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We 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
When the press starts writing about budget negotiations, I always read the word “net contributor” at some point. And every time I read that word I am overocme by surprise and bafflement by the lack of either reflection or hypocrisy with which it is used both by journalists and politicians.
First of all, the EU is – by definition – a community in which solidarity amongst its members is necessary in order to make it work, something which is too often forgotten.
Yet, even without being a “Euro-enthusiast”, there are obvious reasons why the word “net contributor” does not make any sense.
Let’s get the facts straight.
What is a net contributor? Quite intuitively, it is a Member State which is getting less out of the budget than it pays into it. Fair enough.
But is everything that Member States are paying into the budget their own money, or is it sometimes EU resources, which they are in fact just collecting? Quite often, it is the latter.
As the EU has a Common Trade Policy (which allows the EU to be an important worldwide player), much of the EU’s own resources are represented by tariffs.
Hence, some of the net contributors are only collecting monies which are the EU’s and spreading it around. This is especially the case for the Netherlands, where the so-called “Rotterdam-effect” leads to significant contributions.
One could argue that it is this Member State’s administration which has to do all the work, and that it is therefore their money as well – true, and this is why the country is allowed to keep 25% of the tariffs it is collecting. Quite a fair deal I would say.
And how do you quantify how much one gets? Is it only through what is coming out of the budget? Or do budgetary decisions and EU rules have implications which go beyond simple financial transactions?
It needs to be reiterated that the EU is a guarantee for peace and welfare on our continent, something which is worth investing in.
Yet, there are other reasons which show that the term net contributor does not make any sense:
- Most of the structural funds also benefit richer countries – first, because structural funds often create infrastructure, which is relied on by all Member States, including so-called net contributors. Furthermore, since many projects are international projects, it is possible that companies from richer countries profit from funds transferred to poorer countries.
- EU policies also create social welfare, especially in richer countries – The internal market is a success story for all EU countries, and especially Germany, the largest “net contributor”. Some policies cannot be quantified in budgetary terms, but in the end everybody should know that through EU policies we all get more out than we pay in.
The term “net contributor” is therefore flawed , leading to rebates which make no sense (and not just the British rebate – take a look at the list of rebates at the end of this report) and neither brings the EU closer to its citizens nor helps them to understand it.
- Christian
Spring is traditionally seen as the season of rebirth, renewal and regrowth. Yet in Brussels, despite the unseasonably warm weather, this could be the Spring of discontent.
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.
- Rob
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.
Porto - this might be as good as it gets
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.
- Rob
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
Sunday’s election in Finland which saw the True Finns party make substantial gains to become a potential “king-maker” in the country’s new government could well be a sign of things to come throughout the Eurozone.
A True Finn drinking some dodgy beer at The Lobby's bar of choice on Place Lux
The True Finns leader – presumably the truest Finn of them all – Timo Soini opposes the Portuguese bailout which will have to be partly funded by the Finnish taxpayer.
The party’s anti-immigrant stance has led them to be seen as far-right and “extremist” – an accusation which Mr Soini stringently denies – but make no mistake: this was coming.
Finland’s accession to the EU was preceeded by a referendum which saw “only” 56.9% say yes. Which of course means 43.1% said no. A not insignificant percentage.
The yes vote was still higher than Sweden (52.8%, and a non-Eurozone country) but substantially lower than Austria (66.6%) .
When it came to joining the Eurozone however, there was no referendum in Finland, just as there wasn’t in many other Eurozone countries, and they may well be paying the price now.
After all, sooner or later there were going to be problems in one or more Eurozone countries, particularly when the Eurozone decided to invite the “PIGS” (Portgual, Italy, Greece, Spain) to join the party, and presumably, in the spirit of solidarity, the other countries would have to chip in to help out their Euro brethren.
And here’s the thing. Explaining to the populace that they can use their currency when they’re on holiday on the Algarve = an easy win. Explaining to the populace that any budgetary problems experienced by their partners will have to be paid for out of their own pocket = not so easy.
This is the crux of the Eurozone’s problems. Solidarity does not come about because high-level politicians refer to it on a daily basis in Brussels or Helsinki. Nor does it come about by spending two weeks abroad in the country in question.
Brussels – and in the case of the Euro, Frankfurt am Main – is often accused of being remote and centralised. Perhaps now they are reaping what they and the political elite in the Member States sowed a decade ago.
- Rob
The news that Portugal has finally bitten the bullet and requested a bailout will surprise few, but the impact on the Eurozone as a whole – and particularly Spain – remains to be seen.
Historians may look back at this moment and consider it the end-game of the current Euro-crisis- the three countries that were always going to ask for a bail-out did, but that was the end of it.
Spain suffered but survived. Italy hung on. And Belgium finally got its act together.
This is the best-case scenario, but what actually does happen next is anyone’s guess. In the short-term, will the bailouts be successful? In the long-term – well, just who would want to join the Eurozone now?
As they say in the US, “all politics is local”, but this looks like one of the few trends which will successfully span the transatlantic divide.
At the end of the day, Chancellor Merkel is not elected by Portuguese citizens, and her shocking defeat in the Baden-Württemberg elections a few weeks back will focus Christian Democrat minds, meaning that Portugal can expect few favours from Europe’s paymaster in the weeks and months ahead.
Germany will pay, but it will get its money’s worth. It has to. Make no mistake.
Further ahead, the question needs to be asked: will the Eurozone ever agree on a common fiscal policy?
The current crisis has demonstrated the folly of a “one size fits all” approach when it comes to a single monetary policy, stretching as it does from Finland to Faro, whilst fiscal policy remains a national comptetence.
It was worth a try, but the carrot hasn’t worked, so the stick needs to make a comeback. Hence, if Spain is to be brought back on an even keel, the Eurozone needs to act now or risk being terminally stunted by its members on the periphery.
It won’t go down well in Stuttgart or Salerno, but the time has come for the Eurozone to put its money where its collective mouths are!
- Rob
As the EU Observer reports, the Commission has poured cold water on an “English-only” entrance exam for the EU institutions for the benefit of our cross-channel chums in Britannia, saying it is “illegal”.
After all, up to now all candidates have had to demonstrate an ability of at least one other language – fair enough really, at least when you’re working in an organisation which has no less than 23 official languages.
Yet, in an attempt to get more Brits to apply to work in the EU institutions, the UK government has called for more flexibility in the “concours” in order to allow more monoglot UK candidates to feel up to the challenge of applying for a well-heeled position in the institutions.
This is all very embarrassing – at least for The Lobby’s anglo-saxon arm. It is true that working life in the EU institutions has now been anglicised to such an extent that one could easily get away with only speaking English – but that is hardly the point.
If Brits are unwilling to learn another language, then what does it say about them? Can’t be bothered to learn a language, don’t care much for other countries, no interest for other cultures. Frankly, why would we want them in Brussels? And why would they want to come?
Rather than try to force a lowering in standards for entrance – a race to the bottom – the UK administration would be better off trying to tackle the problem at source, namely increase – not reduce, as is currently happening – language learning in UK schools.
If failure to do this means the number of British nationals in the EU institutions declines, resulting in a perceived lack of UK influence in the EU corridors of power – then so be it. Sorry. Tough luck. Put your own house in order first.
There is, though, an additional reason for the underrepresentation of the UK, particularly in the lower levels, which actually has little to do with languages and more to do with the education system.
When UK students leave universities they do so aged 21 and are expected to virtually walk straight into a career, buy a house, you name it. When you have a student debt in excess of €20,000, you have little choice in the matter.
The giant debt acquired by the average British student automatically rules out earning an internship wage with no guarantee of a job at the end of it. Why come to Brussels on a shoestring budget when you can rake it in in the City?
In contrast most upcoming Eurocrats from other countries have little debt to speak of, are delighted to get Brussels-based internships after their university education, and would not consider buying a property until around the age of 30. The rush to enter a career and get on the property ladder, so prevalent in the UK, appears to be absent from their mindset.
So is there any hope for our poor, poverty-stricken monoglot British graduate?
Look no further than The Lobby’s alma mater, Maastricht University, which has unleashed a PR blitz on UK students, encouraging them to leave behind the sky-high university fees in the UK and experience a continental education in a city synonymous with EU integration.
Will this help boost UK representation in the institutions? Maybe. Or maybe not. After all, the courses on offer in Maastricht are…in English.
- 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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