Tuesday, December 22, 2009

The Spanish take on the EU Presidency yet we now have a new President of the European Council. So, who will be calling the shots in 2010?

On January 1st 2010, Spain will take over the rotating Presidency of the European Union. José Luis Rodríguez Zapatero, the socialist President of Spain, will, with his government lead the European Council for the next six months. Spain will set the agenda in Council, preside over Council meetings, lead negotiations and attempt to broker compromises between the member states on current European Affairs and a set of predefined priorities.

And yet, we also have – thanks to the implementation on 1st December 2009 of the Lisbon Treaty – a permanent President of the European Council in the person of former Belgian Premier, Herman van Rompuy, whose job it is to chair the European Council, which consists of the Heads of State of the EU’s 27 Member States. The Lisbon Treaty was meant to bring about more consistency in policy-making at the centre of the EU decision-making machinery; so why does the EU persist with its six-month Presidency where each Member State has Buggin’s Turn at the top of the table?

National capitals have to prepare their priorities well in advance of the start of their turn at the Presidency (Spain has been preparing for over a year). For some, the Presidency is an opportunity to show-case their government at the European level; for others, it’s just a distraction. National ministers are required to spend more time in Brussels and much of the civil service becomes pre-occupied with matters that are not necessarily core to their department. Rotating presidencies do not make for consistent policy-making. Often the priorities of one Presidency are completely at odds with those of its successor.

For now, at least, it will be business as usual for the rotating Presidency system. Herman van Rompuy has no administration that he can instruct to run the constituent parts of the Council. The European Council will continue to be assisted by the General Secretariat of the Council, and as such, the President will depend on the advice and support of the staff of the General Secretariat.

The new foreign affairs council will be chaired by the High Representative – another position created by the Lisbon Treaty. Former European Trade Commissioner, Baroness Ashton will perform this function. Unlike the President, she will have her own department – the European External Action Service (EEAS) - which is expected to be operational in April 2010 and will act as the EU diplomatic corps, drawing advisers from Foreign Ministries across the European Union. Already, President van Rompuy has made the point of keeping foreign ministers out of the European Council meetings now that they have a dedicated Foreign Affairs Council. There are signs that a turf war is about to break out between the Foreign Affairs Council and the General Affairs Council, which since its split from External Relations Council (when it was known by the acronym, GAERC – General Affairs and External Relations Council), focuses mainly on co-ordination across policy areas or preparation for the European Council. It is rumoured that trade policy and enlargement will fall under the remit of the Foreign Affairs council, despite the General Affairs Council’s attempts to keep the policy areas within its own mandate.

The Foreign Affairs Council is unique in that it is chaired by the High Representative rather than the Presidency. The High Representative will also appoint her own representatives to chair the constituent parts of the European External Action Service, such as the Political and Security committee. All other Councils – such as the Economic and Financial Affairs Council made up of 27 Finance Ministers - will continue to be chaired by the relevant minister from the rotating presidencies. The Committee of Permanent Representations (COREPER) which comprises of the EU 27 Ambassadors and deputy Permanent Representatives) and the Council working groups, made up of national officials based in Brussels - will continue to be chaired by the rotating Presidencies too.

The role of President of the European Council is very new and the job description provided by the text in the Lisbon Treaty is deliberately vague. It can be as elastic as the office-holder wants it to be. If Tony Blair had been appointed, there is no doubt that he would have set to work straight away on building a power-base, very much modelled on Baroness Ashton’s EEAS. President van Rompuy is much more limited in his ambition. Nevertheless, it is not inconceivable that the remit of the permanent President’s role (and accordingly that of the General Secretariat) will, at some point, expand to the point where it rivals the rotating Presidency in setting the Council agenda and pushing through legislation on behalf of the 27 Member States.

The Lisbon Treaty and its implementation impose a complex political balancing act on the Spanish Presidency. Mr Zapatero has been careful to work closely with the new President of the European Council to avoid potential friction over the two presidential roles. They agreed in mid-December to create a working group to coordinate their activities for the next six months. Mr Zapatero told Mr van Rompuy; “Mr Council President, the rotating presidency is at your disposal to support you in taking up appropriately the role of leadership and political steering of the European Council”. However, it seems unlikely that Spain will handover the fruit of months of preparation to someone appointed just last November. It appears that Messrs Zapatero and Van Rompuy have already agreed that Madrid will Chair the EU-US and EU-Latin America Summits, which in principle are to be led by the Council President. So far so good. But what about the implications for the long term future of the Presidency?

The Council President could evidently fully replace Country Presidencies, yet one could argue that rotating presidencies add specific expertise and funding that a single President could not deliver. There’s a case to be made for either system but as events unfold and turf wars break out, as they inevitably will, it will be hard to make a case for both.

Wednesday, December 9, 2009

Chancellor sets out challenge of EU financial regulation threats in Pre-Budget Report

Not many clues in the UK Chancellor's Pre-Budget report today on how the Treasury is preparing to defend the City of London against new measures coming from Brussels aimed to restrict the financial services sector. Much less was there any ideas of what the rationale would be when there is, according to some, pressure in the UK economy to reduce dependence on the financial services sector.

New Internal Market Commissioner, Michel Barnier, is on record as saying that the City of London is an asset to Europe. However, there is real anxienty in the Square Mile that the European Commission proposals on market regulation will put the City in a competitive disadvantage and that the Government is not properly geared up to take the battle to Brussels. The Anglo-Saxon model has been castigated by the French, Dutch, Belgian and Germans for the financial crisis even though their banks too were horribly exposed.

The Pre-Budget Report says that the Government is "closely involved in negotiating the proposed Alternative Investment Fund Manager Directive" and that it "has been working to secure substantial improvements". Still early days I suppose but its not clear that the Government has developed a fully operational strategy yet to deal with the regulatory threats to its hedge fund and private equity industry.

The Pre-Budget Report also says that the Government is "actively engaged in EU efforts to amend the Capital Requirements Directive to provide a state-of-the-art prudential framework for credit institutions and investment firms in the EU." Current proposals will raise the amount of capital banks must hold against resecuritisations and assets held in their trading books: "The UK is strongly supportive of the adoption of these rules and will continue to ensure that EU legislation appropriately strengthens prudential standards while being consistent with international agreements."

Another priority is “Solvency II”: "contributing to the development of modern and risk-based EU-wide solvency requirements for insurers that protect Europe’s claimants, savers and pensioners. What would be good to know is what the Government's position on the tax consequences of the Directive is.

The British have a real fight on their hands to defend the interests of the City. It will also have to square its position with its claim to take a global leadership role in cracking down on "excessive risk-taking" in in financial services as well as reducing over-reliance on the financial sector in the British economy.

Monday, December 7, 2009

"For a Free Market Europe" - Syed Kamall

Syed Kamall - the Conservative MEP for London kindly sent me a copy of his new book -"For a Free Market Europe" - a collection of his articles over the last three years setting out his views on a European Union which should do more to promote free market liberalism.

Syed has been consistent champion of free market values in the European Parliament since he became an MEP in 2005. He is a leading figure in the Brussels Network - which brings together conservatives and centre-right figures in Europe who want to campaign for small-state government. This collection of short articles illuste=rates his commitment to the free-market cause.

Some highlights:

The dilemma of being a free market classical liberal in the European Parliament:
He starts from the fundamental nature of the European Union and its basic premise: Should it be a free-market coalition of sovereign states or should it try to ape the "cross-continental socialist model"?

Should pro-free-market MEP’s work within the system to change it or attack it from the outside? Should some liberalism be an adequate compromise as the “perfect” free-market is unachievable?

The are big questions. However, Syed seems to think the answer is easy. He says the EU should provide a marketplace and a framework of basic rules and minimum standards – better to be an unregulated single market than one subject to overbearing directives

Politicians can only do what they can with the tools available – therefore free-market liberal MEP’s should work from within the system to change it

He applies his free-market thinking to environment policy too: The liberalisation of trade does not cause environmental damage, he says; “Calls for higher taxes often have precious little to do with real environmental factors but a lot to do with environmental posturing or the need to raise new revenue”

“Globalisation and free trade are not only the key to enriching this planet; they may also prove to be the key to saving it.”

Whether you agree with Syed Kamall or not, his written articles over the last few years show that he is on of the most consistent and energetic campaigners of the free market in the European Parliament.

Friday, December 4, 2009

Fight is on for the 73rd Seat

Dan Hamilton writes in ConservativeHome that the Ministry of Justice in the UK has not yet directed the lectoral Commission to allocate the new seat to the UK due to it under the Lisbon Treaty rules: http://alturl.com/7vzo

Notwithstanding the conclusion he makes that this somehow shows the Labour Government has threatened British interest by not yet naming the 73rd MEP, Hamilton does make a good case for decision sooner rather than later.

It looks like the UK's 73rd seat would go to the West Midlands which would mean the Conservatives would get another MEP. Perhaps this is why there is no rush to make the nomination. If the extra seat goes to London, then Labour would get the extra MEP - Anne fairweather.

In any case, the new MEP - Tory or Labour would have to wait until 2011 (by which time a complex legal protocol will be ratified by national governments) before they are able to cast a vote as a full Member.

Monday, November 30, 2009

Barroso II - Winners and Losers

Last week William Hague said that the appointment of Baroness Ashton as High Representative was the result of a deal done by Brown with the French to allow Sarkozy to secure the prized Internal Market post for his nomination Michel Barnier.

Whether a deal was done or not, Ashton’s appointment opened the way for the French to secure the job. This has implications for the City of London which faces a raft of EU regulatory measures. The French have been critical of the anglo-saxon model which they blame for the credit crisis and are more keen than the British on regulatory solutions to problems in the banking sector.

Along with France – the other winner is Belgium. Not only did they win the Council President job with the appointment of former PM Herman von Rompuy, they have also secured the powerful Trade job. Karel de Grucht who replaced his compatriot Louis Michel as Development Commissioner when Michel left to become an MEP in June, is a free-market neo-liberal.

Another winner is Germany. Although likely to be disappointed that they didn’t keep the Industry brief, they have taken the Energy Commissioner job with Gunter Oettinger as the replacement for Gunter Verheugen. Germany has a lot of commercial energy interests so should be delighted.

The Spanish too will be happy with getting the Competition portfolio – although there were expectations that their nomination would get Economic and monetary affairs.

I would argue that Finland is another winner. Ollie Rehn who was widely respected while the Commissioner for Enlargement, gets economic and monetary issues.

I understand that Antonio Tajani is not happy with the Industry and enterprise portfolio. I think he was keen to stay at Transport. However, he should be pleased that pharmaceutical controls have been transferred to him from Health to Industry.

Neelie Kroes will be disappointed at getting the new portfolio of digital policy. The only reason Dutch PM Balkenende appointed her (she is not a member of his CDA party) is because he was assured she would get competition again.

Sweden’s Cecillia Mallstrom gets Home Affairs. She is a liberal left wiinger and this will put her in contention with the more conservative Roman Catholic Viviane Reding from Luxembourg who gets the Justice portfolio. This policy enjoys a higher profile under Lisbon and so this policy area could lead to some controversy over the next 5 years.

Johannes Hahn from Austria is the new Regions Commissioner. Austria gets little EU regional funding so this is probably a good thing. ON the other hand Romania a big beneficiary of agricultural funds gets….. Agriculture (DAacian Ciolos who studied agriculture in France and did an internship in DG AGRI).

Barossohas gone ahead with his plan to create a Commissioner for Clime Action – this goes to the Danish Connie Hedegaarde – the Danes are proud of their tough line on climate change and Connie will be a tough taskmaster.

Androulla Vassiliou – moves from health to Education and Culture despite her best efforts to stay.

Friday, November 20, 2009

EU and Industry need closer dialogue on tobacco smuggling

I understand that there is a motion for resolution doing the rounds in the European Parliament basically banning any contact between the tobacco industry and the EU institutions. If this is true, not only is it gratuitously prohibitive and an ill-thought-out interpretation of what is in the Framework Convention on Tobacco Control, it is also smacks of posturing which could result in bad governance: Particularly at a time when EU policy-makers need to work closely with the tobacco industry to crack down on the growing threat of counterfeit and contraband tobacco.

Tobacco smuggling undermines both the industry as well as EU Member States. The imperative for EU action is the €8bn revenue loss for EU governments in 2008.Tobacco smuggling cost the industry €700m last year.

The Organised Crime, Contraband and Counterfeiting Forum is about to embark on a campaign for a more joined-up approach to fight tobacco smuggling. Some MEPs have already signed up to the cause – such as Bill Newton Dunn (UK, ALDE), Edit Herzog (Hun, S&D) and Andreas Schwab (Ger, EPP). Newton-Dunn wants a European version of the FBI to counter the smuggling trade. How well would they be able to contribute to policy development on this if they were banned from speaking to the industry

OLAF too is talking about the need for greater cross-border co-operation. So far the only co-ordinated effort is being led by the WHO through the FCTC and this just calls on governments to “monitor and collect data on cross border trade in tobacco products including illicit trade”.

The EU should allocate more manpower to stop smuggling (according to the EC Customs Directorate, there are now 10,000 fewer customs officers across the EU than five years ago). MEPs and Commission officials need to be better educated about the industry and how it can help reduce the smuggling. Likewise, EU governments would do well to recognise that it is the sharp excise duties that lead to such big price differentials which has created the boom in illicit trade.

In short - both the industry and the institutions need more dialogue right now - not less

France and Germany - not Belgium and UK - are the real victors of yesterday's EU deal

Ok so I was wrong last night. I had underestimated Fredrick Reinfeldt. The Swedish Prime Minsiter managed to find a consenus and before they even finished eating their line-caught bass. Against the odds, all 27 European leaders agreed on the Council's nomination for Council President and High Representative. I had predicted a majority vote and to be fair there was every reason to think that unanimity would be impossible. After it became clear that Tony Blair could not muster the necessary support, more names were added to the mix. There were calls for the two posts to strike a balance between North and South, East and West, Male and Female, Left and Right. An almost impossible task.

I also predicted that Former French Minister, Elizabeth Guigou would get the Foreign Affairs job. She didn't - it went to Baroness Ashton, the current Trade Commissioner and former Leader of the House of Lords in the UK. Cathy Ashton has won respect for her command of the brief in the 12 months she has been in the Trade job since she stepped in to replace Lord Mandelson. She was well liked by President Barroso who was instrumental in her successful nomination (she will be Vice President of the Commission as well as representing the Council on foreign policy).

I predicted that Van Rompuy - the unassuming Belgian premier would get the President job - so one out of three aint bad. Mr Van Rompuy is the ultimate consensus candidate. He won't stop the traffic but he will be a stabilising force and will be more than able to broker agreements between member states on european legislation.

Mr Van Rompuy was championed by Sarkozy and Merckel who were keen to prevent a high-profile President (such as Tony Blair) who would steal some of their lime-light. The new Franco-German alliance was successful in getting their Stop-Blair candidate through but I think equally so in allowing the British to think they have done well out of getting the second prize. The High Representative job is potentially very powerful but the British originally wanted an influential economic or industrial post. However, the French have a clear run at the Internal Market position - a role long coveted by Sarkozy and the Germans may go for Trade or stay with industry. Between them they will have removed the anglo-saxon domination of European economic policy of recent years.

Thursday, November 19, 2009

The Ultimate Behind Closed Doors Deal

Its happening in Brussels over dinner tonight - there will be no unanimity but will be decided on majority support (qualified majority at that). Shame the rest of us dont get a say in the matter.

Im still sticking by my prediction: Von Rompuy as President and Guigot as Foreign Affairs (or could Catherine Ashton get it).

What does a Liberal mean in the Europesn Parliament?

I had always thought that many of the national delegations in the ALDE Group made for very uncomfortable bedfellows. A loose coalition of "liberal" interests, some are free-market evangelicals who would make Lady Thatcher blanche. Others are see themselves as socially progressive first and are comfortable with the state taking responsibility for the well-being of more vulnerable citizens - even if it means social engineering and sometimes even state control of certain aspects of the economy. The British Liberal Democrats would fit into the latter camp - tehir Finance Spokesman, Vince Cable had even advocated the nationalisation of the banks following the financial crisis - something even the Centre-Left Labour governmemt could not countenance doing.

There are other ALDE members who would better fit with the free-market right - of course the FDP is the best example of this. The FDP after years of being in theb wilderness has become a minority partner in the German Government. FDP politicians have secured some senior positons in the Merckel Administration - such as Business, Foreign Affairs, Health (watch for spending cuts) and even International Development (which it had wanted to abolish!). It will be interesting to see how the coalition develops. The FDP regard the CDU as pro-big government and in favour of big spending and high taxes - the FDP dismisses the CDU as "socialists who go to church". It will be a difficult coalition I suspect. As a right wing party, the CDU might seem like natural allies but the FDP would never dream of sitting with them in the EPP Group in the European Parliament. Its strange that the FDP fit in so naturally with ALDE but then again the issue of tax and spending is not so big in the European Parliament. The issue of European integration of course is - which is why the pro-internal market FDP could not hook up with the newly formed European Conservatives and Reformists either.

I was at an interesting event yesterday in Brussels with Alexander Graf Lambsdorff the influential German MEP, who as a member of the liberal pro-free market FDP. He said he was happy to work with the ECR on market issues but they rub eachother up the wrong way on integration issues. I'm a big fan of Lambsdorff's political skills. He said that the FDP is very pro-market but it is also highly aware that markets can and do fail. The more I get to know about ALDE the more fascinating I find it - a lose coalition of parties held together only by their championing of the European Union, civil liberties and, less so, the free market. The pro free-market Guy Verhofstadt the Groups new leader and former Belgium PM is a million miles from his predecessor the more progressive Graham Watson

Wednesday, November 18, 2009

Darling deserves more credit for his role in handling the financial crisis

Sometimes you come across something which makes you wonder just how anglo-centric your view of the world is. Nothing wrong in that necessarily – I am after all English and very proud (for all our faults) to be so. But even as a proud Englander, I like to think I can take a helicopter view of all things European. However I was jolted by a Financial Times poll on who was the most effective Finance Minister in Europe is. That Christine Lagarde, the French Finance Minister, tops the poll, is no great surprise. Cool and commanding, she made her management of the financial crisis seem effortless. France has come out of the recession earlier than most and has a healthy balanced economy. However, it is by no means out of the woods yet. Even though Mme Lagarde topped the poll, the French economy ranked number 9 among the panel of experts who factored in political influence, economic assessment of each country and the credibility of each politicians.

No surprise too Brian Lenihan came bottom (out of 19) as Finance Minister for Ireland – the experts ranked the economic status 19 out of 19.

However, I think the unassuming Mr Darling should have ranked higher than 7. True his polling has been dragged down by a poor showing on the economy assessment (UK came 12th because of the disproportionate effect of the financial crisis on the City of London) but it was acknowledged he scored well on credibility (he came 4th). But overall he only ranked 7th – behind Italy’s Giulo Treomonti, for heaven’s sake. He is ranked higher than Lagarde for credibility but lower than German Finance Minister Peer “We are all doomed” Steinbruck. Steinbruck is the Vince Cable of European politics – quick to sound the alarm bells but would be less than helpful in a crisis. Darling has shown the same cool-headed leadership as Mme Lagarde. He should be in second place at least. However, maybe Ive just observed him more closely than the others and I’m just saying that from the Anglocentric perspective of things.

Tuesday, November 17, 2009

ETS - the next sub-prime? Should we just tax carbon instead?

I never realised just how huge carbon trading has become. From nothing it has become a €84bn business in London. If the US Congress adopts a cap and trade scheme the value of the market could rise to €3,000.

The European Union's Emissions Trading Scheme (the largest cap and trade carbon market in the world) is arguably the cheapest way to encourage carbon emissions. But there are fears that there will be too much price volatility - coupled with political uncertainties . Wild volatility would not provide any useful price signal for investment in life long assets such as nuclear power stations. Trading will be vulnerable to shocks and destroy at a stroke a company's competitiveness. In short it carries risks - huge risks

Would tax be a better way to deliver carbon emission reduction targets?. It offers greater certainty and is easy to administer. Hopefully US Congress will learn from the weaknesses of the European system and hopefully, there will be some changes agreed to cap and trade at Copenhagen in December. Nevertheless, I can't help thinking good old fashioned taxation might have been preferable all along

shadowy power games expose EU's democratic deficit

I know it just the nature of things in a club of 27 different countries but the Swedish PM's heroic efforts to find a consensus candidate for the EU President job will result in the lowest common denominator. Worse than that it exposes the democratic gulf that exists in the new post-Lisbon.

I'm no federalist but I am becoming sympathetic to the idea of giving the President a democratic mandate. It might cause a division - possibly between left and right, north and south or east and west - but at least it would produce strong leadership.

Two leading women Commissioners, Nellie Kroes and Margot Wallstrom this week gave their support to former Latvian PM - Vaira Vika-Freiberga aka "The Iron Lady Mark II" for the EU President job which will be decided by European leaders behind closed doors on Thursday. Kroes and Wallstrom say that it is "utterly undemocratic" that more women do not hold senior EU positions. Oh but come on! Utterly unrepresentative, maybe but not one popular vote will have been cast for any of them. Nothing personal - I rate them both highly - but they need to be careful in future when describing whats democratic and whats not.

Friday, October 30, 2009

Have Socialists let Centre-Right choose a candidate just to spike Blair?

What has been most surprising about last nights dinner discussions in Brussels the role of the Presidency and Foreign representative jobs being created by the Lisbon Treaty is that the European Left have capitulated so quickly on the Presidency job.

Are we expected to believe that the socialist parties are more interested in holding the office of Foreign Representatives when the President job should be alot more powerful in terms of setting the political agenda for the EU. Of course, it's still not clear just how big the job will be - and that was something EU leaders did discuss only very loosely at dinner last night - but it will still be a powerful counterpoint to the position of the European Commission President - and if a member of the centre-right EPP has just been appointed to Commission President position then it is reasonable for the Socialists to go for the top Council job.

I can only assume that opposition among the socialist parties to Blair's candidacy is so great that they conceded this early to spike any potential Blair bandwagon. Blair was counting not so much on the support of Socialist PMs like Zaparto in any case. He did however need the firm support of Merckel and Sarkozy. The Franco-German axis is back - and unconstrained by any centre-right partners in the UK. Sarkozy was enthusiastic in his early support for Blair but has shown he is quite fickle lately -while Merckel has cannily kept counsel on who her favourite contender would be.

The British Press have now assumed that with Blair out of the running for President, then UK Foreign Secretary David Milliband is somehow favourte for the EU Foreign Affairs job. He would make a good candidate certainly - he is from a Centre-Left party and he gave a very-well recieved speech recently mapping out his vision of a post-Lisbon Europe - however, there are stronger candidates such as the French Socialist former Europe minister, Elizabeth Guigou. While Milliband could certainly match Ms Guigou's talents, No 10 would be very reluctant to let him go - his departure would force a by-election in his South Shields constituency. EU think tank veteran Stanley Crossick suggests that if the UK nominate Chris Patten for the post, we would be more likely to win it. Mr Patten - a former EU Commissioner - is hugely experienced in international affairs and would be a restraining influence on his more eurosceptic conservative colleagues. However he is from the centre-right and of course the Socialists will want one of their own for this post.

As for the Presidency job - I am going to be brave and make a prediction. If Tony Blair is too rich for their blood - then the Franco-German axis will go for a compromise candidate - and Herman van Rompoy - Belgian PM would be the classic compromise candidate.

Its not so surprising that this has come down to a tradition Left-Right fight but the fact that the Socialists have just simply sat back and let the Centre-Right pick the top job for one of their own warrants further explanation.

Tuesday, September 22, 2009

Bruegel Report - Memo to the new Commissioners

They have not yet taken office - nor even been nominated, yet the new Commissioners have already face a list of demands from some of the European Union's leading thinkers. The Bruegel Report issues memos to the new Commission and makes interesting reading. I highlight some of the demands to the prospective Commissioners for Financial Services, Internal Market, Industry and Competition - the four portfolios, in my opinion most likely to go to a UK nomination (I have since ruled out Trade or Environment).

Memo to Financial Services Commissioner

Public institutions necessary to make a single EU financial system sustainable should be created. Many considered that such a system could look after itself with regulation and supervision being secondary issues. Effective supervision cannot be neglected and the EU must choose between an abandonment of a single EU financial system or the build up of institutions to suit financial integration.

• Be wary of excessive or poorly conceived regulation which could restrict Europe’s competitiveness and growth potential. Ill thought through reactions to the current financial crisis could hinder recovery.

• Act on both a short and long term agenda. In the short term, comprehensive recapitalisation and restructuring is needed as part of a system-wide approach to fix the banking crisis, either EU wide or across the main continental European countries (as British and Scandinavian countries can be considered autonomous).

• Depending on the severity of the crisis, significant public sector investments into financial institutions may be required. In this case innovative solutions will be needed to prevent massive distortions in the European economy.

• In the long term, for financial stability there must be effective supervision, protection and a capacity to manage future crises. Financial efficiency should also be improved to enhance Europe’s growth potential.

• Financial fairness should be pursued though protection of weaker players in the system which may include consumers, investors or potential competitors to established players.

• Continue, defend and promote financial integration with harmonisation of rules and regulations as well as effective enforcement mechanisms to ensure compliance and implementation.

• Publish ‘a clear vision for the financial system Europe needs’ reflecting the four dimensions previously described and to work to build a consensus for this vision among member states and the public. Over the next six months, a comprehensive Subsidiary review is to be carried out by the Commission’s services.

• You must determine which tasks to be taken from, and given back to member states and which new bodies may be required to carry them out. Partnership with the newly elected European Parliament should be a core tenet of the commissioner’s ambitions.

The Commissioner for Competitions Policy

• Competition policy has developed into a powerful instrument for enforcing a set of consistent rules across Europe.

• The impact and significance of EU competition can be divided into both internal and external dimensions. The former provides a consistent set of rules through a coherent implementation of competition law and spreads the competition culture across Europe. The latter is that Europe speaks with one voice on competition matters to countries such as the US and China.

• Europe has been at the forefront of competition policy and has been referred to as the world’s leading jurisdiction in antitrust matters, but there are major policy challenges ahead that need to be addressed:

• Enforce state aid rules and keep the rules of competition policy intact and firmly enforced in times of economic crisis, particularly in the area of state aid.

• Continue the policy of a ‘more economic approach’ and to focus on markets and consumer benefit in order to preserve competition, not competitors.

• Strengthen the role of efficiencies in merger control when approving or blocking mergers and clarify which dynamic efficiencies are acceptable.

• Strengthen the emphasis on supply side factors in defining relevant antitrust markets or downgrade market definition as an antitrust screening device.

• Protect consumers through effective competition, rather than by direct regulatory intervention and increase coordination

• Broaden and deepen global ties with competition regulators and emerging countries with a view to strengthening competition ties with the authorities of developed countries, especially the US.

The Commissioner for the Single Market

• The current economic crisis presents the biggest test ever to the cohesion of the EU’s single market. The biggest test faced by the Commissioner for the Single Market will be to uphold single market rules and to prevent backsliding by individual member states.

• Existing single-market rules must be strictly enforced and the existing instrument of the single market scoreboard strengthened.

• ‘Business as usual’ is not, on its own a strategy for the single market. The strategy must be comprehensive and clear at the outset to all stakeholders with long term plans explained in detail. The commissioner’s approach should be to refer to the global role of Europe and its single market as a force for good on the global scale.

• A truly integrated market for services in Europe must implemented in the form of the services directive, which although having already been adopted will need to be properly implemented. This directive is a key part of the EU’s economic policy, currently known as the Lisbon Strategy.

• A number of member states, possibly many, are unlikely to have all the rules in place by the end of this year, depriving businesses of a border-free services market. A clear strategy towards these member states should me adopted which helps those with genuine problems, while giving a strict timetable to those who fail to cooperate.

• The EU’s success as a global standard-setter relies primarily on the single market remaining intact and under the current pressure and needs a coordinated approach across its institutions, Commission department. It also needs a common ‘face’ to defend and to promote the single market to external governments and businesses.

• It is proposed that you:
- Coordinate European stakeholders’ efforts to define a global regulatory standard-setting approach for the EU.
- Use the EU’s external standard-setting power as an additional argument to convince EU governments to cooperate.
- Expand the regulatory dialogue with other countries and international institutions.

The Commissioner for Enterprise and Industry Policy

• Avoid the ‘zombification’ of Europe’s economy. Governments may be tempted to encourage or force banks to provide credit to businesses which are not viable in the current form to prevent them from restructuring if that means making significant redundancies. Such action would turn them into ‘zombie banks’ which are insolvent but protected by national authorities and would have similar effects on other businesses.

• You should defend the vision of a European Union leads in frontier innovation, breeds world-class new companies and maintains the prosperity of its citizens. The emphasis should be on creating the right framework conditions for success.

• Ensure that the policy responses to the crisis do not weaken European economic integration. There is a distinct risk that government action will lead to the fragmentation of Europe’s single market which is among the EU’s most valuable but also most fragile assets.

• You should make the restructuring of industries severely damaged by the crisis the main focus of your term. This is a temporary but crucial task as existing policy tools such as competition policy and single market policy may not suffice to meet the challenges given the magnitude of the economic shock.

• You may wish to take a similar approach to Etienne Davignon, you predecessor in the late 1970s and early 1980s when national governments’ support of troubled sectors threatened the common market. The ‘Davignon Plan’, implemented in the 1980s involved accepting governments’ state aid in exchange for coordinated restructuring plans that drastically reduced production capacity.

• A similar approach could now be used in the automotive sector which suffers from structural overcapacity as a result of changing market conditions and has been badly hit by the crisis. Davignon’s approach of joint action by the member states, spearheaded by the Commission could be usefully replicated today.

• Industry specific EU task forces should be formed that would help you to coordinate national governments’ moves and to suggest relevant EU decisions. Such task forces would report to you and if well designed and managed, could play a powerful role providing a shared understanding of industry dynamics and could be a catalyst of joint actions where a fragmentation of policy initiatives is leading to demonstrably inefficient outcomes.

Euro-Parliament Grand Coalition would freeze out Tories

While Westminster is still to be roused from its long summer slumber, the European Parliament is back at work. New (and returning) MEPs hit the ground running after the Euro elections in June. Already, new political groups have been formed, senior posts agreed, new Rapporteurs appointed to carry on legislation left over from the previous parliament – and last weeks’ last minute approval of President Barosso for third term at the Commission. However, the real work is yet to start.

So what can we expect from the new Parliament? A study by LSE Professor Simon Hix attempts to give a flavour of what the political dynamics will look like. Written for the Swedish Institute for European Policy Studies, “Return of the Grand Coalition” says that because of the success of the smaller parties, neither the centre-right or the centre-left could have the strength to dominate the new Parliament.

He says that the proportional increase in the seat shares of the smaller political groups has come "at the expense of the three main groups – the European People’s Party (EPP), the Socialists and Democrats (S&D) and the centrist Alliance of Liberals and Democrats (ALDE). The EPP have gone down "from 36.7% to 36.0%, the Socialists from 27.6% to 25.0%, and ALDE from 12.7% to 11.4%" of total seats.
Although the Centre Right have fared better than the Centre Left, it is the groups to the right of the EPP that have done much better this time round – at the expense of the Big 3. The European Conservatives and Reformists (including UK Conservatives) have 7.5% of the proportional make-up of the House.

Because the UK Conservatives have defected from the EPP to the new ECR, the German CDU/CSU delegation will dominate but the Italian, French and Polish MEPs will be more influential in the new group than in the old group.The Germans will also dominate the S&D and (along with the British) the ALDE Groups.

I remember when UK’s Labour delegation was larger than the German SPD delegation – in fact it was the largest single group in the Parliament – some 62 MEPs out of 84 UK MEPs (its now down to 11). Yet even with 62 MEPs, the German delegation managed to get its way every time – because of internal faction-fighting in the EPLP (For a day-to-day account of the EPLP’s “glory” days, read the new book by former Labour MEP, Anita Pollack).

Professor Hix says that what is striking about the political groups in the last parliament was the high level of cohesion – higher than that for Democrats or Republicans in the US – quite remarkable when you think of all the nationalities – and various national pressures involved.

Already we are seeing the Franco-German axis making a come-back. This is mostly because the largest group - the EPP has no UK members and the UK's interests - particularly in financial services-where the French and Germans from both left and right want to see more regulation while the UK (again from left and right) want to see - on the whole - a light touch approach. My guess is that we will see the EPP and ALDE and S&D work together more than before - and smaller parties frozen out. It will in some respects resemble the Grand Coalition that has kept Angela Merckel in power for the last four years.

Friday, September 18, 2009

EU leaders say exit strategy from fiscal stimuli must wait until recovery is sustainable

"The bonus bubble burst tonight" - so said Frederick Reinfeldt - the Swedish Premier after announcing the conclusions to a special EU summit yesterday. Reinfeldt said it was time for the talking to stop and time to take action on banker's bonuses.

Sounds pretty definitive - we can expect EU measures to unilaterally crack down on excessive rewards for risk-taking in the financial services. Reinfeldt, who chaired the Summit, said the public will not stand for profits to remain in private hands while losses come at taxpayers expense. Apart from holding the EU Preseidency, there is good reason to sit up and take notice of the Swedes when they start talking about learning lessons from the banking crisis. Their bail-out of busted banks in the 1990's and subsequently returning a profit for the taxpayer was the model for Gordon Brown when he led the international response to the global banking collapse. So it's a little disappointing that despite the hyperbole from Reinfeldt, his idea of remuneration caps do not feature in the informal common position - only a suggestion that it could be picked up at G20 as a multilateral solution.

Sarkozy, of course was keen on the bonus caps. Berlesconi less so - he says that acting on irresponsible speculation was much more important.

Apart from the economy, mitigation costs of climate change was he other big issue - the Commission wants to raise €100bn by 2020 for mitigation costs. Member States yesterday agreed to a commitment of €7bn upfront annual payments.

The main message, however from the Summit that the exit strategy from the fiscal stimuli should not be applied until the recovery is secured.

Summit Conclusions: http://alturl.com/i68u

Thursday, September 17, 2009

Barroso finally gets second term mandate

Jose Manuel Barroso has been given the support from the European Parliament to start a second mandate as President of the European Commission.

Mr Barroso secured 382 votes in support of his nomination (more than the 269 threshold he would have need in the muhc tougher conditions that would have been set by the Lisbon Treaty). There were 219 votes against and the remainder abstained.

The vote was held in a secret ballot but in reality, Mr Barroso was already assured of three large political groups. Last week, he had met the leaders of the EPP Group (centre-right and the largest group in the Parliament), ALDE (including the UK liberal democrats) and the ECR (including UK Conservatives) who had pledged support for him at the vote earlier today. The ALDE Group leader, Guy Verhofstadt (former Belgian Premier and a contender for Commission President last time round when he had lost out to Barroso) had withheld support until he was able to secure some important concessions for his Group. One of the concessions made to Verhofstadt was to create a special Commissioner post for justice and civil liberties – as well as pledge a new economic recovery plan and a single financial market regulator.

In a three hour debate yesterday, Mr Barroso spelt out his concessions to ALDE on top of his earlier manifesto pledges. They included root and branch EU funding reform in order to source further funding from Member State governments for the Commission and a common approach to migration. Its not clear what the UK conservative-dominated ECR Group - which is also supporting Barroso - think of these concessions.

Mr Barroso stopped short of offering anything substantial to the Socialist Group parties – such as their demands for a new Posting of Workers Directive – although he did say he would look into how best to bring about a new framework for public services

The response from leading figures in the Socialists and Democrats (S&D) has been very negative – Leader of the S&D Group, Martin Schutz says that Barroso’s Presidency would be the weakest in the EU’s history. He has clearly forgotten all about Jacques Santer.

Earlier this month, Mr Barroso issued a 41 page document “Political Guidelines for the next Commission” which set out his priorities for the next term. However, they did not differ from what he had set out in a two page letter to Government leaders in July.

In his document, Barroso proposes that the Lisbon Strategy for growth and jobs, the renewed social agenda, the Stability and Growth Pact, competition and state aid policy, the Sustainable Development Strategy, the climate change and energy strategy, the European Research Area, and the Hague and now the Stockholm programmes on justice and home affairs, all be "channelled" to deliver by 2020 “the kind of social market economy that he says Europeans are calling for”.

Barroso now has to start the difficult task of building a team of Commissioners around him – based on Member State nominations but subject to European Parliament approval.

Wednesday, September 16, 2009

UKIP leadership in disarray

What an extraordinary turn of events. Marta Andreasson - serial whistle-blower - has resigned from her post as UKIP Treasurer over Paul Nuttal's (Party Chair)insistence that the salary of a UKIP official be doubled. Marta was the trophy candidate for UKIP at the Euro-elections after she gained notoriety for blowing the whistle on Commission spending when she was the Chief Auditor. For UKIP it was, of course, a gift that she had agreed to be one of their candidates.

Only weeks after UKIP - agains the odds - returned 13 MEPs to Brussels, the party seems to be falling apart at the seams. Not least because its leader the charismatic and charming Mr Nigel Farage has resigned to concentrate on fighting John Bercow for his Buckinghamshire seat at the next UK General Election. Not only does it seem bad form to stand against the Speaker of the House - it seems futile. Mr Farage says he wants to give the elctorate a more traditionally conservative alternative. Yet how does he square this with efforts to make the party more appealing to working class and traditionally Labour supporting voters.

My guess is that Paul Nuttall - a working class boy from Bootle will take on Lord Pearson - - until recently a member of the Conservatives to become Mr Farage's replacement. It will be interesting to see what develops but the general impression of disarray among the leadership will not help them.

I recently had dinner with Nigel Farage - and was impressed with his ambitions to make his party more appealing to the mainstream of politics. Nigel is the best company and hugely personable but I cant help thinking he has made a poor decision here. We will see what pans out but I would imagine that potential donors to the party are for now a little nervous.

Why McMillan-Scott was expelled

The Conservatives have expelled the former leader of Conservative MEPs, Edward McMillan-Scott from the party. This is extraordinary. Mr McMillan Scott is a highly-respected parliamentarian and I remember him as a compelling figure in the European Parliament when I worked there almost ten years ago.

McMillan Scott was expelled for standing against Michal Kaminski - a fellow member fo the newly formed European Conservatives and Reformists - for a Vice President of Parliament post which Mr McMillan Scott had won.

McMillan Scott had always been a reluctant member of the new political grouping - feeling more at home with the mainstream European People's Party and it will be interesting to see what he does next (he had said before his expulsion that he would not necessarily leave the ECR to re-join the EPP and that he had stood for the Vice President job as a genuine independent).

He is unsurprisingly angry - saying the decision is vengeful and fruitless. He says that to be "expelled on a point of principle is disgraceful".

Cameron has long wanted to sideline Europe as an issue for his party and I supose by expelling a member of its European Parliamentary Party (particularly a senior and serious figure like McMillan Scott) sends a warning shot across the bows of other potential rebels and keep the more avidly pro-European MEPs in line. The Conservative Leadership knows the threat of a party divided over Europe and will want to keep a lid on any hint of division.

Monday, June 29, 2009

Could Baroness Vadera be the UK Commissioner? And who would be sitting with her at the next College of Commissioners?

My money's on Shriti Vadera being the next European Commissioner. Its such a no-brainer I don't know why I hadn't suggested it before. Now it looks as though Lord Mandelson has given Baroness Vadera his blessing. Its been leaked in the weekend pres that Gordon is thinking of nominating Shriti - a politician entirely of his making - rather than Geoff Hoon who had previously been the favourite. I had assumed that when he left government after the European elections, it was to pave the way to his nomination. But the prospect of an embassing defeat for Labour in Hoon's constituency if he was sent to Brussels was always going to be a dark cloud hanging over his chances. No such problem for Baroness Vadera - a member of the House of Lords. It helps that she is a woman. Barroso has said he wants more women to be nminated to his Commission. The current holder Baroness Ashton is also a woman of course but she has only ever been considered as an interim appointment to allow Brown pull off his masterstroke by bringing Mandelson into his government in 2008. Vadera will either get Trade or Competition.

What about the other names being considered by Member States across the EU? 20 of the 27 Commissioners could be new - so who could they be?

Lithuanian finance minister, Algirdas Semeta has already replaced Dalia Grybauskaitė, the EU budget Commissioner, after the latter was elected President of Lithuania last month. It is expected that Semeta will keep the budget portfolio in the new Commission.

Polish Prime Minister Donald Tusk has chosen Janusz Lewandowski, a member of the European Parliament (EPP-ED) who was re-elected in June, to replace Danuta Hübner, currently commissioner for regional policy, who herself also won a seat in the Euro-elections.

Other possible new Commissioners include the Former Swedish Prime Minister, Carl Bildt (centre-right) who might take the Communication Strategy Commissioner Margot Wallstrom’s place. Industry Commissioner, Gunter Verheugen is retiring and there is equal support for rivals Peter Hinze (centre-right) and Martin Schluz (Socialist Group Leader). Commissioner for Justice, Freedom and Security, Jacques Barrot may have to stand aside to allow President Sarkozy to nominate French Agriculture Minister Michel Barnier to be the new Commissioner for the Internal Market. Another candidate is the Chairman of the regulatory body for financial markets in France – Jean-Pierre Jouyet. Hence it is widely believed that the French are campaigning hard to get the Internal Market job which has been in the hands of the laissez-faire pro-free market Charlie McCreevy and the French have led the way in calling for tougher regulations in the sector.

I expect the Estonian, Siim Kalls to keep his job as Commissioner for Administrative Affairs. So too is Health Commissioner Androulla Vassilou from Cyprus. Italian Antonio Tajani, Transport Commissioner, is expected to be renominated but serve in a different role. Rather unusually, Viviane Reding is expected to serve a third term with the same portfolio after coming top in the European elections. Greek Stavros Dimas is also likely to stay. He wants to remain as the Environment Commissioner for as long as he keeps the responsibilities that are going to form part of a newly proposed DG for Climate Change. He faces a serious challenge from the UK if Gordon Brown cannot keep the Trade portfolio. Malta’s Joe Borg, the Maritime and Fisheries Commissioner wants to stay but may be replaced. Slovenia’s Janez Potocnik, Science Commissioner, may stay unless former PM Anon Rop wants the job. Finland has confirmed Olli Rehn, the enlargement Commissioner as its candidate – although he is rumoured to want the job as the High Representative for Foreign Affairs and Security Policy once the Lisbon Treaty is ratified. Meglena Kuneva, the Consumer Affairs Commissioner from Bulgaria is almost certain likely to be re-nominated. Vladimir Spidla (socialist) the Employment Commissioner from the Czech Republic is also likely to stay despite a strong challenge from the Europe Minister Alexander Vondra (centre-right).

Spain’s Joaquin Almunia, Economic and Monetary Affairs Commissioner, may be called back to Madrid to become Finance Minister and could be replaced by fellow Socialist, Lopez Aguilar. Slovakia may replace Jan Figel, the Education Commissioner with Maros Sfcovic. Former Belgian PM, Yves Leterme may replace Louis Michel, the Development Commissioner since Michel is standing down. Nellie Kroes, the Competition Commissioner from the Netherlands is set to be replaced by NATO Secretary Japp de Hoop Scheffer or Europe Minister Frans Timmermans. There are a number of potential names for Ireland’s candidate following the announcement that Charlie McCreevy, Internal Market Commissioner is retiring. Among them are former PM John Bruton and former European Parliament President Pat Cox. The Austrian Benita Ferrero-Waldner, External Affairs Commissioner, is expected to be replaced by former federal chancellor, Wolfgang Schussel. Danish Mariann Fischer Boel, Agriculture Minister is expected to stand down as is Laszlo Kovacs, the Taxation Commissioner, from Hungary. So too is Romanian Leonard Oban, the Multilingualism Commisioner, and Andris Piebalgs, the Energy Commissioner from Latvia.

Monday, June 22, 2009

Centre-Right anti-federalists form new political group

The Conservatives have succeeded in forming a new political group within the European Parliament. Tory MEPs led by Geoffrey van Orden MEP have put together a grouping of MEPs from eight different member states - meeting the requirement of having at least one MEP from seven different EU countries. Negotiations over the last couple of days led by Van Orden and the Party's shadow minister for Europe, Mark Francois, have focused on getting commitments from individual MEPs from across the EU27 that they could peel away from the centre-right EPP Group and among new MEPs enetering the Parliament for the first time.

The Conservatives had already secured agreement from the Polish Law and Justice Party which returned 15 MEPs and from the Czech Civic Democratic Party which returned 9 MEPs. The new group includes single MEPs from Belgium, the Netherlands, Hungary, Latvia and Finland.

All member parties have varying domestic political agendas but can claim to be united in their opposition to what they pericieve as federalism. The new Group will be called the European Conservatives and Reformists Group. The Prague Declaration sets out their common values; namely free enterprise, personal responsibility, sustainability, family-values, transatlantic security, effectively controlled immigration, modern public services and greater transparency of EU funds. They will have to carve out a niche for themselves in the Parliament by finding ways of making the Group more distinctive from natural political allies. To this end, they call themselves "Euro-realists" - neither as enthusiastically pro-European as EPP members nor as euro-sceptic as the anti-EU parties such as UKIP.

Already the business community is nervous about the new dynamics of the European Parliament now that the Conservatives have left the EPP. There is a feeling that the EPP - the largest political group in the Parliament - will be effectively a Franco-German alliance and that their approach to business regulation will prevail in the Parliament now that the Conservatives are no longer parliamentary partners. The European Commission President, Jose Manuel Barroso (himself a former centre-right PM from Portugal) has already expressed his "regret" at this move by the UK Conservatives.

Nevertheless, David Cameron has expressed a willingness to co-operate with the EPP. This is the first real practical test of his judgement as leader. He will be keen for this to work. If he senses that the Group will be too euro-sceptic for his mainstream members and the wider public to stomach, it wouldn't surprise me if he would effectively hand the whip back to the EPP Group on everything outside the on-going debates on the Lisbon Treaty.

Friday, June 19, 2009

UK govt succeeds in changing EU proposals on financial services supervision

The UK has done well to get the EU Summit to share its concerns over the transfer of powers away from national authorities in the financial services sector and has now seemed to have pledged to safeguard the powers of national authorities.

The Czech presidency, along with France, Germany and the UK, reached an agreement in creating the 'European Systemic Risk Board' and the UK succceeded in getting a compromise on the nomination of the Chair. It will finally be given to someone named by the general council of the European Central Bank (where a British governor sits), and not simply to the ECB governor. Another major concession made to the UK; a clause will be included to financial supervision regulations currently being considered stipulating that any mediation between two national supervisors will not have any consequences on the "fiscal sovereignty" of member states.

The Czech presidency already approved the text, and it has been endorsed by the European Council on June 19th 2009. The Council has called for the framework for EU supervision to be implemented in the course of 2010. But lets see what the Commission makes of it all in October

The French and Germans are playing games but it is the Irish who are causing sleepless nights for Barroso

It was complicated enough in the days when the appointment of new Commissioners was subject to political bartering and backroom deals. Now the negotiations are not only highly political but institutional and legal too.

The coming Irish referendum on the Lisbon treaty is causing all kinds of headaches in terms of timing (the Summit this week agreed provisions for the concerns raised by the Irish in a new annex of the Treaty).

Before the euro elections earlier this month, the Parliament deferred the Commissioners appointment to November, when the referendum results will be known. The Nice Treaty (currently in effect) allows for the nomination of a total of 26 European Commissioners, hence leaving one member state deprived of a representative.The Lisbon Treaty makes provision for the nomination of a commissioner per Member State. We have no way of knowing which rules will apply to the make up of the new Commission until we know the outcome of the Lisbon ratification process. How can Commissioners be nominated, approved by the Parliament and appointed to new jobs if we don't know yet how many Commissioners there wil be?

While this is a headache for the Commission, it does offer some political convenience to member states, since it gives them time promote their favoured candidates for a top job and secure policy commitments from the Commission President. Angela Merkel, for instance, wants to wait until the outcome of national elections in September where she is confident of good result for her party following a strong showing in the Euro-election results. If she succeeds in getting the Social democrats out of the government coalition, she will be free to nominate a Christian democrat.

But postponing the Commission nomination so that it falls under the Lisbon Treaty regime invites another legal problem. People tend to forget that the Lisbon Treaty will not be implemented for a few years, and, even more importantly, is contested by constitutional courts.

In the meantime, the President of the Commission has to be nominated. The European Council gathering this week for the last time under the Czech presidency unanimously called for the renewal of José Manuel Barroso as president of the college of commissioners. Uncertainties prevailed at the Summit about the legal effect of this nomination. Nicolas Sarkozy and Angela Merkel called for this decision to be merely informal and political, whereas Sweden asked for the decision to be legally binding. Fredrik Reinfeldt, the Swedish PM, declared that he feared “uncertainty” and that the EU needed a stable force at this time of transition. In the end, EU leaders only showed an informal and political support to Barroso's nomination to start a second term as President. They put off the legal endorsement of Barroso until mid July when the Parliament is expected to vote on the matter.

However this half-hearted support for Barroso from Council is only half the story. There is a dilemma over when the Parliament's endorsement or otherwise should take place. Should it take place in July, under the Nice treaty, which asks only for a simple majority of the voters? Or should it take place after the Irish referendum, as requested by France, to fall under the Lisbon Treaty regime, hence requiring an absolute majority, much more difficult to achieve?

Even Angela Merkel, who declared a clear support for Barroso's candidature, said that reaching even a simple majority in Parliament will be easier said than done. Whyso? Barroso is facing opposition from the Greens, the Socialists, some Liberal Democrats, and even some from his own group the PPE, who intend to present another candidate in the person of Mr Guy Verhofstadt, Belgium’s former PM.

But altogether, this opposition represents 294 MEPs, which is clearly not a majority (there are 736 MEPs in total). But they maybe will count with the 93 MEPs who are not affiliated yet. However, since the ballot is actually secret, it is difficult to make any sensible prediction.

My money is still on Barroso getting re-nominated - simple or absolute majority. The nomination of Barroso is seen by many as the only solution to resolve the financial crisis and assure continuity in the European Union policies. Asked about his priorities for his second mandate; the former Portuguese prime minister said he would first focus on tackling the financial and economic crisis. Striking a deal at the UN global climate talks in Copenhagen is his second short-term priority, he said.

Furthermore, rumors are flying bout the possible the possible commissioners. Only 7 out of 27 are expected to renew their mandate.

France is pushing to get Barnier, former Agriculture ministry and newly elected MEP, as the Commissioner for Internal Market. However, seeing that this portfolio is significant for the financial supervision reform, Sarkozy might propose the nomination of Jean-Pierre Jouyet, chairman of the French financial market authority.

On the other hand, Merkel stated that she would nominate the Commissioner only when the portfolios are done being attributed to Member States. However, it seems that she plans for Wolfgang Schäuble, Christian Democrat Interior minister, to be the next German EU commissioner, even though others already declared their interests. On the contrary, in Luxembourg, the choice seems to be made, and Viviane Reding should be assured to go on being the Commissioner for the information society portfolio for the third time. In the UK, Geoff Hoon might replace Mandelson, but it would lead to a by-election in his constituency which would be another blow to the already beleagured Prime Minister if Labour were to lose it at a time he is focusing on his fight-back.

Wednesday, June 10, 2009

Centre-Right Parties Make a Clean Sweep

Centre-Right Parties Celebrate Electoral Advances Across Europe
The European Parliament elections presented voters across Europe with their first opportunity to cast a verdict on how the EU has responded to the economic crisis that has gripped its 27 Member States. The result was a surprising endorsement of centre-right governments across Europe. Centre-left governments – particularly the Labour government in the UK - fared less well.

The elections should really be a vote on how well sitting MEPs have served their constituents and a mandate for another five years of scrutinising laws made in Brussels and Strasbourg. There is, however, always a temptation to present the European elections as a snapshot of public opinion across the EU 27 Member States. In many ways, that is understandable. Given that voters are not choosing or rejecting a European government, they will take the opportunity to register support or opposition to their own country’s leaders. The political parties’ European groups nevertheless promote pan-European manifestos that address issues such as immigration, climate change and unemployment.

Even though centre-right governments enjoyed a strong showing, there were no significant, pan-European trends to call. The extremist parties enjoyed a surge in support in some Member States but a slump in others. Even the lower turnout – a slip from 45.47% in 2004 to 43.09% in 2009 - can be attributed to factors that varied from country to country.

One clear pattern that has emerged is the consolidation of support for the centre right parties. In the “Big Five” Member States – Germany, UK, France, Italy and Spain, the leading centre-right parties came top of the polls.

The Party of European Socialists (PES) will be dismayed by their poor results. Their share of the vote has fallen from 27.6% to just 22%. The PES had hoped that the centre-right parties who govern Germany, France and Italy would be punished for the economic downturn that has driven up unemployment. However, the French president, Nicolas Sarkozy, German chancellor Angela Merkel, and the Italian prime minister Silvio Berlusconi all saw their parties’ support hold up. In most cases, they faced divided and weak opposition.

In Germany, chancellor Angela Merkel’s Christian Democratic Union and a regional sister party, the CSU, won a total of 42 seats. Their tally is down seven but the result puts the centre-right far ahead of the Social Democratic Party (SPD), the junior party in the governing Grand Coalition. The CDU/CSU remains the largest party in the EPP. The CDU / CSU. With 20.8%, the SPD had its worst result in nationwide elections since the Second World War. This is huge blow to the SPD, which is gearing up for heavy losses in the general election on 27 September. Angela Merkel should be in a stronger position after the elections, not having to keep her opponents on board. Still, she may form a coalition with the liberal Free Democrats, following a surge in their support at the Euro-elections.

In France, the Socialists’ complacency led them to suffer a heavy defeat on Thursday. M. Sarkozy’s personal approval ratings have been in the low 30s yet his UMP won 30 seats – up by 13 from the 2004 elections. The Socialists lost 17 MEPs and ended up with just 14. Francois Bayrou, the centrist who came third in the presidential election of 2007 suffered a humiliating defeat. He tried to use the European campaign to attack M. Sarkozy and build support for another presidential bid in 2012. This seems to have run into the ground following his poor showing in the polls.

Martine Aubry, the new Socialist leader, admitted her party was no longer credible, that it needed to stop internal divisions and make some profound reforms. These elections might plunge the already weak party into further disarray. Many are already referring to the electoral earthquake in 2002 when the party's presidential candidate, Lionel Jospin, failed to reach the second round.

The leader of the New Anti-Capitalist Party, Olivier Besancenot who achieved notoriety for leading a strong left-wing response to the economic downturn also failed to make any breakthrough in the election.

In contrast to M.Sarkozy, Italy’s prime minister Silvio Berlusconi could claim that personal popularity was enough to see off his opponents – even if his party, the People of Liberty Party (PDL) won a smaller share of the vote than expected. The fact that PDL did not reach the 40 per cent share Mr Berlusconi hoped for can be attributed to the ongoing scandal over claims of an inappropriate relationship with Noemi Leitzia, an 18 year old model. Mr Berlusconi won 29 seats compared to the 22 seats won by the centre-left Democratic Party (DP). He was helped by a strong showing from the Lega Nord, a right-wing party that forms part of the governing coalition.

Antonio Di Pietro, a former state prosecutor and fierce critic of Mr Berlusconi, saw his support almost quadruple compared to 2004 to 8%, which will give his party a total of eight MEPs.

The centre-right also made big gains in Poland. Prime Minister Donald Tusk's Civic Platform party won 45.3% of the vote – twice as much as his 2004 results, giving him 25 seats. The nationalist and conservative opposition Law and Justice party was second with 29.5% (15 seats). The Law and Justice Party will join the UK Conservatives in a new political group in the European Parliament. The results confirm a clear trend in Poland towards the Centre-Right at the expense of both the far right and the far left.

United Kingdom voters turned on the governing Labour Party in spectacular style. Labour scored its lowest share of the vote since the days of Ramsay Macdonald.

Spain’s socialist prime minister, Jose Zapatero, seemed get off lightly compared to the drubbing that political commentators were expecting. The Spanish socialists slipped into second place, but they lost just three MEPs and their opponents, Partido Popular, lost a seat.

Fears that the eurosceptic parties would make further in-roads in the European Parliament were unfounded. Despite a strong showing from the United Kingdom Independence Party (UKIP) which came second in the share of the overall UK vote, the Independence-Democracy group, lost votes and the threat from the anti-Lisbon Treaty party, Libertas never materialised.

The Greens say they ran an EU-wide and EU focused campaign but their results across the EU-27 were highly variable. In Germany, the Greens slightly improved on their result from 2004, winning 12.1% of the and gaining one MEP, for a total of 14, In France, the Green Party, headed by Daniel Cohn-Bendt surprisingly finished in third place – just 0.6% behind the Socialists. They won 8 new seats and now have 14 MEPs. Yet in Italy, all the Greens MEPs were defeated and in the UK Green Party didn’t make the gains in the UK as they had hoped.

The election of two British National Party MEPs sent political shockwaves through the UK. Yet the far-right fared even better in the Netherlands where the controversial Gert Wilders Freedom Party came second with 16.9% of the vote. The party is openly anti-Islamic, and Wilders has been refused entry to the UK because of his inflammatory views. The far right made significant gains too, in Austria, where it scored nearly 18% of the vote, and in Slovakia, Hungary and Denmark. However, again there was no pan-European trend since the National Front lost 3 seats in France, three were lost in Latvia and were wiped out in Poland.

The voter turnout across Europe, although generally lower than in 2004, cannot be attributed to any single factor. In some countries such as Poland, the fall in turn out (27.4% - up from 20.87% in 2004) can be attributed to general satisfaction of the EU. However, the proportions of voters in the UK (34.8%) Germany (43.33%), France (40.48%) remain stubbornly low, owing to the growing cynicism and lack of interest towards EU politics.

Even though the British Conservatives (with 26 MEPs) are leaving the centre-right bloc, the European People’s Party (EPP) remains by far the largest political group in the European Parliament, notching up a total of 263 against 163 for the Socialist Group, the PES. The latter won 54 fewer seats than in 2004. The Liberal and Democrat Group (ALDE) has lost 20 MEPs but remains the third largest political grouping in the Parliament with 80 members.

The EPP had been the predominant group in the last European Parliament with 284 MEPs (including 26 UK Conservatives) while the Socialist Group contained 215 members. However the gap has widened and the European People’s Party can expect the support of the UK Conservatives and its allies in the new right-wing grouping on many pieces of legislation going through parliamentary committees.

The strong showing by the EPP parties will change the nature of the European Parliament. There will be less consensus-seeking and a clearer demarcation between left and right. The president of the Parliament come from the EPP and centre right members will have first pick of the most powerful committees. The Commission president Jose Barroso, himself a former centre right prime minister of Portugal, will be relieved that he can push his post-2010 “competitiveness and growth” programme through the European Parliament, without being troubled too much by Socialist Group delays.

The 2009 election results mean that the centre-right will be the dominant force in European politics. The EPP has increased its lead in the European Parliament, Moreover, the collapse in the support for the centre-left in the major Member States such as France, Italy, the UK, Germany, Spain and Poland point to a European Council with a strong centre-right presence.

Saturday, April 18, 2009

Should Europe Regulate to Protect Personal Data on the Net?

Facebook had to back down when it proposed plans to keep personal data entered onto its site - as though it were its own personal property - even if the subscriber closed the account. Google's new Street View service which trained roving cameras on unsuspecting bystanders in 25 UK cities prompted Privacy International to file a complaint with the Information Commissioner. Google has since backed off.

No doubt, on-line media is pushing the boundaries of what many of us are comfortable with. Equally, the authorities, whose job it is to protect our privacy, are struggling to keep up with new innovations. However, do the actions of Facebook and Google prove that industry is capable of regulating itself because it is responsive to customer concerns? Or does it expose the fact that we are woefully ill-prepared for the fast moving developments in new Web 2.0 capabilities?

The European Commission is beginning to believe that new legislation is needed. The Commission recently filed a complaint against the UK government for allowing secret trials by BT and Phorm where internet users habits were monitired without permission. This has led to a Commission review of the regulary regimes in the EU 27 Member States.

It is necessary for industry and government to come together to map out a framework - ideally a voluntary but robust code of conduct - to counter the alarming increase in data privacy breaches. It is industry's interest to reach a consensus with the Commission since flagrant abuses of data protection serve only to damage the reputation of social network and on-line media sites.

It will be up to the industry to show the Commission that it is serious about data protection. Otherwise, new regulations will be introduced - and they could be highly restrictive.

There is every danger that new regulations could be over-imposing and heavy-handed. On 19 February 2009, the Article 29 Working Party concluded that the activities of search engines should "fall under the EU Data Protection Directive” which states that "personal data may be processed only if the data subject has unambiguously given his consent" – the so-called “opt-in” option. This move would represent a radical turnaround in comparison to how search engines have so far worked. Since a query is considered to be personal data, Google and Yahoo will be requested to ask the consent of every single user in order to store this information. Regulators also agreed that these provisions apply to search engines based outside EU, provided they "use automated equipment based in one of the member states for the purposes of processing personal data".

Perhaps the real issue is the enforcement of existing safeguards. They are simply ignored and the sanctions are weak. The EU Data Protection Directive is 14 years old - its provisions are outdated and unclear. It makes sense to review the legislation but it makes more sense to secure a clear commitment from the Commission that the industry can and will responsibly regulate itself.

Sunday, March 1, 2009

EU Competition Law and Public Affairs

Its a mystery to me why its so readily assumed by pretty much every-one in Public Affairs that lobbying has no place in supporting anti-trust files doing the rounds in Brussels and that anything to do with EU competition law is best left with the lawyers alone to deal with. That's why it was refreshing to see that from the lawyer's perspective, political engagement can be of enormous help to a company is the subject of a competition inquiry or is having to deal with DG COMP officials for whatever other reason. Of course, lobbying officials handling competition cases is a no-no but there are compelling reasons for building up political support and developing an understanding of your rationale.

Some of Brussels leading competition lawyers have written on this subject in the latest issue of Concurrences. They concuer that competition is as political as it is legal. Public Affairs brings some accountability to the process and a little transparency can ensure EC officials handle the case more carefully and diligently. Lobbying in the competition arena does require some sensitivity and it is important to know your audience and not over-do it but good lobbying can add practical understanding od the real-world effects made by the Commission and national competition officials.

The Court of Public Opinion is as instructive as the Courts of Law and lawyers increasingly recognise the importance of public affairs in support of their clients' case. Stephen Kinsella says its no longer enough to just defend the client in written submissions and closed hearings - publlic and shareholder perceptions of the case could alos have a significant impact. Kinsella says that many lawyers work in specialised fields and have a blind-spot when it come to other policy issues that will impact on a decision; not taking into account the officials from other Commission departments that have some knowledge and insight into the case. Public affairs consultants can give guidance on how to interpret messages from other DGs.

Kinsella says that there are many political elements to decision-making in antitrust cases. Sector-specific expertise is needed as is an understanding of national interests and even in some cases, engagement with MEPs can help. He reckons, "Consultants can be invaluable in helping put together a strategy and work out where some additional investment in time might pay off in influencing the outcome." Admittedly its sometime hard to identify which bit of your political engagement can have direct effect on the outcome but its generally felt by the legal profession in Brussels that it can add a great deal to the client's armoury or at least insure against a worst case scenario.

Philip Marsden notes that it is important to create a climate where the regulatory and political institutions are more receptive to the clients' business model. Officials in the EU institutions are aware that they live in a regulatory bubble - most have come straight from academia and have never worked in industry and so will welcome a better understanding of the real effects of their decisions.

In summary, the lawyers agree that while you should not attempt to lobby the officials dealing with the case or influence anyone who might put pressure on case handlers, it is a brave and foolish company that operates in Europe without
public affairs advice. Public affairs in the UK has traditionally developed alongside the PR market but in Brussels there is increasing need for skilled publc affairs advice to complement the legal sector. I have always thought it odd that lobbying in the EU anti-trust field has been so under-developed for so long.

Saturday, February 28, 2009

UK unions push for early implementation of EU agency worker rules

The UK Department for Business and Regulatory Reform is burdened with a rather onerous title and, worse a very inconvenient acronym (DBERR). So it probably should come as no surprise that is responsible for creating one of the most inelegant and soulless phrases I have come across for a while. The "Comparator Worker" is some-one who does the same job as you at the same company as you and recieves the same salary as you, only difference being s/he is on a temporary contract.

There should not even be any reason to come up with a new name for what is already understood universally as a temporary worker except DBERR is to carry out a consultation on how best to define such a worker as part of its preparations for the implementation of new EU legislation on agency workers. Businesses want to ensure that there is a clear difference between a temporary worker and a permanent one even if the nature of their work is the same. However Union leaders from the GMB and Unite will be giving a different interpretation when they see Gordon Brown in Bristol today.

The UK reluctantly agreed to a new EU Directive that would give temporary workers to pay as much to temps who have been in the job at least 12 weeks as they would to permanent employees (if their jobs can be similarly defined) and also award the same levels of redundancy to the temp (after 12 weeks) as they would to permanent employees. This arrangement removes the disincentive to employ some-one on a permanent contract as well as any possibility of discriminating against the agency worker if s/he have been working effectively as a permanent employee. The Unions will want to see the measures adopted as law in the UK by April 2010 but business wants to wait until the EU deadline of the end of 2011.

Lord Mandelson will have a view. As will Harriet Harman. Somehow, I'm not sure they will be the same as eachothers.....

E-campaigning trend will decentralise UK political parties

The UK Centre-Left is preparing to play catch-up in a Centre-Right domintaed blogosphere. Leading weblog commmentators and campaigners from the world of New Labour - such as Derek Draper and Tom Watson MP - are coming together at a Conference organised by think-tank, Progress in London today, to examine how they can harness new media to transform the Labour Party's campaigning.

Of course, many enthusiasts for e-campaigners will point to Obama's remarkable Presidential election campaign as the model for using internet social networking as an effective way of reaching out to voters. Obama's team were highly successful in amassing a huge network of active supporters, prepared to rally more support for Barack Obama in their local communities.

The problem for this model in the UK, however, is that political parties here are much more centralised than they are in the US. Pretty much all political messages and means of campaigning are centrally engineered.

Could e-campaigning lead to decentralised political parties in the UK? Nick Anstead, lecturer in politicas at the University of East Anglia writes in February's Progress Magazine, "We are leaving the mass media age, which was defined by collective information consumption, and entering a period of selective and participatory media..... In order to compete in such an atomised environment, parties must also be decentralised."

As for the race to dominate the blogosphere, the Weekly Political Note from Bell Pottinger Public Affairs points to a stronger Centre-Right presence. It says, "Of those listed in "The Total Politics Top 100 UK Political Blogs", 48 are on the right of the political spectrum and just 30 on the left. The BPPA political note generously gives ResEuropa a mention - although I should point out that it is neither in the Top 100 nor is it politically aligned to either the left or the right!

As soon as the European Election campaigns start in earnest, no doubt we will see UK bloggers try to tackle some European issues. However, there is no sense yet that politicians of either side of the political fence have any real sense of knowing how they could use not just their blogs but other on-line social networking tools, to improve their electoral chances.

Thursday, February 26, 2009

McCreevy insists that the Commission should not regulate its way out of financial crisis

I was at a Conference today in Brussels organised by the European Commission to bring together widely varying views on how private equity and hedge funds should be regulated in the European Union (ostensibly in light of the current financial crisis - although in realty as a result from the European Parliament early last year). The Internal Market Commissioner, Charlie McCreevy - in a keynote speech continues to warn his fellow-policy makers that we cannot regulate our way out of the financial crisis and in any case private equity investment was never part of the problem - but can be part of the solution. Despite bring criticised from within the Commission for being too supportive of private equity, he again made a point of separating private equity from hedge funds. He knows very well it suits his opponents to some-times lump them together.

The Commissioner was generous enough to share his slot with another key-note speaker - his most ardent critic, former Danish PM and leading Socialist in the European Parliament, Poul Nyrup Rasmussen. The Danish MEP continues to push for heavy regulation for the sector. He gave a withering attack on the European Venture Capital Association (EVCA) who, in its submission to the Commission's consultation said that any company that does not abide by the industry's code of conduct could be excluded from its membership. He took this as a reason for why self-regulation would not work - ie: the consequences for non-compliance are too small. (This was more than a little unfair to EVCA since their submission was highly detailed and well thought-through)

It was up to Sir Michael Rake to explain just exactly what self-regulation means in practice and how it should work. He should know - he is the Chairman of the private equity oversight group in the UK - the "Guidelines Monitoring Group", set up following the Walker Review. Since the Walker Review into private equity governance, the UK has set the standard in bringing about higher levels of transparency. Sir Michael told us that compliance is actually rather high. In other words, self-regulation actually works.

However, what Rasmussen really wants is more conditions to be put on Private Equity. The risk for the industry is that when the Commission does come up with its recommendations on improving transparency, that Socialist MEPs would add yet other cumbersome conditions. Rasmussen is clearly paving the way for this. Although he will not get very far while Charlie McCreevy is still in charge, he and his supporters in the Socialist Group may fare better under his successor before he or she puts their feet under the table this Autumn.

Tuesday, February 24, 2009

Internal Market Committee could disappear in European Parliament Shake-Up

I'm getting word that the all-powerful Internal Market and Consumer protection Committee, IMCO, could be disbanded as part of a radical shake-up of the European Parliament's committee system. There is a powerful lobby within parliament that wants to see the legal aspects of the committee go to the JURI Committee (legal affairs) while the responsibility for economic and industrial aspects of the internal market would go to ITRE (industry, research and energy).

ITRE would lose energy to Environment (ENVI) which in turn would lose responsibility for public health and food safety. A new committee would be formed for health issues.

A dedicated health committee is long over-due, in my opinion. The suggested reforms gives greater weight to health policy at EU level as initiatives such as the Health services directive pushes the sector higher up the EU agenda. Likewise, energy policy should, to some degree, be considered as part of the environmental agenda (although the Industry Committee must too play an important role in promoting the interests of the energy sector). IMCO has been showing some signs of dysfunctionality with consumer protection issues not being given the prominence that it might perhaps deserve. Although, given the sketchy information we have so far, its not entirely clear whether consumer protection policy is better served elsewhere in the parliament.

The idea is for health and consumer affairs to be dealt with in a single committee - effectively mirroring the responsibilities of the Commission's DG SANCO (health and consumer). Like Energy and Environment, it may seem like a natural fit but it could in fact be a recipe for constant conflict - the new committee would have to deal with the complexities of the pharmaceutical package, which includes directives on information to patients. The interests of the big pharma companies will not always be palatable to powerful consumer groups in Brussels. Again, the Industry committee would need to play a supportive role in forming a coherent parliamentary response to Commission initiatives that affect the sector.

None of this is a done deal and there will be some gnashing of teeth before any overhaul of the committee system is completed. Nonetheless, we can expect some big changes being put in place for the 2009-14 Parliament.

Saturday, February 21, 2009

Could the Euro-Elections Finish Off Gordon?

Talk this week of another leadership challenge to Gordon Brown is rightly dismissed as absurd by the UK press. Nevertheless, it hasnt stopped the UK press from playing up the story. It stems from Deputy Labour Leader, Harriet Harman's drive to get Cabinet action to curb bonuses to bankers. So the theory goes; she is making noises to appeal to the left wing vote of her party and so, it follows, she is positioning herself to take over from Gordon should he fall under a bus. However, Harriet Harman has been doggedly pursuing the issue of city bonuses for nigh on a year. Does she want the job? Most likely, and she would be vying for the mainstream left support of the party along with Ed Balls (ignore the stories that his wife, Yvette Cooper would be the ideal Stop Harriet candidate - for Cooper, read Balls).

More seriously, the Labour High Command are bracing themselves for a dire outcome to the European Elections in June. If Labour come third, then Gordon Brown would be looking as weak and vulnerable as he was last Summer. The BNP are campaigning hard to increase the percentage of the vote they got in the Northwest in 2004 (6.4%) to the 9% they would need to secure an MEP in the region. This would be bad enough but if they won another seat in the Yorskshire and Humberside region, there would be no hiding place for the PM.

Even in this scenario, I don't think that there would be an organised coup against Gordon Brown. I have said that he will feel increasingly compelled to see through the full 5 year mandate to steer the economy through the recession and wait until May 2010 before he calls an election. However, it won't prevent certain colleagues from positioning themselves should he decide to quit early or at least raise their profile over the next 12 months.

Lord Mandelson's determination to see through his controversial proposals to reform Royal Mail against the wishes of a considerable body of Labour MPs will also be a dangerous flashpoint for the PM. Brown could shrug of any revolt over the Royal Mail bill and reinforce his credentials as a radical reformer of public services. It will be the European Elections that would inflict fresh wounds on an already beleagured Prime Minister. Since Harriet Harman is heading the election campaign, she is in real danger of being blamed should the results be disastrous.
"British Jobs for British Workers" - EU rules may need to be re-written to clarify workers rights

It will be interesting to see what the outcome will be at an unusual meeting between the EU's top business and trade union leaders on Wednesday (25th feb). The crunch summit between John Monks, general secretary of the European Trades Union Confederation (ETUC) and Ernest-Antoine Seilliere of BusinessEurope, hosted by the European Commission, will tackle the thorny issue of how best to prevent workers being undermined when a company from another Member State brings across its own employees to service a contract.

The Posting of Workers Directive, which has been in force since 1996, means that so-called "posted workers" would be covered by the host country's terms and conditions and that collective agreements reached between unions and employers should apply to posted workers. In other words, if you had to move country for a limited period of time, you should expect to enjoy the same benefits as host country workers as a minimum. However, a recent spate of wildcat strikes in the UK in protest of foreign companies eschewing the local labour force in favour of its own workers has got people asking whether the EU rules surrounding "posted workers" are perversely undermining employment standards; an indigenous workforce being sacrificed for the hgher cause of free movement of people in the European single market.

The ETUC blames a recent European Court of Justice judgement for undermining the founding principles of the "Posted Workers" directive. Suddenly, it seemed that the conditions set out in the directive were no longer the minimum that an employer was obliged to honour but rather the maximum. BusinessEurope will be adamant at Wednesday's meeting that no revision of the directive is necessary. They say that to go further would mean posted workers would be discriminated against. Wednesday's meeting will be critical for the European Commission which is itself reluctant to review the directive. The Commission says that the court ruling merely reflects the variety of industrial relations in member states. Although, the pressure will be hard to resist, particularly when the British Nationalist Party is making hay out of the issue in its Europan elections campaign, the Commission will want to avoid any risk of protectionist tendencies creeping in. I have to say that the Commission cannot just wish the problem away. The Services Directive will be implemented this year and this will only increase the amount of workers being posted to another Member State.

The Political Fall-Out in the UK

The row over the posted-workers at IREM, an Italian company, of work it is doing at Total oil refinery in Lincolnshire that has caused something that looks suspiciously like a rift in the Cabinet.

Lord Mandelson has defended the European directive that provides for the arrangements where workers are posted from one EU country to another, while Alan Johnson has said that the EU directive needs to be reviewed.

Nevertheless, the Government line now is that it has been assured Total that the work was open to British workers and that the terms and conditions for Italian workers than would have been to the local workforce.

So That's What They Meant By "Social Dumping"?

Some MEPs from the Socialist Group in the European Parliament have long argued for measures that prevent "social dumping" whereby companies take advantage of the gap between the conditions of the Member State of the guest company and those of the host state.

Now the European Court of Justice says that the Directive limits the level of protection guaranteed to posted workers. Neither the host Member State nor the social partners can ask for more favourable conditions, that go beyond the mandatory rules for minimum protection in the Directive. In effect, while it provides minimum employment protection, it does not guarantee for posted workers rights to be negotioated by collective bargaining in the host state where the employment conditions of host workers are better than the guest workers.

The ETUC wants Member States to revisit the directive and build in extra employment protections into the directive.

The Directive itself is not controversial and has been succesfully freeing up labour mobility for years. However a recent judgement on the directive - called "Laval, Rüffert and Commission v Luxembourg " *has rather negatively interpreted the local workers rights assumed in the directive.

The European Parliament adopted a report by a broad majority on 22 October 2008 ( “Challenges to collective agreements in the EU”) and the Commission’s forum on ’Workers’ rights and economic freedoms’ organised on 9 October 2008 also considered the need for a review. The ETUC is already mobilising support for a review of the directive since it believes the recent ECJ rulings have challenged the original intention of the European legislator.

Whats the Laval Judgement?

Laval, a Latvian company won the tender for construction work at a school in Sweden. They posted their workers from Latvia to Sweden to fulfil the contract. The Swedish unions started negotiations with Laval in order to sign a collective agreement with regard to wages and other working conditions. Laval did not want to pay the wages requested and so they signed a collective agreement in Latvia - and not Sweden. In response, the Swedish negotiations, the Swedish trade unions took action by blockading the construction site.

With regard to the right to strike as a fundamental right, the ECJ applied the "proportionality test". The Court said that collective action for the protection of the workers of the host State (Sweden) against "social dumping" (undermining the conditions for host state workers) may constitute an overriding reason of "public interest". The means of blockading action by a trade union falls within the objective of protecting workers. But in the actual case concerned the action could not be justified due to an incorrect implementation of the posting of workers Directive.Most of the judgement concerns the interpretation of this Directive. The ECJ found that negotiation at the place of work, on a case-by-case basis, when minimum rates of pay are not determined in accordance with one of the means provided for by the posting of workers directive, are not permissible under the Directive. The Court heavily criticised the Swedish collective bargaining system, saying that it created uncertainty for businesses since they had no way of knowing what the conditions they would have to guarantee before they would post their existing workers from Latvia to Sweden.

The ETUC wants regulation for the joint and several liability of main contractors and intermediaries, at least where the payment of tax, social security contributions and wages is concerned. The Commission produced a paper on this on 2 July 2008 but the ETUC says it doesn't go far enough. They are looking for further rights to transnational collective bargaining, not available under the Posting of Workers Directive.

A Resolution drafted by Jan Andersson MEP and adopted by the European Parliament in October last years says that the ECJ in recent rulings has interpreted the directive in such a way that effectively changes the directive from one setting minimum standards to one setting maximum standards.The Jan Andersson Resolution says it is up to Member States to implement the directive - the way it was intended to be since labour market legislation and rules concerning negotiations and collective agreements are the competence of Member States.At EU level it proposes:new legislative proposals to prevent conflicting interpretation in the future. This should include a partial review of the PWD, "with specific regard to the issues of applicable working conditions, pay levels, the principle of equal treatment of workers in the context of free movement of services, respect for different labour models and the duration of posting".re-casting the directive so that it is made explicit that it does not prohibit member states and social partners from "demanding more favourable conditions, aimed at equal treatment of workers, and that there are assurances that Community legislation can be implemented on the basis of all the existing labour market models."new EC measures to combat "letterbox-companies" "which have been created, sometimes even directly by the main contractor in the host country, for the sole purpose of carrying out business in the host country, in order to circumvent the full application of host country rules and regulations in particular with regard to wages and working condition"immediately adopt the Temporary Agency Workers Directive.