France beats Britain in race for key EU job

Plum post will oversee the financial services industry – including the City

(EPA)

The carve-up of jobs within the new European Commission caused an upset to Britain yesterday after last- minute lobbying by the French president Nicolas Sarkozy saw France clinch a key appointment with regulatory powers over the financial services industry including the City of London.

Michel Barnier, the current French farm minister was appointed Commissioner for the Internal Market, a powerful portfolio that includes oversight of Europe's financial services sector. The French are keen to rein in bankers they hold responsible for triggering the recession and have set their sights on reforming the City, home to 80 per cent of Europe's finance industry.

The 58-year-old Mr Barnier was appointed as part of the new 27-strong team at the EU executive, which proposes laws and policies for the EU's 500 million citizens. President José Manuel Barroso had been expected to shave off banking services from the dossier and bring the sector under a separate Commission portfolio. He was apparently forced to capitulate at the last minute after a flurry of calls from President Sarkozy, who "spoke to him at length" late on Thursday night from Brazil, according to sources cited by Le Monde.

Mr Barnier's appointment, predicted in The Independent a week ago, will fuel speculation that Gordon Brown struck a deal with Mr Sarkozy under which France landed the internal market brief in return for French support for Baroness Ashton landing the newly created post of EU "foreign minister".

Downing Street has dismissed the claims. But senior ministers including Lord Mandelson, the Business Secretary, and Alistair Darling, the Chancellor are understood to believe it would have been better for Britain to win influence over financial services to safeguard the City of London than to land the "foreign minister" post.

One minister said yesterday: "In the long term, the internal market job will prove much more significant. We backed the wrong horse."

William Hague, the shadow Foreign Secretary, said: "Once again Gordon Brown has put the next day's headlines ahead of the long-term British national interest. It is crucial the new Commission continues on the pro-growth, pro-free market approach of the last. If businesses are driven out of Europe by too much of the wrong kind of regulation not just Britain but all of Europe will be the losers."

Michael Fallon, the senior Tory member on the Commons Treasury Select Committee, said"For the first time ever, we will have a Frenchman with his fingers on the City's throat. Gordon Brown has been completely outwitted at such a vulnerable time for the City".

Speaking to journalists in Paris, Mr Barnier brushed off British fears, saying, "it's all part of the game".

A senior Brussels diplomat also played down the threat. "There will be plenty of people who'll say this is bad news for the City, but at least there's one very prominent Brit who will be able to put the brakes on Barnier". He was referring to the appointment of Jonathan Faull as head of department. Mr Barnier himself proposed the senior British civil servant as a sweetener, alongside another Briton to his team of advisers.

Two of the most coveted posts in the Commission, economy and competition, will go to Finland's Olli Rehn and Spain's Joaquin Almunia respectively, while a little-known regional German politician, Guenther Oettinger will be in charge of energy. Nine women, one more than at present, have been appointed. The new Commissioners, who will steer the EU for the next five years, include the EU's first-ever green tsar. Denmark's Connie Hedegaard will become the EU's Climate Action Commissioner in a bid, said Mr Barroso, to "mainstream climate action and make it more visible. We'll have to keep working on this with the Americans, Chinese, Russians, even after Copenhagen," he added, referring to next month's global climate change summit in Denmark. In one of the most curious moves, Romania, a new member state which has been lambasted and fined for misusing EU farming funds, clinched the agriculture portfolio.

The European Parliament has the power to reject the appointments during confirmation hearings next month. Baroness Ashton faces a grilling over her lack of foreign policy expertise and her youthful membership of the Campaign for Nuclear Disarmament. Olaf Cramme, director of Policy Network, a London-based think-tank said Mr Barroso had little room for manoeuvre.

"He gave the big economics job to a politically-neutral Finn and put a very unspectacular German in charge of energy, who might be listened to more by the Russians in a crisis. But the problem is that the Commission is getting weaker and weaker, we don't see the same strong personalities as a decade ago. And Britain might find it lacks the influence it craves. Ashton is Commission vice-president but it's not clear she'll take a stand when needed."

Who's who: Jobs in the new Commission

*Commission President José Manuel Barroso (Portugal)

*High Representative for Foreign Affairs and Security Catherine Ashton (UK)

*Competition Joaquin Almunia (Spain)

*Economic and Monetary Affairs Olli Rehn (Finland)

*Internal Market Michel Barnier (France)

*Trade Karel De Gucht (Belgium)

*Energy Guenther Oettinger (Germany)

*Environment Janez Potocnik (Slovenia)

*Employment, Social Affairs and Inclusion Laszlo Andor (Hungary)

*Budget Janusz Lewandowski (Poland)

*Enlargement Stefan Fuele (Czech Republic)

*Justice Viviane Reding (Luxembourg)

*Regional Policy Johannes Hahn (Austria)

*Climate Action Connie Hedegaard (Denmark)

*Research and Innovation Maire Geoghegan-Quinn (Ireland)

*Transport Siim Kallas (Estonia)

*Health John Dalli (Malta)

*Agriculture Dacian Ciolos (Romania)

*Overseas Aid Rumiana Jeleva (Bulgaria)

*Home Affairs Cecilia Malmstroem (Sweden)

*Digital Agenda Neelie Kroes (The Netherlands)

*Education Androulla Vassiliou (Cyprus)