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June 12, 2008

Eurotown tells Mandelson where to stick it

Today’s referendum is for Irish voters and the question is about Europe. But one of the paradoxes of modern Ireland and the confident role it plays in European affairs is that America’s presence is felt - and celebrated - everywhere in the country. Take O’Dea’s Hotel, a family-run establishment is the town of Loughrea, County Galway.

As I walked into the lobby at 8 o’clock this morning , having spent three hours driving west from Dublin and talking to bleary-eyed voters in Loughrea as they emerged from their polling station, whose face should I spot beaming at me from a photo on the reception desk but that of Bill Clinton.

The ex-president was a frequent visitor to Ireland during this eight years in office, as was, according to local accounts - his daughter Chelsea. Both were made exceptionally welcome, as US presidents and their families always have been in Ireland.

But it so happens that some years ago Loughrea was designated Ireland’s “Eurotown”, in a project that saw several dozen local small businesses switch to the euro from the old Irish pound on an accelerated basis. Their experiences were then used to help small businesses elsewhere in Ireland get used to the single European currency.

There’s not a lot in Loughrea these days to remind you that it was once Eurotown. But in the surrounding countryside you see quite a a few No campaign posters, put up by those who want Ireland to reject the European Union’s Lisbon treaty.

Though I have nothing against Peter Mandelson, the EU trade commissioner, one of the most eye-catching No posters is the one that displays a huge pitchfork and the words : “Tell Mandelson where to stick it.”

Be that as it may, the fact is that American culture, American business practices, American investment and American people are a big part of what makes modern Ireland tick and feel proud of itself. The Irish have achieved the clever and admirable feat of making themselves liked in Europe without sacrificing their close connections with the US.

In some countries on the Continent, a European identity is treated as something that almost by definition must be in opposition to America. Not so in Ireland.

There is a lesson there for another island on the north-west coast of Europe, that’s for sure.

June 11, 2008

Yes camp’s bravado versus No camp’s confidence

Perhaps it’s just bravado, or the effects of one extra Guinness for the road, but the Yes camp appears less nervous than you might think. On Tuesday night, only 36 hours before the polls open for Ireland’s referendum on the European Union’s Lisbon treaty, an adviser to an Irish government minister reviewed the state of the world from his seat in a Dublin bar and confided that he expected a 52 to 48 per cent victory for the pro-Lisbon forces.

This morning, I put his forecast to a prominent businessman in the Irish capital. “Oh really? I’d heard 53 to 47,” he replied.

Whether either of these predictions owes anything to the private polling that is being conducted around the Emerald Isle is not entirely clear. The No camp, for its part, has a point when it says the most recent published polls show the anti-Lisbon vote steadily going up. “We’re not taking a single vote for granted,” says Declan Ganley, the leader of the anti-Lisbon Libertas movement.

 By common consent, a great deal depends on the turn-out. It was the low turn-out of about 35 per cent that caused the upset No vote in Ireland’s referendum on the EU’s Nice treaty in June 2001. When the Irish voted again on the treaty in October 2002, the turn-out was 49 per cent and the result was a convincing Yes victory.

On Thursday, experts say that a turn-out of 45 per cent or more of Ireland’s 3.05m voters should be sufficient for the Lisbon treaty to squeeze through.

 But it may not be quite so simple. According to an Irish Times poll published on June 6, 70 per cent of respondents said they were very likely to vote in the referendum. Even if such a high turn-out is improbable, some analysts say that much  “soft opinion” - people who are not especially pro -or anti-European and who may not even have decided whether to bother to vote on Thursday - is trending in a No direction.

If this is so, a high turn-out - say, between 60 and 70 per cent - may not work to the advantage of the Yes forces. “As things stand, we may very well see a situation where a very low turn-out favours the No side,  a medium turn-out favours the Yes side, and a very large turn-out might just favour the No side,” writes Harry McGee of the Irish Times political staff.

June 10, 2008

‘Good for him, bad for us’: Ganley’s ‘No’ campaign focuses on France

A dozen campaign volunteers standing around a large white truck, a dozen reporters with microphones and notebooks, and a handful of pedestrians trying to squeeze past on the pavement: this wasn’t exactly the largest crowd at a political event in Dublin’s history.

But if Declan Ganley, the self-made businessman who is one of the loudest voices calling on Irish voters to reject the European Union’s Lisbon treaty in Thursday’s referendum, was disappointed by the low turn-out, he was giving nothing away. 

It was a beautiful sunny afternoon in the Irish capital, and Ganley had summoned the media to admire his final campaign poster, about to be plastered in various public places around the city. Next to a picture of French President Nicolas Sarkozy, the poster proclaims: “Good for him, bad for us. Vote No to Lisbon.”

France seems to be playing an unusually large role in Ireland’s referendum. It was only on Monday that French foreign minister Bernard Kouchner suggested that the rest of Europe would view the Irish as selfish ingrates if they voted No in spite of having received billions of euros in EU funds over the last 35 years.

For some of the Irish reporters milling near Ganley’s truck, however, the focus of interest wasn’t France or the new poster but how Ganley has been financing his campaign. The questioning was pretty aggressive, but it looked to me as if Ganley held his nerve.

On the other hand, a stunt he tried to pull off on Monday didn’t go quite according to plan. Having said the leaders of Ireland’s three main political parties should all go to Brussels on Friday to renegotiate the EU treaty if it is defeated the day before, Ganley announced he had bought Aer Lingus plane tickets in advance for each of them.

Unfortunately, the ticket purchased for Irish premier Brian Cowen spelled the passenger’s name “Brian Cowan”.

June 9, 2008

China’s love of museums

China’s hunger for African raw materials is well-known. Less well-known, but utterly fascinating, are the stratagems which China uses to satisfy its hunger.

A few months ago, some officials from Beijing were being shown around Belgium’s Royal Museum for Central Africa, which is located in Tervuren on the outskirts of Brussels. Known for short as the Africa Museum, this is one of the world’s great anthropological, zoological and geological institutes, with wonderful collections of ethnographic objects, insects and tropical wood as well as an active scientific research centre.

The Africa Museum houses the archives of Sir Henry Morton Stanley, the Victorian explorer who played a part in the annexation of what is now the Democratic Republic of Congo (DRC) by King Leopold II of Belgium. In addition, the museum has all sorts of detailed maps and geological data about central Africa in its possession.

Given the DRC’s large reserves of diamonds, gold, copper, cobalt, coltan (used in mobile phones and laptop computers), zinc and manganese, this makes the museum a place of more than passing interest to mining executives, financial investors - and guests from booming economies in Asia.  

So after a routine tour of the stuffed animals, the Chinese visitors suggested to the museum staff that it would be a honour, a privilege, an unforgettable gesture of friendship, if they could be allowed to take a quick look at the maps and other specialised documentation not generally on public view. Of course, of course, came the reply. Why ever not?

So in they trooped into the vaults. Then the Chinese put in another request. Sorry to be a nuisance and all that, but would it be possible to take some copies of these materials?

What happened next is difficult to pin down. According to one version of events, the offer of a €20 banknote was enough for the Chinese to get their way. If so, it was - from a Chinese point of view - a brilliant and almost unbelievably, ridiculously cheap coup.

No need to send out geologists and surveyors to central Africa - it’s all been done for you a century ago! And no need to dip too deeply into China’s $1,682bn foreign exchange reserves! Inflation may be preying on everyone’s minds these days but, hey, €20 can get you a long way.

June 5, 2008

Honouring the Czechs

With apologies to France, whose eagerly awaited European Union presidency has not yet even started, it is tempting to cast one’s eyes forward and wonder what will happen when the Czech Republic begins its six-month spell in the driving seat next January.

The question is preoccupying more people in Brussels than you might think - starting with José Manuel Barroso. The European Commission president went to Prague last month and gave a rather curious speech in which he urged the Czechs to use their presidency “as an opportunity to engage with Europe”. You can’t imagine him needing to say something like that in Dublin, Rome or Ljubljana, the capital of Slovenia, which holds the EU presidency at the moment.

The problem is that the Czechs earned a reputation, soon after they and seven other countries joined the EU in 2004, as one of the most awkward and Eurosceptical of the new member-states.

Personally, I think it’s unfair. Charles Grant of the Centre for European Reform think-tank makes the excellent point that Poland under the Kaczynski twins, and the Greek Cypriots under ex-president Tassos Papadopoulos, were much more prickly. I would add that the Czechs’ experiences as a small nation first in the Habsburg Empire, then at the hands of the Nazis after the British and French betrayal at Munich, and finally under Soviet domination, go a long way to explaining the Czech outlook on the world.

Still, there’s no doubt the Czechs have sometimes rubbed up their EU partners the wrong way. They have persistently brought up human rights violations in Cuba in a way that has exasperated those in Spain who feel Madrid knows best how to handle its former colony.

In President Vaclav Klaus, who openly opposed the EU’s constitutional treaty and who warns of the threats to national sovereignty posed by EU integration, the Czechs have a head of state who is as canny as the Good Soldier Svejk and as politically incorrect as a Brit.

So the worry in Brussels has been that, come next January, the Czechs’ alleged Euroscepticism would find expression in their leadership of the EU. They would, in short, spoil the party for everyone else.

Some of this concern is still around. The Czechs will be the first to hold the EU presidency in the new era launched by the Lisbon treaty, assuming it’s fully ratified by the end of December. They will therefore run the first “diminished presidency”, because from January the EU will have a semi-permanent president to chair summits and represent the EU abroad - you know, the job Tony Blair won’t get.

How to satisfy countries that will hold the rotating EU presidency, but won’t bask in the usual spotlight for six months, is extremely sensitive. It is bothering Sweden, which will assume the EU presidency in July 2009, as much as the Czechs.

But the good news is that the Czech government is already giving serious attention to its presidency. The bureaucratic machinery is in place and the policymakers are developing some interesting ideas. For example, the Czechs have suggested holding a summit of European energy consumers and suppliers to discuss energy security.

More broadly, the Czechs say the three core issues of their presidency will be “Competitiveness, the Four Freedoms [freedom of movement of people, goods, services and capital] and a Liberal Trade Policy”.

Not bad for a bunch of Eurosceptics, eh?

May 28, 2008

National pride at stake in Brussels

A big and rather heavy parcel arrived in the Brussels office last week.

It contained three weighty tomes - including Norman Davies’ 1,365 page work ”Europe a History.” Also in the box were three discs, two large, glossy picture books and two brochures - all linked to the western Polish city of Wroclaw.

The package came from Poland and promotes the city, which is vying to host a new EU agency - the European Institute of Technology.

Evidently, national pride and political prestige is at stake when choosing the location of new EU bodies (countries are due to decide on the EIT this week).

If a country secures an EU agency, politicians can tell voters that they won something for them in Brussels. This is even though the EIT concept has been much watered down, under pressure from big, rich member states such as the UK, and the headquarters will employ just 60 people. 

Brussels hopes that the institute will turn more high-tech discoveries into money-spinning products and help Europe close the innovation gap with rivals such as the US and Japan.

Poland is competing with Spain, Hungary and an Austrian-Slovak alliance to house the EIT. The chosen area will hope to gain fresh investment, as well as boost its high-tech industry credentials.

All the candidates have lobbied in Brussels ( you wonder how many of these Polish packages have been sent).  Barcelona’s bid gave ministers and diplomats an iPod with videos of its site. 

The campaigning reminds me of a Finnish-Italian spat in late 2003 over the location of a new EU food safety agency. Here’s a teaser from the story that my colleagues wrote at the time…

Plans for the location of a dozen new European agencies have stalled, thanks to an epic tussle involving the merits of Parma ham.

Matti Vanhanen, Finnish prime minister, vowed this week to block a deal on the siting of the European Union bodies covering areas from satellites to police training - until he resolves a battle with Italy over a new food safety agency.

The dispute has become a question of national pride, with Mr Vanhanen insisting his country has the perfect facilities for the food agency.

But Silvio Berlusconi, Italian prime minister, has blocked the transfer of EU staff to Helsinki for almsot two years,  claiming the agency should be based in Parma.

“The Finns don’t even know what prosciutto is, “Mr Berlusconi famously stormed at a summit in 2001.

Read more here. 

Italy won the agency, by the way…

  

May 21, 2008

An unsustainable biofuels policy

Read a European Commission document closely enough, and there’s usually a nugget in it somewhere. In the case of Tuesday’s communication on rising global food prices, it was to be found in the final paragraph, which asked the question: Should the EU drop its biofuels target due to rising food prices?

European Union leaders committed themselves last year to producing 10 per cent of their road transport fuel by 2020 from biofuels. Among scientists, car manufacturers and green campaigners, not to mention several EU governments, it was always a contentious target. But the Commission reaffirmed the goal in January, describing biofuels as one of the few measures “realistically capable of making a significant impact on greenhouse gas emissions from transport”.

The tone of Tuesday’s message from the Commission was subtly different. It stated: “The target has never been to reach 10 per cent biofuels at any price. It is 10 per cent biofuels under strict conditions. Those conditions include a workable and robust sustainability scheme, and commercial viability for second generation biofuels…”

In a word, the Commission is putting more emphasis now on the question of “sustainability” - that is, whether biofuels can be produced in a way that does not degrade the environment - and less on the 10 per cent target itself.

To some extent, the switch of emphasis reflects the pressure that the EU feels under from those who argue volubly that biofuels production is driving up world food prices and damaging the environment at the same time. But some EU governments would no doubt heave a private sigh of relief if the 10 per cent biofuels target were to be put to one side. 

Significantly, the target is also coming under criticism from influential political circles in the European Parliament, which would have to approve the 10 per cent goal for it to become law.

All of which raises the question of whether the first big hole is being blown in the EU’s campaign against climate change. Adjusting the biofuels target should, of course, be a matter of simple common sense. It ought not to involve a massive loss of face.

But climate change is a war in which the EU likes to lead the world from the front - partly because it is neither willing nor able to handle real wars. Any climbdown from the biofuels target is bound to be seen as an embarrassment for the EU. That’s a pity, but if truth be told the risk of red faces has been growing for more than a year.

May 19, 2008

Another fine mess in Kosovo

For weeks it has been an uncomfortable secret in Brussels that the European Union’s law and order mission in Kosovo is stuck in a political, diplomatic and legal morass. This initiative, announced with great fanfare last December, was supposed to show the EU at its best, shouldering responsibilities in a conflict-torn part of Europe where it did not exactly cover itself with glory in the 1990s.

Instead, officials now acknowledge that there is absolutely no chance that the EU will deploy its full complement of 1,900 policemen, judges, prosecutors and other administrators by mid-June, as originally planned. Why not? Because the authority to transfer police powers from the United Nations operation that is already in place in Kosovo to the new EU mission rests with the UN Security Council, where Russia has a veto.

Russia is no mood to help out the EU because it fundamentally disagrees with the decision of a majority of the EU’s 27 states to recognise Kosovo’s secession from Serbia in February. And the Kremlin has made it very plain to UN Secretary-General Ban Ki-moon that it expects him not to do the EU any favours on this score.

It looks highly unlikely there will be a quick solution to this problem. As a result, a de facto partition is taking hold between ethnic Serb-dominated northern Kosovo and the rest of the province, where ethnic Albanians are in an overwhelming majority. The EU’s nascent law and order mission has practically no influence over northern Kosovo, and there is little reason to think Serbia or Russia will let it develop any.

Perhaps the only glimmer of hope in all this was the May 11 Serbian election victory of the pro-EU political forces associated with President Boris Tadic. At present, however, it is unclear if Serbia’s next government will be formed by these forces or by a militant nationalist-socialist coalition. In any case, even Serbia’s pro-EU forces refuse to accept Kosovo’s secession. You can safely add Kosovo to your list of long-term troublespots on the EU’s periphery. 

May 14, 2008

Stalinism, Siberia and the EU

The European Union’s leaders travel next month to Khanty-Mansiysk for a summit with Dmitry Medvedev, the new Russian president. Will they find time, I wonder, in this booming western Siberian oil town to stop off at the crossroads of Sverdlova and Pionerskaya streets? They should do. There, in front of School No. 5, they will find a recently erected memorial to the victims of Stalin’s repressions - at least, so the town’s government website says.

The existence of this memorial reminds us to think twice before rushing to judge today’s Russia. The country clearly moved to a more authoritarian, centralised form of rule under Vladimir Putin, and civil liberties were curtailed. But many Russians remain as determined as ever to expose the truth about their country’s bloodstained communist past. These days, Stalin cannot be airbrushed from Russia’s history as easily as he used to airbrush his opponents.

Putin’s reordering of Russia and his revival of its great power foreign policy ambitions contributed to a downturn in EU-Russian relations, but none of that makes Russia a monotonal society. As EU enlargement commissioner Olli Rehn said in a thoughtful speech last week: “The rise of the middle class and entrepreneurs in Russia should eventually mean growing demands for property rights and, by extension, legal certainty. This internal dynamic may lead Russia to reform its legal system and make its political system more accountable - but this is certainly not an automatic process by any means.”

Russia’s leaders at present can hardly be said to share the EU’s core values of freedom, democracy and the rule of law. But neither do other countries important to Europe, including, for example, most of its neighbours on the southern shores of the Mediterranean. As with these neighbours, so with Russia - there’s little choice but to try to improve relations. 

It would be wrong to kick Russia out of the G8, as John McCain suggested in March - even if that were possible. Rather, the EU and the US should be hard-headed but practical in its dealings with Russia and, above all, recognise that relations with Moscow tend to be at their most difficult when western countries themselves are disunited.

“Experience shows that Russia respects the EU when we are able to adopt united positions, and act accordingly. Conversely, Russia is adept at exploiting disunity among member-states,” David Milliband and Bernard Kouchner, the UK foreign secretary and French foreign minister, wrote in a joint letter in March to the EU’s Slovenian presidency.

All too true. But the Khanty-Mansiysk summit will show whether these wise words were just that - words.

May 8, 2008

Pussycats and wolves in the eurozone

The European Commission takes a lot of flak for being full of highly paid, unaccountable elitists brimming with a Euro-zeal that finds no match in the European population at large. So it is a pleasure to say that the Commission’s report on 10 years of European monetary union is a model of incisive analysis and sensible recommendations.

For sure, as Jean Pisani-Ferry and André Sapir wrote in the FT, the report has its fair share of “hype”, trumpeting the euro as a “resounding success”, etc, etc. But why not? Part of the Commission’s role is to be a cheerleader.

Sometimes this relentlessly upbeat tone leads to unfortunate results. The Commission’s regular economic forecasts, for example, are invariably too optimistic and produced a bit later than those of other reputable forecasters. In 10 years of following the eurozone economy, I have yet to meet one private sector economist who awaits the Commission’s predictions with bated breath.

But the report on monetary union is a different matter. It is pretty blunt about the problem of divergence - in terms of productivity and competitiveness - between the best-performing and worst-performing eurozone economies. It recognises that some countries have had a free ride inside the eurozone, avoiding painful reforms because they have the shelter of a fixed exchange rate and common monetary policy.

It doesn’t name these countries, of course - the Commission is too polite for that. But we all know who they’re talking about - Greece and Italy, principally, with a dash of Portugal, Slovenia and Spain thrown in.

It is not the Commission’s role to speculate in public about whether the reluctance of the eurozone’s laggards to reform themselves will one day lead to the disintegration of the euro area as we know it. But one friend of mine at the Commission told me the other day that the laggards “have about 10 to 15 years” before the price for their lack of reforms becomes too expensive to pay.

In other words, one or two countries might just drop out of the eurozone.

I’m not so sure about that. It strikes me that the political commitment of the eurozone countries to stick together is extremely strong. Would Germany and the Netherlands really throw Italy and Greece to the wolves (the cost of abandoning the eurozone would be astronomically high)?

Yes, you do hear a few Germans and Dutch fume privately about Mediterranean economic incompetence, recklessness and corruption. But in the end the northerners are pussycats.

More likely, a deal will be struck under which the strong and less strong find some middle position that will keep the eurozone intact but make it less internationally competitive. That should please the rest of the world, if no one else.


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