In order to widen the debate about the future of the EU, Open Europe will be organising events across Britain and Europe. To receive information about future events please sign up to receive our fortnightly bulletin.
Click on the links below to view Open Europe's events by year:
2010
“EU Supervision and Regulation in the Securities Markets: Will One Size Fit All?”, 12 July 2010, London
JP Morgan kindly hosted a joint Open Europe and Policy Exchange panel discussion on the EU’s proposed role in financial supervision, including the establishment of three new EU supervisory authorities (ESAs), currently being negotiated between member states, MEPs and the Commission. The discussion focused specifically on regulation of the securities markets and the creation of the European Securities Markets Authority (ESMA).
To listen to an audio recording of the event click here.
Salvatore Gnoni, from the Internal Market DG within the European Commission, argued that the EU’s proposed new powers of financial supervision were required because the Single Market “was not complimented with parallel supervision” and that the financial crisis had inflicted costs on the financial services industry and taxpayers. He argued that EU supervisors were needed to ensure that EU financial services legislation was “consistently applied” across all 27 member states and said that their role would primarily be to coordinate the roles of national regulators.
He said that ESMA would have direct supervision over credit rating agencies which he said, “by nature have a pan-European reach”. He added that, “It cannot be excluded that in the future direct supervision will be extended to other entities.”
Mr Gnoni said that in “an emergency situation” EU supervisors would have the power of “direct supervision” over individual firms. He said that the direct supervision of firms would only occur as a last resort; only when national regulators did not comply with the ESAs recommendations; and when EU law “was directly applicable”.
He added that EU supervisors would have the power to make “binding decisions” to settle disagreements between national regulators.
When asked about the ESAs power to ban certain market practices, such as short-selling, Mr Gnoni replied that “we don’t know exactly how it will end” because the possibility to ban specific financial transactions or products is likely to be included in future individual EU directives. He said, “The real discussion will be when the sectoral legislation is proposed.”
Kay Swinburne, a Conservative MEP for Wales and member of the EP’s Committee on Economic and Monetary Affairs, said that the current ‘trialogue’ talks between member states, MEPs and the Commission were at a “make or break” stage. She said that a positive aspect of the creation of the ESAs was that they “should deliver a stronger Single Market” by universally applying a “single European rulebook.”
She said that the “major sticking point” in the negotiations was the power that the ESAs would have over national regulators and individual firms. She said that the new supervisors’ powers had to be carefully worded “so that member states actually know that there will be no fiscal consequences from someone else’s decision making. And that the ‘emergency situation’ really is an emergency and not someone trivially trying to cause an issue with one member state not applying laws.” She added that, “We need to make sure that the legislation has little or no scope for national authorities to be overruled.”
Ms Swinburne said she could not support the EP’s version of the proposal, which she said “completely breached all subsidiarity rules and took an awful lot of sovereign states’ initiative away” in an attempt to regulate the “Anglo-Saxons.” She said that the compromise text had some positives, especially in ensuring “even implementation” of EU rules but said that member states still needed “adequate safeguards” so that EU supervisors “only intervene when EU legislation is consistently breached and that there is an increased systemic risk to another member state.”
Ms Swinburne said that she had originally come at the proposals with a “very UK Conservative line where we are protective about our sovereignty and handing over any additional powers” but now questioned whether “we were being too precious about it and, if we are, then maybe we do need to facilitate our companies’, who are facilitating the real economy’s growth, to access the single market.”
When questioned about what safeguards there would be on the decision making role of the ESAs, Ms Swinburne answered that the she felt it was important that member states had the power to call an “emergency situation” and not the Commission, the ESAs or the EP. However, she conceded that, under the current proposal, a vote on declaring an emergency situation is “likely to be simple majority”, meaning that the UK would have the same voting weight as Malta.
William Underhill, Chairman of the City of London Law Society's Company Law Committee, said that there is a feeling that the financial crisis was “leading to a change in architecture for financial regulation that was not limited to those areas that you might have thought were a proper response to the crisis.” He said it was important to ask “What are the boundaries of the single EU rulebook that lies behind a lot of this new architecture?”
He pointed out that new regulation would touch people who are not financial institutions. “It touches any investor in the market,” he said. He said that the concern was that “the mood has become one of single rulebook. The assumption is that the single rulebook in all circumstances justifies the change, whereas I think we still need to look at each specific proposal, each technical standard that comes forward needs to be justified against more subsidiarity principles.”
He said that by creating the framework, “It’s going to be much easier to bring forward proposals that expand the single rulebook.” Mr Gnoni said, “We can’t foresee the evolution in five or ten years time but we know that there are already global stakeholders calling for something more.” He noted that the proposals include “review clauses” that will allow policy makers to assess “the need to change something, to strengthen something, or to simply modify. I think we can’t assume.”
Ms Swinburne said that she was sceptical about concerns of mission creep because of the ESAs’ limited budgets. She added that the Commission’s recruitment rules should be relaxed for the ESAs to ensure the best people were hired and that the ESAs were independent from political interference.
When asked whether the ESAs would have prevented the financial crisis, Mr Underhill said that “It wouldn’t have had any effect at all because none of the issues to do with the credit crunch are within the remit of what ESMA is going to cover.” Ms Swinburne said, “Will they prevent a future crisis? We don’t even know what form a future crisis is going to take.”
“From Euroscepticism to Eurorealism”, 30 June 2010, London
Open Europe hosted a book launch in the House of Lords for Derk-Jan Eppink MEP’s latest work, Bonfire of Bureaucracy in Europe.
Conservative MP Robert Halfon opened the talk with some introductory remarks.
Mr Eppink, a List Dedecker MEP, then introduced his new book Bonfire of Bureaucracy in Europe by discussing the tendency of the European institutional elite to always act “more, faster, bigger”. He drew a comparison to the Tower of Babel, and rhetorically asked whether the EU is not creating something that risks collapsing because quantity is given precedence over quality.
Mr Eppink said that the EU’s institutional elite does not dare ask itself difficult questions, and regards itself as a group carrying forward a “holy mission” towards “ever closer union”. “Just like Douglas Jay’s gentleman in Whitehall believes he knows better what is good for the people than the people know themselves, so the bureaucrats in Brussels believe themselves to know what is best for Europe”, he said.
Offering an alternative to “Euroscepticism”, Mr Eppink outlined a concept he defined as “Eurorealism”, recognising the EU’s key four problems. Firstly, that the idea of an “ever closer union” has reached its limit: the euro crisis demonstrated that Member States have very different views on what form monetary union should take. Secondly, grand EU projects such as EU2020 or Galileo are palpably similar to old Soviet-style “five-year plans” designed to outshine the US. Thirdly, EU legislation is of poor quality with policymakers and legislators showing little interest in the effects of its implementation. Fourthly, the EU has a tendency to simply ask for more money rather than concentrating on how and where it is spent.
Mr Eppink argued that the EU should accept that there can be several layers of participation in the Union, and that not all development must go in an ‘ever closer’ direction. Mr Eppink’s called on the EU budget to be limited to 1 percent of GDI and took a firm stand against any form of direct EU tax. He added that he is taking action in this respect by initiating a European Citizen’s Initiative against any future introduction of EU taxation (www.noeutax.eu).
Dirk-Jan Eppink’s book is available at www.amazon.co.uk.
“The EU after the Euro crisis: Superstate or disintegration?”, 23 June 2010, Brussels
Open Europe organised an evening debate in Brussels, entitled “The EU after the euro crisis: superstate or disintegration?”
Giles Merritt, Secretary-General of Friends of Europe, started by saying, “If only we here, in Brussels, had the organisational powers to create a superstate then I might be prepared to discuss it, but the fact is we don’t. The separation of powers is so enormous there is no way we will have a superstate for a long time.” Instead he recommended focusing on “real problems” such as “competitiveness, education and lack of political identity”. We need “clarity of goals” and “political focus”, he added.
Conservative MEP Dan Hannan responded to a previous reference by Giles to the term “Europhobes”, saying that he is opposed to the euro “for economic reasons, not for Europhobic reasons." The core of his argument was that “in the sweep of history the greatness of European civilisation always rested on its diversity, on its variety and on its pluralism” arguing that this is precisely what “lifted Europe to its position of hegemony in the past”. He argued that, “centralisation is very un-European. Certainly at a moment when the world is embracing European values, it would be strange to see more centralisation in Europe.”
Jochen Bittner, the EU correspondent for Die Zeit in Brussels, argued that the purpose of the EU is to “increase competitiveness” and that “some states are honest in this attempt.” He said his solution to the current predicament is “to empower the Commission” because “at least the Commission is controlled by the European Parliament whereas the Council is not controlled by anything.” He also said that moving forward, the EU could be faced with a choice between prosperity and democracy.
Open Europe Director Mats Persson pointed out the three factors he saw as most relevant to the future of the EU after the eurozone crisis: “voters and taxpayers”, “the markets” and the “Franco-German axis”. He asked whether taxpayers would put up with further integration which has “come with an enormous price tag” for German taxpayers in particular. He added that “it’s a lot easier to work your way around voters than around markets.”
To listen to a recording of the event click here.
"The AIFM Directive: Striking the right balance between protection and growth?", 25 March 2010, Brussels
(l-r) Karel Lannoo, Uwe Eiteljoerge, Pieter Cleppe, Mats Persson and Gunnar Hökmark
Open Europe organised a debate in Brussels, looking at the EU's proposed AIFM Directive and to what extent the proposal would hurt investors and lead to more protectionism. Speakers included Gunnar Hökmark, Swedish MEP and Member of the EP's Committee on Economic and Monetary Affairs; Uwe Eiteljoerge, European Commission, DG Internal Market, Asset Management Unit; Karel Lannoo, CEO of the Centre for European Policy Studies; and Mats Persson, Director of Open Europe.
The European Commission's Uwe Eiteljoerge, one of the authors of the draft Directive, explained that the Commission had included all funds currently not regulated at the EU-level under the scope of the Directive in order to avoid funds converting into other structures and so avoid being regulated by the Directive.
He also suggested that member states and the EP should go back to the Commission's controversial first draft on the point of offshore restrictions: "My answer to the question how to avoid protectionism is to go back to our original proposal last year...because it provides market access to third country funds and at the same time it establishes a level playing field between third country fund managers and European fund managers."
Open Europe's Mats Persson argued that this would be a bad idea, suggesting that the Commission’s original draft was flawed, in particular regarding the restrictions it imposed on offshore funds and managers. He said that such restrictions will have “a real life impact, and it's a global impact. I disagree with this whole idea of equivalence criteria. It's very difficult to achieve. The EU and the US have spent thirty years trying to work out equivalence criteria for UCITS funds, without success. Going down that path would be a mistake. We have seen that this approach is now also generating calls for retaliation from the US side”.
He added, “It also hurts investors. Real life people; pensioners through pension funds, charities, universities. It reduces their choice - 40% of all hedge funds would be cut off from EU based investors if the original Commission proposal or similar restrictions would be adopted. 40%! That means a massive loss of value for money for these guys.”
He also argued that restrictions on EU investors to invest in offshore funds could cut off vital funding for growth projects in developing countries. “Simply put”, he concluded, “The protectionist element has to go.” Mats also said that that it was wrong to refer to the managers covered by the AIFM Directive as “unregulated”, giving the example of UK-based investment trusts which are subject to several different laws already, both at the EU and the UK level.
Swedish MEP Gunnar Hökmark said: “I think the process of the AIFM is just now on the right track in parliament. We have dealt with a number of necessary exceptions. We have tried to separate private equity from hedge funds. I've never understood why we should mix them together. We are also trying to secure open borders for third countries, although we're not there yet. We are trying to reduce bureaucracy and trying to focus more on systemic risk.”
He also warned that an overly burdensome Directive could lead to economic stagnation in the EU “Listen to a shocking truth now. We need to have dynamic financial markets in Europe. Have you heard that lately? We need them to be as stable as possible, but not with the kind of stability that hinders dynamic development. Because too much stability gives you stagnation. And stagnation, I can tell you, provide you with more and more imbalances in the economy.”
Karel Lannoo, CEO of the Centre for European Policy Studies (CEPS) said: "three quarters of hedge funds are based outside the EU. Why are these based in offshore jurisdictions? There should be a reason for that. We have a regulation in place for funds, UCITS, which is covering about 70% of all funds. 30% of funds are unregulated, most of them being hedge funds.”
He continued to argue, “What has the crisis shown? Everybody knows what we decided one year ago in London at the G20 summit in London, saying we will regulate all products, institutions and markets, and the EU is following that mandate of the G20 by regulating an element of the market, hedge funds, which are not regulated today.”
Lannoo also said that “Hedge funds are trying to defuse the debate on some other issues, like the third country issue, and capital requirements, but the things they want most to avoid is more disclosure and more reporting to the authorities. Until today there was hardly any reporting by hedge funds to the authorities.”
Mats Persson responded, saying: “Everybody agrees that there should be more transparency, so that’s not what the debate is about.” He added that there is a consensus built around hedge funds not being a source of the crisis, which was explicitly stated in the De Larosière report for the Commission.
To listen to a recording of the event click here.
"Europe: A priority for the next government?", 17 March 2010, London
(l-r) Mats Persson, Timothy Kirkhope, John Peet, Ed Davey and Chris Bryant
Open Europe held a debate in the House of Commons on 17 March, in conjunction with Business for New Europe. Speakers included Europe Minister Chris Bryant, Timothy Kirkhope, leader of the Conservatives in the European Parliament, and Lib Dem Shadow Foreign Secretary Ed Davey, under the title “Europe: A priority for the next government?" The debate was chaired by John Peet, Europe Editor of the Economist.
Europe Minister Chris Bryant started by saying that his approach to Europe stemmed from the fact that he was “an internationalist”, adding, “I believe consensus is the basis of all political endeavour… [and] the EU, more than any other bodies…is premised on consensus”.
He also said that he believed the EU, “despite being flawed in many ways, in particular over the last eight years because it’s spent so much time obsessing about its own rules and regulations and its own internal processes, I believe it’s one of the great political successes of humanity.”
Lib Dem Shadow Foreign Secretary Ed Davey said he thought it was “disappointing” that EU issues did not feature during the last European elections because of the expenses crisis. He also said that he thought crime, defence and foreign policy were three issues he thought would be critical for the next Government.
On crime, he said that the European Arrest Warrant was important to tackle organised, cross-border crime. He added that cooperation between member states needed to be built on “as we implement the Lisbon Treaty.” He added that a key issue for the next Government was “whether it’s going to exercise these opt-ins and opt into these new Justice and Home Affairs measures…are we going to opt-out of the European Arrest Warrant, Eurojust, and Europol? I hope not.”
He added that shared defence procurement is “greatly in the interests” of the UK, adding “defence will be a big issue, and the European dimension of that is inescapable…that’s why you can’t stop at Anglo-French cooperation. It’s got to go wider”.
Timothy Kirkhope said that he thought the next election in the UK would be about “trust”, adding that the public “needs a government which can be trusted to promote Britain's national interests in the European Union by advancing its ideas clearly and firmly”.
He said that during the 13 years of the current Government, “public support for our membership of the European Union has fallen, it is lower now then when they took office. That is a sad indictment of their record in Europe. For all the sound-bites and soft words, the Government hasn't delivered in Europe and the public knows it.”
He also said that he thought the Government had not offered consistent leadership on Europe, pointing out that “they pledged to defend the British rebate and to get reform in Europe, whilst in Brussels they sacrificed part of the rebate in return for the offer of a 'review' of the CAP, a very expensive review.”
Following a question about what the concrete advantages of EU membership were, Chris Bryant said that the UK’s contributions to the EU were “worth its weight in gold” in terms of trade and the soft power the UK gained. Ed Davey added that there are “a lot of things we can’t do unless we work with other European countries”, and said that he had always supported a proper cost/benefit analysis of EU membership.
On a question about whether new EU financial regulations likely to be passed in the summer would represent a big enough transfer of power from the UK to the EU to trigger a referendum under a Conservative government, Timothy Kirkhope said he did not think that those rules were, in themselves, “a good reason for a referendum”.
On a question on whether or not Switzerland’s relationship with the European Union would be a good model for the UK, Chris Bryant said that the suggestion that Switzerland was a good model for the British economy was “inane”.
On a question on what the speakers’ position on the UK joining the euro was, Ed Davey said that eventually he wanted the UK to join the euro. Chris Bryant added, “Yes I would long term like to see the United Kingdom join the euro but we made it absolutely clear that we would not do unless the economic conditions in the UK were right and it was in our economic interest to do so, and we wouldn’t do so unless there had been a referendum which said yes, and for me that would be a significant constitutional change and therefore would necessitate a referendum.”
To listen to a recording of the event click here.
"Is the EU a threat to civil liberties?", 23 February 2010, Brussels
(l-r) Mats Persson, Jonathan Faull and Christian Engström
Open Europe held a debate in Brussels to discuss whether or not the EU is a threat to civil liberties. The event was chaired by Open Europe Director Mats Persson.
Jonathan Faull, Head of the European Commission’s Justice, Freedom and Security DG, said the EU was “of course not” a threat to civil liberties, and emphasised the progress made by the EU in the field of human rights’ protection over the last decade. In particular, he cited the fact that the EU is now negotiating its accession as a legal entity to the European Convention on Human Rights (ECHR) with the Council of Europe.
He described as “untrue” the assumption that citizens’ security can be ensured in a more effective way by member states acting separately. On the contrary, he stressed the importance of closer cooperation and coordination as a means not only to tackle crime, but also to prevent it over the coming years. He said for the moment, what the EU institutions can is “to create a legislative environment in which law enforcement authorities...can operate”.
Birgit Sippel, German MEP from the S&D Group, also suggested that the EU is not a threat to civil liberties, adding: “but it can happen”.
She underlined the difficulties stemming from the contradiction of several different legal traditions within the EU. “German Grundgesetz [Fundamental Law] provides for a right to privacy, not to security”, she said, adding that the State (and subsequently, the EU) should undoubtedly be responsible for people’s security, but its efforts to create a safe environment for its citizens should never infringe on their fundamental rights.
In addition, she also called into question the usefulness the creating huge databases for the gathering of information. “More data don’t mean more security”, she said, adding that the overload of information could even risk harming the effectiveness of the whole system, since a large amount of data could easily prove hard to manage.
Swedish MEP from the Pirate Party Christian Engström opened his remarks by saying that “unfortunately yes” the EU is a threat to civil liberties. He added, “when the Berlin Wall fell, we [Western Europeans] thought that they [the former Soviet countries] were going to become like us, but things are just going the other way around”.
He also complained about the limited involvement of the European Parliament in the decision-making process, in spite of new procedures outlined by the Lisbon Treaty. Birgit Sippel added that this was especially true in reference to the recent rejection of the SWIFT Agreement: “if you [the Commission and the Council] want us to say ‘Yes’, then we need to be informed. We learned in the debate on SWIFT that the Council didn't want us to say ‘Yes’ or ‘No’. They wanted us to say ‘Yes’”.
In response to a question from the audience, when asked to clarify an issue relating to the Anti-Counterfeiting Trade Agreement (ACTA), which addresses issues surrounding internet piracy and access, Christian Engström said “I would like to answer any question on ACTA, but the thing is I can't. I'm just an elected Parliamentarian. I'm not allowed to know anything about it. This will be presented to Parliament and to the citizens as a fait accompli...The Commission refuses to give us any information”.
When asked whether the European Arrest Warrant poses a threat to civil liberties, Jonathan Faull said: “It has been used to good effect and it has been used in controversial cases as well. I know that. Is every system for criminal justice in the EU perfect? Obviously not...The European Commission has always been very clear that if the European Arrest Warrant had to be adopted, it had to be accompanied by, and also the EP agreed with us on that, a leveling up of procedural rights for accused and defendants in criminal justice systems in other member States so that people wouldn't feel that they were being exposed to 'rubbish legal systems”. However, he admitted that the EU had not been successful on that in the end.
2009
"Eurozone: out of the woods, or off the cliff?", 27 October 2009, London
Open Europe held a debate in London to discuss the prospects of the Eurozone. The event was chaired by William Keegan, Senior Economics Commentator at the Observer.
(l-r) David Marsh, Otmar Issing, William Keegan, and Derek Scott
David Marsh, Chairman of the London and Oxford Group, started the debate, arguing that the ECB had largely made the right decisions during the financial crisis. However, he said, the real test for the eurozone may come once the crisis is over and member states begin to implement “exit strategies” to move away from excessive public spending. He argued that the “underlying problems with the eurozone haven’t gone away”, pointing in particular to the large divergence in competiveness between different EMU countries, with Germany coping rather well with the current financial crisis but others falling behind.
David also argued that “many countries that signed up [to the eurozone] didn’t know exactly what they signed up to”, and didn’t fully appreciate what kind of fiscal and economic discipline that would be required for them in order to be consistent with the ECB’s policies of price stability and low inflation.
Looking ahead, David predicted that a “stronger political union” will inevitably be needed to address the growing divergences within the eurozone. He said that such a union is likely to be pushed “through the back door”, and will be led by Germany with German standards and rules becoming the norm for the entire eurozone.
Otmar Issing, former member of the Executive Board of the German Central Bank and the European Central Bank, said that the EMU “is a unique experience in history” and that the “start of the eurozone has been a major achievement”, which occurred without any major disruptions in the financial markets. Looking at the crisis, Otmar argued that “if we still had national currencies the crisis would have been much worse,” noting that the situation in the eurozone is now “beginning to stabilise”. However, he admitted, no one knows if EMU has “reached a level of self-sustainable development.” Refuting David Marsh’s argument, he said that “a monetary union can function without a political union”, as long as the ECB has a clear mandate in order to ensure continued price stability.
Derek Scott, Managing Consultant at Europe Economics as well as Open Europe’s Vice-Chairman, said that “the fundamental reason why we got into this mess [the financial crisis] is because of a series monetary policy mistakes.” He argued that part of the blame for the crisis must be laid with the European Monetary Union itself, since the ECB fuelled the asset bubble in several member states. He argued that the establishment of the European Exchange Rate Mechanism (ERM) led countries such as Ireland to deflate their currencies and go into economic downturn even though the actual economic situation would have called for different measures. Derek noted that it is hard for countries to get out of the financial crisis without their own monetary policy, since these countries cannot adjust their exchange rates to boost their competiveness.
He predicted that the EMU could lead to another major political or financial crisis, which would then be followed by a stronger political union, and a level of integration which never would have been accepted in the absence of the EMU. His conclusion was that the eurozone is “balanced on a cliff like the bus in the Italian Job”.
Otmar Issing, responded to Derek’s argument, saying that low interests rates did indeed contribute to the financial crisis, but that the crisis was primarily triggered by the collapse of the American financial market. He added that all EMU countries, even Germany, would have “had tremendous problems at the moment”, if they still had their national currencies.
In response to a question from the audience, Otmar pointed out that leaving the EMU would be the “best recipe for committing economic suicide” since, he argued, international investors would never invest in a country which re-established its national currency. However, David Marsh disagreed and said that in the long-term, leaving the EMU might actually be a viable option for some countries.
On the prospect of Britain joining the Euro, David pointed out that historically, “when Britain wants to join, the other EU countries do not want us to join” – and vice versa. He argued that the UK would only join the euro, if the country faces “a cataclysmic economic failure.”
To listen to a recording of the event click here.
"What priorities for a Conservative Government in Europe”, 7 October 2009, Manchester
Open Europe held a fringe event at the Conservative Party conference in Manchester entitled, "What priorities for a Conservative government in Europe?"
To listen to a recording of the event click here.
(l-r) David Rennie, Dan Hannan, Lorraine Mullally, Mark Francois, Peter Oborne
David Rennie, European Union Correspondent for the Economist, kicked off the debate saying that other European countries are seriously worried about what the Conservatives will do once in government. He gave the example of the Swedish Moderate Party, which, he argued, are very concerned about the prospect of the Tories unpicking the Lisbon Treaty. This is problematic, he said, as the Moderate Party are the “natural allies” of the Conservative Party but may look for partners elsewhere if the Conservatives go down that route. He also warned that should the Conservatives move towards a policy of unilaterally repatriating powers from the EU, it could isolate the UK, in turn paving the way for the “franco-german engine” to dominate the Union once again. “I don’t know if you’ve noticed”, David said, “but for the last couple of years this engine has not been working, because Merkel and Sarkozy don’t get along.”
David stressed that instead of holding a referendum on the Lisbon Treaty or a referendum on “blanket opt-outs” from EU policies, a future Government should choose its battle in the EU wisely. Looking at the Conservatives’ idea for repatriating powers over employment and social policy, he argued that the EU has effectively stopped legislating in this area, and that apart from the Working Time Directive, which he said was “a disaster”, there’s actually not much to repatriate. Instead, he said, a future UK government should concentrate on protecting the City of London from the burden of EU regulation currently being negotiated in Brussels. He added that, "The UK is one of three big EU beasts...if it has a good idea and communicates it coherently it usually wins in Brussels." He said that the Single Market is a “fundamentally neo-liberal concept”, and that a strong European Commission was needed to protect it – something which the Conservatives had failed to grasp. He urged the Conservatives to stop "wallowing in the comfort of Opposition" and “talking to themselves” on Europe.
Daniel Hannan, MEP for South East of England, criticised the recent media coverage of the Conservatives' new group in the European Parliament, as well as the coverage of what the party may choose to do regarding the Lisbon Treaty. He said that was strange, since the position of the Conservatives on the Lisbon Treaty hasn’t changed. He said that “I fully support the position of David [Cameron], who has been very clear about the need for a referendum on the Lisbon Treaty.” He also said he was "cautiously optimistic" about getting a referendum on the Treaty, but noted that if the Treaty already had been ratified in all other member states, a Conservative government should decide what to do then. He argued that in such a scenario, a referendum on some parts of the Lisbon Treaty or on other key EU reforms should be considered as alternative to a fully-fledged referendum on the Lisbon Treaty.
Daniel also rejected David Rennie’s claim that a strong Commission was needed to protect the Single Market, arguing that trade in Europe can take place without “the hundreds of thousand bureaucrats” in the European Commission, noting that this is happening in several areas already.
Political columnist for the Mail, Peter Oborne, said that he thought that the EU, as a political priority, would be overshadowed by the UK's debt crisis and the recession, once the Conservatives took office. However, he said "there is a crisis" in the Conservative Party over Europe because the Lisbon Treaty would most likely be ratified by the time they came to power. He said that although he “strongly supported” a referendum on the Treaty, he said that if it had already been ratified when they took office, the Conservatives "should live with it". He said that if they tried to unpick it, the row that would follow in Europe would dominate the political agenda for years, which in turn could result in a Cameron government lasting only one term in office.
Peter criticised what he saw as the EU’s contempt for ordinary voters – something which a Conservative government would have to address on all levels.
Mark Francois, Shadow Europe Minister, said that the Conservatives' priority in Europe would be to fight for an "open, flexible EU in favour of free trade, which resists protectionism." He said that combating climate change and boosting economic innovation and growth were the key aims a Conservative government would seek to achieve at the EU level.
He reinforced that the Conservatives were wholly committed to a referendum on the Lisbon Treaty if it had not been ratified in all member states, and repeated that if it had been ratified a Conservative government “would not let matters rest there.” He said he was “very serious” about pursuing a reform agenda even if the Treaty had come into force, for example by bringing back powers over social and employment policy. He also stressed that last year at a similar Open Europe event at the party conference in Birmingham many people questioned whether the Conservative Party would really leave the EPP group in the European Parliament and form a new group. He said that “I think we’ve shown by leaving this group that we’re absolutely serious when we say that we will not let matters rest there”.
He welcomed the idea that the Minister for Europe should be a full Cabinet Minister, noting that under Labour, the role of Europe Minister had seemed to be “to tour the country, selling the EU to the British people”, rather than to fight the UK’s interests in Brussels.
Open Europe also hosted an evening reception at the Conservative Party Conference, entitled "Beers of Europe"
"European Union: Costs, Benefits and Strategies for Estonia" - September 16 2009, Tallinn
(l-r) Mats Persson, Ambrose Evans-Pritchard, Aivar Sõerd, and Ülo Kaasik
Open Europe, in conjunction with The Educational Initiative for Central and Eastern Europe, organised a seminar in Tallinn, Estonia.
There were two separate panel debates. The first one posed the question “would the euro be good for Estonia?”, with Ambrose Evans-Pritchard, International Business Editor of the Daily Telegraph, warning that the euro is not a safe-haven for small countries, pointing out that Iceland’s independent currency absorbed much of the shock created by the financial crisis. He mentioned that the euro area is moving further and further away from an optimal currency area (OCA), mentioning a nobel prize winner who said that even Canada is not an OCA: “If you live in Eastern Europe, you can't work in Britain, unemployed Germans aren't going to work in Spain. The EU budget is only 1.27% of EU GDP, which is far too small to serve as a shock absorber”.
He asked the question: “Why did Estonia's inflation go up to 10% last year? My suspicion would be that this is not just because of fiscal policy, this is because of monetary policy. This was the delayed effect of the European Central Bank's 2% interest rate. It was 2% until December 2005, which was very low, even by their own means, because they were violating their monetary targets. That caused spill-over effects in Estonia, as fast growing economies need much higher interest rates.”
Ambrose’s speech was followed by Estonia’s Central Bank Chief Economist Ülo Kaasik and former Finance Minister Aivar Sõerd, who outlined the prospects of Estonia joining the euro and the current state of play. Sõerd said that the goal of the Estonian government is to become a full member of EMU as soon as possible, but due to inflation Estonia had been forced to postpone its introduction of the euro, which was initially planned for 11 January, 2007. He stressed that developments occurring after Estonia joined ERM II were not completely in accordance to earlier expectations, citing intensive financial integration, the decrease of interest rates, extending of loan repayments period, the opening up of labour market and increasing salaries which were not in accordance with productivity. He added that the recent economic turmoil meant that fulfilling the budget deficit criterion was now the main challenge.
The second debate touched on how EU regulation impacts on Estonia and other smaller member states, with Open Europe Research Director Mats Persson stressing the need for improving the scrutiny and impact assessment of EU proposals at an earlier stage in the policy process. He said, "It is clear that we should pay attention to how EU regulation impacts on Europe’s newest member states, and identify areas where it hurts rather than helps them. Research by Open Europe has shown the regulatory burden imposed by the EU in the new member states is as high as in the rest of Europe". Further participants to the debate included Economics Professor Ülo Ennuste and Kalev Kallemets, who is CEO of NGO Estonian Nuclear Station.
To read Ambrose's Telegraph article on the subject, click here.
"Common sense or a step too far? Private equity, hedge funds and the EU AIFM Directive" - September 11 2009
Poul Nyrup Rasmussen being interviewed by the media after the debate
Open Europe, in conjunction with Policy Exchange, organised a debate on the EU’s proposed regulation of the alternative investment fund industry, chaired by Brooke Masters, the Financial Times' Chief Regulation Correspondent, and hosted by the City of London Corporation.
Poul Nyrup Rasmussen, President of the European socialist group in the European Parliament, began by asserting his strong track record on the economy, noting that Denmark became one of the five most competitive economies in the world as a result of economic reforms he made when he was Danish Prime Minister. He also underlined his commitment to competitive markets, but said that this cannot be achieved without “creating transparency and level playing fields for all financial players” – which he sees as one of the proposed directive’s main aims.
Rasmussen then turned to the economic crisis, arguing that “this crisis is undeniably the result of excessive debt” and that private equity and the hedge fund industry had to shoulder part of the blame for it. Rasmussen also said that a “short-sighted” focus on securing returns had “undermined the ability” of the industry to invest and create jobs, and noted that many bad loans can be traced back to the private equity business model. He went on to assert that “there is a broad consensus in the European Parliament, amongst conservatives, socialists and liberals, on the need to regulate” and that “it is not a question of whether we are going to have regulation or not…but how we are going to make it in the best possible way”.
Rasmussen also suggested several areas in which the Directive should go further than the current draft, including less far-reaching exemptions for smaller funds, saying “I think the capital requirements are too modest and too imprecise.” He said that a fund manager could “easily divide the funds” to avoid the Directive, and that this was another loophole that needed addressing, in addition to saying “we are only covering the fund managers, but we also need to have a look at the funds”. Rasmussen did, however, concede to demands for a full impact assessment, stating, “We have the time to do that, we are prepared to do that…it would be foolish not to do that”.
He responded to accusations of protectionism by saying the European Commission is attempting to create a single financial market for Europe and that “You cannot call that protectionism; if you take the full consequences of calling this protectionism then you should call the whole single market protectionist”. He added “if you come from the US and want to have this ‘passport’…to the EU’s financial market you are not going to have it for free” and “There must be a difference between those who operate primarily onshore [i.e. within the EU] and those who operate offshore: otherwise we will have unfair competition.”
UK City Minister Lord Myners described the draft Directive as “flawed” and said that he was disappointed by the “lamentable absence of public consultation” by the European Commission on the Directive. He said that the alternative investment industry plays a crucial role in the European economy and particularly in the aftermath of the economic crisis as firms are looking to rebuild and start-ups are struggling to secure capital investment. He went on to say that “imposing ill-considered rules in haste is counter-productive, whether at European or national level” and warned that “we must not be beguiled by protectionism hiding as though it were protection”.
Lord Myners noted that the UK already had an effective regulatory system in place and for this reason the UK does not have a problem of hedge fund fraud, unlike the US, and that the UK has managed to gain market share from the US owing to its appropriate levels of regulation. He continued by warning that the current proposals risked reducing investment in European businesses and said he saw no reason for private equity to be required to go beyond the current Walker guidelines. He concluded by saying he was disappointed that the UK “no longer has a significant voice in the European People’s Party” owing to the Conservative Party’s withdrawal from the group, which means Britain’s job in lobbying for changes to the Directive will be “considerably more difficult”.
Blackrock’s Doug Shaw noted that the impact of the directive would fall disproportionately on smaller firms, and that the result of the directive could be to “prevent the Blackrocks of tomorrow competing vigorously with us”. Shaw continued that it has been asserted that around a thousand amendments to the directive are needed, which equates to around twenty amendments per article, and warned that a decrease in returns would lead to bigger and deeper deficits for investment funds – many of which have already been hit hard by the financial crisis.
Jonathan Russell, Managing Partner at 3i, said there was a general consensus that the private equity industry was not a cause of the crisis but that it could be an important part of the solution as “Europe needs patient and long term capital”. He also asserted that there are components of the Directive that are “completely irrelevant to private equity”, such as capital requirements and the independent valuator process, from which he said “investors gain no ultimate benefit but it has a cost and it generates bureaucracy.”
To listen to a recording of the event click here.
"Europeans for Democracy" - September 9 2009, Dublin
(l-r) Professor Roland Vaubel, Eline van den Broek, Erik Lakomaa, Chair: Bruce Arnold, Gisela Stuart MP, Svetla Kostadinova, and Dr. Jochen Bittner
Open Europe hosted a lunchtime debate on the Lisbon Treaty in Dublin, chaired by political columnist for the Irish Independent Bruce Arnold, called “Europeans for democracy”. The discussion focussed on the detail of the Treaty, such as the implications for national parliaments, and the flexibility clause, which will allow the EU to extend its own competences.
British Labour MP Gisela Stuart, who was a member of the European Convention which drew up the Treaty, said that a basic test for democracy should be whether citizens can get rid of politicians, and that “Lisbon does not give you, as a citizen, the means to control the executive or the politicians who decide on your behalf, and that’s the hurdle it falls on in my view.” She added that, “whilst I am a deeply committed pro-European…this is not a structure that will take us forward”.
She said there would be no increase in powers for national parliaments, saying “all national parliaments have got is more opportunity for information and discussion, and that’s not power in my book.” Gisela warned that “under Lisbon, there will be no more treaties, no more referendums anywhere” on EU integration, and noted that one of the big dangers of Lisbon is the bullying of the smaller countries by the big ones. She said: “The nature of democracy is truly at stake.” Asked what would happen if Ireland votes ‘no’, she said: “We are dealing with an organisation which is very good at making rules but which is completely un-bound by rules itself”.
Dr Jochen Bittner, Europe Correspondent for German daily Die Zeit, said the Treaty “allows for something unique in human history and that is the possibility that states may constitute laws for other states, in areas which formerly were reserved for national sovereignty.” He said, “Whereas in the past the possibility to make laws for other states was confined to common market issues, with the Lisbon Treaty it will additionally cover justice and internal issues, and potentially foreign policy.” He added that, with the Treaty, “sovereignty would be shifted from the people to the next higher level - the governments” and that “this is a major step, and one should discuss the wisdom of this step”.
He added: “With the Lisbon Treaty, I think we are seeing the emergence of a state-like system in the EU. A state-like system which behaves like a state, without providing for the essential ingredients of a democratic state, and my fundamental question would be whether we want this.”
He said that proponents of the Treaty claim it will make more the EU both more democratic and efficient, but said the two are not compatible, adding “You simply cannot argue that the Lisbon Treaty makes the EU both efficient and democratic.” Noting that China is “very quick at decision-making…because it is a dictatorship”, he added that “politicians should be so honest to say that we have a choice between more efficiency or old-fashioned democracy as we are used to. I think that would be the right question to ask.” Dr Bittner added that in Brussels people were already saying, “We can’t have the Treaty being stopped by 5 million people.”
Swedish political consultant Erik Lakomaa said that his main problem with the Treaty was that “the EU will get, not only the power to decide on a list of areas but also, this most important question… the right to decide on what it could decide on, without further consulting the people.”
He said: “The Swedish parliament voted by about 80% in favour of the Lisbon Treaty last year…but if you look at the polls, a majority of voters of every party is in favour of having a referendum on the Treaty and they would also vote no, with the exception of supporters of one party in Sweden - the People’s Party. If you ask a more general question like ‘are you in favour of transferring more power to the EU’, you have a 90/10 split against that.”
Svetla Kostadinova, Executive Director of the Institute for Market Economics in Bulgaria, said that she also applied tests to the Treaty, of whether it would lead to more freedoms and more prosperity for the government, business or the individual, and whether it will result in more transparency for the citizens of Europe. She said that, “the general conclusion when we ask these questions, and we see the answer is probably that this Treaty will not give the freedom we need to lead to more prosperity.”
Eline van den Broek, a Dutch journalist and political scientist, said that “there were many arguments [in the Netherlands] to vote against the EU Constitution, and those are the same reasons to vote against the Lisbon Treaty, because they are basically the same thing.” She added that she thought it was, “not so much the Treaty itself which is undemocratic…but the actual process of implementing the Constitution or the Lisbon Treaty.”
Roland Vaubel, Professor of Economics at the University of Mannheim, said that he was concerned with the ‘general empowering clause’, also known as the flexibility clause, which allows the EU to decide on its own competences. He said: “The German constitutional court has ruled that the general empowering clause must not be invoked without the explicit legislative assent of the German Parliament. To my knowledge the Irish Parliament is not protected in this way, nor are the Irish people, who without the Lisbon Treaty would have the right to vote on such transfers of power to the EU. So I think these changes would really open the floodgates for interference from Brussels.” He noted that Ireland belongs to the “anti-EU regulation coalition” in the Council, which would find it more difficult to block regulation under Lisbon.
Professor Vaubel argued the Nice Treaty is working “very well”, because “the share of contested decisions in the Council has fallen since the Nice Treaty and also since eastern enlargement, so it is not true that a reduction in majority requirements is necessary…in fact it has been quite easy to agree under these rules.”
Bruce Arnold added: “we are no longer making Europe, Europe is making us”, adding “you can’t have democracy unless you can get change and throw people out.”
To read a full transcript of the event, please click here.
To listen to a recording of the event click here.
To read a short biography of all of the speakers, please click here.
"EU proposals for financial regulation and supervision: Is the UK behind the ball game?" – July 15 2009
Open Europe held an event in London, chaired by Open Europe Research Director Mats Persson, to discuss the EU's proposals for financial regulation and supervision in the wake of the financial crisis. The event had a strong emphasis on how the proposals affect Britain and how the British government, financial institutions and other financial actors should respond.
(l-r) Mats Persson, Dr David Doyle, Mark Hoban MP, and David Green
David Green, Advisor on International Affairs to the Financial Reporting Council, opened the debate by suggesting that "There is currently a divide between euro area banks and non-euro area banks. There is no place where the chairman of the FSA and the ECB can meet". He suggested that "The [European] systemic risk board will provide for the first time a platform for a proper debate between the people who matter most for financial stability in the EU”.
However, he described the tabled proposal for an EU risk board as “slightly peculiar” and said that there was "a disturbing feature in the voting system”. He argued that “[the voting system] should be evenly weighted between euro area banks and non-euro area banks". He also emphasised that the UK would have the same voting strength on the board as smaller countries. Green emphasised that the UK is in a “rather special position in that it runs a very large off-shore centre” and that a significant number of firms based in London aren’t UK owned firms.
In response to a question about the need for the UK Government to engage with key European actors on financial regulation, Green urged the UK to negotiate with finance ministers across Europe.
Mark Hoban MP, Shadow City Minister, argued in his speech that "the Treasury and the Government took their eyes off the ball in the first part of this year", adding that "we needed robust, early engagement from the government" whilst "discussions were taking place in Brussels which were going to set the tone for regulation not just for the next few months but for years". He argued because of the UK’s late engagement, “we have now lost the automatic right to be heard” in the debate in the Commission and the Parliament about the direction of regulation.
Turning to the EU’s proposed directive on hedge funds and private equity, he reiterated that hedge funds were not the cause of the financial crisis, but that some member states “want to see the wings of hedge funds clipped”. He also emphasised that various member states want to see the directive go further than the current proposal, particularly the French. He warned that if hedge funds move out of the City, they will move offshore outside the EU, so other member states “should be welcoming the strength of London”.
Hoban added that the “divergence of views [within the UK’s financial sector] makes it harder for us to get the message across” and that there is a clear need to develop a more coordinated approach, while addressing the “wider picture about engagement with the EU”. He also emphasised the need to “beef up the Treasury’s role in working with the Commission” and suggested that UK government ministers spend more time in Brussels articulating the British perspective before the Commission is actually tabling its proposals. He also added that the UK needs to identify what exactly it is that we want, “what we want the EU to do and what the EU should leave alone.”
In response to a question about the hedge fund Directive and the fact that many hedge fund managers are ready to relocate outside the UK, he argued that the directive “doesn’t achieve any particular objective”, but insisted that hedge fund managers “threatening to walk away” won’t persuade those pushing for stronger regulation to change their minds, adding that “in fact, they might rather like it”.
Dr David Doyle, Senior Advisor at the Brunswick Group, focussed on the three new EU authorities which will be created under the Commission’s draft plans for more pan-EU supervision of financial institutions. He confirmed that the new EU institutions would get legal powers to override national financial authorities, arguing that this will address the problem of member states interpreting and implementing EU laws in different ways. However, he emphasised that day-to-day financial supervision would remain with national supervisors.
He argued that upgrading "these committees into fully fledged departments with legal powers to investigate, sanction, to ensure EU application and regulation of the legislation" would be an important step to solve such diverging interpretations. He denied that such a move would lead to a lack of national sovereignty or that “a transnational supervisory board will take over”, emphasising that day-to-day supervision would remain with national supervisors. He highlighted the need to “ensure that cross-border institutions have some form of supervisory mechanism” and stressed that a level playing field is good for competition.
He also emphasised the need to engage equally with the European Commission, the European Parliament and its committees “before it is too late”. He urged the UK to “take a more proactive role and offer inspiration to other regulators”.
Addressing the hedge fund directive, Doyle said that the directive was “produced under duress and at great speed” and said that the UK must prepare “substantive, tangible arguments” before the European Parliament’s key committees meet in the autumn. However, he did add that “all is not lost”.
Doyle also emphasised the critical role that British MEPs Sharon Bowles (Chair of Economic and Monetary Affairs Committee) and Malcolm Harbour (Chair of the Internal Market Committee) will have in influencing the direction of financial regulation in the European Parliament.
The second Irish referendum and the fate of the Lisbon Treaty – June 18 2009
(l-r) Joe Higgins MEP, Elmar Brok MEP, Simon O'Connor, Chair
As EU leaders met in Brussels on 18 and 19 June to discuss the upcoming second Irish referendum on the Lisbon Treaty, Open Europe held an event at The Centre in Brussels, in collaboration with the Bertelsmann Foundation, to discuss the issue of whether any Irish 'guarantees' would actually change the text of the Lisbon Treaty, and if they would be legally-binding.
Joe Higgins, newly elected Irish Socialist Party MEP, kicked off by pointing out that the debate about what Ireland will do next is not about whether the people want to leave the EU, but rather about what direction the EU was heading. He said, “There are many red-herrings on both sides of the debate”, and described the process going on behind closed doors at the European Council as “an elaborate charade” to make people think they will be voting on a different text a second time around. He noted that, according to the draft conclusions of the Council, the Treaty itself will not be changed prior to the second referendum, saying the agreement "doesn't advance the issue one iota." He noted, “It is exactly the same text, word by word, not even a comma has been changed”, and stressed that none of the Irish people's real concerns are addressed.
When questioned by a Commission official in the audience about why we should bother with referendums, when "nobody votes on the question asked", Mr. Higgins said it was "highly arrogant" for someone from the Commission, or indeed anyone else, to stand up and claim that the Irish people had no idea what they were voting for. He said that the results of the vote were barely through before people started calling for a re-vote, and noted: "The right of Irish people to disagree was being questioned." He noted that ahead of the second referendum, the establishment would "terrorise the Irish because of the Irish crash" in the economy. He said this would be "the biggest red-herring of all" in the debate, and challenged proponents of the Treaty to clarify what exactly in the Treaty would help to stop people in Ireland losing their jobs.
Elmar Brok, German MEP for the CDU Party, replied that the Irish people were responsible for the fate of 500 million EU citizens, adding “you get this, or you get nothing", there is “no chance of negotiating a new Treaty”. He also said that if Ireland votes No, the Union would see a “break up into first and second class Member States”, which would distort the proper functioning of the EU. He concluded saying the guarantees Ireland have been promised would be carried out in a similar way to those awarded to Denmark at the Maastricht ratification process in 1992: “These types of declarations have worked before, and there is no reason to believe they wouldn’t work again. They are legally binding declarations and have been a big success”.
Jens-Peter Bonde, the former MEP, reacted from the audience, stating that “EU Member States cannot enter into international agreements”. He said: “These declarations are politically binding, but they have no legal value. All of the Danish ‘guarantees’ have been breached, every single one of them, so they are not legally binding guarantees”. Brok replied: "This decision will become a protocol and then it will become legally-binding."
Paddy Smyth, Brussels correspondent for the Irish Times said, “it is not undemocratic to ask the people to vote again. I would agree with Joe; nothing has changed in relation to the declarations. It is a question of clarifications entirely, apart from the guarantee of an Irish commissioner”. He pursued: “Nothing in the declarations materially affects the treaty text. If there was a material difference, then the Treaty would have to be re-ratified in all the other member states” and said that “the difference to the Danish case is that Denmark got an opt-out, which was a material change in effect”. Smyth further pointed out the differences between the Yes and No campaigns for the Lisbon Treaty, stating that “the Yes campaign was a defensive campaign addressing those issues raised by the opposition to the Treaty, such as abortion or workers’ rights. Many of the proponents of the Treaty had not read it and didn’t understand it to properly defend it”. The No campaign, he claimed, will “gain much steadier ground through the debate around the guarantees”.
(l-r) Elmar Brok MEP, Simon O'Connor, Chair, Paddy Smyth, Bruno Waterfield
Bruno Waterfield, the Daily Telegraph’s Brussels correspondent said that in one sense, it was “great to have a second chance for a debate, especially when other countries haven’t had the chance for even one”. He argued that the “EU is a club of leaders and administrators that are running away from debate, and rely on legal forms and arguments. But no one really understands them, and they don’t really mean anything”. He said: “now is the time for an open and honest debate, an open debate about Europe, but it should not be governed by legal nonsense. The sad thing is that the EU, which is supposed to be about the rule of law, is tying itself in knots to obfuscate politics. The guarantees say more about what the Irish people want, in a kind of a cartoon depiction of what the leaders think the Irish referendum was about”.
Westminster or Brussels: Who rules Britain? - May 11 2009
Gisela Stuart MP kicked off the debate, arguing that it is very hard for voters to know what parties stand for in the European elections. She pointed out that even as a Labour MP, she doesn’t know exactly what ‘her group’ in the European Parliament – the Party of European Socialists – stand for in reality.
She said she had no problem with “federalism” as a concept, but argued that the basic “contract” between politicians and voters rested on the assumption that “I make decisions on your behalf and you will hold me to account for that.” This, she said, is the platform on which politicians run their campaigns, noting that this contract doesn’t exist in EU politics.
She said that there was no area under Lisbon treaty which wouldn’t be affected by EU competences – including the NHS – where the cross-border healthcare directive would see the NHS’ principle of residency-based access compromised. She said, “I bet you my wages that in 10-15 years, if this Directive goes through, we cannot have a generally tax-funded NHS system.”
Gisela offered three suggestions for reform to improve scrutiny and democracy in the EU: The permanent UK Representative should be answerable to the House of Commons to improve scrutiny; all EU proposals should begin by stating why they could not be achieved at the national level – to address the issue of subsidiarty; and an automatic end to all the Commission’s proposal once its mandate period ends, in the same way that Governments’ proposals fall when their mandate ends.
Responding to a question on whether or not it is better to have genuine pan-European political parties campaigning in the European elections, Gisela said that the logical extension of that argument is a “fully-fledged federal system” in the EU, in order to make possible the platforms political parties can run on in national elections.
(l-r) Baroness Sarah Ludford, Lord Trimble, Lorraine Mullally, Gisela Stuart, David Heathcoat-Amory and Mats Persson
Lord Trimble congratulated Open Europe on its study on the cost and proportion of EU regulation, and stressed the importance of evaluating regulations also in “qualitative terms”. He argued that the merits of EU regulations should be based more on the question “What does the British majority agree with?”
He went on to argue that national Parliaments don’t have enough scrutiny over EU legislation, and that the so-called ‘co-decision procedure’ – where legislation is agreed jointly by national ministers and the European Parliament – is actually making scrutiny of EU legislation even harder. One of the biggest problems with the EU, he argued, is that the “executive” – the Council of Ministers – is making laws, unlike in national systems where the legislator, Parliaments, have that responsibility.
Lord Trimble also said that he thought the single transferable vote voting system was the “worst possible” arrangement. He also said that proportional representation – currently employed in the European elections – is making it impossible for voters “to throw out the rascals” and hold politicians to account.
During the Q&A session, Lord Trimble criticised Baroness Ludford and the Lib-Dems for wanting a referendum on the UK’s membership of the EU, rather than on the Lisbon Treaty. He said, “I think that’s a very dangerous line to take”, arguing that it would give a platform to those who wanted the UK to leave the EU. The Lisbon Treaty, he said “is a very important constitutional document” and that a referendum on the document would “ask a very legitimate question”.
Responding to questions on the possible outcome of a second referendum on the Lisbon Treaty in Ireland, he said that the Irish economic situation is being made “much much worse by the euro”, which has been noted by the Irish public. But he said that the Irish may still vote Yes in a re-run referendum, fearing that a No vote could disqualify them from financial support from other member states. However, he argued, such fear is misplaced as it will be the International Monetary Fund, not the EU, that will be charged with bailing out Ireland should the country go bankrupt.
Baroness Sarah Ludford MEP stressed the importance of a constructive discussion on how the EU should be reformed, rather than an “in or out” debate, which she described as “not particularly meaningful”.
She said that she accepted many of the proposals for reform in Open Europe’s report on regulation, including the introduction of ‘sunset clauses’ for regulations, more robust Impact Assessments and the lapse of proposals after a certain amount of time.
She also agreed that the European Parliament should be “more conscious” about the need to reduce burden stemming from EU regulations, including producing Impact Assessments of its own as proposals change during the course of negotiations.
She criticised Open Europe’s report for not properly accounting for the benefits of regulations, citing a Directive on road safety. She agreed, however, that the UK Government “had sold out” on the controversial Temporary Agency Workers Directive and it was now “saddled” with the Directive.
She went on to argue that “first reading agreements” – in which national ministers and the European Parliament agree on a proposal very quickly – are “problematic”, since it is very hard for national politicians to scrutinise these proposals.
Baroness Ludford suggested that the Lisbon Treaty could improve national parliaments’ scrutiny of EU legislation with the red/orange/yellow card system when it came to scrutiny of EU proposals. However, she went on to say that “The Lisbon Treaty is not the be all and end all” and that if the Irish vote No again in a second referendum on the Lisbon Treaty, that would probably kill it.
Baroness Ludford also emphasised that MEPs are not responsible for the travelling circus between Brussels and Strasbourg, and said that “Governments consign us to it”, pointing out that the only other Parliaments in the world that cannot choose where they sit are Cuba and North Korea.
She went on to criticise the Conservatives’ decision to leave the EPP grouping in the European Parliament and said it was possible to remain in the same party and disagree on some issues, for example with reference to disagreements over nuclear power in ALDE.
David Heathcoat-Amory MP highlighted the “gradual transfer of power and authority” to the EU from Westminster, which he said is taking place “without voters being asked”.
He argued it is only possible to understand what’s happening in the regulatory field if we understand the “constitutional revolution” that is taking place, whereby the UK is losing its ability to exercise self-determination.
David stressed that, once a power has been given away to the EU, it cannot be taken back.” With regards to the ongoing row over MPs’ expenses, he said “the allowances system [in the UK] can be reformed, but powers given to the EU are irreversible.”
He also said that EU politics were “corroding” national politics, with regards to the major UK parties breaking their promises to hold a referendum on the Lisbon Treaty, reminding the audience that the Commons Scrutiny Committee had concluded that the Lisbon Treaty and the original EU Constitution are effectively the same document.
He said that voters either react with anger or apathy at the eroding powers of national politicians, suggesting that “apathy is prevailing”. He noted that the increased powers of the European Parliament had not increased voter turn-out in European elections, but that turn-out is in fact declining. This, he said, is a sign that people do not feel represented by their MEPs.
Turning to the inadequate scrutiny of EU legislation in Westminster, David pointed out that the British Parliament only debates about 5 percent of EU legislation overseen in the Commons Scrutiny Committee. He also said it amounted to a “scandal” that the Committee met in secret.
On proposals for reform, David stressed the need for a referendum on the Lisbon Treaty, for repatriating powers and to radically improve scrutiny of the EU legislation in the British Parliament.
During the Q&A sessions, David said that it was perfectly reasonable for the Irish to vote no to the Lisbon Treaty based on not understanding it, arguing that not making the Treaty comprehensible was the “failure of the political class”.
On the issue of the Conservative Party leaving the EPP group in the European Parliament, David said that it would be “dishonest” for the Conservatives to belong to a political grouping they don’t agree with. He said that the choice between “more or less Europe” is a big choice in the European Parliament, and that the Conservative are trying to give voters that choice by creating a new group.
European Monetary Union: Second honeymoon or pending divorce? - April 28 2009
In conjunction with The Centre, Open Europe organised a debate in Brussels looking at European Monetary Union and the challenges it faces.
Ignazio Angeloni, Advisor to the Executive Board, European Central Bank, gave an overview of economic data on the eurozone, saying that 6 to 7 million jobs have been created during the 10 years of the euro. He said that an important achievement was that labour markets had become more flexible, in particular in Italy, Spain and Portugal.
He admitted that it was debatable whether this was due to the euro. “Quite frankly”, he said, “I don’t think economists have an answer to that. Most of the progress took place before 1999, but then again, one could argue that it is because of the euro. The important thing is that the labour market has changed in the positive direction.”
His analysis continued, saying that “a lot of times it is referred to the loss of competitiveness. A group of countries have lost competitiveness – Italy, Greece, Spain, Ireland – but relative to the average of the eurozone some countries have improved (Germany, Austria) and some have remained at the same level.”
He concluded with comments on the future expansion of the eurozone: “What is going to happen to the family? The decision to join the euro area is very similar to marrying. Do it only if you are convinced. Not only your partner should be right, but also you should be ready to marry. Don’t also do it because of other problems that you have”.
David Marsh, author of "The Euro: The politics of the new global currency", said “the euro was set up as follows: You can not make changes in real exchange rates through nominal exchange rates, you can only do that by changing production costs.”
Looking ahead to the future of the EMU project, he said: “I’m not predicting doom and gloom, but I’m saying this will be a time of real reckoning. There will be political blackmail. Germany will pay a very high price to keep EMU together, whether it will be through the back door or not. EMU is about preserving Germany’s export markets, and is something like a holy grail.”
He further lamented the ECB for not being transparent enough: “Jean-Paul Trichet is allowed to make too many speeches on things for which he’s not really responsible for culture, jobs, etc but he does not tell us terribly much about monetary policy. I think the ECB should publish more on its decision making process.”
He concluded: “the only way for the euro to survive is to have a political union. Without that, sooner or later the eurozone will break up. It will not be the same as how we started. I cannot predict when exactly, whether it will be in 10, 20 or 30 years.”
Derek Scott, vice-Chairman of Open Europe and former Economic Advisor to Tony Blair, said that “the Economic and Monetary Union was a major mistake, as it has imposed an asset price bubble on top of all the mistakes made in the US. We know that for countries in the upturn of the economic cycle, inflation had been too low, inflation would pick up, and when the boom goes to bust, the opposite occurs: in countries where inflation has risen very high, it falls more dramatically and interest rates are higher at exactly the time when they should be lower. That is what we’ve seen in a number of countries, because of initial weaknesses in Germany, interest rates were kept far too low, in countries like Spain, Ireland and Portugal and Greece.”
He went on, saying: “the eurozone has been presented somehow as a zone of stability. It is true that countries have avoided currency crises in the way that they may have done if they hadn’t been in the single currency, but currencies are important measures of things going wrong just as in the ERM real interest rates were important signals. What we’ve done is to throw away important phenomena: when the patient gets sick, all that means is that the symptoms come out in other areas, and we are beginning to see that in very high levels of unemployment, higher debt and so on.”
He predicted serious costs for Germany: “There is no doubt that one way or another, some kind of temporary bailout will be put together to tie things over for the next two/three years, but we need to be careful what we understand about a bailout, because in the absence of a depreciation of the currency of a country involved, a bailout is not a one-off bailout. It becomes a continuing drain on the sources of the current account surplus countries, in effect, Germany.”
Concluding, he said: “so it seems to me that Mr. Delors was probably right, saying that this thing cannot exist without having a political union, and you cannot impose a political union, it has to require the citizens of Spain, Britain, France and Germany seeing their relationship with their union in the same way as the citizens of Massachusetts, Texas and California do to their union. That isn’t going to happen. It seems unlikely to have a debt union without a political union. This is going to end up sometime along the road, not immediately, because I think things will be patched together, in a major political financial crisis in Europe.”
EU regulation: Getting better or out of control? - March 30 2009
In conjunction with the American Chamber of Commerce to the EU, Open Europe organised a debate in Brussels looking at the issue of EU regulation, drawing on the themes in its report, “Out of Control? Measuring a decade of EU regulation”, which can be downloaded here.
(l-r is Professor Jacques Pelkmans, Jens Hedstrom, Mats Persson, Renato Addis, Christofer Fjellner and Marianne Klingbeil)
Open Europe Research Director Mats Persson presented the findings of Open Europe’s report, which calculated the cost of EU regulation since 1998 to the UK economy and the EU as a whole. He said that, “Our conclusion is that although various positive steps have been taken to reduce or simplify the existing burden of regulation, the EU’s Better Regulation Agenda has not addressed the flow of new regulation, which means that the cost of EU regulation is going up, year on year.”
He argued that the European Commission had launched several good initiatives to tackle existing regulation but that, “When it comes to concrete results a lot of the benefits have been neutralised by the continuous flow of new regulation, and more importantly the cost imposed by that flow.”
Mats outlined some of the recommendations in the report, including an independent board to act as a filter to oversee and veto Commission proposals for new regulation. He concluded, “This idea of cultural change…needs to continue. The idea of ‘more regulations meaning more Europe’ must be resisted, particularly in times of recession.”
Christofer Fjellner MEP welcomed Open Europe’s report and the opportunity to debate the issue of regulation, saying, “Putting a price tag and making everything that politicians don’t see with their proposals visible, I think, is extremely important.”
He said, “I still think the fundamental idea of the European Union is deregulation and simplification because I think that is the best thing with the internal market…the idea of facilitating the free movement of goods, services, capital and people through deregulation and streamlining the vital parts of EU legislation.”
He argued the importance of distinguishing between different EU institutions and different EU politicians. He said, “There are definitely different Commissioners with different approaches and different price tags, so to speak. There are definitely different MEPs with different approaches and different price tags”. He added that, “I think that one of the biggest problems right now in deregulation is maybe not the Commission but might be my own institution, the European Parliament.”
He added that businesses also have a role to play: by resisting the temptation to ask the EU to ‘regulate up’ to national standards, “not using regulation as a tool to hit the other guy”.
Marianne Klingbeil, Director of the European Commission Secretariat General, Better Regulation, Programming and Impact Assessment, said, “We live in a society that is older and richer…We have a request for safety, we have a request for environmental protection, which we didn’t have to this extent ten, twenty, thirty years ago.”
She agreed with the importance of subsidiarity: “You have to make sure that you have at European level and at national level what needs to be regulated at national and European level – in other words subsidiarity”.
She concluded by arguing that the Commission’s decision making process was improving and agreed that both subsidiarity and improving the processes were key but rejected Open Europe’s proposal for an independent board to evaluate Commission proposals.
Jens Hedstrom, Chair of the Business Europe Better Regulation Working Group, said that, “What our members want is a regulatory system that is easy to understand and regulations that are easy to comply with…This report shows that there are a lot of rules, they are very complex and we have a price tag on it, which is very costly for business.”
“Sometimes businesses are prepared to pay the cost for regulation if the consumers are prepared to pay the price, but sometimes they are not, and then we have competitiveness for businesses as a problem.”
He said that, “We have seen a Commission now with political commitment and a target working on the systems. I’m not saying that they are working perfectly well, they are not…but they are starting in the right direction.” He urged all EU institutions to take on the Better Regulation Agenda.
Professor Jacques Pelkmans said, “I appreciate the study and I value the message.” He complimented the extent and depth of the research and its contribution to the debate on regulation, saying, “Many preach to do this pain-staking work but Open Europe has done a serious attempt at it.” He said that, “You are not anti-EU, if you’re tough on regulatory issues at EU level”.
Referring to EU decision making, he called for more transparency, particularly with regard to comitology decisions within the Commission.
He criticised aspects of Open Europe’s report, including the failure to adequately consider the benefits of regulation and the extrapolation of EU-wide figures from UK data. He said that, “I read the study as a cry for more serious work…but take this positively.” Professor Pelkmans also said that figures in the report showing the growing number of EU regulations were misleading, if not fully explained.
Mats responded to Professor Pelkmans, arguing that the report was aimed at measuring the cost of rather than the number of regulations for this very reason: “The report was written in the context of the British debate, which is focussed on the number of pages of regulation, absolute number of regulations, ‘the acquis communitaire is growing by X pages each year’, which we don’t think is a meaningful measure. That’s precisely why we focussed on cost and played down the absolute number”.
EU communication policy: biased propaganda? - January 27 2009
Open Europe organised a debate in Brussels on the EU’s communication policy, in order to discuss the themes in its new book:
"The hard sell: EU communication policy and the campaign for hearts and minds", which can be downloaded here.
Open Europe Director Lorraine Mullally chaired the debate. As co-author of the book, she gave an overview of it, explaining how the EU is spending billions of euros a year promoting itself and its central aim of 'ever closer union’, and inviting the panel to discuss whether or not it is a fair use of taxpayers’ money for the European Commission to promote a political message.
Referring to Open Europe’s cost estimate, she said: “We can argue over which figures to use, but we make no apologies for including EU spending on youth, education and culture. What you can’t argue with is that this is very clearly – as it says in all the policy documents – designed to promote European integration.”
Joe Hennon, Spokesperson for EU Communication Commissioner Margot Wallström, argued that EU culture, citizenship and education projects which promote European integration do so because the commitment to an ever-closer union "is in the treaties". However he disputed Open Europe’s cost estimates and argued that EU communication efforts were designed “to encourage debate and discussion”, warning against using the word ‘propaganda’ because of its very negative connotations.
Mr. Hennon disputed Open Europe's claim to be independent, leading Open Europe Director Lorraine Mullally to clarify that the think-tank receives no funding from political parties or the EU, in sharp contrast with the many organisations listed in Open Europe’s research, such as the European Movement, which are heavily subsidised by the EU and yet state very clearly on their websites that they are independent. The European Movement, for example, received €2.5 million in EU funds between January 2005 and October 2007 alone.
Mr. Hennon noted that groups receiving EU funding had never had their funding stopped for criticising the Commission in public, and argued that the reason why very pro-integration organisations like the European Movement receive EU funds as opposed to more critical ones, is that these do not tend to respond to calls for funding for the citizenship and other EU projects.
Chris Heaton-Harris MEP gave a series of new examples of dubious EU ‘communication’ efforts, citing a pamphlet which said that the Common Agricultural Policy is a “minimum cost” to the EU budget. He also said that while the EU has claimed to make TV sports coverage available to all, EU intervention has in fact made live TV sports coverage more expensive for UK viewers.
On the link between selling EU integration and the Erasmus and ‘Town Twinning’ programmes, he referred to a letter by Margot Wallström to the president of the European Parliament, citing: “we will mobilize European and local networks, NGO’s and other organisations with whom the Commission works in order to get a more positive European spin about European elections and to get more people out. (…) Cooperation with and information to NGOs, former Erasmus students and town twinning organizations will be an important partner of the Commission’s actions.” He commented that “although it’s for a good cause - to get more people out for the EU elections - I find that slightly worrying. What strings are attached to that funding?”
Hendrik Kröner, Secretary General of the European Movement, said that “every national government is informing its citizen on policy. Of course it is not efficient enough. I’m ready to discuss here and there shortcomings of how to spend the money. Europe is a construction site.” Referring to the history of the EU he said: “after the second world war, people said you need a more United Europe. You have to face competition of the United States. We’re facing the threat of the Soviet Union.”
Hans-Martin Tillack, a journalist with German magazine Stern, who was arrested at the instigation of EU authorities after investigating EU fraud, but later cleared, described how the staff in the Commission's DG Communication were behind the rumours which first lead to his arrest. Joe Hennon objected, saying, “It wasn’t the Commission. It was the Belgian police”, while later asking the public “how many journalists do you know who are being investigated by the police?” Mr Tillack also lamented the re-appointment of Franz-Hermann Bruener as head of OLAF - the EU anti-fraud office which was criticised by the EU ombudsman for its handling of the Tillack case – by EU Communications Commissioner Margot Wallström, amongst others.
Commenting on Open Europe’s book, Mr Tillack said: “the PR of the Commission is not only biased, it is also simply wrong. One example is how often the Commission tries to diminish its importance and compares its number of employees to the typical medium-sized city council in Europe, while this is beside the point. The Commission has no nurses, no police. Actually you have to compare the Commission to, for example, the German federal government… the Commission has more employees than the German federal government.”
He continued: “it is highly questionable and unacceptable that the Commission is paying media outlets for reports. A friend of mine is an independent TV journalist who wanted to make a report on fraud in Brussels, but a German TV station did not want to go on with it, as they said they didn’t want to loose the funding they’re receiving from the Commission.”
He went to say that: “in the European Parliament, only eurosceptic groups question the Commission, and not the big traditional groups, so the whole EU system is a lot more vulnerable to corruption and waste as a lot goes unreported.”
To listen to a recording of the event click here.
2008
Kicking us while we’re down? The end of the opt-out from the EU working time rules and what it could mean for Britain - December 10 2008
Open Europe organised a panel discussion on what the impact of losing the individual opt-out from the Working Time Directive would have on the UK.
Alistair Tebbit, Head of EU and Employment Policy for the Institute of Directors argued that “If the UK’s opt-out is abolished…we estimate that as many as 3 million people in the UK who work in excess of 48 hours a week regularly or even occasionally will find that they can no longer work those hours…Any idea that this would not have a negative impact on the UK economy, in our view, is absurd.”
He questioned the move at a time of global recession: “We are in the middle of a deep economic downturn…Given that businesses of all sizes are at risk, any unnecessary addition of new cost could be the difference between a company surviving the downturn or failing.” He concluded by urging EU politicians “who may come from countries where there is a different kind of labour model to respect the UK’s labour market model and allow it to continue to function as it is, without any addition restrictions.”
Paul Sellers, Trades Union Congress Policy Officer responsible for working time law said that “This is a health and safety issue” and that “The right to work long hours must be moderated by the duty to work safely.”
He dismissed concerns over losing the opt-out during a recession, saying, “Turning to the issue of whether ending the opt-out will really cause major difficulties to UK business…well actually all the signs are that they will be able to manage.” He added, “We are in a recession. We’re all focussed on that. But ordinary people find it quite hard to understand why business is saying ‘we need long hours, we’re in a recession’ when we all know hours are going to fall in the coming period.”
David Yeandle OBE, Head of Employment Policy at the Engineering Employers Federation said that “We believe it is important to retain the individual opt-out. It’s an important element of the flexible labour market which has enabled us to have high levels of employment and to be reasonably successful over the last ten years.” He also stressed that the European Parliament’s vote on the Working Time Directive was not a forgone conclusion and that we should not be “too pessimistic” about the potential outcome.
He argued that it was unfair that the UK had been singularly criticised over the working time opt-out because other countries had also found ways around the EU’s working time rules: “I think the UK Government by playing it fair, playing it straight and using the legislation as it’s strictly written has been almost victimised by going down this route.”
He said that “With Europe, you think you’ve won but then you haven’t and it is much like the civil service here…I’d personally like people to leave things alone for 5 years and let businesses get on to run their business.”
David Coats, Associate Director of Policy at The Work Foundation argued that “There are other countries in the EU that have employment records over the last decade or so that are just as good as the UK’s…They have strong welfare sates, higher taxes, stronger unions, more generous welfare benefits and stronger labour market regulation. And they have all done well.”
He said that “To believe that this is some terrible imposition from Brussels that is going to wreak death, destruction and havoc on the UK economy when it is at its weakest is simply false.” He added that that losing the opt-out would force employers to improve work efficiency and that “now is the best possible moment to start thinking about how you can improve output per hour worked.”
To read a full transcript of the panellists' speeches click here.
Listen to a recording of the event.
No Means No – December 8 2008
Open Europe organised an evening discussion in Brussels in conjunction with the Manifesto Club, titled “No means No”. The event took place three days before EU leaders met in Brussels to discuss the way forward following Ireland's rejection of the Lisbon Treaty.
At the event, the following two new publications were showcased:
EU Phrasebook: 27 ways to say 'no doesn't really mean no' (by Josie Appleton), which can be ordered here.
No Means No! Essays on the Eve of the European Council Meeting (by Bruno Waterfield and Christopher Bickerton), which can be downloaded here.
Open Europe Director Lorraine Mullally welcomed the public, saying “we’re here to say that no means no. There is a lot at stake on the future of Europe and it’s important to debate this.” Declan Ganley, who was due to speak on the panel, was unfortunately unable to make it and was replaced by Jens-Peter Bonde.
Jens-Peter Bonde, former Danish MEP and EU transparency campaigner, kicked off the debate saying: “I’ll give you a very good bottle of wine if you manage to find a legally binding act which can be adopted by the European Constitution and not by the Lisbon treaty. Both documents are essentially the same, and this is also what former French president Valéry Giscard d’Estaing has said, who chaired the European Convention that drafted the European Constitution.”
He referred to his own book “Reader-friendly edition of the Lisbon Treaty”, which can be downloaded here. He said: “not one of the PMs have read the document they signed in Lisbon at that time. This is not a way to proceed”. He suggested that EU Commissioners should be elected in each member state, in order to raise interest in the EU, adding that “then maybe the European Commission would be composed by people which the public likes instead of which prime ministers dislike.”
Josie Appleton, Convenor of the Manifesto Club and author of the EU Phrasebook, which brings together quotes of EU leaders responding to no-votes in Ireland, France and the Netherlands, said: “It was as if the treaty was handed down from some mountain. As if it wasn’t written by some guys on laptops. We cannot change it, there is no plan B. One of my favorite quotes is from Labour MEP Richard Corbett, who said: “if there was a plan B, its very existence would affect plan A, which is to ratify the treaty”. However, politics is normally the best of your options: you have plan A, B or C and then you chose the best. This Treaty is therefore a post-political document. “
However she said, “the no vote is an exciting point, when the dynamic of this kind of elite-politics was disrupted. The referendum in Ireland has been a confrontation of two different worlds: on the one hand the world of this very estranged elite of policy makers, at the other the very dynamic, open world of civil society. The referendum made clear that there was mutual incomprehension, different languages, different logics between both worlds”.
Gerry Feehily, an Irish writer based in Paris, said there is a tendency to apologise for anybody who takes any serious opposition to the society we live in. He referred to a journalist who said “the Irish are mad”, and also to former Strasbourg mayor and current MEP Fabienne Keller saying “the irish are ill. They suffer”. “This”, Feehily commented, “made clear that “the Irish were considered a people of reluctant patients not knowing what’s good for them. However democracy should mean a discussion between equal peoples. That’s opposed to pedagogism, whereby a master takes pupils into a certain direction”.
Christopher Bickerton, Lecturer in International Relations at the University of Oxford, said that we have come a long way: “Thirty years ago, national governments and officials based in Brussels felt they could do what they like. Former UK Secretary and European Commission president Roy Jenkins, said in 1975, commenting on why he thought the British had voted “yes” to be in common market: “the British took the advice of people they were used to following”. That was the permissive consensus at the time, which is being referred to as the natural situation to go back to. This was broken up in the early nineties.”
He continued, saying: “out of this emerged the division between “europhiles” and “eurosceptics”. This division is now dead. Europhiles presented a totally inaccurate propagandistic image of the EU. Eurosceptics would at the other hand present us with a pristine image of the nation state, as if we could return to that. That was not a very illuminating debate, not making clear what the EU was really about. Now we’re experiencing something of a new political moment, something very positive, since 2005, when there were the no-votes in France and the Netherlands, extended to this year’s no-vote in Ireland. What characterises this new political moment, is that EU voters seem unwilling to take the leap of fate that is asked of them by their governments. This is a first step towards a real politics of representation in Europe, far away from the politics of “experts” where the EU is driving on. Therefore, the no-vote is to be celebrated and is real cause for optimism in Europe.”
Bruno Waterfield, the Brussels correspondent of the Daily Telegraph, chaired the debate. He also referred to his essay, when making clear there is a fundamental problem with “transparency” in the EU, as it is a weasel bureaucratic word that little more than “releasing of documents in very strict conditions”. Instead, he advocates “openness” and criticises in particular “Coreper”, which is the EU Committee of Permanent Representatives. He said most documents of great general interest which are being discussed there in great secrecy five times a week are entirely private, in the sense that they belong to national diplomacies. He said: “institutions like Coreper have been set up to conduct politics”.
The EU Climate Action and Renewable Energy Package - Are we about to be locked into the wrong policy? – November 28 2008
Open Europe organised an evening debate on the EU's Climate Action and Renewable Energy Package, which proposes a 20% target for overall emissions reduction by 2020, and binding targets for 20% of all energy to be sourced from renewables, and for 10% of transport fuels to come from biofuels. The event was chaired by Open Europe Chairman Rodney Leach.
Open Europe’s Hugo Robinson argued that “For certain energy-intensive industries subject to high levels of international competition, and for whom 30%, 50% or in some cases 70% of running costs may be energy related, this really is a matter of life and death: under this kind of pressure they will not be able to compete with products made by rivals outside Europe.” He said that ‘green tariffs’ were being planned in order to offset this effect, and that this would mean “The EU package risks being a driver of protectionism.” He said that “The technology-specific targets for renewables and biofuels can only mean that resources are diverted towards projects chosen by the bureaucrats, rather than the most cost-effective methods of removing CO2 from the atmosphere”.
Gordon Edge of the British Wind Energy Association argued that the binding target for renewable energy was needed because “if we’re going to have it, let’s have it now – let’s force the pace and make it happen… an early challenging target is a good idea”. He said that concerns over intermittency could be overcome, and that the targets would be achievable given the number of wind projects that were already in the pipeline.
Andrew Bainbridge, Director General of the Major Energy Users' Council said that Britain’s energy industry was characterised “chaos”. He said, the view of major energy users is that “It is not feasible to diversify away from fossil fuel dependence to reduce CO2 emissions so quickly in pursuit of arbitrary, politically determined targets of questionable practicality decided in the UK and the EU disregard for economic circumstances. We’re trying to keep ourselves afloat – we’re short of money – this is nonsense. We can’t and won’t meet our share of the EU target, and we know that businesses will go bust trying to comply with ludicrous penalties.” “We need a common sense approach which doesn’t tax glass manufacturers or chemical companies or other energy intensive industries out of existence. If renewables are going to whack 30% on our energy bills by 2020, do not expect major energy users to sit back and accept what the government says is inevitable”. He concluded “All I can foresee is continued chaos, and then the lights will go out”.
Ian Fells of Newcastle University said, “There’s no chance at all of getting to 15% renewable energy by 2020.” He went on to say, “Where do these targets come from? I was in Brussels about 18 months ago talking to the civil servants there at the Commission, and I said ‘Where does this 2020 target come from?’ And they laughed. They said, ‘those are political targets – those are not the real targets.’ A bit depressing that the civil servants at the Commission think that”.
Fells said that a premium should be given to reliable, carbon-free generation – including nuclear and large hydro power – rather than just focussing on intermittent, unreliable renewable sources such as wind.
Michael Grubb of the Carbon Trust spoke on the EU Emissions Trading Scheme said phase three of the Emissions Trading Scheme would be a big step towards creating a pan-European price signal for carbon. He suggested that “other mechanisms” beyond a carbon price were necessary in order to foster innovation.
Open Europe's Hugo Robinson (right) addresses the audience before the debate.
Listen to a recording of the event.
Financial crisis: strengthening or weakening the EU? – November 12 2008
Open Europe organised a panel discussion in Brussels on the Financial Crisis and the consequences for the EU.
Daniel Schwammenthal, editorial writer for the Wall Street Journal warned against more regulation, saying that “regulatory hell is paved with good intentions”. He insisted that we should look to the real causes of the crisis, and accept that these had been too much government intervention. This was primarily the case in the US, “with Freddie Mae and Freddie Mac, which are quasi government backed institutions that pushed complicated securities and lending for people who simply could not afford the mortgages they were offered.” He warned, “Before we scream ‘capitalism is bad’, we should look at the causes”.
Daniel Daianu MEP, former Romanian Finance Minister and economics professor, said “it's about finding proper regulation”. He argued, “we knew it was going to happen. There were blatant conflicts of interest.”
However he said that “securities per se are not necessarily bad” and that he “sympathised with the view that regulation should be appropriate”, he insisted that “We can not be complacent. We have to regulate globally if we want to tackle a global problem.” Commenting on concerns that more financial regulation might be especially harmful for the UK, he objected, saying: “This would also be to the benefit of London, because in my view, London has relied too much on the financial sector in the last decades. London and the UK have to learn also other sorts of business apart from finance.”
Karel Lannoo, CEO of the Center for European Policy Studies (CEPS), was very critical towards regulators, “we need to see where mistakes have been made”, giving the example of the Belgian Dexia Bank: “core capital was below 2 percent capital, which is the trigger ratio to close a bank in the United States”, complaining that no action had been undertaken and proposing overview by an extra institution as a solution. On regulation, he said: “On a global scale, Europe is probably not underregulated. Let's however simplify regulation for banking.”
On the eurozone, he admitted that “in Brussels people will say it’s an argument for the Swedes and the Danes, to join the eurozone, but if you go outside of Brussels you get a whole different story, for example in Spain, where interest rates were deemed inappropriate.”
Mike Verknocke, head of the City of London Office in Brussels, analysed the crisis as follows: “supervisors should be looking at concentrating on risks. However, the problem for the UK was based on the assumption that the interbanking market wouldn’t dry up overnight, as has happened.” He insisted that “one thing should be very clear: the financial industry is one of the most regulated industries in the world. There is a great danger here of politics just aiming to punish somebody. This could actually conflict with policy, for example with regards to the capital requirements directive where a proposal had been made to put a capital charge on interbank lending when at the same time governments were making efforts to get the interbank market to start operating again.(…) If we get this wrong, it's not so much the banks who will suffer, but it is the real economy, the taxpayers.”
After the Irish 'No' vote: What next for Europe? - October 1 2008
Open Europe organised an evening reception and a lunchtime panel discussion at the 2008 Conservative Party Conference in Birmingham.
Bruno Waterfield, the Brussels Correspondent for the Daily Telegraph, opened up the panel discussion by giving an update on the current state of the Lisbon Treaty, in the aftermath of the Irish “no” vote. He said that it is very likely that the Irish government will call “a second vote of some kind”, noting that the Irish could be offered a guarantee to keep their commissioners and stronger opt-outs from EU defence policy in order to persuade people to vote “yes”. Bruno said that although the discussion so far has centred on a second Irish vote being held in the autumn of 2010, there is a possibility that a referendum will be called prior to the European elections taking place in June next year, possibly as early as March. He warned: "Don't underestimate how quickly they might find a fix", predicting an "intensive, short and sharp information campaign when the time comes.".
Mark Harper MP (left) and William Hague at Open Europe's evening reception.
David Heathcoat-Amory MP, who was a member of the 2002/2003 Convention which drew up the original EU Constitution, argued that the EU elite has “no intention of giving up on the Lisbon Treaty”, arguing that the EU has proved “immune” to political and financial pressure. He went on to argue that “it would be shameful” for the Irish government to collude with the EU in pushing through the Lisbon Treaty against the will of the people. Looking at the debate over the Lisbon Treaty’s complexity, David said that although the Treaty is legally complex, the main issue is “actually very simple” - whether or not to transfer more powers to the EU. “That’s what the Irish voted no to”, he said. He concluded, “It is the centralised bureaucratic model of the EU that is old-fashioned and out of date. We need to make a reality of politicians’ aims to distributing powers downwards.”
The Shadow Minister for Europe, Mark Francois, reiterated the Conservative Party's intention to withdraw from the European People's Party (EPP) in the European Parliament. He said that the Conservatives are "absolutely committed to form a new grouping", after the elections for the European Parliament in June next year. Echoing William Hague's remarks from earlier in the day, Francois restated the Party's ambition to hold a referendum on the Lisbon Treaty, if the Treaty has not come in to force by the time the Conservatives take office. Francois added that in the event that the Treaty has been ratified by that time, the Party would consider the Treaty to lack the "democratic consent" of the British people and would engage in some "difficult discussions with EU partners" over the document's validity in the UK. However, Francois said it was too early to say exactly what policy the Conservatives would pursue in such a scenario, not least since it could weaken the negotiation position in future negotiations with EU partners.
2007
Galileo - is it worth it? 9 October, 2007
Open Europe hosted a debate on the EU’s planned satellite navigation programme in the House of Lords on 9 October: “Galileo – is it worth it?”
Conservative MP Bernard Jenkin, who is a Member of the Defence Select Committee and a former Shadow Secretary of State for Defence, kicked off the debate arguing that “Virtually everything the Commission says on its website [about Galileo] is pure fantasy”. He said the system will have almost no effect on the operation of the transport system of the EU, it will not be available by 2008 – the PPP the Commission envisaged has all but collapsed. According to the head of the Galileo project the costs are expected to be in the region of €10 billion – 150% more than the original estimate of €4bn. He said the project is “Massively behind schedule and way over budget.”
He said, “The commercial case simply does not and will not ever stand up”. He argued that it does not offer additional value for money than GPS on performance, because the original accuracy advantages to be brought by Galileo are no longer relevant because GPS has since moved on. Because GPS is free, “the only places that Galileo is likely to attract is a few publicly funded projects from national EU governments desperate to prop up the latest EU white elephant.” Bernard said the number of jobs Galileo will be nowhere near the 150,000 predicted by the Commission.
Moving on to the strategic arguments for Galileo, he said: “Here we come to the real agenda behind Galileo: it is as much a European defence project as it is a transport project.” He argued, “The strategic argument is actually damaging to the British national interest and also misconstrues the interests of the other member states.”
Bernard explained that the Commission wants Galileo and other European space projects to be brought within the European Security and Defence Policy. The European Space Agency will be subsumed into ESDP in the same way the WEU was – Galileo will then, as the Commission’s website states: “underpin the common European defence policy.” He argued that it’s no use ministers saying such a thing will never happen, because they gave the same guarantees about the WEU.
He argued that the strategic military argument for Galileo – the idea that the US would switch off or corrupt the signal – is flawed in two major ways: the GPS system is now too linked into the US and global economy for them to do something like that. He said that even when in 2004 the US military discovered that al-Qaida in Iraq was using GPS against US troops, there was no attempt to switch off or corrupt the system. The White House announced only last month that GPS 3 will no longer have the capability for selective availability.
Bernard said that the second flaw is in thinking that US-Europe relations would ever sink so low that the US would not allow Europe access to GPS. If things ever got that bad, then GPS would be the least of our worries.
He concluded, “It is an EU vanity project”, and that the EU does not need a strategic satellite system independent from the US system, because it will never have to depend on it. He said, “Galileo is part of an agenda which aims potentially to decouple the EU from NATO and ultimately from the US in the quixotic hope that the EU will somehow emerge as a geo-political counterweight to American power. This is the primary reason why Galileo is not just pointless, but potentially damaging. It contributes to the undermining of the supremacy of NATO and to the destabilising of transatlantic relations.”
He also said it was particularly irresponsible for the EU to involve the Chinese in Galileo, saying, “The idea that Europe’s interests are more closely allied to those of China than the US is quite bizarre.” He said they could penetrate Galileo security systems for military purposes if they have any access at all to the project.
Dr. Stephen Ladyman, former Minister of State for Transport, argued, “Galileo is, certainly was, a great concept. There is absolutely no question in my mind that if, when we first proposed Galileo, we had gone about managing it in the right way… if we had kicked ass and got on with it at the speed that we originally intended, there would have been huge economic and scientific benefits for the European Union.” He said, but that was then, and this is now; is it still a great concept?
Stephen argued that creating a project on the scale of Galileo is something that only Europe can do; we cannot do it as individual member states. But, he said, “Europe is at its worst when it engages on a project like this and then allows national self interest to divert it”, instead of what is in Europe’s best interests, which, he argued, is what happened with Galileo, “and I plead as guilty to this as anyone else.”
He said, “We broke all the rules of good business in the way we put this project together, so, frankly, we shouldn’t be surprised that we’ve got to the position we’ve got now. We’ve allowed ourselves to be diverted from the path of good science, from the path of good business, by the way we’ve allowed politics to make decisions about the project. And that is something the EU desperately needs to learn from.”
He said that we could take the view that we should now scrap the project, “and I’m not saying that that would not be at least partly justified. But in my view we haven’t reached that position yet. There is a position where we can rescue Galileo, and if we can convince the rest of the EU to adopt that position then maybe it still has benefits.”
He said, “We have to revisit the business case”, and outlined things in the original business case that we now need to start disregarding:
- Galileo is intended to provide a better quality signal, an independent signal. “If those things had been true, then clearly Galileo would have had an advantage, but as Bernard has said, they are not true anymore, with GPS 2 being available, with GPS 3. The independence argument to some extent has gone away because there’s also the Russian system, potentially the Chinese system, so the likelihood of GPS-type technologies not being available for people to use in the future has become very slim. So we need to re-examine that argument, and if that benefit has gone, then we need to discount it in our business calculation.”
- The idea that Galileo would not be too expensive – “the Commission compared it with some other projects, saying, look, Galileo only costs the same as these, so it’s cheap. One was terminal 5 at Heathrow. When it opens, terminal 5 will be, by itself, the 3rd biggest airport in Europe. 6,000 will work there, 65,000 people will help build it, and it will guarantee 1 million jobs in West London. If that is the measure of whether Galileo, at the price of Galileo, is providing good value for money, I have to say it doesn’t measure up to what terminal 5 at Heathrow is going to provide in terms of job security. So that argument is gone – we need to develop a better test for whether Galileo is providing us with a business return."
- The argument that Galileo was not commercially viable was rebutted by the Commission by saying the concessionaires are willing to put their own money into Galileo – “well, now we know they’re not – so we have to re-evaluate that part of the business case as well.”
- The idea whether Galileo should be a military service or not. The Commission says that some nations’ militaries around Europe will make use of it – and why not? Stephen argued that that doesn’t mean we’re breaking away from NATO – “so maybe we need to re-evaluate that argument as well.”
Stephen said, “At the end of the day, if what we are relying on to go ahead with Galileo, is that business case, then I have to say I will come down on the side of Bernard and say, it needs to go, it cannot be justified at this cost for that business return, because those business returns have disappeared. We need to be asking ourselves where is the new business return.”
He asked what can we make Galileo into that would give it “a unique competitive advantage” over GPS and the Russian and Chinese systems? If they can do that, then because of the scientific and technological benefits, then it might well be worthwhile going ahead with Galileo – “but only if they can do that. And that I hope is a piece of work which the Commission is trying to get on with at this moment. If it is not, then Galileo is doomed.”
The British Government should now be setting out two criteria: “tell us what the unique business case is, make it work as a business argument and a scientific argument, and then let’s work out how to make sure that we’ve got all the advantages of competitive tendering driving down the costs of delivering this project. And if we get the right answers to those two things, then we stay with Galileo and it’ll be a great project. If we don’t get the right answers, the worst thing we could do for the EU would be to persevere with it and provide ammunition to people like Bernard to attack the European Union.”
During the Q and A session, he said that we need something that is higher quality than GPS, but whether GPS or Galileo can produce it is the question. He said “We cannot wait until 2014 for this”, but said if we need another 6 months to identify the business case then that would be preferable to spending another €2.1 bn now on the current business case that might not work.
Peter Brookes – Senior Fellow at the Heritage Foundation, began by saying that Galileo has not had much play in the US for a while, with several people saying Galileo is “off the radar.” He said, “Is Galileo worth it? I would say no, but that’s coming from a conservative fiscal orientation and a concern about how Europe spends its money.”
He said there are three primary security concerns about Galileo – which haven’t changed much since Galileo was talked about in the US in 2003, 2004:
- Potential impact on the transatlantic relations. Peter said that some in the US are alarmed about the military aspects of the Galileo – it was denied for a long time that it had any sort of military aspect, but a number of officials seem to make it quite clear to us that it does have a defence side to it as well. These critics of Galileo see the push for the system as symptomatic of some in Europe that are pushing Europe to pursue its own security and defence identity, separate from the US and NATO. He said some in the US are not at all keen on the idea of the EU’s common foreign and security or the ESDP. He said, “It could be argued that the militarisation of the EU – Galileo being part of that – marks one of the greatest geo-political shifts in the transatlantic alliance since the second world war. In the eyes of some the ESDP embodies some of the worst elements of European animosity towards the United States.” In addition in the eyes of some it would fundamentally undermine the NATO alliance and the Anglo-American special relationship. Some think that these moves are evidence of Europe’s efforts to not only act independently of the US, but also as a counterweight to it. He said, “I think the US would like to see Europe take on more security and more defence responsibility, but they don’t want to see new policies dividing the transatlantic relationship. I fear that a revival of Galileo could be an accelerator for that sort of effort.”
- Potential impact on European defence spending Stephen questioned why Europeans are spending all this money on Galileo when only 5 out of 21 EU NATO members are now spending the required NATO benchmark of 2% GDP on defence, and when many European troops need airlift and high-tech weaponary in Afghanistan, for example.
- Potential impact on Chinese defence modernisation and military capability Peter explained that China is a great concern to the US, with its military build-up, fast-growing defence budget etc. He said that Galileo will have important military applications, and implications, especially for the US. It will improve the precision of weapons guidance systems – this is incredibly important for the military. He said that China is currently developing a range of advanced land attack, ballistic missiles etc all of which can be aided by satellite navigation. “If the US and China wind up in military confrontation over Taiwan, Galileo could improve China’s precision, strike capability against US forces in the pacific.” He said that Galileo, while unintentionally, could be used against US forces. “The US does not want to give China more options than is necessary – such as access to Galileo.”
Peter concluded by saying that despite all this, Galileo’s fate is actually more likely to be determined by Franco-German rivalry and the bean-counter, more than the security concerns of the transatlantic alliance.
Richard Peckham, Business Development Director (UK) EADS Astrium argued that Galileo has significantly more performance than GPS – it has more advance signals that will work better in built up areas. He said there are lots of reasons why Galileo will be better than GPS, and that the next generation of GPS is running two to three years late – it will be a long time before a useful number of satellites are up.
On rivalry with GPS, he said that since 2001 things have changed dramatically, putting rivalry between the two to bed. He argued that having two lots of satellites with the same signal would be good for users and manufacturers.
Richard argued that because we are becoming increasingly dependent on satellite navigation, it would be irresponsible for European governments to allow that much dependence but with no control, not because the US might switch off GPS, but because it is not infallible, and is vulnerable to terrorist attack, earthquakes etc. He said, “The economic consequences are huge such that we should be thinking about a second system.”
Talking about why Galileo has so far stalled, Richard said that the money was never an issue – the banks were prepared to lend the money to the concessionaires – but that ultimately the whole thing fell apart on squabbling.
He argued that there is a lot of demand for a new system, because lots of people are saying they cannot use GPS for what they want to do, and that satellite navigation is an important new growth area, where the industry expects real business potential.
Open Europe book launch and discussion: “Life of a European Mandarin” - 5 September 2007
With: Derk-Jan Eppink
Derk-Jan Eppink spent more than seven years working as a senior official behind the scenes in the European Commission.
At an event to mark the launch of his book - "Life of a European Mandarin: Inside the Commission", Derk-Jan talked about his experiences in the Commission and outlined his ideas for reform. Copies of his speech are available from the Open Europe office.
Open Europe discussion: The new EU treaty and the future of Europe - 15 June 2007
Brendan Donnelly, Director of the Federal Trust, kicked off the debate arguing that the proposed constitutional treaty is by no means the most revolutionary document in the history of the EU. He argued that the most “integrationist” treaty is the Single European Act, which was signed by Margaret Thatcher. He argued that “Any argument that says that the constitutional treaty is wholly unacceptable is de facto an argument that the EU is wholly unacceptable. Now that’s a perfectly coherent and logical point of view held by many people in this room, but I think we should call things by their name”.
He argued that the EU will never be a mirror image of the UK. There is an argument in this country saying “I’m all in favour of the EU, I just want it to be fundamentally reformed. That strikes me a little bit like saying I’m a Catholic but I don’t believe in Papal infallibility…you must accept in good faith the institutional structure of the EU and the community method”.
In regards to give the public a vote on the constitutional treaty, he said that referendums are not the most authentic forms of democracy: “I find it particularly strange that some people who would regard that the cardinal sin of the EU is that it undermines the role of the national parliament, then seek to undermine the role of the national parliament further by being an enthusiastic advocate of a referendum on the constitutional treaty.”
Neil O’Brien, Director of Open Europe, responded to Donnelly’s argument on the UK not having had previous referendums, saying that “the problem is exactly that, we didn’t have referendums on these previous steps, and discontent with the EU, and the lack of accountability, the lack of transparency has been building up for a long time. In a sense this is an overdue referendum”.
He went on to look at what will be in the new treaty, arguing that three key items from the original text will be in the revised treaty: an EU President, an EU Foreign Minister and changes in the voting system.
Speaking about the EU President, Neil pointed out that “This will be a powerful post because not only will this man or woman have 3,500 civil servants in the Council Secretariat at his or her disposal, which will be a really strong powerbase, he will also have an incentive to increase his powers over time… in the longer term this is seen by a lot of integrationists in Brussels as a stepping stone to US-style President of Europe”.
On the Foreign Minister he said that “One is the question of the Foreign Minister itself and whether he or she would speak on our behalf in international meetings. Another question is whether in the new draft the Foreign Minister will be accompanied by a move to QMV in foreign policy as was the case in the original text.” He also said that the idea of an EU diplomatic service would risk sending mixed messages to the world.
The new voting system, Neil argued, “Makes it a lot easier to pass legislation and cuts the UK’s ability block legislation by 30%, which means inevitably that the EU will produce even more regulation with even higher costs for business”, noting that the EU is already regulating pretty hard with the cost of its regulation, according to BCC being £40 bn.
Neil argued that the UK Government is digging itself into a hole on a referendum on the Constitution: “Gordon Brown has talked of a new form of politics, a humble politics involving the public…All of that rhetoric will just be cut off by their knees if the Brown spends his first couple of days in office going on TV explaining why voters are too stupid to have a say on this new text”.
Sir Stephen Wall, former Europe Advisor to the Prime Minister, argued that “My perception of the Constitutional treaty is that it is not the next step towards a political union such that had been perceived in the 50s, 60s 70s and to some extent the 80s, but if you like the last expression of a rhetoric that was no longer born out of the reality. And I think the reality of today’s EU is much different. It is a much more – and I personally don’t think this is good for our future – intergovernmental organisation than it was”.
On the new EU treaty, Sir Stephen argued that there will be a President of the Council, but it will be a limited role reflecting the wishes of some member states. Similarly, regarding the so-called Foreign Minister, he said there’s “no question” of this person replacing member states in terms of a single seat and voting for example in the UN Security Council. He argued that no UK Government will accept that a Foreign Minister will be able to command QMV.
On Justice and Home affairs, he argued that the UK will insist on an opt-out, and that the Government will also seek “to strengthen the extent to which it is clear that foreign policy remains a prerogative of the governments”.
Sir Stephen argued that it is “quite difficult to predict” which way the changing voting weights will go, since “on the one hand the threshold is lower, on the other hand Britain’s weight in the system actually increases,” and “Britain is actually one of the member states who want to see decision taken by majority voting”, outlining a number of issues such as reform of the CAP or liberalisation of the financial sector in which majority voting could serve Britain’s interest.
He argued, “Europe is now in the lead…in tackling two of the most crucial issues that we face. One is the whole question of energy security…and the other is climate change.” He said “ I hope that we will not lose sight of the very, very big British interest in terms of cooperating very closely with our allies and partners within the EU”.
Derek Scott, former Economics Advisor to the Prime Minister criticised Tony Blair for caricaturing those critical of the EU’s current direction. He argued that, “given its geographical position and history, the notion that the UK can disengage from Europe is fantasy. The question, as ever, is how.”
He argued that today’s EU’s institutions offer “the worst of all possible worlds – a mixture of the supranational and the intergovernmental which is giving us a bureaucratic organisation accountable to no one.”
He argued that it is possible to talk about cooperating “on a whole range of areas” but that “Having established that basis for cooperation you don’t need to infill afterwards and have common policies or harmonisation. And frankly given the evidence of the Common Agriculture Policy and the Common Fishery Policy, the notion that what Europe needs is a common energy or a common policy to deal with climate change strikes me as being completely bizarre”.
He said, “What we have had is more and more powers going to the centre from the member states…this has happened almost by accident. But what we can’t have is a process that is proceeding by stealth.”
He continued , “To say [as Brendan did] that it’s not possible to challenge the EU Constitution without wanting to come out the EU, is to fly in the face of what actually happened ahead of the previous Constitution. The balance of power between the centre and member states was the agenda at the Laeken Council and was supposed to be the agenda for the Convention, but Giscard D’Estaing simply chose to ignore it”.
“The democratic case for a referendum seems to me pretty clear cut. Can you imagine what would have happened if the votes would have gone the other way in Holland and France and those of us who were opposed to the Constitution said that they were not really voting against the Constitution. They didn’t know what they were doing. We must have another go. You’d be laughed out of court.”
He noted that in all EU member states there’s a majority in favour of referendum on any new treaty that would mean a further transfer of powers to the EU. He argued that the absence of referendums before Maastricht and the Single European Act was a mistake that should not be repeated.
He argued that “Gordon Brown should have the confidence to say no to any new treaty that further enhances the power of the centre against member states and if his declared intention to involve people in decisions is anything other than hot air, I can’t think of any better decision in which to involve people than that of the new treaty for the European Union”.
Iran, Britain and Europe: Post hostage crisis, what can we expect next? - 22 May 2007
Patrick Mercer MP began the discussion with a briefing on Iran’s involvement in Iraq, arguing that arms, expertise and possibly personnel were being supplied by Tehran with the aim of killing coalition forces. Weapons caches linking back to Iran have been found in Iraq. Iranian involvement has contributed to a greatly increased potency of the insurgency movement, with Explosively Formed Projectiles (EFPs) “manufactured to a commercial, factory grade standard” being used to successfully target armoured vehicles.
Mercer believes there has been a “definite surge” in Iranian activities in Iraq in recent months, and hinted that Iran could even be supporting al Qaeda – raising the prospect of an “extremely sinister” association between Sunni and Shia terrorists. He also said there was mounting evidence that Tehran was beginning to support the insurgency in Afghanistan, despite the previous animosity between Iran and the Taliban. Mercer concluded that “we are already involved in military operations with Iran”, and that in view of this “constant and serious threat” it is essential that the EU, the UN and the UK make “unequivocal statements” over how to confront Iran. He argued that US sanctions needed to be backed up by the EU, and that the EU should try to encourage “rapprochement” between the US and Iran.
Mark Fitzpatrick of the International Institute for Strategic Studies, and former Deputy Assistant Secretary for Non-proliferation at the State Department, spoke on the threat level posed by Iran’s nuclear programme. Fitzpatrick said that Iran was guilty of “systematic violations” of IEA rules, and that whilst many countries use nuclear power, it is quite another matter to enrich uranium domestically – in fact only one third of nuclear power using countries do this. He said that in a best case scenario, Iran could be expected to have enriched enough uranium for nuclear weapon capabilities by 2009/10. In terms of delivery systems for nuclear warheads, Iran currently has the Shahab 3 medium-range missile at its disposal, capable of hitting Israel, Turkey, Egypt and Saudi Arabia. Iran is looking to develop longer range missiles capable of reaching western Europe.
Fitzpatrick argued that Israel “has real reason to see an Iranian nuclear capability as an existential threat”, but noted that there were other reasons to oppose Tehran’s proliferation. Risks include a leaking of nuclear expertise to terrorists or other parties, and the triggering of proliferation amongst Iran’s regional rivals. A nuclear armed Iran would mean the increased regional power of an “antagonistic, autocratic regime”, destabilising the Middle East.
Claude Moniquet, Director of the European Strategic and Intelligence Centre argued that there was a danger of terrorist attacks in Europe if military action is taken against Iran. He said that the Iranian secret services – which are integrated in Iranian embassies – had already deployed people in Europe and had carried out reconnaissance missions. Possible targets include nuclear power stations. Moniquet compared Iran’s Revolutionary Guard, likely to be at the vanguard of such efforts, to the Nazi SS, as an “ideological and military tool, fanatically devoted to protection of the regime”. Moniquet argued that revolutionary Iran has always used terrorism as a political tool, having launched around 200 attacks since 1979, and caused 1000 deaths. Hezbollah has been one of the prime agents for launching such attacks. He said that “Iran was a terrorist state for 23 years. We have no proof this has changed. Iran is working hard to organise terror in Europe,” targeting the UK in particular.
Moniquet said that military action should not be taken off the table, and a global sanctions policy would be necessary if Tehran is to begin to take the position of the West seriously. He said that the opposition People’s Mujahaddin of Iran should not be taken off the EU terror list, as it is still a terrorist organisation, and has only broken with the regime for strategic reasons.
Nazenin Ansari , Diplomatic Editor of Persian language newspaper Kayhan spoke on the domestic situation in Iran, arguing that the “Achilles heel” of the regime was opposition from within the country itself. She characterised the regime in Tehran as “not a nation state, but a non geographical ideological force” aiming to “export theocratic revolution”. She argued that the Iranian Revolutionary Guard, as guardians of the state, had established strong influence over the Iranian economy, with all government contracts going to the IRG, effectively marginalising the private sector. Iran accounts for 1% of the world’s population and 7% of the world’s resources, yet has experienced steady economic decline, with unemployment and inflation both running at over 20% and a ‘brain drain’ of 400,000 per year. She described systematic human rights abuse in Iran based on “gender, ethnic, religious apartheid” which began right after the revolution.
Ansari argued that “diplomatic negotiations are flawed, as they are based on the assumption that Iran wants a solution”, as the regime in Tehran, not acting as a conventional nation state, is not sensitive to the incentives and sanctions being proposed. She said that “conventional diplomacy will not work unless in conjunction with the Iranian people”. When asked on why the People’s Mujahaddin of Iran is still proscribed as a terrorist organisation in the EU, Ansari said that before this situation changes, the movement will have to change its charter, as it is currently far from being a pro-democracy movement.
The EU, Trade and Development: Are Economic Partnership Agreements the right way forwards? - 26 March 2007
By the end of this year the EU is due to replace its preferential trade arrangements with African,
Opinion is divided. Some believe that EPAs are the only way for these countries to join the modern global economy. Others argue that by pushing developing countries to liberalise their economies too far and too fast we risk making their problems worse, not better.
With the deadline looming and negotiations stalled, we brought together leading economists and negotiators to discuss the way forwards. The seminar was chaired by Larry Elliot, Economics Editor of the Guardian, and Simon Cox, Economics Correspondent for the Economist.
Patrick Messerlin, Professor of Economics at Sciences Po argued that the ideal trade policy to be adopted through EPAs should involve a uniform, moderate tariff, with the same level applied to all goods. He argued that the current EPAs do not satisfy this need, as they cut the lowest tariffs, risk exacerbating the strength of lobbies at a political level, whilst restricting developing countries’ policy space by reducing fiscal revenues. He concluded that EPAs are “exactly the opposite of the ideal trade policy”.
View presentation here.
Sophie Powell from Traidcraft criticised the way in which aid was being tied to acceptance of free trade agreements, and spoke of the importance of boosting trade facilitation. She argued that complex Rules of Origin requirements were a major restriction on
View presentation here.
Sanoussi Bilal from the European Centre for Development Policy Management suggested that there could be a danger – in delaying agreement on EPAs – of shifting responsibility to the next generation. However, he urged that good EPAs, rather than EPAs simply agreed to comply with deadlines, should be the objective for negotiators.
To view ECDPM’s overview of the EPA debate, click here.
To view ECDPM’s update on negotiations, click here.
Paul Brenton of the World Bank predicted that developing countries’ share of world trade would increase as global integration intensifies. He suggested that
View presentation here.
Chris Stevens from the Overseas Development Institute argued that the EU Commission had drastically raised the stakes in negotiations with developing countries, threatening them with higher tariffs if they did not sign EPAs by the assigned end-2007 deadline. He suggested that in reality it was already too late to complete well negotiated, balanced EPAs, and said that it was very uncertain that the deals would help regional integration. Stevens cited ODI research showing that if the deadline lapsed, and African countries became subject to tariffs, some exports would collapse – in the case of
View presentation here.
Stephen Karingi, Chief of Trade and International Negotiations Section for the Economic Commission for
Francis Mangeni, Regional Trade Policy Advisor for the Commission of the African Union, said that the European Commission is not recognizing the concerns of
View presentation here.
The seminar concluded with a question and answer session. In response to a question on the end-2007 deadline for EPAs, Chris Stevens commented “this will not do… in the real world of trade you can’t leave purchasing decisions to 31st December and then make your pricing decisions. Goods are ordered up to a year in advance. The people buying them have to take a view on what the tariff will be in January. I can assure you that Kenyan horticultural exporters and the Namibian beef exporters are under no illusion that they can trust
In response to a question on regional integration, and the apparent anomaly of South Africa being subject to differential treatment vis-à-vis its regional trading partners,
He argued that WTO compatibility “is driving the agenda, but it is not the only element that is driving the agenda. [Regarding
Chris Stevens intervened, branding the Commission’s stance “topsy-turvy… apparently it’s completely unreasonable for the EU to charge a high tariff on imports of bananas from Guatemala and a low tariff on Belize, but it’s only political common sense to know that you’re going to have charge a higher tariff on imports from South Africa, but a low tariff on imports from Botswana. Whenever it’s in the EU’s interest, it’s common sense, and whenever the EU can’t liberalise, it’s ‘you’ve got to accept political realities’. And where its perfectly acceptable, after the end of this year, to charge a tariff of 10.1 percent on imports of green beans from
Francis Mangeni concluded by noting that the EU’s “mercantilist” stance towards South Africa could have “adverse” effects on neighbouring Least Developed Countries in the region, which the EU intends to treat differently.
2006
The Future of Europe: Reform or Decline - 12 December 2006
Open Europe and Policy Exchange hosted a joint meeting on 12 December with Alberto Alesina, Professor of Political Economy, Harvard University, and Ludger Schuknecht of the European Central Bank, discussing the prospects for future reform in Europe.
Prof. Alesina spoke of his new book The Future of Europe: Reform or Decline. Alesina argued that the European economic miracle following the Second World War is now definitely over, as a result of failure to keep pace with the US technologically, along with the introduction burdensome policies, particularly in regards to the welfare state and labour market regulation. He noted that Europe has seen a decline in working hours per person coupled with a reduction in productivity rates, contributing to rapid economic decline, especially relative to the United States.
Relative decline in wealth is important, he said, as it may lead to tough global adjustments, a “culture of stagnation” and ultimately the decline of Europe as a military and political force in the world. Alesina also alluded to Europe’s unfavourable demographic trend. He questioned whether the EU might be the solution to these problems. The single market and the Euro are examples of EU measures that have worked reasonably well, but, he said, that EU attempts to harmonise social policies are “useless”. Instead, he argued that the EU should stick to its core purpose of the liberalisation of services and goods.
He argued that the EU must drop its “obsession” with the growth and stability pact, stating that member states should be permitted to run high current account deficits for a few years in order to allow reform to take place. He singled out Italian Finance Minister Tomaso Padoa Schioppa’s recent decision to raise taxes in order to bring Italy in line with the growth and stability pact, where in fact his priority should have been tax cuts and other growth promotion strategies. He suggested that in order to incentivise greater fiscal discipline in countries running high deficits such as Italy, the ECB could raise the threshold at which it buys up sovereign debt.
He claimed that EU member states should not seek to allocate more public spending to education or innovation, but rather let the market provide the incentives. Reform, Alesina acknowledged, will not come easily, quoting statistics stating that only 36% of the French believe in free markets. He said it would be preferable to reform all sectors at the same time rather than piecemeal sector-by-sector reform.
Ludger Schuknecht of the European Central Bank drew up a sketch of the experiences some European countries have had with reforms. He pointed to a set of data, including social welfare indicators, arguing that ambitious reform of a country’s welfare system can in fact increase growth, productivity and job-rates without necessarily leading to growing income gaps. He argued that Europe still is too concerned with “protecting rents” and spends too little money on creating opportunities.
Echoing Alesina’s point, he noted that the countries that successfully reformed in the past had introduced comprehensive, broad-based reform packages. Such packages included cuts in public spending, particularly size-downs of bureaucracies along with improvements in fiscal institutions and budget management. This was also accompanied by labour market reforms through deregulation, tax cuts, etc. Moreover, he argued that countries that reduce social spending do not necessarily experience a worsening in their income distribution ratio. On the contrary, income distribution can “improve” after reform, since, he explained, reform can sharpen the targeting of welfare spending. He concluded that rent-seeking continues to hamper growth in Europe, particularly as it is undermining the “four freedoms” that constitute the Single Market.
Read Ludger Schuknecht's presentation here
Wider still and Wider? - 8 December 2006
Less than a month ahead of the accession of Romania and Bulgaria to the EU, on 8 December Open Europe hosted a lunch on the theme of EU enlargement. Participants heard speeches from the Ambassador of Bulgaria to the UK, H. E. Dr. Lachezar Matev, the acting Romanian Ambassador to the UK, Raduta Matache, the Croatian Ambassador to the UK H.E. Josko Paro, and Natasha Srdoc, President of the Adriatic Institute in Croatia.
The Romanian and Bulgarian Ambassadors agreed on the importance of the EU accession process for driving reform in their respective countries, with Raduta Matache saying Romania wouldn’t have undergone the transformation it has without the prospect of EU accession. She said “enlargement is the EU’s most powerful tool to spread security and prosperity”, and that nothing can replace it, but added, “that’s not to say that the EU should enlarge forever.” She said Romania will form part of the consensus to take forward institutional reform once it joins the EU. She concluded that the EU’s approach towards Romania over the past seven years was a “perfect mixture of carrots and sticks.”
Dr. Lachezar Matev noted that the EU accession negotiation process has changed a lot over the years, and that the process for Romania and Bulgaria was “completely different” than for the ten member states that joined the EU in 2004. He said for example that in the area of Justice and Home Affairs, these countries were allowed to enter the EU without having implemented all the legislation, while this is not the case for Bulgaria and Romania. He said, “With each new enlargement the bar rises higher and higher”, and said this trend will continue for the countries hoping to join the EU in the future. He also said his government believes there is a need for consensus on the EU Constitution, and that it is against “cherry-picking”, but is not excluding the possibility of a “mini-treaty” as suggested by French Minister Nicolas Sarkozy. Dr. Matev said he was disappointed with the UK’s decision to restrict labour market access for Bulgarians and Romanians. He also said that Bulgaria would spend over €10 billion implementing EU environmental legislation.
The Croatian Ambassador Josko Paro talked about the “extremely cumbersome” accession procedures his country has already had to go through as part of its negotiations to join the EU, which are more difficult again than those faced by Romania and Bulgaria. He said the problem was not just the complexity of the rules, but the fact that they are “still not clearly defined.” He said 21,000 pages of legislation have been completed so far, involving 2,000 people and 429 administrative bodies, but that the process has been too slow – in a whole year of negotiations Croatia (and Turkey) were allowed to open and close only one ‘chapter’ of the accession conditions. He said it is sometimes “impossible to feel the sense of movement and direction.” He said that only 40% of Croatians are now in favour of joining the EU, “due to the procrastination of our accession.” He noted that despite the lack of a “favourable wind” of support the Croatian Government were “rowing hard” to keep up movement towards membership, but that there was now an “adverse tide” against further enlargement. The UK Government is to work with Croatia to produce a cost-benefit study of Croatian membership. If it completes the negotiation process, Croatia could have a referendum on membership in 2009.
Natasha Srdoc of the Adriatic Institute condemned the non-existence of cost-benefit analysis of Croatia joining the EU, and the lack of debate. She said EU accession represents many opportunities for Croatia, such as implementation of free market reforms, but also noted several “threats”, such as loss of sovereignty, and the possible harmonisation of social policies and taxes. She argued that what Croatia needs is strong leadership to help bring about the rule of law and eliminate corruption, and that if it had this, it wouldn’t necessarily need EU accession.
John Hulsman : “Ethical Realism” - 15 November 2006
In a talk that marked the UK launch of his new book, Dr John Hulsman explained what he saw as the urgent need for the United States to reject neo-conservative thinking and adopt a new, more pragmatic policy, based on the concept of “ethical realism”. He argued that despite spending vast sums of US taxpayers’ money and sacrificing thousands of US servicemen’s lives, the war in Iraq had failed in its objective of creating a stable democratic country. As such, he argued the neo-conservative’s policy was “immoral” because it had failed to leave the country in a better state than in which it was found. He called for the United States to return to the traditions of international relations of former Presidents Eisenhower and Truman.
Download John’s speech on the seminar “Ethical Realism”
Conservative Party Conference Fringe event - 3 October 2006
Can the EU be reformed? If so how?
Open Europe held a fringe event at the Conservative Party conference on 3 October titled “Can the EU be reformed? If so, how?”, with David Heathcoat-Amory MP, former Times Brussels correspondent Anthony Browne, Shadow Europe Minister Graham Brady, and chaired by Charles Moore, former editor of the Telegraph. Nearly 200 people attended the event, which was covered on BBC Radio Scotland.
David Heathcoat-Amory, a former member of the European Convention, was sceptical as to whether reform would be possible, arguing that the EU is “unreformable – I know because I tried”. He argued that the EU is not only undemocratic but is now undermining democracy, citing the lax attitude of many member states towards implementing legislation they have voted for. He also condemned the lack of debate in the UK Parliament on the important issue of the EU’s accession treaties, which give Bulgarians and Romanians automatic residence rights in the UK, as well as on the Free Movement Directive, which makes it illegal for the UK Government to deport foreign EU criminals from the UK. David also argued that the UK needs to be free to negotiate its own bilateral free trade agreements saying “what’s the point in [the Conservative Party] having policies if we can’t implement them… the question ‘why vote’ becomes unanswerable.” He argued that the EU is a “rival system of government”.
Anthony Browne said he agreed with David’s analysis but said his conclusion is that reform is possible. He argued that reform could be brought about through “constitutional crisis” and said a more “hardball” approach from member states such as the UK would force change to happen. He gave several recent examples of when the Government could have “put its foot down” and used its veto in Brussels but failed to. He said for example that the Common Agricultural Policy is “completely ridiculous” and that the UK should “pull out of it”. He said that in several areas of legislation the Government “should just pass a law to revoke it” and “deal with the consequences”, saying our attitude should be “so what” when the Commission and other member states complain. In response to questions from the floor, Anthony said there should be more referendums in the UK, arguing that a referendum campaign on the Common Fisheries Policy, for example, would help put it back on the political agenda. He also said that parliament needs to be able to better debate EU issues and give the Government a mandate for discussion in EU meetings.
Graham Brady also argued that reform is possible, saying the EU has “reformed throughout its history”, albeit in the wrong direction. He said a Conservative government would prioritise the creation of a “genuinely flexible” EU allowing some countries to press ahead with integration without others also having to. He said it would repatriate EU social and employment law – “our policy is to bring powers back to Britain”, and said a Conservative government would be “absolutely intransigent” in EU meetings, making the most of its veto to pressure other member states. Graham also promised to hold a referendum on “any policy giving up significant power”, including elements of the EU Constitution. He said that the party “would rule nothing out” in terms of reforming the Common Fisheries Policy. He concluded that “it’s crucial that this country and this party offers leadership for a different kind of Europe”, and that the consequences of doing nothing would result in Europe becoming a “costly, overregulated backwater”. In response to a question from the floor he said, “I am the only person who can bang on about Europe. I have a licence to. It’s my job”.
Discussion with Gisela Stuart and Vincent Cable - 15 June 2006
The European Union: where next?
Gisela Stuart and Vincent Cable discussed the future of Europe, and the current talks on reviving the rejected EU Constitution. Both argued that a referendum would be needed on a new treaty.
Vincent Cable MP said that there would almost certainly have to be a referendum if a new treaty was agreed, and noted that that the public were unlikely to say yes to such a treaty. He said: “This a subject which most British people in British politics regard with considerable dread. Because it is very, very difficult to see under any circumstances how a treaty, if it was at all substantial, would pass a referendum in the UK."
"The Conservatives would almost be certain to demand a referendum, I think we would also. If the treaty came up in a revised form anything like what happened before, with nothing serious on issues of subsidiarity, for example, I think there would be widespread worry about it. Unless what we were going to be offered was a series of very limited technical changes – you know, reducing the number of foreign Commissioners to a couple – and things of this kind, which could be dealt with on a piecemeal basis – I find it very to difficult to see how the British, across the spectrum could conceivably sign a treaty in the foreseeable future”.
Labour MP Gisela Stuart, who represented the UK on the European Convention which drew up the EU Constitution, said: "Other countries will try to bring back the Constitution after the French election. The British Government should make it clear that it will not be part of any process that implicitly or explicitly tries to revive the Constitution. There is no better time than now for Britain to take the initiative."
"During the "period of reflection" governments in other countries have not been afraid to speak but the British Government hides behind a reluctance to pre-empt a decision, whatever that means. "If the Government goes on like this it will be 3-0 down at half time... The first thing the Government needs to do is to state categorically that the Constitution is finished. Like the parrot: dead, deceased and no more. The second thing that needs to be done is to make clear that in Britain any future treaty which deals with the political and institutional arrangements of the EU, whether or not it is called a Constitution, will be subject to a referendum: it is the only way that a government can ensure the consent of the people in this matter."
Listen to a podcast of the seminar
Read what they said
Speech by William Hague - 7 June 2006
"The Future of Europe: freedom and flexibility"
The Shadow Foreign Secretary William Hague outlined the Conservative party's policy on Europe in a speech at the Lewis Media Centre in London.
He called for the EU to become a more flexible structure, with only the Single Market as a compulsory core. He said, “In Britain and some other countries we want the EU to do a great deal less. Others, like the Dutch, want the EU to do less in some areas and more in others while those like the Belgians see a need only for increases in the EU's power. Our aim must be to let each country find the level of integration it is most comfortable with.”
He called for “a flexible Europe, with the Single Market at its core”, and said that “a further enlarged Europe will only be able to work with such a model.”
Read William Hague's speech
listen to a podcast
Open Europe panel discussion - 8 May 2006
"Can the Doha Round be saved? Prospects for world trade"
On 8 May Open Europe held a discussion on the prospects for the Doha Round of talks and the future of world trade. Alan Beattie, World Trade Editor of the Financial Times, chaired the seminar and introduced the panel. He spoke about the ongoing crisis of the Doha Round and why it has not progressed. Beattie said that the WTO is the only multi-lateral institution to which the US still allows itself to be bound.
Sandra Clark, Economic Counsellor from the US Embassy in London, explained the US position at the Doha talks. She said that agriculture was very important to this "development" round because reduction of farm tariffs promised to deliver nearly two thirds of the potential benefits for developing countries. Clark noted that agriculture has the highest remaining barriers to trade, because only one of the previous trade rounds had really addressed the issue. She said that the US had made a very ambitious proposal to reduce agricultural barriers. She disagreed that the Doha Round had been lost, but said tha to achieve agreement all members need to work together to find points of compromise.
Roger Liddle, a member of the Cabinet of Peter Mandelson, European Commission DG Trade, argued that the Doha Round can be saved but there is not much time to do it and agreement must be reached by the summer. He said that the EU was willing to refine and improve its agricultural offer but would not act unilaterally or without the US and G20 also showing willingness to move towards a compromise position. He said that it was this “need for a grand bargain in which there is movement on all sides which is lacking at present and extremely depressing for those who have been involved.” Liddle argued that a solution is not just down to the EU shifting on agriculture, and said that the offer was politically ambitious, with Irish beef farmers saying they would be wiped out, and France talking about the loss of 100,000 jobs.
In his view there are two major obstacles; the US’ "over ambitious" demand for cuts in agricultural tariffs (plus their refusal to say how they will cut their own subsidies) and the limited nature of the concessions the G20 is willing to make on industrial tariffs and market access to services. He warned that a substantial deal was needed because a minimalist deal could be rejected in Congress: "Otherwise, frankly the whole thing is going to sink under the Congressional pressures from Republicans, who, in a very difficult year for them in mid term elections, are likely to put their electoral interests ahead.”
Paulo Estivallet de Mesquita, the Deputy Permanent Representative of Brazil at the WTO, argued that Brazil would be reaching for a limited deal simply in order to preserve the credibility of the WTO, because "if the Round fails we will move backwards and lose credibility." He argued against claims that Brazil and other developing countries were not willing enough to move on services trade, and said that that Brazil has more open services market than the European or American markets. Mesquita said that what is currently on offer at the Doha talks will not amount to significant cuts in agricultural subsidies, and went on to say that there was an imbalance in the Round with demands for major industrial tariff cuts not being matched by significant agriculture offers. He also noted that Brazil had been asking for the "green box" of supposedly non- distorting farm subsidies to be examined more closely, noting the tension between claims that such subsidies are not distorting markets and the claim that they need to be maintained to support the industry.
Professor Patrick Messerlin, Professor of Economics, Sciences-Po, and Co-Chairman of the UN Taskforce on Trade, said that the G20 are not convinced by the EU and US offer, and are reluctant to liberalise. He said that the EU is "really bad" on tariffs but the US proposal is so "extreme" that it was quite possible that the US would not be able to follow their own proposals if they were agreed. Messerlin said that the choice of a tiered formula for the agriculture negotiations had been a mistake. It meant negotiators now had eight weeks to agree sixteen numbers to structure the agriculture deal alone. He also said that the discussions on services are very difficult because "we simply don’t know how to negotiate on services" noting that even within the EU the services directive had been a failure.
Going forward, Professor Messerlin argued that negotiators should focus on tariffs not subsidies, as this would raise the future cost of subsidies. He warned that removal of export subsidies alone, if not part of a big trade and growth creating package, would damage net agricultural importers. He suggested that the EU should back off from its over ambitious demand for a deal in non agricultural products, because EU businesses would be quite happy with a deal which compressed the maximum tariff to 20%, never mind the 15% the EU was asking for.
Dr Razeen Sally, Head of International Trade Policy Unit at the LSE, talked about how little was achieved at the Hong Kong ministerial conference in December. Dr Sally argued that the hope that a deal will be achieved “verges on the utopian”, because only six months will remain after the June/ July deadline for the fine details to be agreed, and that the small print had taken longer than this to negotiate in previous rounds.
He said that there was still likely to be a minimal deal, but that it would be not really "worth getting out of bed for". Dr Sally thought that all groups would be happy with a modest deal except for the US, where the US Congress may reject it. The dangers of a modest deal are that the WTO will not be taken seriously and there will be an acceleration towards free trade agreements and possible flouting of WTO rules. He argued that the WTO would continue in all the wrong directions as it has been doing in the last few years; more in the direction of "the easy politics of an aid agency" and "away from the hard politics of trade liberalisation." He noted that one third of the post-Hong Kong statement had been about aid.
Dr Sally said the WTO needs to "live in an age of diminished expectations and expect far less in the future from liberalisation". He also argued that trade barrier reductions in future were likely to be driven mostly by unilateral action.
In questions and answers, the panel discussed France’s power over the EU’s position at the WTO talks, CAP spending and why the EU doesn’t liberalise unilaterally even if the US doesn’t follow.
Listen to a podcast of the seminar
Open Europe round table discussion - 24 April 2006
"World trade and domestic reforms"
Dr Don Brash, the leader of the New Zealand National party since 2003, spoke at Open Europe’s round table event on “world trade and domestic reforms”.
Dr Brash was the Governor of the Reserve Bank of New Zealand between 1988-2003 and in the 2005 election led his party to an 18% gain, taking them to the brink of government.
Don Brash said that in the 2002 election, the National party had its worst defeat in its 70 year history because the party’s programme was quite unclear. He argued that they failed because they had too many policies which meant the electorate didn’t fully understand what they were saying or promising. He commented that “In some respects we were not unlike the Conservative party here, in that we were saying that we would do everything Labour’s doing but more of it.”
In the 2005 election, in which the National party increased its vote from 20.9-39.1% - their most successful result since 1990, Brash concentrated on 5 key issues, including the economy, tax reduction and welfare reform.
During the discussion Brash was asked questions on agricultural subsidies, foreign affairs and the Doha round, where Dr Brash expressed optimism for a last minute deal. He said the issues on the table relate to import subsidies, internal trade distorting elements and access for non agricultural items in developing countries, and “if you can get those three bits together you can have an outcome that is reasonable, if you don’t it all falls apart.”
A question was asked about how New Zealand had achieved the ending of agricultural subsidies. Brash told how the Labour government, who had no particular affinity for the farming sector and didn’t expect to get any votes from the farmers, were willing to remove subsidies virtually overnight. It was difficult for farmers especially when manufacturing subsidies were reduced over a 10 year period, but, he argued, “there is no great support in the farming sector now to go back” and growth in the farming sector has been greater than anywhere else.
Listen to a podcast of the seminar
Open Europe lunchtime seminar - 18 April 2006
"Farming without subsidies - the future of European agriculture?"
Ben Todhunter and Vaughan Templeton, Nuffield Scholars from New Zealand, and Jack Thurston, a former adviser at the Ministry of Agriculture, Fisheries and Food, spoke at Open Europe’s lunchtime seminar on farming and subsidies in New Zealand and in the EU.
Ben Todhunter and Vaughan Templeton spoke about their experience of farming in New Zealand after reforms in 1986 removed all government subsidies. They argued that the reforms ultimately benefited agriculture in New Zealand improving innovation and increasing efficiency.
Jack Thurston spoke about the situation in Europe and how the Common Agricultural Policy needs to be reformed. He argued that the situation in New Zealand may be completely different to that of the EU, where there were “different motivations for subsidies, different structure and different politics at the time,” but the New Zealand situation does show that “the sector not only survives but ultimately prospers and thrives on it” and that “farming to the market is the only way that farmers can be sure of a future.” Thurston argued that the CAP needed to be reduced with the “intention of abolishing production related farm subsidies.”
Listen to a podcast of the seminar (19 meg)
Open Europe lunchtime seminar - 10 April 2006
"Beyond the European Social Model?"
On 10 April Open Europe launched a new book of essays by leading thinkers from around Europe which argued that the so-called European Social Model is not working. At a lunchtime seminar attended by journalists, business leaders, academics, diplomats and policymakers, contributors to the publication talked about how to reform the so-called Social Model.
Open Europe’s Neil O’Brien kicked off the debate by talking about the urgent need for economic reform in the European Union. He argued that EU leaders used the notion of a European Social Model to justify their interference in areas which should be the responsibility of national and local institutions.
He argued that the high-tax, high-regulation approach in Europe was not only failing in economic terms, but in social terms too, as wage growth for the lowest earners in society has been far slower in the high tax economies than in "Anglo- Saxon" economies like Ireland and Britain. He argued that the tendency in Europe to look to the Nordic models as prototypes for success is a mistake, and that EU leaders would do better to look west instead towards Ireland.
Johnny Munkhammar from Swedish think-tank Timbro talked about Sweden’s experience of a high-tax, highly regulated state, arguing that other European countries should not seek to copy the model, but learn from its mistakes. He described how the system has led to the emergence of an “unfair state” with high unemployment and low growth, causing a decline in Swedish prosperity.
Eric Verhulst from Belgian think-tank WorkForAll talked about Belgium’s problems with high unemployment, and the relationship between high taxes, high and inefficient public spending and low growth. He argued that countries must reform on an individual basis, and that reformers should seek to identify the vested interests acting against reform.
Eline van den Broek from Dutch think-tank the European Independent Institute talked about the Netherlands’ so-called "Polder Model", arguing that the consensus-based system has created an anti-liberalisation climate which has reduced Dutch competitiveness and made reform difficult. Eline looked at the likelihood of reform in the coming years, and warned that real reform may not be grasped until it is too late and there is a real crisis.
Chresten Anderson from the Copenhagen Institute described the problems with the Danish model, where high taxes and a big welfare state mean there is little incentive to move off benefits and into work, and how employers offering pay rises are heavily penalised by the tax system. He argued that the EU must not be allowed to develop the capacity to impose such a so-called ‘social’ model in other countries throughout Europe.
Stephen Pollard looked at the chances of achieving the kinds of reforms endorsed by contributors to the book. He argued that the EU should have no role in imposing a ‘model’ on member states – be it liberal or otherwise – but that it is not enough to pin hopes on a new generation of political leaders emerging in the next round of European elections - as such hopes had all too often been raised and disappointed before. He said the people will not be able to accept reform unless there are strong leaders who can show the people what will happen if their countries do not reform, and unless they can see what they stand to miss out on.
A lively question and answer session followed, with members of the audience raising concerns about how change can be achieved in the face of opposition from vested interest groups and citizens who fear short term penalties. Chairing the meeting, Derek Scott answered a range of questions, including whether the euro acts as an obstacle to reform within the eurozone.
Listen to a podcast of the seminar (19meg)
Read the book "Beyond the Social Model" Hard copies of the book are available at a cost of £5 (including postage and packaging) from our shop.
Open Europe at the BCC annual conference - 3-4 April 2006
At its annual conference (3-4 April) the British Chambers of Commerce published new research showing that the EU was responsible for 86% of the value of new regulations on British businesses last year. Open Europe had a stand throughout the conference and members of our research team met BCC delegates and listened to their concerns.
Open Europe researchers Paul Stephenson and Lorraine Mullally pictured at the conference with BCC Director Christopher Quinton. Christopher is Chairman of Halarose Ltd and President of the South East England Chambers of Commerce.
Open Europe lunchtime seminar - 13 February 2006
Professor John Gillingham, Professor of History, University of Missouri-St. Louis
"Design for a New Europe"
Academics, politicians and business leaders attended Open Europe’s first lunchtime seminar on Professor Gillingham’s new book: “Design for a new Europe”.
Professor Gillingham argued that the EU must undergo root and branch reform if it is to avoid historical irrelevance. He called for the EU to return powers to its member states and to develop a flexible structure which would operate on an opt-in basis.
Read Professor Gillingham's speech here
Download a podcast of John's speech (15 meg)
Order Professor Gillingham's new book: "Design for Europe"
2005
Open Europe's launch - 20 October 2005
Over 200 business leaders, politicians from all the main parties, academics and EU diplomats attended Open Europe's launch party at Bloomberg's European HQ in the City.
Open Europe's chairman, Rodney Leach explained Open Europe’s launch in the context of the current debate about the EU's future direction, and promised that over the coming months it would propose a programme of urgent and radical reform. Derek Scott, Tony Blair's former Economics Advisor introduced Adrian Cooper, Managing Director, Oxford Economic Forecasting (OEF) who presented OEF's analysis of the benefits of EU trade liberalisation and reform of the Common Agricultural Policy for the EU, the UK, and the developing world.
Rodney then chaired a lively Question and Answer session, which included questions from Simon Wolfson (Chief Executive of Next plc), Peter Jay (former Economics Editor at the BBC), David Heathcoat-Amory MP and Theresa Villiers MP, who asked about Open Europe’s plans to extend its appeal across the board, bringing people from a wide range of political and professional backgrounds together in support of free trade and a more open Europe. Theresa Villiers pointed out the importance of reaching out to people who may not be inclined to support free trade. She argued that points made in the presentation showing how the poor stand to benefit the most would be a powerful argument for many people.
Read Rodney Leach's presentation here