The SNP embraces EU reform - but is it trying to have it both ways on treaty change?

Ahead of next month's crucial Scottish independence referendum, the Scottish government has put out its own paper on EU reform, designed to position the SNP on the pro-reform as opposed to the status quo side of the debate. The report has generated very little coverage (our daily press summary being the exception). It's a mixed bag but contains some worthy ideas - we look at the key points below:

Reconnecting European citizens with the EU

The paper notes that "it is important that the EU institutions and the Member States recognise and respond to the challenges to the EU’s wider legitimacy". Its suggestions include:

"the Scottish Government considers that greater observance of the principle of subsidiarity, is one of the key means of maintaining the democratic legitimacy of the EU… it is essential that the procedure for monitoring subsidiarity by national parliaments is extended further to give an enhanced role for both sub-national and local parliaments."

Cutting red tape and EU "competence creep"

The paper notes that warns that “much more remains to be done” to alleviate concerns about EU “competence creep” and excessive “red tape”, and to “restore a balance between the burden of EU legislation and the benefits expected to derive from its implementation.” It adds that:

"the volume and complexity of the EU regulation affecting businesses in Scotland can pose a significant administrative and financial burden on them (particularly SMEs) and is threatening their ability to recover from the economic and financial crisis."

Its recommendations include:

• Consistent regulation - greater adherence to the framework set by the EU Treaties with less ‘competence creep’ without formal amendment of the Treaties,
• Increased flexibility to the member States when incorporating EU law into domestic legal systems and greater use of exemption schemes, in particular for SMEs,
• Further developing the impact assessment tool and applying it at each stage of the EU legislative process where prospective legislation is subject to significant amendment by the Council and/or European Parliament,
• Focusing on overall principles rather than detailed prescriptive measures,
• An increased review of legislation which is no longer appropriate for today’s climate.

The above are good suggestions - indeed ones which Open Europe has been advocating for a while now (see our 2011 report on European localism and our 2010 report on EU over-regulation for example) but as always, the question is how to translate this into practice. 

Still, the report has some pretty big gaps - for example, it barely mentions the EU budget despite this being in radical need of reform (for example, contrary to common perceptions, Scotland would benefit from devolving regional subsidies back to the national level). Likewise beyond some general praise for EU free movement, the report does not discuss whether changes are needed to rules around EU migrants' access to benefits. In some places, the report calls for more protectionist measures at the EU level, such as amending procurement laws to ensure that contractors to pay the living as opposed to the minimum wage. 

The SNP is also keen to distance itself from David Cameron's EU policies and says that changing the EU Treaties is "neither necessary nor desirable". The party claims that its reforms can be accommodated within the existing Treaties. Whatever the rights and wrongs, this is slightly ironic given that Scotland's potential accession to the EU as an independent country rests squarely on the EU Treaties being opened and changed: not only the accession itself (to which all other member states would have to agree) but also to get the opt-outs from the euro and Schengen that the SNP says it wants.

It's also ironic since if SNP has its way, it could deliver the kind of opening of the Treaties that the Tories are hoping for. 

It's official: the 2014 European elections saw the lowest turnout ever

Remember how some tried to make a song and dance about the turnout in May's European elections having increased for the first time since direct voting was introduced in 1979? Having dropped from 62% in 1979 to 43% in 2009, the 2014 elections saw a staggering increase of 0.09%, thus reversing the trend. The always-available-for-BBC-interviews Guy Verhofstadt said this increase in turnout was “an endorsement of the European project”, whilst Viviane Reding, as usual, didn’t disappoint:

Well, courtesy of European Voice, we now learn that the final turnout figure has been revised down to 42.54% – i.e. the lowest turnout ever. The 43.09% figure was based on exit polls so was preliminary, and it has taken a month and half to establish the real figures.

So it’s official: voter turnout has dropped in every single European elections since 1979, whilst the EP’s powers have consistently increased. It’ll be interesting to see how the usual suspects try to spin this one.

This isn’t a cause for celebration. It’s just simply embarrassing.

Juncker's appointment would bolster the Outist line that EU is unreformable

In a letter to the Telegraph today, Open Europe's Chairman Lord Leach notes:

This dispute is largely the product of the wording of the Lisbon Treaty. One part states that the election of the Commission President is the joint responsibility of the European Parliament and the European Council; another that the European Council shall “propose” a candidate to the parliament for election.  

David Cameron was entitled to take seriously the widespread support on the Continent for his speech last year in which he spelled out the need for EU reform. He was also entitled to assume that the selection process would be led by elected leaders of member states, rather than dictated by the largest “political group” in the European Parliament. The absurd portrayal of Mr Juncker as the champion of pan-European democracy is a cloak for German indecision and the failure of nerve of several EU leaders in the face of the European Parliament’s ambition to replace national democracies with its own ersatz alternative. Mr Juncker’s appointment would be a bitter blow to the pro-European cause in Britain, bolstering the Outists’ line that the EU is unreformable.

The European Parliament - a failed experiment in pan-European democracy?

In a new report published this morning we assess the track record of the European parliament and conclude that it has failed as an institution on a number of fronts. Although many individual MEPs work hard and conscientiously for their constituents, the European Parliament as a whole has failed to gain popular democratic legitimacy. Still, given that the EP now has a lot of power to decide law that impacts on people's every day life - from working hours to browsing the web - there's a lot of reason to vote in the European elections.

Here are the key findings:

• Turnout has fallen despite an increase in MEPs’ powers: While the use of ‘co-decision’, under which MEPs have equal status with national ministers in passing EU legislation, has more than doubled during the last two decades – from 27% to 62% – turnout in European elections has fallen from 57% to 43%. Yes, yes, correlation not causation (as the old twitter cliché goes) but point is: if the EP was effective in closing the democratic deficit, we would see exactly the opposite trend. 

• There is no correlation between voter turnout and knowledge of the European Parliament or interest in EU affairs: A common explanation for low turnout in European elections is a lack of public knowledge of EU politics and the EU institutions yet this is not borne out by our research. For example, in Romania 81% and Slovakia 79% of people say they are aware of the European Parliament but only 28% and 20% turned out to vote in 2009.

Likewise, low turnout cannot be explained by a lack of interest - in the Netherlands, 61% say they were interested in European affairs – the highest in the EU – yet the turnout of voters at 36% is one of the lowest.

• The main party groups in the European Parliament agree with each other three quarters of the time: It probably won't come as a surprise to anyone who watched any of the 'debates' between Martin Schulz and Jean-Claude Juncker that, despite representing national parties of different political traditions, the centre-right European People’s Party (EPP) and centre-left Socialist and Democrat (S&D) party families voted the same way 74% of the time in the 2009-14 parliament. Meanwhile, the average majority in co-decision votes in the 2009-14 parliamentary term is over 75% – the highest it has ever been. In effect, this denies the voters the very same choice the EP is meant to boost. 

• In 2012, the European Parliament spent €85 million on fostering a common European political identity through the party groups in the European Parliament and their affiliated pan-European parties and political foundations outside the parliament. This is only part of a budget that has been spiralling out of control - up from €1.4bn in 2008 to around €1.75bn in 2014.
  
  
  

So those are some of the key problems - what about the solutions? While there is no quick easy fix to what is a complex and multi-faceted problem, the single most effective remedy would be to return democratic accountability closer to voters by boosting the role of national parliaments in the EU decision making process and not repeating the mistake of giving more powers to the European Parliament.

This would involve national parliaments being able to group together to block proposed EU laws and amend or repeal existing rules (see here for more details on this). In parallel, the European Parliament should be stripped of its right to increase the EU budget as it is national parliaments that are responsible for raising the revenue. In addition, MEPs should not be able to veto EU trade agreements agreed by national parliaments.

Meanwhile, the €85 million spent on fostering a common European political identity through the party families in the parliament and their affiliated pan-European political parties and foundations should be cut. The 2009 reforms to MEPs’ allowances should be completed by requiring all allowances, such as the general expenditure allowance (worth €51,588 a year) which is vulnerable to misuse, to be conditional on the production of receipts.

Timing, not substance, is the biggest obstacle to David Cameron's reform agenda

Our Director Mats Persson writes on his Telegraph blog:

In a recent Sunday Telegraph article that received surprisingly little attention at the time, David Cameron came close to setting out a “shopping list” of what he wants to change in Europe. He outlined seven areas, though they were more principles than policies: powers flowing back, a beefed-up role for national parliaments, less regulation and more free trade, limiting the influence of European judges (possibly opting out of the ECHR, which is not an EU institution), tightening welfare benefits for EU migrants, tougher controls on future EU accession countries and no more “ever closer union”.

Nick Clegg – in a strange kind of way – has almost endorsed the plan, saying that "Now [Cameron] doesn't even talk about repatriation, instead proposing a mild seven-point plan, most of which wouldn't even require treaty change." European Commission President Jose Manuel Barroso has said that the EU wants to "cater" to the UK without "threatening the Union’s coherence" (though he was all over the place on EU treaty change). And in the Financial Times this week, Jean-Claude Piris, former legal guru of the European Council – the key decision forum for EU leaders – concluded that Cameron's changes could pretty much be done without actually changing the EU treaties.

For Cameron, this is a double-edged sword. Sceptics at home already see Cameron’s starting position as a “sell-out” – mere presentational changes that will allow him to recommend a “Yes” vote in the 2017 referendum. This is a premature accusation as there’s a huge range within the Sunday Telegraph piece, from token reform to sweeping changes.

Cameron could cobble together a decent package without changing the EU treaties. First, areas like toughening up rules on access to benefits, removing trade barriers, signing free trade deals or scrapping red tape – key planks in Cameron’s renegotiation agenda – just fall under normal Brussels decision-making (which doesn’t meant it will be easy. Think European Parliament). Secondly, “repatriating” powers wouldn’t necessarily require EU treaty change but could still be meaningful, for example devolving the EU’s irrational regional policy (saving UK taxpayers £4bn over an EU budget period) or exemptions from maddening working time rules for the NHS.

Finally, the EU specialises in legal acrobatics. When pushed – say when the bloc’s second largest economy risks leaving – it can be amazingly creative. For example, it created a €440bn bailout fund out of thin air and via so-called political agreements, the Danes got four surprisingly effective opt-outs after having rejected the Maastricht Treaty in 1992, which were incorporated when the next EU treaty came around. Something similar can be done for some of the reforms currently being discussed, including giving national parliaments the right to block or revise EU laws.

So it's right that Cameron seeks to maximise the reforms that can happen without EU treaty change. However, not only would a Treaty change be a form of political insurance to the Tory party and public that things have changed but it's also needed since the treaties simply aren’t fit for purpose. With a more integrated eurozone, we need new organisational principles and practical measures to avoid the EU becoming the eurozone, while allowing powers to flow back to countries that wish to be less integrated. A 2017 referendum should be the start of a slimmed down, flexible Europe, not the end destination. A quick and dirty solution will only bring us back to where we are today – and could well generate a referendum result too close to call, solving nothing.

Ironically, the strongest and most plausible contender for a Treaty change is one measure that Cameron – oddly – didn’t mention in his piece: safeguards against the Eurozone writing the rules for the rest of Europe, which will also effectively kill the notion of "ever closer union". Exactly how this principle will be organised needs careful thought (ideas here), but it’s highly desirable that this principle is firmly enshrined in EU law.

Since it’s the eurozone that is now changing the rules via banking union and other measures, not the UK, Cameron would be given a fair hearing in national capitals on this point. It is conducive to a "grand bargain": the Germans and French solve their catch-22, agreeing to beefed up supervision in the Eurozone in return for Berlin underwriting the euro, while the British ask for safeguards against Eurozone stitch-ups in return for nodding through EU treaty change at 28 (which Berlin still prefers). In this scenario, it’s the German-led EU treaty change that may trigger a referendum in France, not the UK’s.

It's whether it can be done before 2017 that remains the biggest question.

9%, 43%, 50%, 60%, 84%: How many domestic laws are linked to EU law? The case of Sweden

It's up there with the origins of the universe as one of the great existential questions of our time (well...): how many national laws stem from Brussels?

European Commissioner Viviane Reding - who does what she can to turn people against the EU - recently told a "Debating Europe" event in Sweden (H/T @AllieRenison):

Did you know that 80% of Swedish laws are not Swedish laws? They are European laws that have been translated into Swedish legislation.

In addition to the comment being ridiculous (it was in reply to a question about the EU costing too much)  she seems to have plucked this number out of thin air. Incidentally, it would top Nigel Farage's much-criticised claim that 75% of all UK laws are made in Brussels. Another example of Better Off Outers and Europhiles agreeing.

As regular readers will know, the Open Europe team has gone to hell and back trying to answer this question, and our conclusion is that it's virtually impossible to determine with any degree of certainty what the share of EU-derived laws is. It all depends on what you count, how you define an EU-derived law and what the counter-factual is.

It most certainly is higher than 9% as some claim. Counting UK Statutory Instruments, which is what the study from which this number is drawn from did, isn't that meaningful as there's no 1-1 correlation between that and EU law. It also doesn't include EU Regulations which, unlike Directives, are directly applicable, giving no rise to separate domestic legislation.

The 84% figure that is often cited originates from an answer to a German parliamentary question, comparing the number of new federal laws and new EU laws in one year. However, this is also too simplistic. For example, counting only federal laws in a federal system isn't particularly meaningful. Germany has 16 Länder that churn out laws as well.

Now, a new Swedish study has thrown in another number to debate. The Riksdag and Departement - the Swedish Parliament's in-house magazine - has reviewed 1,300 Swedish legislative proposals, dating back to 2005. It found that the share of legislative proposals in 2012 originating in the EU stands at 43% - a dramatic increase compared to 2010 when the share was 28%. Of the 104 laws that so far have been proposed by the Riksdag this year, about a third originate in the EU.

This is a quick and dirty study in many ways - it measures only the so-called flow of EU legislation, not its stock. And the flow clearly is subject to a lot of variation. Its proposals and not laws passed. And, as with the German study, it doesn't look at local rules. Local government is important in the Swedish system, with Councils (or municipalities) having plenty of decision-making power. So any serious "EU law count" would have to look at this dimension as well.

But, we're not done yet. A 2010 report by the Swedish Association of Local Authorities and Regions - who should know a thing or two about local decision-making - does address this very question. It says this:

The report shows that, on average, the EU affects 60 percent of items on municipal council agendas. The number is slightly lower for county councils and regions, where the EU influences around 50 percent of agenda items. 

Given that these are local decisions, it does sound high to us, but remember the report doesn't count laws per se, but issues considered by the local government in Sweden (public procurement considerations for example will always be influenced by EU law, despite it not necessarily giving rise to new local rules).

A few conclusions:

• Viviane Reding really must be on the UKIP payroll 
• It remains incredibly difficult to nail down exactly how many laws originate in the EU
• The share of EU laws is best measured in terms of domestic legislation "influenced by" or "linked to" EU decisions, ideally in combination with the measurable impact of these laws (our preferred way) to get a sense of the relative impact
• Any EU law count must also look at the local or regional level.
• Still, a h*** of a lot of domestic laws stem from the EU 

Is the scrutiny of EU legislation only the preserve of the EU-critical?

Who cares about EU scrutiny?

The Hansard Society has today published a collection of essays on improving the current scrutiny of EU legislation in the UK Parliament - well worth a read. Open Europe's Christopher Howarth contributed an essay arguing for greater powers for national parliaments arguing "Scrutiny without power is not scrutiny, it is ritual" - along with a series of detailed suggestions (more on those later). Other contributors include Bill Cash MP, Chris Heaton Harris MP, Robert Broadhurst, Gisela Stuart MP and Lord Boswell and the foreword is written by none other than the Europe Minister David Lidington MP.

However, reading those names you might be struck by the absence of those on the more EU integrationist side of the UK EU debate. Surely those on all sides of the political spectrum have an interest in the EU's democratic accountability? Well here is what the Hansard Society's Ruth Fox had to say:

“A majority of the authors – though not all – might be said to occupy the more eurosceptic end of the political spectrum. We invited a wide range of politicians across all the major parties to our seminar in September 2012 but those who accepted came, in the main, from the eurosceptic perspective. Similarly, we invited a number of pro-Europeans to contribute to this pamphlet but, disappointingly, there were few expressions of interest. This underlines the concern that those engaging with the detail of European issues are drawn from too narrow a tranche of parliamentary representatives.”

So there you have it. Why are those who argue for the UK's place in Europe to remain unchanged and/or more integration so reluctant to say anything about increasing the ability of Parliament to scrutinise the goings on of the EU - what do they think they have to lose?

Did the EU instruct Rome to “unplug” Berlusconi?

If true, this is quite extraordinary.

Fabrizio Goria - business and finance correspondent of the Italian online news site Linkiesta - has recently taken a look back at the Italian crisis towards the end 2011. An English version of the article is available on the LSE's Europe blog. With Italian borrowing costs reaching record highs, he writes that European Commission President Jose Manuel Barroso instructed the then Interior Minister Roberto Maroni (of Lega Nord) to "unplug" Silvio Berlusconi, who was the Prime Minister at the time.

Goria writes:

"In those dark days, with the 10-year Bund-BTP spread close to a historical peak, a unique incident occurred. During an institutional meeting, the then minister of internal affairs Roberto Maroni received a phone call. It was towards the end of October. People attending that meeting, a select group of associates, reported that he turned pale. The call came from José Manuel Barroso [who] was very clear with Maroni: “I don’t want you to take this personally. Neither you nor all other members of the government. But you need to “unplug” Berlusconi.” And in that moment Barroso revealed what the strategy was: a flurry of declarations against the then prime minister. From all fronts, from every European policy maker. The message to be sent was one and one only: Berlusconi is inadequate."

Ten days later, Berlusconi resigned.

It was extensively reported at the time that German Chancellor Angela Merkel and then French President Nicolas Sarkozy (who are obviously much more powerful than Barroso) were putting enormous pressure on Berlusconi to take a hike - and it was always assumed that Berlusconi's departure was at least in part due to European pressure.

However, this would be the most explicit intervention known to date. Now, we haven’t seen this reported anywhere else – and given that it is evidence that the EU fell just short of toppling a democratically elected leader – we'd expect it to be all over Italian and international media.

So we take it with a pinch of salt – but, as always, we’re keen to know what our readers think…

The UK electorate is in the market for something more than the false choice of status quo or exit

When it comes to the question of whether the UK ought to stay in the EU there are two key considerations. Is continued membership the best solution from an economic perspective (trade, regulation etc) and also is it democratically sustainable? (Others will also cite 'influence' and geopolitical clout).

Leaving aside the first consideration for now, the second one has long generated a heated debate, not least in the comment section of our blog, with some regular readers pointing out to us that a majority of the UK public wants to leave the EU. End of story.

In his Europe speech, David Cameron warned that support for the EU was “wafer-thin” – which as we highlighted at the time was a long-term trend (albeit exacerbated by the crisis).

Recent polls have shown an ever larger margin in favour of exit, with a widely cited ComRes poll over the weekend showing that 46% would vote to leave, 24% would vote to stay in, with 30% undecided.

However, there is, of course, an important sub-story here. While this and similar polls have been interpreted by some as a mandate for withdrawal, when a supplementary question about restoring “some EU powers” to the UK is posed, the proportions change quite dramatically with 43% (including 48% of Conservative and 20% of UKIP voters) voting to stay in, 24% voting to leave regardless, and 34% undecided. These figures are consistent with the results of similar questions asked in a number of opinion polls in recent times.

In fact, restricting the choice in the EU debate to only In/Out is rather odd. How often does that happen in other areas of public policy? Would a choice between a 100%, all encompassing welfare state or no welfare state at all, for example, be a fair choice put to the British public? Unlikely, as most of the public wants something in between.

That we consistently see such a large swing in opinion from 'Out' under a straight In/Out scenario to 'In' under renegotiated terms shows that one of the clearest trends in UK public opinion is that the UK public wants to see new EU membership terms first, and only then withdrawal if that fails.

As such, for those who cite the issue of democratic legitimacy as their prime motivation, whilst they most certainly have a point, there is no reason not to at least give Cameron a good shot at his strategy of re-negotiation followed by a referendum.

The democratic question is also frequently cited by those who demand an immediate referendum, including the MPs who voted in favour of the amendment to the Queen’s Speech last week. However, buried in the poll data was an interesting finding that ought to provide some food for thought – 20% of voters (including 52% of Conservative voters) said they had more sympathy with David Cameron while 18% sided with backbench MPs. Meanwhile 48% said they did not have more sympathy for either side.

If there was an overwhelming support for an immediate UK exit - as opposed to substantially reducing the EU's powers in Britain - one would have suspected far greater support for the handful Tory backbenchers who are pushing for an early referendum bill. This isn't to say that there is a major trust issue when it comes to Europe, and that some Tory backbenchers didn't make valid points last week, but merely that the public, again, is basically quite content with the basic idea of the UK negotiating new membership terms followed by a public vote.

At the same time though, politicians and officials who think they can fudge this process or procrastinate over addressing the EU's involvement in too many areas of national life ought to be very careful. The electorate's desire to staying the EU is clearly predicated on substantial reforms taking place.

This is welcome stuff: David Lidington says national parliaments could be given a 'red card' over EU proposals

National Parliaments' should be allowed
to show the EU the red card

This is an idea that's very close to our hearts - and an idea that we have promoted for a very long time.

The first bits of UK Europe Minister David Lidington's interview with German daily Die Welt have just been published on the paper's webpage. We'll have to wait until tomorrow to see the full version. But from what we can see so far, Lidington's interview is likely to reverberate quite a bit across Europe.

He said,

"Perhaps we should lower the threshold for national parliaments to take action against initiatives from Brussels; perhaps we should introduce the principle of a 'red card' so that a given number of national parliaments can block initiatives from the [European] Commission."

Sounds familiar? Well, the 'red card' was first advocated by Open Europe in 2011 in our report 'The case for European Localism'. And again by Lidington's PPS Tobias Ellwood MP in a publication for Open Europe in December 2012, where he argued:

"Any future [EU] Treaty change should include some system of the red card system with the right quota and powers."

A red card is an improvement over a yellow

Open Europe's Director Mats Persson pushed the idea in the Telegraph here in January. Under the Lisbon Treaty, if a third of national parliaments show the Commission the current 'yellow card', the Commission is obliged to reconsider its proposal and explain why it wants to change it, scrap it or push ahead with it. To date, the Commission has withdrawn a proposal in only one case after being shown the 'yellow card' - the so-called 'Monti II' Regulation on the right to strike.

However, this provision has several weaknesses. First, it doesn't oblige the Commission to actually drop the proposal, but only to reconsider it. So it's a far cry from a veto. Secondly, it's only supposed to happen on 'subsidiarity' grounds - and not on 'proportionality'. Thirdly, a third of parliaments are supposed to agree within an eight-week window, meaning that if the Commission tables a proposal in August or September - when most parliaments are in recess - it can basically push ahead with anything.

In other words, it really doesn't do that much to close the EU's infamous democratic deficit. Nor to strengthen the powers of national MPs - an aspect which, as we've argued repeatedly, is absolutely vital if the EU is to regain democratic legitimately.

Therefore, a 'red card' provision giving a certain number of national parliaments acting in unison (the threshold needs to be discussed) an actual veto right, would be an absolutely massive improvement. This is also an area where the UK will have support from Germany and others if it pitches it right.

In the interview, Lidington also pointed out that several times in the past,

"the content of [EU] treaties has been interpreted in a way which was not desired or expected at the time the treaty changes were decided on. Sometimes, the European Commission or the European Parliament try to expand the boundaries of their competences." 

The Europe Minister also stressed that the EU's single market for services is "painfully underdeveloped". echoing similar remarks on the importance of deepening the single market before. However, this time they come after he said that Open Europe's proposals to reignite the EU's services sector and boost EU-wide GDP by up to €294bn were "interesting" and "worth exploring".

More please!

Public support for the EU drops by 16% in one month: is popular support for the euro in Greece finally about to wane?

As we've noted in the past, a factor that will determine whether the eurozone can hang together in the long term is the extent to which the public in the South begins to see the euro and EU austerity as synonymous.

For example, despite everything that has taken place in Greece, this has not been the case, with a majority of Greeks consistently in favour of remaining inside the euro. The choice is instead perceived as being between austerity or some form of alternative. This is why we rightly predicted that Greece would remain inside the euro following its hectic dual elections last year (at a point when many analysts were predicting an imminent Grexit).

But is this now starting to change? 

Possibly.

A new Public Issue poll shows that 66% of Greeks now have a "negative opinion" about the EU. For a country that has traditionally has been staunchly pro-EU, that's bad enough. But extraordinarily, when the same question was asked only a month ago, 'only' 50% of respondents said that had a negative opinion  about the EU- a massive 16% increase in only a month, possibly owing to the handling of the Cypriot bailout and the renewed Troika push for civil service cuts in Greece. Those with a positive view dropped from 48% to 31% in the same space (see the graph below).

A separate poll by Marc for Alpha TV asked the question, “In case it’s not possible to improve the conditions of the loan agreement, what do you think we should do?” 53.8% answered "remain in the EU and the euro", while 41.3% said they wanted to "leave the EU and return to the drachma" (4.9% don't know). Note that this was a question about leaving the EU, not only the eurozone. Whilst still a majority in favour of sticking around, to our knowledge, there has been no Greek opinion poll to date with such a large share in favour of leaving the euro and the EU.

Incidentally, the Public Issue poll also asked who respondents wanted to see as Prime Minister. Top candidate? “None”. (see graph)

We're not drawing any firm conclusion from this, although if this trend continues it will be significant. Currently a majority of Greeks believe that things "would be worse" outside the euro. It's worth listening to our interview with leading German economist Hans-Werner Sinn, which we published today, on the prospects for Greece in the euro. One thing is clear: this won't be easy.

Is the Netherlands heading for a referendum on Europe?

In 2005, Dutch voters rejected the European Constitution

A Dutch citizens' campaign to make it mandatory to hold a referendum on any new transfer of powers to the EU - reminiscent of the UK's referendum lock - has mustered 40,000 signatures, the threshold needed to force Dutch MP's to debate the issue and decide whether they agree with the proposal or not.

A "Parliamentary Commission" still needs to decide whether the initiative meets the conditions for triggering a parliamentary debate. Even if it does, only the Socialist Party, Geert Wilders' populist Party for Freedom and a few smaller parties support the idea - so there's no majority for it in the Dutch parliament. Last week, the centre-right VVD - which governs alongside the Labour Party -  labelled the initiative "unhelpful".

Is this the end of it then? Not quite. The next threshold is 300,000 signatures - which could trigger a non-binding referendum, subject to a new law which still needs to be adopted by the Dutch Senate. The campaigners are already looking ahead to that. There are lots of hurdles to actually get to the stage where a non-binding referendum on whether to adopt a "referendum lock" can be held - let alone adopted - but there's definitely something stirring underneath the surface.

Diederik Samsom, the leader of the Labour Party, said last weekend that changes to EU treaties should indeed require referenda (which is why the Dutch government wants to avoid such changes for now). According to a new poll, 64% of Dutch voters want a referendum on any new transfers of power to the EU (not surprising). However, more surprisingly, 65% of voters actually oppose such transfers of power altogether. With this in mind, gaining 300,000 signatures in a country with almost 17 million citizens does not seem impossible.

As the Dutch government argued in its "State of the EU" report, "The EU's democratic deficit is [the Union's] Achilles heel." The concerns brewing under the surface in the Netherlands show that this shortcoming will need to be addressed sooner rather than later.

Open Europe Berlin: one to watch!

This is exciting stuff. As we've argued repeatedly, the future of Europe will largely be decided in Germany, as that country goes through a very dynamic, internal debate.

Which is why Wednesday's  launch of Open Europe Berlin gGmbH, Open Europe’s new independent partner organisation, was so incredibly timely. 220+ journalists, policy-makers, business leaders, academics, diplomats and others crowded at a packed Hotel de Rome in Berlin, to listen to OEB Director Prof. Dr. Michael Wohlgemuth and the keynote speaker Otmar Issing, former chief economist at the ECB.

The message from the podium no doubt struck a chord: the future of Europe isn't alternativlos – without alternatives to ever more centralisation. In his welcome address, OE Berlin Director, Prof. Dr. Michael Wohlgemuth argued that:

“We stand for a Europe governed by the rule of law and a Europe of citizens, not of bureaucrats… We are Europe-friendly but we place emphasis on measures that made Europe free & prosperous, not central planning… the current crisis measures will lead to institutional sclerosis & harmonised lack of responsibility, a clear case of ‘moral hazard’… Instead we stand for a liberal & competitive Europe; a democratically controllable decentralised arrangement within a clear rules based system.” 

OE Berlin Director Prof. Dr. Wohlgemuth delivering his opening remarks

In a keynote address entitled “More Europe – what kind of Europe?”, the former ECB Chief Economist Otmar Issing noted that “A think tank contributing fresh thinking on Europe is sorely needed and deserves support.”

Otmar Issing and event moderator Karen Horn

In his speech, Issing argued that:

“Placing too much value on a currency, whether it is the D-Mark or the Euro is not a good idea. It cannot be maintained at any cost...I welcome solidarity when it is about helping the weak get back on their feet. However, the fiscal union is a false interpretation of solidarity…The fiscal union is a clear case of wrong incentives. I do not believe that ‘more Europe’, a political union, is an alternative to the present state of affairs.” 

Instead, he said that failures within the euro were structural and were not caused by ‘financial speculation’, and that member states had to deal with their own problems rather than trying to move them to the European level. Issing also criticised the EU Commission’s “deeply absurd” rush towards establishing a banking union. He added that the proposed ‘Chinese wall’ between supervision and monetary policy at the ECB was “illusionary”.

The full video of the launch event is available here (auf Deutsch).

The crowd mingles at the Hotel de Rome

For German media coverage of the launch, see here.

Open Europe London Director Mats Persson outside OE Berlin office on Oranienburger Strasse in Berlin's Mitte district

Eurozone votes for eurozone laws: one way to solve the European Parliament’s “West Lothian question”

In the UK, Scottish MPs can vote on English matters (such as the English NHS and education etc.) where, because they are devolved to the Edinburgh parliament, English MPs have no say on specific Scottish matters. This has been labelled the “West Lothian Question”. Solving it is has been a perennial subject for debate, going way back to debates on Irish home rule in the 19th century right through to Scottish devolution. As yet it remains unanswered.

With a multi-tier Europe becoming more of a reality every day, in wake of further Eurozone integration, the EU is now facing its own West Lothian question. If some countries don’t take part in say, more fiscal integration or if some countries – such as the UK – wish to devolve some EU powers back to the national level, how would the EU’s voting system take that into account?

European Parliament President Martin Schulz said yesterday for instance in an interview with Die Welt, that:

"it can't be the case that individual member states pull out of the common [policy] areas, but believe that they can continue to co-decide on legislation. That's the case for negotiations in the Council, but also in the Commission and for us in the Parliament. The withdrawal of Great Britain raises the second big question apart from the euro question: how do we deal with this now from a legislative perspective? With Schengen, it was already the case that London doesn’t take part but was allowed to co-decide on legislation. We must make this systematic. When Cameron starts picking what he prefers from current Treaty law, we must consider which consequences this has for us as an institution. Whoever doesn't take part in certain policies, should no longer take part in the legislative process. When you withdraw, you need to withdraw completely.”

And he is also quoted by DPA as saying:

“The euro is the currency of the union. The parliament of the union is the European Parliament. Thus the parliament of the euro is the European Parliament. We have 27 EU member states and two, namely Denmark and the UK, said we won’t go along with the euro. All other states are required to introduce the euro sooner or later. Therefore we need a ‘27 minus’ approach on EP decisions on Eurozone-specific issues”.

Schultz has asked the West Lothian question
- but does he have the answer?

Schultz seems to be arguing for the eurozone votes for Eurozone laws. He makes a good point, but how would this work? Well, Britain has some experience of assessing the relative merits of limiting MPs to voting on different laws. In essence the problems that have been thrown up are these:


Problem in UK: How do you ascertain what is a ‘eurozone’ law is when something might effect both parts? 19th Century British PM William Gladstone, for instance, concluded that: "it passed the wit of man to frame any distinct, thorough-going, universal severance between the one class of subject and the other."

Not a problem in EU: In the UK these problems remain due to the imprecise nature of UK governance. However, in the EU all legislation is based on treaty articles and EU competences, so deciding who votes on what should be far easier, though if the line between the banking union and the single market, for example, gets blurred this could suddenly become problematic.

Problem in the UK: English votes for English laws in the UK raised the prospect of a UK government unable to govern England because, it may not in fact command a majority of English MPs (only an ‘overall’ majority) creating constitutional chaos (think posts such as the Home Secretary).

Not a problem in EU: In an EU context allowing differing governments to get on with their business would probably suit the UK just fine, as would limiting MEPs’ power over UK affairs (though we acknowledge the risk of eurozone caucusing etc).

In principle, there’s no reason why variable geometry in the EU voting system can not be made to work – in fact, it could be an important component of a reformed EU, in areas such as the CAP, JHA and social and employment laws, as per the model we’ve outlined below. When these are up for discussion a UK MEP would simply not vote.

Politically, it would need to be managed very carefully. Some euro-outs, such as Sweden, will probably oppose such a differentiated approach. But it would be fair democratically and, as Europe moves towards a multi-tier model, perhaps something the EU will eventually get used to.


Will eurozone votes for eurozone laws catch on in a multi tier EU?

Let's dare to have less Europe!

As leading UK politicians and commentators urge eurozone countries, above all Germany to take the plunge into a fully fledges fiscal and economic union (while firmly rejecting the UK’s participation), it seems they have failed to contend with quite how deep resistance to such a move might be. Indeed we are beginning to witness a bizarre spectacle in which the UK is arguing for more EU intervention while many on the continent are arguing for less, a complete turn-around from recent history.

For example, at the time of going to pixel, the homepage of Die Welt leads with a comment piece by Clemens Wergin entitled “Lets dare to have less Europe”. In the piece, he makes the sorts of arguments often made by the more nuanced EU-critical UK-based commentators, such as:

“The principle of collective responsibility should remain an exception. Therefore, we must return to a Europe in which the welfare of one nation does not depend on how others organise themselves.” 

“[The moves towards a fiscal and banking union] mean even larger intervention rights for the European institutions in national budgets. At the same time it would also mean that the inability of Italian and Greek officials to persuade their wealthy citizens to pay their taxes would be compensated by fees from the dutiful North. It would be the perfect recipe for Europe-wide organized irresponsibility.” 

“This type of deepening is not wanted by the citizens, it will not work and it drives a wedge of division into the continent. It is also further evidence of the implacability with which the political elites of the continent run in the same direction. When it comes to European issues, there is a form of ‘group-think’ that is far too rarely questioned. According to this creed, only he or she who calls for more integration can be considered to be a good European. Meanwhile, it has long been the opposite.” 

Surely these are the sort of sentiments that constructive UK EU-reformers ought to be embracing?

What has the ECtHR done for the UK lately?

A detailed report, written by veteran Parliamentary legal researcher Robert Broardhurst, and commissioned by a group of backbench Conservative MPs including Chris Heaton-Harris MP and Andrea Leadsom MP, has called for action on the European Court of Human Rights (ECtHR) to reinstate Parliamentary democracy.

This important report argues that we must radically change our relationship with the ECtHR so that it can no longer impose trivial notions of rights on the UK against the will of Parliament.

Among the findings the report discovered that:

• Since Britain subscribed to the ECtHR’s jurisdiction in 1966 there have been more than 350 rulings on whether the UK has violated convention rights. The number of judgments made against the UK stands at 271, against only 86 that were successfully defended. This, added to the Human Rights Act's domestic rulings, has led to judgements that fly in the face of public opinion.

Areas looked at where the ECtHR has conflicted with public opinion:

• Prisoner voting rights
• Prevention of deportations
• Extending rights to housing

Broardhurst believes that that the ECtHR's interpretation of human rights in these areas offends the British peoples' common understanding of those rights and that although parts of the Coalition are aware of this problem - the proposed UK Bill of Rights will not offer a full remedy to a growing problem.

Broardhurst's preferred solution offers a more far reaching solution. He argues that to solve the issue once and for all, the democratically accountable UK Parliament should be given the power to overturn ECtHR judgements directed at the UK.

The report suggests that if other signatories to the ECtHR do not agree to this step, the UK may have to withdraw from the Court's jurisdiction. This would also entail withdrawal from the Convention on Human Rights but, as the report notes, the UK could still enshrine the rights of the Convention in national law through a British Bill of Rights. After all, it is the way the rights have been interpreted by judges, rather then the rights themselves, that has been the source of most of the problems.

The UK took the Presidency of the Council of Europe in November 2011 and this will run until May 2012. If reform of the Court is not forthcoming, the number of people willing to consider the option of withdrawal is only likely to increase.

This is of course all complicated by the fact that the EU is set to join the ECtHR in its own right - but that's another story.

Is this what Merkel wants?

A very interesting paper drafted by the German Foreign Ministry has come to our attention, and is today reported in the Telegraph, which sets out concrete proposals for how exactly the Germans might propose to reign in the eurozone’s “debt sinners” (as they are commonly referred to in the German media) in the medium to longer term via an EU Treaty change. (Our full translation is also avalable on the Telegraph's live blog).

Update: Following several requests, see here for a pdf of the full text in English.

While many of these proposals have been hinted at before, this is the first time they have appeared together as part of a comprehensive framework in an official document, and in such great detail, including the relevant Treaty articles that will need to be changed. Here are what we consider to be the most significant and interesting aspects of the paper:

“Currently, there is no real possibility of imposing discipline on member states with massive budget problems. All previously existing options were premised on the voluntary principle. Moreover, there is no credible and workable solution to problems of excessive indebtedness, which can no longer be solved by the bailout package”

The main ‘solution’ to this problem suggested in the paper is greater budgetary discipline within the eurozone, enforceable by other member states and/or EU institutions. For example:

"The theoretical sanctions should be upgraded to real automatic sanctions. Sanctions in the event of excessive deficits would then be able to be directly initiated by the Commission, even without a referral from the Council...Council decisions taken by qualified majority must be replaced here by reverse qualified majority voting.”

Moreover, it is not just the Commission that would acquire additional powers, but the European Court of Justice would also be used to enforce the rules. The relevant section reads:

“Where the provisions of the Stability Pact are consistently violated, the possibility of a right of action before the European Court of Justice (ECJ) should be created, something which is presently explicitly excluded in the Treaties.”

One of the most striking proposals is for the European Stability Mechanism (ESM), the permanent bailout that comes into existence from 2013, to be radically strengthened and turned into a “European Monetary Fund”, along the lines of the IMF. This would give it rights both to intervene in the domestic budgets of member states if they request its assistance, and also to instigate an orderly default where a member state cannot meet its debt repayment, even with assistance:

“If a Member State accepts a support program from the ESM, this shall automatically lead to a restriction of its budgetary sovereignty in the form of a veto at the EU level before the draft budget is presented to the national parliament of the affected country, in the event it fundamentally violates the principles of sound financial management, thereby jeopardizing the success of the consolidation and reform programme. If such a country is unable to satisfy the conditions of the ESM programme, it can have concrete budgetary measures imposed upon it, for example specific spending cuts or the establishment of new revenue streams.”

Pretty strong stuff. Although such demands can be understood from the perspective of Germany and other creditor countries, it poses huge questions over the future of national sovereignty and democracy in the eurozone. Here is the section on orderly defaults:

“For member states that are covered by an ESM programme, but despite complying with it are unable to achieve debt sustainability, the possibility of budgetary interventions is not sufficient. Therefore, there must also be the option of an orderly default in order to reduce the burden on taxpayers (in the other eurozone states), and also to provide the affected country with an opportunity for a fresh start...The ESM should consider the request made by a member state for relief loans against the criteria of debt sustainability. If this is negative, the affected member state would instead receive loans for a limited time only, during which the procedure for an orderly default would be prepared”.

All the measures listed above require some level of political legitimacy, even during times of crisis. The paper therefore proposes to consolidate the economic and fiscal union with greater political integration as a next step:

“In addition to a change of the EU treaties to eliminate the construction of EMU deficits, a new open discussion about long-term and basic deficits of the EU (democratic legitimacy, efficiency, coherency etc.) has flared up. These questions should also be addressed in the medium term. The goal could be a fundamental development of the EU Treaties. The two initiatives are not mutually exclusive, but rather will follow on from one another. The debate on the way towards a political union must begin as soon as the course toward stability union is charted”.

So where does this leave the UK, which has said that it intends to explore the option of repatriating certain powers from Brussels in return for agreeing to Treaty change? Well, the 'good news' is that Germany appears committed to full Treaty change at the EU-27 level, which gives the UK certain leverage via its veto:

“Also for the basic further development of the ESM into a European monetary fund a change of the European Treaties would be the clearest way and would moreover allow the fundamental involvement of EU institutions...A limiting of the execution of the Treaty changes to the Eurozone states would make ratification easier, which would nevertheless be required by all EU Member States (thereby less referenda could be necessary, which could also affect the UK)."

The last sentence is no doubt a reference to the UK's 'referendum lock'. The German Foreign Ministry's plans would seek to limit the changes to the eurozone countries so that the UK would not need to put the changes to a popular vote. However, the paper does make the veiled threat that, if the UK were to block the changes, or perhaps demand too much in return for its agreement, Germany could explore an intergovernmental treaty just among the eurozone members:

“In case this is not politically feasible, an alternative treaty between the Member States [i.e. the eurzone] that is legitimate under international law ought to be considered.”

Germany’s demand for a Treaty change clearly presents a challenge/opportunity for David Cameron. Germany would prefer to make these changes to the eurozone via a deal agreed at the level of 27. Nonetheless, the UK would still have a veto at that level, which could present Cameron with the chance to demand concessions in return. However, there is also a veiled threat from Germany that it could seek a treaty outside the EU framework, stripping the UK of its leverage, if Cameron were to demand too much. With the prospect of further Treaty changes down the road to further develop "political union", there is clearly a delicate balance to be struck, but Merkel is daring Cameron to call her bluff.

This should make today’s meeting between the two leaders very interesting indeed...

What about the democratic deficit, Mr Cameron?

In an interview with today's FT, David Cameron calls on eurozone leaders to take a "big bazooka" approach to the euro crisis, arguing that "You either make the eurozone work properly or you confront its failures" and "if you're in the euro you have accepted some common responsibilities".

Echoing Chancellor George Osborne's remarks at last week's Tory conference, Cameron seems to be implicitly calling for the EFSF, the eurozone's bailout fund, to be topped up to around €2tr - widely considered to be the amount needed to backstop Spain and Italy.

Yes, from a purely economic and financial point of view, Cameron's remarks make sense, as do his calls for banks (French in particular) to be strengthened. However, there are two problems with Cameron's comments. First, democracy. Secondly, financial contribution.

In the interview Cameron says that

"In a time of crisis you have to do the right thing in order to deliver what I think - German politicians and Germany really wants, which is a working eurozone."

Hmmm, isn't this precisely the type of rhetoric that was employed by EU leaders during the debates on the Lisbon Treaty, which Cameron and the rest of the Tory Party consistently criticised for failing to tune in to voters. We're thinking of the two referenda on the Lisbon Treaty in Ireland for example - the common theme being, 'voters don't actually really understand what they want or have voted for so let's have them vote again.'

So, if you follow Cameron's remarks to their logical extension, although virtually all the polls show that German, Dutch and Finnish voters are dead against a top up of the EFSF, what these countries really want is a working eurozone, so such poll results should basically be ignored. Irrespective of the economic merits of his arguments, it's hard to see how the UK government could credibly lecture others on the EU's 'democratic deficit' ever again.

A similar line was touted by an FT leader today, which similarly argued for the EFSF to be boosted but added more or less as an afterthought that:

"Above all, leaders must create the political conditions for good policy. Monetary union can only survive if each of its members wants it to: without voter support Europe will fail."

What exactly does this mean? The article seems to imply that the EFSF needs to be topped up to a couple of trillion, but that, at the same time, without the support of citizens "Europe will fail".

We're having problems squaring that circle.

And if Cameron really thinks that a boosted EFSF would solve the eurozone crisis, with a corresponding positive impact on the UK economy (it may or may not, but that's besides the point for this particular discussion), why should Britain not contribute. It may be their currency, but it's Cameron's banks and recovery, so why not cough up, say, through a financial transaction tax?

The point here isn't that it's wrong to argue in favour of these measures. But we need to be completely honest about the basic tension at the heart of the eurozone crisis: giving markets what they want, invariably means running over voters.

EU leaders may get away with that at the polling booths. But then again, they may not.

Eurocrat unions on the warpath...again

This in from PA:

A union for eurocrats is on the warpath over plans for a 40-hour week -
claiming the move would hit the balance between work and home life.

Some of the best-paid civil servants in the world are being asked to
agree to work another two and a half hours a week as a cost-saving
measure in the midst of mounting pressure from national governments to
cut the EU administrative budget.

Number-crunchers in Brussels say putting in the modest extra hours will
save EU taxpayers one billion euros a year (GBP870 million).

But one of the staff unions representing workers with pay and conditions
which are the envy of national civil servants across Europe is refusing
to negotiate on the increase.

All civil servants in the main EU institutions - European Commission,
European Parliament and EU Council of Ministers - enjoy the same scale
of pay and perks.

And many senior staff work long hours, despite the official norm of 37
and a half hours per week.

Now the Equipe d'Union Syndicale, the European Parliament's joint trade
union, has sent round a message rejecting the call for longer hours.

A group of union officials put their names to a letter declaring: "The
unions and staff associations replied to this proposal with a
categorical 'Niet!'"

They say working a 40-hour week would have a "very negative impact on
reconciliation of working and home life".

The statement adds: "The attractiveness of the European civil service
would deteriorate."

European Parliament staff already have Fridays off in the weeks when
European Parliament plenary sessions are held.

And most staff finish at lunchtime on Fridays the rest of the time.

But some insisted today that staff put in long hours, far in excess of
the official 37 and a half hour week.

On the other hand they can operate a flexi-time system, balancing short
days by working longer hours another day.

And they enjoy time off in lieu for hours over 37 and a half per week -
even in senior management positions.

But Conservative leader in the European Parliament Martin Callanan
insisted today that those fighting the change should "get real", in the
midst of the economic cutbacks being suffered across Europe.

"Public sector staff the world over are facing cutbacks and wage
freezes," he said.

"But here in Brussels they seem to think they live in an economic
microclimate where money grows on trees and the world owes them a very
comfortable living."

He added: "The Brussels pen-pushers, just like many of the politicians
here, just don't seem to get it when it comes to the economy. Austerity
measures are being taken everywhere, but somehow they think the EU is
immune.

"They need to get real and start to talk to us about how they can help
Europe out of this crisis."

It would have been absolutely hilarious had it not for the fact that the is EU facing its worst crisis to date, with falling living standards and redundancies now a fact of life for people across Europe.

As we've noted before, it's almost as if these people go out of the way to be unpopular with ordinary citizens.

Another day, another poll

While the eurozone crisis rumbles on, the mis-match between what the eurozone needs to survive (probably a full-blown fiscal union) and what citizens accept, is growing ever more conspicuous.

Therefore, we were a bit surprised when the we read the following headline in Friday's Die Welt: "Die Deutschen wollen mehr Europa" (Germans want more Europe). This was apparently the most eye-catching finding in a new opinion poll carried out by DeutschlandTREND for German TV station ARD. Some in the twittospehere and elsewhere interpreted this as endorsement by German citizens for more powers being transferred to the EU institutions.

Really?

As it turns out, the question didn't even mention the EU. Instead, respondents were asked whether they supported “more common policy making in Europe over the next few years” ("mehr gemeinsame Politik in Europa"), which can mean a whole range of things, including more inter-governmental cooperation for example. On this question , 64% answered "yes". It's still an interesting finding, but clearly not one that can be taken as a strong indicator of German public support for the transferral of more power to EU's institutions.

(We're not suggesting that there's anything sinister about the Die Welt's write-up of the poll - just a normal case of seeking to spice up a headline. Not like when the European Commission tried to have us believe that just because a majority of respondents to a Eurobarometer poll said that "stronger coordination of economic and financial policies among all EU member states" would be effective or fairly effective to combat the ongoing crisis, that therefore meant that a majority of EU citizens favoured "stronger European economic governance").

However, the DeutschlandTREND poll provides a number of other very interesting findings, which which seem to suggest that, if the eurozone moves towards fiscal union, it will probably do so with German citizens kicking and screaming. According to the poll, only 35% of Germans would accept even “limited” versions of Eurobonds, while 55% oppose them.


As in previous polls, the bailouts aren't popular either: 66% of Germans are opposed to the Bundestag approving an extended bailout fund:


At the same time, 53% of respondents say they oppose a “United States of Europe”, with only 42% in favour, which clearly qualifies the conclusion that Germans are in favour of "more Europe".

However, the most conspicuous expression of changing public sentiments over recent weeks comes from Finland. A poll out last week shows that 47% of Finns think the euro has done more good than harm. When that same question was asked in a Eurobarometer poll only one year ago, 71% said the euro had done more good than harm. Meanwhile, 49% of Finns are opposed to the Greek bailout, with 34% supporting it. It's hard to find a clearer illustration of the political cost of the bailouts and the eurozone crisis.

If it wasn't for that annoying thing called democracy...