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The good, the bad and the ugly of Jean-Claude Juncker’s presidency

20 May 2019

9:39 AM

20 May 2019

9:39 AM

For five years, Jean-Claude Juncker has been head of the European Commission. Luxembourg’s former Prime Minister is known for always being able to crack a joke, but as his term ends this year, it’s a good time to look at the good, the bad, and the ugly of his track record as president of the European Commission.

 

The good

The Juncker Commission has achieved some results when it comes to concluding new trade deals. Most prominently there are its trade agreements with Canada and Japan, with the latter creating the biggest trade area ever. It may not be an orthodox free-trade agreement, as its standards could function in a protectionist manner, but the perfect is the enemy of the good. Juncker, and especially his Swedish Trade Commissioner Cecilia Malmström, deserve credit here. Unfortunately, Juncker was unable to conclude the TTIP trade deal with the United States, but it may have been killed off by President Trump anyway. The EU Commission hasn’t been perfect during the trade tensions with Trump, as it engaged in counter-tariffs that have hit EU consumers, but in the end it managed to convince EU member states to relaunch an attempt for a more modest trade deal with the US, and the EU also offered to reduce some of its own import tariffs

Another policy area where improvements were made by the Juncker Commission is the EU budget, which amounts to a whopping €1,000 billion over seven years. In 2017, the EU’s Court of Auditors concluded, for the first time ever, that a significant amount of EU payments had been largely error-free. That’s not to say the EU budget is managed well, to put it mildly. For a start, this issue only relates to errors in spending and not to outright fraud. The latter is supposed to be fought by the EU anti-fraud agency OLAF, an institution with a controversial reputation.

It also doesn’t refer to poor spending choices. The EU still spends €340 billion on agriculture, with more than 70 per cent simply paid out to those who happen to own agricultural land. Its second biggest spending area, regional spending, also ‘does not seem to contribute effectively to foster income convergence across regions’, according to a 2016 CEPR report, and EU spending on administration, staff and bureaucracy has an even worse reputation.

That said, the first necessary reform to the budget was for the EU’s own auditor to declare that its spending was materially free from errors. As the Chinese saying goes: ‘a journey of a thousand miles begins with a single step.’

 

The bad

Brexit

The one big failure of Jean-Claude Juncker and his Commission is of course the loss of the United Kingdom as a member state. In the UK, Prime Minister David Cameron announced his resignation the morning after the referendum result was announced in June 2016. That Juncker did not do the same is not only due to a difference in political culture, it’s mainly because of a belief within EU institutions that they shouldn’t be blamed for anything Brexit related. That’s bizarre thinking. Brexit is partly the result of the EU ignoring British discontent over the ever greater concentration of power and money at the EU level. Juncker and co. even obstructed Cameron when he attempted to reform the EU and the UK’s relationship with it, even if Cameron himself wasn’t ambitious enough in the negotiations.

There is very little introspection within the EU institutions as to why Brexit happened, even if two out of five of Juncker’s recent objectives for the EU were about ‘less EU’. But these objectives were also partly a response to the recent success of eurosceptic ‘anti-establishment’ parties across Europe. It seems that Juncker hasn’t been able to respond to the rise of populism. During the last five years, people only supported the EU Commission’s preferred option in one in six referendums. Opinion polls also indicate that in mainland Europe, people want the EU to lose powers.

In response, the European Commission has not done much more than coming up with mere pledges supporting ‘subsidiarity’. In practice, the body has simply continued with business as usual, proposing to scrap national vetoes for foreign policy and taxation, while it pushes for European taxes.

 

Over-regulation

The failure of the ‘subsidiarity’ agenda is most visible when it comes to the EU Commission’s ‘better regulation’ agenda, a competence of Dutch EU Commissioner Frans Timmermans. Even if it started ambitiously, the results are disappointing.

From 2014 until 2018, the Juncker Commission came up with 370 legislative proposals, which represents a drop from the period between 2009 and 2014, but is in line with the problematic situation before. After 2008, Brussels came up with a lot of new financial regulation, something which could be described as hysteric, because not lack of regulation but expansive monetary policy was at the heart of the financial crisis. However, it’s of course not the number of proposals which is the problem, but their overall impact. There have been a number of complaints that proposed EU legislation has been issued without proper impact assessments being undertaken.

Nevertheless, it would be simplistic and wrong to only hold Timmermans and Juncker responsible for the European regulatory mania. The controversial recent update to the EU’s Copyright Directive is a good example. Irrespective of Juncker’s close ties with Axel Springer, Europe’s biggest publishing house and Google competitor, a number of countries were against this particular piece of legislation. A joint statement was issued by the Netherlands, Luxembourg, Poland, Italy and Finland, warning that it represented ‘a step back for the digital single market’, as it disproportionally benefited intellectual right holders. Regardless of who is right and who is wrong, it’s a good example of how only a restoration of national vetoes would be an effective guarantee against EU over-regulation.

 

Free movement

Another problematic aspect of the Juncker Commission was its misguided efforts to limit the free movement of workers within the EU when updating the posted workers directive. New EU rules said that companies temporarily posting workers in other EU member states would only be able to do so for a maximum of 12 to 18 months – shorter than before.

Unfortunately, this update to the posted workers directive doesn’t really solve the problem. For posted workers, social contributions that need to be paid on top of their salary still need to be paid in the country of origin. This makes sense, as a company needs to be able to temporarily post workers in different member states, so these workers can then simply continue to be dependent on the social security system of their own country.

These social contributions are however much lower in countries like Poland as compared to for example France or Belgium. That the new rules require employers to pay slightly higher salaries to posted workers does not compensate for their much lower social security contributions. The Belgian and French governments are wary of tackling the problem of high social contributions at home. Instead, they have preferred to support the EU Commission’s attempts to restrict the free movement of workers, as the Commission went around stressing the importance of this EU freedom in the Brexit context.

 

Services

Jean-Claude Juncker has suggested ‘coalitions of the willing’ as a possible future model for the EU, but this idea hasn’t been applied by his Commission to opening up Europe’s services market, which could potentially generate a lot of growth.

In 2018 and 2019, the Juncker-Commission simply ignored requests from 17 member states to ‘scrap the remaining obstacles for labour and training’ when it comes to services. Instead, the Commission preferred to restrict the single market, while at the same time using the single market as an excuse during the Brexit negotiations.

 

The eurozone crisis

When heavily indebted Greece got into trouble once again in 2015, the European Commission pushed hard to keep the country in the eurozone, despite the fact that it had been given two bailout packages already.

Together with France, the EU Commission heavily opposed the temporary euro exit proposed by German Finance Minister Wolfgang Schäuble. In the end, however, German Chancellor Angela Merkel overruled Schäuble, and decided instead to give Greece a bailout package of 86 billion euro. The fear that a Greek exit could lead to a eurozone break-up had trumped concerns that this would lead to even more irresponsible budget policies and internal strife within the eurozone. In 2019, Juncker himself declared that keeping Greece in the eurozone was one of the biggest achievements of his Commission.

The EU’s response to the eurocrisis has been about short-term gain in return for long-term pain. The question, however, is if the common currency can survive by issuing ever more debt to heavily indebted member states. Greece has had some economic growth since 2015, but its debt burden of 181 per cent to GDP still hangs over its future. Meanwhile, the whole house of cards is being supported by the European Central Bank at the expense of savers and European productivity, as the ECB’s extraordinary loose monetary policies have less and less impact on economic growth.

 

The ugly

Martin Selmayr

Less important from an economic point of view, but concerning when it comes to popular support for the EU was the appointment of Juncker’s cabinet chief, Martin Selmayr, to secretary-general of the European Commission, one of the most powerful positions in the institution. According to the European Parliament, this appointment ‘could be viewed as a coup-like action’, and the European Ombudsman described it as ‘a violation of European law and the Commission’s own internal rules’. This of course fed the rumours that Juncker was heavily dependent on Selmayr, in part because of the president’s rumoured alcohol abuse. Whatever the truth, Selmayr has played an important role in the Brexit negotiations, and his hard-line approach has complicated the already difficult talks.

 

The ‘political’ Commission

In 2014, Juncker declared that his European Commission would be ‘very political’, even if he himself had not bothered to run as a candidate in the European Parliament elections in his native Luxembourg. In practice, his desire for a ‘political’ Commission didn’t signify anything good. Juncker has expressed all kinds of wild opinions, such as support for a ‘European army’, which has worsened tensions with the UK.

It’s not normal for a supranational bureaucrat to go around making political proposals that go directly against what many EU governments think. The Dutch Foreign Minister, Stef Blok, certainly thinks so. He recently wrote in the FT that ‘A less political European Commission is needed… A Commission that prides itself on being political undermines its own objectivity.’

Elsewhere, European competition policy is also getting more and more politicised. Margrethe Vestager, the responsible European Commissioner, declared when entering office that she found ‘it only natural that competition policy is political,’ although she did add that when it comes to enforcement, ‘there is simply no room for political interference’. But the Commission has in fact been making clear political choices when deciding whether to take action against countries it feels have violated its competition policies.

Belgium, the Netherlands, Luxembourg and Ireland were all attacked by Vestager over their tax agreements – ‘rulings’ – with big companies, often from the US. But she let the Italian government bail out banks – despite new EU rules aiming to hit investors instead of taxpayers first. Exceptions were also made for the pro-European French president, Emmanuel Macron, who was allowed to nationalise a French shipyard to prevent it from being bought by an Italian company. As enthusiastic as Vestager has been when it comes to enforcing the grey areas of competition law, like the question whether a tax ruling is open to all, she has been nowhere to be seen when there were clear violations of the rules, like bailouts or nationalisation.

Also good relations with the US were all but served by Vestager. President Trump dubbed her the ‘tax lady’ and the CEO of Apple, which she saddled with a retroactive tax bill of billions of euros, called her policy ‘total political crap’.

For the EU, competition policy isn’t an obscure side show. It is at the very heart why especially smaller countries are a member. Undermining it by politicising it will destroy all legitimacy for the already ailing project.

 

Foreign policy

The EU’s relations with its neighbours have not improved under Juncker’s ‘political’ Commission. It may have been the American President who started the trade conflict, but the EU could have refrained from counter-tariffs (which hurt consumers) and its refusal to include agriculture in trade talks. The EU’s sanctions against Russia have also hurt Europe’s agricultural industry, no matter how bad Putin’s actions may have been. Even the EU’s relationship with Switzerland isn’t very warm. Although trade relations with the country are stable, the EU continues to try to renegotiate the relationship, insisting on imposing its top court, the ECJ, as the arbiter of judicial disputes. In late 2018, the EU even threatened Switzerland with an ‘ultimatum’, which has failed to resolve the issue until today.

Whether a country is suffering and on its way towards a dictatorship or whether it has a booming economy isn’t a metric for good relations with the EU: both ties with Turkey and with economically thriving Israel, whose Prime Minister has called the EU ‘hostile’, have worsened considerably.

 

The migrant crisis

Last but not least, there was the reaction of the Juncker Commission to the greatest migration crisis seen on the European continent since the second world war. 2.5 million migrants entered the EU in 2015, 2016, and 2017. Naturally, the European Commission only had limited control over this, because border protection is rightly a responsibility of member states. Nevertheless, the Commission tried to abuse the crisis to once again grab more power.

Despite French warnings, the Commission and the German government together made sure to outvote Central and Eastern European countries, when deciding on mandatory quotas for member states to welcome asylum seekers. In practice, this policy has of course proven impossible to apply – there are no passport checks in the Schengen zone, so one cannot enforce people staying in a certain member state. The policy did, however, lead to more euroscepticism in Central and Eastern Europe, undermining decades of efforts to embed those countries in the West. It also undermined the EU Commission’s questioning of the rule of law in Hungary. There, PM Orbán thankfully used the opportunity to hurt the EU’s credibility, by subjecting the idea of mandatory migration quota to a referendum.

The EU Commissioner for Migration, Dimitris Avramopoulos, also failed to create ‘disembarkation platforms’, where asylum seekers crossing the Mediterranean would be received, something that EU leaders had backed in 2018. Nor did the EU put a lot of effort into coordinating readmission agreements with migrants’ countries of origin.

If asylum seekers had been able to await their asylum requests in a safe area at the EU border, the business model of human smugglers would have been destroyed and thousands would not have died at sea trying to reach Europe. Terrorists would also not have been able to exploit the migration chaos.

Of course, the migrant crisis is a massive challenge, but the EU Commission’s focus on non-effective and divisive mandatory quotas for asylum seekers and more money for border patrol staff – ideally under EU sovereignty – missed the point completely. By now, it should be clear to everyone that the chaotic influx of migrants was not due to a lack of border guards, but the fact that those caught entering were allowed to continue their journey into Europe.

Overall, the Juncker Commission may have done well when it comes to international trade, but otherwise his presidency has been a wasted five years, with his greatest defeat being the loss of the UK as a member state.

Pieter Cleppe represents the independent think tank Open Europe in Brussels.

 


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