Who are the lobbyists?

Lobbyists are bringing US-style hardball tactics to the staid world of Brussels, says Simon Wilson. What do they want, and are they likely to get it?

Who’s spending on lobbying?

The biggest spenders on lobbying in Brussels have traditionally been energy and financial-services groups. But over the past decade the scale of professional lobbying has ballooned in line with the EU’s growing regulatory clout on everything from food safety to internet privacy to carbon emissions. Recently it is big US tech firms that have become the schmoozers-in-chief. According to the EU’s voluntary lobbying register, US tech giants – including Google, Microsoft, Facebook, Yahoo!, Apple and eBay – spent €7m on lobbying Eurocrats and MEPs in 2012.

That sounds quite modest?

Indeed, but then these figures are almost certainly far too low. The EU lacks an American-style system of rigorous disclosure and instead relies on a voluntary register. A report in the EU Observer, a newspaper, exposed that system as being riddled with inaccurate and incomplete information; it omits over 100 big firms known to be actively lobbying in Brussels. (Here in Britain, the government will soon announce plans for a mandatory register in the wake of the latest cash-for-access scandal last month.)

So Amazon is not listed as having any paid lobbyists in Brussels, and eBay claims to spend less than €50,000, despite employing five lobbyists. By way of comparison, the tobacco industry spends about €5m on lobbying in Brussels each year – again almost certainly an underestimate. But even though the exact figures are hard to get at, lobbyists and policymakers agree that the world of Brussels lobbying has become far more intense, and seen a marked rise in aggressive tactics, such as ‘astroturfing’.

What is astroturfing?

It’s a phrase (reputedly coined by the former US Senator Lloyd Bentsen) to describe the setting up of fake ‘grass-roots’ interest groups to influence political opinions. The US tech firms would deny such cynical behaviour. However, they were embarrassed in May this year when the European Privacy Association – a Brussels-based outfit describing itself as an independent think tank – was obliged to change its official designation to ‘in-house lobbying group’ following an official complaint to the EU register. It turned out the ‘independent’ think tank was mostly funded by the big American tech firms.

Is this sort of stuff new?

Brussels has long been seen by public affairs professionals as a rather gentlemanly, consensual cousin of Washington DC. However, veterans of the Brussels lobbying scene who MoneyWeek spoke to for this article talked of similar practices being commonplace since at least the 1990s: setting up supposedly neutral ‘information’ events to gain acceptance for controversial products or initiatives; creating dedicated lobbying outfits that pass themselves off as mere trade associations; drafting parliamentary amendments that end up being copied-and-pasted by Eurocrats too lazy or too swamped to do their own writing.

According to Austrian filmmaker Friedrich Moser, director of The Brussels Business – a documentary on lobbyists’ influence – “the European Institutions, mainly the Commission but the Parliament too – are understaffed. They do not have the personnel to come up with their own expert opinions”, and therefore rely on think tanks and outside experts.

Sounds potentially dodgy?

A scenario in which Brussels is stuffed with almost as many lobbyists (most estimates put the number between 15,000 and 20,000) as the Commission has civil servants (23,000) is one where paid-for influence is likely to flourish. The potential for corruption is clear. Two years ago three MEPs – an Austrian, a Slovene and a Romanian – were caught out in a sting, having agreed not just to ask questions, but to put down amendments in the European parliament in return for pay; one of them boasted of earning hundreds of thousands of euros from lobbyists.

Does lobbying work?

The practice is so diffuse and opaque that it’s hard to say – academic studies on the subject offer contradictory and unclear conclusions. What is certain is that if the work of lobbyists had no effect, their clients would stop paying them and that would be that (see below).

The sums paid are big enough: in Washington, some estimates make lobbying the city’s third-biggest industry after government and tourism. Sceptics argue, however, that if lobbying had clear and measureable benefits, then mature democracies would put a stop to it, or tightly regulate it. The fact that American big business is only willing to pay a few billion a year to try and influence a federal budget that is about 1,000 times that size (£3.8trn) suggests its influence is marginal at best.

The soaring Lobbying Index

One study appearing to provide striking evidence that lobbying works is a US stockmarket index. Compiled by Strategas Research Partners, it focuses on the 50 companies that spend the most money (as a proportion of their total assets) on lobbying Washington. Inevitably, the list is dominated by companies in highly regulated industries, such as defence and pharmaceuticals (though, notably, banks and financial firms are absent, perhaps because their balance sheets have been so leveraged in recent years that the sum they spend on lobbying is a small proportion of assets).

The Strategas findings are remarkable: the ‘Lobbying Index’ has outperformed the S&P 500 for 12 years in a row from 2001-2012 and by a massive margin of almost 11% a year.