Friday 28 November 2014

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UK looking down and out on banker’s bonus cap challenge

Posted by on 23/11/14
It’s a bad start to what looks as if it could be a very challenging day for the UK government with UKIP looking likely to win the by-election in Rochester and Strood.

This morning the European Court of Justice (ECJ) Advocate General Niilo Jaaskinen issued his opinion on the UK’s challenge against the EU’s banker’s bonus cap and it does not make good reading for the UK. Jaaskinen suggested that “all the UK’s pleas should be rejected and that the Court of Justice dismiss the action”. The key points of his reasoning are:
  • The legal basis of the legislation cannot be challenged since remuneration in this sector “impacts directly on the risk profile of financial institutions”, since these operate freely across the EU this can have impacts on markets across the EU.
  • Jaaskinen “accepts that the determination of the level of pay is unquestionably a matter for the Member States”, but since the law is just a stipulation of the ratio and not a direct cap on pay, there is still flexibility to set pay levels.
  • The delegation of power to the European Banking Authority (EBA) is “valid” since it is “merely empowered to elaborate non-binding draft measures” – i.e. create technical standards.
  • There has been sufficient notice of the legislation to allow firms time to adjust to the new rules.
A fairly comprehensive rejection, but there are a few points which we believe have been overlooked or under discussed, laid out below.
  • One of the UK’s main arguments is that this law will result in higher fixed pay which makes remuneration less flexible and raises fixed costs for banks, thereby undermining any attempt to improve financial stability. This issue is not addressed at all in the opinion. Furthermore, while the opinion addresses the issues of remuneration impacting risk and the fact that fixed pay can still vary it does not look at how the two can interact. It is clear that as a result of this fixed pay will increase substantially but there is no question of how this impacts stability. This may be more an economic/financial point but given the issues are discussed separately their interaction should also be examined.
  • The ruling could also have interesting implications for EU jurisdiction when it comes to the rate of pay. Variable pay is very loosely defined. For example, standard overtime paid at double the hourly rate could theoretically fall under EU jurisdiction by the definition used here. This highlights the importance of this ruling as a step into an area which the EU has previously largely steered clear of and the potential precedence it creates. This could develop in many unknown ways in the future.
  • There is no mention of the UK’s claim that this violates international law or is extraterritorial since it applies to all employees of EU banks no matter where they are based. We noted this may not be entirely a legal issue for the ECJ but it deserves some attention. Related to this, it remains unclear whether third countries firms operating in the EU will be forced to institute similar caps if there are to be deemed ‘equivalent’ under rules coming in under MiFID II in 2016.
  • One of the weakest points seems to be on the powers transferred to the EBA. Control over technical standards, particularly here, should not be dismissed lightly. The regulation deals in very broad strokes and leaves significant interpretation for the technical rules – including the exact level of the cap and who it will apply to. This power is being borne out right now with the EBA passing judgement on the way in which the rules are being implemented and whether ‘allowances’ count as variable pay. The EBA retains significant power to judge how the rules are being implemented and adjust the technical standards if it think the spirit of the rule is not being followed.
  • In general, the combination of the ECJ and EBA seem overly focused on the UK (accepted the UK has been pushing the issue as well). But looking at the legislation which Germany has passed on this issue, there are serious questions over how it has implemented the rules. Germany has exempted anyone covered by collective bargaining from all the remuneration requirements of CRD IV, including the bonus cap. This is because collective bargaining is a constitutional right in Germany and cannot be overridden. While it’s not clear how many people this applies to, the principle is concerning and it is a significant exemption. Why this does not merit examination while the use of allowances as a de facto exemption does is not clear.
What happens now?
  • The full ECJ ruling will come early next year and is likely to be in line with the opinion – although the ECJ did previously ignore Jääskinen’s opinion on short selling where to leant towards siding with the UK.
  • The EBA will publish updated guidelines and technical standards in the new year which will incorporate its concerns about allowances. At this point the UK will likely find itself squeezed by both the EBA and ECJ and could face punishment if it is not seen to be implementing the rules properly. The UK could of course refuse, but given the high profile nature of the issue it could escalate the situation. One option for the UK would be to point to other infringements such as the German example above.
  • In terms of the bigger picture, though not a huge issue on its own, this will be another ruling which plays into the hands of those who wish to see the UK exit the EU. It also continues to add to concerns over the role of the ECJ and its ability to be an impartial arbiter, particularly on financial services – an aspect which will likely be crucial if the UK is to remain an EU member both in the short and long term.

European ‘hot air’ should not inflate overseas aid spending

Posted by on 23/11/14

By Hilary Jeune, Oxfam’s EU policy advisor

When 2015 was declared the European Year of Development, it was seen as an ideal opportunity for the European Union (EU) to raise awareness on the bloc’s role in lifting people out of poverty. Yet with the calendars counting down fast, this commitment now appears to be more ‘hot air’ than actual assistance – lots of bluster that simply never materializes on the ground.

This doubt has been brought further into the spotlight today by the release of CONCORD’s new AidWatch report, Aid Beyond 2015: Europe’s role in financing and implementing sustainable development goals post 2015.

What’s the problem?

The report shows the EU’s approach to development aid could do with a breath of fresh air. Despite the growing number and scale of humanitarian and development challenges being broadcast on news outlets across Europe, the EU’s development funding still has a €41 billion hole in it – an amount which could pay for the EU’s current Ebola response to be expanded over forty times.

The EU has also deliberately over counted the amount of aid transferred to developing countries, inflating the figure by €5.2 billion in 2013. Both EU governments and institutions did this by including funding for student and refugee costs, as well as other domestic programs and interest on developmental loans in their overseas aid spending. To claim this interest on already cancelled debt as development aid is staggering when you consider that some EU countries made over €1 billion in interest on loans to developing countries in 2013, with France alone receiving €239 million in interest from development loans at a time when French aid budgets were being slashed. Such actions mean that while global aid appears to have slightly increased, actual aid to the world’s poorest countries – particularly in Africa – will drop by around 5% until 2016.

What are the solutions?

Despite this pessimism surrounding the EU’s development contributions, next year will present the opportunity for both EU governments and institutions to redeem themselves by ensuring a genuine commitment to combating global poverty and inequality.

Firstly, the EU should ensure that upcoming changes to the definition of developmental aid specify that aid is used to eradicate poverty and puts people first, rather than creating new ways for donors to artificially inflate the amount they actually give.

Secondly, both member states and institutions need to prove their mettle and recommit to the aid targets they have so far failed to achieve. Only Luxembourg, Sweden, Denmark and the UK have met the 0.7% of Gross National Income (GNI) target spent on development funding, with half of the EU member states projected to miss the 0.56% target set for 2010. If the EU wants to create a positive incentive for increased global funding for the world’s poorest, it needs to set a far better international example.

Finally, the EU should recommit to aid effectiveness principles and make sure that its contribution has a positive and sustainable impact on the lives of the world’s poorest people.

The EU may have failed to keep its funding promises to help combat global poverty, but with the 2015 European Year of Development fast approaching there is time yet for Europe to shake off the funding cobwebs, turn it’s rhetoric into reality and help improve the lives of poor people the world over.

The EU on the Margins in Asia

Posted by on 23/11/14

For a few days in November Beijing almost seemed like the centre of the world. The Asia-Pacific Economic Cooperation (APEC) summit in Beijing brought together a diverse group of 21 countries from the Asia-Pacific which includes those as far flung as Australia, New Zealand, Chile, China, the US, Russia, Japan, South Korea and several from southeast Asia. For once, the results of a summit exceeded the billing. Much was written in the Western media about who shook whose hand, who smiled at whom and who stood next to whom. Some of these meetings and greetings were undoubtedly important, especially in the case of China’s President Xi Jinping and Japan’s Prime Minister Shinzo Abe, which has perhaps unlocked an improvement in one of the most important relationships in Asia, but there was much more to the summit than this.

The summit produced an APEC  declaration on fighting corruption, one element of which is to establish a regional network on to coordinate anti-corruption activities, apparently set up at the request of the Chinese government. The summit declaration also gave support to the Free Trade Area of the Asia-Pacific (FTAAP), which is backed by China. The other main outcomes of the summit were several declarations concerning issues such as trade and investment, economic development, reform and growth, regional connectivity and infrastructure. China was also eager to promote its vision of regional vision of regional integration through infrastructure construction.

However, it was the bilateral show between China and the US which caught many of the headlines. There were agreements between China and the US on several issues. The main headline grabber was the declaration signed by presidents Xi Jinping and Barak Obama on climate change. There was an additional bilateral agreement on expansion of the WTO Information Technology Agreement (ITA), which reduces trade tarrifs on IT products. Less widely publicized were two sets of rules agreed by China and the US which are intended to avoid military confrontations. The two also signed an agreement easing of visa restrictions,

Other bilateral agreements emerged at the summit, for instance one signed between China and Russian on energy supplies. China and Vietnam also came to an agreement on settlement of maritime disputes. In addition, China and Japan had come to an accord prior to the summit that sought to take the heat out of their disputes and which enabled the Xi-Abe handshake to take place.

It would be wrong to think that the Asia-Pacific has suddenly resolved itself into harmony. Conflicts were on clear view, not least between Russia’s President Putin and several of the other leaders present. China and its neighbours are far from resolving their differences. Despite their agreements, the US and China had obvious divergences, notably between the US and its Trans Pacific Partnership (TPP) and China which is promoting the FTAAP. The US, just to emphasize this divergence, held a meeting in its Beijing embassy to discuss the TPP, although it led to no real progress in the negotiations. Many of the underlying regional problems remain. But for once, the leaders attending the summit could say it had not been a complete waste. The two key countries, China and the US, could both claim to have achieved real successes, both bilaterally and regionally.

Where was the EU in all this? The obvious answer is nowhere, since the EU is not part of APEC. However, this in itself raises a more fundamental issue. What does the EU do in Asia? The APEC summit brought together widely disparate countries of the Asia-Pacific, and produced some real results. There is no equivalent of this for the EU and Asia. True, the EU has its own forum for interaction with Asia, the Asia Europe Meeting (ASEM). But this runs a poor second in terms of status and outcomes. The ASEM bills itself as a “dialogue facilitator”. At best it produces many dialogues, but which, while they may be very worthy, produce few significant outcomes. In the area of trade, the EU has its own efforts at policy in Asia, but their ambitions and achievements are limited, and certainly do not match the goals of the US (whether the US efforts to create TPP will actually achieve anything is another matter). A Free Trade Agreement (FTA) here or there and a scattering of Partnership and Cooperation Agreements (PCA) is the best to be hoped for from the EU. With China the EU has its Strategic Comprehensive Partnership, but at the moment the EU’s level of ambition is limited to negotiating a Bilateral Investment Treaty (BIT).

Of course, the EU does not have the same strategic commitment to Asia as the US. Yet, even leaving this aside, the influence of the EU in Asia remains weak. True, following the APEC summit, the EU was present at the G20 meeting in Australia, a meeting that by coincidence happened on the margins of the Asia-Pacific region. Perhaps there the EU could claim some influence by being partly responsible for forcing climate change onto the agenda over the resistance of the Australian Prime Minister Tony Abbott. A victory in alliance with the US among others over the Australian prime minister can hardly count as a great achievement, and the real momentum had in any case largely been created by the Xi-Obama climate declaration a few days previously. But, in reality the meeting only served to illustrate the weakness of the EU. The main outcome of the G20 was agreement on growth, which supposedly committed the members to adopting policies intended to achieve an additional 2% annual GDP growth over current trends. This merely serves to highlight the EU’s abysmal recent economic record and prospects, in contrast to most of East Asia and even the US.

The EU may see itself as having soft or normative power, and it does do much that is positive in Asia, but it has limited impact in the region.  The fact that China chose to sign a climate change agreement with the US, rather than the EU, which portrays itself a climate change leader, tells us which President Xi regards as most important. The same can be said for the agreement on the ITA between China and the US. These are not just bilateral in importance. The first gives some hope for a global climate change agreement, and the second gives a flickering of vital signs to the comatose global multilateral trade process.  For all the contradictory nature of the US relationship with Asia and with China it remains important, despite signs of its declining power and much that is questionable about the intentions and results of President Obama’s rebalancing to Asia. The EU as a group is marginal to Asia, and disengaged. Will this change with the EU’s new leadership? There are many good excuses for why it will not. First among them is the huge effort required from the EU to rectify its own domestic failings. Externally, problems closer to home, the Ukraine crisis and the disaster that stretches across most of North Africa and the Middle East, will occupy much time. But Asia, and especially China, even if it is far away, requires engagement. Europe has a choice either to accept its marginal position in Asia or do something to change it.


EBRD sticks to ‘business as usual’ in Ukraine

Posted by on 23/11/14
By Iryna Holovko, Bankwatch The need to reform the Ukrainian energy sector is eminent, and yet, some European donors - like the EBRD - continue with business as usual, which does not address the country’s immediate need for improved energy security.

Volunteers’ Friday in Aalborg

Posted by on 23/11/14

At the end of September, to celebrate the arrival of the new season, a special event was organized in Aalborg (Denmark) celebrating its local volunteers and the huge work achieved by all the people, who daily and freely deliver joy and comfort to other people’s lives in their neighbourhoods.

MyNeighbourhood, well represented by its Aalborg team emphasised and illustrated the importance of voluntary work to enhance neighbourhoods lives.

Together with other local groups the Aalborg crew met up in Nørresundby to march across the river bridge – with a musical front figure provided by the Aalborg Garden.


On the bridge a chain of volunteers walked across the Limfjord, on the way to the old town square for refreshments and networking.



25.000 EU experts in each EU country

Posted by on 20/11/14
The EU is a complex game in which Brussels has a key role in close connection with the 28 capitals of the EU Member States. In previous messages I identified the 100.000 EU actors in Brussels, and now the “local EU actors”, those working in the Member States, will be mapped out. On the executive [...]

New G20 ‘commitments’ on phasing out fossil fuel subsidies are worthless

Posted by on 20/11/14
By Eberhard Rhein In 2009, heads of government agreed to phase out fossil fuels subsidies by 2020. This month, leaders at the G20 in Brisbane repeated the aim but scrapped the deadline. Is the G20 the 'loosest governing bodies' on earth?

How close did the Dutch come to ditching the euro?

Posted by on 19/11/14

The Guilder - was it close to making a comeback? 
Yesterday, former Dutch Finance Mininister Jan Kees de Jager, who held the role until November 2012, revealed something very interesting. Apparently, the Dutch government, together with the German govenrment, made contingency plans during the height of the eurozone crisis for the two countries to ditch the euro. A “team” of lawyers, foreign policy experts and economists were employed to investigate different scenarios,. One was to reintroduce the “guilder”:
"The team met regularly on Friday afternoons, but could also be present very quickly in case we needed to make a decision"
He also revealed how Germany was closely involved but other countries were less keen to prepare:
"Some countries considered the fact that several scenarios were being discussed in Europe already very scary. Remarkably enough they did not do this. We were one of the few countries[to discuss scenarios], together with Germany. We even had a team discussing scenarios, Germany-Netherlands.”
Finance Minister Jeroen Dijsselbloem also admitted that the Dutch government was at one point “preparing for the worst case scenario”, saying:  
 “Heads of government, including the Dutch cabinet, always said: ‘We want to keep the euro together and to keep the euro as a single currency.’ That said, we also looked at what would happen if that didn't succeed”.
Dijsselbloem added that no guilder notes were actually printed, and unlike de Jager, he refused to confirm whether Germany had made similar preparations.

This of course is in line with what we've heard before. The Dutch Central Bank has already admitted it made some contingency plans for a euro exit in 2012, while De Volkskrant has revealed that, in June 2012, Prime Minister Mark Rutte threatened the possibility of the Netherlands exiting the euro. Nevertheless, the detail and the format of the planning highlights just how seriously this was taken.

We can't help but feel it puts the continuous protestations by ECB President Mario Draghi that the single currency is  "irreversible" into a new light...

Outcry from Greece, a dissolving country

Posted by on 18/11/14
By Dimitris Rapidis Four years of harsh economic austerity are certainly not a fundamental factor for a country to dissolve. But as 2014 comes to an end, we might state that Greece is a state in full dissolution.

Labour turns its attention to restricting EU migrants’ access to in-work benefits

Posted by on 18/11/14
Iain Duncan Smith's opposite number, Labour's Rachel Reeves, has written an interesting piece on EU migrants' access to welfare for the Mail Online, in which signals an important shift in Labour's policy.

Last week we noted that IDS had set out that he wanted to restrict EU migrants' access not simply to out-of-work benefits but also in-work benefits such as tax credits - something that our Research Director Stephen Booth and LSE Professor Damian Chalmers proposed in a recent Open Europe pamphlet.

Reeves sets out three proposals to reform the EU rules on access to welfare. Firstly:
"We believe that it is right to extend the period that EU jobseekers need to live and support themselves in the UK before claiming out-of-work benefits from three months to two years."
This had been hinted at by senior Labour figures before. But, for the first time, Labour have said they also want to address in-work benefits:
"We must also look at the role of in-work benefits. It is far too easy for employers in Britain to undercut wages and working conditions by recruiting temporary workers from elsewhere in Europe on very low pay and with no job security, knowing that the benefit system will top up their income." 
"So while some have said that we cannot negotiate changes to benefits paid to people in work, I am determined to look at how we can deliver reform in this area too."
As we have noted before, restricting access to this low-wage welfare supplement could reduce the incentive to migrate to the UK for the lowest paid jobs as the UK's system of in-work benefits can make a significant difference to the incomes of the lowest paid.

And thirdly, Reeves has said:
"We will work with European countries to end the absurdity of child benefit and child tax credits being claimed for children living in other countries."
This is near unanimous consensus among all the main parties on this point.

The change in stance on in-work benefits is significant and would have the biggest impact, and it is therefore interesting why this wasn't given top billing in the article?

Join Us at the One Europe Convention in Verona

Posted by on 18/11/14

In my first post here on BlogActiv, I am very pleased to welcome you to our annual One Europe Convention with attendants from 70 countries. The convention will take place in Verona on November 21-23, 2014. For 10 years running, the annual European convention, hosted by, a non-profit organization, has established itself as one of the world’s most culturally diverse gatherings for spiritual growth—a 3-day celebration of human unity and deeply transforming personal experiences.

At this historic event where participants will come from 70 different countries, all the lessons and activities throughout the event such as workshops, meals, and cultural evenings, will focus on the central theme of achieving harmony and sustainability throughout Europe. The purpose of these gatherings is to create exceptional human bonding experiences that leverage the collective powers of any group of people. The force of this connection increases awareness of the importance of benefiting others and creating sustainable environments that allow us to accomplish more collectively.

A new, global world is taking shape before our eyes, a reality in which humanity and nature are all interdependent. We need to study the global laws of our world in order to find our way in it. Kabbalah is a 4,000 year old wisdom with the sole purpose of teaching humanity how to achieve balance and complete harmony amongst ourselves and all of nature in a global world. Come join us to set the path for a better future for Europe and for the entire world. People from around the globe are invited to embark on this groundbreaking journey as we strive to build a European spiritual union, based on love and friendship – a model for the entire world to follow.

The convention is open to anyone with a desire to change him or herself and the world we live in. Students currently studying with, or anyone who wants to take a proactive approach to uniting Europe is welcome to register.

I will be giving six lessons throughout the congress. The lessons will be given in Russian, with simultaneous interpretation into English, German, Hebrew, French, Spanish, and Italian.

To register for the event please visit



Contempt for a public oath of impartiality underscores Commission illegitimacy

Posted by on 18/11/14

Commissioners are obliged by Treaty law to swear or affirm on their honour that they are absolutely impartial and independent. They must pledge not to take any instructions or seek instructions from governments, political parties or any interest groups or any ‘entities’, that is, anybody else.

Is that clear? Believers in divine justice in our democratic Judeo-Christian society, make an oath or affirmation before God. Those who are agnostic or atheists make an affirmation before their conscience (as their record for the Day of Judgement).

So far the Juncker Commission — whose members deem themselves to be in office — has contemptuously failed to take the oath of office. Today they are merely politicians, selected by governments as their personal and national representatives. This is contrary to the letter and spirit of treaties since 1951 — even  of the misbegotten Lisbon Treaty that violated national referendums.

Over the years, as Europe’s honest broker showed itself less than honest, the Commission tried to make the oath an obscure and hidden operation. Was that because of a bad conscience about funding wasteful wine and milk lakes, meat mountains, butter bergs and politicians’ pet projects of useless airports, bridges and motorways to nowhere?

Taking an oath of office should be a celebration of legitimacy and public support. It follows general national practice in democracies. Members of governments, privy counsellors, members of national parliament generally take an oath of office BEFORE they take office. The US President takes his oath of office very publicly — with a whole day of celebration and before the widest audience possible. It is all broadcast on radio, television and the internet.

Why does the European Commission feel it is above the law?

A European Commission that refuses to take a very open and public oath of impartiality and independence while freely drawing its salary is acting contrary to Treaty law. This requires that they make a ‘solemn undertaking‘ BEFORE they start work. Why wait? What are they up to now?  Making inappropriate deals? Perhaps obscuring problems and crises that may involve personal, party or national interests? Do they think they are permitted to violate the Treaties before they take the oath?

It is no argument to say ‘We will take the oath later, when we have time.‘ It shows contempt of the office. Where does logic or law say an oath of impartiality or any oath can act retrospectively?

Commissioners do not take office UNTIL they have pledged their suitability in an oath of impartiality. If they doubt this ask the judges at the European Court of Justice! Their oath is made as their entry into office. The President of the Court confirms the Commissioners’ oath to be the essential link BEFORE installation to office.

Why have 28 Candidate Commissioners, who should encapsulate honest politics, all remained silent about the issue?

The following is the oath of independence they have to agree to. Just reading it makes it plain that it must be sworn or affirmed BEFORE they start work.

  • “Having been appointed as a Member of the European Commission by the European Council, following the vote of consent by the European Parliament
  • I solemnly undertake:

    • to respect the Treaties and the Charter of Fundamental Rights of the European Union in the fulfilment of all my duties;
    • to be completely independent in carrying out my responsibilities, in the general interest of the Union;
    • in the performance of my tasks, neither to seek nor to take instructions from any Government or from any other institution, body, office or entity;
    • to refrain from any action incompatible with my duties or the performance of my tasks.

    “I formally note the undertaking of each Member State to respect this principle and not to seek to influence Members of the Commission in the performance of their tasks.

    “I further undertake to respect, both during and after my term of office, the obligation arising therefrom, and in particular the duty to behave with integrity and discretion as regards the acceptance, after I have ceased to hold office, of certain appointments or benefits.”

    If Commissioners only take this oath months after taking office, does that mean that they can say in Court that what they did illegally before taking the oath is permissible as they are not obliged to be impartial before? Hardly. That is why the oath should be taken immediately and very publicly.

    The first oath was not made in secret. Nor in the building of the European Court of Justice. It was made in the most public place, the City Hall of Luxembourg, before a big audience and national observers. A Court environment is useful to remind Commissioners that they have a legal obligation to be impartial. If they are not, they can be taken to Court.

    But what is more important for the EU as a whole is that this oath should be widely known by all European citizens. All the ‘entities‘, the interest groups and all the many lobbies and lobbyists should see and hear it. They should know it is illegal to communicate with the Commission in secret. The treaties give specific means so that the Commission can be fully informed about all issues in Europe without secret lobbying of governments, companies and political parties.

    Today it makes more sense that the oath should be taken in Brussels, before the public and the press, and broadcast to the whole Continent and the world. The Commission should act like any mature democracy does. Why? Because the entire population of more than half a billion people in the EU need to hear that all Commissioners pledge absolutely that they will not receive instructions, nor seek them. They will make decisions according to their conscience and as openly as possible.

    Their oath, like that of the judges of the European Court of Justice, is intended to be taken before they start work. In the case of the Commission the oath is even more detailed than the judges’ about the impartiality that they must acknowledge and follow. Any deviation from impartiality will bring them to the European Court of Justice.

    At the moment the Commissioners have not promised anything. Yet the Commission is in a crisis about tax fraud, tax evasion and avoidance  and a number of other serious matters.

    How will the unsworn Commission act now towards the citizen — who pays their salaries? What about ‘tax havens‘ for the world’s biggest companies? If the global companies do not pay tax, the burden falls on small companies and poor individuals.

    Consider the matter of the State extracting your personal or small company taxes. You are brought to a Court of Law. How would you react if faced with a judge highly prejudiced and partisan against you? Distrust and fear.

    How about a judge who was directly chosen by ‘entities and interest groups‘ who have already taken 40 percent of your income? For your case, they especially chose a judge who has declared and demonstrated his partisanship for decades. He maintained with pride his strong links to parties and specific interest groups.

    I am not referring to a mere magistrate but the most powerful judge in the land. What if the judge was involved in multi-billion euro deals with the very people who were stripping you bare of your meager resources?

    Wouldn’t you cry: INJUSTICE! Your whole being would revolt against the system. All Courts across the land would lose public confidence, their legitimacy would be reviled. People would forms groups based on their separate outrages to overturn and destroy the system. Society would be divided between the rulers and the skeptics. Europe will fragment. It’s happening.

    What are the most powerful actors against individuals in society? Many would consider governments wield the most power. Consider how much tax they raise from society. They usually take up to half of all income.

    2012 Tax on national income
    Country % burden
    Austria 43.1%
    Belgium 45.4%
    Bulgaria 27.9%
    Cyprus 35.5%
    Czech Rep. 35%
    Denmark 48.1%
    Estonia 32.5%
    Finland 44.1%
    France 45.0%
    Germany 39.1%
    Greece 33.7%
    Hungary 39.2%
    Ireland 28.7%
    Italy 44.0%
    Latvia 27.9%
    Lithuania 27.2%
    Luxembourg 39.3%
    Malta 33.6%
    Netherlands 39.0%
    Poland 32.5%
    Portugal 32.4%
    Romania 28.3%
    Slovakia 28.3%
    Slovenia 37.6%
    Spain 31.8%
    Sweden 44.2%
    United Kingdom 35.4%

    EU28:                       39.4%   (Eurostat 2014).

    History tells us that the State provides benefits but also abuses its powers. Some governmental groups, for example political parties, are assumed to incorporate the needs and interests of sections of the population. But their policies are often made in secret and donors to party funding often dictate the policies.

    In the UK House of Parliament, whose members like to consider themselves the paragons of democracy, the following exchanges took place on 10 July 2013:

    Ed Miliband, leader of the Opposition Labour Party: The Prime Minister ‘ is owned by a few millionaires at the top of society and everyone knows it.’

    PM Cameron: ‘The trades unions own you (Mr Miliband) lock, stock and block vote. … They buy the candidates (for Parliament), they buy the policies, they buy the leader.’

    Some consider that large corporations now detain the world’s most formidable powers. Even by 1900s commercial companies represented around half of the world’s largest entities, bigger than many national States. Today Corporations are huge. They provide goods and services for the public. They act globally. But who really controls them? Certainly not the public, it seems.
    But the Commission is the world’s first international anti-cartel agency. For good reason. Cartels were the major cause of World War One. If the Commissioners are not staunchly impartial and seen to be impartial, how can the Commission control global cartels, global tax fraud, international mafias and illicit foreign exploitation of the EU’s internal energy and financial markets?

    Corporations want maximum profits, minimum taxation. Hence they want to make secret tax arrangements with some governments so that they can avoid paying tax in all the Member States. And then the other States complain of lost revenues. The corporations work such ‘fiscal competition‘ to their own benefit.  Multinationals can parachute their flexible ‘headquarters‘ into the most favourable State. Small States offer ‘sweetheart deals’. That means depriving other States of tax, but it means that small States can benefit hugely. If they tax the multinationals only a small percentage, it is a major boost to the small national budget. The large States– which might have large revenues if taxed at ordinary rates — are left high and dry. ‘European‘ tax has in theory been paid.

    A dog-fight behind closed doors between them and tax administrations occurs. Governments are desperate to be able to tax the most lucrative corporations in the world. The public does not see the counter-struggle of the multinationals who fob off one administration against another and select the cheapest option. The Robber State is robbed and conned.

    Now consider the public. What is their view? Because the corporations are paying low tax, the general public in all countries is paying higher personal tax.

    Tax is levied by the State or rather the party politicians. They want to remain in power. How can they go about it? They usually try to bribe the public by offering ‘services‘, by creating ‘infrastructure’, by providing what they call ‘benefits‘ to certain groups who will vote for them. The also create bureaucracies and inefficiencies. Is their choice always correct and fair? Obviously not! That is why one lot of rascals gets thrown out in elections and another lot of rascals gets put in place.

    However, nowadays it is harder and harder for the average citizen to distinguish between parties of ‘left‘, ‘right‘ or ‘centre‘. They seem all to be working on the same agenda. Some suspect this is ‘fleece the public‘ and maintain a well-paid career. Youngsters leave university, join the party apparatus and they spend the rest of their life in the service of the party. Nowadays it is common for politicians to have never held any other job or earned a proper salary in their life.

    The main distinction people see nowadays is between new instant parties that wish to leave or destroy the European Union with its obvious corruption, and those who wish to maintain the status quo.

    How can the honest, hardworking citizen find an exit to this sorry tale of corrupt entanglement and self-interest by

    • States
    • Politicians
    • Corporations
    • Cartels and paper companies
    • Trades unions
    • Other interest groups
    • External cartels and exploiters?

    As Giscard d’Estaing reminded Brussels institutions recently, the Treaties say the Commission should be reduced to 13 or at maximum 15 persons. No public debate has been conducted, nor has public approval been given that justifies the Council delinquency in demanding 28 Commissioners, one for each Prime Minister.

    • The European Commission is not the exclusive zone for hiring party politicians and excluding eminent members of the public who are not party political. The concept of the Commission being made up of only national representatives is repellent, odious and an affront to the Community’s supranational principle.
    • A small, impartial Commission should be in permanent dialogue with duly-elected Consultative Committees who represent the whole European Community, its economy, its regions and its energy resources.
    • The Council of Ministers is the institution for expressing national positions. The Commission is not their secretariat.
    • The European Parliament is the place for political parties to express their views. The treaties say it should be elected according to a Single Statute for the whole of Europe. Politicians refused. Voters have been diddled out of their voice for more than sixty years. The politicians should be defending the individual who is in need and not consciously or indirectly furthering blind party politics.


    Will the EU and its Member States support foundations?

    Posted by on 18/11/14
    Guest blog post by Gerry Salole, Chief executive, European Foundation Centre. Our organisations, the European Foundation Centre (EFC) and the Donors and Foundations Networks in Europe (DAFNE) representing together over 7,000 foundations, would like to call your attention to the proposed EU regulation on the European Foundation (FE), and the critical role of all EU Members States [...]

    The Nordics: A point of reference for the European Union

    Posted by on 16/11/14

    Last week, I was asked to discuss the potential lessons for the European Union from the Nordic Models at the Nordic Labour Movement congress SAMAK. For me, three points seem essential:

    First: Freedom and prosperity needs to be created through opportunities and challenges!

    Democracy, respect for human rights and rule of law remain guiding principles of the European Union. The mission has remained to promote them beyond the borders. This is why the subsequent enlargements have been so important, marking historical turning points from which onwards people in different states hope to lead lives enjoying freedom, dignity and prosperity. But what once has been a common desire now is rather taken for granted. Democracy seems to appear rather as a static arrangement that is there because it is agreed upon in treaties. It is not seen as an ideal that requires all to assume responsibility for its constant development. Therefore the populists have a space to promote a discourse of fear, they build upon disenchantment and despair. They grow stronger day-by-day, trashing democratic politics and actors involved. And they will, unless challenged properly, increase in numbers.

    This is the most important lesson the European Union has to learn from the Nordics: More freedom is needed and it is not given. Everyone has to accept their duties but can demand their rights are respected. Respect and freedom are the basis for a fertile ground for progress and unity.

    Second: Only equality of labour standards ensures long-term progress and social welfare!

    The historical objective of the European integration process was to establish mechanisms of inter-state cooperation that would protect people from conflicts, poverty and hunger. While the traditions that underpin different post-war welfare systems may differ, the overall principles of equality and social justice have been common and hence allowed to speak in terms of an ideal of a European Social Model.

    The vision of a Social Europe is to ensure that the common effort for the Union translates into an improvement of living and working conditions. It has always taken a lot of persistence to negotiate compromises, especially when the strategies for social transformation take a long time to show results. So when they finally reach that stage, the benefits of them are often already taken for granted.

    This is also one of the reasons, why some of the welfare arrangements have evolved to be old-fashioned, not really sticking to our changing society. However, while the crisis hit, conservatives have made no differentiation and social provisions in general have become the first target of austerity.

    The social objectives must translate into both labour and social policies. However austerity policies in many Eurozone countries have significantly impaired the possibility to put forward a new framework on progressive labour and social policies. The recent years have seen detachment of the debate on these even within the progressive movement.

    Furthermore, European added value must not be mistaken for competing on the national level at any cost. An essential is the European labour standards. There is no trade off between efficiency and equality.

    Progressives must reopen the debate and embark on the struggle for quality employment for all. This is especially essential now, when they are working for proposals for a re-industrialisation strategy. Here we encounter one of the main lessons from the Nordics for the European Union to consider. The European Union has to continue to fight for equal labour standards and better income in all European member states. The Nordics have been strong in ensuring common standards based on respect but also based on strong and effective democratic institutions.


    Third: Globalisation gives us the duty to re-define economic thinking!

    Globalisation and its new challenges demand a redefinition of fiscal, monetary and global economic policy. Here both the Nordics and the European Union need to learn.

    Fiscal and monetary policy should be seen as having the fundamental function of ensuring high-levels of aggregate demand. In addition and to fight against inequalities there is an essential need for a common European labour policy and a shift away from the current system of wage repression amongst the member states and amongst the different economic zones elsewhere.

    A common international labour policy and a progressive harmonisation of labour rights and social protection could lead to a reasonably egalitarian income distribution and to an end to the current dysfunctional framework.

    Modern global capitalism cannot remain an uncontrolled “wild” engine. Achieving significant increases in employment, growth and reducing inequality in Europe will not be easy, but it is certainly achievable. It will imply the implementation of a range of progressive economic policies at both the country levels and the EU level. These imply that the European Union will have to become more coordinated and more progress could only be achieved through international cooperation.

    In this regard, a strong and active Union with an agenda of regulated international trade based on decent work for all is to be advanced. New protectionism and fear are not the answers. But this demands a creation of a strong moral and political legitimacy for economic and labour market policy as well as for new trade arrangements such as TTIP. It should become a model for such a new approach in international treaties and an answer to modern globalisation and capitalism.

    When the Nordics are looking for a more human approach in the globalised world this should be done together with other Europeans and not separately. The Nordics are part of Europe and our continent will only remain strong when united. The challenges of our century are immense. Climate change, rising inequalities, technological advances, rising of new global powers, only to name the most challenging one.

    European integration remains the only solid and serious alternative to tackle this. The nineteenth century created the labour movements as an answer to industrialisation. The twentieth century created the European Union as an answer to war and self-destruction in Europe. We should now create an answer to a human globalisation. All the lessons learnt need to be incorporated in order to ensure a better and a more prosperous Europe.



    Half Full or Half Empty? What an APEC Summit Reveals about the EU

    Posted by on 16/11/14

    Food for thought in China-Europe relations is again as abundant as ever. ‘Hang on’, one might be inclined to intervene, ‘it’s been the APEC-summit this week – since when is Europe either Asian or close to the Pacific?’ Moreover, the Asian style dress code (aka “silly shirts”) for the APEC family picture gives room for interpretation of the symbolic end of European/Western cultural dominance in the world – despite the fact that it was actually Bill Clinton who started it in 1993, when he dressed the leaders in leather bombardier jackets.

    This year, however, the Chinese APEC-shirt designer implicitly seems to predict the return of Western dominance – or at least of Hollywood. After all, the resemblance of Xi, Obama, Putin and the other leaders with the well-known Star Trek characters was undeniable. Jean-Claude Juncker, Federica Mogherini and their colleagues must have been relieved not to be forced to dress up as Captain Kirk or Commander Spock look-alikes.

    On a more serious note, the APEC summit still is an excellent opportunity to compare two very different regional integration efforts:

    • To start with, there are commonalities: both the EU and APEC promote free trade. But they are also eager to improve standards of living, education, and foster shared interest
    • On the other hand, there are significant differences: the EU is in a much better position to actually achieve something. APEC, which calls itself an ‘economic forum’ is a purely intergovernmental organisation in the classical sense. There is only one really meaningful meeting of Heads of State and Government at APEC in the course of a year, officially called the ‘Economic Leaders Meeting’. Meanwhile, EU leaders constantly meet; the EU has its own ‘government’ (the Commission), a Parliament and even a Court of Justice whereas APEC has merely established a Secretariat in Singapore and some theme-based committees without real decision-making power.
    • Although security talks do play a role during side meetings and chats over coffee (or tea) at the annual summit, APEC focuses on the economy only: Trade & Investment Liberalisation, Business Facilitation, Economic & Technical Cooperation are on the agenda. Here the EU is much more ‘advanced’, such as with an own Common Foreign and Security Policy.
    • It should nonetheless not be forgotten that APEC’s choice to keep a low profile on politics is in itself a highly political decision: APEC prefers speaking of ‘member economies’ rather than ‘member states’ – after all, APEC also includes Taiwan, pardon, ‘Chinese Taipei’ and Hong Kong.
    • APEC was founded in 1989 in reaction to increasing regionalisation trends on the globe. Its history is thus much shorter than that of the EU. It also does not have a fundamental reason of being like the will for sustainable peace that set the EU on track in the first place.
    • True, just like European integration was considered a means to both contain and integrate Western Germany after WWII (and avoid German dominance after reunification), APEC also had as a purpose to contain economic dominance of Japan.
    • Currently at 21 members, APEC represents 40% of the world’s population. With its 28 member states the EU exceeds APEC in terms of members, but today only represents 7% of the world’s population. Nonetheless, as the world’s biggest trading bloc, it is an ‘economic giant’.
    • When it comes to its geographic scope, APEC encounters similar problems as the EU (which is struggling with the unclear definition of ‘Europe’). India for instance would like to join APEC but since it does not border to the Pacific, APEC so far refused Indian membership. Taking a closer look, APEC (mis-)uses seemingly objective criteria like geography to disguise more political motivations.

    This brief comparison shows that the differences between APEC and the EU clearly outweigh the commonalities. It also mitigates the endless criticism of the EU’s alleged incapacity of being a proper actor in global politics that, famously, ‘does not speak with one voice’. The look from outside tells a different story. As China’s Global Times writes, for instance:

    ‘[T]he EU and APEC differ because the first endeavours to be an active political actor in the international arena while the second remains an initiative of economic regionalism with an impressive geographical reach. The EU has a clear political identity, a contrast to APEC which is barely interested in dealing with security issues. In spite of problems of cohesion within the EU, its main ambition is to speak with one voice on the global stage and become a reliable international power. APEC has been never keen on serving such a goal.’

    So as always, it’s a question of the glass being half-full or half-empty. Or as French master diplomat Talleyrand puts it: ‘When I examine myself, I am worried. When I compare myself, I am reassured.’

    So long / 祝好,