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Tough home truths in IMF report

Tuesday, June 8th, 2010

It was evident from the beginning of the eurozone crisis that the only way to discipline recalcitrant member states in the face of enormous budget deficits was to involve the International Monetary Fund, an independent, external organization which was definitely not part of the family, a body which could lay down tough conditions for winning its support, and could pull the rug out if necessary.

So it was little surprise to see the forthright tone of the IMF team when they left Luxembourg on June 7, having completed their analysis of the situation. Their report makes quite a contrast to the gentle reassurances of the eurozone ministers at their meeting on the same day.

The IMF report doesn’t mince its words. It may be familiar language for failing economies in Latin America, but for the eurozone! Take a few phrases: “Policies need to move urgently from crisis management to fundamental reforms”, “strengthen economic governance of EMU” “longstanding problem of anaemic growth in the euro area must now be addressed”, “the euro area fiscal framework needs to be substantially strengthened”, “more ambitious changes are needed”. And so on, with detail. The fundamental theme is that European countries must transform their economies, slash government spending and drive for economic growth.

The eurozone ministers did formally launch the €440bn European Financial Stability Facility at their June 7 meeting, but that’s definitely “crisis management”. The EFSF has been established as a limited company under Luxembourg law and will work in conjunction with the IMF to guarantee support for eurozone members if their credit position should weaken.

The question still remains as to what the eurozone can do to strengthen its effectiveness and meet at least some of those IMF demands. An intriguing game of smoke and mirrors has been played since the Special Purpose Vehicle and the associated IMF support were announced on May 9, a game designed to convince the markets that Europe is getting a grip of its profound economic crisis. The reality is that everyone has a different idea of what needs to be done and what can be done in the longer term.

Economic government for the eurozone. That’s the catch phrase. President Van Rompuy has used it, French Economy Minister Christine Lagarde has used it and Chancellor Angela Merkel has almost used it – “economic governance” is the closest she has come (also a phrase used by the IMF). President Sarkozy has spoken of a Eurozone Council. But a closer look at how it would work reveals something like a beefed-up version of what already exists.

The argument that a European single currency can only survive if there exists a common economic policy, common fiscal policy and common budget policy may prove to be correct in the long run, but it is clear that this is not what Europe’s present leaders mean when they talk of economic government.

France wants a formal decision-making structure where heads of state and government agree on fiscal discipline and maybe impose sanctions on recalcitrant member countries. Germany in effect argues for a stronger commitment to the stability and growth pact (and has announced budget cuts of €30bn over the next four years to do its part). Luxembourg Prime Minister Jean-Claude Juncker, president of the eurozone group of countries, believes that eurozone governments should vet each other’s budget plans. But nobody contemplates the transfer of fundamental tools of economic management to a supranational European policy-maker. Maybe the IMF is a different matter?

So what of the euro crisis? At least the decline of the euro is seen as a positive, making European goods more competitive and – perhaps – boosting domestic demand within the crucial German economy. What is also evident is an increased determination to cut government spending sooner rather than later, reflected in the G-20 meeting. And of course these are not challenges faced only by the eurozone; the UK’s new coalition government has a massive challenge ahead in reducing spending and boosting growth. A poisoned chalice indeed!

Posted in European politics, Eurozone, Finance | No Comments »

Concerted action replaces platitudes and empty promises

Monday, May 10th, 2010

The markets have been bowled over by the scale of the eurozone bail-out package announced this morning, after agreement by G-7 finance ministers, the ECB, the European Commission, the 16 eurozone governments and the International Monetary Fund. An emergency funding facility of up to €720 billion is designed to protect weaker eurozone members and save the integrity of the euro. At last the swathe of platitudes, reassurances and empty promises which have characterised the year to date has been replaced by concerted action.

The package is a dramatic reminder of the inter-relationships between global economies. Last week we seemed on the brink of a new Lehman-style banking crisis, this time created in the land of the euro but spreading across the world. Inter-bank lending threatened to dry up at the prospect of Greece defaulting, with banks across Europe and beyond hit by the consequent loss of confidence – especially those with substantial holdings of Greek bonds.

The ECB, the IMF, the US Federal Reserve and other central banks are all implicated in the measures to improve liquidity.

The IMF has now become a full partner in the support mechanisms for the eurozone – not a partner much welcomed by those purists who wanted to keep eurozone troubles within the family, but a better agent for enforcing disciplines than the European Commission or the Council of Ministers could ever be. The Fund will provide up to €220 billion of the new facility – one-third of the total, as in the deal to support Greece.

The fact that a possible contender for the French presidency now heads the IMF adds an extra frisson of interest. Dominique Strauss-Kahn and Nicolas Sarkozy are not the best of friends.

For Chancellor Merkel it was a particularly tough weekend. She had hoped to delay any commitments at least until after the elections in North Rhine Westphalia, but the scale and urgency of the crisis and the impact of a Greek default on many German banks made immediate action vital. NRW took its revenge, voting out the CDU – FDP coalition.

As usual it’s the “speculators” who are fingered as the guilty parties for driving down the euro and threatening contagion for Spain, Portugal and others. It’s an easy cop-out to shift the blame for political and economic failure to the malign forces of what former British prime minister Harold Wilson called “the gnomes of Zurich” when the pound was forced to devalue in the 1960s. T’was ever thus.

The waves from the eurozone storm hit Britain’s shores with some force. It was not the prospect of a hung parliament which drove down the London stock market last week, but fears that the Greek crisis would shatter the UK’s recovery prospects. As soon as the stability package was announced this morning, London share prices shot up by three per cent.

The prospect of a coalition government for Britain grows by the hour. It would be the first real coalition since Churchill’s wartime government was dissolved in 1945, but a likely outcome given the Conservatives’ failure to win an outright majority. The Conservatives took 306 seats in Parliament, 20 short of a clear majority, with Labour at 258 and the Liberals at 57.

On May 8 the Conservatives’ David Cameron formally invited the Liberal Democrats to join him in government. It may prove to be a watershed of historic proportions. That is if the Lib Dems dare to take the plunge and if there is enough flexibility on the Conservative side. Talks between Cameron and the Lib Dems’ Nick Clegg have been under way all weekend. Early indications are that agreement would concentrate on measures to tackle the massive UK budget deficit, but would include enough common policies to create a coalition fit for at least two years of stable government. The future of the voting system may be the most intractable issue.

For Nick Clegg, leader of the Lib Dems, the outcome of the British general election was the stuff of dreams, even if it began with disappointment at losing parliamentary seats when all the opinion polls suggested a surge in support. At least Clegg can take the credit for changing the game, for stimulating interest and boosting turnout. The cynicism which many of us thought would sour the elections and cut participation was swept away in a much more positive electoral picture.

Britain’s EU policy seems unlikely to be a major problem in formation of a Conservative – Lib Dem coalition. Although the rhetoric on Europe is different the practical obstacles seem to me to be minimal. Certainly Clegg could not hope to take the foreign affairs job in a coalition government, but no major EU decisions are imminent to upset any partnership. The failure of the UK Independence Party to secure more than 4 per cent of the national vote has probably justified Cameron’s euro-sceptic tone. It may well have seen off europhobia as a major force in British politics.

Posted in Elections, European politics, Eurozone, Finance, UK politics | No Comments »

Ten year strategy must be blueprint for change

Sunday, January 10th, 2010

In his first major initiative since taking up his new role on January 1 2010, European Council president Herman Van Rompuy has convened a summit for February 11 to prepare for the 2020 Strategy, a ten year programme for creating a more competitive Europe. But can these plans really achieve anything? Only if they lay the groundwork for far-reaching change and adaptation.

It was of course the 2000 Lisbon Agenda which set out the first Ten Year Plan for the economic regeneration of the European Union. Who can forget the famous hostage to fortune, that Europe should become the world’s most competitive and dynamic knowledge-based economy by 2010?

The Lisbon Agenda was a creature of its time. The millennium dot-com boom was still booming, the digital revolution was expected to transform society. There was much talk of a new paradigm. Just as soaring stock markets ignored traditional industries in favour of the new, so the Lisbon Agenda envisaged old industries giving way to a new economy of high-tech research-based business creating employment and opening unbounded opportunities for the people.

It was not to be. The collapse of the dot-com dream was a disastrous start for Lisbon. The anticipated growth in output and jobs from the “new economy” proved an illusion. The industries which were expected to deliver a new world foundered in mountains of debt and disillusionment. No surprise then that all those early hopes were dashed.

Yet by the start of 2008 Europe’s economy had picked up. Enlargement had given a great boost and there were signs that governments were bringing more flexibility to their economies, for instance on tax policy and entrepreneurship, where the Lisbon process encouraged many member states to facilitate the creation and expansion of small firms.

Employment participation had gone up from 62.2 per cent of the potential workforce to 65.9 per cent, not yet to the 70 per cent Lisbon target, but certainly an improvement. The growth rate was improving, at 3.2 per cent in 2006 and 2.9 per cent in 2007 – compared with the 3 per cent Lisbon aim.

EU policy-making had made progress too, opening up sectors like telecoms and financial services. The new technologies had become deeply entrenched in traditional industries.

Then came the banking crisis. Collapsing output and rising unemployment have been the consequence and it is clear that the Lisbon targets have been hopelessly missed. Growth slumped to 0.8 per cent in 2008. Economic prospects for 2010 and 2011 look pretty gloomy.

So can Ten Year Plans really achieve anything? I see that Spanish prime minister José Luis Rodriguez Zapatero believes the Lisbon Agenda to be too soft. He wants the adoption of new policies which are binding on the member states, with power for the European Commission to penalise countries which fail to apply them.

This is tough talk, which would be linked with a formalised European economic policy, maybe beginning within the Euro Group. President Sarkozy is a keen supporter of this approach. Angela Merkel is definitely not. It contrasts with the soft policy philosophy of Lisbon which relied on peer pressure, search for best practice and an emphasis on opening up markets and stimulating research.

There is no doubting the challenge which Europe faces as it emerges from the recession. It strikes me that the biggest priority for a 2020 Strategy is to spell out the need for change and identify the hard choices for achieving it. Wealth creation must be the absolute priority. Europe’s industries face huge competitive pressures from countries like China and India at the same time that public spending faces increasing demands from an ageing population. It won’t be easy to find common ground. A good test for Mr Van Rompuy indeed!

Posted in Competition, Digital, European politics, Eurozone, Finance, Telecoms | No Comments »

Shock: British journalist praises Barnier

Tuesday, December 8th, 2009

At last a touch of balance in Britain’s Daily Telegraph over the nomination of Michel Barnier to the internal market portfolio, with responsibility for financial services! I guess it’s no coincidence that the writer, eurosceptic Ambrose Evans-Pritchard, was the newspaper’s correspondent in Brussels from 1999 until 2004 – the same time span as Barnier’s former term as commissioner. No doubt he has personal experience of the Frenchman’s qualities.

I mention this in the context of the furore over recent months concerning EU appointments, linked in the UK with the debate over financial services regulatory reform and the perceived threats to the City of London. Maybe the frenetic atmosphere is beginning to disperse.

It certainly didn’t help when President Sarkozy told Le Monde that the English were “the big losers in this business”, although the wave of aggression whipped up in sections of the British press over Van Rompuy, Ashton and the Commission nominees was quite a provocation, to say nothing of prime minister Brown’s own trumpeting of the Ashton appointment as a national victory in response to Conservative criticism.

It’s just as well that Sarkozy’s plan for a reassuring joint visit to London with Barnier was knocked on the head. It really would have looked like a French conspiracy.

Barnier has been calming things down. His job, he says, is to strengthen Europe’s financial centres, including London. The fears which had been expressed in the City of London were “very exaggerated”.

There has however been a shift in the political mood which is reflected in the composition of the new Commission. The three key economic portfolios – internal market, competition and industry – go to the Club Med with commissioners from France, Spain and Italy. Free markets, raw in tooth and claw, will not be the flavour of the next five years. The drive is clearly for more regulation, especially in financial services, regulation which has to operate at a European level. That’s no surprise, given that the near-collapse of the global banking system did have Anglo-Saxon origins.

An economic double-dip with more lost jobs would put further pressure on EU policy-makers. The challenge for the Barroso II Commission is to maintain progress in the single market, to stimulate business activity, so helping drag Europe out of recession, and to continue the liberalisation of sectors like energy and telecoms. The nominated energy commissioner, Günter Oettinger, may have the most challenging role, given the problems which German firms have with the gas and electricity packages. Neelie Kroes, on the other hand, should be in her element with the “digital agenda”.

As for financial services, the Council of Ministers and the Parliament are of course working on proposals for financial regulation which also date from the outgoing Commission – the legacy of Charlie McCreevy. These include the establishment of the European Systemic Risk Board managed by the ECB and the three European supervisory bodies for banking, insurance and investment services.

There is some progress on these dossiers. It seems that ministers last week agreed that the powers of the three supervisory bodies will be circumscribed, allowing appeal to the Council by a member state which believes its sovereignty is being infringed. MEPs have yet to discuss these proposals.

Meanwhile the treatment of hedge funds and private equity remains a highly contentious issue which may run well into next year – perhaps beyond a British general election, which some rumours suggest could be in March 2010.

Posted in Digital, Elections, Energy, European politics, Finance, Treaty of Lisbon, UK politics | No Comments »

EU appointments: visionaries need not apply

Sunday, November 22nd, 2009

We live in the age of media celebrity. So no surprise at the critical and sometimes bitter press reaction to the nomination of Herman Van Rompuy and Catherine Ashton, virtually unknown beyond their own parishes, as Council President and High Representative respectively. As someone said, it was like a TV talent show where the choice of the people (and the press) was ignored by the judges. If only we’d been able to phone in!

I guess there are two kinds of disappointment: from those who were seeking charismatic European leadership to force the pace of change and talk face to face with other world leaders; and from those like UKIP who wanted appointment of a powerful figure like Tony Blair to demonstrate that the feared “European Superstate” really had been born. Two sides of the same coin, in fact.

It does at first sight seem a sad reflection on the EU’s lack of ambition that it should choose people with relatively little experience at the highest level of international affairs.

The reality is somewhat different though. This is a period of consolidation. Visionaries need not apply. The European Council was looking for a president who could provide continuity in the management of its business, escape from the six-monthly presidential rotation (although that will still apply for the specialist councils) and build longer term relationships on the international stage. By all accounts Van Rompuy seems well suited to this chairmanship role. His term as Belgian prime minister certainly demonstrated considerable political skills.

It strikes me that creation of the European External Action Service led by the High Representative could be much more far-reaching in its impact than the presidential appointment. Catherine Ashton will have a formidable task, but one with great potential – to “conduct” the Union’s common foreign and security policy and defence policy, making new proposals for policy development and carrying out the Council’s mandate. She will both chair the Foreign Affairs Council and sit as vice president in Commission meetings.

She has to create a European diplomatic service bringing together up to 6,000 officials from the Commission, Council and member states, which for the first time will integrate the Commission’s capabilities with the foreign affairs decisions of the Council, so the trade, aid and substantial budget resources of the Commission can be used to leverage the Council’s policy ambitions. A joined-up European foreign policy at last!

Who knows whether this institutional change will transform Europe’s role in the world as it should, using the soft power policies implemented by the Commission to achieve broader political goals and moving beyond foreign-policy-by-press-release (with all respect to the great efforts made by Solana).

Let’s take one region – the Middle East. The European Commission has for years provided the funding to keep the Palestinian Authority alive, yet the Council has developed no coherent political strategy, for instance on the recognition of Hamas after its success in the Gaza elections and the question of Jewish settlements. It’s time that Europe became an equal partner of the United States in such issues.

There is a host of areas where a stronger EU policy must be developed if Europe’s influence in the world is not to decline further in the face of major shifts in economic and political power across the globe. There is need for a European voice in NATO, much stronger co-ordination of policy within the United Nations and other international organisations and coherent European policies towards China, Russia and others.

In other words there is huge amount for Rompuy and Ashton to do, but they will only make progress if the member states accept the need for a concerted EU approach to the external problems which the Union faces and are willing to toughen up policy vis a vis the rest of the world.

Posted in Defence, European politics, International, Treaty of Lisbon | No Comments »

Conservative realpolitik after Lisbon

Friday, November 6th, 2009

With the final ratification of the Lisbon Treaty the British Conservatives have set out the policy which an incoming Conservative government would apply towards the European Union. There is to be no referendum, but a series of legislative measures to limit the extent of EU jurisdiction, and negotiations to take employment and social policy law back into national hands.

Political expediency – or perhaps we should say realpolitik – has been the hallmark of Conservative policy on Europe since David Cameron became leader of the Tory party in 2005. His overriding priority has been to hold his party together at a time when it is adopting domestic policies which belong to the centre ground of British politics, whether on public services, climate change, poverty, equality or infrastructure spending – respectable policies for any European centre-right party.

An aggressive stance on Europe has given satisfaction to those eurosceptic sections of the party which might otherwise have caused real trouble over Cameron’s leftwards policy shift on domestic issues. What’s more, the refusal of Blair, then Brown, to hold a referendum despite earlier promises has been a mighty stick to beat the Labour Government.

Cameron’s policy has also comforted those sections of the British press which have consistently attacked British membership of the EU.

Ratification of the treaty has obliged Cameron to find a formula for future Conservative policy consistent with past commitments, tough enough to keep the eurosceptics on board, but not giving too many hostages to fortune for any incoming Conservative government.

There is no point in being too negative about Cameron’s post-ratification approach (although the scathing comments of France’s Europe minister Pierre Lellouche might be quite helpful in suggesting to the sceptics that battle will be joined!).

Party unity is as vital as ever for the Conservatives. A general election must be held by the end of June 2010 and the opinion polls currently promise a reasonable Conservative majority, provided the party can remain united. The great fear is that smaller parties will top-slice the Tory vote, giving success to avowedly anti-European parties like the UK Independence Party (UKIP) or the British National Party (BNP). This could mean a smaller majority, and even a hung Parliament, which would certainly please the Liberal Democrats and the minority parties if it gave them the balance of power.

A thin majority was the nightmare of former Conservative leader John Major in the 1990s and even drove him to resignation and re-election to resist the eurosceptic wing of his own party. Cameron wants no repeat of that.

So how damaging would Cameron’s new policy be for relations between a Conservative government and its partners in the European Union? There is a commitment to hold a referendum on any major new treaty, which mirrors Irish legislation, and also before any adoption of the euro. A law is promised to assert UK sovereignty, but this would not compromise the supremacy of European law and parallels existing powers of the German constitutional court. The commitment to “repatriate” employment law looks the most difficult part of Cameron’s package: perhaps surprisingly British employers’ organisations have greeted this with no great show of enthusiasm.

Withdrawal of the Conservative MEPs from the EPP is the one decision which has already caused major damage to Cameron’s future relations with other European leaders. This will require a major repair operation if a Tory government is to achieve its aims in Europe.

Meanwhile European diplomatic channels are humming as the candidates for President of the Council and the High Representative for Foreign Affairs are analysed and assessed. It’s getting close to decision time, and it looks as if Blair’s name for president has faded away.

At the same time the British foreign secretary David Miliband is still getting strong support for the High Representative role, not least from the European Commission, which sees him as the ideal person to set up and run the European External Action Service which I discussed in my last blog. Miliband is also the candidate of the European Parliament’s socialist group. Miliband himself says that he is not taking the job, but we’ll see. He is only one of several potential successors to Gordon Brown in the event of a Labour defeat in the spring, and who wants to spend four or five years in opposition?

Posted in Elections, European politics, International, Treaty of Lisbon, UK politics | No Comments »

Leadership needed for Europe’s foreign policy

Monday, October 19th, 2009

A fundamental purpose of the Treaty of Lisbon is to make the European Union an effective force in the modern world, a global player with a power and influence far greater than the sum of its parts. The appointment of a High Representative bestriding Commission and Council, served by the European External Action Service (EEAS), is designed to provide the institutional framework to achieve this aim, in conjunction with the new Council President.

But will the member states appoint people capable of fulfilling such high ambitions? and how much power will governments be willing to concede in making the new system work? In particular how will, say, France and the United Kingdom approach the challenge, given their highly active foreign service and foreign policy traditions? Remember President Sarkozy and Georgia? Who will speak for Europe in the future?

The rumour mill is working overtime as we await the Klaus signature on the Treaty. The Council President could be an effective bureaucrat or a political driver, male or female, from big country or small. Ireland’s Mary Robinson is one possibility for the presidential job. Tony Blair? I don’t think so, given the UK’s absence from the euro, Schengen etc and Blair’s record with Bush. The Netherlands’ Balkenende could run strongly for the High Representative job. It’s fun to speculate, but no one seems to have any real idea.

It does matter who gets the job of High Representative for Foreign Affairs and Security Policy. The external relations aspects of the Treaty imply far-reaching change within the EU institutions. Over the next two or three years thousands of officials will be brought together from the Council Secretariat, from the external services of the Commission and from the member states to form the EEAS, a separate entity to handle the EU’s relations with the outside world. Great leadership qualities will be essential to build an effective service.

There will be some fierce institutional battles before there are any diplomatic ones. On Thursday October 22 MEPs will vote on the Elmar Brok report which outlines the parliamentary view of the EEAS and insists that the service should be clearly affiliated to the Commission and funded from its budget. This would give Parliament a direct say which it would be denied if EEAS and its funding were to be hived off to the Council. ALDE member Andrew Duff warns of a block on the new Commission appointments if the EP does not get its way. So it’s clear that the institutional wrangling is by no means over.

The scale of the changes ahead is considerable. It seems that more than 5,000 people could be transferred from the Commission alone – a fifth of its total complement. They may continue to work in the building where they are now, probably the Charlemagne, but they will no longer be Commission officials (although remaining EU officials). Trade, development and enlargement will remain the Commission’s direct responsibility, but even these departments will be expected to work closely with EEAS.

The European Commission’s 125 or so delegations across the world, plus the Council’s liaison offices, will become European Union embassies, with responsibility for co-ordinating and implementing European policies in their territory. Up to now it has been the embassy of the member state holding the Council Presidency which had this role (or a caretaker embassy in the absence of a national representation). Many officials of the EEAS will be recruited as “temporary agents” from national governments, to serve in the representations and in Brussels.

I gather that the Swedish presidency, COREPER ambassadors in Brussels and the Commission are working intensively to work out the appropriate structure for EEAS. It will then be up to the High Representative, once appointed, to make a formal proposal to the Council in consultation with MEPs and with the “consent” of the Commission as to how the new organisation will function. It looks as if the HR/VP will be appointed before the new Commission has taken over, in which case the current commissioner from that country would stand down. Whoever takes the post will have a formidable task ahead.

Posted in Defence, European politics, Integration, International, Trade, Treaty of Lisbon | No Comments »

Irish vote launches the Lisbon end-game

Monday, October 5th, 2009

It looks like end-game for the Lisbon Treaty at last. Ireland’s two-to-one majority in favour of ratification on October 2 was a convincing reversal of the 2007 “no” vote, especially given the increased turnout, which at 58 per cent of the electorate was six points up on last time.

The convincing “yes” majority can be ascribed especially to the economic crisis and a hunger for European solidarity in the face of Ireland’s troubles, but there were other factors, including strong leadership of the campaign by former European Parliament president Pat Cox, the specific reassurances given on sensitive subjects such as abortion, tax and defence policy, and the promise to guarantee a Commissioner for every country as from 2014.

There’s even a chance that the Treaty could come into force at the start of 2010. The Polish president may well sign within the next few days, so foreign minister Radoslaw Sikorski told the BBC over the weekend.

The Czechs await a ruling from their constitutional court on questions posed by Czech senators before President Václav Klaus will sign – although it seems that the Court did already give its seal of approval in November 2008 in response to a similar reference. The Czech Europe minister is pushing for ratification before the end of the year.

Once the Court has pronounced there is a suggestion that Klaus could declare himself indisposed for 24 hours to allow his temporary replacement to put a presidential signature to the Lisbon document.

The Irish referendum result couldn’t have come at a worse time for the British Conservative leader David Cameron, just as his party conference begins. Party unity is vital in the run-up to a general election and there’s no subject like Europe to reveal the fault lines. Cameron has apparently written to Klaus, in effect urging him to delay ratification (while rejecting any “interference” in the Czech ratification process!) to give time for an incoming Conservative administration to hold a referendum.

Be careful what you wish for! The Scottish National Party is planning a referendum on Scotland’s separation from the UK. Given Scotland’s general enthusiasm for EU membership a United Kingdom vote on Europe could give quite a boost to the nationalist cause. One referendum could beget another.

Everyone is now asking Cameron whether he will still hold a referendum if the Treaty has been ratified and implemented by the time of a general election, which must be held by June 2010 at the latest. The eurosceptic wing of his party is angrily demanding a vote whether or not the Treaty has been ratified. Klaus however remarked after the Irish vote that “the people of Britain should have acted much sooner” if they had wanted to stop the Treaty. There would be no further referendums on Europe, so he told reporters. Not particularly helpful for Cameron.

The Swedish presidency is now wrestling with the question of how to select a new Commission, whether under Nice or Lisbon rules. Under Article 213 of Nice there must be fewer than 27 Commissioners, which would leave one member country unrepresented, but one idea is to nominate the Council foreign affairs supremo at the same time on the assumption that he or she will become the 27th Commissioner once Lisbon is implemented.

Of course Lisbon does give the Commission president the task of allocating portfolios between members of the college, but there seems little reason why Barroso should not work with the member states in selection of the individual candidates and their allocation of roles. That would surely be the reality in constructing the college whatever treaty was in force.

Posted in Elections, European politics, Integration, Treaty of Lisbon, UK politics, Uncategorized | No Comments »

Vote for continuity before Copenhagen

Sunday, September 20th, 2009

The European Parliament’s convincing vote for Jose Manuel Barroso’s second term as European Commission president puts him in a stronger position than any candidate since Jacques Delors in the 1980s. To have secured the votes of the European Conservatives and their allies and an estimated 25 Socialists in addition to his centre right supporters in a secret ballot was a considerable achievement, at 382 delivering 13 more votes than an absolute majority.

Cometh the hour cometh the man. Barroso is no Delors, but can deliver the continuity which will be needed in a highly unpredictable period, where I see that the latest threat is from the Czech constitutional court which could delay Lisbon ratification for another six months even if the Irish vote “yes” on October 2.

Whatever the result of the referendum, Europe must get its act together for the Copenhagen conference on climate change, much as it did more than 20 years ago when the Vienna Convention on the ozone layer and the Montreal Protocol were negotiated.

I mention this because just 80 days before the opening of the Copenhagen conference the United Nations designated September 16 2009 as Ozone Day. The UN sees action on the ozone layer as a curtain raiser for Copenhagen, a model for what can be achieved through concerted international action in the face of a major environmental challenge.

It’s 24 years since the Vienna Convention for protecting the ozone layer was signed and 22 years since the Montreal Protocol, which set the timetables for phasing out of the man-made chemicals responsible for the depletion of the ozone layer. It is proving a remarkable success, although the task is by no means complete. A UN note gives more detail.

What does surprise me is the contribution that the ozone-depleting chemicals, and particularly chlorofluorocarbons (CFCs) were making to global warming. CFCs have now been virtually phased out (January 1 2010 is the phase-out deadline of CFCs for the poorest countries) and scientists argue that this co-ordinated action has given the world up to 12 years of extra breathing space for arresting the process of climate change. They reckon its impact to be five or six times the impact of the first phase of the Kyoto Protocol.

The late 1980s were years when environment policy came of age. The Vienna Convention was first based on a scientific thesis of ozone depletion caused by man-made chemicals, and only proven as fact in 1988 when US spy planes confirmed the existence of a vast hole in the ozone layer above the Antarctic caused by man-made chemicals. It will be many decades before the ozone layer is fully restored, but things are no longer getting worse and should progressively improve.

Of course tackling climate change is a vastly more complex challenge than reversing ozone layer depletion. Every country and every industry is involved, as is the whole human population, but there are some fundamental principles which have been established through the Vienna process which are relevant to Copenhagen:

A template was negotiated to assist developing countries through a combination of financial assistance and phasing to allow further time for adaptation, plus special help for the countries of central and eastern Europe.

The last twenty years have demonstrated industry’s remarkable capacity to adapt and innovate once faced with obligatory targets. Firms which at first resisted the proposed Montreal measures, arguing that there were no alternatives, have developed new products and new technologies – a process which must continue.

The international community found the political courage and the mutual trust to accept the scientific consensus and build a global policy in the face of inertia and downright opposition.

The European Community (as it then was) was a major driver in formulating an international agreement and seeing it through to completion. It’s a good precedent for the European Union to follow.

Posted in Climate change, Environment, European politics, Treaty of Lisbon | No Comments »

A rentrée of doubt and anticipation

Monday, September 7th, 2009

Rarely has the Brussels rentrée occurred in such a muddle of doubt and anticipation. Doubt because the October 2 Irish referendum could kill the Lisbon Treaty for good; anticipation because approval of Lisbon should open up new capabilities for Europe and settle the constitutional uncertainty which has dogged the EU for so many years – and provide some jobs for the boys.

The Irish Times reports that support for a “yes” vote slipped eight points in a recent opinion poll, with 46 per cent in favour, 29 per cent against and 25 per cent don’t knows – and that’s just four weeks before the vote. Irish political leaders have started to raise the tempo of their campaign, but the Swedish prime minister Fredrik Reinfeldt has confirmed that contingency plans are being drawn up to apply the terms of the Nice Treaty in the event of an Irish rejection.

Of course even a “yes“ vote in Ireland is not quite the end of the affair. Germany, Poland or the Czechs could delay ratification well into 2010, raising the hopes of some British Conservative eurosceptics that a victory in a June 2010 general election would allow them to hold a referendum, steer a de-ratification through the Westminster Parliament and so block the treaty. A mouth-watering prospect for constitutional lawyers!

The hero of these eurosceptics is of course Czech President Vaclav Klaus who has so far refused to sign the act of ratification and is determined to be the last to do so. Germany now appears to be on the brink of approval having agreed more national scrutiny of EU legislation. The Polish president has yet to sign.

It’s looking inevitable that the present Commission, which would normally step down on October 31, will be asked to remain in office for some months until the treaty is fully ratified, taking its term beyond the Copenhagen post-Kyoto summit, but at least Barroso should provide continuity into a new college provided that he can secure the approval of the European Parliament on (probably) September 16 following this week’s meetings with the political groups.

I was particularly intrigued to learn that the EP vote on the Commission president would be through secret ballot. A defeat for Barroso would be an interesting test of party loyalty – but I suppose we’d never know who the rebels were.

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