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2009 Maintaining Momentum

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2009: Maintaining Momentum
Dear Reader,

December 2008 - Issue 35

- 2009: A Year of Transition
through the coffee grinder - No Treaty this Christmas - The financial crisis and the return of Marx - Green matters in Brussels? froth - Europe falls for tall dark stranger - The dark secrets of transparency EU agenda EU Agenda January 2009

The word "momentous" is often overused when one looks back at any given year – particularly the one just lived through. Yet 2008 has been exactly that. As we move forward to 2009, this Espresso looks back at the disappointments, the main events, the winners and losers, and tries to make sense of 2008 in order to foresee events in 2009. Such has been the global impact of 2008 – the US Presidential elections, the collapse of the Doha trade talks, the world financial crisis, to name but three major issues – that 2009 risks becoming something of an anticlimax. Moreover, the next twelve months could see the EU left out in the international wilderness as it prepares for a new Commission and European Parliament. From May to November Brussels will become even more introspective than usual, as future EU Commissioners are proposed, ratified, and confirmed, and new priorities come to the fore at the expense of the old. Meanwhile, swathes of new MEPs are set to enter through the Parliament’s revolving door from all corners of the EU, testament to the continent’s core democratic values. The Lisbon Treaty’s fate looks set to be finalised in 2009, but whether before or after the elections the tricky negotiations over “institutional reform” – illogically linked to one Member State’s apparent obsession with having their own Commissioner – look set to continue well into next year. Meanwhile, on the world stage two new leaders take to the boards, one bent on “change” (whatever that might be) the other seemingly on recreating a glorious past for the Russian nation. Both leaders, at under 50 years of age, are relatively young and look set to dominate proceedings in 2009 and beyond. With energy, oil supplies, and security of supply topping the world agenda, the EU must not go AWOL at this critical time. As tempting as it may be for Europe’s leaders to busy themselves with Treaty ratification, Commission nominations, and national responses to the very international financial crisis, what happens on the world stage will directly impact the EU, and hence it will need to ensure that it can continue to be a major global actor. The EU’s attempts to connect with its citizens must not lead to a profound disconnect on the world stage. 2009 offers the EU the chance to make its play on a global level - it must make the most of this opportunity.
Robert Francis Editor

Russell Patten, Chief Executive 14A rue du Luxembourg 1000 Brussels Belgium T: + 32 2 732 70 40 F: + 32 2 732 71 76 www.grayling.com Please send your comments to the editor: espresso@be.grayling.com

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Grayling’s espresso

December 2008 - Issue 35

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2009: A Year of Transition
With several months to go before the selection of a new European Commission and uncertainty on the Lisbon Treaty looming over the reshuffle of the EU’s top jobs, the European electorate will have its own dose of uncertainty in 2009. Incumbent Commission President José Manuel Barroso has already publicly outlined that he wants a second term. Several Commissioners are also very keen to pursue their career in Brussels instead of rejoining party politics or moving into either the private sector or retirement. As it happens, the latter option is likely only to apply to 72 year old French Justice & Home Affairs Commissioner Jacques Barrot. Personal ambitions, however, may be hampered by national elections. Austrian conservative Benita Ferrero-Waldner, for instance, has been lobbying to wear the hat of a new EU position from 2009, namely that of a hybrid Energy-Climate Change Commissioner. However, following recent elections Austria’s Commission post may be filled by a left-wing candidate to pacify the country’s new Grand Coalition. The chairs of high-level EU civil servants have already started moving, with President Barroso launching a far-reaching reshuffle of some of the most prized jobs in the Commission, including the head of the Commission’s Legal Service and the Directors-General of DG Competition and DG Environment.
Socialists silent over Commission Presidency

Indeed, José Manuel Barroso stated in November that the EU’s tough budgetary rules restricting deficits to 3% of GDP in “normal times” would be applied with maximum flexibility during the crisis. These suggestions have not been met with enthusiasm in all EU capitals. Indeed, German Chancellor Merkel is particularly reluctant in terms of getting into “a race for billions” with other countries.
“Europe without barriers”

Interestingly, the upcoming Czech EU Presidency is likely to mark a move away from the current EU Presidency chaired by the energetic Nicolas Sarkozy who surprised many commentators by his embrace of government intervention in the wake of the financial crisis. The Czech Presidency does not want a “return to protectionism and excessive state regulation”. Its motto “Europe without barriers” is intended as an allusion to Prague’s current freemarket orientation - a pragmatic approach which may suit the country’s EU Presidency given its reputation as one of the most eurosceptic Member States. While the Czech threats over the future of the Lisbon Treaty seem to be vanishing following the country’s Constitutional Court giving the green light, Ireland remains a “hot potato.” In principle, Ireland could organise a new referendum if it wins a declaration covering the key concerns of voters, including a clarification about the country’s exclusive right to choose its tax and family law policy and maintain its strong principle of neutrality.
Learning from Obama

The activism within the Commission contrasts with the surprising silence of the Party of European Socialists (PES) in the European Parliament. The leader of the European Socialists, the MEP and former Danish Prime Minister Poul Nyrup Rasmussen, has been hoping to act as a potential left-wing successor to José Manuel Barroso if his political family wins the European Parliament elections in June 2009. So far, however, the PES has failed to nominate a candidate for Commission President, and it seems the issue will only reappear on the party’s agenda in February 2009. The art of socialist selfdestruction is not the sole preserve of the French Socialists! Furthermore, the Spanish and Portuguese Prime Ministers, José Luis Zapatero and José Socrates respectively, have thrown a spanner in the works of the party, declaring that they would support a second term for President Barroso. These developments send a mixed signal to the electorate, as party leaders are effectively pre-empting the choice of the Commission President before a single vote has been cast. This confusion around the election campaign seems quite ironic after several years during which all EU institutions have been deploring the lack of democracy and a European “public opinion”. Hence, will 2009 be a year of irony? There is a certain irony, for sure, in the fact that the European Commission, which has been harping on for years on the need for Member States to keep their spending in check, is now urging them – unsuccessfully – to spend in order to tackle the financial crisis.

However, Irish Internal Market Commissioner Charlie McCreevy has undermined this option, arguing that the negative result of his country’s referendum on the Lisbon Treaty should be respected. Meanwhile, McCreevy’s fellow Commissioner Günter Verheugen is searching for some communication advice to provide Europe with inspiration during its ongoing Treaty crisis. The EU needs to learn from US President-Elect Barack Obama on how to sell its vision of the future, Industry Commissioner Verheugen has said. “We have a tendency to deliver our policies and to present our strategies in a language that is perhaps a little too technical, sometimes even boring” he told a press conference on 5 December. But with high-profile issues centre stage, forcing policy-makers to understand the linkages between the climate issue and the economic recovery, and a number of ambitious candidates for an uncertain number of top jobs, as well as a “Europe without barriers” Brussels looks set for a year of “Europe without boredom”.

Sabine Seggelke

Grayling’s espresso

December 2008 - Issue 35

through the coffee grinder
No Treaty this Christmas
One year ago the 27 EU Member States signed the Lisbon Treaty, the light version of the late Constitutional Treaty. The grand signing took place on 13 December 2007 with President Barroso declaring: "After six long years of negotiations, we can leave institutional matters aside and put all our energy into serving the public". The Lisbon Treaty would introduce much needed reforms, such as downsizing the college of Commissioners, a move that would guarantee that they remain representatives of the general interest. The text would also allow downsizing and a redistribution of the number of MEPs and give them more control over the EU budget. The whole nature of the Union would also change, as a voluntary withdrawal clause would be introduced, making membership a clear and ongoing choice. The initial plan was to have the Lisbon Treaty effectual from January 2009, and in fact we nearly made it, since all but one of the 27 national Parliaments have ratified the text. This comes as a real achievement after the 2005 Constitution disaster. One tiny issue though, that will still keep the EU from "serving the public": Ireland, the only country that was constitutionally bound to have a referendum on the issue, voted no, thereby scuppering the general masterplan. But this is just a flesh wound, as the Irish will no doubt be given some concessions and should vote again in Autumn 2009. Should they vote no, we may hear some of the EU leaders singing "with or without you", but we believe the Irish will vote yes. As these reforms were needed more than ten years ago, at least before the EU increased from 15 to 27 members, it seems we can easily wait one more year, and by Christmas 2010 – promise! - we will have a Treaty! (we will hold you to that – Ed.) The answer is the financial crisis. Attracting attention from August this year, it has turned into a near catastrophe and is not over yet, despite experts repeatedly saying it would not last and would pass without incident. The financial turmoil is indeed going to last and will affect the real economy, real jobs, and real people. When the US Government decided in mid-September to sacrifice the investment bank, Lehman Brothers, and following its announcement of its intention to put together a general bail-out scheme for all banks, which would make Marx smile if he could rise from his grave, it was clear that an unprecedented crisis was just about to start. How did this all happen? The 2008 Nobel Prize winner for economics, Paul Krugman, clearly states that the policies of the outgoing Bush Administration have led to the current crisis and argues that the world of hedge funds, money market funds, and other instruments has deregulated the whole banking and financial system and led to countries’ vulnerability to this crisis. Other commentators, especially those supporting a free market and opposing any role of the state in the financial world, argue that this crisis is mainly due to a huge failure of regulation, poor observance of rules, and poor monitoring of risk. As a consequence, the new financial order will need to tighten up its monitoring of risks. Regulation is certainly a very important aspect to cope with, but this crisis goes beyond even that. Indeed, it throws into doubt the functioning of the global free market as such, together with the deregulation policies of recent decades which allowed a huge amount of money to flow across national borders without any public control or role for the state. The events of the past few months are likely to represent a clear break from decades of a free market consensus that refused government intervention and regulation of financial markets. In a time when it is fashionable to repeat Marx’s theory, namely vthat capitalism’s greed eventually leads to its destruction, questions about the future role of the state and the public sector in the private market will have to be addressed. In its early years, the establishment of peace in Europe was the primary objective of the EU, yet times have moved on, and no longer can such an initiative be built on negative foundations. The next "big idea" of the EU was the move towards Economic and Monetary Union (EMU). Advocates of the "big idea" theory contend that for the EU to have the backing of its citizens, there is a direct need to sell itself as working towards some overarching goal, rather than producing incremental benefits for Europeans. Therefore, this apparent need for a "big idea" begs the question that both challenges and drives EU decisionmakers – what is the EU for today? One year ago, the most common response would have been; to provide global leadership to climate change and environmental challenges. Of course this was before the financial markets nosedived, and citizens had to focus their concerns on repayments rather than recycling. However, not everything has gone quiet on the green front, since progress is still being made on a number of important dossiers. Indeed, a case in point is the most recent Environment Council in Brussels on 4 December, when EU Environment Ministers pushed forward with work on the Sustainable Consumption and Production (SCP) Action Plan, procedures regarding Genetically Modified Organisms (GMOs), and the legislative package on climate change. Thus, whilst sorting out the financial crisis might be the priority for EU leaders, it would be unjustified to state that environmental matters are on the backburner. Communication problems have plagued the EU for years and, accordingly, for the EU to endure and prosper eurocrats must be able to inform Europeans, "Look, this is what we are doing for you." It just so happens that at the moment the EU has a number of "big ideas" that it can inform its citizens it is working on, since leaders are attempting to simultaneously restore financial stability without neglecting the need to provide global leadership on green matters.

Talander Jansen

The financial crisis and the return of Marx
Karl Marx is back in fashion, at least according to German booksellers who report that Marx’s works are suddenly in demand again after decades. Why?

Ilja Lorenzo Volpi

Green matters in Brussels?
There is a school of thought that for the EU to function effectively, it needs one particular mission which drives the project forward and gives it purpose.

Michael Brown

Grayling’s espresso

December 2008 - Issue 35

froth
Europe falls for tall dark stranger
News of Barack Obama’s win in the Iowa Caucus accomplished a near miracle in January of 2008, overshadowing the French romance between pop star Carla Bruni and French President Nicolas Sarkozy and kicking off a wave of Obama-mania throughout Europe. The President-Elect’s ability to attract attention in European tabloids and newspapers alike was cemented during his July world tour, when his speech in Berlin drew screaming crowds and comparisons to former US President John F. Kennedy. Now, as he prepares to take office, President-Elect Obama remains a fixture in the European spotlight, with political leaders all rushing to offer congratulations and advice to the man that Italian Prime Minister Silvio Berlusconi considers not only capable but tall, handsome – and “tanned.” The book of Berlusconi gaffes has just got that bit longer. Megan McSeveney

2008 was the year when the controversies over how MEPs spend their considerable expense allowances were revealed – well, nearly. In a nice example of self-interest, MEPs in the Legal Affairs Committee voted against making the relevant documents public, thereby keeping from public view the full extent of what UK MEP Chris Davies called "MEPs fiddling their expenses". The transparency issue was the "nearly" issue in Brussels in 2008. Along with the MEP expense fiasco, the Commission published its revised proposal on access to documents, which is intended to facilitate access to documents – except it doesn’t, at least according to MEPs. Similarly, the much-vaunted Commission lobbying register, originally intended to shed light on lobbying practices, has failed to capture the imagination of both lobbyists and decision-makers, mainly due to its voluntary nature. "Transparency" is in danger of being itself an empty concept, cast around in Brussels’s circles to give an idea a certain credence and justification. Yet if Brussels was to become truly transparent, the powers-that-be would have to admit that transparency is nothing more than an empty concept to appease a sceptical public. Some things, it seems, are best left in the dark. Robert Francis

The dark secrets of transparency

EU agenda January 2009
Council:
7 15-16 20 16-27 15-16 Meeting between Czech Government and Commission Justice & Home Affairs (informal) ECOFIN European Council General Affairs & External Relations

Parliament:
12-15 20-21 20-22 21-22 Plenary Session Committee on Economic & Monetary Affairs Committee on Transport & Tourism Committee on Environment