The EU's crisis dependency

By Jordy Benooit

The recent release of the Franco-German Report on EU Institutional Reform signals a growing momentum for institutional reform within the EU, the kind we have not seen in almost two decades. The Lisbon Treaty (2007-2009) ushered in the European Union (EU) as we know it today, and with it its current decision making procedures. One  significant innovation introduced under the Lisbon Treaty is the simplified revision procedure, which grants the EU a degree of flexibility to adapt if need be by allowing the European Council to change parts of the Treaty on the Functioning of the EU (TFEU) through unanimous agreement. Regrettably, the EU’s overreliance on the procedure has pushed back the incentives for substantial institutional reform whilst making any reform efforts conditional on institutional and societal crises.  

Since the implementation of the Lisbon Treaty, the EU has been in a perpetual state of crisis, necessitating EU coordinated responses that are unfortunately characterised by the typical EU pattern of targeted yet confined measures. The first post-Lisbon crisis, the European sovereign debt crisis or eurozone crisis, serves as a good example. During this period, the EU employed the simplified revision procedure to establish its own lending mechanism. This resulted in the establishment of both the European Financial Stability Facility (EFSF) and the European Financial Stability Mechanism (EFSM), which were subsequently replaced by the permanent European Stability Mechanism (ESM). Remarkably, the legal basis for the ESM was created by adding just two sentences in lid 3 of article 136 of the TFEU. Via the simplified revision procedure the EU has brought about a range of institutional reforms in every subsequent crisis. The problem with this type of gradual institutional reform is that it is both limited and reactionary.  

The inherent limitations of this type of reform are twofold. Firstly, the scope of the reforms are limited because it’s restricted to Part III of the TFEU (Union Policies and Internal Actions), and it cannot be used to delegate additional competences to EU institutions. Simultaneously, the intergovernmental tendencies of EU Member States to cling to full autonomous decision-making power limits the scope of the reforms in terms of their impact and effectiveness. Consider the case of the ESM. The mechanism only came about after an intense legal battle in Germany’s Constitutional Court, where opponents of the mechanism, representing diverse political persuasions, attempted to block the German government from consenting to the creation of the ESM. Eventually the ESM was deemed lawful, but under strict conditions. Those conditions govern the ESM’s deployment to this day and, as said before, limit both its impact and effectiveness.  

Furthermore, reform under the simplified revision procedure is also reactionary, mainly because this type of reform comes as a consequence of the EU not being able to act on the crisis it finds itself in at that time. The EU responds to crises by analysing its past mistakes, identifying its shortcomings, and devising measures that could have prevented the crisis from unfolding. Based on those insights, the EU implements the legal changes that will allow it to enact those measures in the future, but only to the extent that is absolutely necessary. If several euro countries find themselves again at risk of defaulting on their national debts, then the EU will have the instruments to prevent a crisis from ravaging through these countries. But what about the next crisis? It's not that the EU is incapable of identifying its own institutional shortcomings and anticipating possible scenarios in which these shortcomings might be detrimental. Rather, the initiative and power to substantially reform the EU ultimately lies with the Member States, who have little incentives to do so until absolutely necessary.  

The adaptability that the simplified revision procedure offers has provided a seemingly convenient solution to complex problems. The stringent requirements and political will required to enact substantive institutional change through the ordinary revision procedure make reform based on minor amendments much more appealing. The EU’s overreliance on incremental institutional reforms to address acute crises has further reduced the incentives for substantial institutional reform. It is evident however that this method of gradual institutional reform offers no substantive institutional changes that will enable the EU to effectively cope with future challenges. This is primarily because it is the EU’s inability to overcome these challenges that will drive the reform in the first place. Consequently, the current practice of incremental institutional reform is intrinsically conditional on institutional and societal crises, hindering the EU’ capacity to enact anticipatory institutional reforms.