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Interview | EU Foreign Agent Law: Time is of the Essence

On December 12, 2023, the European Commission unveiled its controversial Defence of Democracy Package. At its core, the package features a directive with an ambitious goal to establish harmonized “transparency and accountability standards” for activities defined as “interest representation” within the internal market. The current proposal introduces a registry for entities engaged in third-country “interest representation,” and intending to influence policy, legislation, or public decision-making within the EU. Upon registration, these entities would be assigned a European Interest Representation number (EIRN), which would be obligatory for any interactions with public officials.

Despite its aims, there are significant concerns about the potential impact on civil society, the accelerated initial process and the wider implications for the EU’s credibility as a champion of democratic values within and beyond its borders. On behalf of Civil.ge, Kristina Pitalskaya spoke to Nicholas Aiossa, one of the most vocal opponents of the package.


Nicholas Aiossa has been with Transparency International EU since 2014 and is presently the Director. He has worked on a variety of policy areas, including coordination of TI’s advocacy efforts on the EU whistleblower directive. Additionally, he worked on issues concerning the rule of law and the misuse of EU funds. Before working at TI EU, Nicholas worked in the European Parliament on topics of human rights and transatlantic relations. Nick is a board member of Civil Society Europe.


Kristina Pitalskaya, Civil.ge: Mr. Aiossa, thank you for speaking with Civil.ge. To begin, let me ask you, does the EU truly need this directive, often referred to as EU FARA legislation? Can you speak to us about the context and preconditions for the European Commission to propose this legislation?

Nicholas Aiossa, TI EU: Well, in one regard, I would agree with President Ursula von der Leyen acknowledging the need for additional instruments to safeguard European democracies, citing the threat of malign foreign influence. Where we unfortunately deviate is the choice of most effective instruments in protecting our democracies. And unfortunately, the Commission’s decision to propose a Foreign Influence Act (FARA) raises concerns as we believe it is extremely misguided for several reasons.  

Firstly, it is crucial to acknowledge that threats to democracy come from foreign and domestic agents. A prime illustration of this is the Qatargate corruption scandal involving third-country actors, with internal actors aiming to corrupt democracies from within. The second reason underscores that when examining threats to European democracies from foreign or domestic actors, a significant risk area is political party financing. Unfortunately, this instrument does not address this concern comprehensively. The European Commission lacks the competence to legislate in this regard. The attached recommendations to member states in this package attempt to tackle political party financing and other issues like misinformation. Thirdly, the proposed lobby register, targeting only foreign-funded entities, is a misguided approach falling short of effectively countering undue influence. We would argue that FARA is simply not the appropriate tool for this purpose.

We would argue that FARA is simply not the appropriate tool for this purpose… due to its limited scope, the instrument might not capture the desired information and could potentially lead to the stigmatization of civil society organizations.

The European Commission’s proposal essentially introduces a lobby register similar to the existing transparency register at the EU level. However, it exclusively applies to entities or interest representatives that receive foreign funding under specific conditions. This approach is criticized for not aligning with the policy objective of addressing malign influence.

While it may make lobbying more challenging, its primary purpose is to enhance transparency. Despite making the process more difficult, it is considered a useful tool against undue influence. Nevertheless, due to its limited scope, the instrument might not capture the desired information and could potentially lead to the stigmatization of civil society organizations.

Within the Union, there is, of course, a clear reason behind the European Commission’s decision to take Hungary to court over a similar law five years ago, which resulted in a victory. The current move has, however, inflicted irreparable damage to the EU’s geopolitical credibility. When the Commission rightfully criticizes foreign laws, such as in the recent case of Georgia, where we fully supported their stance, it diminishes their authority. Borrell’s critiques, once credible, are now less so, as the Commission has, in many respects, adopted a more stringent version of the Georgian law they criticized less than a year ago.

From our perspective, these issues pose significant challenges, revealing a lack of foresight and a misguided attempt to address the legitimate problem of malign or undue influence from foreign or domestic agents on European democracies.

You mentioned an ongoing Qatargate corruption scandal, highlighting the EU’s tendency to focus on foreign interference while neglecting domestic challenges. Critics cite the speed at which proposal of the Defence of Democracy Package was made. Was it rushed? What are the primary criticisms you have raised?

The process was problematic from the beginning. The commitment in the 2022 State of the Union address led to a rushed procedure for electoral optics, to the detriment of the actual instrument, overlooking the need for a proper impact assessment to ensure a favorable electoral exercise for a President of the Commission who is likely running again. The parallel drafting of the directive without a comprehensive impact assessment reflected a lack of due diligence. The consultation process seemed more like a box-ticking exercise. The rush jeopardizes the instrument’s effectiveness and credibility, echoing an electoral optics exercise to showcase democratic protection.

The consultation process seemed more like a box-ticking exercise. The rush jeopardizes the instrument’s effectiveness and credibility, echoing an electoral optics exercise to showcase democratic protection.

Upon learning about the impending release of this package, our primary criticism was rooted in the well-known issues associated with foreign influence acts. There is substantial evidence demonstrating their failure to serve their intended purpose, often resulting in abuse by countries possessing such acts against civil society, journalists, opposition, or dissenting voices.

The Commission’s belief that a lobby register alone could effectively counter malign influence indicated a lack of thorough research. A more diligent approach would have involved a proper consultation procedure, distinct from the perfunctory exercise undertaken in parallel with drafting the directive. The decision to conduct an impact assessment came late in the process.

With proper research, they might have identified a way to present an instrument that mitigates negative aspects while still achieving policy objectives of countering influence in democracies. Our recommendation is for the Commission to establish a lobby register encompassing all interest representatives, regardless of foreign funding, encompassing civil society or public consultancies – similar to practices in several Member States, including France, Germany, and Ireland. While imperfect at the EU level, it warrants examination despite its structural flaws.

Our recommendation is for the Commission to establish a lobby register encompassing all interest representatives, regardless of foreign funding, encompassing civil society or public consultancies – similar to practices in several Member States, including France, Germany, and Ireland.

Rather than taking the time to consult extensively and thoughtfully, the European Commission focused on engaging with the US Justice Department and the Australians, who have their own Foreign Agents Registration Act (FARA) laws. Both countries have grappled with issues related to FARA, particularly the Americans, as the law has been in place for years and has faced challenges of politicization, necessitating constant revisions. The problematic aspect of the process lies in this approach.

As civil society, we collectively urged the Commission to reconsider its process and insisted on conducting an impact assessment. While the Commission did undertake this assessment, there are reservations about whether it adhered to the usual quality standards of a consultative process. The process unfolded somewhat hastily over the summer, seemingly without the expectation of reinventing the wheel. Notably, when the European Commission initiated the impact assessment, a draft directive and staff working document were already prepared. Given the challenge of proposing changes before the upcoming European elections, it appears unlikely that they were inclined to revisit and redo the process. I remain convinced that, in many respects, this is primarily an electoral optics exercise, framed as an effort to protect democracy against foreign malign influence in an election year.

The context in which this directive is born is very contentious. Some EU members and candidate countries, intentionally or unintentionally restrict civic space. Populism is on the rise, which seems to be giving the right-wing movements a chance to come to government and succeed in the EU elections. In many countries civil society is readying to accompany and observe elections. So what is the damage to civil society’s independent and autonomous image?  

To begin with, we have to mention that at the earliest this directive will be transposed by Member States by the end of 2026. Also, the European Commission should be credited for their active support of civil society over the years. However, it appears that they may have unintentionally overlooked the negative consequences of the new directive that an impact assessment would have revealed.

Irrespective of the proposed foreign agent act, it is not surprising that civil society faces ongoing threats in Member States. This remains true irrespective of elections or the enactment of this act. In this context, the challenges have been exacerbated, particularly in the aftermath of the Qatargate scandal.

Unfortunately, one of the main figures involved, former MEP Antonio Panzeri, established a front NGO -allegedly for money laundering. While he could have chosen a consultancy firm for the same purpose, he opted for an NGO, possibly due to his role as the ex-chair of the Human Rights Sub-committee and his familiarity with that domain. The primary issue arises from the fact that the transparency register at the EU level is not mandatory, and Panzeri’s NGO was not registered.
 
Following Qatargate, civil society in Brussels has faced attacks on their activities, subjected to increased scrutiny by various stakeholders. This situation contributes to the attractiveness of having a Foreign Agents Act for some. It is acknowledged that increased transparency among interest representatives, whether NGOs or not, is generally a positive development. Our organization, like many others, supports this idea. We are not against more transparency of interest representatives, not least, because organizations like ours disclose all this in the EU transparency register.  

Given past experiences with such acts and their exploitation by far-right and populist factions, there is a legitimate fear that these tools will be used against civil society, opposition figures, and journalists.

Our primary concern is that the proposed directive is restricted to foreign-funded entities. Given past experiences with such acts and their exploitation by far-right and populist factions, there is a legitimate fear that these tools will be used against civil society, opposition figures, and journalists. The Commission faces the challenge of incorporating as many safeguards as possible to curb potential abuse against civil society. However, being a directive, it necessitates transposition and is subject to amendments during the legislative process with co-legislators.

The safeguards implemented may or may not endure through these negotiations. When Member States like Hungary receive the directive proposal, the question arises whether they will transpose it properly. The Commission possesses tools to intervene during transposition, but they are limited, time-consuming, and rarely employed. Consequently, the instrument’s form and the uncertain fate of these safeguards in the negotiations between Parliament and the Council create a substantial problem.

Lastly, it is argued that the directive is grounded in the internal market article. The Commission’s aim is to harmonize the internal market concerning foreign-funded interest representatives, a feasible objective that is currently executed incorrectly.

What is the alternative EU civil society has advocated for?

TI EU has long advocated for a similar initiative, essentially calling for distinct transparency registers, lobby registers, or interest representative registers at the Member States’ level. Our argument has centered on the diverse transparency and disclosure requirements across Member States within the same sector. We proposed that the Commission, recognizing this disparity, should harmonize the rules for interest representatives overall. The rationale behind the current proposal seems to stem from the recognition of multiple registers across Member States, each acting independently. However, the challenge is that no MS has Foreign Agents Registration Acts (FARAs), but rather many instead have broad registries, making the harmonization unclear.

We proposed that the Commission, recognizing existing disparity [among the Member States], should harmonize the rules for interest representatives overall.

The directive attempts to create a limited register and harmonize it with existing registers at the Member State level, but the methodology remains ambiguous. One safeguard outlined in Article 4 attempts to prevent Member States from introducing more stringent provisions than those in the directive. However, the application of this safeguard is unclear, especially for Member States with fully functional interest representative registers for foreign-funded and non-foreign-funded entities, NGOs or not.

The uncertainty arises regarding whether these Member States must amend their existing registers to narrow the scope or create an entirely separate register capturing the same information but exclusively for foreign-funded interest representatives. This could potentially result in double registration for entities receiving foreign funding. It appears that the instrument, instead of harmonizing the market, might be introducing an additional layer of rules for the same sector, despite the presence of existing registers.

While time will tell, the perception is that the Commission has overly complicated the process. A more straightforward approach would have involved recognizing the value of a register for increased transparency and disclosure, encompassing all forms of funding and interests. By drawing inspiration from existing functional registers in countries like France and Germany, the Commission could have harmonized rules across all 27 Member States, offering a more comprehensive understanding of undue influence and making it challenging for malign influence to exploit the system. Such an approach would have avoided the negative geopolitical consequences associated with proposing a FARA-style instrument.

By drawing inspiration from existing functional registers in countries like France and Germany, the Commission could have harmonized rules across all 27 Member States, offering a more comprehensive understanding of undue influence and making it challenging for malign influence to exploit the system.

If the Commission had proposed an Interest Representative Act, the challenges associated with the current directive could have been avoided. I would endorse such an act not only in Georgia but also here in the EU that all lobbyists register and disclose specific information, and these rules are uniformly applied across all sectors. The idea is to establish a framework where, if one is attempting to influence policymaking in a particular Member State, certain financial details must be disclosed, including information about funding sources, the nature of activities undertaken, and enhanced transparency about the organization itself. This approach could have been pursued by the Commission, but unfortunately, it was not. I am hopeful that the Council and the Parliament will recognize the shortcomings in the Commission’s approach and appreciate the benefits of expanding the proposal’s scope to capture more comprehensive data on the influence on democracies. This expansion could help mitigate known threats, including the geopolitical credibility issues associated with the current proposal.

Is there some room for maneuver left in the legislative process?

Absolutely. The Commission proposes the legislation, but co-legislators must now scrutinize and amend it. However, there is concern that immediate recognition of the problems with a foreign influence act might be challenging. The imperative is to design an instrument that effectively captures the scope of malign influence, considering that such actors do not adhere to established rules. So, what you need to do is design an instrument in such a way that you capture as much scope as possible. You make the rules in such a way that loopholes and circumvention of the rules are difficult for malign actors because they do not play by the rules. I still think they perhaps can appreciate that fact. They have not gotten there yet, but we are working on it. 

Some suggest applying specific country filters to the directive, focusing on countries like Russia or China. What is your perspective on this?

It is possible but the Commission has opted not to do it. While possible, I find it complicated because just applying specific country filters could create loopholes and areas of circumvention. Similar challenges exist in areas like illicit financial flows.

I understand why it might make it easier for people to understand that you are worried about certain countries versus other countries, but I just do not think that foreign influence laws, in principle, are a good idea given the very limited but very stark realities of the ones that are in place, like in the US. And again, why would you limit yourself? My message is that they should be more ambitious in many regards. A more ambitious approach would be to widen the scope and capture a broader range of information rather than limiting the directive to specific countries.

Are there any positive aspects to this directive?

The opportunity exists to transform this directive into a dedicated Interest Representative Act for all entities. However, if it remains limited to a foreign influence act, the fundamental flaw of exclusively targeting foreign-funded entities overshadows any potential positive aspects. Removing this limitation could open avenues for negotiation on other provisions like sanctions, record keeping, and reporting disclosure requirements while ensuring a more comprehensive and effective instrument.

How can we effectively communicate to the public, both within and outside the EU, about the external dimensions of a directive, which is negatively affecting the EU’s overall image? In the face of propaganda and differing political perspectives, especially in countries like Georgia, how can we navigate and communicate the intentions and benefits of such directives to address concerns from various groups, including those who may view the EU negatively and exploit the situation for political gain? 

The EU’s proposed directive aimed at countering disinformation has sparked significant concerns. I have consistently communicated to the European Commission the lack of a clear and justifiable explanation for creating a foreign influence act. Despite attempts to present it differently, the reasoning behind such legislation remains murky, and clarifications might be sought directly from the European Commission.

The US State Department’s response to the Georgian law also lacks clarity, focusing on technical differences and due process without delving into the intricacies. While safeguards and judicial structures are discussed, there is a fundamental lack of justification for how this legislation differs from other foreign influence initiatives.

Geopolitical and credibility concerns loom large. If the directive is implemented as it stands, there could be significant geopolitical damage and credibility loss for the European Commission. Beyond Georgia, other countries in the Balkans are poised to introduce similar laws, potentially creating reciprocity issues. The EU’s role as a major donor to civil society globally could be jeopardized, leading to potential repercussions and a global trend in implementing foreign agent acts.

Concerns arise with the suggestion to apply the directive to lobbyists, not just civil society. Having different standards for various sectors may create loopholes exploitable by malign actors, potentially tarnishing the reputation of the civil society sector. A more effective strategy, rather than pursuing foreign agent instruments, would involve widening the scope to include all actors and establishing interconnected registries with shared data, aligning better with the policy objective of countering threats to democracy.

Civil society should be actively included in the process, and there is still room for adjustments and maneuvers by the EU to address the raised concerns.

Despite the current challenges and flaws, there is an opportunity for positive changes. Civil society should be actively included in the process, and there is still room for adjustments and maneuvers by the EU to address the raised concerns. Stakeholder engagement is crucial in the ongoing legislative process, extending beyond individual concerns. Entities in Brussels, including public consultancies and umbrella groups, recognize challenges they may face under different regulations based on funding sources. Stability and a sectoral approach with harmonized rules are vital for a cohesive internal market.

The proposal from the European Commission is open to amendment during this process, allowing for the rectification of structural flaws. Time is of the essence in the ongoing legislative process to address concerns and amend the proposal effectively.

The call to action involves active engagement from all stakeholders during ongoing discussions involving the Council and the Parliament. The proposal from the European Commission is open to amendment during this process, allowing for the rectification of structural flaws. Time is of the essence in the ongoing legislative process to address concerns and amend the proposal effectively. Despite the challenges, there is a positive message, especially for individuals in Georgia and civil society. Shared experiences and evolving status within institutions make voices from Georgia particularly influential, and leveraging this receptivity can contribute to conveying a constructive narrative.

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