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'EU integration is an opportunity to protect our national constitutional values jointly'

The euro crisis of 2010 has shown that the Eurozone lacks economic cohesion and that EU fiscal integration is needed for a stable euro. But can this integration exist without clashing with the national constitutional interests of the Member States? Frederik Behre looked into this matter in his PhD thesis which he will defend on 21 October 2021.

Frederik Behre

The euro crisis, which erupted in 2010 shortly after the global financial crisis, was a challenging moment for the EU’s single currency. Greece and other countries threatened to go bankrupt. ‘The crisis essentially revealed that the Eurozone was lacking economic convergence, that it was not adequately equipped to withstand macroeconomic shocks’, PhD candidate Frederik Behre says. ‘Most scholars and politicians agree that some form of EU fiscal integration is required to stabilise the euro. This would include, for example, a Eurozone budget, a Eurozone Ministry of Finance and more EU control over national budgeting.’

However, these proposed ideas are controversial as they challenge the national conception of democracy and sovereignty. The national budget is considered the core prerogative or the 'crown-jewel' of national parliaments and in fact decisions on how to spend available funds or whether to introduce a new tax are important political questions that are part of the democratic process in the Member States. ‘This leaves us with a dilemma’, according to Behre. ‘On the one hand, we seem to need EU fiscal integration to fix and stabilise the euro in order to avoid another euro crisis with all the associated high socio-economic costs. On the other hand, the required EU fiscal integration steps seem legally impossible to achieve. This apparent dilemma is the starting point of my investigation. In my PhD research, I evaluate whether it is indeed legally impossible to implement EU fiscal integration or whether constitutional space can be identified – and even be created – to accommodate EU fiscal integration steps in order to make the euro more resilient and crisis-resistant.’

Flexible and rigid systems

In his research, Behre compared national constitutional approaches to EU fiscal integration proposals to map the constitutional space available at the national level for EU fiscal integration initiatives. As it was hardly possible to look into all 27 constitutional systems of the EU Member States within his PhD, Behre worked with a general distinction of two different categories or types of constitutional systems: flexible systems and rigid systems. In flexible systems, the approval of EU fiscal integration is mostly a political question. ‘Take for example Finland, where the core question is whether the prescribed majority in the Finnish Parliament can be gathered to confirm the required conferral of powers to the EU.’ Other constitutional systems established rigid limitations to the prospect of EU fiscal integration. One example is the German Federal Constitutional Court which established high legal hurdles for the conferral of powers and which found last year that the ECB had acted outside the powers that were given to it by the German Parliament. ‘Hence, in Germany, fiscal integration is not only a matter of uniting the required political support but it also depends on whether the conferral is permissible under these strict constitutional limits formulated by the Constitutional Court.’

The research reveals that constitutional identity limitations are the most immediate and strictest substantive hurdle for EU fiscal integration proposals. Subsequently, the comparative research setting also allowed Behre to determine whether national constitutional systems could, for example, learn from each other. So, whether a best practice or a particularly constructive interpretation of democracy in one Member State could be implemented in another Member States to create additional constitutional space for EU fiscal integration.

Space for EU fiscal integration

The most important research finding is that there is ultimately space for EU fiscal integration if designed properly. This means, for example, that national parliaments have to be better integrated into the decision-making on budgetary and fiscal policy decisions at the EU level in order to address and overcome a major constitutional concern in relation to protecting national democracy. By institutionalising the involvement of national parliaments and by, for example, creating a representation of national parliaments at EU level that is tasked to discuss fiscal policy matters EU law itself can signal to national constitutional actors that they take the concerns seriously.

But national constitutional authorities are also required to modify their conception of EU integration which is often portrayed as an intrusion into the national constitutional space against which the national constitutions have to be protected. The comparative assessment revealed that constitutional limits that are more flexible and receptive towards EU integration are, in fact, not automatically less effective or offer less protection than strict-rigid constitutional limits. ‘Take for example the Finnish interpretation of sovereignty. According to the Constitutional Law Committee, the conclusion of a trade agreement will likely be more beneficial for Finland when negotiated as a bloc of 27 Member States as opposed to only Finland alone. Hence, by conferring powers to the EU level in order to conclude such trade agreements, Finnish interests may be better safeguarded.’

Thus, it can be argued that supranational cooperation can be an effective tool to protect our national interests but also to preserve national constitutional values such as sovereignty or democracy. By pooling powers at the supranational level, EU Member States can retain a say in global affairs, says Behre. ‘This shows that EU integration is an opportunity to protect our national constitutional values jointly – and that EU integration and national constitutional law are not opponents but can and should be mutually reinforcing allies in a globalised world.’

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