The incoming European Commission President, Jean-Claude Juncker, announced the allocation of Commission portfolios yesterday, and there was great surprise that Lord Hill was given a mandate for ‘financial stability, financial services and capital markets union’. David Cameron has welcomed the decision as a “great piece of news”, and the UK media is widely reporting that the outcome is a triumph, particularly in view of Cameron’s vocal opposition to Juncker’s own appointment. Speaking to BBC News, Juncker claimed that had “always intended to give a major portfolio to the British Commissioner to show he was not angry about the decision making process” and that he wanted to see Britain as an “active and constructive member” and did not want to see the British leaving “as we would lose all the virtues it is representing”. Gavin Hewitt summed up for BBC as saying that the decision was a peace offering to Britain.
The superficial conclusion to be drawn, therefore, is that we should all be hanging our Union Jack flags out the window (possibly for the last time, depending on the result of the September 18th referendum) and rejoicing that, despite all the odds, David Cameron stood up for his principles and has scored a stunning victory which shows that Britain remains a force to be reckoned with in Europe.
So is it all it is cracked up to be? Let’s look again at the full title which Lord Hill has so generously been given: financial stability, financial services and capital markets union. The most important word is the last one: union. There should be no mistaking that Jean-Claude Juncker is a true federalist, and no coincidence that he previously held the position of President of the Eurogroup from 2005-2013, through the height of the economic and financial crisis. If David Cameron thinks that Lord Hill is going to be able to roll back the raft of EU banking rules and supervisory measures introduced since the crisis, then he has another thing coming. If one was to be extremely cynical, it could even be said that a decision to place Lord Hill in such a position is the most effective way to neutralise UK opposition to further financial services integration for the years to come.
What about the details of the ‘major portfolio’ given to Lord Hill? Financial services used to be part of a much wider portfolio called ‘Internal Market and Services’ and Lord Hill is only getting half of it, while the other elements have been farmed out to other Commissioners. It is interesting to note that the French Commissioner Pierre Moscovici has been given Economic and Financial Affairs, Customs and Taxation, which will cover economic governance, so Lord Hill really has a rather narrow task indeed, even if it still remains important for Britain in view of the City of London.
We should also pay close heed to the new structure which Lord Hill is coming into. Juncker has appointed seven Vice-Presidents, and Lord Hill is not amongst them. Lord Hill will report up to another Commissioner, Jyrki Katainen from Finland, who will be responsible for Jobs, Growth, Investment and Competitiveness, while a new position of First Vice-President has gone to the Dutch and then there is Juncker himself. It is far from clear that Lord Hill will be in a position to push through his own agenda with so many institutional trapdoors on the road to success.
At the end of the day, it is more or less believable that Juncker does not wish to see Britain leave the EU, because as an arch federalist he does not want to see any country leave the EU, as it would shake the union to its core and the wheels would fall off the project. But does he really intend to let Britain, through Lord Hill, play a leading role in setting the direction and agenda of the EU for the years to come? Time will tell.