CRITICAL THINKING AT THE CRITICAL TIME™

SMOOTH OPERATORTHE JUNCKER COMMISSION AND ITS PRIORITIES

CRITICAL THINKING AT THE CRITICAL TIME™

smooth operator: the juncker commission and its priorities - october 2014

The New European Commission

A period of intense speculation and Parliamentary hearings with candidate Commissioners is officially over. On 22 October the European Parliament approved the Juncker Commission with 423 votes for to 209 against and 67 abstentions. Contrary to many predictions, the new Commission can start its work as foreseen on 1 November, pretty much with the original line up of candidates.

The new Commission and Juncker in particular have made an overall positive impression. The clear set of priorities Juncker has committed to, the new structure that supports these priorities and some very strong Commissioners in key positions are all encouraging. Moreover, Juncker can count on the support of the largest political groups in the European Parliament, who have in the whole process asserted their level of influence, at the expense of the smaller parties. In this sense Juncker was probably the right choice for Commission president – a fact he himself has not failed to point out. This hints towards the emergence of a cross-divide political mainstream in the European Parliament that will support the overall direction of the new Commission. Juncker will have to ensure that voices outside of this mainstream are not squeezed out by this political consensus of the centre, and that he delivers real impactful policies, or European voters may feel ever more alienated.

Juncker’s success will depend on Member State support and the individuals in charge of the respective portfolios. His most important task will be to adopt coherent policies in a context of strongly diverging positions among Member States, while maintaining overall goodwill. The next five months will already provide plenty of opportunity for him to demonstrate if he will be able to tackle the most pressing issues. As he himself has said, this will be the last chance to win the confidence of EU citizens. The stakes could hardly be higher.

The Juncker Commission will be much more political than the previous Commission. They will, according to the man at the helm, be more than “just a bunch of technocrats”. Indeed, Juncker has tried to ensure a team of political heavyweights able to resist pressure from Member States. With this move he clearly wants to address growing scepticism and disinterest in the European Union.

Jobs and growth are the key priorities for Juncker, and his €300bn investment package is the cornerstone in addressing these priorities and close to Juncker’s heart. Vice-President for

Budget & Human Resources Kristalina Georgieva will present the investment package before Christmas.

The digital economy, energy and capital markets are the key sectors that are supposed to contribute to the jobs and growth agenda. Juncker has highlighted that he will pay special attention to the social dimension of the aforementioned sectors . The new Commission will have a stronger focus on issues such as foreign policy, immigration and the Ebola crisis. Furthermore, the Ukraine-Russia crisis will be addressed with the utmost urgency.

On the new structure, consisting of seven Vice-Presidents that are each in charge of one of the overarching priorities, Juncker clarified that the Vice-Presidents are “no little bosses” but have to coordinate initiatives and ideas. He described it as obvious that you need a coordinator for large political projects such as Jobs, Growth and Investment that consist of many different portfolios. In his vision the Vice-Presidents are clearly more than just window-dressing as they first have to agree before an initiative is tabled in front of the College of Commissioners. In this structure the first Vice-President Frans Timmermans has the key role to ensure better regulation and subsidiarity in order to hold true to Juncker’s credo to focus on the big problems and leave the small matters to the Member States.

Regarding the Trans-Atlantic Trade and Investment Partnership (TTIP) and in particular the controversial Investor State Dispute Settlement (ISDS), Juncker will not accept that jurisdiction or the access to justice in the EU is limited. The rule of law must prevail and if Frans Timmermans does not agree there will be no ISDS in TTIP.

Finally, addressing concerns expressed at the hearings, Juncker made some changes to the portfolios: under pressure from Parliament and health NGOs he returned pharmaceutical regulatory policy to the Health Commissioner and away from Internal Market. On another front, Space Policy has come under the umbrella of Internal Market; it was originally part of the Transport portfolio. Moreover, in response to strong concerns expressed by the S&D Group, he added sustainable development to the portfolio of Vice-President Frans Timmermans. Because of doubts regarding his human rights credentials, Juncker removed Citizenship from the Education and Culture portfolio of the Hungarian Commissioner-designate, Tibor Navracsics.

october 2014 - smooth operator: the juncker commission and its priorities

Frans Timmermans

First Vice-President, Better Regulation, Interinstitutional Relations, Rule of Law and Charter of Fundamental Rights

• He wants to introduce a mandatory transparency register • Timmermans will propose an interinstitutional agreement

on better lawmaking in line with his role to ensure that EU legislation focuses on the big problems. The proposal will be put forward next year

• The Commission needs to become more political and less dry and legalistic and engage more with EU citizens

• Timmermans will also be responsible for sustainable development policy

Jyrki Katainen

Vice-President for Jobs, Growth, Investment and Competitiveness

• EU competitiveness and job creation will be at the heart of his mission

• The €300 billion investment plan put forward by Juncker would mainly be funded by private investment with some public participation

• Increased lending capacity of the European Investment Bank and other financial instruments (e.g. the European Investment Fund) are ways to leverage the EU budget

• The Emissions Trading Scheme reform must be one of the main priorities in order to foster investments in climate-friendly technologies

Valdis Dombrovskis

Vice-President, The Euro and Social Dialogue

• Social impact assessments will be introduced in cases of Member States’ needing crisis assistance in the future

• Social dialogue will be strengthened as it is essential for reforms and completing the EMU

• He calls for implementing structural reforms, deepening the internal market and increasing innovation and research

• Fiscal adjustment is almost over and now demand side policy will be looked at. This will be done by moving taxation from low paid labour to other areas, such as capital, property and environment. All reforms will include social indicators

Maroš Šefčovič

Vice-President for Energy Union

• He will push for binding targets for the EU’s 2030 Climate and Energy Framework

• A more intelligent Eco-Design Directive will be a priority • Carbon capture and storage is an option to reduce our

carbon footprint • The European Commission should play a key role in

negotiating gas contracts. The idea of common gas purchases is a good one

• The EU needs to work on the southern corridor and to develop further energy trade with Norway and Algeria

• There will be no biofuels target after 2020

Andrus Ansip

Vice-President for Digital Single market

• Ansip hopes to restore Europe’s place as a global leader in the digital economy, creating hundreds of thousands of new jobs while giving the highest priority to data protection

• The Data Protection Directive needs to be rapidly adopted • Ansip would not rule out suspending the so-called Safe

Harbour Agreement with the United States • A key project is reforming the rules for a single

telecommunications market • Guarantees net neutrality: “All internet traffic must be

handled equally. Nobody has the right to exploit a dominant market position.”

Kristalina Georgieva

Budget and Human Resources

• Her first priority is finalising the negotiations for amending the budgets of 2014 and 2015

• She will reorient the EU budget towards growth and competitiveness

• She plans to advance the establishment of a European public prosecutor and strengthen the EU’s anti-fraud agency OLAF to better tackle fraud

• The Commission will start very early to review the Multiannual Financial Framework, that lays down the maximum annual budgets for the next five years

smooth operator: the juncker commission and its priorities - october 2014

Federica Mogherini

Vice-President, High representative for foreign affairs and security policy

• Foreign policy issues have to be better structured within EU institutions to enable the EU to speak with one voice

• In the Ukraine crisis she puts her hopes on the Minsk agreement and stressed the need to support the political efforts that the Ukrainians are making to come to a peaceful solution

• The EU might have a crucial role in facilitating peace negotiations in the Middle East

Miguel Arias Cañete

Climate Change and Energy

• Committed strongly to combatting climate change

• He strongly supports renewables, energy efficiency, and interconnections (particularly in the Baltics and the Iberian Peninsula)

• He will work on a shale gas legislative proposal to ensure compliance with strictest environmental standards

• There needs to be better coordination of national energy policies in order to ensure that the EU speaks with one voice

Věra Jourová

Justice, Consumers and Gender Equality

• Four key files of her mandate will be women on boards, data protection, the EU Public Prosecutor and the consumer safety package

• She wants sustainable, responsible behaviour in all sectors, including the financial sector (she will have oversight of application of rules on bankers’ bonuses)

• She will not compromise EU citizens’ rights in international negotiations on data protection

• Jourova is committed to equality and upholding women’s rights and principles of EU justice

Günther Oettinger

Digital Economy and Society

• He stressed the importance of infrastructure for a successful digital economy and more resources must be devoted to the Connecting Europe Facility

• One of his key priorities will be copyright reform. It will be tough to manage the balance between defending the interests of copyright-holders while at the same time undergoing a revision of digital rules

• The EU needs a firm line on data protection and data storage if it wants to negotiate these issues with the US

Dimitris Avramopoulos

Migration, Home Affairs & Citizenship

• Setting up a regular immigration framework is the best way to fight illegal immigration, not building a fortress

• The Dublin II Regulation will not be reviewed, however he plans to carry out studies to find better ways of burden sharing

• He will seek to expand the responsibilities of the European border agency Frontex and wants to work towards a real European border system

Elżbieta Bieńkowska

Internal Market, Industry, Entrepreneurship and SMEs

• Reindustrialising Europe by 2020 in a sustainable and innovation-driven manner across all sectors is her overarching priority

• She wants to facilitate the access of SMEs to finance through alternative, more efficient and reciprocal instruments at EU and national level

• She also wants to deepen the external dimension of the internal market and access to non-EU markets

• She aims to cut down administrative burdens and dismantle rules that are unhelpful to SMEs

october 2014 - smooth operator: the juncker commission and its priorities

Vytenis Andriukaitis

Health and Food Safety

• His focus will be on preventive healthcare (prevention, promotion and protection) and improving healthcare systems through e-Health solutions

• The EU needs a very solid anti-corruption package for healthcare systems

• Andriukaitis wants to follow up on the implementation of the Cross-Border Health Directive

• He will review the decision-making process for GMOs within 6 months of his mandate, in line with Juncker’s political guidelines

Cecilia Malmström

Trade • Both the EU and the US want an “ambitious” TTIP, including

lower tariffs, regulatory harmonisation, services, procurement, and energy

• The Investor State Dispute Settlement agreement (ISDS) could be taken out of TTIP but this needs thorough discussion and assessment of the public consultation. On the other hand in the EU-Canada agreement (CETA) ISDS will not be renegotiated

• Malmström will start discussions on access to documents on trade negotiations

• Other priorities include finalising the Economic Partnership Agreements (EPA) with the African, Carribean and Pacific countries and upgrading the trade agreement with Mexico

Johannes Hahn

European Neighbourhood Policy and Enlargement Negotiations

• It is unlikely that any candidate country for EU membership will achieve the accession criteria during the next five years

• The rule of law and fundamental rights, the economy, and democracy are the most important criteria for accession

• Hahn wants to use the neighbourhood policy to invest in infrastructure that will visibly improve the economy and quality of life in the western Balkans like roads, railway, and energy grids

• Libya is one of the most pressing countries in the EU’s neighbourhood and urgent action is needed to improve security and get the basics working

Jonathan Hill

Financial Stability, Financial Services and Capital Markets Union

• His first priority is the implementation of around 400 measures that were brought in under outgoing Internal Market Commissioner Barnier

• Further priorities include benchmarks, structural issues around banks and legislation for the Capital Markets Union

• European Long-term Investment Funds (ELTIFs) will form part of the Capital Markets Union and will be an urgent priority

• Shadow banking can provide important sources of investment. It is thus essential to strike the right balance between effective regulation and not strangling the funding of the real economy

Phil Hogan

Agriculture and Rural Development

• Hogan plans to simplify the administration around the CAP for farmers, and in particular the system of direct farm payments. He will develop early in his mandate ideas for a simplification of the CAP in accordance with general regulatory fitness principles (REFIT)

• The Commission will focus on sufficient funding for investments, business start-ups and local development in rural areas

• The environment and sustainability will remain at the center of the EU’s agricultural policy

Neven Mimica

International cooperation and development

• The number of development priorities has to be reduced. This exercise will be finalised by the end of the year

• The Post-Cotonou agreement with the African, Carribean and Pacific countries is a real priority and a group of those countries is already reflecting on the issue

• As regards tax evasion, Mimica favours developing countries being part of the negotiations on how to build global common tax evasion mechanisms

smooth operator: the juncker commission and its priorities - october 2014

Carlos Moedas

Research, Science and Innovation

• Focus will be on clean energies, “green growth” and jobs – a third of Horizon 2020 funding will be directed to renewables

• There is a need to maximise synergies of public funding and improve monitoring and coordination of initiatives at Member State level to boost private investment in times of budgetary constraints

• At the international level the EU will step up its efforts in science diplomacy

Marianne Thyssen

Employment, social affairs, skills and labour mobility

• Job creation is going to be the clear priority. Investing in research, cutting red tape, making it easier to start a business and develop a capital market to make companies less dependent on banks for their investments are possible measures to create jobs

• Thyssen committed to adding more social parameters to the evaluation of EU Member States in the European Semester

• The Directive on Maternity Leave will be re-opened under the new legislature after the European Parliament could not reach an agreement with the Council on the duration of maternity leave

Margarethe Vestager

Competition

• Her overarching goal is to tackle key obstacles to job creation

• Vestager will fight tax evasion: in particular arrangements such as the “Double Irish” that allow companies to shift income to lower-tax countries are very unfortunate and Vestager will continue to bring such activities to the fore as Almunia did

• The EU needs to make sure that it has the right tools to keep up with the rapidly evolving digital sector

• She opposes ideas to relax state aid rules to support the creation of national champions

Violeta Bulc

Transport

• The future of transport is to be connected at every level. One of the ways to achieve this is to promote integrated carbon measurements

• The share of renewables and alternative fuels should be strengthened in transport to reduce greenhouse gas emissions

• The Roadmap for a Single European Transport Area (2011) will be re-assessed and possibly revised

• She called for awareness of social issues in transport and their impact on labour force, workers’ health and employment

Karmenu Vella

Environment, Maritime Affairs & Fisheries

• The 7th Environmental Action Plan will be Vella’s most important policy guideline with particular emphasis on the circular economy (i.e. optimising recycling)

• The Birds Directive has not been reviewed for 35 years, it is time to take new science into account

• He highlighted that the Commission services have made suggestions to promote the mixing of crops to address the potential extinction of bees

• Eliminating dangerous chemical substances is a priority

Tibor Navracsics

Education, Culture, Youth & Sports

• Education is at the heart of the jobs & growth agenda, with a review to be produced within three months. Investment in education must be protected from cuts

• Europe’s universities should become the best in the world in view of their key role in innovation

• He supports the European Institute of Innovation & Technology (EIT) and wants to spread its work across Europe

• Segregation is one of the issues that should be tackled at EU level, for example the Roma population in Hungary

CRITICAL THINKING AT THE CRITICAL TIME

™

Arne KoeppelHead of Research+32 2 289 09 39Arne.Koeppel@fticonsulting.com

FTI Consulting Brussels+32 2 289 09 30

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Christos Stylianides

Humanitarian Aid & Crisis Management

• The focus will be on investing in crisis resilience

• The Ebola crisis will be one of the first issues he will address

• He is ready “to negotiate with the devil” to get humanitarian assistance to those in need in remote, forgotten areas

• The World Humanitarian Summit in Istanbul in 2016 will be an important event in view of the refugee crisis in Syria

Corina Creţu

Regional Policy

• Unpaid invoices in cohesion policy amounting to €23 billion by the end of last year are a key issue

• Among her priorities are less bureaucracy for beneficiaries and a proper management of funds

• The focus must lie on the administrative capacity of Member States, in order to reduce errors; this includes specialists (economists) to be sent by the Commission to help Member States

• She wants high quality operational programmes for the next seven years to be adopted as soon as possible

Pierre Moscovici

Economic and Financial Affairs, Taxation and Customs

• Moscovici is serious about Member States’ compliance with the Stability and Growth Pact (i.e. setting limits for national budget). He will not defend any exemptions and derogations

• Moscovici is committed to fighting tax base erosion and wants to support the automatic exchange of information. The Commission should make proposals to invite national governments to improve information exchange in tax matters

• He supports the Financial Transaction Tax