Britain-Germany

Downsizing Brussels

Luxembourg's Prime Minister Jean-Claude Juncker, left, speaks with German Finance Minister Wolfgang Schaeuble during a meeting of eurozone finance ministers at the EU Council building in Brussels on Monday, Nov. 7, 2011. Greece's two biggest parties resumed talks Monday to agree on who should be the country's new prime minister, after reaching a historic power-sharing deal to accept a massive financial rescue package and prevent imminent bankruptcy. Fellow European governments will want concrete progress by the evening, when eurozone finance ministers meet to discuss the possibility of unfreezing bailout loans that had been kept on hold while the country sorted its political turmoil. (AP Photo/Virginia Mayo)
Luxembourg's Prime Minister Jean-Claude Juncker, left, speaks with German Finance Minister Wolfgang Schaeuble during a meeting of eurozone finance ministers in Brussels.
  • Why it matters

    Why it matters

    By advocating reforms of the E.U. in Brussels, Germany, Europe’s largest economy, may play a role in helping keep Britain in the European Union.

  • Facts

    Facts

    • Germany’s finance minister has proposed stripping the European Commission of its powers to enforce some of the European Union’s rules, according to a German newspaper.
    • Wolfgang Schäuble wants issues such as competition enforcements to be handled by a separate institution, similar to Germany’s independent Bundeskartellamt regulator.
    • British Prime Minister David Cameron also wants to claw back powers from the European Commission, part of his quest to renegotiate the terms of Britain’s E.U. membership.
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The German finance minister is reportedly calling to broadly reform the powers of the European Union government, a diplomatic opening to Britain that could bring about a retrenchment of central power after years of its gradual expansion from Brussels and Strasbourg.

In mid-July, Wolfgang Schäuble floated the idea of creating a new E.U. wide antitrust regulator – similar to the U.S. Federal Trade Commission or Bundeskartellamt – that would sever the political link between the Brussels-based European Commission’s power-setting and administrative roles.

The proposal, first reported by the Frankfurter Allgemeine Zeitung, is a move toward Britain, which is contemplating leaving the 28-nation European Union unless its members – including Germany – agree to reform and clip its administrative wings in many areas of national law.

That may not be enough to keep Britain in the zone, some observers said. In fact, some may interpret it as just the opposite – a further attempt to grab policymaking away from the British government.

“I suspect they (the British) would be cautious about any process which took powers away from an increasingly politicized E.U. Commission to an unaccountable, technocratic organization in Brussels” said Thomas Raines, research associate at Chatham House, a London think tank.

Whether they can eventually agree on a face-saving set of reforms that can keep Britain in the European Union, Mr. Schäuble and British Prime Minister David Cameron both have problems with the form of European government being championed by E.U. Commission President Jean-Claude Juncker, the longtime Luxembourg national leader and Brussels heavyweight.

In their minds, Mr. Juncker is turning the European Commission into a too intrusive, political presence – the sort of European government that goes far beyond what they believe is the Commission’s role as an impartial enforcer of rules and treaties governing the 28-nation bloc.

For Mr. Cameron, who is expected to call a referendum in Britain on its E.U. membership next year, the issue is a fundamental one — a difference over the structural reach of Brussels and its influence.

For Mr. Schäuble, a reform of the E.U. is looking better and better after his own frustrating efforts to take a tough line with Greece in its euro zone rescue.

The timely but unlikely common interests have the potential to help keep Britain in the European Union.

“Other countries coming in with ideas makes it clear that it’s not just a U.K.-centric thing and that it’s opening up the debate about E.U. reform in other countries too.”

Raoul Ruparel, Co-Director, Open Europe

Mr. Schäuble is especially angry with the Commission’s role in the latest bailout for Greece.

Instead of acting as an impartial arbiter in the dispute between Greece and its creditors – the other 18 countries in the euro zone – Mr. Juncker, the E.U. commission president, injected himself into the talks with Greek Prime Minister Alexis Tsipras and lobbied aggressively for Greece to remain in the common currency.

The accusation from Mr. Schäuble’s camp: An E.U. Commission that increasingly acts like a European government can’t at the same time serve as the impartial guardian of the E.U.’s treaties and rules, which many in Germany would argue Greece has violated for the past few years by failing to reform its economy.

The “right balance” between these two tasks must be restored in Brussels, a spokesman for Germany’s finance ministry said Thursday.

Restoring that balance could mean stripping the European Commission of some of its responsibilities for things like antitrust actions against companies and enforcing the single market in the European Union, or even actions taken against E.U. countries that violate the body’s common rules.

The idea would be to place that responsibility in a new, independent body, along the lines of Germany’s own anti-trust authority, the Bundeskartellamt, or the Federal Trade Commission in the United States, which also acts independently of the White House.

 

wolfgang schäuble george osborne june 2015 source reuters
The German finance minister, Wolfgang Schäuble, and the British chancellor of the exchequer, George Osborne, in June. Both nations would like to trim the E.U.’s influence from Brussels. Source: Reuters

 

Creating a new E.U. watchdog is something that Mr. Schäuble proposed in a mid-July meeting with E.U. finance ministers, Germany’s Frankfurter Allgemeine Zeitung reported Thursday.

The proposal seems to fall right into the lap of Britain’s Prime Minister Cameron, who has lobbied for a wide-ranging reform of how Brussels operates, promised to renegotiate his country’s relationship with the European Union and, following that, put Britain’s membership in the European Union to a referendum some time in 2016.

Raoul Ruparel, the co-director of Open Europe, a Brussels-based think tank, says that while Germany’s proposals for reforming Brussels are still “quite vague,” it’s a good sign that Britain is not alone in its quest to reform the European Union’s institutions.

“Other countries coming in with ideas makes it clear that it’s not just a U.K.-centric thing and that it’s opening up the debate about E.U. reform in other countries too,” Mr. Ruparel told Handelsblatt Global Edition.

Mr. Schäuble is one of Britain’s biggest supporters in the European Union. Last month he said it would be “unimaginable” for Britain to be outside the 28-nation bloc.

 

MerkelCameron-Reuters
Shall we stay E.U. friends? Source: Reuters

 

The German finance minister is also a passionate believer that the European Union needs to be reformed. But whether Mr. Schäuble and Mr. Cameron can find enough common ground on this question remains in doubt.

Part of the challenge is that they both come at the problem from different perspectives: While Mr. Cameron sees Brussels as a bureaucratic beast and hopes to return powers to national governments; Mr. Schäuble is more interested in making Brussels’ institutions more independent.

“Mr. Schäuble is actually a very convinced European,” argued Matthias Kullas, who heads economic and fiscal policy research at the conservative German think tank, the Center for European Policy. “I don’t think he wants to see more power in the hands of national parliaments.”

In Mr. Schäuble’s eyes, stripping the European Commission of its technocratic responsibilities could actually free it to become even more political: Mr. Juncker could focus on broader goals without having to worry about impartially enforcing the E.U.’s existing treaties.

That could be a red-herring for Mr. Cameron and Britain.

“It’s not clear what the Commission will be once the single market is hived off, how political it will be,” said Mr. Ruparel.

 

Christopher Cermak is an editor with the Handelsblatt Global Edition in Berlin, covering finance, economics and politics. Allison Williams is the Global Edition’s deputy editor in chief. Mirjam Moll of Handelsblatt’s sister-publication Der Tagesspiegel contributed to this story. To contact the authors: cermak@handelsblatt.com and williams@handelsblatt.com

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