Ad hoc solutions in the wake of the euro crisis. The meaning for accountability and reform in the EU. A review by Albert Weale.
With the Eurozone crisis not yet over, the Hertie School Governance Report 2015 analyses the key issues facing the European Institutions in terms of economic governance. As ad hoc solutions are found to deal with urgent matters, what does this mean for political accountability and reform in the EU, and what lessons have been learnt?
The European financial and economic crisis since 2008 has overturned the normal workings of the central institutions of the European Union. The policies and practices established in the Maastricht Treaty and the Stability and Growth Pact (SGP) have been transformed in a seemingly endless series of improvised measures. National budgetary and economic policy planning are coordinated through the European Semester. Stronger preventive and corrective procedures are in place through a reinforced SGP. Member States now have a treaty requirement to have automatic correction mechanisms for budgetary deficits. The European Stability Mechanism operates as the de facto bailout mechanism for national governments, a function at one time prohibited by the Maastricht Treaty. The European Central Bank is now engaged in outright monetary transactions, a policy that comes close to monetizing government debt. Banking supervision has been reformed.
Against this whirlwind background of changes, it would be hard to find a volume simultaneously as informative and insightful as the Hertie Governance Report 2015, published on 14 April. In particular, with its focus on the legitimacy challenge to EMU governance, it manages to be both policy primer and a source of serious analysis. The primer is excellent. Dotted throughout the volume are guides to the central institutions and policies that shape the economic governance of the EU. I found particularly valuable the one page diagram, Figure 3.1 on p. 51, outlining the processes of the European Semester. Would that the European Commission on its website had been able to set out the processes so clearly! These valuable reminders of the basics are supplemented by a useful chapter by Liam McGrath providing time trends of indicators of governance paying due attention to divergence between states.
However, the core of the analysis is to be found in the three chapters by Enderlin, on the underlying economic tensions in the euro project, by Dawson, on the rise of coordinative governance in the euro crisis, and by Joerges, on the significance of the constitutional incompleteness of European economic governance. At the intellectual centre of these contributions is the forceful analysis by Joerges showing that the constitutional order of EMU lacks validity and that what distinguishes ‘the European order from that of constitutional democracies … is the lack of a political infrastructure and institutional framework in which democratic political contestation could continue and legitimate a completion or improvement of what had been agreed.’ (p. 80). Against this constitutional and institutional background, the authors take up the idea of ‘exploratory governance’, defined as ‘ad hoc and stepwise policy-making under uncertainty with an aim of avoiding mistakes’ (p. 17). The basic idea is, then, that given the incompleteness of EMU governance and the distinctiveness of the EU as a type of polity, there is no grand design waiting to be implemented but rather a series of institutional reforms to be explored.
The authors do not shirk the task of stating the fundamental principles of reform having analysed the need for reform. In the final chapter they set out a series of guidelines that should shape reform efforts, including the need to address economic structural and cyclical convergence, closing the political accountability gap and opening up mechanisms of judicial redress and rethinking the relationship between conditionality and solidarity. At the heart of these principle is the further principle that the normalisation of crisis governance is to be rejected; contestation needs to be embraced. In the nature of the case, these guidelines are general and abstract, but they state requirements against which any proposed reform might be judged. They are aspirational but not utopian.
Often yearbooks are, by their nature, ephemeral, but this volume is one that will be worth pondering for many years. If I were to supplement its analysis, I would say that more attention needs to be paid to parliamentary institutions as ways of holding political authority to account by a thorough scrutiny of decision premises and a careful monitoring of the extent to which intended consequences are realised in actual outcomes. At present neither the European Parliament nor the national parliaments do this scrutiny well in particular with respect to the European Semester. They are at best process orientated and insufficiently critical of the assumptions and evidence that go into calls for structural reform. How to frame the analytical capacities of parliamentary committees so that they are really able to challenge the assumptions and inferences of the Commission and national governments in their economic forecasts and prescriptions is a major challenge. Perhaps this is a topic that should be added to the agenda of exploratory governance?
This text was first published on the UCL European Institute’s Britain and Europe blog on 14 April 2015.