Brussels shuffle Ideally, renewal of the European institutions, driven by the Lisbon Strategy, would have been completed in November. Christophe Sykes of IMA-Europe explains how the political complexities of the EU have surfaced and led to an unprecedented institutional dispute. The European Commission To prove his commitment to competitiveness, he has created Following the EU’s enlargement of 1 May 2004, ten new and will chair a specialised group within the Commission to Member States (MS) joined the existing 15 MS to create a oversee the implementation of the Lisbon Agenda. union of 455m. people. Back in June, after many weeks of The mid-term review of the Lisbon Strategy, due in the first negotiations, Jose Manuel Durao Barroso – Portugal’s former half of 2005, will draw from the report published on 3 Foreign Minister and Prime Minister – suddenly emerged from November by the High Level Group led by former Dutch the wings and was unanimously chosen for the post of Prime Minister, Wim Kok. “Facing the challenge” foresees European Commission (EC) President. He will succeed devastating effects if the Lisbon process is not reinforced. Romano Prodi and will lead the EC for the next five years. Amongst its many recommendations, the report suggests After this initial step, each MS government nominated a boosting innovation and reducing the administrative burden Commissioner in consultation with the incoming President. imposed on businesses. Indeed, on 26 October German From initial communications, it seems clear that Mr Chancellor Gerhard Schröder had presented his “seven Barroso’s programme will be based on working towards the chances for the single European market”, which includes the economic reforms enshrined in the Lisbon Strategy1, ie. complete liberalisation of gas and electricity markets in all making the EU the world’s most dynamic economy by 2010. countries by 2007. 74 December 2004 LEGAL EYE With these great challenges already in mind, Barroso The other important Commissioners for our sector are: surprised most observers by revealing on 12 August – earlier Jacques Barrot (France) for Transport; Markos Kyprianou than expected – the make-up of his Commission. In his own (Cyprus) for Health and Consumers Protection; Charlie words, he wanted to create a Commission that is recognised McCreevy (Ireland) for Internal Markets and Laszlo Kovács for its “efficiency and effectiveness”. Barroso worked with MS (Hungary) for Energy. The latter (see further) and Neelie Smit- governments to create his new college of Commissioners. Kroes, the new Competition Commissioner, are two of the Previously, the EC Commissioners were appointed by candidates that did not receive the full endorsement of the EP. unanimous agreement of the MS governments. With the There were allegations that Smit-Kroes close links to the signing of the Nice Treaty2 in December 2000, the formal business world would hamper her work. Of course these appointment of a new Commission requires the European candidates’ interviews did not get as much attention as that of Parliament’s (EP) approval. Prior to the formal vote, each the Italian candidate, Rocco Buttliglione, and there is no need Commissioner is interviewed by the parliamentary committee to dwell on this well publicised case. whose area of competence corresponds to the Having decided to go head-to-head with the EP, Barroso Commissioner’s policy area. These hearings establish an initial realised just in time that on 27 October he would lose the working relationship between EP committees and their required vote and plunge the EU into crisis. Through this crisis, respective Commissioners and also record an initial everyone now knows that the Nice Treaty does not allow the benchmark against which all subsequent performances will EP to reject individual Commissioners. The MEPs must vote be measured. for or against the entire Commission. The decision to Prior to the institutional row of 27 October, of the 24 postpone the investiture vote of the new EC opened up a Directorate General (DG), Germany and the UK obtained two whole legal and political no man’s land for the Brussels of the most important portfolios. After having successfully executive and Prodi was asked to stay on as EU President steered the EU latest enlargement process, Günter Verheugen during the interim period. A new Commission has never been (Germany) was given the leadership of the re-named rejected before and this EP position sends a clear message to Enterprise and Industry DG. At his EP hearing, Verheugen MS, who have always regarded the nomination of rejected suggestions that lower taxes in the new MS will lead Commissioners as their prerogative. to job losses in the rest of the Union. More so, he stressed that Barroso was given more time to review his college and the foreign direct investment in the new MS is too low and that he reshuffle implicated more than Buttliglione. At the November did not support the idea of harmonising taxes across the EU EU summit, Barroso declared “we are now back on track”. as the EC has no competences in fiscal areas. On the subject Indeed, Franco Frattini now replaces Buttiglione as Italian of the environmental aspects of the Lisbon Strategy, he clearly Commissioner for Justice, Freedom and Security and the stated that economic growth must come first but promised to Hungarian Commissioner, Laszlo Kovacs, will move to maximise mutual reinforcements of economic and environ- taxation. The last change involves the new Latvian nominee, mental pillars where such synergies exist. Andris Piebalgs, who will take over the energy portfolio and The second of these important portfolios, Trade, was given replace Ingrida Udre, who had ‘failed’ her EP interview. The to Peter Mandelson (UK). In his capacity as Trade “Barroso II” Commission should be submitted to parliamentary Commissioner, Mandelson would take part in the current vote during the next plenary session (15-18 November), once round of world trade talks – the so-called Doha round – which the new candidates and those changing portfolios have been could already be concluded at the end of 2005. In August, interviewed by the corresponding EP committees. an agreement was reached on a framework for opening up It seems that Barroso has the game won as the EP global trade and this would mean reduced agricultural President, Josep Borrell Fontelles, has initiated a “fact track subsidies in the EU. Following the US imposed tariffs on steel procedure” with the interviews taking place just a few days imports, outgoing Trade Commissioner Pascal Lamy won his after the Commissioners’ nominations and the waiving of the appeal at the WTO and the EU has been allowed to retaliate written questionnaire. The EP socialist group (second largest and impose its own sanctions. It would be left to Mandelson to group in the EP) has also stated that it sees these changes manage this dossier. as quite positive. The appointment of Stavros Dimas (Greece) as the head of Once in place, one small decision that could have a major Environment caused some waves in and around the European impact is Barroso’s idea to bring all Commissioners and their institutions. His background as an economist and lawyer has cabinets back to one of Brussels landmarks, the newly led some green members of the European Parliament (MEPs) renovated Berlaymont building. This closeness might help gel to question the depth of his “environmental fibre”. Dimas the team together and help prevent some of the frequent listed his four priorities as climate change, biodiversity, clashes of the previous commissions. environmental and health issues, and the shift towards sustainable production and consumption. Dimas said that it is The EP – new balance of power essential to give unreserved support to this strategy. Back in June, Europeans from old and new MS were invited During his EP interview, Vladimir Spidla (Czech Republic), the to elect 732 MEPs, making it the largest democratic election Commissioner for Employment and Social Affairs, underlined outside India. The centre-right group (the European the importance of creating new job opportunities and stopping People’s Party in alliance with the European Democrats, or delocalisation of EU employment. He also urged the EU’s old EPP-ED) won 36.7% and 268 seats. The party of European members to open their labour markets to the new MS, Socialists (PSE) obtained 27.1% and will be represented by pointing out that the three MS which had done so – the UK, 200 MEPs. The Liberals (ALDE, Alliance of Liberals and Ireland and Sweden – had not been adversely affected by the Democrats for Europe) remain third with 12%, but with a move. Last but not least, he told MEPs that, as part of an greater number of seats (88) through an alliance with French overhaul of working-time rules, he favours a crackdown on and Italian centrist groups. companies exceeding the EU’s 48-hour working week. Putting aside the ever decreasing voter turnout from 63% in December 2004 75 LEGAL EYE Number of European Council votes per MS (total 321) led by a Russian-born businessman. In 2005, there will general elections in the UK (May) and parliamentary elections France, Germany, Italy, UK 29 in Poland (September). Luxembourg will hold the EU Presidency in the first half of 2005. Luxembourg’s Prime Minister and Finance Minister, Poland, Spain 27 Jean-Claude Juncker, was recently appointed as the first President of the 12 euro nations (only 12 of the 25 EU MS have the euro as their national currency) by the European Netherlands 13 finance ministers. His two-year presidency will start on 1 January 2005 and it is widely believed he will help reinforce a growth oriented monetary strategy. The UK is next in line for Belgium, Czech Republic, 12 the EU Presidency from July 2005.