Monday, December 16, 2013

What Germany's new coalition government means for the EU

Almost three months after the general election in September, Germany finally has a new government. In a grassroots referendum, members of Germany’s Social Democrats (SPD) voted to accept a coalition agreement that party leaders had drawn up with Angela Merkel’s Christian Democrats (CDU) and its smaller, more conservative sister party, the Christian Social Union (CSU). The new government is unlikely to change EU policy a great deal.

In German, the coalition agreement is called Koalitionsvertrag, or coalition treaty. Germans like treaties and other rules that bind. But Germans also know that coalition agreements do not necessarily bind the politicians that sign them. Few of the big decisions that have shaped German politics in recent years were included in coalition agreements; for example the decisions to send troops into foreign wars, abolish conscription or shut down all nuclear power stations were not. The last coalition agreement of 2009 said nothing about the euro crisis.

Therefore, the new coalition treaty should be taken for what it is: a declaration of intent and a snapshot of what the three parties involved are thinking at the moment. Even bearing this in mind, the European policy chapter of the new agreement will inspire few people. The three parties make a strong commitment to the EU (“European integration remains our most important task”) and to the euro (“Germany stands by the single currency”). But like the rest of the text, the Europe chapter often papers over conflicts by simply adding up positions: we want fiscal consolidation; and growth. We want a stronger Europe; and subsidiarity. We want more solidarity; as long as countries take responsibility for their own problems. And so on.

There are few concrete proposals for reforming the EU. Beyond a vague promise to “adjust the treaty provisions on economic and monetary union” (perhaps to allow for banking union, stronger fiscal oversight or reform contracts), there is no mention of a major treaty change, nor of a move towards fiscal or political union.

The agreement reconfirms the ‘community method’ as being central to EU decision-making (the community method involves the European Commission, Parliament and Council of Ministers in EU law-making) – despite the fact that Merkel has on several occasions expressed a preference for inter-governmental decision-making. Unless the euro crisis flares up again, European governance is likely to revert from crisis mode (late-night phone calls between big country leaders and dramatic Eurogroup summits) to the established interaction between Commission, Parliament and Council. However, other than stronger fiscal oversight, the Commission is unlikely to gain much additional authority as long as Merkel stays in power.

Guido Westerwelle, the FDP foreign minister, has been replaced by Frank-Walter Steinmeier, who held that job during the last grand coalition. Steinmeier is less of a true believer in European integration than Westerwelle. Nevertheless he will be one of the strong figures in the government and the weight of the foreign ministry – traditionally, sympathetic to the EU – in decision-making may grow.

The agreement advises Brussels to “focus on the big issues of the future” instead of meddling in policy areas that are better left to the member-states or their regions. It also calls for a measurable reduction of EU regulation in selected areas, specifically those that affect small and medium-sized businesses. The new German government also wants to see a “more streamlined and efficient college of commissioners, with clearer responsibilities for individual commissioners”. This implies that the German government is open to the idea of dividing the college into junior and senior Commissioners (as proposed in a recent CER report).

The coalition agreement seems to confirm a gradual disillusionment of the German political class with the European Parliament. Traditionally, Germany has been one of the strongest backers of the EU’s legislature. However, the coalition deal states that for the democratic legitimacy of the EU, the involvement of national parliaments in EU business is “equally important as” a strong European Parliament. This will please people in Britain, the Netherlands, Denmark and other countries that want to see a stronger role for national legislatures in the EU. But it will surprise and infuriate many MEPs.

Relations between Berlin and the Parliament may be rocky in the coming years, partly because Merkel does not like its idea that the party with the most seats after the European elections should see its designated candidate automatically become Commission president (see the recent CER essay by Heather Grabbe and Stefan Lehne). The coalition agreement does not deal with this topic, but instead calls for an EU-wide electoral system with a minimum threshold to keep fringe parties out of the European Parliament.

When it comes to handling the euro crisis, the coalition treaty reconfirms the traditional German line that the main responsibility for dealing with it lies with the euro countries that got into trouble. “The public debt ratios in the euro countries need to be reduced further”, states the agreement. And it calls for the EU to strengthen its oversight and control over national budgets.

But the coalition parties also acknowledge that fiscal overspending was not the only reason for the crisis. The debate in Germany has in any case moved on from stereotyping work-shy Southern Europeans. But it is noteworthy that the coalition text explicitly lists fundamental flaws in the construction of the euro, mentioning financial market distortions and macro-economic imbalances among the causes of the crisis. It is equally noteworthy that the agreement does not offer new solutions to these problems.

The agreement states that economic imbalances in the eurozone need to be addressed through the efforts of “all euro member-states”. But those who had hoped that the inclusion of the Social Democrats in the government would result in Germany spending much more, and thus helping to rebalance the eurozone economy, are likely to be disappointed. Sebastian Dullien from ECFR has calculated that the extra spending promised for infrastructure, education, municipalities and pensions amounts to 0.1 per cent of German GDP for each year that the new government can expect to be in power. Most of the additional spending will go on consumption. A new national minimum wage and the first strengthening of trade union rights in decades could push wages up, which might lower Germany’s large current-account surplus. What Germany particularly needs for sustained growth, however, is more investment. On growth-boosting structural reforms in Germany, the coalition agreement says little.

The agreement demands that the EU must finally break the “interdependence between private bank debt and public debt”. It does not promise faster or more wide-ranging steps towards a banking union than had hitherto been proposed by Angela Merkel and Wolfgang Sch√§uble, her finance minister (who will stay in post). The new government insists that shareholders and creditors must be first in line when a bank gets into trouble, and that a new eurozone resolution fund should be paid for by the banks themselves, not taxpayers. Until the new fund has collected enough money, the European Stability Mechanism, the eurozone’s bail-out fund, may be used for bank recapitalisations, but only as a last resort (if bail-ins and national bail-outs are exhausted) and only up to a limit of €60 billion. As expected, Germany does not want its local savings banks included in the banking union, and it still rejects joint European deposit insurance.

Looking beyond the crisis, the coalition agreement puts a lot of emphasis on the need for structural reforms in the eurozone, to increase economic growth rates in a sustainable way. The idea of “reform contracts” between individual euro countries and the “European level” is taken up again. However, there is no explicit commitment to a new eurozone budget to motivate countries that struggle with tough reforms. Instead, the coalition agreement calls for a better use of EU Structural Funds and the European Investment Bank to underpin structural change and modernisation.

The SPD’s influence is visible in a lengthy section about the need to strengthen the “social dimension” of the EU. However, the only tangible measures in this respect are German help for neighbouring countries that want to improve their apprenticeship systems (this started under the last Merkel government) and the drawing-up of an EU social “scoreboard”. This scoreboard (a Commission idea) would be an attempt to feed warning signs of high employment and social pain into the EU’s strengthened fiscal and economic surveillance.

It should not come as a surprise that the coalition agreement largely perpetuates Germany’s euro policies of the last four years. First, when it comes to euro crisis management, Germany has effectively had a grand coalition since 2010. In her last government (a coalition with the liberal FDP), Angela Merkel was faced with a small but persistent anti-bailout rebellion within her own ranks. Therefore, she had to rely on the SPD to pass almost all big euro-related measures in parliament. Therefore, Germany’s euro crisis management was already to some extent a compromise between the CDU/CSU and the SPD.

Second, existing and pending rulings by the powerful constitutional court put clear limits on what any German government can do. The court has ruled that no German government is allowed to create unlimited liabilities for the German taxpayer. The coalition agreement’s reiteration that the new government will not support eurozone debt mutualisation is therefore not surprising.

Third, German voters overwhelmingly support the cautious course that Merkel has charted in the crisis so far. For the SPD to demand a radical departure would have been politically risky – and hard to sell now that most Germans think the worst of the crisis is behind them.

Finally, the past four years have taught German politicians that it would be foolish to lay down either ambitious goals or rigid red lines at a time of crisis. As long as the eurozone looks shaky, German politicians will want to have a large degree of flexibility to react to developments. For some, the fact that the coalition programme is rather vague on EU policy will be disappointing. But this vagueness will allow the new German government to react flexibly if there is renewed instability in the eurozone.

Katinka Barysch is director of political relations at Allianz SE. The views expressed here are her own.

Friday, December 13, 2013

Not flashy but effective: Closer EU co-operation in defence investments

This month, European leaders will discuss how to strengthen EU military co-operation. It is the first time that defence has been on the European Council’s agenda since 2008 and EU officials had hoped the member-states would unveil bold initiatives to stem the deterioration of their armed forces. But governments remain wary of ambitious joint efforts in defence. So the best that can be hoped for is that the Council will endorse EU military reforms which are relatively modest, but easier for member-states to support. One of these should be closer co-operation in regulating private investments in European defence companies – somewhat technical and unspectacular but nonetheless useful.
European governments acknowledge that the case for EU defence collaboration is even stronger today than it was when France and the UK launched the Common Security and Defence Policy (CSDP) fifteen years ago: the US will not always be able or willing to help Europeans stem violence in their neighbourhood, so European states must be capable of upholding regional security alone. And EU countries could save money through closer co-operation amongst their armed forces, and by more integration between their fragmented defence markets.
Over the last decade and a half, however, EU states have often disagreed about which parts of their neighbourhood threatened their security and how to respond. Many governments have been averse to putting their troops in danger. They have also been wary of pooling military capabilities without knowing where or how the equipment would be used. And since the outbreak of the economic crisis, governments have also worried that voters would be angry if they funded large joint equipment programmes when ministries of defence are cutting civilian and military personnel.
As a result, EU defence co-operation has struggled. Member-states have deployed under the EU flag 29 times. But many of the missions have been civilian operations. At times, the security restrictions EU states have imposed on their personnel have hampered operations’ effectiveness. Recently, for example, some of the staff from an EU mission designed to help the Libyan authorities improve border security were evacuated to Malta because of concerns about their safety. 
The EU published a security strategy in 2003 (and updated it in 2008) in which governments committed to tackle global threats together. But member-states have not paid the strategy enough attention or based national defence planning on it. The European Defence Agency (EDA) has helped member-states improve some of their capabilities, by providing helicopter pilot training for example. But EU countries continue to do much of their maintenance and logistics alone. The EU has introduced rules to make it easier for governments to use competition to drive down prices when buying defence equipment, and to reduce the bureaucracy needed to send military equipment to the armed forces of another member-state. But many equipment programmes are still inefficiently duplicated across the EU. For example, according to the European Commission, there are 11 suppliers of frigates in the EU. Even Europe’s largest defence companies remain relatively small, limiting their ability to reduce costs through economies of scale and to be more innovative. The average American aerospace firm is over 20 times bigger than top EU companies. The challenge for the EU is to find the sweet spot between an oligopoly of suppliers who can raise prices at will, and a proliferation of niche manufacturers serving national markets, whose high unit prices reflect short production runs.
If EU governments want to boost their contribution to international security without increasing their defence spending, they will have no choice but to overcome their various aversions to closer European co-operation. As the CER’s Ian Bond argues, member-states ought to base their co-operation on a common security strategy. Otherwise they will continue to disagree on where to deploy, and refuse to own military equipment in common. But as the last 15 years attest, it will take time for EU states to forge a common military culture. So in the meantime, EU governments should exploit those collaborative measures which are relatively easy to introduce.
One example would be harmonising the system for regulating domestic and foreign investments in their defence companies. Large shareholders can influence a firm’s decisions and access sensitive information, so government checks on investors are essential to national security. But rigid and excessive state controls can unnecessarily restrict the ability of European defence firms to access capital. In France, an EU country with particularly cumbersome controls, the government can investigate attempts by foreign investors to acquire more than a 33 per cent stake in any French defence firm. The state also controls its defence industry through golden shares – enabling it to bloc acquisitions of more than 10 per cent of shares in Thales. And the government itself is a large, and sometimes exclusive, shareholder in several defence firms. In contrast in Sweden, where investment safeguards are lighter, the state has no equity or golden shares in Swedish defence companies. According to former US official Jeffrey Bialos, foreign investors need merely to receive the government’s approval in order to buy a Swedish defence firm (and the CEO must remain Swedish).
As the CER has argued in the past, EU states could streamline their controls on investments in defence companies by relying primarily on ministerial committees instead of inflexible rules and government ownership. As these committees draw on advice from officials and independent experts to examine investment requests on a case by case basis, they reduce the risk of blocking investors unnecessarily.
As a safeguard for the interests of other member-states, EU governments could also make it a legal requirement to consult each other before accepting a sizeable domestic or foreign investment in one of their defence firms. An investment in one EU state could adversely affect another country’s security of supply. For example, the German army might rely on radios produced by a company in Sweden. Deployed German troops could be put at risk if new owners of a Swedish firm decided to stop producing such equipment. The six European countries with the largest defence budgets are already committed to consult each other on such matters. And the EDA has been encouraging all EU member-states to do so. But according to EU officials, governments still rarely check with their neighbours. Legally-binding commitments would change that.
In preparation for the European Council, the European Commission has proposed that it should identify shortfalls in national controls on defence industries and explore options for an EU-wide monitoring system for investments. EU heads of state and government should encourage the Commission to pursue its proposal in close co-operation with the EDA, in order to avoid any duplication of efforts.
Not all European governments yet feel ready to jointly own fleets of drones, or rely on other countries to provide minesweepers for the entire EU. But it would be a missed opportunity if leaders did not use the December European Council to improve the workings of the European defence market in ways that do not require large sums of money or even shared security priorities.


Clara Marina O’Donnell is a senior fellow at the Centre for European Reform and a non-resident fellow at the Brookings Institution 

Monday, December 09, 2013

The Eastern Partnership: The road from Vilnius leads to …?

The EU’s Eastern Partnership has run out of steam. It was launched in 2009 with the stated goal of creating "the necessary conditions to accelerate political association and further economic integration” between the EU and its partners. But of the six partners, one (Belarus) was already under EU sanctions in 2009; and one (Azerbaijan) has shown little interest in the partnership – particularly those aspects which would require it to improve its governance and human rights record.

Approaching the Vilnius Eastern Partnership Summit on November 28th-29th, Armenia, which was on the point of initialling an Association Agreement with the EU, succumbed to Russian pressure, put the relationship with the EU on hold and agreed to join the Russian-led Customs Union; and Ukraine announced that it would not sign the Association Agreement which it had initialled in March 2012. Thus only Georgia and Moldova continue to subscribe wholeheartedly to the Eastern Partnership.

Rather than trying to keep all six partner countries in a single framework as they increasingly choose divergent paths, the EU should accept reality and not pretend (as it did in the Vilnius summit declaration) that there has been “considerable progress made in … bringing Eastern European partners closer to the EU”.


Azerbaijan and Belarus show no sign of changing course, so Europe should continue to support hard-pressed civil society organisations there, and regional or cross-border projects which benefit their more democratic neighbours, but nothing else. Armenia, dependent on Russia for gas, support for its ageing nuclear power plant and security against Azerbaijan, has for the moment no alternative to doing Moscow’s bidding, though the EU should do what it can to keep Armenia’s long-term options open.

Ukraine, larger in population than the other five partners combined, has a poor record of reform, but is too important for the EU to turn its back on. The country in its current state may not be much of a geopolitical prize for the EU, but a permanently impoverished and unstable Ukraine on Europe’s borders would be worse.

At the time of writing, large pro-EU demonstrations are continuing in Kyiv, while the authorities are still trying to see whether they can squeeze more attractive terms out of Moscow or Brussels. The ball is now in Yanukovych’s court, but the EU can influence where he hits it. Rightly, the EU has made clear that it is still ready to sign the Association Agreement once Ukraine meets the necessary conditions, including an end to politically motivated prosecutions of opposition leaders. But the EU has done a poor job of explaining the impact and implications of the Association Agreement to Ukrainians, particularly in the Russian-speaking east and south of the country. Commission President Barroso told the media after the Vilnius Summit that the agreement would save Ukrainian exporters 500 million euros per year through cuts in EU import duties and add 6 per cent to its GDP in the longer term, but the EU has done little to publicise this, particularly in Russian-speaking eastern Ukraine. An easy win for the EU delegation in Kyiv would be providing more information in Russian: a handy brochure explaining the main points of the Association Agreement is currently available on the delegation’s website, but only in Ukrainian.

Without such information, many Ukrainians will be left to rely on misleading scare stories from the Russian media about the terrible impact the agreement will have. The EU should at least ensure that Ukrainians know the facts, so that they can make up their own minds about whether their leadership is taking the right decisions for the country.

Tempting though it is for EU leaders to write off the current Ukrainian government and its oligarchic backers, they should step up their political engagement, rather than giving the Russians free rein to threaten, flatter and bribe the Ukrainian elite. Former Polish President Kwasniewski and former European Parliament President Cox visited Kyiv 27 times before the Vilnius Summit with a mandate to secure the release of former Prime Minister and Yanukovych’s rival Yulia Tymoshenko. Though they were ultimately unsuccessful, they should be given an enlarged mandate to use their relationships with government and opposition to move Ukraine towards signature of the Association Agreement. 

Cox and Kwasniewski should not be alone in this effort. Those EU Foreign Ministers who went to Kyiv for the OSCE Ministerial Council meeting on December 5th-6th were right to do so; those who made time to see the opposition as well as the government deserve even more praise. Senior Western visits to Kyiv should continue; the fact that Yanukovych agreed with Barroso to host EU High Representative Catherine Ashton in the week of December 9th is a positive step.

Now that Georgia and Moldova have become the EU’s closest partners in the region, they are likely to face the wrath of Russia, particularly once the Sochi Winter Olympics are out of the way and the Russian authorities no longer have to worry about international protests or boycotts. Tbilisi and Chisinau will need European support. The EU should move as quickly as possible from initialling to signature of the Association Agreements with the two countries (neither is likely to be subject to the kind of political delays which affected Ukraine, whose agreement was initialled in March 2012). Thereafter, it should be generous in provisionally applying the agreements before EU member-states have ratified them, to ensure that Georgia and Moldova can feel the earliest possible benefit from their association.

That may not be enough, however. Moldova in particular looks vulnerable to Russian pressure. It relies on Russian gas and has an unresolved conflict with the separatist Transnistrian region (where Russian troops are stationed). Remittances from Moldovans working in Russia make up almost 10 per cent of GDP. Russian Deputy Prime Minister Dmitry Rogozin has already warned Moldova that it might freeze this winter, and compared the country to a locomotive on a twisty track, which might “lose some of its carriages” (ie Transnistria) on the way to Brussels. In October the Russian Federal Migration Service threatened to expel 190,000 Moldovans working illegally in Russia. In September, Russia banned imports of Moldovan wine on “health grounds” – a serious blow, given that annual wine sales to Russia amount to about 2 per cent of Moldova’s GDP. The fragile coalition government of pro-EU parties faces an election next year; an economic crisis which could be blamed on the current government turning its back on Moscow might help the pro-Russian Communist Party back into power.

The European Commission has already proposed increasing export quotas for Moldovan wine to compensate for the loss of the Russian market. A gas pipeline is being built from Romania to Moldova (but will not be ready this winter). The Commission is proposing to give visa-free access to the Schengen area to Moldovan citizens with biometric passports. But Moldova, already the poorest country in Europe, will need financial and political support for the foreseeable future to buttress its European choice. US Secretary of State John Kerry sent a positive signal by visiting Chisinau on December 4th; EU leaders should follow his example.

Georgia is a little less vulnerable, in part because it re-oriented its economic relations away from Russia after their 2008 war. Even so, remittances from Georgian workers in Russia made up 4 per cent of GDP in 2012. Georgia needs three things from the EU: continued technical and financial assistance; diplomatic support in its unresolved conflict with Russia over the separatist regions of Abkhazia and South Ossetia; and, above all, consistent political engagement.

After ten years of the mercurial pro-Western Mikheil Saakashvili, Georgia now has the politically inexperienced Giorgi Margvelashvili as President. Prime Minister Bidzina Ivanishvili has resigned in favour of his loyal lieutenant, 31 year-old Irakli Garibashvili (who as Interior Minister was responsible for arresting former senior figures in the administration of then-President Saakashvili). Though the new government has restated its commitment to European integration, there have also been hints that it might continue settling scores with its political opponents. Western visitors need to encourage continued political and economic reform, while reminding the new leadership of the effect political prosecutions have had on Ukraine’s European integration prospects and its internal stability.

Not only does the EU need to take a fresh look at its eastern partners; it also needs a comprehensive and clear-sighted review of its approach to Russia. There should be no more illusions that the EU needs only to explain the Eastern Partnership better for Russia to see it as beneficial. It should be clear by now that President Putin and his government have decided that their interests are better served by having weak and dependent autocracies as neighbours than prosperous and independent democracies.

The EU should defend its own interests in stability and prosperity on its borders, not least by action to uphold international trading rules. Georgia, Moldova and Ukraine are all WTO members (as is Russia). Russian actions to block the export of Ukrainian and Moldovan goods to Russia are almost certainly contrary to WTO rules, so either country could invoke the WTO dispute settlement system. The EU would have the right to declare itself a third party to such a dispute, and make submissions to WTO dispute settlement panels in support of its neighbours. If the Eastern Partnership can no longer be “win-win-win” for the EU, its partners and Russia, then at least it should be “win-win” for the EU, Georgia, Moldova and (hopefully) Ukraine.

In the long run, the best way to anchor in Europe those countries that are serious about reform is to look again at offering them an explicit membership perspective, however distant. In present circumstances, there would be no sense in making this offer to all six members of the Eastern Partnership. But Article 49 of the Treaty on European Union states that any European state which respects the principles of liberty, democracy, human rights and the rule of law may apply to become a member of the Union. The Vilnius Summit Declaration avoided referring to this article or describing the eastern partners as European states, merely acknowledging “the European aspirations and the European choice of some partners”. If the EU treats even its most reform-minded and pro-EU neighbours as less than fully European, then it is little surprise if Russia does the same.

Ian Bond is director of foreign policy at the Centre for European Reform.

Thursday, December 05, 2013

David Cameron and EU migration: Nasty, visionary – or just necessary?

David Cameron said last week that Britain will try to limit EU migrants’ access to the UK’s welfare system, within the current rules. His statement comes one month before Bulgarian and Romanian immigrants gain the right to work in Britain and other member-states, and six months before the UK Independence Party may top the poll in the European elections.

Cameron has proposed that no EU migrant living in Britain will be entitled to receive benefits until they are a resident for at least three months. Nationals of other member-states will also start to lose any entitlements they get after being out of work for six months, if they have no genuine chance of finding a job. If they are homeless or begging, they could be expelled. But the UK already qualifies EU migrants' access to benefits with a 'right to reside' and 'habitual residency' test. (The criteria for these tests vary depending on the circumstances of each individual migrant. But, broadly, both are intended to deter welfare tourism by non-workers, especially the newly-arrived.) Healthcare costs incurred by EU migrants for the first three months of residency are supposed to be reclaimed from their home governments. And the long-term unemployed and those who pose a danger to society can already be expelled by the British authorities.

Therefore Cameron must only mean that the UK will interpret the existing rules more strictly and enforce them more rigorously. However, the prime minister also wants to discuss with other EU leaders ways of qualifying the right to free movement in future. When Margaret Thatcher signed up to the 1986 Single European Act, most member-states assumed the free movement of people meant the 'free movement of workers', or migrants with existing job offers, moving between their countries. But the European Court of Justice (ECJ) ruled in the 1991 Antonissen case that the term 'worker' also meant unemployed job-seekers. The judges were perfectly right: no serious labour market can function unless people are free to move around to seek work rather than waiting to be recruited.

The Antonissen decision took on greater significance as the Union enlarged to much poorer regions in 2004 and 2007. This is especially true for Britain which has a universal welfare system where the level of entitlements is not specifically linked to personal contributions, unlike most other European countries. The ruling and the 2004 enlargement prompted the UK to introduce, respectively, its 'right to reside' and 'habitual residency' tests. And there is an extra twist in the shape of the eurozone crisis. Britain – which stood aloof from the single currency and is not responsible for its fate – still functions as a safety valve for the eurozone because large numbers of unemployed workers from its austerity-stricken periphery move there. (It does share this exposure to the crisis with other non-euro members, however, and also benefits greatly from a ‘brain-drain’ of skilled workers from Italy and other euro countries.)

The ECJ has gone on to join free movement rights to the concept of EU citizenship, introduced by the Maastricht treaty in 1992. That has resulted in such rights – including access to healthcare – being extended to the partners and families of EU nationals and, to the great relief of the British in Spain, pensioners. Again, there are good reasons for this. Workers are more likely to move around the EU if they can bring their loved ones with them. And older people who have worked up a pension in one country should be entitled to spend it wherever they like. So Spain’s young unemployed take temporary refuge in Britain, helping to man its economy, and elderly Britons get to retire on Spain’s beaches. This is free movement working well.

But ECJ rulings have also had some unintended effects on national immigration policy. For example, its 2008 Metock decision has led to an increase in fake marriages across Europe whereby foreigners marry EU citizens for money, in order to use their free movement rights in other countries, including work permits, benefits and visa-free travel to the US. (Malta even plans to sell citizenship, and therefore EU migration rights, for €650,000 per head.) The Luxembourg-based Court has staunchly upheld free movement rights in a series of cases, sometimes on what seem like weak premises to non-lawyers. One example is allowing foreigners free movement and residency rights even after their relationship with an EU citizen ends. Rulings like these mean that UK immigration tribunals will rarely expel EU nationals, or those who are or have been dependent on them, if they have already been resident in Britain for two years.

The ECJ is now qualifying its support for free movement in a number of rulings such as the Alopka case last October in which a Togolese national failed to annul a deportation order from Luxembourg despite relying on free movement rights acquired from her children. But the European Commission displayed a political tin-ear during the summer when it chose to take Britain to court over its ‘right to reside’ test. Furthermore, British civil servants worry about open legal questions concerning EU migrants' access to benefits. For example, EU workers living in Britain can receive child benefit for children not resident there. To many, that seems unfair. The British state might even have further legal responsibilities to these children as they grow up, such as offering them loans to attend university.


Such issues could be clarified by updating the EU laws that govern free movement: a 2004 directive on the rights of EU citizens and a 2009 regulation on how member-states co-ordinate their social security arrangements. Some ideas include having a single set of EU benefits available to anyone who uses their right to move around the Union; or finding a way to 'individualise' free movement rights so that only actual residents can benefit from them.

Cameron’s statement on free movement may be intended to manage a ‘nasty’ British tendency to see EU migrants as scroungers or welfare fraudsters. (Most evidence indicates they are overwhelmingly the opposite. See John Springford's CER policy brief here.) But the prime minister has also pointed to a more fundamental problem. EU countries need to create a better legal and administrative infrastructure for free movement that allows them to anticipate and manage certain issues before they become political problems. The alternative is to let the public debate rage on and leave the key questions to the courts.

Hugo Brady is the CER’s Brussels representative and a senior research fellow.