Chapter 3 of the second Title of the Treaty of Lisbon’s Treaty on the Functioning of the European Union concerns the formation and management of the Union’s budget. Rules are outlined as to how the Annual Budget should operate and be administered.
Each institution (except the European Central Bank) is required to submit expenditure estimates for the next year by the 1st July of the current year. It then falls to the Commission to compile all of these into a draft budget for the EU.
The Commission then sends this draft to the Council of Ministers, where it should be discussed and analysed. A decision is reached, and the decision and budget are then forwarded to the European Parliament.
There is a bias within the Treaty at this point towards adoption of the budget. Article 314.4 states that if the European Parliament takes longer than 42 days to respond, then the budget is to be adopted. This is the first hint at attempts to keep monetary matters away from the people; away from democracy.
The European Parliament, upon receiving the budget, is left with three options. The first is to approve it; the second is to do nothing, and thus approve it by default. And last option, to offer amendments, is the only option to control the finances of Brussels that the people of Europe are given. Not even through the muddle that is the European Parliament can the people of Europe block a budget, reverse a decision or do anything to challenge the actual institutions of the EU in any deep or meaningful way.
Should a budget not be adopted by the start of the actual financial year, effectively 1/12th of the previous year’s budget is used to keep things ticking over. Only the Council can authorise any spending in excess of 1/12th, again keeping power away from the Parliament.
Article 314.5 shows what is to happen should the Parliament table amendments to the budget. A Conciliation Committee forms to discuss Parliamentary amendments, comprising 50% of Council representatives, and 50% of representatives from the Parliament. In a nod at fairness, the Council is limited by Qualified Majority Voting representing at least 15 members of the Council or at least 65% of the EU’s population, whereas the Parliament needs a simple majority.
Thus it could be argued that the EU has taken steps to remove power away from the largest and strongest states and pushed things further towards a vacuum, forcing the democratic political market to work and alliances to be formed. But this would be missing certain other articles in the Treaty.
Article 317 states that only the Commission can transfer appropriations from one budgetary chapter to another. Article 319 goes further, giving only the Commission permission to implement the budget. The Commission is even allowed to transfer its currency holdings in the currency of one member state into the currency of another, given the Commission theoretical power to pressurise governments.
In Article 324, the Presidents of the EU’s different institutions are obliged to find a common position in cases of disagreement, effectively pressurising the President of the European Parliament to accept the Council’s will and favouring more federalist elements, as this can only take place on the Commission’s initiative.
Thus in their attempt to keep control of the EU via power over the budget, the large core states have in fact shifted power to the Commission. By attempting to keep budgetary matters away from the people and the even poorly-constituted democracy of the Parliament, the actual winner has been the Commission, the farthest removed from the people and most anti-democratic of all the institutions.