Avoiding the Inappropriate: The European Commission and Sanctions under EU Fiscal Policy Coordination

Since the beginning of the European Economic and Monetary Union, fiscal non-compliance has been subject to the potential imposition of sanctions. However, the extent to which punitive action should be automatic – rather than political – is a point of constant discussion among European Union decision-makers. The most recent reform of the Stability and Growth Pact, in the aftermath of the European Sovereign Debt Crisis, has attempted to make sanctions more automatic and has created the possibility to trigger them at earlier stages of the surveillance procedure. With this in mind, the reform has enhanced the powers and autonomy of the European Commission in the application of the new rules. Despite the reinforcement of punitive provisions, the Commission has so far refrained from proposing the imposition of sanctions. Against this background, this thesis aims to answer the question of how we can best explain that the European Commission does not propose financial sanctions because of Member State non-compliance with the Pact’s fiscal objectives. The thesis draws upon four post-crisis cases in which sanctions for fiscal non-compliance might have been imposed – Belgium in 2013, France in 2015, Portugal and Spain in 2016, and Italy in 2018. The thesis uses theory-testing process-tracing methods and applies an adaptation of normative institutionalism that takes into account strategic actor behaviour. Based on this theoretical and methodological framework, it is argued that the normative-strategic minimum enforcement mechanism explains the Commission’s behaviour. Given that the imposition of sanctions is perceived as inappropriate in the cases at hand, Commission actors strategically refrain from applying the enforcement provisions to their full extent.