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The European Semester and Parliamentary Oversight Institutions Inside and Outside of the Euro Area

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The European Semester and Parliamentary Oversight Institutions Inside and Outside of the Euro Area Politics and Governance (ISSN: 2183–2463) 2021, Volume 9, Issue 3, Pages 100–111 https://doi.org/10.17645/pag.v9i3.4129 Article The European Semester and Parliamentary Oversight Institutions Inside and Outside of the Euro Area Thomas Winzen Department of Government, University of Essex, UK; E‐Mail: [email protected] Submitted: 1 February 2021 | Accepted: 6 May 2021 | Published: 13 August 2021 Abstract The European Semester is a challenge for national parliaments but also an opportunity to reform domestic oversight insti‐ tutions. Drawing on data from all member states, this study examines the conditions under which national parliaments use this opportunity. Is Euro area membership a prerequisite for parliamentary adaptation to the European Semester and, if so, which further combinations of conditions account for variation among Euro area countries? The analysis suggests that membership in or close ties with the Euro area and institutional strength constitute necessary conditions for parliamentary adaptation. Combined with other factors—in particular, public debt exceeding the Maastricht criteria—these conditions explain reform in many cases. National parliamentary adaptation to the European Semester thus follows existing institu‐ tional divisions constituted by differentiated integration in the Euro area and uneven national parliamentary strength. Keywords differentiated integration; economic governance; European Semester; national parliaments Issue This article is part of the issue “Rising to a Challenge? Ten Years of Parliamentary Accountability of the European Semester” edited by Eric Miklin (University of Salzburg, Austria), Aleksandra Maatsch (University of Wroclaw, Poland) and Tomasz P. Woźniakowski (Hertie School, Germany). © 2021 by the author; licensee Cogitatio (Lisbon, Portugal). This article is licensed under a Creative Commons Attribu‐ tion 4.0 International License (CC BY). 1. Introduction complicated by the architecture of economic gover‐ nance and the diversity of existing parliamentary insti‐ The European Semester is the process through which tutions. Euro area integration is highly differentiated, the EU seeks to ensure member state compliance with and the Semester’s implications vary accordingly across its macroeconomic and fiscal rules. Concerns have been countries. Yet, the literature on differentiated integra‐ raised that this yearly cycle of coordination, monitoring, tion has largely sidestepped any discussion of national and assessment, combined with significant enforcement parliaments, and research on national parliaments has procedures, might curtail the authority of national par‐ hardly mentioned differentiated integration (for reviews, liaments. The European Semester might thus lack input see Holzinger & Schimmelfennig, 2012; Winzen, 2021; legitimacy (Crum & Merlo, 2020; Dawson, 2015; Lord, but see Genovese & Schneider, 2020). Specific research 2017). In turn, it has been argued that national parlia‐ on the European Semester, moreover, disagrees on ments should prioritize attention to EU economic gover‐ the effect of Euro area membership on national par‐ nance (de Wilde & Raunio, 2018). Against this backdrop, liaments (Hallerberg et al., 2018; Rasmussen, 2018). this study examines whether national parliaments adapt Similarly, regarding existing institutions, it has been to the European Semester by reforming domestic over‐ argued that strong existing oversight in EU or budget sight institutions, defined as rights and procedures to matters could encourage adaptation to the Semester scrutinize the government during the Semester process. but also render Semester‐specific adaptation superflu‐ The question of whether national parliaments adapt ous (Dimitrakopoulos, 2001; Kreilinger, 2018; Maatsch, institutionally to the European Semester is rendered 2017; Rozenberg, 2017, p. 45). Politics and Governance, 2021, Volume 9, Issue 3, Pages 100–111 100 My argument starts from the premise that national Mechanism (ERM) are found to be necessary for reform. parliaments consider institutional reform as a response Institutional strengths—defined by pre‐existing institu‐ to changes in EU authority (e.g., Raunio & Hix, 2000). tional rights in EU or budgetary matters—is another The European Semester, in principle, constitutes an necessary condition. These two explanations, combined opportunity for reform. However, two further points with a range of other factors, form several sufficient can be made. First, differentiated integration means configurations of conditions for reform. Public debt that some parliaments are exempt from EU authority, exceeding the Maastricht criteria appears in several of notably the Semester’s enforcement procedures, and these configurations. thus unlikely to consider reform at all. Euro area mem‐ As discussed in the conclusion, these findings add bership and close institutional ties to the Euro area more specific evidence on the role of parliaments in the (explained below) would thus constitute a necessary con‐ European Semester than available so far. More broadly, dition for parliamentary adaptation. Second, even mem‐ if input legitimacy is understood in terms of parliamen‐ ber states for which the Semester is a significant reform tary oversight institutions, a key conclusion is that there opportunity do not necessarily reform oversight proce‐ is cross‐national variation in the input legitimacy of the dures. Rather, existing institutions and other party politi‐ European Semester. This variation reflects broader insti‐ cal and economic conditions highlighted in the literature tutional differences constituted by uneven parliamen‐ (Dimitrakopoulos, 2001; Raunio, 2005; Winzen, 2017) tary strength and differentiated integration. The con‐ might be required to motivate reform sufficiently. clusion further highlights different perspectives on the Empirically, I examine data on European Semester‐ implications of this finding. specific reforms of parliamentary oversight institutions in all member states. A qualitative comparative anal‐ 2. Challenges and Opportunities for National ysis (QCA) is used to assess which combinations of Parliaments conditions are necessary and sufficient for reform. The main findings include that only a few parliaments In comparison to earlier fiscal and economic coordi‐ have implemented Semester‐specific oversight institu‐ nation processes, the European Semester has stronger tions. Euro area membership or close ties to the Euro procedures and enforcement mechanisms. As Table 1 area via the Fiscal Compact and the Exchange Rate shows, the EU conducts country‐specific monitoring of Table 1. The European Semester: Process and enforcement. Phase Key procedural steps Countries Legal bases Nov–Mar Surveillance of macro‐economic imbalances All ‘Six‐pack’ (2011). Macro‐economic scoreboard Country reviews Commission economic priorities European Council economic priorities Apr–Jun Plans & recommendations All ‘Six‐pack’ (2011). Structural reform plans (‘National Reform Programs’) Fiscal plans (‘Stability and Convergence Programs’) Country‐specific recommendations by Commission Council and European Council endorsement Sep–Dec Budgetary coordination EA ‘Six‐pack’ (2011), Assessment of draft budgets against SGP & CSRs ‘Two‐pack’ (2011), Commission recommendations, Council debate Fiscal Compact (2013). Enforcement Macro‐Economic Imbalances Procedure (MIP) Mixed ‘Six‐pack’ (2011). Recommendations & Corrective Action Plan All Non‐compliance judgment by RQMV All Sanctions: Deposits and fines by RQMV EA Enforcement Excessive Deficit Procedure (EDP) Mixed Art. 126 & 139 TFEU, Policy recommendations All ‘Six‐pack’ (2011), Decision on inadequate action (QMV) All ‘Two‐pack’ (2011), Economic and Partnership Programmes EA Fiscal Compact (2013). Enhanced surveillance & reporting EA Sanctions by RQMV EA Notes: EA: Euro area; RQMV: Reverse Qualified Majority Voting. Source: Own compilation based on the legal instruments cited in the column ‘Legal bases’. Politics and Governance, 2021, Volume 9, Issue 3, Pages 100–111 101 macro‐economic conditions, requests reform and fiscal (Hallerberg et al., 2018; Kreilinger, 2018; Rasmussen, plans before national budgets are presented to national 2018; Rittberger & Winzen, 2015). Whereas the effec‐ parliaments, and makes country‐specific recommenda‐ tiveness of the Interparliamentary Conference remains tions for compliance with the Stability and Growth Pact debated, the second path, which is the focus here, is well‐ (SGP) and macro‐economic stability goals. Euro area established in EU governance and might be relevant for member states additionally submit draft budgets for the European Semester as well. EU scrutiny. EU recommendations for macro‐economic reform and compliance with the SGP can be enforced 3. Differentiated Euro Area Membership and with a new Macro‐Economic Imbalances Procedure (MIP) Parliamentary Adaptation to the European Semester and a reformed Excessive Deficit Procedure (EDP), which can result in enhanced surveillance, financial deposits Can parliaments be expected to adapt domestic over‐ and financial sanctions unless opposed by a quali‐ sight institutions to the European Semester? The litera‐ fied majority of member states. However, the sanc‐ ture on national parliamentary adaptation to the EU high‐ tions only apply to the Euro area. Finally, since 2021, lights conditions under which parliamentary actors— to access funding under the EU’s Covid‐19 Recovery mainly political parties—consider reforms of oversight. and Resilience Facility,
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