Page - 149 - in Austrian Law Journal, Volume 2/2018

ALJ 2018 European Monetary Fund 149 This section will critically analyse the proposed integration of the ESM into the EU legal framework. In particular, it will examine the rationale for integrating the ESM into the framework of the European Treaties. It will then analyse whether such integration is legally possible - in other words, whether the EU has a competence to do so. Finally, it will turn to the wider implications of such integration. A. The Rationale for Integrating the ESM into the EU Legal Framework So far the ESM constitutes an anomaly in the EU system. It is an intergovernmental institution based on an international treaty between the nineteen euro area Member States rather than 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 an ESM Member or between ESM Members.64 Such a conferral of jurisdiction is possible under Article 273 TFEU. Moreover, the Council must approve macroeconomic adjustment programmes negotiated within the framework of an ESM-programme, before the respective ESM bodies can adopt it formally. The ESM was also authorised by its Member States to delegate certain tasks to other European institutions, such as the Commission and the ECB.65 For instance, the Commission is responsible for (a) negotiating the conditions and (b) monitoring compliance with the macroeconomic adjustment programmes. 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’.66 This created a bizarre and opaque situation. Hence, the underlying idea of ‘integrating the ESM into the Union legal framework’ is to end this anomaly and make the institutional structure of EMU more coherent. European issues, in particular those with a direct reference to the euro area, should be dealt with in the EU Treaties. Otherwise we will see a further fragmentation of legal sources, which will eventually reduce transparency and legitimacy. In the long run, such fragmentation could also weaken European institutions and the EU in general. From a practical perspective, integrating the ESM into the EU legal framework also has a number of advantages: For instance, EU institutions could be directly involved in the daily operations of the ESM; recourse to the complex concept of ‘Organleihe’ would therefore no longer be necessary. Moreover, ESM personnel would be subject to the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union. This would clarify their status and simplify their mobility between the European institutions. Perhaps even more important, the integrated ESM would be fully subjected to the jurisdiction of the ECJ, while so far the latter could only exercise limited jurisdiction over the ESM.67 64 See Article 37(3) ESMT. 65 See Council Document 12114/11 of 24 June 2011 which provides: ‘The representatives of the Governments of the Member States of the European Union agree that the ESM Treaty include provisions for the European Commission and the European Central Bank to carry out the tasks as set out in that Treaty’. 66 COM (2017) 827 final, supra note 6, at 3. 67 See Article 37(3) ESMT.