The Role of EU Agencies in the Eurozone and Migration Crisis: Impact and Future Challenges [1st ed.] 9783030513825, 9783030513832

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EUROPEAN ADMINISTRATIVE GOVERNANCE

The Role of EU Agencies in the Eurozone and Migration Crisis Impact and Future Challenges Edited by Johannes Pollak · Peter Slominski

European Administrative Governance

Series Editors Thomas Christiansen Luiss University Rome, Italy Sophie Vanhoonacker Maastricht University Maastricht, The Netherlands

The series maps the range of disciplines addressing the study of European public administration. In particular, contributions to the series will engage with the role and nature of the evolving bureaucratic processes of the European Union, including the study of the EU’s civil service, of organization aspects of individual institutions such as the European Commission, the Council of Ministers, the External Action Service, the European Parliament, the European Court and the European Central Bank and of inter-institutional relations among these and other actors. The series also welcomes contributions on the growing role of EU agencies, networks of technical experts and national officials, and of the administrative dimension of multilevel governance including international organizations. Of particular interest in this respect will be the emergence of a European diplomatic service and the management of the EU’s expanding commercial, foreign, development, security and defence policies, as well as the role of institutions in a range of other policy areas of the Union. Beyond this strong focus of EU administrative governance, the series will also include texts on the development and practice of administrative governance within European states. This may include contributions to the administrative history of Europe, which is not just about rules and regulations governing bureaucracies, or about formal criteria for measuring the growth of bureaucracies, but rather about the concrete workings of public administration, both in its executive functions as in its involvement in policy-making. Furthermore the series will include studies on the interaction between the national and European level, with particular attention for the impact of the EU on domestic administrative systems. The series editors welcome approaches from prospective contributors and are available to contact at [email protected] and s.vanhoonacker@maastrichtun iversity.nl for proposals and feedback. All books in the series are subject to Palgrave’s rigorous peer review process: https://www.palgrave.com/gb/ demystifying-peer-review/792492

More information about this series at http://www.palgrave.com/gp/series/14977

Johannes Pollak · Peter Slominski Editors

The Role of EU Agencies in the Eurozone and Migration Crisis Impact and Future Challenges

Editors Johannes Pollak Webster Vienna Private University Vienna, Austria

Peter Slominski Institute for Political Science University of Vienna Vienna, Austria

ISSN 2524-7263 ISSN 2524-7271 (electronic) European Administrative Governance ISBN 978-3-030-51382-5 ISBN 978-3-030-51383-2 (eBook) https://doi.org/10.1007/978-3-030-51383-2 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover image: © PeskyMonkey/iStock/Getty Images Plus This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Praise for The Role of EU Agencies in the Eurozone and Migration Crisis

“The Eurozone and migration crises exposed severe gaps in the administrative capacity of the EU. This fine volume offers an insightful interdisciplinary and comparative analysis of how EU Agencies were strengthened in response. But it also raises important concerns about accountability.” —Frank Schimmelfennig, ETH Zürich, Switzerland “The proliferation, design and accountability of EU agencies is the focus of a vibrant academic debate. Pollak and Slominski, two foremost experts on EU agency governance, have assembled a timely and stellar volume, which widens the research agenda on EU agencies. Zooming in on the eurozone and migration crises, the contributions to this volume explore how the different crises have affected agency governance and the delicate balance between agency autonomy and accountability.” —Berthold Rittberger, Ludwig Maximilian Universität München, Germany “In the literature on the crises that have beset the EU, the role of agencies has often been overlooked. This volume fills that gap, but it also does a lot more. Combining insights from legal scholars and political scientists, it contributes to important and topical debates about the role of agencies in EU governance. A distinctive feature is that the case study authors

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PRAISE FOR THE ROLE OF EU AGENCIES IN THE EUROZONE AND …

approach agencies as actors in their own right rather than mere artefacts. In short, this an indispensable guide.” —Hussein Kassim, Professor of Politics, University of East Anglia, UK, and ESRC Senior Fellow ‘The UK in a Changing Europe’

Contents

Part I Introduction 1

EU Agencies in Times of Crisis: An Introduction Johannes Pollak and Peter Slominski

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2

EU Agencies and the Politicized Administration Michelle Everson and Ellen Vos

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Part II 3

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Agencies and the Eurozone Crisis

Fit for Purpose or Drowning in Details? Institutional Evolution of the European Financial Sector Supervisory Authorities a Decade After the Global Financial Crisis Aneta B. Spendzharova The Supervisory Board of the ECB: An Agency-Like Body to Stabilise the Banking Sector? Paul Weismann The Single Resolution Board: Salient Features, Peculiarities and Paradoxes Nicola Ruccia

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CONTENTS

The Single Resolution Board: What About Accountability? Marta Božina Beroš and Marin Beroš

Part III 7

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EU Agencies and the Migration Crisis

The European Border and Coast Guard Agency Frontex After the Migration Crisis: Towards a ‘Superagency’? Vittoria Meissner Beyond the ‘Migration Crisis’: The Evolving Role of EU Agencies in the Administrative Governance of the Asylum and External Border Control Policies Evangelia (Lilian) Tsourdi Interagency Relations and the EU Migration Crisis: Strengthening of Law Enforcement Through Agencification? Chiara Loschi and Peter Slominski

Index

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Notes on Contributors

Marin Beroš holds a Ph.D. in Philosophy and a B.A. in Philosophy and Comparative Literature from the University of Zagreb (Croatia). serving as a junior diplomat at the Croatian Ministry of Foreign and European Affairs, he transferred to the Institute of Social Sciences “Ivo Pilar” in Pula where his research focused on political philosophy, political and legal theory. He publishes extensively on the topics of deliberative democracy, global justice and cosmopolitanism in particular. Currently, he is a national representative in two competitive EU projects focused on reappraising deliberative democracy and civil rights in Europe. Marta Božina Beroš is an Associate Professor at the Faculty of Economics, Juraj Dobrila University of Pula (Croatia), where she teaches on EMU law and governance. Božina Beroš graduated cum laude from the Faculty of Law, University of Zagreb (2003). She holds an M.Sc. in Economics from the University of Zagreb (2007) and a Ph.D. in Economics from the University of Ljubljana (2012). She was and Intellectual Exchange Fellow of the Japan Foundation, a UNIDROIT invited scholar, and the recipient of two Jean Monnet Module projects awarded by the European Commission. Recently, she has been awarded a grant for the promotion of science diplomacy by the Horizon 2020 “S4D4C” project. Her research interest focuses on integration dynamics within the EMU, and on agency governance in the context of differentiated integration. Since 2019 she has been working on an “experimentalist-informed” ix

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analysis of the EBA and the SSM as participant in the Horizon2020 “Integrating Diversity in the EU-InDivEU” project. Her publications have appeared in the Journal of Common Market Studies, the Maastricht Journal of Comparative and European Law as well as the Palgrave Series in Banking and Finance. Michelle Everson is Professor of Law at Birkbeck College, University of London. She has researched and published widely in the fields of regulatory law, constitutional law, financial law, legal theory and the concept of risk. Her first works on European Agencies were published in the 1990s ((1995): “Independent Agencies: Hierarchy Beaters?” Vol 1:2 European Law Journal 180–204). More recently, she has published extensively together with Ellen Vos on the agencies of the new millennium ((2014): with Cosimo Monda & Ellen Vos (eds), European Agencies in Between Institutions and Member States, Kluwer). Chiara Loschi is currently a postdoc researcher at the University of Vienna, Centre for European Integration Research, IPW, in the frame of a project funded by the Austria Science Fund and titled “The EUBorder Protection Regime: The Cooperation between EU Agencies and its Consequences for Fundamental Rights” (project P30703-G29). From 2017 to 2018, she has been based in Tunis as a CNRS postdoc researcher in the frame of an EU HORIZON2020 project, “EUNPACK. Good intention mixed results” (grant N. 693337), on EU crisis response in Libya. Her recent publications include: “Whose enemy at the gates? Border management in the context of EU crisis response in Libya and Ukraine” coauthored with Alessandra Russo and published on Geopolitics, and “EU-Algeria (non)Cooperation on Migration: A Tale of two Fortresses”, coauthored with Federica Zardo and published on Mediterranean Politics. Vittoria Meissner works as a research advisor at the Institut für Europäische Politik e.V. in Berlin where she also researches within the Horizon 2020 Project “EU IDEA—Integration and Differentiation for Effectiveness and Accountability”. Her research interests include the EU migration and asylum policy, differentiated integration as well as European integration processes and institutional change. She completed her Ph.D. at the TUM School of Governance at the Technical University of Munich, where she also worked for three years

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as a research assistant within an ERC Project on the empowerment of international organizations. Prior to these positions, she studied Political Science and International Relations in Rome and Dresden. Johannes Pollak is Professor of Political Science at Webster Vienna Private University where he also serves as rector. He is Senior Research Fellow at the Institute for Advanced Studies, Vienna (IHS) and chairman of the Executive Board of the Institute of European Politics (IEP) in Berlin. He also serves as co-editor of the ECPR’s Journal Political Research Exchange (PRX). He is the author of Repräsentation ohne Demokratie (Springer 2007), co-editor of Political Representation (Routledge 2017) (jointy with C. Lord), co-editor of Creating Political Presence (University of Chicago Press 2019) (jointly with D. Castiglione). His recent publications concern the relationship between democracy and representation, supranational democracy, democratic theory and European Integration. In addition, he has published widely in international journals such as the Journal of European Public Policy, Journal of Common Market Studies, West European Politics, Journal of European Integration, etc. Nicola Ruccia is a Research Fellow in EU Law at the University of Bari. He is a member of the Editorial Board of La Comunità internazionale and OSORIN and a member of the Research Group of the Bank of Italy on PSD2 and Open Banking. Nicola was previously, among other positions, Visiting Scholar at the University of Essex. He obtained his Ph.D. from the University of Bari and his LL.M. from Sapienza University of Rome. He has published several articles (e.g. European Business Law Review, Revue des Affaires Européennes, Studi sull’Integrazione Europea). His monograph is on the Banking Union, while he is currently working on another one on the European Council. Peter Slominski is an Assistant Professor at the Institute for Political Science/Centre for European Integration Reserach (eif) at the University of Vienna where he is currently principal investigator and manager of a two-year project on EU Border Management funded by the Austrian Science Funds (FWF). He has also taught a variety of courses on EUrelated topics at the Universities of Salzburg, Innsbruck and Webster Private University/Vienna Campus. Peter has coordinated or participated in numerous national and international projects such as Lisboan,

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RECON, CONNEX, NATAC or Cost Actions (IS1309; CA17119). He has published widely in relevant high-ranking international journals such as the Journal of European Public Policy, Journal of Common Market Studies, West European Politics, Journal of European Integration, International Migration, Global Environmental Politics, European Foreign Affairs Review, European Law Journal, and Telecommunications Policy and established international academic presses including Oxford University Press, Routledge or ECPR Press. Aneta B. Spendzharova is Associate Professor of Political Science at Maastricht University. She holds a Ph.D. in Political Science from the University of North Carolina—Chapel Hill, USA. Before coming to Maastricht, Aneta was postdoctoral researcher at the Institute for Advanced Studies, Vienna (IHS). Her research interests are in the areas of financial regulation, regulatory governance and policy coordination in the European Union and Central and Eastern Europe, and research methodology. Her research has been published in journals, such as the Journal of Common Market Studies, Review of International Political Economy, West European Politics, and the Journal of European Integration. She is the author of Regulating Banks in Central and Eastern Europe Through Crisis and Boom (Palgrave Macmillan, 2014) and the project coordinator of the Jean Monnet Research Network VISTA (EU Single Market Integration in a Turbulent Age). Evangelia (Lilian) Tsourdi is Assistant Professor and Dutch Research Council VENI grantee at Maastricht University, as well as visiting professor at Sciences Po Paris. She is a member of the coordination team of the "Odysseus Network" on Legal Studies on Immigration and Asylum in Europe. Lilian was previously, among other positions, Departmental Lecturer at the University of Oxford (Refugee Studies Centre), and Max Weber postdoctoral Fellow at the European University Institute (EUI). She obtained her Ph.D. from the Université Libre de Bruxelles. She has published several articles (e.g. German Law Journal, Common Market Law Review), has co-edited Exploring the boundaries of refugee law (with J.P. Gaucci & M. Giuffré, Brill 2015), and two special journal issues (RSQ 2016 with P. De Bruycker; MJECL 2017 with D. Thym). Her monograph on the constitutional foundations and administrative governance of the EU asylum policy is forthcoming in Oxford University Press, while she is also currently working on a Research Handbook on EU Migration and Asylum Law (with P. De Bruycker, Edward Elgar).

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Ellen Vos is Professor of European Union Law at the Law Faculty of Maastricht University. She is co-director of the Maastricht Centre for European Law of Maastricht University (MCEL). She coordinates the Academic Research Network on EU agencies and innovation (TARN) (https://tarn.maastrichtuniversity.nl/). She is coordinator of the EU Horizon2020 project Reconciling sCience, Innovation and Precaution through the Engagement of Stakeholders (RECIPES). Ellen’s main research interests concern EU law and governance (comitology and agencies), market integration and EU risk regulation (precautionary principle, food safety, pharmaceuticals, nanotechnology). She has published extensively in these areas. She supervises (and has supervised) numerous master and Ph.D. theses in these areas. Paul Weismann is a Postdoctoral Researcher at the University of Salzburg, Department of Public, International and European Law and Salzburg Centre of European Union Studies (SCEUS). He has taught and published in various fields of EU law and public international law. His doctoral thesis was about European Agencies and Risk Governance in EU Financial Market Law (Routledge 2016). His current research interests are constitutional questions relating to European agencies, the Economic and Monetary Union (in particular: the Banking Union), EU soft law and mechanisms aimed at ensuring Member States’ compliance with EU law.

List of Figures

Chapter 3 Fig. 1 Fig. 2

ESAs budget contribution from the EU budget, MFF 2014–2020 (Source European Commission [2017]) ESAs total number of staff employed (Source European Commission [2017])

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List of Tables

Chapter 3 Table 1

Budget of the ESAs, 2016 (in million e)

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Chapter 9 Table 1

Bilateral agreements between Frontex, EASO and FRA

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PART I

Introduction

CHAPTER 1

EU Agencies in Times of Crisis: An Introduction Johannes Pollak and Peter Slominski

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Introduction

In the last two decades, the emergence and institutionalisation of EU agencies has been widely studied by EU scholars from many perspectives. While some studies focus on formal, functional or normative aspects of agencification (e.g. Curtin 2014; Borrás et al. 2007; Busuioc et al. 2012), others examine to what extent EU agencies have impacted on the EU’s institutional balance (e.g. Everson and Vos 2016; Kelemen 2005; Van Ooik 2005). Works within this strand of research are particularly interested in whether EU agencies are an important element of an increasingly intergovernmental governance structure (Bickerton et al. 2015) or whether they have gradually escaped control from the member states exercising de facto decision-making authority (Gehring and Krapohl

J. Pollak (B) Webster Vienna Private University, Vienna, Austria e-mail: [email protected] P. Slominski Institute for Political Science, University of Vienna, Vienna, Austria e-mail: [email protected] © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_1

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2007; Busuioc 2009). Yet others take a more global view arguing that EU agencies play a crucial role in an emergent European executive order (Trondal 2010) or in an EU administrative governance system (Hofmann and Türk 2006). What has received less academic attention, however, is how a crisis situation affects EU agencies and what role EU agencies play in crisis management (notable exceptions are e.g. Jordana and Triviño-Salazar 2020; Vos 2000; Moloney 2011; Horii 2018). Given their executive power in key areas including the Eurozone as well as border and migration management, this is an astonishing gap.

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The EU’s Two Make or Break Moments: The Eurozone and the Migration Crisis

A crisis can be conceived as an exogenous event that can influence the trajectory of a policy (e.g. Kingdon 1984). We can define a political crisis as a situation in which policy makers are confronted with significant need for action, on the one hand, and limited time for extensive policy deliberations, on the other (Falkner 2016). The pressure to act in order to tackle a profound systemic challenge opens a window of opportunity that may be used by political entrepreneurs to advance their policy interests. Crises-related measures can either lead to deep policy change that creates a new policy path (Capoccia and Kelemen 2011; Sabatier 1988) or to gradual change (Mahoney and Thelen 2010). Throughout its history, the EU has been compelled to deal with numerous crises. The EU historian Desmond Dinan even states that the history of the EU is replete with so-called crises (Dinan 2017). At the same time, many scholars agree that the EU has not only survived these past crises, but has even been strengthened by them (Kühnhardt 2011). However, both the Eurozone crisis and the migration crisis constitute a multi-dimensional crisis that is unprecedented in seriousness and severity (Dinan 2017). What is more, within the short time span of just a few years, the EU has been confronted with two major and overlapping ‘transboundary crises’ which have been perceived as a make or break moment (Kupchan 2011; Reuters 2018). EU scholarship has devoted considerable attention to both crises. Focusing on the driving factors and varying outcome, scholars have asked why both crises, despite their similarities, led to different responses and paths of integration. From an intergovernmentalist perspective, Biermann et al. (2019) discussed the interest divergency among member states and

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inter-state bargaining dynamics with the view to explain the variation of crisis management and its impact in the context of the Euro and migration crisis. While both crises were triggered by external events, their trajectories proved to be different. While the Eurozone crisis led to substantial EU reforms enshrined in legally binding supranational rules, the migration crisis resulted in modest EU measures mainly revolving around administrative and financial support (Trauner 2016). By contrast, with regard to the migration crisis, member states’ preferences prohibited an agreement for ‘joint action’ to avoid a ‘common bad’. Asymmetric interdependence produced power asymmetry leaving states that have lower costs of non-agreement in a better position than states which carry the brunt of the crisis and thus have a greater interest in reform. As a result, states that are less affected by migratory pressures had no incentive to advocate or support major policy reforms (Biermann et al. 2019, p. 248). From a neofunctional perspective, scholars emphasized the differences and deficiencies of the existing governance design (Schimmelfennig 2018). Like liberal intergovernmentalist scholars, neofunctionalists observed that the crisis responses and outcomes have been different. However, unlike intergovernmentalists, they identify transnational interdependence and supranational capacity as the main factors that explain the variation of these outcomes. While the governance system of the Eurozone has strong supranational institutions (e.g. European Central Bank [ECB]), EU migration and refugee policy lacks a similar institutional set-up. As a result, national authorities still have considerable powers in implementing and administering EU policies. Moreover, migrants are regarded as weak transnational actors who are not capable to impose strong costs on EU governments. In contrast to the Eurozone crisis, exiting the Schengen or Dublin regime or resorting to unilateral behaviour has been perceived as less costly than leaving the Eurozone (Schimmelfennig 2018, p. 970). Transcending the intergovernmentalist-neofunctional divide, the newly developed ‘failing forward argument’ (Jones et al. 2016; Scipioni 2018a) focuses on the incomplete governance architecture of the eurozone and EU migration and refugee policy. Lowest common denominator bargaining results in incomplete agreements which create the conditions for subsequent crises which—in a next step—stimulates further functional spill overs dragging reluctant member states into the next incomplete agreement and so forth (Jones et al. 2016). Incomplete governance

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structures are characterized by a modest level of supranational harmonization, a low level of rule precision that is often complemented by legally non-binding instruments (i.e. soft law) which leaves considerable national autonomy and weak supranational monitoring (Slominski and Trauner 2020; for a pre-crisis assessment see Schelkle 2007). Structural similarities between the Eurozone crisis and the migration crisis have also been identified by proponents of ‘core state powers’. Since monetary and migration policy belong to core state powers (high political salience and heavily politicized), both crises can be characterized by three sources of failure: low compliance rate of the existing acquis; regulatory gaps which leaves large room of manoeuvre to the discretion of member states without creating a level-playing field or producing policy consistency; insufficient burden and risk-sharing ensuring solidarity between EU member states. Given the structural similarity of the crises, the EU basically relied on three instruments to manage both crises: regulatory tightening, strengthening of risk and burden-sharing arrangements and externalization of crisis management (Genschel and Jachtenfuchs 2014, 2018). What has been widely overlooked by this literature is that while the Eurozone and migration crises have produced different outcomes in terms of supranationalization, both events have further strengthened the agency governance in the EU.

3 Creation and Strengthening of EU Agencies in the Wake of Crises Since the mid-1970s, the EU has established over 30 EU agencies which operate in numerous fields ranging from pharmaceutical regulation, energy regulation, food safety, environment or railways (Geradin et al. 2005). Scholarly literature widely agrees that agencies have the power to enhance the credibility of long-term policy commitments (Kelemen and Majone 2012). In order to meet these functional demands these agencies have to operate at arm’s length from their political principals (i.e. EU governments) who have an interest to strengthen the EU’s regulatory capacity without directly enhancing the power of supranational institutions, notably the Commission (Bickerton et al. 2015). While this autonomy or independence from political interference may be considered as necessary from a functional point of view, it nevertheless creates tension with accountability. To tackle this dilemma, democratically elected policy-makers can adopt precise legal mandates and frameworks that ex

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ante specify the tasks and modus-operandi of the agencies. Furthermore, they can establish political or administrative oversight and judicial review processes allowing ex-post control. Finally, principals may also commit agencies to establish internal guidelines that oblige them to perform in a rational, inclusive and transparent way (McCubbins et al. 1987; Gehring and Krapohl 2007). In a time of crisis, EU policy-makers are confronted with an unexpected situation that not only threatens established policy objectives but also requires urgent action to respond to the challenge. In the following we examine how a crisis situation has affected EU agencies in the fields of financial and migration policy. In particular, we shed light on rationales of EU policy-makers in establishing an agency or strengthening its powers, how agencies have shaped changed the trajectory of the policy concerned and how these developments have affected the well-known accountability problematique of agencification. It is the degree of an EU agency’s institutional independence, measured in terms of regulatory power (mandate) and available resources that determines the necessary degree of accountability. The greater the agency’s discretion, the more need for a sufficient degree of accountability to protect the interests of those over whom the agency has power. From the outset, the debate about the regulatory power of EU agencies has largely been shaped by the Meroni-doctrine of the European Court of Justice which allowed delegation of only limited powers to EU agencies. This limited delegation was deemed necessary to preserve the EU’s institutional balance as foreseen in the Treaties. EU member states are allowed to create new agencies such as the European Central Bank which has considerable discretionary power, but only through Treaty or primary law and not through secondary law (Kelemen and Majone 2012). As a consequence, agencies which are established by EU regulations are not allowed to have discretionary power. Instead, they have to rely on soft modes of governance such as information and expertise, give operational support to member states or contribute to the regulation of certain sectors in the common market (Egeberg and Trondal 2011). Notwithstanding this legal obstacle, some agencies play de facto a crucial role in EU regulatory politics (e.g. Gehring and Krapohl 2007). While powerful EU agencies have already been at work before the two crises unfolded, their role has been further enhanced in the wake of the Eurozone and migration crises. Within the limits of the Meroni doctrine, the mandate of an EU agency is laid down in EU secondary

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law. The legislative format is indispensable to ensure both political as well as legal accountability. Scholars have highlighted that EU legislators (i.e. the principals) are regularly confronted with potential bureaucratic drift which occurs when agencies develop and pursue an agenda that is different from that of their principals. To address this challenge, principals have relied on numerous ex ante, ongoing and ex post mechanism to keep the powers of EU agencies in check (Keleman 2002). These safeguard mechanisms make sure that the crisis-induced expansion of the regulatory powers of agencies is discussed at the proper political level in a transparent way. However, Giandomenico Majone has emphasized, the EU’s regulatory power can also be increased ‘by stealth’ (Majone 2005). This holds especially true for European agencies which operate in a broad ‘zone of discretion’ (Thatcher and Stone Sweet 2002; Sabel and Zeitlin 2010; Abbott and Snidal 2000; Pollak and Slominski 2009). Such a creeping mandate expansion may often go unnoticed and can therefore not adequately be discussed by the democratically legitimated institutions at the EU and national level. Hence, while the law itself has not changed, the agencies’ regulatory activities have expanded both in breadth and depth (Heidbreder 2013; Scipioni 2018b). In terms of outcome, both approaches of mandate expansion have strengthened the role of EU agencies. The relaxing of the strict Meroni requirements has widely been justified by the growing complexity of EU tasks (Everson and Vos 2016). This rationale has gained traction in the course of EU crises management thereby further accentuating the problem of political and legal accountability. In addition to mandate expansion, the degree of an agency’s institutional independence also depends on its available resources. In 2016, EU agencies have had a total budget of 1.2 billion Euro and roughly 5500 staff (Deloitte 2016). While some scholars argue that some EU agencies are under-resourced (Heims 2016), it has also been observed that those EU agencies which tackle the Eurozone and migration crisis have experienced a substantial increase in their resources (Migliorati 2020). As a consequence of the enhanced role of EU agencies in the EU’s crisis management, questions of accountability still loom large. The chapter by Michelle Everson and Ellen Vos deals with the balance of independence and accountability of EU agencies. While agency scholars have discussed this issue for more than two decades, it has become more pressing following the 2012 ESMA-ruling of the Court of Justice of the EI (CJEU). Both authors see EU agencies as ‘in-betweeners’ amongst

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EU institutions and member states which cannot hope to be wholly independent but at the same time—not least due to the EU’s polycrisis—are expected to cope with functional necessities. Against the background of a crisis situation, the CJEU was confronted with the tricky question of whether to stick to the Meroni doctrine or acknowledge the functional needs of a crisis situation ‘to get things done’. The Court chose to go down the latter path. Whilst upholding the orthodox narrative of agencies which are mainly dealing with technical and implementation issues, the CJEU has relaxed Meroni and granted (limited) discretionary power to ESMA. However, the ESMA ruling has had implications for EU agencies more broadly. Focusing on both the Eurozone and migration crisis, the contributions to this edited volume provide ample evidence of the EU agencies’ enhanced regulatory role and increasing margin of discretion. 3.1

Agencies in the Financial and Banking Sector

The EU has responded to the global financial crisis by establishing the European System of Financial Supervision (ESFS) in 2011. The chapter by Agneta B. Spendzharova is dealing with three EU agencies which have been established in the context of the Eurozone crisis, the European Banking Authority (EBA), the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). These three agencies have been tasked to develop and enforce a centralized supervisory rule book in their respective sectors and issue binding decisions to ensure greater regulatory consistency. The EBA, the ESMA and the EIOPA built on existing informal networks and have been transformed into formalized EU agencies in the wake of the financial crisis. The chapter assesses the EU’s crisis management and ask to what extent the the Court’s ESMA ruling deviates from the Meroni doctrine and whether this has led to a shift towards supranationalisation of financial market regulation. To tackle the EU’s banking crisis, the EU has also begun to reform and gradually supranationalise the banking sector. The contribution by Paul Weismann deals with Supervisory Board within the ECB. While the Board de iure belongs to the ECB, it de facto shows several parallels with European agencies that makes it unique in the administrative space of the EU. Given its institutional embeddedness into the ECB, the author is sceptical that the ECB is able to separate its supervisory from its monetary tasks. Like other EU agencies the Supervisory Board of the ECB also exhibits a

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considerable degree of independence and thus needs to be held accountable. Weismann argues that the democratic and financial accountability of the Board can be assured. The chapter by Nicola Ruccia deals with the Single Resolution Board (SRB) which is the main resolution authority within the EU’s Banking Union. The task of the SRB is to ensure an orderly resolution of failing banks with minimum impact on the real economy, the financial system, and the public finances of the EU member states. In doing so, the SRB cooperates with the National Resolution Authorities (NRAs) of the member states, the European Commission, the European Central Bank and the European Banking Authority (EBA). It has been established in 2014 as a response to the Eurozone crisis (Regulation 806/2014). Given the interconnectedness of financial markets, EU policy-makers felt compelled to set up the SRB to intervene in a banking crisis within the Eurozone. Against the background of the interconnectedness of the EU’s financial and banking sector, the EU realized that common measures at a centralised level are necessary to avoid a ‘common bad’, i.e. the collapse of the EMU. The contribution by Marta Božina Beroš and Marin Beroš discusses the discretionary power of the SRB and its relation to the Meroni doctrine in greater detail. The article also acknowledges the wider importance of the 2012 ESMA ruling for allowing agencies to adopt legally binding decisions. Not only is the SRB allowed to take decisions on the basis of objectively-set, technical criteria (e.g. bank liquidity levels) but also in relation to vague standards such as the “public interest” thereby raising various challenges relating to democratic oversight, accountability and legitimacy. Beroš and Beroš argue that the SRB’s performance is indeed subject to a robust system of political and judicial accountability. While the European Parliament’s specialized ECON Committee ensure political accountability, the CJEU review the legality of the SRB’s action. At the same time, the extension of the agency’s mandate has revealed shortcomings of current accountability arrangements requiring a new accountability mechanism to keep the SRB’s activities under control such as parliamentary hearings at the national level. However, the authors are not overly optimistic that national parliaments live up to their task because they lack the knowledge to hold the SRB effectively to account (see Busuioc 2013). Hence, the modest parliamentary involvement renders legal accountability all the more important. The authors confirm that the EU has established an appropriate system of judicial review with accessible

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and effective legal protection to ensure that the activities of the SRB are in accordance with the law. Moreover, legal accountability is complemented by mechanism of quasi-judicial review exercised by the SRB’s internal Appeal Panel. However, Beroš and Beroš seem to be sceptical that the duality of judicial control as well as the limited expertise of the CJEU may have the potential to compromise the SRB’s legal accountability. 3.2

EU Agencies in the Field of Migration, Asylum and Border Policy

EU scholars have shown that the crisis management and outcome of the financial and migration crisis were strikingly different. While the EU was able to adopt a series of important supranational measures to tackle the Eurozone crisis, its response to migration crisis was more modest. This insight also holds true with regard to agencies. While the financial and banking crisis led to the creation of several new agencies in the field, the migration crisis has only strengthened existing agencies. With regard to Frontex, EU policy makers succeeded to adopt two new regulations (2016 and 2019) that led to a considerable upgrade of the agency. The various internal and external political challenges, geopolitical changes and increasing irregular migration flows have determined the Schengen policy environment to be in a constant state of flux. This has required the EU agency Frontex, established in 2005 for the management of the EU external borders, to continuous institutional innovation especially after the unprecedented 2015–2016 migration flows. In 2016, Frontex was transformed into a European Border and Coast Guard Agency (EBCG) and its mandate expanded accordingly. In 2019, the EBCG was once again reformed and further strengthened. The chapter by Vittoria Meissner sheds light on the reforms of Frontex post-migration crisis. Relying on historical institutionalism, the chapter shows how the crisis has led to an increased delegation of authority which is followed by a consequent path dependent process that strengthens it even further. While this development may pave the way for its transformation into a ‘superagency’ in the near future, Meissner also sees some challenges here. First, it remains to be seen if Frontex succeeds to attract a sufficient number of border guards. Second, despite its institutional upgrade, Frontex still relies on the support of national governments. Last but not least, Meissner is also sceptical that the sole focus on Frontex may not

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be sufficient to ensure a sustainable functioning of the Schengen system more broadly. While Frontex has been strengthened by legislative means, EASO witnessed an institutional upgrade through informal and legally nonbinding instruments. The chapter by Lilian Tsourdi seeks to address the novel tasks of both Frontex and EASO. She shows how both Frontex and EASO gradually enhanced their role in implementing EU law and policy in the member states, monitoring and steering member states in the course of the 2015 migration crisis. As a result, both agencies are at the forefront of an increasingly integrated European administration. Their enhanced powers, however, create various tensions with the agencies’ governance structures which are largely intergovernmental. In addition, it poses considerable challenges to independence and accountability. While both agencies are—albeit to a varying degree—accountable to numerous political, legal, administrative or social fora, many normative problems remain and need to be solved in the future. The chapter by Chiara Loschi and Peter Slominski deals with the widely under-researched phenomenon of interagency relations in the field of border and asylum policy. It asks how the 2015 migration crisis has affected the horizontal interactions between Frontex, EASO and FRA and whether these relations have enhanced the law enforcement focus of EU JHA or, conversely, strengthened the fundamental rights of migrants and refugees. Empirically, the chapter assesses interagency relations before and after the 2015 migration crisis. Like the chapter by Tsourdi, it argues that despite growing human rights sensitivity, the migration crisis has not substantially changed the border management approach of Frontex. In fact, the reforms have not led to a profound policy change but rather consolidated the law enforcement profile of Frontex and EASO still leaving considerable problems in terms of fundamental rights and accountability.

4

Conclusion

Crisis management through agencification has—albeit to a varying extent—deepened the integration in the Eurozone and in migration and border policy. While the outcome of the Eurozone crisis has been regarded as a considerable move towards supranationalisation, measures adopted in the wake of the migration crisis are widely viewed as modest

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and have only gradually changed the policy trajectory. In more substantive terms, the establishment of several new EU financial and banking agencies are seen as important and necessary steps to integrate the Eurozone’s financial institutions in a manner that leave them better prepared for a future crisis (Véron 2018). Despite these functional improvements, the institutional power of the newly created agencies still poses serious challenges in terms of accountability. In a legal sense, the creation of new EU agencies followed the constitutional script of the EU and attempted to preserve both political and legal accountability. But as the contribution of Ellen Vos and Michelle Everson makes clear, the Court in its ESMA ruling acted as a complicit of EU policy makers who seemed to be more concerned with the functional necessities of preserving the Eurozone than with the legal integrity of the EU’s legal order. While formally upholding the Meroni narrative, the Court’s ESMA ruling de facto undermines it by allowing agencies to develop their own regulatory roles within a wide margin of discretion, especially when immediate action is an imperative. As the chapter by Spendzharova shows, ESMA led to a profound shift towards more supranational centralization in EU financial sector governance (see also Howarth and Quaglia 2016; Quaglia and Spendzharova 2017). By enhancing the regulatory mandate of agencies, the EU’s crisis management reinforced and consolidated the supranational features of the institutional and policy path within the Eurozone. Spendzharova shows how the ESMA is allowed to take decisions with a direct and binding effect on market participants and national supervisory organisations—a significant break with the institutional predecessor under the Lamfalussy framework and a remarkable deviation from the established Meroni doctrine. As a result, ESMA has become a much more politicized administration resulting in new challenges for accountability. Analysing the role of the SRB, the chapter by Beroš and Beroš offers a similar assessment. They show that EU agencies often operate within a vaguely circumscribed regulatory environment (see also the chapter by Everson and Vos) which provides them with substantial authority in shaping policy. As a result, this extension of agencies’ powers by stealth has further blurred the line between technocratic and political decisions (see also Moloney 2018). Beroš and Beroš convincingly argue that the enhanced power of the SRB has not only brought it ‘closer to the political sphere’ but also underlined the importance of proper accountability mechanisms. While they acknowledge that the SRB is subject to a robust de iure system of political and judicial accountability, they also point to

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de facto shortcomings of existing accountability mechanisms. According to Beroš and Beroš, the ‘limited expertise’ of both the EP and the Court makes it difficult to cope with the challenge of holding the Board accountable. At the same time, the chapters identify examples of agencification which can be considered far less independent. Discussing the independence and accountability of the Supervisory Board, the chapter by Weismann emphasizes that the Board’s embeddedness in the ECB ensures the proper degree of accountability vis-à-vis the Parliament, the Council and the Commission. Moreover, Weismann also refers to the ‘intense and strongly intertwined cooperation between national and EU actors within the SRM and the SRB. Similarly, the chapter by Ruccia argues that while the SRB appears to be independent, their de facto autonomy is rather limited. In particular, the assessment of the margin of discretion of the resolution decisions is exercised by the Commission. In addition, the evaluation of their impact on the fiscal sovereignty and financial stability of the member states as well as on the financial stability of the EU as a whole is evaluated by the Council. Like Weismann, Ruccia stresses that it is this dense interaction and sharing of responsibility, that the SRB is not fully independent and kept under control (see also Moe 1985). What is more, the reinforced cooperation between EU and national administrative actors further underlines the hybrid and compounded nature of the EU’s administrative governance system. By contrast, the 2015 migration crisis has not led to the creation of new agencies yet. While the Commission submitted a proposal for transforming EASO into a new European Agency for Asylum (COM [2016] 271), it remains to be seen whether this will ever be approved. At the same time, EU policy-makers indeed succeeded in strengthening Frontex through two legislative measures (2016/1624 and 2019/1896). As the chapter by Meissner shows, this reform has not led to a path-breaking change of the policy core but can rather be regarded as the consolidation of the existing securitization of migration and border management (Jeandesboz and Pallister-Wilkins 2016). In contrast to agencification in financial regulation, Frontex still lacks comparable discretionary powers. While post-crisis reforms may have the potential to transform Frontex from a small implementing and coordinating structure into a possible ‘superagency’ with 10,000 staff members and considerable executive powers, it should not be overlooked that Frontex still relies heavily on the contribution of EU member states. As a result, Meissner’s chapter

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presents a mixed picture of the strengthening of the formal powers of Frontex and its persisting dependence on the EU member states to support its actual activities on the ground. Moreover, the strengthening of Frontex is further undermined by the incapacity of EU policy-makers to adopt major reforms with regard to EU migration and asylum policy at large. However, as Tsourdi points out in her contribution, agencification does not necessarily require formal mandate expansion but can also be extended by stealth. Both Frontex as well as EASO are increasingly responsible for implementing and enforcing EU policies. While these enhanced powers are partly the result of the EU’s crisis management, Tsourdi emphasizes that many measures have predated the crisis and will certainly remain in place post-crisis. She also points to a structural tension between agencies that are monitoring national implementation of EU policy whereas they are at the same time involved in the implementation process themselves. Finally, the enhanced executive powers of Frontex and EASO also means more direct interaction with individual migrants and asylum seekers thus posing new challenges of fundamental rights protection. Given the hybrid character of EU agencies, a way forward in ensuring accountability is anything but easy. One possibility, Tsourdi suggests, may be an enhanced role of independent external expertise within agencies (e.g. through the Consultative Fora of Frontex and EASO) as well as strengthening accountability processes that should also be accessible to individuals and geared to respect for fundamental rights, such as the internal ‘individual complaint mechanisms’. The chapter by Loschi and Slominski deals with the widely underresearched topic of inter-agency relations, notably the interaction between Frontex, EASO and FRA. Like Meissner and Tsourdi, the authors stress that the 2015/2016 migration crisis has not been a critical juncture but has only intensified the long standing trend of agencification in EU JHA. In particular, interagency relations among the three agencies started pre-crisis but have been further accentuated and consolidated post-crisis. Contrary to the formal mandate expansion of EU agencies in the field of financial market regulation, Loschi and Slominski highlighted that the migration crisis and the creation of EU hotspots in Greece and Italy have led to an informal strengthening of Frontex and EASO. This has not only strengthened the law enforcement focus of both agencies which is also reflected in the sharp increase of their personnel and financial resources. In particular, the broad zones of agency discretion established by vague and

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often legally non-binding executive decisions raise considerable concerns with regard to accountability. While similar observations have also been made with regard to EU agencies in the financial sector, the problem is much more pressing in the case of JHA agencies which potentially interfere with fundamental rights of individuals.

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Quaglia, L., & Spendzharova, A. (2017). The Conundrum of Solving ‘Too Big Too Fail’ in the European Union: Supranationalization at Different Speeds. Journal of Common Market Studies, 55(5), 1110–1126. Reuters. (2018). Migration Challenge Is Make-or-Break for EU, Says Passionate Merkel. https://www.reuters.com/article/us-europe-migrants-merkel/mig ration-challenge-is-make-or-break-for-eu-says-merkel-idUSKBN1JO0TO. Sabatier, P. A. (1988). An Advocacy Coalition Framework of Policy Change and the Role of Policy-Oriented Learning Therein. Policy Sciences, 21(2/3), 129– 168. Sabel, C. F., & Zeitlin, J. (2010). Experimentalist Governance in the European Union: Towards a New Architecture. Oxford: Oxford University Press. Schelkle, W. (2007). EU Fiscal Governance: Hard Law in the Shadow of Soft Law. Columbia Journal of European Law, 13(3), 705–731. Schimmelfennig, F. (2018). European Integration (Theory) in Times of Crisis: A Comparison of the Euro and Schengen Crisis. Journal of European Public Policy, 25(7), 969–989. Scipioni, M. (2018a). Failing Forward in EU Migration Policy? EU Integration After the 2015 Asylum and Migration Crisis. Journal of European Public Policy, 25(9), 1357–1375. Scipioni, M. (2018b). De Novo Bodies and EU Integration: What Is the Story Behind EU Agencies’ Expansion? Journal of Common Market Studies, 56(4), 768–784. Slominski, P., & Trauner, F. (2020). Reforming Me Softly—How Soft Law Has Changed EU Return Policy Since the Migration Crisis. West European Politics. https://doi.org/10.1080/01402382.2020.1745500. Thatcher, M., & Stone Sweet, A. (2002). Theory and Practice of Delegation to Non-majoritarian Institutions. West European Politics, 25(1), 1–22. Trauner, F. (2016). Asylum Policy: The EU’s ‘Crisis’ and the Looming Policy Regime Failure. Journal of European Integration, 38(3), 311–325. Trondal, J. (2010). An Emergent European Executive Order. Oxford: Oxford University Press. Van Ooik, R. H. (2005). The Growing Importance of Agencies in the EU: Shifting Governance and the Institutional Balance. In D. M. Curtin & R. A. Wessel (Eds.), Good Governance and the European Union: Reflections on Concepts, Institutions and Substance (pp. 125–152). Intersentia: Antwerp. Véron, P. (2018). EU Financial Services Policy Since 2007: Crisis, Responses, and Prospects. Global Policy, 9(1), 54–64. Vos, E. (2000). EU Food Safety Regulation in the Aftermath of the BSE Crisis. Journal of Consumer Policy, 23, 227–255.

CHAPTER 2

EU Agencies and the Politicized Administration Michelle Everson and Ellen Vos

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Introduction: A ‘Fever’ of Agency Creation

In their efforts to categorize the growing body of agencies operating at EU level, influential commentators on the state of the Union have of late noted a veritable ‘agency fever’ (Busuioc et al. 2012; Egeberg and Trondal 2017), or an exponential rise in the creation of ‘non-majoritarian’ (Majone 1996, 1997) governance structures within the European Union. This development raises a series of queries, which will be tackled in this contribution, not the least of which is the issue of whether, in its increasingly politicized use of the agency vehicle, the European Union is placing an impossible stress on agency actors. Although they were never foreseen by the founding treaties, EU agencies have become an integral part of the EU’s institutional structure over

M. Everson (B) Birkbeck College, University of London, London, UK e-mail: [email protected] E. Vos Faculty of Law, Maastricht University, Maastricht, The Netherlands e-mail: [email protected] © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_2

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the years (European Parliament, the Council, & the European Commission 2012). Today, the EU can no longer work without its agencies (Everson et al. 2014b, p. 3). In this, it is not alone. Resort to agencies by public authorities to assist them in the carrying out of executive tasks is a very old phenomenon within national executives in Europe (Egeberg and Trondal 2017), albeit that more recent processes of ‘agencification’, whereby new entities have been created in the public sector, or whereby existing agencies have been given greater autonomy to carry out specific tasks, also have their roots in the generalized retreat of centralized state administrations and modern theories of public management (Jacobsson and Sundström 2007, p. 5). This latter development is inextricably linked with deep political process, and global ideological shifts which have seen state-steering cede to notions of the market-conform regulation, not only of the economy, but also of broader social policy goals. As such, albeit in the reverse constellation, new agencies are also subject to the selfsame doubts and concerns which accompanied the much-celebrated wave of agency creation during the economically-interventionist US New Deal. As academic comment, and in particular the work of Martin Shapiro (2005), has revealed, although idealized agency governance is, by its very raison d’être, concerned solely with technical implementation tasks, the wholesale delegation of executive function to autonomous governance bodies has always given rise to suspicions about the nature and the consequences of the political impetus for agency creation, the potential for unfair or politicised decision-making within agency operation, as well as the nature of the relationship established between agencies and the citizenry outside the traditional constitutional strictures of transmission belt administrations (Stewart 2005).1 These concerns have been profound and widespread throughout the history of agency creation and operation, and have also been met with 1 Identified first by Richard B. Stewart, the ‘transmission belt model of administration’ is a historical one denoting the direct transfer of power from the citizenry to the political executive to the technical administration, whereby the latter is constrained to follow the political will. As Strauss has also noted, since the 1970 this model has experienced a fundamental shift within the US, where the recognition of the burgeoning of the regulatory state has led to a pluralization of political process, whereby administrative action can be subjected to post-legislative political challenge, at least to the degree that procedural law allows for the challenge to substantive agency action in practice. For an updated review of his work (Stewart 2005).

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vigorous efforts to ensure the constitutional legitimacy and accountability of agency operations, most famously within the fiercely proceduralized ambit of the US Administrative Procedures Act of 1946 (Shapiro 1996).2 It would be equally illusionary to expect them not to have arisen with regard to the proliferation of agencies within the EU. Nevertheless, within an ever-evolving EU setting of supra- and transnational organisation, with its heavy modern reliance upon the technical rationality of European decision-making, it is similarly a given that the constellation of politicisation problems sometimes differs from that found at national levels within the EU, or, and paradigmatically so, within the US. Thus, to the degree that EU agencies have traditionally been assigned a combination of tasks, varying from provision of information to decision making and operating in variety of policy fields, they are likewise a part of a more general process of functional decentralisation within the EU executive, in its turn compensating for administrative lacunae within Commission administrative capacity. At the same time, we may also observe a geographical decentralisation, with agencies being seated all over the EU. Agencification is, today, a very visible characteristic of the EU executive (Curtin 2009) within a system of integrated administration dominated by intense cooperation between the various executive levels of the Union (Hofmann 2008). A natural challenge to the institutional balance within the EU, both as regards potential for usurpation of supranational powers of political initiative, and with an eye to their potential for alienation of national implementation competence, the broad range of agencies established prior to the Millennium have already created their own concerns as to their constitutional and political legitimacy, and especially so within the peculiar structures of the EU Treaties. More recently, however, in a fever of agencification, the number and importance of EU agencies have only increased. Most strikingly, agencies have been resorted to in response to crises, beginning with the BSE crisis and the oil tanker Erika crisis. Financial crisis, in its turn, has led to the creation of a further three supervisory authorities, the most powerful ever created within the EU setting: the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), as 2 For the evolution of the US APA as a means to pluralise democracy or allow for post-legislative challenge of agency acts (Shapiro 1996).

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well as the Single Resolution Board (SRB). Equally, in the wake of an on-going border crisis, the EU has transformed the existing European Agency for the Management of Operational Cooperation at the External Borders (Frontex) into another, far more powerful agency, the European Border and Coast Guard, the new FRONTEX (Rijpma 2017).3 Moreover, more powers have also been conferred upon the European Police Office (Europol).4 In the following critical appraisal of the current state of EU agencies, we limit our analysis to the so-called ‘decentralised agencies’. Broadly defined as bodies governed by European public law which are institutionally separate from the EU institutions, have their own legal personality and a certain degree of administrative and financial autonomy, as well as legislatively specified tasks,5 such decentralized agencies are now accruing an increasingly broad range of powers, only heightening political and constitutional legitimacy concerns. We will sketch out and address these concerns, beginning with a discussion on the conceptualisation of EU agencies (Sect. 2). We turn subsequently to the problematic constitutional constellation within which EU agencies function (Sect. 3). We furthermore address one of the most pressing legal concerns about EU agency operation, namely delegation of powers to EU agencies (Sect. 4). We then counter-pose an underlying lack of legal and constitutional certainty about EU recourse to agencies with an investigation of their independence and accountability at the legal and political level (Sect. 5); concepts which seek to provide hierarchy-beating agencies with a measure of compensatory legitimacy. Finally, in a concluding section, we take up the problem of agency politicization and investigate the possible futures within the European Union.

3 Regulation 2016/1624 of the European Parliament and of the Council of 14 September 2016 on the European Border and Coast Guard and amending Regulation (EU) 2016/399 of the European Parliament and of the Council and repealing Regulation (EC) No. 863/2007 of the European Parliament and of the Council, Council Regulation (EC) No 2007/2004 and Council Decision 2005/267/EC, OJ 2016 L251/1. 4 Regulation (EU) 2016/794 of the European Parliament and of the Council of 11 May 2016 on the European Union Agency for Law Enforcement Cooperation (Europol) and replacing and repealing Council Decisions 2009/371/JHA, 2009/934/JHA, 2009/935/JHA, 2009/936/JHA and 2009/968/JHA, OJ 2016 L135/53. 5 This excludes the three agencies set up in the field of Common Foreign and Security Policy, the executive agencies and other agency-like bodies.

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In-Betweeners: The Tensions of an Evolutionary Polity

The fundamental problems associated with the legitimacy of agency operation within the EU are perhaps most clearly illustrated by the difficulties that the literature on European agencies betrays when attempting to categorize EU agencies. Certainly, agency operation within the EU may be part of the far broader global trend to strictly-technical, or marketconform regulation, but it is also happening within the confines of an evolving EU polity, with its on-going negotiations between national and supranational competence. Thus, in a recent review of existing literature on the agencification of EU executive governance, Egeberg and Trondal have captured three broad conceptual images of EU agencification as, alternatively, an intergovernmental, a transnational, or a supranational image. The intergovernmental image reflects the view that EU agencies are set up to implement or monitor the implementation of policies agreed upon by Member States. The transnational image presupposes that EU agencies are ‘loosely coupled’ to national and EU institutions, and consequently regard agencies as regulator networks. A supranational image sees EU agencies as integral elements of the EU administration, more specifically the Commission. According to Egeberg and Trondal, these images highlight ‘overlapping, supplementary, co-existing and enduring governance dynamics within and among EU agencies;’ three images, which, according to the authors are likely to co-exist, but also to change over time and within each separate agency (Egerberg and Trondal 2017, pp. 2–3). The EU polity is a polity on the move, and the institutional framing of agencies is necessarily contingent on patterns of Union evolution. What is clear from this analysis, however, is that the agency phenomenon has induced a shift away from the Community Method of indirect administration, whereby EU policies were implemented by Member States to a more direct administration, whereby implementation is carried out at the EU level, by inter alia EU agencies (Egeberg and Trondal 2017, p. 8; Keading and Verluis 2014, pp. 73–86). For Egeberg and Trondal (2017, p. 9), this is indicative of an ongoing trend of the supranationalisation of executive power within the EU (Egerberg and Trondal 2017, p. 9). EU agencies may thus be argued to have contributed to the centralisation of EU administration. Importantly, however, they have not done so at the expense of the Commission’s executive power, as they generally

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perform functions that the Commission cannot perform itself because its lack of expertise or by virtue of political resistance towards it. Keleman vitally highlights the fact that tasks have been assumed at the EU level by means of agencies, which would otherwise never have been undertaken by the Union by virtue of political suspicions about Commission action (Keleman 2002, p. 112). Busuioc and Groenleer (2014, p. 179) argue that agencies have been established within the Union, because it was felt that it would not be politically appropriate to entrust certain tasks to the European Commission as the latter would be too bureaucratic, too politicised and composed of only generalists. A lack of political faith in the Commission which arises by virtue of its own politicised, generalist or bureaucratic nature, and its vulnerability to Member State interests in the context of comitology, have greatly facilitated the rise of agencies within the EU structure (Everson et al. 2014a, p. 235). The conferral of powers upon ESMA to intervene in emergency situations in the national financial markets is indicative of this. A similar trend towards direct administration and supranationalisation may also be identified within the operation of EU agencies within regulatory networks, whereby agencies such as EFSA, although not being placed at a hierarchical apex within the network, nonetheless manoeuvre as a form primus inter pares between national counterparts and/or stakeholders in a ‘multi-level procedural labyrinth’ (Dabrowska 2010) or even a ‘super-agency’ (Vos and Wendler 2010). The fact that EU agencies contribute to a reinforcement of EU executive power and lead to a pluralisation of the EU executive (Hofmann and Morini 2012), is not, however, in itself conclusive in determining the precise location of agencies within the political-administrative setting. Egeberg and Trondal (2017, pp. 10– 11) indeed, assert that it is not possible to determine with certainty where agencies are located but they conclude on the basis of the existing data, that these agencies lean more towards the Commission than to any other potential masters. By contrast, legal literature often connects the phenomenon of EU agencies with a depiction of the Union as a composite or shared administration. Agencies are seen as ‘interesting hybrids’ (Everson 2009), a status that is expressed, both institutionally, in their relationship with and their (in)dependence from the EU institutions and the Member States, as well as substantively, in their multiple tasks (Rijpma 2012, p. 90). Representatives of both Member States and the EU institutions sit in their steering boards, which, by virtue of their ‘double-hats’ serve both

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national and European authorities (Egeberg and Trondal 2011). Thus, potential tension, competition and/or conflicts between national and European interests seem to be inherent to the composite character of the EU executive (Vos 2018, pp. 14–20). Hybridity and complexity, however, is only increased where account is taken of the fact that agencies not only assist EU institutions, but may also act for the Member States (Chamon 2012, pp. 76–80; Ott et al. 2014). EASA, for example, represents Member States at the international level, in the context of the Interstate Aviation Committee, concluding various arrangements. Furthermore, whilst the ‘borrowing’ of EU agencies by Member States to implement EU law, as permitted by EU law, is not as such troublesome in practice (De Witte and Beukers 2013),6 it does raise more general concerns about their accountability: to whom are EU agencies accountable, for what purposes and when? The latter is a general problem that is inherent to the hybrid character of EU agencies. As ‘inbetweeners’, beholden both to the EU institutions, particularly the Commission, and the Member States (Everson et al. 2014a), EU agencies, in contrast to US and Member State agencies, present very specific accountability problems: whose agenda are they pursuing when and why? How easily can they be suborned by their respective masters, or how easily can they escape all supervision? The problems are myriad, and are only heightened within a context of the incomplete constitutionalisation of the EU agency structure.

3

An Incomplete Constitutionalisation? 3.1

Formal Recognition

Unforeseen within the Treaties, the process of the mushrooming of agencies within the EU’s institutional setting understandably gave rise to historic concerns about their place within the emergent EU polity. Their rise has nonetheless demanded many adjustments within EU constitutional principles, above all the principle of the balance of powers, and the formal recognition of agencies within the Lisbon Treaty must now be welcomed, above all with regard to the enhanced jurisdiction of the

6 In view of the Court’s liberal attitude towards the ‘borrowing’ of EU institutions by Member States when implementing an international agreement outside the EU legal framework (De Witte and Beukers 2013).

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Court of Justice. Codifying longstanding practice (Vos 2018), the Court may now review the legality of agency acts ‘intended to produce legal effects vis-à-vis third parties’ and their failure to act, while it may also interpret agency acts in preliminary rulings.7 Although the provision does not confer the possibility for agencies to challenge acts of EU institutions, the limited constitutional legitimation of agencies is to be welcomed as ensuring greater legal certainty in the judicial review of agency acts (Saurer 2010; Alemanno and Mahieu 2008).8 The Treaties moreover recognize agencies in various provisions such as internal security, financial measures and independence of the European Central Bank, and complaints about instances of maladministration submitted to the Ombudsman (see Vos 2014). Equally, in the same breath as the EU institutions, agencies are made subject to the principle of transparency (including access to documents),9 the requirement for personal data protection10 and the respect for the constitutional right of citizens to submit questions and receive answers in their own language.11 They are also required to establish an open, efficient and independent administration.12 The belated constitutional recognition that agencies form a part of the EU executive and must accordingly be made subject to the constitutional values of transparency, openness and participation is important, especially given earlier criticisms about agency transparency with regard to conflicts of interest declarations (European Court of Auditors 2012). However, it is also very true that the strictures of the Lisbon Treaty do very little to regularize comprehensively the status of agencies within the EU with

7 Article 263 TFEU moreover permits that the founding regulation of agencies lay down specific conditions and arrangements concerning actions brought by natural or legal persons against acts of these bodies, offices or agencies intended to produce legal effects in relation to them. The relevant Articles are: failure to act: Article 265 TFEU, preliminary rulings: Article 267 TFEU and plea of illegality: Article 277 TFEU. 8 See already the Court’s rulings in Case T-411/06 Sogelma—Societá generale lavori manutenzioni appalti Srl v European Agency for Reconstruction (AER), ECLI:EU:T:2008:419 and Case T-70/05 Evropaiki Dynamiki v. EMSA, ECLI:EU:T:2010:55. 9 Article 15(1) and (3) TFEU. 10 Article 16(2) TFEU. 11 Article 24 TFEU. 12 Article 298 TFEU.

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regard to the clear stipulation of their purpose, their exact relations with the varied centres of political power within the EU, or indeed, fully address the issue of how agencies might be comprehensively controlled. At legal level, an incomplete constitutionalisation of EU agencies is immediately noticeable in the continuing failure to establish an EU administrative act, much in the manner of the US Administrative Procedures Act (Curtin et al. 2013); an act which might submit European agencies to a unified procedural code, and, concomitantly, open up new possibilities for evolution of a more pluralist EU polity through enhanced possibilities for judicial challenge to agency actions, or, if the US model is followed in its entirety, a far greater number of public challenges, not only to ultra vires agency decisions, but also to actions taken within their legislative mandates.13 3.2

Constitutional Gap

Closely linked with the issue of delegation of powers to agencies, which we will discuss below (Sect. 4), is the system of delegation laid down by Lisbon and the explicit failure of the drafters of the Treaty to position agencies as bodies to whom powers can be delegated in Articles 290 and 291 TFEU. It is first important to note that agencies are not mentioned in Articles 290 and 291 TFEU. This is quite remarkable in view of the composite character of the EU executive and in view of the fact that agencies do appear in the Treaties elsewhere, as we set forth above. This ‘constitutional neglect’ is mostly likely to be explained in terms of the Commission’s own unitary view on the EU executive (Scharpf 2001, p. 8). Although in the same White Paper the Commission did acknowledge the merits of resorting to agencies, it blatantly focused on the Community Method and the institutional triangle of the Council, Parliament and the Commission, which led it to suggest that the impact of comitology on its decision-making should be diminished and that comitology should be replaced by the adoption of delegated acts with a direct

13 As Richard Stewart has famously demonstrated, the US Administrative Procedures Act has also become a mechanism whereby legislative programmes may be challenged during the course of their implementation.

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ex post 14 control mechanism on the exercise of the Commission’s powers. This view has been codified in Articles 290 and 291 TFEU. As a consequence, the hierarchy of norms introduced by Lisbon pays no attention to the fact that agencies form part of the EU executive and may exercise binding decision-making powers. For example, binding legal acts on the registration or refusal of a European Trade Mark adopted by EUIPO are clearly an act of an executive nature and comparable with Commission decisions on the approval or refusal of a EU-wide approval of a novel food. However, while the latter decisions are implementing decisions in the sense of Article 291 based on comitology, EUIPO’s acts do clearly not fall under this category. This highlights the uncomfortable and unconstitutional position of agencies who may nonetheless adopt binding executive acts that might be at odds with the principle of conferral. This situation only gains in legal status as Articles 263 and 277 TFEU do recognise jurisdiction of the Court for agency acts that ‘intend to produce legal effect vis-à-vis third parties.’ Seen in this context, the claim put forward by the UK in ESMA that the delegation of powers to ESMA would be incompatible with Articles 290 and 291 TFEU, makes very good sense. The Court was explicitly asked to judge whether Articles 290 and 291 TFEU were intended to establish a single framework under which certain delegated and executive powers may be attributed solely to the Commission, or whether other systems for the delegation of such powers to Union agencies may be contemplated by the EU legislature. In its judgment, the Court affirms the latter and finds no difficulty in circumventing the carefully crafted hierarchy of norms in these Treaty provisions. The Court deduces from the inclusion of agencies in other Treaty provisions that the possibility to confer powers upon such bodies exists; ‘a number of provisions in the FEU Treaty nonetheless presuppose that such a possibility exists’.15 Also crucial for the Court is the fact that the amended judicial review provisions also apply to agencies. It thus explicitly refers to the practice of the EU legislature to delegate decision-making powers to agencies as ECHA, OHIM (now EUIPO), CVPO and EASA. In relation to ESMA, the Court underlines that the conferral of certain decision-making powers on ESMA in ‘an area which requires the deployment of specific technical

14 I.e. after the adoption and before the entry into force of the Commission act. 15 Case 270/12, supra, para 79.

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and professional expertise’16 does not ‘correspond to any of the situations defined in Articles 290 TFEU and 291 TFEU’.17 The Court asserts therefore that this does not undermine the rules on delegation of powers laid down in Article 290 and 291 TFEU18 and hereby saves the system as laid down in the Treaty.

4

Delegation of Powers to EU Agencies 4.1

Meroni and ESMA

Concerns about the politicisation of agency activity are generally most clearly expressed with regard to the extent of powers that may or may not be delegated to them. The situation within the EU is no different, albeit that this question also touches upon potential alienation of national and supranational competences under the balance of powers. Consequently, the issue of delegation, is the most extensively discussed legal question within the agency debate. Once again, however, the problem is seemingly intractable, and although Lisbon included, for the first time in primary EU law, the term delegation (Article 290 TFEU), it nevertheless did not define delegation and is similarly silent on salient issues, such as the possibility to delegate powers to agencies, and the nature of these powers. The question of delegation is also inextricably linked with the establishment of a hierarchy of norms within the Lisbon Treaty. We will first discuss the question of which powers may be delegated to EU agencies, and then conclude with a discussion of recent of developments in the field; developments demonstrating a continuing problem of vaguely circumscribed delegation within the constitutional traditions of the EU. Since the late 1950s, legal thinking within the EU institutions and literature has been dominated by the so-called ‘anti-delegation’, or limited-delegation or Meroni doctrine. This doctrine allowed for the delegation of very limited powers to EU agencies based on the Meroni rulings of the Court in the 1950s.19 In these cases, the Court rejected the transfer of sovereign powers to subordinate authorities outside the EU institutions and ruled that only ‘clearly defined executive powers’ could be 16 Case 270/12, supra, para 82. 17 Case 270/12, supra, para 83. 18 Case 270/12, supra, para 86. 19 Cases 9/56 and 10/56, Meroni v. High Authority [1957–1958] ECLI:EU:C:1958:7.

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delegated, the exercise of which was to remain at all times subject to Commission supervision. Although the Meroni judgments related to the ECSC, their applicability to the EU Treaty has been generally accepted (Lenaerts 1993, p. 41) and was confirmed by the CJEU in its case law in the 2000s.20 In Meroni, the Court considered that the institutional balance would be distorted if discretionary powers were delegated to bodies other than those established by the Treaty. The underlying concern about the distinction between ‘clearly defined executive powers’ and ‘discretionary powers’ and the concern about the prohibition on delegation of the latter to bodies other than the institutions appears to be a reflection of the Court’s understanding of democratic legitimacy; a democratic legitimacy founded, perhaps incongruously at the EU level, within the principle that it must be possible to trace the powers of any rule-making body to the authority of a democratically-elected parliament (Joerges et al. 1999). As early as 2002 Giandomenico Majone highlighted the struggle between various Commission DGs, whereby policy-oriented DGs increasingly acknowledged a functional need to confer more powers on agencies in view of the growing complexity of the EU’s tasks, contrasting with the stance of the Commission’s Legal Service which sought to stick to a strict interpretation of the Meroni doctrine (Majone 2002). A European manifestation of the age-old clash between transmission-belt administrative models and the simple need to get things done, regardless of deep constitutional theory, it is thus unsurprising that legislative reality is characterised by a far more indulgent attitude towards the delegation of powers (Vos 2014). This is especially so under conditions of crisis, as evidenced by the wide-ranging soft law powers conferred upon EASA in the wake of financial collapse, as well as the far-reaching enforcement and intervention powers conferred upon all three of the new financial supervisory authorities (Ottow 2014; Chiti 2013, pp. 93–110). It is the latter kind of powers conferred upon ESMA that the UK authorities decided to challenge in 2012.21 Thus, after more than 50 years of discussion within legal literature, the Court was finally called upon in ESMA or Short-selling to answer the question of whether the Meroni case law still made ‘good 20 Joined Cases C-154/04 and C-155/04, Alliance for Natural Health and Others [2005] ECLI:EU:C:2005:449, para 90. 21 Case 270/12, United Kingdom of Great Britain and Northern Ireland v European Parliament and Council of the European Union [2014] ECLI:EU:C:2014:18.

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law’ (Lenaerts 2014, p. 760). When judged under a radically new constellation of EU powers, as well as urgent functional needs, would it still hold true? In ESMA, the UK held that wide discretionary power was delegated to ESMA and therefore infringed the principles established in relation to delegation of powers in the Meroni case law.22 The specific power in question was the power to issue legally binding measures (prohibit or impose conditions) in relation to short selling against financial institutions of the Member States in the event of a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the EU. The Court however did not agree with the UK. It confirmed the validity of Meroni but did not rule out entirely the possibility to delegate discretionary powers to EU agencies. Three considerations are of particular importance. First the Court points to the fact that, contrary to the bodies in Meroni that were governed by private law, ESMA is a ‘European Union entity, created by the EU legislature’.23 Second, the Court finds it essential that the powers delegated to ESMA by the EU legislature were ‘circumscribed by various conditions and criteria which limit ESMA’s discretion’.24 This means according to the Court that, ultimately, ‘ESMA is not vested with “a very large measure of discretion”.’25 Third, the Court finds that delegation of intervention powers to the ESMA were amenable to judicial review, after Lisbon formally recognized in Article 263 TFEU. Hence the Court in ESMA does not exclude discretionary powers conferred upon agencies as such, but instead focuses on the possibility to limit the discretion of agencies. 4.2

Impact of ESMA

ESMA is a case decided at the very limits of the rule of law; it is a case within which, by virtue of continuing political conflicts within the evolving EU polity (Commission primacy within the EU executive) the

22 European Parliament and Council Regulation (236/2012 on short selling and certain aspects of credit default swaps, OJ 2012 L86/1. 23 Case 270/12, supra, para 43. 24 Case 270/12, supra, para 45. 25 Case 270/12, supra, para 54.

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Court is faced with the task of bridging a gap between normative provisions (the treaties) and functional reality (delegation to agencies under conditions of crisis). Seen in this light, the Court might be praised for its acts in adapting the Meroni doctrine to the twenty-first Century and to the Lisbon amendments to the constitutional framework of the Treaties: the Court establishes Meroni 2.0 (Vos 2018). If delegation complies with the legal guarantees set by the amended Treaties, the Court sees no objections to the conferral of delineated but discretionary powers conferred upon agencies. Of great importance here is that such delegation must take place to agencies that are set up by the EU legislature and not to bodies governed by (Belgian) private law, as was the case in Meroni and that agency acts are amenable to judicial review. With its pragmatic approach in ESMA, the Court upholds the delegation of decision-making powers to EU agencies and bridges the ‘constitutional gap in EU executive rulemaking’ (Marjosola 2014). Nevertheless, the degree of legal interpretation required is great, as are the consequences, as the Court argues that the mention of agencies in other Treaty provisions ‘presupposes’ that the possibility to delegate powers to agencies exists, having particular regard to the amended judicial review provisions (Marjosola 2014, p. 527): if agencies can adopt acts that can be judicially reviewed and if Member States’ courts can even ask the Court to interpret agency acts, it must be possible to confer the powers to adopt such decisions to agencies. As a consequence, the Court takes on a constitutive role in compensating for constitutional neglect, establishing the competence to confer powers upon agencies outside the provisions of primary EU law. The Court thus corroborates that Lisbon’s intention to introduce an all-embracing hierarchy and categorisation of norms is a genuine failure in relation to agency acts, in addition to its obscure distinction into delegated and implementing acts (Vos 2018). Whereas Meroni has generally been considered as a ruling that hinders agency operation, ESMA can now be viewed as a case that supports further development of agencies. The de facto relaxation of the Meroni conditions (Marjosola 2014; Chamon 2014), is thus matched by an implied, but important, modification to the exact character of the principle of the balance of powers. Although the Court does not expressly refer to the institutional balance principle in its judgment, it implicitly relies on it when referring to the recent Treaty reforms, identifying agencies as bodies of the Union whose acts will be subject to judicial

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review proceedings (Articles 263 and 277 TFEU).26 The Court thus now appears to emphasise an interpretation of the institutional balance which stresses the importance of protection for the interests of the individual within the EU. ESMA thus entails an important adaptation of the principle of the institutional balance to ‘the new realities of European governance’ (Everson et al. 2014a), and gives agencies an autonomous character whilst at same time, it attempts to constitutionally demarcate the mode of their operation, at least as regards the protection of individual rights. 4.3

More Powers to Agencies?

The Court in ESMA both protects and confines the Meroni doctrine to EU agencies operating beyond the modes of delegation described in Articles 290 and 291 TFEU (Everson et al. 2014a), and this new Meroni 2.0 must be welcomed in functional regulatory terms as an adaptation of law to functional reality. Under this new reading, tasks which are conferred upon the Commission but cannot be carried out by the Commission due to lack of technical expertise, could now be left to agencies. An eminent example of such a situation is the task delegated to the Commission to adopt regulatory technical standards in the field of banking, whilst at the same time it is recognised that the Commission is unable to do so. Therefore, the task to draft such standard is delegated to the European Banking Authority (EBA).27 The Regulation stipulates in this case that EBA shall submit its draft standards to the Commission for endorsement. The use of the wording ‘endorsement’ and not ‘adoption’ seems telling in this respect hinting at the fact that the Commission is merely rubberstamping what the Agency has done. The Regulation moreover emphasizes that ‘regulatory technical standards shall be technical, shall not imply strategic decisions or policy choices and their content shall be delimited by the legislative acts on which they are based’.28 Also the fact that the Regulation instructs EBA to organize public consultation 26 Case 270/12, supra, paras 65 and 66. 27 Article 10, Regulation 1093/2010 of the European Parliament and of the Council,

establishing a European Supervisory Authority (European Banking Authority), amending Decision No. 716/2009/EC and repealing Commission Decision 2009/78/EU, as lastly amended by Reg. 2018/1717, L. 2911/2018. 28 Article 10 (1) of Regulation 1093/2010.

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processes and analyse the potential related costs and benefits points to the fact that the development of regulator technical standards is in reality a task for EBA. It seems therefore only expedient to make EBA and not the Commission responsible for the task it is carrying out. This would also be in accordance with the new interpretation of Meroni post-ESMA. 4.4

Facilitating the Emergence of a Politicised Administration

The Court’s willingness to allow the delegation of intervention powers to ESMA and its fresh interpretation of Meroni is not unproblematic, especially with a view to the equally vexed question of whether agency actions can be traced back to a political (democratic) mandate. The Court’s statement that the possibility to delegate intervention powers to ESMA in exceptional circumstances did ‘not correspond to any of the situations defined in Articles 290 and 291 TFEU’, disregards indeed the fact that in other fields, such as foodstuffs, the EU legislature confers similar powers upon the Commission under these provisions who will be able to adopt an act in emergency situations, based on an advice of agency and after consultation of a comitology committee.29 Moreover, whilst considering that ESMA’s powers were not very discretionary, the Court ignores the problem that the exercise of the powers delegated may entail important political, economic or social choices to be made by ESMA (Schammo 2011). Such a view denying functional realities, and still at core based on the non-majoritarian model of independent technocratic agencies clearly fails to take into account the value-laden nature of many regulatory issues. It is illusionary to think that the managerial and scientific tasks conferred upon agencies in these fields are merely technical and do not embrace political issues. The need for a ‘political administration’ and the demand to ‘reintroduce politics into the apolitical sphere of economic regulation’ has been recognised in the literature (Everson 2005, p. 156). Paradox is heaped upon paradox. The concerns of the Commission contribute to a critical constitutional lacuna within the Treaties. The Court seeks to correct this gap adapting its Meroni jurisprudence with a specific eye to the protection of private rights. It adapts EU constitutional structures to functional reality with an eye to the stylised transmission

29 See, for example, Article 53 of Regulation 178/2002.

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belt model of administration. At the same time, however, disregarding its own jurisprudence sanctions the transfer of broad discretionary powers to agencies (Hofmann 2016),30 the cases of Schräder and Rütgers recognising that the tasks conferred upon agencies may involve political, economic or social choices (Chamon 2014, pp. 395–396), it facilitates the emergence of a politicised administration, which no judicial review can properly oversee.

5

Independence and Accountability: A Sufficient Corrective?

The reluctance of the judges within the Court to review agency decisions is far from surprising. A recurring theme within general agency literature, the problem of legal review of technical and/or political issues entails its own questions of legitimacy: to what degree can the law claim any power to review beyond the sphere of the protection of individual rights. In recognition of this problem, contemporary theories of agency governance seek rather to place the legitimacy for agency action within broader constitutional schemes of independence and accountability, which seek to ensure ‘that no-one controls the agency, yet the agency is under control’ (Moe 1985). This trend has been reproduced at European level (Everson 1995), yet, once again, the very complex conundrums of the evolutionary European polity may similarly have undermined this alternative form of legitimacy. Half-hearted constitutionalisation of EU agencies by the Lisbon Treaty has only heightened existing

30 Case T-187/06 was upheld by the Court in C-38/09 [2010] ECLI:EU:C:2010:196. See also C-281/10 P, PepsiCo v. Grupo Promer Mon Graphic SA [2011] ECLI:EU:C:2011:679, where the Court admitted that ‘the General Court may afford OHIM some latitude, in particular where OHIM is called upon to perform highly technical assessments, and restrict itself, in terms of the scope of its review of the Board of Appeal’s decisions in industrial design matters, to an examination of manifest errors of assessment’ (para 67). This wording was repeated in Joined cases C-101, 102/11 P Neuman and Galdeano v. José Manuel Baena Grupo SA [2012] ECLI:EU:C:2012:641 (para 41). In case C-534/10 P, Brookfield New Zealand v CVPO and Schniga GmbH [2012] ECLI:EU:C:2012:813, the Court emphasised the broad discretion of the CVPO in the carrying out of its functions (para 50). In Case T-145/08 Atlas Transport v OHIM [2011] ECLI:EU:T:2011:213, the General Court viewed that the discretion of the Board of Appeal to suspend proceedings or not to, is a broad discretion and confirmed that is such cases of broad discretion the Court carries out only a limited review (paras 69–70).

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concerns about the control and accountability of EU agencies. Nevertheless, the major disturbing factor with regard to EU agencies remains the reluctance to afford agencies true independence, or to relinquish hierarchical (steering) control, in favour of simple measures of objective accountability. The question of the control of agencies thus seems, initially at least, to be contrary to the very purpose of agency creation: they need to be independent, at ‘arms length’ from the European Commission and other institutions. Equally, the primary founding appeal of agencies within the EU lies precisely in the fact that agencies can perform technical tasks independently from the European Commission. For the European Commission, the independence of the technical and/or scientific assessments of agencies is, in fact, their real raison d’être. The main advantage of using the agencies is that their decisions are based on purely technical evaluations of very high quality and are not influenced by political or contingent considerations. (European Commission 2002, p. 5)

In principle, therefore, a combination of technical regulatory efficacy and political independence, ensured by means of institutional-legal accountability has acted as a legitimizing power for these agencies (Everson 2015). Nevertheless, the Commission desire for retention of control over the burgeoning EU executive, together with the principle of the balance of powers, has led to specificities in EU agency design (European Commission 2001, p. 24). Unlike their American counterparts, EU agencies have consequently been expressly designed as being dependent on various institutions, mainly the European Commission, and to act as a part of networks that rely heavily on national counterparts (Geradin 2005), all contributing to the complexity of EU accountability mechanisms. The delicate question of balance between independence and accountability and control has likewise only become more pressing following the ESMA ruling recognizing limited discretionary powers for EU agencies. 5.1

Independence

The characterisation of EU agencies as inbetweeners, subject to principals and the balance of powers, also reflects their complex relationship with the notion of independence. Various authors plead in this context for the

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use of the term autonomy instead of independence (Busuioc and Groenleer 2014). The use of the term autonomy is indeed appropriate in the EU setting, allowing for a more subtle assessment of the positioning of agencies vis-à-vis other parties who may also exercise control over them. Yet, in a further confirmation of the complexities and incoherencies of the EU polity, the legal language of the Treaties, the founding regulations, the case law of the Court of Justice as well as, of the European Parliament’s proposed Law of EU Administrative Procedure (European Parliament 2013), continue to talk about independence. This and the need for agencies to be independent from commercially driven interests leads us to conclude that independence (including impartiality) remains the appropriate term to be used. Analysis of the formal, de iure independence of EU agencies in relation to their institutional design, staffing, finances and functions reveals a diffuse picture: an agency’s independence very much depends on the specific context in which it operates and upon the legal requirements placed upon it (Vos 2016). Often, the institutional design of agencies and the legal requirements imposed upon them, demand that principals, namely the Parliament, Council, Commission, and Member States are included and form an integral part of the agency. The membership of Member States of management boards can thus be considered to be an expression of a ‘Member State-oriented’ institutional balance of powers principle, having due regard for the powers of both the EU institutions and the Member States (Vos 1999). The representation of all Member States on agency boards is in line with the conceptual understanding of the EU executive as an integrated administration and is also an expression of its composite (Besselink 2007; Della Cananea 2003) or shared character. Agencies have become pivotal mixtures of EU and Member State institutions (Curtin 2009). The legal concept of independence is therefore not an absolute, but is, rather, a relative concept with varying degrees of independence being afforded. Most strikingly, in matters of institutional design, finances and operational activities, agencies are required to interact intensely with their principals, undermining their very advantage as institutions which operate at ‘arm’s-length’ from the Commission, Parliament or the Member States. EU agencies are from that perspective ‘in-betweeners’, which necessarily raises a particular problem of the freedom or otherwise of agencies from political or national influence; a particularly pertinent issue with regard to the supervisory agencies in the financial sector. However, in

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these agencies, members of the supervisors boards and management boards are not representatives of Member States, but heads of the national authorities competent for the supervision of credit institutions, and have clear requirements of acting ‘independently and objectively in the sole interest of the Union as a whole’; likewise they shall ‘neither seek nor take instructions from the Union institutions or bodies, from any government of a Member State or from any other public or private body’.31 The strong focus on independence must be understood in the light of the supervisory tasks of these agencies, and the particular position of their counterparts in the national settings that are independent from other government structures. Yet, at the same time, national supervisory authorities have never been completely independent from their respective political arenas and the double function of board members serving two masters indicates that independence is in practice always a necessarily relative, and thus fragile concept (Ottow and Lavrijssen 2012). The demands of the constitutional principle of the EU balance of powers continue to make agency design within the EU a troublesome process. Market independence and the need to ensure that agencies act independently from commercially driven interests is less controversial but equally difficult to achieve. Literature and practice agree that EU agencies should be independent of market parties so as to avoid capture. Particular reference is made to the membership of the technical and scientific organs of agencies that are to adopt the opinions of agencies on technical or scientific matters. Yet, market independence appears to be particularly difficult to achieve, where the problem of ‘revolving doors’ seems common practice (Committee on Budgetary Control 2011).32 The principle of impartiality as proposed by Parliament seems to be inadequate

31 See Arts 42 (Board of Supervisors), 46 (Management Board), 49 (Chairperson), and

52 (Director) of the Founding Regulations of the Supervisory Authorities (Regulation 1093/2010 of the European Parliament and of the Council, EBA, OJ 2010 L 331/12; Regulation 1094/2010 of the European Parliament and of the Council, EIOPA, OJ 2010 L 331/48; and Regulation 1095/2010 of the European Parliament and of the Council, ESMA, OJ 2010 L 331/84). 32 These practices were rigorously condemned by the European Parliament who was

unwilling to give a budgetary discharge to agencies like EMA and EFSA in view of problems of the independence of their experts and staff. See Report on discharge in respect of the implementation of the budget of the European Union Agencies for the financial year 2010: performance, financial management and control of European Union Agencies, 2011/2232(DEC), Committee on Budgetary ControlA7-0103/2012.

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to induce market independence, lacking any reference to commercial or business interests. Moreover, in practice scientists of good repute who could serve on the scientific panels or committees of agencies will be likely to be or have been involved in industry or national affairs. Independence of members on agency committees therefore is often a matter of transparency and a question of how to deal with cases of conflict of interest. Under pressure from the European Parliament’s Committee on discharge, EU agencies have designed formal policies on independence of scientific advice and how to deal with conflicts of interests that apply to their staff and members of agency committees or other organs such as the boards as well as external experts. To this end the Commission has drafted guidelines that the agencies may use.33 5.2

Control and Accountability

During the honeymoon period of EU agency operation in the 1990s and early 2000s, agencies were regarded as boosting the EU’s legitimacy by means of the expertise that agencies embraced, as well as the manner in which such expertise was rendered: it was more open to public participation and transparent, particularly by comparison to the comitology system, whilst agency expertise was far more likely to be independent from political and industry interference. At this time, agencies were seen as being the solution par excellence to the many problems the EU faced. However, with their flourishing into well over thirty bodies, EU agencies are now seen as a problem which must itself be tackled (Busuioc and Groenleer 2014, p. 175). Their non-majoritarian character, and perceived independence have given rise to growing anxiety about agencies becoming ‘uncontrollable centres of arbitrary power’. Accordingly, many mechanisms have been put in place to keep EU agencies under control and make them accountable for what they do (Busuioc 2013). Nevertheless, the relative independence of EU agencies once again plays its role (Vos 2005).

33 Control in this context denotes a situation where a principal has power over the delegate and covers a wide range of instruments employed by the principal to direct, steer and influence the behaviour and decision-making of the agent or delegate. Accountability refers to ex post control, to ascertain whether the agent or delegate has carried out its tasks correctly.

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The design of EU agencies includes a mix of control and accountability. Ex ante control is determined by the legal boundaries set in the founding regulations of agencies, such as the scope of action, powers, finances and the determination and position of the agencies’ principals as well as the general principles that apply to or are declared applicable to agencies. Most prominently involved in the ex ante control are therefore the European Parliament and the Council as legislators. Ongoing control refers to the direct control by the principals in order to steer or influence the actions of the agencies. In this way, the autonomy of agencies is reduced and made more dependent upon the controlling principals (Busuioc 2013, pp. 35–37). Examples of this are the European Parliament’s initiatives to link up a Member of European Parliament to a European agency to be able to follow this agency better (Jacobs 2014), the position of the Member States as representatives in the Management Board or as competent authorities in other advisory organs of the agencies and, with a greater degree of impact, the alert or warning mechanism given to the Commission for actions of agencies’ management boards. This form of control is therefore most relevant with regard to the relations established between agencies, the institutions and the Member States. It is most evident in the exercise of agency competences for external relations where some agencies are obliged to ask approval from the Council or Commission prior to the conclusion of international cooperation acts (e.g. Europol and EASA), or consult with the Commission (e.g. Frontex) (Ott et al. 2014). To date, however, research has yet to reveal the degree to which Council and Commission make use of these powers in practice. Ex post control equals accountability established during a retrospective process of information, discussion and evaluation of agencies’ actions. It expressly precludes direct intervention and ongoing control. Five forms of accountability may be observed: managerial accountability, vested, in particular, in management boards; political accountability to the European Parliament and the Council; administrative accountability, whereby the European ombudsman plays an important role in supervising general rules on transparency and access to documents (European Ombudsman 1998); financial accountability, whereby agencies are accountable to the Commission’s financial controller, the Council and discharge of annual budgets by the European Parliament and the Court of Auditors; and judicial accountability under Article 263 TFEU. In the absence of any ministerial responsibility, or oversight of agencies by EU commissioners (Mehde 2003), it is interesting to observe that

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the EU is also beginning to develop an interest in notions of ‘horizontal responsibility’ or ‘public accountability’ (Curtin 2005, 2009; Bovens et al. 2010), focused upon the clients of an agency or network. In this case, all agencies have adopted a code of conduct. At the same time, however, a nascent form of ‘ministerial’ responsibility may be evolving. Curiously, the ‘alert or warning mechanism’ introduced by the Common Approach, obliges the Commission to raise the alarm if it has ‘serious reasons for concern’ that an agency management board is about to adopt a decision that (i) may not comply with the mandate of the agency, (ii) may violate EU law or (iii) be in manifest contradiction of EU policy objectives. In such a situation the Commission will formally raise the question in the relevant management board and request it to refrain from adopting the relevant decision. If the management board does not respond, the Commission will formally inform the European Parliament and the Council, with a view to allow the three institutions to react quickly, to use their powers to restrain the agency. This alert mechanism, however, also points to continuing problems of agency accountability. What happens if the Commission does not engage the mechanism, yet an act proves to be contentious? According to the Commission, the Common Approach has no formal status, so that it should not bear any formal responsibility. The Council and Parliament, however, could be unlikely to agree, leaving the Commission responsible for the acts of others. Equally, the alert mechanism is undoubtedly restrictive of agency independence34 and may even prove to be incompatible with the founding regulations of new agencies such as EBA, ESMA and EIOPA. In addition to its mix and match attitude to independence or autonomy, or to control and accountability, the series of accountability mechanisms applied to EU agencies is extraordinary complex, may create instances of accountability overload (Busuioc 2013, p. 230), and is similarly a reflection of on-going political conflicts between the institutions of the EU and between the supranational level and the Member States.

34 It must be emphasised that this system is about acts of agencies’ management boards and is not concerned with acts that are adopted by other organs (scientific committees) of the agencies giving scientific advice to the EU institutions.

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6

Conclusion: The Politicised Administration

As noticed, it is a commonplace that independent or autonomous agency operation gives rise to political concerns, either about the deep (ideological) purposes of agency mandates, the potential for ultra vires political actions on the part of agencies, as well as the potential for a breach in constitutional relations between a polity and its executive. Nevertheless, and all such concerns notwithstanding, the global approach to the design and control of agency structures continues to posit their purely technical nature and to place them within the institutional structures of the polity with this in mind: hence, the overwhelming emphasis upon transmission belt models of administration, or upon the dual constitutional mechanisms of independence and accountability. Such an approach is understandable: the additional legitimacy offered a polity by concepts of technical excellence are hard to reject, especially where an executive also takes seriously its duty to provide effective and sensible implementation of its policies. Various authors, however, have never ceased to demand the unveiling of the myth of a depoliticised administration at national level (Shapiro 2005), and it is perhaps at EU level that an imperative is developing to view agencies as politicised beings. The primary reason for such a conclusion is to be found in the uncertain and evolving nature of the EU polity and its unfinished constitution. EU agencies must exist as ‘in-betweeners’, of an uncertain constitutional character, amidst EU institutions and Member States within the indelibly composite EU executive. EU agencies cannot hope to be wholly independent from principals who are necessarily suspicious, not simply of agencies, but also of their institutional and national counterparts and the influence that they might exercise, or the competences that they might accrue within this new EU governance vehicle. Equally, EU agencies are vulnerable to constitutional lacunae which similarly reflect such deeper conflicts, such as their notable absence from the hierarchy of norms established by Articles 290–291 TFEU, and the consequent potential for legal challenges to their operations. At the same time, and by virtue of crisis-drive functional necessities, EU agencies are taking on ever greater and ever more important workloads far beyond the normative strictures of primary EU law. The Meroni 2.0 doctrine, as developed by the Court, can be seen as allowing agencies to further develop their own regulatory roles, with a wide measure of discretion, especially where immediate action is an imperative.

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How then should we react to agencies as a politicised administration? At one level, our reaction must be very cautious indeed, especially where we continue to expect agencies, in their character as technical regulators, to be efficient and effective administrators. Giandomenico Majone highlights, with frightening clarity, a fundamental break within processes of European integration (Majone 2014). Post financial crisis, and, above all, in view of the continuing failure to comprehensively control and combat sovereign debt crisis, Europe can no longer continue in a spirit of ‘blind optimism’, to posit the total success of harmonisation strategies. Crisis has not only taught us that European projects can and do fail, but has also required us to review the famous Community Method of total harmonization without our once somewhat rose-tinted, integration spectacles. Majone points to a series of problems that characterize that Method: first, the European tendency, most apparent in relation to the construction of Economic and Monetary Union to disguise precarious political projects as technical exercises, and thus to obscure the fact that such projects are contentious and might fail; secondly, the focusing of integration processes upon a goal of total harmonization, which again obscures the fact that Member State interests can and do differ, also endangering the success of harmonization per se; and thirdly, a European obsession with process, rather than results, which determines that the success of European integration processes are measured solely in line with the yardstick of ‘legitimate decision-making’, with concomitantly very little regard for the quality of European ‘outputs’—a quality, which post-crisis is now of far greater interest to European publics than was once the case. Although Majone’s observations are global in nature, concerning the state of European integration grosso modo, they provide constructive guidance also for our more limited remit of evaluating the development of the EU agency model. More particularly, they prompt examination of the question of whether in its headlong rush to deploy ‘the’ agency model, the EU is likewise obfuscating the contestation of political projects and increasing potential for failure through application of technical instruments where (a lack of) political will is instead determinative. Whether it is reacting in an incomplete and contested manner to crises, engaging in totalizing harmonization strategies without thought for continuing divergence in national interests; and once again, whether it is placing far too much emphasis upon process rather than outputs. The irony of EU reliance upon EU agencies cannot be overlooked. A traditional mode of depoliticised agency operation is seemingly morphing

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into a process of ‘politicised depoliticisation,’ whereby agencies may be used to move European policy and integration strategies beyond and circumvent current institutional impasses and political conflicts within the Commission, amongst the Member States, or between Union institutions. This is precisely the case with regard to the three supervisory authorities that now have powers to draft harmonised financial standards, who must similarly operate within a political minefield of conflicts between Member States and the EU institutions about the development of a single financial regime divided into a members and non-members of the Eurozone. The same holds true for the European response to the refugee crisis. The issue is not simply one that EU agencies are required to engage in political processes and must negotiate complex and conflicting interests to pursue open-ended rather than clear mandates, but also one that such agencies confronted with open-ended mandates in relation to highly contentious situations, might be unable to carry out their tasks with any degree of effectiveness. European agencies can surely never compensate for failures of European policy, especially in crisis. At the same time, however, if the agency model survives its implication in current political malaise, a European recognition that arm’s length government is not necessarily congruent with depoliticised governance may, in its turn, have its own positive sides. Certainly, the likely evolution of EU agencies into political creatures will require profound scholarly attention. Nevertheless, where EU agencies are at last given constitutional recognition as elements within the composite executive power at EU level, and the appropriate mechanisms of independence and accountability are applied, could it be that agencies might properly develop their already visible characters as political negotiators—negotiators between the complex and contested interests of the institutions, the Member States and even the general European public? (Everson et al. 2014a).

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Bovens, M., Curtin, D., & ‘t Hart, P. (Eds.). (2012). The Real World of EU Accountability: What Deficit? Oxford: Oxford University Press, 2010. Busuioc, M. (2013). European Agencies: Law and Practices of Accountability. Oxford University Press. Busuioc, M., Groenleer, M., & Trondal, J. (Eds.). (2012). The Agency Phenomenon in the European Union. Manchester: Manchester University Press. Busuioc, M., & Groenleer, M. (2014). The Theory and Practice of EU Agency Autonomy and Accountability: Early Day Expectations, Today’s Realities and Future Perspectives. In M. Everson, C. Monda, & E. Vos (Eds.), European agencies in Between Institutions and Member States. Alphen aan den Rijn: Wolters Kluwer. Chamon, M. (2012). The Influence of “Regulatory Agencies” on Pluralisms in European Administrative Law. Review of European Administrative Law, 5(2), 61–91. Chamon, M. (2014). The Empowerment of Agencies Under the Meroni Doctrine and Article 114 TFEU: Comment on United Kingdom v. Parliament and Council (Short-Selling) and the Proposed Single Resolution Mechanism. European Law Review, 39(3), 380–403. Chiti, E. (2013). European Agencies’ Rulemaking: Powers, Procedures and Assessment. European Law Journal, 19(1), 93–110. Committee on Budgetary Control. (2011). Report on Discharge in Respect of the Implementation of the Budget of the European Union Agencies for the Financial Year 2010: Performance, Financial Management and Control of European Union Agencies, 2011/2232(DEC), A7-0103/2012. Curtin, D. (2005). Delegation to EU Non-Majoritarian Agencies and Emerging Practices of Public Accountability. In D. Geradin, N. Petit, & R. Munoz (Eds.), Regulation Through Agencies in the EU: A New Paradigm for European Governance. Cheltenham: Edward Elgar. Curtin, D. (2009). Executive Power of the European Union: Law, Practices and the Living Constitution. Oxford: Oxford University Press. Curtin, D., Hofmann, H., & Mendes, J. (2013). Constitutionalising EU Executive Rule-Making Procedures: A Research Agenda. European Law Journal, 19, 1–21. D˛abrowska, P. (2010). EU Governance of GMOs: Political Struggles and Experimentalist Solutions? In C. F. Sabel & J. Zeitlin (Eds.), Experimentalist Governance in the European Union: Towards a New Architecture (pp. 177–215). Oxford: Oxford University Press. Della Cananea, G. (2003). L’Unione Europea: Un ordinamento composito. BariRoma. De Witte, B., & Beukers, T. (2013). Case C-370/12, Thomas Pringle v. Government of Ireland, Ireland, The Attorney General, Judgment of the Court of

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PART II

Agencies and the Eurozone Crisis

CHAPTER 3

Fit for Purpose or Drowning in Details? Institutional Evolution of the European Financial Sector Supervisory Authorities a Decade After the Global Financial Crisis Aneta B. Spendzharova

1

Introduction

The 2008 global financial crisis led to a severe economic downturn in advanced industrialised economies. Considering that weak financial sector oversight contributed to the crisis, there was an unparalleled opportunity for redesigning financial sector supervision in the European Union (EU) (FSA 2009; Moloney 2011a; Haentjens and Wessels 2015). A vantage point a decade after the financial crisis provides a good opportunity to assess the institutional developments in EU financial regulation and supervision. This chapter examines the impact of the 2008 global financial crisis and the subsequent Eurozone sovereign debt crisis on the institutional development of the three financial sector European Supervisory

A. B. Spendzharova (B) Maastricht University, Maastricht, The Netherlands e-mail: [email protected] © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_3

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Authorities (ESAs), particularly focusing on the case of the European Securities and Markets Authority (ESMA). I investigate the tasks that the three ESAs have performed since their creation and how these have changed and expanded as a consequence of the global financial crisis and the Eurozone sovereign debt crisis. In the overarching architecture of European financial sector governance, the three ESAs are the successors to three smaller networked committees of national supervisory authorities with limited decisionmaking powers—the so-called level 3 committees (Quaglia 2010). Set up as part of the Lamfalussy financial supervision reforms, the level 3 committees played an important role in exchanging best practices across member states and sectors, and in facilitating regulatory convergence (European Central Bank 2007; Grossman and Leblond 2011). However, they were only authorised to issue non-binding recommendations. In recognition of the need for further institutional reforms in EU financial supervision, the three level 3 committees signed a joint protocol on cooperation to ensure greater coherence and consistency as early as November 2005, well before the outbreak of the 2008 crisis. They pledged to share information more effectively, exchange experience, reduce duplication of reporting and issue joint reports and strategies for future development (European Central Bank 2007). In the aftermath of the most severe global economic crisis since the Great Depression, and as part of the so-called 2009 de Larosière reforms, the three Lamfalussyv committees became European supervisory authorities (ESAs), namely, the European Banking Authority (EBA), the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). Fully operational since January 2011, the three ESAs have been developing and enforcing the single supervision rule books in their respective sector and issuing binding decisions to ensure greater regulatory coherence. As we will see in the case of ESMA, now the ESAs can take decisions with a direct and binding effect on market participants and national supervisory organisations. Previously, this was not possible under the Lamfalussy framework. The central argument in this chapter is that the crises affecting the EU’s financial and economic order since 2008 created a momentum for centralisation of governance, as shown by the creation of new EU bodies and transfer of powers and competences from the member states to the EU level (see also Salines et al. 2012; Howarth and Quaglia

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2016; Quaglia and Spendzharova 2017). Furthermore, since becoming operational in 2011, the three ESAs have received new responsibilities and powers to ensure harmonised rule application across the EU as a consequence of a series of incremental EU legislative reforms, where unintended consequences have been an important factor reinforcing the trend toward greater supranationalisation that started in 2008. The chapter is organised as follows: section two outlines the evolution of the European financial sector governance framework and the role of the ESAs. Section three discusses the increasing powers of ESMA as a case study of the changing roles and tasks of the EU financial supervisory bodies. Subsequently, section four puts forward the analytical framework, focusing on the far-reaching effects of incremental institutional change in financial regulation and section five applies this framework to the case of ESMA. Finally, section six considers legal challenges taken up by the member states, in particular, the case brought by the UK against the Council and the European Parliament regarding the EU Regulation on Short Selling (case C-270/12) and section seven summarises the main findings.

2 The Institutional Evolution of EU Financial Sector Regulation This section starts with a brief overview of recent milestones in EU financial regulation, which helps to contextualise the increased powers of the European supervisory authorities. The first overarching policy at the EU level in the realm of financial markets and services was the Financial Services Action Plan (FSAP) covering the period 1999–2005. Due to its slow implementation, in 2000, the ECOFIN Council of Ministers appointed an expert committee, chaired by Alexandre Lamfalussy, to speed up EU-wide convergence in regulating securities markets. The so-called Lamfalussy financial supervision framework was adopted in 2002 after lengthy negotiations between the European Commission, Council, and Parliament. Subsequently, the principles outlined in the Lamfalussy report for the securities sector were extended to banking and insurance (Lannoo 2002; Quaglia 2007, 2010). In 2004, the European Commission reviewed the Lamfalussy process and engaged in extensive consultations to fine-tune its implementation. The Commission’s White Paper on Financial Services 2005–2010 succeeded the FSAP in terms of

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providing an overarching vision for developing the single market in financial services (European Commission 2005; see also Masciandaro et al. 2009; Quaglia 2010; Grossman and Leblond 2011). The three level 3 committees, namely, the Committee of European Banking Supervisors (CEBS), the Committee of European Securities Regulators (CESR) and the Committee of European Insurance and Occupational Pensions (CEIOPS), were among the most innovative institutional features of the Lamfalussy financial supervision framework. They were set up to foster the exchange of best practices across member states and sectors, and to facilitate regulatory convergence (European Central Bank 2007; Grossman and Leblond 2011). However, they were only authorised to issue non-binding recommendations. In November 2005, the three committees signed a joint protocol on cooperation to ensure greater coherence and consistency. They pledged to share information more effectively, exchange experience, reduce duplication of reporting and issue joint reports and strategies for future development (European Central Bank 2007). In the aftermath of the 2008 global financial crisis, the European Commission launched a new initiative to redesign the European financial architecture following the recommendations of another high-level expert group, chaired by Jacques de Larosière (see Hodson and Quaglia 2009; Quaglia 2010; Mügge 2010; Posner and Véron 2010). These reforms envisaged the creation of a European Systemic Risk Board (ESRB) in charge of macro-prudential supervision—monitoring and assessing systemic risk in European financial markets (European Commission 2009a). A second institution—the European System of Financial Supervisors (ESFS)—would complement the ESRB in the realm of microprudential supervision. The ESFS includes the three new European supervisory authorities in banking, securities and insurance (European Commission 2009b; Amtenbrink 2011). The first new institution, the European Systemic Risk Board, monitors risks to financial stability in the EU-28 and has been received by the member states fairly free of controversy. It is comprised of the 28 national central bank governors of the EU member states, the two top European Central Bank officials, as well as representatives of the Commission and the three newly-created European supervisory authorities. The second institution, the European System of Financial Supervisors, has caused more debate. The de Larosière reforms empowered the ESAs to issue decisions with binding power. While member states in favour of

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greater centralisation and harmonisation of financial regulation as well as the European Commission and Parliament welcomed the enhancement of the ESAs’ powers, other member states voiced concerns about possible loss of national regulatory autonomy and potential fiscal burdens (Buckley and Howarth 2010; Mügge 2011; Spendzharova 2012, 2014; Spendzharova and Bayram 2016). These tensions become clear when we consider the case of ESMA discussed below.

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The Increasing Powers of ESMA

ESMA is an integral part of the European System of Financial Supervision (ESFS), together with the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the relevant national competent authorities of the EU member states. The central mission of ESMA is to ‘enhance investor protection and promote stable and orderly financial markets’ (ESMA 2016). This translates into three objectives: investor protection, orderly markets and financial stability (ESMA 2016). While investor protection has always been within the core mandate of national securities markets regulators, safeguarding financial stability is a novel addition to the objectives of securities regulators, which has come to their attention in the aftermath of the 2008 global financial crisis. Thus, as pointed out by ESMA’s Chair, Steven Maijoor, in addition to its core investor protection mandate, ESMA has been very active in the field of financial stability (Maijoor 2016). To achieve its mission and objectives, ESMA’s activities fall in four core areas: assessing risks to investors, markets and financial stability; completing the single rulebook for EU financial markets; promoting supervisory convergence; and directly supervising some financial entities which are essential for the EU’s financial markets infrastructure, such as credit rating agencies (CRAs) and trade repositories (TRs). As ESMA (2016) points out, these four types of activities are closely interlinked. Risk assessments are used as input for work on the single rulebook and supervisory convergence. Better supervisory convergence itself is seen as a desirable outcome of the single rulebook. Lastly, the direct supervision of CRAs and TRs provides information for ESMA’s risk assessments and its single rulebook actions, and vice versa. More than a decade after its predecessor, CESR, was set up, ESMA has gained and exercised a wide range of powers that substantially exceed

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CESR’s competencies and even approximate those of its US counterpart—the Securities and Exchange Commission (SEC). To name the main powers of the agency, ESMA develops guidelines, recommendations and draft regulatory and implementing technical standards in the area of securities regulation. It can also issue opinions to the EU institutions, which is relevant for ongoing EU legislative negotiations in financial sector governance (Moloney 2011a, b). Within its responsibilities to promote convergence of supervisory practices across the EU, ESMA has powers to conduct peer reviews, identify best practices, mediate and resolve disputes between national competent authorities of the member states and cooperate with the ESRB in the field of systemic risk, especially risks stemming from financial innovation (see also Moloney 2011a, b; Schammo 2011). Next, let us examine the relevance of incrementalism for understanding the recent EU reforms of financial sector governance.

4 Analytical Framework: The Far-Reaching Effects of Incremental Institutional Change Rational institutional design models of agency creation emphasise the ability of public actors to create or reshape institutions in order to best pursue shared public policy goals, such as financial stability. For example, Howlett and Rayner (2007, p. 7) have examined a variety of ‘integrated strategies’ in rational policy design, through which governments attempt to achieve ‘coherent policy goals, relying on a consistent set of policy instruments that support each other in the achievement of the policy goals’. According to this model of agency creation, setting up new bodies and the delegation of powers is the result of deliberate and targeted choices by public actors (Howlett 2011). By contrast, incrementalism is an alternative framework that can account for the institutional development of ESMA since its creation, drawing on the work of Charles Lindblom. He used the metaphor of the branch method to describe his approach, ‘continually building out from the current situation, step-by-step and by small degrees’, rather than starting from scratch every time decision-makers encounter a problem (Lindblom 1959, p. 81). Lindblom’s analytical framework is particularly relevant for policy environments where decision-makers are faced with conflicting priorities and disagree about the most appropriate course of action. Such constraints become all the more evident and important in fragmented multi-layer systems of decision-making such as the European

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Union. The simple rank ordering of policy alternatives is not feasible, and policy actors often neglect important possible outcomes and alternative policies. In the end, policy adjustment tends to occur in the margins because decision-makers ‘simultaneously choose a policy to attain certain objectives and choose the objectives themselves’ (Lindblom 1959, p. 82). Incrementalism entails policy adjustments in the margins. At the same time, Lindblom has stressed in his later work that ‘incrementalism in politics is not, in principle, slow moving…not necessarily, therefore, a tactic of conservatism’ (Lindblom 1979, p. 520). He even suggested that a fastmoving sequence of small changes could bring about a substantial change in the status quo. This may very well be what we are currently observing with the growing powers and prominence of ESMA in European financial sector governance. In complex decision-making involving many actors, the ‘best’ policy emerges not out of a comparison against an abstract ideal, but out of a pragmatic agreement on a policy that is acceptable to all parties (Lindblom 1959, p. 82). This aspect of Lindblom’s work is especially relevant for understanding collective action in the EU. While Lindblom’s incremental model of policy change is derived from a pluralist system of interest representation, such as the USA, it applies well to the current multi-level system of EU decision-making, where supranational, national, and subnational interests, as well as organised business, other stakeholders and labour shape policy together. In addition to those aspects of incrementalism, Lindblom emphasised a cognitive component. Decision-makers focus on a few policy alternatives only marginally different from the status quo, because this approach makes the most of existing knowledge and their ability to anticipate the future consequences of their most preferred policy. Otherwise, when there are too many moving pieces, one cannot credibly predict the actual impact of policy change. The literature on bounded rationality has developed this insight further. Decision-makers often have to generate the possible policy alternatives themselves and define them according to their understanding of the problem at hand (Simon 1979, 1996). More recently, public policy scholars have shown that actors tend to have ready policy solutions which they put forward when a window of opportunity opens, often created by a crisis or policy failure (Cohen et al. 1972; Kingdon 1996). In response to the powerful critique by scholars of incrementalism and bounded rationality, recent work in rational choice institutionalism

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has developed a more nuanced understanding of rationality, taking into consideration the cognitive constraints of decision-makers. Drawing on the cognitive aspect of partisan mutual adjustment, Lindblom’s work on incrementalism can be used to shed light on how decision-makers overcome collective action problems in the EU. Committed to the overarching project of completing the single market in financial services, most EU member states would find a common set of financial regulation rules to be more optimal than the perpetuation of a myriad of national regulations. Yet what kind of harmonised policy could satisfy the member states and the EU institutions involved in negotiating new legislation?

5 Incremental Institutional Upgrading of the European Supervisory Authorities: The Case of ESMA Drawing on the case of ESMA, I argue below that expanding the decision-making powers of level 3 Lamfalussy committees emerged as a key focal point of the early discussions on reforming EU financial sector governance. However, these institutional reforms became politically feasible only after the 2008 global financial crisis and gained further momentum during the Eurozone sovereign debt crisis. In 2010, the EU institutions adopted the ground-breaking Directive 2010/78/EU, also known as the Omnibus I directive, which spelled out the new supervisory framework and main powers of the ESAs, including ESMA. The following year, they passed another directive, Omnibus II, that empowered the ESAs even further. The adoption of recent financial markets legislation, such as the European Market Infrastructure Regulation (EMIR 2012), the revised Markets in Financial Instruments Directive (MiFID II 2014) and Markets in Financial Instruments Regulation (MiFIR 2014) shows an incremental trend over time toward reinforcing and expanding ESMA’s powers as a European financial sector regulator. EMIR (2012) expanded ESMA’s powers in the realm of post-trading. Subsequently, the Regulation on Short Selling and Certain Aspects of Credit Default Swaps (2012) reinforced ESMA’s powers in ensuring market integrity and transparency. The agency’s market integrity and investor protection powers were further expanded in 2014 by the Market Abuse Regulation (MAR). Lastly, four

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substantial pieces of legislation expanded ESMA’s powers in the realm of drafting regulatory technical standards (RTS) and implementing technical standards (ITS). These are the Markets in Financial Instruments Regulation (MiFIR 2014), Market Abuse Regulation (MAR 2014), EU Benchmarks Regulation (2015) and (Securities) Prospectus Regulation (2017). Moreover, ESMA has a wide range of implementing tasks for existing (and amended) legislation in the realm of securities regulation, such as the Prospectus Directive (2003, amended 2010) and the newly adopted Prospectus Regulation (2017), the Transparency Directive (2003, amended 2013), the UCITS Directive (2009, amended 2010, 2011, 2013, 2014) and the AIFMD Directive (2011). With respect to financial and staff resources available to the ESAs, including ESMA, to carry out their rapidly expanding set of tasks and responsibilities, as shown in Figs. 1 and 2, the ESAs’ total budgets have more than doubled during the first years of their operations, with an average growth rate of more than 25% per year (European Commission 2017, p. 164). On the one hand, the budgetary growth was factored in the amounts earmarked for the ESAs in the EU’s Multiannual Financial Framework 2014–2020 to ensure the implementation of the single rule books in their respective

ESAs EU Budget Contribution (mil. €) 18 16 14 12 10 8 6 4 2 0

2013

2014

2015

2016 EBA

2017 ESMA

2018

2019

2020

EIOPA

Fig. 1 ESAs budget contribution from the EU budget, MFF 2014–2020 (Source European Commission [2017])

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ESAs Staff 180 160 140 120 100 80 60 40 20 0

2013

2014

2015 EBA

2016

2017 ESMA

2018

2019

2020

EIOPA

Fig. 2 ESAs total number of staff employed (Source European Commission [2017])

sector. The estimates also show that no substantial budgetary growth can be accommodated from 2018 onwards. On the other hand, in line with an incrementalist account, it seems that the new tasks and demands placed on the ESAs, including ESMA, surpass their current resources. For example, due to budget constraints, ESMA had to remove from its IT Work Programme 2017–2019 the development of the European Electronic Access Point (EEAP) in favour of the implementation of the Prospectus Directive and Money Market Funds Regulation projects, even though both actions are required from ESMA under the current EU legislation (European Commission 2017, p. 165). Furthermore, staff testimonies before the EU Parliament show that the ESAs have difficulties in meeting their objectives in a number of crucial areas such as assessments of third country equivalence, consumer protection and supervisory convergence (European Commission 2017, p. 165) (Table 1). As ESMA is a de facto European agency, it is important to relate the argument developed in this chapter about the incremental increase in powers of EU agencies to general explanations of agency formation (Busuioc et al. 2012; Busuioc 2013; Rittberger and Wonka 2015;

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Table 1 ESA

EBA ESMA EIOPA

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Budget of the ESAs, 2016 (in million e) EU contribution

Member states contribution

Direct income from supervised bodies

Total ESA budget

14.7 10.2 8.3

22.4 16.2 13.3

0 10.5 0

37.1 36.9 21.6

Source European Commission (2017)

Egeberg and Trondal 2016; Bach et al. 2016). Groenleer (2011) puts forward three widely used accounts of agency creation in the literature—functional, political and transnational policy diffusion. According to functional explanations, regulatory divergence across the Union and growing pressures on the Commission’s resources lead to setting up independent agencies. Agencies bring together independent expertise at the EU level, increase the transparency and visibility of EU policymaking, and reduce transaction costs for national governments (Groenleer 2011; see also Dehousse 1997; Majone 1996). According to political explanations, agencies demonstrate decision-makers’ credible commitment to optimise collective action arrangements and improve the regulatory environment, especially in the wake of a crisis (Kelemen 2002; Shapiro 1997; Kelemen and Tarrant 2011). Lastly, policy diffusion explanations emphasise that, in the past two decades, governments have set up a large number of independent regulators at the domestic level. This institutional design has been emulated at the European level. In this context, European agencies are complementary to the national regulatory authorities and act as a hub for regulatory cooperation (Dehousse 1997; Chiti 2000; Egeberg and Trondal 2009; Levi-Faur 2011). In a similar vein, Yesilkagit and Christensen (2010) have tested two main explanations of the institutional design and formal autonomy of national regulatory agencies in Sweden, the Netherlands, and Denmark—historical-cultural and political ones. All in all, Groenleer (2011) notes that, overall, ‘most [European] agencies have a limited mandate…and only a few agencies have been granted decision-making tasks’. Against this backdrop, this chapter sheds light on the factors that made possible the creation and further delegation of powers to ESMA as a

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powerful European regulator. In order to trace the process of institutional reform, I draw on official reports evaluating the Lamfalussy and de Larosière frameworks, triangulated with official documents, the academic literature and systematic press coverage. In particular, several expert committee assessments of the Lamfalussy financial regulation framework, as well as ECOFIN Council conclusions, show the build-up of functional pressures, especially in the mid-2000s, to enhance the powers of level 3 committees and pursue greater regulatory coherence across the Union. Next, I discuss the conclusions and recommendations of those reports in greater detail. The first comprehensive review of the Lamfalussy framework in 2004 resulted in a positive assessment by ECOFIN and the extension of the general approach from securities to all financial services sectors. We can glean experts’ reasoning from the regular reports of the Inter-institutional Monitoring Group (IIMG) which was responsible for assessing the implementation of the Lamfalussy process and identifying bottlenecks. Convened in 2003, the IIMG was reconstituted in 2005, following the extension of the Lamfalussy process to all financial services. The IIMG highlighted that European financial markets had changed considerably and new issues needed to be addressed (IIMG 2007, p. 6). For example, regulators increasingly had to oversee the activities of large cross-border European financial groups. These market developments called for stronger coordination between the national supervisory authorities and more consistent application of EU rules across the member states to realise the full benefits of the single market (IIMG 2007, p. 13). The expert committee reports provide evidence of a gradual increase in the powers of the three Lamfalussy supervisory committees. The initial focus of the committees’ work was on providing expert advice in the preparation of urgent sectoral legislation such as the Capital Requirements Directive (CRD), the Markets in Financial Instruments Directive (MiFID) and the Solvency Directive. Later on, as member states started the implementation process, the convergence tasks of level 3 committees came to the foreground, and so did the question of their powers (FSC 2007, p. 6). Level 3 committees faced mounting challenges due to the increased speed of market integration and growing prominence of financial conglomerates. In this new environment, the committees acquired new tasks, and their supervisory discretion grew over time. After all, level 3 committees were the only European bodies that had both the staff and prior experience to handle the new regulatory pressures (FSC

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2007, p. 8). The sunk costs of establishing and funding the committees as well as increasing returns of promoting supervisory convergence served as a constraint on any alternative options for an institutional redesign. In sum, we do observe some enhancement in the supervisory discretion of level 3 Lamfalussy committees due to functional pressures, referring to Groenleer’s (2011) analysis. Yet this occurred without changing the committees’ legal basis and within the framework of issuing non-binding decisions, which suggests some political backlash against these functional pressures and the presence of actors wishing to constrain the independent decision-making powers of agencies (see Kelemen and Tarrant 2011; Busuioc 2013). The first reviews of the Lamfalussy process also show that a positive feedback effect supported the institutional development of level 3 committees. They were largely seen to perform their tasks well and live up to the expectations of both the member states and EU institutions. The IIMG applauded their important advisory work and stressed that they had fully met their original mandate (IIMG 2007, p. 15). Based on its positive assessment of the committees’ performance, the IIMG recommended ‘a considerable uplift in their resources…which may require changes to the level 3 committees’ legal base or status within the EU system’ (IIMG 2007, pp. 18–19). However, the IIMG also stressed that its members were divided about the need for such further empowerment. Thus, despite the presence of a positive feedback effect supporting the further transfer of powers to level 3 Lamfalussy committees, important EU policy actors were not convinced that this step was necessary The redesign of European financial regulation unfolded in a political environment where discretion in enforcement was relatively low, and the policy process was dominated by strong veto players—each of the EU’s legislative institutions could thwart the reform process. In this institutional environment, the literature on incrementalism would anticipate small gradual changes over time rather than bold institutional redesign in one go. Consistent with this expectation, the outcome of the de Larosière institutional redesign shows evidence of incremental institutional reform. The European supervisory authorities, such as ESMA, are an upgrade of level 3 committees, but we also observe a very close correspondence in terms of their core mandate, staff, and location. Furthermore, in the case of ESMA, three (out of six) important pieces of EU legislation shown in figure which conferred more powers to the agency after it

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became operational in 2011 are amended versions of existing EU directives or regulations, such as MiFID II and MiFIR and the Market Abuse Regulation (MAR) which replaced the 2004 Market Abuse Directive (MAD). By 2017, all ESAs, and ESMA in particular, have gained more binding powers and tasks compared to their predecessors in spite of opposition from some member states. We find the greatest preference heterogeneity about the new European financial supervision architecture in the Council. The European Commission and Parliament clearly favoured a further transfer of powers to the European supervisory authorities in order to enhance regulatory convergence in the Union and ensure stronger sanctions in case of failure to comply (EurActiv 2009b; Financial Times 2009; EurActiv 2010; Tait 2010). By contrast, member states’ preferences about this issue diverged, with some member states such as the UK being watchful about preserving national regulatory autonomy (see also Buckley and Howarth 2010; Grossman and Leblond 2011; Spendzharova 2012). Public stakeholder consultation position papers from the mid-2000s provide further evidence of these disagreements (see for example European Banking Federation 2009; Hungarian Financial Supervisory Authority 2009; Luxembourg Bankers’ Association 2009). In January 2007, the Inter-institutional Monitoring Group invited all interested parties to comment on its second interim report on the Lamfalussy process. It received 34 reactions from the main stakeholders, such as national and EU level industry associations, member states’ central banks, financial regulation agencies and finance ministries, banks and financial companies. The consultation revealed that a number of stakeholders saw a problem in the existing incentives for the members of level 3 committees to follow predominantly national interests. To correct this perceived shortcoming, they proposed that level 3 committees should be able to take binding decisions based on a majority vote. This, in turn, would encourage supervisors to take a pan-European view rather than a national one (IIMG 2007, p. 26). A major tipping point toward giving the European supervisory authorities greater regulatory powers occurred in 2009, following the 2008 global financial crisis. In the June 2009 ECOFIN Council meeting, member states agreed to give the ESAs powers to take binding decisions in order to promote harmonised and consistent supervision of financial institutions across the EU (Council 2009a, pp. 4–6). However, the UK led a coalition of member states demanding the adoption of the so-called

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‘triple-lock’ safeguard mechanism, which provided the member states with multiple appeal mechanisms to contest decisions taken by the ESAs (EurActiv 2009a, c). The three steps of the ‘triple-lock’ mechanism are summarised as follows: as a first option, a member state can appeal a decision before the ECOFIN Council of Ministers. A simple majority of at least 14 member states can then overturn that decision. The second level is an appeal before the Court of Justice of the European Union. Third, as a last resort, a country can also appeal a decision before the European Council (EurActiv 2009a, c). The October 2009 ECOFIN Council conclusions built up on the June 2009 decision and provided a detailed roadmap for the EU regulatory framework (Council 2009b). The European Commission launched its proposal for a directive specifying the powers of the three European supervisory authorities (2009/0161 COD) in October 2009, which was then discussed by the Council in July 2010 and passed first reading in the European Parliament in September 2010. The Parliament’s amendments further bolstered the European mandate of the ESAs, especially when it comes to overseeing cross-border financial institutions and imposing legally-binding mediation on national supervisory bodies or colleges of supervisors. Furthermore, MEPs gave the ESAs a stronger consumer protection profile: the ESAs gained powers to investigate specific financial institutions if they posed a significant risk to the European financial market. The Parliament also achieved its priority to have veto power over the appointment of the ESA chairpersons (EurActiv 2010; European Parliament 2010). Overall, the amendments introduced by the European Parliament increased further the powers of the European supervisory authorities and their supranational profile. Within a month, the Council approved the Parliament’s amendments. That, in turn, paved the way for the official adoption of the three European Union Regulations (1093/2010, 1094/2010, 1095/2010) that set up the European supervisory authorities and European Union Directive 2010/78/EU that specified their powers in November 2010. Since then, the Commission has carried out two formal rounds of policy evaluation of the ESAs, in 2014 and 2017, confirming that they are fulfilling their mandate as expected, but also emphasising the need for greater financial resources than originally anticipated (European Commission 2014, 2017). The latter point was very pressing in the case of ESMA

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in the 2017 Commission evaluation, which indicates that the EU institutions had not anticipated the extent of new tasks and demands that would be placed on ESMA after its creation in 2011.

6

Challenges by the EU Member States: CJEU Case C-270/12 About EU Short Selling Rules

As we have seen so far, since its creation in 2011, ESMA has gained extensive powers to regulate European financial markets. At the same time, some EU member states, which from the very outset had reservations about preserving sovereignty is key areas of decision-making, have kept a close watch on the growing powers of EU agencies, as this has important implications for national regulatory autonomy. This concern was clearly manifested in June 2013 when the Court of Justice of the EU (CJEU) heard a legal challenge to the EU Regulation on Short Selling in the case ‘C-270/12, United Kingdom of Great Britain and Northern Ireland v. Council of the European Union, European Parliament’. The UK’s government filed the legal challenge in 2012, aiming to curtail the powers of ESMA to stop or limit short selling across the 28 EU member states in the event of a crisis. Considering general developments in EU governance, the legal challenge before the CJEU was not unprecedented. The Court had already been involved in adjudicating cases dealing with scientific uncertainty and complexity (see Vos 2013). Nevertheless, the short-selling case was a crucial test whether ESMA’s expanded powers would withstand judicial scrutiny. The case brought up by the UK government refers to Article 28 of the EU Regulation on Short Selling (SSR) which provides ESMA with powers to intervene directly in financial markets in exceptional circumstances, for example, when the ‘orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union are threatened’ (Art. 9(5) SSR). The article enables ESMA to prohibit or place conditions on ‘entering into a short sale’ or ‘entering into other transaction in a financial instrument that confers a financial advantage in case of a decrease in value of another financial instrument’ (but this does not apply to sovereign debt and sovereign CDS). It is important to note that this type of intervention is not aimed at harmonisation of the single market in financial services, but at safeguarding financial stability. According to Commission official Bernardus Smulders, ‘the objective of those interventions is clearly one to ensure financial stability’. Furthermore, Anders Neergaard, a European Parliament official clarified that ESMA must ‘be able to show that there is a threat’ to financial markets

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before taking any decisions, which further ensures that the agency would not act in an arbitrary manner (Smulders and Neergaard cited in Bodoni and Brunsden 2013). The UK government questioned whether ESMA had the legal power to impose short selling bans if the member states’ national regulators did not see the need for such a ban. The legal case tested the boundaries of the so-called ‘Meroni Doctrine’, which governs the allocation of powers between the supranational EU level and the national level of the member states in the absence of specific treaty provisions. Going back to 1958 Meroni case (Meroni & Co., Industrie Metallurgiche, SpA v High Authority of the European Coal and Steel Community), at that time, the Court stressed that the discretionary delegation of powers to EU agencies or similar independent bodies should not infringe the ‘principle of institutional balance’ between the Community and the member states. Pelkmans and Simoncini (2014, p. 2) have clarified the essentials of the Meroni doctrine, as applied to the short selling case. The EU Member States have delegated powers to the EU level, and it cannot be assumed that ‘any such powers can, in turn, be delegated to (say) an EU agency without an explicit decision, although an explicit Treaty base is not indispensable.’ If powers are delegated, they cannot be so wide that the ‘margin of discretion may lead to the execution of actual economic policy’ (Pelkmans and Simoncini 2014, p. 2). Under EU law, the body to which powers have been delegated should not make discretionary choices about the execution of policy, as this alters the ‘institutional balance’ in the Union. According to the UK government, ESMA’s powers to ban short selling constitute such a ‘wide discretion’, thus contradicting the Meroni doctrine. In addition, the UK government argued that the new powers of ESMA contradicted a principle set in the Romano case (C-98/80) concerning the prohibition on administrative bodies to adopt measures of general application with the force of law (see also Chamon 2011; Pelkmans and Simoncini 2014). The CJEU, however, ruled against the UK government. The Court’s assessment stated that in the broader context of financial stability, the additional powers for ESMA were warranted, especially because those powers were limited in significant ways in the relevant regulation. Advocate General Niilo Jääskinen also stressed that principles such as Meroni and Romano should be interpreted in light of the new EU constitutional framework after the Lisbon Treaty. Jääskinen (2013) emphasised that the Lisbon Treaty has introduced important safeguards that allow the EU colegislators to lawfully delegate regulatory powers to EU agencies, such as Arts 263 and 277 TFEU on judicial review. Therefore, the Advocate

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General emphasised that if delegation complied with the legal guarantees set by the current context of the treaties, no dangerous (and unlawful) shift of responsibility would occur (Jääskinen 2013). In line with this interpretation, the CJEU concluded that EU agencies: Have a high degree of professional expertise and work closely together in the pursuit of the objective of financial stability within the Union. … Therefore, Article 28 of Regulation No.236/2012 … cannot be regarded as undermining the rules governing the delegation of powers laid down [in the FEU Treaty]. (CJEU 2013, paras 85–86)

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Conclusion

Since 2011, the three financial sector ESAs, and particularly ESMA, have become established regulators in EU financial sector governance. This chapter put forward an incrementalist institutional explanation of the observed trend toward greater supranationalisation to complement explanations focusing on rational institutional design after crises. Nevertheless, some EU member states, which from the very outset preferred to preserve national regulatory autonomy, have kept a close watch on the expanded powers of ESMA, in particular, and EU agencies and agency-like bodies in general. One important example illustrating this dynamic is the CJEU case brought up by the UK government in June 2013, which challenged the powers of ESMA to impose a ban on short selling. These powers could be used by ESMA to overrule a member state’s national securities regulator. The CJEU’s decision in the short selling case shows that, so far, the concerns about financial stability at the EU level have been paramount and, thus, the post-crisis trend to centralise and consolidate the powers of the ESAs in European financial markets regulation has persisted.

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European Banking Federation (EBF). (2009). Comments on European Commission Communication on European Financial Supervision. Accessed Through EU Public Consultation Database CIRCA, 2 March 2010. European Central Bank (ECB). (2007). Review of the Lamfalussy Framework. Eurosystem Contribution, Frankfurt: ECB. European Commission. (2005). White Paper: Financial Services Policy 2005– 2010. Available at: http://ec.europa.eu/internal_market/finances/docs/ white_paper/white_paper_en.pdf. Accessed 2 March 2010. European Commission. (2009a). Proposal for a Regulation on Community Macro Prudential Oversight of the Financial System and Establishing a European Systemic Risk Board, COM(2009) 499 Final. European Commission. (2009b). Proposal for a Directive in Respect of the Powers of the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, COM(2009) 576 Final. European Commission. (2014). Commission Staff Working Document Accompanying the Report from the European Commission to the European Parliament and Council on the Operation of the European Supervisory Authorities (ESAs) and the European System of Financial Supervision (ESFS), COM(2014) 261 Final. Available from: http://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52014SC0261&from=EN. Accessed 12 January 2020. European Commission. (2017). Impact Assessment Accompanying Proposal for Regulation of the European Parliament and of the Council on the European Supervisory Authorities, SWD(2017)308 Final. Available from: https://ec.eur opa.eu/info/law/better-regulation/initiatives/com-2017-536_en. Accessed 12 January 2020. European Parliament. (2010). Amendments by Parliament to the Commission proposal for Directive COM(2009)0576 – C7-0251/2009 – 2009/0161(COD), European Parliament Document. Financial Services Authority (FSA). (2009). The Turner Review: A Regulatory Response to the Global Banking Crisis. Available at: http://www.fsa.gov.uk/ pubs/other/turner_review.pdf. Accessed 4 December 2011. Financial Services Committee of the European Union (FSC). (2007, November 8). FSC Report on the 2007 Review of the Lamfalussy Process, Brussels. Financial Times. (2009, September 24). Single Market Rules. Grossman, E., & Leblond, P. (2011). European Financial Integration: Finally the Great Leap Forward? Journal of Common Market Studies, 49(2), 413–435. Groenleer, M. (2011). Regulatory Governance in the European Union: The Political Struggle over Committees, Agencies and Networks. In D. Levi-Faur (Ed.), Handbook on the Politics of Regulation. Cheltenham: Edward Elgar. Haentjens, M., & Wessels, B. (Eds.). (2015). Research Handbook on Crisis Management in the Banking Sector. Cheltenham: Edward Elgar.

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Hodson, D., & Quaglia, L. (2009). European Perspectives on the Global Financial Crisis: Introduction. Journal of Common Market Studies, 47 (5), 939–953. Howarth, D., & Quaglia, L. (2016). The Political Economy of Banking Union. Oxford: Oxford University Press. Howlett, M. (2011). Designing Public Policies: Principles and Instruments. London: Routledge. Howlett, M., & Rayner, J. (2007). Design Principles for Policy Mixes: Cohesion and Coherence in New Governance Arrangements. Policy and Society, 26(4), 1–18. Hungarian Financial Supervisory Authority. (2009). Comments of the Hungarian Financial Supervisory Authority on the de Larosière Report. Accessed Through EU Public Consultation Database CIRCA, 2 March 2010. Inter-Institutional Monitoring Group on the Lamfalussy Process (IIMG). (2007, October 15). Second Interim Report Monitoring the Lamfalussy Process, Brussels. Jääskinen, N. (2013). Opinion of Advocate General Jääskinen on Case C–270/12. Available from: http://curia.europa.eu/juris/liste.jsf?num=C270/12. Accessed 12 January 2020. Kelemen, R. D. (2002). The Politics of Eurocratic Structure and the New European Agencies. West European Politics, 25(4), 93–118. Kelemen, R. D., & Tarrant, A. D. (2011). The Political Foundations of the Eurocracy. West European Politics, 34(5), 922–947. Kingdon, J. (1996). Agendas, Alternatives, and Public Policies. Boston: Little, Brown. Lannoo, K. (2002, May). Supervising the European Financial System (CEPS Policy Brief No. 21). Levi-Faur, D. (2011). Regulatory Networks and Regulatory Agencification: Towards a Single European Regulatory Space. Journal of European Public Policy, 18(6), 810–829. Lindblom, C. (1959). The Science of ‘Muddling Through’. Public Administration Review, 19(2), 79–88. Lindblom, C. (1979). Still Muddling, Not Yet Through. Public Administration Review, 39(6), 517–526. Luxembourg Bankers’ Association. (2009). ABBL Views on the Proposals of the de Larosière Expert Group. Available from: http://www.abbl.lu/dossiers/eu-sup ervisory-framework#dropdownbox. Accessed 12 November 2010. Maijoor, S. (2016, June 29). Politico Morning Exchange Interview with Steven Maijoor. Available from: https://www.esma.europa.eu/press-news/ esma-news/politico-morning-exchange-interview-steven-maijoor. Accessed 12 January 2020. Majone, G. (1996). Regulating Europe. London: Routledge.

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Masciandaro, D., Nieto, M., & Quintyn, M. (2009). Financial Supervision in the EU: Is There Convergence in the National Architectures? Journal of Financial Regulation and Compliance, 17 (2), 86–92. Moloney, N. (2011a). The European Securities and Markets Authority and Institutional Design for the EU Financial Market: A Tale of Two Competences: Part (1) Rule-Making. European Business Organization Law Review, 12(1), 41–86. Moloney, N. (2011b). The European Securities and Markets Authority and Institutional Design for the EU Financial Market: A Tale of Two Competences: Part (2). European Business Organization Law Review, 12(2), 177–225. Mügge, D. (2010). Widen the Market, Narrow the Competition: Banker Interests and the Making of a European Capital Market. Colchester: ECPR Press. Mügge, D. (2011). Limits of Legitimacy and the Primacy of Politics in Financial Governance. Review of International Political Economy, 18(1), 52–74. Pelkmans, J., & Simoncini, M. (2014, February 18). Mellowing Meroni: How ESMA Can Help Build the Single Market. CEPS Commentary. Posner, E., & Véron, N. (2010). The EU and Financial Regulation: Power Without Purpose. Journal of European Public Policy, 17 (3), 400–415. Quaglia, L. (2007). The Politics of Financial Services Regulation and Supervision Reform in the European Union. European Journal of Political Research, 46(2), 269–290. Quaglia, L. (2010). Governing Financial Services in the European Union: Banking, Securities and Post-trading. London: Routledge. Quaglia, L., & Spendzharova, A. (2017). The Conundrum of Solving ‘Too Big to Fail’ in the European Union: Supranationalization at Different Speeds. Journal of Common Market Studies, 55(5), 1110–1126. Rittberger, B., & Wonka, A. (2015). EU Agencies. In J. Richardson (Ed.), European Union: Power and Policy-Making. New York, NJ: Routledge. Salines, M., Glöckner, G., & Truchlewski, Z. (2012). Existential Crisis, Incremental Response: The Eurozone’s Dual Institutional Evolution 2007–2011. Journal of European Public Policy, 19(5), 665–681. Schammo, P. (2011). The European Securities and Markets Authority: Lifting the Veil on the Allocation of Powers. Common Market Law Review, 48(6), 1879–1913. Shapiro, M. (1997). The Problems of Independent Agencies in the United States and the European Union. Journal of European Public Policy, 4(2), 276–291. Simon, H. A. (1979). Rational Decision-Making in Business Organizations. American Economic Review, 69, 495–501. Simon, H. A. (1996). The Sciences of the Artificial. Cambridge: MIT Press. Spendzharova, A. (2012). Is More “Brussels” the Solution? New European Union Member States’ Preferences About the European Financial Architecture. Journal of Common Market Studies, 50(2), 315–334.

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Spendzharova, A. (2014). Regulating Banks in Central and Eastern Europe: Through Crisis and Boom. Basingstoke: Palgrave Macmillan. Spendzharova, A., & Bayram, E. (2016). Banking Union Through the Back Door? How European Banking Union Affects Sweden and the Baltic States. West European Politics, 39(3), 565–584. Tait, N. (2010, February 10). MEPs Want More Financial Watchdog Powers. Financial Times. Vos, E. (2013). The European Court of Justice in the Face of Scientific Uncertainty and Complexity. In M. Dawson, B. D. Witte, & E. Muir (Eds.), Judicial Activism at the European Court of Justice (pp. 142–166). Cheltenham: Edward Elgar. Yesilkagit, K., & Christensen, J. G. (2010). Institutional Design and Formal Autonomy: Political Versus Historical and Cultural Explanations. Journal of Public Administration Research and Theory, 20(1), 53–74.

CHAPTER 4

The Supervisory Board of the ECB: An Agency-Like Body to Stabilise the Banking Sector? Paul Weismann

1

Introduction

The recent multiple crises in the EU (economic and financial crisis, state debt crisis, migration crisis) have brought about fundamental changes in EU and EU-related law, on a material, but also on an institutional level. The former encompasses measures such as the reinforcement of the Stability and Growth Pact, the non-standard measures of the ECB or the

This contribution is largely based on the following article: Weismann, P. (2018). The ECB’s Supervisory Board Under the Single Supervisory Mechanism (SSM)—A Comparison with European Agencies. European Public Law, 24(2), 311–334. In the course of revision, a number of deletions, additions and updates have been made. P. Weismann (B) Department of Public, International and European Law, Salzburg Centre of European Union Studies (SCEUS), University of Salzburg, Salzburg, Austria e-mail: [email protected] © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_4

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long-lasting political debate on a reform of the Dublin system. The latter include the establishment of the ESM and its predecessors or the reinforcement of Frontex with respect to competences and manpower. In terms of financial market regulation and supervision the establishment of the European System of Financial Supervision (ESFS) in 2011 is to be mentioned which brought about the creation of the European Systemic Risk Board (ESRB) and the three European financial market supervisory agencies (the ESAs), namely EBA (banking sector), ESMA (securities and markets) and EIOPA (insurance and occupational pensions sector). While the ESAs are called ‘supervisory authorities’, in fact they are more strongly engaged in regulation and only undertake to coordinate the supervisory actions of the respective national supervisors (Teixeira 2019, pp. 138f.). Just under two years later, the Commission proposed another reform relating to the banking sector, the ground-breaking Banking Union. It is the big crisis project relating to the supervision and resolution of banks, composed of the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) and the (to be established) European Deposit Insurance Scheme (EDIS). The SSM constitutes a ‘system of financial supervision composed by the ECB and national competent authorities of participating Member States’ (Article 2 para. 9 of Council Regulation 1024/2013 [SSM-Regulation]). This administrative network is comparable to those coordinated by some European agencies (the EFSA, the ECHA, the ESAs and the Single Resolution Board [SRB]), but its organisation is, due to the strong powers of intervention of the ECB vis-à-vis the national authorities, certainly more hierarchical than that of the latter. In order to prevent the Member States (MS) participating in the SSM (for the time being that means: the Euro-MS; other MS may join in the framework of a ‘close cooperation’) from dominating decision-making also in the EBA, its founding regulation was amended accordingly (Article 44 para. 1 of Regulation 1093/2010, as amended). According to the legal basis of the SSM-Regulation, Article 127 para. 6 TFEU, the ECB may be vested with banking supervisory powers. In consideration of the ECB’s independence in the exercise of its monetary policy functions, an ‘internal body’ within the ECB was created which deals exclusively with these new supervisory tasks (Article 26 para. 1 of the SSM-Regulation). The Supervisory Board operates as the central nexus of the SSM. It cooperates with the national supervisors and prepares the supervisory decisions which are then formally adopted by the ECB’s main decision-making organ according to the Treaties, the Governing Council.

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The Supervisory Board, although de iure belonging to the ECB, de facto is another actor in an increasingly polycentric EU administration. This development has been facilitated over the past decades in particular by the establishment of European agencies. While the Board’s lack of legal personality and its incorporation in the ECB make it clear that it is not a European agency itself, against this backdrop, when assessing the Supervisory Board within the ECB, it appears worthwhile for the sake of comparison to bear in mind the situation of European agencies. In the following, the legal basis and the tasks/powers of the Supervisory Board (2.) as well as its composition (3.) shall be briefly presented in order to provide an overview of the essential legal and institutional settings of the Supervisory Board. Thereafter, the main issue of this contribution, the independence (4.) and accountability (5.) of the Supervisory Board shall be addressed. The latter are two sides of one coin. The accountability regime of an independent body can only be grasped in view of the shape of this independence. Thus, an analysis of the accountability of the Supervisory Board would be incomplete without an account of its independence. The institutional embeddedness of the Supervisory Board within the ECB renders it unavoidable to also address, in this context, the ECB as a whole. An assessment and outlook (6.) shall be made at the end of this contribution.

2

Legal Basis and Tasks/Powers

Article 127 para 6 TFEU provides that the Council may, by a unanimous decision, and after consulting the European Parliament (EP) and the ECB, ‘confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings’. On this legal basis the SSM-Regulation was adopted as an immediate reaction to the banking crisis. It vested the ECB with a number of banking supervisory competences. This empowerment of the ECB brought about a conflict of objectives. While the exercise of the ESCB’s actions shall be guided by its primary objective—to maintain price stability (other objectives, in particular the support of the general economic policies in the EU, are subordinate to the objective to maintain price stability; see Articles 127 para. 1 and 282 para. 2 TFEU)—, the primary objective of banking supervision is to ensure ‘the safety and soundness of credit institutions and the stability of the financial system’ (Recital 65 of

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the SSM-Regulation; Türk 2019, pp. 50f.). These two objectives require different actions, and hence it is easily possible that a measure directed to reaching one objective is in conflict with the respective other objective (Goodhart 2000, pp. 1, 2 and 20; Beck and Gros 2012, p. 6). For example: Where an increase of the capital of credit institutions is required in order to maintain the stability of the financial system, this may lead to a decrease of the amount of money banks are providing for the economy. Where inflation is high, this measure will result in a reduction of the inflation rate and hence (also) serve the aim of price stability. Where inflation is low or where a deflation is in place, this measure will further reduce the amount of money on the market and hence reinforce this development (which may result in an outright credit crunch). In this case, the supervisory measure—an increase of the capital requirements for banks—is in conflict with the objective of price stability, in the context of which the ECB aims at an inflation rate of ‘below, but close to, 2%’ (ECBa 2019). This clash of objectives goes beyond the balancing of (possibly) conflicting interests public authorities are entrusted with within their respective scope of discretion, because the two objectives at issue both claim primacy vis-à-vis other interests or objectives. In addition to that, the institutional setting, i.e. the separation within the ECB, aims at preventing a situation in which these two objectives are balanced. As indicated above, these two objectives may not only conflict but also conform with each other. Especially in these cases it can be difficult to distinguish monetary policy measures from banking supervisory measures. Such a distinction is necessary, however, in order to ensure that the monetary policy branch and the banking supervisory branch of the ECB stick to their respective competences. In the cases Pringle, Gauweiler and Weiss the Court had to distinguish monetary and economic policy. The Court has emphasised that ‘an economic policy measure cannot be treated as equivalent to a monetary policy measure for the sole reason that it may have indirect effects on the stability of the euro’ (case C-370/12 Pringle, para. 56). For the Court it is the objective pursued by a certain measure which is of primary importance. In this context it is in particular the statements of the acting body itself to which the Court pays tribute (case C-493/17 Weiss, paras 53ff., with references to Pringle and Gauweiler). Following this approach (per analogiam) also for the divide between monetary policy and banking supervision would ensure a considerable leeway for the ECB in the performance of its respective tasks, which would reduce the likelihood of the

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Court quashing a measure of the ECB for interference with its respective other branch. This leverage cannot do away with the separation requirement, against the background of which the organisation of ECB banking supervision is to be understood (Alexander 2016, pp. 267f.; Wymeersch 2012, pp. 1, 9 and 11). The fact that and the extent to which the Council has vested the ECB with banking supervisory powers had its cause in the banking crisis. The empowerment of the ECB (instead, for instance, of the EBA; see Weismann 2016, pp. 77f.) and the legal technique of setting up the Supervisory Board—by a Council Regulation that is—, however, in view of Article 127 para. 6 TFEU apparently were without alternative. With European agencies the situation is different: Their respective legal bases are less precise than Article 127 para. 6 TFEU. The most frequently used legal basis is now Article 114 TFEU (and its predecessors), and had earlier been the flexibility clause (now: Article 352 TFEU; Sander 2012, pp. 16ff.). Though the existence of agencies has been acknowledged in primary law since the Treaty of Lisbon,1 an explicit legal basis for the establishment or empowerment of European agencies still does not exist.

3

Composition

The Supervisory Board is composed of a Chair, an individual of recognised standing and experience in banking and financial matters who is not a member of the ECB’s Governing Council, and a Vice-Chair chosen from among the members of the ECB’s Executive Board (Article 26 para. 3 of the SSM-Regulation), four ECB-representatives and one representative each of the banking supervisory authorities in the participating MS. The Chair and the Vice-Chair are proposed by the ECB after hearing the Supervisory Board, and, given the EP’s approval, appointed by the Council (see Article 26 para. 3 of the SSM-Regulation; Interinstitutional Agreement 2013/694/EU [IA EP-ECB]). The ECB representatives— which ‘shall not perform duties directly related to the monetary function of the ECB’—are appointed by the Governing Council (Article 26 para. 5 of the SSM-Regulation). This composition is to be perceived as an 1 In the English version of the TFEU an explicit reference to ‘agencies’ can be found e.g. in Article 263 para. 1. In the German language version, for example, the reference to European agencies is made only implicitly (argumentum ‘Einrichtungen oder sonstige Stellen der Union’).

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attempt to balance the calls for an independent expert as a Chair, for ECB representation—after all, it is formally ‘the ECB’ acting as a banking supervisor—, and for MS representation (critically: Wymeersch 2015, p. 113). The latter requirement is a clear parallel to the ‘paradigm … for Member State interests to dominate’ (Craig 2012, p. 163) which is known from the main decision-making bodies of European agencies (Comte 2010, p. 76). Also the expert, chosen after an open selection procedure, as the head of the body is known from more recent agencies (Craig 2012, p. 164; Curtin 2005, p. 103), such as the ESAs, ACER or REACH.2 Furthermore, the organisational structure—a monocratic representative and a collegiate organ as the main decision-making body—is familiar from European agencies. More recent agencies tend to have an additional body vested with managerial tasks (Orator 2014, p. 131; see below). It is to be noted, however, that, since the Supervisory Board is not a legal person like European agencies, but only an internal body of a legal person, the ECB, its Chair in that respect rather corresponds to the Chair of an agency’s administrative board. Its shape is somehow hermaphroditic, in that, in addition to tasks of the Chairperson of an agency’s administrative board—preparing, convening and chairing the meetings (Articles 2 and 4 para. 1 of the Rules of Procedure of the Supervisory Board of the ECB [SB-RoP])—, it shares qualities, and competences respectively, of an agency’s Executive Director, such as the independence and expertise guaranteed by an open selection procedure, the possibility to act as a delegate of the Board, or the participation in hearings before the Eurogroup or the EP (Article 8 of the SB-RoP; Article 20 paras 4f. of the SSM-Regulation). It does not, however, represent the Board externally. The activities of the Board are, besides its secretariat and four Directorates-General of the ECB (ECBb 2019; Schoenmaker and Véron 2016, p. 10), supported by the Steering Committee which is composed of a selection of Board members: its Chair (also chairing the Committee), its

2 Cf. e.g. Article 51 para. 2 of Regulations 1093-1095/2010 (ESAs); Article 16 para. 2 of Regulation 713/2009 (ACER; note the Commission’s preselection prerogative); Article 84 para. 1 of Regulation 1907/2006 (REACH; again providing for Commission influence). The founding regulations of older agencies, e.g. Cedefop, do not provide for such guarantees of independence and expertise of the agency’s director: Article 6 para. 1 of Council Regulation 337/75; cf., as further examples, Article 11 para. 1 of Council Regulation 2062/94 (EU-OSHA), or Article 9 para. 1 of Regulation 401/2009 (EEA).

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Vice-Chair, one (additional) representative of the ECB and five representatives of the national supervisory authorities (Article 26 para. 10 of the SSM-Regulation and Article 11 paras 1f. of the SB-RoP). Institutionally, the Steering Committee must be understood as a separate internal body of the ECB which is subordinate to and only works for the Supervisory Board. In terms of its preparatory tasks and in terms of its composition, it can be compared to the Management Boards of the ESAs. In addition to their main decision-making organ, the Board of Supervisors, a Management Board composed of the Chairperson and six members of the Board of Supervisors performs mainly preparatory, but still important tasks (Weismann 2016, pp. 160–162). Also the ACER disposes of two collegiate organs, the Administrative Board and the Board of Regulators, with a different division of labour to be applied, though (Hauenschild 2012, pp. 105f.; Stefan and Petri 2018, pp. 528f.). Other agencies with more than two management organs are, for example, the ECHA and the SRB.3 We can certainly conclude that, taking note of the organisational anomalies of the more recently established agencies just mentioned, the organisational structure of the SSM-branch of the ECB bears resemblance to that of European agencies (Comte 2010, p. 76). One important mismatch—the lack of a representative function of the Chair—follows from the most significant institutional difference, that is the Board’s lack of legal personality. Without legal personality an entity cannot act externally and hence there is no room for representation by one of its bodies. As an internal body of the ECB, the Supervisory Board de iure is only preparing the decisions to be taken by the Governing Council of the ECB, in terms of decision-making formally subordinate to the latter. An external decision-making power of the Supervisory Board, and hence equal rank of the Board and the Governing Council, would have infringed the organisation of the ECB as laid down in primary law—in particular Articles 282-284 TFEU and Articles 9-13 of the Statute. On the other hand, in order not to challenge the independence of the ECB in the exercise of its

3 The SRB, strictly speaking, has only one collegiate organ which may, however, assemble in two sessions: the executive and the plenary session, respectively; for further agencies with more than one collegiate organ cf. Analytical Fiche Nro 6, pp. 4f.; cf. also the Executive Board of the ECB, a group of six, including the ECB’s President and Vice President, which exists next to the Governing Council (and the General Council).

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monetary policy functions,4 the supervisory functions of the ECB have to be kept separate from the latter, and hence also the Supervisory Board has to be kept separate from those organs/bodies of the ECB which are preoccupied with monetary policy tasks (see 2. above). That is why the Board de facto takes the supervisory decisions of the ECB, the Governing Council only de iure (see 4. below).

4

Independence

The ECJ has held that ‘[i]n relation to a public body, the term “independence” normally means a status which ensures that the body concerned can act completely freely, without taking any instructions or being put under any pressure’ (case C-518/07 Commission v Germany, para. 18). In a later judgment, it added that the independence of (national) supervisory authorities ‘is intended to ensure the effectiveness and reliability of the monitoring of compliance with the [relevant law]’ (case C-362/14 Schrems, para. 41). Here the focus shall be laid on the Board’s independence from other EU institutions and bodies, not on the independence from MS or the various actors on the market (Vos 2014, pp. 37f.). Secondly, it is the formal independence—as laid down in law—which shall be at issue, not the actual/de facto independence which is impossible to examine with the means traditional legal methodology provides (Busuioc and Groenleer 2014, p. 180). Ex ante control is an unavoidable concomitant of a delegation of power. It is said not to principally conflict with the delegate’s (by and large) independence (Busuioc 2009, pp. 607–610). The modalities of the appointment of the different actors discussed above have already disclosed one of the most important means of ex ante control, next to the definition of the mandate by the legislator in the respective founding acts (Vos 2014, p. 34). First, the (formal) independence of the Board shall be addressed. The securitisation of the ECB’s independence laid down in Article 130 TFEU only applies with regard to the ECB’s tasks according to primary law, and—since its banking supervisory powers are mainly based on the SSM-Regulation—does not apply with regard to its supervisory tasks (differentiated: Türk 2019, pp. 49f.). Article 282 para 3 TFEU—which solely refers to the ECB and not, as Article 130, to the ESCB and its

4 More precisely: the tasks conferred on the E(S)CB by primary law.

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components—provides for the ECB’s independence ‘in the exercise of its powers and in the management of its finances’. Whether this independence also extends to the ECB’s tasks not conferred upon it by primary law, and hence also to its supervisory tasks under the SSM, is a matter of dispute (in the affirmative e.g. Selmayr 2015, para. 114; tending to the negative: Hahn and Häde 2010, p. 221). The wording of the provision suggests so. The independence of the ECB as an institution (not: with regard to the concrete powers it exercises; see AG Cruz Villalón in case C-62/14 Gauweiler, para. 108) also facilitates the protection of the ECB’s primary objective, because otherwise—if the ECB were dependent on outside actors (other EU institutions, the banking industry etc.) in the exercise of secondary law powers —the influence from outside the ECB would be likely also to affect the ECB’s monetary policy (with regard to which independence is required by the Treaties without any doubt; Hahn and Häde 2010, p. 221). This risk would be existent, even if separate departments (‘Chinese walls’) were put in charge. While, as we can see, the TFEU is ambiguous in this respect, the SSM-Regulation itself provides for the independence of the Board in terms similar to Article 130 TFEU (see Article 19 of the SSM-Regulation and below).5 The main difficulty in this context is that the supervisory branch and the monetary policy branch (primary objective: price stability) are to be kept separate, are to work independently from each other. This is the new dimension of ECB independence which was brought about by the vesting of the ECB with banking supervisory tasks, which again was brought about by the banking crisis. Here the focus shall not lie on the independence of the monetary policy branch of the ECB, but on the independence of the crisis measure as such, that is the Supervisory Board, and on the separation of the ECB’s supervisory function from its monetary policy function. The SSM-Regulation provides not only for the ECB’s independence but also for that of the national supervisors (Beck and Gros 2012), when carrying out its (their) tasks under this Regulation. According to its Article 19 paras 1f., the members of the Board and the Steering Committee shall act ‘independently and objectively in the interest of the Union as a whole’. They shall neither seek nor take instructions from— to put it shortly—anybody and this independence shall be respected by 5 The Board’s resources are managed by the ECB as a whole and hence are certainly covered by Article 282 para 3 TFEU (‘management of its finances’).

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others. In this context the ECB has published a Code of Conduct for the members of the Supervisory Board which prescribes, for example, that members of the Board (and other participants in its meetings) shall act ‘free from undue political influence and from commercial interference that would affect their personal independence’ and that they shall abstain from professional activities that could ‘hinder their independence’ or ‘present them with the possibility of using privileged information’ (Article 4 paras 2f. of the ECB Code of Conduct for the Members of the Supervisory Board, 2015/C 93/02). Furthermore the ECB has established an internal Ethics Committee to deal with critical questions also in this context (ECB Decision 2015/433). The separation of the ECB’s supervisory function from its monetary policy function is mainly laid down in Article 25 of the SSM-Regulation (Beck and Gros 2012; Angeloni 2017). It provides that when carrying out its tasks under the SSM-Regulation the ECB shall pursue only the objectives set therein—this excludes in particular the aim of price stability. A mutual interference of supervisory tasks and monetary policy tasks of the ECB shall be barred,6 but not the exchange of necessary information (Article 13k para. 3 of the ECB-RoP). The microprudential tasks under the SSM-Regulation shall furthermore not interfere with the ECB’s tasks in relation to the ESRB, or any other tasks of the ECB. The ECB shall report to the EP and to the Council on how it implements this separation of tasks in practice—an instance of ex post control (accountability) exercised by the EP and the Council (see 5. below). The separation between supervisory and monetary functions of the ECB shall include organisational measures such as separate staff, separate meetings and separate agendas of the Governing Council. The ECB has furthermore chosen to have separate buildings (Schoenmaker and Véron 2016, p. 25). In terms of internal structure and staff, this separation shall be catered for by the Executive Board of the ECB after consultation of Chair and Vice-Chair of the Supervisory Board (Article 3 para. 2 of ECB Decision ECB/2014/39). As regards the Governing Council which takes the final decisions also under the SSM-Regulation, no personal separation is provided for: While meetings and agendas need to be strictly separate (Recital 65 of the SSM-Regulation), it is the same individuals deciding in 6 This is a requirement of the Treaties. There are, however, opinions in favour of nonseparation: Lo Schiavo (2015, pp. 121f.) and Goodhart (2000, pp. 8ff.) with arguments in favour of, and the latter (24ff.) with arguments against such a separation.

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monetary policy and banking supervisory matters (Peters 2014, p. 400). This ‘double hatting’ as such—a hole in the Chinese walls, as it were— poses a considerable risk of mixing up the two policies (ECB-internal influence). But there may also be ECB-external influence: If the guarantees of independence for the supervisory branch of the ECB were less effective than those for the monetary branch, via the Governing Council this would also affect the latter branch. What is more, the Vice-Chair’s obligatory belonging to the ECB’s Executive Board sits oddly with the separation paradigm (Article 26 para. 3 of the SSM-Regulation). In spite of the separation principle, the ECB may, in the interest of an efficient and effective delivery of services, establish shared services providing support for both supervisory and monetary policy functions of the ECB (Article 3 para. 4 of ECB Decision ECB/2014/39; see also ECBc 2019, pp. 81 and 88f.). Provision is also made for professional secrecy and the exchange of information between the supervisory and the monetary policy branch of the ECB (Articles 4-8 of ECB Decision ECB/2014/39). The ECB has furthermore established a Mediation Panel, the purpose of which is to ‘resolve differences of views expressed by the competent authorities of participating Member States concerned regarding an objection of the Governing Council to a draft decision by the Supervisory Board’ (Article 25 para. 5 of the SSM-Regulation).7 In practice, the ‘intrinsic tension between loose monetary policy and strict banking supervision’ does not appear to have materialised in an overly lax supervision (Schoenmaker and Véron 2016, p. 25). In any event, ECB supervision is considered tougher than most of the national supervisory regimes it has (partly) ousted (Schoenmaker and Véron 2016, p. 25). The formal, de iure independence of European agencies—to draw a comparison to them—is, if at all, laid down in their respective founding regulations in different, on a whole less elaborate ways (see Busuioc and Groenleer 2014, pp. 180f. and 186), but it is nevertheless a commonly accepted (at least implicit) characteristic that ‘nobody controls the agency, yet everything is under control’ (quoted after: Griller and Orator 2010, p. 3; see also Görisch 2009, p. 212). Another issue to be addressed under the heading ‘independence’ is one aspect of the relationship between the

7 According to ECBd (2020, p. 95), there has been no intervention by the Mediation Panel in 2019. Also for the preceding years the respective annual reports do not indicate any such intervention on part of the Mediation Panel.

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EBA and the ECB, the two main EU actors in the field of microprudential banking supervision/regulation. While these two bodies cannot generally be brought into a hierarchical order,8 there are instances in which the ECB may ‘rule’ over the EBA and vice versa (see Weismann 2016, p. 195). While the former does not appear to be problematic with regard to the ECB’s independence, the latter—a fractional subordination to EBA-decisions, notably those adopted on the basis of Articles 17-19 of the EBA-Regulation (see Weismann 2016, pp. 132–136; see also case C-577/15 P, SV Capital OÜ v EBA)—clearly is a novelty for an EU institution and raises concerns in terms of the EU’s institutional balance (Gurlit 2014, pp. 17f.), ‘a principle which requires that each of the institutions must exercise its powers with due regard for the powers of the other institutions’ (case C-73/14 Council v Commission, para. 61). The Commission’s involvement in the procedure according to Article 17 of the EBA-Regulation—it may address a ‘formal opinion’, a soft ‘instruction’ that is (see Witte 2014, pp. 97f.), to a competent authority and hence also to the ECB—is problematic. After all, it claims not to exercise legal supervision over agencies (see e.g. Commission 2002, p. 12), which must—by analogy and, given the Board institutionally belongs to the ECB, a fortiori—also apply here. Also with regard to regulatory and implementing technical standards which are de iure adopted by the Commission the ESAs play the leading role in determining their content (see Harlow and Rawlings 2014, p. 283). Where these acts are to be applied by the ECB, it is again bound—at least indirectly—by the word of the ESAs.

5

Accountability

Having considered the Board’s independence, we shall now consider the counterpart of independence, as it were, that is accountability. The malleable (see e.g. Curtin 2005, p. 88) term accountability is described by the EP as forms of ex post control: ‘Accountability means, broadly speaking, that an institution is obliged to demonstrate, review, and take responsibility for the performance of its tasks, both as regards the results achieved and the means used’ (European Parliament 2019; see also 8 Rather, the two entities are conceptualised as performing different tasks. Cf., for example, Recitals 7 and 32 of the SSM-Regulation, acknowledging the EBA’s role in contributing to the creation of the single rulebook.

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Bovens 2007, p. 447; Busuioc 2009, pp. 607f.). In the following, the focus shall be laid on accountability in accordance with this definition. It is acknowledged that the different forms of control in practice cannot always be clearly separated from each other, as, for example, hearings or even reports may regard on-going issues, issues lying in the past or issues lying in the future (see Craig 2012, p. 161). The analysis in this paper shall— as far as possible—be limited to democratic/financial ex post control of the ECB exercised by other bodies (in particular: EU bodies), hence administrative9 and judicial review, and investigations against individual officials of the body at issue shall not be considered; neither shall examinations by actors institutionally belonging to the body at issue. Instances of ex ante control have been touched upon above, in particular in the context of the appointment of the main actors of the Board. In addition to that, mention should be made of work programmes. Participation in its drafting is another important way to influence the actions of a body, a way which the Commission takes in the case of most European agencies (Analytical Fiche Nro 31, p. 2). As regards the ECB’s supervisory tasks—and, besides, also as regards its other, in particular its monetary policy tasks—no work programme is provided for (see also Amtenbrink 1999, p. 319). If it were, however, it would have to be decided upon by the Governing Council and hence any participation of the Commission in the drafting process would run counter to the ECB’s independence. Under the heading ‘Accountability and reporting’,10 Article 20 of the SSM-Regulation lays down the ECB’s accountability towards the EP, the Council, the Commission, the Eurogroup and the Court of Auditors. Which kind of accountability is referred to—administrative, financial, democratic/political etc.—is not made clear, though. The provision is more specific regarding the ECB’s reporting duties. To all of the actors just mentioned, it shall annually send a report on the execution of the tasks conferred on it by the SSM-Regulation. This report (which the ECB also publishes online) shall simultaneously be forwarded to the national parliaments of the participating MS. They may request the ECB to reply in writing to any (reasoned) observations or questions submitted by them (Article 21 para. 1 subpara. 2 and para. 2 of the SSM-Regulation). The 9 Such administrative review may in particular be undertaken by review boards (such as the Administrative Board of Review of the ECB), the European Ombudsman, or OLAF. 10 Reporting obligations, i.e. the duty of a body to provide information about itself, in my understanding are one instance of accountability; see also Curtin (2007, p. 532).

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national parliament of a participating MS may furthermore invite the Chair or a member of the Board to participate in an exchange of views respecting the supervision of credit institutions in that MS, together with a representative of the national supervisory authority (Article 21 paras 3f. of the SSM-Regulation; see also Zilioli 2016, pp. 176–178). The ECB’s annual reports on its supervisory activities tell about such ‘exchanges of views’ (ECBc 2019, p. 71). In addition to that, the Chair of the Board shall participate in hearings on the execution of its supervisory tasks,11 either by, and upon request of, the Eurogroup (Article 20 para. 4 of the SSM-Regulation) or by the competent committees of the EP upon its request (Article 20 para. 5 of the SSM-Regulation).12 Furthermore ‘[t]he ECB’ shall reply orally or in writing to questions posed by the EP or the Eurogroup (Article 20 para. 6 of the SSM-Regulation; I.3. [first indent] of the IA EP-ECB). This latter duty, in both a systematic and a teleological interpretation, must be understood as only referring to the ECB’s duties under the SSM-Regulation, since otherwise this provision would—in its generality—run counter to the ECB’s independence as laid down in the TFEU (for the more specific reporting duties of the ECB laid down in primary law see Articles 140 para. 1 and 284 para. 3 TFEU). Provision is also made for ‘confidential oral discussions behind closed doors’ between the Chair of the Board and the Chair and the Vice-Chairs of the competent EP committee, where this is required for the exercise of the EP’s powers under the TFEU (Article 20 para. 8 of the SSM-Regulation). Where the EP opens investigations according to Article 226 TFEU—a measure aimed at democratic accountability—, the ECB shall—as an expression of the principle of loyalty pursuant to Article 13 para. 2 TFEU—cooperate sincerely with the former (Article 20 para. 9 of the SSM-Regulation). Recital 55 of the SSM-Regulation provides that ‘[a]ny reporting obligations should be subject to the relevant professional secrecy requirements’. As regards financial accountability, first of all the Board is financed from the ECB’s resources. The ECB ‘must be able to devote adequate 11 This is to be interpreted widely, so as to ‘cover all aspects of the activity and functioning of the SSM’ according to the SSM-Regulation; I.2. (eighth indent) of the IA EP-ECB. 12 As regards the EP, the IA EP-ECB provides for two ordinary public hearings per year, and the possibility of ‘additional ad hoc exchanges of views’; I.2. (first and second indent) of the IA EP-ECB.

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resources to the effective exercise of its supervisory tasks’ (Article 28 of the SSM-Regulation). In fact, these resources in their entirety— in 2018 the costs for the ECB’s supervisory function amounted to 537 million euro (ECBd 2020, p. 99)—are provided by the supervised credit institutions upon which the ECB shall levy an annual supervisory fee (see in particular Article 30 of the SSM-Regulation and ECB Regulation ECB/2014/41). Hence, institutionally speaking, the Board is self-financed, the budgetary authority lying with the ECB’s main decision-making organ, the Governing Council. The expenditure necessary for carrying out the ECB’s tasks under the SSM-Regulation shall be ‘separately identifiable’ within its budget (Article 29 para. 1 of the SSM-Regulation). The annual report referred to above shall also inform ‘in detail’ on the budget for the ECB’s supervisory tasks (Article 29 para. 2 of the SSM-Regulation). Also the accounts which the ECB has to draw up and publish annually pursuant to Article 26 para. 2 of the Statute of the ESCB/ECB shall include the income and expenses related to the supervisory tasks (Article 29 para. 2 of the SSM-Regulation). These accounts—and hence also the SSM-related parts—shall be examined by independent auditors recommended by the Governing Council and approved by the Council in accordance with Article 27 para. 1 of the Statute of the ESCB/ECB (Article 29 para. 3 of the SSM-Regulation; see also Waldhoff 2016, para. 2). An explicit examination of the accounts, let alone a discharge granted by another Union body would constitute an infringement of the ECB’s independence, in particular its independence ‘in the management of its finances’ according to Article 282 para. 3 (third sentence) TFEU. The supervisory tasks performed by the ECB under the SSMRegulation shall also be taken into account by the Court of Auditors when undertaking its examination. It is to be noted, however, that this examination is limited to the operational efficiency of the management of the ECB according to Article 287 TFEU in conjunction with Article 27 para. 2 of the Statute of the ESCB/ECB (Article 20 para. 7 of the SSMRegulation; critically: Schoenmaker and Véron 2016, p. 37)—financial expenditures are excluded. The mechanisms of democratic ex post control set in place for European agencies, apart from the investigatory powers of the EP laid down in Article 226 TFEU, vary considerably from each other, but on a whole— and in comparison with the Supervisory Board—the following can be said. European agencies have to forward their annual report to the EP, the

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Council, the Commission and the Court of Auditors, sometimes also to the Economic and Social Committee, to the MS, or to an agency-internal body.13 Most of the time, the report is furthermore published online (see Curtin 2005, p. 105). In terms of financial accountability, the budgetary procedure and, as a measure of ex post control, in particular the discharge procedure, are to be mentioned. The budgetary procedure follows the pertinent financial law (Regulation 966/2012 and Commission Delegated Regulation 1271/2013), in which the respective agency, the Commission as well as the Council and the EP participate. The discharge is regularly granted by the EP upon a recommendation of the Council. Agencies which are fully self-financed14 have their own financial regulations15 which are all, as far as possible, in line with general EU financial law. In these cases the discharge is regularly granted by an internal body of the respective agency. As regards the assessment by the Court of Auditors, European agencies are subject to a comprehensive examination according to Article 287 TFEU.

6

Assessment and Outlook

The ECB has been engaged in banking supervision under the SSM for six years now. During that time on average it has directly supervised around a 120 banks (most recently: 115). In this context, it has—inter alia—performed thousands of authorisation procedures (in particular licenses and withdrawals, acquisitions of qualifying holdings, passporting procedures, fit and proper assessments of banks’ management and supervisory board members etc.) and numerous comprehensive assessments of banks, it has authorised hundreds of on-site inspections, mostly related to 13 See e.g. Article 26 para. 3 of Regulation 178/2002 (EFSA), Article 124 para. 2 lit. d of Council Regulation 207/2009 (EUIPO; former OHIM), Article 8 para. 6 of Regulation 401/2009 (EEA), Article 12b para. 1 of Council Regulation 337/75 (Cedefop), Article 43 para. 5 of Regulations 1093-1095/2010 (ESAs), Article 13 para. 12 of Regulation 713/2009 (ACER), Article 10 para. 2 lit. b of Regulation 1406/2002 (EMSA), Article 33 para. 2 lit. b of Regulation 216/2008 (EASA). 14 For a list of fully/partially self-financed agencies (excluding more recently established agencies) see Analytical Fiche Nro 20, p. 1. 15 Article 143 of Council Regulation 207/2009 (EUIPO), Article 112 of Council Regulation 2100/94 (CPVO), Article 15 of Council Regulation 2965/94 (CdT), Article 64 of the SRM-Regulation (SRB).

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assessing the credit risk of banks, and it has made use of the enforcement and sanctions regime the SSM-Regulation provides (see e.g. ECBc 2019, pp. 33ff., 56f., 58–60). During this time, a consolidation of administrative practice could be perceived in many respects (see Herz 2018, p. 5; 2019, p. 13). While the idea of having a supranational banking supervisor in the EU was born long before the crisis (see Hakkarainen 2019),16 it was the crisis—and the shortcomings of the up to then nearly exclusively national banking supervision this crisis has revealed—which paved the way for its implementation. In that sense, the concrete shape of the SSM—its institutional and functional design—is a fruit of the crisis. With the Supervisory Board the legislator has opted for a representation of national authorities instead of entrusting solely a small number of full-time experts (see Wymeersch 2015, p. 113). This exemplifies once more the legislator’s conviction that within a network of numerous national authorities and one EU body the national authorities should—for reasons of legitimacy and political acceptance—all have a say in the decision-making of the EU body.17 As regards the independence of the Board, due to its embeddedness in the ECB it is arguably less difficult to ensure its external independence than to facilitate its separation from the monetary policy branch of the ECB. The setting laid down in the SSM-Regulation, which in fact is an imposition of the TFEU, cannot exclude all mutual interferences, not least due to the Governing Council’s final decision-making power. In terms of accountability, it is apparent that the Board is democratically accountable to the EP, the Council (Eurogroup) and the Commission. The banking supervision laid in the hands of the ECB is exceptional both as regards the legal/institutional framework and the amount of powers—two factors which are apparently inter-connected. While the empowerment of the ECB (instead e.g. of the EBA) was strongly suggested by Article 127 para. 6 TFEU, the large amount of powers

16 Note also the fact that the content of Article 127 para. 6 TFEU was introduced into primary law already with the Treaty of Maastricht. 17 The political importance of representation (in a broader sense) for (all) MS in EU bodies has recently been exemplified by the decision to increase the number of judges of the General Court by 28, even though only twelve new judges were asked for by the Court itself; see Hoffmann (2016, pp. 199f).

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arguably was instigated by the crisis. This wide interpretation of competence clauses, in particular during the crisis, was also criticised in the context of other provisions, notably Article 114 TFEU (Moloney 2011, p. 219; Fahey 2011, pp. 582 and 594). But, leaving the unique circumstances of this case apart, the SSM may be perceived as an example of a more nuanced approach towards the EU’s two-level administration (see Commission 2017, p. 11). These new dynamics unsurprisingly do not appear as a break with the development so far, but as a pronounced advancement of the latter. Some of its characteristics are borrowed from (the younger) European agencies, but the intense and strongly intertwined cooperation between national and EU actors of the network (for the practical cooperation between the ECB and the EBA see Commission 2017, pp. 15f.), under the guidance of the latter, is unprecedented and may be regarded as a role model. This is exemplified by the SRM composed of the national resolution authorities and—on the EU level— above all a European agency, the SRB. The two mechanisms—the SSM and the SRM—bear a strong similarity in a number of respects, e.g. the composition of their respective main EU bodies, the role they grant to national parliaments in holding the respective EU actors to account (see Article 46 of the SRM-Regulation; COSAC 2014, pp. 49–51 and 55–59), or their way of sharing tasks with their national counterparts: systemically important (‘significant’) banks are dealt with by the Supervisory Board (ECB) /the SRB, others in principle by the national resolution authorities (for the SRM: Articles 7 and 28-31 of the SRM-Regulation; with regard to the arrogation of powers by the SRB see in particular its Article 7 para. 4).18 It is true that the legislator claims the SRB to be a ‘specific Union agency with a specific structure, corresponding to its specific tasks, and which departs from the model of all other agencies of the Union’ (Recital 31 of the SRM-Regulation). However, the departure from the composition of ‘all other agencies’—which is heterogeneous itself—does not prevent the SRB (which is again inspired by the SSM) from constituting a blueprint for future agencies. While EU policy-makers have promised ‘more balanced governance, improved efficiency and accountability and greater coherence’ in the context of European agencies (Roadmap 2012, p. 1), they have certainly 18 These similarities shall not conceal the substantial differences between the two regimes, which exist as well, and regard, for example, the strong involvement of EU institutions (Council, Commission, ECB) in the SRM, or the SRB’s legal personality.

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not promised fewer competences for these bodies. The recent reinforcement of Frontex and the ACER or the creation of the European Labour Authority bear witness of this.19 In view of the permissive approach the Court has taken in its more recent case law, in particular in the famous ESMA case (case C-270/12 UK v EP/Council ), the Commission and the legislator appear to be more daring in testing the blurry (but existent) boundaries to an empowerment of European agencies. In that sense, the crisis measure SSM may be understood as a new paradigm of EUnational co-administration to which the establishment of new agencies, or the reinforcement of existing ones respectively, may not live up to, but may nevertheless be inspired by.

References Scholarly Works Alexander, K. (2016). The ECB and Banking Supervision: Does Single Supervisory Mechanism Provide an Effective Regulatory Framework? In M. Andenas & G. Deipenbrock (Eds.), Regulating and Supervising European Financial Markets: More Risks Than Achievements (pp. 215–230). Cham: Springer. Amtenbrink, F. (1999). The Democratic Accountability of Central Banks: A Comparative Study of the European Central Bank. Oxford: Hart Publishing. Angeloni, I. (2017). Faraway or Close? Supervisors and Central Bankers. Paper presented at Halle Institute for Economic Research (IWH). https://www. bankingsupervision.europa.eu/press/speeches/date/2017/html/se170202_ 1.en.html. Accessed 20 November 2019. Beck, T., & Gros, D. (2012). Monetary Policy and Banking Supervision: Coordination Instead of Separation. CEPS Policy Brief, 286, 1–9. Bovens, M. (2007). Analysing and Assessing Accountability: A Conceptual Framework. European Law Journal, 13(4), 447–468. Busuioc, M. (2009). Accountability, Control and Independence: The Case of European Agencies. European Law Journal, 15(5), 599–615. Busuioc, M., & Groenleer, M. (2014). The Theory and Practice of EU Agency Autonomy and Accountability: Early Day Expectations, Today’s Realities and Future Perspectives. In M. Everson, C. Monda, & E. Vos (Eds.), European Agencies in Between Institutions and Member States (pp. 175–200). Alphen aan den Rijn: Wolters Kluwer.

19 For the ‘justified’ deviation from the Common Approach in case of the ACER see Commission, Proposal COM (2016) 861 final/2, pp. 22f. For the European Labour Authority see Regulation 2019/1149.

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Comte, F. (2010). 2008 Commission Communication ‘European Agencies— The Way Forward’: What Is the Follow-Up Since Then? Review of European Administrative Law, 3(1), 65–110. Craig, P. (2012). EU Administrative Law (2nd ed.). Oxford: Oxford University Press. Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union (COSAC), Twenty-second Bi-annual Report of 4 November 2014. http://www.cosac.eu/documents/bi-annual-reports-ofcosac/. Accessed 20 November 2019. Curtin, D. (2005). Delegation to EU Non-majoritarian Agencies and Emerging Practices of Public Accountability. In D. Geradin, R. Muñoz, & N. Petit (Eds.), Regulation Through Agencies in the EU: A New Paradigm of European Governance (pp. 88–119). Cheltenham: Edward Elgar. Curtin, D. (2007). Holding (Quasi-)Autonomous EU Administrative Actors to Public Account. European Law Journal, 13(4), 523–541. Fahey, E. (2011). Does the Emperor Have Financial Crisis Clothes? Reflections on the Legal Basis of the European Banking Authority. Modern Law Review, 74(4), 581–595. Goodhart, C. A. E. (2000). The Organisational Structure of Banking Supervision. FSI Occasional Papers, 1, 1–46. Görisch, C. (2009). Demokratische Verwaltung durch Unionsagenturen. Tübingen: Mohr Siebeck. Griller, S., & Orator, A. (2010). Everything Under Control? The ‘Way Forward’ for European Agencies in the Footsteps of the Meroni Doctrine. European Law Review, 35(1), 3–35. Gurlit, E. (2014). The ECB’s Relationship to the EBA. Europäische Zeitschrift für Wirtschaftsrecht (Beilage), 25, 14–18. Hahn, H. J., & Häde, U. (2010). Währungsrecht (2nd ed.). München: C.H. Beck. Hakkarainen, P. (2019). The Banking Union Option—Observations from My Experience. Paper presented at conference ‘A Deepening EMU—Where Will It Leave Sweden and Denmark?’ https://www.bankingsupervision.europa. eu/press/speeches/date/2019/html/ssm.sp190205~b0b7cdad7c.en.html. Accessed 20 November 2019. Harlow, C., & Rawlings, R. (2014). Process and Procedure in EU Administration. Oxford: Hart Publishing. Hauenschild, H. (2012). Agentur im Energierecht. In N. Raschauer (Ed.), Europäische Agenturen (pp. 103–109). Wien: Jan Sramek Verlag. Herz, B. (2018). Die Entwicklung des europäischen Bankenaufsichtsrechts in den Jahren 2016/2017. Europäische Zeitschrift für Wirtschaftsrecht, 29(1), 5–13.

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Herz, B. (2019). Die Entwicklung des europäischen Bankenaufsichtsrechts in den Jahren 2017/2018 (Teil I). Europäische Zeitschrift für Wirtschaftsrecht, 30(1), 13–18. Hoffmann, J. (2016). Der Gerichtshof der Europäischen Union – re-organisiert. Europarecht, 2, 197–203. Lo Schiavo, G. (2015). The Single Supervisory Mechanism: Building the New Top-Down Cooperative Supervisory Governance in Europe. In F. Fabbrini, E. Hirsch Ballin, & H. Somsen (Eds.), What Form of Government for the European Union and the Eurozone? (pp. 111–130). Oxford: Hart Publishing. Moloney, N. (2011). The European Securities and Markets Authority and Institutional Design for the EU Financial Market—A Tale of Two Competences: Part (2) Rules in Action. European Business Organization Law Review, 12(2), 177–225. Orator, A. (2014). Die unionale ‘Netzwerkagentur’ als Paradefall europäischer Verwaltungskooperation. In K. Gotthard, C. Hofstätter, P. Ivankovics, M. P. Neubauer, J. Pirker, M. Scharfe, P. Trappl, & M. Willgruber (Eds.), Kooperation und Koordination als Rechtsentwicklungstrends (pp. 127–144). Wien: Jan Sramek Verlag. Peters, K. (2014). Die geplante europäische Bankenunion – eine kritische Würdigung. Zeitschrift für Wirtschafts- und Bankrecht, 9, 396–404. Sander, P. (2012). Europäische Agenturen: Rechtsgrundlagen in und sonstige Berührungspunkte mit dem primären Unionsrecht. In N. Raschauer (Ed.), Europäische Agenturen (pp. 1–40). Wien: Jan Sramek Verlag. Schoenmaker, D., & Véron, N. (2016). Introduction and Executive Summary. In D. Schoenmaker & N. Véron (Eds.), European Banking Supervision: The First Eighteen Months (pp. 1–6). Brussels: Bruegel Blueprint Series. Selmayr, M. (2015). Art. 282 AEUV. In H. von der Groeben, J. Schwarze, & A. Hatje (Eds.), Europäisches Unionsrecht (7th ed.). Baden-Baden: Nomos. Stefan, O., & Petri, M. (2018). Too Weak to Be Controlled? Judicial Review of ACER Soft Law. Yearbook of European Law, 37, 525–550. Teixeira, P. G. (2019). The Future of the European Banking Union: Risk-Sharing and Democratic Legitimacy. In M. Chiti & V. Santoro (Eds.), The Palgrave Handbook of European Banking Union Law (pp. 135–154). Cham: Palgrave Macmillan. Türk, A. H. (2019). European Banking Union and Its Relation with European Union Institutions. In M. Chiti & V. Santoro (Eds.), The Palgrave Handbook of European Banking Union Law (pp. 41–64). Cham: Palgrave Macmillan. Vos, E. (2014). European Agencies and the Composite EU Executive. In M. Everson, C. Monda, & E. Vos (Eds.), European Agencies in Between Institutions and Member States (pp. 11–47). Alphen aan den Rijn: Wolters Kluwer.

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Court Cases and EU Documents Analytical Fiche Nro 6. https://europa.eu/european-union/sites/europaeu/ files/docs/body/fiche_6_sent_to_ep_cons_2010-12-15_en.pdf. Accessed 20 November 2019. Analytical Fiche Nro 20. https://europa.eu/european-union/sites/europaeu/ files/docs/body/fiche_20_sent_to_ep_cons_2011-07-20_en.pdf. Accessed 20 November 2019. Analytical Fiche Nro 31. https://europa.eu/european-union/sites/europaeu/ files/docs/body/fiche_31_sent_to_ep_cons_2010-10-22_en.pdf. Accessed 20 November 2019. Commission. (2002). Communication COM (2002) 718 final. Commission. (2017). Report on the application of the SSM-Regulation COM(2017) 591 final. ECBa. (2019). The Definition of Price Stability. https://www.ecb.europa.eu/ mopo/strategy/pricestab/html/index.en.html. Accessed 20 November 2019. ECBb. (2019). Banking Supervision. Organisation & Governance. https://www. bankingsupervision.europa.eu/organisation/whoiswho/organigram/html/ index.en.html. Accessed 20 November 2019. ECBc (2019). Annual Report on supervisory activities 2018. ECBd (2020). Annual Report on supervisory activities 2019. ECJ. (2010). Case C-518/07 Commission v Germany, ECLI:EU:C:2010:125. ECJ. (2012). Case C-370/12 Pringle, ECLI:EU:C:2012:756. ECJ. (2014). Case C-270/12 UK v EP/Council, ECLI:EU:C:2014:18. ECJ. (2015). Case C-62/14 Gauweiler, ECLI:EU:C:2015:400.

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ECJ. (2015). Case C-362/14 Schrems, ECLI:EU:C:2015:650. ECJ. (2015). Case C-73/14 Council v Commission, ECLI:EU:C:2015:663. ECJ. (2016). Case C-577/15 P SV Capital OÜ v EBA, ECLI:EU:C:2016:947. ECJ. (2018). Case C-493/17 Weiss, ECLI:EU:C:2018:1000. European Parliament. (2019). Single Supervisory Mechanism (SSM). Accountability Arrangements and Legal Base for Hearings in the European Parliament. http://www.europarl.europa.eu/RegData/etudes/ATAG/2017/. 497742/IPOL_ATA(2017)497742_EN.pdf. Accessed 20 November 2019. Roadmap on the Follow-Up to the Common Approach on EU Decentralized Agencies. (2012) https://europa.eu/european-union/sites/europaeu/files/ docs/body/2012-12-18_roadmap_on_the_follow_up_to_the_common_app roach_on_eu_decentralised_agencies_en.pdf. Accessed 20 November 2019.

CHAPTER 5

The Single Resolution Board: Salient Features, Peculiarities and Paradoxes Nicola Ruccia

1

Agencies in Brief

The Single Resolution Board (SRB) is, from a legal perspective, a proper Union agency with a structure mirroring its particular tasks. It is responsible for the effective and consistent functioning of the Single Resolution Mechanism (SRM)—established by “Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010” (Regulation No. 806/2014). The SRB serves, within the Banking Union, as a centralised Economic and Monetary Union (EMU) decision-making and financing system for the resolution of banks (Capolino 2019). Quite remarkably, Union primary law neither provides a general definition of Union agencies, nor does it determine their status and/or position

N. Ruccia (B) Dipartimento Jonico in “Sistemi Giuridici ed Economici del Mediterraneo: Società, Ambiente, Culture”, University of Bari, Bari, Italy © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_5

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within the institutional framework of the Union (Tovo 2016; Chamon 2016; Mathieu 2016; Coman-Kund 2018). Nevertheless, in few circumstances EU law does refer to them explicitly. The most important case is the submission of their acts to the judicial review of the Court of Justice for the following purposes: annulment under Article 263 Treaty on the Functioning of the European Union (TFEU); failure to act pursuant to Article 265 TFEU; questions on the validity and interpretation as provided in Article 267 TFEU; plea of illegality as stated in Article 277 TFEU. Furthermore, agencies are bound to comply with the principle of good administration provided in Articles 15, 16 and 228 TFEU. Finally, pursuant to Articles 287 and 325 TFEU, they are respectively subject to the Court of Auditors and to the Union system for financial control. Given the dearth of a legal definition of Union agencies, one can speculate that these are independent bodies—endowed with legal personality and established by an act of secondary legislation—the purpose of which is to accomplish a specific technical task (Commission 2002). In particular, their establishment by acts of secondary legislation, coupled with the absence of an ad hoc legal basis of primary law, distinguishes them from the institutions and bodies encapsulated in the legal framework of the Treaties (Tovo 2016). Generally, Union agencies help regulate—some of them do this de jure whereas other ones de facto—a particular sector at a Union level and support the implementation of new regulations in a specific policy area (Tovo 2016). Additionally, by performing their tasks, they contribute to improve the way in which the rules are implemented and applied throughout the Union. In other words, they play an active role in exercising executive powers at a Union level. In this capacity, they can also promote the European integration process. It must be added that the Union’s regulatory agencies’ powers are subject to a set of limits which are imposed by the Meroni doctrine, which was formulated by the Court of Justice—in its judgement of 13 June 1958, joined cases 9–10/56, Meroni—in order to make the delegation of power compatible with the Treaty provisions (Tridimas 2009). Firstly, the delegation of powers will be explicit and compatible with the “principle of conferral” (Rossi 2017; Shaw 2018) under which the delegating institution cannot delegate more powers than those it holds (Jacqué 2004). Secondly, the delegate’s exercise of the powers at issue will be carried out under the same procedural conditions as the delegating authority would

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be subject to. Finally, the delegation of powers will not lead to any transference of responsibility, thus the transfer of wide discretionary powers from the delegating institution to the delegate authority, if this option is not provided for in the Treaty. With reference to the SRB, it is quintessential to discuss—as this is fundamentally the research question of the chapter—its role in order to assess how it has contributed to shape the EMU policy in the last decade and what its function is under normal financial market conditions. To this end, it seems necessary to analyse the salient features, the peculiarities and, also, the paradoxes of this new agency. Notably, the delegation of regulatory powers to subjects other than Union institutions is not allowed since it could alter the system of responsibilities and accountability established by the Treaties. As a result, only purely executive powers can be delegated to Union agencies and their use will be fully supervised by the delegating institution. In its judgement of 22 January 2014, case C-270/14, ESMA, which has been widely interpreted as a sign of a substantial upgrade of the Meroni doctrine, the Court of Justice reaffirmed the criteria set by the doctrine, reconfiguring them in the light of the changed normative framework and assigning them a new role in modelling EU policies (Tridimas 2012; Adamski 2014; Carr 2014; Chamon 2014; Lenaerts 2014; Nicolaides and Preziosi 2014). In addition to this, the interconnected nature of financial markets has “catapulted” the 2008/2011 crises (the widespread bank insolvencies of 2007/2008 and the ensuing sovereign debt emergency) into a global dimension. The EMU has been required to play a central role as a result of these events. Therefore, all of a sudden it has become necessary to set up an agency, such as the SRB, with specific powers to operate, outside the EMU, at an international level. In this scenario it is worth examining these unexplored powers to understand the impact of the external activity of the SRB on the management of the EMU.

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Resolution Actions

Resolution actions are taken if a credit institution is failing or is likely to fail and—after taking into account timing and other relevant circumstances—when there is no realistic prospect that any alternative measures would prevent its failure within a reasonable time-frame (Fernadez Torres and de Gioia Carabellese 2019; de Gioia Carabellese and Zhang 2019a).

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They aim to safeguard the continuity of the critical functions—i.e. the essential financial services—of the credit institution concerned, to maintain the stability of the financial system and avoid significant adverse effects towards it, to reduce moral hazard and, finally, to protect public funds—by minimising reliance on extraordinary public financial support— as well as depositors, investors, client funds and client assets (Haentjens and de Gioia Carabellese 2020; De Poli and de Gioia Carabellese 2020, forthcoming; Cranston et al. 2018). These actions shall be envisaged and detailed in the resolution plan. Within the Banking Union this is drawn up by the SRB (Regulation No. 806/2014, Article 8, para. 6). Together with the Council, the Commission and the National Resolution Authorities (NRAs), the SRB will apply the uniform rules and procedures enshrined in the legal framework of the SRM (Regulation No. 806/2014, Article 1). Basically, the resolution plan is directed to detail how the bank’s crisis will be managed before such a bank failure manifests in all its gravity (de Gioia Carabellese and Zhang 2019b).

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Framework

Bank resolutions require swift and effective decision-making processes. It is for this reason that the SRB departs from the model of Union agencies that has developed over recent decades. As a result, its structure is quite unconventional and sui generis, once compared with the traditional “fellow” EU agencies. The SRB is also different from the three European Supervisory Authorities established in 2010 within the ambit of the European System of Financial Supervision (ESFS). These are the European Banking Authority (EBA), the European Insurance and Occupational Pension Authority (EIOPA), the European Securities and Markets Authority (ESMA). The SRB is composed by a Chair, a Vice-Chair, four further full-time members—permanent participants—and a member appointed by each participating Member State, representing their NRAs (Regulation No. 806/2014, Article 43, para. 1). The permanent participants are appointed on the basis of an open selection procedure which respects the principles of gender balance and takes into consideration: merit, skills, knowledge of banking and financial matters, and relevant experience of financial supervision, regulation and banking resolution (Regulation No. 806/2014, Article 56, para. 4). They will be designated by the Council, acting by a

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qualified majority, on a proposal by the Commission and after obtaining the consent of the European Parliament (Regulation No. 806/2014, Article 56, para. 6). The term of their office is five years and is not renewable. The SRB is articulated in two sessions. The first, i.e. the executive one, consists of the Chair and the four full-time members. Furthermore, when deliberating on a bank or a cross-border group, the representative of the participating Member State involved also participates in its decision-making process (Regulation No. 806/2014, Article 53, paras. 3 and 4). As a result, SRB’s composition is variable since it would change depending on the Member State in which the relevant bank or group operates. Given the variability in this composition, permanent participants must ensure that the resolution decisions and actions are coherent, appropriate and proportionate (Regulation No. 806/2014, Article 53, para. 5). The second session, i.e. the plenary one, is extended to all members of the SRB (Regulation No. 806/2014, Article 49). In both executive and plenary sessions, the Commission and the European Central Bank (ECB) each designate a representative entitled to participate as permanent observers (Regulation No. 806/2014, Article 43, para. 3). In the executive session, the SRB may invite further observers, including a representative of European Banking Authority (EBA) (Regulation No. 806/2014, Article 43, para. 3 and 53, para 1). Finally, although this is not clearly stipulated, it may also invite a representative of the Council. This initiative seems positive since the Council, like the Commission, has a specific role to play in the adoption of resolution plans (Busch 2015, 2017). The most important decisions are taken in the executive sessions. Generally, they are adopted by consensus (in total agreement, without any possible dissenting voice) or, if the members are not able to reach it, by simple majority of permanent participants with a casting vote of the Chair in the event of a tie (Regulation No. 806/2014, Article 55, paras. 1 and 3). The composition of the SRB should ensure that all the relevant interests at stake in resolution procedures are taken in due account. According to this line of reasoning, firstly, the permanent participants should provide for an efficient bank crisis management, thanks to their specific competence. Secondly, the NRAs representatives would play a double role. On the one hand, they know much more thoroughly than the central experts the reference market of the bank under resolution. Within this remit, they

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should also ensure that the SRB’s powers are exercised as close to the citizen as possible, ultimately pursuant to the proximity principle referred to in Article 10, para. 3, Treaty on European Union (TEU) (Fois 2015). On the other hand, the SRB would represent a form of resistance by the Member States to the transference of sovereignty to the Union in the banking sector and, therefore, would balance national interests with the Union’s ones, which sometimes are inconsistent with each other. Finally, the representatives of the Commission, the Council, the ECB and the EBA should ensure coherence of resolution actions with other Union banking policies.

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Powers

The powers and the degree of discretion of the SRB are much greater than those of traditional Union agencies which have been shaped by the Meroni doctrine (de Gioia Carabellese 2019, p. 2). The ESMA case is the epitome of such a demarcation line between the agency under the discussion, on the one hand, and the other “sisters”, on the other hand. As stated in Article 7, para. 2, Regulation No. 806/2014, the SRB is responsible for drawing up the resolution plans and adopting all decisions relating to resolution—including the use of the Single Resolution Fund— for entities falling within the scope of the SRM. Therefore, its most important powers are connected to the implementation of resolution tools which are listed in Article 22, para. 2, Regulation No. 806/2014: (i) the sale of the business; (ii) the establishment of a bridge institution (the so-called bridge bank); (iii) the asset separation (the so-called bad bank); (iv) and the bail-in (Binder 2019). The first—as mentioned in Article 24, Regulation No. 806/2014—confers the SRB the power to transfer to a purchaser, on commercial terms and without requiring the consent of shareholders, the whole or part of the shares or other instruments of ownership or any assets, rights or liabilities of the bank concerned. The second, conforming to Article 25, Regulation No. 806/2014, provides the creation of a legal person—controlled by public authorities—for the purpose of receiving and holding some or all of the shares or other instruments of ownership of the bank involved, or its assets, rights and liabilities with a view to maintaining access to critical functions and selling it when market conditions become appropriate. The third, pursuant to Article 26, Regulation No. 806/2014—which can be exercised only in conjunction with another power—implies the transfer of impaired assets to an asset

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management vehicle, with the aim of permitting them to be managed and sold over time in order to cleanse the balance sheets of the troubled banks. The fourth, provided in Article 27, Regulation No. 806/2014, consists in the write-down and conversion of liabilities of an entity under resolution and provides consent for reducing the claims of unsecured creditors and to transform debt into equity. One can therefore observe that, although the SRB is a technical body, its activity is not limited to opinions and recommendations since it makes decisions which are binding upon those banks, cross-border groups as well as private operators, to which they are addressed. Also, these decisions have direct effects, since they can, straightaway, create rights and engender obligations for the addressees who, as stated in Article 86, Regulation No. 806/2014, can invoke them and rely on them before the Court of Justice. However, it is worth noting that, according to the resolution procedure established in Article 18, Regulation No. 806/2014, para. 7 (infra, para. 5), the discretionary decision of the SRB, as to whether the resolution scheme shall be adopted, is ultimately taken by Union political institutions. In this respect, the SRB is not dissimilar from the traditional Union agency model. In fact, the highly technical nature of these matters could result in limiting the attitude of Union institutions towards the intervention in banking crises. The latter would require the application of the principal-agent model (Laffont and Martimort 2002; Kassim and Menon 2003). This occurs when one entity—the agent—is able to make decisions and/or take actions on behalf of, or that impact on, another entity—the principal—. It implies the analysis of relationships between entities in circumstances where such entities have conflicting goals and where there is an asymmetry of information. Based on the assumption that the delegation of responsibilities allows, among other achievements, the pursuit of goals that would otherwise be too costly (or with the involvement of too much expertise)—i.e. in resolution of credit institutions—it implements the agency relationship which is created when one party (i.e. the principal) enters into a specific agreement with a second party (i.e. the agent) and delegates to the latter responsibility for carrying out a function or set of tasks on the principal’s behalf. In the light of both this model and the limited time for the resolution procedures to be concluded, the Council and the Commission might consider it appropriate to rely on the evaluations carried out by the SRB, allowing it to autonomously decide. As a result, they would simply confirm and conform to the SRB’s approach on the specific resolution case.

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Finally, we turn to the SRB’s powers which relate to early intervention measures. The pertinent legal provisions are Article 13, Regulation No. 806/2014 in combination with Articles 27, para. 1, 28 and 29 of the BRRD (Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the European Parliament and of the Council). These norms confer on the SRB broad discretion as regards the evaluation of the conditions for their exercise (Kern 2019; Morais 2019). They are established through a wide legal framework which leaves room to a considerable degree of appreciation on ‘whether’ and/or ‘when’ to apply them. For instance, one can observe numerous undetermined legal concepts such as ‘significant deterioration in the financial situation’ and ‘deteriorating liquidity situation’ as well as ‘increasing level of leverage’, whose specification is referred to the discretion of the SRB. Moreover, they can be implemented both in case of a breach of the European Banking Law by a credit institution and where the SRB estimates that the same breach, in the short term, applies. In other words, these powers are substantially exercised out of the influence of Union institutions although they affect directly and significantly on the legal sphere of the troubled bank.

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Independence

As stated in Article 47, para. 1, Regulation No. 806/2014, when performing its tasks, the SRB shall act independently and in contemplation of the general interest. To this end, first and foremost, it should have the ability and expertise to deal with large groups and to act swiftly and impartially. The SRB has been conceived as independent because one of the endeavours of the Union is to interfere in the close relationship between sovereign risk and bank risk. The former refers to the danger of government default on a loan made to a Member State or guaranteed by it. The latter is the uncertainty about the future cash flows of a bank, specifically the probability of a loss or a shortfall—compared to planned revenues—as a result of certain financial transactions. This can lead to the recourse to the central bank or to government liquidity (Altunbas

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et al. 2011). Public intervention on troubled banks has generated an increase of the level of debt for some Member States while the purchase, by banks, of bonds of Member States with large deficits has undermined their financial stability (Mathieu and Sterdyniak 2012; Buzelay 2013). Due to propagation effects, this has spiralled to a cross-border dimension. By contrast, the independence of the SRB should eventually stop this deleterious chain-reaction and re-allocate the aforementioned risks in a more neutral relationship. It should also ensure that appropriate account is taken of both national and internal market financial stability. In more general terms, one can affirm that independence of the SRB should guarantee that its activity be taken beyond the influence of politics (Macchia 2014). The independence of the SRB is embedded in the various duties of its members. Pursuant to Article 47, para. 2, Regulation No. 806/2014, they shall act—as well as the SRB considered as a whole—independently and objectively in the interest of the Union. Furthermore, they shall neither seek nor take instructions from the Union’s institutions or bodies, from any government of a Member State, or from any other public or private body. It is clear, indeed, that lobbies of various kinds would benefit from exercising influence on the SRB’s members to the detriment of the Union’s general interest. As a result, members shall express their own views and vote independently in the deliberations and decision-making processes within the SRB. This obligation is reflected in the corresponding duty, provided for in Article 47, para. 3, Regulation No. 806/2014, for Member States, the Union’s institutions and bodies, or any other public or private body, to respect their independence and to abstain from any attempt to influence them in the exercise of their functions. The independence of the SRB is also guaranteed through the modalities of appointment of its permanent members. As stated in Article 56, para. 6, Regulation No. 806/2014, the Commission shall submit a proposal for their appointment to the European Parliament so that the latter body may grant its approval. Following this, the Council shall adopt, acting by qualified majority, an implementing decision to appoint them. Conversely, if one permanent member no longer fulfils the conditions required for the performance of his or her duties or has been guilty of serious misconduct, pursuant to Article 56, para. 9, Regulation No. 806/2014, the Council may, on a Commission’s proposal which has been approved by the European Parliament, adopt an implementing decision

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to remove him or her from office. The Council, in this case too, shall act by qualified majority. Within this ambit, two observations can be made. Firstly, the European Parliament has an effective power to influence both the appointment and the removal of the permanent members of the SRB. This may be considered one of the forms of democratic control which have been established by Regulation No. 806/2014 to overcome the chronic democratic deficit in the Union concerning the management of the recent financial crisis (Ruffert 2011; Villani 2011; Habermas 2012; Nicolaïdis 2013; Daniele et al. 2017; Tosato 2017). Secondly, while the appointment of permanent members is collective, their removal can be individual, which may be considered—in light of some of its features—a sort of motion of censure. Finally, as stated in Articles 57 and 58, Regulation No. 806/2014, the SRB shall have an autonomous budget which is not part of the Union budget and shall be responsible for devoting the necessary financial resources to the performance of its tasks. In conclusion, the SRB appears to be independent from both the Union institutional and political framework as well as from participant Member States. However, in practice, this independence is rather limited. Independence effectively only applies for the SRB’s executive session. Indeed, the plenary session includes members appointed by each participating Member State and representing their NRAs from which they are not autonomous. Even if no Union body or institution can intervene in the SRB’s decision-making process, or influence it directly, one must note that the resolution plan will be shared, pursuant to Article 18, Regulation No. 806/2014, with the Commission and the Council. Indeed, para. 7 provides that the SRB’s decision to adopt the resolution scheme may enter into force only if they have expressed no objection within a period of 24 hours after its transmission by the SRB itself. The involvement of the Commission and of the Council is justified by the margin of discretion which remains in the adoption of each resolution scheme and by the exercise of their implementing powers according to Article 291 TFEU. Particularly, the assessment of the discretionary aspect of the resolution decisions will be exercised by the Commission. The evaluation of their impact on the fiscal sovereignty of the Member States, on the financial stability of the latter and on the financial stability of the Union considered as a whole, will be evaluated by the Council. In other words, the aforementioned Union institutions definitely share the responsibility for the results of the SRM. This would explain why a full independence for the SRB cannot be recognised.

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6 Resolution Colleges and Relationship with EBA Resolutions colleges, as stated in Article 88, BRRD, are networks of NRAs that aim to carry out resolution tasks for cross-border groups, which have entities established in more than one Member State, and to ensure cooperation and coordination with third-country resolution authorities. After the entry into force of Regulation No. 806/2014, they will be established only for groups which include entities of participating and non-participating Member States—for which the SRB is the group-level resolution authority—or of non-participating Member States. Taking into account international standards, the EBA develops draft regulatory standards in order to specify the operational functioning of the resolution colleges for the performance of their tasks. To this end, it shall contribute to promoting and monitoring their efficient, effective and consistent functioning. Resolution colleges are able to adopt joint decisions. It is for this reason that they stand out from other international cooperation fora between administrative authorities, such as the Crisis Management Groups, provided by the Key Attributes and regulated by Memoranda of Understandings (MoUs). However, they are not aimed at transferring power to a supranational authority. As stated in Article 8, paras. 2 and 3, BRRD, the NRAs shall endeavour to reach a joint decision and EBA, at their request, assist them in reaching it. In the absence of a joint decision between the competent authorities—and after a very complex procedure—the EBA, according to Article 19, para. 3, Regulation No. 1093/2010, may take a decision requiring them to take specific action in order to settle the matter. Pursuant to Article 32, para. 4, Regulation No. 806/2014, non-binding cooperation arrangements concluded by the SRB must be in line with the EBA framework cooperation arrangements. This rule establishes a third limit to the external dimension of the SRB due to the EBA’s cooperative activity with third-country authorities. It requires the examination of the relationship between them, under their international relations profile, especially with regard to the division of their tasks—and to their potential overlap—and the way in which the former may participate in the decision-making of the latter. Firstly, it is worth mentioning that Article 33, Regulation No. 1093/2010 assigns to the EBA an active role in order to develop contacts and enter into administrative arrangements with the administrations of

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third countries. However, those arrangements shall not create legal obligations for the Union and its Member States nor shall they prevent Member States and their competent authorities from concluding bilateral or multilateral arrangements with those third countries. Particularly, as stated in Article 97, para. 2, BRRD, the EBA may conclude non-binding framework cooperation arrangements with relevant third country(ies) authorities where: (i) a Union subsidiary of the third country parent undertaking is established in two or more Member States; (ii) a third country institution operates Union branches in two or more Member States; (iii) a parent undertaking established in a Member State with a subsidiary institution or significant branch in another Member State also has one or more third country subsidiary institutions; and (iv) an institution with a subsidiary institution or significant branch in another Member State has established one or more branches in one or more third countries. Furthermore, as stated in Article 75, para. 1, Regulation No. 1093/2010, third countries which have concluded agreements with the Union—whereby they have adopted and are applying Union law in the area of competence of the EBA—may participate in the work of the latter. Pursuant to Article 75, para. 2, Regulation No. 1093/2010, the EBA may cooperate with the above mentioned third countries, applying legislation which has been recognised as equivalent in the areas of its competence, as provided for in international agreements concluded by the Union in accordance with Article 216 TFEU. Indeed, given the globalisation of financial services and the increased importance of international standards, the EBA is required to foster dialogue and cooperation with competent authorities outside the Union. Bearing this in mind, it should have specific powers. For instance, it should be allowed to develop contacts and enter into administrative arrangements with the authorities and administrations of third countries and with international organisations, while fully respecting the existing roles and respective competences of the Member States and the Union institutions. Participation in its work should be open to countries which have concluded agreements with the Union whereby they have adopted and are applying EU law, and it should be able to cooperate with third countries which apply legislation that has been recognised as equivalent to that of the Union. Secondly, it is worth noting that Articles 10, para. 1 and 15, para. 1, Regulation No. 1093/2010, gives the EBA the powers to develop, respectively, draft regulatory technical standards and draft implementing

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technical standards. Put briefly, the EBA is entitled to enact binding legal acts (Magiera and Weiss 2014). This involves a questionable power shift that would be analysed with regard to the balance of powers (Wellerdt 2015). To this end, one could observe that the SRB, pursuant to Article 5, para. 2, Regulation No. 806/2014, is subject to the aforementioned binding regulatory and implementing technical standards, and to any guidelines and recommendations developed by the EBA. Moreover, the EBA must ensure compliance with Union law. Within this ambit, one should pay attention to recital 18, Regulation No. 806/2014, which affirms that in cases where Union law confers discretion on competent authorities, the EBA’s decisions cannot replace the exercise in compliance with Union law of that discretion. It will perform its tasks under this principle. It can be noted, therefore, that the SRB—despite its leading role in resolution for banks in the EMU—is placed, in the relationship with the EBA, at the same level of national authorities, with two orders of consequences. Pursuant to Article 97, para. 4, BRRD, NRAs and, therefore, the SRB shall conclude non-binding cooperation arrangements in line with EBA framework arrangement with the relevant third country authorities. First of all, even with regard to the SRB, the acts that the EBA may issue in place of the national authorities, if necessary conditions are met, would be adopted. Moreover, the EBA would be given the role of the regulatory authority for resolution across the Union considered as a whole. It would be the main guarantor of financial stability of the latter, having specific powers to intervene on national authorities and banks of all Member States, including cross-border groups. Another matter of considerable complexity is represented by the participation of the SRB in the decision-making of the EBA. According to Article 30, para. 5, Regulation No. 806/2014, the SRB shall appoint a representative which shall participate in the Resolution Committee of the EBA, which is a permanent internal committee established for the purpose of preparing EBA decisions—including draft regulatory technical standards and draft implementing technical standards—relating to tasks that have been conferred on resolution authorities, as per legal provisions encapsulated in the BRRD. This Committee promotes the development and coordination of resolution plans and implements methods for the resolution of failing banks (BRRD, Article 127). Within this ambit, the EBA must ensure structural separation between the resolution committee and other functions

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referred to in Regulation No. 1093/2010. The scope is to avoid conflicts of interest that may occur when the impartial and objective exercise of its powers in resolution for banks is compromised for reasons involving any other of its institutional functions.

7

Legal Personality

Article 42, para. 1, Regulation No. 806/2014, gives legal personality to the SRB, however, it does not specify whether its nature is either domestic or international. According to a literature which refers to the general provisions existing in their founding regulations (van Ooik 2005), one could suppose that the SRB is endowed with international legal personality. This interpretation would stem from Article 8, paragraphs 6 and 11, lit. d), Regulation No. 806/2014. The latter legal provision states that a group resolution plan which includes entities incorporated in third countries will identify appropriate arrangements for cooperation and coordination with the relevant authorities of those third countries and the implications for resolution within the Union. As the resolution plan is drawn up by the SRB, the latter may establish binding relations with other subjects of international law. This would give it a specific competence, at an international level, to act independently from the Union institutions and delineate its own external dimension. To confirm this, it is worth noting that some aspects of this cooperation had already materialised, for example with the US Federal Deposit Insurance Corporation (FDIC) and the Swiss Financial Market Supervisory Authority (FINMA). In fact, one can affirm—in accordance with a more recent school of thought (Ott et al. 2013)—that Article 42, para. 1, Regulation No. 806/2014 does not assign international legal personality to the SRB. It would only have the capacity to act in the domestic legal order of the participant Member States. Therefore, it would have a much smaller internal legal personality and its external dimension would be merely cooperative, similar to that assigned to the Commission—with regard to international organisations—under Article 220 TFEU. The denial of the SRB’s international legal personality seems coherent with the decision-making in the SRM which attributes the most important role to the Council and, in a subordinated way, to the Commission. Indeed, if the most important topic in favour of the attribution to the SRB of the international legal personality is founded on its responsibility in drawing up the resolution plan, it is worth observing, one more time,

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the well-known resolution procedure established in Article 18, Regulation No. 806/2014. Under this profile, the SRB’s international legal personality would be contrary to the spirit and letter of the SRM Regulation as well as to a common sense of reasonableness and political opportunity. The extent of its external dimension would be identified, therefore, with reference to the Council’s prerogatives. Finally, the regulatory conferment on the SRB of legal personality would only represent the manifestation of its own autonomy of external action, which is similar to those of the most important national resolution authorities considered on a global scale. In other words, the SRB is an integral part of the Union’s institutional system because it simply is the central resolution authority of one part of the latter—the Eurozone—and not a self-contained entity within the Union itself. Under this profile, it is worth mentioning that the international subjectivity of an entity, far from being attributed in a solemn and formal way, depends on its actual and effective participation in the international community and on its own autonomous juxtaposition to the members that compose it (and other subjects), as well as on the nature—and the size—of its competences, the power to enter into international agreements, and the responsibility for its own activity (Draetta 2010).

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International Cooperation

International cooperation of the SRB is based on awareness that interconnection of financial markets requires action, policy and guidance on a global scale. To this end, the SRB has specific relations with international organisations (which play a role in promoting convergence and in providing advice in resolution for banks), non-participating Member States (under the coordination of EBA), and third countries. As stated in Article 32, para. 1, Regulation No. 806/2014, where a group includes entities established in SRM Member States as well as in non-participating Member States or third countries, the SRB shall represent the national resolution authorities of the former for the purposes of consultation and cooperation with the latter. However, it must act without prejudice to any approval by the Council or the Commission required under the Regulation at issue. This is the general norm which regulates the external relations of the SRB. Firstly, it affirms that the SRB shall represent one or more national resolution authorities—those of the entity of the participating Member

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State(s) included in an international group—and not the Banking Union considered as a whole, although it is responsible of the second pillar of the latter. This would imply an ambiguity between the interest to be pursued, whether the Eurozone or the national one. Since—as stated in Article 8, Regulation No. 806/2014—the SRB replaces the NRAs of the participating Member States in their resolution decisions, one can affirm that it should preserve their own national interest, circumstances which remain somewhat ambiguous under a Eurozone perspective. Indeed, although the interest of a SRM Member State, to the detriment of a nonparticipating Member State or third country coincides with the Eurozone one, it can be argued that—due to the well-known interconnection of financial markets—this has side effects on another (or others) Eurozone Member State(s) implying asymmetric shocks in the common currency area. Secondly, the rule establishes a double limit to the activity of the SRB. The first is the operating level which is limited by consultation and cooperation, excluding binding regulatory acts. The second is the subordination of its action to the approval of the Council and the Commission. This would confirm a certain degree of autonomy of the SRB in its external relations, which is counterbalanced by the control of the Union institutions. The norm at issue must be analysed in combination with Article 93, para. 1, BRRD which states that the Commission, in accordance with Article 218 TFEU, may submit to the Council proposals for the negotiation of agreements with one or more third countries concerning the tools of cooperation between the resolution authorities and the relevant third country authorities for the purpose of information sharing in connection with recovery and resolution plans for banks. This implies that agreements on the matter are reached with the ordinary procedure established in the Treaties. As a result, the Council shall authorise the opening of their negotiations, their signing and conclude them while the SRB will implement them under the control of the Council itself as well as the Commission. Paradoxically, consultation and cooperation of the SRB with relevant third countries may be subordinated to bilateral agreements between participant Member States and the same relevant third countries. This can apply until the entry into force of an agreement regarding the matters at issue concluded between the Council and the mentioned relevant third

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countries. In order to limit the implication of this unconventional subordination, Article 93, para. 4, BRRD provides a stand still clause although it does not create the SRB. It establishes that Member States may enter into bilateral agreements with a third country, to the extent that such bilateral agreements are not inconsistent with BRRD, until the entry into force of an agreement concluded between the Council—specifying, therefore, the role of the SRB in consultation and cooperation—and the third country itself. Article 32, para. 2, Regulation No. 806/2014 is a special rule concerning the external dimension of the SRB. It extends the operating level of the latter since it affirms that the SRB and competent authorities of the non-participating Member States shall conclude MoUs describing in general terms how they will cooperate with one another, under the BRRD, in the performance of their tasks. MoUs are soft law agreements, negotiated and signed by authorities outside political interference—albeit under the umbrella of legal legitimacy constituted by the power conferred to them by law—that set the framework for technical cooperation. Their non-binding legal nature makes their conclusion easier. On the other hand, it does not push the contracting authorities to fulfil their obligations, leaving a margin of domestic action. Therefore, they are often formulated in vague and ambiguous terms in order to avoid possible prescriptive readings. As a result, they do not substantiate genuine collaborative engagement by other contracting authorities and avoid false allegations as well as associated reputable damages in case of failure in cooperation. Even if this approach is in line with international cooperation on the matter (Financial Stability Board 2014), the rule at issue circumscribes and restricts it to non-participating Member States. In other words, it only applies in the Union considered as a whole excluding third countries. This determines, almost in principle, a double level of international relations of the SRB although their respective limits are not established.

9

Recognition and Enforcement of Third Country Proceedings

A third country institution or parent undertaking may have subsidiaries established in one or more participating Member States and/or assets, rights or liabilities located therein or governed by their law. In this scenario, in the lack of an international agreement signed between the

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Council and the third country concerned, regarding the tools of cooperation between the SRB and the relevant authority, pursuant to Article 33, para. 2, Regulation No. 806/2014, the SRB may issue a recommendation addressed to the NRAs on the recognition and enforcement of resolution proceedings conducted by the resolution authority of the third country at issue. Firstly, it is worth noting that such a recommendation is a non-binding act. As a result, the final decision on the recognition and enforcement of third country resolution proceedings, from the standpoint of the law, is adopted by the NRA; on its turn, this impacts on the external dimension of the SRB. Indeed, as stated in Article 32, para. 4, Regulation No. 806/2014, NRAs implement the SRB’s recommendation and ask for the recognition or enforcement of the resolution proceedings. Alternatively, they will explain in a reasoned statement to the SRB why they cannot implement it. In other words, they can accept or refuse its execution. In any case, the SRB issues its recommendation after consulting the NRA involved and, where a resolution college is established, with the resolution authorities of non-participating Member States. In such a recommendation, the SRB gives due consideration to the interests of each individual participating Member State where a third country institution or parent undertaking operates, and in particular to the potential impact of the recognition and enforcement of the third country resolution proceedings on the other parts of the group and the financial stability in those Member States. Besides, the SRB intervention is aimed at an overall assessment. The latter concerns the interconnection of financial markets, the impact of the third country resolution proceeding not only in the Member State involved but in the Euro area considered as a whole. It is for this reason that the recommendation under discussion seems to be one of those acts of soft law which characterise the current governance of international financial relations. The SRB may also recommend, as provided in Article 32, para. 3, Regulation No. 806/2014, to refuse the recognition or enforcement of third country resolution proceedings. This may occur in several circumstances. Firstly, they have an adverse effect on financial stability in one or more participating Member or they would have material fiscal implications for them. This would undermine, indeed, the aims of the SRM and, in a broader sense, of the Banking Union. Secondly, their effects are contrary to the national law applicable or it prejudices any normal insolvency proceedings. Thirdly, creditors of a participating Member State do

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not receive the same treatment as third country creditors with similar legal rights under the third country home resolution proceedings. Formally, this is a reciprocity clause which seems to be established in order to protect, in substantive terms, investors of the Euro area.

10

Conclusion

As clarified in this contribution, the SRB—established within the SRM—is a Union agency whose purpose is to resolve the crisis of credit institutions of the Euro area. It shows more differences than similarities with the classic model of Union agencies stemming from the “Meroni doctrine”. Indeed, it does replace the previous system, which was based on the integration of Union and national rules as well as institutions, with a supranational body conceived to ensure the centralised management of a sector—i.e. resolution for banks. It is well-known that, particularly for cross-border groups, the resolution can only be addressed through common measures, after recognising new and more incisive powers to supranational structures. This new trend, whose cornerstone is the delegation of discretionary powers to the Union agencies, would lead to the independence of the latter. Under this profile, the SRB seems to be autonomous from the Union’s institutional and political framework as well as from participant Member States, albeit in a quite limited manner. Firstly, resolution plans—whose drawing-up and adoption are the SRB’s main tasks—shall be shared with the Commission and the Council. Secondly, the SRB only is endowed with an internal legal personality. The denial of an international personality, albeit in line with the main features of Union agencies, is coherent with the decision-making of the SRM. Thirdly, non-binding international cooperation arrangements concluded by the SRB must be in line with the EBA’s cooperation activity existing with third country authorities. As a result, the external dimension of the SRB, although different whether related to non-participating Member States or third countries, is quite limited. Its operating level is restricted to consultation and cooperation—excluding, therefore, binding regulatory acts. Nevertheless, this external dimension is subject to the approval of both the Council and of the Commission. It goes without saying that it shall be in line with the EBA’s activity. Furthermore, international agreements on the matter must be concluded in compliance with Article 218 TFEU.

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It can be concluded that the independence of the SRB, regardless of the magnitude and projection of its actions (either internal or external), results in being sacrificed on the altar of the politics, which ultimately shares the decisions of resolution for banks, either failing or likely to fail. Notwithstanding this and in looking at the matter from a more practical perspective, it is acknowledged that political institutions hardly object to the determinations of a technical body, also because the former have been instrumental in the appointment of the latter. This involves a questionable shift of power (politics versus technocratic bodies) which, on its turn, requires a more in-depth analysis of the dynamics existing in the Union.

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Tovo, C. (2016). Le agenzie decentrate dell’Unione europea. Napoli: Editoriale Scientifica. Tridimas, T. (2009). Community Agencies, Competition Law, and ECSB Initiatives on Securities Clearing and Settlement. Yearbook of European Law, 28(1), 216–307. Tridimas, T. (2012). Financial Supervision and Agency Power: Reflection on ESMA. In N. Nic Shuibhne & L. W. Gormley (Eds.), From Single Market to Economic Union: Essays in Memory of John A. Usher (pp. 56–83). Oxford: Oxford University Press. van Ooik, R. (2005). The Growing Importance of Agencies in the EU: Shifting Governance and Institutional Balance. In D. Curtin & R. Wessel (Eds.), Good Governance and the European Union (pp. 125–152). Antwerp: Intersentia NV. Villani, U. (2011). Prove tecniche di governance europea dell’economia. Sud in Europa, 14, 1–2. http://www.sudineuropa.net/files/SudinEuropa-dicembre. pdf. Accessed 16 September 2019. Wellerdt, A. (2015). Organisation of Banking Regulation. Heidelberg: Springer.

CHAPTER 6

The Single Resolution Board: What About Accountability? Marta Božina Beroš and Marin Beroš

1

Introduction

The Single Resolution Board (SRB) has been established in 2016 as a decentralized EU agency and the key executive entity of the Banking Union’s second constitutive pillar, the Single Resolution Mechanism (SRM), after much political contestation about the common approach to unviable banks in the Euro area. The SRB elevates the responsibility in resolution matters to the European level in order to disassociate unviable credit institutions from their sovereigns and thus safeguard neutrality of decision-making in bank resolution as well as foster consistency of resolution practices across member states (Recital 12, Regulation 806/2014, hereinafter the SRM Regulation; also Quaglia 2019, p. 1). The SRB is now one of the key entities within the EU’s broader prudential policy

M. Božina Beroš (B) Faculty of Economics and Tourism, Juraj Dobrila University of Pula, Pula, Croatia e-mail: [email protected] M. Beroš Institute of Social Sciences Ivo Pilar-Regional Centre Pula, Pula, Croatia © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_6

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framework, also disposing with the power to solely initiate resolution procedures (Art. 18, SRM Regulation) and hence determine banks’ business prospects, therefore exerting important economic repercussions on member states participating in the SRM framework (Chiti 2015, p. 16). The positioning of an EU agency as a central element in financial sector policy-making comes as a direct result of the institutional strengthening of the EU level of governance brought about by the Banking Union that, in respect of EU agencies, has materialized as a “qualitative increase” in powers and capacities (Busuioc 2013, p. 15; Quaglia 2019, p. 2). In addition, crisis events sharpened public’s interest in greater de-politicization and credibility of EU policies (Majone 1996, p. 330), which allowed agencies to proliferate within the EU financial sector in search of greater sustainability and stability of banking governance (Epstein and Rhodes 2016, p. 416). In this sense, agencies can phase out political interferences since they rely on specialist knowledge in adopting decisions on complex policy matters hence contributing to the overall expertization of policies (Everson 2012). This reasoning underpinned the establishment of the European Supervisory Authorities (ESAs) in 2010, which as the first set of EU agencies in finance, laid the legal and institutional foundations for the SRB. Similar to agencies in other policy fields, agencies in the EU financial sector operate within a composite legal framework whose contours are sketched by the principle of institutional balance, as well as by relevant jurisprudence of the Court of Justice of the EU (CJEU), most notably the Meroni doctrine (Case 9/56 Meroni v High Authority)1 and its recent reformulation in the “ESMA Short-selling case” ruling (Case C 270/12 United Kingdom v European Parliament and Council), which broke the ground for further agency empowerment in finance.2 Unlike agencies in

1 In essence, the Meroni doctrine “prohibits agencies from engaging in discretionary action without appropriate conditionality imposed by the delegating EU institutions”. See Moloney, N. (2018). The Age of ESMA—Governing EU Financial Markets (p. 38). Oxford and Portland: Hart Publishing. For an exhaustive insight into constitutional and legal boundaries of agencies’ delegated powers see Vos, E., & Everson, M. (2014). European Agencies: What About the Institutional Balance? (Maastricht Faculty of Law Working Paper No. 4). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2467469. Accessed 8 August 2019. Also Chamon, M. (2016). EU Agencies: Legal and Political Limits to the Transformation of the EU Administration. Oxford: Oxford University Press. 2 In the “ESMA-Short selling case” the CJEU “de facto relaxed the Meroni conditions: it did not rule out entirely the possibility to delegate discretionary powers (…) it limited

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other policy fields however, the ESAs and the SRB face distinct challenges, firstly because the Banking Union opened a cleavage between the internal market for financial services and the euro area (Moloney 2014, p. 1610) setting countries on different political and economic trajectories and intensifying differentiation tensions between member states depending on their Banking Union status. This burdens internal governance processes of agencies with EU-wide membership such as the ESAs, since it increases the potential for interest alignment between different country subsets, jeopardizing the genuineness of European policies. Meanwhile, tensions also arise in agencies with homogeneous membership such as the SRB. The 19 euro area countries gathered in the SRB have different economic and political realities that in turn influence their distinct policy preferences (Božina Beroš 2018, p. 67). In order to mitigate tensions and governance vulnerabilities, a new model of EU agencies has emerged during the crisis, embodied by the SRB and marked by an expansion in powers and mandates. At the same time, the increase in agencies’ capacities has blurred the line between technical and political decisions (Moloney 2018, p. 11) opening ”a Pandora’s box” of challenges relating to democratic oversight, accountability and legitimacy of powerful EU agencies (Busuioc 2009, p. 599). Even though the Board’s decision-making procedures are tailored to the institutional matrix envisaged by the Meroni principle,3 the Board’s core activities de facto stretch doctrinal limitations since the SRB can adopt resolution decisions not only on the basis of objectively-set, technical criteria (e.g. bank liquidity levels) but also on the basis of inexact benchmarks such as the “public interest”, whose interpretation brings the SRB closer to discretionary actions. Having in mind that discretionary decisions are ESMA’s discretion rather than excluding it. The Court moreover considered it essential that the powers delegated to ESMA by the EU legislature were “circumscribed by various conditions and criteria which limit ESMA’s discretion.” In Vos, E. (2018). EU Agencies, Common Approach and Parliamentary Scrutiny. European Parliamentary Research Service Study, PE 627.131. http://www.europarl.europa.eu/thinktank/en/document.html?refere nce=EPRS_STU(2018)627131. Accessed 8 August 2019, at p. 6. 3 The European Commission and the Council of the EU are both involved in decisionmaking. Within 24 hours of adopting the decision, the Commission has the right to object the Board’s planned activity and remit the issue to the Council for further consideration, possible objection or final approval (see Art. 18(7)(b), SRM Regulation). Therefore, the coordination with its notional principal—the European Commission, and furthermore with the Council, limit the extent of discretionary powers of the SRB keeping it, at least de jure, within constitutional and legal boundaries.

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“susceptible to multiple influences beyond the conditions set by legislature”, questions emerge on the appropriateness and robustness of the Board’s overall accountability regime (Moloney 2018, p. 39). Therefore, in order to keep the Board within Treaty established perimeters, while allowing its operational independence as well as an impartial and effective exercise of its authority within the SRM framework, robust accountability arrangements are imperative. Moreover, appropriate accountability preserves public confidence in resolution consistency, since it prevents political interests to interfere with decision-making processes and curtails agency’s propensity to move away from its mandate (Moloney 2018, p. 47; Peters 2014, p. 211). Indeed, accountability issues crop up in discussions on the powers delegated to the SRB in prudential policy, echoing concerns revealed by a pioneering body of scholarship on the accountability of EU agencies across policy fields (for instance Curtin 2005; Vos 2005; Geradin et al. 2005). Busuioc’s (2013) subsequent systematic research into the law and practices of agency accountability made a seminal contribution to this strand of literature, not least because of its coverage of agency accountability in the context of European finance. Arguably, the literature on the accountability of EU agencies within an “incomplete“Banking Union as well as their effect on the institutional capacities of national actors is yet to be developed (Epstein and Rhodes 2016; Quaglia 2019). The body of literature discussing the political, institutional and legal aspects of the ESAs or the crisis-forged SRB is thriving, but the majority of studies deal with accountability on the margins of broader discussions of financial sector agencification or the evolution of specific agencies therein (for example, Andenas and Chiu 2014; Weismann 2016; Božina Beroš 2018; Moloney 2018). Only a couple of writings stand out because of their focus on political and/or legal accountability of the ESAs (Rijsbergen and Foster 2017; Chiu 2016) or the SRB (Vlachou 2018). At the same time the limited literature on the Board’s accountability contrasts the high number of cases pending before the CJEU contesting the Board’s resolution decisions,4 as well as reports questioning the accountability’s efficiency (European Court of Auditors 2017; Rosenthal 2018). 4 According to the European Banking Institute website, as of January 2019 more than 50 cases are pending before the CJEU against the SRB and in relation to its resolution decision of the Banco Popular Español, requesting its annulment and (in some cases) compensation, while two cases request the annulment of the resolution decision in respect

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Against this backdrop, the paper examines the formal provisions and practices of political and judicial accountability, aiming to highlight problematic aspects of individual arrangements and proposing advancements in light of more purposeful review. Although arrangements of political and judicial scrutiny mirror the ones established in respect of the ESAs, new practices and relationships of account giving have been developed (for instance, confidential consultations) that challenge the effectiveness of “old“accountability fora. At the same time, some of the existing mechanisms struggle to capture the complexities SRB’s powers (Busuioc 2013, p. 220). The discussion is organized as follows: after the introduction, section two introduces the concept of accountability, elucidating accountability’s relevance to the legitimacy of EU agencies. The section also highlights political and judicial accountability as crucial mechanisms in the context of legitimizing agencies’ increasing power in EU financial sector governance. This sets the stage for section three and its examination of the legal provisions and actual practices of political and judicial accountability of the SRB, with the aim to highlight problematic issues and recently disclosed gaps in specific arrangements as well as to propose advancements towards more purposeful accountability. Section four presents our concluding remarks.

2

Agencies in the EU Financial Sector: Contours of Political and Judicial Accountability

Accountability is often perceived as an “umbrella concept”, comprehensive enough to include a variety of different meanings all associated with good democratic governance (Busuioc 2013, pp. 44 and 45; see also Schillemans 2011). Regardless of its conceptual extensiveness, a workable definition of accountability can be detected based on a minimal understanding of the essential elements that form its core (Busuioc 2013, p. 46; Lastra and Shams 2001, p. 167).5 In this respect, Bovens presents

of the Latvian bank. See further at: https://ebi-europa.eu/publications/eu-cases-or-jurisp rudence/. Accessed 15 July 2019. 5 For a detailed examination of the various facets of this “evocative political word” see Costa, M. (2017). The Accountability Gap in EU Law. Abingdon, Oxon: Routledge; Bovens, M., Goodin, R. E., & Schillemans, T. (Eds.). (2014). The Oxford Handbook of Public Accountability. Oxford: Oxford University Press; Busuioc, M. (2013). European Agencies-Law and Practices of Accountability. Oxford: Oxford University Press.

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a seminal definition of accountability, describing it as a social relationship in which those exercising public authority (the account giver) have the obligation to publicly explain and justify their conduct to a general or institutionally specific accountability forum (the acountee). Accountability is always retrospective; an ex post facto process6 that revolves around three essential stages: information gathering, responsive deliberation and imposing consequences of actions.7 The accountability forum gathers and assesses relevant information by means of various relationships with the account giver, in order to decide whether those wielding power should be subject to (some sort of) sanctioning. In this sense, accountability allows those delegating powers (i.e. the principals8 ) to maintain democratic control over those exercising authority (i.e. agents), which is fundamental to modern democratic governance that operates on a matrix of “principal-agent” relationships.9 Besides democratic control, the formalized process of public scrutiny entailed by accountability, serves 6 Bovens, M. (2004). Public Accountability. In E. Ferlie, L. Lynne, & C. Pollitt (Eds.), The Oxford Handbook of Public Management (pp. 182–209). Oxford: Oxford University Press. 7 Although the possibility to impose some sort of consequence in cases of power misuse and/or abuse is central to accountability, procedures that consist only of informing of, and debating with forums lacking formal sanctioning powers can still be considered as structuring viable accountability systems if remedies are available elsewhere (e.g. before judicial authorities). See in Busuioc, M. (2013). European Agencies-Law and Practices of Accountability (p. 48). Oxford: Oxford University Press. 8 It is important to keep in mind that in the European financial sector, agencies have been delegated powers jointly by several principals (e.g. the Commission, member states). In terms of accountability, multiple delegating principals imply multiple account holders. 9 At this point, it is worth noting that “accountability” and “control” are often used interchangeably in literature, however: “Control refers to a whole range of mechanisms employed by the controlling actor in order to direct, steer and influence decision making and behaviour of the controlled agents. Accountability, on the other hand, precludes direct control from the principal. The need for accountability and the introduction of accountability mechanisms is relevant precisely because the principal has delegated powers to an agent and, thus, renounces direct control.” See in Busuioc, M. (2009). Accountability, Control and Independence: The Case of European Agencies. European Law Journal, 15(5), 599–615, at p. 605. In this paper, the conceptualisation of “accountability” is synonymous with ex post information giving, discussion and assessment. It is further worth noting that the delegating principal and accountability forum can be different entities with distinct mandates, while some policy sectors can point to multiple accountability forums, each relating to a different form of accountability, be it fiscal, judicial, managerial, political, or other. See in Busuioc, M. (2013). European Agencies —Law and Practices of Accountability (p. 55). Oxford: Oxford University Press.

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an additional purpose—it ensures and enhances legitimacy of governance, since it brings the governors closer to the governed, fostering “public confidence in government” (Bovens 2004, p. 193). The importance of tailored political controls that keep agencies’ activities within circumscribed legislative mandates (Tallberg 2002, p. 26; also Busuioc 2009, p. 608) is crucial in EU economic governance since the euro area crisis intensified anxieties on agencies’ “intention and opportunity for shirking” (Vlachou 2018, p. 5; also Busuioc 2009, p. 610). Indeed, in politically salient fields, such as the Banking Union, accountability functions as a legitimation mechanism for agencies wielding substantial powers in policy creation processes, such as the SRB. Kuile et al. (2015, p. 167) posit that purposeful accountability emanates from legal stipulations. To this end the constituting acts of the ESAs and the SRB provide a variety of arrangements of political and judicial review, that allow the EU executive and legislative branch (in addition to national parliaments in the case of the SRB) to scrutinize agencies’ performance and outcomes from a democratic perspective as well as in light of mandated zones of discretion (Moloney 2018, p. 38; also Vos 2018, p. 7). When reflecting on the democratic oversight of agencies in EU finance, a closer look at founding acts reveals the contours of agencies’ relationship with the European Parliament and the Council as chief forums of political accountability, in addition to the European Commission in the case of the SRB (for instance, Art. 2(2)(b) to (d), Regulation 1093/2010, hereinafter the ”EBA Regulation”10 ; Art. 45(1), SRM Regulation).11 For the main part these arrangements consist of agencies’ interactions with the European Parliament through formalized hearing reports whose scope and dynamics are broadly determined by

10 We use the example of the EBA Regulation in order to draw comparisons between

practices of political and judicial account giving between the ESAs and the SRB, because of the overlapping functional jurisdiction of the EBA and the SRB (i.e. banking prudential policy). However, the arrangements of political and judicial accountability of the EBA are identical to the ones provided by the constituting acts of the other two ESAs—the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). 11 The ESAs and the SRB are further subject to related reporting obligations to other stakeholders such as the ECB or the European Court of Auditors, in view of institutional and budgetary oversight, which together with political and judicial review piece a comprehensive accountability system, however these arrangements fall beyond the scope of the paper.

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their constituting acts. More concretely, agencies’ parliamentary examination falls within the competence of the Parliament’s Economic and Monetary Affairs Committee (ECON), and entails a range of reporting obligations for the ESAs and the SRB, such as annual performance reports (Art. 43(5), EBA Regulation; Art. 45(2), SRM Regulation) in addition to annual reports on work programs in the making (Art. 43(6), EBA Regulation; Art. 50(1)(a), SRM Regulation).12 Besides elaborating on annual plans and performances, reporting touches on a wide variety of topics pertinent to the discharge of agencies’ tasks and to their contribution to broader policy agendas (e.g. the role of the EBA in developing a common supervisory culture, or the interface between the SRB and the European Central Bank in the Banking Union). While the evaluation of agencies’ annual performance against legislative mandates bears indisputable relevance to political accountability, the scrutiny of planned work programs seemingly contradicts accountability’s ex post character. However, the ex ante reflection on proposed work programmes undeniably contributes to the retrospective assessment of whether agencies actually pursued pre-determined policy priorities (Busuioc 2013, p. 118). In this sense, parliamentary scrutiny also allows to reflect on agencies’ outcomes and actions in the context of their circumscribed mandates (Moloney 2018, p. 12), consequently contributing to the broader assessment on the lawfulness of agencies’ actions. The reflection on legality, leads to judicial accountability, and to Art. 263 of the Treaty on the Functioning of the EU (TFEU), which provides the CJEU explicit jurisdiction to review the legality agencies’ acts and decisions. The Court’s competence is further confirmed by agencies’ constituting acts (Art. 61, EBA Regulation and also Art. 86, SRM Regulation). In line with relevant legislative provisions, members states, EU institutions, natural or legal persons may institute proceedings against the decisions of the ESAs or the SRB in accordance with Treaty stipulations. The contestations raised can be process-oriented (for instance, agencies’

12 Given their reliance on EU budgetary funding (in addition to member states’ and industry contribution), the ESAs have to comply with additional reporting obligations toward the Commission and the European Parliament and the Council under the budgetary discharge procedure. As for the SRB, being a self-financed EU agency, it has no obligation to transmit budget proposals or plans for funding increases for additional staff to the Commission and the joint budgetary authorities. Thus, the SRB decides on discharge in respect of the implementation of the budget in its plenary session.

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omission to act, infringement of procedural requirements) or outcomerelated (for example, misuse of delegated powers). It is important to note however, that claims against agencies’ decisions can be brought before the CJEU only after they have been subject to the administrative review by the agencies’ internal appeal mechanisms, namely the joint Board of Appeal of the ESAs or by the Appeal Panel of the SRB (Art. 60, EBA Regulation; Art. 85, SRM Regulation).13 The quasi-judicial review of appeal mechanisms strengthens the agencies’ overall accountability, since these bodies are equipped with the specialist expertise required to reflect on the merits of specific decisions as well as with the capacity to timely correct identified failures (i.e. the right to remit decisions). Furthermore, agencies’ administrative (or quasijudicial) review not only provides additional reflection on complex policy issues but also functions as “a de facto filter” for the key stage of judicial accountability—the judicial review before the CJEU (Perassi 2018, p. 8). Indeed, it is a prerogative of judicial authority to check and curb agencies’ powers by disputing and analysing their acts and decisions, as well as by demanding legal remedies (Busuioc 2013, p. 196). However, the crisis-driven extension of agencies’ powers and mandates begun to challenge the effectiveness of the Court’s judicial review in unprecedented ways. For instance, in the context of the SRM framework, the Court’s lack of specialist knowledge in resolution matters frustrates the effectiveness of judicial review, while the Mechanism’s multi-level framework and compound legal basis opens the way to legal uncertainty (Lastra et al. 2019, p. 19).

13 As a separate procedure subject to specific rules, administrative review is performed by agencies’ internal bodies composed by “individuals of high repute” (Art. 58(2), EBA Regulation, and Art. 85(2), SRM Regulation) whose task is to provide a “robust, factbased“examination of agencies’ conduct that would otherwise be “challenging to deliver in the traditional judicial review context”. See in Moloney, N. (2018). The Age of ESMA— Governing EU Financial Markets (p. 84). Oxford and Portland: Hart Publishing. At the same time, proceedings may be instituted directly before the CJEU only in cases when agency decisions cannot be contested before its appeal body (Art. 61(1), EBA Regulation; Art. 86(1), SRM Regulation).

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3 Holding Power to Account: The Case of the Single Resolution Board 3.1

Political Accountability: Grappling with “Parliamentary Knowledge”, “Closed-Doors” and Limited Member State-Engagement

Alongside the Council, the European Parliament is one of the primary loci of the Board’s political accountability. This can be concluded from the rules of parliamentary scrutiny set in the SRB constituting act (Art. 45, and Art. 46, SRM Regulation). These rules mostly mirror the provisions set for the ESAs and, thus, centre the political review process on regular reporting and hearing obligations toward the Parliament’s competent ECON committee. As a result, one of the main channels of accountability is the annual report of the SRB, which is publicly transmitted and presented to the European Parliament, allowing it to review the report and address related questions on potentially ambiguous matters of resolution processes (Art. 45, SRM Regulation). At the same time, a closer look to the SRM Regulation reveals that democratic accountability arrangements of the SRB depart from standing practices, since they create new practical modalities of democratic oversight, such as “confidential oral discussions behind closed doors” (Art. 45(7), SRM Regulation) and establish relationships with new accountability forums, specifically with national parliaments (Art. 46, SRM Regulation).14 To this end regulatory provisions extend the legislative base of the Board’s accountability by stipulating an interinstitutional agreement between the Board and the European Parliament that will govern “the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the Board” (Art. 45(8), SRM Regulation). Concluded in 2015, the Interinstitutional agreement enhances the instruments of political scrutiny at the Parliament’s disposal in line with the SRB’s powers and capacity.15 Together with the SRM regulatory 14 Since the SRB relies on national authorities in executing its tasks (e.g. to feedback relevant information on the domestic banking sector) and considering that the Board’s decisions exert redistributive effects in SRM—participating member states, it was important to establish a direct accountability channel at member state-level. 15 Interinstitutional Agreement between the European Parliament and the Single Resolution Board on the practical modalities of democratic accountability and oversight over the exercise of the tasks conferred on the Single Resolution Board within the framework

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provisions this binding act, pieces a comprehensive framework of political accountability for the SRB that covers a wide array of issues from cooperation in ordinary public hearings, access to information on executives’ appointment procedures or related to the SRM funding facility (the Single Resolution Fund), to handling and protection of classified material, and modalities of confidential meetings. Practice shows that since the Board’s establishment, the Chair of the SRB has appeared before the ECON Committee quite frequently; at least twice annually, with a peak of four public hearings in 2016 (Fromage and Ibrido 2019, p. 83). Throughout this time, the hearings have been portrayed as occasions for the Board’s executive to present policy achievements and introduce policy priorities, rather than opportunities to “generate formal consequences or feedback” related to SRB actions in prudential matters (Moloney 2018, p. 89). Yet, the extent to which the Parliament is able to closely monitor the Board’s performance and “assign political responsibilities” is critical in light of the Board’s discretionary action and in terms of accountability as a legitimation mechanism (Busuioc 2013, pp. 115 and 116). The fact that the Board possesses specialist, technical knowledge in one of the most complex areas of banking prudential policy calls into question ECON’s capacity to carry out meaningful reviews. Even if it most certainly is an interested observer, the ECON Committee limits reviews to “high-level political checks” on the SRB, failing to provide a closer examination of the Board’s decisions to date (to paraphrase Moloney 2018, p. 92). The ECON’s restraint in engaging the Board’s executive in meaningful discussions (Busuioc 2013, p. 124) does not surprise, since not all ECON members dispose with an equal degree of prudential expertise. At times members who are competent in resolution matters struggle to ask clear-cut questions as these require “granular reporting metrics (…) against which accountability oversight can be exercised” (Moloney 2018, p. 96). Moreover, the SRB’s capacity to base its decisions on interpretative benchmarks, best illustrated by the criteria of “public interest”, complicates the monitoring of discretionary action. Judging by the current set of resolution decisions “public interest “roughly corresponds with financial stability, another regulatory outcome difficult to frame with specific performance metrics (Gadanecz and Jayaram 2009). Arguably, the criteria’s “open texture” of the Single Resolution Mechanism. Official Journal of the EU L 339/58, Brussels 24.12.2015; hereinafter “IIA”.

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(Moloney 2018, p. 93) is one of the more pressing challenges of political accountability arrangements. Therefore, the Interinstitutional agreement supports parliamentary engagement by providing that the Board has to transmit a “comprehensive and meaningful record” of its decision-making related to the resolvability of a bank to the ECON, in order to enable full understanding of its decision. Still, these records as well as the annual ECON hearings, fail to provide substantial reasoning on the presence or absence of “public interest” in concrete cases. Without the development of specific metrics that allow a common understanding of “public interest”,16 anxieties about the agency’s propensity to bureaucratic drift as well as legitimation concerns will persist (Moloney 2018, p. 95). In this sense, ECON’s parliamentary review could strive for greater conceptual clarity and highlight this point as an essential prerequisite to accommodate the Board’s discretionary action and legitimacy within the SRM framework. The 2015 Interinstitutional agreement provides an additional opportunity to elaborate the grounds of “public interest” through “confidential oral discussions behind closed doors” held between the Board’s Chair and the Chair and deputies of the ECON Committee (IIA, point 1–2). Given the Board’s discretion, closed-door meetings are important from the aspect of its purposeful democratic oversight, and indeed relevant provisions stipulate that confidential consultations will be held “where necessary for the exercise of Parliament’s powers under the TFEU and Union law” (IIA, point I-2). At the same time, it is almost impossible to ascertain their effectiveness in terms of political review, since no minutes or recordings of the meetings are available to broader ECON members, nor are public statements made. Confidential consultations are moreover problematic because they are inaccessible to stakeholders beyond the EU level of governance (Božina Beroš 2018, p. 79), which raises member states’ concerns about the authenticity of the European perspective to policies.

16 For instance: “the determination of some thresholds above which the public interest is presumed” with the advantage of reducing the agency’s discretion, since in this case the SRB—as well other stakeholders within the Mechanism—would know in advance whether resolution should be adopted in a concrete case. See in Lastra, R. M., Russo, C. A., & Bodellini, M. (2019). Stock Take of the SRB’s Activities over the Past Years: What to Improve and Focus on? EGOV DG for Internal Policies of the Union Study, PE 634.392, at p. 11.

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The SRM regulatory provisions tackle this issue to an extent, since they establish reporting obligations to national parliaments corresponding to the ones toward their European peer, such as annual performance reporting, the right to express “reasoned observations” and request information by the Board “orally or in writing”, as well as the right to invite the Board’s Chair to an exchange of views with national parliamentarians and national resolution authorities, regarding specific resolution cases and which the Chair is obliged to follow (Art. 46, SRM Regulation). However, the effectiveness of “strengthened” accountability arrangements before national parliaments (Fromage and Ibrido 2019, p. 85) remains unclear. First of all, national parliaments are known to display varying degrees of involvement in scrutinizing European policies and, indeed, to date the exchanges between national assemblies and the Board’s executive have been rare.17 Secondly, unlike the European Parliament that can assign consequences to the SRB by endorsing the removal of the Board’s executives (Art. 56(9), SRM Regulation), the political review of national parliaments is “toothless” in the sense that it cannot subject the SRB to some sort of sanctioning. This calls for reflection on whether accountability before national assemblies simply amounts to information providing “along the lines of Protocol No. 1 TFEU on the role of national parliaments in the Union” (Teixeira 2019, p. 147), which in turn casts doubts about the capacity of national parliaments to effectively hold the SRB to account. The backdrop of modest parliamentary involvement at member state level, together with ECON’s limited sanctioning powers underscores the importance of legal review processes. Although parliamentary review remains a cornerstone of agencies’ accountability in the EU, legal recourse “against the actions of the unelected” (Vibert 2007, pp. 172–173, as cited in Busuioc 2013, p. 197–198) is salient to uphold the democratic dimension of agency governance. Therefore, the following section turns to the Board’s judicial accountability.

17 There have been three hearings overall, one in 2015 before the German Bundestag,

one in 2015 before the French senate, and finally in 2017 a hearing before the Spanish Parliament concerning the first resolution case under the SRM. See Fromage, D., & Ibrido, R. (2019). Accountability and Democratic Oversight in the European Banking Union. In G. Lo Schiavo (Ed.), The European Banking Union and the Role of Law (p. 85). Cheltenham: Edward Elgar.

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Judicial Accountability: Coping with the Limits of Judicial Review

The possibility of effective judicial review is central to the Board’s accountability and to uphold the legitimacy of its actions considering that the Board has the capacity to decisively inform policy choices of delegating principals because of its relevant expertise. Practice shows that all resolution decisions adopted by the SRB thus far have been approved without hesitation by the European Commission. This in turn means that in the context of prudential policy-making post crisis the boundaries between agencies’ scientific advice and decision-making have been practically erased (Busuioc 2013, p. 192), which indeed raises legitimacy concerns. This is where judicial review steps in, allowing to hold the SRB accountable for the legality of its decisions before a judicial authority, thus sanctioning the misuse of discretionary powers (Scholten et al. 2017, p. 8; also see Duijkersloot et al. 2017) and keeping the SRB within set constitutional and doctrinal boundaries. To this end, Art. 86 of the SRM Regulation establishes that any natural or legal person, alongside member states and EU institutions, “may institute proceedings before the Court of Justice against decisions of the Board” in respect of procedural failures (e.g. omission to act) as well as policy outcomes. This provision follows that of Art. 263 TFEU establishing the possibility of legal review against legally binding acts of EU agencies. As sketched in the previous section, before instituting proceedings before the CJEU, specific decisions have to be contested before the Board’s internal Appeal Panel. Where there is no right of appeal, proceedings may be brought before the CJEU directly.18 Composed of individuals with proven professional experience and technical expertise in resolution policy, as well as substantive legal proficiency, the Panel can review the merit of the Board’s decision (Art. 85(8), SRM Regulation) and reflect on its legality (Art. 85(2), SRM Regulation).19 The Panel’s further insight into technical issues within 18 Resolution actions in respect of specific credit institutions may be brought directly before the CJEU. In addition, all decisions made by the Appeal Panel are contestable before the CJEU. See Lastra, R. M., Russo, C. A., & Bodellini, M. (2019). Stock Take of the SRB’s Activities over the Past Years: What to Improve and Focus on? EGOV DG for Internal Policies of the Union Study. PE 634.392., at p. 20. 19 In this sense, the Panel may also decide to suspend the application of the contested decision until the conclusion of the appeal procedure (Art. 85(6), SRM Regulation).

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resolution matters is binding to the SRB, so in this sense appeal procedures provide a straightforward instrument of quasi-judicial review that can promptly correct resolution failures (to paraphrase Lamandini 2014, p. 293). Still, the “full competence over the legitimacy” of the Board’s acts and decisions remains a prerogative of the CJEU’s judicial review process (Lamandini 2014, p. 290). To this end the CJEU also retains competence of preliminary rulings when it has received an official request by a member state’s judicial authority concerning the validity and interpretation of the SRB’s acts (Art. 267 TFEU; Recital 120, SRM Regulation). At the same time, because of the “duality of legal regimes at the national and European level” involved in resolution processes (Lastra et al. 2019, p. 19), national judicial authorities remain competent, in accordance with their national law, to review the legality of decisions adopted by national resolution authorities in exercising their powers within the SRM framework (Recital 120, SRM Regulation). The de jure provisions of EU primary and secondary law entail appropriate judicial accountability in respect of the SRB, since they clearly delineate readily available processes of (quasi) judicial review that can “check and curb“the agency’s acts and decisions. Practice confirms this perception, judging by the collection of claims against the SRB pending before the CJEU as well as of appeals reviewed by the Appeal Panel.20 Yet, the evolution of the SRB’s powers, as well as the “multi-layered” system of judicial controls (both EU and national) created by the SRM, reveals problematic issues in judicial accountability of the SRB. The first one concerns the limits of accountability before the CJEU (Busuioc 2013, p. 219) in light of the recent extension of agency powers. While the SRB’s specialist expertise and professional experience permit discretion in interpreting and assessing “public interest “and consequently deciding on bank business prospects, the Court can struggle with the technical reasoning (i.e. liquidity assessments) underpinning concrete decisions, which creates an unprecedented accountability gap. Scholars propose to offset this shortcoming by establishing separate court chambers equipped with specialist judges, therefore enhancing accountability in light of the Board’s heightened mandate (Lastra 2018, p. 12). In addition, greater legislative specification of “public interest” would give greater clarity to 20 Admittedly, the majority of appeals concern the agency’s decisions on access to documents, and in this sense are more important for the advancement of transparency standards than the quality of the SRB’s decisions.

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the Board’s discretion, and thereby support the effectiveness of judicial review as an accountability mechanism (Moloney 2018, p. 96). As judicial proceedings concerning resolution decisions are yet to be concluded, it remains unclear whether the Court will prove its ability to keep up with the SRB’s expanded mandate. At the same time, we have to bear in mind that the CJEU follows judicial restraint in assessing the Board’s decisions, limiting itself to the review of legality and not the merit. Indeed, the Court does not aim to “supplant or replace the decision taken” (Lastra 2018, p. 13) and from this perspective the Court’s limited expertise does not hinder effective judicial review nor weaken accountability. Moreover, the Court’s judicial restraint may even be justifiable considering that the Board is also subject to parliamentary scrutiny exercised by the specialised ECON committee, and that the robustness of the overall accountability system depends not only on the strength of individual arrangements but also from their interplay within the broader “accountability cycle” (Busuioc 2013, p. 260). The second issue concerns the complicated system of litigation put forward by the SRM’s multi-level and multi-actor framework. Since national resolution authorities retain specific powers within the SRM framework, a duality of legal regimes is introduced in resolution processes, which consequently creates a “multi-layered system of litigation” (Lastra et al. 2019, p. 19). In this system interested parties (e.g. creditors of banks resolved under the common framework) can present multiple claims to national and EU judicial authorities, generating legal uncertainty and undermining procedural effectiveness. The current high number of cases brought before the CJEU and before national judiciary regarding the resolution of Spanish Banco Popular, as well as the staggering number of cases disputing member state contributions to the Mechanism’s common financial backstop—the Single Resolution Fund— (Lannoo 2019, p. 17) are compelling illustrations of this concern. In order to safeguard the consistency of judicial review as well as facilitate the accessibility to legal recourse, a “clear hierarchy of claims“should be established, however this development falls beyond the purview of the CJEU (Lastra et al. 2019, p. 19). Arguably, the multiplicity of claims does not resonate with legal certainty in respect of judicial review processes, which then impairs judicial accountability.

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Conclusions

Since the euro area crisis, agencies have strengthened their position in EU banking governance thanks to increased public demands for greater policy credibility and to their capacity to feed specialist knowledge into policy-making processes, thus contributing to the depoliticization of policies. The development is best illustrated by the establishment of the SRB whose discretionary power brings it closer to the political sphere. Within politically salient and composite governance frameworks, such as the Banking Union, this raises anxieties about the agency’s potential to escape democratic control. Against this backdrop, purposeful accountability arrangements become imperative as they allow EU institutions and legislators to reconnect agency powers with Meroni-established principles as well as allow legal recourse against their actions (Simoncini 2017, pp. 61 and 62). In this sense, a closer look at the relevant legal provisions of SRM Regulation, confirms that the Board’s performance is subject to a robust system of political and judicial accountability, which largely builds on the system previously established for the ESAs. The political accountability remains chiefly in the hands of the European Parliament’s specialized ECON Committee (although, the Council and the Commission also exert democratic control), while the legality of the Board’s action is scrutinized by the CJEU. At the same time, the extension of agency mandates revealed shortcomings in the current arrangements of political and judicial review, calling for the development of innovative accountability provisions that will allow to check and curb the Board’s heightened powers. To this end, several novel relationships and practices of account giving have been introduced within the political review process, such as the extension of parliamentary hearings to the national level as well as the establishment of confidential consultations on sensitive information related to resolution. Although intended to intensify parliamentary engagement as well as to facilitate a responsive approach to legitimacy concerns (for instance, limits to parliamentary review because of confidentiality) their potential has been challenged by several problematic issues stemming from the complexity of resolution. In fact, this policy area requires specialist expertise from the accountability forum to assess actors’ performance adequately. Practice thus far reveals that parliamentary scrutiny (both at the EU and national level) has failed to engage the Board into meaningful

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discussions on resolution decisions, largely revolving around high-level policy goals, without closer inspection of the Board’s decisions and its reasoning. This is a weakness further exacerbated by the lack of precise performance metrics in respect of the SRB, particularly concerning the reasoning on the absence or presence of “public interest” in resolving of a specific entity. Together, the lack of specialist “parliamentary knowledge” (Busuioc 2013, p. 60) and clear-cut performance benchmarks (Moloney 2018, p. 92), impairs the accountability potential of these arrangements. Therefore, the ECON should adopt a proactive role in parliamentary hearings, striving for greater conceptual clarity in respect of the “public interest” through the development of specific metrics, in order to foster the purposefulness of political review. At the same time, the development of objective benchmarks will also benefit the engagement of national parliaments, which thus far, have showed limited interest in holding the SRB to account. Yet, the political review of the SRB exercised by national parliaments and national authorities is immensely important considering that confidential consultations are inaccessible to actors beyond the EU level, while the repercussions of bank resolution primarily affect national finances. Turning to judicial accountability, a general conclusion is that the SRB is framed by an appropriate system of judicial review with accessible and effective legal protection against the arbitrariness and unlawfulness of the agency’s actions. In this system, the CJEU is the chief judicial authority competent to examine and assess the legality of the Board’s acts and decisions, further aided by a practical mechanism of quasi-judicial review exercised by the agency’s internal Appeal Panel. Again, issues of adequate expertise and professional experience emerge as important challenges to the examination of judicial accountability arrangements highlighting the limits of judicial review of the SRB’s decisions (legality vs. merit of decisions). At the same time, it has been noted that the multi-level framework of the SRM presents additional concerns in respect of judicial accountability stemming from the potential legal uncertainty generated by the duality of judicial controls available within the SRM. While the revision of this problem falls beyond the purview of the CJEU, the weight of the Court’s limited expertise in terms of the efficiency of judicial review will

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only unravel after the adjudication of the cases against the SRB pending before the CJEU.

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Lastra, R. M., & Shams, H. (2001). Public Accountability in the Financial Sector. In E. Ferran & C. A. Goodhart (Eds.), Regulating Financial Services and Markets in the 21st Century (pp. 165–188). Oxford: Hart Publishing. Majone, G. (1996). Regulating Europe. Abingdon: Routledge. Moloney, N. (2014). European Banking Union: Assessing its Risks and Resilienece. Common Market Law Review, 51(6), 1609–1670. Moloney, N. (2018). The Age of ESMA—Governing EU Financial Markets. Oxford and Portland: Hart Publishing. Perassi, M. (2018). Judicial Review in the Banking Union and in the EU Financial Architecture. Conference jointly organized by Banca d’Italia and the European Banking Institute. Quaderni di Ricerca Giuridica della Consulenza Legale, No. 84.https://ebi-europa.eu/judicial-review-in-the-banking-unionand-in-the-eu-financial-architecture. Accessed 19 August 2019. Peters, B. G. (2014). Accountability in Public Administration. In M. Bovens, R. E. Goodin, & T. Schillemans (Eds.), The Oxford Handbook of Public Accountability (pp. 211–226). Oxford: Oxford University Press. Quaglia, L. (2019). The Politics of an ‘Incomplete’ Banking Union and Its ‘Asymmetric’ Effects. Journal of European Integration. https://doi.org/10. 1080/07036337.2019.1622541. Regulation (EU), No 806/2014 of the European Parliament and of the Council of 15 July 2014 Establishing Uniform Rules and a Uniform Procedure for the Resolution of Credit Institutions and Certain Investment Firms in the Framework of a Single Resolution Mechanism and a Single Resolution Fund and Amending Regulation (EU) No. 1093/2010, OJ L 225/1, Brussels, 30 July 2014. Rijsbergen, M., & Foster, J. (2017). ‘Rating’ ESMA’s Accountability: ‘AAA’ Status. In M. Scholten & M. Luchtman (Eds.), Law Enforcement by EU Authorities-Implications for Political and Judicial Accountability (pp. 53–81). Cheltenham: Edward Elgar. Rosenthal, C. (2018). Negative News for European Union Bank Failure Board. The Regulatory Review, 11 June. https://www.theregreview.org/2018/ 06/11/rosenthal-negative-news-european-bank-failure-board/. Accessed 6 August 2019. Schillemans, T. (2011). Does Horizontal Accountability Work? Evaluating Potential Remedies for the Accountability Deficit of Agencies. Administration & Society, 43(4), 387–416. Scholten, M., Luchtman, M., & Schmidt, E. (2017). The Proliferation of EU Enforcement Authorities: A New Development in Law Enforcement in the EU. In M. Scholten & M. Luchtman (Eds.), Law Enforcement by EU Authorities-Implications for Political and Judicial Accountability (pp. 1–27). Cheltenham: Edward Elgar. Single Resolution Board. ABLV. https://srb.europa.eu/en/content/ablv.

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Simoncini, M. (2017). Paradigms for EU Law and the Limits of Delegation. The Case of EU Agencies. Perspectives on Federalism, 9(2), 47–71. Tallberg, J. (2002). Delegation to Supranational Institutions: Why, How, and with What Consequences? West European Politics, 25(1), 23–46. Teixeira, P. G. (2019). The Future of the European Banking Union: Risk-Sharing and Democratic Legitimacy. In M. Chiti & V. Santoro (Eds.), The Palgrave Handbook of European Banking Union Law (pp. 135–152). Basingstoke: Palgrave Macmillan. The Banking Union and Union Courts: Overview of Cases as at 16 October 2019. https://ebi-europa.eu/publications/eu-cases-or-jurisprudence/. Accessed 9 December 2019. Vlachou, C. (2018). The Constitutional Challenges of the Agencification Process in the Context of the Banking Union (II): The Accountability of the Single Resolution Board. Revue de l’euro. https://resume.uni.lu/story/theconstitutional-challenges-of-the-agencification-process-in-the-c-1. Accessed 2 December 2019. Vos, E. (2018). EU Agencies, Common Approach and Parliamentary Scrutiny. European Parliamentary Research Service Study, PE 627.131. http:// www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_S TU(2018)627131. Accessed 8 August 2019. Vos, E. (2005). Independence, Accountability and Transparency of European Regulatory Agencies. In D. Gerardin, R. Muñoz, & N. Petit (Eds.), Regulation Through Agencies in the EU—A New Paradigm of European Governance? (pp. 120–137). Cheltenham: Edward Elgar. Vos, E., & Everson, M. (2014). European Agencies: What About the Institutional Balance? (Maastricht Faculty of Law Working Paper No. 4). https://papers. ssrn.com/sol3/papers.cfm?abstract_id=2467469. Accessed 8 August 2019. Weismann, P. (2016). European Agencies and Risk Governance in EU Financial Market Law. Abingdon,Oxon: Routledge.

PART III

EU Agencies and the Migration Crisis

CHAPTER 7

The European Border and Coast Guard Agency Frontex After the Migration Crisis: Towards a ‘Superagency’? Vittoria Meissner

1

Frontex and the Migration Crisis

The migration crisis of 2015–2016 shook the institutional foundations of the European Union (EU) and revealed a cracked Schengen system against which Member States (MS) were not able to find swift, common and effective solutions. In the turmoil of the crisis, the European Commission sought to address the challenges that were persisting

This chapter is based on the fourth and sixth chapters of my Ph.D. dissertation „European Union Migration Agencies at the Crossroads: Significant Empowerment after the Schengen Crisis?” 2020 Technische Universität München. I would like to thank my first supervisor, Prof. Dr. Eugénia da Conceição-Heldt and my second supervisor, Prof. Dr. Sandra Lavenex for their insightful and valuable feedback while writing my dissertation. V. Meissner (B) Institut für Europäische Politik, Berlin, Germany © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_7

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at the common EU external borders by proposing in 2015 its first European Agenda on Migration (COM(2015) 240 final). The Agenda rotated between various important short-term actions in the hope to immediately contain the crisis, such as the establishment of ‘hotspots’ in Greece and Italy to support the countries’ reception systems in managing the increasing flows of irregular migrants. Additionally, the Agenda called for a reinforcement of the agency Frontex—the institutional body that since 2005 has been in charge of managing the external borders of the EU—, in order to specifically assist EU MS in the Mediterranean Sea. Although the Commission’s 2015 Agenda had thus envisaged a reinforcement of Frontex’s operational tasks, the migration crisis soon called for more extensive and long-term solutions. As a result, in December 2015 the Commission submitted its proposal for the creation of a European Border and Coast Guard Agency (EBCG), which, once rapidly adopted by the Council of the European Union (henceforth the Council) and the European Parliament in September 2016,1 replaced Frontex’s old structure and significantly enhanced the agency’s mandate. This first comprehensive reform of Frontex was followed in November 2019 by the adoption of another Regulation that aims at strengthening Frontex’s role even further in the future.2 The experience of the Schengen crisis thus seems to have prompted EU institutions to delegate more powers to Frontex, consequently accelerating the agencification process in the shared border control policy.3 By adopting an historical institutionalist approach, this chapter explores the changes that the agency Frontex has undergone within the border 1 Regulation (EU) 2016/1624 of the European Parliament and of the Council of 14 September 2016 on the European Border and Coast Guard and amending Regulation (EU) 2016/399 of the European Parliament and of the Council and repealing Regulation (EC) No. 863/2007 of the European Parliament and of the Council, Council Regulation (EC) No. 2007/2004 and Council Decision 2005/267/EC [2016], OJ L251/1 (hereinafter referred to as ‘2016 Regulation’ or ‘Regulation (EU) 2016/1624’). 2 Regulation (EU) 2019/1896 of the European Parliament and of the Council of 13 November 2019 on the European Border and Coast Guard and repealing Regulations (EU) No. 1052/2013 and (EU) 2016/1624 [2019], L 295/1 (hereinafter referred to as ‘2019 Regulation’ or ‘Regulation (EU) 2019/1896’). 3 According to Article 4(2)(j) of the Treaty on the Functioning of the European Union (TFEU), “in the establishment of a common policy on border control the EU’s exercise of power is shared with the Member States. This means that the Member States can adopt legislation autonomously as long as the EU has not adopted legislation on the same matter” (Mungianu 2016, p. 20).

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control policy during the years immediately after the outbreak of the Schengen crisis,4 i.e. between 2016 and 2019. Following the historical institutionalist conceptualisation, the migration crisis of 2015–2016 is interpreted as a critical juncture in the agency’s institutional history, which allegedly originated a path dependent process that reinforced Frontex’s development into an ever stronger EBCG. In line with the overarching aim of this book, the chapter addresses the questions of how the migration crisis impacted on Frontex and what role the agency has performed since its transformation into the new EBCG. In order to answer these two driving questions, the chapter specifically compares the border agency’s mandate in terms of carried out tasks and available resources before and after the crisis. The upcoming section offers a brief overview of the current state of the art on the subject as well as an outline of Frontex’s mandate and resources prior to 2015. The third section explains how the migration crisis of 2015–2016 has impacted on Frontex by exploring the role of the agency as the new EBCG as well as the further enhancement planned for the agency according to the Regulation adopted in 2019.

2 The Need for a European Integrated Border Management: An Agency Is Born Ever since the creation of the Schengen area and the consequent abolition of internal border controls, the common integrated management of the EU’s external borders has become a political priority. While MS’ governments struggle in a continuous effort to keep the delicate balance between national security and economic growth within the Schengen zone, there is no doubt that the protection of the external borders of the EU has become an essential corollary to the free movement of EU citizens (e.g. Hobbing 2005; Meissner 2020, p. 156). Since December 2001, when in the shadow of the 9/11 terrorist attacks the Laeken European Council had discussed for the first time the need for an integrated border management (in short IBM) (European Council 2001), the EU has tried to guarantee and enhance efficient cooperation among MS in managing their common external borders. By involving all EU MS and not only those whose national borders coincide with the common external ones of the

4 This chapter interchangeably refers to the ‘Schengen crisis’ and the ‘migration crisis’.

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EU, the IBM would have allowed to counteract terrorism, human trafficking and illegal immigration, which corresponded to the so called ‘new’ security threats of the post-Cold war era. Initially, in the early 2000s, border control issues were dealt with at the supranational level by a Working Party of the Council, the Common Unit for External Border Practitioners, which accordingly had a strong intergovernmental character. However, the Common Unit was soon considered unsuited to fulfil its tasks as well as unaccountable for its actions (Commission of the European Communities 2003, p. 2). As a result, in 2004 upon a proposal of the European Commission, MS’ representatives sitting in the Council agreed to create a new permanent operational structure that would implement external border controls and enhance supranational cooperation: the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union—in short Frontex. The establishment of Frontex exemplifies the historical responsibility shift from the national level to the supranational one in sensitive areas as the one regarding border control. From a legal perspective, the ongoing agencification in the EU and the resulting reinforcement of the EU executive immediately raised important legitimacy questions (e.g. Scholten and van Rijsbergen 2014). By their very nature Frontex’s competences touch upon the sovereignty of EU MS and have consequently turned to be highly political, although MS tried initially to create a ‘light’ structure by establishing a regulatory agency with mere implementing powers. The increasing political importance of the agency already finds its evidence in the first years of its activity, when the agency experienced an extensive upgrading of its initial resources (both the agency’s total budget and staff, for instance, respectively more than tripled between 2005 and 2007) (Meissner 2020, pp. 121ff.). The relevance of Frontex’s work at and beyond5 the EU external borders continued to grow over the years, reaching its highest peak in 2015.

5 For an assessment of Frontex’s ‘external’ work with non-EU countries see for instance, Meissner (2017).

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State of Research

Since 2005, which corresponds to Frontex’s first operational year, scholars have widely researched the activities of the border agency (e.g. Carrera 2007; Ekelund 2014; Léonard 2010; Neal 2009; Niemann and Speyer 2018; Pollak and Slominski 2009). At the beginning of the agency’s history, academics were mainly engaging with questions regarding the securitisation of migration through the agency’s work (e.g. Léonard 2010) as well as the legitimacy and accountability of this European institutional body (e.g. Carrera 2007; Pollak and Slominski 2009). In the past decade, the core of Frontex’s mandate, i.e. the agency’s task of carrying out risk analyses, has received scholarly attention, in particular with regard to the agency’s overall impact on the EU MS’ decision-making in border control related issues (e.g. Horii 2016). After the migration crisis, Frontex gained again momentum in the academic debate and new studies were carried out on the topic, with a specific focus on the reform of the agency into its enhanced version: the EBCG (e.g. Carrera et al. 2017; Niemann and Speyer 2018). Another relevant strand of literature that complements the overall picture on the complex border control policy and the EU agency involved, engages with general questions on the Schengen crisis as well as the EU’s failed reforms in border control and the interrelated asylum policy sector (e.g. Biermann et al. 2017; Börzel and Risse 2018; Schimmelfennig 2018; Slominski and Trauner 2018). Against this backdrop, academia has presented interesting comparisons between the causes and outcomes of the Schengen crisis on the one side and of the Euro crisis on the other (e.g. Börzel and Risse 2018). These valuable insights refer however only marginally to the role of agencies after the crises, concentrating more on the intergovernmental processes within the broader migration policy (e.g. Schimmelfennig 2018). Other studies investigating the mandate of agencies in both the border control and asylum policy sectors argue that these bodies’ developments are the result of strong power asymmetries among the EU MS. These changes are thus once again analysed by shifting the focus from the agencies’ role to the power dynamics between MS impacting these bodies’ autonomy (see, for instance, Ripoll Servent 2018). With regard to those studies looking specifically at the case of Frontex after the crisis, some scholars have revived neofunctionalist explanations to shed light on the negotiations leading to the creation of the new EBCG

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(Niemann and Speyer 2018). Academic works have thus examined the new structure and mandate of the EBCG from different angles, rotating between sceptical evaluations (Carrera and den Hertog 2016) and more optimistic ones (Niemann and Speyer 2018). Yet, the possible conceptualisation of the agency’s development as a path dependent process and its broader implications for the border control policy’s future have received rather limited attention (see also Meissner 2020, pp. 242ff.). 2.2

Frontex’s Mandate Before the Migration Crisis of 2015–2016

Before and during the first months of the migration crisis, Frontex was an autonomous regulatory agency, that had just been delegated the minimum amount of power to ensure the coordinated control of the EU common borders. The agency had thus merely implementing tasks (see Meissner 2020, pp. 106ff.) and was highly dependent on the MS’ “goodwill” in carrying out its mandate, especially with regard to its personnel and material resources (Pollak and Slominski 2009, p. 920). The strong migration-security nexus (Faist 2005) has underlain Frontex’s mission ever since the agency’s establishment. Through its operational activities and the essential elaboration of risk analyses at the external borders of the EU, Frontex developed over the years an unmatched technical expertise in order to carry out the tasks foreseen in its establishing mandate. Ever since the early 2000s, EU regulatory agencies had been primarily created because of the specialized knowledge they would be able to provide in areas of growing complexity (see European Commission 2008) and because they would take on responsibility for political conflict, uncertainty and blame (Meissner 2020, p. 64; Thatcher 2011, p. 794). Borrowing from arguments of the international relations literature, the specialised knowledge and the experience gained over time ultimately determine how the agent behaves and how it is perceived by other institutional actors, namely as a depoliticised institutional body offering ‘objective’ information (Barnett and Finnemore 2004). In order to guarantee the necessary specialised know-how and depoliticised support to all MS in the border management field, in 2004 the Council had established Frontex through Regulation (EC) No. 2007/2004, immediately after the European Council had issued its “Declaration on Combating Terrorism” (for more information see European Council 2004). From the very beginning, security and the fight against

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illegal crimes at the EU’s common borders have been key aspects in shaping Frontex’s development (see also Meissner 2017). In line with what is stipulated in Art. 77(2)(d) of the Treaty on the Functioning of the European Union (TFEU), the EU needs to adopt any measure necessary for the gradual establishment of an integrated management system for external borders. The creation and continuous upgrading of Frontex fall within this commitment, following which in 2011 the Council and the European Parliament adopted first major changes to the agency’s mandate. Regulation (EU) No. 1168/2011 amended the agency’s mandate as enshrined in its 2004 Regulation by extending the agency’s scope of action, although simultaneously introducing a series of obligations primarily related to the respect of fundamental rights (Meissner 2020, pp. 111ff.). These amendments—which were followed by corresponding increases in Frontex’s budget and staff—were the result of the unprecedented migratory flows crossing the Mediterranean Sea in the aftermath of the Arab Spring and the civil war in Libya. An interesting assessment of Frontex’s 2011 amended mandate and its changed accountability can be found in Parkes’ study (2015) outlining the different policy agendas of the Council, the European Parliament and the Commission with regard to border control related matters. Specifically, the study highlights that the European Commission would usually adopt a securityoriented approach with regard to border control related matters, thus aligning itself with the Council, whereas the European Parliament would conversely advocate a more human rights-oriented approach (see also Meissner 2020, p. 156). The 2011 amendment to Frontex’s mandate displayed the growing MS’ need for European solutions as well as for supranational coordinated cooperation. The elaboration of the IBM, the related agency’s work and the geo-political events in the EU’s neighbourhood rapidly resulted in a system of interdependencies and collective problem-solving, to which MS could no longer renounce. The fast-paced changes in border control related matters during the past two decades needed to be accompanied by an equivalent enhancement of the agency in charge of implementing the EU’s common border management. By setting up Frontex in 2004, EU institutions had offered MS a new venue in which they could cooperate. The agency’s administrative board, i.e. Frontex’s Management Board, is the specific venue where 26 MS’ representatives and two representatives of the European Commission

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regularly meet to discuss and decide on border control related matters.6 The Management Board is thus the result of a delicate compromise between intergovernmental and supranational interests, which oversees the agency’s activity. Given the strong national influence in the agency’s board and despite the 2011 amendments, until 2016 Frontex was highly dependent on the MS’ willingness, especially with regard to its staff and technical equipment. In 2007, the European Commission had tried for the first time to circumvent such limits by proposing the establishment of Rapid Border Intervention Teams, a proposal that was eventually approved by the Council and the European Parliament (see Regulation (EC) No. 2007/2004). These teams were meant to assist MS only in case of emergencies and not to provide long-term assistance (Meissner 2020, p. 119). The availability of technical equipment was another critical aspect of Frontex’s mandate before 2016. In the 2009 external evaluation of the agency’s work, weaknesses and limits to the deployment of the Rapid Border Intervention Teams were ascribed inter alia to the lack of a sufficiently large equipment pool, indispensable for the agency to carry out its operations. Since MS were not bound to deliver the promised technical equipment, the agency could, as an ultimate resort, lease private equipment, but not dispose of its own (COWI A/S 2009, p. 7). In 2011, the Rapid Border Intervention Teams were renamed into European Border Guard Teams (in short EBGT). The EBGT were composed of selected experts contributed by each MS via a national pool, thus representing a pool of experts separate from the staff employed at Frontex’s ‘headquarters’ in Warsaw. According to the 2011 amended Regulation, each team member needed to be trained by the agency in relevant union and international law, including fundamental rights and access to international protection, in order to be deployed during the agency’s joint operations and other interventions. The crisis of 2010–2011 had already laid bare the link between external events (shocks ) and the resulting upgrade of Frontex’s role. The 2011 amendments to the agency’s mandate were a first timid attempt to intensify the agency’s work by expanding its tasks in the face of new challenges. However, comprehensive changes in Frontex’s overall structure and role would take place only later in the aftermath of the severe Schengen crisis. 6 Representatives from the UK and Ireland are invited to participate in the Management Board’s meetings. Norway, Iceland, Lichtenstein, and Switzerland participate in these meetings too as associated countries, but with limited voting rights (Meissner 2020, p. 110).

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Frontex’s Evolution: Towards a ‘Superagency’?

Border control issues fall under the overarching Area of Freedom, Security and Justice (AFSJ), which is the EU regulatory framework of policies on border checks, asylum and immigration and “one of the EU’s fastest expanding policy-making domains in the last two decades” (Meissner 2020, p. 2; see also Monar 2010). After the Schengen crisis, the responsibility in the border control policy has been increasingly shared between MS and the EU (e.g. Carrera et al. 2017). In line with these developments, the new Frontex, i.e. the EBCG established in 2016 through Regulation (EU) 2016/1624, has received more competences and more autonomy vis-à-vis the EU MS in the border control area. 3.1

How the Migration Crisis Impacted on Frontex: The Critical Juncture

The migration crisis reached the shores of the EU between the end of 2014 and the beginning of 2015, spreading rapidly to the rest of the continent and keeping national and EU institutions engaged throughout 2016. Frontline MS as Greece and Italy, which were heavily hit by the unprecedented migratory flows coming primarily through the Mediterranean Sea, increasingly lamented the solidarity deficit within the Dublin system7 (e.g. Carrera et al. 2017; Meissner 2020; Slominski and Trauner 2018). Although the numbers of irregular migrants entering the EU decreased after 2017, the crisis’ consequences are still noticeable at present. Greece in particular is yet struggling under the weight of humanitarian responsibilities and bureaucratic challenges (e.g. Blake 2019). The Schengen crisis of 2015–2016 displayed the difficulties encountered by Frontex in managing unexpected waves of illegal immigration. Against the challenges rising at the EU external borders, in 2015 Frontex had started to ask for more members of staff, especially with regard to its EBGT (Leggeri 2016).8 In 2016, numerous MS still refused to

7 For an overview of the main elements and contemporary reform proposals of the Dublin System, see European Parliament (2017). 8 Between 2015 and 2016, Frontex requested more than once staff reinforcements, as for instance at the hotspots in Greece. These requests were however only partially satisfied by EU MS (Agence Europe 2016).

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grant Frontex the right to carry out independent controls at EU external borders, fearing large sovereignty losses (Bossong 2019, p. 2). Besides the limited number of available experts, the agency was also lacking European Dactyloscopy (Eurodac) devices to register asylum seekers entering the EU.9 By the end of 2015, insufficient staff was evidently hampering Frontex’s work, especially at the hotspots in Greece and Italy, although in its 2015 Agenda on Migration the European Commission had clearly maintained the importance of reinforcing the agency’s operational activity as a direct and immediate response to the crisis (European Commission 2015, p. 3). In the light of these considerations, the Schengen crisis of 2015–2016 matches the historical institutionalist concept of ‘critical juncture’. A critical juncture corresponds to a specific point in time during which “key decisions (and key events in influencing those decisions) steering the system in one or another direction” are taken (Capoccia and Kelemen 2007, p. 369). The time juncture becomes critical when it triggers a path-dependent process by placing “institutional arrangements on paths or trajectories, which are then very difficult to alter” (Pierson 2004, p. 135). During these specific junctures, the probability that agents (as the EU institutions) might affect the outcome of interest is at its highest (Capoccia and Kelemen 2007, p. 348). The benefit of adopting an historical institutionalist approach lies in its focus on specific events and the causal logic behind its arguments. After a specific event, historical institutionalism accordingly expects relatively long periods of institutional path-dependent stability, which are then in turn punctuated from time to time by short phases of flux. The latter correspond to the mentioned critical junctures during which significant changes are possible (Capoccia and Kelemen 2007, p. 341; Meissner 2020, pp. 242ff.). By concentrating on time sequences, historical institutionalism allows to identify the Schengen crisis as a phase of institutional flux in the history of EU integration. The crisis of 2015–2016 produced innovation by generating enduring institutional changes, as for instance the creation of a new EBCG and its consequent enhancement. Building on the case of Frontex, one could shift the focus even further back in time 9 Mr. Leggeri announced that in the future Frontex would have “to develop its own resources, its own tool either of border guards, or of devices or operational assets. […] Indeed this agency Frontex and the new European and Coast Guard Agency need to have more means but also more powers [emphasis added]” (Leggeri 2016).

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and identify the 9/11 terrorist attacks as the original critical ‘external shock’ that in a context of heightened uncertainty triggered the establishment and subsequent development of Frontex (ibid.). Back then, MS and EU institutions were confronted with unexpected and hitherto unknown security threats, which ultimately called for institutional changes as the creation of the border agency. The same mechanism was then triggered later in time by similar junctures: a political crisis resulting from heightened security threats and uncertainty, which led in 2016 to ‘innovative’ decision-making (cf. Carrera and den Hertog 2016). Within the specific EU system, the European Commission in its role as EU Executive adopted a proactive strategy in the face of the crisis (as for instance through its 2015 Agenda on Migration) and made use of its right of initiative to enhance the overall EU executive powers. Following these assumptions, the Schengen crisis disrupted the status quo and created the opportunity for EU institutions to reinforce existing supranational institutional bodies as Frontex. Given political deadlocks and national inefficiencies in dealing with the crisis, this critical juncture favoured political conditions under which EU institutions could push for reform by enhancing the mandate of a relevant EU migration and home affairs agency working under the aegis of the corresponding Commission’s Directorate-General (i.e. Directorate B—Borders, Interoperability and Innovation) (see also Capoccia 2016). As a result, the role of the entire EU executive expanded during the crisis. External factors (the geopolitical momentum corresponding to the Schengen crisis) and internal ones (changed policy priorities) led to a series of decisional steps with regard to Frontex’s future: first, upon a call of the JHA Council in 2014 (Council of the European Union 2014), the Commission started through the earlier mentioned Agenda of May 2015 to take concrete steps towards the reinforcement of Frontex’s border surveillance operations (European Commission 2014). The Agenda was then followed by the Commission’s proposal on a new EBCG (COM(2015) 671 final), which was eventually adopted by the Council and the European Parliament in September 2016. Domestic and supranational interests related to border control issues (e.g. Council of the European Union 2015, p. 2; European Parliament 2018) played into the structuring of the new EBCG. Yet, the management of irregular migration does not translate into border control alone. After the Schengen crisis the work of the agency has expanded in other areas as well, such as rescue or return activities. The know-how that

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Frontex had already accumulated within these specific areas as well as the increasing dependence of national authorities on a supranational coordinating structure shaped the agency into a fast-changing and strengthened organisation (Meissner 2020, p. 143). Although the lack of fair responsibility-sharing among countries in the EU led between 2015 and 2016 to a solidarity crisis within the borders of Schengen, with regard to the enhancement of supranational border controls, all MS eventually found a common interest in strengthening Frontex. The initial reluctance of MS to transfer their powers in sensitive policy areas as the ones touching upon security and migration issues made room for a more supranational approach in border related matters, leading to a significant reform of the involved agency. 3.2

The Role of the New European Border and Coast Guard Agency: A Path Dependent Process?

Whereas a critical juncture corresponds to an alleged brief phase of change producing a certain outcome, the consequent path-dependent process represents the further institutional steps over the medium or long run, which are likely to reinforce that specific outcome. The concept of ‘path dependence’ refers thus to a process in which a structure that prevailed after a specific external shock in time shapes the subsequent institutional developments along a certain trajectory (Fioretos 2011, p. 376). This ‘incremental process’ entails also unintended consequences that might reinforce an “existing institutional equilibrium over time” (Meissner 2020, p. 242). Along this line of thinking, the migration crisis of 2015–2016 determined the transformation of Frontex into the EBCG, a change that was then reinforced in 2019 by an additional reform (more details follow below). Compared to the earlier mentioned Common Unit, which was a purely intergovernmental structure within the Council, the contemporary EBCG could be considered, in historical institutionalist terms, an unintended consequence of supranational negotiations that had taken place in the early 2000s. When MS established the border agency in 2004 as a mere coordinating structure, they had not envisaged its enhancement into an EBCG. Specifically, during the establishing phase of Frontex the Commission had already tried to propose the creation of a common ‘European border police’, based on suggestions made by Italy and later supported also by Belgium, France, Germany and Spain. At the same

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time, however, other countries such as the UK had opposed the project and eventually all MS had agreed on more moderate solutions: first on the Common Unit and then on an implementing border control agency (Jorry 2007, pp. 7ff.; Meissner 2020, p. 137).10 Contrary to what MS had initially agreed upon, the current EBCG has been delegated extensive powers, as for instance by having a right to intervene in a MS’ territory, given an emergency at the EU external borders, upon a decision of the Council and without needing the involved country’s approval. A further benefit of examining the development of Frontex through the lenses of historical institutionalism is that the approach allows to distinguish between ‘transformational change’, as the one produced by the crisis, and ‘incremental process’, which might follow the outcome of change. The latter concept refers to the mentioned unintended consequences that over time are likely to reinforce a new institutional equilibrium (Meissner 2020, p. 242). According to these assumptions, the further reinforcement of the EBCG in 2019 could be regarded as such an incremental process. 3.2.1 The Reform of 2016 In December 2015, the European Commission submitted a proposal to revamp and reform Frontex’s mandate (COM(2015) 671 final). In “record time”, the Council and the European Parliament agreed on the text and adopted Regulation (EU) 2016/1624 (Carrera et al. 2017, p. 43), based on which the EBCG can rely on an extensive delegation of power. Compared to the past, since 2016 Frontex exercises more influence in the border control policy by carrying out comprehensive risk analyses as well as vulnerability assessments and by relying on an increased number of staff, which grew from a total of 35 in 2005 to 655 members in 2017 (Meissner 2020, pp. 121 and 172). The overall budget of the EBCG has also been accordingly increased. In 2017, Frontex was allocated a total amount of approximately e 280 Million, which compared to the initial budget of e 6 Million registered in 2005 represents an enormous increase of more than 4500% (ibid., p. 124). Moreover, the upgraded Frontex has the task to evaluate the security capacity of EU 10 For more details see the Council’s document on the “Plan for the Management of the External Borders of the Member States of the European Union” available online under http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2010019% 202002%20INIT (last accessed on 3 March 2018).

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MS, in order to safeguard “a vital common interest” of the EU (Leggeri 2018). Whereas according to its initial mandate Frontex was merely ‘supporting’ MS in the management of the external borders, for the first time the 2016 Regulation clearly defined the external border management as a shared responsibility of the EU and its MS. Furthermore, it conceptualised in detail the IBM, envisaging a broader mandate for the agency (Meissner 2020, p. 111). One of the EBCG’s most important tasks is related to the aforementioned vulnerability assessments, which the agency carries out to determine the readiness of MS in facing challenges at the EU external borders (Art. 8(b) of the 2016 Regulation). Conversely to what the Commission’s proposal of 2015 had initially foreseen, namely larger powers for both Frontex and its Executive Director with regard to this task (recital 13, COM(2015) 671 final), the final text of the adopted Regulation shifted again relevant decisional power to the MS’ representatives sitting in the agency’s Management Board. As a result, if a situation requiring urgent action arises at the EU external borders, the European Commission needs to take action by first consulting Frontex and then, upon this consultation, by proposing a decision that has to be approved by the Council. Within this process, the European Parliament has to be merely informed of the situation and of all subsequent measures and decisions thereof (Art. 19(2) of the 2016 Regulation). These specific institutional steps related to the ‘vulnerability assessment’ thus seem to recreate a power imbalance between the Council and the European Parliament as had been the case in Frontex’s establishing regulation of 2004 (Meissner 2020, p. 129). Despite the strong intergovernmental influence, the new 2016 mandate opened up for Frontex the possibility to reach new levels of influence on national ground (cf. Carrera and den Hertog 2016). The monitoring role of Frontex and its resulting influence over MS was enhanced by the additional deployment of liaison officers to EU countries (at the time of writing 11 in total, since most liaison officers are usually responsible for more than just one country in the same region). In the past, the agency had already relied on the work of its liaison officers, who were however exclusively posted in third countries and in Brussels to exchange information with foreign immigration services in the fight

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against illegal immigration.11 At present, the added objective of this staff category is to ensure close communication between the agency and the EU MS as well as to keep reporting on a regular basis to EU institutions, specifically the Commission. The corresponding enhanced monitoring powers of the agency over EU countries follow a horizontal approach, since each liaison officer represents the border agency across Europe, displaying the agency’s “constant presence on the ground” (Meissner 2020, p. 130). With regard to the overall agency’s capabilities, the 2016 Regulation introduced two important novelties. First, a rapid reaction pool of European Border and Coast Guard Teams representing a standing corps to be rapidly deployed in the agency’s joint operations and border interventions. Second, the establishment of an unprecedented technical equipment pool to reinforce the co-ordinating activities of the agency, in particular of the migration management support teams at hotspot areas. The creation of hotspots in both Greece and Italy upon the Commission’s Agenda on Migration foresaw numerous new tasks for the agency, which were then taken over in the EBCG’s mandate. At the hotspots, Frontex is expected to support the host MS by screening, registering, and fingerprinting third country nationals entering the EU and by providing mobile offices for its experts, who have a duty to debrief each asylum seeker (Meissner 2020, p. 117). After the migration crisis and the consequent 2016 reform of Frontex into the EBCG, not only were the tasks of the agency expanded, but its autonomy seems to have increased too. In particular, the new right to intervene on a MS’ territory was conferred on the agency besides the availability of the earlier mentioned rapid reaction pool, which would be composed of a minimum of 1500 border and coast guard officers. Moreover, the agency was turned into a ‘return agency’ by being conferred wide competences in this realm through the creation of a new pool of return experts (Art. 29ff. of the 2016 Regulation). Still, critics stressed that despite these innovations Frontex’s remit remained limited, given that the agency was not provided with its own staff and that it could not exercise “direct executive powers” (Carrera et al. 2017, p. 48).

11 Regulation (EC) No. 377/2004 of 19 February 2004 on the Creation of an Immigration Liaison Officers Network [2004] OJ L64/1 (Council of the European Union 2004).

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3.2.2 The Reform of 2019 Given the enduring limitations of the border agency, in September 2018 the European Commission made another swift attempt to reinforce the young EBCG (COM(2018) 631 final). The corresponding official proposal of the EU Executive, which was presented at an informal summit of EU leaders to give the EBCG an even stronger mandate by 2020, found however little enthusiasm, given the numerous challenges that the EU had to simultaneously face on different fronts (e.g. the Brexit negotiations) (European Council 2018). According to the Commission’s new proposal, first the EBCG, specifically its standing corps, should have been granted executive powers such as “authorising or refusing entry at the external borders” under the control of the hosting MS. Second, the EBCG’s already upgraded tasks on return should have been expanded further, by allowing the agency to prepare return decisions for national authorities while organising and financing joint return operations. Yet, MS would continue to be responsible for taking the final return decision (European Commission 2018b). A third important novel aspect of the 2018 proposal was the envisaged reinforced agency’s cooperation with third countries. After concluding a specific working arrangement with the country in question, the enhanced EBCG should have been able to organise joint operations outside the EU and beyond the territories of neighbouring countries (European Commission 2018b). These three major clusters of change should have enabled the new planned ‘superagency’ to eventually achieve the necessary equipment, both in terms of tasks and capabilities, and thus effectively face emergencies at the common EU borders. The heads of state and government meeting informally in Salzburg in September 2018 analyzed the outlined EBCG proposal. The summit hosted by Austria laid bare once again the reluctance of frontline MS, specifically Greece, Italy and Spain, towards a further reform of the EBCG. In particular, these countries feared that by delegating more powers to Frontex they would have to further limit their own sovereignty. Hence, in order to implement these major structural changes and make the EBCG fully up to its tasks, certain member states—as maintained back then by the Austrian Chancellor—would have needed to convince other important EU players about the necessity of such reforms (Agence Europe 2018). Eventually, after the 2018 summit and three years after the peak of the migration crisis, the European Parliament and the Council adopted

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Regulation (EU) 2019/1896 to additionally expand the EBCG’s role. Border control is the “lowest common denominator” on which the EU and its MS seem to eventually always reach an agreement (Bossong 2019, p. 1). The main innovation introduced by the 2019 Regulation on the EBCG is certainly the commitment to “gradually but swiftly” setting up a standing corps of 10,000 operational staff with executive powers by 2027 (Regulation (EU) 2019/1896, recital 5 and Annex I). The standing corps should be composed of four categories of staff, namely (1) staff seconded to Frontex by the MS in the long term (whereas in the past this option had been explicitly discarded); (2) staff seconded by MS for short-term deployments; (3) reserve staff for rapid reaction for rapid border interventions; and finally (4) a category of statutory staff directly employed by the agency (ibid., recital 58 and Art. 54). It is this latter category of staff that will be granted additional competences, as the exercise of executive powers and direct involvement in operations, instead of carrying out mere coordinating activities (Art. 55 of the 2019 Regulation). The six Annexes to the 2019 Regulation outline an eight-year plan, which establishes the specific annual targets to be met by each MS, in order to reach the final set number of 10,000 staff members by 2027. Although the 2018 proposal of the Commission had planned for MS to contribute short and long term staff to the agency on a mandatory basis for any kind of operation (rapid border interventions and not) (European Commission 2018a, p. 4), in the case of regular joint operations the reformed EBCG still depends on the MS’ goodwill. In the time period between 2021 and 2027, the growing number of staff members should be accompanied by a corresponding increase of the agency’s budget. As a result, for 2020 the European Commission has already planned a budget increase for Frontex of approximately 33% compared to 2019 (Council of the European Union 2019). The 2019 Regulation changed the border agency’s role also with regard to return operations, which the upgraded EBCG will be able to organise independently. The agency will thus no longer just have a coordinating role as established in its previous mandate, but be increasingly engaged in the return activities of EU MS in order to step up the effective return of irregular migrants.12

12 For further details on the “Action by the Agency in the area of return” see section 8 of the 2019 Regulation.

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Finally, in the adopted text MS made a more general commitment to intensify their cooperation with the agency in view of an effective implementation of the IBM (see also Bossong 2019, p. 2). For this purpose the Regulation sets out a four-stages multiannual strategic policy cycle (Art. 8), by means of which the Commission and the EBCG will lay down strategic guidelines and policy priorities to coherently and systematically address border management and return challenges. The overarching aim of the 2019 reform is to allow Frontex to contain future migration crises looming on the EU’s horizon, before they spread out to the entire continent as has been the case in the past. However, when looking at the current status of the EBCG and as highlighted in recent studies (Bossong 2019, p. 2), Frontex is still working on completing the creation of a standing corps of 1500 (as established in its 2016 Regulation) as well as setting up its enhanced technical equipment pool. In the agency’s general report for 2018 it was stated that Frontex yet needed to reach the number of 1000 operational staff by 2020, a target year that had been also foreseen in the Commission’s proposal (European Commission 2018a, p. 157). The ‘gradually but swiftly’ imperative of transformation as enshrined in Frontex’s 2019 Regulation seems to be slowed down—and possibly even hindered—by reality. Despite the growing problems within the migration policy, which would demand foremost for a comprehensive renovation of the Common European Asylum System, reforms continue to be advanced with regard to border control only. Consequently, the common migration policy of the EU is becoming growingly unbalanced, not just because of the ‘unfair’ sharing of responsibility between its MS, but also because of the partiality with which the EU undertakes reforms in the overall AFSJ— that is by prioritising border control over asylum issues (see also Meissner 2020).

4

Conclusion: Frontex Caught Between Borders

The Schengen crisis of 2015–2016 represented a decisive turning point in the history of European integration and in the institutional structure of the EU border agency. Compared to its ten-year existence prior to the crisis, Frontex experienced major upgrades within just three years. In the light of the supranational challenges growing at the EU borders, EU institutions and MS found in record time a mutual agreement on how

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to expand the remit of the agency and significantly increase its capabilities. The adoption of the two Regulations in 2016 and 2019 attests the remarkable fast-paced development of Frontex after the migration crisis, which worked as a catalyst of the agency’s evolution. By issuing these two official documents, EU institutions seem to have paved the way for the border agency to transform from a small implementing and coordinating structure into a possible ‘superagency’ with 10,000 staff members and wide executive powers. Yet, numerous challenges are attached to the implementation of such comprehensive changes. The first problem relates to the employment of an increasing number of border guards. On the one side, it might be difficult to find a high number of well-trained and qualified border guards; on the other side, given that Frontex’s seat is in Warsaw, the agency’s human resources department has always struggled with recruiting, due to the rather unattractive employment conditions in Poland compared to other EU countries (Meissner 2020, p. 178).13 A further problem regards the actual powers of the agency, which still needs to rely on the MS’ support, and the linked different, sometimes contrasting, MS’ policy agendas, which hamper an already weakened common migration policy in the EU. This chapter identified the Schengen crisis of 2015–2016 as a critical juncture during which EU institutions, specifically the European Commission, found enough leeway to pass comprehensive reforms strengthening the executive powers of the EU. Two set of factors set the context for supranational institutional change to occur, namely national inefficiencies in MS overwhelmed by the crisis and the European Commission’s drive to safeguard the Schengen area. In the specific case of Frontex, the turbulent years of the crisis seem thus to have triggered a path dependent process, which stemmed from the establishment of the new EBCG replacing the old border agency’s structure. After only three years since the 2016 reform, the newly set up EBCG was—or at least is planned to be—transformed again into an even stronger version. Although at the beginning of the agencification process in the early 2000s MS had meant to keep agencies in the AFSJ realm weak, fearing sovereignty losses in sensitive security-related issue areas, Frontex has been remarkably empowered in very little time and is meant to grow 13 The coefficient rate as established in the EU Staff Regulations (Regulation No. 31 (EEC), 11 (EAEC) of 2014) determines a lower salary in Poland, where the headquarters of Frontex are located.

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significantly by 2027. Nonetheless, it remains to be seen whether the path dependent process will keep running and continue to reinforce the institutional changes introduced through the establishment of the EBCG, since the path towards the creation of a ‘superagency’ appears to be fraught with numerous challenges. The ever-present imbalance between frontline MS and other EU countries as well as the prioritisation of actions at the border (such as return activities) rather than behind the border (e.g. an effective and fairly shared processing of asylum applications) is not yet solved. In order for the agencification process to show its benefits, the ‘hobbling’ Schengen system needs a long term and viable vision in all related policies. The reintroduction of internal border controls during and even after the Schengen crisis is the symptom of an increasingly uncertain policy context that calls for comprehensive reforms related to migration. Up until now, such reforms have taken place in the border control policy sector but not in the adjacent one dealing with asylum issues. The fast supranationalisation process testified by the increasing delegation of power to Frontex in the border control area will remain a failed attempt to achieve more EU integration and to improve the functioning of the Schengen area, if the EBCG’s continuous upgrade is not accompanied by overarching and extensive reforms in the overall EU migration policy.

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CHAPTER 8

Beyond the ‘Migration Crisis’: The Evolving Role of EU Agencies in the Administrative Governance of the Asylum and External Border Control Policies Evangelia (Lilian) Tsourdi

1

Introduction

EU agencies are now at the forefront of policy implementation in EU’s migration, asylum and external border control policies. The initial implementation design foresaw that national executives assume responsibility in the main for the application of European law. It was therefore broadly

This work was supported by a VENI programme grant (project Nr. VI.Veni.191R.040) which is financed by the Dutch Research Council (NWO). The author would like to thank the editors of this volume Johannes Pollak and Peter Slominski for their useful comments on earlier versions. All errors remain my own. E. (Lilian) Tsourdi (B) Faculty of Law and Maastricht Centre for European Law, University of Maastricht, Maastricht, The Netherlands © The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_8

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underpinned by the theory of executive federalism (Lenaerts 1993, 28).1 This theory can be summed up as follows: apart from exceptional cases where the EU level directly implements policies (direct implementation), national executives assume responsibility in the main for the application of European law (indirect implementation) (Schwarze 2006, 8). Strictly applied, this leads to a neat division of labor for most policies, where legislation is adopted at EU level, and the implementation of EU law is a matter of predominantly national concern. The realization of a common policy is thus secured primarily through legal harmonization, aided by the Court of Justice of the European Union (CJEU) as the authoritative interpreter of EU law. Exceptionally, the Commission is involved in its role of guardian of the treaties, to pursue infringements of EU law. The theory of executive federalism, however, increasingly fails to capture the reality of implementation of EU law, and the intricate links that increasingly exist between the EU and the national levels. Institutionalization of practical cooperation through EU agencies has begun to unsettle the initial implementation paradigm. These developments were further catapulted by the 2015–2016 spike in arrivals of third country nationals and stateless persons at the EU’s external borders, many of them with international protection needs, for example, fleeing persecution or generalized violence. Notably, Member States detected 1.82 million irregular border crossings in 2015, especially on the socalled Eastern Mediterranean route between Turkey and the Greek islands in the Eastern Aegean Sea (885,386 crossings) (Frontex 2016, 6) and through the so-called Central Mediterranean route to Italy (154,000 crossings) (ibid.). These increased arrivals overwhelmed the EU and triggered several political and legal reactions at the national level. While it has been referred to as a ‘migration crisis’, the aftermath of the increased arrivals was rather a governance crisis revealing weaknesses in the implementation design of these policies and political rifts among the Member States on the issue of migration (Tsourdi 2020a; Thym 2016; Trauner 2016).

1 Lenaerts describes ‘executive federalism’ in the following sense: ‘[T]he division of powers between the central government and the component entities is not just one defined in terms of areas in which each government holds substantive competence, but relates also to the split between the central government holding the legislative power and the component entities holding the executive power in a given area’.

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Against this backdrop agencies have come to the forefront for two primary reasons: to overcome the policy implementation gap, and to enhance interstate solidarity. Focusing specifically on the de jure and de facto mandate expansion of the European Asylum Support Office (EASO) and the European Border and Coast Guard Agency (EBCG, commonly referred to as Frontex), two broad trends become apparent: Firstly, the operational expansion of EU agencies’ mandates has led to patterns of joint implementation, with their staff and experts deployed in fields such as border control, returns and the processing of asylum claims. Secondly, their mandate has expanded to encompass functions that far exceed support, including operational support and administrative cooperation. Reference is made to monitoring-like, as well as to functions which have the potential to steer policy implementation. Given the member states’ support for increased agency involvement these two trends will only intensify. They may well become the precursor of more radical shifts in the implementation modes of these policies. Nevertheless, in the immediate future these agencies will need to find responses to several challenges, such as resourcing, independence, accountability and respect for fundamental rights. In my contribution, firstly, I scrutinize the emergence of joint implementation patterns, as well as monitoring-like functions, and functions with steering potential. Thereafter, I outline key challenges for these two agencies: balancing joint implementation with supervision; ensuring fundamental rights oversight and accountability; and squaring their internal governance structures and independence. I adopt an interdisciplinary approach drawing both from legal analysis and political science theories, while also referring to administrative practice as documented in secondary sources. I conclude with overall critical remarks on the evolving administrative landscape and the resulting challenges from the rise of agencification in the migration field.

2

The Expanded Mandate of FRONTEX and EASO: Beyond Support

There is a qualitative difference between the developments concerning FRONTEX and EASO; while the mandate expansion of the former has taken place de jure, EASO’s mandate expansion has taken place de facto. The FRONTEX Regulation has undergone a series of legislative amendments since member states adopting the agency’s founding document in

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2004.2 Notably, the instrument was amended consecutively in 2007,3 2011,4 2016,5 and most recently in November 20196 -the legal document which is currently in force. The 2016 amendment marked the passage to a ‘European Border and Coast Guard’ which, despite its denomination, does not aim to replace national border guard units centralising external border management, remaining essentially ‘a new model built on an old logic’ (De Bruycker 2016). Nevertheless, the 2019 Regulation enounces European integrated border management as ‘a shared responsibility of the Agency and of the national authorities responsible for border management’, while recognising in the same article that ‘Member States shall retain primary responsibility for the management of their sections of the external borders.’7 In the case of FRONTEX, patterns of joint implementation had long preceded the ‘migration crisis’ but they intensified after its advent. As for monitoring functions and functions with steering potential these were mainly introduced through the 2016 amendments to the agency’s regulation.

2 Council Regulation (EC) No 2007/2004 of 26 October 2004 establishing a European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union, OJ L 349/1. 3 Regulation (EC) No 863/2007 of the European Parliament and of the Council of 11 July 2007 establishing a mechanism for the creation of Rapid Border Intervention Teams and amending Council Regulation (EC) No 2007/2004 as regards that mechanism and regulating the tasks and powers of guest officers, OJ L 199/30 (hereinafter: 2007 FRONTEX Regulation). 4 Regulation (EU) No 1168/2011 of the European Parliament and of the Council of 25 October 2011 amending Council Regulation (EC) No 2007/2004 establishing a European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union, OJ L 304/1. 5 Regulation (EU) 2016/1624 of the European Parliament and of the Council of 14 September 2016 on the European Border and Coast Guard and amending Regulation (EU) 2016/399 of the European Parliament and of the Council and repealing Regulation (EC) No 863/2007 of the European Parliament and of the Council, Council Regulation (EC) No 2007/2004 and Council Decision 2005/267/EC, OJ L 251/1, (hereinafter: 2016 EBCG Regulation). 6 European Parliament and Council (2019), Regulation (EU) 2019/1896 of the European Parliament and of the Council of 13 November 2019 on the European Border and Coast Guard and Repealing Regulations (EU) 1052/2013 and (EU) 2016/1624, 2019 O.J. L 295/1 (hereinafter: 2019 EBCG Regulation). 7 2019 EBCG Regulation, Art. 7(1).

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On the other hand, EASO’s founding regulation adopted in 2010 remains unaltered.8 The Commission issued a proposal for a revamped European Union Agency on Asylum (EUAA) in 2016.9 The two colegislators, i.e. the Council and the European Parliament, reached a political agreement for several chapters of the EUAA proposal in late 2017.10 In the meantime, the Commission released in 2018 an amended proposal11 containing only targeted amendments reinforcing the operational tasks of the EUAA. In February 2020, however, negotiations on a number of contentious issues remain pending and the fate of the proposals remains uncertain. Therefore, in the case of EASO patterns of joint implementation emerged de facto shortly before the advent of the ‘migration crisis’ and were catapulted by it. Monitoring-like functions are merely envisaged as part of its future mandate. As for functions with steering potential, the agency currently only possesses functions with an indirect steering potential, while further developments are envisaged as part of the EUAA mandate. The mandate expansion has not altered these agencies’ initial functions of information-exchange, practical co-operation etc. (e.g. training activities). In my contribution though, I do not cover exhaustively the entirety of activities these agencies undertake. Instead, I only focus on their novel functions of joint policy implementation; monitoring; and functions with steering potential. These functions signal the emergence of an integrated European administration and mark a significant turn, both qualitative and quantitative, in the role of these agencies in the administrative governance of the EU asylum and EU external border control policies. The next sections retrace these developments, classifying relevant functions under the three conceptual categories. 8 Regulation No 439/2010 of the European Parliament and of the Council of 19 May 2010 Establishing a European Asylum Support Office, 2010 O.J. (L 132/11) (hereinafter: EASO Regulation). 9 See European Commission. (2016). Commission Proposal for a Regulation of the European Parliament and of the Council on the European Union Agency for Asylum and Repealing Regulation (EU) 439/2010, COM (2016) 271 (hereinafter: EUAA proposal). 10 The partial agreement was included as an Annex I to Council of the European Union, Doc. 10555/17, (hereinafter: EUAA partial agreement). 11 European Commission. (2018). Amended proposal for a Regulation of the European Parliament and of the Council on the European Union Agency for Asylum and repealing Regulation (EU) No 439/2010. COM(2018)633 (hereinafter: EUAA 2018 amended proposal).

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Patterns of Joint Implementation: An Emerging Integrated European Administration?

Joint implementation patterns, i.e. agency and/or deployed national experts working alongside national authorities implementing EU’s external border control policy, have been part of the functioning of FRONTEX since early on. The 2007 version of its Regulation already established the initially called ‘Rapid Border Intervention Teams’ and regulated the modes of operation of deployed experts.12 Over time the volume of resources available to the agency, whether human or financial, has grown exponentially. By deploying operational personnel (made available through member states’ administrations or own personnel) and equipment (made available through member states or its equipment), FRONTEX enhances the human and financial resources of individual member states by drawing from the EU budget. Nevertheless, the operational element was initially tied down to the notion of emergency, rendering it—in theory—an exceptionality, given that the entire operationalisation of the solidarity principle under Art. 80 TFEU was emergency-driven (Tsourdi 2017). However, the EU seems to be moving away from such emergencydriven conceptions of agency involvement (and indirectly of intra-EU solidarity and fair sharing). This is exemplified by FRONTEX’s move to increase its operational (i.e. statutory) staff to 3000 by 2027, while the number of staff to be provided by member states for long-term secondments (i.e. minimum of 24 months, extendable once for an additional 12 or 24 months) should reach 1500 by 2027, and for short-term deployments should reach 5500 by 2027.13 The total would amount to 10,000. These numbers point to structural involvement in policy implementation, and consequently to structural forms of interstate responsibility-sharing. The new enhanced role of FRONTEX in return policy, including in

12 2007 FRONTEX Regulation. For commentary on one of the first such deployments see Carrera, S., & Guild, E. (2010). Joint Operation RABIT 2010’: FRONTEX Assistance to Greece’s Border with Turkey: Revealing the Deficiencies of Europe’s Dublin Asylum System. Brussels: CEPS; for a global appraisal see Rijpma, J. J. (2017). Frontex and the European System of Border Guards: The future of European Border Management. In M. Fletcher et al. eds. The European Union as an Area of Freedom, Security and Justice (p. 217). Oxford: Routledge. 13 See 2019 EBCG Regulation, Annex I.

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the coordination and organisation of return operations,14 points to this direction as well. The involvement of EASO in implementing the EU asylum policy, and specifically in processing asylum applications, is new. EASO’s Regulation foresees the deployment of Asylum Support Teams (ASTs).15 ASTs are made up of seconded national experts, including interpreters.16 The first such operations were launched shortly after the EASO’s establishment and they gradually grew in number and scope. The EASO AST deployments were not operational like the border guard teams deployed by Frontex which interacted with individual migrants at external borders. Work consisted of expert advice in ministry departments, or involved training and study visits of members of national administrations (McDonough and Tsourdi 2012, 80–96). Gradually, the EASO separated deployments from increases in refugee influxes, testing joint-processing pilots. The content of the term ‘joint processing’ is yet to be clarified and can theoretically encompass different options ranging from assistance in emergency scenarios through agency deployments, to a completely harmonised approach, meaning centralised processing (Ramboll and Eurasylum 2013, 2–4). Cognisant of the legal limitation included in the EASO Regulation, it is useful to distinguish between three possible scenarios: assisted processing, common processing and EU-level processing. Assisted processing refers to the examination of asylum applications by officials of the competent Member State with the support of officials of one or other Member States, possibly coordinated through EASO. This would mean in practice either that national officials are active at every procedural stage and are merely assisted by the EU (coordinated) level, or that deployed experts conduct independently only preparatory acts and do not undertake actions or adopt decisions that involve executive discretion. Common processing essentially refers to ‘mixed’ or ‘composite’ administrative proceedings (Della Cananea 2004; Chiti 2004; Hofman 2009).

14 2019 EBCG Regulation, Arts. 51 and 54. See also commentary on the use of European-level resources in implementing return policy in Slominski, P., & Trauner, F. (2018). How Do Member States Return Unwanted Migrants? The Strategic (Non-)use of ‘Europe’ During the Migration Crisis. Journal of Common Market Studies, 56(1), 101. 15 EASO Regulation, Art. 10(a)–(c). 16 EASO Regulation, Art. 15.

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Broadly speaking: ‘they ensure that input into single administrative procedures can be given from authorities from various jurisdictions. Irrespective of whether a final decision will be taken by a Member State or an EU authority, both levels can thus be directly involved in a single administrative procedure’ (Galetta et al. 2015, 18). In our context, they concern asylum-related decision-making. They occur if the EU (coordinated) level is exclusively responsible for one or more parts of the decision-making procedure involving executive discretion (such as responsibility determinations under Dublin III, or proposing asylum decisions on the basis of interviews). The final scenario is EU-level processing, where the joint elements disappear, and the decision is taken entirely by an EU authority instead of the Member States. Of these three scenarios, only the first (assisted processing) is within EASO’s current mandate. The second scenario (common processing) is beyond the limits of the current mandate of EASO, which is expressly prohibited from exercising power with respect to decisions (of the Member States’ asylum authorities) on individual applications for international protection.17 The third, EU-level processing, is legally impossible under the TFEU, which envisages that ‘a Member State’ is ultimately responsible for the examination of an application.18 Several pilot joint-processing exercises took place between June 2014 and June 2015. In 2014, twenty-two experts took part in the jointprocessing pilot projects conducted by EASO in nine Member States, and in 2015, eighteen experts from fifteen Member States were involved in three EASO pilot projects (EASO 2015a, 14). These activities were not clearly anchored in the EASO Regulation. At the beginning, the joint-processing activities involved tasks that did not entail administrative discretion, such as initial registration, or data archiving (EASO 2015b, 6). They evolved beyond that, including, for example in the Netherlands, the assessment of the merits of individual cases by deployed experts that had conducted the asylum interview (ibid.). However, these joint-processing exercises were small scale and short term.

17 EASO Regulation, Rec. 14 and Art. 2(6). 18 See TFEU, Art. 78(2)(e).

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The next push came during the 2015–2016 ‘migration crisis’ and the operationalisation of the hotspot approach to migration management (European Commission 2015: Annex II).19 There are a variety of administrative tasks that must be completed at hotspots, including registration and identification of migrants, and channelling of migrants into further procedures, e.g. return or assessment of an international protection claim (Neville et al. 2016, 27–29). Previous deployments, although beneficial, could not address the structural weaknesses of Member State asylum systems, undermined by insufficient human and financial resources. During this subsequent period, EASO officials moved away from expert consulting and began to undertake more hands-on tasks, such as providing information to arriving third-country nationals, and assisting with the emergency relocation process. As pressures increased, forms of common rather than assisted processing emerged in Greece, with deployed experts undertaking admissibility interviews20 and submitting opinions that, despite being advisory and non-binding on national authorities, entailed the exercise of administrative discretion (Tsourdi 2016, 1021–1026). Further developments include the involvement of EASO (deployed experts) in assessing the merits of asylum claims (Tsourdi 2020b). The Commission proposal on an EUAA confirms these integrative trends. If adopted, elements of not only assisted but also common processing would be ingrained in the Agency’s mandate. The envisaged measures, as part of operational support, are variegated. They include preparatory acts of the asylum procedure that do not entail administrative discretion, such as assistance with the identification and registration of third country nationals, and assistance with the provision of information on the international protection procedure.21 The proposed regulation 19 The hotspot approach involves inter-agency collaboration, in which deployed national experts, under the coordination of a specific agency, operationally assist national administrations. A hotspot is in essence an EU external border section facing high numbers of arrivals of third-country nationals. In practice, these arrivals most often present a mixture of individuals, some of whom qualify for international protection since they are fleeing persecution or generalised violence, and others who do not. 20 Admissibility represents a preliminary stage in the asylum procedure, where a determination is made as to whether the asylum application should be examined on the merits, or whether the application should be discontinued as inadmissible, for instance, because the individual can safely be returned to a third country. 21 EUAA proposal, Art. 16(3)(a), (3), (h).

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also includes a form of common processing: migration management teams deployed in areas under pressure could potentially be tasked with the ‘examination of claims’,22 even though the final decision on protected refugee status would remain the competence of Member States.23 These trends are further enhanced in the Commission’s amended proposal, released in September 2018, which in many respects complements, rather than repeals, the earlier proposal.24 Overall, the workings of the EU asylum agency, both de facto currently, and de jure prospectively, point towards the emergence of an increasingly integrated European administration. 2.2

Monitoring-like Functions: Effectively Supplementing the European Commission?

FRONTEX already possesses monitoring-like functions. The first such element in its mandate is the existence of liaison officers. Namely the Regulation states that one of the agency’s tasks is to ‘monitor the management of the external borders through liaison officers of the Agency in Member States’.25 Liaison officers are to ‘foster cooperation and dialogue between the Agency and the national authorities responsible for border management […]’.26 Their tasks are variegated and include informationcollection; reporting on the execution of return operations; reporting on the situation at the external borders and measures Member States have taken where a situation requires the adoption of urgent measures etc.27 The role of the liaison officers is intrinsically linked with the so-called vulnerability assessment that the agency undertakes.28 The main aims of the assessment are to assess the capacity and readiness of the Member States to face challenges at their external borders and to contribute to the standing corps and technical equipment pool; and to identify (especially for those Member States facing specific and disproportionate 22 EUAA proposal, Art. 21(2)(b). 23 EUAA proposal, Rec. 46. 24 EUAA 2018 amended proposal. 25 2019 EBCG Regulation, Arts.10(1)(d) and 31(1). 26 2019 EBCG Regulation, Art. 31(3). 27 See for the full list of tasks, 2019 EBCG Regulation, Art. 31(3)(a)–(k). 28 See also 2019 EBCG Regulation, Rec. 42.

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challenges) possible immediate consequences at the external borders and subsequent consequences on the functioning of the Schengen area.29 The assessment could lead to the adoption of recommendations by the Executive Director for alleviating the vulnerabilities by the Member State enhancing or improving their capabilities, technical equipment, systems, resources and contingency plans.30 The Member State in question is also given a time limit to implement the measures in question. In case of non-implementation with the latter, the next step is a binding decision endorsed by the Management Board prescribing measures to be adopted by that Member State.31 A final, ‘nuclear’ option is to be activated when the functioning of the entire Schengen area is put in jeopardy. That is the adoption by the Council, on the basis of a proposal from the Commission, of a decision by means of an implementing act prescribing measures, including the roll out of agency-coordinated missions, and deployment of the standing corps on its territory.32 The Member State has an obligation to comply with the Council decision and cooperate with the agency.33 Nevertheless, in practice if the Member State refuses to cooperate, there is no ‘right to intervene’ in a Member State—not for FRONTEX, nor for the EU institutions (e.g. enforcing deployments on the ground). The ultimate measure is recourse to the procedure to reintroduce internal border controls, as foreseen in the Schengen Borders Code.34 The process includes a gradation of measures and the involvement of the Commission and the Council is necessary in order for the final binding decision prescribing measures, including deployments to be adopted. Nonetheless, the role of the agency is pivotal. It gathers the necessary information, including through the presence of liaison officers. It has the capacity, through the Executive director to prescribe measures, and in a later stage through its Management Board, to prescribe binding measures.

29 See 2019 EBCG Regulation, Art. 32(4). 30 See 2019 EBCG Regulation, Art. 32(7)–(8). 31 See 2019 EBCG Regulation, Art. 32(10). 32 See 2019 EBCG Regulation, Art. 42(1). 33 See 2019 EBCG Regulation, Art. 42(8). 34 See Regulation (EU) 2016/399 of the European Parliament and of the Council of

9 March 2016 on a Union Code on the rules governing the movement of persons across borders (Schengen Borders Code), Art. 29.

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These first steps are necessary prerequisites to the adoption of the final ‘nuclear option’, and the Council binding decision takes into account the prior evaluations and assessments undertaken by the agency. Apart from monitoring though, the agency jointly operationalises integrated border management with the Member States, including through deployments. I explore the potential tension between the implementation and supervision limbs of FRONTEX’s mandate in a next section.35 One observes the same trends in EASO where the Commission introduced in its 2016 proposal a monitoring role for the future EUAA which has been somewhat watered down during the negotiations. Currently the agency does not undertake any activity that could be classified as monitoring-like. EASO chose not to give this tone to the only activity that could indirectly come close to a monitoring-type function, i.e. the annual report on asylum.36 The latest available report, for the year 2018, clarifies that ‘[i]ts objective is to provide a comprehensive overview of the situation of asylum in the EU (including information on Norway, Switzerland, Liechtenstein and Iceland), describing and analysing flows of applicants for international protection, major developments in legislation, jurisprudence, and policies at the EU+ and national level and reporting on the practical functioning of the Common European Asylum System (CEAS).’ (EASO 2019, 8)

The language is carefully crafted, and the content of the report is not geared to ascertaining Member States’ performance, or shortcomings of national asylum systems. Thus, the Commission proposal marks a significant departure from the status quo. The partial agreement on an EUAA establishes a function to ‘monitor the operational and technical application of the CEAS with a view to assisting Member States to enhance the efficiency of their asylum and reception systems’.37 The envisaged scope of this function was even broader in the original Commission proposal as the agency was expected to monitor the implementation and assess all aspects of the Common European Asylum System in Member States; monitor compliance by Member 35 See infra, Sect. 2.1. 36 See EASO Regulation, Art. 12(1). 37 EUAA partial agreement, Art. 2, emphasis added.

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States with operational standards, indicators, guidelines and best practices on asylum; and verify asylum and reception systems, including staffing and financial resources available.38 Member States through the Council though have managed to greatly align the EUAA monitoring mechanism to the ‘vulnerability assessment’ process in the EBCG Regulation. The now stated aim of the monitoring is to ‘prevent or identify possible shortcomings in the asylum and reception systems of Member States and to assess their capacity and preparedness to manage situations of disproportionate pressure so as to enhance the efficiency of those systems’.39 It is envisaged that information would come mainly through the Member States themselves, but that the agency ‘may also take into account information provided by relevant intergovernmental organisations or bodies, in particular UNHCR, and other relevant organisations’. Finally, the EUAA would have the capacity to conduct on-site visits and case sampling. The findings of this monitoring exercise would be sent to the Member State for comments. Taking those comments into account, the Executive Director would then draw up draft recommendations, in consultation with the Commission, outlining both the measures to be implemented by the Member State, including with the assistance of the Agency as necessary, and providing a timeline for their implementation.40 The Member State would be given again an opportunity to comment, after which the Management Board would adopt the recommendations by a 2/3 majority of its voting members.41 If these recommendations are not followed, and it is considered that the functioning of the Common European Asylum System is jeopardized, the next layer of monitoring actions involves the European Commission. The Commission would address its own recommendations to the Member State in question, and might decide to organize on-site visits to follow-up on their implementation.42 A final, ‘nuclear’ option, largely aligned with what is foreseen in the EBCG Regulation, is an implementing act to be adopted by the Council prescribing a

38 See EUAA proposal, Art. 13(1)(a)–(c). 39 EUAA partial agreement, Art. 13. 40 EUAA partial agreement, Art. 14. 41 Ibid. 42 Ibid.

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set of measures, including potential operational deployments, which the Member State would be required to accept.43 Even this more circumscribed version as envisaged currently in the partial agreement would alter the character of EASO’s functions. It would support Member States in implementing, and, assess their performance in doing so. This would normally shift the existing balance between Member States and the agency, and also alter the purpose of information exchange between them. While information exchange was so far exclusively geared to identifying particular pressures in order to mobilise assistance and to map out weaknesses in order to remediate them through training and the sharing of good practice, now it would also be geared to monitoring compliance and indirectly linked with enforcement processes. The final shape of this monitoring mechanism of course remains to be seen since negotiations on a revamped EUAA are ongoing. 2.3

Functions with Steering Potential: From Indirect to Innovative Steering Processes?

The final novelty is that of functions with a steering potential, i.e. a potential to steer policy implementation. This trend is exemplified in the case of FRONTEX by the agency’s role in adopting a ‘technical and operational strategy for European integrated border management’.44 This strategy was initially introduced by the 2016 version of the Regulation. At this previous version of the legal document, the text indicated that the strategy was to be adopted ‘by decision of the management board based on a proposal of the executive director’,45 as well as that national authorities should establish their own national strategies for integrated border management which should ‘be in line’ with the strategy of the agency.46 While the strategy was to be limited to ‘technical and operational elements’, hence arguably not setting policy, the lines were blurry in the 2016 version of the FRONTEX Regulation. The agency was given a function with increased steering potential, and the legal instrument was silent on the role of the other institutions in this setting.

43 EUAA partial agreement, Art. 22. 44 2019 EBCG Regulation, Art. 8(4). 45 2016 EBCG Regulation, Art. 3(2). 46 2016 EBCG Regulation, Art. 3(3).

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The new 2019 version clarifies matters and provides a pivotal role for the Commission within this process. Notably, the strategy is now inscribed in a broader ‘multiannual strategic policy cycle for European integrated border management’. The 2019 Regulation establishes that the European Commission and FRONTEX are to ensure the effectiveness of integrated border management by means of this multiannual policy cycle.47 The process now foresees a collaboration between FRONTEX and the Commission: the latter prepares a document setting out this multiannual strategy on the basis of FRONTEX’s ‘strategic risk analysis for European integrated border management’.48 While drawing from FRONTEX material and information, the Commission, together with the European Parliament and the Council, are now clearly the policy agenda setters. The Regulation foresees a role also for the European Parliament and the Council as the Commission submits to them this document for discussion, after which it adopts a relevant communication.49 Thereafter, FRONTEX adopts a ‘technical and operational strategy for European integrated border management’ which should, however, be in line with the multiannual strategic planning and consequently the Commission’s communication.50 While this strategy is adopted with a similar process (decision of the Management Board based on a proposal of the Executive Director) the Regulation now clarifies that it is prepared ‘in close cooperation with the Member States and the Commission’.51 Thereafter, the Member States establish their own national strategies which should be in line both with the technical and operational strategy of FRONTEX, and with the multi-annual strategic policy.52 FRONTEX’s role remains crucial and its strategy has a steering potential and influences national implementation. However, the roles of the European institutions, especially that of the European Commission, have been clarified and strengthened by the recently amended legal instrument. This is in line with the legal limits to agencification established by CJEU

47 2019 EBCG Regulation, Art. 8(1). 48 2019 EBCG Regulation, Art. 8(4). 49 Ibid. 50 2019 EBCG Regulation, Art. 8(5). 51 Ibid. 52 2019 EBCG Regulation, Art. 8(6).

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analysed above,53 notably that EU law prohibits a form of discretion that allows an EU agency to develop policy on its own, that is, being empowered to make political, economic, or social policy choices. The previous version of the Regulation left open questions regarding the compatibility of this function with said constitutional limits. The legal design of the new process, however, has clearly framed the agency’s role within them. When it comes to EASO, the agency’s current functions at best only have an indirect steering potential. A poignant example is the agency’s role in country of origin information (COI). EASO’s mandate includes gathering COI; drafting COI reports; the management and further development of a portal for disseminating COI; as well as the development of a common format and a common methodology for presenting, verifying and using COI.54 EASO’s Regulation highlights that the agency should not purport to give instructions to Member States about the grant or refusal of applications for international protection.55 Thus, Member States are not bound legally by the analysis included in the COI material EASO produces. However, due to the status of the agency, the material is influential for national authorities and thus arguably has an indirect steering potential. The new EUAA would, however, have the potential to directly steer policy implementation through a novel process around country of origin information. The partial agreement of 2017 foresees an enhanced role for the EUAA through the development together with Member State experts, of a ‘common analysis’ on the situation in specific countries of origin and the production on this basis of guidance notes to assist Member States in the assessment of relevant applications.56 The Executive Director would submit, after consultation with the Commission, the guidance notes accompanied by the common analysis to the Management Board for endorsement. Once endorsed, Member States should take this analysis into account in their decision-making ‘without prejudice to their competence for deciding on individual applications’.

53 See infra, Sect. 2.2. 54 See EASO Regulation, Art. 4. 55 See EASO Regulation, Art. 12(2). 56 See EUAA partial agreement, Art. 10.

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The original 2016 proposal of the Commission envisaged an even more robust role for the revamped EUAA. Namely, the Commission had foreseen that once endorsed, Member States would be required to take this common analysis into account.57 This had been coupled with a consequent obligation of Member States to ‘on a monthly basis, submit to the Agency relevant information on the decisions taken in relation to applicants for international protection originating from third countries subject to the common analysis’.58 Not only should they provide detailed information on the number of decisions granting or refusing international protection as they concern third countries subject to the common analysis, but they should provide specific statistics on the cases where the common analysis was not followed and the reasons for not following it.59 The Commission’s proposals were a far cry from the provisions that are currently in place which highlight that the agency’s analysis on COI should not purport to give instructions to Member States about the grant or refusal of applications.60 It is therefore not surprising that they were met with resistance during the negotiations and were thus watered down. Even the amended version though, clearly provides EUAA with a steering impetus and could increase the harmonisation of practices. Given its impact on asylum applicants’ fundamental rights, however, the objectivity and wealth of information contained, as well as the quality of the analysis, becomes crucial. The next sections critically analyse the challenge of quality and respect for fundamental rights, alongside a number of further key challenges that these agencies’ expanded mandate raises.

3

Key Challenges in an Evolving Administrative Landscape

The mandate expansion of EU agencies appears to be based on the recognition that external border management and asylum provision are, in

57 Ibid. 58 See EUAA proposal, Art. 10(4). 59 See EUAA proposal, Art. 10(4)(a)–(c). 60 Cf., EASO Regulation, Art. 4(e).

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essence, regional public goods61 that benefit all member states regardless of their geographic position (i.e. regardless of their proximity to EU’s external borders). This also entails that external border management and asylum provision are shared responsibilities between the EU and its member states. The fact that it is shared has consequences on how the asylum and external border control policies are to be implemented, and how the financial and human resource costs for their operationalisation are distributed (Tsourdi 2017, 672–675).62 It also implies a shift towards forms of joint implementation whereby EU agency staff, deployed experts from member states and national administrators work side by side in implementing EU policies. In addition, it means a shift from a predominantly national financing component towards more centralised funding, both directly through EU funds and indirectly by benefitting from agency deployments and joint implementation patterns. EU agencies also have a central role in operationalising the cooperation between the EU and non-EU countries in managing migration from non-EU countries, which increasingly includes the externalisation of protection obligations and containment of migrants in third transit states. This brave new administrative landscape stirs up several challenges for FRONTEX and EASO. Some are of a practical nature, for example the existence of sufficient financial and human resources to realise their expanded mandate. While politically sensitive, the answer to these practical challenges is rather straightforward. I focus instead my analysis on a set of challenges that are harder to tackle and broadly revolve around balancing tasks of different nature, independence, accountability, and respect for fundamental rights. 61 Suhrke conceptualises refugee protection as a global public good, a good whose benefits once provided: (i) cannot be excluded from other members of the international community (non-excludability) and (ii) do not diminish or become scarce when enjoyed (non-rivalry). See Suhrke, A. (1998). Burden-Sharing During Refugee Emergencies: The Logic of Collective Versus National Action. Journal of Refugee Studies, 11(4), 396. Betts argues that in refugee protection it is unlikely these non-excludable benefits will accrue equally to all members of the international community. States with greater proximity to a given refugee outflow benefit more from a neighbouring state’s contribution, thus making refugee protection a regional public good. See Betts, A. (2009). Protection by Persuasion: International Cooperation in the Refugee Regime (p. 29). Ithaca, NY: Cornell University Press. Recently, Lutz, Kaufmann and Stünzi conceptualised ‘humanitarian protection’ as a European public good; see Lutz, P., Kaufmann, D., & Stünzi, A. (2019). Humanitarian Protection as a European Public Good: The Strategic Role of States and Refugees. Journal of Common Market Studies. https://doi.org/10.1111/jcms.12974. 62 See also TFEU, Article 80.

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Balancing Joint Implementation and Supervision63

The 2019 EBCG Regulation enounces European integrated border management as a shared responsibility.64 Increased EBCG resources (financial, human) and the executive powers foreseen for its statutory staff and deployed national personnel (subject to the authorisation of its host member state) can be understood as effective means by which the EU can undertake its responsibility in operationalising European integrated border management. No legal text explicitly enounces this conception of shared responsibility in the context of asylum; not even the proposal for a revamped European Union Agency for Asylum (European Commission 2016).65 However, the increased operational role foreseen for deployed experts and EASO staff—whether de jure66 or de facto—can be considered as implicitly moving in the same direction. The monitoring-like functions of EU agencies (e.g. EBCG’s vulnerability assessment and role of liaison officers, EUAA’s monitoring mechanism) are inscribed in a different trend. These processes can be seen as supplements of the Commission’s supervision mandate. These mechanisms are circumscribed in their focus on technical and operational aspects (i.e. the existence of capabilities, infrastructure). In fact, they serve a double purpose: on the one hand, they identify particular pressures to mobilise assistance and map out weaknesses in order to remediate them; on the other, they are linked to the gradation of enforcement-type measures that could culminate into the adoption of Council implementing acts. The two limbs of the expanded mandates—supervision and operational—are linked. Structural shortcomings and capacity issues first identified through the supervision-like processes could then be (partially) overcome through the additional deployment of human and technical resources and enhancement of joint implementation actions. There is

63 This section draws from Tsourdi, E. (2019). EU Agencies. In P. de Bruycker, M. de Somer, & J. L. de Brouwer (Eds.), From Tampere 20 to Tampere 2.0: Towards a New European Consensus on Migration (p. 27). Brussels: European Policy Centre. 64 See also infra, Sect. 2.2. 65 European Commission (2016). Proposal for a regulation of the European Parliament

and of the Council on the European Union Agency for Asylum and repealing Regulation (EU) No 439/2010, COM(2016)271 (hereinafter: 2016 EUAA proposal). 66 See 2016 EUAA proposal, Arts.19 and 21.

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also an inherent underlying tension, especially if these monitoring-like functions gradually expand from technical aspects to the supervision of the implementation of the policies themselves, as was the European Commission’s initial conception of the EUAA monitoring mechanism.67 In this case, the agencies would be called on to play a double, and at times contradictory role: implementing jointly while simultaneously supervising the implementation of these. The example of the current operationalisation of the ‘hotspot approach’ in Greece is telling. 3.2

Ensuring Fundamental Rights Oversight and Accountability68

The exercise of executive powers and tasks entailing executive discretion by EU agency (deployed) staff results in greater direct interaction with individual migrants and asylum seekers, consequently potentially affecting their fundamental rights. In addition, agency deployments in third countries raise additional fundamental rights concerns and the need to coordinate action with international level stakeholders. These developments bring to sharp relief the necessity to hold, alongside member states involved in these operational activities, EASO and FRONTEX accountable. Accountability has been characterized as ‘a chameleon-type term […] that crops up everywhere performing all manner of analytical and rhetorical tasks and carrying most of the major burdens of democratic ‘governance’’ (Mulgan 2000, 555). The EASO and FRONTEX Regulations foresee a host of potential accountability processes69 : judicial, financial, political, extra-judicial, and social. This calls for the adoption of an understanding of accountability that is broad enough to accommodate such processes. The concept of accountability developed by Bovens, Goodin, and Schillemans, is fitting. According to these authors, accountability may be conceptualized as ‘an institutional relation or arrangement in which an agent can be held to account by another agent or institution’ (Bovens et al. 2014: 9; Bovens 2007). It consists of three elements or stages: 67 2016 EUAA proposal, Art. 13. 68 This section draws from E. Tsourdi (2020b). 69 The reason I refer to them as ‘potential’ accountability avenues is that in order to

ascertain if a specific process is indeed an accountability process, the study of its legal design is sometimes not conclusive and needs to be complemented by empirical data. A good example to illustrate this point is the case of social accountability processes.

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(i) The actor should be obliged to inform the forum about his or her conduct, by providing various sorts of information about the performance of tasks, about outcomes, or about procedures; (ii) there needs to be a possibility for the forum to interrogate the actor and to question the adequacy of the explanation or the legitimacy of the conduct; and finally, (iii) the forum may pass judgment on the conduct of the actor (ibid.). The mention of a ‘judgment’ in this context should not be equated with a legally binding final pronouncement by a court or tribunal. Rather what is meant is the possibility of concrete consequences following the information provision and debate stages. EASO and FREONTEX are subject to a mosaic of accountability processes. First, several political accountability processes: before the agencies’s own Management Board70 ; before the Council71 ; before the European Commission72 ; and finally before the European Parliament.73 Next, their Regulations envisage judicial accountability through the Court of Justice, for example, an action for annulment against agency decisions relating to access to documents,74 jurisdiction over instances of contractual liability,75 as well as for instances of non-contractual liability, for example, an action for damages in relation to ‘any damage caused by its departments or by its staff in the performance of their duties’.76 An intricate tango involving the Commission, the Council, the European Court of Auditors, and the European Parliament ensures financial accountability.77 When it comes to social accountability processes, these are most arguably lacking in EASO. The agency’s Consultative Forum is not conceptualized as an accountability forum; thus, the agency does not have to report, or explain its actions, to representatives of civil society. The main aim is one of dialogue, exchange of information,

70 See, e.g., EASO Regulation, Art. 29; EBCG 2019 Regulation, Art. 106(5). 71 See, e.g., EASO Regulation, Art. 31(3); EBCG 2019 Regulation, Art. 106(2). 72 See, e.g., EASO Regulation, Arts. 7(1), 12(2); EBCG 2019 Regulation, Art. 106(3). 73 See, e.g., EASO Regulation, Art. 30(1); EBCG 2019 Regulation, Art. 106(2). 74 See EASO Regulation, Art. 42(3); EBCG 2019 Regulation, Art. 114(5), and TFEU,

Art. 263. 75 See EASO Regulation, Art. 45(2); EBCG 2019 Regulation, Art. 97(3). 76 See EASO Regulation, Art. 45(3); EBCG 2019 Regulation, Art. 98 and TFEU, Art.

340(2). 77 See EASO Regulation, Arts. 34 and 36; EBCG 2019 Regulation, Art. 116.

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and pooling of knowledge.78 On the contrary, the processes established by the FRONTEX Regulation are arguably genuine accountability processes. FRONTEX has the obligation to provide its Consultative Forum with ‘effective access in a timely and effective manner to all information concerning the respect for fundamental rights including by carrying out on-the-spot visits’.79 In addition, the FRONTEX Consultative Forum prepares an annual report of its activities which becomes publically available.80 Therein, it could ‘pass judgment’ on the agency’s fundamental rights record, and the agency could suffer reputational sanctions.81 Finally, the EASO Regulation contains a general provision on extra-judicial accountability stating that ‘[t]he activities of the Support Office shall be subject to the controls of the Ombudsman in accordance with Article 228 of the TFEU’.82 It also contains an additional reference to the European Ombudsman’s (EO) mandate in relation to the specific issue of access to documents.83 The FRONTEX Regulation contains a set of similar provisions.84 The exhaustive analysis of all these processes goes beyond the remit of this contribution. While they certainly contribute to the effective oversight of these agencies they are also mired by pitfalls when it comes to ensuring the respect of individuals’ fundamental rights. For example, judicial accountability at EU level remains largely inaccessible to individual asylum seekers and migrants due to the strict rules on admissibility, standing, and establishment of liability (Lisi and Eliantonio 2019, 599; Fink 2018). Other processes, such as social accountability processes in the framework of EASO, fall short of being genuine accountability processes, as they remain at the level of information exchange. Financial accountability is particularly effective (European Parliament 2019a, b) but it is mainly geared to ensuring sound financial management of public funds and can only indirectly address broader fundamental rights concerns.

78 See EASO Regulation, Art. 51(2). 79 See EBCG 2019, Art. 108(5). 80 See EBCG 2019, Art. 108(4). 81 On reputational sanctions see Busuioc, M., & Lodge, M. (2016). The Reputational Basis of Public Accountability. Governance, 29(2), 247. 82 See EASO Regulation, Art. 47. 83 See EASO Regulation, Art. 42(3). 84 See EBCG 2019, Arts. 114(5), 119.

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As I have analysed elsewhere (Tsourdi, 2020b), extra-judicial accountability emerges as a promising avenue to ensure procedural fundamental rights compliance. For example, the European Ombudsman has had the chance to scrutinize the role of EASO in asylum processing at the hotspots (European Ombudsman 2018, 2019). She seems to be increasingly grappling with the complexities that mixed processing raises. Her scrutiny of the first such complaint was arguably superficial, brushing aside the constitutional-level challenges based on uncertain future legislative amendments and placing the entire burden of safeguarding procedural standards on the under-resourced Greek administrative authorities that EASO experts have been deployed to assist (European Ombudsman 2018; Tsourdi 2020b). In the treatment of the second complaint though, the Ombudsman recommended the adoption of concrete procedural standards, such as notification obligations to national authorities of errors identified by the agency, and the establishment by EASO of an internal individual complaints mechanism (European Ombudsman 2019; Tsourdi 2020b). The establishment of an internal individual complaints mechanism is still under negotiation in the framework of EASO. However, such an internal extra-judicial accountability mechanism is already operational in the framework of Frontex. Namely, consecutive amendments to the Frontex Regulation have led to the development of novel fundamental rights oversight mechanisms, such as an independent Fundamental Rights Officer that is responsible for the running of ombudsman-type processes taking the form of an individual complaints mechanism.85 The mandate of the Fundamental Rights Office was further strengthened in the recent November 2019 amendments to the founding Regulation of that agency, thanks to the enhancement of its capacities and the creation of the function of fundamental rights monitors.86 While the effectiveness of these mechanisms will be tested in the years to come, they hold the promise of meaningfully complementing as well as interacting with judicial accountability processes at both national and EU levels. 3.3

Squaring Internal Governance Structures and Independence

In order to operationalise their mandate effectively, agencies must be independent of national interests and political influences. Independence is

85 See 2019 EBCG Regulation, Rec. 104 and Art. 11. 86 2019 EBCG Regulation, Art. 110.

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an element that is highlighted in the agencies’ founding regulations, albeit with different nuances.87 EU agencies, however, are, however, both institutionally and functionally dependent on EU institutions and Member States. This is exemplified through the design of their internal governance structures, specifically the member state-dominated management boards88 and the process by which they operationalise their mandate, which is inherently collaborative. Management boards have far-reaching functions in regards to the planning and operationalisation of the agencies’ mandates, including pivotal roles in the monitoring-like functions. It has been observed that ‘having all Member States represented at agency boards is in line with the conceptual understanding of the EU executive as an integrated administration and is an expression of the composite or shared character of the EU executive’ (Vos 2016, 218). When the European level, through an EU agency, starts to be more implicated in policy implementation, including through the deployment of statutory staff and experts on the ground, member states are understandably keen to have a strong say. The operational tasks undertaken are intrinsically linked with the implementation of asylum and external border control policies, and the duty to implement the EU asylum and external border control policies legally rest with the member states. While external border control management is increasingly admitting that it is a shared responsibility, member states still retain the ‘primary responsibility’, according to the EBCG 2019.89 Therefore, it cannot be concluded that the national level is seeking to ‘reappropriate powers’ through the back door. At the same time, the independence challenge posed should not be underestimated. First, there is a potential conflict between accountability and independence which is most vividly portrayed through the accountability of the agencies towards their Management Board. Taking the example of EASO, its Regulation places great importance on the independence of the Director. It foresees that she should be independent in the performance of her duties and that she should ‘neither seek nor take instructions from any government or from any other body’.90 Therefore,

87 See e.g. EASO Regulation, Art. 2(4), EBCG 2019 Regulation, Art. 93(3). 88 See e.g. EASO Regulation, Arts.25-27, EBCG 2019 Regulation, Art. 99, p. 409. 89 2019 EBCG Regulation, Art. 7. 90 See EASO Regulation, Art. 31(1)–(2).

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independence is sought vis-à-vis both national governments and the EU institutions or bodies. However, the latter statement is conditioned on the premise that it is ‘[w]ithout prejudice to the powers of the Commission, the Management Board …’91 Given the predominantly Member State composition of the Management Board,92 there is a delicate balance between ‘not taking instructions from any government’ and respecting the prerogatives of the Management Board as an accountability holder. Secondly, there could be an underlying tension surrounding the agencies’ supervision functions that are linked to a gradation of enforcementtype measures and to the strong role of the agencies’ Management Board in these processes. Since the monitoring-like functions of EASO are still debated as part of its revamping into an EUAA this point is best illustrated through FRONTEX. As previously analysed,93 the vulnerability assessment could lead to a binding decision endorsed by the Management Board prescribing measures. At later stages the European Commission and the Council are involved and a final ‘nuclear option’ is the roll out of agency-coordinated missions, and deployment of experts through a Council implementing act. The stakes are high: the monitoring process could eventually lead to concrete obligations on the part of Member States, and an eventual obligation to allow deployments on its territory, even if there is no ‘right to intervene’ on the part of the EU. The supranational character of EASO and FRONTEX means that there is also another danger. Given the distribution of power and political stakes in the field of asylum, they risk being captured by strong regulators and used as ‘proxy’ to control weaker ones (Ripoll Servent 2018).94 Indeed, understanding ‘national interest’ in these fields as one-dimensional does not do justice to the divergence of interests between Member States, nor their power differential.

91 See EASO Regulation, Art. 31(2). 92 According to EASO Regulation, Art. 25(1), each Member State appoints one member

to the Management Board, while the Commission appoints two. UNHCR also participates as a non-voting member; see EASO Regulation, Art. 25(4). 93 See analysis above in Sect. 2.2. 94 For a conceptualisation on the power differential between member states in the

migration field see Zaun, N. (2017). EU Asylum Policies: The Power of Strong Regulating States. Houndmills: Palgrave Macmillan.

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4

Conclusion

Institutionalization of practical cooperation most notably through FRONTEX and EASO, two EU agencies, have led to significant shifts in the implementation modes of the EU asylum and external border control policies. Patterns of joint implementation have emerged. Moreover, these agencies are increasingly obtaining functions that have the potential to steer and monitor policy implementation. These developments were intensified by the ‘migration crisis’ but were neither exclusively due to the crisis, nor were they limited to the duration of the crisis. They rather point to deeper shifts in the implementation and enforcement modes of these policies and signal that EU agencies are here to stay. Together with the financial and human resources available to EU agencies they could act as precursors to deeper forms of integration, eventually leading to a full ‘Europeanization’ of these policies’ implementation modes. This should not be specifically linked with political aspirations of an increasingly ‘federalized’ EU, but rather could be viewed as a pragmatic approach to effectively implementing policies that arguably lead to the provision of regional public goods. The tension brought about by the mandate expansion of these agencies is palpable. There is an obvious tension between jointly implementing while simultaneously having a pivotal role in supervising implementation. The mandate expansion has not been coupled with a radical redesign of the internal governance structure of the agencies in what concerns the composition and role of their Member State-dominated Management Boards raising the challenge of independence. Finally, the exercise of executive powers means greater direct interaction with individual migrants and asylum seekers, potentially affecting their fundamental rights. This raises the challenge of accountability for fundamental rights violations. The way forward to counter these challenges is not clear. Further enhancing the role of independent external expertise within these agencies, and strengthening accountability processes that are accessible to individuals and geared to respect for fundamental rights, such as the internal ‘individual complaint mechanisms’ are some potential avenues. What is certain is that the mandate expansion of EASO and FRONTEX and the pivotal roles they are called to play should go hand in hand with a broader rethink of their internal governance structures, as well as the interrelated issues of independence and accountability.

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European Parliament (2019a). Decision of 23 October 2019 on Discharge in Respect of the Implementation of the Budget of the European Asylum Support Office for the Financial Year 2017 (2018/2208(DEC)). European Parliament (2019b). Decision of 26 March 2019 on Discharge in Respect of the Implementation of the Budget of the European Asylum Support Office (EASO) for the financial year 2017 (2018/2208(DEC). Fink, M. (2018). Frontex and Human Rights: Responsibility in ‘Multi-Actor Situations’ Under the ECHR and EU Public Liability Law. Oxford: Oxford University Press. Frontex. (2016). Frontex Annual Risk Analysis for 2016. Warsaw: Frontex. Galetta, D. A., et al. (2015). The Context and Legal Elements of a Proposal for a Regulation on the Administrative Procedure of the European Union’s Institutions, Bodies, Offices and Agencies. Brussels: Study for the European Parliament. Hofman, H. C. H. (2009). Composite Decision-Making Procedures in EU Administrative Law. In H. C. H. Hofman and A. Türk (Eds.), Legal Challenges in EU Administrative Law: Towards an Integrated Administration (p. 136). Cheltenham: Edward Elgar. Lenaerts, K. (1993). Regulating the Regulatory Process: “Delegation of Powers” in the European Community. European Law Review, 18(1), 23. Lisi, G., & Eliantonio, M. (2019). The Gaps in Judicial Accountability of EASO in the Processing of Asylum Requests in the Hotspots. European Papers, 4(2), 589. Lutz, P., Kaufmann, D., and Stünzi, A. (2019). Humanitarian Protection as a European Public Good: The Strategic Role of States and Refugees. Journal of Common Market Studies. https://doi.org/10.1111/jcms.12974. McDonough, P., & Tsourdi, E. (2012). The ‘Other’ Greek Crisis: Asylum and EU Solidarity. Refugee Survey Quarterly, 31(4), 67. Mulgan, R. (2000). Accountability: An Ever-Expanding Concept? Public Administration, 78(3), 555. Neville, D., Sy, S., & Rigon, A. (2016). On the Frontline: The Hotspot Approach to Managing Migration. Brussels: European Parliament. Ramboll and Eurasylum. (2013). Study on the Feasibility and Legal and Practical Implications of Establishing a Mechanism for the Joint Processing of Asylum Applications on the Territory of the EU . Brussels: Study for the European Commission. Rijpma, J. J. (2017). Frontex and the European System of Border Guards: The future of European Border Management. In M. Fletcher, et al. (Eds.), The European Union as an Area of Freedom, Security and Justice (p. 217). Oxford: Routledge.

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Ripoll Servent, A. (2018). A New Form of Delegation in EU Asylum: Agencies as Proxies of Strong Regulators. Journal of Common Market Studies, 56(1), 83. Schwarze, J. (2006). European Administrative Law: Revised (1st ed.). London: Sweet & Maxwell. Slominski, P., & Trauner, F. (2018). How do Member States Return Unwanted Migrants? The Strategic (non-)use of ‘Europe’ During the Migration Crisis. Journal of Common Market Studies, 56(1), 101. Suhrke, A. (1998). Burden-Sharing During Refugee Emergencies: The Logic of Collective Versus National Action. Journal of Refugee Studies, 11(4), 396. Thym, D. (2016). The ‘Refugee Crisis’ as a Challenge of Legal Design and Institutional Legitimacy. Common Market Law Review, 56(6), 1545. Trauner, F. (2016). Asylum Policy: The EU’s ‘Crises’ and the Looming Policy Regime Failure. Journal of European Integration, 38(3), 311. Tsourdi, E. (2016). Bottom-up Salvation? From Practical Cooperation Towards Joint Implementation through the European Asylum Support Office. European Papers, 1(3), 997. Tsourdi, E. (2017). Solidarity at Work? The Prevalence of Emergency-Driven Solidarity in the Administrative Governance of the Common European Asylum System. Maastricht Journal of European and Comparative Law, 24(5), 667. Tsourdi, E. (2019). EU Agencies. In P. De Bruycker, M. De Somer & J.L. De Brouwer (Eds.), From Tampere 20 to Tampere 2.0: Towards a New European Consensus on Migration (p. 27). Brussels: European Policy Centre. Tsourdi, E. (2020a). The Emerging Architecture of EU Asylum Policy: Insights into the Administrative Governance of the Common European Asylum System. In F. Bignami (Ed.), EU Law in Populist Times: Crises and Prospects (p. 191). Cambridge: Cambridge University Press. Tsourdi, E. (2020b). Holding the European Asylum Support Office Accountable for its role in Asylum Decision-Making: Mission Impossible? German Law Journal, 21(3), 506–531. Vos, E. (2016). EU Agencies and Independence. In D. Ritleg (Ed.), Independence and Legitimacy in the Institutional System of the European Union. Oxford: Oxford University Press. Zaun, N. (2017). EU Asylum Policies: The Power of Strong Regulating States. Houndmills: Palgrave Macmillan.

CHAPTER 9

Interagency Relations and the EU Migration Crisis: Strengthening of Law Enforcement Through Agencification? Chiara Loschi and Peter Slominski

1

Introduction1

The creation of an agency structure at the European level has been one of the most remarkable features of the EU governance system in the recent past. It is thus hardly surprising that numerous EU scholars have dealt with various functional, political as well as normative aspects of this

P. Slominski Institute for Political Science, University of Vienna, Vienna, Austria e-mail: [email protected] C. Loschi (B) Department of Philosophy and Communication, University of Bologna, Bologna, Italy e-mail: [email protected]; [email protected] 1 The research for this book chapter was funded by the Austrian Science Fund (FWF) under the project number P30703-G29.

© The Author(s) 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2_9

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phenomenon (for overviews see Kreher and Mény 1997; Geradin et al. 2005; Curtin 2009; Curtin and Egeberg 2008; Rittberger and Wonka 2011; Busuioc et al. 2012). Despite this broad interest, scholarly literature has largely ignored the horizontal interaction among EU agencies. This research lacuna is particularly unfortunate when it comes to politically salient areas such as EU border control and migration policy where several EU agencies are currently implementing EU policy objectives. It is the main objective of this chapter to assess the interaction between Frontex,2 the key agency in the field of EU border management, and two other relevant EU agencies, namely the European Asylum Support Office (EASO) and the European Union Agency for Fundamental Rights (FRA). In particular, the chapter will explore how interagency relations affected the balance between law enforcement focuses and fundamental rights. Formally, agencies are often politically and legally expected to engage in interinstitutional cooperation. This can happen either through an invitation of the European Council or a more formal act of EU law which requires more interagency cooperation. With regard to EU border management, EU policy-makers have increasingly called for more cooperation among relevant agencies, notably between Frontex, EASO and FRA and made regular calls to increase the resources and competences (European Council 2010; Council of the European Union 2013a, 2013b; European Commission 2013a; EASO Regulation (EU) 439/2010; see also: Frontex Regulation (EU) 2016/1624 and 2019/1896). However, interagency cooperation is by no means self-evident and has largely escaped scholarly attention so far. It is the objective of this chapter to address this research gap by assessing the various collaborative efforts between Frontex and other EU JHA agencies in the field of EU border control pre- and post-2015 ‘migration crisis’.3 Considering Frontex as the core agency in external border control, we can identify 2 Since the 2016 Frontex Regulation (2016/1624) which amended and expanded the founding regulation (2007/2004/EC) the agency has been officially renamed as ‘European Border and Coast Guard Agency’. Following the common practice, the paper continues to use the established acronym Frontex. 3 In the following we use the term ‘migrants’ for individuals who leave a third country (country of origin or transit) travelling irregularly towards Europe. By using the term migrant, we do not exclude the possibility that he or she may be a refugee or asylum seeker (for a similar approach see Human Rights Watch 2009, p. 22). We also use the term ‘crisis ‘ to stress that the 2015/2016 influx of migrants has been perceived as an

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many more agencies which contribute to border and migration management. In the surveillance of external borders, indeed, Frontex currently engages with a number of EU agencies.4 However, for the purpose of this chapter, we will deal with the interaction between Frontex and the EU agencies EASO and FRA because they can be regarded as the most important agencies in the field of border management and asylum policy.5 In particular, we assess whether these interagency relations have enhanced the law enforcement focus of EU JHA or, conversely, strengthened a human rights-promoting EU as a ‘Union of Values’. We argue that the crisis has led the EU to reinforce pre-crisis practices of interagency cooperation with the aim to consolidate and restore the status quo of the EU border regime (Jeandesboz and Pallister-Wilkins 2016; Campesi 2018). The chapter is based on official documents including legal texts, agreements or working arrangements between EU agencies, and policy documents.

2 EU JHA Agencies: The Early Years of Interagency Relations In the last two decades the multi-level-system of the European Union witnessed an unprecedented proliferation of agencies causing some authors to speak of an ‘agency fever’ or ‘agencification’ (Levi-Faur 2011; Pollit et al. 2001; Christensen and Lægreid 2005). Establishing EU agencies is often justified by the objective to ensure the correct and uniform implementation of EU policies and legislation (e.g. Majone 1996;

emergency that has to be dealt with (Boin et al. 2013). We do not want to engage with the debate whether the migration crisis has been ‘real’ or ‘socially constructed’. 4 In addition to the already mentioned EASO and FRA, the official Frontex partner

agencies are Europol, the European Policy College (CEPOL), eu-LISA (European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice), the European Defence Agency (EDA), the EU Data Protection Supervisor (EDPS), the European Fisheries Control Agency (EFCA), the European Maritime Safety Agency (EMSA), the European Space Agency (ESA), Eurojust (European Union’s Judicial Cooperation Unit), European Union Agency for Law Enforcement Cooperation (Europol), the EU Satellite Centre (EUSC). 5 EASO and FRA cover all relevant activities in the field of border management including information gathering, analysis and exchange, operational activities as well as capacity building and training; see Frontex official website. https://frontex.europa.eu/par tners/eu-partners/eu-agencies/c.

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Dehousse 1997). Scholarly literature has reacted to this phenomenon and produced an abundance of work dealing with the creation and design of agencies, their increasing role in EU policy-making and implementation as well as their impact on legitimacy and accountability. Most of this work has discussed to what extent the establishment of EU agencies has resulted in retaining national governments’ control over the regulatory process or, conversely, to what extent EU agencies have trans- or supranationalized it (Everson 1995; Keleman 2002; Geradin et al. 2005; Curtin 2007; Groenleer 2009; Rittberger and Wonka 2011; Busuioc 2013; Everson et al. 2014; Egeberg and Trondal 2017). Other scholars have focused their attention on individual agencies (e.g. Krapohl 2004; Pollak and Slominski 2009) and their impact on individual policy areas or on the comparison of (in most cases) two agencies (e.g. Groenleer et al. 2010). A limited number of contributions have also dealt with the relationship between national regulators and EU agencies (e.g. Heims 2016, 2017; Busuioc 2016) or between EU agencies and international institutions (Groenleer 2012). Assessing the balance between fundamental rights and security interests has been a key theme in the EU JHA literature in the last decade (Lavenex and Wagner 2007). It is a widely shared criticism that the establishment of Frontex reflects and reinforces the “securitization” of migration and asylum in the EU (Neal 2009; Léonard 2009). However, there is also a (much smaller) literature which argues that the supranationalisation of border management has not automatically led to a decrease of human rights standards. In particular, arguments have been made that the establishment of Frontex may even be regarded as a potential to improve current national border practices (Thielemann and El-Enany 2008; Kaunert 2009; Rijpma 2010; Kaunert and Léonard 2012; Slominski 2013). 2.1

Gradual Formalization of Interagency Cooperation

Interagency relations among different EU JHA agencies have started in the late 2000s and have mainly been of an informal nature. Gradually, these relationships have been formalized and intensified, especially in the wake of 2015 migration crisis. The case in point here is the establishment of EU ‘hotspots’ at the external borders (Italy and Greece) where various EU JHA agencies have been cooperating together in the fields of EU border control and asylum policy.

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Taken together, according to the will of EU policy makers, interagency cooperation is expected to ensure greater degree of effectiveness, coherence and legitimacy. In practice, EU agencies are by no means entirely free to engage with other EU agencies. As their mandates are prescribed by the Council along with the European Parliament, interagency interaction is typically demanded by the European Council and the EU legislature, and prescribed by EU law as well as by legally nonbinding rules (soft law). In addition, EU agencies themselves may also conclude formal agreements on a bilateral basis in which they specify their relationship. With regard to EU external border management, the 2006 Council conclusions (European Council 2006), identified inter-agency cooperation as part of the Integrated Border Management (IBM) concept, which was subsequently codified by the 2009 Lisbon Treaty (Art. 77(1)(c) TFEU). Moreover, Art. 71 TFEU establishes a Standing Committee on Operational Cooperation on Internal Security (COSI) within the Council in order to ensure that operational cooperation on internal security is promoted and strengthened within the Union. In particular, COSI worked on the coordination between JHA agencies promoting “practical and informal arrangements to ensure more effective co-ordination, information sharing and joint activities” (Council of the European Union 2013b). In addition, provisions in the various regulations of Frontex, Europol, FRA and EASO request each agency to cooperate with other JHA agencies. Following a request by the European Council in its Hague Programme in 2005,6 some JHA agencies have started to cooperate sporadically in some areas (e.g. intelligence exchange) and in 2006 nine JHA agencies created the network of Justice and Home Affaires agencies

6 See the relevant quote in the Hague Programme: “To gain practical experience with

coordination in the meantime, the Council is invited to organise a joint meeting every six months between the chairpersons of the Strategic Committee on Immigration, Frontiers and Asylum (SCIFA) and the Article 36 Committee (CATS) and representatives of the Commission, Europol, Eurojust, the EBA, the Police Chiefs’ Task Force, and the SitCEN” (European Council 2005, p. 10).

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Table 1

Bilateral agreements between Frontex, EASO and FRA

Frontex-EASO

Frontex-FRA

EASO-FRA

Working Arrangement (26 September 2012)a Cooperation Plan 2017–2018 (30 January 2017)b Cooperation Plan 2019–2021 (18 July 2019)c

Cooperation Agreement (26 May 2010)d

Working Arrangement (11 June 2013)e

a See

https://www.easo.europa.eu/sites/default/files/public/20120926-FRONTEX-EASO-workingarrangement-FINAL_0.pdf b See https://www.easo.europa.eu/sites/default/files/Easo-frontex-cooperation-plan.pdf c See https://www.easo.europa.eu/sites/default/files/easo-frontex-cooperation-plan-2019-2021.pdf d See https://fra.europa.eu/sites/default/files/fra_uploads/891-Cooperation-Agreement-FRA-Fro ntex_en.pdf e See https://fra.europa.eu/sites/default/files/fra-easo-cooperation-agreement-.pdf

“to boost cooperation in the migration and security fields”7 and agreed to meet three times a year in the format of the Heads of JHA Agencies. The European Council reiterated and specified its call for stringent cooperation between the Union agencies in the 2010 Stockholm Programme in order to “enhance policy coherence and the internal security of the Union including improving their information exchange” (European Council 2010, p. 18). The Stockholm Programme also declared that all security activities have to be in accordance with fundamental rights. As a result of the political calls for more interagency cooperation, Frontex, EASO and FRA concluded bilateral agreements with which the agencies formalized previously informal collaborative activities (see also Thatcher and Coen 2008) (Table 1). According to a Council documentation, 16 multilateral activities among various JHA agencies took place in 2012 covering topics such as data protection, trafficking in human beings, planning cycles, external JHA action and links between external and internal security, financial instruments and regulations, as well as training of JHA agencies’ staff 7 The agencies are EASO, Frontex, Fra, Europol, CEPOL, eu-Lisa, European Institute for Gender Equality (EIGE), European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) and Eurojust. See “the EU Justice and Home Affairs Agencies”, http://www.emcdda.europa.eu/system/files/publications/848/BZ0414283ENC_ web_474844.pdf.

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and human resources to further inter-agency mobility (Council of the European Union 2013b). Given the broad list of participants, it seems that many topics get inputs both from law enforcement agencies but also from those who are primarily concerned with human rights such as FRA.8 2.2

Fields of Activity of Interagency Cooperation Before the 2015 Migration Crisis

Frontex has to support and coordinate member states’ activities at the EU’s external borders by pursuing several tasks including risk analysis, joint operations, rapid response, research, training, return operations and information sharing. In order to fulfill these tasks, Frontex has to cooperate closely with other EU agencies which—albeit having a different mandate—also have an interest and expertise to intervene in these areas from their particular angle (see recital 76 of Frontex Regulation (EU) 2019/1896). According to their mandate, agencies engaging in cooperation with Frontex can be distinguished between law enforcement agencies like EASO on one side, and fundamental rights oriented like FRA. Distinguishing between law enforcement and fundamental rights agencies has analytical value as it allows us to focus on the core objective of a certain agency. Obviously, this does not mean that law enforcement agencies have the freedom to behave as they deem fit and are not bound by legal rules. With regard to Frontex we can observe that the EU Internal Security Strategy (ISS) has further reinforced the existing law enforcement focus of Frontex including its strengthened cooperation with like-minded agencies such as Europol. At the same time, Frontex makes clear that “the issue of fundamental rights remains at the heart of all Frontex activities at every stage” (Frontex 2010, p. 19). Similarly, EASO’s objective is to improve the implementation of the Common European Asylum System (the CEAS), to strengthen practical cooperation among Member States on asylum and to provide operational support to member states subject to particular pressure on their asylum and reception systems (Art. 1 EASO Regulation (EU) 439/2010). In doing so, EASO respects fundamental rights and observes the EU’s Charter of Fundamental Rights of the European Union, as well as the right to asylum. 8 Multilateral activities principally comprise the EU agencies CEPOL, EASO, EIGE, EMCDDA, Eurojust, Europol, FRA and Frontex. However, this does not necessarily imply that all of these agencies participate in all multilateral meetings and projects.

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It also organizes training activities of national border guards in which international human rights law and the EU asylum acquis play an important role (Art. 6 EASO Regulation (EU) 439/2010). In doing so, even before the 2015 migration crisis, EASO is not only monitoring the implementation of the asylum acquis but can also draft guidelines or operating manuals to bring national rules more in line with international refugee law and United Nations High Commissioner for Refugees (UNHCR) guidelines. In addition to that, Frontex regularly participates in EASO’s Management Board. In contrast to the law enforcement focus of Frontex and EASO, the sole objective of FRA is to protect and advance the standard of fundamental rights in Europe and make sure that both EU and member states “fully respect fundamental rights” when implementing EU law (Art. 2 Regulation 168/2007). Interagency cooperation is particularly apparent when it comes to joint operations. Joint Operations refers to emergency situations for which, on request of a member state, EASO coordinates the necessary technical and operational assistance and the deployment of a so-called Asylum Support Team (AST) to the applicant country. Modeled on the concept of the Frontex Rapid Border Intervention Teams (RABIT; Comte 2010, p. 400), the AST underlines the law enforcement character of the interagency relations between the two agencies. In February 2011, following a request by Greece, Frontex and EASO deployed respective teams along with UNHCR staff, at the Greek/Turkish border in order to help Greece and its border guards with the coping of the influx of migrants from Turkey, especially in regard to reducing the backlog of asylum appeal claims9 but also to “improve reception conditions” (EASO 2012b, 2013). EASO deployed 70 experts under the first plan (2011– 2013) and 73 experts under the second plan (2013–2014), while training sessions (regarding inclusion, interview techniques, evidence assessment and country of origin information gathering) were organized for 524 officials (De Bruycker and Tsourdi 2016, p. 492). The 2012 Frontex/EASO Working Arrangement formalizes and further strengthens cooperation in the areas of common operational activities, especially when it comes to ‘emergency’ situation, i.e. member states “facing particular influx or mixed migratory flows at their external borders” (Art. 2 EASO/Frontex 2012). 9 While the Greek operation was the most prominent operation, it is worth mentioning that between 2011 and the summer 2015 EASO deployed Asylum Support Teams in other five member states: Luxembourg, Sweden, Bulgaria, Italy and Cyprus (De Bruycker and Tsourdi 2016, p. 492).

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Another example of practical cooperation, right before the 2015 crisis, was the “Task Force Mediterranean”, that comprised experts from Member States, the European Commission, the European External Action Service (EEAS), EASO, Frontex, Europol, FRA, and EMSA (European Commission 2013b). Within this framework, EASO, Frontex Europol and Eurojust engaged in a pilot project to collect anonymous data in Italy and Malta provided by asylum seekers during voluntary debriefings about migration routes and smuggling networks (EASO 2015, p. 6). 2.3

Fundamental Rights Mainstreaming Through Interagency Cooperation?

FRA only began its relations with Frontex in 2009 with exploratory talks on areas of common interest (Frontex 2009, p. 11) but has meanwhile developed into an important partner in mainstreaming fundamental rights into all Frontex and EASO activities. Based on his expertise, FRA is expected to write annual as well as thematic reports, formulate policy recommendations, develop a communication strategy and promote dialogue with civil society in order to raise public awareness of fundamental rights in general (see Art. 4 Council Regulation 168/2007). The activities of FRA are principally laid down in a multi-annual framework adopted with a Council Decision every five years and have to be in line with the Union’s priorities and ensure complementarity with other EU bodies and agencies (Art. 5).10 While the first multi-annual framework (2007–2012) only generally encouraged FRA to collaborate with other EU institutions and bodies, the current multi-annual work (2018–2022) identifies general thematic area such as “migration, borders, asylum and integration of refugees and migrants” which leaves broad room for further specification. The Council Decision also explicitly states that Frontex and EASO are among the most relevant EU agencies with whom FRA is expected to cooperate (recital 6 Council Decision 2017/2269). To ensure a consistent approach between annual and multi-annual programming, FRA adopts a programming document 10 The first multi-annual framework covered the years 2007–2012 (Council Decision 2008/203), the second multi-annual framework covered the years 2013–2017 (Council Decision 252/2013). Currently the third multi-annual framework for the year 2018–2022 applies (Council Decision 2017/2269).

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providing detailed information about its projects and activities that the agency will carry out.11 From the outset, FRA has pointed out that the cooperation with stakeholders and EU Agencies such as Frontex is essential “in ensuring that the Agency’s projects and activities are connected to the key legislative and policy developments on fundamental rights in the EU” (FRA 2013, p. 7). According to the 2010 FRA/Frontex cooperation agreement, both agencies cooperate in the context of joint border operations, training for border guards and return operations (FRA/Frontex 2010). With regard to training, a Fundamental Rights Manual for training of national border guards was developed in 2012, and FRA and EASO were among those external organizations which were regularly consulted in the drafting process (Frontex 2012, p. 61). In addition, Frontex staff also received fundamental rights training which was developed by FRA and UNHCR (ibid.). In addition, FRA has also started to attend the annual Heads of Agencies Meeting. While this body initially included only law enforcement EU agencies such as Frontex, Europol, Eurojust and CEPOL, the latter agreed to invite the heads of other agencies including FRA (Council of the European Union 2011). The inclusion of FRA into the more security-oriented network of JHA agencies has been regarded as a modest yet positive development toward a more balanced approach in the JHA area (Ramboll 2012, p. 83). Within this context, FRA is included among the most relevant partners of EASO (Art. 52 EASO regulation (EU) 439/2010), and the two agencies signed a working arrangement in June 2013 (EASO/FRA 2013). Since then, EASO participates in FRA’s Fundamental Rights Platform (Art. 12 EASO/FRA 2013). Of particular relevance in the strengthening fundamental rights through interagency cooperation are the two Consultative Fora of EASO and Frontex. The idea to institutionalize the interaction between EU agencies and ‘outsiders’ (i.e. other EU agencies, civil society actors, international organizations) in the format of a so-called Consultative Forum was introduced by the EASO founding regulation (Art. 51 EASO Regulation (EU) 439/2010) which served as a role model for the Frontex recast regulation in 2011. It has been reported that the Council had difficulties to accept such a Forum worrying that it might lose influence on the

11 For detailed information about FRA’s multi-annual as well as annual work programme see https://fra.europa.eu/en/about-fra/what-we-do/annual-work-programme.

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agency’s activities. However, on the insistence of the European Parliament, the Consultative Forum was finally incorporated into the EASO regulation aiming to strengthen the interaction between EASO and civil society organizations as well with international organizations operating in the field of asylum policy (Comte 2010, p. 390). Besides UNHCR which is a member of the Consultative Forum ex officio, the EASO regulation remains silent on who is allowed to participate in the Consultative Forum but leaves it to EASO itself to select Forum members among relevant stakeholders. According to EASO’s Consultative Forum Operational Plan “[e]verybody must be able to provide EASO with input”. Although there is no stringent accreditation system, EASO has adopted a set of criteria for the selection of participants to EASO’s various consultative activities such as relevance, expertise, availability or the relationship of the organization with EASO. In order to cope with the initial stages of the Consultative Forum, EASO created an advisory group that contained representatives from the European Commission, UNHCR, ECRE, the International Association of Refugee Lawyers and the academic Odysseus Network (EASO 2012a). Considering the frequency of interaction, EASO explicitly made clear that the engagement with the Consultative Forum is “not just an annual meeting, but rather a continuous two-way dialogue” that encompasses participation in workshops, expert meetings, online consultation as well as the legally required annual plenary meeting (EASO 2012a, p. 7). In 2011, the EU legislature also established a Consultative Forum on fundamental rights within the Frontex architecture as well as a Fundamental Rights Officer (FRO) to assist the Executive Director and the Management Board in fundamental rights issues (Art. 26a Frontex Regulation (EU) 1168/2011). This Consultative Forum is composed by 15 members of which EASO, FRA and UNHCR “shall be invited” (Art. 26a Frontex Regulation (EU) 1168/2011). These Fora are not the only example of mainstreaming fundamental rights issues within interagency cooperation. Besides chairing the Frontex Consultative Forum during the first two years, FRA was also involved in the recruitment of the first FRO (Ramboll 2012, p. 82) and in establishing the Frontex Fundamental Rights Strategy for which the Consultative Forum should provide recommendations (Art. 26a(2) Frontex Regulation (EU) 1168/2011). Since the FRO has to report to the Frontex Consultative Forum on a regular basis, it is ensured that both FRA and

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EASO officials as members of the Forum are kept informed about fundamental rights issues on a regular basis (Frontex 2012, p. 59). Moreover, the EASO/Frontex working arrangement formalized membership of the two agencies in respective Consultative Fora (Art. 12 EASO/Frontex 2012) and, according to the 2019 Cooperation plan, it is now the Frontex Fundamental Rights Officer having the role of promoting cooperation between the two Fora (Frontex/EASO 2019, p. 6).

3 Consolidation of Interagency Cooperation During the 2015 Migration Crisis Since early 2015, migration, asylum and border issues have been high on the political agenda of European and national policy makers. The combination of high numbers of incoming migrants and refugees, the soaring death toll in the Mediterranean and the inability of the EU to develop a common response to these developments prompted many observers to speak of a migration or refugee crisis. In contrast to the euro crisis, the political response to the high numbers of incoming migrants and refugees has not produced bold supranational measures that led to a further deepening of the field (e.g. Schimmelfennig 2018, Börzel and Risse 2018). Instead, to cope with this crisis and to curb tensions among member states, EU measures mainly revolved around operational support of overburdened EU member states through Frontex and EASO (Trauner 2016). Building on pre-existing provisions and practices of interagency cooperation, this approach has by no means changed pre-crisis approaches to border and migration issues. Instead, it consolidated the EU’s border and migration regime putting particular emphasis on registering and fingerprinting incoming migrants in newly created hotspots in Greece and Italy with the view to maintain the Schengen and Dublin acquis (Campesi 2018; Guiraudon 2018; Jeandesboz and Pallister-Wilkins 2016).12 The reliance on EU agencies such as Frontex and EASO has also strengthened the securitised aspect of EU migration and border policies and security concerns within JHA, and created additional tensions in regard to the adherence to fundamental rights. The stronger reliance on law enforcement EU agencies in times of crisis is also reflected in the agencies’ different growth path regarding 12 Other measures, which partly also involved Frontex and EASO, included financial support for frontline member states, border and military missions in the Mediterranean (e.g. JO Triton; EUNAVFOR MED Sophia) and the conclusion of bilateral arrangements with relevant third countries such as Turkey, Afghanistan or Libya.

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their budget and personnel. Generally, the budgets of Frontex, EASO and FRA have increased in the last decade, but these increases occurred with different speed. While the budget of Frontex grew from e118 million in 2011 to e333 million in 2019, EASO’s budget increased from e8 million in 2011 to an amount close to e103 million in 2019. By contrast, FRA has had to work with a far more modest budget of around e20.7 million in 2011 which experienced only a slight increase to e22.8 million in 2019.13 3.1

Stepping-Up Interagency Cooperation: The Case of EU Hotspots

In the course of the 2015 migration crisis, one of the most visible drawbacks of European solidarity was related to the increasing number of asylum applications filed in EU member states. The inflows triggered accusations from northern member states that frontline countries such as Italy and Greece were neglecting their obligations under the Dublin regime principle of “first-country-of-entry”, notably systematic identifying, registering and fingerprinting of incoming migrants and allowing them to move to Central and Northern Europe, allowing for growing “secondary movements” of asylum seekers (Trauner 2016). In May 2015, the European Commission introduced the hotspot approach in its European Agenda on Migration. This executive yet legally non-binding instrument, endorsed in June 2015 by the Council, aimed at empowering EU agencies such as Frontex and EASO “to swiftly identify, register and fingerprint incoming migrants” in designated hotspot areas in Greece and Italy (European Commission 2015a). The wording and operational profile of the hotspot approach confirmed the reinforced law enforcement role of Frontex and EASO and, in particular, their interagency cooperation. In an ‘Explanatory Note’, the Commission differentiated between ‘hotspot’ and ‘hotspot approach’. According to the Commission, a ‘hotspot’ is a section of external borders characterised by “specific and disproportionate migratory pressure, consisting of mixed migratory flows”. In contrast, a hotspot approach is a platform for relevant EU agencies such as Frontex, EASO, Europol or FRA ‘to intervene, rapidly and in an integrated manner’ in frontline states during a migration crisis (European Commission 2015b, pp. 2–3). In this context, a 13 Data were derived from official statements of revenue and expenditure of EASO, Frontex and FRA (2011–2019) and compiled by the authors.

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hotspot should only be considered for a ‘limited period of time’ in which the support of the hotspot approach is necessary. Indeed, the hotspot approach is triggered by the request of a member state which has to be assessed by the ‘relevant agencies’ under the overall coordination of the Commission. Specifically, Frontex was charged with assisting national authorities in registering and screening incoming migrants to determine their identity and nationality, and to distinguish between the categories (a) asylum (b) return or (c) unclear situation. Moreover, Frontex officials had to assist national authorities in debriefing migrants to gather information about migration routes, secondary movements or smuggling networks. Following Frontex activities, EASO experts support respective member states in the processing of asylum claims in accordance with pertinent EU law and in respect of “first-country-of-entry” principle. Building on the support instruments of RABIT and AST deployment in countries “subject to particular pressure”, Council Decision (2015/1523)14 announced that the agencies of Frontex, EASO, and Europol had to cooperate on the ground as Migration Management Support Teams (MMSTs).15 While these tasks further have strengthened the law enforcement focus of the Frontex/EASO cooperation, the 2015 Explanatory Note has also pointed to the expertise of FRA to address fundamental rights challenges (European Commission 2015b, p. 1). This reference, however, has been very general and did not provide further specification with regard to tasks, activities and venues for cooperation among the agencies. It remains to be seen to what extent it softens the law enforcement bias of interagency cooperation in the EU’s hotspot approach. Against the background of a (perceived) migration crisis, the hotspot approach aimed at ensuring the compliance of EU rules and, by extension, restoring the status quo of the Dublin regime. To implement this consolidation approach (Jeandesboz and Pallister-Wilkins 2016, p. 318), the 14 The Decision (also referred to as the Relocation Decision) explicitly points here to the screening of incoming migrants (including clear identification, fingerprinting and registration) as well to support either possible relocation of migrants to other member states or—in the case of non-eligibility—their return (Art. 7). 15 MMSTs are defined as a “team of experts which provide technical and operational

reinfor-cement to Member States at hotspot areas and which is composed of experts deployed from Member States by the European Border and Coast Guard Agency and by the European Asylum Support Office, and from the European Border and Coast Guard Agency, Europol or other relevant Union agencies” (Art. 2(9) Frontex Regulation (EU) 2016/1624).

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EU has strengthened interagency cooperation with the aim to assist and monitor frontline member states’ external borders and asylum management. Instead of reforming the Dublin system through legislative means, the EU has opted for a pragmatic and largely depoliticized strategy with a strong law enforcement focus, in order to deal with interest diversity among EU member states of how to handle the crisis. This soft approach is not only reflected in the many legally non-binding instruments that govern the hotspot approach but also in the low level of precision and incomplete nature of these instruments (see generally Abbott and Snidal 2000). With the hotspot approach, the EU put forward an underspecified and legally non-binding framework, emphasizing the operational dimension of support from EU agencies. Using broad objectives such as ‘meeting the challenges presented by high migratory pressure’ (European Commission 2015b, p. 1), the EU intensified cooperation and delegated considerable powers to EU JHA agencies with the view to translate these goals into practical measures on the ground. However, from the EU’s point of view, the formally soft and vaguely worded hotspot approach has had the advantage to have an operational and flexible tool at its disposal that allows for swift reactions to fast-moving situations. As such, strengthening interagency cooperation enabled the EU to demonstrate problem-solving capacity in times of crisis and to accommodate interest diversity among member states (Héritier 1999), while ensuring that security concerns and law enforcement needs were adequately addressed. A case in point is the creation of the EU Regional Task Forces (EURTF) in Greece and Italy which have had the task to manage and to regulate interagency relations and the interaction between EU agencies and the host state. The relevant EU documents, however, do not offer much substantial guidance: The EURTF will coordinate its efforts with national competent authorities. Depending on whether the major challenge is pressure at the external borders, or processing asylum applications or investigating criminal networks, the relevant Agency would need to take up the role of coordinator in the EURTF in cooperation with the competent authority of the host Member State. The coordinating EU Agency will take care of the administrative and logistical arrangements in cooperation with the competent authority of the host Member State (European Commission 2015b, pp. 3–4).

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With the hotspot approach, interagency relations have been increasingly codified both in soft and hard law and the law enforcement focus went hand in hand with denser regulation between Frontex and EASO. At the same time, the lack of political guidance and precision remained. In February 2017, the 2010 Frontex/EASO Working Arrangement was complemented by a Cooperation Plan regarding joint operational activities (Frontex/EASO 2017). While the document mentions numerous areas of ongoing and future cooperation, especially with regard to operational cooperation, information and analysis or capacity building, it remains silent on the specifics of these issues. The updated 2019 Cooperation Plan provided a bit more details about the various areas of interagency cooperation, especially with regard to law enforcement activities. While this information may enable outsiders to identify certain areas of cooperation, many provisions or projects are mere announcement of intentions or future activities. Hence, it is still unclear what both agencies are actually doing when they cooperate, what kinds of challenges they are dealing with or on which issues they agree or disagree (Frontex/EASO 2019). With regard to fundamental rights, the 2019 Cooperation Plan contains particularly meagre and general statements regarding future activities, around which further underlines the law enforcement focus of interagency cooperation.16 Moreover, the 2019 Regulation (2019/1896) has strengthened the power of Frontex and further consolidated its cooperation with other EU JHA agencies. After lengthy negotiations among EU member states, the regulation has introduced a permanent, fully trained and operational standing corps which should ‘gradually but swiftly’ reach the capacity of 10,000 operational staff by 2027 (see Art. 54-59 and Annex 1). The tasks of the standing corps include verifying the identity and nationality of persons, authorising or refusing of entry upon border check, stamping of travel documents, issuing or refusing of visas, border surveillance and patrolling and registering fingerprints (Art. 55(7)). In cases of “disproportionate migratory challenges at particular hotspot areas” the standing corps provides technical and operational assistance in the framework of migration management support teams (Art. 40). This may include the 16 “The Agencies will explore possible joint activities/synergies between their Consultative Fora. They will promote attendance of each Agency’s Consultative Forum and participation in their initiatives as appropriate, as well as cooperate bilaterally with the Frontex Fundamental Rights Officer in relevant activities” (Frontex/EASO 2019, p. 6).

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“screening of third-country nationals arriving at the external borders, including the identification, registration, and debriefing (…) and, where requested by the Member State, the fingerprinting (…)” (Art. 40(4)). The teams are also in charge of “initial information to persons who wish to apply for international protection and the referral of those persons to the competent national authorities of the Member State concerned or to the experts deployed by EASO” (Art. 40(4), Frontex Regulation 2019/1896). While all these tasks may not only create tension with the host states’ competences while affecting the rights of individual migrants, it remains unclear to what extent these new powers which are strengthening the law enforcement profile of Frontex and EASO are accompanied by accountability mechanisms. Specifically, during discussion for the proposal of Regulation 2019/1896, the Consultative Forum of Frontex has raised concerns that the constant increase of Frontex staff has not led to a staff increase of the FRO (Frontex 2019, p. 21), which poses even further implications with the new Regulation entering into force). What is more, the 2019 regulation stipulates that the evaluation of inter-agency cooperation is left to the European Commission without involving the FRO, the Consultative Forum or FRA (Art. 121(1) Frontex Regulation (EU) 2019/1624).

4

Conclusions

In this chapter, we dealt with the evolution of the interinstitutional relations among EU JHA agencies pre- and post-migration crisis. Specifically, we asked to what extent interagency relations have affected the balance between law enforcement focus and fundamental rights in the field of border and migration management. Empirically, we analysed the interaction between Frontex, the key European agency on external borders management, with EASO and FRA. Since its inception in the late 2000s, interagency cooperation has gradually increased, especially in the aftermath of the 2015 migration crisis. The cooperation between Frontex and EASO which dealt with securing the EU’s external borders, channelling migration flows and monitoring Dublin system implementation, notably in times of high migratory pressure, has been particularly relevant for EU policy-makers. At the same time, law enforcement agencies, particularly Frontex, have been met with concerns that their activities are not in accordance with established fundamental rights standards. To address this criticism both Frontex as

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well as EASO have concluded formal cooperation agreements with FRA. However, these codifications have been soft both with regard to form and content. Provisions laid down in those agreements are legally non-binding and vague, containing only general statements, areas of cooperation and the intent to facilitate to cooperate. The 2015 migration crisis has led to a further intensification of interagency relations with the objective to provide operational support for overburdened frontline states, namely Greece and Italy, and to strengthen law enforcement focus of interagency cooperation. As a result, codification efforts have also increased. While many interagency-related issues have still been laid down in legally nonbinding instruments, we can also discern that interagency relations are increasingly regulated by EU hard law (i.e. regulations). Generally, the mandate as well as the financial and staff resources of all three agencies have been increased since the beginning of the migration crisis. However, while law enforcement agencies like Frontex and EASO have experienced a considerable increase in their resources, the budget and staff of FRA has only modestly risen. The case in point here is the EU hotspot approach that builds on existing interagency relations to ensure and restore precrisis administrative capacities of frontline states. Initially, the soft law approach allowed the EU to establish hotspots quickly in Greece and Italy without resorting to complex and time-consuming legislative procedures. Subsequently, hotspots have increasingly been regulated through legallybinding but rather vague law. While the shift from soft to hard law has to be welcomed from a rule of law perspective, the level of precision of these codifications has remained modest and therefore unsatisfactory. This is particularly worrisome in cases where EU agencies are engaged in operations and growing interagency cooperation interferes with fundamental rights of individuals (e.g. forced fingerprinting, detention). In sum, interagency relations have been significantly stepped-up in the aftermath of the crisis. Numerous soft law instruments and an increasing number of hard laws regulate the expanding scope of activities of law enforcement agencies like Frontex and EASO. However, many provisions are still general and vague leaving many issues unaddressed. Since the mandate and resources of FRA have only modestly increased, post-crisis interagency relations have further strengthened the law enforcement focus of EU JHA.

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Index

A Accountability, 6–8, 10–16, 23, 24, 27, 37, 38, 41–44, 46, 81, 88, 90–92, 94–96, 105, 129–144, 155, 157, 177, 192, 194–198, 200, 208, 221 Administrative governance, 4, 14, 179 Aegean Sea, 176 Agencification, 3, 7, 12, 14, 15, 22, 23, 25, 130, 152, 154, 169, 170, 177, 189, 207 Agency, 6–8, 10, 11, 15 Agency fever, 21, 207 Appeal Panel, 11, 135, 140, 141, 144 AST: Asylum Support Teams, 181, 212, 218 Asylum, 11, 12, 15, 155, 159, 160, 165, 168, 170, 175, 177, 179, 181–184, 186, 187, 191–194, 196–200, 206–208, 211–213, 215–219

Autonomy, 6, 14, 22, 24, 39, 42, 43, 59, 65, 68, 70, 72, 117, 118, 155, 159, 165 B Banking Union, 10, 80, 103, 106, 118, 120, 127–130, 133, 134, 139, 143 C CEAS: Common European Asylum System, 168, 186, 187, 211 Charter of Fundamental Rights, 211 CJEU: Court of Justice of the European Union, 8–11, 32, 69–72, 128, 130, 134, 135, 140–145, 176, 189 COI: Country of origin information, 190, 191, 212 Comitology, 26, 29, 30, 36, 41 Commission, 6, 14, 23, 25–27, 29, 30, 32, 33, 35, 36, 38, 39,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 J. Pollak and P. Slominski (eds.), The Role of EU Agencies in the Eurozone and Migration Crisis, European Administrative Governance, https://doi.org/10.1007/978-3-030-51383-2

229

230

INDEX

41–43, 46, 57, 58, 65, 69, 70, 80, 84, 90, 91, 94–97, 104, 106–109, 111, 112, 116–118, 121, 129, 132, 134, 143, 152, 154, 157, 161, 162, 164–168, 176, 179, 183–187, 189–191, 193, 195, 199, 209, 217, 218 Constitutionalisation, 27, 29, 37 Consultative Forum, 195, 196, 214, 215, 220, 221 Control, 3, 7, 10, 11, 14, 30, 37–45, 86, 88–91, 93, 94, 104, 112, 118, 132, 133, 141, 143, 144, 152–163, 166–168, 170, 175, 177, 179, 180, 185, 192, 196, 198–200, 206, 208 Cooperation, 14, 23, 24, 42, 56, 58, 65, 80, 96, 113–121, 137, 153, 154, 157, 166, 168, 177, 184, 189, 192, 206, 209–212, 214, 216, 218–222 Council, 14, 22, 24, 29, 35, 39, 40, 42, 43, 57, 68, 69, 81, 83, 88, 91, 93–95, 103, 106–112, 116– 121, 128, 129, 134, 136, 143, 152, 154, 156–158, 161–164, 178, 179, 185–187, 189, 193, 195, 199, 209, 210, 214 Court, 9, 13, 14, 27, 28, 30–37, 44, 70, 71, 82, 83, 95, 97, 129, 134, 135, 141, 142, 144, 195 Court of Auditors, 42, 91, 93, 94, 104, 130 Court of Justice, 7, 8, 28, 39, 104, 105, 109, 140, 195 Crisis, 4–15, 23, 24, 32, 34, 44–46, 55, 56, 58, 59, 61, 62, 65, 68, 70, 79–81, 83, 87, 95–97, 106, 107, 112, 121, 128–130, 133, 135, 140, 143, 151–153, 155, 158–163, 168, 169, 176, 200, 206, 207, 213, 216, 219, 222

D Delegation, 7, 11, 22, 24, 29–36, 60, 65, 71, 72, 86, 104, 105, 109, 121, 170 Democratic, 10, 32, 36, 91–93, 112, 129, 131–133, 136, 138, 139, 143, 194 De-politicization, 128, 143 Direct administration, 25, 26 Dublin regime, 5, 217, 218 Dublin system, 80, 159, 219, 221

E EASO: European Asylum Support Office, 12, 14, 15, 177, 179, 181–183, 186, 188, 190–200, 206, 207, 209–218, 220–222 EBA: European Banking Authority, 9, 10, 23, 35, 36, 40, 43, 56, 59, 65, 80, 83, 90, 95, 96, 106–108, 113–115, 117, 121, 133–135, 209 EBCG: European Border and Coast Guard Agency, 11 ECB: European Central Bank, 5, 9, 14, 28, 56, 58, 79–96, 107, 108, 133, 134 ECOFIN Council, 66, 68, 69 ECON Committee (European Parliament), 10, 136–138, 142, 143 ECSC: European Coals and Steel Community, 32 EDIS: European Deposit Insurance Scheme, 80 Effectiveness, 46, 86, 131, 135, 138, 139, 142, 189, 197, 209 EIOPA: European Insurance and Occupational Pensions Authority, 9, 23, 40, 43, 56, 59, 65, 80, 106, 133

INDEX

EMU: Economic Monetary Union, 10, 45, 103, 105, 115 Enforcement, 32, 67, 95, 120, 188, 193, 199, 200 EP: European Parliament, 10, 14, 22, 24, 32, 35, 39, 40, 42, 43, 57, 69, 70, 81, 90, 103, 107, 110–112, 128, 133, 134, 136, 139, 143, 152, 157, 158, 161, 163, 164, 166, 178, 179, 185, 189, 193, 195, 196, 209, 215 ESA: European Supervisory Authorities, 56–58, 65, 67–69, 106, 128 ESAs budget, 63 ESFS: European System of Financial Supervision, 9, 58, 59, 80, 106 ESMA: European Securities and Market Authority, 8–10, 13, 23, 26, 30–36, 38, 40, 43, 56, 57, 59–65, 67–72, 80, 97, 105, 106, 108, 128, 129, 133, 135 ESRB: European Systemic Risk Board, 58, 60, 80, 88 Ethics Committee, 88 EUAA: European Union Agency on Asylum, 179, 183, 184, 186–188, 190, 191, 193, 194, 199 EU Hotspots, 217, 222 EUIPO: European Union Intellectual Property Office, 30, 94 EU Regulation on Short Selling, 57, 70 Eurogroup, 84, 91, 92, 95 Eurojust, 207, 209–211, 213, 214 European Agency for Asylum, 14 European Commission, 10, 22, 26, 38, 57–59, 63–65, 68, 69, 129, 133, 140, 151, 154, 156–158, 160, 161, 163, 164, 166–169, 179, 183, 187, 189, 193–195,

231

199, 206, 213, 215, 217–219, 221 European Council, 69, 153, 156, 166, 206, 209, 210 European Labour Authority, 97 European Market Infrastructure Regulation (EMIR), 62 Europol: European Police Office, 24, 42, 207, 209–211, 213, 214, 217, 218 Eurozone, 4–7, 9–12, 46, 55, 56, 62, 117, 118 Executive Director, 84, 164, 185, 187–190, 215 Executive powers, 14, 15, 25, 26, 30–32, 46, 104, 105, 161, 166, 167, 169, 176, 193, 194, 200 Experts, 40, 41, 57, 58, 66, 84, 95, 107, 158, 160, 165, 177, 180– 183, 190, 192, 193, 197–199, 212, 213, 215, 218, 221

F Founding treaties, 21 FRA: Fundamental Rights Agency, 12, 15, 206, 207, 209–215, 217, 218, 221, 222 FRO: Fundamental Rights Officer, 197, 215, 216, 220, 221 Frontex: European Border and Coast Guard Agency, 11, 12, 14, 15, 152, 153, 155, 156, 159–170, 177, 178, 180, 181, 184, 185, 187–189, 193, 195–198, 206, 218 Fundamental rights, 157, 158, 177, 191, 192, 194, 196, 197, 200, 206, 208, 210–216, 218, 220–222

232

INDEX

G Governance, 3, 5–7, 12, 13, 21, 22, 25, 37, 44, 46, 56, 57, 60–62, 70, 72, 96, 120, 128, 129, 131–133, 138, 139, 143, 176, 177, 194, 197, 198, 200, 205 Greece, 15, 152, 159, 160, 165, 166, 180, 183, 194, 208, 212, 216, 217, 219, 222

I IBM: Integrated Border Management, 153, 154, 157, 164, 168, 178, 186, 188, 189, 193, 209 Implementation, 9, 15, 22, 23, 25, 29, 40, 44, 57, 63, 64, 66, 95, 104, 108, 134, 168, 169, 175–180, 186–190, 192–194, 198, 200, 207, 208, 211, 212, 221 Independence, 6–8, 10, 12, 14, 24, 28, 37–41, 43, 44, 46, 80, 81, 84–93, 95, 111, 112, 121, 122, 130, 132, 177, 192, 197–200 Infringements, 93, 135 Interagency cooperation, 206–212, 214–222 Intergovernmentalist, 4, 5 Interinstitutional agreement, 83, 136, 138 Italy, 15, 152, 159, 160, 162, 165, 166, 176, 208, 212, 213, 216, 217, 219, 222

J JHA: Justice and Home Affairs, 12, 15, 16, 24, 161, 206–210, 214, 216, 219–222

L Lamfalussy, Alexandre, 56–58, 62, 66–68 Larosière reforms, 56, 58 Law enforcement, 12, 15, 206, 207, 211, 212, 214, 216–222 Legitimacy, 10, 23–25, 32, 37, 41, 44, 95, 119, 129, 131, 133, 138, 140, 141, 143, 154, 155, 195, 208, 209 Level 3 committees, 56, 58, 66–68 Liability, 195, 196 M Management board, 39, 40, 42, 43, 85, 157, 158, 164, 185, 187–190, 195, 198–200, 212, 215 Mandate, 6–8, 10, 11, 13, 15, 29, 36, 43, 44, 46, 59, 65, 67, 69, 86, 130, 132–135, 141–143, 152, 153, 155–158, 161, 163–167, 177, 179, 182–184, 186, 190–193, 196–198, 200, 209, 211, 222 MAR: Market Abuse Regulation, 62, 63, 68 Mediterranean Sea, 152, 157, 159 Meroni Doctrine, 7, 9, 10, 13, 31, 32, 34, 35, 71, 104, 105, 108, 121, 128 MiFID: Markets in Financial Instruments Directive, 62, 66, 68 MiFIR: Markets in Financial Instruments Regulation, 62, 63, 68 Migration, 4, 6, 7, 11, 152, 155, 161, 162, 165, 168–170, 175–177, 183, 184, 192, 199, 206–208, 210, 213, 216–218, 220, 221 Migration crisis, 4–6, 8, 9, 11, 12, 14, 15, 79, 151–153, 155, 156, 159,

INDEX

162, 165, 166, 168, 169, 176, 178, 179, 183, 200, 206–208, 211, 212, 217, 218, 221, 222 Migration-security nexus, 156 Ministerial responsibility, 42 Monetary policy, 80, 82, 86–89, 91, 95 Monitoring, 6, 12, 15, 58, 86, 113, 137, 164, 165, 177–179, 184, 186–188, 193, 194, 198, 199, 212, 221

N Neofunctional, 5

P Power, 4–10, 13, 22–24, 26, 27, 29–34, 36–43, 46, 56–72, 80, 81, 83, 85–87, 90, 92, 93, 95, 96, 104, 105, 108, 110, 112–117, 119, 121, 122, 128–133, 135, 136, 138–143, 152, 154–156, 160, 162–166, 169, 170, 176, 178, 182, 199, 219–221 Practical cooperation, 96, 176, 200, 211, 213 Public interest, 10, 129, 137, 138, 141, 144

R RABIT: Rapid Border Intervention Teams, 158, 178, 180, 212, 218 Refugee crisis, 46, 216 RTS: Regulatory technical standards, 35, 63, 114, 115

233

S Schengen, 5, 11, 151, 153, 162, 169, 170, 185, 216 Schengen crisis, 151–153, 155, 158–161, 168–170 Securitization, 14, 208 Solidarity, 6, 159, 162, 177, 180, 217 Spain, 162, 166 SRB: Single Resolution Board, 10, 11, 13, 14, 24, 80, 85, 94, 96, 103, 105–113, 115–122, 127–131, 133–145 SRM: Single Resolution Mechanism, 14, 80, 96, 103, 106, 108, 112, 116–118, 120, 121, 127–130, 133–144 SSM: Single Supervisory Mechanism, 79, 80, 85, 87, 92–97 Stockholm Programme, 210 Supranationalisation, 9, 12, 25, 26, 57, 72, 170, 208 T TFEU: Treaty on the Functioning of the European Union, 28–31, 33, 35, 36, 42, 44, 71, 80, 81, 83, 85–87, 92–96, 104, 112, 114, 116, 118, 121, 134, 138–141, 152, 157, 180, 182, 192, 195, 196, 209 U UNHCR: United Nations High Commissioner for Refugees, 187, 199, 212, 214, 215 US Administrative Procedures Act of 1946, 23