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Although the talks between the US and the EU were ultimately cancelled last week due to the government shutdown, the EU-US negotiations are moving forward.

We are therefore pleased to present you with the October edition of the Pondhopper, Grayling’s transatlantic e-zine providing you with differing perspectives on issues currently spanning ‘the pond’.

Please do not hesitate to contact us if you have any questions on the attached or if you would like to learn more about Grayling’s transatlantic governmental affairs offering.

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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

When you live inside the EU bubble, you sometimes forget that there is a world outside the EU. This is why holidays are great, because they allow you to escape all the ordinary procedures, discover a new country, and get a better understanding of its political landscape.

Is Egypt's future as bright as its past?

In mid-April some representatives of The Lobby decided to spend two weeks in Egypt, and the impressions gathered through conversations with locals met in restaurants, trains, planes, or just in the street, together with some very good lectures, were fascinating.

Unfortunately, there is much less enthusiasm about the “Arab Spring” than there was before.

Whereas one can only respect a country whose people risked their lives to attain their freedom, there is also a certain amount of trepidation when one considers the enormous expectations these people have towards their future new government.

The causes of the 25-January revolution, as the Egyptians call it, are deeply rooted. Some reasons for this Egyptian malaise are the enormous social inequalities, the lack of jobs corresponding to the qualifications of young graduates, a climate of corruption, religious fundamentalism, rising food prices, and, last but not least, the lack of political liberties.

When looking into the future, there is a sea of uncertainties: will the new government and President be able to tackle some of these problems? What about the Muslim Brotherhood’s influence, and in particular the Salafist movement? How can democracy work in a country with an illiteracy rate of around 40%?

Yet, I remain cautiously optimistic: Egypt is a wonderful country with a rich cultural and religious diversity, and the awakening of a sense of citoyenneté during these last months demonstrates that there is a reason to believe that Egypt may successfully manage its regime change.

- Christian

The creation of a European diplomatic service is one of the long expected innovations brought in by the Lisbon Treaty. A fundamental of European integration is the belief that the EU has a global mission, but so far it has lacked the tools to carry this out.

This might be changing however with the new post of High Representative of Foreign Affairs and Security Policy held by Baroness Catherine Ashton and the upcoming European External Action Service (EEAS).

The European Parliament will not let the Commission and the Council set up the new body by themselves. Source: http://www.nlm.nih.gov/exhibition/frankenstein/hollywood.html

According to the Treaty, the Council is responsible for setting up the EEAS, a not-so-easy task given that the body is supposed to be a mixture of the Commission and the Council.

With concrete proposals expected from Baroness Ashton end March and a final agreement end April, it is hard to go further than questions:

What will be the structure?

Which kind of and how many national diplomats will be put forward by the Member States?

What portfolios will it share with or take over from the Commission (development and cooperation, humanitarian aid, neighbourhood policy)?

Who will represent the EU in major negotiations, for example on trade and climate change?

For those interested in the details, Europolitics gathered draft organisational charts from Baroness Ashton (page 1) and a counter proposal from the German delegation (page 2).

Hence there are many options and many complications even before you take into account that the European Parliament (EP) wants to scrub in. The EP is not supposed to have much to say on it but is playing the card “if you want me to approve any budget on this, you better let me in on all the rest”.

MEPs Elmar Brok (EPP, German) and Guy Verhofstadt (ALDE, Belgium) for the Foreign and the Constitutional Affairs Comittees respectively are leading this battle. They have expressed 7 priorities highlighting two main preoccupations, namely oversight from the Parliament and as much influence as possible for the Commission on the EEAS to “protect” it from being controlled by national agendas (also see page 3 of the Europolitics document).

The final question, however, lies in the national agendas. Regardless of the body or the structure, the point is how much of a mandate will the EU nations give to the EEAS?

It will take years of work for national players to develop enough trust both in the body – to defend their best interests – and in the system – so that they accept losing on some issues whilst knowing  they will win on others.

- Talander

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© RIA Novosti. Grigoriy Vasilenko

More than a month after the Ukrainian elections, the EU and the newly elected Ukrainian President Viktor Yanukovych have shown mutual diplomatic signs of understanding which now make Yanukovych’s previously labelled “pro-Russian” views appear to be an exaggerated account of his real political intentions.

Following the EU’s repeated messages that Ukraine was a very close European partner, Mr Yanukovych has pledged in return to work for closer EU integration while at the same restoring more cooperative links with Russia. In fact, Yanukovych’s very balanced position might help him to be more successful than his predecessors in positioning his country as a bridge between the East and the West, for two reasons:

First, the EU’s main strategic interest with Ukraine is very clearly the transit country status of Ukraine for EU gas supplies. Recurrent gas crises in recent years have acutely highlighted the importance of maintaining good relationships between Russia and transit countries. Yanukovych’s closer ties with the Russian government should hopefully give him a better chance of successfully renegotiating the gas supply contracts with Russia which are so critical for his country and for Europe.

Second, Yanukovych’s pro-Russian views make it easier for the EU to dismiss talks about a possible membership of such a large country which, politically and economically, is not quite ready yet for EU accession.

Positive signs towards the EU were further strengthened yesterday when Ukraine announced it was not interested in the Customs Union offer of Russia and instead preferred seeking an Association Agreement with the EU which would include the creation of a free-trade zone.

Would Mr Yanukovych have had the same openness towards the EU if the 2004 Orange Revolution had failed or not taken place? The Lobby finds it hard to judge and wonders whether EU leaders are secretly no happier with the current Yanukovych than they were back in 2004 when MEPs and EU officials proudly walked around Brussels dressed in orange shirts and ties, acclaiming how the Orange Revolution represented the fundamental European values of democracy.

- Maxime

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After her defeat in Ukraine’s second round presidential run-off, Yulia Tymoschenko has declared her intention to contest the results of the election, despite international recognition of her rival’s victory.

Indeed, Commission President José Manuel Barroso has already congratulated Viktor Yanukovich on his win in the 7th February run-off vote, which he achieved with a slim 3.48% majority. Ms Tymoschenko remains adamant, however, that Mr Yanukovich’s win is not legal and that around one million crucial votes were invalid, a number which could potentially invalidate his victory.

Is it all over for Yulia? (Credit © European Union, 2010)

There could be severe implications for the EU, for Mr Yanukovich is known for his pro-Russian stance in comparison to Ms Tymoschenko’s more European positioning.

During the election campaign in January, for instance, Tymoschenko vowed to do everything she could to bring about EU membership for Ukraine if she were elected as President. To this aim she also proposed negotiating a political association agreement with the EU and establishing an EU-Ukraine Free Trade Agreement.

Whether the accusation of fraud is legitimate or not, the very fact that the election is to some degree open to contention suggests that despite the supposedly groundbreaking Orange Revolution (or maybe because of it?) Ukraine is still haunted by the spectre of corruption. It implies that Tymoschenko’s time as Prime Minister did not significantly (or at all?) improve Ukraine’s democratic situation and thus raises questions about her ability to bring about significant change in the position of President.

It is clear that Ukraine still has a way to go when it comes to democratic stability, something that will not necessarily be helped even if Yanukovich is confirmed as President, however, for in this situation Tymoschenko would be expected to remain as Prime Minister, and such an impasse is unlikely to be conducive to stabilisation!

So we await the verdict of Ukraine’s Election Commission, which is likely to confirm Mr Yanukovich’s victory this week, and remain apprehensive about Ukraine’s prospects for progress either way…

One thing seems certain however: EU membership looks set to remain a speck on the horizon for a while yet.

- Rhian

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eu lobbying, eu lobbyists, eu lobbying tips, lobbying, brussels

So who do I call? (Credit © European Union, 2010)

Once upon a time, there was a great leader of the new world who had a vision of creating a bilateral arrangement with the old world, and so he asked his political advisors whom he should speak to in Brussels.

His advisors usually responded to his questions in a flash, but this time around they looked at each other perplexed and informed the great leader that they would have to research the matter in great detail.  Having investigated the matter quite thoroughly, the advisors returned and, instead of giving him the answers he sought, suggested that their young European intern from the European Commission would be best placed to explain the complex web of people and procedures…and so the nightmare began.

The young intern turned to the great leader and asked what kind of bilateral arrangement he had in mind? He replied proudly that he wanted to urgently create a new arrangement where the US and Europe would pool their knowledge and resources to eradicate all forms of the flu once and for all, and that both regions would equally donate US$25 billion to the initiative.

The advisors all looked at each other, some raising their eyebrows; others were heard to sigh deeply, whilst others scratched their heads and looked confused, realising that the night would be long.

The young intern turned to the great leader and said:

“You should probably first speak to the President of Europe, sometimes referred to as the Head of the Council of Ministers, because he is the top guy in Europe.  This is a new job, so he has only been in power for a few months – a lovely chap called Van Rompuy who is very keen to engage on the world stage, but since he does not have any real powers, I would advise that you contact José Manuel Barroso because he has been around for a long time and is President of the European Commission which is responsible for policy and legislation. But there again, Sir, as you know the Commission is a weakened institution, and I am not sure that they would be able to push your great idea without the support of some important people!”

The great leader interjected and asked how many other important people there were in Brussels that he should consider meeting as he was very busy and needed to speak to the most important leader.

The intern blushed and explained that there was another President, namely that of the European Parliament, the only democratically elected institution representing the interests of European citizens. At this point the great leader said that this was the man! But then the intern began to look agitated.

“Well go on then,” the great leader enquired of the intern, “explain to me if I should not see him, what other President should I consider?”

The intern went on to explain that it was not so much other Presidents as other Prime Ministers, such as Mr Brown and Ms Merkel, although she is a “Chancellor”, and, of course, there was Mr Sarkozy who was actually another President.

The great leader looked him in the eye and said:  “But this Mr Sarkozy, is he more or less important that the other Presidents?” Now there was a question…

The intern was by now fully engaged and explained that this President and those Prime Ministers were really very important indeed because they were the leaders of the three most important countries in Europe and that they were actually more important than the President of the Commission, the Parliament, and the so-called Council of Ministers, and that if he really wanted to conclude this agreement he would definitely need their support.

The great leader reflected on what he had just learnt and finally proclaimed that he understood that he had to speak, not to one, but to six Presidents, and that in many ways he thought this very original and democratic, albeit it a little exaggerated. But he was nonetheless willing to give it a go, so he ordered his advisors to set up these meetings and told them he was going to Brussels the next day.

Upon hearing this news, the most senior advisor grew paler by the second and eventually asked the great leader to consider some additional factors. The great leader, pleased with his earlier solution, managed to grunt “What else now!?”

The advisor explained that he would not be able to visit all six at the same time or in the same place. The great leader looked more perplexed than ever and asked exactly how many places he would have to visit in order to meet them all. Having studied the calendar of the EU institutions the intern stated proudly that the great leader would have to first go to Brussels, then Strasbourg because it was Parliament plenary week, and finally to London, Paris and Berlin.

“Anything else, I should be considering?” asked the great leader.

A dead silence reverberated around the room as the advisors gathered their courage to explain that there were indeed a few more people to consider, such as the EU Health Commissioner John Dalli, but that he was on business in Malta next week, and then there was Baroness Ashton, the Commissioner responsible for foreign affairs and security policy who was also Vice-President of the Commission and a great ally of America, and then of course there was the Commissioner for International Cooperation, Humanitarian Aid and Crisis Response who would have to be considered. And why not the head of the WHO in Geneva?

The great leader, known for his composure, sat back, put his head in his hands and was heard mumbling.

“So I have to see six Presidents/Prime Ministers/Chancellors in five locations, three Commissioners, one in Malta and two in Brussels, and some leader in Geneva – so that makes 10 people in seven cities.”

Surveying his advisors he asked: “So if I see all 10 people in 7 cities all will be fine?”

By then he knew the answer and challenged his intern to surprise him. The intern, knowing that he was coming to the end of his work placement, provided a very pragmatic answer.

“They will most likely all agree with you, Sir, but at the same time they all disagree with each other, and reaching an agreement could take literally years as the EU decision-making process is based on full stakeholder participation and consultation and is therefore very time consuming!”

Itching to speak, but not daring to, one of the other advisors finally mustered up all his courage and explained that as far as he knew there was also the Prime Minster of Spain whom the great leader should meet, because his country currently holds the EU Presidency.

“In fact”, the advisor continued, “you should also speak with the Prime Ministers of Belgium and Hungary because they share the Presidency with Spain in this new troika system.”

His fellow advisors were astonished at their colleague who had neglected to mention the role of the national parliaments which have now been given the power to reject EU proposals if they feel the issue could be dealt with better by them.

“How many of these are there?” the great leader asked.

“Oh, only 27 for the moment,” replied his advisors.  “But there could be 30 very soon…”

The great leader, who by then was lost in deep thought, very quickly came out of his reverie to claim that he would abandon his initiative with the EU altogether and instead would propose it to the UN, as this would definitely be quicker and would resolve the problem at a global level.

All looked at each other, and for the first time that morning smiles appeared on all their faces. The perfect solution had been found!

“No wonder the EU was not at the final table negotiating the climate change no-deal!” reflected the great leader that evening.

- Russell

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President Obama will be unable to attend an EU-US Summit meeting set to take place in Madrid in May, due to a scheduling misunderstanding.

As a result of Obama’s absence, the summit will be postponed until the autumn.

The New York Times describes Europe’s feelings as ‘insulted’, ‘taken for granted’, ‘losing importance in American eyes’, and the Spanish prime minister, José Luis Zapatero was described as ‘angry and embarrassed’ when he learned the news. . .

Good ol’ Jose Manuel Barroso seems to be the only cool-headed man in the mix, as he calmly told the press that he understands completely, and that both parties can work to find a mutually agreeable time.

So my questions are two-fold: why does the Summit hinge upon Obama’s attendance, and why the hard feelings?! We’ve all double booked a party (summit?!) at one time or another. Let’s not be so hard on him.

- Victoria

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As countries quarrel

About fame, gender, prestige

The people ask: who?!

- Lieneke & Rob

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While some are focused on tonight’s France-Ireland or Portugal-Bosnia games, another match is taking place in Rome this week. The goal: to find a way to feed 9.2 billion people by 2050.

Since Monday, world leaders, convened at the Food and Agriculture Organization (FAO) Headquarters for the UN World Summit on Food Security, have been reflecting on the best ways to eradicate hunger. A key solution foreseen is to boost agricultural investment in poor countries. New technologies were also discussed as a way to “produce more food with less” – three polemical initials should come to your mind in this regard – GMO!

But the real wake up call was the warning by UN Secretary-General Ban Ki-Moon that failure at next month’s international climate change negotiations would result in a further rise in hunger. “There cannot be food security without climate security”, he said. In particular for countries in Sub-Saharan Africa and South Asia, which already are suffering from declining yields and a worrying frequency of extreme weather events.

But can climate change and hunger be solved together? The biofuel example, which has introduced competition between “crops for food” and “crops for fuel” and exacerbated the rise in food prices, proves that if the two problems are linked, then it is necessary to find joint solutions.

UK Minister Jim Fitzpatrick declared that food and climate security were “two sides of the same coin”. Well, the die is cast but there are no doubts about the bets of politicians. If Copenhagen and its preparation have been focusing political attention for over a year, many noted that Italian Prime Minister Silvio Berlusconi was the only G8 leader to attend the UN Food Summit. Let’s just hope that political will is not the only key to buck the hunger trend.

If you want to play a role on the ground, you could start by taking a Fair Trade Breakfast this weekend. This Oxfam initiative should be a convivial opportunity to familiarise people with the issues surrounding global trade and its impact on hunger in poor countries.

- Delphine

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