EU Referendum


EU politics: Mr Juncker's first week


07/11/2014



000a Mail-007 Brussels riots.jpg

I was hugely entertained the other day by Jean-Claude Juncker getting worked up about the lack of respect afforded to a personage of his high office."I didn't like the way several prime ministers were behaving after the European Council", said the former prime minister of Luxembourg, and now Lord High Commissioner of the European Empire.

"For a long period of time I've taken notes and I was always comparing what is said in the room and what is said outside the room", he added. "And from time to time it happens that the notes are not coinciding".

The target in this instance was Matteo Renzi, prime minister of Italy. At the time, he had been highly critical Commission officials, complaining that the EU was overtly bureaucratic. At one point he warned that he would make public the cost of EU "palaces" in a row over Italy's budget projections.

For Junker this was unacceptable. "I have to tell my good friend Matteo Renzi", he snarled, "that I am not the chairman of a gang of bureaucrats ... I am the president of the European Commission which is a political body".

Five days into his presidential rein, President Juncker is flexing even more muscles in his quest for respect, ridiculing David Cameron's "failures" in Brussels – and declaring he was "not frightened" of facing him down.

He accepted people criticising the Commission, because he himself had many criticisms to make when he wasn't yet Commission president", then adding in what amounts to a declaration of war: "But I do not accept unjustified criticisms, everybody needs to know that. There will no longer be attacks on the Commission without a reaction".

However, scarcely touched by the general media, other than the Guardian is a deeper issue which may blunt the martial ambitions.

This, the New York Times has picked up at surprising length, telling us that the new president has been "buffeted" by a flood of leaked documents detailing his home country's role as a haven for hundreds of companies seeking to drastically reduce their tax bills. Some 28,000 leaked tax papers have come to light, revealing that the Grand Duchy has been rubber-stamping tax avoidance on an industrial scale.

While Luxembourg's finance minister has denounced as illegal the unauthorised release of these papers, pressure is mounting on Juncker - Luxembourg's prime minister from 1995 until last year - to clarify his involvement in some serious tax avoidance schemes.

"It is ridiculous to claim this was going on unbeknownst to Juncker - he was in charge", Egide Thein, a former director of the Luxembourg Economic Development Bureau. "Tax evasion was a wilful policy of the Luxembourg government, which always justified this by saying it was not its job to act as a tax man for foreign countries".

This rather un-European attitude is rather at odds with Mr Juncker's current ambitions, even more so as the documents are raising questions about whether his previous activities are at odds with his current duties.

Tax avoidance, as legal ways of slashing or even eliminating tax bills are known, has become a highly sensitive political issue across Europe, says the NYT, and it is not wrong. The public has little patience for corporate welfare at a time when governments, struggling with low economic growth and high unemployment, have trimmed their budgets, often under pressure from the European Commission, now headed by Mr. Juncker.

The resentment has fed growing disenchantment with the European Union — a malaise that Mr. Juncker has said he hoped to cure - and, on occasion, violent protests. But the signs are not good with major riots in Brussels yesterday, with 100,000 turning up to make their views known about spending cuts proposed by the new Belgian government.

This, though, could be merely street theatre compared with the leaked tax documents, released by the International Consortium of Investigative Journalists. They relate to the tax affairs of global companies like PepsiCo, Ikea and FedEx and are shining an uncomfortably bright light on practices in Luxembourg, where hundreds of corporates have been allowed to duck their tax liabilities.

Faced with a lot of journalists anxious to explore Mr Juncker's role in this affair, the Commission president cancelled a scheduled public appearance at an event in Brussels yesterday, and went seriously offline.

So far, though, the commission is holding the line. Margrethe Vestager, the EU competition commissioner, who is leading investigations into tax breaks for Apple, Starbucks and Amazon, avoided any criticism of her boss. She had not, she said, had time to assess the leaked documents, which include so-called "comfort letters" effectively private tax rulings issued to more than 300 companies in Luxembourg.

Meanwhile, after his earlier outburst about Mr Cameron and other EU leaders, Juncker was said to be "very serene" and "cool". However, Vestager is having the last laugh. She has warned Luxembourg she was considering launching a series of fresh investigations into state aid, in light of the revelations.

This brave Commissioner is about to investigate her own boss. If she comes up with anything substantive, it will be interesting to see whether Mr Juncker will be "frightened" of facing her down. But so far this is just Mr Juncker's first week - a total bundle of laughs. Even Mr Cameron might find it funny.

FORUM THREAD