Article 136 TFEU

Article 136 TFEU
Treaty	Treaty on the Functioning of the European Union
Part	Part Three: Union Policies and Internal Actions
Title	Title VIII: Economic and Monetary Policy
Chapter	Chapter 1: Economic Policy
Article	136
Adds to	Treaty on European Union

Article 136 TFEU is a provision within the Treaty on the Functioning of the European Union that establishes a specific legal framework for enhanced coordination and surveillance of budgetary discipline and economic policies for Eurozone member states. It serves as a cornerstone for the European Union's response to financial crises, providing the legal basis for measures like the European Stability Mechanism and stricter fiscal rules. The article was introduced via the Treaty of Lisbon and later amended during the European debt crisis to strengthen the Economic and Monetary Union.

Legal Text and Context

The core legal text, situated within Title VIII of the TFEU, authorizes the Council of the European Union to adopt specific measures for Eurozone countries concerning the surveillance of their budgetary discipline and the coordination of their economic policies. This provision operates under the broader umbrella of Article 121 TFEU and Article 126 TFEU, which govern multilateral surveillance and the excessive deficit procedure for all European Union members. The inclusion of this article was a direct consequence of the Treaty of Lisbon, which reformed the foundational treaties of the European Union, including the Treaty of Rome. Its placement reflects a deliberate move to create a distinct legal regime for the single currency area, acknowledging the unique interdependencies created by the euro.

Purpose and Objectives

The primary purpose is to safeguard the stability of the Eurozone as a whole by preventing negative spillover effects from unsound national fiscal policies. It aims to deepen the coordination of economic policies beyond the general rules applicable to all European Union members, thereby addressing the inherent tensions within a monetary union without a full fiscal union. A key objective was to provide a durable legal foundation for crisis management mechanisms, a need starkly revealed by the Greek government-debt crisis and the subsequent European debt crisis. Ultimately, it seeks to reinforce the credibility of the European Central Bank's monetary policy and ensure the proper functioning of the Economic and Monetary Union.

Amendments and Revisions

Article 136 TFEU was notably amended by the European Council decision 2011/199/EU, an action taken under the simplified revision procedure outlined in Article 48(6) of the Treaty on European Union. This amendment, often referred to as the "Fiscal Compact" treaty change, added a third paragraph explicitly authorizing the establishment of a permanent stability mechanism. This legal change was imperative for the creation of the European Stability Mechanism, a firewall institution designed to provide financial assistance to distressed Eurozone members. The amendment process itself was a rapid political response to the escalating European debt crisis, following earlier temporary solutions like the European Financial Stability Facility.

Role in Economic Governance

This article plays a central role in the European Union's post-crisis economic governance architecture, often called the "Six-Pack" and "Two-Pack". It provides the direct treaty basis for regulations that strengthen the Stability and Growth Pact, particularly the corrective arm dealing with excessive deficits. The European Commission uses this authority to issue country-specific recommendations and monitor compliance with stricter budgetary rules. Furthermore, it underpins the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which was signed by most European Union leaders. The European Court of Justice has upheld measures derived from this article, reinforcing its legal potency in cases like those concerning the European Stability Mechanism.

Relationship with Other Treaty Provisions

It has a symbiotic relationship with Article 121 TFEU on multilateral surveillance and Article 126 TFEU on excessive government deficits, acting as a lex specialis for the Eurozone. It also interacts closely with Article 122 TFEU, which provides a general legal basis for solidarity measures, though the former is now the preferred basis for specific financial assistance programs. The provisions on economic policy coordination in the Treaty on European Union, particularly in Title IV, set the overall principles that this article implements in a stricter form. Its connection to the mandate of the European Central Bank is critical, as reinforced fiscal rules support the bank's primary objective of price stability under the Treaty on the Functioning of the European Union.

Implementation and Legal Effects

Implementation occurs through binding regulations and decisions adopted by the Council of the European Union, typically acting on a proposal from the European Commission and after consulting the European Parliament. The most significant legal effect has been the establishment and operation of the European Stability Mechanism, an international financial institution headquartered in Luxembourg. It has also enabled the creation of enhanced surveillance procedures for countries receiving financial assistance, granting the European Commission, the European Central Bank, and the International Monetary Fund significant oversight roles. The article has fundamentally altered the balance between national fiscal sovereignty and European Union oversight, creating enforceable obligations for Eurozone member states that are adjudicated by the European Court of Justice.

Category:Treaty on the Functioning of the European Union Category:European Union law Category:Economic and Monetary Union of the European Union