The Crisis and Political Decision-Making Processes: The Impact on European Constitutional Systems

Tarchi (2016a).

Grasso (2012).

These provisions form part of a large and varied set of procedures that may be subdivided into three distinct bodies of norms, all having the purpose of revising and updating the Stability and Growth Pact. This Pact was established by Regulations no. 1466 and 1467 of 1997, which set the parameters for the economic and financial sustainability of the EU Member States (MSs).

In particular, the “Sixpack” (hereinafter, SP) consists of one directive and five regulations: Regulation (EU) No 1175/2011, amending Council Regulation (EC) No. 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of policies, as amended in 2005; Regulation No. 1177 of 2011, amending Regulation (EC) No. 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure, which was also amended in 2005; Regulation (EU) No. 1173 of 2011 on the effective enforcement of budgetary surveillance in the euro area; Regulation (EU) No. 1176 of 2011 on the prevention and correction of macroeconomic imbalances; Regulation (EU) No. 1174/2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area; and Directive 2011/85/EU on requirements for budgetary frameworks of the Member States.

The “Twopack” (hereafter, TP) consists of two regulations: Regulation (EU) No. 472/2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability; and Regulation (EU) on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area.

Finally, the “Fiscal Compact” (hereafter, FC) is an international treaty (the formal name is the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, hereinafter TSCG) that was signed on 2 March 2012 by 25 MSs of the EU (with the exception of the United Kingdom and Czech Republic) and entered into force on 1 January 2013. The failure to obtain the consensus of all MSs made it necessary to resort to a treaty of international law, rather than a revision of the European treaties.

In the context of this research project, these topics have been addressed especially by Degni (2016), Talarico (2016) and Bramanti (2016).

According to these, the annual deficit-GDP ratio cannot exceed 3% and the total debt-GDP ratio cannot be greater than 60%.

Tarchi (2016b).

Tarchi and Fiumicelli (2016).

Pizzorusso (1988, 2008).

Chiti (2013) and Nugnes (2016).

Ferrarese (1992).

Mostacci (2013) and Morrone (2015).

In recent years, a plentifulness of commentaries has been published, all expressing deep concern and positing a bleak future. It is impossible to enumerate the contributions exhaustively due to their sheer volume. Among the most recent, see: De Witte (2015), Joerges and Glinski (2014), Tuori and Tuori (2014), Scicluna (2015), Fasone (2012), Gambino and Nocito (2012), Morrone (2014), Menéndez (2013), Dehousse (2012), Tuori (2012) and Raffiotta (2013). The arguments advanced by these authors are examined in Martinico (2016).

The issue of complexity has been discussed by Guarino (2012), who affirms that the decision to establish systems that are autonomous and parallel to one another constituted a violation of the Treaties. See, also, Tosato (2013).

On this, see Puetter (2012).

The organ’s current composition is very important, comprising figures covering important governmental positions in the national domain. The body’s political barycenter is clearly of German origin.

Fabbrini (2015, 2013).

According to Grimm (2015).

On the erosion of the principle of legality, see De Witte (2015).

Bin (2009) and Pizzorusso (2012); however, this is not a new development: see Senden (2004) and Poggi (2007).

Luciani (2005). See also Talarico (2016), who describes these cases as classic examples of “ceding sovereignty”.

See Canepa (2016), Fidalgo De Freitas and Franco (2016), Marketou (2016), Ferri and O’Sullivan (2016) and Kombos (2016).

This is the view endorsed in Martinico (2016), according to whom asymmetrical integration is possible if it is also sustainable, as in the case of Canada.

See, again, De Witte (2015).

The historical record is clear. In 2005, running afoul of the European Commission’s proposal, Ecofin did not sanction France and Germany for their excessive deficit; a few years later, Portugal, which was in a similar situation, was treated rather differently.

Fabbrini (2016).

For a comprehensive analysis of these decisions and the one issued on 7 February 2014, see Talarico (2016).

In this case, these statements concern only the budgetary power. However, they may be read in expansive terms, since the protection of rights and of the (German) welfare state depends on the allocation of financial resources.

The notion of constitutional mutation is discussed again in Jellinek (2004); see also Luciani (2013b).

De Witte (2015) and Martinico (2016).

See Mostacci (2013), whose conclusions we share.

Scicluna (2015).

In particular, a decline was experienced by the model of majority parliamentarism based on alternation, as illustrated in Spain, Portugal, Greece and, to a lesser extent, Germany.

A number of central blocs thus emerges, which recognize essential liberal values that lead to a defence of capitalism and of markets operating in accordance with certain rules, but which do not however adequately distance themselves therefrom. Those who do not share these beliefs lose the legitimacy to govern. This is not accepted by “European citizens”, as proven by the success of the new political entities.

The Continental European tradition has always been characterized by the prevalence of multi-party systems, as coalition governments: Lijphart (2014).

As in France, where the strong powers of the President of the Republic no longer enjoy legitimacy, in terms of popular consensus and policy support.

This paper does not deal with the delegitimization of politics brought about by the crisis and the consequent strengthening of technocracy, as illustrated by the formation of “technical governments” (as occurred in Italy) and the appointment of technical experts to the ministries of economy and finance, developments that led to a “special monitoring” of politics. In Italy, for example, the Minister of Economy and Finance does not so much direct economic policy, as guard the principle of budgetary equilibrium, holding the power to veto the actions of national and local political bodies.

We will mention two of the many available examples. In Ireland, to compensate for the unpopularity of the anti-crisis measures, the Government launched a series of constitutional reforms after the 2011 elections, appointing a special commission to draft proposals on several topics including an enhancement of fundamental and social rights. This resulted in a paradox: only the amendment on same-sex marriage was approved, and was introduced by means of an amendment to Article 41(4) of the Constitution which entered into force on 29 August 2015.

In Slovenia, a “sterilization” of the referendum” [as defined by Bardutzky (2016)] occurred. After the amendment of Article 90 of the Constitution in May 2013, referendums can no longer be called by a minority in Parliament, but only by 40,000 voters; in addition, several subjects have been excluded from the scope of referendums, such as treaty ratification, budget laws, taxation laws and urgent measures to protect national safety. The anti-crisis measures were thus reinforced against potential popular backlash. This decision matches the one taken in Greece in November 2011, when a referendum that had already been called by the Government was revoked after the negative reactions of the European and international institutions. Therefore, the crisis certainly succeeded in reducing the room available to democracy in two senses: direct democracy was curtailed in favour of representative democracy, and, with regard to the latter, governmental action was favoured over that of parliamentary assemblies.

With the TSCG of 2012, the 25 Contracting Parties committed to transpose the following rules into domestic law, in addition to and without prejudice against the duties deriving from EU law: the national budget must be balanced or in surplus; the rule shall be deemed to be respected if the State’s structural deficit is equal to the country’s medium-term objective, and in any case not greater than 0.5% of GDP; the Contracting Parties may temporarily deviate from the medium-term objective or from the adjustment process only in exceptional circumstances, or in periods of grave recession, provided that the deficit does not affect medium-term budget sustainability. If the public debt/GDP ratio is significantly lower than the 60% threshold, and if the risks for the medium-term sustainability of public finances are low, the parameter applicable to the deficit can exceed 0.5%, but in any case cannot exceed the limit of 1% of GDP. In addition, in case of significant deviations from the parameter or the adjustment process towards it, the participating States must activate an automatic correction mechanism, which must include the duty, for the Contracting Party in question, to implement the necessary measures to correct the deviation within a given time limit.

Besselink and Reestman (2012) and Hartwig (2013).

Delledonne (2016a).

This development was fostered by the Constitutional Tribunal itself, which urged the adoption of stronger limitations on the incurrence of further debt: see BVerfG, Judgment No 9.7.2007, para.s, p. 133 ff.

The reform is very detailed, and rewrites Articles 109, 109 a) and 115 GG. It is not possible to cover its entire content here. We will note that the obligation to respect the balanced budget rule is different for each Länder. Indeed, it is only for the Federation that the principle is deemed observed if the debt does not exceed 0.35% of nominal GDP. Article 109(3) establishes that the Länder may regulate the budget while bearing in mind the economic climate, as well as allow derogations in case of natural disaster or exceptional emergency beyond the State’s control and that seriously compromises its financial capacity. The exceptional circumstances must be approved as such by an absolute majority of the Bundestag and be accompanied by an appropriate amortizing plan. See, Heintzen (2015); Bifulco (2013a, b), Delledonne (2011) and Luther (2016).

Perez (2011).

Raffiotta (2013).

In Cyprus, the innovations introduced (by means of primary legislation that implemented the Memorandum) had limited formal effect; on the other hand, there were significant substantive effects, with de facto marginalization of the Parliament’s role in favor of the executive power, due to the Troika’s precise indications. Kombos (2016), deemed this such a constitutionally significant evolution of budgetary procedures to be devoid of democratic legitimacy.

In Ireland too, the 2010 Memorandum of Understanding was implemented by means of a set of primary legislative measures (the first and most important of which was the Financial Emergency Measures in the Public Interest Act of 2010) and in addition, the center of political decision-making power shifted remarkably towards the Government, which directly managed all institutional steps from the very beginning of the crisis, marginalizing the other constitutional bodies and becoming the veritable leader of the legislative process, including the one pertaining to budgetary laws. See Ferri and O’Sullivan (2016).

Marketou (2016), with reference to the procedures to ratify the memorandums (all falling foul of those established by the Constitution), to the consequent redefinition of the relations between public powers (wide-ranging delegations of power to the executive and, in particular, the Minister of Finance) and the unjustified resort to decree-laws (a textbook example of which is the closing of the public television that criticized the anti-crisis measures) and regulations.

Luciani (2013a, c).

We will not explore this topic here. Suffice it to note that this is one of the most significant effects brought about by the anti-crisis measures, operating in a decisively centralizing direction, in both federal and regional systems (Spain and Italy).

The phrase “golden rule of the public finances” dates back to the end of the nineteenth century. According to the definition coined by Paul Leroy-Beaulieu, the State may incur a deficit to finance public investments. Today, this pre-Keynesian view has been largely distorted to include the principle of balanced budget, which imposes limitations on debt for such investments too.

The law is rather detailed. To provide a very brief summary, the salient features are the introduction of the concept of structural balance (which cannot exceed 0.5% of the GDP over a single economic cycle); and the means to achieve such balance, emphasizing the utility of the planning legislation provided for in Article 34 of the Constitution and their linkage to yearly financial laws. A correction mechanism is also introduced, to be activated in case significant deviations from the objective of structural balance occur. In addition, the Haut Conseil des finances publiques (HCFP) is established as an independent body tasked with monitoring the observation of the golden rule set by the TSCG by the sources mentioned above. On the subject, see Carcassonne (2007), Benoit (2012), Fraysse (2013), Bouvier (2015), Ferrari (2016), Celati (2016) and Delledonne (2016b).

Mostacci (2013).

Article 3 of the TSCG provides that the rule of balanced budget and all related and complementary norms “shall take effect in the national law of the Contracting Parties at the latest 1 year after the entry into force of this Treaty through provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to throughout the national budgetary processes.”

See Fabbrini (2011) and Bifulco (2013a, b).

We do not treat Ireland, however; in this case, the Thirtieth Amendment of the Constitutional Act of 2012 only allowed the State to ratify the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union, done at Brussels on the second day of March 2012. It was added only: “No provision of this Constitution invalidates the laws and regulations of the State which are required by the State’s obligations under that Treaty or prevents the adoption of laws, regulations, laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State”.

In Spain, Article 135 provides that “[t]odas las Administraciones Publicas adecuaran sus actuaciones al principio de estabilidad presupuestaria”, and is addressed to the State and to the Comunidades autonomas. Local authorities must also ensure a balanced budget. In addition, the Comunidades autonomas are required to amend their Estatutos to ensure their conformity with the new constitutional provisions and the effectiveness of the principle of balanced budget.

In Italy, the reform modified both Articles 81 and 97(1). The principle of budgetary equilibrium and of the sustainability of public debt were imposed upon all public administrative bodies. Article 119 was also amended to introduce the obligation for all territorial entities other than the State to observe the balance of their respective equilibriums, as well as the observation of economic and financial duties established by EU law.

Which reduced the timeframe for parliamentary process to a minimum and prevented the discussion of amendments. The absence of any real debate sparked protests among minority parliamentary groups, which left the session before the vote and then lodged a recurso de amparo before the Tribunal constitucional; this, however, was rejected (Auto n. 9/2012). This prompted some scholars to conclude that there had been a change in Spanish constitutional culture, even though this was only a single and (as yet) unrepeated event.

The bill was approved by the Council of Ministers on 8 September 2011. The Constitutional Law was published in the Official Gazette of 2012.

Unlike the situation in Germany, in cases where Articles 109(2) and 109(a) referred to federal legislation approved by the Bundesrat, the principles, valid for the Federation and the Länder: (a) on budgetary legislation, (b) on a budgetary policy that takes into account the economic juncture and the multiple-year financial planning, (c) the establishment of the Stability Council, (d) the preconditions and process required to identify a budgetary difficulty, and (e) the principles to create and implement consolidation programmes that can prevent such difficulties from arising in future.

This source is empowered to determine the maximum threshold of structural deficit in relation to the GDP, the establishment of the principles introduced by the constitutional reform and the other aspects of Article 135(5) of the Constitution.

For this and other studies on the Slovenian situation, see Bardutsky (2016) and Petrovcic (2015).

See Antonelli (2016) and Pacini (2016).

In both Spain and Italy, several months were required to approve these implementing laws (respectively, the Ley Orgánica 2/2012, de 27 de abril, de Estabilidad Presupuestaria y Sostenibilidad Financiera—LOEP—and Law no. 242 of 24 December 2012, Disposizioni per l’attuazione del principio del pareggio di bilancio ai sensi dell’articolo 81, sesto comma, della Costituzione). In Slovenia, the approval process took 20 months, and was granted in July 2015. All of these measures are rather detailed and complex, substantially amending the institutional framework to adapt it to European law. For example, the Spanish legislation applies the same definitions (of terms such as “public sector” or “financial stability” to mean budgetary equilibrium) and accounting provisions adopted at the European level. The new measures significantly amend the method for compiling budgets. It also identifies a set of maximum thresholds for certain parameters with respect to the GDP, allowing for some degree of flexibility (limited, however, by the standards established by European law); these thresholds are binding for all levels of government, which must establish a maximum amount of expenditure that is compatible with the objective of stability. The provisions also enhance the powers of the central Government to create coordinating mechanisms between public administrative bodies, to ensure that the principles introduced by the reform are effectively applied and that the implementing measures are consistent with the European legislation. The Stability and Growth Pact is evidently the model for the sanctions and correction system enshrined in Chapter IV of the organic law.

The new Article 148(2) now states that the “[r]evenues and expenditures of the budgets of the state must be balanced in the medium-term without borrowing, or revenues must exceed expenditures. Temporary deviation from this principle is only allowed when exceptional circumstances affect the state”.

Aa. Vv. (2011), Buelga (2013), Ruiz Rico (2013), Raffiotta (2013) and Medina Guerrero (2015).

Luciani (2013a), Rivista della Corte dei conti; Luciani (2013c), Scaccia (2011), Brancasi (2012), Bilancia (2013), Pisauro (2013), Raffiotta (2013), Landi (2014), Giupponi (2015) and Andreoni (2016).

Also by means of the establishment of an independent body, within the Parliament, entrusted with checking the performance of the public finance and evaluating observance of the budgetary rules. The creation of such technical bodies at the national level implements a duty imposed by the TSCG; as for the various means of implementation of the institution and the reasons for the particularity of the Parliament Budget Office, the only one to have been positioned within the Parliament, whereas all of its counterparts are housed in ministerial or other technical contexts (or the Court of Auditors, in France), see Sikera and Manzetti (2016); see also Manzetti (2016).

And relates to the idea of the long-term sustainability of the public finances: Mostacci (2013).

With regard to Italy, Luciani (2013a), has defined the reform as questionable, inappropriate and unnecessary given the source chosen.

The constitutional reforms of the twenty-first century have curtailed the prerogatives of the executive power over the parliamentary assemblies, enhancing the role of parliamentary oppositions. This counter-trend is justified by the original structure of the Fifth Republic, which decidedly favoured the President of the Republic and of the Government. See Delledonne (2016b).

Bilancia (2016) and Bigazzi (2016).

Luther (2016).

This prudent attitude was common, and shared by most of the countries examined: Ireland, Cyprus, Slovenia, Spain and Italy. The measures seeking to combat the crisis were deemed an expression of an exceptional salus rei publicae need; on their altar, all other constitutional principles were sacrificed. See, Fasone (2014), Salazar (2015) and Aa. Vv. (2015), The impact of the crisis on fundamental rights across Member States of the UE. Comparative Analysis; Addis (2016) and Brancati (2016).

For example, to this end, the Italian Constitutional Court “rediscovered” the institute of modulating the temporal effects of judgments of unconstitutionality, pursuant to the balancing of the new Article 81 of the Constitution and other constitutional provisions (Judgment no. 10/2015).

Mostacci (2013); on Italy, see Luciani (2011).

The Euro area adjustment: about halfway there, www.​jpmorganmarkets.​com (see, in particular, the paragraph titled The Journey of national political reform).

Crouch (2003).