European Union

With 35 days to go, Labour and the Tories remain neck-and-neck in the polls, to the internal frustration of some Labour politicians, who recognize that the party should be faring much better by now, given the persistence of its anti-austerity rhetoric.

As such, it continues to be clear that neither main party will secure enough votes to form a majority government-paving the way for small parties to hold the balance of power on May 8th.  It’s all going to come down to a numbers game, and a confidence and supply arrangement between Labour and the Scottish Nationalist Party (SNP) remains a very real option.

The possibility of any such formal arrangement caused significant controversy few weeks back, amidst revelations that some Labour strategists are in favour of a permanent alliance with the SNP after the election. The prospect of a Labour-SNP coalition was widely perceived as a threat to the unity of the country, and the news was met with calls for Labour to confirm that no electoral pact with the SNP would be made in the event of a hung Parliament, putting the Leader of the Opposition under pressure to declare there would be “no SNP ministers in any government I lead.”

The SNP currently has only six MPs at Westminster, but is predicted to significantly increase its number at the general election, possibly winning up to 50 of the 59 Scottish parliamentary constituencies. Feeling emboldened by the opinion polls, Alex Salmond, the party’s former leader, declared in a New Statesman interview last week that the SNP would block a minority Conservative government by voting down its Queen’s Speech. This would effectively result in a vote of no confidence against a minority conservative government, and provide Labour with the chance to form a stable government.

His comments may be bold, but Alex Salmond has good reason to feel smug. This week’s Guardian/ICM poll confirmed SNP’s lead at 43% of the of the predicted vote-a whole 16% ahead the Scottish Labour party. Considering how unlikely it is that Labour and the Liberal Democrats alone will be able to scrape together the 326 MPs needed to form an overall majority, these numbers indicate just how likely it is that the SNP will remain central to any post-election negotiations. It’s worth remembering that the SNP brought down a government in 1979- there’s every chance it could do so again.

Salmond’s comments were of course met with fierce criticism from the Conservatives who accused the ex-SNP leader of “trying to sabotage the democratic will of the British people”.  It is highly likely that the ex-Scottish First Minister will play a big role post-election despite no longer being the leader of the SNP, and such rhetoric is being used to portray Miliband as a weak leader who is dancing to Alex Salmond’s tune.

There is much uncertainty around this election, and the aftermath is set to throw up even more uncertainty, especially for business.  Any confidence and supply arrangement between Labour and the SNP would result in large cash transfers to Scotland, and potentially another referendum on independence. This would lead to a climate of uncertainty for business, and result in a potentially dramatic drop in foreign investment. The other potential scenario, which would see an SNP surge north of the border, could cost Labour enough seats to put the Conservatives into power, bringing with it the dread of an EU referendum in 2017. This situation could prove equally disastrous in the economic sense, and result in just as much business uncertainty and fear of investment.

It’s going to be a tight race, and it remains to be seen whether the SNP will succeed in persuading enough Scottish voters that they are the magic solution that will both keep the Conservatives out of Westminster and protect Scottish interests; or whether Labour’s message that a vote for the SNP means a vote for Cameron, will finally resonate. Either way, the possible economic impact of each outcome appears worryingly bleak.

James Dowling

Cecilia Malmstrom, the EU trade commissioner, during a press conference last week

Meet the Miculas: two twin brothers, Ioan and Viorel, whose battle with EU law will be of interest to anyone following Europe’s fitful trade negotiations.

The duo’s battle to save their beer-to-biscuits food empire in northern Romania may not seem an obvious proxy for an increasingly bitter fight over the EU’s trade deals with the US and Canada. But it cuts to the heart of one of the most politically contentious issues surrounding both trade accords: the status of international investment tribunals.

The brothers, who also hold Swedish citizenship, have had a terrible start to the week.

On Monday, the EU said they would have to repay all the subsidies they received to build up their business in the poor northern Romanian county of Bihor, on the Hungarian border. Their factories, which produce brands such as Servus beer and Rony biscuits, depended on what Brussels ruled was illegal state aid. According to their lawyers, the pair had decided to invest in a region as impoverished as Bihor on the understanding that Romania would subsidise them. On that pledge hang some 9,000 jobs.

Their business model, which predated Romania’s accession to the EU, came unstuck when Bucharest decided to join the European club. Competition authorities no longer allowed this kind of state largesse. In 2005, Bucharest cut the funds to the brothers in Bihor. (Romania finally joined in 2007).

This is where things get interesting legally, and the trade aficionados will start to realise something is afoot.

As Swedish citizens, the Miculas took their case to an international tribunal and won. At the end of 2013, the International Centre for Settlement of Investment Disputes awarded a settlement of $250m from the Romanian government because of its suspension of the subsidies. It was one of the largest sums ever awarded by an international investment tribunal. To Brussels, the award of damages meant state aid was now effectively being paid “through the back door”.

Prime Minister Alexis Tsipras at a cabinet meeting Sunday night in the Greek parliament

There has been lots of analysis on a new list of economic reforms that the Greek government sent to its bailout monitors over the weekend, including this incredibly comprehensive report from the Athens-based analytical website Macropolis.

But before everyone goes concluding that this is the final list that eurozone creditors will rule on, remember: nothing has been submitted yet to the eurogroup – the committee of 19 eurozone finance ministers that will ultimately rule on whether the reforms are sufficient to unlock the remaining €7.2bn in bailout funds Athens desperately needs.

And tonight’s “deadline” for bailout monitors to approve a submission, and then forward it onto the eurogroup, is nothing more than a self-imposed one; in reality, there is no deadline other than the date when Athens eventually runs out of cash.

People on both sides of the negotiations say that despite three days of talks, the list is not comprehensive as yet. “There was no such thing as an original list,” insists an official from one of the bailout monitoring institutions. “There were contributions, tables, pieces of paper.”

Indeed, on the Greek side, some involved in the discussions say a fuller, longer, and more detailed document is in the works. They argue the issue is not, as many among the bailout monitors claim, a lack of detail. The issue is getting all the details – some 72 reforms, according to one person in the Athens camp – into a well-organised document, in English, without mistakes in substance or politics.

As part of its wide-ranging digital single market strategy, the European Commission is considering introducing regulations which would bring about major changes for on-demand video providers like Netflix or Amazon Instant Video.

The Commission Vice-President for the Digital Single Market Andrus Ansip has firmly set his sights on the practice of geo-blocking, claiming it’s unfair that citizens across Europe can’t access the same digital services on equal terms. With the European Commission committed to ambitious legal steps in its digital single market strategy, geo-blocking is close to public enemy number one in the eyes of the EU’s executive branch.

Far too often, consumers find themselves redirected to a national website, or blocked. I know this from my own experience. You probably do as well….In the offline world, this would be called discrimination. In the online world, it happens every day.

Andrus Ansip, European Commission Vice-President for the Digital Single Market

The Commission seems to think that distributors, like these on-demand services, are deliberately signing contracts to distribute content selectively across the EU, then using this as a defence for geo-blocking, by claiming they only have the rights to distribute certain content in certain territories or languages (for example, when Netflix launched in Belgium, you could only watch the massively popular House of Cards if you set your language to English, as they’d sold the French-language rights to another channel).

The Commission, considering this an unacceptable situation for consumers, is actively considering banning arrangements like these, which could leave online services with the simple choice of licensing content for all of Europe, or none of it.

Operators like Hulu and Crave TV, or even Singtel have the advantage of watching the situation play out from the outside, even if they won’t be able to ignore the EU market and its 500 million consumers forever.

And when they do enter, they along with those already present, will likely have to deal with a new European-level law governing the sale of digital content, as the Commission looks to update existing rules on e-commerce and introduce new ones. This could even include forcing content providers to strip back their contract terms, presenting consumers with only the most important ones in an easy-to-read format, instead of the 100+ page agreements we are used to seeing.

As the definitive form of the digital single market plan evolves, all eyes will be on the European Commission ahead of the planned release of the strategy on May 6th.

Tiernan Kenny