Danish non paper on the dischargeDanish non paper on the formalization of the discharge procedurebetween the Council and the European Parliament

Background

According to the Lisbon Treaty“The European Parliament, acting on the recommendationfrom the Council, shall give a discharge to the Commission in respect of the implementation of thebudget”(Article 319 being identical to Article 276 of TEC). In recent years, theEuropean Parliament has initiated the practise of giving a discharge not only tothe Commission but also to each of the other institutions of the EU.In February 2009 as part of the process concerning the discharge for the imple-mentation of the Council’s 2007 budget, the Parliament’s Committee on Budget-ary Control (COCOBU) requested formal and official bilateral meetings with theCouncil as well as written answers to questions on certain aspects of the Council’sbudget. The Council refused this request because such a formalized discharge pro-cedure between the two institutions would be contrary to the usual informal dia-logue between COCUBU and the Council’s Secretariat on discharge questions – apractice based on the “Gentleman’s Agreement” of 1970. This agreement foreseesthat each branch of the budgetary authority refrains from questioning the admin-istrative budget of the other. As a reaction to the Council’s refusal the EuropeanParliament decided on 23 April to postpone granting the discharge to the Counciluntil autumn, giving the Council another opportunity to comply with the Parlia-ment’s request. De facto the decision calls into question the established informalpractices governing the relations between the two institutions in regard to dis-charge matters.On 10 September Coreper discussed the possible refusal by the European Parlia-ment to grant the discharge for the implementation of the Council’s 2007 budget.The Swedish Presidency was given a mandate to contact COCOBU to arrange ameeting as well as to raise the matter with the leaders of the political groups in theParliament. In addition the Presidency would answer the Parliament’s writtenquestions on the Council’s budget and publish the relevant documents on theCouncil’s website. During the meeting with COCOBU the Presidency wouldamong others convey the message that the Council wishes“….to discuss how to en-sure an effective and efficient availability of information in the future on the discharge, withoutcalling into question the established practise in relation to each other’s administrative expendi-ture”.1The Swedish Presidency emphasized that possible amendments in the dis-charge procedure should be addressed in the broader context of future discus-

sions with the Parliament on budgetary matters linked to the entry into force ofthe Lisbon Treaty.As a response to the Council’s accommodation the European Parliament decidedon 25 November 2009 to grant discharge to the Secretary-General of the Councilin respect of the implementation of the Council’s budget for 2007. As part of thedischarge decision the Parliament calls“…. on the Council to continue to further improvecooperation with its competent committees on the basis of its recent practice”and asks“…. forthe formulation and inclusion in the IIA by the institutions of an annex specifically dealing withthe discharge procedure for the Council”.In the context of the next discharge procedurefor the Council, Parliament in addition calls on its competent committee (COCO-BU) to secure among others the provision of written answers to relevant ques-tions and if further clarification is needed, an oral explanation on the basis of thewritten answers.2

Reflections

The course of events linked with the process leading up to the Parliament’s deci-sion on discharge for the implementation of the Council’s 2007 budget clearlyshows, that the Parliament calls into question the established informal practicesgoverning the relations between the two institutions on discharge matters. Defacto this implies a rejection of that part of the “Gentleman’s Agreement” con-cerning the established informal discharge procedure between the two institutions.As a consequence, Council and Parliament do not need to refrain from question-ing the implementation of the administrative budget of the other any more. Thisline of reasoning assumes that the “Gentleman’s Agreement” still functions inrelation to other budgetary matters, most importantly decisions on the contentand size of the administrative appropriations of the two institutions.The Parliament furthermore wishes a formalization of a new discharge procedurebetween the two institutions to be implemented in amendments to the Interinsti-tutional Agreement of 17 May 2006 between the European Parliament, the Coun-cil and the Commission on budgetary discipline and sound financial management(the IIA).3The present IIA does not contain any regulation of the interinstitu-tional collaboration during the discharge procedure, unlike the very detailed provi-sions on the collaboration during the budgetary procedure, including a specialannex (II) of this.In Denmark’s view, the Council should be prepared to enter into discussions withthe Parliament to ensure that each arm of the discharge authority can scrutinise, infull transparency, the other’s implementation of the administrative budget. Thediscussions on the future discharge procedure between the two institutions shouldbe linked with broader budgetary issues, including the necessary amendments ofthe IIA following the entry into force of the Lisbon Treaty.23

Discussions with the Parliament on a formalization of the discharge procedurebetween the two institutions should be facilitated by the entry into force of theLisbon Treaty. This implies the establishment of a new European External ActionService (EEAS) as a single service with its own budget under the authority of theHigh Representative for Foreign Affairs and Security Policy. The staff of EEASwill among others be drawn from the General Secretariat of the Council, where-upon the existing administrative expenditure of the Council in the field of ForeignAffairs and Security Policy will be brought to an end.

Solution

PremisesDenmark would like to see a durable solution to the future relations between theCouncil and the Parliament during the annual discharge procedure. In our opiniona solution should be based on full transparency with regard to the financial man-agement of the budget of both institutions in line with the budgetary managementof all other EU institutions. Consequently the Council as well as the Parliamenton an equal basis will have the possibility to ask critical questions concerning thebudget implementation of each other to be able to make an assessment of thequality of the financial management. Furthermore an amended discharge proce-dure shall secure symmetry in the exchange of information between the Parlia-ment and the Council during the discharge, including financial and other reportingon the budget implementation of the respective institutions. Finally it may be nec-essary to adjust the existing discharge timetables of the Council and the Parlia-ment to secure a meaningful and smooth application of a new formalized dis-charge procedure.ProposalAn agreement on the formalization of the discharge procedure between theCouncil and the Parliament should be included in the amended IIA and containthe following main elements:A new part xx of the IIA designated “Improvement of InterinstitutionalCollaboration during the Discharge Procedure”.A point referring to the broader provisions of the discharge in the LisbonTreaty and the Financial Regulation on the general budget.A point on the purpose of the agreement, which may be formulated as fol-lows: “To improve the sound financial management of EU funds by streng-thening the collaboration between the Council and the Parliament duringthe annual discharge procedure.”A point on the principles of the mutual exchange of information betweenthe Council and the Parliament during the annual discharge procedure -such as equality, symmetry and transparency.

A point of the types of necessary information to be exchanged between theCouncil and the Parliament, including annual financial and other reportingon the budget implementation of the respective institutions.A point on the mutual obligation of both institutions to submit any infor-mation at each institution’s request, required for the smooth application ofthe discharge procedure for the financial year in question - such as deliver-ing answers to written questions on the budget implementation of the re-spective institutions.A point on the agenda, form, place and timing of meetings on dischargematters to be held between the Council and the Parliament during the year.

Time frameIf possible a solution on the future discharge procedure should be found beforethe Parliament decides on the discharge concerning the financial year 2008 (pro-bably in the end of April 2010). Therefore the Council should soon discuss howto ensure an effective and efficient availability of information in the future on thedischarge, cf. the initial discussions at Coreper meeting of 10 September 2009.This implies among others to provide for practical mechanisms as regards themutual exchange of information between the two institutions. As part of thepreparation for another Coreper meeting, the Budget Committee should discussthe matter as soon as possible.