The moment Dermot Ahern, Irish justice minister, conceded that defeat was inevitable yesterday lunchtime the action in Brussels, shifted from the Berlaymont, the 13-storey star-shaped home of the European Commission, to a scruffy Irish bar on the other side of the street.

No campaign activists clustered in the shadow of the ‘Berlaymonster” they loathe, to celebrate the Irish rejection of the Lisbon treaty. It felt as though they had been joined in Kitty O’Shea’s by almost every reporter and camera crew in town. Even supporters of the Yes campaign were drawn to Kitty O’Shea’s in order to find a journalist to give their views to. With a pint (sorry half-litre), of Guinness in one hand, Nigel Farage, leader of the eurosceptic UK Independence party, accosted Andrew Duff, the British Liberal MEP who had played a role in drafting the original constitution. Would he accept defeat, Mr Farage demanded? Certainly not to him, was the riposte, before Mr Duff stomped off to address the waiting microphones.

It was as raw as genteel Brussels gets. “We keep asking the people and they keep saying No,” whooped Mr Farage - or, as another supporter of the No vote put it: “three out of three isn’t bad”.

After the Dutch and French rejection of the constitution that forced Brussels back to spend “a period of reflection” before going back to the drawing board to draw up the Lisbon Treaty, there was a sense of déjà vu. But this blow may be harder for Brussels to recover from. As each No result was displayed on the pub’s big screen TV a cheer went up. But the biggest roar was reserved for the appearance of MEP Kathy Sinnott, at the Cork count. The independent Brussels politician who was one of only two MEP to oppose the treaty. Her son was in the pub audience.

Joady Sinnott, 35, works for his mum and said: “This vote was not anti-Europe. The Irish love Europe. But if it is going to get more powers it has to get more democratic.” Gerard MaCarthy, an Irish waiter at the pub, disagreed. “I would have voted yes,” he said. “The Irish should remember all the money we got for infrastructure. It was only 60 years ago that Europe was at war. We should try to improve it not reject it.” Waiting for some word, any word, from the Commission - protocol decreed that Irish leaders speak first - diplomats huddle in corners plotting the future.

“There are a couple of ways forward,” joked one. “We could wait for climate change to drown Ireland or, since it’s halfway across the Atlantic anyway, tell them to join Nafta.”

To the 23 official languages of the European Union can be added a 24th – Silviospeak.
Yes, Berlusconi is back and once again turning heads and headlines across Europe.
The incoming Italian premier has yet to form a government but has already irked Brussels on two issues: his defence of lossmaking airline Alitalia and the nomination of a Italy’s European commissioner.
The billionaire businessman helped wreck talks to sell Alitalia to Air France/KLM by holding out the prospect of an Italian takeover. Now, if local businessmen do not stump up the cash, he could just nationalise it, he said on Tuesday.
He invented a new word – “zignare” - to describe the hectoring of the Commission, which is anxious to ensure that the airline does not receive any more government subsidies, disadvantaging its competitors.
“If they continue hectoring, we could take a decision in which Alitalia could be bought by the state - by the state railway,” Berlusconi told a news conference. “It’s a threat, not a decision.” Some suspect it may also be a joke since the railway lacks the resources to take on the airline.
Jacques Barrot, the EU transport commissioner, has expressed doubts over whether an emergency 300m government loan complied with state aid rules. The Commission on Tuesday said that nationalisation would not pose a problem as long as the state did not pay above market rates for the 50.1 per cent of Alitalia it did not own. Given the lack of private buyers a market rate could be difficult to gauge.
Italy gave Jose Manuel Barroso, Commission president, a further headache on Tuesday when Franco Frattini, its commissioner, asked for his leave of absence to be extended until May 15. He took time off to campaign with Berlusconi and is expected to become Rome’s foreign minister.
Barroso last week said that if he resigned Italy would lose the sensitive justice and home affairs post, which temporary fill-in Barrot would retain. The new Italian would take Barrot’s transport portfolio. Rocco Buttiglione, Berlusconi’s last pick, (cd xref to beeb or our story) had to withdraw in 2004 after offending the European parliament with remarks about homosexuality and the role of women.
Patience with Italy is strained in Brussels. After his time spent with Berlusconi, it might be wise for Frattini not to return.

There has been much talk of the Franco-German motor that has traditionally propelled the European Union breaking down recently. So the cancellation of a meeting last week between the two countries to discuss proposals to cut pollution from cars led to plenty of puns.

The German press said the process has stalled but the French government said that was overblown. Whatever happens, the two biggest automakers in the European Union will have to strike a deal over  whose companies will have to make the biggest changes to ensure the European Union meets - or at least comes close to - its climate change targets.

The gas-guzzling, supercharged German machines have a head start. Angela Merkel’s government has made clear that the continent’s biggest producer cannot accept European Commission plans for swingeing fines from 2012 for manufacturers who do not hit targets. Brussels’ draft directive calls for a 25 per cent cut to an average emission of 120g or carbon per kilometre by 2012.

Savvy punters in Brussels expect the date to slip to 2015.  The European parliament, its members having one eye on the car plants in their constituencies, has already voted in favour of this.

ACEA, the carmakers’ lobby group, argues that since it takes five years to design a car they need that time to come up with the necessary models. And 6 out of 10 cars on the road now will still be on the road in 2012. Arguments that ACEA itself signed up voluntarily to such a target a decade  ago are rebutted. Governments did not keep their side of the bargain through tax breaks, improving congestion and other measures to encourage consumers to embrace smaller cars, it says.

France, like Italy, makes smaller cars so is closer to the 2012 target and has less to lose. However, it also inherits the presidency of the EU in July and is desperate for some big successes. They are not going to come without German co-operation. France wants an outline deal by the time EU environment ministers meet in June.

Gloomy Commission officials and green groups expect a compromise that would put the EU even further off course from its target of cutting emissions by 20 per cent between 1990 and 2020. The meeting may have been cancelled but a Greenpeace protest went ahead. Transport is the only sector where emissions are growing and the European Environment Agency has already determined that the Commission’s car package is not radical enough.

If one sector does less, then others must do more. Allowing cars to burn more carbon will mean factories, power stations or households will have to burn even less.

This race is nowhere near as predictable as a grand prix, however. As one of those behind the wheel observed, national trade-offs between issues can produce unpredictable results. This race will be won on the last bend.

Thursday’s thundering Financial Times editorial on the food crisis unfortunately arrived too late to change opinions on the 13th floor of the Berlaymont, the European Commission nerve centre. The day before the call for a pause in the push for biofuels was made Jose Manuel Barroso, Commission president, defended the policy.

He said the use of crops for fuel had so far had little effect on higher food prices. It can’t be often that the Commission disagrees with its multilateral brethren, the IMF, World Bank and United Nations.

Barroso said the push to increase biofuels to 10 per cent of the EU transport fuel mix by 2020 will continue. In fact, by creating a market for sustainable biofuels the EU could improve their production round the world, he said.

Perhaps he will listen to the EU’s own scientific advisers. On Thursday advisers to the European Environment Agency called for the target to be scrapped.

“The overambitious 10 per cent target is an experiment, whose unintended effects are difficult to predict and difficult to control,” they said.

However, Barroso did warn of a human tragedy caused by high food prices and called on EU countries to lift their giving to affected countries.

The link between the EU policies and food shortagesis beginning to worry some in the Berlaymont. It is seeking to end export subsidies that see cheap food dumped on poor countries. However, there are still many high tariff barriers that prevent poor farmers exporting to the EU. Doubtless this debate will become a centrepiece of the haggling over the mid-term review of the common agricultural policy this year.

France is already talking about the need for “food security” while Franz Fischler, former agriculture commissioner who keeps on top of the issues, told me recently that Europe has a duty to feed itself and the world.

Meanwhile, Andris Piebalgs, the energy commissioner, has been making the case for stimulating investment in farm productivity through the biofuels target.

He wrote in a recent blog post: “Substantial tracts of arable land lie fallow since the collapse of the collective farming system used during Communist times in many of the new Member States. The EU’s ambitious but realistic 10% target will provide the market pull stimulation that these farmers need to face a future market based agricultural economy and less dependence on EU subsidies.”

But with Gordon Brown among others calling for a change of stance, I wouldn’t advise any farmer to start sowing the seeds of biofuel crops until they are sure of exactly what they will reap.

Jacques Barrot must be a mean poker player. The European transport commissioner has often been dealt a weak hand in negotiations. Yet he has managed on many occasions to outwit, or outbluff, his opponents.To name just one, he has steered the Galileo satellite navigation system to the launch pad amid bickering among EU members over how to pay for it and who should build it. But now he faces his toughest test: convincing the US to yield control of its airlines to Europeans. Barrot had to drop this demand to get a transatlantic open skies deal that should boost traffic across the ocean and lower prices when it comes into force on March 30. The UK, which had previously blocked such a deal because it did not want to widen access to the lucrative Heathrow hub without US concessions, was forced into agreeing to the deal after the other EU governments backed it. But it added an important caveat. Unless the US lifted restrictions that limit foreign companies ownership of its airlines to 25 per cent in second stage negotiations the deal would be scrapped. While the US administration agrees with the change, Congress opposes it.

Talks on the second stage begin in May. Barrot says he will now employ his Gallic charm to sweet-talk the airline unions into accepting that European owners would not treat them worse than American ones.

“It is the American pilots we have to convince,” he told me in an interview this week. Congress is very attentive to their views. We have to explain that an EU airline would preserve their rights.”

However, it will be harder to convince congressmen and women obsessed with national security that a European-owned aircraft is as safe as a US-owned one.

Barrot is also talking tough on two other issues. He said that he wanted the US to consult Europe before taking new security measures and to agree to allow its airlines to join the EU’s emissions trading system, forcing them to buy permits to emit carbon dioxide. Washington has said such a move would be illegal.Neither is likely to happen but, appearing to give away his hand, Barrot said: “Investment is the priority, the other two are secondary. If we achieve investment [reciprocity] we will consider the negotiations well advanced.”

Mind you, with talks continuing until 2010 and the suspension of rights only possible from 2012 Barrot is probably not too worried. His mandate ends next year and he will be happy to be remembered as the man who brought us cheap transatlantic air travel.

An even more surreal session of the European parliament than usual in Strasbourg this week. The “highlight” was what is known in euroland as a “solemn ceremony” to mark 5o years since the assembly was born.  It seems an odd title for a celebration. At least there was a birthday cake - and plenty of fizz, of course.

Solemnity there was, with the Ode to Joy, the EU’s putative anthem played by the European Youth Orchestra, marked by many members getting to their feet. But jollity, too, with much backslapping and some wonderful music. See more here.

There was also the small matter of nine MEPs being formally docked up to five days’ worth of allowances for their noisy protests at the signing of the charter of fundamental rights in December.

This is not the allowances story everyone is interested in, of course. The confidential internal audit report that showed widespread pocket-lining is still the talk of the town. By parliament’s standards, things have moved fast. The bureau of senior MEPs who run the place have agreed to review the system for employing assistants and hopefully change it before the 2009 elections. At the moment members are given 16,500 euro a month each to hire people. They often use intermediaries and the audit report revealed that some of these are controlled by the members themselves, along with other scams.

The new system will probably see assistants employed by the parliament. That would clean things up but may not save the taxpayer much - officials think they will probably have to take on 20 staff to run the operation.

Then there is the question of other expenses. The European ombudsman Last week the bureau agreed to publish for the first time in a simple form everything an MEP can claim, but not what they actually do. This is not good enough for Malta Today, the paper that filed the complaint. It sould go to court.

They are not the only ones pressing. Paul van Buitenen, the whistleblower whose revelations brought down the commission in 1999, now says he needs to do a similar clean-up of parliament, where he is now a member. He told me that if there is no reform he will start publishing cases of abuse of other allowances. He has already posted a summary of the audit report on his website. “We cannot let the pressure off,” he said.

Members moving house after the election to benefit from generous commuting allowances and those buying property to rent out at parliament’s expense are just some of the examples he has up his sleeve. This one should run and run.

Some breaking news to add to my post of yesterday about MEPs’ allowances and excesses, sorry expenses. The wall of silence surrounding the confidential internal audit report into employment of assistants is breaking down. Paul van Buitenen, the whistleblower who brought down the Commission of Jacques Santer in 1999, is responsible. Now a Green MEP, he read the report and has just published a summary of it.

Having said that, Jens-Peter Bonde, a veteran eurosceptic from Denmark, is now claiming that there is a second, even more top-secret report. That one contains names and has not been read by any MEPs or sent over to Olaf, the anti-fraud agency, he says.

Here are some brief highlights. Remember the report examined just 167 of more than 4,000 payments between 2004 and 2006 and mentions no names. Given the extent of the irregularities and there is 135m euros - around 15,500 per member per month, at stake, it seems like the tip of the iceberg.

To avoid administrative most MEPs channel the money through “service providers” who handle the paperwork. Some of them seem to have little direct expertise in this. According to van Buitenen, in one case the provider involved was a child care company, in another a timber trader. In two cases money was paid to service providers even though the MEP had no staff.

In three cases MEPs paid money to their own bank accounts. Other companies used appeared to be fictitious. There was widespread paying of bonuses to assistants, often adding up the amount of allowance unspent at the end of the year. One case of a former member who paid a company he controlled has been referred to the anti-fraud authorities but if anyone is to get in trouble over this it could be van Buitenen, for breaching parliamentary procedure by revealing details of the report.

There seem to be as many opinions on what the European parliament should do about the fuss over abuse of the expenses regime as there are MEPs. That is part of the charm of the place. But if there is one thing all 785 should be able to agree on it is that the scandal is not going to die down. And with elections next year, that should give them an incentive to do something about it.

It began, you may recall, with Liberal MEP Chris Davies publicising some of the contents of an internal audit into the arrangements for paying staff. Members get around 16,000 euros a month for employing staff and there are only as many checks as they themselves institute.

The debate then moved on to whether the report should now be published.

The big centre-right and centre-left groups, the European People’s party and the Socialists, put paid to that.

There have been scandals like this before. But one reason this won’t go away is that the  European ombudsman, the administrative watchdog of the union, is also on the case. He has yet to find a convincing argument why the parliament should not force members to account for their allowances and expenses and how much they pay their staff.

Parliament sees it differently and has said it would merely collate for the first time and make available on the internet all the various stipends to which members are entitled. Diana Wallis, the British Liberal Democrat who drafted the reply, said this was a “step change” because many MEPs had once opposed even that. She also has the parliament’s legal team onside.

She commissioned research into how many national assemblies published expenditure and found there were few more transparent than Strasbourg.

“It would not be proper for this parliament to to do something that is out of step with [members] cultural and legal traditions at home,” she told me. “There should be nothing to stop individual members or national delegations from going further.”

She also added that it would be unfair to change the rules halfway through a mandate. Hence new procedures for employing staff will not come into effect before 2009.

Publishing assistants’ salaries, even without names, could give enough clues for them to be identified, breaching their privacy, she said. We shall see if this is enough for the ombudsman and the Maltese journalist who first filed a complaint. 

Some British members already give greater detail. Members of the Labour and Conservative parties must get their accounts audited, though they do not publish the results. They have recently pledged to reveal who employs their spouse, after the Derek Conway affair at Westminster.

The Liberals, the third biggest force, have so far been most vocal in pressing for reform. They voted for publication of the internal report. It was a Liberal president, Pat Cox, who forced debate on the issue during his time in office in 2004.

Group leader Graham Watson has been thinking radically about the issue. He believes that the comparatively low salaries []  means many see their allowances as an extra top-up - and they are allowed to get away with it. Members earn between 800 and 12,000 euros a month depending on where they are from though that will be replace  by a flat rate 7,412 euros in 2009, pegged at 38.5 per cent of the earnings of a European Court of Justice judge.

“We all know MEP’s salaries are low compared with what we could earn outside. Society has chosen to put a cap on salaries and given generous allowances.” That should be reversed, he said. Pay should be increased but all allowances paid out only on the basis of receipts. ”The public wants to know what MEPs are paid and they have a right to know.” 

“There are a number of people in this house who think they have very comfortable terms and conditions and do not wish to have them changed.”

Watson himself took a 50 per cent pay cut when he left HSBC bank to become an MEP though he says he did it for love, not money. As an underpaid hack, I can only agree with him but doubt there will be much sympathy for the likes of us as the chill wind of a US recession hits Europe’s voters.