[A-List] EU: internal struggles

["Keaney Michael" <Michael.Keaney@xxxxxx>]

Romano Prodi's unlikely allies
By Paul Betts
Financial Times: June 26 2002

Europe's biggest companies have long mastered the art of thwarting
hostile takeovers. Now they are rushing to defend and strengthen the
role of the European Commission in a power struggle over the future
shape and control of an enlarged European Union.

"As big multinationals, we have thrown our lot in [with] European
development and in creating European business structures and we feel
current criticisms against the Commission are damaging and risk
hindering Europe's efforts to become more competitive," says Morris
Tabaksblat, a former chairman of the European Round Table of
Industrialists (ERT), which represents 44 of Europe's business leaders.

Mr Tabaksblat, chairman of Reed Elsevier, the Anglo-Dutch publishing
group, and a former chairman of Unilever, the consumer products multi-
national, was in Brussels yesterday to add the ERT's voice to the
corporate governance debate. His message to members of the Convention on
the Future of Europe, headed by Valéry Giscard d'Estaing, former
French president, was simple, if perhaps un- expected.

ERT members - including the heads of companies such as Royal Dutch
Shell, Siemens, BP, Renault, Philips, British American Tobacco,
Vodafone, ThyssenKrupp, Nestlé and Saint-Gobain - are unanimous in
backing the Commission against efforts to water down its powers by
transferring them to EU member states or to a system of shared
responsibility.

The ERT supports Germany and most of the smaller EU countries, which
feel their interests would be best protected by a strong Commission in a
federal Europe.

In contrast, Britain, France and Spain want a Europe of nation states,
with power firmly in the hands of elected ministers in the shape of the
EU Council of Ministers.

Business, says Mr Tabaksblat, wants a growth-oriented and predictable
economic environment, which is increasingly being undermined by the
absence of a clear and consistent decision- making process in Europe.

"The European Council's commitment in Lisbon two years ago to turn
Europe into the most competitive society is certainly not being helped
by a cumbersome decision-making process [and] threats to make it even
more cumbersome," he argues.

The ERT business leaders feel the Commission has done a "good job"
overall in putting the single market on its feet and in introducing the
euro.

"If anything, the Commission should be treated with more and more
confidence and trust rather than suspicion," says Mr Tabaksblat, who
also chairs the ERT's working group on European governance.

But they fear there is a drift to "re- nationalise" certain Commission
competences.

The ERT has been described as a shadowy lobby group that has for the
past 20 years exerted a strong grip on policymaking in Brussels.
Nonetheless, it can claim much of the credit for providing the initial
impetus that led to the European single market in 1992.

It also persuaded European leaders to adopt the familiar business
practice of benchmarking for guiding EU policies. And the Lisbon
strategy, billed as a way to turn the EU into "the most competitive and
dynamic knowledge-based economy in the world by 2010", drew largely on
ERT recommendations.

The centre-piece of the ERT's latest recommendations is a strengthening
and refocusing of the Commission on its core business of promoting and
acting as a guardian of the single market and boosting the economic
interests of the EU.

"We believe the Commission should be strengthened in the economic field
and less concerned outside the economic field," says Mr Tabaksblat. The
trouble is that its role has been steadily eroded.

The result has been a depressing inability to push through Europe's
decision-making maze a series of reforms and initiatives, such as a
community patent, a take-over directive, improved labour market
flexibility and a common policy to deal with economic shocks.

What the ERT does not say is that this decision-making sclerosis has
also prevented the enforcement of an initiative that is particularly
distasteful to business: the French-sponsored social agenda protecting
the rights of workers across the EU.

"Everything is stalled," says Mr Tabaksblat. "Countries are not
delivering on social and economic reforms. The Lisbon commitments are
petering out as fast as they were embraced. And we are now telling
policymakers: 'You asked us to be European, we are European, now please
deal with us as Europeans rather than sending us back to national
governments.' "

In short, the core economic powers of the Commission should not be
impaired because business believes the it to be the European institution
most capable of articulating the common European interest above national
and regional interests.

The ERT also wants to see a strengthening of the position of the
Commission president, with powers to influence the selection of
individual commissioners.

To enhance the president's authority with the Council of Ministers and
the European parliament, the ERT recommends a more direct and democratic
nomination process instead of the current system, whereby the president
is chosen by EU governments and subsequently approved by the European
parliament.

The big business lobby also endorses in part recent proposals by Romano
Prodi, Commission president, to reform and streamline the Commission by
creating an inner cabinet to give him greater authority as well as a
more manageable decision-making vehicle to cope with the enlargement of
the EU in 2004.

The business leaders say they, too, are worried by the future size of
the Commission.

"A college of 27 commissioners, or perhaps even more, could well result
in cumbersome decision-making, ineffectiveness and infighting," the ERT
warns in a paper on EU governance. It recommends new methods of
organisation and forms of management to deal with the growing number of
commissioners.

But the business leaders do not want to see the Commission extending its
influence in fields such a security, immigration, and foreign and home
affairs.

"These areas should have different decision-making structures since they
are not the Commission's core single market business," says Mr
Tabaksblat.

As for the European Council, its prime purpose is giving overall
guidance and setting priorities and strategy, the ERT says.

But the business leaders say the Council is increasingly burdened with
specific and sometimes trivial issues that should be resolved at a lower
level. Without reform, they argue, the situation will only deteriorate
after enlargement.

The six-month rotating presidency of the Council of Ministers is a
further source of frustration and confusion. Each presidency attempts to
set its own priorities, hindering the ongoing flow of discussion and
legislative work in the Councils, the ERT says.

But Mr Tabaksblat does not join Tony Blair, the UK prime minister, in
advocating the appointment of a president of the Council for an extended
three-to-five-year term to ensure continuity. Such a proposal would
undermine the authority of the Commission and its president, the ERT
argues.

"What we can do is establish common platforms from one presidency to
another. Establishing strategic priorities and targets and pursuing
these consistently over time should not be too difficult," Mr Tabaksblat
says.

After monetary union, the single market and the introduction of the
euro, the next big step in the construction of Europe for business
leaders was the vision of Lisbon on making Europe more competitive.

Mr Tabaksblat says the ERT would like European governments to restate as
a priority the commitments they made at Lisbon. "After all, we were also
going through difficult economic times when the single market was
established in 1992."