Araceli Turmo , 6 décembre 2012

The European Commission set out its proposals for the future of the Eurozone in a Communication published on 30 November 2012. This “Blueprint for a deep and genuine economic and monetary union” clearly indicates the Commission’s preferred solution to the economic and institutional crisis currently affecting the single currency: a sharp increase in EU-level competences, leading up to a de facto federalization of the Euro area.

The Communication sets out possible reforms on the short, medium and long terms. In the first section, the Commission sets out its agenda for the next eighteen months. It calls for full implementation of the six-pack[1] and the European Semester, as well as the proposed two-pack[2] and Single Supervisory Mechanism[3], but warns that they will be insufficient, even in the short term. The Commission hopes for a quick agreement on the 2014-2020 Financial Framework, and will propose the creation of a “Convergence and Competitiveness Instrument” within the EU budget, to provide support for the implementation of structural reforms, on the basis of contractual agreements with individual Member States. Proposals will also be made to enhance external representation of the Euro area, with a focus on the IMF, which has played a crucial role in the current crisis. As a complement to the Single Resolution Mechanism, the Commission will make a proposal for a Single Resolution Mechanism, the next step towards a fully effective banking union, which would put a European Resolution Authority in charge of the restructuring and resolution of banks.

The next two sections set out the Commission’s proposals for institutional reforms within and beyond the next five years. In the medium term, the Commission argues for the establishment of further budgetary and economic coordination in the Euro area (all these reforms should, where possible, be open for participation by other Member States). Proposals include a proper fiscal capacity for the Euro area (i.e., revenues based on own resources and a capacity to borrow), Eurobills, and a European redemption fund (in reference to the proposals put forth by the German Council of Economic Experts). Regarding budgetary integration, the Commission proposes an obligation for Member States to revise national budgets or individual decisions of budget execution where they are found to be incompatible with EU law, and a clear competence for the EU level to harmonise national budgetary laws, along the lines of the Treaty on Stability, Coordination and Governance, with the ability to have recourse to the Court of Justice in case of non-compliance. Deeper coordination also appears necessary in the fields of taxation and employment. Some of these reforms would necessitate Treaty changes, although the Commission encourages use of the existing provisions wherever possible, since the two-pack already reaches the bounds of EU competences as set out in the Treaties as they stand.

The Blueprint also deals with the wider question of the future of the EU, and governance of the Euro area, and demonstrates a clear preference for the “two-speed Europe” solution, setting out possible institutional reforms which would apply only to the Euro area and other States on a voluntary basis. The main objective and “final stage” in the Economic and Monetary Union is the establishment of a full fiscal and economic union, together with a full banking union. This would involve a central, autonomous budget for the Euro area, providing for a stabilisation tool aimed at macroeconomic stabilisation. This would require Treaty amendments involving significant transfers of sovereignty, and would therefore also lead to further political integration and democratization at the European level. The last section deals with the issues of democratic legitimacy and accountability in a new, deepened Economic and Monetary Union. The Blueprint underlines on the problems which would arise if intergovernmental action of the Euro area were expanded, instead of relying on EU institutions such as the Parliament, and on cooperation with national parliaments.

The Communication can be viewed as one of the most significant contributions to the current debate concerning the future of the European Union, and the reforms which will allow it to solve its economic and institutional crisis. Unsurprisingly, the Commission offers a staunch defence of EU institutions and the “Community method”, as opposed to further intergovernmental solutions, paving the way for a federalization of a “hard core” of Member States. Although this document, which will be discussed by at the next European Council meeting, is a major contribution to the existing debate, its impact will depend on the political will of governments.