Business and Politics in Europe. Governance and decision making in the EU

Table of Contents

1. Introduction

2. Ordinary legislative procedure

3. What is governance about

4. European Governance and Member States

5. Lobbying

6. Does the prevailing system fit the EU?

7. Conclusion

8. References

1. Introduction

Since its inception the European Union (later referred to as: the EU) has expanded to 27 Member States comprising more than 490 million citizens. The most important institutions are the European Commission (later refereed to as: the Commission) consisting of national ministers and the European Council (later referred to as: the Council), which is made up of the heads of the Member States. Furthermore, the European Parliament (later referred to as: the Parliament), consisting of 754 Members of Parliament (later referred to as: MEP) is the only directly democratic institution within the EU. In such a complex environment it becomes hard to make decisions that satisfy everybody’s needs. Therefore this paper tries to answer the question on how policy formulation and decision making processes within the EU function, thereby focusing on the governance mechanism of the EU and its Member States, taking into consideration the influence of stakeholders and the process of lobbying. Finally, the analyzed prevailing governance system is assessed in light of the Euro crisis.

The paper is structured around two main issues, namely European governance and lobbying. Before these issues are discussed a brief introduction regarding the ordinary legislative procedure is given. Afterwards, the concept of governance, which is merged into European governance, is considered. Thereby the focus is put on legitimacy, in particular on democratic legitimacy. Since the EU’s governance system is partly dependent on its Member States systems, it is classified and compared to those. Following this, lobbying and the interest articulation of other stakeholders are discussed. By that means it is studied if some type of “elite pluralism” exists within the EU. Finally, there is a discussion about the shortcomings of European governance, with special regard to the current Euro crisis and an outlook on possible advancement of the EU is given, based on the line of argumentation put forward by The Economist.

2. Ordinary legislative procedure

In order to grasp the overall concept of governance it is important to have some background knowledge on how the EU formulates policies. The following paragraph elaborates on the ordinary legislative procedure.

In the ordinary legislative procedure the Commission drafts proposals, which are presented to the Parliament and the Council for the first reading. The proposals are influenced through interest expression of Member States, private organizations, through lobbying, and other interest groups. If the adopted opinion of the Parliament is concurrent with the Council, the proposal will be adopted. Otherwise the Council’s opinion is sent back and the Parliament can either adopt the answer or make adaptations and send it back to the Council. In case the Parliament rejects the opinion, it is sent to the Conciliation Committee, consisting of 27 MEP and 27 members of the Council. They try to reach consensus by a joint text, which afterwards has to be approved by the Parliament with an absolute majority. A non-absolute majority leads to a final rejection of the proposal (European Parliament, 2012). As one can easily imagine, in between many different interests try to find its way into the process. The following pages will shade light on the process, mostly referred to as governance.

3. What is governance about

To see how the EU functions one has to recognize that on the one hand the EU is neither a “superstate” with sovereign power over the Member States nor a federal state with clearly defined areas of responsibility. On the other hand, the EU is not a confederation, which ensures the sovereignty of the Member States (Kohler-Koch, 1998, p.2). The EU is rather a network consisting of states, public actors, private actors and society. It can be seen as a transnational negotiation system, in which the EU forms the playing field for its different members, interest groups and enterprises. Beck and Grande coin the term “post-imperial Empire”, which describes the EU as system of cooperation, interdependence, voluntarism and overcoming of national borders (Beck and Grande, 2007, p.53). Consequently, the alignment of different interests with an according binding decision, where the involved parties comply to, is crucial to uncover the value added by cooperation. A current example, which shows how difficult it can be to achieve this, would be the discussion about the excessive spending by debtor countries. The creditor countries blame the debtor states for excessive spending, and the debtor states try to articulate that austerity is not the solution (Profligacy is, 2011, p.2).

The institutionalization of the process of interest alignment and solution to difficult situations can be described as governance. Governance refers to the channeling of decision-making in a decentralized network of stakeholders with no clear decision making center. It aims to achieve binding and effective policy decisions with respect to the diverging interests of different affected groups, and the assurance of compliance by the affected groups, once the policy is in place (Kohler-Koch, 1998, p. 1). The participating actor’s compliance depends on the authority of the policy-making organization, whereas compliance serves as a reinforcing factor to authority. The authority stems from either input legitimacy, which is directly tied to democratic legitimacy or output legitimacy that vests on the fact that the decisions are effective and efficient with regard to the diverging interests and decisions taken (Bouwen, 2011, p.317). However as seen in the infancy of the EU, if everything works well, such as job creation, trade and prosperity, output legitimacy is sufficient. As soon as serious problems arise, such as the Euro crisis, it becomes insufficient, because citizens hold the system of the EU responsible for their misery (An ever-deeper democratic, 2012, p.2/4).

Nevertheless, it must be kept in mind that the situation is far more complicated in practice. A bizarre problem exists in the EU, because due to multiple differing interest groups, all with different characteristics and diverse cultural heritages, it is understandable that the decisions-making process is often quite slow, especially because the interest groups, organized in peak association’s, function with consensus too. The British doubt every development in the EU before it happens, whereas the French welcome new rules because they can still ignore those in a later stage if beneficial for national interest. This is one reason why the EU cannot agree on a collectively supported consensus on the Euro crisis (The Euro crisis. But what would, 2010, p.2). A truly federal system is one solution, but requires a time-consuming treaty change. Such a change in EU institutional design would increase democratic participation by society, consequently leading to greater participation in EU governance and therefore to the effective application and implementation of EU decisions (Schmidt, 2006, p.670).

4. European Governance and Member States

To better understand the term “post-imperial Empire” as defined by Beck and Grande, European governance, which is classified as “network type of governance”, is analyzed in the following paragraph (Kohler-Koch, 1998, p.14). The organizing principles of political relations, consisting of majority voting and consociation, and the constitutive logic of the polity, consisting of common purpose and parallel interest help to build a model where the Member States of the EU can be characterized. Those in turn influence the characteristics of network governance.

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