EU Council tasks: Enlargement

According to the Treaty of Lisbon, any European state which respects the EU’s founding values and is committed to promoting them may apply to become a member of the European Union.

Although the Commission does the donkey work, the decisive steps of the accession process are intergovernmental, with the European Council, the Council as well as the member states’ governments and parliaments in key roles.


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Eligibility

There are three groups of criteria for eligibility:

1) European state has not been defined, but in 1987 Morocco’s application to join the European Community was rejected on the grounds that it was not a European state. .

2) The values Article 49 of the amended Treaty on European Union (TEU) refers to are mentioned in Article 2 TEU: respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities (OJEU 9.5.2008 C 115).

3) The conditions of eligibility agreed upon by the European Council shall be taken into account. The current criteria have been laid down by the European Council in Copenhagen (1993) and Madrid (1995).


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Council’s tasks

The applicant state addresses its application to the intergovernmental Council. The Council consults the Commission and needs the consent of the European Parliament for a decision to open membership negotiations.

Even if the formal decision is taken by the Council, unanimously, almost everyone would agree that the decisive political green light is given by the European Council.

The donkey work of conducting the accession negotiations is delegated to the Commission, but regulated and keenly followed by the Council. The applicant state has to adopt the existing Community legislation (acquis communautaire), and the negotiations advance Chapter by Chapter (35 in all).

The accession treaty is concluded intergovernmentally, between the member states and the applicant state, subject to ratification by all of them.



Ralf Grahn

EU Council tasks: Treaty reform

If the areas of the common foreign and security policy (CFSP) and the common security and defence policy (CSDP), including permanent structured cooperation, are intergovernmental, even more so is changing the primary legislation of the European Union at the present time.

Treaty amendments have seen the governments of the EU member states convening in intergovernmental conferences outside the institutions (but using Council infrastructure).

The Treaty of Lisbon would reform the process of treaty amendment, by making the Convention method the primary option. The Convention is more broadly based than an intergovernmental conference, and it bears some traits of a constituent assembly.

There have been two Convention experiments, leading to proposals to the member states’ governments.

The first Convention led to the EU Charter of Fundamental Rights, declared politically binding by the institutions in December 2000 in Nice and destined to become legally binding if the Lisbon Treaty enters into force.

The second, known as the European Convention, wrote the draft Treaty establishing a Constitution for Europe. The intergovernmental conference 2003 and 2004 pared down the proposals somewhat to agree on the Constitutional Treaty, but the ratification processes petered out after the French and Dutch referenda.

The IGC 2007 produced the ‘Constitution light’ initially prepared as the Reform Treaty, but now known as the Treaty of Lisbon, after the city where it was signed on 13 December 2007. (The consolidated version was published in the Official Journal of the European Union, OJEU 9.5.2008 C 115.)


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Treaty revision procedures

In the Treaty of Lisbon, Article 48 of the amended Treaty on European Union offers two modes for treaty amendment:

1. the ordinary revision procedure
2. simplified revision procedures.


Proposals for the amendment of the treaties are addressed to the Council, and they can be made by any member state, the European Parliament of the Commission.

The Council submits the proposals to the European Council and notifies the national parliaments.

(The European Council can reject the proposal or it can vote for a Convention or an intergovernmental conference; but formally the latter take place outside the institutions. A Convention makes proposals only, but a subsequent IGC decides. )

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Simplified revision procedures


TFEU internal policies and action

Interestingly, proposals for revising all or part of the provisions of Part Three of the Treaty on the Functioning of the European Union (TFUE) relating to the internal policies and action of the Union are addressed directly to the European Council. They may lead to a unanimous decision to revise the treaty, but cannot increase the competences (powers) of the EU.


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Added flexibility

Some flexibility is built into the provisions enabling the European Council to facilitate decision making in the Council, by moving to qualified majority voting in an area or in a certain case. (In a similar way, the European Parliament can be involved by moving from a special legislative procedure to the ordinary legislative procedure.)


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The formal provisions mentioning the Council do not offer a comprehensive view of the active participation of the governments (ministers) in the various stages of treaty reform. With or without a preparatory Convention, the ordinary revision procedure is concluded by an intergovernmental conference.


Ralf Grahn

EU Council tasks: Security & defence policy CSDP

The European Union’s common security and defence policy (CSDP) is an integral part of its common foreign and security policy (CFSP). At this stage of development, it is geared towards humanitarian, peace and crisis management missions drawing on both civilian and military assets (Petersberg tasks).

The Treaty of Lisbon envisions the progressive framing of a common Union defence policy, leading to a common defence.

The intergovernmental CSDP respects a) the ‘specific character’ of the security and defence policy of ‘certain member states’ (non-aligned, neutral) and b) the obligations of the vast majority which are NATO members.

We look at the Council’s CSDP tasks in the light of the Lisbon Treaty, with the relevant provisions located in the amended Treaty on European Union (TEU).


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Defining objectives

The Council of the European Union defines the objectives for the implementation of the CSDP, assisted by the European Defence Agency (EDA)(OJEU 9.5.2008 C 115):


Article 42(3) TEU


3. Member States shall make civilian and military capabilities available to the Union for the implementation of the common security and defence policy, to contribute to the objectives defined by the Council. Those Member States which together establish multinational forces may also make them available to the common security and defence policy.


Member States shall undertake progressively to improve their military capabilities. The Agency in the field of defence capabilities development, research, acquisition and armaments (hereinafter referred to as ‘the European Defence Agency’) shall identify operational requirements, shall promote measures to satisfy those requirements, shall contribute to identifying and, where appropriate, implementing any measure needed to strengthen the industrial and technological base of the defence sector, shall participate in defining a European capabilities and armaments policy, and shall assist the Council in evaluating the improvement of military capabilities.


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Unanimity

The CSDP decisions are adopted unanimously by the Council:


4. Decisions relating to the common security and defence policy, including those initiating a mission as referred to in this Article, shall be adopted by the Council acting unanimously on a proposal from the High Representative of the Union for Foreign Affairs and Security Policy or an initiative from a Member State. The High Representative may propose the use of both national resources and Union instruments, together with the Commission where appropriate.


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Delegation of tasks

The Council can delegate the execution of tasks (a mission) to a group of member states (Article 42(5) TEU), with the willing and able keeping the Council informed. If the decision needs to be changed, it is dealt with by the Council, as provided in Article 44 TEU.


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Implementation and scope

According to the second paragraph of Article 43 TEU, the Council adopts the decisions relating to the extended Petersberg tasks, listed in paragraph 1:


Article 43 TEU

1. The tasks referred to in Article 42(1), in the course of which the Union may use civilian and military means, shall include joint disarmament operations, humanitarian and rescue tasks, military advice and assistance tasks, conflict prevention and peace-keeping tasks, tasks of combat forces in crisis management, including peace-making and post-conflict stabilisation. All these tasks may contribute to the fight against terrorism, including by supporting third countries in combating terrorism in their territories.

2. The Council shall adopt decisions relating to the tasks referred to in paragraph 1, defining their objectives and scope and the general conditions for their implementation. The High Representative of the Union for Foreign Affairs and Security Policy, acting under the authority of the Council and in close and constant contact with the Political and Security Committee, shall ensure coordination of the civilian and military aspects of such tasks.


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European Defence Agency

The European Defence Agency (EDA) is intergovernmental, ‘subject to the authority of the Council’ (Article 45 TEU). The EDA’s statute, seat and operational rules are adopted by the Council by a qualified majority.


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Permanent structured cooperation

According to Article 46 TEU, the Council adopts, by qualified majority, the decision establishing permanent structured cooperation (akin to enhanced cooperation in other policy areas) between member states, which fulfil the criteria and made the commitments on military capabilities in accordance with Protocol No. 10.

Decisions concerning later entrants are decided by the participating states.

Permanent structured cooperation is one of the questions in need of preparatory work, public discussion and implementing decisions, if the Treaty of Lisbon enters into force.


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Council configurations

The current Council configuration, the General Affairs and External Relations Council (GAERC), already meets separately for its two main areas of activity. The Lisbon Treaty would separate the configurations, and the Foreign Affairs Council (FAC) would carry on with the whole of the European Union's external action, namely common foreign and security policy, European security and defence policy, foreign trade, development cooperation and humanitarian aid. (Cf. current Council’s Rules of Procedure and Lisbon Article 16(6) TEU.)


The Defence Ministers of the EU member states convene in connection with GAERC meetings and for separate informal meetings. The latest informal meeting was held in Prague on 12 to 13 March 2009.


The Council is assisted by the Political and Security Committee (known as PSC or COPS), which monitors the international situation, delivers opinions and can be authorised to direct crisis management operations (Article 38 TEU).


The European Union Military Committee (EUMC) is the highest military body set up within the Council. It is composed of the Chiefs of Defence of the Member States, who are regularly represented by their permanent military representatives. The EUMC provides the PSC with advice and recommendations on all military matters within the EU.

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European Parliament

Being on the sidelines of the intergovernmental CSDP does not prevent the European Parliament from showing a keen interest in The European Security Strategy and ESDP, as witnessed by the 19 February 2009 EP Resolution P6_TA-PROV(2009)0075, based on an own-initiative report by the Committee on Foreign Affairs:

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2009-0075+0+DOC+XML+V0//EN

The European Parliament sees the need for a common defence policy in Europe requiring an integrated European Armed Force which consequently needs to be equipped with common weapon systems so as to guarantee commonality and interoperability.

In addition, the EP Resolution offers an updated overview on the latest proposals and current shortcomings of the EU’s security and defence policy.



Ralf Grahn

EU Council tasks: Foreign & security policy CFSP

Nationally elected ministers decide on the common foreign and security policy (CFSP) of the European Union in Brussels.

Currently the foreign ministers meet in the General Affairs and External Relations Council (GAERC), but if the Treaty of Lisbon enters into force, they would convene in the Foreign Affairs Council (FAC), while the coordination of Council activities would take place in the General Affairs Council (GAC).

We take a closer look at the CFSP tasks of the Council in the light of the Lisbon Treaty.


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Conduct of foreign policy

Unanimity rule


External action is a wide concept, covering all areas including the ones managed by the Commission. The CFSP (including the CSDP) is narrower and intergovernmental (but the Foreign Affairs Council deals with all aspects of external relations).

Roughly, the Lisbon Treaty splits the provisions on external relations in two. After principles common to external relations in general, the CFSP and the CSDP provision are laid down in the amended Treaty on European Union (TEU), and the rest of external relations are regulated in the Treaty on the Functioning of the European Union (common commercial policy, cooperation with third countries and humanitarian aid).

According to Article 24(1) of the Treaty on European Union (TEU), the EU's common foreign and security policy (CFSP) covers all areas of foreign policy and all questions relating to the Union's security, including the progressive framing of a common defence policy that might lead to a common defence (consolidated version of the Lisbon Treaty, published OJEU 9.5.2008 C 115).

The CFSP is subject to specific rules and procedures. It is defined and implemented by the European Council and the Council acting unanimously, except where the Treaties provide otherwise. The adoption of legislative acts is excluded, as is generally the jurisdiction of the Court of Justice of the European Union.

The intergovernmental character of the CFSP and the EU’s inability to “speak with one voice on the world scene” are enshrined in the basic unanimity rule, allowing even one dogged member state to paralyse the EU in key questions, despite the evocation of the principle of mutual political solidarity (paragraph 3).


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CFSP


Instead of dealing with the EU’s external action as a whole in the Treaty on the Functioning of the European Union, the intergovernmental conference (IGC 2007) broke the unity by keeping the CFSP and CSDP provisions in the Treaty on European Union.

Because of the specific character of the CFSP, Article 26 TEU reiterates the leading role of the European Council and the tasks of the Council in an area where the Commission and the European Parliament are on the sidelines.

The Council’s tasks are laid down in the second paragraph:


Article 26(2) TEU


2. The Council shall frame the common foreign and security policy and take the decisions necessary for defining and implementing it on the basis of the general guidelines and strategic lines defined by the European Council.

The Council and the High Representative of the Union for Foreign Affairs and Security Policy shall ensure the unity, consistency and effectiveness of action by the Union.


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European External Action Service


If the Treaty of Lisbon enters into force, the European External Action Service (EEAS) will be established by a Council decision. This is one of the more demanding implementing tasks with regard to the Lisbon Treaty, requiring preparation and public discussion (naturally based on an open preparatory stage, so far sadly lacking):


Article 27(3) TEU

3. In fulfilling his mandate, the High Representative shall be assisted by a European External Action Service. This service shall work in cooperation with the diplomatic services of the Member States and shall comprise officials from relevant departments of the General Secretariat of the Council and of the Commission as well as staff seconded from national diplomatic services of the Member States. The organisation and functioning of the European External Action Service shall be established by a decision of the Council. The Council shall act on a proposal from the High Representative after consulting the European Parliament and after obtaining the consent of the Commission.


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Operational action


At the operational level, the Council (FAC) makes the decisions, according to Article 28(1) TEU:

Article 28 TEU
(ex Article 14 TEU)

1. Where the international situation requires operational action by the Union, the Council shall adopt the necessary decisions. They shall lay down their objectives, scope, the means to be made available to the Union, if necessary their duration, and the conditions for their implementation.

If there is a change in circumstances having a substantial effect on a question subject to such a decision, the Council shall review the principles and objectives of that decision and take the necessary decisions.


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Particular matters


In addition to the operational action mentioned above, the Council may adopt decisions on a common approach to particular CFSP matters. If the Council is able to agree, the member states are supposed to act in accordance with the adopted approach:


Article 29 TEU
(ex Article 15 TEU)

The Council shall adopt decisions which shall define the approach of the Union to a particular matter of a geographical or thematic nature. Member States shall ensure that their national policies conform to the Union positions.


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CFSP initiatives and proposals

Whereas the Commission has a near monopoly in making formal proposals within the current ‘Community pillar’, the intergovernmental and political character of the CFSP is illustrated by the right of each member state to submit initiatives or proposals to the Council (besides the right of the High Representative):


Article 30(1) TEU
(ex Article 22 TEU)

1. Any Member State, the High Representative of the Union for Foreign Affairs and Security Policy, or the High Representative with the Commission's support, may refer any question relating to the common foreign and security policy to the Council and may submit to it initiatives or proposals as appropriate.


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Qualified abstention

Article 31(1) TEU repeats that CFSP decisions are generally taken unanimously by the European Council and the Council. According to the general voting rules, abstention does not prevent a decision from being taken, but the second subparagraph of Article 31(1) adds that a member state can make a formal declaration to the effect that it is not obliged to apply the decision (qualified abstention). It is expected not to act against the decision. This is described as a spirit of mutual solidarity. If the minority is sizeable, no decision is taken:


Article 31 TEU
(ex Article 23 TEU)

1. Decisions under this Chapter shall be taken by the European Council and the Council acting unanimously, except where this Chapter provides otherwise. The adoption of legislative acts shall be excluded.

When abstaining in a vote, any member of the Council may qualify its abstention by making a formal declaration under the present subparagraph. In that case, it shall not be obliged to apply the decision, but shall accept that the decision commits the Union. In a spirit of mutual solidarity, the Member State concerned shall refrain from any action likely to conflict with or impede Union action based on that decision and the other Member States shall respect its position. If the members of the Council qualifying their abstention in this way represent at least one third of the Member States comprising at least one third of the population of the Union, the decision shall not be adopted.


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Qualified majority


The main rule for CFSP decisions is unanimity, but there are exceptions. According to Article 31(2) TEU qualified majority voting (QMV) applies to questions where the European Council has laid down the guiding principles or asked for a detailed proposal. It applies also to implementing decisions and to appointing special representatives.

Despite these limitations, the Lisbon Treaty contains an “emergency brake”. Even one member state can prevent a vote. This leads to a mediation effort by the High Representative, but if this fails, the matter may be delegated upwards to the European Council for a unanimous decision:


Article 31(2) TEU


2. By derogation from the provisions of paragraph 1, the Council shall act by qualified majority:

— when adopting a decision defining a Union action or position on the basis of a decision of the European Council relating to the Union's strategic interests and objectives, as referred to in Article 22(1),

— when adopting a decision defining a Union action or position, on a proposal which the High Representative of the Union for Foreign Affairs and Security Policy has presented following a specific request from the European Council, made on its own initiative or that of the High Representative,

— when adopting any decision implementing a decision defining a Union action or position,

— when appointing a special representative in accordance with Article 33.

If a member of the Council declares that, for vital and stated reasons of national policy, it intends to oppose the adoption of a decision to be taken by qualified majority, a vote shall not be taken. The High Representative will, in close consultation with the Member State involved, search for a solution acceptable to it. If he does not succeed, the Council may, acting by a qualified majority, request that the matter be referred to the European Council for a decision by unanimity.


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Expanding QMV in CFSP

There is a cautious opening towards wider use of qualified majority voting in the Council with regard to the common foreign and security policy, but only by unanimous decision by the European Council:


Article 31(3) TEU

3. The European Council may unanimously adopt a decision stipulating that the Council shall act by a qualified majority in cases other than those referred to in paragraph 2.


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Further limits

Qualified majority voting is excluded for matters with military implications and even a unanimous European Council is unable to extend QMV to these questions:


Article 31(4) TEU

4. Paragraphs 2 and 3 shall not apply to decisions having military or defence implications.


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Procedural questions

Procedural questions are the only ones where the Council (FAC) can advance by “normal” majority decisions:


Article 31(5) TEU

5. For procedural questions, the Council shall act by a majority of its members.


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Consultation

The member states are supposed to consult each other in the European Council and the Council, leading to converging views and coordinated action:



Article 32 TEU, first subparagraph
(ex Article 16 TEU)

Member States shall consult one another within the European Council and the Council on any matter of foreign and security policy of general interest in order to determine a common approach. Before undertaking any action on the international scene or entering into any commitment which could affect the Union's interests, each Member State shall consult the others within the European Council or the Council. Member States shall ensure, through the convergence of their actions, that the Union is able to assert its interests and values on the international scene. Member States shall show mutual solidarity.


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Special Representative

The Council can appoint a special representative, on a proposal by the High Representative (Article 33 TEU).


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Personal data protection

The protection of personal data is one of the principles the European Union prides itself on, but in the area of the common foreign and security policy the member states’ governments do not want to be hampered by the rules laid down in Article 16 TFEU, including the movement of such data.

Therefore, in a treaty written by the member states, the Council adopts the rules in the CFSP area, without the need to co-legislate with the European Parliament:


Article 39 TEU

In accordance with Article 16 of the Treaty on the Functioning of the European Union and by way of derogation from paragraph 2 thereof, the Council shall adopt a decision laying down the rules relating to the protection of individuals with regard to the processing of personal data by the Member States when carrying out activities which fall within the scope of this Chapter, and the rules relating to the free movement of such data. Compliance with these rules shall be subject to the control of independent authorities.


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CFSP expenditure

Article 41 TEU lays down basic rules on the allocation of CFSP expenses, with various Council decisions, including some instances where the Council can unanimously deviate from the main rules.


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Hobbled Giant

The Lisbon Treaty preserves the unanimity rule (liberum veto), with minor exceptions, and the intergovernmental character of the common foreign and security policy. These principles constitute the “clay feet” of the European Union in world affairs.

With these constraints, the Council (FAC) ─ guided by the European Council ─ requires intensive efforts to formulate working common policies. The foreign ministers meet frequently, including informal meetings (Gymnich), to agree on the CFSP, perhaps even effective implementation.

Despite its shortcomings, the Lisbon Treaty would improve the chances of more consistency and coherence in EU foreign affairs. In this respect, non-conclusive treaty reform and ratification difficulties cause competing powers much joy.





Ralf Grahn

EU Council tasks (principles)

Each member state of the European Union is represented by its head of state or government in the European Council and by its government in the Council, the two most powerful institutions of the EU (although the European Council formally becomes an institution only if the Treaty of Lisbon enters into force).

The second of these intergovernmental institutions, the Council of the European Union (European Community) exercises legislative and budgetary functions. It also holds executive powers, but in the Treaty of Lisbon this is expressed more obliquely by using the words policy-making and coordinating functions.


This post looks at some general principles concerning the exercise of power by the Council (and the other institutions).



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Treaty in force

The main provision expresses the tasks of the Council in a fragmented manner in Article 202 of the Treaty establishing the European Community (TEC), published in the latest codified version of the treaties in force in the Official Journal of the European Union (OJEU) 29.12.2006 C 321 E/135:

SECTION 2
THE COUNCIL

Article 202 TEC

To ensure that the objectives set out in this Treaty are attained the Council shall, in accordance with the provisions of this Treaty:

— ensure coordination of the general economic policies of the Member States,

— have power to take decisions,

— confer on the Commission, in the acts which the Council adopts, powers for the implementation of the rules which the Council lays down. The Council may impose certain requirements in respect of the exercise of these powers. The Council may also reserve the right, in specific cases, to exercise directly implementing powers itself. The procedures referred to above must be consonant with principles and rules to be laid down in advance by the Council, acting unanimously on a proposal from the Commission and after obtaining the opinion of the European Parliament.


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Consolidated Lisbon Treaty

Council’s tasks in general

Since the publication of the consolidated version of the Treaty of Lisbon on 9 May 2008, the proposed primary legislation of the European Union is on the whole more readable than the existing treaties (although a modernised text cannot abolish the complicated structure of the EU).

In two sentences Article 16(1) of the amended Treaty on European Union (TEU) in the consolidated version of the Treaty of Lisbon manages to convey a general idea of what the Council is supposed to do (OJEU 9.5.2008 C 115/24):

Article 16 TEU

1. The Council shall, jointly with the European Parliament, exercise legislative and budgetary functions. It shall carry out policy-making and coordinating functions as laid down in the Treaties.


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Conferred powers

According to the Treaty of Lisbon, the institutions of the European Union act within the limits of the treaties; the principle of attributed or conferred powers:


Article 5(1) TEU

1. The limits of Union competences are governed by the principle of conferral. The use of Union competences is governed by the principles of subsidiarity and proportionality.


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Institutional framework


The guiding principles are common to the institutions, which depend on each other:


Article 13(1) TEU, first subparagraph

1. The Union shall have an institutional framework which shall aim to promote its values, advance its objectives, serve its interests, those of its citizens and those of the Member States, and ensure the consistency, effectiveness and continuity of its policies and actions.


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Limited powers

The powers of each institution are set out and limited by the treaties, and the need for interinstitutional cooperation is stated (institutional balance):


Article 13(2) TEU

2. Each institution shall act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them. The institutions shall practice mutual sincere cooperation.


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This sets the background for the treatment of the various tasks the Lisbon Treaty confers upon the Council.



Ralf Grahn

Lisbon Treaty & European Council: President’s job

In these troubled times, new job openings are scarce. Have you thought about becoming President of the European Council?

If the EU Treaty of Lisbon enters into force, the heads of state or government of the member states are going to fill a new post, that of the President of the European Council. We look at the official job description and look at how openly our leaders have prepared the position and the perks.



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Lisbon Treaty

Article 15(6) of the amended Treaty on European Union describes the tasks of the new President (OJEU 9.5.2008 C 115/23):


Article 15(6) TEU

6. The President of the European Council:

(a) shall chair it and drive forward its work;

(b) shall ensure the preparation and continuity of the work of the European Council in cooperation with the President of the Commission, and on the basis of the work of the General Affairs Council;

(c) shall endeavour to facilitate cohesion and consensus within the European Council;

(d) shall present a report to the European Parliament after each of the meetings of the European Council.

The President of the European Council shall, at his level and in that capacity, ensure the external representation of the Union on issues concerning its common foreign and security policy, without prejudice to the powers of the High Representative of the Union for Foreign Affairs and Security Policy.

The President of the European Council shall not hold a national office.



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Liaisons

In addition, as President of the European Council you would have to liaise with the new General Affairs Council (GAC) and the Commission:


Article 16(6) TEU, second subparagraph

The General Affairs Council shall ensure consistency in the work of the different Council configurations. It shall prepare and ensure the follow-up to meetings of the European Council, in liaison with the President of the European Council and the Commission.


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Emergency meetings

The leisurely pace of four annual meetings may be broken if developments on the international scene turn for the worse. You may have to convene an extra meeting:


Article 26(1) TEU, second subparagraph

If international developments so require, the President of the European Council shall convene an extraordinary meeting of the European Council in order to define the strategic lines of the Union's policy in the face of such developments.


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Convention

If the European Council decides to call a Convention to examine treaty amendments, your job is to send the invitations:


Article 48(3) TEU, in part

3. If the European Council, after consulting the European Parliament and the Commission, adopts by a simple majority a decision in favour of examining the proposed amendments, the President of the European Council shall convene a Convention composed of representatives of the national Parliaments, of the Heads of State or Government of the Member States, of the European Parliament and of the Commission. ---


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Package deal

If you apply for this prestigious job, to become a member of the European Council (without a vote), you will have to convince at least a qualified majority of the current members that you are their man or woman.

But besides your personal qualities, you will have to fit into a larger pattern. In Declaration 6 the heads of state or government (intergovernmental conference) agreed on the following guidance for the (s)election of the President of the European Council. Note that political affiliation and gender are not mentioned among the relevant factors of diversity (OJEU 9.5.2008 C 115/338):



6. Declaration on Article 15(5) and (6), Article 17(6) and (7) and Article 18 of the Treaty on European Union

In choosing the persons called upon to hold the offices of President of the European Council, President of the Commission and High Representative of the Union for Foreign Affairs and Security Policy, due account is to be taken of the need to respect the geographical and demographic diversity of the Union and its Member States.


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Taking over

When you take over the reins, you may need to know how your buddies have planned the transition:


8. Declaration on practical measures to be taken upon the entry into force of the Treaty of Lisbon as regards the Presidency of the European Council and of the Foreign Affairs Council

In the event that the Treaty of Lisbon enters into force later than 1 January 2009, the Conference requests the competent authorities of the Member State holding the six-monthly Presidency of the Council at that time, on the one hand, and the person elected President of the European Council and the person appointed High Representative of the Union for Foreign Affairs and Security Policy, on the other hand, to take the necessary specific measures, in consultation with the following six-monthly Presidency, to allow an efficient handover of the material and organisational aspects of the Presidency of the European Council and of the Foreign Affairs Council.


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Salary and perks

According to Article 243 of the Treaty on the Functioning of the European Union (TFEU), your salary and perks will be decided by your peers:


Article 243 TFEU
(ex Article 210 TEC)

The Council shall determine the salaries, allowances and pensions of the President of the European Council, the President of the Commission, the High Representative of the Union for Foreign Affairs and Security Policy, the Members of the Commission, the Presidents, Members and Registrars of the Court of Justice of the European Union, and the Secretary-General of the Council. It shall also
determine any payment to be made instead of remuneration.


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Preparatory work: Start

You might be interested in how the implementation of the Treaty of Lisbon is moving along. Your first source of information is naturally what the European Council has decided in public. First you encounter the initial decision right after the signing of the treaty. The Presidency Conclusions reassuringly tell you that on 14 December 2007, the European Council agreed that it will take stock of progress on necessary preparatory work when appropriate so as to ensure the full functioning of the Treaty as soon as it enters into force. It underlines the comprehensive nature of this exercise and the consequent need for a single framework as well as political guidance at the highest level. Technical work will start in Brussels in January on the basis of a work programme which will be presented under the authority of the incoming President of the European Council [Slovenia].


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Follow-up

The following tidbits are offered to you and the rest of the public half a year later, in the 13 June 2008 report by the Slovenian Council Presidency to the 18 and 19 June 2008 European Council (document 10650/08). This is what it has to say about your coming job with regard to the needed new Rules of Procedure of the European Council:

Considerable progress was made on technical aspects of the European Council's Rules of Procedure; some other issues, related in particular to the preparation of European Council meetings, will require further work. A preliminary exchange of views focussed on the respective roles of those involved in the preparation of European Council meetings. There was broad support for the need for all of them to work closely together. A significant number of delegations underlined the need to ensure an adequate role in European Council meetings for the Head of State or Government of the Member State holding the Council presidency. These issues will require further work.


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Up-to-date information

Having seen that further work is needed, you want fresh information on progress.

The December 2008 meeting of the European Council was mainly interested in Ireland. It also tried to envision the transition to the Lisbon Treaty with regard to the numbers of MEPs and Commissioners, as well as the nomination of the President of the Commission and the rest of the Commission.

It did, however, without preceding public discussion, offer a glimpse of its thoughts about the preparation of the decisions concerning your new job and other matters of interest (document 17271/1/08 REV 1 Annex 1). As you see, you are to be consulted, if elected:

Declaration of the European Council

Treaty of Lisbon – Transitional measures concerning the Presidency of the European Council and the Presidency of the Foreign Affairs Council

In the event that the Treaty of Lisbon enters into force at a date when a six-monthly Presidency of the Council has already begun, the European Council agrees that, as a matter of transition, in order to take into account the preparatory work and ensure harmonious continuity of work:

− the competent authorities of the Member State holding the six-monthly Presidency of the Council at that time will continue to chair all the remaining meetings of the Council and the European Council, as well as third-country meetings, until the end of the period of office;

− the following six-monthly Presidency of the Council will be in charge of taking the necessary specific measures relating to the organisational and material aspects of the Presidency of the European Council and of the Foreign Affairs Council during its period of office, in conformity with the Treaty. On these issues, close consultation will be established between this Presidency and the President (elect) of the European Council and the High Representative (designate) of the Union for Foreign Affairs and Security Policy.


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Other matters

You may be interested in the nomination procedure, the public debate, the weighing of your merits and the decision making, before you are consulted about the organisational and material aspects of your office as President of the European Council.

Sorry, the best public information you are able to lay your hands on is yesterday’s response from Europe Direct, available with comments on the Grahnlaw blog (Lisbon Treaty implementation: State of play).

Why worry? If you don’t belong to the charmed circle readily informed about the real state of affairs, you have no chance of getting the job.



Ralf Grahn

Lisbon Treaty & European Council: Tasks and powers

Arguably the European Council already is the politically most powerful (influential) body of the European Union. Formally the Lisbon Treaty would retain the description of the European Council’s general tasks almost as they are, but the heads of state or government have increasingly taken over the leading role from the Community institutions. The Treaty of Lisbon would see the European Council among the EU institutions in a formal sense as well (Article 13 TEU).

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General tasks

In the consolidated Treaty of Lisbon, Article 15(1) of the Treaty on European Union (TEU), replaces the first paragraph of the current Article 4 TEU. In the amending treaty, the general political guidelines become the general political directions and priorities. The clarification is added that the European Council does not exercise legislative functions (but it comes awfully close) (OJEU 9.5.2008 C 115/23):


1. The European Council shall provide the Union with the necessary impetus for its development and shall define the general political directions and priorities thereof. It shall not exercise legislative functions.


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Role of European Council

Paul Craig and Gráinne de Búrca describe the role of the European Council in a few well chosen sentences (with added explanations and examples):

• The European Council is central to the very development of the Community and Union itself.
• The European Council will often confirm important changes in the institutional structure of the Community.
• The European Council can provide the focus for significant constitutional initiatives that affect the operation of the Community and Union.
• The European Council will frequently consider the state of the European economy as a whole.
• Conflict resolution is another issue addressed by the European Council.
• The European Council plays a role in the initiation or development of particular policy strategies.
• The European is also central in external relations.
• The European Council will also consider new accessions to the Community.

(Source: Paul Craig and Gráinne de Búrca: EU Law ─ Text, Cases, and Materials; pages 56 to 57; Fourth edition, Oxford University Press)


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Communication: Presidency Conclusions


The European Council communicates its political guidelines through Presidency Conclusions, issued at the end of each meeting.

The next ones are expected tomorrow, after the spring European Council.

The European Council does not have the Rules of Procedure necessary according to the Lisbon Treaty (one of the implementing tasks to prepare), but the General Secretariat of the Council has published Rules for the organisation of the European Council (January 2007):



Conclusions

12. The conclusions, which shall be as concise as possible, shall set out policy guidelines and decisions reached by the European Council, placing them briefly in their context and indicating the stages of the procedure to follow on from them.

13. An outline of the conclusions shall be distributed on the day of the European Council meeting in good time for the start of proceedings. The outline shall distinguish clearly between those parts of the text which have previously been approved and which are not in principle subject to discussion and those parts of the text which the European Council is to discuss with a view to reaching final conclusions at the meeting.


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In addition, the European Council reports to the European Parliament.


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Comments

Naturally, being central to includes the limits and limitations imposed by the European Council and by its decision making mostly based on unanimity or consensus.

The European Council is essentially free to set its own agenda, when it acts outside the specific decisions mandated by the treaties. It chooses independently how it deals with the political (non-mandatory) input from the Community (Commission) and intergovernmental (Council) feeding mechanisms. Thereby it becomes the most intergovernmental body of the European Union, sometimes concluding intergovernmental agreements outside the institutional framework, but with direct bearing on it.

On the other hand, most of the formal decisions are still taken by the ‘Community’ institutions.

Since the formal description of the general tasks of the European Council remain almost unchanged under the Treaty of Lisbon, most reports and comments on the amending treaty have concentrated on the obvious changes (President, High Representative, Presidential relations), while the incremental rise of the body have gone almost without remarks.



Ralf Grahn

European Council: Tasks

The current Article 4 of the Treaty on European Union (TEU) uses a sweeping formula to describe the tasks of the European Council (OJEU 29.12.2006 C 321 E/12):


Article 4 TEU

The European Council shall provide the Union with the necessary impetus for its development and shall define the general political guidelines thereof.


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General tasks

Impetus and general political guidelines cover all areas crucial for the development of the European Union. Without being an institution in the formal sense, the European Council is arguably the most important body setting the course for the European Union.

Its conclusions have set treaty reforms and other major developments in motion, but it also sets the limits to what the EU can achieve, taking into account the severe restrictions caused by consensus (unanimous) decision making.

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Specific tasks

Besides the general guidelines there are some provisions on specific tasks for the European Council.

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Reporting

According to the third paragraph of Article 4 TEU the European Council reports to the European Parliament after each meeting and annually:

The European Council shall submit to the European Parliament a report after each of its meetings and a yearly written report on the progress achieved by the Union.


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Meeting report

The Presidency Conclusions issued at the end of each European Council are the main instrument to communicate the results, but a livelier version is offered when the member state holding the Council Presidency reports to the European Parliament.

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Annual report

Subsidiarity and proportionality

According to the Protocol (No 30) on the application of the principles of subsidiarity and proportionality (1997) the Commission has an obligation to report annually on the application of Article 5 TEC. According to point 10 the European Council shall take account of the Commission report within the report on the progress achieved by the Union which it is required to submit to the European Parliament in accordance with Article 4 of the Treaty on European Union.

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CFSP and CSDP

The intergovernmental European Council makes the crucial decisions pertaining to the common foreign and security policy (CFSP), including the common security and defence policy (CSDP), according to Article 13(1) and (2) TEU:

1. The European Council shall define the principles of and general guidelines for the common foreign and security policy, including for matters with defence implications.

2. The European Council shall decide on common strategies to be implemented by the Union in areas where the Member States have important interests in common.

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European defence

If and when the progressive development of a common defence policy leads to a common (European) defence, the decision is taken by the European Council, according to Article 17(1) TEU:

1. The common foreign and security policy shall include all questions relating to the security of the Union, including the progressive framing of a common defence policy, which might lead to a common defence, should the European Council so decide. It shall in that case recommend to the Member States the adoption of such a decision in accordance with their respective constitutional requirements.

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CFSP referral to the European Council

The decisions under Title V on the common foreign and security policy are basically taken unanimously by the Council, but with the possibility for a member state to abstain (Article 23(1) TEU).

Where the treaty foresees a decision by qualified majority, an opposing member state can use the so called emergency brake on grounds of important reasons of national policy. It must state its reasons and request that the matter be referred to the European Council for decision by unanimity (Article 23(2) TEU):

2. By derogation from the provisions of paragraph 1, the Council shall act by qualified majority:

— when adopting joint actions, common positions or taking any other decision on the basis of a common strategy,

— when adopting any decision implementing a joint action or a common position,

— when appointing a special representative in accordance with Article 18(5).
If a member of the Council declares that, for important and stated reasons of national policy, it intends to oppose the adoption of a decision to be taken by qualified majority, a vote shall not be taken. The Council may, acting by a qualified majority, request that the matter be referred to the European Council for decision by unanimity.

-----

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Enhanced cooperation in criminal matters

A referral to the European Council is possible with regard to a decision to establish enhanced cooperation in an area of police and judicial cooperation in criminal matters (Title VI). The detour delays but does not stop the decision, if the requirements are fulfilled (Article 40a(2) TEU):

A member of the Council may request that the matter be referred to the European Council. After that matter has been raised before the European Council, the Council may act in accordance with the first subparagraph of this paragraph.


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Enhanced cooperation generally

Enhanced cooperation between member states in an area referred to in the Treaty establishing the European Community can be referred to the European Council, but it does not stop the pioneering group from moving ahead after the discussion (Article 11(2) TEC):


A member of the Council may request that the matter be referred to the European Council. After that matter has been raised before the European Council, the Council may act in accordance with the first subparagraph of this paragraph.


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Broad economic policy guidelines

The European Council formulates conclusions on the broad economic policy guidelines (BEPGs), according to Article 99(2) TEC.

The spring (March) European Council is traditionally the venue for economic policy and reform, including the BEPGs and the Lisbon Agenda for Growth and Jobs.

In a union with a (partly) common currency, but with national fiscal and economic policies, the European Council meeting starting tomorrow 18 March 2009 has its plate full in the middle of the serious financial crisis and economic recession.

This time the conclusions would have to be ground-breaking, if the European Council wants to turn the tide:

2. The Council shall, acting by a qualified majority on a recommendation from the Commission, formulate a draft for the broad guidelines of the economic policies of the Member States and of the Community, and shall report its findings to the European Council.

The European Council shall, acting on the basis of the report from the Council, discuss a conclusion on the broad guidelines of the economic policies of the Member States and of the Community.

-----


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ECB reporting

Article 113(3) TEC adds the European Council to the addressees of reporting by the European Central Bank (ECB), almost as an afterthought:

3. The ECB shall address an annual report on the activities of the ESCB and on the monetary policy of both the previous and current year to the European Parliament, the Council and the Commission, and also to the European Council. The President of the ECB shall present this report to the Council and to the European Parliament, which may hold a general debate on that basis.


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Joint employment report

The European Council adopts conclusions (during its spring meeting) on the joint employment report by the Council and the Commission, according to Article 128(1) TEC:

1. The European Council shall each year consider the employment situation in the Community
and adopt conclusions thereon, on the basis of a joint annual report by the Council and the
Commission.


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Conclusion

The European Council has set in motion the major developments of the European Union during the last decades, but the construction is plagued by inadequate rules, highlighted by the recession.

Given that, what can we expect from the next two days?


Ralf Grahn

European Council: Members and tasks

We turn to the composition and the tasks of the European Council as laid down in the existing treaties and the European Union’s Treaty of Lisbon.


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Current treaty

Article 4 of the existing Treaty on European Union (TEU) lays down the tasks and the composition of the European Council (in the latest consolidated version of the treaties, OJEU 29.12.2006 C 321 E/12).

The words impetus and guidelines indicate the guiding role of the European Council. The public guidance is summed up in a consensus paper, the Presidency Conclusions formally issued by the member state holding the Council Presidency.

The results are reported to the European Parliament after each meeting by the Council Presidency.

In principle, there is one member from each member state, either the head of state (France and perhaps some other member states with a presidential system) or more commonly the head of government (prime minister).

In some countries the relations are ambiguous or at least contested. Thus, there have been public spats between the president and prime minister of Poland.

Finland is one example of an ambiguous relationship, where the president wants to hold on to a leadership role in foreign policy while the government is responsible for EU affairs. This has led to situations described as the problem of “two plates” (at the dinners). Meanwhile the foreign minister has been exiled from the meeting room.


Article 4 TEU

The European Council shall provide the Union with the necessary impetus for its development and shall define the general political guidelines thereof.

The European Council shall bring together the Heads of State or Government of the Member States and the President of the Commission. They shall be assisted by the Ministers for Foreign Affairs of the Member States and by a Member of the Commission. The European Council shall meet at least twice a year, under the chairmanship of the Head of State or Government of the Member State which holds the Presidency of the Council.

The European Council shall submit to the European Parliament a report after each of its meetings and a yearly written report on the progress achieved by the Union.


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Lisbon Treaty

Article 13 of the Treaty on European Union (TEU), as amended by the Lisbon Treaty, would elevate the European Council to the role of an official EU institution, and Article 15 TEU builds on this to give more detailed provisions on this institution.

Still the European Council does not exercise legislative function, but it makes binding decisions on a number of issues.

The basic membership remains the same, although the President is added to the Commission President (both without votes). The second paragraph clarifies that the High Representative participates in the meetings.

Four regular meetings annually (twice every six months) codifies existing practice, where the current treaty says ‘twice a year’.

The real novelties are in paragraphs 5 and 6: the elected President of the European Council (not of the European Union). The office has been unanimously agreed, but the role of the future President is contested.

Here is the text of Article 15 TEU, as presented in the consolidated version of the Lisbon Treaty (OJEU 9.5.2008 C 115/23):


Article 15 TEU

1. The European Council shall provide the Union with the necessary impetus for its development and shall define the general political directions and priorities thereof. It shall not exercise legislative functions.

2. The European Council shall consist of the Heads of State or Government of the Member States, together with its President and the President of the Commission. The High Representative of the Union for Foreign Affairs and Security Policy shall take part in its work.

3. The European Council shall meet twice every six months, convened by its President. When the agenda so requires, the members of the European Council may decide each to be assisted by a minister and, in the case of the President of the Commission, by a member of the Commission. When the situation so requires, the President shall convene a special meeting of the European Council.

4. Except where the Treaties provide otherwise, decisions of the European Council shall be taken by consensus.

5. The European Council shall elect its President, by a qualified majority, for a term of two and a half years, renewable once. In the event of an impediment or serious misconduct, the European Council can end the President's term of office in accordance with the same procedure.

6. The President of the European Council:

(a) shall chair it and drive forward its work;

(b) shall ensure the preparation and continuity of the work of the European Council in cooperation with the President of the Commission, and on the basis of the work of the General Affairs Council;

(c) shall endeavour to facilitate cohesion and consensus within the European Council;

(d) shall present a report to the European Parliament after each of the meetings of the European Council.

The President of the European Council shall, at his level and in that capacity, ensure the external representation of the Union on issues concerning its common foreign and security policy, without prejudice to the powers of the High Representative of the Union for Foreign Affairs and Security Policy.

The President of the European Council shall not hold a national office.

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Lisbon Treaty implementation

Preparatory work is needed in case the Treaty of Lisbon enters into force. The role and the perquisites of the President of the European Council need to be hammered out.

Progress reports and (alternative) draft proposals are eagerly awaited.


Ralf Grahn

EU: Monetary policy IV ECB supervision and Lisbon Treaty

What does the EU Lisbon Treaty say about the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?

Would the Treaty of Lisbon be more likely to prevent financial meltdown by instituting banking supervision at European level, under the auspices of the European Central Banks?

Are the national supervisory structures appropriate for global and European financial institutions?

We start by looking at the contents of the Treaty of Lisbon.

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The current Treaty establishing the European Community (TEC) was ─ perhaps still is destined ─ to become the Treaty on the Functioning of the European Union (TFEU), and generally the so called innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications ‘in the usual manner’ (points 17 and 18, pages 6 and 7).

I found nothing specific in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007) about Article 105 TEC.

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In Article 2, point 91 of the original Treaty of Lisbon (ToL) the IGC 2007 agreed on the following concerning Article 105 TEC (OJ 17.12.2007 C 306/72):

MONETARY POLICY

91) Article 105 shall be amended as follows:

(a) in the first sentence of paragraph 1, ‘ESCB’ shall be replaced by ‘European System of Central Banks, hereinafter referred to as “ESCB”,’;

(b) in the second indent of paragraph 2, the reference to Article 111 shall be replaced by a reference to Article 188 O;

(c) The text of paragraph 6 shall be replaced by the following:

‘6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.’.


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The TFEU table of equivalences confirms that Article 105 TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 127 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII (OJ 17.12.2007 C 306/211─212).

(In the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115, the Tables of equivalences start on page 361, but the ToL numbers have been omitted.)

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Consolidated Lisbon Treaty

Article 127 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/102─103:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

Chapter 2 Monetary policy

Article 127 Lisbon Treaty
(ex Article 105 TEC)

1. The primary objective of the European System of Central Banks (hereinafter referred to as ‘the ESCB’) 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. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 119.

2. The basic tasks to be carried out through the ESCB shall be:

— to define and implement the monetary policy of the Union,

— to conduct foreign-exchange operations consistent with the provisions of Article 219,

— to hold and manage the official foreign reserves of the Member States,

— to promote the smooth operation of payment systems.

3. The third indent of paragraph 2 shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.

4. The European Central Bank shall be consulted:

— on any proposed Union act in its fields of competence,

— by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article 129(4).

The European Central Bank may submit opinions to the appropriate Union institutions, bodies, offices or agencies or to national authorities on matters in its fields of competence.

5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.

6. The Council, acting by means of regulations in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament and the European Central Bank, confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings.

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The following post is going to compare Article 127 TFEU with the current TEC, the draft Constitution and the Constitution, and then take a look at some legislative materials and comments.


Ralf Grahn

EU: Monetary policy IIIb ECB supervision in Constitution?

Does the Constitutional Treaty differ from the draft Constitution with regard to the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?

Did the intergovernmental conference (IGC 2004) make it easier to supervise European and global banks at the European level?

Let us see what our legal materials have to say.

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Draft Constitution Article III-77 and Constitution Article III-185 texts compared

Renumbering the Articles referred to was a technical adjustment. In paragraph 4, where the draft Constitution spoke of ‘fields of competence’, the Constitutional Treaty used the slightly more direct expressions ‘areas within its powers’ (twice) and ‘matters within its powers’ (once), but without making any material difference.

The word ‘offices’ was added to what became the string ‘Union institutions, bodies, offices or agencies’ (paragraph 4).

The contribution ─ whatever that means ─ of the European system of Central Banks to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system, in paragraph 5, remained identical with the proposal by the European Convention. The draft Constitution, as we remember, was the same as the current Article 105(5) TEC; the draft only writing the ESCB ‘in extenso’.

In paragraph 6, the Convention had proposed ordinary European laws as a means to give the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions. This would have meant co-decision by the European Parliament and qualified majority voting in the Council.

The IGC 2004 put paid to that. The governments reverted to the current unanimity rule, with some fine-tuning of the details.

Instead of the ordinary legislative procedure, proposed by the Convention, the Constitutional Treaty provided for a European law of the Council. In place of full participation (co-decision), as proposed by the draft Constitution, or even assent, as currently under the TEC, the European Parliament was further marginalised to be consulted, along with the European Central Bank.

In 2004 the member states’ governments (more or less) slammed the door on European level supervision of financial institutions, leaving the European Union with a fragmented network of national supervising authorities for increasingly global and European banks.

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Sweden

The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52; December 2004) described the signed Constitutional Treaty.

The Swedish government gave a factually correct description of the current Article 105(6) TEC and of Article III-185(6) Constitution. The government mentioned ‘some weakening’ of the European Parliament’s influence, since the EP was only to be consulted (page 241):

”Inom ramen för den monetära politiken får rådet i dag genom enhälligt beslut på förslag från kommissionen efter att ha hört Europeiska centralbanken och med Europaparlamentets samtycke tilldela Europeiska centralbanken särskilda uppgifter i samband med tillsynen över kreditinstitut och andra finansinstitut med undantag av försäkringsföretag. I det konstitutionella fördraget får Europeiska centralbanken i en europeisk lag som antas av rådet tilldelas dessa särskilda uppgifter. Rådet skall besluta med enhällighet efter att ha hört Europaparlamentet och Europeiska centralbanken (artikel III-185.6). En viss försvagning sker här av Europaparlamentets inflytande i och med att dess samtycke ersätts med dess hörande.”



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On the whole, here on page 173, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.

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Finland

The government of Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). In the government’s view, the proposals concerning EMU legislative procedures did not change the institutional balance essentially, but it first mentioned the instances, where the ordinary legislative procedure was instituted, and then the ratification bill mentioned where the position of the European Parliament was weakened (pages 81─82):

”Perustuslakisopimus merkitsee tiettyjä muutoksia lainsäädäntömenettelyihin talous- ja rahaliiton alalla, mikä ei kuitenkaan muuta olennaisesti toimielinten valtasuhteita. Perustuslakisopimuksessa siirrytään tavanomaiseen lainsäätämisjärjestykseen monenvälistä valvontamenettelyä koskevien yksityiskohtaisten sääntöjen vahvistamisessa (III-179 artiklan 6 kohta), Euroopan keskuspankkijärjestelmän ja Euroopan keskuspankin perussäännön eräiden määräysten muuttamisessa (III-187 artiklan 3 kohta) sekä sellaisten toimenpiteiden osalta, jotka ovat tarpeen euron käytössä yhteisenä rahana (III-191 artikla). Toisaalta Euroopan parlamentin asema tietyissä talous- ja rahaliittoa koskevissa kysymyksissä heikkenee, kuten päätettäessä eräiden kieltojen täsmentämiseksi tarvittavista säännöistä (III-183 artiklan 2 kohta), erityistehtävien antamista Euroopan keskuspankille (III-185 artiklan 6 kohta) sekä liikkeeseen laskettavien eurometallirahojen yksikköarvojen ja teknisten määritelmien yhdenmukaistamisesta (186 artiklan 2 kohta).”

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The same remarks on legislative procedures within EMU appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), with the Finnish government’s comments on page 84:

”Det konstitutionella fördraget innebär vissa ändringar i lagstiftningsförfarandena på området för den ekonomiska och monetära unionen, vilka ändå inte på något väsentligt sätt förändrar maktförhållandena mellan institutionerna. I det konstitutionella fördraget övergår man till ordinarie lagstiftningsförfarande i fråga om meddelandet av närmare föreskrifter om det multilaterala övervakningsförfarandet (artikel III-179.6), ändrandet av vissa bestämmelser i stadgan för Europeiska centralbankssystemet och Europeiska centralbanken (artikel III-187.3) samt nödvändiga åtgärder för att använda euron som gemensam valuta (artikel III-191). Å andra sidan försvagas Europaparlamentets ställning i vissa frågor som gäller den ekonomiska och monetära unionen, t.ex. när man skall besluta om regler som behövs för att närmare ange hur vissa förbud skall tillämpas (artikel III-183.2), särskilda uppgifter som tilldelas Europeiska centralbanken (artikel III-185.6) samt harmonisering av valörerna och de tekniska specifikationerna för de euromynt som skall sättas i omlopp (artikel 186.2).”

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Fischer

Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005) only made the observations that „Artikel III-185 EUVV korrespondiert mit Artikel 105 EGV“ and „Artikel III-185 EUVV korrespondiert mit Artikel III-77 VVE“ (page 316).

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United Kingdom

According to Protocol (No 13, in the Constitutional Treaty) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland as regards economic and monetary union, Article 4, the Constitution’s Article III-185(1) to (5) did not apply to the UK. The United Kingdom was thus exempted from the ESCB contribution to the smooth operation of national prudential supervisors, but the UK opt-out did not concern paragraph 6, so Britain (surprisingly) remained among the potential veto powers concerning the transferral of new supervisory tasks to the European Central Bank (if I understand correctly).

The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) briefly remarked that the government had advocated the amendment on prudential supervision put forward by the Irish presidency in document CIG 81/04, Annex 18 (page 46).

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In other words, in 2004 the EU member states unanimously signed the Constitutional Treaty requiring unanimous European laws by the Council (and marginalising the European Parliament) to confer financial supervision on the European Central Bank.

The next instalment turns to the IGC 2007 and the Lisbon Treaty.



Ralf Grahn

EU: Monetary policy IIIa Constitution contents

What, if anything, did the Constitutional Treaty do to the objectives and to the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?

Did the intergovernmental conference (IGC 2004) facilitate European level prudential supervision of the financial sector?

We look at the contents of first Constitution clause in the section on monetary policy, within the context of economic and monetary union (EMU).

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In the Treaty establishing a Constitution for Europe the provisions on monetary policy are located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.

The objectives and the basic tasks of the European System of Central Banks and the European Central Bank are found in Article III-185, OJ 16.12.2004 C 310/81─82:


Article III-185 Constitution

1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-177.

2. The basic tasks to be carried out through the European System of Central Banks shall be:

(a) to define and implement the Union's monetary policy;

(b) to conduct foreign-exchange operations consistent with Article III-326;

(c) to hold and manage the official foreign reserves of the Member States;

(d) to promote the smooth operation of payment systems.

3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.

4. The European Central Bank shall be consulted:

(a) on any proposed Union act in areas within its powers;

(b) by national authorities regarding any draft legislative provision in areas within its powers, but within the limits and under the conditions set out by the Council in accordance with the procedure laid down in Article III-187(4).

The European Central Bank may submit opinions to the Union institutions, bodies, offices or agencies or to national authorities on matters within its powers.

5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.

6. A European law of the Council may confer specific tasks upon the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. The Council shall act unanimously after consulting the European Parliament and the European Central Bank.

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The next post is going to compare the Constitutional Treaty with the draft Constitution and look at some legislative materials on the Constitution.


Ralf Grahn

EU: Monetary policy IIb ECB and prudential supervision

Has European Community (European Union) monetary policy, based on the single currency (euro), advanced during the protracted treaty reform process since the 2001 Treaty of Nice?

In particular, given the present financial turmoil, did the European Convention offer anything, which could have prevented or mitigated the problems of today concerning the lack of European level prudential supervision?

We compare the proposal of the European Convention (Article III-77) with the current Article 105 of the Treaty establishing the European Community (TEC) on the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB).

After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.

Would the government positions in 2008 remain what they were in 2003?

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Texts compared

There are some (material) differences in the referrals and the text between Article III-77 of the draft Constitution and the existing Article 105 of the Treaty establishing the European Community (TEC).

Price stability was retained as the primary objective, but the Union’s general objectives in Article I-3 had been reformulated with regard to Article 2 TEC.

The second referral in paragraph 1 underwent a change, too. The contents of Article 4 TEC and Article III-69 were practically identical, but what had been guiding principles for the European Community (former European Economic Community, EEC) generally, became the introductory principles for economic and monetary policy ─ a policy area ─ within the context of the unified European Union (which would have abolished the EC ─ EU duality).

In paragraph 2, the foreign exchange operations consistent with Article 111 TEC moved the Article referred to from the section on monetary policy to the chapter on international agreements (Chapter VI).

The real difference was that the legal base concerning prudential supervision of credit institutions and other financial institutions, in paragraph 6, underwent a change. The draft Constitution replaced unanimous Council decisions by European laws.

The European Convention started the practice to replace the acronyms ESCB and ECB by the European System of Central Banks and the European Central Bank.

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Convention Working Group

For a look at the background, you can read the Final report of Working Group VI on Economic Governance, CONV 357/02 (21 October 2002. The remarks give an indication of the discussion on monetary policy (page 3):

"A large number of members of the group consider that the tasks, mandate and statute of the European Central Bank should remain unchanged, and should not be affected by any new treaty provisions. However some consider that its mandate should be widened to include the objectives of growth and employment

The group also discussed the accountability and transparency of the ECB. Some consider that there is scope for improving the accountability of the ECB, and have put forward ideas such as enhancing the ECB's reporting to the European Parliament, giving the EP a greater role in the designation of ECB Board members, and providing for the obligatory publication of ECB minutes. Others consider that the ECB has already demonstrated a commitment to increased openness, and do not therefore think that any changes are necessary.

The group agrees on the importance, in the light of enlargement, of amending Article 10 paragraph 2 of the ECB statutes relating to the working methods of the ECB's Governing Council, and invites the ECB and/or the Commission to make use of the enabling clause included in the Treaty of Nice to make proposals for amending Article 10 paragraph 2 of the ECB statute as soon as the Nice Treaty enters into force."

The Working Group Report is available at:

http://register.consilium.eu.int/pdf/en/02/cv00/00357en2.pdf

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de Poncins

Étienne de Poncins presented the proposed text of Article III-77 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), and he remarked on the changed legal base concerning prudential supervision, on page 302:

« Commentaire : le paragraphe 6 permet de confier à la Banque centrale européenne des missions particulières avant trait au contrôle prudentiel. Aujourd’hui cette décision requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative ordinaire sera d’application, le Conseil se prononçant à la majorité qualifiée. »

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Sweden

Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.

The government of Sweden briefly mentioned the proposed amendment on prudential supervision in the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003). The relevant passage is on page 55:

“Vidare föreslås ändrade beslutsregler för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB).

On page 56 the government noted the favourable opinion of Sveriges Riksbank (Sweden’s central bank) regarding the abandonment of the unanimity rule concerning prudential supervision:

”Sveriges riksbank stödjer konventets förslag om att frångå kravet på enhällighet vid beslut om att ge ECB särskilda uppgifter i samband med tillsynen av kreditinstitut och andra finansinstitut. Riksbanken har inte heller några invändningar mot förslaget om att ändra beslutsordningen för justering av ECB-stadgan.”

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Sweden

Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden described the proposed provision on prudential supervision, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49:

”Europeiska centralbankens tillsynsbefogenheter och stadgar

Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”

On page 50 the Swedish government revealed its own ‘farsighted’ position. Supervision of financial markets is a matter for the member states. According supervisory functions to the European Central Bank should continue to be ruled by unanimity:

”Medlemsstaterna bör även fortsättningsvis själva kunna avgöra hur de organiserar övervakningen av de finansiella marknaderna. Det är därför inte lämpligt att släppa på kravet om enhällighet för överföring av tillsynsbefogenheter från medlemsstaterna till ECB.”


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United Kingdom

The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).

Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:

“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.

75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”

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Finland

Finland has adopted the euro currency, but relinquishing unanimity when transferring prudential supervision to the European Central Bank did not find favour with the Finnish government in 2003.

In the view of the Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), joint supervision was not appropriate, given the sensititvity of these questions and their economic repercussions (page 66):

”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”

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We have seen that in 2003 none of our sample of three governments wanted to approve the proposal by the European Convention to facilitate the creation of joint financial supervision at European level, under the auspices of the European Central Bank.

In the following instalment we look at how the IGC 2004 and the Constitutional Treaty treated the proposals in the draft Constitution.

What was, and given the current financial crisis, what should have been the response in 2004 and later?


Ralf Grahn

EU: Monetary policy IIa

Did the European Convention have anything to say about the basic objectives and tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?

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Article III-77 of the draft Constitution, proposed by the European Convention, corresponds with Article 105 TEC, and it is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.

First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-77 on the objectives and basic tasks of the European System of Central Banks and the European Central Bank is found in OJ 18.7.2003 C 169/42:

Article III-77 Draft Constitution

1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-69.

2. The basic tasks to be carried out through the European System of Central Banks shall be:

(a) to define and implement the Union's monetary policy;

(b) to conduct foreign-exchange operations consistent with Article III-228;

(c) to hold and manage the official foreign reserves of the Member States;

(d) to promote the smooth operation of payment systems.

3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.

4. The European Central Bank shall be consulted:

(a) on any proposed Union act in its fields of competence;

(b) by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council of Ministers in accordance with the procedure laid down in Article III-79(6).

The European Central Bank may submit opinions to the Union institutions, bodies or agencies or to national authorities on matters in its fields of competence.

5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.

6. European laws may confer upon the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. Such laws shall be adopted after consultation of the European Central Bank.

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The next post is going to look at some legal materials concerning the European Convention proposal.


Ralf Grahn