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We have updated the “Coffee table” page with this year’s issues of our BigPictureBrussels – a bi-monthly publication which covers many of the key events in Brussels at the EU level.

Everything you wanted to know about EU Summits, and everything you didn’t know that you wanted to know, etc.

Happy reading!

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.

Follow us on Twitter @TheEULobby

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

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:

  1. 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.
  2. 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

Recently, there has been a lot of talk around the corruption charges against MEPs highlighted by the Sunday Times. In this context, some articles published in the press associated lobbying with corruption. Even the Secretary General of a major European party stated: “It does look like an infestation of corporate lobbyists in the European Parliament and it seems that their only entry pass into the Parliament is a credit card.”

Of course, The Lobby cannot condone such behaviour by either lobbyists or MEPs, but neither can it stay completely silent when such accusations are put forward against our entire industry. It’s worth recalling that, in the case of the Sunday Times, fake lobbyists trapped real MEPs.

Like most industries, lobbying produces its fair share of black sheep. However, the vast majority of interest representatives use honest and straightforward means to bring their point across, and many subscribe to a voluntary chart of self-regulation and are also signatories to the Commission’s voluntary Register of Interest Representatives.

Still, many people believe that lobbyists – even if they are not corrupt – are problematic for the democratic functioning of a society. This is completely wrong.

Interest representatives are a democratic necessity. If one thing is certain in EU-Brussels, it is that there are lobbyists for everything: large corporations, NGOs, trade unions, trade associations, national, regional, or local governments, consumer groups, patient groups, professional groups, and so on.

It is up to decision makers to decide whom they listen to, particularly those who will be impacted by the decision, consider their arguments, and take a decision. Indeed, most MEPs would say that lobbyists are actually appreciated, since they can provide necessary information which is just not available elsewhere.

Anything else would be tantamount to policy being made in an ivory tower, far away from what society really needs. Can this be said to be truly democratic?

- Christian

 

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