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Jakov Bojović

Jakov Bojović

Jakov Bojović holds an MA degree in Public Policy, with specialization in European Public Policy, from Central European University. The title of his MA thesis is „The Role of the Commission in the New Economic Governance of the European Union“. His main research interests are European economic and social governance, role of supranational institutions in EU integration, Europeanisation and EU enlargement. Mr. Bojovic is an author of peer-reviewed research articles published in Serbia, BiH, Hungary and Germany.
Jakov Bojović

On 1st of November 2014, the new European Commission with Jean-Claude Juncker as President started its mandate. Among the first public events Mr. Juncker chose to attend are the presentation of Helmut Kohl’s book in Frankfurt and a debate with former Commission President Jacques Delors. The two people he decided to meet have, along with Francois Mitterrand, marked the process of building the Economic and Monetary Union (EMU) in the 1990s. This process is known to be characterized by the strong influence of the Franco-German engine of EU integration and the European Commission with a strong leader, Jacques Delors. I believe most of us can agree that in the meantime, we had three Commission Presidents that hardly left a mark.

What is already evident, not only from the individuals Mr. Juncker went to meet and get advice from, but also from his first statements as the Commission President, is that he will try to bring the “glory” of Delors’ days back and politicize the Commission. As euobserver recently noticed, Mr. Juncker refers “to his mandate as the last chance Commission” and “wants it to shake off its technocratic image.” Of course, Mr. Juncker is not the first among the last three Commission Presidents who will try to politicize the Commission, nor he is the sole inventor of the idea of Commisson’s politicization. In fact, this idea has been around academic and EU policy circles for a very long time. So, for a start, let us see what the theory says.

Theory

The topic of the role of the European Commission as the only body with formal right to propose legislation in the EU is in the center of recent debates of European integrations and policy oriented studies of the EU.

There are two distinct views on the nature of its roles. The first perceives this institution as a bureaucracy (agent) to which the Member states (principals) give clearly defined roles (starting from Hoffmann, 1966). This is mainly because the Commission is percieved as an institution which has sufficient expert knowledge, logistics and continuity of work in Brussels to deal with them. This model portraits the decision-making of the European Union in a hierarchical manner in which the Commission is below the member-states which define its roles and set the legislative agenda through the European Council.

The second approach defines the role of the Commission in a broader manner, as an institution that has an agenda of its own, pursuing integrationist perspectives (starting from Haas, 1958). This model supposes that the European Commission is on equal footing with the European Council in setting the agenda for the Union and pursues distinct interests in the legislative process from the ones of the Member states in the Council and the European Council. In this sense, the European Commission is seen as a political institution.

Theory says a lot about why it is important for the EU that the Commission is a strong and political institution. For example:

to protect the interests of the smaller and less-powerful countries;

to present a counter balance to Franco-German common positions,

to protect the EU citizens from the national governments which pursue short-term goals (which is why the Commission should control excessive deficits);

Theory also says a lot about why it should not be a strong and political institution:

there is a fear that if the Commission is too strong, the member-states will loose their (economic) sovereignty;

the Commission is not a democratic but technocratic institution, hence the problem of democratic deficit arises;

it is perceived as a bureaucratic beast with a life of its own and a self-centered growth agenda

it is perceived as a neo-liberal institution by some authors;

it is perceived as a communist institution by some other authors;

Without taking a normative perspective, in this article I present a case for the intergovernmenalists: that the European Commission is a bureaucratic institution, without the power to exert real influence in the most important issues of the European Union. Also, unlike Mr. Junker I believe that this will very hardly change. I will show this in a very specific example of a Commission’s attempt to influence EU policy during the economic crisis. This is the attempt to introduce Eurobonds (2009-2012). I will use the most popular public policy methodology: process tracing.

Practice

Case: Eurobonds

Idea of common issuance of debt of the Euro zone members with a goal of bridging the gap between the more and less favourable interest rates of different countries, originates from the discussion among the Member States in the early years of the EMU after the Gionannini Group which was advising the Commission published a report regarding co-ordination of debt issuance. In 2009 the European Primary Dealers Association published a paper discussing common issuance of bonds (EPDA). In the same year, the Commission published the EMU@10: Successes and challenges after ten years of  Economic and  Monetary Union  report in  which Eurobonds were also discussed (see Andrews, 2013). In 2010, the European Parliament joined the discussion as its DG for Internal Policies published a report named EU public debt management and Eurobonds. This document points out both the pros and cons of the Eurobonds and suggests that “the Eurobonds should be issued by all euro-area Member States or by an EU Institution” (p. 1). In 2009 and 2010, many policy briefs were published advocating for such a solution (e.g. De Grauwe and Moesen, 2009; Delpla and Weizsäcker, 2010; Jones 2010). Jean Claude Juncker (who was then the Prime Minister of Luxemburg) together with Giulio Tremonti (who was then the Minister of Economy and Finance of Italy) advocated for Eurobonds in an article for the December 5 edition of Financial Times (Juncker and Tremonti, 2010). Only a week later in the same magazine Mario Monti called for Germany to leave aside their short-term interests and be more favourable regarding the E-bonds for several reasons: “Germany itself would not have to give up the advantage it enjoys in terms of lower cost of financing relative to less disciplined countries. The scheme would increase the disciplinary effect of the markets on the latter countries” (Monti, 2010).

Therefore, in the period of 2009-2010 the Commission, various think-tanks as well as individual intellectuals and leaders tried to put the Eurobonds on the agenda of the Union. However, the Commission did not act decisively enough to put up concrete legislative proposals. These discussions run parallel with the preparing of six legislative proposals known as the six-pack. In the conclusions of the European Council meeting of 16-17 December 2010, focusing on the Euro-crisis and speaking of the six-pack and the Europe 2020 strategy, there is no mention of Eurobonds. Both Angela Merkel and Nicolas Sarkozy swiftly rejected the plan to introduce Eurobonds already in late 2010 (The New York Times). Even though the Commission officially proposed the six-pack to the Council and the Parliament in October 2010, the Commission was relying on the Herman Van Rompuy’s Task Force (HRTF) report to the European Council which was published just a couple of weeks before the Commission’s proposal. The HRTF’s report has no mention of Eurobonds. This shows how the European Council dominated the agenda setting during the crisis, not allowing the Commission to propose such extreme proposals, hence delegating tasks to the HRTF and afterwards asking the Commission to put forward to the Council and the Parliament what was earlier proposed in the HRTF’s report. The Six Pack was approved in October 2011.

A month later, on November 23 2011, the European Commission published the “Green paper on the feasibility of introducing Stability Bonds”, the most comprehensive plan for introducing Eurobonds. The Council of Economic and Financial Affairs met on November 30 2011. Although the Council took note of the Commission’s document and described the three possible ways of enacting Eurobonds, together with Commission’s proposals for enhanced surveillance (later to become the two-pack), there is no mention of Eurobonds among the six adopted conclusions of the Council.

Not much has happened regarding Eurobonds until Francois Hollande became the President of France on May 15 2012. His debut informal European Council meeting on May 22 was marked by his strong favourable take on the Eurobonds. Mario Monti, Prime Minister of Italy at the moment and the author of the aforementioned article from 2011, backed Hollande’s proposal. However, Merkel strongly opposed the idea, emphasizing how it is not in interest of countries with prudent finances and is allowing moral hazard (The Guardian). Since then, Eurobonds have not been on the agenda of the European Union.

The Commission’s Blueprint for deep and genuine EMU, published in November 2012, proposed the idea of Eurobills, a watered-down version of Eurobonds (Philippon and Hellwig, 2011). Since Eurobonds were actually discussed as one of the possible answers to the crisis and proposed by the Commission before, one would expect the Commission to push more decisively for their enactment? Instead, Eurobills are proposed, defined as medium-term goals and placed lastly among them (p. 30).  This shows the Commission’s lack of agenda setting powers during the crisis. The crucial role of Merkel’s positions as well as Hollande’s support for Eurobonds regarding agenda setting, go in line with domestic politics approach to European integration (Moravcsik 1991, 1998; in crisis: Vilpisauskas, 2013).

Explanation and conclusion

To summarize, the first part of the story suggests that the Commission, along with several think tanks as well as the European Parliament, had a supranational bias in its publications and a tendency to politicization, at least in the start of the debate. The second part shows how it did not have the power to act entrepreneurially, but had to keep track of the European Council meetings, the report of the VRTF and its proposals. The third part shows how the Commission watered down its proposal influenced by the leaders in the European Council.

It is of course, hard to understand this policy episode without understanding the broader picture (see Hodson, 2013 or Fabbrini 2013). In short, this example goes in line with a series of other instances of the Commission not pursuing integrationist goals and taking a role of an expert bureaucracy. Many times during the crisis, the Commission traded its political goals for task expansion, which is more important not only for the leaders in the member states but also for the bureaucrats working inside it. The reform of the Stability and Growth Pact is the best example for this. The Commission agreed to rules which transferred a bunch of technocratic duties without any political influence. Best example is the bureaucratized process of the European Semester, but also the “reform” of the Excessive deficit procedure, implementation of the (kind of pointless) Macroeconomic Imbalance Procedure…

Going back to Delors and his influence on the process of building EMU, why was Barroso’s Commission so different in a “similar” time of crisis? Here, I want to emphasize three (of many) points, for which I believe the Juncker’s Commission will not be much different.

First of all, unlike the time when EMU was being built, there is no more political will for such large shifts. This is a time of slow, gradual changes. And these changes are left for the European Council to set the agenda on and to control them, while the European Commission is there to execute them and sometimes provide expert advise.

Secondly, today the European Council is completely institutionalized and has its own organization. For this reason, then President of the European Council Herman van Rompuy was one of the main individuals during the crisis with its “task force” being the main agenda setter, along with the political leaders. In the case of the two-pack and the six-pack this was most evident as the HRTF gave the opinion to the European Council which merely asked the Commission to create a legislative proposal to be in line with HRTF’s recommendations.

Thirdly, although his influence in building EMU is indisputable, Delors was not as powerful it is often preached. In a lecture he delivered last year (JCMS 50th Anniversary Lecture), speaking on the time EMU was built he pointed out:

“It was the economic axis that was missing. I therefore proposed a pact for the co-ordination of policies to run alongside the monetary Stability pact. This was not accepted. Instead, it was deemed sufficient to merely add the word ‘Growth’ to the name of the Stability pact. Politicians really do have a fascination for words. In reality, this was purely and simply a budgetary stability pact: no economic co-ordination; no instruments to stimulate, co-operate or regulate (175). The ideal would be for EMU to have an economic axis – in other words, that certain competences are transferred to EMU in its own right, to promote healthy economic growth.”

From this quote, it seems that Delors’ main ally at the time was the fact that there was political will for EMU. On the other hand, his proposals were as he points out, watered down to absurdity.

Since Juncker’s Commission is, of course, a lot closer to Barroso’s than Delors’ – in terms of political will, ideology, the situation and the structure of the EU, even its beginners’ belief in its politicization  – it is very hard to expect that its influence will be any bigger than in its previous mandate.

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Jakov Bojović
Jakov Bojović holds an MA degree in Public Policy, with specialization in European Public Policy, from Central European University. The title of his MA thesis is „The Role of the Commission in the New Economic Governance of the European Union“. His main research interests are European economic and social governance, role of supranational institutions in EU integration, Europeanisation and EU enlargement. Mr. Bojovic is an author of peer-reviewed research articles published in Serbia, BiH, Hungary and Germany.

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