Monday

6th Apr 2020

Brussels pushes for radical shift in budget powers away from parliaments

  • The new proposals 'scale back the democratic process', say critics (Photo: ec.europa.eu)

The European Commission has proposed perhaps the most radical shift in decision-making away from parliaments and toward unelected bodies in the history of the European Union.

Under proposals unveiled by the EU executive on Wednesday (23 November), while formal domestic lawmaking procedures are to remain in place, almost all fiscal policy decisions would be taken out of the hands of national assemblies and delivered up to European civil servants.

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The far-reaching proposals instantly provoked accusations of a hollowing out of democracy in Europe - allegations that the commission has angrily dismissed, saying the moves are necessary if the euro is to survive.

Under pressure from markets to deliver tighter economic integration in the eurozone, the EU executive has proposed that governments in member states that use the single currency be forced to submit their budgets to both the commission and the eurogroup of states for vetting - before they are submitted to their own national parliaments.

If the commission does not like what it sees, it can demand changes to the budget, as well as other mid-term plans a government may have for its economy.

Those countries that have exceeded EU rules on the size of their debt and deficit would also be subject to tighter monitoring by Brussels and would have to submit regular reports on how they are progressing in trying to correct the situation.

The commission would be able to issue recommendations for how this should be done.

All eurozone states would also be forced to create independent fiscal councils - bodies of 'experts' unaccountable to parliaments - who would issue budgetary and economic forecasts.

A country's budget would in turn have to be based on the reports of these fiscal councils.

For countries in deeper troubles and facing serious financial difficulties, Brussels could send teams of inspectors - akin to the 'Troika' monitors sent to member states that have received bail-outs.

The overseers could be sent to any state that the commission decides, even if the county has not requested any international assistance.

The commission is also seeking the power to recommend to the Council of Ministers, representing the member states, that a country should take a bail-out. While this remains only a recommendation, the market pressure resulting from such a call in effect renders this new power equivalent to an order to take out a rescue programme.

The bloc's economy chief explained to reporters that it was necessary to be able to force countries to agree to bail-outs against their will.

"Recent experience has shown that a member state normally wants to avoid a programme until the very last moment," he said in the EU capital. "This has caused the situation to worsen in the meantime both for the country concerned and for the whole euro area and increased costs to other member states and increased the financing needs as well."

"There are no volunteers for an EU-IMF programme."

'Scaling back democracy'

The unprecedented proposals come at a time when commentators, trade unions and even editorial cartoonists have made much of the EU's imposition of technocratic administrations on Greece and Italy.

For some in the European Parliament, this goes one step too far.

The centre-right in the European Parliament, the European People's Party, warmly embraced the commission's proposals, saying that national budgets must be developed with "guarantees of independence", and the centre-left Socialists and Democrats welcomed "strong surveillance and control over the implementation of national budgets."

But the commission was also accused of undermining democracy by the Greens on the left of the house and of launching an assault on national sovereignty by the European Conservatives and Reformists (ECR), the anti-federalist grouping to the right of the EPP.

"The EU is doing what it does best: creating new rules and layers of governance that undermine national sovereignty," said MEP Jan Zahradil, the Czech chairman of the ECR.

The proposals "are fundamentally flawed by the complete absence of any democratic check or legitimacy," said Green MEP Philippe Lamberts, the group’s economic policy spokesman.

"Simply giving far-reaching budgetary surveillance powers to EU technocrats, with no in-built democratic checks, would amount to a scaling back of the democratic process," he said.

Questioned by journalists over whether the moves do not insulate decision-making from elected chambers, commission President Jose Manuel Barroso said he did not wish to engage in "philosophical debates".

He said that national budgets would still be prepared by governments and that national parliaments "will of course have the final say”.

He argued that the request for closer economic integration was issued by the eurogroup, and so while there would be a delegation of responsibilities to the commission, ECB and eurogroup itself, this transfer of powers was voted on by elected representatives.

“It was their decision ... So in terms of democracy, let’s be clear. When democratic member states in full respect of constitutional rules entrust some entities with some powers, this is a fully democratic process and absolutely in respect of democratic principles.”

He compared the transfer of oversight of fiscal policy to the transfer of monetary policy to central banks that has occurred in many countries over the past two decades.

"Just as in our own countries, when we give some powers to a central bank, it is of course not accountable to a parliament, but of course the central bank was created through democratic procedures and is an institution that is absolutely built on a sound democratic architecture."

He said that without these moves, the euro could collapse: "It will be difficult if not impossible to sustain a common currency."

He insisted: "The principle of parliamentary democracy is sacred."

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