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Abigail Hofman:

Abigail Hofman:

I wonder if ______ is an extremely optimistic person or in a cocoon of senior management denial

Bank deleveraging has barely started

Bank deleveraging has barely started

Banks lending money to governments to help fund bank bailouts looks horribly circular

October 1999

Bruxellisation of the dream of Europe





E-Force One glides into the Gare du Midi, Brussels. The band strikes up buongiorno il duce and Prodi emerges from the presidential train, glowing from his triumph at the G3 summit in Bruges.

"Prod off!" read the headline in this morning's Sun: "Prodi tells Bush where he can put his B52s."

This is the new Europe which, three years into the 21st century, has found its feet as a superpower. European armies are sorting out trouble-spots from Belarus to Burundi. The Americans are nowhere. Coca-Cola, Ford, Microsoft, IBM, McDonnell Douglas and the Sixth Fleet are in retreat. Peugeot-Citroën, Olivetti, Matra, Arbed, Deutsche Telekom and the Fourth Belgian Foot are on the march. The likes of Goldman Sachs, Morgan Stanley, and Citibank took a bath in Latin America, while WestLB, Crédit Lyonnais and ScotWest now dominate the global banking scene.

Europe's national governments are fighting for subsidies from the European Commission, which controls taxation. Prodi's unelected administration of commissioners call the shots. The European Council, whose twice-yearly meetings used to have eurocrats running around like headless chickens, is now a headless chicken itself. The peripatetic European so-called "presidency" has become little more than a ceremonial sham. Last year, during the German presidency, German premier Edmund Stoiber was jeered into speechlessness while trying to lecture the European parliament on the virtues of subsidiarity.

The European Commission is the body that holds the purse-strings and rules by diktat. It is no longer a collection of political has-beens fronting a directive-recycling plant staffed by a million bureaucrats.

In your dreams.

As I saunter down the rue du Gouvernement Provisoire (Voorlopige Bewindstraat) avoiding the potholes, I fear it will take more than a few years to turn this forlorn city into a worthy capital of the United States of Europe.

The term "bruxellisation" - turning a once grand metropolis into a jumble of decaying concrete - also describes the fate of those earnest plans and drafts that are stretched and battered by the mandarins of 15 member states. Brussels is the graveyard of simplicity and the hothouse of pluralism. eurocrats are enslaved by their own jargon and the plethora of committees and councils that feed on it.

A "fonctionnaire" (qualified Euro civil servant) at one of the 24 directorates-general, which are the guardians of the "aquis communautaire" (rules of the EU), must be able to nurse legislation through its precarious cycle from "green paper", to "communication" and "interpretative document", and perhaps ultimately to "directive" (law). Passing and then enforcing a directive is a long and cumbersome business, especially if any of the 15 member states has to pass laws at home to comply with it. Far less trouble is the practice of "mutual recognition" or "home member state supervision", whereby the competence of each national regulator is held sufficient to give the regulated entity an EU-wide "passport". But like Lilliput's big-endians and Blefescu's little-endians there are those who favour "maximum harmonization" and those who want "minimum harmonization" of financial legislation across the EU.

Chasing EU legislation through its hoops requires an intimate knowledge of the committee process, and of the peculiarities of the "rapporteur", the MEP (member of the European parliament) leading the examination of the topic. A rapporteur often has his own agenda.

The passage through parliament can be speeded up by a 1997 fast-track process called Slim (simpler legislation for the internal market). Parliament coordinates its law-making with the European Council by means of "co-decision" or the "co-operation mechanism". If they can't agree they set up a "conciliation committee".

The draft law must pass scrutiny by Coreper, the commission of permanent representatives to the EU, made up mostly of career diplomats. Well actually there are two Corepers: Coreper II, made up of these ambassadors, and Coreper I, a forum of their deputies who actually do the work.

With tricky financial questions there are various bodies and committees to go to for advice, such as the banking advisory committee (BAC), the insurance committee, and the HLSSC (the high-level securities supervisors committee). But that doesn't stop the commission or the parliament setting up ad hoc committees, such as the financial services policy group, and the intergroup for financial services (which is a creature of the parliamentary Kangaroo Group). Alles klar?

Then, when a directive is in place, it may not do the trick because the situation has changed. Rather than put it on the scrapheap of history, or painfully go through the tortuous process again for an amendment, it might just be saved by a GTIAD (group to interpret a directive). Even then a country can slide out of complying with an EU law by invoking an evil called the "general good".

Recent changes in the Brussels power-structure aren't likely to affect this labyrinthine process much. President Romano Prodi's new commissioners, led by the redoubtable deputy Neil "Boyo" Kinnock, are expected to work more closely with their DGs, in a process called "responsibilization" (making commissioners more responsible) - a term even uglier than "subsidiarity" or "super-equivalence". "Responsibilization" should mean that the commissioner's "chef de cabinet" can no longer do what the hell he likes.

Unlike in the dream, the European Council, comprising the senior cabinet ministers of the 15 states, ultimately calls the shots. Coreper II ambassadors chew the cud over higher points of EU policy, then pass a proposal to the council for ratification. If they pass it up as an "A point", it is nodded through without debate. If they call it a "false B point" it's likely to be debated. If there's the chance of a serious clash in the council, other bodies get involved, such as the political committee, the monetary committee and the K4 (justice and home affairs committee). Big policy changes like the Maastricht treaty, the Amsterdam treaty and the Rome and Brussels conventions need an IGC, inter-governmental conference.

And what does the humble Belgian make of this, seeing his small city under occupation by the world's biggest bureaucracy? Mayor of Brussels Eric André, who describes it as "the poorest region of Belgium apart from [French-speaking] Wallonia" says that "without the EU we'd be just a provincial city". But you are, Eric.







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