Overview
The Belgian Presidency
By Philipp Bruchert, Head of Financial Services, Hill & Knowlton
On 1 July, Belgium, one of the founding members of the European Union, will take over the presidency of the EU for the 12th time. This presidency, however, will be very different from its previous ones in many ways. Never had it to manage the consequences of a similar financial and economic crisis. Naturally, this will therefore have to be Belgium’s first and overarching priority, which will also reflect on its approach to many sectoral priorities.
Currently, the Presidency’s main objective will have to be the organisation and coordination of fiscal consolidation. Member States by and large agree that they need to reduce their budget deficits, which in most cases have been completely blown out-of-proportion following the banking crisis and various rescue and stimulus packages. The means to achieve this are more controversial. At the same time, the Belgian Presidency will have to strike a fine balance between that necessary fiscal consolidation and the slow economic recovery which Europe is currently experiencing. It would be ironic if the agenda for growth, embedded in the Europe 2020 strategy agreed by EU heads of state and government, would fail due to austerity measures which are partially imposed by the EU.
But beyond negotiations on how to best get EU countries’ finances back on track, the Belgian Presidency will also have to continue working closely with the Commission and Member States on the root of the problem that got the world and Europe into this crisis. It needs to be, together with the Commission, a driver for intelligent and appropriate financial markets regulation. A more integrated or at least coordinated financial supervision must become a reality rather sooner than later and capital requirements must truly reflect the risks that financial players are exposed to. The biggest challenge will be to overcome the different cultural perspectives on financial regulation and strike meaningful compromises (e.g. Hedge Funds legislation).
But even without the economic and financial crisis, there is a plethora of dossiers and issues that the Belgians will have to deal with. Among the most important ones are the ongoing work on mutual recognition of asylum and immigration matters. In the environmental field, Belgium will have to play a key role in reviving global discussions after Copenhagen’s failure. From an internal market perspective, further efforts to introduce a true European patent will be critical. Finally, on external policy, accession negotiations with Croatia (and possibly Turkey) will be top of the agenda. Moreover, implementing the new European external action service should be placed equally high on the agenda, so that Europe can finally be perceived as speaking with one voice.
But Belgium, quite visibly, also has put social affairs and cohesion on its agenda. Given that this is an area traditionally neglected at European level, it remains to be seen what exactly Belgium can achieve on that front – especially in these exceptional economic times.
Finally, the Lisbon Treaty, entered into force at the end of last year, has changed the institutional framework considerably. One increasingly got the impression that in the past six months, it was mainly the newly created President of the European Council, Herman van Rompuy, who was running the Council. Arguably, this was the case because the Council seems to have been in a constant crisis mode since last year. One will therefore have to see whether Belgium can put its mark on the Council’s work in the coming months as successfully as Mr. van Rompuy, a Belgian, has done. This, of course, will depend on how quickly and efficiently it manages to settle its internal divisions which brought down the last government and puts in place anew team. It will also depend on how the new leadership manages to cooperate with Mr. van Rompuy.
Ceci N’est Pas Un Etat
The effect of Belgium’s Regions on the EU Presidency
By Dominic Robinson, Account Manager, Hill & Knowlton
Talk of Belgium splitting up is at an all-time high, with the recent Federal elections in June which have not yet resulted in the formation of a new government. When the government fell earlier this year, there was much speculation over how the ongoing friction between the Regions of Flanders and Wallonia would affect Belgium’s running of the EU Presidency. However, the decentralised nature of Belgium’s constitution may instead play a very positive role as at the heart of the Regional political culture is compromise and consensus – the key priority of any successful EU Presidency.
Understanding the country can sometimes be tricky as a decentralised constitutional structure can be difficult to understand at the best of times and in Belgium you have the additional complexity of three linguistic ‘community’ groups (Flemish, French and German) and three regions (Flanders, Wallonia and Brussels).
Adding EU decision making to that mix can make your head spin but understanding how the country interacts on the European level underlines the inherent stability of the country and how such a complex constitutional structure can in fact work quite well. It also underlines an important, if underreported, fringe-benefit of the EU membership: an enormous incentive to find consensus, a prerequisite for participation on the world stage and the leitmotif of a successful EU Presidency.
Belgium has only recently become a decentralised country – and still could go further as demanded by some Flemish political parties. The process started in the 1970s when the three ‘communities’ (based on linguistic lines) were established. Then in the 1980s the three ‘Regions’ were established. However, it was only in the last two decades that substantial powers were transferred to the regional governments and Belgium was officially transformed into a ‘Federal’ state (being made up of both ‘Regions’ and ‘Communities’).
Today powers are either the ‘exclusive’ competence of the Regions or the Federal government, or shared between the administrative layers. The Federal government still manages the public finances, the army, the judicial system, social security, foreign affairs and substantial parts of public health and home affairs.
Unlike most other federal states, the Regions (and Communities) in Belgium also have powers relating to international relations – and by consequence, towards EU relations. The Regions are allowed to conclude treaties with other countries and regions on matters for which they are competent. Since the Treaty of Maastricht, they are also allowed to represent the entire country at Council meetings – an opportunity quickly seized upon by the Belgian Regions.
In 1994 the Federal and Regional Governments concluded a “Cooperation Agreement” which set out exactly how policies would be coordinated, and when and who would represent Belgium at Council-level meetings – sometimes it would be the Federal Minister, but more often than not, it would be a Regional Minister whose competence the discussions fall under. Moreover, the Regional governments are also not elected at the same time as the Federal government which means that many of the Council Chairs will not be affected if and when the new government is formed.
The Presidency’s job is to find consensus between 27 Member States rather than push their national interest – which perhaps puts Belgium in a rather good position as a huge part of its political culture is based around finding a compromise position between its very powerful Regions.
Before Belgium held the Presidency, if the Regions failed to find an agreement on any given issues, the country was forced to abstain from decisions – however, with unanimity or qualified majority voting, abstention is never neutral. For this simple reason, the incentive to find a compromise position no matter what is very high. This political attitude filters through the government institutions and has developed a strong political tradition of inter-Regional cooperation as going it alone, the Regions have much more to lose in the long-run on the European level.
The fact that the Belgian Prime Minister was picked to become the permanent Chair of the Council partly because of his proven track record in bringing together the seemingly politically entrenched Regions of Belgium underlines the potential strength of this country holding the Presidency.
At first glance, the European motto of ‘Unity in Diversity’ does not fit today’s post-election Belgium, but there is perhaps more life in a unified Belgium than current sceptics suggest. Although it is uncertain how long the new government will take to be formed – maybe not even before the end of the year as previous negotiations can testify to – the unique decentralised constitutional structure of Belgium may even contribute to a more successful EU Presidency than other, more constitutionally unified countries, have managed.