Greece has understandably dominated the headlines. Much has been written and said about the various facets of the ongoing crisis, the possibility of a Grexit, the multilateral and prolonged negotiations to reach an 11th hour agreement, and the like. Instead of rephrasing the same arguments, I wish to discuss a structural feature of the situation that, I feel, escapes the attention of analysts. This is the constitutional order of the Economic and Monetary Union (EMU), as concerns decision-making.
At first, the EMU is not a state, properly so-called. It has a single currency, the euro, a set of fiscal rules—the six-pack, two-pack, fiscal compact regime—and a nascent financial union encapsulated in the Single Supervisory Mechanism, the forthcoming Single Resolution Mechanism and what will most likely be a European Deposit Insurance Scheme; all layered on top of the single market. While much progress has been achieved in recent years, admittedly in retroactive fashion, the fact remains that the system, as it currently stands, still lacks the higher-level structures of a genuine democratic polity. These namely concern a formal upper stratum of governance coupled with the fiscal capacity commensurate with the function of governing in accordance with fundamental principles of EU law.
It is typical to reference the European Union as a sui generis entity. A valid classification which, for our purposes, can withstand some further specification. Just by studying the concatenation of events taking place during the last weeks in this seemingly endless Greek crisis saga, it can be inferred that the institutional milieu resembles a confederation, without actually being one. National sovereignty on monetary and key fiscal matters has been transferred to community institutions or mechanisms, while the full array of technical parameters constitutive of the Greek bailout package is handled by “the institutions” (a.k.a. the “troika”) and/or the various arrangements of European leaders.
What remains elusive, is the ownership of both the Greek programme and the broader decision-making framework. Some issues are set arbitrarily in backstage negotiations among technical experts. Others are settled in “mini-summits” on the sidelines of actual European Council meetings, by a handful of EU leaders and institutional actors. This kind of grey area has, rightly or wrongly, enabled the Syriza-led Greek government to take certain unilateral decisions aimed at altering the format of the negotiations. Its destabilising effects are well-known.
Against this backdrop, a degree of uncertainty exists concerning the process of policy-formation. In the absence of a clear, comprehensive ruleset, combined with the lack of full-fledged instruments for delivering predictable outcomes, decisions on yet-to-be-delineated domains are formulated in inter-governmental meetings. These manifest in either the Eurogroup or European Council formats, though in recent times, it often is the case to witness ad hoc top-level meetings usually involving some EU institution, the chief of the IMF, together with the political heads of France and Germany.
The gist is that a nexus of concurrent processes unfolds on two distinct levels. One is that of nation-states, with governments, finance ministries, national parliaments, media outlets, and civil society engaged in the formulation of their stance on the phenomenon. The other, the quasi-confederal, is grounded in an awkward symbiosis of clearly-stipulated rules and arbitrariness; an amalgamation of legitimate institutions with modes of conduct and processes of a dubious character. The latter, in contradistinction to the former, is found wanting in two substantive, cardinally important ways: (i) legality at a constitutional level, and (ii) effective democratic legitimacy/accountability.
Legitimate and questionable
Where the path ahead remains uncharted, and the means of navigation rest in the hands of governments with common goals yet competing ambitions, final decisions are ultimately predicated on circumstantial power relations, rather than common principles. This represents a setup geared for competition rather than collaboration. A Union that has its members engaged in zero sum games, can only be nominal qua Union for that particular subject.
This article is not the appropriate context for expounding on the normative propositions concerning the future of the EMU. We have solely addressed its actuality. Though the exact conclusion to this extended story is open to speculation, the afore-outlined political order clearly lacks the potentiality for delivering a truly optimal outcome. What exists in the realm of probability are states of affairs ranging from bad to calamitous. Whatever the case, the constitutional facets of this “problem” are not Greek, while the possible consequences of a [non-]agreement will be deleterious for more EU/Euro member-states than just Greece.
Side note: I previously announced that I will be relaunching my Euroblog. <a href="https://protesilaos.com/euroblog-relaunch/">Here</a> I outlined the context of that decision. Consider this to be my first entry in this new chapter.