EU Financial Assistance Conditionality after 'Two Pack'

Conditionality is the new topos of EU economic governance. In Pringle, the ECJ raised “strict conditionality” to a necessary requirement of assistance to Members in financial distress, and after the recent amendment of Article 136 TFEU this is also explicitly set out in the Treaties. Moreover, conditionality proved to be an extremely powerful instrument. It has been used to press for reforms in recipient countries’ economies, healthcare and pension systems, education and research. On many occasions, the conditions for accessing European financing are prescribed in minute detail. Never before had European institutions been engaged in so close surveillance and micromanagement of domestic public policies. Starting from these observations, this article has two purposes. Firstly, to shed some light to the origins and the mechanics of EU financial assistance conditionality, and, secondly, to offer a critical appraisal of its role in the context of the new EU economic governance, especially after the so-called “Two Pack” set of reforms. Although Regulation 472/2013/EU succeeds in putting all forms of conditional lending under a common EU framework, it fails to address the basic concerns raised by the emergence of conditionality as a cornerstone of EU economic governance. Blurred responsibility, wide executive discretion, and uncertainty as to the legal instruments are some of the points that remain problematic.