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10 Sep 2020

A Changing EU

On 8 September, the European Commission President, Ursula von der Leyen, nominated Irish MEP Mairead McGuinness to be the new Commissioner for financial services.

The opening came up after the resignation of Trade Commissioner Phil Hogan, following controversy over him breaching Covid-19 guidelines while on a visit to Ireland this summer.

Ms. McGuinness will take over financial services from senior Commissioner Valdis Dombrovskis, freeing him up to adopt responsibility for trade, alongside with the rest of his economic role. If approved by the European Parliament, which appears largely a formality given her decade and a half as an MEP, she is due to be in post until 2024.

But what does the nomination tell us about the dynamics between the EU institutions?

The rules on replacing commissioners

First, the rules. The legal requirements for appointing replacement commissioners are set out in various treaty provisions (see annex in link). Candidates have to be generally competent (not necessarily in their specific area of responsibility), independent of the government that nominates them and come from the same member state whose commissioner has left.

The candidate or candidates are proposed by the member state and the Commission President proposes one to the Council, which must agree by ‘common accord’, i.e. with the support of all member states.

The European Parliament must also be consulted and asked for its opinion. This is via the relevant committee that deals with the policy area of the nominee (for Ms McGuinness, this will be the Economic and Monetary Affairs Committee).

Strictly speaking, the European Parliament does not have the legal right to reject individual commissioners, but this has become a de facto power.

The Parliament can reject the entire College of Commissioners when first elected or demand that it resign at any point with a two-thirds majority vote. As a result, to avoid a public political tug of war, troublesome candidates tend to be shuffled off and replaced, as happened with three of the original candidates for the current Commission.

A more forthright Commission

Although von der Leyen did play an active role in shaping who member states put forward for Commission positions in 2019, this appointment appears much more explicitly a selection of the Commission President herself over and above the preference of the Irish government. Dublin, correctly it seems, read a lot into the fact that von der Leyen requested ‘a woman and a man’, rather than ‘a man and a woman’.

As Irish Times journalist Pat Leahy wrote, Brussels ‘picked the Irish commissioner, which is a complete reversal of established precedent’.

The choice of Ms McGuinness has shown a couple of things very clearly. President von der Leyen is serious about gender balance in her Commission and jumped at the chance to improve it (assuming McGuinness is approved, there will be 13 women and 14 men). It also showed that, if individuals have particularly strong links at EU level, candidates can run entrepreneurial campaigns for themselves.

This appointment may be unique, and had Simon Coveney – Ireland’s well-respected Foreign Affairs and Defence Minister – gone for the job it may have been a different story. But the fact that he didn’t is revealing in itself.

The Commission President wasn’t willing to go out on a limb, promise him a plum position and possibly have to substantially restructure the Commission, especially when she had another candidate in mind herself.

The rising importance of the European Parliament

As the chart below shows, the movement of Ms McGuinness from one EU institution to the other reflects an increasing trend of parliamentarians becoming commissioners.

In the Prodi Commission (1999-2004), just two of the 30 commissioners (7%) were former MEPs. In the von der Leyen Commission, it is now nine of 27 (33%). Partly, this reflects the EU’s expansion and that MEPs in newer member states often represent a disproportionate share of a country’s EU expertise.

The Parliament has also been a particularly effective mechanism for getting more women into the Commission. Of the 28 Commissioners in the last five Commissions who were previously MEPs, 13 (46%) were women. Yet during that time women represented on average just 35% of MEPs.

Women have thus disproportionately made the jump between these institutions. This perhaps reflects that the European Parliament is easier for women to access than many national parliaments and governments. In 2018, for instance, women made up around or below just 30% of representatives in 17 of 27 national parliaments.

Politics trumps expertise

Despite being vastly experienced at EU level, Ms McGuinness has no obvious qualification in financial services. Her background in the European Parliament, of which she has been a member since 2004, has mainly been in agriculture and rural affairs. Moving her to the agriculture role – which her Irish predecessor held in the previous Commission – would have precipitated a complicated reorganisation.

With the financial services job earmarked for Ireland, Andrew McDowell – the other candidate nominated by the Irish government – would have been better qualified as a former vice-president of the European Investment Bank (EIB). Ultimately, politics trumped expertise.

The appointment caps a remarkable series of finance-related positions accrued by Irish nationals in the EU institutions. The President of the Eurogroup, the Director-General of the Commission’s finance department, the Chief Economist of the European Central Bank (ECB), one of the six members of the ECB executive board and now the European Commissioner for finance are all Irish nationals.

Not everyone has welcomed this trend. Many from southern member states in particular routinely accuse Ireland of being a tax haven that undermines other EU countries, and see Irish occupation of these roles as a barrier to EU tax reform.

As the leader of the centre-left group in the European Parliament, Iratxe García, tweeted on McGuiness’s appointment, ‘Ireland is not a fair tax player, and holding both FISMA [the Commission financial services department] and Eurogroup is not what the EU needs’. Feelings are clearly still raw over the defeat of the Spanish candidate for Eurogroup President, Nadia Calviño.

Finally, the appointment of Ms McGuinness also matters to the UK. It will be McGuinness and her department that makes the equivalence decision(s) regarding the UK’s financial services regime and future access to EU financial services markets for UK-based firms. Regardless of what happens in the future relationship negotiations, financial services will be a key area of interaction in future.

By Matt Bevington, public policy and foreign affairs analyst at The UK in a Changing Europe.

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