Slovenia fights back - but maybe it's a few months too late?

Gone but not yet forgotten

The European Parliament and the political machines that dominate it were, according to many, not supposed to select the President of the European Commission - but they got their man. MEPs, led by Spitzenkandidaten Martin Schultz and Jean-Claude Juncker outplayed the member states through a clever use of ambiguous treaty wording and a political deal, which in turn was driven by pure German domestic politics.

Having installed Juncker as Commission President MEPs took the individual candidates, nominated by the member states, to task. According to the Treaties, the EP can accept or reject the entire Commission, but MEPs have turned this into de facto votes on individual Commissioners, with intra-EP politics meaning some nominees may be taken 'hostage'. Having called back the UK's Lord Hill for a second hearing - creating jitters in Downing Street - MEPs finally voted down Slovenian candidate Alenka Bratušek. She was today forced to resign - despite Juncker himself insisting on her candidacy. MEPs seemed to have made their point - it has voted down individual nominees in the past, and as we predicted, the EP was bound to claim a scalp. 

MEPs now seem to be pushing their luck further - attempting to tell the Slovenian Government who they should appoint as their new candidate, with both the EPP and S&D calling for the nomination to go to social-democrat MEP Tanja Fajon. Slovenia, however, is pushing back. The country's PM has issued a statement saying:

"The Slovenian Prime Minister expects political groups in the European Parliament to abide by EU law and the fundamental democratic principle in selecting candidates for commissioners" 

In other words, the Slovenians say, this is for their Government - not MEPs - to decide.

Will MEPs stand back? We will see. To be fair, Slovenia has a new government and we can't blame it for events over the least few months. But we can't help asking, isn't this exactly what member states were asking for when agreeing to the Spitzenkandidaten in the first place?

Malmström impresses in her hearing, but is she on the same page as Juncker on TTIP?

Cecilia Malmström during her hearing today

The European Parliament kicked off its hearings of Commission nominees today, with most of the attention focused on Sweden's Cecilia Malmström, the current Home Affairs Commissioner who has been handed the hugely important Trade portfolio. The hearing was eagerly anticipated due to the controversy around certain aspects of the EU-Canada (CETA) and EU-US (TTIP) free trade deals; specifically around investor safeguard clauses (ISDS).

Indeed, the hearing managed to make waves in Germany (where the issue is particularly sensitive), after Malmström's written response to initial questions from MEPs suggested that she rejected the need for ISDS in TTIP. German Green MEP Sven Giegold posted the relevant section on his website:

As the President-elect Juncker has committed himself to in his Political Guidelines..."no limitation of the jurisdiction of courts in the EU Member States will be accepted in [TTIP]; this clearly means that no Investor-State Dispute Settlement mechanism will be part of that agreement."

However, this version - sent out to MEPs on Friday - was subsequently re-called, and the new version published on the Commission's website now reads:

As the President-elect Juncker has committed himself to in his Political Guidelines... he will "not accept that the jurisdiction of courts in the EU Member States is limited by special regimes for investor disputes."

In other words, a clear change from ruling out ISDS altogether to a much more qualified acceptance. This change was subject to much speculation on Twitter, and Malmström herself claimed it was "simply the wrong version".

However, at today's hearing, Dutch MEP Marietje Schaake claimed that the Microsoft Word version sent out on Friday contained 'track changes' made by none other than Martin Selmayr, Jean-Claude Juncker's chief of staff (seemingly confirming rumours in Brussels about Selmayr's "Rasputin-like qualities"). Malmström replied that she had agreed to Juncker's office inserting a quote from Juncker and tried to brush off the affair as a "misunderstanding" and an "over-interpretation", basically denying that she and Juncker were at odds over the ISDS question.

In her opening remarks and in answers to questions, Malmström strongly endorsed the principle of free trade and TTIP specifically, which rather dominated the debate, while also defending European social and environmental standards (there is always something for everyone in the European Parliament). On ISDS, she defended the principle, while clarifying that she was committed to transparency and qualifications - such as protections for national parliaments to legislate in the national interest. She claimed that there was no need to renegotiate ISDS in CETA, as without it the deal could fall apart, that the EU itself would want to include ISDS in future agreements with other parties, but added that possibly it could be excluded altogether from TTIP - so far from a coherent line overall.

Malmström put in a solid performance - with the right mixture of assertiveness and reassurance - and it is certainly good to have a pro-trade voice in that role. However, as the shenanigans over her written answers demonstrate, there are questions over whether Malmström and Juncker are on the same page on TTIP.

European Parliament hearings of Commission nominees: Will MEPs claim any notable scalps?

Will Juncker's Commission survive unscathed?
(picture via @Gruene_Europa)

On Monday we will see the first hearings of European Commission nominees by the European Parliament committees responsible for their respective policy areas (full calendar here). The UK nominee, Lord Hill, will ironically be grilled by MEPs at the same time as David Cameron will be giving his closing speech to the Conservative party conference. 

MEPs are not able to strike down individual Commissioners but they do have a veto over the Commission as a whole and have in the past used this leverage to force member states to withdraw nominees that they did not like; Rocco Butiglione in 2004 and Rumiana Jeleva in 2009 (although Jeleva also faced considerable domestic opposition). There has also been a lot of speculation that one or more nominees to the Juncker Commission could also be 'taken out' by MEPs (Alex Barker of the FT has a good round-up here). There will certainly be a hell of a lot of posturing - but are any of the candidates at genuine risk? We asses the most 'problematic' candidates below:

Lord Hill - Financial Services (UK)

There has been a lot of speculation that MEPs will target Lord Hill (and some have already made it clear they will) but this is based less on reservations about his character or ability, and more to do with his record as a lobbyist, concerns about the UK being allocated the sensitive financial services portfolio, and hostility to the Conservatives' EU policies more specifically. While MEPs will not give Lord Hill an easy ride it is highly unlikely that he will face any major problems given that this would be seen as a huge and unnecessary provocation towards the UK (with no chance of Cameron backing down and putting forward somebody else). Juncker has further lessened the risk by transferring the contentious issue of bankers' bonuses from Lord Hill's remit into that of Vera Jourova, the nominee for the Justice brief. 

Prospects for survival = Strong

Pierre Moscovici - Economic and Monetary Affairs (France)

It is no secret that the appointment of former French Finance Minister Pierre Moscovici to this key portfolio is far from popular among conservatives in the European Parliament. Can Moscovici, whose country is consistently failing to meet the its EU deficit reduction targets, be credible enough to police eurozone countries’ budget policies? However, given that Moscovici will be effectively man-marked by two fiscally hawkish Vice-Presidents (Finland's Jyrki Katainen and Latvia's Valdis Dombrovskis), and also that it would be hugely unprecedented to reject such a high profile candidate from such a large member state (particularly given Francois Hollande's recent problems), he should be safe. The only serious threat to Moscovici would arise if the centre-left S&D group tried to veto one of the centre-right EPP candidates (see below) and the EPP decided to retaliate, and they've hinted that in that case they would target Moscovici. 

Prospects for survival = Strong

Karmenu Vella - Environment, Martime Affairs and Fisheries (Malta) 

European Voice suggests that Vella could also be in trouble as MEPs are unhappy at Juncker's decision to merge environment and fisheries and to give Vella a mandate for 'deregulation' in these areas, and also because Malta's track record in implementing EU environmental laws is poor. However, Vella himself is not responsible for the design of the Commission and it should suffice for him to assure MEPs he will give both parts of his role equal consideration. He may also face some awkward questions about long-standing allegations of "political thuggery, tax evasion and corruption" in his time in Maltese politics, but these have never been proved and so it is unlikely he will be placed under serious pressure.

Prospects for survival = Strong

Tibor Navracsics - Education, Culture, Youth and Citizenship (Hungary)

Hungary's nominee was always going to be controversial due to the strained relations between the EU and the Hungarian government headed by Viktor Orban who has been accused of anti-democratic practices such as undermining media plurality and the independence of the judiciary - particularly sensitive given the portfolio Navracsics has been given. Is is clear that Navracsics will face a hostile audience but with the backing of the EPP it remains to be seen whether enough other MEPs will actively try to see him axed from the Commission; in that case any Orban nominee would surely prove unacceptable, and this would trigger a wider political crisis. Moreover, as a former University lecturer Navracsics seems well qualified for this post and so we think that, ultimately, he will be safe.

Prospects for survival = At risk 

Miguel Arias Cañete - Climate Action and Energy (Spain)

Spain’s Cañete will come under fire for a number of reasons. In fact, it'll be open season. Firstly, there is his alleged bias towards fossil fuels compared with renewables. Secondly, there are concerns about alleged conflicts of interest; Cañete has sold his shares in two Spanish oil companies but Green MEPs have complained to Juncker that Cañete’s “wife, son and brother in law all remain as either shareholders or board members of these companies.” Furthermore, it has also been estimated that, during his time as Spanish Agriculture Minister, Cañete’s wife, Micaela Domecq-Solis and her siblings received around €1.8m in EU farm subsidies (though the same accusation could also embarrass some MEPs on the Agriculture Committee). 

Cañete will also very likely face questions about some remarks, widely interpreted as sexist, that he made after a TV debate ahead of the European Parliament elections in May. He said, “The debate between a man and a woman is very complicated. If you abuse [your] intellectual superiority, it looks as if you’re a machista and are cornering a defenceless woman.” There are enough ingredients for a lively hearing but as with Navracsics, the support of the EPP and the fact that he is a heavyweight figure within Partido Popular may be enough to see him through. However, he's definitely on the front line. 

Prospects for survival = At risk 

Alenka Bratušek - Vice President for Energy Union (Slovenia)

Where to begin? Former Slovenian PM Alenka Bratušek is seen by many as the weakest link in the new Commission and faces a raft of challenges. For a start, she nominated herself for the role as acting PM even though her party (appropriately named the Alliance of Alenka Bratušek) received a drubbing in the preceding parliamentary elections, picking up only 4.3% of the votes. The new centre-left coalition has launched in inquiry into her auto-nomination and would like to replace her with Tanja Fajon, one of their own MEPs (which would preserve the Commission's gender ratio).

Moreover, she has been allocated a hugely significant and sensitive role - Vice-President responsible for 'Energy Union' - despite having little experience in that area. As a member of the liberal ALDE group she lacks the protection of the two big centre-right and centre-left blocs (although ALDE's has joined the 'grand coalition' in the European Parliament). Her saving grace might be that not there will not be enough appetite in the European Parliament to reject the Commission outright, but if anyone will be substituted it is likely to be her.  

Prospects for survival = At risk

We will be covering the most significant hearings live so make sure to follow us on twitter @Open Europe.

Juncker: The next Economic and Monetary Affairs Commissioner will be a Socialist

UPDATE (14:15) - One possibility we have not considered in our original blog post is that European Commission portfolios can change. They can be split, broadened, and so forth.

However, at this stage it is quite hard to know whether and how this will happen. Hence, our reasoning is based on the existing portfolios.

ORIGINAL BLOG POST (13:15)  

Pieces are falling into place with regard to the composition of the next European Commission. Jean-Claude Juncker, who is waiting to be confirmed as new Commission President by MEPs in a vote next Tuesday, has just said that the next EU Commissioner for Economic and Monetary Affairs will be a Socialist.

Given the recent debate over EU fiscal rules and their 'flexibility', this sounds like a key pledge from Juncker to secure the backing of centre-left MEPs - since the Economic and Monetary Affairs Commissioner is responsible for enforcing such rules.

Now, two candidates for the post spring to mind instantly: former French Economy Minister Pierre Moscovici and Dutch Finance Minister Jeroen Dijsselbloem, both from their respective countries' centre-left parties. The decision will likely also depend on what happens to the Presidency of the Eurogroup of eurozone finance ministers - with Spain making no secret of its interest in the job.

Scenario 1 - Dijsselbloem becomes the new EU Economic and Monetary Affairs Commissioner

This looks very likely to happen if Spain secures the Presidency of the Eurogroup. German Chancellor Angela Merkel would not be keen to see Mediterranean countries holding the posts of ECB President (Italy), Eurogroup President (Spain), and Economic and Monetary Affairs Commissioner (France) at the same time.

This would also mean that France will push to secure another key economic portfolio for Moscovici: Internal Market, Competition or Trade. This would not be ideal from David Cameron's point of view, although the UK would be likely to get whichever of the bigger briefs France did not get.

Scenario 2 - Moscovici becomes the new EU Economic and Monetary Affairs Commissioner

This would probably mean that Dijsselbloem will stay as Eurogroup President. At that point, Spain could be 'compensated' with an important portfolio in the new Commission. According to the Spanish media, Miguel Arias Cañete - a former centre-right Agriculture Minister who is widely tipped to be appointed Spain's new Commissioner - would be interested in the Trade brief.

Under this scenario, the UK would possibly have a greater chance of securing the Internal Market or the Competition portfolio (both very relevant, as we explained here) - not least because France would no longer be a contender. That said, as we pointed out above, Germany is probably wary of this scenario. And the UK may well be concerned about France controlling the brief which has the most impact on the issue of the balance of power between euro 'ins' and 'outs'.

One to watch for the UK: Finland's Jyrki Katainen  

One more thing to bear in mind. Until today, former Finnish Prime Minister Jyrki Katainen was seen as a strong candidate to succeed his fellow national Olli Rehn as Economic and Monetary Affairs Commissioner. However, it now seems he will have to go for another portfolio. This could have important implications for the UK. Under a positive scenario, reform-minded Finland along with the UK could secure the Internal Market brief as well as the Competition portfolios. Indeed, France getting the Economic and Monetary Affairs portfolio could increase the chances of this happening. 

This is all quite speculative, and based on wishes Juncker expressed during his hearing with the centre-left S&D group in the European Parliament. National governments will play an important role when the time to assign portfolios in the new European Commission comes.

At the moment, there is still a decent chance of the UK securing a good porfolio despite the Juncker débâcle. One thing is clear, though: most other EU countries have already settled on high-profile candidates (note the numerous mentions of both former and acting finance ministers and prime ministers above), while the UK is yet to even decide on a clear shortlist of candidates. It is time to kick it into gear on this front.

European Parliament committees: more secret ballots and backroom deals?

EU democracy at work?

The European Parliament has announced the composition of its Committees, with MEP groups hard at work negotiating the final deals to see who will be Chair and Vice-Chair of the different bodies.

These Committees vary in importance, from the powerful ECON and IMCO committees which deal with Economic and Monetary affairs and the single market respectively - to more niche Committees such as the 'Petitions' Committee.

Looking through the lists of MEPs appointed, the first thing that strikes us is that all the Committees are gigantic - the Committee on Foreign Affairs has a ludicrous 71 members (almost 10% of the entire parliament)! It's not immediately clear why this is, but we can't help but wonder if the possibility for significant travel abroad is not a factor. But even the more serious Committees are of an unwieldy size - Trade (also with some travel perks) has 41 members, which is perhaps more justifiable as the EP now has a veto over free trade deals. It is worth remembering that under Parkinson's "coefficient of inefficiency" a committee of more than 20 members is less likely to make good decisions.

Secondly there are some interesting appointments:

• German neo-Nazi MEP Udo Voigt will sit on the European Parliament's Civil Liberties, Justice and Home Affairs Committee.
• AfD leader Bernd Lucke is to be nominated as vice chair of the ECON committee - in charge of monetary union. Combine this with the fact that the Chair is likely to be an Italian Socialist MEP and some eurozone members might be concerned about this committee.

Under the EU's favoured D'Hondt formula, the different groups are allotted committee chairs according to their relative weights. The ECR group for instance, has secured an additional chair due to its increased size; it has gained Security and Defence on top of its existing Internal Market chair.

However nothing is settled in the EP until you have had the mandatory secret ballot. One potential secret upset could be an attempt to deprive the UKIP/M5S EFDD group of it sole Committee chair - the Petitions committee. Under a secret ballot it is entirely possible for the larger groups to block the EFDD group from chairing a committee.Whether or not you agree with their politics, there is no doubt that they are entitled to such a role, and even the Greens have come out saying as much. Another stitch up here would once again expose a lack of democracy and transparency at the heart of the European Parliament - and surely only play into the hands of those who want to leave the EU.

If Carlsberg did consolation prizes for 'losing' a 'Presidential' election...

Advocates of Pan-European Democracy, foremost among them the Socialist's 'Spitzenkandidat' Martin Schulz MEP wished to turn the recent European Elections into a quasi-'Presidential' election. The idea was that the 'winner' would be the 'lead candidate' from the leading political group. That turned out to be Jean-Claude Juncker, who is now the President-elect of the European Commission.

In the manner of a US presidential election, Schultz 'conceded' defeat. It might therefore come as a surprise that the self-proclaimed loser in the election has now been rewarded for his defeat by being given one of the other powerful EU presidencies - that of the European Parliament. Schulz was yesterday re-elected as EP President for the next two and a half years with the support of 409 out of the total 751 MEPs.

It's not entirely easy to find an equivalent to the EP President in national democracies: the position involves elements of the "Speaker" role, which exists in the UK, Sweden, Poland and Germany. Notably, the Speaker in these countries come from the largest group or is based on a nomination from the largest group (in the case of John Bercow, a Tory backed by Labour).

However, the EP President has far more power, due to the way 'executive' and 'co-legislative' functions are distrubted in the EU between the Commission, Council and EP. Schulz effectively wields the EP's co-legislative power in talks with other institutions, over issues such as the EU's long-term budget for example. Such positions are most definitely associated with the "winners" in elections.

So if Schulz was a loser on both these counts, why is he still running the European Parliament?

The answer: transnational "democracy". The vote follows the formation of a ‘grand coalition’ within the European Parliament between the centre-right EPP, the centre-left S&D and the Liberal ALDE groups. In other words, in the spirit of pan-European democracy, some representatives from the main groups agreed amongst themselves who should become EP President. In the spirit of transparency, the vote was then put to the full European Parliament via a secret ballot (so we're afraid we can't tell you who actually voted for Schulz).

Yet another reason why the Spitzenkandidaten process has turned out to be a charade. This is Brussels politics, business as usual.

Would Cameron have been able to block Juncker if the Tories were members of the EPP?

No major party in the UK backed Jean-Claude Juncker, or any other 'Spitzenkandidat'. It is therefore fair to say that the UK electorate had no influence over the course of what some describe as an 'election'.

The counter-charge is that David Cameron is to blame because he 'left' the main centre-right group - the European People's Party (EPP).  Former Lib Dem leader Charles Kennedy made this point yesterday in the Commons - which was also alluded to by Labour MPs. If Cameron was a member, so the argument goes, he could have blocked Juncker's appointment as the candidate and then had some say over the 'election campaign' and associated deals. Critics are zooming in on the meeting of EPP-affiliated leaders in Dublin in early March, at which Juncker was selected (behind closed doors no less).

It may not be that simple though:

• The Conservative Party was never a member of the EPP. It was a member of the European Democrats (ED) that was linked to the EPP in the so-called EPP-ED. As such, the Tories didn't have offical 'voting rights' and therefore David Cameron would not have had a vote over Juncker's appointment. 
• It's also worth noting that the Labour Party, although being a member of the S&D group failed to block Martin Schulz as their group's Spitzenkandidaten.
• Likewise the Liberal Democrats failed to block Guy Verhofstadt as the ALDE candidate

There's an argument that Cameron could have used the political influence and clout garnered from being associated with the EPP to stop Jucnker, even absent a formal vote. However, other EPP leaders had limited influence on the EPP candidate. Sweden's Moderaterna were opposed but were over-ruled. Berlusconi failed to attend and Hungary's Orban was hostile.

In any case, we will never know.

The reason the Conservative Party left the EPP-ED is because they did not agree with the EPP's push for further integration. The wider problem for the UK political parties - and reform-minded parties in other countries too - is that their views are grossly under-represented in the main groups. This, in turn, links to to the fundamental problem with the European Parliament itself (as we argued here).

Note:

For the record this is how the EPP delegates voted to adopt Juncker, so Cameron's vote would have made little difference - but again, we won't know:

EPP delegate votes to adopt Juncker as candidate

Dutch PM Rutte talking a lot of sense

Dutch Prime Minister Mark Rutte talks a lot of sense in this interview with Dutch news site Nu.nl - and sets the scene for the inevitable bust-up with the European Parliament over the appointment of the next European Commission President. Rutte says:

The European Council has never committed itself to these candidates [the Spitzenkandidaten appointed by the various political families]. The whole election has been invented by European political groups.

The European Parliament does not nominate [the European Commission President], the Council does. The Parliament can then say 'yes' or 'no'. That will probably lead to fierce discussions between the Council and the Parliament, but we are not afraid of that.

Bring on the MEPs, then...

The Dutch Prime Minister used the same interview to reiterate how the next European Commission needs to get its priorities straight:

Why can't our architects still not work in Italy or France? [...] The [EU's] Services Directive is far from ideal [...] In the meantime, the EU is keeping itself busy with female quotas. Europe is even dealing with forest strategy and rules for websites. The EU shouldn't be touching this.

Making the case for an EU that focuses on facilitating trade and jobs, rather than meddling in all sorts of areas, in a concrete manner is key. Something we would like to hear more of, especially from UK Prime Minister David Cameron and British (and European) politicians.

What happens next after the European elections? Get ready for a royal punch-up...

With the European elections taking place on Thursday through to Sunday this week, it is worth considering what happens next. The proposed Spitzenkandidaten or European Parliamentary families’ candidates for European Commission President is set to make the post-election horse-trading and politicking more fraught than usual. As we warn into today’s Times this could have huge implications for the future of the EU and David Cameron’s reform agenda.And it will be nothing short of a royal punch-up.

The EU treaties are ambiguous about exactly how the next Commission President should be selected, but the Lisbon Treaty states that EU leaders must for the first time take “into account” the result of the European elections when proposing the new European Commission President. Ultimately, EU leaders retain the power to reach a compromise candidate among themselves, but the EP’s veto over the appointment could lead to a stand-off between governments and MEPs.

Here is a quick timeline to keep in mind – in effect there will be a three round selection process:

ROUND 1 – 22-25 May 2014: election days

27 May: Martin Schulz (currently European Parliament President and the Socialists’ Spitzenkandidaten), Jean-Claude Juncker, the centre-right EPP candidate, meet the other candidates over breakfast to discuss outcome of elections – presumably to put pressure on national leaders who will meet for dinner later the same day to appoint one of the MEPs' chosen men.

ROUND 2 – 27 May: EU leaders meet for dinner to discuss outcome of the elections – they will no doubt discuss whether to opt for a Spitzenkandidat or propose another candidate. Whether an alternative candidate would come from either the centre-left or centre-right will likely to depend on the outcome of the elections. However, it is unlikely EU leaders will be able to publicly select their candidate before the distribution of the political groups is known (see below).

June: formation of European Parliament political groups – this could be important because the post-election jockeying will determine the political groups’ distribution in the new parliament. If the result between the centre-right EPP and centre-left S&D is tight, as it is looking, picking up a few MEPs here and there from other groups could be vital in becoming the largest group.

The focus will also be on whether Marine Le Pen and Geert Wilders manage to put together a new far-right grouping and what the post-election scramble might mean for other groups such as UKIP’s EFD and even the Conservatives’ ECR group. To get the formal status of a political group it must consist of at least 25 MEPs, elected in at least one-quarter of the Member States (i.e. at least 7).

ROUND 2a – 26-27 June: EU leaders meet at European Council meeting. When the European Council has made its proposal for the Commission President, a period of negotiations with the Parliament on his/her political priorities and programme could take place.

1-3 July: EP constitutive session: MEPs officially take up their seats in the Parliament. Election of EP President (not to be confused with the Commission President), vice-presidents and quaestors

7-10 July: official EP political group meetings

ROUND 3 – 14-17 July: session of the Parliament – election of Commission President by a majority of MEPs. Should EU leaders’ candidate be rejected, the European Council, acting by a qualified majority, has one month to propose a new candidate.

Once the Commission President has been elected, the Council, in agreement with the Commission President-elect, adopts the list of commissioners designated (i.e. proposed Commissioners from each member state are assigned a portfolio).

September: hearings of designated European Commissioners. The Commissioners-designate appear before the parliamentary committee(s) relevant to their prospective fields of responsibility. MEPs do not have the power to reject individual Commissioners but, in the past, these hearings have led to candidate commissioners withdrawing or having their portfolio changed.

October (tbc): Vote on the full European Commission. The new European Commission must be approved en masse by a majority of MEPs.

So, given that both parts have an effective veto - echoing the Italian parliamentary system (that great constitutional model for getting stuff done) - this stand-off can last for a long time.

Regardless, it won't be pretty. 

So, Nick, how many laws come from Brussels?

In the first IN/OUT Europe debate between Nigel Farage and Nick Clegg on 26 March, the leader of the Liberal Democrats claimed that the percentage of UK laws coming from the EU was 7%, citing research by the House of Commons Library.

This created much debate at the time, particularly as Nigel Farage claimed that figure was actually 75%, quoting the long-standing UKIP supporter Viviane Reding.

We are no stranger to this debate having written a number of times about the futility of estimating the proportion of EU laws implemented in the UK, and the differing claims. However we were surprised to discover that Nick Clegg himself is no stranger to this debate. Here he is writing in 2003:

Probably half of all new legislation now enacted in the UK begins in Brussels. The European parliament has extensive powers to amend or strike down laws in almost every conceivable area of public life.

And in case that was an accidental slip of the keyboard, here he is again speaking in 2004:

Well over 50 per cent of all new laws in the UK now emanate from Brussels and are processed by Parliament and that MEPs are now arguably some of the most powerful legislators in Europe.

That people - usually depending on ideological disposition - give wildly conflicting estimates about the share of EU laws is old news. Radically conflicting estimates from the same person is something new, however.

The anti-EU vote: Spot the difference

Question: What's the difference between these two opinion polls for this month's European elections?

Answer: Ok, the percentages in the bottom graph are slightly higher, but there is a striking similarity.

The top graph plots the front runners in the French European elections: Marine Le Pen's Front National, the centre-right opposition UMP, and Francois Hollande's governing Parti Socialiste.

Meanwhile, the bottom graph plots the latest European election poll results for UKIP, Labour and the Conservatives.

There is always a tendency to see the anti-EU/government/establishment phenomenon as unique to one's own country. These European elections are likely to prove otherwise.

The Farage allowances episode is primarily a sign of a fundamentally broken allowances system

The Times today uses the news that Nigel Farage is to be investigated by the EU’s anti-fraud office OLAF, following a complaint from an ex-Ukip official that £60,000 of EU allowances paid into his personal bank account have gone “missing”, to attack the “fraudulent prospectus” that he is “the politician who is not a politician”.

The chief allegation is that:

"The Ukip leader has received £15,500 a year from the EU since at least 2009 to pay for the upkeep of his constituency office, a small converted grain store near Bognor Regis, according to transparency reports filed on the party’s website.  

However, the grain store was given rent-free to Mr Farage by Ukip supporters 15 years ago. Utilities and other non-rental costs amount to no more than £3,000 a year, according to the former office manager, leaving about £12,000 a year unexplained."

The paper also notes that Mr Farage “also revealed that he used a proportion of his [General Expenditure Allowance] to pay more than £1,000 a month towards a controversial second EU pension scheme of which he was a member between 1999 and 2009.”

We looked at this additional pension scheme back in 2009, when it closed to new members, and it was controversial for two reasons. Firstly, it was two-thirds funded by taxpayers and, second, the system relied on MEPs being honest enough to fund the shortfall in their allowances out of their own salary. Credit to Farage for leaving the scheme - but being part of it in the first place doesn't reflect well on him (though he's one of many, many MEPs from all parties who were or still are).

Whatever the rights or wrongs of Farage's actions, this illustrates that the EP's allowances and expenses system is still miles away from what taxpayers should accept. The General Expenditure Allowance is notoriously vulnerable to abuse because it is generous, has a wide list of potential uses and does not require MEPs to produce receipts. The Times' leader itself admits that "It is probable, even if these allegations prove to be true, that Mr Farage has done nothing illegal".

Predictably Farage's response casts him as the victim of a "politically motivated attack from what is the establishment newspaper." The general expenditure allowance, he said, "is given to every MEP and we can spend it how we want to," adding:

"We have used the money to promote the cause of Britain leaving the European Union and we have done that unashamedly"

It is right that Nigel Farage is subject to proper scrutiny and that investigations are carried out if he has a case to answer, but there's still no proof he has done anything illegal. And whether singling out Farage will actually help or hurt his cause remains to be seen. However, what's clear is that the EP's allowance system must urgently be reformed.

The EP allowances system is something that we'll most definitely return to.

MEPs miss an opportunity to do their job

Last week, the European Parliament had the opportunity of doing what most other elected bodies in the free world consider a core task: making sure taxpayers' money is spent in a transparent, accountable and regular way.

MEPs were asked to provide discharge to the 2012 EU budget, in which according to the European Court of Auditors, the rate of error rate had increased to 4.8% compared with 3.9% in 2011 and affected every area of EU spending. The COA's own benchmark for acceptable levels of error is 2%. Of the total €138.6bn spent by the EU in 2012, €6.7bn was affected by errors.

However, MEPs voted to approve the discharge report, drafted by German CDU MEP Markus Pieper, with 488 votes in favour, 121 against and 10 abstentions - effectively signing off the budget.

The report admits that: 

"For the 19th time in succession, the Court of Auditors was unable to grant a positive statement of assurance regarding the legality and regularity of the payments underlying the accounts". 

(Yes, we know the Court of Auditors signed off the Commission's own accounts, so no need for any Commission officials reading this to make that well-worn point). The MEPs provided various justifications for nodding through the budget despite the errors, including:

"a distinction must be drawn between errors and fraud, and [the EP] considers that, in the vast majority of cases, errors stem from administrative mistakes, many of which are linked to the complexity of Union and national rules, which can be corrected".

They have a point. Errors and fraud are not the same thing - though the line can be awfully blurred. However, we doubt the average taxpayer would be entirely content with that explanation. The bottom line is that the cash should not have been paid out. As we've argued before, the high level of error is primarily due to the nature of the EU budget itself - it's size, complexity, confused objectives etc - and this will persist until it's fundamentally reformed.

What's interesting about the MEPs' behaviour is that they are a lot less forgiving when it comes to the spending by European Council/Council of Ministers - i.e. the member states.The EP decided to postpone the approval of the Council's accounts "because of its lack of cooperation".

EU Anti-Fraud Commissioner Algirdas Šemeta reacted to the EP's decision by saying that "The EU budget is the one of the most transparent and accounted for public budgets in the world", while arguing that "For the past 5 years, the overall error rate has been consistently below 5%. In other words, over 95% of all EU spending is in line with the rules."

The Netherlands, Sweden and the UK- three of the biggest net contributors to the EU budget collectively responsible for 20% of the funding - take a radically different approach. They again voted against discharge in the Council of Ministers, regretting that

"the overall error rate in recent years has increased to 4.8 %, being significantly above the acceptable threshold of 2 %."

Surprisingly, Labour and Lib Dem MEP, but also Dutch VVD MEP Hans Van Baalen voted against the position taken by their member states in the Council.

Not inspiring confidence.

Are MEPs about to take on the English legal profession?

English knights seeking to protect their estates were a driver behind 
the creation of English Trust law.

MEPs are set to vote this Thursday on the 4th Anti-Money Laundering Directive - which aims to shed light into who owns private companies. This sounds positive and innocuous and the sort of thing politicians, including David Cameron, often - and rightly - call for. But the devil is in the detail. Some MEPs are reportedly now proposing to extend this 'transparency' into Trusts as well as companies, which could have major impact on UK business.

Making a register of the beneficial owners of all private companies, based on millions of underlying arrangements, changing on a day to day basis, was already looking to be complex. But when it comes to Trusts, transparency runs into a serious intellectual and practical problems. Who is the beneficial owner of a discretionary trust? How do you report that a spouse has an interest in a property/company - something that may only become apparent in a divorce court?  Trusts encompass all manner of arrangements; trusts to protect children, trusts holding money pending a transaction, insurance policies, pensions, collective investment schemes etc. Without Trusts the UK's financial services industry would not be able to operate. Will MEPs really seek to have all this reported on a potentially public register? If it is indeed possible, reporting millions of ever changing arrangements could add a massive regulatory cost to everyone's financial affairs. Logic would dictate they would steer clear but lobbyists are already in full swing, pushing amendments that would radically increase the scope of the report.

This is also an important test for how the EU balances the interests of different member states. Trusts are a major innovation of the UK's, (particularly the English) legal system. Whereas continental legal systems traditionally tended not to look beyond the legal ownership of a property, the English legal system has taken a different approach, for better or worse dating back to the Crusades. Essentially, if you hand over the legal ownership of property to a relative in the expectation that you retain an interest (i.e when you come back alive from a Crusade) and it is not respected you could go to the King to receive justice - in the jargon you retained an 'equitable interest'. Other EU states have different set ups such as Stiftungs and Anstalts but these are not as widespread as UK Trusts.

What will happen? Well there are signs that some MEPs are aware of the problem, the EPP for one seems to be against, but David Cameron's ECR group (perhaps to save him embarrassment?) seems, for now at least, curiously undecided about coming out against these ideas.

This is not to say the English legal system should be exempt from transparency, but rather than EU politicians of all colours need to be acutelyy aware of the unintended consequences of regulating 28 different legal systems - with practices sometimes dating back centuries - with one broad brush.

MEPs reject plans for controversial fund managers' bonus cap

The European Parliament has voted down a controversial proposal put forward by German Green MEP Sven Giegold to introduce a bonus cap for managers of UCITS investment funds. Mr Giegold wanted to curb bonuses so that they could no longer exceed managers' basic salaries.

However, UK Conservative MEP Syed Kamall brokered an amendment with the European People's Party (EPP) and the Liberals (ALDE) to scrap the bonus cap. The amendment was passed this morning. It establishes that bonuses

"shall be considerably contracted where subdued or negative financial performance of the management company or of the UCITS concerned occurs, taking into account both current compensation and reductions in payouts of amounts previously earned."

MEPs will now wait for EU member states to agree on a common position on the new UCITS rules. After that, negotiations will start.

Mr Giegold has called today a 'schwarzer Tag' (a 'black day'), but the truth is the bonus cap would have been a bad idea for a number of reasons:

• Unlike banks, investment funds haven't received a penny from taxpayer-backed rescue packages. Therefore, although one can agree with the need to align pay with performance in the financial services sector, it would have made little sense to impose on fund managers a harsher bonus cap than the one recently introduced for bankers.

• The cap would also have undermined the competitiveness of the UCITS industry, which currently accounts for over 70% of net assets managed by the entire European investment fund industry.

• Perhaps most importantly, such a largely ideological measure could have made the City of London more eurosceptic at a time when the debate over the future of UK-EU relations is at a crucial stage.

So, good news from Strasbourg, although similar proposals on remuneration in the financial services sector are likely to come up again sooner or later - especially from the European Parliament.

However, today's vote shows that the UK is indeed listened to in Europe when it comes to financial regulation (although it also helped that a lot of UCITS funds are based in France). It's all about having a clear negotiating strategy and moving early enough in the EU's law-making process.    

Finally a deal on the EU long-term budget?

On Wednesday, European Parliament President Martin Schulz wrote to Irish Deputy Prime Minister Eamon  Gilmore warning him that the latest compromise on the long term EU budget agreed by EU leaders in February would be rejected. Yesterday morning, however, a deal was struck between the two negotiating teams. So had member states suddenly given in to all MEPs’ demands?

Although not all the details are fully clear, it looks as though MEPs have not secured anything substantial above and beyond the compromise they rejected last week.

Retaining unspent funds and ‘flexibility’ – A decent win for MEPs; member states have agreed that rather than taking back unspent funds as before, these can be rolled over to next year’s budget – although a) in recent years there has not been much of a surplus and b) while unlimited unspent funds can be rolled over at the start of the seven year period, this is capped towards the end. There is also scope for moving some cash around between budgetary headings.

Topping up the 2013 annual budget by €11.2bn – A big win for MEPs who demanded payment in full of the additional €11.2bn requested by the Commission to retroactively top-up the 2013 budget (although this is less down to MEPs themselves and more down to the fact that annual budgets are decided under majority voting). So far €7.3bn has been committed despite the UK voting against. This leaves €3.9bn outstanding and Martin Schulz has already warned that if member states renege on this, after MEPs have approved the budget, they will hold hostage the 70 or so individual pieces of implementing legislation for the EU's long-term budget.

A mid-term review: It looks as though MEPs have secured their demand for a compulsory review mid-way through the seven year budget but crucially it seems all but certain that this will take place under unanimity, not majority voting as MEPs had demanded, a scenario which could potentially have seen the spending limits increased. Intriguingly, this could coincide with a UK referendum should David Cameron still be in Downing Street.

Direct EU budget taxes – A big defeat for MEPs who pushed for a complete overhaul of the “own resources” system which would have seen the introduction of direct EU taxes and the scrapping of the UK and other rebates. This issue is completely left off the Commission’s press release and at a press conference following the agreement, the parliament’s negotiator only mentioned further “debate” on this issue. This was a clear red line for member states.

Extra help for youth unemployment – MEPs have also secured an additional €2.5bn to help combat youth unemployment, although this will be reallocated from existing funds, so it is not new money. Member states will also be able to voluntary commit additional funds in this area if they chose to.

So, despite a huge amount of posturing, overall the threat to veto the agreement proved to be an empty one and many of the MEPs' key demands were unmet - as we predicted at the time. They will now get two votes on the long term budget – a non-binding one next week and then a binding one come September or October. A lot could still happen between now and then, especially if MEPs decide they want another stab at obtaining further concessions or if member states refuse to pay more money into this year’s budget.

Even though the UK would not have been in a bad position had the parliament vetoed the agreement, politically it is better for David Cameron to be able to point to a concrete cut (as has already been proposed for the 2014 budget) as this adds credibility to his argument that he is able to secure a better deal for the UK in Europe.

Commission's draft budget for 2014: The Good, the Bad and the Ugly

While all eyes will be on George Osborne and Ed Balls this afternoon, the EU Commission has slipped out its draft annual budget for 2014. This is important as it the first budget to be drawn up using the reduced expenditure limits (or 'ceilings' in EU-speak) agreed by David Cameron and other EU leaders in February. However, the European Parliament so far refused to sign off on these, so they remain provisional for the moment (more on this later). Here is our breakdown of the content of the budget according to the good, the bad and the ugly, continuing an earlier OE tradition.

The Good

Compared with 2013, there's a cut to the 2014 EU budget. The headline figure is a cut in both commitments and payments from €151.6bn and €144.5bn down to €142bn and €135.9bn respectively. This is a 6% cut in commitments and a 5.8% cut in payments. This is clearly a win for David Cameron who was mandated by parliament to secure a real terms cut in spending, but is also not all what it seems to be (see below). Next year's savings would be even lower if not for the fact some spending - such as the new €6bn youth unemployment initiative - is being 'front loaded' onto this years' budget.

Some particularly wasteful spending has been cut, for example the commitments on 'Communication actions' defined as spending aimed at "increasing the interest, understanding and involvement of citizens in the EU integration and policy-making process" has been cut by 20%.

The Bad

Somewhat bizarrely, the above savings have only materialised because a lot of money has been added onto the 2013 annual budget via a number of 'amending budgets' (a favourite tool for the EP and Commission) - increasing the total from €132.8bn to €144.5bn. If not for this additional cash, we would have seen an overall increase in 2014. While some of this additional spending can be justified - for example to accommodate Croatia - many believe that the bulk has been requested by the Commission simply to use up all the available money left under the current long-term budget rather than because it corresponds to an actual need for funds.

The European Parliament has made payment in full of this amount a pre-condition for agreeing to the 2014-2020 budget, and so far most of it has been pledged by member states (although the UK was recently outvoted on committing an additional €7.3bn of the additional funds requested as annual budgets are decided by QMV, not unanimity). In total, €3.9bn remains outstanding, so taking this off the total means we only have a reduction of 3.2%.

The Ugly

The substance of the budget remains broadly unreformed with the bulk of the budget still going towards distorting farm subsidies and regional development subsidies for wealthier member states (although the proportion of the latter has been reduced). In fairness overall spending on the CAP has decreased by 2.3%, but the amount going on farm subsidies tied to land ownership or production levels (the new CAP rules allow some re-coupling) will go up by 0.3%.

Administrative spending is set to go up again by 1.5% overall. The table below gives the full breakdown:

• While the drop in spending on European Schools is welcome, many of the other headings see increases at a time when the EU should be busting a gut to cut down on administrative spending, as member states have been for the last couple of years.
• The Commission has made some cut backs but due to salary increases of 0.9% it sees a 0.1% increase (or 0.8% increase when including cost of Croatia's accession). 
• Spending on EU officials' pensions has also increased by 7.2% due to the number of staff retiring ahead of the entry into force of the new Staff Regulations. This highlights the need to make further and more urgent progress on making EU expenditure on former officials' pensions sustainable.
• While the Court of Auditors, an institution that often flags up EU waste and mismanagement, sees its budget cut by 4.2%, the European Parliament sees its budget go up by 1.7% despite the fact that it has not committed to reducing its headcount unlike other institutions. This news comes the day after we highlighted a video of two MEPs pushing and shoving a journalist who had the nerve to challenge them for allegedly signing in to claim to their daily allowance before 'sodding off' straight away.
• Spending on the EU's 'decentralised agencies' which form the bulk of the EU's 52 quangos are set to receive a 3.8% increase while the European and Economic and Social Committee and the Committee of the Regions see a 0.2% cut and a 0.3% increase respectively despite the fact that these organisations are outdated, with no evidence of their usefulness whatsoever.
• While expenditure on the EU's external policies (aid and development) sees a fairly substantial cut of 8.2%, for some reason the institution that manages this expenditure - Baroness Ashton's External Action Service - has been awarded a 3.2% increase. In contrast the FCO sees an 8% cut in todays spending review.

The deal all rests on the European Parliament agreeing to the 2014 - 2020 MFF otherwise the 2014 budget will revert to 2013 ceilings + 2% for inflation. While this would not be an awful result for the UK mainly because of the security guaranteed by the rebate (see here for details), it would nonetheless most probably not result in an actual cut, thereby undermining David Cameron's claim to have achieved a degree of EU reform by cutting the budget for the first time in EU history.

Meanwhile, MEPs' initial responses don't exactly inspire confidence...

The EU budget proposal of the Commission for 2014 is again supporting the recession and unemployment instead fighting it.
— Hannes Swoboda (@Hannes_Swoboda) June 26, 2013

'My reaction was excessive, but the journalist was rude': Italian MEP caught on camera responds

Italian MEP Renato Baldassarre has responded to the posting of the video in which he's seen pushing and slapping a Dutch journalist (or at least the journalist's microphone) after being caught on camera allegedly signing in for a day's work, and then sodding off.

We posted a cut down version of the video on our blog, and it has generated quite a bit of interest .

As we're always keen on a right to reply, we've now translated Mr Baldassarre's response below. Again, judge for yourself (and if you understand Italian, the full interview is available here).

"First of all, I’m really sorry about that episode and the relevance which was given to it. But the truth has to be re-established. I answered the questions that I understood in a very correct fashion, until the insistence – and I would also say the rudeness – of the interviewer has triggered a reaction, perhaps excessive, but also justified by the fact I was not exactly in the best of moods given that around that time I had received the news that a very close relative of mine had been hospitalised."

"That said, this is about the usual episodes aimed at highlighting waste and privileges allegedly involving the European Parliament...I have a very high attendance record, 90% in plenaries and 85-86% in the various Committees. On that specific day, I had just arrived and was going to my office where I stayed until 10pm. Therefore, I really believe the whole fabrication around this episode is frankly excessive."

It is also worth noting that this story has unfolded on the same day as the Parliament has told member states it will not accept the latest compromise proposal on the EU's long term budget. In other words, MEPs are still holding the budget cut negotiated by David Cameron and other EU leaders hostage. Not a great day for MEPs from a PR point of view...

The 2014-2020 EU budget: The deal that never was?

After the umpteenth round of talks on the next long-term EU budget between negotiators from the Irish Presidency, the European Parliament and the European Commission, Ireland's Deputy Prime Minister Eamon Gilmore announced yesterday,

"We have concluded negotiations on the EU's multi-annual budget for the next seven years [2014-2020]. I have reached an agreement with the European Parliament's chief negotiator. We have agreed a package that we are both going to recommend to our respective institutions...This is a balanced package that addresses all four of the issues identified by the European Parliament as important for the EU budget." 

In exchange for agreeing (through gritted teeth) to a historic cut in overall spending from the 2007-2013 budget period, MEPs would secure concessions on "more flexibility" between spending areas and annual budgets, plus a mandatory 'mid-term review' of the long-term budget in 2016. There was also an agreement on "a method for carrying forward discussions" on direct taxes for the EU budget - whatever that means - but no binding commitment.

All sorted? Not quite. Alain Lamassoure, the French centre-right MEP who is heading the European Parliament's negotiating team, told a rather different story to AFP,

"Some members of the European Parliament's delegation are very cautious [on the outcome of the talks], and it's for this reason that I couldn't commit the European Parliament."

The leaders of the main political groups in the European Parliament will meet on Tuesday to decide whether or not they are happy with the latest compromise on the table. In other words, it seems the Irish Presidency was so eager to end its term with a landmark deal that it got a bit ahead of itself.

And not without consequences. German MEP Reimer Böge, from Angela Merkel's CDU party, resigned as the EPP rapporteur's on the 2014-2020 EU budget this morning in protest against what he described as "nothing more than a manipulation" from the Irish Presidency. According to him,

"The European Parliament's negotiating team last night decided not to continue the negotiations, if they can be called such at all, and submit the texts to the European Parliament."

A 'deal' that turned out not to be a deal after all. We can only wonder what ordinary citizens make of all this posturing, brinkmanship and back-room horse-trading.

Moreover, several important questions remain unanswered. How would this 'revision' work exactly, and what would it involve? Are MEPs prepared to drop their demand for it to take place under QMV and not unanimity? What's the point of having a non-binding discussion on 'own resources', given that there's no appetite for direct EU taxes across the bloc?

Ultimately, MEPs should be careful not to overplay their hand in seeking concessions - if push came to shove would they really veto the agreement painstakingly negotiated by EU leaders?

Things should become clearer next week. For the moment, it's worth keeping in mind that, whatever the outcome of the negotiations with MEPs, the deal will have to be endorsed by EU member states by unanimity - meaning that the UK would still have a veto over it. 

MEPs around Europe defy their parties on EU budget

Earlier today we looked at how UK MEPs voted on the EU budget, pointing out that Lib Dems defied the national party line (earning them a telling-off from Nick Clegg). However, we thought it would also be interesting to round up how other national delegations voted, in particular those of member states whose leaders were most insistent on imposing budgetary discipline on the EU.

Germany: Angela Merkel was instrumental in forcing through the budget cut but both her own CDU MEPs and CSU MEPs voted to "reject it in its current form", siding with their EPP group. Likewise, MEPs from her junior coalition partner, the FDP also voted against the budget. At the national level, all three parties have been steadfast in their insistence on budgetary discipline in the eurozone.

Netherlands: Dutch PM Mark Rutte was another key ally for Cameron in pushing for a cut to the budget. However, his VVD MEPs followed the ALDE leadership in voting against the budget.

Sweden: The Swedish Moderaterna MEPs remained loyal to their Prime Minister and backed the deal but in doing so had to defy the EPP group.

Finland: Despite the Finnish government being one of the strongest supporters of the deal its MEPs from the ALDE and EPP groups managed to split both ways within their groups.

Poland: PM Donald Tusk's Civic Platform party backed him and supported the deal but in the process 'rebelled' from the EPP party line.

Are certain governments regretting having given the EP more powers via the Lisbon Treaty we wonder?