Archive for December, 2008

Flowers for France’s presidency, brickbats for the Commission

Thursday, December 18th, 2008

It seems that France has had a good presidency. It could hardly have been a more challenging one, but despite the occasional sniff of folie de grandeur, President Nicolas Sarkozy has proved to be the man of the hour, with the élan needed to make things happen.

Foreign minister Bernard Kouchner and finance minister Christine Lagarde have also been key players. The French presidency’s handling of the Georgia crisis reinforced Europe’s diplomatic credibility, while the EU’s response to the economic crisis has been forceful and surprisingly coherent. “If people thought there was no such thing as a political Europe, well here it is” says Kouchner.

Time magazine even made Sarkozy runner-up (behind Obama) as 2008 Person of the Year – and asked Tony Blair to write an appreciation  just as speculation mounts as to who might be the EU president if the Lisbon Treaty comes into effect by the end of 2009. Should we put two and two together?

The dynamism of the French presidency has apparently raised questions about the effectiveness of the European Commission.  It is accused on the one hand of becoming just a secretariat of the Council and on the other of being too bureaucratic (independent?) in applying state aid policy.

I suspect that Commissioner Kroes’ insistence on the Commission’s task in controlling state aid has run up against the desperate urgency of governments to rescue their banks in the face of  the credit crunch.  DG Competition is always the bugbear of governments in times of economic crisis.

In fact there is bound to be a long-term rebalancing in the relative strength of the different EU institutions.  As the legislative programme diminishes and the Union’s political capabilities and ambitions expand, so the Commission (and the Parliament) will lose power to the Council. The Commission’s role becomes less that of policy driver and more that of policy manager, administering the budget and acting as policeman for Community rules.

On the economic side, the Commission’s role has always been strictly limited, even within the eurozone. Let’s not forget: first it was told to develop a stability and growth pact, then it was asked to produce a fudge when France and Germany crashed through the barriers. Economic policy in the EU essentially remains the preserve of national governments.

Of course the Commission still has a key policy role. The year ends with agreement on quite a package: a European Economic Recovery Plan totalling €200 billion, which includes an extra €30 billion in ECB loans; approval of the energy and climate change bundle; the basis for new regulatory regimes for telecoms and energy; likely agreement on a European defence procurement market to replace the current chequerboard of separate national markets; and, yes, a relaxing of state aid rules on funding of SMEs.

The Commission has been the prime mover in most of these areas even if it has not always achieved all it set out to.

As for the Lisbon Treaty, Ireland has been offered a formula which might persuade the Irish to allow ratification by this time next year.

Promises, promises. Next year will test how much can really be delivered. A European recession is likely to put great strain on EU solidarity as sectors like the motor industry are threatened by collapsing sales, unemployment rises and individual countries face major crises in their economies. Global negotiations over climate change will culminate in Copenhagen next December, but will the EU still be speaking – and acting – with a single voice?

And I wonder how a divided Czech leadership will manage the presidency ahead. Can Good King Wenceslas tread in the footprints of his French predecessor as we move into the Obama era?

Posted in Competition, European politics, Eurozone, Finance, Treaty of Lisbon | No Comments »

Reassuring words for an autumn vote in Ireland?

Wednesday, December 10th, 2008

“The way forward is beginning to emerge”. So said Dick Roche,  Ireland’s minister for European affairs, on the eve of the Brussels December summit. It looks like a second Irish referendum for the autumn of 2009.

The Irish Taoiseach Brian Cowen is expected to tell EU colleagues that he will seek a second referendum in the autumn as long as some reassuring protocols can be agreed. These would deal with taxation (where corporate rates have been such a key factor in boosting inward investment), abortion (EU keep out!) and defence (no threat for Irish neutrality).

Putting a fence around Irish taxes may not go down well with those member states which dislike low corporate tax regimes, but reflects the realities of EU policy. On abortion and defence there should be no problem.

The Irish government will also call for the scrapping of Article 17 (5) of the Lisbon EU draft treaty which would reduce the number of commissioners by one third as from 2014, but I see that the Article itself provides that it can be changed by unanimity. My sympathies are with the Irish on Article 17. The Union is distant enough from the citizen as it is. One commissioner per country will certainly be unwieldy in an EU of 30 or more members, but is a price worth paying for smaller states to have someone of their own to engage with in Brussels.

Of course none of this will guarantee an Irish “yes”, but the tide of opinion may well have turned. Ireland has punched well above its economic weight as a financial services centre over the last 30 years, but faced with the credit crunch it is only the country’s eurozone membership and ECB support which have staved off an Icelandic-style financial disaster. The people have taken note.

The credit crisis has transformed the political and economic landscape for everyone. Denmark is now looking increasingly likely to hold its own referendum on adopting the euro to stabilise its economic position. And now we have Iceland desperate to join the EU and the eurozone to rebuild its economy.

So can the UK be far behind? Yes, far behind. Unless, that is, the global economic turbulence gets worse and the Bank of England no longer has adequate resources to bail out the financial services sector. I liked President Barroso’s provocative remarks noting the growing British interest in the euro, especially given his regular meetings with Gordon Brown and the curious spectacle of Sarkozy, Brown and Barroso all getting together in 10 Downing Street to praise each other’s expansionist policies and say, poker-faced, that they had no doubt Germany would join in. Chancellor Merkel is not so convinced.

As well as the Irish question and the financial crisis, EU leaders will be looking at some new dimensions in European defence policy. In one week we have seen the establishment of a naval task force to combat Somali pirates in the Gulf of Aden and the transfer of policing powers in Kosovo from the United Nations to an EU police and justice mission. The European Security and Defence Policy seems to be evolving nicely, with or without Lisbon.

Posted in Defence, Elections, European politics, Finance, Kosovo, Treaty of Lisbon, UK politics | No Comments »