Special Newsletter on EU elections

EU Network for
Financial Services
Views from the Capitals
National perspectives on the European Parliamentary
elections of May 2014
Introduction
The Financial Policy Advisers Network is happy to present you with the first edition of its special
newsletter dedicated to the upcoming institutional changes and their impact on financial services
regulation across Europe. Each article has been provided by experts in our network.
Brussels
As the election days get closer, Brussels earns more than ever its title of capital of
Europe - key individuals and election results are at the core of every discussion.
Germany
Given the size of its economy and relative influence in EU policy, Germany’s EU election results will have a critical importance for the future of the EU.
Italy
A real baptism of fire for Matteo Renzi’s government, the elections in Italy will test the
trust of the citizens compared to other political alternatives.
France
In a rather tense national political context, politicians confront different visions for the
European Union while insisting on the need to preserve a French influence.
United Kingdom
With financial services so important to the UK economy the elections will have a big
impact on the UK’s ability to shape EU policy.
Poland
Following the recent government reshuffling, several important figures of the Polish
political scene are now lining up for key EU top jobs
Sweden
As a traditionally more liberal and pro-European country, Sweden is used to playing
moderator, however these elections should see the government be challenged.
Ireland
While shaken by the crisis, Ireland has started its recovery. However, general feeling
towards national politicians and Europe remains ambiguous.
Spain
The financial crisis did not tame the strong pro-European sentiment, which should
dominate once again the elections results.
Page 2
The EU Elections viewed from within the
Brussels Bubble
Mark Foster, Brussels
[email protected]
With less than a month to go until the European Parliament (EP) elections, anticipation amongst Brussels insiders is starting
to reach fever pitch levels. In any other European capital only a limited number of politicians, policymakers and stakeholders
follow with interest European Union (EU) political developments. But inside the Brussels bubble the upcoming institutional
changes are the highlight of the year. And with good reason: the EP elections at the end of May represent the most imminent milestone in a series of key moments which will shape the future direction of EU policy.
Other highlights include: the nomination and election process for the European Commission president (June-July), the
allocation of other top jobs, such as the President of the European Council, the High representative for external affairs and
security policy (June), the establishment of the college of Commissioners and allocation of portfolios (July-August), the
scrutiny of the Commissioners-designate by the newly established EP via the hearings process (September-October) and
the publication of a new Commission multi-annual work programme (December).
The above timeline is based on the premise that all goes smoothly with the nominations/hearings processes, something
which is unlikely to happen based on previous experience. As such, delays might be expected. What’s more, the application for the first time of changes introduced by the Lisbon Treaty are being seen by some as making the outcome of the
EP elections and subsequent input into the top jobs procedure an essential new element. This could see the EP block the
Council’s nomination for Commission President if MEPs feel the ‘appropriate consultations’ haven’t been made to ‘take into
account’ the outcome of the EP elections.
The creation of the eighth directly elected EP will therefore set things in motion. Recent polls suggest the next EP will look
decidedly different from the current one in several, important ways. Firstly, it seems it will be a much closer contest in
terms of who will be the overall “winner” than last time round. The latest polls suggest the European People’s Party (EPP)
will probably win the most seats overall (approx 215 out of 751) but will be closely followed by the Socialist and Democrats
(S&D) with approx 210 seats.
In terms of the other parties the Liberals (ALDE) and Greens both look likely to reduce in size. The ALDE are likely to do
poorly in UK (with Liberal Democrats suffering as minor coalition partner in London) and in Germany (given the recent
German constitutional court removing the threshold for obtaining seats, combined with the poor performance by FDP at
the last federal elections at the end of 2013). These are currently the biggest ALDE delegations and thus ALDE could go
down from currently approx 80 to approx 50-60 MEPs. Similarly, the Greens (currently approx 60 MEPs) are also expected
to do poorly compared to last time in their two main delegations France and Germany. This could see the group reduce to
approx 35-45 MEPs in the new EP.
The European Conservative and Reformist party (ECR – where the British Conservatives sit) is also likely to reduce in size
and there are even questions as to whether they will meet the thresholds to formally form a group (25 MEPs from 7 Member States). On the fringes the united left (GUE) is likely to score well, particularly in southern Europe, with its anti-austerity
message and could increase from its current 35 members to around 50-55 MEPs. Finally, there’s a sense that EFD (led
by UKIP) and a new far right group (led by Le Pen) will do well. Some predictions suggest there might be as many as 150
nationalist/extreme MEPs. Our feeling is that this prediction will not fully materialize as the polls suggest, however we believe they will have sufficient numbers to create a far right group, should they be willing/able to put aside their differences
to obtain a stronger EU platform.
In short, the new EP will be dominated in terms of a functioning majority by the EPP and S&D working together. Policy might
be indirectly influenced by the extremes whilst the role for the other smaller parties will be more challenging in the new set
up than was the case in this EP. The final result will be closely evaluated by EU leaders at an extraordinary meeting directly
after the elections. This represents the starting gun for the ensuing negotiations on the top jobs, a process which will last
much of the rest of this year and the outcome of which will shape the direction of EU policy for the coming five years.
Page 3
Germany: National choices likely to define the
future of Europe
Bernd Brabänder, Berlin
[email protected]
The campaigning for the European election has just begun to heat up, but it can already be said today that the German
population, in light of the crisis, is aware that the choices made in this election will set the course for the political and economic development of Europe and thus for their own economic vitality. Despite strong criticism of certain measures taken
to save the Euro and a feared immigration of the poor to take advantage of social welfare systems in the richer countries,
the vast majority of Germans are pro-European Union - the only Eurosceptic party, “Alternative for Germany” (Alternative für
Deutschland [AfD]), accounts for roughly 6% of the expected vote and thus will not play a major role in Brussels.
The Christian Democratic Union and the Social Democratic Party of Germany (SPD) have been governing in a coalition since
the end of 2013 - in the European elections they are campaigning against each other. The CDU has nominated the former
state premier of Lower Saxony David McAllister, who also holds British citizenship, as the top German candidate; he is expected to play an important role within the EPP contingent. The focus of his campaign is on the economy and finances, and
includes the preservation of the permanent firewall of the European Stability Mechanism (ESM) and the concept of helping
Euro countries in trouble to help themselves, while still firmly rejecting mutualisation of debt. The leading candidate of the
SPD is the well-known president of the European Parliament Martin Schulz, who as a pan-European candidate of the Social
Democrats has a credible chance of becoming the next president of the European Commission. He is challenging both
right- and left-wing populists. Important goals include the separation of investment and commercial banks, the revocation
of banking licenses for banks who actively assist in tax fraud, pan-European minimum wages and greater influence and
power for the European Parliament.
Although Martin Schulz and Chancellor Merkel get along well with each other there is not much room for a unified approach
of the Grand Coalition regarding the position of the Commission President. While the Social Democrats will stand in for
Schulz, CDU and CSU will champion Jean-Claude Juncker; Recent opinion polls show that the Social Democrats will likely see better results this time than after the EU election campaign 2009 (27/28% compared to 20,8%) and in the federal
elections of last year (25,7%), but CDU and CSU are clearly the front runners with an expected outcome of around 40%
of the votes. Much depends on the turnout of voters which is expected to be rather low – an aspect that usually helps the
conservative CDU/CSU as they manage to mobilize there voters better than the Social Democrats in EU elections. The lukewarm reaction of Chancellor Merkel to the joint declaration of the European Parliament stating that only one of the two top
candidates, either Schulz or Juncker, should take the position of Commission President not only stands in sharp contrast
to that of Social democrat leader Sigmar Gabriel but gives the impression that Germany may look for other ways out, if the
opportunity arises in the member states’ horse trading over top EU jobs.
No break in regulation efforts!
Since 2008, the German federal government has been pursuing an ambitious programme of regulation to enhance the
functionality of the capital markets, aimed at minimising system risks and false incentives in the future. Demands from capital
market participants for a pause in the efforts on regulation were forcefully rejected by Finance Minister Wolfgang Schäuble.
This also applies to EU financial market regulation, which in his opinion needs to be rapidly advanced.
The list of expectations for EU regulation is long. One important issue is the separation of perceived higher-risk banking
activities from deposit-taking and other lending operations. Germany already set a precedent in 2013 with the Act on the
Separation of Risks and Recovery and Resolution Planning for Credit Institutions, which Minister Schäuble believes could
function as a model for a European legislation implementing the Liikanen recommendations. Germany is also urging the European Commission to draft a proposal as quickly as possible specifying the details of the bank levy to finance the European
fund for liquidating failing banks. Moreover, the regulation of shadow banks is to be tightened so that the same regulatory
framework applies to them as to the classic banking sector for identical operations and identical risks. Regarding the credit
rating agencies regulation, Germany is aiming for a reduction of statutory provisions requiring the involvement of the three
big rating agencies, as well as a reduction in the significance of external ratings. At the same time, the founding of European
rating agencies will be encouraged. Criminal law and the law on regulatory offenses, which in the view of the German federal
government are not effective enough in the financial markets, should likewise be tightened. Germany will campaign for the
inclusion of strict provisions in the EU legal frameworks that raise the requirements for fiscal sanctions to an “appropriate”
level and provide for the imposition of painful sanctions against those companies that violate regulatory standards.
Finally, the federal government is advocating for the introduction of a financial transaction tax in Europe. As part of the
enhanced cooperation, Germany and France are seen to be keeping together the group of 11 countries in planning a
corresponding tax with a broad assessment base and a low tax rate. The design of the tax is intended to avoid negative
consequences for small investors, retirement pension instruments and the real economy.
Page 4
Italy: EU elections to put to test a newly
elected government
Claudia Pomposo, Rome
[email protected]
These upcoming European elections represent a crucial vote, enriched by the multifaceted challenges they represent. It
will not only stand as a contest between the three main political leaders (Renzi – Democratic Party, Berlusconi – Forza Italia
and Grillo – 5 Star Movement) of the moment, but also as a referendum on how the former Mayor of Florence’s political
consensus has held on after the first weeks of government.
The elections will see Mr. Berlusconi forced in a marginal role, for the first time after nearly 20 years of presence in the
electoral campaigns. After being convicted for tax fraud, Berlusconi has started to serve his sentence by doing community
service. Forza Italia and Centre-right as a whole seem to generally be impaired by the lack of cohesiveness and the absence of a leader. In addition, the European elections could represent an informal referendum on the Euro and on Europe
in general - Beppe Grillo’s 5 Star Movement has strong positions against both the euro and the EU, as much as a renewed
Forza Italia does. These protest positions are fueled by an ever growing dissent on the European Union austerity approach.
For Matteo Renzi this will be the first real electoral challenge as Prime Minister and Democratic Party Leader. One month
before the test of European elections, the Democratic Party is expected to gather 32% of voting preferences, thanks to
consensus gathered around Renzi. Currently, the Democratic Party alone overtakes by several points the Centre-right
coalition formed ahead of the elections (composed of Forza Italia, Nuovo Centro and Fratelli d’Italia for the EPP). It has to
be noticed that Democratic Party’s electoral symbol does not include the name of its leader - some analysts say this could
negatively impact on its performance, as much of the recent success could also be attributed to Renzi’s charismatic figure.
According to the current election polls (see below for illustration) the S&D group, where the Democratic Party sits, could get
up to 29 seats, whereas the European People’s Party could win 21 seats. Among other political groups, in Italy as well as
in the rest of the EU, a substantial number of votes could enlarge the Non-attached Members group, which would include
MEPs of the 5 Star Movement of Beppe Grillo. Currently the 5 Star Movement is decreasing as main anti-European movement in Italy (24.4%). With regard to the anti-Euro sentiment, a poll of June 2011 reported that only 18% of Italians were
at that time in favor of giving up the Euro. Less than 12 months later, that rate was increasing and climbed up to a striking
40%. With the 2014 European elections coming up, the percentage has decreased again and is now at around 33% of
people in favor to a return to the Lira.
In terms of public figures, the most important candidates running for a seat in the European Parliament are
Antonio Tajani (FI, EPP), Vice President of the European
Commission; Renato Brunetta (FI, EPP), economist and
former Italian Minister for Public administration and Innovation; Gianni Pittella MEP (PD, S&D), Vice President
of the European Parliament. Regarding the possible
candidates for the European Commissioner position,
the government has not yet chosen, but the two likely
front-runners are Massimo d’Alema, former Prime Minister and Foreign Affairs Minister, and Enrico Letta, former Prime Minister. Paolo De Castro, socialist MEP, is
seen as the outsider
Regarding key economic priorities, after presenting macro-economic targets characterised by fiscal rigour, the Economy
Minister Pier Carlo Padoan said that Italy would make of their review of the EU’s budget rules a key objective of its six-month
European Union Presidency. According to the document presented, banks will have to pay higher tax rate on their revalued
stakes in the Central bank. Furthermore the Prime Minister announced the publication of a decree that increases tax on
capital gain at 26% in order to reduce income tax on low earners.
In terms of financial servicest the Italian Presidency is likely to prioritise the following dossiers: the Bank Structural reform,
where important divergences between Member States already exist; the Financial Transaction Tax, where Italy’s experience with its national tax could help move the discussions forward; the Payment Services Directive, with the clear aim to
reach an agreement; and the Information accompanying transfers of fund Regulation; In addition, the Presidency intends
to progress on the European Long-Term investment funds, MMFs and benchmarks dossiers, which are all currently under
discussion. Finally the Presidency will is expect to follow up closely the implementation of the Banking Union.
Source: PollWatch 2014
Page 5
France: The challenge of fulfilling campaign
promises while restoring trust in the EU
Thaima Samman, Paris
[email protected]
“My true opponent has no name, no face, no party, it will never submit its candidacy, it will never be elected, and yet, it
governs. My opponent is the world of finance”. Those words, pronounced in January 2012 by the then Socialist candidate
to the presidential election François Hollande triggered a wave of anxiety among financial markets participants. Two years
later, this is a perfect illustration of the existing gap between the political statements and the concrete measures taken by
the French decision makers. While the first part of François Hollande’s mandate has indeed included a few initiatives to
regulate financial markets, their result and the general approach to financial issues have actually been quite pragmatic, in
a context where the financing of the economy and the attractiveness of the Paris financial center are crucial objectives.
Of course, topics such as the Financial Transaction Tax have been given a very vocal political impetus, but the reality of
the negotiations is different, and the final compromises are actually based on a variety of influences, one of them being the
very strong – and very connected to the public sphere – French banking sector, who has been vocal previously on other
EU regulations either in support (e.g. for the Banking Union) or in opposition (e.g. against the Banking Structural Reform).
Political objectives are often mitigated by market realities, as shown by the acknowledged impact of the French FTT on
the volumes traded on exchanges (-10%) and by the “soft” Banking Reform adopted in July 2013. The priority has now
shifted from regulating financial markets to finding the right balance allowing these markets, along with banks, to provide
the necessary funding to the French economy.
From an institutional point of view, the “historical debacle” endured by the governing majority at the March municipal
elections has shattered its traditional strong local presence – the keystone of its political power – and prompted a government’s reshuffling. The new team in place, starting with a Prime Minister known for his pro-market positions, confirms the
“social-liberal” (i.e. free-market) turn announced by President François Hollande last January, and will have the difficult task
to lead the battle for the European elections, which are expected to see an important rise of the far-right and anti-European
party, Front National.
Largely pro-Europe but yet regularly critical about the institutions, the Socialist Party maintains an ambiguous relationship
with the EU. François Hollande made a strong case for Europe in his January address to the nation, and he is now directly
supervising the cross-ministerial division coordinating the French European policy. But the newly appointed Minister in
charge of European Affairs, Harlem Désir, is a mere Junior Minister, and not a heavyweight in this field. Moreover, EU topics
as well as the really hardworking MEPs, such as Sylvie Goulard (ALDE), Jean-Paul Gauzès (EPP) or Pervenche Bérès (S&D)
receive little exposure, not to mention little recognition at the national level. The first two, active members of the ECON
Committee and often cited among the most influential MEPs, stand good chances of being reelected.
Since his eviction from the Government in April, the former Minister of Economy and Finance Pierre Moscovici claims his
legitimacy for a Commissioner position, but other leading figures position themselves, such as Elisabeth Guigou, former
Minister of Justice. The current Commissioner for Internal Market, Michel Barnier, failed to obtain the EPP’s nomination
for the Commission’s presidency, but conceivably could yet reappear on the stage as a compromise candidate in case of
disagreement between the EP and the Council. As a major member of the EU, France will clearly aim at securing a powerful position in the future European Commission, however, in addition to the fact that this is not a priority for a Government
pretty challenged on the national scene, France is also not in the best position currently to dictate the attribution of the
Commission’s top jobs. Internal discussions are ongoing on who will be the candidate, which is likely to impact the portfolio
that would be granted - Pierre Moscovici is already positioning himself for an economic portfolio in the future Commission,
whereas Elisabeth Guigou could rather favor the Trade or Justice portfolios.
The same ambiguity exists with regards to the French people’s mindset about the EU, as different surveys reveal different
states of mind. The Pew Research Centre survey published in May 2013 showed that France was experiencing the sharpest decline among its EU counterparts in terms of the population’s support for the European project. But the EU Barometer
conducted around the same time showed that France did not differ markedly from its western counterparts on the way the
EU is perceived. French citizens appear attached to the idea of the European Union and concrete realizations such as the
Erasmus program and freedom of circulation. For half of them, the EU still symbolizes peace.
From an invisible political opponent, the finance world is turning into a rather visible – but also legitimate – interlocutor for
the French public authorities, eager to establish a long-term, mutually beneficial relationship, based on clear principles. It
remains to be seen whether and how the expected rise of the far-right influence at the EU level will weigh on this pragmatic
approach.
Page 6
Facts and Figures: predictions on the composition of the
EP and key Commission candidates
Latest predictions for the composition of the
European Parliament in percentage of seats
Source: European Parliament, April 2014
Commission top job: Official contenders from
transnational parties
Jean-Claude Juncker
EPP
Martin Schulz
PES
Guy Verhofstadt
ALDE
José Bové
Greens/EFA
Ska Keller
Greens/EFA
Alexis Tsipras
GUE/NGL
Photo credit: Flickr, Twitter, ALDE Group, Green Group, Facebook, Alexis Tsipras website
Page 7
UK: Ever present in the background remains
the prospect of an in/out EU referendum
Chris Pond, London
[email protected]
There is very considerable antipathy in the UK towards the EU institutions, although recent opinion polls suggest that most
British people favour remaining within the European Union. Those favouring staying in are divided between those content
with the status quo, and those (the larger number) who favour a re-negotiation of the UK relationship, including some repatriation of powers.
The UK is currently governed by a coalition made up of a dominant Conservative Party and a minority Liberal Democrat
partner. Britain is not used to Coalition government, for which its electoral system does not generally accommodate. This
is an uneasy coalition, becoming more fractious as the General Election of May 2015 approaches. In the run-up to that
election each party is seeking to distance themselves in the public’s perception from their partnership with the other.
The Conservative party in general is being pulled to the political right by elements within its own party for fear of an increasingly attractive anti-EU United Kingdom Independence Party (UKIP). By contrast, the pro-European Liberal Democrats are
being pulled increasingly to the Left, seeking a political niche of being the sole truly pro EU UK mainstream political party.
Many Conservative MPs fear that they will lose support and votes to UKIP, whose stances on Europe and immigration are
seen to appeal to many traditional, rural Conservative voters. In a European context the British Conservative Party is already considered to be further to the right than most centre right/Christian Democrat parties in Europe. This was illustrated
by its self-imposed decision to pull out of the main and largest centre-right grouping in the European Parliament, the EPP,
at the start of the current European parliamentary term in 2009
The Conservatives are committed to an ‘in-out’ referendum in 2017, should they win the national election in 2015. If he
wins, incumbent Conservative Prime Minister David Cameron has promised to negotiate with the EU for ‘reforms’, so far
vaguely specified. His intention is thought to be to secure reform in Europe which would enable him to recommend a
positive vote in the referendum for this new relationship. The main opposition, the Labour Party, led by the enthusiastically
pro-European Ed Miliband, has said that it will only call such a referendum if there were a significant further transfer of
powers from Britain to the EU in the future.
Despite a generally favourable climate for business in the UK, long term investment decisions are overshadowed by considerable electoral uncertainty in the coming 12 months (European and general elections). The latest polls for the European
Parliament elections predict the present Coalition partners will be punished for austerity measures. UK polling suggests the
Conservatives would decrease from their current 27 MEPs to 18, whilst their junior coalition partners would suffer an even
larger loss proportionately falling from 12 to 3 MEPs. Labour looks likely to win, doubling their contingent of MEPs from 13
to 26, whilst UKIP are expected to perform strongly, increasing their representation from 8 to 19 MEPs. Were this results
to be confirmed, the Conservative led government would be the clear losers, making UK influence within the new EP even
more challenging than is currently the case.
Regarding the makeup of the new Parliament, especially the ECON Committee, there are several influential British MEPs
that will not be returning (e.g. Bowles, McCarthy and Skinner), meaning that there will be a lack of experienced MEPs
with an economic background. It is also next to impossible that a UK MEP would secure the ECON chairmanship this
time round. From the returning MEPs, some have already been active in ECON activities as substitutes and may seek to
remain so (for example Labour MEP Catherine Stihler) this time as full members. Other prominent MEPs, like Syed Kamall,
have indicated that they don’t intend to focus on economic affairs. However, Neena Gill, a former MEP with an interest in
economic and financial issues, will almost certainly be returning to the Parliament after a spell in business and given the
enlarged Labour delegation, she might be well placed, should she wish, to join the ECON committee.
There is still no clarity on who would be possible UK candidates for Commission posts. The only long standing name being
mentioned is Andrew Mitchell. Other potential candidates include:
• Andrew Lansley MP, Leader of the House of Commons, previous Health Secretary and currently the bookies favourite,
• Andrew Tyrie MP, Chair of the Treasury Select Committee
• Theresa Villiers MP, Secretary of State for Northern Ireland and former MEP Rapporteur on MIFID I).
In terms of what role for the UK in the next Commission, it seems highly unlikely that the UK will get a top economic
portfolio, despite this being a key policy area for the UK. The most likely Commission portfolios where the UK has strong
credentials to vie for a top role could be around Competition or Trade.
Irrespective of the portfolio obtained, the most important issues for the UK Commissioner on the economic/financial sector
to be actively influencing – through the Commission as well as the Parliament - will be bank structural reform, benchmarks,
FTT and level 2 implementation (CRD IV, RRD, MiFID II).
Page 8
Poland: A new government facing internal
divergences on Europe and the Eurozone
Katarzyna Urbanksa, Warsaw
[email protected]
The second Donald Tusk government was formed in November 2011 after the Civic Platform (PO) had won the elections.
It is a coalition government of the Civic Platform and the Polish People’s Party (PSL). The coalition has remained in power
continuously since 2007, when PO had won the parliamentary elections for the first time.
Both the Civic Platform (PO) and the Polish People’s Party (PSL) are members of the European People’s Party (EPP). Initially, Tusk’s government embraced a free-market approach, fiscal conservatism and liberal stance on social issues. More
recently, however, this liberal platform drifted towards a bigger role for the state in economic policies, e.g. by enforcing a
transfer of assets managed by private pension funds to the state-managed social welfare authority. Ministries, which are
considered critical from the standpoint of the financial industry, are led by PO appointees.
In November 2013, PM Tusk introduced his long-expected Cabinet reshuffle. As a result, Mateusz Szczurek, previously the
chief economist of ING Poland, replaced Jan-Vincent Rostowski as the Minister of Finance. Szczurek’s appointment came
as a surprise after a number of high-profile economists refused to succeed Rostowski. Rostowski – in charge of the Ministry of Finance in 2007-2013 – is running for the European Parliament, leading the PO’s list in Kujawsko-Pomorskie province.
In the first 100 days in office, Minister Szczurek focused on a reset of financial relations with Brussels, as the European
Commission kept accusing Poland of implementing insufficient austerity measures. He tightened cooperation with the
Directorate General for Economic and Financial Affairs (DG ECFIN) and set the following agenda:
• Construction of the first budget (2015), consistent with the newly-introduced public expenditure rules;
• Tightening budgetary expenses, in order for Poland to be released from the EU’s excessive deficit procedure (the
European Commission recommended additional reforms and further savings of at least 0.5% of GDP by 2015);
• Sealing loopholes in the tax system, including: an introduction of regulations preventing circumvention of the Taxation Code in Poland, an improvement of VAT collection and an improvement of co-operation with tax authorities
from other EU countries.
There is a split within the Government on the issue of the euro zone. The Ministry of Finance claims that a rapid entry would
harm the competitiveness of the Polish economy. Minister of Foreign Affairs Radek Sikorski is concerned that without the
euro Poland will fall out of the EU decision-making circle. Once the country has fulfilled the technical criteria necessary
to enter the euro zone, politicians are then to decide whether or not Poland will join the club. According to the Ministry
of Finance, the public sector deficit will fall below 3% of GDP by 2016. In that case, Poland would be eligible to enter the
ERM2 in 2015. The debate on the adoption of single currency is being affected by the recent crisis in Ukraine. PM Tusk expressed an opinion that Poland’s entry into the euro zone would not be safe for the country right now. President Bronislaw
Komorowski decided to delay his position on this issue to 2015.
The Civic Platform politicians fear a low turnout in the EU elections. A CBOS poll in February 2014 showed that Poles do not
consider the EU elections important. Only 36% of respondents eligible to vote declared that they will cast their votes. The
turnout in the 2009 EU elections was a mere 25%. This is interesting given that the Poles are generally Euro-enthusiasts
This is part of a general trend of a declining sense of importance of any elections to representative institutions.
Two major factions in Poland – PO and opposition PiS (Law and Justice) – are running head-to-head. In an opinion poll
published on 14 March, PiS received 32% support (22 seats) and PO – 29% (19). Following are the Democratic Left Alliance
(SLD) gaining 10% (7), and the current junior coalition party PSL with 5% (3).
The following candidates are in our view likely to join the European Parliament after the elections: Janusz Lewandowski
(PO), former EU Commissioner for Budget; Dariusz Rosati (PO), current Chairman of the Parliamentary Committee for
Public Finances, former Minister of Foreign Affairs and former member of the Monetary Policy Council; Jan Vincent-Rostowski (PO), former longtime Finance Minister in the Tusk government; Michał Boni (PO), former chief advisor to PM Tusk
and former Minister of Administration; Barbara Kudrycka (PO), former Minister of Science and Higher Education in the Tusk
government; Krystyna Szumilas (PO), former Minister of Education in the Tusk government; and Bogdan Zdrojewski (PO),
the current Minister of Culture and former longtime mayor of Wroclaw.
Jan Vincent-Rostowski is often mentioned as a candidate for a Commissioner. Dariusz Rosati’s first priority is to be member of the ECON committee. His second choice is to join the Foreign Affairs Committee. His ambition is to become chairperson, or at least vice-chair, of the ECON committee. This is however uncertain, as he might contend for this position with
Jan Vincent Rostowski, former minister of finance, who might as well consider a high level position in the ECON committee.
Page 9
Sweden: European elections to serve as a
sanctioning tool towards the government?
Göran Riegnell, Stockholm
[email protected]
The current Swedish government was formed after the 2006 elections by the “Alliance for Sweden”, a coalition of four centre-right parties, headed by Prime Minister Fredrik Reinfeldt (Moderate or conservative Party). The Alliance government was
re-elected as a minority government in 2010. It lost its majority due to the entry into Parliament by a new party, the Sweden
Democrats, a populist, anti-immigration and anti-EU party which is shunned by all other parties.
The current sentiment in Sweden is anti-government. Opinion polls predict a defeat for the government in the next general
elections in mid-September this year. The opposition, the Social Democrats, the Greens and the Left Party (populist/socialist), have majority support, which, however, is likely to be reduced as the elections move closer. The Sweden Democrats
might again hold the balance in Parliament. A centre-left government might not be easy to form, as the three parties have
different positions in key policy areas such as national defence, economic growth, balancing of the budget and the attitude
towards the EU.
Polls of the public’s attitude to Sweden’s EU membership show that around 50 % are positive, and 20 to 30 % are negative.
Those undecided tend to increase at the expense of those against the membership. Sentiments are still massively negative
to joining the Euro, with about 75 % against and some 15 % in favour.
When it comes to Sweden status within the European Union, its position outside the Euro zone limits
Sweden’s involvement in a number of the ongoing
projects relating to the financial institutions. A leading strategy of Sweden’s very strong Finance Minister, Anders Borg (Moderate), has been for Sweden to be able to stay outside a number of the new
structures aimed at coming to grips with the financial crisis, such as the Banking Union, while being
consulted and not isolated.
Source: PollWatch 2014
While supporting in a general sense the financial regulation initiatives following the financial crisis, Sweden has had a tendency to hold back on the most
ambitious moves. However, once new regulation
has been enacted, Sweden is a loyal EU member
and quick to implement, also those which Sweden
has been against, such as some of the Corporate
Governance aspects of CRD IV.
Furthermore it is interesting to note that influential MEP Gunnar Hökmark (EPP), who has been ECON rapporteur for the
Bank recovery and Resolution Directive, recently said that a moratorium for further financial legislation should be declared in
the EU; it is time to implement and evaluate. He also called for a rejection of the Liikanen proposals. There is considerable
sympathy in Sweden for this position.
In the Swedish election to the European Parliament, usually a joker card turns up. In 2009 the Pirate Party gathered many
voters, especially the young. In 2014, the Pirate Party however does not seem to retain its seats. New entrants will likely be
the Sweden Democrats, who are already discussing their EP affiliation with parties like the French Front National and the
Free Democrats of Austria. Opinion polls made in February show considerable gains in relation to 2009 for S&D and GUE/
NGL, a slight gain for EPP, and losses for ALDE and the Greens/EFA.
There has been quite limited discussion about Swedish priorities for EU top jobs. It is taken for granted that the Commissioner will be chosen from the Alliance parties. In a similar way it has been taken for granted by some (esp. in ALDE circles)
that current Home Affairs Commissioner Cecilia Malmström will continue.
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Ireland: A recovering country now focusing
on reestablishing its reputation in the EU
Jacqueline Hall, Dublin
[email protected]
The current government has been in place since March 2011, and is a coalition of Fine Gael (EPP Grouping) and the Labour
Party (S&D Grouping). Elected with a significant majority, the key focus of the Government has been on economic recovery,
complying with and exiting the bailout programme negotiated with the Troika (IMF, ECB and the EU) and focusing on a recovery of Ireland’s reputation within the financial markets. The inward investment element of the economy remains buoyant,
and there are modest indications of a recovery in the commercial and residential property market in some areas.
The upcoming EU elections will coincide with elections to every local authority in the country. Recent domestic political
controversies, together with successive years of austerity budgets, a cutback in public expenditure and the introduction of
new taxes and levies, have had a negative impact on the popularity and standing of the coalition government. It is likely
that this will translate into a backlash against Government party candidates, but is likely to have more of an impact on the
local rather than European elections.
At a general level, traditionally there has been a strong pro-Europe sentiment attitude in Ireland. During the period of the
bailout programme and its aftermath, those with a more left-leaning perspective cast the blame on Europe for the austerity
measures, and their direct impact on communities. However, a general sense of pragmatism prevails, acknowledging the
value of the support from the EU and other institutions in facilitating economic recovery. As the campaign evolves over the
coming weeks, it will be interesting to see if this is reflected in the rhetoric of the various candidates.
Within the EU, Ireland’s position and credibility has been restored over the past three years. On fiscal policy, the Government
has stated its absolute determination that Ireland should be allowed to retain its 12.5 % corporation tax rate. In response
to the focus on the rates of corporation tax paid by multinational companies in a number of EU states, the Government has
emphatically stated that it is working with the OECD on international taxation initiatives, including Base Erosion and Profit
Shifting (BEPS).
The Central Bank has acknowledged, “The regulatory agenda of the Central Bank is driven by Europe”. Agreement on the
Single Supervisory Mechanism (SSM) was reached under the Irish Presidency of the EU in the first six months of 2013.
Five credit institutions in Ireland will be subject to the Comprehensive Assessment process in advance of the commencement of the SSM on 4 November 2014. In addition, a process is underway to identify the necessary legislative changes at
a domestic level to “accommodate and facilitate the new structure of prudential supervision”. The Central Bank will retain
responsibility for the supervision of all credit institutions with regard to their compliance with non-prudential rules, including
anti-money laundering and consumer protection.
On the basis of media speculation, the leading contender for the role of Ireland’s Commissioner appears to be Phil Hogan, TD (Teachta Dala), the current Minister for the Environment,
Community & Local Government. Other potential contenders are current Ireland East MEP,
Mairead McGuinness, and Minister for Agriculture, Marine & Food, Simon Coveney TD. Ireland
currently holds the Research and Innovation Portfolio - given the importance of agriculture and
the agrifood sector within the Irish economy, there have been calls from that sector for Ireland
to seek the Agriculture brief.
For the European Parliament elections, there are three electoral constituencies for the election
of 11 members to the European Parliament. There are a total of 28 candidates – from the
Phil Hogan, TD
mainstream parties as well as from Sinn Fein, the Green Party and a number of independents.
Environment, Community and
Given the “midterm” nature of this election, it is difficult to predict the outcome, but it was
Local Government Minister
expected that Sinn Fein and Fianna Fail would poll well at the expense of the candidates from
the coalition parties, but the recent arrest and detention of Sinn Fein party leader Gerry Adams, TD, may have an impact on
their performance at the polls.
Photo credit: European Parliament, Fine Gael
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Spain: A pro-EU country addressing the
long-lasting impact of the crisis
Eugenio Martinez Bravo, Madrid
[email protected]
Since Spain joined the European Economic Community (EEC) in 1986, a pro-European sentiment has prevailed amongst
the great majority of the Spanish population. The financial crisis and the adoption of austerity measures in the wake of the
financial crisis sparked glimpses of concern about what was perceived as an imposition from Brussels but the assumption
of the European Union (EU) as the natural context for democracy and prosperity was never critically compromised.
Thus far, Europe has mainly been perceived as a solution and eurosceptics (like Marine Le Pen in France) are not expected
to win any material support. As economic expectations brighten up and confidence is restored, criticism is gradually fading
away.
After a socialist rule that spanned 8 years, the Popular Party (EPP, Christian-Democrats) has been in power in Spain since
December 2011 with a broad absolute majority in the Spanish Parliament (186 members in a 350-member Congress of
Deputies). Institutional stability at a legislative level guarantees that any proposal or stance put forward by Spanish Government will be sufficiently backed at a national level. Equally important, European pacts needing national implementation will
go through smooth parliamentary debates and are not likely to be derailed by a fragmented vote. This has been the case
with the structural economic reforms required to overcome the financial crisis.
In the EU context, Spain occupies a significant space and ranks fifth - along with Poland- among the member States in
terms of voting power in the Council of Ministers. In the last few months the Spanish Government has intensified its efforts
to ensure that Spain obtains a fair representation in the European institutions. Luis de Guindos, the Spanish minister of
finance, is one of the best positioned candidates to take on a senior post in the new EU level hierarchy. Since the inception
of the financial crisis, he has been a pivotal figure in the handling of the sovereign debt crisis and the negotiations that led
to the restructuring and recapitalization of the Spanish banking sector under the July 2012 Memorandum of Understanding
(MoU). That agreement was a turning point in the European crisis and Spain became a test field for the regulations that
would later be formalized in the three pillars of the European Banking Union.
Spain still has to push forward its agenda of financial sector reforms. In the last assessment report of the progress made
in the wake of the Financial Assistance Programme for the Recapitalisation of Financial Institutions, the European Commission highlights that the following issues, amongst others, should be addressed: finalising measures initiated under the
MoU; monitoring banks’ efforts ahead of the ECB’s AQR and Stress Tests; ensuring a smooth integration into the Single
Supervisory Mechanism; continuing efforts to improve the sale of complex financial instruments to retail investors; and
completing the restructuring process of state-owned savings banks.
Recently, the finance ministers of the EPP appointed Mr. De Guindos co-chairman of the EPP ministerial group, a position
he shares with the Swedish minister of finance, Anders Borg. Some see this nomination as a step closer to becoming the
next head of the Eurogroup, as Jeroen Dijsselbloem’s term expires in the summer of 2015. Voices favouring this role to be
a permanent one are gathering momentum, so Mr. De Guindos could become the first “eurozone finance minister”.
President Rajoy met Angela Merkel during the EPP Congress in Dublin last month, and he casted a vote for Jean-Claude
Juncker, the German chancellor’s candidate to head the European Commission. In return, it is expected that Germany will
support De Guindos’s candidacy for the Eurogroup next year and one of the vice-presidents of the European Commission
will also be filled with a Spanish name.
The European elections will have an impact in the composition of the Spanish Government, as Miguel Arias Cañete, minister of agriculture and environment will leave office and head to Brussels to lead the Spanish delegation of the EPP. He is
likely to be replaced by Isabel García Tejerina, the secretary general of agriculture, a close collaborator of Mr. Arias Cañete
who is expected to follow a path of continuity.
*****
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