Thursday, 29 September 2011

What would the world look like without the EU?

They used to say that when America sneezes, Europe catches a cold. That’s certainly what they (and I) were saying during the 2008 economic crisis, when misadventures on Wall Street and the subsequent collapse of Lehman Brothers created a disaster that quickly spread to Europe. How the tables have turned. Now the US is waiting helplessly to see if Europe can avoid a disaster that would eclipse Lehman Brothers in scale and could throw the US back into recession.

It’s a testament to just how important Europe has become to the global economy that it is now Europe’s sneeze that can give the world a cold. The EU is now a larger market than the United States, and over the past twenty years it has literally become the world’s regulator. Is it conceivable that this entire project could now collapse?

This is the question that is now being asked in the United States. When I was home last weekend I was asked by friends, “Is the EU going to fall apart?” Trying to show a bit of false confidence, I assured them that it is not. Germany is in the end going to suck it up and do what needs to be done to save the euro, I insisted, because the alternative is complete economic meltdown. The vote for the increased bailout fund today in the German parliament seems to go some way in justifying that optimism. The truth is that Europe’s problems are not insurmountable.

Wednesday, 28 September 2011

EU banker tax? UK says no

"In the last three years member states - I should say taxpayers - have granted aid and provided guarantees of €4.6 trillion to the financial sector. It is time for the financial sector to make a contribution back to society. That is why I am very proud to say that today, the Commission adopted a proposal for the Financial Transaction Tax."

With these words European Commission President Jose Manuel Barroso put forward what is bound to be an enormously controversial piece of EU legislation, a transaction tax on bankers and investors who invest in stocks, bonds and derivatives. Speaking to the European Parliament in Strasbourg today for his annual 'state of the union' address, Barroso said the tax would bring in €55 billion per year, starting from 2014.

The language used by the president was clearly populist in nature, emphasising a sense of fairness and responding to a public feeling that the bankers who caused the economic crisis of 2008 have never been called to account and have not been asked to contribute to the recovery from the pain they caused. Stock markets and investment firms have made remarkable recoveries over the past few years, and executive pay has steadily risen. But at the same time the economy as a whole has suffered enormously and continues to suffer.

Monday, 26 September 2011

Sakozy loses French Senate to the Left

Small signs of hopes for the European left continue to mount. In a vote over the weekend the French Senate changed hands from Nicolas Sarkozy's centre-right UMP party to the Socialists. It is the first time that the Senate has ever been out of the centre-right's control since the creation of the current French state in 1958, and it is a stunning setback for the French president just seven months ahead of France's general election.

So is this outcome a harbinger of a wider reascendance to power for the left, not only in France but also in Europe as a whole? Like the recent centre-left victories in Latvia and Denmark, this news comes with some important caveats. For starters, French Senators are not directly elected by the French people. They are instead chosen by 150,000 local officials throughout the country. These include mayors, city councelors and regional councelors as well as members of the lower house, the National Assembly.

In terms of power the French senate is much more similiar to its British cousin the House of Lords than to its American counterpart. The real power in France, after the presidency, lies with the National Assembly. The Senate can propose law and it must sign off on law, but like in the UK with the House of Lords, they can be easily overridden by the lower house and the president. Like with the House of Lords the French senate is often considered a refuge for people who used to be important, such as former assembly members or cabinet officials.

Sunday, 25 September 2011

Palestinian UN bid divides Europe

I'm at JFK about to fly back to Brussels, and all around the airport you can see signs of this week's general assembly at the United Nations. I saw several pro-Israel and pro-Palestine demonstrations scattered around the city over the past few days, mostly outside hotels where I assume diplomats and leaders were staying.

Despite the best efforts of the United States and her allies to convince him not to, Palestinian National Authority President Mahmoud Abbas went ahead on Friday with his request to have the UN recognise Palestine as a 'non-voting observer' member. The machinations around this have been described as a slow-motion "diplomatic car crash" by diplomats. Coming as it does in the middle of the 'Arab spring', the United States knows it will look bad if they use their veto in the security council to deny the request. On the other hand, their close alliance with Israel means that the US government believes it has no choice but to veto the move.

But will the US be the only one to issue the veto? And which US allies will support the bid in a full assembly vote? Europe is showing characteristic disunity on the issue. France, which also holds veto power on the security council, is supporting the Palestinian bid. Spain, Portugal, Greece, Belgium and Luxembourg have joined France with their support.

Thursday, 22 September 2011

Bike sharing coming to New York?

I’m in New York City today, I’ve come home again for a baptism that was rescheduled due to last month’s hurricane.  It’s just a short trip for the weekend, so I’ve only brought a carry-on bag. Because I’m traveling light, I was able to take a bike to the train station this morning, which is always nicer than taking the tram.

I use the Brussels bike-share scheme every day actually, it’s quite nice to have in a city with not very comprehensive public transportation. It’s quite simple really. For €30 a year I can check out a bike from any the stations scattered around Brussels and return it to a different station at my destination. It’s free as long as I return it to another station within a half hour. If I want to take it out for longer, it’s €1 for every 30 minutes. It’s particularly nice because my apartment is downhill from my office, so I take the metro to work and check out a bike to coast home.

Today I’ve learned that New York is considering implementing a similar scheme. But will it work in New York as well as it’s worked in European cities?

Wednesday, 21 September 2011

DADT repeal: US joins the Western world

Yesterday America's infamous Don't Ask, Don't Tell ban on gays in the military was officially repealed. It was a hard-fought battle for the Democratic Party, and the Obama administration was keen to publicize the fulfillment of one of the president's key campaign promises. It wasn't easy, and the past three years have been met with opposition and setbacks.

The level of jubilation from Democrats was incredible, but understandable considering how long they have fought to end this ban. But looking at the situation in a global context, the excitement over a rather small policy change might seem strange. After all, until Tuesday the United States was the only country in the developed world that still had a ban on gays serving in the military.

Barring gays from military service is illegal under European law, and no such ban exists in any EU state - even in ultra-Catholic Poland or Italy. In fact the only country in all of Europe to have a ban on gays in the military is Serbia. In Latin America, the only countries to have bans on gays in the military are Cuba and Venezuela. As can be seen in the map above, the divide between gay bans (in red) and no gay bans (in blue and gray) mirrors the divide between the developed and developing world. Gay service bans are common in Africa and the Middle East.

Tuesday, 20 September 2011

Lib Dems declare 'rhetoric war' on Conservative allies

This week's Liberal Democrat party conference in the UK has been generating big headlines in the British press as each successive speaker tries to outdo the previous one in denouncing the party's coalition allies. But do the harsh words signal an impending divorce with the Conservative Party, or are they merely a move to stop the freefall in Lib Dem support.

According to opinions polls the party has lost more than half of its supporters since its decision to join with the Conservatives to form a coalition government last year. A subsequent u-turn on tuition fees and the loss of the alternative votereferendum – the prize they had been awarded for allying with the Conservatives – has sent the party to what some think could be their lowest popularity ever. This despite the fact that they are now in government for the first time.

The language being used at this week's conference shows the party is going to try a drastic change of tact in order to stop the haemorrhaging of support. Though they have been restrained in showing major disagreement with their coalition partners over the past year, after this week the honeymoon is clearly over - rhetorically at least.

Monday, 19 September 2011

Another small victory for Europe's Left - or is it?

Saturday's general election in Latvia yielded a victory for the country's centre-left coalition Harmony Centre. The coalition won the largest amount of seats in the parliament. But though this may seem like yet another promising victory for Europe's left following Thursday's election in Denmark, the facts on the ground are a bit more complicated than that.

Harmony Centre is a coalition between the Social Democratic Party and the Socialist Party (the communists). The SP is essentially an ethnic Russian party, formed in 1991 to replace the Communist party after the country achieved independence from the USSR. Though the new state was formed around the Latvian ethnic and linguistic identify, in fact less than 60% of people in Latvia are ethnically Latvian. Almost 30% of the country is made up of ethnic Russians, some of whom moved there during the Soviet period but others of whom have lived there hundreds of years. The majority of the ethnic Russians cannot speak Latvian. In some of latvia's largest cities they constitute the majority of residents by far.

Friday, 16 September 2011

Denmark's election: is the Left clawing its way back?

The centre-left Social Democratic Party scored a victory in yesterday's closely-watched general election in Denmark, ending the 10-year reign of a conservative coalition that had been moving steadily further and further to the right.

The campaign of the centre-left coalition, called the 'Red Bloc', was centred around a promise to raise taxes on the country's investment banks and wealthiest citizens, reversing a trend of decreasing corporate taxes led by the previous government. The victory for this message is a stinging rebuke to the current austerity crusade dominating the governments of Europe. The Social Democrats, led by Helle Thorning-Schmidt (pictured above), promised to actually expand Denmark's welfare system, which is already one of Europe's largest. They have also promised to use the proceeds from increasing taxes on investment banks and the wealthy to improve roads, schools and hospitals.

So is this a sign that Europe's hobbled left may be on it's way back? Are voters across Europe growing tired with the messages of the right and ready to turn to a new direction? Or are the circumstances of this change in direction limited to Denmark?

Thursday, 15 September 2011

Will Europe federate, or separate?

People here in Brussels have cautiously started to use the F word again. Though it has long been banned from people's vocabulary after the traumatic experience of trying to ratify the EU constitution and Lisbon Treaty, ‘federalism’ is again being heard in the corridors of power. The federalist idea – to create a "United States of Europe" – back.

European Commission President Jose Manuel Barroso signalled as much in an impassioned speech to the European Parliament this week in Strasbourg. "What we need now is a new, unifying impulse – a new federalist moment," he told MEPs. "Let’s not be afraid of the word – a federalist moment is indispensable.” Federalist parliamentarians rejoiced. The people may have rejected the idea of a European superstate, but now the markets are stepping in and demanding one. Could it be that the fulfilment of the 'European dream' could be triggered not by Europeans themselves, but by the markets they've created?

The federalist rejoicing may be premature. All that is clear right now is that the EU cannot continue operating the way it has. Europe is at a crossroads, and it is being pulled in two different directions. On one hand, the public has grown weary of the European project and the mood of the day is calling for more local control. There is an increasingly vocal minority in Europe who want to see the EU project walked back for the institutions Brussels has built up to be dismantled. On the other hand, the economic circumstances and the euro crisis are pushing Europe toward greater federalisation in order to avert a catastrophe. The markets are calling for more integration, and European leaders agree with them.

Wednesday, 14 September 2011

US tells Europe to act quickly on euro crisis

Barack Obama delivered some sobering words to Europe this week, saying the world economy will remain weak and destabilised unless EU leaders take action to stem the Euro crisis. It's not the first time the US has expressed frustration with what they say is a slow and inadequate European response to the situation, but the president's words were the most stark to date.

Obama said he will put the issue at the top of the agenda for the G20 meeting in France in November. "[European leaders] are taking some steps to slow the crisis but not solve the crisis," the president told a group of journalists at the White House. "The bigger problem is what happens in Spain and Italy if the markets keep making a run at those very big countries?" Few would disagree with the president on these sentiments, but it might be hard to take from a country which almost deliberately drove itself to default because of its broken political system.

Friday, 9 September 2011

War of words between PIGS and FANGs

The European Commissioner from Spain delivered a surprising attack yesterday on the Northern European countries pushing Southern Europe to adopt painful austerity measures. The comments follow a controversial proposal from the Dutch prime minister earlier this week which called for EU member states struggling with debt to be put under the 'guardianship' of the European Commission, surrendering their ability to make their own financial decisions.

"There are member states, in particular some of the most powerful -- Germany, Netherlands, Finland, Austria -- who feel that they don't have this kind of problem," Almunia told a group of business executives in New York. "[They believe] they don't need to make an additional effort to compensate the lack of resources of the countries who have the most difficulties to reduce imbalances."

The rhetoric was then ratcheted up to an even more dramatic level today when the European Commissioner from Germany told the tabloid Bild that if indebted (read: Southern) EU countries refuse to comply with new rules on debts and deficits, their flags should be flown at half mast outside institutional buildings. Mourning the loss of fiscal prudence, perhaps?

Thursday, 8 September 2011

Could Strasbourg battle pit country against country?

The long-running battle between the European Parliament and France over where the institution's permanent seat should be located has reached boiling point in recent months, following the parliament's vote in March to combine two of its mandated Strasbourg sessions into one. The fight has now been taken to the European Court of Justice, and following a call from Dutch parliamentarians today, the war could for the first time pit member state against member state.

The official headquarters of the European Parliament, as mandated by the EU treaties, is Strasbourg, France. The EU treaties require the parliament to meet there twelve times a year. But for well over a decade the working offices of the parliament have been in Brussels, where the other EU institutions are based (they surreptitiously built a giant parliament building there by telling France it was going to be a "conference center"). So once a month the entire European Parliament is made to make a five hour trek from Brussels to Strasbourg to hold three-day sessions. It would be like the US Congress uprooting itself once a month to hold sessions in Pittsburgh, Pennsylvania.

The majority of members of the European Parliament (MEPs) hate the monthly "traveling circus". A 2007 survey by Liberal MEP Alexander Nuno Alvaro showed that 89% of MEPs want to end the Strasbourg sessions. MEPs have tried to force the issue several times, but changing the treaties to end the Strasbourg requirement would need the unanimous approval of all member states – and France has always promised to veto such a move. They are insistent that one of the EU capitals should remain in France – even if no actual work is done there and it is merely a place where things already agreed are rubber-stamped.

Wednesday, 7 September 2011

Germany backs bailouts – for now

The markets are breathing a sigh of relief today after Germany's constitutional court ruled that it is legal and in line with the EU treaties for the country to be bailing out its struggling Eurozone neighbors. But the jubilation may be short-lived, because in its ruling the court sewed a minefield of potential future obstacles that will have to be dealt with in the coming months.

The ruling was in response to a lawsuit from Eurosceptic German citizens who said the bail-outs of Portugal, Ireland and Greece to stem the European debt crisis are unconstitutional because the German parliament should have control over taxpayer money, rather than the European Central Bank. The court rejected that argument, saying Germany's participation did not amount to an excessive burden on the country's budget, nor did it constitute a significant transfer of power away from Berlin.

Germany is by far the largest contributor to the bailout funds. If the judges had sided with the challengers in this ruling today it would cast Germany's ability to participate in those bailouts into question, which in turn would have thrown the markets into turmoil. Instead, the announcement this morning sent European stocks shooting up. Amongst the German public, who are growing weary of what many perceive as Germans being on the hook for the profligate spending of their Southern neighbors.

Tuesday, 6 September 2011

EU still terrified of treaty change

During today's midday briefing a European Commission spokesperson emphatically insisted that any tightening of economic integration in the Eurozone will not require treaty change. Reporters in the room didn't seem to be buying it. It's not hard to see why, after the president of the European Central Bank said yesterday that such a change would require such a treaty change.

It's an uncomfortable situation for the EU, which only recently was able to pass the long-stalled Lisbon Treaty after a painful and embarrassing six year saga. There is now a consensus that the only way to save the euro from the contagion of the debt crisis is to establish a tighter economic union between the countries that use the currency, essentially establishing a single finance ministry instead of having separate economic policies for the different states.

But there is fear that doing so will require yet another treaty change, and Brussels is worried that another round of treaty change approval by member states would be a disaster. There is still uncertainty over whether such changes would meet the threshold for UK Prime Minister David Cameron's 'cast-iron guarantee' to hold a public referendum on every treaty change. Because of the widespread antipathy toward the EU in Britain, it is guaranteed that any referendum on an EU question would fail – even if it is on a question that doesn't directly concern Britain, such as the eurozone (the UK does not use the euro and would therefore keep its own finance ministry).

Monday, 5 September 2011

Conservative Party may disband in Scotland

In an attempt to shed its image as an 'English party', members of the Conservative Party in Scotland are considering splintering off from the Tories and forming a new Scottish centre-right party. The move, which would not be the result of any policy disagreement with the Tory leadership but rather for identification issues, reflects just how strong regionalism has become in Europe in recent years.

The change is being proposed by Murdo Frasier, a candidate in the current race for a new leader of the Conservatives in Scotland. The Tories have been pretty much banished from power by Scottish voters for over a decade now, ever since a massive defeat in 1997. They currently hold only 15 of the 129 seats in the Scottish Parliament and only one of Scotland's 59 seats in the British Parliament. Since 2007 the largest party in the Scottish Parliament has been the Scottish National Party, which wants to seceed from the UK.

Frasier has centred his leadership campaign around a promise to break this trend by dissolving the party, which he says has become a "toxic brand" in Scotland because people see it as representing the interests of Westminster over Edinburgh. The new party would likely not even have the words "conservative" or "tory" in its name.

Friday, 2 September 2011

Berlusconi: Italy is a "shitty country"

He's survived sex scandals, corruption investigations and insurrections – but can Italian prime minister Silvio Berlusconi survive in his post even after insulting the country he rules? Considering the shocking vulgarities he has been caught using while referring to Italy in a secret recording, this may be too much for even the Teflon Prime Minister to fend off.

The recording, made in July but released this week, catches Berlusconi saying he wished he could leave Italy – saying it is a "shitty country" that "sickened" him. The recording was made by Italian police, who were investigating allegations that Berlusconi was paying a man to corroborate his story that he was unaware the women supplied to him for his infamous "bunga bunga parties" were prostitutes.

The transcript of the recorded conversation came to light after police arrested a wealthy Rome businessman and his wife in a raid at dawn on Thursday, charging them with blackmailing Berlusconi. They allegedly demanded payment from Berlusconi in order to keep quiet about arranging the prostitutes for him. Berlusconi has admitted paying them but says he wasn't blackmailed and did it voluntarily.