EU Law Restrictions on Member States’ Competences Have Grown during the Crisis

The reaction to the crisis has inadvertently granted the European Commission with increasing competences for the control of the provision of (non-economic) public services by the Member States.

Summary

• The crisis has altered the balance of power between MS and the EU, particularly as a result of the use of EU Institutions for purposes that went beyond the ‘ordinary’ functioning and the scope of the Treaties (ESM, etc.)
• This (undemocratic response) was the only feasible one, particularly under tight timeframes and urgency in the decision-making
• As a result of the “new balance” of powers, the EU (and the Commission in particular) have gained creeping competences in areas traditionally reserved to MS
• This can be clearly seen in the field of public services / SGEIs (case study)

One of the main topics of the conference was to analyse how (and if), despite the rise of Euroscepticism, extremism, and populism, the on-going crisis may become a catalyst for deeper political and economic integration—as well as their implications in terms of democratic governance of the Union.

In my view, the extraordinary circumstances created by the economic crisis and Member States’ reaction to it — by mainly using (i.e., instrumentalising) European institutions as a vehicle for policies that were clearly outside the scope of the existing Treaties — are acting as a catalyst for deeper (legal and economic) integration… by undemocratic means. 

However, resort to (less than if not fully un)democratic means seems to have been the only sensible and viable approach to a fast-changing reality that exceeded the institutional design of the EU (and the Member States). Indeed, short of creating a truly federal government of the EU, it is hard for me to see any way of adapting such institutions in a manner that allows for quick and focused reaction to extraordinary (or urgent) circumstances. The experience with the failed European Constitution is a clear indication that democratic/more representative decision-making (constitutional) procedures are almost utopian in times of Euroscepticism and polarisation.

Apart from such general considerations, and focusing more specifically on the reaction to the crisis, I would submit that, generally, the (convenient) use of the EU Institutions as shorthand for parallel inter-State negotiations that needed to be completed urgently (such as the European Stabilization Mechanism shows, see C-370/12Pringle) has altered the balance of powers/competences between Member States and the EU (Institutions) in a fuzzy manner (leading to what, in the conference, was qualified as creeping intergovernmentalism).

However, at the same time, this ‘new balance’ allows EU Institutions [and the Commission in particular—given the technical and oversight powers that the European Commission had (and is, implicitly, being granted)] to develop creeping competences into areas that had so far been reserved for the exclusive (legislative) exercise by the Member States.

In my opinion, this is particularly clear in the case of public services (or SGEIs), which were one of the areas of major political debate in the Lisbon Treaty (and the failed European Constitution) and where Member States protected their competences through Article 14 TFEU and Protocol 26 TFEU.

Art 14 TFEU: Without prejudice to Article 4 of the Treaty on European Union or to Articles 93, 106 and 107 of this Treaty, and given the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion, the Union and the Member States, each within their respective powers and within the scope of application of the Treaties, shall take care that such services operate on the basis of principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall establish these principles and set these conditions without prejudice to the competence of Member States, in compliance with the Treaties, to provide, to commission and to fund such services.

Protocol 26 TFEU:

Article 1

The shared values of the Union in respect of services of general economic interest within the meaning of Article 14 of the Treaty on the Functioning of the European Union include in particular:

- the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest as closely as possible to the needs of the users;

- the diversity between various services of general economic interest and the differences in the needs and preferences of users that may result from different geographical, social or cultural situations;

- a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights.

Article 2

The provisions of the Treaties do not affect in any way the competence of Member States to provide, commission and organise non-economic services of general interest.

In my view, and despite Art 14 and Protocol No 26, the European Commission is regulating (non-economic) social services, sometimes as part of the memoranda of understanding, and sometimes in a more indirect manner.

More importantly, such (re)balancing of powers and competences remains substantially under the radar screens, given that the European Commission uses soft law instruments whereby it sets the policy agenda and designs the enforcement priorities and interpretative criteria for this increasingly complex are of EU Economic Law [see E Szyszczak, ‘Soft Law and Safe Havens’, U Neergaard et al (eds), Social Services in the EU, (TMC Asser Press, 2012)].

In particular, the 2012 Almunia Package for the financing of SGEI and the imminent reform of the rules on public procurement (substituting Directive 2004/18) have created a clear pressure form MS to marketwise the provision of public services (including those of a social nature), and the Commission is developing a set of soft law instruments that clearly restrict Member States’ degrees of freedom in their design and financing [see A Sanchez Graells & E Szyszczak, “Modernising Social Services in the Single Market: Putting the Market into the Social” (September 2013), http://ssrn.com/abstract=2326157].

Dr. Albert Sánchez Graells, University of Leicester 

For the Greek Public Policy Forum 2nd Annual Chania Forum 2013, 27-28 September 2013