Macroeconomic Conditionalities: Using the Controversial Link between EU Cohesion Policy and Economic Governance

The reform of EU economic governance since the outbreak of the euro area crisis has not stopped at the borders of Economic and Monetary Union. With the introduction of macroeconomic conditionalities in all European Structural and Investment Funds (ESIF), EU cohesion policy is now closely linked to the Stability and Growth Pact. The European Commission is expected to propose the suspension of ESIF funding in case of non-compliance with the Excessive Deficit Procedure. This article focuses on Portugal and Spain, which were nearly sanctioned under the macroeconomic conditionalities in 2016. It will address the question of why the application of this sanctioning procedure was softened compared to the hardness of its legal provisions. Drawing on the ‘usage of Europe’ approach and on the concepts of hard and soft law, this article argues that the usage actors make of a procedure has an influence on its legal character at the enforcement stage. This article finds that the hard law character of the procedure was softened by the European Commission’s flexible application of the provisions and by the European Parliament’s strategic usage of the rules.