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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 At last the swathe of platitudes, reassurances and empty promises which have characterised the year to date has been replaced by concerted action.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 »

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 »

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 »

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 »

Iceland’s path to EU membership may be a rocky one

Monday, July 27th, 2009

I see that the EU Council of Ministers has asked the European Commission to deliver an opinion on Iceland’s application to join the EU, just 10 days after Reykjavik submitted its formal request for membership. The Swedish presidency wants the report by the end of the year, and foreign minister Carl Bildt has implied that Iceland’s status as an EEA country could speed the process of the application, in contrast to the slow progress for the Balkan applicants.

The Icelanders no doubt remain shell-shocked by the collapse of their banking system and the consequent halving in the value of the krona, and crave the stability of the eurozone, but it strikes me that the path to membership may be far from smooth. At the end of the process – say in 2011 – lurks a referendum: by then the mood of the country may have changed.

Fisheries could be a major stumbling block. Seafood accounts for almost half of Iceland’s exports and 10 per cent of its gross domestic product, which is quite something when another chunk of the country’s economy – the banking system – has disintegrated. The cod wars of the 1970s, when Iceland extended its territorial limits to 200 miles and the Royal Navy sent frigates to protect British fishing vessels, showed the depth of national feeling on this issue.

Even now international relations on fisheries policy remain poor. I gather for instance that Iceland has been excluded from negotiations on the management of mackerel stocks in the North Atlantic and has therefore opted out of catch allocations. The country is very concerned to rebuild cod stocks, which is a key economic asset. Stocks may be recovering but there will be intense opposition to surrendering quota to EU fishermen under the common fisheries policy. Just to add to the sensitivities, Iceland still has a whaling industry.

At least the review of the EU common fisheries policy is timely, with signs that ministers have accepted the need for fundamental change (just as well, as many fish stocks in European waters are on the point of collapse – and see Sarkozy’s change of heart). However, the fisheries chapter in the Commission’s Iceland report will be one of the most difficult to compose. Could it be the catalyst for the creation of a new fisheries policy, or will it hark back to the disastrous EU policy which has been pursued since 1973?

Becoming part of the eurozone is the big driver for Iceland, but there could be difficult issues here as well, given the level of Iceland’s public debt (about 100 per cent of gdp). For Iceland to qualify for eurozone membership could be an even greater challenge than is faced by the Baltic states and Hungary.

The vote in the Althing to apply for membership was a close run thing – 33 in favour, 28 against – and it would certainly be wrong to underestimate the negotiating difficulties which lie ahead. If the Irish vote “no” on Lisbon then the prospects for any enlargement would be gloomier still.

Meanwhile Britain’s Conservative shadow foreign secretary William Hague continues to inveigh against Lisbon. But whatever you think of his views, he is a consummate speaker. You may like to savour his recent performance in the House of Commons on the possibility of Tony Blair becoming president of the European Council under a ratified Lisbon Treaty. No wonder Gordon Brown needs a holiday!

Posted in Agriculture, Enlargement, Eurozone, Fisheries, Treaty of Lisbon, UK politics | No Comments »

Barroso’s future in Parliament’s hands

Sunday, June 28th, 2009

Who’d be leader of the British Conservatives in the European Parliament? No sooner had the European Conservatives and Reformists Group (ECR) been formed, with representation of eight member countries, than Finland’s Hannu Takkula decided not to join the group after all. He has chosen to remain with the Liberal ALDE group in deference to home party loyalty.

So the ECR is back to seven countries, the minimum number necessary to form an EP group and rather close for comfort. There is much debate over whether the group can survive. The 26 British Conservatives, 15 Polish MEPs from the Law and Justice Party led by the Kaczyski brothers and nine Czechs from the Civic Democratic Party form the core of the new grouping, with single members from Belgium, Hungary, Latvia and the Netherlands making up the total of 54. Seems to me it could be a rather flaky coalition.

The first test will be over the reappointment of Commission president Barroso. He is certainly desperate for the job. I’m told that he was in tears at the wind-up press conference at the June European Council, when he received a somewhat grudging, hedged-about approval.

Of course Barroso’s future is now in the hands of the European Parliament, where the EPP is keen for his nomination, the Greens and Socialists casting about for an alternative and the Liberal group divided: most UK members of ALDE are in favour of the nomination while François Bayrou’s six French liberals and Germany’s 12 FDP MEPs are against. The Conservatives seem likely to give Barroso their votes. However, there is strong pressure to await the outcome of the Irish referendum in October before a parliamentary decision.

There is much wheeling and dealing in the Parliament. Even with ECR support, the EPP cannot muster sufficient votes to give Barroso the simple majority he needs, so offers are being made to other party groups for the EP presidency over the second half of the five year mandate beginning in 2012. (The EPP will fill the post for the first 2 ½ years).

Matters are likely to come a head on July 9, when the conference of presidents is to decide on the timing of the vote for Commission president. If they opt for a July 15 vote, Barroso is probably home and dry. If not, then everything is to play for.

The end of a Commission mandate is always a difficult time, as political manoeuvring completely upstages the making of policy. This time it could be worse than ever, yet there are big decisions to be taken over the next six months, including response to the economic crisis and the Copenhagen conference on climate change. It will all be quite a challenge for the incoming Swedish presidency.

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

Barroso on the spot before European Council nomination

Monday, June 15th, 2009

People have been grumbling over the last year or so that Barroso’s presidency of the European Commission has been too much influenced by hope of a second term, and that he has leant over backwards not to upset the big member states. I’m not convinced of the evidence for that, but the Commission president has certainly been put on the spot now.

The European Council is expected to give its provisional endorsement for Barroso’s reappointment later this week, but President Sarkozy has threatened that this decision is conditional on the candidate’s good behaviour. Indeed, the French president says that the appointment might need further confirmation after the coming into force of the Lisbon Treaty, when ratification in the European Parliament would require a majority of members and not just a simple majority of those voting.

When Sarkozy and Chancellor Angela Merkel gave their conditional approval to Barroso on June 11 they were speaking from a position of strength following their strong showing in the European Parliament elections, in dramatic contrast to British prime minister Gordon Brown who could hardly be weaker and whose party suffered a bitter defeat in the polls.

So what does Sarkozy want? Tighter regulation of financial markets for one thing, with stricter regulation, for instance of hedge funds, derivatives markets and rating agencies. He wants policies which at least purport to show that the era of Anglo-Saxon dominance of these markets, which many perceive as the root cause of the recession, has been weakened for good.

Commission proposals based on the Larosière Report may not go far enough for Sarkozy, although the Brits are fiercely opposed to giving responsibility to the European Central Bank for the European Systemic Risk Council, while firms in the City of London run an intense campaign claiming that new rules will impose unacceptable constraints on their business and force them to move outside the EU.

The broader concern of the French president will relate to the nominations and portfolios of commissioners. The internal market job, including financial services, is a key one. Competition policy is another. Neither Charlie McCreevy nor Neelie Kroes are favourites of Sarkozy. Barroso will have to tread carefully in selecting candidates for a new college.

The approach of the newly elected European Parliament raises other doubts. Will MEPs choose to await ratification of Lisbon before endorsing anyone as Commission president? Will Barroso achieve the simple majority he needs if there’s a July vote? And where will the Conservatives stand with their 25 GB plus two Ulster seats? If they don’t vote for Barroso, for whom will they vote?
The Conservative position could be especially crucial in the debates over the new financial services legislation, when the Commission’s new proposals come to the Parliament during the forthcoming autumn and through 2010.

As a group outside the EPP the Conservatives are likely to forfeit any influence they might have had in shaping policy towards light touch regulation – an influence which was extremely strong in the previous Parliament. There will no doubt be those within the EPP who will be inclined towards tougher regulation. Without the presence of the Conservatives their views may well prevail, carrying the group with them. It would certainly be a strange irony if the defection of the Conservatives from the EPP played directly into the hands of the French President!

Posted in Better regulation, Competition, Elections, European politics, Eurozone, Finance, Treaty of Lisbon, UK politics | No Comments »

Expenses scandal to dominate Britain’s European elections

Wednesday, May 27th, 2009

Just a week to go before European elections, and British prime minister Gordon Brown launches his personal manifesto. It is our task, he says, to persuade people that millions of new jobs will depend on higher levels of co-operation between EU members. He calls for a European growth strategy and advocates a much enhanced role for the EIB and the European Bank for Reconstruction and Development. He says that he has spoken to President Barroso about apprenticeships.

For Gordon Brown it is a forthright message: “Britain must remain a nation in Europe’s mainstream and not in its slipstream”. The odd thing is that the PM has chosen a column in the Financial Times to make his case. Much as I revere that esteemed paper, you could hardly imagine a less populist outlet to rally the British people to his cause. What’s more, seven days does not give much time for the message to get around.

But maybe that’s the point. The British political scene is now totally dominated by the scandal of MPs’ expenses. The whole political class is now vilified, almost to the point of witch-hunting, and any campaigning for the European elections is completely overshadowed by the Daily Telegraph’s daily diet of stories detailing the use and abuse of the expenses system by one MP after another.

The British public is furiously angry with its elected representatives and has no time for matters of policy. The party volunteers who canvass for votes have been shocked by the anger on the doorstep.

The question is: how will voters react next Thursday June 4, when the British are due to vote? The fact is: nobody knows. Perhaps massive abstention, so turnout collapses; and/or a surge of votes to the British National Party whose anti-immigrant views chime with those voters who resent the more open policies of the main parties.

The UK Independence Party could (once again) be a major beneficiary of the public mood with its Get-Britain-Out rallying call, although other parties have been swift to point out that UKIP is no stranger to scandal. A surge to the Conservatives from UKIP, which seemed a likely outcome a month or so back, now appears less probable, given the opprobrium which has been heaped on Tory as well as Labour MPs in the expenses scandal. In normal times the unpopularity of the government would guarantee a massive switch from Labour to Conservative. These are not normal times.

Britain is in the middle of a massive political crisis, which makes its European election outcome impossible to call, but other countries will learn next week just how disgruntled – or satisfied – their own voters are in the face of the current recession. It’s easy for me to complain about Gordon Brown’s low profile approach, but a French friend tells me that Sarkozy’s government has kept deliberately quiet about the elections, while the German leadership has simply seen the vote as precursor for the September general election.

A just-published poll undertaken for the European Parliament in early May recorded a surprisingly high interest in the elections, so perhaps the turnout will be higher than many fear. In 2004 the turnout across the Union was 45.7 per cent, part of a steadily declining trend since 1979 when it was 63 per cent. It would be good to see a newly rising level of interest in a parliament which may have greater power and will certainly face tough decisions over the next five years.

Agreement on the future president of the European Commission will be the first challenge for the 736 new MEPs when they take their seats. I’m sure that Barroso is not counting his chickens. No one can predict which eggs will hatch.

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

Europe’s game of people and politics in full swing

Sunday, March 22nd, 2009

It looks very much as if early October will be the time for Ireland’s second referendum on the Lisbon Treaty. This is certainly what the ALDE leader Graham Watson assumes after talking with Taoiseach Brian Cowen in Brussels last week. It also reflects recent comments by Europe minister Dick Roche.

An earlier vote – for instance to coincide with European elections in June – could go negative, caught up in a surge of feeling against Cowen’s government and against the background of a worsening economic situation. Even the delight over Ireland’s rugby Grand Slam victory may have worn off by then!

Europe’s game of politics and people is now in full swing, with the result of Ireland’s new vote a critical factor. Parliament president Hans-Gert Pöttering wants the July 14 EP inaugural session to confirm the new Commission president in the light of the elections outcome, while also dealing with “upcoming legal, political and personnel questions”, which would presumably cover eventualities with and without Lisbon.

At the end of his speech to the March 19-20 summit Pöttering said that a new Commission must be able to take office before the end of the year. He also had comforting words for Ireland.

Gordon Brown has already expressed British support to Barroso as president of the new Commission (he evidently has no doubts that the EPP will be the dominant group in the new Parliament!). Angela Merkel also seems supportive, whereas President Sarkozy wants no decision until the autumn.

Everyone has their own agenda, but it is classic French policy to make a package of the top international posts. If Lisbon is ratified, there will be two key posts to be filled in addition to Commission President: the President of the Council, and the High Representative, who will have the unenviable task of sitting at two tables – Commission and Council. It’s no surprise that France wants to keep its powder dry.

NATO does seem to be sorted. Danish Prime Minister Anders Fogh Rasmussen is expected to be appointed at the April 3-4 NATO summit to succeed Secretary General Jaap de Hoop Scheffer when he steps down at the end of July. That’s one contender whom we can take off the list for EU top jobs.

Then there is the British Conservatives’ departure from the EPP. I am intrigued to know whether this will have any impact on the balance of power in a newly elected European Parliament. Will the Conservatives vote with the centre-right bloc?

There’s every indication that the Conservatives will do well in the June poll, reversing the UKIP (UK Independence Party) successes of 2004 and riding high on the Labour government’s unpopularity. They should substantially increase their number of MEPs, although whether they have any chance of forming a new group with the required 25 members from seven countries seems highly doubtful without inviting in some dubious bedfellows.

Cameron’s confirmation that his party will leave the EPP can only be interpreted as a pre-emptive strike against UKIP and the BNP (British National Party) in advance of the European elections. That’s politics. But it will also have a self-fulfilling prejudice against selection of pro-European candidates, which I find a depressing prospect.

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

Economic crisis exacerbates tensions

Tuesday, February 17th, 2009

The economic crisis is exacerbating tensions across the EU. President Sarkozy has done his bit, stating on television that while French manufacturers can make cars in India which are for sale to Indians, they should not make cars in the Czech Republic which would then be sold in France. He apparently called for the repatriation of car manufacture to French soil.

Sarkozy’s remarks could not have come at a worse time for the Czechs. The last thing you want when unemployment is rising and your currency is under pressure is any threat to the new investments which are so vital for your economy. Nor is it helpful when your country still has to ratify the Lisbon Treaty and you depend on a sceptical parliament to vote it through.

An angry Czech prime minister Mirek Topolanek warned of the spectre of protectionism, which could prolong and intensify the downturn. On February 9 he announced plans for a European Council to discuss protectionism, while on the very same day Sarkozy and Chancellor Merkel issued a joint (rival) statement calling for an informal European Council “to prepare the spring summit”.

It has now been agreed that everyone will lunch together in Brussels on March 1. Will protectionism be mentioned at all, I wonder.

Protectionism can take many forms. Who can resist a headline? “British jobs for British workers” said Gordon Brown at the 2007 Labour Party conference, only to see his rallying call spelled out on strikers’ placards earlier this month as British workers complained that Italians and Portuguese were carrying out a contract at a British oil refinery (owned by Total). Right-wing parties made hay of it and we will no doubt see the slogan again during the European election campaign although not, I imagine, in the hands of Labour candidates.

The president of Italy’s Cofindustria expressed her dismay at the phrase, complaining of “protectionist tendencies and raw nationalistic instincts” in an article in the Financial Times.

The French bail-out plans for the car industry have put the European Commission on the spot. Competition Commissioner Neelie Kroes was quick to condemn Sarkozy’s original remarks. When the plan itself was unveiled, the Commission asked for further details to ascertain whether state aid conditions were being met. Commission president Barroso was rather defensive of the French, saying that if regional aid was proposed it would clearly relate to investment within France.

There is another interested party to this debate on protectionism: the United States. The €800bn emergency bill which was passing through Congress contained some significant “Buy American” clauses for public contracts, with particular relation to steel. It seems that President Obama was quick to amend this to say that any such moves must be compatible with international trade obligations, but you can be sure that the small print of the 1,000 page document will be rigorously scrutinised by trade officials across the globe.

As the April G20 meeting comes closer, where the role of international institutions such as WTO, IMF and World Bank will be discussed, everyone will be scrutinising everyone else’s actions for any moves towards the erection of trade barriers in the face of the worldwide recession. European solidarity has rarely been more essential.

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