German Foreign Minister welcomes discussion on EU Treaty Change

German Foreign Minister, Frank-Walter Steinmeier, is visiting his counterpart, William Hague, in London today. Although the visit doesn't seem to have received much media coverage, we've just been at the press conference, and Herr Steinmeier had some interesting things to say. Unsurprisingly, Steinmeier said he wanted the UK in the EU.

Further Eurozone integration

Steinmeier said that the UK could play a pivotal role in making the EU more effective and competitive, but he also said that it was important not to "backtrack on European integration", but it was not clear if he was referring to Eurozone integration – which the UK actually isn’t against. Hague opened the press conference, saying that both government agreed to work together to ensure a "fairer system" to all Member States in the EU.

Repatriation of Powers 

Steinmeier also made clear that the EU should govern on the "big questions" - that it should rule where it is most effective. In this context, then, he said that there should be a further discussion on which competences would be best regulated on the national level. It was unfortunate that we didn't get a chance to ask Herr Steinmeier to comment on CDU's draft European Parliament election manifesto, which Handelsblatt reported on today as explicitly saying:

“A repatriation of competences to the national level should be possible.” 

Treaty change

The German government – particularly the CDU/CSU wing continue to insist on Treaty Change in some form to provide more central control in the eurozone over spending. At the same time, Cameron wants a Treaty Change to institutionalise flexible integration including the possibility to pursue “less Europe”. The idea is to combine the two in a new grand bargain. Remember, last week French President Francois Hollande restated that Paris didn’t see Treaty Change as a “priority” for fear of a referendum (which would be politically hard to avoid due to the German-style Treaty Change, not the British one). This created headlines in the UK.

Steinmeier said that discussions over Treaty Change are far more nuanced than a polarised vision of Britain on one side asking for the all the Treaties to be opened up, and France on the other, resisting any such discussion – which is exactly what we’ve said. In fact, Steinmeier said he "welcomes a debate" and is "not against discussing an adaptation of the Treaties." He added that there’s a debate raging in Germany at the moment over how to put Eurozone integration on a constitutionally and politically sound footing.

However, he also said that Germany and Britain aren’t completely aligned over Treaty Change, and, somewhat uncomfortably for Hague et al, argued that any major revision to the Treaties along the lines of what the UK is calling for, should perhaps be deferred until the eurozone stabilises further.  "It's not just to do with the UK and Germany that some things are stalling," said Steinmeier.

When asked the crucial question whether he believed that Treaty Change would coincide with David Cameron's 2017 timeline, Steinmeier said it "was too complicated a prognosis" to be able to give a straight answer.

Free movement 

Steinmeier said that the Bundestag has set up a working group to present solutions on how square sensible rules on access to benefits with free movement. He said that the debate in Germany on free movement – while it was definitely was an intense debate - was in "sensible boundaries", a nod to the UK press and its handling of Romania and Bulgaria.

Hague says UK wants national parliaments to have power to show 'red card' to EU proposals

William Hague backs giving national parliaments
a new 'red card' to replace the current yellow card

William Hague will today further develop plans for a new 'red card' system for national parliaments to block unwelcome laws from Brussels, a move first proposed by Europe Minister David Lidington a couple of weeks ago. In a speech in Germany, Hague will argue that only by giving greater powers to national MPs, rather than MEPs in the European Parliament, will Europe be able to restore the democratic deficit.

The proposed 'red card' would beef up the little-known 'yellow card' system already in place, which is pretty weak in practice since it only forces the Commission to ‘reconsider’ a proposal.

We have long championed this approach and the idea of a ‘red card’ in particular, including in our paper making the case for ‘European localism’, published in 2011. Today, our Director Mats Persson backed the move and is quoted by PA as saying,

"Allowing national parliaments to block unwanted EU laws would go a long way to bring back democratic accountability over EU decisions.”

"However, whilst it's encouraging that the UK government is looking at this, it must press ahead with this reform now to avoid the impression that it has no immediate strategy in Europe - a charge that's becoming more frequent. There's support for this reform in other parts of the EU."

This is the first major proposal for EU reform the Government has made since Cameron's speech and it is a very welcome one. The fact Hague will make his speech in Germany is no accident and there is certainly a great deal of support for this idea amongst other member states who feel that for too long the EU institutions have run roughshod over national politics - yesterday's intervention from the Commission on migrant benefits (another area where the UK's concerns are shared with other powerful EU countries) is a case in point.

Its also worth noting that this option would enjoy substantial support among the UK public with 42% of respondents in the recent ComRes poll for Open Europe listing "giving the UK parliament more powers to block unwanted EU laws" as one of their top four priorities for renegotiation. Of all the available options, this was the second most popular after immigration.

We need to see much more of the same and, all importantly, the political will to make it a reality.

Hague's first Europe speech moves the Government in the right direction

William Hague’s first major (and long overdue) speech on Europe since coming to office struck a refreshing tone. In Berlin this morning, the Foreign Secretary set out a case for economic reform in the EU and a new vision for Britain’s place in Europe that was both robust and intellectually consistent. This was the thrust:

“The Eurozone countries must do what they must to resolve the crisis, but the way forward for the EU as a whole is not more centralisation and uniformity but of flexibility and variable geometry, that allows differing degrees of integration in different areas, done in ways that do not disadvantage those that do not wish to participate in everything, and preserves the things we all value.”  

It seems to signal a new tone, if not a new approach, by the Government. Gone was the needless and fruitless lecturing of the eurozone, the counterproductive demands for Germany to pick up the tab for the crisis and the intellectually inconsistent approach that has characterised the UK Government’s rhetoric to date. In short, it has been a complicated mix of demands for a federal eurozone, while threatening to veto the very same thing - 'eurosceptic fiscal federalism' as we've dubbed it. 

Instead, Hague offered a different, far more sensible approach,

“Clearly the Eurozone’s current structures are not working. We respect the democratic decision of the countries of the Eurozone to preserve it. That will require changes. We know the options. It is not for Britain to tell you what the exact remedy should be.”

In fact, Hague held up Germany as a positive economic role model:

“Others can learn lessons, Britons among them, from Germany’s policy choices: structural reforms, its sound public finances and its culture of excellence and enterprise have made Germany globally competitive. It is one of the great trading nations of the world.”

We would hasten to add, this model did not involve cheap central bank cash to paper over deep economic cracks - which seems to be what some members of the UK Government are suggesting the eurozone moves towards. However, the Foreign Secretary still avoided sounding soft. He reminded the German audience that the UK public’s scepticism of the EU is at an all-time high:

“I must also be frank: public disillusionment with the EU in Britain is the deepest it has ever been…People feel that the EU is a one way process, a great machine that sucks up decision-making from national parliaments to the European level until everything is decided by the EU. That needs to change. If we cannot show that decision-making can flow back to national parliaments then the system will become democratically unsustainable.”

He repeated the theme, first developed in David Cameron’s Conference speech, that Europe is losing the global economic race:

“If we do not succeed in making our economies globally competitive and generating sustainable growth then whatever else we do, whatever treaties we sign, whatever structures we build, whatever declarations we sign, will all ultimately be irrelevant. There will be no Social Europe, there will just be an Excluded Europe.”

He also repeated the obvious, yet important, British view that future eurozone integration would have to be compatible with the Single Market:

“While developing a governance of the Eurozone that really works we must equally ensure this leaves the Single Market coherent and intact. The debate on establishing a full banking union shows that this will be complex and sometimes difficult. There are obvious issues for countries not in the Eurozone, for whom it will never be acceptable to have a situation in which the Eurozone acts as a bloc in Single Market institutions in a way that determines the outcomes before the others have even met.”

But, most interestingly, Hague started to articulate a vision of the EU that the UK might be at home in:

“Often important things will not be agreed or cannot be done through the EU. It would be neither right nor realistic to think that questions of war and peace could or should be decided by QMV. Indeed, just because some things work well in coordination with all of our European partners does not mean we should do everything at 27. A more effective EU does not have to mean a bigger, more expensive or more centralised EU.” 

“…The EU is already a diverse place and with further enlargement it will become more so: by the time all the Western Balkan nations join there will be more than thirty countries in it. Its peoples do and will want different things from the EU. Some will be in the Eurozone and some not. Some are comfortable with ideas of federalism, other are not. Some, like Britain, play an active part in foreign and security policy, others find its practice difficult. Some yearn to go further in opening up markets. Others find the idea threatening.

We should recognise and embrace that diversity – it would be a dangerous denial of reality to wish it away. We must respond to what our people and democratic institutions are saying – not just in Britain, but across Europe.”

This was not the finished article by any means but it did signify that the Government (or at least its Conservative part) might finally be coming around to the idea that it needs to explain to the rest of the EU - and UK voters - what it wants from any future renegotiation (Hague also outlined the UK’s review of EU powers), and where the referendum will fit in.

The question is whether Cameron’s much anticipated speech this autumn will deliver.

Hague can't ignore prospect of treaty change for much longer

Speaking on Andrew Marr's show yesterday, William Hague repeated his view that there is no "immediate prospect" of repatriating powers from Brussels. "The repatriation of powers, which is something I support by the way, is not an immediate prospect because no countries are proposing widespread treaty change," he said.

"That may change, but at the moment, that is not what they are proposing..."

But as we've said before, this is all moving much faster than the UK Government is letting on or perhaps would like. Contrast Hague with German Foreign Minister Guido Westerwelle's rather more urgent tone in an interview with the FT last week. He said that Berlin wants to persuade other members of the EU to draft changes to the bloc’s founding treaties at a new 27-nation convention (or IGC) that would take place in 2012.

The Convention should be given a clear mandate and a one-year time limit to deliver results by mid-2013, when the eurozone’s permanent €500bn rescue fund – the European Stability Mechanism – is supposed to come into effect, he said. "We need treaty changes to overcome the shortcomings of (European) construction."

He added that the Convention should consider whether the European Court of Justice would be used to enforce budgetary discipline, and if a “stability commissioner” for the euro should be appointed, suggesting “Probably both are necessary.”

These are clearly "widespread treaty changes" that Hague seems to suggest are far off on the horizon but 2012 is less than two months away. Yes, the actual process of negotiating Treaty changes takes years. But, which the UK govenrment should know from experience, getting in early and getting with a clear agenda, is absolutely vital if a country wants to influence the outcome.

It's time the Government picked up the pace.

Europe at the Tory conference: much ado about nothing

The blog has been a bit quiet for a few days because the Open Europe team have been busy in Manchester at the Tory party conference. However, normal service will now resume.

In the days leading up to the conference, "Europe" was predicted to be one of the major issues on the agenda, which it was. Preceding and during the conference, Cameron and Hague both publicly supported a renegotiation of powers from Brussels but stressed this was something that was either "for the longer term" or "many years" away. Both rejected calls for an EU referendum - something which Boris Johnson said was "not a bad idea". But this is the closest that the papers got to a 'Tory split over Europe' story.

To be honest, the entire conference was a bit flat, and for all the talk about Europe leading up to it, and the whole host of fringe meetings on the topic, nothing particularly new or exciting was actually said.

Over on ConHome, Bruce Anderson argues that, "The heat has gone out of the Europe debate. Everyone knows that the EU is in retreat; no-one is afraid of a renewed federalist onslaught." This is partly true, but it's equally true that many Conservatives probably find it difficult to grasp where, exactly, Europe is at - which isn't surprising, given that Europe (if that ever was a coherent political entity) itself has no idea where it is at, or is heading.

In addition, despite what some have argued, there's a growing realisation that the eurozone crisis is seriously scary, and at worst, threatens to send the UK economy straight back to recession. Conservative MPs and activists realise (though not without exception) that there's a difference between the immediate economic crisis - which is about contingency planning, buffering up banks and preparing the economy for potential sovereign defaults - and the long-grinding political and constitutional settlement that will follow the crisis (should it ever end).

The usual calls for an in/out referendum aside, Europe therefore never really kicked off as an issue at the conference. But nonetheless, for the Conservative party leadership, now is the time to be thinking strategically for the future, as important tactical battles most certainly remain on the horizon.

Speaking at one of our fringe events, Dr Kay Swinburne MEP warned of the climate of “hostility” towards the UK in Brussels, arguing that the Government should focus its efforts on increasing the number of British civil servants in the Commission. She also suggested that the Government should have “killed off” plans for an EU-wide financial transactions tax earlier, noting that EU Tax Commissioner Algirdas Semeta had “already started work” on presenting the FTT as a valued added tax (VAT) – which could be imposed without a unanimous vote and therefore strip Britain of its right to veto.

The party leadership's hopes that any major decision on Europe can be delayed depends on events in the eurozone, which continues to edge closer to a tipping point (though eurozone leaders seem to have made a common sense move, by focussing on the recapitalisation of banks). While Tories made EU small talk in Manchester, France and Belgium were forced to bail out another bank in the shape of Dexia (due to fears over its exposure to Greece) and Italy was downgraded.

Last night, only hours after Hague said to the BBC, "Don't run away with expectations that there is about to be some major treaty change, these things take years to negotiate and then to ratify in other countries," President Jose Manuel Barroso was telling gathered reporters that, "We may need treaty change for more integration if current (financial) mechanisms are proved not to be enough." Alongside him, Chancellor Merkel added, "we shouldn't rule out the possibility of treaty change."

Yes, EU treaty changes are slow-moving things, but if they are to have any chance of setting at least parts of the agenda, Messrs Cameron, Osborne and Hague may have a lot less time than they hope.

Hague hits back on the Euro

The Spectator’s James Forsyth has conducted an extended interview with Foreign Secretary, William Hague, which contains a lot of interesting points, not least about the ongoing Eurozone crisis, the future direction of the EU, coalition politics on Europe and finally his future job prospects…

The central theme of the section of the interview relevant to Europe is one of vindication, in particular regarding Hague’s campaign to keep Britain out the Euro when he was party leader, even if this was widely mocked at the time. Hague does not mince his words, describing the euro as:

"A kind of historical monument to collective folly… a burning building with no exits”

Hague clearly thinks that many of the current problems stem from the fact that the rules were fudged to allow the struggling countries to become members in the first place. Nonetheless, to his credit, he does not indulge in gloating or triumphalism but is quick to acknowledge that the eurozone’s troubles also threaten Britain’s national interest, and Britain should not hope for the break-up of the single currency, saying:

“We are very concerned about what would happen if the euro broke up and so despite all our opposition to it… we must support [the Eurozone]”.

Significantly, his “no exits” line means he does not advocate a default by any of the struggling economies, arguing instead that the Greeks, Portuguese and possibly even Italians “will have to accept some very big changes in what happens in their country” (which indicates having to adopt further austerity measures), while crucially, he says that the Germans will “have to accept that they are going to subsidise those countries for a long time to come really, for the rest of their lifetimes.” This is clearly not going to be acceptable to the Germans, as proved by their refusal to countenance expanding the EFSF even further, for example by allowing it to be leveraged through the ECB.

Worryingly, however, Hague does not elaborate on what would happen if these conditions were unable to be met, and says that if the Eurozone countries are unable to meet a six week deadline set by George Osborne to push through measures already agreed to try and protect the Euro, “then we’ll be even more worried”, which even if honest, hardly inspires confidence.

Away from the apocalyptic narrative surrounding the Eurozone, Hague indicated that in terms of broader UK-EU relations, he still believes that:

“The EU does have too much power, I haven’t changed that view from being in government, in fact if anything being in government has reinforced that view and there should be powers that are returned to this country”

However he refuses to be drawn on what he is going to do about this, giving a rather vague answer that it would have to be discussed within the coalition. James Forsyth concludes that “Hague seems to see bringing back powers as very much a second term issue”, reinforced by Hague’s assertion that Europe could be one of the dividing lines between the coalition parties put forward at the next election. Here we would argue that there is no excuse for inaction on repatriating powers and EU reform, and the Government must try to build a consensus on this issue, even if this means Conservative and Liberal Democrat backbenchers having to make some compromises on their respective Eurosceptic/Europhile beliefs.

Finally on a lighter note, at the end of the interview, Hague insisted that whatever he may turn to in the future, replacing Cathy Ashton as the European Union’s external affairs commissioner is most definitely not on his agenda, insisting that “any job I have in the future will not be in the European Union”.

Europe: It's so hot right now

There was a time when "Europe" was an issue that drew the occasional news story. And although EU issues still don't get nearly enough attention in British and European media, it has now reached a stage where it is literally impossible not to give this issue (which in fact, is a whole range of different issues) some serious attention.

And there are several story lines unfolding in parallel:

• Osborne went on record over the weekend, saying that a new EU treaty to fix the eurozone is now "on the cards". According to the Telegraph, a proposal will be tabled in the autumn which would see negotiations over the Treaty commence as early as December. This is clearly a moving target - and we shouldn't draw hasty conclusions. But potential talks over a new EU treaty so soon is clearly big news.
• It comes as a group of 90+ MPs will meet tonight in Westminster, as part of a new initiative to help the Government come up with constructive ideas for how to re-order the UK's relationship with Europe. In an interview with Saturday's Times, Foreign Secretary William Hague appeared to semi-endorse the group, saying: "I was talking to some of them about it last night…It’s certainly not career suicide. I’m always pleased by good, healthy, democratic debate. They’re not approaching it in a confrontational spirit. They will be welcome in this office to discuss it.”
• Osborne also said over the weekend that Hague was drawing up a list of demands for powers to be repatriated to Britain in return for treaty change. To us, it seems increasingly as though the UK government has made a policy shift over recent weeks, and is now openly acknowledging that the aim is to bring some powers back should a new EU Treaty be up for negotiation.
  

Meanwhile in the eurozone:

• ECB Chief Economist Jürgen Stark resigned from the ECB’s Executive Board on Friday “for personal reasons” – although the move is almost certainly linked to disagreements over the ECB’s on-going purchases of weaker eurozone countries’ bonds. As Handelsblatt notes, his resignation has made it clear that "Germany's stability culture has not managed to prevail within the ECB. The Central Bank is increasingly becoming an instrument of politicians."
  
• Ambrose notes in the Telegraph, this move marks "a German vote of no confidence in EMU management." The decision has thrown global markets into fresh turmoil.
• German media report that officials at the German Finance Ministry are looking into the consequences of not lending Greece more money. Two scenarios are being discussed, according to Der Spiegel: Greece going through a hard default but remaining in the eurozone; or going through a hard default and leaving the single currency.
• In a further sign of the tensions within Germany, the junior coalition partner to Angela Merkel, the FDP, are planning to organise an internal referendum on the future of the European Stability Mechanism (ESM), the eurozone’s post-2013 permanent bailout fund. The article notes that 3,400 signatures – about 5% of FDP members – are needed to call this referendum. If one-third of party members take part in the vote, the result becomes official party policy.
• In an interview with Greek TV channel Mega, Greek Deputy Finance Minister Filippos Sachinidis has warned that Greece will run out of liquidity next month, if the next tranche of the first EU/IMF bailout is not paid out.

And elsewhere: Slovakian President Ivan Gasparovic has admitted that the Slovakian government may collapse as a result of disagreements over changes to the EFSF, the eurozone’s temporary bailout mechanism.

There's clearly no such thing as a quiet EU news week any more.

Hague and Lidington raising the stakes?

The last few days have seen some tough talk from the UK's Foreign Office on the size and role of Catherine Ashton's External Action Service. Following a meeting of EU foreign ministers yesterday, Europe Minister David Lidington used uncharacteristically undiplomatic - albeit justified - language, describing Ashton's demands for a 5.8% increase to the EEAS' budget next year as "somewhat ludicrous", adding “They’ve got to get real as far as the budget is concerned.” (indeed)

He also made a point of underlining how the FCO is now keeping a watchful eye on the EU's 136 embassies around the world, saying that “William [Hague] has sent out instructions to all our posts around the world to be vigilant about any risk of competence creep,” referring to the ever-present risk of the EEAS taking on an increasing number of responsibilities that should belong to member states.

And, in case anyone in Ashton's bureaucratic machine hadn't quite got the message, the man himself (Hague, that is) used an interview on the Today Programme this morning to fire a couple of warning shots of his own. On the proposed budget increase for the EEAS, he said,

"I don't think it is necessary to have such an increase at a time where diplomatic services across the world, certainly across Europe, are tightening their belts, becoming more efficient. We are expanding our diplomatic network in the world but we are doing that by saving GBP100 million of administrative costs."

On the risk of the EEAS' incrementally increasing its power, he noted,

"We will always guard against mission creep. We are very clear about what's a UK responsibility and what is an External Action Service responsibility. I am certainly giving a pre-emptive warning. Where we have seen one or two instances of it, we have dealt with that but we will always be vigilant about that."

Then he went on to make, possibly, the most important point of all - which we highlighted in our recent paper looking at the need to overhaul the EU's North Africa and Middle East policy (which to be fair, is a view that the Commission/the EEAS is coming around to as well):

“Where more money is needed…is the much bigger project, and it’s one much in line with what the United States is seeking, of a bold and ambitious approach to change in the Middle East and North Africa - Europe providing a magnet for positive change; the resources that will help small and medium sized enterprises to grow in these countries and bring economic stability. And that is the big issue rather than the administrative budget of the External Action Service."

This is a pretty robust - but more importantly a sensible - line from the Foreign Office. More please.

How important is Clause 18?

Is Cameron facing defeat over the EU Bill tomorrow? Some have flagged up that prospect though we suspect the Bill will see it through tomorrow's debate in the Commons unscathed (backbench Tory MPs have differing priorities, Labour MPs are a bit all over the place and Lib Dems are not flip-flopping for a change - you work out the odds).

The so-called ‘sovereignty clause’ within the Government’s EU Bill is currently the subject of some criticism and debate, and this is the part that will come up for discussion in Parliament tomorrow (the rest of the Bill will be left for the following week or later).

Some important questions have been raised about the sovereignty clause but, arguably, they relate more to domestic concerns about the constitutional role of Parliament than the UK's relationship with the EU (though a link clearly exists). Irrespective of the merits of arguments on either side, the sovereignty clause should not be confused with the 'referendum lock' (which the vast majority of the Bill is concerned with) that seeks to identify areas where EU power can be extended and introduce some national controls on them.

These are two discussions that should have always remained separate.

The Government, and William Hague specifically, argues that Clause 18 of the Bill “confirms and affirms the position that EU law in this country is only recognised by virtue of the authority of acts of Parliament.” The Government says that it is attempting to “address concerns that the doctrine of Parliamentary sovereignty may in the future be eroded by decision of the courts”.

But some backbench Tory MPs have noted that the Government’s assertion, in the explanatory notes, that the Bill reinforces the “common law principle that EU law takes effect in the UK through the will of Parliament and by virtue of an Act of Parliament” contradicts this very aim. As Bernard Jenkin MP argued yesterday, “The common law is judge-made law. The judges are its authors and its guardians. They may change it whenever they see fit.”

The argument goes like this: by legally rooting Parliamentary sovereignty in common law, the Government would in fact be inviting judges to become more involved, leading to the logical extension that, if Parliament is sovereign because of a decision of the courts, the courts can just as easily change their minds. As Jenkin notes, Parliament is sovereign because Parliament is sovereign. This is the principle of the UK’s constitutional settlement.

A valid question is also whether Clause 18 was necessary at all? Did anyone really dispute whether Parliament could choose to repeal the 1972 European Communities Act at any point in time should it want to? (the Commons EU Scrutiny Committee's report and evidence on the topic is pretty interesting if anyone should have the appetite to trawl through it).

It is no accident that it is the EU that has sparked this debate. The lack of a formal written constitution leaves the UK hugely exposed to the EU’s centralising instincts.

But confusing this discussion with the other, in our view, more important aspect of the Bill, the referendum lock (we wouldn't rule out that the Government may have done this intentionally) runs the risk that MPs do not focus enough of their energies on closing the loopholes in the Bill that deal with transfers of power to the EU. We have identified several relating to justice and home affairs but there are also other areas where the Bill needs tightening up, and Tory MPs have done a good job in tabling sensible amendments. These amendments would strengthen Parliament's de facto powers the second the Bill came into force. That would be a step forward for parliamentary democracy, and a very practical one at that.

Constitutional debates about the role of Parliament are of course important but they will also no doubt roll on. However, this may be the only chance to get the practical measures within the Bill right and in our view they should therefore be the primary focus for MPs.