by Hugo Brady
EU leaders are racking their brains to come up with candidates for the future presidency of the European Council. The job, to be created by the nearly-ratified Lisbon treaty, will replace a system whereby the EU is 'led' by a different national leader every six months. Instead, the Union will have a full-time consensus builder who will also represent the EU to foreign heads of state, for a maximum five-year term. The man or woman who gets the job is banned from holding national office, but the assumption is that potential incumbents need to have served as a president or prime minister in a past life.
Strangely, suitable candidates are proving elusive, even though the post has the potential to be both prestigious and influential. Of those names that have been touted so far, some – like the former British prime minister, Tony Blair – are divisive figures that would inevitably bring much political baggage to the office. Others – like Jan Peter Balkenende, the current Dutch prime minister – are agreeable to most, but uninspiring. They lack the profile and international standing that is needed if the post is to be more than merely ceremonial.
In early 2008, I tried to imagine the qualities the successful candidate for European Council president should have, in a mock job advert published in CER's bi-monthly bulletin:
"As the first person to hold this post, you will enjoy enormous scope to shape its future potential. Second-rate candidates need not apply. You should be a formidable communicator, highly capable but not overly assertive. You need to be firm but conciliatory. Modesty would be an asset. Although this position offers prestige and influence, power and perks will be limited. With only a handful of staff and no presidential cavalcade, the job will resemble that of the UN secretary-general rather than that of US president. Beyond your right to assemble us for emergency meetings, your formal powers will be limited. We are counting on your ability to set the agenda and forge consensus through persuasion and quiet charisma."
('Applicants sought for EU council president', CER bulletin, April/May 2008).
These are virtuous attributes indeed but, even in the rarefied corps of past and present European leaders, they are hard to find. Moreover, the job appears to require its holder to be a walking paradox: charismatic but modest, highly effective but non-intimidating, a consensus builder but also a decision-maker. Most ex-leaders of national governments would struggle to adjust to the limitations and requirements of such a position. That is one reason why candidates are so scarce.
Hence the member-states would find more suitable candidates if they widened their search beyond former heads of government to heads of international organisations, former European Commissioners with a distinguished record and, perhaps, even prominent figures from the world of business with an international profile. Some potentials might be Dominique Strauss-Kahn, (although it is probably more important that he stay in his current position as head of the IMF), or Chris Patten, a former EU commissioner for external relations.
In an ideal world, the most promising candidate from the non-leaders category would probably be Pascal Lamy, the current head of the World Trade Organisation. Judged against the criteria quoted above, Lamy emerges as a front-runner for a number of reasons. First, as the current head of a complex but indispensible organisation that operates by consensus and moves at a slow pace, Lamy could argue that he has done this sort of work before. Second, he has no political baggage of the sort that would identify him as a tool of one particular camp of member-states or another. A French socialist who supports free trade, Lamy would be a prime candidate to bring the Union together on many issues, especially on further steps to hasten economic recovery.
Also, whilst chief of staff for Jacques Delors, a former president of the European Commission, Lamy was a highly effective consensus builder who managed to thrive amid often spectacular political infighting. That is a quality that would stand him in good stead in the power-sharing triumvirate established by the Lisbon treaty, where the Council President's responsibilities rub up against those of the president of the European Commission and a newly powerful High Representative for Foreign Policy.
Opponents could argue that Lamy has no foreign policy experience on big picture issues like the Middle East peace process or Iran's nuclear programme. But trade – along with enlargement – has long been the EU's most important foreign policy tool, and Lamy is a former EU trade commissioner. Furthermore, rising powers like China or India will sit up and take notice if the head of the WTO were to depart suddenly to take up the European Council job.
I have no idea if Lamy is interested in the EU presidency, or whether he would be willing to leave the WTO were it offered to him. But the member-states will have a bigger, better field of candidates to choose from if they can let go of the idea that the first incumbent - so important to the future success of the position - must first have been a member of their own club.
Hugo Brady is a senior research fellow at the Centre for European Reform.
Tuesday, October 20, 2009
Thursday, October 08, 2009
Greece: Nowhere to hide
by Simon Tilford
The Greek economy is on a very dangerous course. Unless the government takes steps to boost productivity and strengthen public finances, Greece faces a bleak future. Many Greeks appear to believe that membership of the euro insulates their country from the threat of financial crisis. This is mistaken. Membership may free the country from the threat of a currency crisis, but not from a fiscal crisis.
Eurozone membership requires considerable discipline. The reason is obvious. A country that loses trade competitiveness within the currency union can only regain it by ensuring its costs rise less quickly than the rest of the eurozone. In short, it must engineer a real depreciation within economic and monetary union (EMU). It cannot rely on devaluation to restore competitiveness.
Costs can be held down by wage freezes, although this risks depressing domestic demand and exacerbating the weakness of the fiscal position. Only stronger productivity offers the chance of regaining competitiveness without hitting domestic demand and bringing on a fiscal crisis. Higher productivity requires reforms of labour markets and the opening of the domestic economy to more competition.
Greece only has a small window of opportunity. The government deficit is on course to exceed 8% of GDP this year – this despite the Greek economy having only just entered recession. With the economy set to contract next year and stagnate the following year, the debt to GDP ratio will rise dramatically. The IMF estimates that it will jump to 134% by 2014. In reality, it looks like being much higher than this. And once the deficit reaches such a level it is hard to prevent it rising further because of the rising burden of interest payments.
Greece cannot finance deficits of this size domestically. It has to attract funding from abroad. This will become increasingly difficult if investors believe that the economy will be stuck in a cycle of very weak economic growth and rising public debt. Investors will lose faith in the ability of the Greek government to service its debts.
Many Greeks appear to believe that the eurozone as a whole would step in to prevent a debt crisis. They are probably right, but this would not be cost free. Assistance would be provided only in return for a commitment to reform the economy and cut public spending. It would make much more sense to take steps now rather than having to take more painful steps later.
The election result suggests that there is little stomach for reform in Greece. But Greece has no choice but to reform. Delay will only make the eventual medicine more bitter.
Simon Tilford is chief economist at the Centre for European Reform.
The Greek economy is on a very dangerous course. Unless the government takes steps to boost productivity and strengthen public finances, Greece faces a bleak future. Many Greeks appear to believe that membership of the euro insulates their country from the threat of financial crisis. This is mistaken. Membership may free the country from the threat of a currency crisis, but not from a fiscal crisis.
Eurozone membership requires considerable discipline. The reason is obvious. A country that loses trade competitiveness within the currency union can only regain it by ensuring its costs rise less quickly than the rest of the eurozone. In short, it must engineer a real depreciation within economic and monetary union (EMU). It cannot rely on devaluation to restore competitiveness.
Costs can be held down by wage freezes, although this risks depressing domestic demand and exacerbating the weakness of the fiscal position. Only stronger productivity offers the chance of regaining competitiveness without hitting domestic demand and bringing on a fiscal crisis. Higher productivity requires reforms of labour markets and the opening of the domestic economy to more competition.
Greece only has a small window of opportunity. The government deficit is on course to exceed 8% of GDP this year – this despite the Greek economy having only just entered recession. With the economy set to contract next year and stagnate the following year, the debt to GDP ratio will rise dramatically. The IMF estimates that it will jump to 134% by 2014. In reality, it looks like being much higher than this. And once the deficit reaches such a level it is hard to prevent it rising further because of the rising burden of interest payments.
Greece cannot finance deficits of this size domestically. It has to attract funding from abroad. This will become increasingly difficult if investors believe that the economy will be stuck in a cycle of very weak economic growth and rising public debt. Investors will lose faith in the ability of the Greek government to service its debts.
Many Greeks appear to believe that the eurozone as a whole would step in to prevent a debt crisis. They are probably right, but this would not be cost free. Assistance would be provided only in return for a commitment to reform the economy and cut public spending. It would make much more sense to take steps now rather than having to take more painful steps later.
The election result suggests that there is little stomach for reform in Greece. But Greece has no choice but to reform. Delay will only make the eventual medicine more bitter.
Simon Tilford is chief economist at the Centre for European Reform.
Friday, October 02, 2009
The Czechs will probably ratify the Lisbon treaty this year
by Charles Grant
Any prediction about the timing of the Czech Republic’s ratification of the Lisbon treaty must be heavily qualified; politics in Prague are so complex and opaque that many Czechs find it hard to understand what is going on. But having just spent a couple of days talking to politicians and officials in Prague, I think it likely that the Czechs will ratify this year.
The republic’s maverick president, Vaclav Klaus – who shares the passion of his idol, Margaret Thatcher, for free markets and bashing Brussels – is doing his best to delay the ratification of the Lisbon treaty. Last year a group of eurosceptic senators allied to Klaus challenged the treaty in the constitutional court, with six specific complaints about the document. After seven months the court approved the treaty and earlier this year the parliament voted for it, but Klaus has delayed signing the law of ratification. On September 29th the eurosceptic senators mounted a second challenge to the treaty in the constitutional court, thereby giving Klaus a good reason not to sign.
If the Irish approve the treaty in their October 2nd referendum, Poland’s president, Lech Kaczynski, is likely to sign his country’s law of ratification. The Czech Republic would then be the only EU member-state not to have ratified the document.
The general view in Prague is that the court, based in the Moravian town of Brno, will once again approve the treaty. It is an independent institution and nobody thinks its judges are particularly eurosceptic. But how quickly will it rule? Klaus has admitted receiving a hand-written letter from David Cameron, the leader of the British Conservatives, apparently stating that they are with the Czech president in his fight against the treaty. If Klaus can delay his signature till the Conservatives take office in Britain – after the general election that is due by next June – Cameron will hold a referendum on the treaty. The result would almost certainly be a No, and that would be the end of the Lisbon treaty.
Nobody knows how long the court will take to consider the treaty. Although it took only ten days to rule on a recent case concerning early parliamentary elections (the court insisted that the current parliament continue to the end of its term), it will need to give a full and considered response to the new challenge to the Lisbon treaty. However, one senior figure I spoke to was confident that the ruling would be “in weeks not months”. The case for a quick ruling is that the court has already spent time on the treaty, dealing with last year’s case, and that “the court does not exist in a political vacuum”. The judges understand, apparently, that there is much at stake for the whole of Europe. The chairman of the court has said that he and his judges will prioritise this case and that other matters will be put on hold. The predominant view of people I spoke to was that the court would rule by Christmas.
But could Klaus’s friends in the Senate seek to delay the treaty further, by mounting a third legal challenge? The leader of the eurosceptic senators, Jiri Oberfalzer, is reported to have said that they would not do so. Oberfalzer has also said it is unlikely that the president himself would start a new case before the court. Indeed, at a recent dinner of leaders of the Visegrad countries (the Czech Republic, Hungary, Poland and Slovakia), Klaus apparently said that ratification was like a train in motion that could not be stopped.
So long as Klaus jibs at signing the ratification, he will face mounting pressure from other EU governments. And he may face threats from France and/or Germany. In Paris there is talk of punishing the Czech Republic for delaying ratification, for example by making sure the next Czech commissioner gets a non-job or by blocking Czech participation in international bodies. In the Commission and the European Parliament some people say that the Czechs could lose their commissioner altogether: if the next Commission has to be appointed under the rules of the Nice treaty – so that the number of the commissioners must be less than the number of member-states – the Czechs should be the ones to lose out.
That kind of threat would probably be counter-productive. Klaus is famously stubborn and is never happier than when standing up for a little country against bullying by big member-states. Czech officials worry that France’s president, Nicolas Sarkozy – renowned for his impulsive comments – could put his foot in it with a stinging attack on the Czechs.
It would be wiser to let the Czech people themselves put pressure on their president. Klaus is out of tune with Czech public opinion, which is predominantly in favour of the Lisbon treaty. All the main parties except for the Communists support the treaty. The recent decision of President Barack Obama to scrap plans for an anti-missile radar in the Czech republic has weakened the hand of those Czech politicians who argue that the American alliance is more important than European integration. Indeed, since the US decision on missile defence there has been more talk in Prague of boosting the EU’s role in defence. The best course of action for Europe’s leaders is to wait patiently for the court to rule and keep their fingers crossed.
Charles Grant is director of the Centre for European Reform.
Any prediction about the timing of the Czech Republic’s ratification of the Lisbon treaty must be heavily qualified; politics in Prague are so complex and opaque that many Czechs find it hard to understand what is going on. But having just spent a couple of days talking to politicians and officials in Prague, I think it likely that the Czechs will ratify this year.
The republic’s maverick president, Vaclav Klaus – who shares the passion of his idol, Margaret Thatcher, for free markets and bashing Brussels – is doing his best to delay the ratification of the Lisbon treaty. Last year a group of eurosceptic senators allied to Klaus challenged the treaty in the constitutional court, with six specific complaints about the document. After seven months the court approved the treaty and earlier this year the parliament voted for it, but Klaus has delayed signing the law of ratification. On September 29th the eurosceptic senators mounted a second challenge to the treaty in the constitutional court, thereby giving Klaus a good reason not to sign.
If the Irish approve the treaty in their October 2nd referendum, Poland’s president, Lech Kaczynski, is likely to sign his country’s law of ratification. The Czech Republic would then be the only EU member-state not to have ratified the document.
The general view in Prague is that the court, based in the Moravian town of Brno, will once again approve the treaty. It is an independent institution and nobody thinks its judges are particularly eurosceptic. But how quickly will it rule? Klaus has admitted receiving a hand-written letter from David Cameron, the leader of the British Conservatives, apparently stating that they are with the Czech president in his fight against the treaty. If Klaus can delay his signature till the Conservatives take office in Britain – after the general election that is due by next June – Cameron will hold a referendum on the treaty. The result would almost certainly be a No, and that would be the end of the Lisbon treaty.
Nobody knows how long the court will take to consider the treaty. Although it took only ten days to rule on a recent case concerning early parliamentary elections (the court insisted that the current parliament continue to the end of its term), it will need to give a full and considered response to the new challenge to the Lisbon treaty. However, one senior figure I spoke to was confident that the ruling would be “in weeks not months”. The case for a quick ruling is that the court has already spent time on the treaty, dealing with last year’s case, and that “the court does not exist in a political vacuum”. The judges understand, apparently, that there is much at stake for the whole of Europe. The chairman of the court has said that he and his judges will prioritise this case and that other matters will be put on hold. The predominant view of people I spoke to was that the court would rule by Christmas.
But could Klaus’s friends in the Senate seek to delay the treaty further, by mounting a third legal challenge? The leader of the eurosceptic senators, Jiri Oberfalzer, is reported to have said that they would not do so. Oberfalzer has also said it is unlikely that the president himself would start a new case before the court. Indeed, at a recent dinner of leaders of the Visegrad countries (the Czech Republic, Hungary, Poland and Slovakia), Klaus apparently said that ratification was like a train in motion that could not be stopped.
So long as Klaus jibs at signing the ratification, he will face mounting pressure from other EU governments. And he may face threats from France and/or Germany. In Paris there is talk of punishing the Czech Republic for delaying ratification, for example by making sure the next Czech commissioner gets a non-job or by blocking Czech participation in international bodies. In the Commission and the European Parliament some people say that the Czechs could lose their commissioner altogether: if the next Commission has to be appointed under the rules of the Nice treaty – so that the number of the commissioners must be less than the number of member-states – the Czechs should be the ones to lose out.
That kind of threat would probably be counter-productive. Klaus is famously stubborn and is never happier than when standing up for a little country against bullying by big member-states. Czech officials worry that France’s president, Nicolas Sarkozy – renowned for his impulsive comments – could put his foot in it with a stinging attack on the Czechs.
It would be wiser to let the Czech people themselves put pressure on their president. Klaus is out of tune with Czech public opinion, which is predominantly in favour of the Lisbon treaty. All the main parties except for the Communists support the treaty. The recent decision of President Barack Obama to scrap plans for an anti-missile radar in the Czech republic has weakened the hand of those Czech politicians who argue that the American alliance is more important than European integration. Indeed, since the US decision on missile defence there has been more talk in Prague of boosting the EU’s role in defence. The best course of action for Europe’s leaders is to wait patiently for the court to rule and keep their fingers crossed.
Charles Grant is director of the Centre for European Reform.
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