Portfolio blogger

Sunday, March 22, 2015

Donald Tusk declared victory after the first day of tbe European council, and not without reason. The perspective of agreeing to start creating an energy union was not rosy , several member states were weary to give up their independence, among them the Hungarian prime minister, who made several shady energy deals with Russia, including an obscure offshore company skimming the difference between the cost an sales price of gas supplies and a nuclear power plant (some ten years in advance of the real need of starting it, if energy needs i. 2035, the expected expiry of life of the present plant, is at all foreseeable) to be constructed exclusively by the Russians and also financed by a loan from them), but other countries were also not enthusiastic. So what about the result? Euobserver analysis is cautiously optimistic. The conclusions paint a more sober picture than the triumphantdeclarations: they reflect the limitations imposed by the self-interest of the member states jealous to save their separate ways: ..".the European Council focused on some of the aspects", "ensuring full compliance with EU law of all agreements for buying gas from external suppliers" - isn't this so without emphasising it? "confidentiality of commercially sensitive information just be guaranteed" -as if Orbán had it dictated... And finally: "assessing options for voluntary demand aggregation mechanisms" - no common buying arrangements, just assessing options; emphasising sovereignty and right of the member states twice. Some positive e!ements are no doubt a!so present: cooperation,reinforcing the legislative framework for secure supply of electricity and gas. So, the first small steps were taken. But the plans earned already criticism: this article reveals why the development of domestic energy resources and the freedom of member states to decide on their energy resources features prominently in the text: Poland is strongly dependent on coal and wants to develop shale gas. See also here So it was not just the reluctant followers who got their special deal, but also the leader.

Thursday, September 11, 2014

What does the portfolio allocated to the Hungarian commissioner mean for the EU and Hungary?



The strained relationship of the Hungarian government with the EU makes this question very interesting. Are turf wars being fought? How will the new Hungarian commissioner fit into the team? How will he perform? Will this mean something to Hungary? The topic is also good to give rise to some remarks on the sidelines about the structure of the new commission and about other portfolio assignments.
1., Contrary to his demands Mr Navracsics did not receive the enlargement or neighbourhood portfolio. This went to Johannes Hahn from Austria, previously commissioner for regional policy. Given the Hungarian government's nationalist rhetoric and recent tentatives to appease with Russia and to slip out of sanctions, this is no surprise.
2., Thus, the message of the president, that it is not countries but people to whom the portfolios are allocated (in plain English, that the experience and assumed capabilities of people defined the allocation, not the performance of their country – even, as the example of Mr Moskovici shows, their performance in their country), may not quite be true for the Hungarian commissioner. I will go into more detail below, it is just to mention that the performance and lines taken by a politician in his/her own country cannot be entirely separated from his/her capabilities and expected performance. The "persons, not countries" approach is rather true for the French and the British Commissioners. Although Mr Moskovici is under the coordination of Mr Katainen, he got a weighty portfolio (see below). By the nomination of Mr Katainen, however, according to Open Europe, a British think-tank close to the Conservative Party (and thus not really an euro-enthusiast) " Germany has ensured that there is a voice in favour of austerity and structural reform to balance out the French preference for fiscal expansion." See: http://www.euractiv.com/sections/eu-priorities-2020/dutch-eu-nominee-wield-veto-right-over-excessive-bureaucracy-308344. Mr Hill of Britain got the financial services (but not the internal market) portfolio and a dedicated new directorate general will be set up. To draw conclusions from the reorganisation (i.e. which parts of the organisation move to this new DG), requires a separate analysis.
2., Previous gossip that he may get the trade portfolio (although this version was quickly questioned: http://blogs.ft.com/brusselsblog/2014/09/03/the-mysterious-new-commission-organigram/) or development (somewhat akin to the enlargement or neighbourhood portfolio he was eyeing) did quickly subside (International Cooperation & Development was allocated to Neven Mimica, delegated by Croatia and commissioner since Croatia's accession, dealing with consumer protection,-separated from the health and consumer protection portfolio for him), but the latest guess that he may get customs also has proven wrong (customs was not, as it would have been in this scenario, separated from taxation and both were assigned to Mr Moskovici, to create sort of a super-portfolio of economics). Finally, he received the "Education, Culture, Youth and Citizenship" portfolio.
3., The EU does not have too many rights in education and culture (in federal Germany, education is not even federal, but "Länder" competence). Mr Navracsics has no great credentials in this area, either. The areas related to the labour market, skills, continuing and professional education etc., have been taken over to the Belgian Commissioner, Marianne Thyssen, to be responsible for employment, social affairs, skills and labour mobility Some bits and pieces were added to Navracsics's portfolio: the EIT, situated in Hungary and led by a strongly reform-minded ex education minister of Hungary (oh, another potential controversy), who is liberal by the way while Orbán, the Hungarian prime minister declared that he wants to build an "illiberal" state (whatever this means), the Joint Research Centre (with the message that the JRC has to support his activity by scientific analysis) – but research and innovation is the portfolio of the Portuguese Carlos Moedas - and the Publications Office (with a Director General, who is a Luxembourger and is at the moment assigned the portfolio of Ms Reding – both Luxembourg and the former Fundamental Rights commissioner and vice president Reding had a controversial relationship to Hungary and vice versa). As a small irony, he will take over part of that portfolio (although small): to manage the communication of the Europe for Citizens Programme, and the responsibility for the Preparatory Action “New Narrative on Europe” 2015.
4., He is mentioned in the press release as a strong point in the Commission as an ex deputy prime minister and ex minister (which is true) and as having extensive foreign relations experience as an ex minister of foreign affairs – a post he occupied for some five months and this only as a preparation for his post as commissioner. His real area as minister was law and administration where his track record has not been dismal in technical terms but he was part of some very controversial actions of the government (forced retirement of judges, cutting the rights of the Constitutional Court, creation of a mameluks' university "called Public Service University) and he was also part of the effort to curb media freedom. Besides his personal track record, he is a fathful member of FIDESZ, whose leader, the Hungarian prime minister was the only besides Cameron who voted against the nomination of Juncker as Commission president in the decisive Council meeting. If Navracsics and Juncker want to demonstrate that in spite of all these controversies, they can work well together, and thus avoid future controversies, may be helping the spirit but lead to conflict-avoidance even in questions where conflict could be productive. But having actions guided by past offences is not productive either. There is a declared will to co-operate, at least.
5., Five years are a long time. Mr Navracsics may plan to return to domestic politics thereafter (or try to spend another cycle as there is a probability that his party, FIDESZ will win the 2018 elections) but to do any of these, he has to perform in his role. To return to domestic politics, however, he also has to be in line of the government's lukewarm attitude to the EU. This is a contradiction in itself. He faces and even more difficult choice, on the other hand, if we assume that the elections in 2018 bring a new government in Hungary. The EU has not too many prerogatives in education but reading the mission letter http://ec.europa.eu/about/juncker-commission/docs/navracsics_en.pdf we can see that there are tasks. But these are not the ones in which the Hungarian government excelled – although independently of the influence of the new commissioner.
He is to take part in several priority projects of president Juncker where he will have to work under the co-ordination of several vice presidents, among others with Andrus Ansip from Estonia (a selection where the country is also right: Estonia is spearheading e-administration), where Hungary just recently closed its representation. There are interesting times ahead.
Further details: http://europa.eu/rapid/press-release_MEMO-14-523_en.htm

Saturday, August 23, 2014

Women in work - the trend increases in spite of traditional family values rethoric - introducing also the Eurostat gadget

Eurostat has a gadget generator on its site. I used this to show the proportion of women in work in Hungary during the latest years:

Sunday, July 20, 2014

Hungarians in the European Institutions

The European elections mark a change in the composition of not just the Parliament but also the Commission, election of the new president of the European Council and of the High Representative of Foreign and Security Policy, who is at the same time the vice-president of the Commission responsible for external affairs, head of the European External Action Service and chairs the meetings of the Foreign Affairs Council (all other Council configurations being chaired by the respective minister or prime minister or head of state of the country holding the rotating six months presidency of the Council, depending on the configuration).
Civil servants do not change, only some directors general may change posts (usually remaining directors general, just in another Directorate General), but this is a much smaller change even among directors general than the usual rotation after they have spent about five to seven years on their post. It is not going without attention, however, at least in some member states, how they are represented among civil servants of the EU (see here the British and here the French), in particular on management posts. So we will give a little analysis of what can be seen now in the “strength” of Hungarians in the EU.

The data and positions of the MEPs are public, and the Commission also publishes regularly different staff statistics. As far as the Parliament is concerned, the blog of Julien Frisch published overall nationality data. No data were found about the Council secretariat. Here is what Julien Frisch knows about it. Here you can find interesting research about the attitudes of Commission staff.

Hungary has 21 members in the European Parliament. Two of the members of the FIDESZ-group (EPP) are from the Hungarian minority in the neighbouring countries (Romania and Serbia) while three MEP-s won mandate from the Hungarian parties, one in Slovakia and two from Romania. One representative of the FIDESZ party was elected vice president of the Parliament – the FIDESZ-group already gave a vice president in the last cycle so this is confirmation of their position. As the EPP lost places, the support of the relatively large FIDESZ-group is important.
The distribution of Hungarians in the committees is not quite even, in some (the Committee of Civil Liberties, Justice and Home Affairs) there are too many Hungarians (OK, this will or could be the scene for discussions of the rights of national minorities, as here are two of the representatives of the Hungarians in Romania and in Slovakia in this committee besides the two MEPs from FIDESZ and one from Gyurcsány’s party; also, this was the committee which prepared and approved the famous “Tavares report” and also in the Committee for the Environment while there is no Hungarian in the important committees “Economic and Financial Affairs” and “Budget”. As far as vice-presidents of the committees are concerned, of the 20 committees and 2 sub-committees, four have Hungarian vice-president, among them one from the Socials and Democrats grooup (but not the leader of the Hungarian delegation of this group, who eyed a vice president's position in the Employment Committee,. The real power in the committees belongs, however, to the co-ordinators. Out of 56, 21 are German, 4-4 are Dutch, Spanish and French. All other countries have less posts – Hungary ne, and one vice-coordinator, both from FIDESZ.

The Parliament disclosed in 2010 the number of its officials by nationality (MEPs and their assistants have a special status, they are probably not included): out of 7652, 210 are Hungarian, which is a little more than the 2% (a little less since the accession of Croatia) Hungary represents in the number of inhabitants in the EU.

More detailed data (although only the latest status) are available from the Commission which is the biggest institution and also very important in preparing decisions. Although final decisions are taken in the Council and the Parliament, their staff has less influence on the decision of their institutions. In the Commission there were 2.39% Hungarians among the officials (and temporary agents, a category to replace them when their status is empty), this increased to 2.59% by now. This is important even if not a big increase, as slowly the return of officials to Hungary started: some didn’t like the environment or working abroad, the spouses could not accommodate, or, they were temporary agents and their contract expired (this was the case of several management officials).
The proportion of Hungarian administrators (the higher of the two main employee categories till the 2013 reform – as a third, lower category was introduced in 2013, their numbers are not meaningful) is higher than of assistants (the other group).

Statistics on management positions are currently not available (got hold of some before, when they were new) but we know that there are about 1200-1400 heads of unit in the Commission. We also see the composition of officials by grade and as Hungarians are not long ago in the organisations, it could be assumed for a while that those who are in grades where managers are, are indeed managers and not clerks who rose through time to a high grade. 2009 and 2011 data were published on the overall number of heads of unit and the proportion of Hungarians among them was only 1.89% in 2009 but 2.43% in 2011. Slowly, however, administrators who entered the Commission as AD5 or AD7, reach the level of AD 9 which is the lowest grade for heads of unit. So today’s figure of more than 3% can be misleading. A quick count through the EU Official Directory (showing management staff) and allowing for some people with Hungarian-sounding names who are not Hungarians but only of Hungarian origin – and the other way round, there are about 25-30 Hungarian heads of unit (so a little still more than 2%) and about 10 directors and equivalents, which always was above the 2%. Further analysis, however, shows that in at least three important central department (DG) there is no Hungarian manager: in the Secretariat General, the Legal Service and the Budget Directorate General. This darkens a little the bright picture shown by the numbers.

Sunday, July 13, 2014

The "Google case" - right to be forgotten by search providers

„Dumm hat Glück” - stupid is lucky, says the German. Sometimes lazy people also have luck: I did not have the energy to comment about the „right to be forgotten” case involving Google search results but recent days brought new developments, so I have an occasion to make up for this.

We read from time to time that “Google is evil”. Even Google gives nice results for this. And we also read sometimes interesting reactions to that. But it is not just Google. What appears once on the net, will stay there (or at least in references or at least in the cache of some computer) forever. So Viviane Reding, vice-president of the European Commission responsible for Justice, fundamental rights and citizenship made the “right to be forgotten” an important element of the EU data protection reform. We will give links to more recent materials on the reform below, and the blog quoted above also carries an analysis of the judgment of the European Court of Justice.

The case will be called “Google Spain”, it carries the number C-131/12 and the judgment can be found here . It says that the operator of a search engine is responsible for the processing it executes on personal data which appear on web pages of third parties and is obliged to remove the data from its search results on a legitimate request of the data subject, even if the data remain on the original web page. There are conditions, however, among others for the processing to fall under European law, and the Court also explained one aspect of the legitimacy of the request.

A Spanish citizen sued Google to remove from its search results data concerning him. The Court found that given that Google has an operation in Spain whose activity was found to be related to presenting the search results to Spanish users. The processing of the data and the presentation of search results was not done by Google Spain, who was only selling advertisements to be shown on the Spanish search result pages. This was sufficient for the Court to say that the activity was related. On the other hand, the Court also said that there may be reasons of overriding public interest which would justify that the search engine does not remove the data from its search results.

What is important in this judgment, that although the “right to be forgotten” will only be enshrined (if the Member States and the European Parliament approve – see a recent argument by the British minister of Justice) in new data protection regulation now under preparation, it already recognised based on the present legal framework that data subjects have the right not only to request the deletion of their data from the records of those who process their data, but also the indirect appearance of these data on the Internet.

This of course has consequences to all who provide references to data others put on the web. But also means that even if some data cannot be deleted (like official documents published), they may have to disappear from secondary sources, thus making finding this information more difficult or even impossible. If will be an interesting question whether the search results of the primary publisher of the information also will have to “forget” the information.

The saga is, however continuing as Google receives thousands of requests to remove information from its search results, and took an overly cautious approach and removed links to several articles on a public personality but was forced to retreat and reinstate the references.

For those who want to read more, here is a thorough analysis. And the Guardian, who was one of those whose articles were removed, who gave also a good reporting of the case.

On data protection reform, here is the latest text under discussion by the Council.

Sunday, July 6, 2014

What does the Hungarian minister of the national economy (including finance) know and understand?

According to a press article,the minister of the national economy, Mihály Varga (this superministry integrated or rather melted into itself the finance ministry, ministry of economy, labour and the different sectoral ministries - foreign trade, commerce, industry etc.) declared that the Hungarian government will not follow the recommendation of the European Council (it is prepared by the Commission but descussed in the Council and signed by the president of the Council) to cut tax benefits to poor people. Apart from the fact that low earners in Hungary have no special tax benefits (they were abolished by the FIDESZ government to cover partially the costs of the flat personal income tax), the article states that Varga confused the tax wedge with the tax benefits as the coutry-specific recommendation to Hungary proposed to decrease the tax wedge for low earners (see point 3 on page 7). Actually the document complains in an earlier paragraph (number 12 on page 5) that the" tax wedge on single low-income earners is one of the highest in the EU". Probably Mr Varga should have read the Hungarian version. There, the translator (who knows why, certainly not fearing misunderstanding by an economist and economy minister) translated the tax wedge to "tax burden" (pages 5 and 8 as the Hungarian text is somewhat lengthier).
The recommendations are denouncing the sectoral extra taxes (with the following justification: "The application of different tax rates across sectors is an obstacle to the effective allocation of resources
and thus negatively affects growth" and recommend a more equitable tax system. This is no surprise. No surprise either but very instructive are, however, some other statements about the situation of the economy and about economic policy: "Notwithstanding the Central Bank's subsidised 'Funding for Growth' scheme for small and medium-sized enterprises, normal lending to the economy has not picked up in a sustainable manner." (see also in Hungarian: Why the "funding for growth" programme did not help?)
"The regulatory burden on the financial sector has been
further increased, thus limiting the capacity for capital accumulation. Measures like
the increase of the financial transaction duty have contributed to a pick-up in the cash
usage of the economy. The household portfolio has further deteriorated and the high
proportion of non-performing loans currently represents one of the biggest
challenges for the financial sector. Portfolio cleaning is hindered by the weak
efficiency of resolution proceedings."
Also interesting: "The youth unemployment rate has decreased in 2013, while the rate of young people who are not in employment, education or training has increased." -  hints to the phenomenon often discussed in the Hungarian economic press that employment figures may hide more than reveal the real processes. "The Public Work Scheme attracts the bulk of budgetary resources available for employment measures, but in 2013 less than 10% of its participants were able to return to the open
labour market after exiting the scheme."
"The business environment in Hungary is characterised by frequent changes in the
regulatory framework and limited competition in an increasing number of sectors.
New barriers have been introduced in the services sector and existing ones have not
been removed (e.g. pharmacies, waste management, mobile payment, retail tobacco
and textbooks)."
"Overall investment has declined particularly strongly in those sectors
where sector-specific surtaxes have been imposed in recent years. Between 2010 and
2013, nominal investment declined by 44 % in energy, 28 % in finance and 18 % in
the communication sectors, while increasing by 3.4 % overall."

And so on, and so on. So if after this, the minister of national economy says that Brussels does not require adjustment any more, obviously concentrating on the budget balance (in fact this is also a little false as the recommendations state: "Reinforce the budgetary measures for 2014 in the light of the emerging gap of 0.9% of GDP relative to the Stability and Growth Pact requirements, namely the debt reduction rule, based on the Commission 2014 spring forecast. In 2015, and thereafter, significantly strengthen the budgetary strategy to ensure reaching the medium-term objective and compliance with the debt reduction requirements in order to keep the general government debt ratio on a sustained downward path."), he forgets his role beyond being the minister of finance, to be very polite. For the uninitiated: a lot of criticism and recommendations target the governments pet measures, denounced also in Hungary even by economists who supported FIDESZ before.

There are problems also in the social area (another superministry is the Ministry of Humnan Resources): "The proportion of early school leavers is on the rise and the adoption of an early
school leaving prevention strategy has been repeatedly delayed." - and this in the context when compulsory upper schooling age has been decreased.

A final quote: "Review the impact of energy price regulation on incentives to invest and on competition in the electricity and gas markets. Take further steps to ensure the autonomy of the national regulator in establishing network tariffs and conditions. Take measures to increase energy efficiency in particular in the residential sector." - Another pet project, the "decreasing utility charges" is under attack. If we look what was written above about the investment scenario, we see why. The criticism of the public procurement system is very diplomatic, but sstill, recommends improvement. THis would, however, stop the government from distributing public work contracts to its cronies. No surprise but very sad that the minister shows himself deaf.