The New Challenges for National Parliaments

The Eurozone crisis has led to several reforms of the EMU that, together, have led to a significant deepening of the Union's authority in fiscal and economic policy-making. These reforms have partly been realized in secondary legislation within the existing treaty framework and partly through new intergovernmental treaties that are closely linked to, albeit not part of, the EU's founding treaties. The causes and the details of the deepening EMU have been discussed in detail elsewhere (Hodson 2014; Tosun etal. 2014; Menz and Smith 2013). This chapter focuses on one reform, the ESM, that puts parliaments under particularly strong adaptation pressure, and another reform, the TSCG, that offers them the opportunity to re-consider their preferences on a direct European role.

The origins of the ESM lie in the decision of the Eurozone members to provide financial assistance to avert an imminent default of Greece in 2010. This decision deviated from the original architecture of the Eurozone that had foreseen cross-national convergence towards prudent fiscal policies as the basis for evening out the economic diversity of the member countries. With the decision to grant financial support to Greece, the original 'no bail-out' rule that prohibits financial transfers between member states came under pressure, and was subsequently weakened further with the introduction of institutional mechanisms to organize financial support between Eurozone states. Temporary at first, these mechanisms were replaced by the permanent ESM as of 2012. The ESM's total lending capacity amounts to 700 billion euros, of which Germany, the largest donor, holds 190 billion. The contributors make a part of their contributions immediately (for example, 23.26 billion euros in the German case) and guarantee to make the remaining sum available from their national budgets should the need arise (so-called 'callable shares'). The ESM supports member states in financial difficulties with loans and financial guarantees. In turn, it makes the principled agreement on financial support as well as the payment of each tranche of assistance conditional upon the fulfilment of the debtor countries of reforms specified in a so-called 'memorandum of understanding'. Decisions within ESM arenas are negotiated and made by national governments deciding, with few exceptions, unanimously. The ESM treaty does not envisage an explicit role for national parliaments. The question, thus, arises whether domestic policy-makers nonetheless deem it necessary to create participation and information rights in order to secure parliamentary involvement in international decisions with potentially far-reaching budgetary implications.

The TSCG focuses on the EU-level coordination of national fiscal and economic policies. It builds upon the so-called 'European Semester' (ES) that the EU introduced in 2010 on the basis of a European Council decision and six pieces of secondary legislation. The ES is a structured process in which the European Commission identifies macro-economic imbalances in the member states and failures to comply with the Union's fiscal and budgetary rules. On this basis, the Commission makes country-specific recommendations. Failure to follow these recommendations leads to sanctions unless a qualified majority of national governments rejects the recommendations or sanctions—the so- called principle of 'reverse qualified majority voting' (RQMV). The purpose of the 2013 TSCG is to reinforce compliance with the EU's fiscal and budgetary rules and to deepen the coordination process of the ES. Thus, the TSCG requires its signatories to enshrine the EU's rules on fiscal discipline in national legislation, preferably of a constitutional nature, and to install an automatic correction mechanism in the case of excessive debt. It also extends the use of RQMV to most European-level decisions made to remedy excessive budgetary deficits in the member states and, thus, further facilitates the sanctioning of non-compliance. Finally, the TSCG requires member states to inform each other of plans to issue new debt and major economic policy reforms. Unlike the ESM treaty, the TSCG explicitly encourages the involvement of national parliaments. Article 13 states:

The European Parliament and the national Parliaments of the Contracting Parties will together determine the organization and promotion of a conference of representatives of the relevant committees of the European Parliament and representatives of the relevant committees of national Parliaments in order to discuss budgetary policies and other issues covered by this Treaty.

The TSCG, thus, encourages the creation of what has since become known as the Article-13 conference, while leaving the choice of its design to national parliaments and the EP. Recently, it has become clear that parliamentarians across the member states have different views on the mandate of the Article- 13 conference (Kreilinger 2013; Cooper 2014).

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