Amending the National Constitutions to Save the Euro: Is This the Right Strategy?

By Comella, Víctor Ferreres | Texas International Law Journal, Spring 2013 | Go to article overview

Amending the National Constitutions to Save the Euro: Is This the Right Strategy?


Comella, Víctor Ferreres, Texas International Law Journal


SUMMARY

INTRODUCTION ...................... 223

I. DO WE NEED CONSTITUTIONAL RIGIDITY AT THE NATIONAL LEVEL TO PROTECT THE EURO? ...................... 228

A. The Authority of European Union Law ...................... 229

B. Two Models of Constitutional Rigidity ...................... 232

C. The Reliability of National Institutions to Enforce Austerity Norms ...................... 234

II. SOME COMPLICATIONS ON THE HORIZON ...................... 236

A. Different Levels of Constitutional Rigidity ...................... 236

B. The Relationship Between National Law and European Austerity Principles ...................... 238

CONCLUSION ...................... 240

INTRODUCTION

Economists have long debated whether the euro is based on solid foundations. They have discussed, in particular, whether the European Union (EU) complies with the conditions that need to be met for a region to become an "optimal currency area."1 One of those conditions, the existence of an intense flow of commerce among states, seems to be fulfilled.2 But there are serious doubts about two other conditions that are also relevant: the possibility for labor to move freely from one place to another, and the establishment of an institutional system that ensures a deep fiscal integration.3 EU law does protect the free movement of workers,4 but there are cultural and linguistic barriers that make it unlikely that people will change their places of residence for economic reasons.5 As to fiscal integration, the capacity of the European Union to tax and spend is very limited.6 It is basically the states' responsibility to provide citizens with public services and goods, and to obtain the necessary resources to pay for them through the pertinent national taxes. The EU's budget, in contrast, is very reduced.7

In spite of these difficulties, the euro is viable, according to "[s]ome academics and journalists."8 What is necessary, they claim, is to achieve a certain measure of coordination of national budgetary policies.9 Some convergence needs to be attained at the state level in order to compensate for the limited capacity of the European Union to enact its own fiscal policies from above. That is the whole point of the Stability and Growth Pact (the Pact), which comprises a set of legal instruments that seek to control national budgets and coordinate economic policies.10

It is for economists to figure out what needs to be done, ultimately, to ensure the stability of the euro. The task for constitutional scholars is of an instrumental nature. If we assume that constraining the public debt and the public deficit of the different states whose currency is the euro is the right path to take, as many economists seem to believe, then the constitutional question is what are the best institutional arrangements to guarantee that such constraints will be observed? What procedures should be set up to ensure compliance with the Pact? What, in particular, is the right distribution of responsibility between the European Union and the national authorities?

The current structures have important shortcomings. The European authorities play too small a role in enforcing the fiscal constraints that states must respect under the treaties. The European Commission, for example, can open proceedings against a state that fails to observe the Pact, but it is not entitled to make any final decision - it merely makes proposals for the European Council to consider." The crisis of November 2003 illustrates the weakness of the system.12 The Commission agreed, at that time, that France and Germany were in breach of the Pact, but the Council decided not to impose any sanctions on them." Instead of following the recommendations submitted by the Commission, the Council issued its own recommendations. The European Court of Justice (ECJ) was asked to decide the controversy between the two institutions, and it held that the Commission had the sole right to make recommendations, which the Council was free to reject. …

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