Abstract
Fiscal policy surveillance, including the possibility to impose financial sanctions, has been an important feature of Economic and Monetary Union since its inception. With the reform of fiscal rules in the aftermath of the financial and sovereign debt crisis, coercive provisions have been made stricter and the Commission has formally gained power vis-à-vis the Council. Nevertheless, sanctions under the Stability and Growth Pact for budgetary non-compliance have so far not been imposed. This article asks why the Commission has until now refrained from proposing such sanctions. Using minimalist process-tracing methods, three post-crisis cases in which the imposition of fines was possible, are analysed. Applying an adaptation of normative institutionalism, it is argued that the mechanism entitled “normative-strategic minimum enforcement” provides an explanation of why no sanctions are imposed in the cases studied: Given that the Commission does not perceive punitive action as appropriate, it strategically refrains from applying the enforcement provisions to their full extent.
Highlights
Rules on fiscal policy surveillance and financial sanctions have been an integral part of Economic and Monetary Union (EMU) since its inception
Despite the reinforcement of coercive provisions with the post‐crisis reform of fiscal policy surveillance and the strengthened role of the European Commission, it has so far refrained from proposing financial sanctions for non‐compliance with fiscal recommendations
Applying an adaptation of normative insti‐ tutionalism, it is argued that the Commission strategi‐ cally refrains from using coercive provisions to their full extent because sanctions are not perceived as appro‐ priate in the cases at hand
Summary
Rules on fiscal policy surveillance and financial sanctions have been an integral part of Economic and Monetary Union (EMU) since its inception These provisions have, always been a source of dispute. After a soft‐ ening of the EU’s budgetary surveillance framework in 2005, additional reforms were deemed necessary in the aftermath of the financial crisis and the subsequent sovereign debt crisis Amongst others, this latest reform intended to limit the role of the Council concerning the imposition of sanctions (EU Regulation of 16 November 2011, 2011). Applying minimalist process‐ tracing methods, Commission behaviour is explained by a mechanism that is entitled “normative‐strategic min‐ imum enforcement.” It argues that because punitive action is not perceived as appropriate in the cases at hand, the Commission strategically refrains from apply‐ ing existing enforcement provisions to their full extent. The article ends with a summary of the findings and con‐ cluding remarks
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