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Monday, July 7, 2008

Eu Administration and economics in may, 08

A rather tedious read, like all the economical stuff. At least for me. The last article is particularly interesting, as well as the first. The others are not exactly just filling, they are interesting, but long. So I encourage you to read them :)
  • Compromise in sight on energy liberalisation
  • Russia's economic rebirth
  • Brussels warns Bulgaria over EU funds mismanagement
  • Speculation rife over next EU Parliament chief
  • EU Parliament under fire for 'lack of transparency'
  • Rethinking the EU budget
And in short-energy liberalisation has moved a step closer to the goal with a new draft proposed to easy the pain of France and Germany. Parliament is preparing for its new functions with the Lisbon Treaty and thinking of its new Chairman-hopefully not Polish(sorry, folks, but anyone who consider gays marriages more important than Europe is not good to me). And in the last article, people are still trying to unchain their hearts from the catch of the French farmers. Unsuccessfully.

Compromise in sight on energy liberalisation

16 May 2008

A compromise deal on how to force more competition onto EU gas and electricity markets is taking shape in Brussels after the European Commission presented a modified text aimed at soothing French and German opposition to "ownership unbundling".


France, Germany and six other member states are leading the resistance to Commission plans that would see large energy firms such as EDF and E.ON forced to split their energy production and transmission businesses - a process known as 'ownership unbundling'.

Together, they tabled an alternative proposal which, they argue, would guarantee a similar result. Called the 'Third Way', the Franco-German alternative would save energy firms from splitting their energy production and transmission businesses (EurActiv 01/02/08).

The draft proposalword , obtained by EurActiv, was unveiled by EU presidency holder Slovenia at a meeting of diplomats (COREPER) on 14 May.

Although unofficial, EU sources said the revised text would go a long way towards accommodating France and Germany, which have threatened to derail the Commission's initial proposal by forming a blocking minority with six other member states in the Council.

The objective, an official said, is now to agree on a "general approach" at the next meeting of EU energy ministers on 6 June which would be formalised at a later stage. "The intention is to find a compromise."

An 'independent' Transmission System Operator (TSO)…

The revised text would allow former state monopolies such as EDF or GDF in France and E.ON or RWE in Germany to retain ownership of their gas and electricity grids. However, they would have to leave their management to an independent Transmission System Operator (TSO) with "effective decision-making rights" over day-to day activities such as network operation and maintenance.

…under close supervision

But in a key concession to France and Germany, the TSO itself would now be subject to close scrutiny by a Supervisory Body "in charge of taking decisions which may have a significant impact on the value of the assets" of the mother company.

Such decisions, the text adds, include in particular "the approval of the annual financial plan, the level of indebtedness of the transmission system operator and the amount of dividends distributed to shareholders."

Crucially, the Supervisory Body would be composed of members appointed in part by the vertically-integrated firm which owns the network. Other members would be appointed by "third party stakeholders" and employee representatives of the TSO but the proportions of each are unspecified at this stage and still up for discussion.

Under a previous compromise textPdf circulated by the Commisison in late April, members of the Supervisory Body would have been nominated chiefly by an independent Trustee with no prior involvement in the mother company for at least five years prior to his appointment (EurActiv 05/05/08). But this paragraph has now been scrapped, to the satisfaction of France and Germany.

Indeed, such drastic supervision would have restrained companies' decision-making capacities to such an extent that it would have risked hitting their stock market valuation, according to one diplomat.

A review clause after five years

A review clause has also been added to the text, requesting the Commission to come forward with a "detailed report" on the application of the directive, five years after it comes into force. The report would outline "the extent to which the unbundling requirements [of the directive] have been successful in ensuring full and effective independence of transmission system operators". However, the draft text leaves the number of years between brackets, meaning it is still up for discussion.

The revised text now appears more acceptable to the group of eight countries opposed to "ownership unbundling", according to a senior diplomat, who was speaking on condition of anonymity. He said the group's position rested on three red lines:

  • That there is no "deconsolidation" of companies' decision-making structures, including on the nomination of supervisory board members and the conditions applicable to raising capital on financial markets.
  • That the agreed options are workable in practice.
  • That there is no discrimination in how the Commission assesses how successful countries have been in fulfilling the directive's aims, taking no pre-emptive stance for or against those that have opted for full ownership unbundling in its review.

"The Franco-German position on this, despite what has been said, has not moved one millimetre," the diplomat commented.

It now remains to be seen what stance the European Parliament will take when it votes on the Commission's proposals in the coming weeks.

In a vote earlier in May, the Parliament's Industry, Research and Energy (ITRE) Committee gave an indication of the Assembly's leaning when it gave its backing to full ownership unbundling, potentially setting the Parliament on a collision course with the Council (EurActiv 07/05/08).

But the vote only concerned the proposal for electricity and there are suggestions that the countries supporting full ownership unbundling will now try to negotiate a differentiated approach where the Franco-German alternative would only apply to gas. But this is likely to open a Pandora's Box in the Council: "What is clear is that, in COREPER, the Presidency and a majority of member states" said they were in favour of treating gas and electricity markets in the same way, according to a Council source.

Meanwhile, some MEPs are predicting that the spirit of compromise will end up prevailing, with a compromise agreement likely to be struck in heated last-minute negotiations. "Now, everyone is taking strong positions and trying to put pressure on the other side, but at the end there is a European logic that normally would work," said Alejo Vidal-Quadras (EPP-ED, Spain), one of the leading MEPs on the dossier.

Speaking to EurActiv in an interview, Vidal-Quadras however suggested that the Franco-German alliance were only delaying the inevitable. source

My comment:Delaying the inevitable, that's what I think too! It's going to happen one way or another. And the changes in the draft are rather obscure to me.

Russia's economic rebirth

16 May 2008
Lúcio Vinhas de Souza, Centre for European Policy Studies (CEPS)

Russian economic recovery is all the more remarkable given the doom and gloom surrounding the 1990s, but this resurgence needs to be upheld by further reforms, argues Lúcio Vinhas de Souza in a CEPS paperback published in May.

This economic revival has made Russia an economic and political power and a country that can no longer be ignored, says de Souza.

Russia's economic performance after the implementation of structural reforms remains impressive, argues de Souza, with a functioning market economy having been established. This means the macroeconomic framework has become more robust than it was in the 1990s, he observes. Despite structural reform slowing down in certain sectors, it has not stopped altogether, the author adds.

De Souza believes the resumption of economic growth in Russia is down to the effects of economic and structural reform, as well as recent high energy prices. For him, the changing nature of the Russian economy can mostly be seen in the way the country has withstood the financial instability which has swept global financial markets.

De Souza is suitably impressed by Russia's economic performance since 1999 compared with similar economies from the Commonwealth of Independent States – which gathers the former Soviet republics – both in terms of GDP and inflation.

However, the author believes Russia needs to step up its reform in the macroeconomic area and create a better investment climate. This, he says, is indispensable in combating the "perennial Russian problem, the need to diversify the economy away from the commodities sector."

Reform of the Russian state institutions and policies must be twinned with what de Souza calls "external anchors for reform". These include the G8, WTO, OECD, the future EU-Russia framework agreement, "EU-Russia deep free-trade agreement" and the EU-Russia sectoral dialogues.

The author supports liberalisation of the energy sector, which is tightly connected to the reform of foreign direct investment legislation in Russia.

Liberalisation of the Russian energy sector can only be established if the EU acts in a consistent and effective manner, claims the author. source

My comment: Haha, like we don't know that already. But let's see what happens with the new Russian president.

Brussels warns Bulgaria over EU funds mismanagement

13 May 2008

Bulgaria may lose some €11bn of EU funding because the European Commission does not trust the country's mechanisms for managing the European money from which it benefits as an EU member, reports.

Corruption and deficiencies in the management of funds by Sofia have prompted Germany and Austria to call for cuts to the funding allocated to Bulgaria, which joined the EU in January 2007. The country's accession treaty does indeed provide for such a sanction in case of mismanagement. The European Commission has already frozen funding under all EU pre-accession aid programmes (Phare, SAPARD and ISPA) in recent months on suspicion of fraud and embezzlement, with anti-fraud office OLAF carrying out several investigations in Bulgaria.

The toughest sanction discussed by EU diplomats is the triggering of article 7 of the Nice Treaty, which amounts to freezing Bulgaria's EU membership, the Bulgarian weekly 'Capital' announced. Then Sofia would lose its voting rights in the EU Council. There has been only one similar sanction in history – against Austria in 2000, over the participation of the far-right party of Joerg Haider in the Austrian government.

But the financial sanction is the more realistic, diplomats said. "At the political level there is large support for the idea of freezing the EU funds until 2013," a German representative said in Sofia.

Trying to buy time, the Bulgarian government announced its intention to create a new agency responsible for control over the EU funds. The new body will be led by the newly appointed Deputy Prime Minister Meglena Plougchieva, exclusively in charge of EU funds.

Another challenge for Plougchieva, who took office on April 22, will be to improve communication between Sofia and Brussels. Plougchieva disclosed that correspondence from Brussels was often ignored by Bulgarian officials. The problem was endemic and a sign of both negligence and corruption, she said.

Danuta Hübner, Commissioner for European Regional Policy, who met Meglena Plugchieva last week in Brussels, said that first important milestone in her future work will be to prepare and deliver good compliance assessment reports in the coming months. The Commissioner stressed the need to improve the handling of public procurement and the management of contracts, her spokesperson told EurActiv.

Enlargement Director General Michael Leigh gave Bulgaria a final deadline of 16 June to prove that it abides by the EU rules while dealing with its funding, the daily 'Dnevnik' wrote. The measures Brussels expects to be implemented by the Sofia authorities include sacking several high ranking officials who have proved to be incapable of working with Brussels.

In June the Commission will publish its final reports on its monitoring of Bulgaria and Romania. Depending on progress, sanctions can be imposed on both countries. source

My comment: Well, unfortunately Brussels is absolutely right to do freeze the money. How could you possibly just ignore the corespondence with EU? While spending its money? That's an absurd!

National parliaments prepare for bigger role in the EU

9 May 2008

Members of parliament from across the EU, meeting in Brdo (Slovenia) on 7-8 May, have begun developing an embryonic strategy to deal with new provisions contained in the EU's Lisbon Treaty that would significantly increase their powers within the EU.

National MPs attending the Conference of Community and European Affairs Committees of Parliaments of the European Union (COSAC) underlined the need to develop novel mechanisms to make use of these new rights and powers.

Indeed, the Lisbon Treaty, due to enter into force in 2009 once it has been ratified by all member states, would give national MPs a stronger voice in the EU policymaking process by granting them the right to raise objections against European Commission legislative proposals - the so-called "yellow and orange card" procedure.

Under this historic new mechanism, national parliaments will be able to send to the presidents of the Commission, the Council and the European Parliament reasoned opinions on whether or not draft legislation complies with the principle of "subsidiarity". This principle prevents the European Union from deciding matters on behalf of national, regional or local authorities unless it adds value.

In this new legislative context, cooperation among national parliaments will be essential. Indeed, a reasoned opinion will have to gather support from at least a third of all EU national parliaments (18 out of the total of 54 chambers in the EU) in order for a proposal to be sent back for review by the Commission (the so-called "yellow card"). To actually strike down a Commission proposal ("orange card"), a simple majority of national parliaments will be required.

Speaking at the conference, Dutch Parliament representative Han ten Broeke noted that with the new Treaty, "national parliaments effectively become EU institutions and as such they need to take responsibility and behave as part of the EU set up".

In order to enhance the subsidiarity process, national parliaments have also called for the European Commission to provide them directly with a weekly list of all new documents it publishes. This is expected to help strengthen mutual dialogue and exchange of views.

But subsidiarity is not all that counts, noted Pierre Lequiller, president of the French National Assembly's Delegation to the European Union. "We need to stop talking about subsidiarity and processes. It is time to really have constructive discussions of substance: how national parliaments can really influence legislation on climate change, energy, defence and the Union for the Mediterranean."

The French Government intends to take leadership role for this "urgently required" approach when it takes over the EU Presidency in July, Lequiller told Euractiv. source

My comment: I liked mostly "National Parliaments are becoming an European institution". Doesn't that sounds amazing? Well, it does to me. Anyway, I so want to see what will happen after the Treaty is ratified. It just have to be good.

Speculation rife over next EU Parliament chief

25 April 2008

Jerzy Buzek, a former Polish prime minister now turned MEP, confirmed his interest in chairing the next Parliament to emerge from the European elections in 2009 but denied reports that a secret arrangement had been struck to put him in the prestigious post.

The president of the European Parliament will hold one of the four key EU positions that will be up for grabs in 2009 after the European elections in June (together with the newly-invented EU President, the President of the European Commission and the High Representative for Foreign Affairs and Security Policy).

The decision is likely to be made as part of a "package deal" among the 27 EU countries, which will also include the other three posts.

Apart from his qualifications, EU heads of state and government will have to take into account the nationality and political affiliation of the candidates. However, it remains to be seen how the balance of power might change in the Parliament after the next elections in June 2009.

Speaking to EurActiv, Buzek said there was "not a bit of truth" in reports by the German daily Handelsblatt on 21 April, reporting that the leaders of the two dominant political groups in Parliament - the centre-right EPP-ED and the Socialist Group - had struck an agreement that will see him succeed the incumbent Hans-Gert Pöttering after the European elections next year.

However, he did not rule out being selected for the job "among several other highly-qualified candidates" and admitted feeling honoured by being mentioned for this high-level position.

Power-sharing deal

The Parliament chief traditionally originates from the political force which comes out strongest in the European elections. However, as part of a power-sharing deal, the job is usually held successively by the centre-right EPP-ED and the Socialists, with a swap taking place at the mid-term of the five-year legislature.

Last time this happened was January 2007, when German conservative Hans-Gert Pöttering succeeded Josep Borrell Fontelles, a Spanish socialist, in the chair. The agreement was concluded because neither of the two major groups had the absolute majority of MEPs (345 members) needed to get a candidate elected.

But the deal was criticised by the ALDE group, the third largest in Parliament. "Liberals and Democrats opposed the deal at the beginning of this mandate between Christian Democrats and Socialists as unnatural," said Graham Watson, a speaker for ALDE. He added that 2007, the 50th year of the signing of the Treaty of Rome, was "an appropriate year to seriously begin this [reform] process".

A President from one of the 'new' member states?

Commenting on the next Parliament chief, Buzek expressed his hope that the Chair be handed to an MEP from one of the new EU member states, making a case for his home country Poland. Although he added that in the end "it is not nationality or political colour that matters but simply personal qualification".

According to Handelsblatt, Buzek – a well-respected figure - received the backing of the German Martin Schulz, the leader of the Socialists in the Parliament, who has himself been traded as potential candidate for the job and never denied his interest.

In exchange for his support, Schulz could hope to succeed Buzek in the second half of the term, the newspaper said, as it is highly unlikely that another German would be accepted to succeed Pöttering.

The smaller parties were, however, alarmed by the report on a prior-election agreement, fearing they could be left on the sideline again. "If this report really turned out to be true, it would reveal a very odd understanding of politics," the German Green MEP Cem Özdemir told EurActiv. source

My comment: Do you notice how the politics of the EU gets bigger and bigger in scale? Because I do! But I don't want a polish anything in one of the 4 positions. Poland is like a hell for me. I mean-telletubies-gays? As much as I hate the show, that's idiotic!

EU Parliament under fire for 'lack of transparency'

16 April 2008

European Ombudsman Nikiforos Diamandouros insisted that the EU institutions become more transparent after demands to strenghten his access to confidential documents were delayed by the two main political groups in the European Parliament.

Presenting the findings of his 2007 annual report yesterday (15 April), Diamandouros expressed "concern" at the "growing number of critical remarks" he had to make to the European institutions last year. A record number of inquiries (28%) concerned "lack of transparency in the EU institutions, including the refusal of information or documents," the report revealed.

One particular example of this problem was highlighted by Diamandouros. Last year, the Ombudsman's office received a complaint from a Maltese journalist whose request for details of certain MEPs' allowances had been rejected by the Parliament on the grounds of data protection.

The affair led to calls for the improvement of the Ombudsman's access to confidential documents, including those relating to MEPs expenses. But a formal request to do that was delayed "following political manoeuvrings" from the centre-right EPP and the Socialist Group in the European Parliament, said Anneli Jäätteenmäki, a liberal MEP from Finland who drafted a report on strengthening the Ombudsman's status.

"If the two largest political groups oppose enhanced transparency arrangements it must be because they have something to hide," said Jäätteenmäki, adding the Ombudsman's annual report "demonstrates once again […] how important it is to strengthen his statute in order that he enjoys a greater degree of independence in the pursuit of his internal enquiries involving the European institutions".

In total, there were 3,211 compaints from citizens, companies, NGOs and other associations received by the Ombudsman in 2007, Diamandouros said. Other types of alleged maladministration included late payments for EU projects, unfairness, abuse of power and unsatisfactory procedures. The Ombudsman highlighted the fact that his office "closed a record number of inquiries in 2007 (348 inquiries), representing a 40% increase compared to 2006".

64% of the inquiries dealt with in 2007 concerned the European Commission, though Diamandouros stressed that "this does not reflect that the Commission has a bad administration". Rather, as the Commission is the main EU institution to make decisions which have a direct impact on citizens, "it is normal that it should be the principal object of citizens' complaints," he said.

A key role of the Ombudsman is to "increase the transparency of the institutions," said Diamandouros, though he was quick to emphasise that he had to be very careful to respect the relationship between transparency and privacy. "Absolute transparency leaves no privacy, while absolute privacy leaves no transparency," he said. source

My comment: Absolutely agree-more transparency is needed. Let's make this a better institution than our national one. I really want a transparent Commission with public access to its decisions, policies and financing. A Democracy!

Rethinking the EU budget

23 April 2008
Daniel Gros, Director, Centre for European Policy Studies (CEPS)

The EU budget is outdated, does not represent current Community needs and should be reformed at its core by addressing the decision-making procedures, argues CEPS Director Daniel Gros.

Despite strong public demand for increased involvement in the fields of education, research and infrastructure, these make up just one-third of Community spending as opposed to the more than 40% spent on agriculture - which is a declining sector, asserts the 3 April paper.

Furthermore, there are greater calls for more attention to be paid to the common foreign policy, defence, security, immigration and citizens' rights, yet budget allocations to these fields are 'negligible', says Gros.

Currently, the budget is a political game used by member states to redistribute money among themselves rather than to achieve common objectives, claims the author. As long as this 'perverse incentive' continues to be the case the budget structure will remain 'impervious to change', with no member state standing up for the general EU interest as the returns of doing so are minimal, he observes.

Gros believes one of the main stumbling blocks is the influence farmers unions have on their governments, adding it will take a brave politician to deny them favourable budgetary transfers received from the CAP. The current multi-year financial perspective (MYFP) is 'a repeat of the past', claims Gros - while any CAP reform is blocked until 2013 due to a 2002 Franco-German agreement.

Gros launches a scathing attack on the CAP, suggesting it does little to facilitate cohesion (as it is mainly rich farmers who benefit) and describing agricultural spending is a 'major distorting factor' for Europe's economy. Gros shows how three member states – Germany, Italy and France – receive approximately half of the CAP budget and thereby about a quarter of the overall EU budget.

If the CAP were to be seriously reformed it would also remove the UK rebate, which Gros argues introduced the principle of 'special treatment' for a member state. The rebate reinforces the view of the budget as a medium of inter-state transfers reflecting member states negotiating strength and not for the benefit of the Union as a whole, he argues.

The author suggests increasing the effectiveness of and spending more on research and development (R&D) in Europe, paricularly as this important growth factor was included in the Lisbon Agenda's emphasis on a 'knowledge society'.

The problems surrounding the latest MYFP show member states are more interested in ironing out net imbalances as they are less inclined to remain net contributors to the EU budget, believes Gros. Meanwhile, enlargement has created more problems as new members draw a greater share of funds from the budget at a time when net contributors want to decrease their input, says Gros - while beneficiaries of Structural Funds want to delay the reduction of funds received.

In comparing the CAP and Structural Funds' actual shares of the EU budget, Gros observes that CAP spending has been more above than below budget in the last 14 years, with Structural Funds receiving on average 8% less than the one-third earmarked for them. Gros therefore suggests a change to the tax regime: not necessarily creating a new tax, but rather "dedicating a share of VAT receipts to the EU budget".

Gros recommends synchronising the MYFP with European Parliamentary elections to make it a main theme in elections and increase voter interest.

He concludes that the re-branded Reform Treaty will only "impose legal clarity, but not much more," criticising the drafters of the treaty for not reforming the budget decision-making mechanism despite having the power to do so. source

My comment: Research and development should be the main goal of Europe. It's the only way to make Europe a competitor to USA! And as for the farmers, I don't see how we can fight them in the World's Food Crisis. People are way to panicked to not be influenced easily. And that won't help to change the idiotic subsidies. Oh, well. Maybe time will heal it, after all.


Anonymous said...

Good Afternoon

Can I link to this post please?

Anonymous said...

Hi, very interesting post, greetings from Greece!


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