30 March - 5 April, 2014
After meeting Prime Minister Arseniy Yatsenyuk, who has cut an impressive figure in Brussels, Fule said, “We talked about two principles throughout the two days: inclusivity and unity. For the application of the Asso-ciation Agreement the outreach to all parts of Ukraine is important, as it is the continued dialogue with the Verkhovna Rada and civil society, both of whom play a significant role in advancing reforms.”He continued, “We have been to-day focusing on the set of economic, political reform and stabilisation needed in Ukraine and how best we can support it.”He concluded by saying, “I hope rather soon, a transparent public document, available not only to the government and other important stakeholders and to the European Union, but available to all Ukrainians to make us accountable for the prom-ises we are making.”The mission demonstrates that the EU, often considered slow to act, has found a way to bring the nation towards Europe, using soft power and one asset that Putin and the oligarchs can’t offer; honest government.The European Union is taking a huge gamble on not only Ukraine, but its own future, by sending an unprecedented delegation to Kiev. It is without doubt a brave move, but some effects are already being felt.There has been an air of despera-tion inside the EU institutions and numbers of highly experienced staff have been making discrete enquiries about early retirement after years of crisis and a lack of leadership.There are real signs that the Ukraine crisis has galvanised many into action and there is the sense that there is a window of opportunity, not only for Ukraine, but also for the EU to regain its sense of purpose.The Ukraine plan is simple, to reform the country, to make it more open and honest, improving the lives of ordinary people. This will not only make the EU attractive to its current neighbours, but will also act as an en-gine for reform, the central mission of the next commission.The challenge is to persuade the oligarchs that they will be better off being businessmen not gangsters, that facing Europe is better than fac-ing Moscow. Another challenge is Yulia Ty-moshenko’s desire to run for the presidency. While Brussels was aghast at her imprisonment on dubi-ous charges and worse trial, there is a widespread view that she is too divi-sive a candidate and there is greater concern over her financial dealings. Although she was welcomed to the EPP summit in Dublin, there were many sharp intakes of breath on hearing the news. There is a feel-ing, (or is it hope?) that she will not stand, citing medical grounds.This will be a tough task, but suc-cess will revitalise Ukraine and the EU. Failure will have an equally high price.
OLAF vs Oligarchs
EU sends heavyweight delegation to clean Kiev
EDPS: Gaps in EU policies regarding the evolution of big data
By Samy Klein
Personal information, which are a source of market power, has become a form of currency to pay for so-called ‘free’ online services and is a valu-able intangible asset for an increasing number of companies doing business in the EU. According to Peter Hustinx (Eu-ropean Data Protection Supervisor), this situation requires closer inter-action between different regulators because “the evolution of big data has exposed gaps in EU competition, consumer protection and data pro-tection policies that do not seem to have kept up with this development. Knowing that privacy and data protection are fundamental rights in the EU, the interaction “will support growth and innovation and minimise the potential harm to consumers.”The EDPS notes that there is a lot in common with the EU rules in these policy areas: each aims to pro-mote growth and innovation and to promote the welfare of individual consumers.However the weak point lies in the fact that there is currently little dialogue between policy makers and experts in these fields.It is essential that synergies in the enforcement of rules controlling anti-competitive practices, merg-ers, the marketing of so-called ‘free’ on-line services and the legitimacy of data processing are explored. This will help to enforce competition and consumer rules more effectively and also stimulate the market for privacy-enhancing services.The role of EDPS will be to facili-tate discussions among experts and practitioners from the EU and the US, including a workshop in Brussels on 2 June 2014.Two other points are noted by the EDPS, the need for a fuller under-standing of the massive growth in ser- vices that are marketed as free but in effect require payment in the form of the personal information of their cus-tomers; and the need for a definition of consumer harm in the enforce-ment of competition rules.
[3/28/14 6:00:33 PM] Andy Carling: Giovanni Kessler, General Director of the European Anti-fraud Office (OLAF) is heading up anti-corruption reform in Ukraine
[3/28/14 6:00:44 PM] Andy Carling: EPA/WOLFGANG KUMM
Resolution mechanism, a major step but not the end of the story
By Christos Kissas, Phd
“Today’s political agreement on the single resolution mechanism completes our banking union,”
declared the Eu-ropean Commission’s President, José Manuel Barroso. So, is the banking union complete? Not quite, but a step has been takeneven though, it took lengthy negotiations among the main European member states, and finally a political compromise to reach an agreement.But let’s take things from the start. The so-called “banking union” is an idea that was born out of the euro-zone crisis in 2012, and aimed at creating a centralized system for su-pervising EU’s too-big-to-fail banks. Its ultimate purpose is to prevent soverign debt crises from evolving into banking crises and vice versa. This system has three key compo-nents: a monitoring mechanism, a resolution mechanism, and a bank deposits guarantee scheme. After intense debate, the monitoring was assigned to the European Central Bank (ECB), butat Germany’s in-sistenceonly for “systemic” banks, thus excluding all the Landesbanken, which Germans wouldn’t want to see audited by an external authority. Un-der this arrangement, smaller banks, that aren’t a threat to the euro system, will continue to be supervised by the local central banks of the member states. Finally, the Single Supervisory Mechanism or SSM (in pure bureau-cratic language) was created.The second component is the the resolution authority, or Single Reso-lution Mechanism (SRM). The idea behind a Europe-wide authority is to avoid situations such the one that prevailed in Spain, where the local central bank long covered the bank-ing system’s bad debts in order to avoid taking resolution decisions. Here again, Germany started by be-ing opposed to the idea, claiming that a single authority would be impos-sible under current EU treaties, and proposed the creation of national resolution funds, each using its own funds for bank resolution and restruc-turing instead. Another thorny issue was that of decision-taking inside the authority; how would a member state be protected from an external deci-sion to spend money from its budget in order to restructure one of its banks? A pure veto option, supported by several member states, would have undermined the very concept of the single resolution authority. Other solutions, such as giving the affected state’s vote more weight, or exercising some form of control on the author-ity’s board, were deemed unsatis-factory. Finally, a compromise was reached whereby ‘recommendations’ on whether to close down a bankrupt bank and how to share costs of such closing will be presented by a single resolution board, while the European Commission will have the final say-ing. In some limited cases, the mem- ber state concerned will be able to oppose the decision.The resolution authority will be backed by a common fund of 55 bil-lion euro that will be built up over eight years. The common fund will replace the national resolution funds, which will ultimately merge. This fund will have permission to tap the markets, but (at Germany’s request) will not get any government guaran-tees, neither will it be authorized to seek financing from the European Sta- bility Mechanism (ESM)another emergency fund set up to finance euro-zone governments in distress. All in all, the adoption of the single resolution mechanism is a positive step towards common banking super- vision. However, being a multilateral compromise, this system has several limitations that might render it inop-erative. The scope of the mechanism is only limited to ‘systemic’ and ‘cross- border’ banks and does not apply to all banks operating within the EU, as the Commission and the Parliament had initially planned. The common resolution fund is too small to face a major bank restructuring (remember, Dexia cost around double the fund’s assets), and the time frame for its creation is too longeight years, al-though European Commission nego-ciators consider this a success against the initially planned ten year period). Finally, the decision mechanisms are too complicated, and full of tightrope walking; nobody can tell if all this is going to work in practice, or if it’ll end in deadlocks. Apart from the supervision and reso-lutiom mechanisms, there is a third key component for the banking un-ion to be complete: the common deposit guarantee scheme. Without such an EU-wide deposits insurance program, the whole supervision pro- ject cannot work. Let’s not forget, the ambitions are quite highto avoid new bank bailouts with the taxpay-ers’ money. We’re not quite there yet.
Christo Kissas, PhD www.christoskissas.com(Continued from Page 01)