29 April 2021

Between European Commitment and ‚Taking the Law Seriously‘

The EU Own Resources Decision in Finland

On 27 April 2021, the Constitutional Law Committee (CLC) of the Finnish Parliament adopted its much-awaited opinion on the EU’s Own Resources Decision (ORD). It established that its approval requires a qualified majority and thus a significant bulk of votes from the opposition, which has been highly critical of the package.

In the spring and summer 2020, I wrote a series of blogs (here, here and here) on the handling of the EU measures relating to COVID-19 crisis in the Finnish Constitutional Law Committee. My series ended with a true cliffhanger. In June 202O, in a unanimous statement, the CLC concluded that the government may not accept or promote the proposed Union borrowing and the liability stemming for Member States from EU grants. Unless significant changes would take place, the ORD package might require a two-thirds majority in the Parliament.

However, the Grand Committee, charged with EU affairs and dominated by government parties, organized its own hearing of selected constitutional law experts, and then decided to set aside the position of the CLC. It was known that the dispute would culminate in the ratification of the ORD – a process in which the Grand Committee has no role.

Debating the NGEU

The ORD has provoked a fundamental debate on the future of the Union and the benefits and pitfalls of EU membership in Finland. Polls show that the Next Generation EU (NGEU), a 750 billion Euro temporary stimulus instrument, has clearly weakened support for the EU. A citizen’s initiative calling for a referendum on the NGEU gathered the required signatures in just a couple of days. Critical discussion of the package has largely taken place on social media. Traditional media has opted for a pro-integrationist agenda and given limited space to critical views.

The NGEU is important for many reasons, including European solidarity. However, only an idiot pays three Euro for one Euro and feels happy about it. For Finnish taxpayers the NGEU is a lousy deal. Based on the latest calculations, Finland’s share of the funds is estimated at 2,1-2,9 billion while its share of costs for the grants is 6,6 billion Euros plus other costs. For Finland, the costs of borrowing through the EU are also higher than those of borrowing on a national basis.

In addition, the package means a surrender of some of the key principles of Finnish EU policies: the no bailout principle and resistance of joint debt. In public debates, the package is considered incompatible with EU Treaties. The fact that the government set aside the CLC opinion is widely known: it was admitted by the Prime Minister in an interview.

There are historical reasons for the Constitution taking centre stage in Finnish debates. In the 19th century, Finland formed an autonomous Grand Duchy of the Russian Empire. During the the periods of oppression Finns relied on the law to defend their autonomy.

This does not mean that the role of the CLC goes unchallenged. There is a constant discussion about whether its ex ante control should be complemented by a stronger ex post control in a constitutional court. Governments also differ in their respect for the CLC. The current Prime Minister is quoted saying, ‘I will deal with the Constitutional Law Committee’.

When her fellow party member and former trade union actor Antti Rinne was recently appointed chair of the CLC – a distinguished position requiring a great degree of integrity – he argued that the task of the CLC is to ‘scrutinise government proposals in relation to the Constitution.[…] The CLC engages in legal, not political scrutiny, and not party political scrutiny in any way.’

During the COVID-19 crisis the CLC has stayed true to this vision: it defended the Constitution and evaluated what is permissible in a crisis situation. It has scrutinized government proposals fiercely, and rejected many as unconstitutional, often because they would interfere with fundamental rights in a disproportionate manner.

CLC opinion on the Own Resources Decision

As regards the ORD, the key task of the CLC was now to assess the outcome of negotiations in light of its June 2020 statement. Did fundamental changes take place to change its overall assessment? Its focus was on the interpretation of Section 94 of the Constitution, in particular whether the ORD involves ’such transfer of authority to the European Union […] that is of significance with regard to Finland’s sovereignty’, in which case ‘the decision shall be made by at least two thirds of the votes cast’.

The conclusion of the CLC was preceded by leaks in the media revealing a tight situation and speculations about how expert opinions would be divided. The latter is usually not very relevant – it frequently happens that the most compelling arguments are not presented by the majority. The CLC would however seldom go against a unanimous view of consulted experts.

This time stakes were high. The evening before the CLC meeting the national broadcasting company YLE reported the results of the government’s ‘confidential’ consultation with the Council Legal Service (CLS). The response from the Legal Service had been a ‘full knockout’ – a rejection of the package would result in an unprecedented loss of reputation for Finland and possibilities to influence future EU decisions for years to come. Democratic choice involved in the ORD process thus appeared significantly limited.

The statement of the CLC of 27 April 2021 builds on its earlier unanimous June 2020 analysis. It is not convinced about the relevance of the subsequent changes in the NGEU for its constitutional analysis, which builds on an idea of political sovereignty. While Finland’s financial responsibilities are now more clearly specified, repayment only begins after seven years. The annual sums remain small, but the package will continue to affect the budgetary powers of the Parliament until 2058. The arrangement also involves a secondary state guarantee. Most fundamentally, the NGEU will de facto amend the nature of the Union and the relationship between the EU and its Member States in a manner that is problematic for the overall control of risks and Finnish budgetary sovereignty.

While the ORD has a legal basis in the Treaties, it is not an ordinary ORD, but includes a clause empowering the Commission to seek funds from the markets and distribute them as grants. The COVID-19 crisis enables recourse to Article 122 TFEU for certain solidarity measures, but these measures cannot be of a kind that make permanent changes in the fundamental principles of the EU. The changes brought by the NGEU are both qualitative and quantitative.

For the CLC, the objectives of the NGEU reach far beyond the implications of the COVID-19 crisis. Its design is problematic regarding the objective of sound financial policies in the Member States. The NGEU makes funding EU policies based on debt politically easier in the future. The EU does not have explicit competence to fund its policies based on debt. Yet, through the ORD, this new way of funding is in practice approved. While technically drafted as temporary, the funding model may be very permanent.

The CLC does not directly assess the legality of the NGEU under EU law. Instead, it argues that its new and unanticipated construction has constitutional consequences. Building on its established doctrine, the CLC evaluates that the measures are not about ‘minor adjustments’ or ‘development’ of Union tasks based on its existing competences – amendments that it has earlier found to be compatible with sovereignty. Instead, the ORD creates a situation which could not have been anticipated when Finland ratified the Treaties and which even the EU’s own institutions (Council and Commission) have considered legally impossible until the COVID-19 crisis. The established reading of Article 310 and 125 TFEU was thus reflected in the Finnish constitutional doctrine on sovereignty.

The CLC concluded that the new interpretations amend the central functioning principles of the EU in a manner that is in substance comparable to EU secondary legislation being used to introduce significant new procedures or elements not approved when ratifying the Treaties. The situation is thus comparable to one where significant competence is transferred to the European Union and requires a 2/3 majority in the Parliament.

Who was politicised?

The minutes from the meeting of the CLC reveal that the statement is the result of a close 9-8 vote. Three members appointed by government parties supported qualified majority voting. The other members of government parliamentary groups supported simple majority voting for reasons explained in a long dissenting opinion, which adopts most of the majority argumentation but takes a different conclusion.

In this case, the procedural aspects of CLC decision-making are interesting. First, based on a general analysis of the minutes of the CLC, it hardly ever votes. It aims at consensus, and makes compromises in order to accommodate conflicting views. This is seen to support its authority.

Second, dissenting opinions are rare. Moreover, I cannot think of another case where the dissenting opinion would be adopted in the name of four parliamentary groups instead of individual members, as was in this case.

Finally, decisions taken by the CLC are based on drafts, which are prepared by the Secretaries to the Committee based on instructions and a general discussion in the CLC. The minutes relating to this file suggest that the draft seems to have remained unchanged since the end of February. In the meeting of 27 April, the chairman of the CLC tabled an alternative text, and had his proposal defeated by the majority. He was the first signature in the dissenting opinion. I have not heard of other cases where the CLC chair would take this role.

After the decision had been taken, Chairman Rinne was quick to point out for the press that the majority of experts had in fact approved simple majority voting, and stressed the serious political consequences of the decision taken by his own Committee. The same message was repeated on twitter by the Europe minister.

Yet, constitutional deliberation is not about identifying a majority of expert opinions. It is a matter of assessing the credibility of legal argumentation and maintaining the consistency and internal logics of constitutional doctrine. This is essential for credibility. Changes to established doctrine need a proper justification.

When placed within the Parliament, this deliberation is part of a political process. The Parliament’s internal rules stress that selected experts should represent a broad spectrum of views. Many experts called by the CLC are professors at key universities whose expertise might be rather general.

Critical discussion of CLC opinions is always in place. Experts whose advice was not followed frequently disagree with its conclusions and feel that their views and expertise were disregarded. Yet, the CLC is the only body whose main function is constitutional scrutiny in a process specified in the Constitution. This offers authority to its opinions. It is worrying that government ministers or the CLC chair undermine the authority of its findings. Corrupting constitutional procedures and bodies from within is not something that should be taken lightly.

‘Fortunately, you cannot walk over the CLC. That is the greatest thing in this country’, commented Miko Bergbom, Chairman for the Youth section of the True Finns in his reply to the Europe Minister’s tweet quoted above. May his faith in the CLC always remain justified.

Consequences

The legality of the NGEU is likely to be assessed by the ECJ. Yet, despite the creative nature of the legal construction of the NGEU, the ECJ is likely to look the other way. Its main challenge will be to frame its judgment in a manner that maintains trust in the existence of proper constitutional control in the EU and assures the more sceptical audiences that the Treaties matter, even in cases where they constrain Union action. As long as it fails to do so, some degree of constitutional ulta vires scrutiny seems necessary for ensuring the legitimacy of EU decisions.

The statement of the CLC does not ultimately settle the Finnish position on the NGEU. Instead, it makes sure that a broad majority in the Parliament is needed to approve it. Whether this can be found remains to be seen.

For many MPs, the situation creates an impossible dilemma between their European commitment and taking the law seriously. European institutions would be well advised to adopt policies that do not place national decision-makers in a position where they need to make a choice between these two imperatives.

The author was one of the experts consulted by the Constitutional Law Committee. 


SUGGESTED CITATION  Leino-Sandberg, Päivi: Between European Commitment and ‚Taking the Law Seriously‘: The EU Own Resources Decision in Finland, VerfBlog, 2021/4/29, https://verfassungsblog.de/between-european-commitment-and-taking-the-law-seriously/, DOI: 10.17176/20210429-181619-0.

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