Ulrike Liebert, Professor in European Studies, looks at the tensions that are arising between the need for effective economic governance in the Eurozone and the need for democratic accountability, both of member states and the EU as a whole, particularly in the context of the outcome of the Greek referendum.
Eurozone leaders sometimes seem to forget that that they are governing an economic and monetary union that is part of the European Union of states and citizens, founded on common values such as ‘respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities’ (Art. 2 TEU).
The Greek population of 11 million represents a minority within the nineteen Eurozone states of some 300 million citizens, a minority which is deeply divided over the burdens which Eurozone rules require them to bear for the sake of the euro’s stability. The referendum of 5 July was an unprecedented instance of a plebiscite on Eurozone bailout conditions, and Eurozone leaders had no choice but to acknowledge it as a legitimate means of democracy. Greek voters turned out in unexpectedly high numbers and forcefully spoke their will.
With the Eurozone crisis not yet over, Albert Weale, Professor of Political Theory and Public Policy at UCL, reviews the Hertie Governance Report 2015 as it analyses the key issues facing the European Institutions in terms of economic governance. As ad hoc solutions are found to deal with urgent matters, what does this mean for political accountability and reform in the EU, and what lessons have been learnt?
The European financial and economic crisis since 2008 has overturned the normal workings of the central institutions of the European Union. The policies and practices established in the Maastricht Treaty and the Stability and Growth Pact (SGP) have been transformed in a seemingly endless series of improvised measures. National budgetary and economic policy planning are coordinated through the European Semester. Stronger preventive and corrective procedures are in place through a reinforced SGP. Member States now have a treaty requirement to have automatic correction mechanisms for budgetary deficits. The European Stability Mechanism operates as the de facto bailout mechanism for national governments, a function at one time prohibited by the Maastricht Treaty. The European Central Bank is now engaged in outright monetary transactions, a policy that comes close to monetizing government debt. Banking supervision has been reformed.