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Weeks after the United Kingdom’s legal challenge to the European Union’s bonus cap policy another challenge has surfaced against the policy.

Now, the second largest bank in the EU, Barclays,  has decided to circumvent the bonus cap policy by providing a new payment plan for the top bankers. 

The EU’s current policy prohibits any bank from giving a banker an annual bonus higher than the amount of her salary or double her salary if the shareholders of the bank have specifically approved of the bonus. 

The new policy that Barclays is discussing would be a cash allowance in addition to annual bonuses and the salary that the banker already receives. The payment plan would include a monthly allowance that would be paid in cash and would not count toward their pensions. Barclays’ new payment scheme would also allow a more flexible payment scheme that can be removed if the employee switches roles at Barclays. This will ensure that the policy is still in compliance with the bonus cap because it is not considered a part of the salary or based on the performance of the employee. 

This proposal is expected to cause a shareholder’s uproar because Barclays has already incurred a 5.8 billion euro fine imposed by banking regulators and a 290 million euro fine for “manipulating the interbank borrowing rate.” 

Barclays has declined to comment about the proposal. There is speculation that the reason that Barclays is employing this payment policy to circumvent the EU policy because of concern that many of the senior staff at the large bank will transfer to banks in Asia and United States.

Barclays is not the only banking company that has made moves to circumvent the EU bonus cap. HSBC Holdings PLC, Europe’s largest lender, stated that it will try to circumvent the EU policy by raising the salary for any banker that works for it.

 

 A shipwreck last week near the Italian island of Lampedusa  that killed almost 300 African  migrants has ignited a political debate to further protect the borders of the European Union.  The shipwreck was caused by water that flooded the ship which mixed with the fuel and caused it to igniteThe public response to the  tragedy has forced the European Union to adopt a new surveillance system that will help alleviate the European Union’s growing problem with illegal immigrants. 

The citizens of Lampedusa have previously complained to the European Union about the thousands of migrants who illegally cross their borders every year from Africa and the Middle East. While trying to mourn the tragedy, the European Commission President, Jose Manuel Barroso, was heckled by the islanders protesting the current immigration policy.

In response to the rising concerns and protests about the current immigration policy, European Home Affairs Commissioner Cecilia Malmstrom proposed expanding the role of the agency that patrols the sea for migrant ships. Currently the agency, Frontex, only can patrol off the coast of Italy using equipment loaned from the EU member states but the proposal suggests requesting the EU governments to give cash and to provide the boats and aircrafts that will protect the Mediterranean Sea.

The surveillance system that the EU has adopted is predicted to improve information gathering and information sharing throughout the member states while using satellites to help deter another tragedy such as this one from happening again.  In the interim, President Jose Barroso has promised Italy 30 million euro to provide assistance to care for the migrants.

On October 7, the European Parliament finally passed new regulations governing the multi-billion dollar tobacco market.   The new legislation aims at tightening up the 2001 Tobacco Products Directive.  Some of the new sanctions placed on the tobacco industry include:  bigger warning signs on cigarette packs, the elimination of “10-pack” cigarettes, and also a ban on menthol and other flavored additives.  Some of these regulations, if passed by the European Council, would not take effect for another five to ten years.

After intense lobbying from the growing electronic cigarette industry, including global tobacco companies, the European Parliament refused to include the European Commission’s recommendation to classify electronic cigarettes like other medicinal products.  The new tobacco regulations still need approval by the 28 European Union government leaders in the European Council, who along with the European Commission, want electronic cigarettes controlled under medical regulations.  There will soon be an intriguing battle in Brussels.   The European Council has endorsed the European’s Parliament’s philosophy on marketing electronic cigarettes as medicines.  However, the European Council would allow tobacco companies more time to acquire medicines marketing authorization.

Should electronic cigarettes be regulated as tobacco products or should they be sold in pharmacies as medicinal products?  Research claims that 85 percent of electronic cigarette users start in order to help them quit smoking.  Electronic cigarettes also cost 90 percent less than your traditional cigarette.  Most electronic cigarette users think that smoking electronic cigarettes is less harmful than smoking traditional cigarettes.  However, health experts are still divided on the long-term effects of using electronic cigarettes, and they are still years away from uncovering these effects.  At the moment, there is yet a clear answer for the European Union on how to regulate electronic cigarettes.

 

 

 

On Tuesday, October 8, 2013, European lawmakers approved sweeping new regulations governing the multibillion-dollar tobacco market.  The new regulations include more visible and more extensive health warnings on cigarette packs and a ban on menthol in order to further curb smoking. After months of bitter debate and strong lobbying campaigns by members of the tobacco industry, the European Parliament voted in Strasbourg to dismiss the claims by the tobacco industry that the proposed regulations were disproportionate and limited consumer freedom. The lawmakers voted to impose warning labels covering 65 percent of cigarette packs to be shown above the brand logo. Current warning labels cover only 30-40 percent of packages. In addition, the inclusion of gruesome pictorials, for example showing cancer-infested lungs, may also be permitted to cover the cigarette packs.

Before the regulations can enter into force, the legislature still must reach a compromise with the 28 European Union governments on certain points. The new proposed rules were viewed by the World Health Organization and EU health officials as an important milestone.  However, this milestone does not serve as the end of the quest to stop people from smoking and keep teens from ever picking up a cigarette.

Smoking bans in public, limitations on tobacco firms’ advertising, and other measures over the past decade have seen the number of smokers fall from an estimated 40 percent of the EU’s 500 million citizens to 28 percent now. Still, treatment of smoke-related diseases costs about 25 billion euros ($34 billion) a year, and the bloc estimates there are around 700,000 smoking-related deaths per annum across the 28-nation bloc.

For the second time, the Arctic Council has deferred an EU application to become an observer on the multilateral Arctic forum. The Arctic Council was formally established through the Ottawa Declaration in 1996. The impetus behind the Council’s inception was the need for an intergovernmental  forum in which Arctic states could cooperate in matters mutually beneficial for the region.

The European Commissioner for Maritime Affairs and Fisheries, Maria Damanaki, has argued that the EU “has a stake in what happened in the Arctic”, and “is an Arctic actor by virtue of its three Arctic states, Denmark, Finland, and Sweden.” The EU has not shied away from speaking about its Arctic interests. In June 2012, the Commission proposed a three point Arctic policy, the most salient of which is the sustainable development of resources.

It is undeniable that the EU has a stake in the future of Arctic development. It is estimated over 90% of Europe’s oil production and 60% of its gas production comes from offshore operations occurring in the North Sea and Norwegian Sea. Moreover, an estimated 13% of the world’s undiscovered oil reserves and 30% of its undiscovered gas reserves are lying within the Arctic seabed. Additionally, proponents of EU accession have argued that climate change is a trans-boundary issue, and thus, will adversely impact European weather patterns and fish stocks.

There have been two primary arguments against the EU attaining permanent observer status in the Arctic Council. First, the Heritage Foundation has repeatedly asserted that the EU is a “supernational” organization and, therefore, does not meet the criteria to join the Arctic Council as an observer. Second, the Canadian government has opposed EU observer status since the EU submitted its first application in 2009.

Canadian opposition began in May 2009 when the European Parliament voted 550-49 to impose a seal trade ban throughout the European Union. A Canadian Inuit group challenged the ban, but the General Court of the EU dismissed the appeal. Additionally, similar challenges have been brought before the European Court of Justice, but they also resulted in dismissal. Consequently, this lack of success in the European courts inspired a Nunavut-based group to begin the “No Seal, No Deal” petition calling on the Canadian government to reject the EU’s application for full observer status.

This second argument may carry more weight with the Arctic Council than the former. Following the announcement of the EU’s deferral, Leona Aglukkaq, the new Canadian chair of the Arctic Council, pointed out that one of the criteria that observers must meet is to demonstrate respect for the traditional ways of life of the indigenous people of the North.

The EU’s interests in the Arctic are not disappearing any time soon. Recently, Italy joined EU member states: France, Germany, the Netherlands, Poland, Spain, and the United Kingdom, as observers on the Arctic Council while Finland, Sweden, and Denmark all have permanent membership. Hopefully these EU Arctic actors will keep the EU’s best interest in mind until relations are able to thaw with Canada.

On October 2, 2013, Nick Westcott, the European Union’s most senior official in charge with relations in Africa, proclaimed the European Union should stop lecturing Africa about gay rights.  Westcott believes the European Union needs to be understanding of Africa’s cultural differences.  When asked to elaborate on cultural issues at a debate in Brussels about European Union foreign policy, Westcott stated “We can lecture about lesbian, gays and bisexuals until the cows come home. And it will have a wholly counterproductive effect on our usefulness in Africa. We need to focus on fundamental values.”

Protecting the rights of the LGBT community is a fundamental value of the European Union.  Westcott’s stance on how to handle gay rights in Africa is contrary to the European Union’s overall foreign policy on the rights of gays and lesbians in partner countries.  Article 21 of the the European Union’s Charter of Fundamental Rights prohibits discrimination based on sexual orientation.The principle of equal treatment is a fundamental value for the European Union, which is going to great lengths to combat homophobia and discrimination based on sexual orientation.

In July 2012, the European Parliament released a resolution to help combat violence against lesbian women and the rights of the LGBT community in Africa.  In July 2013, the European Parliament submitted another resolution condemning a law passed by Nigeria that criminalizes not only same-sex marriage, but those who fail to denounce them. Even more than that, the law made it illegal to show a public display of affection to someone of the same sex.

The European Union’s fight for LGBT rights also extends to other parts of the world.  The European Union recently condemned Serbia’s ban  of a gay pride parade for the third consecutive year.  They have also condemned the Ukraine for its new laws banning propaganda of homosexuality, and threatened the Ukraine’s ties to the European Union because of it.  It appears Westcott’s opinion on how to handle LGBT rights in Africa is not the majority view of the European Union.

UK Member of Parliament Adam Afriyie is pushing for a referendum on whether or not the UK should leave the EU.  A referendum in the UK is a yes/no vote put to the people for their opinion on the subject so that the politicians know what the public opinion is on the proposed question.  Referendums are not binding on Parliament, despite the fact that they may represent the public’s opinion on the matter.  Afriyie is pushing for the referendum now so that there is time for negotiations before the next election, because he feels that the “EU member states would need to ‘accommodate’ British demands for reforms ‘if they wish us to remain’.”

TEU Article 50 sets forth the procedure for a member state to leave the EU.  (To find Article 50 in the text, use the search function in your browser to locate the article).  According to Article 50(1) the UK may leave by the requirements of its own constitution.  Article 50(2) provides that the “Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.”  This provision indicates that prior to the UK’s leaving, both the EU and the UK would consider the possible future relationships between the former member state and the Union.  This provision might ease some of the worries of British citizens who fear the financial and societal repercussions of leaving the EU.

Whether leaving the European Union is truly in the best interests of the British people is a question for their government to decide, but under current EU law, it is possible for the UK to leave using the procedures set forth in the Article.

In a recent measure which appears to bring the country a step closer toward EU integration, Bosnia and Herzegovina has agreed to remove a constitutional provision which prohibited minorities from running for presidential office. This ban has been part of the country’s constitution since the Dayton accords following a bloody civil war in the country which killed over 96,000 people. This war saw conflict involving Serbian forces, and Bosniak and Croat civilians.

Because the Bosnian War was in large part caused over political disagreements among the Bosniaks, Croats and Serbians, the three major ethnic groups in the region, the country’s post-war constitution provided for a three person presidency composed of one member from each group. This requirement thus effectively prevented the candidacy of any individual who did not belong to one of these groups. In 2009, the European Court of Human Rights held that the constitutional provision unfairly discriminated against minority groups living in the country. The EU has continually encouraged, and now appear to have achieved, a repeal of this discriminatory measure.

This repeal may also benefit Bosnia and Herzegovina from an economic standpoint. The three-member presidential panel generally makes governance decisions by majority vote. However, any of the three ethnic groups may block any decision it deems contrary to its interests. This decentralized nature of the presidency has been blamed for Bosnia and Herzegovina’s failure to achieve long-term economic stability and prosperity following the war. Indeed, the US has pressed Bosnian leaders to increase the government’s effectiveness through political consolidation as far back as 1997. As Bosnia moves toward full European integration, this forthcoming constitutional repeal should bring benefits to the country in more ways than one.

When Italy’s Integration Minister, Cecile Kyenge, was appointed back in April of 2013, her nomination was tarred by distasteful comments and racist attacks by unknown critics. Kyenge, an eye doctor and Italian citizen originally from the Democratic Republic of Congo, is Italy’s first Black minister. This past summer, Kyenge continued to be on the receiving end of racist jibes but this time it came from Italian politicians stemming from Italy’s rightwing members known as the Northern League Regionalist Party. In July, Roberto Calderoli, the League’s deputy speaker in the upper house of Parliament, sparked horror when he said the 48-year-old minister had “the features of an orangutan”. Calderoli was stiffly reprimanded for his comments by Prime Minister Enrico Letta, but as of today he remains in his position in the senate. Calderoli’s comments led Joëlle Milquet, the Deputy Prime Minister of Belgium, to suggest the recent meeting accompanied by seventeen European Union representatives to sign the recent “Declaration of Rome” which took place on September 23rd.  The purpose of the meeting was to provide a robust response not only to Kyenge’s trials but also to those of racism sufferers throughout Europe. The recent “Roman declaration” is not only Europe’s response to the attacks and insults directed at Kyenge since her appointment but it also serves to remind Europe of its founding values. The participating European Union representatives signed the declaration condemning racism and urging greater action to promote diversity across the Union.

Part of Basel III, the international regulatory framework for banks  that the EU is currently putting into effect, is being challenged by the United Kingdom (UK).  The UK has a problem with the part of Basel III that imposes a cap on the amount that a banker can earn as a bonus. 

The cap was designed to limit bonuses for bankers up to the amount of bankers salaries. The amount can be higher if the shareholders agree. The UK was the only Member State that opposed the plan during the discussions to implement this regulation.

The six reasons that the UK stated that it does not believe that the cap will not work are:

  1. “It is unfit for purpose, and was introduced without any impact assessment
  2. It unlawfully delegates to the European Banking Authority (EBA) because it concerns policy and is not simply a technical matter
  3. It is legally invalid because it contravenes the legal base of regulation that expressly excludes legislation ‘affecting the rights and interests of employed person’
  4. It is being rushed into effect without the necessary legislation in place including rules determining to whom the cap will apply
  5. It fails to protect personal data
  6. It wrongfully applies outside the European Economic Area”

The challenge was filed with the European Court of Justice on September 20th, 2013 by the Chancellor of Exchequer/Second Lord of Treasury for the United Kingdom. Chancellor George Osborne of Britain believes that this cap will increase the basic salaries of bankers and further reduce the ability to efficiently link performance with pay.

Commenting about the challenge to the regulation, the Chancellor stated that it was to “ensure the legislation respects the EU Treaty.” Cases usually take 18 months to two years to be heard so the UK has stated that it will adhere to the policy while the challenge is taken up.