Christos Karetsos, City Law School
On the 2 October 2023 at City, University of London, Institute for the Study of European Laws (ISEL), Professor Peter L. Lindseth and Professor Päivi Leino-Sandberg presented their research project in progress, titled ‘‘Beyond ‘As If’ Constitutionalism: Revenue, Borrowing, and Spending in the New Regime of European Integration.’’ This blog post outlines the key ideas of the presentation and the discussion that followed.
Through the Recovery and Resilience Facility (RRF) – whose legal basis is the flexibility clause in the Treaty’s cohesion title, Article 175(3) TFEU – the use of cohesion policy has transformed supranational involvement in national economic and fiscal policymaking. Through RRF, cohesion policy has become the basis of ‘money for reforms’, regardless of whether the EU or the Member State hold legislative competence in the relevant area. As a result, cohesion policy and economic and related fiscal policies have morphed into one integrated policy field in which any economic or fiscal policy measure can be plausibly described as a structural reform.
How did this happen?
One might respond ‘COVID-19’ (and hence NGEU) but that would not be exactly right, as the basis of this constitutional transformation was in fact a revolutionary reinterpretation of Article 175(3) TFEU that predated NGEU. And that reinterpretation was undertaken by the legal services of the EU institutions largely outside of public scrutiny. While the institutional legal services support that ensuring the quality and objectivity of their advice demands that they remain confidential, these opinions need to be exposed to public debate and critique lest they undertake fundamental transformations without the requisite democratic and constitutional legitimation.
The project seeks to make this hidden legal evolution visible by examining previously undisclosed legal analyses of the Council Legal Service on this question.
With NextGenerationEU (NGEU) and related programs, the EU has embarked on a potentially profound constitutional transition, one that may portend the emergence of a genuinely new regime of European integration. This new regime has several components. It builds, first, on the effort to establish a quasi-autonomous EU borrowing and spending power of an unprecedented scale and scope. It is backed, second, by new revenue from the member states to help service the dramatically increased levels of EU debt. And it further seeks, third, to align the new revenue, borrowing, and spending with a range of EU policy initiatives, both immediate and longer term. Although the question whether this transition will ultimately come to full constitutional fruition remains an open question, by mobilizing resources at a macroeconomically and geopolitically salient scale, NGEU may lead to the establishment of a new constitution for European integration, moving beyond the “as if” constitutional paradigm.
This is, however, not unproblematic. Even as the NGEU model moves beyond “as if” constitutionalism in socio-political fact, it nonetheless relies on problematic features of the old mindset in law. This residual “as if” constitutionalism poses a threat to the legitimacy, effectiveness, and durability of the transition that the EU is otherwise rightly attempting to pursue. The project undertakes a detailed analysis of the historical roots and actual operation of the NGEU model to outline the legal dimensions of a potential new political settlement for integration, one that attempts to avoid the pitfalls of the “as if”-constitutional approach. The analysis of the historical roots and actual operation of the NGEU paradigm shows that, even as it derives from opaque, top-down re-engineering, it has still been unable to escape ultimate dependence on the Member States as the bottom-up foundations for the emergent revenue, borrowing, and spending capacities essential to the current transition.
The authors support that the re-engineering of Article 175(3) TFEU is too tenuous a legal basis to bear the weight that a permanent regime would place on it. That flimsiness is not only a consequence of questionable reinterpretations or the massive scale of funding these reinterpretations are now meant to support. It is also a consequence of the broader institutional effects of this radical scaling-up. The authors’ view is that any political and constitutional settlement for the new regime must explicitly take cognizance of this dependence, thus being able to reconcile the historic nature of European integration -polycentric and demoi-cratic- with the need to develop revenue, borrowing, and spending capacities at the supranational level to enhance the added value and resilience of the integration project as it proceeds into an uncertain future.
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References: Professor Peter L. Lindseth and Professor Päivi Leino-Sandberg, ‘How Cohesion Became the EU’s Vehicle for Economic Policy’<https://verfassungsblog.de/how-cohesion-became-the-eus-vehicle-for-economic-policy/>