Does the Eurozone need its own parliament?

Since the sovereignty debt crisis ‘Europe’ more often means the Eurozone of 17 nations rather than the European Union of 27 states. Now, this new ‘Europe’ is to receive political representation.

Piotr Maciej Kaczynski
25 September 2012

What is Europe? There is a geographic sense of Europe that would include Russia and Iceland. There is a cultural sense of Europe that would include Georgia, New Zealand and Cape Verde. And there is a political sense of the word. Politically ‘Europe’ meant the ‘EU’ composed of all its members – until the sovereignty debt crisis, that is. Since then ‘Europe’ more often means the Eurozone of 17 nations rather than the European Union of 27 states. Now, this new meaning of ‘Europe’ is to receive political representation.

Herman Van Rompuy’s  ‘’Issue Paper on Completing the Economic and Monetary Union”[1] published on the European Council website on 12 September 2012 posits the idea that a fiscal union should have its  own budget. This would be an important step forward in building of a true ‘economic’ union. This fiscal union and its budget would in turn necessitate the creation of a treasury office, also excercising budgetary control over national budgets. Hence, there is talk of some sort of a European super-finance minister. The democratic accountability of such a position remains a sensitive issue. Herman Van Rompuy asks the question: ‘’Would a more integrated economic policy framework require dedicated accountability structures specific to the euro area?” In other words, does the Eurozone need its own parliament?

On 17 September a group of foreign ministers led by the German minister Guido Westerwelle brought out a report[2] in which the group stressed the importance of democratic legitimacy and the central role in this process of the European Parliament. Yet they recognised that,  ‘’...if a decision applies only to the Euro area plus other ‘pre-in’ member states who wish to participate, ways should be explored to involve the MEPs from these countries...”. In other words, the Eurozone will borrow democratic oversight from the existing European Parliament to codecide (or, to be consulted) on Eurozone-related issues, in the same way that for over a year the Eurozone has already borrowed its democratic oversight from the European Council. Why? Because the Eurozone-related issues are of much more concern to the Eurozone governments,  and MEPs are already elected from the Eurozone states. (When the situation falls outside of the EU competences, the national parliaments need to be consulted, too.)

Another element of the Westerwelle group’s paper mentions the principle that further amendments to the EU treaties should not have to be ratified by all member states for it to enter into force. In return, treaties would be binding only on those states which have ratified them. Effectively this takes away a national veto from amending EU founding treaties and is a quasi-direct aftermath of last year’s British attempt to veto the Fiscal Compact from becoming a part of the EU’s founding treaties. Further on down the path, it is conceivable that a Eurozone country could drop out of the core group (if it were to happen, probably Greece or Ireland).

Hence the following scenario: if Mr. Van Rompuy is right, the Eurozone will get its own budget administered by the European treasury. Its democractic accountability (Westerwelle group) would be provided by the Eurozone-elected MEPs. Potentially they would even elect the head of the new institution, ‘’the European Treasurer.” This powerful position would a) administer the Eurozone budget; b) control the national budgets of the countries in the fiscal union; c) chair the Eurogroup finance ministers meetings (currently the role played by the Luxembergish PM Juncker); and d) be fully accountable to the Eurozone MEPs and the national parliamentarians.

Thus is multi-speed Europe born. In its core is a ‘’political union” based on fiscal union, macroeconomic cooperation and budgetary control mechanisms matched with democratic legitimacy. With time, the dichotomy of EU competences vs. national competences in economic affairs will have to be overcome; hence the call for a new European Convention ( an idea promoted most recently also by the Commission President Barroso[3]) to solve this problem. The core institutions of the ‘’political union” include the summits of Eurozone heads of states and governments, the European Treasury, and Eurozone-elected MEPs. The group could even be equipped with a European army (Westerwelle group).

In the second circle is the current European Union with the full European Council, the full European Parliament, the European Commission, and the European Court of Justice. Together they will need to provide the consistency achieved by the core group within the larger EU. The relationship between the European Commission and the European Treasury will be crucial, unless the latter is integrated into the Commission services (currently unknown).

The borders between the two speeds need to remain one direction-open-ended (so that you may join, but not leave). Those nations, who contemplate fast (Latvia) or slow (Lithuania and Poland, maybe in the future also Bulgaria, Czech Republic, Denmark, Hungary, Romania and Sweden) Eurozone accession, need to have a possibility of joining the core group in the future. Their accessions should depend on a) meeting the technical criteria, and b) the necessary expression of political will on the part of the joining country.

In the meantime one country contradicts this trend. The United Kingdom is not only not interested in joining any sort of a closer European cooperation. The UK from time to time attempts to veto any closer integration of those countries who wish to do so – hence the 2011 veto on the fiscal compact becoming  part of the EU’s treaties, or the negative apprehension in many continental capitals that the British government might veto the banking union proposals, which require unanimity in the Council even if they applied only to the Eurozone member states. Such obstruction forces other states to look for alternatives such as new treaties outside of the EU legal framework (e.g.: Fiscal Compact of 2012). Further down the line, Britain is contemplating its relationship with the rest of Europe; a referendum on its exit from the European Union could take place within a few years.

But the ultimate objective of the new political/fiscal/budgetary/economic core should be for as many as possible EU member states, if not all, to join in.

[1] http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/132413.pdf

[2] http://www.auswaertiges-amt.de/cae/servlet/contentblob/626322/publicationFile/171798/120918-Abschlussbericht-Zukunftsgruppe.pdf

[3] Jose Manuel Barroso, ‘’State of the Union” speech in the European Parliament, 12 September 2012


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