BigPictureBrussels Luxembourg Presidency

ImageLast night’s EU election results can be read in two ways.

  • First, the status quo continues, with European People’s Party (EPP) expected to be the largest political group with 212 seats, followed by the Socialists & Democrats (S&D) on 185, with the Liberals trailing in third place with 71 seats.
  • Together with the Greens with 55 seats, this ensures the European Parliament has what could loosely be considered a pro-European majority, and this alone should ensure that policy-making during the next mandate will be largely unchanged, in the sense that laws will get passed, motions will be tabled, and the legislative agenda rumbles along.

That is one way of looking at it. Here is the second.

  • Undoubtedly this has been an historic night for the parties representing the Far Right, the Far Left, and the Eurosceptic bloc. In France the National Front became the largest party in the European Parliament, an honour shared by the UK Independence Party (UKIP) in the UK and the Far Left Syriza in Greece.
  • However, it is not clear whether these parties will be able to work together – UKIP has already stated that it cannot form a political group with the National Front, and historically parties on the political extremes have failed to form a cohesive unit. With a party group needing to be composed of at least seven Member States, a critical few weeks awaits.
  • Moreover, it should be remembered that MEPs from these parties do not draft legislative reports or play a meaningful role in the political process, meaning that their legislative impact will be limited, even if they continue to make a lot of noise.

The scramble to be kingmaker

  • For all that EPP and S&D remain the largest blocs, both lost large numbers of seats (61 and 11 respectively), and the beneficiaries were undoubtedly MEPs which are not aligned with any existing political group.
  • As many as 67 MEPs have yet to declare which party to stand for, leading to uncertainty over which of the smaller groups could be considered “kingmakers” in the new Parliament.
  • At the current time it looks like most laws will have to get passed through a “grand coalition” made up of the S&D and EPP, which could create problems on certain dossiers, not least those of an economic and financial nature.

A new Commission President in the wings

  • And what of the Commission? The EPP’s victory means that Jean-Claude Juncker, the party’s candidate for Commission President, should theoretically be the Parliament’s first choice. Yet, not only will he likely be black-balled by the Council, there seems to be a likelihood that he will not get the necessary majority in the Parliament. The same scenario confronts the S&D candidate, Martin Schulz and the Liberal candidate Guy Verhofstadt.
  • Step forward then Danish Prime Minister Helle Thorning-Schmidt. As a Social Democrat she would win the hearts of her party group, as a Scandinavian of a non-Euro country she could win over some of the European Conservatives and Democrats group, as well as the Greens and the far left GUE/NGL – all of which would give her a Parliamentary majority. The fact she is an alumnus of the College of Europe no doubt stands her in good stead too.

Time for talk is over

  • It is customary for politicians from the centre to claim they have “learnt the lessons” from such results and to acknowledge the strength of anti-EU and a broader anti-establishment feeling.
  • Yet they said the same thing five years ago, and five years later there are more – many more – MEPs from the extremes of the political spectrum sitting in Strasbourg and Brussels.
  • Indeed, at 43% turnout was up for the first time ever in EU Elections, yet this seems to have played into the hands of parties who want to destroy the entire political dimension of the European Union.
  • For those bent on repelling the anti-EU forces, the time for talk is over. There needs to be real engagement from the centre parties towards the Eurosceptics, and fundamental questions have to be asked about how the EU can win back the hearts and minds it has lost, not just over the last five years, but over recent decades.
  • These elections represent a challenge to the political class – they must meet it head on, or risk becoming politically irrelevant.

– Rob

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.

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Countries who take over the EU Presidency in the second half of the year always complain that they have drawn the short straw.

Sandwiched between the Summer holidays and the Christmas break, these Presidencies like to point out that they only have a three month window – September to end November – to make realistic progress on the dossiers.

Lithuania’s task is made even harder given the need to finalise what is on the table before the EU elections in May next year, with the legislative slowdown due to kick in from March.

For a first-time Presidency and a small country, this is no easy task.

Such countries are often eager to succeed during their time in the EU limelight, but there is a danger that Lithuania could be overwhelmed, both in terms of the sheer number of dossiers and the political struggles within the Council.

Indeed, Presidency or no, there is no doubt who still calls the shots.

If turning the EU around is akin to turning round an oil tanker, then Chancellor Merkel is very much on the bridge, steering the EU through troubled waters.

Moreover, with Lithuania not a member of the Eurozone, it will not be able to influence the engine-room of fiscal and monetary integration which is still largely driven by France and Germany and remains the headline issue for the Eurozone at least, if not the EU as a whole.

In past times it used to be said that “all eyes are on the Presidency” – not anymore.

With the new roles for President Van Rompuy and Commissioner Ashton, and the Eurozone taking centre stage, rotating Presidencies are now reduced to that of policy mandarins, digging into details and marrying the interests of the divergent Member States.

Important, undoubtedly. But headline-grabbing? Absolutely not.

Maybe this suits Lithuania just fine.

– Rob

To see Grayling’s full preview of the Lithuanian Presidency, click here!

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

In the first of a series of interviews with EU policy experts and decision makers, Brian Simpson the Chairman of the European Parliament’s Transport and Tourism Committee exchanges with Grayling’s Kevin Doran on the Airports Package that is currently being reviewed at the Europoean Parliament.

The latest Grayling BigPictureBrussels explains that:

  • Two mainstream parties in Greece managed to achieve a majority in the weekend’s elections and are likely to form a government of national unity to press ahead with the terms of the country’s bailout. A Greek default has however not been ruled out.
  • Earlier this month, the European Commission adopted its package on bank recovery and resolution with the aim of putting banks on a stronger footing to face down future crises.
  • German Chancellor Angela Merkel has made it abundantly clear that a banking union is impossible without first establishing a fiscal union – an idea resisted by France and Italy, not to mention the UK.
  • The Spanish bailout and the uncertainty in Greece have pulled the Eurozone closer to a banking union, and it remains to be seen whether it can be designed in a way that suits both the weaker and stronger economies and does not undermine the EU’s single market in financial services.

France and Germany do Battle over Eurobonds

My name is Bond, Euro Bond

  • EU leaders agree that Greece should remain in Eurozone – but stick to its bailout conditions.
  • New French President François Hollande not shying away from doing battle with Chancellor Merkel over Eurobonds – battles ahead!
  • Key decisions to come at June Summit on how to strengthen banks’ liquidity and on expanding fiscal and monetary union.
  • Mr Hollande’s confident performance likely to draw further support from other countries…to Germany’s cost.
For our full report, please read Grayling’s latest BigPictureBrussels

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.


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