Year LIX, 2017, Single Issue, Page 104

 

 

The Proposals Advanced by Jean-Claude Juncker: New Ambitions and Old Difficulties

 

PAOLO PONZANO

 

 

With a new “window of opportunity” to relaunch European integration now opening in the wake of the French and German elections, the President of the European Commission chose to use his latest State of the Union Address to the European Parliament, on 13 September 2017, as an opportunity to take, once again, a political initiative. Jean-Claude Juncker’s aim was, in fact, to exploit, to this end, what has emerged as a politically propitious moment, thanks to the coming together of a series of favourable circumstances. First of all, even though Brexit has raised some questions about the appeal of the European project, the British withdrawal from the EU means that, as from March 2019, the UK will lose its power to veto European Treaty revisions and the next (post-2020) EU financial framework. Second, on 25 March 2017, the EU heads of state and government adopted a declaration of principles in which they reaffirmed their intention to relaunch the European integration project by adopting a series of measures, in the fields of security, social policy and external relations, that should be capable of winning back political support for the EU among the Union’s citizens. Third, we are now seeing signs of a generalised economic recovery across all the countries of the EU, while unemployment, albeit still high, currently stands at its lowest levels for the past nine years. The fourth favourable circumstance is the “isolationist” behaviour of the new US administration, which has convinced most European political leaders that Europe, more and more, is going to have to look after its own security. Finally, the election of Emmanuel Macron as French president and his declarations on the need to build a new European sovereignty show that the European Commission can now count on the political support of France, a major EU country and founding member state that on several previous occasions has hindered Europe’s development (in this regard, we may cite France’s failure to ratify the European Defence Community Treaty in 1954, the empty chair crisis and Luxembourg Compromise of 1965/66, and France’s rejection of the European Constitution in 2005).

So, taking advantage of this propitious moment, the President of the European Commission, aiming to further the debate on the future of the European Union, set out a series of institutional and policy proposals, all of which (unlike those subsequently advanced by President Macron in a speech at the Sorbonne) can be implemented under the existing Treaty provisions. Indeed, the European Commission, whose role is, among other things, to act as the guardian of the Treaties, has never yet used the power it has, under article 48 of the Lisbon Treaty as well as other, previous provisions, to submit, on a par with the member states, proposals for amendment of the Treaties. Even the “Penelope project” in 2002, which represents the Commission’s boldest foray into this area to date, was relegated by President Prodi to the status of a “feasibility study” following negative reactions from Giscard d’Estaing, who was president of the Convention on the Future of Europe, and from the commissioners themselves, who had not been involved in the drafting of the project.[1]
 

1. Institutional Proposals

With regard to the European institutions and the EU decision-making processes, President Juncker put forward practically every single proposal that could possibly be implemented under the existing Treaty provisions, and in so doing avoided opening the “Pandora’s box” of Treaty revision (unlike President Macron who, in his speech at the Sorbonne, did precisely this). It could be said that Juncker “scraped the bottom of the barrel” of possibilities that exist under the present Treaty framework for improving or simplifying the workings of the European decision-making process. However, as will be explained below, his proposals raise a number of political and institutional difficulties, and they are the very ones that have been apparent since the entry into force of the Lisbon Treaty, and have thus far prevented the implementation of the kind of measures he suggests.
 

1.1. Use of so-Called Passerelle Clauses to Allow the Adoption of Majority decisions in Sectors Currently Subject to the Unanimity Rule.

The Lisbon Treaty gives the European Council the possibility to decide unanimously to introduce the qualified majority rule for the adoption of politically sensitive measures that currently require a unanimous vote by the member states (for example in the fields of foreign policy and taxation). The European Council also has the faculty to decide, again by unanimity, to allow the European Parliament to participate, on an equal footing, in deciding matters on which at present it only expresses a non-binding opinion prior to the Council’s ultimate decision (i.e. to allow co-decision). Juncker identified the single market as the area in which decisions should be taken by a qualified majority and cited several specific tax measures (corporation tax, VAT and the tax on financial transactions, for example) on which unanimity decision making should be replaced by qualified majority decisions. Even though Juncker’s proposal makes sense, given the ongoing difficulties over tax harmonisation within the European Union, realistically the likelihood of the member states giving up their power of veto in the area of taxation is very slim indeed, if not zero. After all, some member states derive an important economic advantage from the unanimity rule, since the veto instrument allows them to apply more favourable tax regimes to multinational companies investing in their territories (Ireland and Luxembourg are the most striking examples in this regard, although Austria and the Netherlands also benefit from the absence of tax harmonisation). Furthermore, the Lisbon Treaty includes a further procedural guarantee, under the terms of which the parliament of even just one member state, having been notified in advance, can reject and thus block any proposal to use a passerelle clause, providing it does so within a six-month time limit. What is more, the British Parliament even passed a national law prohibiting its heads of government from authorising the use of passerelle clauses on EU matters. Even after Brexit, we are still likely to see similar initiatives by the parliaments of the aforementioned states (in this respect, it can be recalled that Ireland requested assurances on the question of tax regimes as a condition for its ratification of the Lisbon Treaty). Therefore, President Juncker’s proposal to use passerelle clauses in the field of taxation would probably fail to gain the unanimous support of the European Council, or be blocked by the preventive veto of a single national parliament.
 

1.2. Merging of the Roles of President of the European Council and President of the European Commission.

Juncker proposes that there should be a single President of the European Union, whose role would combine the currently separate functions fulfilled by the President of the European Commission and the President of the European Council. This is not a new proposal, having first been aired by French politician Pierre Lequiller during the European Convention chaired by Giscard d’Estaing. At the time, it did not gather widespread support, partly because many Convention members from smaller countries were opposed to the creation of a permanent President of the European Council, even though neither the Constitutional Treaty nor the Lisbon Treaty, whose texts contained nothing to indicate an incompatibility between the two offices, excluded the possibility of their being merged. The proposal was subsequently revived by Michel Barnier in a speech given in 2011, but was not received any more enthusiastically.

At first glance, in this case too, Juncker’s proposal seems to make sense, as it would permit a simplification of the Union’s institutional structure and, above all, would allow European citizens to associate the highest office in the European Union with a single individual. Also, it would finally provide an answer to Kissinger’s famous question: “Who do I call if I want to call Europe?”. However, this solution fails to take into account the political and institutional difficulties stemming from the differences between the roles played by the two presidents and, above all, from the current Treaty provisions:

a) The President of the European Commission heads an institution that is required to “promote the general interest of the Union” (art. 17 TEU), whereas the President of the European Council must “endeavour to facilitate cohesion and consensus within the European Council” (art. 15, par. 6, TEU). In other words, the President of the Commission’s role, institutionally, is to initiate legislation and monitor the application of the Treaties and the measures adopted by the institutions, while that of the President of the European Council, on the other hand, is to mediate between the various positions of the heads of state and government, in pursuit of their unanimous consent. It is certainly true that the role of the European Commission has changed over the years and that, as a result, its president is now more likely to seek consensus within the European Council rather than rigidly defend the proposals of his/her institution.[2] Merging the two roles under a single president would undoubtedly carry the risk of reinforcing, rather than combating, this tendency.

b) The President of the European Commission is elected for a five-year term by the European Parliament on the basis of a proposal from the European Council that takes into account the results of the European elections. Furthermore, the European Parliament can censure the work of the Commission, and any motion of censure passed by the Parliament would require the entire Commission, including its president, to resign. The President of the European Council, on the other hand, is elected directly by the heads of state and government for a renewable 36-month term, without any involvement of the European Parliament. It thus seems inconceivable that, in the eventuality of the EU having a single president, the heads of state and government would be willing to accept that a motion of censure against the Commission, tabled by the European Parliament, should culminate in the resignation of the person who also acts as European Council president. Conversely, however, were this person permitted to stay on in his/her capacity as President of the European Council, this would, in effect, restore the dualism of Union leadership that currently exists.

Therefore, to combine the functions of President of the Commission and President of the European Council in an office held by a single person, even though this could be done without amending the Treaties, would be to risk running into the political and institutional problems described above, with the result that, in the end, the Treaties would have to be amended anyway, in order to get rid of the contradictions inherent in the current provisions. Furthermore, it should be considered that this merging of two presidents into one would carry the risk of strengthening the intergovernmental character of the process of appointing the President of the European Council, and of the office itself, at the expense of the Community method (based on the European Commission’s right of initiative, majority voting and the European Parliament’s powers of political control) that Juncker, through his proposals, would actually like to see strengthened. The presentation of various documents advocating a strengthening of economic and monetary union, drawn up jointly by all or some of the presidents of the European institutions (whose road maps have been disregarded by the European Council) seems to underline this risk.
 

1.3. Creation of a European Minister of Economy and Finance (a Role to be Filled by the European Commissioner for Economic and Financial Affairs, Who Should Also Chair the Eurogroup).

The suggestion to create a European Minister of Economy and Finance, who would be required to manage a euro area budget line, monitor the correct application of the provisions relating to EMU, chair the Eurogroup, and serve as the main interlocutor with the European Central Bank, is another sensible proposal, and a move that would strengthen both the effectiveness and the democracy of the European institutions, particularly as this new minister would be accountable to the European Parliament, albeit only to the MEPs of the eurozone countries (i.e. to the European Parliament operating in restricted composition). However, to have this role filled by the European Commissioner for Economic and Financial Affairs (a position currently held by Frenchman Moscovici) would be to raise, once again, problems of an institutional nature, as well as a possible conflict of interests:

a) the Eurogroup president is chosen by the member states without the participation of the European Parliament, whereas the European Commissioner for Economic and Financial Affairs, although initially nominated by the member states, has to be approved by the European Parliament and is accountable to the latter, just like all the other members of the European Commission;

b) the Commissioner for Economic and Financial Affairs, as a member of the European Commission, exercises the latter’s right of legislative initiative vis-à-vis the Eurogroup. Therefore, were he/she required to combine this particular role with the mediatory one of the Eurogroup president, then a conflict of interests could easily arise between the two functions (after all, institutionally, the Eurogroup president is required to seek compromises in order to facilitate agreements on proposals made by the European Commission). Furthermore, were the two roles to be combined, his/her task of monitoring the correct application of the Treaty provisions (a specific institutional function of the European Commission) would risk being compromised by the fact of his/her having been appointed by the very member states he/she might be called upon to sanction for breaches of Treaty rules.

Although, in connection with this question, reference is often made to the dual role filled by the current High Representative of the European Union for Foreign Affairs and Security Policy (Federica Mogherini), who is both Vice-President of the European Commission and Chair of the Foreign Affairs Council, her situation is not pertinent. Indeed, the European Commission does not have the power to initiate legislation in the field of foreign policy, while the Foreign Affairs Council, in the vast majority of cases, decides by unanimity, with the result that potential conflicts of interest between the two functions simply do not arise. Moreover, the Foreign Affairs Council normally adopts decisions of an executive and non-legislative nature, decisions that may concern, for example, the deployment of peacekeeping missions, the sending of observers to oversee elections in politically sensitive areas, the definition of political strategies towards third countries, and the imposition of sanctions against countries that do not respect human rights. In these cases, the High Representative, both in her capacity as Vice-President of the European Commission, and as chair of a configuration of the Council of the European Union, is performing executive functions. In short, whereas there are no potential conflicts of interest between the functions of High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission, the same cannot be said in the case of combining the role of the President of the Eurogroup with that of the Commissioner for Economic and Financial Affairs.
 

1.4. Eurozone Strengthening and Creation of a Budget Line.

President Juncker’s main concern is the unity of the 27 member states within the EU, and he is not in favour of splitting the Union into two concentric circles. He does not rule out the possibility of initiatives being carried out by smaller groups of countries, but he does not envisage an institutional strengthening of the eurozone (the third scenario indicated in the European Commission’s white paper on the future of Europe). Therefore, unlike President Macron, Juncker is not proposing the creation of an autonomous budget for the eurozone, financed with European taxes, but merely calling for the creation of a euro area budget line within the EU budget. Indeed, in line with his view that the Treaties should not be amended, his proposal is to create a financial instrument for macroeconomic stabilisation within the EU budget, designed to be used to support the countries that use the single currency (conversely, the creation of an autonomous budget for the eurozone, financed with European taxes, would require amendment of the Treaties).
 

1.5. Strengthening of European Democracy.

Remaining faithful to his general approach, which is to act within the framework of the existing Treaties, Juncker would like to see the Spitzenkandidaten experience repeated during the next European elections. Speaking on a personal level and with a measure of caution, he expressed, in his address, his “sympathy for the idea of having transnational lists in European elections”[3] from as early as the 2019 vote. This is a proposal that has been advanced more forcefully by President Macron and other European leaders. Juncker also expressed his support for “President Macron’s idea of organising democratic conventions across Europe in 2018”, in order to continue the debate on the future of Europe throughout the coming year.

Juncker’s other proposals for strengthening democracy within the EU, whose inherent difficulties have been highlighted above, are to use passerelle clauses to extend the scope of majority voting and to combine the functions of the President of the Commission and the President of the European Council.
 

2. The policy Proposals

In his state of the Union address, and in a letter of intent[4] sent to the President of the European Parliament and the Prime Minister of Estonia, Juncker set out a series of significant proposals, dividing them into initiatives that the European Commission undertakes to launch within the current legislature and others to be “launched with a 2025 perspective” (even though Juncker cannot bind the decisions of the next European Commission, which will be appointed in 2019). Thus, Juncker uses the same method that the European Commission now traditionally adopts when drawing up its work programmes (namely that of presenting “roadmaps” that indicate the essence of the various proposals advanced together with the timetable envisaged for their implementation). In a recent analysis, the European Commission’s in-house think tank was careful to underline that about 80 per cent of the proposals put forward by President Macron on September 27 are already envisaged by Juncker in the European Commission’s work programme.

This article is not the right place for a detailed examination of the proposals set out by the Commission president in his address and letter of intent. What should be underlined, however, is Juncker’s wish to see the European Commission’s power of initiative used in order to: boost economic growth and investment (in particular through packages of proposals for a digital single market); build a “resilient Energy Union with a forward-looking climate change policy”; develop a new EU industrial policy strategy (notwithstanding the insufficiency of the powers conferred by the Treaties); and strengthen the internal market. Particular attention should be drawn to President Juncker’s intention to present what he has called a “fair taxation package for the creation of a single EU value added tax area” and his proposal to establish rules at EU level that would allow “taxation of profits generated by multinationals through the digital economy”. Given the criticisms levelled at President Juncker in the past for having allowed his homeland, Luxembourg, under his leadership, to adopt permissive practices on the tax treatment of multinationals, this move may be seen as a turnaround.

The proposals advanced by Juncker in the social policy field are more limited. He calls for a “proclamation by the EU institutions of the European Pillar of Social Rights” and the establishment of “a European labour authority to strengthen cooperation between labour market authorities [...], as well as other initiatives in support of fair mobility, such as a European social security number”. While there can be no underestimating the symbolic importance of a new European charter of social rights, it cannot really be argued that this initiative would allow the creation of the “social Europe” listed among the objectives set out by the leaders of 27 member states and EU institutions in their Rome Declaration of 25 March 2017. The fact is that the citizens’ support for the European project will only be won back through different legislative measures (necessarily binding on the member states) in the social field, such as the establishment of a European minimum income and/or the creation of a European unemployment allowance, measures that have already been proposed by some EU member states and by the European Parliament. While it is certainly true that the insufficiency of the current European budget and the lack of new own resources are a major obstacle to the implementation of these measures, they could be funded in a transitional phase through financial contributions from the member states, providing these states were exempted from the requirement to keep their government deficit to 3 per cent of GDP or less.

Juncker’s proposals for a strengthening of the Economic and Monetary Union are, instead, more significant, envisaging transformation of the European Stability Mechanism (ESM) into a proper European Monetary Fund, to be managed by the future European Minister of Economy and Finance, and the creation of a dedicated euro area budget line to serve as a source of financial assistance for national structural reforms and a means to promote macroeconomic stability of the euro area and facilitate the economic convergence of the countries that have not yet adopted the single currency. However, to the extent that Juncker’s proposals are based on the Treaties in their present form, the creation of these financial instruments would inevitably be subject to the constraints of the current European budget, and would therefore be unable to produce the embryo of a future European “federal” budget — an objective that, in particular, would demand the creation of new own resources.

Equally significant are Juncker’s proposals on migration policy and the creation of “an area of justice and fundamental rights based on mutual trust”, in particular the elements of his proposed anti-terrorism package, which would have the effect of strengthening the security of European citizens and should help them to perceive more clearly the added value of the European project. It is also worth mentioning the initiative, to be launched in autumn 2018, to strengthen the enforcement of the rule of law in the European Union. This is an area in which the European institutions find themselves needing to regain some credibility in the wake of their failure, thus far, to trigger the procedure laid down in Article 7 of the Treaty on European Union in order to determine the existence of a serious and persistent breach, by Hungary and Poland, of the EU’s founding values of democracy and the rule of law. Certainly, the fact that the existence of such a breach has to be determined by the European Council acting by unanimity greatly reduces the deterrent effect of Article 7. What is more, the EU’s inability to act in defence of fundamental rights within its own confines has greatly undermined the credibility of any response it might make to similar breaches by third countries. For these reasons, the initiative announced by President Juncker is to be welcomed.
 

3. Conclusions

This brief analysis of the proposals advanced by President Juncker in his address and letter of intent leads to the conclusion that his institutional proposals have little chance of actually being implemented since they raise political and institutional problems that it would be difficult to overcome without a revision of the Treaties (serving to remove the restrictive clauses and incompatibilities present in the current provisions).

The only exception is the idea of creating a euro area budget line within the EU budget. However, this proposal is really only a different version of the creation of a financial instrument designed to support the eurozone countries already advocated in the European Commission’s blueprint document of November 2012. The policy proposals, on the other hand, must be assessed differently as these, were they to be implemented, would represent a significant contribution to a relaunch of the European project (even though the creation of a binding instrument in the field of social policy — one that would allow European citizens to verify the added value of the European Union in the fight against unemployment and social exclusion — continues to be lacking). Therefore, the address by the President of the Commission cannot be regarded as “the last hurrah of an unrepentant federalist”,[5] but rather as Juncker’s attempt to restore to the European Commission its “Monnetian” role as a legislative initiator and privileged interpreter of the European interest. Unfortunately, the most significant proposals put forward by Juncker have been overshadowed by the even more ambitious ones advanced by President Macron in his speech at the Sorbonne on 27 September. Since the French president’s proposals, both institutional and relating to policy content, go beyond actions implementable under the current Treaty framework, and envisage a process centred around the next two rounds of European elections, they are far more ambitious than Juncker’s. Indeed, geared at creating European sovereignty and altering the current institutional order, they include a separate budget for the euro area; a reduction in the number of commissioners; half of MEPs to be elected on transnational lists; the creation of a common intervention force and a common defence budget; and the creation of a common guard at the Union’s external borders. President Juncker has recently responded by distributing, among the heads of state and government, a document[6] drawn up by The European Political Strategy Centre (the European Commission’s in-house think tank), which underlines the significant convergence between the proposals advanced by the two leaders (“about 80 per cent” of Macron’s proposals “are already proposed or foreseen in the European Commission’s work programme” presented by Juncker) and points out that “some of President Macron’s proposals would require Treaty change and more far-reaching institutional innovation, therefore requiring significantly more time.” However, as already explained, President Juncker’s institutional proposals, too, would require modification of the Treaties in order to eliminate the safeguarding clauses and incompatibilities present in the provisions of the Lisbon Treaty.


[1] In truth, even though the European Commission has never submitted formal proposals to amend the Treaties, President Delors and his negotiating team obtained significant changes to the Treaties in force both in the IGC that produced the Single Act [extension of Community powers, increased provisions for majority voting, increased powers of the European Parliament, introduction of differentiation in the single market (Art. 100, par. 4, TEC)] and in the Maastricht IGC on economic and monetary union.

[2] Nowadays, it is hard to imagine the European Commission withdrawing a proposal on the Erasmus programme — as the Commission led by Delors did in 1986 — merely because the Council had requested a more than 50 per cent reduction of the budget allocated to the programme. Similarly today, the Commission would be very unlikely to succeed in obtaining adoption of the Galileo project that, when originally submitted, was opposed by three or four member states (Germany, UK, Netherlands, Denmark) which formed a blocking minority.

[3] http://europa.eu/rapid/press-release_SPEECH-17-3165_en.htm.

[4] https://ec.europa.eu/commission/sites/beta-political/files/letter-of-intent-2017_en.pdf.

[5] See the article by Riccardo Perissich, Juncker’s Last Hurrah, 21/09/17 (http://www.iai.it/en/pubblicazioni/junckers-last-hurrah).

[6] http://g8fip1kplyr33r3krz5b97d1.wpengine.netdna-cdn.com/wp-content/uploads/2017/09/EPSC_TwoVisionsOneDirection.pdf.

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