Between The Rock and a hard place: Spain threatens to shut UK out of EU crime databases

The WSJ reports today that Spain is using its dispute with the UK over Gibraltar to hold up/block the UK's re-entry into a number of EU crime and policing laws. 

To recap, the UK has already decided to exercise its block opt-out of over 130 EU crime and policing laws and, at the time, it was announced that the Government would like to opt back into around 35 of them - but it can only do this after exercising the opt-out. The opt-out takes effect on the 1 December, so time is running out if the UK wants a seamless transition.

For the record, we have long urged the UK Government to use this opportunity to negotiate bi-lateral or intergovernmental cooperation outside the auspices of the ECJ, which these 'opt-ins' would fall under for the first time (i.e. they increase the power of the EU institutions over the 35 laws). Any fundamental rethink has seemingly been shelved for now (partly due to the constraints of Coalition) but Justice Minister Chris Grayling and Theresa May have indicated this will be part of a Tory renegotiation.

For the vast bulk of these 35 laws, including the controversial European Arrest Warrant (EAW), the European Commission is responsible for admitting the UK back into these arrangements and, in July, the UK reached agreement with the European Commission on re-entry. However, there are handful which require unanimous agreement from other national governments before the UK can re-enter. These mainly cover data-sharing arrangements related to the Schengen agreement, which are used to share data on wanted criminals, terrorists, etc, which the UK wants access to.

What does this mean? Well it's all getting extremely tight for time - the Government has promised a vote in Parliament on the 35 opt-ins, which is unlikely to be plain sailing by any means with many Conservative MPs opposed both in principle and on the detail of some these laws, the EAW in particular. The UK could conceivably opt back in to just those laws the Commission has agreed to, while negotiations on the remainder continue (Spain reportedly thinks the UK should opt back into a few more EU laws as part of the package). However, this would mean the UK had no access to security databases at a time when the threat of terrorism is high and, less importantly, only draw out a parliamentary process that is already likely to be uncomfortable for the Government.

In all likelihood a last-minute deal will be done, not least because other member states have all signed up to the agreement with the UK and are just as frustrated that Spain is using an unrelated bilateral dispute to potentially disrupt important EU cooperation on terrorism. Still, it looks like Spain is going to make this as uncomfortable as possible for the UK, and Conservative ministers will be under huge domestic pressure not to give into Spain's demands.

What do Wayne Rooney, Rambo and Don Quixote have in common?

The script is written and the scene is set: Cameron will go down fighting in his bid to prevent Jean-Claude Juncker from becoming the Commission President with only Viktor Orban for company. While this has earned him some relatively positive headlines in the British press, the German press has not wasted an opportunity to stick the boot in.

According to Bild, “Cameron is becoming more and more the Wayne Rooney of EU politics: he lines up, he loses, he goes home.” The paper adds that:

"Great Britain and Hungary - this is not the strongest alliance in the EU. This could be a foretaste of what could happen if the Brits decide leave the EU in the 2017 referendum announced by Cameron. Instead of taking part in the largest and most economically significant association of states in the world, the Brits will be locked outside. The relevance and influence of Great Britain will fall dramatically."  

Die Welt describes Cameron as “the loneliest man in Europe”, and earlier this week likened him to "Rambo" - running in head first all guns blazing. FAZ’s London correspondent Jochen Buchsteiner describes the Cameron as the “Don Quixote” of EU politics, noting that “a majority of Brits see him as a hero – even when he comes back home beaten.”

Of those three, we suspect Rambo is the most favourable comparison, even if it was not meant as such. At least, Rambo is usually the only guy left standing once the credits start to roll. 

Can journalists please stop referring to Sikorski as "Cameron's ally"?

The leaked conversation in which senior Polish politicians including Foreign Minister Radoslaw Sikorski savage Cameron's EU strategy - exclusively translated into English by Open Europe yesterday - is all over the UK press today.

Many of the stories have headlines refer to Sikorski as a key "ally" for David Cameron, but as we have repeatedly argued, this has long not been the case; in January, we pointed out in the wake of the row over free movement and EU migrants' access to benefits that "It isn't Brussels that David Cameron should worry about in Europe at the moment – but Warsaw".

Despite being a university friend of David Cameron and Boris Johnson's [insert obligatory Bullingdon club reference here], as well as an Anglophile and self confessed Thatcher fan, Sikorski has never been an ally on EU reform. Poland has its own interests in the EU to look after - and in recent years it become more assertive and effective in doing so - it is under no obligation to support the UK (this is after all what playing the EU game is all about). Poland considers its membership of the EU as its best guarantee of security - especially following recent events in Ukraine - and therefore sees any attempts to 'weaken' it as inimical to its interest. However, Sikorski has not only not supported the UK, he has gone out of his way to undermine Cameron's reform agenda, for example by painting it in 2012 as an attempt to "wreck and paralyse the EU".

It is true that more recently his tone and rhetoric has been more constructive - in April he said that Poland would be "perfectly willing to help [the UK] fix some of the problems of the EU”, but even his only specific suggestion was fixing the Working Time Directive. The WTD is certainly a significant issue which needs to be addressed but its hardly the most pressing problem facing the UK within the EU and it misses the point that there is a much wider critique to be made of how the EU currently operates. Indeed Sikorski's wider rhetoric - “Britain is a great victor of the EU" is implicitly dismissive of these concerns and only serves to sustain the perception that of an out of touch, arrogant EU elite.

Despite their differences over the key issue of free movement, Poland and the UK continue to share strategic interests in a number of areas from free trade, better EU regulation, energy policy, rights for non-euro members (it'll be a long time before Poland can join) and Russia/Ukraine. International diplomacy remains above all else a pragmatic business.

However, just because Cameron and Sikorski used to be Oxford drinking buddies, it does not mean they are natural allies on EU reform.

Where are the real fault lines in the EU?

Ipsos Mori has this week published an interesting poll on public attitudes* in ten EU member states. Across the ten countries as a whole relatively few people want to leave the EU outright (18% on average), but the single most popular option is staying in the EU but reducing its powers (34%).

Just over a third want to see either the EU’s powers strengthened further (19%), or even a long-term policy of working towards a single European government (18%) - click to enlarge the charts.

Broken down by country, the British (68%), along with the Swedes and Dutch (69% and 68% respectively) are most in favour of leaving or reducing the EU’s powers:

The research suggests that, on average, two in three (68%) think things across the EU are moving in the wrong direction. People from the Netherlands, Sweden, Belgium and Britain are in line with the average, but those in the Mediterranean countries are the most pessimistic.

France, is the most pessimistic of the countries polled, whch seems to have a lot to do with the state of the country's economy. People in France, Italy and Spain are all particularly negative about the EU’s impact on the economy (74%, 74%, and 68% respectively are critical), and many feel that their economy has been damaged by the demands of austerity (75%, 70%, and 75% respectively).

The UK political debate on Europe may be a few years ahead of many other countries (perhaps with the exception of the Netherlands), but at the level of the individual, there are many people disenchanted with the European project. Many countries are deeply split but, on average, there is clearly an appetitie for the EU to do less. Most interesting though is the striking fault line in the eurozone. Francois Hollande has had precious little influence on EU policy since his election as president, but the question is, how long before the French public's disenchantment is reperesented by its politicians?

If you think the UK is the awkward partner, imagine if French politicians actually started telling Chancellor Merkel what their people think about Europe.

* It should be noted that the poll is not representative of the entire electorate in Belgium, France, Great Britain, Germany, Hungary, Italy, Poland, Spain and Sweden (where 16-64 year olds were interviewed), while the Dutch panel is representative of voters. Why they chose not to poll people over 65 is unclear and in our view is likely to skew the results somewhat (in different directions for different countries).

Merkel's speech: far too early to jump to conclusions

Chancellor Angela Merkel has delivered her much hyped and anticipated speech to both Houses of Parliament - so what conclusions can we draw and was it good or bad news for David Cameron's EU strategy?

In short, Merkel delivered a very statesmanlike speech but there was little new here.

The Chancellor was never going to set out a definitive list of reform proposals or endorse/reject Cameron's EU reform agenda. She made the point explicitly in (perfect) English that her speech would disappoint both those who hoped it would "pave the way for a fundamental reform of the European architecture which will satisfy all kinds of alleged or actual British wishes" and those who expected she would "deliver the clear and simple message that the rest of Europe is not prepared to pay almost any price to keep Britain in the European Union".

Here are some of our key observations:

• Merkel opened with a long passage about Britain's role in both world wars and its commitment to Europe's democratic values. She emphasised that "the UK has no need to prove its commitment to Europe". This was a clever gesture of diplomatic goodwill that she didn't necessarily have to make. She also highlighted Germany's view that the EU remains a vehicle to ensure stability across the Continent.
• There were few specifics but she made it clear that in order to strengthen the eurozone the EU treaties will have to be adapted in a “limited, targeted and swift” manner, adding that if the UK and Germany show they are serious about reform, they will find the legal mechanisms to make it happen. 
• In terns of EU reform generally, she stated that that Europe had to change to adapt to new realities - a clear acknowledgement that the status quo is untenable. She said the EU policies needed to be evaluated by all member states. "For all EU member states it is essential that all EU policies – whether energy and climate, shaping the single market or external trade relations – have to be measured by whether they contribute to the European economic strength or not," she said.
• Merkel reiterated her statements on the need to cut red tape and ensure the EU is competitive.
• She emphasised the benefits of the four freedoms of the single market and that they are inseparable, but added that "it is also true that, to maintain and preserve this freedom of movement and gain acceptance for it from our citizens... we need to muster the courage to point out mistakes and tackle them" - a clear hint at the possibly of reforming the rules around EU migrants' access to benefits. She further expanded on this in the press conference by pointing out that free movement could not involve unrestricted access to benefits and that this was as much of a concern in Germany as in the UK.
• Merkel called on the EU to be more outward looking, particularly given that 90% of global growth over next five years will take place outside EU, despite it occupying 25% of the global economy. She was clear on the need for the EU-US free trade deal (TTIP).
• She also argued that the principle of "subsidiarity must be respected more in Europe".
• She stressed the importance of the City of London to the EU economy - a nod to those who fear that the City remains in Brussels' sights.
• While Merkel stressed the need for the EU to change economically and politically, the was little more on addressing the EU democratic deficit, which Cameron has been keen to emphasise.

In summary, Merkel's speech was a statesmanlike address. The rhetoric reflected Germany's cultural and historical affinity with the EU but, without being specific, Merkel was equally clear about the need for the EU to change. She added, "Our ideas of how the future European Union ought to look like may vary on the details but we, Germany and Britain, share the goal of seeing a strong, competitive European Union join forces."

Her pitch to Cameron could be summed up with her comments that "we need a strong United Kingdom with a strong voice inside the European Union. If we have that, we will be able to make the necessary changes for the benefit of all." As we noted in our briefing, there is ample scope to translate these shared principles into concrete reforms which would attract a lot of public support in both countries. It is also worth remembering that when it comes to reforms, Merkel is a believer in a more gradual, step-by-step process as opposed to the huge all-encompassing package that many UK observers are looking out for.

It is now up to David Cameron to put forward concrete policy proposals, not only to the German Chancellor but to the wider EU negotiating table.

Tories' Polish allies label Cameron's migration comments as "unacceptable"

Much has been said and written about EU free movement, indeed the rhetoric has escalated in the weeks before the lifting of transitional controls on citizens from Bulgaria and Romania. The question of on what terms EU migrants should be able to access the UK's welfare system - a crucial and sensitive issue - has been rolled into a wider debate about the costs and benefits of immigration per se.

While the tough message adopted by the government is designed to reassure a concerned public that EU migrants will not be a drain on the public purse, this has also generated a lot of concern among EU partners. While protests from the likes of Viviane Reding and Laszlo Andor will not cause anyone in Whitehall or Westminster to loose any sleep - in fact quite the opposite - the reaction from broadly sympathetic EU partners like Germany and the Netherlands ought to. 

Today, even Poland's largest opposition party Law and Justice (allied with the Conservatives in the European Parliament) stuck the boot in, letting it be known that leader Jaroslaw Kaczynski had personally written to Cameron to complain after the Prime Minister described Labour's decision not to apply transition controls to the A8 countries in 2004 as a "mistake" and a "shameful dereliction of duty". 

In an interview with Polish Radio today, Law and Justice MP Marcin Mastalerek described Cameron's comments as "unacceptable", adding that:

"If Cameron does not revise his view on this subject it will make working together in the European Parliament exceptionally difficult". 

Wprost cites Law and Justice MEP Ryszard Czarnecki as saying that:

"This is a completely mistaken diagnosis of the situation. The British economy has earned billions of pounds thanks to the work of Polish migrants over the past 9 years... I think the letter from [former] Premier Kaczynski will provide Prime Minister Cameron with some valuable material."

He added that he hopes the Polish government would also protest against Cameron's words which "are hurtful to the hundreds of thousands of Polish citizens who are working to advance the welfare of the UK".

Of course Law and Justice cannot afford to be seen giving Cameron a free pass on rhetoric that is seen as being hostile towards Polish citizens, so the tough tone is partially for domestic consumption. It remains to be seen whether the two parties really will struggle to work together within the ECR group.

Former Polish President Lech Walesa also joined the fray, accusing the UK of not appreciating how much they've benefited from the fall of Communism and of behaving "irrationally and short-sightedly".

The wider risk - as we've pointed out in our recent briefing analysing the results of our simulated UK-EU negotiations - is that Cameron's tendency to jump from headline to headline when it comes to EU issues risks alienating potential allies in his bid for reform.

Another UK win on single market safeguards in financial services?

An interesting report popped up on Reuters this afternoon. According to internal documents seen by the news agency, the UK has secured another important safeguard on financial services.

Specifically, during last week’s negotiations over the controversial revision of the Markets in Financial Instruments Directive (MiFID), an agreement was reached which saw the insertion of the following clause:

“No action taken by any regulator or the European Securities and Markets Authority (ESMA) should discriminate against any member state as a venue for the provision of investment services and activities in any currency.”

This is important given the on-going dispute between the UK and the eurozone concerning the location of institutions engaging in the clearing of euro-denominated financial transactions outside of the single currency bloc.

Quick recap: the UK has launched a case against the eurozone and the ECB at the European Court of Justice after an ECB legal opinion suggested that all transactions in euros should be cleared within the eurozone. This raises questions over the City of London’s position as the financial centre of Europe, and could force trillions of euros worth of financial transactions away from the city.

Although this is a very technical issue it could be a very important one in terms of the debate about the UK’s position in Europe.

That said, we’re hesitant over getting too excited for a couple of reasons:

• Firstly, this is just a preliminary agreement between officials. The final text still needs approval from the European Parliament and EU political leaders, meaning it could well be subject to substantial revision.
• Secondly, even if it is kept in, it’s not clear whether it will be legally binding, particularly when it comes to the ECB. Since the ECB is independent and currency issues usually fall under its purview, it may retain jurisdiction and authority over this decision.

Some important caveats then, but there is no doubt this is a positive step and highlights that progress can be made if the UK explores all of its political and legal options to boost its position. The government must continue to do so.

Why France can hold up EU-US free trade talks

David Cameron wants to use the gathering of G8 leaders in Northern Ireland next week to launch formal negotiations on the planned EU-US free trade agreement. But progress depends on breaking the deadlock in talks today over France's insistence that any agreement must include protections for its film and TV industries against American imports. These talks are to give the European Commission a mandate to start negotiations.

The French, though, have a pretty strong bargaining position. The EU Treaties (Art 207) set out the procedures for opening and concluding free trade agreements under the so-called Common Commercial Policy.

The Commission makes recommendations to national governments, which authorise it to open negotiations. The Commission then conducts the negotiations in consultation with a special committee appointed by ministers.

In principle, trade agreements are negotiated and concluded by qualified majority voting. However, there are a number of exceptions where unanimity (and therefore national veto) still applies, including “in the field of trade in cultural and audiovisual services, where these agreements risk prejudicing the Union's cultural and linguistic diversity.”

In a bid to break the deadlock, the European Commission and the Irish EU Presidency have proposed asking EU member states to give unanimous approval to any parts of the draft agreement affecting the audio-visual industry once the negotiations on that specific sector are concluded. However, Le Figaro quotes a source from the office of French Trade Minister Nicole Bricq as saying, “We already have a veto on the conclusion of the agreement, so [the offer] doesn’t change anything for us.”
 
In a world where trade agreements are increasingly all-encompassing affairs, ranging across the entire economy, this gives France in particular a great deal of leverage.

Ten things that David Cameron should NOT say to Angela Merkel

UK PM David Cameron is today meeting German Chancellor Angela Merkel, as part of British efforts to explain to EU partners the thinking behind Cameron's recent EU speech. As we've argued repeatedly, this is the UK's most important bilateral relationship in Europe. So what could Cameron tell Merkel to convince her that his vision of Europe is worth investing in? Well, see here and here for some suggestions.

But knowing British diplomacy, equally important is what Cameron SHOULDN'T say. So after consulting our esteemed colleagues at Open Europe Berlin, we give you ten quips that most certainly wouldn't go down well with the Iron Chancellor - and that Cameron best stay well clear of. Here goes:

1. "How's that new exciting anti-euro party coming along?"

2. "Could you explain this ‘Target 2’ thingy…[pause]…how big!?” 

3. "We have formed this new ECR group in European Parliament - thought you might want to get involved?” 

4. "I always thought the ECB should become more activist."

5. "We’ve got some very clever people in the City who could design those Eurobonds for you. It's the 'inexorable logic' of a monetary union don't you know?" 

 6. "We’ve got a new central bank governor, he’s foreign, and he has stressed the need for ‘flexible inflation targeting’, why are you guys so uptight about Mario?" 

7. "Can you point me to that no-bailout clause in the EU treaties again?" 

8. "Have you been following Berlusconi’s political comeback? Very interesting…" 

9. "Those tweets of yours are hilarious – who says Germans don’t have a sense of humour?" 

10. "So Angela, Nick Clegg and Philipp Rösler - want to swap?" 

One of those is an actual Cameron quote - a free copy of an Open Europe report of choice for those who can figure out which....