In Britain’s popular culture the marketing restrictions on bendy bananas and curly cucumbers have always been associated with the Bureaucrats of Brussels. Nothing so well underpinned a public perception of meddling officials in a foreign country imposing their will on a hapless populace by setting fruit and veg dimensions by millimetre and by degree. The story was always guaranteed to provoke a curious mixture of exasperation and delight.

The Commission has now announced a relaxation of the EU rules. As from July 2009 the EU standards for 26 fruit and vegetable categories will be abandoned altogether and for the 10 most widely purchased, such as apples, strawberries and tomatoes, national governments will be free to permit the public sale of non-classified produce as long as it is labelled as for jam-making or similar.

I suspect that in many cases it is national governments which displayed the real passion for regulating. It’s worth recalling that a year ago Commissioner Verheugen dismissed the idea that the use of imperial measures (pounds and ounces for instance) was illegal under EU law, but this didn’t stop the criminal prosecution of some market traders in Britain for using the old measures.

Certainly past experience suggests that the supermarkets will continue to demand uniformity and quality when negotiating with their suppliers. But at least there should be no more martyrs such as those shopkeepers who did not abide by the rules and were prosecuted in consequence.

The Agriculture Commissioner Mariann Fischer Boel takes credit for the latest moves, but this decision is very much in tune with the campaign for Better Regulation which the Barroso Commission has been pursuing. Its main front-man Commissioner Verheugen is still pushing hard, as you can see from his recent speech. All strength to his elbow!

So Commissioner Viviane Reding has decided to play hardball over telecoms reform. Some weeks ago we discussed how the Commission’s proposed telecoms package would hand over extensive new powers to Brussels.

The European Parliament watered down these proposals in first reading, but it seems that the revised version to be sent to the Council gives little ground on the core issue.

As if to remind the member states just how hopeless their regulators can be, the Commission has demanded that the Belgian regulator should do something about Belgacom.

Belgium’s incumbent operator has retained the lion’s share of residential telecoms business despite a liberalised market and has actually increased its market share for business users by value and by volume.

The message seems to be that competition policy has not done its job. The Commission wants action. This is regulation, raw in tooth and claw. What’s more, it enhances the Commission’s image as defender of the consumer – excellent public relations which build on Reding’s assault on the mobile operators’ text and roaming charges.

In last week’s Venice speech to the incumbent operators Reding set out her philosophy quite clearly, emphasising that the virtues of regulation had recently become rather widely recognised in the context of the credit crisis. No apologies there, then.

So the Commission has given little to the Parliament on the issue of control. The main change to her proposals seems to be the creation of an Office for the European Telecoms Regulators (OETR) managed by a 12-strong board, half of them appointed by the Commission and half by member states. The European Regulatory Group (ERG) would apparently have an advisory role and the Commission would retain a veto over the decisions of national regulators, albeit with some OETR involvement.

Some loss leaders have been abandoned or modified, such as previous proposals on network security, spectrum and policing of the internet, but when telecoms ministers meet on November 27 we can expect some fierce skirmishing in defence of national regulators before a qualified majority can be achieved, and maybe further hastily convened Council meetings before the end of the French  presidency.

The package is scheduled to go to second reading in the Parliament in April 2009. The question for Reding is, can she get such a tough package through before the June elections?

While the United States and Britain reel from one catastrophe to another in the storm of the sub-prime crisis, the eurozone has seemed remarkably detached, until recently anyway. For the Americans and the Brits the news is totally dominated by stories of collapsing banks, bail-outs, vast lines of credit insurance which turn out to be no insurance at all, and an American administration desperately seeking a safe path for the US economy over the quicksands of collapsing confidence.

I’m not saying that the Land of the Euro is immune from the impact of this crisis – it clearly is not. The turbulence over Fortis Bank, to name but one of the repercussions, deepens the black hole for the missing Belgian government.

But there does seem to be a difference. The US and UK economies are so much more dependent on their financial services sector than most of the countries of the eurozone. What’s more, the great bubble of house prices linked with high mortgage commitments brings this crisis straight to everyone’s front door in Britain and America.

Maybe the continental reaction is also different because the power centres of the eurozone are so widely dispersed. It’s not like London or New York/Washington where the various regulatory institutions are perceived to work closely together. The European Central Bank from its fortress in Frankfurt is responsible for providing liquidity for the banking system across 15 countries; the framework for EU financial services regulation across the EU is crafted and overseen by Brussels; and individual member states have their own particular responsibilities for applying the rules, such as the clamp-down on short selling.

It’s striking to see how different players are reacting to the crisis. In the UK there may be talk of international co-operation, but the British government makes no mention whatever of the European legal framework, although it is evident that most of the legislation governing the solvency of banks and other financial bodies and the activities of financial services firms derives from EU decisions.

As for continental reaction, note the contrast between President Sarkozy and Charlie McCreevy, Commissioner responsible for the financial services sector. The French President is determined to push for more regulation and reserves particular venom for ratings agencies.

The Commissioner, by contrast, is keeping a low profile. He doesn’t like interfering with markets and plays down the need for drastic action on the regulatory front. He has even said that (unregulated) hedge funds and private equity should not be “tarred with the same brush” as the regulated sector.

Nonetheless, McCreevy must be seen to act, and sure enough the Commission is expected to come forward this week with some new proposals tightening up banks’ capital requirements in relation to securitised debt, although according to reports he has been persuaded by the banking sector not to go too far. Rating agencies will also face registration requirements, though short of the controls which the French and Germans would like.

The German finance minister Peter Steinbrück believes that the US will cease to be the global financial superpower following the credit crisis. He blames Washington for its failure to introduce stricter regulation despite European demands and has told journalists that in ten years time “we will see 2008 as a fundamental rupture”.

Apparently the Minister was particularly stung by the actions of a state-owned bank, which earned the soubriquet of Deutschland’s Dümste Banker from Bild Zeitung after it transferred €350m to Lehman Brothers two hours before Lehmans folded. Steinbrück is pushing for much tougher regulatory measures than McCreevy envisages.

After the Enron and WorldCom crises the US introduced Sarbanes-Oxley, a complex set of rules and red tape which many now see as over-reaction. Policy-makers now face another challenge – of preventing the excesses which produced the credit meltdown from ever recurring.

The Commission’s proposals will be a first step for Europe, although getting even such modest measures through Council and Parliament will be tough, given the impending European elections in June 2009. Maybe, though, this will be the opportunity for the EU to take the initiative in establishing a worldwide framework of regulation which does not throw Baby out with the Bathwater.

It seems that the Dutch were particularly cautious in their approach, as Netherlands radio made clear. The Srebrenica massacre remains an especially awful memory for the Dutch (although it was actually an indictment of the whole UN operation). They stress that the arrest of Ratko Mladic and Goran Hadzic is the vital next step.

Notwithstanding these reservations, the developments in Serbia must be a great satisfaction for Commissioner Rehn and the Commission as a whole. A few weeks ago it looked as if the Socialists might throw in their lot with the nationalist Radicals and take Serbia down a more easterly path, but the formation of the coalition with President Boris Tadic’s Democratic Party was reminiscent of that period in the late1970s when a fledgling Portuguese democracy was under threat and rescued by the determination of Portugal’s social democrats to join the European mainstream.

It seems unlikely that there will be any turning back for Serbia, but for a view from closer to home see Antal Dániel’s blog.

There is no doubt that the successful easterly expansion of the European Union is the EU’s greatest achievement of recent years. Its influence continues to spread among candidates, associates and partners. Of course the introduction of the acquis freed up trade and stimulated economic growth, but its impact has been much more profound: it has introduced a system of ethics into business and even into personal relationships for countries where communist regimes had totally eliminated any such standards.

But old habits die hard. Joining the EU is not an automatic guarantee of change and I suppose that the latest European Commission reports on Rumania and Bulgaria are evidence of that. By the way, Italy is also in the spotlight for the corruption in Naples.

The Commission has been tougher in its reports than many people expected, especially in relation to Bulgaria, but given the pressure it is under for managing the EU budget it had little choice. What’s more, the Commission has an obligation to give maximum support to those local forces seeking fundamental reform. And that includes the vast majority of the people themselves.

So a new Club Med is born! More than 40 presidents and/or prime ministers turned up in Paris on July 13 for the launch of the Union for the Mediterranean. It was a welcome diplomatic triumph for President Sarkozy, embattled as he is by a disillusioned and critical French public opinion.

When asked many years ago what was the collective term for a gathering of political leaders, British Prime Minister Callaghan suggested it was a “Lack of Principals”, and of course everybody is highly sceptical about the purpose and the prospects of the new body. It embraces all 27 member countries of the EU, the Balkans, the countries of the Maghreb and the Middle Eastern countries bordering the Mediterranean – 44 states in all including the Palestinian Authority. There are a few conflicting interests among that lot!

I must declare some sympathy with Colonel Gadhafi of Libya, who refused the invitation to Paris and gave a speech explaining why. It was the word Union which really got to him, given his lifelong experience in striving to create unions which failed, between Arabs, the Africans, the Maghreb countries, Libya and Egypt, Libya and Tunisia etc etc.

For example, he said, how could one possibly envisage a union between the countries of North Africa and those in Scandinavia “where it is common to see people walk around naked”. Quite so. It’s those Danish summer beaches!

Let’s agree with the Libyan leader that this is not a Union. But that doesn’t mean that it has no potential value. When Sarkozy originally floated the idea following his election it had the marks of a personal ego trip. He saw its membership confined to countries bordering the Med, quite firmly under French leadership, albeit with some financial support from the EU budget and widely perceived as a half-way house for Turkey in place of EU membership.

This formulation was well calculated to upset the Germans and everyone else, which it duly did, but with the help of Angela Merkel, Sarkozy’s brainwave has been transformed into a full-fledged EU initiative under the Barcelona process. See Stanley Crossick’s blog.

The Paris launch seemed to have a far more substantial political dimension than the Barcelona meetings ever did, so maybe the organisation can provide a valuable new forum for engagement between Europe and its neighbours and between the neighbours themselves. It is certainly conceived as a more balanced relationship, with a joint presidency and a secretariat outside the EU.

Europe needs to find traction for its role in advancing peace in the Middle East and the Paris meeting was notable for constructive comments made by the Israeli prime minister and the Syrian leader – see Mark Mardell’s blog - although a commitment to deal with weapons of mass destruction in the region had rather a hollow ring. If the new Union could really tackle problems of that scale it would be something special indeed.

But let’s look at some of the more practical long-term aims, which could offer major benefits to the region, such as cleaning up the Med, managing water resources (which is one of the conflict triggers in the Middle East), developing solar energy capabilities, improving transport links and tackling natural disasters. Really effective action in these areas could be a major contribution to the wellbeing of the region as a whole – and an experience in working together.

One issue of fundamental importance to the non-EU participants is better access for their food exports to European markets, but I saw no mention of that in the communiqué or reports of the Paris meeting. Given Mr Sarkozy’s attacks on Commissioner Mandelson for his stance on Doha it looks like deliberate avoidance, yet must surely be a fundamental element in helping to build the economies of our southern neighbours.

As the Doha Round reaches its climax (or anti-climax) perhaps this issue will be decided in another forum.

The immediate challenge is to decide where the secretariat is to be based, with the aim of having a fully operational organisation by the end of 2008. Let’s hope some of the high-flown rhetoric can be translated into tangible results and above all that the Union of the Mediterranean will provide a mechanism for the EU to make a substantive contribution to peace in the Middle East.

I see that the French National Assembly has agreed a compromise proposal on the accession referendum, which will give the President the power to opt for the people or the parliament to approve Turkish membership.

The clause requiring a popular vote for any new accession increasing the EU population by 5 per cent will remain in the French constitution, but the President will now be able to choose decision by parliament instead, as long as he gets the support of a three-fifths majority in both the Senate and the National Assembly.

Final decision on this formula is expected at the Versailles Congress on July 21, when various constitutional changes should be confirmed.

Mr Sarkozy has meantime confirmed to the European Parliament that further enlargement cannot be contemplated before the Lisbon Treaty has been implemented.

I may be sceptical about the timetable for EU enlargement of the European Union following Ireland’s referendum, but there has been one welcome development as France takes over the presidency: the French Senate has voted by 297 votes to seven to scrap the obligation to hold a national referendum over Turkish membership.

The issue is scheduled for final decision on July 7, when the National Assembly will be asked to revoke a recent bid to retain the clause.

Of course Turkey was not named in the legislation, which was introduced into the constitution by President Chirac in 2005. It applied to any candidate country representing more than 5 per cent of the EU population, but nobody doubted its target. It has seriously damaged relations between France and Turkey and cast a shadow over France’s chairmanship of the enlargement negotiations for the next six months.

Mr Sarkozy no doubt remains sceptical about Turkish membership, but this move would restore an element of good faith while talks continue. Chirac’s 2005 gesture did seem a somewhat cynical response in the face of opinion polls of the time.

The worst fears of Europe’s leaders have been realised: Ireland’s voters have scuppered the Lisbon Treaty, with 862,415 votes against and 752,451 in favour on a turnout of 53.4 per cent in the Irish referendum. Politicians can complain till the cows come home about small countries and slim majorities. After all, the Irish “no” voters represent maybe one in 300 of the EU’s voting population. But the people have spoken and Ireland cannot ratify.  The treaty will not come into effect at the start of 2009.

There will be no quick and easy solution. The vote was surely another demonstration of popular disdain of the political elites, which is widespread across Europe. It was not enough for all the major parties, the business organisations and the trade unions to argue for a “yes” vote. Their leadership was widely rejected.

I see that the Irish Taoiseach Brian Cowen says that this is Europe’s problem. That seems a bit of an understatement, also  known as passing the buck. But since nobody can identify particular issues which led to the Irish rejection I suppose Mr Cowen is saying that the Irish government can think of no specific changes which could be made to the treaty which would make it more palatable for a second referendum. There is no appetite in Ireland to repeat the double.
 
We’re back to the old argument about representative democracy versus the popular vote. The referendum drew in all kinds of extraordinary allegations about the treaty. One poster said it meant that children would all have to be micro-chipped. Some campaigners claimed that abortion would be legalised under the treaty and others that Irish youngsters would be conscripted for a European army.
 
Yet people’s commonest complaint was that they simply did not understand Lisbon and they refused to vote for something they did not understand. It’s a classic situation where parliament does seem the right place to decide highly complex issues. But it has to be based on the assumption that politicians have the trust of the people. To win the support of the people requires a vision, and there was little sign of that in the Irish campaign.

When French and Dutch voters rejected the Constitutional Treaty in 2005 enormous efforts were made by Sarkozy, Merkel and others to get the reform process back on track. It will be difficult to find the political will to repeat such a massive exercise, especially in a period when public opinion across Europe is increasingly preoccupied with prices, jobs and immigration. Two-speed Europe, referendum by-pass, Irish opt-out: none of them seems to provide an answer.

Most likely is that the treaty will be put to sleep for the time being and with it the next phase of enlargement. Business can continue as usual (the EU has been functioning pretty well since the 2004 enlargement) and efforts will be made to strengthen common positions on global issues like climate change, energy and foreign affairs, but it could be quite a while before there is a president of the European Council and a foreign affairs supremo bestriding the rue Charlemagne between the Commission and the Council.

We can expect the European Council on June 19-20 to call for ratification to continue, but the Czechs have already hinted that they want to suspend their ratification process.

Without the institutional streamlining provided by the Lisbon Treaty we can expect membership for the Balkan countries and Turkey to be seriously delayed and even put in further doubt. The painful challenge of setting a course for the EU in the aftermath of the Irish vote will fall to the French presidency, which takes office on July 1. Although the French will be frantically seeking a solution, putting enlargement on the back burner might not go down so badly in Paris.

“That’s the only cut this year!” quipped a council member when European Central Bank president Jean-Claude Trichet took the knife to the ECB’s birthday cake in Frankfurt on June 2. The occasion was the tenth anniversary of the Bank’s establishment. Apparently the mood in Frankfurt was of genuine celebration tempered by concern at the conflicting challenges which the Bank currently faces over inflation and growth.

It has been a long journey since June 1998. It’s strange to think that the decisions on who would join the euro zone were taken under British presidency in May ‘98. In the chair was Prime Minister Tony Blair, who had won a landslide election just twelve months earlier. He had to praise the significance of the euro, although he had decided against taking Britain into the new currency, a decision regarded by many people as one of his biggest failures given the strength of his position, and no doubt strongly influenced by Gordon Brown at the Treasury.

The most interesting drama at the time was over the ECB presidency. President Chirac demanded that Trichet, who was then governor of the Bank of France, should be ECB president, whereas Wim Duisenberg from the Netherlands was the consensus candidate.

The crisis was resolved with a classic fudge. I will be far too old to serve two terms as ECB president, said Duisenberg, but any decision to resign “will be my decision alone”. There was, however, an understanding that Trichet would take over once Wim had taken that his solitary decision. Chirac conceded. Relief all round.

When the French president pressed for Trichet’s appointment in 1998 he no doubt hoped that a more relaxed French regime would prevail over Germanic discipline, setting interest rates with an eye to boosting growth. In the event Trichet has staunchly defended ECB independence and its key mission: to fight inflation.  Trichet’s own appreciation of the ECB’s role, its record and the tasks ahead was summarised in his Frankfurt birthday speech.

The record of the ECB has surpassed expectations. Its handling of the sub-prime crisis since last August has impressed everyone and the euro continues to strengthen its position in global markets – as well as appreciating in value. It now accounts for around 25 per cent of foreign currency reserves across the globe and we can expect that to rise steadily. China, for one, is keen to increase its euro holdings.

May 1998 marked the creation of the Euro Group of ministers.  This group of 11 countries was expected to become a potent force in European politics and it was Britain’s exclusion from the club which many of us thought would be the biggest penalty for not joining the euro zone.

I can’t say it has turned out like that. For a start, total disregard of the Stability and Growth Pact by some of the biggest members caused deep divisions within the group. Not much solidarity there!

There has also been real divergence in the performance of the euro zone economies, both in terms of their growth rates and their inflation. Maybe the interests of the euro zone countries (15 of them now) are so varied that they will never be able to take common decisions on such issues as international exchange rates and the value of the euro, economic management or taxation policy. President Sarkozy, for instance, has called for a cut in certain VAT rates across the EU to put the brake on rising prices, but his finance minister Mme Lagarde got short shrift from colleagues when she put forward the idea at the recent Frankfurt meeting.

On the international front the Euro Group president, Luxembourg’s Juncker, has bemoaned Europe’s failure to speak with one voice in the IMF. The question is, what should the voice say? A high level delegation to China was hyped as a first example of euro diplomacy, but it does not seem to have amounted to much. Maybe that could be a role for the soon-to-be-named Council president – provided he/she comes from a member of the Euro Group. 

I see that Slovakia will be the next country to adopt the euro, as of January 1 2009, when it abandons the koruna. It has revalued its currency in advance as an anti-inflationary move. Political opinion in Denmark continues to move in favour of membership. A referendum would of course be needed, and Sweden is publicly stating that a positive Danish vote would open the way for Sweden to consult the people as well, at the earliest in 2011.

Which leaves the United Kingdom. Willem Buiter, former member of the Bank of England’s Monetary Policy Committee is in no doubt. In his view Britain should join now. The FT’s Martin Woolf strongly disagrees.

Buiter refers to the enormous external liabilities of the UK’s financial services industry – €400bn in foreign currencies in his estimate, which is four times the country’s GDP. The Bank of England, he maintains, could never act as lender of last resort for such liabilities. Joining the euro and depending on the resources of the European Central Bank is for him the only way to defend the UK from an Iceland situation, where vast liabilities have accumulated in proportion to the size of the domestic economy.

It’s a bit tough being compared with Iceland, but it does focus on some of the issues raised by the sub-prime banking crisis and the new perceptions of risk that we have to live with. But probably the biggest test for the ECB over the next 10 years will be how far the euro zone can handle its own internal tensions and the divergence of its national economies.

Allemagne quartorze points, Royaume-Uni 14 points, la Russie 272 points, Ukraine 230 points, la Grèce 218 points. So it was a runaway victory for the Russian entry in the Eurovision Song Contest, held in Belgrade on May 24, and oblivion for most west European entries. The centre of gravity moves further east. See you in Moscow in 2009!

Some (western European) commentators see the modern contest as a great conspiracy of political block voting, with the Nordics, the Balkans, the East Europeans voting for their neighbours and so swinging the results.
 
But it seems the reality is much more complicated. It reflects the complex ethnic mix in so many European countries. The fact that Estonia, Latvia, Lithuania and Ukraine each gave the full 12 points to the Russian entry (as did Israel) reflects the size of the Russian ethnic population in these countries rather than any political block vote.
 
Likewise for the former Yugoslavia, with its intermixing of Serbian, Bosnian and Slovenian populations. Bearing in mind that you cannot vote for your own national entry, what more natural than to vote for your ethnic identity? Douze points for the cousins. By the same token, Turkey always does well from the German voters, mirroring its population of 2.6 million of Turkish extraction, although I see that this year Greece took Germany’s 12 points and Turkey only 10.
 
If you managed to miss three hours of the actual final, then you can treat yourself to a (brief) taster of any of the finalists - and maybe decide that the outcome was not so unfair after all. There’s an amalgam of western pop and eastern music which can work rather well – and is maybe part of a changing European identity – an eastwards shift in our cultural centre of gravity.