The EU and its institutions

The EU and its institutions
1 September 2017

Table of contents 1 The European Union’s history 8
The Court of Justice of the EU 2 The Member States 9 The decision-making process 3 The EU’s competences 10 The EU’s legal acts 4 The European Commission 11 The EU agencies 5 The European Parliament 12 The euro 6 The Council of the EU 13 The EU budget 7 The European Council 14 Questions and answers

Founding principles After WWII, Western European leaders looked for a more efficient way to prevent a new war. 9 May 1950, Schuman Declaration: “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany.” Goal: to create common interests between European countries which would lead to gradual political integration, eventually giving rise to a European “federation”. 1951: Belgium, France, West Germany, Italy, the Netherlands, and Luxembourg created the European Coal and Steel Community (ECSC), the EU’s ancestor. ECSC: regulates countries’ industrial production of coal and steel under a centralised supranational authority, and creates a single market for these products, which are essential to waging war. Key principles on which the EU is founded: peace, democracy, human rights, rule of law, plus human dignity, equality, and solidarity (Charter of Fundamental Rights of the European Union).

Timeline 1951: European Coal and Steel Community – Treaty of Paris
1958: European Economic Community (EEC) – Treaty of Rome 1968: Customs Union (removal of all customs duties, common external tariffs) 1979: First direct elections to the European Parliament 1979: European Monetary System (stabilisation of exchange rates) 1986: Single European Act (completion of the Single Market) 1989: Fall of the Iron Curtain, German reunification 1993: European Union (EU) – Treaty of Maastricht 1993: Single Market is completed, the “four freedoms” of circulation are established 1994: European Economic Area (EEA) – EU + Norway + Iceland + Liechtenstein 1995: Schengen Agreement (removal of internal border controls) 1999: Creation of the euro (notes and coins put in circulation in 2002) 2004: Treaty establishing a Constitution for Europe (not adopted) 2009: Treaty of Lisbon (institutional reform, legal personality for the EU) 1958 besides the EEC, Euratom (European Atomic Energy Community) is also created. Single Act = roadmap towards the completion of the Single Market, simplified decision-making process. EU (Maastricht) = single currency rules, joining the “pillars” under a common institutional framework + foreign policy. 1993 Single Market is completed officially as in practice barriers still remain to this day. 1999 also Treaty of Amsterdam (institutional reforms to prepare for the 2004 enlargement) + same objective in 2003 with Treaty of Nice. 2009 = Lisbon -> 2 treaties in reality: the Treaty on the European Union, and the Treaty on the Functioning of the European Union, or TEU and TFEU (TEU = core principles, basic outline of the main institutions, foreign+defence policy; TFEU = pretty much everything else, it details the functioning of the EU’s institutions).

The Member States (1/2) Country Population GDP ($ millions) Currency
Accession Germany (DE) 81,089,331 3,874,437 euro (EUR) 1958 France (FR) 66,352,469 2,833,687 United Kingdom (UK) 64,767,115 2,950,039 pound sterling (GBP) 1973 Italy (IT) 61,438,480 2,147,744 Spain (ES) 46,439,864 1,406,538 1986 Poland (PL) 38,005,614 547,894 złoty (PLN) 2004 Romania (RO) 19,861,408 199,093 leu (RON) 2007 Netherlands (NL) 17,155,169 880,716 Belgium (BE) 11,258,434 534,230 Greece (EL) 10,846,979 237,970 1981 Czech Republic (CZ) 10,419,743 205,270 koruna (CZK) Portugal (PT) 10,374,822 229,948 Hungary (HU) 9,855,571 136,989 forint (HUF) Sweden (SE) 9,790,000 570,591 krona (SEK) 1995 The MS are sorted by population size, rather than by alphabetical order or GDP, because population is an important factor in the decision-making process (see slides on the Council of the EU).

The Member States (2/2) Country Population GDP ($ millions) Currency
Accession Austria (AT) 8,581,500 437,582 euro (EUR) 1995 Bulgaria (BG) 7,202,198 55,824 lev (BGN) 2007 Denmark (DK) 5,653,357 342,362 krone (DKK) 1973 Finland (FI) 5,471,753 272,649 Slovakia (SK) 5,403,134 99,869 2004 Ireland (IE) 4,761,865 250,814 Croatia (HR) 4,225,316 57,073 kuna (HRK) 2013 Lithuania (LT) 2,921,262 48,288 Slovenia (SI) 2,062,874 49,570 Latvia (LV) 1,986,096 31,972 Estonia (EE) 1,313,271 26,506 Cyprus (CY) 847,008 23,263 Luxembourg (LU) 562,958 65,683 1958 Malta (MT) 429,344 10,514

Historical enlargements
Founding countries: Belgium, France, West Germany, Italy, Netherlands, Luxembourg 1973: Denmark, Ireland, United Kingdom 1981: Greece 1986: Portugal, Spain 1990: East Germany (reunification) 1995: Austria, Finland, Sweden 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia 2007: Bulgaria, Romania 2013: Croatia

Future enlargements EFTA countries: Iceland, Liechtenstein, Norway, Switzerland Recognised candidates: Albania, Macedonia, Montenegro, Serbia, Turkey (de facto frozen) Candidate: Bosnia and Herzegovina Potential candidate: Kosovo Association agreements: Georgia, Moldova, Ukraine Withdrawing: United Kingdom EFTA = European Free Trade Association. Recognised candidate = negotiating for accession. Candidate = submitted an application (but not accepted yet). Kosovo = did not formally apply, but wants to (complicated status, with some Member States not recognising its independence). Association agreements = FTA but also cooperation, development aid, and in the case of those 3 countries the EU recognised their “European perspective” (potential EU member, in the long term).

Exclusive EU competence
Only the EU can legislate in these areas (Members States have surrendered their right to act individually): The customs union (mainly the common external tariff) The establishing of competition rules necessary for the functioning of the internal market (antitrust, State aid regulation, merger control) The monetary policy for the Member States whose currency is the euro The conservation of marine biological resources under the common fisheries policy The common commercial policy (mainly negotiating trade agreements) Concluding international agreements: when their conclusion is required by a legislative act of the EU when their conclusion is necessary to enable the EU to exercise its internal competence in so far as their conclusion may affect common rules or alter their scope

Shared competence The Member States can act in these areas only if the EU has chosen not to. This is a constant process: as the EU decides to legislate in a particular area, it also removes the Member States’ right to legislate in the covered area. The internal market (the “four freedoms” of circulation) Social policy, limited to certain aspects defined in the Treaties Economic, social and territorial cohesion (includes regional development funds) Agriculture and fisheries, excluding the conservation of marine biological resources The environment Consumer protection Transport Trans-European networks (in transport, energy, and telecommunications) Energy The “area of freedom, security and justice” (police and justice cooperation, free travel area) Common safety concerns in public health matters, limited to certain aspects Research, technological development and space (includes research funds and grants) Development cooperation and humanitarian aid (towards third countries)

Competence to support, coordinate, or supplement actions of the Member States
In these areas, the EU cannot adopt legally binding acts that require the Member States to harmonise their laws and regulations. The protection and improvement of human health Industry (promoting competitiveness, innovation, job creation…) Culture Tourism Education, vocational training, youth and sport (includes the Erasmus programme) Civil protection (mechanism for crisis response in Europe and outside) Administrative cooperation Health = very wide -> prevention, food crises, cross border health threats (Ebola), best practice sharing, food labelling, tobacco, etc. Culture = mostly funding, to protect and make available to all Europe’s shared cultural heritage + support for creative industries. Education = besides Erasmus, the Bologna process (facilitate moves between the different education system, promote the recognition of diplomas). EU Civil Protection Mechanism – examples of emergencies where it intervened = Japan Tohoku Earthquake, Syrian civil war, forest fires, floods, Ebola epidemic…

Competence to provide arrangements within which Member States must coordinate policy
In the following areas, the Member States retain their ability to legislate, but must first coordinate their policies within the EU. To this end, the EU can adopt measures, such as guidelines or framework arrangements for these policies. Economic policies (includes the “European semester” process, where the EU issues recommendations each year on national budgets) specific provisions for Member States whose currency is the euro (such as the Stability and Growth Pact to limit public debt and deficits) Employment policies Social policies The coordination and economic policies was especially reinforced after the 2008 financial crisis, with measures to protect the stability of the financial markets. Employment and social policies = mostly coordination and monitoring, support for Member States to share best practices.

Common Foreign and Security Policy
The Treaties also give the EU the competence to define and implement the Common Foreign and Security Policy (CFSP), including the progressive framing of a common defence policy. The EU is allowed to develop relations and build partnerships with third countries, as well as with international, regional, or global organisations which share its principles: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law. The CFSP does not replace national foreign policies or external relations, nor does it reduce the Member States’ competences in these areas. Unlike other areas of competence, the European Commission does not have powers of initiative for the CFSP – it cannot propose new legislation.

Concluding international agreements (1/2)
Within its areas of competence, the EU is not restricted to just legislating but may also conclude treaties and agreements with third countries or international organisations. The division of competences between the EU and its Member States directly impacts the process through which such agreements are adopted. The content of each agreement (i.e. the areas of competence covered) determines its nature, with two possibilities: Exclusive agreements, also called EU-only agreements They cover only exclusive EU competences, and/or shared competences insofar as the EU has sufficiently legislated in that particular area, and Member States no longer have a competence to act. Mixed agreements Any other agreement. Mixed agreements = any other, which means that an agreement covering only exclusive competences, except for one area of Member State competence, is considered a mixed agreement.

Concluding international agreements (2/2)
The ratification process differs depending on the type of agreement. Exclusive agreements Mixed agreements Identical procedure, but then followed by the individual ratifications of the Member States, according to their own procedures. A provisional entry into force, for the areas of the agreement covered by exclusive competences, is possible after the Parliament’s approval while the Member States complete their ratification procedures. Commission proposal Signature by the Council Parliament approval

The Commission – Role and powers
The European Commission (EC): promotes the general interest of the Union; ensures the application of the Treaties and EU legislation (“guardian of the Treaties”); oversees the application of EU law under the control of the Court of Justice; executes the budget and manages programmes; ensures the Union’s external representation; is in charge of achieving inter-institutional agreements. More practically speaking, the Commission is responsible for proposing legislation, implementing decisions, and managing the day-to-day business of the EU. It is essentially the executive branch of government. Unlike traditional governments, however, in the EU it is the only institution to hold the power of legislative initiative (the power to propose new legislation). Once legislation is in place, the Commission also acts as a surveillance authority, ensuring that EU law is correctly implemented and upheld. To this end, it can impose sanctions on Member States and other stakeholders. The Commission has a monopoly on the power of initiative. However, the European Parliament, 25% of the Member States, or one million EU citizens can formally request the Commission to put forward a proposal. But the Commission remains free to act as it sees fit.

The College of Commissioners
The Commission is composed of a college of 28 members, including the President, the High Representative for Foreign Affairs, and the Vice-Presidents. Each member (except for the President and the High Representative) is nominated by a Member State, but Commissioners do not represent their country. After their nomination, Commissioners are given a portfolio by the President. The European Parliament then holds hearings for each candidate, and votes on the suitability of the entire College. The College is then formally appointed for a 5 year term. Decision-making: The President defines the policy direction for the Commission, which enables the College to collectively decide strategic objectives and prepare an annual work programme. The Vice-Presidents are in charge of coordinating the work of Commissioners in their area of responsibility. In practice, decisions are usually made by consensus. But in theory, the Commission adopts its decisions by a simple majority vote, with one vote per Commissioner. Parliamentary hearings = the EP cannot refuse to appoint a single Commissioner, as it can only vote for/against the College as a whole. But in practice the EP can often pressure for the removal of a candidate it deems unsuitable, by threatening to vote against the whole team.

The President of the Commission
Jean-Claude Juncker is the current President of the European Commission. As the head of the EU’s executive branch, he leads the College of Commissioners, collectively accountable to the European Parliament. He defines the Commission’s main policy objectives. The President allocates portfolios and vice-presidencies amongst Commissioners, and reshuffles or dismisses them as necessary. According to the treaties, the President is nominated by the European Council. Previously, this was done by informal consensus, but the Lisbon Treaty changed the process: “Taking into account the elections to the European Parliament […] the European Council, acting by a qualified majority, shall propose to the European Parliament a candidate for President of the Commission.” Consequently, ahead of the 2014 European Parliament elections, each pan-European political party selected their candidate (“Spitzenkandidaten”) for the Presidency. After the elections, the European Council appointed the candidate of the party with the most votes: the EPP (centre-right). Jean-Claude Juncker is from Luxembourg. Jean-Claude Juncker was the first (and so far the only) President appointed through the Spitzenkandidat process. Considering that this process is not actually outlined in the Treaties, but is rather the consequence of a “power grab” by the EP, it is not certain that the next President will also be appointed in the same way. It seems likely to happen, though, because it would seem “undemocratic” to undo this change and return to an appointment decided behind closed doors by the European Council.

The High Representative for Foreign Affairs and Security Policy
Federica Mogherini is the current High Representative of the Union for Foreign Affairs and Security Policy. As such, she is the chief coordinator and representative of the CFSP. She is responsible for controlling general foreign policy (outside of trade, development, and enlargement which have to be made in coordination with the Commission), including security initiatives and intelligence sharing. However, although the HR may prepare initiatives, decisions are taken by the Member States in the Council. The HR controls the staffing and budget of the European External Action Service (EEAS), which includes the EU’s delegations around the world. The HR is appointed by the European Council. However, she is also an ex officio Vice-President of the Commission, and is therefore audited by the European Parliament like other Commissioners, and subject to the Parliament’s vote of approval. The HR attends meetings of the European Council, and chairs the Foreign Affairs Council. Federica Mogherini is from Italy. There have been 3 HRs since the creation of the office. So far, all of them came from large Member States (Spain, UK, Italy). The job is not reserved to large Member States, but they tend to be favoured as smaller Member States rarely have the kind of international influence and diplomatic network that larger countries have. In practice, it is difficult to determine what the boundaries are between the roles of the HR and of the national foreign ministers. Furthermore, the President of the Commission, the President of the European Council, and the President of the EP also frequently speak on behalf of the EU on the international stage. The general consensus is that “so long as the EU speaks with one voice, it doesn’t matter who is speaking.” This leads to some competition between them, from time to time. Because the College of Commissioners has 28 members, but the President and HR are chosen by the European Council and Parliament, the two Members States from which the President and HR come from do not actually get to name “their” Commissioner.

The Commission’s structure
The Commission is divided into departments known as Directorates-General (DGs), similar to national departments or ministries. Each DG covers a specific policy area (e.g. Agriculture) or internal services (e.g. Human Resources) and is headed by a Director-General who is responsible to a Commissioner. A Commissioner’s portfolio can be supported by multiple DGs. They prepare legislative proposals for the Commissioner, and also manage the day-to-day monitoring and surveillance of EU law implementation under their area of responsibility. DGs vary widely in terms of staff, budget, and influence; this changes over time, depending on the Commission’s current priorities. Each Commissioner is aided in their task by a Cabinet (from the French meaning of the term). The Cabinet is the Commissioner’s personal office. It typically includes a Head of Cabinet (chief of staff), a Deputy Head of Cabinet, and a half-dozen of members/advisors each in charge of a particular area and of liaising with other Cabinets. Each Cabinet also includes one or two spokespersons, and 5-6 administrative assistants. Cabinets are appointed by the Commissioners, who can replace their staff as they see fit. Heads of Cabinet typically yield a lot of political influence. They also meet once a week, to prepare the weekly meetings of the College of Commissioners. The EU has 24 official languages, and every official document is translated in each language. However, internally the Commission only uses three working languages: English, French, and German. In practice, English is used for over 85% of the work. The Commission is by far the largest EU institution by number of staff, with around 32,500 personnel (civil servants, temporary workers, delegated national officials).

Important DGs and departments
Agriculture and Rural Development (AGRI) Budget (BUDG) Climate Action (CLIMA) Communications Networks, Content and Technology (CONNECT) Competition (COMP) Economic and Financial Affairs (ECFIN) Employment, Social Affairs and Inclusion (EMPL) Energy (ENER) Environment (ENV) European Neighbourhood Policy and Enlargement Negotiations (NEAR) Financial Stability, Financial Services and Capital Markets Union (FISMA) Health and Food Safety (SANTE) Internal Market, Industry, Entrepreneurship and SMEs (GROW) International Cooperation and Development (DEVCO) Justice and Consumers (JUST) Maritime Affairs and Fisheries (MARE) Migration and Home Affairs (HOME) Mobility and Transport (MOVE) Regional and Urban Policy (REGIO) Research and Innovation (RTD) Taxation and Customs Union (TAXUD) Trade (TRADE) Data Protection Officer (DPO) European Anti-Fraud Office (OLAF) Legal Service (SJ) Secretariat-General (SG) Taskforce on Article 50 negotiations with the United Kingdom

The Commission – Political dynamics
The Commission officially decides by single majority. But in practice, the President holds a significant amount of power (currently) and nothing is decided without his approval. Commissioners are independent from their Member States. In reality, they do occasionally press for their national interests. The President appoints portfolios and vice-presidencies freely. However, he usually tries to manage national sensitivities. Large Member States expect “their” Commissioner to receive important or prestigious portfolios. The President must also find a balance between political parties, ensure that at least a few smaller Member States receive important positions, promote gender equality, etc. In practice, a lot of “horse-trading” takes place behind the scenes during the nomination process. Certain portfolios wield a lot of power and influence. This can vary over time. Commissioners’ Cabinets are very important. A good team can enhance enormously the influence of a Commissioner. They also act as gatekeepers and the main point of contact for external stakeholders. Turf wars are frequent in the Commission: between Commissioners, between DGs, and also between a DG and the Cabinet of the responsible Commissioner. President’s influence: varies on the person. Jacques Delors is still remembered as the most independent and active President, who did not hesitate to confront powerful Member States when deemed necessary to further the Commission’s objectives. José Manuel Barroso was less assertive, less willing to take risks, and more subservient to the interests of large Member States. Commissioners and national interest: depends a lot on the person. Some are staunchly independent, others will support their country’s interest all the time (mostly behind the scenes, not too openly). Also, once appointed a Commissioner cannot be removed by his/her Member State (only the President can remove a Commissioner). It also depends on the political party of the Commissioner, and that of his/her government. For example, the current Polish Commissioner is from the liberal party, but the conservatives are now in power in Poland. This applies to all top jobs in the EU. Certain portfolios have always been influential, regardless of the Commission’s priorities: Competition, Trade, Agriculture, Financial Services… Martin Selmayr, Juncker’s Head of Cabinet, is widely seen as one of the most influential (and ruthless) persons in the Commission.

The Parliament – Role and powers
The European Parliament (EP) is the directly-elected parliamentary institution of the EU. The Parliament is composed of 751 members, called MEPs. As a co-legislator, the EP shares equal legislative powers with the Council in the ordinary legislative procedure. Likewise, it has equal control over the EU budget. In a limited number of areas, however, the Parliament holds only a consultative role. Unlike most national parliaments, the EP does not possess legislative initiative. As such, it can only amend, adopt, or reject legislation, but cannot propose new legislation. The EP can, however, adopt non-binding resolutions and hold committee hearings. The Commission is accountable to Parliament, which must approve its appointment. The EP can also force the Commission to resign by adopting a motion of censure. The current President of the European Parliament is Antonio Tajani, from the centre-right EPP group, and was elected in January The European Parliament has its official seat in Strasbourg, where it holds its plenary sessions. Committee meetings take place in Brussels. In practice, the most important part of the Parliament’s work takes place in Brussels. MEP = Member of the European Parliament. Special legislative procedures where the EP has a reduced role include foreign affairs, security and defence, justice and home affairs, taxation, and certain aspects of other policy areas such as the fiscal aspects of environmental policy, for example. For the adoption of the EU budget, the EP can have the last word over the Council, making it the only area where the EP is actually more powerful than its co-legislator. Antonio Tajani is from Italy. There is a never-ending dispute regarding the Strasbourg seat. A majority of MEPs consider it inefficient, annoying, and costly to have to move to Strasbourg for 4 days every month. However, the Strasbourg seat is enshrined in the Treaties, and therefore cannot be changed without the approval of all the Member States. So far, France has always refused to give up the Strasbourg seat.

The Parliament’s composition
The EP is organised around pan-European political groups, none of which has ever held the absolute majority of seats. Consequently, coalitions are necessary to adopt legislation. However, given that the EP does not form the government like in most traditional parliamentary systems, its politics have developed along more consensual lines rather than majority rule. Therefore, coalitions are made and unmade each time legislation is passed. In practice, for much of its life the EP has been dominated by a grand coalition between the EPP and S&D. The two major groups tend to cooperate to find a compromise between themselves, leading to proposals endorsed by large majorities. EPP (liberal-conservatives, centre-right) 215 S&D (social-democrats and socialists, centre-left) 189 ECR (Eurosceptic conservatives, right-wing) 73 ALDE (liberals and centrists) 68 GUE/NGL (socialists and communists, left-wing) 52 Greens/EFA (Greens and regionalists) 51 EFDD (Europhobic far-right) 42 ENF (Europhobic far-right) 40 NI (non-attached members) 18 EPP = European People’s Party S&D = Progressive Alliance of Socialists and Democrats ECR = European Conservatives and Reformists ALDE = Alliance of Liberals and Democrats for Europe GUE/NGL = European United Left – Nordic Green Left Greens/EFA = The Greens – European Free Alliance EFDD = Europe of Freedom and Direct Democracy ENF = Europe of Nations and Freedom The EPP/S&D grand coalition traditionally also shares the presidency. Usually, the EPP and S&D agree on each group having one of their members elected as EP President for 2.5 years. For example, during the term, Jerzy Buzek (EPP) served for the first half of the term, then resigned and Martin Schulz (S&D) was elected for the second half. Similarly, the “grand coalition” takes the lion’s share of important EP jobs such as committee chairs and vice-chairs.

The European elections
Elections to the European Parliament take place every five years, by direct universal suffrage. The next election will take place in The Commission is renewed following the elections, making the Parliament’s and Commission’s term coincide. There is no uniform voting system for the elections, which take place separately in each Member State, on different dates during the same week. Some countries have a single electoral area, while others are subdivided. The only restriction is that the system must be a form of proportional representation. The allocation of seats to each Member State is based on the principle of degressive proportionality: the size of the population of each country is taken into account, but smaller Member States elect more MEPs than is proportional to their populations. Turnout is generally rather low (around 43% in 2014). DE 96 AT 18 FR 74 BG UK 73 FI 14 IT DK ES 54 SK 13 PL 51 HR 11 RO 32 IE NL 26 LT BE 21 LV 8 CZ SI EL CY 6 HU EE PT LU SE 19 MT The degressive proportionality principle is necessary due to the extreme disparity between the population of Member States. Without it, Malta would only get 0.6 MEPs, while Germany would receive 120. Alternatively, the total number of MEPs would need to be doubled. The low turnout is due to a combination of factors, including the EP’s lack of visibility, a lack of public interest in EU politics, and the impression among many people that the EP doesn’t have a lot of power. What will happen to the UK’s seats after Brexit is still unclear. They are likely to be redistributed among other Member States.

Voting process in the Parliament
The decision-making process in the Parliament is organised around two main stages: Parliamentary committees are tasked with preparing legislation. The EP includes around 20 committees (varies over time), each handling a particular policy area. Each MEP is typically member of one committee. The committees examine legislative proposals, designate an MEP as rapporteur (and shadow rapporteurs from the other political groups), discuss and vote amendments, and finally decide whether to forward the amended proposal to the plenary. Plenary sessions formally amend, adopt, or reject proposed legislation. The plenary gathers all the MEPs once a month. Voting is normally based on absolute majority of all 751 MEPs, including those absent or not voting. Important committees: Foreign Affairs (AFET) International Trade (INTA) Budgets (BUDG) Economic and Monetary Affairs (ECON) Environment, Public Health and Food Safety (ENVI) Industry, Research and Energy (ITRE) Internal Market and Consumer Protection (IMCO) Agriculture and Rural Development (AGRI) Legal Affairs (JURI) Civil Liberties, Justice and Home Affairs (LIBE) Temporary special committees are sometimes created. For example, recently a committee on Emission Measurements in the Automotive Sector was set up, following the Volkswagen emissions scandal (“dieselgate”). The EP also includes delegations. They do not play a role in the decision-making process. Instead they maintain and develop relations with other countries, or groups of countries (e.g. the delegation for relations with the Maghreb countries and the Arab Maghreb Union, the delegation for relations with the Pan-African Parliament, the delegation for relations with the countries of Central America, the delegation for relations with Japan, etc.).

The Parliament – Political dynamics
While the EP is organised around political groups and MEPs represent all citizens, not just those of their Member State, in practice national interests sometimes prevail. This is mostly relevant for a small number of issues, usually related to national sovereignty or on which strong differences still exist among Member States. Most of the time, the plenary simply follows the decisions made by the committees. Therefore, committees are where decisions are really made. Political discussions, negotiations, and compromises happen in the committees, and informally between key MEPs around the same time. Out of the 751 MEPs, some are much more influential than others. In each committee, a handful of MEPs actually do the majority of the work, and go out of their way to build alliances and coalitions. Certain positions, such as political groups’ coordinators and rapporteurs are especially key in the decision-making process. The EP’s influence among the EU institutions has been steadily growing over the last decades. Originally a consultative body, it is now almost equal to the Council. The EP often tries to leverage its legitimacy as the only directly elected institution, in order to increase its power. For example, it successfully imposed the “Spitzenkandidat process” to the European Council. However, the EP is undermined by the low turnout of its elections, and often suffers from a lack of visibility in Member States. Examples of issues where national interests strongly influence MEP votes: defence and foreign affairs (esp. between more interventionist countries such as FR or UK, and neutral or more pacifist countries like IE, FI, DE), nuclear power (pro-nuclear vs anti-nuclear), agriculture. More generally, in most areas nationality always plays a small role in influencing MEP votes. For example, Nordic MEPs generally tend to be more pro-free trade than their Southern counterparts, within the liberal political group *and* within the socialist group.

The Council – Role and powers
The Council of the European Union (often referred to as the Council of Ministers, or just “the Council”), is the EU’s other co-legislator. It represents the executive governments of the Member States. Council meetings are attended by ministers or state secretaries (ministerial level). Unlike the Commission and Parliament, the Council has no fixed term. Instead, its composition varies along with national elections and other government reshuffles. Just like the Parliament, the Council can amend, adopt, or reject legislation, but does not have the ability to propose new legislation. For the ordinary legislative procedure, the Council and the Parliament are on equal footing as co-legislator. However, in some specific areas, the Council holds more power than the Parliament (CFSP, justice and home affairs, taxation, and certain aspects of other policy areas such as the fiscal aspects of environmental policy, for example). The Presidency of the Council rotates between the Member States every six months. Ahead of Council meetings, the Presidency prepares the agendas and brokers compromises. During the meetings, the representative of the country holding the Presidency acts as the chairperson. The Presidency is currently held by Estonia. Bulgaria will take its place in January 2018, followed by Austria in July 2018.

The Council’s configurations
The Council is a single legal entity, but it meets in 10 different “configurations”, depending on the subject being discussed: General Affairs (GAC), co-ordinates the work of the Council, and prepares European Council meetings; Foreign Affairs (FAC), chaired by the High Representative; Economic and Financial Affairs (Ecofin), includes budgetary and Eurozone matters via an informal group composed only of Eurozone member ministers; Agriculture and Fisheries (Agrifish); Justice and Home Affairs (JHA), includes police and justice cooperation; Employment, Social Policy, Health and Consumer Affairs (EPSCO); Competitiveness (COMPET), merger of three previous configurations, Internal Market, Industry, and Research, it also deals with space policy; Transport, Telecommunications and Energy (TTE); Environment (ENV); Education, Youth, Culture and Sport (EYC), includes audio-visual issues. The General Affairs Council is also responsible for the coordination between Member States during the negotiations with the UK on its withdrawal from the EU.

The Council’s voting system
The Council takes its decisions by a simple majority, qualified majority or unanimous vote, depending on the decision that needs to be taken. Qualified majority is used for the ordinary legislative procedure, which accounts for the large majority of the EU’s legislative acts. It is based on a double threshold system: At least 55% of the Member States (16 out of 28)… …representing at least 65% of the EU’s population. Abstentions are counted as a vote against. A blocking minority can also prevent the adoption of an act (four Member States and 35% of the population). When the Council votes on a proposal not coming from the Commission or the High Representative a decision is adopted if: At least 72% of Council members vote in favour, and they represent at least 65% of the EU’s population. Simple majority (15 countries out of 28) = for procedural matters, or to request the Commission to undertake studies or submit proposals. Unanimity (no country voting against, abstention does not prevent a decision from being taken) = CFSP, citizenship (granting new rights to EU citizens), EU membership, harmonisation of national legislation on indirect taxation, EU finances (own resources, the multiannual financial framework), certain provisions in the field of justice and home affairs (family law, operational police cooperation…), harmonisation of national legislation in the field of social security and social protection. In addition, the Council is required to vote unanimously if the Commission disagrees with the amendments made to its proposal. The “double majority” system ensures that decisions cannot be taken either by a large number of very small countries, nor by a small number of very large ones. The four largest Member States (DE, FR, UK, IT) together represent 54% of the EU’s population, while the ten smallest (SK, IE, HR, LT, SI, LV, EE, CY, LU, MT) do not even make up 5%. Before November 2014, qualified majority was based on a very different system, where each Member State had a certain number of votes (between 29 for the largest countries, to 3 votes for Malta). Qualified majority was reached with at least 260 votes out of the total 352.

The COREPER The Committee of Permanent Representatives (COREPER), is made up of the heads or deputy heads of mission from the Member States in Brussels. It prepares the work of the Council and, as such, is an essential cog in the decision-making mechanism. In practice, the Council only debates less than a third of legislative proposals because Member States have already reached an agreement in the COREPER in most cases. The COREPER meetings take place every week, and most proposals feature on the agenda several times, as they try to resolve differences. There are in fact two committees, COREPER I and COREPER II. The first one deals with issues related to the ordinary legislative procedure, while the second is in charge of more sensitive topics, such as political, financial, trade, and foreign policy issues. The work of the COREPER itself is prepared by a working party (there are more than 150 such preparatory bodies in the Council, for each topic) composed of attachés from the Member States. Working parties undertake a general examination of legislative proposals, and exchange on them. The outcome of their discussions is presented to the COREPER, with agreement sometimes found at working party level. The Member States’ missions to the EU in Brussels are called “permanent representations.” They are separate from embassies, which deal with bilateral relations with Belgium. On the Council’s agenda, items are organised under two categories: “A” items and “B” items. A means that agreement is expected without debate, because the COREPER already reached an agreement (two-thirds of the items are A). Member States can always request a debate for an A item, if they wish. B includes items left over from previous Council meetings, that have not been settled by the COREPER, or that are too politically sensitive to be settled below ministerial level. The Trade Policy Committee is an example of a working party.

The Council – Political dynamics
Before the introduction of the new “double majority” system, most Council decisions were actually taken by consensus, rather than by actual voting. Although the Council now votes systematically, in practice Member States continue to look for consensus rather than simply reaching the 55% and 65% thresholds required for a text to pass. Member States actively try to get everyone to agree on proposals, and they will offer concessions to isolated countries in the minority, even if those countries are not actually required for the text to pass. This leads to most votes being unanimous, or with only a few abstentions. While the governments of each Member State belong to different political parties, in the Council national interests are usually more important than traditional left-right opposition. Some Member States are more efficient than others at building coalitions in the Council. This is based on differences in bargaining power, national decision-making, political culture, and geopolitical position. The Presidency of the Council is expected to be neutral when preparing agendas and also tries to broker compromise. Nevertheless, its central role in the Council’s work makes whichever country hold the Presidency a very important actor to reach out to for external stakeholders. Why are Member States in the majority making concessions to those in the minority when it is not necessary? Because they are afraid that, next time, it might be them in the minority, and they do not wish to be isolated then… Coalition building – examples: Germany obviously has the most bargaining power as the most populated Member State. However, its federal structure and the relatively limited power of its Chancellor limit its ability to make quick decisions in the Council. Conversely, France is much more centralised, with a very powerful executive branch, which gives it some advantages when it comes to building coalitions. France and the UK are also experienced nations when it comes to international politics: they have well-established diplomatic networks and know-how in building consensus. Geopolitical position also has an important impact: on many topics, groups of like-minded Member States vote along similar lines (e.g. “poorer” Eastern countries from the former Soviet bloc, Northern countries favourable to free trade and placing a high-value on healthy public finances, Southern/Mediterranean countries more likely to use public deficit to encourage growth, etc.). This play a role in the construction of coalitions in the Council, and the ability for a country to build bridges between different “groups” can provide a lot of influence. Due to the relative lack of media attention on EU affairs, Member States will sometimes take unpopular decisions in the Council, and later use the EU as a convenient scapegoat.

The European Council – Role and powers
The European Council is charged with defining the EU’s overall political direction and priorities. It comprises the heads of state or government of the Member States (usually the more powerful of the two – this depends on each country). The President of the European Council and the President of the Commission are non-voting members. The European Council defines the EU’s policy agenda and can push for institutional reform. It also sometimes settles issues that could not be solved at a lower level. However, the European Council is not a legislative body and does not typically take binding decisions. European Council decisions, called “conclusions,” are generally adopted by consensus, though unanimity or qualified majority voting may sometimes be used. In that case, the European Council follows the same voting rules as the Council of the EU. The European Council meets four times a year, and extraordinary meetings can also take place. Meetings are sometimes referred to as “European summits.”

The President of the European Council
The Treaty of Lisbon created a new position: the President of the European Council. He is one of the main representatives of the EU on the world stage, along with the Commission’s and Parliament’s presidents, and the High Representative. He presides over and leads the work of the European Council. The current President of the European Council is Donald Tusk. The President is elected for a once-renewable term of two-and-a-half years by the European Council (qualified majority), from outside its members. However, being a former member of the European Council is an informal requirement. The President does not have a vote in the European Council, instead chairing meetings, building consensus, and acting as a largely symbolic figurehead. Hence, the role is mostly political. In practice, it largely falls on the President to define his role. Former President Herman Van Rompuy acted mainly as a low-profile consensus builder. Donald Tusk tries to be a more visible figurehead, and frequently makes political statements. Donald Tusk is from Poland (former Prime Minister). In March 2017, Donald Tusk was re-elected for a second term. His home country, Poland was the only one to vote against him (Tusk’s liberal party lost power in Poland to the Eurosceptic conservatives, in November 2015). Before that, all the presidential elections had been unanimous.

The European Council – Political dynamics
The European Council takes almost all decisions by consensus rather than vote. It functions more like a traditional international organisation than the other EU institutions. As a consequence, decision-making in the European Council is first and foremost a game of power and influence, where Member States engage in “backroom” diplomacy and give-and-take concessions to build consensus while defending their national interests. Member States frequently try to build alliances ahead of summits to influence their outcomes. This is done through formal and informal networks, such as the Visegrád Group (PL, CZ, HU, SK), the Benelux (NL, BE, LU), the Nordic Council (SE, DK, FI, plus EFTA members Norway and Iceland), the Baltic Assembly (LT, LV, EE), the EU Med Group (FR, IT, ES, EL, PT, CY, MT), the “Inner Six” (DE, FR, IT, NL, BE, LU), etc. Historically, the most important driver of European integration has been the “Franco-German Axis.” The former war rivals were instrumental in the creation of a united Europe, and both countries have since then tried to act as the leading political force in the EU. The personal influence of leaders plays an important role. Since assuming office in 2005, Angela Merkel has slowly built power over the years. Jean-Claude Juncker was Prime Minister of Luxembourg for 19 years; his experience gave him a disproportional influence during summits, relative to the size of his country (the 2nd smallest Member State). The EU Med Group is sometimes jokingly referred to as the “Club Med.” In practice, the Franco-German Axis is at its strongest when the German Chancellor and the French President have a strong personal relationship. The alliance was certainly at its closest under Helmut Kohl and François Mitterrand, in the eighties. A leader weakened at home (by unpopularity, scandals, etc.) will have a weakened position in the European Council as well. National elections can also impact the European Council: a leader that is likely to lose their job won’t have a lot of influence. An upcoming national election can also “freeze” important discussions: for example, in 2017, elections in France and then in Germany mean that no important decision on the future of Europe will be taken until after those elections have taken place.

Which Council?? Confusion is frequent between the many European institutions whose names include the word “council.” In the EU, the Council of the European Union, the co-legislator that gathers Member State’s ministers, must not be confused with the European Council, the EU’s political driver, where heads of state or government meet. When one simply mentions “the Council,” it refers to the first one. Another institution is the Council of Europe, which is an international organisation independent from the EU. It comprises all the countries of Europe, including Russia, Turkey, and the Caucasus, with the exception of Belarus. Its main goal is to uphold human rights, democracy, and the rule of law in Europe. Its best-known body is the European Court of Human Rights (ECHR), which enforces the European Convention on Human Rights and can impose sanctions on its member countries. The Council of Europe was founded in 1949 (before the creation of the ECSC, the EU’s ancestor). All EU Member States are and must be a member of the Council of Europe. The European Convention on Human Rights is considered an integral part of the EU law. The European Court of Human Rights is generally praised for its excellent track-record in promoting human rights. The Council of Europe was also instrumental in the abolition of the death penalty in Europe.

The CJEU – Role and powers
The Court of Justice of the European Union (CJEU) is the EU’s judiciary branch. It consists of two separate courts: the Court of Justice and the General Court. The General Court acts as a court of first instance for most proceedings, and is composed of two judges per Member State. The Court of Justice is essentially the EU’s supreme court. It hears appeals on judgements from the General Court, and is also responsible directly for certain matters, such as preliminary rulings. It is composed of 28 judges and 11 Advocates General. The CJEU oversees the uniform application and interpretation of EU law, in cooperation with the national judiciaries of the Member States. It also resolves legal disputes between national governments and EU institutions. The CJEU can enforce compliance by Member States of their obligations under the Treaties, and may take action (e.g. sanctions) against them or EU institutions. Journalists frequently use the non-official acronym ECJ (European Court of Justice). Depending on the context, it can either refer to the whole institution (CJEU), or only its highest court, the Court of Justice. An Advocate General’s role is to consider the written and oral submissions to the Court in every case that raises a new point of law, and deliver an impartial opinion to the Court on the legal solution. The opinion is not binding, and the Court is free to follow the advice of the Advocate General, or not. In most cases, it does. Advocates General are not equivalent to public prosecutors or district attorneys. They do not represent any particular institution or interest, and simply give their opinion on points of law. EU law has primacy over the national laws of the Member States: in case of a conflict between EU and national legislative texts, the national text must be set aside.

The CJEU’s main procedures
Infringement procedures: The Commission may bring a case against a Member State that has failed to fulfil its obligations under EU law (e.g. not implementing a directive). After a preliminary procedure where the Commission requests the Member State to comply, the Commission can ask the Court of Justice to confirm its findings and, if necessary, to impose fixed or periodic financial penalties on the Member State in question. Annulment procedures: Any institution, Member State, or individual may ask the CJEU to annul a measure adopted by an EU institution, if the measure is not compatible with the Treaties. Preliminary rulings: To ensure the effective and uniform application of EU law, national courts must request the Court of Justice to clarify issues concerning the interpretation of Union law, if such an issue arises in a national case. The Court’s ruling must then be followed by the national judge, in order to rule on the case. Opinions: A Member State, the Parliament, the Council, or the Commission may request the Court to rule on whether an international agreement the EU intends to conclude is compatible with the Treaties. Financial penalties on Member States can be very high (sometimes millions of euros per day until the Member State complies). Preliminary rulings are extremely important. They represent the largest part of the Court of Justice’s caseload, and they are a unique tool for the Court to enforce the uniform application of EU law across the Union. Through this mechanism, the Court of Justice can also request a national judge to set aside a national law, if it is deemed incompatible with EU law. Opinions: where the opinion of the Court is adverse, the agreement envisaged may not enter into force unless it is amended or the Treaties are revised.

The CJEU – Political dynamics
The CJEU has always been a key driver of European integration. Historically, it has been a pro-federal institution, using its role as the sole interpreter of EU law to strengthen the balance of power between the European Union and its Member States in favour of the former. The CJEU has often been ambitious in its interpretations of EU law, sometimes going beyond what the legislators had originally intended. For example, in 1964, the CJEU adopted a landmark decision which established the supremacy of EU law over the laws of its Member States. This principle is now firmly established in the Treaties. Another landmark decision from the same period established the direct effect of EU law. This means that, unlike traditional international law, EU law creates legal rights which can be enforced by natural or legal persons before the courts of the Member States, and not only by the Member States themselves. The CJEU was also instrumental in breaking down barriers against the free circulation of goods, services, persons, and capital. Many key decisions by the CJEU were later enshrined in the Treaties. In 1964, the Treaties had not yet established the principle of primacy of the EU law. The CJUE ruled that EU law had a special and unique nature, and that allowing domestic provisions to override it would deprive it of its character, and call into question the legal basis of the EU itself. In the other decision, the Court’s reasoning was that such a doctrine was necessary to ensure the compliance of Member States with their obligations under the Treaties.

The institutional triangle
The “institutional triangle” informally refers to the three institutions responsible for the decision-making process. Together they prepare, discuss, and adopt legislative acts. In the EU, the European Commission is the sole institution with the power of initiative. This means that any legislative act must originate from a Commission proposal. In practice, the Commission often tables proposals following requests from the Council or the Parliament, and it also follows the general political agenda set by the European Council. The Council and the Parliament are the EU’s equal co-legislators. For a text to be adopted, the two institutions must agree. They can both amend the Commission’s proposal, which implies much back-and-forth during this phase.

The ordinary legislative procedure
The ordinary legislative procedure (also known as “codecision”) is the main decision-making procedure used for adopting EU legislation. It applies to around 85 policy areas. After the Commission publishes its proposal, the Parliament will examine it in first reading and propose amendments. The Council may then, in its first reading, adopt the Parliament’s position, in which case the text is adopted, or propose new amendments. In second reading, the Parliament examines the Council’s position. It may then either (i) reject it, and the procedure ends, (ii) adopt it, which is the case for the vast majority of proposals, or (iii) propose new amendments. In the last case, the Council examines the new position of the Parliament in second reading. If the Council does not adopt the text in second reading, the Conciliation Committee is convened. It is composed of an equal number of MEPs and Council representatives, who try to reach agreement on a joint text. If the Conciliation Committee reaches an agreement, the new text is examined in third reading by the Parliament and the Council. They cannot make amendments to the text, only adopt or reject it. If both institutions adopt it, the text becomes law. Legislative proposal First reading Second reading Conciliation Third reading Trade policy is among the 85 policy areas using the ordinary legislative procedure (but not the conclusion of trade agreements itself, which uses the consent procedure). The Commission has the right, at any time during the procedure, to withdraw its proposal. This immediately ends the procedure, and the act cannot be adopted. The CJEU ruled that this power is inseparable from the Commission’s right of initiative. It is an extremely rare thing to happen, however. In parallel to the “official” procedure described here, the Council, EP, and Commission often meet informally to facilitate the codecision process. These informal meetings are called “trilogues.”

Other decision procedures
In a limited number of policy areas, the other decision procedures are used. In those cases, the Council is essentially the sole legislator, and the Parliament is only required to give its consent to a legislative proposal or be consulted on it. Consent procedure: Under the consent procedure, the Council can adopt legislative proposals after obtaining the consent of the European Parliament. The Parliament therefore has the power to accept or reject a legislative proposal, but cannot amend it. The consent procedure is used for certain international agreements negotiated by the EU, for the accession of new EU members (and withdrawal from the EU), for legislation against discrimination, and in cases of a serious breach of fundamental rights. Consultation procedure: In this procedure the Parliament may approve, reject, or propose amendments to a legislative proposal. The Council is not legally obliged to take the Parliament's opinion into account. The consultation procedure is used for international agreements adopted under the CFSP, and for internal market exemptions and competition law. Cases of a serious breach of fundamental rights refers to Article 7 TEU, which allows for the suspension of a Member States’ voting rights.

The Treaties The Treaty on the European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU), commonly referred to as “the Treaties” are, in practice, the European Union’s “constitution.” The TEU is the shorter of the two. It defines the EU’s core principles, provides a basic overview of the main institutions, and outlines the Common Foreign and Security Policy. The much longer TFEU details the EU’s competences and the functioning of the institutions. It defines its main policies and the decision-making process, and outlines the EU’s budgetary rules. The Treaties, together with the EU’s Charter of Fundamental Rights, and the “general principles of Union law” are known as primary legislation. International agreements concluded by the EU are subordinate to primary legislation. General principles of Union law are general rules of law that have been defined by the CJEU. They are not always explicitly written in the Treaties, but are considered to logically flow from the Treaties’ spirit. They include fundamental rights, proportionality, legal certainty, equality before the law, and subsidiarity.

Secondary legislation
Secondary legislation comes in four main variants: Regulations are of general application, binding in their entirety and directly applicable in all the Member States. They must be complied with fully by those to whom they apply (private persons, Member States, EU institutions). Directives are binding as to the result to be achieved, but leave to the national authorities the choice of form and methods. National legislators must therefore adopt a transposing act or “national implementing measure” to transpose directives and bring national law into line with their objectives. Decisions are binding in their entirety, but they are specific instead of general. They stipulate the Member States, natural persons, or legal persons which they are addressed to. Recommendations and opinions do not confer any rights or obligations on those to whom they are addressed, but may provide guidance as to the interpretation and content of EU law. The Commission proposes regulations when the uniform application of Union law in all the Member States is absolutely necessary. Directives are instead chosen when it is ok to leave Member States choose how they want to implement certain objectives. Directives will always include a deadline for the transposition by Member States. If a country does not implement a directive in the given time frame, the Commission can open an infringement procedure against that country. When it comes to transposing directives, Member States are free to choose the national type of measure, so long as it ensure the application of the directive’s objectives. This means that some countries may implement a directive with a national law, while other may adopt executive decrees, and yet other may delegate the implementation of their own regional/local authorities.

EU legislation hierarchy
Primary legislation Legislative acts Delegated acts Implementing acts Legislative acts are legal acts which are adopted through the ordinary or a special legislative procedure. Delegated acts are non-legislative acts of general application which supplement or amend certain non-essential elements of a legislative act. The power to adopt these acts may be delegated to the Commission by the co-legislators. Implementing acts are generally adopted by the Commission, which is competent to do so in cases where uniform conditions for implementing legally binding acts are needed. Practice has also led to the development of a whole series of unique documents: inter-institutional agreements, resolutions, conclusions, communications, green papers, and white papers. Under the CFSP, specific legal instruments are used, such as EU actions and positions.

The EU agencies – Role and powers
Agencies of the European Union are decentralised bodies. They are distinct from the institutions, and each agency has its own legal personality. Agencies are established to accomplish specific tasks. Some answer the need to develop scientific or technical know-how in certain fields, while others bring together different interest groups to facilitate dialogue at European or international level. Some agencies are tasked with the regulation of a particular sector, or manage specific EU programmes. Unlike US agencies, EU agencies have little to no role in shaping policy. When they are allowed to take executive decisions, these decisions are subject to the CJEU’s legal scrutiny. There are over 40 agencies, with their headquarters spread across the EU’s Member States.

Important EU agencies The European Medicines Agency (EMA) is in charge of the evaluation of medicinal products. It coordinates the evaluation and monitoring of such products, and gives marketing authorisations. The European Union Intellectual Property Office (EUIPO) is responsible for the registration of the EU-wide trade marks and industrial designs. The European Food Safety Authority (EFSA) that provides scientific advice and communicates on risks associated with the food chain. The European Aviation Safety Agency’s (EASA) responsibilities include analysis and research on safety, authorising foreign operators, giving advice for the drafting of EU legislation, implementing and monitoring safety rules (including inspections), and giving aircraft and component certifications. The European Chemicals Agency (ECHA) registers, evaluates, and authorises chemicals in the EU. The Body of European Regulators for Electronic Communications (BEREC) provides advice to ensure a consistent application of the EU regulatory framework on telecoms The European Data Protection Supervisor’s (EDPS) goal is to ensure that European institutions and bodies respect privacy and data protection when they process personal data and develop new policies. The European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Systemic Risk Board (ESRB) were created after the financial crisis to monitor and regulate the financial markets. The EMA and the EBA are currently located in London. The EU has stated that they cannot remain in the UK after the country ceases to be an EU member. The other Member States have to decide where to relocate the two agencies, which is certain to lead to typical EU horse-trading (the EMA in particular represents a large number of jobs, and is also likely to attract additional activity from pharmaceutical companies).

The Eurozone 19 of the 28 Member States use the euro (€) as their currency. Although no deadline has been set, all Member States are required to eventually adopt the euro, with the exception of Denmark and the United Kingdom. Six countries outside of the EU also use the euro as their currency. The European Central Bank (ECB), based in Frankfurt, sets the monetary policy of the zone. The ECB’s principal task is to keep inflation under control. It is governed by a president and a board of the heads of national central banks. The ECB is also responsible for the printing of euro banknotes, and authorises the minting of euro coins by national central banks. Denmark and the UK have negotiated an opt-out from the single currency. Denmark is however part of the exchange rate mechanism that ties the Danish krone to the euro. Andorra, Monaco, San Marino, and the Vatican have a monetary agreement with the EU to use the euro. Montenegro and Kosovo use the euro unilaterally. Mario Draghi is the current President of the ECB. The euro was created in 1999, with eleven Member States. Other countries have progressively joined the Eurozone as they each met the euro convergence criteria (also known as the Maastricht criteria). The criteria include inflation level, public deficit, public debt, exchange rate stability, and long-term interest rates. Once inside the Eurozone, members are expected to abide by the Stability and Growth Pact (SGP), which includes the same criteria of public debt and deficit (respectively 60% and 3% of GDP).

The Eurogroup The Eurogroup is an informal group of the Finance ministers of the Eurozone. It exercises political control over the common currency and related aspects such as the Stability and Growth Pact. The ministers meet a day before the meetings of the Ecofin Council. The Eurogroup has a semi-permanent president, with a two year term. The current president is Dutch Finance Minister Jeroen Dijsselbloem. Although the Eurogroup is not an institution and does not have any formal powers, its importance has grown significantly in the wake of the 2008 financial crisis, and the following government-debt crisis. The Eurogroup took strong measures to prevent the collapse of the common currency. Therefore, in practice, the Eurogroup’s decision carry a lot of weight, and it is frequently criticised for its lack of transparency and lack of accountability. Reform proposals have been made to democratise the informal group, such as the creation of an “EU Finance Minister.” Reminder: the Ecofin Council is the Economic and Financial Affairs formation of the Council. Jean-Claude Juncker was the previous Eurogroup president. Lack of accountability: as the Eurogroup is not an institution, its decisions cannot be appealed in front of the CJEU.

The EU budget – Main principles
The European Union has a budget to pay for policies carried out at European level and for its administration. The annual EU budget is around 150 billion euros, which represents about 1% of the EU’s GDP. By comparison, the average government expenditure of EU Member States is 45% of their GDP. The annual budget is agreed upon each year, but is subject to limits established by the multiannual financial framework (MFF). The MFF sets the maximum annual amounts which the EU can spend in various policy areas over a given period (usually 7 years). The budget is proposed by the Commission, and approved by the Parliament and the Council. The Parliament has the final say at the end of the procedure, if no agreement was found with the Council. The EU is not allowed to operate at a deficit. Therefore, the budget’s revenue and expenditure must be balanced. €150 bn = approx. ¥19,000,000,000,000. The 1% is actually an informal rule: Member States have agreed that the budget should not go over this limit, for the time being.

The EU budget – Expenditure
Smart and Inclusive Growth Competitiveness for Growth and Jobs (includes mostly research and innovation funding, and education-related programmes) Economic, Social and Territorial Cohesion (regional development funds) Sustainable Growth: Natural Resources (essentially the Common Agricultural Policy, the fisheries policy, and funding for rural areas) Security and Citizenship (justice and home affairs, border protection, immigration and asylum) Global Europe (covers all external action, such as development assistance or humanitarian aid) Administration (administrative expenditure of all the institutions, salaries and pensions) Other special instruments Expenditure

The EU budget – Revenue 2015 Budget Revenue
GNI-based own resource (a uniform percentage levied on the GNI of each Member State) VAT-based own resource (a standard percentage levied on the harmonised VAT base of each Member State) Traditional own resources (customs duties on imports from outside the EU and sugar levies) Surplus from the previous year Other revenue (taxes on EU staff salaries, contributions from non-EU countries to certain programmes, antitrust fines on companies…) 2015 Budget Revenue GNI = gross national income. The GNI-based own resource was originally designed simply as a balancing system, but over time it has become the EU’s largest source of revenue. In the past, some countries felt that they were paying too much towards the budget, compared to other countries. Measures were agreed upon to “compensate” these imbalances. The main measure is the so-called “UK rebate,” whereby the UK is reimbursed by 66% of the difference between its contribution and what it receives back from the budget. Rather than reducing the total EU budget, the cost of the UK rebate is divided among EU member countries in proportion to the share they contribute to the EU’s GNI. Germany, the Netherlands, Austria, and Sweden, negotiated a “rebate on the rebate.” VAT-based own resource: because VAT levied in each Member States directly contributes to the EU budget directly, Member States cannot modify their VAT without the EU’s approval. This is an exception as fiscal matters are normally not an EU competence. The withdrawal of the United Kingdom from the EU may have important budgetary implications, given that the country is a major contributor to the EU budget.

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The EU and its institutions

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The EU and its institutions

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