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.

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.

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

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.

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.