in Southern Europe Threatens the EU’s Social Dimension’, Friederich Ebert Stiftung International Policy Analysis 2013 (discussing the threat that austerity policies produce on the welfare state).

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75 See note 57 above, p 839. See also International Monetary Fund, World Economic Outlook Database, available at http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/index.aspx [last accessed 7 November 2014] (reporting that in 2012 Spain had a GDP at current prices of 1,029.279 billion euro, while Greece had one of 193.347 billion euro).

76 Article 8 ESM.

77 Annex I ESM.

78 See also Napolitano, G, ‘Il Meccanismo Europeo di Stabilità e la nuova frontiera costituzionale dell’Unione’ (2012) 5 Giornale di Diritto Amministrativo 461 Google Scholar.

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80 Article 14 Fiscal Compact.

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84 Article 4(4) ESM.

85 Article 4(7) ESM.

86 Significantly, in authorising the ratification of the ESM Treaty by the German Parliament, the German Constitutional Court was explicit in requiring that Germany takes step to ensure that its veto power be maintained in case new Member States access the ESM, and thus that the German percentage of control over the system does not decrease. See BVerfG, Case No 2 BvR 1390/12 et al, judgment (final) of 18 March 2014, para 193 (stating that ‘Germany’s veto position, which is required under constitutional law, will also be maintained under changing circumstances. Pursuant to Article 44 ESM Treaty, accession to the European Stability Mechanism requires a unanimous decision by the Board of Governors […]. This enables, and if necessary requires, the Federal Government to make its approval of an application for membership contingent on an amendment of [the voting rights system within the ESM] in order to safeguard the Bundestag’s overall budgetary responsibility.’) On this decision see also note 2 above.

87 Article 5(7)(m) juncto Article 37(2) ESM Treaty.

88 The ESM Treaty provisions which rendered Estonia’s participation to the ESM effectively irrelevant were challenged before the Estonian Supreme Court. See Supreme Court of Estonia, Case 3-4-1-6-12, judgment en banc of 12 July 2012. In its decision, however, the Court rejected the challenge upholding the constitutionality of the ESM Treaty. On this decision see also note 2 above.

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95 See Agreement on the transfer and mutualisation of contributions to the Single Resolution Fund, 21 May 2014 (hereinafter SRF Agreement) available at: http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%208457%202014%20INIT [last accessed 25 May 2014].

96 See note 93 above.

97 Article 11(2) SRF Agreement.

98 Article 3 Protocol No 36 (provisionally attributing to every Member State a number of weighed votes in the Council of Ministers). Because the Member States participating in the SRM are the Member States of the Eurozone, the total number of weighed votes of these 19 countries (as of 1 January 2015) is 224, meaning that at least 202 votes must be cast in favour of the SRF for it to enter into force. With 29 votes each, Germany, France and Italy, and with 27 votes Spain, are therefore necessary to reach the critical threshold.

99 Article 4 SRF Agreement.

100 Article 5 SRF Agreement.

101 Article 7 SRF Agreement.

102 See text above accompanying nn 18–24.

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108 Article 12(5) Agreement of the International Monetary Fund (granting votes pro-quota).

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121 See text above accompanying nn 37–46.

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123 For the data see US Census Bureau, Apportionment Population (2010), available at http://www.census.gov/population/apportionment/files/Apportionment%20Population%202010.pdf [last accessed 1 June 2014] and US Department of Commerce Bureau of Economic Analysis, Gross Domestic Product by States (2013), available at http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm [last accessed 1 June 2013].

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128 Voting Rights Act Reauthorization and Amendments Act of 2006, Pub. L. No 109–246.

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132 See note 61 above.

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136 See note 14 above, p 31.

137 See European Parliament Resolution, ‘On the Elections to the European Parliament in 2014’, 22 November 2012, P7_TA(2012)0462, §1.

138 See also D Kelemen and A Menon, ‘Fight Club: When the EU’s Campaign Season Ends, the Real Political Battle Will Begin’, Foreign Affairs, 18 May 2014.

139 European Parliament, Result of the 2014 European Elections, available at: http://www.results-elections2014.eu/en/election-results-2014.html [last accessed 7 August 2014].

140 European Council Conclusions, 27 June 2014, EUCO 79/14, §25 (proposing the election of Jean-Claude Juncker with 26 heads of states and government in favour, and 2 against).

141 European Parliament, press release, Parliament Elects Jean-Claude Juncker as Commission President, 15 July 2014 (reporting vote to elect Jean-Claude Juncker as Commission President with 422 votes in favour, 250 against and 47 abstained).

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149 European Council Conclusions, 27 June 2014, EUCO 79/14, §27 (stating that to address the concerns of the UK ‘the European Council will consider the process for the appointment of the President of the European Commission for the future, respecting the European Treaties.’).

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151 For the data see Eurostat, European Population by Countries (2013), available at http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tps00001&plugin=1 [last accessed 1 June 2014].

152 BVerfG 123, 267 (2009) §§284–285.

153 Schönberger, C, ‘Lisbon in Karlsrhue: Maastricht’s Epigones at Sea’ (2009) 10 German Law Journal Google Scholar 1201 (holding that the standard of democratic legitimacy set by the court ‘is unable to account for federal states, including Germany’.)

154 Calculations are based on the data on the apportionment of seats for the European Parliament elections of May 2014 available at: http://www.europarl.europa.eu/news/en/news-room/content/20130308STO06280/html/How-many-MEPs-will-each-country-get-after-European-Parliament-elections-in-2014 [last accessed 17 April 2014].

155 Article 189 TEC.

156 See eg S Hix and B Højland, The Political System of the European Union, 3rd ed (Palgrave Macmillan, 2011).

157 See also note 148 above.

158 Council Decision of 25 June and 23 September 2002, amending the Act concerning the election of the representatives of the European Parliament by direct universal suffrage, 2002/772/EC, Euratom [2002] OJ L 283/1.

159 Piattoni, S, ‘Is the EU a Representative Democracy? The Normative Debate and the Impact of the Euro-Crisis’, in F Fabbrini et al (eds), What Form of Government for the European Union and the Eurozone? (Hart Publishing, 2015)Google Scholar.

160 Novak, S, ‘Les grand retour des Etats’ (2014) 149 Pouvoirs CrossRefGoogle Scholar 19, p 23.

161 A Gratteri, ‘Parlamento e Commissione: Il difficile equilibrio fra rappresentanza e governabilità nell’Unione Europea’ (2014) La Comunità Internazionale 237.

162 Martin Schultz promoted his campaign in Germany with electoral posters stating ‘Nur wenn Sie Martin Schultz und die SPD whälen, kann ein Deutscher Präsident der EU-Kommission werden’ [Only if you vote for Martin Schultz and the SPD can you have a German President of the EU Commission].

163 See also Bartolini, S, Restructuring Europe (Oxford University Press, 2005)CrossRefGoogle Scholar.

164 See also note 145 above.

165 B Romano, ‘E’ Juncker il candidato PPE alla Commissione Europea’, Il Sole 24 Ore, 8 March 2014.

166 Editorial Comments, ‘After the European Elections: Parliamentary Games and Gambles’ (2014) 51 Common Market Law Review 1047, p 1048.

167 European Parliament, press release, Members Elect Chairs and Vice-chairs of Parliamentary Committees, 8 July 2014.

168 D Willis, ‘In New Congress, House Committees Will Carry a Strong Texas Accent’, The New York Times, 26 December 2014 (reporting how, in the 114th Congress from 2015–16, representatives elected in Texas, which is the second largest US state, will assume the leadership of six out of 21 Committees in the House of Representatives and indicating that, among others, representatives from California, the largest US state, held five committees, and the speakership, in the 111th Congress, from 2009–10).

169 See text above accompanying nn 66–102.

170 See also Fabbrini, S, Which European Union? Europe after the Euro Crisis (Cambridge University Press, 2015)CrossRefGoogle Scholar (making the case in favour of a new constitutional settlement in the EU based on separation of powers).

171 See eg G Papandreou, Foreign Minister of Greece, contribution to the debate of the European Convention, amendment No 43 (suggesting the direct election of the President of the European Council and explaining that this would ‘contribute to the substantial equality of the Member States.’) in Convention Secretariat, Summary sheet of proposals for amendments, 9 May 2003, CONV 709/03.

172 F Fabbrini, ‘Austerity, the European Council and the Institutional Future of the EU: A Proposal to Strengthen the Presidency of the European Council’ (in press) 22 Indiana Journal of Global Legal Studies.

173 Thucydides, The Peloponnesian War (TE Wick ed, Modern Library, 1982), p 351.