Lobbyists 1, Obama 0

I’m here in the US for a white Christmas, it’s been lovely so far. The big news here, other than the terrorism attempt on a trans-Atlantic jet last night, was the historic passage of the healthcare reform bill in the US senate on Christmas Eve. But if some of you across the pond think this represents a fulfilment of the ‘hope and change’ promises in Barack Obama’s campaign, think again. The compromise legislation about to be enacted is being seen by liberals as a disappointing failure, and an indicator that the change the American president promised is not likely to materialise.

By definition, what was passed in the senate Thursday is not universal health care. It will bring the coverage level up to about 94%, meaning the US will remain the only developed nation without universal coverage. True, it will bring an additional 30 million people into the coverage umbrella. But it does so simply by legally requiring them to purchase insurance, without lowering the astronomical cost of insurance. It would force 30 million people to buy into the existing broken healthcare system. Rather than real reform, it’s a bit of a fudge.
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Europeans and Americans see Copenhagen through different eyes

So, was Copenhagen a failure or not? It would appear the answer depends on which side of the Atlantic you’re on when you ask the question.

The Copenhagen Accord, finalised after hours of intensive negotiations, theoretically recognises a goal of limiting global warming to two degrees Celsius, but contains no targets to achieve that. There are no specific emission reduction actions by developing countries and no specific commitments on long term financing for mitigation and adaptation efforts. Not only is it non-binding, the agreement wasn’t even adopted by all UN countries. Instead it has just been 'noted', which means that countries recognise its existence but don’t necessarily agree with it.

European NGOs and governments were united in their condemnation of the Copenhagen climate summit’s result this weekend, which failed to include any kind of binding agreement and was only able to muster an optional “accord”. Though the language the political leaders were using was obviously more diplomatic than that being used by the climate activists (Greenpeace’s director called Copenhagen a “crime scene”), the basic message is still the same: the summit failed. Swedish prime minister Frederik Reinfeldt, still holding the EU presidency, said the agreement, “will not solve the climate pressures, the climate threat to mankind.” Commission president Jose Manuel Barroso said, "The level of ambition is not what we were hoping for." The British leadership has been railing against the Chinese all weekend, pointing the finger of blame squarely in their court. Brown said that they were, "clinging to their version of what an international organisation should not do,” and British environment minister Ed Milliband delivered the extraordinary charge today that the Chinese hijacked the summit. If there is a mainstream European publication that did not use the word ‘failure’ today to describe the summit, I am not aware of it.
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NGO fury after Copenhagen ban

Yesterday’s decision by the UN to ban a large number of NGO delegates from the main venue of the Copenhagen climate change summit was, to say the least, unpopular on the ground.

Delegates from the green group Friends of the Earth arrived at the Bella Centre Wednesday morning to find their badges were no longer valid. This news apparently spread like wildfire both within the Bella Centre and among the protestors on the streets, stoking a feeling of resentment among the marchers. One delegate described to me his heartbreak as he saw a girl crying on the train, saying she had waited for years to attend the summit and was now being made to feel like an intruder.

The UN insists the move was necessary after it received word that FoE members were going to facilitate a security breach and let protesters into the centre. But yesterday’s move seems to be part of a wider strategy to block access to NGOs in the final day of the conference. This may be necessary as more heads of state and VIPs need to get into the centre.

According to reports NGOs have now been ordered to give up 35% of their access passes. Today the number observers allowed in was limited to a list of 300 names. Apparently the NGOs weren’t told before thge summit that thsi siphoning off of access would happen in the final days.
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EU slaps Microsoft, again

If you buy a new PC in Europe next year, you’re going to see an unfamiliar little pop-up window the first time you boot up, asking you which internet browser you would like to set as the default. Believe it or not, that pop-up is the result of a bitter ten-year legal battle that was finally resolved this week.

The EU has been involved in anti-trust charges against Microsoft for years, alleging that the company has operated as a monopoly in various ways. It was the weak regulatory system in the United States that allowed this to happen in the first place, but over the last decade the EU’s competition regulator has become increasingly assertive, and today it is widely acknowledged as the world’s regulatory body.

This specific dispute centred on the fact that since the vast majority of PCs use the windows operating system, the vast majority of computer users were using internet explorer as their web browser simply because it was presented as the only option with the system – even though it isn’t. IE is used by about 56% of internet traffic. This issue is just one of many complaints against Microsoft launched by the EU. Microsoft has paid €1.7 billion in fines to the EU so far.
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After Berlusconi attack, Italy on dangerous road

It was the projectile cathedral-smack heard ‘round the world. Sunday night’s attack on Silvio Berlusconi in Milan almost immediately started generating so much internet snark and celebration that the facts quickly became clouded. First reports said he was punched – a light enough incident for the internets to make light of the situation. Then it emerged he had been hit with an object and had been seriously hurt – slightly less jovial. Then the facts just turned bizarre – a crazed man had thrown a miniature replica of the Milan Cathedral from the crowd, and managed to hit the Italian prime minister right in the mouth.

The news about Silvio Berlusconi over the past year already seemed like it had reached the height of bizarre absurdity, but this took the cake. The philandering Italian tyrant everyone outside of Italy loves to hate seemingly given a “taste of poetic justice” by being smacked in the face by a symbol of the very conservative values he has exploited to maintain his grip on power. Almost overnight the deranged man who allegedly threw the church, Massimo Tartaglia, attracted thousands of fans on Facebook.

The attack fits in perfectly with the persecution narrative the Italian prime minister has built around himself. This victim image was being hammed up to levels worthy of the worst Italian B-movie earlier today as Berlusconi whispered from his hospital bed, "love will always truimph!" All he was missing was a crown of thorns.

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American desires for Anglican Africa

The continuing controversy over the American Christian right’s connection to a new law in Uganda giving the death penalty to gays may not on its surface seem like a European issue. After all this is a America-Africa story right? But watch with amazement as I find the European connection!

There is actually a third player in this story: the Anglican church. In fact this entire episode is an illustration of the continuing conflict between American evangelicals and British Anglicans in a new “scramble for Africa” – as the former works tirelessly to replace the latter as the spiritual coloniser of that “magnificent African cake.”

The new legislation in Uganda which is about to be adopted mandates life in prison for gays, death by hanging for gays with HIV, and 3 years in prison for anyone who knows of a gay but does not alert the police. The introduction of the legislation follows the heavy infiltration of that country by American anti-gay Christian evangelical groups. They have sent missionaries to talk to that country’s parliament about the evils of homosexuality. Emissaries to Uganda to talk about the American brand of evangelical Christianity have included Rick Warren, the hugely popular American evangelist who was selected by Barack Obama to deliver the national prayer at his inauguration. They have also included Republican senators James Inhofe and Chuck Grassly.
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Obama's troublesome shadows

Barack Obama won’t be the only high level American politician flying to Copenhagen next week. Shadowing him at the talks will be a determined group of US congressmen who have one mission: to convince the gathering that like Al Gore after Kyoto, Obama will not be able to have his commitments confirmed by the US congress after Copenhagen.

Senator James Inhofe, who once called climate change the “greatest hoax ever perpetrated on the American people,” will be leading a group of Republican congressmen to deliver just that message. Climate change legislation is currently struggling in the US senate and it is by no means certain that it will pass. Polls show the number of Americans who believe climate change is caused by man is actually decreasing, falling to its lowest point in three years in October. With the entire House of Representatives and many senators up for reelection next year, it could be a tough sell to convince conservative Democrats to back legislation with teeth - particularly those from coal states. Many in congress have said they will fight any effort by the Environmental Protection Agency to bypass congress by regulating GHG emissions under the Clean Air Act.

The Republican lawmakers at the summit next week won’t be just a sideshow distraction, they will be a reflection of political reality. Much of the American media coverage to the summit has been sceptical, with the hacked email scandal receiving a large amount of attention. An editorial by potential 2012 Republican presidential candidate Sarah Palin calling on the US to boycott Copenhagen saw wide circulation on Tuesday.

Certainly the US won’t be the only country with opposition parliamentarians grumbling in the background next week – the Australian government faces some of the same challenges. But given that the US is key to any successful outcome, the American opposition may receive quite a bit of attention, particularly at home. Continue reading

Dutch drop objection to Serbia in EU

Serbia moved a step closer to joining the EU today as the Netherlands withdrew its objection to the accession.

The EU had been in an 18-month deadlock over whether to grant Serbia free trade and association, which is a precursor to membership. The Dutch, who are hosting the international criminal court proceedings against Serbs accused of genocide during the Balkan civil wars, had insisted for more cooperation from Serbia in tracking down war criminals first.

Serbia had argued it legitimately couldn’t find the accused, which seemed doubtful considering many of them were walking around the country in broad daylight. However Serbia recently arrested two key leaders, and apparently that was enough to satisfy Dutch concerns. Though the Dutch foreign affairs minister said the tribunal still needs more cooperation from Serbia.

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France and Britain go to war over regulator

A war is looming between Britain and France, and Nicolas Sarkozy has his missiles pointed squarely at the City of London.

The French president made some unusually undiplomatic comments this week gloating over his Agriculture Minister, Michel Barnier, being appointed as European Commissioner for the internal market. That position is one of the most important in the EU, especially as the world recovers from the shock of the economic crisis.

He boldly and defiantly blamed the economic collapse on the “free-wheeling Anglo-Saxon” (aka British and American) economic model, saying, “I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism." He said the fact that a Frenchman had been appointed, while the EU had refused to even consider a Brit for the position - despite Gordon Brown’s pleading - reflected how discredited the Anglo-Saxon model has become. The bravado was an indication that Sarko intends to push Barnier hard to create a pan-EU financial regulator based on the continental European economic model that would have power over the City of London (London’s financial centre).

It was a remark seemingly calculated to elicit the most fury possible across the channel, and boy did it work. UK Chancellor Alistair Darling almost immediately put pen to paper to fire back in an editorial in the Times, saying:

"National supervisors, such as the FSA, must remain responsible for supervising individual companies…The reality is the real competition to Europe's financial centres comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial centre."

Darling signalled that he would go into Wednesday’s meeting of European finance ministers with an uncompromising stance against a pan-EU regulator that could supersede the British authorities. And thus the first Franco-British battle for economic reform commenced.

The first skirmish

The European Commission has drawn up plans for three new supervisory authorities to oversee banks, insurers and investment firms. In addition a separate body, the European Systemic Risk Board, would oversee the wider stability of the European financial system as a whole. Though the national regulators would be involved with it, it would be led by the European Central Bank. This last part would be highly controversial in Britain since it does not use the Euro and is currently not beholden to the bank in any way.

Yesterday’s meeting appears to have been a draw. Both Germany and France went in pushing hard for powerful EU supervisory bodies, but by all accounts Darling was equally fierce in his opposition to them. French finance minister Christine Legarde came out saying they had found a compromise, adding “Not everyone was on the same wavelength.”

Darling came out of the meeting insisting he had negotiated a guarantee that the EU regulator could not supersede national regulators, and it could not force states to pay up for taxpayer bailouts.

But in essence both his guarantees and Legarde’s calming words are premature. The ministers only agreed on the most general of outlines for the plan yesterday, and much still has to be worked out. The thought from some in parliament is that the big ‘macroeconomic’ authority and three ‘microeconomic’ groups are being split up as a purposeful distraction. Guy Verhofstadt, the leader of the Liberals in the parliament who favours a strong authority, indicated after the meeting that the parliament will attempt to bypass this “trick” by voting on both bodies as one. He said after the meeting:

"This "forced agreement" is difficult to understand. Member States are repeatedly saying they want a single market for financial services, but now that the time has come to agree on the basic principle of creating supra-national supervisory authorities, some of them appear totally reluctant". Moreover, by separating micro-prudential supervision from the macro-prudential one, Council tries to impose its own views and its own agenda. But the European Parliament as co-legislator will play its full role and has already decided to consider the proposals on micro and macro prudential supervision as a whole."

What comes out of this is anybody’s guess. A column in today’s Wall Street Journal suggested that the Square Mile was overreacting and taking Sarko’s bait, and the paper seems confident that in the end the city will not be regulated from Brussels. But if I were a betting man, I wouldn’t be putting my money on Britain winning this fight.

The UK already has dimished influence in Brussels because of its lack of engagement. And with a weakened government that will be preoccupied in the coming months with an election it is sure to lose, I don’t see them as being a very difficult foe to vanquish.

This is a shame really. As badly as financial reform is needed, Darling is correct to say that London is the leading financial centre of Europe and should have a significant say in new regulatory structures, regardless of the sins the city and its hedge funds have committed in the past to get us into this mess. One should keep in mind that Merkel and Sarko’s push for a strong EU financial regulator with power over the city is not entirely altruistic. Part of their motivation is a desire to scale down the city’s prominence in the European financial sector and give more power to Frankfurt and La Defense.

But as some commentators have pointed out, if the EU overegulates without some reform from its trading partners, there is a risk that financial services companies will flee Europe altogether. Rather than moving from Britain to France and Germany, they could be more likely to high tail it over to Switzerland.

And speaking of Switzerland, I’m about to get on a plane to fly there. My dad is having a belated Thanksgiving dinner. I’m wondering if the minaret ban vote will come up during the dinner conversation with his Swiss colleagues. It could be an interesting night! Continue reading