Year LIX, 2017, Single Issue, Page 88

 

 

The Impact of Deeper Eurozone Integration on the Institutional Framework of the European Union

 

LUCA LIONELLO

 

 

1. Introduction

The ongoing process of reform and completion of economic and monetary union (EMU) has created the need to provide the euro area with its own institutional system able to handle the further sharing of sovereignty that has now become necessary in order ensure the stability of the single currency. Although some EU institutions are already designed to operate according to a variable geometry approach, and thus able to involve countries in decision-making processes in different ways that reflect the level of integration chosen by each, other institutions, at present, rule out any form of internal differentiation. Creating a Eurozone institutional system within that of the European Union would clearly be a complex and challenging undertaking, given the need to ensure, as far as possible, the unity of the European legal framework, while also meeting the specific governance needs of the countries that have adopted the single currency.

The aim of this article is to analyse, in relation to the deepening integration of the euro area, the scope for institutional evolution of the European Union. It is divided into two parts. The first sets out the reasons why the Eurozone countries need to deepen their political integration and have their own institutional framework and decision-making mechanisms. The second looks at the capacity of the existing institutional framework to adapt in ways that cater to the need for differentiated integration, looking specifically at the European Central Bank (ECB), the Council and the European Council, the European Parliament, and finally the Commission.

2. The Spilt Between the Eurozone and the Other EU Member States and the Gradual Emancipation of the Euro Area

The roots of the current split between the Eurozone and the other EU member states can be traced back to the negotiations that led to the signing of the Maastricht Treaty, when it was decided that the creation of the single currency would not necessarily involve all the member states, only those choosing to take part,[1] and that participants would have to meet certain convergence criteria.[2] Basically, the monetary union has always embodied a fundamental contradiction: indeed, although the Treaty stated that euro was the official currency of the European Union and the ECB was its central bank, this new European sovereignty in the monetary field, supported by close coordination of fiscal policies, has only ever concerned the euro area member states.

Even though, formally, the European Union retained a unitary legal framework, with the Maastricht Treaty there gradually began to emerge, in different ways, forms of differentiation between the Eurozone countries and the EU’s other member states. As shall be analysed in more detail further on, some institutions began to operate according to a variable geometry approach, to allow decisions specifically concerning the euro area to be taken only by representatives of countries that had adopted the single currency. Second, some of the Treaty provisions introduced differences in rights and obligations according to whether or not the country in question had adopted the single currency, or whether or not a natural or legal person was resident or headquartered in the Eurozone.[3] Finally, also from the convergence perspective, the euro area countries could be differentiated from the rest: during the first ten years of the single currency, they all experienced a consistent level of inflation, a relative ease of access to credit and, overall, an improvement in their economic conditions.

The explosion of the sovereign debt crisis had the effect of speeding up this process of emancipation of the euro area from the rest of the EU. As the logic of economic convergence faltered, the need to guarantee the survival of the monetary union led to the emergence of new forms of cohesion between its members, which further distanced the euro area countries from those outside the monetary union.

First of all, the countries of the Eurozone set up new mechanisms, rules and procedures designed to ensure the stability of their area through sovereignty sharing in further economic and fiscal policy areas. The European Stability Mechanism (ESM) provided financial support to governments in crisis, subject to their implementation of a series of reforms, which were agreed and set out in a Memorandum of Understanding (MoU).[4] The Commission and the Council enhanced their power of surveillance of economic and budgetary policies in the Eurozone by introducing an assisted procedure for the adoption of national budgets.[5] Meanwhile, under the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG, or “fiscal compact”), the Eurozone countries committed themselves to introducing a balanced budget rule into their national legal systems in order to put an end to deficit-driven fiscal policies.[6] Finally, in the framework of the banking union the ECB was given broad powers to supervise prudentially the Eurozone’s key credit institutions,[7] and a single resolution mechanism was created to support struggling banks.[8]

Furthermore, following the outbreak of the sovereign debt crisis, the Eurozone countries found themselves with new interests and priorities that were not necessarily shared by the rest of the European Union. The need to rescue states in financial difficulty (Greece primarily) is a case in point: in fact, the high costs of bailing out Greece were borne solely by Eurozone governments. Another example has been the implementation, within the Eurozone, of greater prudential regulation of the banking sector and the creation of a supranational authority responsible for monitoring the main lenders.[9] Similarly, the proposal to introduce a common tax on financial transactions appears to be of interest only to a group of countries from the Eurozone.[10] More generally, there is a growing awareness, in Europe, that the countries that share the single currency must, to ensure its survival, be willing to accept a further, and substantial, sharing of sovereignty. Since 2012, the European institutions have published several discussion papers and proposals on the importance of completing the economic and monetary union, underlining the common need to ensure the stability of the euro area as a whole.[11]

Finally, analysis of the legal basis upon which some of the most recent reforms of economic governance were adopted provides further evidence of the disunity between the Eurozone and the rest of the EU. Indeed, rather than pursuing unanimous amendment of the EU Treaties through the procedures set out in Art. 48 TEU, the Eurozone countries have often preferred to enter into separate international agreements, such as the ESM and fiscal compact Treaties. Furthermore, the provisions of Art. 136 TFEU, regarding economic coordination within the euro area, have also been extensively used for the adoption of secondary law.

In conclusion, although it does not yet have a legal personality distinct from those of the European Union and the single EU member states, the Eurozone is in the process of breaking free and becoming an autonomous entity with its own policies, decision-making mechanisms and interests. The following analysis will look at how the European Union’s institutional framework has adapted, and could further adapt, to this gradual process of self-determination of the euro area.

3. The Development of an Institutional System Tailored to the Euro Area

3.1 The Difficulty of Reconciling a Single European Legal System with Different Ways of Operating Within EU Institutions.

The fact that there has emerged a solid group of countries committed to ensuring the stability of the entire euro area necessitates a profound reflection upon the functioning of the European Union’s institutional system, and this reflection should take into account two basic principles. First of all, given that dividing the EU into Eurozone and non-Eurozone countries has a bearing on several crucial aspects of the integration process, such as the exercise of sovereign powers, the rights and obligations assigned to member states, and the protection of specific interests, the representatives of the euro area countries need to be able to decide autonomously on those issues that specifically concern their bloc. At the same time, however, any reform of the institutional mechanisms of the Eurozone should, as far as possible, leave the European legal framework intact. In other words, the aim should not be to dismantle the existing institutions, but rather to create, within the Union, an integrated core group with a capacity for self-determination that may be exercised in the fields of economic and fiscal policy.

Bearing these considerations in mind, let us explore the hypothesis of establishing a specific institutional system for the euro area starting from the existing legal framework. Indeed, rather than creating new institutions and adding to the existing Treaties, it would be preferable to allow the nascent Eurozone government to evolve through gradual adaptation of the existing institutional mechanisms to the specific needs of economic and monetary union.

3.2 The European Central Bank.

The European Central Bank is the EU institution responsible for managing monetary policy.[12] Because not all the countries in the EU are part of the Eurozone, the ECB has always constituted a fundamental paradox: although it is an institution that belongs to the Union as a whole, in reality its mandate and the instruments at its disposal limit its Community vocation, making it a partial institution that actually works only for some (albeit the majority) of the member states.[13]

The ECB is the only European institution specifically designed to operate with a variable geometry. Indeed, the authors of the Maastricht Treaty, realising that not all the member states would immediately adopt the single currency, constructed the internal machinery of the ECB in such a way as to distinguish between the participating and the non-participating states. Accordingly they gave it a tripartite structure. Indeed, the ECB has three internal organs that have different compositions and different mandates. The Executive Board, consisting of the ECB’s president and vice-president plus four other members, all appointed by the European Council acting by a qualified majority, is responsible for implementing monetary policy and managing the day-to-day business of the ECB. The Governing Council, comprising the six members of the Executive Board plus the governors of the national central banks of the euro area countries, adopts the guidelines and takes the decisions necessary to ensure the performance of the tasks entrusted to the ECB; in addition, it formulates monetary policy for the euro area, and provides the Executive Board with guidelines for the implementation of its decisions relating to monetary objectives. Finally, the General Council, on which sit the governors of the national central banks of the Eurozone and non-Eurozone countries, essentially has an advisory role and collects statistical information. Even though the General Council was meant to be a transitional body that would disappear once all the EU countries had adopted the single currency,[14] the growing divide between the Eurozone and the rest of the EU means that this is now very unlikely to happen.

The recent attribution of prudential supervisory powers to the ECB has extended the variable geometry concept to the framework of the banking union. Indeed, several EU countries outside the monetary union have opted to participate in the Single Supervisory Mechanism (SSM), which is headed by the ECB. However, the national supervisory authorities of these non-Eurozone countries, despite being involved in the preparation of decisions, cannot take part in their final adoption, which is a task that, under the terms of Reg. (EU) No 1024/2013, falls to the Governing Council of the ECB. Clearly, in order to avoid having to take orders from an organ in which they are not represented, EU countries outside the Eurozone can, at any time, decide to stop participating in the SSM; in this way, in the event of serious disagreement, they can prevent the ECB from having the last word on the supervision of banks located in their territory.[15]

3.3 The Council and the European Council.

Although the Council of the European Union, which has legislative and budgetary responsibilities, was conceived as an institution of the Union as a whole, it has adapted seamlessly to the requirements of euro area governance. Unlike the ECB, whose organs were, at the outset, designed to operate in accordance with the needs of different groups of countries, the Council has had modify its internal machinery in order to allow decision-making processes to differ according to whether or not the items on the agenda specifically concern the Eurozone. The Council’s intergovernmental nature and uti singuli mode of operation have obviously facilitated this adaptation.

The Council’s variable geometry approach to its role has been accepted both formally and informally. On a formal level, the Maastricht Treaty stipulated which governments could participate in decision-making processes concerning EMU. Under the terms of Art. 139 TFEU, for example, the voting rights of members of the Council representing countries that have not adopted the single currency should be suspended for the adoption of measures that specifically concern the Eurozone countries, in particular the recommendations and sanctions provided for under the system of surveillance of national budgets.[16] On an informal level, on the other hand, the Eurozone finance ministers have taken to meeting regularly, as the so-called Eurogroup,[17] to discuss issues specifically related to EMU. Clearly, the main purpose of these meetings is to reach a basic consensus among the euro area countries, which will then influence the formal decision making by the Council.[18]

The gradual establishment of the Eurogroup as the de facto economic government of the euro area has served as a model for the adaptation, to a variable geometry method of operating, of another intergovernmental institution, namely the European Council, which certainly saw its role strengthened during the sovereign debt crisis, as it assumed responsibility for the basic fundamental choices that served to keep the monetary union intact. In adopting the fiscal compact, it sanctioned the creation of the Euro Summit, a forum that had already been emerging slowly, in practice, ever since the outbreak of the crisis.[19] Meetings of the Euro Summit bring together the heads of state or government of the countries whose currency is the euro, as well as the president of the European Commission and the president of the ECB.[20] They serve to discuss issues relating to the specific responsibilities, with regard to the single currency, that are shared by these countries, issues concerning the governance of the euro area, and strategic orientations for increasing convergence within it.[21] Having evolved as an informal body, the Euro Summit does not affect the rights of the European Council provided for in the EU Treaty.

3.4 The European Parliament.

3.4.1 Does the Eurozone Need its Own Parliament? Reasons Against.

Following the introduction of tighter measures of Eurozone governance in the wake of the outbreak of the sovereign debt crisis, the issue of democratic control of these new instruments for economic coordination has become a prominent topic in political debate. In this regard, there have been proposals to create, within or outside the European Parliament, a specific level of democracy for the euro area.[22] However, closer examination of their feasibility reveals that these proposals present a series of difficulties.[23]

First of all, the working of the European Parliament could not be based on a variable geometry approach without first finding a way of differentiating the role of MEPs on the basis of the country they represent. Because, at present, Art. 14.2 TEU, in stating that “The European Parliament shall be composed of representatives of the Union's citizens”, prohibits such a differentiation. This provision serves to underline the European Parliament’s supranational nature, in other words, the fact that it is the expression of the voice of the European citizens as a whole, and not merely an assembly of different nationally elected representatives. To start distinguishing between Eurozone MEPs and those from other member states would be to risk splitting the Parliament into at least two groups. Second, given that the monetary union is not the only example of differentiated integration provided for under EU law, any new variable geometry mode of operation of the European Parliament would, logically, also have to be extended to all the other situations in which a certain group of member states has opted to pursue a closer level of cooperation. Accordingly, leaving aside specific technical cases (e.g. enhanced cooperation in the fields of divorce and legal separation and European patent law), any new ad hoc form of democratic control should apply not only to EMU, but also to the Schengen system and, ultimately, to the permanent structured cooperation in security and defence policy.[24] But the risks, in this case, are that the Parliament would become an à la carte forum, or “European Parliament” would come to be a meaningless umbrella term for an assembly composed of numerous mini-parliaments — as many there are examples of differentiated integration. Third, it makes no sense to fragment the European Parliament given that, under the EU Treaty, almost all the EU member states are required to participate in the third stage of EMU, and consequently to introduce the euro at some point in the future,[25] and therefore, in the medium to long term, the European Parliament will in any case be composed almost exclusively of representatives from the enlarged euro area.

Finally, it has to be considered that the introduction of a new parliamentary chamber composed only of MEPs elected in Eurozone countries would further complicate and fragment the European legal framework and, in particular, would undermine the European Parliament’s role as the supreme democratic institution of the European Union.

These are the reasons why it is necessary to find a form of Eurozone governance that can be democratically legitimised by the European Parliament in its full composition, avoiding fragmenting its internal machinery and creating substitutes for it.

3.4.2 Does the Eurozone Need its Own Parliament? Reasons For.

Reasonable as they are, the arguments just set out are not a sufficient basis on which to dismiss entirely the question of the need to create a specific form of democratic control for the euro area.[26] Indeed, the democratic deficit in EU economic governance must be set in the context of the current movement towards greater sharing of fiscal sovereignty among the countries that use the single currency. It is no coincidence that the proposals in favour of a separate parliament have arisen in connection with the creation of European tools for monitoring national budgets, and the emergence of a plan for an ad hoc budget for the euro area.[27] In this regard, it is important to stress that the creation of an embryo of fiscal power at European level would affect, after currency, taxation, another element of state sovereignty that requires strong democratic control.[28] Taxation is the power of the state to collect part of the wealth of citizens and, through public spending, to invest the resulting revenues for the common good. Modern democracies came into being as a result of the struggle to wrest budgetary power from the absolute sovereign and transfer it to the parliament. The motto of the American Revolution “no taxation without representation” neatly encapsulates the relationship between citizens and fiscal sovereignty, and also explains why the introduction of a European control power over national budgets and the definition of a fiscal capacity for the monetary union demand stricter application of the democratic principle.

The proposals geared at creating a separate level of democracy for the Eurozone were advanced following doubts over the European Parliament’s ability to adequately meet the needs, in terms of democratic representation, of the countries that have adopted the single currency. In this regard, there are two main issues to be considered.

First, the European Parliament, being by nature an institution of the Union as a whole, also has members coming from outside the euro area, elected by citizens who are not involved in the process of fiscal integration. Allowing these MEPs to participate in decisions pertaining to the euro area alone would undermine the very basis of democratic representation, namely that any political power must be exercised by the representatives of those who are subject to that power. Therefore, in order to safeguard the relationship between those who govern and those who are governed, and avoid, for example, Swedish or Polish MEPs making the difference in a vote concerning the governance of the euro area, it would make sense to ensure that only representatives from the latter have the power to make decisions on issues that concern it.[29]

Second, the current method of electing the European Parliament does not respect the principle of electoral equality of citizens. This is an effect not only of the fact that each country has its own electoral law for choosing its MEPs, but also of the principle of degressively proportional representation of citizens provided for in the Lisbon TEU, according to which the citizens of smaller countries are overrepresented compared to those living in the most populous countries. For example, an Austrian citizen is twice as represented as a French one, while a citizen of Lithuania is about three times more represented than a Polish citizen.[30]

This disproportion in representation has long been justified by the argument that the Union is not only a union of citizens, but also of states, and therefore that that territorial boundaries also need to be taken into account.[31] In the light of the considerations set out above, however, this justification is no longer acceptable.[32] Whereas manipulation of representation could be tolerated as long as the Union had an only limited impact on the sovereign prerogatives of states, the current impact of European governance on budgetary laws and the prospect of further fiscal integration in the euro area obviously require that all European citizens be represented in the same way. Given that economic and fiscal integration influences the relationship between responsibility and solidarity in a political community, the citizens of the Eurozone should all have the same say in the management of the economic governance of their bloc. The risk, otherwise, is that one country’s taxpayers will have far more influence than another’s, even though they are all subject to the same rules.

3.4.3 What Kind of Parliament Does the Eurozone Need?

Were the governments to decide that the Eurozone should be given its own form of democratic representation, they would first need to have worked out the ways in which this idea could actually be turned into reality.

The first thing to be appreciated is that introducing a specific level of democracy for the euro area countries demands a reform of the European Treaties. This is because the existing legal framework excludes, a priori, any differentiation of the role of MEPs based on their country of election. Amendment of the EU Treaties would also be necessary in order to involve the representatives of the citizens in the processes of economic governance of the Eurozone, given that this is currently exclusively in the hands of the Council, the European Council and the Commission. Thus, in the light of these considerations, there seem to emerge two main options for realising this vision.

One possibility is to create, within the European Parliament, a “European subcommittee” responsible for matters relating to EMU.[33] This would have to differ from the European Parliament's current Committee on Economic and Monetary Affairs in two respects: first of all, it would have be composed only of MEPs elected in countries that have adopted the single currency; second, it would have to be the only parliamentary authority able to take part in decisions on the economic governance of the Eurozone. Indeed, were the “European subcommittee” to be nothing more than a discussion forum responsible for preparing plenary sessions of the European Parliament, it would fail to meet the representative needs of the euro area.[34] The merit of this proposal lies in the fact that the creation of a special committee within the European Parliament would leave the Parliament formally intact and facilitate coordination between the euro area MEPs and all the other MEPs. However, establishment of such a committee would demand a complex reform of the Treaties by unanimity, especially if it were decided that euro area MEPs should not be represented in a degressively proportional manner.

The other main option for giving the Eurozone its own form of democratic representation would be to create a separate parliamentary assembly. This could be achieved by setting up a new chamber elected at European level or by setting up a second-level parliament composed only of national parliamentarians from the euro area countries. The fiscal compact, moreover, already envisages the creation of a conference of representatives of the European and national parliaments to discuss budgetary policies and other issues covered by the Treaty.[35] It should be noted, however, that whatever form it were to take, the creation of a new chamber for the Eurozone would undoubtedly have a series of negative repercussions: it would render the legal framework of the European Union complex and fragmented; above all, the political weight of the European Parliament could be reduced as a result of the involvement of the new assembly in EMU decision-making processes.[36]

3.5 The European Commission.

The transformation of Eurozone economic governance following the outbreak of the sovereign debt crisis has undoubtedly led to a strengthening of the role of the European Commission. Indeed, as well as being involved in the surveillance of national budgets, the Commission also plays a key role in the implementation of conditionality policies under the EMS. Furthermore, the most recent EMU reform proposals also mention the possibility of creating a Eurozone finance minister and treasury within the framework of the European Commission.[37]

As the process of emancipation of the euro area from the rest of the EU has gradually gained momentum, the Commission has remained, in many ways, the institution that least needs to adopt a variable geometry approach. There are two main reasons for this.

Given the way it operates, the European Commission cannot be considered an organ of the states, but rather an organ made up of individuals who act independently in the interests of all. The independence of the individual commissioners, not only of their governments but also of the electorate in their countries of origin, is illustrated by the decision, enshrined in the EU Treaty,[38] to reduce the Commission members to a maximum number corresponding to two thirds of the number of member states. In the present framework, in which the Union does not yet qualify as a parliamentary democracy, the individual commissioners are not directly accountable to the citizens; instead, the Commission as a whole is accountable to the Parliament. This explains why any motions of no confidence or censure that may be tabled by MEPs are directed at the Commission as a whole, and not its single members. It can therefore be inferred not only that the Commission is a unitary and cohesive organ, but above all that it is a supranational institution that is largely unconstrained by the logic of national representation.

As regards the functions of the Commission, the EU Treaty assigns it three main roles: it has the right of legislative initiative, it monitors compliance with EU law by member states, and it fulfils an executive function. Although these are key competences, all directly relevant to the management of economic governance in the euro area, they do not require that the members of the Commission play different roles according to their nationality. Indeed, the Commission’s interventions in the current framework of economic governance are, above all, of a technical nature, given that it merely makes recommendations and puts proposals to the Council and subsequently implements the decisions of the latter. Even though the Commission’s technical evaluations are central to the adoption of excessive deficit procedures or the withholding or withdrawal of support from the countries that have applied for, or are receiving, financial assistance under the EMS, these are still decisions that have to be taken by the Council. Even in the event of greater democratisation of the EMU's decision-making framework through involvement of the European Parliament, the Commission would continue to carry out its present functions, namely preparation and implementation of policy choices regarding the management of economic governance.

These considerations may be taken as confirmation that the Commission acts as a unitary and independent body, able to ensure correct application of EU law both in matters relating to the Union as a whole and when safeguarding the specific interests and needs of the euro area. Even the possible creation of a Eurozone minister within the European Commission would not necessitate any differentiation of roles within it, given that this would only require, at most, a tacit agreement that this role be assigned to a citizen from a country whose currency is the euro.

Conclusions

The aim of the considerations set out in this paper was to demonstrate that the Eurozone needs an institutional framework for managing the transfers of sovereignty that have already taken place and those that are still needed in order to ensure the completion of EMU. While the reaching of separate agreements at intergovernmental level cannot be ruled out entirely, it is to be hoped that the governance requirements of the euro area will be met through a reform of the existing institutional framework.

The present analysis has shown that the manner of the Union’s “adaptation” to the logic of enhanced integration of the euro area has differed from institution to institution. Whereas some, like the ECB, were originally designed to operate according to a variable geometry approach, others (the Council and the European Council) have adapted to this need. As for the European Parliament, the introduction of a specific level of democracy is clearly necessary, but difficult to put into practice. Only the European Commission, does not require an internal differentiation of roles, given that it has a purely executive role in economic governance and is already fully legitimised at European level.

In conclusion, institutional reform of the Eurozone is a fundamental challenge that must be addressed in any future Treaty reform process. It has become necessary not only to strengthen the political integration of the Eurozone, but also to reinforce generally the relationship between the citizens and the European institutions, through a new definition of the EU's governance structure.


[1] The United Kingdom and Denmark secured the right to opt out of the obligation to introduce the single currency.

[2] The Treaty establishes four economic convergence criteria (price stability, sound public finances, exchange rate stability and stability of long-term interest rates) and one legal convergence criterion (independence of the national central bank). It should be noted that some countries are intentionally violating the convergence criteria in order to avoid joining EMU.

[3] The actions of the ECB, in exercising its monetary policy mandate, its exchange rate interventions, its management of official reserves and guarantee of the proper functioning of the system of payments, are effective only in the Eurozone. Moreover, the Council is invested with a general power to coordinate the economic policies of all the member states, in accordance with the procedures laid down in articles 121 and 126 TFEU, but its recommendations are binding only on euro area countries, and only the latter can be sanctioned should they persistently breach the convergence criteria.

[4] The Treaty Establishing the European Stability Mechanism was signed by the Eurozone governments on March 2, 2012.

[5] European surveillance of national budgetary cycles is envisaged by Reg. (EU) n. 1175/2011 on the European Semester and by Reg. (EU) n. 473/2013 on the common budgetary timeline.

[6] The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union was signed on March 2, 2012, by twenty-five EU member states. Only the United Kingdom, Croatia and the Czech Republic did not take part in the agreement.

[7] The single supervisory mechanism was provided for by Reg. (EU) n. 1024/2013.

[8] The single resolution mechanism was provided for by Reg. (EU) n. 806/2014.

[9] Membership of the banking union is compulsory for eurozone countries and optional for the other member states.

[10] Ten members of the euro area (France, Germany, Italy, Spain, Belgium, Portugal, Austria, Greece, Slovakia and Slovenia) are negotiating the introduction of a tax on financial transactions to be implemented through enhanced cooperation. Cf. European Commission’s Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax (COM/2013/71).

[11] In June 2012, the President of the European Council, Van Rompuy, presented a report entitled Towards a Genuine Economic and Monetary Union, prepared in close collaboration with the Presidents of the Commission (Barroso), the Eurogroup (Juncker) and the ECB (Draghi), EUCO (2012) 120. In November 2012 the European Commission published a communication entitled A Blueprint for a Deep and Genuine Economic and Monetary Union Launching a European Debate, COM (2012) 777 final. In June 2015, the president of the European Commission, Juncker, in close collaboration with the presidents of the European Council (Tusk), the Eurogroup (Dijsselbloem), the ECB (Draghi) and the European Parliament (Schulz) presented a new report on reform of EMU: Completing Europe's Economic and Monetary Union (this text can be consulted at, for example, https://www.ecb.europa.eu/pub/pdf/other/5presidentsreport.en.pdf). Finally, in May 2017, the Commission published a Reflection Paper on the Deepening of the Economic and Monetary Union, COM(2017) 291. The above documents set out a roadmap for the completion of EMU through the subsequent establishment of a banking union, a union of capital markets, a fiscal union, a true economic union and, finally, a political union.

[12] Under the Maastricht Treaty, which allows it considerable independence in exercising this sovereign power, the ECB is required to pursue, primarily, the objective of price stability and, without prejudice to this objective, to support the general economic policies in the Union.

[13] Even though the authors of the Maastricht Treaty imagined that this paradoxical situation would be only temporary, given that nearly all the member states were destined to join the monetary union, the process of monetary union enlargement has now run into considerable difficulty, leaving the ECB effectively operating as an exclusively Eurozone institution.

[14] Cf. Art. 141 TFEU.

[15] On this point, see N. Moloney, European Banking Union: Assessing its Risks and Resilience, Common Market Law Review, 51 (2014), pp. 1609 ff., p. 1663.

[16] This refers, in particular, to the multilateral surveillance procedure under Art. 121 TFEU and the excessive deficit procedure referred to in Art. 126 TFEU.

[17] An initial reference to the Eurogroup was contained in the Lisbon Treaty (Art. 137 TFEU). Furthermore, Protocol No. 14 to the Lisbon Treaty, on the Eurogroup, envisages the election of a president every two and a half years (who may be returned only once).

[18] With the majority already in close agreement on certain positions, debates in the Council obviously become rather sterile.

[19] Cf. Art. 12 TSCG.

[20] The president of the Euro Summit is appointed by the heads of state or government of the contracting parties whose currency is the euro by simple majority at the same time as the European Council elects its president, and for the same term of office.

[21] Euro Summit meetings are prepared by the Eurogroup, whose president may attend them.

[22] Proposals involving the creation of a parliament for the Eurozone have been put forward on several occasions by Emmanuel Macron, both when he was economy minister in the French government, and in his election manifesto during the French presidential election campaign. Cf. Macron Calls for Radical Reform to Save Euro, Financial Times, 24 September 2015. German finance minister Schäuble has also come out in favour of such a project. Cf. Schäuble Advocates Separate Eurozone Parliament, Euractiv, 28 January 2014.

[23] In academic debate on this issue, those opposed to the introduction of a separate Eurozone parliament include: F. Fabbrini, Representation in the European Parliament: of False Problems and Real Challenges, Zeitschrift für ausländisches öffentliches Recht und Völkerrecht, 73 (2015), pp. 823 ff.; F. Fabbrini, Economic Governance in Europe, Oxford, Oxford University Press, 2016, pp. 208-220; F. Allemand, F. Martucci, La légitimité démocratique de la gouvernance économique européenne, Revue de l’OFCE / Débats et politiques, n. 134 (2014), pp. 115 ff.; C. Fasone, European Economic Governance and Parliamentary Representation. What Place for the European Parliament?, European Law Journal, 20 (2014), pp. 164 ff..

[24] Cf. Art. 46 TEU.

[25] Under the right to opt out provided for in the Maastricht Treaty, the United Kingdom and Denmark are excluded.

[26] In academic debate on this issue, those in favour of the introduction of a separate Eurozone parliament include: A. Von Bogdandy C. Calliess, H. Enderlein, M. Fratzsche, C. Fuest, F. Mayer, D. Schwarzer, M. Steinbeis, C. Stelzenmüller, J. von Weizsäcker, G. Wolff, Aufbruch in die Euro Union, Zeitschrift für Rechtspolitik, 46, n. 7 (2013); L. Lionello, Does the Eurozone Need Its Own Parliament? Legal Necessity and Feasibility of a Eurozone Parliamentary Scrutiny, in D. Daniele, P. Simone, R. Cisotta (eds.), Democracy in the EMU in the Aftermath of the Crisis, Berlin, Springer, 2017, pp. 179 ff..

[27] Cf. note 11. See also the European Parliament resolution of 16 February 2017 on budgetary capacity for the euro area (2015/2344(INI)).

[29] This is the logic behind the variable geometry mode of operating adopted by the Union's intergovernmental institutions, such as the Council and the European Council.

[30] On this point, see N. Véron, How Unequal is the European Parliament’s Representation?, Bruegel Blog Post, 19 May 2014.

[31] F. Fabbrini Representation in the European Parliament: of False Problems and Real Challenges, op. cit. pp. 823 ff., p. 827.

[32] In June 2009, this point was also raised by the German Constitutional Court in its judgement on the ratification of the Lisbon Treaty: “The degressively proportional composition prescribed for the European Parliament by Article 14.2(1) third sentence Lisbon TEU stands between the principle of equality of states under international law and the state principle of electoral equality. [...]. In federal states, such marked imbalances are, as a general rule, only tolerated for the second chamber existing beside the parliament [...]. They are, however, not accepted in the representative body of the people because otherwise that could not represent the people in a way that does justice to equality based on the principle of personal freedom. The arrangement of the right to vote in the European Union need, however, not be a contradiction to Article 10.1 Lisbon TEU, which provides that the functioning of the Union shall be founded on representative democracy; for the democracies of the member states with their majorities and decisions on political direction are represented at the level of the European institutions in the Council and also in the Parliament. Thus, this arrangement of representation of the member states only indirectly represents the distribution of power in the member states. This is a cogent reason for the fact that it would be perceived as insufficient if for example a small member state were represented in the European Parliament by only one Member of Parliament if the principle of electoral equality were observed more strictly. The states affected argue that otherwise it would no longer be possible to reflect national majority situations in a representative manner at European level. This consideration alone shows that it is not the European people that is represented within the meaning of Article 10.1 Lisbon TEU but the peoples of Europe organised in their states, with their respective distribution of power brought about by democratic elections taking into account the principle of equality and pre-determined by party politics”. German Constitutional Court, Judgement of 30 June 2009, [2 BvE 2/08], paras 284–286.

[33] On this point, see S. Verhelst, A Eurozone Subcommittee in the European Parliament: High Hopes, Low Results?, Egmont European Policy Brief n. 31/2014.

[34] It should be noted that the idea of creating a committee with its own electorate and specific sovereign competences within a broader parliamentary assembly has already been discussed by the British parliament in relation to the co-called West Lothian Question. The latter concerned the possibility of introducing a variable geometry system in the Westminster parliament, following the devolution of certain sovereign powers to Scotland, Wales and Northern Ireland, but not to England. In 2012, the British government gave a commission chaired by Sir William Robert McKay a mandate to propose possible solutions to the “West Lothian Question”. In 2013, the Commission adopted a report containing a series of proposals designed to ensure the principle: “English votes for English laws”. “Decisions at the United Kingdom level with a separate and distinct effect for England [..] should normally be taken only with the consent of a majority of MPs for constituencies in England [..]”. Cf. Report of the Commission on the Consequences of Devolution for the House of Commons, (The McKay Commission), March 2013, pp. 8-9.

[35] Cf. Art. 13 TSCG.

[36] In addition to giving voice to all European citizens, the European Parliament has, over many decades, gained a level of political authority and institutional influence that would not be easy to replace.

[37] See European Parliament resolution of 16 February 2017 on budgetary capacity for the euro area (2015/2344(INI)).

[38] Cf. Art. 17.5 TEU.

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