Nigeria floats the naira

On May 25th, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, made the long-awaited announcement that the country would no longer peg the naira at N197 to the dollar. This change went into effect on Monday, which was the first time in recent history that the naira’s value was determined by market forces. The change represents the latest significant macroeconomic policy change by the government, following the lifting of fuel subsidies and restrictions on fuel imports last month.

Nigeria had held its currency at N197-199 to the dollar for the last 16 months, despite the steep dive in oil prices, which accounted for approximately 90% of Nigeria’s earnings from exports. The drop in the price of oil and decline in exports caused a severe foreign exchange shortage, forcing the Nigerian government to restrict currency exchange. Emefiele banned the use of forex for the importation of several dozen products—ranging from toothpicks and Indian incense to private airplanes—in mid-2015, followed by a restrictive limitation of dollar-denominated ATM transactions for bank customers. The Central Bank then discontinued the sale of foreign exchange to currency exchange operators in the country in mid-January 2016, and blocked many online payments in foreign currencies for Nigerian cardholders. Throughout this period, the black market exchange rate soared as high as N360 to the dollar.

While most welcome the new policy, the government has made it clear that the policy change will not improve the economy overnight. According to some reports, there is up to $4 billion worth of unmet demand in the forex market that must be addressed. There are concerns that this significant backlog may take longer than the targeted four weeks to clear following this week’s policy shift.

Still, international actors have lauded Nigeria’s forex policy shift. IMF spokesman Gerry Rice conveyed the IMF’s view on the issue, stating in a letter to Nigerian President Buhari that the government’s policy shift “is an important welcome step,” and that “it will provide greater flexibility in . . . the foreign exchange market.”

Nigeria was one of few oil-exporting countries to maintain its fixed currency value following the dramatic decline in the price of oil. Other oil-exporters, such as Angola and Russia, allowed their currency rates to float. Experts believe that the official exchange rate will settle somewhere between N275 and N300 in the new market, although Emefiele wrote in a letter to President Buhari that he expects the exchange rate to stay closer to N250 to the dollar.

The naira took a predictable dive, of about 23 percent, against the dollar following the currency float. The resulting devaluation of the naira will have several immediate effects on Nigeria’s economy. One positive effect is that the flotation of the naira will boost exports, as the ensuing devaluation will make Nigerian exports cheaper. The CBN also hopes that the devaluation will ease business transactions for those that have found it difficult to procure foreign currency. However, a rise in inflation is also expected to accompany the devaluation.

At this time, it remains unclear if this policy shift will be accompanied with the easing of other restrictions that have limited business operations in Nigeria, such as the limitations on repatriation of currency. With the prices of consumer goods soaring, individuals and entities still limited in their access to foreign currency, and the economy retracting for the first time in more than a decade, the CBN Governor and President Buhari will have to make many more substantial policy changes to battle inflation and recession.

This post can also be found on CovAfrica, the firm’s blog on legal, regulatory, political and economic developments in Africa.

 

 

 

East Asia Watch: U.S. to Lift Sanctions on Myanmar

At his meeting with visiting Myanmar (Burma) State Counselor Aung San Suu Kyi on September 14, President Obama announced that he intends to issue a new Executive Order that will generally remove longstanding U.S. sanctions on Burma. Given further progress in Myanmar’s transition to a democracy, he argued that “it is the right thing to do in order to ensure that the people of Burma see rewards from a new way of doing business and a new government.”  He pointed out as well that “a lot of work remains to be done but it’s on the right track.”

In her response, Aung San Suu Kyi stated that “the time has now come to remove all the sanctions that hurt us economically because our country is in a position to open up to those who are interested in taking part in our economic enterprises.” She committed to “continue with our efforts to amend the constitution to make our country the truly democratic union that our founding fathers dreamt of.”

Immediately following this, the U.S. Treasury’s Office of Foreign Asset Control (OFAC) posted on its website that: “The President has announced his intention to terminate the national emergency with respect to Burma.  His decision will be legally effective when he issues a new Executive Order terminating that national emergency and revoking the Burma Executive Orders.  At that time, the sanctions imposed under OFAC’s Burmese Sanctions Regulations will no longer be in effect.  OFAC will formally remove the Burmese Sanctions Regulations from the Code of Federal Regulations and take other administrative actions as necessary.  Other departments and agencies will implement additional changes that will be announced on their websites as appropriate.”

What follows?

The expectation is that the President will issue this new Executive Order fairly shortly, possibly within the next week or two. It is expected that this will remove the bulk of remaining U.S. economic sanctions on Burma, in particular, the prohibition on dealing with many of  the hundred or so Burmese parties currently on the List of Specially Designated Nationals and Blocked Persons (SDN) list under the Burma sanctions program and the entities in which they own a majority interest.  This also is expected to lift sanctions on the export of financial services to Burma’s Defense Ministry in connection with the provision of security services, and allow the import of minerals such as jadeites and rubies from Myanmar into the United States.  U.S. sanctions affecting Burmese persons and companies designated under other laws, e.g., related to trade with North Korea or drug trafficking, are expected to remain.  OFAC will be providing more detailed and precise explanations following the issuance of the new Executive Order, presumably also to address whether existing reporting obligations associated with new investment in Burma will be phased out.

What is the likely impact?

The most immediate and concrete impact will be to lower the regulatory hurdles for U.S. persons and companies seeking to do business in Myanmar. This will also facilitate their joint ventures and business cooperation with other foreign companies trading with and/or investing in the country.  This should significantly spur U.S.-Myanmar trade and investment relations, especially after the Generalized System of Preferences (GSP) trade benefits and tariff reductions are restored to Myanmar after the lifting of the sanctions.

More broadly, the expansion of economic ties with the United States could further boost Myanmar’s economic growth. Although Myanmar’s annual real GDP growth rate has climbed to over eight percent (from a very low base) over the past few years, it is still considered the poorest country in Southeast Asia, after having been among the most prosperous Asian countries before WWII.  It reported a GDP of less than $70 billion (nominal terms) for a population of about 60 million in 2015.  It is estimated that nearly one-third of its people live below the poverty line.  Hence, the need and desire for investment in infrastructure and energy and virtually every sector of the economy from agriculture to manufacturing and services, e.g., tourism and banking, is enormous.  U.S. companies should thus be able to find abundant trade and investment opportunities in Myanmar.

Increased U.S. economic presence in Myanmar would also help the country diversify its overall trade and investment relations. Notwithstanding longstanding U.S. sanctions, most other countries have continued to trade with and invest in Myanmar over the years.  In particular, China has grown to be Myanmar’s dominant trading partner, taking in nearly 40 percent of Myanmar’s exports and making up over 40 percent of Myanmar’s total imports in 2015.  China has also been by far the largest foreign direct investor in Myanmar with cumulative investment at an estimated $18 billion, compared to $10.5 billion from neighboring Thailand, $4 billion from the U.K. and $3.5 billion from South Korea.  As a result of U.S. sanctions, direct U.S. investment in Myanmar is currently negligible.

Human rights groups express concern that the lifting of U.S. sanctions will remove pressure for further political reforms. Others argue that President Obama’s decision could potentially support the democratization process in Myanmar. To the extent that this boosts the country’s economic development, it helps to improve the environment within which the new civilian government can address the many critical political and security challenges of the country, especially the ongoing religious and ethnic strife between Buddhists and Muslims across the country.  As Aung San Suu Kyi herself noted here in Washington, “we want to make sure that our people are better off materially in order to strengthen our political initiatives.”  Moreover, to the extent that America’s increased economic presence also reduces the country’s dependence on China, this could also strengthen the position of the civilian government vis-à-vis the military in their currently tenuous relationship and eventually lead to constitutional reform limiting the latter’s role in government.

This Week in Congress – September 26, 2016

After failing to reach agreement last week on a continuing resolution to keep the government funded beyond the end of the current fiscal year, Congress is now racing the clock to strike a deal to keep the government open beyond midnight on Friday, September 30.  With five days to go before a government shutdown, the parties are not that far apart, but those differences have proven difficult to resolve over the past month.  The sole item on the congressional “must-do” list for the September work period remains unresolved and seems to hinge on Democrats’ demands for a provision that will provide emergency assistance for communities with drinking water contamination issues, like Flint, Michigan.  On the other hand, because Democrats may see it in their political interest to force a government shutdown and let Republicans take the blame, the target may move as the week progresses.

After three weeks of negotiations to produce a bipartisan continuing resolution (CR) to keep the government running beyond the end of this month and into December, Senate Majority Leader Mitch McConnell last week took action by offering legislation to fund the government, largely at current levels, through December 9.  The bill is generally consistent with Democratic demands for a “clean” CR without policy riders.  The Majority Leader’s bill includes bipartisan provisions that have long been part of CR discussions, such as the $1.1 billion in funding for Zika virus eradication efforts, $37 million for opioid abuse assistance, and $500 million in emergency assistance for communities affected by flooding and other natural disasters.  Democrats expressed immediate opposition to the Republican bill, claiming that several issues were unresolved.  In particular, Leader McConnell’s bill does not include emergency funding for communities facing drinking water contamination issues, such as the lead pollution in the drinking water in Flint, Michigan, a provision Senate Democrats have actively pursued since the summer.  Leader McConnell’s bill also includes one policy rider, language to prevent the Securities and Exchange Commission from implementing a rule to require corporations to disclose their political spending; Democrats oppose that provision.

A government shutdown remains unlikely, but in the face of Democratic opposition and an implicit threatened veto of the bill by the Administration even if it were to pass, Leader McConnell’s bill does not yet appear to have the 60 votes of support necessary to advance on Tuesday, when a procedural vote on the bill is scheduled to occur.  Beyond the Democratic opposition, Republican senators are not united behind the bill.  Senator Lindsey Graham (R-SC) told reporters he would vote ‘no’ because the bill does not contain a rider, supported by Democrats, to fix the quorum provisions of the Export-Import Bank so that it may approve loans even in the absence of a board quorum.  Other Republicans, led by Sen. Ted Cruz (R-TX), have been pushing to include in the CR a provision to prevent the transfer of internet governance from the Commerce Department’s National Telecommunications and Information Administration to the ICANN, an international nonprofit organization. That provision is not included in Leader McConnell’s bill.

With the election just six weeks away, there is little appetite among Republicans to play a game of high-stakes chicken with a government shutdown, but it is not clear if Democrats share that view, given the accepted view that prior government shutdowns have been politically costly for Republicans.  Press reports indicate that negotiations continued over the weekend to try to garner an agreement, but it is unclear how leadership will move forward if the procedural vote on Tuesday fails to achieve the 60-vote threshold.  One possibility remains a short-term CR into the first week of October if the parties are close to a deal by the end of the week but lack the time to get it fully enacted by midnight on Friday.

While the House waits for the Senate to approve and send over a CR, members will take action on a number of other legislative items.  The House is scheduled to return on Monday, when 16 bills will be considered under suspension of the rules.  These measures include the Cyber Preparedness Act of 2016 (H.R. 5459), legislation to bolster resources and information related to cyber threats and cyber attacks, and 4 bills reported out of the Veterans Affairs Committee.

On Tuesday, members will consider an additional 3 bills under suspension of the rules before taking up H.R. 5303, the House version of the Water Resources Development Act (WRDA), subject to a rule.  Since the Senate passed its version of WRDA earlier this month, House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) has been working to move the House bill, which was easily approved by a committee voice vote in May, to a vote on the House floor before the chamber adjourns for the elections.  The bipartisan support for the bill is waning after Republican leadership made changes to the bill in order to comply with budget rules.  House Transportation and Infrastructure Committee Ranking Member Peter DeFazio (D-OR) has withdrawn his support after a provision to make the Harbor Maintenance Trust Fund mandatory spending was stripped out of the committee-approved draft.  The change was intended to allow all fees taken in by that Trust Fund to be spent on harbor and port maintenance.  Currently only a portion of the trust fund money is dedicated to dredging and the remainder is allocated elsewhere in the federal appropriations process.  The new version of the bill has drawn criticism from Democrats due to the last-minute change.  Further, unlike the Senate-passed bill, the House WRDA lacks a provision to provide assistance to communities like Flint, Michigan facing drinking-water contamination, prompting more Democratic complaints; House Republican leaders have expressed their intent to address that issue through a conference committee.

It is also likely this week that both chambers will vote to seek to override President Obama’s veto of legislation that would allow the families of 9/11 victims to sue the government of Saudi Arabia and other countries over alleged ties to the terrorists who carried out the attacks.  If the veto is overridden, it would be the first such loss by the President since he took office.  Leaders in both chambers have suggested that the votes exist to override the veto, but bipartisan foreign policy and defense experts are urging the veto be sustained, so the outcome of the vote remains uncertain.

Activities by congressional committees slim down considerably this week in anticipation of the scheduled recess, but several high profile hearings are scheduled.

FBI Director James Comey will be appearing at two separate hearing on Capitol Hill this week.  The first is a Senate Homeland Security and Governmental Affairs Committee hearing on Tuesday morning regarding homeland security threats to the United States 15 years after the September 11, 2001 terrorist attacks.  Committee members will hear testimony from Director Comey, as well as from Homeland Security Secretary Jeh Johnson and Nicholas Kasmussen, Director of the National Counter Terrorism Center.

Director Comey is also scheduled to provide testimony to the House Judiciary Committee on Wednesday morning during an FBI oversight hearing.  Members will likely focus on a broad range of issues facing the bureau, including intelligence and counterterrorism efforts related to recent terrorist attacks in New York and New Jersey.  In a statement announcing the oversight hearing, Committee Chairman Bob Goodlatte (R-VA) indicated he also intends to question Director Comey on the Justice Department’s decision to not prosecute former Secretary of State Hilary  Clinton for mishandling classified information through private email servers.  Director Comey previously defended the FBI’s investigation and findings before a very contentious hearing in the House Oversight and Government Reform Committee in July; that committee is currently continuing its review of the FBI’s investigative file on Secretary Clinton’s private email.

Relatedly, the Oversight and Government Reform Committee is holding a Tuesday hearing on the immunity granted by the Justice Department to several individuals involved  in former Secretary Clinton’s use of private email servers.  Last Friday, Committee Chairman Jason Chaffetz (R-UT) revealed to the press that Cheryl Mills, Clinton’s Chief of Staff at the State Department, received immunity from the Justice Department in exchange for cooperation in the FBI’s investigation.  Mills is a new addition to the list of State Department staffers who were granted full or partial immunity in exchange for cooperation. The other staffers granted immunity were Heather Samuelson, an aide to former Secretary Clinton at the State Department, and John Bentel, who was director of the State Department’s Office of Information Resources Management. Two other individuals, including former IT advisor Bryan Pagliano, were previously identified as receiving immunity deals.

Federal Reserve Chairman Janet Yellen is also scheduled to appear before the Financial Services Committee this week to provide testimony on the Fed’s role in financial regulation. The Dodd-Frank Act included a provision that created a new position at the Fed, the Vice Chair for Supervision, whose occupant is supposed to take a lead role in guiding the Fed’s actions and plans for bank regulation and supervision. The provision required that the position be filled by a person appointed by the President and confirmed by the Senate, and that that officer testify twice a year before the Financial Services Committee and the Senate Banking Committee. President Obama has yet to nominate an individual for the position, five years after signing Dodd-Frank into law, and House lawmakers have requested that Chairman Yellen testify in lieu of the non-existent Vice Chair on the Fed’s regulatory activities.

The Federal Trade Commission (FTC) is the subject of two Senate Commerce, Science, and Transportation Committee events on Tuesday.  In the morning, the full committee will hold an oversight hearing, with FTC Chairwoman Edith Ramirez and Commissioners Maureen Ohlhausen and Terrell McSweeney scheduled to provide testimony.  (The FTC consists of five commissioners, but two seats are vacant.)  The Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security will hold an afternoon hearing on “outside perspectives” on these FTC issues.  Experts and academics are scheduled to appear on the witness panel, including former FTC Commissioner Joshua Wright.

The Senate Judiciary Subcommittee on Immigration and the National Interest will host a Wednesday oversight hearing on the Administration’s FY2017 Refugee Resettlement Program, rescheduled from last week. In a closed briefing earlier this month, U.S. Secretary of State John Kerry told House and Senate Judiciary Committee lawmakers that the Administration plans to increase the number of refugees into the country to 110,000 in FY2017, 10,000 more than previously called for, and an increase from the cap of 85,000 in FY2016.  Last week President Obama affirmed this increase at the United Nations Leaders’ Summit on Refugees.

The House Ways and Means Subcommittee on Trade meets on Tuesday to discuss effective enforcement of U.S. trade laws.  The hearing will focus on U.S. Customs and Border Protection’s enforcement of U.S. trade laws, facilitating and streamlining the flow of legitimate trade, and the implementation of the Trade Facilitation and Trade Enforcement Act of 2015.

The Oversight Subcommittee of the Ways and Means Committee will hold a Wednesday hearing on the federal investigation and prosecution of health care fraud and improper payments, particularly within the Medicare program.

The full details for these events and other congressional hearings scheduled this week are included below:
Tuesday, September 27, 2016

House Committees

Examining Expanded Access to Investigational Therapies
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
10 a.m., 2322 Rayburn HOB

Examining Legislative Proposals to Address Consumer Access to Mainstream Banking Services
House Financial Services – Subcommittee on Financial Institutions and Consumer Credit
Subcommittee Hearing
10 a.m., 2128 Rayburn HOB

New Orleans: How the Crescent City Became a Sanctuary City
House Judiciary – Subcommittee on the Constitution and Civil Justice
Subcommittee Hearing
10 a.m., 2237 Rayburn HOB

Department of Justice and Witness Immunity
House Oversight and Government Reform
Full Committee Hearing
11 a.m., 2154 Rayburn HOB

Are We Losing the Space Race to China?
House Science, Space and Technology – Subcommittee on Space
Subcommittee Hearing
10 a.m., 2318 Rayburn HOB

Opportunity Rising: the FAA’s New Regulatory Framework for Commercial Drone Operations
House Small Business – Subcommittee on Investigations, Oversight and Regulations
Subcommittee Hearing
11 a.m., 2360 Rayburn HOB

Investigating How VA Improperly Paid Millions to Incarcerated Veterans
House Veterans’ Affairs – Subcommittee on Disability Assistance and Memorial Affairs
Subcommittee Hearing
10 a.m., 334 Cannon HOB

Effective Enforcement of U.S. Trade Laws
House Ways and Means – Subcommittee on Trade
Subcommittee Hearing
10 a.m., 1100 Longworth HOB

National Security Space: 21st Century Challenges, 20th Century Organization
House Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
3:30 p.m., 2118 Rayburn HOB

The U.S.-Republic of Korea-Japan Trilateral Relationship: Promoting Mutual Interests in Asia
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
2 p.m., 2172 Rayburn HOB

H.R.3693, the “Iran’s Islamic Revolutionary Guard Corps (IRGC) Terrorist Sanctions Act of 2015”
House Foreign Affairs – Subcommittee on Terrorism, Nonproliferation, and Trade
Subcommittee Markup
2 p.m., 2200 Rayburn HOB

Libya’s Terrorist Descent: Causes and Solutions
House Foreign Affairs – Subcommittee on Terrorism, Nonproliferation, and Trade
Subcommittee Hearing
2:15 p.m., 2172 Rayburn HOB

The Financial Stability Board’s Implications for U.S. Growth and Competitiveness
House Financial Services – Subcommittee on Monetary Policy and Trade
Subcommittee Hearing
2 p.m., 2128 Rayburn HOB

Senate Committees

Federal Trade Commission Oversight
Senate Commerce, Science and Transportation
Full Committee Hearing
10 a.m., 253 Russell SOB

Fifteen Years After 9/11: Threats to the Homeland
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., 342 Dirksen SOB

Federal Trade Commission Outside Perspectives
Senate Commerce, Science and Transportation – Subcommittee on Consumer Protection, Product Safety, Insurance and Data Security
Subcommittee Hearing
1:30 p.m., 253 Russell SOB

Pending Nominations
Senate Foreign Relations
Full Committee Markup
2:30 p.m., S-216

Wednesday, September 28, 2016

House Committees

Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System
House Financial Services
Full Committee Hearing
10 a.m., 2128 Rayburn HOB

FBI Oversight
House Judiciary
Full Committee Hearing
9 a.m., 2237 Rayburn HOB

Department of Veterans Affairs Leases: Is the VA Over-Paying for Leased Medical Facilities?
House Transportation and Infrastructure – Subcommittee on Economic Development, Public Buildings and Emergency Management
Subcommittee Hearing
10:30 a.m., 2253 Rayburn HOB

Health Care Fraud Investigations
House Ways and Means – Subcommittee on Oversight
Subcommittee Hearing
10 a.m., 1100 Longworth HOB

Department of Defense Laboratories: Innovation through Science and Engineering in Support of Military Operations
House Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Hearing
2 p.m., 2212 Rayburn HOB

The Impact of US-EU Dialogues on U.S. Insurance Markets
House Financial Services – Subcommittee on Housing and Insurance
Subcommittee Hearing
2 p.m., 2128 Rayburn HOB

Cybersecurity: Ensuring the Integrity of the Ballot Box
House Oversight and Government Reform – Subcommittee on Information Technology
Subcommittee Hearing
2 p.m., 2154 Rayburn HOB

Senate Committees

The Persistent Threat of North Korea and Developing an Effective U.S. Response
Senate Foreign Relations – Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy
Subcommittee Hearing
10 a.m., 419 Dirksen SOB

Oversight of the Administration’s FY2017 Refugee Resettlement Program
Senate Judiciary – Subcommittee on Immigration and the National Interest
Subcommittee Hearing
10 a.m., 226 Dirksen SOB

Joint Committees

The ‘New Normal?’ An Assessment of the Economic Recovery
Joint Economic
Full Committee Hearing
2:30 p.m., 216 Hart SOB

Thursday, September 29, 2016

House Committees

Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts
House Financial Services
Full Committee Hearing
10 a.m., 2128 Rayburn HOB

Advancing U.S. Interests in Latin America and the Caribbean
House Foreign Affairs
Full Committee Hearing
10 a.m., 2172 Rayburn HOB

Ongoing Oversight: Monitoring the Activities of the Justice Department’s Civil, Tax and Environment and Natural Resources Divisions and the U.S. Trustee Program
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
10 a.m., 2237 Rayburn HOB

Document Production Status Update, Part II
House Oversight and Government Reform
Full Committee Hearing
10 a.m., 2154 Rayburn HOB

Academic Research Regulatory Relief: A Review of New Recommendations
House Science, Space and Technology – Subcommittee on Research and Technology
Subcommittee Hearing
10 a.m., 2318 Rayburn HOB

2020 Census: Outcomes of the 2016 Site Test
House Oversight and Government Reform – Subcommittee on Government Operations
Subcommittee Hearing
2 p.m., 2247 Rayburn HOB

Senate Committees

Regional Impact of the Syria Conflict: Syria, Turkey and Iraq
Senate Foreign Relations
Full Committee Hearing
10 a.m., 419 Dirksen SOB

Millennial Perspective on Federal Employment
Senate Homeland Security and Governmental Affairs – Subcommittee on Regulatory Affairs and Federal Management
Subcommittee Hearing
10 a.m., 342 Dirksen SOB

European defense strengthened after Brexit?

Since June of this year, a major effort has been made at EU level to give new impetus to European Defense. A ‘Global strategy’ was presented at the end of June by the High Representative; a joint EU-NATO Declaration was issued during the NATO summit in Warsaw in July; a German white paper announcing an enhanced German participation in defense efforts was also published in July, and a Franco–German paper was issued in September with audacious proposals for a better-structured European defense. On top of this, European defense was one of the few highlights of the Bratislava summit on September 16, from which the UK was excluded.

It is at first sight paradoxical that all these initiatives emerged after the June 23rd referendum in which a majority of UK citizens voted to leave the EU. The UK is indeed one of EU’s biggest members, contributing 25 % of current EU defense capabilities.  But the current developments are not so irrational for those who have practiced European Defense in the last decade.

An autonomous European defense, using the EU framework, was originally proposed by Tony Blair in a speech in August 1998, when he thought this would help convince the people of the UK to join the Eurozone. An agreement with France was concluded in December of the same year in Saint Malo, and the concept was then adopted by the other EU members and confirmed in the Nice Treaty of 2001.

But soon after, the British military establishment succeeded in sabotaging a process that they had never really accepted. The reinforcement of the ‘privileged relationship’ with the US at the time of the Iraq war in 2003 encouraged them to block, systematically, the development of the so called ‘Common Security and Defense Policy’ of the EU (‘CSDP’), which they accused of ‘duplicating’ NATO’s means and weakening the transatlantic link.

The danger of having the ‘supranational’ EU Commission interfere with military matters – seen by them as a step towards the creation of a ‘European army’ – was presented to the British public as a threat to national security. The proposal of Belgian Prime Minister Guy Verhofstadt in 2003 to establish a European headquarters in Brussels for EU operations was rejected with no discussion, under British-American pressure. And each year until now, when the budget of the EU Defense Agency is discussed, the UK blocks automatically any increase, thus discouraging the development of joint armament programs and the restructuring of the European Defense Industry.

In the new geopolitical environment of the last few years, the United States has developed a more positive attitude towards EU autonomous defense efforts – which they now see as a useful way to encourage burden sharing. But this did not help British behavior in CSDP matters to evolve. When the Brexit vote arrived, many of those involved in European defense secretly rejoiced and started drawing plans they would never earlier have dared to propose, out of fear of a British veto. This explains the multiplication of initiatives since the end of June and the defense chapter in the Bratislava roadmap.

The objective of the Bratislava summit of September 16th was to demonstrate that the ‘27’ were sticking together, that there was no ‘contagion’ from Brexit, but also to send the message to the increasingly Eurosceptic population of the continent that the EU had a future and could even increase co-operation among its members.

The best illustration could have been a further integration of the Eurozone, as the UK is not part of it. Indeed, the completion of the Banking Union and further measures to integrate the fiscal and economic policies of the Eurozone members have been on the table for a long time and most economists consider them as key for the survival of the common currency. But progress in this field will have to wait: with Matteo Renzi challenged by a referendum in November and elections in the Netherlands, France and Germany next year the time has not come yet for compromises on either austerity policy nor efforts for more solidarity among members of the zone.

Logically, the key message was to address what EU citizens expect most from the Union in today’s context: to protect them better. To protect them by bringing illegal immigration under control, to protect them against terrorist attacks and, yes, to protect them from external threats, by reinforcing cooperation in defense. This is the meaning of the ‘roadmap’ adopted in Bratislava: ‘Never allow return to uncontrolled flows’ of illegal migrants, ‘full control of the external borders’, intensified cooperation and information-exchange among security services’, ‘strengthening EU cooperation on external security and defense’.

The roadmap is rather precise on the work to be done in the field of ‘Internal Security’, less so on ‘External Security and Defense’, for which decisions were pushed back to the December European Council. The agreed text is deliberately vague to accommodate the reservations of the remaining EU ‘neutral’ countries – mainly Ireland. The roadmap is also keen not to scare the other Brussels’ organization in this field, in adding that the Joint Declaration concluded with NATO in June should start to be implemented ‘immediately’. But it is clear that what is envisaged goes far beyond what could have been agreed if the UK had remained a member.

The regained interest for European defense did not emerge because of the Brexit vote. After ten years of stagnation, a major effort had been made in 2013 to reinforce EU military capabilities, whose shortcomings had been tragically exposed in the Libya war of 2012. The European Council in December 2013 adopted a comprehensive CSDP agenda: the leaders asked among others for development of EU capabilities in the field of remotely piloted aircraft systems (drones), air to air refueling capacity, satellite communication and cyber security.

These conclusions were made ‘credible’ by an important evolution in the approach to common defense by the biggest but traditionally ‘pacifist’ EU member, Germany. With the blessing of Angela Merkel, her Defense Minister and close ally Ursula von der Leyen had, since 2013, gradually been developing a more substantive and aggressive German defense policy. When she presented the German White Paper on Defense in July this year, Ursula von der Leyen introduced it by saying: ‘Germany is now ready to lead’.

The ‘Global Strategy document’ published in June by High Representative Federica Mogherini is the first serious attempt to update the ‘EU strategic concept’ brilliantly drafted by Javier Solana in 2003, at the time when EU members were significantly divided by the Iraq war (see here). It contains, in a deliberately careful presentation, the various military tasks CSDP should plan in the current geopolitical context:

  • To help protect the European way of life at home’: fight against terrorism, cyber and energy security, external border management, etc.;
  • ‘to contribute to the resilience of states and societies to the East stretching to Central Asia and South down to Central Africa’ – in other words, an extended ‘neighborhood’ security policy;
  • ‘To help maintain sustainable access to the global commons’, with a focus on Asia and maritime security;
  • ‘To assist further and complement UN peacekeeping’, a classic EU priority field of action.In a speech at the annual meeting of EU Ambassadors in September, Federica Mogherini openly appealed for the EU to reach ‘strategic autonomy’ (from the United States) and create an EU ‘structure for civil military planning’ (in other words, the famous EU headquarters vetoed until now by the UK).

Jean Claude Juncker, the President of the EU Commission, also mentioned Defense Policy in his so called ‘State of the Union address’, two days before the Bratislava summit. He suggested the establishment of a European Defense Fund to ‘turbo boost research and innovation’ in the defense field. The Commission also plans to include 500 Million Euros in the next research program (2020-2027) for defense research.

This new atmosphere – and the Bratislava format of 27 – also encouraged the French and the Germans in preparation for the summit, to present joint proposals which will now be discussed openly in advance of the December European Council: in addition to the creation of a joint civil and military headquarters in Brussels, they ask for operationalization of the ‘battle groups’ (which until now were merely virtual) and the ‘permanent structured cooperation’ – a way for some member states to combine their capabilities and even integrate their forces without the need to involve all EU members. All this can be achieved with no Treaty change, given that these concepts were already in the Lisbon treaty but have never been applied, for the reasons outlined above.

What will happen in the months to come? The UK is still a member state and at the time of the December European Council will probably not even have triggered Article 50 of the Lisbon Treaty. Michael Fallon, the British Defense Minister, was asked by The Times of London, the day after Bratislava, about his reaction to these attempts to create a “European army’. He gave the archetypal UK answer: that ‘this is not going to happen’, and that he was concerned about ‘unnecessarily duplicating what we already have in NATO’. He went so far as to say that ‘we are full members of the EU and we will go on resisting any attempt to set up a rival to NATO’.  

It would be sad and immensely counter-productive if the efforts of the EU 27 to boost European defense were opposed formally by the UK in the next months, at a time when the maximum possible goodwill should be developed on both sides to allow Brexit negotiations to begin in a positive atmosphere. Instead of fighting ideas which they are the only ones to oppose, those in charge of defense policy in the UK should concentrate on the new relationship they will need to establish with the EU and its main members in the defense field. It is in the interest of both sides to have the UK continue to participate in research on EU defense projects and contribute to the new ‘fund’ announced by Jean-Claude Juncker. Even the European Defense Agency might establish a better relationship with the UK outside than within the EU.

Even if no formal negotiation on Brexit can be begun before Article 50 is triggered, it might be useful for experts to start thinking of how to reconstitute a European defense on a new basis, with the aim of transcending the old quarrels about duplication with NATO, at a time when this argument is no longer used by the United States itself. The joint EU-NATO declaration is clear on this point, and should be the new basis on which current threats from the East and the South are addressed.

 

The Latest Twist in the Backpage Litigation and its Implications for the Attorney-Client Privilege in Congressional Investigations

Litigation by the Senate Permanent Subcommittee on Investigations to enforce a subpoena for documents from Carl Ferrer, the CEO of Backpage, an online forum accused of contributing to sex trafficking, has taken another interesting twist, with the D.C. District Court ruling that Backpage cannot assert the attorney-client privilege to protect certain documents.  It is rare for a court to issue a ruling on attorney-client privilege in a congressional investigation, and the court’s ruling has significant implications for any individual or company facing demands from Congress for documents, information, or testimony.

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Federal Court in D.C. Rules Against FEC in Important Disclosure Case

In an important decision, U.S. District Judge Christopher Cooper today ordered the Federal Election Commission to reconsider its dismissal of a complaint filed by CREW against two tax-exempt advocacy organizations that have never registered with the FEC. CREW alleged that the two groups, American Action Network and Americans for Job Security, had as their “major purpose” influencing federal elections, and that they therefore should have registered as federal political committees, which would have meant disclosing their donors.  The FEC split 3-3, with the three Republican Commissioners voting not to find “reason to believe” that a violation had occurred.

For years, campaign finance reform groups have sought to breathe life into the “major purpose” test, first enunciated in the seminal 1976 campaign finance law case, Buckley v. Valeo (a case that was litigated by Covington & Burling). There has been considerable uncertainty since Buckley as to the point at which expenditures related to federal elections would cause influencing federal elections to be an organization’s “major purpose.”  Judge Cooper ruled that the FEC erred in two respects when it dismissed the cases against AAN and AJS.  First, the Republican Commissioners had considered only “express advocacy” of the election or defeat of clearly identified federal candidates to count for purposes of the major purpose test.  The Court held that electioneering communications should have also been taken into account, even though they do not include express advocacy.  Second, the Court ruled that the Commissioners erred by considering the groups’ recent election related ads only in the context of their lifetime history of activities spanning many years, which tended to downplay the centrality of federal election activity to their missions.  Accordingly, the Court remanded the case to the FEC for further proceedings.

For a variety of practical reasons, there is a good chance that the case will now die on the vine at the FEC. Because the Court did not define a specific standard that the FEC must adopt, limiting itself to rejecting the standards that the Republican Commissioners applied, ample room remains for the FEC to deadlock again on remand, even if the deadlock rests on different grounds.  But the significance of the case has less to do with the final outcome of this particular case, and much more to do with the standard that will apply in future cases.  Depending on whether the FEC appeals the Court’s decision, and if so, the outcome of the appeal, Judge Cooper’s decision may point the way to a more expansive conception of the major purpose test, validating campaign finance reform groups’ decades long crusade to use that test as a battering ram to force outside groups to register as reporting committees.  In the short run, it is fair to assume that those filing complaints with the FEC will cite liberally to Judge Cooper’s decision.

This Week in Congress – September 19, 2016

The finish line for Congress could come this week as House and Senate leaders continue to negotiate the details of a continuing resolution (CR) to keep the government running beyond the end of this month and into December, through the November election. The emerging details of the funding deal will overwhelm any other activity occurring in either chamber this week. Many members remain optimistic about heading home and back to the campaign trail early for the pre-election recess, but major points of contention over possible provisions of the CR were unresolved as of Friday evening.

Congressional leaders and the President are in agreement that the CR will run through December 9. The Senate continues to take the lead in the discussions and plans to act first once an agreement is reached. Details of the bill remain unresolved, and as Senate Republican Whip John Cornyn noted last week, until every detail is resolved, nothing is resolved.

As discussed in previous columns, disagreements reportedly continue over Zika funding because of Republican demands for offsets for the spending and restrictions for Planned Parenthood-affiliated clinics in Puerto Rico; Democrats oppose these demands. While legislative language is exchanged among congressional leadership offices, other members have floated ideas for other issues to include in the eventual CR package. Among those proposals is emergency funding for Louisiana to support relief efforts after the August flooding there. Democrats want funding to assist communities with contaminated drinking water systems, as in Flint, Michigan. Another proposal would prevent the transfer of internet governance from the Commerce Department’s National Telecommunications and Information Administration (NTIA) to the ICANN, an international nonprofit organization. That transfer is scheduled to take effect on October 1.

Senate Majority Leader Mitch McConnell (R-KY) has scheduled a procedural vote on the legislative vehicle for the CR, H.R. 5325, for Monday, but the timing for this vote could be pushed back if the bill is not finalized over the weekend. The Senate is unlikely to work on any other legislative business during this week, except for measures that can pass by unanimous consent. Once the CR is approved, the Senate is expected to break until after the elections.

The House is scheduled to return on Tuesday, when it plans to consider 35 bills under suspension of the rules. The heavy suspension package includes a number of non-substantive items, such as U.S. postal-facility and courthouse name designations, a bill to make U.S. Olympic medal winners’ medals and related compensation tax exempt, and a community counterterrorism preparedness bill. On Wednesday, the House will consider an additional 14 bills under suspension of the rules. As the heavy work load shows, this is the time of year Congress tries to clear the decks. Some of these suspensions may even make it through the Senate this week (the Olympic medal-winners’ tax bill is one because it has already passed the Senate (due to the constitutional requirement that revenue bills originate in the House, this House bill is the version that will be enacted).

Once the suspensions have been dealt with, members will turn their attention to H.R. 3438, the REVIEW Act, legislation to postpone the effective date of high-impact rules pending judicial review. The legislation would require federal agencies to postpone the implementation of any rule imposing an annual cost on the economy of at least $1 billion if a petition seeking judicial review of that regulation is filed within 60 days of the rule taking effect. Under the bill, implementation would be postponed until any judicial review is resolved. Consideration of H.R. 3438 in the House will be subject to a rule. The bill is another in a series of House Republican bills designed to enhance oversight and transparency of the regulatory process, but the bill stands no prospect of Senate consideration either prior to the recess or in the lame duck session.

The House will then consider two bills related to the Obama Administration’s recent admission of $1.7 billion cash payment for a claims settlement to the Government of Iran. H.R. 5931, the Prohibiting Future Ransom Payments to Iran Act, would prohibit an Administration from making future cash payments to the Government of Iran. The House will also consider H.R. 5461, the Iranian Leadership Transparency Act. This legislation would require the U.S. Department of Treasury to provide reports in 2017 and 2018 to the Congress on the financial assets held by specified Iranian political and military leaders. The reports would describe how the assets were acquired and any unclassified portions of those reports would be posted on the Treasury’s website in multiple languages. Consideration of each bill will be subject to a rule. These bills too reflect an effort to make a political statement that Republicans hope will highlight to their benefit and the benefit of their presidential nominee the Obama Administration’s dealings with Iran to allow that country’s nuclear program, ostensibly for civilian purposes, to continue.

This week the House also continues its work on the Republican “innovation agenda,” with consideration of H.R. 5719, the Empowering Employees through Stock Ownership Act. This legislation would allow employees at certain startups who own stock in their companies to defer paying taxes on their investments for seven years or until the company stock becomes tradable on an established market. The bill also provides exclusions for specific groups of employees, such as CEOs. Consideration of H.R. 5719, which was favorably reported by the House Ways and Means Committee on a voice vote, will be subject to a rule.

The final item on the floor agenda scheduled for this week, other than potential consideration of a CR, is H.R. 1309, the Systemic Risk Designation Improvement Act of 2015. H.R. 1309 would amend the Dodd-Frank law to alter the process by which federal regulators determine which bank holding companies should be designated as systemically important financial institutions (SIFIs). Under current law, all banks with consolidated assets exceeding $50 billion are automatically designated as SIFIs. H.R. 1309 would repeal the automatic designation for such bank holding companies and establish a process under which such firms would be designated on a case-by-case basis. Consideration of the bill will be pursuant to a rule.

The House also aims to consider the CR in the event agreement is reached on the legislation and the Senate acts on it favorably. Once the House passes the CR, it too plans to adjourn until after the elections.

Committees on both sides of the Capitol continue their activities before adjourning until the lame duck session.

The high-profile event of the week will be the appearance of embattled Internal Revenue Service (IRS) Commissioner John Koskinen before the House Judiciary Committee. Members of the conservative House Freedom Caucus have led an effort to impeach Commissioner Koskinen over allegations of misconduct during the congressional investigation of the political targeting of conservative non-profit groups by the IRS. The Judiciary Committee met previously in May and June to hear testimony from members of the Oversight Committee that, along with the Ways & Means Committee, has led the inquiry into the alleged political manipulation by the IRS, and from outside experts on recommendations for congressional action. Even though the Judiciary Committee has not acted since those hearings on formal articles of impeachment, the members of the House Freedom Caucus last week attempted to force a vote. The rebellion resulted in a negotiation with Speaker of the House Paul Ryan and Judiciary Committee Chairman Bob Goodlatte (R-VA). The negotiations produced an agreement to postpone the controversial vote until after the November election, if at all, in exchange for Commissioner Koskinen’s appearance before the Judiciary Committee this Wednesday morning. Several members of the House Freedom Caucus, including its chairman, Rep. Jim Jordan (R-OH), are members of the Judiciary Committee and will have the opportunity to question the Commissioner directly on his involvement in the scandal (Rep. Jordan also serves on the Oversight Committee).

The House Oversight and Government Reform Committee continues its investigation into former Secretary of State and current Democratic presidential candidate Hilary Clinton’s use of private email while at the State Department. The committee is conducting a review of the FBI’s investigative file on Secretary Clinton’s private email. In its initial hearing, the committee heard from the contractors and officials who set up and maintained Clinton’s email servers and mobile devices during her tenure at the State Department. The committee also heard from the FBI’s Acting Assistant Director for Congressional Affairs, Jason Herring, last Monday, regarding classifications and redactions in the documents the FBI provided to Congress. Committee Chairman Jason Chaffetz (R-UT) has now subpoenaed the FBI seeking the full investigative file. The committee plans hearings this week on Tuesday and Thursday.

A third hearing related to business interests will occur in the Senate Judiciary Committee on Tuesday morning. The hearing will focus on concerns of consolidation and competition in the U.S. seed and agrochemical industry. Senators will hear testimony from the CEOs of Bayer North America, Dow, DuPont, Monsanto, Syngenta and several farm groups. The hearing comes on the heels of the announcement by Bayer AG that it had reached a $66 billion deal to acquire Monsanto. Press reports indicate if the deal is approved by regulators, the merged company will control more than a quarter of the global markets for seeds and pesticides. The Justice Department and Federal Trade Commission are currently analyzing two other seed and agrochemical company proposed mergers: one between Dow and DuPont and another between ChemChina and Syngenta. Judiciary Committee Chairman Chuck Grassley (R-IA) is facing reelection in November, and the spate of mergers is no doubt roiling voters in one of the country’s most productive agricultural states.

Even as the House considers legislation on the subject, congressional committees continue to review the Obama Administration’s cash payments to Iran The payments have come under intense scrutiny, particularly from congressional Republicans, who view them as ransom payments for Americans seized by Iran for purported violations of law. On Wednesday morning, the House Foreign Affairs Committee will hear testimony on the implications of the payment for U.S. interests. Committee Chairman Ed Royce (R-CA), who stated previously that the “cash bonanza has emboldened Iran’s radical regime, and undermined America’s national security,” is the lead sponsor of the Prohibiting Future Ransom Payments to Iran Act (H.R. 5931), one of the bills noted above scheduled for a vote on the House floor. The Senate Banking, Housing, and Urban Affairs Subcommittee on National Security and International Trade and Finance will also meet Wednesday morning on the same topic. Former U.S. Attorney General Michael Mukasey will be among the witnesses providing testimony.

The Senate Judiciary Subcommittee on Immigration and the National Interest is scheduled to host a Wednesday oversight hearing on the Administration’s FY2017 Refugee Resettlement Program. U.S. Secretary of State John Kerry told House and Senate Judiciary Committee lawmakers in a closed briefing last week that the Administration plans to increase the number of refugees into the country to 110,000 in FY2017, 10,000 more than previously called for, and an increase from the cap of 85,000 in FY2016.

The House Ways and Means Social Security Subcommittee is scheduled to meet on Wednesday morning on “Understanding Social Security’s Solvency Challenge.” The hearing will focus on the difference between the Social Security solvency projections of the Congressional Budget Office and the Social Security Board of Trustees, the causes of the difference, and what this means for Social Security’s long-term solvency.

On Thursday, the House Financial Services Committee will hear the annual report of the Financial Stability Oversight Council (FSOC). The FSOC was established under the Dodd-Frank Act to identify and respond to risks to U.S. financial stability; however, republicans have been critical of the powers granted to this new entity and the lack of transparency in its evaluation and designation processes. The 2016 Annual Report includes the activities of the Council, significant financial market and regulatory developments, and potential and emerging threats to the financial stability of the United States.

The full details for these events and other hearings scheduled this week are included below:

Monday, September 19, 2016

Senate Committees

Assessing the Recent North Korea Nuclear Event, Missile Tests and Regional Dynamics
Senate Foreign Relations
Full Committee Closed Briefing
5 p.m., SVC-217

Tuesday, September 20, 2016

House Committees

An Assessment of Deficiencies at the Northport VA Medical Center
House Veterans’ Affairs
Full Committee Field Hearing
9 a.m. Northport VA Medical Center, 79 Middleville Road, Northport, New York

Classifications and Redactions in FBI’s Investigative File (Part II)
House Oversight and Government Reform
Full Committee Hearing
9 a.m. 2154 Rayburn HOB

Veterans Affairs Contracting: Improvements in Policies and Processes Could Yield Cost Savings and Efficiency
House Veterans’ Affairs – Subcommittee on Oversight and Investigations
Subcommittee Hearing
4 p.m., 334 Cannon HOB

Senate Committees

Hyten Nomination (U.S. Strategic Command)
Senate Armed Services
Full Committee Hearing
9:30 a.m. 216 Hart SOB

An Examination of Wells Fargo’s Unauthorized Accounts and the Regulatory Response
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., 538 Dirksen SOB

Pending Nominations
Senate Foreign Relations
Full Committee Hearing
10 a.m., 419 Dirksen SOB

Laboratory Testing in the Era of Precision Medicine
Senate Health, Education, Labor and Pensions
Full Committee Hearing
10 a.m., 430 Dirksen SOB

Consolidation and Competition in the U.S. Seed and Agrochemical Industry
Senate Judiciary
Full Committee Hearing
10 a.m., 226 Dirksen SOB

Pending Nominations
Senate Foreign Relations
Full Committee Markup
2:30 p.m., 419 Dirksen SOB

Wednesday, September 21, 2016

House Committees

15 Years after 9-11: The State of the Fight Against Islamic Terrorism
House Armed Services
Full Committee Hearing
10 a.m., 2118 Rayburn HOB

Restoring the Trust for Families and Working-Age Americans (Fiscal/Policy Challenges Impacting Families)
House Budget
Full Committee Hearing
10 a.m., 210 Cannon HOB

The Future of Housing In America: A Better Way to Increase Efficiencies For Housing Vouchers and Create Upward Economic Mobility
House Financial Services – Subcommittee on Housing and Insurance
Subcommittee Hearing
10 a.m., 2128 Rayburn HOB

Consequences of Cash to Iran
House Foreign Affairs
Full Committee Hearing
10 a.m., 2172 Rayburn HOB

Stopping the Next Attack: How to Keep Our City Streets from Becoming the Battleground
House Homeland Security
Full Committee Hearing
10 a.m., 311 Cannon HOB

Allegations of Misconduct and Articles of Impeachment Filed Against IRS Commissioner John Koskinen
House Judiciary
Full Committee Hearing
10 a.m., 2237 Rayburn HOB

Oversight Hearing on the Impacts of the Obama CEQ’s (Council on Environmental Quality) Final Guidance for GHG (Greenhouse Gases) Emissions and the Effects of Climate Change
House Natural Resources
Full Committee Hearing
10 a.m., 1334 Longworth HOB

Supplanting the Law and Local Education Authority Through Regulatory Fiat
House Education and the Workforce – Subcommittee on Early Childhood, Elementary and Secondary Education
Subcommittee Hearing
10 a.m., 2175 Rayburn HOB

Examining Misconduct and Intimidation of Scientists by Senior DOE Officials
House Science, Space, and Technology – Subcommittee on Energy; Subcommittee on Oversight
Subcommittees Joint Hearing
10 a.m., 2318 Rayburn HOB

FEMA’s Local Land Use Development Decisions
House Transportation and Infrastructure
Full Committee Hearing
10 a.m.

Pending Legislation
House Veterans’ Affairs
Full Committee Markup
10:45 a.m., 334 Cannon HOB

Understanding Social Security’s Solvency Challenge
House Ways and Means – Subcommittee on Social Security
Subcommittee Hearing
10 a.m., B-318 Rayburn HOB

Seapower and Projection Forces in the South China Sea
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Hearing
2 p.m., 2212 Rayburn HOB

Corporate Governance: Fostering a System that Promotes Capital Formation and Maximizes Shareholder Value
House Financial Services – Subcommittee on Capital Markets and Government Sponsored Enterprises
Subcommittee Hearing
2 p.m., 2128 Rayburn HOB

Federal Management of Wolves
House Natural Resources – Subcommittee on Oversight & Investigations
Subcommittee Hearing
2 p.m.

Reviewing the Rising Price of EpiPens
House Oversight and Government Reform
Full Committee Hearing
2 p.m., 2154 Rayburn HOB

Senate Committees

The U.S. Department of Agriculture and the Current State of the Farm Economy
Senate Agriculture, Nutrition and Forestry
Full Committee Hearing
10 a.m., 328-A Russell SOB

Housing Vulnerable Families and Individuals: Is There a Better Way?
Senate Appropriations — Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
Subcommittee Hearing
10:30 a.m., 192 Dirksen SOB

Terror Financing Risks of America’s $1.7 Billion Cash Payment to Iran
Senate Banking, Housing and Urban Affairs – Subcommittee on National Security and International Trade and Finance
Subcommittee Hearing
10:30 a.m., 538 Dirksen SOB

Pending Business
Senate Commerce, Science and Transportation
Full Committee Markup
10 a.m., 253 Russell SOB

Pending Business
Senate Health, Education, Labor and Pensions
Full Committee Markup
9:30 a.m., 430 Dirksen SOB

Combating the Opioid Epidemic: A Review of Anti-Abuse Efforts by Federal Authorities and Private Insurers
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., 342 Dirksen SOB

FDA’s Role in the Generic Drug Marketplace
Senate Appropriations – Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee Hearing
2:30 p.m., 192 Dirksen SOB

Fish and Wildlife Service Mitigation Policy
Senate Environment and Public Works – Subcommittee on Fisheries, Wildlife and Water
Subcommittee Hearing
2:30 p.m., 406 Dirksen SOB

Pending Legislation
Senate Indian Affairs
Full Committee Markup
2 p.m. TBA

Oversight of the Administration’s FY2017 Refugee Resettlement Program
Senate Judiciary – Subcommittee on Immigration and the National Interest
Subcommittee Hearing
2:30 p.m., 226 Dirksen SOB

Thursday, September 22, 2016

House Committees

Identifying the Enemy: Radical Islamist Terror
House Homeland Security – Subcommittee on Oversight and Management Efficiency
Subcommittee Hearing
10 a.m., 311 Cannon HOB

Discussion Draft to Modernize Multiemployer Pensions
House Education and the Workforce — Subcommittee on Health, Employment, Labor and Pensions
Subcommittee Hearing
10 a.m., 2175 Rayburn HOB

Rehabilitation of the Chesapeake Bay: Healing in the Bay the Voluntary Way
House Agriculture – Subcommittee on Conservation and Forestry
Subcommittee Hearing
10 a.m., 1300 Longworth HOB

Midterm Review and Update on the Corporate Average Fuel Economy Program and Greenhouse Gas Emissions Standards For Motor Vehicles
House Energy and Commerce – Subcommittee on Commerce, Manufacturing and Trade
Subcommittee Hearing
10 a.m., HVC-210

Modernizing the Telephone Consumer Protection Act
House Energy and Commerce – Subcommittee on Communications and Technology
Subcommittee Hearing
11 a.m., 2322 Rayburn HOB

The Annual Report of the Financial Stability Oversight Council
House Financial Services
Full Committee Hearing
10 a.m., 2128 Rayburn HOB

ICE Oversight
House Judiciary
Full Committee Hearing
10 a.m. 2141 Rayburn HOB

Examining Preservation of State Department Federal Records
House Oversight and Government Reform
Full Committee Hearing
9 a.m., 2154 Rayburn HOB

Examining the Agenda of Regulators, SROs, and Standards-Setters for Accounting, Auditing, and Municipal Securities
House Financial Services – Subcommittee on Capital Markets and Government Sponsored Enterprises
Subcommittee Hearing
2 p.m., 2128 Rayburn HOB

Diplomacy and Security in the South China Sea: After the Tribunal
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
2 p.m., 2172 Rayburn HOB

Treating the Opioid Epidemic: The State of Competition in the Markets for Addiction Medicine
House Judiciary – Subcommittee on Regulatory Reform, Commercial and Antitrust Law
Subcommittee Hearing
2 p.m., 2237 Rayburn HOB

National Park Service Mismanagement
House Oversight and Government Reform – Subcommittee on the Interior
Subcommittee Hearing
1 p.m. TBA

Closing the Talent Gap in Federal IT
House Oversight and Government Reform — Subcommittee on Information Technology
Subcommittee Hearing
3 p.m. TBA

Examining Billion Dollar Waste through Improper Payments.
House Oversight and Government Reform — Subcommittee on Government Operations
Subcommittee Hearing
3 p.m., 2247 Rayburn HOB

Senate Committees

Oversight of the HUD Inspection Process
Senate Banking, Housing and Urban Affairs – Subcommittee on Housing, Transportation, and Community Development
Subcommittee Hearing
10 a.m., 538 Dirksen SOB

Pending Legislation
Senate Energy and Natural Resources
Full Committee Hearing
9:30 a.m., 366 Dirksen SOB

Exploring Current Practices in Cosmetic Development and Safety
Senate Health, Education, Labor and Pensions
Full Committee Hearing
10 a.m., 430 Dirksen SOB

Exploring a “Right to Try” for Terminally Ill Patients
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., 342 Dirksen SOB

Agency Regulatory Guidance Review (Part III)
Senate Homeland Security and Governmental Affairs – Subcommittee on Regulatory Affairs and Federal Management
Subcommittee Hearing
3 p.m., 342 Dirksen SOB

Friday, September 23, 2016

House Committees

Bioresearch Labs and Inactivation of Dangerous Pathogens
House Energy and Commerce
Subcommittee on Oversight and Investigations
9 a.m., 2322 Rayburn HOB

Reviewing the Tennessee Valley Authority’s Prohibition on Houseboats
House Oversight and Government Reform – Subcommittee on Government Operations
Subcommittee Hearing
9 a.m., 2247 Rayburn HOB

Vacant Federal Properties
House Oversight and Government Reform – Subcommittee on Transportation and Public Assets
Subcommittee Hearing
9 a.m., 2154 Rayburn HOB

The Week Ahead in the European Parliament – September 16, 2016

Summary

Next week is constituency week in the European Parliament, one of the four weeks a year when MEPs return to their Member States to focus exclusively on constituency work, or go abroad on interparliamentary delegations. For those looking to interact with Parliamentary staff, constituency weeks are a good opportunity given that the workload in Brussels is considerably lower than usual. See here for an explanation of the Parliament’s calendar.

This week saw the European Commission President, Jean-Claude Juncker, deliver his State of the Union address to the Parliament on Wednesday, September 14, in Strasbourg. Mr. Juncker began in relatively bleak terms, telling MEPs that “our European Union is, at least in part, in an existential crisis.” He used the speech to propose various initiatives which he believes would win back support for the EU amongst increasingly eurosceptic Europeans, and tackle aspects of the migration and economic crises the EU faces. He committed the Commission to publishing a white paper on the future of the bloc by March 2017, in time for the 60th anniversary of the founding Treaty of Rome. Meanwhile, the Commission is to release funding intended to provide free wireless internet access in every European city and village by 2020; double a jobs-focused investment fund, launched last year, to €630 billion by 2022; and create a separate investment fund for Africa and the European Neighbourhood, potentially worth up to €88 billion. See the full text of the speech here.

Sir Julian King, the new UK Commissioner for Security, was formally endorsed by the European Parliament on Thursday, September 15, at a vote in plenary. This followed his hearing before the Civil Liberties, Justice and Home Affairs committee (LIBE) on Monday, September 12 – a performance that was largely deemed impressive. Sir Julian’s appointment was recommended by 394 votes to 161, with the Alliance of Liberals and Democrats, the Parliament’s fourth largest party, abstaining. This was, they said, due to the political context of Brexit. See press coverage on the vote here, and the Parliament’s official press statement here.

The Parliamentary Committee of Inquiry into Emission Measurements in the Automotive Sector (EMIS) reported to Parliament on its progress so far through the publication of an interim report on Tuesday, September 13. The Committee has met twelve times and heard from 37 experts during 50 hours of hearings, and has received some 400 written answers to questions. The report led to a resolution, approved by the Parliament, calling for the Commission to speed up its disclosure of documents. The Committee also told Parliament that, in the second half of its mandate, it intends to speak more to Member States, to understand better how discrepancies between performance on-road and in test-centre conditions were not identified earlier. See an interview with the co-rapporteurs here, and the interim report here.

Finally, in foreign policy, the Parliament ratified a trade deal allowing duty-free exports to the EU for 5 economies in southern Africa, and improved market access for South Africa. See the Parliament’s press release here. The deal took 6 years to achieve, in part because of rigorous human rights clauses demanded by the EU. On constitutional issues, on Wednesday, September 14 the Parliament adopted a resolution supporting the Commission in its stance on Poland’s constitutional crisis and calling for a swift resolution. See the press release concerning the Poland vote here.

Meetings and Agenda

 September 19 to 25 is a constituency week for the Parliament and there will be no official meetings.

 

Investing in solar energy

Solar energy is a very good and important investment in sub-Saharan Africa.

The energy is cheap, clean and relatively easy to install. It is also very beneficial to consumers.  As Andy Herscowitz, the coordinator for Power Africa notes, individuals do not have to rely on an electricity grid that can be unreliable, and once they own their own systems, they are self-reliant for power.

For example, Mobisol, a German solar housing company active in Tanzania and a partner of the Power Africa initiative, provides solar panels that enable customers to power welding and pipe cutting equipment, water pumps, and egg incubators as well as fans to make cook stoves more effective. Solar-powered appliances can be “super efficient,” and utilize a fraction of the power of traditional appliances.

Moreover, an increasing amount of public money is being invested in solar energy, which mitigates risk for private investors, makes long-term capital available at competitive prices, and provides access to government expertise and other benefits that come from working with international financial institutions.

In June, for example, the World Bank through its initiative, Scaling Solar, conducted an auction in Zambia to enable the government to procure solar energy quickly and at very competitive prices. The winning bidders, Neon/First Solar and Enel, will enjoy some of the lowest prices for solar anywhere in the world at 6.02 cents per kilowatt hour and 7.84 cents per kilowatt hour, respectively. This compares very favorably with oil-based power, which can be three to four times as expensive per kilowatt hour.

First Solar, the biggest U.S. panel producer, and France’s Neoen will jointly build a 45-megawatt power plant and Enel, an Italian sustainable energy producer, will provide power from a 28-megawatt facility. The two companies are expected to be generating electricity within a year. Enel will invest approximately $40 million in the construction of the new plant, and has signed a 25-year-long power purchase agreement for the sale of all the energy generated by the plant to the state-owned utility ZESCO.

Senegal and Madagascar are also participating in the program, which may eventually spur development of 850 megawatts of solar capacity in the three countries. This could amount to investments of nearly $1 billion.

Scaling Solar was developed to help introduce solar technology to the Zambia, using competitive auctions and the endorsement of the World Bank. That helps to overcome the concerns of international banks about political risk and makes these emerging markets more appealing to developers and investors. It also includes standardized contracts, eliminating the often lengthy process of negotiating power-purchase deals one at a time. Scaling Solar is an initiative of the World Bank Group, Power Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of Foreign Affairs of Denmark, and the Infrastructure Development Collaboration Partnership Fund (DevCo).As part of its “High 5” initiative, the African Development Bank earlier this year also launched a multi-billion dollar  New Deal on Energy for Africa, which aims to establish 75 million new off-grid connections. Since USAID’s Power Africa was launched in 2013, the program’s off-grid partners have added more than 2.5 million new electrical connections.

Solar energy in Africa is an increasingly attractive investment.

This article originally appeared on The Brookings Institution’s “Africa in Focus” blog.

Supreme Court Refuses to Stay Senate Subpoena, Highlights the Difficulties Inherent in Challenging a Congressional Subpoena

The Supreme Court today refused to block a subpoena by the Senate Permanent Subcommittee on Investigations of the online forum Backpage and its CEO Carl Ferrer. As we previously reported, Ferrer lost at the District Court in his effort to block the Senate subpoena, arguing primarily that the subpoena abridged his First Amendment rights.  Ferrer appealed the District Court’s decision to the Court of Appeals.  Since losing at the District Court, Ferrer has been fighting a parallel battle to delay the enforcement of the subpoena while the appeal is pending.

Ferrer sought a stay of the subpoena from the District Court and lost; sought a stay from the D.C. Circuit Court of Appeals and lost; and finally sought a stay from the Supreme Court. The Supreme Court delayed the enforcement of the subpoena briefly last week to permit both sides to submit briefs, but today’s action lifts that reprieve.  Ferrer will now face a short deadline with which to comply with the Senate’s demand for documents.

Ferrer had previously contended that his case met the legal standard for a stay pending the outcome of the appeal, arguing that he was likely to prevail in the appeal. Ferrer has now lost in all three courts on that question, and he will shortly be required to deliver to the Senate the documents he had long sought to protect. We wonder whether these developments will alter his approach to the appeal, as he would now be advancing the appeal primarily as a matter of principle.  The briefs in the appeal are due next month.

In our previous post, we noted that the case could have significant implications for the law related to congressional investigations and the enforceability of congressional subpoenas. At this juncture, the case serves primarily as a cautionary tale of the difficulties inherent in challenging a congressional subpoena.  Ferrer had to defy the subpoena and endure a congressional contempt resolution merely to get into court, and under today’s order from the Supreme Court, he now must produce the documents to the Senate even before his legal arguments are heard by the Court of Appeals.

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