Friday, May 30, 2014

The new European Commission: which president, and what priorities?

The EU has probably never faced greater challenges. Chronically slow economic growth, and a euro crisis that is dormant but far from resolved, have undermined support for the EU – helping anti-establishment parties to win 20 per cent of the seats in the European elections. A wave of europhobic sentiment may carry Britain out of the EU, while Russia is becoming a more menacing neighbour.

The EU cannot tackle such problems without a strong European Commission – the body that defines the common interest, helps to forge common policies and polices the rules. Yet many intelligent and serious pro-Europeans want the Commission’s next president to be chosen by a method that is bound to weaken it.

This is the system of Spitzenkandidaten, or designated candidates, promoted by the European Parliament and the main pan-European political parties. They argue that the recent elections gave voters a real choice – between Jean-Claude Juncker, the candidate of the centre-right European Peoples’ Party (EPP), Martin Schulz, the candidate of the Party of European Socialists, and those representing smaller groups. Advocates of this system also claim that it enables people to see a link between the way they vote and the faces running the EU. And because the EPP won the most MEPs (though many fewer than five years ago), they argue, the European Council should bow to the ‘popular will’ and anoint Juncker. However, these arguments suffer from serious flaws.

First, the two leading candidates did not offer voters a real choice. Juncker and Schulz hold similar views, supporting more powers for the EU without wanting to change much in the way that it works. In any case, electors cannot realistically choose between candidates without knowing who they are. Most of those who voted have never heard of Schulz or Juncker, which is not surprising, since they are obscure politicians to most people living outside Brussels.

Second, the idea of Spitzenkandidaten is based on the assumption that if people vote for one face rather than another, policy will shift. But in reality the appointment of Juncker rather than Schulz would make little difference to what the Commission does, even if they held significantly different views: either would be constrained by having to work with a broad coalition of 27 commissioners, from various parties, appointed by national governments. Only the most dynamic of Commission presidents, such as Jacques Delors, have been able to make much difference.

Furthermore, the Commission has little executive power, except in a few areas like competition policy. Most key decisions in the EU are taken by the Council of Ministers. And although the Commission initiates legislation, the Council and the Parliament revise and then have to pass each law. So if advocates of Spitzenkandidaten lead electors to believe that their votes will change EU policy, through determining the Commission president, the result may soon be disillusionment.

A third problem with Spitzenkandidaten is that this idea would make the Commission more party-political, at least in terms of perceptions. A President Juncker would be seen as accountable to the EPP group in the Parliament. That would have serious implications for the Commission’s credibility and legitimacy as a regulator and enforcer of rules. Suppose that the centre-right Spanish government broke eurozone budget rules, and that the Commission treated it softly; the institution would be accused of political bias. Many of the Commission’s tasks require to it remain above party politics.

The fourth and most important reason for the European Council to reject Spitzenkandidaten is that the quality of those running the EU is hugely important. Schulz’s executive experience is limited to being mayor of a small German town. Juncker has considerable political experience, having been prime minister of Luxembourg from 1995 to 2013, but he left office under a minor cloud, having mismanaged a spy scandal. As chairman of the Eurogroup, from 2008 to 2013, he can hardly be blamed for the eurozone crisis. Nevertheless he lacked the clout to stand up to the big member-states, when the eurozone made mistakes, and was out of the loop at many key moments. Jean Pisani-Ferry’s excellent new book, ‘The euro crisis and its aftermath’, reveals that from January 2010 to June 2012, US Treasury Secretary Tim Geithner called the ECB president (whether Jean-Claude Trichet or Mario Draghi) 58 times, Wolfgang Schäuble (Germany’s finance minister) 36 times, Olli Rehn (the EU economics commissioner) 11 times and Juncker just twice.

The televised debates among the presidential candidates generated little interest in most member-states, perhaps because they were between largely unknown and uninspiring figures – the exception being Alexis Tsipras, the far left’s designated candidate, who has some charisma. If the debates had featured not only Tsipras but also, say, Angela Merkel, Silvio Berlusconi, Nicolas Sarkozy and Marine Le Pen – politicians who have made an impact outside their homelands – many millions might have watched.

But the system of Spitzenkandidaten discouraged heavyweight leaders from putting their names forward. Those in office would have had to resign without any certainty of gaining the nomination or winning the presidency. Several plausible candidates for the presidency – some with fresher faces than the designated candidates – held back from seeking nomination. These include Dalia Grybauskaite, Enda Kenny, Christine Lagarde, Fredrik Reinfeldt, Helle Thorning-Schmidt and Donald Tusk, respectively the leaders of Lithuania, Ireland, the IMF, Sweden, Denmark and Poland (other serious contenders, currently out of office, include Finland’s Jyrki Katainen, France’s Pascal Lamy and Italy’s Enrico Letta).

Rather than humouring the Parliament by appointing a designated candidate, the European Council should appoint a strong president. That would strengthen the Commission as a whole. Indeed, that institution’s weakness is one cause of the EU’s travails, and thus, indirectly, of the rise of euroscepticism. The Commission has been poorly led, lacked focus and proposed too many regulations that are badly drafted. It has become too willing to pursue the Parliament’s agenda, thereby damaging its credibility in national capitals.

A strong Commission requires a dynamic and effective president – one who can shake up the institution while retaining the confidence of both the Parliament and the member-states. The Commission’s priorities should include:

* Boosting economic growth. The Commission should propose to extend the single market (especially in services and the digital economy), negotiate more trade deals with other parts of the world, support the best research in the EU and invest in crucial infrastructure like energy transmission. Some of these measures would be unpopular. The president must therefore be astute at building coalitions for change, explaining the benefits and ensuring help for those who may be disadvantaged. The Commission should be more careful not to create impediments to growth: it should improve the impact assessments that it carries out on draft laws, and resist the Parliament when it demands regulations that are unnecessary. In the long run, faster growth would undermine support for populists.

* Restoring the eurozone to health. The euro's difficulties have done much to damage the EU’s overall economic performance. Though the euro crisis has slipped out of the headlines, major problems remain: an ill-conceived focus on austerity that smothers demand; deflationary pressures in Southern Europe that the European Central Bank (ECB) has failed to tackle; barely sustainable levels of public debt in much of Southern Europe; the reluctance of some governments to commit to painful structural economic reforms; and Germany’s unwillingness to generate the domestic demand that would stimulate activity elsewhere in the eurozone. Particularly in the early years of the crisis, the Commission lacked the backbone to stand up to the ECB, Germany and other governments when they pursued harmful policies.

* Encouraging the 28 to forge a common response to a more assertive Russia. The member-states have not reacted in the same way to Russia’s meddling in Ukraine: some worry about their military security, others fear for their energy supplies; some want the EU to prioritise human rights, others believe that engagement assists moderate voices within the Russian system. Despite these disagreements, even the modest EU sanctions adopted so far have hurt market confidence in Russia. In order to maximise Europe’s leverage vis-à-vis Russia, the Commission should work with the European External Action Service and the key member-states to herd the 28 towards a coherent approach. The Commission is developing sensible ideas for improving the EU’s energy security – including boosting energy efficiency, accessing alternative energy sources, building gas and electricity connections between member-states and co-ordinating the member-states’ negotiation of gas contracts with third parties – but will need drive and determination to persuade national governments to adopt them.

* Coping with the British problem. Whichever party wins the next British election, the UK is likely to demand major reforms to the way the EU works. Some member-states will support its efforts. Others will be less enthusiastic, but after the European elections, fewer governments will be willing to say that ‘business as usual’ is acceptable. The Commission president will face a Herculean task: constructing an agenda for reform that helps to keep the UK in the EU, but at the same time is acceptable to 27 other governments. And because there is unlikely to be a new EU treaty in the next few years, EU leaders will find it hard to craft reforms within the existing treaties that look substantive. The appointment of Juncker as Commission president would decrease the chances of keeping the British in the EU, since he (like Schulz) has an antagonistic relationship with them.

The EU treaties are clear: when the European Council chooses the Commission president, it should take into account the European elections; MEPs then have to approve that choice. This means that the president probably has to come from the party – or group of parties – that can muster the largest number of MEPs. The treaties, however, say nothing about Spitzenkandidaten. European leaders should not indulge the Parliament by tolerating its attempted power-grab. The challenges facing Europe are far too serious for its leaders to risk the choice of a weak Commission president. Of the potential candidates from the centre-right, Christine Lagarde is among the strongest (though apparently François Hollande would rather not have her as president). She would bring her experience as a minister and at the IMF, her communications skills and her economic expertise to the job.

Charles Grant is director of the Centre for European Reform.


Charles Clarke said...

I enjoyed your recent piece on the new Commission, with which I completely agreed. However there's one additional argument that I think is worth including, which is this. The idea that a vote for the SPD or PASOK is a vote for Martin Schultz as President of the Commission, or the same for Junker with comparable parties is quite simply nonsense. There was no process whatsoever by which voters across the EU were able to make a choice based on those individuals and so the idea that they, as Commission President candidates, have democratic credibility, and so strengthen the EU, is simply wrong.

Robert Cooper said...

I agreed with everything you wrote.

But maybe I can add a couple of things:

First, were the spitzencandidat system to function as the EP intends, it would make the Commission entirely the creature of EP. This is neither desirable nor what is intended by the Treaty.

Second, I have three further tasks for the President.

i) Enable the EEAS to come closer to its potential by operating as though the Commission and the EEAS were a single organisation serving common European interests. In particular it needs to be recognised that aid often needs to be used so as to achieve political goals - see Ukraine or Myanmar, The CER's ideas on this are sensible.

ii) Shake up the bureaucracy - which in some areas is over staffed, old fashioned, lacks clarity of responsibility. The Commission has a lot of executive responsibility - namely it is responsible for a large budget. Spending decisions are sometimes taken with a view to fulfilling formal requirements rather than getting results.

iii) With 28 MS there is a real need for leadership, vision etc - a point you make in different language. Why does it always have to be a politician? Some business people have the right qualities. (Jean Monnet was never elected to anything).

For the first two of these it would be good if the Commission President (and the High Representative) was given an explicit mandate by the Heads of Government.