Can Europe Make It?

Barroso: from Europeanist to global banker

Mr. Barroso’s appointment as Goldman Sachs non-executive chairman is disappointing. As a former President of the European Commission, he should be held to higher ethical standards. Español

Manuel Nunes Ramires Serrano
21 July 2016

Jose Manuel Barroso with Tony Blair. PAimages/Efrem Lukatsky. All rights reserved.Before becoming Portugal’s Prime Minister, Mr. Barroso was first elected to Parliament in 1985 and served as State Secretary for Home Affairs, State Secretary for Foreign Affairs and as Minister of Foreign Affairs. A prominent figure during the last 10 years in Europe, José Manuel Durão Barroso ascent to the top of the financial world comes as no surprise, if we take into account Goldman Sachs’ hiring policy. Intelligent, connected and with a deep knowledge of Europe’s profound complexities, Mr. Barroso is the perfect fit for Goldman Sachs’ London International Bureau (GSI), the bank’s largest subsidiary - particularly after the UK´s decision to leave the EU.

But, should Mr. Barroso have accepted Goldman Sachs´ offer to become the chief lobbyist for the investment bank that, among other dubious moves, helped Greece to circumvent the Maastricht deficit rules? Accepting a position at Goldman Sachs reflects a poor sense of state. Poorer even than his decision, back in 2004, to leave Portugal´s prime-ministership and move to Brussels after only 2 years in office. His decision reflects what many Portuguese have known for a long time, and Europeans are learning just now: Mr. Barroso’s first priority is not his country´s future, not the European project, but himself.

Criticism of Barroso’s appointment has been quick to emerge. Mathias Fekl, the French Secretary of State for Foreign Trade, accused Mr. Barroso of representing that “old Europe” which, according to him, “our generation will change”. Politicians, however, have not been alone in their criticism. The Union for Unity (U4U), the largest trade union representing the EU´s civil servants, has also called for appropriate action on the matter and has circulated a petition, which has been signed by many EU civil servants, for his monthly €18,000 pension to be immediately suspended.

The bank that rules the world

Goldman Sachs is a well-known institution, at least since the 2008 stock market crash. Linked to the collapse of the financial system, it played a notorious role during the subprime loan crisis and in masking Greece´s true debt through an obscure operation of financial engineering that ended up doubling the country´s debt.

Described as the “bank that rules the world”, the investment entity lives by a simple motto, according to the French journalist Marc Roche: more money equates to more power. Goldman Sachs not only dominates the financial world, it also controls governments, institutions and people on a global scale. Mario Draghi (current president of the European Central Bank), Romano Prodi (former Italian Prime Minister), Hank Paulson (US former Secretary of the Treasury) and Mario Monti (former Italian Prime Minister) have all held positions at Goldman Sachs before revolving into positions of power.

With is allegiances spread across the political spectrum, Goldman Sachs strongly invests in hiring smart, connected people capable of cultivating influences on its behalf. Mr. Barroso fits in perfectly.

Mr. Barroso has violated no formal regulations because, after the standard 18-month direct lobby ban has elapsed, former commissioners have no obligation to inform the Commission of their professional whereabouts. Yet, we should ask: is it ethical for such a former high ranking authority to join a multi-billion dollar corporation that actually does not respect the rules he was responsible for enforcing?

Revolving commissioners

It is paramount that a line be drawn between the public and the private sphere in order to avoid corruption and conflicts of interests - and to prevent political institutions from being abducted by corporations. The European Commission, however, has failed to draw this line.

The line has been crossed many a time. Five out of thirteen commissioners who served during the first Barroso Commission (2004-2010) have joined the ranks of companies such as BNP Paribas, Munich Re, BNY Mellon, Ryanair and the Royal Bank of Scotland. Triggered by popular unease at this sort of revolving-door practice, the Code of Conduct for Commissioners was reformed in 2011. Yet, despite some minor advances, the door is still open. 

One third of the second Barroso Commission members have taken a corporate role or a role with corporate links. That is, 9 out of 26 commissioners who left office in 2014 have ended up in private corporations and business organizations.

Evidently, Mr. Barroso´s case is no exception. A revision of the European Commission Code of Conduct is needed to ensure that commissioners behave with integrity and discretion after they leave office. Increasing the conflict of interest period to 5 years would be an efficient measure to put an end to this sort of revolving-door practice.

Personal ethics and legal obligations

Mr. Barroso has come a long way since its Maoist days. Once the leader of the Federation of the Marxist-Leninist Students in Portugal, he certainly made it to the top of the political ladder when he became President of the European Commission in 2004. A brilliant man, he shifted from left to right in an intelligent, yet rather opportunistic way.

This time, though, Mr. Barroso’s lack of ethics should not go by with impunity. There are some legal obligations commissioners must respect after leaving the Commission, and these obligations also bind the President. Beyond the 18-month ban, it is understood that they are committed to promoting the general interest of the Union and taking appropriate initiatives to that end (17 TEU). This obligation implies behaving with integrity and discretion (245 TFEU) and refraining from disclosing information (339 TFEU) and it applies even after commissioners (or in this case, the President) leave office.

Mr. Barroso said in a recent interview, published in the Portuguese newspaper Expresso, that he has no political ambitions left. Certainly, the number of positions he currently holds, despite the fact that many are academic and honorary, will keep him busy: a total of 23 as of July 2016, if we add his recent position as Goldman Sachs non-executive chairman. But his obligations as former EU President, as enshrined in the European treaties, do not cease to exist just because Mr. Barroso has decided to move on from politics.

Accepting a position such as the one offered by Goldman Sachs entails serious consequences. And Mr. Barroso, intelligent as he is, is fully aware of this. His reckless action only comes to confirm what many have feared for a long time: that the ties between the financial elites and the political elites are strong, and who rules whom is a debatable question.

Political Insensibility

Of course, Mr. Barroso is entitled to pursue a professional career. But the cooling off period should extend well beyond 18 months, so as to make sure that public interest is preserved and that the line between the private and public sphere is in place. If the cooling off period were to be extended to 5 years, would Mr. Barroso’s connections be of much use to Goldman Sachs?

In any case, is this professional burden not being generously paid for? Commissioners are entitled to a 36-month transitional allowance after leaving office, ranging between 40% and 65% of a commissioner’s basic salary. This makes you wonder whether Mr. Barroso can honestly justify his decision by defending his right to “have a professional career”. He knew the rules then, he certainly knows the rules now.

Mr. Barroso is not the first former president of the European Commission to move from European corridors to the financial heights. But he is the first to do so directly. It is hard to believe that he had no other option, or that he could not find a suitable job to further his professional career elsewhere. Yet, he chose precisely Goldman Sachs, a company whose unscrupulous conduct is well documented

Many will defend that such decision is a matter of personal ethics. Indeed. But it is also an exercise in political insensibility. No one is asking Mr. Barroso to sacrifice himself for the European project. But his decision undoubtedly damages how the EU is perceived by European citizens and it destroys the idea a few still nurtured that European politicians place European values and democracy over their own interests.

The French Newspaper Libération rightly described his appointment as the worst timing for the Union and a boon for Europhobes. Far-right leader Marine Le Pen was quick to take advantage of it by stating that Mr. Barroso’s move is not surprising for all those who know that the EU does not serve people but high finance.

Speaking of betrayal makes no sense, as Mr. Barroso is no longer a European official. But is it too much to ask of a former president of the Commission not to slap the EU in the face? Mr. Barroso has not violated the rules, yet his decision shows how urgent it is for the rules to change. Putting an end to the notion that it is fine for corporations to hire those who are up in the political ladder and to use them to further their own interests and lobby the institutions should be a priority.

Just because Mr. Barroso does not take an interest in politics anymore, does not mean that politics will not take an interest in him. After a lifetime’s work and commitment to European values, joining a corporation that puts money and power over honesty is a decision that can, and should, be unacceptable. Not because he, as an individual, cannot do it, but simply because, as former President of the European Commission, he should not

Get weekly updates on Europe A thoughtful weekly email of economic, political, social and cultural developments from the storm-tossed continent. Join the conversation: get our weekly email


We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram WhatsApp yourData