Political lobbying has existed for as long as politics itself. The Ancient Greeks and Romans had it. In modern democracies, it is virtually omnipresent – always there, but seldom talked about. In the United States, it has been a large industry for so long and become so ingrained that it is a century since President Woodrow Wilson described the lobbying industry as being so powerful that “the government of the United States is the foster child of special interests”.
The size and power of the National Rifle Association is well-known. For years, the giants of the tobacco and pharmaceutical industries have pumped millions of dollars into influencing and distorting US legislation. What is not so widely acknowledged is the extent of the influence of lobbyists operating in Westminster and Brussels.
Large-scale lobbying of the European Parliament is a relatively recent phenomenon. Until 1997, with its legislative powers severely restricted, lobbyists would direct their attention to the European Commission rather than Parliament. However, as the responsibilities of the Parliament have grown, particularly with the signing of the Amsterdam Treaty in 1997, so the Brussels lobbying industry been drawn to it.
A 2008 report by Alexander Stubb for the European Parliament’s constitutional affairs committee, published shortly before Stubb became foreign minister of his native Finland, estimated that there were around 15,000 lobbyists and 2,500 lobby organisations in Brussels. Of these, Stubb indicated that 5,000 operated solely in the European Parliament. With the adoption of the Lisbon Treaty, making Parliament a co-legislator on virtually all European Union legislation, the lobbying industry has exploded. That 15,000 estimate is now likely to be a very conservative one.
Moreover, the global economic crisis and the political response to it have led to lobbying on a spectacular scale. Since EU legislators made it clear that the massive shortcomings in the regulation of the financial industry meant a complete overhaul on everything from bank bonuses, capital requirements and short selling to hedge funds, derivatives trading and credit rating agencies, it seems that representatives of the financial sector have stationed themselves in Brussels on a permanent basis.
For them, this makes sense. Major financial legislation is not decided in Westminster any more. If most regulation of the City and the financial sector in general is done by the European Parliament, why bother too much with the House of Commons? As a result, financial lobbyists have laid virtual siege to the European Commission, European Parliament and the Council of Ministers.
The impact has been immense. The email addresses of politicians are flooded with requests for meeting. If lobbyists can’t meet the politicians, they are almost as keen to meet those who work for them. Many MEPs say that if they agreed to even half these requests, they would do nothing but go from meeting to meeting.
Similarly, the number of free dinners and receptions that firms organise mean that, if they chose, European politicians need hardly ever pay for a meal. Whoever said there is no such thing as a free lunch had clearly never been lobbied by the financial services sector.
While financial institutions spend a fortune on lobbying to water down the legislation that is supposed to make them more risk-aware, safer and less likely to bring the entire global economy to its knees again, other organisations do not have the same resources.
This is not to say that political lobbying has no place in law-making. It is not necessarily a bad thing, if it is not abused. After all, the Labour Party was established by the trade unions, which were created to lobby for better pay and working conditions for their members.
And talking to lobbyists can be instructive. It is difficult to grasp all the numerous strands of the financial markets, no matter how much reading and research you do, so meeting one of their representatives can be enlightening – even if it does nothing to change your mind.
Perhaps this is how things should operate in an ideal world. On very complex issues, politicians should hold discussions with lobbyists, from various sides of the argument before forming their own judgement.
But this is not what tends to happen. A sizeable minority of lobbyists are aggressive and seek to be intimidating. During the process of formulating the EU’s Capital Requirements Directive, with its emphasis on tightening the laws on bonuses, the likes of Deutsche Bank, Morgan Stanley and the British Bankers’ Association threatened that such restrictions would force them to leave Britain and other EU countries for Switzerland, Hong Kong or other tax havens.
Private equity organisations did the same in 2009 until they realised that their arrogant attempts at bullying were counter-productive when directed against strong-willed politicians.
Unsurprisingly, many of the right-wing amendments to financial directives are drafted, not by Conservative politicians, but by financial sector lobbyists. In my role as an advisor to an MEP, I have seen draft amendments that have been sent to me by lobbyists being tabled, in identical form, by other MEPs – often several times.
Similarly, when it comes to a vote, politicians can expect to receive detailed voting lists telling them how they can help the respective lobbyists. This must be effective, otherwise it wouldn’t keep happening. But it is hardly democracy in action.
The other shocking aspect of the lobbying industry is how unregulated it is, although this is being addressed at EU level. There is a mandatory public register for all lobbyists in the European Parliament.
In fact, in 2008, the Stubb report called for a mandatory public register for lobbyists that would cover the European Council, Commission and Parliament – this is commonly referred to as the “one-stop shop” proposal. This register would provide for “full financial disclosure” by lobbyists and include a “common code of ethical behaviour”. It would treat NGOs, think tanks, trade unions and trade associations the same as professional lobbyists or “in-house” company lobbyists.
However, both the European Commission and Council opposed the Stubb report, with Siim Kallas, then commissioner for administration and anti-fraud, proposing a voluntary model for lobbyists. Critics say a voluntary register is as much use as no register.
Although there has been little progress since 2008 and there remain division on the issue between the European Parliament and the Commission, it looks increasingly likely that the latter will back the former on a mandatory register.
If the Council of Ministers, some of whose members have made the laughable claim that they are never lobbied in Brussels by commercial enterprises, can be dragged into line, then the EU will at least have a an effective register and code of conduct. That would not be all doom and gloom and it would be something better than the opaque system which currently exists at Westminster.
While scepticism about lobbyists is understandable, they can have a role to play in helping to formulate good legislation. But there is a fine line between informative advice and freebies in exchange for amendments and votes. When that line is breached – as it too frequently is – then democracy becomes a sham.
And it is particularly galling when the casino capitalists whose greed and recklessness caused the financial meltdown in the first place subsequently spend millions trying to brow-beat lawmakers into killing legislation designed to stop them from causing another crash in the future.
