ECB and the Eurosystem explained in 3 min.
INSTITUTIONS
Committee of the Regions
The Committee of the Regions (COR) is one of the newer Community institutions, set up in the aftermath of Maastricht in order to facilitate the doctrine of subsidiarity; it met for the first time in March 1994. It was established as part of an attempt to bridge the gap between Brussels and citizens of the Union, although anti-federalists claimed that its creation was part of a Brussels plan to undermine the nation state.
The existence of the Committee reflects the growing importance of the regions in many member countries and, indeed, of the new relationships encouraged by cross-border regions such as the Rhine–Meuse (created from parts of Belgium, Germany and the Netherlands) and the Atlantic Islands Council (created by the UK, Republic of Ireland, Scottish Parliament, Welsh Assembly and the Isle of Man). The COR must be consulted during the legislative process on any matter which it is felt has regional implications, the key issues being identified as trans-European networks, health, education, culture and economic and social cohesion. There are those who would like to see the COR become a directly elected body and form a second chamber in an enlarged and strengthened European Parliament.
Like the ESC, the COR also has 344 members, provided by member states in exactly the same proportions and appointed for a four-year term. The criteria for appointment to the COR differ between member states, largely depending on their degree of decentralisation. As a federal state, Germany is represented by members of the Länder governments. Belgium is also virtually a federation of the Flemish and Walloon communities. Other countries such as Italy and Spain are highly regionalised into semi-autonomous regional administrations and these countries draw most of their COR members from the regional governments. More centralised states such as Britain have traditionally appointed COR members from the ranks of mayors of cities or chairmen of county councils. However, the devolved legislatures (the Scottish Parliament, and the Northern Irish and Welsh Assemblies) are also represented.
The COR meets in Brussels for five plenary sessions a year. Again, much of its work is done through a structure of seven standing committees, covering areas such as:
- • Regional policy, structural funds, cross-border and inter-regional cooperation
- • Agriculture, rural development, fisheries
- • Urban issues, energy, environment.
As with the ESC, members are keen to belong to it, but often lament its lack of influence. Its internal divisions and the nature of its membership (deriving, as it does, from large, autonomous bodies but also smaller local councils) combine to mean that as yet it has not fulfilled all of the high hopes of those who devised it.
But it remains a useful channel of communication between the various units of government across the Union.
Ombudsman
The idea of appointing an ombudsman for the EU was first mooted at Maastricht but, because of ‘procedural delays’, no appointment was made until 1995. The ombudsman’s purpose is to reconcile the interests of EU citizens and EU institutions by providing for a thorough investigation of any accusation of maladministration on the part of any EU institution other than the Court of Justice. The appointee has wide-ranging powers of inquiry, the Community institutions being required to hand over all the documents and other evidence that he or she might demand of them. If maladministration is discovered the ombudsman:
- • Reports in full to the institution concerned and makes recommendations for correcting the fault
- • Can also refer the case to the European Parliament for further action.
In the first year of operation the ombudsman and his staff dealt with nearly 700 complaints, the largest number of which came from Britain. Most, however, were ruled to be inadmissible. The number of complaints received has increased steadily year by year since the office was established. In 2004, the total was 3,726, 195 of them from the United Kingdom. Spain has the highest proportion of complaints (482), although on a complaints to population basis Malta has the highest percentage, the UK the lowest.
European Central Bank
The European Central Bank (ECB) was instituted as of July 1998, at a meeting of the Ecofin council in Brussels. Prior to that date work on monetary union had been carried out by the European Monetary Institute (EMI) supported by the combined forces of the central banks of all Community members, the European System of Central Banks (ESCB).
Based in Frankfurt, the ECB is intended to serve as a normal central bank for those countries able and willing to participate in monetary union. As such the bank has three main areas of responsibility:
- • The printing, minting, issue and administration of the new euro notes and coins, together with the ultimate withdrawal of the old currencies after the transition to a single currency, which came about in July 2002
- • The determination of fiscal policy, including the setting of interest rates, for all countries in the ‘euro zone’
- • Maintaining a watching brief on the suitability for entry of countries currently outside EMU.
The ECB has an executive board and governing council that should be composed solely of representatives from those member states participating in stage three of EMU. But the European Council can give special associate membership to non-participating states, the UK being keen to maintain observer status. At the head of the ECB is a president who is appointed for eight years.
Foreign affairs, defence and internal security
The institutions described in this chapter have all been first and foremost institutions of the European Community, which is only one of the three pillars of the European Union, the other two pillars being a common foreign and security policy and a common policy relating to justice, home affairs and internal security. The only institution common to all pillars of the EU is the European Council. For the two created at Maastricht, the TEU had to create new institutions, or rather to rationalise existing ad hoc institutions within a framework of intergovernmental cooperation.
Institutions may seem dull and complex, but they are important to an understanding of the EU, providing the starting point for any understanding of how the Union operates, its policy processes and the direction in which it is moving. By achieving a clear idea of how they function and the way in which power is shared between them, we can better comprehend that the EU is an international body that is distinctive, still evolving and seeking to adjust to its enlarged membership.
Opinions vary as to where power lies within the Union. Supranationalists argue that the supranational institutions, the Commission, Parliament and Court of Justice, are a driving force behind the process of integration, for they are autonomous, being able to take decisions that are binding on member states. Intergovernmentalists stress the role of national governments (via the European Council and Council of Ministers) in making key decisions, leaving them in control of the direction of Union affairs.
Supranationalists can show that the introduction of QMV and co-decision, along with the growing importance of the European Parliament, all point to a loss in the influence of member states over decision-making. Intergovernmentalists can point to the ability of individual countries to opt out of policies they cannot accept as evidence that supranationalism is being held in check. Moreover, the ability of the European Council to shape the future direction of Europe reflects a broader trend in which the role of member states has been increasing in recent years, at the expense of the supranational Commission. The Council has played a leading role in the shaping of European integration and the resolution of contentious issues.
The way in which the Union moves forward is not on the basis of conflict between the various institutions, but via an attempt to achieve consensus which ensures that decisions are acceptable to as many countries as possible.
Glossary
Co-decision – A procedure introduced by the Maastricht Treaty that enhances the role of Parliament in the legislative process. Ultimately, parliament can in many areas veto a measure put forward by the Council of Ministers.
G8 – Group of Eight – An international forum for the governments of the original G7 advanced industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States), plus Russia, which achieved full status in 2002.
Together, the eight countries represent about 65 per cent of the world economy. The G7/8 Summit deals with macroeconomic management, international trade and relations with developing countries. The group’s activities include year-round conferences and policy research, culminating in the annual gathering attended by the heads of government of the member states.
