A fight breaks out in a bar...

Last week we organised a debate in London on the EU's proposed short-selling rules (a summary of the event can be found here). With four excellent panellists, we covered lots of ground and managed to get into the crucial details without losing track of the bigger picture (always a challenge with what is, after all, a highly technical piece of financial legislation).

The proposal is currently gridlocked in negotiations between MEPs, member states and the Commission.

As it stands, the proposed short-selling regulation is a mixed bag - some much needed transparency measures are welcome, but some provisions on the table could be counterproductive and hurt weaker European economies . In particular, MEPs want to impose a blanket ban on short-selling of "uncovered" Credit Default Swaps on sovereign debt, to counter "speculation" against weaker eurozone economies. That the Commission, and virtually everyone else, has pointed out that there is no evidence that short-selling drives up borrowing costs for governments, seems not to matter.

MEPs insistence on a blanket ban is all about political games - it has nothing to do with economic realities. As MEP Syed Kamall (who's opposing the ban) noted at the debate - and others have noted as well - when a fight breaks out in a bar, you don't hit the guy that started the fight, you hit the one you always wanted to hit (see picture - we'd like to say that the two guys sitting down chilling are representative of the UK's approach to Europe but that might be a bit harsh, at least in this case).

We take a closer look at the proposal and state of the negotiations over on Public Service Europe. We acknowledge that,

The overarching goals of the European Union's new short-selling regulations are supposed to "create a harmonised framework for coordinated action at European level, increase transparency and reduce risks". These are commendable aims, which are also widely accepted by those within the industry.

But on the proposed CDS ban, we note

In fact, in many cases, the ability to "go short" increases investments in struggling economies since it serves to reduce risks involved in that investment – while offsetting the exposure investors may have to long positions elsewhere. Take away this form of insurance, and fund managers will grow increasingly reluctant to invest in the very economies that are in need of cash inflows.

For example, take an investor who considers putting his money into a project or enterprise in one of the eurozone economies, which is struggling to cope with large levels of debt at the moment. Naturally, he will want to have a way to hedge or insure himself against potential losses, in what is a risky economic environment. One way of doing this is to take a short position on the sovereign debt of this country in order to offset some of the risk. An excessive ban on CDS short-selling activities would reduce the flexibility of markets to respond to these kinds of risks, which in turn increases the cost of capital and reduces investments in - and lending to - struggling eurozone economies.

Alluding to the "fight in a bar" analogy, we conclude,

The biggest problem with this proposal is, therefore, that it is driven by a narrow political agenda rather than economic evidence, best practice and common sense. It is easier for politicians to accuse "speculators" - a vague group of people that is never really defined - for carrying out an evil conspiracy, than to deal with the real problems facing the EU economy. Such as low growth, an undercapitalised banking sector, an unsustainable single currency and governments spending money they do not have.

Unfortunately, in this fight it seems as if, rather than improving financial regulation, struggling European countries will be hit the hardest

MEP claims he is innocent of corruption, just guilty of vanity

The Sunday Times’ expose has certainly shaken the bees nest at the European Parliament. So far four MEPs have been caught out, on video, agreeing to table amendments to EU directives in return for the promise of cash. However, despite being caught well and truly with their hands in the till, two MEPs are still professing their innocence to the charges and refuse to step down.

The latest to be busted is the Spanish MEP Pablo Zalban, who seems intent on bringing down the reputation of the European Parliament and his EPP party in the process.

In a comment revealing of his integrity, he told El Mundo yesterday that he met with the journalists posing as lobbyists “because I am well mannered” and also because the undercover journalist “was very good looking”.

After three meetings, Zalban actually put forward one amendment, out of two, that the undercover journalists suggested.

“One of these I rejected, but the second, after consulting with the assistants from the EPP, we thought it would enrich and improve the report because it protects small investors and goes in the same direction of consumer associations, and for this I incorporated it”, he said.

What will concern many is that Zalban claims that he acted “in all moments under the norms of the European Parliament” but was a victim of a "trap".

MEP in ‘cash-for-laws’ scandal replaced by...

A professional lobbyist.

No, we're not joking. Austrian MEP Ernst Strasser who was secretly filmed boasting to journalists, “Of course I’m a lobbyist, yes” will be succeeded by a two-times former MEP who runs his own lobbying firm.

Who better to replace an MEP disgraced for agreeing to amend EU laws on the promise of €100,000?

Strasser, who resigned after the Sunday Times released videos of him agreeing to propose amendments to EU laws for a €100,000 consultancy salary, is being replaced by Hubert Pirker, who himself worked as a professional lobbyist since leaving the European Parliament in 2009. He was an MEP from 1996-2004 and from 2006-2009.

The website of Pirker’s former consultancy firm “EU-Triconsult” has been removed from the internet, but under the firm’s services he offered prospective clients “my networks and my negotiation and lobbying experience with European and international institutions at your disposal.”

Meanwhile, the Romanian MEP implicated in the Sunday Times ‘cash-for-laws’ sting, former Foreign Minister Adrian Severin, has been expelled from the Socialist group in the European Parliament but has refused to resign from his post as an MEP. The third MEP involved in the scandal, former Slovenian Foreign Minister Zoran Thaler has resigned.

We asked yesterday whether the EP is reformable. This is not a good start.

How to win friends and influence people (with other people's money)

We've consistently questioned the logic of sending taxpayers' money from Paris to Berlin via Brussels in the form of the EU's regional (or structural) funds. It seemingly makes little sense for taxpayers in economically comparable countries to subsidise each other's regional policies, only minus the Brussels admin fee.

And it turns out that the search for a logical explanation was all in vain, as, according to German MEP Markus Pieper, the use of EU-channelled money to co-finance projects in relatively wealthy member states is completely justified because it contributes towards making the EU more visible to citizens.

"In countries like Germany, France and the Netherlands, Europe shows its face through local projects in the regions," he said.

This is the kind of argument you might expect to hear from the Commission or an MEP from one of the net recipient countries, but coming from a member of Chancellor Merkel's CDU party, which is making some pretty loud noises about fiscal prudence at the moment, makes it quite odd.

And it's not like the Commission doesn't already have a sizeable pot of money to spend on EU PR.

Is the European Parliament reformable?

The European Parliament seems to stumble from one scandal to another. Be it the misuse of allowances, for example by claiming for daily subsistence to work in Brussels only to jet off for the weekend, their second pension schemes, or their junkets to island paradises, MEPs too often make the headlines for the wrong reasons.

But the Sunday Times' investigation published yesterday, now dubbed the 'cash-for-laws' scandal, leaves three MEPs standing accused of outright corruption. The article is behind the paywall, and well worth reading in full if you get the chance, but here are the key details:

- Three MEPs, Adrian Severin, the 56-year-old former Romanian deputy prime minister, Zoran Thaler, the former Slovenian foreign minister, and Ernst Strasser, a former interior minister in Austria, were all caught agreeing to propose amendments to EU laws believing they would be paid for this work with a €100,000 (£87,300) annual salary, a consultancy fee or both.

- The meetings with undercover journalists were secretly filmed and took place in bars, restaurants and the parliament’s two buildings in Brussels and Strasbourg. Severin later emailed the reporters saying: “Just to let you know that the amendment desired by you has been tabled in due time." Then sent an invoice for €12,000 for “consulting services concerning the codification of the Directive 94/19/EC, Directive 2009/14/EC and the amendments thereto”.

- The amendments were intended to dilute directives supposed to protect customers’ deposits after scandals such as the collapse of the Icelandic banks.

The sting has already claimed the heads of two of the MEPs, with Austrian MEP Strasser resigning immediately but claiming this was to avoid "damage" to his Austrian People's Party rather than because he'd done anything wrong.

Severin and Thaler, said that they knew it was a set-up and merely wanted to see where the exchange of emails would lead and initially refused to resign but, according to the latest reports, Thaler has now also done so. Severin has quit his job as deputy chairman of the Romanian Social Democracy Party, but so far held onto his seat at the European Parliament. The Group of European Socialists in the EP has however ordered him to Brussels to explain himself.

As the Sunday Times argued in its leader, this comes at a time when:

"The European parliament and its 736 members matter more now than at any time in its 53-year history. We live in an era when much of British law and a high proportion of the regulations that control our lives are determined in Europe. MEPs have the power to amend those laws and directives in a way that affects everybody."

The EP is launching its own investigation but, if they're found guilty and perhaps even if not, this particular story is shocking enough to engrain the 'gravy train' image of MEPs in the public's mind's eye for good. Various attempts to 'reform' the EP (back in 2009 there were some harmonisation of rules on pay and a ban on hiring family members as staff) have clearly done nothing to stop the rot.

One can't help thinking that the real root of the corruption and general money-grabbing behaviour of many MEPs is the fact that the EP still thinks that it can behave like a banana republic assembly without anyone noticing.

Perhaps MEPs should forgive people for taking the view that the EP, at the end, is not a 'real' Parliament. This was the conclusion of the German Constitutional Court, which said in its ruling on the Lisbon Treaty that:

"Measured against requirements placed on democracy in states, its election does not take due account of equality, and it is not competent to take authoritative decisions on political direction in the context of the supranational balancing of interests between the states. It therefore cannot support a parliamentary government and organise itself with regard to party politics in the system of government and opposition in such a way that a decision on political direction taken by the European electorate could have a politically decisive effect. Due to this structural democratic deficit, which cannot be resolved in an association of sovereign national states (Staatenverbund), further steps of integration that go beyond the status quo may undermine neither the States’ political power of action nor the principle of conferral."

Unfortunately, with the implementation of the Lisbon Treaty in particular, the EP now has extensive powers over laws that impact on people's everyday lives.

Scandals such as these will prompt more people to suggest that it's time to move on from the argument about getting rid of just one of the EP's extra seats in Strasbourg and consider scrapping the entire thing...

"Knife-attack" on two seat parliament

Libya is burning on the EU's doorstep.

The dangers of the sovereign debt crisis still loom large over the eurozone - Portugal is likely to need a bail-out soon.

EU member states are working out how best to help Japan deal with the aftermath of the worst earthquake in the country's history.

Meanwhile, trust in the EU is at an all time low in many countries across Europe.

Mundane issues such as these should not, of course, distract from the really important issue - maintaining MEPs' €180 million/20,000 CO2 a year Strasbourg seat (in addition to their ordinary seat in Brussels and their secretariat in Luxembourg).

At least, that's how France sees it. The French government has said it will challenge the decision at the ECJ, taken by a majority of MEPs to scrap one - we repeat just one - of Strasbourg's annual sessions (the EP holds two plenary sessions in the autumn to compensate for MEPs' extended holiday season.)

The French Europe Minister Laurent Wauquiez explains why:

"The parliament building in Strasbourg is the symbol of a Europe closer to citizens, a Europe that is proud of its symbols. The government will not accept the knife-attack on the contract which is in the treaties."

Well of course. Now it all makes sense.

The Robin Hood tax: take from everyone and give to the EU

The European Parliament today backed calls for an EU financial transaction tax (FTT). MEPs say that their version of the FTT comes with at least two great merits:

- it’s a simple way to raise revenue
- it brings the financial sector to account and deter short selling.

MEPs, we suspect, feel that targeting greedy bankers is the only way to sell an EU tax to an increasingly sceptical public - EU tax proponents is a minority cult. So in the minds of MEPs, two negatives equal a positive. Right?

Wrong.

First, the idea that an EU financial transaction tax could feed straight into the EU budget, as MEPs propose, is fiction. For one, the complexity of financial transactions and the difficulties involved in working out a sensible burden sharing arrangement between member states with massively different levels of financial activity - as well as a fair methodology for deciding what, exactly, should be taxed - make it wholly inappropriate as a tool for funding the EU budget. This is particularly true as greater simplicity and transparency are often cited as key reasons for introducing an EU tax (as opposed to the current - and admittedly complex - system, which combines VAT receipts, contributions based on GDP and 'own resources').

In the absence of a burden sharing mechanism, the impact of an EU financial transaction tax on the UK will be absolutely massive, given the City of London. Both directly, but also indirectly, as many financial transactions taking place outside the UK, are still linked to activities in the City in one way or another.

MEPs say that they hope to raise £20bn in the UK through a transaction tax, but this estimate seems, quite frankly, to be plucked out of thin air. Using MEPs' own methodology (which isn't really a methodology at all to be honest) the burden on the UK is more likely to be between £40bn and £180bn.

Data on financial transactions are as patchy and opaque as the EU institutions themselves, which make it very difficult to nail down what kind of figures we're talking about.

But the World Federation of Exchanges, for example, put the level of financial transactions in the UK at £600tr (for 2009). This would put the impact of the tax at between £60bn (at an incidence of 0.01%, which is the lower end rate proposed by MEPs) and £300bn (at 0.05%, which is the higher end rate proposed by MEPs). If we limit the tax to just derivative, equity and bond trades – which MEPs have proposed - the impact falls to £40bn - £180bn (at same rates).

So, without any adjustments or burden sharing arrangements, the UK would send up to £180bn to the EU's coffers under this proposal! This will of course never ever happen, but it should serve as an illustration of how poorly thought through MEPs' proposal is.

Equally important, contrary to what MEPs seem to believe, this will not be an exclusive tax on rich Londoners or bad bankers. Instead, the cost will be passed straight down to consumers and the real economy (through higher borrowing costs and higher commodity prices, for example) - everyone will have to cough up.

Better regulation and carefully targeted taxes from national governments – or via global coordination – are much better options. As even the European Commission has admitted, with EU taxation commissioner Algirdas Semeta saying:

"With regard to a financial transactions tax at EU-level only, I firmly believe that it is premature to commit to such an option. In fact, taking into account the potential impact that this could have on European competitiveness, it would be irresponsible to proceed with such a tax"

There is also the significant question mark over where, how and why this additional money will be spent. Somehow we don't take huge comfort in the thought of MEPs all of a sudden having billions in extra cash to play around with.

In any case taking from a large tax base and redistributing the money to a very small EU elite - which operates several levels removed from citizens - doesn't sound very Robin Hood-like.

Caviar For Eurosceptic Palates

Why doesn't this strike us as a surprise? MEPs have asked for more of taxpayers' cash, although this time the money will not end up directly in their pockets. The European Parliament's Committee on Budgets voted yesterday to increase MEPs' monthly staff allowance by a further €1,500 - which, multiplied by 12 months and 736 MEPs, amounts to an annual increase of €13.2 million.

Not exactly a wise decision given the wave of austerity that national governments (and taxpayers) are facing across Europe. MEPs already gave themselves a €1,500 office allowance increase last year, following claims that new duties brought in by the Lisbon Treaty had increased their workload. What's more, they already receive a generous monthly allowance of €19,709 to cover staff and other office expenses.

In the words of Italian journalist Marco Zatterin, this really is "caviar for eurosceptic palates".

NB: It's a bit disappointing to see German MEP Ingeborg Grässle (a member of the EP Budgets Committee who has been saying a couple of sensible things in the past, for example on the EU's new diplomatic service budget) saying, "I cannot do the political or control work I have to do if I don't have more staff."

Now who was it who said "where you stand depends on where you sit?"

A two-speed EU patent

EU ministers and MEPs have done something very sensible: agreed on an EU-wide patent.

According to the Commission, obtaining a patent protection for all member states in the EU is currently around 15 times more expensive than obtaining patent protection in the US. And for a change, their estimate might actually be about right.

The absence of an EU-wide patent is a massive obstacle to growth and innovation in Europe - and a barrier for fledgling SMEs in particular. Given all the regulations pumped out by Brussels every year - many far from essential - it's surprising that it has taken so many years for EU leaders to agree on something that instantly can have such a positive impact on Europe's economy and competitiveness. But it's welcome nonetheless.

Not everyone is happy though. Spain and Italy oppose the proposal, feeling snubbed as the EU patent will primarily be translated into English, German and French (who cares about competitive disadvantages for Europe against the rest of the world, eh?).

Spanish and Italian opposition means that other member states will press ahead with a patent under so-called structured cooperation (which allows at least nine member states to take a proposal forward even if some other countries oppose it).

The benefits of this proposal aside, we now await a rash of media comments on how Spain and Italy will be stuck in the EU's "slow lane" on innovation. Because, surely, media's two-speed Europe analogy cannot only apply to the euro?

The Italian government seems to have few regrets, however. El Pais quotes a fuming spokesperson for the Italian government saying that the proposal has been approved "in a worrying and surprising way." Referring to a pending court case at the ECJ (lodged by Spain and Italy on discrimination gounds), he goes on,

It's a failure of respect between the EU institutions.

As ever, there's more to two-speed Europe than what meets the eye.

Regardless, well done EU ministers and MEPs for finally pulling your fingers out.

PolitbEUro

European Council President Herman Van Rompuy got another hostile reception at the European Parliament yesterday. Briefing MEPs on last Friday's summit of EU leaders, he did his best to play down the disagreements that dominated the summit.

German Green MEP Rebecca Harms (pictured here with sunflowers) wouldn't have any of that however. Likening Van Rompuy's speech to the statements made by the Politburo, the main decision-making body in the Soviet Union, she said:

No matter how meagre the results are, we always get reports of how smooth everything went. We need more honest declarations which pinpoint the problems.

We'll not pass judgement on whether the USSR bureaucrat swipe is an improvement on the "damp rag" comparison made by UKIP Chief Nigel Farage last year.

But we suspect that briefing MEPs isn't Van Rompuy's favourite activity...

Meanwhile in the European Parliament...

...yet another armed robbery.

Inspiring so much confidence.

MPs could learn a thing or two from MEPs

Last night MPs debated amendments to the EU Bill to strengthen Parliament's power over the Government on decisions about which EU crime, justice and immigration laws the UK signs up to. These were not abstract or merely technical points. This was about transferring power from the executive to the legislature (and therefore a step closer to MPs' constituents) over lawmaking that can have a material impact on people's lives. Once again, we would point you to the European Arrest Warrant or the EU laws requiring the UK to recognise trials in absentia or decisions on asylum - these are no trivial matters.

We could also point to the 90 or more EU laws that the UK Government could either decide to opt out of altogether in 2014, or remain signed up to (giving EU judges new powers.) The fate of 90 (or even 100 depending on how you count) laws will be decided in one go, in a one-off decision. You'd think MPs should take a bit of interest in such a choice.

But the vast majority of MPs apparently didn't want to know. The sea of empty green benches was evidence of that. Consequently the amendments were not pushed to a vote and the Government will be able to continue opting in to new EU justice and immigration laws, unhindered by any real Parliamentary control.

The Government has pledged to consult with Parliament about giving MPs and Lords more power to scrutinise and potentially vote on “significant” new EU justice and immigration laws. But MPs need to be much more assertive in demanding greater power over EU affairs if it is to become anything more substantive than a pledge to merely consult.

An amendment to put the crucial 2014 choice was defeated 313 votes to 26 under a three-line whip. The Government has committed to put this choice to both houses, which is welcome, but we had hoped for a bit more excitement yesterday on this issue.

There's just something missing.

In a strange kind of way, MPs should learn from Members of the European Parliament here. Those who occupy seats in Brussels and Strasbourg are open about their thirst for greater powers and do all they can to grasp them (usually leading to unwanted and out-of-touch decisions unfortunately - but that's a different discussion). On EU matters, the contrast to Westminster is stark.

And ironically, there's a clear, inverse relationship between the clout of MEPs and the clout of MPs in the areas that were discussed yesterday: every new EU immigration, crime or policing law that our Westminster representatives allow the Government to opt in to will see MPs losing a chunk of power, with MEPs correspondingly gaining the same level of power (as EU JHA laws are decided jointly by ministers and the European Parliament).

Usually it's a noble thing to say no to power, but we fear this is a matter of our elected representatives being happily unaware, not realising that they're outsourcing some of their key responsibilities to bodies that usually (though not always) aren't equipped to balance democracy, law and justice in a union of 27 different legal systems.

If MPs are not willing to put down a marker and fight for some of their own, how can they possibly complain about the 'diminished role of Parliament' or wonder why people out there in the real world continue to ask what their representatives in Westminster are actually paid for.

Come on MPs - you can do much better than this.

How many eurocrats does it take to open a visitors centre?

...apparently, a lot them.

Opening a visitors centre should be a fairly simple matter one would think. But not so. The European Parliament's planned centre is already three years behind schedule and spiralling costs look set to go 35% over the original budget (some estimates even claim twice the orginal cost).

The ambitious centre had an initial budget of €15.3m, but €23m has already been paid out since 2007 and it’s not even finished yet. EU officials now claim that they can finish the job for a hefty €31.6m. Good use of taxpayers’ cash? Hmm…

European Voice quotes Parliament officials admitting they have little expertise in projects of this scope. “It would have been better” to have hired external specialists to set up the centre, says Francesca Ratti, former director-general for communication in the Parliament's secretariat. The Parliament simply lacked the capacity to manage this hugely complex project, she said.

Isabelle Durant, a Belgian Green MEP and vice-president of the Parliament, who is in charge of the project is hitting back: “Yes, it is expensive, but the costs are justified” (sure they are...)

We're now being assured that the centre will open this year, but seriously, how difficult can it be - it's not like this is the Galileo project....

MEPs should vote for common sense

Conservative MEP Ashley Fox may have thought of a practical plan to reduce some of the ridiculous cost of the European Parliament's travelling circus from Brussels to Strasbourg each month.

There have been many previous attempts to abolish this hugely wasteful-PR-disaster-of-a-practice before (it even made it into the Con-Lib Coalition Agreement). But, alas, it is written in the EU treaties that the EP will have its plenary sessions in Strasbourg - which would only change over Sarkozy's (or any other French President's) dead body.

It is estimated that the exercise costs taxpayers around €200m a year and produces at least an extra 20,000 tonnes of carbon dioxide every year.

But, unlike previous efforts, Fox's plan may actually work. Fox wants to combine the two Strasbourg plenary sessions scheduled for September 2012 into one, which he says, "could save €15m and prevent 1600 tonnes of CO2 being needlessly wasted."

The EU treaties say that:

The European Parliament shall have its seat in Strasbourg where the 12 periods of monthly plenary sessions, including the budget session, shall be held. The periods of additional plenary sessions shall be held in Brussels. The committees of the European Parliament shall meet in Brussels. The General Secretariat of the European Parliament and its departments shall remain in Luxembourg.

Combining, rather than scrapping, the extra plenary session wouldn't break the rule of having "12 monthly" sessions in Strasbourg.

So far, 180 MEPs have signed his declaration which would require a simple majority of those present in the parliamentary chamber to be successful.

This would only be a small victory for common sense but it would send an important message and show that many MEPs find the practice as absurd as the rest of us.

"The pill doesn’t need sweetening"

These were the words of Vince Cable today, the first minister from the new Coalition Government to speak in the European Parliament. You can read the full text of the speech here.

Vince was talking, among other things, about the Single Market, suggesting that reinvigorating it did not need a 'package deal' to ‘compensate’ people for freer trade – by for example introducing more social legislation. "The pill doesn’t need sweetening, and the sweeteners may also do serious harm," he said.

In the rest of the speech, he pleaded with the EU to revisit the Doha trade talks and urged Europe to wake up to global competition from countries like China and India.

He concluded his speech by stating the Government's position on the proposed hike to next year's EU budget. MEPs, of course, are likely to call for increases above those acceptable to most member states and certainly the cash freeze called for by the UK. Vince said:

At a time when national governments, including mine, are having to make very painful cuts in public spending, no one can understand why the European budget is not being subjected to the same discipline. There is a big backlash on the way, not only in the UK. Can I plead with you to tackle this issue sensibly? Any sense that the European Parliament and Commission are not acutely sensitive to this issue will be seriously damaging.

One has to presume that sending a Lib Dem and not a Tory minister to deliver this message to the European Parliament was not an accident on behalf of the Government. Perhaps the pill did need sweetening after all...

Hell hath no fury like an MEP scorned

Jean De Ruyt, head of the Belgian permanent representation to the EU, has ruffled a few feathers in the European Parliament, marking a more exciting than usual start to his country's turn at the helm of the EU's rotating presidency. (They're all exciting, honest).

MEPs are outraged by comments made by De Ruyt to De Tijd, in which he said:

"The biggest stumbling blocks for the presidency are with the parliament, an incalculable and badly organised partner. You do not know whether the opinion of MEPs is decided by the content of a dossier or by the wish to be seen and show their power. In some matters they do not even know that themselves."

Jo Leinen, German MEP, said that he found the remarks "astonishing". After regaining his composure, he retorted, "Clearly, the problem is that some people have still not come to terms with the new powers now enjoyed by parliament under the Lisbon treaty."

Leinen's valiant attempt to defend the EP from De Ruyt's accusation that it is power mad continued, "There is a new balance of power in the EU but it seems some want to preserve the old dominance of the council."

Err...Jo...think you might have mentioned your "new powers" twice there...

The statesman-like Lib Dem MEP Graham Watson also decided to wade in with a not-too-subtle jibe at Belgium's current political predicament: "The European parliament exists, the Belgian government does not. The Belgians should get their own house in order before they criticise others."

In footballing circles, this would certainly qualify as 'playing the man and not the ball' but, as De Ruyt said, MEPs often give the impression that they are less focussed on the substance of an argument than on simply shouting down any criticism altogether (Some MEPs' treatment of Czech President Vaclav Klaus comes to mind here).

De Ruyt is one of Belgium's most experienced diplomats, having previously been ambassador to Poland and the permanent representative of Belgium to Nato and the UN in New York. Diplomats with CVs as extensive as this rarely speak out of turn and the reaction that De Ruyt's comments have produced would suggest he might well be on to something.

Since when has breaking the law been a 'competition'?

The European Parliament has today passed a resolution calling for the harmonisation of fines that member states impose on lorry drivers who breach EU working time rules and fail to take adequate rest breaks between journeys. Given the goings on with the new coalition government in the UK and the perpetual trials and tribulations of the euro, this may seem like small-fry but it does nonetheless illustrate why the EU and the European Parliament, in particular, can be so infuriating.

The EPs press release states:

Lorry drivers who break rules on working time, rest periods or working conditions should pay clear and comparable penalties across the EU, says a resolution adopted by Parliament on Tuesday. The resolution criticises wide disparities in EU Member States' fines for similar offences and calls for closer harmonisation and co-ordination of penalties, in the interests of road safety and fair competition.

It laments that "Fines for exceeding the daily driving time by more than two hours are currently ten times higher in Spain (€4,600) than in Greece (€400)."

While no one wants to trivialise the potential damage that could be done to people's lives by lorry drivers who break the rules by acting irresponsibly, the language and logic used by the Parliament is simply crazy.

Since when has breaking the law been a 'competition'? Are MEPs seriously suggesting that lorry drivers are making a conscious decision to look for the EU country with the lowest fines and then choosing to break the law? And even if this were the case, why can't those national governments of the member states with the most lawless lorry drivers be trusted to implement a system of fines that they, rather than MEPs, deem appropriate?

The proposed resolution goes to a full vote in June and we would hope that by then enough MEPs see that this is a ludicrous proposal that should be knocked on the head and never seen or heard of again.

And the winner is...the European Commission

Remember the promise that the Lisbon Treaty would 'streamline' the EU institutions, i.e. making them simpler and more democratic? Well, if you still believe it (after this, this, this, this and this) with the risk of being bored to death, check this out:

One of the more mysterious - and tedious - elements of EU decision making is "comitology". The system works like this: after an EU law has been agreed by the European Parliament and Council (after having been proposed by the Commission), the Commission, aided by national experts, still has room for manoeuvre in amending or adding to the Directive at a later date, with limited involvement from the European Parliament and the Council (as we explain here on page 31). Whenever a Directive says that something will be decided through "implementing measures", this means that details of an EU law are hammered out in these comitology committees.

The European Affairs Committee of the Danish Parliament has noted that the system of comitology “means that the Commission can adopt EU legislation against the will of a majority of Member States in the Council", saying “We find such a procedure undemocratic” and “Another problem with the comitology system is the short time made available for parliamentary scrutiny.”

Recently, University of Utrecht researcher Gijs Jan Brandsma found that expert bureaucrats from the Commission and member states, sitting in these comitology groups, are responsible for deciding the content of almost half of all EU regulations after the actual decision has been made by the European Parliament and the Council of Ministers. Brandsma argues that the extensive use of expert bureaucrats creates big problems for scrutiny and accountability. In his thesis, called "Backstage Europe" he also interviews one of those expert officials, who in a revealing remark sums up how much discretion these guys have in the implementation stage:

On our way to Brussels, he tells me how he has decided what his input is going to be. Nobody higher up in the hierarchy seems to be involved in his case. There are no instructions. His ministry does not take a clear position regarding his file.

Incedentally, experienced EU lobbyist Daniel Guéguen, has just published a book, titled: "Comitology: Hijacking European Power?". In it, he writes,

today, without comitology, the EU would quite simply be at a standstill. Where does the political level stop and the administrative start? (...) The system has become totally out of balance because the implementating measures have come to +/- 2500 per year while only about fifty directives have been adopted during the same period.

He concludes, "comitology represents about 98 percent of the regulatory activity of the Union in a year. And this 98 percent is the Commission's competence".

This is where the Lisbon Treaty comes into the picture. Under the Treaty, the system is being 'streamlined' (wait for the irony) and replaced by a new legal framework which seperates between delegated acts (art 290 TFEU) and implementing acts. Guéguen attempts to explain the new system:

The word comitology is going to disappear! The only common element of understanding about it is going to be removed from the dictionary. From now on, people will talk of delegated acts (which replace quasi-legislative acts) and implementing acts (which replace comitology strictu sensu).

This is murky territory, but basically, "Delegated acts" are "quasi-legislative acts" which amend Directives. They have political impact and are therefore subject to scrunity by the European Parliament (according to a deal agreed in 2006). "Implementing acts" are very similar, but classified as "administrative measures" with no political impact and therefore subject to very limited parliamentary scrunity. Confused? We are too. But it's getting worse.

According to Guéguen, the Lisbon Treaty will blur the distinction between the two even further, and interpreation will vary from institution to institution.

And MEPs are not quite keeping up. A press release from the European Parliament notes that an EP report on how delegated acts will work is due to be discussed in plenary in April. It notes that Hungarian MEP József Szájer, who is the author of the report, claims that the new system will mean a power boost for the European Parliament, arguing "The consequences of this change are considerable as the EP has achieved its historical maturity being placed on the same footing as Council."

But Daniel Guéguen disagrees; MEPs might be put on the same footing as the Council but, he says, "under the Treaty of Lisbon, the Commission will dominate the institutional trio" (page 62). He argues:

as for the Council of Ministers and the member states, they seem to have forgotten what they negotiated and what they signed in the Treaty of Lisbon (...). The new reform (...) was meant to put the European Parliament on the same footing as the Council of Ministers for delegated and implementing acts. But quite the reverse has occurred. The Council of Ministers has lost its power in the area of implementing to the Commission. It can only intervene after the event for delegated acts and has seen its power curtailed in the area of implementing acts

He concludes: "Henceforth, the institutional triangle is no longer an equilateral triangle. One side of the triangle, the Commission side, is now considerable larger than the two other sides."

Perhaps a book that should be on MEPs' reading list.

We've recently found that around 70 percent of the cost of regulations in the UK originates in EU legislation. In addition to that, 50 percent of the content of these EU laws could well be decided after the Council and the European Parliament have agreed on the actual proposal. And now the Lisbon Treaty would give the unelected Commission more powers to implement laws under the radar of public scrutiny.

This Treaty's democratic credentials aren't exactly getting stronger by the day.

MEPs response to the downturn: ban work on Sundays

MEPs are an interesting lot. As we reported in our press summary a couple of weeks ago, a third of all MEPs have signed a petition, urging the Commission to include requirements for 'work-free Sundays' in its upcoming review of the Working Time Directive. In their declaration, the MEPs stated that the Commission should “protect Sunday, as a weekly rest day, in forthcoming national and EU working-time legislation in order to enhance the protection of workers' health and the reconciliation of work and family life.”

German Christian Democrat MEP Martin Kastler has also launched an online petition, trailing the citiziens' initiative created by the Lisbon Treaty (whereby one million signatures will require the Commission to consider a request for a legislative initative in some cases), to call for Sunday to me made a work-free day across the EU. The campaign is called "Mum and dad belong to us on Sunday." The petition has received some 13,000 signatures so far.

Now, few people like to work on Sundays and it's hard to argue against the need for some good, quality time with the family at least once a week. But come on, is this really something for the EU? And is banning work on Sundays what we need right now given the economic climate?

Setting a good example

Amid gloomy economic news about the state of Greece's public finances and impending austerity measures, former MEP and Greek singing legend Nana Mouskouri has today said she will donate her pension from her time as an MEP (1994-1999) to the public coffers to help Greece tackle its debt crisis.


At around £23,000 a year, it won't bring Greece's debt levels to within the 3% GDP required by the EU's Growth and Stability Pact all on its own, but is a response to calls for wealthy Greeks to contribute more money to the national treasury in the current crisis.


Amid never-ending examples of how the European Parliament wastes taxpayers' money, and MEPs voting for endless increases to their allowances, it's nice to see that not everyone goes to Brussels to climb aboard the gravy train and milk it for all they can get (for those who find it hard to believe see last year's blog piece on Swedish MEP Jens Holm donating his travel expenses to charity).

MEPs have a long, long way to go to arrest citizens' declining faith in the European Parliament, but if more took the same approach as Jens Holm and Nana Mouskouri it would make a start.