European federal criminal law: What can Europe learn from the US system of federal criminal law to solve its sovereign debt crisis?

Abstract

The lack of a strong law enforcement authority in the EU with competence in criminal matters that monitors how European funds are applied can be considered one of the main reasons behind the disastrous spending of EU member states. This paper contends that EU funds are to be treated as “federal” funds, and the mismanagement of those has to be prosecuted and punished by the EU itself. On top of longstanding arguments for the legitimacy of EU institutions to enforce criminal sanctions in order to protect its own funds, an additional rationale has become present in the outcome of the sovereign debt crisis. As many Law& Finance studies have shown, there is a close relationship between law enforcement capacity and investors’ confidence. Therefore, to restore investors’ confidence in the Eurozone’s debt, a strong EU law enforcement authority in criminal matters is needed. The parallelism with the US approach is deserved: mismanagement of federal funds is a federal crime prosecuted at the federal level. Though not a federal State, the EU has in this area the same problems as if it were. The injection of Billions of Euros through the bailout programs makes the situation ever more pressing. If the EU is able to provide a uniform system of enforcement at the EU level i.e., federal, not national, level, in matters concerning criminal misconduct affecting EU financial interests, investors will more likely regain the confidence lost in European sovereign debt.