David Cameron was absolutely right for opposing Mr Juncker not only for what he represents but also for the whole procedure hereby the European Parliament, instead of the EU leaders, decided who to nominate to be the next President of the European Commission. Although it is unable to choose the European Commission President without the formal approval of the European Parliament, Article 17 TEU grants to the European Council the power of initiative to nominate the European Commission president. Under the EU treaties, the President of the European Commission is to be elected by the European Parliament on the basis of a proposal from the European Council, which should take into account of the result of the European’s elections. There is nothing in the Treaties providing that the new president of the European Commission should be one of the candidates put forward by the European Parliament, or even that he or she must belong to the party coming first at the European elections. Yet, the European Parliament’s political groups leaders reached a backdoor deal on the process to determine the European Parliament’s candidate to become the next Commission President. The EPP, PES, ALDE, Greens/EFA and GUE/NGL designated their own candidates for the European Commission Presidency expecting the candidate whose party gathered the highest number of seats at the European Parliament, to be the next Commission’s president. The so-called Spitzenkandidat was clearly a power-grab by the European Parliament as the MEPs have taken from the EU leaders, directly elected by their citizens, their right to nominate the European Commission president.
This is not a democratic process as the European Parliament as well as the European Commission has claimed. In fact, such democratic argument is a deceit. Most of voters have never heard of the candidates. In fact, the majority of voters in all Member States were not even aware they were voting to elect the European Commission president. Moreover, it is important to stress that no one in Britain had voted in the European elections for the EPP, consequently no one had voted for Juncker. In fact, Mr. Juncker didn’t even stand for the European Parliament, therefore not even one single voter in Europe has voted for him, thus he could not possible be elected.
Yet, last June, the European Council agreed to propose Jean-Claude Juncker to the European Parliament as Commission President. All EU leaders voted in favour but David Cameron and Viktor Orbán. The veto of the Member States over this matter was already taken at Nice. David Cameron, due to qualified majority voting, was doomed to fail in his quest to stop Juncker nomination, unable to veto it, there was nothing else that he could have done but to try to form a blocking minority, however he was abandoned by his allies. David Cameron said to the other EU leaders “Now is the time to propose a candidate who will convince Europe’s voters we are acting upon their concerns.” He stressed, “If you want reform in Europe, you’ve got to stand up for it. If you want change, you’ve got to vote for it.” However, the other EU leaders failed to understand that the EU needs urgently radical reform and, ignoring their citizens’ demands, appointed Juncker. As David Cameron pointed out, in his statement to the House on the European Council on 30 June, the Council’s decision “risks undermining the position of national Governments, and it risks undermining the power of national Parliaments by handing further power to the European Parliament.” British people have not approved to give more powers to the European Parliament.
Then, on 15 July the European Parliament elected Jean-Claude Juncker, in a secret ballot, as President of the European Commission, by an absolute majority of 422 votes from the EPP, S&D, and ALDE groups. The vote just rubber-stamped the grand pro EU coalition deal. The European Parliament has treated voters with contempt. They said to people that the so-called spitzenkandidaten would put an end to the back room deals in Europe, while the process entailed precisely that. Moreover, as in previous legislatures, the European Parliament president was elected by a back-room deal and secret ballot. Schulz publicly criticized the fact of the EU top posts being decided through back-room deals, yet his so called re-election was the result of that.
The so-called ‘grand coalition’ deal between the European People’s Party, the Socialists and Democrats (S&D), and ALDE has been extensive to all the EU positions. The EPP has secured the appointment of Jean-Claude Juncker as president of the European Commission, hence there was a general agreement that the post of High Representative of the Union for Foreign Affairs should go to the centre-left group. The EPP also got the European Council presidency, which has been counter-balanced with more important Commission portfolios to the Socialist Group and to Alliance of Liberals and Democrats for Europe. The European Commission’s portfolios were also part of the horse-trading.
Surprisingly Jean-Claude Juncker nominated Lord Hill as European Commissioner for financial stability, financial services and capital markets union, and, obviously we should welcome this. According to David Cameron this “shows that when we campaign and fight we can get our way in the EU”. However, this is not such an important victory to the UK as it has been claimed. It is important to recall that the European Commissioners are required to be independent and to act on the Union general interests. Lord Hill would be bound to represent the interests of the EU as a whole rather than the UK. Lord Hill pursuant to Article 17 TEU and Article 245 TFEU is required to swear a solemn declaration, before the Court of Justice of the European Union, pledging to be completely independent in carrying out his responsibilities in the general interest of the Union as well as to respect the Treaties and the Charter of Fundamental Rights in the fulfilment of his duties. Lord Hill will have to uphold all the principles and values enshrined in the Treaties and the Charter of Fundamental rights. Moreover, he will have to pledge not to seek or take instructions from the Government or from any other institution in the performance of his tasks. In fact, in his answers to the European Parliament’s questionnaire Lord Hill stressed that he will uphold the Treaties fully. Hence, having lord Hill as financial services commissioner will enhance the UK position within the Commission but that does not mean that UK’s interest, particularly the interests of the City, would be upheld and protected. Lord Hill is required to act and defend the Union general interest.
Hence, Lord Hill won’t be able to act in the UK’s interest but in the Union general interest. Consequently, he will not be able to defend the City of London interests, particularly if they conflict with the EU’s general interest.
Jean-Claude Juncker has spoken several times that he wants “to give an answer to the British question”. In fact, he stressed, “We have to do this if we want to keep the UK within the European Union – which I would like to do as Commission President.” Yet, his political guidelines just say “I made clear throughout my campaign that I am ready to listen to the concerns of every Member State and to help find solutions.” Mr Juncker, as well as the other Member States, wants to keep Britain in the EU, but not at any price. He pledged to work for “a fair deal with Britain”, but according to Juncker “a fair deal with Britain” will accept “the specificities of the UK in the EU, while allowing the Eurozone to integrate further.” Referring to David Cameron’s article in the Daily Telegraph, he said “I will be ready to talk to him about these demands in a fair and reasonable manner” stressing “My red line in such talks would be the integrity of the single market and its four freedoms; and the possibility to have more Europe within the Eurozone to strengthen the single currency”. Mr Juncker noted that the other member states would have to accept some of the UK demands but, in exchange of “stronger powers for the monetary union.” Hence, the so-called “fair deal” doesn’t mean that all British demands will be accepted, just “some” and in exchange of accepting further integration within the eurozone. David Cameron said that Juncker’s appointment “will make renegotiation of Britain’s relationship with the European Union harder”. It seems Mr Juncker believes that by giving Lord Hill such an important portfolio would help him changing his image in the UK and ensuring Britain will remain part of the EU. He wants us to believe that he is serious about the need to address British demands for a new deal with the EU. One could conclude that Juncker’s plan entails more integration to the eurozone, without having to amend the treaties, for the time being, with the UK endorsement in exchange of minor concessions. Mr Juncker is not concerned in giving us back powers but to overcome any possible UK’s obstruction to deeper EU integration, particularly in the eurozone, and Lord Hill might help him to achieve this. Lord Hill said to the MEPs that he wont help the UK renegotiate a new relationship with the EU, he stated “I want to be a European commissioner and the nature of any reform process negotiation between UK and other member states is a matter for them”. His vision for Europe in 2019 entails a “stronger and more cohesive” EU, which “remains a family of 28 member states – including the United Kingdom.”
The MEPs had the so-called commissioner hearings from 29 September to 3 October. Lord Hill’s first hearing took place before the Economic and Monetary Affairs Committee Wednesday 1 October 2014. As expected, the MEPs were “very tough with lord Hill” and he did not get his confirmation. According to the MEPs seating in that committee, Lord Hill’s policy answers were vague and he has not shown a good knowledge of his financial services portfolio. Moreover, the MEPs, particularly from the left, were not enthusiastic of having a British Commissioner in charge of financial services and responsible for the EU Banking Union, as they believe the UK should not have much say over EU financial issues, as it is not part of the eurozone, the banking union and the financial transaction tax. Gianni Pittella, president of the socialist group in the European Parliament said, “It is unacceptable that this important and sensitive job is given to a Conservative, free-market liberal.” Moreover, he said, “The financial sector urgently needs better regulation and we will not accept any backward step on this issue. It’s a matter of principle.” Furthermore, the MEPs have expressed concerns that Lord Hill may be too close to City of London.
As John Redwood said, “They will want him to be loyal to the treaties Conservatives have opposed, loyal to a federally inclined Commission which we oppose, and keen on the project of ever closer union which the UK cannot accept. He will doubtless use language to get through his test which will upset eurosceptics.” In fact, during his hearing Lord Hill told the MEPs “I am not here as a representative of the City of London, I am here to represent the European interest”. He had no choice but to promise to work in the EU general interest. Then, he stressed “I have a very clear and simple view – it is in the interests of the EU for Britain to be in it, and for Britain to be in the EU.” In fact, he said “I want to work for the common European interest and I want my country to remain part of a Union of 500 million people with shared values, who live together, work together, trade together and who face global challenges together.” Nonetheless, the Economic and Monetary Affairs Committee did not endorse him and demanded a second hearing to assess his suitability for the job.
Ahead of this hearing, Lord Hill has replied to the Committee’s written questions. Lord Hill has been quizzed not only about policy and technical issues but also about the UK relationship with the EU and how he would address “potential conflicts between UK and EU objectives”. MEPs were particularly concerned that Lord Hill will mainly protect the City’s interests rather than the EU as a whole. In his reply to the supplementary questions Lord Hill recalled “I will be under a legal and indeed moral duty, like all Commissioners, to work for the general European interest.” He confirmed that he would serve “the general interest, not any one Member State’s interest”. He then stressed “my strategy will be inclusive and to serve the interests of the European Union as a whole.” During his second hearing, aimed at convincing MEPs about his commitment to the EU and avoid rejection or being assignment a new portfolio, Lord Hill took a more pro-EU stance, as Lord Hill said “I’ve had to overcome some suspicions about being a Brit, especially about being a Brit in this portfolio,’ Under pressure from the MEPs, Lord Hill has endorsed EU policies to the detriment of the Government’s position.
The European Parliament Economic and Monetary Affairs Committee approved Lord Hill as new EU Commissioner for financial services. As it has been reported, the MEPs were well aware that rejecting Lord Hill would make it even harder to defend the EU institutions in the UK. Nonetheless, it is important to mention that Juncker has given to the UK the portfolio where it has more national interest mainly with the purpose of neutralising it, as Lord Hill is required to overcome the national interests and protect the EU general interest.
The European Commission, as a whole, including the President, the High Representative, and the other members of the Commission are subject to a vote of consent by the European Parliament and then the European Council formally appoints the Commission acting by a qualified majority. Theoretically, the European Parliament can only confirm or reject the entire Commission, but it may reject a commissioner nominated by a Member State or asked for a given portfolio to be changed by threatening to reject the college as a whole. In 2004, Rocco Buttiglione and Ingrida Udre had to be replaced and László Kovács had to be assigned a different portfolio. This year, the MEPs sitting in the Industry, Research and Energy Committee and the Environment Committee overwhelmingly rejected Slovenia’s nominee for vice president for energy union and the culture and education committee has not endorsed Hungary’s Tibor Navracsics as the Education, Culture, Youth and Citizenship commissioner but voted to accept him in another role.
Ahead of the confirmation vote, Jean-Claude Juncker, responding to pressure from the European Parliament, has made further portfolio changes so he could secure a majority, namely the second Slovenian nominee has been given the transport portfolio and Maroš Šefčovič of Slovakia is now responsible for the energy union, citizenship has been removed from the portfolio of Tibor Navracsics and added to the migration and home affairs portfolio of Dimitris Avramopoulos whilst the Hungarian Commissioner is responsible for Education, Culture, Youth and Sport.
The three-party grand coalition (EPP, S&D and ALDE groups) that ensured Jean-Claude Juncker election has now ensured the confirmation of the new Commission. The European Parliament approved yesterday the new college of 27 Commissioners with 423 votes in favour, 209 against and 67 abstentions. The European Council will formally appoint the new Commission tomorrow. Mr Juncker and the new college of commissioners will take up office, for a period of five years, on 1 November 2014. Despite all the claims, the idea of the Spitzenkandidaten is not more democratic but it is a defeat for democracy. It has not provided the new president of the European Commission with more democratic legitimacy. In fact, he has no mandate from member states’ citizens, as he is claiming.
There has been a EU’s ‘power grab’ over regulation of the British financial services industry and whilst Lord Hill might be able to limit the impact of future financial regulations he would be unable to address the issues of the regulations already in force, which are having a terrible impact in the City of London. He is required to “ensure that the Commission remains active and vigilant in implementing the new supervisory and resolution rules, making European banks more robust so that they can get back to lending to the real economy.”
The financial crisis has led to an overhaul of the EU regulatory and supervisory framework. The Commission has tabled over 40 proposals in less than 5 years. Such EU regulations and directives have created further burdens on the UK’s financial services. This is irreversible, unless the ESC’s proposal for desaplication of EU legislation notwithstanding the European Communities Act 1972 is introduced.
The Government has been launching legal challenges at the CJEU to limit the impact of the EU financial regulation in the UK, but the Court has already decided against the UK in two of the cases, short selling and the financial transaction tax. The FTT proposal clearly shows how the UK is subject to damaging proposals even if it does not join in, and the Government ability to protect national interest is being increasingly restricted. Yet, the Government attempt to stop the proposal before being adopted has failed. The CJEU’s judgment has drawn attention to the Government powerless in stopping other member states moving forward with further integration and joint policies, under enhanced co-operation, that jeopardise UK interests. There is nothing Lord Hill can do about the FTT. The French Pierre Moscovici will be the commissioner for Economic and Financial Affairs, Taxation and Customs and, it is well known that France has been pushing for the FTT to be introduced in the EU. Jyrki Katainen Vice-President for Jobs, Growth, Investment and Competiveness and Valdis Dombrovskis Vice-President for the Euro and Social Dialogue are both from non-participating member states, Finland and Latvia respectively, but these countries have not opposed to the FTT either and are considering joining in. Nonetheless, Mr Juncker favours a Financial Transaction Tax and will push for its adoption. He pledged in his political guidelines to “work for the adoption at EU level of … a Financial Transaction Tax.” In fact, Jean-Claude Juncker stressed in his “mission letter” to Pierre Moscovici that he should focus, during his mandate in “seeking to finalise negotiations on the Financial Transaction Tax”.
It is well known that the UK is against the cap on bankers’ bonuses therefore it is not surprising that Jonathan Hill will not be responsible for banker’s pay. Mr Juncker has decided not to include the bankers’ bonuses issue in Lord Hill’s portfolio as it has transferred this issue to the Justice, Consumers and Gender Equality portfolio. The European Parliament wants the European Commission to stop banks sidestepping the EU’s cap on bank bonus hence, clearly, the MEPs were not eager in having Lord Hill in charge of this issue. According to the EUobserver Gianni Pitella said that he had “obtained a promise from Mr Juncker on depriving Lord Hill of responsibility for overseeing financial sector pay and a commitment about continuing the reform of the financial sector.” Moreover, it is important to mention that the European Commission is already planning to challenge the use of “cash allowances”, which have been cleared by the UK’s Prudential Regulation Authority. Michel Barnier, the outgoing internal market commissioner, has raised concerns over “cash allowances” that have been used by UK based banks, in a letter to the European Banking Authority. He then asked EBA to share with the European Commission the outcome of their investigation by the end of September, so that the European Commission “can address any concerns in a timely manner through a coordinated policy response”. It remains to be seen what “a coordinated policy response” would entail. Nonetheless, if the UK’s bank use of the “cash allowances” is deemed inconsistent with the bonus cap rules they would have to change this practice. In fact, on 15 October EBA published the result of its investigation on discretionary remuneration practices across the EU banking sector. According to EBA “competent authorities across the 28 EU Member States have reported that 39 institutions use ‘role-based’ or ‘market value’ allowances, which the institutions classify as fixed remuneration.” EBA stated in its opinion “that ‘role-based allowances’ which are not predetermined, are not transparent to staff, are not permanent, provide incentives to take risks or, without prejudice to national law, are revocable, should not be considered as fixed remuneration but should be classified as variable in line with the letter and purpose of the CRD.” EBA is therefore implying that the use of “cash allowances” breaches EU law, namely the bonus cap and other requirements included in the EU Capital Requirements Directive. In fact, EBA’s calls for the EU competent authorities to “use all necessary supervisory measures to ensure that by 31 December 2014 institutions’ remuneration policies are updated to reflect the findings of this Opinion that such allowances should be classified as variable remuneration and that payments of such allowances are not causing institutions to contravene the bonus cap and other CRD requirements.” The EBA’s opinion is not legally biding but EBA is planning to publish new guidelines next year. It is important to recall that EBA has powers to take decisions directly applicable to financial institutions where national regulators fail or incorrectly apply an EU law or technical standards.
In his reply to the economic and monetary affairs committee’s questionnaire Lord Hill pointed out “I am aware that the UK has legally challenged the CRDIV Directive on this issue in a case brought before the ECJ”, and stressed, “it is the Commission’s policy to uphold the law.” Lord Hill further said “If a Member State does not comply with EU rules, or tries to circumvent them, I will ensure that full use will be made of the various enforcement tools available.” In fact, he said, “The Community method is both the right way to proceed in our complex democracy and the most effective way to get things done.” The CJEU is most likely to decide against the UK in the bonus cap case too. In a hearing at the European Court of Justice, ahead of the decision, that it is only expected next year, the Treasury’s lawyers argued that the bonus cap breaches the EU’s treaties. However, according to The Telegraph, the Advocate General, Nilo Jaaskinen, said that the Government’s argument “was inconsistent.” Jean-Francois Gerard, a lawyer that attended the meeting, said, “The feeling I got from the hearing was not so good for the UK, which is not really a surprise, but more of a surprise was the tone of voice from the court.”
As Mr Juncker is not planning to repeal EU financial regulations and under the terms of the European Community Act 1972 (ECA) the UK is required to comply with EU law, including the ECJ’s decisions, which are, under Section 3(1), binding precedents for all UK courts and tribunals, the only possible solution for the UK is to amend the ECA 1972 so that it can disapply EU law where it is in the national interest to do so.
It is important to recall that the European Parliament elected Mr Jucker on the basis of his Political Guidelines. He made several promises to MEPs, of all political groups, in exchange for their support. Mr Juncker’s political guidelines reflect indeed the MEPs demands. He was particularly praised by the Socialists and the Liberals, and, obviously, by the EPP. These guidelines would be now developed into the European Commission working programme, which will shape the future direction of the EU for the next five years, covering policy priorities and the legislation that the Commission will put forward.
Jean-Claude Juncker set out in a “mission letter” the “specific goals” that Lord Hill would have to reach during his mandate. Lord Hill is required to deliver the priorities set up by Juncker in the Political Guidelines and to pursue the EU’s so called reform agenda, hence is room for manoeuvre is very limited. He is restricted by Juncker’s priorities and policy limits.
Mr Juncker has asked Lord Hill to, during the first three months of his mandate, “contribute to projects steered and coordinated by the Vice-President for Jobs, Growth, Investment and Competitiveness and the Vice-President for the Euro and Social Dialogue”, particularly “to the jobs, growth and investment package”. This would entail “measures to improve the investment environment” and “presenting concrete initiatives on the long-term financing of the economy.” Lord Hill has been asked to seek “appropriate ways to revive sustainable and high quality securitisation markets, to reduce the cost of raising capital in the Union and to develop alternatives to … companies’ dependence on bank funding.” He is also expected to contribute to the project team leaded by Andrus Ansip, Vice-President for the Digital Single Market, “to ensure the safety and the modernisation of the Union’s regulatory framework on digital/electronic payments in order to facilitate online purchases” and to assess “the safety and appropriateness of certain virtual currencies” so that “relevant policy measures” can be proposed. Mr Dombrovskis and Mr Katainen will mainly supervise Lord Hill.
Stressing his support of the banking union, namely “the development of stricter controls on banks through a Single Supervisory Mechanism and a Single Resolution Mechanism with a Single Resolution Fund”, Juncker announced, in his political guidelines, his intention to create a Capital Markets Union, complementing “the new European rules for banks”. Mr Juncker has stressed, “a much stricter control of financial markets and institutions is necessary.” Lord Hill would have to ensure that “the Commission remains active and vigilant in implementing the new supervisory and resolution rules fully”. He will have to carry on with the regulatory and supervisory reforms. Lord Hill is required to continue, “to put in place a regulatory framework which ensures the resilience and stability of the financial services sector.” Juncker has requested Lord Hill to ensure “timely and effective implementation of the financial services regulatory reform agenda, including the accompanying delegated/implementing acts.” The president of the European Commission has stressed that “Financial markets and institutions should be appropriately regulated and supervised with, where relevant, appropriate crisis management tools.” Hence, according to Juncker’s plans, the European Commission will continue to proposed more legislation affecting financial services, and the city of London.
It is important to note that Juncker said in his “mission letter” that he wants Lord Hill to “look at the social fairness of regulation in this field”, then he particularly stressed “we should avoid wrong incentives for managers in these industries”. Juncker has made therefore clear that Lord Hill has to uphold and implement the EU rules on bankers bonus cap. In fact, as above-mentioned, Lord Hill will not be responsible for overseeing the EU’s bank bonus rules, as the responsibility for the financial sector pay has been assigned Věra Jourová, the commissioner for justice, consumers and gender equality.
The banking union would dominate Lord Hill’s work, as he would have to make “all necessary arrangements for the Banking Union”, in order that “the Single Resolution Board is set up and operational on time.” Lord Hill has also been instructed to review “the functioning and the operation of the European Systemic Risk Board and the three Supervisory Agencies (“ESAs”), including their interaction with the Single Supervisory Mechanism and the Single Resolution Mechanism”. Such review should particularly focus on “the governance and the financing of these Agencies”. Juncker instructed Lord Hill to “find a way to eliminate EU and national budgetary contributions to the ESAs which should be wholly financed by the sectors they supervise.” The president of the European Commission has not shown any intention of limiting the powers of these authorities by returning them to national regulators.
While in his first hearing, Lord Hill carefully avoided answering questions that directly concerned UK’s Government position, such as the double majority voting in EBA, he could no longer avoid it at his second hearing. In fact, the MEPs directly asked Lord Hill, in their supplementary written questions, whether he could make “a clear commitment” to “guarantee the integrity of the single market” and to “neither propose nor support to introduce double majority voting applicable to euro area and non-euro area Member States such as in EBA?” Obviously, Lord Hill made a clear commitment to “guarantee the integrity of the single market.” It is important to recall that the so-called ‘double majority’ voting mechanism was negotiated by the Government to protect the Single Market and non-eurozone member states from being continuously overruled by the eurozone member states. Under this mechanism, which applies in the European Banking Authority, all legal proposals require a majority of both eurozone and non-eurozone countries to be adopted. As Bernard Jenkin noted, the government “safeguards” in the EBA’s voting arrangements “would make no difference” as “Once the Euro-states agree on new measures within the banking union, the Commission will propose the same new measures for all banks in the EU, in the name of the single market, whose provisions are decided by qualified majority vote.” Moreover, the voting arrangements will be review when there are four or fewer non-participating Member States in the banking union. Far from being a strong safeguard, it could ensure that the UK has a say in the making of banking rules. According to Andrea Leadsome“The UK should also seek to extend the “double majority voting” mechanism, established to prevent the Eurozone caucusing in the European Banking Authority, into other areas of the EU.” Yet, under pressure from MEPs, Lord Hill has not stand up for Government policy. Lord Hill has ruled out “double majority voting” as a model for the future. He said to the MEPs that “The introduction of double majority voting applicable to euro-zone and non- euro zone Member States such as in EBA … was a specific response to a specific issue.” He then said “I do not believe the specific circumstances which existed at the time on this issue and which were felt by the negotiators to justify taking such extraordinary measures exist elsewhere.” In fact he said, “I agree that such rules are not desirable in a well-functioning single market where trust prevails among Member States.”
Lord Hill has also been instructed to put in place “a well-regulated and integrated Capital Markets Union, encompassing all Member States, by 2019, with a view to maximising the benefits of capital markets and non-bank financial institutions for the real economy.” It remains to be seen what such union would entail, but as Alex Barker and Peter Spiegel said in The Financial Times “the move to deepen market integration could stretch to common rules for non-bank finance, moves to revive securitisation markets and possibly the central supervision of critical infrastructure, such as clearing houses.” In his reply to ECON’s supplementary questions, Lord Hill said that “a successful Capital Markets Union will need to be built on strong foundations – that means first completing and implementing the financial regulatory reforms begun by Vice-President Barnier, in order to achieve a single rule- book for capital markets which removes existing barriers within the Single Market and is effectively and consistently supervised and enforced.”
It is important to recall that Mr Juncker played an important role in the creation of the common currency, negotiated the Maastricht treaty, and he was president of the euro group from January 2005 to January 2013. He also played a key role in the negotiation and adoption of all the measures intended to tackle the debt crisis, including the EFSF and the ESM, which breached the EU Treaties, in order to save the euro. He is therefore a euro enthusiast, and, consequently he will focus the Commission work in protecting eurozone interests. He said to the MEPs, “The single currency doesn’t harm Europe, it protects Europe”. According to Mr Juncker’s political guidelines, the European Commission will continue with its reform “to preserve the stability of our single currency”. He is also an advocate for closer EU integration, particularly within the eurozone, therefore, unsurprisingly he wants “to enhance the convergence of economic, fiscal and labour market policies between the Member States that share the single currency.” Mr Juncker wants a “deeper Economic and Monetary Union”, he has endorsed and will pursue the recommendations of the “Four Presidents Reports” and the Commission’s Blueprint for a Deep and Genuine Economic and Monetary Union. He has instructed the Vice-President for the Euro and Social Dialogue, Valdis Dombrovskis, to pursue “the work of the “Four Presidents’ report” and the Commission’s Blueprint for a Deep and Genuine Economic and Monetary Union, integrating the social dimension.” It is important to recall that these reports proposed far reaching measures, urging the EU leaders to move towards a banking union, a fiscal union and, ultimately a political union.
Moreover, Juncker wants to strengthen the external representation of the EMU, and instructed Valdis Dombrovskis and Pierre Moscovici to put forward a proposal for “a more efficient external representation of our Economic and Monetary Union.” A joint representation of the Eurozone in the International Monetary Fund (IMF), has been a European Commission policy for a long time. Juncker stressed that only requires “a qualified majority of Eurozone countries”. If approved, eurozone countries would no longer represent themselves, which would increase eurozone influence at the IMF. Such move is likely to affect UK’s position at this organisation.
Valdis Dombrovskis, as project leader, and Pierre Moscovici, the Commissioner for Economic and Financial Affairs, Taxation and Customs, have been instructed to launch, during the first year of their mandate, legislative and non-legislative initiatives to deepen the EMU, which will deeply affect the UK, including “a stability-oriented review of the “six-pack” and “two-pack” legislation”. It is important to mention that there are provisions on economic coordination and surveillance that also apply to the UK, which is unacceptable. The UK has been subject to burdensome reporting requirements and surveillance missions from the Commission. Moreover, it is subject to the Commission’s warnings and Council recommendations if our economic policy is not consistent with the broad economic guidelines, and might be placed in Excessive Imbalance procedure. Lord Hill would be powerless to reverse this.
Pierre Moscovici, as Commissioner for Economic and Financial Affairs, Taxation and Customs, will have a role “helping to coordinate the economic policies of the Member States and to strengthen the EU’s social market economy.” Pierre Moscovici “Working closely with the Vice-President for the Euro and Social Dialogue” will have to “ensure that the EU’s economic policy coordination is effective and successful, in line with the goals of our social market economy.” Mr Juncker confirmed to be a “strong believer in the social market economy” however a “social market economy” equals low growth and high unemployment.
Pierre Moscovici has been entrusted to “ensure that taxation and customs union policies remain part and parcel of the genuine Economic and Monetary Union and contribute to the smooth functioning of the overall economic governance framework of the EU.” In fact, the new president of the European Commission also favours a Common Consolidated Corporate Tax Base and a Financial Transaction Tax and will push for the adoption of this two damaging pieces of EU legislation. Mr Juncker wants to strengthen Europe’s competitiveness but such proposals will undermine the competitiveness of the EU and the UK. Pierre Moscovici has been entrusted to continue to “improve the functioning of the internal market in indirect taxation and developing the definitive VAT system at EU level, as well as seeking to finalise negotiations on the Financial Transaction Tax and the Common Consolidated Corporate Tax Base.” It is clear that Mr Juncker has tax harmonisation in mind. Some of the Lord Hill’s responsibilities are likely to overlap with Pierre Moscovici’s portfolio. It remains to be seen how the vice-presidents will coordinate overlapping proposals.
Lord Hill will face difficulties to make his ideas to protect the City of London heard. Obviously, Lord Hill will have an important role in deciding the number and direction of EU financial regulation, he is in charge of proposing legislation in this area. However, Mr Dombrovskis and Mr Katainen will have veto power over any initiative, including legislative proposals. Hence, they would be able to block any proposal that Lord Hill might put forward. Lord Hill, as a ‘junior commissioner’ wont be able to present any initiative, any legislative proposal, without the support of the relevant Vice-President. His room for manoeuvre is very limited, particularly to protect the City interests. Moreover, he wont be able to avoid further financial market regulation as he has to comply with Juncker’s political agenda and policy priorities. There is no doubt that the European Commission will continue to proposed more legislation affecting financial services, which is then subject to the CJEU’s jurisdiction. Furthermore, this concentration of power in the hands of the President and his Vice-Presidents will further ensure that the Commission represents the EU’s general interest rather than member states individual interests. Hence, the “senior commissioners” would block any proposal that Lord Hill might present ensuring that the UK, and the city interests, is protected.
Lord Hill will be in charge of EU financial policy and regulating the City of London. The banking union will dominate the work of Lord Hill. Obviously, Lord Hill would not conduct the EU financial services policy in favour of the eurozone, he will seek to keep the EU’s financial services policy focused on the single market rather than the eurozone. Although, Lord Hill would not have much say in setting up the EU agenda for this policy area, at least he will seek to ensure that the EU financial regulations wont be mainly intended to address the eurozone interests and protect the single currency. Lord Hill might have and important role in protecting the single market against a eurozone caucus however as Professor Hix told the European Scrutiny Committee, “There is nothing you can write down in law that could stop a political agreement amongst states acting together in the Council.” Hence, there is nothing Lord Hill can do to prevent the eurozone and other member states part of the banking union to vote in block in financial and banking matters outvoting the UK in matters of national interest, imposing, in this way, further regulations on the City of London.
Nonetheless, having Lord Hill as Commissioner for Financial Stability, Financial Services and Capital Markets Union, it seems, it would no longer help to ensure, as David Cameron’s spokesman said that “the voice of countries that are not in euro and will not join the euro – such as the UK – are fully represented”, as initially thought. In fact, Lord Hill in his reply to the European Parliament’s questions said, “As European Commissioner, my job will be to build greater trust and confidence between the euro “ins” and “outs” in the interest of the European Union as a whole.” In fact, as above-mentioned, Lord Hill yield to the MEPs pressure and committeed to “neither propose nor support or introduce double majority voting applicable to euro area and non-euro area Member States”, whose main purpose is precisely to prevent Eurozone member states for voting as a block, in the EBA, constantly outvoting non-Eurozone countries.
Lord Hill would have to seek approval from the relevant vice president before presenting an initiate, legislative proposal, to the College of Commissioners. Only the president and the vice presidents can decide whether to put an initiative in the Commission agenda. Then, the proposal will have to be endorsed by a simple majority of the commissioners sitting in the College. However, it would be very difficult for Lord Hill to ensure the protection of the UK’s interests in his proposals. In fact, Lord Hill said to the MEPs “I am not here as a representative of the City of London, I am here to represent the European interest”. He is required to put EU regulation above Britain’s national interest.
It is important to note that any proposal on financial services will be subject to the Ordinary legislative procedure and QMV. The ordinary legislative procedure enables the European Parliament to override a decision taken by the Council. The cap on banker’s bonuses has been inserted into the EU’s rules at the European Parliament’s insistence, which clearly shows the power of the European Parliament in changing the outcome of negotiations, to the detriment of the UK. Whereas the European Parliament was able to influence the Council and to change the outcome of negotiations the Government was only able to win minor concessions. As the European Scrutiny Committee noted, “Proposals may change significantly as a result of compromise agreements negotiated with the European Parliament after the relevant EP Committee has scrutinised the Council’s ‘common position’ or ‘general approach’ and significant new provisions may emerge at a late stage during trilogue negotiations which have never been subject to scrutiny”. In fact, it is important to recall that due to QMV, the UK has been outvoted on matters of extreme importance, such as the EU Regulation on short selling and certain aspects of Credit Default Swaps (CDS), the damaging Directive on Alternative Investment Fund Managers and the EU legislation imposing caps on bankers’ bonuses.
Moreover, the UK no longer has an MEP chairing the European Parliament’s Economic and Monetary Affairs Committee, which is now chaired by an Italian socialist MEP, Roberto Gualtieri. The MEPs, particularly left wing MEPs, have been pushing for EU measures that have a negative impact in the City, such as the financial transaction tax and the cap on bankers’ bonuses. It is well know that the European Parliament has been voting against the City. The Government is not always able to form political alliances to block damaging proposals from being adopted. For instance, the UK was opposed to the Alternative Investment Fund Managers Directive and the cap on bankers’ bonuses but they were nevertheless adopted.
It is important to note that Mr Juncker committed the new Commission “to filling the special partnership with the European Parliament”, in fact he wants to have “a political dialogue” with the MEPs. He wants therefore to further strengthening the relationship between the commission and European parliament. The European Parliament secretary general, Klaus Welle, German MEP, said “we can expect much, much closer co-operation between the commission president and the parliamentary majority, which brought him into office,”. He stressed that such relationship “will not just be a technical relationship but a political relationship.” In fact, Mr Juncker pointed out “The larger the majority that supports me and my agenda today, the stronger will my hand be in forming the next Commission, and the more effective I will be in delivering swiftly on this agenda.” The EPP and the Socialists, as well as the Liberal MEPs, have already joined forces as a ‘grand coalition’ in favour of more Europe integration, they want to find a common ground on as many policies as possible. Hence, as in the previous legislatures, most of the decisions will be done through a grand coalition. Decision-making would be even more made through the recourse of the so-called trialogues, consequently it would be even more undemocratic.
The pro EU coalition is therefore seeking to greatly influence the EU priorities and agenda in the next five years. In fact, Mr Juncker has taken on board the priorities of the three groups that elected him and said “Europe’s policy agenda must be shaped in close partnership between the European Commission and the European Parliament, and in cooperation with the Member States” and “in line with the Community method.” He stressed, “The commission will be a political body. I want it to be an even more political body”. Hence, the European Commission would have even a more interventionist role in the EU law making, in partnership with the European Parliament, particularly with the so call pro EU coalition, sidelining, as much as possible, the member states governments and national parliaments.
It is increasingly hard to the Government to keep the UK out of the EU banking regulations, bit-by-bit EU regulation takes over from national regulation, and this is irreversible. There is not much Lord Hill or the Government can do while QMV and the ordinary legislative procedure are the rule, unless the ESC’s proposals for desaplication of EU law and unilateral veto are introduced. In the EU decision-making process, the common interest prevails over the national interest. The text ultimately adopted by the legislative bodies takes into account the EU’s interest and objectives as a whole, and this is not in the UK’s national interest. Lord Hill would not be able to get the European Commission, the other Member States, and the European Parliament to agree to a satisfactory change to the EU secondary law, which would entail repealing the burdensome regulation, which is already in force and is threatening the competitiveness of the City of London. The new European Commission, lead by Mr Juncker, would be like a central government representing the EU’s general interest jeopardising the UK’s individual interests. There is no doubt that the European Commission will continue to proposed more legislation affecting financial services, which is then subject to the CJEU’s jurisdiction. Without a fundamental renegotiation of the treaties, there is nothing the Government can do to protect the UK and the city interests against EU financial services regulation, unless it amends the ECA 1972 introducing a unilateral veto over EU legislative proposals and disapplication of EU legislation notwithstanding the European Communities Act 1972, which are not in Britain’s national interest. There is no other way that would enable the Government to stop the European Commission and the European Parliament proposals that jeopardise UK national interest. This would enable the UK to regain regulatory sovereignty over financial and baking matters whilst the City would be able to regain its competitiveness.
