Hill likely to be approved but Bratusek down as Juncker Commission edges closer

Hill's hearing was less of a duel than expected

Following another long day of hearings the make-up of the Juncker Commission is becoming clearer.

The UK’s Commissioner-designate Lord Hill had his second hearing in front of the Economic and Monetary Affairs Committee today and by almost all accounts performed well. While he was at ease and fluid as in his first appearance, he was importantly much clearer and more specific on the details of what he would like to achieve (for example on capital markets and banking union). This, combined with his extensive written answers, means that there is no grounding for rejecting Hill on content.

There were, of course, those who questioned his impartiality and independence but as we pointed out here, these complaints seemed to have little to do with Hill himself (who has few direct connections to the City left) and more with the fact he was from the UK. As liberal MEP Sylvie Goulard said:

“He took the exercise very seriously…We think it is unfair just to reject him because of his passport.”

Furthermore, compared to other Commissioners (Spain’s Miguel Arias Cañete springs to mind) Hill has far less recent and direct contact with his industry in question. His approval is now widely expected tomorrow.

Equally Cañete looks set to survive following a significant amount of political wrangling with the centre-right EPP sticking to its guns to ensure that the centre-left S&D does not try to block him – mostly by threatening to hold up the approval of France’s Pierre Moscovici, who incidentally also looks set to be confirmed.

As we always said though, things are looking less rosy for Slovenia’s Alenka Bratusek, who struggled on content during her appearance and also faces accusations of corruption over her nomination process. In fact it seems as part of the cross-party deal, she is likely to be rejected, meaning a new representative will need to be found for the post of Vice President for Energy Union.

Finding a new nominee for this position will be tricky not least because Bratusek is an experienced politician from a newer member state and contributed to the much debated gender balance of the new Commission. One option would be for Slovenian to put forward another one of its four nominees such as Tanja Fajon MEP, although she is unlikely to be considered high profile enough for the VP slot, meaning some reshuffling will still be needed (the FT has a plausible option here).

The other hearings from today went more or less as expected with the Netherlands Frans Timmermans particularly impressing, while Finland’s Jyrki Katainen produced a solid display in an area he has extensive experience in.

With Czech Vera Jourova now confirmed after being held up, the main wrangling will be over where to put Hungary’s Tibor Navracsics and who will fill Bratusek’s role. Much of this is expected to be decided tomorrow although with no firm timeline. One final issue which remains to be resolved is the exact split of powers between Commissioners and how the VPs will work with the standard Commissioners. Jean-Claude Juncker may have to provide further detail to the EP on this before he gets the final OK.

However, in the end, after pushing its luck earlier on the European Parliament now seems to have regained its control and sense of perspective.

Timmermans comes out fighting for EU Reform

Vice-President Commissioner Designate for Better Regulation Frans Timmerman's hearing at the European Parliament Conference of Presidents has just wrapped up, and the man who we've hailed as a  thought leader for EU Reform came out pushing many of the reforms we have long been arguing for

Seamlessly switching between five languages, he had some rather important things to say.

On regulation, he said that the EU needs a fundamental 'culture change' in the way in which it regulates to adopt a more "common sense" approach. Impact Assessments will have to be overhauled, and existing legislation needs to be assessed for its effectiveness. Regulations that doesn't make sense should be scrapped, so that business can feel an "immediate relief".

#Timmermans: Commission's impact assessment board has to be composed of ppl who can act w/out vested interests #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

#Timmermans: What I am proposing is to change culture of the way in which we regulate in a more common sense manner (cites oil-jug gate)
— Open Europe (@OpenEurope) October 7, 2014

#Timmermans: I will present a better regulation review proposing regulations that shld be withdrawn within a year #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

Consistent with his - and the Dutch government's - motto "National where possible, European where necessary," Timmermans had some strong things to say on respecting national parliaments:

#Timmermans: "This European Union will not be built against the will of the national parliaments nor the member states." MEPs need to engage
— Open Europe (@OpenEurope) October 7, 2014

#Timmermans: My principle of subsidiarity is you'll only take action on higher level if that's only way to achieve goals you want to attain.
— Open Europe (@OpenEurope) October 7, 2014

#Timmermans: If confirmed I will take debates directly to national parliaments #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

On the need for more transparency and scrutiny, Timmermans said there will be increased scrutiny on behind the scenes deal-making and lobbying.

#Timmermans, we will make sure that there is a Mandatory transparency lobby list - currently only voluntary. #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

On the institutional divide between euro-ins and euro outs:

#Timmermans reiterates that he does not support separate institutions for the #eurozone #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

There was some stuff that may not go down as well in No 10, such as Timmerman's insistence on the importance of the European Convention of Human Rights (see here), and his description of the European Arrest Warrant as a "great success."

#Timmermans defends European Arrest Warrant, "a great success". We desperately need EAW. #EPhearings2014
— Open Europe (@OpenEurope) October 7, 2014

#Timmermans agrees that UK objections to application of #ECHR justified, but that opting out EU court rulings sets dangerous precedent.
— Open Europe (@OpenEurope) October 7, 2014

All in all, this was a strong performance that has already received good reviews on twitter and beyond. The response of the EP will be interesting to gauge and may give an indication as to how hard he will find it to push through some of these reform efforts in the coming years.

Juncker bitten by the hand that fed him as the European Parliament undermines his Commission

Juncker and Schulz in happier times...

The letter from European Parliament (EP) President Martin Schulz to European Commission President Jean-Claude Juncker has now been published in full and contains an extensive list of questions for the UK’s Lord Hill, the Czech Republic’s Vera Jourová and Hungary’s Tibor Navracsics who have all been invited back for some form of second hearing early next week (whether or not these will be ‘full public hearings’ again remains to be seen).

While the EP is certainly entitled to ask questions and has a role to play in the vetting process, we think the whole situation is getting a bit out of hand and that the Commissioner-designates are being set an almost impossible task. Let us outline a few reasons why.

1) Politicians expected to have the knowledge of technocrats. The EP was the driving force behind increasing the politicisation of the Commission, mostly through the Spitzenkandidaten process. With a more political Commission those inside will ultimately be more politicised, as will decision making. Nearly all the candidates are politicians with little technical experience. However, the EP is subjecting them to a level of scrutiny which no national incoming minister would be expected to pass on a brief they have in most cases never overseen. They seem more akin to the hearings a new central banker would face – the arch technocrats.

At the same however, MEPs are very intolerant of any Commissioners holding – as they see it – the ‘wrong’ political views meaning nominees have to tread a tightrope and try to appease a range of competing interests, e.g. promoting trade while protecting social standards, maintaining budgetary discipline while allowing for ‘flexibility’, or cutting energy costs while pursing green policies. This has led to accusations of a lack of coherence on the part of some Commissioners. This confusion over the Commission’s role is largely of the EP’s own making and sets an almost impossible task for the candidates.

2) Trying to force Commissioners to commit to policies ex-ante. This is simply a bad way to make policy. Sure, the candidates should outline key priorities and ideas, however, asking them whether they will or won’t pursue numerous policy proposals or will rule out certain actions over their entire five-year term seems to be overstepping the mark. Ultimately, the proposals the Commission will take forward are the result of a combined decision with the EP and member states and will be subject to economic and political circumstance.

3) The EP has a legislative role in trialogue negotiations, not in these hearings. Following on from the above point, the EP does not have a right to try to restrict the policy options of the Commission ex-ante. The EP has a role in the trialogue negotiations around legislation and can influence and change Commission proposals there. It should not double up this role by trying to tie the hands of new Commissioners by forcing them to take a policy stance before they have even had a chance to get an overview of their brief.

4) Hearings caught up in political games. There is no doubt that the hearings have become embroiled in political games, mostly between the centre right EPP and centre left S&D. While political trade-offs and negotiations are expected, these should not spill over into the public hearings and hamper the assessment of the competence of Commissioners.

5) Judging Commissioners on different and conflicting criteria. It is also obvious that there is no clear consensus on what basis to judge Commissioners. Some have been opposed on the basis of political allegiances, some on the basis of their nationality and some on their experience/knowledge (or a mix of the above). This picking and choosing of criteria once again undermines the process and makes it impossible for the Commissioners to know on what level they are being assessed. This has led to attempts to try to please everyone further worsening the scrutiny process.

The Commission has always been about a balance between political and technical expertise – it both proposes laws and is responsible for upholding them. There are legitimate questions that can be asked about potential conflicts of interest and a basic grasp of the policy issues at hand nut the EP has hugely overstepped the mark by seeking to pin down Commissioners to particular political agendas.

The Spitzenkandidaten process was all about establishing greater political control over the Commission’s agenda (as we warned). The great mistake that EU leaders made over the appointment of Juncker (we’re not talking about Juncker himself, but giving into the EP over the process) has clearly had the effect of emboldening MEPs further. The Commission – and now the nominees – are the piggy in the middle in the increasingly fraught power battle between national governments and the EP. Throw in a large dose of intra-EP politicking and individual egos, and it is a recipe for chaos and one that is likely to further distance the EU institutions from electorates across Europe, particularly if the EP makes the running despite itself hardly securing a vote of confidence in May’s elections.

Updated: UK Commissioner called back for second hearing – what happens now?

A couple of developments since we posted the original blog below.

Importantly, the European Parliament’s Economics Committee failed to reach an agreement over Pierre Moscovici and has delayed a decision on whether to approve him or not until 9.30pm CET tonight. Given his clear knowledge and experience in the area as a former French Finance Minister, the objection is clearly being driven by a fundamental split between the EPP (led by the CDU) and the S&D (led by the French socialists) over whether he is the right man for the job given his political allegiances and the fact France has repeatedly missed the deficit targets agreed with the European Commission over the past few years.

As regards Lord Hill, @Brunobrussels points out that a letter will be sent by European Parliament President Martin Schulz to Commission President Jean-Claude Juncker outlining some key questions for the UK’s nominee. It is unclear exactly what these questions will include, but the focus will be on his knowledge of issues such as the banking union, Eurobonds and financial regulation in general. There may also be questions around exactly what will be under his purview and his relationship with the Vice-Presidents. It also seems that concerns over Hungarian Commissioner Tibor Navracsics are growing, as we warned here. Overall, the process is at risk of descending into in-fighting and horse trading between the EPP and S&D (if it hasn’t already) – and Lord Hill has certainly got caught up in that.

 ********************* Original blog below **********************

UK Commissioner designate Lord Hill yesterday faced the European Parliament’s Economic and Monetary affairs committee which has to judge if he is suitable for the proposed role of Commissioner for Financial Services, Financial Stability and Capital Markets Union. 

While Hill went out of his way to charm MEPs, in what the FT terms an “unprecedented move” the committee has recalled Hill for a second hearing early next week (likely Monday), reportedly due to concerns over his lack of detailed knowledge of the brief.

Having watched the hearing it was clear that Hill struggled on the minute details of some of the more technical questions from MEPs, some of whom have been dealing with this area for years. However, even some members of other UK parties have come to Hill’s defence. Labour MEP Richard Corbett wrote on his blog: 

“When all is said and done, he performed far better than many of the other candidate Commissioners.”

 Former Lib Dem MEP and Chair of the EP Econ committee Sharon Bowles tweeted this morning: 

“If you only give commissioners designate 2 weeks to prepare, on sensitive dossiers second hearings/written follow up inevitable.”

Having watched the other Commissioner hearings Hill is certainly not alone in struggling to come up to speed in such a short time. For example, the centre-right EPP group has issued a stark criticism of Commissioner-Designate for Regional Policy Corina Creţu for failing to provide details on how she will tackle the build-up of delayed cohesion payments. Employment Commissioner designate Marianne Thyssen has also taken flak for not knowing details of the posted workers directive, while proposed Digital Commissioner Gunther Oettinger was criticised for being too vague on surveillance, net neutrality and other specifics of his brief. In short, many Commissioners are struggling to tread the fine line of trying to please all sides in the European Parliament (thereby sticking to vague and uncontroversial answers).

Furthermore, let’s not forget that the outgoing Internal Market Commissioner Michel Barnier – who oversees financial services – had little to no experience of the area before he took over the post having been Agriculture Minister in France.

What happens next?

Hill’s second hearing will likely be early next week. Following the hearing another committee vote/discussion will be held on whether to approve him. These ‘votes’ are informal since the EP does not have direct say over each Commissioner, or which roles they fulfil, but only over the Commission as a whole. There are a few different scenarios over how this could play out:

1) The committee eventually approves Hill: The EP will then eventually have to decide whether to approve the whole Commission. As we have pointed out before, it seems likely that the EP will request that at least one or two of the suggested Commissioners are replaced (if only to flex its muscles). There will then be a negotiation until the EP and Commission President Jean-Claude Juncker (and member states) reach an agreement.

2) The committee does not give Hill approval but he goes ahead anyway: Since the EP cannot veto specific people or roles, it is possible they could reach a deal on the overall Commission set up even without explicitly endorsing Hill. This would certainly hamper Hill in his role since he will be forced to engage with and report to MEPs, however, it should not stop him from fulfilling his brief.

3) The committee does not approve of Hill: In this instance, the committee would fail to approve Hill even after a second hearing and would request he be replaced when they negotiate with Juncker over the final approval of the whole Commission. This would be a difficult negotiation and would raise tensions between the UK and EU. Furthermore, even Cameron were to nominate someone else, it's not clear any UK candidate with direct financial experience/expertise would be more in line with EP thinking and sensitivities. Either way this would be a huge snub and would certainly play into the hands of UKIP and others who want the UK to leave the EU.

4) A re-shuffle: Hill is only one of several candidates who failed to impress MEPs - indeed none of the nominees so far have sailed through, with Spain's Miguel Arias Cañete and Hungary's Tibor Navracsics, both EPP, in trouble (as we predicted) and Slovenia's Alenka Bratusek also facing a tough inquisition. Meanwhile, the EPP could retaliate by blocking one S&D's nominees, with France's Pierre Moscovici the most likely victim. As such, the FT reports there are rumours in Brussels that a "major reshuffle" could be on the cards with the same personnel being moved to 'less problematic' posts. There is a precedent - in 2004, Barroso agreed to swap around a couple of his Commissioners to appease MEPs. Such an approach would fit with the concerns of MEPs which seem to be more centred around the UK having the financial services brief rather than Hill himself.

However, taking financial services away from Hill (even if he is compensated with another big post like Internal Market or Competition) would also be seen as huge slap in the face for Cameron, the City of London, and the UK as a whole. This would probably be the worst outcome in terms of trying to keep the UK in the EU and would play on many of the concerns raised by UKIP.

Ultimately, the most likely scenario remains that Lord Hill is approved albeit with added scrutiny. That said, it seems almost certain the Parliament will request some changes, as it has almost always done, it remains an open question upon whom they will ultimately focus their attention.

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

Cecilia Malmström during her hearing today

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

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

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

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

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

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

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

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

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