Further development of the EMU – should legitimacy come first or last?

Päivi Leino-Sandberg: Adjunct Professor of EU Law, Academy of Finland Research Fellow, University of Helsinki

The June 2012 European Council adopted a report setting out ‘four essential building blocks’ for the future Economic and Monetary Union (EMU): an integrated financial framework, an integrated budgetary framework, an integrated economic policy framework and, finally, strengthened democratic legitimacy and accountability.[1] In its discussions, the European Council stressed that:

Throughout the process, the general objective remains to ensure democratic legitimacy and accountability at the level at which decisions are taken and implemented. Any new steps towards strengthening economic governance will need to be accompanied by further steps towards stronger legitimacy and accountability.[2]

But while the European Council has repeatedly expressed its concern about the legitimacy problems of the EMU, the tools proposed for tackling these problems have remained extremely modest. This trend continues in the recent Five Presidents’ Report adopted in June 2015 (discussed here and here), which again includes a brief concluding section on ‘Democratic Accountability, Legitimacy and Institutional Strengthening’, but manages to discuss the topic without any tangible results. For many readers of the Five Presidents’ Report, it might not be evident that a further centralization of power to EU institutions will automatically bring about greater legitimacy. After all, in many cases the democratic guarantees continue to function best at national level.

There are various legitimacy related challenges that should be addressed if there indeed is a wish to make the EMU more sustainable. For example, think about the blurred division of competence between the EU and its Member States especially in the area of economic governance. While the Treaties still specify economic and fiscal policy as falling under Member State competence, the six-pack and the two-pack have increased EU level steering, and in practice turned EU recommendations binding by introducing sanctions for non-compliance. Since all EU institutions agreed on the necessity of these amendments, their significance for the division of competences between the EU and Member States has been subject to very little public discussion.[3] Many of the reforms are legally problematic, but a formal Treaty amendment reassessing the nature of Union economic policy competence was not deemed possible within the timeframe that has been deemed necessary. Ambiguity in drafting the rules has in many ways been intentional, but it has also contributed to blurring responsibilities between the EU and national level. The complexity of rules has increased, which in its turn has strengthened the discretion of the Commission in implementing the rules, and weakened faith in them. At the same time, Member States have needed to embark on numerous ‘solidarity operations’. In addition, the strict conditionality attached to financial assistance has had major implications for the policy choices of programme countries. As a result of the crisis and the way in which it has been dealt, Europe is effectively divided into creditors and debtors. Very few see the EMU as treating them fairly.  This has contributed little to the aim of improving the legitimacy of decision-making, and is probably the strongest motivation for the need to reform the EMU. An arrangement that is widely experienced as being unfair cannot be sustainable in the long run.

Second, thinking how many of the problems relating to the euro-crisis are connected with a lack of transparency when making past decisions, one would think that European decision-makers would now hurry to do what they can to improve openness. In April 2011 the President of the Euro Group, today the President of the Commission, Jean-Claude Juncker, was quoted as stating that when it came to economic policy, he was ‘for secret, dark debates’.[4] Even the more minor steps are still to be taken, such as the formal extension of the scope of Regulation No 1049/2001 on public access to documents to those held by the European Council; however, almost six years after the entry into force of the Lisbon Treaty stipulating such an extension, the amendment is still to be made. Most decisions aiming at curing Europe’s economic crisis are characterised by a lack of procedural transparency. Proposals have been made late; this sets clear limitations on national discussions,[5] as well, since they are then conditioned by the fear that the EU would – in particular in case national debates proved substantial and required amendments - not be capable of taking the necessary decisions in a timely manner. Again, this has not contributed to a stronger legitimacy of decision-making.

Last week, on 21 October 2015, the Commission adopted a package of proposals intended to implement the first stage of proposals included in the Five Presidents’ Report. In many ways, these proposals take the development to the completely wrong direction with respect to the concerns expressed above. The Commission Communication ‘On steps towards Completing Economic and Monetary Union’ once again includes the compulsory final section on ‘Effective democratic legitimacy, ownership and accountability’. It repeats the old ideas of dialogue with and debates in national parliaments, without adding anything new.

In fact, when reading the Commission Communication, there is fairly little to add to what the Grand Committee of the Finnish Parliament already commented to similar proposals in its Statement 4/2012:

“It is dangerous for democracy to adopt quasi-democratic rules that offer the appearance but not the reality of democratic legitimacy. […]The committee considers that respect for the treaty is a minimum requirement for the EU’s democratic legitimacy. […] The measures taken to control the economic crisis leave something to be desired in this respect, as regular procedures have been waived and serious doubts have been voiced about whether these measures are consistent with the treaty. […]Finally, the committee wishes to point out that democracy also requires that the principles of transparency and public access to documents are realised in the development of EMU.”

In short, the place of legitimacy and democracy seem to be exactly the same as they were in 2012.

As far as the trend of blurring competences is concerned, the package includes a Proposal for a Council decision laying down measures in view of progressively establishing unified representation of the euro area in the International Monetary Fund. While being somewhat out of touch with reality (in the form of decision-making rules in the IMF, and the modalities for amending them), the reading of Union competence reflected in the proposal is fundamentally flawed. The proposal refers to how the recent measures of economic governance

“have integrated, strengthened and broadened EU-level surveillance of Member State policies in essential areas of macroeconomic and budgetary relevance. The European Stability Mechanism was established as the permanent crisis resolution mechanism for the countries of the euro area. The Union has also put in place a Banking Union with centralized supervision and resolution for banks in the euro area and open to all other Member States. At the same time, the external representation of the euro area has not kept up with those developments. The progress that has been achieved on further internal integration of the euro area needs to be projected externally […].”

While unified representation does not necessarily mean a shifting of competence, in the view of the Commission, there is in the IMF context an obligation of “full coordination” of national positions. The proposal does not stipulate what happens if a shared position cannot be found. Considering that economic and fiscal policy remain national competence, as does the ESM, one wonders whether this new attempt to blur the division of competence further does anything to strengthen the voice of the euro group in the IMF, or whether actually the opposite is the case.

The new package also includes a Commission decision establishing an independent advisory European Fiscal Board, which many European actors have seen necessary in  limiting Commission discretion in the application of the rules of economic governance and making the monitoring exercise more objective. The Board set up by the Commission based on its own decision, and applicable as of 1 November 2015, now has the task of contributing ‘in an advisory capacity to the exercise of the Commission's functions in the multilateral fiscal surveillance as set out in Articles 121, 126 and 136 TFEU as far as the euro area is concerned’. For this purpose it shall provide to the Commission an evaluation of the implementation of the Union fiscal framework, advise it on the prospective fiscal stance appropriate for the euro area as a whole based on an economic judgment; cooperate with the national fiscal councils, and on the request of the President, provide ad-hoc advice.

While all of these are undoubtedly noble and necessary tasks which could contribute to strengthening the credibility of EU rules, the public is not to enjoy from information concerning them any more than the Member States are, since information provided by the Board is to remain primarily a Commission prerogative. The decision stipulates that the meetings of the Board shall not be open to the public. And as far as transparency is concerned, the Commission decision is rather straightforward:

Article 6 Transparency

The Board shall publish an annual report of its activities, which shall include summaries of its advice and evaluations rendered to the Commission.

It is of an interest that the Commission sees it fit to set up a body for assisting itself in exercising its Treaty-based tasks, administratively attached to the Commission's Secretariat General, but without a trace of the Treaty-based transparency obligations that apply to the Commission itself: the presumption of openness, and the principle that access to documents can only be limited on a case by case basis, based on Regulation No 1049/2001, which includes an exception to be invoked in case of harm to the financial, monetary or economic policy of the Union or a Member State. Instead of providing access as the main rule, apart from summaries published at a later stage, only the Commission is to know what the European Fiscal Board advices. While this would also seem to be contrary to the Treaty, such an arrangement does little to increase faith in the objectivity of decision-making or the legitimacy of the exercise. Instead, it seems to be nothing than a new way of buttressing the Commission’s own position in the application of rules by offering it the opportunity to justify its position with reference to unpublished advice by an independent Board.

At the same time, the Treaty of Lisbon would already offer a number of solid tools specifically aimed at tackling the Union’s well-known problems relating to democratic legitimacy, through improved openness and wider citizen participation in decision-making, and a clearer division of competence between the EU and its Member States. None of these reforms are as much as mentioned in any of the high-level reports. And yet, they would provide a number of concrete means for many of the problems illustrated above. The most recent Commission package yet again demonstrates a complete failure to grasp what legitimate decision-making is about. It matters how decisions are taken, and what their outcomes are. Therefore, instead of treating the questions relating to legitimacy and democracy as an appendix or afterthought in the style of the recent reports, these should be the questions that are tackled first. An economic policy that is not experienced as legitimate is seldom effective. This would be useful starting point for the further development of the EMU.

Barnard & Peers: chapter 19

Photo credit: voxeurop.eu

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[1] Towards a Genuine Economic and Monetary Union. A report prepared by Herman Van Rompuy, President of the European Council in close collaboration with José Manuel Barroso, President of the European Commission; Jean-Claude Juncker, President of the Eurogroup and Mario Draghi, President of the European Central Bank, 5 December 2012. See also European Council conclusions on completing EMU adopted on 14 December 2012. 

[2] December 2012, para 14; European Council conclusions on completing EMU, adopted on 18 October 2012, para 15.  For a discussion, see e.g. Päivi Leino and Janne Salminen, Should the Economic and Monetary Union Be Democratic After All? Some Reflections on the Current Crisis, 14 German Law Journal (2013) 844–868. 

[3] See Päivi Leino and Janne Salminen, “Going ‘Belt and Braces’ – Domestic Effects of Euro-crisis Law”, EUI Working Paper LAW 2015/15.

[4]“Eurogroup chief: 'I'm for secret, dark debates'”, published by euobserver on 21 Aril 2011, available at https://euobserver.com/economic/32222 .

[5] For a discussion, see Päivi Leino and Janne Salminen, ’The Euro Crisis and Its Constitutional Consequences for Finland: Is There Room for National Politics in EU Decision Making?’, 9 European Constitutional Law Review (EuConst) 3/2013 451–479.  

The Five Presidents’ Report on Completing the EMU: A Glimpse at the Future of Europe

Menelaos Markakis, DPhil student at University of Oxford, Academy of Athens scholar

On 22 June 2015 the Presidents of the EU and Euro area institutions presented their report on ‘Completing Europe’s Economic and Monetary Union’. The report provides a roadmap for ‘deepening’ and ‘completing’ the Economic and Monetary Union (EMU). Building on the measures enacted to combat the crisis, the Five Presidents’ Report makes a wealth of valuable suggestions for strengthening the EMU governance framework and deepening economic integration in the Euro area. The EU Presidents recommend that progress be made towards a genuine Economic Union, a Financial Union, a Fiscal Union, and a Political Union.

An overview of the proposed reforms

The proposed reforms would be implemented in two consecutive stages. In the first stage (1 July 2015 – 30 June 2017), the EU institutions and Member States ‘would build on existing instruments and make the best possible use of the existing Treaties’ (p. 5). In the second stage (mid-2017 to 2025), ‘concrete measures of a more far-reaching nature would be agreed to complete EMU’s economic and institutional architecture’ (p. 5). What follows is perforce merely a general indication of the content covered within the report.

(i)                 A genuine Economic Union

As regards the economic ‘pillar’ of the EMU, the Five Presidents’ Report recommends that each Euro area Member State create a Competitiveness Authority which would be ‘in charge of tracking performance and policies in the field of competitiveness’ (p. 7). The rationale behind this proposal is twofold. Such bodies ‘would help to prevent economic divergence’ and ‘would increase ownership of the necessary reforms at the national level’ (p. 7).

It is patently clear that these Authorities are expected to boost economic convergence in the Euro area, most notably in relation to policy areas which fall outside the EU’s competence. These bodies would have a mandate to ‘assess whether wages are evolving in line with productivity and compare with developments in other euro area countries and in the main comparable trading partners’ (p. 8). Moreover, ‘these bodies could be mandated to assess progress made with economic reforms to enhance competitiveness more generally’ (p. 8). The Five Presidents’ Report further recommends that a Euro area system of Competitiveness Authorities be created, in order to coordinate the actions of these Authorities on an annual basis.

The report seeks to link this proposed technique of policy co-ordination to already existing forms of rules-based governance in the Euro area. The Commission is expected to ‘take into account the outcome of this coordination … in particular for … decisions to be taken under the Macroeconomic Imbalance Procedure (MIP), including whether to recommend the activation of the Excessive Imbalance Procedure’ (p. 8). In principle, Euro area Member States are and would remain free to choose whether to follow the best practices in Europe. However, if they choose not to, the Commission and Council might respond to such divergence by subjecting the Member States concerned to the Excessive Imbalance Procedure. In this connection, the presidents of the institutions explicitly recommend that the corrective arm of the MIP be used ‘forcefully’, in order to ‘encourage structural reforms’ (p. 8). Furthermore, they do not shy away from adding that social partners ‘should use the opinions of the Authorities as guidance during wage setting negotiations’ (p. 8).

At a later stage, ‘the convergence process would be made more binding through a set of commonly agreed benchmarks for convergence that could be given a legal nature’ (pp. 5 and 9). These binding standards would be laid down in EU legislation. In some areas, this would lead to ‘further harmonisation’ (p. 9). In other areas, ‘it will mean finding country-specific solutions’ (p. 9).  ‘Significant progress towards these standards – and continued adherence to them once they are reached – would be among the conditions for each euro area Member State to participate in a shock absorption mechanism for the euro area’ (p. 5), which will be discussed below (iii).

It is not clear which competence basis the EU institutions would use for the adoption of such instruments. It might be the case that the Five Presidents’ proposals rest on the implicit assumption that the EU Treaties will be amended before or during stage two of this process. It might also be the case that the EU institutions plan to make full use of Articles 114, 136, 153 and 352 TFEU and/or of the Treaty provisions on enhanced cooperation.

In this connection, the Constitutional Affairs Committee of the European Parliament has proposed that binding economic policy guidelines for the Euro area countries be adopted on the basis of Article 136 TFEU (p. 10 para. 15). It has further called for ‘the dropping of the restrictions under Article 136 TFEU’ and for ‘the upgrading of this article into a general clause for the adoption of legal acts concerning the coordination and setting of legally-binding minimum standards with regard to economic, employment and social policy’ (p. 16 para. 73). This would give more say to the European Parliament on Country-Specific Recommendations.

Moreover, it should not escape our notice that ‘Country-Specific Recommendations would continue to be used in this context’ (p. 9). Furthermore, the report suggests that the MIP ‘be utilised as a tool … to foster reforms and monitor progress in each euro area Member State towards these common standards’ (p. 9). As such, rules-based and co-ordination based governance techniques would continue to ‘form “hybrid” normative grids and accountability frameworks’ (Armstrong).

(ii)               Towards a Financial Union

As regards the proposed Financial Union, the Five Presidents’ Report recommends that the Banking Union be completed and that the Capital Markets Union be launched. First, the report recommends the full transposition into national law of the Bank Resolution and Recovery Directive. It is recalled that, in the opinion of the Commission, 11 Member States have not fully implemented the Directive into national law. Second, the report argues that, before the Single Resolution Fund (SRF) is sufficiently capitalised, an ‘adequate bridge financing mechanism’ should be created for banks that need to be orderly unwound (p. 11). Third, a common backstop to the SRF should be implemented. In the opinion of the EU Presidents, this could be achieved through a credit line from the European Stability Mechanism (ESM) to the SRF (see p. 11). ‘In due course, the effectiveness of the ESM’s direct bank recapitalisation instrument should be reviewed, especially given the restrictive eligibility criteria currently attached to it’ (p. 11). Fourth, the report recommends that a European Deposit Insurance Scheme be launched. Fifth, it proposes strengthening macroprudential supervision at EU level and ‘review[ing] the treatment of bank exposures to sovereign debt, for example by setting large exposure limits’ (p. 12).

Building on the Commission’s Green Paper on ‘Building a Capital Market Union’, the report further proposes launching a Capital Markets Union for all 28 EU Member States. This would ‘ensure more diversified sources of finance’ and would ‘strengthen private sector risk-sharing across countries’ (p. 12). However, financial integration carries risks with it, because a problem in one country can rapidly spread to another. As such, the Five Presidents’ Report recommends that financial supervision be strengthened in the EU and that a single European capital markets supervisor be created (p. 12).

(iii)             Towards a Fiscal Union

As regards the proposed fiscal union, the Five Presidents’ Report puts forward two proposals. First, it recommends that an advisory European Fiscal Board be created. This body would coordinate and complement the national fiscal councils that have been set up in accordance with Regulation 473/2013. The European Fiscal Board ‘would provide a public and independent assessment, at European level, of how budgets – and their execution – perform against the economic objectives and recommendations set out in the EU fiscal framework’ (p. 14), thereby adding extra pressure on national Executives and legislatures to take EU fiscal rules seriously. ‘Such a European Fiscal Board should lead to better compliance with the common fiscal rules, a more informed public debate, and stronger coordination of national fiscal policies’ (p. 14).

Second, the report proposes the creation of a fiscal stabilisation function for the Euro area. Such a mechanism would enhance public risk-sharing in the Euro area (p. 4) and could build on the European Fund for Strategic Investments. However, it ‘should not lead to permanent transfers between countries or to transfers in one direction only’ (p. 15). ‘It should also not be conceived as a way to equalise incomes between Member States’ (p. 15). Notably, this stabilisation function ‘should be developed within the framework of the European Union’ (p. 15, emphasis added).

Democratic Accountability, Legitimacy, and Institutional Reform

The discussion thus far has focused on the economic reforms proposed by the presidents of the EU institutions. The focus now shifts to proposed reforms for enhancing the democratic credentials of the EMU. Save for the proposals for a more timely and better-structured parliamentary debate during the European Semester (see p. 17), it is hard to see how these proposals add anything to the already existing ‘six-pack’ and ‘two-pack’ arrangements for ‘institutional dialogue’. Be that as it may, the added emphasis on the role of social partners and civil society, as well as on consultation with EU-level social partners, should be readily applauded (see p. 22).

There is a strong focus on output legitimacy and on synergies between the European and national parliaments. ‘After many years of crisis, governments and institutions must demonstrate to citizens and markets that the euro area will do more than just survive. They need to see that it will thrive’ (p. 5).

Moreover, the report lays down a number of proposals for strengthening the EMU governance framework. More specifically, the EU Presidents suggest that the various treaties concluded outside the formal confines of the Lisbon Treaty be incorporated into the EU Treaties and secondary legislation and that the governance structure of the ESM be ‘fully integrated within the EU Treaties’ (p. 18). The report further suggests that a full-time presidency of the Eurogroup be considered and proposes the creation of a Euro area treasury (see p. 18). In the opinion of the authors of the report, ‘the world’s second largest economy cannot be managed through rule-based cooperation alone’; ‘it will need to shift from a system of rules and guidelines for national economic policy-making to a system of further sovereignty sharing within common institutions’ (p. 5). The division of labour between a Euro area and national treasuries is not made clear.

Regrettably, there is no elaboration of what accountability structures should be put in place if a Euro area treasury or fiscal stabilisation function were to be created. Likewise, there is no analysis of the desired accountability mechanisms for the proposed Financial Union. To be sure, requiring the consent of the European Parliament for the appointment of the Chair and the Vice-Chair of the Supervisory Board was a major step forward (see Article 26(3) of Regulation 1024/2013). What is more, there are no proposals for improving transparency in the workings of the Eurogroup, whose role in economic governance has now been heightened. A body actively seeking to foster economic convergence among Euro area countries (see p. 9) should not operate behind closed doors.

Final remarks

There will be no attempt to summarise the preceding argument. It is nonetheless worth highlighting certain features that are of particular importance. First, since ‘all euro area Member States must participate in all Unions’ (p. 5), these proposals would, if implemented,  put the idea of a multi-speed Euro area to sleep. To be sure, it might still be the case that not all Euro area Member States would meet the requirements to make use of the proposed shock absorption mechanism. Second, the EU Presidents’ proposals would, if implemented, entail a massive upward flow of power from the national to the EU/Euro area institutions and bodies. Arguably, this should be matched by increased democratic controls and robust accountability mechanisms. Third, it is particularly noteworthy that the report notes that all members of the Euro area should gain from EMU membership (p. 4). Spreading welfare gains across the Union and promoting economic, social and territorial cohesion might require that more thought be given to the EU’s regional and structural policies (see also the 1989 Delors Report). Lastly, at least some of the proposed reforms might require a Treaty amendment in order to be implemented, and therefore the Prime Minister of the United Kingdom might get his chance to renegotiate Britain’s relationship with the EU and to enshrine the desired precepts in primary law.

Barnard & Peers: chapter 19 

Photo credit: roarmap.org

The possibility of a UK referendum on the EU: The plot thickens

Steve Peers

What to make of the latest twist in the complicated tale of the UK's relationship with the European Union?

Back in January 2013, the Conservative party committed itself to a policy of renegotiating the UK's membership in the European Union by 2017, and then submitting the results of that renegotiation to an 'in/out' referendum, which would decide whether the UK stayed in the EU. It would only be in a position to deliver on that promise if it won a majority of seats in the next general election (May 2015), or at least came very close to holding a majority (possibly a small number of MPs from other parties would support its renegotiation and referendum pledge). So a referendum depended on the result of the next general election.

Now, an 'in/out' referendum at first glance seems more likely, with a change in the policy of the Labour party on March 11th to support such a referendum. However, the Labour party supports a referendum on a different basis than the Conservative party. It does not intend to aim for a renegotiation of UK membership, but rather supports an 'in/out' referendum only if there is an amendment to the EU treaties which transfers significant powers from the UK to the EU. This appears to align the Labour party policy on this issue with the longer-standing policy of the Liberal Democratic party - which could be relevant if the two parties decide to consider a coalition government or other form of political agreement following the 2015 election.

In fact, the European Union Act 2011 already requires a referendum in such circumstances - but it need only be a referendum on whether to approve the changes resulting from this Treaty amendment, rather than an 'in/out' referendum.  So the change in the Labour party's policy is really only meaningful if there is such a major Treaty amendment.

What are the odds of this? While there is some prospect of a major Treaty amendment to address the issues facing the eurozone, which might also apply to non-eurozone States that wished to participate in those changes, it would be easy to draft a treaty which made major changes, but exempted the UK from them. This would be particularly easy if those changes only applied to Member States applying the single currency, perhaps including those Member States obliged to apply it (all other Member States except the UK and Denmark) or all non-eurozone Member States that wished to participate.

This scenario could be combined with a renegotiation of the UK's position (if the Conservative party holds a majority), or could simply leave the UK's position untouched. It would seem odd to pass up the opportunity to, at the very least, clarify the relationship between the eurozone and non-eurozone Member States, which would be directly relevant to such a Treaty amendment.

A more likely scenario is that, if any amendments to the EU primary law are deemed necessary, they will take the form of a treaty among a group of Member States, avoiding the Treaty amendment procedure altogether. This process was approved by the CJEU in the Pringle judgment, at least as regards the treaty establishing the European Stabilisation Mechanism. It was also applied as regards the fiscal stability treaty, after David Cameron vetoed the possibility of a Treaty amendment to that end. Such treaties do not need all the Member States, or all their signatories, to enter into force, and at least in some circumstances can use the EU institutions to implement them.

So the net result of today's policy change is a slightly increased likelihood of using such a procedure in order to avoid a Treaty amendment. This was already likely in the event of a Conservative government; now it is also likely if the Labour party takes office. This outcome does nothing to improve the transparency or complexity of EU law. It would have been preferable to take the opportunity in the near future to consider the role and functions of the EU more fundamentally, not only as regards the UK, in order to attempt to rebuild its rather tarnished democratic legitimacy. 

Barnard & Peers: chapter 2

Democracy and its discontents: Should the results of the European Parliament elections determine the next President of the European Commission?

Steve Peers

It is highly unlikely that the next President of the European Commission will be decided by the Court of Justice of the European Union (CJEU).  Law sets the framework in which elections take place, but usually does not directly impact upon the outcome - although there are important exceptional cases to the contrary, such as the American election of 2000.

The election of the Commission President in 2014 is also an exceptional case, at  least to the extent that the rules have changed and their interpretation is contested. Previously the President was appointed by the European Council, after approval of its preferred nominee by the European Parliament. The new rules, which were introduced by the Treaty of Lisbon and are now being applied for the first time, now specify that the President is 'elected' by the European Parliament, on the basis of a nomination by the European Council, 'taking account of' the results of the election to the European Parliament.

At first glance, the rules have not really changed, given that the European Council anyway has assumed since 1999 that the Commission President had to come from the same political background as the largest party in the European Parliament. However, the majority of European political parties take the view that the Treaty amendments mean that they should nominate their preferred candidate for the job of Commission President before the elections, and that the candidate preferred by the party winning the most seats should be the next Commission President.

They take this view not only because of the change in the rules, but also because of the more fundamental political consideration that enhancing the link between the election to the Parliament and the Commission President selection would enhance the democratic legitimacy of the EU. Voters would be selecting the EU executive in the same way that the votes in national parliamentary elections select the executive in Member States with parliamentary systems.

However, this interpretation is not uncontested. The ECR party (technically the AECR party, in the election), which includes the British Conservatives, will not name a candidate, since it objects in principle to the link between elections to the European Parliament and the selection of the Commission President, and is running wholly national campaigns instead. The EFD party, which includes the UK Independence Party, will not name a candidate either. Moreover, Angela Merkel, the German Chancellor, does not accept any automatic link between the. EP elections and the nomination of the Commission President. Finally, the UK Labour party doesn't support the candidate chosen by the Party of European Socialists as its nominee for Commission President, although it nevertheless agrees in principle to the idea of the parties nominating such candidates.

The ECR party objects to the idea of the European Parliament elections deciding the Commission President on grounds of democraticy legitimacy, because it believes that there is no public demand for the move and that the principal method of legitimacy of EU policies should be via the mans of national governments. A detailed critique of the idea, by Heather Grabbe and Stephan Lehne for the Centre for European Reform, also objects to the proposal on a number of grounds.

Post-election scenarios

It's always risky to guess the results of a political  process, but it's necessary in this case because the idea of a 'partisan' Commission President can't be judged without making certain assumptions about what will happen at the time of the next appointment. The Grabbe/Lehner paper suggests three scenarios: (a) the EP wins the argument and the largest party's candidate is proposed by the European Council without demur; (b) a deadlock between the European Parliament and European Council results over the appointment; and (c) a backroom deal is done. They were writing in October 2013, when (c) seemed more probable; in the meantime, the European People's Party looks less likely (as they had assumed) to win the largest number of seats, and is going ahead with its plan to nominate a candidate.

However, there could still be a messy deadlock. Whichever party wins the most seats in the European Parliament in the May elections will not hold a majority of the seats, due to the application of proportional representation voting as required by the EU Treaties. So for it to vote down the preferred nominee of the European Council, it will need the support of some other parties. Equally it will need the support of some other parties for its preferred candidate for President to be elected - assuming that the European Council puts that name forward in the first place. If the European Council fails to put that name forward, there could indeed be a deadlock.

Having said that, it should be recalled that the European Parliament has always sought to enhance its role in the appointment of the Commission. It began to hold hearings for nominees to the Commission even before it gained a decisive role in its appointment. And when the last two Commissions were appointed, it found a way to reject individual nominees, even though the Treaties don't provide for this. It might therefore be expected that if it comes to it, a majority of MEPs would veto any candidate for Commission President who is not the nominee of the largest party, and that the European Council will recognise reality accordingly. In effect, when it comes to appointment of the Commission President, the European Council would become the equivalent of a constitutional monarch like Queen Elizabeth II.

Is the 'election' of the Commission President via the European Parliament elections a good idea?

Just because it seems to be increasingly likely to happen, does not necessarily mean that it is a good idea. Let's look first of all at one set of arguments advanced by Grabbe/Lehne, concerning its potential effect on the effectiveness of the Commission. First of all, they argue that a 'partisan' Commission President could not do his or her job effectively, given the number of Commission tasks which require objective assessment, namely economic governance, state aids, competition, human rights and infringement actions. Secondly, they argue that a President elected via the EP elections might not be a leading political figure, and would be less able to work closely with national governments. Thirdly, he or she would be beholden to the EP, and therefore his or her initiatives would be blocked by the Council, resulting in the legislative gridlock familiar to Americans. Fourthly, given that the other Commissioners are chosen by the Member States, it is possible that the President comes from one party and the majority of Commissioners will come from the opposing political background.

The second set of arguments concern the legitimacy and democratic credentials of the notion. Here the Grabbe/Lehne argument overlaps with the ECR's explanation of its position. Both argue that the EP is remote from its constituents, and that enhancing the link with the selection of the Commission President will not change this, given that the candidates will not have wide recognition.

These are all valid arguments in principle, so let's examine them one by one. First of all, it should not be forgotten that many of the Commission's more technical tasks have been transferred to EU agencies, and that its main task remains the proposal of legislation. There are obviously political choices to be made about which legislation is proposed by the Commission, and about the content of Commission measures implementing it. State aid and competition decisions are anyway subject to objective rules and can be challenged in the courts, and the Commission's infringement actions have to be made out in court. It would be a good idea, if the Commission President were 'partisan', to establish mechanisms to ensure that the less political aspects of its decision-making are separate from its political choices. But this is not impossible: see, for instance, the separation of the European Central Bank's functions as regards (politically accountable) banking supervision from its role as an independent central bank. Anyway, the Grabbe/Lehner argument forgets that since 1999, the Commission President has already been chosen from the party which won the most seats in the EP - without any sign of contamination of the Commission's more technical tasks.

Secondly, while it seems likely that the next Commission President will not be a former Prime Minister (unlike the last three Presidents). However, this is not a guarantee of effectiveness: the most effective Presidents (Hallstein and Delors) had not been Prime Ministers, whle the least effective President (Santer) had been. This line of argument assumes that neither the Member States nor the Commission President will make any effort to work effectively with the other, but this seems unlikely. The history of the EU shows a continuing attempt to reach a broad consensus between institutions. Similarly, as regards the third argument, any Commission President is bound to know that his or her initiatives have to obtain the support of a least a qualified majority in the Council.

The fourth argument (the partisan mix of the Commission) is perhaps the strongest point. To draw an analogy, it is difficult enough for the British Conservative party to accept that it has to govern with a minority of Liberal Democrats in the cabinet. So how could a government work if David Cameron were Prime Minister, with a majority of cabinet members from the Labour party?

The answer is that the EU institutions also seek broad consensus within them. In fact, due to the different makeup of the different governments of the Member States, the Commissioners have always had a broad mix of political backgrounds. Also, the Grabbe/Lehner thesis overlooks the Treaty provisions which seek to reinforce the influence of the Commission President: the requirement of all Commissioners to work under his guidance and her ability to sack individual Commissioners. The added legitimacy of indirect election of the President would only reinforce this. Plus, as noted above, the Commission President will need the support of several political parties to be elected anyway. Finally, a more radical answer to this critique is that the EP should go further, expecting the political parties to nominate an entire team of Commissioners which would constitute the next Commission. So far, of course, this step has not been taken.

As for the argument about political legitimacy, the poll which the ECR commissioned to justify its decision not to run a candidate was very interesting. While large numbers of voters were critical of the EU's legitimacy, and were not familiar with the names of the candidates for Commission President, the bigger percentage of respondents agreed that they were 'happy' with the idea of the vote for the EP elections determining who would become Commission President, because this would make the EU more democratic. This was particularly pronounced in Poland, where the poll of Poles (I couldn't resist) indicated that 50% supported the idea, while only 19% were opposed. The idea was also supported in France, Italy and Spain, but opposed in Germany and the UK - which makes the British Conservative position (and perhaps also the UK Labour Party's contortions) understandable.  In any event, the poll suggests that many of those who think the EU lacks legitimacy would be 'happy' with the idea of enhancing that legitimacy by means of the indirect election of the Commission President. And how many people had heard of Barroso, in February 2004? Or Obama, in January 2008?

This is ultimately the decisive argument in favour of indirect election - the need to attempt to forge a greater democratic link between EU citizens and the Union. The idea certainly has its flaws, but for the reasons set out above, the existing EU institutional system can adjust to accommodate it. Those flaws are outweighed by the advantages of seizing the opportunity to take a significant step towards democratising the EU, and giving the voters an opportunity, however indirect, to (in Weiler's terms) 'throw the rascals out'. Nor does it mean that the EU necessarily becomes more centralised. In my view, the debate on the future of the EU could only have benefited from (for instance) John Major setting out the ECR's case across Europe for a less centralised, less regulated EU focussing on free trade.

Barnard & Peers: chapter 3