The Commission has proposed a set of measures to address the harm that corruption causes to European societies. The Commission is setting up a new mechanism, the EU Anti-Corruption Report, to monitor and assess Member States’ efforts against corruption and encourage more political engagement. Supported by an expert group and a network of research correspondents, and the necessary EU budget, the Report will be managed by the Commission and published every two years, starting in 2013. It will identify trends and weaknesses that need to be addressed, as well as stimulate peer learning and exchange of best practices.
How effective will the report be? It’s a very good sign that the EU will have a more focused approach towards diagnosing serious corruption in Member states. But it’s far from certain that ample treatment will follow the diagnosis. If we consider the experience with the reports under the Cooperation and Verification Mechanism for Bulgaria and Romania, it appears that the Commission reports stir a lot of emotions and produce fewer practical results.
Any effort to independently monitor corruption levels in any Member state should be commended. The Commission should also consider benefiting from the existing monitoring mechanisms set up by Transparency International and OECD.
The Greek financial crisis now threatens the whole eurozone. It appears that without substantial debt restructuring Greece is likely to default, and would have to leave the eurozone. This could lead, however, to substantial collateral damage and unintended effects for the whole European banking and financial system. The other option is a very large fiscal transfer from the eurozone core. This second option will lead donor Member States to demand substantial political guarantees for fiscal discipline in Greece and other possible recipients (i.e. Ireland and Portugal).
It looks like the crisis has brought back the idea for a true European political union on the table. The president of the ECB, Jean-Claude Trichet, himself has called for the establishment of a European financial minister.
Now, the idea is not really new. Back in the 1950s there was such a project, called the European Political Community (EPC) that aimed to politically unite the Member States in the European Economic Community (read more about it in the excellent paper by Berthold Rittberger). The main institutional innovation in the EPC was the central role of the bicameral parliamentary body in adopting the budget and the legislation. The EPC project failed, but some of its ideas were later implemented by including the European Parliament in the legislative and budgetary procedures.
Going back to Mr. Trichet’s ideas, we see something completely different. In his framework, the Council would act on the basis of a proposal by the Commission, in liaison with the ECB, to take some measures directly affecting the economy of the Member State that has not implemented its fiscal stability program. There is no role for the European Parliament whatsoever. Apparently Mr. Trichet believes that the very agreement on a stability program is substantial legitimation for a direct involvement in the economic and fiscal policies of a Member State by the Council.
This is quite doubtful. It’s very difficult to imagine how the same people that violently oppose to austerity measures taken by their democratically elected governments will somehow accept direct interference by an institution of the European Union. It’s equally difficult to imagine that the European Parliament will approve such an institutional framework. I can certainly understand the reasonable motives for proposing such a second stage of austerity enforcement, but I’m afraid that such a procedure will decisively worsen the democratic deficit of the European Union.
If and when the governments of the Member States decide that a more profound Treaty revision is needed for establishing tighter fiscal coordination, they will have to consult their national parliaments and the European Parliament. Such consultations are in fact inevitable, since TEU requires the summoning of a Convention to adopt the draft text of the revision (art. 48, para. 2-5 TEU).
Posted in Budget and Finance, EU Reform, Institutional Affairs
Tagged debt, European Central Bank, European Parliament, European Political Community, European Union, eurozone, fiscal policy coordination, Greece, Jean-Claude Trichet, political union, proposal
The Commission has put forward an important proposal for the reformation of the so-called Generalised System of Preferences (GSP) which grants specific tariff preferences to developing countries in the form of reduced or zero tariff rates or quotas.
Key elements of the proposal include:
1. Concentrating GSP preferences on fewer countries. A number of countries would no longer be eligible to benefit, including:
- Countries which have achieved a high or upper middle income per capita, according to the internationally accepted World Bank classification (such as Kuwait, Russia, Saudi Arabia and Qatar).
- Countries that have preferential access to the EU which is at least as good as under GSP – for example, under a Free Trade Agreement or a special autonomous trade regime.
- A number of overseas countries and territories which have an alternative market access arrangement for developed markets.
2. Reinforcing the incentives for the respect of core human and labour rights, environmental and good governance standards through trade by facilitating access to the GSP+ scheme which grants additional, mostly duty-free preference to vulnerable countries.
3. Strengthen the effectiveness of the trade concessions for Least Developed Countries (LDCs) through the “Everything but Arms” (EBA) scheme.
4. Increasing predictability, transparency and stability.
European citizens should think more about their demands when talking about the EU. Here’s why.
These are not the best of times for the European Union. There’s a financial crisis; an immigration crisis; a crisis of trust, and who knows what else. In a nutshell, the EU is in trouble.
What is more difficult to comprehend is the malignancy and the “I-told-you-so” attitude of so many politicians, commentators and European citizens. The poignancy of the negative feelings is really remarkable. That is why I would like to do something unusual for this blog and address these skeptics. My objective is to provide a merciless, subjective and heavily normative critique of the complacency of those that seem to prefer a European future without a European Union.
In order to do that, I need to make an important observation. Homo Sapiens has not evolved substantially during the last 60 years. That being said, the claims that a new war on the European continent is impossible seem strange. It was not the tanks and airplanes that destroyed Europe during World War II, it was the people in them. What is more, our physical and genetic ancestors have waged war on one another for at least two millennia on this continent. In fact, the only longer peaceful episode in recent history has been the period of European integration. It’s true that NATO and the dynamic of nuclear deterrence also played a part. But it was the cooperation of European elites within the European Community that cemented this security pact.
Nowadays many believe that wars are part of the history, but not of the future. Others think that wars may be a useful instrument of foreign policy. What unites them is the lack of any wartime experience. This virus of complacency and ignorance is widespread. It has caught up with politicians, journalists, and all kinds of experts. The McDonalds rule is their flag, although it has already been broken. This virus makes them think that states are well equipped to solve emerging problems using the classic instruments of intergovernmental cooperation. The problem with their narratives is that this type of cooperation has recently failed spectacularly – with the UN Climate Change Conference failing to agree on new rules for climate change mitigation, WTO failing to agree on the completion of the Doha round, and the G-20 failing to agree on anything except for the summit menu. These are not just incidents; these are symptoms of the limitations of the classic forms of international cooperation.
Someone might argue that if the EU were so successful, it wouldn’t have experienced its recent crisis. That is true. The EU is not perfect, and we are now bearing the fruits of the lax rules of the Economic and Monetary Union. But it is much better than any other form of cooperation especially given the small economies of many Member States. This issue of economic efficiency is usually not discussed by euroskeptics. The truth is that without the European Union economic life in Europe would definitely slow down, and businesses know that. This is the problem of some anti-EU parties: their constituencies will actually suffer from any possible withdrawal from the Union. That is why they prefer to grumble about the EU without taking a meaningful step towards resolution of their grievances. Referendums should be held in each and every Member State that feels the need to take a different path to prosperity. The United Kingdom should be particularly encouraged to conduct a referendum on its EU membership. The European Union is not a club of convenience; its success depends on the high motivation of its members.
The European Union is not at a crossroads. It is a well-functioning and unique mechanism for political integration. It’s up to its users – the European citizens, to use it properly. It will deliver results only if we command it to do so. That is why from now on I would like to hear more demands, and less chaotic criticism when discussing the EU.
Posted in EU Reform, Foreign and Security Policy, Human Rights, Institutional Affairs, Internal Market, Justice and Internal Affairs
Tagged COP16, Europe Day, European Union, G-20, history, intergovernmental cooperation, war, WTO
Regulation (EU) No 182/2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers has been published in the Official Journal. It repeals Decision 1999/468/EC (the old ‘Comitology Decision’). There are now two comitology procedures – the advisory procedure and the examination procedure. The advisory procedure is the same as in the old Comitology Decision. The examination procedure replaces the management and regulatory procedures. The examination committee can approve or reject the implementing measure with qualified majority (the same voting rules as in the Council apply). In case no decision is taken, depending on the subject matter of the implementing measure, the Commission can either adopt the measure or submit it to an appeal committee, where new, final voting takes place.
All the legal and institutional issues on delegated lawmaking and the new comitology regime are reviewed in my new paper for the EUSA conference.
There’s quite a lot of talk recently about who should replace Jean-Claude Trichet as president of the European Central Bank. Sylvester Eijffinger and Edin Mujagic from Tilburg University say that a firm ECB president, unwilling to yield to political pressure, is needed. Jean Quatremer provides, as usual, a very detailed picture of the behind-the-curtain negotiations surrounding the nomination of the future president of the ECB.
Two things are important here. First, we should avoid at all cost a North-South polarization surrounding this issue. True, the ECB president is elected by qualified majority, but any trust in the eurozone that is still available will be lost if Member States start fighting over this post. Second, whoever is elected should be able to guarantee strong leadership. We certainly do not need an ECB president that divides instead of unifying the eurozone.
At a time of great peril there’s no room for experimenting. I do hope that all Member States, and France and Germany in particular, will not try to over-politicize this nomination. Otherwise consequences may become overwhelming, and history will apportion blame accordingly.
Posted in Budget and Finance, EU Reform, Institutional Affairs
Tagged ECB, eurozone, France, Germany, Jean_Claude Trichet, nomination, North, President, South
The European Commission has launched a consultation on technical details underpinning a European crisis management framework for the financial sector. The main measures proposed:
- Preparatory and preventative measures such as a requirement for recovery and resolution plans and powers for authorities to require banks to make changes to their structure or business organisation where such changes are necessary to ensure that the institution can be resolved;
- Powers for supervisors to take early action to remedy problems before they get out of hand such as the power to change the managers;
- Resolution tools which empower authorities to take the necessary action, where bank failure cannot be avoided, to manage that failure in an orderly way;
- A framework for cooperation between national authorities.
The two main principles proposed by the Commission are:
- Effective arrangements which ensure that authorities coordinate and cooperate as fully as possible in order to minimise any harmful effects of a cross-border bank failure, and
- Fair burden sharing by means of financing mechanisms which avoid use of taxpayer funds.
Now, the problem is that we already have a situation that may well get out of hand. Fortune has quoted Scott Minerd, chief investment officer at Guggenheim Partners, who thinks the entire banking system of Europe could be on the brink of disaster (I recommend reading the whole article). If this is true, the Commission’s initiative will not have the time to translate into meaningful EU policy. More, the proposal is not sufficient to solve the problems of the EU banking sector, which is heavily exposed to sovereign debt.
Scott Minerd says that it’s now up to Germany to take leadership in organizing a fiscal union and creating a common EU bond. He rightly points out that this means a true federalization of the European Union, since fiscal policy will be, to some extent, managed on EU level.
In other words the impending banking crisis in the European Union could result in a true federalization – the dream of the founding fathers of the EU. But it sounds simpler than it actually is. Many things can go wrong, and the markets are not exactly ready to accommodate the Hamletian dilemmas of EU Member State governments. The recent approach of Germany and France to coordinate positions and try to sell them as unconditional proposals is not sustainable. EU governments should discuss options multilaterally, taking into account varying positions and nuances. We need true European consensus on fiscal governance, not empty declarations on the centrality of the Economic and Monetary Union.
Posted in Budget and Finance, EU Reform, Institutional Affairs, Internal Market
Tagged bank failures, bank resolution, banks, consultation, crisis management mechanism, Economic and Monetary Union, federalization, financial sector, sovereign debt