Introduction: democratic accountability in the EU economic governance post-crises: its many faces and potential outstanding gaps

ABSTRACT

The article introduces the special issue ‘Parliaments in times of crises: democratic accountability in the EU economic governance from the euro to the COVID crisis’ explaining how it seeks to make a novel contribution in the field of parliamentary studies. It first explains the trajectory of the crisis-driven institutional changes affecting parliaments from the great financial crisis to the COVID pandemic. It then introduces the concept of democratic accountability as a guiding notion of the special issue and differentiates among its various dimensions as well as potential outstanding gaps in the area of EU economic governance. Finally, it demonstrates in what ways particular contributions of this collection address the under-researched questions related to the abovementioned dimensions of EU democratic accountability.

KEYWORDS:

• European Parliament
• national parliaments
• interparliamentary cooperation
• Eurocrisis
• COVID crisis
• Economic and Monetary Union

From the financial crisis to the health crisis: defining the trajectory of institutional changes

Crises have the tendency to cause lasting effects on the institutional balance within systems of governance because they commonly call for some degree of institutional improvisation. New rules or bodies are oftentimes established in an ad hoc manner, as is justified – and required – by the emergency of the then-prevailing situation. The Great Financial Crisis that started in 2008 was no exception to this. It called for several hasty reforms of the rules governing the European Union (EU)’s Economic and Monetary Union (EMU). While most of those reforms were conducted by means of formal changes to the legal framework, others were induced by practice and the activism of some of the EU institutions, such as the European Council which played a key role at the peak of the crisis, or the European Central Bank (ECB) whose former president was determined to do ‘whatever it takes’ to save the euro (Draghi, 2012). At the same time, the measures adopted to counter the crisis were met with increasing criticism in several countries, and in some cases distrust by EU citizens, leading to the rise of extreme and Eurosceptic parties at the EU and the national levels. In light of these developments, important issues of democratic accountability arose, not least because (euro) EMU-specific bodies, such as the Eurogroup, the Euro Summit or the ECB, have acquired important powers while being submitted to looser (and in many cases improvable) control mechanisms by parliaments (Fromage, 2018; Markakis, forthcoming).

Democratic accountability is generally understood here as a relational concept referring to communicative exchanges between an agent and an audience in a system of democratic representation, whereby the former is publicly answerable to the latter who may impose sanctions in case of a misconduct (Auel, 2007; Bovens et al., 2014). These sanctions, expected to yield disciplining effects, may take different forms depending on the context, including the threat to veto a decision or to remove the agent from office, or reputational damage or a decline in social trust. This special issue focuses on the accountability function performed by democratically elected representatives of citizens – legislatures – who, in order to exercise political control in the decision-making process, must have sufficient information and be able to express their opinions.

The COVID crisis appeared to confirm, and even exacerbate, the previously existing trend of sidelining of parliaments in the governance of the EMU. For instance, the European Parliament (EP) was only marginally involved in the definition of the immediate response to the crisis, and Eurogroup meetings in inclusive formats were favoured over standard Economic and Financial Affairs Council (ECOFIN) meetings (Dias Pinheiro & Fromage, 2020). While the informal nature and limited transparency of the Eurogroup’s decision-making procedures have long been criticised (Markakis, forthcoming; Markakis & Karatzia, 2022), the pandemic-related circumstances led to their being held remotely, a factor that made ensuring adequate levels of parliamentary scrutiny even more difficult. The immediate and the long-term responses to the COVID crisis, as well as the Weiss judgement of the Bundesverfassungsgericht issued in 2020, could bring about important longer-term changes to the existing paradigm of EMU governance. Economic solidarity among member states is no longer a taboo, and strict conditionality is no longer the condition sine qua non for loans to be granted. To mitigate the adverse effects on the economy and avoid the emergence of another financial crisis, the ECB, too, adopted a series of monetary policy and banking supervision measures. New financial assistance and recovery programmes were established as well, both as part of the EU budget and under the auspices of the intergovernmental European Stability Mechanism (additional use and pooling of budgetary resources). These measures could be agreed upon thanks to the resort to already well-established mechanisms, which, for some of them, had been adopted in response to the euro area crisis, but also to creative and indeed innovative legal engineering. To put things clearly: unique solutions could be devised thanks to creative interpretations of the treaties currently in force, so much so that their legality has sometimes been doubted. Hence, the solutions adopted took various forms, and were numerous too.

Immediately after the outbreak of the pandemic in the spring of 2020, several measures were introduced to preserve the European economy from the potential negative consequences of, inter alia, the lockdown measures that had to be imposed (for a detailed account of the various anti-crisis instruments, see Fromage, 2020). They included, for instance, the suspension of the Stability and Growth Pact, the relaxation of the state aid rules in place, and the creation of the Support to mitigate Unemployment Risks in an Emergency (SURE), a clear manifestation of solidarity among member states. Later on, as the pandemic continued to hit Europe and the world, measures were introduced that aimed at fighting more long-term effects of the economic slowdown caused by the health emergency, whilst also making the European economy more resilient to future crises. The most important instrument in this respect is Next Generation EU (NGEU) whose largest programme is the unique Recovery and Resilience Facility (RRF). In its form, size and financing, NGEU is totally novel. It is the first time ever that member states agreed to the Commission borrowing 750 billion euros on financial markets on behalf of the EU and redistributing these funds both as loans but also and especially as grants – that is, as funds beneficiary member states are not called to reimburse. Moreover, this financial operation was only possible because member states resorted to legal engineering and accepted to guarantee these European bonds, a move which has sparked fierce debates among legal scholars (most notably De Witte, 2021; Leino-Sanberg & Ruffert, 2022). These measures represented a change of paradigm not only because of the (high) degree of solidarity among member states they have required, but also because these were, for their vast majority, EU-wide measures whilst the reforms adopted in response to the euro area crisis had been largely focused on the euro area only. They also embodied a change in terms of the applicable logic, as member states agreed to transfer resources, and to collectively guarantee the EU’s issuance of bonds.

Democratic accountability of the EU economic governance revisited

After the euro area crisis had already significantly affected parliaments’ role within the EU at both the national and the supranational level, the abovementioned changes have once again challenged, on the one hand, the overall (pooled) accountability standards of the EU decision-making and, on the other, the many particular/individual accountability channels between executive and legislative actors situated at the various levels of the compound EU governance system. Due to the specific nature of the EU’s economic governance, where an intergovernmental regime applies, inter alia, to the coordination of national economic and financial policies, and where monetary policy is delegated to the independent ECB, the relations of accountability between the agents and the audience becomes particularly strained and adequate standards become difficult to ensure.

For the purpose of this special issue, we differentiate among three possible dimensions of democratic accountability in the EU economic governance: the supranational, the domestic and the multilevel circuit. The supranational circuit refers to the centralised accountability of EU executive bodies to the EP. In this respect, while the EP is directly elected by European citizens, and therefore its role as a democratic accountability forum could be expected to be privileged, the practice indicates that it is sidelined in economic governance. As regards monetary policy – which belongs to the EU’s exclusive competence – the leading decision-making actor is the ECB, which cooperates with 19 national central banks within the European System of Central Banks. While the EP tries to exert control on the ECB, it can do so only to the extent that its statutory independence is not violated (cf. Fasone, 2019; Fromage et al., 2019). In the field of broader economic and fiscal policy – belonging to member states’ competence – but where member states are called to coordinate their actions within the Union (art. 2(3) TFEU) – the powers of the EP are also rather limited, and arguably rightfully so since accountability should primarily be guaranteed at the national level in this domain. As evidenced by the description of the adopted measures above, those introduced in response to the COVID crisis have led to a blurring of the distinction of responsibilities between national parliaments, on the one hand, and the European Parliament, on the other. This is the case because the funds spent in the framework of the RRF are EU money, which calls for control by the EP. On the other hand, national parliaments should also be attributed a role since member states guarantee the repayment of the bonds issued. Furthermore, considering that, as explored in this special issue, the RRF has been integrated in the pre-existing European Semester for financial coordination, the European Commission’s influence and supranational influence in general have significantly risen.

The second, domestic, circuit pertains to the decentralised accountability of national governments towards (their) national parliaments. In this respect, since the control over national budgets is arguably the most important prerogative of national parliaments, it is important to ensure that domestic legislatures are involved in the decision-making processes affecting their budgetary prerogatives. Yet the emergence of a series of measures designed to streamline national budgetary policies across EU member states, thereby reducing parliaments’ margin of influence as a result of the financial crisis of 2008–2012, undermined to some extent the basic powers of domestic legislatures. Indeed, their prerogative to control the domestic budgetary process and to represent their constituents’ interests during the coordination of economic policies was affected and is arguably more constrained than it used to be (Crum, 2018; Jancic, 2017). Some have found, though, that the opposite was the case in some of the member states (Fasone, 2015). The recent COVID crisis has further challenged national parliaments by forcing executives to undertake emergency measures without democratic deliberation and control by parliaments being possible. In this sense, adequate parliamentary scrutiny of the implementation of NGEU, the RRF and the Recovery and Resilience Plans (RRPs) is essential to ensure that democratic legitimacy standards are upheld, as well as to foster a sense of citizens’ ownership of this implementation process. Parliaments, in their communication function, could and arguably should contribute to bring NGEU closer to citizens.

The third circuit – the multilevel one – interconnects and cuts across the levels of governance and jurisdictions, thus reflecting the increasingly complex accountability relationships in place within the EU’s compound polity. In this circuit, the unidimensional executive-legislative accountability is extended towards other members of the multi-level governance network transcending national borders. Among of the illustrations of such interdependence are the various forms of inter-parliamentary cooperation whereby parliaments, both domestic and European, exchange information and jointly oversee the actions of the executive authorities within the EU. While many scholars view inter-parliamentary cooperation as an avenue for the national and European parliaments to reduce their informational asymmetry vis-à-vis the EU (and national) executives (Curtin, 2014; Kreilinger, 2019), others point to its unfulfilled potential with regard to democratic oversight and accountability enhancing function (Borońska-Hryniewiecka, 2021; Fromage, 2016; Kinski, 2021).

Against this background, this special issue seeks to take stock of the statute of these three avenues for accountability in the EU’s EMU after the pandemic – that is, it considers whether and how they may have been affected by the COVID-19 crisis and the measures adopted to counter its negative economic effects. Further to this, it aims to establish whether the accountability gaps that had been identified following the euro area crisis are still outstanding or whether, on the contrary, democratic accountability may be deemed adequate when the three circuits of accountability are considered together.

Literature review

Research and publications on democratic accountability and parliamentary engagement in the EU economic governance are not lacking: in fact, the opposite is the case. Scholars analysing the broader dimension of EU accountability architecture have, for instance, shown in what ways the Great Financial Crisis transformed the structure of EU economic governance and undermined parliamentary scrutiny and control at both the national and the EU levels (see inter alia Crum, 2018; Kluger Dionigi, 2020; Kratochvíl & Sychra, 2019; Papadopoulos, 2021).

Others have studied parliamentary involvement in a more specific sets of measures adopted as a response to the sovereign debt crisis, namely the European Semester (see inter alia Miklin et al., 2021) finding considerable cross-country variations in this respect (Hagelstam et al., 2018; Hallerberg et al., 2018; Kreilinger, 2018).

Also, one of the key themes with regard to democratic accountability of the EU’s economic governance was the way in which interparliamentary cooperation might increase parliaments’ leverage in scrutinising executive actors (eg Cooper, 2019). While some authors have viewed the so called Article 13 Inter-Parliamentary Conferences as an added value in strengthening parliamentary oversight of economic governance (Kreilinger, 2018), others have been less optimistic (eg Borońska-Hryniewiecka, 2021; Fromage, 2016) and have suggested solutions to improve existing shortcomings (Lupo & Griglio, 2018).

Finally, the latest research has attempted to probe in what ways the COVID crisis and the adoption of measures to counter its negative effects have affected parliaments. Authors have analysed the role played by parliaments in the design of the immediate response to the COVID-19 outbreak (Dias Pinheiro & Fromage, 2020) and the scope for potential parliamentary involvement in the RRF (Bekker, 2021), They have also considered where parliamentary could be best exercised, coming to the conclusion that this should be at the EU level (Crum, 2020). However, the existing scholarship remains partial because it has examined only some of the pertinent issues, and as it was produced, for its most part, shortly after the adoption of the relevant measures, making an analysis of their consequences for national parliaments and the EP impossible.

Our contribution

Against this background, this special issue delves deeper and in a more comprehensive manner into the various aspects mentioned above. Its underlying goal is to cast new light on the ways in which the crisis-driven (re-)balancing of powers between intergovernmental and supranational institutions affected the various dimensions of democratic accountability in the EU economic governance. The main research questions addressed in this collection refer to the impact of the COVID-19 pandemic on parliaments and their relationship with the executives. In this context, authors examine whether new forms of accountability have been introduced in this new context, or whether the pre-existing ones have rather been adapted; whether, and in what ways, the resulting situation compares to the pre-pandemic state of affairs of post-euro area crisis; and to what extent, if at all, parliaments have tried to mitigate the risk of marginalisation that threatens them in this domain.

The contributions to this special issue approach these questions in an interdisciplinary manner, representing legal and political science perspectives. They focus on different aspects of democratic accountability of the EU’s economic governance including national parliaments’ standing in crisis-related measures (Griglio; Dias Pihneiro & Dias; Barrett), the European Parliament’s role in the design and operationalisation of the post-pandemic response (Fasone; Fromage & Markakis) and its relationship with the ECB (Diessner; Fracarolli, Giovannini, Jamet & Persson), and interparliamentary dynamics in the area of economic governance (Bartolucci & Lupo; Borońska-Hryniewiecka & Kinski; also Dias Pinheiro & Dias). The contributions also adopt different methodological and data-collecting approaches, ranging from institutional analysis, through surveys and semi-structured interviews, to textual analysis of primary documents. Taken together, they offer a comprehensive and up-to date evaluation of the crisis-driven implications for parliaments and democratic accountability in the EU.

The first contribution in this collection, by Elena Griglio, provides an insightful comparison of how national parliaments reacted to the challenges to their possibility of active and efficient involvement posed by, on the one hand, the euro area crisis and, on the other, the COVID-19 pandemics. Through an analysis of their scrutiny procedures and practices developed in the context of the European Semester and in the post-COVID recovery framework, Griglio identifies elements of continuity and discontinuity in parliamentary adaptation to the two crises. Her evaluation indicates resilience of national parliaments vis-à-vis the major changes in the euro-national (economic) governance structures, confirming the adaptive capacity of parliamentary scrutiny procedures despite the absence of any real ‘learning curve’ between the two crises, but with potential innovations observable in the ex-post scrutiny of national RRPs.

In the second contribution, Bruno Dias Pinheiro and Cristina Dias take a closer look at national parliaments’ involvement in the RRF. Their analysis departs from the premise that parliamentary capacity to adapt to the newly emerging, post-COVID challenges is incremental and conditioned by previous experience. Because the implementation of the RRF is closely linked to the European Semester, the authors hypothesise that a stronger parliamentary ownership of the latter is likely to result in a better capacity to scrutinise the RRF. While their comparative analysis reveals limited involvement by parliaments in the scrutiny of the RRF Regulation during its adoption procedure, as well as in the preparation of the national Recovery and Resilience Plans, a more in-depth analysis of the Italian case tends to confirm the incrementality hypothesis.

The third contribution, by Gavin Barrett, investigates the Irish parliament’s participation in drafting and implementing of the Recovery and Resilience Plan. By making parallels to the Brexit crisis, the author shows how parliamentary marginalisation in the field of economic governance has exacerbated in the case of the COVID-19 pandemic. Barrett argues that the apparent inertia, and even decline, of parliamentary oversight in this respect is caused by a combination of two factors: limited executive confidence in the ability of the Irish parliament to be effectively involved in recovery planning, and lack of political interest of Members of Parliament (MPs) to engage in the electorally unrewarding activity of policy formation in European matters.

The two subsequent contributions focus on the role of the EP in the reaction to the COVID-19 pandemic. Building on the EP’s experience in the euro area crisis, Cristina Fasone critically evaluates the means and tools through which this institution has managed to ensure it has a meaningful role in the adoption of the main post-pandemic recovery mechanism, namely NGEU. By means of document analysis, Fasone travels analytically through the pandemic time to identify various stages in EP’s crisis-related positions, ranging from limited involvement, through fighting back, to advancing its own claims. She concludes that, overall, the EP has managed to better secure its institutional role as an accountability and democracy-enhancing forum in the context of the COVID-19 pandemic than in the financial crisis of 2008–2012. Its capacity to anticipate the need for a supranational and unitary EU response to the unprecedented health crisis has confirmed its standing as a genuine representative institution.

In a complementary way, Diane Fromage and Menelaos Markakis delve deeper into the role played by the EP in EMU following the adoption of the measures designed to shield the European economy from negative consequences. They analyse in particular whether its prerogatives have been enhanced in a way that is commensurate with the leap forward, which in particular NGEU and the RRF have represented for European (economic) integration. They find that the EP’s role in the operationalisation of these measures is particularly limited, and even wonder if this should not be viewed as a missed opportunity. However, they acknowledge that legal and political constraints make any reinforcement of the EP unlikely and propose some ways to improve this unsatisfactory state of affairs, including the reinforcement of the cooperation between national and European parliaments.

The next two contributions examine the question of the parliamentary accountability of the ECB, an important supranational institution with exclusive competence in one area of economic governance: monetary policy. In his article, Sebastian Diessner revisits the concept of ‘legitimacy’ to argue that the ECB’s democratic legitimacy mostly manifests itself in the form of perceived throughput legitimacy and, in particular, perceived accountability towards the EP. Diessner uses survey data and élite interviews to illustrate that Members of European Parliament are aware of the need to enhance the accountability structures and practices currently in place in the monetary policy domain, including the need to increase the transparency of the ECB’s activities.

Taking on a methodologically different perspective, Nicolò Fraccaroli, Alessandro Giovannini, Jean-François Jamet and Eric Persson analyse the ECB parliamentary hearings in order to identify what type of information the Bank provides when it communicates with the EP, as compared to its communication in regular press conferences that follow monetary policy decisions. Using text analysis of the ECB President’s introductory statements in parliamentary hearings and of press conferences from 1998 to 2021, the authors show that the ECB uses the hearings to discuss topics less covered in press conferences, further explains policy decisions first presented at these conferences and puts them in a broader context. They also find that the ECB’s policy stances as well as the degree of language complexity are similar in the two fora.

The two final contributions direct their attention to the inter-parliamentary dimension of the EU economic governance. In their article, Luca Bartolucci and Nicola Lupo cast a new light on the so far under-researched political and partisan dimension of inter-parliamentary cooperation. Assuming a positive relationship between the participation of opposition parties and accountability of inter-parliamentary conferences, the authors delve deeper into the composition and activity of parliamentary delegations to the meetings of the inter-parliamentary Conference on Stability, Economic Coordination and Governance in the EU (the so-called ‘Article 13 Conference’). While they find that political representativeness of parliamentary delegations to the analysed inter-parliamentary conference is guaranteed, their more in-depth analysis reveals a rather grim picture with regard to the actual involvement of the opposition MPs in the deliberative process within the conference.

In the final contribution, Karolina Borońska-Hryniewiecka and Lucy Kinski take a more detailed look at the bilateral dimension of inter-parliamentary cooperation by analysing the activity of the Franco–German Parliamentary Assembly (FGPA), an example of unprecedented collaboration between the parliaments of the two most powerful EU member states. Based on an extensive document analysis and on interviews, the authors show that, in the context of the COVID pandemic, this fairly recently established forum has provided an important, if not transformative, tool of transnational accountability that cuts across the traditional domestic and EU channels of executive oversight. Contrary to what might have been expected, the 2020–2021 health crisis increased this forum’s leverage in holding the executives to account, as well as in co-shaping the political agenda. The emergency-related context has also shifted the assembly’s focus beyond bilateral cooperation, to the strategic issues of EU economic governance.

Conclusions

The overall findings of the articles presented in this collection point to the fact that the latest COVID crisis has further marginalised national parliaments in the field of economic governance with respect to both information and control rights, as well as in terms of their capacity for meaningful influence within the decision-making processes. Neither during the design phase nor during the implementation phase of these measures has any relevant role been foreseen for them. Such sidelining has been especially visible at the EU level, where no specific mechanisms of parliamentary engagement were established in order to ensure a proper democratic oversight of the measures adopted. This resulted in parliaments’ reliance on domestic governance arrangements characterised by discretionality and cross-country variations in terms of parliamentary involvement. This situation is, in our view, hardly satisfactory if one considers the leap forward in economic integration, which the approval of NGEU and especially the RRF have represented. Further to this, the research conducted expects the parliaments that have developed stronger ownership of the European Semester procedures to perform better as controllers or scrutinisers in the current post-COVID recovery governance architecture. This aspect of incrementality of parliamentary involvement surely requires more nuanced empirical studies, for the evidence available to date is still particularly limited. However, a causal relationship could exist indeed, as illustrated by the Italian example.

Regarding the EP, as time passed, it has adapted its behaviour and gained more rights that it previously had under the European Semester. This time around, it was in a much stronger institutional position, though, for NGEU is part of the EU’s budget whilst the standard European Semester had aimed at the mere coordination of national economic and fiscal procedures – that is, the EU dimension and its capacity to influence member states was much more limited. Future research could examine whether there is any legacy effect of this evolution – that is, whether the EP continues to be as actively involved in the semester procedure as it currently is.

With regard to inter-parliamentary cooperation, the findings reveal the unfulfilled potential for politicisation of the inter-parliamentary conference on Stability, Economic Coordination and Governance in the EU where national opposition parties still remain silent observers instead of active discussants and input-givers with respect to the EU economic governance. This rather pessimistic picture is, however, counterbalanced by a promising assessment of a novel inter-parliamentary cooperation model presented by the FGPA. While its novelty lies in the application of transnational forms of political accountability cross-cutting the traditional executive-legislative axis, the case of FGPA also points to a new potential for national parliaments to exercise political oversight within the EU multi-level system of governance. Interestingly, inter-parliamentary cooperation is also viewed as a means to compensate for the shortcomings that exist at the national and the EU level at present, and several of others encourage its enhancement in the future.

At the time of concluding this special issue, a new paradigm shift can be observed with regard to the EU economic governance. The disastrous Russian invasion of Ukraine and its negative consequences for Europe, including the rise in inflation, have resulted in a growing opposition against the EU borrowing again on financial markets to support its member states in dealing with the negative consequences of the war. The results of elections organised in several EU member states since the beginning of the COVID-19 outbreak, including the strong economic powers France and Germany, confirm this trend in favour of a shift of paradigm. Current evolutions thus point to the NGEU and the RRF being rather bound to remain a one-off initiative at the EU level rather than a new normal in the E(M)U governance architecture. Future research will thus have to consider whether this is indeed the case, and whether this one-off experiment as well as other events, including monetary policy’s new paradigm, will have long-lasting effects on national and European parliamentary participation in EMU.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Karolina Borońska-Hryniewiecka

Karolina Borońska-Hryniewiecka (dr.hab) is Adjunct Professor at the Institute of Political Science and a lecturer at the Jean Monnet Chair of the University of Wrocław. She is also a Visiting Fellow at the Centre européen de sociologie et de science politique (CESSP) of Panthéon-Sorbonne (Paris 1).

Diane Fromage

Diane Fromage is Professor of European Law at the University of Salzburg and Affiliated Research at the Law School of Sciences Po, Paris.