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The European Parliament on Wednesday (20 October) adopted by a crushing majority new budgetary and staff regulations for the European External Action Service (EEAS), clearing the last legal hurdle for the launch of the new institution. "It's a historic vote. We're all one happy family now," an official in the entourage of EEAS chief Catherine Ashton told EUobserver.

Ms Ashton is also close to a compromise with the parliament's foreign affairs committee on hearings for new EEAS ambassadors. The diplomats are likely to face parliament questions in early December, after receiving full accreditation from their host countries. Ms Ashton wants the hearings to be held for the most part behind closed doors. Following the vote on Wednesday, the foreign affairs MEPs have little leverage to use against her. Details of the parliament vote on three separate EEAS reports saw the compromise deal get through by over 500 votes in each case against no more than 51. The budget-and-staff package envisages detailed parliamentary oversight on EEAS hiring and firing of diplomats in foreign missions but not on EU member states' spending of the €3-billion-a-year European Development Fund or on military missions. It stipulates an "appropriate and meaningful presence of nationals from all the member states" but not quota-type targets for nationals from new EU countries, as called for by Polish centre-right MEP Jacek Saryusz-Wolski, who tried to put a positive spin on developments in an emailed statement on the day.

Member states are considering taking the EU Parliament to court if it does not back down on demands for new powers on EU foreign policy and international agreements, EUobserver has learnt. Ambassadors representing member states at a meeting in Brussels on Wednesday (13 October) signaled their discontent over an inter-institutional agreement between the European Commission and the EU legislature which may give fresh powers to euro-deputies, especially when it comes to international negotiations on behalf of the EU.

The draft report, according to an analysis by the council of ministers' legal services, could lead to a stand-off between EU institutions if adopted as such next week in Strasbourg. "The court option is not off the table," one EU source said. Ambassadors will come back to the matter in their meeting next Wednesday, following the MEP's vote in the plenary. The crux of the matter is to what extent MEPs can be part of EU delegations to multilateral and bilateral meetings and negotiations with other countries. According to the draft, the Parliament wants to have its representatives guaranteed participation in all multilateral, but also bilateral agreements "of particular political importance" - for instance on trade or fisheries.

Ahead of an EU summit opening today (28 October), Liberal group leader Guy Verhofstadt warned that the European Parliament was determined to use its new powers under the Lisbon Treaty and would not let economic governance plans be "diluted" by Germany and France.

But Verhofstadt, who leads the Parliament's Liberal group, warned that such backroom deals were now over. The European Parliament, he said, would have full co-decision powers on legislative proposals that will come out later in the year to flesh out the EU's new economic governance. His warnings were echoed by other political groups in Parliament, including the centre-right European People's Party (EPP), which commands the largest number of seats in the Strasbourg assembly. Iñigo Mendez De Vigo, a Spanish MEP in charge of institutional issues at the EPP, said he welcomed the Task Force's proposals. But he added that "they should take into account that the European Parliament is now co-legislator and will play its full part in defining the reforms to come".  "I regret that the French-German proposal does not even mention the European Commission, which also has a say on this issue," De Vigo said, adding the Parliament should also be more involved. The Greens, the fourth largest group in Parliament, also backed the Liberals and the EPP, in a move which could herald a long battle with member states over the economic reform plans. The Parliament "will be a co-legislator on four of the six legislative proposals" on economic governance, said Belgian MEP Philippe Lamberts, saying his group was "in favour of a more ambitious and broader economic framework than the Commission and Council". Verhofstadt said he hoped this new battle would not take nine months, referring to the time it took to pass a recent package of financial supervision laws through the assembly.

In a statement, Verhofstadt detailed the three key areas where the Task Force had diluted the Commission's initial proposal and on which he said Parliament was ready to pick a fight. First, the Commission had proposed to impose sanctions on member countries with excessive deficits or severe imbalances at an earlier stage, without delay. By contrast, the Task Force argues that a political decision should be taken on the proposed sanctions, meaning that they could be blocked by a country capable of putting together a blocking minority. The result is that there will be no preventive procedure and therefore no sanctions, the liberal group leader warned. Second, the Task Force foresees a "double filter" for decision-making, involving a political recommendation by the Council before the Commission can take action. In practice, this means the Commission will be allowed to take sanctions only after a certain period, Verhofstadt said. Finally, while the EU executive had proposed that corrective action or sanctions be initiated directly by its own services, the Task Force called instead for a recommendation that would need subsequent backing by the bloc's 27 finance ministers. "It's easy to change a recommendation, and far more difficult to change a proposal by the Commission, because in that case you need unanimity," Verhofstadt explained.

A last attempt to reach an agreement for the 2011 EU budget failed on Monday (15 November) due to reluctance by member states to grant MEPs extra powers in future multi-annual budget negotiations. The EU commission will now have to draft a new proposal, while the first months of next year will be funded on the basis of the 2010 budget.

The final collapse was mainly due to disagreements over procedures and extra powers granted to MEPs under the Lisbon Treaty, the EU's new rulebook. Junior ministers from Britain and the Netherlands insisted that the only issue on the table was the budget for 2011 and declined to discuss contentious issues for the long-term budgetary perspective, such as raising more EU "own resources" through supplementary taxes or the "flexibility" of the budget when unexpected expenses arise. Shortly after announcing €95 billion in domestic budget cuts, Britain has spearheaded demands for next year's EU budget to stay frozen at 2010 levels or go up by a mere 2.9 percent, or less than half the MEPs' original request.