According to Brian Cowen, Ireland’s premier, a No result in Friday’s referendum on the European Union’s Lisbon treaty would raise the prospect of a “two-speed Europe”, with some countries forging ahead with closer political and economic integration and others staying outside.  But isn’t a two-speed Europe the dog that is hauled out of its kennel every time there’s a EU institutional crisis but which, in the end, never barks?

After Irish voters rejected the Lisbon treaty in June 2008, a number of politicians were quick to assert that a two-speed Europe was the only way to keep the European “project” on the road.  Jean-Claude Juncker, Luxembourg’s prime minister, who has lived through more EU crises than most of us have had quetsch plum tarts, mused in public that perhaps it was time for a “Club of the Few” to go ahead on their own. Continue reading "Two-speed Europe is the dog that doesn’t bark"

Since February 1999, when the Organisation for Economic Co-operation and Development’s anti-bribery convention came into force - with the aim of reducing bribery of foreign officials in international business deals - the US has brought 103 cases, Germany more than 40, France 19 and the UK just one.  So says “Global Corruption Report 2009: Corruption and the Private Sector”, a study published on Wednesday by Transparency International, the anti-corruption watchdog.

From a British point of view, the report makes uncomfortable reading.  “UK companies still have a long way to go to increase their awareness and adopt robust anti-bribery compliance programmes,” it says.

It adds that, in the light of the 2006 al-Yamamah affair,  when the authorities cited national security reasons to shut down a corruption investigation into a multibillion-pound British arms deal with Saudi Arabia, ”it is essential for the government to improve its enforcement of the [OECD] convention and bring more cases to court.  The government and companies need to raise their game.  Otherwise the United Kingdom will be perceived as a country that is not serious about fighting international corruption.”

Of course, other nations come in for a hammering in the report, too.  Take the so-called BRIC countries, supposedly jumping from strength to strength as the western world drowns in recession and debt.  Everyone from President Dmitry Medvedev to the man in the Moscow metro knows about Russia’s corruption disease, but it is particularly interesting to read what Transparency International says about the club’s other three members: “Firms from India, China and Brazil are regarded by their peers as among the most corrupt when doing business abroad.”

Has international business corruption increased since the global financial crisis exploded?  The report doesn’t really answer this important question.  But it does point to “the hazardous implications of corporate strategies that seek to exploit weak regulation, taxation and disclosure standards in some pockets of the global banking system”.  It also highlights “financial offshore structures whose lack of transparency, regulatory oversight and co-operation facilitate capital flight and tax evasion, while hindering the recovery of public assets stolen by corrupt rulers”.

Better regulation and more effective enforcement of existing rules are obviously the answer.  But let’s not forget what Tacitus, the great Roman senator and historian, said: “It’s the most corrupt state that has the most laws.”

Now that José Manuel Barroso is safely re-installed as European Commission president for the next five years, it would be tempting to think that - from an institutional point of view, at least - all is well in Brussels.  Tempting, but wrong.

Once again, it is our old friend the Lisbon treaty that is the problem.  On October 2 Irish voters, who rejected the treaty in a referendum in June 2008, will have the chance to reverse their verdict.  Opinion polls indicate that the Yes camp will win this time.  But there is an unmistakeable air of nervousness at the European Union’s headquarters that the polls may not be a reliable guide to the eventual outcome.

The fundamental problem is Ireland’s economic collapse over the past 12 months, which has plunged the government’s popularity ratings to unprecedented depths.  The public mood is as sour as a pint of stale Guinness.  In this climate, anti-Lisbon campaigners are finding some voters receptive to the argument that, since pro-Lisbon politicians ruined the economy, why should they be trusted when they say the treaty is good for Ireland?

But the Irish referendum is not the only cloud on the EU’s horizon.  For even if Ireland votes Yes, there remain considerable doubts over when Václav Klaus, the Czech president, will append his signature to the Lisbon treaty, allowing it to take force.  Fears are growing in Brussels that Klaus intends to find an excuse to delay signing as long as possible - certainly, until some time in the first half of next year.

The EU will then face its ultimate nightmare - that the Lisbon treaty will not have been ratified by the time that the UK holds its next general election, due by June.  The rampantly anti-Lisbon Conservative party is widely expected to win the election, and Tory leaders have made clear that, if Lisbon is unratified when they take power, they will call a referendum on the treaty.  All the evidence suggests the British would vote No.

If events take this course, it will poison the atmosphere in the EU and make it even harder than it is now to defend all the good things about the 27-nation bloc, such as the single European market and the successful knitting together of western and eastern Europe.  Troubling times, indeed.

It’s less than a week since General Motors agreed to sell Opel, its European arm, to a group led by Magna International of Canada, but already a wave of anger at the implications of the deal is building up.  Nowhere is this more true than in Belgium and the UK, where workers at GM plants seem far more at risk than their colleagues in Germany of losing their jobs.

This episode is, however, about much more than potential job losses.  It’s about Europe’s reluctance to come to terms with huge overcapacity in its car industry.  It’s about how best to preserve a broad manufacturing base in an era when the other main recent driver of European economic growth - lightly regulated financial capitalism - is discredited.  Finally, it is a test of the European Commission’s ability to uphold its strict rules on competition and state aid during the worst recession in the European Union’s history.

Lord Mandelson, the British government minister responsible for business and innovation, told the BBC this morning that he hoped the Commission (of which he was a member until last year) “should not accept anything that looks like a political fix” in the Opel deal.  This remark came very close to accusing the German government of offering shedloads of financial aid to Opel - €4.5bn, to be precise - in return for a promise not to sack carworkers in Germany as the nation heads towards a general election on September 27.

This is, of course, exactly how matters are viewed in Belgium, where politicians fear that Opel’s plant in Antwerp has been earmarked for closure.  As Kris Peeters, who heads the government of the Flanders region, bluntly put it in July: “Those who put more money on the table win.”  The Flanders government had tried its best, offering up to €500m to Opel, but the Germans crushed them with a sum nine times bigger.

The Commission made clear last Friday that it intended to study very closely the terms of the Opel sale.  According to Der Spiegel, the German news magazine, some Commission experts think the Antwerp plant may be more efficient than the Opel factory in Bochum, one of four company plants in Germany.  But don’t hold your breath on this one.  In EU institutions as much as in German politics, the power of the German car industry lobby is something to behold.

The truth of the matter is that almost no one in the EU, whether in government or in the car industry, wants to face up to the chronic problem of overcapacity.  Fiat’s Sergio Marchionne is an honourable exception, but he lost out early in the scramble for GM’s European assets.

As surely as night follows day, there will be a loser in all this.  And at the moment, it looks like being the German taxpayer.

When does No mean Yes - or maybe?  I’m not venturing here into the treacherous territory of date rape law, but rather thinking of what politicians say when they’re asked if they want to be the European Union’s first permanent president.

Take Felipe González, Spain’s socialist prime minister from 1982 to 1996.  Rumours have swirled around Brussels for months that González is interested in the job and that President Nicolas Sarkozy of France would be pleased to see him get it.  González’s fellow Spaniard, Javier Solana, who is the EU’s foreign policy high representative, is on record as saying last June that he believes the ex-premier “has the energy and the capacity for the job”.

So I feel it’s my duty to report that John Thornhill, a Financial Times colleague, took González to one side at a conference in Italy last weekend and put the $64,000 question to him.  Here is what the great man replied: “Some people are talking about myself, and I have said that I will not be a candidate.  This means that I have to be extremely careful about talking about other candidates, whether it is to support them or not.  Some people could criticise me for making my views public when I’m not going to be a candidate.”

González’s reply looks superficially like a No.  In fact, to say that you’re not a candidate isn’t the same thing at all as saying that you will never accept the job under any circumstances.

As it happens, I think there is one very good reason why González would be right to think twice before taking on this particular job.  The permanent EU presidency is set to come into operation in January, if Irish voters approve the EU’s Lisbon reform treaty in a referendum next month and if Václav Klaus and Lech Kaczynski, the recalcitrant Czech and Polish presidents, can be persuaded to sign the document.

But the establishment of the permanent presidency will not mean the abolition of the existing EU system, under which every country holds the union’s rotating presidency for six months at a time.  All EU member-states love their six months in the spotlight, and many have no intention of stepping to one side in order to let the EU’s first permanent president grab all the attention.

And guess what?  The country that will hold the rotating presidency from January 1 to June 30, 2010 - just when the permanent presidency is to be launched - is none other than Spain.  The Spanish government has absolutely no intention of meekly vanishing into the shadows to let the EU’s first permanent president steal the show.

Perhaps national pride would induce a more accommodating attitude from Spain, if González were picked for the job.  But I wouldn’t bet on it - and from the sound of things, nor would Felipe.

What’s the connection between martial arts and European financial market regulation?  Answers in Bulgarian, please.  Because the most colourful member of the newly elected European Parliament’s powerful economic and monetary affairs committee is surely Slavi Binev, a Bulgarian MEP. 

Binev is a Taekwondo champion whose parliamentary website describes him, with little exaggeration, as “the most recognisable figure in the history of martial arts in Bulgaria”.  Perhaps I should add that he is also a wealthy man who belongs to Bulgaria’s ultra-nationalist Ataka party and who runs a company specialising in nightclubs, construction and finance.  He knows, shall we say, how to look after himself.

The committee on which Binev sits is extremely important.  Along with national governments and the European Commission, it will shape all the financial services legislation that the European Union intends to adopt in the wake of the global financial crisis.  People in the City of London are nervous that the EU will damage their business by clumsy or aggressive over-regulation.  But the truth is that, if they want to stop that happening, they must roll up their sleeves and get to work with Binev and his fellow committee members (who include Rachida Dati, France’s former justice minister, and Eva Joly, the Norwegian-born French anti-corruption magistrate).

A close look at the committee’s make-up reveals some interesting details.  It has 48 full members and 46 substitute members.  Among the full members, a key role will be played by MEPs from Germany, the UK, France and Spain, who account for exactly half their number (eight Germans, six Brits, six French and four Spaniards).  Sixteen other countries are represented on the committee.

But these days MEPs tend to vote more along party lines than nationality, so it is also useful to note that this committee contains 17 moderate centre-right members, 13 socialists, five centrist liberals and a sprinkling of Greens, far leftists, Eurosceptics and other oddballs - including Binev.  As in previous legislatures, the three mainstream political groups will dominate proceedings.

Crucially, the committee chairmanship will be held by Sharon Bowles, a British liberal.  It is possibly the most important committee post in the entire European Parliament.  With the right input from governments, the Commission and the financial services industry itself, her influence may go a long way to ensuring that the EU does nothing foolish, or too foolish, in the field of financial market regulation.

The EU’s corridors are notably busier today, but it’s a gloomy time for Brussels, says The Economist’s Charlemagne, with concerns over institutional uncertainty, fears of being sidelined in economic policy-making among the reasons for the grim mood.

Today the focus is on the imminent phase-out of the most power-hungry incandescent light-bulbs, which will start disappearing from the shelves tomorrow. For Howard Brandston, a lighting consultant, the decision is wrong-headed. “While energy conservation, a worthy cause, has strong advocacy in public policy, good lighting has very little,” he complains in the Wall Street Journal’s op-ed pages.

Finally, the British rebate is also back in the news. The Sunday Telegraph says the UK will lose out because a full review of EU spending - promised to Tony Blair when he gave up part of the British rebate in 2005 - will in fact not happen.

If it were not funny, it would be tragic.  The UK Conservative party’s decision to quit the European People’s Party (EPP), the main centre-right political group in the European Parliament, is backfiring on the Tories in spectacular fashion.  The decision was always daft - a bit like the right wing of the US Republican Party splitting off and forming a minority group in Congress - but it now looks more short-sighted than ever.

On Tuesday the Tories relinquished the leadership of their new “anti-federalist” faction, the so-called European Conservatives and Reformists (ECR) group, to Michal Tomasz Kaminski, a Polish politician.  They felt obliged to do so after Edward McMillan-Scott, a Tory MEP, refused to respect a deal in which Kaminski had been promised one of the parliament’s prestigious vice-presidency posts.

McMillan-Scott, who instead secured the vice-presidency for himself, has now effectively been kicked out of the ECR, and the Tories are being led by a Pole.  This, to put it mildly, was not in David Cameron’s script when he led his party out of the mainstream EPP group.

There are, in any case, serious doubts over how effective the ECR will be over the legislature’s five-year term.  To meet the requirement that an officially recognised faction should have at least 25 MEPs from seven countries, the ECR has been cobbled together out of 26 Tories, 15 Poles, nine Czechs and a solitary politician each from Belgium, Hungary, Latvia, Lithuania and the Netherlands (a Finn was also supposed to be in, but dropped out a couple of weeks ago).  The Tories are bound to spend half their time nursing the egos of the last five individuals, any two of whom could destroy the group by leaving it.

This, however, is far from the whole story.  Perhaps the most important development this week has been the decision of the EPP, the centre-left and the centrist liberals - the assembly’s three largest groups - to form a broad ”pro-European bloc”.  This will reinforce the marginalisation of the Tories, who will find themselves on the fringes of the legislature in the company of French communists, assorted Greens, anti-Islamic populists and extreme rightists such as the British National Party.

And what have the Tories got in exchange?  Well, Malcolm Harbour, a Tory MEP, will chair the parliament’s internal market committee.  Otherwise, it’s a grand old mess, unworthy of one of the world’s great political parties.