I – Political context

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Austria

The views expressed in this report are solely those of the author in her private capacity. The report provides an overview and makes no claim to completeness.

Political change     
I.1
What is the political context of the Eurozone crisis period in Austria? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

All of the crisis measures have been decided by the 2008-2013 government consisting of a coalition of the Social-Democrat Party (SPÖ) and the Austrian People’s Party (ÖVP) (conservative center-right party) under a SPÖ chancellor, Werner Faymann (see questions V.1 and VIII.1. Maria Fekter (ÖVP). Maria Fekter (ÖVP) was the Minister of Finance of that government. From the opposition parties, the Greens were generally siding with the government on the stabilization measures (but not the fiscal measures), whereas the far right parties, the FPÖ and the small BZÖ, were opposing both, the stabilization and the fiscal measures in a general anti-European tone. Probably as a result of the crisis, there was a new ‘protest party’ that ran for elections in autumn 2013 and that has reached considerable results at regional elections in Carinthia, Lower Austria, Tyrol and Salzburg. It was lead by the Austro-Canadian millionaire Frank Stronach under the title ‘Team Stronach’ and was fiercely opposing the ESM[1], and the Euro (e.g. suggesting its replacement with ‘National Euros’).[2]

National Council elections took place in September 2013 and a new government was constituted in December 2013. The results of the elections were SPÖ 26.82%, ÖVP 23.99%, FPÖ 20.51%, BZÖ 3.53%, Greens 12.42%, Frank Stronach 5.73%, Neos 4.96%. Basically, the two governing parties had small losses while the FPÖ gained a little, the BZÖ did not pass the threshold to enter into the National Council and two new parties entering instead. On the one hand, Stronach, who, however, remained below expectations, and on the other hand a new, liberal party, the Neos, managed to enter the parliament. The Neos are an interesting new party that attracted mostly former voters of the ÖVP or the Greens. It is definitively a pro-European party. The new government consists of again the same SPÖ – ÖVP coalition under the leadership chancellor Werner Faymann (SPÖ), while the Minister of Finance and simultaneous Vice-chancellor), replacing Maria Fekter, was initially Michael Spindelegger (ÖVP, replaced since September 2014 by Hans-Jörg Schelling from the same party

Regional elections took place in all of the nine provinces (Länder) during the 2008-2013 period, but major turnabouts happened only in Carinthia and in Salzburg.

·         Carinthia: It is impossible to talk about Carinthia without mentioning Jörg Haider who was its governor from 1989 to 1991 and then again from 1999 to his death in 2008. First head of the FPÖ on federal level, he then split off with a group of fellow party members and founded the BZÖ in 2005 that remained rather unsuccessful on federal level but very successful in Carinthia. In 2009 (after Haider’s death) its Carinthian branch split off under the name FPK and won the Carinthian elections with 44.9%. It is the Carinthian government under a FPK governor that brought the case against the ESM in front of the Austrian Constitutional Court. However, the FPK shrank to 6.4% (while the FPÖ still ‘resurrected to’16.8%) at the regional election of March 3, 2013. The SPÖ won these elections with 37.1 %, which means that Carinthia now has a social-democrat governor for the first time in 14 years.

·         Salzburg: Salzburg that had traditionally been an ÖVP-governed province had been governed by an SPÖ-led coalition from 2004 to 2013. A financial speculation scandal lead to anticipated elections in 2013 and the SPÖ lost its majority to the ÖVP. Remarkably, the Greens established themselves as anti-corruption and anti-speculation party in Salzburg and got 20.18%, which means that they are the third strongest force, leaving the far-right parties behind.

Further major events during the crisis were the (partial) nationalizations/restructurings of a handful of medium-sized banks (Hypo Alpe Adria, Kommunalkredit, KA Finanz, Austrian Volksbanken AG). For more details see the IMF’s 2013 Country Report Austria – Art. IV Consultation 2013 (the 2014 Report is being published shortly) at http://www.imf.org/external/pubs/ft/scr/2013/cr13280.pdf, notably its pages 8 and 9.

[1]              Webpage of party “Team Stronach”, at http://www.stronachinstitut.at/stop-esm

[2]              Die Presse, “Jedem sein eigener Euro, September 24, 2012, at http://diepresse.com/home/politik/innenpolitik/1293771/Team-Stronach_Jedem-sein-eigener-Euro

Lithuania

Political change     
I.1
What is the political context of the Eurozone crisis period in Lithuania? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Note on a general background for a public reaction to the austerity measures

The crisis of 2009 is the third significant economic crisis experienced by Lithuania in the last two decades. This experience might have contributed to the general approach towards the crisis and the ‘culture of patience’ that is characteristic of the public reaction to the changes during the period at issue and the nature of the measures undertaken during the crisis.[1]

The first crisis was the economic restructuring crisis of the 1990s which resulted in a decline of 70 percent of the country’s GDP over a few years. It also led to a decision to introduce the model of a currency board. The Lithuanian currency had been pegged to the euro from 2002 until 1 January 2015, when it became the official currency.

The second crisis – 1998-99 resulted from the financial crisis in Russia, which led to significant spending cuts and public management reforms (strategic planning).

The first election during the period at issue (see below) occurred at the very onset of the financial crisis.

Political context

Lithuania is a parliamentary democracy, governed on the basis of the Constitution of 1992. The post of the head of state, a President, is held by Dalia Grybauskaitė since 12 July 2009. She was elected in the very first round on 17 May 2009 with 68 percent of the popular vote, and reelected for her second term in office with a 58 percent in May 2014.

The parliament of Lithuania (Seimas) is a unicameral body, composed of 141 members, and elected for a four year term. The Prime Minister is appointed by the President with the approval of the Seimas. The Government is appointed by the President after nomination by the Prime Minister.

Before the financial crisis struck, the parliamentary majority was held by the Social Democratic Party which also led the government with Gediminas Kirkilas as Prime Minister.  In 2007-2008 the government, supported by the opposition, made a number of decisions significantly increasing budgetary expenses (eg increasing public sector wages and social expenditure, including maternity leaves and pensions as well as introducing an automatic indexing of the budgetary pay-outs). These decisions were made despite the fact that the budget was never in surplus, even during the intensive period of economic growth in 2002 – 2007, which in 2007 was 9.8 percent of the GDP.    

The first round of the 2008 Seimas elections took place a month after the collapse of Lehman Brothers, on 12 October. However, the topic of possible austerity measures never was on the political agenda. It is considered that the reason for that is that the possible impact of the external financial crisis was never sufficiently appreciated either by the opposition or the incumbent government.

October 2008 parliamentary elections

The October 2008 elections led to the following distribution of the 141 seats of Seimas:

The Conservative party (Homeland Union – Lithuanian Christian Democrats) – 45 seats.

The Social Democratic Party of Lithuania – 25 seats.

The newly established National Revelation Party (composed mostly of well-known stage performers) – 16 seats. The party’s goal was to eliminate from politics both the Order and Justice Party and the Labour Party, which, as argued by the leader, were a threat to Lithuanian internal and external security. However, the party lost its popularity quickly: during the 2009 elections to the European Parliament it collected only 1 percent of the votes. It acceded to the Lithuanian Liberal and Centre Union on 22 September 2011.

Order and Justice Party – 15 seats. It is a party which is described as a Lithuanian eurosceptical party. The main criterion of attribution is the fact that both members of this party who were elected to the European Parliament in 2009-2013 (Rolandas Paksas and Juozas Imbrasas) were members of the Europe of Freedom and Democracy political group.[2] On 10 August 2013 this party adopted a resolution inviting the public to actively encourage the politicians to organize a mandatory referendum and obtain public mandate for the introduction of the euro.[3] At the same time the Order and Justice Party is a member of the coalition of the government formed in 2012, which publicly declares the goal to introduce the euro. However, although it was publicly voicing eurosceptical opinions with respect to the euro (see discussion under Question V.3), the party did not take steps encouraging the initiation of a referendum on the issue.

Labour Party – 10 seats.

Liberal Movement – 11 seats.

Liberal and Centre Union – 8 seats.

Electoral Action of Lithuanian Poles (LLRA) – 3 seats.

Lithuanian Peasants’ Union – 3 seats.

New Union (NS) – 1 seat.

Independent candidates – 4 seats.

The coalition government was formed by the Conservative Party, who were joined by the National Revelation party and the two liberal parties. The leader of the Conservative Party Andrius Kubilius became Prime Minister.

The newly formed Government, presented with the macroeconomic forecast of 0 percent growth at its very first meeting, had to take immediate measures adjusting the draft budget. It thus became notorious for its ‘night reforms’, introducing sharp spending cuts and tax rises only a few days before the start of the new financial year of 2009. These measures are also often described as contributing to the severe contraction of the economy by 15 percent in 2009.[4]

The austerity measures provoked the first massive protests on 16 January 2009. For the first time since the restoration of independence in 1990 the police applied measures involving tear gas and rubber bullets. 30 persons were injured. Although subsequently a number of protests against the austerity measures were organized, none of them led to violence. However, at the end of 2009 there were 16,000 residents less in Lithuania compared to 2008. It is commonly assumed that they left to look for better opportunities abroad.

As the economy plunged 15 percent in 2009, the government decided not to call on foreign aid and instead took further austerity measures.[5]

This government became the first one in Lithuania’s history to serve a full four-year term in office despite its unpopularity.

The other elections during the period at focus did not attract notable public interest and were not of special importance. The elections to the European Parliament of 7 June 2009 were marked by an exceptionally low turnout – only 20 percent of the electorate participated. Most of the seats – 4 out of 12 – were taken by the Conservative Party (the Homeland Union). The municipal elections of 27 February 2011 did not lead to any surprises.

October 2012 parliamentary elections

On 14 October 2012 national Parliamentary elections and a consultative referendum on the construction of a new nuclear power plant took place.

The Social Democratic Party became the winner of the election, with 38 seats, and formed a coalition with the controversial Labour Party, led by Viktor Uspaskich (29 seats),[6] the populist Order and Justice (11 seats), led by an impeached president and a member of the European Parliament Rolandas Paksas, and the Electoral Action of Poles in Lithuania (5 seats). The Conservatives ended only narrowly behind the Social Democrats with 33 seats. The Liberal Movement, a member of the incumbent coalition, ended with 10 seats, only one seat less than during previous elections.

In 2012 another newly established party, Drąsos kelias (DK, The Way of Courage) entered Seimas, winning 7 seats. Its establishment resulted from a non-political so-called paedophilia scandal, which allegedly involved an assistant of an influential Member of Seimas. Both him and the father of the minor subsequently died. The formal leader of the Party was a priest Jonas Varkala, however, an important role in its establishment had an aunt of an allegedly abused minor girl, formerly a judge Neringa Venckienė, who was elected to the Seimas in 2012. She fled Lithuania in April 2013, after she was stripped of parliamentary immunity in a criminal investigation against her on the charges including contempt of court and abuse of the status of a guardian of her niece. Allegedly she claimed asylum in the United States in April 2013.[7] Her whereabouts are currently unknown.[8] Soon after the whole party went to a disarray: it could not take part in 2014 elections to the European Parliament as it failed to collect the minimum 10 000 votes required by law,[9] and on 19 June 2014 its separate political group in Seimas ceased to exist. Questions were raised whether as it happened this party still had the number of members to be considered a political party as required by law.[10]

The issue which became a source of most political confusion was the result of the consultative referendum on a planned nuclear power station. On a 52 percent turnout 65 percent of voters were against the project, despite the fact that all major parties were in principle in favour of it.  

25 May 2014 elections to the EP, the second round of Presidential elections and a failed attempt to have a referendum on the euro

Two eurosceptical issues were mainly raised during the EP electoral campaign: the selling of land to foreigners and introducing the euro in 2015. Referendums were attempted on both questions. The initiators managed to collect the required 300.000 votes with respect to a referendum on the selling of land to foreigners, which took place on 29 June 2014, but failed, as it attracted only 15 percent of the electorate. However, it is important that it was the first time in the country’s history that 300.000 signatures for holding a referendum were collected: all prior referendums were initiated by the Seimas. The attempt to initiate a referendum concerning the introduction of the euro was blocked at its infancy: on 7 April 2014 the State Electoral Commission refused to issue the initiators the signature collection papers, reasoning that the initiative was against the Constitution and Lithuania’s international obligations.[11] An appeal against the decision was filed to the Supreme Administrative Court of Lithuania, which referred the case for an opinion to the Constitutional Court. On 17 July 2014 the Supreme Administrative Court, in view of the opinion of the Constitutional Court of 11 July 2014,[12] and sitting in its extended composition, decided that the Central Electoral Commission was correct in refusing to register the initiative and to issue it the signature collection papers.[13] 

The very initiative for a referendum on the introduction of the euro was taken in February – March 2014, with the initiators arguing that introducing the euro in 2015 was too early as ‘it might cause a crisis and Lithuania would end up like Greece or Portugal’.[14] The initiators argued that they did not contest Lithuania’s EU membership, but that they only wanted to give a chance to the people to express more clearly their will on the issue, especially because after the referendum on EU membership of 2003 the legal framework of EMU had changed significantly. One of the initiators, R. Ozolas, who is also known as the father of the national currency, argued that a key factor of the Baltic States’ success in dealing with the crisis was the fact that they had their own national currencies. Although the initiators of the referendum were not against euro membership in general, they thought that it was too early for Lithuania to join the eurozone. They formulated a draft law on a constitional amendment supplementing Art. 125 of the Constitution with two additional parts providing, first, that the national monetary unit of Lithuania is the litas, and second, that the Bank of Lithuania has an exclusive right to issue money. It was suggested to include a third part of the article that was to provide that the decision to change the national monetary unit may be decided only by a referendum and that international treaties may allow for payments in other monetary units.[15]

Both selling of land to foreigners and introducing the euro in 2015 were topics that were raised by a nationalist party during the elections to the European Parliament of May 2014. However, in view of the Ukrainean crisis and the Russian aggression in the Crimea the mainstream political parties did not put them on their agenda emphasizing instead the European security issues. The entry to the eurozone was presented as a security, not an economic issue, and the mainstream media presented the supporters of the referendum on land ownership as undercover agents for separation from the EU. Questioning the importance of the EU (or NATO) was viewed as betrayal.[16]

Another factor in the European Parliamentary elections was the fact that their date coincided with the date of the second round of the Presidential elections. The fact that Dalia Grybauskaitė did not collect a sufficient number of votes to be reelected at the very first round meant higher participation rates at the elections to the European Parliament. However, this also had an impact on the nature of campaigning: the major topics of the campaign were security issues and Russian aggression.[17] The other topics included fighting unemployment, promoting Lithuania’s energy independence, social inclusion, security, Lithuania’s role in the EU, federalization of the EU and discrimination of Lithuanian farmers with respect to direct payments.[18]

The critical view on the introduction of the euro in 2015 equally failed to persuade the electorate. Although the Eurobarometer 2013 autumn results showed that as many as 49 percent of the respondents did not support the single currency, compared with 40 percent who did and 11 percent who were undecided,[19] support grew to 50 percent in 2014[20] and constituted 73 percent in July 2015.[21] Lithuania became a member of the eurozone on 1 January 2015.

A surprising outcome of the EP elections was that the incumbent Social Democratic Party won only two seats at the European Parliament, which was substantially less than expected on the basis of the opinion polls. The same number of seats went to the opposition Conservative Party (Homeland Union), the Order and Justice Party and to the Liberal Movement, which was the best result in its history. The Labour Party, the Peasants and the Greens got one seat each.

Municipal elections of March 2015

The municipal elections of March 2015 were the first municipal elections through which mayors were directly elected. This might explain an elevated public interest in the event: compared with the elections of 2011, the public participation increased by 3 points (2011- 44.08 %, 2015- 47.17%). After the elections two political parties changed their leadership: Andrius Kubilius resigned from the Conservative Party giving way to the member of the European Parliament Gabrielius Landsbergis, and Loreta Graužinienė resigned from the leadership of the Labour Party. Its newly elected leader is a member of the European Parliament (ALDE group) Valentinas Mazuronis, who only recently left another party, Order and Justice. Although the majority of municipal mandates (359) were collected by the Social Democratic Party, followed by the Conservative Party (253), the results demonstrate an increasing political influence of the Liberal Movement, which received 217 mandates. The Labour Party ended with 148 mandates, the Peasants and Greens – 82, a coalition of Polish Electoral Action and Russian Alliance –  62 mandates. The community electoral committees – non-party units collected 118 mandates throughout the country.  

 

 

 

[1] R. Vilpišauskas, V. Nakrošis, V. Kuokštis, The Politics of Reacting to the Crisis in Lithuania from 2008-2013: Exiting the Crisis, Entering Politics as Usual? In: K. Bukovskis (ed.) The Politics of Economic Sustainability: Baltic and Visegrad Responses to the European Economic Crisis. Riga: Latvian Institute of International Affairs, 2014, p. 38- 63, p. 38.

[2] M. Jastramskis, Lietuvos visuomenės ir politinių partijų nuostatos ES atžvilgiu.[Positions on EU of the Lithuanian Public and Political Parties] Lietuva Europos Sąjungoje. Metraštis [Yearbook] 2009-2013, Europos Integracijos studijų centras: 2014.

[3] Resolution of the Order and Justice Party of 12 August 2013, available in Lithuanian at http://www.tvarka.lt/index.php?id=8125 [last accessed on 23 November 2015]. Also see T. Janeliūnas, „Tvarka ir teisingumas“ remsis euroskeptikais? [Order and Justice will draw on eurosceptics?] www.iq.lt, 2013-08-14. [last accessed on 23 November 2015].

[4] G. Davulis, Global Crisis and Economic Processes in Lithuania and other Baltic Countries. Business Systems and Economics No. 2 (1), 2012: 134-147, p. 139, 140; J. Čičinskas, A. Dulkys, Finansų krizė ir nauji sprendimai Europos Sąjungoje: mažos valstybės atvejis. [Financial Crisis and new decisions in the European Union: a case study of a Small State]  Lietuvos metinė strateginė apžvalga 2012-2013, p. 125; S. Jakeliūnas, Lietuvos krizės anatomija [The Anatomy of Lithuanian Crisis], Iš arčiau: 2010, p. 68; LRV 2008 m. veiklos ataskaita, pritarta 2009 m. kovo 25 d. nutarimu Nr. 223, [report of the Government of the Republic of Lithuania on its activities in 2008].

[5] Discussed in detail at I. Hawkesworth, R. Emery, J. Wehner and J.Saegert, Budgeting in Lithuania, OECD Journal on Budgeting 2010/3, p. 8, available at http://www.oecd.org/countries/lithuania/48170576.pdf

[6] V. Uspaskich was indicted with criminal charges for for fraud and fraudulent bookkeeping and was sentenced to four years in prison by Vilnius Regional Court on 12 July 2013. See BNS, Vilnius Court pronounced the verdict in Labour Party’s case, available at http://www.lithuaniatribune.com/44590/vilnius-court-pronounced-the-verdict-in-labour-partys-case-201344590/  On 7 August 2013 another case was filed against V.Uspaskich for contempt of court. The factual circumstances are discussed in detail at European Parliament, Report on the request for waiver of the immunity of Viktor Uspaskich, A8-0149/2015, 11 May 2015.

[7] The Lithuania Tribune, Venckienė‘s attempts to seek political asylum abroad seem suspicious, 2013- 04-13,   http://www.lithuaniatribune.com/35766/venckienes-attempts-to-seek-political-asylum-abroad-seem-suspicious-201335766/

[8] LRT, Prokurorai prisipažino, kad nežino, kur yra N. Venckienė [Prosecutors concede that they are not familiar with the whereabouts of N.Venckienė], www.lrt.lt, 2015-11-01.

[9] BNS, Dar vienas rinkimų fiasko: „Drąsos kelias“ nesurinko parašų [Another election failure: ‘Way of Courage’ failed to collect the necessary number of signatures], www.delfi.lt, 2014-04-10.

[10] Lietuvos Respublikos politinių partijų įstatymo pakeitimo įstatymas XII-614 [The Law amending the Law on Political Parties], Žin., 2013-12-14, Nr. 128-6513. Art. 5(3) of the Law currently requires 2000 members for the purpose of establishing a party. If the number of members becomes less than the required statutory minimum, and the party does not reorganize itself within two years so that its number of members fulfils the legal requirements, the party is removed from the register of political parties.

[11] Lietuvos Vyriausiosios rinkimų komisijos sprendimas Dėl atsisakymo įregistruoti iniciatyvinę grupę privalomajam referendumui paskelbti [Decision of the Central Electoral Commission on refusal to register the petition on announcement of a referendum] 2014-04-07, nr. SP-101.

[12] Ruling of the Constitutional Court of the Republic of Lithuania on the compliance of the provisions of the Republic of Lithuania’s law on referendums [sic] with the Constitution of the Republic of Lithuania, an official translation is available in English at http://www.lrkt.lt/en/court-acts/search/170/ta859/content

[13] Decision of the Supreme Administrative Court of Lithuania of 17 July 2014 No. R-858-11-14.

[14] R. Vilpišauskas et al, Lithuania. Available at:  http://www.eu-28watch.org/?q=node/1203

[15] J. Ūdris. Member of the Central Electoral Commission. Pažyma dėl referendumo iniciatyvinės grupės prašymo [Certificate on the request to register the petition to announce a referendum] 2014-04-07, www.lrs.lt

[16]  G. Aleknonis, European Parliament elections in Lithuania: populist competition in the shadow of the presidential vote. Political preferences 9/2014: 39-56, p. 41.

[17] Ibid, p. 46.

[18] R. Vilpišauskas et al, Lithuania. Internet Access: http://www.eu-28watch.org/?q=node/1203

[19] Standard Eurobarometer 80, autumn 2013, p. 25. Available at http://ec.europa.eu/public_opinion/archives/eb/eb80/eb80_first_en.pdf

[20] Standard Eurobarometer 81, autumn 2014, p. 20, available at http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/surveyKy/2040

[21] Standard Eurobarometer 83, first results May 2015, p.26.

 

[1] R. Vilpišauskas, V. Nakrošis, V. Kuokštis, The Politics of Reacting to the Crisis in Lithuania from 2008-2013: Exiting the Crisis, Entering Politics as Usual? In: K. Bukovskis (ed.) The Politics of Economic Sustainability: Baltic and Visegrad Responses to the European Economic Crisis. Riga: Latvian Institute of International Affairs, 2014, p. 38- 63, p. 38.

 

[2] M. Jastramskis, Lietuvos visuomenės ir politinių partijų nuostatos ES atžvilgiu.[Positions on EU of the Lithuanian Public and Political Parties] Lietuva Europos Sąjungoje. Metraštis [Yearbook] 2009-2013, Europos Integracijos studijų centras: 2014.

 

[3] Resolution of the Order and Justice Party of 12 August 2013, available in Lithuanian at http://www.tvarka.lt/index.php?id=8125 [last accessed on 23 November 2015]. Also see T. Janeliūnas, „Tvarka ir teisingumas“ remsis euroskeptikais? [Order and Justice will draw on eurosceptics?] www.iq.lt, 2013-08-14. [last accessed on 23 November 2015].

 

[4] G. Davulis, Global Crisis and Economic Processes in Lithuania and other Baltic Countries. Business Systems and Economics No. 2 (1), 2012: 134-147, p. 139, 140; J. Čičinskas, A. Dulkys, Finansų krizė ir nauji sprendimai Europos Sąjungoje: mažos valstybės atvejis. [Financial Crisis and new decisions in the European Union: a case study of a Small State]  Lietuvos metinė strateginė apžvalga 2012-2013, p. 125; S. Jakeliūnas, Lietuvos krizės anatomija [The Anatomy of Lithuanian Crisis], Iš arčiau: 2010, p. 68; LRV 2008 m. veiklos ataskaita, pritarta 2009 m. kovo 25 d. nutarimu Nr. 223, [report of the Government of the Republic of Lithuania on its activities in 2008].

 

[5] Discussed in detail at I. Hawkesworth, R. Emery, J. Wehner and J.Saegert, Budgeting in Lithuania, OECD Journal on Budgeting 2010/3, p. 8, available at http://www.oecd.org/countries/lithuania/48170576.pdf

 

[6] V. Uspaskich was indicted with criminal charges for for fraud and fraudulent bookkeeping and was sentenced to four years in prison by Vilnius Regional Court on 12 July 2013. See BNS, Vilnius Court pronounced the verdict in Labour Party’s case, available at http://www.lithuaniatribune.com/44590/vilnius-court-pronounced-the-verdict-in-labour-partys-case-201344590/  On 7 August 2013 another case was filed against V.Uspaskich for contempt of court. The factual circumstances are discussed in detail at European Parliament, Report on the request for waiver of the immunity of Viktor Uspaskich, A8-0149/2015, 11 May 2015.

 

[7] The Lithuania Tribune, Venckienė‘s attempts to seek political asylum abroad seem suspicious, 2013- 04-13,   http://www.lithuaniatribune.com/35766/venckienes-attempts-to-seek-political-asylum-abroad-seem-suspicious-201335766/

 

[8] LRT, Prokurorai prisipažino, kad nežino, kur yra N. Venckienė [Prosecutors concede that they are not familiar with the whereabouts of N.Venckienė], www.lrt.lt, 2015-11-01.

 

[9] BNS, Dar vienas rinkimų fiasko: „Drąsos kelias“ nesurinko parašų [Another election failure: ‘Way of Courage’ failed to collect the necessary number of signatures], www.delfi.lt, 2014-04-10.

 

[10] Lietuvos Respublikos politinių partijų įstatymo pakeitimo įstatymas XII-614 [The Law amending the Law on Political Parties], Žin., 2013-12-14, Nr. 128-6513. Art. 5(3) of the Law currently requires 2000 members for the purpose of establishing a party. If the number of members becomes less than the required statutory minimum, and the party does not reorganize itself within two years so that its number of members fulfils the legal requirements, the party is removed from the register of political parties.

 

[11] Lietuvos Vyriausiosios rinkimų komisijos sprendimas Dėl atsisakymo įregistruoti iniciatyvinę grupę privalomajam referendumui paskelbti [Decision of the Central Electoral Commission on refusal to register the petition on announcement of a referendum] 2014-04-07, nr. SP-101.

 

[12] Ruling of the Constitutional Court of the Republic of Lithuania on the compliance of the provisions of the Republic of Lithuania’s law on referendums [sic] with the Constitution of the Republic of Lithuania, an official translation is available in English at http://www.lrkt.lt/en/court-acts/search/170/ta859/content

 

[13] Decision of the Supreme Administrative Court of Lithuania of 17 July 2014 No. R-858-11-14.

 

[14] R. Vilpišauskas et al, Lithuania. Available at:  http://www.eu-28watch.org/?q=node/1203

 

[15] J. Ūdris. Member of the Central Electoral Commission. Pažyma dėl referendumo iniciatyvinės grupės prašymo [Certificate on the request to register the petition to announce a referendum] 2014-04-07, www.lrs.lt

 

[16]  G. Aleknonis, European Parliament elections in Lithuania: populist competition in the shadow of the presidential vote. Political preferences 9/2014: 39-56, p. 41.

 

[17] Ibid, p. 46.

 

[18] R. Vilpišauskas et al, Lithuania. Internet Access: http://www.eu-28watch.org/?q=node/1203

 

[19] Standard Eurobarometer 80, autumn 2013, p. 25. Available at http://ec.europa.eu/public_opinion/archives/eb/eb80/eb80_first_en.pdf

 

[20] Standard Eurobarometer 81, autumn 2014, p. 20, available at http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/surveyKy/2040

 

[21] Standard Eurobarometer 83, first results May 2015, p.26.

 

 

 

Belgium

Political change      
I.1
What is the political context of the Eurozone crisis period in Belgium? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The general election of 2007 sparked the beginning of a prolonged period of political instability due to tensions between the two major linguistic groups, Dutch and French speaking. Although de facto a bipolar federal system, Belgium has two different kinds of substate entities with their own sets of competences: regions (three: Flanders, Wallonia and Brussels) and communities (three: Flemish Community, the Francophone Community and the Germanophone Community). Regions are territorially defined, and the communities generally follow these lines, with the main exceptions for Brussels (governed by the Flemish and Francophone community). The main thrust of the division of competences is to allocate subject matters with regards to defined socio-economic issues to the Regions, and cultural and linguistic matters to the Communities.[1] The federal level holds the competences with regards to macro-economic policy, social security, labour law, criminal law, and taxation. Additionally, the federal level has the residual competence.

Inherently unstable due to this bipolarity and the absence of national political parties, multiple reforms of state have occurred with regularity since the 1960’s. The recent cycle 2007-2011 culminated in the Sixth Reform of State, with a wide scope: 47 articles of the Constitution (out of 197) were altered, 15 Special Acts and 18 statutes set out in detail the reform. These acts amount to 1130 pages in the Official Gazette.[2] 

Three federal elections have occurred: June 10, 2007, June 13, 2010, and May 25, 2014. In 2007 the formation period during which political parties negotiated to form a government, took 194 days, in 2010-11, an astonishing 541 days. Elections occurred at the substate level in 2009. New governments were rapidly formed. 

During these long periods of political upheaval, the federal government was often the outgoing coalition, competent according to custom with regards to the current affairs. This constitutional doctrine prescribes a certain restraint because of the absence of meaningful parliamentary control. 

Election

Caretaker government

(named after PM)

Political composition[3]

Formation period

Date of new government

(named after PM)

Political Composition

10/06/2007

Verhofstadt II until 21/12/2007

Vld, MR, Sp.a, PS

194 days

 

Temporary government[4]: Verhofstadt III until 20/03/2008

CD&V, cdh, MR, Vld, PS

 

20/03/2008
Leterme I until 30/12/2008

CD&V, cdh, MR, Vld, PS

Van Rompuy I until 25/11/2009

CD&V, cdh, MR, Vld, PS

Leterme II until elections June 2010

CD&V, cdh, MR, Vld, PS

13/06/2010

Leterme II until 6/12/2011

CD&V, cdh, MR, Vld, PS

541 days

 

 

 

6/12/2011
Di Rupo I until elections May 2014

 

PS, Sp.a, CD&V, cdh, MR, Vld

 

25/05/2014

Di Rupo I

PS, Sp.a, CD&V, cdh, MR, Vld

139 days

11/10/2014

(Michel I)

CD&V, Vld, MR and NVA

From this background, it results that during important phases of the financial crisis (financial turmoil starting in 2007 and the EU debt crisis 2010 onwards), the most important actor, the federal government, was often an outgoing government, under the constitutional duty to limit itself to the current affairs.

Moreover, public opinion and political efforts were distracted from the external financial crisis because of the internal on-going state reform and formation process.

[1] For a general introduction: P. Popelier & K. Lemmens, The Constitution of Belgium (Oxford, Hart 2015) 228 p., forthcoming in the series Constitutional Systems of the World.

[2] See in Dutch:  J. Velaers, J. Vanpraet, Y. Peeters and W. Vandenbruwaene (eds.), De Zesde Staatshervorming: instellingen, bevoegdheden en middelen (Intersentia 2014) 1026 p.;  in French: J. Sautois & M. Uyttendaele (eds.), La sixième réforme de l’Etat (2012-2013). Tournant historique ou soubresault ordinaire?  (Limal, Anthemis, 2013) 610 p.

[3] The traditional political parties are divided along linguistic and ideological lines: christen democrats: CD&V and cdh; socialists: Sp.a and PS; liberals: Open Vld and MR; greens: Groen and Ecolo. From 2007 onwards, the Flemish Nationalist Party (NVA) rose to dominance (27 seats out of 150 in the Federal House of Representatives and around 30 % of the votes in Flanders polled continuously since 2010).

[4] This temporary government Verhofstadt III was constitutionally required to limit itself to the current affairs. Mainly because the formation discussions did not seem to lead to a new government fast, and because an annual budget had to be drawn up, this temporary government was sworn in with a limited program of 10 points (see Parliamentary Documents, House of Representatives, report of the debates 21 December 2007, complete report nr 13). The same problem of a drafting an annual budget under current affairs arose again in 2010-11, but was deemed permissible under the doctrine because parliamentary control was guaranteed: it could refuse to adopt the budget.

Bulgaria

Political Context

I.1

What is the political context of the Eurozone crisis period in Bulgaria? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The political context in Bulgaria since 2008 has seen many changes. While in the beginning of the Euro crisis the political situation was relatively stable, since the beginning of 2013 it has been very volatile. It has involved the resignation of two Governments and the respective appointment of two Caretaker Governments,[1] two minority Governments, a recent bank crisis and raging protests for the bigger part of this, less than biannual, period.   

Period of stability

The 40th National Assembly was elected on 25 June 2005 and its mandate ended on 25 June 2009. The 86th Government was formed on the basis of a three-party coalition between the three biggest parliamentary groups represented in the 40th National Assembly. These were, out of 240, (1) Coalition for Bulgaria[2] with 82; (2) National Movement Simeon the Second (known by its Bulgarian abbreviation – NDSV)[3] with 53; (3) Movement for Rights and Freedoms (known by its Bulgarian abbreviation – DPS)[4] with 34. The 86th Government governed Bulgaria from 17 August 2005 till 27 July 2009 with Sergei Stanishev as Prime Minister. Sergei Stanishev was the leader of the Bulgarian Socialist Party (BSP), which was the biggest and predominant party in the Coalition for Bulgaria.[5] For now, he is also the President of the Party of European Socialist (PES). 

The 41st National Assembly was elected on 5 July 2009 and it was dissolved on 14 March 2013. The 87th Government was a minority Government formed by Citizens for the European Development of Bulgaria (known by its Bulgarian abbreviation – GERB).[6] GERB obtained 117 seats in the National Assembly and needed further parliamentary support in order to form the Government. GERB found such initial support in three small parties ATAKA,[7] the Blue Coalition and Order Law and Justice[8] (known by its Bulgarian abbreviation – RZS), which were against the parties that were part of the three-party coalition, which hitherto governed Bulgaria. With the vote in the National Assembly on 27 July 2009 the 87th Government with GERB’s leader – Boyko Borissov – as Prime Minster started governing Bulgaria. In the autumn of 2011 the Presidential and local elections took place together. The first ballot for both took place on 23 October and the second on 30 October. The Presidential elections were won by Rosen Plevneliev who was supported by GERB. These elections were challenged by the opposition (Coalition for Bulgaria), which was held by one of the Bulgarian MEPs to be unprecedented in Bulgaria’s history since the democratic changes.[9] The Bulgarian Constitutional Court (BCC) admitted the case but eventually did not annul the elections.[10] GERB was also very successful during the local elections. As it can be seen from the answer to Question III.2, these elections played an important role in the discussions of the proposed constitutional amendment.

The beginning of the instability

The political situation was stable during the biggest part of the mandate of the Borissov Government. However, in the end of 2012 certain level of public discontent turned into sporadic protests. In the beginning of 2013 the protests unified around the discontent against the monopoles of the electricity distributers and the high energy prices, later evolving into protests against the Government’s policies in general. A few people even set themselves on fire, which some parts of the public saw as connected to the protests. Amidst the protests, on 27 January 2013 a referendum, which was politically initiated by Sergei Stanishev, took place with a question that read “Should nuclear power in Bulgaria be developed through the building of a new power plant?”. While the results were 60.6% ‘yes’ and 37.9% ‘no’ (the rest to 100% were void bulletins), the referendum failed due to low turnout.[11] These protests eventually led to the resignation of Boyko Borissov on 21 February 2013, a few months before the end of the four-year mandate.[12] His Government stayed in power until 13 March 2013 when, after all major parties declined to try to form a Government, a Caretaker Government was appointed by the President.[13]

The 42nd National Assembly was elected on 12 May 2013 and was also prematurely dissolved on 6 August 2014 by the President.[14] Despite the protests and the resignation that followed in February, GERB won the elections with 30.5%, followed closely by Coalition for Bulgaria with 26.6%.[15] The third and the fourth in the elections were DPS with 11.3% and ATAKA with 7.2%. The turnout was a record low for National Assembly elections – just 51.33%.[16] These elections were also challenged. Interestingly, the elections were challenged by the national representatives from GERB – the party that won the elections.[17] The BCC again did not annul the elections.[18] Eventually, the mandate of the Caretaker Government was ended with the formation of the 89th Government on 29 May 2013. The 89th Government was formed by Coalition for Bulgaria and DPS, which together had 120 national representatives (exactly half of the total 240). On 29 May it was Volen Siderov (ATAKA’s leader) who registered in order to provide the quorum for the Government to be formed, which created much controversy.[19] While Volen Siderov stated that his party will not support this Government, the national representatives of GERB accused ATAKA of participating in a covert three-party coalition. The accusations were based on the fact that registering to secure quorum and then not voting against the, formally, two-party coalition, ATAKA de facto allowed for the new Government to be formed.[20] This highly controversial start of the new Government brought up many legitimacy concerns[21] and accusations of backdoor dealings.

Increased instability and continuous protests

On 28 May 2013 – a day before the formation of the 89th Government, the leaders of Coalition for Bulgaria and DPS submitted a draft law to the National Assembly for the amendment of the Law on the State Agency for National Security (known by its Bulgarian abbreviation – DANS). One of the proposed amendments was to strip the President from his (not constitutional) power to appoint the President of that Agency on a proposal from the Council of Ministers and to give that power to the National Assembly after a proposal of the Prime Minister. The draft law was quickly adopted on 7 June 2013 and in accordance with its last provision it was to enter into force on the day of its promulgation in the State Gazette (SG). The Law was promulgated on 14 June 2013.[22] On 14 June 2013 the plenary session of the National Assembly started in its very beginning with a request to include in its agenda a proposal by the Prime Minister – Plamen Oresharski – on the President of DANS. It was approved and the session started with proposal by the Prime Minister. His first words were that on the basis of Article 8(1) of the abovementioned law he was proposing Delyan Peevski (DPS). The National Assembly adopted a Decision shortly after the proposal with which it appointed Mr Peevski as a President of DANS.[23] 

Due to the background of Mr Peevski, his appointment quickly created unprecedented outburst in the society and was held by some to have been the beginning of the end of the Oresharski Government. In a matter of hours thousands of people went on the streets in protests against the appointment, which caught the attention of the international media.[24] The enormous outcry against the appointment led to a statement by Mr Peevski on the very next day, expressing his willingness to step down. On 19 June 2013 the National Assembly with a first point in the agenda adopted a Decision repealing its Decision from 14 June.[25] Lyutvi Mestan (DPS), who presented the annulment Decision stated, with respect to the explanations of the annulment Decision, that

“The politically responsible reading of the situation requires as an obvious necessity that the Decision of 14 June 2013 for the election of the President of DANS to be urgently annulled in order to give the Prime Minister an opportunity to propose a new President of DANS which after the necessary consultations to be discussed and adopted in accordance with the applicable parliamentary procedure.”[26]

However, the protests were gathering force and the protesters were not satisfied with this reversal and started asking for the resignation of the Government, less than a month after it was formed.[27] This appointment and its swift reversal led also to wave of constitutional litigation on the status of Mr Peevski as a national representative considering the failed appointment.[28] This litigation eventually ended on 14 January 2014 with the BCC upholding the status of Mr Peevski as a national representative.[29] After its first, largely unpopular, Decision in these cases the BCC was demoralised when it was mockingly put for sale on Ebay.[30] After 140 days of protests, further impetus was given to them in the autumn of 2013 when, following the BCC Decision in one of the Peevski cases, the students of the Sofia University occupied the main lecture hall during a lecture of one of the BCC judges, which led to a months-long occupation of the whole University.[31] The protests have been widely covered in the media and this Report will not go in further detail. Since the political situation was hugely affected by these protests it was necessary to give this overview, which does not claim to be exhaustive and to necessarily be giving the complete picture. Thus, this author invites the reader to further examine the situation in order to fully comprehend the situation.

In times of continuing, but much less active, protests, another important turning point during the 89th Government came about – the European Parliament elections. In December 2013 Lyutvi Mestan (DPS) saw the forthcoming European Parliament elections as an opportunity for the Government to show that it has legitimacy.[32] The elections took place on 25 May 2014 and were again won by GERB with 30.4%, followed by Coalition for Bulgaria with 18.9%, DPS with 17.2%, the newly formed (and soon after dissolved) coalition of Bulgaria Without Censorship (BWC) with 10% and another newly formed coalition – the Reformist Bloc, with 6.4% (see infra an introduction of the last two).[33] These results fuelled even more the feeling of illegitimacy among the general public with respect to the Government in power and gave further impetus to the continuing, for almost a year at that time, protests.[34] The legality of the elections was challenged before the BCC, as it was the case in the previous two National Assembly and Presidential elections. The BCC this time rejected the request for declaring the elections unlawful, citing lack of powers to do this with respect to the whole of the European Parliament elections in Bulgaria.[35] The BCC considered itself having the power to declare unlawful only the election of particular MEPs but not the elections as a whole due to the provisions of the Elections Code.[36]

The banking crisis

Yet another crucial issue that destabilised the political situation in Bulgaria was the 2014 banking crisis. Before giving a short overview of the banking crisis, it is worth quoting one statement, made about three years before the crisis, by Qnaki Stoilov (Coalition for Bulgaria) during the 15 June 2011 discussions in the National Assembly on the amendments of the Law for the Planning of the State Budget (LPSB). Mr Stoilov stated: 

“While here it is being talked about the stability of the banking system in Bulgaria, I would like to focus your attention to one risk. I am not going to discuss anything concrete because this is a sensitive matter and we should not create disturbances in it. Let a report be made and you ask for it Mr [Finance] Minister from the management of the Bulgarian National Bank, on how many of the commercial banks in Bulgaria dare to credit their own enterprises, that is, the same people participating in the ownership and the management of the commercial banks to collect resources from the public and then invest them in their own enterprises. I could not call this in any other way than draining of the financial capital for corporate and self-serving goals. If these are going to be the fundamentals of this stability [that the LPSB is trying to ensure] they can come out to be very shaky.”

The crisis started with an alleged assassination attempt against Delyan Peevski in the beginning of June 2014, which was rumoured to be ordered by the majority shareholder of Corporate Commercial Bank (CCB) – Tsvetan Vasilev.[37] The Prosecution Office in Bulgaria responded with searches in different corporate enterprises, including CCB’s office building.[38] However, it was not clear whether or not these searches were connected with a signal made to the Prosecution Office in the beginning of 2014 by activists from “Protest Network” concerning alleged illegal activities of financial nature of Delyan Peevski, Tsvetan Vasilev and Nikolai Barekov – BWC’s initial leader.[39] In the public space rumours followed that Mr Peevski was removing large amounts of his own funds from CCB.[40] A bank run followed, which enormously damaged the liquidity of CCB and another, recently acquired by CCB, bank.[41] Soon after this, the Bulgarian National Bank (BNB) announced nationalisation of CCB and its recent acquisition, suspended operations at both and stated that it will recapitalise it out of the deposit guarantee fund.[42]

The crisis deepened when a bank run on another, unrelated to CCB, bank – First Investment Bank (FIB) took place on 27 June 2014, which led the President of Bulgaria to make a public statement saying to the depositors that their funds were safe.[43] The president also announced that the National Assembly was planned to be dissolved in late July and that new elections were to take place in the beginning of October. The bank run on FIB later became clear to have been separately plotted to deliberately destabilise the banking system by using e-mails and SMSes.[44] The plot did not completely succeed and FIB’s situation quickly stabilised a few days later and depositors’ trust was regained.[45] Support for this was also given by the favourable position of the Commission on the credit line for the banking system.[46]

The situation with CCB, unfortunately, worsened. An audit of the CCB by the BNB found credit records missing for more than €1.7 billion (while CCB’s credits in total amounted to €2.7 billion).[47] According to BNB, the credit records that were missing were relating to debtors in close relationship with Tsvetan Vasilev.[48] This shows the relevance of the statement of Qnaki Stoilov that was quoted above. Even more, in the day before CCB was put under special supervision, more than €100 million were drained in cash, allegedly, under the command of Mr Vasilev.[49] At certain point Mr Vasilev was also put on Interpol’s list.[50] At the moment Mr Vasilev is in Serbia and court proceedings for his extradition are undergoing.[51] On 12 March 2015, during a visit of the Bulgarian President in Serbia, the Serbian President, in answering a question on his relationship with Mr Vasilev, while saying that Mr Vasilev was not friend of his did say that his investments in Serbia were excellent.[52]

For Bulgaria, covering the costs over CCB meant increasing its sovereign debt, which also increased its budgetary deficit from about 1.8% to almost 3%.[53] With this the budget also had to be updated, which furthered the political spats.[54] Eventually, the BNB put CCB in insolvency proceedings. This short overview shows how controversial and politically relevant this banking crisis really was and still is. Further detail on this point will be spared for now. It must be noted, however, that the CCB issue and the recovery of the deposits was decided to be a political question and was left to be solved for after the elections.

Eventually, with the decline in the, initially low, public support for the Government and the retraction by DPS of its political support[55] the Prime Minister was forced to submit his resignation and he did so on 23 July 2014.[56] The resignation was accepted by the National Assembly the next day with 180 votes in favour and 8 against.[57] The President dissolved the National Assembly and appointed a Caretaker Government on 6 August 2014.[58] This Caretaker Government had as a Prime Minister Georgi Bliznashki – a former senior member of the BSP up until earlier that year, when he was expelled from the party for openly supporting the anti-Government student-occupation protests.[59]  

The transformation of the political parties and coalitions

This political situation, leading to the elections for the 43rd National Assembly, also caused a major rearrangement and restructuring of the political background, where new parties and coalitions appeared on their own, other parties appeared after splitting form already existing ones and others went through a leadership change. All of these changes can probably be the object of separate political science research project and cannot be examined in detail here. However, a very basic overview will be provided here as it is needed to understand the election results for the 43rd National Assembly and the political developments that followed.

 

A little earlier, in the beginning of 2013 an attempted assassination (that later seemed to be just a hoax[60]) of DPS’s leader – Ahmed Dogan, happened right before his resignation from the leadership position and his nomination of Lyutvi Mestan as his successor.[61] Later in 2013, one of the new coalitions was formed – the Reformist Bloc. It was cofounded by Democrats for Strong Bulgaria, the Union of Democratic Forces (both of which formed the core of the former Blue Coalition), Bulgaria for Citizens (led by Meglena Kuneva[62]), as well as the Freedom and Dignity People’s Party (led by Kasim Dal[63]), and the Bulgarian Agrarian People’s Union.[64] Another new party which also created a coalition was BWC.[65] It made a coalition with three small parties[66] and together they got two MEP places. Soon after the European Parliament elections the coalition dissolved. In preparation for the new elections BWC entered in another coalition with LIDER (a small party that has existed since 2007 but never had elected representatives).[67] Another new coalition was formed in August 2014 – the Patriotic Front. It combined the National Front for the Salvation of Bulgaria (NFSB)[68] and VMRO, one of the earlier coalition partners of BWC.[69]

Yet another new party that was created in the meantime, in January 2014, was Alternative for Bulgarian Renaissance (known by its Bulgarian abbreviation – ABV).[70] ABV is a reanimated project from 2010 of the former President – Georgi Parvanov (2001-2012) leader of BSP until he stepped in office.[71] The new party was created in anticipation of the European Parliament elections and attracted major figures from the BSP, leading to its major political split.[72] These recent developments for the BSP reflected heavily on its leader Sergei Stanishev who eventually stepped down from the leadership position on 27 July 2014 when Mihail Mikov was chosen as the new leader.[73] With the change in leadership, the coalition in which BSP hitherto participated also changed its name. From Coalition for Bulgaria it became BSP – left Bulgaria. Not long after this leadership change, Mr Stanishev’s leadership position in PES also came under attack.[74] With this major political reshuffle for a relative small amount of time Bulgaria prepared for a new round of National Assembly elections. 

Towards relative (in)stability

The 43rd National Assembly was elected on 5 October 2014. The election was won by GERB with 32.7%, followed by BSP with 15.4%, DPS with 14.8%, the Reformist Bloc with 8.9%, Patriotic Front with 7.3%, BWC with 5.7%, ATAKA with 4.5%, and ABV with 4.15%.[75] The lack of majority for any one party led to long and difficult negotiations, which culminated in the formation of a coalition Government on 7 November 2014. The 91st Government was formally formed by GERB and the Reformist Bloc with the parliamentary support of ABV and the Patriotic Front.[76]

Since the formation of the 91st Government the political situation achieved some balance but it is still by far not stable. Some of the main issues, relevant for this Report, that have frequented the public discussion have been (1) the continuous CCB crisis, (2) the diversification of the gas supplies, and (3) accruing new sovereign debt of 16 billion leva (about €8 billion).

The CCB crisis saw new developments from the European Union (EU) level. In particular, the Commission (1) found Bulgaria to be “in a situation of excessive imbalances requiring decisive policy action and specific monitoring”,[77] largely due to the CCB situation and (2) initiated infringement proceedings[78] against Bulgaria. The infringement proceedings relate to the way Bulgaria handled the CCB guaranteed deposits. In particular, the Commission brought proceedings for a failure to correctly transpose the Deposit Guarantee Scheme Directive and a violation of the free movement of capital under Article 63 TFEU. This has put even further pressure for the swift solution of the CCB crisis. CCB is currently in insolvency proceedings but a liquidator is not yet appointed due to appeals by the shareholders of CCB against the Decision to revoke CCB’s licence.[79]  On 11 March 2015 Prime Minister Borissov warned that CCB’s property is being plundered and said to the National Assembly that the Government will make a proposal for such a liquidator.[80] With respect to the economic impact of CCB on the Bulgarian budget, it must be noted that the budget deficit for 2014 ended up rocketed as high as 3.7% of the Gross Domestic Product (GDP) (almost 2% increase since before the beginning of the crisis).[81]

With respect to the gas supplies the political developments have been closely related to the Ukraine crisis and have evolved around the status (and possible revival) of South Stream,[82] Nabuko[83] and other pipeline projects going through Turkey.[84] The insecurity created around these projects weighs heavily on the political situation in Bulgaria because of the full dependence on Russian gas, on the one hand, and the economic importance of these projects for Bulgaria in terms of transition fees, on the other hand. In light of the banking crisis such questions have become even more politically charged.

Most recently the National Assembly approved the accruing of new sovereign debt amounting to 16 billion leva (about €8 billion).[85] The debates for this debt sparked a lot of controversies and its approval by the National Assembly was not certain up until the actual vote. The controversies evolved mainly around the amount of the debt and if it really was necessary to be as big. The stakes were very high with respect to the debt because the Prime Minister suggested a possible resignation of the Government if it was not approved by the National Assembly.[86] The debt also got the support of the President.[87]

Since the elections for the 43rd National Assembly, some of the newly formed parties also went through leadership changes. BWC went through structural changes including a change in its name (to Bulgarian Democratic Centre) and its leadership.[88] Also, the leadership of ABV fell into uncertainty when its leader – Georgi Purvanov resigned as a sign of protest against the support of ABV’s national representatives for the new sovereign debt.[89] However, he will remain the leader at least until 25 April 2015 when ABV’s national council will convene. Last but not least, on 9 March the European Parliament Committee on Legal Affairs unanimously decided to recommend to the European Parliament to waive the parliamentary immunity of Sergei Stanishev, in light of the request by the Chief Public Prosecutor of the Republic of Bulgaria on 24 November 2014.[90]

[1] Caretaker Government is a term of art for Governments of temporary nature which are appointed once the ruling one is dissolved until the new one is formed following elections. See in general P Schleiter and V Belu, ‘The Challenge of Periods of Caretaker Government in the UK’ (2014) Parliamentary Affairs doi: 10.1093/pa/gsu027 First published online: December 19, 2014.

[2] Coalition for Bulgaria was a coalition of leftist parties concentrated around the Bulgarian Socialist Party. The parties in Coalition for Bulgaria have changed over the years. Coalition for Bulgaria was replaced by “BSP – left Bulgaria” since the National Assembly elections in 2014.

[3] Later renamed National Movement for Stability and Progress. See B Cholova and JM De Waele, ‘Populism in Bulgaria: The Politics of Resentment’ (2014) 38 Southeastern Europe 56, 62-63.

[4] For further reading see B Stefanova, ‘Between ethnopolitics and liberal centrism: the Movement for Rights and Freedoms in the mainstream of Bulgarian party politics’ (2012) 40 Nationalities Papers: The Journal of Nationalism and Ethnicity 767.

[5] For further reading see M Spirova, ‘The Bulgarian Socialist Party: The long road to Europe’ (2008) 41 Communist and Post-Communist Studies 481.

[6] Y Georgiev and M Trifonova, ‘Bulgaria’ in K Vida (ed) Strategic Issues for the EU10 Countries: Main Positions and Implications for EU Policy-making (Foundation for European Progressive Studies, Budapest 2012) 5.

[7] ATAKA is considered by some as extreme right or even ultranationalist. See for extreme right – S Katsikas, Negotiating Diplomacy in the New Europe: Foreign Policy in Post-Communist Bulgaria (I.B Tauris, London 2011) 64; M Meznik and T Thieme, ‘Against all Expectations: Right-Wing Extremism in Romania and Bulgaria’ in U Backes and P Moreau (eds) The Extreme Right in Europe: Current Trends and Perspectives (Vandenhoeck & Ruprecht, Göttingen 2012) 205–207. See for ultranationalist – J Bugajski, ‘Bulgaria: Progress and Development’ in S Wolchik and J L Curry (eds) Central and East European Politics: From Communism to Democracy (2nd ed, Rowman & Littlefield, Lanham 2011) 262

[8] RZS initially formed a parliamentary group but on 9 December 2009 it was dissolved after one of its members left it and its membership fell below the 10-members threshold. Its members continued their work as independent national representatives. Г Моева, 9 декември 2009, Парламентарната група на РЗС престана да съществува <http://dariknews.bg/view_article.php?article_id=447744> accessed 14 March 2015.

[9] Statement of Iliana Malinova Iotova on 14 November 2011 <http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+CRE+20111114+ITEM-018+DOC+XML+V0//EN&language=HR> accessed 14 March 2015.

[10] Decision № 12 of 13 December 2011 in Case № 11 of 2011, SG 99 of 16 December 2011.

[11] 27 January 2013, Bulgaria nuclear vote ‘invalidated by low turnout’ <http://www.bbc.com/news/world-europe-21217882> accessed 14 March 2015.

[12] Published 20 February2013 – 08:56, Updated 20 February 2013 – 15:46, Bulgarian prime minister quits following mass protests over electricity bills <http://www.euractiv.com/energy/bulgarian-prime-minister-resigns-news-517946> accessed 14 March 2015.

[13] Presidential Decree № 56 of 13 March 2013, SG 25 of 13 March 2013.

[14] Presidential Decree № 201 of 5 August 2014, SG 65 of 6 August 2014.

[15] See B Cholova and JM De Waele, ‘Populism in Bulgaria: The Politics of Resentment’ (2014) 38 Southeastern Europe 56, 65.

[16] Обобщена активност на гласуване за страната към 21:00 ч. <http://results.cik.bg/pi2013/aktivnost/> accessed 14 March 2015.

[17] Thursday 16 May 2013, Bulgaria’s election results disputed <http://www.enca.com/world/bulgarias-ex-premier-challenge-election-result> accessed 14 March 2015.

[18] Decision № 5 of 9 July 2013 in Case № 13 of 2013, SG 63 of 16 July 2013.

[19] National Assembly, Stenographic record of the 4th meeting, 29 May 2013.

[20] It must be noted that Volen Siderov, himself, voted ‘against’ in the actual vote for the formation of the Government. However, he was the only one to vote from ATAKA. The voting inactivity of the other national representatives took the form of passive support, instead of the active opposition that was proclaimed.

[21] E.g. ПИК, 9 September 2013, Левият Георги Близнашки: Кабинетът управлява без легитимност и кауза <pik.bg/левият-георги-близнашки-кабинетът-управлява-без-легитимност-и-кауза-news99276.html> accessed 14 March 2015.

[22] Law for amending the Law on the State Agency for National Security, SG 52 of 14 June 2013, 3.

[23] National Assembly, Decision for the election of a President of State Agency for National Security of 14 June 2013 (it did not get to be promulgated in the SG).

[24] Tsvetelia Tsolova, 14 June 2013, Bulgarians protests over media magnate as security chief <http://www.reuters.com/article/2013/06/14/us-bulgaria-government-idUSBRE95D0ML20130614> accessed 14 March 2015.

[25] National Assembly, Decision for annulment of the Decision for the election of a President of State Agency for National Security of 14 June 2013 of 19 June 2013, SG 54 of 21 June 2013, 2.

[26] National Assembly, Stenographic record of the 13th meeting, 19 June 2013.

[27] V Ganev, 3 October 2013, The Summer of Bulgarian Discontent <http://councilforeuropeanstudies.org/critcom/the-summer-of-bulgarian-discontent/> accessed 14 March 2015.

[28] Decision № 7 of 8 October 2013 in Case № 16 of 2013, SG 89 of 11 October 2013; Decision № 14 of 18 December 2013 in Case № 17 of 2013, SG 1 of 3 January 2014; Determination № 1 of 14 January 2014 in Case № 21 of 2013, SG        7 of 24 January 2014.

[29] Правен свят, 14 January 2014, КС прие за недопустимо искането на президента по решението за отмяна избора на Пеевски <http://legalworld.bg/34010.kspriezanedopustimoiskanetonaprezidentaporeshenietozaotmianaizboranapeevski.html> accessed 14 March 2015.

[30] D Cohen, 12 November 2013, For Sale: Bulgaria’s Constitutional Court <http://www.usnews.com/opinion/blogs/world-report/2013/11/12/bulgarias-constitutional-court-is-for-sale-amid-a-sea-of-corruption> accessed 14 March 2015.

[31] G K, 31 October 2013, Students on the barricades <http://www.economist.com/blogs/easternapproaches/2013/10/bulgaria> accessed 14 March 2015.

[32] 21 December 2013, Местан: Евроизборите ще покажат легитимността на правителството <http://novinite.bg/articles/59395/MestanEvroizboriteshtepokajatlegitimnosttanapravitelstvoto#sthash.7tXLB6vg.dpuf> accessed 14 March 2015.

[33] These are the figures only for the parties and coalitions that actually won seats in the EP. Резултати от избори за Европейски парламент 25.05.2014 г. за страната <http://results.cik.bg/ep2014/rezultati/index.html > accessed 14 March 2015.

[34] 28 May 2014, Нов протест пред парламента <http://bnt.bg/news/obshtestvo/novprotestpredparlamenta> accessed 14 March 2015.

[35] Determination № 3 of 17 July 2014 in Case No 11 of 2014, SG 61 of 25 June 2014.

[36] For further discussion on the BCC’s powers on that point see M Vatsov, European integration through preliminary rulings? The case of the Bulgarian  Constitutional Court, German Law Journal (Special Issue

on ‘The preliminary reference to the Court of Justice by Constitutional Courts’ M Dicosola, C Fasone & I Spigno (eds) forthcoming).

[37] Б Митов, 13 June 2014, Трима души са обвинени за готвено убийство на Пеевски <http://www.mediapool.bg/trimadushisaobvinenizagotvenoubiystvonapeevskinews221460.html > accessed 14 March 2015.

[38] Ibid.

[39] 25 February, Активисти на “Протестна мрежа” внесоха сигнал срещу “Пеевски-Василев-Бареков” <http://www.capital.bg/politika_i_ikonomika/bulgaria/2014/02/25/2249408_aktivisti_na_protestna_mreja_vnesoha_signal_sreshtu/ > accessed 14 March 2015.

[40] F Coppola, 30 June 2014, What On Earth Is Going On In Bulgaria? <http://www.forbes.com/sites/francescoppola/2014/06/30/what-on-earth-is-going-on-in-bulgaria/> accessed 14 March 2015.

[41] Ibid.

[42] K Hope, 22 June 2014, Bulgaria rushes to nationalise politically-connected bank <http://www.ft.com/intl/cms/s/0/cf0ed87a-fa2b-11e3-a328-00144feab7de.html#axzz3U1s9w3HB> accessed 14 March 2015.

[43] E Konstantinova, 29 June 2014, Bulgaria Has Resources to Stop Run on Banks, President Says <http://www.bloomberg.com/news/articles/2014-06-29/bulgaria-arrests-two-men-amid-efforts-to-stop-run-on-banks> accessed 14 March 2015.

[44] G K, 1 July 2014, Why the run on banks? <http://www.economist.com/blogs/easternapproaches/2014/07/bulgaria> accessed 14 March 2015.

[45] K Hope, M Arnold and N Buckley, 30 June 2014, Fears of Bulgarian financial crisis ease with central bank action <http://www.ft.com/cms/s/0/eb671570-004b-11e4-a3f2-00144feab7de.html#axzz3U1s9w3HB> accessed 14 March 2015.

[46] G Jones, 30 June 2014, EU approves Bulgaria credit line for banking system <http://www.reuters.com/article/2014/06/30/bulgaria-crisis-eu-idUSL6N0PB14Z20140630?feedType=RSS> accessed 14 March 2015.

[47] E Konstantinova and B Groendahl, 15 July 2014, Bulgaria Asks ECB to Supervise Banks as Crisis Festers <http://www.bloomberg.com/news/articles/2014-07-15/bulgaria-asks-ecb-to-supervise-banks-as-crisis-festers> accessed 14 March 2015.

[48] 12 July 2014, Цветан Василев откраднал 3,5 млрд. лв. от КТБ <http://www.monitor.bg/article?id=435586> accessed 14 March 2015.

[49] Ibid.

[50] 12 August 2014, KTB Majority Owner Tsvetan Vasilev Indicted, Sought through Interpol <http://www.novinite.com/articles/162679/KTB+Majority+Owner+Tsvetan+Vasilev+Indicted,+Sought+through+Interpol> accessed 14 March 2015.

[51] A Vasovic and T Tsolova, 11 March 2015, Serbian court overturns extradition for Bulgarian fugitive businessman <http://uk.reuters.com/article/2015/03/11/uk-serbia-bulgaria-corpbank-idUKKBN0M71V920150311> accessed 14 March 2015.

[52] 13 March 2015, Tsvetan Vasilev is no friend of mine: Serbian President Tomislav Nikolic <http://www.focus-fen.net/news/2015/03/13/365989/tsvetan-vasilev-is-no-friend-of-mine-serbian-president-tomislav-nikolic.html> accessed 14 March 2015.

[53] Л Границка, 16 July 2014, Нов държавен заем ще решава проблемите в КТБ <http://www.mediapool.bg/novdarzhavenzaemshtereshavaproblemitevktbnews222706.html> accessed 14 March 2015.

[54] Ibid.

[55] 5 June 2014, Bulgarian Co-ruling Party DPS Calls for Early Elections by end-2014 <http://www.novinite.com/articles/161086/Bulgarian+Co-ruling+Party+DPS+Calls+for+Early+Elections+by+end-2014> accessed 14 March 2015.

[56] Published 24 July 2014 – 10:05, Updated  8 January 2015 – 15:45, Bulgarian government resigns without nominating a Commissioner <http://www.euractiv.com/sections/eu-elections-2014/bulgarian-government-resigns-without-nominating-commissioner-303687> accessed 14 March 2015.

[57] 24 July 2014, National Assembly accepts resignation of Plamen Oresharski’s Government with 180 “yes” and 8 “against” votes <http://www.parliament.bg/en/news/ID/3221> accessed 14 March 2015.

[58] Presidential Decree № 200 of 5 August 2014, SG 65 of 6 August 2014.

[59] T Tsolova and M Williams, Troubled Bulgaria names law professor as interim prime minister <http://www.irishtimes.com/news/world/europe/troubled-bulgaria-names-law-professor-as-interim-prime-minister-1.1888281> accessed 14 March 2015.

[60] T Brady, 21 January 2013, Was ‘assassination’ attempt on Bulgarian politician a hoax? Gunman used gas pistol loaded with pepper spray that would not have killed opposition leader <http://www.dailymail.co.uk/news/article-2265805/Ahmed-Dogan-Was-assassination-attempt-Bulgarian-politician-hoax.html> accessed 14 March 2015.

[61] 19 January 2013, Bulgaria’s Ethnic Turkish Leader Resigns after Surviving Attempt on His Life <http://www.novinite.com/articles/147011/Bulgaria’s+Ethnic+Turkish+Leader+Resigns+after+Surviving+Attempt+on+His+Life> accessed 14 March 2015.

[62] Meglena Kuneva was a founding member of NDSV and after it came to power became a Chief Negotiator of Bulgaria with the EU. Later-on she became the Minister of European Affairs in Bulgaria until she was appointed Bulgaria’s first Commissioner at the EU.

[63] Kasim Dal was considered second in rank in DPS, which he co-founded with Ahmed Dogan. In January 2011, however, after blaming Ahmed Dogan for the decline of the party he left the party. 18 February 2011, Bulgaria’s Ethnic Turkish Party DPS Expels Dissenter <http://www.novinite.com/articles/125419/Bulgaria’s+Ethnic+Turkish+Party+DPS+Expels+Dissenter> accessed 14 March 2015.

[64] 20 December 2013, Bulgarian Rightists Seal Reformist Bloc Coalition <http://www.novinite.com/articles/156583/Bulgarian+Rightists+Seal+Reformist+Bloc+Coalition> accessed 14 March 2015.

[65] G K, 4 May 2014, A controversial newcomer could be kingmaker <http://www.economist.com/blogs/easternapproaches/2014/03/bulgaria> accessed 14 March 2015.

[66] VMRO- Bulgarian National Movement, the Agrarian National Union (not the same as the one forming part of the Reformist Bloc) and Movement “Gergiovden”.

[67] 18 August 2014, Bulgaria without Censorship Strikes Alliance with Lider Party <http://www.novinite.com/articles/162782> accessed 14 March 2015.

[68] NFSB was formed in May 2011 after its founder – the owner of SKAT TV station – separated from ATAKA. SKAT TV was used by the leader of ATAKA – Volen Siderov – to gain popularity with his TV show, also called ATAKA, and then join the political scene.

[69] 3 August 2014, Two Bulgarian Nationalist Parties Team Up for Early Elections <http://www.novinite.com/articles/162454/Two+Bulgarian+Nationalist+Parties+Team+Up+for+Early+Elections> accessed 14 March 2015.

[70] 12 January 2014, Bulgaria’s Ex-President Revives Leftist ABV Movement <http://www.novinite.com/articles/157170/Bulgaria’s+Ex-President+Revives+Leftist+ABV+Movement> accessed 14 March 2015.

[71] V Zhelev, 8 November 2010, Bulgarian president sets up new political group <https://euobserver.com/news/31220> accessed 14 March 2015.

[72] Published 14 January 2014 – 08:57,| Updated 08 January 2015 – 15:53, Influential MEP splits Bulgarian Socialist Party before EU election <http://www.euractiv.com/eu-elections-2014/prominent-mep-splits-bulgarian-s-news-532728> accessed 14 March 2015.

[73] A Krasimirov, 27 July 2014, Bulgaria’s Socialists pick new leader as election looms <http://uk.reuters.com/article/2014/07/27/uk-bulgaria-socialists-idUKKBN0FW0PS20140727> accessed 14 March 2015.

[74] Published 26 September 2014 – 08:15, Updated 8  January 2015 – 15:45, PES to hold congress and seek successor to Stanishev <http://www.euractiv.com/sections/eu-elections-2014/pes-hold-congress-and-seek-successor-stanishev-308723> accessed 14 March 2015.

[75] Резултати от избори за народни представители 05.10.2014 г. за страната <http://results.cik.bg/pi2014/rezultati/index.html> accessed 14 March 2015.

[76] Published: 07 November 2014 – 07:57, Updated: 08 January 2015 – 15:13, Bulgarian parties approve coalition agreement, cabinet <http://www.euractiv.com/sections/elections/bulgarian-parties-agree-coalition-agreement-cabinet-309849> accessed 14 March 2015.

[77] European Commission, Communication, 2015 European Semester: Assessment of growth challenges, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011, SWD(2015) 20 final to SWD(2015) 47 final, 26 February 2014, 14.

[78] European Commission, Press Release IP/14/1041, Bulgaria must allow bank customers to access their money, 25 September 2014 <http://europa.eu/rapid/press-release_IP-14-1041_bg.htm> accessed 14 March 2015.

[79] For a short appraisal by the Commission of the banking crisis see European Commission, Country Report Bulgaria 2015: Including an In-Depth Review on the prevention and correction of macroeconomic imbalances SWD(2015) 22 final, 26 February 2015, 17.

[80] 11 March 2015, Bulgaria PM: We will propose liquidator for CorpBank today <http://www.focus-fen.net/news/2015/03/11/365819/bulgaria-pm-we-will-propose-liquidator-for-corpbank-today.html> accessed 14 March 2015.

[81] 31 December 2014, 2014 Budget Deficit Projected at 3.7% of GDP <http://www.bta.bg/en/c/DF/id/984333> accessed 14 March 2015.

[82] 3 December 2014, Sinking of South Stream gives Brussels a headache <http://www.euractiv.com/sections/global-europe/sinking-south-stream-gives-brussels-headache-310529> accessed 14 March 2015.

[83] 5 March 2015, Bulgaria wants to revive Nabucco, Azerbaijan says pipeline name ‘not important’ <http://www.euractiv.com/sections/energy/bulgaria-wants-revive-nabucco-azerbaijan-says-pipeline-name-not-important-312645> accessed 14 March 2015.

[84] 11 March 2015, Political concerns mar Turkish Stream project <http://www.euractiv.com/sections/energy/political-concerns-mar-turkish-stream-project-312815> accessed 14 March 2015.

[85] S Okov, 25 February 2015, Bulgarian lawmakers back 8 billion-euro bond sale plan <http://www.chicagotribune.com/news/sns-wp-blm-news-bc-bulgaria25-20150225-story.html> accessed 14 March 2015.

[86] A Krasimirov and T Tsolova, Bulgaria approves 8 billion euro overseas borrowing plan <http://www.reuters.com/article/2015/02/25/us-bulgaria-debt-idUSKBN0LT18R20150225> accessed 14 March 2015.

[87] 23 February 2015, Bulgarian President Supports Government Proposal for BGN 16 B Debt <http://www.novinite.com/articles/166729/Bulgarian+President+Supports+Government+Proposal+for+BGN+16+B+Debt> accessed 14 March 2015.

[88] Sofia Globe, 22 December 2014, Barekov resigns as leader of ‘Bulgaria Without Censorship’ coalition <http://sofiaglobe.com/2014/12/22/barekov-resigns-as-leader-of-bulgaria-without-censorship-coalition/> accessed 14 March 2015.

[89] 6 March 2015, Bulgaria’s ABV Accepts Resignation of Leader Georgi Parvanov <http://www.novinite.com/articles/167038/Bulgaria’s+ABV+Accepts+Resignation+of+Leader+Georgi+Parvanov> accessed 14 March 2015.

[90] Committee on Legal Affairs, Report on the request for waiver of the immunity of Sergei Stanishev of 9 March 2015 (2014/2259(IMM)).

Croatia

Political change
I.1
What is the political context of the Eurozone crisis period in Croatia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

In December 2011, Croatia got a new Government as the result of the parliamentary elections. The new parliamentary majority consisted of the members of Kukuriku coalition, led by the Social-Democratic Party. Members of the Croatian Democratic Alliance, a moderate right wing political party, formed the previous Government. The new Prime Minister became Zoran Milanovic instead of Jadranka Kosor. The change of the Government, to a certain extent, represents the result of the financial crisis on which Croatia has been, huge deficit and high level of corruption and the fact that the employment rate is only 57%.

From a perspective of European integrations, the change of the Croatian Government was not particularly relevant, since both parties were very pro-European oriented, so there was no effect on Croatian progress into the European Union. The leaving Prime Minister Jadranka Kosor signed the Accession Treaty of Croatia itself.

The most important post-2008 date for Croatia is certainly 1 July 2013 when Croatia will become part of the European Union as the 28th Member State after long accession negotiations. The referendum for EU accession took place on 22 January 2012 and around 2/3 of the citizens who voted, voted in favour of the EU accession.

During 2013, Croatia will have to adjust its fiscal policy in accordance with EU requirements.

Cyprus

Political change
I.1
What is the political context of the Eurozone crisis period in Cyprus? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The impact of the financial crisis on Cyprus was the shift of the public’s and politicians’ attention from the ‘Cyprus dispute’ [1] to the economic condition and the public finance of the country. Cyprus ‘experienced’ three elections during this very unstable period: One presidential election in 2008, one parliamentary in 2011 and one presidential in February 2013 – all of them scheduled to take place in the respective dates.

The governmental system of Cyprus is presidential democracy. The executive power is exercised by the President and the Vice-President of the Republic,[2] as well as the Council of Ministers of the Republic of Cyprus, as provided in Art. 46 and 54 of the Constitution.[3] The legislative power is vested in the House of Representatives and is exercised by the House of Parliament (or House of Representatives) in accordance with Art. 61 of the Constitution of the Republic.[4] The Communal Chambers may also have legislative powers with regard to specific matters, as stipulated in Art. 87 of the Constitution of the Republic.[5]

In Cyprus, there are two different types of elections, which take place every five years. The one is the ‘presidential election’ through which the President of the Republic, head of the state and of the government, is elected directly from the people of Cyprus. Amongst his other powers, the President of the Republic appoints (and dismisses) the members of the Council of Ministers of the Republic (thus forming the government) as well as the independent state officials and judges of the Supreme Court and he has the right to veto any draft bills from becoming laws of the Republic. President Christofias of the AKEL party (adjacent to the left political ideology) won the presidential elections of 2008, while the Pro European and liberal conservative party DESI (Democratic Rally) and its president Nicos Anastasiades won the presidential elections of 2013, right before the signing of the ‘Loan Agreement’. Despite the ‘left’ parties’ pleas, no referendum has, so far, taken place, with reference to the crisis. The parliamentary (legislative) elections also take place every 5 years – with the last one taking place in May 2011. Among the many responsibilities of the Parliament figure the amendment of the Constitution, the enactment of legislation and the parliamentary scrutiny and control.[6] The House of Parliaments further influences the formulation of the economic and the financial policy of the Republic and is responsible for the investiture of the President of the Republic.[7]

In the 2011 Parliament elections the Democratic Rally (DISY) party (adjacent to the conservative political ideology) concentrated 34,28 % of the votes and won the elections. AKEL party was allocated 19 seats in the parliament, as opposed to the 20 of DISY, whereas DIKO (the Democratic Party, adjacent to the liberal political ideology) received 9 seats, EDEK 5 seats, the European party 2 seats and the Ecological Party 1 seat.[8] AKEL and DIKO formed a coalition government. The coalition collapsed in August 2011 following policy disagreements, leaving AKEL in a minority government.[9]

[1] The ‘Cyprus dispute’ refers to the ongoing conflict between the Republic of Cyprus and Turkey, over the Turkish occupied northern part of Cyprus.

[2] The position is currently vacant as it is reserved for a Turkish Cypriot.

[3] Article 46 of the Constitution of the Republic of Cyprus reads as: “The executive power is ensured by the President and the Vice-President of the Republic.

The President and the Vice-President of the Republic in order to ensure the executive power shall have a Council of Ministers composed of seven Greek Ministers and three Turkish Ministers. The Ministers shall be designated respectively by the President and the Vice-President of the Republic who shall appoint them by an instrument signed by them both. The Ministers may be chosen from outside the House of Representatives.[…]

The Council of Ministers shall exercise executive power as in Article 54 provided.[…]”

Art. 54 of the Constitution of the Republic of Cyprus reads as: “Subject to the executive power expressly reserved, under Articles 47, 48 and 49, to the President and the Vice-President of the Republic, acting either separately or conjointly, the Council of Ministers shall exercise executive power in all other matters other than those which, under the express provisions of this Constitution, are within the competence of a Communal Chamber, including the following:

(a) the general direction and control of the government of the Republic and the direction of general policy;

(b) foreign affairs as in Article 50 set out;

(c) defence and security, including questions thereof as in Article 50 set out;

(d) the co-ordination and supervision of all public services;

(e) the supervision and disposition of property belonging to the Republic in accordance with the provisions of this Constitution and the law;

(f) consideration of Bills to be introduced to the House of Representatives by a Minister;

(g) making of any order or regulation for the carrying into effect of any law as provided by such law;

(h) consideration of the Budget of the Republic to be introduced to the House of Representatives.

 (translation from: http://www.presidency.gov.cy/presidency/presidency.nsf/all/1003AEDD83EED9C7C225756F0023C6AD/$file/CY_Constitution.pdf)

[4] Article 61 of the Constitution of the Republic of Cyprus reads as: The legislative power of the Republic shall be exercised by the House of Representatives in all matters except those expressly reserved to the Communal Chambers under this Constitution.” (translation from: http://www.presidency.gov.cy/presidency/presidency.nsf/all/1003AEDD83EED9C7C225756F0023C6AD/$file/CY_Constitution.pdf)

[5] Art. 87 of the Constitution of the Republic of Cyprus reads as: “1. The Communal Chambers shall, in relation to their respective Community, have competence to exercise within the limits of thisConstitution and subject to paragraph 3 of this Article, legislative power solely with regard to the following matters: (a) all religious matters;(b) all educational, cultural and teaching matters;(c) personal status; (d) the composition and instances (βαθμούςδικαιοδοσίας – dereceleri) of courts dealing with civil disputes relating to personal status and to religious matters; (e) in matters where the interests and institutions are of purely communal nature such as charitable and sporting foundations, bodies and associations created for the purpose of promoting the well-being of their respective Community; (f) imposition of personal taxes and fees on members of their respective Community in order to provide for their respective needs and for the needs of bodies and institutions under their control as in Article 88 provided; (g) in matters where subsidiary legislation in the form of regulations or bye-laws within the framework of the laws relating to municipalities will be necessary to enable a Communal Chamber to promote the aims pursued by municipalities composed solely of members of its respective Community; (h) in matters relating to the exercise of the authority of control of producers’ and consumers’ co-operatives and credit establishments and of supervision in their functions of municipalities consisting solely of their respective Community, vested in them by this Constitution: Provided that (i) any communal law, regulation, bye-law or decision made or taken by a Communal Chamber under this sub-paragraph (h) shall directly or indirectly be contrary to or inconsistent with any by which producers’ and consumers’ co-operatives and credit establishments are governed or to which the municipalities subject, (ii) nothing in paragraph (i) of this proviso contained shall be construed as enabling the House of Representatives to legislate on any matter relating to the exercise of the authority vested in Communal Chamber under this sub-paragraph (h): (i) in such other matters as are expressly provided by this Constitution. (translation from: http://www.presidency.gov.cy/presidency/presidency.nsf/all/1003AEDD83EED9C7C225756F0023C6AD/$file/CY_Constitution.pdf)

 

[6] From the official website of the Parliament of the Republic of Cyprus: http://www.parliament.cy/easyconsole.cfm/id/146/lang/en/

[7] Ibid.

[8] See also: http://www.nsd.uib.no/european_election_database/country/cyprus/

[9] http://thecommonwealth.org/our-member-countries/cyprus/constitution-politics

Czech Republic

Political change      
I.1
What is the political context of the Eurozone crisis period in the Czech Republic? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

In February 2008, Presidential elections took place. At the time, the President used to be elected by Parliament. The candidates were incumbent President Klaus, and economist Jan Švejnar. In the first attempt (three rounds), neither of the candidates was elected (with Klaus missing one vote in the last round). The week after, a second attempt took place and Klaus was narrowly elected for the second five-year term. The elections divided Civic Democrats, as well as the governing coalition with Greens supporting Švejnar and Christian Democrats unable to agree on the support for either of the candidates. Failure to re-elect Klaus would have probably led to the fall of Prime Minister Topolánek and his coalition Government.

In 2008 the Lisbon Treaty ratification saga started. A group of members of the Chamber of Deputies (paradoxically members of the Civic Democrats, the party who hold the position of the Prime Minister and half of the seats in the Government, which negotiated and signed the Lisbon Treaty) filed a petition to the Constitutional Court for a preliminary review of the compliance of the Lisbon Treaty with the Constitution. The President joined the proceeding. The Court ruled that the petitioned parts of the Lisbon Treaty are in compliance with the Czech constitutional order (Lisbon Treaty I). Subsequently, the Chamber of Deputies and the Senate gave their consent to the Treaty on February 18, 2009 and May 6, 2009 respectively.

Until May 8, 2009 the Czech Government lead by PM Mirek Topolánek (Civic Democrats, a traditional conservative party and the main party on the right since 1992) was composed of Civic Democrats (81 seats in the Chamber of Deputies of the Parliament), Christian Democrats (13) and Greens (6). The Government did not have a majority (100 seats out of 200 in the Chamber of Deputies of the Parliament) and the coalition partners exercised disproportional influence in the Government. This second Topolánek Government was thus inherently unstable since its inception (the original vote of confidence was secured by the votes of two opposition MPs). Despite this fact, the Government passed its major reform of public finance (effective from January 1, 2008) amending 46 laws. Three new environmental taxes were created; the tax system was simplified; direct taxes were decreased, while indirect taxes increased; the average tax burden became around 21.3%. The reform also introduced patients’ fees, changed a price-setting scheme for medicaments, and reformed various social benefits. In 2008-09, two Deputies left the Greens and three Deputies from Civic Democrats formed a fraction, including one Christian Democrat,[1] with economic reforms and church restitutions being the major divisive issues. These changes further weakened the coalition Government.

In September 2009, a group of Senators (mostly from the Civic Democratic Party again) filed another petition to the Constitutional Court for a preliminary review of the compliance of the Lisbon Treaty with the Constitution. The Court ruled that also in the newly petitioned parts of the Lisbon Treaty, the Treaty was in compliance with the Czech legal order (Lisbon Treaty II). Despite the consent of three-fifth majorities in both chambers of the Parliament and two Constitutional Court judgments (the Court in obiter dictum indicated that the President was obliged to sign the Treaty promptly), the President refused to sign the Treaty unless the Czech Republic was given the same guarantees regarding the application of the Charter in CR as were given to the UK and Poland. CR was last to ratify. The Government therefore negotiated a political declaration adopted by the European Council in October 2009 that the Protocol 30 on the UK and Poland exemptions would be modified to include the Czech Republic as well.[2] President Klaus signed the Treaty, mentioning the pressure from the Constitutional Court and his on-going reservations, on November 3, 2009 and the ratification instrument was deposited ten days later with the Italian Government. On September 5, 2011 the Czech Government, in a letter from its Permanent Representative, submitted to the Council a proposal, in accordance with Article 48(2) TEU, for the amendment of the Treaties to add a Protocol concerning the application of the Charter to the Czech Republic. On May 22, 2013, the European Parliament adopted a resolution calling upon the European Council not to examine the change of Protocol 30 in regard to the Czech Republic’s “opt out” mentioning, among others, meanwhile emerging case law of the CJEU on the so-called opt outs for the UK and Poland.[3] Eventually, the ‘Czech exemption’ has not been included into the ratification of Croatian Accession Treaty as originally envisaged and with a new President elected in 2013 and a new Government appointed in 2014 (both of centre-left affiliations), the ‘Czech exemption’ has been buried.

Going back to Czech domestic politics in 2009, the division within Civic Democrats appeared to be crucial. President Klaus, who disliked Topolánek who succeeded him as the chairman of the party, which Klaus founded in early 1990s, retained significant influence over some members of the party. From January to June 2009, CR held the EU Presidency. During the Presidency, on March 24, 2009, the Social Democrats and the Communist Party with help of two Civic Democrats and two Greens voted non-confidence to the Government (it was already fifth attempt to vote non-confidence). Given that there was no majority in the Parliament, President Klaus upon an agreement between the governing coalition and the main opposition party, Social Democrats, mandated Jan Fischer, then the director of the Czech Statistic Office, to form a technocratic government until early Parliamentary elections. The Fisher Government took office on May 8, 2009.

The Constitution at the time did not provide for the possibility of voluntary dissolution of the Parliament by its own action (or by the President). Only more complicated variants existed. The Chamber of Deputies of the Parliament therefore followed a precedent from 1998 and passed a constitutional law on its own dissolution agreed to by the Senate and the President, with a view that early elections could take place in the Autumn. A group of MPs turned upon the Constitutional Court, which surprisingly annulled the constitutional law stating that it was not law at all as it lacked fundamental qualities of law, foremost general applicability.[4]

The elections to the Chamber of Deputies therefore took place in the regular term only. In the general elections on May 28-29, 2010, several new political parties gained seats in the Chamber of Deputies, particularly a conservative TOP 09, lead by Karel Schwarzenberg (former Foreign Minister representing the Greens) and Miroslav Kalousek (former leader of Christian Democrats) and a centrist and populist Public Affairs (Věci Veřejné), a truly new party with politically inexperienced MPs. These new parties gained momentum due to the financial crisis calling for fiscal responsibility and anti-corruption programme. New Civic Democrats’ leader Petr Nečas formed a government (effective from July 13, 2010) composed of Civic Democrats (53 seats in the Chamber of Deputies of the Parliament), TOP 09 (41), and Public Affairs (24). The Government called itself a “coalition for fiscal responsibility, rule of law and fight against corruption”, which also summarizes its programme. Despite a comfortable majority of 118 seats out of 200 seats in the Chamber of Deputies, the Government became soon unstable. The main clashing points were church restitutions and pension reform.

On October 23, 2010 Senate elections took place,[5] in which the Social Democrats gained majority (41 seats out of 81) for the first time in the history of the Senate traditionally dominated by Civic Democrats. The municipal elections, that took place at the same time, were narrowly won by Social Democrats.

In December 2010, Social Democrats unsuccessfully voted non-confidence to the Nečas Government. The first Government major crisis came in April 2011 as a result of corruption scandal within the junior coalition partner, Public Affairs.[6] After the leader of the party and another member were found guilty by the first instance court in April 2012, eight MPs left the party and formed a new party LIDEM (Liberal Democrats). Public Affairs left the coalition and a new coalition between Civic Democrats, TOP 09, and LIDEM was formed and received the vote of confidence (105 MPs out of 200). The new junior party was very unstable and made the coalition governance difficult (another crisis emerged in December 2012, when LIDEM left the Government after its leader Karolína Peake was recalled by the PM from her post of Defence Minister after only 8 days in the office due to a pressure from President Klaus and his supporters within Civic Democrats).

On January 1, 2012, The Constitutional Court issued its judgment in the Slovak Pensions case, proclaiming the judgment of the CJEU in the preliminary question in Landtova case to be ultra vires and therefore without effect in CR.[7] On October 20, 2012, Senate elections took place with Social Democrats enhancing their majority and the left parties gaining constitutional (three-fifth) majority. At the same time, Regional elections took place. Social Democrats won and formed regional governments in 11 out of 14 regions.[8] These failures of the governing coalition significantly weakened the Nečas Government.

In November 2012, the Parliament voted on major tax reform of the Government (mainly VAT increase). Given an internal opposition within Civic Democrats, but also other coalition parties, the Government connected the vote on the reform with a confidence vote. If the reform failed, it would mean a fall of Government. In order to solve the crisis, three MPs from Civic Democrats, who refused to vote for the reform, resigned from the Parliament in exchange for positions in state-owned private companies. In June 2013 the three former MPs were arrested and charged with corruption constituted in these acts. This fact contributed to the fall of the Nečas Government.

In January 2013, the outgoing President Klaus granted a controversial amnesty that, among others, stopped prosecution of number of people suspected from large financial frauds during the 1990s. According to the Constitution, an amnesty act needs a countersignature of PM, and by countersigning, the Government takes political responsibility (as the President is not politically accountable). The Government was divided over the issue (PM allegedly did not consult his action with the Government)[9] and many competing constitutional interpretation on what is the Government role in sanctioning President’s acts emerged. The opposition called the Parliament to vote non-confidence, however, this attempt failed once again. Further blow to the centre-right Government came with the presidential elections on January 25-26, 2013. First time ever direct general elections of president were won by Miloš Zeman,[10] who defeated Karel Schwarzenberg, conservative TOP 09 leader.

Miloš Zeman promptly (on April 3, 2013) finalized the ratification of the Council Decision on Art. 136 TFEU Amendment in a ceremony for which he “requested” attendance of Commission President Barosso to indicate the change of course towards the EU integration.[11] TOP 09, junior government party, attempted to use the momentum and urged for accession to the Fiscal Compact, threatening to leave the Government. However, as the momentum dissipated, they backed down.

On June 13, 2013 a major scandal lead to resignation of PM Nečas, which necessarily meant a fall of the whole Government.[12] By that time, the original majority of 118 seats out of 200, with which the Government started, did not exist anymore (11 MPs created three new political parties and another 6 were without political affiliation). Neither there was any other majority. The governing coalition nominated Civic Democrat Deputy Chairwoman and Chairwoman of the House of Deputies Miroslava Němcová for PM declaring a support of 101 (out of 200) MPs. Despite the declared majority for Němcová, President Miloš Zeman, who doubted such majority existed, designated Jiří Rusnok (former Finance Minister in Zeman Government in 2001-02, an economist, CEO of ING Pension Fund, and a member of the National Economic Council of the Government since 2010 – an expert advisory body of the Government) to form a new government. This was an unprecedented step from the President, given that CR is parliamentary democracy. The President, former leader of Social Democrats, elected in direct general elections unlike his predecessors, considered his mandate considerably strengthened by the fact of popular vote, while the Nečas Government was widely unpopular due to its fiscal austerity programme (tax increase, social benefits cuts, pension reform, etc.) and corruption scandals.[13] On August 7, 2013, the Government failed to pass vote of confidence and resigned. At the same time previously declared majority for Němcová ceased to exist. In reaction to the fact that no majority (either on right or left or for the technocratic government) existed, the Chamber of Deputies asked the President to dissolve the Chamber (the Constitution was changed to allow explicitly for such option) and the President, who is obliged by the Constitution to do so in such case, dissolved the Chamber on August 28, 2013 and set early elections for October 25-26, 2013.

Social democrats lead by Bohuslav Sobotka won the general elections (50 seats in Chamber of Deputies), although with much less share of votes than expected, followed closely by a new protest movement party ANO of billionaire Andrej Babiš (47 seats). Communists were third (33 seats), followed by TP 09 (26 seats), Civic Democats (16 seats), another new protest movement party Úsvit (14 seats) and Christina Democrats (14 seats). The former coalition parties were utterly defeated. A new center-left government of PM Sobotka composed of Social Democrats, ANO, and Christian Democrats was appointed in January 2014. It declares a turn in Czech European politics, pledging to accede to the Fiscal Compact and banking union and work towards adoption of euro.

In November 2013, the Czech central bank started massively selling Czech koruna to decrease its value fearing a risk of deflation in 2014. The central bank pledged to keep a koruna to euro ratio at 27:1 (in comparison to 25:1 before the intervention; koruna dropped by 4.4.% in one day).[14] This move was criticized by politicians, while economists were divided.[15]

Let me briefly describe major political and economic reforms in the Czech Republic during the Euro-crisis. In general, despite the corruption scandals and unstable majority of the Nečas Government, it more or less successfully passed most of its economic reform programme. Also, the Finance Ministry was rather stable – lead between 2007 and 2013 (with an exemption of the technocratic government in May 2009 – July 2010) by Miroslav Kalousek from the conservative TOP 09. Although the debt rose from 37.8% of GDP in 2010 to 48.5% of GDP in 2013, the reasons rest in growing mandatory expenses, mainly pensions burden on the one hand, and stagnating GDP growth on the other hand. The Government passed church restitutions (financial separation of the church from the state negotiated since 1989), enhanced the independence of police and prosecution, and passed a major Civil Code reform. It failed to start up economic growth (its austerity measures, including social benefits cut, and limitation of investments affected the recovery from a foreign trade decline (80% of trade exchange is with the EU, mostly with Germany), did not incite the citizens to join its pension reform; and although it stopped the gradual increase of annual deficits, the debt has grown considerably. Most of the economic reforms between 2009-2013 were recommended by the EU as part of EDP started with CR in 2009 with an aim to be concluded by 2013.

Regarding the Eurocrisis measures, there has been more support for the ESM (only Public Affairs, Communists, and a part of Civic Democrats were against) than for the Fiscal Compact (supported by Social Democrats and TOP 09 only), the banking union (denied by all), and the Euro Plus Pact among the political parties. Majority of political parties argued a vital dependence of CR on a healthy Eurozone, given that almost 80% of CR export goes to the EU, mostly Germany. Moreover, the arguments go, all major Czech banks are daughters of banks with the seat in Belgium, France, Austria, or Italy and so the entire banking system is closely connected to the Eurozone. From the debates, it can be seen that support or refusal of the Eurocrisis-incited plans mostly depends on whether immediate obligations follow for CR from a plan. Any plans requiring transfer of competences or financial assistance have been difficult to defend. This must be assigned to a long-term opposition to the EU integration from then President Klaus who were able to influence part of the leading right party, the Civic Democrats. The Civic Democrat PMs Topolánek and Nečas had to reconcile their position with this fraction within the party. Even the pro-European TOP 09 has been hesitant to support measures that would limit fiscal sovereignty of CR, while Social Democrats feared that any pledge to strict fiscal policies would limit their ability to deliver their promises once they win elections and form government. Various polls results indicated historically low support to further integration making any transfer of competences to the EU politically very difficult.

A general position of CR towards the Eurocrisis measures was summarized in the Government’s document of 2013[16] “Stabilisation and future of the EMU: A Czech Republic contribution to the European debate.” In the section “Addressing fiscal policy failure and non-compliance with EU rules on coordination of fiscal and economic policies,” CR emphasizes: “The basic principle of coordination should be a differentiated approach towards non-euro area and euro area countries. For the former, the existing framework of coordination of fiscal and economic policies is sufficient. For the latter, the coordination should take into account the degree of risk that particular Member State poses to the smooth functioning of the monetary union. It is possible to discuss additional options how to motivate euro area Member States threatening the well functioning of the monetary union to implement the necessary reform measures to the benefit of the whole. Member States whose economic situation is stable and their public finances sustainable should remain free to decide on their own fiscal policies and economic reform measures as long as they observe the relevant EU law. After all, they are the ones best suited and legitimized to choose the most appropriate approach.”[17]

[1] On the other hand, four former Social Democratic Deputies left the party and occasionally supported the Government.

[2] See the European Council Conclusions, Brussels Oct. 29-30, 2009, available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/110889.pdf.

[3] Judgment of the Court of Justice of 21 December 2011 in Joined Cases C-411/10 and C-493/10, especially paragraph 120. See European Parliament resolution of 22 May 2013 on the draft protocol on the application of the Charter of Fundamental Rights of the European Union to the Czech Republic (Article 48(3) of the Treaty on European Union) (00091/2011 – C7-0385/2011 – 2011/0817(NLE)). Available at: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2013-209.

[4] Parliamentary Elections (Case Melčák) Pl. ÚS 27/09 [2009] No. 318/2009 Coll., English translation available at: http://www.concourt.cz/view/726. In general, the Constitutional Court cannot review constitutional amendments. A constitutional amendment, once enacted, changes the constitution and thus changes the referential framework for the Constitutional Court. However, according to the Court, a constitutional amendment that breached procedural and material requirements of constitutional revision (Art. 9/1,2 of the Czech Constitution), the eternity clause included, could not be considered constitutional law at all.

[5] Senators are elected for a term of six years. Every two years one-third of the Senate is renewed. Senate does not vote on a budget and on a vote of confidence (that means the Government is accountable to the Chamber of Deputies only). The Senate may veto ordinary laws (a majority of 101 members of Chamber of Deputies may override the veto; the President disposes of the same power). Constitutional laws require three-fifth majority of both Chambers.

[6] In connection with another alleged corruption (in the State Fund for Environment, due to which a Environment Minister resigned), Social Democrats called for another vote of non-confidence, which the Government survived again.

[7] Pl. ÚS 5/12 Slovenské důchody (Slovak Pensions) XVII [2012]. See Tichý, L., Dumbrovský, T. Ústavní soud ČR mezi dvěma právními řády: od interpozice k nové evropské doktríně (The Constitutional Court of the Czech Republic between two legal orders: From interposition towards new European doctrine), Právní rozhledy 2013, 21(6): 191-198.

[8] Communists formed a coalition government in 1 region, and Civic Democrats governed in 1 region (Prague – elections too place in 2010). In 2013 the Civic Democrat mayor of Prague was replaced by a mayor from TOP 09 with support of Social Democrats, thus Civic Democrats lost their last region.

[9] It complicated the position of Schwarzenberg in the presidential race, who served as a Deputy PM in the Government.

[10] Zeman was a Social Democratic PM 1998-2002. After new leaders of Social Democrats, despite left having majority, did not support Zeman in the indirect presidential elections of 2002 (Klaus was elected instead), Zeman left the party and set up his own leftist party. Zeman has had a similar influence on the Social Democratic party as Klaus has exercised over Civic Democrats even after he left the party. He has tried to exploit this support with Social Democrats and Communists voting for confidence to Rusnok Government appointed by Zeman).

[11] Zeman and Barosso also hoisted the EU flag at the Prague Castle, the seat of the President.

[12] Several high profile politicians and civil servants were arrested and charged with abuse of office and corruption, including the head of the PM cabinet and close advisor (and mistress above all) Jana Nagyová.

[13] Which was rather a result of reforms to make prosecution and police more independent on politicians than any unusual amount of corruption among state officials.

[14] Czechs Play Koruna Hardball With Unlimited Interventions , Bllomberg, Nov. 8, 2013, http://www.bloomberg.com/news/2013-11-07/czechs-play-koruna-hardball-as-intervention-triggers-record-drop.html.

[15] Očima expertů: Měnová intervence ČNB. Komu pomůže a komu ublíží? , Peníze.cz, Nov. 15, 2013, http://www.penize.cz/makroekonomika/275985-ocima-expertu-menova-intervence-cnb-komu-pomuze-a-komu-ublizi. Zeman: ČNB intervencí zpomalila vstup do eurozóny, Týden.cz, Feb. 18, 2014, http://www.tyden.cz/rubriky/byznys/cesko/zeman-cnb-intervenci-zpomalila-vstup-do-eurozony_298587.html#.UwmBYyjycqg.

[16] New center-left government appointed in Jan. 2014 has not comprehensively formulate its policy yet. As mentioned above, a certain turn can be observed with the government’s pledge to accede to the Fiscal Compact, join the banking union, and work towards adoption of euro.

[17] Government of the Czech Republic, Stabilisation and future of the EMU: A Czech Republic contribution to the European debate, April 24, 2013, available at: http://www.vlada.cz/assets/evropske-zalezitosti/dokumenty/CZ_non_paper_on_EMU.pdf.

Estonia

Political change
I.1
What is the political context of the Eurozone crisis period in Estonia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Estonian political landscape remained stabile throughout the crisis. Prime Minister Andrus Ansip formed three governments, in 2005, 2007 and 2011, respectively. His party, the Reform Party maintained popularity in spite of economic reforms and stringent austerity measures taken during the crisis, winning regular parliamentary elections both in 2007 and 2011. After nearly nine years in office, on 26 March 2014 Andrus Ansip resigned as Prime Minister and a new government was formed. The new Prime Minister Taavi Rõivas leads a coalition consisting of two political parties – the Reform Party and the Social Democratic Party. The latter replaced in the government the Pro Patria and Res Publica Union. Effectively conducted economic policy enabled Estonia to adopt the Euro on 1 January 2011, in the midst of the economic crisis.            

Finland

Political change      
I.1
What is the political context of the Eurozone crisis period in Finland? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

During this period there has been three Councils of State (governments): Prime Minister Vanhanen (II), period 19.4.2007–22.6.2010; Prime Minister Kiviniemi 22.6.2010–22.6.2011, and Prime Minister Katainen 22.6.2011–, all relying on a majority in the Parliament. Since 2008, parliamentary elections have been held once (17 April 2011). Prime Minister Vanhanen’s second Government and Prime Minister Kiviniemi’s Government were formed by the same parties (The Center Party, the National Coalition Party, the Greens and the Swedish People’s Party) except for the change of Prime Minister, following the resignation of Prime Minister Vanhanen from the post of the chairman of the Center Party. On 12 June 2010 the party elected Mari Kiviniemi as the new chairperson, and this change was reflected in the Government. Prime Minister Katainen’s Government is formed by the National Coalition Party, the Social Democrats, the Greens and the Swedish People’s Party. The Left Alliance also served in the Government until 25 March 2014.

The parliamentary election campaign before the general election in April 2011 “was regarded as more dynamic than in elections of recent years. The high level of public engagement was typically attributed to the economic crisis and the rise of the True Finns party, which was reportedly gaining support from voters disillusioned with the leading established parties.” (OSCE/ODIHR Election Assessment Mission Report 2011) According to the observers, there “was polarization between the positions of the True Finns party and other parties. Topics included international issues such as – – the financial crisis in Europe, with the True Finns Party being the most Euro-skeptic. The rise in popularity of the True Finns party caused much media discussion of their priorities and their potential role in a government coalition also played a role in the campaign.” (Ibid.)

The adoption of the Portuguese aid package coincided with the Parliamentary elections in April 2011. Voter turnout in the elections was 67 %. As indicated already in the polls before the elections, the True Finns party was the winner of elections (39 seats after election out of a total of 200, indicating a huge increase of 35 seats when compared with the situation prior to the elections). It gained 15 % more votes than in the previous elections. Subsequently, all other key parties lost voters, most critically the Center Party of Finland (seats after election 35, – 16), the party of both Prime Minister Vanhanen and Kiviniemi. The current Prime minister party, the National Coalition Party, turned into the largest party (seats after election 44, -6) in the Parliament.

Thus, the election resulted in a clear power shift in Parliament. It also turned government formation into an exceptionally difficult exercise for Finnish conditions. The elections were held in April, and a new government took up office as late as in June. The current Government is a large coalition known as the ‘rainbow government’ or the ‘six-pack’, an arrangement between the National Coalition Party (Prime Minister Jyrki Katainen’s party), Social Democratic Party of Finland (holding other key positions including the posts of the Minister of Finance and for Foreign Affairs), Left Alliance, Green League, Christian Democrats in Finland, and the Swedish People’s Party in Finland. Even if contacts were made between the future Prime Minister and the True Finns, the latter ultimately refused to undertake responsibility in the Government, which placed the Euro-sceptic party in opposition. Naturally, the euro crisis has provided it with plenty of opportunities to challenge the Government’s EU policies.

In current Finnish politics some commitments made prior to the elections continue to affect Finnish positions. For example, a key promise given by the Social Democratic Party during the electoral campaigning was that Finland would not lend money without collateral; a promise it has struggled to keep in Government. Even if not genuinely attracted by this commitment, this has been the solution that the Prime Minister has needed to respect as the price for preserving his own position and keeping his government together.

In the current Parliament the True Finns Party has basically opposed all the decisions connected to the euro crisis, questioning the constitutionality of these decisions in Finland, too. The other large opposition party, the Center Party of Finland, has not been that categorical, but has continued to question the choices of the Government, even if some of them also bear a connection with decisions made during its own lengthy period in power.

Since the Constitution plays a significant role in both the political and legal culture in Finland, constitutional challenges have been visible in everyday decision-making as concerns relating to national sovereignty, the financial competence of Parliament and the democratic legitimacy of the exercise of financial powers.

France

Political change      
I.1
What is the political context of the Eurozone crisis period in France? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Elected on May 6, 2007[1], President Nicolas Sarkozy’s right wing party “UMP” could rely on a center and right-wing coalition majority in both Houses of Parliament until September 2011, when partial elections took place in the Senate[2]. These elections resulted in a majority shift in the Senate[3], benefiting a left, far left and greens coalition led by current President François Hollande’s left party “PS”. The PS and its allies subsequently won the Presidential elections (May 6, 2012)[4], and the Legislative elections at the National Assembly (Assemblée Nationale, June 17, 2012)[5].

The ratification of the Fiscal Compact was arguably the first of the Euro-zone crisis instruments to be politicized on a large scale, with a notable and mediatized opposition between the two main parties of the political spectrum: the UMP and the PS. It became one of the political issues of the presidential elections. As a candidate to the Presidency of the Republic, François Hollande promised that if he were elected, he would renegotiate the Fiscal Compact and introduce a growth and employment dimension in the European anti-crisis instruments design. After the victory of François Hollande, the Fiscal Compact was ratified[6] but reinterpreted in terms allowing for the vote of an organic law[7] instead of the Constitutional amendment sought after by former President Sarkozy. (See also question 53). However, the fact that the Treaty was eventually signed prompted the opposition of the far left[8].

The idea to enshrine a “Golden Rule” limiting budgetary deficits had already been supported by President Sarkozy before the debates on the Fiscal Compact. In March 2011, his government already proposed such a constitutional amendment[9]. However, it lacked the parliamentary majority[10] necessary on the basis of Article 89 Constitution for the final adoption of the amendment (3/5th of both Houses of Parliament gathered in Congress)[11] (see also question III.2). The right-wing government had then envisaged to by-pass the Congress and pass the amendment through referendum, were Nicolas Sarkozy re-elected[12].

[1] http://www.elysee.fr/la-presidence/nicolas-sarkozy/

[2] http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000000815090&dateTexte=&categorieLien=id

[3] http://www.interieur.gouv.fr/Elections/Les-resultats/Senatoriales/elecresult__senatoriales_2011/%28path%29/senatoriales_2011/index.html ; http://www.vie-publique.fr/actualite/alaune/senatoriales-2011-consulter-resultats-ligne.html ; http://www.lemonde.fr/politique/article/2011/09/25/pour-la-premiere-fois-de-son-histoire-le-senat-bascule-a-gauche_1577644_823448.html

[4] http://www.interieur.gouv.fr/Elections/Les-resultats/Presidentielles/elecresult__PR2012/%28path%29/PR2012/FE.html

[5] http://www.interieur.gouv.fr/Elections/Les-resultats/Legislatives/elecresult__LG2012/%28path%29/LG2012/FE.html

[6] Loi autorisant la ratification du traité sur la stabilité, la coordination et la gouvernance au sein de l’Union économique et monétaire (23 octobre 2012): http://www.senat.fr/dossier-legislatif/pjl12-021.html

[7] http://www.senat.fr/dossier-legislatif/pjl12-043.html

[8] http://lepartidegauche38.org/?q=content/manifestation-contre-le-tscg

[9] http://www.senat.fr/dossier-legislatif/pjl10-499.html

[10] http://tempsreel.nouvelobs.com/politique/20110830.OBS9484/regle-d-or-accoyer-deconseille-a-sarkozy-de-convoquer-le-congres.html

[11] http://www.assemblee-nationale.fr/connaissance/revision.asp

[12] http://www.lefigaro.fr/politique/2012/02/14/01002-20120214ARTFIG00669-regle-d-or-sarkozy-et-fillon-veulent-un-referendum.php (February 2012)

Germany

Political change      
I.1
What is the political context of the Eurozone crisis period in Germany? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

 

In 2008, the German Government under Chancellor Angela Merkel was formed by the Christian Democrats (CDU) and the Social Democrats (SPD). In this period of time, Germany had to deal with effects which arose from the crash of the bank “Lehman Brothers”. Many German citizens suffered severe losses in this time due to their engagement in risky assets sold to them by their banks in Germany. Subsequently, several court judgments obliged the banks to pay damages to their clients because they had faultily advised them.

 

After the federal elections in 2009, the Christian Democrats (CDU) and the Liberals (FDP) governed the Federal Republic of Germany. The chancellor was again Angela Merkel. In this period of time, the direct Greek aid package was adopted. This was approved by a clear majority in the parliament. Chancellor Merkel expressed in a speech at the Bundestag in 2010 a sentence which had become famous afterwards. She said: “If the Euro fails, Europe fails” (“Scheitert der Euro, scheitert Europa”). From her point of view, there is no alternative (“alternativlos”) to the financial assistance programmes for European countries such as Greece. Despite these clear words, the opposition in parliament (Social Democrats (SPD), the Greens (Bündnis 90/Die Grünen) and the Left (Die Linke)) criticized that the Bundestag did not receive sufficient information regarding the implementation of this political aim. Most members of the opposition were also in favour of a financial transaction tax in order to force banks to participate in the costs of the financial crisis. This proposal was rejected by the Federal Government. The German federal state also had to rescue some banks, such as the “WestLB” and the former “Hypo Real Estate” for which public bad banks had been created. In 2015, the German Bundesbank published a report which stated that since the beginning of the crisis the German Federal State has already invested Euro 236 billion to rescue banks. In addition, the Länder had to pay additional public money to save banks, in particular banks of the Länder (for example the Länder Hamburg and Schleswig-Holstein for the “HSH Nordbank”).

 

Germany’s participation in the rescue packages has raised many concerns. Amongst other reasons these concerns had led to the foundation of a new political party, the “Alternative for Germany” (“Alternative für Deutschland”) or briefly AfD. The beginning of this party in 2013 constituted the creation of the “Electoral Alternative 2013” (“Wahlalternative 2013”) whose manifesto was endorsed by economists, journalists, and business leaders, half of whom were professors and three-quarters of whom had academic degrees. They also had support from some of the complainants at the Bundesverfassungsgericht against Euro Crisis measures. After having participated in an election in Lower Saxony the AfD also competed against other parties in the 2013 federal elections and achieved a result of nearly 5 % of the votes. It was only due to the 5 % barrier that the AfD did not enter the German Bundestag but it was seen as a remarkable success for the young party. In 2014, the AfD participated in the elections for the European Parliament and achieved 7.1% of the national votes which allowed them to send 7 MEPs to Brussels. The AfD is a member of the European Conservatives and Reformists (ECR) group in the European Parliament. The AfD had further success in election campaigns and is today represented in some Länder parliaments, amongst them Saxony, Bremen, Thuringa and Brandenburg. In 2014 and 2015, the party faced extreme inner-party conflicts between a right-wing faction mainly focusing on topics in migration policy and a faction focusing on Euro criticism and financial politics. In July 2015, the right-wing faction won the internal battle which caused many exits of party members, amongst them one of the founders and some MEPs. Some members of the AfD who left the party created a new party called “Alliance for Progress and Renewal” (“Allianz für Fortschritt und Aufbruch”), or briefly ALFA. Until today, they did not participate in elections but some of their members are members of Länder parliaments because they cancelled their membership of the AfD and became members of ALFA while keeping their mandate as an elected MP.

 

In the 2013 federal elections, the Liberals (FDP), which were the junior partner of the Christian Democrats in the Merkel-government from 2009 to 2013, failed to achieve the minimum threshold of votes (5 %). Chancellor Merkel is since then leading a coalition of Christian Democrats (CDU) and Social Democrats (SPD). The discussion about the Euro crisis became intensive after the election of a new government in Greece under Prime Minister Tsipras. In particular, the contrary positions of the Greek Finance Minister Giannis Varoufakis and the German Finance Minister Wolfgang Schäuble raised much media attention. Schäuble did not want to exclude the Exit of Greece from the Eurozone (so-called “Grexit”) which had become a well accepted opinion in Germany after the ambiguous positions and behaviours of Greek members of the Government and negotiators. The discussion in Germany focused on the limits of the German contribution to financial assistance programmes.

 

During the whole period of the Euro Crisis, the data of the German economy was all in all positive. The federal state benefited from the high demand for German securities which allowed the Finance Minister to issue German securities with very low interest rates. The German yearly deficit financing could be reduced being positive in 2014 (surplus of 0.27 %).

Greece

***General observations:

For the completion of large parts of this questionnaire (TFEU amendment, ESM, Fiscal Compact) only the parliamentary debates in the Parliament Plenum were used as a source. The debates in the special parliamentary committees are only available in video.

Political change     
I.1
What is the political context of the Eurozone crisis period in Greece? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Since 2008, Greece has experienced major social and political developments that are exceptional, if not unique, for a western state. Since the end of the colonels’ dictatorship (1967-1974), two parties have traditionally been at the center of the political scene: PA.SO.K. (Pan-Hellenic Socialist Movement, center-left, socialist) and N.D. (New Democracy, center-right). The last decade before the economic crisis, Greece has experienced a period of outstanding economic growth. However, the Greek economy and the State mechanism have always been characterized by important structural deficiencies, mainly caused by the establishment of a clientelist system, corruption, and the constant failure of reforms.[1]

After five years of Government by the center-right N.D., political and social crisis in Greece was already obvious from the violent riots of December 2008, following the murder of a young anarchist by the police in Athens.[2] The center-left socialist party PA.SO.K. won the early elections of October 2009 with the slogan “there is money”, promising that it would not proceed to any austerity measures, even though N.D. warned that such measures were indispensible.[3] However, almost immediately after the elections, Eurostat revealed the real data on the Greek deficit, together with the statistics juggling committed by the N.D. Government.[4] Thus, the Government of PA.SO.K. was taken by surprise and finally decided to proceed to austerity measures in March 2010 (see section X). However, in the autumn of 2009, the credit rate of the Greek State was devaluated by the rating agencies. In April 2010, the Greek Government officially asked for financial assistance by the IMF and the EU. A loan agreement of 110bn. was concluded, accompanied by the so-called Memorandum of Understanding, which stipulated measures of unprecedented austerity as a condition for the financial assistance to Greece.[5] Violent protests and general strikes followed.[6] This important shift in the government program was considered approved by the Greek people via the local elections in November 2010, won by PA.SO.K.[7] According to the loan agreement, each disbursement of the loan to Greece would take place by a unanimous Eurogroup decision, depending on the evaluations of the reforms to which the Greek Government has proceeded by the so-called “troika”, composed by a representative of the ECB, the IMF and the European Commission. This new technocrat institution has thus acquired extraordinary powers, and Giannis Drosos, Professor of Constitutional Law, has talked about a new way of functioning of the Constitution.[8]

The reforms agreed between the Government and the “troika” proved to be difficult to implement in practice. The following months many general strikes were called, local crises and conflicts between citizens and the police took place, protests became more and more violent and incidents like political suicides repeatedly shocked the public opinion. In June 2011, after having obtained the vote of confidence by Parliament, the Government, while an enormous and violent protest was unfolding in the center of Athens, voted a new austerity package contained in the Medium term budgetary framework for the period 2012-2015.[9] In July a new bailout of 109 bn. for Greece was agreed.[10] Meanwhile, an important social movement that had started through the internet, following the example of mobilizations in Spain, was getting more and more important.[11] In October 2011, a “haircut” of 50% of the Greek debt was agreed between the Greek Government, the European leaders, the IMF and banks, with the voluntary participation of the private sector (PSI).[12] The Prime Minister announced a referendum because new austerity measures were demanded as a condition for the loaning agreement. This decision had been immediately translated by the press as posing to the Greek people the dilemma between Euro and drachma.[13] However, under pressure of European leaders and the criticism by a large part of the political world in Greece, Giorgos Papandreou retired the referendum proposal on the 3rd of November.[14] Some days later, he resigned in order for the President of the Republic to form a coalition government.[15]

Indeed, on the 11th of November a new Government was formed with the support of PA.SO.K., N.D., and the far right populist LA.O.S. (Popular Orthodox Rally). Loukas Papademos, a technocrat recognized by the European partners for his service as a vice-president of the ECB, was appointed Prime Minister. [16] The main task of the new Government was to make sure that Greece would fulfill its obligations vis-à-vis its European partners and then to lead the country to elections. In February 2012, and while another violent protest with a very high participation was unfolding outside the Greek Parliament, another austerity package was voted, in order to satisfy the conditions set by the Memorandum of Understanding for the second bail-out agreement. Many deputies of the Government coalition refused to vote further austerity measures and were suppressed from the parliamentary groups of their parties, thus weakening importantly the parliamentary majority supporting the Government.[17] Restructuring of the Greek debt was concluded in April 2012 and elections were announced for the 6th of May.

The elections of the 6th of May marked a new era in Greek political life. For the first time, a total of seven parties were elected in Parliament, of which three for the first time (AN.EL. – Independent Greeks, a right wing patriotic party, DIM.AR. – Democratic Left, a left party formed by deputies who had seceded from SY.RIZ.A. and which held a more moderate position than the latter, and Chrysi Avgi – Golden Dawn, the ultra-nationalist party. The rest of the parties in Parliament were N.D., SY.RIZ.A., PA.SO.K., and the Communist Party, K.K.E.). The two traditional big parties, N.D. and PA.SO.K., obtained a very low percentage (32,03% in total combined, instead of 77,39% in the elections of 2009), whereas the third party of the Papademos Government coalition, LA.O.S., did not obtain seats in Parliament. On the other hand, the parties opposed to the governmental austerity policies obtained an important increase of their percentage. It is remarkable that SY.RIZ.A., a left party composed by components ranged from center left to extreme left, quadrupled its 2009 percentage by obtaining the 16,78% of the votes. Chrysi Avgi obtained a 6,68% of the votes, whereas, in the previous elections it had obtained only a percentage that did not exceed the 0,25%.[18]

The results of the elections were interpreted as showing the anger of the Greek people against corruption and the policies of austerity pursued by previous Governments. The social dimension of the crisis was a key factor. Indeed, the political world was literally divided between the Memorandum and the anti-Memorandum forces and so was society.[19] After the shocking results of the May elections, PA.SO.K. and N.D. also integrated in their political programs the renegotiation of the terms of the Memorandum and the adoption of social policy measures.[20]

The great dispersion of votes in the 2012 elections made it impossible to form a government that would enjoy social legitimacy, as SY.RIZ.A. refused to participate in a government that would not renounce the commitment of the country to the Memoranda. The leaders of the two big parties had provided personal letters to the Eurozone partners, where they expressed their personal commitment to the obligations of the Greek state contained in the bailout agreements.[21] Therefore, in the lack of agreement between the two first parties, an interim Government under the Prime Minister Panagiotis Pikrammenos, former president of the Council of State, led the country to new elections on the 17th of June. During the pre-election period, European leaders and the media constantly stressed the danger of a “Grexit”. According to the President of the Republic, the German Chancellor Angela Merkel, in a personal conversation, went as far as to propose to him the holding of a referendum about the remaining of the country in the Euro.[22] In the June elections, a polarization of the electoral body was observed and N.D. and SY.RIZ.A. obtained higher percentages (29,66% and 26,89% respectively).[23] Hence, a coalition government was formed with the participation of the three pro-European parties, N.D., PA.SO.K., and DIM.AR, under the chief of the N.D. party, Antonis Samaras. The mandate of the Greek people was interpreted as imposing the remaining of the country in the Eurozone, thus enhancing the necessary structural reforms, while renegotiating the harsh austerity conditions set by the European partners.[24]

From June 2012 until the summer of 2013, the political situation in Greece seemed relatively appeased. Of course, general strikes, protests, and local conflicts between citizens and the police did not cease to exist. Moreover, racist attacks against immigrants became more and more recurrent. Nevertheless, the Greek people seemed to be used to the functioning of the Government, a delicate combination of decisions between the Government coalition and the “troika”. However, a general degradation of the rule of law has been observed and the executive is systematically infringing constitutional rights, such as the freedom of expression.[25] Furthermore, the excessive use of “administrative acts of legislative content”[26] and other emergency legislation procedures have caused a degeneration of the functioning of the Parliament which is unprecedented since the fall of the military junta in 1974. On the 12th of June 2013, the closure of the public radio and television by the Government authorized with such an act, and despite the disagreement of the Government parties, caused the reaction of the press and the political world in Greece and abroad.[27] On the 21st of June 2013, DIM.AR. (Democratic Left, the left party) announced that it does not any more support the Government coalition, which is now only supported by N.D. and PA.SO.K.. The public television issue was the main cause of disagreement between left and the government.[28]

It is important to note that Greece in 2013 was passing its sixth consecutive year of economic recession. Greek employees have suffered a harsh reduction of their income,[29] while unemployment has reached 27,4% of the population[30] (while it was at 8,3% in 2007)[31] and 62,5% for under 25 years old.[32] According to the statistics of NGOs, Greece was the country in Europe with the highest percentage of increase in suicides.[33]

The socio-economic situation did not change much in the following years, despite the fact that the statistics of the Greek economy slightly ameliorated. In May 2014 the local, regional and European elections took place and were perceived as a victory for SY.RIZ.A., but also for extreme right parties like Chrysi Avgi. This result was confirmed in the elections of January 2015 that took place after an unsuccessful voting for the President of the Republic. SY.RIZ.A. collected 36.3% of the votes, against 27.8% for N.D. Chrysi Avgi was the third party, with 6.3% of the votes. After its victory, SY.RIZ.A. formed a government coalition with the patriot and populist party AN.EL. Shortly after its nomination, the SY.RIZ.A.-AN.EL. Government announced that it will not apply the Economic Adjustment Programme agreed by the previous Government and that it does not recognize the “troika” as an institutional interlocutor. Since, the Government is negotiating with the country’s creditors (the “institutions”) for a new agreement on the Greek debt and a “Grexit” seems possible.

[1] Xenophon Contiades and Ioannis Tassopoulos, “ The Impact of the Financial Crisis on the Greek Constitution”, in Xenophon Contiades (ed.), Constitutions in the Global Financial Crisis (Ashgate 2013),  chapter 7, 195.

[2] Vaios Papanagnou, “December 2008: the hate”, To Vima, 6 December 2011, http://www.tovima.gr/vimagazino/views/article/?aid=433521.

[3] Giannis Pretenteris, “There is money!” [in Greek], To Vima, 27 May 2012, http://www.tovima.gr/opinions/article/?aid=459615.

[4] See Xenophon Contiades and Ioannis Tassopoulos, op. cit., 195. N.D. had estimated the deficit of 2009 to be at 5.4% GDP, whereas Eurostat at 15.4% GDP! However, the chairman of the Greek Statistics’ Authority, the authority that provided the relevant data to Eurostat, is suspected by the Greek justice for artificially inflating the deficit numbers. Cf. Evangelos Vallianatos, “The Greek Lesson”, The Huffington Post, 12 December 2012, http://www.huffingtonpost.com/evaggelos-vallianatos/the-greek-lesson_b_2279413.html.

[5] See the questions in the section “Member States receiving financial assistance”.

[6] During one protest three employees of a private bank who could not participate in the general strike died because of a fire in the building where they were working. The fire was put during the protests. This incident shocked the public opinion. Cf. http://tvxs.gr/news/%CE%B5%CE%BB%CE%BB%CE%AC%CE%B4%CE%B1/%CF%84%CF%81%CE%B5%CE%B9%CF%82-%CE%BD%CE%B5%CE%BA%CF%81%CE%BF%CE%AF-%CE%B1%CF%80%CF%8C-%CE%B1%CF%83%CF%86%CF%85%CE%BE%CE%AF%CE%B1-%CF%83%CE%B5-%CF%84%CF%81%CE%AC%CF%80%CE%B5%CE%B6%CE%B1-%CF%83%CF%84%CE%BF-%CF%83%CF%8D%CE%BD%CF%84%CE%B1%CE%B3%CE%BC%CE%B1

[7] See the interview of the Prime Minister Giorgos Papandreou to the journal To Vima on the 14th of April 2010, http://archive.pasok.gr/portal/resource/contentObject/id/c6d1bb17-ee7b-4a54-a152-2b46216c249f. In this interview, the Prime Minister conferred clear political character to the local elections.

[8] Giannis Drosos, «ΤοΜνημόνιοως σημείο στροφής του πολιτεύματος [The ‘Memorandum’ as a turning point of the regime]», www.constitutionalism.gr, published in The Book’s Journal, Vol. 6, April 2011, 42.

[9] “Greece austerity vote and demonstrations”, The Guardian, 29 June 2011, http://www.guardian.co.uk/world/blog/2011/jun/29/greece-austerity-vote-demonstrations.

[10] “EU leaders agree €109bn Greek bail-out”, The Financial Times, 21 July 2011, http://www.ft.com/cms/s/0/952e0326-b3af-11e0-855b-00144feabdc0.html#axzz2Wbu1s9TY. The bail-out was extended to 130 bn. with the Eurogroup decision of the 21st of February 2012.

[11] The Greek Indignant was a movement without a specific political identity, protesting against austerity and corruption. In this movement people from all the spectrum of the political world participated and thus was accused of increasing the influence of populist parties, and especially the Golden Dawn. See the article Antonis Liakos, “’Indignants’ and Golden Dawn”, I Avgi, 16 September 2012, http://archive.avgi.gr/ArticleActionshow.action?articleID=713898.

[12] See section “Member States receiving financial assistance”.

[13] “Papandréou nous impose de choisir entre lui et la drachme”, Le Monde, 3 November 2012, http://www.lemonde.fr/crise-financiere/article/2011/11/03/un-referendum-pour-choisir-entre-papandreou-et-le-drachme_1597547_1581613.html.

[14] “Referendum: “Yes” or “No” to the new loan agreement”, Ta Nea, 31 October 2011,  http://www.tovima.gr/politics/article/?aid=427794. For the reactions of European leaders and especially Merkel and Sarkozy, cf. http://www.tovima.gr/finance/article/?aid=427899. The referendum was considered by the pro-European parties and certain members of PA.SO.K. as an indication of untrustworthiness of the Government towards the European partners. The left winged parties and other important personalities, on the other side, criticized the choice of the referendum because it would be presented as raising the dilemma of the remaining of the country inside Europe or no, a dilemma which, according to them, was artificial. For the reactions of the Greek political world to the referendum proposal cf. http://www.cosmo.gr/Epikairotita/Ellada/Politiki/epithesh-twn-kommatwn-sthn-apofash-toy-papandreoy-gia-dhmopshfisma.1433995.html.

[15] “Eurozone crisis: Greek PM George Papandreou to resign”, The Guardian, 6 November 2011, http://www.guardian.co.uk/world/2011/nov/06/greece-george-papandreou.

[16] Reuters, PROFILE-Greek Prime Minister Lucas Papademos, 23rd November 2011, www.reuters.com/.

[17] http://www.guardian.co.uk/business/2012/feb/13/eurozone-crisis-greece-austerity-package-vote.

[18]             For the results of the elections of May 2012, cf. the site of the Minister of Internal Affairs, http://ekloges.ypes.gr/v2012b/public/index.html#{%22cls%22:%22main%22,%22params%22:{}}. 

[19] Cf. also Xenophon Contiades and Ioannis Tassopoulos, op. cit., 212. The authors say that the pro and anti Memoranda cleavage has substituted the traditional division between Left and Right.

[20]            For the program of N.D., cf. “The 18 propositions of N.D. for the economy”, Ta Nea, 31 May 2012, http://www.tanea.gr/news/greece/article/4726301/?iid=2. For the program of PASOK, cf. http://www.pasok.gr/portal/theseis_index.jsf. It is indicative that Antonis Samaras, for example, has promised the restitution of the lowest pensions and of some allowances to the levels of 2009, the institution of an urgent unemployment allowance, the abstention from the further reduction of salaries in the private sector, the reduction of the taxes and other measures that would improve the economic situation of the middle and the lower class households.

[21] For the exigency of the personal commitment of the Greek political leaders, cf. “Ultimatum Juncker for the 6th tranche”, To Vima, 22 November 2011, http://www.tovima.gr/politics/article/?aid=431375.

[22] “The Presidency insists on the Merkel proposition for a referendum on the remaining in the Euro”, To Vima, 18 May 2012, http://www.tovima.gr/afieromata/elections2012/article/?aid=458414. This fact was denied by the German Chancellor but the Greek President of the Republic insisted on its truth.

[23] See the official site of the Minister of Internal Affairs http://ekloges.ypes.gr/v2012b/public/index.html#{%22cls%22:%22main%22,%22params%22:{}}.

[24] “Greece parties agree coalition government”, BBC News, 20 June 2012, http://www.bbc.co.uk/news/world-europe-18515185.

[25] See for example the press release of the Amnesty International on the 20th of June 2013, concerning the prosecution of the conscientious objectors in Greece, available at http://www.amnesty.org.gr/co-exioglou. See also the article on Reuters considering the arrest of a Greek journalist after having published the “Lagarde list”, “Greek editor stands trial over Swiss accounts list”, Reuters, 29 October 2012, http://www.reuters.com/article/2012/10/29/us-greece-corruption-list-idUSBRE89S0EP20121029. Finally, see the public statement of Amnesty International on the 22nd of March 2013, concerning the excessive use of police force against the protestants who object to the gold mining operations in the North of Greece, http://www.amnesty.org/en/library/asset/EUR25/004/2013/en/c81397ca-0895-4f7a-92b5-82370134de8f/eur250042013en.html. Some of these protestants are now considered by the police to have formed a “criminal organization” and thus their phone calls and their phone conversations with various journalists have been recorded. See http://tvxs.gr/news/ellada/mazikes-parakoloythiseis-dimosiografon-logo-xalkidikis.

[26] On this legal instrument and its normally exceptional character cf. question III.1.

[27] “Greek coalition in disarray after state broadcaster’s closure”, The Guardian, 12 June 2013, http://www.guardian.co.uk/world/2013/jun/12/greek-coalition-disarray-broadcaster-closure. Despite the decision of the Council of State, declaring the interruption of public radio and television illegal, ERT remains closed.

[28] Cf. http://www.reuters.com/article/2013/06/21/us-greece-idUSBRE95K0IJ20130621 , http://www.lemonde.fr/europe/article/2013/06/25/nouveau-gouvernement-de-coalition-en-grece-pour-garantir-la-stabilite_3436423_3214.html.

[29] See Eurostat,

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Living_standards_statistics.

[30] Source: Greek Statistics Authority, http://www.statistics.gr/portal/page/portal/ESYE.

[31] Source: Eurostat,

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Unemployment_rate,_2000-2011_(%25).png&filetimestamp=20120502100338.

[32] “Eurostat: 62,5% youth unemployment in Greece”, To Vima, 31 May 2013.

[33] To Vima, 8 December 2011, http://www.tovima.gr/society/article/?aid=433980. The research concerns the first five months of 2011 in relation to the first five months of 2010.

Hungary

Disclaimer: in most of the cases where parliamentary debates are quoted, the Government has a two-third majority of the seats in the Parliament. In these cases there was no need of compromise between the governmental and opposition parties, not even in those cases, in which the European legislation had to be implemented by an act voted with the two-third majority of the MPs. Therefore these debates had no effect on the final decisions in most cases.

Political change     
I.1
What is the political context of the Eurozone crisis period in Hungary? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

A political crisis started in Hungary in 2006 when Prime Minister Ferenc Gyurcsány’s speech about his party (social democrat MSZP) and Government lying to the public was leaked.[1] He did not resign, however serious protest and street riots were held against him all over the country, especially in the capital city, Budapest.

The Government lost the support of the public immediately, and during the next three years the Prime Minister became marginalized in his own party, becoming unable to finish the four years term. A new prime minister, Gordon Bajnai was elected by the majority of the Parliament who formed a ‘technocrat Government’ in April 2009.

As Prime Minister, Bajnai began the consolidation of the economy of the country by introducing fiscal harshness and austerity decisions. His actions were not popular with the Hungarian voters and he was still linked to former Prime Minister Gyurcsány, who symbolized the lies of the 20 years of democratic system to the people. Bajnai did not run for office in the 2010 April elections. Conservative central right party Fidesz won 52% of votes and more than two-thirds – 263 out of 386 – of seats in the Parliament. This was called a ‘polling booth revolution’ by the newly elected Prime Minister Viktor Orbán.[2]

Fidesz was backed by a two-third majority of votes in Parliament and started to reform the whole legal system of the country[3]. From an economical aspect the most important decision from the first year of the new Government was the nationalization of private pension savings of citizens.[4]

This stabilized the economy for the year of 2011 but did not help to solve the long term problems that caused instability in the system. According to Article 24 paragraph 5 of the former Constitution, the Constitution could have been amended by a two third majority of the votes of the MPs, but a process of forming a new constitution requires the votes of four fifth of the MPs. After being elected and holding two thirds of the seats in the Parliament, the Fidesz Government amended the four fifth rule to a two thirds rule and then initiated a process for a new constitution. Leftish opposition parties opposed this decision saying that the Government amended the constitution to ignore their opinions on the necessity of a new constitution. They refused to take part in this process, therefore the new Fundamental Law was delivered exclusively by Fidesz. It was only the far right Jobbik party that took part in the Parliamentary debates on the Fundamental Act that was adopted after five weeks of debate on April 25, 2011, the first anniversary of the 2010 elections when Fidesz won.[5] This process was harshly criticized internationally[6]. The Fundamental Act of Hungary was voted by the Parliament on 25 April 2011, on the first anniversary of governing coalition Fidesz-KDNP, and went in force on 1 January 2012.

[1]http://news.bbc.co.uk/2/hi/europe/5359546.stm

[2]http://www.economist.com/blogs/easternapproaches/2010/07/hungary

[3]http://www.bbc.co.uk/news/world-europe-21792644

[4]http://www.ft.com/cms/s/0/0e01c370-06de-11e0-8c29-00144feabdc0.html#axzz2ScHepWYg

[5]For a detailed analisys see the Opinion on the New Constitution of Hungary by the Venice Commission, Strasbourg 20 June 2011, http://lapa.princeton.edu/hosteddocs/venice-commission-hungarian-constitution.pdf

[6]See for example: http://hungarianspectrum.wordpress.com/2013/03/19/kim-lane-scheppeles-testimony-at-the-helsinki-commission-hearing-on-hungary-full-text/ and http://www.europarl.europa.eu/meetdocs/2009_2014/documents/libe/pr/935/935253/935253en.pdf

Ireland

Political change     

I.1 What is the political context of the Eurozone crisis period in Ireland? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?[1]

Considering the depth of the economic downturn, the cuts in government spending and the dramatic rise in unemployment in Ireland since 2008 the political system has remained remarkably stable with a single change of government and limited demonstrations of popular discontent.

There have been three relevant nationwide political campaigns since the beginning of the financial crisis, the second referendum to approve the Lisbon Treaty in 2009 (‘Lisbon II’), the general election of 2011 and the referendum to approve the Fiscal Treaty in July of 2012.[2] Outside structured political events there has been some extra-parliamentary political activity and protests. Finally much of the Government’s dealings with public sector workers has also been the focus of much political activity culminating in a comprehensive wage and productivity agreement.

A referendum to adopt the Treaty of Lisbon was held on 12 June 2008 and was rejected by 53.4% of the votes cast.[3] Following a number of ‘guarantees’ in various forms and of uncertain legal nature the Treaty was again put before the Irish people on 2 October 2009, this time with the public voting in favour by 67.1% of the votes cast,[4] a swing of 20.5%. A more vigorous campaign on behalf of the ‘Yes’ side, the disintegration of one of the main anti-Treaty organizations, changes in the broadcasting rules regarding referendum coverage, and the sharp downturn in the Irish economy all contributed to this change in public opinion. The importance of a positive result to economic recovery was stressed by the pro-treaty campaign. Fears regarding workers rights and the potential impact of the Treaty of Lisbon on the minimum wage were raised as issues by anti-Treaty campaigners and in particular the weak nature of the assurances that were obtained by the Irish government following the initial rejection of the Treaty. However this was vigorously contested by the ‘yes’ side.[5]

A series of political events triggered by the entry of Ireland into a programme of financial assistance and mismanagement by the Taoiseach Brian Cowen of his coalition lead to the withdrawal of the junior party (the Green party) in early 2011 and the holding of a general election in May of that year. The terms of the bailout were a central issue in the campaign and in particular the interest rate of 5.8% was considered punitive.[6] The two main opposition parties, Fine Gael and Labour argued for a renegotiation and a lowering of the rate which was achieved in parallel with an amendment of the terms of the Greek bailout in July of 2011.[7] The opposition parties focused on reversing one particularly iconic measure associated with the bailout and its austerity regime, the reduction in the minimum wage, a promise that was carried out when in Government in July of 2011.[8]

While perhaps not as widespread, frequent or intense as in other peripheral Member States the crisis in Ireland has produced a number of protests. Two general protests against austerity measures organised by the trade union movement took place in February 2009[9] and in November 2010[10] drawing up to one hundred and fifty thousand protestors. Other protests against specific policies or measures have also taken place. One of the earliest of such protests was a march by older people against the withdrawal of an automatic entitlement to a medical card (allowing for free medical services) to retired people.[11] Three separate protests by third level students over the possibility of reintroducing third level fees took place in October of 2008,[12] November 2010 (which turned violent at times)[13] and in November of 2011.[14] Students also occupied the offices of various politicians and those of the Department of Social Protection.[15] Finally, the introduction of a ‘household charge’, a precursor to the introduction of a general property tax became an issue around which popular opposition to the government and the policy of austerity focused and drew a crowd of 5000 in Dublin. This protest took place outside the party conference (‘Ard Fheis’) of the largest government party (Fine Gael).[16] Various other localised protests included a general protest in Donegal[17] and at the Labour Party (the junior Government party) conference in Galway. Branches of the Occupy movement also appeared in Dublin[18] and Cork, where a building in the city centre was occupied.[19]   In November of 2012 teachers in Dublin staged a protest against cuts in the education budget generally and more specifically regarding the pay differential between newly qualified teachers and other colleagues.[20]

Much political comment and activity has centred on the treatment of public sector workers. During the economic boom there was an increase in the numbers employed in the Irish public service and a significant rise in wages, particularly amongst higher earners. A significant reduction in the public sector wage bill was a key condition in the Programme of Financial Assistance. After a number of unilaterally imposed cuts to wages, rises in the employee contribution to pensions and recruitment freezes the Government and the major public sector trade unions negotiated the Croke Park agreement (named after the venue where it was concluded) promising neither mandatory job losses nor further pay cuts in exchange for greater productivity and flexibility. The ‘Public Service Agreement 2010-2014’ has been a major plank in the state’s industrial relations policy and budgetary policy. The Croke Park Agreement is not a legal document but rather operates at the level of a political agreement a fact that has been confirmed by the High Court.[21] Recently the Government has sought to replace and extend the Agreement with the Croke Park II an agreement that was initially rejected but later, after amendments, accepted by a majority of Unions.[22]

[1]              Much of the answer to question I.1 draws on work completed in November 2012 as part of a research project on the impact of the Euro crisis on Ireland and in particular on social legislation.

[2]              Note that amendment of Bunracht na hÉireann (the Irish constitution) requires a popular referendum, not all of which are relevant to the Eurocrisis per se (although the financial crisis has triggered a general period of political and legal reform in the state). Thus referenda on rights of children and the holding of enquiries by parliamentary committees have also taken place in the relevant period.

[3]              Turnout of 53.13%.

[4]              Turnout of 58.9%.

[5]              Stephen Quinlan, ‘The Lisbon Experience in Ireland: ‘No’ in 2008 but ‘Yes’ in 2009 – How and Why?’ (2012) 27 Irish Political Studies 139, 145 ff.

[6]              Conor Little, ‘The General Election of 2011 in the Republic of Ireland: All Changed Utterly?’ (2011) 36 West European Politics 1304, 1308.

[7]              Council of the European Union, Statement by the Heads of State or Government of the Euro Area and EU Institutions (Brussels, 21 July 2011).

[8]              Social Welfare and Pensions Act 2011, s 22.

[9]              Huge Protest over Irish Economy’ (BBC News, 21 February 2009)  <http://news.bbc.co.uk/2/hi/europe/7903518.stm> accessed 20 October 2012.

[10]             Thousands march against austerity measures’ (RTE News, 29 November 2010)  <http://www.rte.ie/news/2010/1127/economy.html> accessed 20 October 20112.

[11]             Fine Gael medical card motion defeated’ (RTE News, 23 October 2008)  <http://www.rte.ie/news/2008/1022/budgethealth.html> accessed 20 October 2012.

[12]             10,000 students at fees protest’ (RTE News, 22 October 2009)  <http://www.rte.ie/news/2008/1022/fees.html> accessed 20 October 2012,

[13]             Gardaí, students clash in Dublin’ (RTE News, 3 November 2010)  <http://www.rte.ie/news/2010/1103/education.html> accessed 20 October 2012.

[14]             Thousands of students hold Dublin protest over fees’ (Irish Times, 16 November 2011)  <http://www.irishtimes.com/newspaper/breaking/2011/1116/breaking15.html> accessed 21 October 2012.

[15]             Nine students arrested after Galway protest ’ (RTE News, 30 November 2011)  <http://www.rte.ie/news/2011/1130/galway.html> accessed 21 October 2012‘Maynooth students refuse to leave TD’s office’ (RTE News, 3 December 2011)  <http://www.rte.ie/news/2011/1203/education.html> accessed 21 October 2012 and ‘Student leaders in protest over fees’ (RTE News, 30 November 2011)  <http://www.rte.ie/news/2011/1129/students.html> accessed 21 October 2012

[16]             Maire O’Halloran, ‘Thousands Protest against Household Charge’ Irish Times (Dublin) 7.

[17]             ‘Thousands of Families with Empty Chairs at Christmas’ TD Tells Protest’ (Donegal Daily, 3 December 2011)  <http://www.donegaldaily.com/2011/12/03/thousands-of-families-with-empty-chairs-at-christmas-td-tells-protest/> accessed 21 October 2012.

[18]             ‘Occupy Dame Street’ protest in Dublin’ (RTE News, 10 October 2011)  <http://www.rte.ie/news/2011/1008/damestreet.html> accessed 21 October 2012.

[19]             Occupy movement takes over Cork building’ (RTE News, 3 January 2012)  <http://www.rte.ie/news/2012/0103/occupy.html> accessed 21 October 2012.

[20]             Teachers from Dublin Schools protest over new pay structures’ (RTE News, 24 October 2012)  <http://www.rte.ie/news/2012/1024/teachers-pay-protest.html> accessed 25 October 2012.

[21]             Holland v Athlone Institute of Technology (n 153).

[22]             ‘Unions mollified by Haddington Road concessions’ Sunday Business Post (Dublin, 26 May 2013) Home

Italy

Political change     
I.1
What is the political context of the Eurozone crisis period in Italy? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The center-right coalition led by Berlusconi (PdL) won the elections of 2008 conquering the widest margin in terms of parliamentary seats in Italy’s republican history.

But a series of internal dynamics undermined this success: in brief, firstly one of its components, led by the then President of the Chamber of Deputies Fini, left the PdL in 2010; secondly, the coalition was electorally defeated in the local elections of May 2011; soon after, the referenda of 12 and 13 June 2011 went against some political choices of the government (not related, in any case, to the Eurozone crisis), and were perceived as a failure for it.

During the summer of 2011 Italy witnessed a worsening of the economic and financial crisis, due to the increased spread on government bonds, which led to the ECB’s letter of the 5 August (see question X.10 and X.11); and this despite the measures already adopted in June 2011 with the Decree n. 98/2011, containing most of the financial manoeuvres necessary to achieve a balanced budget in 2014.

The interaction between the political and financial crisis became evident in the widespread skepticism of the major financial players and of some supranational and foreign authorities towards the resilience of the Italian economic system. This attitude determined, at the end of July 2011, a major increase in the interest rates of the Italian public debt bonds, bringing with it the need to bring forward to 2013 the goal of achieving a balanced budget (Decree 138/2011).

The opposition and a part of the media believed[1] that the main causes of this skepticism lay with the poor credibility of Berlusconi’s government, whose international image was already tarnished due to his political and personal misadventures. Furthermore, within the ruling coalition and the government itself conflict increased, as emblematic in the distance between the Prime Minister and the Minister of Economy and Finance Giulio Tremonti, also on the merits of the possible measures to be taken to address the financial emergency and for the revitalization of the country.

A clear split within the political majority became evident on 11 October 2011, when the lower Chamber (Camera dei Deputati) rejected by one vote the 2010 State Administration General Statement bill («rendiconto generale dello Stato per l’esercizio finanziario»): that did not imply – as for formal, and widely used and misused, votes of confidence/no-confidence – a legal obligation to resign, but led to a necessity of “parliamentary monitoring of the continuance of such confidence”[2] . This monitoring took place on 14 October, when the Camera dei Deputati formally approved, with 316 votes in favour and 301 against, the motion of confidence presented by the government to verify the persistence of the majority.

But as a consequence of this situation of impasse, the President of the Republic became «the main actor on the stage»[3] . He firstly launched two severe warnings in close succession (26 October and 1 November 2011) on the need to take «decision, albeit unpopular … in the national and in the European interest», and on his «constitutional duty to verify the conditions for the realization of this perspective», given the «further deterioration of the Italian position within the financial markets».

He then marked with an increasing number of communications, meetings, notes and statements («informal talks with the major components of the opposition and majority forces») the course of action for a formal vote, on 8 November 2011, of the same State Administration General Statement bill rejected a month before (with the absence of the opposition, in order to ensure the approval but at the same time demonstrating that the government did not have the absolute majority), and, the day after, for the announcement of Berlusconi of his willingness to resign after the approval of the Stability Law (Law 196/2009).

This approval arrived on 11 November, again with the decision of the opposition not to engage in filibustering, due to a «sense of responsibility towards the country»; on 12 of November Berlusconi resigned.

After only two days of consultations with political and social groups, and without elections, on 16 November Professor Mario Monti, recently nominated Senator-for-life in accordance with article 59.2 of the Constitution, presented the members of the new government, all external to the political parties. They were sworn in and obtained the confidence of the Senate on the same day, with the support, as mentioned, of all the political groups except the Lega Nord (281 votes in favour and 25 against), a record. Two days after, the Camera dei Deputati also voted its confidence (556 votes in favour and 61 against) to this ‘technical’ government of so called ‘national commitment’.

The Monti government fully exercised its functions until the end of 2012 (the natural end of the legislature being the Spring 2013), when (6 December) the center-right coalition of the PdL left the majority; on 8 December 2012, after a meeting between Prime Minister Mario Monti and President Giorgio Napolitano, the former announced through the latter his resignation after the approval of the Stability law.

On 21 December 2012, after such approval, the government remained in office as usual for the current business until the settlement of the new Chambers and the birth of the new government.

But the elections of the end of February 2013 gave a rather complex result, even complicated by the often criticized Election law n. 270/2005: this led to a sort of equilibrium, not in terms of seats but surely in terms of political influence, between the two traditional main coalitions, with a good result of the new populist Movement led by comedian Beppe Grillo.

The new, and somehow unexpected, impasse led to several unprecedented moves.

Firstly Italy saw a re-election (for the first time in the Italian history) of Giorgio Napolitano as the President of the Republic: in particular, he announced to accept this unprecedented option under the same conditions of responsibility and commitment towards the country by the main parties, in the national and in the European interest, already expressed months before at the time of the crisis of the Berlusconi IV government.

Then, after the failure of the first mandate to form a government offered to MP Bersani, the leader of the center-left coalition which had the majority of the Camera’s seats (but not of the Senate), Napolitano constituted two small Commissions of so called wisemen (renowned experts on institutional and economic affairs) for the assessment of the reforms to be considered as urgent for the country.

He then offered the mandate to Enrico Letta (PD) for the construction of a government with bi-partisan support and members, from both the center-left and the center-right coalitions.

In turn, Enrico Letta also constituted a Commission for Constitutional reforms, composed of around 40 experts, which worked during the summer and then published a complete series of reports (both a common and individual ones),[4] trying to prompt new institutional reforms in Italy by 2015.

More recently, the process has been accelerated by the decision of the Constitutional Court (n. 1/2014)[5] to strike down part of the contested electoral law (n. 270/2005), and by the comprehensive proposal of amendments to the standing orders of the Chamber of Deputies,[6] although the issue dealing with budget and the oversight on the fiscal policy have not been included.

[1]               See for instance http://www.economist.com/blogs/charlemagne/2011/11/italy-under-imf-supervision.

[2]               As expressed by Valerio Onida, one of Italian leading constitutional scholars, in an opinion then cited directly by the President of the Republic Napolitano.

[3]               T. Groppi, I. Spigno, N. Vizioli, The Constitutional Consequences of the Financial Crisis in Italy, in X. Contiades (ed.), Constitutions in the Global Financial Crisis. A Comparative Analysis, p. 102.

[4]               All published at the website http://riformecostituzionali.gov.it/documenti-della-commissione/relazione-finale.html.

[5]               http://www.cortecostituzionale.it/actionSchedaPronuncia.do?anno=2014&numero=1.

[6]               See on this the report of the works of the “Giunta per il regolamento” of the Chamber, 12 December 2013, available at: http://documenti.camera.it/leg17/resoconti/commissioni/bollettini/html/2013/12/12/15/comunic.htm.

Latvia

Political change      
I.1
What is the political context of the Eurozone crisis period in Latvia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Before the economic crisis the last parliamentary elections were held in 2006. During the crisis there were two elections – ordinary elections in 2010 and emergency elections in 2011.[1] There are 100 places in the Parliament of Latvia and elections are held every four years and the MPs are elected by proportional representation with a 5% threshold. Latvia has a multi-party system.

Electoral developments

On 13 January 2009 big demonstrations took place asking the President to dismiss the Parliament due to the general dissatisfaction with the way the Government was dealing with the crisis (around 10 000 people participated); but these demonstrations remained without results. However on 20 February 2009 then Prime Minister Ivars Godmanis resigned. As the reason he mentioned the lack of cooperation from the coalition members TP and ZZS.[2] On 12 March 2009 Valdis Dombrovskis became the new Prime Minister. He established an unsteady and not very comfortable coalition. In general he benefited from being outside the Government before and from having opposed the stabilisation programme before for it being insufficient.[3] He managed to achieve an almost symbolic meaning of being a ‘new figure’ capable of dealing with the mistakes of previous governments. Therefore he enjoyed a broad mandate to act and this allowed him to successfully carry out austerity measures without significant opposition.[4]

In 2010 a new political alliance consisting of National Party (Tautas partija) withdrew from the coalition leaving prime minster at the time, Valdis Dombrovskis, in a minority coalition. The minority coalition continued working comparatively successfully but there of course were problems with getting political support for new legislation, inter alia the draft laws implementing austerity measures.

On 2 October 2010 the next parliamentary elections took place. The spectrum of political parties noticeably changed. One of the previously main political forces National Party (Tautas partija) which had 23 places in Parliament after the 2006 elections was liquidated before the 2010 elections due to the negative response to this party expressed by the society and in the press. Three parties together established a political union called the Unity (Vienotība) with Valdis Dombrovskis as a candidate for the position of Prime Minister and this union included some of the previous members of the National Party. The Unity provided a counterweight to the left-wing Harmony Centre (Saskaņas centrs) mostly representing Russian voters. The Unity won the elections and Valdis Dombrovskis became the Prime Minister again. Regarding the re-election of “Latvia’s tough-minded governing coalition” Bideleux argues that this means that the chosen strategy of the government enjoyed strong popular backing.[5] This is questionable when such issues as unwillingness of the people to vote for either pro-Russian parties or parties associated with oligarchs are taken into account. Even during the crisis at the end of the day the main reasons for and against voting for a particular political force were national considerations and divide between political parties mostly went along the lines of ‘Russian’ and ‘Latvian’.

In 2011 the President of Latvia (Valdis Zatlers) decided to initiate a referendum to dismiss the Parliament after one of the MPs (Ainārs Šlesers, associated with oligarchs) was not subjected to prosecutions due to his immunity (the Parliament voted against his extradition). One of the reasons mentioned was also the inability of the government to deal with the crisis in the present situation. However, true reasons seemed to be political because the political situation was shaky and with the help of emergency elections Valdis Zatlers might have seen a chance to avoid losing his position as a President and a possibility to successfully enter the political scene, since at the time it was clear that he would not be re-elected for a second term.

After the referendum, where the population voted in favour of dismissing the Parliament, the previous president (Valdis Zatlers) established a political party, which together with the party of Valdis Dombrovskis (Vienotība) gained considerable support. The only party which advertises itself as being left-wing, even though its policies at most could be considered centric, and which is considered to be representing the interests of the Russian-speaking part of the country, Saskaņas Centrs (SC), won the elections but was not able to build a coalition. This party to this day has never been in the governing coalition in the Parliament. Valdis Dombrovskis was able to unite three parties (Vienotība, ZRP and NA) in the coalition. Therefore he remained Prime Minister also after the emergency elections.

The reasons behind the emergency elections were mainly political and the results were representative of the divide between Latvian and Russian votes as well as illustrated some resentment towards some personalities considered to be ‘oligarchs’. Partly, at least due to the lack of truly socially oriented parties in Latvia, the results of the emergency elections did not represent the dissatisfaction with the social situation. However the social considerations served at least to some extent as an excuse behind initiating emergency elections and it was also behind the phenomenon of ‘empty votes’ as a type of protest about the lack of political parties offering socially oriented politics.

Frederiks Ozols has rightly argued that local peculiarities have to be taken into account when the election results in Latvia during the times of crisis are considered. The descriptions of left- and right- or centric-oriented are particular in Latvia – Russian speaking parties are considered to be more left and Latvian speaking ones – right and centrist.[6] During the 2010 Parliamentary elections, the media claimed that the people have voted for the austerity policy implemented by Valdis Dombrovskis because the alliance Unity won the vote and Prime Minister Valdis Dombrovskis was one of its main leaders. This led to a conclusion by the media (especially foreign) that support is given for even more austerity measures. This conclusion is incomplete because there were more reasons behind this victory.  The protest votes against Russia-linked political forces thought to be influenced by the Kremlin, the phenomenon ‘voting with an empty envelope’,[7] the fact that many citizens had left the country to find work abroad and the successfully chosen slogan by Unity – ‘stability’ – to which people were responding very well, also played a role.[8]

It has been argued that “Latvians have given their backing to more tough austerity measures, re-electing the country’s centre-right government in the first vote since the Baltic state received a €7.5bn bail-out from the International Monetary Fund”.[9] However, this is doubtful at least. The vote was quite nationalist (as it has been the case since regaining the independence) and since there are no (Latvian) political forces taking a more social position, voters really have no choice. Prime Minister Valdis Dombrovskis after the elections said that the “Voters have quite clearly voted for stability”.[10] It is rather argued that voters simply did not vote for parties associated with oligarchs and for pro-Russian parties and had no possibility to choose political parties which would aim to protect social rights and stand up for social matters.

Social mobilisation

In Latvia there has been only one significant demonstration concerning matters of the economic crisis. It took place on 13 January 2009 and was organised by a recently established political party “Sabiedrība citai politikai” which later was one of the parties establishing the political alliance Unity (Vienotība). It was organised against the deteriorating economic situation in the country[11] and during it the President was asked to dismiss the Parliament on the basis of general dissatisfaction with the changes to legislation introduced by the Parliament. Around 10 000 people took part in the demonstration[12] and it was definitely the biggest since Latvia regained independence in 1991. Also the Free Trade Union Confederation actively took part by demanding immunity for labour law from measures during the crisis. During the crisis the Free Trade Union Confederation disagreed with many of the austerity measures.[13] Additionally, shortly after 13 January 2009 farmers’ protests were organized on January 27, 2009. Moreover, other actions coordinated through the Internet like flash mobs and special websites took place.[14]

There have also been some smaller demonstrations, however, they did not gather significant support of people and have remained almost without any consequences or resonance in the press.[15] For example, on 24 July 2009 about a hundred of employees of state institutions were demonstrating against wage reductions in the State Social Insurance Agency, the State Employment Agency and the State Revenue Service. The demonstration was organised by the Trade Union of Employees of State Institutions, Self-governments and Finance Sector.[16] This is exemplary of the type and extent of the demonstration culture in Latvia. Similar protests were organised by the pensioners when the pension cuts were introduced.

Instead the social mobilisation in Latvia normally happens via more individualised means, for example, litigation (see information on cases decided by the Constitutional court during the economic crisis) or the sending of petitions and letters to institutions, Government and individual MPs. Rajevska and Romanovska have argued that already the demonstrations on 13 January 2009 and the following dismissal of government and postponing of the most important austerity measures to after the European Parliament and local government elections were very atypical for the Latvian political culture.[17] Indeed one could almost agree with the pessimistic view that “When these protests failed to bring about change, the public’s response was to vote with their feet and exit the country”.[18] It is more characteristic for Latvians to deal with the crisis on their own in individual ways.

It is true that “unconventional participation forms like demonstrations, boycotts are not common in Latvia after the renewal of independence. Even during crisis the population chose not to demonstrate but simply emigrate from the country.”[19] Bideleaux has argued that “the present-day adult populations of Europe’s post-communist states were for the most part poor, disillusioned, demoralized, atomized, weakly unionized, worn down by ‘transition fatigue’, somewhat inured to seemingly endless hardship and upheaval and disinclined to join political parties, social movements and public protests.”[20] As a consequence he stated that the normal response to the economic crisis is “to grit their teeth, keep their heads down and work even harder than before, in the hope or expectation that this crisis would (like previous ones) eventually blow itself out and allow people to get on with their lives.”[21] To at least some extent one could agree with this statement. Besides since the demonstrations taking place on 13 January 2009 did not have the intended effect on the Government and the Parliament, it seemed that demonstrations do not lead to any socially better solutions.

Labour issues

In general, the bailout itself is considered a success story, at least by the politicians. However, the general public might have a rather different opinion. Latvians tend to ‘protest with their feet’ by leaving the country which together with a low birth-rate might deepen and aggravate the consequences of the crisis. The social consequences have not been fully evaluated yet and it might be true that they turn out to be worse than predicted. The central issue faced by the country at the moment and in the upcoming years will be how to keep people in the country where wages are lower than the European average and as well social protection does not seem alluring at all. The biggest fear is that the loss of young people who are the most flexible and most likely to leave will rapidly worsen the demographic situation and inevitably cause more economic problems in the future.

For example a research carried out by marketing and public opinion research centre “SKDS” shows that 76.8% of respondents do not believe that the state is able to ensure a sufficient pension and 18.7% have chosen the answer “I rather would not believe”.[22] Just 0.5% believes in the ability of the state to ensure this.[23]

Approximately 20% of SKDS’s respondents have been in the situation when an employer does not pay the severance pay and other compensations. Even a higher number of respondents (21%) has written the resignation “of one’s own will” or “as agreed by both sides” due to the influence by the employer. 15% of respondents have received a notice of termination of employment relationship without due procedure and in violation of the notice period foreseen by law.[24]

During and since the crisis the fear of unemployment has played an increasingly important role in facilitating breaches of labour laws (e.g. undeclared employment, ‘wages in envelopes’). The SKDS’s research show that in fear of losing their job more than half of respondents (52%) would agree to the breach of their own labour rights and to receive ‘wage in envelope’, if the employer suggested it.[25] Only half (50%) in a situation when their labour rights were breached would try to convince the management of the company to observe their rights, 28% would submit a complaint to institutions responsible for dealing with these issues, 11% would hand in resignation, 6% would not react at all and 18% would not know what to do.[26]

A research carried out by the Baltic Institute of Social Sciences shows that two problems are dominant – overtime work without pay and ‘wages in envelopes’ (22% of respondents have faced such situations). In the construction industry almost half of respondents indicate two additional problems – delays of pay and employment without a contract in written form. More rare are the breaches of labour rights in the public sector; however, some before unseen problems have been indicated as well here – unpaid overtime work, worsening of working environment, use of personal means for carrying out work and abusive treatment by colleagues (might be caused by stress concerning employment cuts).[27]

Interesting might be that the EU has not been strongly blamed for the crisis in Latvia. It has even been argued that the EU has nothing to do with the situation when its competences are considered and the social responsibility has to be taken by the government and, in general, by the country itself.[28]

While the Prime Minister has stated that the main indication for overcoming the crisis will be a decrease in unemployment levels[29] and not the increase of GDP, it rather seems that the situation is more complicated and the indication of overcoming the crisis in the long-term will rather be the stabilisation of the demographic situation.

A survey carried out in December 2010 (number of respondents 1004) showed that only 23.1% of respondents “feel safe about their future in Latvia”. More than half (56.7%) said that they did not and one fifth of respondents had difficulties to evaluate the feeling of safety concerning their future in Latvia. This shows a high degree of uncertainty and insecurity.[30]

No surveys seem to have been carried out considering how successful the bailout is in the opinion of Latvians. However, it seems that the overall bleak prognoses and perspectives taken by the Latvians indicate that they do not consider it to be a complete success story. One issue is the financial crisis in a fiscal sense but a completely other is the social crisis and the following deepening of the demographic crisis. Until these will be solved, there is no ground to consider the overcoming of the crisis in Latvia a success story.

Additional information:

1. Short overview concerning the main political parties which played a role during the crisis.

The main political parties represented in the Parliament during the crisis:

1)      TP – Tautas partija (People’s Party) was a conservative right wing party, founded on 2 May 1998. It was part of the 7th, 8th, 9th and 10th Parliament. It has led several Governments (the one led by A. Kalvītis was blamed for excessive spending and for leading Latvia towards the crisis by following Governments and as well by part of the people). On 9 July 2011 a decision was taken to liquidate the TP.

2)      LPP/LC – Latvijas Pirmā partija/Latvijas Ceļš (Latvia’s First Part/Latvian Way) was a centric political party in Latvia, created by merging the Christian democratic Latvia’s First Party (LPP), the liberal Latvian Way (LC) and a couple of regional parties.

On 12 June 2010 the TP and LPP/LC by uniting several smaller political forces established PLL (Par Labu Latviju (For Good Latvia) which participated in the 10th Parliament Elections but got only 8 MPs.

3)      ZZS – Zaļo un Zemnieku Savienība (Union of Greens and Farmers) is a centre oriented green and agrarian political party alliance founded in 2002.

4)      JL – Jaunais Laiks (New Era Party) was a centre-right political party which was represented in 8th, 9th and 10th Parliament. It was founded in 2002 and in 2011 by merging with PS and SCP formed Vienotība.

5)      PS – Pilsoniskā Savienība (Civic Union) was a liberal conservative party founded in 2008. It has also been described as right-wing or centre-right.The PS in 2011 by merging with JL and SCP formed Vienotība.

6)      SCP – Sabiedrība Citai Politikai (Society for Political Change) was a social liberal political party, founded on 6 September 2008. In the 10th Elections it ran as part of the alliance Vienotība. The SCP after the elections demanded the exclusion of TB/LNNK from the new Government. The SCP in 2011 by merging with JL and PS formed Vienotība.

7)      Vienotība (Unity) – This is a liberal-conservative or center-right political party. It was founded as political alliance of the PS, SCP and JL in March 2010. It was formed to provide a counterweight to the left-wing SC. On 6 August 2011 the alliance was transformed into a single political party.

8)      TB/LNNK – Tēvzmei un Brīvībai/LNNK (For Fatherland and Freedom/LNNK) was a free market national conservative political party. It was founded in 1993. Initially belonging to the nationalist right the party become more moderate and shifted emphasis from supporting economic interventionism to the free market. For the 10th Elections it formed an alliance (NA) with far right nationalist VL (Visu Latvijai (All For Latvia). In July 2011 both parties transformed into a single political party under the name NA (Nacionālā Apvienība (National Alliance).

9)      NA – Nacionālā Apvienība (National Alliance) is a right-wing political party. The party is formed by conservatives, Latvian ethnonationalists and economic liberals. It was first formed as an electoral alliance in 2010 by TB/LNNK and VL and in July 2011 it transformed into a unitary political party.

10)  PCTVL – Par Cilvēktiesībām Vienotā Latvijā (For Human Rights in United Latvia) is a left-wing political party, supported mainly by ethnic Russians and ethnic minorities. It was established in 1998. In recent years its voters have switched allegiance to SC and in the 10th Elections it lost its representation in the Latvian Parliament. The political party has never been in a government coalition.

11)  SC – Saskaņas Centrs (Harmony Center) is a center-left political party founded in 2005 mainly supported by ethnic Russians. It positions itself in favour of social democracy and one of its emphases is on good relationships with Russia. It also supports increased social spending in order to boost the economy and increase the general welfare. The political party has never been in a government coalition.

12)  ZRP – Zatlera Reformu Partija (Zatler’s Reform Party) is a centre-right political party founded by the former President Valdis Zatlers on 23 July 2011. It was founded on the same day when the referendum for Parliamentary dissolution took place. One of its main claims was that it will not cooperate with ‘oligarch parties’ – ZZS, LPP/LC and TP. In April 2012 the party changed its name to Reformu Partija (RP, Reform Party).

2. Short overview (timeline) concerning changes in the political situation (changes of Government, political parties, coalition/opposition division etc.) during the crisis.

There are 100 MPs in the Parliament of the Republic of Latvia.

7 Oct 2006 – 9th Elections of the Parliament:

        TP – 23 MPs

        ZZS – 18 MPs

        JL – 18 MPs

        SC – 17 MPs

        LPP/LC – 10 MPs

        TB/LNNK – 8 MPs

        PCTVL – 6 MPs

7 Nov 2006 – A. Kalvītis establishes a Government and becomes Prime Minister. The Coalition consists of TP, ZZS, LPP/LC, TB/LNNK

5 Dec 2007 – the Government of A. Kalvītis resigns

20 Dec 2007 – I. Godmanis establishes a Government and becomes Prime Minister. The Coalition consists of LPP/LC, TP, ZZS, TB/LNNK

20 Feb 2009 – the Government of I. Godmanis resigns

12 Mar 2009 – V. Dombrovskis establishes his First Government and becomes Prime Minister. The Coalition consists of JL, TP, ZZS, TB/LNNK, PS

2 Oct 2010 – 10th Elections of the Parliament:

        Vienotība – 33 MPs

        SC – 29 MPs

        ZZS – 22 MPs

        NA – 8 MPs

        PLL – 8 MPs

3 Nov 2010 – the First Government of V. Dombrovskis finishes its work

3 Nov 2010 – V. Dombrovskis establishes his Second Government and becomes Prime Minister again. The Coalition consists of Vienotība and ZZS

17 Sep 2011 – 11th Elections of the Parliament (Emergency Elections)

        SC – 31 MPs

        ZRP – 22 MPs

        Vienotība – 20 MPs

        NA – 14 MPs

        ZZS – 13 MPs

25 Oct 2011 – the Second Government of V. Dombrovskis finishes its work

25 Oct 2011 – V. Dombrovskis establishes his Third Government and becomes Prime Minister again. The Coalition consists of Vienotība, ZRP and NA

[1] The Central Elections Commission of Latvia, Vēlēšanas Latvijā. Available under: http://web.cvk.lv/pub/public/27093.html (last visited 2 Nov 2012) (last visited 24 June 2013)

[2] http://www.apollo.lv/zinas/godmanis-pazino-par-demisiju-papildinats-15-54-foto/401524. In general the reasons for his resignation were partly definitely related to the unstable situation created by the crisis and as well likely the lack of support among the coalition partners for his plans for overcoming the deficit.

[3] Samuel Dahan, ‘The EU/IMF Financial Stabilisation Process in Latvia and Its Implications for Labour Law and Social Policy’, ILJ 41(3), pp. 305-327, p. 310.

[4] Ibid.

[5] R. Bideleux, ‘Contrasting Responses to the International Economic Crisis of 2008–10 in the 11 CIS Countries and in the 10 Post-Communist EU Member Countries’ (2011) 27 Journal of Communist Studies and Transition Politics 338–363. p. 355.

[6] F. Ozols, ‘The math of the parliamentary elections in Latvia’, 6 October 2010. Available under: http://www.euinside.eu/en/analyses/math-of-the-parliamentary-elections-in-latvia (last visited 24 June 2013)

[7] A lot of people as a form of protest for inadequate political offer for the elections voted with an empty envelope (without a ballot in it). Such an approach and form of protest was greatly popularized before the elections. This scores ???

[8] F. Ozols, ‘The math of the parliamentary elections in Latvia’, 6 October 2010. Available under: http://www.euinside.eu/en/analyses/math-of-the-parliamentary-elections-in-latvia (last visited 24 June 2013)

[9] Andrew Ward (2010a), “Latvian Voters Back Government’s Austerity”, Financial Times, October 2. Available under:

http://www.ft.com/intl/cms/s/0/d6d968b8-ce15-11df-a156-00144feab49a.html#axzz2B0s0D5hH (last visited 2 Nov 2012)

[10] Ibid.

[11] B. Lulle, Vecrīgas grautiņu pašcieņas tests. 15 August 2012. Available under http://nra.lv/viedokli/baiba-lulle/77719-vecrigas-grautinu-pascienas-tests.htm (last visited 2 Nov 2012)

[12] Deputāti uz delnas, 2009. gada 13. janvāra protesta akcija un grautiņi Vecrīgā. Last updated on 14 August 2012. Available under http://www.deputatiuzdelnas.lv/notikumu-hronika/sabiedribas-protesti-aktivitates/2009gada-13janvara-protesta-akcija-un-grautini-vecriga.html (last visited 2 Nov 2012)

[13] EPSU discussion document, The Financial and Economic Crisis. Consequences for the public sector and economy at large, an EPSU response. Available under http://www.epsu.org/a/4969  (last vistied 2 Nov 2012) p. 9

[14] Rajevska F., Romanovska L. “Crisis Impact on Social Policy of Latvia”. Paper presented at the 17th Annual Conference of the Hungarian Political Science Association “Structures and Futures of Europe” workshop “National Responses to Financial Crisis”. Available under: http://www.cps.ceu.hu/sites/default/files/publications/rajevskaromanovska-crisis-impact-on-social-policy-in-latvia.pdf (last visited 2 Nov 2012) p. 12

[15] The list of actions and events carried out by the Free Trade Union Association is available under: http://www.lbas.lv/about/history/years_2006_2011?locale=lv (last visited 2 Nov 2012)

[16]  TVNET, Valsts iestāžu darbinieki šodien piketēja pie Ministru kabineta. 24 July 2009. Available under http://www.tvnet.lv/zinas/latvija/216167-valsts_iestazu_darbinieki_sodien_piketeja_pie_ministru_kabineta_papildinata_plkst_1200 (last visited 2 Nov 2012)

[17] F. Rajevska, L. Romanovska, Crisis Impact on Social Policy in Latvia. Available under: http://www.nacionalaidentitate.lv/wp-content/uploads/2011/06/Rajevska-Romanovska-Crisis-Impact-on-Social-Policy-in-Latvia_FINAL_paper-presented-at-HPSA1.pdf (last visited 1 Nov 2012) p. 1.

[18] J. Sommers, M. Hudson, Latvia and the disciplines of ‘internal devaluation’. 16 September 2011.Available under http://www.guardian.co.uk/commentisfree/cifamerica/2011/sep/16/latvia-anders-aslund-austerity (last visited 2 Nov 2012).

[19] F. Rajevska, L. Romanovska, “Crisis Impact on Social Policy of Latvia”. Paper presented at the 17th Annual Conference of the Hungarian Political Science Association “Structures and Futures of Europe” workshop “National Responses to Financial Crisis”. Available under: http://www.cps.ceu.hu/sites/default/files/publications/rajevskaromanovska-crisis-impact-on-social-policy-in-latvia.pdf (last visited 2 Nov 2012) p. 12.

[20] R. Bideleux, ‘Contrasting Responses to the International Economic Crisis of 2008–10 in the 11 CIS Countries and in the 10 Post-Communist EU Member Countries’ (2011) 27 Journal of Communist Studies and Transition Politics 338–363. p. 339.

[21] Ibid.

[22]  LETA, Aptauja: 95.5% darbspējīgo netic valsts spējai nodrošināt pietiekamu pensiju.  30 March 2011. Available under http://www.delfi.lv/news/national/politics/aptauja-955-darbspejigo-netic-valsts-spejai-nodrosinat-pietiekamu-pensiju.d?id=37703421 (last visited 2 Nov 2012)

[23] Ibid. In the survey more than 900 respondents in the age group 15-64 years were interviewed

[24] D. Gailīte, Darba tiesību „diskriminācija” krīzes laikos. Jurista Vārds, Vol. 23 (576), 9 June 2009. Available under http://www.juristavards.lv/index.php?menu=DOC&id=192899 (last visited 2 Nov 2012).

[25] Ibid.

[26] Ibid.

[27]  Ibid. Full research (in Latvian) available under:

http://www.lbas.lv/upload/stuff/201004/dt_dd_petijums_02_04_2009.pdf (last visited 2 Nov 2012)

[28] A. Dimitrovs, Latvijas sociālā atbildība. 17 November 2009. Available under

 http://politika.lv/article/latvijas-sociala-atbildiba (last visited 2 Nov 2012)

[29] G. Amoliņš, Premjers: Galvenais krīzes pārvarēšanas signāls būs zems bezdarba līmenis. 15 September 2012. Available under http://www.latvijasradio.lv/zinas/raksts.php?id=49153&gr=0 (last visited 2 Nov 2012)

[30] Rajevska F., Romanovska L. “Crisis Impact on Social Policy of Latvia”. Paper presented at the 17th Annual Conference of the Hungarian Political Science Association “Structures and Futures of Europe” workshop “National Responses to Financial Crisis”. Available under: http://www.cps.ceu.hu/sites/default/files/publications/rajevskaromanovska-crisis-impact-on-social-policy-in-latvia.pdf (last visited 2 Nov 2012) p. 19-20

Luxembourg

Political change     
I.1
What is the political context of the Eurozone crisis period in Luxembourg? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Luxembourg being one of the founding fathers of the European Union has a big interest in upholding the Eurozone. The long-time Prime Minister Jean Claude Juncker – head of government from 1995 to 2013 – was the head of the Eurogroup for 8 years and was supported by most parties in his actions in the context of the Euro crisis. The national laws approving the participation in the rescue mechanisms (EFSM, EFSF, ESM) were all passed by a big majority in Parliament consisting of the governmental parties CSV (Christian Democrats) and LSAP (Social Democrats) as well as déi gréng (the Greens) and DP (Conservative Liberals), which were in opposition at this time, and only rejected by a parliamentary minority (ADR (National Conservatives) and déi Lénk (Democratic Socialists)) which were part of the parliamentary opposition. The only exception was the Fiscal Compact, which was not supported by the Greens, the National Conservatives and the Democratic Socialists. Political discussions focus more on the development of the social model in Luxembourg, the reform of the education system and the pension system as well as the unemployment rate.[1]

On 20 October 2013 snap elections took place after the LSAP (Social Democrats) did no longer support the government under Jean-Claude Juncker because of a spy scandal which became public by a news paper report and which was confirmed by a parliamentary report which stated a non-efficient control by the government about the Luxembourg intelligence service.[2] Even though the former governing coalition of CSV (Christian Democrats) and LSAP (Social Democrats) has received enough votes in the 2013 elections to continue the coalition, the new Prime Minister is the leader of the DP (Conservative Liberals), Xavier Bettel, whose party has reached a governmental agreement with the Social Democrats and the Greens (so-called ‘Gambia-coalition’). The new government, supported by 32 MPs of their parties in the Chambre des Députés, is in office since 4 December 2013.[3] The CSV, which governed Luxembourg for nearly 40 years, is now in opposition under their leader Jean-Claude Juncker, holding 23 seats in the parliament. The National Conservatives (3 seats) and the Democratic Socialists (2 seats) complement the parties being in parliamentary opposition.

Economic problems also exist in Luxembourg, even though their significance in comparison to south European countries is evanescently low. Luxembourg is criticized because of the negative development of their competitiveness.[4] In response to this criticism Luxembourg has modified its pension system at the end of 2012, which is seen as a major political reform. In addition, the automatic system of rising wages was suspended for three years because this system is seen as not being in conformity with the real economic development of Luxembourg. The fast increase of wages in comparison to the economic development has reduced Luxembourg’s competitiveness.

Luxembourg had to defend its economic model (financial market place for banks) after the bail-out and bail-in of Cyprus. Prime Minister Juncker defended this economic model with the argument, that the financial system of Cyprus and Luxembourg is not a comparable model because Cyprus has four national banks while Luxembourg has around 150 banks, most of them having their seat in foreign countries. Furthermore, banks in Luxembourg do not have the same business model. However, public discussion in Luxembourg is aware of the inherent risks resulting from a construction of the national economy mainly based on the banking sector. Even though Juncker was not in favour of it for a long time, Luxembourg nowadays invests a lot of money in a new university and scientific research.[5]

[1] Interview with Jean-Claude Juncker on l’essentiel.lu, 18 December 2012, http://www.lessentiel.lu/de/news/luxemburg/story/21493287

[2] See the report ‘Luxembourg PM Juncker offers government resignation’ on BBC.co.uk, 11 July 2013, http://www.bbc.co.uk/news/world-europe-23275318

[3] See the report ‘Assermentation des membres du nouveau gouvernement’ on the official governmental website of Luxembourg, 4 December 2013, http://www.gouvernement.lu/3311168/04-assermentation

[4] See the report ‚Luxemburg rutscht aus der Top 20’ on lessentiel.lu, 24 October 2011, http://www.lessentiel.lu/de/news/luxemburg/story/30644379

[5] See the report in the German weekly newspaper DIE ZEIT, ‘Wo das Geld regiert’, 8 July 2013, http://www.zeit.de/2013/23/luxemburg-steuern-bankgeheimnis

Malta

Political change      
I.1
What is the political context of the Eurozone crisis period in Malta? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Since the independence of Malta in 1964, two parties have dominated the political system: The Christian Democratic Nationalist Party and the Labour Party. Malta was governed between 2004 and 2013 by the Nationalist Party under Prime Minister Lawrence Gonzi and since 2013 by the Labour Party under Prime Minister Joseph Muscat. Malta has joined the EU on 1 May 2004 and the Eurozone on 1 January 2008.

The Maltese government under the guidance of Lawrence Gonzi (Nationalist Party) lost its one-vote majority at the end of 2012, when a dissenting Member of Parliament did not want to vote for the budget bill. This was not directly related to Eurocrisis measures, but to reforms in the transport sector. Government wanted to confer the management of Malta’s bus service to a German company, a decision this MP did not agree with.[1] Thereupon, Prime Minister Gonzi announced the dissolution of the House of Representatives on 7 January 2013 and new elections took place on 9 March 2013. The elections were won by the Labour Party which received 39 seats in the Maltese Parliament, while the Nationalist Party got 30. No other party received enough votes to enter Parliament. The election period is five years.

Malta’s political discussion was – amongst others – dominated by the state aid to Air Malta which is a state owned airline.[2] In 2013, the government (Labour Party) plans to rescue the national energy company ‘Enemalta’ by allowing a Chinese electricity producer (owned by the Chinese state) to become a minority shareholder.[3] This plan is also criticised by referring to the argument that Malta would lose its energy sovereignty.[4] On 12 November 2013 Malta has adopted an amendment of the ‘Maltese Citizenship Act’ which allows individuals to receive the Maltese citizenship under a special ‘individual investor programme’.[5] It seems as if Malta tries to generate money by selling Maltese citizenship, whereas international criticism seems to be stronger than at the national level.[6]



[1] See the report ‘Malta government falls after PM Gonzi loses majority’ in BBC, 10 December 2012, http://www.bbc.co.uk/news/world-europe-20672774; see also the report ‘Government collapses as budget rejected’ in The Malta Independent, 10 December 2012, http://www.independent.com.mt/articles/2012-12-10/news/government-collapses-as-budget-rejected-519012353/?archive=20121210000000

[2]              See for example the report ‘Air Malta halves operating losses, annual losses down to €30.9 million’ in Malta Today, 30 October 2013, http://www.maltatoday.com.mt/en/businessdetails/business/businessnews/Air-Malta-halves-operating-losses-annual-losses-down-to-30-9-million-20131030

[3]              See the report ‘Malta secures China cash injection deal for Enemalta‘ in Malta Today, 11 September 2013, http://www.maltatoday.com.mt/en/newsdetails/news/national/New-Chinese-agreement-to-see-direct-cash-injection-in-Enemalta-20130910

[4]              See the report ‘Government selling energy sovereignty – Busuttil’, in Malta Today, 16 September 2013, http://www.maltatoday.com.mt/en/newsdetails/news/national/Government-selling-energy-sovereignty-Busuttil-20130916

[5]              See the ‘Maltese Citizenship (Amendment) Act’ (Act XV of 2013) which entered into force on 15 November 2013, http://www.parlament.mt/file.aspx?f=44746

[6]              See the report ‘Widespread criticism of Malta’s citizenship sale’ in Times of Malta, 14 November 2013, http://www.timesofmalta.com/articles/view/20131114/local/Widespread-criticism-of-Malta-s-citizenship-sale.494583

Netherlands

Political change
I.1
What is the political context of the Eurozone crisis period in The Netherlands? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The political situation in The Netherlands in this period was quite turbulent. Some major EU crisis measures were negotiated in situations when there was not a full functioning government or where government had to rely strongly on the support from the House of Representatives. Please see the answers to questions IV.1, V.3, VI.1 and VII.1 for the specific political context surrounding specific EU measures that have been negotiated during these periods. Since a clear majority of the political parties within Dutch the House of Representatives is pro-EU and government, early on, adopted a close working relationship with the House of Representatives, in terms of a information protocol, there were no real obstacles encountered in the negation or ratification of the EU debt crisis related measures. For ease of reference please find here a schematic overview of political events and their relevance to the EU crisis measures:

Political event NL

Effect

EU measures implemented

February 2010: government falls over military participation in Afghanistan. New (minority) government formed in October 2010.

 

Interim period during which government can only deal with current affairs and is not allowed to decide on any ‘controversial’ affairs.

 

Negotiation and implementation of the EFSF and EFSM

October 2010 – April 2012 Minority government (Liberal and Christian democrats) in place that relies on support on anti-EU Party for Freedom of Geert Wilders

For EU related policy matters government had to rely on pro EU opposition parties and was consequently very careful with informing the House of Representatives and agreed on a working document

Government had to rely on the pro-EU opposition parties to get a mandate for the negotiation of the Euro-Plus-Pact. A clear majority within parliament (that includes the Social Democrats, Centre Right Liberals and Greens) is pro-EU and, eventually, government received a broadly supported mandate to negotiate the Euro-Plus-Pact. Parliament did request government to ensure in all its negotiations on the combined economic governance measures, coined as the Europact in The Netherlands, to ensure not to move towards a political union. Concretely this meant that there could be no transfer of powers on the level of policy measures to be undertaken on a national level.

The (minority) government fell in April 2012 because the main right wing Party for Freedom (the PVV of Geert Wilders) withdrew support for the Liberal and Christian Democrats led (VVD and CDA) government after failed negotiations on government cuts. New government was formed in November 2012.

Interim period during which government can only deal with current affairs and is not allowed to decide on any ‘controversial’ affairs.

 

Both the ratification of Art 136 TFEU amendment and the ESM Treaty took place within this period. Both were adopted with broad parliamentary support from the centre left and right that traditionally strongly support the European Union project.

The government in place since November 2012 has a majority in the House of Representatives but not in the Senate

Government depends on opposition parties to support legislative initiatives in Senate (a number of – non EU related – legislative proposals have already been blocked in the Senate)

Government depends on support from opposition parties to pass current Wet Hof and other implementing measures related to directive 2011/85/eu

 


Poland

Political change
I.1
What is the political context of the Eurozone crisis period in Poland? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

In October 2007 the liberal-conservative Platforma Obywatelska (PO) won the parliamentary elections and received 41,51% of votes for Sejm’s mandates (209 mandates).[1] The national-conservative Prawo i Sprawiedliwość (PiS) received 32,11% of votes for Sejm mandates (166 mandates). The centrist Polskie Stronnictwo Ludowe (PSL) received 8,91% of votes (31 mandates) and the left-wing Committee SLD+SDPL+PD+UP – 13,15% of votes (53 mandates) and one mandate – the German minority. Only the Platforma Obywatelska, Prawo i Sprawiedliwość and one independent candidate received seats in the Senat (accordingly 60, 39 and 1mandate).[2] The Platforma Obywatelska created a coalition with the Polskie Stronnictwo Ludowe, which lasted until the next elections in October 2011 with Donald Tusk (PO) as prime minister.

In the next parliamentary elections in October 2011, the Platforma Obywatelska again gained the highest number of votes 39,18% (207 mandates) and due to the lack of majority, it entered again into coalition with the Polskie Stronnictwo Ludowe which repeated its outcome from 2007 elections (8,36% of votes, 28 mandates). Donald Tusk became prime minister again. The PiS won 29,89% of votes (157 seats), the left-wing parties Sojusz Lewicy Demokratycznej (SLD) attracted 8,24 % of votes (27 mandates) and the Ruch Palikota (RP) – 10,02 % of votes (40 mandates). The German minority received one mandate. In 2012, some of the PiS MPs formed a new party in the Sejm, right-wing Solidarna Polska (SP).[3] In the Senat, the PO gained 63- seats, the PiS- 31, the PSL – two and also four independent candidates received seats.[4]

The President of the Republic is elected directly by the people to serve for five years and can be re-elected only once. In 2005 Lech Kaczyński (PiS) started his term as President of the Republic. In 2010, due to the crash of presidential plane and death of the President Lech Kaczyński, Bronisław Komorowski (PO) became President of the Republic.

No national referenda have taken place within the period at stake.

The Eurozone crisis has definitely affected the perception of Poles about the EU in general. [5] In March 2013, 78% of Poles supported Poland’s membership in the EU, whereas 15% was against it. These numbers are visibly smaller compared to the situation in previous years (July 2007), which was a share of 89% and 5% accordingly. This decrease is ‘certainly due to the financial crisis problems in some of the Member States’.[6]  Moreover, only 64% of Poles is in favour of the Eurozone accession.[7] Yet, the main reason is the possible increase of prices (25%) and not the financial crisis in the Member States that adopted Euro (8%).[8]

[1] http://wybory2007.pkw.gov.pl/SJM/PL/WYN/M/index.htm.

[2] http://wybory2007.pkw.gov.pl/SNT/PL/WYN/W/index.htm.

[3] http://wybory2011.pkw.gov.pl/wsw/pl/000000.html.

[4] http://wybory2011.pkw.gov.pl/wsw/pl/000000.html#tabs-2.

[5] The data comes from the CBOS questionnaires. CBOS is a well established institute researching public opinion in Poland. Cf. CBOS, Obawy i nadzieje związane z wprowadzeniem Euro w Polsce, http://www.cbos.pl/SPISKOM.POL/2013/K_042_13.PDF

[6] CBOS, Obawy i nadzieje związane z wprowadzeniem Euro w Polsce, http://www.cbos.pl/SPISKOM.POL/2013/K_042_13.PDF, p.1.

[7] CBOS, Obawy i nadzieje związane z wprowadzeniem Euro w Polsce, http://www.cbos.pl/SPISKOM.POL/2013/K_042_13.PDF, p.3.

[8] CBOS, Obawy i nadzieje związane z wprowadzeniem Euro w Polsce, http://www.cbos.pl/SPISKOM.POL/2013/K_042_13.PDF, p.9.

Portugal

Political change      
I.1
What is the political context of the Eurozone crisis period in Portugal? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

There were parliamentary elections on 27 September 2009 and on 5 June 2011, as well as presidential elections on 23 January 2011.

The elections in 2009 resulted in the re-election of the Socialist Party (PS), centre-left political formation, as the first party in the country. However, in the context of the Eurozone crisis and the already ongoing unpopular reforms, Socialists lost the majority; José Socrates formed a minority government (see question X.1).[1]

Anibal Cavaco Silva, Portugal’s conservative president was re-elected on 23 January 2011.

The Prime Minister resigned on 23 March 2011 after a defeat in a parliamentary vote on a package of austerity measures that came to be known as “PEC IV” (Stability and Growth Pact, SGP 2011-2014). Pedro Passos Coelho, at the time Democratic People’s Party/Social Democratic Party (PPD/PSD)’s leader, opposed these measures and strongly advocated for calling for international financial assistance (see question X.1). On 24 March, Germany regretted that the austerity measures package was not adopted; it was the Euro’s stability that was at stake. Portuguese bonds recorded high after resignation: interest rates went from 7% to 14%. The political void and the financial situation left no alternative but to seek assistance from the European Financial Stability Facility (EFSF), the Eurozone’s bail-out fund.

On 5 June PPD-PSD won the elections and formed a coalition with the People’s Party (CDS-PP), a centre-right party. The MoU was negotiated before the elections with little public discussion (see question X.3).

The governing coalition came close to collapse in mid-2013 after the minister of finance, Vítor Gaspar, resigned on 1 July. In his resignation letter, Vítor Gaspar stated that his credibility had been undermined by rulings by the constitutional court overturning government policies in October 2012 and in April 2013. He also suggested that his increasing isolation within the cabinet over the implementation of Portugal’s EU/IMF austerity programme contributed to his resignation, adding that his departure would reinforce “the cohesion of the government”.[2] Vítor Gaspar had been seen as inflexible by the Popular Party (CDS-PP), and parts of the dominant Social Democratic Party (PSD), particularly in response to calls for lower taxes and other measures to support investment and economic growth.[3]

Minister or Foreign Affairs, Paulo Portas (CDS-PP leader), resigned from the government immediately after Vítor Gaspar was replaced by his deputy, Maria Luis Albuquerque. Paulo Portas stated that the prime minister had chosen the “path of continuity”, a decision he did not support. The prime minister did not accept his resignation and political instability sent interest rates on government debt soaring.[4]

On 21 July, Portugal’s president, Aníbal Cavaco Silva, announced that the current government should remain in office until the end of its term (2015). Paulo Portas reintegrated government as Deputy Prime Minister.[5] The decision followed the failure of negotiations between the three main political parties (PSD, CDS-PP and PS) to agree on a broader parliamentary consensus over the steps necessary to complete the country’s EU/IMF programme.[6]

Portugal made a clean exit from its EU/IMF bailout in May 2014.[7]

[1] Socratic Method, 1 October 2009, The Economist at http://www.economist.com/node/14560974#.

[2] Full resignation letter can be read in http://expresso.sapo.pt/carta-de-demissao-de-vitor-gaspar=f817482.

[3] For more details see Country report, the economist intelligence unit, available at http://country.eiu.com/article.aspx?articleid=1570676341&Country=Portugal&topic=Politics&subtopic=Forecast&subsubtopic=Political+stability&u=1&pid=762217060&oid=762217060&uid=1

[4] For more details see Country report, the economist intelligence unit, available at http://country.eiu.com/article.aspx?articleid=2020682386&Country=Portugal&topic=Politics&subtopic=Forecast&subsubtopic=Political+stability&u=1&pid=762217060&oid=762217060&uid=1

[5]Seeking to Repair a Rift in Portugal’s Ruling Coalition”, 6 July 2013, available at http://www.nytimes.com/2013/07/07/world/europe/seeking-to-repair-a-rift-in-portugals-ruling-coalition.html

[6] The Economist Intelligence Unit, Portugal, available at http://country.eiu.com/article.aspx?articleid=980757082&Country=Portugal&topic=Politics&subtopic=Forecast&subsubtopic=Political+stability&u=1&pid=762217060&oid=762217060&uid=1

[7] The Economist Intelligence Unit, Portugal, http://country.eiu.com/portugal; “Portugal bank knocks recovery”, 10 August, The Financial Times

Romania

Political change      
I.1
What is the political context of the Eurozone crisis period in Romania? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The Eurozone crisis period in Romania is characterised by high political unrest and instability. Since 2008, Romania has known six government changes, one suspension of the President (2012), two national parliamentary elections (2008; 2012), two presidential elections (2009; 2014 forthcoming) and two referenda (2009; 2012).[1] The long electoral periods did not favour a coherent approach to austerity packages and to their implementation, generating a largely unstable environment.

The political unrest has partially its roots in the institutional architecture put in place by the 1991 Constitution of Romania as revised in 2003. The fundamental law enshrines a semi-presidential political system whereby the responsibilities of President, Parliament and Government are often intertwined and mutually dependent.[2] The legislature of Romania is bi-cameral, formed by the Chamber of Deputies and the Senate, directly elected for a period of four years. The President is directly elected for a five years mandate. The executive power is bicephalous (dualist executive), with both a directly elected President and a Prime Minister, invested by the President after receiving the Parliament’s vote of confidence. The system ensures important space for checks and balances. However, at the same time it makes the ‘cohabitation’ of the three political institutions particularly difficult when not on the same side of the political compass. This was often the case in the analysed period.

Three parties have largely dominated the political discourse: the centre-right Democratic Liberal Party (PDL), the centre-left Social Democratic Party (PSD) and the centre-right National Liberal Party (PNL); the two latter parties allied as Social Liberal Union (USL) from February 2011 to March 2014.

The time sequence of major political events in the context of the main EU financial assistance agreements follows the order below:

·         2008, November 30, Parliamentary elections

·         2008, December 22, Government Boc (1) [PDL, PSD]

·         2009, June 23, MoU EC-Romania 2009-2011

·         2009, October 1, PSD ministers resign

·         2009, October 13, Motion of censure of the Parliament, Government dissolved

·         2009, November 22, December 6, Presidential elections

·         2009, November 22, Referendum on transition to unicameral parliament and reduction of MP seats to maximum 300

·         2009, December 23, Government Boc (2) [PDL]

·         2010, February 22, 1st supplemental MoU EU-Romania 2009-2011

·         2010, August 08, 2nd  supplemental MoU EU-Romania 2009-2011

·         2011, January 19, 3rd supplemental MoU EU-Romania 2009-2011

·         2011, April 08, 4th  supplemental MoU EU-Romania 2009-2011

·         2011, June 29, MoU EU-Romania on precautionary assistance 2011-2013

·         2011, December 27, 1st supplemental MoU EU-Romania 2011-2013

·         2012, February 6, Government Boc (2) resigns

·         2012, February 9, Government Mihai Razvan Ungureanu [PDL]

·         2012, April 27, Motion of censure of the Parliament, Government dissolved

·         2012, May 7, Government Ponta (1) [USL]

·         2012, June 29, 2nd supplemental MoU EU-Romania 2011-2013

·         2012, July 29, Referendum on the dismissal of the President

·         2012, December 9, Parliamentary elections

·         2012, December 21, Government Ponta (2) [USL]

·         2013, November 3, MoU EU-Romania on precautionary assistance 2013-2015

·         2014, February 25, fall of USL coalition, PNL ministers resign

·         2014, March 5, Government Ponta (3) [PSD]

·         2014 November 2, November 16, Presidential elections (forthcoming)

 

The November 2008 parliamentary elections were a close call. The Social Democrats (PSD) won followed with less than one per cent difference of votes by the Liberal Democrats (PDL).[3] As a coalition agreement was reached between PSD and PDL, President Traian Băsescu (candidate of PDL predecessor party in 2004 presidential elections) nominated the leader of PDL as Prime Minister (Emil Boc).[4] On December 22, 2008 the Parliament gave the vote of confidence to Prime Minister Boc and his cabinet, formed by PDL and PSD members.[5] The invested Government had as first two governance objectives to ensure a stable economic climate in the context of global economic crisis and job creation.[6] Since the two parties of the governing coalition were so far apart ideologically, the coalition generated endless disputes. The Government operated in an atmosphere of constant conflicts and tensions from the very beginning. By mid-2009, political instability became so deep that the PSD eventually started acting as an opposition party, regardless of the fact that it was a member of the coalition.[7] During this period, Romania requested direct financial assistance form the European Union and the International Financial Institutions, agreement announced on March 25 2009.

On October 1st 2009, a few weeks before the presidential elections of November 22, 2009, the fragile coalition collapsed.[8] Shortly after, on October 13, 2009, the Government collapsed under the vote of no confidence passed by the Parliament (the ‘motion of censure’).[9] The motion of censure was the first one to get the quorum since the first post-communist legislature of 1992.[10] Government Boc nevertheless remained in charge as a caretaker Government until late December 2009, as the subsequent attempts of the President to appoint different cabinets failed.

The political instability impacted on the engagements with the International Financial Institutions signed in April 2009.[11] After the first review of the IMF Stand-by-Arrangement on October 9, 2009[12] the collapse of the Government on October 13, postponed the second review until the new Government was in place.[13] In this sense the IMF country report on Romania states:“[w]hile offsets through cuts in capital spending, lower interest payments, and some late revenue recovery enabled the government to ultimately meet the revised end-year deficit target, implementation delays in spending measures and budget uncertainties in the run up to Presidential elections delayed completion of the second review.[14]

The Presidential elections and referendum held on November 22, 2009 fuelled the political rivalry between PDL, on one hand, and PSD, on other.[15] First, the Romanian citizens endorsed the referendum initiated by the President,[16] voting in favour of a unicameral Parliament to replace the bi-cameral one and the reduction of the parliamentary seats to a maximum of 300.[17] In the second tour of December 6, 2009, President Traian Băsescu (PDL candidate) outvoted Mircea Geoană (PSD candidate) roughly by 0.7%.[18] The Constitutional Court dismissed the allegations of fraud and validated the results of both the Presidential elections and the referendum.[19]

The re-elected President again put forward the candidacy of Prime Minister Emil Boc (PDL), who managed to get the Parliament’s vote of confidence by a fragile majority on December 23, 2009[20] and maintained the position in office until February 6, 2012. This time, the Prime Minister’s governance agenda included as a top priority the revision of the Constitution according to the results of the 2009 referendum (unicameral Parliament with maximum of 300 seats); followed by: economic redress, including no raise in VAT; respect of commitments agreed with IMF, World Bank and European Commission; transition to multi-annual budget model; revision of pension system, et al.[21]

The elections have again generated delays in implementation of the first 2009 MoU adjustment measures. Once a new Government was in place, the first addendum to the 2009 MoU between Romania and the EU has been signed in February 2010, updating the initial conditions and targets on the background of crisis deepening and worsening output indicators.[22]

The Government led by Prime Minister Boc (PDL) was the one to adopt the harsh and highly unpopular austerity packages of 2009 and mid 2010, including the fixed annual tax on private companies, the public sector salary cut by 25%, the attempt to cut the pensions by 15% and the raise of VAT by 5% (from 19% to 24%), all passed by way of the so-called ‘engagement of responsibility’ in front of the Parliament (whereby the government subjects the measures to a confidence vote procedure), thus avoiding parliamentary and public debates on the matter (please refer to sections III.9, X.3, X.4, X.5 below).[23]

On 5 February 2011, the Social Liberal Union (USL) opposition was formed by an alliance between PSD, PNL and two other small parties: the Conservative Party (PC), and the National Union for the Progress of Romania (UNPR). The highly unusual alliance between socialists and liberals was fed by the common goal of a strong opposition against the governing PDL party and the President (Traian Băsescu) whose public popularity fell dramatically after the enforcement of the two adjustment packages in 2009 and 2010 respectively (please refer to section X.6 and X.9 below).

In January 2012 the growing public discontent burst into large-scale protests, supported by the USL opposition. The protests forced Prime Minister Boc and his Cabinet to resign on February 6, 2012.[24]

On February 9, 2012 President (Traian Băsescu) designated Mihai Răzvan Ungureanu, a formally politically independent candidate, to form a new Government. Prime Minister Ungureanu staid in office for less than 3 months, as the reunited chambers of the Parliament supported by the USL majority passed a second motion of no confidence on 27 April 2012, dissolving the Government.[25] The declared reasons of the motion were, inter alia, the failure of the Government to address the economic downturn and the lack of transparency, including lack of parliamentary debates on the Fiscal Compact.[26] (On the Fiscal Compact please refer to section IX below).

Left with no other option, the President designated Victor Ponta (PSD leader) as Prime Minister. Led by Prime Minister Ponta, USL was given the Parliament vote of confidence and became the governing coalition on May 7, 2012.[27] The Coalition maintained in office until early 2014. Immediately after the investiture, on May 18, 2012 the Government passed emergency legislation on gradual recoupment of 2010 salary cuts and restitution of certain pensions and social security rights.[28]

The new Government investiture brought about the onset of a difficult period of cohabitation between President Băsescu one the one hand, and the Prime Minister and his USL Cabinet on the other. Political tension was on constant rise on the background of the constitutional dispute between the President and the Prime Minister about the representation of Romania to the 28-29 June 2010 European Council meeting.[29] On 27 June 2010 the Constitutional Court decided that it was for the President to represent the country.[30] Nevertheless the Prime Minister ignored the decision of the Court explaining that it was impossible to change the European Council delegation list just one day before the summit. On the same date, the Constitutional Court declared the local electoral law amendment establishing a first-past-the-post system (the-winner-takes-it-all), introduced less than six months before the local elections unconstitutional.[31]

The culmination of the political crisis hit in early July 2012 when the USL Government together with the USL members of Parliament attempted an overthrow of President Băsescu.[32] First, on July the 3rd, the Ombudsman and the PDL presidents of the two Chambers of the Parliament were dismissed by way of Parliament resolution.[33] Second, on July the 4th the law on the functioning of the Constitutional Court was amended by way of Emergency Ordinance, so that the Court could not review Parliament resolutions.[34] Third, on July the 5th the referendum law provisions on the quorum were amended by Emergency Ordinance, in the sense that a referendum may be validated if endorsed by fifty plus one per cent of the participants as opposed to prior fifty plus one per cent of the citizens with a right to vote.[35] Fourth, on July 6, the Parliament adopted the decision to suspend the President for serious acts of infringing the Constitution, pursuant to Article 95 thereof and decided on the date of the referendum on the dismissal of the President.[36] (The same president has been suspended also in April 2007, the outcome of the referendum on dismissal was negative.) In spite of the fact that more than 87% of the referendum participants favoured the dismissal of the President,[37] the Constitutional Court did not validate the referendum held on July 29, 2012, as the half plus one quorum had not been met.[38] In the view of the Court, despite the legislative change introduced, the provisions were still to be interpreted as meaning fifty plus one of the citizens with a right to vote.[39]

The above-enumerated events stirred prompt and harsh reactions from the part of EU institutions and the international community. The Council of Europe Venice Commission framed the problem in terms of constitutionality and the need of constitutional review to avoid further institutional clashes in the future,[40] whereas the European Commission adopted a rule of law discourse.[41]

The overwhelming USL victory in the parliamentary elections of December 9, 2012, brought USL the absolute majority quorum in both Chambers of the Parliament.[42] Supported by the Parliament majority, Prime Minister Ponta was re-stated in office on December 21, 2012.[43] The parliamentary elections brought the much-expected stability awaited both internally and externally, notably by the International Financial Institutions. As the USL Government enjoyed a stable parliamentary majority the decision making process was much eased. The USL coalition controlled largely the legislative initiatives, having the certainty that these are supported by the Parliament. After a period of relative stability, the USL coalition fell apart on February 25, 2014 on the eve of the European Parliament elections of May 2014 and forthcoming presidential elections of November 02 and 16, 2014.

On March 5, 2014 Prime Minister Ponta presented the new PSD Cabinet, invested with the Parliament’s vote.[44] The cabinet is currently in office. It is expected to change (or not) depending on the results of the Presidential elections of November 2014.

The eve of the forthcoming presidential elections of November 2 and November 16, 2014[45] finds the country in the midst of a recession period and attempts of economic consolidation, burning discussion on improvement of the European Structural and Investment Funds absorption capacity; fight with extreme poverty and corruption; implementation of justice reform; continuing efforts towards joining the Schengen area (blocked in 2012), attainment of euro adoption benchmarks; and – highly important – on-going discussions on Constitutional reform, which puts forward two fundamental challenges for the future: the reshaping of central inter-institutional competences and attributions; and the territorial administrative reform (on constitutional reform please refer to Section III.2, below).

Along these lines, Mr. Herman Van Rompuy’s speech in Bucharest on 25th April 2013 presents a comprehensive summary of Romania’s current priorities:

 “Prime Minister Ponta updated me on the constitutional reform in the country […] I encouraged him to continue the reform process, in full respect of fundamental values such as: respect of the rule of law and separation of powers and ensuring the widest possible consensus in the society. We addressed important economic topics. […] In this context, we further talked about further improving Romania’s absorption capacity in order to make better use of the existing EU funds. […] We also discussed the necessity to move gradually but relentlessly towards a genuine economic and monetary union. […] In terms of Romania’s aspirations to adopt the euro, we share the view that it is important for Romania to stay as close as possible to the euro area’s developments in order to ensure a good preparation for it. There is progress on the convergence criteria, and now, I encouraged the Prime Minister to continue these efforts, for meeting all the necessary conditions for your euro joining later on.”[46]

Social context

The social context has also known escalating tensions on the background of the 2009 and 2010 economic redress packages (see section X.6 and X.9 below) .

On October 5, 2009, more than 800.000 public sector employees protested against the harsh austerity measures that included the freezing of the public sector bill, cut of bonuses, gradually decreasing the number of public servants, freeze of pension point, prohibition to accumulate the pensions with the salary, et al. In this sense, observers reported that: “[n]umerous offices, administrative departments and schools closed for the day. Hospitals restricted services to emergency cases. Some 15,000 workers and public servants took to the streets of Bucharest to protest, bringing traffic in the national capital to a standstill for hours.”[47] The social movement was reported as “the biggest in the country since the fall of Communism in 1989”.[48]

The 2010 austerity package, including the 25 % cut of public employers salaries, 15% cut of unemployment benefits, child raise support and numerous others social benefits, did not bring large immediate protests. These however fed the public discontent generating massive violent clashes and continued protests in January-February 2012. The protests were triggered by certain adjustment measures on the public health reform agenda but shortly transformed into countrywide protests, which gathered about 90.000 people on the streets of the largest cities in Romania, including the capital Bucharest.[49] The protests led to the resignation of the Boc Government on February 6, 2012 (see above).

[1] Permanent Electoral Authority of Romania, historic data, available at: http://www.roaep.ro/istoric/, consulted on 05.09.2014.

[2] For instance, the President must promulgate the laws adopted by the Parliament and may send them back for revision (Article 77, Constitution); the President designates the candidate for Prime Minister and invests the Government but based on the Parliament’s vote of confidence (Article 89). The Parliament may withdraw the vote of confidence given to the Government by adopting a ‘motion of censure’ by majority (Article 113). The President may dissolve the Parliament (Article 89). At the same time, the Parliament may suspend the function of the President (Article 95), et al. Constitution of Romania available at: http://www.cdep.ro/pls/dic/site.page?id=371

 

[4] According to the Constitution of Romania, Article 85 (1), the President designates a candidate for Prime Minister to from a cabinet, and invests the formed Government, after the vote of confidence of the Parliament. The President is not held to designate a Prime Minister from the wining party.

[5] Parliament of Romania, Reunited chambers, 22 December 2008, stenograph vote, available in Romanian at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6564&idm=6&idl=1, consulted on 07.09.2014.

[6] Parliament of Romania, Reunited chambers, 22 December 2008, debates on the Government agenda and members, stenograph, available in Romanian at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6564&idm=3&idl=1, consulted on 07.09.2014.

[7] http://www.theepochtimes.com/n2/world/romania-presidential-elections-26250.html

[8] http://news.bbc.co.uk/2/hi/europe/8284565.stm

[9] The motion of censure ‘11 [ministers] against Romania!’, of 13.09.2009. All 10 motions of censure initiated during 2008-2012 legislative period are available in Romanian at: http://www.senat.ro/motiuniv.aspx.

[10] For an overview of the motions of censor since 1992, see the Parliament of Romania, Senate chamber, available in Romanian at: http://www.senat.ro/index.aspx?Sel=D8F0E028-96B4-4348-B38D-581C6B5CD19B

[11] The initial agreement with IMF representatives was reached on March 25, 2009, the Memorandum of Understanding was drafted on April 1st 2009, a first formal Letter of intent was sent on April 24, 2009. IMF, Press Release No.09/86 of 25 March 2009, available at: https://www.imf.org/external/np/sec/pr/2009/pr0986.htm.

[12] IMF, First review under Stand by Arrangement, October 08, 2009, available at: https://www.imf.org/external/pubs/cat/longres.aspx?sk=23349.0

[13] IMF, Press Release No 09/392 of November 06, 2009, available at: https://www.imf.org/external/np/sec/pr/2009/pr09392.htm

[14]IMF, Country Report, Romania, p.12, available at: http://www.imf.org/external/pubs/ft/scr/2012/cr1264.pdf

[15] For a comprehensive analysis of the general political context before and after the elections see: Sergiu Gherghina, Election Briefing No 52, Europe and the Presidential Election in Romania, November 22-December 6 2009.

[16] Decree of the President no. 1507 of 22 October 2009, Official Journal 714/22.10.2009.

[17] Central electoral bureau 2009, final results referendum (Romanian), available at: http://www.bec2009p.ro/rezultate-Turul%20I.html. Currently the Parliament of Romania counts 453 members.

[18] Central electoral bureau 2009, final results presidential elections (Romanian), available at: http://www.bec2009p.ro/rezultateP-TURUL%20II.html. See further on motion of censure: http://www.cdep.ro/pls/dic/site.page?id=126.

[19] Constitutional Court of Romania, Ruling 39/2009 on the request of annulment of the results of Presidential elections of 6 December 2009, Ruling 37/2009 on the validation of the results of the referendum, Official Journal 924/30.12.2009.

[20] Parliament of Romania, session of united chambers of 23 December 2009, vote of confidence, 276 votes for out of 470, stenograph in Romanian available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6738&idm=6&idl=1.

[21] Parliament of Romania, session of united chambers of 23 December 2009, presentation of governance programme, stenograph in Romanian available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6738&idm=2&idl=1

[22] First addendum to the MoU, between EU and Romania of 22 February 2010, Brussels, paras 5-6, available at: http://ec.europa.eu/economy_finance/articles/financial_operations/pdf/2010-02-25-smou_romania_en.pdf

[23] Constitution of Romania, Article 114, the Government may engage its responsibility on a programme, political declaration or legislative proposal, which may enter in force without the direct implication of the Parliament. In this case, the Parliament has three days to withdraw the vote of confidence given to the Government, by adopting a motion of censure. If no motion of censure is adopted, the programme, legal initiative or declaration is adopted and becomes binding on the Government. See further Section III.9 below.

[24] The protests were triggered by the Government intention to amend the public health law and the planned privatization of emergency services. The protests first initiated in support of SMURD (Mobile Service of Emergency and Reanimation), the public emergency service without legal personality, but rapidly spread as a general anti-Government protest all over the country. See: Presidency of Romania, Press release, January 13, 2012, (Romanian) available at: http://www.presidency.ro/pdf/date/13502_ro.pdf 

[25] http://www.ft.com/intl/cms/s/0/a6be01c6-9069-11e1-8cdc-00144feab49a.html#axzz3DHgHotOv

[26] Parliament of Romania, United Chambers, session of 27 April 2012, Presentation of motion of censure, (Romanian), available at: http://www.cdep.ro/motiuni/2012/1468.pdf

[27] Parliament of Romania, United Chambers, session of 7 May 2012, Vote of investiture, steno http://www.cdep.ro/pls/steno/steno.stenograma?ids=7124&idm=5&idl=1

[28] Emergency ordinances 17/2012, Official Journal 366 of 18.05.2012 and 19/2012, Official Journal 340 of 18.05.2012.

[29] It was a general political dispute; no particular interest regarding specific points on the European Council agenda was put forward.

[30] Constitutional Court of Romania, Decision 683/27.06.2012, Official Journal 479 of 12.07.2012.

[31] Constitutional Court of Romania, Decision 682/27.06.2012, Official Journal 479 of 12.07.2012.

[32] For a comprehensive sequence of the events please see: Venice Commission, Opinion 685/2012 on the compatibility with Constitutional principles and the Rule of Law of actions taken by the Government and the Parliament of Romania in respect of other State institutions and on the Government emergency ordinance on amendment to the Law N° 47/1992 regarding the organisation and functioning of the Constitutional Court and on the Government emergency ordinance on amending and completing the Law N° 3/2000 regarding the organisation of a referendum of Romania, Adopted by the Venice Commission at its 93rd Plenary Session, pp. 4-5, (Venice, 14-15 December 2012), available at: http://www.venice.coe.int/webforms/documents/CDL-AD(2012)026-e.aspx#, consulted on 05.09.2014.

[33] Parliament of Romania, Decision of United Chambers No 32 of 03.07.2012, Decision of the Senate No 24 of 03.07.2012, Chamber of Deputies No 25 of 03.07.2012.

[34] Emergency Ordinance 38/2012 on the amendment of Law 47/1992 on the Organisation and Functioning of the Constitutional Court. By Decision 727 of 09.07.2012 the Constitutional Court declared the emergency ordinance unconstitutional; as well the law approving the emergency ordinance by Decision 738 of 19.09.2012 was found unconstitutional.

[35] Emergency Ordinance 41/2012 on the amendment of Law 3/2000 on referendum.

[36] Parliament of Romania, Decision of United Chambers No 33 of 06.07.2012.

[37] Central electoral bureau on referendum 2012, final results (Romanian) available at: http://www.becreferendum2012.ro/DOCUMENTE%20BEC/Rezultate/rezultat.pdf

[38] Ruling No 6 of 21.08.2012, Official Journal 616 of 27.08.2012. According to prior Decision 731 of 10.07.2012, the Court held that the modified provisions of the referendum law are still to be interpreted in the sense that 50% plus one quorum has to be met.

[39] Ibidem.

[40] Venice Commission, Opinion 685/2012, available at: http://www.venice.coe.int/webforms/documents/CDL-AD(2012)026-e.aspx#, consulted on 05.09.2014.

[41]European Commission, Statement by the European Commission on Romania Brussels, 6 July 2012, available at: http://europa.eu/rapid/press-release_MEMO-12-529_en.htm.

[42] Central Electoral Bureau 2012, Parliamentary elections final results for Chamber of Deputies and Senate, available at: http://www.becparlamentare2012.ro/rezultate%20finale.html

[43] Parliament of Romania, United Chambers Session of 21.12.2012, Vote of confidence to the Government, stenogram (Romanian) available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=7184&idm=5&idl=1

[44] Parliament of Romania, United Chambers, session of March 5, 2014, decision on the modification of the composition of the Government, stenogram (Romanian), available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=7356&idm=3&idl=1

[45] Central Electoral Bureau, Presidential elections 2014, available at: http://www.bec2014.rohttp://www.bec2014.ro

[46] European Council, Press release, Bucharest, April 25, 2013, available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/136946.pdf

[47] http://www.wsws.org/en/articles/2009/10/roma-o12.html

[48] Ibidem.

[49]Besliu, Raluca, ‘Honour and Solidarity: the 2012 Romanian Protests’, available at: http://politicsinspires.org/honour-and-solidarity-the-2012-romanian-protests/

Slovakia

Political change
I.1
What is the political context of the Eurozone crisis period in Slovakia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Since the early parliamentary elections of 2006, won by a leftist party Smer – sociálna demokracia (Direction – Social Democracy; Smer-SD), the government was composed of Smer-SD (having majority in the Government – 11 out of 16 seats) with its leader Robert Fico being the Prime Minister, far-right party Slovenská národná strana (Slovak National Party; SNS) led by Ján Slota,[1] and national conservative party Ľudová strana – Hnutie za demokratické Slovensko (People’s Party – Movement for a Democratic Slovakia; ĽS-HZDS) led by former Prime Minister Vladimír Mečiar.

On January 1, 2009, Slovakia became a member of the Eurozone and was put under the EDP for a second time since the accession in 2004 (EDP is likely to be lifted in mid 2014).[2] In spring 2009, presidential elections were held. The first round took place on March 21. The two most successful candidates from the first round advanced to the second round –  incumbent president Ivan Gašparovič (supported by SMER-SD, SNS, and two non-parliamentary and marginal parties HZD and ND) and Iveta Radičová (with support of SDKÚ-DS, KDH, a Hungarian minority party Strana maďarskej komunity (Party of the Hungarian Coalition; SMK), SaS, and two non-parliamentary marginal parties OKS and Liga). In the second round that took on April 4, 2009, Ivan Gašparovič was elected for his second consecutive five-year term.

In the European elections of June 2009, with only 20% eligible voters participating (the lowest in the EU), the coalition party succeeded – Smer-SD gained 32%, SNS 5.5%, and ĽS-HZDS 9%. The main opposition parties, SDKÚ-DS and KDH, received 17% and 11% respectively. A month later, regional elections were held. It was again a success for the governing party Smer-SD that won seven out of eight regions and formed regional governments in all regions, but Bratislava, with six of them being headed by Smer-SD members.

Smer-SD of incumbent Prime Minister Robert Fico also won the general parliamentary elections held on June 12, 2010 receiving 12 more seats in the Parliament (41% of the seats in the Parliament altogether) than in the 2006 elections. Despite this success, the opposition formed a government lead by Iveta Radičová, the leader for the elections[3] for a liberal conservative party Slovenská demokratická a kresťanská únia – Demokratická strana (Slovak Democratic and Christian Union – Democratic Party; SDKÚ-DS). The coalition was formed by SDKÚ-DS, a centre-right liberal party Sloboda a Solidarita (Freedom and Solidarity; SaS) founded and led by Richard Sulík, a conservative party Kresťanskodemokratické hnutie (Christian Democratic Movement; KDH) lead by Ján Figeľ, and a inter-ethnic rightist party Most-Híd[4] led by Béla Bugár.

A referendum on political reform was held on September 18, 2010. The referendum failed due to a low turnout with only 22.8% of the electorate voting (well below the 50% threshold required by the Constitution). The referendum was called after a successful petition that started as a civil activity and resulted in the foundation of a new liberal party Freedom and Solidarity (SaS). Large majorities voted in favour of the six proposals: First, to abolish the television licence; second, to limit parliamentary immunity; third, to lower the number of MPs from 150 to 100 by 2014; fourth, to set a maximum price for limousines used by the government at €40,000; fifth, to introduce electronic voting via the internet; and sixth, to change the Press Code by removing politicians’ automatic right of reply.

In the local elections held on November 27, 2010, Smer-SD of Robert Fico was again the most successful party with 20.6% of the votes.

On September 14, 2011, the opposition called for a vote of non-confidence, which the government survived.[5] However, the Radičová Government lost in a next confidence vote a month later, on October 11, 2011 and resigned. It was a result of an internal coalition struggle for the ratification of the increase of guarantees under the EFSF that was fiercely opposed by the coalition party SaS of Richard Sulík. Slovakia was last to ratify and the Commission and the Eurozone exercised pressure on the Slovak government to speed up the ratification process. PM Radičová, after failing to persuade SaS, linked the vote on the increase of guarantees to vote of confidence, which she lost. The Parliament then recalled Mr. Sulík from his position of the Chairman of the Parliament (Speaker). The remaining three coalition parties made a deal with the main opposition party Smer-SD, which had originally opposed the increase of guarantees. Smer-SD made it clear that it would support the increase of guarantees only in exchange for early elections or government reconstruction. The governing coalition and Smer-SD then passed the increase of guarantees and an early elections constitutional bill.[6] This solution was also accompanied by another constitutional act stipulating that the President would entrust the Government in demise with the execution of its duties until a new Government is appointed only in a limited extent, especially that the Government can appoint and recall state officials only with the consent of the President.[7]

On December 8, 2011, the Parliament adopted Constitutional Act No. 493/2011 Coll. on Fiscal Responsibility (Fiscal Responsibility Constitutional Act), which became effective on March 1, 2012 (with certain provisions becoming effective as of January 1, 2015).

Smer-SD won the early parliamentary elections on March 10, 2012 with a landslide victory. It gained a majority (83 seats out of 150) in the Parliament and Robert Fico formed a single-party government. The Government formed a new ministerial post of deputy PM for economy.

In January 2013, the Parliament considered an action against President Gašparovič for an intentional breach of the Constitution. The reason rest in the fact that although the Parliament elected a candidate for the position of General Prosecutor of Slovakia, the President refused to appoint him citing irregularities during the elections. Smer-SD of Prime Minister Fico, having clear majority, supported the President and stalled the action, which has thus never reached the Constitutional Court.[8] On September 19, 2013, the opposition attempted to vote non-confidence to the Government.[9] All opposition parties voted against the Fico Government, which, however, sustained the vote given its solid majority.[10]

On November 9 and 23, 2013, two-round regional elections took place. Regional parliaments and heads of the regions are elected separately. Centre-left Smer-SD won the elections (it received alone and in coalition with KDH almost 43%) and its candidates governs in four out of eight regions.[11] On March 15 and 24, 2014, presidential elections were held. Incumbent Prime Minister Robert Fico and an entrepreneur Andrej Kiska advanced to the second round. Two other elections will take place in 2014 in Slovakia – European parliamentary elections in May and municipal election in November.

[1] Party of European Socialists (PES) suspended the membership of Smer-SD for forming the coalition with SNS. PES considered SNS a “political party which incites or attempts to stir up racial or ethnic prejudices and racial hatred.” PES Press Release, SMER suspended from PES political family, Oct. 12, 2006. Available at: http://www.pes.eu/en/news/smer-suspended-pes-political-family.

[2] Slovakia entered the ERM II in November 2005. The assessment of the Maastricht criteria was as follows (2007-08): Deficit of 2.2% GDP, debt of 29.4% GDP, inflation of 2.2%, long-term interest rates of 4.5%.

[3] Mikuláš Dzurinda, the founder of the party and former Prime Minister, remained the chairman of the party.

[4] The party aims to “bridge” Hungarian minority and Slovak majority – “Most” and “Híd” are Slovak and Hungarian expressions for “bridge”).

[5] The voting was as follows: 69 votes of MPs from Smer-SD and SNS for non-confidence to 78 votes against. 23rd session of the 5th parliamentary term, voting no. 3, Sept. 14, 2011. Available at: http://www.nrsr.sk/web/Default.aspx?sid=schodze/hlasovanie/hlasklub&ID=29137. As the reasons for the non-confidence vote, the opposition cited inability to curb the public debt, which has risen during the two years of Radičová Government more than during the four years of the Fico Government (2006-2010), unemployment and inflation growth, stalled economic growth, austerity measures burdening socially weak groups of population, and corruption scandals. See the documents attached to Parliamentary Press no. 493 of Sept. 8, 2011. Available at: http://www.nrsr.sk/web/Default.aspx?sid=zakony/cpt&ZakZborID=13&CisObdobia=5&ID=493.

[6] Similarly to the Czech Constitution prior to a recent revision, the Slovak Constitution does not provide for self-dissolution of Parliament. The Slovak Parliament therefore adopted a special constitutional act on its dissolution and early elections (Constitutional Act No. 330/2011 Coll.; Parliamentary Press no. 533 of Oct. 13, 2011, available at: http://www.nrsr.sk/web/Default.aspx?sid=zakony/cpt&ZakZborID=13&CisObdobia=5&ID=533). It is worth noting that when the same solution was adopted by the Czech Parliament in 2009, the Czech Constitutional Court struck the constitutional act down for breaching unalterable provisions of the Czech Constitution. See more in my Czech Republic Report for this project.

[7] Constitutional Act No. 356/2011 Coll., amending the Slovak Constitution. For the legislative process and the text of the Act see Parliamentary Press No. 548 of Oct. 21, 2011, available at: http://www.nrsr.sk/web/Default.aspx?sid=zakony/zakon&MasterID=3878.

[8] Parliamentary File No. 383, 6th parliamentary term, received on January 17, 2013. Available at: http://www.nrsr.sk/web/Default.aspx?sid=zakony/cpt&ZakZborID=13&CisObdobia=6&ID=383.

[9] The opposition criticized the Government’s decision to acquire ownership in a mother company to strategic gas company named Slovak Gas Industries, which has been in loss for some time. The loss has been bore among others by J&T company, co-owner of the mother company. It was revealed that a document presented by the responsible minister to the Government, on which the Government based its decision, has been prepared by J&T company. This incident has united the opposition and raised suspicions about an excessive influence of certain economic groups on the Government’s decision-making.

[10] 24th session of the 6th parliamentary term, voting no. 44, Sept. 19, 2013. Available at: http://www.nrsr.sk/web/Default.aspx?sid=schodze/hlasovanie/hlasklub&ID=32779.

[11] A right-wing extremist Milan Kotleba was elected the head of region of Banska Bystrica.

Slovenia

Political change      
I.1
What is the political context of the Eurozone crisis period in Slovenia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Political parties in Slovenia:

Desus – democratic party of pensioners

Državljanska lista Gregorja Viranta (DL) – center right

Liberalna Demokracija Slovenije (LDS) – liberal democrats

Nova Slovenija (NSi) – christian party

Pozitivna Slovenia (PS)- center left

Slovenska demokratska stranka (SDS) – democrats

Slovenska Ljudska Stranka (SLS) – conservative

Slovenska Nacionalna stranka (SNS) extreme nationalist

Socialni demokrati (SD) social democrats

Strake Mira Cerarja (SMS) center

Zavezništvo Alenke Bratušek (AZ) – center left

Zares – social liberals

Združena Levica (ZL) left

Slovenia has gone through a period of high political instability since 2008. In the September 2008 parliamentary elections, the Socialni demokrati (SD) (left) obtained 29 seats, followed by the Socialna Demokratska Stranka (SDS) (right) with 28 seats. The SD leader Borut Pahor became prime minister and formed a (left wing) coalition government with three small parties (LDS – liberal democrats, Zares – social liberals, Desus – democratic party of pensioners). Pahor’s government attempted to introduce several changes. The Government of the Slovenian Republic [hereinafter Slovenian Government] proposed reforms in December 2010 to reduce public debt by increasing the retirement age to 65, implementing pension reform, and cutting social benefits. Several reforms were however overturned through referenda, which often had a very low participation. This initiated a strong debate concerning the need to revise the right to petition a referendum, which has been often used as a means of blocking reforms. In September 2011, Pahor’s government collapsed after a no confidence vote, leading to early elections in December 2011.

During the December 2011 election, Pozitivna Slovenia (central left), led by Zoran Jankovic, won most votes, with 28 seats, followed by SDS with 26 seats. Janković however failed to secure a parliamentary majority to form a government. That is why Janez Jansa, the leader of SDS, got the mandate and formed a (right wing) government (with DL, Desus, SLS, NSi).

Jansa’s government was in power from 2012 until early 2013. A minimal tax reform was adopted in April and May 2012 that aimed to improve the economic situation —by introducing a tax reduction for businesses and incentives for investments—. A special austerity law was adopted in May 2012 which helped reducing the budget deficit by half. In July of the same year, the government adopted a legislative package for growth, which aimed to lift bureaucratic obstacles for entrepreneurs and citizens. In October 2012, the government adopted the Slovenian Sovereign Holding Act[1] and the Act Determining the Measures of the Republic of Slovenia to Strengthen Bank Stability.[2] Further, in December 2012, the government adopted a pension reform. The law proposal, which tightened the retirement conditions by raising the retirement age to 65 years or 40 years of pensionable service, was passed without a single opposing vote. The reform nonetheless reduces the burden on public finances only until 2020.[3]

Several protests took place in December 2012 and January 2013. On January 8, the Corruption Prevention Commission released a report which found that both Janša and Jankovič violated the country’s office-holder integrity law, by having failed to report their assets. Three out of five parties left the coalition after Janša rejected their calls to resign as PM. As the government lost its majority, the opposition parties launched talks on an alternative government or early election in a bid to resolve the political crisis.

There were no elections in 2013. The parties agreed to form a new coalition, ruled by PS’s leader Bratušek. Bratušek, who was named interim head of the PS on 17 January 2013, after leader Janković suspended his position in the wake of a report that found he violated the country’s public office integrity law.[4] The new coalition members were PS, DL, Desus and SD.

In March 2013, the National Assembly of the Republic of Slovenia [hereinafter National Assembly] has passed the labour market reform without a single opposing vote. This was one the most important structural reforms planned by the Government to improve the economic and financial situation aimed to tackling market segmentation and increase Slovenia’s competitiveness. The new legislation, which social partners negotiated for five months, enabled easier hiring and firing, which aimed to contribute to a greater competitiveness of the Slovenian economy. In May 2013, the National Assembly adopted also the Act Amending the Public Sector Salary System. This Act regulates the system of salaries for officials and public servants in the public sector, the rules for stipulating, calculating and paying such salaries, and the rules for stipulating the amount of funds for salaries. Slovenia was facing a severe banking crisis, driven by excessive risk taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools. The government suggested the creation of the Bank Asset Management Company to ring-fence impaired assets.

In April 2014, the leading political party PS held a congress during which it elected the next party’s president. Two candidates applied for the post: the previous president Janković and Bratušek, at the time, the Slovenian prime minister. The coalition parties SD, DL and DeSUS threatened to leave the government if Jankovič were elected. Janković won the election, triggered a formal resignation of Bratušek.

After the resignation of Alenka Bratušek’s government, Slovenia had parliamentary elections in June 2014. The Party of Miro Cerar (SMC), a newly formed party led by the lawyer and professor Miro Cerar, won the election obtaining 36 seats. SDS obtained 21 seats, DeSUS 10 seats, the United Left—a new political party—and SD both obtained 6 seats, Nsi 5, and the AB 4 seats. The Slovenian People’s Party, Positive Slovenia (the winner of the 2011 election), and Civic List failed to retain seats in the Assembly.

[1] Zakon o Slovenskem državnem holding, Ur.l. RS, št. 105/2012, available at http://zakonodaja.gov.si/rpsi/r07/predpis_ZAKO6457.html.

[2] Zakon o ukrepih Republike Slovenije za krepitev stabilnosti bank, Ur.l. RS, št. 105/2012, available at http://zakonodaja.gov.si/rpsi/r01/predpis_ZAKO6521.html.

[3] http://www.mddsz.gov.si/en/newsroom/news/article/1939/7010/a09775e816a0d5493ae3c6a1fa84fb69/

[4] http://www.freedomhouse.org/report/freedom-world/2012/slovenia (last visited June 8, 2012). Prease release, Slovenian Times, The End of Janša´s Government, PM-designate Bratušek Still Without Clear Coalition, February 27 2013, available at  http://www.sloveniatimes.com/today-the-end-of-jansa%C2%B4s-government; The Slovenian Times, Alenka Bratušek, Slovenia’s First Female PM, February 28, 2013, available at http://www.sloveniatimes.com/alenka-bratusek-slovenia-s-first-female-pm/2.

Spain

Political change      
I.1
What is the political context of the Eurozone crisis period in Spain? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

Spain’s political system: brief explanation

Spain’s political system is based on a parliamentary system, where the Government is designated by the Parliament and is accountable to it. The Head of Government is the Presidente del Gobierno (currently, Mariano Rajoy Brey) and the Head of State is the King (currently, Felipe VI). The Parliament is officially called Cortes Generales and it consists of two different houses, the Congreso de los Diputados and the Senado. Both the Congreso and the Senado represent the Spanish people (the Senado also represents the Spanish territory) and have legislative, budgetary and political control functions. However, the Congreso de los Diputados is clearly the more important of the two houses. Just to mention some examples: the most important members of the Government are members of the Congreso (e.g. the Head of the Government and his/her Ministers); the Head of the Government only appears in the Congreso to explain the agreements reached in Brussels (i.e. Eurogroup, European Council) and, in case an act is adopted by the Congreso and vetoed or amended by the Senado, the Congreso can still reject these vetoes or amendments by voting again (and attaining an absolute majority). The elections to the Congreso and the Senado are held (together) every four years. Since the electoral system is different (because the Senado includes territory representation considerations) the outcome of the elections is also different. However, for instance, the Partido Popular currently has an absolute majority in both houses. The political parties, and the grupos parlamentarios (parliamentary groups) that the former constitute, which are currently represented in the Congreso de los Diputados are the ones listed below. It is important to highlight that the grupos parlamentarios consist of a minimum of 15 members (in the case of the Congreso) or 10 members (in the case of the Senado). It is also important to take into account that there are two essential dimensions in Spanish politics: (1) left/right wing, and (2) regional nationalism.

·      Partido Popular (PP)/ Grupo Popular – Right wing[1]

·      Partido Socialista Obrero Español (PSOE)/ Grupo Socialista – Centre left

·      Convergència I Unió (CiU)/ Grupo Catalán – Centre right. Catalan nationalism

·      Izquierda Unida/ Izquierda Plural – Left wing

·      Iniciativa per Catalunya Verds (ICV)/ Izquierda Plural – Left wing. Green party

·      Amaiur/ Grupo Mixto – Left wing. Vasc nationalism

·      Partido Nacionalista Vasco (PNV)/ Grupo Vasco – Centre. Vasc nationalism

·      Unión Progreso y Democracia (UPyD)/ Grupo UPyD – Centre

·      Esquerra Repúblicana de Catalunya (ERC)/ Grupo Mixto – Left wing. Catalan nationalism

·      Bloque Nacionalista Gallego/ Grupo Mixto – Left wing. Galician nationalism

·      Coalición Canaria, Nueva Canaria y Partido Nacionalista Canario/ Grupo Mixto – Centre right. Canarian nationalism

·      Compromís/ Grupo Mixto – Left wing. Nationalism from Valencia

·      Foro de Ciudadanos/ Grupo Mixto – Centre right. Regionalism from Asturias

·      Geroa Bai/ Grupo Mixto – Centre left. Vasc nationalism

 

Elections to the Spanish Parliament

(1) In March 2008, the PSOE (Partido Socialista Obrero Español) won the elections to the Congreso de los Diputados.[2] The PSOE got 169 seats, the PP (Partido Popular) got 153 seats, and the rest of the parties represented in the Congreso got 27 seats in total: Convergència I Unió (11), Partido Nacionalista Vasco (6), Esquerra Repúblicana de Catalunya (3), Izquierda Unida (2), Bloque Nacionalista Gallego (2), Coalición Canaria (2), Unión Progreso y Democracia (2) and Nafarroa Bai (1). The PSOE decided to govern alone, which forced it to negotiate with other parties in order to be able to adopt important measures.  

(2) In November 2011, the PP (Partido Popular) won the elections to the Congreso de los Diputados.[3] The PP got 186 seats, the PSOE got 110 seats and the rest of the parties represented in the Congreso got 54 seats in total: Convergència I Unió (16), Izquierda Unida (11), Amaiur (7), Partido Nacionalista Vasco (5), Unión Progreso y Democracia (5), Esquerra Repúblicana de Catalunya (3), Bloque Nacionalista Gallego (2), Coalición Canaria, Nueva Canaria y Partido Nacionalista Canario (2), Compromís (1), Foro de Ciudadanos (1) and Geroa Bai (1). The PP obtained absolute majority. This is very important in the context of the crisis governance, because it allows the Government to continuously adopt urgent anti-crisis measures and then to ratify them in the Parliament without needing the support of other parties. In this sense, the opposition has repeatedly criticised the Government for its lack of will to reach agreements.[4]

 

Economic and Financial Crisis Governance in Spain (January 2008- November 2012)

(1) In March 2008, the PSOE (Partido Socialista Obrero Español) won the elections to the Spanish Parliament. Although it was already evident that the inflation was accelerating, the unemployment was rising and the consumption of families was falling, the Government refused to speak about “crisis” and only admitted an economic “desaceleración”.[5] In this context, social measures like the cheque bebé[6] were maintained and new ones were introduced, like the refund of 400 Euros to IRPF taxpayers.[7]

(2) In June 2008, Zapatero admitted that Spain was in a very difficult situation and adopted an austerity plan with the major aim of reducing public spending in the public administration. Some of the measures of this plan were: a major reduction of public job offers for 2009 (in relation to 2008), and the freezing of salaries of high positions in the public administration.[8] The Government emphasised that only the salaries of high positions would be frozen, because of its commitment to keep the agreements with the syndicates of the public administration.    

(3) In August 2008, the Government adopted a plan consisting of 24 economic measures mainly affecting the following sectors: transport, energy, telecommunications, environment, housing and financing of small and medium enterprises. From the point of view of social rights, it is important to highlight the introduction of measures to facilitate the financing for the acquisition of subsidised housing.[9]

(4) In November 2008, the Government announced a new plan to activate the economy, consisting of 11000 million Euros for public investment, 8000 of which to be destined to town halls to finance public works (Fondo estatal de inversión local).[10] With this plan, Zapatero hoped to create 300000 jobs in 2009.

(5) In January 2009, the Government presented the Plan E (Plan español para el estímulo de la economía y el empleo),[11] which consisted of 82 economic measures basically in four different fields: aid to families, promotion of employment, modernisation of the economy and support to the financial sector. From the point of view of social rights, the most important measures are: the creation of a Fondo estatal de inversión local[12] and the promotion of subsidised housing.

(6) In September 2009, the Government announced the increase of the IVA (VAT) and the abolition of the refund of 400 euros to IRPF taxpayers, introduced in March 2008.[13]

(7) In May 2010, the Government announced a reduction of 15000 million Euros in social spending.[14] The cuts mainly affected the salaries of public officials (-5% on average), the retirement pensions (freezing in 2010), the abolition of the cheque-bebé (introduced in 2007) and the Ley de la Dependencia.[15] These cuts also had an important impact on the healthcare system and on the education system. 

(8) In September 2010, the Government presented a labour market reform.[16] This reform reduced the cost of dismissals and introduced new instruments to better control the unemployed. 

(9) In June 2011, a reform of the retirement pensions system was adopted. The main innovation of the reform was the change of the retirement age from 65 to 67 years.[17]

(10) In February 2012, the recently elected Government of the PP (Partido Popular) presented a new labour market reform.[18] The reform reduced the costs of dismissals, allowed for collective dismissals of public officials and gave more freedom to employees to modify working days, salaries, timetables and positions.  

(11) In April 2012, the Government announced a 10000 million Euros cut[19] affecting the healthcare system[20] and the education system.[21] In relation to the healthcare system (7000 million Euros cut), the most important of the measures introduced was the copago (co-payment) of medicines, which would vary depending on the income of the citizens. For instance, pensioners (who did not have to pay for medicines before) will now generally pay 10% of the price of medicines. On the other hand, employed citizens whose annual income is below 18000 Euros will generally pay 40% of the price of medicines (which they were already doing), while those annually earning between 18000 and 100000 Euros will now have to pay 50% of the price of medicines. Finally citizens with incomes above 100000 per year will pay 60% of the price. Among the most important measures affecting the education system, it is important to highlight the increase of the maximum number of students per class and the increase of the amount of class hours per teacher. 

(12) In May 2012, the Spanish Government rescued Bankia, the fourth largest bank of the country, injecting more than 23000 million Euros on this operation. By the end of May, Spain’s risk premium rose to 530 points,[22] and the EU warned the Government that it should reduce public spending in order to control its public deficit.[23]

(13) In June 2012, in particular on the 9th of June, the Spanish Government publicly announced its intention to ask for European financial assistance to recapitalise banks, and it stressed the fact that the Eurogroup had responded positively to this intention in its meeting held on the same day.[24] Later, on the 25th of June, the Spanish Government officially requested financial assistance for the banking sector. The European Commission, together with the ECB, the European Banking Authority (EBA) and the IMF assessed and concluded that Spain fulfilled the eligibility conditions. Therefore, they negotiated and eventually agreed with the Spanish authorities the specific financial-sector policy conditions attached to the financial assistance, which resulted in a Memorandum of Understanding on Financial-Sector Policy Conditionality and a Financial Assistance Facility Agreement.[25] As stated in the Memorandum, the main objective of the bailout is “to increase the long-term resilience of the banking sector as a whole, thus, restoring its market access”. Therefore, the key component of the bailout is to strengthen the weak segments of the Spanish financial sector. However, the text also stresses the fact that “there is a close relationship between macroeconomic imbalances, public finances and financial sector soundness”. This is the reason why Spain is compelled to ensure the attainment of deficit targets of 6.3% of GDP for 2012, 4.5 of GDP for 2013 and 2.8 of GDP for 2014. Moreover, the Memorandum “invites” Spain to introduce modifications in concrete fields such as its taxation system (so that it is “more supportive to growth”) and to implement the labour market reforms.  

(14) In July 2012, in particular on the 13th of July, the Government announced a new set of measures.[26] The most important reforms are the increase of the IVA (VAT), the increase of the Impuesto de Sociedades (Corporate Income Tax), the reduction of housing assistance, the cut of unemployment benefits, the modification of the Ley de Dependencia, and the reduction of public spending in public officials (e.g. the extra pay of December is abolished).  

(15) In August 2012, the Government withdrew the tarjeta sanitaria to irregular immigrants, which means that their access to the healthcare system is now limited to very specific cases (i.e. maternity, emergency care). This measure is one of the reforms to the healthcare system adopted in April 2012.[27]

(16) From September to November 2012, the Spanish press continuously reported about the “imminent” second bailout for Spain, in this case not for its banking sector, but for the Spanish public debt.[28] On 26 October 2012 the Government announced the creation of a Commission to undertake a reform of the public administration to better manage public services and to avoid unnecessary bureaucracy and duplicities. Moreover, the Government adopted the regulation allowing for collective dismissals in the public administration, which is an implementation of the labour market reform of February 2012.[29]

[1]Notice that this is only a tentative classification of the political ideology of the different parties in the Congreso in order to be able to contextualise the parliamentary debates mentioned and explained throughout the questionnaire. 

[2]See the results of the 2008 General Elections, as published in the Boletín Oficial del Estado (BOE), in:

http://www.boe.es/boe/dias/2008/04/17/pdfs/A20322-20377.pdf

[3]See the results of the 2011 General Elections, as published in the Boletín Oficial del Estado (BOE), in:

http://www.juntaelectoralcentral.es/jelect/2011/GENERALES_2011_Resultados.pdf

[4]See, for example, an article published in El País (03/07/2012):

http://politica.elpais.com/politica/2012/07/03/actualidad/1341339765_422675.html

[5]Solves, the Minister of Economy, preferred to speak about a “significant deceleration” than about a “crisis” in 2008:

http://elpais.com/diario/2008/06/03/economia/1212444007_850215.html

[6] The “cheque bebé” was an amount of 2500 euros that was given to families for every child born or adopted in Spain. It was introduced in 2007 and it disappeared in 2011:

http://www.rtve.es/noticias/20100512/jose-luis-rodriguez-zapatero-dice-adios-cheque-bebe-medida-estrella-politica-social/331041.shtml

[7] The IRPF is the Spanish income tax. To read about the introduction of the measure visit: http://www.cincodias.com/articulo/economia/gobierno-aprueba-devolucion-400-euros-mitad-abonara-junio/20080523cdscdseco_2/

[8]Read the press release of this austerity plan in the website of the Government: http://www.lamoncloa.gob.es/ActualidadHome/2008/230608CES.htm?galv2r=0

[9]Read the press release of this plan in the website of the Government:

http://www.lamoncloa.gob.es/ActualidadHome/2008/140808-enlacereformas.htm

[10] See the regulation adopting the measures of this plan in the BOE (Boletín Oficial del Estado):http://www.boe.es/buscar/doc.php?id=BOE-A-2008-19432

And the news regarding the plan inEl País:

http://elpais.com/diario/2008/11/28/economia/1227826801_850215.html#despiece1

[11]See the news on the Plan E in El País:

http://elpais.com/diario/2009/01/13/economia/1231801205_850215.html

[12]Notice that this measure had already been adopted in November 2008. However, it was considered to be part of the Plan E

[13]See the news on these measures in RTVE:

http://www.rtve.es/noticias/20090926/gobierno-sube-dos-puntos-iva-general-elimina-deduccion-400-euros/294000.shtml

[14]See the regulation adopting these measures in the BOE:

http://www.boe.es/boe/dias/2010/05/24/pdfs/BOE-A-2010-8228.pdf

And the news about it in El País:

http://elpais.com/diario/2010/05/13/espana/1273701601_850215.html

http://elpais.com/elpais/2010/05/12/actualidad/1273652221_850215.html

[15]The Ley de Dependencia had the aim of promoting the care and the personal autonomy of dependent people. See this regulation, as adopted in 2006, in:

http://www.boe.es/buscar/doc.php?id=BOE-A-2006-21990

[16]See the regulation adopting this labour market reform in:

http://www.cincodias.com/5diasmedia/cincodias/media/201009/18/economia/20100918cdscdseco_1_Pes_PDF.pdf

And the news about it in La Vanguardia:

http://www.lavanguardia.com/economia/noticias/20100909/54000612374/el-gobierno-logra-sacar-adelante-definitivamente-su-reforma-laboral-sin-las-enmiendas-de-la-oposicio.html

[17] See the regulation adopting this reform in the BOE:

http://www.boe.es/boe/dias/2011/08/02/pdfs/BOE-A-2011-13242.pdf

[18]This labour market reform was adopted in June 2012. See the regulation in the BOE:

http://www.boe.es/diario_boe/txt.php?id=BOE-A-2012-9110

[19]See the news about “el mayor recorte al Estado del Bienestar” (The biggest cut to the Welfare State) in El País:

http://politica.elpais.com/politica/2012/05/17/actualidad/1337245957_222091.html

[20] See the regulation adopting the healthcare system reform in the BOE:

http://www.boe.es/boe/dias/2012/04/24/pdfs/BOE-A-2012-5403.pdf

And the news about it in La Vanguardia:

http://www.lavanguardia.com/salud/20120420/54284664222/gobierno-luz-verde-recortes-para-ahorrar-7-000-millones-sanidad.html

[21] See the regulation adopting the education system reform in the BOE:

http://www.boe.es/boe/dias/2012/04/21/pdfs/BOE-A-2012-5337.pdf

And the news about it in El País:

http://sociedad.elpais.com/sociedad/2012/05/19/actualidad/1337450845_829383.html

[22] See the news about Spain’s risk Premium in June 2012 in El País:

http://elpais.com/elpais/2012/06/01/inenglish/1338558583_391652.html

[23] See, for instance, the document “Following in-depth reviews, Commission calls on Member States to tackle Macroeconomic Imbalances”, MEMO/12/388, 30 May 2011 in:

http://europa.eu/rapid/press-release_MEMO-12-388_en.htm?locale=en

[24] See the news about the intention of the Spanish Government to request financial assistance in the official website of the Government:

http://www.lamoncloa.gob.es/ServiciosdePrensa/NotasPrensa/MinisterioEconomiaCompetitividad/2012/110612tesoro.htm

[25] See the 23th of July 2012 Memorandum of Understanding on Financial Sector Policy Conditionality and the 24th of July 2012 Financial Assistance Facility Agreement in (respectively):

http://ec.europa.eu/economy_finance/eu_borrower/mou/2012-07-20-spain-mou_en.pdf

http://www.efsf.europa.eu/attachments/efsf_spain_ffa.pdf

Also, see these agreements, as published in the 10th of December 2012 Boletín Oficial del Estado (BOE) in:

http://www.bde.es/f/webbde/SJU/normativa/BOE-A-2012-14945.pdf

[26]See the regulation adopting these reforms in the BOE:

http://www.boe.es/boe/dias/2012/07/14/pdfs/BOE-A-2012-9364.pdf

And the press release about the measures in the website of the Government:

http://www.lamoncloa.gob.es/ConsejodeMinistros/Resumenes/2012/130712-consejo.htm

[27] See the news about it in El País:

http://politica.elpais.com/politica/2012/08/31/actualidad/1346438706_297231.html

[28]See the news about the second bailout in September:

http://www.lavanguardia.com/economia/20120925/54351805414/rescate-espana-bruselas-gobiernos.html

http://economia.elpais.com/economia/2012/09/08/actualidad/1347122589_255164.html

In October:

http://www.elmundo.es/elmundo/2012/10/03/economia/1349255442.html

http://www.expansion.com/2012/10/26/economia/1351242765.html

http://politica.elpais.com/politica/2012/10/31/actualidad/1351678526_422326.html

And in November:

http://www.elmundo.es/elmundo/2012/10/31/espana/1351668733.html

[29]See the press release of these announcements in the website of the Government:

http://www.lamoncloa.gob.es/ConsejodeMinistros/Resumenes/2012/261012-consejo.htm

And the news about the measure allowing for collective dismissals of public officials:

http://economia.elpais.com/economia/2012/10/30/actualidad/1351588770_264660.html

Sweden

Political change     
I.1
What is the political context of the Eurozone crisis period in Sweden? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The government is made up of a centre right-wing coalition. It consists of four political parties: Moderate Party (Moderaterna), Centre Party (Centerpartiet), Liberal People’s Party (Folkpartiet), and Christian Democrats (Kristdemokraterna). The opposition consists of the centre-left Swedish Social Democratic Party (Socialdemokraterna), Green Party (Miljöpartiet), Left Party (Vänsterpartiet), and the far-right Sweden Democrats (Sverigedemokraterna).

General elections are held every four years, most recently in September 2010, when the centre right-wing coalition was re-elected. In 2010, the Sweden Democrats, a far-right, anti-immigration party, got elected into the Swedish Parliament. In May 2013, some Stockholm suburbs with a heavy immigrant population suffered from riots. While the Government portrayed these riots as the work of a few hundred ‘hooligans’, the centre-left Social Democrats (Sweden’s biggest party) argued that the riots were a question of class and not of immigration. However, in the case of Sweden, these two events can hardly be explained by the Euro-crisis; there are rather other socio-economic explanations to be found. For many reasons, Sweden has not suffered badly by the euro crisis. Sweden suffered by the 2008 global crisis, but recovered soon. The GDP growth was negative throughout 2009, but the Swedish economy had stabilised. In the recession, the Swedish currency weakened, but recovered soon.

In 2003, Sweden held a referendum on the euro. The question was: are you of the view that Sweden should introduce the euro as currency?” 55.9 % voted against and 42 % in favour.[1] The referendum was only legally non-binding, but the Riksdag decided that Sweden would not adopt the euro for the time being. In the campaign, three political parties in the Parliament were in favour of the euro: Moderaterna, Folkpartiet, and Kristdemokraterna. The centre-left Social Democrats were split. In the recent years, and as a result of the Euro crisis, these parties have introduced more cautious declarations in their party programmes on the euro. No political party is of the opinion that Sweden should join the Euro today. Folkpartiet is the most euro-friendly party, but in the recent two years, it appears split.

For the period 2003 to 2007, the public support to join the euro was steadily negative.[2] In 2009, the public opinion was for the first time in favour of the euro (a poll showed that 47 % were in favour and 42 % against). The reason is likely that the Swedish Krona had been weakened against the Euro. A few months later, when the Krona strengthened, the public opinion changed again. In the beginning of 2010, the public opinion was strongly negative. A poll in June 2010 showed that 61 % were against the Euro and only 24 % in favour. In another poll in December 2011, 87,6 % were against and 9,7 % in favour.

[1] The turn-out was 82,6 %. For an economic analysis of the referendum, see Lars Jonung and Jonas Vlachos, “The Euro – What´s in it for me? An Economic Analysis of the Swedish Euro Referendum 2003,” Sieps 2007:2, available at http://www.sieps.se/sv/publikationer/the-euro-whats-in-it-for-me-an-economic-analysis-of-the-swedish-euro-referendum-2003-20072

[2] Interestingly, during the same period, the public opinion to the EU increased. See Sören Holmberg, “Ökat opinionsstöd för EU,” Sieps, 2008:5epa.

United Kingdom

Political change      
I.1
What is the political context of the Eurozone crisis period in the United Kingdom? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?

The UK’s last general election was on 6 May 2010. None of the parties achieved the 326 seats needed for an overall majority. The Conservative Party won 306 seats and so a coalition government was formed with the Liberal Democrat Party. Coalition governments are unusual in the British Parliamentary System. Governments are elected on the basis of the first past the post system which usually leads to one party having a majority.

The Coalition Agreement ruled out Britain joining the euro and further agreed that there would be “no further transfer of sovereignty or powers over the course of the next Parliament.” It also set out the intention to “amend the 1972 European Communities Act so that any proposed future treaty that transferred areas of power, or competences, would be subject to a referendum” and to “examine the case for a United Kingdom Sovereignty Bill to make it clear that ultimate authority remains with Parliament.”[1]

The European Union Act 2011 intended to implement the Coalition Agreement regarding the EU. In introducing the Bill, the Secretary of State for Foreign and Commonwealth Affairs (William Hague (Conservative)) stated that it intended to address the problem that whereby the EU has “a greatly enlarged place in our national policy and politics” there is also a “growing disconnection between…- the British people, the voters – and the EU’s institutions”. He also noted that there is a “growing sense… that the EU’s democratic legitimacy in the country has been weakened.”[2]

The European Union Act 2011 has two main sections relevant for present purposes. Firstly, the Act provides for a referendum to be held in certain circumstances before an amendment of the Treaties, before any new Treaty replacing those currently in force and before a decision that would transfer a power or competence from the UK to the EU.  Included within the decisions requiring a referendum is the decision to make the euro the currency of the UK (s.6(5)(e)). Secondly, it declared that EU law is only directly effective in the UK by virtue of an Act of Parliament. This aims to reaffirm the sovereignty of the UK Parliament.[3]  

The British Prime Minister, David Cameron, has expressed his intentions to try to negotiate a better settlement for Britain within the EU. On 23rd January 2013, Cameron made a speech in which he stated that the time had come either to renegotiate Britain’s settlement within the EU or for Britain to leave the EU.[4] More recently, Cameron stressed the benefits of EU membership,[5] but he still maintains that there ought to be a referendum where the public are able to vote either to stay in (on newly negotiated terms) or to leave the EU. The referendum will take place after 2015 if the Conservative Party wins the next election.[6] It is unclear whether the other parties will hold referendums on Europe if they are elected in 2015, when the next general election takes place.

The pressure for an independent Scotland has also increased since the 2010 election.  a referendum will be held in 2014. One issue behind the drive for independence is the dissatisfaction of the current austerity programme in the UK.[7] A further issue is EU membership. A recent poll demonstrated that support for Scottish Independence increased depending upon whether it seemed Britain would be a part of the EU.[8]

The coalition government introduced several constitutional reforms which, according to McEldowney were to ensure a strong government in the face of the “political uncertainties that might lead to financial market instability.” For instance, there is now a Fixed Term Parliaments Act 2011 which means that it is no longer up to the Government to decide when to call an election: there is a fixed term of five years. An election will only be called before this point if there is a vote of no confidence in the government or a vote by at least 2/3rds of MPs in favour of an early election. The Cabinet Manual has also now been published, putting large parts of the UK constitution into a written form.

[1] Liberal-Conservative Coalition Agreement https://www.gov.uk/government/publications/the-coalition-documentation

[2] Second Reading in the House of Commons of European Union Bill, HC Hansard 7 Dec 2010, Col 191 http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm101207/debtext/101207-0002.htm#10120737000002

[3] Section 18 of European Union Act 2011 states “Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act.”

[4] https://www.gov.uk/government/speeches/eu-speech-at-bloomberg

[5] https://www.gov.uk/government/speeches/plan-for-britains-success-speech-by-the-prime-minister

[6] http://www.conservatives.com/Policy/Where_we_stand/Europe.aspx

[7] http://www.snp.org/sites/default/files/document/file/scotlands_economy-_the_case_for_independence.pdf

[8] http://news.stv.tv/politics/225950-poll-possible-eu-withdrawal-could-boost-scottish-independence-support/