Yearly Archives: 2008

Ring out the old, ring in the Flemish haiku

December 29, 2008 12:46 pm by Tony Barber

Belgians are about to find out whether it’s easier to write a haiku than form a government.

King Albert II has asked Herman Van Rompuy, the 61-year-old head of Belgium’s lower house of parliament, to put together a government following the collapse of Yves Leterme’s coalition a mere nine months after it took office.

Herman Van Who? Few people outside the Benelux countries will have the slightest clue who Van Rompuy is. But let me tell you something. Beneath the cool exterior of this 61-year-old Flemish Christian Democrat beats the heart of a man of passion, honour and intellect.

Oh, yeah? I hear you say. Well, let me direct all you sceptics to the website on which Van Rompuy publishes poetry … in the form of haikus.

With apologies in advance to Van Rompuy and to the worldwide community of specialists in the Dutch-language variant of this Japanese poetical form, here is my translation of a haiku he put out on November 3:

ALL SOULS

A dead leaf hangs weak/ on a branch. A dead person/ lies still forever.

Great stuff. So, once again with apologies to Van Rompuy, here is my personal effort:

THE STATE OF BELGIUM

Governing Belgium is a thankless/ Task. Please, let’s have/ An election.

Tags: Belgium
Posted in EU | Permalink

2009 shapes up as a weary, dreary year for EU enlargement

December 19, 2008 3:19 pm by Tony Barber

Turkey should almost be pleased. On Friday the European Union agreed to open two new “chapters”, or policy areas, in Turkey’s EU accession negotiations – on the free movement of capital and on information society and the media. The Czech Republic, which takes over the EU’s rotating presidency from France on January 1, hopes to open two more chapters during its six-month spell in charge.

So out of the 35 chapters that need to be completed before a country can join the EU, Turkey now has 10 open and could have 12 open by June 30. Whoopee! At this rate, all 35 will be open by some time in 2015. Except, of course, that certain western European governments have no intention of letting Turkey into the EU at all. Moreover, eight of Turkey’s negotiating chapters were frozen two years ago because the EU disapproves of Turkey’s refusal to open its ports and airports to trade with Cyprus. All in all, far from moving steadily forwards, Turkey’s accession talks are going nowhere fast.

Still, at least Turkey is under fewer and fewer illusions about where things really stand. With Croatia, there is less certainty. Quarrels with Slovenia, its former fellow-Yugoslav republic, meant that the EU on Friday concluded only three chapters with Croatia and opened one more. Slovenia blocked further progress.

This was a bitter blow for Croatia, which had wanted to conclude five chapters, open 10, and race ahead to completing its EU entry talks by next December, with a view to becoming a full member-state in 2011. Instead, Croatia now has concluded only 7 of the 35 chapters, with another 15 open and 13 more still to be launched. Finishing these talks inside the next 12 months is starting to look like a very tall task.

Then there is Serbia. A report by the United Nations war crimes prosecutor this month made it clear that, even if Serbian co-operation with the war crimes tribunal in The Hague had improved, it ought to be even better. The arrest of Ratko Mladic, the Bosnian Serb general accused of genocide, would do the trick. But as long as he remains at large, the Dutch government won’t lift its block on closer Serbian association with the EU.

Macedonia is stuck, too – over that wearisome dispute with Greece about what its name should be. As for Bosnia-Herzegovina, it will be something of an achievement if it hangs together as a state, never mind about joining the EU. And when Montenegro officially presented its membership application on Monday, there were mutterings on the EU side that this was much too premature.

Some people put these problems down to “enlargement fatigue” in the EU’s older member-states. I don’t know if they’re right. But it certainly looks as if, as far as concerns enlargement, everyone can settle down to a good long sleep in 2009.

The European fiscal stimulus and the trick cigar

December 15, 2008 9:57 am by Tony Barber

The European Union’s much-touted €200bn fiscal stimulus package is looking more and more like one of those trick cigars I remember from years ago. A trick cigar looks like a cigar. It even feels like a cigar. But when you try to smoke it, nothing happens.

In the case of the EU’s fiscal stimulus – an initiative designed to pull Europe out of its deep recession, and approved by EU leaders at last week’s summit in Brussels – one gets the distinct feeling that someone somewhere is trying to pull wool over the general public’s eyes. The €200bn is there on paper, but there is not much evidence of it in the real world.

This is explained very clearly by David Saha and Jakob von Weizsäcker in a freshly published study for the Bruegel think-tank, “Estimating the Size of the European Stimulus Packages for 2009″. They say only one country in the 15-nation eurozone is genuinely applying the classic Keynesian recipe of increased deficit spending to counter a downturn. That country is Spain.

Particularly startling is their analysis of the measures recently unveiled in Italy by Prime Minister Silvio Berlusconi’s government. Officials in Rome portrayed this as an €80bn stimulus, or roughly 5 per cent of Italian gross domestic product. What nonsense. The Bruegel economists conclude that the Italian measures announced since September add up not to a stimulus, but to the opposite - a small fiscal tightening of €0.3bn!

As it happens, there are very good reasons why it would be imprudent for Italy to embark on a spending spree right now. With a public debt higher than its annual economic output, and with financial markets acutely nervous about traditionally profligate borrowers such as the Italian state, Berlusconi and his colleagues need to show great care in navigating their way out of the recession.

As the Italian example suggests, there is rather more support in private around Europe for Germany’s well-known apprehension about the EU-wide fiscal stimulus than is admitted in public. To name just a few countries – in and outside the eurozone – that share Germany’s wariness, think of Lithuania, the Netherlands, Poland and Sweden. And, of course, the European Central Bank is sympathetic to Germany’s position, too.

The bottom line is that, whatever the severity of the recession, Europe’s leaders are loath to do anything that might imperil the euro and the cohesion of the eurozone. For them, this is the multi-national European project that matters. As far as possible, therefore, they will try to stay within the limits set by the Stability and Growth Pact, the EU’s fiscal rulebook. And this means restricting the scope of a European fiscal stimulus.

Tags: Italy
Posted in Euro | Permalink

Is it sneaky to sneak a treaty through a Croatian back door?

December 12, 2008 11:23 am by Tony Barber

So, there is to be another Irish referendum on the European Union’s Lisbon treaty – probably in September or October 2009. When the news emerged at the EU summit in Brussels on Thursday, I didn’t hear anyone cheering.

This wasn’t only because no one can confidently predict that the Irish will vote Yes next time. Another reason is that the delicate, behind-the-scenes negotiations that have gone on to permit the second referendum are not, in fact, finished.

Ireland will get its concessions – on taxation, abortion law, neutrality and the right to keep a seat on the European Commission. But the unanswered question is: What form should these concessions take? A straightforward declaration by all EU leaders won’t be enough, because it may not be legally binding.

On the other hand, if the concessions to Ireland were wrapped into Croatia’s EU accession treaty (Croatia is aiming to conclude its membership negotiations by the end of 2009), that may be no good, either.

That’s because all other EU countries will have to approve Croatia’s accession treaty, probably during 2010. If this document included extra language on concessions to Ireland, it would look as if the EU was trying to sneak changes to the Lisbon treaty through a back door.

In the UK, but possibly in other countries, too, cries would go up for a fresh look at the Lisbon treaty as a whole. And you can imagine the mayhem if all this were happening in mid-2010 and the fiercely anti-Lisbon Tories had by then replaced the ruling Labour party in the UK after winning an election. To the horror of the UK’s EU partners, the Tories might find a way to scupper the Lisbon treaty.

It is , of course, possible to imagine another scenario in which it would make no difference at all what the Tories were to do. And that is if the Irish were to vote No for a second time. The tension is unbearable…

Posted in EU Commission | Permalink

Be bold, Angela, and talk about yield spreads at the EU summit

December 10, 2008 2:06 pm by Tony Barber

More than six weeks ago, I drew attention to the way that the global financial crisis was testing the eurozone’s stability by widening the yield spreads between German and other government bonds. This topic won’t exactly dominate the two-day European Union summit that starts in Brussels on Thursday, but you know what? Perhaps some leader or other - Angela Merkel, for example - should mention it.

Because the fact is that the problem is more serious today than it was in late October. Back then, the spread between German and Italian 10-year bonds was 95.6 basis points, compared with 72.3 a week earlier, 69.6 a month earlier and 25.8 a year earlier. Today the spread is 129.9 basis points, compared with 122.8 a week earlier, 91.9 a month earlier and 26.9 a year earlier.

The spread with Greek government bonds hit 174 basis points this week, compared with about 120 points when I was blogging in late October. Bond traders will tell you this has little or nothing to do with the urban riots that broke out last weekend and represent the most serious violence in Greece for six decades. I agree – but I would add that the picture of an unpopular government helpless in the face of street battles, arson and looting hardly helps.

In any case, the yield spreads are attracting attention at the European Central Bank’s highest levels. Here is what Jürgen Stark, the German member of the ECB’s executive board, wrote in an article in today’s Wall Street Journal Europe: “Interest rate spreads for government bonds are already very high in some euro area countries. Moreover, the current calls for a particularly loose application of the European Union’s framework of fiscal rules questions the credibility of politicians’ commitment to sound public finances.”

If you are looking for an explanation as to why Merkel’s government will only reluctantly sign up to the EU’s planned €200bn fiscal stimulus to overcome Europe’s recession, here it is in a nutshell – kurz gesagt, as the Germans say. They think the integrity of the EU’s fiscal framework, and hence the very future of the eurozone itself, is being put recklessly at risk.

And who knows? They may be right. Certainly, José Manuel Barroso, the European Commission president, sees the problem. Though a supporter of a well-timed, carefully planned fiscal stimulus, he told me this week: “I sense in the German position the traditional, prudent approach to spending that is very rational, reasonable and wise. We have to respect the way Germany sees the situation and the way they take decisions.”

Tags: Barroso
Posted in Euro | Permalink

Czech foreign minister reminds Europe: “We’re not all saints”

December 8, 2008 12:50 pm by Tony Barber

One of the pleasures of the Czech Republic’s forthcoming presidency of the European Union will be to watch in action a thoughtful, humorous, bow-tied 71-year-old who rejoices in the name of Karl Johannes Nepomuk Josef Norbert Friedrich Antonius Wratislaw Mena, prince of Schwarzenberg. Karel Schwarzenberg, as he is better known, has served as the Czech foreign minister for the past two years, and I caught up with him over breakfast.

An old friend of Vaclav Havel, the philosopher-playwright who became the Czech head of state after the anti-communist Velvet Revolution of 1989, Schwarzenberg will have the task of keeping the Czech ship on a steady course at a time when quite a few other EU countries are worried about how Prague will handle its six months in the hot seat. Schwarzenberg is diplomatic elegance personified but, as with Havel, that doesn’t mean he’s afraid to speak his mind.

I’ll give just one example. The question came up of whether the EU should continue to delay implementing its so-called stabilisation and association agreement with Serbia, an accord that would put Belgrade clearly on the road to EU membership. The EU is taking this line mainly because the Dutch government is unhappy that the Serbian authorities have not yet arrested Ratko Mladic, the Bosnian Serb military leader accused of war crimes in the 1990s.

Like many other EU foreign ministers, Schwarzenberg says he understands the Dutch point of view, but thinks they are wrong: Serbia should be brought in from the cold. His reasoning, though, is quite distinctive. ”I look back at Europe after the second world war from the perspective of each future EU country. If each war criminal had had to be dealt with first [before launching the EU], I’m not sure the process would have started before the 1980s,” he said.

He was too polite to mention which countries had failed to prosecute war criminals until four decades after the war’s end - the 1980s were famous in France for the cases of Klaus Barbie and Maurice Papon - but in fact I didn’t get the impression that Schwarzenberg was trying to accuse other EU states of hypocrisy. Rather, he was just suggesting that the world is an imperfect place and we must accept that reality and move on.

“Each country has its own bloody history,” he said. “I think Iceland is the only country that’s had no connection with war criminals over the past 100 years – and perhaps Denmark. Everyone else did something. We shouldn’t behave as if we’re all saints.”

Tags: Balkans
Posted in Uncategorized | Permalink

An aroma of hard work and metallic coffee fills the air of Brussels

December 4, 2008 4:23 pm by Tony Barber

No one can complain that France, as it completes its six-month spell in charge of the European Union, isn’t extracting every last drop of blood, sweat and tears from the officials and diplomats based in Brussels and EU national capitals.

A recent meeting on climate change and energy policy, attended by deputy ambassadors from the EU’s 27 member-states, started at 10:00 on a Friday morning - usually the quietest day of the EU’s working week, when it is not unknown for some staff to slip away for an early weekend. At French insistence, this meeting did not end until a bone-creaking, ghost-eyed 6:00 on Saturday morning.

Old-timers in Brussels calculate that Nicolas Sarkozy, France’s president, has staged more EU summits since July 1 than any previous leader in the bloc’s 50-year history. What’s more, there are rumours that he won’t be satisfied even after the last scheduled summit of France’s EU presidency wraps up its work in Brussels on December 12. Diplomats are bracing themselves for a possible final French summons at some point before December 31.

All of which, from the point of view of your average hard-working Eurocrat, underlines the importance of having easy access to a good coffee machine to help you stay awake. It’s just as well, then, that the French aren’t holding their meetings in the European Commission headquarters.

For twenty newly installed, state-of-the-art coffee makers have just been hurriedly withdrawn from the Commission HQ after an employee discovered his coffee was contaminated with extraordinarily high levels of nickel. How much was spent on the machines? About 100,000 euros.

Posted in EU Commission | Permalink

Europe’s socialists fight under the banner: “The Free Market Failed”

December 3, 2008 11:55 am by Tony Barber

To get a sense of how the financial turmoil and economic recession are reshaping European politics, take a look at the socialists’ manifesto for next June’s European Parliament elections. “This crisis marks the end of a conservative era of badly regulated markets. Conservatives believe in a market society and letting the rich get richer, to the detriment of everyone else. We believe in a social market economy…”

When they plotted their strategy, socialist leaders across Europe clearly decided that their best line of rhetorical attack would be to paint their opponents as reckless advocates of unrestrained free market economics. “The conservatives often talk about economic and social crises as if they are unavoidable, a law of nature… Conservatives have pursued a policy of blind faith in the market – serving the interests of the few rather than the general public…”

The manifesto was agreed this week at a conference in Madrid by leaders as varied as Prime Minister José Luis Rodríguez Zapatero of Spain; Martine Aubry, the newly crowned leader of the French socialists; Sergei Stanishev, Bulgaria’s prime minister; and Gediminas Kirkilas, Lithuania’s outgoing premier.

For Europe’s humbled financial institutions, the manifesto proposes “rigorous capital requirements”, limits on borrowing and bad loans to prevent excessive risk-taking, caps on executive pay and bonuses, curbs on short-selling, stronger regulation of hedge funds and private equity funds, and an end to “tax havens, tax avoidance scams and tax evasion”.

Some of these measures are already in the works at European Union level, and in a sense it’s disappointing to see the socialists shrink from proposing more imaginative steps that would marry the need for better regulation with acceptance of innovation as a fact of financial life.

Nevertheless, the socialists do go further in other areas, for example by calling for a “European Social Progress Pact”. This would require that every piece of EU legislation include a “social progress clause” – that is, something setting out goals and standards in the fields of social policy, health and education. Potentially, pretty expensive.

The socialists also propose a European pact on wages, establishing “decent minimum wages” in all EU member-states, and “a European framework for cross-border collective bargaining and collective agreements”. There are some veiled hints at trade protectionism, as in their support for steps that would prevent energy-intensive industries in Europe from relocating to parts of the world where climate change policies are less strict (read: China and other Asian countries).

Because of the European Parliament’s growing importance in framing EU laws, it is important to listen to what the socialists are saying. At present they have 215 seats in the legislature, compared with 288 for the centre-right group and 101 for the liberal group. But they will surely increase their presence after the June vote.

And then, who knows? Perhaps they will be strong enough to bring their ideas to bear on the membership and political direction of the next European Commission, due to be chosen less than a year from now. Then we will really know that we’re in a new era.

Tags: Elections 2009
Posted in EU Parliament | Permalink

Ethnic unrest and Eurasian criminals: America’s view of Europe in 2025

December 1, 2008 12:32 pm by Tony Barber

What fun it is to predict the future! You can paint the most outrageous scenarios, and no one can prove you’re wrong because they haven’t happened yet.

This thought crossed my mind when I was reading Global Trends 2025, the report published last month by the US intelligence community. Here is the bit where they talk about the risk of a global pandemic: “Tens to hundreds of millions of Americans within the US homeland would become ill and deaths would mount into the tens of millions. Outside the US, critical infrastructure degradation and economic loss on a global scale would result, as approximately a third of the worldwide population became ill and hundreds of millions died.”

And they say Americans are optimists.

The report’s forecasts for the European Union are tame by comparison, but they have the ring of truth. The most important sentence goes: “Continued failure to convince sceptical publics of the benefits of deeper economic, political and social integration, and to grasp the nettle of a shrinking and ageing population by enacting painful reforms, could leave the EU a hobbled giant distracted by internal bickering and competing national agendas and less able to translate its economic clout into global influence.”

To a large extent, the authors are merely describing the EU as it is today and saying that there’s no reason to think things will change much by 2025. This also goes for their prediction of “deepening ethnic cleavages” in western European societies, as the Muslim population grows but is disproportionately confined to low-status, low-wage jobs.

For a European reader, the report’s most startling prediction is surely that “crime could be the gravest threat inside Europe as Eurasian transnational organisations – flush from involvement in energy and mineral concerns – become more powerful and broaden their scope. One or more governments in central and eastern Europe could fall prey to their domination.”

I love the choice of the word “Eurasian”. The authors presumably have in mind Russian-led organised crime groups with political connections, but to call them “Eurasian” makes them seem much more sinister and slippery – rather like the bad guys in a James Bond movie.

As for what nation, or nations, might fall under the control of the dastardly Eurasians, it’s unclear if the US intelligence folk are thinking of countries already in the EU or countries outside. Inside, you would have to go for Bulgaria on present form – unless Dominique de Villepin can work his magic.

Outside, it could be any of them, from Montenegro and Moldova to Bosnia and Belarus. But of course, there’s no way of knowing. If only we could skip the financial crisis and recession and move to 2025 tomorrow!

Posted in EU | Permalink

Medvedev gives frosty response to Sarkozy on Lithuania’s energy needs

November 28, 2008 1:50 pm by Tony Barber

Buried in last Wednesday’s €200bn European Commission economic recovery plan for Europe was a proposal that sent waves of relief through Lithuanian policymaking circles. This was the idea of allocating €5bn for trans-European energy connections.

A large chunk of this money is destined for Lithuania, the aim being to reduce the dangers that face the country after the planned closure of its Ignalina nuclear power plant on December 31, 2009. Ignalina supplies 70 per cent of Lithuania’s electricity, and when the plant is shut down Lithuania will be almost entirely dependent on Russia for its energy.

For sure, Russia has no obvious interest in starving Lithuania of electricity. The lines that send Russian electricity to Lithuania also send it through Lithuania to Kaliningrad, the Russian territory to the west. Still, given it’s only 17 years since Lithuania gained independence from the Soviet Union, and given the icy relations between Russia and its tiny neighbour, any form of dependence is understandably an unnerving prospect from a Lithuanian point of view.

As officials in Vilnius point out, Lithuania relies for gas on a single Russian pipeline that passes through Belarus. As for oil, the Russians closed down the ironically named Druzhba (“Friendship”) pipeline in 2006 for repair work that mysteriously never seems to get finished.

Once Ignalina is closed, “the probability of disaster is not very high, but it is probable that there will be serious problems”, says Aleksandras Abisala, the government’s special representative on energy security.

The Lithuanians have been hammering away at their European Union colleagues on this subject for so long that, according to those in the know, French President Nicolas Sarkozy finally decided to raise the matter with Russian President Dmitry Medvedev at the recent EU-Russia summit in Nice. The response was very revealing of the present peppery mood in the Kremlin.

On the question of reopening the Druzhba pipeline, Medvedev committed himself to absolutely nothing. On the question of promising to maintain electricity deliveries to Lithuania from January 2010 onwards, Medvedev in effect said: “Nicolas, why are you talking to me about this? If the Lithuanians think they have a problem and want to talk about it, tell them to come and see me.”

In other words, Sarkozy’s efforts to speak up for Lithuania and give Medvedev a demonstration of what EU solidarity means in practice hit a big brick wall.

Lithuania had better receive some of that €5bn in EU funds quickly, or it will be a bitingly cold winter in 2010.

Tags: Baltic states
Posted in Energy | Permalink