Hans-Werner Sinn

Nationalökonomie & Finanzwissenschaft

Ifo Viewpoint

Ifo Viewpoint No. 19: Double Majority

Munich
05 December 2000

Europe's formal decision-making processes are complicated, being the result of historical compromises. In the EC-6 this was not a problem, in the EU-15 the decision-making processes must be taken seriously, and in a future EU-25 they will determine the course the Union takes. Also a country like Germany, which has generously held back in the apportionment of voting rights, must seek to influence the decision-making structures that will take effect after EU enlargement.

Germany will contribute 39% of the seignorage assets to the EMU, will receive 31% of the interest payments these assets generate and currently holds 12% of the seats in the Governing Council of the European Central Bank.

Germany is the largest bloc in the European Parliament with 99 votes, before France, Italy and the United Kingdom with 87 votes each. But Germany's voting share does not match its population size. The weight of a French voter is 25% more than that of a German voter in the European Parliament.

In the European Commission, Germany has two members along with France, Italy, the United Kingdom and Spain; smaller countries have one each. Germany's share of commissioners is 10% although it accounts for 24% of the EU population.

In the Council of Ministers as well, which takes all important decisions in the EU in its ca. 100 annual meetings, the proportions are similar. The four largest countries have 10 votes, Spain has 8, and countries such as the Netherlands, Belgium, Greece or Portugal each have 5 votes. Even Luxembourg has 2 votes. Leipzig, whose population is similar to Luxembourg's, is represented in the Council of Minister with no more than 0.05 votes through its share of Germany's seats. An inhabitant of Greece has a voting weight that is 390% the voting rate of a German, and a French inhabitant has a voting weight of 140%.

The system is greatly distorted since it creates first, second and third class EU citizens. This is incompatible with the idea of fair cooperation in constructing the new European Union. The argument that the imbalance is a necessary protection for the small countries is no longer tenable - the imbalance is much too great and unsystematic.

There are good arguments for a bicameral system in the EU, as the German Foreign Minister has proposed. One chamber could resemble the German Bundesrat and represent the regions, accepting whatever imbalances may occur. The other would consist of the European Parliament, which would have considerably more functions than at present and would be a proportional representation of the European population. But the EU lacks the political will for such fundamental reform.

Action is necessary before EU enlargement, however. A linear extrapolation of the old system to an enlarged Union would lead to an impossible situation. Since the EU, in Estonia, Latvia and Lithuania, would have three new Luxembourgs, the influence of the large countries would be even more diluted and the democracy deficit would grow to be intolerable.

At Nice the EU countries are planning to take a small but important step. They intend to expand the area of majority decisions in the Council of Ministers, and, as a decision-making rule, to introduce the double majority. For a decision to be made, first the agreement of the majority of the countries in the Council of Ministers is necessary, and, second, this majority must also reflect the majority of the population in Europe. This is an important step towards more democracy and equality in Europe. Hopefully, this will not again be undermined by the implicit or explicit re-weighting of some of the countries.

Hans-Werner Sinn
President of the Ifo Institute