Analysis – EU Authority Fraying In Reaction To Brexit Vote

(REUTERS) – The European Union’s authority is fraying as governments and politicians in many members challenge EU policies and take aim at “Brussels bureaucracy” in the aftermath of Britain’s vote to leave the 28-nation bloc.

The Czech president and some contenders for the French presidency have called for their own referendums on continued membership of the pan-European economic and political community, although no such plebiscite is on the cards in the near future.

Verbal assaults on the role of the European Commission and the European Parliament since the British shock almost two weeks ago look more like an attempt to appease domestic public opinion than a concerted drive to strip Brussels of its main powers.

But they could further undermine the legitimacy of the EU’s common institutions in the eyes of citizens.

France, facing a presidential election next year, has threatened to stop obeying EU rules on workers posted from one member state to another, which it says undercuts the jobs of native employees. President Francois Hollande has also demanded a rewriting of EU merger control rules and restrictions on state aid to industry to enable the creation of “European champions”.

Socialist Prime Minister Manuel Valls said on Sunday an EU regulation allowing employers to pay seconded workers less than their local counterparts must be changed soon or Paris would stop applying it.

Employers are not now obliged to pay posted workers more than the minimum wage of the host country – often well below the average wage in the sector – and they pay social contributions in their home country welfare systems which are usually far lower than those in western Europe. Central and east European governments oppose moves to reduce the gap.

“There must be equal treatment upwards to fight social dumping,” Valls said.

Spooked by a surge of support for anti-EU nationalist Marine Le Pen, conservative candidate Alain Juppe called on Monday for a new balance of power between Brussels and member states and a halt to further EU enlargement, ending Turkey’s membership bid. He called last week for a referendum on a “new Europe”.

Italy is demanding a loosening of recently adopted EU regulations that make shareholders, bondholders and depositors liable for the losses of failed banks before taxpayers.

“SOULLESS TECHNOCRACY”

Italian Prime Minister Matteo Renzi, who has fought to bend EU budget deficit rules and now seeks to pump billions of euros into his country’s ailing banks if needed to shore them up, said on Monday the EU was run by “a technocracy with no soul”.

He also opposed sanctions against fellow southern members Spain and Portugal for violating the EU’s deficit limits last year – a step the Commission is due to consider on Tuesday in a German-backed drive to uphold the much-abused budget rules.

Italy’s banks are saddled with 360 billion euros ($401.18 billion) in bad loans and their share prices plunged after last month’s Brexit vote. Rome is in talks with the EU Commission to devise a plan to recapitalise its lenders with public money limiting losses for bank investors.

Dutch and German ministers have attacked a Commission decision that the European Parliament can approve a trade pact with Canada without referring it to national parliaments. The Dutch parliament was assured it would have a chance to weigh in on the treaty.

But perhaps most worryingly for the EU, senior ministers in Germany, the bloc’s reluctant hegemon, are advocating shrinking the executive Commission, trimming its powers, and bypassing common European institutions to take more decisions by intergovernmental agreement.

A call from veteran German Finance Minister Wolfgang Schaeuble, long an advocate of closer integration, to shift more policy decision-making to governments for expediency’s sake was among the most striking indicators of the mood around Europe.

“If the Commission doesn’t get involved, then we should take the matter into our own hands and solve problems between governments,” Schaeuble told Welt am Sonntag newspaper, saying now was a time for pragmatism.

“This intergovernmental approach proved successful during the euro zone crisis,” he added.

Berlin insisted on setting up the euro zone’s rescue fund as an intergovernmental body outside the control of the EU’s common institutions, giving itself a veto on each stage of bail-outs for distressed states and the decisive say on fiscal policy conditions.

Many experts say further moves towards intergovernmentalism would accentuate German dominance and increase resentment among other EU members.

Among some former communist countries that joined the bloc in 2004, there is resentment at perceived meddling by Brussels, notably on issues concerning the rule of law and media freedom, as well as environmental regulation.

The Polish and Czech foreign ministers called last week for European Commission President Jean-Claude Juncker to resign as a scapegoat for the June 23 British vote.

The Visegrad Group of four central European countries – Poland, Hungary, the Czech Republic and Slovakia – demanded that the powers of the EU executive be reined in and more competences be returned to capitals.

“We need to change the overall functioning of the EU and I think it is needed to change the functioning of the European Commission,” said Czech Prime Minister Bohuslav Sobotka.