special report - European Voice

Welcome, Croatia
A special report on the soon-to-be 28th
member of the European Union
Pages 15-20
30 May – 5 June 2013
Volume 19 Number 21
NEWS
Scenting blood
MEPs round on Giovanni Kessler, the head
of the EU’s anti-fraud office. PAGE 3
NEWS
Recommended reading
Commission issues country-specific
prescriptions for economic reform.
PAGES 4 AND 5
EU, Russia in dogfight
over passenger data
ANALYSIS
Solar powered
De Gucht urges the EU to stay united in a
trade dispute with China. PAGE 7
COMMENT
When more is less
The European Council was wrong to allow
the college of European commissioners to
keep on growing. PAGE 8
PROFILE
Strong stock
Jerzy Plewa: the
head of the
Commission’s
agriculture
department.
PAGE 10
REUTERS
Our crisis should
not be the poor’s
Europe’s economic crisis does not justify
cutting smart aid for the world’s poorest.
EU-USA TRADE AGREEMENT
A GAME-CHANGER?
European Parliament, 4 th June, 10:00am
The event will be webstreamed
more information at www.ecrgroup.eu
Price: Eurozone €4.70 UK £4.20
9 771370 601128
21>
Andrew Gardner
andrewgardner@economist.com
The European Commission is
scrambling to persuade Russia
to suspend a decree that would
require European airlines, from
1 July, to submit data about
their passengers to the Russian
authorities.
Diplomats and EU officials
say that, if the decree takes
effect, Russia could deny planes
from the European Union
rights of entry or overflight in
Russian airspace, or could fine
their operators.
The developing dispute will
be raised at an EU summit with
Russia that is scheduled for next
week (3-4 June). Tension ahead
of the summit has already been
heightened by jousting over Syria,
with Russia warning the UK
and France against exporting
arms to rebels fighting President
Bashar Assad.
A Commission official said
that Russia’s intentions on the
airline dispute remain “totally
unknown”, reflecting a broader
failure to engage with European
authorities to provide “basic
facts and assurances” about
the obscure transport-ministry
decree.
He said that the Russian authorities
had been pressed to
provide more information on
various occasions over recent
months, including at a meeting
of European commissioners
with Russian ministers in
Moscow in March.
Russia’s ambassador to the
EU, Vladimir Chizhov, yesterday
(29 May) told European
Voice that there had been “no
lack of communication”, pointing
to the commissioners’ meeting
and a meeting of experts on
22 May. EU officials “should
read the newspapers”, he said,
noting that the decree was published
on 22 September in Russia’s
official gazette.
He described the data required
as basic information already
routinely provided under
bilateral agreements. He said
the decree does not apply solely
to European carriers and “does
not distinguish between airlines
and merchant-marine companies
or buses or railways”.
The uncertainty about the
passenger data is likely to scupper
any possibility of the EU
agreeing to a deal on visawaivers
for Russian officials.
That deal was otherwise very
close to agreement, sources say.
Chizhov said that Russia had
hoped to finalise the visa-facilitation
agreement by the summit,
which will be held in Yekaterinburg.
The summit will be
attended by Herman Van
Rompuy, the president of the
European Council, José Manuel
Barroso, the president of the
Commission, and Catherine
Ashton, the EU’s high representative
for foreign policy.
The issue of service passports
is the trickiest remaining element
of the visa-waiver agreement,
which would ease travel
for particular categories of EU
and Russian citizens.
Russia is seeking waivers for
about 15,000 of its officials. At
issue is what categories of authorised
officials should be
allowed to visit the EU on
government-related business.
Chizhov refused to say what
action Russia might take if
EU carriers do not transfer
data about their passengers.
Officials and diplomats on
the EU side say that European
carriers would be in breach of
EU law if they transferred data
in the absence of a framework
agreement.
The EU currently has agreements
on the transfer of passenger
data with the United States
and Australia but is not currently
discussing any such agreement
with Russia. Discussions would
inevitably be protracted and
highly sensitive politically.
The level of political controversy
about data exchanges even
within the EU was highlighted
in April, when the European
Parliament’s committee on civil
liberties rejected a draft proposal
for the intra-EU exchange of
air-passenger name records.
An EU official said that at this
point the “only possible solution”
to the issue of passenger
data was for Russia to introduce
a moratorium, an opinion
echoed by diplomats.
The Association of European
Airlines said that Russia’s demand
for information about
passengers is part of a broader
global pattern. Other countries
that have asked for data, including
North Korea, have agreed to
moratoriums.

2
30 May 2013
NEWS
Troika tribulations
What a bumpy adolescence can teach the
eurozone’s creditors. COMMENT 13
THIS WEEK
Words and (mis)deeds
MEPs wasted €5m last year requesting interpreters who
were not used. NEWS 6
More sunshine
EU ombudsman praises progress on transparency.
NEWS 6
Spring cleaning
Europe’s banking sector must be put in order.
COMMENT 12
Oz shrugged
Why Australia’s media looks on the EU with disdain.
FEATURE 14
THE WEEK AHEAD
30 MAY
Commission adopts monthly
infringements package.
30 MAY
Member states’ research
ministers meet, Brussels. On
the agenda: Horizon 2020
research programme.
30 MAY
European Parliament committees
meet, Brussels. On the
agenda: development aid,
social investment package,
ITER, intellectual property
rights, blue growth, CAP
reform, matrimonial property,
Schengen governance.
INDEX
For a round-up of the morning papers,
look for the Paper Clip on our website
NEWS 2
EDITORIAL 8
COMMENT 9
PROFILE 10
31 MAY
EU-US inter-parliamentary
meeting, Dublin. On the
agenda: trade, economic
governance, cybersecurity.
3 JUNE
Extraordinary meeting of
MEPs on subcommittee on
defence, Brussels. On the
agenda: European military
capabilities.
5 JUNE
Commission college meeting,
Brussels. On the agenda:
cigarette smuggling
(pictured), convergence
report for Latvia.
FEATURE 14
SPECIAL REPORT 15-20
CAREERS 21
ENTRE NOUS 23
FOREIGN AFFAIRS Syria
Dismay at decision to end
the Syrian arms embargo
France and UK force the
EU to drop two-year ban
No arms to be supplied
before August
Toby Vogel and Andrew Gardner
tobyvogel@economist.com
andrewgardner@economist.com
European Union diplomats
were this week
struggling to assess the
effects of a decision by national
foreign ministers to
end an embargo on exporting
arms to Syria.
The decision came after 13
hours of talks on Monday
(27 May) as the foreign ministers
struggled to find a formula
that appears to maintain
the Union’s common
position on the war in Syria.
Afterwards little attempt
was made by ministers and
officials to hide that the decision
had been pushed
through by France and the
United Kingdom against the
will of the 25 other member
states.
In the absence of unanimity,
the EU’s sanctions
against the government of
Bashar Assad were to lapse
altogether. Monday’s decision
keeps in place the sanctions,
but allows member
states that might wish to (ie,
France and the UK) to supply
weapons for defensive
purposes to the rebels who
are fighting Assad.
Member states agreed in
principle that no arms
would be supplied before
1 August, so as not to preempt
a peace conference
that is expected to take place
in Geneva in June.
William Hague, the UK
foreign minister, suggested
EUROPEAN POLITICS
Bulgaria’s parliament backs
technocratic government
Andrew Gardner
andrewgardner@economist.com
Bulgaria’s President Rosen
Plevneliev yesterday (29
March) succeeded in breaking
a post-election deadlock
by persuading the national
parliament to back a technocratic
government.
However, the government
secured the backing of just
120 votes in the 240-member
parliament. Its creation
hinged on the support of one
member of a nationalist party,
Ataka, with whom other
parties had been reluctant to
that the move would help
those peace talks. “It was important
for Europe to send a
clear signal to the Assad
regime that it has to negotiate
seriously, and that all options
remain on the table if it
refuses to do so,” he said.
But he said the next day
(28 May) that the agreement
did not prevent the UK from
supplying weapons before
1 August.
ally themselves.
The election, held on 12
May, had produced no plausible
majority government.
The new prime minister,
Plamen Oresharski, has
served two previous stints in
government, in the first instance
– between 1997 and
2001 – as deputy finance minister
for a now defunct centreright
party. He returned to the
finance ministry – this time as
the senior minister – in 2005-
09 in a Socialist-led government
under Sergey Stanishev.
Stanishev, who remains the
Socialists’ leader, but has not
Criticism
Russia sharply criticised the
EU’s decision. Sergey
Ryabkov, deputy foreign
minister, warned that it
“does direct damage to the
prospects for convening the
international conference”.
Russia had already announced
that it would deliver
to Assad sophisticated anti-aircraft
missile systems.
They could greatly complicate
any potential attempt
by the Western allies to enforce
a no-fly zone in Syria.
Vladimir Chizhov, Russia’s
ambassador to the EU,
said: “I can understand the
intention to bolster the socalled
moderate opposition
forces, but life is more cruel
than that and even today you
see that the most robust of
the opposition are exactly
the extremist forces.”
Chizhov said that the move
would not make the rebels
more flexible ahead of the
Geneva conference. “Russia
is not supplying any offensive
weapons, Russia is not
concluding any deals on additional
supplies, Russia has
no plans to negotiate deals
on arms supplies,” Chizhov
said. “The weapons that
have been reaching Syria in
the two years since the conflict
[began] have only been
defensive.” They were based
on agreements that pre-date
the conflict, he said.
Austria, which wanted the
arms embargo preserved intact,
says that it is now considering
removing its 380
United Nations peacekeepers
from the Golan Heights,
a decision that would leave
the UN with the challenge of
finding a country willing to
place its troops in a buffer
zone between Israel and
Syria.
The member states’ decision
was greeted with dismay
by MEPs from various
political groups during a debate
in the European Parliament
yesterday (29 May).
joined the government,
backed his nomination to the
premiership.
One of a number of Socialists
in the new government is
a serving member of the European
Parliament, Kristian
Vigenin, who has been given
the post of foreign minister.
The new administration
was opposed by the winner of
the election, the centre-right
GERB party. GERB was in office
between 2009 and this
February, when street protests
prompted Prime Minister
Boyko Borisov to resign and
bring forward elections by
several months. Despite its
opposition to the government,
a couple of the new ministers
are closely associated with
GERB, the party to which the
REUTERS
Arnaud Danjean, a centreright
French MEP, described
Monday’s decision as a “halfmeasure
to give ministers a
good conscience” and criticised
the Council for its failure
to discuss questions of
substance relating to the
Geneva conference, such as
whether Assad and Iran, his
main foreign backer, should
be invited.
A senior international official
involved in preparing
the Geneva conference said
that the EU had no role in
the process leading up to the
peace talks. He said that
there was overwhelming opposition
to Iran’s attendance
but urged the opening of a
parallel channel to Iran.
president belongs.
One, Tsvetlin Yovchev, is a
former chief of staff to
Plevneliev. Yovchev has been
given the highly sensitive post
of interior minister.
Another GERB-related figure
is Danail Papazov, director
of the important port of
Varna. He has been given the
portfolio of transport, information
technology and communications.
Two of the most sensitive
dossiers – economic affairs
and energy – have been given
to one man: Dragomir
Stoynev, who served as an
economic adviser to Stanishev
in 2005-09. The street
demonstrations that brought
down Borisov were prompted
by high energy prices.

NEWS
30 May 2013
3
PARLIAMENT Anti-fraud
Questions over Kessler’s
leadership of OLAF grow
Bad relations with OLAF’s
supervisors fuel concern
Handling of Dalli inquiry
raised legal doubts
Tim King
timking@economist.com
The credibility of Giovanni
Kessler, head of
the European Union’s
anti-fraud office (OLAF),
suffered severe damage this
week during exchanges at
the European Parliament.
Disquiet about Kessler’s
leadership appears to be
growing among members of
the Parliament’s budgetarycontrol
committee, concerned
about his poor relations
with the supervisory
committee that is supposed
to oversee OLAF’s work.
MEPs are also disturbed at
how Kessler handled an investigation
that led to the
resignation of John Dalli as
a European commissioner.
Members of the supervisory
committee gave evidence
this week to the committee.
Catherine Pignon,
who is also chief public prosecutor
of the court of appeals
in Angers, France, voiced the
supervisors’ doubts about
the use of evidence from
telephone calls during the
Dalli investigation.
“On the taping of telephone
conversations, we
have stated that when a person
is under investigation
and where there is a recording
of conversations between
that person and a
third party…[there could
be] an infringement of a
right to privacy,” she said.
“There should be a legal
basis. Where there is no legal
basis, this would be a violation
of article 8 of the European
Convention on Human
Rights and Article 7 of the
[EU’s] Charter of Fundamental
Rights.”
She went on to say that
in the Dalli case, the supervisory
committee did not
find a legal basis for the
taped conversations.
Kessler told the budgetary
control committee: “We
have fully respected law and
jurisprudence… in the Dalli
case.” He said the quality of
the evidence in the Dalli case
had to be judged by the
courts.
Unsatisfied
But MEPs were clearly unhappy
with Kessler’s responses.
Ingeborg Grässle, a German
centre-right MEP, who
is drafting the committee’s
response to the supervisory
committee’s report, accused
Kessler of being content to
act illegally.
She has for months been
critical of Kessler’s investigation
of the Dalli case, along
with Green MEPs José Bové
and Bart Staes. But Liberal
MEPs, including Jan Mulder
and Michael Theurer,
the chairman of the committee,
this week also voiced
criticism of Kessler’s leadership.
Mulder criticised changes
that Kessler had made to
how information on cases
was provided to the supervisory
committee. Theurer
was provoked by Kessler’s
claim that relations with the
supervisory committee were
now much improved. He
pointed out that members of
the supervisory committee
clearly still felt there were
problems.
Kessler’s difficulties with
his supervisory committee
have overshadowed OLAF’s
annual report for 2012,
GIOVANNI KESSLER Head of the EU’s anti-fraud office. REUTERS
which was published last
Thursday (23 May). Kessler
said that the average length
of time to investigation cases
had decreased by almost
six months to 22.6 months,
while the selection phase
had been shortened to 1.4
months from 6.8 months in
2011. Kessler wrote that this
cut in processing time was
primarily due to a new caseselection
unit. The number
of cases closed during the
year more than doubled,
from 208 in 2011 to 465 in
2012. But the number of
open cases at year-end also
rose sharply, from 463 in
2011 to 716 in 2012.
Commission urged to
stop being a spectator
MEPs this week also criticised
Algirdas Šemeta
(pictured), the European
commissioner for antifraud,
for failing to address
the problems that they see
with OLAF, the European
Union’s anti-fraud office.
They accused him of
hiding behind the defence
that OLAF must be independent
of the European
Commission. Michael
Theurer, the chairman of
the budgetary-control
committee, told Šemeta
that the Commission was
responsible for ensuring
that the institutional
framework was effective.
A succession of MEPs
asked him why he had not
brought the supervisory
committee and Kessler together
to resolve their differences.
Theurer also flagged up
resignations from the supervisory
committee and
difficulties in finding replacements.
The Commission
should be concerned,
he said, to ensure that the
supervisory committee
was in good health.
Since soon after the resignation
of John Dalli as a
European commissioner,
the Commission has been
at pains to distance itself
from the OLAF investigation.
But as dissatisfaction
grows in the budgetarycontrol
committee about
the OLAF investigation,
MEPs are increasingly unconvinced
by Šemeta’s refusal
to get involved. With
the supervisory committee
raising doubts about respect
for human rights,
MEPs have argued, the
Commission has a duty to
see that EU law is respected.
Ingeborg Grässle said it
was incredible that the supervisory
committee’s report
on the Dalli case had
not been seen by Šemeta.
Instead, it had been sent to
José Manuel Barroso, the
president of the Commission,
and not passed on.
Grässle has been urging
Šemeta to suspend
Kessler. In theory, since
the director-general of
OLAF is appointed by the
Commission, following
consultation of the Parliament
and the Council of
Ministers, Kessler is a
Commission member of
staff.
As such he can be disciplined
by the Commission,
but before taking any disciplinary
measures the
Commission has to consult
OLAF’s supervisory
committee, which is supposed
to ensure OLAF’s
independence.

4
30 May 2013 NEWS
BUSINESS IN BRIEF
Data-roaming takeover
The European Commission
yesterday (29 May) approved
the acquisition of Mach, a
data-connection company
based in Luxembourg, by
American company Syniverse.
Both firms provide mobile
roaming services. The approval
is conditional upon the divestiture
of Mach’s data-clearing
and roaming data-exchange
services in the European
Economic Area.
Chip deal wrapped up
Canadian food company
McCain was cleared yesterday
to acquire Belgian potato
processor Lutosa. Lutosa’s
branded frozen-chip business
in the EEA must be divested.
EIB lending
The European Commission last
week (23 May) adopted a proposal
to increase lending by
the European Investment Bank
outside the EU. The proposal
would focus resources on tackling
climate change and supporting
the pre-accession partners
and the EU’s southern and
eastern neighbours. The new
legislation covers the period
2014-20 and is expected to be
adopted in the coming year.
Labelling merger
Swedish label and processingpaper
company Munksjö was
cleared to merge with Finnish
company Ahlstrom by the
European Commission on Friday
(24 May). Both operate in
the specialty paper industry.
Ahlstrom must divest its
abrasive paper backings and
pre-impregnated paper business
in Germany.
Electronics projects
The Commission announced
yesterday (29 May) that it will
spend €100 million on the first
five projects of the European
Electronics Strategy, launched
last week. The projects focus
on microchips, aiming to link
European manufacturers with
technology companies, chip
designers, researchers, and
universities at the earliest
stages of product development.
Funding will rise to a
total of €700m once member
state and industry contributions
are added.
FINANCE Long-term budget
New momentum
in budget talks
Focus shifts to specific
areas of diagreement
Latest negotiations have
been “constructive”
Toby Vogel
tobyvogel@economist.com
Dave Keating
davekeating@economist.com
Industry and business ministers
have given a cool reception
to European Commission
attempts to impose
obligations on companies to
rotate their auditors.
At a meeting of the EU’s
competitiveness council in
Brussels yesterday (29 May),
ministers cast doubt on the
Commission’s proposal to revise
the audit directive. The
proposal, put forward at the
end of 2011, would require
companies with public interest
implications, such as financial
institutions, to
change auditors every six
years.
The EU would also draw
up a blacklist of non-audit
services that auditors would
be forbidden to provide.
Most ministers said that
while they could support a
blacklist, the Commission’s
proposal would exclude too
many services. “We agree
EAMON GILMORE Ireland’s deputy prime minister. EC
Negotiations between
the European
Union’s institutions
on the EU’s budget for 2014-
20 turned for the first time
this week to the substantive
areas of disagreement.
Up to now, the talks between
the European Parliament,
the Council of Ministers,
represented by Ireland,
and the European Commission
have been largely procedural.
But Eamon
Gilmore, Ireland’s deputy
prime minister, who chaired
three and a half hours of negotiations
on Tuesday (28
May), said that there had
been “new momentum” in
the talks. “We made real
progress,” he said.
Officials described the atmosphere
as “constructive”.
“Differences of views remain
but I can also see the
scope for agreement,” Gilmore
said. “I remain convinced that
we can reach an agreement
over the coming weeks.”
The negotiators have set
themselves a deadline of the
end of June for reaching an
agreement.
Ireland and the MEPs
asked Janusz Lewandowski,
the European commissioner
for financial programming
and budget, to draft compromise
texts on four elements
of the €960 billion
multi-annual financial
framework for 2014-20 that
are at the heart of the negotiations.
The four areas of
disagreement are the flexibility
of the EU budget, a revision
clause, the future of
the EU’s own resources, and
the unity of the EU budget.
Concessions
In all these areas, the MEPs
had demanded concessions
when in March they rejected
a deal struck between the
national governments at
February’s meeting of the
European Council.
The Council and the MEPs
asked Lewandowski to produce
the compromise texts in
time for the next round of political
negotiations, which is
scheduled to take place next
Tuesday (4 June). Technical
meetings to propose Tuesday’s
talks are scheduled for
today (30 May). The Parliament’s
budget committee will
discuss the state of the negotiations
today.
An official said that the
meeting produced “the best
we could hope for”. “Now we
are past the stage when you
are asking yourself whether
with the principle, but the list
currently drafted would prohibit
almost all non-audit
services,” said Stephen Green,
UK minister for investment.
“We need to thin out the
number of measures on the
list,” agreed Philipp Rösler,
German economy minister.
Several ministers said they
doubted that rotation would
improve audit quality. The
European parliament’s legal
affairs committee voted last
month to extend the maximum
permitted period without
rotation to 14 years.
Ministers were evenly split
on whether the EU should
give oversight of auditing to
the EU’s European Securities
and Markets Authority, as
proposed by the Commission.
Many ministers support
an alternative proposal from
Germany to expand the remit
of the existing decentralised
network of national
oversight bodies. “We support
the alternative lighttouch
approach,” said Green.
you are negotiating or not,”
the official said. “Now we are
down to business.”
MEPs are also linking
their backing for the longterm
budget to member
states’ agreement to meet
shortfalls in the annual
budgets, whether carried
over from last year or emerging
in 2013. Lewandowski at
the end of March asked for
€11.2bn in additional contributions
from the member
states to finance the deficit;
the member states earlier
this month agreed in principle
to pay €7.3bn up front
and come back to the remainder
later this year.
Lewandowski has delayed
submitting a draft annual
budget for 2014 – the first of
the next multi-annual cycle
– to the college of commissioners.
The college was
initially scheduled to adopt
the draft budget yesterday
(29 May). Under the EU’s
budget procedure, the draft
annual budget has to be presented
by the Commission
by 1 July.
Ministers wary of strict auditor rules
But Michel Barnier, the
European commissioner for
the internal market, said a
centralised authority was
needed. “It would be in all of
our interests to save costs by
pooling resources and using
ESMA,” he told the ministers.
“I am happy to work on the
contents of the blacklist,” he
said.
Ministers also discussed
state aid reforms and recommendations
for EU copyright
law. The council will today
discuss space industrial policy
and the space surveillance
programme.
On Tuesday (28 May) the
Commission released its annual
report on EU competition
policy.
It showed the Commission’s
action in 2012 focused
on financial services, key
network industries such as
energy, telecoms and postal
services, and knowledgeintensive
markets such as
smartphones, e-books and
pharmaceuticals.
NEWS
SPECIAL
Member
states given
more time to
cut deficits
Commission recommends
economic reforms
France and Spain win
budget reprieve
Peter O’Donnell
peterodonnell@economist.com
The European Commission
yesterday (May
29) issued recommendations
of economic reform
for 23 of the European
Union’s member states, but
eased its demands of various
struggling countries.
The recommendations,
which will become the basis
for discussion at next month’s
European Council, confirm
the fragility of economic recovery
in the eurozone.
The country-specific recommendations
are made on a
review of each member state’s
economic and social performance.
They concentrate on
what should be achieved in
the next 12-18 months. The
Commission does not make
recommendations for the
countries that are receiving
EU bail-outs – Greece, Portugal,
Ireland and Cyprus – because
they are already subject
to recommendations made as
a condition of the loans.
The deluge of material released
yesterday contains a
sombre diagnosis of the economic
situation in most
member states. But it also
contains numerous attempts
to balance the picture with
optimistic assessments of
progress.
The recommendations suggest
that the Commission is
weakening in its commitment
to austerity. Extra time is to be
allowed for Spain, France, the
Netherlands, Poland, Portugal
and Slovenia to correct their
excessive deficits, while Belgium
has been spared sanctions
for backsliding.
The Commission offers a
justification for its indulgence:
“Fiscal consolidation and
growth are not mutually exclusive,
and the EU has been
consistently recommending
fiscal ways to boost growth,
including by improving the
efficiency of public expenditure
and increasing the fairness
and effectiveness of tax
systems.” It warns the six
countries that are being
granted a delay: “This is not a
chance to relax reform efforts
– on the contrary, this breathing
space should be used to
intensify reforms, continue reducing
debt and pave the way
for a sustainable recovery.”
The recommendations cover
public finances, with a
focus on reforms of taxation,
pension and health systems,
and the labour market, selected
as holding out hopes of improving
competitiveness and
reducing high unemployment.
The EU “is tackling the serious
structural problems that
built up over the last decade”,
says the Commission, “and

NEWS SPECIAL
30 May 2013
5
Mind your language8
MEPs criticised for requesting, but not
using, interpretation services. NEWS 6
ECONOMICS LESSON José
Manuel Barroso and (right) Olli
Rehn deliver the Commission’s
economic recommendations.
REUTERS
adjustment is particularly noticeable
in the more vulnerable
member states”. It notes
“major changes in employment
law” in Spain and Italy,
and French measures to reduce
taxes on labour. And it
says “public deficits have fallen
by almost half since their
2009 peak”.
But there are plenty of admissions
of continuing problems.
The repair of the banking
sector is “slow to bear
fruit”, and is not delivering
lower interest rates and the
restoration of normal lending
to the economy. A major challenge
is rising unemployment,
especially youth unemployment,
it says. The Commission
is “very concerned by the
rise in poverty, particularly
child poverty”. In addition,
“the lack of the right skills,
products and services poses a
serious threat to Europe’s
future growth”.
Taxation
On tax, the Commission urges
a shift in the tax base from
labour to consumption and
to recurrent property
or environmental taxation,
which it says will encourage
growth by increasing incentives
to work and hire, cutting
labour costs, deterring housing
bubbles and stimulating
the development of green
technologies. It also recommends
elimination of tax
exemptions, allowances, reduced
rates and loopholes,
and tougher action to improve
tax compliance and
fight fraud.
For the eurozone, the Commission’s
assessment is that
“the intensity of self-fulfilling
and destructive confidence
spirals has dissipated”. “However,
significant market fragmentation
remains”, says the
Commission. “The risk of further
financial-market fragmentation
and financial
turmoil illustrates the importance
for the euro area of rapidly
moving ahead with the
creation of the banking union
while avoiding ad hoc approaches
to bank resolution.”
Country by country
recommendations
Belgium
“Credible implementation
of ambitious structural reforms”
to boost growth
and achieve durable correction
of fiscal imbalances
must be presented
by October. No effective
action has been taken to
put an end to the excessive
deficit (but a one-year
extension is granted).
France
Put an end to the excessive
deficit by 2015 (a two-year
extension), and attain a
headline deficit of 3.9% of
gross domestic product
(GDP) in 2013, 3.6% in
2014, and 2.8% in 2015.
Pursue structural adjustments
so as to reach by
2016 the medium-term objective
of a balanced budget
in structural terms (in
line with the treaty on
stability, co-ordination
and governance – also
known as the ‘fiscal compact
treaty’). Take measures
by the end of 2013 to
bring the pension system
into balance in a sustainable
manner no later than
2020.
Germany
Preserve a sound fiscal position
that ensures compliance
with the mediumterm
objective. Pursue
a growth-friendly fiscal
policy through additional
efforts to enhance the costeffectiveness
of public
spending on healthcare.
Improve the efficiency of
the tax system.
Italy
Action under the excessive
deficit procedure should
be dropped. Ensure that
the deficit remains below
3% of GDP in 2013 by fully
implementing adopted
measures. Pursue structural
adjustment through
growth-friendly fiscal consolidation
so as to achieve
and maintain the mediumterm
objective as from
2014. Achieve the planned
structural primary surpluses
in order to put the
high debt-to-GDP ratio
(forecast to be 132.2% of
GDP in 2014) on a steadily
declining path.
Netherlands
Put an end to the present
excessive deficit situation
by 2014 – a one-year extension.
Reach a headline
deficit target of 3.6% in
2013 and 2.8% of GDP in
2014.
Spain
Ensure correction of the
excessive deficit by 2016.
Reach a headline deficit
target of 6.5% of GDP in
2013, 5.8% of GDP in
2014, 4.2% of GDP in
2015, and 2.8% of GDP in
2016 – a two-year extension.
Implement the
measures adopted in the
2013 budget plans at all
levels of government, reinforce
the medium-term
budgetary strategy with
sufficiently specified structural
measures for the
years 2014-16.
UK
Implement a reinforced
budgetary strategy, supported
by sufficiently specified
measures, for the year
2013-14 and beyond. Ensure
the correction of the
excessive deficit in a sustainable
manner by 2014-
15, and set the high public
debt ratio on a sustained
downward path.
Eurozone
Co-ordinate the major economic
reform plans of
members of the eurozone,
and monitor the implementation
of structural reforms,
notably in the
labour and product markets.
Explore ways of overcoming
national differences
in lending rates,
especially to smaller firms.
Action under the excessive
deficit procedure
should be dropped for
Hungary, Latvia,Lithuania,
Poland, Portugal and
Romania. But for Malta,
an excessive deficit procedure
should be opened.
The process
Country-specific recommendations
were issued
for all member states except
the four programme
countries – Greece, Portugal,
Ireland and Cyprus –
which are already subject
to more intensive monitoring
to restore macro-financial
stability, growth
and competitiveness. The
recommendations are
Austria
Belgium
Bulgaria
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Romania
Slovakia
Slovenia
Spain
Sweden
UK
= Commission recommendation
= no recommendation
based on a Commission assessment
of the economic,
employment and budgetary
situation in each country,
and on the adequacy of
the policy plans they have
submitted.
The Irish presidency of
the Council of Ministers
has scheduled meetings
among member state experts
to discuss the recommendations
before they
are presented to employment
ministers on 20
June, finance ministers on
21 June, and general affairs
ministers on 25 June.
The decisions of ministers
will then be endorsed at
the European Council on
27-28 June, before final
Public finances
Sound public
finances
Pension and
healthcare
systems
adoption during July.
Member states at the
Council can amend the
recommendations, but
the Commission cautions
that if they “were to be substantially
softened, the
process would lose credibility”.
Member states are expected
to implement the
recommendations in
drafting their national
budgets later this year, and
formal assessment of each
member state’s performance
will happen in May-
June 2014, when the Commission
presents next
year’s country-specific
recommendations and
accompanying analysis.
Fiscal
framework
Taxation
Cyprus, Greece, Ireland and Portugal should implement
commitments under EU/IMF financial assistance programmes
Source: European Commission

6
30 May 2013 NEWS
EUROPEAN PARLIAMENT Spending
MEPs ‘wasted €5m in
interpretation funds’
Report calls for greater
sharing of resources
English the dominant
language in plenaries
Toby Vogel
tobyvogel@economist.com
Adraft report from
the European Parliament’s
budgetarycontrol
committee has criticised
MEPs for requesting –
but not using – interpretation
services worth €5.5 million
last year, 12% of the
Parliament’s entire annual
budget for interpretation.
The report calls for a comprehensive
review of how the
sharing of interpretation resources
across the EU’s institutions
could produce cost
savings, and asks the European
Court of Auditors to
issue by next March a report
on interpretation and translation
costs in the Parliament,
the European Commission
and the Council of
Ministers. The report has no
legal force, but is a signal that
the Parliament is looking for
additional savings in budgets
for language services. The
Parliament’s budget has earmarked
€53m for direct interpretation
costs.
The committee had a first
discussion of the report,
drafted by Esther de Lange, a
centre-right Dutch MEP, on
Monday (27 May), and
MEPs are today (30 May) debating
new restrictions on the
sale and marketing of cigarettes,
as concerns grow louder
about their impact on the
economy.
Linda McAvan, a British
centre-left MEP who is guiding
the legislation through
the European Parliament,
wants the rules to go further
than the European Commission
proposal by banning the
use of branded logos on packs
and forbidding internet
sales. But amendments proposed
by centre-right MEPs,
particularly those from eastern
and southern Europe,
and inspired in part by fears
about the economic impacts
in a time of recession,
MEPs have until today (30
May) to propose changes.
The report is scheduled to be
put to a vote on 17 June in the
committee and in September
in the plenary.
The €5.5m waste from unused
interpretation services –
up from €4.4m in 2011 –
nearly cancelled out the savings
of €6.8m that were made
last year through new policies,
such as the more even
scheduling of committee
meetings through the week.
The report notes a “growing
trend in late cancellations”
and asks the Parliament’s
administrative
leadership, the bureau, to
provide the budgetary-control
committee with a detailed
analysis of the issue.
In its request for investigation
by the European Court
of Auditors, the report urges
an assessment of whether the
EU institutions have adequate
procedures to ensure
that services provided meet
the needs identified and are
MEPS REJECT CROATIA’S COURT CANDIDATE
The European Parliament’s budgetarycontrol
committee on Monday (27 May)
rejected Croatia’s candidate for a seat on
the European Court of Auditors in Luxembourg.
Neven Mates, a senior adviser to the governor
of Croatia’s central bank since July
2009, left MEPs dissatisfied during his
HEALTH Tobacco
Economic concerns grow
over tobacco restrictions
Dave Keating
davekeating@economist.com
nomination hearing when he gave a
legalistic reply to questions about whether
he would withdraw his candidacy if the
Parliament failed to endorse him. The
Parliament’s position is not binding on the
Council of Ministers, which appoints the
member states’ representatives at the
Court.
could gut the measure.
Many of these amendments
echo concerns raised
by member states. Earlier
this month (17 May), the
agriculture ministers of Bulgaria,
the Czech Republic,
Hungary, Poland, Romania
and Slovakia adopted a joint
declaration criticising the
Commission’s proposal to revise
the tobacco products directive,
claiming it would
harm economies and hurt
thousands of families that
depend on tobacco cultivation
or marketing for their
living.
They argued that the proposed
requirement for 75% of
cigarette packs to be covered
by graphic pictorial warnings
would harm brand-owners
and increase counterfeiting,
depriving national coffers
EP
provided at the lowest possible
cost. It suggests that the
Court should report every
year as part of the annual discharge
procedure, in which
MEPs approve the spending
of the EU’s bodies.
English-speaking plenaries
The report includes a breakdown
of the languages spoken
in plenary between September
2009 and February
2013, providing evidence
that English – spoken during
29.1% of the total speaking
time – has become the Parliament’s
de facto working
language. It is followed by
German (13.6%), French
(9.5%), Italian (8.5%), Polish
(7.7%) and Spanish (5.8%).
Eight of the EU’s 23 official
languages were used less
than 1% of the time –
Danish, Bulgarian, Lithuanian,
Slovene, Gaelic, Latvian,
Maltese and Estonian.
Croatian becomes
the EU’s 24th official
language – See page 20
of funds that would flow
instead into the black market.
Any such measures could be
entertained only if the EU established
“support instruments
for producers which
would compensate for losses
incurred due to the implementation
of the directive”,
they said.
Athanasios Tsaftaris,
Greece’s agriculture minister,
told his counterparts at the
agriculture council on 13 May
that the Commission’s proposal
to ban flavourings in
cigarettes would be devastating
for Greek families who
earn a living from growing
Burley flavouring for cigarettes.
Spain, Italy and Cyprus
are sympathetic to the Greek
objection. The issue may be
raised in today’s competitiveness
council.
Change of emphasis
Tonio Borg, the European
commissioner for health, said
this week he is concerned that
economic concerns are starting
to dominate the debate.
CITIZENS Complaints
Ombudsman praises EU
progress on transparency
Toby Vogel
tobyvogel@economist.com
In his last annual report
as European Ombudsman,
Nikiforos Diamandouros
has hailed positive changes
in the European Union’s
administration over the ten
years he has been in office.
But he warned that the fiscal
crisis could negatively affect
relations between citizens
and the EU institutions.
Diamandouros presented
the annual report for 2012 to
the European Parliament’s
petitions committee on Tuesday
(28 May). He noted that
the number of complaints
about a lack of transparency
had dropped by 36% last
year. “The European institutions
have worked a lot to improve
their transparency,” he
said. “This is a key issue for
the citizens.”
The European Ombudsman
deals with complaints
about alleged maladministration
by EU institutions.
Of the 2,442 complaints received
during 2012, only 740
were within the mandate of
the ombudsman. Of these, a
record 465 led to investigations
– an increase of 18%
over the previous year. The
ombudsman found maladministration
in 56 cases and
made critical remarks in 47
cases.
The highest number of
investigations concerned
Spain (340), Germany (273),
Poland (235) and Belgium
(182). However, the EU’s
small member states – Lux-
“This is a predominantly
health matter. I have no problem
discussing it elsewhere as
well, but the main decisions
should be taken in the health
council,” he said.
“I do not exclude that if we
reach our target of reducing
the number of smokers by
2% over the next five years
there would be some economic
consequences, but at
the same time there would be
positive ones which I think
would be even more.”
Other member states, including
France, Belgium, Finland,
Ireland and the UK,
have been strongly supportive
of the Commission’s proposal.
Some of them want the
EU to go further. The Irish
government announced on
Tuesday (28 May) that it will
enact a ban on brand logos on
cigarette packs – the first EU
country to do so. The positions
of Germany and Italy
are not yet clear. Borg is to visit
Berlin and Rome in the
coming weeks.
McAvan said she believes
embourg, Cyprus and Malta
– led in cases per capita. Of
the investigations, 53% concerned
the European Commission,
17% the European
Personnel Selection Office,
13% the EU’s agencies, and
5% the European Parliament.
The overwhelming
majority of complaints –
85.3% – were brought by private
citizens. The report says
that 69% of cases were completed
within one year of
their receipt.
Commenting on a drop in
the number of complaints
for the fourth year in a row,
Diamandouros attributed
this to improved information
about the scope and
limits of the office’s competences.
At the same time, the
number of cases resolved in
favour of the complainants
was the highest in the last
decade. Diamandouros said
that this tendency suggested
that “more and more citizens
addressing the ombudsman
do it for the right reasons”. A
review conducted by his office
last year found that EU
institutions complied with
the ombudsman’s recommendations
in four out of
five cases.
Three MEPs and three officials
from outside the European
Parliament are
standing to succeed Diamandouros.
The petitions
committee will hold hearings
with the candidates on
18 June, and the plenary is
scheduled to elect the new
ombudsman at its July session
in Strasbourg (1-4 July).
Mates worked for the International
Monetary Fund (IMF) in Washington, DC,
for 17 years; his last IMF post was as head
of its office in Moscow in 2004-09. For the
previous 15 years, he held various roles
at the Institute of Economics in Zagreb –
an independent government institution –
including as chief of the monetarypolicy
division.
Mates’s nomination was rejected by 16
votes to 11, while that of George Pufan,
Romania’s candidate for its seat on the
Court, was narrowly approved, by 14 votes
to 13 (see page 23). The two nominations
will now go to a plenary session.
Toby Vogel
the economic objections being
used by MEPs and member
states are coming from
the tobacco lobby. “There are
exaggerations that are being
put out there,” she said. “We
have to set the economic costs
against the health costs of
smoking.”
The Irish presidency of the
Council of Ministers is hoping
to secure a general agreement
between member states
at the health council on 21
June, but if no agreement can
be reached an additional
health council may be scheduled
for October. The Parliament’s
environment committee
will vote on 10 June, with
a plenary vote envisaged in
September.
On Wednesday (5 June),
the Commission will try to allay
fears that plans for large
pictorial health warnings
would increase cigarette
counterfeiting. It will adopt
a package of measures
to strengthen protections
against cigarette smuggling
on the EU's eastern border.
IN BRIEF
Afghanistan mission
On Monday (27 May), member
states prolonged the EU
police mission in Afghanistan
(EUPOL Afghanistan) until 31
December 2014. A budget of
€108 million was allocated for
the additional period, which
runs from 1 June.
Maritime labour deal
Member states and MEPs
reached a deal yesterday (29
May) on new labour standards
for ships sailing under EU flags.
The rules implement the international
Maritime Labour
Convention.
Bee risk identified
A report released by the European
Food Safety Authority
(EFSA) on Monday identified a
possible risk to bees from seed
treatment pesticide Fipronil.
Three other pesticides used for
seed treatment were temporarily
banned last month
after an EFSA report in January
identified a possible risk. German
chemical company BASF,
which makes Fipronil, said the
EFSA report is inconclusive.
Olive oil ban withdrawn
The European Commission last
week (23 May) withdrew a
proposal for new rules to
strengthen the olive oil sector
after concerns were raised
over a provision that would
ban refillable olive oil containers
in restaurants. The proposal
had already been approved
by member states. Dacian Cioloş,
the European commissioner
for agriculture, said he
would revisit the proposal after
consulting with restaurant
owners and consumer groups.
See page 9
Iceland’s government
The composition of Iceland’s
new centre-right coalition government
was revealed on
Thursday (23 May). The party
that won the 28 April election,
the Independence Party, has
five seats. The government
will, though, be headed by the
leader of the Progressive Party,
Sigmundur Davíð Gunnlaugsson.
Progressives will also hold
two the posts that are pivotal
in relations with the EU, foreign
affairs and fisheries.
Access to lawyers
MEPs, the European Commission
and Ireland have agreed
that anyone facing criminal
proceedings in the EU should
have the right to consult a
lawyer. The agreement on
Tuesday (28 May) is a breakthrough
in negotiations on EUwide
minimal procedural standards
on the rights of suspects
in criminal cases. It requires
the formal approval of MEPs
and member states.

30 May 2013
7
ANALYSIS
Trade
Long walk towards monetary union
A swift, drastic clean-up of Europe’s banking
system is needed more than ever.
COMMENT 12
Commissioner takes
tough line with China
Dumping of solar panels
‘part of a wider problem’
Andrew Gardner
andrewgardner@economist.com
Karel De Gucht, the
European commissioner
for trade, declared
this week that the
European Union’s biggestever
anti-dumping case was
part of a “fundamental debate”
about trading relations
with China.
In a thinly-veined warning
to Germany, he said “if we in
the EU do not stand together
on this, then we will lose”.
His comments, made at an
event organised by European
Voice on Tuesday (28 May),
were targeted at member
states that have criticised the
Commission’s plans to impose
temporary, six-month
punitive tariffs on Chinese
producers of solar panels.
Germany’s economics
minister, Philipp Rösler, said
on 19 May that punitive tariffs
would be “a grave mistake”.
The UK’s minister for
climate action, Greg Barker,
said this Monday (27 May)
that he had written to his EU
counterparts to urge them to
oppose levies. His ministry
said that restrictions on Chinese
imports would put “the
growth of the low-carbon
market across Europe at
risk”.
The Commission must
formally announce its decision
by 6 June, nine months
into an investigation that will
last 15 months. Europe’s imports
of Chinese solar panels
amounted to €21 billion in
2011, making it by far the
biggest trade-defence case
that the Commission has
ever handled.
According to EU trade
rules, a decision on whether
to impose tariffs during the
course of an investigation is
for the Commission to make.
When the investigation is
completed, five-year tariffs
The increasingly rancorous
debate about the
European Commission’s
plan to impose punitive
tariffs on Chinese producers
of solar panels has
largely overshadowed the
start of a process that
Commission officials say
could become a steppingstone
to a free-trade deal
with China.
On Thursday (23 May),
the Commission sent EU
member states the details
of the mandate that it
would like to be given for
negotiations with China on
an investment agreement.
The draft of the mandate
has been in the works since
February 2012, when EU
and Chinese leaders gave
can be imposed, but by
member states rather than
by the Commission.
Debating the theme “Is the
EU still a force for open markets?”,
De Gucht told his audience:
“What’s wrong about
this, I believe, is that member
states, already in this
stage of the discussion, they
want to have a predominant
influence on what is happening.
I think that this is completely
contrary to their own
interests.”
He continued: “We all
know that China is trying to
influence and scare off member
states. I think that this
not a good habit...but the
best protection for the member
states is to say that this is
the competence of the European
Commission.”
The proposal, which was
EU takes a step towards investment agreement with China
their go-ahead for the project.
This would be the first
stand-alone investment
agreement since the European
Union gained the
power in 2009 to negotiate
investment agreements
on behalf of member
states.
EU officials say that the
negotiations would follow
two tracks. The more important
would address the
“huge” problem of access
to the “long list of closed
sectors” in the Chinese
economy, or to sectors that
are open, but with conditions
attached. The other
track would look at the
protection of investments.
The Commission said
first circulated within the
EU’s institutions in April, has
come under attack chiefly
from ministers in Germany,
Europe’s biggest solar market
and Europe’s chief exporter
to China, and from
the UK, a champion of open
markets.
that most EU member
states have indicated that
they approve of the mandate
as drafted, and said
that it could be finalised
within a couple of months.
It is still, though, looking
for a “clear confirmation
from the top leadership level”
in China that Beijing is
interested in a wide-ranging
agreement. “There has
to be explicit acknowledgement
that market access
will be taken into account,”
an official said.
The EU’s bid to open up
China’s markets is being
launched in a context of
testy trade relations complicated
by efforts by China
to strike trade deals
with the US, South Korea
and Japan.
The conditions that EU
and Chinese companies
experience on each other’s
markets also differs greatly,
as an official acknowledged.
“Because the China
market is so much more
closed than the European
market, it is clear that
there are some additional
measures that China will
have to make,” he said, noting
too that Chinese investors
do not complain
about the level of protection
provided to Chinese
investors.
Nonetheless, the Commission
says that an agreement
should be of interest
for China, in part because
China is turning into a
Protectionism allegations
Within the solar industry,
opponents of retaliatory tariffs
base their case on the argument
that punitive measures
would shrink the solar
market and therefore harm
the EU’s own interest. However,
the Chinese government
and media routinely
portray this trade-defence
measure as protectionism,
prompting German Chancellor
Angela Merkel to say,
after meeting Chinese Premier
Li Keqiang on Sunday
(26 May), that “protectionism
is not the answer to
globalisation”. She did not
refer to the solar case specifically.
“It is interesting that no
one is putting into question
whether they [Chinese producers]
are dumping,” De
Gucht said of the Commission’s
critics.
The Commission is also
investigating whether subsidies
provided by the Chinese
government to the Chinese
solar industry amount to an
unfair trade practice.
But De Gucht placed the
case in a wider framework,
of overall Chinese industrial
policy. “What [this case] is
about is whether or not they
have to respect a certain
number of disciplines, a certain
number of rules and
conventions that add up
to fair competition. It is
whether we can accept that
they can dump as they wish.”
Some in the European solar
industry have suggested
that dumping is largely a
matter of sales of stocks by
companies that are collapsing
as China’s solar industry
consolidates. However, De
Gucht indicated that Chinese
producers’ practice of
selling below cost on foreign
markets followed a pattern
set by the Chinese government.
Dumping, he said, was
“happening in a number of
industrial sectors and it is
very easy to find them: you
read the last five-year plan
[set by the Chinese government]
and you can identify
“capital exporter”. Chinese
investment in Europe has
soared in the past two
years and an agreement
would provide assurances
to China that the EU’s
market will remain open
in the long term.
Much of the benefit for
both sides, the Commission
says, would come
from consolidating the 25
existing bilateral agreements
between China and
member states, some of
which date back to the
1980s.
Officials believe talks will
strengthen “the voices in
the [Chinese] government
that are pleading for further
liberalisation”. One
said that there has been “a
STRONG WORDS Karel
De Gucht, the European
commissioner for trade.
JENNIFER JACQUEMART
De Gucht: disunited EU will
‘lose’ trade battle with China
them, and it is in those sectors
that it is happening”.
On 15 May, the Commission
warned China that it is
prepared to impose sanctions
on two telecoms equipment-makers,
Huawei and
ZTE Corp, if the Commission
concludes that they received
illegal subsidies or
dumped their products on
the European market.
De Gucht, who later indirectly
referred to China as
“our fiercest competition on
almost all our markets”, said:
“Member states should realise
that when they try to
weaken the European Commission,
first of all they are
weakening themselves.”
For more, go to
www.europeanvoice.com/
open_markets
leap in liberalisation and
that has turned out well for
China and there is a realisation
that continuation is
good for them”.
A UK government
source welcomed the bid
to secure an investment
agenda, though his comments
came before he had
seen the mandate. “The
EU’s trade relationship
with China has been a bit
less than the sum of its
parts...It has lacked the
weight that you get when
you are in negotiations
with people.” Talks on the
investment agreement
“will thicken out the relationship,
not just the content”.
Andrew Gardner

8
30 May 2013
COMMENT
International Press Centre, Résidence Palace,
Rue de la Loi 155, Box 6, 1040 Brussels, Belgium
Decision on size
of Commission
does not add up
Some promises should not be kept. Regrettably, at their
meeting last week the European Union’s government
leaders kept a promise – to alter the Lisbon treaty to
ensure that there is one European commissioner per
member state.
That promise was made in December 2008, when the then
European Council was desperate to persuade the people of
Ireland to ratify the Lisbon treaty, which they had already
rejected once. The yet-to-take-effect treaty proclaimed that from
2014 the number of commissioners would be fewer than the
number of member states. But after those campaigning for a ‘No’
vote in Ireland had latched on to the (potential) loss of “Ireland’s
commissioner”, the European Council promised to revisit the
treaty before 2014. Having put the issue off for longer than was
prudent, last week the government leaders rewrote the treaty.
It is the wrong decision, made in the wrong way, and therefore
doubly regrettable.
To deal first with the style rather than the substance. The
Lisbon treaty has been re-written by a mere decision of the
Council. That stems from a wilful misreading of the treaty, using
a clause that says the precise size of the college can be altered by
decision of the Council. The overarching principle – that the
college’s size should be less than one commissioner per member
state – was not supposed to be reversed at the whim of the
Council. But the EU now runs scared of revising its treaties, for
fear of losing a referendum, so it resorts to subterfuge.
On the substance: the college of European commissioners is
already too large and should not be expanded further (as it will
be when Croatia joins the EU on 1 July and when any other
country joins the Union). The equation of one commissioner per
member state reinforces an erroneous impression that
commissioners go to Brussels to do the will of their home
country. They should not. They are required by the treaty to act
impartially in the interests of the EU. They go to Brussels leaving
behind them any allegiance to country, party or special interest.
There are arguments on the other side: by tradition, the
Commission is a guarantor of the interests of the smaller
member states to balance the dominance of the larger member
states. The presence of a commissioner from each state, with
equal voting rights in the college, reinforced that impression. It
also underlined that the Commission makes decisions on behalf
of every part of the EU.
But those arguments were not enough to outweigh the need to
constrain the size of the college. A college of such size is not a college
of equals. In practice, it becomes a college run by the president, or
by the president and a cabal of just a few commissioners.
If last week’s decision is to stand – and a legal challenge would
be no bad thing – then it imposes an obligation on the next
president of the Commission to reform the organisation of
commissioners and indeed the structure of the Commission. A
proliferation of job titles for 28 commissioners is not the answer.
The European Council has set the next college on course for
further duplication and diffusion of effort. The next president
must change course.
PARESH NATH, THE KHALEEJ TIMES, UAE © PARESH/CAGLE CARTOONS
TEN YEARS AGO Brussels, 28 May 2003
Putin bids to bypass Chechnya
Chechnya will be off limits at the
EU-Russia summit in St
Petersburg if Vladimir Putin has
his way.
Both Moscow and European
Union sources have confirmed
that the topic of human-rights
abuses in the mainly Muslim
republic has been omitted from
the draft programme for the 31
May summit, at the request of the
Russian president. “We don't see
the need for a discussion on this,”
remarked one Russian source.
However, Greece, which holds
the presidency of the Union, is
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holding open the possibility that
it will raise concerns about
reports of extra-judicial killings
in Chechnya. “This is a
contentious subject that we
would like to be on the agenda
but one that the Russians don't,”
said an aide to George
Papandreou, the Greek foreign
minister. “But it is unlikely to be
completely ignored, given there
are so many people in Europe
concerned about it.”
Amnesty International is
expected to turn the spotlight on
Chechnya, when it launches its
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2003 annual report in Moscow. In
a recent statement, the human
rights watchdog stated that
Chechen civilians continue to
‘disappear' after being
apprehended by Russian troops in
their villages, with many later
found in mass graves.
Although the summit is part of
the events scheduled to mark the
tricentenary of St Petersburg, it is
due to last just two hours. Much of
that time will be devoted to a
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Russian relations can be bolstered.
Speaking to European Voice,
Russia’s outgoing ambassador to
NATO, Sergei Kislyak, argued it
would be useful to establish new
structures to facilitate EU-
Moscow dialogue.
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COMMENT
30 May 2013
9
On the wrong side of transparency
REUTERS
Carl Dolan explains why companies should not fear new
EU transparency rules
The robust response of
Apple’s chief executive,
Tim Cook, to a US
Congressional hearing last
week that investigated the
tech giant’s use of a complex network
of offshore vehicles to minimise its tax
bill, was: “We pay all the taxes we owe,
every single dollar. We not only comply
with the laws, but we comply with the
spirit of the laws”.
This is, of course, exactly as it should
be. For some reason, however, Apple is
very shy of sharing the good news more
widely. A Transparency International
report published last year showed that
it disclosed precisely nothing about the
corporate income tax it paid in the
various countries that it operates. It
was ranked 91 out of the 105 global
companies that were assessed on their
disclosure practices. Apple may be near
the bottom of the transparency class,
but in terms of publicising the
information about where it pays its
taxes it is merely average. Of the 105
companies we surveyed, 85 revealed
nothing to the wider public about the
corporate income tax they pay to
governments around the world.
Given this state of affairs and the
drip-feed of revelations about the
aggressive tax-avoidance strategies
used by multinational corporations
over the past few years, it should come
as no surprise to Cook that politicians
are unwilling to take statements about
good corporate citizenship on trust. At
last week’s summit on tax evasion,
European Union leaders backed an
initiative that would require the largest
European companies to disclose
detailed information about taxes paid
and other financial information for
every country where they operate – a
mandatory ‘country-by-country’
reporting standard.
Such a standard has long been
advocated by those who believe that a
step-change is required in corporate
transparency. It is now a reality for the
oil, gas, mining and banking sectors,
following hard-fought legislative
campaigns in Brussels over the past
two years. If those campaigns are
anything to go by, we should expect
EU bashing and olive oil
Alberto Alemanno considers
a tale of Euroscepticism,
political opportunism and
a European Commission
‘own goal’
In the aftermath of the last
European Union summit, one of
the many provisions proposed by
the European Commission within
the framework of its action plan
for the olive-oil sector unexpectedly
gained global attention.
The provision, which had already won
member states’ backing, would have
required that restaurants serve olive oil in
sealed, clearly labelled and non-reusable
containers, instead of relying on refillable
containers. The UK’s prime minister,
echoed by his Dutch counterpart, publicly
attacked the Commission’s adopted
proposal by dismissing it as “exactly the
sort of area that the European Union
needs to get right out of”. While Dacian
Ciolos˛, the European commissioner for
agriculture, initially defended the
proposal as a way to promote quality olive
oil and to protect consumers from fraud,
he rapidly withdrew the measure,
declaring that the ban was “not
formulated in such a way as to assemble
widespread support”.
The tale of the proposal captures many
of the misperceptions surrounding the
EU’s work, but also reveals how a rule
that has the member states’ blessing can
be overturned by a minority.
First, it illustrates the lack of
understanding of the scope of the
regulatory authority granted to the EU.
While the Commission proposes around
60-70 legislative acts, it adopts – together
with the member states – around 2,000
measures implementing previously
agreed legislation every year. The olive-oil
proposal fell into the latter category.
Second, it confirms politicians’
tendency to fuel misinterpretations of the
EU to suit their immediate political
calculus. In particular, it shows how easy
it is to turn the public against the EU by
depicting a rule supposedly aimed at
consumer protection as the umpteenth
attempt to over-regulate EU citizens’
lives. As such, it illustrates once more the
cynicism of leaders who blame the Union
for systematically over-reaching the
loud cries of protest from the business
community, pointing to the mounting
pile of red tape, the costs of compliance
and the unnecessary intrusiveness of
the new rules.
This would be short-sighted and
wrong. Assuming that most chief
executives share Cook’s view of their
firm’s compliance on tax matters, they
have nothing to fear from a more
informed debate about corporate tax
policy. Companies collect all this data
in any case for accounting purposes, so
the cost of putting it all together for
public disclosure will not be
significant. More importantly,
companies have the opportunity to
press ‘re-set’ on their relations with
governments, investors and the wider
public, by embracing a new standard of
transparency.
These relations have been soured
lately by the perception – perhaps
unjustified – that companies have not
been shouldering their fair share of the
recessionary burden. While highly
profitable enterprises continue to
stockpile cash reserves – as much as
$1.8 trillion (€1.4 trillion) by US
corporations alone – there is growing
frustration that the benefits have not
been felt more widely, in the form of a
exercises of the very same regulatory
powers that they have entrusted to the
EU.
Hence, the trivial, yet frequent, claim
that the EU, at times of economic
difficulties, had better things to do than
regulating bottles of olive oil carries
limited credibility. Denying multi-tasking
ability to a political system is like
suggesting that when one of us breaks a
leg she should not breathe anymore.
More remarkably, this story teaches us
that even once a rule has gained the
majority support of member states (even
though not a qualified majority vote) and
has been adopted, it is still possible to get
it withdrawn if political leaders of the
countries that were left in minority are
capable of spinning that story as the latest
EU attempt at ‘regulating everything’.
The most pernicious effects of this
approach are made possible by
widespread ignorance and a profound
lack of understanding of the EU’s basic
functioning. Attacked by the disease of
Euroscepticism generated by a few
political leaders, public opinion behaves
like a human body whose immunity
system is deficient. By not having the
right antibodies, public opinion does not
react to the disease, allows it to gain
ground, and even accelerates its spread.
It is the task of the Commission, as the
holder of the monopoly of legislative
higher tax-take, increased investment,
or dividends to shareholders. It is
no wonder that a Eurobarometer
survey published this year reported
that 41% of European citizens felt that
the overall impact of business on
society was negative. More tellingly,
two-thirds of citizens did not feel
informed about company efforts to
behave responsibly.
EU companies have lost the trust of
their heartlands. In aspiring to be
global players they have forgotten that
accountability structures are still
primarily national or regional.
Regaining trust can start with firms
disclosing detailed information about
their local impacts – not just taxes
paid, but also capital investments,
community contributions and
donations to political parties. Only
then will citizens have a more complete
picture of the contribution that a
company makes to society.
It is an agenda that companies
should be happy to embrace, rather
than once again positioning themselves
on the wrong side of a new tide of
transparency.
Carl Dolan is a senior policy officer at
Transparency International EU.
initiative, to promote the development
of the right antibodies against this
manipulation of public opinion.
To do so, the Commission should
systematically engage in EU-wide
stakeholder consultations while
assessing the impact of its proposed
rules.
Unfortunately, in this case there was
no impact assessment of the contested
provision. As Ciolos˛ conceded, the
Commission therefore could not
effectively illustrate the merits nor prove
the possible effects of the rule. What is
more, he could not claim to have
consulted with all relevant stakeholders.
This explains why the Commission,
which proposed the rule and mobilised a
majority of member states in support of
this measure, eventually did not stand
by its own proposal.
Only a highly formalised, evidencebased
and participatory decisionmaking
process could provide the right
antibody against politically driven
Euroscepticism. At a time of growing
disaffection with the EU, this should be
the lesson learned for the Commission
from the olive-oil tale.
Alberto Alemanno is a Jean Monnet professor
of EU law and risk regulation and director of
the HEC-NYU EU Regulatory Policy Clinical
Programme.

10
30 May 2013
PROFILEJERZY PLEWA
Model
maker
His boyhood dream of
becoming a pilot crashed
to the ground before it
even took off, when he
had to wear spectacles.
But Jerzy Plewa has risen to unexpected
heights on the strength of his other
senses. He became director-general of the
European Commission’s agriculture and
rural development department in April,
after making a name for himself as a
visionary navigator on farm policy, and a
safe pair of hands at the controls.
After gaining exemplary school
results in the small provincial town of
Kraśnik, Plewa enrolled in the faculty of
aeronautical engineering at Poland’s top
technical university, in Warsaw. Barred by
his eyesight from flying, but driven by a
fascination for innovation, he switched to
energy technologies, and then to the justemerging
possibilities of using computers
in simulations. Fate drew him into
agriculture, as his doctorate in
mathematical modelling of complex
systems led to an associate professorship
at Warsaw Agricultural University and
international collaborations on modelling
agricultural processes at the French
agriculture institute, INRA, and with
Jean-Jacques Dethier of the World Bank.
When Poland began its bid for
European Union membership in the
early 1990s, agriculture was high on the
agenda, and government negotiators
came looking for experts. Plewa was an
obvious recruit. As administrations – and
agriculture ministers – rose and fell in
those tempestuous years, the politically
neutral Plewa was consistently retained
as deputy agriculture minister. His
frequent role as an interface between
high politics, technical issues, and
ordinary farmers was made easier not
just by his academic expertise but also by
his own rural background: his
grandfather had been a farmer.
In 1997, as official accession
negotiations started, Jerzy Buzek, then
Poland’s prime minister, nominated
Plewa as the negotiator responsible for
agriculture. Five years of intense activity
ensued, as Plewa steered his way through
the storms that repeatedly broke over
Polish agriculture – both at home, and in
the 15 EU member states fearful of the
impact of Poland’s large and poor
farming sector. Plewa had to chart a path
between the often conflicting views of the
country’s president, successive prime
ministers, and coalition parties, and at
the same time to persuade the rural
community – and many powerful
Eurosceptics – both of the advantages of
accession, and of the need to adjust the
agricultural sector to EU requirements.
“It wasn’t an easy time for my family,”
he recalls, “since I spent so much time
backwards and forwards to Brussels and
travelling around Poland with Buzek
explaining what accession could mean.”
Later, he was one of the key officials in
the ante-room at that fateful summit in
Copenhagen in 2002 when the deal for
the ‘big bang’ enlargement was finally –
and painfully – struck, and at which
Polish agriculture became the dealbreaking
issue. The result, he believes,
has been good for Poland and its farmers.
“They used to be so ready to protest. It’s
not so easy to get them onto the streets
now”, he observes.
After Poland’s accession, Plewa
returned to the more sedate life of
academia, but he remained in demand as
an adviser. Notably, when Leszlek
Balcerowicz, renowned as the driver of
Poland’s economic reforms, became
chairman of Poland’s central bank, he
appointed Plewa as the treasury
representative on the board of the
government’s rural bank. In 2006, enticed
by the prospect of a new challenge, Plewa
joined the European Commission, as
deputy director-general for international
agricultural affairs, and then for rural
development and sustainability.
Plewa has many friends. Current and
former colleagues, both compatriots and
those who were his counterparts in
negotiations, concur in their descriptions
of a charming and educated man, a real
expert, a reliable co-worker – although
many also recall his tenacity: “I wouldn’t
like to be his adversary on any matter he
believed in”, says one of his colleagues
from those frenetic years of negotiations.
He is also a dedicated family man, and
colleagues recall that he used to make
sure that whenever possible he would
accompany his children to school and
attend parents’ evenings. He remains
quietly proud of his daughter’s economics
studies in London and his son’s work on
innovation at Stanford. “My son has
realised my dream”, he adds. “He has a
pilot’s licence”.
But it is not hard to find those who
are conscious of the challenges he faces –
both in the battles over the imminent
He was one of the key
officials at that fateful
summit in Copenhagen in
2002 when the deal for
the ‘big bang’ enlargement
was finally struck, and at
which Polish agriculture
became the dealbreaking
issue
CURRICULUM VITAE
1953: Born, Kras‘nik
1978: Master’s degree, Warsaw
University of Technology
1982: PhD, mathematical modelling and
computer simulation of complex
systems
1983-95: Associate professor, Warsaw
Agricultural University
1995-97: Director, Polish ministry of
agriculture
1997-2004: Deputy minister of agriculture, and
negotiator on agriculture
2004–06: Adviser to the president of the
National Bank of Poland and
associate professor at the Warsaw
Agricultural University
2005-06: Board member, Polish BGZ – Bank
of Food Economy
2006-13: Deputy director-general for
agriculture, European Commission
2013-: Director-general for
agriculture, European Commission
reform of the Common Agricultural
Policy (CAP), and in the still more problematic
review of how EU agricultural
policy should evolve over the longer term.
At present he is closely engaged in the
intense three-way talks between the
Commission, the Council of Ministers and
the European Parliament on proposed
CAP reform. He remains, he says, optimistic
that an agreement can be found
before the Irish presidency of the Council
of Ministers finishes at the end of June.
The thornier debate he faces is what
shape the future of EU agriculture should
take. This 58-year-old could have a
significant say in the post-2020 configuration
of the CAP. He says his ambition is
to make it “efficient and simple, for
farmers, authorities, and member states”.
And he admits it is a “big challenge”.
Commission insiders agree on the size of
that challenge. They are quick to point to
the conservatism of the hierarchy that
rules over European agriculture, and its
resistance to real innovation. They also
note the additional complications of
achieving strategic coherence when the
directorate-general for agriculture is not in
perfect synch with the young and
energetic commissioner responsible for it,
Dacian Cioloş. Much of the attention will
focus on the relationship that emerges
between Plewa and Cioloş, who was
deputy agriculture minister in Romania at
the same time that Plewa was deputy
agriculture minister in Poland. At stake
could be the degree of constructive cooperation
over the future of agricultural
policy, and how far Plewa's influence will
stretch.
Some change is already perceptible. As
Plewa’s predecessor, Jose Manuel Silva
Rodriguez, says: “It is right for Poland to
take over this post, just as Spain replaced
France at the head of the agriculture
department. We are the only two non-
French directors-general in the history of
this department.”
Looking back on his own career, Plewa
remarks: “You have to have some
discomfort with a new challenge. If you
want to grow, you need confidence and
the readiness to accept some discomfort –
a sense of adventure.” The next few years
will determine whether his tenacity will
help him soar still higher on his
adventure – or whether he will be blown
off course by the turbulence of CAP
reform and Commission politics.
Peter O’Donnell

COMMENT
30 May 2013
11
Edward Lucas looks at
three oddities in the case
of a US diplomat paraded
as a spy by the Russian
authorities
The spy who bored us
Here is the big news from
the boiling cauldron of
the East-West spy wars.
Russia is being
annoying; the United
States barely notices and does not care.
The details are familiar: Ryan Fogle,
a third secretary at the US embassy in
Moscow was arrested, carrying –
supposedly – wigs, a compass, lots of
money, a map of Moscow, and a “Dear
friend” letter to a potential recruit in
the Russian security service, the FSB.
Much of this is unsurprising. So long
as Russia spies on the US (which it
does rather well), American spycatchers
will want to stop them. It did
this brilliantly when it recruited
Alexander Poteyev, who was in charge
of the ‘illegals’ (deep-cover agents) in
north America, who were rounded up
in the summer of 2010. They included
the sizzling but trivial red-head Anna
Chapman, and the far more important
Donald Heathfield. (I write about this
in my book “Deception”.)
Other reasons to spy on Russia
abound. It menaces its neighbours.
Links between organised crime and
officialdom are troubling. Islamist
extremists in the north Caucasus and
elsewhere can mount outrages abroad.
Russia has provided some temporary
and partial information on the latter to
Western services, but if an FSB officer
approached the CIA with the offer of
more, in exchange for money, it would
be worth taking a bit of a risk to find
out how much he knew.
Nor is it odd that the hapless Fogle
got caught. Espionage involves lawbreaking
and deceit, which is inherently
risky. If it did not, it would not be
espionage. Perhaps the source was a
trap – a ‘dangle’ in espionage parlance.
Perhaps Fogle’s tradecraft was sloppy.
All spy operations seem brilliantly
successful when they work and
shamefully bungled when they do not.
Espionage does involve occasional
doses of public humiliation to the other
side. America’s FBI released some
embarrassing videos of Chapman and
her colleagues. But nothing matches
the gratuitous treatment meted out to
Fogle and his embassy colleagues,
‘spotlighted’ (in spy jargon) on Russian
television. That – the first big oddity –
had echoes of the iciest days of the
Cold War. To add insult to injury,
Russia named the CIA station chief in
Moscow (a big breach of espionage
protocol). News also leaked of the
earlier expulsion of Thomas Firestone,
a prominent American lawyer in
Moscow, who formerly worked at the
US embassy. He is a leading authority
on official corruption in Russia.
What is going on? One answer may
be that Russia’s spy-catchers simply
wanted to crow about a rare success.
Another is that the whole affair fits the
story that the Kremlin tells to its own
people, of Russia as a besieged fortress,
the opposition as the puppets of
foreign spy services, and the West as
duplicitous and incompetent.
A second oddity is the Obama
administration’s response to a series of
gross provocations: a bored shrug. Its
top priority is big cuts in nuclear
weapons. A joint move on co-operation
in applying international humanitarian
law to cyberspace is expected soon.
Such stuff matters. Spy games,
ultimately, do not.
The third oddity is the change in
Germany, which for the first time since
the era of Helmut Schmidt and Jimmy
Carter is taking a tougher line on the
REUTERS
Kremlin than the US does. In past
years, political pressure blocked
intelligence and security officials from
attacking Russian targets, unless
organised crime was involved (in fact,
even that seemingly limited field
provided a rich harvest). But times
have changed. Having caught Andreas
and Heidrun Anschlag, two long-term
Russian deep-cover spies, Germany
now wants to trade them for jailed
Western agents. Time to re-read those
early novels by John le Carré.
Edward Lucas edits the international section of
The Economist.
LETTERS
Committed to transparency
In a letter published in European Voice last
week, (“Impossible to ignore lobbying
concerns”, 23-29 May), Koen Roovers from
ALTER-EU claims that EPACA, the
European Public Affairs Consultancies’
Association, fiercely opposes stronger rules
on the lobbyist profession.
An amazing statement given that
EPACA, both in its written contribution to
the Commission’s consultation on the
revision of its transparency register, and in
the two stakeholder meetings on the
revision of the register, where ALTER-EU
also participated, has stated our view that
further amendments to the register and
new requirements should be legislated and
mandatory This has been our clear
position for several years.
Furthermore, we have suggested a
number of ways to improve the accuracy of
the data in the register and ideas on how
to encourage even more organisations to
sign up to it.
EPACA represents a high proportion of
the professional European Union public
affairs services providers in Brussels. All
our members have to abide by our code of
conduct, which we have recently updated.
It now explicitly requires our members to
engage transparently with all stakeholders,
not just the EU institutions, thus going
farther than the transparency register code.
We are an engaged partner in the
transparency debate and we are committed
to leadership in quality and professional
standards in the public affairs community.
ALTER-EU has a number of good ideas
on how to improve the register and
strengthen the rules. Unfortunately, they
have chosen to position themselves in the
debate as the voice against corporate
lobbying, instead of being a voice militating
for an effective framework for ethical and
transparent lobbying. EPACA welcomes a
constructive dialogue and we are convinced
that if only ALTER-EU listened to what we
say, instead of making it up, our two
organisations would find a lot of common
ground in the efforts to improve the
transparency register.
Karl Isaksson
Chairman, EPACA
WORDS
European proverbs
Kozla boysya speredi, konya – szadi, a
likhogo cheloveka – so vsekh storon
(Russian). Beware of the goat – from its
front side, of the horse – from its back
side, and the evil man – from any side.
Zemheride yo urt isteyen, cebinde bir
inek tas˛ır (Turkish). Who wants yoghurt
in winter must carry a cow in his pocket
(if you want something difficult, you must
be willing to take the trouble to get it).
Padres, primos e pombos. Os dois
primeiros, não servem para casar. Os
dois últimos só servem para sujar a casa
(Portuguese). Priests, cousins and pigeons.
The first two are not good to marry. The
last two only make the house dirty.
Yesli khochetsya rabotat' lyag pospi i
vsyo proydyot (Russian). If you feel an
urge to work, take a nap and it will pass.
Kopeklerin duası kabul olsa gökten
kemik yaǧardı (Turkish). If
dogs’ prayers were accepted it would rain
bones from the sky.
Warm showers
The Germans have pinpointed some
particularly egotistic types:
Warmduscher. Someone who is easy on
himself (literally, warm showerer).
Trittbrettfahrer. To take advantage of
someone else’s efforts without
contributing anything (literally, the
person who rides on the stepping board
of a bus or train without buying a
ticket).
Nose in the clouds
It’s another short step from egotism to
conceit:
Nosom para oblake (Serbian). He's
conceited, puffed up (literally, he's
ripping clouds with his nose).
Cuello duro (Spanish). A snob, stuckup
(literally, hard or stiff neck – from
keeping one’s nose in the air).
You can respond, with comments,
additions and, where necessary,
corrections, through our website,
www.europeanvoice.com, where our
words column will regularly be found.
Adam Jacot de Boinod is the author of “The
meaning of tingo and other extraordinary words
from around the world”, published by Penguin
Books, and the creator of the iPhone app Tingo.

12
30 May 2013 COMMENT
FLEMING ON FINANCE
REUTERS
Resolving to end European stagnation
Cleaning up Europe’s banking sector is an essential
step on the road to economic recovery, writes Stewart
Fleming
The speed of recovery in the
economy of the United
States demonstrates that
governments can combine
economic and fiscal
reform – so-called “austerity” – with
growth.
It also contradicts the arguments of
fiscal stimulus junkies, such as
American professors Larry Summers
and Paul Krugman and, sotto voce, the
chief economist of the International
Monetary Fund, Olivier Blanchard, a
Frenchman.
There are various reasons for the US
upswing (European Voice, 29
November 2012), but a financial system
that was quickly purged of its excesses
after the 2007-08 crash is
unquestionably one of them, a factor
highlighted by the latest OECD
Economic Outlook (29 May).
The contrast is stark between the
parlous state of Europe’s financial system
today and the financial clean-up that
occurred in the US, which went beyond
banks to include the effective
nationalisation (in the US of all places)
of the state-dependent home-loan
facilitators Fannie Mae and Freddie Mac.
Now, in much of the European
Union, ‘zombie’ banks are desperately
shrinking their balance sheets, while
lending to failing ‘zombie’ companies,
in part because they cannot afford to
take the losses that would come from
cleaning up their loan books.
This is yet another European vicious
circle, comparable to the ‘doom loop’
between banks and governments. In
this case, as economists at Deutsche
Bank point out (Focus Europe, 17 May),
there is an added twist: lending by
zombie banks to zombie companies is
probably squeezing out lending to
healthy companies that are vital to
growth.
Further evidence of the severity of the
funding crisis, particularly in the
troubled, peripheral economies of Italy
and Spain, which are dominated by
small companies, came last week.
Confindustria, Italy’s main employer
organisation, warned that many small
and medium-sized enterprises (SMEs)
in the north of Italy, the country’s
economic powerhouse, could run out of
money before the end of the first
quarter of 2014.
Almost four years ago, in a seminal
paper for Bruegel, an economics thinktank
in Brussels, Nicolas Veron and
Adam Posen urged a swift, drastic
clean-up of Europe’s banking system.
Veron told me last week that he
believed it was needed more than ever.
The opportunity is still there. The
European Commission’s (almost
enacted) Single Supervisory
Mechanism (SSM), coupled with a
proposal expected in June for a single
resolution mechanism (SRM) for
banks in the eurozone, could lay the
foundations for a banking clean-up –
provided that European leaders can cut
a deal on resolution which is more
than a tacit bail-out for reform-shy
governments.
The SRM should not just be seen as
yet another step towards stabilising the
single currency, adding a vital
component to the ECB-based
supervisory mechanism, and
addressing the threat from banks that
are ‘too big to fail’.
It is all of these things, but most
importantly it can also become the
foundation for Europe’s much needed
growth strategy.
Evidence of the importance of this
next step towards banking union is
provided by Japan. The failure there,
early in the 1990s, to act swiftly to
re-capitalise and restructure banks
contributed to Japan’s economic
stagnation, now nearly two decades-old.
Today, a similar failure in Europe
could herald a further protracted but
worse stagnation. Japan, note well,
managed to avoid the mass
STEPS FORWARD
In their paper on banking union, Deutsche Bank economists argue that the eurozone must embrace what
Nicolas Veron and Guntram Wolff of Bruegel have termed (February 2013) a “big bang” leap forward. “It
is actually very difficult to ‘stop on route’ and deliver credible single supervision, a single rulebook for
bank resolution and no federal backstop,” they write.
Graham Bishop, a London-based authority on EU financial markets, argues that if they are correct, then
another big step towards deeper political as well as economic integration of the eurozone looms.
In a speech last week (20 May), Paul Tucker, deputy governor of the Bank of England, argued that effective,
credible resolution regimes are essential. “The crucial next step is for an EU resolution directive,”
he said.
It is the moment to press ahead, he argued, not least to prevent the world “slipping into a hard-to-reverse
Balkanisation of the international financial system”.
He did not say so, but that Balkanisation would also throw the fortunes of the City of London into an
irreversible downward spiral. British Eurosceptics may not like it but, as Mario Draghi pointed out in a
speech in London last week, the City’s prospects are inextricably linked with those of the eurozone.
unemployment which is already
wracking Europe.
As Zsolt Darvas of Breugel writes:
“Much of Europe suffers from a
mutually reinforcing interaction
between limited productivity gains,
protracted deleveraging, weak banking
sectors and distorted relative prices,
[which] threaten to turn into selfperpetuating
stagnation.”
The awaited SRM proposal is deeply
contentious, since, if it is to be credible
it must involve a further surrender of
national sovereignty by participants.
Unsurprisingly, therefore, Sweden and
the UK will not participate.
There are deep divisions over the
underlying principles. In September
2012, Germany, Finland and the
Netherlands rejected the idea that
bank “legacy assets” could be
mutualised.
Why, they wondered, should the
jointly funded European Stability
Mechanism (to which Germany makes
the biggest contribution) be a vehicle
for helping to recapitalise weak banks
whose parlous condition can be
attributed to negligent decisions made
several years ago by national
governments and their bank
supervisors? A good question.
And what about the coherence of the
new banking union structures. With
the ECB as a single supervisor, what
Deutsche Bank economists describe as
“a federal institution” will for the first
time have the power on prudential
grounds to order the closure of a
member state’s bank.
But if this is the stick, where, they
ask, is the carrot, the “federal backstop”
(the equivalent of the Federal Deposit
Insurance Corporation in the US), that
would facilitate what has to be a swift
recovery or resolution process in which
shareholders, other creditors and large
uninsured depositors should take the
first hit?
Most immediately, how tough will be
the planned ECB-led assessment of the
health of eurozone banks, the asset
quality review?
Yves Mersch, a member of the ECB
executive board, said last month (5
April) “Supervisors cannot give
objective verdicts on the viability of
banks if banks can only be closed in a
disorderly way.” Correctly, the ECB sees
the SRM and a federal backstop for
European-approved assets as vital
elements of its new responsibilities to
supervise banks.
It is easy to see why. Were the ECB to
come under pressure to makes its asset
review less than rigorous, that would
compromise the independence of its
monetary policy, undermine its hopes of
becoming a credible bank supervisor,
relax the pressure to sanitize a sick
financial system, and so damage the
prospects of economic recovery. The
stakes are high in the next stage of the
long march towards a genuine
economic and monetary union.
Stewart Fleming is a freelance journalist based in
London.

COMMENT
30 May 2013
13
Europe’s troika should grow up
Jean Pisani-Ferry
considers the record – and
the future – of the troika
of international creditors
that is ministering to the
EU’s struggling member
states
In early 2010, a group of men
(and a few women) in dark suits
landed in Athens. They belonged
to a global institution, the
International Monetary Fund
(IMF), and to a pair of regional ones,
the European Commission and the
European Central Bank. Their mission
was to negotiate the terms and
conditions of a financial bail-out of
Greece. A few months later, what
became known as the “troika” was
dispatched to Ireland, then to Portugal,
and later to Cyprus.
This endeavour was bound to have
wide implications. The troika
negotiated what ended up being the
largest financial assistance packages
ever: loans to Greece from the IMF and
European partners are set to reach
€240 billion, or 130% of the country’s
2013 GDP – far more in both absolute
and relative terms than any country has
ever received. Loans to Ireland (€85bn)
and Portugal (€78b) are also
significantly bigger than those usually
provided by the IMF.
Moreover, co-operation between the
three institutions is unprecedented.
Back in 1997-98, during the Asian
crisis, the G7 flatly rejected Japan’s
proposal for an Asian Monetary Fund.
Now the IMF has even accepted a
minority-lender role, with the bulk of
assistance coming from the European
Stability Mechanism (ESM), a new
institution often viewed as an
embryonic European Monetary Fund.
It is frequently argued that the size of
the assistance packages is a testament
to Europe’s clout within the IMF.
Perhaps, but the packages are, first and
foremost, a consequence of the
constraints to which Europeans were
(and still are) subject.
Economic adjustment is necessarily
slower within a monetary union than it
is for countries with their own currency,
because, even for very flexible
economies, prices change more slowly
than the exchange rate. Delivering the
same result therefore takes more time,
and requires keeping countries in
intensive care for longer – and at higher
cost.
Three years later, the results are
mixed at best. Unemployment has
increased much more than anticipated
and social hardship is unmistakable.
There is one bright spot: Ireland, which
is set to recover from an exceptionally
severe financial crisis. But there is also a
dark spot: Greece, where GDP has
shrunk by 20% since 2009 and where
the public debt/GDP ratio is now
higher than anticipated at the launch of
the programme, despite the debt
reduction negotiated with private
creditors in February 2012. This is not
because of a lack of fiscal consolidation.
On the contrary, the Greek authorities
have done more than planned on this
front. But the collapse of GDP has
necessarily implied a rising debt ratio,
driving the country into a recessionary
spiral as economic contraction forces
further spending cuts.
Could the troika have done better? It
was not responsible for existing
monetary conditions – a currency union
with a central bank focused on price
stability. But European officials’
REUTERS
hesitant response to the crisis added to
the difficulty. Prolonged controversies
over the terms and conditions of
assistance and the absurdly high
interest rate initially set on official
loans exacted a heavy toll on countries
already under stress.
Furthermore, the troika made three
mistakes. First, Greek debt reduction
was postponed for too long. Once it
became clear that the burden was
unbearable, debt should have been cut
expeditiously. Too many creditors were
reimbursed at par on their maturing
claims.
Second, the troika based its
programmes on overly optimistic
assumptions. It misjudged the
consequences of fiscal consolidation
and credit constraints,
underestimating the contraction of
employment and overestimating
exports and privatisation receipts.
Finally, not unlike what happened
during the Asian crisis in the late
1990s, the troika took country cases
one by one. As a result, it did not pay
enough attention to cross-country
spill-overs and deteriorating
conditions in the wider eurozone.
Should the troika survive? Its three
participating institutions have
different mandates and different roles.
It was perhaps inevitable that initially
they worked jointly; but there is reason
to question such an approach now.
Operationally and financially, the
IMF has become much more involved
in Europe than its global shareholders
deem sustainable. It should become a
catalytic lender whose participation in
eurozone programmes remains
desirable but not indispensable –
giving it the possibility to disagree and
walk away.
The ECB is in an odd position as
well, but for different reasons. As the
eurozone’s central bank, rather than a
lending institution, it does not have a
clear role in negotiations on behalf of
creditors. If it remains in the troika, its
participation should be mostly silent.
Finally, Europe should transform the
ESM into a European Monetary Fund
capable of providing policy assessment
and advice, as well as financial
assistance – possibly drawing on
European Commission staff.
Beyond European specifics, the troika
experiment answers a question of major
importance to other parts of the world:
Can the IMF co-operate with regional
institutions? The answer is ‘Yes’ – but not
easily. The troika has proved functional,
and Europe would have been at pains to
provide conditional assistance to eurozone
countries without the IMF’s participation
and support. But co-operation has proved
to be difficult, if only because each
Clean air plays a key
role in keeping people in good health
and preserving the environment. Despite
good progress in recent years, air quality standards
continue to be exceeded throughout the EU, especially
from pollutants like particulate matter, ground-level
ozone, and nitrogen dioxide. In 2013 the Commission will
review its current air policy. The 2013 edition of Green Week,
the biggest annual conference on European environment policy,
will therefore focus on air quality. The Conference will take place
from 4 to 7 June at the Egg Conference Centre in Brussels. Over
three days and some 40 sessions, European Commissioners,
MEPs, ministers, scientists, national and local authorities,
NGOs, businesses and the public will focus on fi nding ways
to improve air quality. Green Week offers a unique
opportunity for debate and exchanges of experience
and best practice on environmental protection
issues. It is open to the public and
participation is free of charge.
Green Week2
2013
Brussels 4-7 June
Jean Pisani-Ferry is professor of economics at
Université Paris-Dauphine and currently serves
as director of economic policy planning for the
prime minister of France. This column draws on
a Bruegel report co-authored with André Sapir
and Guntram Wolff. © Project Syndicate, 2013.
http://ec.europa.eu/environment/greenweek/
participating institution has rules and
constraints that are not easy to reconcile
with the others’.

14
30 May 2013
FEATURE
James Panichi explores
why the EU struggles to get
a good press in Australia
On paper, the relationship
between Australia and the
European Union has never
been better. Where once
the very mention of
agriculture was enough to leave
Australian diplomats seething, today
differences are managed cordially
within the Australia-EU Partnership
Framework. There is also a treaty-level
‘framework agreement’ ready to be
signed, and diplomats from both sides
swear (publicly and privately) that they
get along just fine.
But there is a problem: the Australian
media. The consensus at a recent
conference in Melbourne on Australia-
EU relations was that local coverage
of European affairs is inadequate,
superficial and often downright hostile.
And it is not just that Australian
journalists do not ‘get’ Europe; the
problem is that they do not hold the
EU in particularly high regard.
“We talked to people from the world of
politics, from the business sector, from
civil society and the media,” says Eva
Polonska-Kimunguyi, from the
European and EU Centre at Monash
University, which hosted the event. “But
it was only the media people who were
negative. They hated the EU. My feeling
was that there was anger among them.”
This journalistic antagonism towards
the EU was recently quantified by the
National Centre for Research on Europe,
at New Zealand’s University of Canterbury.
A study revealed that the level of
coverage of EU and European affairs by
the Australian media is considerably
lower and less nuanced than in other
countries in the Asia-Pacific region.
Polonska-Kimunguyi, who worked on
the Australian side of the research, told
the conference that when asking
Down-and-out
Down Under?
journalists for metaphors with which to
describe the EU, what she got were
words like ‘sinking’, ‘falling apart’,
‘disease’. The stories that do get a run
tend to reflect that bleak outlook.
All this means that the EU has a
serious PR problem Down Under – one
that Australian-based European
academics fear may pose problems for
the future of the bilateral relationship.
Yet there is no simple solution in sight,
because while everyone agrees that the
problem exists, its causes are hard to
pinpoint.
Most of the academics at the
conference agreed that the total absence
of Australian journalists working out of
Brussels is part of the story. Australian
newspapers cover Europe from London,
as does the Australian Broadcasting
Corporation, the government-owned
broadcaster, which closed its Brussels
bureau in 2003. When the EU does get
a mention, it is usually through articles
taken from the British press.
Andrea Nicolaj, the first counsellor at
the EU’s delegation to Australia, said he
was in no doubt that local EU coverage
was “through the lenses of Eurosceptical
reporters based in London”. David
Morgan, a senior official at Australia’s
Department of Foreign Affairs and
Trade, agreed that the “filter of London”
is leaving Australians with a distorted
view of European affairs.
“This has been an issue for those of us
inside the department over the past few
years with the [economic] crisis in
Europe,” Morgan said. “The imperative
of political integration in Europe is still
very strong, but that is typically not
accurately reflected in media reporting
here in Australia. What we really need
are more reporters – whether they are
REUTERS
Australian or not – who are based in
Europe and who report directly into
the Australian media.”
Yet Australian media sense that the
top priority is Australia’s often delicate
relationship with Asia and the staffing
arrangements for journalists tend to
reflect that. Australian reporters may
be missing in Brussels, but they are
very much on the ground in Beijing,
Bangkok, Tokyo and New Delhi.
The challenge now for the EU and its
supporters in Australia is to convince
the country’s media gatekeepers that
European news (not just the bad news)
is worthy of space alongside news from
China or Indonesia. That will not be
easy.
James Panichi is a journalist based in Brussels.
He is on extended leave from the Australian
Broadcasting Corporation.
european inventor award 2013
the european patent office
congratulates the winners
6
2 5
3
INVENTORS ARE THE HEROES OF THE
21 ST CENTURY ECONOMY
Innovation creates competition, dynamic markets, jobs, prosperity and
growth. Ingenious inventions in such technologies as healthcare, transport
and communication can improve our lives and protect our environment.
Inventors are the champions of progress, refusing to accept the status quo
and harnessing the forces of nature to create new products and processes.
The European Patent Office protects inventions with patents. From a field
of many thousands of patentees, the European Inventor Award recognises
six truly exceptional individuals or teams.
These inspirational inventors secure our future. Most of them dedicate
their entire life to improving ours. We thank them for their contribution to
society and the economy.
THIS YEAR’S WINNERS
1 a
1 b
4b
4c
4a
INDUSTRY 1a Claus Hämmerle 1b Klaus Brüstle Soft-close furniture hinge
SMEs 2 Pål Nyrén Rapid low cost DNA sequencing RESEARCH 3 Patrick
Couvreur and team Nano-capsules for targeted delivery of anti-cancer
drugs NON EUROPEAN COUNTRIES 4a Ajay V. Bhatt 4b Bala Cadambi
4c Jeff Morriss and team Universal serial bus (USB) LIFETIME ACHIEVE-
MENT 5 Martin Schadt LCD techno logy POPULAR PRIZE 6 José Luis López
Gómez Independent wheel guidance for high speed trains
28 may
amsterdam
WWW.EPO.ORG

30 May 2013
15
SPECIAL REPORT
Croatia
BUDDY, CAN YOU SPARE A KUNA? Croatia’s economic problems
WHO’S WHO The main players in the Croatian government
BORDER TROUBLE The impact of accession on the western Balkans
REUTERS
The accession
process is over
and Croatia is
ready to join the
European Union,
but the celebrations
will be
low-key, write
Andrew Gardner
and Toby Vogel
Croatia will on 1 July become
the 28th country in the
European Union. There will
be ceremonies in Zagreb, attended
by the leaders of the
EU’s institutions and a scattering
of EU prime ministers.
For the public, there will
be fireworks and concerts.
But, overall, the moment of
accession will be a muted
affair. That is partly because,
for the first time since Greece
joined the EU in 1981, this
wave of enlargement involves
just a single country.
The mood in Zagreb was
in any case set to be downbeat.
Though the ‘Yes’ vote in
Croatia’s January 2012 referendum
on accession was
sizeable (66%), the country’s
prime minister, Zoran Milanović,
acknowledges that a
New kid on the bloc
sense of deflation and fatigue
has sapped Croats’ enthusiasm.
Within the EU itself
these days, few are
pro-enlargement.
But there is another reason
for the unusual sobriety:
there is little sense of apprehension.
Croatia has been
through an accession
process that was unusually
long (it applied for membership
in 2003) and unprecedentedly
rigorous. The result
was a clean bill of health
from a European Commission
painfully conscious of
the maladies that still afflict
the EU’s two most recent
members, Romania and
Bulgaria (see page 17).
But perhaps the noncommital
calm is misplaced.
The EU is taking on board a
small country whose rather
uncompetitive economy is in
crisis – and, since it is
obliged to adopt the euro at
some point, its problems
may soon become the eurozone’s.
The EU knows full
well how small countries can
produce big problems.
There is certainly a case for
concern that Croatia will
join a list headed by Greece,
Cyprus, Ireland, Portugal
and now Slovenia.
On top of that there are
peculiarities specific to Croatia.
While it is small in clout
and population, it has land
borders of 2,372 kilometres
– a larger populationto-border
ratio than even
thinly-populated Finland.
The significant extension of
the EU’s external border will
make it still harder to police,
and its vulnerability will
surely again be an issue as
Croatia moves to join the
Schengen zone of passportfree
travel.
Then there is its recent
history. Only 18 years ago
Croatia was still a war zone,
and, as even government
categorisations suggest, it
may well still be shellshocked:
80,000 Croats
claim invalidity benefits for
post-traumatic stress disorder
caused, they say, by the
war – 80% of the total disability
claims in the country.
Might the EU be importing
a nation with a highly developed
sense of victimhood?
Small and modernising
Such concerns may, though,
be over-simplistic. First, it is
worth restating just how
small Croatia is: its population
of just 4.3 million is the
seventh-smallest in the EU
and 3 million less than
Bulgaria’s. The accession
process was long (see page
17). The government is reforming
the economy (see
page 16). Its domestic politics
features two parties that
have thoroughly modernised
themselves and that fit comfortably
(although Croats
may beg to differ) within the
mainstream of European social
democracy and Christian
democracy (see pages
17-19).
Croatia’s impact on the
EU itself looks likely to be
limited (see page 20), and –
in part because it has been
forced by the EU to address
the legacy of the war – its
impact on its own neighbourhood
could prove positive
(see page 20). Moreover,
it has gone through war, reform
and political reinvention
and its government has
changed colour (albeit only
twice, in 2000 and 2011)
without a hiatus in the reform
dynamic.
4,284,889
Population
(2011 census)
Croatia is also evolving in
ways that show it to be not
untypical of how society is
changing across Europe. It
remains a very conservative
and Catholic country, but
the debate on homosexual
rights shows that the
Catholic Church’s clout
has weakened substantially.
Similarly, while anti-Serb
sentiment remains strong,
particularly in football stadiums,
attitudes to Muslims
may be more liberal than in
many European countries.
Unlike neighbouring Slovenia,
for example, it has had
no disputes over minarets.
Tensions with Muslims
occasionally surface, but
these are with Bosnian Muslims
who moved to Croatia
in the 1970s: these disputes
have little to do with religion
and more to do with the
presence of a non-indigenous
working class.
While they cannot command
enthusiasm on 1 July,
Croatia’s political leaders
will be able to request,
with considerable justice,
credit for the changes they
have achieved in a country
that is the first since 1952 to
join the EU within two
decades of being engulfed in
war.

16
30 May 2013 CROATIA
The Croatian
economy is in
poor health, and
its revival will
depend on the
crisis-hit single
currency, writes
Dave Keating
In the early part of the
last decade, Croatia’s economy
was enjoying a boom.
Though it had missed out on
the first waves of investment
in central and eastern Europe
after the fall of the
Berlin Wall because of the
1991-95 war of independence,
at the turn of the century
things were looking up
for Croatia. An increase
in tourism and consumer
spending was yielding
steady growth in gross
domestic product of 4%-6%.
But since the onset of the
global economic downturn
in 2008, it has been a very
different story. The country
experienced a sudden downturn
from which it has yet to
recover. “Croatia depended
on foreign finance rather significantly,
so this has been a
crisis in part induced by the
drying out of credit and foreign
finance internationally,”
says Vladimir Gligorov, an
economist specialising in the
Balkans at the Vienna Institute
for International Economic
Studies.
In 2008, foreign direct
investment in the country
was €4.2 billion, with unemployment
at 13.4%. That figure
had fallen to just €624
million by last year, and unemployment
is expected to
rise above the 20% mark
this year. The country’s economy
contracted by 2% last
year and is expected to lose
another 1% this year, according
to Eurostat, the EU’s
statistical office.
It is in this context that
Croatia joins the European
Union in July. Perhaps
matching the gloomy economic
outlook, there is little
expectation among the
Croatian public that acces-
REUTERS
2.9%
Budget deficit as a percentage
of GDP.
(CIA World Factbook – 2012)
sion will mean a quick fix to
the country’s economic
problems. “As far as overall
effect of EU demand for
what Croatia has to offer,
this is going to be subdued in
the short term, because the
EU is not really having a
very high growth rate, to put
it mildly,” says Gligorov.
Since Croatia fell back
into recession in 2012, the
government has cut spending
and pursued liberalisation.
It has also cracked
down on tax avoidance and
raised value added tax, and a
new property tax is planned.
But it will be some time
before these reforms have an
effect. In the short term, the
cuts – including a plan to axe
15,000 public sector jobs –
will be painful and may, in
the eyes of many Croatians,
be associated with joining
the EU.
A slow start
The initial impact of EU accession
on Croatian businesses
may be negative. On
1 July, Croatia must leave the
Central European Free
Trade Agreement (CEFTA),
the free-trade area for non-
EU countries in southeastern
Europe. Trade
agreements with its Balkan
neighbours will have to be
renegotiated. In the meantime,
some of the country’s
manufacturing facilities may
shift to Bosnia, Serbia or
Macedonia in order to stay
in CEFTA.
Croatia’s star will instead
be hitched to the eurozone’s
wagon – although it will not
be a member of the single
currency. The country will,
however, continue to behave
like a pseudo-member of the
eurozone, says Gligorov. If
the eurozone’s woes continue,
so will Croatia’s.
But there is a recognition
that, whatever the shortterm
consequences, Croatian
businesses face a new
reality from 1 July. Natko
Vlahović , executive director
of the Croatia-EU business
council, says Croatian small
businesses have been
preparing for the change for
some time – particularly
in retail, one of the country’s
most-developed sectors.
“One of the key challenges is
that there will be a much
bigger interest in Croatia
from western companies,” he
says. “You won’t have customs
any more. The retail
sector has been preparing
and consolidating.” One example
is Kozum, Croatia’s
biggest retailer, which has
been trying to expand into
Slovenia so that it is
well placed once EU competitors
enter the market. As
competition grows, niche
sectors are likely to benefit,
such as software development,
specialty food
All eyes on
a eurozone
recovery
products, lumber and
tourism.
Vlahovic points out that
the vast majority of small
and medium-sized enterprises
in Croatia are
local players. Retailers seeking
to move will stay in the
Balkans or Turkey for the
medium term, he says. “We
will have to see whether
21.1%
Population below the poverty
line.
(CIA World Factbook – 2012)
some of the big Croatian
companies will compete in
EU markets, or whether
they would rather compete
in the region, where they can
expand faster and more easily
than in very developed
EU markets.”
One tricky new area for
Croatian businesses will be
state aid and competition
policy. “Many businesses
have been receiving state aid
through different packages
and subsidies – that will have
to change,” says Vlahovic.
Croatian companies will have
to learn how to take advantage
of the €11 billion of
structural funds now available
to the country from the
EU. “It’s going to be disruptive
for big guys like Croatia
Airlines,” Vlahović says.
“They haven’t restructured
properly, they have always received
money from the state.”
Croatia’s state-owned
companies may also have a
hard time dealing with the
liberalisation and deregulation
that will have to follow
accession. These companies,
including the electricity,
post, water and railways
providers, will face serious
challenges with their high
employee numbers. With
unemployment already dramatically
high, that will not
be easy.
Pipeline diplomacy
REUTERS
Croatia is hoping for a new
gas pipeline to end its energy
dependency, writes Dave Keating
Last week (23 May), three
Balkan countries jointly
endorsed a new pipeline
project. The announcement
was monitored closely by
the world’s energy markets,
which may seem surprising
given that the pipeline
would merely skirt the three
countries.
The Trans-Adriatic Pipeline
(TAP) aims to bring ten
billion cubic metres of natural
gas from Azerbaijan to
Europe via Greece, Albania
and Italy. Last week, Croatia,
Montenegro and Bosnia and
Herzegovina joined Albania
in supporting the project, and
the timing was no accident.
The announcement came
just weeks before the Shah
Deniz 2 consortium chooses
whether to use TAP or its
rival, the Nabucco West project,
to transport fresh gas
supplies from the Caspian
Sea to Europe.
What really interests the
three Balkan countries is
the planned Ionian-Adriatic
Pipeline (IAP). Croatia,
Montenegro and Bosnia
want the IAP and TAP to be
connected, probably in
Albania. That would give all
four countries access to a
new supply of gas, reducing
their dependence on Russian
imports.
“For IAP, the most logical
connection is with TAP,” says
Michael Hoffmann, director
of external affairs at TAP.
“Our southern route means
that TAP is the only pipeline
in the southern gas corridor
with the capability to connect
to IAP.”
Because of its limited
energy resources, Croatia is
heavily dependent on imported
oil and gas: 64% of
demand is satisfied domestically,
while 34% is imported
from Russia. Around 10%
comes from Croatia’s four
main hydroelectric plants.
The country is keen to
reduce its dependence on
Russian energy, and sees the
IAP pipeline as its main
hope of doing so. The government
has been vocal in
its support for the IAP-TAP
link. Vesna Pusić, the foreign
minister, recently confirmed
Croatia’s interest in TAP, and
the country’s gas transmission
operator, Plinacro, was
the first company to sign a
memorandum of understanding
with TAP, in 2011.
But the country is also keeping
its options open just in
case Nabucco ends up being
the chosen project.
There are also ambitions
to exploit possible offshore
oil and gas reserves in Croatian
waters in the Adriatic
Sea. Ivo Josipović, Croatia’s
president, recently said that
the country is looking for
partners in exploring these
offshore areas. Given the
economic challenges the
country is facing (see above),
the government is hopeful of
exploiting these Adriatic reserves,
but it will have to
convince oil companies of
their worth.

CROATIA
30 May 2013
17
REUTERS
Government
loses its grip
The Social Democratic Party will lead Croatia into the EU,
but it has lost support at national and local level, writes
Toby Vogel
For much of the country’s
two decades of independence,
Croatia’s politics has
been dominated by the conservative
Croatian Democratic
Union (HDZ). The
current coalition government,
which ousted the previous
HDZ administration
from power in December
2011, is only the second in
Croatia’s post-independence
history that does not include
the HDZ.
Led by the Social Democratic
Party (SDP) – successor
to Tito’s League of Communists
– of Prime Minister
Zoran Milanović, it also includes
four ministers from
the Croatian People’s Party
(HNS), led by Foreign Minister
Vesna Pusić, one from
the Istrian Democratic
Assembly (IDS), a regional
party, and two without party
affiliation. The government
may be unpopular because
of tough austerity measures
and a sluggish economy, but
it appears stable and is expected
to last until the next
general election, scheduled
for December 2015.
However, recent elections
have suggested a high level
of dissatisfaction with the
SDP. In elections to the
European Parliament on 14
April, the HDZ won six of
the country’s 12 seats, doubling
the share it had among
Croatia’s observer MEPs,
while the SDP fell from six to
five seats. Turnout was just
20.75% – the lowest ever in
any election in Croatia, and
one of the lowest in any
member state in elections to
the European Parliament.
Local elections on 19 May
brought no relief, with the
HDZ dominating the SDP in
many of the country’s larger
cities. Next Sunday (2 June),
a second round of elections
will be held in the country’s
four largest cities – Zagreb,
Split, Osijek and Rijeka.
Particularly bitter for the
SDP will be its expected failure
to recapture the office of
mayor of the capital, after its
candidate, health minister
Rajko Ostojić, trailed badly
in the first round. Since
2000, this post has been
held for most of the time by
Milan Bandić, a former leading
member of the SDP, who
was expelled from the party
when he stood (and lost)
against Ivo Josipović, the
party’s official candidate, in
the January 2010 presidential
election. Allegations of
corruption and irregularities
have dented Bandić’s image
as a hands-on problemsolver.
Nevertheless, he
appears poised to win reelection
on Sunday.
Bandić is also expected to
be able to forge a centreright
coalition with the HDZ
and other parties to form a
majority in the city assembly.
(Mayors are elected directly
at the same time as city or
municipal assemblies.) The
SDP’s bids to win Split and
Osijek also appear doomed
to fail. Tomislav Karamarko,
the HDZ leader, feels vindicated
in his policy of returning
the party toward the
right end of the political
spectrum.
Perhaps the biggest blow
early in the current government’s
term came at the end
of last year, when Radimir
Cačić, its most powerful
member after Milanović, was
forced to resign as deputy
prime minister and minister
of economy following his conviction
for causing a fatal car
crash in Hungary before becoming
minister. A construction
entrepreneur, Cačić,
a prominent leader of
Pusić’s HNS, had also been
minister of public works in
the SDP -led government of
2000-03. He was seen as a
close associate of Milanović
in a way that Pusić is not.
Presidency
Ivo Josipović is Croatia’s
third post-independence
president, and his low-key
manner signals a shift in the
presidency’s powers. Croatia
changed its constitution following
the death of Franjo
Tudjman at the end of 1999,
abandoning the presidential
semi-authoritarianism of
the 1990s. But Tudjman’s
successor, Stipe Mesić, who
had left the HDZ in protest
against Tudjman’s policies,
was not one to shy away
from seeking to influence
politics. It is only now, with
the soft-spoken Josipović,
that the presidency has become
largely ceremonial.
Josipović was elected in January
2010 and the next presidential
election is scheduled
for February 2015.
Once bitten, twice shy
The EU claims to have learnt the lessons of the 2007
enlargement, but the legacy of the war with Serbia has
hung over Croatia’s accession process, writes Andrew
Gardner
When the European Commission
published its last
report on Croatia’s accession
process in March,
the message was unequivocally
that the changes
wrought over the eight
years since the country
began negotiations with
the EU were irreversible.
The EU should not be worried
about this new member
state.
Its conclusion is buttressed
by the contention
that it has learnt lessons
from the EU’s enlargement
to Romania and Bulgaria,
particularly about
the importance of starting
to tackle the trickiest issues
for candidate countries
early in the process
and closing them only at
the end. (The experience
of dealing with Croatia has
reinforced the lesson:
chapters 23 and 24 – on
the judiciary and fundamental
rights, and on freedom
and security – are
now opened with subsequent
candidates at the
start of talks and closed
last.) An extended period
of pressure on Croatia
means that the Commission
is very confident that
corruption and the rule of
law will not become a
headache.
On the political level, the
climate has also changed,
with little of the pressure
to bring Croatia into the
EU swiftly that was evident
in the case of the 2007 enlargement.
This has made
for a slower, lower-key
process for Croatia, with
the main risk from adverse
public opinion being in
Croatia rather than in EU
member states.
Nonetheless, Croatia’s
path to the EU was thorny
– because other EU member
states have been prickly.
In the latter stages, German
doubts may have been
the most visible, but the
Dutch have been the most
consistently wary. The
hard line taken by the
Dutch reflects a recent
generalised hostility to
enlargement. But it also
reflected a principled concern
that Croatian governments
were unwilling to
send two generals – Ante
Gotovina and Mladen
Markač – to the International
Criminal Tribunal
for the former Yugoslavia
to face war-crimes charges
over the conflict with Serbia.
As a result, talks began
only after Gotovina was
captured and transferred
to The Hague in 2005.
The two men were eventually
acquitted in November,
to much jubilation in
Croatia. For many Croats,
the issue of war crimes became
a matter of two men
– who had been duly
cleared. But as Vesna Pusić,
Croatia’s foreign minister,
commented at the
time, the verdict did not
81
Rank in Global Competitiveness
Index 2012-13
(out of 144)
clear others already found
guilty of crimes.
The legacy of the war
had been a running sore in
relations with the EU since
accession talks began in
2003, and while issues related
to war crimes did not
feature in the final to-do
list given to Croatia by the
Commission, details in the
final progress report hint
at some of the previous
problems. War-crimes cases
were addressed by
courts in the areas where
the crimes were alleged to
have taken place – an approach
unlikely to convince
the victims or ensure
speedy processes. Only recently
have cases been
passed to specialised
courts.
Political scandals
Croatia also had to battle a
perception of corruption
created by a string of scandals,
including the killing of
the daughter of a prominent
lawyer in 2008. The
then prime minister, Ivo
Sanader, suggested the
murder was the work of the
mafia and sacked two ministers.
Sanader himself, the
premier between 2003 and
2009, was later convicted
of corruption and is serving
a ten-year sentence.
Perhaps unsurprisingly,
Croats have a low view of
their political and business
elite. Croatia ranked only
62nd in the world for
transparency in a survey
by Transparency International
in 2012.
But those perceptions
47
Rank in Human Development
Index 2012
(out of 187)
perhaps need re-touching.
The Commission thinks so:
it points to hundreds of
convictions in recent years
as an indication that anticorruption
institutions
have put down roots. The
effort has been reinforced
since January by the creation
of a conflict-of-information
commission that
has already ensnared some
politicians. Prime Minister
Zoran Milanović, who
served under Sanader in
the foreign ministry many
years before he became
Sanader’s political rival,
suggests that Sanader’s
trial is testament to
the system’s willingness to
reform itself.

18
30 May 2013 CROATIA
Croatia’s movers and shakers
Zoran Milanović Prime minister
When Zoran Milanović came to power in late 2011, he became only the second
Social Democrat to serve as prime minister in the 20 years since Croatia gained
independence. He had broken the mould set by the Croatian Democratic Union
(HZD) – once stridently nationalist, latterly a centre-right party – and he did so
with little apparent effort.
That ease was the trademark of a man sometimes seen as the golden boy of
Croatian politics, but it does an injustice to his carefully-measured political style.
His family is part of Croatia’s civil service and military elite; his economist father
held prominent posts in communist Yugoslavia, and went on to serve as an
assistant minister in the first post-independence government of Franjo Tudjman.
A top-ranking law student, Milanović junior glided – with top marks – into the
newly independent Croatia’s foreign ministry in the early 1990s. He was soon
despatched to Brussels, serving as advisor at Croatia’s mission to NATO and the
EU in Brussels, and returned with a degree in EU law.
He waited before entering politics in 1999. A year later, the Social Democrats
(SDP) finally broke a decade of HZD rule and put Milanović’s diplomatic past to
use, as co-ordinator of relations with NATO and later as assistant foreign minister
in charge of multilateral co-operation. By the time the party’s leader, Ivica
Račan, died in 2007, Milanović had gained enough support within the party to
trounce rivals previously seen as being above his category.
Winning public support took longer: he lost the elections in 2007. He lacked –
and still does – the ability to arouse much public enthusiasm. But nor did he
provoke substantial antipathy. Instead, he came to be seen as an astute politician
with a safe pair of hands.
He reinforced the impression in the 2011 election and has enhanced it since. A
quiet man, he has an ego strong enough to handle – with little strife to date – a
coalition government that is peopled with serious egos. But with a crisis still
gnawing at the economy, his skills may yet await their sternest test.
Andrew Gardner
PHOTOS:
REUTERS/COUNCIL
Vesna Pusić First deputy prime minister and foreign minister
Vesna Pusić has been the calm face of Croatia in the EU for the past two years –
and a calm face has served Croatia well as it has sought to disentangle its various
disputes with its northern neighbour, Slovenia, over borders and Yugoslav property
disputes.
Pusić’s preference is not to play to the gallery, which might seem odd for the leading
light of the government’s very small junior party, but it reflects a belief in
relatively friendless social causes. In the years that she led the liberal Croatian
People’s Party (HNS), between 2000 and 2008, she established an activist pattern
that persists, choosing to challenge voters rather than please them, by pressing the
progressive case on issues from the treatment of Roma to homosexuality to
reproductive rights.
Her defence of minorities may have kept the HNS a very small minority in Croatian
politics (it has 14 seats in the 151-seat parliament) and encouraged a view of her
party as elitist and determined to impose its values. But it has earned her respect,
and has forced conservative forces in the country onto the back foot.
Her liberal views evolved in the increasingly open and affluent Yugoslavia
of the late 1960s and 1970s and in a cosmopolitan family of well-educated
achievers. Her brother Zoran has become a prominent human-rights activist;
Vesna became a professor of sociology and, in 1990, added politics to her
activities, gaining a reputation for piercing criticisms of the regime of Franjo
Tudjman, Croatia’s president throughout the 1990s. Pusić is a reminder that
there is a liberal tradition in Croatia and the Balkans. The presence of liberal issues
on the agenda reflect the effectiveness of her activism, as well as the changing
times.
AG
Vladimir Drobnjak Permanent representative
to the EU
A career diplomat and lawyer by background, Vladimir Drobnjak
served as Croatia’s chief negotiator with the EU for the entire
duration of the membership talks, from 2005-12. In 2003-05, he
served as Croatia’s ambassador to the United Nations in New York
and before that, in 2000-03, in the job he currently holds. He was
head of the department for multilateral affairs of the foreign
ministry in 1997-2000 and deputy UN ambassador in New York in
1992-97, during the crucial wartime period.
Born in Zagreb in 1956, Drobnjak started out in 1980 as a journalist, first with the daily Vjesnik and
in 1986-88 as editor-in-chief of the paper’s Sunday edition. In 1988-92, he was UN and US
correspondent in New York for several Croatian newspapers and broadcasters.
Toby Vogel
Ivo Josipović President
Independent Croatia’s first president
was Franjo Tudjman, the
man who carved Croatia out of
Yugoslavia and dominated its
politics for a decade. In the years
since, the post has shrunk to that
of a constitutional figurehead.
For such a limited function, the
selection in 2010 of a man once
described as a “backbencher’s
backbencher” might seem fitting.
But that view belittles the role
and belittles the man, Ivo
Josipović. A composer in his
spare time and a quiet man by
nature, Josipović was not a major
political figure when Zoran
Milanović put him forward as the Social Democrats’ candidate
for the presidency. But his reputation for incorruptibility won over
the vast majority of an electorate tired of corruption. He then
used his powers over foreign policy to reach out to Serbia, to
accelerate reconciliation. On both fronts, he indirectly helped end
the HDZ’s dominance of Croatian politics. But he also reinforced
the role of the president as statesman.
AG
Milanka Opačić Minister of social policy and youth
Serbs once made up 12% of Croatia’s population; that figure is now
down to 4%. Most of those that remain vote for Zoran Milanović’s
Social Democrats, a party in which Milanka Opačić has long been a
leading Serb. Like the other Serb in the 22-member cabinet, Željko
Jovanović, Opačić has liberal views, and, like Jovanović, she has a
portfolio where her liberal views can find expression: her brief is
social policy, as well as youth issues. Her voice is amplified by a reputation
for competence and by her positions as deputy leader of the
Social Democrats and as one of the four deputy prime ministers. These are positions earned by a
political experience that would, outside post-communist Europe, seem atypical in length and depth
for a 44-year-old: she first entered parliament 21 years ago and a year later joined the Social Democrats’
central executive.
AG

CROATIA
30 May 2013
19
Željko Jovanović Minister of sport,
education and science
In sports-mad Croatia, a minister
for sport does not lack profile.
But Željko Jovanović has a political
prominence in a different
league from his portfolio. There
are two reasons. He is an ethnic
Serb in a post that has required
him to try to cool virulent nationalism
in the stadium, often directed
at Serbs. It is not just hooligans that he riles – the owner of
leading Croatian football club Dinamo Zagreb has insulted him
publicly as someone who by definition works against Croatia
because of his ethnic background. That is quite a charge to level
against a 48-year-old who participated in the Serb-Croat war of
1991-95 on the Croat side – albeit as a medic.
Jovanović himself has a warrior side, of the cultural sort. In the
23 years since he first entered parliament, he has established
himself as a leading liberal within the Social Democrats on social
issues, giving the right (as well as the far-right) an extra reason to
loathe him. The latest clash has been over his introduction of sex
education into primary schools. Jovanović pushed it through
without the usual consultative process, causing fury among
lawyers as well as his political opponents. He has responded with
ad hominem attacks on judges. In the reactions he prompts and
some of his own actions, Jovanovićis a reminder that an
unhealthy hothouse quality persists in Croatian politics.
AG
Neven Mimica European commissioner-designate
When Croatia joins the Union on 1 July, Neven Mimica is slated to
become the country’s first European commissioner. His hearing
before the European Parliament is scheduled for next Tuesday (4
June).
From Split, Mimica is an economist and trade specialist by background.
He served in various diplomatic functions from 1978, both
for Croatia and for Yugoslavia, in an era when the Yugoslav
republics had their own diplomatic relations with foreign countries –
up to a point.
After Croatia declared independence in 1991, Mimica became assistant trade minister and served
in senior posts in Cairo and Ankara before his appointment as chief negotiator for the pre-accession
Stabilisation and Association Agreement with the EU in 2000-01, and as minister for European integration
in the Social Democratic-led government in 2001-03. A technocrat, he joined the SDP in
2004 and was a member of parliament in 2004-11, serving as chairman of the European integration
committee. With Mimica, Milanović’s government will lose a minister who is seen as very capable
and an achiever. He is also very close to Milanović personally.
TV
Ranko Ostojić Interior minister
Born in 1962 in Split, Croatia’s second city, Ranko Ostojić, a lawyer
by training, stood for mayor of Split in 2009 but was defeated by
Željko Kerum, a populist supermarket magnate not affiliated to any
party, who was voted out earlier this month. Ostojić has a strong
local base in Split and is seen as possible leadership material in the
SDP. Before his appointment as interior minister, he was a member
of parliament in 2007-11.
Ostojić’s public career started out in municipal affairs. He was
head of resources for his native city in 1997-2000 and briefly served as head of the regional police
department, before becoming assistant minister and chief of Croatia’s police in the first SDP-led national
government in 2001-04. He worked as an executive of Slobodna Dalmacija, Split’s main daily,
in 2005-07.
(Not to be confused with Rajko Ostojić, the health minister, who is standing for mayor of Zagreb in
a run-off election next Sunday.)
TV
MEPs
Croatia’s 12 MEPs were elected on 14
April, in an election surprisingly dominated
by the centre-right Croatian Democratic
Union (HDZ), Croatia’s main opposition
party and a member of the European
People’s Party. Previously, the country had
had only observer MEPs, sent from its
national parliament, the Sabor.
The HDZ managed to double the number
of observer MEPs it had to six, while
the ruling Social Democratic Party (SPD) –
whose MEPs are part of the Socialists and
Democrats group in the European Parliament
– declined from six to five seats. The
small Labour Party kept its one seat, while
three smaller parties lost theirs. Turnout
was just 20.8%. The new MEPs will serve
until Parliament reconvenes after EU-wide
elections in May 2014. Croatia will then
lose one seat, as will several other member
states, to ensure that the total of
MEPs complies with the provisions of the
Lisbon treaty.
Croatia’s 3.7 million voters were asked to
rank individual candidates on party lists,
rather than voting for a closed party list as
had been the practice before.
The SPD’s Tonino Picula, a sociology professor
who served as foreign minister in
the party’s first government in 2000-03,
achieved the best result by far, with
106,000 votes. He was followed by Ruža
Tomašić, the Eurosceptic and socially conservative
candidate of a small right-wing
party who, as part of an electoral alliance,
Slavko Linić Finance minister
When Neven Mimica becomes
Croatia’s European commissioner,
Slavko Linić will be the only
member of the Croatian cabinet
to have served as a senior minister
in a previous government.
That detail belies a more important
point – that Linić, now
Croatia’s finance minister, has for
years been a leader in his own
right. Indeed, he is perhaps the
most plausible alternative leader,
though not a rival, to Prime Minister
Zoran Milanović among the
Social Democrats. He is not close
to Milanović, either personally or
in age.
At 63, he has behind him a career that includes ten years as the
mayor of Rijeka, a regional power base that served as a springboard
to three years as deputy prime minister to the Social Democrats’
late doyen, Ivica Račan, in 2000-03. In the years between
ministerial posts, he consolidated his political standing
with the chairmanship of two parliamentary committees.
Through those years in local government, national government
and in parliament, he has maintained a reputation for competence.
Now, Linić, whose career began in managing businesses’
finances, faces the greatest test of his financial acumen.
AG
Orsat Miljenić
Justice minister
A lawyer, Orsat Miljenić was
born in Dubrovnik and is a
founding member of Transparency
International Croatia.
As justice minister, he is in
charge of Croatia’s fight
against corruption. In 1996-
2000, he worked for the foreign
ministry and was posted
as a diplomat to the Netherlands.
In 2000-02, he was
head of the government office
managing relations with the
UN war crimes tribunal for the
former Yugoslavia and rose, in
2002-04, to be assistant minister
and then deputy minister
for European integration.
He practiced law from 2004
until his appointment as minister,
without political affiliation.
TV
had been included on the HDZ list.
Tomašić, a former police officer in
Toronto, got the best result on the entire
opposition side, with close to 62,000
votes. Next highest was the HDZ’s Andrej
Plenković, a career diplomat who was
state secretary for Europe in the Kosor
administration, with 36,000 votes.
The HDZ-led coalition also includes
Dubravka Šuica, Davor Ivo Stier, Ivana
Maletić and Zdravka Bušić. Biljana
Borzan, Marino Baldini, Oleg Valjalo and
Sandra Petrović Jakovina are the other
MEPs from the SPD-led alliance. Nikola
Vuljanić is the Labour Party’s MEP; as an
observer, he was affiliated with the S&D
group.
TV
A troubled history
Croatia 1991-present
Croatia declared independence
from the crumbling Yugoslavia in
June 1991, together with Slovenia,
its neighbour to the north-west.
The Yugoslav People’s Army
(JNA), which by then had come
under the sway of Serbian
strongman Slobodan Milošević,
attacked both republics, but withdrew
from Slovenia after a tenday
war to focus on Croatia, with
its sizeable ethnic Serb population.
That autumn, the JNA’s brutal
siege of the towns of Osijek and
Vukovar prompted outrage –
especially in Germany, whose
diplomacy was instrumental in
the EU’s decision in mid-December
1991 to recognise the two
republics on 15 January 1992.
Croatia’s separation from
Yugoslavia was bloody and traumatic,
with the JNA and Serbian
paramilitaries taking control of
large swathes of territory along
the border with Serbia and with
Bosnia and Herzegovina, to which
the war spread in the spring of
1992. Non-Serbs were violently
expelled from those areas, a practice
that brought the term ‘ethnic
cleansing’ back into the political
vocabulary.
In the spring and summer of
1995, after three years of stalemate
in Croatia, the Croatian
army, with US assistance,
launched two lightning offensives
against Serb forces, advancing
deep into Bosnia and forcing
Milošević to the negotiating table
in Dayton, Ohio, in November. The
offensive sent some 200,000
ethnic Serbs fleeing to Serbia and
Serb-held areas of Bosnia and
Herzegovina.
The hard-line nationalist policies
of Franjo Tudjman, Croatia’s
leader, had also wrought havoc in
Bosnia. Croatia initially backed the
Bosnian government but, in 1993,
Tudjman agreed with Milošević to
partition the country, and turned
against his allies in a bid to carve
out a Croatian state within Bosnia.
Perhaps the most poignant symbol
for that bloody struggle is the
divided city of Mostar, in Herzegovina,
whose Ottoman-era
bridge was destroyed by shelling
from units under the command of
a Croatian general, Slobodan
Praljak. Praljak was sentenced to
20 years in prison by the United
Nations war crimes tribunal in
The Hague yesterday (29 May).
The fate of Tudjman’s Croatian
Democratic Union (HDZ), at the
time an extreme nationalist movement
that refused to make any
gesture of accommodation to the
country’s Serb citizens, mirrors
that of Croatia itself. Tudjman’s
death threw the HDZ into an identity
crisis, and it was out of power
between 2000 and 2003. But Ivo
Sanader, its new leader, began
turning the hardline nationalist
grouping into a more mainstream
Christian Democratic party.
Sanader in mid-2009 abruptly
resigned as prime minister in
unexplained circumstances and is
now serving a ten-year prison
sentence for corruption; his
successor, Jadranka Kosor,
continued his modernisation
agenda.
But as important as the HDZ’s
internal renewal were the three
years from 2000 during which
Croatia was governed by coalitions
led by the Social Democratic
Party (SDP) of the late Ivica
Račan. He had been the last
leader of the Yugoslav-era League
of Communists of Croatia, was an
indecisive prime minister, and had
great problems holding his coalition
together. But it was his government
that led Croatia out of its
international isolation and undertook
the reforms that paved the
way for the start of membership
negotiations with the EU in 2005.
Croatia before 1991
An independent mediaeval kingdom
for two centuries until it
came under Hungarian rule in
1102, Croatia was part of the
Habsburg Empire from the early
16th century. For centuries,
Catholic Croatia was on the frontier
with the Ottoman Empire,
which ruled neighbouring Bosnia,
Serbia and Montenegro with their
Muslim and Christian Orthodox
populations, a frontline experience
that has shaped Croatia’s national
identity (and inspired
Samuel Huntington’s notion of a
clash of civilisations). After the
collapse of Habsburg rule in the
First World War, Croatia joined
the other South Slavs (except the
Bulgarians) to form the shortlived
Kingdom of Serbs, Croats
and Slovenes (renamed the Kingdom
of Yugoslavia in 1929).
The kingdom’s dismemberment
by the axis powers in 1941 led to
the creation of the Independent
State of Croatia led by Bosnianborn
Ante Pavelić. “From this
regime,” writes the historian John
Lampe, “sprang the most savage
intolerance seen anywhere in
Europe during the Second World
War outside of the Nazi regime
itself.” Pavelić’s Ustaša regime
and the Jasenovac concentration
camp became synonymous with
the extermination of Jews, Serbs,
Roma and others.
The second Yugoslavia was
founded and dominated by Josip
Broz Tito, partisan leader and perhaps
Croatia’s most famous son
(albeit born to a Slovene mother
in what was then the Habsburg
Empire). Croatia, like the other
Yugoslav republics (Slovenia,
Bosnia and Herzegovina, Serbia,
Montenegro, and Macedonia)
and Serbia’s two autonomous
provinces (Vojvodina and Kosovo),
had a degree of self-rule,
especially after 1966, within the
confines of one-party rule.
In 1971, Tito purged Croatia’s
liberal leaders in order to rein in
Croatian nationalists who had
benefited from the loosening of
party orthodoxy in the republic;
among those imprisoned was
Franjo Tudjman, who two decades
later would lead the country to
independence following Tito’s
death, and the resurgent Serbian
nationalism it triggered.
Toby Vogel
Ethnicity
The preamble to the Croatian constitution of 1990, amended in 2010,
describes Croatia as “the nation state of the Croatian nation and the
state of the members of its national minorities”, and then goes on to list
22 groups –including Serbs – “and others”. Its adoption in 1990 meant
that ethnic Serbs in Croatia went from being the dominant group in
Yugoslavia to being a minority in Croatia.
In the last pre-war census, in 1991, Serbs made up 12.2% of Croatia’s
population. By the time of the first post-war census, in 2001, the proportion
had dropped to just 4.5%, where its has roughly remained since.
That was largely the effect of the offensive that brought Serb-controlled
territories under government control in the summer of 1995, prompting
a huge exodus of ethnic Serbs.
According to the 2011 census, no other ethnic minority came even
close to 1%, although taken together they made up 7.7% of Croatia’s
population. At the same time, 95.6% of Croatia’s population listed
Croatian as their mother tongue. Just 0.53% of Croatian residents held
foreign citizenship.

20
30 May 2013 CROATIA
EC
Speaking up
Croatian, the official language
of the Republic of Croatia, will
become the European Union’s
24th official language on 1 July.
Spoken by almost all of Croatia’s
4.3 million citizens, it is
also one of the three official
languages in neighbouring
Bosnia and Herzegovina.
Until the break-up of
Yugoslavia in the early 1990s,
Croatian was considered a
variety of Serbo-Croatian, the
leading South Slav language.
The South Slav language group
also includes Slovenian, the
language of Croatia’s neighbour,
which is closely related
but distinct. Since then, Serbo-
Croatian has been divided into
Croatian, Serbian, Bosnian, and
Montenegrin, even though
there are no obstacles to
mutual understanding.
Croatian exclusively uses the
Latin alphabet, while Serbian
tends to be written in the
Cyrillic alphabet.
The EU treats the four varieties
as separate languages
and requires separate accreditation
by interpreters and
translators. The US State
Department in 2009 reversed
its earlier policy and now –
again – treats Serbo-Croatian
as a single language for the
purposes of training and
assignment. The International
Criminal Tribunal for the
former Yugoslavia, a United
Nations court in The Hague,
likewise makes no distinction
in assigning interpreters of
Croatian, Bosnian or Serbian
citizenship to particular cases.
There is no interpretation
between Bosnian, Croatian
and Serbian at the court.
In a preface from 2000 to his
standard English-language
textbook for Serbo-Croatian, in
use since 1950, the late American
Slavist Thomas Magner
puts the correspondence of
Croatian and Serbian sounds,
vocabulary, declensions, conjugations
and syntactic formations
at between 95% and
100%, and attributes the split
into separate languages to
political rather than linguistic
judgments. “There is a greater
difference between British
English and American English
than between Croatian and
Serbian,” he writes, “but there
exists no political or parochial
movement that would proclaim
American English to be a
language distinct from British
English.”
Toby Vogel
The EU’s newest
member will have
strong support in
some quarters,
and strained
relations elsewhere,
writes
Andrew Gardner
On 16 May, Croatia finally
cleared the biggest hurdle in
the closing phases of its
negotiations with the European
Union: its accession
treaty was finally ratified by
the German parliament.
This was no mere formality.
Last October, the European
Commission decided to issue,
as one official puts it, a
“wake-up call” to Croatia to
drive through the last reforms
it required from the
government in Zagreb so
that the final report could
be “rosy”. The Bundestag
showed more alarm than expected,
with its president declaring
that Croatia was not
yet ready for accession.
Germany’s wary posture
marked a turnaround in historical
terms: back in 1991,
in the early days of the Yugoslav
wars, it was Germany
that pressed other European
Community members to
recognise Croatia as an independent
state. Similarly,
the accession process wore
down Croatia’s relations
with another long-time ally,
Slovenia. Only in March did
the two settle their bilateral
differences to a sufficient degree
for Slovenia to lift its
threatened veto of Croatia’s
accession.
Does this alienation of natural
allies suggest that Croatia
will enter the EU friendless?
Far from it. Germany’s
position was no doubt
prompted by a desire to protect
the integrity of the en-
The day after Croatia celebrates
its accession to the
European Union, President
Ivo Josipović is
scheduled to host a meeting
of the leaders from the
other western Balkan
countries – countries that
are all seeking EU membership
as well.
Josipović is worried that
Croatia’s borders with its
neighbours might become
a ‘Chinese wall’ after Croatia
joins the Union. This
concerns above all troubled
Bosnia and Herzegovina,
with which Croatia
shares the longest border
and close ties. Josipović
has pledged to prevent
such walls becoming a reality.
“We consider Bosnia
and Herzegovina perhaps
our most important
neighbour,” he said. “We
consider this stage, in
Friend or foe?
largement process. Slovenia’s
tactics were just the latest example
of an almost ritualised
use of leverage before a
neighbour joins the EU.
Both countries are likely
to revert to their normal status
as allies. For Slovenia,
Croatia is its closest ex-
Yugoslav neighbour, both
geographically and culturally.
For Germany, the relationship
is shorter and shallower,
developed out of the
shock of seeing Serb-dominated
Yugoslav troops lay
waste to Croatian cities in
1991. Austria and Italy are
also particularly strong allies,
for reasons of geography
and history.
Croatia, though, is unlikely
to mobilise such affinities
for particular purposes. On
the EU’s current agenda,
there are no issues on which
it is inclined to take a hard
line. Nor is it likely to join a
particular camp in the EU’s
debate on austerity. A lack of
which Croatia is an EU
member and Bosnia and
Herzegovina is not, a transitional
period. We will
do everything to help
Bosnia and Herzegovina
become an EU member
state.”
But in the meantime,
Bosnian politicians must
figure out a way to certify
that the country’s meat
and dairy products – the
country’s most important
exports to Croatia – meet
EU sanitary and veterinary
standards. The question
of whether certification
should be at the level
of the central government
or the country’s constituent
parts remains
highly politicised.
On the whole, though,
the regional implications
of Croatia’s accession to
the EU are more serious
enthusiasm for the EU might
suggest there is scope for it to
become a supporter of
changes to the nature of the
EU. But at this point, debate
on the future shape of the EU
– including banking union
and treaty change – is a step
too far for a public and a political
class whose attention
has been focused on accession.
Schengen ambitions
Where allies as large as Germany
and Italy may come in
useful in the immediate future
is in Croatia’s bid to join
the Schengen zone of passport-free
travel. On this, it
may clash again with its usual
sparring partner of recent
times, the Netherlands. But
EU officials believe that the
Dutch will not extend the
reservations they expressed
over Romania’s and Bulgaria’s
inclusion to include
Croatia. They argue that
Croatia falls into an
A Balkan balancing act
Croatia’s leaders are concerned about the impact of EU
accession on relations with their closest neighbours,
writes Toby Vogel
2,372 km
Length of Croatia’s
land border
for Croatia than for the
other western Balkans
countries. Croatia’s automatic
exit from the common
market of EU hopefuls
(CEFTA) is expected
to create problems for
Croatian firms, since the
CEFTA trade agreement is
asymmetrical: it facilitates
entirely different, unproblematic
category – an assessment
reflected in the Commission’s
decision not to
subject Croatia to the same
post-accession monitoring
that still applies to Romania
and Bulgaria.
New MEPs
Croatia’s impact on the
European Parliament is also
likely to be limited, for reasons
other than its small size
(just 1.6% of the 766 MEPs,
as of 1 July). The elections to
the Parliament on 14 April
may have resulted in a victory
for Croatia’s centre-right
opposition, but the net impact
on the Parliament itself
was neutral: the 12 Croatian
seats were evenly split between
deputies for the European
People’s Party and the
Socialists and Democrats.
There had been a danger
for Croatia that its influence
over the Commission could
swiftly be limited, because of
access to the EU’s common
market, but allows its
members to maintain
some barriers to imports
from the EU.
Many Croatian companies
are household names
across the former Yugoslavia
and have captured
large segments of the market
there, but are uncompetitive
in the EU.
Leaving CEFTA and
entering the EU’s single
market means that Croatian
exports to the CEFTA
countries will be subject to
higher customs duties than
at present; in some instances,
tariffs will be
massively higher, for example
cigarettes, making
its exports there uncompetitive.
Brand recognition
Croatian brands have little
or no recognition in the
EU, which means that
Croatian consumer products
are unlikely, at least in
the short term, to balance
the loss of Balkan markets
with gains in the EU. This,
says Vladimir Gligorov, an
economist at the Vienna
Institute for International
Economic Studies, has
prompted Croatian firms
COME ON IN Zoran
Milanović, Croatia’s
prime minister, and José
Manuel Barroso, the
president of the European
Commission. EC
suggestions that countries
should not be automatically
entitled to a full commissioner
when the next Commission
takes office late next
year. But at their summit on
22 May, the EU’s leaders decided
that every country
should have a commissioner
until 2019.
In the short term, if Prime
Minister Zoran Milanović’s
European counterparts can
mobilise his support, Croatia’s
most notable short-term
impact on EU high politics
may come from reinforcing
the recent leftward momentum
in the European Council.
Milanović will be the
third recent addition to the
still-small left-wing camp in
the European Council, after
Slovenia’s Alenka Bratušek
and Italy’s Enrico Letta. But
Croatia’s major impact on
the EU may be its influence
on how the EU deals with its
neighbours in the western
Balkans (see below).
to open local facilities in
other Balkan countries
including Serbia or Macedonia.
1,009 km
Length of Croatia’s border
with Bosnia and Herzegovina
Croatia might well become
a champion of EU
enlargement to the other
western Balkan countries
and extend technical assistance
on accession issues
to them. But, with the exception
of Montenegro,
which began membership
talks a year ago, none of
these countries is anywhere
near joining; it is
highly likely that, even under
the most favourable
of circumstances, the EU’s
29th member will not join
this decade.

CAREERS
30 May 2013
21
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JOHAN DACKNER Senior nuclear safeguards inspector in the European Commission’s energy
directorate-general.
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Being a nuclear safeguards inspector is a huge responsibility,
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MOVERS & SHAKERS
There are not many jobs
in the European Commission
that give you
the right to a special kind of
passport. “We all carry an inspector’s
card,” says Johan
Dackner, producing a set of
documents bound between
sturdy green covers. “That
authorises me to access any
nuclear installation holding
fissile material.”
Dackner is a senior nuclear
safeguards inspector in
the Commission’s energy directorate-general
in Luxembourg.
He and his colleagues
make sure that all the European
Union’s civil fissile material
– material such as uranium,
plutonium and
thorium, which is capable of
sustaining a nuclear reaction
– is in the right place, is used
for its intended purpose and
does not go missing. “In
some respects you could
liken us to accountants, but
we don’t count money, we
count uranium and plutonium
atoms,” says Dackner.
Ensuring that nuclear installations
are operated safely
and securely is usually a
matter for national authorities,
but the Euratom treaty
gives the Commission responsibility
for verifying that
nuclear proliferation is not
taking place from civil
sources. As a result, all civil
fissile material must be declared
to the Commission.
Some material is used in
nuclear power plants or research
facilities, some is undergoing
reprocessing or
stored as waste. The nuclear
safeguards directorate
checks that these declarations
are complete and consistent
on paper. Then it
sends out inspectors to
check the reality.
Most inspectors have a
background in physics or engineering,
to which the
Commission adds around a
year of training. Dackner
studied nuclear engineering
in Sweden, going on to work
at a nuclear fuel fabrication
plant and then in a reactor
training centre. The idea of
becoming a safeguards inspector
only came to him
when he saw the job advertised.
“There are 160 of us, so
it’s a very small cadre of people
doing this in the European
Union,” he says. “So
was I expecting that? No,
not at all. But I do find it
challenging and interesting.”
Physical inspection
Each inspection involves
verifying that the objects listed
are physically there, accurately
labelled and consist of
the material described. Inspecting
a nuclear reactor
might take one person one
day, while a reprocessing
plant might involve a team
working for up to a week. “If
it’s a fuel assembly, I can very
easily see that it is a fuel assembly,”
Dackner explains.
“But if it is a spent fuel assembly
that has come out of
the reactor, it will be highly
õ The European Commission has appointed Kurt Vandenberghe, a Belgian national, as director for
environment in its research department. Vandenberghe is currently the head of the private office of
Janez Potočnik, the European commissioner for environment, and was previously deputy head of the
private office when Potočnik was commissioner for science and research. Previously, Vandenberghe
served in the private office of Philippe Busquin, European commissioner for research, in 1999-2004.
He joined the Commission in 1996. He replaces Andrea Tilche, acting director, on 1 July.
õ Maria Cristina Russo of Italy has been appointed director for international co-operation in the
European Commission’s department for research and innovation. She is currently head of unit for
financial services and redress in the Commission’s department for health and consumer affairs. Russo,
who joined the Commission in 1992, also served in the secretariat-general and – like Vandenberghe –
as a member of Busquin’s private office in the Prodi administration. She replaces Laurent Bochereau,
acting director, on 1 July.
õ Hanna Pennock, a Dutch national, has been appointed acting director-general of the International
Council of Museums (ICOM), an organisation serving museum professionals. She replaces Julien
Anfruns after his return to France’s culture ministry. Pennock is scheduled to serve until the end of the
year.
õ François de Bie of the Netherlands has been elected chairman of European Bioplastics, an
association of firms producing or working with bio-based or bio-degradable plastics.
õ Send details of Movers & Shakers to info@europeanvoice.com
radioactive and stored about
nine metres underwater in a
spent fuel pond. For that, I
will need a device that allows
me to say that it still is
uranium as opposed to anything
else.”
Little personal risk is involved,
yet it is not a job to be
taken lightly. “A lot of responsibility
is placed on you
as an individual,” Dackner
says. “When on-site you have
to think on your feet, you will
be faced with a certain number
of decisions and a certain
amount of assertiveness
might be required.”
That is part of the job’s attraction,
along with the variety
of installations he has
visited over 15 years as an inspector.
“I’ve seen a width of
the nuclear power industry
that I would not have seen if
I’d been working as an engineer
specialising in one particular
aspect.”
Yet most of the time this
search for something out of
place leads nowhere. “Nuclear
operators in Europe
perform very well,” Dackner
says. “We haven’t had any
cases of diversion of nuclear
material. What we sometimes
find is that human error
will come in. Someone
will have written down the
wrong thing in an accountancy
line, and that’s what
the verifications are there
for.”
Ian Mundell is a freelance
journalist based in Brussels.
T
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IN THE MONEY A raft of legislation on financial services
POWER OF A UNION The EU’s plans for a banking union
Birthday celebrations
for Europe’s
Don’t miss out
single market
cannot hide some
persistent and
deep flaws, writes
Ian Wishart
on EV Special Reports.
Subscribe today.
There is no shortage of conflicting
views on the single
market. Some people regard
it as the greatest achievement
of the European
Union. Others doubt that it
exists. Some credit it with
doing more to bring its peoples
together than any other
development in post-war
history. Others maintain
13 that it is a painful and alltoo-clear
illustration of the
25 October 2012
EU’s inability to join up fragmented
markets and establish
the most basic of common
standards. There will
be plenty who approach next
month’s ‘20th anniversary’
celebrations with some
weariness.
The celebrations are as
much to do with wanting to
inject the single market with
LOSING THE WILL However political priorities change, global warming 15 remains a threat
fresh impetus as marking 15 a
13 September 2012
11 October true 2012 starting-point. The
DISCUSSIONS IN DOHA Will countries show their commitment to the climate-change roadmap?
20th anniversary is an approximation
to what was, step too far for many Europeans, was a bruising experience for t
YOU WIN SOME... Trade unionists demonstrate in 2006 agains
EMISSIONS TRADING The flagging price of carbon and bad press for the ETS
back in 1992, a deadline. France and the Netherlands. REUTERS
BEING PREPARED Why adapting to climate change is as important as mitigation
The single European act actually
took effect in 1987. It
SPECIAL REPORT
Twenty ye
GREEN MONEY Tying funding to environmental issues could solve budget stalemate
was inspired by the report
drawn up in 1985 by the
then European commissioner
for the internal market
EU Studies
Arthur Cockfield. That report
set out 297 measures
15
GEM OF AN IDEA OPAL looks at how national parliaments engage in EU politics
that were needed to complete
the single market by out, broken up and nation-
More subtly, the spectre of
4 October 2012
EIB INSTITUTE Applied economics and reaching out to university networks
the end of 1992. From 1986 alised. They have withdrawn an EU of variable speeds is
GENDER AND THE EU Is enough attention paid to gender issues in EU policies?
to 1992 the EU adopted from cross-border lending to up and running and threatening
the uniformity of a
nearly 280 pieces of legislation
aimed at breaking down markets. The idea of a uni-
single market. The rancour
retrench on their domestic
SPECIAL REPORT
the barriers between member
states. What the 20th talked about longer even 8-9 December, when David
tary patent, which has been of the European Council of
anniversary celebrations are than the single market itself, Cameron, the British prime
The future of food
trying to re-create is the atmosphere
of those formative drawing board (see page 16). change after failing to win
lingers frustratingly on the minister, blocked treaty
years during the European The European single currency,
which was meant to service regulation, brought
exemptions from financial
EXPENSIVE TASTES The rising cost of food
17
Commission of Jacques Delors,
and the widespread realise the single market’s home the extent to which
27 September 2012
WHAT A WASTE From field to plate to dustbin
awareness of “1992”, which potential, instead threatens the member states fall short
GROWING CONTROVERSY The battle over GM rages on
in the business world took to undermine it. The wave of of a common vision of the
on an almost millenarian austerity that has swept single market. Proposals for
DESIGNER LABELS What
SPECIAL
information should be on our food?
REPORT image.
across the continent tempts a banking union that the
member-state governments Commission published yesterday
(12 September) (see
Changing times
TORTILLA into protectionism, TROUBLE state aid,
But how to achieve fresh impetus?
Much of the early in-
against thetical increases to a single the market. ble challenge: How can a
A and protest other in Mexico behaviour City anti-
page 20) will be a formida-
Renewable energy
nocence about the single price Anti-EU of corn. parties REUTERShave capitalised
on the eurozone’s difpervisor
be made compati-
single eurozone banking su-
market’s potential has faded.
LEGISLATION Is the economic crisis dethroning the 2020 targets? Some of its ideals are in tatters.
The dream of crossstream
parties are ket? The UK suggests that 13
ficulties – and even mainble
with the EU’s single mar-
SOLAR SUBSIDIES Sudden changes are discouraging potential investors border consolidation between
large banks to provide doms of the Schengen area tion conflicts with the free-
tampering with the free-
tighter European integra-
FORWARD PLANNING The European grid needs adapting to accommodate deeper and more new energy liquid capital
markets is tarnished. epitomised the achieve-
Much of the rest of the EU
sources of borderless travel that once doms of the single market.
FRIEND OR FOE? Changing
SPECIAL
attitudes towards biofuel
REPORT
Banks have had to be bailed ments of the single market. argues the opposite.
REUTERS
SPECIAL REPORT
Climate change
The single market
ON AND ON AND ON The struggle for a Europe-wide patent
BOARD GAMES A blueprint for companies’ senior executives
HIT THE SWITCH Liberalising Europe’s energy markets
IN THE MONEY A raft of legislation on financial services
POWER OF A UNION The EU’s plans for a banking union
Throughout the year, European Voice takes an in-depth look at some
of the main issues affecting Europe. For news, features and the facts
on the subjects affecting the headlines, European Voice’s Special
Birthday celebrations
for Europe’s
e proposed services directive. The proposal, which aimed to deepen the single market, proved a
European Commission and was blamed for the ‘No’ votes on the EU constitutional treaty single market
cannot hide some
Reports are your most reliable source.
persistent and
deep flaws, writes
Ian Wishart
ars On of ever-thinner progress? Food forice
thought
There is no shortage of conflicting
views on the single
market. Some people regard
But with pressure come mittee on internal market for ensuring that it is applied
it as the greatest achievement
of the European
opportunities. Michel and consumer protection. “It and promoted in member
Union. Others doubt that it
Barnier, the European commissioner
for the internal where we have problems. politicians and officials
doing more to bring its peo-
also brings into sharp focus states. He and other EU
Visit www.europeanvoice.com/tryEV
New worlds of
exists. Some credit
study
it with
market, has set in motion an On things like copyright and know that proposals to overhaul
Europe’s copyright
development in post-war
ples together than any other
unprecedented conveyor [orphan] works and the
belt of financial-service legislation
that would scarcely ucts across borders.” tive Demographic dispute resolution challenges laws, demand new European that it is patterns a painful and ditional all-
food is strongly tive of increasing agricultur-
ability to source digital prod-
regime, to establish alterna-
history. Others maintain
have been thinkable five He says that technology to enable the mutual recognition
in growing, of professional distributing quali-
and consuming food, EU’s writes inability Dave to join up fragture,
which perhaps explains In some ways the policies
too-clear illustration of identified the with regional culal
output and fishing yield.
years ago (see pages 18-19). has altered people’s perception
of how the single marfications,
and to carry out a
mented markets and estab-
why Europeans have been so have been victims of their
Using the crisis to justify the
Keating
lish the most basic of common
standards. There nology will like genetically mod-
Europe’s fish stocks are over-
suspicious of new food tech-
own success. Today, 75% of
introduction of tighter, more ket can benefit them. “People
are doing more remote ment Last rules year, humanity are of pressing reached global conundrum beset by curity is be about plenty human who approach secuified
nextcrops (see pages 18-19). fished, according to the Eu-
revision of public procure-
uniform regulation across
the EU, the results might yet transactions and they want importance: a rather unsettling without milestone.
growth The earth’s there popula-
will be mental concerns.
But celebrations while the number with of some world worries about food tensive agricultural practices
economic
looming health and environrity.”
month’s ‘20th anniversary’ But while the rest of the ropean Commission, and in-
create a real and credible to be able to pay and to have
single market in financial their data secure – and data no solution reached to seven the eurozone billion, Recent increases in food people weariness. is growing, the shortages, Europe is dealing pose dangers to biodiversity
services.
protection which would crisis. up from three billion just five prices, which have already amount The of land celebrations earth is are with as the opposite problem. and water supply. Reforms
have been seen as a civil liberties
issue is now a crucial ebrations, the population the to reach European nine hunger, are already re-
farming inject must the be single used market to in with Europe over the past half ing debated by MEPs and
decades As well ago. as leading Experts the expect cel-
led to food riots and mass not. This much means to do new with ways wanting of The toabundant supply of food of both policies currently be-
Digital economy
billion by 2050. That means minders of the dangers increase yield (see page century has led to overconsumption
and, in turn, rising ing to balance this out, re-
member states are attempt-
Progress in other areas is no single market issue as well,” Commission will set out a
fresh impetus as marking a
nine billion mouths to feed. posed by an inability to feed 18). More controversially,
l i l “Th h
f h li fi d i
true starting point The
Subscribe today and you’ll never miss out on our unique coverage.
ments such as the drought in
the United States this summer.
Spiking commodity
prices are already having an
effect on grocery stores
across Europe.
The growing middle class
in India and China will also
alter the picture. As those
populations earn more, they
choose to eat more meat and
fish. This will drive up prices
in Europe, and could oblige
Europeans to switch to kinds
of meat and fish not tradition-

22
30 May 2013
Advertisement
Call on U.S. and UN by 18 prominent personalities who have visited Camp Ashraf
Kobler’s actions in Liberty must be heard in the court of law. We are ready to testify.
Remove Kobler from the case of Ashraf and Liberty,
and assign it to the UNHCR. Return the residents to Ashraf.
During the years 2003 to 2008 when protection of Ashraf was
with the U.S. forces, we, the signatories of this statement, visited
this camp and thoroughly spoke for several days with the
residents. This statement addresses the stance of UN envoy Mr
Martin Kobler regarding Camp Liberty. Mr Kobler’s real mandate
has been to close down Ashraf at any price and to dismantle the
People’s Mojahedin Organization of Iran (PMOI).
At a U.S. Congress hearing on 13 September 2012, Mr Tahar
Boumedra, a former senior UN official serving in Iraq, disclosed
under oath that UNAMI’s decisions on Ashraf are made at the
Iraqi prime ministry and the Iranian government’s embassy.
At the end of 2011 and the beginning of 2012, Mr Kobler met
five times with the Iranian ambassador to Iraq Hassan Danaifar, a
well-known Quds Force commander, to discuss Ashraf.
Following these meetings, Mr Kobler evicted the residents from
Ashraf to Liberty prison. He promised the residents that they
would be swiftly resettled in third countries, that they would have
security in Liberty, and that Liberty enjoys humanitarian standards.
Unfortunately these were empty promises.
In various meetings and interviews, Mr Kobler had claimed that
half of the residents would return to Iran after their transfer to
Liberty. When this did not happen, making use of his staff under
the pretext of UNAMI monitors, he doubled the pressure
on residents. Our personal acquaintance with Liberty residents,
telephone conversations with them, daily examination of Liberty
Daily Reports and the repeated behaviour of Mr Kobler force us
to the conclusion that in all probability he is not implementing
the goals of the UN but rather playing into the hands of officials
and regimes who have every intention to harm the inhabitants.
In light of the above points, we underscore the following:
1. The only goal of Liberty residents is to free their homeland and
it is natural that they will not accept dissolving or annihilating
their organization at any price. They are the determining factor in
moving Iran towards democracy and stability, preventing extremism
and internal war.
2. Measures conducted by Mr Kobler and his staff in Liberty need
to be investigated in a competent court. We are ready to testify.
3. There is a genuine difference between Mr Martin Kobler’s action
and other mistakes of the UN in Rwanda, Srebrenica and
Sri-Lanka. In the case of Ashraf and Martin Kobler, the issue,
much beyond a fear or negligence, is of clear collusion with the
perpetrators of repression and siege.
4. We urge UN and US to discharge Mr Kobler from the case of
Ashraf and Liberty and to hand over the responsibility to UN-
HCR; to return the residents to Ashraf; we ask to set up an international
investigative delegation, to look into the actions of Mr
Martin Kobler. Their investigations should be made public.
, Vice-President of the Eu-
, Former Director of French Direc-
, Member of the European Parliament
- Estonia
, Member of European Parliament
, Member of European Parliament
, Member of European Parlia-
Parliament
Parliament

30 May 2013
23
ENTRE NOUS
!Jens
Ferreting out love
British Liberal MEP Chris
Davies returned last week to
one of his pet subjects – the
subject of pets.
The European Parliament has
voted on new rules governing
the non-commercial transport
of dogs, cats and, most importantly,
ferrets.
Ten years ago, Davies welcomed
the introduction of a
pet passport that would allow
ferrets to cross national borders
within the EU, saying that
they would “make it much easier
for British male ferrets to
meet French female ferrets”.
A decade on, the ‘pet passport’
legislation that was adopted in
2003 has been simplified.
THE (POLE)CAT
WHO GOT THE
CREAM Chris
Davies (right)
and friend.
ARCHIVE
Davies has become more
graphic in the meantime. He
greeted last week’s vote by
saying: “Ferrets, cats and dogs
can now travel across Europe
for holidays, competitions or
sexual liaisons for breeding
purposes. This is the EU creating
opportunities and adding
value to the experience of people
and their pets in a way that
no single country could do
alone.”
What chance do the UKIP
MEPs and other assorted
Eurosceptics stand once
Davies has mobilised the
cross-border sex-for-ferrets
vote? The result of the (if you’ll
pardon the phrase) in-out
referendum is in the bag.
At his confirmation hearing
this week, George Pufan, Romania’s
nominee to become
a member of the European
Court of Auditors, narrowly
escaped censure from the
European Parliament’s budgetary-control
committee.
After Pufan had promised
to withdraw his candidacy if
MEPs voted against him, the
committee endorsed him by
just 14 votes to 13 votes. (The
committee was less gentle
with Croatia’s candidate,
Neven Mates, who tried to
wriggle out of the question
of whether he would accept
the result of the vote, and so
was rejected by 16 to 11
votes.)
The narrow vote came
after a difficult hearing on
Monday (27 May), when Pufan
received some pointed
questions from members,
notably Monica Macovei, a
centre-right Romanian MEP,
former justice minister and
an anti-corruption crusader.
On the principle of damned
if you do, damned if you
don’t, he was asked how it
was possible that he obtained
an accounting degree in
2008-11, at a time when he
was secretary-general and
chief authorising officer at
the Romanian Court of Accounts.
Then he was asked
why his grades were not better.
Sadly, nobody asked questions
about gaps in the curriculum
vitae that Pufan had
Weidmann, the president of Germany’s Bundesbank, is about to have his two days in court – the German
constitutional court, which will hold a hearing on 11-12 June to consider the Bundesbank’s challenge to the European
Central Bank’s policy of Outright Monetary Transactions (OMT). But who will speak for the ECB? Who will
fight back against the criticisms of the Bundesbank that OMT is illegal, that it will ruin the Bundesbank’s balance
sheet, that it will harm the credit markets and undermine the independence of the central banks? It turns out that
responsibility on the ECB’s executive board for such legal issues falls to Jorg Asmussen, so the former senior official
in the German finance ministry can hardly shirk the task. That is most inconvenient for the very politically aware
Asmussen, who is thought to harbour ambitions to become finance minister if and when the post is in the gift of the
Social Democratic Party. To be fighting the Bundesbank and duelling with Weidmann might not help that cause.
We don’t know what you did last summer
REVEALED The complex process used to select Romanian candidates for the European Court of
Auditors. REUTERS
submitted to the committee.
According to the CV,
Pufan attended Bucharest’s
Technical University for Civil
Engineering in 1979-84,
the darkest years of the
Ceauşescu regime. The CV is
then blank until 1992 (after
the 1989 coup that removed
Ceauşescu), when Pufan
shows up at the interior
ministry, working at a police
high school for a few months
before switching to the private
construction business.
(The only entry for the entire
period 1984-92 is a driving
licence that he obtained in
1989.) The year 1999 has an
entry “Ministry of National
Defence – alumnus of
National Defence College”.
Quite when Pufan attended
the National Defence College
is left unexplained. In
1994, he joined the Romanian
Court of Accounts,
where he has been working
ever since, with a brief break
of less than a year in 2001-
02, when he worked as an
adviser to the mayor of
Bucharest, who at that time
was Traian Băsescu (now
the country’s president).
Pufan is Romania’s third
candidate for the ECA post,
which has been vacant since
January 2013. In May last
year, Romania’s incoming
centre-left government withdrew
the candidacy of Mircea
Vasile Popescu, the nominee
of the previous centre-right
government. The new government’s
nominee, Leonard
Orban, a former European
commissioner, withdrew his
candidacy after being given a
negative vote by the Parliament’s
plenary.
Swift getaway
Belgian prime ministers do
not usually hurry away from
meetings of the European
Council, because, unlike
most other national leaders
attending such summits,
they do not have a long journey
home and no plane is
necessary.
But Elio Di Rupo, the current
prime minister, was unusually
stressed at the end of
last week’s European Council
(22 May), and anxious to
get away.
It turned out that he was
going to Leipzig for festivities
to mark the 150th anniversary
of the German
Social Democratic Party.
TRAVELLING COMPANIONS Elio Di Rupo and Enrico Letta.
REUTERS
Better still, he had cadged a
lift from fellow Social Democrat
Enrico Letta, Italy’s
prime minister, who was being
flown to Leipzig in his
prime-ministerial jet.
Fortunately for them,
German scrutiny of public
finances does not yet extend
to refusing airspace to prime
ministers of countries with
debt levels that breach the
eurozone’s convergence
criteria.
A first-class mistake
Birutė Vėsaitė’s contribution to Lithuania’s
presidency of the EU’s Council of Ministers is
over before it even began. As the economics
minister of Lithuania, Vėsaitė was in line to chair
the internal-market configuration of the competitiveness
council during the six-month presidency
from July to December. But Monday will
be her last day in office. Vėsaitė’s days were
numbered when it emerged that she had flown
to a recent government meeting and business
conference on a flight chartered by Arvi, a
Lithuanian group that deals in everything from
fertilisers to poultry. Arvi reportedly offered the
minister a seat on the plane for free. Although
the ministry paid Arvi what a seat on an ordinary
flight would have cost, Vėsaitė still opted
for the private charter. Her fate was sealed with
a message from the office of President Dalia
Grybauskaitė that “the actions of the economy
minister feature characteristics of open political
corruption”. Thank you and goodbye.
Contact: pauldallison@economist.com

24
30 May 2013