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The EU has big plans for the world of financial services over the next year.
While several Directives are underway (including the never-ending Alternative Investment Fund Managers saga) regulations are in the pipeline (work on Capital Requirements Directive IV has already begun in the midst of the Capital Requirements Directive III), and measures are planned for the near future (regulating derivatives markets and credit default swaps).
What’s more, still more ideas, such as a proposal for an international bank levy, are being shoveled onto the table.
Is it feasible to imagine that this tsunami of regulation could possibly remain on schedule?
Not only is there physically too much on the table to remain on time with these proposals, but financial services also remain a very sensitive issue.
If the AIFM Directive is any indication of the difficulty we are facing in reaching an agreement that will suit all stakeholders, then the outlook isn’t pretty. And of course, there is the current domestic crisis in Belgium, which will most likely prevent the Belgian Presidency from keeping up with all these proposals.
AIFM is a perfect example of the complexity of the discussions. Whilst the US is upset about protectionism in the third country clause, the severity of the UK’s opposition to the text is evidenced by Gordon Brown’s phone call to Zapatero in the wee hours of the morning, removing it from the ECOFIN Council agenda in March.
France sees the Directive as imperative to protecting the internal market, and the European Venture Capital Association is incensed by clauses on depositaries, capital and audit requirements, and reporting.
It is likely that the EU will push forward and continue to try to pass these reforms, but given the sensitivity of the subject, the inability of stakeholders to agree, and the political climate, it will be an interesting next few months to see how the negotiations will play out.
By Chris Rogers
Last night we had the first of three groundbreaking Prime Ministerial TV debates in the UK. Pages of rules and a muted audience didn’t detract from the fact that political porn like this is rare, a testament to the 9.9 million viewers. They tuned in with the same appetite as an audience ready for the X-Factor.
Crikey it was intense though, the three gentlemen all shaved and primped to within an inch of their lives stood astride the polished silver lecterns delivering ninety uninterrupted minutes of argument. The moderator of this debate was Alistair Stewart (ITV) and he had arguably the worst night. He suffered an episode of newsreader’s tourettes as he sporadically yelled “Mister Brown, Mister Clegg, Mister Cameron”, switching the debate with a shrill tone, reminiscent of a mother berating a small child for sticking their fat finger in a juicy pudding! I must confess to taking a forced break at around the sixty minute mark to find some Scotch…but the candidates had no such pleasure.
Mr Brown (Labour)
The Prime Minister proved the proverbial human light-bulb. No one ever knows if there is enough Argon in the atmosphere to sustain his egregious smile for longer than a second before burnout.
In my opinion he was a close third place but others have promoted him higher. Let down by attempted punch lines and by misreading the “stay positive” strategy of Clegg and Cameron at the beginning, he demonstrated a sound command of policy as you might expect. The one with thirteen years of record to defend, he fell into the trap of wobbling his head in denial – like a Churchill’s car insurance advert – instead of remaining pensive.
However, at the end he stole a hilarious march on the other two candidates, taking off into the crowd like a thunderbolt. He wolfed up great swathes of the audience into his hands even before his flat-footed opponents had a chance to register. I’ll remember that part of his performance above all.
Mr Cameron (Conservative)
Call Me Dave had the nicest tie, and lots of stories about people he’d met and places he’d been. Perhaps too many – you got the feeling that every time he needed a policy or stance on something he’d wander out into the provinces – like Livingstone searching for the source of the Nile – and ask a native who he happened to meet what the best way to go was.
Steady as she goes though it was the sort of performance that you come to expect from him, compelling in places and a little cheesy in others. Brown shouldn’t have agreed to this debate but Cameron felt like the one who had most to lose, so he was never going to win really – second place.
Mr Clegg (Liberal Democrat)
Who is this chap, hands in pockets – not like the other two. Trying his best not to join the argument while the other two argued, because, you know, he’s not argumentative like the other two. Remembering that Jackie (a questioner) came from Burnley was very impressive, neither of the other two managed that and he always asked to see the face of the questioner behind the blinding studio lights. Let me connect with you, sir! That’s better.
Mr Clegg had the advantage of surprise, a relative unknown quantity for many and he took his chance with alacrity. Brown and Cameron will have learned their lesson. He really is very different from the other two, isn’t he?
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.
When races for top jobs are on, a complicated combination of criteria come into the picture. In EU politics, this matter is even more complex since a balance has to be found between big and small EU countries, north and south, men and women and left and right.
This is reflected in the current race for the new top jobs of President of the Council and EU High Representative for Foreign Affairs and Security Policy. Indeed, Swedish Prime Minister Fredrik Reinfeldt has admitted that it will be difficult to fill all the criteria.
The UK is putting a major hurdle in the way called Tony Blair. UK Prime Minister Gordon Brown still backs Mr Blair for being the first President of the EU, despite his unpopularity in several countries over his support for the war in Iraq. In addition, pro-Europeans do not see a politician from the UK as an ideal candidate for this post since the UK is neither in the eurozone nor the Schengen area. Mr Brown said that Mr Blair is the only UK candidate for these EU jobs, supposedly ruling out the possibility of UK Foreign Minister David Miliband becoming the foreign policy chief.
The EPP and the PSE will play a key role in the determination of the top. Indeed, they agreed that the President post will go to the EPP and that the foreign policy position will be a socialist. This deal should exclude Mr Blair’s candidacy as President of the Council.
Mr Brown wants a high profile EU President that can give a ‘face’ to Europe in the world. German Chancellor Angela Merkel and other leaders prefer a facilitator and consensus builder rather than a big name that could put them in the shadow. Ideal candidates for them are Belgian Prime Minister Herman Van Rompuy, the Dutch Prime Minsiter Jan Peter Balkenende, and Luxembourgian Jean-Claude Juncker. All of them are from the EPP.
Such a scenario could lead the way for a more forceful foreign policy chief from a big country, and a socialist. Massimo D’Alema, former Italian Foreign Minister who is supported by the socicalists is seen as the frontrunner if Mr Miliband confirms his unavailability. Mr D’Alema’s candidacy also has the support of the centre-right Italian Government, but his past as an affiliate of the Italian Communist Party could be a major obstacle for receiving support from the Eastern European countries.
Mr D’Alema is considered more pro-European and left-wing than Mr Miliband. Therefore, Mr Balkenende could be favoured for the post of President, since he is considered less federalist and more right-wing than Mr Van Rompuy.
A special summit to choose the top jobs will be held on 19 November, but leaders still have a long way to go. However, The Lobby feels that early candidates are going to be ditched along the way, as usually happens in negotiations for EU posts.
And where are the female candidates?
A chat over coffee (with Tanya Joseph, Managing Director of Public Affairs, Grayling London)
What a week in the UK! Following a wave of high profile ministerial departures last week and a very poor performance in the local and EU elections, the smart bets were on Prime Minister Gordon Brown having to step down.
Europe Minister Caroline Flint was one of those who departed, launching a scathing attack on Brown following her resignation – saying the Prime Minister treated her “as female window dressing” and that he operated a “two-tier Government”.
But he remains there, albeit with his authority seriously undermined, and it is uncertain how much longer he will survive.
Last week’s Ministerial reshuffle vividly demonstrates the weakness of his position. Alan Johnson’s acceptance of the Home Secretary job was crucial in keeping the Prime Minister afloat, and he had been widely tipped to succeed Brown, but by taking on the Home Office portfolio he has signalled his support for the Prime Minister.
A real winner is former EU Trade Commissioner Peter Mandelson who has an enhanced role with his Department for Business, Enterprise and Regulatory Reform.
As an interesting footnote, it has almost gone unnoticed that Glenys Kinnock has been given a Government job as Europe Minister. She and her husband Neil – also a former EU Commissioner – remain significant figures in the Labour Party, and her arrival could signal a determination to bring unity to the beleaguered Party.
But Brown, ever steadfast, told assembled journalists late last week, “I will not waiver. I will not walk away. I will get on with the job and I will finish the work”.
For more thoughts on developments, please visit my blog.
Voting in the EU elections began yesterday, with the UK and the Netherlands first out of the blocks. Voting takes place on the traditional day of voting in the country, hence different countries vote on different days. This of course means that the UK and Netherlands will have to wait for three full days before the results are announced (will the UK still have a government by then?)
Voting in the UK – at least for the EU elections – has always been a ridiculously low-key affair, and this year was no exception. You had to dig a little to get the latest news in the national newspapers, though one story courtesy of the BBC told how some ballot papers had apparently been difficult to unfold, thereby obscuring the parties at the bottom of the list – including everyone’s favourite eurosceptics, UKIP. Never one to shy away from publicity, the party are said to be considering a legal challenge.
Apart from that, the headlines in the UK are currently revolving around Cabinet Ministers resigning amid rumours that Gordon Brown’s position as leader is about to be made untenable. The election results may provide his detractors with another excuse to lambast the man who had to wait 10 years to become Prime Minister, only to fail miserably once given the chance.
A chat over coffee (with Chris in London)
Sometimes you get a set of political circumstances that make the mind boggle with rumour and anticipation, and this is one such time. The coming together of the European Elections on June 4th with local government elections in the UK and an ongoing expenses scandal has diminished the appeal for mainstream parties in the UK and is creating the conditions for a perfect political storm.
Voter apathy will more than likely result in poor showing for Labour and exaggerated proportions for minority parties like the Greens, UKIP and, worryingly, the BNP. The Prime Minister is in a corner and will need newspaper headlines within hours of the election. Speculation is rife for a big Cabinet reshuffle, so where is the pressure?
- Home Secretary Jacqui Smith has become a magnet for some dreadful headlines, like her husband’s secret taxpayer subsidised porn and the stabvest incident – “et tu, Gordon?”.
- Hazel Blears, the Communities Secretary is the proverbial red squirrel – small, chirpy and in danger of extinction – demoting her would look strong after her vocal criticisms.
- Geoff Hoon, the Transport Secretary has some expenses mud stuck to him and recently alienated the rail industry. He could face European exile if his loyalty to Brown can’t save him.
- Remember former EU Trade Commissioner Peter Mandelson? The now Baron Mandelson of Foy has performed strongly but is unlikely to get his dream of Foreign Secretary as he is too good on domestic tactics to go abroad (and Brown will want to keep his Blairite rival David Miliband away too). A possible for the Home Office.
- Husband and wife Ed Balls and Yvette Cooper answer unswervingly to the PM from their adjoining constituencies, and Ed Balls is Brown’s anointed heir. Keep an eye on this couple.
- Rumoured to have spent a ‘secret weekend’ with the PM in Chequers, we may see the return of Sadie to the front benches as guide dog to the new Communities Secretary, David Blunkett.
- Peter Hain, famed for his “tango-man” perma-tan could be in for a shock recall to the front benches.