From Fiscal Compact to Fiscal Union? New Rules for the Eurozone

Abstract

AbstractAs a consequence of the British veto a reform of the EU Treaty, with the aim to strengthen the stability of the eurozone by transferring new competences in the field of fiscal and economic policies, became impossible. Therefore an international Treaty, the so called Fiscal Compact, was concluded among 25 Member States of the EU. The contribution deals with the complex relationship between both Treaties, especially with the institutional arrangement. It argues that the Fiscal Compact is in comparison to the adopted secondary legislation, the so called Six Pack, of a rather symbolic nature. The more important is the legal link between Fiscal Compact and the European Stability Mechanism (ESM), which makes stability a precondition for European solidarity. European control of stability might interfere with the budget sovereignty of national parliaments but as stability is, since the Treaty of Maastricht, a legally binding principle of the European Monetary Union, its more efficient control is in line with former transfer of competence. Not least budget sovereignty is lost if an over-indebted Member State’s choice is just between sovereign default and financial aid by the ESM. A fully fledged European control of the national budget is therefore in the last resort legitimate.