In the name of the markets: Which legitimacy for which European governance ?

1. Cécile Barbier Senior researcher Conférence Sociale Européenne : Bilan de la gouvernance économique lors du premier Semestre Européen. Observatoire social européen 19 September 2010 In the name of the markets: Which legitimacy for which European governance ?

2. From the « democratic deficit » to the involvement of « civil society » in order to restore the EU legitimacy Ratification of the Maastricht treaty (1992): End of the « permissive consensus » Insertion of the Open Method of coordination (Lisbonne European Council 2000): « méthode autorisant l’Union à agir dans des domaines dans lesquels elle est dépourvue de compétences grâce à la fixation, par le Conseil, d’objectifs communs dont la mise en oeuvre respecte le libre choix, par les États, des moyens les mieux adaptés » (Rapport d’information du Sénat français, 3 mars 2006). White Paper on European Governance (2001): forget the « democratic deficit » by the implication of civil society in the EU processes in order to raise their legitimacy 2005: rejection of the Constitutionnal treaty, called a treaty establishing a Constitution for Europe. Failure of the exercice to constitutionalise the European Union and to raise the legitimacy of the European project.

3. Preparation of "post-Lisbon“: address the “ownership deficit " • 2006: The European Commisssion attributes the feable achievments of the objectives of the Lisbon Strategy to a lack of « ownership » by public opinions • 2006: Questioning of the Prime Minister of Luxembourg Jean-Claude Juncker, the political risk of the Structural reforms. • 2007: Structural reforms how far? (Paul De Grauwe) • European Council decision of March 2008 to prepare the "post-Lisbon“ • “EU official: New narrative needed for Lisbon Agenda”: “political ownership is very important for effective delivery of the structural reforms“ Euractiv, 24 June 2009. • Can the renewal of this strategy be achieved without democratic debate?In response to a parliamentary question, the Commission announced its intention to launch a consultation of civil society in the month of September 2009. • Launch in late November. "Stakeholders" had until Jan. 15 to send contributions to the Commission. The Platform of Social NGOs and the groups of the Greens / EFA and that of the Socialists and Democrats (S & D) of the European Parliament had expressed doubts about the proposed timetable. • The timing was tight but hardly thinkable to use "civic disobedience" due to the weight of economic actors.

4. The NGOs in the consultation process 1 December 2009: entry into force of the Lisbon treaty New horizon for the European Union: to work for a « highly competitive social market economy » No change in the division of competence: the fight against poverty is set out in articles 3.3 of the TEU (to combat social exclusion) and in articles 151 and 153 of the TFEU. Economic governance: new article 136 authorising the eurozone members states to sthrengten their budgetary discipline and to set out economic policy guidelines for them. Combined with article 121, their implementation will reveal some surprises from the European Parliament which will be involved in the reinforcement of the Stability and Growth Pact February 2010: according to a first document on the result of the consultation, the NGO "broadly support" the approch of the European Commission In reaction to this publication, the Social Platform of European NGOs denounced what can be called the manipulation of the position of the social NGOs. « How could social NGOs 'broadly support' a text while considering it to have a 'weak, if not absent' social dimension as the paper states »(Conny Reuter, president of the Social Platform of European NGOs, to EurActiv).

5. Europe 2020: a new « governance » • 3 March 2010: « Europe 2020 sets out a vision of Europe's social market economy for the 21st century ». • « Fiscal consolidation and long-term financial sustainability will need to go hand in hand with important structural reforms, in particular of pension, health care, social protection and education systems ». • In the field of poverty: 20 million less people should be at risk of poverty. • How: "European platform against poverty" to ensure social and territorial cohesion such that the benefits of growth and jobs are widely shared and people experiencing poverty and social exclusion are enabled to live in dignity and take an active part in society. • Governance: The reporting of Europe 2020 and the Stability and Growth Pact evaluation will be done simultaneously, while keeping the instruments separate and maintaining the integrity of the Pact. • Ecofin Council (16 March 2010)« The Council (…)emphasises that restoring macro-economic stability and returningMember States' public finances on a sustainable path are prerequisites for growth and jobs,and that growth is important to support fiscal consolidation. The Council therefore underlines that structural reforms and fiscal consolidation under the Stability andGrowth Pact (SGP) need to go hand in hand and stresses the need to ensure thatmacroeconomic and fiscal constraints are fully observed as they are a prerequisite for longtermsustainability of our social models » (point 3).

6. Definition of the « economic governance » by the economic actors Task force on the Economic governance headed by the President of the European Council (finance ministers of the 27 member states, president of the European Central Bank, president of the Eurogroupe and European Commissioner for Economic and financial affairs).No connection with the social actors. President of the ECB (May/June 2010) : « We need a fiscal federation » Presentation of the proposal of the European Commission : Institutionnal innovation: reverse majority rule, implying a Commission proposal is adopted unlss rejected by the Council acting by a qualified majority (in fact a blocking qualified majority). New excessive imbalance procedure added to the Stability and Growth Pact allowing for financial sanctions for the euro area Member States. Report of the Task Force: The importance of the logic of "ownership" by member states in the field of fiscal policies (national budgets must reflect the recommendations of the Commission or the Council during the "European Semester"). Pact euro plus and implementation of article 136 between the eurozone member states: same logic of economic reforms targeting core social items.

7. Meanwhile, a profound questioning of the "European social model" is already happening Market pressures: the introduction of reforms in several countries considered "courageous" by the European institutions (wage freeze or cuts in public service, flexible labor laws, lower pensions, abolition of posts in public service, deferred the retirement age ...). When several national components of the "European social model" are crumbling, the model itself is eroded and reduced. Possible corrections on the basis of treaties? Using the procedure of Article 153 TFEU Bridging procedure (question of political feasibility in a context dominated by the better regulation and social measures of austerity plans already adopted), Enhanced cooperation in the field of taxation (corporate tax, green taxes ...), social clause (a mention in the guidelines for employment in October 2010) but what impact in face ofthe reinforcement of the Stability and Growth? With regard to SGI, the implementation of the treaty is highly speculative or risky. The question of general interest tasks assigned to social housing in the Netherlands is raised (action against the European Commission, Case T-202-10, April 2010). The ruling is expected during 2012. Article 16 of the TFUE forsees sectoral regulation, should the flexibility clause be used for the adoption of a framework Directive ?

8. Oppostion from the citizens, but In the street (various eurodemonstrations and other events elsewhere in the EU) but also at the polls (raises of the abstention rates) expressed opposition to dominant neoliberal thought rejecting the logic of "ownership" underpinned by the ongoing reforms. Same reactions to the plans adopted in Greece, Portugal and Ireland under the supervision of the IMF, the European Commisssion and the ECB. The 15M 'Indignant Movement' in Spain and elsewhere. According to the October European Council, the reform of European governance, i.e the strengtening of the stability and growth pact, “should be completed by June 2011”. Pressure to finish quickly, involvement of the EP. Fast track procedure under codecision for the revision of the quasi constitutionnal pact. Vote scheduled on 28 September 2011. Pressure on the EP for the adoption of the reform of the stability and growth pact “in order to reassure the markets”. In the same time following the advice by Germany and France, revision of some national constitutions to include 'golden rule' guaranteeing budgetary stability. Contested in Spain because it will prohibit further developments of the welfare state which is very important in the fight against inequalities.

9. Towards a revision of the European Treaties but what in the meanwhile? • Following the European Council in October 2010 the TFEU was revised by incorporating the principle of a mechanism for crisis management to maintain financial stability in the euro area as a whole. National ratifications required by the end of 2012. • 11 July 201: signature by the Economic and Finance Ministers of the treaty establishing a European Stability Mechanism. Aim: to replace the temporary instruments of financial support established in May/June 2010. Strong conditionnality and involvement of the IMF (national ratifications, approbations required). • 21 July: second plan “on the paper” to assist Greece. As in 2010, national ratifications required (Done early September in France, Belgium and Luxembourg). But doubts of the markets/pressures of the IMF (August 2011) • On 7 September 2011, the German Constitutional Court court ruled that Germany may provide financial aid to eurozone countries without infringing its Basic Law. This requiresgreater involvement of the German parliament’s budgetary commisttee (prior agreement each time that Germany wants to pledge to provide substantial aid to a country). Doubts about eurobonds. • A new revision of the EU treaties is not excluded but it is a realistic project and will it be the occasion to raise the legitimacy of the EU ? Meanwhile the austerity is the only common language even if there are alternatives to the neoliberal/ordoliberal recipes to be explored and that deserved to be supported (Union of compensation, reduction of working time, financial regulation, etc).