The recent EU budget negotiations have been subject to quite some debate and media attention, mainly because of their first-time-ever smaller total capacity and the row between Northern European states urging for more cuts and Southern European States urging for increased spending. It would seem the North won – and maybe winter really is coming. But without going deeper into the intergovernmental bargaining and possible economic effects of the newly agreed budget, this article takes a look at what this all means for the EU’s inter-institutional relations, i.e. the balance of power between Council, Commission and Parliament.
Let’s first see how it all formally works. The budget procedure follows a Community method of decision-making, meaning that it is not only decided by bargaining member states but also by Commission and Parliament. The method works like this: Commission make a draft proposal of the budget and submits it to Parliament and Council. First the Council – which is the European Council and not the Council of Ministers – takes a look at it and can effectively totally discard the Commission’s initial proposal, making the Commission’s role essentially negligible. This is the part where the member states start bargaining and Britain (in unison with some usual suspects such the Netherlands) traditionally starts making a fuss about everything. Once a deal is made it goes to the Parliament that has veto power over the whole endeavour, able to reject or approve the entire budget but (formally) not to make any suggestions for change. If Parliament says no, they set up a Conciliation Committee, which does what it says. Should the Committee fail – which has never happened – the Commission has to propose a new draft and the whole process starts over again.
As I said, the Commission’s role is largely negligible, being able only to present an initial draft and do some background swaying and soothing. Its role really only becomes important when the Parliament and Council are stuck and they need a third party to (informally) reconcile them. More interesting are the roles of the Council and the Parliament. When the treaties refer to “the Council” they mean the Council of Ministers (aka the Council of the European Union), but I haven’t heard much of that Council in the latest budget negotiations. Today, it’s all about the European Council (the gathering of heads of states and governments formerly known as the European summit). Traditionally the European Council sets out the general guidelines for the Union and only directly intervenes when topics are deemed too important for anything less than the highest political level. However, the European Council has been increasingly active in al areas of EU economic policy in the latest years. This of course has a lot to do with the multiple crises Europe is facing and the crucial political and economic importance of the new EU budget, but we do see a larger trend here. Indeed, the latest innovations in the field of European economic governance saw a focus on inter-state policy coordination rather than an empowerment of the EU institutions through the Community method. (see the article by Uwe Puetter, 2011) The budget adventure also clearly shows that the “heads” are taking over, but that this does not necessarily means a breakdown of the European project, leaving out a few rotten apples.
The Parliament’s role is an example of that. Ever since the Lisbon Treaty the Parliament has full veto power over the budget, which is one of its few strong arms. Initially, this move was cheered by Europhiles, but was received with some suspicion by many economics who feared that Parliament, being a group of elected politicians who need to bring home the bacon and might take a more short-term vision, would make creating a long-term budget deal more difficult. The economists, in my view, were proven wrong, as Parliament has taken its new powers very seriously. It is currently playing a crucial role in the process, rolling its muscles on some vital aspects of the agreement, such as flexibility regarding unspent money and the gap between commitment and payments. Yet many of its objections have already been included in the agreement, so its language is seen by many as unnecessary “posturing”. Nevertheless, Belgian MEP Guy Verhofstadt warns for an EU budget deficit, saying that “now we’ll have a deficit at the European level as a means of fixing their national problems.” Similarly, Parliament president Martin Shulz claimed that “the European Parliament will not accept this deficit budget if it is adopted in this way, that is certain.” However, to me these warning signals are nothing more than the Parliaments way to make their voice heard and adding to the negotiations – which, by the way, they can only do through public statements as they are formally not allowed to make any adjustments to the Council’s proposal. Indeed, if the member states can include the Parliaments’ concerns already during the first round, the budget agreement can be concluded much sooner. I am thus confident that Parliament is serious about the budget and will not needlessly stall the process with impossible demands.
The inter-institutional relations in the EU thus saw some reconfiguration during the past years and the budget negotiations clearly show this. The European Council is becoming increasingly important, taking on a pivotal role at the highest political level of the EU. Simultaneously, the Parliament is increasingly aware of its powers and is testing its limits. The Commission, unfortunately, is being somewhat left out. Increasingly, its role is more of a technical and administrative nature and, without understating the importance of its technical input in the daily workings of the Union, it would seem to me that its heydays as political engine for Europe are definitely over.
About the Author
