Over the past few weeks we have heard about the EU trying its best to stabilize the situation caused by unsustainable borrowing and debt of its member states. However when one thinks back to February the EU was desperately trying to figure out a way to help Greece and make sure its situation is never again repeated in the EU. Even after 3 months of negotiations all we managed to get is the European Stabilization Pact and a mechanism for the ECB to be printing money out of thin air.
However this Pact cannot mean the end of all the problems. Even the markets saw this as their early optimism has faded and now the euro continues to fall again. Thus the minister meet again in Brussels, with Germany leading the agenda, to discuss other proposals to address the reasons for the situation we find ourselves in. According to the commentators we have a few different proposals on the table.
The most controversial one comes from the European Commission and it deals with the European ministers scrutising the budget of eurozone member states before the national parliaments. In effect this is giving over of the sovereign budgetary powers to Brussels. It sounds very populist to sum it up like this, but it’s the easiest way. However, this populist undertone has already been used by many opposition parties in the eurozone countries to gain a few percentage points in the polls. When one is to examine the proposal, however, it makes a lot of sense. It effectively finally gives the Commission and the Council a way to make sure the Maastricht criteria are enforceable and that no country will ever step over those.
The second proposal is to cut the European Funding to any country that crosses over the the limit of the Maastricht Treaty. This proposal is quite nice in the way that it creates an effective way to punish the ‘wrongdoers’, so to say, without infringing the national sovereignty. But, as always, there is a catch. the EU funds are usually used by the smaller and lesser developed countries, whereas the net contributors to the EU such as Germany or France(i.e. the bigger and more developed countries) do not benefit a lot from these funds. Thus if a country from the latter category breaks the Maastricth criteria, yet again the EU is left toothless.
The third proposal, one backed by Angela Merkel, is to reach a consensus from all the countries to put an amendment to the constitution of each eurozone member that would ensure a 3% deficit to be the maximum. In effect, putting the Maastricht criteria on constitutional status. This yet again enforces the criteria without infringing the national sovereignty. However this enforcement is done through the highest courts in the respective country and they may have a differing tradition in ruling against the state. For example the German Constitutional Court is very active in enforcing the constitution even if it means judicial policy making for the state. On the other hand we have courts that are very reluctant to give an order regarding the public spending (for example the Irish Supreme Court). Even if this barrier was overcome, though, one might question such a proposal. In the hierarchy of law, the EU law is at the highest level, with the Treaties being the highest level of EU law. As such it can be argued that the Maastricht criteria can be enforced by the courts. So far, however, this has not been even considered or tried. If we were to make such a constitutional amendment, it would seriously undermined the status of EU law.
Thus we have 3 differing proposals to try and remedy the reasons behind the current situation. Each of them has its own drawbacks and pluses. This author would prefer the first, if only because of closer European integration, as well as the flaws of the other two proposals being simple too great to prevent this situation from reoccurring again. However, it does not matter which one is picked as one thing is certain: the EU help that comes with these 3 proposals creates a definite two tier Europe of the EU and the closer integrated eurozone- something that might go against the Lisbon strategy of unifying all of Europe.
The EU help
Posted by mariobilo on May 23, 2010
Over the past few weeks we have heard about the EU trying its best to stabilize the situation caused by unsustainable borrowing and debt of its member states. However when one thinks back to February the EU was desperately trying to figure out a way to help Greece and make sure its situation is never again repeated in the EU. Even after 3 months of negotiations all we managed to get is the European Stabilization Pact and a mechanism for the ECB to be printing money out of thin air.
However this Pact cannot mean the end of all the problems. Even the markets saw this as their early optimism has faded and now the euro continues to fall again. Thus the minister meet again in Brussels, with Germany leading the agenda, to discuss other proposals to address the reasons for the situation we find ourselves in. According to the commentators we have a few different proposals on the table.
The most controversial one comes from the European Commission and it deals with the European ministers scrutising the budget of eurozone member states before the national parliaments. In effect this is giving over of the sovereign budgetary powers to Brussels. It sounds very populist to sum it up like this, but it’s the easiest way. However, this populist undertone has already been used by many opposition parties in the eurozone countries to gain a few percentage points in the polls. When one is to examine the proposal, however, it makes a lot of sense. It effectively finally gives the Commission and the Council a way to make sure the Maastricht criteria are enforceable and that no country will ever step over those.
The second proposal is to cut the European Funding to any country that crosses over the the limit of the Maastricht Treaty. This proposal is quite nice in the way that it creates an effective way to punish the ‘wrongdoers’, so to say, without infringing the national sovereignty. But, as always, there is a catch. the EU funds are usually used by the smaller and lesser developed countries, whereas the net contributors to the EU such as Germany or France(i.e. the bigger and more developed countries) do not benefit a lot from these funds. Thus if a country from the latter category breaks the Maastricth criteria, yet again the EU is left toothless.
The third proposal, one backed by Angela Merkel, is to reach a consensus from all the countries to put an amendment to the constitution of each eurozone member that would ensure a 3% deficit to be the maximum. In effect, putting the Maastricht criteria on constitutional status. This yet again enforces the criteria without infringing the national sovereignty. However this enforcement is done through the highest courts in the respective country and they may have a differing tradition in ruling against the state. For example the German Constitutional Court is very active in enforcing the constitution even if it means judicial policy making for the state. On the other hand we have courts that are very reluctant to give an order regarding the public spending (for example the Irish Supreme Court). Even if this barrier was overcome, though, one might question such a proposal. In the hierarchy of law, the EU law is at the highest level, with the Treaties being the highest level of EU law. As such it can be argued that the Maastricht criteria can be enforced by the courts. So far, however, this has not been even considered or tried. If we were to make such a constitutional amendment, it would seriously undermined the status of EU law.
Thus we have 3 differing proposals to try and remedy the reasons behind the current situation. Each of them has its own drawbacks and pluses. This author would prefer the first, if only because of closer European integration, as well as the flaws of the other two proposals being simple too great to prevent this situation from reoccurring again. However, it does not matter which one is picked as one thing is certain: the EU help that comes with these 3 proposals creates a definite two tier Europe of the EU and the closer integrated eurozone- something that might go against the Lisbon strategy of unifying all of Europe.
Posted in European Union, International Relations | Tagged: commentary, economics, EU, politics | 1 Comment »