Transparency, Accountability and Solidarity: the missing elements of the euro area debate and the urgent need to progress on that

Discussions on the reforms for completing the euro area (EMU) have been on the agenda of EU leaders since 2009, triggered by the turmoil of the financial crisis of 2007–08 and the following Great Recession.

The need to strengthen the social dimension of the EMU has long been underlined alongside the completion of the banking, financial and fiscal unions.

We don’t need to go back to the previous term, with the great efforts of Commissioner Andor, the report ‘Towards a Genuine Economic and Monetary Union’ (the so-called ‘Four Presidents’ Report’) and the Commission’s ‘Blueprint for a Deep and Genuine EMU’ of 2012, to recall that.

The 2015 report ‘Completing Europe’s Economic and Monetary Union’ (the so-called ‘Five Presidents’ Report’) envisaged the creation of a macroeconomic stabilisation function for the euro area and stressed the need to foster convergence, prosperity and social cohesion and increase the democratic accountability and legitimacy of the EMU. In the framework of the White Paper process, this Commission also dedicated one of its reflection papers to the ‘Deepening of the Economic and Monetary Union’, pointing to the need of tackling economic and social divergences and increase transparency and accountability of governance structures. It states that solidarity should go hand-in-hand with responsibility and that risk reduction should be accompanied by risk-sharing.

Yet, progress in these areas is much slower than in the banking and financial sector.

EU leaders met for the Euro Summit in inclusive format of 27 EU member states last 29th of June. As indicated in the Leaders’ Agenda and suggested by the outcome of the March Euro Summit, concrete decisions were awaited on the reform of the EMU and expectations were high that clear indications would be given on next steps for creating a fiscal capacity and reforming the institutional set up of the EMU.

Yet, EU leaders’ decisions have been limited to the future role of the ESM and the completion of the banking union. The other issues have been left for the next Euro Summit in December 2018. The letter sent to President Tusk by the Eurogroup’s President, the Portuguese Finance Minister Mario Centeno, gives an indication of the reason. When it comes to convergence, stabilisation and solidarity, differences of views remain that prevent any progress on proposed funding mechanisms, let alone a Eurozone budget.

I don’t need to recall here the economic arguments behind the need to foster the resilience of the EMU by strengthening its social dimension through convergence and stabilisation tools. They are all included and well explained in the institutional reports and documents mentioned above.

The urgency to move forward in these areas is in this moment very much political. Less than a year ahead of the next European elections there is a pressing need to restore citizens’ trust in the EU project. Showing them that they have a say in decisions taken in Brussels and that the EU is more than the internal market and the common currency is the only way to do that.

This is why together with a number of other organisations; we published a letter calling for the improvement of accountability and democratic legitimacy of EU economic decision making structures.

And this is also the reason why we will continue advocating for the prioritization and increase of public social investment at EU level – through cohesion funds and the newly proposed European Investment Stabilisation Function – and at national one – including through a reform of the EU macroeconomic rules that would allow Member States enough fiscal space to adequately fund social investment.

We are running out of time and we must act now.