N. Nugent

The Government and Politics of the European Union2010

Chapter 13Other Institutions

The European Economic and Social Committee (EESC)

• In the negotiations that led to the Rome Treaties it was decided to establish a consultative body composed of representatives of socio-economic interests for four principal reasons:

1. Five of the six founding states had such bodies in their national systems.

2. The essentially economic nature of the Community meant that sectional interests would be affected by policy developments and key participants and determiners of the development of integration.

3. It was not thought that the Assembly (as the EP was then called) would be an effective forum for the expression of sectional views.

4. The institutional framework of the Rome Treaties was based on the Treaty of Paris model, and that had provided for a socio-economic advisory body in the ECSC Consultative Committee.

EESC - Membership• The EESC has 344 members. • The largest national representations (France, Italy, Germany, UK)

have 24 members each, whilst the smallest (Malta) only 5. • The total size of the EESC is capped at 350, which means that –

with EU enlargements – the national allocations of membership will have to adjust sometime in the future.

• The members of the EESC are proposed by the governments and are formally appointed by the Council of Ministers. The term of office is five years which may be renewed.

• To ensure that a broad spectrum of interests and views is represented, the membership is divided into three groups that are just about equal in size.

• All members are appointed in a personal capacity and not as delegates of organisations.

The three groups of the EESC• Group I: Employers. Just less than half of this group are

drawn from industry. The rest are mostly from public enterprises, commercial organisations, banks etc.

• Group II: Employees. The great majority in this group are members of national trade unions.

• Group III: Various interests. About half of this group are associated with either agriculture, small and medium-sized businesses, or the professions. The rest are mostly involved with public agencies and local authorities, consumer groups, environmental protection organisations and so on.

EESC - Organisation• The administrative support for the EESC is organised by its

Secretariat General.• Every two years EESC elects a President, two Vice Presidents, and

a Bureau from amongst its members. • Presidency rotates amongst the three groups (the two groups that

do not occupy the Presidency each assuming a Vice Presidency). • There are 37 members of the Bureau: the President, the two Vice

Presidents and 34 members drawn from the three groups.• The main role of the President (with the assistance of the Vice

Presidents) is to see to the orderly conduct of the EESC’s business and to represent the EESC in its relations with other EU institutions, m-s, and outside bodies.

• Main tasks of the Bureau are to provide guidelines for EESC’s work, to coordinate that work and to assist with external representation.

EESC - Organisation (II)• The groups operate in a somehow similar fashion to the political

groups in the EP. • Most of the work of EESC consists of giving opinions on EU-related

matters and is undertaken by six sections: Agriculture, Rural Development and the Environment; Economic and Monetary Union and Economic and Social Cohesion; Employment, Social Affairs and Citizenship; External Relations; The Single Market Production and Consumption; and Transport, Energy, Infrastructure and the Information Society.

• The sections appoint rapporteurs to prepare draft opinions.• Plenary meetings are held in Brussels, over a two-day period, usually

nine or ten times a year. Agendas are dominated by consideration of reports from the sections. The standard procedure is for each report to be introduced by its rapporteur, for a debate to be held, and for a vote to be taken.

EESC - Functions1. It issues information reports on matters of contemporary

interest and concern.2. It liaises, via delegations, with a host of other international

bodies and groupings.3. It seeks to promote understanding between sectional

interests by organising conferences, convening meetings, being represented ate congresses and symposia, etc.

4. It seeks to take advantage of various contacts it has with other EU institutions to press its views. The most regularised contact is with the COM. COM officials and sometimes Commissioners themselves, attend plenaries and meetings of sections. Occasionally ministers address plenaries.

5. Above all, it issues opinions on a range of EU matters.

EESC’s opinions• Opinions are issued in one of three sets of circumstances:– Mandatory referral. – Optional consultation.– Own initiatives.

• The EESC normally issues over 200 consultative documents per year on which the vast majority are opinions on COM proposals and communications.

• The EESC tends to operate in a reasonably consensual manner, with most of its opinions issued unanimously or with a very large majority.

• The EESC is not as concerned as the EP to reach a single position that excludes all minority views. It is quite possible for minority positions to be attached as annexes to EESC opinions that have received majority support in the plenary.

EESC - Influence• The influence exercised by the EESC on EU policy and decision-

making is limited for a number of reasons:‐ There has always been a lack of clarity as to its role in the EU

system.‐ The EESC is not the only, and in many circumstances is not even

the most important, channel available to sectional interests wishing to exert pressure on EU decision-makers.

‐ The EESC’s formal powers are relatively weak.‐ It is by no means uncommon for proposal to be referred to the

EESC at a stage of policy advancement when agreements between the key decision-makers in the COM, Council and EP have already been made in principle and are difficult to unscramble.

‐ The members of the EESC serve only on a part-time basis, which places time limits on what they can do.

EESC’s Role

• The EESC basically does two things:• First, it provides a forum in which representatives of

sectional interests can come together on a largely cooperative basis to exchange views and ideas.

• Second, it is a consultative organ that provides some limited – though in some cases only very limited – opportunities for interests to influence EU policy and decision-making.

The Committee of the Regions (CoR)• Regionalism, regional issues and regional politics have come to

assume a significant role and importance in the EU. The main factors accounting for this are as follows:

• There are great variations in wealth and income between m-s and between regions in the m-s.

• Since the ERDF was established in 1975, regional and local groupings have had a clear focus for their attention at EU level: the attraction of funds.

• Many subnational levels of government have established direct lines of communication wit decision-makers in Brussels.

• Over the years several transnational organisations that bring together the subnational governments of different m-s have been established to promote common interests and, where appropriate, to make representations and exert pressure.

CoR - Composition• The size and national composition of the membership of the CoR is

the same as that of the EESC.• Members must be elected members of regional or local

authorities or be politically accountable to an elected assembly. • The organisational structure of CoR is similar to that of the EESC.

The planning and overseeing of the work is undertaken by its 60-member Bureau (President, First Vice President, 27 other Vice Presidents, 27 other members, and the chairs of the four political groups). Members of the Bureau are elected for a two-year term.

• Most of the work is channeled through six specialised committees, called commissions. Most of the administrative support is shared with the EESC.

• Unlike in the EESC, political groups paralleling the main groups in the EP exist in the CoR.

CoR - Functions

• The functions and powers of the CoR are, like those of the EESC, of an advisory nature.

• The range of policies on which the CoR must be consulted is narrower than for EESC.

• As they can with EESC, the EP, the Council or the COM can set a time limit on the CoR for the delivery of its opinion.

• The influence of CoR appears to be at least comparable to that of the EESC.

• CoR is only one of a number of channels available for regional interests to make a mark on Europe.

European Agencies• There are now over 40 EU agencies in existence, with at least

one agency to be found in just about every area of EU policy activity.

• There regulatory and executive agencies.• All executive agencies are located close to the COM and they

are controlled by the COM cia “parent” Directorates General.

• Regulatory agencies are of higher political importance.

The differing types of regulatory agencies

• Agencies adopting individual decisions that are legally binding on third parties.

• Agencies providing technical or scientific advice to the COM and, where necessary, to the m-s.

• Agencies in charge of operational activities.• Agencies responsible for gathering, analysing, and making

available relevant information and/or networking.• Agencies providing services to other agencies and

institutions.

The European Investment Bank (EIB)• EIB was created in 1958 under the EEC Treaty. Its members

are the m-s of the EU. The bank is located in Luxembourg.• The tasks of the EIB are to contribute on a non-profit-making

basis, via the granting of loans and the giving of guarantees, to the “balanced and steady development of the internal market in the interests of the Union”.

• In practice, Bank’s main job is to act as a source of investment finance for projects that further EU goals. In so doing, it is by far the larger provider of EU loan finance.

• EIB policy is framed within Corporate Operational Plans (COPs) that prioritise objectives. Central to the COP for the 2009-11 period is an increase in the scale of EIB operations as part of the European Economic Recovery Plan.

EIB - Projects• For the EIB to consider providing finance, at least one of

the following criteria has to be met :– Projects must further economic and social cohesion by

contributing to the economic development of the EU’s less prosperous regions.

– Projects must support innovation, contribute to the competitiveness of EU industry, and help implement the “Lisbon Strategy”.

– Projects must be of common interest to several m-s of the EU as a whole.

• Also, projects must be financially and technically viable, and loans must be guaranteed by adequate security.

EIB – Projects (cont.)• A major attraction EIB borrowers is that loans are offered at very

competitive rates. They are so partly because the Bank enjoys a first-class international credit rating and is thus itself able to borrow at favorable rates and partly also because the Bank is not profit-making and is thus able to pass on in favorable rates.

• The Bank does not usually lend more than 50% (the average is about 30%) of the investment cost of a project unless it is part of a special programme.

• The Bank generally only deals directly with large loans – of more than about €25 million.

• Other activities are undertaken including projects that are eligible for both EIB loan finance and EU grant aid the European Investment Fund (EIF).

EIB - Organisation• The Board of Governors decides on the Bank’s subscribed capital

and lays down general directives on EIB activities. Also responsible for formally appointing the members of Board of Directors and Management Committee. The Board of Governors is composed of one minister per m-s, usually the Minister of Finance, and normally meets once a year. Certain major Board decisions have to be made unanimously, whilst others can be made by a majority of members representing at least 45% of subscribed capital.

• The Board of Directors has general responsibility for ensuring that the Bank is managed according to the provisions of the TFEU, the Bank’s statute, and directives issued by the Governors. More specifically, the Board has sole responsibility for deciding on loans and guarantees, raising funds, and fixing interest rates. There are 28 Directors (one nominated by each m-s and one by COM). Normally meets every 4-6 weeks.

EIB – Organisation (cont.)

• The Management Committee controls current operations, makes recommendations to the Board of Directors and is responsible for implementing decisions made by the Directors. The Committee consists of the Bank’s President and eight Vice-Presidents. It meets at least weekly.

• EIB’s administration is divided into 13 departments, included amongst which are: the General Secretariat and Legal Affairs; the Directorate for Lending Operations in Europe; the Directorate for Lending Operations Outside Europe; the Finance Directorate; and the Projects Directorate.

• EIB employs around 900 staff.

EIB - Importance

• EIB is a bank, not a grant-dispensing body. It must observe certain basic banking principles. At the same time it is an EU institution charged with furthering a number of policy objectives. These two roles do not always sit easily together.

• The scale of EIB borrowing and lending is small when compared with the total operations of commercial banks across the m-s. However, it is the largest international financial institution on capital markets and within EU it is a useful source of medium and long-term finance for EU oriented projects.

• It complements other public and private funding resources for the promotion of capital investment projects that, in general terms, promote economic development and further integration within EU.

The European Central Bank (ECB)

• At the heart of EMU is the ECB, which is located in Frankfurt. The Bank operates within the European System of Central Banks (ESCB), which embraces the national central banks of all EU m-s whether they are eurozone members or not.

• The primary objective of the European System of Central Banks… shall be to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union. (Art. 127 TFEU).

ECB – Organisational structure• The decision-making bodies of the ECB are the Governing Council

and the Executive Board.• Governing Council is responsible:– To adopt guidelines and make the necessary decisions to

ensure the performance of the tasks entrusted to the ESCB.– To formulate the Union’s ,monetary policy, including, as

appropriate, decisions relating to intermediate monetary objectives, key interest rates and the supply of ESCB reserves.

• The Governing Council, which meets twice a month, is made up of the members of the Executive Board and the governors of euro member NCBs.

• The President of the Ecofin Council and a member of the COM may attend Governing Council meetings, but do not have right to vote.

ECB – Organisational structure (II)• The main responsibilities of the ECB Executive Board are:– To implement monetary policy in accordance with the

guidelines and decisions laid down by the Governing Council, and in so doing, to give the necessary instructions to the NCBs.

– To execute policies delegated to it by the Governing Council. • Although these responsibilities suggest that the Executive Board is

the servant of the Governing Council, in practice it is very much involved in the formulation of policy, not least in helping to set the agenda and shape the decisions of the Council.

• The Executive Board consists of the ECB President, Vice President, and four other members. They are appointed “from among persons of recognised standing and professional expertise in monetary or banking matters” by the European Council acting by qualified majority. The term of office is a non-renewable 8 years.

ECB – Organisational structure (III)• The ECB also has a General Council. • Its membership comprises the ECB President and Vice-President

and the governors of all NCBs (from both euro and non-euro zone states). The other 4 members of the ECB Executive Board may participate in General Council meetings, but do not have the right to vote.

• General Council’s tasks include supervision of the functioning of the post-single current Exchange Rate Mechanism, considering the monetary and exchange rate policies of the m-s that are not in the euro zone, and undertaking various advisory, administrative, and technical duties.

• The governing bodies of the ECB are supported by an ECB staff complement of around 1,400 employees.

ECB – Functioning difficulties

• Tensions arising from the fact that whilst the ECB is broadly responsible for the monetary policies of the eurozone the m-s retain the main responsibility for economic policies.

• Some uncertainty and disagreement as to whether the ECB should pursue exchange rate objectives.

• How ECB can maintain independence and profit from its political autonomy and at the same time be viewed as legitimate and accountable to the European public.

• ECB has become the main focus for complaints about the economic performance of the eurozone.

The Court of Auditors - Membership• There are 27 members of the Court of Auditors. Each member is

appointed by the Council of Ministers by QMV post-Nice, on the basis of one nomination per m-s and after consultation with the EP.

• At the time of their appointment members of the Court of Auditors must belong to, or have belonged to, an external audit body in their own country, or be appropriately qualified in some other capacity. The appointment is for a renewable six-year period.

• The members elect one of their number to be President of the Court for a three-years renewable term. The President sees to the efficient running of the Court and also represents it in its external relations.

• Members are assigned a general area of activity for which they hold a particular responsibility regarding preparation and implementation of the decisions of the Court. Each are falls under one of five audit groups, which act primarily as coordinating agencies and filters for plenary sessions of the whole Court.

The Court of Auditors - Activities• The main tasks of the Court of Auditors are to examine all EU

revenue and expenditure accounts, the same for bodies set up by the EU unless the relevant legal instruments preclude such examination, and to provide the Council and the EP with a Statement of Assurance on the reliability of the accounts and the legality and regularity of the associated transactions.

• This activity involves what is known as external auditing, with the “spending agencies” themselves undertaking what is known as the internal auditing.

Auditing of the general budget• The COM is required to draw up, for each financial year accounts

relating to the implementation of the budget, a financial statement of the assets and liabilities of the EU, and an analysis of the financial year.

• The Court undertakes its audit (the external audit) partly on the basis of an examination of COM documentation and partly of its own independent investigations. The Court transmits to all relevant institutions any comments that it proposes to include in its annual report and after receiving possible replies completes the final version of its annual report, which is communicated to other EU institutions by 30 November.

• The EP, acting on a recommendation of the Council, is supposed to give discharge to the COM in respect of the implementation of the budget by 30 April of the following year.

The Court of Auditors – Activities (II)• The Court engages in two main types of activity.

– The first is to see whether revenue has been received and expenditure has been incurred in a lawful and regular manner, and also to examine whether the financial management of EU authorities has been sound.

– The second is to deliver special reports and opinions on a range of subjects.

• Considerable progress has been made in recent years in improving financial control and overseeing, especially since the College of Commissioners was forced to resign in 1999 because – in large part – it was seen to have been lax in respect of financial management.

• However, the total sums involved are relatively modest. EU decision-makers are, for the most part, obliged to work to tight budgets and within limited resources.