After all the excitement of an amazing US presidential election, here we stand in the cold light of dawn, wondering what happens next. What can we Europeans expect of President Barack Obama? As others have pointed out, his first duty will be to serve the interests of those who elected him and not the political priorities of friends and neighbours, so we should not raise our hopes too high.

Yet things do seem very different this time. All the evidence suggests that Senator Obama will be a president who is deeply committed to a multilateral approach and who perceives international co-operation as fundamental to meeting the challenges which the US faces. His July trip around Europe gave a strong indication of his global perspective. The deeply unpopular image of America across the world causes him real distress.

Obama was careful during his campaign to avoid giving too many hostages to fortune, but trade was one exception, as the candidate argued that free trade agreements such as NAFTA were responsible for job losses and that outsourcing of production benefited businesses while damaging the interests of their workers.

A strengthened Democrat majority in Congress will not make it any easier to resist protectionist sentiment and no doubt we can expect some early measures such as support for the US auto industry – a distant echo of President Bush’s support to steel and farming in the early days of his first term. There may well be tax changes as well, which make outward investment less attractive to US firms.

There is a small window of opportunity. Over the coming weeks people will seek to breathe new life into global trade negotiations. The new trade commissioner Baroness Ashton has raised the hope of progress for the Doha Round in what I thought a rather convincing BBC interview and Pascal Lamy has offered to stay on at the WTO in pursuit of an agreement.

So will the November 15 summit in Washington open the way for trade talks as the Brazilians hope, I wonder? And will President Sarkozy speak for free trade during the meeting? Maybe it will be easier in the absence of ex-Commissioner Mandelson!

Climate change is an issue where we can confidently assume that the new president will chart a new course. Take a look at his manifesto on energy and climate change. He espouses emissions trading, wants renewables to provide 25 per cent of energy needs by 2025 and sees further investment in biofuels and new technologies. Nuclear power and energy saving also feature on his wishlist.

Europe should feel comfortable with this agenda, but faces some fundamental challenges of its own, in particular whether it can deliver on the commitments already made, without which its current position of leadership will melt away. The broader challenge is to bring China, India and similar economies more directly into global decisions. Real progress by Europe and the US will be an essential precursor of movement here.

The evolution of US policy towards Russia will be of special interest to Europe, intertwined as it is with the issue of Star Wars missile defence.

Medvedev’s clumsy reference to Russia’s anti-missile missiles in Kaliningrad (or are they anti-anti-missile-missiles?) is hardly likely to change US policy, but I suppose was intended to put pressure on the EU and to drive in deeper any wedge between the US and Europe. After all, Russia already has such armaments in situ. For Polish prime minister Donald Tusk Medvedev’s statement was political and not military.

Obama is a man who will take his time. Once in office he will no doubt weigh up the efficacy of the anti-ballistic missile system, its budgetary cost and its political implications. The Pentagon is asking for $65.5 billion for development at a time of severe budgetary pressures. Any improvements in US-Iran relations would also come into the picture. If there is a change in US policy it will be rationally thought through and set in a wider context than just providing comfort for Russia.

The Europeans are keen to seize the initiative on a reform of global economic management at the November 15 Washington summit and produced a detailed set of proposals when they met in Brussels on November 7.  The current mood in the US will certainly be responsive to tougher regulation, maybe going further than the European Commission, for instance, would want. How far a new president will respond to giving more power to international organisations such as the IMF remains to be seen. Once again the Democratic dominance in Congress will be an important factor.

Finally there are those issues such as the Middle East conflict and the war in Afghanistan. While Europeans hope for a more proactive US role in the peace process they can also expect the new president to demand greater support against Al-Qaeda. This may be the most challenging element in transatlantic relations over what promises to be a period of far-reaching change.

The OSCE seems to have serious doubts about Georgia’s role and there are even suggestions that the conflict was provoked by Vice President Cheney in order to boost McCain’s cause in the US elections.

Rash initiatives by the Georgian government in South Ossetia were almost certainly the trigger for the Russian action, but a trigger which Moscow had long been anticipating. The campaign was surely a far-reaching and thoroughly planned operation to damage the regime of President Mikhail Saakashvili, to assert Russia’s right to dictate political developments in its near abroad and to block NATO expansion in Ukraine and the Caucasus.

The tensions had been building for some time, apparently including a mounting level of cyber attacks on Georgian official websites similar to those previously experienced by Estonia, and reprisals against Russian sites by so-called “hacktivists” who specialise in DDOS – Distributed Denial of Service, where websites are sabotaged by swamping.

It is the scale of Russian actions in Georgia which may prove deeply counter-productive for Moscow. It seems likely to strengthen the US presence in the region and will raise the level of scepticism about Russia’s good faith in its international dealings. It will no doubt give quite a boost for those who wish to build new oil and gas pipelines which bypass Russia. Much will depend on how quickly the Russians withdraw from occupied Georgian territory and engage with OSCE and EU. There is no denying, though, that NATO expansion now looks much more challenging than it was before August 8. European members of the Alliance will have no enthusiasm for extending the guarantees of Article 5 to the Caucasus.

The European Union has acted quickly with its ceasefire proposals, some strong words and convening of a special summit in Brussels, where deep divisions of opinion were papered over and a united Franco-German position carried the day.

Europe is at pains to stress that the EU makes common cause with the Americans, but its rhetoric has been much more cautious. Sanctions have been rejected and dialogue sustained. If President Sarkozy and his colleagues can make real progress in their talks with the Russian leadership, even to the extent of launching a programme to resolve the “frozen conflicts” of South Ossetia and Abkhazia, then that would be a very considerable achievement

Russia needs the EU quite as much as the EU needs Russia, if only to counterbalance and moderate American policies in the region. While keeping the pinch of salt to hand (and remembering the black belt), it’s interesting to see what President Medvedev had to say to Euronews in defending the Russian position and expounding on the EU-Russia relationship.

August is the traditional month for invasions. Foreign politicians are on holiday, much of the harvest has finished and there’s time to consolidate before winter sets in. So this time it was Georgia.

None of us who were around at the time will forget the August day in 1968 when Soviet bloc troops invaded Czechoslovakia to scupper the Prague Spring. On that very evening Mstislav Rostropovich and the USSR Symphony Orchestra gave a deeply moving performance of Dvorak’s cello concerto at a London Promenade Concert – a very poignant memory.

So has nothing changed? Russian troops moved into Georgia on August 8 2008, 40 years almost to a day later. But it’s not at all clear whether this was the launch of a more aggressive Russian foreign policy and reversion to an earlier model, or a justifiable response to Georgian military action in South Ossetia, an echo of the NATO campaign in Kosovo with different characters, as the Russians would claim. Truth is always the victim in these circumstances.

The OSCE seems to have serious reservations about Georgia’s role in the whole affair and there are even suggestions that the conflict was provoked by Vice President Dick Cheney in order to boost McCain’s cause in the US elections.

Rash initiatives by the Georgian government in South Ossetia were almost certainly the trigger for the Russian action, but a trigger which Moscow had long been anticipating. Its campaign was surely a far-reaching and thoroughly planned operation to damage the regime of President Mikhail Saakashvili, to assert Russia’s right to dictate political developments in its near abroad and to block NATO expansion in Ukraine and the Caucasus.

The tensions had been building for some months, apparently including a mounting level of cyber attacks on Georgian official websites similar to those previously experienced by Estonia, followed by reprisals against Russian sites by other so-called “hacktivists” who specialise in DDOS – Distributed Denial of Service, where websites are sabotaged by swamping.

It is the scale of Russian actions which may prove deeply counter-productive for Moscow. It seems likely to strengthen the US presence in the region and will raise the level of scepticism about Russia’s good faith in its international dealings. It will no doubt give quite a boost for those who wish to build new oil and gas pipelines which bypass Russia. Much will depend on how quickly the Russians withdraw from occupied Georgian territory and engage with OSCE and EU. However on NATO membership for Ukraine and Georgia the Russians may well have made their point. To offer NATO protection for these two countries under Article 5 would be to play for very high stakes.

The European Union has acted quickly with its ceasefire proposals, some strong words and convening of a special summit in Brussels, where deep divisions of opinion were papered over and a united Franco-German position carried the day.

Europe is at pains to stress that the EU makes common cause with the Americans, but its rhetoric has been much more cautious. Sanctions have been rejected and dialogue sustained. If President Sarkozy and his colleagues can make real progress in their talks with the Russian leadership, especially to the extent of launching a programme to resolve the “frozen conflicts” of South Ossetia and Abkhazia, then that would be a very considerable achievement

Russia needs the EU quite as much as the EU needs Russia, if only to counterbalance and moderate American policies in the region. While keeping the pinch of salt to hand it’s interesting to see what President Medvedev had to say to Euronews in defending the Russian position and describing Russia’s relationship with the EU.

The surge in world food prices, oil prices at well over $110 a barrel and measures to boost the use of biofuels in the US and Europe are putting policy-makers into crisis mode.
 
It is extraordinary how this situation has taken fire in just a few months and how intertwined the different factors are. A perfect storm, indeed. International organisations warn that the rising cost of food will threaten the stability of nations, especially developing countries. Even for a country like China food inflation is a major threat to the government.  A “silent tsunami” is how the head of the World Food Programme has described the global situation.
 
The European Commission has responded with an increase in emergency food aid, just as it should, but we are witnessing more than a short-term crisis. Commissioner Louis Michel pulled no punches when he spoke to the European Parliament recently. While announcing an increase in EU food aid spending to nearly €300m so far this year, he also warned just how dangerous the international situation was becoming.

The current food price situation focuses attention on the future of the common agricultural policy. You might think that high market prices for cereals (somewhat mitigated by the strength of the euro) would reduce the need to spend European taxpayers’ money on expensive support arrangements for EU agriculture, but that’s not how French farm minister Michel Barnier sees it.
 
For him the present situation proves the need for an expensive protectionist policy. He even urges other countries to follow suit and build their own c.a.p., so everyone would aim for autarkic self-sufficiency. His German counterpart Horst Seehofer is walking in the same direction. On the other hand this particular view was swiftly rebutted by Agriculture Commissioner Mariann Fischer Boel who took a pro-trade stance, just one month before her proposed overhaul of the CAP.
 
Of course agricultural ministers always resist change, but these interventions suggest that longer term moves to review the future of the c.a.p. will run into stiff opposition. We can probably kiss goodbye to any hope of completing the Doha Round before the US elections. Interestingly, Brazil is making tariffs on biofuels a key aspect of its position on Doha.
 
Pressure on the EU biofuels commitment continues to build. Commission President Barroso has asked for an assessment of the impact of biofuel production on food prices and on development. The Commission press room is thick with rumours of division in the college. Some officials are briefing that the 10 per cent commitment for biofuels in transport fuel by 2020 has been sidelined, while others dismiss any such talk.
 
Among member states the British appear to be reconsidering their biofuels commitment after a national 2.5 per cent obligation came into effect. Prime Minister Gordon Brown is concerned that some biofuels do not meet the necessary sustainability criteria and may call for changes in the EU targets.

The fact is that European and American subsidies for biofuels, which were designed to prime the pump until the industry could become viable in its own right, have produced a host of unpredictable and positively absurd consequences.
 
For instance, it seems that a big chunk of Europe’s biofuel industry has been put out of action because of the imports of “splash and dash” biodiesel from the US. All you need is a tanker load of biodiesel, maybe exported from the EU or South America, add 1 per cent of mineral oil, collect a subsidy of €200 per tonne from the US administration and then ship it back to Europe where you collect further subsidy. The EU companies have now lodged a formal anti-subsidy and anti-dumping complaint.
 
The debate over GMOs is going to hot up as well. It takes on a new urgency as world food prices continue to soar and is bound to provoke some intense debate in Commission, Council and in the member states. No doubt there are risks to be analysed and assessed, but I wonder how the arguments against the use of genetically modified crops could stand up in the face of a major world food crisis and massive malnutrition in developing countries.

I see that the corporate status of Volkswagen is in the spotlight again.  Last year the European Court ruled that limitations on voting rights in VW’s statutes infringed EU rules on freedom of capital movement, so the German government has now notified Brussels of proposed legislative changes to satisfy the Court judgment.

For Commissioner Charlie McCreevy these changes are not enough and letters have been exchanged.
 
It’s another of those battles where a member country wants to protect a national champion,  except that in this case the predator is also German: family-owned Porsche AG, which already holds 30.9 per cent of VW’s shares and is determined to push its holding above 50 per cent, which in most companies would mean a takeover. However, the VW law requires an 80 per cent vote in favour to adopt major decisions. That, I suppose, is the sticking point for the Commission.

The German government relinquished its own shareholding some years ago, but the Land of Lower Saxony still holds 20.3 per cent, and is thus able to block any takeover – and resist any moves to transfer the business away from Wolfsburg.
 
So what is Porsche’s interest? To bring all VW and Porsche models as it were into the same corporate garage, ensuring that VW remains German and, by the way, using the fuel-efficient Golfs to balance out the turbo-charged 911s when EU vehicle emission rules are tightened up under climate change legislation.

VW has survived attempts in the past to break up its voting structure, as when former Commissioner Frits Bolkenstein tried to push through a radical takeover directive and had to abandon his objectives in the face of widespread opposition. His successor McCreevy decided last year not to press ahead with one-share-one-vote legislation, but the VW case raises different issues of government control and the Commission is bound to pursue this one.
 
The Commission has another challenge on its plate, which is the bid by Austria’s OMV (30 per cent government owned) for Hungary’s MOL (independent quoted company). The Hungarian parliament last year adopted the so-called Lex MOL, a measure which would allow directors to block a bid for any utility company of national strategic importance.
 
This might seem a simple case of blocking capital movement within the EU, just like the VW case. Mr McCreevy is currently examining the legislation under this heading. But the closer you look, the more complex the issues become, enmeshed in the manoeuvring for control of energy markets across central and south-eastern Europe and the Balkans.

Heaven knows who is on whose side! Russia’s Gazprom was said to support OMV’s bid, and a Russian businessman bought a substantial slice of MOL stock on the Budapest stock exchange last summer which he then obligingly passed to OMV, yet OMV portrays itself as Gazprom’s competitor in the region and supporter of the Nabucco pipeline project, a gas transit route from central Asia through Turkey to Europe which would bypass Russia and offer an alternative to Gazprom’s South Stream pipeline.
 
Nabucco is a favourite project of the EU, as Commissioner Piebalgs has confirmed and is enthusiastically supported by the US, although ironically it would seem to depend on tapping Iranian gas supplies to become viable, which of course does not go down well with the Americans.
 
Needless to say, Russia is no enthusiast for Nabucco, but no doubt delighted that Hungarian prime minister Gyurcsany recently signed an agreement in Moscow supporting the South Stream pipeline – a move which cynics said was designed to boost his pension following defeat in the recent referendum in Hungary, rather in the style of a former German Chancellor who became a Gazprom executive.
 
OMV’s bid was notified to the European Commission under the Merger Regulation in January 2008. An in-depth investigation was announced in March, with a decision currently foreseen for July 22. Separating the economic from the geopolitical aspects of this case will be no easy task for the Commission’s competition team and you can be sure that colleagues from DGs for energy and external relations will have plenty to say.

Europe is once again facing an external crisis which will require the most skilful handling. It concerns the future of Kosovo, seedbed of the Balkan wars some 15 years ago. On November 17 a general election in the province reinforced the demand for independence – unilateral if necessary. December 10 is the deadline for the international community to take a decision on the province’s future.

The conflicts of the early 1990s in the wake of Yugoslavia’s collapse remain an awful memory, an indictment of Europe’s inability to deal with a major crisis on its own doorstep. Some 100,000 people were killed and millions displaced. Those TV reports from Mostar, Sarajevo and Srebrenica will stay long in the memory. How could we let it all happen, and be so impotent?

It was only the intervention of the United States which ultimately brought a kind of peace to the region, culminating in the NATO action against Milosevic for his programme of ethnic cleansing of the Kosovar Albanians.

Europe has responded to the challenge. I believe that the EU can take much of the credit for bringing stability to the region over last 10 years. It has deployed its economic and peace-making capabilities effectively, has shepherded Macedonia (sorry, FYROM) through threats of civil war and has used the prospect of partnership and ultimately EU membership to bring about political and social change across the region.

But the forces which drive politics in the Balkans are dark and deep. Serbs will tell you that Kosovo is to them what Jerusalem is to the Jews. For them any prospect of Kosovo independence brings talk of war, while in Kosovo itself there are threats that the guns will come out if independence is not granted.

The US favours independence, while the Russians are fiercely defending the Serb position and demand a UN solution (where they have a veto). Can the Europeans stand together in their positioning? They have made a commitment to do so, but clearly there are differences of opinion. The Brits and French may recognise an independent Kosovo, but others are worried about what their own ethnic minorities might be tempted to do. How about the Turks in Cyprus, the Albanians in Greece or the Basques?

A proposal from the EU envoy for Kosovo, Wolfgang Ischinger, that a decision on the status of Kosovo should be shelved, has received short shrift from both sides.

It seems that the Commission is playing the partnership/membership card as strongly as it can. Commissioner Olli Rehn signed a Stabilisation and Association Agreement with Serbia on November 7, with its promise of financial assistance and closer links with EU on the path to membership. This could be ratified by member countries in January, but one can imagine certain delays if the Serbian government kicks up rough over Kosovo.

Russian President Putin is the hero of many Serbs, who see him as their champion over the Kosovo issue, some even hoping that the Russians would consider military intervention on their behalf. As Putin increases the rhetoric and employs gestures such as the stand-off on over-flying of Siberia to demonstrate that Russia is a great power again, Balkans policy will be a here-and-now indicator of his real thinking.

I must say, the future of energy supply is an escalating issue in EU-Russia relations, especially in light of the reciprocity provisions in the latest energy proposals. The Commission reckons that half of Europe’s gas will come from Russia by 2030 – double the current proportion, while state-owned Gazprom is looking for partners like Eon to strengthen its position in the European market. A fascinating study by Capgemini warns of trouble ahead.

We talk as if Russia holds all the cards on energy supply, but I was struck by estimates indicating that without massive new investment Russian oil production would begin to decline as from about 2015 while domestic demand is continuing to grow. So where is the investment to come from? This will surely be a key factor in the future of EU-Russia relations.

Kosovo is NOW. Turkish membership is a much longer game. I must say, the Commission’s autumn report on Turkey’s progress to membership is more positive than we had been led to expect. There is recognition of the way in which the Turkish army’s threatened intervention had been handled and the integrity of the July elections, as well as the continued growth of the economy, which has been so impressive.

The Commission is playing a difficult hand, trying the keep the show on the road while acknowledging the political reluctance in many member states to see Turkey as an EU member.

Olli Rehn is forthright in defending membership. Quite right too. Turkey has transformed itself over many decades in preparing for EU membership, while for the EU having an Islamic state as a member will be of profound importance in relating to the rest of the Moslem world and a rejection of the Clash of Civilisations postulated by Huntingdon.

A big concern for the Commission is that the Turks themselves will turn against membership, frustrated by the negative messages from those like President Sarkozy, who is now proposing a group of Wise Men to map the way ahead for Europe. See this interview with Turkish Secretary General for EU Affairs Mustafa Oguz Demiralp for more.

Just a word on the 2004 enlargement, which was a key justification for the revision of the treaties because it was assumed that an EU of 27 would require new mechanisms to work efficiently. But maybe not: Helen Wallace’s recent analysis of the impact of enlargement on EU policy-making indicates that the Nice formula has worked rather well since 2004. Far from creating gridlock, she says, it has been business as usual.

European governments may have abandoned state ownership as a way to control Lenin’s “commanding heights of the economy”, but that certainly doesn’t mean that the politicians no longer want to exercise control.

Some of the fiercest tensions between the Commission and member states and between the member states themselves increasingly reflect a determination to keep a national flag flying and to wield a degree of political influence which amounts to control, especially in so-called national strategic sectors. All the signs are that the Commission is finding it increasingly hard to prevent isolated incidents from becoming a trend.

Latest manifestation of these tensions concerns the bid by Austria’s energy company OMV (30 per cent state-owned) for MOL, the fully privatised Hungarian operator.

Old feelings die hard. It may be nearly 90 years since the break-up of the Austro-Hungarian Empire, but I note that Austria is still described in press reports as “the former imperial power” as the Hungarian government puts through a new law which would make it easier for company directors to block any takeover of MOL (or any other Hungarian company). There’s more than economics at stake here!

Budapest stresses that it does not want to contravene European law, but the Commission has threatened legal action.

You have to sympathise with this relatively new member state in the light of what Old Europe is up to. I’m thinking of the French declaration on its strategic sectors, the machinations to thwart the bid from Endesa which produced the merger between Gaz de France and Suez and the denunciation of European competition policy by President Sarkozy at the June summit.

The draft changes demanded by Sarkozy in the Reform Treaty relegates the stated purpose of competition policy from a Treaty article to a protocol.

Michel Petite, who heads the Commission’s Legal Service, argued at the time that this would make no practical difference, but for Dr Alan Riley in a CEPS brief (and for the French President!) it could have profound consequences, particularly relating to control of state aid.

Economic patriotism is the name of the game. Whether it produces greater efficiency is highly doubtful. Will the householder enjoy a more consumer-friendly service from his “national champion” energy supplier? It would be nice to think so, but I suspect it will mean even more frustration as one struggles through the multiple layers of automated telephone answering systems trying to find an actual person to arrange an appointment, only to be told after navigating six layers of digits – to call back later.

Defence of national interest has been the bugbear of EADS. It did look in July as if a fair deal  had been agreed between France and Germany to streamline the leadership of the company, but the firm now faces a potentially destructive crisis over insider trading which would appear to have strong political overtones.

The Galileo project is another sad story. A Public Private Partnership, bringing together a European aerospace consortium to fund development of a world-beating global positioning system was an exciting concept.

Europe’s aerospace industry has never been slow to complain about its weakness vis à vis US competition, but when given the chance to take the initiative it fails to grasp it. Every company wants a bigger share of the spoils and so the project becomes another victim of economic nationalism. The Commission now proposes funding from the EU budget, drawing on the savings from reduced spending on agricultural support.

To return to the subject of corporate control, I see that Charley McCreevy has abandoned his campaign for one-share one-vote in company governance, which triggers distant memories. As I recall there were two issues which really aggravated Frits Bolkestein during his term as Internal Market Commissioner in the Prodi Commission. One was the prospect of Turkish EU membership; the second was the rejection of one-share one-vote under the takeover directive.

But shareholder democracy is a rare and fragile fruit, and Commissioner McCreevy has decided that discretion is the better part of valour.

Credit to McCreevy and his team where it’s due, for piloting through the financial services action plan over the last few years. This programme is transforming the nature of the European market and hugely strengthening the global position of its financial services industry. November 1 marks the introduction of the new framework for investment services across Europe – the MiFid. It is an impressive outcome for collaborative policy-making between EU bodies, governments, regulators and industry.

So working together can sometimes yield very significant results.

What relief among EU competition officials when, on September 17, the European Court of First Instance upheld the Commission’s decisions on the Microsoft case!

I know the case could still be appealed to the full European Court, but I’m sure that for Commissioner Neelie Kroes it was a major boost just when she needed it – on the eve of proposals for liberalising Europe’s energy market.

The Microsoft judgment was crucial for the European Commission as a whole. Defeat at the hands of the CFI on such a major case would have undermined the Commission’s overall credibility, because competition policy has become the main driver of European internal market policy.  As the number of new proposals from the European Commission falls to an all-time low in the service of “better regulation”, so a bigger burden falls on the instruments of implementation and enforcement, especially competition policy.

The fundamentals of the case take us back to the 1984 IBM affair, when a European competition ruling required the firm to provide interoperability information to rivals on product attachments, computer memory and software and the personal computer revolution was launched. Commissioner Kroes anticipates equally dramatic results from this latest ruling. We’ll see.

That’s certainly not how US Assistant Attorney General Thomas Barnett sees it. He said the judgment could “chill innovation and discourage competition” – a rather extraordinary intervention, not so much for what he said, as that he said anything at all, given the close relationship between EU and US competition authorities.

I was glad to see that Neelie Kroes responded to his remarks in her customary forthright manner.

The energy package, with its proposals for separating ownership of gas and electricity networks from generation and supply, was adopted two days after the CFI judgment. It was the outcome of a long process of consultation and political arm-wrestling. The battle lines had long been drawn, with Germany and France particularly resistant to the sort of changes which the Commission wanted.

I suppose much of the package was as expected, with the Commission’s favoured option of ownership unbundling side by side with the less-favoured accountant’s solution of independent system operator (ISO), where vertically integrated companies would survive, allowing the regulator and not the market to ensure the separation of their various activities. The response of the market players was much as expected as well – see the FH analysis.

A bigger surprise to me was the proposed Agency for the Co-operation of National Energy Regulators “with binding decision powers” –  ACER. This body would be a reborn version of the EU networks of national regulators which have become increasingly important as the Union has expanded.  These networks have a special role where the Commission seeks to ensure consistent implementation of European rules across 27 member countries in sectors such as competition policy, financial services, telecoms and energy.

From the Commission’s point of view the key to the success of each network is that the 27 member bodies in effect switch their loyalties. They should no longer act at the behest of their national political masters; their task becomes the objective implementation of European law. This of course is no easy task.

The EU networks of regulators for gas and electricity markets have not always distinguished themselves by their independence of national governments (the Spanish electricity regulator springs to mind), so the Commission is seeking a half-way house which sets up a body with regulatory powers without trying to subsume national regulators into a single European regulator.

It seems that Commissioner Viviane Reding is facing a similar challenge with her draft telecoms package. According to the FT she is facing fierce opposition from Commissioners Kroes and Verheugen for advocating an EU telecoms regulator and “functional separation” for dominant telecoms operators which looks much like the ISO energy model.

My guess is that this formula is seen to threaten the role of competition policy in the European telecoms market. I recall the current Competition Director General telling a Brussels conference that maybe regulation was the enemy of competition.

Let’s not write off Commissioner Reding’s political capabilities. It was she who proposed the Eurotariff for mobile roaming and has pushed through new EU tariff structures in the face of fierce lobbying from the mobile phone industry and opposition from other Commissioners.

As for the new energy package, it’s interesting that the impact assessment is the biggest document – 107 pages. Its analysis concludes that the proposals put forward by the Commission are the best options. You could paraphrase Mandy Rice-Davies, “well it would, wouldn’t it”, because there is criticism that EC impact assessments are not sufficiently independent of the Commission, but if the Commission is doing its job properly surely its own internal analysis should reflect the same conclusions as the published assessment.

Talking of better regulation, it seems that the Barroso Commission is finding it just as difficult to withdraw proposals or to modify them in a de-regulatory direction as it ever was to introduce the legislation in the first place.

For instance a proposal to reduce record-keeping on hygiene practices for small bakers, butchers and grocery shops ran into opposition from the big operators. Although it would not affect the level of sanitary protection, they thought it would undermine competition.

The affair of the Chinese toys was a bit different. In this case the Commission proposal would reduce checks on imports of industrial products but not of consumer goods. The Council of Ministers went one further, going for the light touch on consumer products as well. Commissioner Meglena Kuneva has been fighting a rearguard action in the Parliament to reverse this, with the scandal of Chinese toy imports still running strong. It is a reminder that consumer protection was always a major driver of new legislation.

A brief digression to the UK: I see that the Dutch cabinet has decided not to hold a referendum on the EU Treaty. This is a blow to David Cameron’s campaign for a vote on the Treaty in the UK. It always looked as if the Tory leader was using his policy on Europe – including the order for the Conservative Group to sail off to a desert island – as a lightning conductor to divert right-wing disaffection within the party away from new-look domestic policies.

The Conservatives’ policy on Europe should spike UKIP’s guns if there is an early general election in Britain. But what if an EU Treaty is adopted and ratified by the end of 2008: what home then for the Tory disaffected?