Continuity and change in Germany's EU policy

Continuity and change Germany's EU policy

Continuity and change in Germany's EU policy

Written by Charles Grant, 06 September 2013

However the Germans vote on September 22^nd, Berlin’s attitude to the EU is not going to change much. The opposition Social Democrats call for a bit less austerity in Southern Europe but otherwise support most of Chancellor Angela Merkel’s policies. Nonetheless German policy on Europe is evolving – independently of the elections – in some important respects.

Germany is making a new effort to revive its damaged relationship with France. It is moving towards accepting a full banking union, including a resolution regime, though not, for now, on terms acceptable to most of its partners. It is recognising – with some regret – that there will not be a significant revision of the EU treaties in the coming years. And it is increasingly critical of the European Commission and the European Parliament.

The big strategic decisions on Germany and the EU are taken by politicians like Guido Westerwelle, the foreign minister, and Wolfgang Schäuble, the finance minister, and, above all, Merkel. But the key officials in the Chancellor’s office, the foreign ministry and the finance ministry are hugely influential on EU policy. That is not surprising, given that they – unlike most politicians – understand the technicalities of the EU’s inner workings.

These officials are more relaxed about the euro than they were six months ago. They think that modest progress in Ireland, Portugal and Spain is vindicating their insistence on austerity in these countries. They regard Greece as a hopeless case, but too small to threaten the euro’s survival. Italy is a much bigger worry, because its political system seems to make structural economic reform impossible.

As for the Official Monetary Transactions (OMT) – the bond-buying scheme unveiled by the European Central Bank a year ago, which reduced the cost of borrowing for the Southern Europeans – it should be “a bazooka that is left in the cupboard”, according to one official. If ever used, the ECB’s independence could be compromised: politicians would put pressure on the bank to deploy the OMT to achieve a particular spread for a country’s bonds, he says. And what would the ECB do if, once an OMT programme had started, its beneficiary stopped reforming? This official thinks that if a country applies the right policies, as Spain has done recently, it does not need OMT. And if a country chooses the wrong policies, OMT cannot save it.

Germany’s constitutional court in Karlsruhe is due to rule on the legality of the OMT this autumn. The view in Berlin is that court is unlikely to ban the OMT outright, though it may set conditions for its use.

German officials think that France, unlike Italy, is capable of reform. But in his first year as president, President François Hollande infuriated German officials: he tried teaming up with Spain’s and Italy’s leaders to oppose Merkel at summits, and did very little to revitalise France’s economy. The Germans talked of moving ahead without France. The French found the Germans’ tone patronising.

But this summer the atmosphere between Paris and Berlin has improved a little. The Germans understand that they cannot lead Europe on their own. They say they have learned that lecturing France will not persuade it to reform. Only if France believes that it is an equal partner of Germany’s, they think, is there a chance if it reforming. Meanwhile Hollande has not tried to manoeuvre against Merkel in the European Council since February (when he was in a minority of one over the EU budget). At the end of May, a joint Hollande-Merkel letter floated ideas such as a eurozone budget, a bank resolution regime, contracts for economic reform and a permanent president for the Eurogroup (which brings together the countries in the euro).

German officials hope that after the general election they can restart the Franco-German motor with a grand bargain. France would accept Merkel’s idea of contracts – it would have to negotiate structural reforms with the Commission – and Germany would agree to a modest eurozone budget, to reward countries that undertake painful reforms. Some Germans believe that these contracts would be the most effective means of getting France to reform. The bargain would also cover a bank resolution regime, which France is keen to see implemented. None of these steps would require treaty change.

Despite their new, softer line on France, some Germans still worry that the French will exploit Germany’s willingness – in the event of a serious crisis – to do whatever is necessary to keep it in the euro, and that they will therefore shy away from difficult reforms. France would then slowly drift into Southern Europe and Germany would find it hard to lead the EU on its own.

Banking union is currently a major bone of contention between Berlin and Paris. Schäuble wants a resolution regime with a first phase “based on effective co-ordination between national authorities; and effective fiscal backstops, also including the European Stability Mechanism (ESM) as last resort.” (see FT article by Schäuble). The Commission, however – backed by most member-states, including France – wants to run a centralised system that draws on a new resolution fund. The Germans think the Commission would not be capable of acting quickly to resolve a bank, and that, given the fund’s initial small size, they might end up having to pay to clean up others’ banks. They also argue that the Commission is abusing the treaties by using a single market article as the legal base for its proposal.

At the moment, the two camps are far apart. But German officials are convinced that the EU needs a viable resolution regime. A possible compromise, one suggests, could involve Germany accepting the Commission as the resolution authority, provided the ESM is the backstop. Germany likes the ESM because it is run by a German and it has an effective veto over its money being spent.

Many German politicians, being committed to a federal Europe, retain some affection for the Commission and the European Parliament. But the key officials have become very critical of both bodies. They say that the Parliament has too much power and is out of touch. So when it comes to the proposed ‘new’ method of choosing the Commission president – the idea is that after the 2014 European elections, the party with the most MEPs would appoint its designated candidate – German officials are wary. They fear that this method could lead to a powerful Commission-Parliament alliance against the Council of Ministers (in which Germany is a dominant force). This wariness extends to senior German politicians. Without the co-operation of Angela Merkel and her European People’s Party, MEPs may struggle to impose the president of their dreams on the European Council.

Officials complain that the Commission lacks economic expertise, that it produces too many meddlesome rules, and that it spends too much time worrying about its own power. It annoyed them recently by pushing ahead with a directive banning certain greenhouse-gas coolants that are used in Mercedes air conditioners. And they are frustrated that the Commission gave France extra time to meet the 3 per cent budget rule, without first extracting commitments on structural reform.

Some German officials are keen to build up the ESM as an alternative to the Commission for eurozone governance. They admit that the ESM currently lacks economic expertise but think that in the long run it could evolve into a European Monetary Fund. They believe that in contrast to the Commission it is not subject to political pressure. However, some foreign ministry officials understand that Germany is rather isolated in its desire to bash the Commission. For example, Poland – an important German ally – is usually supportive of the Commission. These officials therefore believe that any German attempt to promote the ESM as an alternative will not get very far.

Another source of tension between Berlin and Warsaw is the Eurogroup. The Poles – like the British – want the key body for taking decisions in the EU to remain the 28-member Council of Ministers. They worry that building up the Eurogroup could hurt countries outside the euro, as well as the single market. Some German officials are ready to go along with France’s wish to develop eurozone-specific institutions. Merkel, however, is keen to maintain the importance of the 28, partly because of her warm relations with the Polish and British prime ministers.

Twelve months ago, German officials were all for treaty change; six months ago, they really hoped it would be possible, but recognised that it might not be. Now they think that in an ideal world, treaty change would be desirable, but they are mostly reconciled to its postponement for a long time. The reason is simple: the only other member-state that wants treaty change is the UK, which means that the chances of the whole EU adopting a new treaty are zero.

The top officials say that if there is to be a new EU treaty, it would have to be negotiated in 2016, as the various election and referendum calendars allow no other possibility. Any new treaty would be a small, “surgical” change that would not require a convention (a suitable model may be the fiscal compact, last year’s non-EU treaty that did not require ratification by all signatories before entering into force). But these officials acknowledge that there may well be no new treaty of any sort, and they say that the EU can cope perfectly well with the existing ones. (The finance ministry would still like a treaty amendment to strengthen the independence of the EU’s new banking supervisory mechanism, but that is a long-term objective. Its own plans for a resolution regime would not require an amendment in their first phase.)

Germany’s recoiling from treaty change will be unwelcome news to some British Conservatives. They have been counting on the EU needing a new treaty, and thus a British signature, in order to extract concessions – such as the repatriation of powers – from Britain’s partners. It seems unlikely that the British government will enjoy that kind of leverage before the referendum that David Cameron has promised in 2017.

Charles Grant is director of the Centre for European Reform

Comments

Between rock and hard place in Brussels

Written by Charles Grant, 27 June 2013

Link to press quote:
http://online.wsj.com/article/SB10001424127887324328204578571502010292918.html

What is wrong with the European Commission?

Written by Charles Grant, 27 June 2013

The European Commission, a crucial EU institution, is beset with difficulties. It is popular with neither governments nor voters. Twenty years ago, many people looked to the Commission to set the EU’s agenda and take the lead in managing crises. But few people expect the Commission to play that role today.

Ever since the time when Jacques Delors ran the Commission (1985 to 1995), its authority vis-à-vis EU governments has been waning. The member-states – and especially the big ones – have sought to constrain an institution that they consider over-mighty.

The Lisbon treaty, in force since 2009, created two important institutional innovations: the permanent president of the European Council, a post now occupied by Herman Van Rompuy; and the European External Action Service (EEAS), a body now led by Catherine Ashton. Both of these carry out some tasks that the Commission used to do and have contributed to its sense of insecurity.

Paradoxically, the euro crisis has led to the Commission gaining unprecedented formal powers – on the surveillance of national economic policies – but further eroded its standing and credibility. National governments have provided the money for helping countries in trouble, so they set the terms for bail-outs. The Commission has had to leave the high politics to the European Council, and often to a few key governments, while focusing on its subordinate though important technical role.

The eurozone’s travails have accelerated a longstanding shift in the nature of EU governance. The EU used to take few executive decisions that were politically salient. The Commission proposed laws and regulated, while the Council of Ministers and European Parliament passed laws. Both the Commission and the Council acted, from time to time, as an executive – for example the former blocked corporate mergers and the latter imposed sanctions on countries in other parts of the world.

But the euro crisis has drawn the EU into taking increasingly political executive decisions. The EU has forced heavily-indebted counties to cut budget deficits, pass painful reforms and wind up banks. The Commission may propose such measures, but only eurozone prime ministers or finance ministers have the authority to take these decisions.

These are long-term trends, but personalities also matter. The current ‘college’ of commissioners contains few heavyweight politicians. Within the Commission, Barroso is a strong leader who dominates his colleagues; given the number of commissioners – one for each of the 28 member-states – he may have no choice but to rule with a firm hand. But outside the Commission, some governments complain about what they perceive as weak leadership. During Barroso’s second term as president, which started in 2009, Berlin, Paris and London have become more critical of the Commission. Even some of the smaller member-states, traditionally allies of the Commission, complain about it more than they used to.

A number of governments accuse the Commission of failing to prioritise; of implementing new initiatives too slowly; or of focusing insufficiently on fixing the eurozone. Some of this is unfair: the politicians who criticise the Commission for not coming up with relevant solutions to the eurozone’s problems are sometimes the same ones who get annoyed when it does propose a big idea, such as eurobonds. And while the Germans have sometimes whinged about the Commission being too soft on countries under surveillance, many others believe that it has been too Germanic in its enthusiasm for budgetary discipline. Evidently, the Commission cannot please everyone.

Two reasons, in particular, explain the member-states’ diminishing confidence in the Commission. First, they argue that the Commission proposes too many detailed rules, particularly in areas such as the environment, food safety and social policy. In May 2013, for example, Polish ministers complained about Commission attempts to regulate the shale gas industry and to ban menthol cigarettes – both of which are popular in Poland. In the same month the Commission proposed banning olive oil in re-usable bottles, but then climbed down after a storm of protest. Earlier in the year, German politicians sharply criticised a Commission proposal to set quotas for women on company boards.

Some senior Commission officials acknowledge that the institution can be over-active. But they blame the increasing sway of the Parliament over the Commission. And that is the second reason why some national capitals have turned against the Commission.

The Parliament has exerted more influence over the second Barroso Commission than the first, and not only because the Lisbon treaty gave it more power. Lobbyists and NGOs find it quite easy to get MEPs to support their projects for new EU rules. The Parliament then puts pressure on commissioners to come up with new directives. They are loath to annoy the Parliament since it can make trouble. Another reason why commissioners like to propose new rules is to justify their existence. The Commission’s secretariat-general works hard to cull what it regards as superfluous legislative proposals, but does not always win arguments against commissioners.

None of this is to say that that the Commission should ignore the Parliament. That body is better placed than any other to vet the work of commissioners and, working with the Court of Auditors, to criticise their mistakes. Before the appointment of the last two Commissions, the Parliament played an admirable role in questioning sub-standard commissioners-designate and forcing them to withdraw. Given the Parliament’s powers of co-decision over new laws, the Commission cannot and should not ignore it.

The problem is that over the past four years the Commission has become much closer to the Parliament than to the Council on many issues. The Commission should be accountable to both – it is appointed by governments and approved by the Parliament. But it should also be independent of both.

The politicisation of the Commission is a problem. There has always been some ambiguity over its contradictory roles: it is a political body that initiates legislation and brokers compromises among the member-states, but also a technical body that polices markets and rules, and negotiates on behalf of the member-states. During the euro crisis the Commission’s technical role has grown, which makes the ambiguity more problematic. When it pronounces, say, that France may be given two further years in which to meet the 3 per cent budget rule, is that the result of objective economic analysis or a reflection of the shifting political climate in national capitals? This ambiguity gives governments and others an excuse to criticise the Commission.

Politicisation can mean favouring political parties. Some socialist politicians claim that the Commission has been over-indulgent of Viktor Orban, the prime minister accused of curtailing political pluralism in Hungary, because his European People’s Party is the leading force in the Commission and the Parliament. There is not much evidence for that particular allegation, but if the Commission becomes too party-political, its ability to carry out technical functions effectively – or in this case, to act as a guardian of liberal democracy – may be compromised.

Next year’s European elections could accelerate the Commission’s politicisation. Most of the pan-European political parties say they will each designate a candidate for Commission president. After the elections they want the European Council to propose the candidate of the party with the most MEPs as president – and then the Parliament to invest him or her. Were the European Council to propose any other name, MEPs would reject it.

If this scheme works, there might be a bit more interest in the European elections. But it is far from certain that the political parties and the European Council will, in the end, play this game. If they do allow the Parliament to appoint Barroso’s successor, the Commission is likely to become more beholden to the Parliament – and the leading party within it – than is currently the case.

Such an outcome would be alarming, because the EU needs a strong and independent Commission – to consider the wider European interest, draw governments’ attention to long-term trends, propose solutions to pressing problems (whether in the wider EU or the eurozone), work doggedly to deepen the single market, and perform its monitoring role in eurozone governance. As the eurozone integrates, one key task will be to ensure a smooth relationship between the countries inside the euro and those outside it. Decisions made by the eurozone should not damage or fragment the single market.

So what can be done to strengthen this flagging institution? The most important step requires not a treaty amendment or an institutional reform, but simply an agreement among heads of government. They should decide to reinforce the Commission’s independence by appointing strong figures as commissioners, and above all by ensuring that a heavyweight politician takes on the presidency.

The member-states should mandate the new president and his team to maintain their independence from the European Parliament, and support them in their efforts to do so. After the last European elections the Commission and the Parliament reached an ‘inter-institutional agreement’, covering future legislation and procedures, which gave the Parliament several things that it wanted. The Council of Ministers spurned the opportunity to make this a tripartite arrangement; if it had done, it could have balanced the legislative activism of the Parliament and pulled the Commission closer to it. After the next European elections the three main EU institutions should seek a tripartite accord on the EU’s work programme.

As for reform of the Commission itself, the problem of too many commissioners needs to be tackled. There are not enough important jobs for 28 of them, and with so many people around the table, substantive discussions are almost impossible. The one-commissioner-per-country rule encourages both governments and those they appoint to the Commission to assume – in breach of the treaties – that the job of commissioners is to represent their homeland.

So the next president should divide his or her commissioners into seniors – who could become vice presidents – and juniors. There should be an informal understanding that, though all commissioners are of equal legal status, the senior ones will co-ordinate the work of the juniors in their particular areas of responsibility. The seniors should meet regularly. In the longer run, when the treaties are re-opened, the EU should adopt a system whereby big countries would always have a commissioner (though not necessarily one of the top jobs) and smaller countries would take it in turns.

Another useful treaty change would be to give the European Council the right to sack the Commission. The Parliament has that power and by threatening to use it forced the resignation of the Santer Commission in 1999. If the treaties said that either body could sack the Commission, its equidistance between governments and MEPs would be reinforced. And that would help to give the EU the strong and independent Commission that it needs.

Charles Grant is director of the Centre for European Reform

Comments

Added on 28 Jun 2013 at 04:27 by Eurocentric

Third, how will drawing the Commission closer to the Council increase its legitimacy and effectiveness? It already must negotiate between them in the OLP, and both alreadly have influence over legislative proposals (though the E. Council's is more formalised and the Council can introduce some proposals in the JHA). Therefore it is must be aware of the need to pass a bill in both institutions. The shift towards parliament is more likely to be a rebalancing as the Parliament becomes the Council's equal.

By drawing back from the EP and favouring the (E.) Council's influence, which I would argue has resulted in the most polarising decisions in respect of the Eurozone, the Commission is pushed further away from democratic accountability without any appreciable gains in legitimacy. If the policies are still set by the E. Council in a manner were power politics reigns, then how does this help the Commission's standing in the smaller Member States and with the public generally?

Since the Commission will have to play a political role in any case, and it needs to be more legimitised, the EP elections development is very welcome, rather than a cause for alarm. Making the Commission a focus of electoral debate brings an executive institution with the power to introduce legislative proposals into public debate and subject to electoral support. In comparison to the ideas for increased powers for national parliaments (which are positive suggestions), this would give voters more control over a policy-creating part of the EU. Democratic accountability is not simply about blocking legislation, mediation or shifting the overall ideological preferences of one or two directly or indirectly elected institutions, but about the ability to generate policy initiatives.

This would tackle both the "input" and "output" legitimacy of the EU - though of course it depends on uptake by the electorate, which is likely to be slow to develop and is the subject of another debate.

So while I agree with you that the technical enforcement part of the Commission could benefit from more impartiality (perhaps some insulation from the political College of Commissioners would be appropriate?), drawing the Commission further away from the EP would not increase its legitimacy. How this evolves depends on the resistance of the Council, but if public support for a more EP-accountable Commission grows and the Council doesn't prevent it, I don't see how it would be bad to let this evolve.

Added on 28 Jun 2013 at 04:27 by Eurocentric

I disagree. The underlying assumption to your article appears to be that the Commission should return, or at least emphasise, its technocratic approach, and that this will make it more legitimate. But with the monopoly of legislative initiative and the position of the Commission within the institutional infrastructure, both politically and technically (through enforcement and the exercise of implied/deligated powers), mean that there will always be a strong political element to the Commission and this will raise questions of legitimacy and accountability.

Firstly, it is not clear that the Commission is over-sensitive to the European Parliament (EP), though undoubtedly it is more so than before. On the question of Hungary, for example, EU inaction could be just as easily explained from the point of view of Member State governments being unwilling to confront a fellow government. Notably, the EPP is more dominant in the Council than it is in the EP, and there have been very critical voices in the EP on the Hungarian situation.

Indeed, the Council, and the European Council, have a high level of power with regard to the legislative programme of the EU (with regard to JHA, the Stockholm Programme and the Hague Programme before it are prime examples).

Second, why is the Commission (apart from it's treaty-described position), the sole institution able to present the European interest? Does the EP not also do this? The decisions you describe are not purely techinical matters, and deserve wide debate and public engagement. We should not fall into the trap of seeing the current European economic policy as the only way things can be done. The parliamentary approach in most EU Member States allows for executives that are closely integrated with their parliaments, with independent budgetary offices for forecasts, etc. Would a similar approach (albeit with a strong and institutionally equal Council) not be a good direction for the EU?

CER wins Prospect UK International Think Tank of the Year award 2013

CER wins Prospect UK International Think Tank of the Year award 2013

25 June 2013

The CER won UK International Affairs Think Tank of the Year at the Prospect Think Tank Awards for 2013 on 25 June. Presenting the award, Bill Emmott (former editor of The Economist) said that a pro-European think tank had not been an obvious choice at a time when the EU was in crisis and when it had never been less popular in Britain.

Website link:

http://www.prospectmagazine.co.uk/blog/think-tank-awards-2013-winners/#.UcrywPmG06z

Location info

London

Further information: http://www.prospectmagazine.co.uk/blog/think-tank-awards-2013-winners/#.UcrywPmG06z

Event Gallery

EU's eroding support imperils crisis response

EU's eroding support imperils crisis response

Written by Charles Grant, 25 June 2013

Link to press quote:
http://online.wsj.com/article/SB10001424127887324637504578567573242500846.html

Tusk says he won't run for EC presidency

Written by Hugo Brady, 11 June 2013

Link to press quote:
http://www.wbj.pl/article-63010-tusk-says-he-wont-run-for-ec-presidency.html?typ=wbj

How to reduce the EU's democratic deficit

Written by Charles Grant, 10 June 2013
From The Guardian

Can national parliaments make the EU more legitimate?

Written by Charles Grant, 10 June 2013

The EU has long had a problem of legitimacy, but the euro crisis has made it worse. According to Eurobarometer, 72 per cent of Spaniards do not trust the EU. The Pew Research Centre finds that 75 per cent of Italians think European economic integration has been bad for their country, as do 77 per cent of the French and 78 per cent of the Greeks.

For more than 60 years, the EU has been built and managed by technocrats, hidden from the public gaze – or so it has seemed. In fact national governments have taken most of the key decisions, but public scrutiny has been insufficient. This model cannot endure, because the EU has started to intrude – particularly in the euro countries – into politically sensitive areas of policy-making.

Political institutions can gain legitimacy from either ‘outputs’ or ‘inputs’. The outputs are the benefits that institutions are seen to deliver. The inputs are the elections through which those exercising power are held to account. The euro crisis has weakened both sorts of legitimacy.

The outputs are hardly impressive. Economies are shrinking in many member-states, credit is in short supply in southern Europe, unemployment in the eurozone is over 12 per cent, and youth unemployment in Greece, Italy, Portugal and Spain is between 40 and 65 per cent. Neither the EU nor the euro appears to be delivering much in the way of benefits – whether to Greeks who blame Germans for austerity, or to Germans who resent contributing to Greek bail-outs.

Input legitimacy has also suffered. Given the complexity of decision-making, with power shared among many institutions, lines of accountability in the EU have never been easy to follow. But the perception that power is unaccountable is growing, especially in the heavily-indebted eurozone countries.

Power over economic policy has flowed away from national parliaments and governments to financial markets and to unelected institutions. Having mismanaged their economies, Greece, Portugal, Ireland and Cyprus have had to negotiate programmes of deficit reduction and structural reform with the ‘troika’ of the European Commission, European Central Bank and International Monetary Fund. Other countries, such as Italy, Spain and Slovenia, have avoided full bail-out programmes but had to follow the Commission’s budgetary prescriptions in order to avoid reprimands and possible disciplinary proceedings. Decisions on bail-outs and the conditionality that applies to them have been taken by eurozone finance ministers and heads of government. It is not at all clear where and how such decisions can be held to account, as became evident during the messy rescue of Cyprus in March.

There is no silver bullet that can suddenly make the EU respected, admired or even popular among many Europeans. Its institutions are geographically distant, hard to understand and often deal with obscure technicalities. However, unless the EU becomes more legitimate and credible in the eyes of voters, parts of it could start to unravel. For example, at some point eurozone governments may seek to strengthen their currency by taking major steps towards a more integrated system of economic policy-making. But then a general election, a referendum or a parliamentary vote could block those steps and so threaten the euro’s future.

The best way to improve the EU’s standing would be to improve its ‘outputs’. If European leaders moved quickly to establish a banking union, to strengthen the EU’s financial system; if Germany did more to stimulate demand, thereby helping southern European economies to grow; if structural reform started to restore the competiveness of those economies; and if unemployment started to fall – then EU leaders would look competent, and support for eurosceptics and populists would wane. For the most part such outcomes require not new institutions, but better policies.

Nevertheless EU governance is in bad need of an overhaul. For many federalists, the answer to perceptions of a democratic deficit is simple: when decisions take place at EU level, the European Parliament should exercise democratic control (alongside the Council of Ministers). And if more decisions are being taken at EU level, the powers of the Parliament over them should grow.

However, these arguments face both practical and theoretical difficulties. The practical problem is that the Parliament has serious shortcomings as an institution. Since its first direct elections in 1979, four major treaties have boosted its powers. MEPs now have considerable sway over the EU’s laws, budget and international agreements. Yet in every European election, the turn-out has declined – from 63 per cent in 1979 to just 43 per cent in 2009.

MEPs do a good job in some areas. In recent years they have, for example, improved the directive on hedge funds and private equity, and helped to reform the Common Fisheries Policy. But few voters are aware of the Parliament’s good work and many of them are sceptical that MEPs represent their interests; a lot of MEPs have little connection to national political systems.

Much of the time, the Parliament’s priority appears to be more power for itself. Since the 2009 European elections, MEPs have increased their hold over the Commission, and not only because of the extra powers the Lisbon treaty gave them. One of their techniques is to block what the Commission wants in one area, in order to extract a concession in another. The Parliament always wants ‘more Europe’ – a bigger budget and a larger role for the EU – but there is little evidence that most voters think the same way.

There are also theoretical objections to the Parliament becoming the main body for democratic oversight of the eurozone. In the EU’s usual law-making procedures – known as the ‘community method’ – the Parliament plays an important role. Thus in the last few years it has amended and approved new laws on eurozone budgetary discipline. And it is probably the best-placed body to question the Commission on its monitoring of member-state economies.

However, the money that rescues heavily-indebted member-states has to be voted by national parliaments. The EU budget is not involved to a significant degree, so the European Parliament plays only a minimal role in bail-outs. Decisions on bail-outs and the conditionality that applies to them are taken at EU level by eurozone finance ministers and heads of government. But these decisions have to be implemented by national parliaments: the German Bundestag had to vote money for Cyprus’s bail-out, while the Cypriot parliament had to approve the winding up of Cypriot banks.

These are reasons to increase the involvement of national parliamentarians in eurozone governance – and in the EU more broadly. Critics of their involvement argue that most of them focus on national issues and have little understanding of the wider European interest. Those are valid points. Any attempt to enhance the role of members of parliament (MPs) therefore needs to encourage them to ‘think European’. The European Council has helped heads of government to do so. The prime ministers who attend wear two hats – as national political leaders and members of the EU’s supreme authority. As Luuk van Middelaar, an adviser to Herman Van Rompuy, demonstrates in his excellent new book ‘The passage to Europe’, when national leaders attend the European Council, they start to consider the European interest – sometimes to their own surprise.

So how can MPs play a bigger role in scrutinising the EU? There are increasing numbers of ‘inter-parliamentary’ bodies that bring together MPs and MEPs. These range from the general Conference of European Scrutiny Committees (COSAC) to more specialised groups for foreign policy and Europol. And the recent fiscal stability treaty set up a ‘conference’ that will gather MPs and MEPs to scrutinise the operation of the treaty and discuss wider economic issues. However, these bodies – though useful – are merely consultative and are often treated disdainfully by MEPs. They do not give MPs a sufficient stake in the EU.

Accountability should start at home. Some parliaments, such as that of Denmark, have good systems for holding ministers to account, before and after they attend the Council of Ministers. Others, including that of Britain, scrutinise draft EU laws but do not follow Council meetings closely. National parliaments could improve their systems by emulating best practice across the Union.

The links between national parliaments should be strengthened. The Lisbon treaty created the ‘yellow-card’ procedure, whereby if a third or more of national parliaments believe that a Commission proposal breaches subsidiarity – the principle that decisions should be taken at the lowest level compatible with efficiency – they may ask that it be withdrawn. The Commission must then do so or justify why it intends to proceed. So far this procedure has been used just once, when the Commission withdrew a measure that would have enhanced trade union rights. A small treaty change could turn the yellow-card procedure into a red-card procedure, so that, say, half the national parliaments could force the Commission to withdraw a proposal. A similar system could enable national parliaments to club together to make the Commission propose the withdrawal of a redundant or unnecessary EU law.

A more fundamental reform would be to implement the long-discussed idea of establishing a forum for national parliamentarians in Brussels. The forum’s workload should be modest, so that the best and brightest MPs would want to participate. It should not duplicate the legislative work of the European Parliament. Rather, the forum should ask questions about, and write reports on, those aspects of EU and eurozone governance that involve unanimous decision-making and in which the Parliament plays no significant role.

This forum could become a check on the European Council. It could challenge EU actions and decisions that concern foreign and defence policy, or co-operation on policing and counter-terrorism. On eurozone matters the new body could – meeting in reduced format, without MPs from non-euro countries – question the euro group president or give opinions on bail-out packages. The forum could start work as an informal body and, if it proved useful, be given formal powers – such as the election of the euro group president – through a new treaty.

Hopefully, the forum would encourage MPs to think European. Sceptics and cynics will rightly argue that a new institution cannot on its own make the EU accountable. But in the long run, MPs will have to become more involved in the workings of the EU. Because MPs are usually closer to their constituents than MEPs, and because they are elected on a higher turnout, they stand a better chance of improving the EU’s legitimacy.

Charles Grant is director of the Centre for European Reform.

Comments

Added on 16 Jul 2013 at 07:41 by Angus

One good model of how to involve national MPs in European affairs would be one that has been successfully used for more than 60 years at the EU's less well-known older sister, the wider circle of nations (now 47) that is the Council of Europe.

The Parliamentary Assembly of the Council of Europe was the main focus of the early builders of Europe for a few brief post-war years before some of its disenchanted luminaries peeled off to create the Coal and Steel Community, the EC and so on. It came up with - and still guides, to some extent, the development of - the European Convention on Human Rights.

Churchill and the others who conceived the CoE understood that "tying in" parliamentarians was critical to the success of the whole enterprise.

And today it is PACE which, despite its limited statutory powers, is generally regarded as "the driving force" of the Council of Europe, prodding the governments into action, and often taking the lead in new initiatives - such as opening its arms to Eastern Europe after 1989 for example (and now Arab Spring countries), or abolishing the death penalty.

There are other democratic advantages. National obsessions have a natural outlet at European level, and the traffic can be two-way: MPs return to their home parliaments having "rubbed shoulders" and compared notes with their fellows in Strasbourg, who are often dealing with the same issues back home. The overall effect is to tilt perspectives away from troublesome national interest and towards deeper European values - just what the EU is after.

There have been growing ties in recent years between the Council of Europe and its much more successful offshoot, the EU. But if the EU is seriously considering a parliamentary arm it might do well - as my father (a native of Aberdeen) used to say - to "tak pints" from its forerunner.

Added on 10 Jun 2013 at 15:49 by Tony Brenton

It really does say something about the state of the European debate that the suggested solution to the current opaque proliferation of Euro- institutions is to create another one.

Added on 10 Jun 2013 at 15:48 by Marcus Walker

I don’t buy van Middelaar’s argument that Merkel and co. become Senators of the Republic of Europe when they go to Brussels. I think this is a self-serving and wishful-thinking piece of Van Rompuyian propaganda. Having researched and written close reconstructions of the Eurocrisis summitry since late 2009, I think there is far more evidence that these were negotiations between hard-nosed national interests wrapped in the European flag.

This affects the kind of education/socialisation that national MPs could realistically undergo if they played more of a role in Europe. The difference between, say, Merkel and her Bundestagfraktionen isn’t that she thinks more of the broader European interest, but that she thinks of a bigger set of domestic and foreign national interests; whereas sacrifices of the former for the latter can be harder for MPs to sell to their constituents, who are also socialised by German media to think mainly in terms of the price tag of bailouts.

My sense is that national leaders were more likely to think and decide ‘as Europeans’ before the financial crisis – especially when the Kohl/Delors generation was in office – than in the era of Merkel and friends. The pressures of this crisis have sharpened the struggle for national interests – of obtaining exactly and only those European policies and institutions that suit individual creditor or debtor countries – that used to be softened by lofty historic ambitions of ‘building Europe’. It’s a change of personalities/generation as well as of circumstances. Call me cynical.

Poor old Schäuble sometimes gets into trouble because he’s a throwback to that earlier generation…he agrees to a ‘European’ deal because that’s where his heart lies, but then Merkel tells him he went too far and he has to go back to Brussels and do it again. It has happened at least twice, including over debt relief for Greece.

Furthermore, different policies could improve the ‘output’ as you say, but the policies you rightly list are hard to imagine if power in the EU/Eurozone is dominated by a club of self-interested national governments. German national interests and political culture militate against banking union, fiscal stimulus or a broader mandate for the ECB. Southern Europe’s national political cultures and institutions make liberal economic reforms possible only at a snail’s pace – and under a level of duress that creates these very problems of legitimacy. Only federalism could break through this, but voters don’t support it: why reward EU institutions whose outputs have been so bad…

Added on 10 Jun 2013 at 15:42 by Ian Campbell

The EU Commission should be a technocratic/secretariat "back office" type institution to national governments and parliaments. It should not be initiating anything other than co-ordinating issues of mutual interest to the membership and helping to find the best solutions across that membership. Perhaps some extra powers for the Council of Ministers who should have their proposals accepted by parliaments/governments.

It was created in the reverse order required to give it any democratic legitimacy. It should be subservient to the nations it serves.

This construct would add time to getting matters through such revised EU machinery , but this would mean that it only dealt with what must be at the European level. Thus subsidiarity would be consistent with its brief and role.

Added on 10 Jun 2013 at 15:23 by Anne Palmer

You ask, "Can national parliaments make the EU more legitimate"?

It is far too late to even try to make any NATIONAL Parliament here in the United Kingdom of Great Bitain and Northern Ireland to make the EU more Legitimate.

Right from the very beginning in 1972/3 here in the UK, lies HAD to be told to the people of this Country-by a Head of Government no less, before the only Referendum the people have had on "whether to remain in the then European Community", to get then to vote to remain in what they were told was a Common Market, in which "there would be no loss of essential Sovereignty".

Legitimate=to make lawful? The EU could never be LAWFUL here in the UK because it was and is and always will be completely contrary to our very own long standing Common law Constitution.

Had the people been told the truth from the very start, the people would never have agreed to remain in the then "Community".

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