As Saturday’s ‘special’ European Council Leaders’ Summit draws closer, the speculative frenzy over which high-flying politician will end up in which post continues to grow. European leaders have the difficult task of agreeing on the EU’s top positions of European Council President (Herman Van Rompuy’s replacement) and High Representative for Foreign Affairs and Security Policy (Catherine Ashton’s replacement). And filling these posts will require consideration of a number of factors, including reconciling political geographic and gender politics, all the while accounting for fundamental differences between Member States as regards foreign and economic policymaking. It’s diplomatic horse-trading at its finest – what we, here in the EU-bubble, love to chew the fat over; that game of ‘if X, then Y’ can keep us busy for hours – and has!
Making waves: Saturday & its ‘trickle down’ effect
So the leaders “just” have to agree on two names on Saturday – I know what you’re thinking, “sounds straightforward” right? Well, not so fast. Deciding the next European Council President and EU Foreign Affairs Chief is a pretty big deal (even if we’re still not sure who answers the phone when Kissinger wants to call Europe). And it’s not expected to be all smooth sailing.
A *few* challenges exist: That whole not-having-enough women nominees for Commission posts matters. As does the ongoing fundamental disagreement over how the EU deals with conflict (see: Ukraine) and economic reform (pro or anti-austerity?). Balancing these issues, along with appeasing political parties – particularly the Social Democrats so they feel appropriately represented – will all come into play. Whatever is decided on Saturday will also have ‘trickle down’ implications for Juncker’s subsequent allocation of portfolios. It may not be bumpy seas, but let’s say we expect Saturday’s agreement to create some political waves.
Once the high political posts are decided on the 30th, then Juncker needs to go away and assign portfolios for the rest of his College. He too, will have to ruminate on the politics of geography, gender, economic policy viewpoint, and ‘Eurozone or non’. Decisions over which nominee will become the head honcho for everything from trade to competition to multilingualism and more will be politically charged. These allocations are sure to be discussed in the margins of Saturday’s Summit, though not formally decided as that’s Juncker’s prerogative. On top of it all, Juncker must keep in mind that his College can serve only after being given the nod of approval by both the European Parliament and the Member States – and each of those bodies will have their own priorities for the compilation and structure of the next executive body of the EU.
Who’s up for what?
- Battling out the course of direction for European foreign policy are the current Commissioner for International Cooperation, Humanitarian Aid and Crisis Response (Bulgaria’s Kristalina Georgieva), as well as two current Foreign Ministers (Italy’s Federica Mogherini and Poland’s Radosław Sikorski). Mogherini is the only Social-Democrat candidate put forward and seems to be the front runner, although Central European countries have publicly opposed her candidature as she appears soft on Russia. They have thrown their support behind Sikorski who is seen as more bull-ish on Russia and quite critical of the US. Georgieva, on the other hand, is generally seen as a good compromise candidate given her experience and more moderate positioning than the other two.
- There are various names in the mix for the position of Council President as well. Donald Tusk seems to be the front runner for the centre-right EPP and enjoys the support of Merkel and Cameron, though recent reports indicate he may prefer an economic portfolio. Danish Prime Minister, Helle Thorning-Schmidt may prove to be the best candidate given her political affiliation and gender status. That said, neither Denmark nor Poland are Eurozone Member States, which has been a concern raised by France and means they might face lingering opposition. If that’s the case, then Latvia’s Valdis Dombrovskis could emerge as a strong compromise for geographic balance and Eurozone status. Other contenders from the EPP include Ireland’s Enda Kenny and Finland’s Jyrki Katainen.
The gender issue: A red herring?
On multiple occasions President Juncker has committed to having a fair representation of women in his College and both EP president Martin Schulz, and ALDE group president, Guy Verhofstadt, have said that the European Parliament would accept nothing less. However, Member States have only nominated four women. As a potential means of hedging his bets, Juncker has recently stated that if he doesn’t receive more female candidates he would redress the situation by looking to assign ‘important portfolios’ to those female candidates who have been nominated. Questions remain however, as to whether this would appease the European Parliamentarians who appear ready to take Juncker to task over the issue.
A possible structural shake-up?
Juncker could seize his moment as President to restructure the Commission to better fit his College – which currently includes a few former prime ministers amongst other highly political operators. One of the ideas is to create two vice-president posts for Commissioners that have a coordination and filtering function similar to the role played by the Secretariat General. These posts could including Vice-president in charge of budget, economic and employment reform in Member States and a Vice-president in charge of coordinating growth and investment programmes.
Further structural reforms of the Commission, such as creating clusters was discussed and discarded in the formation stages of the Barroso II Commission. A cluster structure could be politically difficult to accept as it could mean that some Member States would have a Commissioner without a portfolio, and would be seen to be accepting a more “junior” position. Furthermore, the Lisbon treaty prescribes parity in the College of Commissioners – a principle which would be hard to combine with hierarchical clustering.
As long as the ship doesn’t veer off course, EU leaders will decide on the positions of High Representative and Council President tomorrow and the remaining ambiguous Member States will announce their nominees for the Commission posts. Once that happens, Juncker will have to get to work on formulating his College so that it can be approved by Parliament. The EU leaders are already running behind as their July Summit ended without answers as to who will fill these top political posts. If the process is delayed any further, the Juncker Commission will struggle to be in port on 1 November.
By Lindsay Hammes & The FleishmanHillard IRU (Institutional Research Unit) Team
August 29, 2014
Excuse us being the latest of a long string of commentators to use this time-honored title for our blog post, but sometimes it’s a reminder that just has to be said again and again.
This weekend, case in point, European leaders are once again meeting in Brussels for their third attempt to settle on who gets the EU’s top jobs for the next five years. Cue chatter in the press, on Twitter, and all across town revolving around the thrilling question of whether a Dane or a Pole will get to fill the shoes left by Herman van Rompuy when he vacates the office of the President of the European Council. Similarly, people wonder, should Europe appoint a foreign policy chief that could strike a conciliatory tone with Russia, or one who might stir the pot just a bit more?
This is, superficially, what this weekend’s summit is supposed to decide, allowing European Commission President-designate Jean Claude Juncker, to get on with the business of forming his college of Commissioners. The real machinations under the surface, however, are proving to be far more complex, and (surprise!) are actually all about the economy.
By the numbers, Europe has been having a tough year. Everyone started 2014 taking about the recovery finally – finally! – taking hold, and shifting their focus to post-crisis policy. In reality though, Eurozone inflation has dropped to worryingly low levels, economic growth seems to be stalling in many countries (with Italy sliding back into a technical recession this month), and the simmering conflict between Russia, Ukraine and its ambiguously-badged ‘rebels’ has sparked a two-way sanctions battle that threatens to undermine exports and, in turn, growth for a number of European economies.
European politicians and officials have been quick to notice this – and while watching their approval ratings plunge and support for radical anti-establishment parties soar – they know that something has to be done, and done quickly. Italy, benefiting from a charismatic new Prime Minister in Matteo Renzi and from holding the rotating Presidency of the Council of the European Union, has pushed relentlessly for greater flexibility to be introduced into EU fiscal rules, thereby allowing governments to ease-off austerity. France has backed this push with its embattled President, Francois Hollande, calling this week for a special Eurozone Summit to be held to agree on specific measures for boosting growth and investment across the continent.
So, great then, right? Who doesn’t want to boost growth an investment? Well, let’s just steal our next cliché from Facebook as say that “it’s complicated”.
Complicated, because, while other EU Member States, chiefly Germany, are all for increased growth and investment, they harbor deep concerns that easing EU budget rules could reduce the incentive for countries to make the necessary structural changes needed to boost their own economic competitiveness, and could lead to the kind of fiscal profligacy that started the Eurocrisis in the first place. This also isn’t just a purely political or economic calculation, but an institutional one that gets to the very credibility of the EU’s system of checks and balances, and how Europe’s treasuries are viewed in international credit markets. For now, Germany is nodding politely to the calls for renewed economic initiatives, but this hides a deeper political game being played that may not come to the surface for some time yet, but that will nevertheless be a dominant theme in this weekend’s Summit negotiations.
Jobs likley to be as, if not more, contentious than the Council President and High Rep posts, will be the EU’s Commissioner for Economic Affairs and the Chair of the Eurogroup. Two officials who wield significant influence in determining and policing Europe’s budget rules. Witness this morning’s revelation in the German press that Angela Merkel’s government is planning to strongly oppose the nomination of France’s Pierre Moscovici to the Commission’s economic portfolio. That’s them putting one card on the table – they’ve still got a few more in their hand.
Ultimately, however, the economic picture coupled with the fallout from the tensions with Russia present a challenge that Eurozone leaders – French, Italian, and German too – know that they have to address. The sting of squeezed trade with Russia may provide the necessary bit of extraordinary justification for a one-time easing of austerity measures. Alternatively, something even more ambitious might take shape, like substantially increasing the size and roll-out of Juncker’s 300 billion euro investment plan. The ECB could even step in with a US-Fed style quantitative easing programme to inject more cash into the economy.
In the end though, all this comes down to whether European leaders can leverage this year’s unexpected challenges to get a strong mandate from their domestic audiences, and use that to work with each other to strike a balance between fiscal responsibility and growth that is as sustainable politically as it may be economically. This is much easier said than done, but it’s the one issue that will dominate the agenda this weekend, and very likelyfor the rest of the year.
By Martin Bresson, Scott Martin, and Claire Bravard
August 29, 2014
- What has been achieved
Whilst attention over the past months has focussed on the high politics of institutional change, continuing efforts to reboot the economy and attempting to nudge some order into the EU’s eastern neighbourhood, a quiet evolution has taken place in the euro payments system. Originally planned on 1st February 2014, the extended deadline of 1 August marked the date for all Eurozone payment transactions to migrate into SEPA compliant formats, completing – in the words of the ECB – “one of the largest financial integration projects in the world”. In simple terms, it means all payment transactions will have to be handled in compliance with a set of standardised rules, of which the IBAN/BIC system is the most noticeable. The extension of the deadline was necessary to avoid severe disruptions in the EU payments market as not all market participants were ready to use SEPA standards by 1st February. The table below shows the strong compliance efforts accomplished over the first half of the year.
Source: European Central Bank
It’s worth clarifying that whilst SEPA deals with payments made in Euro, SEPA also covers the broader European region. In fact not only are all EU member states part of SEPA, but also Norway, Iceland, a series of microstates (Andorra, Liechtenstein, Monaco, Andorra), and even Switzerland. By way of derogation, market participants in non-Eurozone countries have until the end of October 2016 to ensure full migration – while certain “niche” products also enjoy temporary exemptions across the EU.
While this migration is in many ways a technical achievement rather than a political one, the idea of SEPA is deeply rooted in the idea of the Single Market, making this largely unnoticed event one to remember for the spiritual descendants of the likes of Jacques Delors.
2. What is SEPA, and why is it important for the Single Market?
The “Single Euro Payment Area” project is a natural outcome of the creation of the Euro, and is an offspring of the 2000 Lisbon competitiveness strategy. The logic is compelling: creating a single currency and supporting a series of natural “spin-offs” of the Euro will tear down the remaining barriers to cross-border trade and investments and – once these forces are unleashed – will result in higher levels of growth. The hope was to not only create a SEPA but a fully integrated financial system and economic space, where borders for financial markets would be a thing of the past.
From this perspective, it is undeniable that SEPA is one of the most successful outcomes of the Euro project. In essence, it standardises Euro denominated transactions in the SEPA, which – as mentioned before – is broader than the Eurozone. This standardisation goes beyond the standardised use of the IBAN/BIC scheme, but sets out a complete standardised rulebook governing processing, clearing & settlement. It is a classic example of reducing friction costs which most economists and policy-makers will only applaud. Indeed, an economic analysis commissioned by the European Commission to PWC, estimates the benefits of a “fully embraced” SEPA at around €22 bn in yearly savings resulting from price convergence and process efficiency.
2.1 Benefits and limitation of SEPA: A Euro d(en)ominated project
The benefits of the SEPA are undeniable, not in the least from a very practical perspective. However, there are some remaining limitations that remain present even after successful migration.
SEPA marks practically full standardisation of pure Euro transactions, which for consumers making cross-border transactions within the Eurozone means that – in theory – they should be as easy/fast/reliable as domestic transactions. This is important because in the past, despite the introduction of the Euro it could have still proved challenging and time consuming for interbank and/or cross-border payment transfers, because of different formats of bank account numbers, standards, clearing process, etc. Under the SEPA project, from now onwards, a French bank account holder should be able to conveniently make daily payments across the Eurozone. She can just go online to pay monthly rents for her apartment in Paris and book a beach house on Fuerteventura for holidays – two experiences that will be almost identical procedurally – in a couple of clicks, without additional paper forms to fill in, phone-calls to make or long-queuing during visits to the bank.
From an EU Single Market point of view, the beauty of a fully endorsed SEPA system is that it applies to all euro payments made in the SEPA area, regardless of whether the counterpart’s account is denominated in Euro. However, this is not to say that SEPA is the perfect solution. For Euro to non-Euro transactions, whilst they also enjoy the benefits of SEPA standardisation, there are some limitations due to the risk and transaction costs associated with currency conversion. This is indeed an inherent limitation of SEPA, as at this point, 14 different currencies circulate in the single payments area.
Euro-domination manifests in the governance of SEPA, as the newly established European Retail Payments Board (ERPB), an engagement platform set up to provide input into SEPA related policy issues, is firmly rooted within the ECB, which has a strong mandate for governing the SEPA area. The ECB also oversees the SEPA compliant credit and debit schemes, while it also plays an important role in payments settlement through Target2. For obvious reasons the ECB is, of all EU institutions, the most euro-centric.
2.2 Ongoing project to build a single payments market: looking beyond SEPA migration
Some other EU legislative proposals touch on the fundamental idea of SEPA, i.e. promoting a single EU payments market. EU has recently adopted rules with the objective to make it easier for citizens to switch/open payments accounts in different Member States. This initiative, which originated from the concept of social inclusion, can also find roots in single market logic, although it is not without industry concerns around some practical implications on, for example, fighting financial crimes. Further, the review of the Payment Services Directive currently negotiated is crucial in improving consistency between national rules as well as enhancing competitiveness and security. One of its main aims is to bring new payment services providers within scope of the EU supervisory framework to ensure level playing field regarding security and consumer protection. The more politically controversial proposal to regulate interchange fees between banks is also embedded with the concept of pushing for a more competitive and integrated payments market. Ongoing debates between policy-makers and market participants shows that, in the path towards a more integrated and competitive payments market, it isn’t necessarily easy to draw a clear line between unjustified high transaction costs and a proper profit generating system to ensure the provision of quality services and encourage innovation.
While SEPA experiences some limitations within Europe, it probably isn’t entirely foolish to suggest that (parts of) the SEPA rules could be expanded across the globe. Although SEPA is an EU project, one of its components, the IBAN, stands for “International Bank Account Number”. While first developed by the European Committee for Banking Standards, it was later picked up by the ISO, the International Organisation for Standardisation . Today, aside from SEPA, only a few other jurisdictions have implemented the IBAN/BIC model, amongst which are Turkey and Brazil. Though global standardisation has not always been successful – think of the last time you’ve tried to charge your laptop abroad – in several cases, the EU has been a decisive pioneer in pushing for global standards.
Martin Bresson, Mandy Shi Lai and Marijn Swinters
August 6, 2014
FleishmanHillard recently gathered representatives of the food & beverages, agriculture and retail industry to hear about the expectations of European consumers towards the food industry. To feed the debate, Nick Andrews presented the recent FleishmanHillard research called “Authenticity”. The research, undertaken in Germany, the Netherlands, and the UK with expert consumers revealed that the industry is falling short on people’s expectations to provide transparency around production methods and sources, more personalised and easier to use products and services.
Commenting on the consumer’s expectations, the Deputy Director General for the Food Chain at DG SANCO, Mr. Ladislav Miko, shared with the participants his views on how the European Commission’s current and future initiatives will support the industry meet these expectations.
The Authenticity Gap research is available on our Center On Reputation website and will give you insights into what consumers expect from your industry! Reputation matters when it comes to policy-making and regulation too!
How is your company doing reputation wise and how much does it support or hinder your public affairs objectives?
July 15, 2014
The issue of healthcare sits in an increasingly delicate place in the European arena. Traditionally, healthcare has been a matter of Member State competence. That continues to be the case, but the impact of the economic crisis and intensified involvement of the European Commission in the economic governance of Member States, means that the institutions are cautiously engaging in a new dance on healthcare.
Now in its fourth year, the Commission provides so called ‘country-specific recommendations,’ or CSRs, on where some Member States should be focusing their budgets (and cuts). Such economic governance and scrutiny has spilled over into the arena of healthcare budgets, a large component of national government spending. These put the spotlight on the efficiency of health systems and expenditure. At the end of June the European Council generally endorsed the CSRs and today 8 July these were formally adopted by EU finance Ministers. It will now be up to the EU Member States to implement the recommendations when drafting their national budgets and other relevant policies.
As far as health is concerned, a step-change in recent years is the increasing number of countries (now 16) receiving CSRs relating to healthcare. With this trend we see European Health Ministers more ardent about claiming their stake in the economic debate, as witnessed recently when the EU’s Council of Employment, Social Policy, Health and Consumer Affairs Ministers (EPSCO) gathered round the table in Luxembourg. A primary concern of EPSCO was the perceived lack of consultation and coordination with Health Ministers on CSRs and budgetary negotiations which impact on health. This signals a growing recognition at the highest political levels that more coordinated action, is needed to address healthcare issues in the context of economic policy in the EU.
What does all of this mean for the future of healthcare in the EU? It remains to be seen both how Member States plan to implement the CSRs relating to health, and how the European Commission intends to scrutinize action in this area. Given the fairly general nature of the CSRs, which propose such actions as improving the cost-effectiveness of the health-care sector, they may prove difficult to evaluate. Nevertheless, we are seeing a growing momentum by the EU to do more in health, and an increasing necessity for economic and healthcare decision makers to start dancing to the same tune.
July 8, 2014
King Felipe VI: Called to be a Symbol
In a turn of events that few would have predicted a fortnight ago, King Juan Carlos I of Spain (76) formally announced today his decision to put an end to his 39-year reign and abdicate in favour of Crown Prince Felipe (46). The decision follows three years of accelerated decline in the popularity of the Monarchy caused by family scandals and a series of major missteps by the King himself. The succession comes one week after the irruption into the Spanish political scene of Podemos (We Can), the leftist grassroots movement that obtained a stunning five seats and 1.2 million votes in the European Parliament elections on 25 May.
The rise of Podemos –created in March around a telegenic, fast-talking and pony-tailed university professor—crystallised the degree of dissatisfaction of a large sector of the Spanish electorate with the traditional political parties. Both the conservative Partido Popular, now in power in Madrid, and the Socialist Party lost millions of votes. More importantly, the poll marked the end of the de-facto bi-partisan system that has governed Spain since the restoration of democracy in 1976, where Conservatives and Socialists have alternated power for 35 years.
The upheaval caused by the election result has so far forced the resignation of Socialist Party leader, Alfredo Perez Rubalcaba, and opened an uncertain process to renew the party’s leadership. It has also signalled the pre-eminence, in number of votes, of the pro-independence ERC party in Catalonia over the more moderate CiU. But beyond specific effects, it has highlighted the ‘exhaustion’ –a term frequently used by political analysts—of the political framework that emerged after the death of General Francisco Franco in late 1975.
King Juan Carlos I, appointed by the dictator himself to preserve his regime, won the support of an overwhelming number of Spaniards by doing the opposite and championing the country’s rapid transformation into a constitutional democracy in the early days of his reign. His position was further enhanced when he aborted a military putsch in 1981. For years thereafter, the Monarchy served as a symbol –internally and internationally— of the ‘new’ Spain. However, the combined effect of the corruption trial against his son-in law, the fallout from the King’s elephant-hunting trip to Botswana at the height of the economic crisis and his alleged dalliance with a dubious German socialite have led to approval rates below 50% –and increasing calls for the abolition of the Monarchy.
Future King Felipe the Sixth has made efforts to disassociate himself from the reputation meltdown of the Crown. Over the past three years, as Juan Carlos has been in and out of hospitals, the Prince has raised his profile as a poised, articulate and socially-conscious, individual in tune with the times. At the same time, he has cultivated an image as a caring and modern family man, far removed from his father’s whispered reputation as a playboy and rumours about less-than-appropriate business deals.
During his televised abdication speech on Monday the King said that he took the decision to abdicate in January. This, however, contrasts with Juan Carlos’ own words during his last Christmas speech in which he affirmed his “determination” to continue discharging his duties. Whether carefully planned or forced by events, the royal transition acquires its full meaning only when examined in conjunction to the May 25 outcome. For the first time, a significant mass of voters channelled their opposition to EU mandated austerity, to rampant corruption among the traditional parties, to the financial system and to the Monarchy through a new “anti-system” political brand.
The ‘official’ Spanish body-politic –the main parties, the Government, the heads of key institutions, business leaders and academics— have tried to minimise the meaning of the ‘Podemos’ phenomenon and explain that its recent electoral showing cannot be extrapolated to upcoming municipal and general elections in 2015 and 2016. However, the Parliament that emerges as a result of the next general election is likely to confirm the decline of Conservatives and Socialists and further deconstruct the dominant statu quo.
Barely two hours after the abdication announcement, United Left leader Cayo Lara called for a referendum to abolish the Monarchy and social media exploded with calls for pro-Republic demonstrations. Regional groups favouring the independence of Catalonia and the Basque Country, as well as the new and radical movements like ‘Podemos’, are overtly or potentially anti-Monarchy and would have little choice but to support a potential groundswell for Spain’s transformation into a republic if public trust in the Crown is not restored.
The current Parliament –with a safe pro-Monarchy majority—will have to now take the constitutional steps to proclaim Prince Felipe as King, something that will most likely happen before the end of June. It is reasonable to think that Juan Carlos and his advisors have determined that a succession that is sure to be swiftly approved by the current Cortes will give the new King time to assert his own influence and project a totally new style.
In a country where emotions weigh heavily on voter’s choices, future King Felipe VI is faced with a daunting challenge: that of being a symbol of renewal. The question will be whether the institution he embodies –its reputation tarnished, its usefulness questioned— will regain the trust of Spaniards.
June 2, 2014
Environment Commissioner, Janez Potočnik, is an ambitious and tenacious man. In the dying days of this Commission, he is trying to push out perhaps his most ambitious law to date and overhaul Europe’s Waste law.
One of the last acts of his fellow Commissioners will be to back a call to effectively ban the landfill of household waste by 2030. Recycling targets across the board will be ratcheted up.
You would have thought that the Commission would not try and push out a major initiative in its dying days in office. And, whilst that is the normal rule of the Commission, like all good rules, there are exceptions, and here the President voiced support for the unwritten initiative before, so the current Commissioners are going to bind their successors with an ambitious new policy and draft law.
The Commission’s internal sign off process to proposed laws, known as Inter Service Consultation, is carried out in relative secrecy. It seems to have started on 27 May and it will last 15 working days (weekends and public holidays excluded). It will be interesting to see many objections come in from other services.
The Environment Commissioner has a good track of getting proposals out that he wants. Other Commissioners will have their eyes focused on post-Commission life. Commissioner Tajani, whose DG Enterprise Department, did so much work to block DG Environment’s initiatives, is now a MEP. It will be interesting to see if others inside the Commission, Governments or industry raise question marks about an outgoing Commission pushing out ambitious legislative proposals in their last moments in office.
Banning landfill will be a very tough act for some countries to ever meet. If adopted, local authorities may need to re-open long term waste recovery contracts with waste management companies who’ll need to invest in state of the art technology to divert household waste. Households will land up paying any additional prices for their waste collection. Many governments, still operating under tough fiscal restraints, will find it hard to pay for necessary infrastructure improvements.
This overhaul of Europe’s convoluted waste regulation regime will be one of the first new pieces of legislation for a new European Parliament to consider.
June 2, 2014
The headline above refers to a Stealers Wheel song from 1972 made famous (again) by Quentin Tarantino as part of the soundtrack for his deservedly acclaimed 1992 movie, Reservoir Dogs.
If you ask my teenage daughters, both of those references are “SO ancient! SO old!” But to me, they are extremely timely.
In the next few days, we are likely to see “blood on the floor” from some of the mainstream parties in the European Parliament. In fact the political scenario might make the scenes in Reservoir Dogs look like something out of Toy Story. In all probability, during the post-election phase, attentive observers will be able to see lead negotiators of those same mainstream parties sing the above song – probably off key and definitely not in unison –as a chorus.
Why? Politics. Tactics. Nationalities. All are legitimate explanations. Governance issues are equally important, chiefly the Parliament’s need as an institution to assert its position as a credible counterpart to the European Council.
But there’s a bigger explanation, a meta explanation, which transcends all of these reasons. If you believe in democracy, the explanation is this: real politics (not to be confused with realpolitik) is made by those people who will and can.
So you can make a very simple matrix…
Brilliant people will arise on either side of the political spectrum. By showing that they are effective communicators, they will convince us that they could – probably – make European politics. These same people will also make it abundantly clear – as written in their very programs – that they are not willing to do so. Despite the speeches, rallies and massive support…. nothing will materialize.
Throughout the political spectrum, you will also have profoundly good and willing candidates – soon to be MEPs – who have a lot of unguided goodwill but no real ability to put it to use. Failing to devise any revolutionary strategies and feeling disappointed at being misunderstood by electorate and colleagues (politicians rarely recognizes their own lack of abilities), they will become innocuous, doing no evil, but falling in line to follow those who are genuine leaders.
Equally dispersed across the spectrum – but hopefully not in equal numbers – you will find those who don’t care and don’t want to do anything – the passive and disinterested. They ran for office and won the election for reasons unexplained and inexplicable. They will be forgotten even before the first picnic-trip to Strasbourg, regardless of how many times they are re-elected to Parliament.
And finally you’ll have those who are both willing and able to do what they are here for, regardless of where they stand on the political spectrum.
If an election can be about “Yes, we can” the post-election reality for ‘real politicians’ will always be “yes we will.” These latter specimens will be able to make political compromises and decisions that determine the future of Europe in a wider sense, because they can. They will lead the colleagues who can’t step forward, and energize some of those who simply won’t, and in the end, it is they who will make politics – stuck in the middle as they will be.
May 23, 2014
You’ve all heard the story of the global financial crisis, the banks that failed, the bets that lost, and the governments that just didn’t know what to do. You’ve probably also heard about the deluge of economic initiatives and financial regulation that poured forth from the public sector in the wake of the crisis to try to make sure that ‘it will never happen again.’
What you may or may not have heard about, is the group of people in Brussels who played a big part in driving that effort forward – or sometimes forcing it to take a sharp turn.
Sure, Europe’s Finance Ministers and the folks who show up at G20 meetings a couple times each year are the ones who normally call most of the shots, but since Europe’s Lisbon Treaty came into force in 2009, the European Parliament has played an increasingly decisive role in shaping the content of EU law. Though this is the case across sectors, the response to the crisis created an unprecedented situation where this trend has been most acutely felt in the field of financial regulation.
Who are these ‘faceless’ Parliamentarians then? Well, as our PA2.0 blogger, Stephan Thalen, from the other week pointed out, most of the Parliament’s substantive work takes place in Committees, with the Economic and Monetary Affairs (or ECON) Committee being the one we’re getting at here.
Why do these people matter?
Given the impact of the global financial crisis, MEPs on the ECON committee have carved themselves a crucial role in the implementation of the G20’s post-financial-crisis agenda. Drafting their own version of the Commission’s proposals and fighting it out with Member States in trench wars that sometimes have dragged on for months on end. Integrated European banking, markets, and insurance standard-setters? Higher contributions for banks to pay in case of their failure? Strict limits on the bonuses that banks can pay their employees? Yep, those were all things the ECON Committee clung to in negotiations and didn’t let go of until they got their way.
So the big question then is, how do we expect this vitally important committee to change with the European elections this month? It’s ultimately hard to say, as the composition of Committees is always the subject of a long and murky process of horse-trading before their creation (again, see Stephan’s blog). But based on the big trends we’ve been highlighting recently, and our understanding of each MEP’s prospects, we’ve come up with a number of outcomes we think we’re likley to see in ECON later this year:
- Center-Left / Centre-Right cooperation: Recent polls show that an EPP-Socialist grand coalition is likley to be the only workable majority in the next EP – and this will be reflected across committee structures – including ECON. While both are (for the most part) pragmatic, the two groups often do not see eye-to-eye, so the process of coming to common positions may become longer, and even more complex.
- Uncertain influence for smaller groups: The Liberals used to be the king-makers in ECON, but their future looks increasingly uncertain as poor election performance could diminish their ranks. Similarly, the UK Tories (who have been part of the somewhat-sidelined European Conservatives and Reformists – ECR – Group) in ECON may weather the 2014 poll well, but still face increasing uncertainty in the next Parliament . This means that the continued presence of traditionally market-friendly voices in ECON is at risk. The Greens, who have been the main drivers behind top files such as the reform of bank structure and remuneration limits, have developed a strong working relationship with the Socialists in this Parliament, and look to stand a better chance of maintaining the influence they’ve gained.
- Significant turnover: Several important ECON MEPs have decided to step down ahead of this month’s election. This includes ECON Chair Sharon Bowles, Vice-Chair Arlene McCarthy, the EPP coordinator Corien-Wortmann Kool, and EPP veteran Astrid Lulling. Many other crucial MEPs are further considered to be at risk of not being re-elected in the coming vote. While this may not affect overall Group numbers, it could strengthen the hand of more experienced members who remain, including German MEPs from Angela Merkel’s CDU/CSU (making them well placed to grab the Chairmanship of the Committee).
Also, a recent debate that we’re watching closely has been over whether or not the Parliament should have a specific committee to deal with Eurozone-only issues, such as oversight of the single currency, the Eurogroup, the European Stability Mechanism, and the newly formed Banking Union. While opposition to some form of ECON Eurozone Sub-Committee has softened recently, with German and French delegations warming to the idea, strong resistance is still expected from other influential groups such as the Polish delegation, who fear this could lead to a two-tier “ins” and “outs” decision-making model and entrench divergent interests between the two sides of the currency bloc.
So, how complicated can things get?
The ECON Committee stands to experience significant shifts in the next few months – but none more important than the numbers game of how the political groups count to a majority. While Grand-Coalition type configurations are easy to understand, their politics usually tend to be much less straightforward, relying on strategic trade-offs, accumulation of favors, and often obscure negotiations. While strong positions are often harder to come to, the benefit, from the Parliament’s perspective, is that the position (once reached) will normally benefit from unusually strong support among its members and ideally be harder to dislodge in negotiations with the Council.
If you’re interested in an even more in-depth look at what we here at FleishmanHillard think the ECON Committee will look like after the election, and the implications this could have for financial services policy in Europe going forward, you can read our “Changing Faces in ECON” briefing written by FH’s Financial Services Practice.
May 22, 2014
Brace yourselves – the European Parliament elections are coming. Though turnover will be less dramatic than the Game of Thrones cast (no spoilers or EU-version of the Red or Purple Wedding, I promise), Brussels can expect a significant number of new movers and shakers representing the different political houses and kingdoms of Europe to ascend their Institutional thrones this summer. This is especially so for the European Parliament, where hordes of wildlings, a.k.a. MEPs, will congregate following the May elections for the new Parliament’s first plenary meeting on 1 July 2014 to decide on committees, their composition and chairs.
European Parliament committees, as per its Rules of Procedure, are set up following a proposal by the Conference of Presidents (CoP) – if the CoP, which consists of the EP President, political group chairmen and a non-attached MEP, thinks Parliament needs a committee on the Seven Kingdoms, they’re the ones who decide. Expect most standing committees to return for the 2014-2019 parliamentary term.
Committee members are nominated by political groups and non-attached members, and are elected during the Parliament’s first sitting. This process is (painstakingly) repeated two and a half years thereafter during the mid-terms, so early 2017, ahead of the 2019 elections.
Each committee, however, has one chairperson who ascends the ‘throne’. From here they influence all rulemaking during their ‘reign’ – for those that aspire to ascend it or are interested in knowing how those who have did, here are three “easy” steps to becoming a Parliamentary committee chairperson:
An obvious first hurdle, I know, but it’s easier said than done. For the 751 seats up for grab in the 2014 elections, there are already more than 6,400 (!) candidates – that’s a ratio of about 1:9, though this depends per country.
Not ‘The Hound’, d’Hondt. Named after a Belgian lawyer, the d’Hondt system is used (in practice – it’s not in the Rules of Procedure) for the allocation of committee chairs between political groups. Most of you likely understand the system or at least know of it – it’s widely used in Europe and the UK, including Northern Ireland (i.e. Westeros).
For those not familiar, you may want to reach into your inner Master of Coin as it helps to have some rudimentary math skills. Here’s the basic idea: a political group’s seat total is divided by 1 – this increases by 1 each time a group wins a committee chairs. As the divisor becomes bigger, the political group’s total in succeeding rounds gets smaller, allowing parties with lower initial totals to win seats. For a great example in Northern Ireland by BBC News, see below:
Once you’ve entered the great halls of Spinelli, the skilful manoeuvring of a Littlefinger will be useful in becoming a committee chairperson. Though chairs and vice-chairs, the bureau, are elected by their respective standing committees in separate ballots using the D’Hondt system (see above), weeks of horse trading among the political group coordinators and national delegations ahead of the first plenary are what actually decide who joins the ranks of chairperson.
To give you a concrete example, Italy, the second largest delegation in the winning centre-right European People’s Party following the 2009 elections (breakdown below), saw the Parliament’s presidency go to MEP Jerzy Buzek of Poland, but instead was given control of the highest number of committees (see chart below), followed by Germany and France – a large number of vice-chair positions were also given to Italy. This system of ‘appointment by acclimation’ should again be expected this summer.
Using the d’Hondt system, the EPP with 265 seats received the first committee chair appointment. The divisor was subsequently increased by 1, leaving the EPP with 132.5, and therefore giving the S&D with 184 second choice. The same increase to the S&D divisor following its win would reduce its point total to 92, and thus allow the EPP to choose again in the third round. This process continued until the allocation of all committee chairs as per the chart below was completed.
Though nothing can be said with certainty at this stage about who will claim each committee ‘throne’ given we’ll need to await the election results, expect behind-the-scenes wheeling and dealing as well as trade-offs to dominate Parliament and its new inhabitants come June.
May 5, 2014