Like all parliaments, the European Parliament (EP) has three basic powers:

the power to legislate;

the power of the purse;

the power to hold the executive to account.

Legislative power

The EP participates in the legislative process of the EU through four procedures, depending on the nature of the proposal concerned.

1. Consultation (single reading): Parliament's opinion must be obtained before a legislative proposal from the Commission is adopted by the Council. This opinion must be considered by the Council before it makes its decision. The consultation procedure applies, for example, to the agricultural price review.

2. Co-operation procedure (two readings): Parliament can amend the Council's draft legislation. If the opinion the EP delivered at its first reading is not sufficiently taken into account by the Council, Parliament may reject the proposal on second reading. The Council can overturn the EP's rejection only by a unanimous decision. The co-operation procedure now only applies to certain areas of EMU.

3. Co-decision procedure (three readings): This is Parliament's most important legislative instrument, and it applies to most proposed legislation. It allows Parliament to share decision-making power equally with the Council. If the Council fails to take due account of the EP's opinion, Parliament can prevent the adoption of the proposal. If the EP decides to reject the proposal, it cannot be adopted by the Council. To prevent avoidable rejection, a Conciliation Committee (drawn from Parliament and Council) is convened to seek a compromise before the third reading by Parliament. If agreement is still not reached, Parliament can reject the proposal definitively.

The Amsterdam Treaty, which came into force on 1 May this year, extended co-decision from 15 to 38 (and later 40) areas of EU law-making. It applies to important policy areas such as employment, environment, public health and consumer protection.

4. Assent procedure: Parliament's assent is now needed for the accession of new Member States, association agreements with third countries, new international agreements, a uniform procedure for elections to the EP, rules governing the right of residence for EU citizens, the organisation and goals of the Structural Funds and Cohesion Fund (regional development), and the tasks and powers of the European Central Bank.

Budgetary power

At the end of April each year, the Commission proposes a preliminary draft budget for the following year, which forms the basis for a first reading by the Council. The EP's Committee on Budgets, and each specialised committee, analyse this draft in preparation for the plenary session at which the EP will submit proposed modifications to compulsory expenditure (on which the Council has the final say and which mainly covers the Common Agricultural Policy) and table amendments to non-compulsory expenditure (on which the EP decides and which covers important areas such as economic and social cohesion, transport, research and development). Parliament's policy priorities are reflected in the budget. It is the EP which adopts the final budget, and the EP President's signature which gives it legal effect. Having adopted the budget, Parliament monitors the use of public funds through its Committee on Budgetary Control which acts continually to minimise fraud. Each year, Parliament assesses the Commission's use of the budget in the preceding year. If it approves the way the budget was used it gives the Commission a "discharge". If it does not approve, it can refuse to give a discharge and so force the Commission to resign.

The power of democratic supervision

The Parliament exercises democratic control over all EU activities. This power mainly applies to the activities of the Commission, but has been extended to the Council of Ministers. By two-thirds of the votes cast and an absolute majority of its Members, the EP can adopt a motion of censure forcing the Commission to resign.

The European Parliament's approval is a prerequisite for the appointment of the Commission President and the Commission as a whole.

Parliamentary scrutiny can also be exercised through parliamentary written or oral questions to the Commission and Council. The EP can also set up committees of inquiry, such as that set up to examine the issues surrounding the BSE crisis.