Another twist

Here's another thought for the weekend.

Apart from the legal obstacles (at least on paper) involved in giving emergency support to Greece - something we've touched on many times before - there may be a second legal hurdle that EU leaders have to clear if they wish to come to the rescue of struggling neighbours.

Le Monde yesterday suggested that EU leaders consider the common issuance of debt by voluntaring eurozone member states, as a possible way to kick start the bail-out of Greece.

But such an option isn't spot-on legally either. According to German EU Law Professor Matthias Ruffert (FAZ interview here), for example, the German government would not be allowed to lend money to Greece in that way. "That's impossible" he says, adding that "the ban for governments to bail out banks also extends to governments. When a state gives a credit facility to another one, this is in breach of the EU Treaty". He cites article 123 of the EU Treaty:

"Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments."

It seems as if the betting has now really started: bail-out or no bail-out. (And everybody can participate by buying Greek bonds. The Chinese, known as quite the gamblers, seem to have passed on the opportunity).

WSJ correspondent Adam Cohen thinks it's going to be a bail-out, arguing: "The credibility of the euro, perhaps the bloc’s grandest project and still a young one, is more important than a simple moral lesson for spendthrift politicians." And he's not the only one to say so.

But, remember, somewhere in all of this there is also the citizens and taxpayers of Europe. And they may not be that keen. As a poll commissioned by us last June showed, 70% of Germans are against using their own money to bail out other EU countries.

Whether small matters such as public opinion will stop EU leaders from pressing the button is of course a completely different story.

ridiculously generous

MEPs on the European Parliament's Budget Committee voted on Wednesday to award themselves an extra €1,500 and to hire an additional 150 staff. MEPs say they're in desperate need of more money because the Lisbon Treaty is now in force which means more work for them. In total, MEPs can already cash in on some £360,000 year in pay and allowances. For most people this seems like an incredibly generous amount - but not for the MEPs themselves apparently. The increase will cost taxpayers an extra €13.3 million a year and send the EP's total annual budget past the €1.6 billion mark.

Just like EU bureaucrats' recent über-insensitive demand for a 3.7% pay rise - now awaiting a decision in the Courts - this latest display of the money-hungry culture prevailing in Brussels will not go down well with taxpayers or voters. Nor will this document, published before the EP Budgetary Control committee's meeting, showing how MEPs squander public money. Amongst various spending items, it reveals that the EP last year spent €2.3million to renovate its own sports centre, €4.3million on a new visitor centre (although it already has one), hundreds of thousands of pounds on gas-guzzling cars (some emitting as much 260 CO2 g/km - fighting climate change anyone?) and a staggering €8.8 million on repairing a ceiling that collapsed in the Strasbourg Parliament (which reinforces the stupidity and wastefulness of having a Strasbourg Parliament in the first place). As a side, the document also reveals that the EP lost 54,000 in sick days in 2008.

Although, to be fair, since the new Members' Statute came into effect last year, MEPs do not receive this assistants allowance directly anymore, with assistants being paid directly from the European Parliament's budget. However, this should not detract from the patently ridiculous amount of expenses and allowances available to MEPs.

The editor of the European Voice, Tim King, yesterday summed up why taxpayers and voters have the right to feel very unhappy about this whole affair:

For 40 years, a near-secret agreement has governed how the three main institutions of the European Union divide up administrative spending. That agreement should be brought into the harsh light of day. It should then be ripped up and replaced.

He notes that while the principle behind the agreement is itself not stupid, "what is stupid is the corollary that went with that principle: an agreement that the Parliament would be guaranteed a 20% share of the administrative budget."

He goes on,

Forty years on, it is obvious to many outside observers that the Parliament has more money than it knows what to do with. The Parliament may have set up a temporary committee on the economic crisis, but it is otherwise unscathed by Europe's economic difficulties. Although the Parliament is very fond of climbing into its pulpit to criticise the misuse of EU money when that money is managed by national administrations or the European Commission, it is much less outspoken about the misuse of money under its own palatial (albeit occasionally collapsing) roofs.

He points to the internal 2008 report (that MEPs voted to keep secret) which revealed widespread abuse of allowances in the EP, MEPs' immoral second pensions scheme and other questionable perks and practices.

He concludes,

Now the Parliament's leadership is drawing up its 2010 budget and is struggling to stay within a 20% share of the total spending on administration. Laughably, the MEPs are describing their 20% slice of the pie as 'the long-standing self-imposed limit', not noticing that the description is inherently contradictory: if the 20% was not ridiculously generous, it would not have been 'self-imposed' for so long. The truth is that it is not a meaningful constraint, so MEPs and their officials have been more than happy to live with it...It is scarcely credible that an agreement that dates back to when there were only six member states should remain in place, unquestioned, unexamined.

Exactly.

To bail out or not to bail out, that is the question

As Greece's troubles continue (save yesterday's temporary boost), the debate on whether the EU Treaties legally allow the EU to bail out one of its member states rages on. On his blog, the FT's EU correspondent Tony Barber claims that the "EU possesses the legal power to rescue Greece if necessary."

For what it's worth, we're not convinced it does, although there is so much ambiguity in the EU Treaties that it's probably going to be a case of 'where there's a will, there's a way'.

Barber refers to article 122 of the TFEU Treaty (former article 100), arguing:

The second clause states that when a member-state 'is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council [of national governments], on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the member-state concerned.'

However, as we set out last July, the 'no bail-out' clause in the EU treaties explicitly prohibits member states from taking on the financial 'commitments' of a national government (i.e. assisting in closing a budget deficit). And this is what the no bail-out clause says in full:

The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. (article 125 TFEU)

This 'no bail-out' article is supposed to guard against 'moral hazard', embodying the important principle that it us unreasonable and fundamentally undemocratic to let taxpayers in one country pay for the mistakes of governments (in Greece or elsewhere) in a different country (over which they have no democratic control).

In a written answer to former MEP Kathy Sinnott, the Council suggests that the 'no bail-out' clause is superior to the article allowing for financial assistance to member states. On how article 100 (now article 122) can be used, they said:

the Council recalls the terms of the Declaration on Article 100 of the Treaty establishing the European Community, which is attached to the Nice Treaty. According to this declaration, 'decisions regarding financial assistance, such as are provided for in Article 100 and are compatible with the 'no bail-out' rule laid down in Article 103...

The Council therefore refers to a "Declaration on Article 100" (that was attached to the Nice Treaty), which states that actions under article 100 must be "compatible with the 'no bail-out' rule".

But that may not be the end of the story. The EU doesn't exactly have a brilliant track record in abiding by its own rules (the EU hasn't managed to follow its own budget rules for 15 years).

The Council's written answer to Kathy Sinnott also reveals that the EU's member states have never thought to set out exactly what "exceptional occurrences" beyond the control of a member state might constitute. The Council said:

No definition of "exceptional occurrences beyond the control of a Member State" exists and the Council has never discussed it. Similarly, the Council has never discussed the possibility of invoking "exceptional occurrences" in the context of the current economic situation.

Tony Barber argues that "if you don’t define the 2007-09 world financial crisis as an 'exceptional occurrence', then it hard to see what type of event could ever fall into this category". With this reasoning the EU (including non-Eurozone members such as the UK) could be asked to bail out a eurozone member in trouble and as Barber notes, none of the Eurozone leaders have "any doubt whatsoever that, if the worst happens, they will have to rescue Greece.."

But such an interpretation would take some nerve. The Swedish and Finnish Finance Ministers have clearly said that a bail-out is legally impossible. And in the following interview with Frankfurter Allgemeine Zeitung, German EU law professor Matthias Ruffert completely rejects the idea that the financial crisis could credibly be defined as “exceptional occurrences beyond [the Greek government's] control”, saying: "state debt certainly cannot be counted among those." On whether "the financial crisis couldn't be seen as extraordinary and uncontrollable", he answers: "that wouldn't convince a judge. In other areas, jurisprudence strictly distinguishes between scientific and non scientific grounds in order to justify exceptions."

We suspect that this debate will drag on. One thing is for sure: the EU has an amazing ability to be creative with its own laws when the boat gets a bit rocky.

Kick-start

Open Europe has a short article in this month's edition of Parliament Magazine, detailing how the Spanish EU Presidency could contribute to getting Europe's economy back on track. We argue:

Instead of trying to make economic underperformance illegal and centralise more powers in Brussels, the Spanish Presidency should kick-start the new Lisbon agenda by empowering Europe’s businesses to create real jobs and growth....The threat to Europe’s overall competiveness arises not from a lack of binding targets or Commission powers, but from over-intervention and rules that de-incentivise growth, innovation and job-creation. Growth cannot be legislated – it receives its thrust from individuals, businesses and communities. Designing the right environment for these actors is therefore absolutely vital to unleash Europe’s potential and talent. And here the Spanish Presidency can help by resisting the temptation to pursue activist and mis-targeted regulatory policies.

You can never leave

A recent legal paper by the European Central Bank deals with the subject: “Withdrawal and Expulsion from the EU and EMU: Some reflections”. It has received quite a bit of attention. Unsurprising, perhaps, given the state of the Greek economy (see here, here, and here for example).

It starts of admitting that the EU isn't exactly becoming more popular:

The transfer of an ever-increasing share of [member states'] essential sovereignty to the supranational European institutions, in conjunction with the EU’s declared ambition (unpopular with the public of some Member States) to bring new members within its fold, have created new tensions or exacerbated existing ones, testing the Member States’ commitment to the furtherance of European integration.

It goes on to say that the possibility of "secession" from the EU and the EMU is now worth taking a close look at, given the huge challenges facing some member states (Greece isn't mentioned specifically, but it's clear of which countries the paper speaks):

The increase, under the recently ratified Lisbon Treaty, of the number of policy areas where decisions will be taken by qualified majority voting rather than unanimously, the economic difficulties faced by some euro area economies (and the association made between those difficulties and the euro), the rigors of the Stability and Growth Pact, and the impact of EMU on the Member States’ room for manoeuvre in economic policy at a time of severe financial crisis are all additional reasons why the possibility of secession from the EU or EMU, and its implications, are worth examining.

The paper also gives a worrying indication of how people at the top of the EU - supposedly still an "international organisation" - think about the sovereignty of its member states:

The fact that EU membership is voluntary is not in itself conclusive since sovereignty is … given full expression in the right of any State to join a particular organisation, or not; but once a State decides to enter an organisation it is no longer free, and its own wishes are no longer decisive

Extrordinary, this reasoning seems to imply that a member state is not free to decide for itself weather it wants to leave the EU. This is of course nonsense; a country can simply unilaterally choose to take off - which Greenland did in 1985. The Lisbon Treaty now also provides for this option (But only after the country has asked the other members and the European Parliament for permission. If they disagree, the country can only leave after 2 years. (Article 50 TEU) ).

Turning to the possible succession from the eurozone, the paper goes on to say that "the only way to withdraw from EMU is to withdraw from the EU". It concludes:

A genuinely unilateral right of withdrawal would be unthinkable in the context of EMU, not least on account of its open conflict with the plain language of Articles 4(2), 118 and 123(4) EC and Protocol 24 on the Transition to the Third Stage of Monetary Union and, in particular, with the references therein to the ‘irrevocability’ of the substitution by the euro of the currencies of the participating Member States and to the ‘irreversibility’ of the monetary union proces.

This is all pretty mind-boggling stuff, and reminds us of that old the Eagles song, ending with the line: "You can check out any time you want, but you can never leave!".

In light of what the monetary union has done - and is doing - to the eurozone's 'periphery', causing bubbles in countries such as Ireland and Spain, for example, or locking in structural economic problems in Greece, you would think that now is the time for a serious 'two-way street' debate about the euro. The legal provisions were written at a time when the EMU only existed on paper. As the euro experiement is unfolding in real life, these legal provisions might soon be in need of revision.

The Commissioner for Everything

Michel Barnier - the man who was handed the crucial Internal Market portfolio in the Commission following a complete miscalculation by Gordon Brown - is definitely on the move. The job as the entire Single Market's (and the City's) Chief Regulator doesn't seem quite big enough for him. Barnier wants more.

Before Christmas he said that he would make sure to "give his opinion" on EU farm policy to the new Commissioner for Agriculture, Dacian Cioloş, insisting on the need to "preserve farm regulations because feeding people is not a service like any other".

And in thinly veiled criticism of Catherine Ashton's decision not to go to Haiti following the earthquake, he now seems to be setting his eyes on the Commission's foreign policy portfolio as well. On his blog Jean Quatramer reports from a press briefing with Barnier on Wednesday.

After having refused to criticise her directly: [Barnier] let slip a poisonous remark during a press lunch earlier: 'when the tsunami hit in December 2004, I immediately made myself available'. At that time, he was Chirac’s Foreign Minister. Barnier added that at the meetings of the 27 European Commissioners, he would put constant pressure on the leader of European diplomacy (who is also the Vice President of the Commission) on 'issues of foreign policy and defence', implying that there is work to be done.

It seems that for Mr Barnier the world is not enough..

It concerns the EU’s very existence

An issue facing those who want to constructively question the path of EU integration - the kind of democratic opposition that is desperately lacking from EU politics, most notably in the European Parliament - is that EU enthusiasts automatically portray any criticism as a parochial attack on the entire EU project rather than rationally facing up to the EU's failings (which, ironically, is a hugely counterproductive tactic as seen in most polls).

But it is a lot harder for people to simply put their fingers in their ears when a former German President and a former Dutch EU Commissioner say that the EU is getting things wrong. Last Friday, Roman Herzog and Frits Bolkestein, accompanied by the Director of the German based Centre of European Policy think tank Luder Gerken, made their case in the German press for why the EU needs to change or risk "complete collapse".

Herzog made a similar splash in 2008 when he argued that something had to be done to "Stop the European Court of Justice", calling the EU a "mammoth institution" - an article which recieved widespread attention from all sides of the debate (and served to heat up the debate in Germany).

The latest article, entitled "The EU is harming the European ideal", takes a broader look at the EU and argues that the greatest challenge it faces is existential. And the three luminaries aren't pulling any punches:

"It concerns the EU’s very existence: the EU must win back support for its existence, which it has lost from many citizens and even from many parts of the economy. Without this endorsement there is a risk of permanent damage to the people’s acceptance of the fundamental principle of European integration with immeasurable consequences for the EU, including the possibility of it completely breaking down."

They argue that the loss of public support for the EU is a direct result of over-regulation and the one-size-fits-all nature of EU policies:

"The loss of this endorsement stems from an almost all encompassing impression that Brussels legislates regardless of the people’s wishes and of long established traditions and cultures, constantly introduces rules and regulates things that could be regulated at least as well at the regional or national level."

They note that the EU institutions cannot be relied upon to enforce the subsidiarity principle because they are only interested in extending their powers:

"The European Court of Justice will do nothing to enforce the principle. The Court also has an interest in a constant expansion of its areas of competence. The same is true for the European Parliament."

It is therefore up to national governments, parliaments, the media and the public to be the "guardians" of subsidiarity:

"National governments must finally develop a culture of categorically saying No to the horse trading and alliance brokering in the Council of Ministers, when the suggested legislation contravenes the principle of subsidiarity or goes beyond the EU’s areas of competence."

These are not exactly observations coming from the fringes of society. Concern over the EU's democratic deficit does not mean that one cannot at the same time recognise the need for the EU, in one form or another. Herzog, Bolkestein and Gerken cannot be accused of being "anti-European" - the article demonstrates genuine concern for the EU's continued existence - and it would be dangerous to ignore them.

They are voicing the concern of a huge number of European citizens who feel that EU integration has continually been allowed to breach acceptable limits and, as Herzog et al argue:

"European integration is only feasible if the public is also involved. We are a long way away from this, perhaps further away than ever. And if European citizens ever reject the EU in its entirety, we risk creating a mountain of political rubble of historic proportions."

Exactly. When will the EU establishment start to open its eyes to the problems that citizens all across Europe can see?

Whiplash

We confess that we are getting a touch of whiplash trying to keep up with the Lib Dems' constant to-ing and fro-ing over their position on a referendum on the 'EU question'.

As you might remember, the Lib Dems backed a referendum on the Lisbon Treaty in their 2005 manifesto, only to abandon that commitment (by abstaining with characteristic decisiveness) and teaming up with Labour to block a referendum when the Treaty went through Parliament in 2008.

They then said they were in favour of an 'in-or-out referendum', but Lib Dems in the Lords again abstained from voting for such a referendum when an amendment to that effect was put down.

Then in December last year, former leader Sir Menzies Campbell voiced yet another position saying that there was "no public appetite" for an in-or-out vote on the EU since the Lisbon Treaty was now ratified.

Now we see, in a debate in the House of Commons last night, Lib Dem Foreign Affairs Spokesman Ed Davey saying: "Liberal Democrats support a referendum on Europe, but on Britain's membership of the EU and not on the legalese of any specific treaty. We believe that the British people want to be able to answer the in-out question, and that that is the sort of constitutional issue that is best put in a referendum".

Parties should be free to change their minds when they have a genuine change of heart but the Lib Dem's flip-flopping on this issue smacks of complete incoherence and more than a whiff of political opportunism. Perhaps Sir Menzies hit it on the nose when he said that they have no interest in a referendum of any kind.

A question of trust

An interesting new poll from Politics Home of 1,200 voters has found that less than half of Labour voters expect the party to fulfill its manifesto pledges.

50% of Labour voters think it is fairly, or very unlikely to fulfill its manifesto pledges, which is a tellingly high number. The equivalent figure for Conservative and Lib Dem voters' confidence in their parties are that 22% think their Party is fairly/very unlikely to fulfill its manifesto pledges.

While not wanting to disect voters' confidence in the political parties they support, this does smack of inevitability.

To imagine that there would be no fallout, or decline in trust in the Government, from its shabby decision to renege on its manifesto pledge to give voters a say on the Lisbon Treaty would have been naive in the extreme.

There are other factors at play here to be sure, but manifestos are a question of trust and abandoning manifesto pledges are a betrayal of that trust. If half of Labour voters now feel unable to trust that the Party will deliver on its promises, then those MPs that voted against holding a referendum can have no-one to blame but themselves if they fail to win back their seats at the next election.

The Lisbon Treaty and national parliaments: In practice

The true effect of Lisbon, the practice not the theory, is beginning to come to light and, as some of us warned, it is far from pretty.

The House of Commons' European Scrutiny Committee, the body charged with sifting through EU legislation and holding the Government to account, has published its annual report today and has some quite interesting things to say about the Lisbon Treaty's impact on Parliamentary scrutiny of EU proposals - a largely unexciting process but, if it can be effective, one that is key to maintaining a link between our national representatives and the Brussels legislative machine.

Lisbon Treaty advocates have always argued, which we have refuted here, that it would improve national parliaments' scrutiny of new legislation and even increase their powers to enforce subsidiarity - the principle that actions should only be taken at the EU level if they cannot be achieved at the local, regional or member state level.

However, as politicians, the public and the media are starting to realise, the Lisbon Treaty is desperately failing the Ronseal test.

The Committee notes that under the Lisbon Treaty's so-called yellow and orange card procedures, which in theory give member states' national parliaments the right to ask the Commission to withdraw a proposal on the grounds that it infringes subsidiarity, "the legislative decision on subsidiarity would continue to rest with the EU institutions." I.e. the Commission is still free to ignore the views of national parliaments (for more on this see here).

The Committee therefore concludes:

There is, in our view, less to the provisions on subsidiarity than meets the eye. In our experience it has been rare for the entirety of a proposal for legislation to be inconsistent with the principle of subsidiarity. We do not therefore expect frequent use to be made of the yellow and orange cards. Indeed it would be surprising if the mere existence of such provisions gave rise to a growth in the number of well-founded subsidiarity cases.

The point is that subsidiarity is a politically subjective concept and that for as long as the Commission makes the decisions they are only likely to go one way. The European Commission will always find a way to justify EU action if it wants to and, needless to say, it usually does.

These are the challenges facing the Conservatives in their pledge to introduce a Sovereignty Bill which could give the Government the teeth to actually say No when it believes the EU is over-interfering.

The Committee's report raises two more important points. The first is the Government's increased overriding of the Committee's scrutiny reserve. Among other things, the scrutiny reserve obliges ministers to provide the Committee with requested information before they sign up to EU proposals. Between July and December 2008 there were 23 overrides compared with 12 during the corresponding period in 2007. If scrutiny is to be effective, MPs must curb the Government's willingness to circumvent Parliament.

Secondly, the report suggests that the growing use of 'first reading deals', often negotiated in confidentiality between the Council, the European Parliament and the Commission, make it "well nigh impossible" for national parliaments to scrutinise any amendments made to an original Commission proposal in the process. With the Lisbon Treaty now in place this is only going to become more problematic as it has dramatically increased the number of policy areas to which co-decision between the Council and the EP applies.

Stay tuned for more of what they failed to tell you about the implications of the Lisbon Treaty in practice.

Not the best expression of European democracy

Over on his Brussels blog, the FT's Tony Barber contrasts the lively and through hearings of presidential appointees in the US Senate, to the European Parliament's dull and far-from-rigorous confirmation hearings of would-be commissioners, which are taking place this week. He concludes:

The European Parliament is obviously a work in progress, rather than the finished product, so one shouldn’t carp too much. But the hearings, combined with the fact that this legislature was elected last June on the lowest turnout since direct elections to the European Parliament started in 1979, do not convince me that what is going on here is the best possible expression of European democracy.

Not least in light of the ever-so-unelected Baroness Ashton's non-hearing, we certainly agree.

Is the opt-out safe?

The Hungarian nominee for EU Employment and Social Affairs Commissioner, Laszlo Andor, has had his European Parliament today, and it was not quite as dull as some other hearings - Mr Andor seemed willing to share his views on several issues and actually offer an opinion.

(For anyone who didn't read our briefing on the Spanish EU Presidency, they have pledged that it will be a "factory of rights", suggesting that the employment portfolio might be one to keep an eye on in the next 6 months.)

Andor said that there was a "compelling case to revisit" the Working Time Directive - negotiations on which collapsed last year.

UK Lib Dem MEP, and former member of the conciliation committee during negotiations on the Working Time Directive last year, Liz Lynne asked Mr Andor about the rights of workers to engage in overtime if they so choose, and about the opt-out more generally.

Mr Andor's response: "Since we have economic and monetary union, I think that opt-outs are, in general terms, never the best solution. We always have to think first about what rules can be or in principle could be applied in every country. But if there is some kind of fundamental obstacle to apply an overall regulation in an EU country, yes there is a possibility of opting out. Opting out, perhaps temporarily, we also have to bring in the time dimension when we think about these issues and face difficult negotiations."

"Concerning the voluntary overtime, this is really an issue that needs to be seen. I am not sure that a general conclusion could be reached. My approach would be that if it's voluntary in a certain period, within a broader context of working time regulations, we should still find ways to protect the workers, because it comes from the health and safety considerations. We should give room to voluntary arrangements that exceed regulations with certain conditions."

In her follow up question, Liz Lynne mentioned that the latest unpublished report from the Commission found that 14 states are using the opt-out, and asked him if he thought there was a possibility of bringing forward WTD negotiations on the health sector, separately from other sectors.

Mr Andor's response: "When we bring back the Working Time Directive [negotiations] we need to have a new approach and the sectoral approach can be one of the aspects. Obviously we have to learn from the difficulties of the previous attempt to review the Directive. The opt-out itself is not an abuse. I think the opt-out is a reflection of different realities in different member states and we have to take that into consideration when the discussion next comes up."

So...what conclusions can we draw, if any, on Mr Andor's stance on the Working Time Directive, and negotiations on the opt-out which is sure to come back onto the agenda this year? Well, he doesn't seem to be opposed to the opt-out itself, and recognises that different national characteristics in labour markets mean that certain adjustments need to be made in any EU approach within the field of social and employment policy.

However, he does indicate that he is against opt outs in general, suggesting they are not conducive to the smooth operation of the internal market - and they can only ever be temporary measures. This is surely not good news and would provide further support for our case that decision-making in social and employment policy should be repatriated altogether (since the opt-out has to go sooner or later with Andor's reasoning).

Additionally, the suggestion of a sectoral approach to working time negotiations spells a worrying turn. While there is much evidence that the Directive does not work well with the NHS, and other health services across the EU, the health sector is not the only one people should focus on in this respect.

It is not hard to imagine a scenario where some kind of deal is done on health workers, say by the European Parliament agreeing to a change in the definition of on-call time and rest periods, across the EU, in return for which a qualified majority could be reached within the Council to agree to an end to the opt-out altogether.

As Liz Lynne mentioned, 14 EU countries currently use the opt-out, but mostly out of necessity because the ECJ rulings on the Working Time Directive, with regards to on-call time and rest time, are not easily workable in health services.

But what about other workers that want the ability to take on voluntary overtime as and when they choose, and don't necessarily want a maximum cap on working hours handed down by their MEPs, most of whom they have probably never heard of. For more information on the kind of people that want to retain the opt-out for their industries, see our briefing on the Directive and opt-out.

All in all, there are definitely worse people we could see in the position of Employment and Social Affairs Commissioner than Laszlo Andor, but his appointment may not be good news all round.

Is there an answer?

As the European Parliament 'confirmation' hearings for incoming EU Commissioners rumble on in the background, we thought we might take a look at Cathy Ashton's hearing yesterday.

It received a fair amount of press coverage (see here, here, here and here).

You can watch the hearing here but unless you have trouble sleeping tonight, you might want to give it a miss. These Parliament hearings were never going to set Europe alight with inspiration, and were always going to be filled with that old favourite - the "non-answer" answer - or the "answer-so-bland-and-long-winded-that-you-have-lost-the-will-to-live-by-the-end" answer.

Example: Cathy Ashton - we have a "once in a lifetime opportunity to create the External Action Service"..."we need to be results orientated".

She identified "Afghanistan, Pakistan, Iran, the Middle East, Somalia, and Yemen" as "clearly among some of the top priorities" for foreign policy, and adding that she intends to travel to Washington soon to discuss how to co-ordinate strategies on such global issues. But apart from name-dropping some obvious countries, there wasn't a trace of substance in her answers.

One MEP was moved to ask Baroness Ashton what the next step in her vision for Afghanistan was - and reiterate that a specific answer was wanted.

Baroness Ashton's response: "The next steps are going to be very important...we've had some really good successes in the amount of change in primary health care...but there's a huge amount still to do on the ground and I really want to provide concrete results for the people of Afghanistan through what we do."

While the EU Foreign Minister blazing a trail ahead of individual member state governments' foreign policy is clearly not a desirable scenario, does Baroness Ashton have an opinion beyond what is she is being briefed on by the Commission advisors she has surrounded herself with?

Back in December, Cathy Ashton was told by a German MEP that she would need more specific policies at this hearing, and she assured them that she would have "more considered policies".

But that didn't seem to be the case. German MEP Elmar Brok reportedly said after the hearing, "She clearly still has a lot of learning to do; there are many gaping holes that will have to be filled very quickly."

While Baroness Ashton is new to her job (and new to most things in high international politics it seems), this does highlight some of those niggly points we raised back then - that this new sui generis role blurs the line between transnational and supranational, and as yet it is unclear how it will operate in the 'eurospace' between the Commission and the Council - and above all that the Foreign Minister job is a blank cheque and it is still unclear how EU policy will be formed in concrete terms.

One rather telling question from an MEP asked Baroness Ashton where her loyalty will lie in a disagreement between the Council and Commission on a given issue, e.g. Iraq.

Baroness Ashton's response: "The issue for me is not to be in that position - the issue for me is to bring the Council and Commission together, in order to develop strategic and common policy in the right way."

Right...much clearer.

NB: there is a rather hilarious anecdote on the Economist's Charlemagne blog, relating to MEPs' concerns that overseas EU delegations employ the appropriate protocol staff to ensure that MEPs are met at airports with official cars when they go on foreign jollies.

Infuriating and fatal

Over on Comment is Free we take a look at the simmering EU pay dispute, which took a new turn yesterday when the Commission decided to take all 27 EU member states to the ECJ over their refusal to increase their offer of a 1.85% pay rise for EU officials to 3.7%.

It seems it is not only us that think this is a ridiculous situation. An article in Die Welt by Brussels correspondent Hannelore Crolly argues that,

"It is a fatal decision for the EU Commission to argue over the increase in payment to 50,000 already well-paid employees in the face of objections from the debt ridden member states in court…In a deliberately insensitive and almost frightening way, the Commission is again sending the wrong message to the people, who it should be trying to win over for the European cause."

Similarly an article in Kölner Stadt Anzeiger argues: “The EU is fighting against the countries that support it. It is not just painful, it is infuriating.”

In today's WSJ Charles Forelle takes a critical look at the "compulsory method" that was used to arrive at the 3.7% pay increase demanded by EU civil servants and which has become central to the dispute. He notes that,

"To crunch the civil servants' cost-of-living adjustment, the EU's statistical office doesn't rely on Belgian data for housing costs. Instead, each year it surveys its own staffers, asking them how much they pay. The purpose isn't lost on those surveyed. A privacy statement attached to the survey says the data will be used "for the calculation of the annual salary adjustment."

He adds,

"Rent-survey data accounted for nearly all of the increase in the EU's
bespoke cost-of-living figure…Had the EU used the Belgian consumer-price index -
which fell 1.1% - to adjust the civil-servant salaries, the raise would have
been a more recession-friendly 1.7%, instead of the now-vilified 3.7%."

As we've argued before, with civil servants in Latvia seeing their pay cut by 25% and Ireland slashing 1.3 billion euros off its public sector wage bill, EU officials' refusal to accept a compromise wage increase of 1.85% does seem rather churlish, to put it mildly.

2.5 million tonnes of EU waste

Few things represent the absurd and outdated nature of the EU's budget as well as the weird butter and grain mountains. These mountains consist of surplus produce that Europe's farmers have been unable to sell on the market and that is instead bought up by the EU Commission under the Common Agricultural Policy. It is then stored in massive stockpiles providing the ultimate image of EU waste.

It's somewhat of a common perception that these mountains are a thing of the past - that they've disappeared following a series of reforms of the CAP (for which Tony Blair gave up £4 bn of the UK's rebate from the EU's budget).

Not so.

From Swedish agricultural magazine Land we learn (for those of you who aren't regular readers of the publication) that there's now some 2.5 million tonnes of surplus produce in store around Europe. 2.5 million tonnes! The butter and grain mountains appear to be growing again, following the Commission's decision last year to reinstate controversial "intervention buying" in the dairy sector (the phasing out of which was meant to form a central part of the CAP reforms promised to Tony Blair).

Tony's complete failure in the EU budget negotiations in 2005 is becoming more conspicouos by the day.

"You may not trust the people, but we do"

Iceland's President Olafur Ragnar Grimsson appears to be a giving a rather strong 'two fingers up' to Britain and the Netherlands at the moment, by refusing to sign the 'Icesave' bill, sending it to the Icelandic people for a referendum instead. The bill in question would see Iceland pay Dutch and Britain savers £3.6 billion in lost deposits from the collapsed bank Icesave, and take on a debt worth around 40% of Iceland's GDP in 2009, equivalent to around 12,000 euros for every Icelandic citizen.

Speaking to Newsnight last night, President Grimsson said "You have to trust the democratic process. You see in France, in the Netherlands, in Ireland, in many European countries, referendums are a normal part of the democratic process."

Is it a coincidence that he selected three countries which chose to ignore the outcome of their referendums on the Lisbon Treaty? They are not the only EU countries to have ever held referendums - so we suspect that by flagging up those three, President Grimsson is making a rather pointed comment, something along the lines of: "just because the EU is afraid of referendums, and chooses to bulldoze over the will of its people, does not mean that Iceland will do the same."

He went on to add, "I know in Britain you don't really have the experience of trusting the people with a referendum, but all over Europe there are countries that trust the people with a referendum."

Hmm...you don't have to be Alan Turing to decode that one either: "Just because Britain reneged on its promise to hold a referendum on the Lisbon Treaty because it didn't think it could trust the people to vote in the 'correct way' doesn't mean we will do the same."

Meanwhile a new poll out today from MMR has found that 58% of respondents in Iceland said they would vote against the bill in the upcoming referendum, to be held on 20 February, and 42% said they would vote in favour of it. Will the polling numbers remain like that? Possibly not. Iceland might see the same not-so-subtle pressure applied to it that Ireland did (in Lisbon Mark II). See comments from Lord Myners yesterday, threatening Iceland with being frozen out of the international financial system, and not being allowed to join the EU, although following it with a "I don't think it's a case of us having to warn them...The Icelandic Government recognised that this was the case."

In all honesty, the EU might have to think twice about extending membership to a country that trusts the people and is willing to put an issue like this to the test.

Downright scandalous

We had been forced led to believe by the powers that be that the ratification of the Lisbon Treaty (by hook and by crook) was meant to signal the end of the EU's internal wrangling and launch the EU into a new decade more outward looking and firmly focussed on the needs of its citizens.

However, the 40,000 - 50,000 or so EU bureaucrats in Brussels (and Luxembourg) plainly have other ideas. They have decided to start 2010 by taking all 27 member states of the EU to the European Court of Justice over their refusal to agree an inflation busting 3.7% pay rise. EU officials have been unwilling to accept a compromise offer from member states of a 1.85% rise.

Now this is so outrageous on so many levels that you would be forgiven for thinking this was a joke or something concocted by the most vehement eurosceptic. But if you're struggling to believe it, take a look here.

First, the pay rise itself. EU officials are paid well, very well. The basic monthly salary of the lowest pay grade is €2,550 per month, while a department head can expect to earn around €17,700 per month, and are paying special "community taxes" ranging from 8% to 45% (with the highest tax bracket applying only on wages above €6,700 per month). They receive all manner of benefits, including generous allowances for their children's education and very favourable pension arrangements.

Despite these benefits, EU officials are insistent that, in the worst recession for generations, they are entitled to more because "that's what the 'compulsory method' for calculating the figure says" and that it is a matter of "rule of law" as a Commission spokesperson delicately put it. Evidently, recessions can't penetrate the Brussels bubble and, even if they did, they would of course be superseded by EU law.

The scale of the brazen disregard for what is happening to Europeans elsewhere and the sheer bloody-midedness is quite frankly awesome.

Second, is the process by which this issue of the pay rise will inevitably happen be decided. You could cut the lack of democratic accountability with a knife. Today's decision to take the matter to the ECJ was taken by the 'College of Commissioners', which includes all 27 EU Commissioners and the UK's very own Catherine Ashton. The decision was taken by unanimity, so it therefore follows that the Baroness thought this a good idea too.

Because all the salaries of those directly employed by the EU institutions are based upon the same pay scale, the 27 EU Commissioners are also set to benefit from the additional 3.7%. Now Ashton's decision is not looking so silly (well, for her anyway). As Bruno Waterfield over at the Telegraph notes, Ashton will pocket an extra £9,000 on top of her basic annual salary of £241,000 if the commission's legal action is successful. But it does not stop there.

Not content with an assault on EU taxpayers' wallets, the Commissioners have made sure to insult their intellect for good measure. Commission spokeswoman Pia Ahrenkilde Hansen told journalists that due to the stalemate between member states and the Commission "Now it's for the court" to decide. Reading this at first glance one would think this reasonable - an impartial judiciary is just the job for such institutional difficulties.

But, hang on a minute, aren't the ECJ judges' salaries also based on the very same pay scale as all other EU officials? Why yes they are. Thank the EU for those checks and balances. The festive season may be over but the expression 'Turkeys don't often vote for Christmas' still very much applies.

mistaken identity

With the news that Mr Bean briefly replaced Jose Luis Rodriguez Zapatero last night as the face of the Spanish EU Presidency's website, courtesy of an intrepid hacker keen to point out the Spaniard's resemblence to the British comic character, we thought we'd seek suggestions on any other candidates for EU look-a-likes.

Here are a couple to get you going:

Dutch PM Jan Peter Balkenende...















...and the little magician...















Swedish PM Fredrik Reinfeldt...















...and Shrek?...















And possibly a long shot...EU President Herman Van Rompuy...










...and the Grinch...















Maybe this last one requires a bit of a squint but we're open to any further suggestions...

Do as I say, not as I do

In October EU ministers and heads of state met under the Swedish EU Presidency to discuss how to fight global poverty and combat climate change.

The Swedish press reported over Christmas that the participants in these so-called European Development Days managed to clock up some £310,000 in limousine expenses alone during the five days that the conference lasted, providing yet another text-book example of how not to go about your business if you want citizens and the rest of the world to follow your "lead". The extensive use of limousines to ferry ministers to EU meetings where poverty and CO2 reductions are being discussed doesn't exactly send out the right signals..

2010: a better year for Europe?

Happy New Year - some thoughts on 2009 and the new year ahead from us over on Conservative Home.

The top 100 most costly EU regulations

Open Europe has today published a list of the top 100 most costly EU regulations, detailing the annual cost of the laws, the cumulative cost of them by 2020, and the article base in the Lisbon Treaty for each regulation . We estimate that these laws will in total cost the UK economy a staggering £184 billion by 2020. To put that figure in context: for the same amount, the UK Government could abolish the country's entire budget deficit and still leave the Exchequer with some £6 bn. All cost estimates are based on the UK Government's own impact assessments so the figures are instructive.

The top four items on the list account for almost £97 billion - or 53% - of the total cost of the 100 regulations by 2020. Looking at these four laws clearly illustrates the enormous, and often overlooked, potential for the UK economy to save money by making a few key regulations less burdensome. Notably, cutting down the costs of these regulations could happen without any of the stated benefits being lost in the process.

1) The Working Time Directive, to cost the UK economy £32.8 bn by 2020: This Directive has been widely criticised for being overprescriptive, impractical and generally out of touch with reality - particularly as it applies to the NHS. Merely changing the on-call time and compensatory rest rules entailed in the WTD could save the UK's public sector millions - if not billions - of punds every year.

2) The EU's Climate Action and Renewable Energy Package, to cost the UK economy £28.2 bn by 2020: As we've argued before, the EU could find a much more cost-effective way to achieve carbon emission reduction by setting overall targets, and then allowing for individual member states to decide for themselves how best to reach them (as opposed to the current micromanaging approach). This would hurt the economy less and provide a more credible alternative to follow for countries outside Europe.

3) Energy Perfomance Certificates for buildings, a.k.a Home Information Packs, to cost the UK economy £20.2 bn by 2020. Again, this cannot possibly be described as the most cost-effective way to achieve reductions in carbon emissions from the residential sector.

4) The Temporary Agencey Workers Directive, to be implemented in 2011 and set to cost the UK economy £15.6 bn by 2020: When he was Business Secretary, John Hutton warned that this Directive could consign "literally thousands of people to benefit dependency" (this was in 2007, before Gordon Brown was outnegotiated in a horsetrading deal involving the UK's opt-out from the EU's 48 hour working week. The Government is now trying to defend the Directive).

Making these laws less burdensome or tailor them to better fit the UK is not easy - but it certainly isn't impossible. Neither is avoiding repeats of these laws. But this does require a far tougher and smarter approach to EU regulations/negotiations than that employed by the current government. See here for our ideas on what such an approach should entail (chapter 5).

An excellent place to start would be for an incoming UK government to opt out altogether from the articles in the EU treaties which give rise to EU's social legislation (articles 151 to 161 as amended by the Lisbon Treaty). With correspondng domestic reforms, this could instantly reduce much of the cost stemming from, for instance, the Working Time Directive and the Temporary Workers Directive.

At a time when every penny is needed to close a massive public deficit, surely cutting the cost of regulation should be a top priority for the next government?

The EU in 2010

As 2009 draws to a close, Open Europe today looks ahead to 2010 and what the EU has in store.

From 1 January 2010, Spain takes over the six-month rotating 'presidency', currently held by Sweden.

The new Lisbon Treaty rules mean that the country holding the Presidency is stripped of its power to 'represent' the EU because of the appointment of a permanent EU President and Foreign Minister. However, Spanish ministers will chair most meetings of the Council of Ministers, and as the first in the next 'trio' of presidencies, Spain gets to lay out an agenda for the EU for the first six months of the year.

In a new briefing note, Open Europe outlines the main priorities for the Spanish EU Presidency, and takes a look ahead to key events and developments in the EU in 2010.

Key things in the pipeline:

- New social legislation to bolster 'European citizenship', including turning the EU into a "factory of rights" Yikes!
- "Common economic governance", including the creation of controversial new EU financial supervisory authorities and new rules for managers of alternative investment funds
- Speedy establishment of the new EU Foreign Service - hoped to become "the biggest diplomatic service in the world"
- Efforts to turn the controversial 'Stockholm Programme' into concrete justice and home affairs legislation

What's clear is that the Spanish government wants to use its Presidency to achieve greater political, social and economic integration in Europe - to work for a more 'unified' EU. This is fundamentally at odds with British priorities for the EU in 2010. Reformist governments must resist moves towards 'building Europe' for the sake of it, and instead concentrate on promoting economic reform.

In particular, the Spanish government's determination to push for new EU social legislation over the next six months and beyond should ring alarm bells at Westminster. The UK Conservatives have said that if they win next year's election, they will fight for control over social and employment policy to be returned to the UK where it can be properly controlled closer the people it affects. This kind of legislation already represents a huge regulatory burden in the UK, and the Spanish government's talk of turning the EU into a 'factory of rights' tells us fundamental reform is more urgent than ever.

Please click here to read the briefing: The EU in 2010 - what to expect from the Spanish Presidency:

http://action.openeurope.org.uk/page/m/4b660976/1ba9f669/85d4f97/7c5561ff/2392946743/VEsH/

Lisbon Treaty = even more cash for MEPs

Amid all thee excitement over the EU bureaucrats' demands for an inflation-busting 3.7% payrise smack in the middle of the worst recession since the 1930s, Bruno Waterfield at the Telegraph brings us news that according to an internal document seen by the paper European Parliament officials have proposed a 9 percent increase in the partliamentary assistance allowance, taking it to £203,000 in 2010. It is also understood that staff expenses will be further increased by another £16,000 in 2011, taking the total annual allowance to almost £220,000.

Why? Because EP officials reckon all the extra cash is needed as a result of the Lisbon Treaty.

Don't forget this is on top of the "general expenditure allowance" worth over £44,000 that MEPs can pocket without having to provide any receipts. While working in Brussels or Strasbourg, MEPs also trouser a £265 cash subsistence payment, worth over £40,000 tax-free every year.

And with the expected 3.7% salary rise, an MEP will earn almost £86,000 a year.

The Euro: rewarding bad behaviour

There has been no shortage of stories recently about the troubles looming in Eurozone countries Greece and Spain. These problems have now prompted Angela Merkel to call for direct EU intervention in the economic and social policies of highly indebted countries in the Eurozone, thereby marking a highly significant shift in German policy.

As German daily Handelsblatt notes: "until now, Germany had always defended national economic sovereignty and rejected stronger European coordination of economic policy in the Eurozone”. The German Chancellor, says the article, is conscious that any such moves “would diminish the national sovereignty of member states”. Yesterday, the EU followed Merkel as it was reported that “the EU has put its member states on a leash”, referring to how Commission President Jose Manuel Barroso has called for binding “quality control” on member states’ budgets.

Only two weeks ago, Ambrose Evans-Pritchard observed that the ECB had begun to turn off the liquidity tap:

"The move to knock away emergency support for banks is likely to hit some countries harder than others, creating intra-EMU tensions between North and South. There are particular worries about Greece and Ireland, where banks have relied massively on ECB support because they cannot raise money cheaply on the open market. The ECB has let them use a wide range of low-grade mortgage debt as collateral for loans. Private markets are unlikely to be so forgiving, raising the risk of a roll-over crisis for weak lenders."

Now, he notes that "the eurozone's weakest link starts to crack", and, "Without wanting to rehearse all the pros and cons of euro membership yet again, or debate whether EMU is a ‘optimal currency area’, there is obviously a problem for countries like Greece that were let into EMU for political reasons before their economies had been reformed enough to cope with the rigours of euro life - over the long run."

However, some countries are not keen on the idea of a cross-border bail-out. Finland and Sweden oppose giving financial support to Greece. “The EU cannot help, that’s part of our rules. They were established to let member states take care of themselves”, said Finnish Finance Minister Matti Vanhanen. And Vanhanen is absolutely correct – as we’ve argued before.

Last week Edward Hugh asked, “How far is it the responsibility of richer and economically healthy states to continually come to the rescue of those who insist on doing nothing to improve their own situation?”

On the wider point about eurozone membership vis-a-vis reform he noted:

"Rather than acting as a stimulus to deep economic reform, Euro membership has rather acted to reward those countries who would get into more and more debt, with ever less sustainable economic models, by supplying them with funding at far cheaper rates of interest than the markets would otherwise make available.”

If you don’t believe him, check out what the EU President himself, Herman Van Rompuy, who was one of the key figures behind Belgium’s entrance into the Eurozone in the nineties, has to say on the issue. Looking back on Belgium's experience with the Euro, he wrote in 2007, in his book "In search of wisdom":

“The monetary pressure in Belgium has fallen away with the disappearance of the Belgian franc. This because the euro is standing far from us and is moreover very strong in recent years. The absence of that external pressure makes it extra difficult for the government to act. Without those sticks behind the door, society easily sinks away in reform fatigue. In a couple of countries around us, economic fate has however hit so hard that fundamental reforms have been carried out. But politics in a democracy needs that pressure. Sad, but it is like this.”

ETS awards millions in windfall profits to oil companies and heavy industry

As national ministers meet this week in Copenhagen to discuss a new climate change deal, Open Europe has found that under the EU's Emissions Trading Scheme (ETS), oil and gas companies' operations in the UK were granted a surplus of carbon permits worth €28.6m in 2008. For example, ExxonMobil received €4.3m and Total received €5.4m.

Meanwhile, heavy industrial polluters such as Corus received €47m, while cement firms Hanson and Lafarge received €17.3m and €20.2m.

The EU is keen to be seen to take the lead at the UN climate change summit in Copenhagen and has already announced ambitious targets to reduce its carbon emissions. However, the EU's principle policy for achieving those reductions, the ETS, is fundamentally flawed.

Due to the economic downturn, many heavy polluters, such as oil and gas companies and heavy industrials, have been left with a surplus of carbon permits - essentially a free asset that firms can sell on to bolster their short term profits.

The glut of surplus permits on the market has driven down the price of carbon and led to a sharp increase in the number of permits being traded via carbon exchanges. Open Europe has found that the two largest carbon trading exchanges, European Climate Exchange[1] and Bluenext[2], which includes members such as Barclays Bank, JP Morgan, Merrill Lynch and Shell, have earned a combined average of €245,000 a day from the trading of carbon permits so far in 2009, in transaction fees alone. In total, they have made over €57m between them in 2009.

Instead of producing a firm carbon price to encourage investment in greener technologies, the ETS has become a subsidy to some of the UK's biggest polluters and has simply created a new breed of carbon traders, which are cashing in on a policy that is failing to achieve its core objective.

Click here to read more.

Dear Dirk

Last week, we were told by journalists that Dirk Ahner, the Commission's Director-General for regional policy, had apparently sent a letter to the members of the European Parliament's Budgetary Control committee, criticising Open Europe's 50 examples of waste involving EU funds.

Despite the fact that the letter addressed our publication, and cited extensively from it, Mr. Ahner did not send a copy to Open Europe, and has failed to send us one after repeated requests both on the phone and by email.

In the end we managed to get the letter from other sources. You can read it here.

Here's an excerpt from the letter:

As I committed to do, I have asked my services to investigate their claims on the projects in question. However, it is essential to underline to the citizens you represent that, given the shared management system, the European Commission is not responsible for the selection of the projects... Most of the claims are true, in the sense that European money has co-financed the projects mentioned. However, Open Europe seems to take the view that anything related to tourism and culture is a waste of money, regardless of whether the projects create jobs and are part of an overall development strategy. Some statements are misleading or completely incorrect: just to take an example, the Commission will not pay a cent to the mentioned Slovakian bulletin-board tender (project 49).

Well, we don't take the view that anything "related to tourism and culture is a waste of money", but, as we set out here, the structure and nature of the EU budget often facilitate poor project selection, to a greater extent than national spending schemes do. We also wanted to illustrate how having a massive redistribution scheme involving some of the richest countries in the world sending money back and forth via Brussels (at a huge admin cost) is becoming increasingly hard to justify economically. In addition, we wanted to highlight one of the wider problems with the EU budget (the co-financed part in particular, i.e. the Structural Funds and the Rural Development Programme), namely the blurred line between the spending of public money and accountability.

Predictably, Mr. Ahner passes on the responsibility for the project selection to member states, as the Commission usually does (but then goes on to defend the projects, interestingly).

It is true that the managing authorities in the member states select projects - no one is disputing that - but the Commission runs the policy and does have a thing or two to say about the project selection as well - in addition to being one of the staunchest defenders of the Structural Funds. And some of the people on the ground won't let the Commission off the hook that easily. For example, responding to one item on our list - the ‘gender equal’ wood design centre in Sweden - one of the local officials involved in the project defensively wrote, "The gender-part of that project was just a small part, put there to please the EU officials."

So as a taxpayer, if I'm not happy with the way the Structural Funds are ran and spent, who should I approach? As we've said many times before, the Commission could do itself a massive favour by encouraging member states to scrap the Structural Funds in the most well-off member states - say, those with a GDP of 85-90% of average EU GDP or more - where the value-added of the EU funds, on the whole, is negligble at best. None of these issues were addressed by Mr. Ahner. Anyway, here's our open letter to Mr. Ahner:

Open letter to Dirk Ahner, Regional Policy Director-General, European

Dear Mr. Ahner,

We write to you in regards to a letter you sent to members of the European Parliament’s Committee on Budgetary Control (“Subject: OPEN EUROPE 'fraud and waste' list of projects”, REGIO B1/AM D(2009)). Since the correspondence with the MEPs was addressing material published by Open Europe, we thought it appropriate to respond and also to address some of the claims you make in the letter (see attached document).

First, it is regrettable that the Commission continues to single out Open Europe for criticism, and has not given us opportunity for the right of reply. You sent the letter to MEPs, without copying to Open Europe, and failed to respond to telephone calls as we sought to find a copy of the letter. Despite repeated requests over the phone and via email, your office has still not sent us a copy of the letter. In fact, Open Europe was not even acknowledged when we tried to get hold of the letter. Instead we have acquired the letter from other sources. Your refusal seems to be in violation of the European Ombudsman’s Code of Good Administrative Behaviour.

Of the 17 Regional Development Fund projects analysed, you seem to be saying that one of them is incorrect, in that EU funds were not in the end used for the purposes mentioned: the ‘Bulletin-board tender’, which Open Europe said was indeed being investigated by the Commission. You claim that the point about Lazarote hotels having illegally received EU funds is “incorrect”, but are only able to clarify that “the Spanish authorities removed the hotels from the ERDF programme. This means that the hotels will not receive any funding from the EU budget.” No evidence is provided to show that the hotels did not receive the money – only that they “will” not receive money in the future – so we remain unconvinced by your claim that this is incorrect.

For all the other projects, you either defend the use of funds, or simply state that the example is correct, such as the fact that the Chairman of Porsche received €2,500 in EU rural development funds for a small estate in Bavaria where he goes hunting in his free time. For one or two you quibble over the amounts spent.

It is most concerning that you have spent so much time piecing together this rebuttal, and sent it to members of the European Parliament with an instruction that they “underline to the citizens you represent that, given the shared management system, the European Commission is not responsible for the selection of the projects funded.” There is no acknowledgement of Open Europe’s wider point which is that the waste is ultimately down to the structure of the EU budget (as Open Europe has set out here, for instance: http://euobserver.com/7/28979 ) - and that the budget in general and the Structural Funds in particular are in need of fundamental reform.

Open Europe maintains that all are examples of the EU wasting money, and an illustration of how the EU budget is spent, which was the objective of our report. Your comments represent a different point of view about how public money should best be spent, which Open Europe is seeking to challenge.

We look forward to a more open dialogue with the European Commission on these issues in the future.

Yours sincerely,

Open Europe

Out there in eurospace

Foreign Secretary David Miliband appeared before the House of Commons Foreign Affairs Select Committee this afternoon to discuss developments in the EU, ahead of the formal six-monthly European Council meeting in Brussels on Thursday and Friday this week.

Although Foreign Ministers usually attend these meetings, the Lisbon Treaty states that it should only be EU heads of state. The Swedish EU Presidency, on the advice of the legal service for the Council, according to Miliband, had decided that Foreign Ministers will not be invited, which has put some noses out of joint. Thanks to Lisbon, EU Foreign Ministers are no longer welcome but instead EU Foreign Minister Cathy Ashton gets a seat.

However, Miliband added that the Treaty still allows for heads of state to bring along a minister when the agenda requires it, and that EU leaders will have a discussion over dinner about "whether the Treaty means what it says", with regards to whether or not foreign ministers may be allowed to attend these meetings in future. What a bizarre thing to say - what do we do if they find the Treaty does not "mean what it says"? That goes down as another admission from the Government that the text is indeed highly ambiguous and that, as we argued, MPs were effectively signing a blank cheque when they agreed it.

Miliband also revealed that, although the final outline and recruitment policy of the new European External Action Service, EEAS, is still to be decided (another of Lisbon's 'unanswered questions), the Foreign and Commonwealth Office anticipates that it will be contributing 18-25 staff to the new EU institution.

You may remember back in October, a document from the Swedish EU Presidency on the outline of the EEAS. This stated that staff from Member States should represent at least one third of staff at the senior level, including diplomatics in delegations - with people keen to keep in mind a geographic balance for those working in the new institution. The rest of the staff would be taken from the Commission and the General Secretariat of the Council.

Since it has been suggested that the size of the EEAS could reach anything between 6,000 and 8,000, it is not quite clear how those two ideas tally. Unless the UK will be sending a bloc of staff way below the number which other member states are sending, it may turn out that long-time eurocrats (the same ones striking for a payrise next week) may make up the bulk of the staff in the EEAS after all.

There were also some Select Committee questions regarding the appointment of Cathy Ashton, and the role of the new EU Foreign Minister, specifically in relation to the EEAS. One MP pointed out that it was a rather strange message to send, for Ashton to have her office in the Commission building, when the nature of the job was supposed to be 'intergovernmental', i.e. to represent the foreign policy of all 27 member states.

Asked this very question recently, Ashton said she was staying in her office in the Commission simply because she knows where the coffee is. Hmm.

Conservative MP for Wells David Heathcoat-Amory pointed out that as a sui generis institution, without precedent, it is extremely unclear where the lines of responsibility for the EEAS are, and it sits in some kind of limbo-like "euro-space" between the Council and Commission.

Indeed. The problem with this brand new institution, which the EU has made clear will become a seperate institution in its own right, with its own budget (£45 billion over 3 years, according to Javier Solana), is that for the very first time it is an institution which seems to straddle both the Commission and the Council - blurring the lines between the intergovernmental and the supranational if you like. In this sense it will be a real "EU foreign office" - with EU diplomats for the first time, instead of mere European Commission 'delegates' and representatives abroad. They will supposedly speak on behalf of the EU as a whole, as opposed to representing just the Commission.

How will that work in practice? It seems Miliband and even Ashton aren't too sure about that. We left the Select Committee hearing none the wiser.

On another planet Part 585

In his PBR today Alistair Darling has announced a public sector pay freeze for 4 million UK workers, including vital frontline staff such as nurses, police and teachers.

Meanwhile, over in la-la land, the Dutch, French and Spanish press report that EU civil servants in Brussels are planning a strike for Monday against attempts by 15 member state governments (including the UK) to stop 38,000 EU civil servants (including Commissioners) getting an inflation-busting 3.7% payrise. (Standaard Standaard 2 Le Monde)

The member states are resisting because the wages of national civil servants are being frozen or cut. The national governments claim that because of the economic crisis, an exceptional clause in the civil servants' statute should enter into force. The clause states that "in times of serious and sudden deterioration of the economic and social situation" in the EU, the Commission can impose a new wage proposal.

However, according to some reports, it looks likely that national governments will have to agree to the pay rise, because they are contractually bound to the agreement and are likely to lose the case if it goes to the European Court of Justice. Trade unions are demanding that member states "respect the rules".

Not only that, but a Trade Union President with 38 years experience working in the Commission told Spanish paper El Mundo today that the payrise should go ahead because the money "has already been put aside", and would otherwise "end up being lost in the EU budget and will go on milk quotas."

Great. So either we grant the unjustified payrise, or we waste the money on milk quotas. What a choice.