Parliamentary oversight in the EMU: Stocktaking and ways forward

Summary In this report, we take stock of the effectiveness of existing national and European parliamentary oversight mechanisms introduced during the crisis and discuss how these can be strengthened and how new ones can be introduced.

The European Commission’s recent roadmap for completing the European Monetary Union (EMU) suggests parliaments will become more involved in EU economic governance by being equipped with sufficient oversight powers. These include proposals to formalise the economic dialogue, create a European Minister of Economy of Finance who is accountable to the European Parliament (EP), integrate the Fiscal Compact into EU law, and establish a European Monetary Fund anchored in EU law.

These initiatives seem to be a godsend for both national parliaments and the EP, who have played a marginal role in the EU’s response to the sovereign debt crisis due to the executive-dominated approach to crisis resolution. While the crisis has seen the emergence of various legal and political instruments of parliamentary involvement in economic governance, there have long been calls to strengthen the EMU’s thin democracy.

In this report, we take stock of the effectiveness of existing national and European parliamentary oversight mechanisms introduced during the crisis and discuss how these can be strengthened and how new ones can be introduced. We also discuss how the Commission’s suggestions could potentially increase political accountability and/or if new structures should also be considered. The first three contributions focus on the role of national parliaments in the EMU, the next four on the EP, and the last on the reform proposal to create a European Minister of Economy and Finance. Each contribution is preceded by a short abstract.
National parliaments and the EMU

The report shows that national parliaments’ involvement in the EMU is rather informal in nature. It is the prerogative of member states, not the EU, to decide how national parliaments are involved in EU economic governance, risking a fragmented political accountability across member states. Both the EP and national parliaments play a largely discursive role – they can debate and engage in dialogue with executive actors, but they do not necessarily hold the right to veto.

In most member states the scrutiny of governments in the European Semester has increased since 2012, when the Semester was first launched. Budget committees have also increased their involvement vis-à-vis European Affairs Committees. National budgets are increasingly discussed in the framework of the European Semester, contributing to an increased Europeanisation of national parliaments.

The EP and national parliaments have also been able to exercise joint scrutiny of EU executive bodies through sharing information and best practice in the Interparliamentary Conference on Stability, Economic Coordination and Governance (SECG). This constitutes the main venue for interparliamentary cooperation in EU Economic Governance, although parliaments by no means speak with a single voice.
The European Parliament and the EMU
In recent years, the EP has been successful at expanding its oversight powers in the EMU beyond its formal powers. It has done so through the creative use of five strategies: by linking different bargaining arenas, threatening to delay decisions, mobilising public opinion, allying with like-minded member states or institutions, and by ‘moving first’ to establish new oversight procedures.

One of the oversight powers the EP recently gained in secondary legislation is the economic dialogue, which the Commission now suggests to formalise. However, this suggestion does not appear to change the current relationship between the two institutions, as the Commission already has a treaty obligation to respond to questions from MEPs.

The economic dialogue suffers from a number of weaknesses that could be addressed in a future ‘revision’ of the dialogue. Currently, the set-up of the European Semester makes it difficult to attribute responsibility. Furthermore, the format of the dialogue and the type of questions asked far from allow for a proper scrutiny of executive actors.

This indicates that a strengthening of the economic dialogue needs to go further than just formalising the procedure. The dialogue is still a young initiative and is part of an ongoing learning process. The monetary dialogue – which has had more years to evolve – has changed over time. The style and substance of the monetary dialogue – between the EP and the President of the European Central Bank (ECB) – has improved since 2009.

This report shows that the ECB President has shown an increased preparedness to discuss both the technical details and the broader ramifications of its monetary policy.

The Commission’s proposal to create a European Minister of Economy and Finance might ensure a greater say for the EP on economic governance, particularly on those aspects where the EP does not currently enjoy formal co-decision rights. This is because the new position – as envisaged by the Commission – is double-hatted in nature and carries both intergovernmental and supranational elements, which may be difficult to strictly separate in practice.

It is, however, questionable if the new ministerial post will have any real powers without a Eurozone budget, the ability to conduct economic policies (e.g., impose/reduce taxes) and economic reforms. Without any tangible powers, a European Minister of Economy and Finance risk being nothing more than a figurehead, potentially adding to the image of the EU as a bureaucratic entity.

It is the hope that this report will contribute to a better understanding of parliaments’ current roles in the EMU and offer ideas on how to increase their involvement in the future. The report is a result of a workshop held at Think Tank Europe in March 2018 as part of the H2020 project ‘Transcrisis’, supported by the EU’s Horizon 2020 research and innovation.

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