Samuel Lowenberg - Independent Journalist biography articles articles

Lobbying, Euro-style

After repeated missteps, U.S. companies are trying to figure out how to play the influence game in the European Union.

The National Journal  September 8, 2001


BRUSSELS-You've heard plenty about their battles with the Bush Administration over global warming and missile defense, but the issue that really has Europeans in an uproar these days is exploding television sets. At least that's the view being pushed by the global public relations and lobbying firm Burson- Marsteller, which has been waging a campaign on behalf of its clients in the bromine industry against legislation in the European Union that would ban the chemical as a flame retardant in household appliances.

Burson-Marsteller's lobbyists and their clients, which include Great Lakes Chemical Corp. and the Dead Sea Bromine Group, have a big fight on their hands. The regulation is being pushed by the Green Party-a powerful force in Western Europe-and has the support of several countries. Critics of bromine are concerned because the chemical is toxic and they fear it will leach into the environment. After wending its way through the European Union's three governmental bodies, the bill is now going before the EU Parliament for a second time.

During its long campaign, Burson-Marsteller has created the Bromine Science and Environmental Forum, which publishes scientific studies and has an annual conference. It has also established the Alliance for Consumer Fire Safety in Europe, which operates a Web site in English, French, Dutch, and German. The site gives examples of horrific fires from around the Continent, and implies that the combustion of household products causes 4,000 deaths and 80,000 injuries in Europe each year.

"This is an incredibly technical piece of legislation," said Jeremy Galbraith, who heads the Burson-Marsteller lobbying operation in this city that serves as the European Union's capital. After four years of public relations and lobbying, he said, the firm is making "progress" in demonstrating the benefits of bromine to European Union officials.

That the European Union became engulfed in this lobbying battle royal over such a narrow issue might surprise people in the U.S. policy world. If the bromine initiative arose in Washington, it would likely be stuck in the bowels of a regulatory agency and not in Congress. Were it to get to Capitol Hill, industry lobbyists could probably quash the legislation by applying political pressure or by neutralizing it during the appropriations process.

But as American companies are slowly learning, the rules of the influence trade are very different in the European Union from what they are in Washington.

Indeed, for most Washingtonians, the European Union is hard to fathom. When the European Union's actions do attract notice in the United States-such as in the recent scuttling of the merger between General Electric Co. and Honeywell International Inc.-they are usually greeted with shock and indignation and then explained away as being driven by politics, protectionism, and elitism. But in fact, the quashing of the merger by Brussels, and the astonishment it generated on the other side of the Atlantic, shows that U.S. corporations are often behind the curve in figuring out how to play the influence game at the European Union.

Eighty percent of the regulations that affect businesses in Europe originate with the European Union, according to the public affairs firm Hill & Knowlton. Yet it is only in the past few years that U.S. companies peddling their wares in Europe's 340 million-person market have started to realize that they can no more ignore regulators and politicians in Brussels than they can their counterparts in Washington. This summer, for instance, the European Union's reach has ranged far beyond merger approvals to issues such as food safety, securities regulation, and the prohibiting of television advertisements aimed at children. In late August, European Union regulators moved against Microsoft Corp., arguing that the software giant was attempting to monopolize the browser market on the Continent.

And yet this is a world largely without campaign contributions, where the revolving door would be considered crass, and where "astroturf"-the American practice in which industry lobbyists manufacture grassroots support for their clients-is almost nonexistent.

Although the internal dynamics of lobbying differ considerably in Brussels from those in Washington, the overriding principles of access and influence remain constant. Both cities operate in a bubble, little understood or observed by the public, where often-overworked and understaffed politicians and bureaucrats decide on complex policy issues. Thus in both places, lobbyists exercise influence as providers of substantive information and political intelligence.

But as some of the biggest U.S. companies have been slow to learn, simply transporting K Street tactics and personnel to Brussels can be a recipe for failure. As early as March, Euro lobbyists were talking about how General Electric CEO Jack Welch's bluster over the proposed GE-Honeywell merger had poisoned the waters with European officials, repeating mistakes made by executives from Monsanto Co. and Coca-Cola Co. in previous years. Even Jack Valenti, the president of the Motion Picture Association of America, who is regarded as a paragon of K Street smooth, made serious mistakes during his visit to the European Union several years ago when trying to counter French- led attempts to curtail the invasion of American movies. The U.S. film industry, according to a Brussels lobbyist for a multinational entertainment company, is still trying to regain ground lost by Valenti. "Valenti talked about culture as if it was a commodity to be traded," said the lobbyist. "We are still in a post-Jack recovery mode, even years later."

Different Geometry
For lobbyists who touch down in Brussels, navigating the European Union system is in some ways geometrically more complicated than lobbying in the United States. In Washington, although Republicans and Democrats constantly vie for control, the general lines of power are firmly established. Issues and players vary, but one lobby campaign follows much the same format as another. Not so in the still-evolving European Union, formed in 1993, where lobbyists face a monumental task in simply trying to figure out where to focus their efforts.

"In Washington lobbying, you get access to people. In Brussels lobbying, you get people who show you the way through the big, untransparent maze," said Maurits Bruggink, the managing director of the Brussels lobbying shop Grayling Political Strategy. K Street's trend of going bipartisan isn't enough here: The 12 lobbyists in Bruggink's office hail from seven different countries and speak nine different languages. Bruggink, who is Dutch, speaks five languages himself. Grayling, which is headquartered in London, has offices in seven countries.

The nature of lobbying on the Continent is different-and so are the fees, which fall on the low end of the K Street scale. Brussels firms report hourly charges of from $100 to $200, and monthly fees ranging from $5,000 to $10,000.

The entity called the European Union is actually made up of a variety of institutions, all vying with each other for power; even defining where power begins and ends is difficult. In cases ranging from human rights to banking, EU officials have issued guidelines that member states interpret and put into law. How they choose to do so can vary widely. In other instances, though, such as the fight over the use of bromine as a flame retardant, the European Union spends many months debating narrow issues that are smaller than anything that would rise to the level of a congressional floor debate.

For lobbyists, there are three vital EU decision-making bodies. The Council of Ministers is composed of leaders from member nations and senior Cabinet officials who propose and approve legislation. The European Commission is the giant multinational bureaucracy that promulgates regulations. And the 625-member European Parliament has taken on an increasingly powerful oversight role, particularly on environmental and consumer affairs issues. Within these institutions are members who hold allegiances to a multitude of political parties, among them Socialists, Greens, Thatcherite Conservatives, and ultra- rightists. EU regulators are technically nonpartisan, but are quite activist by American standards. As many companies have learned, while they may have the support of one EU body, another always seems ready to pop up and make life difficult with inconvenient laws and rules.

Consider the case of Disney Co., which is fighting a Swedish effort to enact a European-wide ban on television commercials aimed at children. Such a ban would be unthinkable in the United States, but it makes perfect sense in Sweden, where the government long ago enacted this prohibition. Greece, Belgium, Denmark, and Italy are expected to join Sweden in pushing for the restrictions. Disney and other companies that market to children, such as Mars Inc., MTV Networks, and Coca- Cola, are fighting the proposed restrictions on the grounds that children's programming depends on advertising revenues. On a more philosophical level, the companies are also arguing that such a ban would violate the U.N. Convention on the Rights of the Child.

The drawn-out and contentious policy-making process in Brussels further complicates influence-peddling. These days, European lobbyists are focusing their efforts on Parliament, which has gained power in the past few years. Elaine Cruikshanks, Hill & Knowlton's European chairman, noted in a recent article that Parliament has become a favorite for lobbyists because it "is open and accessible and has members with relatively few staff to support them," and the members are thus eager for input from helpful lobbyists. To Washington lobbyists, that probably sounds a lot like Capitol Hill.

Many Players
The aspect that is perhaps most underestimated by U.S. companies is the European Union's essential makeup: The union consists of 15 sovereign countries, which, unlike American states, do not share the same underlying ideological and economic interests. American lobbyists often focus on decision makers in Brussels without realizing that it is equally, if not more important, to concentrate first on the capitals of some or all of the 15 member nations-all the countries of Western Europe, except Norway and Switzerland.

"If I want a positive outcome, I have to have the message coming from the member states," said Ivan Hodac, a Czech who runs AOL Time Warner's lobbying operation in Brussels and whose other lobbyists are from Spain, Italy, and Holland.

In Washington, campaign contributions and entrenched party politics enable most issues to be dealt with in a few congressional cycles as companies hire lobbyists who can enlist the help of the party leadership and the relevant committee chairmen, regardless of what state they are from. But for a company in trouble in Europe, it is not simply a matter of hiring the local Haley Barbour, Tommy Boggs, or other star lobbyist to straighten out the mess. Given the European Union's decentralized nature, it is hard to imagine that such a person exists.

The golden rule of Euro lobbying is to get four things right: timing, intelligence, targeting, and sensitivity, said veteran EU lobbyist David Earnshaw, who had been a senior parliamentary aide for a Socialist member and then worked as a lobbyist for pharmaceutical giant SmithKline Beecham.

Connections simply do not mean as much in Brussels, because of the high number of players and because the policy- making process is drawn out and consensus-based. Slipping in a last-minute provision or neutering a bill in appropriations is usually not an option. European lobbyists place much less importance on "getting a meeting" than do their American counterparts. One lobbyist for a U.S. investment bank maintains that the bank has well-connected former high-level officials on retainer in almost every European country. "We can get access to anybody we want to," said the American. But most European lobbyists scoff at such claims, emphasizing that technical knowledge and a good case are more important than political connections.

Lobbying in Brussels is more low-key than in the United States, said Cruikshanks. "It's much more workmanlike, I would say. We are not the stars-the client is." Cruikshanks said that the role of her lobbyists-who, as a group, speak nine of the 11 EU languages-is to act as facilitators.

For Americans, adjusting to this different culture takes time. One lobbyist for a U.S. company that is currently under fire said she uses a European firm because "a lot of times I don't want to show my face. You send people in so as not to leave fingerprints." In Washington, corporations and industries often send out hired guns with political connections to fix problems with the government. But this is not an accepted practice in Brussels, where most European lobbyists say they rarely talk to officials on behalf of their clients. In fact, lobbyists say they often do not even accompany their clients to meetings. A lobbyist for a European liquor trade group expressed horror at the idea of sending an advocate on his industry's behalf.

"When you go and talk to politicians here, they like to see the whites of your eyes," said Ken Baker, who lobbies for Monsanto in Brussels. Baker, a New Zealander, speaks French, Dutch, Italian, and some German, and said he is perceived as a fellow European.

Even that sacred K Street tradition, the revolving door, is a rarity for Euro lobbying shops. Europeans have a professional bureaucracy, and the concept that regulators might cash in by going to work for corporations they once oversaw is a foreign one. Further, old contacts can go stale, as the presidency of the Council of Ministers rotates among countries every six months, and the heads of the Commission's various agencies are reappointed every five years. One head of a lobby shop said she prefers to hire not former legislators but former journalists, because they tend to have a broad range of contacts and know how to write.

Of course, politicians here are no strangers to the backroom deal and the under-the-table envelope. Last year, the Commission was dissolved in a cloud of scandal and then reorganized, while corruption at the highest levels was revealed recently in France and Germany.

The American system involves the widespread passing of money through mostly regulated (and disclosed) campaign contributions. Comparing their work to that of their Washington counterparts, Brussels lobbyists point to the lack of campaign donations as the biggest difference. Corporations can give money to political parties in most European countries, but they are usually limited in their donations to individuals, as much by custom as by law. Another difference is that European politicians do not face the same fundraising pressures as Americans do: David Robert Bowe, a two-term British member of the European Parliament, said that his last campaign cost 30,000-about $43,000.

In England, where the public is quite sensitive to any perceived ties between government and industry, a few intermediaries have popped up to facilitate contact. "There is a lot more suspicion of vested corporate interests influencing the democratic process here," said Phil Royal, a lobbyist with the London firm of Butler Kelly, who directs the Environment Forum, a bipartisan group that brings together companies and politicians. The group holds dinners and lunches so that corporate representatives can chat informally with regulatory officials and members of Parliament.

While the lack of campaign contributions removes a crucial tool from the lobbyist's tool kit, American corporations face an even bigger difficulty: learning to negotiate the European Union and its multilateral policy-making process. Each of the union's 15 member states has substantial power to push through or veto policy initiatives. Brent Staples, who heads the Brussels office of APCO Worldwide, a huge PR and lobbying firm, compares EU lobbying to "three-dimensional chess." And that means that public opinion often plays a greater role here than in the United States, particularly on environmental issues. Burson- Marsteller, for instance, created a unit dedicated to working on environmental issues, the company's only such issue-specific division.

Indeed, American companies often hit a wall when confronted by the fact that many European countries are social democracies built on very different political foundations from those of the United States. Thus, when a company tries to make the case that its position will benefit the general populace, invoking the name of the Chamber of Commerce or the National Association of Manufacturers does not carry the same cachet as it does in Washington. A recent article in The New York Times on the Daimler-Chrysler merger pointed out that American executives were shocked that their German counterparts were used to dining in the same company cafeterias as low-level employees. For American lobbyists in Brussels struggling to form a personal connection with European officials, the differing political mores can be confounding.

"There is a whole kind of underlying socialist suspicion" of corporations, said a lobbyist for a U.S. investment bank. "Consumers are treated like children in Europe. It's all part of the tradition of Big Government here."

The American penchant for trying to substitute self- regulation for government oversight has little credibility with officials in Brussels, who tend to take the view that companies will misbehave if left to themselves. But it's not only European regulators who hold this view. Bertel Heerink, government affairs director for the European Chemical Industry Council, said that public demands for corporate responsibility have caused his group to publicly disagree with at least one of its American members, ExxonMobil Corp., which is seeking to eliminate a variety of regulations on chemicals."Sometimes you come to the limit of where you can stretch" in terms of principle versus public perception, Heerink said. "It's the political reality of today."

Environmentalists Hold Sway
Corporate lobbyists in the European Union also face an obstacle that does not exist in the United States: a powerful environmental and consumer movement that has elected members of governments. The green movement began in Germany, the industrial giant; France fights heated trade wars on behalf of family farmers and fresh pastries; and England, home of Thatcherism and privatization, is also a nation of militant bird-watchers and gardening-club members.

"You have U.S. companies that don't see it in the U.S., and it comes as a terribly rude shock to them in Europe," said Gavin Grant, a managing director at Burson-Marsteller's London office, who formerly worked on cruelty-to-animal issues for an NGO. "Often, American corporations don't understand the pace at which this stuff moves over here."

No company has learned that lesson better than Monsanto, the St. Louis-based agriculture concern whose bioengineered seeds became the focal point for continent-wide protests in Europe in the 1990s against corporate globalization. The company's attempts to respond only made things worse; currently, the European Union has a ban on introducing new genetically modified seeds.

At the root of Monsanto's problems were an entrenched hubris and a tin ear as to how its products and actions were being perceived across the Atlantic-this, according to Monsanto's own lobbyists. The fact that the company was stacked with past Clinton Administration officials, including former Commerce Secretary Mickey Kantor and former senior White House aide Marcia Hale, got the company access, but little more.

"These senior executives thought they could just walk in and buy [British officials] a glass of champagne and charm them," said Evie Soames, a lobbyist at BSMG, which has represented Monsanto in England for four years. "I got to the point where I was trying not to arrange meetings for them."

Ann Foster, a British lobbyist who formerly worked in- house for Monsanto and still does work for the company, recalled the frustrations she went through in trying to explain the culture clash to her American colleagues. She said she found herself saying "that whatever tried-and-tested methods had worked in the past were not going to work now. We had to explain to them that what seemed entirely normal behavior wasn't going to work now and came across as bullying."

Ultimately, said Monsanto spokesman Tony Combes, the company's bad press dried up only because "we stopped talking." These days, the company conducts its governmental and public communications through European trade associations such as CropGen and EuropaBio.

From this debacle, Monsanto also learned the lesson that public relations, rather than legal clout, plays a crucial role in policy advocacy in Europe. Perhaps the most noticeable thing about the Brussels lobbying community is the lack of lawyers; there are virtually no Washington law firms with significant public policy profiles in Brussels. (The law firms tend to be relegated to regulatory matters such as antitrust.) Rather, public relations companies that have presences in both Washington and Brussels are far and away the largest firms. The strong standing of the PR industry in Brussels is especially surprising given that in Washington, the use of PR firms is more often than not an afterthought; they are brought in when the damage is already done. Their lobbying arms tend to be dismissed as decorative add-ons to increase the firm's attractiveness to clients.

For the big PR firms-APCO, Burson-Marsteller, and Hill & Knowlton-setting up a public affairs practice in Brussels was a logical step. All of the firms already had good coverage in many other European capitals, giving them an important source of intelligence and cultural understanding. In Brussels, legislation gets tossed between the Commission, the Council of Ministers, and the Parliament so many times that large-scale image and coalition-building campaigns often make more sense than rifle- shot lobbying. With the power in the hands of so many, intelligence-gathering and strategy take precedence over access and influence.

PR's Limits
But PR has its limits. Procter & Gamble's chief lobbyist in Brussels, Erik Jonnaert, said that while he keeps Hill & Knowlton and APCO on retainer, he does not use them as much as he used to. Jonnaert said he initially hired the PR firms to help make contacts, but he has now developed his own. These days, he uses the firms to monitor issues and gather political intelligence. But even these roles are sometimes not useful, because as the Commission has become more transparent in its workings, the PR firms sometimes end up providing him with information that he could easily have found on his own.

"There's a lot of insider's knowledge required to be effective, and that's why consultants can be important," Jonnaert said. He initially tried using the PR giants throughout Europe, but they did not always have the necessary contacts. Now he chooses lobby shops by country capital, based on which has the best local contacts. Jonnaert said he has also had problems when agency employees handling his account have left to work for competitors. There's a "competitive advantage to building up expertise in-house, rather than relying on agencies," he said.

These days, he relies mostly on his in-house lobbying group, which is based in a huge Procter & Gamble research and administrative compound on the outskirts of Brussels. P&G also has lobbyists in Germany and England.

In Washington, most of these corporate lobbyists would have come off the Hill or from the relevant federal agencies. In Procter & Gamble's case, however, only two of the seven in the Brussels group used to work at the European Commission-one for the consumer policy directorate, the other for a leading member of Parliament who is active on consumer issues. The rest of the lobbyists have scientific backgrounds. The expertise of these lobbyists from Germany, Belgium, and Britain is attractive because some of Procter & Gamble's biggest current EU lobbying issues deal with the ongoing revisions to regulations governing chemicals, and with a ban on marketing goods tested on animals.

But lobbyists such as Earnshaw, the former aide to a Socialist member of the British Parliament, thinks it will be some time before most American lobbyists and their corporate clients become truly effective in Brussels. Earnshaw, who has worked in the past for corporate clients but who is now the chief lobbyist for the global charity organization Oxfam International, said that the United States is rooted in the ideology of free markets and a hostile view of regulation, both of which come into sharp conflict with fundamental European Union values.

"The American context is so neoliberal that it is very hard for any American, whether they are a consumer organization or a corporation, to understand what drives Europeans," he said.

Research for this article was funded in part by the German Marshall Fund of the United States.

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