European agency share out leaves bitter taste in Central Europe

Prague and the rest of Central Europe lost out in the latest share out of European agencies across the continent. It has created a lot of anger and resentment in some capitals that the smaller and newer states were again pushed around by the bigger and older ones. The Czechs admit their bid for the European Banking Authority was always a big challenge and they were probably outsiders. But they also admit misgivings about how the share out evolved.

Aleš Chmelař, photo: archive of Czech GovernmentAleš Chmelař, photo: archive of Czech Government An extremely angry Slovak prime minister, Robert Fico, denounced what he described as the move a few days earlier by the big and established EU countries to ignore agreed selection criteria and site EU agencies in Western Europe. Such issues hurt the smaller and newer member states and would have to be raised, Fico warned.

Slovakia felt severely hard done by after bidding to host the European Medicines Agency with its hopes raised by the fact it so far hosts no major EU institution or agency. The Czech Republic put its own bid in for the European Banking Authority. Both have to be relocated because of Brexit. Bratislava and Prague were both disappointed with the final choices going to Amsterdam and Paris. And there’s little doubt that this has left a sour taste in many Central European capitals.

Aleš Chmelař is the Czech Secretary of State for European Affairs. He admits the Czechs were probably always outsiders for the EBA. Nonetheless, looking back on the share out he feels that more might have been done to make sure at least one Central European country landed one of the agencies. I asked him first of all what chances Prague had of putting itself on the European banking map.

"If we looked at the criteria tabled by the European Commission in June and that was evaluated by the commission in September, it was visible that the Czech Republic would have to table a very strong offer. That is no just physically bit diplomatically. In these terms maybe there was a larger effort demanded from us than from other countries which, for example, have large financial centres nearby or that are in the Euro zone or could somehow have larger infrastructure in terms of, for example, flight connections. Our offer, considering our geographical position, and strategic position would have to be stronger than for the others. But I think we had a fair chance in terms of the bid and our efforts had shown that we were very close to the second round where we could have counted with the geographical balance to be included in the debate. Unfortunately, in the first round the geographical balance was not part of the thought or reflection from any member state."

"Overall the effect of the agency… would be positive and this came out from the evaluation that we did in 2016."

When you talk about geographical balance you mean that so far not many EU institutions have been sited in Central and Eastern Europe.

"Yes, that’s true and also the fact that Prague has quite a small agency and just part of the overall Galileo system. So in these terms we thought that Prague would also be an interesting place to site this agency because the prominence of other cities in terms of their agencies was larger than in the Prague case."

What would have been the immediate advantages in terms of jobs if the agency had been placed in Prague and the spin off effect from extra jobs and skills attracted?

"We made an evaluation of the bid in 2016 already which counted with a net budget effect on the Czech government that would be to the tune of hundreds of thousands of euros. It was not negligible. Then there were staff opportunities for administrators and support staff. Also in terms of visitors, that was in terms of thousands per year that would also use the well paid conference programme of the agency. So overall the effect of the agency despite some initial costs for the Czech government would be positive and this came out from the evaluation that we did in 2016. And we based the government decision on this evaluation."

And was it ever possible or was it attempted to get some Visegrad position on this, that maybe the other countries would back Prague for the banking authority and maybe Bratislava for the drugs authority? Was this reviewed as perhaps counterproductive if all the Central European countries came as a whole and said ‘give us this.’?

European Banking Authority headquarters in London, photo: archive of EBAEuropean Banking Authority headquarters in London, photo: archive of EBA "We had an agreement and let’s say quite a good one and well established one that we would support each other in spite of the fact that Warsaw was a candidate for both agencies, the EMA and EBA, so there was not just a single candidate for the agencies within the V4. But the support was there and it was actually realised. In terms of the V4 we do not actually have anything to reproach ourselves about, the bids were there with a lot of transparency and support from all the members of the V4. But that showed itself not to be enough because we had some trouble drawing attention to the geographical balance and to our agencies from the recent enlargements if I have to put it in those terms."

Recent enlargements being what…Croatia?

"Well 2004 onwards in Central and Eastern Europe if I have to simplify."

How did the Czech bid play out? You did not get through to the next round. As I mentioned earlier, I saw an interview with the Slovak prime minister Fico in which he was extremely angry saying that the basic [selection] criteria weren’t respected and the big countries decided that they would get the sites and agencies themselves. Is that fair to say or is that a simplification?

"Well, the expectations of Slovakia and Bratislava were legitimate because they don’t have an agency. They had a strong bid and they had a good building. They also had the infrastructure, being helped by the proximity of Vienna airport. But in general it was a very good offer in a state which does not have an agency yet. So the expectations of Slovakia and the chances if we take a more political approach was actually quite high. In the Czech case we were really an outsider looking at the position of our banking sector and our position outside the euro zone. We tried to make an advantage out of this but it showed that it was not taken as such. So in these terms I think that the reaction of Slovakia is legitimate but our expectations, despite the fact that we were actually closer to the second round than Slovakia, in the Czech case were lower."

"If we were in a position to renegotiate the methodology then we would probably approach it differently."

But is the criticism that to some extent the criteria were left aside and the big countries basically said ‘Yes. this has to be done fairly quickly, Brexit is approaching and we will site them in the big countries where it can be done perhaps quicker or easier?’

"All the countries, member states, agreed to the methodology in June on the level of prime ministers and presidents. This was done collectively so there is no point in showing that the methodology could have been better. From our evaluation of the states that made their bids and the chances for the geographical balance to be realised, we think now that looking back that the methodology could have been created to create more space for a political collective decision, say, on putting one agency into a more recent member state. So in this respect if we could, if we were in a position to renegotiate the methodology then we would probably approach it differently. But no-one knew what would be the final bids and how the support would develop.

"There was no conscious decision of big states not to have an agency in a more recent member state. Ina way this methodology was individual. Every member state negotiated for themselves and there was no guaranteed communication between them that I will withhold my bid because newer member states have more rights to have an agency or those that don’t have an agency should have one. In this respect it was the methodology that was very individual for every state and none wanted, logically, to censor themselves and withdraw from the bid because that would weaken themselves. Even if they realised that the geographical balance was important, the fact was that they were defending their own bid and not taking into account the others and that led to this decision. It was not a willingness of the big states, or let’s say the less recent member states, that they wanted this to happen. It was more that this was how the methodology was chosen and how it was pursued."

"There was no conscious decision of big states not to have an agency in a more recent member state."

It’s little secret that there was probably massive lobbying from France for Paris to be the site of the banking authority due to the French overall aim of taking as much business from London as possible and creating a rival financial centre in Paris?

"There was lobbying from every member state behind their positions. Some of the member states chose not to put high preference for both agencies but only one of the two. In the French case, I think that if you ask the EBA employees they would agree that France was actually one of the best destinations and logically so. It’s two hours by train from London, it’s an hour and a half from Brussels and a couple of hours from Amsterdam. It is very centrally placed, it has the infrastructure, it has the living standards that somehow the employees would expect. It has the financial infrastructure. So in some terms it was the logical choice. Political motivation played a role in every single bid. It’s logical there would be rivalry in the bids for the banking agency based on the expectations of these cities to become more concentrated financial hubs. There have been decisions of banking houses in London to move to the continent. So in this respect it was expected to happen. "