The Commission and the European Semester: is the Fox Guarding the Chicken?

2013 is a pivotal year for Commissioner Rehn, the European Semester and the Commission. All three have had to prove their legitimacy regarding economic governance. Rehn’s credibility and that of the European Semester centre on the reputation of the Commission and that of DG EcFin in particular. Given the importance of the European Semester, it is important that there are no doubts about the independence and the quality of Olli Rehn as Commissioner. To save the euro project and the trust people have in the Commission in euro-related processes, it was decided in 2011 to create the post of an ‘independent’ Commissioner to supervise the Stability and Growth Pact. The famous six-pack and two-pack have reinforced the role of the independent Commissioner who now has the power to monitor and even fine Member States. The Commission’s unshaken reputation is crucial, if it wants stand up to criticism in the media and by peers and (Nobel-prize winning) economists.
Alas, the Commission does not stand the test of quality and of independence. As a result, the criticism on this year’s reports and recommendations has been overly political – for example concerning the extra year France received to bring its deficit down – and cannot be brushed aside.

When trying to understand the process through which the ‘independent’ Commissioner has operated, we stumble upon questions concerning the procedure the country reports are actually written by the Commission. First of all, there is the issue of other Commissioners making public statements about Rehn’s work. The remarks by Commissioner for Industry and Entrepreneurship Antonio Tajani who openly criticised Rehn’s emphasis on austerity and those made by Commission President Barroso, that the boundaries of the public acceptance of austerity have been reached, have resulted in any statements by the Commission and hence Olli Rehn being put in a political perspective. Secondly, DG Ecfin does not write the reports independently but needs input from other DGs and hence has to work with colleagues who, for example, fall under Commissioner Tajani’s authority. Thus, Rehn’s reputation depends on more than just DG Ecfin’s work but also on the negotiations among DGs. Thirdly, we do not exactly know what happens with the reports from DG Ecfin once they are passed on to the College of Commissioners. Even officials from DG Ecfin were surprised about changes made in texts. Apparently, there is a lack of transparency at this stage within the Commission.

Fourthly, other Commissioners are allowed to pose questions concerning the reports and recommendations in the College which suggests that there are discussions on the proposals put forward by Rehn before adoption by the College. In addition, Barroso is advised by a senior economic advisor (a newly created post) who is apparently in a position to second- guess the work of Rehn as independent Commissioner. Generally speaking, Rehn wears at least two hats: that of independent Commissioner concerning the excessive deficit procedure and that of ‘normal’ Commissioner (as one among equals in the College) concerning the structural imbalances procedure.

Hence, Rehn’s position in the college is complicated and far from transparent. The six-pack dictates that Member States have to have an independent budgetary authority. Strangely enough, this requirement does not apply to the Commission (DG Ecfin) itself. As a result, we are stuck with a semi-trustworthy European Semester. The Commission confuses its functions as independent economic analyst and its ambition to operate as economic government of the EU.

Reputation is a key factor in advanced economic societies. The Commission does not seem to care about the reputation of the ‘independent’ Commissioner. If it did, it could separate data gathering (Eurostat – also falling under the College of Commissioners), data analysis (DG Ecfin), policy advice (the College) and monitoring (DG Ecfin). Now, all these functions, including the political aspects, remain combined. This situation is unacceptable in view of the required transparency, the promised independence and basic principles of good governance to separate policy from analysis and from supervision. Yet, it is well recorded that the Commission is not very fond of putting its tasks at arm’s length in independent agencies.

Power seems to be more important than reputation. It is high time the Commission re-examines its organisation in the light of the demands of a reliable European Semester process. It remains doubtful whether the Commission will be happy to accept the consequences. It seems to prefer to operate as the fox guarding the chickens.

Europe For Citizens
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