Saving Europe ‘Under Strict Conditionality’: A Threat for EU Social Dimension?

TL;DR: In this paper, the compatibility of EU anti-crisis measures with some key elements of the EU legal system is examined, focusing on the financial assistance programmes devised to rescue some EU Member States that, due to their unsustainably high public debts, came under severe pressure from the financial markets.

Abstract: This paper looks at the compatibility of EU anti-crisis measures with some key elements of the EU legal system. In particular, it focuses on the financial assistance programmes devised to rescue some EU Member States that, due to their unsustainably high public debts, came under severe pressure from the financial markets. In all these cases, recipient States have been invariably required to adopt draconian austerity measures in order to have access to the financial help. This paper argues that some of the conditions attached to the assistance packages raise doubts as to their compatibility with a number of basic social principles and objectives that represent the foundations of the EU social dimension. This is the case with regard to the social objectives enshrined in the Treaties, the allocation of competences between the EU and Member States in the social field and, lastly, some of the social rights contained in the Charter of Fundamental Rights.

Summary

1. INTRODUCTION

• This approach, which is fairly common in ‘emergency times’, raises doubts as to its legitimacy and, far from helping the EU out of the crisis, it may end up damaging the prospects of the European integration process.
• In order to receive the financial help, recipient States are required to adopt a set of fiscal consolidation measures aimed at halting the deterioration in their public finance position.
• This paper aims to assess the compatibility of this approach with a number of basic social principles and objectives that represent the foundations of the EU social dimension.
• The paper looks, first of all, at the conditionality instruments used in the context of the financial assistance packages for EU countries, trying to shed some light on the relevant legal framework.

2. CONDITIONALITY IN FINANCIAL ASSISTANCE PACKAGES

• TO ASSIST EU COUNTRIES Conditionality represents a prominent feature in all the financial assistance packages and mechanisms that have been put in place to respond to the needs of those EU Member States that suffered most from the economic crisis.
• Conditionality cannot be seen only as an external imposition, since the need to make financial assistance subject to the respect of strict policy requirements has been a firm request put forward by some EU Member States and by EU institutions alike.
• Article 4 entrusts the Commission with the task of regularly verifying whether Members State’s policies accord with the adjustment programme and, accordingly, to decide the release of further instalments.
• Indeed, Article 13.3 establishes that the ESM Board of Governors, after having decided to grant stability support to a Member State, entrusts the Commission, in liaison with the ECB and “wherever possible” together with the IMF,14 to negotiate a MoU detailing the conditionality attached to the package.
• 15 Article 6.1 Proposal for a Regulation of the European Parliament and of the Council, on the strengthening of economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability in the euro area, COM(2011) 819 of 23.11.2011.

3. THE CONTENT OF CONDITIONALITY: FINANCIAL STABILITY

• Conditionality attached to the financial assistance packages devised to rescue Euro States is strongly reminiscent of the neo-liberal recipes imposed by the IMF in the context of its structural adjustment programmes of the ’80s and the ’90s.
• This notwithstanding, it can be safely argued that financial stability in this context still represents a priority, to be achieved even at the expenses of any other potentially conflicting objective.
• 32 Article 48.6 TEU grants to the Parliament only a consultative role.

4.1. Strengthening EU Social Dimension: From Rome to Lisbon

• The strategy followed by EU institutions and Member States in trying to restore financial stability in the Euro area and, in particular, its over-reliance upon austerity measures, has attracted sustained criticism from many quarters.
• On the other side, especially starting from the ’90s, the original division of labour came under challenge from the progressive ‘infiltration’41 of internal market law into the social sphere.
• It can be, thus, inferred that, being it a guarantee for the mechanism to comply with EU law, conditionality cannot but fully respect all the limits set by the Treaties, also those concerning the social sphere.

4.2. Conditionality and EU Competences in the Social Field: A Step Too Far?

• Conditionality attached to the financial assistance programmes for Greece, Ireland and Portugal touches upon many key aspects of national welfare regimes in a way that seems to go far beyond the limits imposed by the Treaties to the EU capacity to intervene in this field.
• Article 153.4 TFEU makes clear that these provisions cannot affect or impair Member States capacity to define the fundamental principles of their social security systems, nor affect the financial equilibrium thereof.50 Lastly, Article 153.5 TFEU rules out any EU intervention on issues such as pay and right of association.
• A similar situation can also be observed with regard to health care.
• The conditions contained in the Council decisions regulating the access of Greece, Ireland and Portugal to financial assistance mechanisms seem at odds with these limits.

4.3. Conditionality and EU Treaties’ Social Objectives

• So far, one of the defining features of the strategy adopted to respond to the European sovereign debt crisis is its exclusive focus on restoring financial stability, paying little, if any, attention to other competing objectives.
• As seen above, this one-sided approach appears hardly compatible with the overall vision that, at least on paper, lies at the core of the European integration process and, more poignantly from a legal perspective, with the new catalogue of aims that the EU is bound to pursue with its action.
• Furthermore, the following indent establishes that the EU “shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child”.
• On the one hand, the severity of austerity measures to be adopted by the States receiving financial assistance are hindering the pursuit of objectives set forth by Article 3 TEU, such as combating social exclusion or promoting social justice and protection.
• On the other hand, all these measures aim to restore financial stability paying little, if any, attention to any competing requirement and, thus, spending not too much efforts in trying to find a more appropriate balance between economic and social objectives as required by Article 9 TFEU.

4.4. Conditionality and the Charter’s Social Rights

• Austerity measures adopted in response to the European sovereign debt crisis have a deep impact on the enjoyment of a wide array of basic social rights.
• This means that, as observed by some authors with regard to the Charter, “good arguments can be made for ranging fundamental social rights in the ‘rights’ category, rather than in the ‘principles’ one”.
• Early assessments of the social impact of austerity measures raises several doubts as to the compatibility of the conditions attached to financial assistance packages with some of the Charter’s social rights, even if taken in such a minimalist version.

5. CONCLUSIONS

• This paper sought to assess the compatibility of policy conditionality attached to EU-sponsored financial assistance packages with the three main pillars of EU social dimension.
• The analysis showed that several features of these measures are at odds with fundamental social objectives and principles set out by the Treaty, as well as with some of the social rights recognized by the Charter.
• This, as further specified by Article 9 TFEU, imposes to the EU to find a suitable balance between potentially conflicting objectives, as they enjoy equal status within the EU legal order.
• Indeed, these measures are affecting the minimum core, or the “essence”, to use the wording of Article 52.1 of the Charter, of these rights, and doubts can be raised as to whether they are justified as a proportionate, necessary and suitable response to the crisis.

Full text

Francesco Costamagna
SAVING EUROPE ‘UNDER STRICT
CONDITIONALITY’: A THREAT
FOR EU SOCIAL DIMENSION?
Centro Einaudi
N7 2012 ISSN 2036-1246
working
paper

F
RANCESCO
C
OSTAMAGNA
S
AVING
E
UROPE
‘U
NDER
S
TRICT
C
ONDITIONALITY
’:
A
T
HREAT
FOR
EU
S
OCIAL
D
IMENSION
?
Centro Einaudi • Laboratorio di Politica Comparata e Filosofia Pubblica
with the support of Compagnia di San Paolo
Working Paper-LPF n. 7 • 2012

WP-LPF 7/12 • ISSN 2036-1246
2
© 2012 Francesco Costamagna and LPF • Centro Einaudi
Francesco Costamagna
holds a Ph.D. in International Economic Law from the
“L. Bocconi” University of Milan. His research focuses on European Union Law and
International Economic Law. In particular, he mainly works on the legal aspects of
the relationship between the State and the market with regard to services of general
interests and welfare systems
. His recent publications include: I servizi socio-sanitari nel
mercato interno europeo. L’applicazione delle norme dell’Unione Europea in materia di concor-
renza, aiuti di Stato e libera circolazione dei servizi (2011); The Internal Market and the Wel-
fare State: Anything New After Lisbon?, in M. Trybus and L. Rubini (eds), The Treaty of
Lisbon and the Future of European Law and Policy (2012, pp. 381-397); The Provision of
Social Services in Italy between Federalization and Europeanization, in U. Neergaard, E.
Szyszczak, J.W. van de Gronden and M. Krajewski (eds), Social Services of General
Interest in the EU (2013, pp. 541-568).
e-mail: francesco.costamagna@unito.it
The Comparative Politics and Public Philosophy Lab (LPF), directed by
Maurizio Ferrera, is a Programme of the Centro Einaudi supported by Compagnia
di San Paolo. It looks at the transformation of the political sphere in contempo-
rary democracies, with a specific focus on the relationships between the policy
choices and the value frameworks in which such choices are, or ought to be,
carried out. The reference here is to the “reasonable pluralism” singled out by
John Rawls as an essential feature of political liberalism.
The underlying idea is that implementing forms of “civilized” politics is desirable
as well as feasible. And, as far as the Italian political system is concerned, it is
also urgently needed, since the system appears to be poorly prepared to deal with
the challenges emerging in many policy areas: from welfare state reform to the
governance of immigration, from the selection criteria in education and in public
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In order to achieve this end, LPF adopts both a descriptive-explanatory approach
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F.
Costamagna
•
Saving
Europe
‘Under
Strict
Conditionality’:
A
Threat
for
EU
Social
Dimension?
3
TABLE OF CONTENTS
SAVING EUROPE ‘UNDER STRICT CONDITIONALITY’:
A
T
HREAT FOR
EU
S
OCIAL
D
IMENSION
?
5
1. Introduction 5
2. Conditionality in Financial Assistance Packages to Assist EU Countries
6
3. The Content of Conditionality: Financial Stability as an Absolute Priority? 9
4. Conditionality and EU Social Dimension
4.1. Strengthening EU Social Dimension: From Rome to Lisbon
4.2. Conditionality and EU Competences in the Social Field:
A Step Too Far?
4.3. Conditionality and EU Treaties’ Social Objectives
4.4. Conditionality and the Charter’s Social Rights
12
12
15
17
18
5. Conclusions 23
KEYWORDS
Conditionality, EU social dimension, social rights,
competences, sovereign debt crisis

WP-LPF 7/12 • ISSN 2036-1246
4
ABSTRACT
SAVING EUROPE ‘UNDER STRICT CONDITIONALITY’:
A THREAT FOR EU SOCIAL DIMENSION?
This paper looks at the compatibility of EU anti-crisis measures with some key
elements of the EU legal system. In particular, it focuses on the financial assis-
tance programmes devised to rescue some EU Member States that, due to their
unsustainably high public debts, came under severe pressure from the financial
markets. In all these cases, recipient States have been invariably required to adopt
draconian austerity measures in order to have access to the financial help. This
paper argues that some of the conditions attached to the assistance packages raise
doubts as to their compatibility with a number of basic social principles and objec-
tives that represent the foundations of the EU social dimension. This is the case
with regard to the social objectives enshrined in the Treaties, the allocation of
competences between the EU and Member States in the social field and, lastly,
some of the social rights contained in the Charter of Fundamental Rights.

Frequently asked questions

Q1. What have the authors contributed in "Saving europe ‘under strict conditionality’: a threat for eu social dimension?" ?

This paper looks at the compatibility of EU anti-crisis measures with some key elements of the EU legal system. This paper argues that some of the conditions attached to the assistance packages raise doubts as to their compatibility with a number of basic social principles and objectives that represent the foundations of the EU social dimension. 

Q2. What is the main argument for the decoupling of the social sphere from the economic one?

the decision of decoupling the social sphere, leaving the former firmly in Members States’ hands, from the economic one, which was opened to the intervention of the then EEC,40 rested on the assumption that the benefits accruing from an integrated market would have strengthened States’ capacity to carry out its redistributive duties. 

Q3. What is the main example of the conferral to the Council of the power to adopt legislative measures?

38 The main example being the conferral to the Council of the power to adopt legislative measures for the coordination of national social security systems, so to facilitate the free movement of workers. 

Q4. How important is the proposal to grant to the Commission the power to approve the programme?

Secondly and, to some extents, more importantly, it also proposed to grant to the Commission the power to approve the programme, as the Council would only have the possibility to repeal this decision by qualified majority within ten days. 

Q5. What is the role of the Commission in monitoring the conditions attached to the package?

The Commission—together with the ECB and, “wherever possible”, the IMF—is also entrusted with the task of regularly monitoring compliance with the conditions detailed by the MoU, on which it depends the release of subsequent instalments. 

Q6. What was the main argument for the CJEU’s efforts to find a workable?

44 Indeed, despite the CJEU efforts to find a workable balance between economic and social interests, it was clear that the European integration process could be a destabilizing force in this regard,45 trying to open up systems that rest on a logic closure. 

Q7. What is the CJEU's view on the right to health care?

EU institutions and, as far as the implementation of EU law is concerned, national authorities are called upon to fully respect this right, avoiding, as a minimum, the adoption of measures that can make access to basic health care services too burdensome, especially for the most vulnerable parts of the population. 

Q8. What is the argument that the reference to social market economy stands in a vacuum?

Joerges and Rödl contended that this reference stands in a vacuum, as the EU has not the capacity to intervene in fields—such as taxation and social policy—that are key for the implementation of the model. 

Q9. What is the argument that the applicants are arguing against the measures adopted under the excessive deficit procedure?

In particular, they contended that the measures adopted under the excessive deficit procedure “cannot be prescribed specifically, explicitly and without room for deviation, since that competence is not conferred upon the Council by the Treaties”.