Here’s the latest EU scandal – yes, with the new Commission not even a week old! – and it might be a biggie. It broke this morning:

Oooh, «accords secrets» – secret accords! They’re linked with that “343,” that’s the number of multinational companies to which the Luxembourg granted sweetheart tax deals to come and operate there. This has just emerged from a leak from the offices of Pricewaterhouse Coopers there, which itself earned handsomely in taking up the role of negotiating with the Luxembourg government on those companies’ behalf for these tax-breaks. According to the report cited in this piece in the Tribune de Genève,

While in Luxembourg the tax rate for companies is officially 29%, which is decent [honnête] in international terms, that often passes below 1% after negotiations with the tax authorities.

The important thing to remember here is that multinationals routinely distort their official accounts, through tricks that go under the general name of transfer pricing, to show as much income as they can as coming from a place like Luxembourg where it is subject to the least taxation. Of course, the income has really been overwhelmingly earned elsewhere, in other countries – and those countries thereby effectively have had legitimate tax revenues stolen from them, in often mind-boggling quantities.

The company names sampled in this brief piece are what you would expect: Apple, Amazon, Heinz, Pepsi, Ikea, Deutsche Bank, and also a handful of Swiss companies (as this Swiss newspaper notes): UBS, Credit Suisse, Lombard Odier private bankers (remind you at all of “odious”?), and others. Indeed, with respect to the American companies on this list, their management has to cheat governments out of taxes using techniques like these, in order to increase earnings – otherwise they can be sued by shareholders for breach of fiduciary duty! Behold the face of late twentieth-century/twenty-first century Capitalism!

What really makes this development juicy is of course the identity of the brand-new President of the European Commission, Jean-Claude Juncker, who was Prime Minister of Luxembourg from 1995 to 2013 when presumably all or at least most of these sweetheart tax-deals were negotiated. Now, it’s true that it was pressure from the outgoing Commission that recently Ireland to close its notorious “double Irish” tax loophole (well, at least over the next four years) that enables multinationals to evade enormous amounts in taxes owed elsewhere. The legal justification wielded was that such generous tax terms in effect amounted to “state aid,” which is forbidden to EU member-states.

That same rationale can obviously be brought to bear now on these Luxembourgish arrangements. But will it? As @TeacherDude puts it:

Juncker is going to have to change his spots, and quick. This development is precisely the last thing the EU needs after last May’s elections that saw so many new MEPs elected from extremist parties, reflecting a souring on the EU on the part of the European electorate. Already Marine Le Pen, whose Front National is prominent among those extremist parties, is calling on Juncker to resign from his very new Commission President position .

As I mentioned previously, the main tone I could detect within the European press in reaction to the announcement last week of the specific personnel and assignments of the new Juncker Commission team (to take office – barring any problems with confirmation before the Parliament – on NOV 1) was along these lines:

And with that I thought that the topic was exhausted. Not quite, though: one of the Brussels correspondents of the leading Dutch business daily Het Financiële Dagblad, Ulko Jonker, points out a particular aspect of that “fox guarding henhouses” syndrome that I had not realized, and that is too full of import to be left unmentioned. (Link is behind a paywall with a limited number of articles free per month for non-subscribers.)

Right then, Jonker’s list of EU Commissioner oddities includes:

• The British commissioner in charge of bringing London to heel with Brussels’ financial regulations;
• “[T]he Greek who has to carry out migration policy” (Actually, this was very smart: Greece is one of the main EU member-states charged with holding the line against illegal immigrants – principally along its short border with Turkey – so why not put the Greek Commissioner in charge?);
• “[T]he Hungarian who can explain about citizens’ rights” (Aha, I did note this puzzling paradox in my previous post, it seems at least some elements of the Fourth Estate are taking note of Hungary’s creeping authoritarianism.);
• “[T]he German illiterate who is responsible for the digital economy” (Harsh, but again this is essentially what I remarked on in that previous post.); and
• “[T]he Cypriot who will do ‘crisis management'” (That would be Christos Stylianides, of Humanitarian Aid; I don’t get why he would not be up to the job.)

Jonker’s explanation for all this is up top in his lede: “The biggest difference between him and his predecessor José Manuel Barroso is that Jean-Claude Juncker has a sense of humor.”

Frenchman’s Collision Course with France

It’s not always so funny though, because surely the biggest paradox among the new Commissioners is France’s Pierre Moscovici, put in charge of “Economic and Financial Affairs, Taxation and Customs” – otherwise known as the “budget czar” since Moscovici’s DG is in charge of monitoring member-state budgets to ensure they adhere to the 3%-of-GDP-or-less standard – and to start proceedings for fining the EU government in question when its budget does not. And yes, it is France that looks set to be the greatest offender along these lines, with a projected 4.4% deficit for this year. (more…)

It happens only once every five years, so I’m willing to describe as a pleasure yesterday’s eye-squinting, fast-research exercise in tweeting out the announced composition of the new EU Commission under President Jean-Claude Juncker. A couple of conclusions did come to my mind as a result – conclusions which I think you might find as outside the mainstream.

But first the one proviso that should always be kept in mind on this subject. The US and EU government are of course very different in their structure and their powers, but perhaps it would be useful nonetheless to remind ourselves of the nearest analog in Washington DC to the Commission. It is of course the President’s Cabinet, a collection of administrators appointed (and confirmed) to head executive-branch departments in widely different fields of expertise (Foreign Policy; Agriculture; etc.).

Naturally, it is strongly assumed that those Cabinet secretaries will operate solely with the national interest in mind, and not any interests of the particular state or region that they come from. That is the going assumption for EU Commissioners, as well – yet, incongruously, there a system persists whereby each EU member-state gets one of its own on the Commission! The US counterpart to that – just to show how ridiculous the practice is – would be an insistence that each of the 50 states (and Washington DC, Puerto Rico, etc.) have a representative taking up some function in the President’s cabinet.

It’s supposed to be about expertise and administrative ability, not about where one comes from. Truth be told, it is unlikely that the number of jobs there are to do can really be stretched to equal the number of all member-states: there has to be some degree of duplication and/or “make-work” assignments to artificially inflate the quantity of posts available. (For example, Andrus Ansip, Digital Single Market; Günther Oettinger, Digital Economy). I understand the Brussels powers-that-be are well aware of this consideration, and that they made an effort in connection with the Lisbon Treaty to address it to some degree by introducing a cut-back regime in which it was NOT true that every member-state would be guaranteed a Commissioner. However, I also recall that squelching that was one price Ireland demanded for finally voting the “correct” way in its umpteenth referendum on Lisbon.

1) Right, with that out of the way . . . consider the following, typical of the general tenor of tweets in reaction to yesterday’s announcements:

It’s snarky, it’s maybe a bit superficial – but it’s also a clever point. And I would simply like to add to it the name of Tibor Navracsics, the former Hungarian Foreign Minister who has been assigned the portfolio for “Education, Culture, Youth & Citizenship.”

How Hungary gets a Commissioner at all is something beyond my understanding; more to the point, how it is getting €22 billion euros in economic assistance from the EU is really beyond my understanding. For make no mistake, with its almost-total government control over the press and now its assault on NGOS, Hungary currently resembles no other polity so much as Vladimir Putin’s Russia, and is heading even beyond that to a final destination which is that of Alexandr Lukashenko’s Belarus. (more…)

The beginning of the year coming up, 2012, offers a rather bittersweet anniversary. Do you remember? It was from midnight on 1 January 2002, literally as fireworks still lit up urban skies, that euro banknotes first issued from ATM machines inside the 12 original Eurozone members, and that banks and merchants first returned eurocoins in change, all of those with a national emblem reflecting where they had been minted on one side.

No prize for guessing why any commemoration of this 10-year milestone is lacking so far in the press – everywhere I look, really. For 2012 promises to be a difficult year for European national finances, and therefore for the euro; to many, an exit from the Eurozone of one or several states is likely, and from that possibly even the common currency’s “collapse” (although I think that, no matter what, there will be a rump core of states – Germany, Netherlands, Finland, etc. – still using it for quite a while).

But enough of this depressing talk! We have all read and heard quite enough of it, at least before the onset of the holiday season (when the bureaucrats and bank officials in charge left their desks for a while).* Let’s rather follow the Luxembourg lead and consider the euro from a different perspective:

http://t.co/eNBpc2Z7 Dix ans de l’euro Pas vraiment de mixité dans les porte-monnaie http://t.co/b3mtHfyx

December 27, 2011 12:40 pm via HootSuiteReplyRetweetFavorite

@luxembourg_news

news luxembourg

That perspective is “integration,” always a hot European topic: to what degree are the various European peoples mixing with each other and getting along while they do so? Except that here, in this essential piece from the French-language Luxembourg paper L’essentiel (no byline), the subject is rather the degree to which all the various eurocoins are mixing with each other in people’s pockets. The lede:

Ten years after the arrival of the euro, the coins which sport a national symbol on one face are not yet totally mixed in European wallets.

(more…)

Today’s on-line Le Monde goes deeper into the question of who will succeed Romano Prodi at the beginning of next year as EU Commission President, putting forth five candidates in all under a link Les cinq prétendants: “the five claimants,” or even “the five pretenders” if you like.

(I simply reported yesterday on Belgian prime minister Guy Verhofstadt being tipped as the likely successor by the Czech business newspaper Hospodárské noviny. By the way, I can’t give you any link to this Le Monde article, because the five putative candidates are presented in turn by means of a pop-up picture gallery, with underlying comment that is presented for such a short time that you can barely read it before it disappears for the next picture. So those of you who can read French, but slowly, you’ll have to give up on this one and simply go with what I can report to you below.) (more…)

Bad news for EU taxpayers, at least those who rather expect some concrete results from their representatives at European Union fora in return for the tax-euros they are paid. (Come on now – could anyone really be so naïve?) I know you recall that EU summit in Brussels that took place yesterday and the day before – Chirac also spoke for Germany during yesterday’s session, remember? (Covered in €S from both the French and German points-of-view.) That was nice, a great symbolic gesture and all that, but more pertinent might be the fact that little of note was actually accomplished. At least so the French on-line papers say. (more…)

I’m continuing my coverage of the EU draft constitution, which was handed over last Friday by European Convention President Valéry Giscard d’Estaing to EU member-states at the Thessaloniki European summit. Now it’s in their hands, to add to and subtract from as they see fit to agree (doing so formally in an Intergovernmental Conference which is due to start in mid-October), in preparation for ratification by all member-states separately in the spring of 2004. Considering now some of the German-speaking parts of Europe, reception of the draft here has been mixed – although, crucially, German Bundeskanzler Gerhard Schröder has endorsed it. (more…)

The heads of state of France, Germany, Belgium, and Luxembourg met yesterday in Brussels to launch a new European defense initiative for a multinational force to flesh out the European Union’s foreign and security policies. Presidents Chirac and Schröder and Prime Ministers Verhofstadt and Juncker took pains to emphasize that they were not acting against NATO nor against that alliance’s senior partner, the United States.

Of course, besides Luxembourg, it is true that these were the European countries in the forefront of opposition to America and its “coalition of the willing” as they undertook their assault on Iraq. And many do intrepret this as an anti-NATO gesture – the Times of London‘s foreign editor Bronwen Maddox speaks of a “direct hit on Nato” and “payback time” for these four countries. What do the countries involved have to say for themselves? (more…)