Page - 140 - in Austrian Law Journal, Volume 2/2018

ALJ 2018 Hannes Hofmeister 140 EFSF2 and the EFSM3 – worth several hundred billion euros. Later in 2011, the so-called six-pack measures were enacted, introducing a macroeconomic surveillance mechanism and better budgetary surveillance. 2012 then saw the signing of the ‘Treaty on Stability, Coordination and Governance in the Economic and Monetary Union’ - commonly referred to as the Fiscal Compact. The latter aims to complement the six-pack measures by obliging states to introduce so called ‘debt-brakes’. However, all these measures have not yet brought about the desired effect. The biggest flaw in the EU’s strategy thus far has been that it sought ‘to muddle through the sovereign-debt crisis rather than get on top of it’.4 The establishment of a permanent European Stability Mechanism (ESM) in 2012 was supposed to put an end to this ‘muddling through’ strategy and provide a solid, clearly structured mechanism to prevent future crises. But the ‘big bazooka’5 – as it is sometimes referred to – also suffers from a fundamental flaw: It constitutes an anomaly in the EU system insofar as it is an intergovernmental institution based on an international treaty between the nineteen euro area Member States and not an EU institution. At the same time it is – at least to a certain extent - integrated into the institutional framework of the EU: For instance, the ECJ is tasked with solving disputes between the ESM and ESM Member States. This ‘partial involvement’ of EU institutions in an intergovernmental mechanism has generated a ‘complex landscape where judicial protection, respect of fundamental rights and democratic accountability are fragmented and unevenly implemented’.6 All in all, this created a bizarre and opaque situation. On December 6, 2017, the Commission therefore proposed to integrate – as part of a comprehensive EMU reform package – the ESM into the EU legal framework. In the course of this process the ESM should also be given additional tasks and be renamed European Monetary Fund (EMF). But will these changes finally put an end to the ‘muddling through’ strategy? Will they achieve the objectives set, i.e. making EMU more efficient, coherent and democratic? And – on a more practical note - has the EU the competence to establish such a mechanism at all? In order to answer these complex questions, this article will be structured as follows: (1) It will first analyse the main features of the new EMF. (2) It will then set out the rationale for integrating the new mechanism into the EU legal framework. (3) Having done so, it will then examine whether such integration is legally possible. In other words, it will analyse whether the EU has the competence to establish such a mechanism. (4) It will then critically examine whether the new EMF will actually make EMU more efficient and democratic. 2 EFSF is the abbreviation used for the ‘European Financial Stability Facility’. 3 EFSM is the abbreviation used for the ‘European Financial Stabilisation Mechanism’. 4 Hopes raised, punches pulled, THE ECONOMIST, Feb. 10 2012), available at https://www.economist.com/node/18114793 (last visited Jan. 3, 2019). 5 Mario Draghi: the man behind Europe's 'big bazooka', THE TELEGRAPH, Feb. 29, 2012, available at https://www.telegraph.co.uk/finance/economics/9113256/Mario-Draghi-the-man-behind-Europes-big- bazooka.html (last visited Jan. 3, 2019). 6 Cf. Proposal for a Council regulation on the establishment of a European Monetary Fund, COM (2017) 827 final (Dec. 6, 2017) at 3.