Have the SPD and German unions endorsed TTIP? Not quite...

While the Labour Party's conference dominated the coverage in the UK over the past few days, its German sister party, the SPD, held its own 'mini' conference over the weekend. Opposition to TTIP - the EU-US free trade deal currently being negotiated - was a big factor at both, certainly we picked up on this in Manchester.

Ahead of the SPD's conference, several local and regional SPD associations tabled motions calling on the party leadership to suspend the negotiations due to concerns about investor-state dispute settlement (ISDS) - a mechanism which allows investors to sue governments - as well as the potential watering down of labour laws and environmental standards.

In order to head off the opposition, the Economy Ministry - headed by SPD leader Sigmar Gabriel - issued a joint position paper on TTIP along with the DGB - Germany's trade union confederation including the country's largest trade unions like IG Metall and Ver.di. The paper praises elements of TTIP but pledges that any moves to eliminate non-tariff barriers to trade (such as parallel regulatory regimes) will not threaten Europe's high employment, consumer and environmental standards, and calls on both parties to ensure "compliance with core ILO standards" - something which has little hope of getting past Congress.

On ISDS, they key passage reads:

“Investment protection provisions are generally not required… In any case, investor-state arbitration and unclear definitions of legal terms such as ‘fair and just treatment’ or ‘indirect expropriation’ must be rejected.” 

The SPD and German trade unions have therefore endorsed TTIP in principle, although the mass of caveats that made this possible will hugely complicate the negotiations and could wipe out many of its expected gains. It does however remain unclear to what extent the paper is binding on the SPD, as it includes the caveat that the German Economic Ministry and the DGB "do not have the same stance on TTIP on all points”.

Significantly, in approving the paper, party delegates insisted that its provisions should also be applied to the EU-Canada free trade deal (CETA) which has already been largely concluded and due to be signed off by Commission President Jose Manuel Barroso and Canadian PM Stephen Harper later this month pending implementation. CETA, which many see as the blueprint for TTIP, includes ISDS and could therefore face last-minute opposition having largely flown under the radar up until now.

In a separate development, which could delay CETA even further, the German government and the European Commission are at odds over whether national parliaments will need to ratify the deal alongside the European Parliament; the Commission says no, but Berlin argues that as a "mixed agreement" with some of the issues, goods and services covered by CETA falling outside of the EU's sole jurisdiction, the Bundestag and Bundesrat should also get to scrutinise the agreement and vote on it. The German government has said that it is willing to go all the way to the ECJ.

All in all, it looks like progress towards concluding ambitious trade agreements with Canada and the US will be rather rocky.

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.

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.

Gaining allies for #EUReform: Open Europe / Fresh Start Project's EU Reform Conference is drawing huge levels of interest

Advocates of 'Out' of the EU or the 'Status Quo', are fond of saying that EU reform is impossible - it suits their respective cases. They are wrong. Reform is possible, but will not happen on its own, reformers in the UK need to go out there and win allies and put forward solid thought-through proposals to make the EU more competitive and closer to voters.

This week Open Europe and the Fresh Start Project will attempt to do just that by hosting a ground-breaking conference for EU Reform in London.

It will be a landmark event - and the response to this conference has been absolutely amazing. A reminder to those who say there's "no appetite" for reform in Europe that they may be speaking too soon. There will be 300 delegates from over 30 countries debating a full spectrum of ideas on how to achieve major reform in Europe. Keynote speakers include eight ministers from across the continent, leading business people, MPs, MEPs, former heads of state and a European Commissioner.

Here are some highlights:

• A major contribution from a senior UK Minister.

• Agnieszka Pomaska, Chair of the EU Affairs Committee in the Polish Parliament, and Priti Patel MP debating EU free movement and rules on access to benefits.
• Rachida Dati MEP, Deputy President of the French UMP Party, asking if it’s time for a “realist revolution” in Europe.
• Leading German MP Klaus-Peter Willsch and former EU Commissioner and Dutch minister Frits Bolkestein discussing if, and how, powers can flow back from the EU to its member states.
• UK Europe Minister David Lidington and Irish Europe Minister Paschal Donohoe discussing the role of national parliaments with break-out sessions looking at whether national parliaments should be given veto rights over EU law.
• Maria Damanaki, European Commissioner for Fisheries, explaining why EU reform is possible using the case of the EU’s fisheries policy.
• Bruno Maçães, Portuguese Secretary of State for European Affairs, discussing how services liberalisation can be achieved in Europe.
• Serial entrepreneur Luke Johnson and Dr Daniel Mitrenga of the German Association of Family Enterprises identifying ways to cut EU regulation.
• UK Foreign Secretary William Hague addressing the “Reformers’ Reception”.
• Bulgarian Foreign Minister Kristian Vigenin, Estonian Foreign Minister Urmas Paet, and former Slovakian Prime Minister Iveta Radicova, drawing lessons on reform from Eastern and Central Europe.
• Peter Norman, the Swedish Minister for Financial Markets, looking at how the single market can work for economic recovery.
• Young reformers from across Europe setting out their ideas for change in the concluding “Future of Europe” panel.

What do we hope to achieve?One conference will not achieve #EUReform on its own, but ahead of a crucial year in Europe - with the European elections and the selection of a new European Commission - it'll be a hugely important opportunity to really delve into the kind of policies that will achieve sweeping change in Europe. It'ls also be a key testing ground for what kind of reforms David Cameron might achieve ahead of a potential 2017 EU referendum.

We have provided a platform, now lets see what the delegates make of it...


Commission's dismissal of national parliaments' concerns over EPPO shows why a red card is needed

While all eyes are on EU free movement and EU migrant's rights to welfare access, the Commission has put out its response to the 'yellow card' shown by national parliaments with respect to its proposal for a European Public Prosecutor's Office (EPPO) - a body which would "investigate and prosecute EU-fraud and other crimes affecting the Union's financial interests".

To re-cap, national parliaments in eleven member states - the UK, Czech Republic, Cyprus, France, Hungary, Ireland, Malta, Netherlands, Sweden, Romania and Slovenia - complained that the plans breached the subsidiarity principle - i.e. the principle that the EU should not act where member states are just as able to act on their own. This is only the second occasion on which the yellow card has been deployed.

The weakness in the current system is that a yellow card only compels the Commission to consider whether to "maintain, amend or withdraw the proposal", meaning that if the Commission is determined to push ahead regardless, it can do so. This is is exactly what has happened in this case, with the Commission concluding that the "proposal complies with the principle of subsidiarity... and that a withdrawal or an amendment of that proposal is not required."

The actual document is very detailed, and while its good that the Commission has properly engaged with concerns raised by national parliaments, it is clear that the Commission's mind is already made up as per the following section:

"the drafters of the Treaty have expressly provided for the possibility of establishing the European Public Prosecutor's Office in Article 86 TFEU... This provision gives a strong indication that the establishment of the European Public Prosecutor’s Office cannot be considered per se and in the abstract to be in breach of the principle of subsidiarity."

Very tellingly, the Commission has also appointed itself as the arbiter of what constitutes an 'acceptable' complaint on subsidiarity grounds, arguing that:

"In analysing the reasoned opinions, the Commission has distinguished between arguments relating to the principle of subsidiarity, or that could be interpreted as subsidiarity concerns, and other arguments relating to the principle of proportionality, to policy choices unrelated to subsidiarity, or to other policy or legal issues."

Although the Treaty states the decision has to be reached by unanimity (so no danger of the UK being vetoed), this episode highlights the need to turn the 'yellow card' into an outright 'red card' - i.e. a definite veto. This could apply to existing as well as proposed EU legislation.

In addition, national parliaments should be given more than the existing 8 week period to respond. The scope for national parliaments to object to EU proposals should also be widened from the narrowly defined principle of subsidiarity to prevent the Commission from being able to undermine their validity. As we've argued, in order for national parliaments to have a real impact in the EU they need real powers - otherwise this widely shared objective will not come to much.

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."

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 

'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.

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?

Got Milk? Writing the nanny-state into EU law

Cute babies banned from formula packaging

The European Parliament has agreed new rules that will regulate the labels and content of baby milk and foods.  Under these new rules, “pictures of infants, or other pictures or text which may idealise the use of such formula” will be banned from the packaging of baby formula – so no pictures of cute babies on the front.

In the UK, the use of babies’ pictures is already illegal for ‘infant formula’ (for those between 0-6 months), but is legal for ‘follow-on formula’ (for those between 6-12 months). The new EU rules will ban the use of pictures of infants for marketing on both types.

Why is this necessary? Well, according to the European Parliament’s view-point, mothers may not understand the value of breastfeeding, and thus need to be guided in case they are ‘discouraged’ from doing so by attractive formula packaging.

This just goes to show the extent to which EU legislation now touches on the most unexpected areas of people’s everyday lives. The recent attempt to ban re-usable olive oil containers from restaurants is another example. Thankfully, this ridiculous idea was dropped after widespread ridicule.

But the sheer volume of law and regulation emanating from the EU institutions shows why we need to strengthen the powers of national parliaments to properly scrutinise and block unwanted EU rules and, more importantly, to question whether these are things the EU should be doing at all.

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.

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!

Aufstand im Bundestag: Who are Germany's most rebellious MPs?

On Thursday, the German Bundestag is expected to vote on the Cypriot bailout. The package is likely to be approved with a clear majority - the opposition SPD and Greens will mostly back it. In addition, the symbolically hugely important "chancellor's majority" - the threshold for the government to get an absolute majority with only the votes of its own MPs - is likely to be reached as well. Only around 12 MPs from the coalition parties (CDU, CSU, FDP) are likely to vote against. This is not particularly surprising. Remember, the bill for this rescue package was largely passed on to Cypriot depositors, and therefore enjoys much greater support in Germany.

Still, with the eurozone bailouts remaining ever-so contentious - and with a new anti-euro party on the German political scene - we thought we'd see how many coalition (CDU, CSU and FDP) MPs have so far rebelled on the various eurozone bailout votes. 

As the table below shows (click to enlarge), according to our calculations, at least 36 MPs have rebelled against Merkel on at least one occasion. Four MPs - Klaus-Pieter Willsch & Manfred Kolbe (CDU), Peter Gauweiler (CSU) and Frank Schäffler (FDP) - have a 100% record in rebelling on eurozone votes - for the rest, there's a surprising spread.

Details of Cypriot bailout agreement filtering through

The package is coming together. The IMF has officially announced that it will take part in the Cypriot bailout, providing €1bn of the total €10bn in loans - that gives a UK share of around €50m (see our thoughts here on UK IMF shares). That leaves €9bn to be provided by the eurozone, likely through the ESM. Below we breakdown the country shares (click to enlarge):

Other details of the Memorandum of Understanding (MoU) filtering through include:

• 2.5% interest rate on the loan, with a 10 year grace period on repayments, it will then be repayable over a 12 year period (repayments start in 2023 and finish in 2035).
• 4.5% in cuts/savings to be found before 2018 (on top of the 7% already scheduled by 2015) to drive Cyprus from a 2.4% primary deficit now to a 4% primary surplus in 2018 (two years later than previously envisaged).
• The figures given in the MoU leaked yesterday (which reports suggest are the same in the final agreement) imply an 8% contraction in GDP this year and 3% next year. This seems optimistic and could be closer to 10% and 5% respectively, if not worse, but ultimately depends on how long the capital controls are in place for.
• Eurozone officials will review the agreement tomorrow, with a final proposal to be presented on 9 April, which eurozone finance ministers are expected to approve at an informal Eurogroup meeting in Dublin on the 12 April.
• The Bundestag could vote on the deal around the 15 April. IMF board expected to approve the deal in early May.
• First tranche of bailout funds expected in early May, ahead of debt maturing at the start of June which Cyprus needs to pay off.

A few hurdles left to jump then in terms of approval from national parliaments – which is no mean feat given that the figures underpinning the bailout are likely to come under some well-deserved scrutiny.

Italian elections: Early projections point to Brussels’ and Berlin’s worst nightmare

Update 18:32: the projections for the Lower House are starting to come in and it'll be a close one. The first RAI projection has Bersani's centre-left coalition on 29.1%, Berlusconi's coalition on 28.6% and Beppe Grillo going even stronger than in the Senate, at 26.3%. Again, the Five Star Movement - the party that has toyed with pretty clear enti-euro rhetoric - is set to become Italy's largest single political party (don't say we didn't warn you). 18 to 24 year olds are allowed to vote in the Lower House elections, whilst 25 is the threshold for the Senate elections, which possibly explains the additional Grillo bounce.

Update 17.50: It's not looking any better. These elections now look like producing a hung senate (though much can still happen). This projection is from La Repubblica:

If this holds, none of the coalition arrangements discussed before the elections will achieve a majority in the Senate. Under this scenario, Berlusconi's centre-right coalition would win 123 seats, Bersani's centre-left coalition 104, Beppe Grillo's Five-Star Movement 58 and Mario Monti's pro-reform bloc only 16.

So there are basically three options: A national unity government (if Bersani, Berlusconi and Monti join forces - could be possible if leading to fresh elections soon afterwards), a sensational Bersani / Grillo coalition (unlikely) or re-run election within 2-3 months. If we have re-run elections, there will be a lot of pressure to change the electoral law beforehand to avoid a similar stalemate to that which could occur now. For that, of course, you need a majority in both houses...

As we've said repeatedly over the last year: this one will be very complicated and uncertain...

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The first projections are in. And the results are the stuff of nightmares if you sit in Brussels or Berlin.

Now, the thing to remember is that seats in the Senate are allocated on a regional basis so overall support nationwide doesn’t necessarily translate into a corresponding number of seats. But the projections so far show the following:

• Monti – the darling in Berlin and Brussels – is taking an absolute hammering
• Under the current projections, Berlusconi could prevent a centre-left majority and there could be a hung Senate.
• Italians are coming out in droves to vote against austerity, with Beppe Grillo’s pro-euro referendum, sort-of-anti-euro Five Star Movement being the largest individual political party in half of the projections so far, and third with respect to Coalition arrangements (Grillo won’t join any coalition arrangements)

All eyes are now on the region of Lombardy, which, given the huge number of senators it provides, is likely to be crucial to the fate of these elections.

The vote count for the lower house trails the Senate count.

The pretence of transnational politics and why national parliaments still rule

The home of European Democracy?

The most resolute defenders of the European parliament often argue that it is the home of ‘transnational democracy’ where MEPs look after the interests of European citizens. However, in Monday's debate on the EU budget deal – struck by national leaders – reactions of the leaders of the Parliament’s four largest political groups which we cited on our blog showed just how far from reality this assertion is.

The leaders of the EPP, Socialists and Democrats, Liberals and Greens all attacked the compromise, and demanded renegotiation. They all claimed to speak on behalf of their factions but in reality these tend to be hugely fragmented along national lines, a handful of ‘true believers’ aside. For example, the views of Dutch, Swedish, Danish, British and German MEPs – whose national leaders backed cutting the budget – were barely reflected. Moreover, in the UK and Holland in particular, the need for restraint in the EU budget was an issue of cross party consensus, and not of ideological contention.

Consequently we were treated to the bizarre spectacle of Labour MEPs sitting behind S&D group chairman Hannes Swoboda as he lambasted the budget cut which Labour leader Ed Miliband had demanded. The same applies to Moderaterna MEPs listening to EPP group chairman Joseph Daul and VVD and Lib Dem MEPs listening to the BBC-favourite Guy Verhofstadt ("he's always available"). Meanwhile, Martin Callanan of the ECR group, composed mainly of MEPs from the Conservative party and Poland’s Law and Justice party, broadly welcomed the deal.

However, in a inverse version of the above phenomenon, a debate in the Polish parliament yesterday morning, the Law and Justice representative argued that the budget deal was bad for Poland, in particular the failure to obtain more funds for rural subsidies and to obtain parity in direct payments with the EU15 countries, citing the speech by Jospeh Daul in support of his argument – the same Daul accused by Callanan of “throwing a teenage tantrum”. Meanwhile, referring to the fiscal treaty, the same Law and Justice MP claimed it would "murder solidarity in Europe", a view ostensibly more suited to the socialist and far left than conservative groups.

Particularly when it comes down to the core issues in a democracy  - such as taxation and spending - it's still all about national politics, and securing the best possible deal for domestic constituents and trying to inflict damage on their domestic political opponents. A genuinely transnational politics in the EU is nowhere near to becoming a reality.