Malmstrom makes a point during her unexpectedly contentious hearing on Monday
It is rare that an obscure bit of international trade arcana turns into a major political kafuffle, but that’s just what appears to have happened on Monday over a relatively obscure arbitration system proposed for a new EU-US trade pact.
Although there is much substance behind the dispute, what really has Brussels insiders buzzing is the role played by Martin Selmayr, the increasingly powerful head of Jean-Claude Juncker’s transition team.
According to several EU officials, Selmayr – a workaholic German lawyer who is expected to become Juncker’s chief of staff when the Luxembourger assumes the European Commission presidency – changed the written testimony of Cecilia Malmström, the incoming trade commissioner, before it was submitted to the European parliament without her knowledge.
Dutch Liberal Marietje Schaake, a rising star within the European parliament, first made the accusation publicly during Malmström’s confirmation hearing on Monday afternoon (a video of her revelation can be seen here).
Schaake’s allegation is supported by a copy of the commissioner’s final testimony obtained by Brussels Blog and posted here. The document shows dozens of edits made by Selmayr that were recorded by the word processing programme’s track changes at 8:38am on Sunday. MEPs say the testimony landed in their in-box less than 20 minutes later. Read more
Lord Hill says that there will be no exceptions for member states who fail to jump into line on banker bonuses. Read more
Beppe Grillo arrives at a polling station near Genoa during last week's election
The only more interesting political spectator sport in Brussels these days other than the fight over the next European Commission president is the battle between the three euroceptic political groups in the European Parliament to secure allies from the sudden surge of anti-EU and anti-establishment parties that are coming to town.
On Tuesday, two of the most prominent potential kingmakers arrived in Brussels on the same plane: Beppe Grillo, the Italian comedian turned political insurgent who heads the Five Star Movement and its 17 newly-minted MEPs, and Matteo Salvini, leader of the Italian separatist Northern League, who arrived with 5 seats.
Both were being courted by the two new big eurosceptics on the block: Nigel Farage, the bombastic head of the UK Independence party, and Marine Le Pen, his counterpart for France’s Front National, who both are trying to form their own seven-country party groupings going into the new session. Read more
David Cameron and his wife Samantha after voting in last week's EU parliament elections
David Cameron’s anti-federalist group in the European parliament entered these elections looking a bit shaky. While anti-establishment parties were faring well, the polls for the ECR group were worrying. Cameron took a huge gamble when leaving the centre-right European People’s Party to form a eurosceptic bloc. Some ECR folk feared the group could unravel in the wake of the election.
Daniel Hannan, one of the ECR’s best known MEPs, dismissed the doom laden predictions from “half-clever commentators” (this correspondent included). He was correct; the speculation proved only half-right. The ECR have emerged in a solid position from the vote. It survived and its feathers are well preened for a beauty contest for the leadership of Europe’s eurosceptics. But the dynamics of the group are changing — and it poses some serious political dilemmas for Cameron.
1) The ECR is here to stay….
If it makes no new allies and loses no group members, the ECR will live on. The election results show it has cleared the rather arbitrary seven country official threshold to form a group (there are MEPs from at least 8 member states). At present though, their numbers are down. The ECR is projected to reach 45, a loss of 11 seats. The Tories and the Czech members both suffered at the hands of the electorate.
2) ….with reduced Tory influence
Perhaps as significant is the changing balance of power within the party. Read more
Juncker, left, with Schulz ahead of a debate in Hamburg, Germany earlier this week
With voting now underway in Britain and the Netherlands, the first two EU members to go to the polls in the three-day continent-wide election to pick the new European Parliament, Brussels’ favourite parlour game – guessing who will emerge as the next president of the European Commission – has shifted into high gear.
As with almost everything in the EU, from the eurozone crisis to Russian sanctions, all eyes are on Angela Merkel, the German chancellor, and whether she will throw her backing to one of the two “spitzenkandidaten” – the lead candidates for the largest political groupings – or decide to back someone else for the job.
“Nobody knows,” says a top political operative from a German-allied country. “Everybody has their opinions and views, but nobody really knows.”
To play our part in the echo chamber, Brussels Blog has compiled its own completely unscientific odds on where the main candidates stand. And as they say in US sports betting, these odds are for entertainment purposes only. The Brussels Blog does not advocate gambling (though you can do so at the UK’s gaming company Ladbrokes).
Juncker delivers his acceptance speech Friday at the EPP's party congress in Dublin
By Vincent Boland in Dublin
It is one of the biggest events in the European political calendar. The pre-European parliament election congress of the centre-right European People’s party, which concluded Friday in Dublin, was notable for several things. But three in particular stand out.
The first is that the congress – well organised, held at the new(ish) Dublin Convention Centre, and hosted by Fine Gael, the leading party in Ireland’s coalition government – was a triumph for Enda Kenny, the Irish Taoiseach (prime minister). He managed to both look and sound statesmanlike.
Moreover, Kenny’s rebuttal of José Manuel Barroso, the European Commission president, will have done his domestic poll ratings no harm at all. Barroso, an EPP member who attended the congress, lashed out at critics of his handling of the eurozone crisis, blaming “panic in the financial markets” and too much self-imposed austerity for the pain being felt across the eurozone economy. Read more
Jean-Claude Trichet, right, with the parliament's economic committee chair, Sharon Bowles
The troika of bailout lenders has not been getting much love at the European Parliament’s ongoing inquiry into its activities in recent weeks. But the criticism is not just coming from MEPs in the throes of election fever. Predictions of the troika’s demise have come from some unexpected quarters, including current and former members of the European Central Bank executive board.
During the hearings, MEPs have particularly criticised the troika — made up of the International Monetary Fund, European Commission and the ECB — for its overly optimistic growth forecasts for bailout countries, which have been repeatedly revised downwards. Perhaps unsurprisingly, they have also suggested that the troika be subject to greater parliamentary oversight.
Hannes Swoboda, the Austrian social democrat who heads the centre-left caucus in the parliament, went further, saying the body is undemocratic, hostile to social rights and that the EU would be better off without it. Read more
Viviane Reding, the EU’s justice commissioner, triumphantly claimed that “data protection is made in Europe” after a committee of European lawmakers reached a compromise agreement yesterday to overhaul the bloc’s pre-internet privacy rules.
But for those who have not been following the EU’s data protection process closely, particularly in the wake of the ongoing NSA spying scandal, Ms Reding’s declaration of victory may have seemed a little premature. Read more
Günther Oettinger, EU energy commissioner, proposed tweaking the biofuels policy last year
Among the EU’s less successful policies, the one governing biofuels looms as a particular case study in unintended consequences.
Five years ago, member states agreed to binding targets requiring each country to derive 10 per cent of all transport fuel from renewables by 2020. Those targets were meant to speed the adoption of environmentally-friendly biofuels and were part of a broader campaign by Brusselsto claim the lead in the fight against global warming.
These days, that policy is a mess. The increased demand for crop-based biofuels – made from corn, rape and soya, for example – has been blamed for a surge in world food prices. It also appears to contribute to deforestation as farmers in far corners of the world chop down rainforests to plant biofuel crops.
The EU is now seeking to correct that. The European Commission, the EU’s executive arm, made a new proposal last year that aims to phase out crop-based biofuels in favour of cleaner ones derived from waste products and algae, among other substances. The European parliament’s environment committee last week voted through its own version of the draft legislation.
But it seems even the revised biofuels policy may have its own unintended consequences, including a brewing fight between Europe’s oleochemicals industry – the folks who use processed animal fats to produce everything from lubricants to lipstick – and their suppliers. Read more
Politics in Brussels can verge on the absurd. As a case in point, we bring you the bizarre tale of how Greek Stalinists seemingly helped rescue European fund managers from a bonus cap, then deployed a form of Brussels magic that lets you vote against something, then for it.
Before we start, it is worth mentioning that this blog is partly intended as a way to fully lay out the evidence and address accusations that the FT launched a “sycophantic attack” on the Greek Communist party. Read more
Pity the Lithuanians. When assuming the EU rotating presidency next month they will inherit the mother of all regulatory backlogs, especially when it comes to the financial sector. It is an impossible and thankless task, a numbingly complex pile of half-negotiated, often paralysed and always contentious directives and regulations, which the European Commission is still adding to with some gusto.
There are going to be around 25 financial services files for the Lithuanians to shepherd through, either in negotiations between member states, or directly with the European parliament. The poor Lithuanian officials strong-armed to work the files will have to become instant experts. Most of the proposals will require countless long meetings with member state or parliamentary negotiators; some will need ministerial input and some sacrificial political blood.
The demands could dwarf the resources and time available. After March 2014, the parliament essentially shuts shop for European-wide elections, so the Lithuanian presidency, which runs through the end of this year, is pivotal. Some countries only have one or two financial services attachés covering the bulk of files. Getting MEPs together for talks is like herding cats. Getting them to agree is even harder, especially in this pre-election environment. A lot of the initiatives will not make it through; their fate is then in the hands of the next leaders of the EU’s parliament, commission and council. Read more
Rehn: critics of Cyprus bailout are "comparing apples with pears and coming up with oranges."
During a debate in the European Parliament this morning, Olli Rehn, the European Commission’s economic chief, got roughed up by MEPs lambasting the handling of the €10bn Cypriot bailout by the so-called “troika” of international lenders, of which the Commission is a member.
Jean-Paul Gauzés, the French conservative who led the debate for centre-right parties, called it “disastrous”; his centre-left counterpart, Austrian Hannes Swoboda, dubbed it “neo-colonial” and called on Rehn to disband the troika altogether.
In his response, Rehn chose instead to focus on remarks by Philippe Lamberts, a Belgian Green, who questioned why the size of Cyprus’ funding needs had risen by €6bn over the nine days between the first botched bailout agreement and the second, final deal struck the following weekend:
A month before this famous weekend, €17bn was necessary in order to render Cypriot debt sustainable. Now we found at last week it’s €23bn. Just a slight mistake, a comma here or there. Those who carry out the forecasts and estimates for you, are they incompetent…or was it: well, we’ll play around with the figures to make sure reality looks better than it really is?
Someone may well have been drinking absinthe when they decided it would be a good idea to pack up an entire parliament once a month and shuttle its members and their assorted aides and documents to a second home 400 kilometers away.
On Wednesday, members of the European parliament, meeting in their Strasbourg quarters, will have the opportunity to acquaint themselves with absinthe, the spirit renowned for its green tint and supposedly psychedelic properties. Specifically, they will be voting to determine just what absinthe is.
Their decision could escalate a brewing fight between northern and southern European makers of the spirit, which gained fame in the late 19th and early 20th centuries as a favoured drink for bohemians and artists including Rimbaud, Degas, Hemingway and Toulouse-Lautrec. Read more
Politicians the world over have huffed and puffed about excessive pay at banks since 2008. While remuneration curbs were put in place, nothing fundamentally challenged bank operations, or their ultimate flexibility to reward staff. The European Parliament has bucked that trend with the mother of all bonus clampdowns. Here are five key questions on the cap: how it works, how you can avoid it, whether it will really pass and what it means for Britain and the City.
1. How is the cap calculated and applied? Read more
The EU clampdown on bankers’ bonuses is nigh. The final talks (or so diplomats hope) have begun and the room is booked until midnight. The frantic politicking earlier today certainly indicates the deal is close. This blog includes some of the latest political intelligence and a few tentative predictions. But be warned: the Brussels blog would not wager its bonus on the outcome.
1) Britain is looking isolated. It is a complex picture, but the UK is running short of allies, especially on the terms of the cap on variable-fixed pay. Most member states are happy to compromise with the European parliament, which is leading the bonus charge. Berlin is showing no appetite for running to London’s rescue. Even Sweden, the UK’s main friend on financial issues, was relatively silent at a meeting yesterday. The Netherlands said it could even accept a tougher crackdown. Ireland want a deal this evening. Read more
Should bankers breathe a sigh of relief over the deadlock in EU talks last night on introducing a bonus cap?
The British are certainly happy to have a bit more time to achieve the improbable and turn opinion in Brussels against strict limits on bonuses that are double or triple fixed pay.
At the same time, the omens from parliament are looking no better for the City’s finest. Just look at the tone of this statement the MEPs spearheading the talks put out today:
We are ready to give the Council one more week for internal discussions. If – after ten months of negotiations – a viable compromise cannot be found on 27 February, we do not see any other possibility than to ask the plenary of the European Parliament to vote on its position.
The threat of a vote is mainly symbolic. But there is no sign of backing down. Indeed parliament is upping the ante. They are pressuring the EU member states — who are represented by the Irish presidency — to override the hold-outs to a deal. It is, in other words, a challenge to force the Brits into line or outvote them within the week. High stakes. Read more
It’s hard enough to get 27 member states to agree unanimously on a seven-year, €1,000bn budget – as anyone following the latest EU summit wrestling match can attest. But completing an EU budget deal requires one more thing: the consent of the European parliament.
Martin Schulz, the German social democrat and parliament president, reminded EU leaders and the Brussels press pack of this fact on Thursday evening. In a mildly foreboding press conference, Schulz re-stated his threat that leaders should be prepared for MEPs to block any budget proposal that strays too far from the €1,033bn proposal submitted more than a year ago by the European commission, the EU’s executive arm.
“Yes, we are prepared to make savings, but we are not prepared to have the European Union budget simply amputated,” he said.
Schulz declined to say whether the latest €960bn proposal being considered by Herman Van Rompuy, the European council president, crossed the line from extreme weight loss to amputation. But he was clearly displeased. Read more
The big question entering Thursday’s summit is whether Herman Van Rompuy, the European council president, can find the right balance between the UK’s demands for an austere long-term budget and France and Italy’s calls for a more robust one. The more Van Rompuy stretches toward the Brits and fellow budget hawks by reducing his proposal, the more those on the other side of the debate pull back. Eventually, the whole thing could snap.
But on the eve of the big meeting, Van Rompuy may have found a clever way to give his budget more elasticity: By increasing the gap between budget commitments and payments. Read more
Ukip leader Nigel Farage at a European Parliament session in Strasbourg last year
Following prime minister David Cameron’s address on Britain’s EU future, there may not be two politicians in Europe spoiling for a fight more than the two men who are arguably the most high-profile members of the European Parliament: Nigel Farage and Guy Verhofstadt.
There’s one thing Britain’s foremost eurosceptic and Belgium’s most prominent European federalist agreed on: Within minutes of Cameron finishing his speech in London, both had blasted out e-mail responses lambasting it.
Farage, however, prefaced his criticism by saying he viewed it as the “greatest achievement to date” of his political group, the UK Independence Party, since it put Britain’s EU exit firmly on the agenda. Read more
Martin Schulz, far right, with his fellow EU presidents ahead of budget talks on Monday.
Just how bleak do things look for next week’s summit intended to reach a deal on the EU’s next €1tn seven-year budget?
Only hours after French prime minister Jean-Marc Ayrault threw cold water on the latest compromise effort, another major player in the game – Martin Schulz, the European parliament president – said he now expected the high-stakes summit to come up empty.
“I’m very sceptical about an agreement next week,” Schulz told a small group of Brussels-based reporters, arguing that the compromise put out yesterday by Herman Van Rompuy, European Council president, was significantly different from that offered by the Cypriot presidency just two weeks ago – a sign of “how deep the division is within the Council.”
Van Rompuy’s proposal (a leaked copy of which we’ve posted here) has set off another round of recriminations, helping turn a meeting this morning of EU ambassadors into a complaint-fest, diplomats said. But Schulz said he believed the biggest stumbling block remained Britain, which is the only country calling for a complete EU budget freeze. Read more