Democracy and Eurozone structural adjustment programmes

Alexandros Kyriakidis - Doctoral Student, Department of Politics, University of Sheffield

The mechanism consists of a new Financial Assistance Working Group (FAWG), comprised of 30 elected members of the European Parliament’s Economic and Monetary Affairs Committee. FAWG is tasked with the ‘monitoring of the implementation of financial assistance programmes supported by the ESM’. However, the new working group is not ‘to take part directly in the decision-making itself or in the implementation of programmes by the institutions’. FAWG’s actions focus therefore on organising:

• meetings between the three Troika members, the ESM and the Greek government;

• an exchange of views (in camera) with the Commission after each quarterly programme review; and

• fact-finding missions, reporting to the Parliament’s Economic and Monetary Affairs Committee.

The letter also entrusts some relevant tasks to the EP’s Economic and Monetary Affairs Committee, which:

• will itself (aside from FAWG) hold dialogues with the Troika members, ESM and the Greek government;

• may, drawing on FAWG’s work, compose reports or resolutions on the financial assistance programmes; and

• may invite Troika and Council representatives for an economic dialogue in relation to Eurozone member-states which may, in future. require an structural adjustment programme.

Moreover, plenary debates in the Parliament relating to the financial assistance programmes are now to be organised at least once a year.

All the above is to be set out in a new Inter-Institutional Agreement to delineate the operational specifics. According to additional new information I have obtained, the EP has confirmed that FAWG and relevant provisions will apply to all Eurozone states currently with a structural adjustment programme – that is, Greece, as well as the post-programme Eurozone states (Ireland, Spain, Portugal, Cyprus) which have previously agreed MAPs or MoUs in return for financial ‘bailouts’.

The legislation referenced in the aforementioned letter setting out the new role of the EP advocates greater transparency and accountability by enhancing inter-institutional dialogue between the EP, the Council and the Commission, and further includes the possibility of economic dialogue with representatives of the Troika. Regarding MoU/MAP processes, Regulation 472/2013 Articles 7 and 18 are referenced:

• 7(1) par. 5: Commission orally informs EP relevant Committee on MAP drafting;

• 7(4) par. 3: Commission orally informs EP relevant Committee on conclusions of MAP monitoring;

• 7(10): EP may invite Member State concerned and Commission to exchange views on MAP progress; and

• 18: EP may invite representatives from Commission and Council in dialogue on application of Regulation.

If these are the new arrangements, the question immediately arises as to whether these provisions effectively provide a strong legal foundation for the EP’s activities as outlined in the above letter (FAWG and so on). The truth is that the legal basis underpinning the arrangements is rather thin and, hence, the presented democratic improvement is somewhat limited.

Why? First, in three of the above four provisions only the Commission is referenced (and not the other members of the Troika), while the representation of the ESM is not provided for anywhere within the referenced Regulation.  It is, therefore, ambiguous as to how FAWG is legally covered to interact and hold meetings with all three Troika institutions and the ESM.  Second, even just for the Commission, the referenced provisions include only a one-way obligation of information provision to the EP.  It is doubtful whether this could cover the much broader process of establishing a genuine exchange of views with the EP.  Third, the exclusion of the EP from any actual decision-making processes in relation to MAPs/MoUs is rather limiting in terms of democratic oversight. Overall, then, it is not at all clear from this Regulation that the EP can, in fact, legally monitor the implementation of the financial assistance programme.

Nevertheless, this new mechanism is an important and necessary first step for introducing some democratic oversight into the making of EU structural adjustment programmes. However, the deficit of democratic representative provisions in the existing legal instruments calls into question the effectiveness of even this very modest attempt.  There is still a need to take further initiatives that introduce stronger representative input.  For example, amending the provisions within Regulation 472/2013, specifically to delineate the participation of the EP in the programmes, would offer a much stronger legal foundation for the greater involvement of the EP in the actual programmes and their implementation.

In sum, this new mechanism establishing greater participation by the European Parliament in the MAPs/MoUs processes is a welcome, but only modest step. Serious questions about the democratic legitimacy of the process remain.