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Greece’s 2012 elections: what message to Europe?

Rarely do citizens vote not on the basis of right or left but right or wrong:  and Greeks consider the tough austerity measures plain wrong.

At the ballot box, voters punished the two predominant parties for their role in the economic crisis and for imposing spending cut measures on the population already suffering from a 22% unemployment rate.  This ends the predictable era of politics which saw Greek voters alternate between PASOK and New Democracy.

Biggest winners: Syriza & Golden Dawn

Illustrating the breadth of support, Syriza picked up voters who in 2009 had voted for Pasok (37%), New Democracy (14%) and KKE (9%), the greatest chunk of which were aged 18-35.  According to opinion polls, support for Syriza blossomed when leader Alexis Tsipras announced his objective to form a left-leaning government.  Moving from 4.6% support in 2009 to 16.8%, Syriza convinced voters it is more than a simple third party but a serious coalition partner.

Another winner in the election was the Golden Dawn party that stripped New Democracy of over 40% of its supporters and 20% of PASOK from 2009.  Its base comes largely from under 35-year-olds and is considered a mix of traditional right with young people.  How this party might act in  Parliament is unclear but signals raised by party members demanding journalists stand when the party leader entered a press conference are surely concerning.

End of two party alternating rule

Voters delivered a blow to PASOK by stripping the party of 119 seats (of 300) in the Parliament.  The party lost over 2 million voters from 2009 when it enjoyed 44% support. Back then it swept to power promising to clean up and modernize the government, yet within weeks announced that Greece’s debt numbers had been fudged, plummeting the country into a crisis of confidence involving the markets, then the whole Eurozone as fear of contagion spread.

Two and a half years later, PASOK’s center-right party in the outgoing coalition, New Democracy (ND) had expected to win enough votes to form a government outright or at least with PASOK.  ND finished first, allowing them to take advantage of a reinforced proportionality law (they won while last in government) providing the first party 50 bonus Parliamentary seats.  Yet even this boost wasn’t sufficient to help ND secure a coalition government.

Unity government uncertainties

New Democracy attempts failed to form a government, giving Syriza three days to form a coalition.  Tsipras wasted no time announcing his hopes to build a government that operates inside the European Union, with the Euro, but rejects the austerity measures imposed by the Troika in return for billions to keep Greece afloat.  For a country unaccustomed to coalitions yet accustomed to sweet election promises, the expectations raised by renegotiation rhetoric may undermine efforts to form a lasting coalition.

Markets, lenders, and European and global leaders are holding their breath while leaders of this country of only 11 million people decide more than the country’s future.  Each passing day without a government brings increased uncertainty and the eyes of the world will continue to watch the machinations in Greece as a prophesy for what lies ahead for the European economy and beyond.

By Julie Garman Kolokotsa, a former member of the FH team now based in Athens.

 

 

May 9, 2012 at 6:37 pm Leave a comment

Guess who’s coming to dinner!

European Council president Herman van Rompuy has arranged a summit dinner for EU leaders on May 23. For François Hollande the Brussels feast will be a first opportunity to brief all his colleagues on France’s new approach to the eurozone crisis and how he sees a return to growth in Europe. His message will be relatively well received.

The fascinating question is who will fill Greece’s dining chair and how deep will the Greek crisis have become in two weeks’ time.

Writing on Europe Day, May 9, the prospects are not encouraging. Suddenly the prospects of Greece quitting the euro look much more plausible. While neither PASOK nor the New Democracy party have been able to form a coalition, Alexis Tsipras, leader of the Left Coalition and leader of the second biggest party, demands that any coalition partner must join him in renouncing the bailout package and tearing up the fiscal treaty.

His argument is that Greece can retain the euro without the austerity, because any attempt to expel the country from the eurozone would bring the whole edifice tumbling down. In other words, you need us more than we need you, so you will have to concede.

New Democracy leader Samaras is reported as saying that “Mr. Tsipras asked me to put my signature to the destruction of Greece. I will not do this”. PASOK’s leader Venizelos, who negotiated the latest €130bn package, is equally clear. He wants a pro-Europe unity government.

The most likely prospect seems to be that Lucas Papademos will continue as caretaker prime minister until new elections can be held, possibly on June 17. The question is whether enough Greek voters, faced with the new reality, will revert so soon to traditional loyalties. If the answer is no, then it could be back to the drachma.

The Greek crisis has set François Hollande, by contrast, plumb in the mainstream of eurozone thinking. Commission president Barroso, Mario Monti in Italy, the ECB’s Mario Draghi and Christine Lagarde at the IMF have been quick to argue that Hollande’s priorities are their priorities. More spending by EU structural funds, emphasis on research and innovation, and a bigger role for the European Investment Bank are part of the mix, but deficit reduction remains a major preoccupation.

Until French parliamentary elections on June 10 and 17 Hollande will continue to focus on the growth agenda. He will push for a “growth pact” to be linked with the fiscal treaty but has told the Irish that there is no reason to delay Ireland’s May 31 referendum on the grounds that it might be changed. (Greece, Portugal and Slovenia have already ratified).

Michel Sapin, possible finance minister and a veteran of the Mitterand years, has already said that Eurobonds are not an answer to the crisis (which avoids one contentious issue with Germany), but a financial transaction tax will be high on the French agenda, although Hollande makes reference to the UK’s hostility to the idea in a wide-ranging interview. It’s worth noting, too, that he wishes to move away from the Franco-German “duopoly” in European policy, while retaining close links with Merkel.

There is indeed a widespread assumption that Hollande’s victory and the Greek results mark the end of Angela Merkel’s predominance in European politics. I doubt it. Germany clearly remains fundamental to any resolution of the eurozone crisis and remains the motor of Europe’s economy.

Just to rub home the facts: German exports were up nearly one per cent in March to an all time record of €91.8 billion and imports were up by 1.2 per cent to €78.1 billion – also a record. But on a more sobering note for the new French President French labour costs are now higher than those of Germany. Economic competitiveness will inevitably need to become part of his agenda.

Michael

May 9, 2012 at 1:14 pm Leave a comment

Easy e-citizenship in France

As we have explored numerous times in this blog over the years, the Internet is increasingly shaping political discourse, public scrutiny over elected representatives and our democratic life in general. The upcoming French parliamentary elections are proving once again that e-citizenship is gaining ground fast; for some this year, computers will replace the traditional ballot box.

A major pioneer of e-citizenship was Switzerland, where in some constituencies citizens are already entitled to vote online; now France is on the verge to cross this barrier. For the first time, as a pilot scheme, expatriates will be offered the opportunity to elect their Members of Parliament on the Internet. They will be saved from the effort of going a remote Consulate and queuing to fulfil their civic duties. I thought I was attached to the decorum around the elections, going to the elementary-school turned poll-office and hearing the familiar “A voté”, but, I have to admit that for me at least, pragmatism has won over principles. 

If the experience proves efficient, it should be extended to more ballots and be available to all French voters. Given the very poor participation of expatriates in 2007 (as a shameful reminder, only 47% of French expats living in Belgium voted in the last presidential election) I can only hope that e-voting will raise the general commitment to democracy. Voting by a show of hands, male suffrage, and the poll tax are all antiques that political institutions gave up under social pressure. There is little doubt, in my view, that in a few decades e-voting will seem as natural as any other aspect of progress, either technological or societal.

In spite of the enthusiasm, there are still significant concerns around securing the integrity of the ballot. However, the Swiss encountered no major problems, and efficient solutions for identification and authentication exist e.g. electronic IDs; not to mention that so far I have never been robbed of my e-ordered pizza…

For information: www.monvotesecurise.votezaletranger.gouv.fr  

 Alice Bowdler

April 26, 2012 at 4:44 pm Leave a comment

Economic growth is the theme for spring

Spring is the season of growth, and economic growth in Europe has become the dominant theme of the moment. It is certainly a central theme of the French presidential elections.

In a few days time the European Commission plans to launch its economic growth plan for Europe, setting out the measures it believes that member states must take to stimulate their economies. The plan will focus on what the recent Greek sustainability report called “internal devaluation”, slashing the cost of labour by sweeping away restrictive labour practices, shifting taxes from employment to consumption and stimulating the mobility of labour.

The Commission’s plans will provide a timely backdrop to the French election campaign, which focuses so much on the balance between austerity and jobs and how to stimulate growth while at the same time bringing national budgets under control.

There seems to be clear blue water between Sarkozy and Hollande on economic policy. Sarkozy remains committed to a programme of cost-cutting, with much emphasis on reforming labour laws and stimulating export industries. Hollande wants to reverse the retirement age back from 62 to 60, to impose 75 per cent income tax on the rich, to boost social housing and to recruit a further 60,000 teachers.

Both the main contenders for the May 6 run-off are seeking to establish their patriotic credentials with stirring rhetoric. Hollande says “je veux rétablir notre souveraineté nationale”; Sarkozy praises De Gaulle’s empty chair policy, from which, he says, the common agricultural policy arose. But in truth the freedom of action for Le President – or any other European leader – is more limited than it has ever been.

François Hollande appears on the face of it to mount a bigger challenge to mainstream European policy, with his commitment to renegotiate the “Merkozy” treaty on economic discipline in order to put more emphasis on growth. But his latest remarks in today’s La Tribune seem cautious. If he wins the election he does not wish to challenge the disciplinary aspects of the treaty, but only the growth aspects.

(I can already see a new protocol which would emphasise the need for growth being hatched in the corridors of the Commission for a possible Hollande victory . That is, after all, the mood of the moment).

M.Hollande well knows that whatever his deep antipathy to financial markets and the rating agencies, any weakening of France’s commitment to take tough medicine would push up the cost of borrowing – perhaps dramatically. He has even less room for manoeuvre than François Mitterrand in the early ‘80s when he sought to build socialism in one country, only to be forced to change policy as the franc slumped.

As for Sarkozy, his threat to apply EU preference to French public procurement contracts unless there is reciprocal treatment for public contracts in countries such as China cannot be applied unilaterally without major dispute in Europe and beyond. On the other hand his aims may be partly met by the WTO Agreement on Government Procurement, a voluntary deal which came into effect just two weeks ago after 10 years of negotiation and is expected to be joined by China.

Sarkozy’s aggressive position on Schengen is no surprise. Although given new focus by the killings in Toulouse it is consistent with his position 12 months ago, when he threatened to renounce the Schengen agreement as migrants crossed into Italy en route to France and it was agreed that the agreement should be reviewed.

It is a fascinating election. The polls suggest a photo finish for the first round on April 22, but who knows where the supporters of Le Pen, Mélenchon and Bayrou will put their votes on May 6? And what if parliament returns a conservative majority under an Hollande presidency. Cohabitation? What economic policy will France then adopt?

Michael

April 13, 2012 at 6:47 pm Leave a comment

Good news for the ozone layer, but what lessons for climate change?

A few days ago the death was announced of F. Sherwood Rowland, the American scientist who identified the damage being caused by chlorofluorocarbons (CFCs) to the earth’s protective ozone layer. His pioneering scientific work and the fierce campaigning by him and his collaborators led to a UN framework agreement to tackle the problem and to the 1987 Montreal Protocol, which provided the basis for the global phasing out of CFCs and halons in refrigerators, aerosols and industrial processes – a good template, you might think, for global agreement on climate change.

The European Community was of course a major player in negotiating the Montreal Protocol and subsequent decisions.

It all began as scientific theory, but this was borne out by clear evidence, discovery in the mid ’80s of a vast hole in the ozone layer above the Antarctic. The ozone shield which protects Earth from solar radiation was being rapidly eroded, especially during the winter months, potentially exposing people to increased radiation from cancer-causing UV and threatening extensive damage to the natural world. CFCs and related gases were the culprit.

The good news is that the action taken over the last 25 years appears to be working. We have reached a turning point. A recent study suggests that the ozone layer is no longer undergoing the damage that it was. UV radiation levels are beginning to decline and the scale of ozone holes is diminishing. It was always clear that recovery would take many years as the man-made chemicals dispersed, but positive results are now coming through. It just shows how the world can respond when faced with an identified threat. A NASA website illustrates the trend.

The benefits go further: as well as damaging the ozone layer, CFCs and the other targeted chemicals are greenhouse gases which contribute to global warming, so their elimination is already making a contribution to slowing climate change.

What is striking about the CFC measures is how the scientific evidence was accepted by policy-makers and how the world rallied to take action. There were sceptics, and some industrial sectors were opposed to legislation, but the scientific approach – and the precautionary principle –  prevailed. Given the gravity of the threat the world decided it had to act, even if elements of doubt remained. Would that climate change could be approached with the same degree of global agreement and commitment! But it is of course a hugely more complex problem.

There is scientific theory, and then there is experience. Yet again this spring parts of western Europe, including eastern England, France, Germany, northern Italy and Spain are suffering drought, it seems because the jetstream has taken an unseasonal northerly shift, producing a high pressure area across Europe which is blocking access for the usual spring showers from the Atlantic.  Once more there is talk of harvest failure if the rains don’t come soon.

Climate change is just one of the “evil twins”  spawned by CO2 emissions. The other twin, more secretive and silent, is ocean acidification, where man-made carbon dioxide dissolved in the water is already affecting life in the seas and has the potential to damage ocean ecosystems and destroy vital fish stocks. It is surprising that the European Union has paid so little attention to this threat, but a new Swedish study sets out just how serious the risks are.

Michael

March 27, 2012 at 11:54 am Leave a comment

New deal on finance tax may bring calm

A compromise may be in sight to defuse the conflict over a proposed EU turnover tax for all financial transactions. It seems that finance ministers are looking at stamp duty on share deals as an alternative way of taxing the financial sector, perhaps marking a calmer phase in the evolution of European financial services legislation.

The argument over a Tobin-type tax has come to exemplify deep-seated antagonisms over the future of financial services within the European Union. For some Brits the proposed levy is seen as a weapon designed by others to undermine the predominance of the City of London; for many continentals, especially the French, it would deliver just desserts to a sector which is blamed for all the troubles of the world – and which could be a rich source of revenue (€57 billion is the Commission’s estimated take for its proposed turnover tax).

The French presidential elections will keep up the heat, and obviously there won’t be any resolution of the argument until well after May 6, when the rhetoric of the hustings should give way to a more pragmatic approach. Ministers plan to come back to the subject in June. The question then will be whether any form of financial tax could be introduced as an EU measure. The British would hate that, but might have to accept it as part of a compromise deal.

It is a testing time in the financial services sector as new rules take effect. The Prudential insurance company is threatening to move its headquarters from London to Hong Kong because of the requirements of the Solvency II  directive, while the Bank of England deputy governor Paul Tucker argues that the directive, which comes into effect in 2014, will swamp national regulators and make it more difficult for them to spot big risks

The European Court has joined the fun. Its recent ruling outlawing gender as an element in fixing car insurance premiums and in calculating benefits such as annuities could be seen as just the sort of legalistic nit-picking which brings European law into disrepute. That’s certainly the view of the insurance industry and of many commentators who see the decision as “bonkers”, although to be fair it was foreshadowed in the 2004 anti-discrimination directive.

I suppose that Test-Achats, the Belgian consumer organisation which brought the case, assumed that if the Court ruled in its favour all premiums would drop to whichever level was lower, so the 22 year old male car driver would pay the same premium as his young sister and the woman in retirement would  get the more generous annuity of her male colleague.

Be careful what you wish for! When the new rules come into effect in December 2012 the judgement is expected to trigger a general increase in insurance costs. Women will have to pay more for their car insurance despite the fact that they are generally safer drivers than men, while males will have to accept smaller annuities despite the fact that men tend to die earlier than women. Of course some premiums will come down,  but not by much, and the overall effect is likely to inflate costs and reduce benefits.

Michael

March 14, 2012 at 4:31 pm Leave a comment

The Temptation of Protectionism

I think most French would agree that the presidential election debate has been pretty poor since its beginning in February. No nuances, small media stories turned into polemics, little content overall – all very frustrating for those who enjoy a decent confrontation of ideas on what matters for the country. If you missed the saga of halal meat labelling (no joking), feel lucky.

Up until now, the role of France in the EU had been more or less absent from the debate. We had heard little about what any of the serious candidates would do in Brussels, with the exception of François Hollande, who said he would renegotiate the EU Fiscal Pact signed by 25 Member States at the European Council earlier this month.

On Sunday I was in Villepinte, north of Paris, to listen to Nicolas Sarkozy for what was announced as his first very big “meeting” (ironically that’s how we call political rallyes in French). Probably under the influence of Henri Guaino (his special counsellor who voted against the European Constitution in 2005), his speech contained far-reaching proposals in connection with the EU. Sarkozy is of the opinion that the divide between the ‘pro’ and ‘anti’ Europe is more significant in France than the right/left divide (based on unidentified polls).

Sarkozy promises to submit several proposals to the European Council: he first wants to reform the Schengen Treaty, introducing reinforced border controls, the possibility to exclude a country and political governance for the area. If within a year Schengen rules are not tightened, France would take a unilateral decision to leave the Schengen area. Funnily enough Sarkozy had already raised the issue last year following the Arab Spring and work is already underway to amend Schengen rules.

The other idea Sarkozy wants to introduce at EU level is an obligation to reserve large public procurement to European companies or companies manufacturing in Europe, replicating the US ‘Buy America Act’. “If the US, the most liberal country, does it, we can do it as well”, he justified. France would also also decide to unilaterally apply the idea should it not be popular amongst other Member States. While France under Sarkozy had so far spearheaded EU reforms (with Chancellor Merkel), in these conditions it would certainly turn into a difficult member, an outsider that is more a problem than a solution. The proposal on public procurement would have large consequences for non-EU companies. Third countries would be tempted to introduce retaliatory measures, potentially even more damaging for the EU. At a time when the EU ETS (Emissions Trading Scheme) is considered as a market distortion measure by third countries and that a trade war is threatening European airlines and aircraft manufacturers, it’s unlikely that Member States will agree to embark onto such a overtly protectionist measure.

As a believer in European integration and free market I’m naturally sceptical towards these attempts to build a ‘fortress Europe’, a continent that would have no other choice to maintain growth than to isolate itself from free movement and free trade. But it’s not just Sarkozy: none of the candidates really support a free market approach. I’m even more worried about Sarkozy’s new ‘Blame Brussels’ attitude. His comments about “the technocrats and tribunals” of the European Union are typical of candidates looking for scapegoats outside their national territory when they have run out of solutions to propose.

Clara

NB: French colleagues at Fleishman-Hillard will regularly contribute to Public Affairs 2.0 until 6 May to provide their views on the French presidential elections and their likely impact for the EU – you’re welcome to join the debate!

March 13, 2012 at 10:31 am 1 comment

Managing the word on the (Brussels) street

What does it take to weather a reputation storm in Europe’s capital? FH Brussels mulls it over at European Public Affairs Action Day.

Reputation. Built over time; destroyed in an instant. Coveted but capricious, it can seem uncontrollably fragile when disaster hits. But it is possible to keep reputation safe and sound in the face of adversity – if you nurture a reputation nest egg when the going’s good.  We invited two industry professionals with reputation success stories to tell to join our panel at this year’s European Public Affairs Action Day, a yearly get-together for public affairs types in the know in Brussels.

It’s a tricky thing, the reputation conundrum. As Françoise Humbert, Communications Director at the European Chemical Industry Council (Cefic), pointed out: we all know when reputation is bad – and the impact this can have. It’s fairly easy, nowadays, to cite examples of companies – even whole sectors – that have fallen unceremoniously from grace, seemingly from one day to the next. At the same time, we all know how crucial a good reputation is for getting your voice heard among Brussels policy-makers. The missing link for many people out there is: what’s the secret to having a good reputation, not just today – but forever?

Our panel – entitled ‘harnessing reputation to succeed in Brussels’ – explored precisely this issue, to the obvious interest and enthusiasm of our audience. Anita Kelly, FH Brussels Associate Director, kicked-off by explaining what makes reputation management so difficult. Reputation, a blurry mix of fact, emotion and gut feeling, is a hungry animal in relentless need of nourishment: to stay strong, it needs constant work – in the good times and the bad. Here are Anita’s four building blocks to building a good reputation:

  1. Determine your starting point. Work out how people see you. Are you trusted? Are you understood?
  2. Have a game plan. Do something with the research above. If your stakeholders don’t understand you, what do they want you to do about it?
  3. Walk to talk. Prove you’re worthy of being understood and trustworthy – be how you wish to be seen.
  4. Tell people about it. Use all channels available to you – and, of course, those your stakeholders use.

Françoise’s story backed this up. Cefic, keen to jump-start their relationship with stakeholders, launched a survey to ascertain what people really thought about them. The results were mixed: the overwhelming majority of institution officials now believe that chemicals are key to innovation and growth; but they doubt the public’s trust in both chemicals and the industry at large. But Françoise stressed the positive role of the survey as a starting point: Cefic knew where they were and what they had to do – and they’d grabbed a fair bit of media attention in the process. Today, she sees how the survey informs the everyday work of Cefic – not just that of the comms department, but of everyone: people are more switched-on about reputation and less nervous about losing control by telling people what they’re all about.

Our second panelist Florence Ranson, Senior Advisor at the European Banking Federation, agreed that transparency and honesty are at the heart of reputation. Things will go wrong; mistakes will be made – and at these times frankness is essential.  This is even more important in a member organisation, she stressed, where control can seem even harder – and the actions of one can impact both the organisation as a whole and all its individual members.

For Florence, honesty and transparency pave the way for trust. With the compulsive need for control and secrecy stripped away, the communication flow can be more fluid, engaged and interesting. You can start building credibility by interacting with stakeholders and the media in a meaningful and pertinent way.

Honesty. Integrity. Transparency. A sure-fire approach to reaching out to people and making them believe what you’re about and what you stand for.  And that – if you maintain it – is what reputation building is all about.

Catherine

If you want to learn more about reputation management, follow our Twitter feed at @euroreputation, where corporate communicators from across the Fleishman-Hillard network in Europe share links and insights on corporate reputation.

February 14, 2012 at 6:35 pm Leave a comment

The Rise and Rise of Ethno PR in Europe

By Juergen H. Gangoly, Managing Partner of The Skills Group – Fleishman-Hillard’s affiliate in Austria

Nowadays, it seems as though everyone in Europe is talking about the financial crisis and what it means to them. And, for most of us, the outlook is daunting: jobs are harder to come by, innovation is flailing ― and businesses are struggling to grow.

But there is one hugely significant ― albeit surprising ― silver lining to this rather expansive cloud. For years, NGOs, governments and humanitarian organisations have fought tooth and nail to educate the public about the societal benefits of immigrant communities, expelling the flawed perception of these people as economic burdens and driving home the obvious reality that immigrants are key contributors who give back to societies and economies on a daily basis.

Frankly, it’s been a tough fight. But things are getting better ― and it’s thanks to the economic crisis.

You see, for the first time, firms are looking beyond ‘Joe public’ and towards smaller market segments, like immigrant communities, to keep up-and-running. Now, taking their unique needs and interests into account when devising products and services is no longer just about doing what’s ethically right, it’s absolutely vital for economic survival. And that’s what’s making the difference.

What this means in practice is that all over Europe, big companies, banks, insurance companies, retailers, telcos and car manufacturers – among others – are sitting up and taking notice of how immigrant communities consume, earn and play. What they want and need is to tap into what these groups want ― and communicate with them in the most targeted way possible.

And that’s where we come in.

You see, these companies are our clients. To help them meet their targets we also need to raise our game. It’s no secret that immigrant communities are a black spot for our sector too – empirical data on this group is scarce and, where it does exist, it’s far too broad and sweeping to be really valuable.

Well, all that is beginning to change.

We at The Skills Group, the Austrian FH affiliate, have teamed up with the immigrant lifestyle magazine in Vienna, Biber, and the market research firm Meinungsraum to create EthnOpinion.at: the first opinion research firm in the Austrian German-language area that specialises in surveys of immigrant groups.

What we do isn’t original in itself: a combination of multi-language surveys and in-depth interviews in focus groups. Where we differ from other firms out there is that we specifically tap into immigrant populations in a way that can be fed back into advertising, marketing and PR programmes, and for developing new products and services.

And that’s why we’re able attract and retain prestigious clients from across the public and private spectrum.

This should send a clear message to our sector colleagues:  we have the power to simultaneously lower social and cultural barriers, pay our own way and see our clients through these hard times.

January 18, 2012 at 10:55 am 2 comments

Little choice for Cameron in Europe à la carte

This week’s summit in Brussels has certainly been a defining moment in the history of the European Union. The UK’s decision to block any revision to the existing EU treaties as part of the package to save the euro is confirmation that we live in a Europe à la carte. Whether it proves to be a “two-speed Europe” only time will tell. That depends on how the eurozone evolves.

Given Britain’s position outside the euro and the fiercely eurosceptic mood in his Conservative party I’m not sure that David Cameron had any choice other than to veto proposed modifications to the EU treaties.

Cameron’s approach is consistent with the coalition agreement with the Liberal Democrats. This clearly stated that a referendum would only be triggered if there was a transfer of power from the UK to Brussels. The prime minister does not want to be forced into a popular vote; the best way to avert any such risk is to use the veto and to leave the 17 to work out their own solution.

Suppose Cameron had agreed to support a treaty revision aux 27, it would have been extraordinarily difficult for him to avoid a referendum. Britain is already subject to Article 126 of the EU Treaty concerning excessive deficits and government debt. Any change to the associated protocol to include new rules would surely have raised major problems in the Westminster Parliament. An alternative would be the use of Article 136, which sets out provisions specific to eurozone countries, but that too would seem to implicate the UK, particularly as it would further strengthen the powers of the Commission and the Court of Justice.

Cameron has domestic political reasons to tread carefully. There are quite a few Tory MPs who loathe his partnership with the Liberal Democrats and who would gladly use the European issue to seek to depose him and break the coalition. He may have cited the defence of the City of London as his make-or-break issue, but this seems rather disingenuous, since financial services legislation is governed by the existing treaties, while the imposition of a financial transaction tax, seen as a special danger for UK financial services, would be subject to unanimity.

There is of course an implicit danger here, that the 17 eurozone countries could decide to impose a unilateral tax on their own investment firms, whether operating in London, New York or anywhere else. And pity poor old Ireland, which dreads a eurozone agreement to harmonise corporate taxes and so threaten Ireland’s 12.5 per cent rate.

It is in areas like these that Britain’s longer term negotiating position in Europe will be seriously weakened. It is significant that six non-euro countries are already committed to join the “fiscal compact” agreed in Brussels, while Hungary, Denmark and Sweden will probably do so after consulting their parliaments. The UK will be the odd one out.

One question which the summit does raise is whether the British prime minister has worked hard enough to build alliances with his natural allies in Europe. Briefing after last month’s meeting with Chancellor Merkel suggested that some sort of agreement had been reached between the two of them, but there was no evidence of mutual understanding in Brussels this week.

Former MEP Ben Patterson has just published The Conservative Party and Europe, a comprehensive book tracking how Conservative Party opinion has switched from staunchly pro-Europe in the 1970s to viscerally anti-EU today. This switch led to the decision of the Conservative group in the European Parliament to sever links with the European Peoples’ Party. Patterson argues that this move potentially weakened David Cameron’s position with his natural allies.

The recent EPP meeting in Marseilles was perhaps a case in point, where EPP leaders met informally to agree common positions or at least to clarify reasons for disagreement in advance of the summit.

It could be argued that Friday’s blood-letting has cleared the air. The UK can now concentrate on the overriding priority, to do everything it can – including through the IMF – to help prevent the collapse of the euro. The irony is that it is the weakness of the eurozone structure, and not its strength, which has triggered the need for the new inter-governmental treaty and threatened the future of the whole European project.

Michael

December 9, 2011 at 8:12 pm 2 comments

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About this blog

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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