August 04, 2016
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Thinking Think Tanks

Think tanks present themselves as independent providers of arguments, facts, and figures in the ideologically charged debate on TTIP, the pending free trade agreement between the U.S. and the EU. But is that really the case? Together with the Platform for Authentic Journalism and fellow correspondent Dimitri Tokmetzis, I investigated where think tanks get their money and whether this influences their work.

By Tomas Vanheste, De Correspondent

“We would rather die than let ourselves be influenced. We really are independent, especially in spirit,” says Jacques Pelkmans, researcher at the Centre for European Policy Studies (CEPS) , a think tank based in Brussels, Belgium, and guest lecturer in economics at the College of Europe in nearby Bruges. We spoke to him in a café opposite the European Parliament about the role think tanks play in the TTIP debate, right before he was due to hurry off to a meeting with a European Commissioner.

Indeed, independence is the image that think tanks want to project when they shed light on the issues that policymakers and other stakeholders are grappling with – such as the consequences, benefits and downsides of TTIP. They adopt this image of independent game changer fairly successfully too, because the outside world often views them as a beacon of free thinking.

What do think tanks do?

The best think tanks attempt “to rationalize the debate,” the Belgian politician Philippe de Backer told us in his office in the European Parliament, “and defuse the more emotional arguments using facts and figures. They deliver good and thorough work by analyzing the advantages and disadvantages of TTIP.” The figures, which De Backer believes are reliable, are often used in political debates in Brussels.

Ferdi de Ville, professor at Ghent University’s Centre for EU Studies, agrees that think tanks have left an indelible mark on European policy. “While they may lose out to non-governmental organizations in the public debate, they do influence decision-making and are highly influential in the European Commission and the European Parliament. Their input feeds members of parliament and has a major influence on how they shape their views. In fact, the same people are often asked to write about trade policy. CEPS really dominates in that area.”

“You have to do your best not to get tripped up by the reports,” says Agnes Jongerius, member of the European Parliament for the Dutch Labour Party, PvdA. “The European Commission and the employer organizations like to refer to them to support their views.” Especially popular is the prediction by the Centre for Economic Policy Research (CEPR), for example, that TTIP will generate a whopping €545 in additional income for every European family.

Are they really independent?

Think tanks are not only highly proactive on paper but also in conference rooms. Seven of the leading think tanks in the TTIP debate have organized almost a hundred events about the free trade agreement in the past four years – often with enticing titles such as “TTIP: Big Opportunities for Small Business” and “Getting Innovative: How TTIP Can Boost Transatlantic Entrepreneurship.”

Representatives of the think tanks are welcome guests in the European Parliament too. It seems one of them is inevitably speaking at almost every breakfast meeting, lunch session or afternoon workshop about TTIP. Take the meeting organized by the European liberals last May on the geopolitical impact of the agreement. Both Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE), and Daniel Hamilton, who runs the Center for Transatlantic Relations (CTR), sat on the panel.

In addition to politicians, civil servants maintain close contact with think tanks too, including those working for the Dutch Ministry of Foreign Affairs. Hamilton from CTR took advantage of his connections to expand the ministry and embassy’s networks. And in 2015 he received a visit from the ministry’s Strategy Advisory Unit. This unit did a whistle-stop tour of think tanks , together with the embassy in Washington, D.C., to learn more about TTIP.

All the more reason, then, to take a closer look at these think tanks. Exactly what role do they play as a relationship broker? Are they as independent as they would have us believe? Where do they get their money from anyway? Who sits on their boards? And does their work really reflect a high degree of independence of spirit and objectivity, or does it bear the signature of their clients and funders?

How independent are they financially?

Think tanks are anything but independent, financially speaking. In addition to governments, and in particular the European Commission, the business sector is an important funder of the seven principal think tanks we examined which dominated the TTIP debate. Though there are differences in the degree to which businesses lend financial support, there is not a single think tank that can do without this revenue.

In total, more than three hundred companies sponsor the activities of the seven think tanks. If we put the names of these businesses next to Corporate Europe Observatory’s list of TTIP lobbyists, then it turns out that 115 of these businesses have actively lobbied the European Commission to push for TTIP and influence the negotiation process by presenting their wish list for the trade agreement.

There are a few exceptions. The Bertelsmann Foundation, for example, is fully funded by Europe’s largest media conglomerate, Bertelsmann SE, which welcomes the trade agreement.

ECIPE is another odd one out. By its own account, the base funding for this Brussels think tank comes from the Swedish Free Enterprise Foundation. This foundation was established in 2003 by the Confederation of Swedish Enterprise, a pro-business employer’s organization.

ECIPE is also clearly open to donations from organizations and businesses that “share its vision of a global economy based on free trade.” It does not provide any further information about who they are. In a phone conversation, director Fredrik Erixon proudly revealed that his think tank is funded by dozens of multinationals and indicated why he cannot reveal their names. “After all, we never asked their permission to agree to that.”

The corporate funding of other think tanks takes place mainly by means of special membership programs. For a large sum of money, businesses can become members of a think tank and subsequently gain access to the studies and policy recommendations that are issued and, significantly, to these think tanks’ extensive networks.

It costs $25,000 a year, for example, to become an alliance member of the German Marshall Fund, which allows businesses to attend all events with “international leaders,” including exclusive private dinners. The higher the financial contribution, the more a business receives in return. Opt for the Marshall membership (at $100,000 a year), for example, and GMF will help you to organize your own event on a subject of your choice and set up special briefings on request.

CEPS also has a membership program, which more than 120 businesses have joined. Membership starts at €6,000 and can run up to €18,000, depending on the size of the business. In exchange for this, members gain access to all publications, are kept informed about new events, and receive invitations to corporate breakfast meetings. CEPS’s “inner circle” membership has a price tag of €30,000 a year. This program allows businesses, according to their needs, to send for a CEPS researcher who will update management on key developments.

Why do businesses fund think tanks?

This funding does not compromise independence at all, according to Jacques Pelkmans from CEPS. After all, the rules clearly state that funders are prohibited from exerting influence. “These people don’t come to us for just any old reason. They come to us because we are doing interesting things that are neutral and of a high quality,” explains Pelkmans. “They support us because we’re a public good in the hectic environment of Brussels politics, where a great deal of lobbying takes place. Businesses – but that goes for the European Commission and the embassies too – are relieved when they have the chance to visit CEPS. Because all those things aren’t going on there.”

The latest CEPS report about TTIP is called Rule Makers or Rule Takers? The gist of it is that TTIP is the last chance for the EU and the U.S. to determine the rules of world trade according to our shared standards and values – before new players like China dictate how its done.

So why did they do it? “'REPSOL was very interested in ISDS ,” he explains. “That charming woman who ran Argentina cost them billion.” For the ECIPE think tank, the story of REPSOL’s nationalization in Argentina proves that we need ISDS to protect investors.

It is unlikely that REPSOL’s interest was confined to ISDS. The Spanish company, which has invested heavily in the North American production and export capacity of oil and gas in recent years, will also have read with great interest the chapter in the report called “Energising the TTIP.” Its three authors, including Paolo Natali, who at the time worked for Italian oil company ENI, discuss the opportunities that the agreement presents to open up the American energy market. Ratifying TTIP would help to lift export restrictions on American gas and oil, and that in turn would increase transatlantic trade.

The benefits are clear, so according to coauthor Christian Egenhofer the main question is whether the political will exists to reap these benefits. “Believe me, if the EU and the U.S. get their houses in order, then the certainty of a gas supply will no longer be an issue for the EU.” Europe would benefit from the certainty of a gas supply from the U.S., as opposed to gas from Russia, and the import of American oil could help to salvage ailing European refineries.

Energising the TTIP does not address environmental concerns, such as the impact of the harmful greenhouse gas methane, released during the production of shale gas. Asked why, one of the authors, Gergely Molnar, said that these issues were “too complex” and “beyond the scope of the research.”

The authors did take the time to criticize the European Fuel Quality Directive, however, which is mentioned as one of the areas in which trade barriers have to be lifted. Using this guideline, the EU made an attempt, which ultimately failed, to tax non-conventional oil (shale and tar sands) more heavily because of the associated high CO2 emissions. Indeed, the Fuel Quality Directive has long been a thorn in REPSOL’s side, which in the summer of 2014 shipped its first load of 600,000 barrels of Canadian tar sands oil to one of its Spanish refineries.

There are no indications that REPSOL directly influenced the report. But it is clear that there is little to nothing in CEPS’s chapter about energy that conflicts with the company’s interests. To mention the benefits of opening up the European market for American oil and gas and still neglect to discuss the downsides because they are apparently too complex does not give the impression of complete neutrality.

Does the method of funding compromise independence?

Pelkmans insists that a business giving money and having a voice in no way compromises independence. “We have a fantastic reputation. But that could disappear tomorrow. Don’t come work for us if you’re scared. You have to be highly capable and have nerves of steel.”

Philippe de Backer, member of the European Parliament, does not believe that funding threatens independence. “Sometimes they publish reports that are against the interests of businesses,” he argues. “CEPS recruits the cream of the crop. They really aren’t about to put their reputation on the line just like that.”

That’s too simplistic, in Ferdi de Ville’s opinion. “I don’t think that each of their studies is being scrutinized, but I do think that they are aware that they cannot pursue a line that is in conflict with the corporate interests of those who are funding them. Don’t bite the hand that feeds you.”

And there are plenty of crumbs to go around, for business people and policymakers alike. There are enough options for early risers too. CEPS offers member businesses the “unique opportunity” to exchange ideas with senior officials during a corporate breakfast in an informal setting. On two occasions and under the watchful eye of the director, CEPS’s corporate members ate croissants with former trade commissioner Karel de Gucht, Cecilia Malmström’s predecessor. In the U.S., meanwhile, Damon Wilson, the executive vice-president of the Atlantic Council, invited Michael Froman, the American head negotiator, to a dinner on the occasion of the Atlantic Council’s annual Distinguished Leadership Awards.

Documents that we obtained after appealing to the EU freedom of information act showed that the Atlantic Council and Michael Froman’s office were quite intimate with each other. When the Atlantic Council compiled a report on the benefits of TTIP for small and medium-sized businesses, they wanted Froman to attend the presentation. His assistant, fondly referred to as Becca, asked whether representatives from the business community will be present. “We’re inviting a few of the small businesses, yes,” replied Garrett Workman of the Atlantic Council, “but have to figure out how we’re paying for them to come. Working on that with FedEx.”

Workman seems more the TTIP lobbyist than independent researcher. What fits perfectly in this picture is that in the meantime he has moved to the American Chamber of Commerce, where his task is to promote TTIP.

And he is not the only one at the Atlantic Council who appears to view the free trade agreement with little objectivity. When secretary of state John Kerry spoke at the Atlantic Council, the council’s president Frederick Kempe said: “We’ll do whatever we can to help get this job [TTIP, T.V.] done, because we also consider it historic in nature.”

The German Marshall Fund (GMF) got chummy with Froman too. After he was appointed head negotiator, the think tank enthusiastically offered Froman its services. “If it would be helpful,” the conference director wrote to a member of Froman’s staff, “I’d be more than happy to sit down with you and discuss in more general how GMF can be the most helpful for Mr. Froman.” The staff member referred to a letter in which the boss of the think tank offered his assistance in the efforts related to TTIP negotiations.

However you look at it, offering help and being useful to someone who is trying to get a job done sounds different than doing unbiased research, which, after all, may conclude that the downsides outweigh the benefits.

That think tanks are not always investigating the downsides and benefits of TTIP in an independent way becomes clear from a fascinating series of documents from the Dutch embassy in Washington. The embassy had spent money on a study conducted by the Bertelsmann Foundation, the aim of which was “to provide policymakers, negotiators and the public with a dynamic tool that will demonstrate the value of TTIP in its own right in generating economic growth and jobs.”

It seems to be taken for granted that this is how it is, as opposed to asking whether this is the way it is. But then the think tank’s study took a turn in a direction that the embassy didn’t like. The head of the embassy’s economic department wrote the following in an email: “Hi, could you have a look at this: there are signs that our friends at the Bertelsmann Foundation are retracting on their previous plan about TTIP, but the money has already been spent, so we need to see if this is what we want. I’m concerned: now they want to compare TTIP with the impact on domestic issues. In that case we’d run the risk of getting embroiled in the domestic debate.”

Bertelsmann’s plan had been to compare the economic benefits of TTIP with those of other policy options to create jobs and growth, such as lifting the embargo against Cuba. But the embassy apparently was not keen on a political debate that focused on which options are better and decided to withdraw its funding.

Government and think tanks therefore have close ties. But contact with the business community is no less intimate. Take the Atlantic Council. Its advisory board consists almost entirely of people from the business community, including CEOs of multinationals such as Airbus, Lockheed and Coca-Cola. A clear majority of CEPS’s board of directors also comes from the business community, including the bank Credit Agricole and energy company Engie.

There is less affection for non-governmental organizations (NGOs). Meetings organized by think tanks feature speakers from their own ranks, from the world of politics and from the business community. Fifteen of the hundreds of speakers in our database are affiliated with trade unions, consumer organizations or NGOs.

Are think tanks less objective then?

Okay. For the sake of argument, say it’s all true. Think tanks depend considerably on the business community for their money. Their gatherings are a meeting place for people from the government and the business community. They have less time for initiatives from civil society. Does this also mean that the analyses and facts they furnish are not independent or objective?

That they sometimes go far to accommodate the wishes of a bestselling report is aptly illustrated by the ECIPE publication The Health of Nations: A Transatlantic Trade and Investment Agenda For Better HealthCare. This report was funded by the Alliance for Global Health and Competitiveness (AHC), an influential American employer’s organization in the medical industry whose members include companies such as GE, Johnson & Johnson and Medtronic, and the trade association PhRMA. Four months prior to the report, this lobby organization pushed for the inclusion of the medical sector in negotiations during a European Commission TTIP stakeholder forum. The ECIPE report essentially reads like an elaboration of AHC’s wishes. And though ECIPE needed 34 pages more than the AHC, it made exactly the same recommendations.

The presentation of this report was seized as an opportunity to sell AHC’s position. Edelman, the largest PR firm in the world, was hired to set this up. Four days prior to the publication of the report, they sent an invitation to trade commissioner Cecilia Malmström asking if she could attend the presentation of the The Health of Nations in the luxurious Sofitel Hotel in Brussels. “The discussion,” read Edelman’s email, “in which we believe your input would be highly valuable, will focus on the opportunities to enhance health innovation and patient access to care by reducing trade barriers and increasing harmonization between the European Union and the United States.” Edelman’s disclosed email describes ECIPE as an “independent and non-profit” think tank. Moreover, it states that representatives from Medtronic and UPS were eager to engage with her.

So are think tanks providing clients and funders with welcome information? That’s out of the question, according to Pelkmans. Time and again, he presents himself and his think tank as the epitome of independence and the bringer of calm and reason to a debate contaminated by emotion.

“It’s a horrendous scandal,” he says scornfully. “The gibberish that’s being spread irritates me to no end. Social media, I was already in favor of banning it, and now even more so. It’s extremely damaging. People who don’t know the first thing about it are making all kinds of claims about TTIP. An endless repetition of nonsense that lingers on.”

Pelkmans may advocate calm and reason in the TTIP debate, but the way in which he brushes aside his opponents is not devoid of emotion either.

At the meeting the following day, for example, a panel chair asked whether or not the European Commission had made mistakes by not addressing concerns about TTIP seriously enough. Pelkmans doesn’t want to hear about it. “Policymakers are seen as enemies of citizens,” he claims. “People don’t want to listen.”

But does he want to listen? It became clear during the meeting on 10 November that some of those present had genuine concerns. Thea Lee from AFL-CIO says that we should take all the rosy forecasts with a grain of salt. “In the past, model-based forecasts were never accurate.” She believes that with TTIP the outcome is even more uncertain. After all, all bets are on the elimination of Non-Tariff Barriers.  “That has never been done, and we would need to eliminate something that can’t be quantified.” She also points out that the U.S. has failed to recognize six of the eight labor agreements about fundamental rights in the workplace. “We don’t want to be the partner that undermines European standards.”

But Pelkmans sees no reason to take this concern seriously. He says that the notion that it would weaken regulation is “complete crap.” And as objective and independent as he claims to be, he can barely hide the fact that he is a staunch supporter of TTIP.

This sentiment is expressed in the tome he compiled for CEPS, Rule-Makers or Rule-Takers? The language contained in it is almost jubilant at times. The potential payoff for jobs and growth is “so high” that we can’t afford to ignore it.

But TTIP is not only a blessing economically speaking. The free trade agreement “can serve as a symbolic and practical assertion of Western renewal, vigor and commitment, not only to each other but to high rules-based standards and core principles of international order. It can be assertive, yet need not be aggressive. It challenges fashionable notions about a ‘weakened West.’ In that sense, TTIP is destined to be the key driver of transatlantic political, strategic and economic relations in this era.”

In addition to the introduction, Pelkmans also wrote several chapters in the book. With noteworthy co-authors. He wrote the piece about cooperation in the area of regulation with Peter Chase, from the American Chamber of Commerce; he wrote the story about chemistry with Don Elliott, who used to work for the American Environmental Protection Agency, but now assists companies in environmental matters as a lawyer. In 2012 he published a provocative opinion piece in which he claimed that EPA has been churning out one rule after the other chasing the tiniest of risks. Pelkmans, on the other hand, believes that the Europeans could tone it down a bit. Speaking in a café about the European REACH system, he said: “Total overregulation, completely over the top.”

In their chapter, the authors call the claim that TTIP can lead to “regulatory chill,” the absence of the regulation desired by the EU, an “extremely weak argument, in fact a non-argument.” It’s a conviction based on suspicion in their opinion, which has led “the Greens and others in the European Parliament to adopt a considerably defensive attitude.” Still, there are already two cases of the U.S. exerting pressure during negotiations on regulations that the EU was working on: giving tar sands oil the dirty label and establishing criteria for endocrine disruptors.

Your wish is our command?

“I respect Pelkmans as an intellectual,” says professor Ferdi de Ville. “But if you read some of his pieces, it strikes me that he has almost taken it upon himself to explain the desirability of TTIP. In an article in Intereconomics he recently rejected all criticism of TTIP without seriously examining the arguments in favor. That’s fine, but it’s a one-sided approach, a view that serves him and CEPS well when landing these kinds of assignments.”

De Ville fears that think tanks are steering politicians and policymakers too much in one direction. “They often approach the same think tanks, so the analyses lack pluralism. The ideological position of these think tanks corresponds with the ideas of those who are using their services. It’s a neoliberal ideology that dovetails with neoclassical economic models and their assumptions: the notion, for example, that markets work perfectly and a trade agreement therefore cannot lead to more unemployment.”

The bias of think tanks lies mainly in what they research. The question of whether the agreement is even good for the economy at all, and more importantly who will benefit and who will lose out is of minor importance. The search focuses mainly on how certain sectors will benefit, on the opportunities that the agreement provides for the chemical, energy, and pharmaceutical industries, to name but a few – and not on the environmental consequences of the impetus of American shale gas development.

That also explains why the business community is interested in think tanks. They are helped by seemingly scientific analyses of the growth that TTIP will bring to their sectors. By reports jam-packed with useful information and statistics with the trappings of objectivity.

Indeed, the presentations of these reports are perfect opportunities for business people to underscore once again their view of TTIP and enjoy a tasty morsel while meeting the policymakers that really matter.

Lobbyists, parliamentarians, Commission civil servants, and staff members from think tanks form an intimate clique in the corridors of Brussels, too. It’s difficult – if not impossible – to stay on good terms with everyone, including your clients, and remain truly independent in spirit.

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