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An Overview of the European Institutions

Updated on July 14, 2014

What is the EU? When was it founded? What are its objectives? What is the role of the institutions?

The EU is based on a history of growth, peace and prosperity. It has allowed the individual countries as well as the EU as a whole to become stronger under a single currency and with a growing number of member states which started out as only six countries back in 1958.

The European Union is an economic and political partnership between 27 countries in Europe. Although it was only established under the Maastricht Treaty in 1993, it has a history of half a century. After the Second World War, the idea of a peaceful union of European countries emerged and Robert Schuman, the French Foreign Minister at the time, first officially proposed a supranational community on May 9th 1950 in his Schuman Declaration. The goal was to create a peaceful cooperation with an economic interdependence in order to avoid conflicts. The result was the peaceful post-war European Coal and Steal Community which was the forerunner of other European communities which were to be set up and eventually the European Union. The European Communities and the European Union were the basis for peace, stability and wealth. Living standards were raised, a single European currency was introduced and a single market in which people, goods, services and capital can move freely within the EU member states was built up. Today, the EU is a role model in terms of development aid, environmental policies, the promotion of human rights and democracy and the combat of climate change.

Different European Institutions are involved in the decision-making process of the EU of which the most important ones are The European Commission, the European Parliament and the Council of the European Union.

There are three Councils which are easily confused as they carry very similar names even though they have different responsibilities within the EU. However, one of them is not a European Institution. The European Council consists of the European Heads of State and of Government of all member states of the EU as well as the president of the European Commission. In general, the European Council holds a meeting four times a year in order to determine the general political guidelines of the EU and to control the achieved progress. As the Council represents the premier decision-making body, its meetings are often referred to as the EU summit meetings.

It has been an official EU institution since 2009 when the Treaty of Lisbon came into force. The headquarters of the Council are in Brussels where meetings chaired by its President usually take place.

The Council of the European Union which was previously known as the Council of Ministers is made up of the national ministers of all EU member states. Depending on the topic discussed, different ministers come together. When environmental policies are discussed, for instance, the respective minister from each state appears who is responsible for this area. The Council has legislative authority which it shares with the Parliament. It is the most important decision-making body in the EU. It has important tasks such as the adoption of European legal regulations which is in many areas done in cooperation with the European Parliament. Furthermore, the Council concludes agreements between the EU and one or more states or international organizations. It is also responsible for approving the EU budget together with the European Parliament. On the basis of the general guidelines developed by the European Council, The Council of the European Union develops the general foreign and security policy. Last but not least, the Council manages the cooperation between the national courts and the police forces in criminal affairs. In general, the Council’s tasks concern the areas for which the member states have decided to bundle their rights of sovereignty and transfer their decision-making power to the organs of the EU.


The Council of Europe is not an EU institution but an international organization founded in 1949. It consists of 47 member states with 800 million citizens. Its objective is the protection of human rights, the promotion of cultural diversity and the confrontation of racism and intolerance. Article 1(a) of the Statute reads as follows: “The aim of the Council of Europe is to achieve a greater unity between its members for the purpose of safeguarding and realizing the ideals and principles which are their common heritage and facilitating their economic and social progress.”

One of the early achievements of the Council of Europe was the development of the European Convention on Human Rights, adopted in 1950 through which the European Court of Human Rights was created in Strasbourg. It is the highest European court for human rights and freedom and supervises adherence to the European Convention on Human Rights.

As one of the main institutions of the EU, the European Commission is the executive body. There are 27 Commissioners with one from each of the EU member states. They lead the Commission for a term of 5 years. The president of the Commission is José Manuel Barroso who is currently in his second term of office. The president is nominated by the European Council which also appoints the other Commissioners. Every day business is run by the Commission’s staff such as administrators, lawyers, economists, translators, interpreters, secretarial staff etc. The main responsibilities of the Commission include drafting proposals for new laws with the aim to protect the EU and its citizens, implementing EU policies, spending as well as allocating EU funds and representing the EU internationally.

  1. Drafting of proposals for new laws: It implements EU policies by proposing new laws to the European Parliament and the Council of the European Union, administrating the EU’s budget, enforcing the EU law in cooperation with the Court of Justice and representing the EU as a whole, for instance, by negotiating agreements between the EU and other countries. After it has drafted a new law and 14 of 27 Commissioners have agreed to it, the proposal is sent to the Council and the Parliament. Following their debates and amendments of the draft, they either approve or decline it.
  2. Implementation of EU policies: The Commission functions as the guardian of the Treaties which means it ensures that the member countries apply the EU laws correctly. In case a national government is not applying an EU law, the Commission sends a letter asking the state to solve the problem. If there is no result, the Court of Justice intervenes and can impose penalties.
  3. Spending and allocating EU funds: In cooperation with the Council and the Parliament the Commission determines long-term spending priorities for the EU. It draws up an annual budget which needs to be approved by the Parliament and the Council and takes care of monitoring how EU funds are spent.
  4. Representing the EU internationally: The Commission represents the EU in international bodies such as the World Trade Organisation. Usually, the President attends G8 meetings.


The European Parliament has its administrative offices in Luxembourg; however, plenary sessions and committee meetings take place in Strasbourg and in Brussels. Every 5 years, voters directly elect the members of the European Parliament who represent the people. It is one of the most important institutions and has executive power parallel to the Council of the European Union and the Commission. Its three main roles consist of discussing and adopting EU laws together with the Council, controlling the Commission in order to ensure it is functioning democratically and debating and adopting the EU’s budget along with the Council. The Parliament adopts laws in the areas of agriculture, energy policy, immigration and EU funds, amongst other things. The Parliament must also approve the accession of new countries to the EU. Other responsibilities include the approval of the members of a newly appointed Commission, the examination of reports produced by the Commission and the questioning of Commissioners. The Parliament has a committee that controls the budget and judges how the budget was handled the previous year by the Commission. The number of the members of the European Parliament (MEPs) for each country must be in proportion to its population.


The Court of Justice of the European Union ensures the EU law is applied correctly in all member states. There are different cases that can be taken to court of which the most common cases are:

1) National courts request for a preliminary ruling which means the Court of Justice is asked to interpret a point of EU law. They may concern the interpretation of treaties or acts of the institutions, bodies, offices or agencies of the Union. In April 2011, for instance, the Supreme Court of France asked the European Court of Justice to interpret the European Union law with regards to genetically modified organisms as France had forbidden the cultivation of MON810 Genetically Modified Corn in 2008 on the basis of article 23 of the Directive 2001/18/EC. The ECJ Advocate General Paolo Mengozzi found that as MON810 had already been authorized in the EU in 1998 and as this type of gene-manipulated corn does not represent a serious risk to humans and or animals, it should not be banned from the market.

2) Actions are brought against EU governments for failing to apply EU law. At the end of 2011, the legal experts of the Commission threatened the opening of proceedings against Germany and Great Britain before the ECJ for failure to fulfill obligations if they don’t change their bilateral fiscal agreements with Switzerland regarding the taxation of savings income. The agreements signed by the respective member states would interfere with the EU regulations on this subject and protect fraudsters. Germany and the UK have agreed to re-negotiate the agreements, although Switzerland prefers dealing with bilateral agreements than EU-Swiss deals.

3) Actions for annulment of EU laws which are thought to violate the EU treaties or fundamental rights may be taken. In 2010, the General Court dismissed an action for annulment initiated by Arcelor against the validity of the Emissions Trading Directive. It had been adopted in order to reduce greenhouse gas emissions by means of allowances allocated to operators of specific installations. Operators that are able to reduce their emissions can sell its surplus allowances to another operator. Operators that exceeded the determined limit can purchase allowances from energy-efficient operators. Arcelor claimed that these regulations infringe the right of property, the freedom to pursue an economic activity, the principle of proportionality, the principle of equal treatment, the freedom of establishment and the principle of legal certainty. The General Court dismissed the action however, reasoning that a legal person “may bring action against Community acts if they concern it directly and individually”. However, this would not be the case.

4) Actions are made against EU institutions in cases of failure to make appropriate decisions. Back in November 1993, for instance, the Parliament brought an action against the Commission as it had supposedly failed to present the appropriate plans for the establishment of the free movement of persons within the common market. The Parliament based its action on Article 175 of the EEC Treaty.

5) Last but not least, individuals companies and organizations can take direct action against EU decisions or actions. Any natural or legal person may bring action against the European Union if it has suffered damage due to the action or inaction of the Community or its personnel.

The European Central Bank was founded on June 1st, 1998 as an institution responsible for administering the monetary policy of the countries in the EU that adopted the euro. At the time, the responsibility was transferred from the national banks of the 11 EU member states to the ECB. Its creation was an important step in the process of European integration. The bank’s main tasks are keeping prices stable and controlling inflation as well as ensuring that financial markets and institutions are supervised. It also determines key interest rates in the Eurozone and controls money supply. In order to keep exchange rates in balance, they buy or sell foreign currencies. Last but not least, it authorizes the issuing of euro banknotes by central banks in Eurozone countries. The bank works together with the national central banks in the EU member states. Together they are referred to as the European System of Central Banks (ESCB). It also cooperates closely with the central banks in the 17 countries that have adopted the euro. This cooperation is called the “Eurosystem”.


The Court of Auditors is based on the Budgetary Treaty from 1975 and is the fifth institution of the European Union. Primarily, it has to monitor the implementation and spending of the budget of the European Union. The Court needs to be able to ensure that taxes are appropriately allocated and spent. Furthermore, it must continuously improve the EU financial management and report on the use of public funds. The Court must provide the European Parliament and the Council with an annual report in which the previous financial year is analyzed. The Parliament must examine the report and decide whether or not to approve how the Commission has administered the budget. The Court consists of one member from each EU state appointed for a period of six years as well as its current president Vítor Manuel da Silva Caldeira. Presidents are elected for three years with the option of renewal.


The EU is facing the crisis

The crisis of the European Union which set in at the end of 2009 made many people lose confidence in the up to then seemingly effectively functioning economic and political community. They have been asking themselves whether it was wise to combine 27 very different member states into an. We have discussed whether it is wise to keep Greece in the Eurozone and how to save Portugal, Ireland and Spain which have been in a debt and economic crisis.

The crisis is not over yet. However, recently, a Fiscal Pact was signed by 25 members of the EU during a summit meeting of European leaders at the beginning of March in which fiscal regulations prescribe sanctions for all EU countries that cannot adhere to sovereign debt limits in 2013 and onwards. It obliges EU members to cut their spending and control their budget. Furthermore, the ECB is providing further liquidity assistance worth of €529 billion. This is supposed to give EU countries the possibility to boost competitiveness and overcome the crisis. In addition, the European Commission will be able to supervise the budgets of member countries more closely and take legal action against countries breaking the Pact before the European Court of Justice should this be necessary.

The pact obliges EU member states to cut spending. The European Commission will also be given greater power to monitor members’ budgets and to take legal action in front of the European Court of Justice if necessary.If countries fail to ratify the treaty, they would be blocked off from rescue funds from spring 2013 onwards.

"There is now less tension regarding some issues related to the euro, so it was possible to focus minds on the need for structural reforms for growth," said European Commission President José Manuel Barroso.

"We're turning the page on the financial crisis," Mr. Sarkozy told a news conference after the summit. "The strategy we've implemented is bearing fruit."

The Fiscal Pact marks a “milestone in the history of the European Union,” Chancellor Angela Merkel said.

"The worst is over, but there are still risks. The situation is stabilizing," the ECB chief said in an interview.

This shows that European leaders are confident that the Eurozone can be saved and that Europe is on the road to recovery.

However, there is no reason to have false hopes. According to German Chancellor Angela Merkel, flooding financial markets with capital has bought the necessary time for actions. But she states: "The activities of the European Central Bank have shown us all that we are still not in a completely normal situation," Ms. Merkel told reporters after the summit. "The situation is somewhat calmer, but there is nothing to show that the crisis has been completely overcome and further steps are needed."

European Central Bank President Mario Draghi thinks we have overcome the worst of the Eurozone crisis and the situation is stabilizing. He stated that Europe was doing better than the United States in terms of economic data such as inflation and budget deficits.

It remains to be seen whether the European leaders have managed to make the right decisions and whether the further financial aids that were provided are able to lead to the recovery of the Eurozone or whether a more severe global financial crisis is waiting for us.


Do you think the EU will overcome its financial crisis by measures such as the Fiscal Pact or the provided financial aids?

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    • Electro-Denizen profile image


      6 years ago from Wales, UK

      Nice full hub here on the topic. It's a shame that there are so many problems when the intention behind the EU (certainly the single currency) was/is a good one - to avoid the ugliness from previous wars. Interesting that the Germans were so key to get the EU economic unity working well.


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