View from Brussels - General

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ECJ rejects controversial data retention law

13 April 2014 by Pelle Neroth

Tony Blair was unpopular in large parts of Brussels, for his role in getting Britain involved in the controversial Iraq war and splitting European foreign policy right down the middle.

Now one of the most controversial pieces of European legislation pushed through Brussels under Blair's government has been given the thumbs down by the European Court of Justice.

According to the EU's top court, the mass storage of telecommunications data is illegal and breaches privacy rights, in a ruling announced on 8 April.

The directive, passed in 2006, obliges telecommunications providers to store all connection data about individuals for at least six months. No prior suspicion is necessary. The name and address of the subscriber, his phone number and date of the phone call are recorded. However, the content of the conversation is not recorded.

For mobile calls, the location where the call was made is added to the information stored. Many billions of pieces of information about people's lives were stored across Europe. Now it has been declared illegal and governments have to go back to the drawing board.

The Luxembourg based ECJ said the measures went beyond those necessary to fight terrorism and serious crime. Germany, with a different political culture, never implemented the directive, which was accused of being a case of policy laundering by the British government.

In 2001, Britain passed the Anti Terrorism Crime and Security Act which gave extensive powers to oversee data retention. The legal provision for Internet Service providers store information without compensation was thought to be a step too far, so the UK parliament put a small spanner in the works for the Labour government: it made the code voluntary for Internet Service Providers.

Tony Blair's New Labour, to get its way, decided on what Liberal Democrat MEP and European parliament home affairs spokesperson Sarah Ludford calls "Brussels policy laundering". That is, get something controversial that can't get passed domestically instead pushed through the Brussels policy machine, beyond the range of attention of the domestic media and policy makers. Then, as the date for domestic implementation arrives, shrug and "blame it in Brussels".

A deal struck between the right and left wing blocs in the European parliament meant the body agreed to what British home secretary Charles Clarke had already pushed the Council of Ministers into agreeing. Horror and sympathy for the London bombings in 2005 did play a part.

The Germans were always cool on the legislation, though, in part because of the legacy of the Gestapo and Stasi meant public opinion was very sensitive about privacy issues. There are more checks and balances in the Germany system and, although the Bundestag approved the implementation of the EU directive, the German constitutional court rejected it. It was not against mass storage of data in principle, but wanted it to remain limited to cases of serious crime and had concerns about the security of the data stored. The German government couldn't agree on a revision and the EU commission actually launched an infringement directive to force the Germans to implement the directive.

The directive actually helped boost a German version of euroscepticism, as it was seen as meddling with German freedoms.

The ECJ usually deals with a problem after an issue has been referred to it by national courts. In this case it was the regional court in the Austrian province of Carinthia. Last December the ECJ's advocate general came to the conclusion that the directive breached the EU's relatively new Charter of Fundamental Rights. So it wasn't surprising the full court came to this conclusion too. It usually does. The mass storage of telephone data of citizens was in contravention of the right to a private life as enshrined in the Charter, it was ruled.

Privacy International, a lobby group with offices in London, put out a statement that the court states that it is not and never was proportionate to "spy on the entire population of Europe". The information stored was "incredibly revealing about Europeans' lives". it said it was right and overdue that the legislation was given the thumbs down.

The legislation caused tensions with the British coalition government. The Conservatives, like their Labour predecessors, being less concerned about the privacy costs compared to what they believed was a security benefit than the Liberals.

In response to the ruling, Liberal MEP Sarah Ludford writes that she is "delighted that the authoritarian government under Tony Blair's leadership has finally got its comeuppance from judges in Luxembourg".

According to the BBC, the official British government position is rather more ambivalent. Governments don't have an option to ignore ECJ rulings but a British government spokesman said: "We cannot be in a position we companies are unable to retain this data" and said that legislation played a crucial role in maintaining national security. The BBC said it was ironic to see a British government angry, rather than pleased, about the repeal of a piece of Brussels legislation.

In theory it ought to give eurosceptics pause for thought. That Brussels strikes down intrusive legislation that the British government wishes to preserve somehow doesn't fit into their rather smug picture of an ever encroaching Brussels apparat.

Europe's governments now have to contemplate new legislation on data preservation in such a way that it helps the fight against serious crime and terrorism while satisfying the ECJ's judgments about the right to privacy. A narrower law, with a much smaller number of records stored, and on a targeted rather than a wholesale basis, is more likely. The European commission will have a look at it in the autumn.

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Pelle Neroth -- EU correspondent

Edited: 13 April 2014 at 03:52 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 13 April 2014 10:58 AM     General     Comments (0)  

Ukip are winners in social media game

5 April 2014 by Pelle Neroth

The European parliament gathered together a large number of internet gurus and experts the other day to tell them how to reach the European electorate via social media. The four yearly elections are held over four days, May 22-25, depending on the country,

MEPs were curious to be taught. But the messages from the experts were not simple. What is an indisputable fact is that today's young voters present a challenge to political establishments as never before. Statistics show that young Europeans spend five or six hours a day online, which is twice the time their parents' generation spent watching TV. Political parties are seeing big drops in memberships.

To avoid further declines in interest, some experts say politicians have to be aggressive about going after voters where they most often are, that is, online. However, politicians tend to feel overwhelmed by the new power shift from hierarchies to networks that means they no longer control the message the way they used to, when leaders sent their voters messages twice a day, via the newspaper and the evening TV news. Now, with much more interactivity, and most media sites offering reader comments, the politicians' message was in danger of getting made fun of or distorted.

Some politicians were winners in this new media landscape, typically populists. The Tea Party wing of the Republicans in the United States had managed to virtually take over the venerable party because of its ability to organise online. Whereas ten years ago, it would have remained a minority sect. Europe's populists, like the French rightwinger Marine Le Pen, Italian comedian Beppe Grillo's Five Star party, polling at 25 percent in Italy, or Nigel Farage's Ukip, had an advantage in that their simple messages were punchy enough to break through the internet hubbub.

Their underdog status gives them an authenticity that travels well on the "narcissitic" internet. These are predicted to be winners in the European elections.

Andrew Keen, an internet entrepreneur, told an interviewer that social media users have a sweet spot. A politicians who breaks into the personalised version of the universe that the social media user has constructed for himself is on to a winner. It is not easy, but perhaps the way forward is for politicians to build up networks. While people increasingly don't trust politicians, or mainstream journalists, for that matter, too often both seen as part of the same establishment, they do trust the opinions of their peers, friends, family and colleagues who are part of the same network. A more sceptical view liking an internet page that your friend recommended could be just gesture politics, nothing to with real engagement.

The European parliament had one million followers on Facebook, but how many of those were really likely to go out and vote?
One common sentiment was that the internet has bred a generation of narcissists, living in private bubbles. The mass politics of the second half of the last century. where unions and party youth associations brought people together as activists, was a matter of distant history.

Some mainstream politicians are good at working the new media. The conference mentioned two Scandinavians. Carl Bildt, foreign minister of Sweden, who has been a prolific blogger for over a decade, was one. Alexander Stubb, the FInnish foreign minister, was another. Arguably their being early adopters of social media strategies fits in well with their countries' brand aspirations to be seen at the forefront of global technological progress.

Getting interest in European parliament as an institution, and the rather technical legislation it passes, was seen as being very difficult to translate to social media.

A lot of interesting material was handled at the conference. But in my opinion, the speakers were a bit hard on the populists. The truth is that establishments can no longer reply on consensus formation as much as they used to when they had sole control of content dissemination. For better or worse, they could create truths, narratives, which people had no choice but to accept.

In my opinion, it has had a deleterious consequences for the climate change debate, where the internet has favoured the message peddled by the deniers. In other respects it has been more positive. For instance, foreign policy, where it used to be that the establishment could claim in concerted media campaigns that this or that renegade country posed a threat to the west. Famously you had the Iraq war of 2003, fought on false premises.

The internet has brought more sources of information to the table and a lot of thinking voters are realising the truth is more complex than the leaders and the mainstream media make out. Hence public hostility to action in Syria, and extreme scepticism over whether Putin really is as bad as he is made out to be in the paid for newspapers. In many regards, bloggers, commenters and twitterers keep journalists on their toes, quick to force them into being more consistently accurate.

Summary: some politicians are winners in the social media game, and we could see a much more populist European parliament than ever before. A lot of populists hate the European parliament and the whole elite,corporativist politics it stands for. So the next term could be quite interesting.

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Pelle Neroth -- EU correspondent

Edited: 05 April 2014 at 05:51 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 05 April 2014 05:42 PM     General     Comments (0)  

Russia stops selling cheap gas to Ukraine. Will EU taxpayers ultimately pick up the tab?

28 March 2014 by Pelle Neroth

The EU, unprecedentedly unpopular in current member states, has found itself a new task in life: Ukraine.

This week, a pile of European commissioners and their entourages travelled to Kiev in the wake of the part completion of a political and economic association agreement between the EU and the former Soviet republic. But the enormous rise in gas prices as Russia cuts its subsidies and the big austerity programme imposed by the IMF could lead to economic hardships for the Ukraine, experts fear.

The energy subsidies, which have involved Russia selling Ukraine gas at well below market prices since the end of the Soviet Union, are to cease on 1 April following the breakdown in relations between the two neighbours following recent events in Kiev and the Crimea, when pro EU protesters toppled the pro Russian, if fairly and popularly elected, government and Russia responded by invading the peninsula on which one of its principal naval bases is located.

Ukraine already owes the Russian gas company Gazprom 1 billion dollars. The energy subsidies on their own represent 8% of Ukraine's Gross Domestic Product. With Russia terminating Ukraine's privileged relationship, Ukraine's interim prime minister, Arseniy Yatseniuk, told the Ukrainian parliament this week that the country was on the brink of bankruptcy, and that the economy could decline by a tenth this year unless urgent steps were taken

The IMF, the international monetary fund, has promised to tie Ukraine over with huge loans totalling up to 20 billion dollars, but these come with harsh strings attached, which will make it harder for the money to reach poorer families in need, which will be hit by the higher gas prices as well. Not a smart move if you wish to preserve social stability and dampen extremism in the run up to May's elections.

Prof Michael Orenstein, a US academic associated witrh Harvard, says that the reforms imposed by the international community, with Europe at the head, could make things worse before they get better, even if the grace period is granted where the austerity is imposed after the election.

What is going on with the EU and the Ukraine is happening under the radar of European public opinion, distracted by the high profile occupation of the Crimea by Russia. It's the Pottery Barn rule: break it, and you own it. Do European voters really want to take responsibility for a huge and extremely poor East European state, with all its geopolitical baggage? One of this week's big political stories in the UK was a political debate between British liberal leader Nick Clegg, pro European and the leader of the anti EU Ukip party, Nigel Farage.

Farage made much of the Ukraine and Europe's responsibility for the conflict. And it does raise questions: even if some kind of closer association goes ahead, won't Ukraine's antiquated industries go to the wall if the doors are opened to European imports? Will Ukrainian agriculture, dependent on pesticides banned in the EU, be able to export to the EU?

And, if it all fails, is the European voter prepared to pay for the whole thing? If not, isn't there some truth to Farage's claim that an "imperialist, expansionist" EU "fed a group of Ukrainians with false hopes so they that actually toppled their own elected leader".

He added that "I do not want a European foreign policy". A Yougov poll of British viewers held immediately after the debate gave Farage a victory with 57% of the vote, while 36% of respondents supported Clegg. If a similar result is achieved in the European election in May, Ukip will be the largest British party in the European parliament and this would push the UK a little bit closer to the EU exit. It would be ironic if, having attracted Ukraine, the Eurocrats find themselves losing Britain.

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Pelle Neroth -- EU correspondent

Edited: 28 March 2014 at 10:34 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 28 March 2014 09:33 AM     General     Comments (1)  

Net neutrality under attack

14 March 2014 by Pelle Neroth

Is net neutrality on its way out in Europe? On 24 February, a crucial vote on a net neutrality proposal was postponed in the European parliament's industry committee, ostensibly because of technical reasons: the amendment proposals had not been translated into all the EU's languages.

For activists against the current proposals, and in favour of net neutrality, it gives a few weeks' breathing space to mobilise opinion against the proposals as they currently stand. Net neutrality is the idea that internet should blindly deliver packets of data from one place to the next. Internet providers are banned from throttling, or cutting, at their whim, the flow of data from any particular service, such as Netflix or Facebook, all in order to ensure a level playing field for the competition. One exception to the ban on throttling particular services is the broad rule that allows internet operators to manage pressure on their networks. Streaming television for instance is a huge bandwidth hogger, and operators are allowed to manage this to ensure their network works well. But the throttling has to be applied evenly and fairly, without favour.
What is getting activists up in arms is the European parliament centre right's proposal in the net neutrality legislation.

They are critical of the "weaselly wording" that could allow companies to offer "specialised services" that could lead to a two tier internet. They are okay with it as long as the services - for example, interruption-free high speed television for large financial institutions - are run entirely separately from the open, public, internet, and doesn't create a two tier internet between those who can afford to pay and those who can't. But the current proposals do not give a clear definition on whether the specialised services can be part of the internet or not: whether those on a cheaper subscription rate will be consigned to a relatively degraded service.

The MEP in charge of the hugely important role of piloting the legislation through the parliament, Pilar del Castillo Vera, has come under criticism for writing her proposal with unacceptable ambiguities. This could allow enough loopholes for larger companies such as Telefonica, Orange and Deutsche Telekom to exploit their incumbent position to promote their services, say, of high quality IPTV, at the expense of start ups and smaller companies selling internet services.

The centre left parties, such as the European Socialists, and the Liberals, are in favour of net neutrality - in theory. But the clever thing about the net neutrality proposals, say activists, is that they are bundled with the rest of the telecoms bill, which includes such crowd pleasing laws such as the end to mobile roaming fees. If they hurry through the committee vote, the telecoms bill could yet pass through the last plenary session of the full parliament in April. Before the European elections. Jens Rohde, the liberal leader on the committee, who has a swing vote, is said to be reluctant to fight too hard against the current ambiguous proposals if it means MEPs can't return home to their voters and say they had cut the public's international roaming charges before the elections in May.

Besides, since the telecoms companies are losing out on the roaming income, they ought to be given a let up on the net neutrality laws, right? The activists have set up a website, savetheinternet.eu, with a list of email addresses for MEPs on the committee. They urge those who care about the issue to call, and write, to Brussels. It has been the principles of net neutrality that have allowed today's internet giants like facebook to scale up so easily from the minnows, "two guys in a bedroom", they once were. It would be a shame if net neutrality were allowed to degrade.

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Pelle Neroth -- EU correspondent

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    Posted By: Pelle Neroth @ 14 March 2014 10:20 AM     General     Comments (0)  

Net neutrality under attack
Is net neutrality on its way out in Europe? On 24 February, a crucial vote on a net neutrality proposal was postponed in the European parliament's industry committee, ostensibly because of technical reasons: the amendment proposals had not been translated into all the EU's languages.

For activists against the current proposals, and in favour of net neutrality, it gives a few weeks' breathing space to mobilise opinion against the proposals as they currently stand. Net neutrality is the idea that internet should blindly deliver packets of data from one place to the next. Internet providers are banned from throttling, or cutting, at their whim, the flow of data from any particular service, such as Netflix or Facebook, all in order to ensure a level playing field for the competition. One exception to the ban on throttling particular services is the broad rule that allows internet operators to manage pressure on their networks. Streaming television for instance is a huge bandwidth hogger, and operators are allowed to manage this to ensure their network works well. But the throttling has to be applied evenly and fairly, without favour.
What is getting activists up in arms is the European parliament centre right's proposal in the net neutrality legislation.

They are critical of the "weaselly wording" that could allow companies to offer "specialised services" that could lead to a two tier internet. They are okay with it as long as the services - for example, interruption-free high speed television for large financial institutions - are run entirely separately from the open, public, internet, and doesn't create a two tier internet between those who can afford to pay and those who can't. But the current proposals do not give a clear definition on whether the specialised services can be part of the internet or not: whether those on a cheaper subscription rate will be consigned to a relatively degraded service.

The MEP in charge of the hugely important role of piloting the legislation through the parliament, Pilar del Castillo Vera, has come under criticism for writing her proposal with unacceptable ambiguities. This could allow enough loopholes for larger companies such as Telefonica, Orange and Deutsche Telekom to exploit their incumbent position to promote their services, say, of high quality IPTV, at the expense of start ups and smaller companies selling internet services.

The centre left parties, such as the European Socialists, and the Liberals, are in favour of net neutrality - in theory. But the clever thing about the net neutrality proposals, say activists, is that they are bundled with the rest of the telecoms bill, which includes such crowd pleasing laws such as the end to mobile roaming fees. If they hurry through the committee vote, the telecoms bill could yet pass through the last plenary session of the full parliament in April. Before the European elections. Jens Rohde, the liberal leader on the committee, who has a swing vote, is said to be reluctant to fight too hard against the current ambiguous proposals if it means MEPs can't return home to their voters and say they had cut the public's international roaming charges before the elections in May.

Besides, since the telecoms companies are losing out on the roaming income, they ought to be given a let up on the net neutrality laws, right? The activists have set up a website, savetheinternet.eu, with a list of email addresses for MEPs on the committee. They urge those who care about the issue to call, and write, to Brussels. It has been the principles of net neutrality that have allowed today's internet giants like facebook to scale up so easily from the minnows, "two guys in a bedroom", they once were. It would be a shame if net neutrality were allowed to degrade.

-------------------------
Pelle Neroth -- EU correspondent

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    Posted By: Pelle Neroth @ 14 March 2014 10:20 AM     General     Comments (0)  

Eurocrats in Ukraine

8 March 2014 by Pelle Neroth

Forty percent of the gas used in Germany comes from Russia. That figure rises much higher for some east European countries, whose dependence on Russian gas is almost total. So what would be the consequences if Russian president Vladimir Putin, in response to the Ukraine crisis, were to turn off the taps?

Well, in the short term, probably not much, say experts. A mild winter, and America's fracking revolution, has led to a glut in the global gas markets. Gas reservoirs are filled up with about four months' worth of supplies. If the pipelines through the Ukraine somehow become cut off by Ukrainians, perhaps in the event of civil unrest, there is the Nordstream pipeline across the Baltic, and the Yamal pipelines through Belarus and Poland, that could pick up the slack. If Russia cut off supplies, gas could be shipped in through LNG terminals, although Germany, for one, lacks such terminals. However, Russia, even in the darkest days of the Cold War, always honoured its gas contracts.

Which leads us the question of how the Ukraine got into this crisis, and whether the EU played a part in its making.

One hears all sorts of hostile comments about Russia these days. I don't agree with those who argue that Putin is the new Stalin. And it is a bit rich for the nation that invaded Iraq, killing hundreds of thousands and effectively destroying the country, to condemn an "invasion" of Crimea, which has killed no one so far. If Russia acted in the world the way the United States, or its allies, has done, in the last decade, the calls to do something would be deafening.

I think the EU made a serious mistake in sending the negotiators into Ukraine with a free trade deal that included a back door clause that would have made Ukraine part of the foreign and defence policy of the EU. Buried in the small print, not many may have paid attention to it. But it was certainly noticed by the Russians. It shows the problems of allowing unelected technocrats to effectively make policy an autopilot with huge political ramifications, without political oversight.

Russia sees EU defence policy as a kind of back door to NATO. NATO membership for Ukraine is a neuralgic issue for Russians which, whether Putin is in charge or not, has legitimate geopolitical interests.

Gorbachov, the last Soviet president, was promised by the West when he let the East European states go their own way that NATO would not be allowed to expand into Eastern Europe. The Clinton regime brazenly ignored this and allowed Poland, then Hungary and the Baltic States in.

Then there has always been this idea that NATO could expand further yet, to Ukraine and Georgia. Ukraine is strategically important to Russia. Even if one does not accept that a country that was invaded by Europe twice last century had security interests, one must not discount the reality that Russia is a country armed with nuclear weapons.

It was a bad calculation by the EU in that, while the commission's negotiators may have thought they were making a dry free trade agreement, the Ukrainians saw it differently. There is absolutely no support among the European public for letting in Ukraine as a member of the EU. Ukraine is even poorer than Romania and Bulgaria, the newest and most controversial entrants, and would be the most populous arrival since the UK itself joined in 1973.

Ukraine is poorer by far than neighbouring Russia and Belarus even, caused in large part by the efforts of its gargantuanly corrupt political class, and so would require huge subsidy transfers. We can assume that in the medium term, EU membership for Ukraine is just not on. Ukrainian young liberal idealists, though, the free trade agreement must have been seen as an opening towards just such a membership, and saw it snatched away before their very eyes by their president, attracted by the promise of immediate soft loans from Russia - more appealing than the short term austerity of the EU Free trade agreement - and that was what prompted the initial demonstrations. It is irresponsible to encourage a nation's young to go onto the streets with promises one was not going to to able fulfill.

An alliance of idealist liberals and far rightists has now topped their pro Russian leader and Ukraine is in limbo. Relations between Europe and Russia are at a post cold war low. The western media nearly to a man blame Putin's peaceful occupation of Russian speaking Crimea for the breakdown in relations. (The Russian media say Russia was just responding to fears about new nationalist noises coming out of Kiev against the Russian speaking East), but the EU on autopilot has been irresponsible with its promises.

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Pelle Neroth -- EU correspondent

Edited: 08 March 2014 at 10:55 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 08 March 2014 10:46 AM     General     Comments (0)  

Finland's technology industry restructuring made harder by being member of the Eurozone

27 February 2014 by Pelle Neroth

The countries that have been role models about how to cope with the increasing pace of technological development and growing globalisation have arguably been the Nordic states.

Finland and Sweden's economic policies have been characterised by high taxes, generous welfare systems and an active labour policy market aimed at helping workers adapt as quickly as possibly to technological change. High R&D expenditures and a clever focuses on targeted hi tech manufacturing sectors have also been ingredients in the mix.

This, combined with high levels of foreign trade, have allowed the countries to grow their productivity and production levels and export their way to higher levels of wealth in the last decade or two, while maintaining enviably egalitarian societies. What has been interesting is that Finland's and Sweden's successes went in parallel, despite the fact that Finland was in the euro, while Sweden was outside the euro. As long as the good times rolled, it did not really matter what currency choice the two Nordic countries had made. Other factors mattered more.

However, the picture has diverged between the countries since about 2008, the start of the great financial crisis. Finland has grown a great deal slower while Sweden has continued to prosper. Finland's GDP is still, today, four percent lower than in 2008, while Sweden's is six per cent higher.

The reason for this is that, while Finland's membership of the euro mattered less when the global and European economies were going well, the euro mattered more in times of crisis. Nokia, Finland's technological crown jewel, fell behind when its competitors, like Apple and Google, developed new operating systems for their mobiles. Nokia is now selling its handset division to Microsoft. At the same time, Finland's wood pulp industry is exporting less because of a drop in the demand for paper following the digitalisation of people's reading habits. Finland, extremely dependent on foreign exports of specialised goods, would have been able to manage the readjustments far better if it had had a separate currency that would have devalued in response to Finland's lost competitiveness. As it is, Finland has had to restore competitiveness by wage restraints, which is far harder.

It is a problem for small countries: how to focus research and innovation broadly enough so they don't put all their eggs in one basket, yet at the same time ensure their research efforts in a few areas at least put them in the forefront of technological innovation. It is a hard line to balance, and the Nordics have generally done it well, but Euro membership had made Finland's challenge harder.

Significantly, only a very small percentage of the Swedish population wishes to join the euro. Very few want to leave the EU altogether, on the other hand. Brits take note.

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Pelle Neroth -- EU correspondent

Edited: 27 February 2014 at 11:43 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 27 February 2014 11:36 AM     General     Comments (0)  

Will the European elections deal with how Europe is falling behind in the technology race?

23 February 2014 by Pelle Neroth

Fewer than a tenth of the world's top 100 tech companies are based in Europe. Only 17% of European university students major in mathematics, computer science or engineering, compared to about 30% in China, South Korea and Taiwan. Asian and US companies dwarf European ones when it comes to spending on R&D.

According to a study by the consulting company AT Kearney, R&D investment in Europe is a proportion of GDP, 2%, is less than half the figure of South Korea and 0.8 percentage points less than the United States. Britain, at 1.7%, falls below even this European average. Europe has only a fifth of the venture capital , $4bn, available to its startups compared to the $20bn that US businesses have access to.

When Finnish-based Nokia's sale of its handset division to Microsoft is finalised this spring, Europe will lose one of its flagship technology symbols and Europe will lack a single entrant among the world's top ten handset makers. Europe's countries are outperformed even in an area where one would think they would dominate, that is, European patent filings. The United States tops that list with 25% share of European patent filings in 2012. Japan is second with 20% and Germany third with 13%. Britain is not among the top six patent filers in Europe, beaten even by Canada.

The AT Kearney team concludes that "No matter how you slice the global ICT industry, Europe's representation is low, even as the continent accounts for one-quarter of the industry's global sales." Europe succeeds in some smaller niche sectors, but the tech firms lack the resources to scale up and become a top 100 tech firm: as they become more successful, they become more vulnerable to buyouts from more powerful non European firms. Europe lacks the large ICT firms that could act as consolidators for European companies in their market segment, the consultancy argues.

Although the EU has just launched the next iteration of its science and technology funding programme, Horizon 2020, which will invest about 70 billion euros into promising technology sectors, the consultancy argues that this is still far less than is needed. It called for a strategic master plan from the commission.

Well, some might debate the necessity of a European industrial policy as the consultancy's chiefly continental European consultants seem to be calling for. But where is the debate? There isn't one. The debate in Europe in the runup to the European elections to be held in May ought to start with one basic, agreed upon fact. Europe is falling behind Asia and America in the chief driver for future economic prosperity and growth, which is technology investment. Britain, the chief Eurosceptic country, is absolutely no over achiever in this area. It can't be boiled down to anti or pro European stances. Opinion formers ought to be debating if and then how Europeans, who are in the same boat, can collaborate when competing on a global scale. That is not airy fairy euro idealism, but clever self interest. However, debates about science and technology will probably be as marginal in these Euro elections as they always have been in national ones.

And the debate is likely to be dominated by those whose minds have been made up and say "We don't like Europe" rather than ask "How can Europe work for us". At the last general election, the arch eurosceptic Ukip's science policy was roundly criticised by a national newspaper, which looked at the party's climate change denial, hostility to stem cell research and various other things: "On science, Ukip is dire, with no credibility in the scientific community and candidates who have a demonstrably poor grasp of basic scientific principles".

Can't Ukip's patriotic voters, who are on course for making the party the second largest, if not the largest, of the UK parties in the European parliament, ask what is patriotic about having ill thought out science and technology policies?

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Pelle Neroth -- EU correspondent

Edited: 23 February 2014 at 11:59 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 23 February 2014 11:48 AM     General     Comments (1)  

UK life science industry seeks EU reform, not exit

14 February 2014 by Pelle Neroth

All Tories want to do something about the European Union: some want to reform it, others want to leave. The moderate Fresh Start group, which numbers around 100 Tory MPs, wants to change Europe for the better, while staying in the EU, and has just published a report suggesting improvements to EU policy in the life sciences and biotechnology field.

The life sciences are one of Britain's great areas of expertise: the industry has a turnover of 50 billion pounds and employs 167,000 people in 4,500 companies. Medical research makes up 45% of all business R&D in the UK. One in four of the world's top 100 medicines and 45% of Europe's product pipeline originate in the UK. The pressure on global resources in a world whose population is expected to hit 10 billion by 2050 means there is a need for innovations to help "feed, fuel and heal" the world with the cleverest possible use of technology - and the UK is well placed to provide it, as it seeks pay in its way in a world with an economic model that plays to the UK's strengths.

So is the EU a help or a hindrance for the industry? Having organised four hearings in parliament and taken evidence from 50 British stakeholders - pharmaceutical companies, charities, investors and researchers - the report finds the British life sciences industry has a lot of good to say about the EU. The "vast majority" of stakeholders made the point the EU was a major sponsor of science and research through its various funding programmes, where Britain routinely wins a disproportionately large slice of the grant funding. Many EU policies have worked well, opening up the European market for British companies by imposing a common regulatory framework on 28 member states, for instance, in the area of medical devices. The European Medicines Agency (EMA), based in London, incidentally, is often praised for allowing European pharmaceutical products to come to market faster, by up to three years compared to the US. Professor Derek Hill, CEO of IXICO Ltd, reported that when it came to imaging biomarkers aimed at improving the efficiency of Alzheimer's trials, the EMA process is much more rapid and much less formal than the American equivalent, the FDA.

The EU is able to strike beneficial Free Trade deals with other countries on favourable terms using its size as a negotiating factor - and this has been particularly beneficial for UK pharmaceutical companies. The EU-South Korea Free Trade Agreement abolished tariffs on imports of European medicines, and British exports leaped 20% in 2013 even before the new agreement took effect. The figure could rise yet further this year. Finally, the EU provides "critical mass" in the treatment and research of rare diseases, The EU tissue and cells regulatory system increases the potential donor pool for UK patients to undergo a particular type of stem cell transplantation.

Stakeholders had a lot of good things to say, at the same time, there was also a lot of griping about bad law-making, particularly but not limited to the European parliament, susceptible to the appeals of well organised "green" lobbyists and "fringe political groups" with "little or no support or public legitimacy" who "often pushed science regulations on ignorance rather than evidence". This sometimes pushed the EU institutions beyond their level of competence, and small UK life science companies lacked both the resources and the expertise to compete in the lobbying game.

The big area of EU regulatory failure here was GM crops, which have enormous potential. not just as pest resistant high productivity foods, but as "foods as medicines"; for instance, doctored crops that produce omega 3 fatty acid substitutes for fish oils that benefit human health. Although the commission itself concluded in 2010 that there is no evidence that associate GM crops with higher risks for the environment, an anti-scientific bias has still crept into EU decision-making on biotechnology issues.

As a result, there was just one GM field trial in 2012 in the UK compared to 28 in 1995. With biotech giant Monsanto saying it has dropped plans to introduce new GM crops in Europe, even as they are flourishing elsewhere, the UK's leading agricultural technology company, Syngenta, has also indicated that unless progress is made it will not able to avoid reviewing its commitment to the EU and UK market.

In its list of suggestions for reform, the Tory Fresh Start group calls on a clear statement of the EU policy on biotechnology and the bioeconomy. "The EU needs to make it clear that it aims to be a player in this fast growing and increasingly global field". There ought to be ways to amend flawed EU legislation and European Court of Justice rulings. As well as more joined-up policy making in the EU level, since one of the problems of the EU process is that policy proposals can have a significant, but not immediately obvious, impact in other areas. More transparent and accessible early consultation processes before proposals are put on the table. And better engagement from UK government and MPs in the Brussels policymaking process. Even though more powers for national parliaments was often mooted, UK MPs should liaise with their MEP counterparts at the European level on a regular, informal basis to ensure UK interests are taken into account.

Stakeholders said it was important to avoid the "'better off out' sentiments so often put forward by those not engaged in developing scientific solutions to the global challenges".

With the UK media so overwhelmingly Eurosceptic, it is useful to publicise tones of moderation like these from the Life Sciences industry.

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Pelle Neroth -- EU correspondent

Edited: 14 February 2014 at 04:49 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 14 February 2014 04:38 PM     General     Comments (0)  

Germany embraces Snowden, moves forward with surveillance inquiry

9 February 2014 by Pelle Neroth

The Germans had the Stasi and the Gestapo. Britain has James Bond. With those remarks, and some brittle laughter, some of the tensions were lowered at the recent episode of the Radio 4 programme Start the Week, where the gap between British and German attitudes on internet surveillance were discussed.

The programme featured a correspondent from ARD, the German television network, who remarked that, in Germany, Edward Snowden, the NSA whistleblower, was regarded as a "hero" while in Britain he was often regarded as a "traitor". On cue, an implicit criticism of Snowden was offered by a fellow panellist, a British popular philosopher, whom one had always thought of as a kind of anarchic, freedom loving guy, who said he was deeply uncomfortable with the kind of cyber libertarianism which saw no positive role for the state. And a former head of GCHQ, David Omand, laced his remarks with an air of menace throughout the programme.

He condemned the Guardian for presuming to know which secrets to leak without damaging the national security. The Guardian's correspondent, the final panellist, came across as a somewhat chastened schoolboy to this attack. The ARD correspondent did not say much. But she was brought back into the conversation with a joke that, well, the German stance was understandable because they had had experience of snooping dictatorships, two in fact. While Britain thought of its spies as heroic, think James Bond.

Until the Snowden revelations, the British and Germans were getting along so splendidly Merkel and Cameron had established a personal friendship and the two North European countries made common cause against South European profligacy during the euro crisis. I wonder though if the Snowden revelations won't tear the alliance apart, and isolating Britain in Europe. At the same time, though, it could be a coming of age moment for Germany, that the country have finally found an ideological issue that could resonate with the global public.

A BBC World Service poll from last May showed that modern Germany most popular country in the world. Britain does well too: significantly, much of its respect comes from developing countries and the English-speaking nations. Britain is not particularly popular in France and Germany. And I fear that the image of an offshore casino economy centre that can't make cars whose doors don't fall off may be replaced as a country of run-amok intelligence services who shore up the country's fading position through dirty tricks campaigns. Grossly unfair, but perceptions are as important in politics as realities. It saps the good will Britain is going to need from other member states it seeks to reform Europe.

Last week, stories emerged in the German media that one of the country's top lawyers, Wolfgang Kaleck, has agreed to represent Snowden in discussions about whether it will be possible to strike some kind of deal and return to his homeland. According to der Tagespiegel newspaper, the 53-year-old lawyer will also advise Snowden on the rights of asylum seekers in Germany. That is a very remote possibility at the moment, but the fact it has even been suggested suggests that the climate of opinion is believed to be more sympathetic in Germany than elsewhere. Elsewhere in Germany, the governing Social Democrat (SPD) and Christian Democrat (CDU) coalition has made further moves in setting up a parliamentary committee and inquiry to discuss the revelations of "public surveillance from allied countries".

While the SPD 's main candidate for the European elections in May, Martin Schulz, a former president of the European parliament. has written and argued for a the project for Social Democracy in the 21th century: just as the 19th century Social Democrats looked to claw workers' rights from rapacious employers, the new citizen's rights to privacy will have to be carved out from a world of ever increasing state surveillance. Once upon a time, the effects of industrialization have tamed and channelled into socially acceptable paths, Social Democracy ought to put itself in a position to meet the recent revolution, Whether you agree with him or not, it is interesting that there are leading politicians in Germany looking to formulate a politics to cope with the challenges posed by technology in the new century. You don't get that in Britain.

In Britain, meanwhile, with the bizarre exception of the Daily Mail (and a few smaller technology news websites) silence has greeted the astonishing revelations published by NBC news in America that GCHQ have employed "dirty tricks" including false flag operations (ie posing as someone else), and 'honey traps' to trap nations, hackers, terror groups, suspected criminals and arms dealers.

More here:

">NBC
.

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Pelle Neroth -- EU correspondent

Edited: 09 February 2014 at 08:19 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 09 February 2014 07:25 AM     General     Comments (0)  

New science programme may provide lifeline for cash squeezed European scientists

23 January 2014 by Pelle Neroth

The week's science news from EU-topia: the latest EU multiyear science programme, Horizon 2020, to last from 2014 until 2020, has just been launched, with streamlined rules for new applicants. On the debit side, competition may be tougher than ever before .

Of the 7.8bn euros to be spent in 2014, down slightly from 8.1bn euros in 2013, 1.8billion euros will support Europe's industrial leadership in areas such as robotics, manufacturing and ICT.

Three billion euros will go towards "excellent science" projects, including1.7 billion euros for the prestigious grants for "top scientists" awarded by the European Research Council, and 800 million euros for the Marie Curie fellowships for younger researchers. Marie Geoghegan Quinn, the commissioner for science, told a press conference that the money would provide a welcome boost for researchers who in many countries find science budgets squeezed.

In fact, both the ERC programme and the rest of Horizon 2020 programme are expected to receive more than the normal flood of applications since crisis-hit governments are holding back on their science spending, and 18 months, rather than the usual 12, have passed since the most recent call for proposals.

That may increase competition for grants, so the ERC part of the programme has announced rules designed to discourage those who are less likely to make the grade. Researchers who apply for ERC grants are being asked to ask themselves whether they have the "right level of excellence".

A new rule has been introduced against candidates whose proposals receive a low score this year: they will be barred from reapplying for a grant in the next two years. While those who receive a middling score will be barred from reapplying for one year. The mainstream programme , will not be subjected to those rules - but the commission warns that acceptance rates may be slightly lower than the 20% of previous years.

Apart from that, the new rules are designed to make paperwork easier for applicants. Ever since they began decades ago, the EU's science programmes, even Framework Programme 7 that ended in 2013, have been plagued by accusations of bureaucracy: researchers have been put off by the elaborate, time consuming application procedures where feedback for failed proposals was minimal. Another common criticism was that that the bureaucrats were too prescriptive in the way they wrote their calls for proposals, leading to accusations of "top down" science. And projects with many multinational teams seemed to be rewarded just for the sake of it.

Auditing requirements were complicated and onerous. The European Research Council grants, introduced in 2007, tried to deal with those criticisms: the commission was looking for "blue skies science" where the best ideas were awarded generous grants, and single country teams were not penalised. With the ERC popular despite the low acceptance rates, the industry-facing mainstream research programme has borrowed from that model, trying to be less prescriptive and more streamlined than ever before.

The commission says that the "strong challenge-based approach of Horizon 2020 will allow applicants to have considerable freedom to come up with innovative solutions". Of the 12 focus areas, one is digital security where applicants are expected to work for solutions that increase the security of current applications, services and infrastructures. Another spending area is "smart cities and communities", energy efficiency in town neighbourhoods, and smart mobility services.

Business plans that allow easy large scale replication will be especially favoured. In another novelty, the commission is promising a faster turnover of applications - a pledge of eight months rather than a year - and a simpler method for accounting for grants. The old ways provided plenty of income for consultants to advise clients how to stay out of trouble with the EU's auditors. So there was a sense of optimism in the presentation from the EU science directorate . The consultants, if simpler rules put them out of business, might be less happy about the EU's new science programme launch.

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Pelle Neroth -- EU correspondent

Edited: 23 January 2014 at 10:59 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 23 January 2014 10:00 PM     General     Comments (0)  

Should Europe's defence industry be reformed?

16 January 2014 by Pelle Neroth

Last year, overall EU defence spending fell by 10%. That is the background to the fact that Airbus, despite posting record civilian orders, has just carried out big cuts to its defence division.

These cuts have widened the defence spending gap with the United States. Last year, the US spent 682 billion dollars on defence, the EU countries only 153 billion dollars. Of these, only France, Britain and Greece reach the figure of 2% of GDP. For Spain the figure is just 0.8%. The figure is down a quarter compared to just a few years ago. Whole weapons programmes like Germany's Eurohawk unmanned aerial vehicle, and Britain's Nimrod programme, have been scrapped. The EU institute of strategic studies in Paris talks about the emergence of "Bonsai" armies in three to five years.

Worse, EU states are not just spending less, they are spending it badly. A new European parliament report has highlighted this. It says that if the EU operated in a more integrated manner and in conditions similar to the United States, it would get a lot more bang for its buck: those 153 billion dollars would go a lot further. Or, they could spend a lot less than the current defence budget of 153 billion and still achieve the same level of efficiency.

The cost, the report says, comes from lack of integration of the military structures of the EU member states. European armed forces often operate together on an international basis, but are still organised on a mainly national basis, with national defence staffs and national procurement policies. This leads to a needless multiplication in the cost of maintaining, forming and operating military forces in Europe, argues the report.

Also, there is a lack of a truly integrated market, with 28 different national defence markets, each with their own regulations and admin burdens. The cost of being "non European" in defence issues costs the EU between 26 billion euros at a low estimate and 30 billion euros at a high estimate. It mattered less when defence budgets were large, and the
USA's defence interests coincided more with Europe's, but neither of those situations any longer apply. The war in Syria show that security threats can erupt on Europe's doorstep. Not having armed forces is not an option - but it would be nice if it was cheaper. The combined cost of development of the three European combat aircraft, the Eurofighter, the Rafale and Gripen, was 10.2bn euros more than American Joint Strike Fighter. In Europe, there are 16 shipyards for making warships, in the USA, two. Europe prices itself out of the export market like this. The loser is the European taxpayer.

Governments know this, but are worried about two things: the loss of sovereignty that would result in creating the political structures that would oversee a common defence market, and the loss of jobs and income that would be the consequence of removing duplication of effort and merging defence firms to create European leaders.

Bernard Levy, the CEO of Thales, told a recent conference in London: "On the one hand, governments want competitive products. On the other hand, they want to buy from companies that create jobs in their own countries." Engineering jobs, one might add,

The regular summit of EU leaders in Brussels in December, Cameron opposed a European defence policy. Part of this was for sound reasons: a refusal to underwrite a French vision of a common and defence policy, which would start with - quelle coincidence - the Europeans funding French military missions in Africa. But there were also cheap points scored against the commission for wishing to oversee things.

The British arms industry has conducted a long campaign in Whitehall against an "over regulated market place" for arms procurement, where the "commission is involved in everything". And in that it seems to have been successful. But scoring against the commission does not alter a basic fact that Europe's defence industry is too expensive for purpose.

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Pelle Neroth -- EU correspondent

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    Posted By: Pelle Neroth @ 16 January 2014 11:34 AM     General     Comments (1)  

Pirates seek new ways to avoid internet blocking

10 January 2014 by Pelle Neroth

Pirate Bay, the world's most popular illegal download site, which originated in Sweden, has moved around plenty over the years as the authorities seek to close it down. Its latest domain names have included the obscure .sx, for the Dutch Caribbean island of Sint Maarten, and ac, for Ascension Island, in the Atlantic.

But now the organisation is trying to overcome attempts to take the site offline by creating a browser-like client that avoids the need for a public-facing URL.

A new browser-like app will allow the site's torrent file index to shared among users in a peer-to-peer manner. Since the index will be stored on individual users' computers rather than a central server, IP blocking and domain blocking will become a thing of the past, the organisation says. A standalone client and plugins for browsers Firefox and Chrome are expected soon.

In a separate development, one of the company's founders, the Swede Gottfrid Svartholm Warg - also known to the online world as Anakata - has been in a Danish jail over Christmas, living under solitary contact conditions and denied books or any other reading materials pending a trial hearing in February. The Danish police are continuing to gather evidence to provide cause for an indictment. Supporters set up an online petition addressed to Danish prime minister Helle Thorning Schmidt to alter the terms of his custody. The invitation to sign was, yesterday at least, placed prominently on Pirate Bay's homepage.

Perhaps out of a sense of guilty gratitude for being allowed to download so much expensive software, ebooks and pirated first run movies for free, members of the public dropping into Pirate Bay have been signing at a rate of hundreds per minute, 96,000 in total by the morning of 10 January 2014.

The petition text drew comparisons to the treatment received by Scandinavia's most notorious prisoner, the mass murderer Anders Breivik, who massacred 77 youths at a summer camp on a Norwegian island in 2011. He, the petition claimed, is allowed books, while their man isn't. "Stop treating internet activists worse than mass murderers," the petition says. Yesterday evening some sources reported that Warg was out of solitary confinement, and a link to petition appears to have been removed from the Pirate Bay's homepage.

The case that Warg potentially faces in Denmark has nothing to do with Pirate Bay. Rather, he could face prison on allegations of a separate activity: hacking into a public database controlled by the IT firm CSC, containing police passwords, Denmark's social security database , driving licence database and the register of wanted persons in the Schengen region zone for passport free travel in Europe.

Last year Warg was convicted in Sweden last year on allegations of hacking the database of the IT services firm which provides tax services for the Swedish government. He was extradited when his sentence had a month to run.

According to the English language Copenhagen Post, his Danish lawyer Luise Hoj has been critical of Danish police tactics to isolate him. "It is simply another case of trying to bring him down and put pressure on him, It is a deliberate strategy by the police, I guess to try and make him in participate in more questioning and talk about other issues," she told the paper. She also objected to the hearings being held behind closed doors. "I don't think the things we are discussing are particularly delicate, and it would be good for the Danish people to see what is really going on this case."

She expects him to win his case on a similar argument that got him acquitted in a second Swedish case, involving the Nordea bank: that the prosecutors can't prove that his computer was not being remotely operated by a third party when the hack took place.

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Pelle Neroth -- EU correspondent

Edited: 10 January 2014 at 11:47 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 10 January 2014 11:32 AM     General     Comments (0)  

Video game techniques enliven spying

3 January 2014 by Pelle Neroth

It sounds like a video game: users are encouraged to acquire "skilz" points and "unlock achievements". But no, it is just another day at the American spy facility in Griesheim, near Frankfurt, in Germany.

Nicknamed "the Dagger Complex", the American NSA spy agency's intelligence centre in the German state of Hesse is the most effective of the NSA's many snooping installations, at least if you judge by staff high scores in the incentive structure borrowed from computer games to increase spooks' effectiveness. To motivate operatives, the NSA have incorporated many features from computer games into the top secret spy software program, called XKeyscore, as revealed by the German magazine Der Spiegel. Hence the skilz points.

The ECC, the NSA's European Cryptographic Center, the formal name of the Dagger Complex, is located inside one of the US military compounds in Germany and is responsible for the biggest throughput of intelligence data in Europe, it is claimed. ECC information finds its way into the President's top secret daily briefing twice a week, on average.

The German news magazine has been at the forefront of leaking information from the treasure trove of documents stolen by the American whisteblower Edward Snowden on American cyber spying activities on friends and enemies. XKeyscore, it says, is one of the most interesting programs the NSA uses because it enables non specific search methods. XKeyscore is apparently the NSA's most powerful program for spying on webusers by utilising a system, called Digital Network Intelligence, which allows real-time ongoing surveillance of a user's whole internet activity: metadata email contents, website visits, and all internet searches.

In interesting, evocative language in briefing documents, spooks comparing XKeyscore with older methods of surveillance say spying used to be like "shrimping off the coast of Alabama". In the old days, you would get a boot, a toilet seat, and three small shrimp. With the new tool, the byproducts are left out and you net far larger catches of shrimp - ie information - than ever imagined before. To train spooks on the program, GCHQ, the NSA's British counterpart, and which works closely with it, turned up at the ECC with a training schedule that included exercises in 20 different "stations" within the complex: ECC operatives trained on the system compared the experience of 20 minutes at each station to "speed dating".

The ECC is important for many reasons: it spies on terrorists, and many terrorists from the Middle East pass through Europe. Hackers - like the group Anonymous - are numerous in Germany and they are likely targets too Then there is the German government, which ranks as a 3 on a scale of 1 to 5 on the American spy priority list. The German authorities are subjected to surveillance, particularly relating to questions of foreign policy and stability of the financial system. The EU institutions are also interesting targets, particularly on issues like international trade.

At the same time, it has been revealed that NSA cooperates with the BND, German intelligence, as well as several other European member states agencies ,including Denmark, the Netherlands and Sweden. So Washington spies on many countries as well as sharing information with them. Only the old Anglo-Saxon powers, Australia, New Zealand, Canada and the UK - along with the US called the Five Eyes group - are off limits in terms of US spying. The former director of the NSA, Michael Hayden, told Der Spiegel that the damage to US-German relations was "huge".

Another interesting recent revelation, which I have seen little if at all republished in the British press, is how a division of the NSA called ANT has manufactured different kinds of malware capable of burrowing their into nearly all the architecture made by American digital security companies. An NSA "shopping catalogue" is available to NSA employees with a list of electronic break in tools, the costs varying from free to a quarter of a million dollars. A specific example: an instrument that makes it possible to mimic a mobile phone tower and thus intercept mobile calls costs $40,000. The ANT tream also manufacture malicious software that implants itself in the PC BIOS that can survive any manner of software upgrades or clean installs. Der Spiegel adds none of the companies mentioned in the catalogue, eg Cisco, appeared to have any knowledge let alone cooperation with the NSA over this,.

Maybe Russian President Vladimir Putin wasn't just joking when he said the Russian government was going back to typewriters for official correspondence.

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Pelle Neroth -- EU correspondent

Edited: 05 January 2014 at 01:32 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 03 January 2014 12:23 PM     General     Comments (0)  

Do the French have a point when they are edgy about China?

20 December 2013 by Pelle Neroth

It must seem like a throwback to an earlier century, when foreign potentates lined up to pay tribute to the powerful rulers of the Middle Kingdom.

China is witnessing what it calls a "European season of diplomacy" with a visit in the same week by the prime ministers of France and Britain, desperate to boost business with what is expected to the world's largest economy. The French language edition of the People's Daily newspaper muses on the differences between the two delegations. David Cameron has made clear the importance he attaches to Chinese relations and orchestrated a series of meetings to show how he wishes to build on the good momentum built up between Britain and China in the past year.

But the French visit is more low key, and the paper speculates that this because the prime minister - Jean-Marc Ayrault - plays second fiddle to the president in the French system, and also, that French-Chinese relations are "characterised by some drawbacks". Britain is the second biggest European trading partner, after Germany, of China, while France is only fourth, and total bilateral trade is down 2% on last year. "Business with France must go beyond the usual areas of nuclear technology, aerospace and high speed trains," said the semi official paper somewhat admonishingly.

To be fair, French business - if not the general public - is aware it has to catch up in investment in China. To coincide with the Ayrault's visit, earlier this month [5 December] Renault became the last of the big European vehicle manufacturers to announce at tie up with a company in what is already the world's largest auto market, and which analysts predict will grow to 40 million sales a year by 2020. The potential market is enormous, as German carmakers are already well aware, having grabbed by the largest slice of the foreign car market: car density in China is just a tenth of what it is in Europe, and the population is several times larger than that of Europe.

The 50-50 joint venture with China's Dongfeng auto maker will see Renault invest 932 million euros in Wuhan to produce the Koleos 4x4 vehicle. At the same time, French rival carmaker Peugeot PSA is hoping for a Chinese cash injection after struggling to contain losses of 3 billion euros last year. Critics of PSA says its traditional patriotism, worker solidarity and sheer Frenchness - over half of its generously remunerated workers are based in France - has held it up in the global hunt for strategic partnerships to keep its head above the water. But even the fiercely conservative Peugeot family seems to have seen the writing on the wall.

The Germans and British say its typically French to be cautious about globalisation, and the People's Daily gently reminds the French they could be more helpful about "nuclear technology transfer", but some French commentators believe only France starkly sees the problem its free trade obsessed neighbours - meaning Britain and Germany - don't. The invincible penetration of China into international markets have crippled whole sections of European industry - textiles, shoes, phones, electronics - which have gone to the wall since the fall of the "bamboo curtain" in 1990. Britain - and Brussels for that matter - only look to the benefits of the consumer: the cheaper prices that Chinese imports provide.

But what of the interests of European manufacturers and workers? Even European tie ups and knowledge transfer in nuclear technology and cars will come back and haunt Europeans when the Chinese markets get saturated, and Chinese manufacturers look to unload 20 million cars or nuclear technology built to western standards in Europe. Worker wages in Europe would have to fall by half to be truly competitive in a global free trade regime, and that would cause enormous social unrest. A solution proposed by some French commentators is to retire the World Trade Organisation, fiercely devoted to reducing all tariffs, and impose European protectionism. No more British style global free trade.

The French and British delegations might be both European. To the Chinese, the two countries have very different mind sets indeed.

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Pelle Neroth -- EU correspondent

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    Posted By: Pelle Neroth @ 20 December 2013 10:34 PM     General     Comments (0)  

Iran deal brokered by Ashton, once butt of European criticism

12 December 2013 by Pelle Neroth

The rudest comment I read about Catherine Ashton when she became Europe's "foreign minister" in 2009 was that it was the stupidest appointment since the Roman emperor Caligula made one of his horses a consul. But she has pulled off a spectacular coup in nuclear diplomacy with Iran which could open up the country to billions of dollars in oil industry investment.

Lady Ashton was the untipped, second choice candidate for the post of EU High Representative for Foreign Affairs and Security in 2009, when favourite David Miliband, then UK Foreign Secretary, refused the post and Gordon Brown, who had been "given" the post to fill with a Brit, cast around for other candidates. She was a replacement as trade commissioner after Peter Mandelson and had zero foreign policy experience. But she fitted the bill as someone who was, first, British and, second, not seen as a threat to European leaders' egos. Her responses in the European parliament appointment hearings were suitably bland. The down to earth "Lancashire lass" with a coal mining background soon, however, became the target for gossip in Brussels's French- and German-dominated foreign policy establishment, who wanted someone who wanted to be a conductor of a specifically European foreign policy. "She has no vision for the position, there is no reason to get excited," opined Elmar Brok, the doyen of MEPs.

Being quietly spoken and not having visions was one thing: as said, it was almost a prerequisite for her being given the job by national leaders.

Being inactive is another matter. She was criticised for lacking commitment, which was bad in every continental European's books. She didn't speak French, let alone another language. She was attacked for spending her weekends in London with her husband and family, rather than bringing them over to Brussels at a crucial time when the EU foreign service had to be built up from scratch. Michel Barnier, a fellow commissioner, implied she should have gone to Haiti because he, when foreign minister of France, certainly had flown off to humanitarian crises. A CND activist in her youth, she failed to attend a regular defence ministers' summit, which was something her predecessor, Javier Solana, would never do, and widely seen as a faux pas. Solana travelled a lot; she, in the beginning, did not travel so much. She was seen as Britain's revenge on Brussels: a sabotage attack on European dreams for a foreign policy. One French magazine gave her the "carton rouge", red card, for "three years of inaction at the head of European diplomacy".

Her critics must be eating their words, though, now she has helped pull off the diplomatic deal of the decade: the Iran vs West standoff, which many feared would end up with an American attack on Iran, with incalculable consequences for Middle Eastern stability. Doubtless there were other factors involved in the deal, which bans Iran's high level uranium enrichment in return for a relaxation of sanctions. The Obama administration decided to take Iran seriously for the first time in decades and the change of regime in Iran this summer probably played more important parts. But Ashton was praised for keeping the show on the road with much patient negotiating between all the parties. At the breakthrough summit in Geneva, a confusing series of bilaterals and plenary meetings between Iran and all the various western parties, Ashton was the only figure with an overview of the whole situation.


The good news about the deal is that it frees up about seven billion dollars of Iranian money frozen in foreign bank accounts to spend on some of the imports the damaged Iranian economy so desperately needs. Not just precious metals, spare car parts and civilian aircraft, but also oil industry investment - production facilities, pipelines, export facilities and refineries all need rebuilding. Iran's return to the international oil market could be transformational and that is a major reason why Saudi Arabia is so worried about a peace deal - which is not just about religious differences with a Shiite state. Iran's oil output, currently a million barrels a day, could rise quickly to 2.5 million barrels a day, and from there could go up to 4 million barrels a day or more. European consumers will benefit. If the six month "trial period" for Iran develops successfully, the new economic relationship with the rest of the world could lead to an upsurge in power and influence of the moderate business class in Iran, and weaken the ideological Shiite radicals. Iran could then play a positive role in moderating the war in Syria and Afghanistan. With Iran back in the international fold, America might wind down its network of bases that surround the country in four directions.

These past four years in Brussels have seen the most effective and high profile commissioners being women: Viviane Reding, on privacy issues, Neelie Kroes, on the digital agenda. Now Catherine Ashton has joined their ranks.

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Pelle Neroth -- EU correspondent

Edited: 12 December 2013 at 12:39 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 12 December 2013 12:25 PM     General     Comments (0)  

UK places third in European venture capital league

28 November 2013 by Pelle Neroth

Is this good news for Britain? By one measure at least, it is Europe's third most tech entrepreneurial country after Ireland and Sweden, per capita, and biggest overall. But there are arguments that suggest the UK shouldn't be as sanguine as that headline figure indicates.

The American financial information firm Dow Jones's VentureSource service analysed the amount of venture capital gained by tech companies in each European country since 2003, averaged it out per quarter, and divided by the population to get a figure that allows for population differences. Let us be clear: experts say start up figures per se don't tell the whole story; start up exit is more revealing, but it says something.

And the winner is Ireland, which pulled in an astonishing 650 times amount of venture capital per capita as lowest ranked Bulgaria, and four times the European average. This should not be surprising. Britain's island neighbour does host, after all, European offshoots of Twitter, Apple, Google, Amazon, Dropbox and Facebook - attracted by low corporate taxes, an English speaking environment, and a youthful and relatively well educated population, global in outlook by necessity.

What may surprise those whose knowledge of Irish prospects come from gloomy headlines about the death of the Celtic tiger is that the figures show how the country has weathered the recession quite well. Of over 300 venture capital backed deals since 2003, 43% have come in since 2009, the year of the big recession.

After Ireland comes Sweden, Britain, Finland, Denmark, the Netherlands, Norway, France, Germany and Switzerland. Bottom of the rankings come the usual suspects in the Balkans and South Eastern Europe.

Britain's figure looks good, but is not quite as good as its seems. Only a third of its ten year figure of 4,200 deals has come in since the recession in 2009, so representing a marked slowdown of entrepreneurial activity in the past five years compared to the previous five year period 2003 to 2008.

The British figure also looks better than it really is, inflated as it is by the fact many companies that originate elsewhere in Europe are registered in the UK, which exaggerates Britain's performance and downplays other countries' true performance.

And to further put the news into perspective, all of Europe lags behind America and Israel. In the past ten years, for every one dollar raised in Europe, the US pulls in ten dollars and Israel $16. That puts even Ireland's success at attracting venture capital in the shade.

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Pelle Neroth -- EU correspondent

Edited: 28 November 2013 at 01:41 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 28 November 2013 01:32 PM     General     Comments (0)  

German media step up spy revelations

21 November 2013 by Pelle Neroth

The New York Times worried about freedom of the press in Britain the other day, which might explain that it is the German news magazine Der Spiegel, rather than the Guardian, that has been coming up with the latest electronic spying shenanigans involving GCHQ, the British spy agency, and the NSA, its American counterpart.

Berlin has a very active hacker community, and activists in Germany had secured copies of whistleblower Edward Snowden's files of secret Anglo-American internet mass surveillance even as the Guardian took the early lead in publishing them. While Snowden is enjoying temporary asylum in Russia, and Guardian journalist Glen Greenwald having quit the Guardian is based in Brazil, it could be that the leaks to the world press, via Der Spiegel's recent reportage efforts, could be originating from these copies of the files Snowden filched from the NSA.

It is a good thing that Der Spiegel is stepping up to the plate. The Guardian has been a bit more restrained after pioneering the leaks through the summer period. The New York Times, whose lofty leadership columns more usually target antidemocratic tendencies in China or the Middle East, rather than the USA's closest ally, has the following take on the situation in Britain, which surely can't help but diminish Britain's soft power a little bit, coming from the world's most prestigious publication. Unlike the United States, the newspaper fulminates, Britain has no constitutional guarantee of press freedom. And "parliamentary committees and the police are now exploiting that lack of protection to harass, intimidate and possibly prosecute The Guardian newspaper for its publication of information based on National Security Agency documents that were leaked by Edward Snowden."

Strong stuff, and there is more. The New York Times is critical of the weak responses by British politicians in defence of press freedom.

"In the United States, some members of Congress have begun pushing for stronger privacy protections against unwarranted snooping. British parliamentarians have largely ducked their duty to ask tough questions of British intelligence agencies, which closely collaborate with the NSA., and have gone after The Guardian instead," rails the American newspaper. The extent to which British politicians have been supine might be contested by the MPs themselves, but in politics it is perceptions that matter, and Britain is now getting a worldwide bad rap which I wonder whether the British public is aware of. It is ironic that the authoritarian regime Iran's mouthpiece Press TV and Russia's Pravda, famously a byword for censorship, are gleefully publishing stuff that appears less than prominently, if at all, in some British media outlets. The FT argues that Britain likes and trusts it spies. (Err, Kim Philby anyone?)

While the BBC limited its coverage of GCHQ's alleged scheme to infiltrate the Belgian telecoms giant Belgacom using spoofed LinkedIn websites - Wired magazine has a good report - to a report on the European parliament's civil liberties committee's proceedings. Surely journalist David Leigh's allegation once in the British Journalism Review that every news desk in Fleet Street had a resident spook was an exaggeration, no?

So what exactly has Der Spiegel been breaking? There was the Belgacom story, and then, this week, a report that GCHQ has been monitoring the reservations of 350 of the world's elite hotels where foreign diplomats and leaders usually stay. It's called Operation Royal Concierge and allows operatives to take further spying action against the aforesaid targets. The Guardian wrote recently that it had been behaving responsibly and published only 1 per cent of Snowden's information, stuff that was clearly in the public interest, and for all that still got a tonne of opprobrium from the spy agencies. Will Der Spiegel - under the jurisdiction of the less secrets obsessed German government - now be publishing some of the other 99% of secrets? You can be sure that the spooks in London and Cheltenham will watching closely.

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Pelle Neroth -- EU correspondent

Edited: 21 November 2013 at 12:06 PM by Pelle Neroth

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    Posted By: Pelle Neroth @ 21 November 2013 11:42 AM     General     Comments (0)  

Cameron resists Europe on data protection regulation

14 November 2013 by Pelle Neroth

Whistleblower Edward Snowden's claims about US spying are coming home to roost. The European parliament's powerful Civil Liberties committee voted for sweeping new data protection regulations last month, which include much tougher rules against companies sharing data with non EU states.

Companies that violate the rules face fines of up to several billion dollars.

That should make it much tougher for US digital giants like Facebook, Yahoo and Microsoft to share confidential data on their European customers with the American signals intelligence agency, the NSA.

But the British government is trying to put a brake on the reforms, backed by precisely one other EU member state, namely Sweden. At one of the regular summits of EU leaders, on 24 October, after the European parliament vote, David Cameron won a delay for the law's implementation. The European commission, which is onside with the European parliament on this legislation, called for the law to be processed in the spring of next year - before the European parliament elections and the appointment of a new commission.

But under pressure from David Cameron, the proposal will become law "by 2015", probably after the crucial date of the European elections of June 2014, which could end with the proposals being watered down, depending on the political composition of the new parliament.

Further, European indignation at the NSA's bugging of European leaders' phones, which exploded into public consciousness last month, may also have subsided by then. And new revelations could change the equation, with signs that the NSA is already preparing a fightback to give its version of events.

That could weaken the impetus to change, and the Data Protection Regulation also has pass through several more hoops of the Brussels machine: the full parliament, and the Council of Member States. US technology companies are expected to lobby furiously against change, by persuading MEPs favourable to their cause - typically British Conservatives - to water down the rules.

But we have to look at the wider picture as well. As with all EU legislation, the proposals come in many parts. While restrictions on the information that may be sent to third party countries, ie the USA, is the headline-grabbing bit of the legislation, the Data Protection package contains other components.

And these aspects may ultimately be more far reaching for British and European companies.

The EU Data Protection Regulation would replace member states' own, 28 different, rules for data protection with a single European regulation. One clause of the regulation allows "the right to be erased", which would allow citizens to ask service providers to delete the data they hold on them.

There would also be restrictions on user profiling, which would force companies to minimise the data they hold on customers, seek consent from users on holding data and explain in detail why they are holding that information. Lawyers asked to comment on the issue say this could have a significant impact on the way European and British companies operate. They would no longer be able to hold data willy-nilly on people as a "comfort blanket". And there would be costs as well, as companies would be forced to hire data protection officers to ensure compliance with the new European rules. That could significantly affect the costs for smaller companies.

Claims that the regulation would increase red tape is David Cameron's stated reason for wanting to delay the legislation. But it cannot but help give the impression to Continental European observers that Cameron is on the side of big American companies - and possibly the American intelligence community - rather than the European citizen.

Perhaps it is also partly a cultural issue. Europeans arguably care more about their privacy than Anglo-Saxons. Witness the restrictions on publishing photographs of celebrities in France. At the October summit, Britain's failure to sign a Franco German statement reviewing spy relations with the US, and the failure of Cameron to hold a post summit press conference, suggested tensions with Britain's European partners, yet again.

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Pelle Neroth -- EU correspondent

Edited: 14 November 2013 at 08:37 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 14 November 2013 08:02 AM     General     Comments (0)  

Google proposes remedy for alleged search abuses

6 November 2013 by Pelle Neroth

Is Google heading into a lengthy and formal anti-trust war with the European commission over claims that it discriminates against rivals in its search results?

So far, the commission has kept the dispute on a consensual, informal basis. The latest developments came last week. In its latest bid in the three year saga to allay European Union concerns about anti-competitive practices, Google has offered rival search services a guaranteed place in searches on its specialist search sites - Google Shopping, for example.

But the placements won't be free, they will still be placed below Google's own results. And the rivals would not necessarily appear on the main Google search site at all, which is the overwhelming port of first call for most web users. A screenshot of what a product search on a specialist site would look like if Google's proposals went through can be seen here, FT.

So would it make a difference to rivals' business, which they say is being stymied by Google's interservice favouritism across its expanding empire of internet applications? Google's rivals - including arch competitor Microsoft - have another three weeks to review the proposals.

Google makes a big issue over the fact that the minimum reserve bid for the slots that appear below Google's own results are lower than an offer made last summer: three euro cents a click, down from Google's original proposal of 10 cents. But in truth, these concessions represent small change for Google since it only apply to the "verticals" - insider jargon for specialised sites like shopping and travel - and not to the main site, where Google says the search results are still decided by a neutral algorithm.

There is a certain amount of weariness from the commission,, which is keen to wrap up before the end of competition commissioner Joaquin Almunia's term next summer. If the rivals reject the deal, the commission could still launch anti trust proceedings against Google, which could be painful, and political, as Google still enjoys an enormous amount of goodwill among the general public. Most Europeans value the enormous benefits that Google provides. Relatively speaking, Google is far more dominant in the European market than in the US market, where Microsoft's Bing has a relatively greater presence. Google opponents are reported as being sceptical of the new proposals. Offers to shade the box containing rival links to give them somewhat greater prominence haven't cut much ice.

There is even irritation that the Google will actually profit from this whole affair. Since the proposed auction for the three prized slots beneath Google's own results, would allow Google to extract even more profit from its rivals. However, there is weariness among Google's rivals too. Whether they will take Google in the hand in three weeks' time is anyone's guess.

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Pelle Neroth -- EU correspondent

Edited: 14 November 2013 at 07:57 AM by Pelle Neroth

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    Posted By: Pelle Neroth @ 06 November 2013 01:37 PM     General     Comments (0)  

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