Institutions and mechanisms for economic coordination
EMU works through several institutions, which have changed over time. The ECB acts as central supervisor of financial institutions in the Euro area and sets monetary policy. It has the task to guarantee price stability’. However, ECB’s powers are tightly constrained by the EU treaties: in order to prevent any supranational encroachment on national budgets and economic policies: Art. 123TFEU prohibits the monetary financing of public debts; Art. 125 bans fiscal burden-sharing among Member States or with EU institutions (“no bail out”); Art. 127 essentially restricts the ECB’s mandate to the maintenance of price stability.
(Genschel and Jachtenfuchs 2018, 182—183)
The Economic and Financial Affairs Council (ECOFIN; see Abels in this volume) is responsible for economic policy, taxation and the regulation of financial services; it coordinates national economic policies, furthers the convergence of member states’economic performance and monitors their budgetary policies. The Eurogroup is an informal body consisting of the finance ministers of the Euro area member states meeting monthly (at the eve of ECOFIN meetings) to discuss matters related to the Euro. Though the Eurogroup is not mentioned in the Treaty and does not have any formal decision-making competences, it is a widely accepted powerful body scrutinizing the enforcement of restrictive fiscal policy (Cavaghan and O’Dwyer 2018).The position of the European Commission was strengthened through the European Semester (see below), which establishes country-specific recommendations (CSRs) in order to monitor the development of the national budgetary situation and compliance with budgetary discipline. In this process the government budget deficit criteria are taken into account. EMU also empowers the European Parliament, since it has the opportunity to employ control mechanisms around Euro summits, during Economic Dialogues and in the European Parliamentary Week and the interparliamentary conference on Stability, Economic Coordination and Governance (Fromage 2018).
According to the 1999 Stability and Growth Pact (SGP) member states must comply with the budget deficit threshold fixed in the convergence criteria. Under the 2005 reformed SGP, member states must set a budgetary target for the next three years (Medium-Term Objective, MTO) and yearly targets for how to achieve the MTO. Targets are laid out in so-called stability programmes for Euro area member states, and in convergence programmes for non-Euro member states. Within the parameters of the SGP, member states keep their sovereignty on their national policies (Crum 2013) and the state monopoly regarding taxation, welfare entitlements and public service obligations is secured (Genschel and Jachtenfuchs 2018).
As part of the EU’s annual economic governance cycle, the Commission assesses the national programmes both before and after implementation. This allows to identify risks of non-compliance before they occur and actual instances of non-compliance that could ultimately warrant sanctions. This guidance and surveillance cycle proceeds as follows: (1) The European Semester, introduced in 2010, aims at enabling coordinate of national economic policies throughout the year in close collaboration with the Commission and the European Council; the focus is on addressing economic challenges. This ‘new working method’ was implemented ‘to ensure that discussion on key issues takes place at EU level, before and not after national decisions are taken’ (European Parliament 2012, PE 462.510,6; emphasis in original). During this Semester, lasting from January to July, national fiscal and structural reform policies are analysed by the Commission, which then provides policy recommendations and monitors implementation.‘The second phase is the National Semester, when the Member States implement the policies they have agreed’ (Kerschen and Sweeney 2016, 842).
Within the European Semester member states have to report their economic analyses and priorities for the subsequent year back to the Commission on a regular basis. These reports neither systematically include a gender impact assessment nor require a gender budget analysis. Some authors (e.g. Addabbo et al. 2018) have highlighted that gender equality' is hardly mentioned in any of the coordination processes or documents; within the whole economic governance mechanism gender mainstreaming does not play any role. Only with regard to employment, member states are asked to ensure an increase of female employment and to tackle gender inequalities regarding the quantity and quality of employment (part-time, marginal time employment etc.) (Klatzer and Schlager 2016,41; see also Milner in this volume).
Through the excessive deficit procedure (EDP) the Commission wants to ensure that member states adopt appropriate policy responses to correct excessive deficits (and/or debts). EDP provisions are defined in the 2012 consolidated version of theTreaty on the Functioning of the European Union (TFEU).They comprise schedules and deadlines for the Council, following reports from the Commission and the Economic and Financial Committee, which is an advisory body composed of senior officials from national administrations and central banks, the ECB and the Commission (Article 134 TFEU). Furthermore, opinions on how to judge whether a member state has an excessive deficit are included. The EU calls the EDP the SGP’s ‘corrective arm’. Since EDP’s introduction no member state has been sanctioned, even if theTreaty explicitly links violations to sanctions. Thus, in practice regulations prove to be rather‘soft law’ (Kerschen and Sweeney 2016, 836).