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Miliband vague on most EU issues but categorical on energy

Labour leader Ed Miliband addressed his party conference in Manchester this afternoon. While the focus was on ‘togetherness’, the NHS and his various encounters with members of the public with useful bits for his speech, there were a couple of mentions of the EU and related issues. On the topic he said:

“Let me say it plainly: Britain’s future lies inside not outside the European Union. And the way we reform the EU is by building alliances, not burning them. And it’s why all those who want to leave, including in the Conservative Party, are now a huge threat to the prosperity of our country.”

Miliband went on to add that he saw the need for EU reform in areas such as “the economy, migration and other big issues”. He also cited the UK’s failed opposition to Jean-Claude Juncker’s Commission Presidency as evidence that UK Prime Minister David Cameron cannot achieve reform in Europe, since all countries simply believe he is pandering to his party.

Ultimately the EU section was a side note to the main messages of his speech. Once again there was no detail about exactly which reforms Labour would pursue with regards to the EU, no mention of whether a referendum would be held or not and only vague talk of alliance building with no clear message of how this would be achieved other than by not being the Conservative Party. He also glossed over the fact that the Labour Party ostensibly supported the anti-Juncker push by the UK and that the negotiations over Juncker seem to have resulted in the UK securing a prime post in the new Commission – one many thought they would never get.

Interestingly, there was a bit more detail at one of Open Europe's fringe events with Shadow Europe Minister Gareth Thomas stating that he (and presumably his party) support a red card for national parliaments as well as a specialised European affairs committee to better scrutinise all EU legislation. Certainly commendable if they prove to be concrete Labour policy.

One final interesting point on substance from Miliband regarding energy:

“[We are] making a clear commitment to take the carbon out of our electricity by 2030.”

This is a pretty bold statement (although he did hint at something similar last year), which essentially says that all of the UK’s electricity consumption will be met by renewable sources in 2030. To put that into context current renewable share of electricity generation is around 16%, and is due to rise by to 30% by 2020 – that is if the UK meets its EU set targets (quite a big if at this point).

To achieve the current 2020 target, according to government impact assessment, the Renewables Directive costs £4.2bn per year over the course of a decade. Miliband’s target would essentially involve tripling the increase of renewables over the same timeframe up to 2030 – exactly how much would such a policy cost per year!? (We’d hazard a guess at…a lot). As the graph above from the National Grid shows, most forecasts expect the UK to still have a sizeable chunk of electricity generation from gas and coal, mostly due to the cost and complexity of overhauling the entire grid and the intermittent nature of renewables (note - we have an upcoming paper on these issues and more soon so stay tuned).

All of this also takes place in a context where carbon prices (via the EU ETS) and targets are set and negotiated at the EU level. Will Miliband unilaterally commit to such an approach when it seems likely few, if any, other EU members would sign up to it? We've highlighted before the potential conflict between Labour's energy policy and the EU. Again, more detail needed but at least here there are some interesting questions to chew over.

Renzi highlights Europe's 'UK problem'...or UK's 'Europe problem'

Speaking in the European Parliament, Italian Prime Minister Matteo Renzi has just outlined the priorities of Italy's rotating EU Presidency. It is no secret that Renzi would like to see a 'United States of Europe' - and today he made much of the need for Europe to "find its soul".

A couple of points from Renzi's speech could be interesting from David Cameron's perspective. He said:

"Europe without the UK would not just be less rich. It would be less Europe, less itself."

"We will do everything [...] to affirm that these values of investing on a different Europe need to be brought together to unity."

"Different ideas are a positive thing that make us proud, [they do] not irritate us."

On top of this short bit specifically devoted to the UK's situation, Renzi also spoke of the need to achieve a "smart Europe" and of the importance of making EU institutions "simple". He also stressed how badly the EU needs to boost its economic competitiveness, because "the rest of the world is [currently] running twice as fast as Europe." 

The challenge here, for Cameron as much as the Italian Prime Minister, is to reconcile Renzi's vision of a 'United States of Europe' with his professed desire to keep the UK in the EU. His predecessor, Enrico Letta, spoke about EU treaty changes designed to settle UK concerns.

It is progress, of sorts, that EU leaders are able to identify the issue. However, now there needs to be progress on finding solutions that work for everyone.

Post-Juncker press conference round-up

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Meet Podemos, the great newcomer of the European elections

The European Parliament elections have dealt a blow to Spain's traditional two-party system. Together, Prime Minister Mariano Rajoy's Partido Popular (PP) and the opposition Socialist Party (PSOE) won 49% of votes. In 2009, their combined score was 80.9%. No wonder Socialist leader Alfredo Pérez Rubalcaba has decided to step down following his party's poor showing.

But the big story coming out of Spanish ballot boxes is the success of Podemos (We Can), a new left-wing, anti-austerity movement that came from nowhere to become Spain's fourth largest party and win five seats in the new European Parliament.

And 'nowhere' really means 'nowhere' in this case. Podemos was officially registered as a political party in March 2014 - which makes its performance extraordinary. Its leader, 35-year-old Pablo Iglesias (see picture), is a Political Science professor but also a bit of a TV star in Spain. Interestingly, his parents called him Pablo so their son could bear the same name as Pablo Iglesias, the founder of the Spanish Socialist Party.

Factoids apart, we have been flicking through Podemos's European elections manifesto. The following bits give a good feel for what Podemos stands for in a number of policy areas:

• "Citizens' audit of public and private debt to find out what parts of it can be considered as illegitimate...and declare that those won't be paid back."

• "Creation of democratic and parliamentary control mechanisms for the European Central Bank...Creation of a European public credit rating agency."

• "Regain public control over strategic sectors of the economy: telecommunications, energy, food, transport, health, pharmaceutical and education."

• "Budgetary support for and increased development of public R&D centres, in order to favour the return of Spanish researchers and scientists from abroad."

• "Right to a basic income for each and every citizen, for the mere fact of being citizens" - which sounds a lot like the 'citizenship wage' advocated by the Five-Star Movement in Italy.

• "A moratorium on mortgage arrears for the first houses of families with difficulties in paying their loans back."

• "Increase the EU's social budget, and establish a levy on capital movements within its boundaries" - which basically means saying adiós to free movement of capital. Podemos also calls for a "bigger levy" on movements of capital from the EU to third countries.

• "Establishment of trade agreements among small producers in Southern European countries. Development of specific cooperation mechanisms among Southern European countries." On the other hand, Podemos wants to "abandon" negotiations over the EU-US free trade agreement (TTIP), and calls for a "substantial revision" of the existing EU-Latin America free trade deals.

• "A derogation from the Lisbon Treaty so that public services are exempted from the competition principle." 

• "Stop the use of Memoranda of Understanding" - which set out the conditions attached to EU-IMF bailout loans to struggling eurozone countries.

Call it left-wing, anti-establishment, anti-austerity (but clearly not anti-EU), the rise of Podemos is significant because - similar to what the Five-Star Movement has done in Italy - it can give Spaniards a channel through which they can voice their dissatisfaction with the political establishment (and the current eurozone economic policies), something which has been lacking at the peak of the eurozone crisis.

In an interview with today's El Mundo, Pablo Iglesias has refused to reveal whether he and his movement will stand in next year's Spanish general election. For now, though, it seems Beppe Grillo may just have found someone to work with in the new European Parliament.

Bonjour Monsieur Cameron, there are potential allies on EU reform on the other side of the Channel

Henri Guaino, a French MP from the centre-right UMP party and a former special advisor to President Nicolas Sarkozy, has an interesting interview on Europe in today's Le Figaro. Here are some key excerpts:

Q: What is the European Union, according to you?

A: The EU is France, Italy, Germany, Spain, Belgium...The [European] Commission, Parliament, Court of Justice are just institutions at the service of the states and the peoples of Europe. It doesn't make sense to speak of a general interest of the EU that transcends the interests of these peoples and these states. Institutions never transcend anything.

Q: Europe is peace...

A: It's not the EU that created peace, it's peace that created the EU, and the idea that one guarantees peace on the continent by weakening the states is a dangerous one: for years, the weakening of states has been going hand-in-hand with the rise in Europe of populism, extremism and social tensions. Let's be wary that the federalist dream doesn't turn into a nightmare.

Q: Are the European institutions in need of reform?

A: The institutional Meccano has hit its limits: every reform has just given birth to a bit more bureaucratic monster. There are only two democratic institutions: the [European] Council of heads of state and government, and the [European] Parliament. The Council is more democratic than Parliament because heads of state are more accountable to their fellow citizens than MEPs. It is not certain that democracy has gained a lot from shifting from an assembly composed of delegations from national parliaments to a directly elected assembly. But if there were only one decisive reform to be made, it would be to eliminate the prerogatives of the European Commission and turn it into an administration under the authority of the Presidency of the Council.

On subsidiarity, Monsieur Guaino said:

[Subsidiarity] is working the wrong way round. The EU tends to leave to member states what it can't do. On the contrary, it needs to be asserted that the EU is only destined to do what member states can't do. This principle must allow member states to take competences back from the EU, which has too many.

He also suggested that the principle of 'variable geometry' (in plain English, different levels of integration within the EU) should be "applied systematically".       
 
Finally, asked whether the EU "contributes to making politicians look increasingly powerless", Guaino replied:

Yes...The EU has buried the historical, geographical, cultural and demographic realities underneath the rules, the bureaucracies and the procedures. But realities always avenge themselves when they are ignored.

To put this interview into context, Henri Guaino belongs to the same party as pro-integration MEPs such as Alain Lamassoure or Joseph Daul - which illustrates that 'Europe' is an issue that cuts across parties in a number of countries, not just the UK. Secondly, David Cameron may have allies in unlikely places, which if cultivated could prove helpful in a future negotiation.