Rutte: Don't blame voters for anti-EU sentiments - blame politicians

Dutch PM Mark Rutte is often seen as a key UK ally who is able to maintain warm relations with both the Liberal and Conservative sides of the coalition. In London today to deliver the Isaiah Berlin lecture he talked about the big challenges facing Europe, making the following key points:

• The EU is greater than the sum of its parts but it is a means to an end - prosperity, security etc - rather than an end in itself.
• As a liberal, he said that he believes that decisions should be made as close as possible to those whom they affect - and therefore the EU should not be involved in areas that can be better handled at the national level such as the minimum wage, pensions, social security and taxation.
• However, where the EU could add more value is in expanding the single market, particularly in services (it was Rutte who first made the suggestion that this could take place under enhanced co-operation, an option we explored in our recent report).
• Commenting on the NSA spying scandal, he said the Dutch government would support the Franco-German initiative to clear up the issue with the Americans to prevent a repeat but added that he opposed any new competences for the EU in this area. He also said that it would be "totally counter-productive" to suspend the US-EU free trade negotiations over this issue, and that he strongly opposed this (Business Secretary Vince Cable who was in the audience appreciated that one).
• He said that he backed David Cameron's 'business task force' report which aims to cut red tape and promote competitiveness and innovation which Europe needs in order to maintain the high standard of living many of its citizens have become accustomed to, and that he supported efforts to demarcate EU competences from national ones, but that he opposed unilateral opt-outs which could damage the single market.
• On the political side, he said that there was widespread disillusionment with the European project among much of the public, but that rather than blaming the voters for opting for fringe parties on the left and right, established parties have to shoulder the blame for creating the political space for them to operate in.
• Finally, he stressed that although he was not opposed to referenda per se, his strong preference would be for any eurozone related changes (banking union, competitiveness contracts) to take place under the existing legal framework as opposed to re-opening the EU treaties which would trigger votes in several countries which would inevitably become in/out votes.

All in all then a mixed bag for David Cameron - strong support for his vision of a leaner, business friendly, trade-orientated and more accountable EU, but scepticism towards opening up the EU Treaties which could offer possibilities for more fundamental changes.

'Handygate': The number of EU countries involved growing by the minute

Well, this one snowballed quickly. The number of countries either implicated - or feeling the need to comment on - "Handygate" (as the Germans call it) is growing by the minute. Here's a round-up.

Germany: The fallout over allegations that the NSA hacked Angela Merkel's phone continues. According to Bild am Sonntag, US President Barack Obama was personally briefed about the eavesdropping by NSA Director, Keith Alexander, as far back as 2010. Several papers claim that the American embassy in Berlin was used as a hub for the alleged bugging.

However, according to US officials quoted by the WSJ and FAZ, Obama was unaware of the whole affair. The reason? The NSA has so many tapping operations going on that it wouldn't have been practical to brief the President about all of them. The article suggests the White House did scrap some monitoring programmes upon learning about them, including the one tracking Angela Merkel.

Spain: Spanish daily El Mundo dropped a bit of a bomb today, claiming that the NSA bugged over 60 million phone calls in Spain in just one month - between 10 December 2012 and 8 January 2013. The report, also based on former NSA agent Edward Snowden's secret documents, suggested the eavesdropping didn't involve the actual content of the phone calls - just their duration and where they were being made from. But still.

The Spanish Foreign Ministry summoned the US Ambassador in Madrid, James Costos - who later stressed in a statement that the wire-tapping activities have played "a fundamental role" in protecting both US  interests and those of its allies.

Italy: Italian magazine L'Espresso alleged last week that not only the US, but also the UK had been spying on Rome. The latest is that, according to the Cryptome website, the NSA allegedly bugged some 46 million phone calls in Italy between December 2012 and January 2013. But the Italian intelligence service has urged caution, saying there's "no evidence" supporting the claims.

France: Though the French press has been relatively quiet about the episode today, the country has already summoned the ambassador with the accompanied public outrage from politicians. It seems to be dying down a bit in France, though.

Poland: Notoriously Atlanticist, Warsaw has also been forced to go public, with Polish Foreign Minister Radoslaw Sikorski saying over the weekend that the alleged hacking was a "scandal which undermines trust" and that he would be inquiring with Washington whether Poland was also affected by NSA surveillance. However, asked in the interview whether Poland was under surveillance, he apparently answered with a smile: "We also use surveillance".

Sweden: Foreign Minister Carl Bildt has been taking a chilled approach, insisting that he knows "what kind of world we live in" and that "I never say things over the phone that could hurt Sweden if it ended up with a foreign power."

Netherlands: Prime Minister Mark Rutte has said that "I will support [Merkel] completely in her complaint and say that this is not acceptable. I think we need all the facts on the table first."

Belgium:  Belgian Prime Minister Elio Di Rupo commented, "The idea is to have a working method [at the EU level] by the end of the year, which should avoid that friends spy on each other." However, asked on whether the EU should suspend free trade talks with the US, Di Rupo said, "We want to avoid blackmail."

UK: Finally, though the worst fears over suspension of the EU-US trade deal so far have not materialised (although it's still balanced on a knife's edge), David Cameron remains stuck between a rock (the US) and a hard place (Germany). In the Commons today, Cameron talked up the need for a robust intelligence service, saying it has "also allowed us to warn our EU allies about terrorist plots aimed at their people."

US-EU free trade deal could be collateral damage of latest NSA allegations

So we wondered what the big story of the European Council would be. Now we have the answer: Merkel’s cell phone. Der Spiegel today alleged that Merkel's phone may have been targeted by US security services. Merkel called President Obama to make clear that she "unequivocally condemns such practices” and was told that the US is not monitoring and will not monitor her communications (which as German media commentators have identified leaves open the possibility that this could have taken place in the past). The US Ambassador in Berlin was also summoned for a dressing down which follows similar action taken in France over allegations the US also spied on French diplomats.

Because this issue has been hyped-up by the media, this has the potential to be more damaging to Anglo-Saxon-Continental relations than arguably any other episode since the Iraq war - and there are lots of things going on here.

Civil liberties vs. security: As ever, this encapsulates the very sensitive trade-off between the obligation of the state to ensure the security of its citizens and the right of the citizens not to have the state arbitrarily snooping in their business. The Germans – given the painful memory of Stasi and Nazi surveillance – are particularly sensitive to this (and that the German Chancellor herself is the alleged victim adds fuel to the fire). Forget everything else on the agenda of the EU summit today, this is what really is creating the headlines in Germany.

Data protection - EU vs national: Some EU leaders and politicians - including Justice Commissioner Vivianne Reding (for whom this issue is like ideological steroids) are keen to use the long planned overhaul of EU data protection rules to enforce greater EU-level safeguards, though the link to the tapping of Merkel's phone isn't entirely clear. France and Poland are reportedly keen on fast-tracking this issue through the EU legislative process while others including the UK and Scandinavian countries countries are less keen. Germany has not committed itself either way (although German Interior Minister Freidrich said the current version would have to be revised).

The UK vs France: However, the same Data Protection Directive that France wants to pass also featured in the recent UK business taskforce report as an example of EU rules which hurt innovation and growth, and argument echoed by Rohan Silva in today’s Times. Medical research charities have also warned that the new rules - specifically a series of amendments tabled by the Green MEP Jan Philip Albrecht - could starve them of the data they need to work on new treatments. So this issue might also indirectly pit the UK versus France.

Germany vs. the Anglo-Saxon world: This is a critical one - any souring of relations between the US and Germany is bad news, and the UK could well be implicated by association (remember Tempora). The thing to watch out for will be the impact on the EU-US free trade deal currently under negotiation (TTIP) as Germany could now well insist on various complicated privacy safeguards and guarantees which Obama will have hard time delivering (not least since getting a deal past Congress perceived as undermining national security could prove very tricky). If TTIP were to fail, it would embolden those claiming that the UK needs to leave the EU to maximise global trading opportunities,

This is also putting Cameron in a very awkward position as he doesn't want to offend either the Germans or the US - but he'll most certainly be pressed on taking a position.

Secondly, the European Parliament – which also needs to approve the final deal – may see an opportunity here to hijack TTIP to exert its own power. The EP has form on privacy and civil liberty issues, as seen by its attempt to take SWIFT hostage. In fact, SWIFT itself could be complicated by the accusations against the US (we’re not saying that the EP doesn't have any valid arguments in this area).

So this is an episode that most certainly will reverberate for quite some time.

Why is Berlin so outraged over spy claims? Because they evoke nightmarish memories in Germany

The 'Big Brother State' is a sensitive issue in Germany

The allegation that the US allegedly spies on the EU and its member states - and the related allegations that the UK also tapped German calls and internet traffic - has caused a huge scandal and plenty of anxiety in Germany.

More than in any other country, as details of US whistleblower Edward Snowden’s leaks become public, German politicians are lining up to condemn America for treating Germany like a "third-tier partner" (apparently Germany was spied on quite a lot), while press headlines are bristling at the indignity of it all.

This has pitted the "Anglo-Saxon" world against the, in this case, Berlin-led continental block in a most unfortunate way. As we pointed out yesterday - even before Hollande made it 'official' - this incident is now putting a dark cloud over the fledling EU-US free trade talks.

But beyond the spectacular headlines what, exactly, lies behind the deep-felt German unease about the entire episode? Well, it's a fascinating study into national sensitivities - and incidentally an illustration of just how difficult it is to move towards a common justice system in Europe.

Germany suffers from a lingering memory of the 'Big Brother State' in two of its nastiest forms:  under the Nazis and the former East Germany (GDR). Any hint at massive data collection or snooping always evokes a sharp backlash in Germany.

The systematic collection of data by the state, as witnessed under the Nazis in the 1930s-1940s, was not only used to identify and systematically exterminate groups such as the Jews or Gypsies, but also to keep others in check by infiltrating every aspect of life.

And the surveillance and collection of data was even more intrusive in the GDR. By time the Berlin Wall came down, the Stasi had some 91,000 full-time staff, in addition to a huge network of informants who provided information on their friends, colleagues and families.

The suggestion, then, that the Obama administration is amassing swathes of  personal data indiscriminately makes Germans extremely nervous. (And these fears won’t have been soothed by the comments from Wolfgang Schmidt, a former Stasi honcho who said the magnitude of the purported US surveillance would have been “ a dream come true” for the Stasi.)

Symptomatically, Germany still hasn't implemented the EU's Data Retention Directive due to concerns over privacy and arbitrary data collection (there's also a constitutional discussion involved - despite the fact that one part of the Directive was supposed to be implemented in 2007, the other in 2009.)  This has lead to the European Commission taking Germany to court.

Germans are reserved, coalition-building and and tempered in international affairs (too tempered some would say), but given the country's recent history, this is one area global partners should tread carefully around if they want to keep Berlin happy.