The Court of Justice and the Perils of Eurozone Fiscal Framework
The article aims to interpret the evolution of the Eurozone governance using the lenses of fiscal federalism theory. This perspective would help to understand what the Court of Justice of the European Union had to manage in its cases that faced the economic governance reform process. The focus is mainly on the interpretation made by the Court of some features of the instruments challenged in Pringle and Gauweiler from a theoretical perspective. The thesis is that such evaluations reflect an evolution in the relationship between the norms and political behaviour of actors in the Economic and Monetary Union. Adopting a fiscal federalism theoretical perspective, the cases could be read as reflecting a modification of the system of incentives to assure the responsible fiscal behaviour of the actors. The Eurozone originally relied on market incentives to assure the states’ sound budgetary policies. Today, the system presents a more mixed system of incentives, with legal incentives particularly emerging in the Court of Justice’s interpretation of Articles 125 and 123.1 of the Treaty on the Functioning of the European Union. The explanation of this pre-legal evolution helps to understand the divergence between the interpretation of the Memorandum of Understanding as proposed by the Court of Justice in Ledra Adv. and the different approach proposed by the German Federal Constitutional Court in the judgement ending the Gauweiler saga and in the referral regarding the Quantitative Easing.