JEF Europe continues its efforts and actions for a more democratic European Union, moving towards a more federalist Europe. In this direction, from the 28th to the 30th of March, the Spring Federal Committee of JEF Europe will take place in the capital of Bulgaria, Sofia. Prior to the official discussions, a few Political Commissions are meeting during this period to prepare the ground for the Sofia meeting and the official adoption of JEF’s new political positions. Political Commission number 1, entitled “Institutions and Governance,” has the responsibility of reviewing and updating previous resolutions, as well as suggesting new proposals. One of the many topics that the Institutions and Governance Committee will address is updating the resolution “On the Institutional Design and Governance of the Eurozone.”
The history of the Eurozone
There is a paradox regarding monetary policy and its structure within the EU. While it is the most vertically integrated sector, at the same time, there is a high degree of horizontal differentiation, as seven EU countries are not members of it. Economic and Monetary Union (EMU) was officially established through the Treaty of Maastricht in 1992. In 1997 the Stability and Growth Pact was agreed and according to it, countries which wanted to participate in EMU must meet specific economic criteria. In 1998, the first countries who agreed to the euro and on 1 January 1999 the Eurozone created with the participation of 11 countries. Currently 20 of the 27 member states are members of the Eurozone.
The Eurozone and the Economic and Monetary Union, in general, have faced one of the most difficult challenges in the history of the European Union. The economic crisis that broke out in 2008 in the United States and quickly spread to Europe was the first major crisis the EU had to face before the immigration crisis, COVID-19 and the Russian-Ukrainian war. The negotiations among member states and the decision-making processes of EU institutions during the financial crisis created many precedents, resulting in shifts in EU decision-making in some future situations, such as for example the establishment of the European Stability Mechanism and the enhancement of the financial market integration. However, the financial crisis exposed a series of structural problems within the Eurozone, whose formation was undoubtedly not ready for a crisis of this magnitude. The austerity measures policies that were imposed on the deficit countries by the EU were led to lack of trust support towards EU by the European citizens. One of the biggest problems with the Eurozone’s structure is its decision-making body, the Eurogroup, which is characterized by a high level of lack of transparency. This issue became particularly evident during the negotiations between the Greek government and the rest of the EU when no one was aware of what was being discussed among the Eurozone finance ministers. Eurozone meetings are also known for their failure to keep minutes of the discussions. Both the European Ombudsman and the European Parliament have addressed this issue. The European Ombudsman, in a case from 2016 (case SI/5/2016/EA), called for increased transparency in the Eurogroup.
JEF’s proposals for Eurozone’s improvement
Therefore, JEF Europe resolution “On the Institutional Design and Governance of the Eurozone”, focus on the liabilities of the Economic and Monetary Union venue and tries to propose improvement reforms for a more efficient and democratic Eurozone. This specific resolution has been already adopted two times in 2017 by the JEF Congress and in 2022 by the JEF Federal Committee. However new updates and suggestions retrieved from the Political Commission 1 discussions. JEF acknowledges the need for structural and functional changes to create a fully capable political union throughout the Eurozone. A key point for JEF is the participation of all 27 European Union member states in the Eurozone. For this reason, JEF welcomes Croatia’s inclusion in 2023 and Bulgaria’s intention to join in 2026. To achieve these aims, JEF proposes specific reforms for the upcoming short term. JEF believes that its time for the creation of an Executive Vice President for Economic and Financial Affairs. JEF also believes that the participation of all non-Euro members as observers to the Eurozone meetings is important as a first step for their potential full integration into the Eurozone. Regarding Eurozone’s budget, JEF encourages the EU to provide financial resources aimed at accelerating the adoption of the euro as the common currency by all Member States and it also considers that European Parliament role in defining the Eurozone budget should be more decisive. The implementation of genuine Eurozone own resources, to be collected by national tax agencies under the coordination of the European Commission. These own resources could be a Financial Transaction Tax to complement the Capital Markets Union, a bank levy, either based on the Common Consolidated Corporate Tax Base or on the Value-Added-Tax and a European Carbon Tax complementing the European Emissions Trading System and the European Carbon Border Adjustment Mechanism. The creation of a budgetary capacity for the Eurozone, financed by genuine own resources and excluded from budget ceiling calculations, for the purpose of macroeconomic stabilization. As a medium term aims JEF sets among others, decisions relating to the EU’s fiscal competence to be taken through the ordinary legislative procedure and JEF also believes that the success of the European project will depend on the concrete steps towards a European Federation taken by those Member States willing to further share sovereignty also in areas going beyond economic policy. Finally, some of the long-term goals are, the replacement of the Executive Vic President for Economic and Financial Affairs by an EU Finance Minister, Secondly, the Eurogroup would cease to exist and the current Council formation of Economic and Financial Affairs would be replaced by a Committee on Economic and Financial Affairs in the European Senate, representing the Member States.
In conclusion, it is undisputed that the Economic and Monetary Union of the European Union needs essential reforms. Its exposure to the financial crisis revealed many structural problems that demand a quick response. Moreover, the Eurozone, as the most vertically integrated sector within the EU, can pave the way for a more democratic and unified Union. JEF’s proposals under the resolution “On the Institutional Design and Governance of the Eurozone” aim in this direction. Therefore, the relevant discussion that will take place at the Federal Committee in March attracts significant interest, and many other useful reform proposals may arise before the final adoption of the resolution.
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