Posts filed under ‘politics’

It’s air quality, stupid.

November 13, 2012 at 6:39 pm Leave a comment

The Beijing-Brussels connection

Fleishman-Hillard Brussels was particularly enthusiastic to welcome Li Hong, President of Fleishman-Hillard China, as he visited the capital of Europe last week. While almost 8000 kilometres separate Brussels from Beijing, the upcoming leadership transition in China is poised to have a dramatic impact on the economy here in Europe, as in the rest of the world. His visit was thus the perfect occasion to discuss, with a handful of EU public affairs professionals from a broad range of industry sectors, the challenges the country is facing and the outlook for various industry sectors moving forward.

Trade policy is an exclusive power of the EU which means that it is the EU, and not individual member states, that legislates on trade matters and concludes international trade agreements, covering services, intellectual property and foreign direct investment. With the globalisation of the supply chain, China has become a major, if not the most important, production hub for multinational companies operating in Europe. Any shift in labour or environmental legislation taking place in China has an impact on foreign companies producing in China. Similarly, China is looking at the EU as a landmark for matters like the classification of chemicals substances or product safety legislation.

The fruitful discussions further confirmed the global dimension of EU public affairs. As influence operates from multiple pressure points and sources across different time zones, a silo approach to public affairs is no longer viable. Companies navigate in a globalised system with global challenges (trade, environment, food security, energy scarcity): what happens in China impacts the EU and vice versa.

In view of the current global economic slowdown, all eyes are expectantly turned on market prospects in China where a burgeoning economy and growing middle class still offer untapped opportunities for foreign players, from the pharmaceutical and retail sectors to logistics, automotives and chemicals.

On November 8th at the 18th Party Congress, the Chinese Communist Party (CCP) will see new faces in many of the top leadership posts. Given the importance of the Party’s leadership to the functioning of the world’s second-biggest economy, these major generational changes will strongly impact the margin of maneuver of foreign companies operating in China. It will also have a critical influence on the future of EU-China political and trade relations and therefore on public affairs in Brussels, Beijing and beyond.

Stay tuned for a comprehensive analysis of what the upcoming Chinese leadership change can bring to the industry, European consumers and EU policy makers.

 Francesca

October 23, 2012 at 12:23 pm Leave a comment

Greek debt report reinforces doubts on bail-out deal

It’s no surprise that the “disciplinary” elements of this week’s Greek bail-out deal have been badly received by many in Greece. Strengthening of the Commission Task Force in Athens to provide an “enhanced and permanent presence” to oversee Greek government measures, and deposit of quarterly debt repayment funds in an escrow account to ensure their availability are difficult for anyone to accept. It’s as bad as having the IMF dictate your economic policy!

But the European Financial Stability Facility must be ratified in the parliaments of 17 countries across the eurozone, so further oversight is inevitable to boost confidence in Greece’s ability to keep its side of the bargain, especially as the economic case for the whole exercise is beset by doubt.

Just as Eurogroup ministers were drawing up the conclusions of the February 21 Brussels meeting, Reuters news agency got hold of the EU’s Preliminary Debt Sustainability Analysis for Greece, circulated as a confidential background document on February 15, in advance of the Council. It makes fairly gloomy reading but provides a template against which actual outcomes for the next eight years can be judged.

For many commentators the analysis has proved that the whole project is condemned to fail, because Greece would never be able to achieve the targets specified in the Eurogroup agreement. Recession in the Greek economy has been deeper than expected, structural reforms are slow to come and debt reduction might be slower than anticipated. It is not an optimistic scenario.

Some factors such as the haircut on private debt seem already to improve on the assumptions of February 15. The Eurogroup has also agreed measures on interest rates and on ECB and national bank transfers which may be helpful. But there are so many other unknowns. The document calculates that a one per cent annual reduction in Greece’s economic growth would increase Greek debt to 143 per cent of GDP by 2020 compared with the 120 per cent Eurogroup target, whereas a one per cent higher growth rate would cut the debt to 116 per cent. The gloomiest prognosis would have Greek government debt at 160 per cent of GDP by 2020.

All these figures must seem purely academic to many people in Greece who are struggling to survive cuts in pensions, salaries and jobs, and increases in tax, but it is surely the case that only far-reaching social and structural reform and a surge in competitiveness and economic growth will save Greece from descent towards third world status. Some estimate that an actual devaluation, replacing the euro with the drachma, would cut wages by half.

The current year will see a further 4 per cent decline in the Greek economy. Then the “internal devaluation” identified by the Sustainability Analysis, with its squeeze on labour costs and the whole panoply of structural reforms, should be taking effect. The analysis charts a projection for economic growth of 2.3 per cent in 2014 and 2.9 per cent in 2015 (see the blog from Felix Salmon of Reuters, where he also discusses the pros and cons for journalists of publishing complete documents), but delays in achieving privatisations and other measures will further postpone a return to sustainable debt levels.

Commentators and markets have been generally sceptical about the February 21 deal, while accepting that it gives a breathing space for recovery of Europe’s economy and strengthening of banks’ and governments’ creditworthiness. In the end it will be Greece’s own efforts in transforming its economy which will determine whether this deal can work.

Michael

February 27, 2012 at 6:21 pm 1 comment

Fierce troika attack on Greek labour costs

Devaluation was invariably the path to survival for weaker European economies in the days before the euro. But when devaluation is no longer an option, there is evidently no choice for failing economies but to squeeze public spending and slash labour costs in the hope of paying off debt and restoring competitiveness.

A striking aspect of the Greek case is the attack by the troika of ECB, IMF and European Commission on wages and non-wage costs in Greece’s private sector. This also means an attack on Greek trade unions, which have always been extremely powerful players. I well recall a meeting with the CEO of a major firm in Athens which was having trouble with Brussels, and being told that the union chief had his office just down the corridor. That was a big problem for the client!

The negotiations over recent weeks have shown just how tough is the new reality. The Athens talks have demonstrated a fierce determination by the troika to force a transformation in the Greek economy.

The deal now approved by Athens imposes a range of measures which, according to Athens News  includes cutting the minimum wage by 22 per cent plus a further 10 per cent for young workers, a freeze in basic wages until 2015, a reduction in pension provisions (still to be finalised), lower social contributions and  elimination of the 13th and 14th months’ salary to which private sector workers are entitled. A further reduction of 15,000 people in state employment will be required this year as part of a longer term cut of 150,000 and another €300m of budget cuts as yet unspecified. The scope of the troika’s demands will not be lost on other peripheral eurozone countries.

The troika negotiators are taking  nothing on trust. Greece’s main political parties have been obliged to commit themselves to the deal as a condition of receiving the €130bn bailout in advance of April elections.  Antonis Samaras, who leads the New Democracy party, was holding out, but all the main parties have now signed. Finance minister Evangelos Venizelos headed to Brussels today in the hope of striking an agreement with the eurogroup.

The German idea of putting a Brussels-based manager in charge of the Greek economy may have been a humiliation too far for Greek sensitivities, but the requirement to channel bail-out funds into an escrow account to ensure that interest on the loans will be paid on time would effectively amount to external control of budget management.

When is a default not a default? When Greece keeps the euro, I suppose. After difficult negotiations with the banks and others there does appear to be agreement on the haircut for private sector debt, with the writing off of 70 per cent of the face value of Greek bonds and an interest rate of 3.5 per cent on replacement paper.  As part of the final agreement it seems that ECB president Mario Draghi has said that the ECB will agree to forego the face value of the €40bn of bonds which it acquired at a knock-down price last year, knocking a further €10bn or so off the Greek debt mountain.

So the price to be paid for Greece to remain in the eurozone is high indeed.  There is no doubting the suffering faced by the Greek people. The bitter truth is that the alternative of all-out default and quitting the euro could be even worse. The test will be whether a real reduction in labour costs and a freeing-up of the economy will provide sufficient stimulus for Greece to climb out of the abyss.

An accountant friend of mine has proposed a simple solution to the crisis: Give all we other Europeans a voucher for two weeks’ holiday in Greece. That should get the Greek economy moving again!

Michael

February 9, 2012 at 3:25 pm 1 comment

Human Rights Court under fire

For many British politicians and for much of the UK press, the European Court of Human Rights is the very embodiment of foreign meddling in British life. Two particular findings of the Court have stirred passions in Britain: a 2005 ruling that anyone in prison should be allowed to vote in elections (not currently permitted under UK law); and the recent judgement that the militant Islamist preacher Abu Qatada, currently held in a British jail, could not be deported to Jordan as long as any witness testimony against him in a Jordanian court might have been obtained through torture.

These rulings provoked storms of protest and fed into calls for Britain to withdraw from the European Convention on Human Rights and other European organisations.

Against such a political backdrop it is little surprise that prime minister David Cameron has used the opportunity of Britain’s chairmanship of the Council of Europe Committee of Ministers to demand reform to the workings of the Court.

Cameron’s rendez-vous in Strasbourg on January 25 was played in the British press as if it were to be a full frontal attack on the Human Rights Court, on the Convention and on the Council of Europe as a whole. That’s how the mood music was played for press and politicians in advance of the speech. The reality was more nuanced.

The prime minister’s main aim was to bring down the temperature. He used the classic device of calling for reforms which are in fact well under way, and of assuming progress over time. Attacking the case backlog he cited the 160,000 cases which built up, partly owing to the surge in countries joining the Council of Europe after 1989. The backlog is now being dealt with because of changes in the Court’s practice, although judges are still having to handle more than 50,000 cases a year.

Cameron used the example of “the applicant taking a bus company to court for 90 Euros compensation, because they felt their journey from Bucharest to Madrid hadn’t been as comfortable as advertised” to suggest that the Court of Human Rights was becoming “a small claims court” and said that “we are hoping to get consensus on strengthening subsidiarity – the principle that where possible, final decisions should be made nationally”.

In a most unusual intervention, President of the Human Rights Court, Sir Nicolas Bratza (a British lawyer educated, just like David Cameron, at Brasenose College, Oxford), decided to respond to criticism of his Court in the Independent newspaper (which also outlines the most pertinent ECHR cases involving Britain).  Sir Nicolas notes that of 955 applications to the Court against the UK in 2011 only eight were found to violate the Human Rights Convention. He spells out how ECHR judgements have extended human rights in Britain over many years.

Still, there is no question that the European Court of Human Rights must accelerate reform. Until 2010 the Russian Duma blocked a protocol which would have helped speed the handling of cases, but that obstacle has now been lifted.

As to Cameron’s demand that national courts be regarded as final arbiters in human rights cases, it has its dangers. National courts across 47 countries cannot always be relied upon to uphold the provisions of the Convention on Human Rights. It  is surely no coincidence that a majority of cases coming to the Court relate to Russia and the Ukraine, where individual rights are often under pressure.

Implementation of rulings is also a big challenge for the Court, but for the UK or others to question the Court’s jurisdiction would make it all the more difficult for the provisions of the Human Rights Convention to extend across Europe – a debate which may have particular topical relevance to Hungary.

Michael

January 26, 2012 at 6:35 pm Leave a comment

Consequences of Britain’s summit veto

It’s too early to gauge the real impact of David Cameron’s veto at the European Council in the early hours of December 9 and the decision of 26 countries to devise a new treaty, but there have been straws in the wind over recent days which indicate how positions are evolving and which will set the agenda for 2012.

One consequence of Cameron’s self-imposed isolation in Brussels has been a surge in articles and interviews arguing for Britain’s full engagement with Europe. We’ve seen nothing like it for years. The nicely-named “Atlantis” strategy, whereby Britain takes the eurosceptic route, “repatriating” major elements of EU legislation, quitting key parts of Europe’s decision-making process and becoming (as some British eurosceptic MPs have advocated) like Norway or Switzerland, has been widely exposed as a recipe for decline. See for instance Timothy Garton Ash’s Guardian article.

One long-term consequence of the UK position could be to encourage the break-up of the United Kingdom. Scotland’s first minister Alex Salmond has already questioned whether Scottish interests will be adequately protected, given the UK’s isolation, reflecting the fact that the Scottish National Party has always seen the future of an independent Scotland as a committed member of the EU. The SNP plans a referendum on independence in 2014 or 2015 where the protection of Scotland’s interests will no doubt figure.

British public opinion has been broadly in favour of the Cameron stance and even puts the Conservative Party ahead of Labour, which is no mean feat in these times of austerity, but those questioned in the YouGov poll showed some popular concern over the economic impact.

As for Britain’s EU partners, Chancellor Merkel’s conciliatory speech in the Bundestag after the summit was a helpful start. She stressed Britain’s role in Europe and so provided some comfort to the British prime minister. This contrasted with President Sarkozy’s attack on Britain’s obsession with the single market which was followed by a stream of criticism about the British economy from various French notables, including the head of the French central bank – further evidence that Anglo-Saxon financial services are seen as the ultimate villain behind the present crisis, and also a sign of the tensions within the Franco-German alliance.

That said, there is no doubting the distress that has been caused among several member states by the UK opt-out. Ireland was quick to promise intensive bilateral talks with London to avoid British isolation and agree common agendas.

There has been some back-tracking and some reassurance. Prime Minister Cameron and Chancellor George Osborne said immediately after the Council that the British veto would prevent the European Court and the Commission being used for implementation of the “fiscal compact”, but after a weekend’s reflection Mr Cameron had “an open mind” on the subject. The lawyers had ruled that the EU institutions could be used, under Articles 121, 126, 136 and 273 of the existing Treaty.

Britain’s draft protocol, presented in the early hours of December 9 to give treaty protection for UK financial services, would have demanded the right for the UK to adopt banking laws which were stricter than provided under EU financial services legislation. It seems there was no need to worry though: Commissioner Michel Barnier has since said that the Vickers report, requiring enhanced levels of bank capital, can be applied to meet the UK’s special situation.

In a previous blog I suggested that David Cameron’s prime motivation for exercising the veto in the small hours of December 9 was to satisfy the eurosceptics in his own party and avert a referendum. I have since been told that he said to Barroso and Van Rompuy during bilateral meetings that his job was indeed on the line. One can only draw the conclusion that the British prime minister found himself trapped by political calculation at home and diplomatic isolation abroad, leaving him little choice but to act as he did.

Michael

December 22, 2011 at 5:23 pm Leave a comment

Breaking news from UK PM – Commission supports completing internal market

I have to admit to being a little bit of a pro-European (no? never! you say), so it is with some fidgeting discomfort that I read overnight the happenings in my native land on the EU. Our London office have done a quick round up of the rebellion on their blog (sounds like something Darth Vadar would want to crush).

I think it’s worthwhile reading the Prime Minister’s full statement to the House of Commons from last night in case you missed it. As Jon Worth notes (hat tip for making the front of the Guardian’s online edition yesterday) being in office has driven probably the most Eurosceptic of Prime Ministers closer rather than farther from Europe. As I read through his speech I noted many of the arguments that pro-Europeans make for why the EU is a good thing and in our national interest. Pity it’s taken a financial crisis and frightful backbench rebellion to get Mr. Cameron to say these things out loud and in public.  I do have to laugh however that he’s only just noticed that the Commission are actually for completing the internal market and a friend of the UK’s agenda generally…One has to wonder where’s he’s been since the Single European Act, oh, the UK (well that explains it).

As for the future, I’m of the opinion this debate is not going away, especially in light of the further integration needed as a result of what’s happening in the Euro-zone and the PM’s desire to fundamentally renegotiate our relationship with the EU as expressed in the same speech. As the Americans would say, “Good luck with that”. Well, so be it. It’s time the UK had this discussion and that those who are generally have an aversion to “Europe” acknowledge the good things that the EU does deliver for UK business and citizens. As someone who takes delight in seeking to convert London cabbies to the European cause I’m up for it.

James

(note – see top right, all views expressed on this blog are personal)

 

October 25, 2011 at 10:29 am Leave a comment

PdF meetup: how did that go?

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has”. This quote is from Margaret Mead, an American anthropologist, who lived in the pre-Internet world. Now thanks to social networks, it has never been easier for people with a passion to share it with the world, gather support, and make a difference.

“How has the Internet changed your life?” was the question all participants of the 1st Worldwide Personal Democracy Meetup Day were asked. This unprecedented experiment ran for 24 hours, starting in Australia, passing through Asia and Europe and finishing in the U.S. 50 cities took part, 250 participants in total.

How has the Internet changed my life? If only for one thing, since I started blogging and tweeting I’ve met an incredible amount of people, fantastic folks who share a passion for social media and a determination to convince EU institutions to switch from the broadcast mode to the conversation mode. There is an enduring assumption that when people use social media, they live in a virtual bubble. Not true: building relationships online leads to strong relationships offline. The Internet is not disconnecting people; on the contrary it is reconnecting them. More importantly, it is connecting people across borders, something that was not possible at such a scale in the pre-Internet times.

So how did our Brussels PdF meetup go? It was spontaneous, warm and interactive. 30 people joined us, all working in or around the EU institutions, all sharing our enthusiasm for the potential of the Internet to open up the EU bubble. In terms of attendees, we were amazed to see that our Brussels meetup ranked 2nd, just after New York City, home land of the PdF, and before Washington D.C. Who would have thought? Yesterday EU geeks were at the forefront of global online democracy.

The worldwide PdF meetup was an experiment. It was exciting for us to take part and we look forward to similar experiences in the future!

UPDATE: Read the great report of the worldwide PdF meetup day written by PdF co-founder Micah Sifry. I like Joe Anthony’s suggestion for next time: have a ‘crazy idea’ theme e.g. What would you like to see happen in 5-10 years? Inspiring, isn’t it?

Laurence

July 13, 2011 at 9:54 pm Leave a comment

Small things that could make a big difference for the EU

Since my return to these shores from the U.S. I find myself noting the little things that are different between that country and Europe. It happened again the other night as the missus and I sat down to restart the West Wing boxset from the beginning (a TV show that this blog has neglected to reference since 2009 despite it being the best show of all time – shame on us). It was Josh’s shirt that got me going. It bellows like a hot air balloon about to set down/go up.  What is it with Americans and baggy dress shirts? Last year it took ages to find a retailer that stocked a decent fitting shirt for work. Eventually I plumped for the extra slim fit dress shirt from Brooks Brothers on Connecticut Avenue (just in case you are ever a European desperate for a shirt in the U.S. capital).

I mention this as earlier this week I was a little taken by the comments of Polish PM Donald Tusk. As reported by the Guardian he took his fellow EU leaders to task for talking good game about the EU and then undermining it with their very actions. He also suggested that even in this time of crisis and uncertainty we should be a little bit more confident about being Europeans and what the EU has achieved. It made me reflect that having confidence in their achievements is certainly not something lacking in our transatlantic friends. Perhaps if we could make that small change in our own attitude, combine it with our (relative) ability to focus on something a little more long term than the moment and our infinitely better choice of shirts then we’d be onto a winner.

James

July 6, 2011 at 1:26 pm Leave a comment

US-EU relations are worse than managing three small children

You know all hope is lost for a normal life when a paper from the US Chamber of Commerce drops into the inbox at midnight and you decide to read it on the iPad before getting some sleep. You would have thought three young children were enough to keep one awake. Damn those good people at the Chamber.

During my brief sojourn in the United States the US Chamber’s European programme was a revelation. It may not be the part of the Chamber that grabs the headlines, but it’s chock full of thoughtful Atlanticists (Gary Litman, Peter Rashish) who are doing their bit to ensure that the trans-atlantic agenda does not disappear into the equivalent of a political Bermuda triangle. A triangle that’s somewhere between the intercine warfare of Washington, an almost morbid fascination with the rise of China and an attitude of ‘benign neglect’ from the Obama Administration.

Yesterday’s paper – which you can find here – provides yet another policy option for restarting what is generally thought to be a generally dormant EU-US relationship. It’s a variation of mutual recognition of standards, which starts with integrating the impact on both sides of the Atlantic through each jurisdictions’ regulatory impact assessments. Its starting point is that in terms of product safety the desired outcomes of our regulatory regimes are pretty similar – even if our routes to achieving them are somewhat different. Something which I reflected upon by suggesting last year that we may be able to agree that neither the EU nor the US wants to kill its citizens. It seems from reading to be a decent approach.

My problem (US readers: I mean challenge) with the Chamber’s paper is two fold. First, I wonder whether there is a risk that the Chamber is diluting its own focus and that of those it is trying to convince by coming up with too many ideas at once. It’s only this time last year that the Chamber heralded a zero tariff agreement as the way forward on US-EU trade issues.  Is this now yesterday’s failed idea? Secondly, I’m of the opinion that it is not a lack of policy options that is the issue but a lack of political space. It doesn’t matter how many policy options we come up with. A clear message and an identified constituency needs to be created in Washington that will allow EU-US trade to rise up the agenda and take root there. Frankly speaking, outside of our good friends at the Chamber the educated and influential people I met in my time there just didn’t have Europe on their radar. It’s a non-issue. We may be fascinated by policy in Brussels, but I’d suggest in Washington politics is somewhat more important. It’s the latter that the Chamber and the EU need to get right.

James

June 28, 2011 at 10:22 am Leave a comment

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A blog on politics, policy, public affairs and communications in Brussels and the European Union. The blog is written by the team at Fleishman-Hillard in Brussels. Views expressed are personal and do not reflect those of the company or its clients. You will find the contact details of our team at www.fleishman-hillard.eu

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