Part II - Political Accountability

5 Democratic Accountability in the Banking Union Is There Really a Gap?

Diane Fromage ^*

5.1 Introduction

The creation of the Banking Union (BU) in 2012 represented an important change in the Economic and Monetary Union (EMU), and in the European Union (EU) in general. Indeed, it entailed the delegation of new competences in the areas of banking supervision and bank resolution to the EU level, and it demanded the creation of unique procedures and original governance mechanisms. It has no doubt represented a big step forward in the process of European integration as it is only the second area in which full integration is realised.¹ At the same time, it has also certainly increased the existing level of complexity within the EU. This is the case among other reasons because euro area Member States are part of the BU, but membership to the BU is also open to the rest of the Member States. In fact, in 2020, Bulgaria and Croatia availed themselves of this possibility to join the BU without having adopted the common currency. By creating a third category of Member States next to the EU27 and those that belong to the euro area within the EMU, the BU added a new layer of differentiation in an already largely differentiated Union.²

As a result of this and of the (unaltered) EU legal framework on which basis it was created, the institutional architecture in which the BU is embedded, and the procedures that underpin it, are extremely complex. This is also the case because banking matters are of concern to all EU Member States since banks operate across the Internal market and are thus governed by its rules. Moreover, non-BU EU Member States are also naturally affected by the developments that happen within the BU, not least because BU banks commonly operate in non-BU Member States.³ To make matters worse, whilst banking supervision and resolution are now the ultimate responsibility of an EU institution and agency (the European Central Bank (ECB) and the Single Resolution Board (SRB), respectively), national institutions continue to exercise part of the competences. A division of tasks is operated between various EU authorities, on the one hand, and the national ones, on the other.⁴ Also, within the Single Supervisory Mechanism (SSM), the ECB, for instance, supervises Significant Institutions (SIs) directly, whereas National Competent Authorities (NCAs) remain in charge of the supervision of smaller credit institutions (or Less Significant Institutions, LSIs).⁵

The existing literature on democratic accountability in the BU has, so far, focused on the ECB in its quality as banking supervisor (ECB-SSM), and to a lesser extent on the SRB.⁶ However, a comprehensive assessment of democratic accountability standards in this area of EU public policy requires that a more holistic, all-encompassing view is taken as only such an approach allows to determine whether the four goods that accountability should provide, which are openness, non-arbitrariness, effectiveness, and publicness, can be delivered.⁷ This is precisely the perspective adopted in the present chapter, which aims at going beyond the mere analysis of the accountability mechanisms applicable to these two EU instances. Although both substantive and procedural accountability are considered, this chapter arguably already adds to the existing state of the art by providing a mapping of the accountability mechanisms in place considered altogether, that is from the inception – at the EU level – of the norms that are in force within the BU to their application by national and EU authorities.

To fulfil this objective, the present chapter is divided into four sub-sections: (1) It first examines how the BU operates and disentangles the various mechanisms in place, and the role of the different EU institutions and bodies within them. (2) It then proceeds to map the existing democratic accountability mechanisms. (3) The subsequent sub-section turns to the substantive part of the analysis, that is it considers how these mechanisms operate in practice. (4). The final section concludes by offering an assessment of the democratic accountability standards as they exist following the creation of the BU. It considers in particular whether any gap exists, whether in substance or in practice.

5.2 Who Does What and How? A Mapping of the Existing Procedures

The first substantive section of this chapter will detail the characteristics of the existing mechanisms and the specific role played by the various institutions and bodies involved therein.

For the purposes of this chapter, it suffices to note that European integration in the banking domain differs from what is the norm in other areas of the EMU, for instance, because different from what is the rule in the field of monetary policy, banking supervision is an area of shared competence in which the ECB does not adopt the necessary norms itself but, instead, applies those designed by the EU legislator and by the EU regulator. It is led to apply the standards primarily prepared – for the whole of the EU – by an EU agency, the European Banking Authority (EBA), but which must be formally adopted by the European Commission to become legally binding. This notwithstanding, the ECB may itself also adopt certain norms such that the divide between supervisor and regulator is not as clear-cut as it could seem at first sight.⁸

As noted above, two EU authorities are primarily in charge of banking supervision and resolution within the BU. Their status, as well as the legal bases that underpin their existence, are however radically different. Whereas the ECB is an EU institution in its own right, the SRB is an EU agency. Powers in banking supervision could be conferred upon the ECB, thanks to the existence of a ‘reserve of competence’ contained in Article 127(6) Treaty on the Functioning of the EU (TFEU). It could nevertheless only be entrusted with new competences with regard to those BU Member States that also belong to the euro area, such that specific mechanisms had to be designed to allow the participation of non-euro area Member States in the BU.⁹ By contrast, the SRB was created on the basis of Article 114 TFEU, an EU-wide Internal Market legal basis, even if only BU Member States participate in the Single Resolution Mechanism (SRM).¹⁰

Considering all this, studying the democratic accountability standards of the BU requires a substantive and a procedural analysis of several accountability mechanisms in place, that is those applicable to the ECB-SSM, to the SRB but also those applicable to the EBA, to the Commission and even to the ECB in as far as the ECB’s Governing Council ultimately is the organ that formally approves the supervisory decisions prepared by the ECB’s Supervisory Board.¹¹

To obtain a full picture of the existing situation, a multilevel perspective that considers the national dimension, as well as multilevel (administrative) cooperation and multilevel democratic accountability mechanisms, should also be adopted. Considering the limited space available here, however, this chapter will focus on the EU level and on the existing accountability mechanisms vis-à-vis EU institutions and bodies. The national and multilevel dimensions will only be underlined and considered in as far as it is necessary to assess the EU dimension of this issue.

5.3 Accountability Mechanisms in Place

5.3.1 Accountability Mechanisms Applicable to the ECB

The question of the ECB’s accountability plays a primary role in the guarantee of high (or adequate) democratic accountability standards in the BU because, as noted, the ECB is in charge of banking supervision. Its Supervisory Board – which is an internal organ of the ECB created for the specific purpose of banking supervision by the SSM Regulation –¹² is in charge of preparing supervisory decisions, which are later adopted by the Governing Council following a non-objection procedure. Its involvement is necessary because according to the Treaties, the Supervisory Board is not a decision-making organ of the ECB. As such, both the mechanisms in place to hold the ECB-SSM and the ECB to account are of importance when considering democratic accountability of and within the BU. However, because the role of the Governing Council is secondary to that of the Supervisory Board, the mechanisms in place vis-à-vis the latter will be examined first.

The accountability of the Supervisory Board is to be ensured following procedures defined in the SSM Regulation.¹³ Its Article 20 is dedicated to ‘[a]ccountability and reporting’. According to this provision, the ECB is accountable to both the Council and the European Parliament (EP) for the implementation of this Regulation. To this end, it shall submit every year a ‘report on the execution of the tasks conferred on it by this Regulation, including information on the envisaged evolution of the structure and amount of the supervisory fees’ to the EP, the Council, the European Commission and the Eurogroup. That report shall be presented by the Chair of the Supervisory Board to the EP and to the Eurogroup in presence of those Member States that participate in the BU but do not belong to the euro area (they are also involved in the procedures mentioned subsequently where reference to the Eurogroup is made). This format of the Eurogroup is known as the ‘Eurogroup in BU format’. Both the Eurogroup and the EP also have the possibility (on an individual basis and independently from each other) to invite the Chair of the Supervisory Board to appear before them (or before the responsible committee in the case of the EP) to discuss the execution of its supervisory tasks. Oral or written questions may additionally be put to the ECB (i.e., the ECB-SSM) by both the Eurogroup and the EP.¹⁴

Next to these procedures, the possibility exists that, upon initiative of the Supervisory Board’s Chair, confidential oral discussions behind closed doors be held with the Chair and the Vice-chairs of the responsible EP Committee, that is the Committee on Economic and Monetary Affairs (ECON Committee), where these ‘are required for the exercise of the European Parliament’s powers under the TFEU’. The details of these arrangements are to be defined in an interinstitutional agreement between the EP and the ECB, which was adopted in 2013.¹⁵ Finally, a duty is set on the ECB to cooperate with the EP in its conduct of investigations. To this end,

[t]he ECB and the European Parliament shall conclude appropriate arrangements on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB by this Regulation. Those arrangements shall cover, inter alia, access to information, cooperation in investigations and information on the selection procedure of the Chair of the Supervisory Board.

The interinstitutional agreement details the content of the annual report, which the ECB has to submit to the EP. It also specifies that the Chair of the Supervisory Board shall be submitted at least to two ordinary hearings, although additional ad hoc exchanges of views may be organised too. Additionally, it specifies how confidential oral discussions have to take place in practical terms. Likewise, the modalities for the submission of written questions are specified, and the aim is that the ECB answers them within five weeks (as opposed to the six-week target set for the questions put to the ECB by MEPs on monetary policy issues as per the EP’s Rules of procedure). Specific provisions furthermore detail how information on the ECB’s tasks as a supervisor is to be made available. This includes, for example, access to the record of proceedings of the Supervisory Board by the ECON Committee or non-confidential information regarding a credit institution that has been wound up. The EP is to establish sufficient safeguards for the confidentiality of the ECB documents submitted to it to remain preserved.

As noted previously, also the EU executives (e.g. Commission, Council and Eurogroup) are addressees of the ECB-SSM’s annual report. What may, however, appear as more surprising is the fact that it is with the Eurogroup and not the Council with which the true relationship of accountability is established. Indeed, the annual report shall be presented to the Eurogroup, which may invite the Chair of the Supervisory Board to appear before it and submit both written and oral questions to the ECB-SSM. This state of fact is disturbing for several reasons. As recalled by the Court of Justice on several occasions,¹⁶ the Eurogroup is not an institution of the Union but an informal group whose raison d’être is to allow for the coordination of euro area Member States’ policies. Neither the informal nature of the Eurogroup nor the purpose of its existence squares well with the role it is called to play in guaranteeing the ECB-SSM’s democratic accountability.

Moreover, according to Article 10 TEU, democratic accountability rests upon two pillars within the EU since the entry into force of the Lisbon Treaty: the EP and Member States government representatives participating in the Council. Considering all this, the ECB-SSM could rather have been held accountable by the Council. This would have made all the more sense as the Council (and formally at least, not the Eurogroup) is involved in the approval of (part of) the secondary legislation the ECB has to apply in its quality as banking supervisor. Additionally, the argument can be made that developments within the BU are of interest to all of the EU Member States, as is indeed confirmed by the fact that BU matters are, at least in some instances, discussed in Eurogroup meeting in inclusive format, that is with representatives from all EU27 Member States.¹⁷ The Lisbon Treaty already opened the door to a ‘differentiated Council’, that is one within which on some occasions only euro area representatives may cast their vote, and thus the Council could have been used as an accountability forum. Admittedly, since the possibility formally exists that non-euro area (candidate) Member States may join the BU, an accountability forum that would only bring together BU representatives had to be set up, and only the Eurogroup (and not the Council) could easily be adapted for that purpose. But it remains the case that the solution found is largely unsatisfactory for the reasons outlined previously.

Next to these relationships of accountability with EU organs, ‘relationships with national parliaments’ are also foreseen in the SSM Regulation. Although formally, and according to the ECB itself, it is ‘primarily accountable to the EP’ and not to national parliaments, and although the question as to whether these relationships between the ECB-SSM and national parliaments serve the purpose of democratic accountability has been subject to debate,¹⁸ there is little doubt that the powers with which parliaments have been entrusted vis-à-vis the ECB (written questions, reasoned observations on the annual report and exchange of views) resemble those that commonly exist between parliaments and any institution they hold accountable.

These relationships of accountability add to those that have existed between the EP (and the Council) and the ECB since the creation of the ECB. Indeed, the ECB’s (strong) independence is to be compensated by its relationship of accountability towards the EP (primarily). It must therefore address an annual report on ‘the activities of the ESCB [European System of Central Banks] and on the monetary policy of both the previous and the current year to the European Parliament, the Council and the Commission, and also to the European Council’.¹⁹ This report shall be presented to the Council and to the EP, which ‘may hold a general debate on that basis’. Additionally, the possibility exists for the President of the ECB or the other members of the Executive Board to be heard before the ECON Committee on their own initiative, or on that of the ECON Committee. MEPs are also entitled to submit six questions for written answers to the EP.²⁰ In the framework of monetary policy, although some exchanges were indeed organised in the past,²¹ formally no relationship exists between the ECB and national parliaments, as may appear logical considering that monetary policy is a competence of the Union.²²

The existence of a relationship of accountability between the ECB and the Council makes sense historically as, originally, the status of ‘Member State with a derogation’, that is that of Member State outside the euro area, was meant to remain temporary for all Member States bar Denmark and the United Kingdom which had obtained a permanent opt-out. Thus, correspondence largely existed between the geographical area within which the ECB’s monetary policy would take effect (at that point in time or eventually), and the Member States represented in the Council. However, already at the time when the Lisbon Treaty was drafted, it may be argued that this had become wishful thinking. This notwithstanding, Member States did not choose to change the identity of the forum in charge of holding the ECB accountable and instead the Council kept this prerogative, despite the fact that it is precisely that Treaty (i.e. the Lisbon Treaty) which formalised the existence of the Eurogroup. The choice in favour of the Eurogroup when the SSM was established could point to the willingness to further empower the Eurogroup, a forum which had already been significantly reinforced as a result of the euro area crisis. Furthermore, to state the obvious, a choice in favour of the Eurogroup is also to the benefit of the Member States, since the accountability and transparency standards it is submitted to are much less stringent than those applicable to the Council.²³

5.3.2 Guaranteeing the SRB’s Accountability

The SRM was established a few years after the SSM, and the latter’s accountability mechanisms no doubt inspired those of the former. Indeed, the obligations set on the SRB by the SRM Regulation are similar to those set on the ECB-SSM by the SSM Regulation.²⁴ However, considering that the SRM is an agency and not an EU institution like the ECB, it is accountable not only to the EP and the Member States – coming together in the Council and not in the Eurogroup but also to the Commission. The annual report is submitted to the EP, the national parliaments of participating Member States, the Council, the Commission and the European Court of Auditors. As a result of this, differently from what is the case within the SSM, the Eurogroup is not supposed to be involved in any way in this instance, which could be the case because the SRB is an EU-wide agency. The report is then presented to the EP and the Council. The EP may additionally invite the Chair of the SRB to a hearing, and a minimum of one hearing per year is set by the SRM Regulation. Written and oral questions may be submitted to the SRB by the Council and the EP, and the possibility to hold confidential oral discussions is also provided. Like it is the case between the ECB-SSM and the EP, an agreement that details the modalities of these discussions shall be concluded,²⁵ and the SRB is set to cooperate in any investigation the EP may initiate.

Like the interinstitutional agreement between the ECB-SSM and the EP, the Agreement between the EP and the SRB details the content of the report that the SRB has to submit every year. The topics addressed in the ordinary public discussions are also defined, as is the possibility to organise ad hoc meetings and the practical modalities of the confidential oral discussions. A minimum of two ordinary hearings per year is set. The EP shall be kept duly informed as a ‘comprehensive and meaningful record of the proceedings’ of every executive or plenary meeting is to be submitted to it within the six weeks that follow said meeting. The rest of the provisions contained in the Agreement are similar to those included in the interinstitutional agreement between the ECB-SSM and the EP.

Likewise, the SRM Regulation establishes a direct relationship between the SRB and the national parliaments of the participating Member States. Their nature (i.e., whether they constitute a relationship of accountability) is also not specified, but as they are very similar to those established with the EP they may also be viewed as contributing to the SRB’s accountability credentials. The powers vested with national parliaments in this framework are indeed very similar to those attributed to them vis-à-vis the ECB. However, the SRB is set under stronger obligations towards them than the ECB is.²⁶

5.3.3 The EBA’s Accountability Credentials

Guaranteeing democratic accountability within the BU demands that also the EBA be submitted to democratic control. This is the case because it prepares technical standards that are officially adopted by the European Commission at a later stage, and because it still fosters coordination among National Competent Authorities, including but not only in areas closely linked to banking supervision.

The accountability mechanisms applicable to the EBA were significantly enhanced when the European Supervisory Authorities (ESAs) Regulations were amended in 2019.²⁷ In its original version, the ESAs Regulation only established that ‘[t]he Authorities referred to in points (a) to (d) of Article 2(2) [among which is the EBA] shall be accountable to the European Parliament and to the Council’. By contrast, it is now foreseen that the EBA be accountable to the EP and the Council but that it shall also cooperate with the EP in the event that the latter decides to conduct an investigation. Despite the EBA’s quality as an agency – and differently from the SRB – the EBA is not accountable to the Commission. Several reasons could account for this. Perhaps the most evident one is that this provision concerns not only the EBA (or the ESAs) but also the European Systemic Risk Board (ESRB), which is not an agency but an independent body chaired by the President of the ECB. The EBA’s prerogatives are also more circumscribed than those of the SRB. The Commission is called to formally adopt the normative acts, which the EBA prepares such that it already is in a position to exercise some form of control over its actions, although the procedures differ for non-normative acts.

The EBA’s ‘Board of Supervisors shall adopt an annual report on the activities of the Authority, including on the performance of the Chairperson’s duties, and shall, by 15 June each year, transmit that report to the European Parliament, to the Council, to the Commission, to the Court of Auditors and to the European Economic and Social Committee’. As such, the duty that is now set on the Board of Supervisors is similar to that which the ECB-SSM and especially the SRB have to fulfil. However, in this case, a precise date is set by which the EBA has to fulfil its obligation. The European Economic and Social Committee is, too, an addressee of the report.

Additionally, it is prescribed that the EBA’s Chairperson be heard by the EP – upon its request – at least once a year ‘on the performance’ of the EBA. The format of the hearing is quite precisely defined in the Regulation, as it calls for the Chairperson to make a statement and to answer the questions put to it by MEPs. The EP may ask the Chairperson to report on the activities of the EBA at least fifteen days before the hearing. Specific mention is also made to the possibility for the EP to request that the EBA reports on its participation in international forums, which is all the more welcome as those (which include, for instance, the Basel Committee on Banking Supervision²⁸) have assumed an ever larger role following the outbreak of the Great Financial Crisis.

Next to these procedures, the possibility also exists for the Council or the EP to put written questions to the EBA, which it shall answer within five weeks. As with the ECB-SSM and the SRB, confidential oral discussions may be organised since the EBA Regulation was amended.

5.3.4 The Commission

One last actor that arguably plays an important role in the BU is the European Commission. This is the case for numerous reasons, chief of which are the facts that it is involved in several of the procedures that exist (for instance, in banking resolution), that it has the last word on the standards developed by the EBA, and naturally also that it proposes the norms of secondary legislation that are of application within the BU.

In consequence, upholding suitable accountability standards within the BU demands that the Commission be submitted to sufficient controls. Put differently, in seeking to evaluate whether any accountability gap exists within the BU, one should also check whether the Commission’s actions in this domain are sufficiently scrutinised by the EP.

The EP has numerous means to hold the European Commission to account. Its strongest power lies in its possibility to remove its confidence in the Commission and thus force it to resign collectively.²⁹ The EP and its members may also put some oral and written questions to the Commission or submit Commissioners to major interpellations,³⁰ organise hearings to provide the Commission an opportunity to explain its decisions,³¹ and create committees of inquiry.³²

5.3.5 Conclusion

The preceding analysis has evidenced that mechanisms exist to guarantee the democratic accountability of BU institutions. An evolution towards an enhancement of these mechanisms may additionally be witnessed, both in terms of their nature and in terms of their very existence. Indeed, the accountability of the EBA was significantly reinforced following the reform performed in 2019. Also, the mechanisms in place towards both the ECB-SSM and the SRB are more stringent than those applicable to the ECB. Several reasons may account for this. First, the ECB benefits from a stronger degree of independence in the area of monetary policy than it does in the field of banking supervision.³³ Second, accountability standards have evolved significantly over the past twenty years. For example, the EP is only consulted when the President of the ECB is appointed. In contrast, its consent is necessary for the chair of the Supervisory Board to be nominated,³⁴ that is the EP’s role has become larger over time.

Accountability mechanisms, be they formalised or not, make it more likely that democratic accountability is upheld. However, the mere existence of those mechanisms does not suffice, as there is, for example, no guarantee that they are used by the actors to which they are available. The next sub-section therefore turns to the practice of accountability in the BU to date.

5.4 The Practice of Democratic Accountability So Far

To evaluate the practice of democratic accountability so far, two dimensions in particular will be considered: formal accountability, that is if and how the existing instruments have been used, and substantive accountability, that is what these mechanisms have been used for in terms of substance. The data examined in this sub-section covers the period between November 2014 and April 2022, that is from the start of the functioning of the SSM until the date of submission. It consists of minutes of EP debates, written questions and the responses they received, as well as the yearly reports produced severally by the institutions examined.³⁵ The focus is set on the ECB-SSM, the SRB and the EBA owing to the ECB and the European Commission playing a secondary role in the BU if compared to the ECB-SSM, the SRB and the EBA.

Before proceeding with the proposed analysis, it should be noted that any conclusion drawn at this stage may only be provisional since the two pillars of the BU have only been functioning for a short period of time. This notwithstanding, the proposed study is still valuable because it allows to gain some knowledge of how the existing mechanisms have been used and which shortcomings inherent to them or gaps among them may exist. The conclusion thus provides an assessment of the current situation, as well as some suggestions for improvement.

5.4.1 Practice of Accountability to Date

It must be said from the start that research reveals that the existing democratic accountability procedures have been used indeed: Parliamentary hearings and ad hoc exchanges of views have been organised, reports have been produced and parliamentary questions have been put to the ECB-SSM and to the SRB. However, differences in terms of frequency and fluctuations over time have existed. The following paragraphs first consider the ECB-SSM before turning to the SRB and to the EBA.

As regards parliamentary questions put by MEPs to the ECB-SSM, it must first be said that they were not very numerous in the first years of the functioning of the SSM, as is only logical. They peaked in 2017 and 2018 although they remained infrequent at approximately forty questions per year (by comparison, the number of questions put to the ECB as the European institution in charge of monetary policy was similar in 2017 but it rose to more than three times this amount in 2018).³⁶ The number of questions has since been decreasing and there was only a dozen of them in 2021. Perhaps this could be explained by the varying levels of interest among participating MEPs, with notably one of the most active of them, Sven Giegold, having ceased to be an MEP. Also, the SSM no longer is a new instrument, thus MEPs’ interest could have faded with time, in particular seeing as no new banking crisis has emerged and the ECB thus seems to be fulfilling its tasks satisfactorily. It could be expected that MEPs’ interest would rise again if the ECB-SSM were to deal more closely with controversial issues such as climate change. Despite recommendations in favour of the creation of a space dedicated to questions posed by MEPs to the ECB-SSM (and the SRB),³⁷ no such step has been taken by the EP to date, which is regrettable as it makes relevant information harder to find.

Also, some questions have been put by national members of parliaments, most often from the German Bundestag. It is perhaps unsurprising that the members of the Bundestag are those who have used this mechanism most, considering the fact that the creation of the BU had raised concerns that democratic accountability standards would be lowered as a consequence thereof. Indeed, the German NCA, the BaFin, is functionally placed below the responsibility of the ministry of finance, which may be held accountable for the actions of the NCA.³⁸ More generally, and perhaps most importantly, a tradition exists for German MPs to ask written questions. In terms of their content, some of the questions are very specific and regard a specific credit institution, whilst others are much more general and address, for instance, non-performing loans, the implementation of the Basel standards or supervision in general. Such a mixed set of macro- and micro-topics seems to be healthy for the whole system of supervision.

Parliamentary hearings and ad hoc exchanges of views, as well as hearings before the Eurogroup, have taken place on a regular basis, and the annual reports were duly presented. Though some fluctuations over time may be observed in this regard as well – perhaps also due to the pandemic and the widespread ‘Zoom-fatigue’, it may generally be said that exchanges with MEPs have been more frequent than the minimum set by the SSM Regulation as they have often included a couple of ad hoc exchanges of views in addition to the standard bi-annual hearings.³⁹ The topics covered during these exchanges were varied as they ranged, for example, from the consequences of the pandemic to climate risks and the finalisation of Basel III.

Confidential oral discussions have taken place before hearings of the Chair of the Supervisory Board by the ECON Committee, and they have been ‘reported to be much more confrontational than public hearings, with “tough” language that is often absent in public interactions between the two institutions’.⁴⁰

Finally, the Chair of the Supervisory Board has regularly appeared before the Eurogroup, and these meetings have commonly been organised together with the Chair of the SRB (this is examined more in depth below). Fluctuations in their frequency have existed as well, with notably 2017 standing out as a year of particularly close exchanges, but this was also the year when the first resolution ever took place such that this is perhaps rather unsurprising. As these exchanges are not public, they are harder to assess. Nonetheless, the ECB had noted in the past that ‘[t]he topics of interest to the finance ministers overlapped to a large extent with those discussed in the European Parliament’⁴¹ and the overall issues discussed may be found in the account of the main results of Eurogroup meetings since they exist. The topics covered have included, for example, broader issues such as non-performing loans and anti-money laundering.

If one considers the SRB, one may first regret that the part devoted to accountability in its annual reports remains particularly succinct. Also, it appears that its exchanges with the EP have been less frequent than those organised between the ECB-SSM and the EP as they have generally been limited to two exchanges per year in addition to the presentation of the annual reports. This could be explained by the fact that the SRM has only been activated on one occasion during the period considered here. On the other hand, the fact remains that the setting up of the SRM has raised questions indeed, in terms of its functioning and its financing but also in relation to questions related to the overall architecture of the BU and notably its missing pilar, the European Deposit Insurance Scheme, and the role the SRB could play therein. Therefore, more interest on the side of MEPs could have been reasonably expected.

MEPs have likewise devoted much less attention in their questions to the SRB than they have to the ECB-SSM. To date, they have addressed fifteen questions in total, of which seven were addressed by the same MEP (Sven Giegold).⁴² These questions have sometimes consisted in requests for access to documents, or more general questions such as the architecture of the SRM in general, as well as questions on the Banco Popular case, for example.

Like was the case with the ECB-SSM as well, questions from national parliaments have not been numerous (ten in total) and only German MPs have asked questions to date. The identity of these MPs largely corresponds to those who raised questions to the ECB-SSM. Interestingly, although the answers to these questions are available on the SRB’s website, they are not translated into English but are, instead, only available in German. Whilst this is understandable as translation is demanding on resources, one may wonder whether this does not, in fact, diminish the SRB’s accountability potential vis-à-vis the larger public. Considering how few these questions are, it would be advisable for the SRB to make a courtesy translation available to all. As concerns the topics touched upon by these letters, they have regarded very factual issues, including the number of credit institutions whose resolution planning the SRB oversees, as well as questions related to specific credit institutions or related to findings of the European Court of Auditors.

The relationship between the SRB and the Eurogroup follows a similar pattern as the one between the ECB-SSM and the Eurogroup, not least because the Chair of the Supervisory Board and the Chair of the SRB commonly appear together before the Eurogroup. Issues addressed with the Chair of the SRB have included resolution planning, the built-up of the Single Resolution Fund or resolvability (continuity seems to exist in the topics discussed, which is only logical as the SRB’s main task in normal times is to prepare for potential resolution cases such that the issues that need addressing are rather recurrent as opposed to being individual events). It must be noted that although this practice of joint hearings with the Chair of the Supervisory Board and the Chair of the SRB makes perfect sense as they allow for a more comprehensive control by the EP of what is going on in the BU, it remains that it contradicts the content of the SRM Regulation, which foresees that the SRB – an EU-wide agency – be held to account by the Council. As noted above, it probably would have been best to entrust the Council with the task of controlling both the ECB-SSM and the SRB in the first place, also to guarantee higher transparency and thus higher accountability standards.

The relationship between the SRB and the Commission seems to unfold on a smooth basis, as the SRB noted, for instance, in its annual report for the year 2020 that it ‘continued to maintain its close cooperation with the relevant directorates-general of the Commission, in particular with the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and the Directorate-General for Competition (DG COMP) at all levels on various aspects, which are relevant to the SRB’s work and functions, and participated actively in the meetings of the Expert Group on Banking Payments and Insurance (EGBPI)’.⁴³ Further details are not available.

Finally, one may regret that the information regarding the EBA’s accountability is not much detailed; its annual reports and its website indeed only contain scarce information on this topic, and it is not easy to find. The EBA fulfils its duty to present its annual report to the EP, and it entertains relationships with other EU institutions.⁴⁴ Most of the correspondence publicly available is addressed to the European Commission, and it covers issues that go beyond banking supervision owing to the EBA’s broad mandate. This notwithstanding, some of the letters are indeed addressed to MEPs, but they remain scarce.⁴⁵

5.4.2 Conclusion

The preceding analysis of the use of the existing accountability mechanisms to date reveals first that information on this issue is scattered around the various websites and uneasy to find. This is regrettable, and efforts should be made to improve this situation, as already proposed by René Smits.⁴⁶

Second, it appears that, at the EU level, the existing procedures are being used indeed, as hearings and exchanges of views are organised, questions are posed, and reports are produced. The EP additionally produces annual reports on BU.⁴⁷ Parliamentary questions are, though rather infrequent, and fluctuations have existed over time in the frequency of the oral exchanges held. It is interesting to note that despite its duty to hold the EBA accountable too, the EP only keeps regular records of practice of accountability towards the ECB-SSM and the SRB but not towards the EBA (or any of the European Supervisory Agencies).⁴⁸ This is regrettable as the EBA and these agencies in general play an increasingly important role in financial supervision within the EU, and as the acts of soft law they adopt produce significant effects for banks and have been the object of litigation before the Court of Justice.⁴⁹

In any event, shortcomings exist in the practice of accountability: despite the fact that external experts are regularly invited to produce briefings, the questions put by MEPs are not always sufficiently to the point.⁵⁰ Most importantly, the same questions are not consistently picked up during debates.⁵¹ Also, MEPs are not always clear about the appropriate forum or addressee for a specific issue. For instance, some of the questions put to the ECB were not addressed to it in the right setup, that is MEPs mixed up the setup designed for dialogue on monetary policy issues with the one reserved to banking supervision. Although this confusion could have been due to the very numerous forums in which MEPs have the opportunity to debate with the ECB, it could also be the case that they deliberately chose not to care for political reasons and simply use any channel they had at their disposal.

Beyond all this, it has been found that, in effect, MEPs only have had limited influence on the ECB-SSM’s policy, although this is because MEPs only rarely require such changes but rather use their interaction with the ECB to request information on policy views.⁵² This could point to a usage of public hearings and questions primarily for communication purposes, as opposed to their being used for accountability purposes.⁵³ Confidentiality in banking supervision is a further hindrance in MEPs’ quest for accountability,⁵⁴ and reform proposals have been made to improve this situation.⁵⁵

Finally, and although this issue is only subsidiary to the analysis conducted here, one may observe that very limited use has been made by national parliaments of the possibility they now have to directly interact with the ECB-SSM and the SRB. To assess whether this results in an accountability gap, research should determine whether this is compensated by adequate mechanisms of accountability towards NCAs and the use thereof by parliaments at the national level.

5.5 Conclusion: Is There a Gap and If So, How to Bridge It

This chapter intended to adopt a holistic view of democratic accountability in the BU with a view to determining whether any gap exists. Some gaps appear to exist indeed, and they derive from (a) the EU’s constitutional framework, (b) the BU’s architecture and its characteristics, and (c) from practice, that is how the existing accountability mechanisms are used.

5.5.1 The EU’s Constitutional Framework Has Become Unfit for Purpose

The existing flaws are generally related to both the EU’s architecture and functioning, and specific to EMU. The shortcomings inherent to the EU’s architecture are twofold, and are caused by, on the one hand, the trend of agencification within the EU,⁵⁶ and relatedly to the absence of specific and precise legal basis for EU agencies, which would allow a much necessary update and adjustment of the Meroni doctrine. On the other hand, they derive from the gap that has grown between the existing legal framework, and the degree and the variety of differentiation within today’s EU (where differentiated integration is understood in the largest possible sense). As noted above, the co-existence of the BU, the euro area and the EU27 and the corresponding institutional variations of the meetings of national ministers at the EU level certainly blur the boundaries between the various groups of Member States, and thus the accountability channels applicable to the various procedures. This then must bring back to a reflection on the question of (internal and external) differentiation and membership within the EU more generally.

Some of the existing shortcomings are, though, specific to the EMU and its sub-area the BU. Whereas differentiation is a feature commonly observed within the EU and not specific to the EMU, the EMU is arguably the most extreme example of differentiation in terms of its breadth and reach with, among others, the ECB conducting the euro area’s monetary policy, or the existence of an intergovernmental European Stability Mechanism as an emergency safety net reserved to euro area Member States but one that also serves as a backstop to the (EU) BU. Differentiation within the EMU is then also visible in terms of its institutional embedding with the Eurogroup as a quasi institution, the existence of Euro Summit, of specific voting rules in the Council, and the recurrent proposals in favour of a euro area parliament or at least a euro area sub-committee to the ECON Committee,⁵⁷ to the point that the principle of institutional unity that used to be a requirement to any initiative of enhanced cooperation under Amsterdam could come under threat.⁵⁸ As has been evidenced in this chapter, the mechanisms formally in place within the BU are oftentimes pragmatic solutions to the lack of suitability of the existing legal framework as is illustrated by the Eurogroup’s role in guaranteeing the ECB-SSM’s accountability. Practice shows a further adaptation of the established mechanisms as in the case of the Eurogroup, which also serves as accountability forum for the SRB. Both of these phenomena nonetheless only illustrate that the existing institutional framework is unfit for purpose, because it has not been adapted to match the evolutions that have happened in the breadth of the policies conducted at the EU level and to the form that these take, even if it must be admitted that the framework currently in place has proven to be sufficiently flexible for informal arrangements to be developed.

5.5.2 Flaws Inherent to the BU

Next to these shortcomings related to the EU’s institutional framework, there are also shortcomings that are specific to the BU, although they partially derive from the problems that exist within the EU’s constitutional structure generally.

The BU is in-between the EU27 and the euro area, and relies on both structures. From this derives inherent complexity that in turn makes guaranteeing democratic accountability particularly challenging. Accordingly, democratic accountability standards within the BU may not be assessed by only looking at the ECB-SSM and the SRB. As this chapter has posited, other actors including the Commission and the EBA play an important role as well, and their accountability credentials must, too, be taken into consideration.

Mark Bovens has defined accountability as ‘a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose questions and pass judgment, and the actor may face consequences’.⁵⁹ When the last step is taken within the framework of the BU, that is when the forum that holds the agent to account is to take actions based on its assessment of how the principle has performed, it must hold not only the ECB-SSM or the SRB to account but also the Commission and the EBA because of their role as regulator. The ECB’s nature as an independent EU institution and as a central bank also acting as banking supervisor complicates matters further, as does the EBA’s and the SRB’s nature as independent agencies. As a result of the ECB’s numerous functions, accountability becomes more difficult to ensure because the same group of MEPs are called to regularly interact with the ECB in different capacities, thus demanding from them that they first identify in which forum they must ask which kinds of questions. In any event, however, as recently noted by the former Governor of England Paul Tucker, ‘[t]he European Parliament’s Econ committee is too big to conduct effective oversight of the ECB’s stewardship of the monetary regime’.⁶⁰ The same could be said of the ECON Committee when it is called to hold the ECB-SSM to account although in that context, the possibility for smaller meetings to be organised in the form of confidential oral discussions may partially contribute to solve this problem. Be this as it may, even if Paul Tucker is certainly right in considering the EP ECON Committee to be too large an accountability forum, it is difficult to imagine which other format would have sufficient legitimacy based on its representativeness of the (large) euro area to play such a role. Furthermore, other practical problems outlined below may in fact be a bigger hindrance to effective accountability than the ECON Committee’s large size.

Beyond all this, because the EU does not have exclusive competence in the field of banking supervision and bank resolution, national authorities continue to play a large role. Additionally, harmonisation is only partial such that the applicable rules vary across the BU. EU organs, and primarily the ECB, have to apply national norms upon whose content and legality they have no control.⁶¹

Finally, democratic accountability within the BU does not solely rest on EU institutions and bodies; national institutions, too, play a large role. This is the case because they approve national legislation as noted previously, because they remain competent in areas that are closely linked to BU matters (for instance: anti-money laundering) and because they are closely involved in the functioning and the operation of both the SSM and the SRM.

5.5.3 How to Bridge the Existing Gaps?

If all were best in the best of possible worlds, differentiation within the EU would vanish, that is the three currently co-existing categories of Member States, which the EU27, the euro area and the BU form would disappear. Thus, some of the regulatory gaps and of the institutional complexity would cease to exist.

Likewise, if Treaty change were a realistic option, a better design for EU agencies could be introduced, a proper legal basis for the BU could be created, including the formal acknowledgement of a third category of Member States next to the euro area and the EU27, that is that of BU Member States. A true discussion on whether the ECB should be the BU’s supervisor could be had, and the Chinese wall that separates its monetary policy from its banking supervision functions better designed.

However, unfortunately, none of these options seem to be realistic at this stage of European integration. Even the Conference on the future of Europe is unlikely to lead to the full opening of Pandora’s box, as it might do so but only in specific areas with a specific objective.⁶² It is true that following Brexit the most adamant advocate of the interests of non-euro area Member States is gone, and no non-euro area Member State has as large a financial market as the UK used to have. Consequently, none of them has the UK’s leverage in EU27-negotiations. But a discussion on Treaty change would likely regard many areas other than the BU, and taking account of all the challenges they are already facing internally, including the economic recovery post-COVID, the threats to the rule of law and to EU values, or the ecological and digital transition, EU Member States may not want to take this path at this point in time. Neither would they realistically be in a position to find a compromise solution at this stage if one considers how long they have been unable to come to a compromise solution on the completion of the BU, for instance.

If Treaty change is not an option, what is, then? In addition to the solutions already included in the main sections of this chapter, one could consider additional avenues to improve the existing situation.

First, institutional engineering, that is the improvement of existing practice through the actions of the institutions involved themselves should continue to be exploited. Institutional engineering commonly takes the form of arrangements put in place by institutions on an informal basis or their promoting regulatory change. In a nutshell, it means that institutions use their margin of discretion and action to the largest extent possible. One form this could take would consist in the creation of a dedicated BU sub-committee of the ECON Committee, a possibility that was already considered for the euro area in 2013–2014.⁶³ This would allow for some of the MEPs to become more specialised in BU matters, and they would not necessarily all have to stem from BU Member States.

Changes in secondary legislation (and in primary law where this is easily feasible) should also be considered with a view to upgrading the mechanisms in place, and to simplifying the existing architecture where possible.

Further harmonisation at the EU level should be pursued too, not only in terms of the norms applicable but also perhaps in terms of the minimum requirements set with respect to the features of the national institutions involved. At present, NCAs and NRAs are hosted by very different institutions that correspond to different national traditions and rules. Arguably, if for instance the applicable standards of independence were more strongly defined at the EU level, it would be easier to guarantee democratic accountability in this area, as the institutional setups would be less complex.⁶⁴ It may thus only be hoped that the Court of Justice will be called to continue to perform its duty of clarification and definition of the tasks and responsibilities of the different institutions involved within the BU.

Lastly, it may also only be hoped for that MEPs and MPs will improve the use they make of the existing mechanisms. This would include, as mentioned, asking more informed questions, making more demands for policy changes where necessary, and ensuring better synergies between the mechanisms that exist in parallel. To this end, interparliamentary cooperation should also be fostered, for instance, the Interparliamentary Conference on Stability, Coordination and Governance could be better exploited: to date, it has only rarely addressed BU-related matters. But other mechanisms should be established too, in the form of interparliamentary committee meetings hosted by the EP, and on the initiative of the Presidency parliament and with the involvement of national parliaments only.

As reforms to improve and complete the BU are high on the EU’s agenda again,⁶⁵ it is urgent that they be also accompanied by matching improvements of the democratic accountability mechanisms in place in the whole of the BU.

6 The Political and Legal Accountability of the Eurogroup

Menelaos Markakis ^*

6.1 Introduction

In perhaps one of the most memorable quotes from the Economic and Monetary Union (EMU) literature, Paul Craig once commented, ‘The Eurogroup can lay good claim to being the EU body that is least understood’.¹ This does not mean that it has not played a central role in decision-making in this area since its very inception.² On the contrary, it is, as recognized by the Euro-area leaders, ‘at the core of the daily management of the euro area’.³ The Eurogroup partakes in deciding ‘who gets what, when, how’, which is rightly regarded as a key feature of EMU as a policy area.⁴ Accordingly, this lays bare the necessity of controls over its activities in the EMU.⁵

This chapter looks at the political and legal accountability of the Eurogroup. The discussion begins with the foundations and tasks of the Eurogroup (Section 6.2). The focus then shifts to the political accountability of the Eurogroup (Section 6.3), the emphasis being on its relationship with the European Council and the Economic Dialogues with the European Parliament (Section 6.3.1). The chapter further looks at its legal accountability, in light of the relevant case law of the Court of Justice of the European Union (CJEU) (Section 6.3.2). The penultimate section of the chapter provides an assessment of the Eurogroup’s accountability in light of the framework laid down in the introductory chapter to this volume, namely in terms of procedural and substantive ways of delivering the normative goods of accountability (Section 6.4). Section 6.5 concludes by outlining the key features of the accountability arrangements and practices pertaining to the Eurogroup.

6.2 Foundations and Tasks

The Eurogroup is recognized in Article 137 TFEU, according to which ‘Arrangements for meetings between ministers of those Member States whose currency is the euro are laid down by the Protocol on the Euro Group’. In turn, the preamble to Protocol (No 14) on the Euro Group mentions the High Contracting Parties’ desire ‘to promote conditions for stronger economic growth in the European Union and, to that end, to develop ever-closer coordination of economic policies within the euro area’. As such, it lays down ‘special provisions for enhanced dialogue between the Member States whose currency is the euro, pending the euro becoming the currency of all Member States of the Union’.

Article 1 of the Protocol sets out the composition of the Eurogroup and the purpose of its meetings. It provides that the finance ministers of the Euro-area Member States shall meet informally, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency.⁶ The Commission shall take part in the meetings, whereas the European Central Bank (ECB) shall be invited to take part in such meetings.⁷ The meetings shall be prepared by the representatives of the finance ministers of the Euro-area Member States and of the Commission. Further, Article 2 of the Protocol provides that the finance ministers of the Euro-area Member States shall elect a President for two and a half years, by a majority of those States. The post is currently held by Paschal Donohoe, who is also the finance minister of Ireland.

The real-world picture is conveyed more accurately by the Eurogroup’s webpage: the agenda and discussions for each Eurogroup meeting are prepared by its President, with the assistance of the Eurogroup Working Group (EWG),⁸ the latter being composed of representatives of the Euro-area Member States of the Economic and Financial Committee (EFC), the European Commission and the ECB.⁹ The EWG members elect a President for a period of two years, which may be extended. The post is currently held by Tuomas Saarenheimo, who is also Chairman of the EFC. The office of the EWG President is at the General Secretariat of the Council of the EU in Brussels. ‘The secretariat tasks in relation to the Euro Group are divided between the General Secretariat of the Council (which is in charge, beyond the assistance to the President, of logistics) and the EFC Secretariat (which is responsible for the substance).’¹⁰

According to its webpage, ‘The Eurogroup’s discussions … cover specific euro-related matters as well as broader issues that have an impact on the fiscal, monetary and structural policies of the euro area member states. It aims to identify common challenges and find common approaches to them.’¹¹ Craig comments that the Eurogroup is ‘central to all major initiatives relating to the euro area, broadly conceived’ and that its role is central to EU macroeconomic planning.¹² More specifically, ‘it brokers the agreements necessary for policy to become reality; it fosters implementation through close oversight; it plays a role in ensuring that EU legislation in the financial sector is properly implemented; and it is part of the accountability mechanism in the banking union.’¹³ The activities of the Eurogroup may also have an impact on internal market issues more generally, which are not straightforwardly related to the single currency.¹⁴

Apart from the primary EU law provisions that were set out above, there are various other provisions that confer tasks on the Eurogroup which are scattered throughout secondary EU law and even intergovernmental agreements. Space precludes a detailed exegesis of those legal provisions, such that we will only refer selectively to perhaps the most important of them. The Treaty on Stability, Coordination and Governance (also known as the Fiscal Compact, from its most impactful part) provides that the Eurogroup is charged with the preparation of and follow-up to the Euro Summit meetings.¹⁵ It will be recalled that the Euro Summit brings together the Heads of State or Government of Euro-area Member States, as well as the President of the Commission and the President of the ECB, ‘to discuss questions relating to the specific responsibilities which the Contracting Parties whose currency is the euro share with regard to the single currency, other issues concerning the governance of the euro area and the rules that apply to it, and strategic orientations for the conduct of economic policies to increase convergence in the euro area’.¹⁶ Moreover, according to ‘two-pack’ legislation, the Euro-area Member States shall submit annually a draft budgetary plan for the forthcoming year to the Commission and to the Eurogroup.¹⁷ The Eurogroup shall discuss opinions of the Commission on the draft budgetary plans and the budgetary situation and prospects in the Euro-area as a whole on the basis of the overall assessment made by the Commission.¹⁸ The Euro-area Member States shall further report ex ante on their public debt issuance plans to the Eurogroup and the Commission.¹⁹

Furthermore, the Eurogroup forms part of the accountability mechanisms in the Banking Union.²⁰ More specifically, the Eurogroup receives a report from the ECB on the execution of its tasks in the Single Supervisory Mechanism, which shall also be presented to it by the Chair of the Supervisory Board of the ECB.²¹ Moreover, the Chair of the Supervisory Board of the ECB may, at the request of the Eurogroup, be heard on the execution of its supervisory tasks, and the ECB shall reply orally or in writing to questions put to it by the Eurogroup.²²

6.3 Accountability Arrangements and Practice

6.3.1 Political Accountability

The political accountability of the Eurogroup is described as ‘thin’.²³ Craig comments that:

Its principal political accountability runs to the European Council, as attested to by its role in preparing Euro Area Summits and having the responsibility for ensuring that the recommendations from such meetings are followed up. The reality is, however, … that the Eurogroup has considerable power in shaping macroeconomic policy broadly conceived for euro‐area states. The recommendations that emanate from the European Council will often be at a relatively abstract level, and it will be the Eurogroup that imbues them with greater policy specificity.²⁴

The latter case is exemplified by the Eurogroup’s actions during and in response to the COVID-19 crisis.²⁵ Overall, ‘[t]here 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 the conclusions from such Summits require interpretation and choice in the implementation.’²⁶ This does not, however, preclude the possibility that the Eurogroup may be ‘held to account in the European Council for the more detailed policy initiatives that the Eurogroup embraces when fulfilling European Council policy recommendations’.²⁷

This answers the question of whom account is to be (primarily) rendered to, but does not speak of the standards against which its performance is to be assessed. After all, the Protocol on the Eurogroup merely provides that its main task is to ensure close coordination of economic policies among the Euro-area Member States, in order to promote conditions for stronger economic growth.²⁸ It is rightly argued that a meaningful accountability relationship

is more difficult to achieve where the criteria against which the Eurogroup is being judged are relatively abstract recommendations from the European Council; where it is intended that these should be fleshed out by the Eurogroup; where all institutional players are mindful of the difficult political and economic determinations that have to be made; and where evaluation of success or failure may be difficult, and may not be apparent for some considerable time.²⁹

The Eurogroup’s role during the Euro-crisis, notably with regard to financial assistance programmes, provides a good illustration of this.³⁰ ‘The [Eurogroup] was the body coordinating and, de facto, deciding whether financial assistance would be granted, and under which conditions, to a requesting Euro Area Member State. It is again gaining specific relevance in the context of the Recovery and Resilience Facility.’³¹ The Eurogroup assesses the national implementation of the Euro-area recommendation through national recovery and resilience plans.³² It is also evolved in coordinating the implementation of these plans.³³

The ‘six-pack’ and ‘two-pack’ of EU legislation further make provision for Economic Dialogues.³⁴ Economic Dialogues are held in order to enhance the dialogue between the EU institutions on the application of economic governance rules and with Member States, if appropriate, and to ensure greater transparency and accountability. The competent committee of the European Parliament, that is, the Committee on Economic and Monetary Affairs (ECON), may invite representatives of Member States, the European Commission, the President of the Council, the President of the European Council and the President of the Eurogroup, to discuss economic and policy issues.³⁵ According to the relevant EU rules, the competent committee of the European Parliament may invite the President of the Eurogroup for an Economic Dialogue during certain stages of the implementation of the European Semester for economic policy coordination and in the context of macroeconomic adjustment programmes, including the post-programme surveillance phase.³⁶ It should be stressed that, under the existing rules, the European Parliament has no powers to ‘sanction’ the Eurogroup for its performance or to amend any of the decisions taken. The relevant provisions instead focus on the information and debate stages of accountability.³⁷ There is further the expectation that finance ministers participating in the Eurogroup will be held separately to account by their respective national parliaments, in accordance with national constitutional requirements.

The Eurogroup President takes part in an Economic Dialogue twice a year (in spring and in autumn) and, if needed, on an ad hoc basis. This practice was agreed during the 7th legislative term through an exchange of letters between the competent Committee and the Eurogroup President.³⁸ Nine dialogues were held with the President of the Eurogroup in the ECON Committee during the 8th legislative term (autumn 2014 to spring 2019). Furthermore, the President of the Eurogroup occasionally participated in an exchange of views in plenary as well as in interparliamentary meetings relating to economic governance.³⁹ The Economic Governance Support Unit (EGOV) of the European Parliament provided members of the ECON a briefing in advance of these dialogues, as well as papers written by external experts.⁴⁰ This is important from the perspective of substantive accountability, because it helps address any information asymmetries between the European Parliament and the Eurogroup.⁴¹ Five economic dialogues with the President of the Eurogroup have taken place thus far during the current (9th) legislative term.⁴² In contrast to previous practice where only web streaming was available, a transcript of the dialogues is now made available to the public.⁴³

In line with agreed practices, the following procedure is applied for the exchanges of views with the Eurogroup President. First, there are introductory remarks by the Eurogroup President for about ten minutes. These are followed by five-minute question-and-answer slots, with the possibility of a follow-up question, time permitting, within the same slot. Two minutes maximum are allocated for the question, and then three minutes maximum for the answer. In the first round of questions, each political group has one slot. Thereafter, the d’Hondt system is applied, which determines the order of questions by political groups. Any time for additional slots is allocated on a catch-the-eye basis.

Overall, the MEPs ask well-informed questions. In terms of the topics discussed, these are very much the issues of the day (whether it is, for example, financial assistance programmes back in the day or, nowadays, the assessment of recovery and resilience plans or the future of the EU fiscal rules). The MEPs also address structural issues pertaining to the EMU architecture, such as the completion of the Banking Union. Obviously, these two sets of issues sometimes intersect (as was the case, for example, with questions regarding the postponement of the work plan for the Banking Union). Further, there are questions about the Capital Markets Union, the digital euro, the enlargement of the Euro-area, as well as plenty of other issues. Whenever questions are not (adequately) answered by the Eurogroup President, it is common for the MEPs to return to the point made by their colleagues previously.⁴⁴ It is clear that the questions asked focus not only on the procedure by means of which a particular decision or policy choice was made but also on the substantive worth of the policy decision itself.⁴⁵

The Economic Governance Support Unit has conducted an extensive analysis of the Economic Dialogues with the President of the Eurogroup during the 8th legislative term (autumn 2014 to spring 2019). Nine dialogues were held in ECON during the said period. ‘As a general conclusion, one can say that issues raised during the dialogues reflected on-going policy work by the Eurogroup and other topical issues related to the well-functioning of the euro area, including the public attention given to a specific policy issue at the time of the dialogue.’⁴⁶ The following figure provides an overview of the topics discussed during the 8th legislative term.

Reproduced with permission from EGOV. Source: Hagelstam, De Biase and Navarini, ‘Economic Dialogues with the President of the Eurogroup during 2014–2019’, available at: <www.europarl.europa.eu/RegData/etudes/IDAN/2019/634367/IPOL_IDA(2019)634367_EN.pdf> (last visited 18 Sept. 2021), at p. 2.

The Economic Dialogues with the Eurogroup President are rife with comments on accountability.⁴⁷ It is clear that the European Parliament, and the ECON Committee in specific, wants more on part of the Eurogroup in terms of accountability and transparency. Moreover, it is clear that the MEPs take issue with the frequency of those meetings with the Eurogroup President.⁴⁸ The Chair of the ECON Committee, Irene Tinagli, has opened the first two Dialogues with Eurogroup President Paschal Donohoe with an, to all intents and purposes, identical remark:

President Donohoe, we were very pleased to read in your motivation letter as candidate for the Eurogroup President that, and I quote you: ‘effectively communicating to our citizens and to the European Parliament the steps we are taking in the euro area will be a priority of my term’. So I would like to take this opportunity to reiterate ECON’s request for enhanced cooperation with yourself and with the Eurogroup, and invite you to put forward how you would like to follow up on these. Due to the key role of the Eurogroup in steering the policy work of the euro area as a whole, we would like to stress the importance of a well-established cooperation practice with the European Parliament, notably our Committee. One way would be to go in the direction of the practice that we have for the monetary dialogue with the ECB President, which has been working very nicely in enhancing our cooperation. In these very challenging times, the Eurogroup is indeed at a key position. Therefore I think that the need for transparency and accountability is particularly important for us.⁴⁹

The Eurogroup President replied, on the second occasion that this comment was made, thus: ‘I’ll certainly reflect on what the Chair just said there regarding how we can structure our dialogue in the future.’ Overall, strengthening the (political) accountability of the Eurogroup remains work in progress. This places added emphasis on its legal accountability, which, as seen in the following section, is – at best – scant and indirect.⁵⁰

6.3.2 Legal Accountability

The legal accountability of the Eurogroup has been the subject of lengthy litigation before the EU courts and remained ill-defined for a number of years. The leading authorities are Mallis and Chrysostomides. In very simple terms, it was held in Mallis that litigants cannot admissibly bring actions for annulment under Article 263 TFEU against the acts of the Eurogroup.⁵¹ The Court noted that the term ‘informally’ is used in Protocol (No 14) on the Euro Group and that the Eurogroup is not a configuration of the Council pursuant to the latter’s Rules of Procedure. Accordingly, it could not be equated with a configuration of the Council or be classified as a body, office or agency of the EU within the meaning of Article 263 TFEU.⁵²

In Chrysostomides, the Court held that the Eurogroup is not an ‘institution’ within the meaning of the second paragraph of Article 340 TFEU, such that its actions cannot trigger the non-contractual liability of the Union.⁵³ What renders this judgment uniquely important for the accountability of the Eurogroup is the reasoning provided by the Court for its judgment denying that the Eurogroup is an EU entity established by the Treaties. The Court held that ‘the Euro Group was created as an intergovernmental body – outside the institutional framework of the European Union’ and that ‘Article 137 TFEU and Protocol No 14 … did not alter its intergovernmental nature in the slightest’.⁵⁴ The Court further held that ‘the Euro Group is characterized by its informality, which … can be explained by the purpose pursued by its creation of endowing economic and monetary union with an instrument of intergovernmental coordination but without affecting the role of the Council – which is the fulcrum of the European Union’s decision-making process in economic matters – or the independence of the ECB’.⁵⁵ It also held that

the Euro Group does not have any competence of its own in the EU legal order, as Article 1 of Protocol No 14 merely states that its meetings are to take place, when necessary, to discuss questions related to the specific responsibilities that the ministers of the [Member States whose currency is the euro] share with regard to the single currency – responsibilities which they owe solely on account of their competence at national level.⁵⁶

As argued extensively elsewhere, the Court’s reasoning in Chrysostomides is unconvincing.⁵⁷ First, it is not adequately explained in the judgment why Article 137 TFEU and Protocol No 14 did not alter the Eurogroup’s intergovernmental nature in the slightest. Insofar as the Court refers selectively to arguments provided by the Advocate General, notably his literal and teleological interpretation, this interpretation of the provisions of the Protocol is not straightforward in textual terms, and that whatever the origins of the Eurogroup and its functions prior to the Treaty of Lisbon may have been, they do not seem to warrant the conclusion that, following the entry into force of the Treaty of Lisbon, the Eurogroup remains an entity situated outside the EU legal and institutional framework. Second, it is not clear from the judgment why the informal nature of the Eurogroup means that it is not an EU entity established by the Treaties for the purposes of non-contractual liability. In reality, formally recognizing the Eurogroup by means of primary law provisions would not affect the role of the Council, insofar as those Treaty provisions which confer powers on the Council remained unchanged. It is perfectly possible to recognize the existence of an entity within the EU institutional framework which would not encroach on the powers of the Council. It is also unclear why the informal nature of the Eurogroup is necessary to preserve the ECB’s independence. Third, contrary to what the Court stated, we have seen that various EU law provisions confer powers on the Eurogroup. This also prompts the question of whether secondary EU law may confer powers or tasks on informal, non-EU bodies, especially to the point of involving them in the accountability mechanisms for a formal EU institution, the ECB.

According to the Court in Chrysostomides, individuals may bring before the EU courts an action to establish non-contractual liability of the EU against the Council, the Commission and the ECB in respect of the acts or conduct that those EU institutions adopt following the political agreements concluded within the Eurogroup.⁵⁸ Moreover, the principle established in Ledra Advertising applies,⁵⁹ meaning that an action for damages is admissible insofar as it is directed against the Commission and the ECB on account of their alleged unlawful conduct at the time of the negotiation and signing of the Memorandum of Understanding (MoU) with the European Stability Mechanism (ESM).⁶⁰ Furthermore, the Court extended the Ledra principle to the participation of the Commission in the activities of the Eurogroup. It held that

the Commission … retains, in the context of its participation in the activities of the Euro Group, its role of guardian of the Treaties. It follows that any failure on its part to check that the political agreements concluded within the Euro Group are in conformity with EU law is liable to result in non-contractual liability of the European Union being invoked under the second paragraph of Article 340 TFEU.⁶¹

The Court is effectively arguing that there is a complete system of remedies and procedures, such that litigants in this area are ensured effective judicial protection. Unfortunately, this is most certainly not the case when the agreements reached in the Eurogroup are implemented by non-EU bodies, such as is the case when the MoU with the ESM gives concrete expression to a macroeconomic adjustment programme. The ESM Treaty, as it currently stands, gives jurisdiction to the CJEU only when an ESM Member contests the internal resolution of disputes (with another ESM Member or the ESM itself) on the interpretation and application of the ESM Treaty or the compatibility of ESM decisions with the ESM Treaty.⁶² Private litigants have no standing to challenge the decisions of the ESM organs. What is more, as explained extensively elsewhere, there may be no measures adopted by formal EU institutions incorporating the specific harmful measures that litigants wish to challenge.⁶³ The relevant Council Decision, whether adopted on the basis of Articles 136(1) and 126(6) TFEU as was the case in Chrysostomides or – nowadays – on the basis of ‘two-pack’ legislation,⁶⁴ may not include all the terms from the Eurogroup statement and/or the MoU with the ESM. Chrysostomides is a case in point here, as only some of the harmful measures were mentioned in the impugned Council Decision. EU courts may or may not be able to read any terms that are not (fully) replicated into the relevant Council Decision.⁶⁵

It should be noted that the Court in Chrysostomides recognized, for the first time, that EU law measures (in casu, a Council Decision) that post-dated the adoption of the harmful measures by the national authorities concerned may nevertheless trigger the non-contractual liability of the Union, provided that the relevant Union institution (the Council) had required the maintenance or continued implementation of the harmful measures and that the national authorities concerned had no margin of discretion to escape that requirement.⁶⁶ However, as explained elsewhere, the terms of those measures are often vague, such that the national authorities concerned have a margin of discretion for the purpose of laying down the impugned rules.⁶⁷ Chrysostomides is again a case in point, and the actions for damages were declared inadmissible insofar as they were directed against the relevant Council Decision. The extension of the Ledra principle to the Commission’s participation in the activities of the Eurogroup may appear more promising, but, as argued elsewhere, its scope of application remains uncertain.⁶⁸ It seems that the Commission retains its role of guardian of the Treaties as regards all the activities of the Eurogroup, such that any failure on its part to check that (any of) the political agreements concluded within the Eurogroup are in conformity with EU law may give rise to non-contractual liability of the Union. This is a much broader scope of application for the Ledra principle than the financial assistance context in which it was first elaborated. Further, it is not clear what the Commission should do if, according to its assessment, a political agreement concluded within the Eurogroup is not in conformity with EU law.

6.4 An Assessment of the Eurogroup’s Accountability

The status quo with regard to the accountability of the Eurogroup is probably problematic by any standards. This is rather self-evident, especially if one were to apply national accountability benchmarks to EMU and look into any shortcomings that might exist in their institutionalization at the EU level, notably as regards the role of parliaments but also courts (thereby following a deductive approach, as per Akbik and Dawson).⁶⁹ It is equally true in case standards of accountable behaviour that are inferred from the EU’s Treaty framework are applied to the Eurogroup (which would constitute an inductive approach, according to Akbik and Dawson).⁷⁰ The latter case is exemplified by the transparency arrangements pertaining to the Eurogroup, as well as the judicial protection accorded to individuals affected by its actions, especially after Mallis and Chrysostomides.

To be sure, there is considerable disagreement among scholars with regard to accountability, not only in the specific area of EMU, but also with regard to the EU in general. This disagreement normally centres on four dimensions which frame the accountability discourse.

There is significant divergence of view at the normative level as to the framework against which EU accountability should be judged. There can be real dispute as to what the positive rules prescribe, which can shape different conclusions as to whether the normative vision is properly reflected in those rules. There are differences yet again at the empirical level, as to whether the legal rules, given their natural textual interpretation, capture the reality of how the institutions operate in practice, with consequential implications for assessment of accountability. Temporal change can, moreover, impact radically on the powers possessed by a particular institution, with consequential implications for the suitability and efficacy of accountability mechanisms.⁷¹

Notwithstanding any disagreements between scholars, it may be disputed whether academic discourse about accountability in EMU is ‘at a stalemate’.⁷² This is so, notwithstanding the fact that there could be said to be ‘a gap between what is seen as necessary and what is feasible in the EMU governance framework’.⁷³ For the avoidance of any doubt, the framework introduced by Akbik and Dawson in the introductory chapter to this volume is extremely valuable in analysing the accountability discourse on EMU and in evaluating the existing arrangements as well as their practical application, also beyond the confines of EMU for that matter. It is no coincidence that it is also utilized in this chapter. However, it seems that it is principally the politics of EMU that have reached a stalemate. Enhancing the accountability and transparency arrangements in the EMU is seemingly not on the agenda. It does not appear to be a (top) priority. This could be said to be explained by the fact that national leaders and EU institutions often had to respond swiftly to the various crises that the EU has faced in the past decade. However, this would not explain away the fact that, after all these years, there is no concrete plan to enhance accountability and transparency in the workings of EMU. Nor is there yet a ‘grand plan’ for enhancing accountability and transparency in a reformed (or deepened) EMU either. It has been argued elsewhere that:

high-level reports on EMU reform only discuss accountability as an afterthought. The relevant section in those reports often conflates different issues, thereby mixing accountability with concepts and issues such as: transparency; national ownership; effective implementation; institutional reform more broadly conceived; and the external representation of EMU. We do not yet have a ‘grand design’ for enhancing accountability in a deep and genuine EMU. Instead, one has to trawl through the documents accompanying the Commission’s Roadmap to get a glimpse of the accountability (and transparency) arrangements that would obtain in a reformed EMU.⁷⁴

This remains true, in my opinion, to this day. This is so, notwithstanding the limited improvements that were made when the EU’s recovery plan was introduced.⁷⁵

It could be said to be true that we should not expect the EU institutions to produce such a plan, as this would not be in the interests of those controlled and assessed.⁷⁶ Nevertheless, this approach entails ‘pay-offs and trade-offs’. On the one hand, it obviates the need for Treaty revision and various amendments to secondary law, and avoids any difficult interinstitutional conflicts and/or discussions between the Member States. On the other hand, it is doubtful whether the existing accountability arrangements in the area of EMU are enough ‘to provide a democratic means to monitor and control government conduct, for preventing the development of concentrations of power, and to enhance the learning capacity and effectiveness of public administration’.⁷⁷ At a broader level, it is doubtful whether they ‘can help to ensure that the legitimacy of governance remains intact or is increased’.⁷⁸ As shown in this chapter, this is all the more true in the case of the Eurogroup.

As regards the EMU, the predominance of procedural ways of providing the normative goods of accountability, identified in the introductory chapter to this volume, viz. openness, non-arbitrariness, effectiveness and publicness,⁷⁹ is not fortuitous. Take the first normative good of accountability, for example, openness. ‘We might … want accountability because we see it as a device to ensure that public action is open, transparent, and contestable.’⁸⁰ In the EMU, it is often the case that either the relevant procedures for gaining access to information and documents do not exist at all or that they are found wanting.⁸¹ In which case, it is only natural that the debate principally focuses on having the right procedures in place, which is a step logically prior to regularly probing and contesting official action.⁸² To be sure, the debate should not stop there, and the accountability holders concerned should use the information and documents provided to regularly probe and contest the conduct of the ‘EMU executive’. Nevertheless, it remains the case that accountability holders (and the general public) first have to exert considerable energy to pierce the veil of secrecy or non-transparency behind which the work of the ‘EMU executive’ is sometimes carried out.

The very body that forms the subject matter of this chapter provides a fine example of this, notably as regards the lack of transparency of Eurogroup meetings and requests for public access to Eurogroup documents. Nevertheless, the 2016 Transparency Initiative by the Eurogroup President has covered some ground. More specifically, in the Eurogroup meeting of 11 February 2016, ‘Ministers agreed as a first step to make public the annotated agendas for Eurogroup meetings and the summaries of their discussions’.⁸³ Moreover, the Eurogroup decided on 7 March 2016 that ‘in future, Eurogroup meeting documents would be published shortly after the meetings … unless the institutions which drafted them object’.⁸⁴ ‘Documents which have not been finalised or which contain market-sensitive information will not be made public.’⁸⁵ The European Ombudsman Emily O’Reilly notes that transparency is ‘an issue of prime importance for further legitimacy and public trust’ and has asked the Eurogroup President to make further improvements as regards access to documents relating to the work of the Eurogroup that are not published proactively; transparency in the workings of bodies and services that prepare Eurogroup meetings and notably in the EWG (notices and provisional agendas of meetings); and the publication of draft programme country-related documents prior to Eurogroup meetings.⁸⁶ However, Jeroen Dijsselbloem, then President of the Eurogroup, expressed the view that the Eurogroup is not a Union institution, body, office or agency, such that neither Article 15(3) TFEU and Article 42 of the EU Charter nor Regulation 1049/2001 applies to it.⁸⁷ He nevertheless noted, ‘Despite these legal considerations, the Eurogroup’s recent initiatives respond to perceived shortcomings in transparency and reflect the political will to adhere to the principles stated in Article 15(3) TFEU and Regulation 1049/2001.’⁸⁸ In his response to the Ombudsman letters, the Eurogroup President highlighted the need to protect the internal discussions that take place in the EWG to prepare the Eurogroup at technical level, whilst emphasizing that the Eurogroup’s proactive transparency regime in principle applies to all documents on which the political debate in the Eurogroup is based.⁸⁹ Further, he noted that the publication of programme documentation prior to the Eurogroup meetings was not deemed appropriate by the Eurogroup since they can be subject to change and are part of a negotiation process.⁹⁰ It may be observed that it is hard to separate ‘technical’ from ‘political’ aspects with regard to MoU conditionality. Moreover, the provision of programme-related documents in a sufficiently timely manner is crucial so that they be used by accountability fora in their scrutiny of the activities of the ‘EMU executive’.⁹¹

The most recent developments regarding transparency in the work of the Eurogroup and its satellite bodies are as follows. The previous Eurogroup President, Mário Centeno, informed ministers at the Eurogroup meeting held on 7 September 2018 of his intention to review the transparency initiative adopted by the Eurogroup in 2016 and consider further improvements.⁹² In her letter to the Eurogroup President dated 13 May 2019, the European Ombudsman noted, ‘One outstanding matter is the transparency of the bodies involved in preparing Eurogroup meetings, in particular the Eurogroup Working Group.’⁹³ The European Ombudsman has launched a strategic inquiry into how requests for public access to documents of the Eurogroup, the EWG, the EFC and the Economic Policy Committee have been handled by the Council and the Commission under the EU rules on public access to documents. She further welcomed the Eurogroup President’s views ‘on the possibility of adopting a more ambitious approach to the transparency of the EWG, extending for example to the proactive publication of EWG meeting documents’.⁹⁴ In response to this as well as other calls,⁹⁵ the Euro-area finance ministers agreed in September 2019 ‘on some additional proposals to increase transparency … while paying particular attention to respect the requirement of confidentiality of the Eurogroup’.⁹⁶ These include improving the EWG webpage by providing more information, publishing the EWG’s calendar meeting, expanding Eurogroup summing-up letters where relevant, bringing forward the publication of the draft Eurogroup (non-annotated) agenda, creating an online repository of publicly available Eurogroup documents, and providing more information on the Eurogroup’s webpage on how the right of access to documents may be exercised with respect to documents held by other EU institutions.⁹⁷ These are by no means cosmetic changes, and the Eurogroup and its members are to be commended for introducing them. Whether this meets the higher demands that substantive openness would place on the Eurogroup and its accountability holders is up for debate.⁹⁸ Furthermore, it is not a foregone conclusion that the other ‘accountability goods’ are also delivered, such that it may be contested whether certain Eurogroup decisions are not arbitrary, are effective, and/or are taken in the public interest.⁹⁹

Last, as regards the Eurogroup’s legal accountability, there is no question whether there is a predominance of procedural accountability or whether there is a clearer need for more substantive accountability, because the acts and conduct of the Eurogroup are simply not subject to review by the CJEU. We have seen that the rulings in Mallis and Chrysostomides have rendered the Eurogroup immune to two key judicial accountability mechanisms in the Treaties, viz. actions for annulment and actions for damages. What is more, the Chrystostomides ruling might have wider ramifications for the application of EU rules to the Eurogroup. The reasons provided by the Court for its judgment could be seen to lend credence to arguments that the EU’s transparency regime does not apply to the Eurogroup, examined supra in this chapter with respect to access to documents.

6.5 Conclusion

The preceding discussion has illustrated that the Eurogroup is an informal body with a vague mandate, which exercises an increasing amount of executive power. It is not, however, subject to the accountability checks that exist when executive power is exercised by the Commission or by the formal Council configurations.¹⁰⁰ Its principal political responsibility runs to the European Council, but there is little by way of accountability checks as to its input into European Council/Euro Summit meetings and the manner in which it follows up on the recommendations from such meetings. Further, there is certainly scope to improve the Eurogroup’s interactions with the European Parliament, not least in the eyes of the MEPs themselves. As regards legal accountability, we have seen that actions for annulment may not be brought admissibly against the acts of the Eurogroup, and that the CJEU cannot hear a claim for compensation that is directed against the EU and based on the unlawfulness of an act or conduct the author of which is the Eurogroup. The remaining avenues for judicial review are insufficient to ensure that litigants are accorded effective judicial protection in this area.

Ultimately, the Eurogroup’s accountability regime is currently stuck somewhere on the road between procedural and substantive accountability, with various improvements made over the years (following considerable pressure exerted by other institutions and actors), but also crucial preconditions for more robust accountability mechanisms missing altogether. Strengthening the accountability of the Eurogroup in EU fiscal and economic governance, as well as of the ‘EMU executive’ more broadly, remains work in progress. However, it is seemingly not accorded the political priority that it ought to be given in the various reform plans and blueprints. What is more, if it is indeed the case that the Eurogroup is a non-EU entity (as per Chrysostomides), some key changes to its accountability and transparency may no longer be possible within the framework of the existing EU Treaties.

7 The Economic Dialogues with the Eurogroup Substantive Accountability Claimed, but Unmet

Adina Akbik

7.1 Introduction

The Eurogroup is the most infamous (non-)institution of the Economic and Monetary Union (EMU). As a key decision-maker on financial assistance programmes during the euro crisis, the Eurogroup has attracted significant criticism for its lack of transparency and accountability.¹ As an informal body which meets outside regular Council configurations, the Eurogroup cannot be legally found liable for its decisions because it is not an official institution of the European Union (EU).² Established in the late 1990s, the Eurogroup has always been an elusive body, with an agenda and proceedings that remained secret for most of its existence.³ The Lisbon Treaty (2009) recognised the Eurogroup as an informal reunion of finance ministers of the euro area with a permanent president, elected for two and a half years.⁴ Within the EMU, the powers of the Eurogroup revolve around the implementation of the Stability and Growth Pact (SGP), ensuring the coordination of national and economic policies in view of avoiding ‘excessive government deficits’.⁵ Outside the Treaty framework, the Eurogroup sits on the Board of Governors of the European Stability Mechanism (ESM) and takes crucial decisions on financial assistance.⁶ In many ways, the Eurogroup acts as the ‘economic government’ of the euro area, a political counterweight to the European Central Bank (ECB).⁷

In the past decade, the increased power of the Eurogroup went hand in hand with calls to increase its transparency and democratic accountability.⁸ Against this background, the legislative packages adopted during the euro crisis – the Six-Pack (2011) and the Two-Pack (2013) – institutionalised a new mechanism of parliamentary scrutiny of the Eurogroup. Benignly titled ‘Economic Dialogues’, the mechanism consisted of regular meetings between the Eurogroup President and the European Parliament (the ‘Parliament’), where members of the Economic and Monetary Affairs (ECON) Committee could ask questions about various aspects of the Eurogroup’s activity. In parallel, the Parliament organised Economic Dialogues with other executive actors such as the Commission, the Economic and Financial Affairs (ECOFIN) Council, and individual national governments.⁹ So far, academic analyses of the Economic Dialogues have focused on their legal provisions¹⁰ or made general observations regarding their functioning.¹¹ Less is known about the actual content of Economic Dialogues and the extent to which they ensure the accountability of the Eurogroup.¹²

The effectiveness of the Economic Dialogues in holding the Eurogroup accountable is important for at least three reasons. First, given the informality of the intergovernmental body, the Parliament is the only political or legal forum that can make the Eurogroup President give a public account of decisions taken collectively by finance ministers of the euro area (see Section 7.2). Second, given the redistributive and politicised nature of EU economic and fiscal decisions,¹³ the Parliament has the advantage of representing all Member States as opposed to the interests of one national electorate. Third, when it comes to the main question asked by this volume regarding substantive accountability in EU economic governance, the Economic Dialogues with the Eurogroup represent an essential ‘most-likely’ case.¹⁴ Specifically, if Members of the European Parliament (MEPs) do not make substantive accountability claims towards the Eurogroup, they are unlikely to make them towards other EU executive actors.

This chapter investigates the Economic Dialogues with the Eurogroup since they were initially formalised in January 2013 until the end of the 8th parliamentary term (May 2019). The purpose is to assess the type of accountability claims made by MEPs vis-à-vis the Eurogroup as reflected in the parliamentary questions they pose during Economic Dialogues. Based on the conceptualisation set at the outset of this volume,¹⁵ are MEPs more interested in procedural or substantive accountability in their interactions with the Eurogroup President? Which accountability goods – openness, non-arbitrariness, effectiveness, or publicness – do they prioritise in the oversight of the Eurogroup? Bearing in mind the political character of both actors under investigation, we can expect an emphasis on substantive accountability, with an express interest in the effectiveness and publicness of Eurogroup decisions. Unlike courts of law, ombudsmen, or auditors, members of parliaments can substantively assess the merit and impact of executive decisions as well as their effectiveness and the extent to which they reflect the public interest.

The chapter is structured as follows. The first section discusses the relationship between the Eurogroup and the European Parliament in conjunction with the legal framework of the Economic Dialogues. The second section transposes the theoretical notions of Chapter 2 to the context of parliamentary oversight, explaining how the four accountability goods can be identified in parliamentary questions in their procedural and substantive form. The rest of the chapter is dedicated to presenting the results of the empirical analysis, which includes a total of 474 questions (and corresponding answers) categorised according to the four accountability goods.

7.2 The Eurogroup and the European Parliament

The relationship between the Eurogroup and the European Parliament is only minimally comparable to the dynamic between a finance ministry and a legislature at the national level. From a principal–agent perspective, the European Parliament is not the principal of the Eurogroup in the EMU, as finance ministers of the euro area are individual agents of their own national parliaments and voters. Moreover, since the Eurogroup is an informal body, the counterpart of the European Parliament in the legislative process is the ECOFIN Council, not the Eurogroup. In a broad comparison to presidential systems of government,¹⁶ one could say that the European Parliament and ECOFIN play the role of ‘multiple competing agents’¹⁷ in the EMU because they are supposed to represent citizens and Member States respectively at the EU level.¹⁸ Although the Eurogroup contributes to legislative dossiers, its main activities are executive, concerning the implementation of fiscal and macroeconomic rules in the euro area and the management of financial assistance programmes in the ESM. For its part, the Parliament lacks formal powers to veto or even influence the executive decisions of the Eurogroup.¹⁹

Furthermore, the situation is further complicated by the informal status of the Eurogroup as an EU institution. For accountability purposes, informality is problematic in two ways. On the one hand, the Eurogroup cannot be held liable legally because its decisions do not count as EU acts until they are endorsed by the ECOFIN Council. According to recent judgments of the Court of Justice in the Chrysostomides and Bourdouvali cases, the Eurogroup ‘cannot be equated with a configuration of the Council’,²⁰ it ‘does not have any competence of its own’, and actions cannot be brought against it ‘to establish non-contractual liability of the European Union’.²¹ On the other hand, the informality of the Eurogroup facilitates strict confidentiality of its proceedings, that is, there are no minutes, conclusions,²² or public votes as in regular Council meetings.²³ The lack of transparency makes accountability difficult for obvious reasons: if MEPs do not know how the Eurogroup reaches its decisions, they cannot establish which national governments pushed for or against the final outcome.

Against this background, the Economic Dialogues promised to increase the accountability of the Eurogroup by providing a regular mechanism through which the European Parliament could publicly discuss and question various Eurogroup activities.²⁴ One key policy instrument here was the European Semester – the EU’s framework for economic and fiscal coordination – which included, among others, stricter rules for enforcing debt and deficit rules set in the SGP.²⁵ In respect to the euro area, the Six-Pack listed, as possible topics of the Economic Dialogues, the sanctions and fines applicable in the Excessive Deficit Procedure (EDP) and the Macroeconomic Imbalances Procedure (MIP).²⁶ The Two-Pack added two elements to the list of potential subjects: (1) the monitoring and assessing of budgetary plans in the Eurozone,²⁷ and (2) the special procedures for countries experiencing financial difficulties – procedures which included enhanced surveillance, macroeconomic adjustment programmes, or post-programme surveillance.²⁸ In fact, according to Markakis, the Two-Pack ‘lays down the most detailed accountability and transparency requirements [in the EMU] to date’.²⁹

While the tasks of the ECOFIN Council and the Eurogroup are difficult to separate in the European Semester (e.g. their role in the EDP and the MIP), it was clear that the Eurogroup would be the Parliament’s main interlocutor for questions related to financial assistance. Even though the ESM was not an EU institution, the composition of its Board of Governors coincided with the Eurogroup, while the Eurogroup President served as the Chair.³⁰ Effectively, the Eurogroup brokered ESM agreements and supervised the implementation of aid packages,³¹ which made it uniquely competent to discuss the details and approach of financial assistance programmes. By contrast, the practical administration and monitoring of programme countries fell to the ‘Troika’ – an informal alliance comprising the European Commission, the ECB, and the International Monetary Fund (IMF).³²

The next section discusses ways in which the European Parliament could hold the Eurogroup accountable in the Economic Dialogues, in connection with the theoretical framework outlined in Chapter 2.

7.3 Accountability Goods in Parliamentary Oversight

In the universe of political accountability in a democratic system of government, the Economic Dialogues correspond to parliamentary oversight – part of a legislature’s controlling functions of the executive.³³ In the academic literature, the notion of ‘oversight’ gained traction in the 1970s, in parallel to empirical developments in the United States Congress regarding the growing importance of ‘keeping a watchful eye’ over the administration.³⁴ However, the idea of legislative oversight was hardly new; in fact, congressional oversight has always been an integral part of the American system of checks and balances in connection to the question of ‘who rules the rulers’.³⁵ The objective of oversight was to prevent abuses by the administration, including but not limited to dishonesty, waste, arbitrariness, unresponsiveness, or deviation from legislative intent.³⁶ Although definitions varied, the notion of ‘oversight’ implied an ex-post focus (‘review after the fact’) – that is, ‘inquiries about policies that are or have been in effect, investigations of past administrative actions, and the calling of executive officers to account for their financial transactions’.³⁷

One of the main tools in the repertoire of legislative oversight is the right to ask questions to the executive, either in writing or orally in hearings and plenary debates.³⁸ In fact, parliamentary questions constitute a field of studies on their own, with scholars interested in the behaviour of legislators and the reasons why members of parliaments choose to raise specific questions.³⁹ The connection between parliamentary questions and the ability of legislatures to control executives has always been implicit, following the logic that questions allow parliaments to ‘check, verify, scrutinise, inspect, examine, … criticise, censure, challenge, [and] call to account’ the government and public administration.⁴⁰ In fact, parliamentary questions can easily be connected to the four accountability goods described at the beginning of the volume.⁴¹ The point is that parliamentary questions can make different accountability claims – openness, non-arbitrariness, effectiveness, or publicness – depending on the interest of the questioner. Moreover, members of parliaments can focus on procedural or substantive issues, in line with the four goods. The next pages describe the operationalisation of each good in turn.

First, openness overlaps with notions of transparency, which in the context of parliamentary questions means either requesting details about decision-making processes (procedural openness) or demanding information about the content of decisions and their expected impact (substantive openness). Second, non-arbitrariness varies in line with the nature of the actor to be held accountable. Accordingly, non-majoritarian institutions are likely to be questioned about their compliance with decision-making processes (procedural non-arbitrariness) or potential deviations from their legal mandate (substantive non-arbitrariness). By contrast, political bodies are more often questioned on aspects regarding the equal treatment of different groups in decision-making processes (procedural non-arbitrariness) or the discriminatory effect of their decisions (substantive non-arbitrariness). Third, the interest in effectiveness is straightforward: legislators can either inquire about the speed and hurdles of decision-making processes (procedural effectiveness) or they can ask about the impact of decisions, that is, why policies failed to reach the intended results and what can be done to improve the outcome in the future (substantive effectiveness). Fourth, publicness can refer to the balance of interests involved in decision-making (procedural publicness) or the balance between groups affected by decisions (substantive publicness). In this respect, publicness is linked to the democratic character of decision-making processes, for instance, whether parliaments are involved or whether decisions are fair vis-à-vis specific groups. Table 7.1 provides an overview of the direction of parliamentary questions that can be found across the four goods in both their procedural and substantive forms.

Keeping in mind that oversight is a two-way process – composed of parliamentary questions and answers – it is important to assess the responsiveness of executive answers when engaging with members of parliaments. For the purposes of this chapter, I employ a simplified version of measuring responsiveness, drawing on previous work.⁴² Accordingly, in response to parliamentary questions, executive actors can (1) agree with the member of parliament or simply provide the information requested, (2) disagree with the member of parliament and/or defend existing policies or conducts, or (3) evade the question either intentionally or because of lack of time⁴³ (in both cases, no concrete answer can be identified). Based on this categorisation, the more executive actors evade parliamentary questions, the least responsive they are in oversight. The distinction between agreement and disagreement with members of parliaments is more complex because it depends on government-opposition dynamics and political ideologies. What is important for the analysis of Economic Dialogues is the type of issues raised by MEPs and whether the Eurogroup attempts to systematically evade questions. The next section illustrates the application of this framework to the questions asked by MEPs during 2013–2019.

Table 7.1 Accountability goods in parliamentary oversight. Own account, based on Akbik and Dawson⁴⁴

Accountability good	How it is rendered	Focus of parliamentary questions
Openness	Procedurally	Who was involved in the decision-making process and in what way? When was/will a decision (be) taken?
	Substantively	What was/is/will be the content of a decision or policy? What will happen as a result of the decision? What is your evaluation of the decision? How and when will the decision be implemented?
Non-arbitrariness	Procedurally	Is the decision-making process in line with the rules? How can we make sure that rules are respected? Are countries/groups of people treated equally in the decision-making process?
	Substantively	Are decisions in line with the mandate of an institution? Does the decision result in equal treatment of countries or actors? Is the outcome biased against certain groups?
Effectiveness	Procedurally	Why did the decision-making process take so long? How likely is it that a decision will be taken?
	Substantively	Has the decision achieved the intended result? Why not? What is the strategy to reach the desired results? Is X the right solution to the problem?
Publicness	Procedurally	Why does the decision-making process fail to take into account institution/group X? Have all legitimate interests been taken into consideration? Is the process democratic?
	Substantively	Is the outcome of a decision fair for different groups? Will disadvantaged groups be compensated? How can you restore confidence that the decision taken was/is in everyone’s interest?

7.4 The Economic Dialogues in Practice

Although the ECON Committee held informal sessions with the Eurogroup President before the Two-Pack, such meetings only became formalised in 2013. Sharon Bowles, the Chair of the ECON Committee at the time, explained that the Economic Dialogues were being institutionalised twice per year: once in January to introduce the annual working programme of the Eurogroup, and once in September to take stock of progress on the working programme and follow up on Country-Specific Recommendations (CSRs) adopted in July; she also emphasised that the meetings are ‘all legal now (…) no longer off Treaty’.⁴⁵ Depending on the schedule of the Eurogroup President in a year, meetings were sometimes postponed to February/March and October/November, respectively. In 2013, a special Dialogue took place in May on the ESM adjustment programme for Cyprus. In November 2015, the ESM Director Klaus Regling joined the Eurogroup President to discuss the details of the recently adopted third adjustment programme for Greece.

From the start of 2013 until the European Parliament elections of May 2019,⁴⁶ the ECON Committee organised fourteen Economic Dialogues with the Eurogroup. Throughout the period, the Eurogroup had three Presidents, who attended the meetings as follows: Jean-Claude Juncker (once in 2013), Jeroen Dijsselbloem (11 times between 2013 and 2017), and Mário Centeno (twice in 2018). Not only was Dijsselbloem the main interlocutor of MEPs in the period under focus, but he also led the Eurogroup during difficult times – including the ESM programmes for Cyprus (in 2013) and Greece (in 2015). By contrast, Juncker attended a Dialogue that was his last as Eurogroup President, in which MEPs mostly praised his performance as head of the group and asked him about future career plans in view of the 2014 European Parliament elections. Centeno’s mandate was less eventful because the euro area was in the middle of an economic recovery and no further ESM programmes were agreed since 2016.

As with other hearings in the ECON Committee, the format of Economic Dialogues allocates a five-minute slot for each MEP to ask a question and receive an answer. The longer the question, the higher the likelihood that the Chair would cut off the Eurogroup President halfway through the answer. Most MEPs seem used to this format and seek to get concrete answers to their questions. In line with the Parliament’s Rules of Procedure,⁴⁷ MEPs get the floor in the order of the size of their political groups, starting with the European People’s Party (EPP) and the Socialists and Democrats (S&D). As with other Economic Dialogues, the coordinators of political groups took the floor in almost every meeting: for example, Jean-Paul Gauzès (EPP, France) and Elisa Ferreira (S&D, Portugal) for the 2009–2014 parliamentary term, and Burkhard Balz (EPP, Germany) and Pervenche Bères (S&D, France) during 2014–2019.

In total, the analysis identified 474 single-topic questions asked by MEPs in the fourteen Dialogues examined.⁴⁸ In terms of the issues covered, Figure 7.1 shows that the most frequent topic of questions concerned financial assistance programmes (17 per cent overall), mostly in relation to Cyprus (9 per cent) and Greece (5 per cent). MEPs also had the tendency to connect financial assistance programmes to ongoing developments in the Member States that captured economic and social indicators (15 per cent of questions). The next topic (also found in 15 per cent of all questions) referred to the internal organisation of EMU, which covered the 2015 ‘Five Presidents Report’ as well as the Commission’s ‘Roadmap for completing EMU’ in 2017. Such questions often included the democratic accountability of the Eurogroup and the possible transformation of the ESM into a European Monetary Fund (EMF) under EU law. Legislative files were also an important topic for MEPs (present in 9 per cent of all questions), especially in relation to the completion of the Banking Union and the Capital Markets Union (7 per cent of all questions). Finally, fiscal consolidation and specific instruments of the European Semester feature frequently in parliamentary questions (6 per cent each), showing that the Eurogroup is considered the main interlocutor on the implementation of the SGP – although formally the ECOFIN Council is responsible.⁴⁹

Figure 7.1 Types of issues raised in the Economic Dialogues with the Eurogroup (January 2013–May 2019). Most questions have two codes, except those that address ESM programmes in Greece and Cyprus (which have 3 codes). Total codes assigned: 1095.

Over time, MEPs asked fewer questions on ESM financial assistance, which is consistent with the lack of new programmes since 2016. In the last years (2016–2019), the focus shifted towards legislative proposals in the Capital Markets Union, general reform proposals of the economic governance framework, or economic recovery in the Member States. Having established the main areas of discussion in the Economic Dialogues with the Eurogroup, the next step is to discuss the types of questions and answers identified, in line with the theoretical framework outlined above.

7.4.1 Which Accountability Goods Do MEPs Prioritise?

Figure 7.2 shows the number of questions identified across the four goods in absolute numbers. In terms of percentages, the highest value – 52 per cent of all questions – prioritises substantive issues regarding the merit of policy decisions or measures. Next, 42 per cent of all questions are deemed procedural because they cover various aspects of the process through which decisions were taken. Finally, 6 per cent of all questions do not have a clear accountability claim and are considered opinion questions about developments in the Member States or ongoing policy debates.

Figure 7.2 Types of questions identified in the Economic Dialogues with the Eurogroup (January 2013–May 2019), in absolute numbers.

Among the four accountability goods, openness is the most frequent, not only in respect to decision-making processes but also when it comes to the content and outcomes of decisions. Requests for transparency make 40 per cent of all questions, with a slightly higher emphasis on procedural as opposed to substantive issues (ninety-nine versus ninety-one occurrences). In terms of procedural openness, one important example comes from the special Dialogue on Cyprus in May 2013, when MEPs questioned a controversial Eurogroup decision to ensure financing for the Cypriot economy by imposing a 6.75 per cent levy on all bank depositors, regardless of the protection offered by EU deposit insurance guidelines to small deposits under 100,000 euros.⁵⁰ While the Eurogroup soon backtracked on the measure – not least because the Cypriot parliament rejected it – MEPs wanted to know how the Eurogroup reached the decision in the first place and who supported the move:

Sharon Bowles (Chair, ECON Committee): How did the Euro Summit meeting on the night of the 15th and 16th of March reach its conclusions? (…) How was the meeting prepared and by whom? And actually, we’re still a little bit curious about who was in the room and how many in particular from the IMF and whether there were any subrooms. (…) Did the Cyprus authorities provide or withhold all relevant information at all stages of the crisis?⁵¹

Another memorable question on the same matter is posed by Sven Giegold from the Greens, a long-standing advocate of more transparency in the EMU:

Sven Giegold (Greens-EFA, Germany): we as a Parliament have the right to know more from you how it came to this wrong decision. And we ask this in writing. And I would like to know whether you will respond in writing precisely why this process didn’t deliver. And we have the right to know. The citizens have the right to know. And it’s too cheap simply to say, I will not answer and I am the king of the Eurogroup.⁵²

Leaving the political rhetoric aside, the interest in procedural openness featured throughout the period and went beyond transparency about negotiating positions in the Eurogroup: more generally, MEPs asked questions about the stage and timing of negotiations or about the evidence used as a basis for taking decisions. At the same time, MEPs made numerous requests for information about the substantive policy position of the Eurogroup on different matters. For instance, MEPs inquired whether the Cypriot bank levy on deposits could be applied to different countries as well⁵³ or whether the Eurogroup President Mario Centeno meant what he said to the Greek finance minister that ‘the ball is [now] in your court’.⁵⁴ Other subjects of substantive openness concerned future EMU reforms planned in the ‘Five Presidents Report’ (2015) and the Commission’s 2017 ‘Roadmap for completing EMU’, as well as the risks posed to the euro area economy by Brexit and steps taken to prevent them. At times, MEPs just asked the Eurogroup President to clarify points about policy:

Paul Tang (S&D, Netherlands): Now I’d come back to an earlier exchange you had with Udo Bullman where you said you see ways to combine flexibility and credibility. You said structural reforms, maybe public investments, can be given more time for targeting the fiscal deficit. I would advise you to be more specific on this. Do you want to have a formal procedure, or do you want to take the initiative to enshrine flexibility in the Pact and to combine flexibility and credibility at the same time?⁵⁵

The second-most frequent category is made of questions concerning the effectiveness of policy decisions – 26 per cent in total – with a clear prioritisation of substantive aspects over procedural ones (95 as opposed to 30 occurrences). Many questions in this category concern the effectiveness of the European Semester and the implementation of CSRs by national governments. For example:

Elisa Ferreira (S&D, Portugal): I’d like to know whether or not with the new powers that are conferred on you, we’re going to get a careful and thorough assessment of the quality of these recommendations, which are then imposed on countries. And this [should be] depending on the effective results, not the theoretical results that the recommendations are based on or aiming at.⁵⁶

Other questions concern strategies to improve the current effectiveness of EU policies, for instance, ‘if you are a responsible policymaker, you have to have contingency plans; what is your contingency plan if growth would not come back?’⁵⁷ The effectiveness of the Troika and of austerity policies in particular are also questioned, as MEPs point to the lack of growth in Greece as a sign that the Eurogroup’s approach has failed.⁵⁸ Conversely, procedural effectiveness has to do with the swiftness of decision-making processes and strategies to prioritise certain files or issues in order to reach agreements. For example, MEPs questioned the wisdom of not having a strategy in case Greece had left the euro area in 2015, under the Tsipras government.⁵⁹ Another long-standing aspect has been the proposal to create a European Deposit Insurance Scheme (EDIS), the final step of the Banking Union, which was deadlocked time and again since 2015.

Next, there are questions regarding publicness (15 per cent overall) and non-arbitrariness (12 per cent overall). The interest in publicness is almost equally procedural as it is substantive (36 and 37 occurrences, respectively). One recurrent issue concerns the transformation of the ESM into an Economic Monetary Fund under EU law, with the involvement of the European Parliament. Another aspect refers to the Parliament’s opposition to the creation of an independent fiscal council to monitor national budgets, as captured below:

Jonás Fernández (S&D, Spain): Do you know the name of the independent body that controls fiscal policy? The name of this chamber is the parliament. I have read with interest your letter in which, in the context of presenting the Five Presidents Report, you took the opportunity to defend a personal idea that I don’t share at all. … you defended the creation of an independent fiscal body in charge of supervising and intervening in member states’ national budgets, maybe in the European budget too, as if you were reacting against the supposed politicisation of the Commission. Something that I interpret as a direct, unfair and uncalled for criticisms of the current Commission. You should know that since the beginning of time there are institutions that look after governments budget policies, and they are the parliaments, whether the national ones or the European Parliament.⁶⁰

A similar criticism about the Eurogroup’s lack of democratic accountability referred to substantive issues and thus fell under ‘substantive publicness’. One area of conflict concerned representing the public interest of a Member State (e.g. Alexis Tsipras after winning the election in Greece) as opposed to safeguarding the interest of the euro area as a whole:

Marco Valli (EFDD, Italy): First of all, I would like to congratulate the President of the Eurogroup because I think what you have mentioned is incredible. A few weeks ago, we were facing a democratically elected government which had made promises to Greece and obviously that meant a 70 per cent haircut to the debt. The end of the program, they promised that, and reimbursing war debts on the part of Germany. And just a few weeks ago that’s what we heard and now we’ve got this result. So well done then for showing that we are really in a sort of technocratic dictatorship. I’m sure that’s going to increase Euroscepticism and the consensus about people who don’t believe in this Europe.⁶¹

In respect to non-arbitrariness, there are more procedural questions encountered than substantive ones, but the difference is not significant (33 vs. 25 occurrences). On the procedural side, multiple questions address the uniform application of rules on the SGP and the ‘special treatment’ granted to large countries like France and even Spain. An interesting issue is raised regarding the duplicity of national ministers, who agree to CSRs in the ECOFIN Council/Eurogroup and then make public statements against the Commission to their domestic audiences:

Astrid Lulling (EPP, Luxembourg): On the European Semester you said, if I understand correctly, that the Commission recommendations were passed unanimously by the Council. I’m quite surprised by that. Because immediately following the publication of the recommendations by the Commission, there were very negative reactions … by national politicians, [who] said that there would be no question of Brussels being allowed to dictate what member states had to do. This is almost hypocrisy. And as representatives of Europe, as the Eurogroup, should we not be calling them out on this hypocrisy?⁶²

The point is not about the Eurogroup President specifically but by members of his institution, which is important because it shows that the Eurogroup President cannot be held accountable for the conduct of other finance ministers, especially when such conduct occurred in a domestic setting.

Finally, there are also questions focused on substantive non-arbitrariness, which focus mainly on equal treatment (of citizens, economic actors, or countries) in the context of ESM or EU measures. For example, in relation to the ESM programme in Cyprus, the Chair of the ECON Committee, Sharon Bowles asked how ‘can we establish that there has been equality of citizens and member states in the various bailouts? And is this within both the spirit and the letter of the Treaties and legislation?’⁶³ Overall, non-arbitrariness plays a limited role among the accountability concerns of MEPs, not least because the legal mandate of the Eurogroup is ambiguous while the relationship with the Parliament is not strictly defined. It is difficult for MEPs to constrain the discretion of the Eurogroup if (1) the boundaries of that discretion are fluid, and (2) the Parliament does not set or review the tasks of the Eurogroup in the EMU.

To sum up, the European Parliament uses the Economic Dialogues to make a variety of accountability claims vis-à-vis the Eurogroup. However, most questions focus on openness (both procedural and substantive) as well as substantive effectiveness, revealing a systematic parliamentary interest in the transparency of the Eurogroup and the economic impact of its decisions. Ultimately, MEPs prioritise knowing what the Eurogroup is doing, and whether its actions achieve the intended results. While there is some questioning of the publicness and arbitrariness of Eurogroup decisions, such concerns are secondary to openness and effectiveness. The next section discusses how Eurogroup President responds to parliamentary questions in the Economic Dialogues.

7.4.2 The Answerability of the Eurogroup

When it comes to the types of answers provided by the Eurogroup Presidents, there is a clear trend observable across the four accountability goods. Regardless of the questions addressed by MEPs, Eurogroup Presidents have the tendency to disagree with the points raised or defend the conduct of their institution in respect to both procedural and substantive aspects. Disagreement or defence of conduct was identified in 55 per cent of all answers, with a higher incidence in response to questions on substantive issues (32 per cent) as opposed to procedural ones (23 per cent). Excluding opinion questions (which have no accountability claim), the frequency of answers in agreement with MEPs or simply providing the information is 20 per cent. On the other hand, evasion or lack of replies due to time constraints was identified in 18 per cent of all cases (also excluding opinion questions). In terms of specific accountability goods, answerability is similar. Figure 7.3 provides a snapshot of the various types of replies encountered.

Figure 7.3 Types of answers identified in the Economic Dialogues with the Eurogroup (January 2013–May 2019).

To start with, answers that agree with points raised by MEPs or simply provide the information requested are categorised as ‘agree/provide’ [a reply]. Most of these answers concern openness in either its procedural (22 occurrences) or substantive form (24 occurrences). When the Eurogroup President is asked about the sequence of decision-making regarding the 2013 Cypriot programme, he is transparent about the process and considerations at the time but not about the specific positions of different Member States, which he feels he needs to protect as chairman of the Eurogroup.⁶⁴ Calls for decision-making transparency are finally met in 2016, when several reforms are passed:

Jeroen Dijsselbloem: First on the transparency of the Eurogroup. We have agreed that we will put out in advance of our meetings and annotated agenda which is a lot more information than was accustomed. Secondly, we will put out what is called a summing up letter so it’s not minutes in the sense that you can read who says what but it’s a summing up letter which will give you an idea of the kind of discussion we had and the conclusions that we have come to on all the relevant issues.⁶⁵

In respect to substantive issues, the Eurogroup President is generally open to clarifying the Eurogroup’s policy stances or views on the future reforms of the EMU. For instance, in response to the question about the relationship between flexibility and credibility in relation to structural reforms (posed by Paul Tang), Dijsselbloem provides a lengthy answer and explains his position in respect to the preventive and corrective arms of the SGP.⁶⁶ Eurogroup Presidents also seem happy to provide their own opinions about lessons learned from holding the position, advice to their successors, or ongoing policy debates (see opinion questions, with answers provided in 25 out of 28 occurrences).

The next pages illustrate the range of replies found in the dataset, corresponding to the questions listed in Section 7.4.1. For instance, in response to the question by MEP Astrid Lulling on the effectiveness of CSRs in the European Semester, the Eurogroup President explains that the problem is not ‘the quality of recommendations, but the quality of the implementation and the progress being made where budgets are concerned’.⁶⁷ Years later, in 2017, Dijsselbloem still defended the effectiveness of the Semester:

Jeroen Dijsselbloem: If you look at the OECD reports on structural reforms that have been implemented throughout the eurozone, it’s quite impressive but it varies very much per country. Some countries have done very little. And some countries have been forced by circumstance and sometimes forced by programmes to do very difficult structural reforms. And interestingly enough if you look across the eurozone, now the countries with the highest growth are the countries that did the difficult structural adjustments in the past years. Ireland of course, Spain, Portugal, the Baltics, even the Netherlands. … So I think it’s much more about ownership and we should really think about how we can improve ownership in [other] countries.⁶⁸

Furthermore, the Eurogroup President also defends the democratic accountability of the ESM, arguing that each finance minister is accountable to her own national parliaments. In the Dialogue on 20 February 2014, he also refers to a letter sent by his predecessor Jean-Claude Juncker pledging to report to the European Parliament on a regular basis on the workings of the ESM. In his view: ‘The easy thing is I am here now you can ask me anything you want on the ESM.’ The MEP who originally asked the question (Bas Eickhout from the Greens/the Netherlands) retorts that this is not the same because ‘for example the Dutch Parliament does not have a veto on any payment … whereas the German Parliament has because of the voting rules. So there is a democratic gap in the ESM and … that [needs] more than just that you are here coming.’ The minister replies that the Dutch parliament can fulfil its accountability obligations without the formal voting rules because ‘There is no subject that is debated that much and that often in the Dutch Parliament as the Eurozone agenda including all the programs and all the money that comes from the ESM.’⁶⁹

Furthermore, reacting to the question of MEP Jonás Fernández about creating an independent fiscal council, the Eurogroup President rejects ever saying that such an institution ‘should intervene in national procedures’ on budgets or ‘step into the authority of the Commission’. He argues that it would be good to have ‘a European Fiscal Council that could independently assess whether we are taking the Pact seriously; sometimes criticise us, sometimes evaluate what we’ve done, … but also advise on what we discussed just now, the fiscal stance in the Euro zone’.⁷⁰ In response to Marco Valli’s question about the Greek elections and respecting the democratic wishes of the voters, Dijsselbloem defends the intergovernmental nature of the Eurogroup and the need ‘to deal with 19 ministers who have 19 mandates from 19 electorates’.⁷¹ Last but not least, on the question of Astrid Lulling regarding the hypocrisy of national governments who berate CSRs after voting for them in the Council, the Eurogroup President defends the right of Member States to implement reforms their own way – as long as they engage seriously with the Commission’s recommendations.⁷²

Elsewhere, the point about the equality of citizens and Member States in the various bailouts (raised by Sharon Bowles) is first dodged by the Eurogroup President until it is picked up again by another MEP. At that point, Jeroen Dijsselbloem agrees that ‘every country can be treated different, but it should be done on the same principles and one of the guiding principles is debt sustainability – that the country should be able to recover’.⁷³ Speaking of evasions more generally, Mario Centeno has the worst record in the dataset (with 26 out of 60 questions evaded). In fact, Centeno tends to answer questions in very general terms, without going into any details about the specific questions raised by MEPs. He is also inclined to defend Eurogroup positions through examples with Portugal – and how things worked domestically – although his country was not part of the questions raised by MEPs.⁷⁴

Overall, the answerability of Eurogroup Presidents varies depending on the personality and experience of the incumbent, but there is a broader trend observable across time. In general, Eurogroup Presidents defend the conduct of their institution or openly disagree with the points of MEPs almost three times more often than they provide the answer requested or agree to parliamentary demands. This is not surprising in itself: after all, the job of Eurogroup Presidents is to represent – and by implication protect – the interests of the executive body that they are chairing. This trend, however, is more problematic in the context of the legal framework of the EMU and the Eurogroup in particular. Since the European Parliament cannot impose sanctions on the Eurogroup or force euro area finance ministers to take specific decisions, the type of accountability at play remains limited. The Eurogroup is not responsive to the European Parliament; if anything, the analysis above shows a form of selective transparency and willingness to justify (but not change) decisions already taken. The final section discusses the implications of these findings.

7.5 Conclusions

To sum up, can the European Parliament hold the Eurogroup accountable in substantive terms? The analysis of Economic Dialogues from 2013 to 2019 showed that MEPs are eager to question the extent to which Eurogroup decisions are substantively open and effective, and to a lesser extent whether they are arbitrary or protect the interests of the euro area/the EU as a whole. Among the four accountability goods highlighted at the start of this volume,⁷⁵ the openness of the Eurogroup is the leading concern of MEPs in both procedural and substantive terms (decision-making processes and the content of policy decisions). The next major accountability claim is substantive effectiveness, as MEPs are interested in the concrete impact of Eurogroup decisions on the economies and public finances of Member States. Publicness and non-arbitrariness feature less frequently and are equally found in questions focusing on procedural or substantive issues. For their part, Eurogroup Presidents engage with parliamentary questions in the Economic Dialogues, yet their emphasis is on justification of conduct and a limited form of transparency. While parliamentary exchanges can get heated, MEPs cannot make the Eurogroup do anything. Ultimately, the legal consequences of the Economic Dialogues are vague. As Fasone put it, ‘it is not clear what happens if an Economic Dialogue fails’.⁷⁶

There are crucial implications to this lack of connection between the substantive interest of MEPs in the activities of the Eurogroup and their ability to influence decisions of euro area finance ministers. Unlike in the accountability relationship with the ECB, which tends to focus on procedural issues,⁷⁷ the European Parliament makes substantive accountability claims towards the Eurogroup in the Economic Dialogues. Especially in crisis situations, MEPs are likely to solicit additional information and demand public justification from the Eurogroup. Nevertheless, the Parliament cannot impose sanctions on the Eurogroup or force finance ministers to adopt a different course of action⁷⁸ than the one already announced. Even if MEPs were to follow up on Economic Dialogues with specific parliamentary resolutions listing demands for change, the Eurogroup could simply ignore them. In the end, the most successful Economic Dialogue can only put pressure on the Eurogroup President to defend the conduct of the intergovernmental body and give an economic reasoning for decisions taken. Overall, the Economic Dialogues with the Eurogroup illustrate a unilateral accountability relationship in which substantive demands from the forum remain unmet by the actor.

8 Parliamentary Accountability of the Country-Specific Recommendations Effectiveness and Substance

Tomasz P. Wozniakowski

8.1 Introduction

This chapter sheds light on the role of non-euro area national parliaments (NPs) in holding their governments to account in the EU’s economic governance, making a contribution to the literature on the role of NPs in economic coordination.¹ The parliamentary accountability embedded in the EU context has been subject of scholarly attention for many years,² but the main emphasis was often on the EU as a whole, rather than economic coordination, and included mainly the euro-area member states.³ Moreover, the analysis focusing on the engagement of the NPs in EU economic governance of the non-euro member states is limited to mainly Western countries,⁴ and Eastern members of the EU are largely excluded from the analysis. For instance, the available empirical research regarding parliamentary accountability of economic governance in Poland, the biggest country in the CEE region and the fifth-largest EU member state by population, (after Germany, France, Italy and Spain) is rather scarce.⁵ However, most recently Schweiger⁶ analysed parliamentary scrutiny of the European Semester in Poland as a case study, but he focused on the hearings devoted to the Convergence and National Reform Programmes and not on those devoted solely to the Country Specific Recommendations (CSRs) issued for Poland. Additionally, his analysis did not analyse the impact of accountability on the effectiveness of the whole process. In contrast, this chapter qualitatively analyses the parliamentary hearings concerning the EU’s economic recommendations – the CSRs, as well as their policy effects regarding the implementation rate of those recommendations. It uses an explicit definition of parliamentary accountability, as described in the analytical framework, which will be guiding the empirical analysis.

How can the government be held accountable by a Polish NP in the area of economic governance? In order to answer this research question, the relevant debates in the NP are explored, which allow for the discovery of patterns along the chain of accountability. To this end, the parliamentary discussions in the context of specific area of economic governance are examined in depth – the European Semester, which is an annual cycle of economic and fiscal coordination of EU member states, focusing on its important part – the CSRs. Are the CSRs salient enough for the NP to invest its time and political capital in discussing these guidelines? What exactly is scrutinized? The second objective is to investigate the link between accountability and ‘effectiveness’ of the EU’s economic coordination, as one of the normative goods which accountability could bring, as identified by Dawson and Maricut-Akbik in the Introduction to this Volume: ‘Here, the premise is that the need to justify and even correct conduct will likely improve, and encourage reflection upon, the design of policy-making or implementation.’⁷ The authors of the Introduction do not claim that there is a direct causality line between a forum’s accountability claims and the behaviour of actors, as they focus more on types of claims that accountability forums can make vis-a-vis executive actors. Nevertheless, I will try to analyse if such a link can be established, even if it may not be a causal link, as the implementation of CSRs depends on many other domestic factors, the analysis of which would go beyond the scope of the chapter. Hence, in this chapter, effectiveness is understood through the prism of the implementation of CSRs at the national level, seen as one of key goals of the Semester. Indeed, in the case of the economic coordination, it was argued that ‘greater parliamentary accountability should eventually contribute to the collective ownership of the European Semester’.⁸ This idea is also present among policy-makers. For instance, the European Parliament in 2018 stated that it ‘believes that more national ownership through genuine public debates at national level would lead to better implementation of the CSRs’.⁹ By conducting an in-depth case study and comparing the specific policy issues that were debated with the CSRs and their implementation rate, I aim to contribute to this debate.

8.2 Analytical Framework

The positions of Members of Parliament (MPs) towards CSRs and connected arguments expressed in parliamentary discussions will be explained by applying an analytical framework of justification and contestation as two basic forms of accountability as developed by Wozniakowski, Maatsch and Miklin¹⁰ who drew from the concept of monitoring and political scrutiny developed by Auel¹¹ and consequently distinguished:

1.Justification, or the lighter form of accountability, including questions demanding information and explanation;

2.Contestation, or the heavier form of accountability, including statements of disagreement, requests for change, and sanctions.

Therefore, it investigates substantive accountability mechanisms, putting special emphasis on whether the interactions take lighter or heavier form of accountability, depending on the type of question asked.¹² Additionally, accountability will be defined ‘through the distinction between procedural and substantive means of rendering the normative goods of accountability’,¹³ with a special emphasis on effectiveness. Therefore, my expectation is that if the CSR is scrutinized in parliament, then it is more likely that it will be implemented. While this chapter will focus on effectiveness as one of the four accountability goods as identified by Dawson and Maricut-Akbik in the Introduction to this edited volume, I will also try to explore the finding of the editors who concluded that procedural, rather than substantive, accountability dominates in EMU accountability.

8.3 Parliamentary Scrutiny of CSRs in Poland

Poland is a non-euro-zone country and its parliament, whose two chambers are the Sejm and the Senat, has medium-range budgetary powers, but the Sejm holds regular hearings within the Semester framework. What are the arguments used in those discussions? To this end, the deliberations of meetings of the Committees on the EU Affairs, Public Finance, and Economy and Development, which jointly discuss the European Semester are examined. In particular, I will focus on how the issues pointed in the CSRs played out during the hearings.

The hearings explored in this chapter cover the years between 2015 and 2019. This time frame covers both the Euro-enthusiastic centre-right PO-PSL governing coalition, which ended in 2015, and Euro-sceptic right-wing PiS government, which was created in late 2015 after winning the parliamentary elections. The regular hearings in parliament with the ministers started in 2015. Before that, the CSRs were discussed, but the hearings were organized with either the European Commissioners alone, such as Valdis Dombrovskis, or with both ministers and the Commissioners, such as Janusz Lewandowski – for this reason, it was difficult to distinguish who exactly is held to account by the MPs during the pre-2015 hearings. The hearings were held in the summer (June or July) and were attended by the deputy ministers, usually from two ministries responsible for finance and economic development. Table A.8.1 in the Appendix presents the CSRs issued for Poland between 2015 and 2019, which were subject of those hearings. Table A.8.2 in the Appendix summarizes the thirty-two questions related to CSRs which were asked during the five analysed hearings, which are divided both thematically and based on two types of accountability mechanisms: justification/contestation, followed by their detailed analysis in the following section, subdivided between three main CSRs.

8.3.1 Questions Related to the ‘Fiscal’ CSR 1

8.3.1.1 Fiscal Council

The recommendation to establish an independent fiscal council appeared in both 2015 and 2016, as Poland remains the only EU country which did not formally introduce such a body. Both PO-PSL and PiS governments failed to implement this recommendation, and the reasoning was similar – Poland already has a set of institutions which do monitor the budget, especially the Supreme Audit Office (or NIK). Two questions about fiscal councils were asked during the 2016 hearing: by Joanna Mucha (Civic Platform – PO), who wanted to make sure that the government clearly says ‘no’ to this recommendation and by Marcin Świe˛cicki (PO), who was contesting the minister’s statement that Poland already has institutions which are functionally similar to the fiscal council:

Well, I do not quite agree with the fact that the bodies that already exist, like for example, the Supreme Audit Office or the Social Dialogue Council are sufficient substitutes of the fiscal council…. I believe that it was a bad position [i.e. not to create a council in the past] and that such a council may be of helpful for the Ministry of Finance. The ministry is under pressure from a variety of other ministries, various political goals et cetera and the fiscal council, which would look at the long-term consequences, long-term balance, can only strengthen the position of the ministry and be an additional, I would say, argument or an additional source of information on this matter, guarding the long-term fiscal balance. So, I would suggest that you rethink the recommendation concerning the fiscal council, as it would make sense and would be of added value, because, as I say, the current institutions do not provide this long-term role expert assessment.¹⁴

In her answer Hanna Majszczyk, a deputy minister (undersecretary of state) in the Ministry of Finance (MF), confirmed the reluctance of the government to introduce such an institution and replied that the differences with the European Commission are mainly semantic, as the Commission recognizes the fact that the various functions which fiscal council hold should have been conducted by a number of independent institutions. The pressure is to create one intuition, but the government is in a dialogue with the Commission about that and remains optimistic about the prospects of diminishing this pressure.

This recommendation disappeared in 2017 from the list of CSRs, even if it was never implemented. Nevertheless, Świe˛cicki raised this issue again two years later. After providing similar arguments, that is, that the fiscal council could be a source of valuable long-term assessment of various policies, for instance, regarding the retirement age, he asked if the government plans to come back to this topic. This time it was Piotr Nowak, deputy minister of MF, who responded by emphasizing that the Commission stopped recommending the creation of a fiscal council, after it understood that those functions are performed by different institutions, such as Monetary Policy Council and Supreme Audit Office. Hence, in this case, there is no link between the level of scrutiny and implementation.

8.3.1.2 Deficit

Deficit (and related topics, such as benchmark rule) was by far the topic that was most often raised during the hearings as there were nine questions about it in total. For instance, in 2016 Joanna Mucha (PO) from the opposition asked if the government intends to implement CSR1, which recommends reduction of structural deficit by 0.5 per cent, because in the update of the convergence program, there is no such information. MF representative, Hanna Majszczyk, replied extensively and emphasized the fact that Poland aims to reduce this deficit in 2018. She also highlighted the fact that nominal deficit is the most important factor and, in this regard, Poland is implementing the recommendations. A year later, in 2017, Janusz Cichoń (PO), clearly contested the government fiscal policy by highlighting the fact that in both 2016 and 2017, the government failed to implement recommendations regarding MTO and structural deficit and asked how the government plans to react to those recommendations in the next budgetary year of 2018. In the same round of questions, his demand was repeated by Świe˛cicki (PO). The government representative did not react to those questions, perhaps due to the fact that in 2017 it was represented solely by a deputy minister from the Ministry of Development as this time a minister from MF did not take part in the hearing.

In the following year of 2018, there were four questions concerning the deficit, all of them asked by two opposition MPs: Świe˛cicki (PO) and Henning-Kloska (N or Modern party). Świe˛cicki asked two explanation-demanding questions in this regard: he wondered if the government plans to correct the planned deficit level and if the expenditure benchmark of 4.2 per cent will be met. A similar question, but much more elaborated (with examples of other countries and statistics illustrating the points being made), was asked by Hennig-Kloska, who worried that the slower economic growth than expected may even lead to an increase of the planned deficit. The response was provided by both a Deputy Minister in MF Piotr Nowak, and then via a much more technical response by a Deputy Director of the Department of Macroeconomic Policy Joanna Be˛za-Bojanowska. While the latter focused on the detailed description of MTO and Polish efforts aiming at achieving the expenditure benchmark of 4.2 per cent and reducing the structural deficit by 0.5 per cent of GDP, the latter emphasized the differences between nominal deficit and the deficit and in relation to GDP and asked to focus the discussions on the deficit-to-GDP ratio, as it has fallen last year. Henning-Kloska was not satisfied with this answer and challenged the minister by stating that the fall of the deficit-to-GDP ratio was due to the growth of GDP and strengthening of the Polish zloty at the end of the year. She also reminded him that the debt of public healthcare and pension institutions such as ZUS is not included in the deficit calculations. In his second reply, Nowak agreed that the exchange rates had an impact on public debt, but only in nominal terms, and focused on its relation to the GDP.

In 2019 two questions concerned the deficit. Firstly, Janusz Cichoń (PO), after criticizing the current fiscal policy, asked if the government will implement CSR1 regarding the expenditure benchmark. In his response, Deputy Minister Marcin Ociepa stressed that Poland keeps receiving the same types of CSRs since 2011 and if the opposition criticises the government now it should do the same for the previous governments. The difference is that now Poland does not have a recommendation regarding VAT compliance. Secondly, Izabela Leszczyna (PO) asked about a discrepancy between the Convergence Programme and Multiannual State Financial Plan and the bills that the government sent to the parliament, especially on the reduction of PIT rate from 18 to 17 per cent and to 0 per cent for young people. It was the Director of Department in MF Sławomir Dudek who admitted that there are differences between those documents, but this was because the budgetary cost of the tax proposals changed in the actual budget as for the first time these proposals could be assessed together.

8.3.1.3 Reduced VAT Rates

In a 2016 hearing, Paweł Lisiecki (PiS) asked how the European Commission justified its recommendation to eliminate reduced VAT rates as in his opinion the higher the taxes the higher the tax avoidance. Deputy Minister in MF, Hanna Majszczyk, provided a detailed answer where she explained the positions of both the Commission and the government:

The arguments regarded indeed the revenue side. It [the European Commission] noted that Poland continues to apply reduced VAT rates to many goods and services. This practice, according to the Commission, contributes to the loss of income and reduces the effectiveness of the VAT system (…). As I said before, in our exchange of views with the European Commission we insisted that we do not see this loss of income on the side of reduced rates of VAT, but on the fraud side. We focus our activities here in order to rebuild the tax base and eliminate abuses. In addition, we emphasize (…) the fact that many countries use reduced rates and, as a rule, the rates applied are in line with the EU directives. Thus, those tax solutions do not violate European law¹⁵

In the following year, in 2017, Krystyna Skowrońska (PO) asked what the government wrote in its reply to the Commission about this recommendation on reduced VAT rates. However, Adam Hamryszczak, MF’s Deputy Minister only stressed that the Commission for the first time appreciated Polish efforts in fighting VAT compliance and did not refer to the reduced rates specifically. In both 2016 and 2017, the implementation of this CSR was assessed as ‘no progress’ (Table A.8.2).

8.3.2 Questions Related to the ‘Social’ CSR 2

8.3.2.1 Increase of the Effective Retirement Age

In 2018 two MPs asked about the recommendation to increase the effective retirement age. Świe˛cicki (PO) was wondering about the government’s assessment of the various measures which could go in the opposite direction to the one which is recommended. An MP from PiS, Kazimierz Smoliński, worried that Poland will be outvoted on this issue as a consequence of the reversed qualified majority voting and asked if Poland will need to implement this CSR in such a scenario. Marcin Ociepa, a Deputy Minister, started his answer with a general remark that CSRs are only recommendations which are supposed to help economic growth and some of them relate more to a sphere of politics rather than policy, and he would rather focus on the latter sphere:

The essence of the process known as the European Semester is to help by supporting member states in achieving economic growth, and consequently for the EU as a whole to achieve economic growth, [there are] not the rigid orders from some external authority which we must obey. The philosophy of this instrument is completely different. Because in the end you have to answer the question of who creates and is responsible [accountable] for the economic policy of the state. Well it is a government of that country. So we take these recommendations as a good, kind advice, we often discuss them, argue, and agree with most of them, because they are rational directions, but elsewhere – well, here comes another distinction which should be mentioned. That is, we are dealing with elements that we would call policy versus politics. So the distinction between public politicians and a certain politics sensu stricto. What does it mean? Social policies or public policies can go one way or the other, and we can talk about some effectiveness, but there are such issues – and they appear here and there in the European Semester – which are, I would say, a political dispute that is also going on in Poland. Because the issue of 500+, the issue of approach to KRUS, the issue of lowering or increasing the retirement age, these are also political issues in Poland. So, I think that it should also be borne in mind. It is not my job to address the political element of this process or dispute, for example the question of the retirement age.¹⁶

But then he focused on the word ‘effective’ in the CSR concerning retirement age and that Poland agrees with this recommendation and tries to encourage people to work longer and thus to increase an effective retirement age and not the statutory retirement age, which was a CSR for some other countries, as he noted.

In the next year, 2019, this issue came up again, as Izabela Leszczyna (PO) asked what the government plans to do in order to increase the age when people over sixty or sixty-five retire and so they do not have to support themselves with pensions on which they could ‘starve’. Minister Ociepa failed to answer this question, but in the next round of questions Świe˛cicki pushed him on this topic. This time, Ociepa replied and provided some data supporting his claim:

Let me start with an answer for Mr Świe˛cicki regarding professional activity of elderly people. It is not true that this activity has started to decline. I quote the data: in 2017, because I understand that from that moment on, the MP said that from 2017 so we can possibly talk about a slowdown in growth, while 2017 that’s 50.1%, 2018 that’s 50.3%. Quarterly, Q1 2017 – 49.1%, first quarter of this year 2019 – 50%. So there’s growth everywhere, even in 2019. We will be happy to share this data, with the Economic Analysis Department, this data clearly shows that we have an increase in activity all the time and we have to do everything to keep this growth at a high level.¹⁷

In both 2018 and 2019, the implementation of this CSR was assessed as ‘no progress’ (Table A.8.2).

8.3.2.2 Reform of the Preferential Pension Arrangements

A CSR which advised to reform preferential pension schemes, especially a scheme for farmers (‘KRUS’ as it is called from its Polish abbreviation from Kasa Rolniczego Ubezpieczenia Społecznego or Agricultural Social Insurance Fund) was quite contested in the Sejm. For instance, in a 2015 hearing, MP Stanislaw Kalemba from a coalition partner PSL asked if in other countries similar pension schemes for farmers exists and if similar recommendations to reduce them were issued for those countries. Artur Radziwiłł, a Deputy Minister in the MF, replied that even though farmers were not mentioned specifically, for France and Germany the Commission recommended to take steps aiming to encourage people to retire later in life (Germany) and to balance the pension system, especially those schemes which are outside of the universal system (France).

In 2018, Świe˛cicki asked if the government will have the courage to change the farmers’ pension scheme (KRUS), which turn young farmers into ‘economic invalids’:

Another thing that keeps coming back here is the issue of the unfortunate KRUS. Well, ladies and gentlemen, we are in such a paradoxical situation. At the moment, many young people farmers have higher education, know the languages, they are well prepared. We let them into KRUS, into a system in which they become economic invalids. (…) However, new farmers, those who enter agriculture, these educated, fully capable people don’t need to be admitted for a lifetime, for several dozen years, like some economic invalids, who are unable to either retire or pay taxes, like all the rest of the adult population must do. It is even more proper as the agriculture remains one quite solidly subsidized sector (…).¹⁸

A Deputy Minister of Entrepreneurship and Technology, Marcin Ociepa, gave an extensive answer and focused on the fact that the number of farmers covered by KRUS dropped by 4.8 per cent in 2017 compared to 2016. He stressed that this is an example of philosophy of the government as it tries to create a system which would encourage people to do a certain thing, rather than to force them to do it by hard law means, which would be controversial. In both 2015 and 2018, the implementation of this CSR was assessed as ‘no progress’ (Table A.8.2).

8.3.2.3 Participation in the Labour Market

A CSR advising Poland to increase labour market participation appeared consistently from 2016 to 2019. For instance, in 2017 it was quite detailed: ‘Take steps to increase labour market participation, in particular for women, low-qualified and older people, including by fostering adequate skills and removing obstacles to more permanent types of employment’ (see Table A.8.2). Two questions related to participation in the labour market CSR were asked – in 2017 and 2019. In 2017 Henning-Kloska worried that the current social policy leads to the exclusion of women from the labour market and asked about the plans to change it:

Indicator the activity of women aged 35–44 during the year decreased by more than 1%. It is a lot, considering that we are directly in the period in which our unemployment is falling. So an increasing part of the working-age society should be professionally active, and here in the case of women aged 35–44, during the crucial time for the development of professional life for these women, this indicator goes completely the other way. And my question is: what ideas will you have for women excluded from the labour market to return to this labour market at the age of 45, when they will very often be without experience or will remain for ten years or more outside the labour market.¹⁹

Deputy Minister Hamryszczak replied that the group of women who quit their job because of the program Family+ (500PLN child benefit introduced by PiS) is not substantial. He cited the data from 2016 to support his claim. In 2019 Świe˛cicki asked about planned policies regarding the participation in the labour market of older adults and disabled people. Deputy Minister Ociepa replied by citing data which showed that there is a positive trend when it comes to both older adults and disabled people:

With regard to the professional activity of, for example, people with disabilities, in 2015 – 25%, 2018 – 28%. As for activity of older people, i.e. aged 55–64: in 2015 – 46.9%, in 2018 – already: 50.3%. In all the indicators we have an increase, we are improving the state of affairs. This is what the European Commission appreciates, but we have no regrets as professionals that what is expected of us is to do even more, even better, because we ourselves expect to do even better. But please don’t say that the Polish government is failing when it comes to economic policy, because in all of these areas we have growth, we have progress and we are successful.²⁰

In both 2017 and 2019, the implementation of this CSR was assessed as ‘limited progress’ (Table A.8.2).

8.3.3 Questions Related to the ‘Business’ CSR 3/4

8.3.3.1 Barriers in Railway Investments

One opposition MP Maria Zuba (PiS) in 2015 asked about CSR4 on the barriers in railway investments and what the government plans to do in order to improve the quality of railways and the use of EU funds. Deputy Minister of Economy, Grażyna Henclewska, gave a detailed answer, citing the legislative bills introduced in order to improve the situation and the amount of funding which will be used for railways from the EU programs. Limited progress was made in this policy area (Table A.8.2).

8.3.3.2 Public Healthcare

In 2019 three questions on public healthcare were asked. Henning-Kloska focused on the state of public healthcare. She asked if the government will be able to increase funding on healthcare in the next two or three years. After her question was ignored by Minister Ociepa in the first round, she asked it again and insisted on getting an answer. In the same round, Izabela Leszczyna asked when the target of 6 per cent of GDP will be reached – in 2024 or 2050 as indicated in the document submitted by the government. Ociepa this time replied but provided rather generic answer. He cited PM Morawiecki who said that reforming the public healthcare system is the number one priority and that improvements are being made, even if we are still below the EU average. Limited progress was made in this policy area (Table A.8.2).

8.4 Discussion and Conclusions

On the accountability dimension, it is undoubtedly positive that the hearings on CSRs take place regularly and there is a lively debate where both majority and opposition MPs ask questions and (usually) the representatives from the two ministries responsible for finance and development attend and must provide answers. Most questions fall within the justification category (22 out of 37), in which the demands for explanation or information were made. Certainly, the accountability exercised is substantial and not purely procedural. However, there are certain areas which could be improved. Firstly, the type of interaction – MPs could ask a direct question, rather than simply criticizing the government. This would allow them to push the ministers in case their questions would not be answered. By not asking a clear question, they allow a minister to simply ignore their comments. It seems that more effort should be made towards making explicit demands and possible follow-ups, if the answer is not given. This is what MP Henning-Kloska did in 2019, when she complained that the minister ignored her question on the healthcare expenditures and demanded an answer. Secondly, the relevant ministers themselves should appear in front of the committees, rather than their deputies and high-level civil servants (i.e. at the level of directors of departments, which sometimes replied to more detailed questions). This would allow having a discussion on politics also and not only policies, as some CSR required a change in the former, as in the case of the pension systems. Thirdly, more MPs from the three committees could be active, as only a handful of MPs were actively engaged in the hearings, like Świe˛cicki, Henning-Kloska or Leszczyna. Precisely, only nine MPs asked at least one question during these CSR-focused hearings in 2015–2019, which equals to one-fifth of the European Affairs Committee (42–43 members), not to mention the members of the other two sectoral committees.

On the efficiency dimension, one can hardly see any link at all as the scrutiny of the CSRs has a limited impact on their implementation. One of the objectives of this chapter was to analyse if the level of scrutiny corresponded in any way with the level of implementation. In this case, it was quite limited in delivering a normative good of efficiency understood as the level of implementation of CSRs. Most CSRs were assessed in the Country Reports as ‘no progress’, as only in the CSRs on the participation in the labour market, public health and barriers in railway investments one could observe a ‘limited progress’ assessment. Nevertheless, the Commission was determined in issuing very similar CSRs year after year (only occasionally it gave up, like with the case of a fiscal council, despite a complete lack of progress). This finding suggests that accountability may not necessarily bring about effectiveness understood as the implementation of CSRs.