The crisis has shown the urgency of rejecting the neoliberal ideology currently dominating EU policy-making and reigning in the far-reaching influence of corporate lobbies. There has been a lively debate about the influential role of lobbying in Brussels over the last few years, centred on the lack of transparency around lobbyists’ activities. Scandals linking MEPs to lobbying and former Commissioners going through the revolving door into lobbying jobs have all added to a growing awareness of the levels of corporate influence in Brussels.
A new report published by the Austrian Chamber of Labour puts the number of lobbyists based in Brussels at 15,000 – 20,000, and estimates that total spending on lobbying in Brussels could be as high as 3 billion euro. It highlights a massive imbalance between business lobbies and those representing social and environmental concerns, finding that 68% of lobby groups represent business, and just 1-2% represent unions. That’s as many as 60 times more industry lobby groups than unions. This shocking imbalance reflects the fundamental problem that on virtually every issue, from energy policy to food labeling to banking rules, industry lobbyists outnumber and outspend public interest NGOs and unions.
But the power of the corporate lobbyists in Brussels is not only a result of their superior numbers and budgets. Big business lobbies enjoy preferential treatment, not the least from the European Commission, which has a policy of providing privileged access to big business lobby groups. A large number of Commission advisory groups, which provide expert advice on issues ranging from taxation to consumer protection and agriculture, have been found to be dominated by commercial interests. When the Commission initiates new international trade and investment talks it consults closely with big business lobby groups. Underlying this approach is the flawed assumption that what is good for big business is good for Europe – and the rest of the world.
The results are disastrous. This corporate capture of EU policies has played a central role in sparking the deepest economic crisis for generations. The financial crisis that erupted in 2008, triggering the deep economic crisis we are in, was the result of an unsustainable bubble economy caused by the deregulation of financial markets, initially in the US in the 1980s, but later in Europe, in a drive to create a single market for financial services.
The financial industry itself was heavily involved in shaping these inadequate EU rules via dozens of European Commission advisory groups dominated by lobbyists. The financial industry was virtually allowed to draw up its own rules with its lobbyists given the role of co-legislators. Also after 2008, the dependence of decision makers in the Commission and in member states on banks and bankers has resulted in new financial regulation that is heavily influenced by lobbyists.
The Commission’s preferential treatment of big business lobby groups is a reflection of the market-led model of European unification which has dominated thinking since the mid-1980s. When the European Union’s primary objectives are ‘completing the Single Market’ and boosting the international competitiveness of industry, it is perhaps no surprise that the Commission sees business lobby groups as its natural partner.
The shared neoliberal agenda has not only prevented the emergence of a Social Europe, but as we will examine in our conference on the EU in Crisis next month, the EU’s flawed response to the crisis now also threatens to dismantle the welfare state and other progressive achievements to an extent never seen before.
When the public debt crisis – caused by the bailouts of banks – threatened the survival of the euro, the EU’s response was to subject the most affected member states to harsh austerity conditions in return for loans. This has caused a social disaster in Greece, in Portugal and elsewhere. A similarly dogmatic austerity push is now hitting many other EU member states, as a result of the Six-Pack of ‘economic governance’ rules that were rushed through in record time last year. The Six-Pack gives the Commission far-reaching new powers to enforce budget deficit limits by intervening in member state budgets and welfare policies.
To add insult to injury, the new EU Treaty agreed earlier this year is to make budget deficit rules irreversible and further tightens the screws, introducing a 0.5% long-term budget deficit cap. This absurdly rigid limit on public deficits will cause further massive cuts in public budgets, deepening the crisis and further destroying the welfare state. US economist Paul Krugman has described the EU’s current approach as “just insane”.
With the Six Pack and the Austerity Treaty, industry lobby groups such as the European Roundtable of Industrialists and BusinessEurope see a longstanding wish implemented: boosting powers at the EU level to force governments to introduce neoliberal reforms. The Commission’s use of its new economic governance powers will reshape societies in exactly the way that these lobby groups have demanded for many years. While big business lobbies are cheering, the EU is alienating itself from the citizens.
The treaty still needs to be ratified by national parliaments and this may not be straightforward. This could create an opportunity for governments to avoid sacrificing the welfare state and democracy in order to appease financial markets. Europe urgently needs political leaders that dare stand up against big business lobbies and financial markets.