Reforming: The Stability and Growth Pact Presentation: ECPR-Standing Group on the European Union Second Pan-European Conference on EU Politics

One of the most illustrating example in history of the EUROPEAN Monetary Union are the growing interactions between sovereign countries -each retaining a large degree of fiscal autonomyand the single monetary authority, which managing European monetary policy, since the establishment of the monetary union in 1999. Additionally some regulations as the Stability and Growth Pact (SGP; 1997) introduce new conflicts and gets to one of the mainstays in the European fiscal framework. Since the Ecofin-council meeting in November, 2003 and the failure to impose sanctions against sinner states, the ’Stability and Growth Pact’ is subject of lively academic and public debate. Different alternatives to the current ’Stability and Growth Pact’ exists. There are three main fields of critics about the ’Stability and Growth Pact’. First, the institutional problems. Second, the thresholds and targets and finally the implementation problems. This paper presents a critical assessment of the SGP. The contribution of this paper is: First, summarize the alternative proposals and present a good overview about the huge number of partly vague reform suggestions. In a second step I analyze the the proposals and categorize them into four different ’Reform Alternatives’. Finally, I will extract a reform alternative which takes nearly all critics into consideration and find an answer to: How should the European fiscal framework reformed in future especially the SGP? Moreover the primary target of the paper is to look for new efficient ’supranational-national’ interaction mechanisms. A new finding presented here is that efficient ’supranational-national’ mechanisms need adequate rewards for the restricted party. Additionally I demonstrate that coordination is necessary but with positive incentives. So the paper concludes and shows: How can you solve the interaction between the ’European’ and ’National’ interests efficient. JEL classification: E61, E62, E66