Is this really the best EU leaders can come up with?

The continuing furore over whether Jean-Claude Juncker will this week be crowned European Commission President has diverted attention away from the important issue of what he, or whoever else eventually gets the job, will be expected to do.

Like most others, we have seen a copy of a draft statement from EU leaders, expected to be announced at the conclusion of this week’s summit, setting out a “strategic agenda” for the EU for the next five years.

Safe to say, it is a very mixed bag. The preamble starts off with some reassuring words about subsidiarity:

“In line with the principles of subsidiarity and proportionality, the Union should only act when together we can achieve more than individual countries on their own. It should show self-restraint in exercising its competences when member states can better achieve the same objectives.”

There is another passage that – presumably as a consequence of the Euro elections results – warns against making promises the EU cannot keep:

“The credibility of the Union depends on its ability to ensure that its institutions follow up on decisions and live up to commitments.”

However, some of the subsequent action points seem to interpret both these points very liberally. For example, EU leaders look set to pledge to “further reduce early school drop outs” and “improve educational outcomes.”

Clearly, the futures of young people in Europe is of huge importance, but surely this is a matter for national governments - what will the 'EU', in the narrow sense, do in terms of policy to help school drop outs?

Similarly, the document talks of making “our social protection systems fit for the future”, an area of public policy explicitly reserved for national governments. What happened to the Dutch mantra “Europe where necessary, national where possible”? The next five years risk starting off with the same hollow commitments and lack of focus – responsibilities should be clearly divided and it should be clear where member states and/or the EU will take the lead.

Meanwhile, as Bruno Waterfield notes, there is limited reference to the reforms David Cameron has been arguing for. On national parliaments, the language is pretty vague:

“A greater place should be given to national parliaments, including by strengthening their means of participating in the debate and making their voice heard in the decision-making process.”

There are some more positive elements for Cameron, such as a commitment to “complete negotiations on international trade agreements, including TTIP, by 2015” and tackling “at all levels” the abuse of labour mobility.

One important inclusion is that the document follows the lead set out by UK Chancellor George Osborne and German Finance Minister Wolfgang Schaueble in the FT recently, by calling for:

"The integrity of the single market and openness towards non-euro EU countries should be preserved."

How exactly this will be done is unclear but the formal acceptance of the euro vs. non-euro split as an issue is at least a start.

That said, there is also an extended list of foreign policy commitments, such as "promoting stability", strengthening a common defence policy, etc, which could have been copied and pasted from any such document from the last 15 years.

All in all then, this is not an inspiring first draft. Much work needs to be done to improve it.

The Dutch EU reform agenda - a primer

In previous we've described the Dutch as 'thought leaders' on EU reform. The Dutch Government's 'subsidiarity review' and the Tweede Kamer's report on the role of national parliaments, with its proposals for 'red', 'green' and 'late' cards, all spring to mind.

Many of these ideas were discussed at a seminar in The Hague in January, organised by the Dutch Cingendael and Brussels CEPS think tanks. A short report on the outcome of the meeting is available online and lists over 30 potential reforms to improve democratic legitimacy and accountability. Some are more concrete than others but here are a few of them:

• Give one of the European Commissioners a subsidiarity portfolio.
• Negotiate a political agreement between the Council and the Commission (possibly involving the European Parliament as well), determining certain domains or certain issues where the European institutions will refrain from further initiatives. A closely related alternative is the idea of a moratorium, agreeing not to present new proposals in a specific area for a certain period.
• Establish a separate subsidiarity court to monitor EU legislation.
• Encourage a proactive approach by EU and national legislators to prevent unintended interpretation by the European Court of Justice.
• Ensure that the European Parliament, taking advantage of its role in selecting the next Commission President, does not dictate the agenda to the Commission.
• Introduce ex post subsidiarity control on existing EU legislation to demonstrate whether subsidiarity was respected and to justify the necessity of EU legislative acts on a case-by-case basis. Both member states and the EU institutions should be involved.
• Introduce an informal ‘red card’ for national parliaments, by proposing the political agreement that the Commission will use its discretion to withdraw legislation if one-third of national parliaments raise subsidiarity objections.
• Introduce a ‘late card’, giving national parliaments the opportunity to voice their concerns at a later stage of the ordinary legislative procedure.
• Introduce a ‘green card’ for national parliaments, which would give them the option to table a joint legislative proposal if a substantial number of member states’ parliaments support it.

There are plenty of good ideas here that the Dutch government in particular has been increasingly vocal in supporting. There are many other proposals that we would throw into the mix, from reforming the EU budget by repatriating regional spending to the wealthiest member states to introducing greater legal safeguards for non-eurozone countries.

As our pan-European reform conference showed, there is growing momentum for change in the EU that extends beyond the UK.

Is an EU referendum back on the Dutch agenda?

Thierry Baudet

This week, the Dutch Parliament held a debate on whether it is necessary to hold a referendum on transferring new powers to the European Union. The debate was triggered by a campaign, called "Citizen's forum - EU" which managed to gather over 63,000 signatures, above the threshold needed (40,000 signatures necessary) to force it on to the agenda of the Lower House.

The campaign demands:

1. An end to the creeping transfer of powers to the EU.

2.  If powers are transferred to the EU, a referendum must be held so the Dutch population can have a say on this transfer of powers.

Two of the campaigners, Dutch academic Thierry Baudet (photo), and economist Ewald Engelen said in a speech to MPs: 

"The Lower House is about to lose its core competences...You won’t be able to decide policy any more. You abolish yourself. But you don’t have the right at all to do this. Because the sovereignty is with us, the people. You are merely the representatives of the Dutch people."

As De Volkskrant reported, the reception was more positive than expected. It was not only the "usual suspects", like Geert Wilders' PVV, the Socialist Party and the Party for the Animals that welcomed the idea. These parties have expressed support for a Dutch-style "referendum lock" in the past,

More interestingly, the social-democrat PvdAalso  came out in support, with its EU-spokeswoman Marit Maij MP, saying: "the PvdA wants to proceed quickly with a possible referendum" - albeit with a lot of qualifications,The party is only in favour of a non-binding referendum, and wants it to be held according to new rules currently being negotiated in the Dutch Senate, which would make it necessary to first obtain 300,000 signatures, a high threshold in the Netherlands (but something which the EU referendum campaigners are considering).

The Christian Union, which sits with the Tories in the ECR Group in Brussels, support the idea, with its spokesman, Gert-Jan Segers MP, saying that "by means of exception we accept an advisory referendum".

Dutch PM Mark Rutte's governing VVD reiterated its support for strengthening national parliaments (something which the PvdA also wants), but is against referendums as a tool of policy.

Meanwhile, a new poll, by prominent pollster Maurice de Hond, reveals that 67% of Dutch citizens want a referendum in the event of new powers be transferred from the Netherlands to the EU:

Ja = Yes, Nee = No

This is against a tricky backdrop: current opinion polls show that Geert Wilders' PVV would have almost as many seats the governing VVD and PvdA combined, if an election was held today (though that goes far beyond Europe as an issue). With the Dutch government's campaign to set limits on the powers of the next European Commission shows, the European election campaign could prove interesting in the Netherlands.

The Dutch are emerging as Europe's thought leaders on reform

The Dutch are quickly becoming Europe's thought leaders on EU reform. The Dutch government's "subsidiarity review" contained numerous interesting ideas for EU reform, the Dutch lower house, Tweede Kamer recently published a paper outlining key proposals for how to strengthen the role of national parliaments. And today, the Dutch foreign minister, Frans Timmermans, used a piece in the FT to set out some new ideas for reform.

Timmermans wraps his ideas in quite friendly language but there are some pretty sharp lines in there.

He says that "During the crisis the European Commission...was relegated to the sidelines and never regained the initiative", adding

"That has not stopped its machine from producing directives and regulations, creating a regulatory burden that bears down on businesses and people." 

He notes the European Parliament

"has been fully empowered by the Treaty of Lisbon. It has an important role to play, but at every turn it demands more resources for more Europe while it attracts ever lower electoral turnouts."

His key ideas include:

• A European Governance Manifesto for the next five years with the member states, laying down what the EU should and should not do. "This will mean more Europe in some areas, and less in others."
• "Create a smaller, reformed commission with a president and vice-presidents heading a limited number of policy clusters. The vice-presidents would have the sole authority to initiate legislation."
• Encouraging "national parliaments to bring Europe back home where it belongs." He throws his weight behind a "red card" for national parliaments - if one-third of them object, a Commission proposal is history. As you know, we love this idea. 

However, he says he doesn't want treaty changes and, interestingly, claims the ideas he put forth can be achieved without such changes. We assume that, for the red card, this would effectively mean a political agreement to the effect that the current yellow card means a red card in practice.

Timmermans concludes:

"In this we do not stand alone. Other partners have put forward proposals that share a similar thrust: a more focused and balanced EU with less burdensome regulation. Let us seize this momentum and start with an in-depth debate on change and reform. For this is our chance to shape “our” Europe together."

'Green card', 'Late card': Dutch parliament ups the ante in EU democracy debate

We already knew that the Dutch parliament is a legislature that takes 'subsidiarity' seriously. But now it has really come out swinging.

In today's press summary, we reported on a recently published position paper on the role of national parliaments in the EU from the Tweede Kamer - the lower house of the Dutch parliament - and it includes some seriously good ideas to increase national parliaments' power over EU decisions (the report available in English here, though the translation is a bit awkward).

Amongst plenty of good ideas, building on the current 'yellow card' for national parliaments, there are two key proposals that would substantially bolster the role of national parliaments:

• A 'Green card': This new mechanism would allow national parliaments to propose new policies to the European Commission, including the amendment or repeal of existing EU laws. This would make national parliaments 'agenda-setters' in the EU decision-making process, as opposed to the current situation in which they can only react to proposals originating in Brussels. At present, only the Commission can make proposals to scrap EU laws.

• The 'Late card': This would give national parliaments the right to object to proposals at the end of negotiations between the European Commission, the Council of Ministers and MEPs. At the moment, national parliaments can only examine a proposal when the Commission has tabled it. However, the final product can often look completely different. For example, the bankers' bonus cap was introduced by MEPs and wasn't in the version of the proposal on capital requirements national parliaments received from the European Commission.

Dutch MPs also want to beef up the existing 'yellow card' system - whereby a minimum of one third of national parliaments can force the European Commission to reconsider a proposal if they think the proposal violates the subsidiarity principle. Since the Lisbon Treaty introduced the yellow card, it has only been triggered twice - most recently this week.

The Tweede Kamer proposes three ways to boost the yellow card - all of which are excellent:

• Extend the period during which parliaments can object - at the moment national parliaments only have eight weeks from the date a proposal is published to submit their objections.

• Broadening the grounds upon which parliaments can object to EU laws to proportionality and the legal base of the proposal (the latter is incredibly important). 

• Lowering the threshold for the number of parliaments required to activate the yellow card - they don't provide the 'magic number', but the Dutch report complains that it is always the same group of parliaments that raise objections.

The report also tries to address the important question of how to get national MPs to work more closely together and so act as a counterweight to the Commission's and the European Parliament's centralising tendencies.

It doesn't, however, propose  a new 'red card' system to empower national parliaments to veto unwanted EU proposals - which we have long argued for. However, on the whole, this is a massively welcome contribution to the debate.

We look forward to the UK Parliament throwing its full weight behind these ideas.

Has the Dutch VVD moved further than the Tories on EU reform and return of EU powers?

In the Dutch Parliament earlier, the VVD (the party of the Dutch PM) EU spokesman Mark Verheijen said he thought EU treaty change was “inevitable” and what is more

"when we want less Brussels in several domains, return whole policy areas, then we should not shy away from the option of treaty change."

This is interesting for three reasons:

First, though stressing the need for the EU to do less, until now, the VVD hasn't really been calling for the return of 'EU powers' - this statement is a challenge to the current division of labour between member states and Brussels.

Secondly,  Dutch politicians - including those from the VVD - have been keen to point out they're not seeking EU treaty change, but want to roll back Brussels' interference within the existing structure.

Finally, together with the recent Dutch "subsidiarity review" - that called time on 'ever closer union' in all policy areas -  the VVD Party has moved into areas that David Cameron has so far not dared not go - explicitly looking forward to and advocating treaty change and outlining concrete areas where the EU shouldn't be involved.

Intriguingly, however, later in the same debate Prime Minister Mark Rutte stepped in to cool it all down a bit. Well, he explained, the Dutch government is not actually proactively in favour of EU treaty change "unless it has already become inevitable". In this scenario he would forward his own ideas but he would not take the initiative.

It's almost as if Europe is waiting for someone to take the initiative...

The Dutch coalition is facing stormy waters

According to prominent pollster Dutch Maurice de Hond, just one year on from last year's elections, the Dutch government coalition of the centre-right VVD and centre-left PvdA would lose more than half of its parliamentary seats if elections were held now. They would only retain 30 of their 79 seats, representing 12% (in the case of the VVD) and 7% (in the case of the PvdA) of Dutch voters.

Geert Wilders’ right-wing populist PVV remains the most popular party, which it has been since late last year, and would double its number of seats from 15 to 32, representing one in five Dutch voters. We commented after the elections last year that the relatively bad results for Wilders and the eurosceptic Socialist Party - which would also see an increase in its seats from 15 to 24 according to the latest poll - was hardly the victory for the centre that some had suggested.

The opinion poll also reveals that 48% of respondents do not believe that the coalition will still be in power in 6 months time, while 37% believe it will.

While there is a majority in the Lower House, the coalition doesn't have one in the Dutch Senate. The Dutch government has already announced that there is an agreement within the coalition on €6 billion in extra austerity measures and that the details will be unveiled by Finance Minister Jeroen Dijsselbloem on "Prince's Day" on 17 September. The plans would see the Netherlands closer towards the EU budget deficit target.

Although the Senate does not traditionally reject the government budget - the last time this happened was in 1907 - the VVD-PvdA coalition has reportedly approached two opposition parties, the D66 and CDA, to see whether they'd like to join the coalition in order to obtain a majority in the Senate. The D66 have refused.

The Dutch economy faces huge challenges, with a housing bust which saw house prices falling 20% below their 2008 peak, while no less than one million Dutch households find themselves in negative equity. That's one in four households with a mortgage. The ECB has expressed concern that mortgages are putting enormous pressure on the financial positions of Dutch banks, while the world's largest bond investor, PIMCO, has noted the Dutch economic crisis may spill over to government bonds, suggesting it will no longer buy Dutch government paper and that the triple A country may face French borrowing levels in future.

The Dutch economic advisory council of the Dutch government has a stark warning:

"Dutch households now have the highest level of long-term debt in the euro zone. In 1995, the debt ratio in Germany was at the same level as in the Netherlands (about 56%); for Dutch households, it is now twice as high as in Germany"

At the same time, the newspapers continue to run stories about the ongoing eurocrisis, with extra assistance to Greece on the horizon. This is something Prime Minister Mark Rutte said would not happen. In addition, as we report in today's press summary, immigration has become a heated topic; according to a recent poll, 81% of the Dutch population are opposed to the lifting of labour market restrictions for Bulgarians and Romanians in January 2014.

In an attempt to address the public's sense that things are out of control, the Dutch government has published its EU “subsidiarity review”, an assessment of what the EU should and shouldn't be doing, which it will present to other EU governments in the coming months.

However, the above would suggest that the Dutch electorate will need a lot of convincing if it is to put its faith in the mainstream parties again at the next election.

Boom! Merkel opens up for the return of powers from Brussels

Well, here’s an essential development for those of us who think reform in the EU – including “less Europe” - is fully possible. 

Speaking on an interview to Deutschlandfunk radio and Phoenix TV yesterday, German Chancellor Angela Merkel said decentralisation of powers from Brussels should be discussed once the German election is out of the way. Merkel said:

“I believe that in Europe at the moment we have to take care to coordinate our competitiveness more closely, and for that we don’t have to do everything in Brussels.

‘More Europe’ can not only mean transferring competences from national states to Europe, but you can also have ‘more Europe’ by coordinating national political actions more intensively and rigorously with others. So we discuss if we need even more competences for Europe.

However, we can also consider whether we can give something back. The Dutch are currently discussing this. And we will also have this discussion after the Bundestag elections. Or we can give more competences to the Commission in order to set agreements on specific issues with national states.”

We shouldn't get overly excited – it’s only one statement – but this is the first time, to our knowledge, that Merkel has explicitly opened for the return of powers from Brussels.  This will clearly be welcomed in Whitehall.

Merkel’s comments come at an interesting time. Just this morning it emerged that the eurozone has finally emerged from recession. Is this when Merkel turns away from an inward ‘crisis containment’ policy, towards a reform agenda? This agenda would be  designed, in part, to keep the UK inside the tent (which Berlin wants for a number of reasons), and in part, to kick-start desperately needed reform for the EU to become more competitive.

What's often lost on observers of this scene is that the two go together. As people in Berlin will tell you, Merkel is convinced that Cameron is one of the few EU leaders who understands the ‘global race’. He is seen an ally in ending Europe’s dependence on cheap cash (which is why the UK government simply has to stop lecturing the Germans on the need for turning the eurozone into a debt union).

As we've argued before,  the eurozone is unlikely to take the quantum leap towards more integration, after the German elections (as some still think).  However, a window of opportunity will open up for the UK and other reform-minded governments to come up some credible and concrete proposals for change. Berlin will no doubt be listening.

Also, the October European Council is likely to be a rare occasion when EU leaders won't focus all their energy on solving the eurozone crisis – instead they can now turn to wider question of how to make the EU as a whole to work for growth and competitiveness.

Cameron has a massive opportunity here.

To temper stuff a bit. Merkel hasn't turned into a Tory MP - she chooses her words on Europe carefully. Also, the comments did not make a splash in the German press at all. None of the major newspapers reported them – they were all rather more concerned about the on-going NSA scandal, and Merkel comments on that instead.

However, it would be a typical ‘Merkel coup’ to slowly, step-by-step, start rolling out a reform agenda in the EU, which – in a German way, wrapped in pro-EU rhetoric – would also involve less Europe.

This is getting interesting. 

Has Martin Schulz been receiving some good PR advice recently?

The EU institutions, and certainly the European Parliament, aren't exactly world renowned for their PR skills. Today we can't blame European Parliament president Martin Schulz for that - perhaps he has a new PR advisor?

In an interview with Dutch magazine Elsevier, asked about the Dutch government's recent 'subsidiarity review' - which concluded that the time for ever closer union in every single policy area was over - he endorses the call for the EU to give some powers back to member states and only focus on essential things:

"Do locally what can be done locally, regionally what can be done regionally, nationally what can be done nationally... I believe we are able to win back trust from citizens."

"For a start, we shouldn't call everyone who is critical a eurosceptic. I am an enthusiastic pro-European, but I think that the EU is in a catastrophic situation. In the Netherlands and Germany, people have the feeling that they pay too much and that they get nothing in return. In Greece, that they're under a foreign regime. In order to deal with this, we must return Brussels' tasks to the national states."

"The Union must concentrate on international trade, migration, tax evasion, climate change, organised crime. For these things, the EU needs to be well equipped."

Naturally Schulz adds the usual caveats that the Commission must be an 'EU government' responsible to both the European Parliament and  member states. Moreover, he has expressed similar sentiments before so we are not sure to what extent this will be followed up with concrete action. It is nonetheless interesting that such a self-avowed EU federalist feels the need to publicly make the argument that EU powers can flow both ways.