Behind closed doors: Secret deals in the Council of the EU

Credit: Alexia Barakou

“Blame Brussels.” This familiar response from politicians can be heard all over Europe, with policy-makers — from Sweden to Poland, from Germany to Greece — shifting responsibility for unpopular or controversial legislation to a faceless decision-making body stifled by bureaucracy. The UK found so much to “Blame Brussels” for, that in 2016, the country made the decision to leave the EU altogether.

When pointing their accusing finger at the ‘EU’ what many people don‘t realise is that the politicians are actually pointing at themselves. The Council of the EU, the EU’s main legislative body, is comprised of representatives from the now 27 Member States. It is responsible for — often but not always together with the European Parliament — all law-making within the European Union.

Credit: Reporters’ United, Greece

In the Brussels Council:

  • it is not elected politicians, but national government officials, who legislate. The culture and the procedures are those of confidential diplomacy, not transparent democracy;
  • diplomatic secrecy hinders decision-making and public discourse, so dozens of legislative proposals get stuck for years without citizens ever knowing about it;
  • those responsible almost never have to publicly justify their actions, allowing lobbyists to exert influence behind the backs of voters.

All this is done in a powerful apparatus which — unlike the Parliament or the EU Commission — is largely unknown to many EU citizens. The visible side of the Council is when ministers meet under Europe’s colourful flags to exchange views in front of the cameras or to give their formal blessings to decisions that were made long ago. But the actual negotiation of the legislative texts takes place in more than 150 committees and working groups, bringing together officials from national representations and ministries in the capitals. Their work is coordinated by the 27 EU ambassadors, the Council of Permanent Representatives (or “Coreper” in EU jargon), in its weekly meeting. All in all, there are some 4,000 meetings every year, taking place in the three Council buildings directly opposite the headquarters of the European Commission, behind closed doors and without public minutes.

The Council of Ministers meets in the Justus Lipsius building.

The Council’s default position is one of secrecy. There is “an almost automatic stamping of ‘limité’ on the documents,” according to European Ombudsman Emily O’Reilly, who spoke with IE regarding her concerns about the lack of transparency. ‘Limité’ marks a document as being for internal distribution only, and is not a classification level, although it is often perceived as such.

Changing this “default secrecy”, as well as regularly recording the positions taken by Member States in the legislative negotiations were the main recommendations from the European Ombudsman.

Call for more Transparency

‘The Council of the EU — through practices that inhibit the scrutiny of draft EU legislation — undermines citizens’ right to hold their elected representatives to account.’ This was the conclusion of Emily O’Reilly’s detailed 2018 inquiry into the lack of transparency in the Council.

As O’Reilly explained to Investigate Europe, “If you don’t know that your country was directly involved in making a decision about something which may not be popular back home, then it can be easy for government ministers to deflect attention from their active participation and acceptance of a particular law and talk about the famous faceless bureaucrat.”

The report echoed criticisms made a year earlier by the Association of the EU Committees of the National Parliaments (Cosac). “If our citizens don’t have access to what is going on in their government, how can they possibly cast an informed vote?” asked the Dutch Cosac-delegation, which authored the paper, ‘Opening up closed doors: Making the EU more transparent for its citizens, calling for greater legislative transparency in the Council.

Cosac called on the Council to adopt four recommendations that would facilitate this, notably: “a comprehensive agenda must be distributed for each meeting in which legislation is discussed. Furthermore, the minutes of the meetings must provide details on the files discussed, the points of discussion, submissions made by the Member States and any voting results, either formal or interim/informal, even if no progress was made.”

The European Parliament and the European Court of Justice, along with civil society organisations such as Transparency International, have joined this call for more openness. But in spite of broad support for full legislative transparency, national governments (for it is the national governments that can make this change) have yet to improve the openness of Council processes.

They did not even respond to the letters from O’Reilly and Cosac, nor to the resolution of the European Parliament, thus demonstrating both the weakness and arrogance of the legislators who hide behind the veil of diplomacy. The questions sent by Investigate Europe also remain unanswered.

‘Stuck’ in Council

The limits of legislation with diplomatic means is demonstrated by the fact that, for many important law proposals, the national officials never reach a decision. 

The European Parliament’s legislative database shows the status of legislative files as they progress towards becoming law. As of October, there were 30 draft laws that have not made any progress in three or more years, and have become ‘stuck in Council’. Member States have been unable to reach a compromise that would allow them to progress. Ironically, one such proposed law stuck in the Council — the recast of Regulation (EC) No 1049/2001 — is the revision of the EU law on access to documents. It aims to enhance transparency and accountability by promoting good administrative practice. For 12 years, this law proposal has been stuck in the Council, without the outside world knowing which governments have blocked it.

There is no time frame on which the Council is obliged to make a decision on proposed legislation, and presidencies only put proposals to a vote when they can expect a qualified majority: at least 65% of the represented population and 15 Member States. At the same time, a vote on behalf of 35% of the population or 13 governments is sufficient to block new laws.

Because citizens, journalists and lobbyists don’t know which governments are blocking an issue, they can‘t influence it. There is hardly any pressure on the governments that make up the blocking minority.

At the same time, big lobby groups have the capacity to gather information about what happens in the Council beyond what is available in public documents. And, as sources have told IE, for big lobby groups that want to stop or water-down proposals that they don’t like, the blocking minority is the perfect instrument.

“The secrecy in the Council means that there is little or no pressure on individual EU governments, which allow them to put off difficult decisions,” says Emily O’Reilly, citing the recent example of a French environmental NGO which was denied access to the Member States’ positions on an issue regarding pesticides and bees. It was one more EU decision that had been stuck for several years.

Of the 30 proposals currently ‘stuck’, IE has singled out a few for further examination.

Becoming Unstuck — County by Country Reporting

International companies such as Google, Facebook, Amazon, Apple, Lafarge, BASF,  Daimler snd Fiat-Chrysler register their profits in countries such as Ireland, Netherlands or the Cayman Islands, where corporate tax rates are relatively low. They do this despite most of their turnover coming from elsewhere. Although perfectly legal, the EU Commission says such aggressive tax planning costs EU countries up to €70 bn a year in lost tax revenue.

For four years, EU governments have been negotiating a draft directive — public Country-by-Country Reporting (pCbCR) — to make this tax avoidance more visible by distinguishing which activities relate to a specific country.

After making swift progress (adoption of the proposal by the European Commission in 2016, and approval by the European Parliament in 2017), it arrived in the Council, where it was blocked by several states. Its progress has ground to a halt.

It was reported early on that Germany was the leader of the blocking minority, because the German Minister of Economics had sided with the transnational companies arguing that they would lose competitiveness due to the forced publication of alleged business secrets. But for years, the other members of this ‘blocking alliance’ were unknown.

That only changed in October 2019, when German Green MEP Sven Giegold managed to get hold of information that had, until then (and in-line with Council practices) been a well-kept secret: a list of the countries that were blocking the law.

Some of the names came as no surprise: Ireland, Luxembourg, Hungary, the Czech Republic, Malta and Cyprus have rules that attract multinational companies looking to shrink their tax bill. What was a surprise was the appearance of Sweden and Portugal, two countries with Social Democratic governments that had publicly promised to fight tax avoidance.

Investigate Europe wrote about the list in November 2019. Sweden defended its position by arguing that laws about tax transparency should be adopted in the same way as tax law —  with unanimity. However, IE has proof that the Swedish finance minister had opposed pCbCR before the actual legal proposal had commenced — even before countries found out about the voting procedure.

The reaction from Lisbon was less clear. In a short written statement sent in response to questions from IE, the Portuguese Ministry of Foreign Affairs said: “In the context of this discussion, Portugal has taken a stance of attentive observation of the arguments of member states and the Commission, and there has been no position taken so far, nor any matter to which it has been opposed.”

But in practice, this ‘attentive observation’ resulted in opposing the draft law in the Council negotiations. This had been going on for over two years, while at the same time, the Portuguese government had been publicly proclaiming that “the increasing sophistication and globalisation of tax evasion and avoidance mechanisms make greater European and international cooperation indispensable.”

Furthermore, the Portuguese Government had promised parliamentarians “to fight for greater tax justice on a European scale, combating the erosion of tax bases between different states, tax evasion and unfair competition”.

For Ana Gomes, a former Portuguese Socialist MEP, this was a “total contradiction between what was said in the government’s programme and the country’s position in the Council. Either there’s total political insensitivity, or it’s worse… This shows how a fundamental political issue is dealt with by leaving the worst powers to decide.”

According to German MEP Sven Giegold, Portugal too seems to advocate unanimous approval of the CBCR directive — an unrealistic goal, given the position of countries such as Ireland and Luxembourg. “With its legal concerns, the Portuguese government is protecting tax evaders,” he stated. “The concerns expressed about the legal basis are in fact killing the Commission proposal.

According to Giegold, the unanimity of EU Member States for public tax transparency for large companies will never be achieved, and is not necessary. “For banks, the EU has already introduced public tax transparency on a country-by-country basis under the qualified majority voting procedure. This transparency has been working for years and has not given rise to any legal problems,” he said.

It was only after IE questioned Portugal’s position that the government changed its policy and the legal doubts were overcome. Until then, there had been no national debate about the issue, as the Portuguese government’s position in the Council was not known. 

In November last year, Portugal voted alongside the countries defending the directive, but the directive did not pass, and is still “stuck in the Council”.

“To the question of principle, there is also a problem of method, since this whole process of (not) taking a position by the Portuguese government and aligning with the arguments of the countries opposing the directive has occurred in an opaque manner,” said Portuguese MP Mariana Mortágua.

This was the point previously made in Emily O’Reilly’s official report that proposed that “the Council should systematically record the identities of Member States expressing positions in preparatory bodies.” Portugal, does not share this view. In its blocking of the CBCR directive, it is not known who decided the country’s position, why, or for what purpose.

According to a survey done by IE, there is now a qualified majority for the tax transparency proposal. And yet, it has not been adopted because the German government, during its position as holder of the Presidency, has refused to to put the vote on the agenda of the competent ministers’ meeting. The postponement of the decision violates the role of Council Presidency as a neutral mediator between the EU states: if there is support in favour of a legislative proposal, there is an obligation to put it to the vote. But the Angela Merkel government does not care.

The future of the pCbCR directive and of corporate tax transparency will soon be in the hands of the Portuguese government, when it takes over as Council president in January.

Quota for Women on Corporate Boards

Another important example is a law proposal aimed at increasing the number of woman in corporate boards. It’s good for equality, it’s good for society and most importantly, it’s good for business. So why has a directive proposing measures to promote gender balance – aiming for a minimum of 40% women as non-executive members on company boards – been languishing in the Council for eight years?

Germany and the UK, supported by some smaller countries, were the two main blocking countries. Their argument wasn’t against the idea of quotas — Germany recently announced a quota for women in senior management positions in listed companies. But they blocked it using the common legal argument that this was not a matter for the EU, and that it should be decided and implemented at the national-level.

A screenshot of the ‘Legislative Train’ detailing the journey of the Gender Balance directive

All very well if this is the case, but data indicates that the EU scores low when it comes to equality in decision-making, and that the gap between Member States is widening, which is why it came to be an EU issue in the first place.

With the UK gone from the EU, it would only take “two small countries” to change position for the file to pass, according to an EU diplomat. Germany isn’t budging, but what about these ‘small countries?’ It’s not made public who these countries are, but knowing this, according to Irish Green Party MEP Grace O’ Sullivan “would allow feminist groups in those Member States to organise a targeted campaign on it. This might be particularly effective in the run-up to national elections.”

This argument was supported by Manon Deshayes, Policy and Campaigns Assistant for the European Women’s Lobby, who told us it would just take “one or two Members States to unblock the position.” In a follow-up email she confirmed that, at the moment, the information about the countries opposing the directive does not seem to be mentioned in any written statement, although it could reach the general public through the intelligence gathering work of MEP and CSOs, among others.

For its part, the German Federal Government will not reveal who the blocking countries are. Nor will the General Secretariat of the Council provide any information. Investigate Europe could only find out unofficially with the help of a friendly Brussels diplomat. Accordingly not only the Germans and Danes, but also the Swedes and the Dutch form the blocking minority, along with populists and conservatives in Poland, Hungary, Croatia, Slovakia and Greece. This means means that social democrats and liberals have been acting together with right-wing conservatives for eight years, forming an unholy alliance against more women’s rights. That would be impossible at the national level. But behind the closed doors of Council bodies, those in charge need not fear protests.

Caught in the Net — Fishing Quotas

Decisions about the protection of marine nature (or the lack thereof) also demonstrate how dangerous the lack of transparency in the Council is. The post-Brexit trade deal isn’t the only negotiation that’s struggling to reach an agreement regarding fishing quotas. And where fishing is concerned, the stakes are high; overfishing damages biodiversity and marine ecosystems, and ‘puts the long-term sustainability of EU fish stocks and the viability of fishing fleets on the line’, according to a joint report by Corporate Europe Observatory and Seas At Risk.

The reformed 2013 Common Fisheries Policy (CFP) couldn’t have been clearer: all Member States should stop overfishing, and aim to achieve fish stock sustainability by 2015, or by 2020 at the latest. But Member States aren’t following the scientific advice, regularly setting totals for annual catches that exceed sustainable levels. And this is where a lack of transparency can really be felt, as the negotiations into how these quotas are decided are all conducted behind the Council’s closed doors.

With no record of what is said, of Member States’ positions and views, nor of the people representing the Member States, it is impossible for anyone to scrutinise the logic of decisions that appear to fly in the face of science.

Fishing nets off the coast of Porto, Portugal

After the environmental NGO ClientEarth filed a complaint against the Council, Emily O’Reilly started three separate inquiries into the lack of transparency in the decision-making process, one of which concerned the annual setting of fishing quotas. “The famous all-night meetings of ministers in Brussels are completely behind closed doors and yet make important decisions for the sustainability of fishing stocks and of jobs in fishing communities around Europe,” she said in the press release that accompanied the announcement of the inquiries.

When the conclusion was published, it included a call for the Council to ‘proactively make available documents’, and found that “the documents relating to the adoption of the annual TAC [Total Annual Catches] Regulation fall within the broad definition of ‘legislative documents’ in the EU rules on public access to documents, and should, accordingly, benefit from the wider access to be granted to such documents.”

Again, the Council did not follow the recommendation.

The Rule of Law

And even when it comes to essential questions about the future of the European project, national governments hide behind the Council’s veil of diplomatic secrecy. In October this year, the Council, Parliament and Commission held several trilogue meetings — tri-party negotiations where the Council and the Parliament try to merge their respective positions on the draft law into a compromise, with the Commission working as a facilitator. The task at hand was the negotiation of new EU rules on “rule of law conditionality”. This would allow EU payments to be withheld if the recipient country is found to be in breach of the rule of law. The law was drafted and proposed by the EU Commission in 2016, but for two years, the Council negotiated with no progress. Only now, with the need to decide the EU’s new seven-year budget and the recovery fund to support countries through the Covid-19 recession, has it been given greater urgency.

While everyone knows that Budapest and Warsaw have been strongly opposed to making the rule of law a condition of European funds, few – not even the best informed MEPs and commentators – are aware that these were not the only countries taking this position.

Our source, who had access to the official documents of the German delegation in the Council, provided us with a document which revealed that Portugal’s government claimed, from the start of the negotiations, that a mechanism linking the rule of law to the payment of funds would not be necessary.
 Although Portugal never threatened to block this mechanism in the Council, it helped postpone its approval and this has had consequences: allowing the discussions to drag out for more than two years in the Council has given Hungary and Poland a much stronger hand, now that there is an urgent need to approve emergency aid for the COVID crisis.

According to the Polish politicians we spoke with, it seems that Hungary had found an unlikely ally in Portugal, whose negotiators were ready to support Hungary in its attempts to remove the requirements of the rule of law, as long as Hungary was ready to accept that the rescue package was needed more by southern European countries than other Member States.

Interestingly, it turns out that Portugal also negotiated the rule of law with Poland. Former Polish Foreign Minister Witold Waszczykowski explained: “Sometimes the opposition accuses us of supporting only one country, Hungary, and we know that the Visegrad Group and several other countries, such as Slovenia, Latvia and Portugal, have played together with us.” 

As was the case with the European tax transparency law, the Portuguese government’s position on the rule of law negotiations was not known in Portugal prior to IE’s publication.

The push for transparency

The Council, and indeed the European Union, are hybrid in nature. The Council is a legislative body, writing and adopting laws, but also a negotiating body between Member States. This could go some way in explaining its tendency towards the culture of secrecy that is associated with international negotiations rather than the greater degree of openness associated with a democratic legislative process.

But when European leaders launched the modern EU with the Lisbon treaty 13 years ago, they promised to democratise the Union. Citizens were to be given an explicit opportunity to participate. “Decisions will be taken as openly and as closely as possible to the citizen,” they wrote in the text of the treaty. “To promote good governance and ensure the participation of civil society, the Union institutions shall act as openly as possible,” they added. The Parliament and the Commission have largely adhered to this principle.

However, national governments are still unwilling to apply this to their own legislative activities.

Michael Roth, Germany’s Minister of State for Europe at the Federal Foreign Office, and by default,  the representative of the current Council presidency, considers the secrecy justified. While the German Government is committed to “making more of the work in the Council public”, he tells Investigate Europe that he sees “little room for manoeuvre at present”  for the demand by Ombudsman O’Reilly and the EU Parliament to make the positions of the individual governments public at an early stage. “This concerns the preparatory meetings in the working groups and the Council of Permanent Representatives, which are not open to the public.” There, he said, “confidentiality is needed to have a protected space for the difficult search for compromises. Roth believes that the allegation about the EU’s secretive legislation is “a distortion of Europe, which is highly dangerous and plays into the hands of nationalists and populists.”

O’Reilly and her supporters in the EU Parliament see it the other way round. The Obudsman warns that negotiating “behind closed doors runs the risk of alienating citizens and feeding negative feelings against the EU”. Because Roth and his colleagues keep all negotiations secret until the law is passed, citizens experience EU politics as a fait accompli, where their voice cannot be heard because they do not even know what is going on. In contrast, O’Reilly claims “the legitimate right of citizens to influence”. Therefore, she says, the Council must provide information at “an appropriate time” before everything has happened. Even then, there would be enough room for confidential negotiations.

In order to achieve this, the Ombudsman is counting on a “cultural change” that, she believes, has already begun. And the critics of the secrecy in the Council have a powerful ally: the European Court of Justice (ECJ). The Dutch legal expert Onno Brouwer has for many years represented activists and parliamentarians pro bono in their dispute over transparency in the EU.

On several occasions, the Luxembourg judges have heard the complaints formulated by Brouwer about access to information on what is happening in the Council. So far, they have always upheld the plaintiffs. The judgement which decided in favour of the organisation “Access-Info” in 2012, for example, was ground breaking. The organisation had sued for the publication of national statements on the amendment of the document regulation and was fully justified. The judges rejected the usual claim by the Council that it undermined the decision-making process.

Even more spectacular is a decision from March 2018, when Emilio De Capitani, former head of the secretariat in the EU Parliament’s Legal Affairs Committee, with Brouwer’s help, complained that the Council’s positions should be published during the negotiations with the Parliament. The judges also upheld this complaint. And their reasoning reads like a leaflet by civil rights activists. “It is precisely openness in the legislative process that contributes to conferring greater legitimacy on the institutions in the eyes of EU citizens and increasing their confidence in them by allowing divergences between various points of view to be openly debated,” the judges wrote. “Indeed, the possibility for citizens to be informed about the bases of legislative activity is a prerequisite for the effective exercise of their democratic rights,” they clarified, adding the dire warning: “it is in fact the lack of information and debate which is capable of giving rise to doubts in the minds of citizens, not only as regards the lawfulness of an isolated act, but also as regards the legitimacy of the decision-making process as a whole.”

It is all the more surprising that this and other judgements have not changed the practice of Europe’s most powerful legislator so far. The Council’s practice of secrecy “contradicts existing case law”, said Miguel Poaires Maduro, the former Advocate General of the ECJ, in an interview with Investigate Europe. “The institution behaves like a defiant child”, mocks Brouwer. The answer could, therefore, only be to “continue to go to court” in order to “name and shame those responsible”. In the end, he predicts, “the judges will lose patience”.

A shortened version of this article is available as a co-publication with OpenDemocracy. You can read more about our investigation here, including publications with national media partners and extra material including interviews with the European Ombudsman, Emilio De Capitani and German Minister Michael Roth.