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ImageWe hope you had a peaceful Summer and are looking forward to what is sure to be a very busy end to 2012!

In preparation for the annual “Autumn onslaught” – or perhaps to take your mind off it –Grayling Brussels is pleased to present you with its latest edition of Espresso.

In this week’s publication:

On the run from the BRICs;

A preview of the Cypriot Presidency;

How health policy is affected by the financial crisis; and

An interview with Grayling Consultant Charlotte Ryckman.

You can access Espresso here.

Happy reading!

- Rob

This articles comes fromt he Grayling Brussels Espresso May 2012 edition.

The Commission is proposing that Member States place a minimum tax of between one-tenth and one-hundredth of one

A new tax coming out the woods? (picture by courtesy of JeSaurai)

percent on a range of financial trades.

Although these proportions seem tiny, the sheer volume of trades that occur every day means that the Commission anticipates raising up to €57 billion in revenue from the move.

One Member State attempting to cash in on these high stakes is France. A one-time opponent of the tax, then President Sarkozy became its standard bearer, pressing ahead with a light French version of the tax when frustrated with the slow pace of progress in Brussels.

On the other side of the Channel, David Cameron has adopted a more pragmatic approach, insisting the tax is unworkable unless it is applied on a global scale, and expressing fears that the City of London would be hit disproportionately which would send investors packing.

Having already wielded his country’s veto on the fiscal compact, he has demonstrated his willingness to block proposals that he perceives as a threat to the UK’s interest.

Enhanced cooperation

With unanimity required for decisions on taxation and deep divisions within the Council, there is little hope of a speedy agreement. Nine Member States have already formally requested to be allowed to press ahead on their own, with the Lisbon Treaty’s Enhanced Cooperation procedure providing a framework for a core group of countries to do so.

The Commission is reluctant to go down this road, however, not least because they would then lose control of the proposal.

This may partly explain the recent push to advocate for the FTT on the basis of the cash savings that the tax would bring about for Member States contributing to the EU budget.

Earlier this month, EU Budget Commissioner Janusz Lewandowski claimed the measure could reduce by over €80 billion the direct contributions from Member States over the course of next 7-year budget cycle.

Promised land

Although there is little evidence that his arguments have gained much traction in key opposing Member States, if the Commission did manage to bring the naysayers around, it would not only score a major political victory on financial regulation, but also reach the promised land of generating independent “own resources”, of serious significant value, a goal it has held dear for decades.

However, an EU-wide, or even Eurozone-level, agreement seems optimistic. With negotiations on the next financial cycle due to conclude by the end of the year, time is not on the side of Barroso and his band of Commissioners in his attempt to emulate Robin Hood and his Merry Men.

Nigel

The newly elected European Parliament President Martin Schulz announced in an interview that he is going to try to “put the European Parliament in a confrontation with the heads of government.”

Is the Parliament going to float like a butterfly and sting like a bee? (photo courtest of Mark Pellegrini)

The reason behind this is that, in Mr Schulz’s view, the European Council is becoming more and more powerful, while the European Parliament’s role either “goes unappreciated or [is] stolen by the Member States”.

Clearly, this assessment can only be confirmed by people working in the “Eurobubble”.

When going back home, people seldom realise that the European Parliament is in fact a key institution and no longer a talking shop. Worse, only 43% of electors actually go and vote on election day.

This confirms one of the many shortcomings of the Lisbon Treaty: instead of truly democratising the EU, it actually gave more powers to the European Council by making it an official EU institution, which can de facto act as a sort of directoire.

Of course, one could say that governments are under control of their Parliaments back home, but in times when an increasing number of competences are being transferred to the EU, one would expect that the Parliament – which only focuses on EU issues – gets a louder voice and is appreciated as such by the general public.

In this regard, Martin Schulz’s initiative seems very positive.

Yet, the Lobby cannot help thinking that domestic politics may be the cause. By weakening the Council, the Parliament is weakening its de facto leadership, namely Ms Merkel –  something which the SPD, Mr Schulz’s home party, may try to exploit in the 2013 national elections.

It would be disappointing if this should be true, since this would show that even the European Parliament only sees itself as a means to fulfil domestic politics goals.

Yet, sometimes the ends do justify the means. Therefore, whatever its intentions, The Lobby hopes the European Parliament will experience some proper infighting, which at least will ensure the EU gets a little more democratic!

- Christian

This morning we wake up to news that – finally – Eurozone finance ministers have agreed to bail out Greece for the second time to the tune of €130 billion.

How much longer will this be flying over Athens?

The “aid”, as it is referred to (making Greece sound like a third world country) is conditional on the European Commission having a presence on the ground to oversee that this money is spent in the right way and is not frittered away or mismanaged.

Greece was the first of three Eurozone countries to receive a bailout and is the first to receive two. Lucky them. But throwing money at problems rarely makes them go away, and it remains to be seen:

a)      whether this €130 billion is enough to shore up Greece’s finance for the long-term, bearing in mind that 2011 saw the country’s economy shrink by 7%. To be clear – this is not a recession, this is a depression.

b)      Whether the Greek electorate will tolerate being told what to do by outside officials, be they from the Commission or another Eurozone country. History teaches us that, in the wake of depression, the political world can get shaken up, and parties from both sides of the political spectrum gain ground. There could be trouble ahead.

c)       Whether and to what extent the northern Eurozone population will tolerate granting hand-outs to their southern neighbours with little in return.

There are other fundamental questions too, notably the precedent this sets for the Eurozone and the EU at large.

If, as seems probable, the Eurozone will continue to shore up ailing economies for the foreseeable future, to what extent will this lead the Eurozone into full fiscal coordination, with budgets not just approved in Brussels but also drawn up.

This would seem to be in the Euro’s long-term interest, but where does this leave national governments and the notion of democratic representation?

And where does it leave non-Eurozone countries in the EU? Why on earth would they want such strict oversight and, indeed, governance of their budgets, when they are not even in the same currency?

Finally – and striking at the very core of the EU – why would the non-Eurozone countries decide to stay in a currency bloc which seems condemned to bail out Member States who have been shown to be persistently unreliable and irresponsible bedfellows?

The end of the affair? Why, this is just the beginning.

- Rob

The latest BigPictureBrussels from Grayling looks at the political priorities of the Danish Presidency of the EU and the likely impact Denmark will make during its 6 month term. Denmark takes on the Presidency of the European Union at a time of crisis and uncertainty. Only days after the highly-charged and bad-tempered Summit in Brussels, the Danish Government unveiled its list of priorities for the Presidency. Amid signs of the inter-governmental agreement on fiscal co-ordination and budgetary surveillance unravelling, Denmark is prioritising the Eurozone with the aim of keeping the show on the road. Read More

As the second so-called “new” Member State to take over the EU Presidency after the much-maligned Czechs in the first half of 2009, Hungary was eager to showcase itself and demonstrate its leadership potential.

However, due to circumstances both inside and outside its control, it is hard to assess the Hungarian Presidency as anything other than a slight disappointment.

The big story of the last six months – indeed the last year – has been the Euro crisis, but as a non-Eurozone member Hungary was forced to retreat to the shadows whilst the two Jean-Claudes (Juncker and Trichet) hammered out a series of provisional solutions together with the big-hitters in the Council, President Sarkozy and Chancellor Merkel.

This, in addition to the degrading of the rotating EU Presidency following the entry into force of the Lisbon Treaty, also prevented Hungary from taking leadership on the issue of fiscal governance, which has divided both the EU and the Eurozone.

Yet Hungary also managed to shoot itself on the foot on several occasions, particularly at the beginning of its tenure, insodoing calling to mind their Czech predecessors.

The now infamous “media law”, which is causing concern for the Commission regarding its treatment of the press, the imposition of emergency taxes on foreign companies in Hungary, and an ill-judged carpet placed in the Council building which appeared to reference the idea of a much larger “Greater Hungary”: all emphasised the gap between established core European values and a Hungary that in recent months has been treading on dangerous ground.

But what of the successes?

It is true that Hungary has been key in supporting Croatia’s accession process, which now looks likely to take place on 1 July 2013, and has also successfully pushed through EU strategies on the Danube region and the Roma people – both of which give a distinct Hungarian flavour to this particular EU Presidency.

And yet, in these areas too, Hungary has been found somewhat wanting. Whilst Croatia was indeed a success, particularly given the supposed “enlargement fatigue” plaguing the EU today, the much heralded “Eastern Partnership” Summit has been pushed back for the Poles to organise in September, the Danube Strategy lacks teeth and does not bring any new funding to the table, whilst the Roma Strategy only affects a handful of Member States, as worthy as it may be.

Since the Lisbon Treaty came into force, EU Presidencies have had to focus even more on compromises. However, decision-making in the EU has always been centred on so-called “horse-trading” between various interests, and as ever the devil is in the detail.

This is why, when looking to influence the decision-making process within the Council, it is critical to focus on the Presidency as well as the other 26 Member States.

Building consensus across national boundaries is, after all, what EU decision-making is all about.

- Rob

Optimism…concern…determination.

Just another day at the Lobby – and, it would seem, another EU Summit, at least according to Herman Van Rompuy.

Some people claim to be suffering from Summit fatigue, particularly ever since De Heer Van Rompuy decided to host a Summit every few weeks, or so it seems.

But not The Lobby.  We don’t just like EU Summits, we adore them – we are the Summit equivalents of trainspotters, except we only wear anoraks when it’s really bad weather…

We at Lobby towers love Summits so much we have taken the immense trouble of publishing a snapshot of what was discussed, who said what, how it was reported.  You can thank us later, but first, of course, you have to read it, and to do so all you need to do is click here.

There you are.  We’ve done all your work for you.

If you can’t be bothered to click the link (yes, this link) you are very lazy, but because like any good publishing house, we know our readers, please see below a (very) brief summary:

  • A lot happening on energy;
  • France and Germany trying to get the rest of the Eurozone to agree to some kind of fiscal union – the other members aren’t so keen – it’ll be finalised at March’s Summit (The Lobby says: hmm, not so sure about that one)
  • Member States can’t agree on Egypt – obviously they all want democracy, that’s the easy bit.  But should Mubarak be involved?  If so how?  And where does this leave the EU’s foreign policy?
  • And innovation – researchers, SMEs, a golden future awaits you!

That’s that.  But of course, it would be better if you read our update.  Which you can access here.

Still not clicked it?  OK one last time – here!

Happy reading!

- Rob

Which will it be?

At the beginning of this month the Belgian State Secretary for European Affairs Olivier Chastel is known to have stated that Belgium will mark a “rupture”, or a break, from current practice following the changes introduced by the Lisbon Treaty that, to an extent, give the EU Presidency a backseat role to President Van Rompuy and Baroness Catherine Ashton.

On the eve of his country's Presidency - Belgian PM Yves Leterme (Credit © European Parliament - Audiovisual Unit)

One does wonder however whether the Belgians are not taking this backseat role too literally.

With the full programme and website for the Presidency only having been unveiled today, less than a week before the Presidency is due to begin, it is perhaps not surprising that a certain anxiety has been felt in the air.

While these delays could be explained in light of Belgium’s recent political troubles, and Belgian leaders have tried to reassure everyone that these will not affect the Presidency, the lack of ambition with which certain key political figures reassure still gives ground for concern.

Talking to Mr Barroso this week, for example, Bart De Wever, the Flemish nationalist who claimed victory in the recent election, said he aims “to have a government in place before October, when the really important work of the Presidency will begin”.

It may well be that the groundbreaking work will occur in the autumn months, and having a government in place is not as crucial for ensuring the smooth running of a Presidency.

However, in just six months it is clear that the Presidency has to deliver at a time when fears of a double-dip recession are in the air, and any lack of ambition for the first three of these months could prove fateful.

- Signe

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Silver like our seniors’ hair colour.

I came across this term for the first time when reading the Council Conclusions on Active Ageing, adopted last week. Whilst everyone seems to be focused on tackling the immediate crisis and betting on the death of the Eurozone, the EU also has longer term ambitions.

We all know that challenges linked with the ageing population in Europe will underpin the next crisis around the corner. Moreover, sustainable financing of pensions and labour shortages have been on the political agenda of Member States for many years now but are deadlocked because no one wants to give away advantages which they thought were already in the bag.

So what’s new?

Have a look at the Conclusions. Under polite terms like “active ageing” and “intergenerational solidarity”, the entire text constitutes a direct call for the extension of employment periods.

Active ageing means creating opportunities for staying on the labour market for a longer period of time. By the time I write this I expect that French railway workers will already be on strike, but watch this space because the EU could still gently increase the pressure on Member States to get their collective acts together.

- Delphine

Divorce looks set to become easier for international couples in Europe as the EU will enable them to choose which country’s laws should apply if they are to separate.

What country will they choose? (Souce: FreeFoto)

Under the new plans for enhanced cooperation, in which fourteen EU countries are planning to participate (with the possibility for more to join later), rules will also be laid down concerning which country’s law is to apply if the couple fails to agree on this in the first place.

The new proposals come in a bid to clamp down on cases where one spouse might rush to court to obtain a result where nationality or the place where the marriage took place gives them a greater advantage.

They also appear as an example of what international relations students know as “functional spillover” (to everyone else: the idea that integration in one field may create pressures for integration in another) as Europe-wide measures spread to affect private law.

Currently divorce is the issue of the day, but it really poses the question whether similar measures within the scope of private law might be thought of in the years to come.

Although the issue comes and goes, calls for a “European contract law” system might soon see the light of day. Ideas currently doing the rounds include a harmonised European system that parties entering agreements could opt in to use, and these are bound to create uproar sooner or later!

Interestingly too, with countries opting in and out to participate in enhanced cooperation, we may soon find ourselves in a multi-speed Europe before we even get to debate the concept again.

Nonetheless while marriage may be about love, divorce is about business. So why not facilitate this rather unpleasant business and aim to make it fairer for those who wish to do so?

- Signe

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