DG Competition has lost the argument on HPC

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DG Competition has lost any rational argument on the Hinkley Point C (HPC) state aid case. If approved, the UK gov’t deal would allow around €20 billion subsidy over next 45 years for two new nuclear power plants in south-west England.

Reading the draft decision, on which the college of Commissioners may vote next week, it is clear that single market and competition rules, environmental protection goals, and even general treaty principles such as consistency and continuity have all been set aside. Changes to the original plan (reported in the FT this morning) are largely cosmetic.

Instead COMP’s argument for allow the aid to go ahead relies on 1950s Soviet-styled Euratom treaty provisions, as if they presented some kind of get-out-of-jail-free card for an expensive failing technology to be pulled from a dusty top shelf when desperate means are called for. Spineless anonymous officials in BERL and MADOU buildings find it easier to fudge and fillet OUR law than to do their jobs properly.

This is a tragic state of affairs. In a week when new Commission candidates proudly preen their common-interest ideals before Parliament, over on the other side of the Maalbeek valley, competition control, one of the most powerful Commission functions and a cornerstone of the single market, looks about to turned over to internal intellectual corruption and external political bullying, with the occupants of BERL top floor calling the shots. Barroso’s legacy takes another tumble.

The Lowe principle

Compatible state aid can only be “necessary, proportionate and time-limited“, the recently-retired EC director-general Philip Lowe told a hundred Brussels audiences in recent years. The draft Hinkley Point decision describes none of these. Instead we see the opposite: weak analysis based on vague concepts outside the law such as “de-carbonisation”, whatever that means. Creeping regulatory and governance failure is allowing industry players such as EDF to milk policy and rule-making to their own advantage.

If using state aid control Europe can shut-down ship-yards and airlines in Poland and Greece that are shedding cash, why not the bankrupt nuclear power sector too? If after due process etc. Apple or Fiat can be required to pay their proper taxes in Ireland or Italy, why can’t nuclear operators pay in full for their radioactive waste too?

Euratom, strong or weak?

Euratom is seen by many as a skeleton hidden away in Europe’s constitutional cupboard. The Euratom treaty sits alongside the two Union treaties; the Euratom legal personality sits alongside the Union’s legal personality. Euratom, unchanged since 1957, continues its zombie existence because member states cannot agree by consensus what to do with it.

Any potential court challenge to a Hinkley precedent will rely on a close reading of its provisions. In the draft, the Commission (COMP & SJ) essentially pretend Euratom is strong, providing carte blanche for any amount of effort to accelerate “the speedy establishment and growth of nuclear industries“, as its Article 1 announces so dramatically.

In reality, Euratom is much weaker than it seems at first sight, because Article 2 confines the scope of its application only to provisions actually in the treaty, which when you read them is not that much. As I’ve said before here, Chapter 4 on “investments” is only about monitoring activities and fantasy scenarios.

Does Almunia want this? Does he care?

It’s the end of term. Retiring Commissioners and their staffers are all de-mob happy, with one eye (at least) on their next assignments. I spent a couple of hours with Almunia last week at an unrelated event where he raised the HPC case himself in conversation. It’s obviously on his mind. (“One more big case before I leave.”) What was noticeable in his tone was that he did seem to want to win the decision and he even showed some reluctance to be in the position he was. The 13th floor again?

In the club, so follow the rules

Is this all about Britain? Probably. The majority of Brits, including most in government and most in the media, still have no idea what Europe is about and what it is for. It’s no surprise they think they want to quit.

The country has spent the last 13 years getting wound-up about its nuclear wet dreams. Most of the people running policy today were not there at the beginning and have forgotten all the history in between. Tony Blair, who kicked things off in June 2001, newly return to his second term, has since been replaced by two prime ministers and one change of government. The political appreciation of the global climate crisis has gone through many hues in that time, both in London and everywhere else.

On Europe, the principle applying to the UK and all member states ought to be simple; if one’s in a club, one follow the rules; if one’s not in a club, one can do whatever one wants. Being in the club but then breaking the rules is the worst of all outcomes, because other members and the club’s officials (the institutions) become corrupted by the same intellectual detritus.

The UK nominally calls for reform in Europe but in reality it first fails to define reform positions and then it drag us down because it doesn’t understand or believe that fundamentally Europe is a place where we solve common challenges together. Sorry to repeat myself but the rule of law beats the rule of war.

Democracy wins?

I may be angry but I’m not despondent. What happens in the next five days could still surprise us. First, there could be a delay; other commissioners will not appreciate Almunia bouncing them into a wrecking precedent with long-lasting implications.

Second, as more Commissioner realise what is at stake (end of single market, damage to rule of law, weaker climate protection) more of them will rally against it. If a meaningful Europe itself is on the line here, a critical mass of commissioners could emerge at least to delay if not to resolve. Surely a new nuclear subsidy regime in Europe at least deserves a public debate, doesn’t it?

A revolt in the College happened at least once before in recent times. In July 2010, where (again) Barroso and Almunia, faced losing a vote over eight more years of coal subsidies, caved-in and accepted to table a legislative proposal to end coal aid in only half that time.

Even though the anti-democrat Barroso hates voting, the College decides by simple majority (Article 250) and has voted once already on a state aid file this year. Even before any Court actions are considered, we could still be in for some surprises.

–oo0oo–

Before you ask, NO, I’m not going to share my leaked draft. COMP, SJ and SG were so proud and confident of their work they only sent limited numbers of marked copies to other services. This means sharing copies widely could easily reveal sources to those people who don’t want you to know what they are doing in your name.

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