About Michael Berendt

Author Website: http://
Author Bio: Michael has worked for nearly 25 years in Brussels, both as a European Commission official and as a public affairs adviser. He has been closely involved with the policies, the policy-makers and the whole complex network of people who make the process of European integration so exciting and absorbing. Michael still observes EU affairs, but now from more of a distance, contributing an occasional commentary on current developments - in other words, doing some blogging. Michael was most recently a Senior Policy Adviser with Fleishman Hillard and is currently pursuing this project in conjunction with the digital team in Brussels. The views on this blog do not represent the views of Fleishman Hillard as a company.

Articles by Michael Berendt

Five transformative years for Europe

Posted by Michael Berendt on 26/07/12

At last the sun is shining, after months of rain. London gears up for the Olympics and is thronged with visitors. Brussels is quiet, Paris is empty. The roads to the south are crowded. The mountains and the beaches beckon. It must be the summer holidays. But not for those politicians and officials across Europe struggling with the latest phase of the eurozone crisis, nor for all those individuals whose lives have been turned upside down by the economic downturn and cuts in public spending.

Back in autumn 2007, when I posted the first of this regular series of blogs on European affairs, nobody could have anticipated the scale of the economic crisis which was to hit Europe, nor conceive of the threat which this would pose for the future of the monetary union and indeed for the European Union as a whole. These have been transformative years.

Five years ago the main preoccupation for the EU was approval of the Lisbon Treaty, still to be ratified by several countries and then blocked by the “no” vote in Ireland in 2008. The euro was riding high on world markets and the level of indebtedness of governments, banks and individuals was ignored. Then in the autumn of 2008 came the credit crunch. Most people were unaware how close the world came to a global banking collapse. It was only drastic action by central banks and governments which stabilised the situation.

There have been many victims since then. Almost every country has changed government and changed leader (Germany’s Merkel a notable exception). Coalitions have taken over from single party administrations. Politicians have been forced to take tough decisions, promising little other than hard times ahead, and although they have been punished at the ballot box their successors have been obliged to sustain a policy of austerity.

Ordinary individuals and families have been taking the biggest hit, whether through unemployment or cutbacks in social benefits and other government spending.

The “European social model” will never be the same again. The crisis showed that it depended upon state borrowing and the loading of debt on future generations to fund current spending. Indeed, it’s worth remembering that the Commission took the Council of Ministers to the European Court in 2004 because of the refusal of France and Germany to respect the limits on debt and spending in the Stability and Growth Pact – limits which had originally been put in place on German insistence because of fear that Italy would spend beyond its means!

Of course the emphasis now is on economic growth, but the challenge is to stimulate research and innovation, to encourage training and apprenticeship – all measures which call for public expenditure – and it is the weaker economies such as Spain where the need for such measures is most compelling, to build a dynamic economy for the future.

It’s said that European integration surges ahead in response to crises. The eurozone will only survive if it has all the attributes of a monetary union, including economic and fiscal policy-making at an EU level and the means to ensure that the rules are respected. For those countries outside the euro, and especially the UK, this development will pose a major problem – how to influence policy developments while keeping a distance from the institutional process.

As my series of blogs comes to an end I see that US Republican candidate Mitt Romney, who is attending the opening ceremony of the Olympics, has rather a sour view of alternative ways ahead, of which “one leads to Europe, the other leads to the kind of dynamism and prosperity which has always characterised America.”  It would be interesting to see Romney’s remedy for the US budget deficit. In any event the crisis is forcing Europe to put its economy on a sound footing and rebuild its dynamism and prosperity. The process may well take another five years – or perhaps more.

blogging, Economy & Euro, Eurozone
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Banking Union: magic solution to eurozone crisis?

Posted by Michael Berendt on 10/07/12

It seems that a European Banking Union has become the magic solution to the eurozone debt crisis. This week’s meeting of eurozone finance ministers in Brussels confirmed that European funds will provide direct support to Spanish banks, to the tune of €100bn in loans from the European Financial Stability Facility and subsequently the European Stability Mechanism.

The aim of the scheme is “to break the vicious circle between banks and sovereigns”, which implies that eurozone governments will no longer be expected to shoulder the burden of bailing out their banks in times of trouble. The debt will not be part of Spain’s government deficit, as no guarantee will be required of Spain, but in return the government will bring in tougher austerity measures, in order to cut borrowing below 3 per cent of GDP by 2014, a one year extension to the current deadline.

The plan is bound to raise a further storm in Germany, where many commentators see it as transferring risk to German taxpayers which should be borne by the shareholders of the banks concerned and their governments. Another challenge for Mrs Merkel!

The first tranche of €30bn will be transferred by the end of July and held by the Spanish government as a contingency. Madrid is committed to wholesale reform of the Spanish banking sector as a whole and major institutions will be “stress-tested” to establish their viability.

Next stage will be the creation of a “single supervisory mechanism” for the banking sector which, once established, would oversee the reform and restructuring of banks. This should be in place by the end of the year, provided that Commission proposals, due in September, can be adopted in time.

Commissioner Michel Barnier has identified the questions this raises in his statement to the Economic and Monetary Affairs Committee of the European Parliament, and he still has a lot to answer. He asks whether the supervisor would replace national authorities or complement them; how the authority can “be open” to all member countries and respect the integrity of the single market; and whether it will oversee all banks, or just international institutions and banks in difficulty. Altogether a list of big questions, and of major significance for the City of London.

There is no doubt that the scandal over the alleged fixing of LIBOR and EURIBOR rates by 20 or more global banks will further strengthen the argument for tougher EU regulation just as Europe is planning for a banking union with common rules. Barnier has lost no time in pressing for legislation which would require false reporting of Libor rates to be made a criminal offence and introduce measures to ensure oversight of the reporting system.

For years the prospect of regulation was fiercely resisted across all financial services at both the national and the European level, and still some pockets of self regulation remain, including the fixing of LIBOR rates, which provide the benchmark for a vast range of financial transactions. How times have changed, when we see the deputy governor of the Bank of England, Paul Tucker, describe the whole scandal as a “cesspit” and tells MPs that “self-certified markets are open to abuse”. It’s not an easy time to be a banker.

Banking, Better regulation, Competition, Economy & Euro, Eurozone, Financial Services
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Rio +20 boost for EU fisheries policy reform?

Posted by Michael Berendt on 24/06/12

The word “sustainability” can cover a multitude of interpretations, but when it comes to fisheries policy there is no ambiguity:  today’s overfishing means tomorrow’s collapsing fish stocks. Until recently the Common Fisheries Policy has been a classic case of unsustainability, a stand-off between short term political pressures on the one hand and scientific evidence warning of the destruction of Europe’s fishery resources on the other. But at least change is in the air.  Rio +20 may prove a real catalyst for reform.

NGOs have condemned the outcome of the Rio meeting for its lack of specific commitments, but  I would subscribe to the view of businessGreen that the conference conclusions could have a far-reaching impact on the way that governments and business approach the whole sustainability question. On fisheries the commitments are substantial.

Of course words must now be translated into action, but there are signs of change in Europe.   The EU fisheries council earlier this month set a course for a more sustainable fisheries policy. When the European Parliament discusses fisheries reform in September 2012, using the limited extra powers granted by the Lisbon Treaty, MEPs can be expected to maintain pressure on the Council for an enlightened policy to take effect from 2013. Rio will be an important incentive for change.

The June 12 Fisheries Council commitments are still pretty vague. They called for maximum sustainable yields for different stocks to be set “by 2015 where possible” and “by 2020 at the latest”. Multiannual plans for fisheries management would be used to manage specific stocks – bearing in mind that Lisbon introduced shared national-EU competence for such management. And the banning of discards, whereby fish caught beyond the quota limits are thrown back dead into the sea, would (eventually) be introduced.

According to Hugh Fearnley-Whittingstall, a pioneer campaigner who has gathered nearly a million signatures against discards, about half of the fish caught in the North Sea is currently dumped at sea because it fails to meet by-catch rules or exceeds quota.  His campaign has been remarkably effective in reinforcing the Commission’s ambitions for change in fisheries policy.

The language used in the Rio declaration (paragraphs 158-177) combines environmental and economic measures to protect oceans and seas. On fisheries it commits the parties “to urgently develop and implement science-based management plans, including by reducing or suspending fishing catch and effort commensurate with the status of the stock” and to “further commit to enhance action to manage by-catch, discards, and other adverse ecosystem impacts from fisheries including by eliminating destructive fishing practices”.

Fisheries policy will now take on a different aspect as accession negotiations with Iceland move into their most difficult phase. Ten of 18 chapters have now been negotiated, fisheries still remain.  The prospect of a reformed CFP will be key for Iceland, which will surely settle for nothing less than a firm commitment to change. “A fishing nation like Iceland is something that the European Union hasn’t encountered before,” says Iceland foreign minister Ossur Skarphethinsson – a claim which the Norway might dispute. Indeed, fisheries and energy were the two issues which led the Norwegians to reject entry in the early ‘70s.

There are other issues where Iceland will no doubt want assurances. For example, a situation where quotas allocated to one EU country can be bought up by operators from elsewhere, as where Spanish vessels have registered in British ports and so qualified for British quota allocations, is of course consistent with freedom of establishment, but does little to respect an initial purpose of quotas, ensuring fishing opportunity to locally based fishermen.  A greater emphasis on regional management may be the way ahead here.

Business & Climate Change, Environment, Fisheries
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Eurozone crisis challenges UK role in Europe

Posted by Michael Berendt on 10/06/12

Britain is buzzing with talk of a referendum on “Europe”. See the Nucleus blog.  In May Peter Mandelson was advocating a national vote some time after 2016, when a new Europe of fiscal union will have been defined. He sees it as a way of resolving divisions within Britain’s political parties.

Last week it was David Owen’s turn. He called for a dual option: Question One on UK membership of the “European Community”, which would essentially be the single market plus extras; and Question Two on belonging to the “European Union”, which he defined as the eurozone group of countries in an economic federation. Once Britain’s foreign secretary and one of the Gang of Four which split from Labour to form the Social Democratic party in the early 1980s, Owen was always an advocate of Britain’s place in Europe, but was consistently opposed to joining the euro. He would want “yes” to his EC, “no” to his EU.

The fact is that Owen’s EC and EU cannot be so easily disentangled from each other, and while the referendum option may seem a decisive way of determining Britain’s future in Europe, there is nothing decisive about it. A negative vote would confront the nation with some deeply painful choices and be a recipe for long-term decline.

There is no doubt that the eurozone crisis is a fundamental game-changer for Britain, as it is for the whole European Union. This is the watershed. If the euro is to survive there must be significantly closer economic integration, more discipline over national budgets and a more robust European banking system. Angela Merkel is now talking of political union as well.

Britain and some other countries may wish to keep their distance, but the UK government must tread warily, for this is marshy ground. Such closer integration is bound to have far-reaching consequences for the British economy, especially over financial services. It also has implications for Britain’s influence at a global level and its role in the world.

Although British adoption of the euro is clearly out of the question, at least for the foreseeable future, it remains a fundamental responsibility of any UK government to maximise its influence over the direction of the European project. British ministers may express fierce indignation over the impact of the euro crisis on Britain’s economy (while the German economy, by the way, continues to flourish), but it remains crucially important to maximise leverage over policy and to engage with European partners, not just to shout from the sidelines.

It is hard to see any British government voluntarily choosing the referendum option. Cameron surely had no choice but to opt out of the fiscal treaty last December if he wished to avoid such a vote, but there remains a real danger that his hand will be forced by political pressures within his own party and the inroads which UKIP could make in Conservative seats in a general election. For the coalition government it would be a deal breaker, but at least legislation adopted last year to hold a referendum (only) if further powers were to be transferred to Brussels provides a useful firewall.

The right formula for Britain is as a committed member of the European Union, but with some options kept open.  Schengen, the Charter on Fundamental Human Rights and monetary union are policy areas where opt-outs have been effectively applied. Europe’s direction of travel is unpredictable. Today’s bail-out of the Spanish banks may be a sign of more decisive action, but we still await the Greek general election result, which has come to seem very much like a referendum on the survival of the euro.

Economy & Euro, Financial Services
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EU resists pressure on airline emission scheme

Posted by Michael Berendt on 27/05/12

There is no doubt that European standards for commerce and industry have had a profound influence across the world. Europe’s standards have become global standards, if only because anyone wishing to sell their goods on European markets must respect them. Emission limits for motor vehicles, for instance, is one sector where EU legislation has had a worldwide effect in cutting fuel consumption and emissions.

There are high stakes when the EU seeks to introduce environmental standards with global reach, such as the carbon emissions trading scheme for all air services into European airports. The European airline industry is scared that the scheme will provoke retaliation from countries like the US, India, China and Russia, while Airbus is worried by China’s suspension of orders for new aircraft.

Airlines and industry have been stepping up the pressure to persuade the Commission to soften its position. They have been lobbying Transport Commissioner Siim Kallas, who seems desperate to avoid a trade conflict, but EU governments and the European Commission still insist that the plan will come in on schedule, in April 2013.

There seems to be more international solidarity in opposing the EU measures than in introducing measures to cut emissions, given that 23 countries, including the United States, Russia, China and India, agreed at a Moscow meeting in February to retaliate against the EU if it stuck to its plans.

Europe should stand firm, if only to encourage progress on that international agreement which was promised in the UN’s International Civil Aviation Organisation way back in 2004 and reaffirmed in an ICAO framework agreement in 2010, whose aim was to limit total CO2 emissions from aircraft despite the anticipated increase in air travel. Aviation currently accounts for about 3 per cent of global emissions.

Last week eight Chinese and two Indian airlines refused to provide 2011 emissions data to the European Commission, it seems because the Chinese government has expressly forbidden its airlines to co-operate, but apparently another 1,200 carriers have complied. These governments have accused the EU of taking extra-territorial decisions, but one might say that of all pollutants CO2 is the most global in its impact. When China is opening a new coal-fired power station every week, a limit on aircraft emissions seems a modest measure. And anyway, the EU trading scheme would only affect services into Europe and would be absorbed into an international agreement once that could be agreed.

So how much will Europe’s scheme cost each passenger? Estimates seem to vary from €3 (the price of a cup of coffee says Climate Change Commissioner Connie Hedegaard) to €40 or more. Some airlines already impose a small charge on the ticket to prepare the way. In the longer term everything will depend on how generous the emission allowances will be for individual airlines. There is no doubt that the measure will further persuade the aerospace industry on the need to improve performance, although it pales into insignificance beside the escalating cost of aviation fuel.

Business & Climate Change, Energy Efficiency, Environment, Transport & Services
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Guess who’s coming to dinner!

Posted by Michael Berendt on 09/05/12

European Council president Herman van Rompuy has arranged a summit dinner for EU leaders on May 23. For François Hollande the Brussels feast will be a first opportunity to brief all his colleagues on France’s new approach to the eurozone crisis and how he sees a return to growth in Europe. His message will be relatively well received.

The fascinating question is who will fill Greece’s dining chair and how deep will the Greek crisis have become in two weeks’ time.

Writing on Europe Day, May 9, the prospects are not encouraging. Suddenly the prospects of Greece quitting the euro look much more plausible. While neither PASOK nor the New Democracy party have been able to form a coalition, Alexis Tsipras, leader of the Left Coalition and leader of the second biggest party, demands that any coalition partner must join him in renouncing the bailout package and tearing up the fiscal treaty.

His argument is that Greece can retain the euro without the austerity, because any attempt to expel the country from the eurozone would bring the whole edifice tumbling down. In other words, you need us more than we need you, so you will have to concede.

New Democracy leader Samaras is reported as saying that “Mr. Tsipras asked me to put my signature to the destruction of Greece. I will not do this”. PASOK’s leader Venizelos, who negotiated the latest €130bn package, is equally clear. He wants a pro-Europe unity government.

The most likely prospect seems to be that Lucas Papademos will continue as caretaker prime minister until new elections can be held, possibly on June 17. The question is whether enough Greek voters, faced with the new reality, will revert so soon to traditional loyalties. If the answer is no, then it could be back to the drachma.

The Greek crisis has set François Hollande, by contrast, plumb in the mainstream of eurozone thinking. Commission president Barroso, Mario Monti in Italy, the ECB’s Mario Draghi and Christine Lagarde at the IMF have been quick to argue that Hollande’s priorities are their priorities. More spending by EU structural funds, emphasis on research and innovation, and a bigger role for the European Investment Bank are part of the mix, but deficit reduction remains a major preoccupation.

Until French parliamentary elections on June 10 and 17 Hollande will continue to focus on the growth agenda. He will push for a “growth pact” to be linked with the fiscal treaty but has told the Irish that there is no reason to delay Ireland’s May 31 referendum on the grounds that it might be changed. (Greece, Portugal and Slovenia have already ratified).

Michel Sapin, possible finance minister and a veteran of the Mitterand years, has already said that Eurobonds are not an answer to the crisis (which avoids one contentious issue with Germany), but a financial transaction tax will be high on the French agenda, although Hollande makes reference to the UK’s hostility to the idea in a wide-ranging interview.
It’s worth noting, too, that he wishes to move away from the Franco-German “duopoly” in European policy, while retaining close links with Merkel.

There is indeed a widespread assumption that Hollande’s victory and the Greek results mark the end of Angela Merkel’s predominance in European politics. I doubt it. Germany clearly remains fundamental to any resolution of the eurozone crisis and remains the motor of Europe’s economy.

Just to rub home the facts: German exports were up nearly one per cent in March to an all time record of €91.8 billion and imports were up by 1.2 per cent to €78.1 billion – also a record. A cheap euro was no doubt a help. But on a more sobering note for the new French President, French labour costs are now higher than those of Germany. Economic competitiveness will inevitably need to be part of his agenda.

European politics, Eurozone, Financial Services, french, Innovation and Growth, Trade & Industry
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Budget chickens come home to roost

Posted by Michael Berendt on 26/04/12

The European Commission is struggling to justify an increase of nearly 7 per cent in the EU payments budget for 2013.  The timing could hardly be worse, with national budgets feeling the full force of austerity, governments facing fierce opposition to spending cuts at home, and the Dutch being forced into new elections as coalition consensus crumbles. No surprise, then, that presentation was a major preoccupation at this week’s Commission meeting.

As you might expect, member states which are net contributors were quick to express their indignation at the Commission’s draft budget, which would rise to €151 billion for commitments (up 2 per cent) and to €138 billion for payments (up 6.8 per cent).

But of course everyone is to blame: governments, Parliament and the Commission. Yesterday’s chickens are coming home to roost. Long-term spending programmes from past budgets must be paid for, and a backlog of liabilities has accumulated which must either be cleared, or pushed further into the future.

The roll-over of unpaid bills from 2011 to 2012 amounted to €11 billion out of a total payments allocation of €129 billion for the year. It would hardly be good housekeeping to allow these liabilities to increase further, quite apart from the pressure on member states which have made investments under EU programmes and are then denied reimbursement to which they are entitled.

In presenting the Commission proposals President Barroso stressed that the funds to be committed for 2013 programmes would only increase by the rate of inflation, and I could only find one budget line, “Intermodality between Transport Means” where the proposed commitment has actually been cut. Another cut would be a 5 per cent reduction in Commission staff numbers over five years, but total administrative costs would still rise by 2.8 per cent.

Agricultural spending, including direct payments to producers, continues to take a third of the total budget, but the proposed increase would be less than the rate of inflation.

The budget proposals are of course founded, first on the belief that spending on European programmes will deliver more sustainable growth than spending at the national level, and secondly that they play a vital role in redistribution from wealthier to poorer regions.

On this basis, research, innovation and the structural funds would receive the lion’s share of new commitments. The allocation for the EU’s external relations would go up by 5 per cent. This includes additional resources for Europe’s diplomatic service, a proposal which has not been well received by Baroness Ashton’s home country.

The 2013 draft budget is an attempt to put greater emphasis on growth and to encourage European integration. But with a European population which is much more sceptical about the virtues of greater integration the argument does not have the traction which it once did.

This year’s budget discussions promise to be more bruising than ever, because long-term budget ceilings must be agreed for the years 2014 to 2018, together with the means of funding them. A financial transaction tax will no doubt be pushed as a supplement to the EU budget, combining with the UK rebate issue to ensure a fractious negotiation.

Just as a footnote it is worth recalling that the EU budget constitutes just over 1 per cent of gross national income of the 27 member states. Figures for per capita payments or receipts in 2010, helpfully compiled by Laissez Faire, give some insight  into how EU citizens are impacted by the EU budget and how this may reflect national negotiating positions.  No wonder the Dutch are sensitive!

Economy & Euro, Finance
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Economic growth is the theme for spring

Posted by Michael Berendt on 13/04/12

Spring is the season of growth, and economic growth in Europe has become the dominant theme of the moment. It is certainly a central theme of the French presidential elections.

In a few days time the European Commission plans to launch its economic growth plan for Europe, setting out the measures it believes that member states must take to stimulate their economies. The plan will focus on what the recent Greek sustainability report called “internal devaluation”, slashing the cost of labour by sweeping away restrictive labour practices, shifting taxes from employment to consumption and stimulating the mobility of labour.

The Commission’s plans will provide a timely backdrop to the French election campaign, which focuses so much on the balance between austerity and jobs and how to stimulate growth while at the same time bringing national budgets under control.

There seems to be clear blue water between Sarkozy and Hollande on economic policy. Sarkozy remains committed to a programme of cost-cutting, with much emphasis on reforming labour laws and stimulating export industries. Hollande wants to reverse the retirement age back from 62 to 60, to impose 75 per cent income tax on the rich, to boost social housing and to recruit a further 60,000 teachers.

Both the main contenders for the May 6 run-off are seeking to establish their patriotic credentials with stirring rhetoric. Hollande says “je veux rétablir notre souveraineté nationale”; Sarkozy praises De Gaulle’s empty chair policy, from which, he says, the common agricultural policy arose. But in truth the freedom of action for Le President – or any other European leader – is more limited than it has ever been.

François Hollande appears on the face of it to mount a bigger challenge to mainstream European policy, with his commitment to renegotiate the “Merkozy” treaty on economic discipline in order to put more emphasis on growth. But his latest remarks in today’s La Tribune seem cautious. If he wins the election he does not wish to challenge the disciplinary aspects of the treaty, but only the growth aspects.

(I can already see a new protocol being hatched in the corridors of the Commission for a possible Hollande victory which would emphasise the need for growth. That is, after all, the mood of the moment).

M.Hollande well knows that whatever his deep antipathy to financial markets and the rating agencies, any weakening of France’s commitment to take tough medicine would push up the cost of borrowing – perhaps dramatically. He has even less room for manoeuvre than François Mitterrand in the early ‘80s when he sought to build socialism in one country, only to be forced to change policy as the franc slumped.

As for Sarkozy, his threat to apply EU preference to French public procurement contracts unless there is reciprocal treatment for public contracts in countries such as China cannot be applied unilaterally without major dispute in Europe and beyond. On the other hand his aims may be partly met by the WTO Agreement on Government Procurement, a voluntary deal which came into effect just two weeks ago after 10 years of negotiation and is expected to be joined by China.

Sarkozy’s aggressive position on Schengen is no surprise. Although amplified by the killings in Toulouse it is consistent with his position 12 months ago, when he threatened to renounce the Schengen agreement as migrants crossed into Italy en route to France.

It is a fascinating election. The polls suggest a photo finish for the first round on April 22, but who knows where the supporters of Le Pen, Mélenchon and Bayrou will put their votes on May 6? And what if parliament returns a conservative majority under an Hollande presidency. Cohabitation? What economic policy will France then adopt?

Economy & Euro, Elections, Eurozone, Finance, french
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Good news for the ozone layer, but what lessons for climate change?

Posted by Michael Berendt on 23/03/12

A few days ago the death was announced of F. Sherwood Rowland, the American scientist who identified the damage being caused by chlorofluorocarbons (CFCs) to the earth’s protective ozone layer. His pioneering scientific work and the fierce campaigning by him and his collaborators led to a UN framework agreement to tackle the problem and to the 1987 Montreal Protocol, which provided the basis for the global phasing out of CFCs and halons in refrigerators, aerosols and industrial processes – a good template, you might think, for global agreement on climate change.

The European Community was of course a major player in negotiating the Montreal Protocol and subsequent decisions.

It all began as scientific theory, but this was borne out by clear evidence, discovery in the mid ‘80s of a vast hole in the ozone layer above the Antarctic. The ozone shield which protects Earth from solar radiation was being rapidly eroded, especially during the winter months, potentially exposing people to increased radiation from cancer-causing UV and threatening extensive damage to the natural world. CFCs and related gases were the culprit.

The good news is that the action taken over the last 25 years appears to be working. We have reached a turning point. A recent study suggests that the ozone layer is no longer undergoing the damage that it was. UV radiation levels are beginning to decline and the scale of ozone holes is diminishing. It was always clear that recovery would take many years as the man-made chemicals dispersed, but positive results are now coming through. It just shows how the world can respond when faced with an identified threat. A NASA website illustrates the trend.

The benefits go further: as well as damaging the ozone layer, CFCs and the other targeted chemicals are greenhouse gases which contribute to global warming, so their elimination is already making a contribution to slowing climate change.

What is striking about the CFC measures is how the scientific evidence was accepted by policy-makers and how the world rallied to take action. There were sceptics, and some industrial sectors were opposed to legislation, but the scientific approach – and the precautionary principle –  prevailed. Given the gravity of the threat the world decided it had to act, even if elements of doubt remained. Would that climate change could be approached with the same degree of global agreement and commitment! But it is of course a hugely more complex problem.

There is scientific theory, and then there is experience. Yet again this spring parts of western Europe, including eastern England, France, Germany, northern Italy and Spain are suffering drought, it seems because the jetstream has taken an unseasonal northerly shift, producing a high pressure area across Europe which is blocking access for the usual spring showers from the Atlantic.  Once more there is talk of harvest failure if the rains don’t come soon.

Climate change is just one of the “evil twins”  spawned by CO2 emissions. The other twin, more secretive and silent, is ocean acidification, where man-made carbon dioxide dissolved in the water is already affecting life in the seas and has the potential to damage ocean ecosystems and destroy vital fish stocks. It is surprising that the European Union has paid so little attention to this threat, but a new Swedish study sets out just how serious the risks are.

Agriculture, Business & Climate Change, Climate change, Environment, Fisheries
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New deal on finance tax may bring calm

Posted by Michael Berendt on 14/03/12

A compromise may be in sight to defuse the conflict over a proposed EU turnover tax for all financial transactions. It seems that finance ministers are looking at stamp duty on share deals as an alternative way of taxing the financial sector, perhaps marking a calmer phase in the evolution of European financial services legislation.

The argument over a Tobin-type tax has come to exemplify deep-seated antagonisms over the future of financial services within the European Union. For some Brits the proposed levy is seen as a weapon designed by others to undermine the predominance of the City of London; for many continentals, especially the French, it would deliver just desserts to a sector which is blamed for all the troubles of the world – and which could be a rich source of revenue (€57 billion is the Commission’s estimated take for its proposed turnover tax).

The French presidential elections will keep up the heat, and obviously there won’t be any resolution of the argument until well after May 6, when the rhetoric of the hustings should give way to a more pragmatic approach. Ministers plan to come back to the subject in June. The question then will be whether any form of financial tax could be introduced as an EU measure. The British would hate that, but might have to accept it as part of a compromise deal.

It is a testing time in the financial services sector as new rules take effect. The Prudential insurance company is threatening to move its headquarters from London to Hong Kong because of the requirements of the Solvency II  directive, while the Bank of England deputy governor Paul Tucker argues that the directive, which comes into effect in 2014, will swamp national regulators and make it more difficult for them to spot big risks

The European Court has joined the fun. Its recent ruling outlawing gender as an element in fixing car insurance premiums and in calculating benefits such as annuities could be seen as just the sort of legalistic nit-picking which brings European law into disrepute. That’s certainly the view of the insurance industry and of many commentators who see the decision as “bonkers”, although to be fair it was foreshadowed in the 2004 anti-discrimination directive.

I suppose that Test-Achats, the Belgian consumer organisation which brought the case, assumed that if the Court ruled in its favour all premiums would drop to whichever level was lower, so the 22 year old male car driver would pay the same premium as his young sister and the woman in retirement would  get the more generous annuity of her male colleague.

Be careful what you wish for! When the new rules come into effect in December 2012 the judgement is expected to trigger a general increase in insurance costs. Women will have to pay more for their car insurance despite the fact that they are generally safer drivers than men, while males will have to accept smaller annuities despite the fact that men tend to die earlier than women. Of course some premiums will come down,  but not by much, and the overall effect is likely to inflate costs and reduce benefits.

Banking, Economy & Euro, Financial Services, Taxation
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