Archive for August, 2010

There are many conversations I would like to be a party to.  But for EU purposes any self-respecting eavesdropper ought to be somewhere near German chancellor Angela Merkel and her Slovak counterpart Iveta Radicova on Wednesday. The concept of ‘EU solidarity’ lurks as a conversation centre-piece at their meeting in Berlin.

Sounding more German than the Germans and then going one step further, Slovakia incurred the wrath of both Berlin and Brussels when its parliament earlier this month voted against putting €816 million into a €110 billion Greek bailout fund.

The tone was unrepentant on the day and remains so. After parliamentarians voted 69 to 2 votes against, Radicova, who made this a campaign theme before the elections, underlined how much hardship her country went implementing an austerity programme in 2000 without any external help.

Maintaining the line, Slovak foreign minister Mikulas Dzurinda on Sunday told German press agency DPA:

“At that time we had a drop in real incomes of eight per cent. Unemployment climbed up to 20 per cent. At the end however we overhauled the economy and were the first former Eastern-bloc country ready to join the eurozone.’

Dzurinda, previously prime minister for eight years until 2006, oversaw the harsh measures. Slovakia only joined the single currency last year and remains much poorer than Greece. And so the prospect of paying out rankles.

The move will not have any effect on the overall Greek loan as the rest of the eurozone members have approved it. And the parliament did approve the €4.4bn commitment to the euro area’s €440bn European Financial Stability Facility, a fund meant to stop the Greek crisis spreading. But it was an affront to eurozone sensibilities all the same.

“All member states committed themselves politically to assistance for Greece. Every member relies on solidarity; solidarity is no one-way street,” said Merkel’s spokesman.

EU economic and monetary affairs commissioner Olli Rehn said:

“I can only regret this breach of solidarity within the euro area and I expect the Eurogroup and the Ecofin Council to return to the matter in their next meeting.”

EU solidarity. It’s a nice concept but scratch at it and it proves to be thinly spread on many issues.  I wonder what Merkel might have to say on it. The chancellor, it might be remembered, procrastinated for several months and allowed the public discussion on Greece to turn extremely ugly before agreeing to a bailout mechanism for the indebted country. The real risk of the collapse of the eurozone and as well as German banks’ exposure in Greece formed the backdrop to the decision. It was a pragmatic move after certain reform promises were promised by Athens in return.

In short, Germany could not afford, either for its own or the EU’s sake, not to bail out Greece. And it is now working on the EU’s rules to make sure it is never put into such a position again. Let’s not dress it up as solidarity.

A recent FT Deutschland headline on the meeting suggests Merkel wants to bring Slovakia to its “senses.” That might be difficult. It was a sovereign decision by the country’s parliament after all and Bratislava has okayed its share of the more general bailout fund. Domestically-speaking it would be almost impossible for Radicova to do a u-turn – particularly as the Slovak government has couched the parliament’s refusal in terms of solidarity for the Slovak people.

Well that was a tawdry exchange, wasn’t it? A phone-call would have sufficed. But no, that would be so discreet as to be pointless. French President Nicolas Sarkozy, currently holidaying in the Cote d’Azur, needles the European Commission President in a public letter. By return of post, Jose Manuel Barroso, also on holiday, publicly hits back. And all in the name of flood-ridden Pakistan.

The upshot is that there are now two proposals in the pipelines for making the EU’s response to catastrophes more efficient – a French one and a European Commission one.

The two politicians seem to bring out the worst in each other. Barroso appears to excite Sarkozy’s tendency to try to solve all problems personally (be it the financial crisis, French football or the EU’s response to disasters). Meanwhile, Sarkozy brings out the plaintive and the “so there!” in Barroso.

Just to recap. Le Figaro reported on Monday that Sarkozy had sent a letter to Barroso urging him to “do more” for Pakistan.

“I am counting on you to ensure that the EU shows unity and determination,” he wrote, adding that France will soon propose that the EU set up a rapid reaction force “based on member states’ resources.”

He also called on Barroso to ensure the EU’s visibility for its charity-giving efforts in Pakistan, where at least 2000 have died and around 20 million have been affected by the devastating floods. Visibility in disaster areas is dear to the French politician’s heart. Such French-inspired talk was last heard around the Haiti earthquake at the beginning of this year.

Barroso rose (at length) to the bait. A two page letter pointed out that the commission was the first to react on 30 July with €30 million in aid and again on 11 August with €10 million. He also noted that the commission is already looking into improving the EU’s disaster response capacity, while pointing out that when a European disaster force was formally suggested by the then French commissioner Michel Barnier in 2006, member states were not falling over themselves to endorse the idea.

For good measure, on Wednesday, Kristalina Georgieva, the commissioner in charge of disaster relief, was dispatched to give a press conference outlining all that the EU has done so far as well as to announce a further €30 million in aid. She is also to be sent to Pakistan to raise the EU’s visibility.

All that remains, now that the epistolary chest-beating is over, is to see who comes up with a disaster plan first – Paris or Brussels. Truly the European Union is not well-served by its top politicians at the moment.

Ah, the depths of August. The EU capital is a shadow of its usual self.

Parking spaces are easily found. Crossing the Rue de la Loi road in front of the European Commission’s main building is less of an adventure. Commission spokespeople – few in number as they currently are – bounce up to the podium to reveal they have nothing to announce. Self-aggrandizing and/or ‘outraged’ press releases from MEPs are something of a rarity.

And yet, the cogs in Brussels have been turning.

EU budget commissioner Janusz Lewandowski chose this lethargic month to put the feelers out for an EU tax, specifically mentioning a financial transaction or aviation tax. Germany, France and the UK shot it down immediately, though others were more positive. “An EU tax proposal in August,” said one head-shaking diplomat I bumped into earlier this week with a mixture of disdain and, possibly, admiration.

It seems to me that Lewandowski’s idea could hardly have been proposed at a better or indeed worse time. While the general public might be more open than ever before to a financial transaction tax managed by Brussels, it still needs to be sold as such by member states to their citizens. And this while admitting that money that runs to Brussels coffers is, by default, not running into national coffers.

Hardly the ideal economic or political climate for that just now.

Even France resorted to talk of “sovereignty” – a word more usually found on the lips of British politicians. Europe minister Pierre Lellouche, the French contact point for opinions on everything at the moment, said:

“Clearly the idea of a European tax, the power to levy taxes, raises fundamental political issues and would be a very significant transfer of sovereignty.”

So far, Lewandowski is holding his ground (in the original interview with FT Deutschland he had indicated that Berlin might be on board.) But are member states in any way ready to take this step?

Even if could be shown that governments would pay less to Brussels in return for an EU tax administered by the European Commission, the symbolism of the move would be huge. Direct taxation represents the beginnings of a state. That would raise all sorts of questions about democratic accountability and the exact relation of citizens to the EU. Questions that neither the commission or many member states are keen on raising.

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Fighting talk
August in Washington.  It’s a barren month stateside too. But still the famed ‘can-do’ US spirit appeared to have infected Joao Vale de Almeida, the  EU’s new ambassador to the US. In an interview with the Washington Post and Agence France Presse last week, the Portuguese official-turned-high-ranking-diplomat was loudly proclaiming the letter of the Lisbon law.

“I do not wish or will impose myself on the member states’ ambassadors … Where we have a common position, I am the one leading the show. Bilateral matters are the mandate of the 27 [EU member state] ambassadors.”

Fighting talk indeed, given the nature of the EU. I suspect such authority will have to be earned and cannot simply be plucked from the Lisbon Treaty, no matter how black and white it appears on the page.

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A summit after all

And some uplifting news. The EU and the US do have something to talk about after all. The EU has been smarting ever since Washington pulled out of a planned early summer bilateral summit depriving many an EU politician – particularly Spanish PM Zapatero – of a pleasing photo op. US officials subsequently let it be known that Barack Obama does not do stroking of fragile egos, not even ‘shared-values’ European ones, just for the sake of it. His unsentimental approach means the agenda of the meeting must at least have a hint of substance.

The solution, alluded to at the time, is rather neat. Obama is over anyway for the Nato summit in the Portuguese capital of Lisbon so the EU-US conflab has been tacked onto the end of that meeting (20 November).

It also means that there while there will be a bilateral summit on European soil this year, it won’t (thankfully) be in Belgium, which is currently in post-election coalition negotiations, and, on past form, could still be in this state by the time November rolls round. (Belgium is both in charge of the EU presidency and now the default country for such summits). Meanwhile, there is sufficient time to think up a magnificent agenda.