«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»
The European Council is an invention of the mid-1970s (European Council, 1974). It has been particularly successful from the beginning since it has taken most of the major political decisions of the EC and EU (Westlake and Galloway, 2004; see also Werts, 2008, pp.85–146). 8 Interestingly, both the European Council and the original G7 sprung from the same mind, the French President Valéry Giscard d’Estaing. To some extent, the rationale for creating the European Council in those days was the same as the one underlying the elevation of the G20 to the level of Heads of State or Government in 2008. The idea was that in order to keep the European integration process moving in times of great economic and political difficulties, such as monetary crises, rises in commodity and energy prices and very high inflation, one needed impulses from the highest political level (Werts, 2008 points 1101This has always remained the mission statement of the European Council; from the Tindemans Report of 1975, that was unanimously approved by the European Council, and stated that the European Council is ‘a driving force’ able ‘to give the continuing political momentum’ necessary ‘to build European union’ (Tindemans, 1976) to the 1992 Maastricht Treaty on European Union onwards, its task has been defined as providing the Union with ‘the necessary impetus for its development’ and ‘defin[ing] the general political guidelines thereof’.
Although eight other summits had been held from 1957 to 1974, it was the Paris Summit of December 1974 that institutionalized the European Council as an organ outside the institutional framework of the then European Economic Community. As a historic parallel to the modern G20 it was decided to hold regular meetings of the Heads of State or Government of the Member States – together with their Ministers of Foreign Affairs – with the aim of reaching agreements and coordinating their actions in all fields of international relations that could influence the Community.
The French proposal to create a small secretariat that would have facilitated the preparation of the meetings was not adopted. 9 On the contrary, the Ministers of Foreign Affairs Council configuration would act as a preparatory body of the meetings ensuring consistency and continuity of Community policies. Importantly, political leaders did not restrict the agenda of future European Councils to cooperation in areas within the scope of the Treaty (European Council, 1974, p.297). The European Council already adopted rules on the ‘Organisation of European Council meetings’ in 1977. There it distinguished between informal exchanges of views and discussions meant to lead to decisions, underlined the need for prior preparation of the meetings, upheld confidentiality of the negotiations and maintained the limited number of officials allowed to attend the meetings (European Council, 1977). These rules were updated with the Seville Rules of Procedure (European Council, 2002 Annex 1), that are currently reflected, with the necessary changes brought by Lisbon, in the 2009 Rules of Procedure of the European Council (Council Decision 2009/882/EU). Nowadays, European Council meetings are prepared in detail beforehand by the President of the European Council together with the country holding the rotating Presidency of the Council, the President of the Commission and the General Affairs Council. Summits last two days whereas the number of members of each delegation should not exceed twenty. Even today confidentiality of the discussions is respected and no minutes are held (Werts, 2008, p.75).
In Werts (2008), the author discusses the political milestones in the life of the European Council, from Intergovernmental Conferences to Economic and Monetary Union, enlargement, financial and budgetary issues, Common Foreign and Security Policy, economic and social issues, and terrorism.
Even now the Treaty of Lisbon only provides in TFEU (2009, Article 235, point 4) that the European Council will be assisted by the General Secretariat of the Council.
Jan Wouters and Thomas Ramopoulos
Another similarity of the development of the European Council to the G20, to which we hinted above, has been the fact that for more than a decade – essentially until the Single European Act (SEA, 1986 Article 2) – the former functioned as a regime completely outside the scheme of the founding Treaties, whereas for the following decades until December 2009 it was mentioned in the Treaty but without being subjected to any of the constitutional constraints applicable to EU institutions. Only with the Lisbon Treaty has the European Council been formally elevated to the rank of EU institution (TEU, 2009, Article 13(1) 2nd paragraph, second indent). It now has a permanent President (TEU, 2009, Article 15, points 5, 6). 10 Further, it can adopt legally binding acts on a number of issues within the framework of the EU but has to comply with the relevant provisions in the EU Treaties providing for the legal basis of each act (for a comprehensive list of articles in the TEU and the TFEU allowing the European Council to take legally binding decisions, see Piris, 2010, pp.379–382). The European Council can also be brought before the Court of Justice of the EU (TFEU, 2009, Article 263, 265). Its budget forms part of the EU budget (TFEU, 2009, Article 316, paragraph 3). Finally, in accordance with the Lisbon Treaty the European Council adopted Rules of Procedure, as has been described above (TFEU, 2009, Article 235, point 3). Political realities led to the incremental empowerment of the European Council and this was subsequently legally confirmed with the Treaty revisions, rather than vice versa (Piris, 2010, p.236).
It would be wrong to infer from the aforementioned changes brought about by the Lisbon Treaty that intergovernmentalism in the EU, as embodied in the very essence of the European Council, is fading out. Rather, these changes constitute the culmination of a process whereby the embedded intergovernmental paradigm in the function of the European Council has been under constant refinement with even an incremental ‘communautarisation’, though often at the expense of the original Community method provided for by the Regulation (EC) (1173/2011) Treaties. A telling illustration is offered by recent developments in the field of ‘European economic governance’. Confronted with an existential crisis for the Eurozone and the European integration project as a whole, the European Council took the lead from other EU institutions, especially the Commission. In doing so it shaped almost on its own a new European economic governance architecture (see the legislative ‘six-pack’ – 5 regulations and 1 directive – which entered into force on 13 December 2011 (Regulation (EU) 1173/2011, Regulation (EU) 1174/2011, Regulation (EU) 1175/2011, Regulation (EU) 1176/2011, Regulation (EU) 1177/2011, Council Directive 2011/85/EU)), 11 which bears irrefutable intergovernmental characteristics (see, very critically Ruffert, 2011). Apart from an EU mechanism based on Article 122(2) TFEU, the European Financial Stabilization Mechanism (EFSM) (Council Regulation (EU) 407/2010), the current European economic governance mechanism further includes an intergovernmental Special Vehicle Mechanism established on 7 June 2010, the European Financial Stability Facility (EFSF) (Council Decision 9614/10, in this Decision all 27 Member States further ‘agree[d] that the Commission will be allowed to be tasked by the euro area Member States in th[e] context’ of the function of the EFSF; European Financial Stability Facility, 2011). These two mechanisms will be replaced in July 2013 by the European Stability Mechanism (ESM), a permanent intergovernmental mechanism set up by the euro area Member States to safeguard financial stability of the euro area (European Council, 2010b). The creation of a permanent mechanism has become possible thanks to a limited amendment of the EU Treaties decided by the European Council on 25 The first President elected was Mr. Herman Van Rompuy, former Belgian Prime Minister. On 2 March 2012, he was renewed by the European Council for a second and final term of two and a half years until 30 November 2014 (European Council, 2012, paragraph 45).
The “European Semester” has also become part of the existing institutional framework: Council Regulation (EC) 1175/2011. The intergovernmental Euro Plus Pact remains outside of the existing institutional framework (European Council, 2011a).
The G20 and Global Economic Governance: Lessons from Multilevel European Governance?
March 2011 (Council Decision 2011/199/EU). The ESM treaty (2011) was finally signed on 11 July 2011 by the euro area MS. 12 Thus the ESM constitutes the response by the Heads of State or Government to the European sovereign debt crisis. The then French Minister of Finance Christine Lagarde admitted that, in establishing ESM, European leaders knowingly ‘violated all the rules because [they] wanted to close ranks and really rescue the euro zone’ (Reuters, 2010). Although the detailed discussion of the legality of the aforementioned decisions from an EU law perspective falls outside the scope of this article, both the actions as well as their political justification are of importance to our analytical effort. They prove that, although the European Council’s freedom to act is now formally restricted since it has to follow established rules and some of its acts can be challenged before the EU judiciary, when political imperatives are at play, leaders tend to revert to intergovernmentalism even outside the scope of the Treaties. Therefore the European Council example retains its pertinence with regard to the function and development of the G20, since the former continues to maintain the reflexes and flexibility of an intergovernmental political organ.
A further observation is in order here. Since the advent of the sovereign debt crisis the European Council has demonstrated its flexibility by organizing informal summits of particular groups within the institution, such as the Heads of State or Government of the euro area. These worked in parallel with the actual meetings of the European Council. However, when confronted with insurmountable disagreement at the December 2011 European Council summit, euro area leaders took the further decisive step of going outside the ‘European Council Framework’ to move toward a ‘fiscal union’, based on an intergovernmental agreement among them. Due to the UK veto all other 26 Member States made a statement in addition to the Conclusions of the summit, whereby they expressed their agreement ‘to move towards a stronger economic union’ taking action in the directions of ‘a new fiscal compact and strengthened economic policy coordination’ and ‘the development of […] stabilisation tools to face short term challenges.’ (European Council, 2011b, p.1). On 2 March 2012, this fiscal compact was signed by 25 EU Member States – the Czech Republic did not participate in the end (for the text of the treaty, see ‘TSCG’, 2012). This development is also closely linked to the effet nombre, the negative effect that the substantial increase of the number of participants in the European Council due to the subsequent enlargements exercises on the capacity to reach consensus (Werts, 2008, pp.164–169). Such a rift is difficult to expect within the G20 as it currently functions and given its rather stable and more limited membership. Still, it may be expedient to keep this precedent in mind as the G20 obtains a more permanent role in global economic governance while constantly enlarging the scope of its areas of interest.
Thus, at first sight the European Council seems to furnish an interesting precedent for the G20. It constitutes an intergovernmental political organ that was created outside established EU institutional frameworks with the goal to provide the EU with impetus from the highest political level. Although it has recently been included in the institutional framework of the Union, it continues to primarily obey political imperatives. In order to see whether and if so to what extent the European Council experience offers guidance to the G20, the nature and functioning of the latter will be analysed below.
Heads of State or Government are authorized to ask the European Commission in liaison with the European Central Bank to undertake specific tasks with regard to the ESM. Representatives of the two institutions will participate in the meetings of the Board of Governors of the ESM (ESM Treaty, 2011, Article 5, point 3). The Commission in liaison with the ECB will negotiate “the economic policy conditionality attached to each financial assistance, in accordance with Article 13(3)” (ESM Treaty 2011, Article 5, point 6g). They also will be responsible for the procedure of granting financial assistance from the point of assessment of the situation till the singing of a MoU and further monitoring (ESM Treaty, 2011, Article 13). Disputes arising within ESM will be settled by the European Court of Justice under Article 273 TFEU (ESM Treaty, 2011, Article 37, point 3).
Jan Wouters and Thomas Ramopoulos
The G20: History, Functioning and Legitimacy After a brief historical overview of developments that gave birth to the G20, the focus here lies on specific features of this forum which differentiate it from institutionalized intergovernmental organizations and international financial institutions (IFIs). In the light of this analysis the pertinence of the EU’s multilevel governance experience for the institutionalization of the G20 as a global economic governance executive will be examined.