Europe Inc.

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Europe IncDemocracy in Europe Threatenedby Corporate Interests

Since the early eighties, the increasing political power of the European Union has drawn a largecrowd of lobbyists to Brussels. A few dozen environmentalists, trade unionists and representativesof other social movements are totally outnumbered by an army of thousands of corporate lob-byists that has invaded Brussels. This article tries to show the extent of corporate influence overEuropean Union policies by the example of a not very well-known, but very influential corporatelobby group: the European Roundtable of Industrialists.

Over the past two decades, the growingeconomic and political power of trans-national corporations (TNCs) has beensteadily eroding the powers of nationalgovernments. It is a common assump-tion that this loss of power at the natio-nal level can only be countered by crea-ting supranational blocs like the Euro-pean Union (EU): effective environ-mental or social policies would only bepossible within such supranationalblocs.However, as the inhabitants of the Euro-pean Union experience on a daily basis,the transfer of political power from thenational to the EU level does not lead tobetter protection of the environment orbetter social rights. On the contrary: wesee the EU promoting the constructionof huge new motorways to enable thetransport of goods throughout the singlemarket, we see the European Commis-sion forcing Luxembourg, Austria andItaly to open their markets for geneti-cally manipulated maize of a Swiss-based transnational corporation, Novar-tis AG (a m erger of Ciba-Geigy AG andSandoz AG), all in the name of thesingle market.

We see transnational corporationsconcentrating and restructuring theiractivities within the single Europeanmarket, causing enormous local unem-ployment problems, like recently in Vil-voorde, Belgium. Despite all the rheto-ric about a Social Europe, the EuropeanUnion has shown itself to be incapableof preventing these kind of things hap-pening.The single market is leading to increa-sed tax competition between EU mem-ber states. This has already caused ashift in taxation from capital to labour,with serious (negative) effects onemployment levels. Until now, severalmember state governments have oppo-sed tax harmonization in the EU. InAmsterdam, German Chancellor Kohlprevented the introduction of qualifiedmajority voting on taxation issues in theCouncil of Ministers. This makes itrather unlikely that the damage done bythe freedoms of the single market willbe repaired by tax harmonization mea-sures.It seems that the most important goal ofEuropean Union is to protect the sacred

single market. This is not a result of his-torical necessity, nor did it come aboutby coincidence. For many years now ithas been the explicit aim of corporatelobbyists in Brussels to shift the empha-sis of EU policies and have them refor-mulated in terms of international com-petitiveness. Among the corporategroups that have been chanting thecompetitiveness mantra in Brussels, onestands out from the rest: the EuropeanRoundtable of Industrialists (ERT).Europe's Chief ExecutivesThe European Roundtable of Indus-trialists, founded in 1983 on the initia-tive of EU Com missioner Etienne Davi-gnon and Volvo Chairman Pehr Gyllen-hammar, now represents the interests of45 of the largest European-based trans-national corporations and can be consi-dered a very influential actor on theEuropean political scene.ErikWesselius isoneof heorganisers of the AmsterdamAlternative Summit andco-author ofthe report Europe Inc. DangerousLiaisons Between EU Institutions andIndustry.

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ERT MEMBERSChairmanHelmut O. Maucher, Nes (Switzerland)Vice-ChairmenGerhard Cromme, Fried. Krupp (Germany)Andr Leysen, G evaert (Belgium)MembersAmerico Amorim, Amorim Group (P ortugal)Percy Barnevik, ABB Asea B rown Boveri (Switzerland)Jean-Louis Beffa, Saint Gobain (France))Peter Bonfield, British Telecom (United Kingdom)Cor Boonstra, Philips (The Netherlands)Simon Cairns, B.A.T. Industries (United Kingdom)Bertrand Collomb, Lafarge Coppe (France)$Franois Cornlis, Petrofina (Belgium)Alfonso Cortina, Repsol (Spain)Etienne Davignon, Socit Gnrale (Belgium)Carlo de Benedetti, Cofide-Cir (Italy)Casimir Ehrnrooth, Kymm ene Corp. (Finland)Jean-Ren Fourtou, Rhne-Poulenc (France)Jos Antonio Garrido, Iberdrola (Spain)Fritz Gerber, Hoffmann-La Roche (Switzerland)Ronald Hampel, ICI (United Kingdom)Ulrich H artmann, Veba (Germany)

Cornelius Herkstrter, Royal Dutch/Shell (Uherlands)Daniel Janssen, Solvay (Belgium)Alain Joly, Air Liquide (France)Jak Kahmi, Profilo Holding (Turkey)David Lees, GKN (United Kingdom)Flemming Lindelov, Carlsberg (Denmark)Pietro Marzotto, Marzotto (Italy)Jrme Monod,Lyonnaise des Eaux-Dumez (FranceEgil Myklebust, Norsk Hydro (Norway)Harald Norvik, Statoil (Norway)Theodore Papalexopoulos, Titan Cement (GreeceHeinrich von Pierer, Siemens (Germany)Lars Ramqvist, Ericsson (Sweden)Edzard Reuter, Airbus Industry (European ConsortiumCesare R omiti, Fiat (Italy)Nigel Rudd, Pilkington (United Kingdom)Peter Sutherland, BP (UK)Richard Schenz, OMV (Austria)Manfred Schneider, Bayer (Germany)Jrgen Schrempp, Daimler Benz (Germany)Louis Schweitzer, Renault (France)Michael Smurfit, Jefferson Smurfit (United KingdomMorris Tabaksblat, Unilever (UK/Netherlands)Marco Tro nchetti Provera, Pirelli (Italy)Mark W ssner, Bertelsmann (Germany)

Source: ERT w ebsite - H 1113://www.ert.be/

Dossier

More than just another lobby organisa-tion trying to benefit from the Europeanintegration process, the ERT was for-med with the express intention of revi-ving European integration, which hadcome to a virtual standstill in the earlyeighties, and shaping it to the prefe-rences of European transnational corpo-rations.Unlike UNICE, the massive EUemployers' confederation, the ERT hasalways stayed aloof from lobbying ondetailed legislation. Instead, the ERTaims to paint the big picture and fill theEU political agenda with new sizeableprojects. As ERT Secretary GeneralKeith Richa rdson put it during an inter-view in February this year: We don'tdeal with sectoral issues, we don't dealwith national issues. We only talk aboutthe overall question.Another peculiarity distinguishing theERT from umbrella or sectoral industryorganisations in Brussels is its member-ship. ERT membership is reserved to a.maximum of fifty chief executive offi-

cers of large European transnationalcorporations, who have to be electedinto this exclusive club by the existingmembers. The elite character of theEuropean Roundtable of Industrialistsguarantees an extremely privilegedaccess to decision-makers, both at thenational and at the European level, andhas contributed a lot to the organiza-tion's effectiveness.

We do quite a lot ofthings, but we don't make abig fuss about what we're

doing.Keith Richardson, ERT

From the outset in the 1980s, relationsbetween the European Com mission andthe ERT h ave been excellent. Two ERTmembers, Etienne Davignon of SocitGnrale and Franois Xavier Ortoli ofElf, previously held the position ofComm issioner themselves.

One MarketThe close relationship between theEuropean Commission and the ERTplayed a crucial role during prepara-tions for the Single European Act,which enshrined the Internal Market inthe EC Treaty. In January 1985, ERTchaimian Wisse Dekker of Philips laun-ched a proposal and timetable for theremoval of all obstacles to trade withinthe European Economic Community(Europe 1990; Agenda for Action). TheCommission apparently liked Dekker'sideas. In fact, the pressure from Euro-pean industry leaders for a single Euro-pean market was precisely the momen-tum towards further European integra-tion that the Commission was seeking.The Dekker-plan formed the basis forthe Cockfield White Paper, which waspublished later in 1985 and prepared theway for the Single European Act.Behind this rapid success lay an inten-sive lobbying offensive, waged by theERT. According to ERT Secretary

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General Keith Richardson: WisseDekker made it [the Internal Market]his main priority for four years. Bearingin mind that when it was first launchedgovernments were not very keen, wehelped to push it through.On its website (http:llwww.ert.be/) theERT claims that the Single Marketprogr _ me was an achievement for theERT and for Europe as a whole. But thedeadline was set only for 1992 and theERT felt it was necessary to keep awatch on the established timetable. On1 December 1986, the ERT called thefirst meeting of its Internal Market Sup-port Committee (IMSC). Every sixmonths, ERT Members met the leadingofficials in the country holding the EUpresidency to encourage action on the1992 progr. t was not until 1988that the Single Market progr e secu-red the decisions that made it irrever-sible.Reshaping Europe in Maas-trichtDuring the negotiations of the Maas-tricht Treaty, the ERT again played avery active role, meeting regularly withCommissioners Andriessen, Mac-Sh , Brittan and Commission Presi-dent Delors. Meanwhile back home,individual ERT members met withpowerful national policy-makers, repea-ting the sane messages that were sent tothe Com 'ssion. The two most tangibleresults for the ERT at Maastricht werethe incorporation in to the new UnionTreaty of a time schedule for achievingEconomic and Monetary Union andplans for the construction of so-calledTrans-European Networks, both issuesthat had figured high on the ERT wishlist since the mid-eighties.

One CoinThe 1991 ER T report Reshaping Europecontains a passionate plea for monetaryunion in Europe: Japan has one cur-rency. The US has one currency. Howcan the Community live with twelve?The timetable for Economic and Mone-

tar)/ Union in the Treaty is remarkablysimilar to the one presented in Resha-ping Europe.

They (the ERT) were oneof the main driving forcesbehind the Single Market

Jacques Delors in atelevised interview (March1993), quoted by the ERT

In a recent TV interview for Dutch tele-vision, Mr. Richardson remarked that afew weeks before the 1995 Madrid EUSum 't, ERT members approached theEU heads of government and state andurged them to take binding decisions ontime schedule and the convergence cri-teria for Economic and MonetaryUnion. So it happened.As the EMU seems now well-assuredon the political level, the ERT is notworking on this issue anymore. Thework has been passed on to a closelyrelated organisation: the Association forthe Monetary Union of Europepresided by ERT godfather EtienneDavignon.

TENsThe incorporation in the MaastrichtTreaty of the Trans-European Net-works, the plans for large infrastructuralinvestments comprising 12,000 km ofnew motorways in the EU and the buil-ding of high-speed rail links throughoutEurope, can be considered the secondbig ERT success at Maastricht. Plans forTrans-European Networks were concei-ved by the ERT in the mid-eighties andpublished in two reports (Missing Linksand Missing Networks). The maps inthese reports are remarkably similar tothe maps of the European Com mission.This comes as no surprise when oneknows that the Commission fundedmany ERT activities on transport issuesin the late eighties and early nineties.Furthe ore, the ERT was one of theseven road lobby groups in the officialEU Motorway Working Group whichput together the list of Trans-EuropeanRoad Network (TE } projects.As the ERT already envisaged in themid-eighties, the single market and itslow transport prices have led to an enor-mous increase in long distance transportof goods in the EU. The Trans-Euro-pean Networks are a necessary precon-

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dition to advance on the road towards aglobalized economy which will be evenmore dom inated by transnational corpo-rate interests than today's world alreadyi s . ,Since 1993, the ERT has transferredmost of its activities in the area of trans-port to ECIS, the Rotterdam-basedEuropean Centre for Infrastructure Stu-dies, which was set up by the ERT inthat year. ECIS has regularly providedthe Commission with much neededarguments for the large public invest-ments in TENs. In late 1996, forexample, ECIS released a report writtenon behalf of the Commission and eva-luating the macro-economic effects ofthe high speed railway links betweenParis, Brussels, Amsterdam andCologne. This report was one of themain sources for a Commission reportto the European Parliament on the jobcreating effects of P 1ENs. This summerECIS passed away, ironically due tocuts in EU funding...

After Maastricht :Chanting theCompetitiveness MantraWhen Jacques Santer assumed office inJanuary 1995, one of his first acts wasthe installation of a so-called Com petiti-veness Advisory Group (CAG), imple-menting a decision of the 1994 EssenEU Sum mit. The group received a man-date to report bi-annually on the stateof the Union's competitiveness and toadvise on EU economic policy prioritiesand guidelines with the aim of stimula-ting competitiveness and reaping itsbenefits.The Competitiveness Advisory Groupis described as an independent advisorygroup composed of' top industrialists,trade unionists and academics, handpic-ked by Jacques Santer himself on thebasis of personal merits. However, thereexists a clear link between the CAG andthe ERT: the idea of a body like theCAG was conceived by the ERT andfirst proposed in its 1993 report Beatingthe Crisis. A somewhat reworked ver-sion of the 1993 suggestion was broughtup again in the 1994 ERT report Euro-

pean Competitiveness the way togrowth and jobs. ERT man KeithRichardson boasts that the idea wasfundamentally put together by FlorisMaljers and myself. The first idea wasnot accepted, so we changed the formatand the final idea was accepted at theEssen Summit. Furthermore, the ERThas always been well represented in the13-person Competitiveness AdvisoryGroup, with prominent ERT membersFloris Maljers (Unilever) and DavidSimon (BP) as two of its temporary Pre-sidents.

According to the Commissions perma-nent representative in the CAG, AlexisJacquemin, in a recent interview in theEuropean Voice, the group doesn'tclaim originality. On reading the CAGreports (which have recently been com-piled into a book that has been sent toall EU leaders in preparation of theLuxembourg Employment Summit) onegets the impression that the main func-tion of the CAG is to repeat ideas thatwere previously put forward by industryinterest groups like the ERT andUNICE and lend them an aura of broa-der consensus.

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Amsterdam: Confirmationof the Status QuoThe Treaty of Amsterdam is a messyone, reflecting the extensive horse-tra--ding that took place during the Amster-dam Summit. At the closing pressconference of the Summit, Dutch PrimeMinister Wim Kok claimed successesand improvements in areas like demo-cracy, employment and environment,but a closer look at the AmsterdamTreaty raises the question whether realimprovements have been made in thesefields. On the other hand, internationalcompetitiveness is perhaps more clearlythan ever inscribed in the treaty as thekey to employment and welfare inEurope. Thus the new treaty ignores themany w arning signs that ever increasingglobal competition will lead to furtherjob losses and a race to the bottom ontaxation, social protection, environmen-tal legislation and many other crucialareas.The confirmation of the Stability andGrowth Pact, which commits memberstates to continued and even intensifiedbudgetary discipline after the foreseenstart of EMU in January 1999, and thecommitment of the Luxembourg, UKand Austrian presidencies to give prio-rity to the so-called Single MarketAction Plan, were perhaps the greatestcorporate successes in Amsterdam.For business, the final outcome of theAmsterdam Treaty contains positiveand negative elements. Possibly the big-gest disappointment for industry hasbeen the limited revision of Article 113of the treaty. Despite heavy lobbying onthis article, a much further-reachingproposal to increase the Commission'sauthority in negotiating internationaltrade deals on behalf of all memberstates (lobbied for by both ERT andUNICE) w as scuppered by Jacques Chi-rac. But on the other hand industry willbe happy with the fact that Helmut Kohlsuccessfully torpedoed the proposed liftof national veto power on tax harmoni-zation issues, thus keeping his promiseto the German employers' organisationBDI. With this move, Kohl has minimi-sed the chances for introduction ofEuropean eco taxes.

Initial business reactions to the newTreaty were reserved: a mixed result,but generally positive (UNICE). ERTspokesman Richardson wrote that theEuropean leaders in Amsterdam madesome progress, but they missed theopportunity for far-reaching reforms inthe EU. He added that the EU eco-nomy is in many ways as strong as theAmerican, but we lose out in Europebecause our structures a re still too frag-mented and our political system is slowto take decisions and stubbornly resis-tant to innovation. There lies the realneed for reform which the IGC failed todeliver. Richardson concluded his ana-lysis with the observation that: from abusiness point of view the EU looks likea strong company that is badly mana-ged. Once monetary union and enlarge-ment are upon us and confidence turnsup again, the need for genuine reformand a thorough management shake-upwill be irresistible.

Benchmarking the UnionKeith Richardson's comparison of poli-tical issues with business managementneatly summarizes what kind of Europethe ERT dreams of: a Europe Incorpora-ted, run by the Commission as a kind ofexecutive board assisted by a technocra-tic middle management comprised ofthe Commission staff and the EuropeanParliament.Benchmarking, a term derived frombusiness management and one of thelatest ERT catchwords, can be conside-red as a tool to introduce business tech-niques in politics. According to a recentERT report (Benchmarking for Policy-Makers: the Way to Competitiveness,Growth and Job Creation), benchmar-king means scanning the world to seewhat is the very best that anybody elseanywhere is achieving, and then findinga way to do as w ell or better.The ERT report describes how theDutch government has already usedbenchmarking to evaluate the competi-tiveness of the Dutch economy. Thiscomparison "demonstrated a failure toexploit the full potential of the Dutch

economy. In an effort to outdo its inter-national competitors (i.e. other nationstates), the Dutch government pledgedto reduce the wedge of tax and socialsecurity charges, simplify regulationsand open markets for new entrepre-neurs, and to strengthen both the intel-lectual and physical infrastructure.The Dutch example shows how bench-marking facilitates international (down-ward) competition on taxation andsocial or environmental regulation.It is also revealing that the ERT putsforward the Maastricht convergence cri-teria for EMU as a perfect example ofwhat benchmarking is about. During aninterview in February, Mr. Richardsonelaborated on the function of theconvergence criteria: People some-times ask the question: what do w e do ifwe get to the first of January 1999 andnot everybody is ready? But for us thatis not the question. What is important isthat because the pressure is there,governments are doing things that theyshould have done anyhow . It is the pres-sure that is making governments react.It is creating its own dynamic. It hastransformed the shape of public financein Europe. You see this very obviouslyin Spain and Italy, you see it very muchin Belgium, and you also see it inFrance and Germany.The benchmarking procedure turnspolitical decisions into pseudo-neutraltechnical decisions which can be calcu-lated. Perhaps this aspect has made it sopopular among national and EU deci-sion makers. Earlier this year IndustryCommissioner Martin Bangemann setup a Benchmarking Group, to introducebenchmarking as a leading principle forall EU policies.There is a real danger that the bench-marking mission may succeed andinternational competitiveness be institu-tionalized as the primary criterion fordecision-making, thereby consolidatingthe dominance of neoliberal policies invirtually every field of EU policy-making. To prevent this 'corporateEurope' from becoming a reality, abroad popular movement for a differentEurope should challenge the ideologicalbasis of the current Union and reclaim

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Dinosaurs at play, -mbourg 20.11.97 Photo: Josiane Ney, 0 Photothque V.d.L.

the democratic right to shape the futureof Europe to its own preferences.

Towards a Different EuropeThe network of EU-critical groupswhich has emerged from the series ofalternative EU summits that started withthe 1990 Dublin Alternative Summitand most recently convened at theAmsterdam Alternative Summit (June1997) forms the logical nucleus of sucha broad movement for a differentEurope. Until now the network has beenvery loosely organized, basicallydependent on the initiative and strengthof national coalitions in organizingalternative meetings during their coun-try's presidency of the Union. This hasmeant that after the successful June1997 Alternative Summit in Amster-darn, the movement has had no realopportunities to meet and further deve-lop a common strategy towards a diffe-rent Europe. If the existing networksucceeds to establish structures for

common debate and decision-making,the chances for a different Europe willlargely increase.Such a move towards a different Europeimplies a rapid dismantling of the ever-more powerful and a-democratic trans-national corporations and financial ins-titutions. This dismantling of corporatedominance can be promoted by relati-vely simple policy measures thatoppose the current corporate push forglobalization and instead aim at a relo-calization of the economy. Such mea-sures could include introduction of aTobin tax on international capital tan-sactions, taxes on short-term specula-tive transactions or meas ures to end cor-porate welfare (the state funds cashedby big industry) and to prevent tax com-petition between states.Corporate investments could be regula-ted through 'site here to sell here' andother requirements to be decided uponby affected communities. The urgentrebuilding of local economies could bestimulated by community reinvestment

legislation and direct public investmentin sustainable agriculture, public trans-port for local needs, urban renewal,social services, health care and educa-tion.We only have to remind ourselves andothers of the fact that today's footlooseand fancy-free corporations as well asthe global marketplace in which theyoperate are neither necessary norimmune to change. There is an alterna-tive for Europe!

Erik Wesselius

For more information (e.g. ordering acopy of Europe Inc at 270 LuF, postageincl.), contact:Erik W essel iusW esterkade 21a, 3511 HB Utrecht,The NetherlandsTel/fax: +31-30-2364422E-mail: [email protected] Europe Observatoryw ebpage: http:Iww w.xs4all.nU--ceo

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