EU LEADERS NOMINATE PORTUGUESE PM DURAO

UNCLAS SECTION 01 OF 03 BRUSSELS 002794

SIPDIS

E.O. 12958: N/A
TAGS: PREL EUN USEU BRUSSELS
SUBJECT: EU LEADERS NOMINATE PORTUGUESE PM DURAO
BARROSO AS COMMISSION PRESIDENT; SOLANA REAPPOINTED
AS CFSP HIGH REP, LATER TO BE THE FIRST EU FM


SUMMARY
--------------


1. EU leaders on June 29 nominated Portuguese Prime
Minister Jose Manuel Durao Barroso as the next
Commission President effective November 1. The
leaders also renewed the mandate of Javier Solana as
Council SG/CFSP High Rep with a commitment to
appoint him as the first EU Foreign Minister once
the EU Constitutional Treaty is in place. Barroso,
whose nomination remains subject to confirmation by
the European Parliament in a July 22 vote, said the
allocation of portfolios in his team would be his
"sole responsibility." END SUMMARY.

ONE NEW HEAD AND TWO REAPPOINTMENTS
--------------


2. EU leaders smoothly agreed "by consensus" at a
short meeting in Brussels the evening of June 29 to
nominate Portuguese PM Jose Manuel Durao Barroso as
the next Commission President to succeed Romano
Prodi on November 1, 2004. Barroso's confirmation
remains subject to the approval of the European
Parliament, which will pronounce (majority of EP
membership) on July 22. The EP is expected to
endorse Barroso, a member of the conservative
European People's Party (EPP) that will form the
largest group in the newly elected EP. However,
other factions (Liberals, Socialists and Greens)
will likely want to hear more from Barroso on his
views on the EU and his approach to the job before
deciding how to vote.


3. The leaders also reappointed Javier Solana as
Council Secretary General/CFSP High Rep and Pierre
de Boissieu as Deputy Secretary General of the
Council as from October 18, 2004. They issued a
Declaration stating that Solana will be appointed
Union Minister for Foreign Affairs "on the day of
entry into force" of the Constitutional Treaty. The
implication, which was confirmed to us by a senior
Council official, is that Solana will not/not join
the Commission until that time. Thus, double
hatting (merging the current Solana and Patten jobs)
is not anticipated. Although the leaders invited
the future President of the Commission and the SG/HR
"to organize the working relations between them in a
way that will ensure a smooth and efficient
transition and to take the necessary measures to
that end," a senior official privately told us that
the Council and Commission have not done anything
yet in that respect and that they have 18 months to
fulfill this tasker. In the meantime, it will be up
to Barroso to decide how the RELEX functions will be
fulfilled in his Commission.


4. The leaders also reappointed the Frenchman
Pierre de Boissieu as Deputy Secretary-General of
the Council, a function that entails the day-to-day
management of the Council Secretariat and
organization of work, with a footnote saying that de
Boissieu will be appointed Secretary-General of the
Council on the day of entry into force of the
Constitution (when Solana becomes EU FM).

INTRODUCING THE NEXT COMMISSION PRESIDENT
--------------


5. Barroso appeared at a joint press conference
with a jubilant Irish PM/EU chair Ahern, Solana and
Commission President Prodi. The performance of Jose
Manuel Barroso (as he invited the media to refer to
him) was highly creditable, drawing from his
linguistic and communication skills, a sense of
humor, and marked by a sense of respect for the
European Parliament and the prerogatives of his
function as enshrined in the Treaty. Addressing the
press in his statement and the question period in
Portuguese, French and English, Barroso emphasized
that his nomination was made by consensus. He
stressed the need for a strong Commission that
respects "all sensibilities in the European project"
and insisted that "all conditions are there for such
a project.


6. With the July 29 press reporting pressures on
Barroso from France and Germany to secure top
economic portfolios in his team, the nominee said he
would be happy to listen to "suggestions" but
insisted that the allocation of portfolios would be
his "sole responsibility." To make things clear, he
referred to Treaty provisions concerning the role of
the Commission President. He encouraged colleagues
to propose the best candidates and especially to
propose women as candidates. Pending his
confirmation, he said he was simply not in a
position to express any position nor to give any
undertaking with respect to portfolios. With
respect to the EU and its operation, Barroso
developed a motto of "fairness," highlighting the
need for "balance" between big and small, rich and
poor, the center and the periphery. His concept of
the Union was "based on the principle of solidarity"
(read: financial transfers to poorer members).
Barroso backed the Commission's proposal for the
2007-2013 EU financial framework.

NEXT STEPS
--------------


7. Assuming Barroso passes the test of the European
Parliament on July 22 (and we believe he will),the
focus will turn to the formation of his team (one
Commissioner per Member State). The EU governments
(excluding Portugal),in consultation with the
President-designate, will each nominate the person
they propose to appoint as member of the new
Commission. The Council will draw up a list of the
24 designated Commissioners. The President-
designate will then announce the allocation of
portfolios among the Commissioners-designate. The
EP will hold hearings of the proposed Commission
members on September 27-October 1 and October 4-8.
Following that, the President-designate and the
other members of the Commission will be subject as a
body to a confirmation vote by the EP (Parliament
has no power to refuse individual members). The EU
Council will then formally appoint the President and
the other members of the Commission. This can
happen by qualified majority.

WHEN THE MUSIC STOPS: EXIT VITORINO
--------------


8. The main victim of the leaders' choice of
Barroso as Commission President will be current JHA
Commissioner Vitorino, who cannot be reappointed to
the Commission this fall as his country is only
entitled to have one national in the team. The
current Spanish Commissioner, Joaquin Almunia, now
holding responsibility for economic and monetary
affairs, is expected to be reappointed. However, as
Member States will only be allowed to have one
Commissioner each, Almunia would have to step down
if/when Solana combines the job of Commission Vice-
President and EU FM (not before 2006).

COMMENT
--------------


9. Barroso's nomination was the result of a process
of crossed vetoes of the leading candidates, leading
to a desperate search for the candidate that would
be acceptable to both the largest political group in
the European Parliament and to all governments of
the EU-25. The deal ends two weeks of uncertainty,
during whichsupporters and opponents of unofficial
candidates were pitted against each other in a
behind-the-scenes process in which views on the EU's
future were not given primary consideration and
exposure, fueling criticism on the lack of
transparency of the nomination process.


10. Barroso is on the record as saying he is no
visionary: "I'm a reformist, not a revolutionary, a
centrist, not a free-market fundamentalist." To
judge from his initial comments, he can be expected
to develop a vision of the EU based on strong, equal
rights for Member States as well as well-funded EU
policies to reduce internal disparities and enhance
the EU's profile. The new President will have to
manage integration of the ten new Member States, and
also prepare for the next wave of enlargement into
the Western Balkans. EU leaders are due to decide
in December, just weeks after he takes office,
whether to open accession talks with Turkey. But
drafting the Commission's opinion will not be his
responsibility. As for the organization of his
team, Barroso may be expected to appoint up to five
Vice-Presidents to run clusters of Commissioners in
a more pyramidal management structure.


11. We defer to Embassy Lisbon for a fuller
analysis of Barosso, and will be interested in any
insights Lisbon might offer on key advisors likely
to move with Barosso to Brussels. Though presented
as "largely unknown outside Portugal," Barroso is
perceived in well-informed EU circles as a market-
oriented reformer who imposed strict austerity
measures on his country upon taking office in 2002
after Portugal became in breach of EU rules on
budget deficits. He is seen here as a staunch
defender of the EMU Stability and Growth Pact
underpinning the euro. In spite of his record at
home, Barroso objects to capping EU spending (of
which his country is a major beneficiary),which may
put him on a collision course with major EU budget
funders and net contributors (Germany, France,
Netherlands, in particular). He may soon have to
guide his Commission through difficult choices
between assisting the newcomers and preserving flows
of EU structural aid to poorer members among the
former EU-15, including his home country.


12. A supporter of stronger ties with the U.S. and
promoter of a strong NATO, Barroso also wants bigger
investment in the European military: "Europe cannot
be an economic elephant and a military pygmy," he
once said. "The transatlantic relationship must be
revitalized. This is...a task for political
decision-makers on both sides of the ocean we
share," Barroso said in a speech in October 2003.
"Our planet will be much better if Europe and the
United States work together and worse off if this
doesn't happen."

SCHNABEL