Rolling back corporate capture will take more than EU lobby transparency

#rebuildingtrust

The Vienna Policy Conference,
October 29-30, 2015, will delve into one of the most important trends driving
change in European politics: the dramatic drop in public trust in many
political institutions. Policy researchers, activists, leading European
thinkers, and political figures will discuss new research and analysis of the
causes and consequences of the trust gap across the European continent. Debating Europe and openDemocracy
will be covering the event and its follow-up, and we begin here with the
debate that Olivier Hoedeman, research and campaigning coordinator of the
Corporate Europe Observatory most wants to see take place under this heading.

 

September 24,2015.BMW forced to deny rigging emissions test while VW issues profit warning. Demotix/ Richard Jay. All rights reserved.One of the key
factors behind the growing crisis in public trust is the perception – to a
large extent justified – that governments are increasingly captured by powerful
special interests and therefore unable (or even unwilling) to protect the
public interest. Trust in the European institutions is at an all-time low, with
barely a third of the public saying they trust the European Union, according to
a December 2013 Eurobarometer poll (down from 57 % in 2007, before the
financial crises). Meanwhile, 70% of EU citizens believe there is corruption in
the EU institutions.

The Vienna conference asks whether trust can be rebuilt and accountability
strengthened through anti-corruption efforts and transparency. My answer is
that strong and well-enforced transparency and ethics rules are a pre-condition
for trust, but that this is not sufficient. Citizens will not trust the state
unless it acts in ways that effectively avoid capture by special interests.
Governments and public institutions must earn the respect of the public. This
requires defending the public interest by standing up to powerful economic
interests. Unfortunately there is very little appetite for this among political
elites in Europe today.

Far too often, transparency and ethics initiatives are introduced in reaction
to lobbying scandals, but deeper problems of capture continue regardless of the
transparency and anti-corruption frameworks.

After ten years of campaigns against the corporate capture of EU
decision-making, its clear that some progress has been made in lobby
transparency and ethics rules, but genuine transparency is still far from
achieved, let alone adequate regulation to prevent conflicts of interest, undue
influence and the capture of decision-making by narrow economic interests. The
European Commission's typical pattern of reaction to the many lobbying scandals
that have emerged in Brussels over the last ten years has been first denial and
dismissal of concerns, and then in some cases a half-hearted proposal for
reform that does not effectively solve the problem. In areas such as banking regulation and international trade policy, 80% or more of the meetings are with big business. Promises of striving for balance in meetings with different stakeholders appear to be empty words. 

After seeing concerns about corporate lobbying power becoming an issue in
several countries in the run-up the European Parliament elections in 2014,
Commission President Jean-Claude Juncker has made several surprise
announcements. All meetings that Commissioners and top officials have with
lobbyists are to be listed online. While this has been refreshing compared to the
inertia of the Barroso years, these measures are quite limited. Research by
watchdog groups has revealed that more than 75% of the lobby meetings of
Commissioners and high-level Commission officials are with lobbyists
representing business interests. In areas such as banking regulation and
international trade policy, 80% or more of the meetings are with big business.
Promises of striving for balance in meetings with different stakeholders appear
to be empty words. Transparency measures reveal an extreme imbalance in access
to decision-making, a strong indication of capture. Being transparent while at
the same time continuing business as usual is obviously not going to help build
public trust.

The consistent refusal to take the kind of determined action needed to prevent
corporate capture scandals reflects a flawed political culture at the
Commission. Excessively close contacts and cooperation with big business
lobbyists are considered natural and unproblematic, because large parts of the
Commission see it as their mission to promote these interests. The EU's trade
department, for instance, prepared a negotiation position in the TTIP talks
with the US by actively seeking guidance from big business lobby groups, while
other interests were largely ignored. The result: negotiations were launched
towards a deal with the US that include controversial investor-to-state courts
(ISDS) and a regulatory harmonisation system that fits corporate interests but
would have disastrous consequences for EU citizens. Only after an unprecedented
wave of citizen protest had emerged, did the Commission introduce a number of
transparency measures but without changing the negotiating objectives that had
sparked the public's concern.

A fundamental problem is the dominance of neoliberal ideology within the EU
institutions, a set of beliefs that is centred around marketisation,
deregulation and the idea that what is good for big business is good for
society. This approach has an inherent risk of enabling the corporate capture
of decision-making.

The Volkswagen scandal that broke a few weeks ago will undoubtedly severely
damage public trust in the ability of governments and the EU institutions to
regulate the auto industry. Volkswagen was caught red-handed , having installed
illegal software in 11 million diesel vehicles to ensure that they provided
false information about emissions. “What were they thinking at Volkswagen?”,
one commentator asked: “Very likely that governments are impotent, or co-opted,
or lack the staff to regulate and prosecute.” "What were they thinking at Volkswagen?”, one commentator asked: “Very likely that governments are impotent, or co-opted, or lack the staff to regulate and prosecute.”

The problem in
fact goes even deeper: the scandal exposes what has been termed “Europe’s
automotive-political complex”: the far too cosy relations between car industry
lobbyists and decision-makers, both in Brussels and in key member states such
as Germany. The European Commission and the German government both knew of the
'defeat devices' fitted into cars to cheat under testing conditions – but
failed to act. That it took US regulators to declare there was a problem is a
serious blow to the EU and lays bare the consequences of bringing business to
the regulating table – in this case hundreds of deaths and a huge amount of
extra dangerous emissions.

The European car industry has been successfully flexing its lobbying muscles
for decades: back in the mid-90s it successfully lobbied against binding
emissions targets, instead proposing a voluntary, industry-led scheme. The
scheme failed – industry did not meet its voluntary target – but managed to
delay binding targets for a decade. When binding targets were finally
introduced, they were greatly watered down. Industry has since used the
industry-dominated Commission advisory group 'CARS21' to further delay
emissions standards, while BMW even enlisted German Chancellor Angela Merkel to
lobby on their behalf to further delay the introduction of standards. There
have also been ongoing lobbying efforts to delay a more rigorous testing
regime, although this scandal will surely move things along more quickly.

New transparency and ethics rules to prevent undue lobbying influence are
important in all of this, but the reality is that this scandal reflects a
cultural problem within the Brussels Bubble that has seen regulators and
industry in bed for decades. Until EU decision makers stop conflating the
interests of big corporations with those of the public, profit will come before
climate and public health. If we want policies in the interests of the environment
and public health, then the same companies most likely to resist them should
not be allowed to write them. This applies at all stages of legislation – from
ensuring expert groups are independent, to stopping MEP-industry  fora, to seeing which industry players are
lobbying and which member states are 
trying to weaken legislation.

Change will
have to go far beyond transparency. The car industry's lobbying is fairly
transparent: almost all car manufacturers and their trade associations are in
the EU lobby transparency register which shows that they in 2014 spent more than
€18 million lobbying in Brussels. Also the car industry's heavy presence in
Commission advisory groups is visible, but this in itself does not prevent
scandals like Volkswagen-gate. If Europe is serious about regulating the car
industry and protecting public health and the climate, it needs to stand up to
the car lobby rather than allowing those resisting regulation to write it.

The political
response to the Volkswagen scandal will be a crucial test case in the wider
battle against corporate capture and for public institutions that deserve the
trust of citizens.

If you enjoyed this article then please consider liking Can Europe Make it? on Facebook and following us on Twitter @oD_Europe