As Europe continues to experience a serious economic and social crisis, as Euro zone instability continues to increase there is an urgent need to discuss the options available to the EU to exit the crisis while also ensuring sufficient democratic accountability and scrutiny for Europe's citizens.

The seminar 27 June 2012 began with the presentation of the report undertaken by Professor Pernice and his team at the Humboldt University Berlin analysing these questions in depth.  This was followed by a discussion between MEPs and academic experts concerning how to ensure an exit from the crisis, with a focus on the problem of the current democratic deficit in Europe, unavoidable in light of closed-door back room discussions in the Council, and the preference for intergovernmental rather than Community solutions. This was followed by a debate with participants and questions from the floor.


On Thursday 28th June 2012 and after the seminar, the Spinelli Group held a "Shadow European Council". Thirty years after the “Single Act”, a “Federal Act” was presented. The ‘Federal Act’ contains 12 elements following the outline of the 4 blocks identified by the “Towards a genuine economic and monetary unionproduced by the 4 Presidents.

The Spinelli group calls for a Banking Union including the setting up of an EU wide deposit guarantee scheme and resolution fund and an adequate single supervisor in the Eurozone for banks carrying a systemic risk:
  • Set up of an EU wide deposit guarantee scheme and resolution fund and provide for the direct recapitalisation of the European banks through the establishment of a European fund which could be in the meantime provided by the EFSF and/or ESM

  • Stabilize and clean up the whole banking sector, through establishing an adequate single supervisor in the Eurozone for banks carrying a systemic risk – including medium and large cross-border institutions – and achieve the internal market in the banking sector. Specific measures include imposing stronger conditionalities to the institutions that benefited from crisis-related State aid and the support of ECB liquidity lines, stimulate loans to SMEs by making prudential and capital requirements more favourable (notably through ring-fencing mechanism and adequate risk weighting), ensuring bank balance sheets are down-sized by divesting the most risky activities first, thus ensuring that lending to the real economy is not negatively impacted, ending the executives’ self-serving behaviour as regards pensions, bonuses and salaries; preventing any breach of law by rescued banks, for example tax evasion.



The Economic and fiscal Union have to go in parallel with further structural reforms in order to improve competitiveness.

Beyond the implementation of the Six Pack, therapid finalisation of the ‘Two Pack’, the entry into force of the Fiscal Compact, the ratification of the ESM Treaty and the modification of Article 136, the following reforms are necessary. These reforms have to go in parallel with further structural reforms in order to improve competitiveness.

  • Set-up a “new strategy for economic and social convergence and sustainable growth” with binding targets and sanctions for the Member States of the eurozone;

  • Increase as key element of this “Growth compact” the EIB capital as well as increase the funding of its loan portfolio through bond issuance open to retail investors and launch on a large scale of “project bonds” to support large-scale investment in sectors such as energy, transport and telecommunications of at least 1% of GDP over ten years;

  • Decide on a roadmap to a Eurobond market to enable the mutualisation of debt for the Eurozone Member States;

  • Launch a European collective redemption fund for debt over the 60% of GDP mark for a period of 20-25 years together with eurobills and the coordination of remaining debt issuance or similar proposals.

  • Make the multiannual financial framework (MFF) a real tool to assist paralysed member states to break out of the crisis. Fiscal Union also means a fiscally independent Union: the EU budget must be financed by own resources without increasing the existing tax burden on citizens and leading to a reduction in contributions from national treasuries. There is no recovery without sustainable resources; there are no sustainable resources without own resources.

  • Close loopholes in national tax systems, introduce a mandatory common consolidated corporate tax base (CCCTB), coupled with minimum range of corporate tax rates, to increase the effective real of taxations in the members states and to seriously tackle Value Added Tax (VAT) fraud and other forms of tax evasion.

Political union: a quantum leap towards a truly European democracy is necessary. At the heart of the financial and sovereign debt crisis lies the absence of European government and the question of democracy. Ever closer intergovernmental coordination fails to deal with the crisis and lacks any form of democratic accountability. Extending the powers of the Commission on national budgets and economic policies cannot happen without corresponding reinforced democratic control both by the European Parliament and national/regional parliaments at their respective levels and a radical application of the community method.

The overly technocratic processes that too often characterise the decision-making, such as in the case of Greece, are no longer appropriate and need to be made more political in order to reflect the increase level of scrutiny that is now being placed over them.

In the mid-term a Convention should be organised to attend the democratic shortcoming of the current institutions:

  • Eurozone government must develop, lead and supervise the economic and fiscal policy. It must be fully democratically accountable. In effect it can only be organized within the European Commission. The Commission represents the euro area in the International Financial Institutions and chair the Eurogroup and the Ecofin Council.
  • Introduce pan-European lists to elect a portion of the MEPs on this basis in order to further develop the legitimacy of the European Parliament and of the European democratic process. A European public space should be further develop through the trans-nationalization of the media space, training and exchanges between citizens, stakeholders and groups of citizens on a large scale (as with Erasmus), the European Citizens’ Initiative and all forms of transnational citizen participation including through new social media.
  • Strengthen the democratic legitimacy of the Commission President, with an agreement, prior to the 2014 campaign, between all major EU political families to declare that their candidates to the Presidency of the Commission will only be accepted by the new Parliament if they have preferably been elected to the European Parliament and above all have campaigned throughout all 27 Member States. Furthermore, at least half the College of Commissioners must be drawn from people elected to the European Parliament in the 2014 elections.
The European Parliament voted by 501 to 132 (with 38 abstentions) a political resolution on the outcome of the European Council meeting 27-28 July. The outcome is welcomed by the co-chairs of the Spinelli MEPs, the federalist intergroup in the Parliament (with 108 MEPs), who initiated the resolution.

Andrew Duff, MEP, who is also President of the Union of European Federalists, said: “This shows that, in the light of Europe’s continuing crisis, the federalist party in the Parliament is growing. Never before have so many MEPs voted to support a blueprint and roadmap for banking union, fiscal union and political union. “The ball is now in the court of Mr Barroso and the European Commission to turn the tentative decisions of the heads of government into firm legislative proposals.

This process must happen as quickly as possible, especially in relation to the bank deposit guarantee scheme, the resolution mechanism and the new supervisory powers needed by the European Central Bank. The Commission must also as a priority put forward proposals on the mutualisation of debt – both short term eurobills and the redemption fund.”

Jo Leinen MEP, President of the European Movement International, commented: “I urge the European Commission to quickly present legislative proposals to the European Parliament. The Citizens’ Chamber is the place where the next steps for the resolution of the crisis must be discussed.

“The European Parliament should not accept any longer to be sidelined in the negotiations on the future of the Economic and Monetary Union. If we don’t receive concrete proposals by September 2012, we should consider all options given by the Treaty.”