Negotiating implementation of EU fiscal governance

Abstract

Since 1997 the Economic and Monetary Union has been centred on the Stability and Growth Pact (SGP), which provides the framework for the coordination of economic policies and the surveillance of fiscal policies of member states. The country-specific recommendations, which address the member states' macroeconomic programmes, are the policy instruments of the SGP preventive arm. At the same time, these recommendations are the object of intense negotiation between the Commission and the Council. Why are these recommendations a matter of bargaining between the Commission and the Council? What are the factors that determine the negotiation outcomes? Employing a provisionby-provision text analysis, I show that the Council strengthens almost 50 percent of the country-specific recommendations proposed by the Commission between 1999 and 2015. The Council tightens the recommendations during the financial crisis and against highly indebted countries. Recommendations addressed to large countries are instead less likely to be tightened.

Council Checks of the Commission under the European Semester: Does Member State Power and Euroscepticism Still Matter?*

“…Applying this argument, powerful states are more likely to water down the Commission's recommendations because of the influence they exert in the Council. 2 Therefore, and following the same logic as in Baerg and Hallerberg (2016) and Mariotto (2019), we expect that larger countries with greater voting weights are more successful in weakening the Commission's recommendations. A third hypothesis we test as follows.…”

“…Do edits to the drafts of the Commission's texts merely represent the fixing of minor errors and fine‐tuning, or do they contain evidence of substantively more interesting dynamics such as domestic political pressures and power politics? Previous research found that, in the lead‐up to the GFC, the Council weakened evaluations the European Commission had originally prepared for member states with more eurosceptic populations as well as the evaluations for politically influential states (for example Baerg and Hallerberg, 2016; Mariotto, 2019). Given the reforms made under the European Semester, the question is whether these two factors predict when the Council weakens the Commission's evaluations of member state economic programmes in the post‐reform era.…”

“…As a final potential mechanism, we consider the relative political power that a member state has in the Council of Ministers, which was tested in earlier research. As argued by Mariotto (2019), despite the agenda‐setting role played by the Commission, the Council holds veto power and can amend the Commission's proposed recommendations. This set‐up, in combination with the supermajority rule of the Council, may favour changes to the Commission's proposal.…”

“…Previous literature finds that there were political as well as economic reasons for how, in the pre‐European Semester system, some (though not all) member states could avoid stringent reforms (for example Baerg and Hallerberg, 2016; Mariotto, 2019). The European Commission (henceforth ‘Commission’) wrote annual reports on the economic plans (either Convergence or Stability Programmes) that member states submitted to it.…”

Factors in the choice of fiscal governance: A systematic literature review and future research agenda

“…Scholars used content analysis (Di Mascio et al, 2020;Mariotto, 2019;Raudla, 2010;Raudla et al, 2020), discourse analysis (Warren, 2018(Warren, , 2020Warren et al, 2017), and process tracing method (Degner & Leuffen, 2020). The quantitative approach was used in three studies, with descriptive statistics in Malová and Dolný (2016) and inferential statistics in Kaplan (2017) and Nicoli (2019).…”