Thursday 27 October 2016

Brendan Keenan: EU states need to clarify Brussels' role

Commission plans to set quotas for women on company boards raises issues about member states' powers

Published 09/09/2012 | 05:00

YOU may think it's a good idea to have more women on the boards of public companies. Then again, you may not.

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If you do think there ought to be more female directors, you may think it is a good idea to set a binding quota to get the numbers up. Then, again, you may not.

If you are in favour of quotas, you will presumably approve of the EU Commission proposal to enshrine them in European law. If so, you might like to think again. They are two entirely different questions -- and the second one has nothing to do with women, or company boards.

I might as well come clean on the first questions. I would like to see more women directors. I'm not sure they would be that much different from male ones, but clearly there is a pool of available talent which is not being used.

Irish boards in general do not suggest that talent is so abundant that we can afford to waste it.

I am not so keen on quotas. But I do not care that much one way or another. If the Government decided to impose quotas on board membership, I would not consider it sufficiently interesting to write a column about it. (Though quotas on TDs might be different.)

But the Government is not proposing it: the Commission is.

That raises an issue I do think important, and one which is set to grow mightily in importance -- the role of the European Union and the role of member states.

I am using the word "union" advisedly. The EU calls itself a union, and in recent treaties it made itself into a union. But the word has never caught on. It may be that few want to face up to the realities that such a concept implies.

Even europhobes sometimes seem to prefer worrying about the supposed threat of greater union in the future than dealing with the union already in existence.

The union's leaders, both politicians and officials, also shy away from discussion of its operations, or the theories behind them. There has been lot of comment on the quota proposal, but very little question as to why the Commission should be doing such a thing at all.

This is in marked contrast to full-blooded federations, such as the USA, Canada or Australia. There, the issues of federal and state competences arise in almost every new major policy or legislation. It makes up the bulk of US Supreme Court hearings.

Of course, the Commission has the law on its side. The treaties give it jurisdiction to propose such a measure -- but that is the problem. EU leaders draw up treaties as if they were legislation at home, full of all the things they would like to see. Since there are 27 of them -- from left, right and centre -- that is a lot of things.

Much of this fails one of the few genuinely constitutional points in EU treaties -- that the union should do only that which cannot be done better at state level. Unfortunately, there seems to be no effective supreme court to turn this into practice.

It has not mattered much until now -- but it will not do for the Europe which is supposed to be on its way. The ECB promise of unlimited support for countries under pressure in the debt market is conditional on the creation of a fiscal union and on governments adhering to limits on the size of deficits.

This is to be followed by union banking regulation, supervision and deposit insurance. Other arguments are already being heard. The ECB president, Mario Draghi, wants "strong political underpinning" for the principle that member states should not follow policies which cause economic harm to others.

If he means they should not borrow money on the back of implicit guarantees that others will pick up the bill, then fair enough.

But if he means that states should not compete with each other for exports, investment and the jobs that go with them, that is dangerous nonsense. But it is very popular nonsense.

Other states regard the Dublin IFSC as harming their interests. To the extent that it did so because regulation was lax, they are right to complain and the proposed EU Regulator must apply safe minimum standards.

If Dublin then becomes unattractive for such operations, we'll just have to live with it. If it continues to attract the investment because Dublin is more profitable, even when well-regulated, the others should live with it.

Settling such profound issues requires a clearer, different concept of the role of the union and the role of states. The idea that the number of women on boards is a matter for legislation covering 400 million people in 27 states is worrying evidence that those in charge do not understand what it is they are in charge of.

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