Category Archives: EU Politics

Crimea and Kosovo, one stands where one sits

22 Saturday Mar 2014

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Vladimir Putin stated on Tuesday that Crimea and Kosovo are both break-away regions where an ethnic minority used its unilateral right to secede from their state. He accused the US of applying double standards in international law in order to fit American interests. But Kosovo cannot be compared to Crimea. For starters, Russia opposed Kosovo leaving Serbia, while it supported Crimea leaving Ukraine.

Look at the Tatars come and go in Crimea - Copyright Reuters

Look at the Tatars come and go in Crimea – Copyright Reuters

I am not a foreign policy expert, but teaching regional autonomy at university makes one appreciate the crucial importance of both process and motives when the territorial integrity of a country breaks down. The military intervention against Milosevic’s troops in Kosovo came after China and Russia vetoed such a move in the UN Security Council. In the absence of a UN mandate, NATO justified dropping its bombs on Serbia because of massive human rights violations against Kosovars, and because of the risk that the conflict would reignite regional instability in the Balkans. Kosovo was seen as a test for the international community’s “Responsibility to Protect” civilians against their own sovereigns after the experiences of Rwanda and Srebrenica.

Here is another important difference. While Russia acts alone in Crimea, Western countries acted multilaterally in Kosovo. And NATO acted only after months of diplomacy and attempts at ceasefires, with China and Russia supporting UN resolutions that condemned the excessive force used by Milosevic. A parallel process with Ukraine Continue reading →

What kind of EU democracy is emerging?

10 Monday Mar 2014

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All political party candidates for the European Commission Presidency are known since last Friday when the majority of European People’s Party delegates in Dublin designated Jean-Claude Juncker from Luxembourg as their top man. The social-democrats put forward the German Martin Schulz, who made his political career in the European Parliament. Former Belgian Prime Minister Guy Verhofstadt will defend the blue liberal colours, while the Greens opted for a Franco-German duo, with José Bové, the alter-globalizer farmer from France, and Ska Heller, a multi-lingual German MEP in her early thirties and one of the surprises coming out of these primaries, together with the far left Alex Tsipras who is a member of the Greek Parliament.

EU election result since 1979 - From far left to far right - Note: orange is eurosceptics; grey is non-affiliated, and dark blue is conservatives

EU election result since 1979 – From far left to far right – Note: orange/black is eurosceptics; grey is non-affiliated, and purple is conservatives

Discussions on the EU’s democratic deficit tend to be waged in terms of the presence (or not) of democracy in Brussels decision-making. But various types of democracy exist, and democracy itself is a relative category. On a side-note related to this, the Economist’s democracy index includes 13 of the 28 EU countries in the category “full democracies”, with 15 others such as Italy, Hungary and Romania are in the second-best “flawed democracy” group.

What does the process of appointing the candidates for Commission President and their profile tell us about the type of democracy that is emerging in the EU? Continue reading →

The German Judge and the Italian Banker

13 Thursday Feb 2014

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Wednesday, on a flight from Brussels to Boston, the NSA agent sitting next to me had a transcript from a telephone conversation between Herbert Landau, who is a judge on Germany’s Federal Constitutional Court, and Mario Draghi, President of the European Central Bank.

For non-Euro buffs, the German Court said last week that Draghi’s offer in 2012 to buy as much government bonds on the financial markets as he saw fit, which is widely claimed to have brought down the Euro crisis from scary heights, was most likely illegal under European Union law. But the final ruling will only come after the European Union court had its say.

Angela Merkel: "I usually do whatever it takes to avoid Karlsruhe rulings."

Angela Merkel: “I usually do whatever it takes to avoid Karlsruhe rulings.”

Herbert Landau in Karlsruhe calls Frankfurt …

Herbert: “Can I speak to Mario Draghi?”
Mario: “Speaking.”
Herbert: “What did you mean when you said you would do whatever it takes to preserve the Euro?”
Mario: “That I was ready to defend the Euro, no matter what.”
Herbert: “Is it really your job to defend the Euro?”
Mario: “Excuse me?”
Herbert: “Is that within your mandate, defending the Euro?”
Mario: “I would think so, I am the Central Banker.”
Herbert: “I see. I am the Constitutional judge of your largest shareholder.”
Mario: “I am the lender of last resort. It must be within my mandate to put up the last defence when markets attack. Markets are driven by animal spirits. I need to tame them.”
Herbert: “I am a constitutional judge; my job is to tame you. Did you act within the limits of your mandate? Did you consider more limited approaches to taming those markets?”
Mario: “Either the lion eats me, or I eat the lion. And to kill a lion I prefer a bazooka.”
Herbert: “You could use a handgun for that, no?” Continue reading →

Crisis, deficits and democracy

10 Monday Feb 2014

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As the May European elections are approaching for the 28 member countries, it is time to revisit the famous or rather infamous “democratic deficit” in European Union decision-making.

Singing Power to the People in Ancient Greece

Singing Power to the People in Ancient Greece

How democracy works in the European Union has shifted considerably over the last four years, when the Greek crisis erupted at the same as the new Lisbon Treaty entered into force. The Treaty changed the governance of the EU and was hailed as progress for democracy. Rightly so: it gave the European Parliament major new powers as a legislator. And it reinforced the Parliament’s capacity to overlook policy implementation by the Commission.

But the 2010 crisis made sure that the political action went elsewhere. The countries of the Euro Area came together to create new finance mechanisms under the firm and joint control of their Treasurers. This replaced their initial response of giving bilateral support to Greece. The European Central Bank pumped money in the banks and filled its balance sheet with state debt. Continue reading →

Elections, change and policy legacy

21 Tuesday Jan 2014

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European Union watchers are bracing themselves for the political excitement of the next seven weeks. All major political parties will nominate their candidate for the European Commission Presidency, the key executive post, with the European People’s Party going last at its Dublin conference on March 7. The Greens are organizing debates this week between their four candidates. In the liberal-democrat race Olli Rehn just pulled the plug on his presidential ambitions in favour of Guy Verhofstadt who is now certain of the nomination. The social-democrats will confirm Martin Schulz, the current Parliament President, as their candidate at the end of February.

European Parliament elections in May 2014

European Parliament elections in May 2014

Once all nominations are done, candidates and their parties will have two and a half months to spell out their manifestos to the electorate of the 28 countries in the run-up to the May elections. All of this is a first for the EU, in an attempt to stir up more debate and personalize clashes between different policy visions.

No doubt this will lead to promises for change. However, once in office in the Autumn, the new Commission President will face heavy constraints to change the policy course of Europe. The budget is fixed for the period 2014-2020, so the next Commission will have to execute what was already decided. Continue reading →

A bonus under your Christmas tree?

31 Tuesday Dec 2013

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End of the year marks the start of the bonus season on Wall Street and in the City of London. Stories on who gets what will be followed closely, not just by anti-bank populists but also by traders themselves. On the website of the Financial Times, articles on bonuses tend to reach the rank of the mostly read pieces. Financial Times readers are usually more interested in stories on bonuses than on capital requirements for banks.

Can you multiply your value?

Can you multiply your value?

A recent front page article on the Wall Street Journal (“Big Rally Pumps Up Wall Street Bonuses“) debunks the key argument of the London financial sector to keep bonuses high. What is that argument first of all?

When regulators try to limit bonuses, finance lobbyists retort that they will not be able to retain top talent who boost their firms’ performance. The European Union will soon impose a cap on bonuses, which shareholders can set at a maximum of double the base salary. The UK government is attacking such a cap in the court with legal arguments, but mostly because it fears an exodus of bankers from the City Continue reading →

2014 European elections: an electoral shake-up, and a similar Parliament?

20 Friday Dec 2013

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From January onwards, the election heat will rise in Brussels. Next May, people in 28 European Union countries can vote for a new European Parliament. With widespread anger at austerity and record unemployment numbers in some countries, French President François Hollande fears for an institutional paralysis. More neutral observers, such as LSE professor Simon Hix, predict a breakthrough of anti-European forces. MEP Graham Watson of the UK Liberals sees a scenario that leads to “chaos”.

The next European Parliament: change so that all can stay the same? Photo Reuters

The next European Parliament: change so that all can stay the same? Photo Reuters

That scenario is unlikely, however. The mainstream parties have a very large majority right now. While the centre-right European People’s Party is likely to lose seats in many countries, it would need the equivalent of a political earthquake to topple it from its leading position, especially because the EPP is likely to have a reasonable result in some of the biggest countries. Social-democrats may actually do better than in 2009 in some bigger countries. In Britain, their 2009 score was particularly bad under the Gordon Brown government, and in Germany the recent national result for the centre-left beat the 2009 European result. This could make up for losses in other countries.

But another dangerous and more likely scenario than the one of paralysis could be the following: far-right and far-left parties make substantial gains, while the centre-right and centre-left keep a workable majority. And after a brief period of soul searching on the gap between citizens and Europe, the centrist parties in the European Parliament go back to business as usual.

So the impact on the actual workings of the Parliament of a massive protest vote may actually be minimal. But the impact on the Council and the general political impact in Europe may be more important. Imagine a not unlikely scenario whereby the Front National in France, Geert Wilders in the Netherlands and the UK Independence Party in Britain gather the most votes in their countries. Also the far left Syriza could come first in Greece. The governments in power will want to harden their stance and become less easy to work with in the search for compromises. Continue reading →

Sinners and Saints in the Eurozone Crisis

26 Tuesday Nov 2013

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In a talk at Harvard, German central bank governor Jens Weidmann warned against an overload of expectations on the European Central Bank for resolving the Euro crisis. Having recently opposed a decrease in the interest rate by the ECB, he said that a protracted period of low rates could lead to higher public expenditure and an undesirable situation whereby monetary policy becomes subordinate to government spending.

Reuters - Jens Weidmann wants central banks to do less and insists on national policies to solve the Euro crisis

Reuters – Jens Weidmann wants central banks to do less and insists on national policies to solve the Euro crisis

Weidmann started by referring to economics as moral philosophy, and used his sense of irony to declare himself a Keynesian philosopher for the purpose of the discussion.

Who are the sinners and saints in the Eurozone crisis so far? Weidmann mentioned reckless banks that now depend on ECB liquidity lifelines; wasteful states such as Greece; Germany ignoring the EU’s deficit rules in 2003; and interestingly, governments in the Eurozone who do not have a programme monitored by a Troika and thus do not feel real pressure to reform. In an attempt to raise the pressure, the Bundesbank president proposed to put a cap on how much sovereign debt banks can hold, which would be a more effective government debt brake than fiscal rules applied too leniently by the European Commission in his view.

Other sinners are wage earners in countries such as Portugal and Spain Continue reading →

Divided leadership in the biggest world economies?

26 Thursday Sep 2013

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Lack of leadership is how many have characterised the European Union over the past years. Europeans reacted too slowly to the Euro crisis, it is argued, and kicked the can down the road as their divisions prevented them from defining a sound economic policy. But the current polarization in Washington and the vitriolic rhetoric against political opponents beats what I have witnessed in Brussels.

The episode over a possible government shutdown next Tuesday by the House Republicans, and a Treasury alarm note over a mid-October default continue an American saga that started two years ago. In 2011 a first round of haggling over the debt ceiling occurred, with Standard and Poor decreasing by a notch its US credit rating. To end the saga, political leadership in today’s Washington requires not so much finding common ground, Continue reading →

Angela Merkel, political leadership and the Euro crisis

18 Wednesday Sep 2013

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Many observers expect the German elections on Sunday to result in a third mandate for Angela Merkel but with a switch in government coalition partner from the more free market liberals of the FDP to the Social-Democrats. Jack Ewing in yesterday’s New York Times writes that Merkel’s hand may be “forced” into a so called grand coalition between Germany’s two biggest parties.

The German elections matter for the more than 300 million people in the Euro area as they will shape the leadership for resolving the crisis. Angela Merkel has received heavy criticisms for her record: Joschka Fischer deplores a lack of vision, courage and strength of purpose. The columnist Wolfgang Munchau claims that the Euro cannot work with a German macro-economic policy. And Jürgen Habermas writes about a Germany dozing on a social volcano and shirking its responsibility. But could Merkel have adopted a radically different approach over recent years?

Exercising leadership is about disappointing your people at a rate that they can absorb, Marty Linsky says. Clearly, disappointment in Germany with the Euro has increased over recent years, Continue reading →