The European Parliament Puts Up Its Dukes

Its new powers and leftist leanings spell trouble for business

Intel Corp.'s Keith Chapple used to ignore the European Parliament. When he became the chipmaker's chief Brussels lobbyist a decade ago, Chapple saw the institution, with its two glass-and-steel palaces and 11 official languages, as an impotent and extravagant talking shop. But recently, the parliament has toughened up proposed legislation regulating companies that sell services on the Internet. "We're now paying attention," says Chapple.

Lobbyists representing industries from entertainment to airlines are now all watching with care. Europe's voters will go to the polls from June 10 to June 13 to elect 626 deputies to a new European Parliament. When it convenes in July, it will have more power than any of its predecessors.

Under the Amsterdam Treaty, which went into effect on May 1, the European Parliament's authority to amend legislation was expanded from 15 to 38 sectors, covering all areas except agriculture and monetary union. And for the first time, the parliament will vote on nominations of European commissioners, including the proposed European Commission president, Romano Prodi.

POWER STALL. Many worry that the new body could use its expanded powers unwisely. Even before the Amsterdam Treaty, the parliament was known for its volatile combination of activism and amateurism. Many members are self-proclaimed rabble-rousers, such as Danny "the Red" Cohn-Bendit, the radical leader of the Paris student revolution in 1968. He was a German Green deputy in the last parliament and is leading the French Greens in the upcoming elections. He has led protests against investments by Gaz du France in Algeria and French oil giant TOTAL in Burma. Other populist deputies include German Social Democrat Christa Randzio-Plath, who wants to cut bank fees, and British Labour delegate Christine Oddy, who is fighting for strict regulations on companies that transfer data across borders.

The strengthened European Parliament is almost sure to further anti-business policies begun by the current assembly, which has been in power since 1994. Representatives of Socialist parties make up the largest single bloc of deputies, with 214 seats, and are likely to do well in the upcoming vote. "In general, the parliament favors employees over employers," complains Therese de Liedekerke, Director of Social Affairs at UNICE, the European employers' association.

GREEN GENES. If a raft of new activist candidates win, the parliament could have enough power to stall major European Union reforms. European Commission officials fear a left-leaning parliament could slow efforts to deregulate telecommunications and airlines or permit more subsidies to failing state-owned companies.

Transatlantic trade tensions could also intensify if the new parliament flexes its muscles (table). Under pressure from parliament, the European Commission has begun to crack down on genetically modified products made by Monsanto Co. It also turned down Iowa-based Pioneer Hi-Bred International Inc.'s application to market a genetically modified corn seed.

To be sure, the parliament still suffers from some deep-rooted institutional weaknesses. It can only amend, not initiate legislation. But the parliament steadily has increased its powers since its modest beginnings in 1952. It was then called "an advisory assembly" and national legislators nominated the 78 members. The first direct elections were held only in 1979.

Newly respectful of parliament, business executives are revving up efforts to influence its members. They hope to use the parliament's increasing clout as a tool for making the notoriously bureaucratic commission more responsive. "When I ask the commission about high-profile cases, they often duck the questions," says Stephen Kinsella, a partner in the Brussels office of British-based law firm Herbert Smith. "If parliament can force the commission to answer, that's good for accountability." But before the European Parliament can play such a positive role, the institution needs to grow up.

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