The New Architecture of the European Economic Governance: A Leviathan or a Flat-Footed Colossus?
| Author | Nicolas de Sadeleer |
| DOI | 10.1177/1023263X1201900304 |
| Published date | 01 September 2012 |
| Date | 01 September 2012 |
| Subject Matter | Article |
354 19 MJ 2 (2012)
ARTICLES
THE NEW ARCHITECTURE OF THE
EUROPEAN ECONOMIC GOVERNANCE:
A LEVIATHAN OR A FLAT-FOOTED COLOSSUS?
N S*
ABSTRACT
Whilst the scal crisis lays bare the weaknesses within economic integration, it has
not however sounded the death knell for a political Union, which ha s to some extent
been reinforced. Taking account of the unprecedented scale of this c risis, the European
Parliament and the Council of the European Union adopted, at the end of 2011, the ‘six-
pack’ which represents hitherto the most drastic reinforcement of economic governance
since the launch of the Economic and Monetary Union. Moreover, on 1March 2012, 25
Member States signed the Fiscal Compact , an intergovernmental agreement which has
been embroiled with controversy. It goes without saying that these di erent instruments
signi cantly reinforce the control on n ational scal policies. e question arises as to how
this succession of reform i s likely to impact on the principle of institutional balance.
Keywords: Economic and Monetary Union; economic governance; eu ro area; Fiscal
Compact
§1. IN T RODUC TION
Due to the accumulation of str uctural de cits by certain Member States, bail- outs
of debt-ridden banks and scal sti mulus plans intended to re-launch growt h, budget
de cits started rapid ly expanding a er 2009. Accordingly, the nancial crisis of 2008
was followed by a substantial scal crisis which compromised t he nancial s tability of
the eurozone as a whole.
* Jean Monnet Chai r, Professor at FUSL, Brussels . e author expre sses his gratitude to M r J.V. Louis T.
Roberts and Mr s L.A. Nyssens for thei r invaluable support.
e Ne w Architecture of the E uropean Economic Governa nce
19 MJ 3 (2012) 355
Among the di erent reas ons for the crisis which is underm ining the Europea n
construction, many authors have been hig hlighting t he asymmetr y of the Economic
and Monetary Union (EMU). On the one hand, t here is a single currency fal ling under
an exclusive competence with its own independent centra l bank (the ECB) which has
permitted the moneta ry Europe to speak with one single voice, wh ilst on the other hand
is the prevaili ng disorder where national economic policies are not integrated but only set
within limits.1 As far as the latt er are concerned, it is known that t he Member States retain
their sovereignty subject to compliance w ith a certai n number of headline principles,
such as sound public nances and a n ‘open market economy with free competition’.2
e ECB has therefore been required to determine monetar y policy without being able
to count on the support of a genuine Europea n economic government. is situation has
persisted since the Germa n authorities for many years considered that the establ ishment
of a European economic government would end up leaving a sword of Damocle s hanging
over the independence of the ECB.3
Whilst this new crisis laid bare the weaknesses within economic integration, it has
not however sounded the death knell for a politic al Union, which has to some extent
been reinforced. Indeed, over the cou rse of the last two years a range of new mecha nisms
have arisen out of the depths of t he European Union: the Euro Plus Pact, t he European
Semester, the ‘six-pack’ rules, t he ‘two-pack’ proposals , and the Treaty on Stability,
Coordination and Governa nce. All in al l, these mechanisms a re intended to reinforce
scal discipline. ere is a quest ion as to whether this mask s a deep-seated crisis of
identity withi n the EU institutions which are simply at a loss about what to do, or should
one see here a real desire to reinforce the EM U, which recently fell victim to a congenital
defect?
e rst part of this article sum marizes the suc cession of mechanisms which have
made economic governance possible and discu sses their contribution to t he reinforcement
of sca l discipline. e second part shows how this urry of reforms is likely to impact
on the principle of institutional ba lance.4
1 e powers of the EU a re shared in the area of coord ination of economicand employment policies as
well as of socia l policies (Articles4(1) and 5 TFEU). Unl ike shared competences li sted in Article4(2),
these competenc es are only the subject of co ordination measures , and not of legislative ha rmonization
(Article 5 TFEU). On the other hand, the EU enjoys exclu sive competence in the a rea of monetary
policy for Member State s whose currency is t he euro (Article4(1) c) TFEU).
2 Article119(1) TFEU.
3 N. Jabko, ‘Which Econom ic Governance for the EU?’, 2 SIEPS (2011), p.12.
4 J.P. Jacqué, ‘ e Principle of Inst itutional Balanc e’, 41 CMLRev (2004), p.383.
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