MEPs: The Commission Will Control National Budgets, But Who Will Control the Commission?

Ralitsa Kovacheva, January 13, 2012

The Economic Committee in the European Parliament held its first discussion on the proposals of the European Commission from 23 November 2011, which complement and build upon the package for EU economic governance. As euinside wrote, one of the proposals is aimed at strengthening economic and fiscal surveillance in countries at risk of serious financial instability, and the other - to strengthen surveillance of budgetary policies in the euro area.

The discussion coincides with the negotiations on an intergovernmental agreement on a strengthened economic union (the text, meanwhile, underwent a third revision), where three representatives of the EP are involved: Elmar Brok - EPP, Germany, Roberto Gualtieri - Socialists and Democrats, Italy and Guy Verhofstadt – ALDE, Belgium. Not surprisingly, some MEPs raised the question of how the new proposals of the Commission would be enshrined into the future agreement and whether ultimately the rules would not become too complex and confusing. Others, by contrast, believe the new proposals give an opportunity to synchronise the intergovernmental agreement with the Community law.

"Much of what is proposed in the international treaty can be done through the 'six pack' and these two texts. We should integrate as much of the international treaty elements as possible into these two new texts," Jean-Paul Gauzès (EPP, France), rapporteur on the proposal on surveillance of "bailout countries" commented. This view was supported by a majority of MEPs who took the floor.

Their main concern, however, is related to the democratic legitimacy of some of the proposed changes. They give broad surveillance powers to the European Commission, without, however, solving the problem of its accountability.

"What we are now doing is giving to a supranational institution, namely the Commission, supranational powers to get over the head of elected governments and parliaments, without itself being accountable to anyone else than the heads of states and governments," Green MEP Philippe Lamberts said. The only place that can provide the necessary democratic legitimacy of the process is the European Parliament, he believes: "We don’t like a centralised body to dictate to member states, without itself having to face the consequences of its choice including losing their postings." His colleague Sven Giegold (Germany) supported him by saying that he was not convinced of the need to give greater surveillance powers to an institution that has already failed in this task.

Heated disputes are likely to take place between the MEPs also on the issue of freezing money from EU structural funds to punish countries violating budgetary discipline. Elisa Ferreira (Socialists and Democrats, Portugal), who is rapporteur on budgetary monitoring in the euro area, strongly objected to the proposal. According to her, cutting EU structural funds to countries experiencing economic difficulties and struggling to improve their competitiveness is irrational and politically unfair. Carl Haglund (ALDE, Finland), however, argued that if rules could not be observed, then money should not be received. He stressed that it was very important to distinguish between countries with economic problems and those that do not follow the rules.

As for ensuring proper use of EU funds, Spanish Liberal MEP Ramon Tremosa i Balcells said it was necessary to ensure that infrastructure costs were carefully analysed. He gave the example of Spain, where with a population of 45 million people there were 52 commercial airports, and only six of them were not losing money. At the same time Germany has 82 million people and only 29 commercial airports. High-speed trains in Spain were also losing money, the MEP added. So he will propose an amendment to the Commission's proposals cost benefit analyses to be carried out by the Commission to evaluate the usefulness of infrastructural investments in future budgets of all member states, including some large regions of systemic importance for Europe.

The reports of Jean-Paul Gauzès for monitoring of countries with bailout programmes and of Elisa Ferreira for increased budgetary surveillance in the euro area will be officially presented to the Economic Committee on 29 February.

The debt crisis in the euro area