It Is Broken. Can It Be Fixed? A Look at the European Union's ...

the governments through ECOFIN judge the quality of their own policies (Fatas, Von
Hagen, Hallett, Strauch, and Sibert, 2003, p. 67).
They suggest that the Sustainability Council be funded by and report to the European Parliament,
rather than either the Commission or the Council. They acknowledge that the idea for creation of
yet another EU institution may seem unattractive to many. However, they feel that the benefits of
increased transparency and democracy outweigh this concern and warrant consideration of their
proposal.
Enderlein suggests that the problem for EMU is “how to achieve domestically stabilizing
fiscal policies without creating a collective action problem based on free-riding deficit-spending
by member countries’ governments” (Enderlein, 2004, p. 1042). He suggests two possible
solutions: (a) a full-fledged system of fiscal federalism wherein any surplus money from fast
growing member states would be redistributed to low growth countries; and (b) abolishment of
the SGP replacing it with reliance on Article 99 of the TEU’s Broad Economic Policy Guidelines
(BEPGs).
Of these solutions, Enderlein suggests that the first, while having some appeal, is
unrealistic, at least at this juncture. Therefore, he recommends scraping the SGP and relying on
what is referred as the ‘soft’ approach of the BEGPs. He argues that decisions on deficits and
surpluses are fundamentally political in nature and, therefore, the ‘hard’ approach of the SGP
will not work. He distinguishes between the two approaches with the following example: “the
SGP approach: ‘you are not allowed to run deficits above 3 per cent’…the BEPG approach: in
2004 you should reach a budgetary deficit of 1 per cent’” (Enderlein, 2004, p. 1042). Whether
this is merely a matter of semantics or is a significant difference is probably a matter of
interpretation, however, Article 99 does task the Council with the formulation of these BEGPs
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