The debates surrounding some of the Commission's positions and the criticisms of one or two of their choices (see this column from yesterday, concerning the initiatives on ending the postal monopoly for letters up to 50 grams and opening up the gambling and gaming markets) are perfectly understandable. However, we should not forget some elements which are sometimes overlooked or misunderstood:
1. The electorate chooses. It is unfair to draw an automatic connection between the choices of the European institutions (particularly the Commission) on a given issue, and the provisions of the Treaty. The Court of Justice has demonstrated that environmental or social demands, and even traditions, can be a justification for opt-outs from the principles of the single market. The Constitutional Treaty would have further accentuated (by making it clear) the consideration taken of what is known as the “European social model”, notably in the very sensitive area of services of general economic interest (in France public opinion was fooled on this point by the lies told during the referendum campaign).
In fact, operational choices essentially depend on elections, both national ones (which determine the positions of the Member States within the Council) and European ones (which determine the attitude of the European Parliament, which co-legislates in almost all areas). When the day comes that these two truths are better understood - that is, when the European aspect is fully present in national election campaigns and the electors are fully aware of the importance of European elections and participate in them more fully - democracy in Europe will take a huge step forward.
2. Weaknesses and strengths of the Commission. Initiative always comes down to the European Commission; this is one of the bases of the “Community method”. However, the way in which the Commission functions is fraught with difficulties for which it is not responsible. It has too many members to work as a real college and it is too unbalanced to be able to vote validly by simple majority (see this column in bulletin 9337). In practice, each Commissioner is relatively free to act in the area for which he or she has direct responsibility, and where they do not have the scope or the prestige, it is their services which make the choices for them (which is not always such a bad thing).
These premises are so unfavourable that the way in which the Commission works in reality could almost be considered miraculous, since in fact: several Commissioners have made gains in terms of prestige and authority; the majority of Commission positions are decided by joint agreement (the President wisely avoids formal votes); when there is an urgent choice to be made, the President settles the matter (he has recently blocked at least two controversial initiatives).
With only a few exceptions, the Commission's documents anticipate the point at which there will be overlap between the different ideological positions and interests of the Member States. This is not the ideal situation (several observers are nostalgic for the days when the Commission went beyond simply anticipatory arbitration between national positions and compromises, and came up with innovative ideas and pushed new boundaries within Europe), but the reason for this comes back to the aforementioned composition and imbalance in the current Commission, for which it is not responsible, rather than the individual members of it.
3. The weight of ideology. In some sectors the weight of ideology is particularly marked, and compromises are not possible: a choice has to be made. This is certainly true of the extent to which services of general economic interest (SGEI) should be liberalised and opened up to competition.
Charlie McCreevy is currently playing role formerly played by Frits Bolkestein, including being the chosen target of discontent. I have never subscribed to the demonisation of Mr Bolkestein, who openly defended his ultra-liberal economic convictions. The basic principles from which he drew his inspiration, and which are shared by his successor, are broadly the majority view within Parliament and the Council, and nobody doubts the benefits of free competition. The point of contention with Mr Bolkestein in the past and with
Mr McCreevy today is the lack of flexibility and pragmatism. The developments in the Court of Justice, cited in this column yesterday, legally justify certain choices being contested. The debates are simply an extension of twenty years of battles fought around the issue of SGEIs.
A long story. It may be useful to recall the starting point. In some Member States the history of SGEIs is linked to national identity. Democracy was full of shortcomings (women did not have the vote) and the socialist parties had not yet been born when some states felt the demand for and prestige in providing essential services to their citizens as they were developed: water, postal services, telephones, railways, electricity, etc. The principle of universal service took precedence over prices and competition rules. There were certainly abuses and negative consequences: inefficiency, corruption, shortcomings and delays with respect to technological progress. The typical faults associated with excessive bureaucracy and a lack of competition. The efforts of those who had understood what was at stake, headed by Jacques Delors and Karel van Miert, allowed Europe to progress in the desired direction: reconciling the principle of universal service with a sufficient degree of efficiency and competition, so that services would be of good quality and prices competitive.
The exercise was a complex one, as the traditions, les mentalities, legal systems and economic situations varied widely from one Member State to another. Gradually certain basic principles were developed and consolidating them was part of the draft Constitutional Treaty. The Court of Justice had ruled that the state financial compensation aimed at ensuring universal service were lawful. It had been recognised that the availability and quality of services of general interest are essential to the quality of life of citizens (“necessary to permit citizens to enjoy fully their fundamental rights”) and indispensable in improving the competitiveness of enterprises. Since 1996 it had been admitted that the services in question “constitute an element of the cultural identity” of some Member States. Later it was stressed that achieving the "Lisbon objectives" depended largely on the quality of SGEIs. At the same time the debates highlighted the risk of abuses inherent in SGEIs. The absence of competition and effective controls could make them a hindrance to the modernisation and competitiveness of the economy. There have been many political incidents, but these have been beneficial and after the Court of Justice's judgement in the Altmark Trans case (July 2003), the European Commission was able to write in its White Paper of May 2004 that “services of general economic interest are not subject to the application of Treaty rules to the extent that this is necessary to allow them to fulfil their general interest mission”. This concept was, as mentioned above, reflected in the draft Constitutional Treaty.
Construction not achieved. We are, however, far from defining a European doctrine, as shown by the ongoing debates. There are still ambiguities and shortcomings, and some positions are still as diametrically opposed as they can be. When asked about the criticisms of his proposal to liberalise the last segment of postal activity still under monopoly control, and the risk of a similar storm to the one stirred up by the Bolkestein services proposal, Mr McCreevy responded: “that would be a clear indication that our markets are not open and that we have taken a step back instead of a step forwards”. But on the same subject, the socialist MEP Gilles Savary invited the Member States to “take stock of the risks to which they are exposing one of their oldest public services, a guarantor of national cohesion and the European social model”. In general terms, the Vice-President of the European Parliament Pierre Moscovici stated that services of general interest “constitute the main instrument of solidarity in Europe”. With his typical restraint, Etienne Davignon observed: “sometimes Europe has something of an ideological position”.
The postal services case is current news, but it is not isolated: the project to liberalise passenger rail traffic both internationally and nationally stirs up just as much controversy.
The case of banking is of a different nature. Just to be clear: in my view, the discussions surrounding SGEIs have nothing to do with Neelie Kroes' initiatives against cartels and other abuses. The banking sector was up in arms against the Competition Commissioner's declarations denouncing abuses in the management of bank cards. Ms Kroes, basing her views on an inquiry, stated that there were many obstacles to free competition which artificially raised the cost of banking services for enterprises and consumers. In the payment card sector, the same operation can cost three times as much in one Member State as in another. She talked of the “scandalous profits”, indicating that she would not hesitate to bring actions against banking networks which impose unjustifiable costs.
Contrary to what some of the interested parties would have us believe, there is no element of political divergence in this case: it is quite simply a matter of finding out whether these abuses exist. Ms Kroes has not yet opened any proceedings; to begin with she expressed the hope that the inquiry would lead banks and financial companies to reduce the price of certain services. Either way, any possible proceedings would be contested and the banks, if found guilty, could always go to the Court of Justice. This is a normal situation: no legislative proposal or aspect of the European social model or ideological battle is at stake. It is simply a matter of checking the figures, and assessing rates and attitudes. We should not confuse these two very different types of issue.
(F.R.)