Rehn has spoken. Friday 3 May, the independent Commissioner for economic and monetary affairs gave his verdict on the state of the national economies in the EU. His statements were remarkable in several ways and come at a time when he has to prove his worth as an independent Commissioner. France, which has been dragging its feet regarding the necessary reforms, has received two extra years to bring its budget in order although its deficit is 4,2% and its public debt is moving towards an incredible 96,2% next year. The Dutch are in a better position but received a one year delay while allowing the public burden to increase instead of pushing for reforms. Newspapers and civil servants point to heavy lobbying of, in particular, France.
How do we know whether Rehn has spoken words of wisdom? Whatever Rehn says, he will always be criticised by many. If he criticises, for example, Berlusconi for having failed to reform, even his Italian colleague Antonio Tajani (Commissioner for industry) openly speaks out against him. If he cautions over austerity, he is criticised by EPP MEPs for failing to keep Member States to stick to the rules of the Stability and Growth Pact (SGP). Even Barroso has been going over Rehn’s head by stating that austerity has reached the limits of popular support – displaying evidently that Barroso is primarily a politician. Barroso may not have contradicted Rehn over the need for some slack, but his comments have placed Rehn’s work as independent Commissioner in a political light and Barroso has hinted at differences in the Commission. Other attacks come from economists and Nobel-prize winner Paul Krugman made fun of Rehn’s over-optimistic growth forecasts in the Financial Times and slashed his emphasis on austerity (‘Rehn of Terror’). Hence many, including his colleagues in the College, disagree with whatever Rehn concludes.
Rehn’s advice is easily distrusted. Therefore, the analyses and recommendations of the European semester commissioner should be widely recognised as the result of careful examination of long term trends in national and European economies. The weight of his words depends in many ways on the respect peers in governments, journalist and financial analysts have for the independent Commissioner as institution. His prestige depends on the analytical quality of the reports of DG EcFin, on the reputation of this staff and on the extent to which procedures are trusted to guarantee quality and independence.
Much has been achieved in terms of ensuring the quality of the work of DG EcFin, but not enough. First of all, there are trends that are incompatible with the role of an independent Commissioner. The Commission is increasingly presenting itself as a political body, searching political support from the European parliament and calling itself a ‘government’. This seems to be a worrying step away from the traditional focus of the Commission on content as envisaged by Jean Monnet. An ‘independent Commissioner’ as part of a political ‘government’ seems to be a paradox if not a straightforward contradiction. Pleas in Barroso’s State of the Union (2012) to operate ‘independently under the supervision’ of the European Parliament are equally confusing.
Secondly, the process through which the independent Commissioner formulates conclusions and economic advice to Member States needs to live up to standards such as independence from political influence from both within the Commission and from Member States, quality (size and expertise) of the staff of DG EcFin and transparency. However, if we try to piece together how DG Ecfin operates within the Commission, we cannot conclude that quality and independence are guaranteed.
To start with, reliable statistics are the basis of any economic report. It was already known to insiders that European statistics were unreliable but the Greek crisis in 2009 proved that some countries provided rubbish if not lies. No economic system in the 21st century should aspire to function on the basis of a suspicious statistical system. Moreover, if only for its prestige, Eurostat should not fall under the College of Commissioners but should be an independent agency.
Moreover, although major improvements are to report in terms of economic governance resulting from the 2- and 6-pack, the European semester is still not supported by a transparent depoliticised analytical process. DG EcFin has been enlarged but it is still unclear what is being done with its staff reports. The parts of DG EcFin that are independent remain in any case dependent on other – political – DGs for sector input. Also, the staff papers are forwarded to the College. The staff papers are ‘the sole responsibility’ of the independent Commissioner although officially other Commissioners may pose questions and other DGs are consulted in the writing of SGP reports and of conclusions of the macroeconomic imbalances procedure. Furthermore, the President of the Commission is supported by a Chief Economic Analyst in the process of the drafting of the recommendations. It is unclear why Barroso has an additional analyst if reports are produced by Rehn and DG EcFin. Finally, there are actually confirmations that the recent statements by Rehn have been strongly influenced by national lobbying.
Hence, also the production of the country reports and recommendations should be set aside in an independent agency – just as the 6-pack dictates that Member States should have independent budgetary authorities. If there is an ‘independent Commissioner’ he should not be part of a College. This would also improve the transparency of the process.
As it stands, the legitimacy of the Commission’s role in the renewed European semester remains weakened by compounded functions and procedures. One thing economic governance requires is reliable and transparent institutions. The Commission, of course, will be strongly opposed to any discussion of redesigning its tasks and powers. A pity for those who hoped that the European semester was the start of something new.
