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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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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.
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
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.
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.
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.
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
In recent months Portugal has been the third country to effectively request a bailout from the Eurozone and the International Monetary Fund (IMF) – this after the former government’s “austerity” proposals had come up against a brick wall in the form of the Portuguese Parliament. With outside intervention now inevitable, the new government’s hands will be tied in any case.
Meanwhile, at the other end of the continent, the Finns have announced their apparent opposition to continually bailing out their
Southern partners. The impressive showing of the True Finns party means that it will now likely sit as the main opposition in the Parliament and raises serious questions about the political will in the Member States when it comes to propping up failing economies.
Moreover, talks of Greece “restructuring” its debt are hardly reassuring to Eurozone ears. And if Spain were to join the debtors, it would really put the Eurozone in a downward spiral.
That’s for the euro – but there are wider concerns within the EU which are causing the 27 nation bloc to strain at the edges.
The EU’s budget is being called into question by the net contributors, including the UK and France, who are arguing for “austerity” to be transferred from the national to the EU level and reject any significant increase.
In the opposite corner is a larger group of countries, many of whom are net recipients of EU funds for their regions which lag behind the EU average – and the European Commission.
The battle for the budget has been a perennial highlight of Brussels, but with the current economic and financial context and voters disenchanted, the stakes are higher.
Meanwhile at the EU’s southern fringes there continues to be concern about a supposed flood of immigrants from North Africa following the region’s “Arab Spring”. Once again, the EU’s solidarity is being called into question, with Franc unilaterally closing its border with Italy to prevent what it sees as a possible influx of French-speaking migrants making their way northwards.
Further north, Denmark also decided to reinstall border controls, ostensibly to reduce crime, but in practice to appease the Danish People’s Party, an anti-immigrant party which the government relies on for support.
Previously EU crises had either been bound up in Treaty reform (e.g. the failed Constitution referenda) or in the EU’s lack of competitiveness on the world stage.
Today, the EU seems to be tearing itself up from the inside. Paradoxically, the deeper you integrate, the more likely fissures will open up (e.g. Schengen and the Eurozone). The test for the EU will be whether it can withstand the tensions raging from within, rather than without.
Walking round Porto, Portugal’s second city, over a long weekend, one is struck by how little the country’s near bankrupt economy is affecting daily life on the street.
Restaurants on the riverfront overflow with visitors from all four corners of Europe, two shiny new cable cars ply their way up the steep hills leading off from the river, and a slick new metro whisks commuters from their homes in the outlying suburbs to the hustle and bustle of the business district.
Even the May Day parades, whilst as noisy as ever, seemed to fail to rouse much excitement on a sleepy Sunday morning.
And yet this is a country that has gone cap in hand to its fellow Eurozone members and the International Monetary Fund (IMF), with a bailout plan likely to total in the region of €80 billion.
Always one of Western Europe’s poorest countries, Portuguese citizens will very soon be hit with paying back a loan to their richer neighbours which they can probably ill-afford.
Whilst German taxpayers can therefore rest easy, the old and the soon-to-be old in the poorer districts of Porto must start to scrimp and save already as pensions look set to shrivel like the sardines on the tourists’ plates.
Meanwhile Porto’s lively student fraternity must fear for their future employment just as their local drinking holes must fear for their business.
New elections will be held in early June after the incumbent centre left government resigned its post following its failure to push its austerity package through Parliament. Any incoming government will therefore face significant pressure not to introduce cuts – and yet further delay will only deepen Portugal’s troubles.
Is default a distinct possibility? And who will be next? Perhaps Belgium, the home of the EU institutions and currently without a government for a world record 11 months?
With countries seeming to fall like dominoes, it must be asked how long the Eurozone can continue to bail out ailing Member States without permanently damaging the Euro’s image both at home and abroad. Perhaps it is already too late. Certainly political will in Europe seems to be at breaking point already, and the end is not yet in sight.
Whatever happens, it is likely that the May Day parades on Portugal’s streets will be bigger and noisier next year.
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.
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.
250,000 secret US embassy cables have been published by Wikileaks and some of the most influential and respected newspapers in Europe and in the US have made the choice of conveying this scoop. What can we learn? So far not a lot: “Teflon Merkel” is risk averse, Sarkozy is a “naked emperor”, Putin’s nickname is alpha dog. And many other similar futile pieces of gossip.
For the apostles of transparency this publication serves the most legitimate purpose in a democracy which is to tell the whole truth. On newspapers’ websites, most readers heartily approve of the enterprise: this is the revenge of the people on the establishment and Julian Assange (spokesman of Wikileaks) has given it a damn good thrashing. “They” cannot fool us anymore.
This is a sad and fruitless development which, again, sacrifices analysis against gross information and sensationalism.
People claim their right to know. Fair enough. But what kind of knowledge is offered today? Is it really important to inform the world about how governmental officials depict national leaders amongst themselves? Should we, as citizens, have a right and a duty to check and approve every e-mail sent by our governmental administrations? That seems absolute madness to me.
Total transparency does not necessarily mean total democracy – it is rather a result of total mistrust. This is unfortunately the situation today. The information making the headlines is not intended to help readers better understand international politics nor does it reveal some kind of massive and reprehensible fraud. It only aims to discredit governmental institutions on the excuse that “we all ought to be informed”.
I refuse this information because, sincerest apologies, I trust more the competency and professionalism of the politicians whom we elect and their teams of specialised diplomats in conducting our countries’ diplomacy than the one of my neighbours. This is what we call representative democracy.
The EU loves a good crisis. In the past we’ve had a Treaty crisis, a referendum crisis, an economic crisis, and a Euro crisis – and now, we have a World Cup crisis.
So far this has not been a good World Cup for EU Member States. Favourites Spain lost their opener to a non-EU European country (Switzerland), Germany have literally just lost to a “wannabe” EU Member State (Serbia), and France’s defeat last night accompanies similar under-par performances from EU big-shots Italy, Portugal, and England, the UK’s sole representatives.
Before the competition started some Brussels-based folk tried to put together their dream-EU World Cup team, but now it must be doubted whether such a team could go far in the competition.
Argentina have been the early pace-setters, with the other South American countries (Uruguay, Paraguay, Chile, Brazil and Mexico) all looking “useful” and creating problems for the European nations.
The African countries have shown glimpses of brilliance (Ghana) followed by slightly longer periods of mediocrity (South Africa) and just plain stupidity (Nigeria), but the same could be said for the EU nations. Basically, the EU collective has yet to play anything near to its best in the Rainbow state.
But can an EU Member State win the World Cup? Of course – after all, they have won two of the last three – but the challenges from other global regions are growing all the time.
EU countries now have to compete with the likes of South Korea, Mexico, and the United States who offer stiffer tests than they did ten years ago. Many of these countries’ best players have themselves gained experience in the EU’s national leagues, become better players for it, and now enjoy putting one over their more fancied opponents.
The EU as a bloc is struggling to find its place in a globalised world, but nowhere is this truer than football, as this World Cup has gone to show. The drawback, of course, is that it is much harder to introduce protectionist measures when it comes to a national football team than it is to slap a few hefty tariffs on imports from a developing country.
Perhaps then football is the true result of globalisation, untainted and unsullied by corrective regulations and out of reach of national lawmakers. Globalisation in its purest form. But for how long?
The Netherlands, a country once praised for its tolerance and open mindedness, held its national elections on Wednesday. During these elections, the so-called Freedom Party (PVV) won 24 out of the 150 available seats.
The most concerning thing however is that the winners of the elections, the Liberals (VVD) who won 31 seats, seem to be actually willing to form a coalition and govern with this party.
Although he says his views are permissible under the banner of freedom of speech, Geert Wilders, the leader of the PVV, is sowing seeds of division, specifically targeted at a minority group of the Dutch population.
In addition, his wins are bad news for Europe, as Mr Wilders is amongst those supporting the abolition of the European Parliament.
Talks on the formation of the Government are currently ongoing. The Liberals (VVD) would need another party aside from the PVV to come onboard in order to be able to form a majority coalition and would appear to be eyeing the CDA – the Christian Democrats – who under former Prime Minister Balkenende’s leadership saw their number of seats cut from 41 to 21.
The day after the election results were announced Mr Wilders quickly threw his hat into the ring. He wants to be in the government and appears more than willing to set aside some of his principles to get in.
Would the CDA accept to rule with a party so contrary to its Christian value of loving thy neighbour?
And would such a coalition mean that Mr Wilders would actually become the Deputy Prime Minister of the Netherlands?
The aspiring new Dutch Prime Minister, Mark Rutte – a 43 year old bachelor and former HR Director at Unilever who will be the first Liberal Prime Minister for decades – expects a difficult Government formation.
For the moment he is stating that a coalition with the Labour party is still a “long way off” due to the strong differences in opinion between the two parties. Rutte first wants to speak to the PVV, who he feels is the big winner in the elections. Of course, the fact that the Labour party is almost as big as the VVD – they only won 1 seat less – also plays a role for Mr Rutte as this could potentially lead to internal power struggles.
Is Dutch tolerance a distant past? Or can the VVD really argue that because of the very principle of tolerance, Mr Wilders should be given a fair hearing?