Turnout at the European elections has been steadily on the decline since the European Parliament was first elected directly by European citizens in 1979. At the last elections, five years ago, only 43% of voters bothered to make their way to the polls. The low turnout appears at odds with the evolution of the European Parliament’s powers. Especially after the entry into force of the Lisbon Treaty (2009), its powers have increased significantly. Still, areas remain where there is much to gain for the Parliament. In this blog post I will consider one such area where effective democratic control is currently lacking, namely the operations of the so-called ‘Troika’. Voters could have much more influence on the operations of the Troika through the European Parliament than through their national parliaments, if the Parliament puts its recent Troika report to good use.
By Chris Koedooder
In the years after the Lisbon Treaty was signed, multiple crises shook the EU to its core. There was the global financial and economic crisis that forced Member States to rescue ailing banks. However, it was the subsequent sovereign debt crisis within the Eurozone that spurred a major overhaul of decision-making within the Union. Greece, Ireland, Portugal, Spain, and Cyprus had to ask the Union for financial assistance. In four of these Member States, severe austerity measures were or still are dictated by so-called ‘macroeconomic adjustment programmes’.
These austerity programmes have far-reaching consequences for the population in the Member States receiving support, since financial assistance is allowed only if the granting thereof is made subject to strict conditionality. In practice, this means that the cuts and reforms imposed on Member States entail forced privatization of state-owned enterprises, an increase in the statutory retirement age, pension cuts, across-the-board tax increases, increases in fees to access public services (e.g. hospitals), public sector wage cuts, soaring (youth) unemployment, and grinding poverty. Recently it was even suggested that the rising number of suicides in Greece, one of the most affected Member States, is directly related to the implementation of austerity measures.
Democracy under pressure
In the past few years, Heads of State or Government were reluctant to initiate comprehensive reforms of the European Treaties. As a result, much of the decision-making on how to address the sovereign debt crisis took shape outside the framework of the Treaties. This means that financial assistance is not, formally speaking, provided by the Union, but by the European Stability Mechanism (ESM), an ‘independent’ international organization. Decisions concerning austerity measures are thus technically not imposed by the Union’s institutions. This has negative consequences for democratic control, as the influence of the European Parliament and national parliaments is not guaranteed outside the Treaties.
The most prominent exponent of this approach is the aforementioned Troika, which consists of the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF). On behalf of the ESM – so actually on behalf of the Eurozone Member States – the Troika negotiates with Member States that have requested financial assistance. Once an austerity programme has been agreed upon, under severe pressure from financial markets, the Troika monitors the Member State’s compliance with the conditionality attached. It furthermore green lights the disbursement of subsequent tranches of the assistance.
At least as worrisome as the abovementioned consequences associated with financial assistance, is the fact that, for the duration of the austerity programme, the democratic process in the so-called ‘programme countries’ is being eroded. As long as a Member State needs EU-IMF support, the Troika decides. The government’s room for manoeuvre in negotiations is limited. National parliaments, as a consequence thereof, are largely powerless. Moreover, the chosen decision-making framework – the Troika institutions cooperate on request of the Eurozone Member States, outside the framework of the Treaties – makes it virtually impossible for any court to judge whether the austerity measures imposed are in line with constitutionally guaranteed fundamental rights. Although the Eurogroup factually (though not formally) decides whether financial assistance will be granted and under what conditions, it is unclear to many citizens who they can hold responsible for the austerity measures – the Troika? the government? their own parliament? – and how they can do this.
The role of the European Parliament
The European Parliament therefore started an inquiry on the role and operations of the Troika at the end of last year. During the sovereign debt crisis the Parliament was initially sidelined. However, by using its powers as co-legislator, the Parliament was able to leave its mark on the developments within the Economic and Monetary Union. The Two-Pack (two regulations that contain, among other things, provisions on the strengthening of economic and budgetary surveillance of Eurozone Member States) already brought the decision-making process concerning austerity programmes partly into EU law. This enhanced the role of the European Parliament. What is more, as co-legislator, the Parliament was able to push through amendments that improved its supply of information, the transparency of the decision-making process, and the role of social partners at EU level.
In a resolution of 13 March 2014, based on the inquiry[CK1] , the European Parliament now also sharply criticized the decision-making process of the Troika, the Eurogroup, and the ESM. It emphasized the need for improved democratic accountability and demanded that “the ESM be integrated in the Union’s legal framework and evolve towards a Community-based mechanism”. During the public hearings ECB officials also called into question whether the Troika should be around much longer in its current form. However, resolutions of the European Parliament do not have direct consequences. The Parliament itself furthermore already indicated that the integration of the ESM in the Union’s legal framework requires a revision of the European Treaties. Yet, some first steps are definitely possible.
New mandate – more democracy!
Following the elections, with a renewed mandate and with the Troika report in hand, the European Parliament could insist on further improvements when the legislative process provides opportunities to this end. In a similar way, the Parliament previously came to a political deal with the Council and the European Commission that required the Commission to establish an Expert Group to analyze the feasibility of introducing ‘eurobonds’ in return for adoption of the Two-Pack. The Parliament could, furthermore, urge the new European Commission to finally submit concrete proposals on how to fully integrate the ESM in the Union’s legal order. However, the political colour of the new European Parliament is crucial in that respect. We have little use for MEPs who mimic the austerity rhetoric of their Heads of State or Government for five more years. Citizens in the ‘programme countries’ even less so.
The decision-making process of the Troika, the Eurogroup, and the ESM should be overhauled. A truly democratic Union needs institutions that are fully committed to transparency and appropriate democratic accountability at both the EU level and the national level. There should be no place in the Union for institutions that persistently disregard the confines of the European Treaties.
In my opinion, it would therefore be sensible to consider on 22-25 May (depending on which Member State you are in) what kind of European Parliament we want in the coming years, as a co-legislator and as the one representative body that can call other EU institutions to account. A vote for one of the progressive parties that favour a social alternative to the Troika’s one-size-fits-all approach would be a first step in the right direction.
This blog post first appeared in Dutch on www.stuuf.nl, an initiative of Jong WBS, on 7 May 2014.
Chris Koedooder, MA, LL.M is a PhD candidate at the Amsterdam Centre for European Law and Governance. His personal page can be accessed here.