EPRS History of Budgetary Powers and Politics History of Budgetary Powers and Politics in the EU:The Role of the European Parliament Role of the European in the EU:The History and Politics of Budgetary Powers in the EU: The Role of the European Parliament Part II: The non-elected Parliament 1957-1978 STUDY 2016 European Union History Series EPRS | European Parliamentary Research Service Author: Alfredo De Feo Historical Archives Unit, European Parliament and Robert Schuman Centre for Advanced Studies, EUI November 2015 – PE 563.508 Historical Archives Unit of the European Parliament Robert Schuman Centre forAdvanced Studies European Union History Series November2015 A History of Budgetary Powers and Politics in the EU: The Role of the European Parliament Part II: The non-elected Parliament 1957-1978 STUDY Alfredo De Feo Robert Schuman Centre for Advanced Studies EPRS | European ParliamentaryResearch Service This study has been written at the request of the Historical Archives Unit of the Directorate General for Parliamentary Research Services (DG EPRS). Author: Alfredo De Feo. EUROPEAN PARLIAMENT DIRECTORATE-GENERAL FOR PARLIAMENTARY RESEARCH SERVICES HISTORICAL ARCHIVES UNIT [email protected] Cover: hemicycle of the European Parliament. © European Union - EP, 1983. Illustrations: © European Communities/European Union - EP, 1960-1976. Luxembourg: Publications Office of the European Union. Disclaimer and Copyright Manuscript completed in November 2015, Luxembourg © European Union, 2016. The content of this document is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy. PE 563.508 ISBN: 978-92-846-0112-7 DOI: 10.2861/604009 CAT: QA-04-16-858-EN-N © European Union, 2016 Printed in Luxembourg 2 Abstract This study provides a history of budgetary powers and politics in the EU during the period 1957-1978, focusing on the role of what was then still a non-(or indirectly) elected European Parliament. It follows a timeline divided into three periods: (i) beginnings (1957- 1964), (ii) preparations for modification of the Treaty (1965-1969), and (iii) the first phase of democratic control (1970-1978). The modifications to the Treaty of Rome, with the two budgetary treaties of 1970 and 1975, were the results of conflicts, diplomacy and compromises. After more than 20 years the balance of power between the institutions had changed; full democratic control had not been achieved, but important progress had been made, and Parliament, though still not directly elected, had gained in influence and respect. This study gives a detailed description of various elements of the budgetary powers shaped by the two treaties, in particular those which would enable the elected Parliament to continue its fight for more influence and greater powers, not only in the budgetary domain but also in legislative and institutional matters too. 3 4 Table of Contents INTRODUCTION ..................................................................................................................9 1957-1964: START-UP OF THE EUROPEAN ECONOMIC COMMUNITY..........................11 Historical context: From the ECSC to the EEC...........................................................11 1957 EEC Treaty ..........................................................................................................12 Financial provisions of EEC Treaty ............................................................................12 Principles............................................................................................................................................ 13 Revenue.............................................................................................................................................. 13 Budgetary procedure..................................................................................................................... 14 Execution and control ................................................................................................................... 14 Parliamentary Assembly during the period 1957-1964: The first conflicts ...........15 Absence of dialogue ...................................................................................................................... 16 Respect for the calendar............................................................................................................... 16 Political representation of the Council .................................................................................... 17 Autonomy of the Parliament’s budget.................................................................................... 17 Budgets............................................................................................................................................... 18 Modifications to the budget: the Assembly approach ............................................18 Operational expenditure.............................................................................................................. 18 Administrative expenditure ........................................................................................................19 First revision of the Treaty: Merging the executives ...............................................20 Parliament’s influence over the negotiations..........................................................21 Furler report (June 1963).............................................................................................................. 22 Budgetary implications of the Merger Treaty ..........................................................23 Leemans report (1964) .................................................................................................................. 23 Signing of the Treaty...................................................................................................................... 25 Ambitions of the Parliament......................................................................................26 1965-1969: FORGING MODIFICATIONS TO THE BUDGETARY POLICY .........................29 Another institutional and budgetary battle: The first European crisis ..................29 Commission proposals ...............................................................................................30 Content of the proposals.............................................................................................................. 31 Negotiations .....................................................................................................................................32 Parliament’s position .................................................................................................34 5 On the principles............................................................................................................................. 34 Amendments to the draft Treaty............................................................................................... 34 Luxembourg (dis)agreement......................................................................................................36 Is the Luxembourg Compromise still alive?........................................................................... 37 Towards a new Treaty.................................................................................................38 Proposals for the revision of own resources (Article 201).......................................38 Council position............................................................................................................................... 39 Financial perspective..................................................................................................................... 40 (Failed) revision of Article 201.....................................................................................................40 Decision on own resources ........................................................................................41 Proposals to reinforce the budgetary powers of the EP (Article 203) ....................42 Commission proposals.................................................................................................................. 42 Parliament’s role in the discussions.......................................................................................... 43 Parliament’s position on the substance .................................................................................. 45 1970-1978: THE BEGINNINGS OF DEMOCRATIC CONTROL...........................................47 Approaching the new Treaty .....................................................................................47 Positions of the Member States .................................................................................................47 Last mile of negotiations .............................................................................................................. 48 Final text of the Treaty ...............................................................................................49 Compulsory expenditure (CE) and non-compulsory expenditure (NCE)..................... 49 NCE - Maximum rate of increase (MRI)..................................................................................... 50 ‘Normal’