Banking union, budgetary union, and increased economic policy integration: such are the three major directions of progress proposed by European Council President Van Rompuy, in consultation with Messrs Barroso (Commission), Draghi (ECB) and Juncker (Eurogroup), on the eve of the meeting – heralded as ‘decisive’ – of the European Council on 28 and 29 June 2012. The report, entitled Towards a Genuine Economic and Monetary Union, represents an effort to contribute to this increased political and economic integration that, according to an increasingly widely shared conviction, has become the key to solution of the euro crisis. The intention is to set in motion a process scheduled to deliver results in December.
The plan for a banking union, or ‘single banking supervision system’, is intended, in particular, to provide European-level supervision and resolution of banking crises. The budgetary union, or ‘integrated budgetary framework’, includes a – further – strengthening of budgetary control over Member States at the European level. This framework is intended, in particular, to empower the EU to require a Member State to alter its budgetary policy in the event of violation of the European rules (thus amounting to support for the principle formulated by the Fondation Notre Europe according to which ‘sovereignty ends where solvency ends’). This framework could also include ‘different forms of fiscal solidarity’. As for the increased economic policy integration, the reference made, in particular, is to ‘labour mobility or tax coordination’.
The fourth chapter of the Van Rompuy Report is both the shortest and also the most sensitive: it tackles the question of democracy and the obligation of accountability in the framework of this increased fiscal and economic integration. This will require, according to the report, some ‘strong mechanisms for legitimate and accountable joint decision-making’. Mr Van Rompuy sees Protocol 1 TFEU on the role of the national parliaments in the EU as an ‘appropriate framework’ for the provision of such democratic legitimacy.
According to Mr Philippe Pochet, General Director of the European Trade Union Institute, the report contains proposals for forms of increased integration that are indeed necessary. However, ‘it fails to tackle the heart of the problem which is the need, on the one hand, for regulation of the financial industry, discipline of financial markets in terms of interest rates (something that is today advocated even by the Italian Council President, Mr Mario Monti), a determination to curb financial speculation, in particular via the tax on financial transactions – all of which aberrations are at the roots of the crisis – and, on the other hand, for faster and more concrete implementation of instruments to develop burden-sharing and budgetary solidarity’. As for democratic legitimacy, Mr Pochet ‘doubts’ whether application of TFEU Protocol n° 1 can suffice to restore citizens’ trust in the current mode of euro governance. Between now and December – and completion of the process set in motion by this report – there remains therefore considerable room for improvement.
David Natali and Bart Vanhercke (Co-Directors OSE)