Tusk and Mogherini: Europe's new 'dream team'? Our initial thoughts

Europe's new 'dream team'?

As we noted in our previous post, Cypriot President Nicos Anastasiades had sort of spoiled the surprise. Anyway, now it's official: Polish Prime Minister Donald Tusk has been appointed new European Council President, and Italian Foreign Minister Federica Mogherini will succeed Baroness Ashton as the EU's foreign policy chief (aka High Representative for Foreign Affairs).

A couple of initial thoughts:
  
Donald Tusk 

Tusk has economically liberal and pro-free trade instincts. Most importantly from the UK's point of view, he comes from outside the euro area - and will therefore be sensitive to the concerns of non-euro countries when it comes to safeguarding the integrity of the single market, a point he made during his press conference:

#Tusk We've need to prevent Europe from dividing into euro/non-euro camps, I wouldn't have taken job if it involved new institutional split
— Pawel Swidlicki (@pswidlicki) August 30, 2014

Tusk also explicitly committed himself to ensuring the UK stays in the EU and endorsing (some) EU reforms:

#Tusk: We'll need solutions to the concerns of Great Britain, no one sensible can envisage the "black scenario" of an EU without Britain
— Pawel Swidlicki (@pswidlicki) August 30, 2014

That said, Tusk is also likely to oppose fundamental changes to EU rules on free movement; although he did say that so-called 'welfare abuse' can be addressed, as we've noted, for many the debate has moved on from the issue of 'fairness' to that of 'volume', something Cameron will be under huge pressure to place at the centre of his potential renegotiation. In the more immediate future, Cameron's early support for Tusk as new European Council President could increase the UK's chances of securing a big portfolio in the new European Commission.

Significantly, it has been confirmed that Tusk will also chair the summits of eurozone leaders - despite coming from a non-euro country. This looks like a big concession made, in particular, by French President François Hollande - who was reportedly sceptical of such an arrangement. Perhaps Hollande hopes that giving ground on this point can help him secure the key post of European Commissioner for Economic and Monetary Affairs for his former Finance Minister Pierre Moscovici.

Federica Mogherini

The resistance to Mogherini, put up by Eastern EU member states over the past few weeks, has clearly been appeased by Tusk's appointment as new European Council President. It was noteworthy that Herman Van Rompuy stressed that Tusk and Mogherini would "work closely together to secure Europe's interests and values".  

Italian Prime Minister Matteo Renzi, who has invested a great deal of political capital on Mogherini, seems to have achieved what he was looking for: a diplomatic victory in Brussels to sell to the electorate once back in Italy - where the big reforms are not going forward as fast as announcements, and the economic situation shows no signs of improvement. With the country in recession and deflation, it remains to be seen how much Italian voters will be impressed.

#Mogherini lands High Rep job, #Renzi scores EU victory to sell back at home. Not sure how much Italians will be impressed. #EUCO #EUtopjobs
— Vincenzo Scarpetta (@LondonerVince) August 30, 2014

As we noted in our recent flash analysis, the role of High Representative is less crucial from the UK's point of view - as foreign policy remains primarily a national competence, with every EU member state having a veto. However, in light of the various geopolitical challenges facing the EU (and its neighbourhood), it is possible that Mogherini will play a greater - or at least more visible - role than her predecessor.

"I understand that Tusk it's OK": Has the Cypriot President just spoiled it all?

As we wrote in our round-up of EU leaders' doorsteps, Polish Prime Minister Donald Tusk is the favourite for the European Council President post but it was not yet a done deal. However, have we just inadvertently had confirmation that Tusk has landed the job?

Watch this video from around 16:30 in:



Cypriot President Nicos Anastasiades tells outgoing European Council President Herman Van Rompuy:

"We have news, I understand that Donald [Tusk] it's okay."

And Van Rompuy replies:

"Yes, but keep it."

That sounds like a bit of a spoiler, but we will keep following the summit and provide you with real-time updates on Twitter just in case there are any last minute surprises.

EU top jobs summit has kicked off: here is a round-up of doorstep declarations

EU leaders have all arrived in Brussels for today's summit. There are two big issues on the table: the appointments of the next European Council President and High Representative for Foreign Affairs; and the worsening situation in Ukraine (although the situation in the Middle East is also bound to come up).

Here's a round-up of what EU leaders said upon arrival. Let's start with the assignment of the remaining EU top jobs. Italian Foreign Minister Federica Mogherini and Polish Prime Minister Donald Tusk are the frontrunners for the posts of High Representative and European Council President respectively. However, Mogherini's appointment looks more like a done deal than Tusk's - at least from EU leaders' doorstep declarations:

#Hollande: Support of centre-left leaders to #Mogherini is guaranteed [acquis]. I think she will be the next EU High Rep. #EUCO
— Open Europe (@OpenEurope) August 30, 2014

#Hollande thinks #Mogherini will be new High Rep, says "consensus solution" needed for new #EUCO President. He didn't name Polish PM #Tusk.
— Vincenzo Scarpetta (@LondonerVince) August 30, 2014

Brief doorstep statement from #Merkel: We should be able to decide on #EUtopjobs and we will discuss Ukraine, it should be an exciting #EUCO
— Pawel Swidlicki (@pswidlicki) August 30, 2014

Belgian PM Di Rupo says there are "several quality candidates" for #EUCO President.
— Vincenzo Scarpetta (@LondonerVince) August 30, 2014

Finnish PM #Stubb: I don't usually bet, but I would put my money on #Mogherini and #Tusk. #EUCO
— Open Europe (@OpenEurope) August 30, 2014

Enda Kenny: Increasingly evident that the Italian candidate [#Mogherini] will be appointed as High Representative #EUCO #EUtopjobs
— Pawel Swidlicki (@pswidlicki) August 30, 2014

Swedish PM Reinfeldt: If Socialists want #Mogherini, deal will have to be balanced to reflect other interests, other parts of Europe #EUCO
— Pawel Swidlicki (@pswidlicki) August 30, 2014

Mogherini has travelled to Brussels herself, and has met European Commission President-elect Jean-Claude Juncker - possibly a further sign her appointment is drawing closer. Tusk walked into the European Council building without saying a word, although reportedly with a smile on his face.

Meanwhile, it seems no decision will be made on the name of the next President of the Eurogroup of eurozone finance ministers:

#Spain's PM #Rajoy says new €-group President won't be appointed today. He's hoping for Finance Minister Luis de Guindos to bag job. #EUCO
— Vincenzo Scarpetta (@LondonerVince) August 30, 2014

As regards Ukraine, a few EU leaders stressed the need for a reaction if Russia does nothing to de-escalate the situation. However, the emphasis has significantly differed from one leader to another: 

Lithuanian President #Grybauskaitė says #Russia "is practically at war with Europe", and calls for "full arms embargo" against Moscow. #EUCO
— Vincenzo Scarpetta (@LondonerVince) August 30, 2014

David #Cameron: Situation in #Ukraine "completely unacceptable", and "consequences must follow if that situation continues". #EUCO
— Open Europe (@OpenEurope) August 30, 2014

#Hollande: There will certainly be a request to the European Commission to prepare new sanctions on #Russia. #EUCO #France
— Open Europe (@OpenEurope) August 30, 2014

Finnish PM #Stubb: Further sanctions on #Russia will be needed absent de-escalation, but we also need to keep dialogue open. #EUCO
— Open Europe (@OpenEurope) August 30, 2014

And that's all for the moment. The summit is under way, and we will continue monitoring it. Follow us on Twitter @OpenEurope, @pswidlicki and @LondonerVince for real-time updates and analysis.

EU top jobs: will Matteo Renzi and Mrs. Tusk get their way?

Herman waves goodbye to the European
Council Presidency - who will succeed him?

As we laid out in our flash analysis yesterday, the outcome of tomorrow's EU 'top jobs' summit is looking increasingly predictable. Italian Prime Minister Matteo Renzi's efforts to force his Foreign Minister Federica Mogherini into the High Representative post look set to pay off (with Merkel deciding to keep her powder dry for the almighty scrap over the Economic and Monetary Affairs portfolio). Spanish Europe Minister Íñigo Méndez de Vigo this morning tweeted that Mogherini is the "clear favourite" to take over from Baroness Ashton.

Hence, the flip side of the High Representative post going to the relatively dovish Italy seems to be the European Council President post going to a Central and Eastern European member state, with Poland's Donald Tusk (who has been officially endorsed by David Cameron), Latvia's Valdis Dombrovskis and Estonia's Andrus Ansip all in the mix. Tusk himself is staying tight-lipped, with the Polish government's spokeswoman this morning claiming that he had not yet made up his mind - a notable change of emphasis from Tusk's previous outright denials. Somewhat amusingly, Gazeta Wyborcza reports that the person responsible for potentially changing the Polish Prime Minister's mind is...his wife. Mrs Tusk allegedly thinks the post will mean "[more] prestige, [more] money and less pressure."

Of course, with it being the EU, a last minute surprise cannot be completely ruled out, and as in 2009 we could end up with some completely unexpected names that had not been on the radar. However, given the severity of developments in Ukraine - and also in the Middle East - there will be pressure on EU leaders to take concrete measures instead of wrangling about personalities.

EU leaders will also debate the allocation of key posts within the Commission, and Cameron will be pushing for the UK nominee Lord Hill to get an important economic post like internal market or competition, although these are not set to be announced at least until September 8th.

To follow tomorrow's developments live make sure to stay tuned to @OpenEurope, @LondonerVince and @pswidlicki.

EU leaders fail to agree on the remaining top jobs. Anything to remember from yesterday's summit?

Yesterday's European Council summit ended without an agreement on the remaining EU top jobs. However, something interesting still came out of the meeting.

A socialist (and a woman?) for next EU foreign policy chief

EU leaders appear to have established that the next High Representative for EU foreign policy will be a centre-left politician. German Chancellor Angela Merkel, French President François Hollande and Italian Prime Minister Matteo Renzi all said it in the respective post-summit statements.

Renzi, who is pushing for Italian Foreign Minister Federica Mogherini to get the job, also stressed that, "Everyone agrees that there's no other candidacy than Italy's." Hollande added that the High Representative "will necessarily be a woman, taking into account the image of Europe we have to offer". The French President also made clear that he backs Mogherini's candidacy.

The next European Council President will be appointed by unanimity, and could be one of the 28 sitting EU leaders

As Hollande put it during his press conference, the next European Council President "will be a personality that will have to gather consensus". Similarly, Merkel said, "We need a personality...who can hold us 28 together."

Interestingly, Renzi told Italian journalists:

"Hollande said that, according to him, the next European Council President has to be one of the 28 [sitting EU leaders]. It doesn't matter whether [he/she is] from the eurozone or not. He got broad support [for this idea]."

Speaking after the summit, Polish Prime Minister Donald Tusk confirmed that his name has been informally floated for the post of European Council President (an option we discussed here and here), but that he had not been approached officially.

Tusk reiterated that he would prefer to remain in Poland, but then added:

"We have to play out a complicated game and sometimes in this game the argument goes that all options remain on the table. Therefore, if you ask me if this is impossible, I will say that in the negotiations I prefer to keep every eventuality in reserve in order to achieve the maximum that Poland could possibly achieve."

And that was it. EU leaders will meet again on 30 August to try and wrap up a deal. We will be monitoring the meeting very closely, despite it being on a Saturday.

Will Tusk take over from van Rompuy, and what would it mean for Cameron?

Tusk and Merkel "discuss the World Cup" ahead of today's
European Council summit (h/t Maciek Sokolowski)

Yesterday, we reported that Italian Foreign Minister Federica Mogherini's bid to become the next EU High Representative for Foreign Affairs has run into trouble due to her perceived lack of robustness vis-a-vis Russia and Putin, with around ten or eleven countries - mostly from central and eastern Europe - opposing her candidacy. We argued that one way to try to square the circle would be to appoint someone from that region as European Council president to replace Herman van Rompuy, with Polish PM Donald Tusk the most credible candidate.

Today's Rzeczpospolita splashed the news that Merkel was urging Tusk to take the European Council President post and a few hours ahead of the European Council summit this scenario remains very much in play:

#EU diplos tell me latest ticket making rounds: #Poland's Tusk as @EUCouncil pres to placate East on #Mogherini at #HighRep. Tusk resisting
— Peter Spiegel (@SpiegelPeter) July 16, 2014

It is understandable why this 'dream ticket' could generate widespread support - it ticks a number of boxes; at least one top post goes to a woman, one to someone from central and eastern Europe, an experienced politician as European Council President and a relatively junior one as High Rep. It is clear why Merkel - who has good relations with Tusk - is pushing his candidacy.

So why is Tusk resisting? Well, the main reason - aside from his lack of language skills - is that he has no immediate successor as Polish Prime Minister (not least because he has culled any potential challengers) and Polish domestic politics are particularly precarious in the wake of the Wprost tapes scandal. Law and Justice are currently leading in the polls and it is not clear whether the government would be able to hang on without fresh elections in the event of a Tusk departure. Moreover, Tusk himself feels he still has unfinished business in Poland.

Nonetheless, Mutti can be very persuasive so it cannot be completely discounted, and van Rompuy's successor does not take over until November, which leaves a bit of time for a transition. Given that the role will be very important in broking David Cameron's potential renegotiation, what would it mean if Tusk got the job?

Well let's start with the positives - like the UK, Poland is a non-euro country so shares concerns about eurozone integration potentially disadvantaging non-euro members. Poland is also economically liberal and backs further expansion of the single market and the EU-US free trade deal (TTIP). Poland and the UK have also been close allies on Energy issues and with Russia having emerged as a common concern, both recently worked together to push the EU to adopt a tougher position on Russia. Finally, if Tusk were to get the job, he would be keen to stay close to Merkel, something Cameron could use to his advantage.

However, on the whole, a Tusk Presidency may not be good for Cameron; the two have a strained relationship, exacerbated in recent times by the row over EU free movement and Cameron's (ill-advised) comments about Poles claiming UK benefits (Tusk's former spokesperson Pawel Gras claimed the Polish PM had a proper f****** go at Cameron over these). Moreover, while Cameron and Tusk may agree on specific issues, Tusk is dismissive of Cameron's broader argument that the EU is need of fundamental reform and he is therefore unlikely to go out of his way to help him get significant concessions - Cameron would therefore need to ensure he has enough support among other national leaders to negate this factor.    

Are things heading towards a showdown on the new EU foreign policy chief?

UPDATE (18:20) - The FT's Peter Spiegel and Alex Barker are reporting that Belgium's Karel De Gucht, currently serving as EU Trade Commissioner, could be a late entry into the race for High Representative.

Like former Estonian Prime Minister Andrus Ansip (see below), De Gucht is a member of the liberal ALDE family - that has joined the 'grand coalition' supporting Juncker in the European Parliament and now looks to be asking for something in return.

ORIGINAL BLOG POST (17:07)

EU leaders will meet in Brussels tomorrow to get on with the assignment of the remaining top jobs. Priority will probably be given to the appointment of the EU's new foreign policy chief (aka High Representative for Foreign Affairs and Security Policy).

Italian Foreign Minister Federica Mogherini is still regarded as the frontrunner for the job. However, things may not go as smoothly as initially thought. Sources close to European Commission President-elect Jean-Claude Juncker have told Italian news agency ANSA that "ten-eleven [EU] countries" are currently against Mogherini's appointment.

The sources didn't name any names, but it is understood that Eastern EU member states are particularly reluctant, since they believe Italy did not take a hard enough stance against Russia during the Ukraine crisis.

The Lisbon Treaty establishes that, similarly to the European Commission President, the High Representative is appointed by EU leaders under qualified majority. And Italian Europe Minister Sandro Gozi has made clear Italy is prepared to go to a vote. He said:

"[The appointment of] Juncker is part of an agreement whereby the High Representative goes to the socialists." 

"Juncker has been designated by [qualified] majority. No-one ever raised objections [against Mogherini] with us. If there were any, that would mean the High Representative will also be designated by majority."

Therefore, things may be heading towards another showdown. This time, though, the outcome of the vote could be a lot more uncertain. A group of ten or eleven countries (very likely to include Poland, a qualified majority heavyweight) would have good chances of success in forming a 'blocking minority' to reject Mogherini's appointment. That would be a blow for Italian Prime Minister Matteo Renzi, who seems to be investing a good deal of political capital trying to secure a post that he considers as of great prestige. But it could also shift the balance in the distribution of the other top jobs - notably the Presidency of the European Council.

Mogherini is from a centre-left party. This means her appointment would make it less likely for Danish Prime Minister Helle Thorning-Schmidt, another centre-left politician, to succeed to Herman Van Rompuy as European Council President. However, this argument could no longer be valid if the new High Representative were to come from a centre-right party.

This would be the case with Bulgaria's Kristalina Georgieva, who looks to be gaining momentum as an alternative to Mogherini, although, as our dove-hawk axis showed, Bulgaria has so far also been quite soft on Russia.

Another option could be to offer the post of European Council President to someone from an Eastern European country in order to assuage opposition to Mogherini. Polish Prime Minister Donald Tusk could be an option, although with Polish domestic politics in a precarious state he may prefer to stay put. In that case, former Estonian Prime Minister Andrus Ansip - who has already been nominated as Estonia's next EU Commissioner - could be one to watch. Ansip's Estonian Reform Party belongs to the liberal ALDE group, that has joined the 'grand coalition' supporting Juncker in the European Parliament and would presumably be keen to get something substantial in return.  

In other words, a few surprises may come out of tomorrow's European Council. Stay tuned.

Post-Juncker press conference round-up

We have been following the post-summit press conferences of EU leaders. Here is a round-up of the highlights, starting with German Chancellor Angela Merkel:

MOST IMPORTANT POINTS FROM #MERKEL #EUCO PRESSER: (1/3) "Ever closer union" does not mean one-speed Europe.
— Open Europe (@OpenEurope) June 27, 2014

MOST IMPORTANT POINTS FROM #MERKEL #EUCO PRESSER: (2/3) #spitzenkandidaten process will have to be discussed in #Council.
— Open Europe (@OpenEurope) June 27, 2014

MOST IMPORTANT POINTS FROM #MERKEL #EUCO PRESSER: (3/3) "flexibility" on fiscal pact does not mean member states get to re-write the rules.
— Open Europe (@OpenEurope) June 27, 2014

In his press conference, David Cameron took his defeat on the chin but noted that it would make his reform strategy harder:

“Today’s outcome is not the one I wanted. And it makes it harder, and the stakes higher…This is going to be a long, tough fight and sometimes you have to be ready to lose a battle to win a war. It has only stiffened my resolve to fight for reform in the EU, because it is crying out for it.”

Cameron was asked whether much more of this kind of thing would prompt him to recommend an ‘Out’ vote in a referendum. He declined the offer but did make the point that:

“And at the end of 2017, it will not be me, it will not be the House of Commons, it won’t be Brussels who decide about Britain’s future in the European Union. It will be the British people. It will be their choice, and their choice alone.”

He also pointed to the paragraph in the Council conclusions dedicated to the UK:

1. The UK raised some concerns related to the future development of the EU. These concerns will need to be addressed.  

In this context, the European Council noted that the concept of ever closer union allows for different paths of integration for different countries, allowing those that want to deepen integration to move ahead, while respecting the wish of those who do not want to deepen any further.  

Once the new European Commission is effectively in place, the European Council will consider the process for the appointment of the President of the European Commission for the future, respecting the European Treaties.

Italian Prime Minister Matteo Renzi was particularly keen to claim victory on a more 'flexible' application of EU fiscal rules. Van Rompuy’s agenda for the next European Commission is “very very very good on substance. For the first time, the focus is on growth. Insisting on growth is a turning point for Europe,” he said.

“Those countries who implement structural reforms have the right to greater flexibility, which is the most important political point for us.”

Renzi also touched on other EU top jobs, and made clear that:

“The name of [former Italian Prime Minister] Enrico Letta for European Council Presidency has never been made”

As for French President François Hollande, he tried to wrap his battle for looser EU fiscal rules into a European flag:

“I did not intervene only to defend France. When I evoke the flexibility in the margins of the Stability Pact [EU fiscal rules], I defend a conception of Europe.” 

And as regards the next European Commission, he said France wants “an organisation around big Vice-Presidencies. I will demand a Vice-Presidency for France.”

Read our take on what Cameron's defeat means for the reform agenda here.

EXCLUSIVE TRANSLATION: "Cameron f***** it up" - Leaked tapes shed light on difficult relationship between London and Warsaw

As far as leaked tapes are concerned, this is extraordinary - and Open Europe offers the first translation of it all.

Poland has been rocked by a political scandal involving the covert surveillance of senior government ministers, state officials - including the governor of Poland's Central Bank Marek Belka - and business figures, and recordings of their conversations were leaked to Polish magazine Wprost. 

The whole business is distinctly shady - who did the recording and for what purpose (some have suggested Russian involvement) - and could yet lead to early elections. It has also revealed how Polish politics operates behind closed doors and shed light on what senior figures really think about a range of issues, including UK-Polish relations in the context of the EU.

We have highlighted before that this is a crucial bilateral relationship, the health of which will have a significant impact on the success or otherwise of Cameron's EU reform agenda. Unfortunately, this relationship has become particularly strained in recent times, particularly over the related questions of free movement and access to benefits. Here are the key sections of a conversation between Foreign Minister Radoslaw Sikorski and former Finance Minister Jacek Rostowski at some point this spring (we try to keep this blog family-friendly so apologies for the bad language).

Rostowski: “[Cameron] thinks he’ll go renegotiate and come back, no Polish government could agree to it. Except in return for a mountain of gold.”

Sikorski: “Its either a very badly thought through move, or, not for the first time a kind of incompetence in European affairs. Remember? He f***** up the fiscal pact. He f***** it up. Simple as that. He is not interested, he does not get it, he believes in the stupid propaganda, he stupidly tries to play the system... his whole strategy of feeding [his critics] scraps in order to satisfy them is just as I predicted, turning against him; he should have said, f*** off, tried to convince people and isolate [the sceptics]. But he ceded the field to those that are now embarrassing him.”

Rostowski: “For the Polish government to agree, someone will have to give us some mountain of gold. The Brits won’t give it to us, and the Germans, in order to keep the Brits on board, won’t give it to us either in all likelihood. So the answer will be: f*** off... [the impact of a Brexit] will generally be bad for us, because we would like for Great Britain to stay. I think it’ll be the case that [Cameron] will lose the elections. Great Britain will leave. Once they do, they’ll keep open borders. Not for [gypsy] beggars…"

Sikorski: “Just like Norway... Enough of this!” They've f***** up Eastern Europe and a few other things. [Mimics a Brit] If Europe doesn't reform, it’ll end badly! Let them worry about their economy. If they don’t re-organise themselves, they’ll have as bad an economy as Germany. What is that? What, how is that so monstrous?”

In a separate conversation with Jacek Krawiec, head of Poland's largest oil and gas conglomerate Orlen, Pawel Gras, Prime Minister Donald Tusk's then media spokesperson referred to a phone conversation between Tusk and Cameron in the wake of Cameron's comments about Polish migrants claiming benefits in the UK.

Krawiec: “What the f*** are they on about with these benefits? [Cameron] seems like a really sensible bloke... when I met him in London he talked a lot of sense”.

Gras: “Thoughtless, probably suggested by [some spin doctor] probably came from some focus group, he didn't think through the consequences, the whole thing was stupid, Donald called him at once to discuss it, he had such a go at him, I mean f*** it’s a shame we didn't record it, he had a such a proper f****** go at him.”

So what does this tell us (other than politicians use words in private they'd never use publicly)? Well leaving aside the criticism of Cameron's EU policy - which has been made before - here are a few points we've picked up on:

• It is notable that Rosowski assesses the prospects of Brexit as highly likely, and how resigned both he and Sikorski are to that outcome even while admitting that it would be bad for Poland. 
• As such, it is outright bizarre that they are so flippant and dismissive about Cameron's reform agenda - which - for all its flaws from a Polish perspective - remains the best chance for keeping the UK in the EU from a wider perspective.
• Both Rostowski and Sikorski are adamant that even in the event of a Brexit, the UK will not be able to block free movement - if it wants to maintain access to the single market - a key demand of many better off outers (Switzerland is currently facing this dilemma). 
• As the Krawiec comments demonstrate, when addressing issues of substance, Cameron can count on a good hearing from Polish business leaders, a crucial constituency, but he risks alienating Poles by ill-judged claims about 'benefit tourism'.

In conclusion, international diplomacy remains rooted in pragmatism and it is unlikely this incident will result in long term damage between London and Warsaw. It is also worth mentioning that these conversations could well have taken place before the escalation in the Ukrainian crisis which has helped to firm up Polish-British relations (with the UK taking a tougher position on sanctions than other EU member states and sending RAF fighter planes to the region). 

However, it is clear that issues like EU migrants' access to benefits - something UK public opinion will simply not allow Cameron - or indeed any other UK Prime Minister - to ignore. It is crucial therefore that both governments put aside the hyperbole and think about how tricky issues can be resolved in such a way that benefits both countries. 

Battle for next Commission President is a proxy for a wider debate between two competing visions of Europe

Our Director Mats Persson writes on his Telegraph blog:

"Something is rotten in Europe” was the German newspaper Die Welt’s damming take on the European elections, which last week saw record numbers vote for anti-establishment parties of various shades. The lesson is simple: offer voters a binary choice between “more Europe” and “no Europe”, and eventually they will choose the latter. The answer must be sweeping reform.

Many in the European Parliament are bent on not learning this lesson – and have claimed the "democratic" right to appoint the next head of the EU’s executive arm, the European Commission. Many EU leaders disagree, rightly arguing that this isn’t what the EU treaties say at all. This has triggered a maddening stand-off, perplexing Brussels observers and voters alike. But this is a hugely important proxy battle between two competing visions: one of an EU-lite, centred around the single market with national parliaments as the ultimate democratic check. Or “ever closer union” with Brussels and the EP at the centre of a supra-national democracy.

Having MEPs appoint the Commission's president will do nothing to boost democratic accountability in the EU. Europe lacks a common political space (a demos) – none of the main UK political parties have backed the main EP candidates. Neither do MEPs have more legitimacy than democratically elected national leaders. Consider, for example, that across the EU average turnout in national elections is around the 70 per cent mark – compared to 43 per cent in last week’s European elections.

To add fuel to the fire, MEPs have nominated the very personification of Europe’s old orthodoxy – the arch-federalist Jean-Claude Juncker. PM of Luxembourg for 18 years, he once said of the controversial Lisbon Treaty that “of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?”

David Cameron is now scrambling to block Juncker and he may just succeed – Germany’s Angela Merkel, who tends to decide such things, could graciously move him to another EU top job (an improvement at least). So, if not Juncker, then who? Well, the race is wide open.

The centre-right will have the first go by virtue of “winning” the European elections.

The potential runners and riders include IMF Managing Director and former French finance minister Christine Lagarde – a frenchwoman with an Anglo-Saxon twist, she appeals to many Brits, but would sit awkwardly with François Hollande’s Socialist government.

Irish Taoiseach Enda Kenny would be naturally close to the UK, but if seen as a Cameron puppet in the EU, it might well backfire.

“The EU without Britain is like fish without chips,” said former Finnish prime minister Jyrki Katainen, another candidate who may go down well in London but may lack the necessary gravitas.

Opting for Polish prime minister Donald Tusk would be complicated: though sympathetic on free trade and an atlanticist, he has gone cold on Cameron in the wake of the Prime Minister’s remarks about EU migration.

Alternatively, a candidate from the Baltic states – such as Lithuanian president Dalia Grybauskite – could be parachuted in at the last minute as a compromise.

Ironically, from Cameron’s point of view, one of the three front-runners on the centre-left – which could yet end up being selected depending on who gets other EU top jobs – might be preferable.

Danish prime minister Helle Thorning-Schmidt ticks many boxes: a Scandinavian social democrat sympathetic to free trade, the concerns of non-euro states and, amid domestic pressure, potentially an ally in re-writing EU rules on migrants’ access to benefits.

Former Italian prime minister Enrico Letta is a federalist (like most Italian politicians) but has talked of treaty changes providing “a more flexible Europe in the interest of the UK.”

Former Head of the World trade Organisation Pascal Lamy is a rare breed – a French Socialist with a penchant for free trade.

Or, this being Europe, it could be someone completely different. What’s clear is that whoever comes out on top will be an indicator of Cameron’s chances of achieving sweeping change ahead of a potential 2017 referendum. The stakes are huge.

False row alert: Changes to EU benefits rules don’t necessarily need treaty change

Cameron and Tusk do not see
eye-to-eye on EU free movement

The UK-Poland row over immigration continues. Now Polish PM Donald Tusk has waded in by saying that Poland would veto any EU treaty change aimed at striking down on access to benefits – including child benefit for children living in other EU countries. This is in response to David Cameron's remarks on Sunday that:

"I think it's wrong that someone from Poland who comes here and works hard - and I'm absolutely all in favour of that - but I don't think we should be paying child benefit to their family back at home." 

Somewhat confusingly, Cameron said one way of changing the rules was "the treaty change that I'll be putting in place before the referendum that we'll hold on Britain's membership of the EU by the end of 2017".

Tusk hit back, telling reporters in Warsaw that:

"If anyone, whether it is premier Cameron or anyone else, will want to change the European treaty to make this possible, Poland will veto it, today, tomorrow and forever," 

The two men will have what we assume will be a somewhat tense phone conversation later today.

You know what we think of this row. However, whether we agree or disagree with the changes Cameron proposes - and it's hard to see how the current EU rules around child benefits can stand - most of the changes around access to benefits could be sorted through altering EU directives and regulations. Those who favour the status quo point to the EU treaties’ passages on non-discrimination as a barrier to change.

However, the EU’s Rights of Residence (aka Free Movement) Directive already qualifies the right to access certain benefits on the basis of time resident in a country, so it would be a matter of agreeing to extend this already established principle. The rules on child benefit are governed by the EU’s Social Security Regulation. The Directive and Regulation are both decided though qualified majority, meaning that no single EU country has a veto, meaning Poland would need to muster a blocking minority to see off the changes. No need to touch the EU treaties (unlike an outright cap on immigration, for example). Ultimately, the devil would be in the detail.

But, again, a pragmatic compromise is fully possible. The Open Europe/Fresh Start reform conference next week will bring together some of the key players in this debate - including the head of the EU Affairs committee in Polish Parliament, Agnieszka Pomaska and the Bulgarian foreign minister, Kristian Vigenan - to try to replace the current emotional shouting match with a substance-based discussion.

EU budget talks: The dust has settled - and they all won!

We've been listening to the national press briefings of several EU leaders following the deal on the EU budget (which we analyse here). And you got it - they all won! (well, almost). Here goes:

David Cameron (UK)

• The British Prime Minister said, "I think the British public can be proud that we have cut the seven-year credit card limit for the European Union for the first time ever." 

• He went on, "The only way you can best protect the British taxpayer is to keep overall spending down, and that’s what we’ve done, and also to keep what remains of the rebate, and it is completely untouched." 

• On the possibility of MEPs staging a secret ballot vote on the next long-term EU budget, Cameron said, "Of course the European Parliament has a role, and we should respect that. But I don't really understand secret ballots. Parliaments and votes should be open, should be transparent, people should be accountable for how they cast their votes."

Angela Merkel (Germany)

• As usual, the German Chancellor - the power-broker - did not give away too much during her presser. She said, "The effort was worth it…in my view this agreement is good and important." 

• She also warned that "the negotiations with the European Parliament won't be easy".

François Hollande (France)

• The French President, a bit sulky, said this was "the best deal" on offer given the circumstances.

• He repeatedly stressed that the UK wanted payment appropriations to be lower than €900bn over seven years, while France was insisting on €913bn (see here if you are not familiar with the commitments vs payments distinction). According to Hollande, given that the final compromise was reached at €908.4bn, "Everyone will say who made the bigger step" - a way to suggest that David Cameron had given up more than he did.

• According to Hollande, France will also save some €140m a year on its financing of the various rebates. On the rebates, the French President made his most interesting remark (see here, around 16:00 in). He said, "I knew that there was no possibility to put into question the British rebate, because you know that it is provided for by the [EU] Treaties [which, by the way, is incorrect]. Therefore, it is immutable" at least until the Treaties are re-opened for negotiations. The British, he added, "should keep this in mind, including when they demand treaty changes." If this is not a threat, then what is?  

• He said that funding for agriculture has gone down overall, but he has made sure that aid to French farmers will remain at the same levels as in 2007-2013. Now, that's what you call 'solidarité', right?

• Finally, the French President admitted that the UK was not on its own in these negotiations, as "other countries wanted more for themselves and less for Europe".  

Mario Monti (Italy)

• The (caretaker) Italian Prime Minister hailed a "particularly significant improvement" in Italy's net position compared to other big net contributors to the EU budget.

• He said Italy has secured an extra €3.5bn in funding compared to the compromise proposal on the table at the November summit.

• Furthermore, Italy will save around €600m a year on its financing of the various rebates.

Mariano Rajoy (Spain)

• The Spanish Prime Minister said the deal is "very good for Spain". Contrary to expectations, Spain will remain a net recipient from the EU budget over 2014-2020 - which is huge. 

• Rajoy was particularly pleased by the fact that Spain "will get almost 30%" of the new fund for youth unemployment included in the next long-term EU budget. 

Mark Rutte (Netherlands)

• The Dutch Prime Minister opted for a lower profile. He said, "Of course you never completely get it your way with 27 member states, but I think that we as the Netherlands can be satisfied." 

• He described the deal as a "sober" budget, and said that the Netherlands "worked well together" with Sweden, Germany, Denmark, and the UK.  

Helle Thorning-Schmidt (Denmark)

• The Danish Prime Minister said her country "came here with three priorities, and we satisfied all of them", pointing out that she had secured an annual rebate of €130m.

Fredrik Reinfeldt (Sweden)

• The Swedish Prime Minister said the deal was "a surprisingly good result".

• He argued that, contrary to fears that Sweden's contribution to the EU budget would increase, it is, in fact, set to drop slightly.

Donald Tusk (Poland)

• The Polish Prime Minister spoke of "a huge success" for his country, stressing that Poland's receipts will increase by €4bn despite the long-term EU budget facing a €38bn cut from the previous seven-year period.

• He went even further, claiming today was "one of the happiest days of my life". Wow!

Werner Faymann (Austria)

• The Austrian Chancellor was less enthusiastic than many of his counterparts. He said the deal struck this afternoon is "presentable" for Austria - which managed to secure a rebate, although it will be phased out by 2016 (see the final deal here).

Petr Necas (Czech Republic)

• The Czech Prime Minister was pleased about his choice to threaten a veto. He said, "If the Czech Republic had not seriously threatened to block the negotiations, then it would not have been possible to negotiate a better outcome."