Who is right, HMG or the Commissioner?

There seems to be some problem about those powers to scrutinize member states' budgets that the Commission is claiming despite, as Lord Pearson of Rannoch pointed out yet again and to some murmured agreement in the House:

My Lords, is it not grotesque that an organisation that has not had its accounts signed off by its own internal auditors for 17 years-there being no external auditor-should be handed these powers, given that if it had been a private company in this country the directors would have been in prison every year for the past 17 years?

And yet there are noble peers like Lord Davies of Stamford who can come up with questions such as this:

My Lords, a few years ago was there not a proposal that the Commission be given a duty of auditing the national accounts of member states? That proposal was turned down at the time by the Council. Is it not the case that if it had not been turned down and had been accepted, we would have had an earlier insight into the problems of Greece, the Greeks would have been unable to falsify their accounts, and the grave problems we all now face might have been significantly reduced?

Is an organization who has not had its own accounts (or budget as it is grandly named) signed off by the Court of Auditors really a competent judge of what is and what is not adequate auditing?

All this was part of a short debate on Lord Willoughby de Broke's Starred Question last week:

To ask Her Majesty's Government what is their assessment of the proposal by the European Commissioner for Economic and Financial Affairs that the European Commission should have the power to scrutinise member states' budgets and impose such financial penalties as the Commission deems fit.

As ever Lord Sassoon waffled in response though appeared to agree with the idea that national budgets should be subject to discipline from the Commission whose own budget ... etc etc.

My Lords, the Government strongly support the recently agreed economic governance legislation to strengthen the stability and growth pact. This provides for stronger and more responsible economic governance across the European Union. Under the new legislation, a range of financial sanctions can be imposed by Council within the euro area where member states are deemed not to have taken adequate action. Sanctions are set out under Article 136, which applies to the euro area only.

Lord Willoughby then came back:

My Lords, I am grateful to the Minister for that reply. However, the statement by Commissioner Olli Rehn applies not just to the eurozone but to the whole of the EU, including this country. Therefore, will the Minister confirm that today's Autumn Statement by the Chancellor is nothing more than an aspiration-a wish list? Will he confirm to the House that this will have to be ticked off and agreed by the European Commission before it can take any effect?

The response was somewhat mystifying though the noble Minister did admit that Britain is not entirely free from the various eurozone-related rules:

My Lords, this country has always been party to the stability and growth pact, but as I am sure the noble Lord knows, under Protocol 15 the UK has an opt-out, which means that we have to endeavour to avoid excessive deficits but are not subject to any sanctions such as members of the euro area are. Furthermore, the UK secured particular treatment that ensures-has ensured and will ensure-that Parliament will always be allowed to scrutinise the UK's budget ahead of the European Commission.

It is, of course, reassuring to know that the House of Commons who had, in days gone by, fought for the right to control the finances of this country, will, for the time being, be allowed to scrutinise the UK's budget ahead of the European Commission. Allowed? By whom? As if I didn't know.

There is, however, a problem with the noble Minister's answer that he so blithely insisted on. Not so long ago, Commissioner Olli Rehn, he who is responsible for the EU's Economic and Financial Affairs, published an article in the Daily Telegraph, in which he reiterated his statement on the matter of the six new pieces of regulation that had been nodded through in order to "stabilize the eurozone" or some such strange notion. In this he made it clear that more than just the eurozone is intended.

When this legislation enters into force later this year, the EU will have in place a much stronger framework for preventing the economic mistakes that have cast a shadow over the recent past.

We will be able to scrutinise the Member States' public finances, in particular the level of debt, much more carefully and pre-emptively than ever before. This will include co-ordinated examination of economic policies and budgets in the first half of each year before their adoption by national parliaments in a process known as the European Semester. And budgets will have to be designed and presented according to a common framework, in line with best international standards, so that budget-making is more transparent both for citizens and policy-makers.

No mention of the UK's opt-out there or in this statement of November 8.

This is first and foremost about safeguarding financial stability in the euro area and in the EU by exerting preventive and effective surveillance, according to the rules we have democratically given ourselves.

Let me be very blunt on this: It's either the EU institutions, according to our own rules, procedures and democratic accountability, or the market forces that will do the job. For me, as a committed European and a committed democrat, the choices are clear.

So who is right? The Minister or the Commissioner?

More on Russia

My article on some of the background to Sunday's Duma election is up on Taki's Magazine. Remember, every hit counts.

Is this true?

Der Spiegel reports rather huffily that Britain has been obstructing the building up of a common EU foreign policy. Generally speaking one needs to take these complaints with a large dose of salt. Common statements are not as important as all that and, if needs be, France will deviate from them as well. What matters is the slow building up of the structures and that proceeds apace.

During the Second Reading debate of Lord Pearson's Bill, Lord Stevens of Ludgate said [scroll down to Column 1248]:

I do not propose to spend much time on discussing where all the EU money goes, suffice it to say that a prime example of what appears to me as a layman to be gross duplication and waste is the new foreign service. Its budget is 20 times the cost of the UK's Foreign Office and includes among other items £33 million for 150 bomb-proof limousines for all EU ambassadors. The number of staff employed by its quangos and committees alone has tripled during the past five years, amounting to a total cost of more than £2 billion in 2011. It has just opened a new £25 million office in London, and our Foreign Secretary has claimed that the UK Government have brought the EU budget under control. Perhaps the noble Lord, Lord Sassoon, could confirm in his reply that the UK has no liability for any losses incurred by the ECB, another potential burden on this country.

While there is a foreign service it will find work for itself despite the notorious incompetence of Lady Ashton (her official page on the EU website is here). Whoever was putting a spoke into those plans it was not our Cathy Ashton as this article in the Telegraph makes clear.

What is so odd about the Spiegel story is that the paper has, inevitably, running detailed accounts of the eurozone mess. And yet they can seriously announce that yet another "common policy" is something to strive for.

Mr Putin seems a tad less popular

Earlier this morning, the New York Times wrote:

With 95 percent of the votes processed, United Russia led with a shade under 50 percent, trailed by the Communists with 19 percent, Just Russia with 13 percent and the Liberal Democrats with nearly 12 percent, according to the Central Election Commission. In 2007, United Russia won more than 64 percent of the vote, while the Communist Party was a distant second with 11.5 percent.

Results turned out to be worse for Mr Putin's United Russia than expected. According to the BBC Russian Service, out of the 450 places in the Duma, United Russia got 238, down from 315, the Communists got 92, up from 57, the self-described Social-Democrat "Just Russia" got 64, up from 38 and Mr Zhirinovsky's Liberal-Democrats got 56, up from 40. United Russia still has a majority but it is not so overwhelming as to make life easy for them, though on crucial matters they will probably be able to rely on some of the other votes.

Reuters calls the opposition parties left-wing, which, I suppose, they are though how one distinguishes right from left in Russian politics is something of a mystery. Can they possibly think of United Russia as "right-wing"? On what basis? They are, however, worried that

A weaker showing by Russia's party of power in Sunday's general election and gains for left-wing opposition parties increase the risk Vladimir Putin may hike spending yet further as he seeks to regain the presidency next March.

The prime minister, president from 2000-08, may be tempted to open the fiscal spigots even wider to minimize risks of a credible challenger emerging after his United Russia party's lower-house majority was cut to just 13 seats, economists said.

The chances are that those fiscal spigots will be opened if there is anything to come out of them.

The Economist gives a good analysis of what is going on, what has been going on and what might happen next.

YESTERDAY'S parliamentary poll in Russia was always going to be more a referendum on Vladimir Putin and the ruling United Russia party than a real election. The genuine opposition was barred from taking part long before polling day; television, which remains the main source of news and views for most of the country, has been working at full propaganda throttle; and governors and mayors across Russia were given specific targets for United Russia's voting figures and told to meet them.

Yet United Russia won just under 50% of the vote, down from 64% in 2007. It will enjoy a simple majority in parliament but no longer the two-thirds it needs to alter the constitution. Dmitry Medvedev, Russia’s president, who was placed at the top of United Russia’s electoral list, tried to put a brave face on the result. Boris Gryzlov, the speaker of parliament and United Russia's chairman, argued that the party put in a strong performance compared with other European ruling parties.

That smacked of desperation, given that Russia’s voting procedure bears little resemblance to genuine elections. Most analysts say that the real lesson of yesterday's poll is that Mr Putin's regime is starting to lose legitimacy among its core voters, particularly in large cities.

This explains the Kremlin’s hysterical behaviour towards election monitors. The most important of these, Golos (Voice, or Vote), was harassed and smeared by one of Russia's main television channels after Mr Putin likened its observers, who receive foreign grants, to Judas. What irritated the authorities most, however, was an interactive map created by Golos that allowed people across Russia to report election abuses. On Saturday this earned Golos a $1,000 fine from a Moscow court.

Indeed, there have been many complaints about electoral fraud, intimidation, voters being carted round electoral stations in order to vote early, late and often, and even of opposition websites being attacked and brought down. The complaints, as we can see from the two links, come both from Western observers and Russians.

Other signs of possible falsification were the Soviet-style 99 percent result in Chechnya backing United Russia and a screenshot from state-run Rossia-24 news channel — that quickly went viral on the Internet — showing results in Rostov-on-Don totaling a whopping 146 percent.

All the parties apart from United Russia said that they are mulling over the possibility of going to law because of electoral irregularities and President Medvedev (yes he still is the president) has issued not-so-veiled threats to governors of regions where United Russia did particularly poorly.

This evening there was a demonstration in the centre of Moscow, organized by the group Solidarnost, that demanded the setting aside of the fraudulent election. As a matter of fact, all accounts speak of thousands, the police saying a couple of thousand, whereas others talk of seven thousand.



As is normal for Russia, the demonstration was attacked by the police but by Russian standards the violence of the arrests was mild. Around 300 people were detained and another 100 in St Petersburg. Among others arrested was the anti-corruption blogger Andrei Navalny who at one point disappeared and there were worries about his welfare. It seems that he is alive and well though there seems to be some problem about letting him be seen by a lawyer. (There was a live stream of the crowd outside the prison with demands to let a lawyer through but the battery died on the chap who was filming it all. Oh no, he is back or as back as he can be. Apparently, he has told people that he is off to get some shut-eye.)

What lessons, if any, will the once and future President, now Prime Minister Vladimir Putin draw from it all? Perhaps that elections are rather chancy and it is better to do without them?

Told you so

So, the proposed new powers that might come in if Germany and France have their way (or some of their way or one of their ways) will not need a referendum because "it did not meet the test for a vote, which required a major transfer of powers to Brussels". Now, there's a surprise. Doubts about that were expressed on this blog here, here, here and here. Apparently, a lot of people are disappointed. Well, as Michelle Malkin would say, boo-freakin-hoo.

Respectable? Moi?

I missed the fact that no less a person than Gavyn Davies said in the Financial Times

It has suddenly become respectable to ask the question: what would happen if the euro broke up?

Dear me. Does this mean we are all becoming respectable? Not sure how I feel about that.

Duma elections tomorrow

Some time ago I was warned by a Russian friend who goes back and forth (quite legitimately) that the Duma elections may well be very interesting. Until then I had not paid any attention to them, arguing that as the only opposition to United Russia that is allowed are the Communists, little good will come out of the Duma elections. However, this was someone whose opinion was worth paying attention to, so I did. Sure enough, rumours are coming out of the country that neither Putin nor United Russia are as popular as they were (and they never were all that popular but there were quite literally no alternatives).

Here is an interesting analysis from the Washington Times.

The hardening of the public’s attitude about Mr. Putin was on display at a sports event in Moscow in mid-November, when at least one section of the crowd appeared to boo him.

Alexei Navalny, an anti-graft activist and widely read blogger, said the jeers and catcalls signal “the end of an era.” He is a highly influential figure in an increasingly politicized Russian Internet community, and coined United Russia’s popular, unofficial nickname: “the party of swindlers and thieves.”

Dissent has been growing about a number of issues, such as suspected mass corruption by United Russia officials and the prospect of two more terms in the Kremlin for Mr. Putin, who will seek a third presidential election next year after being constitutionally bound to step down as president in 2008.

Opposition leader Grigory Yavlinsky, head of the liberal Yabloko party, has suggested that the sudden spark of opposition to Mr. Putin’s rule represents a “deep historical shift” in the nation’s mindset.

Others agree. “People are fed up with Putin,” senior Yabloko official Galina Mikhaleva told The Washington Times. “State-run TV earlier zombified the people, but the Internet has played a huge role in waking them up.

With Putin being already appointed to be President, it is only through the Duma elections that people can express their feelings of antagonism, if these are strong enough. The results should be interesting.