David Cameron's timetable for reform in Europe 'impossible'

David Cameron's timetable for reform in Europe 'impossible'

David Cameron's timetable for reform in Europe 'impossible'

By Charles Grant, 29 November 2014
From The Guardian

Link to press quote(s):

http://www.theguardian.com/world/2014/nov/29/david-cameron-europe-timetable-impossible

Cameron's migration speech and EU law: Can he change the status quo?

Cameron's speech

Cameron's migration speech and EU law: Can he change the status quo?

Written by Camino Mortera-Martinez, 04 December 2014

On November 28th, David Cameron delivered a long-awaited speech addressing public concerns on EU migration. Its essence was not anti-European: the British prime minister underlined Britain’s long-term commitment to the principle of free movement, as one of the cornerstones of the single market. Having understood that quotas or ‘emergency brakes’ on EU migrants were unacceptable to all Britain’s partners (including German Chancellor Angela Merkel), Cameron pulled back at the last minute from proposing such ideas. He therefore upset hardline Conservative eurosceptics, who knew that if the UK made a cap on EU immigrants its chief negotiating demand, a British exit would become much more likely.

The prime minister’s speech included five proposals:

  • To deport EU job-seekers who have not found work within six months; and to stop such job-seekers accessing ‘universal credit’ (which will incorporate the current job-seeker’s allowance) when it is rolled out from 2015 onwards, for their first four years in Britain.
  • To impose a four-year period before EU migrants have access to in-work benefits like tax credits and housing benefit.
  • To stop workers in one EU member-state collecting child benefit there for children who live in another member-state. 
  • To prevent workers from countries that join the EU from seeking work in the rest of the EU, until these countries’ economies have partially converged with those of the existing members.
  • To make it easier to deport criminals, fraudsters and beggars from other member-states, and to ban their re-entry.

Are these proposals achievable through new EU legislation, or would the Union’s treaties need amendment? And how likely is it that other member-states would agree to the changes?

The principles of free movement and the equal treatment of workers have been enshrined in the treaties, developed through secondary legislation in the form of directives and regulations, and extended by rulings of the European Court of Justice (ECJ). Any new or amended directives or regulations would have to be proposed by the European Commission and adopted by a majority in the Council of Ministers and the European Parliament. Amendments to secondary legislation that do not amount to discrimination between EU citizens and those of the host member-state would not require treaty revision. However, fundamental changes to secondary legislation that affect the principles of free movement and equal treatment would require treaty change and hence the unanimous agreement of 28 member-states. This distinction is crucial for understanding the legal and political feasibility of Cameron’s proposals.

Restricting the rights of job-seekers: The prime minister’s proposals lacked precision. First, he mentioned the possibility of requiring EU citizens to prove that they had a job offer before coming to the UK. This may have been a wish rather than a concrete proposal, but it would in any case be contrary to the treaties and impossible to implement in practice. Later, Cameron said that Britain would seek to deport EU migrants who failed to find a job within six months of entering the country. Other member-states have already considered this. Under EU law, EU citizens need to be working, studying, or self-sufficient in order to live legally in another member-state.

The ECJ, however, has extended some of these rights to job-seekers, so that EU migrants are allowed to live in a member-state if they can prove that they have a genuine chance of getting a job. According to the Court’s case law, member-states are permitted to limit the period for which unsuccessful job-seekers can access unemployment benefits. Therefore, restrictions on job-seekers, if not unconditional (that is to say, if they are not solely based on time limits, but they also take into account the migrant’s personal situation and their chances of  finding a job) may well comply with EU law. They may also find some political support, notably from Western European member-states such as the Netherlands, Austria and Germany.

Cameron also said that he would stop EU migrants who had not yet worked in the UK from accessing the new ‘universal credit’, which will be introduced in 2015 if the Conservatives remain in power. This would mean they would have no access to unemployment benefit at all while looking for work in Britain. The ECJ’s case law has given job-seekers some rights of access to unemployment benefits, when they assist with integration into the host country’s labour market, so this proposal may put the government on collision course with the ECJ.

Limitations on EU migrants’ access to in-work benefits: The Conservatives may find it hard to impose temporary limits on EU migrants accessing in-work benefits: Article 45 of the Treaty on the Functioning of the European Union (TFEU) forbids discrimination against workers “as regards employment, remuneration and other conditions of work and employment”. Restricting migrants’ access to tax credits could amount to discrimination, since they are a condition of work and employment, and so the reform could require treaty change. Even if UK government lawyers managed to convince Brussels that tax credits should not be seen as a condition of work, and rather as social assistance or a tax advantage, a qualifying period would still be contrary to both a 2011 regulation on the freedom of movement for workers and ECJ case law. Reforming this regulation would need a revision of the underlying treaty principles, and hence require treaty change.

Stopping child benefits being paid to children abroad: Under current EU rules, the children of EU parents working in the UK are entitled to receive child benefits from the UK, regardless of where those children live, provided that neither parent works and lives abroad with the children. This rule is part of a 2004 regulation that addresses situations where the children of EU workers do not live with their parents. Several EU governments support reform of this regulation. Nevertheless to stop EU citizens from accessing child benefits in certain circumstances could be considered as discrimination against EU workers – so some would argue that it required treaty change.

Temporary restrictions on workers coming from new member-states: This proposal should be much less problematic: imposing restrictions on workers coming from new member-states until “their economies have converged with the existing member-states”, as Cameron put it, would be legally and politically feasible. Workers from Romania and Bulgaria faced temporary restrictions on their right to free movement for a period of seven years after those countries acceded. Since accession treaties require the unanimous agreement of all member-states, the UK could, if it wished, insist on restrictions that endured until the accession state’s per capita income had reached a certain percentage of the EU average. But this proposal will not make much difference in the short term: no country is due to join the EU in the next five years.

Expulsion and re-entry bans on EU criminals, beggars and fraudsters: On December 1st the UK opted back into 35 measures of police and judicial co-operation (such as the Schengen Information System and the European Arrest Warrant), which help governments to exercise tighter controls over convicted and suspected criminals across the EU. The current migration debate makes the case for opting back into these measures even clearer: the more police and judicial co-operation there is, the more control the UK will have over EU criminals entering the country, including fraudsters. The ‘citizens directive’ allows member-states to expel EU citizens on the grounds of public policy or public security. Member-states can also ban expelled EU citizens from re-entering the country.

The ‘citizens directive’, however, requires a case by case analysis of expulsion and re-entry bans, and offers a system of procedural guarantees to ensure that EU citizens are protected from arbitrary expulsions and expulsions en masse. Article 27 of the directive has incorporated the ECJ’s case law and says that a criminal conviction is not sufficient reason to expel an EU citizen. Furthermore, the grounds for expulsion cannot be “invoked to serve economic ends”. Therefore, the UK, like any other member-state, is allowed to expel EU citizens on the basis of public policy or security, provided that the decision is based on a solid examination of the citizen’s personal circumstances. Indiscriminate expulsions of criminals, fraudsters or beggars are not allowed under EU law and would require legislative change, although probably not a revision of the treaties.

In sum, several of Cameron’s proposals might require treaty change in order to be legally watertight, since they would discriminate against EU workers. Indeed, Cameron himself said that treaty change would be necessary. In particular, imposing temporary restrictions on access to in-work benefits and expelling job-seekers after six months might violate the principles of the free movement of workers and equality of treatment. Banning parents from drawing child benefits for children abroad could also be regarded as an obstacle to the free movement of workers and might require treaty change.

The UK could, however, try to achieve limited reforms to the rules on access to benefits which would be both treaty-compliant and politically attractive to some other governments; for example, limiting the time that job-seekers can stay in the UK when they have failed to prove that they have a real chance of finding employment or that they are actively looking for a job. The UK could certainly impose restrictions on the right of free movement of workers from future accession countries. Britain can exercise more stringent controls on EU criminals entering the country through the effective implementation of the 35 JHA measures the government has just opted back into. The UK does not need to change EU law in order to expel criminals from its territory, since the ‘citizens directive’ already allows for it.

Cameron will still have to contend with the possibility of the European Court of Justice scrutinising secondary legislation that challenges the principle of free movement. The ECJ has in the past sought to extend the rights of EU citizens working or looking for work in other member-states. Amendments to secondary legislation could be quashed by the Court, on the basis of its interpretation of the treaties. That is why in the long run Cameron may need to underpin several of his proposals by treaty change.

Changing the treaties through the normal method – the holding of a convention of MEPs, national parliamentarians and government representatives, followed by an inter-governmental conference (IGC) leading to an unanimous agreement among 28 member-states, each of which then has to ratify the new treaty – would take many years. At the moment virtually no member-state other than Britain has an appetite for treaty change. Many of them fear that parliaments or electorates (in those countries that would need to hold referendums) would reject the changes, given the strength of eurosceptic feeling in much of Europe. Furthermore, the economic situation in the eurozone, though far from healthy, is not so dire that its leaders believe its rules must be revised in a new treaty. Governments are also reticent because they know that embarking on treaty change would be like opening Pandora’s Box: almost every government has demands that it wishes to see fulfilled in a new treaty. There is no chance of getting a major new treaty ratified by Cameron’s self-imposed referendum deadline of 2017.

Could Cameron find a speedier method? Possibly. The ‘simplified procedure’ allows changes to internal policies that do not involve the transfer of competences to the EU. Under this procedure, EU leaders could dispense with the convention and the IGC. But the procedure cannot be activated without a unanimous agreement to do so, and then the new text still has to be agreed unanimously and then ratified by all members. None of which would be quick or easy.

Probably the only sort of ‘treaty change’ that is feasible by 2017 is a political agreement among heads of government to make specific changes in the future. British officials are thinking about emulating the method used to deal with Ireland’s rejection of the Lisbon treaty in the referendum of 2008. A protocol was drawn up, with language that reassured Ireland over the Lisbon treaty’s provisions on abortion, tax and neutrality. These reassurances helped to persuade the Irish to vote Yes in a second referendum – though they had to wait for the Croatian accession treaty, to which the Irish protocol was tied, before the protocol became legally binding.

If the UK aims to change the rules through this kind of ‘post-dated cheque’, it will face many problems. In a referendum campaign in 2017, would voters believe promises of change that depended on other countries ratifying future treaties? Furthermore, the provisions of the Irish protocol were uncontroversial. Any British attempt to push through the revision of EU rules on free movement via a similar protocol – requiring unanimity – would be fraught. Central European governments have already criticised some of Cameron’s ideas, but many in Western and Southern Europe will also oppose attempts to undermine free movement for workers and job-seekers.

If Cameron bangs the table, resorts to Eurosceptic rhetoric and challenges the principle of free movement, he may achieve very little. But if he embarks on a charm offensive in Europe, building alliances and forging friendships with other EU leaders, he may be able to achieve parts of his package.

Camino Mortera-Martinez is a research fellow at the Centre for European Reform.

Judy Asks: Can Tusk boost EU foreign policy?

Judy Asks: Can Tusk boost EU foreign policy?

Judy Asks: Can Tusk boost EU foreign policy?

Written by Ian Bond, 03 December 2014
From Carnegie Europe

The fear from migration is penetrating the British mainstream (in Hebrew)

The fear from migration is penetrating the British mainstream (in Hebrew)

The fear from migration is penetrating the British mainstream (in Hebrew)

Written by Yehuda Ben-Hur Levy, 11 December 2014
From Walla

The ECB is not the German central bank

The ECB is not the German central bank

The ECB is not the German central bank

Written by Christian Odendahl, 02 December 2014

For many years, the debate about whether the European Central Bank (ECB) was too heavily influenced by Germany was confined to academic papers. As of late, it has become the central policy question of the eurozone. Germany is more influential at the ECB than it should be. In fact, Mario Draghi’s penchant for seeking German approval has been his biggest mistake as head of the ECB. He should end it. If he waits until the German public comes around to looser ECB policy, it might be too late, as the seemingly unstoppable fall in inflation and the eurozone’s weak growth prospects show. The Bundesbank, rather than torpedoing reasonable ECB decisions, should throw its weight behind a more expansionary monetary policy and back the ECB.

The ECB was modelled on the German Bundesbank. As a result, it is one of the world’s most politically independent central banks; its mandate is focused narrowly on price stability; it does not take broader economic goals like unemployment into account in the way other central banks, such as the Fed, do; and it is de facto more restricted than other central banks, since controversial measures can lead to complex political and legal struggles, involving 18 (soon to be 19) countries. Its setup and philosophy are therefore ‘German‘, that is, conservative and cautious.

In terms of the ECB’s conduct of monetary policy, it is worth distinguishing between the pre- and post-crisis periods. A wide range of studies have so far failed to establish a firm consensus on the influence of various countries on the ECB during the euro’s first decade. However, most studies have found that the ECB behaved like a multinational central bank, in which each country has a weight proportional to the size of its economy. This gave Germany a higher weight than other countries because it is the largest economy in the eurozone. But it is hard to argue that there was a German bias at the ECB before the crisis.

In the post-crisis period, the ECB has failed to stabilise the economy, and inflation has fallen to just 0.3 per cent. It is tempting to see this as the product of a German bias, because the German economy has suffered least from the ECB’s hesitation to do more. But it is hard to argue that German pressure prevented the ECB from lowering rates faster during the last two years, for example, or managing the inflation expectations of consumers and investors more aggressively. Rather, the ECB’s misjudgement of the economic dynamic in the eurozone prevented a more timely and aggressive stance.

However, now that the ECB has to move further into unconventional territory to correct its previous errors – potentially by buying government bonds – Draghi has taken German resistance into account and delayed quantitative easing (QE). German policy-makers and commentators argue that further monetary easing will not stimulate the eurozone economy much, but risks encouraging excessive risk-taking and asset price bubbles that could breed future crises. They also claim that buying government bonds would lower the pressure on governments to reform, and adjust their economies and budgets.

This raises the question of why German approval is needed at all. In the governing council of the ECB, all relevant monetary policy decisions are taken by simple majority, with the smaller countries having one vote each, and the larger countries traditionally two (because of the additional votes of executive board members). Some of the more fundamental decisions, like recapitalising the ECB, need a two-thirds majority, based on the ECB’s capital shares, but even then Germany has no veto. What is more, there is currently a clear majority for more aggressive ECB action in the council, which Draghi can draw upon whenever he decides that the time is right. Formally, there is no need for German approval, either from Berlin or from the Bundesbank.

Why, then, is Draghi waiting for German approval? There are two possible reasons. First, he might consider it unwise to conduct monetary policy in the face of opposition from the largest eurozone country. There is some merit to this view but it loses validity when the ECB is failing to fulfil its inflation mandate by a wide margin, as it is now. Not only is inflation below the target of 'just below, but close to 2 per cent inflation'; expectations of future inflation have fallen steeply – a source of alarm even to conservative central bankers. Expanding the scope of monetary policy is therefore a matter of urgency, regardless of which country is opposed. It is with good reason that the statute of the ECB is not limited to a narrow definition of monetary policy but allows the purchase of ‘marketable assets’, including government bonds in the secondary market.

In such circumstances, Draghi should not let himself be bullied by the macroeconomic views of a single, if powerful country – views that few share outside Germany. Even the relatively cautious OECD has now come out in favour of further monetary stimulus, and the IMF has been urging the ECB to do more for a while. Given that the Fed and the Bank of England have bought government bonds on a massive scale, the ECB would be well in line with consensus views on monetary policy if it did the same.

The second reason why Draghi might want to get Germany’s backing is that he may fear losing the German government’s consent for the ECB’s other operations, which are not strictly monetary policy. The most important of these, of course, is the OMT programme, which was announced during a panic-driven run on eurozone government bonds in the summer of 2012. The ECB declared that it intended to buy unlimited quantities of these bonds if the panic did not subside – which it then duly did. This programme makes the ECB the implicit guardian of the eurozone as the lender of last resort to governments, but the OMT is in part a fiscal operation. Without the support of Germany, the country with the deepest pockets, the OMT might fail. Draghi therefore does not need the Bundesbank’s support but that of Merkel and the German government – which has backed him on the OMT.

However, Germany’s attitude towards the OMT should not be misunderstood. The German government understood very well that the eurozone might collapse if the ECB did not intervene in the summer of 2012. In fact, one could hear a collective sigh of relief (some say the sound of popping champagne bottles) in Berlin after the ECB took on the de facto role as lender of last resort to sovereigns – despite shrill German press coverage warning against such a step. Regardless of whether the German government approves of further easing of monetary policy, it would still back the OMT. Draghi should therefore not be overly concerned that further, unconventional monetary easing would threaten his role as guardian of the eurozone.

The outstanding legal challenges to the OMT do not change this. Even if the German constitutional court were to forbid the Bundesbank to take part in such a programme in the end – a drastic but conceivable outcome – the basic idea behind the OMT would still survive. The question that the OMT has answered is how far Germany would go to save the eurozone from breakup. Germany has tacitly approved the nuclear option, using the very deep pockets of the ECB as a backstop for government bonds. Even if the legal details of the OMT programme turn out to be tricky, this answer is still the same: Germany and the ECB are determined to avoid a break-up of the eurozone and a panic-driven run on eurozone government bonds. The history of the euro crisis shows that if there is a will, European policy-makers remove the legal roadblocks that might stand in the way. The market will therefore not bet against Germany’s and the ECB’s resolve to keep the eurozone intact.

Waiting for German consent has been Draghi’s biggest mistake in office, since waiting imposes considerable costs. The most important task of a central bank is to keep the expectations of consumers, firms and investors about the future state of the economy on a reasonably optimistic path. Waiting for German approval in the face of a weakening economy undermines these expectations, making the job of lifting expectations that much harder, once the central bank does decide to act. Draghi has wasted precious time – the ECB should have started to act aggressively in spring 2013 – and is now being forced to use controversial measures on a large scale to turn the economy around. Whether those measures will succeed is still uncertain.

Draghi is not the only one to blame, however. The Bundesbank enjoys huge credibility in the German public. It could easily stand publicly behind the ECB and thus foster an environment in which the ECB can act more aggressively, which most economists agree is desperately needed. At the very least, Jens Weidmann, the head of the Bundesbank, needs to stop undermining the ECB in the eyes of the German public. Likewise, Wolfgang Schäuble, Germany’s finance minister, and Angela Merkel should back the ECB openly, and pressure the Bundesbank to do likewise. After all, one reason for the weak state of the eurozone economy is Germany’s reluctance to accept more expansionary fiscal policies in the eurozone and at home.

Christian Odendahl is chief economist at the Centre for European Reform.


Le Royaume-Uni va-t-il devenir le paradis des fugitifs?

Le Royaume-Uni va-t-il devenir le paradis des fugitifs?

Le Royaume-Uni va-t-il devenir le paradis des fugitifs?

By Camino Mortera-Martinez, 09 November 2014
From L'opinion

Link to press quote(s):

http://www.lopinion.fr/9-novembre-2014/royaume-uni-va-t-il-devenir-paradis-fugitifs-18229

David Cameron under fire across Europe for migrants plan

David Cameron under fire across Europe for migrants plan

David Cameron under fire across Europe for migrants plan

By Camino Mortera-Martinez, 01 December 2014
From The Guardian

Link to press quote(s):

http://www.theguardian.com/uk-news/2014/nov/28/david-cameron-under-fire-migrants-plan

Treacherous sands: the EU and terrorism in the broader Sahel

Treacherous sands: the EU and terrorism in the broader Sahel

Treacherous sands: the EU and terrorism in the broader Sahel

Written by Rem Korteweg, 01 December 2014
From European View

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