Latest Bulletin:
August 2005

TUC leadership under fire over support for Constitution
Bulletin 21: 5 April 2005

Main points:

TUC leadership under fire over support for Constitution
Big unions sound sceptical note

EU fraud still rampant say MPs
Extent of fraud impossible to discover

‘No’ campaign maintains small lead in France
Chirac panicking over rebellion


1. TUC leadership under fire over support for Constitution

The Trades Union Congress held a one-day conference this week to discuss the EU Constitution. However, before the conference even started there was controversy after some unions “accused the TUC of trying to engineer support for the treaty” by only inviting supporters of the Constitution to speak (Times, 4 April 2005). In his speech to the Conference John Monks, General Secretary of the ETUC, argued that the Government is wrong to claim that the Charter of Fundamental Rights won’t affect UK law, while former EU Commissioner Neil Kinnock insisted, “The Constitution gives no new powers to the Commission”. Centre for a Social Europe chair Ian Davidson MP was eventually invited to outline the case against the Constitution. In his speech, he said, “We want the European Union to work, but it will not work if more and more powers are centralised in Brussels”.

The conference, and the controversy that preceded it, gave indications that key trade unions may decide not to back the Government’s ‘yes’ campaign, as they are currently expected to. Some large unions may even move to back a ‘no’ vote. A spokesman for the Transport and General Workers Union told the Guardian, “Tony Woodley has become increasingly unhappy with the low position to which the EU constitution has relegated employment and workers’ rights” (Guardian, 4 April 2005). Paul Kenny, the new acting General Secretary of the pro-euro GMB, told the Times, “The TUC is trying to force unions down a particular line. But we are not going to be bounced into supporting the constitution. There is a level of scepticism in the GMB” (Times, 4 April 2005).

Speaking at the conference, Jane Carolan, the Chair of UNISON’s policy committee, said, “The [Unison] NEC will be recommending to our conference to oppose the EU Constitution and campaign for a ‘no’ vote in a referendum. We will be taking part in a progressive coalition against the Constitution.”

The news that Britain’s biggest trade union, UNISON, is likely to actively campaign for a ‘no’ vote is disappointing for the Government. Increasingly sceptical comments from traditionally more neutral unions like the T&G;, and even from pro-euro unions like the GMB, is a potential disaster for the ‘yes’ campaign. Trade unionists have become increasingly disillusioned by the spin of the pro-Constitution lobby, and increasingly frustrated by the Government’s boast that it has “put the interests of business at the heart of our negotiating position on the EU Constitutional Treaty”. In 1999, Tony Blair hoped that trade union grassroots would deliver the ‘yes’ vote on the ground, but at best he will be looking to what allies he has left in the TUC to try and stop more unions moving into the ‘no’ camp.


2. EU fraud still rampant say MPs

A new report from the all-party Public Accounts Committee in Parliament has said that the precise level of fraud and corruption in the EU budget is difficult to measure given the complexities of the accounts (Eighteenth Report of the House of Commons Committee of Public Accounts, Session 2004-05, HC 498). In 2003, member states reported “irregularities, including alleged fraud” to the value of €922million to sleaze watchdog OLAF, a figure which is even higher than when it was first set up in 1999. But as the member states are not obliged to report in a consistent manner, or differentiate between fraud and other irregularities, the figure may be much higher and there is no reliable way of measuring progress.

The report concludes that “accountability and audit arrangements of the European Union have been characterised by inertia among the institutions. The high levels of fraud and irregularity generally thought to exist in the European Union operations have seriously damaged the Community’s reputation. The fact that the European Court of Auditors has qualified the Union’s accounts for ten successive years gives credence to this view. We believe that obtaining a positive Statement of Assurance is hopeless without dramatic changes to the Common Agriculture Policy and the Structural Funds to make them simple to control, thereby avoiding the high levels of fraud and error.”

The Committee reports that by 2003 the EU budget was €98.3billion and the UK gross contribution was €15.2billion, emphasising the need for better financial management and accountability. It suggested that “the scale of [the Court of Auditors’] work is totally inadequate given the importance of ensuring the effective use of Community funds”, noting that “No independent review of the Court’s work has taken place since it was set up in 1977” and that unlike the UK’s National Audit Office, “the Court does not report on its own performance to anyone”. They demanded that the UK Government uses the EU Presidency to improve accountability.

For years, EU politicians have been saying that they are on the verge of solving the European Union’s problem with fraud and waste. But nothing seems to change – and it’s getting worse rather than better.

The Public Accounts Committee Report is available here.


3. ‘No’ campaign maintains small lead in France

The French ‘no’ campaign has maintained a slender lead over the last week, as the Government launched its ‘yes’ campaign. The latest opinion poll, carried by Ipsos for Le Figaro, shows the ‘yes’ side on 48 percent, with the ‘no’ side on 52 percent. Ten days ago, the ‘no’ lead was 8 points, which represents a narrowing of the gap between the two sides. The ‘yes’ campaign has stepped up its campaign, and its rhetoric. French Justice Minister Dominique Perben said, “We have finally obtained this ‘Europe à la Française’ that we have awaited for so long. This constitutional treaty is an enlarged France.” He added, “It is a Europe written in French” (Le Figaro, 4 April 2005). Pressure on voters also came as currency investors UBS suggested that speculators would “punish the euro” if there was a ‘no’ vote on the Constitution in France (Bloomberg, 5 April 2005).

As the referendum campaign carries on, voters in France will be put under huge pressure to vote ‘yes’ to the EU Constitution. Polls show that a majority of the left in France, as in Britain, oppose the EU Constitution for its attacks on public services and Europe’s social model. All commentators point to a close finish in the campaign, but whether France eventually votes ‘yes’ or ‘no’, the debate there has highlighted the potential damage that the EU Constitution will do to public services across the EU.


4. German MEPs oppose German UN seat

A cross-party group in the European Parliament has come together to oppose Germany’s campaign to secure a permanent seat in the UN Security Council. The MEPs believe it would end the prospect of the EU getting a permanent seat itself. Social Democrat Jo Leinen MEP said, “If we have to decide between a German and a European Union seat [on the Security Council], I am definitely in favour of the European seat”. His Christian Democratic colleague Armin Laschet said: “In the long term a permanent German seat would block the perspective for a European seat” (Die Welt, 30 March 2005).

The EU Constitution develops the European Union’s role in the United Nations. It moves the EU from a position where it “may” present the Union’s position at the UN Security Council, to a position where it “will”. In most cases, but not all, the EU must have a unanimous position before the EU can speak for member states. However, during negotiations, the Government insisted that the EU Foreign Minister should only be allowed to “request an opportunity” to speak on our behalf – but failed to get the text changed.


5. Eurozone economy begins to slow down


The European Commission has lowered its estimate for economic growth for 2005 from 2 percent to 1.6 percent. EU Commissioner Joaquín Almunia blamed this on the poor economic performance of the Eurozone in the second half of 2004. He said, “The second half of 2004 was a very bad period, very low growth rate, so the carryover for 2005 was not strong” (FT, 5 April 2005).

However, despite these poor economic prospects, the European Central Bank appears to be planning to raise interest rates. Holgar Schmieding, a senior economist with the Bank of America in London, said, “They just seem to be itching to raise rates … They want to behave like a normal central bank” (International Herald Tribune, 5 April 2005). In its December meeting the ECB labelled the prospects for inflation “worrisome”, despite the Commission’s forecast of only 1.9 percent inflation for 2005, and a reduced level of 1.5 percent in 2006 (Newratings.com, 5 April 2005).


6. EU supports Wolfowitz for World Bank

EU Ministers have backed Paul Wolfowitz, the controversial neo-conservative nominee for the presidency of the World Bank. Wolfowitz, who as deputy Defence Secretary in the Bush administration was a key architect of the Gulf War, received the support of EU Ministers following a visit to the EU last week. The German Development Minister, Heidemarie Wieczorek-Zeul, said that his appointment was “a new beginning”. While Armand De Decker, Belgian Development Aid Minister said, “There will be no objection to his candidacy” (Times, 31 March).

NGOs rejected the appointment system, which allows the US and EU to split up the appointments to the international organisations between them. Peter Hardstaff, Head of Policy at the World Development Movement, said, “The fault for this truly terrifying appointment really lies at the door of European governments who last year insisted on retaining their right to appoint the head of the IMF rather than adopt an open, democratic and transparent selection process” (UPI, 16 March 2005). Atila Roque, the Executive Director of ActionAid International USA, said, “This secretive leadership selection process is breathtakingly hypocritical” (IPS, 1 April 2005).


7. PR firm hired to spin EU Presidency

There were reports last week that the Government has hired PR group Trimedia Communications to run a campaign to promote its forthcoming presidency of the EU, which begins on 1 July. A source close to the firm told PR Week that the campaign is intended to “soften up people” to vote ‘yes’ in the referendum on the EU Constitution. However an FCO spokesman said, “The EU presidency and Constitution are completely separate” (PR Week, 1 April 2005). The account is in addition to PR agency Geronimo’s existing brief to communicate the benefits of EU membership. The Government has now admitted to spending £1.15 million on promoting the EU Constitution, but it is not clear that this figure represents the real total.


8. Building progressive opposition to the Constitution


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