Financial secrecy common among EU think tanks
Corporate Europe Observatory, July 2005
A new survey conducted by Corporate Europe Observatory (CEO) shows that the financial transparency of many EU think tanks is seriously inadequate. CEO calls upon think tanks to live up to basic transparency standards, including disclosing their sources of funding.
EU think tank boom
Think tanks are increasingly important players in the 'political landscape' in the EU capital Brussels. Their presence is growing both in terms of numbers and size, as more established institutions expand their activities. These think tanks range from large mainstream institutions like the European Policy Centre (EPC), the Centre for European Policy Studies (CEPS) and Friends of Europe to smaller ones like Centre for the New Europe and the European Enterprise Institute. This second group advocates various shades of extreme rightwing neoliberal reforms. New arrivals include Bruegel ("Brussels European and Global Economic Laboratory"), an ambitious new mainstream think tank with a budget of 6 million euro in the first two years, and the much smaller "do-tank" Health Consumer Powerhouse.
The primary motive for establishing think tanks in Brussels is to influence the thinking among EU policy-makers and therefore, EU decision-making. Due to the nature of their operations, which includes countless publications, panel debates and workshops, their impact is mostly indirect and hard to measure. However, the rapid increase in these activities and the money involved would suggest it is considered highly worthwhile.
This rise could be interpreted as think tanks filling part of the vacuum that exists because of low citizen involvement in the decision-making of EU institutions. Yet while think tanks could contribute to the emergence of genuine pan-European public debate, there is clearly the risk that they create a pseudo-debate that does not reach beyond EU officials, diplomats, parliamentarians and professionals lobbyists within the Brussels bubble.
When interpreting the role of think tanks in Brussels, it is clear that there are striking similarities with Washington D.C. However, EU think tanks are far less resourced and have yet to reach the levels of political clout witnessed in the US. Rightwing free market think tanks like the American Enterprise Institute and the Heritage Foundation have become significant actors in US politics. Aided by ever-growing donations from large corporations and conservative family foundations, they have played a key role in preparing the ground for the neo-conservative political take-over of recent years. In Brussels, this brand of ideological hardliners is still relatively marginal, but there are signs that increased funding from European and US corporations is helping them break out of isolation (see also "Covert industry funding fuels the expansion of radical rightwing EU think tanks").
Irrespective of their political agenda, enabling increased public scrutiny of think tanks and their growing influence in EU politics is crucial.
While there are exceptions, in general, EU think tanks do not do much "lobbying" in the strict sense of the word (for example, one-on-one contacts with decision-makers on a specific piece of legislation).
Yet given the primary aim of these think tanks is to shape EU policies, it is imperative that decision-makers, the media and the public have access to necessary information in order to understand the interests behind messages coming from think tanks. This would include information about their sources of finance.
The websites of most EU-focused think tanks contains a wealth of briefings, newsletters and workshop reports, but little, and sometimes no, information about funders. An exception is the newly founded "Brussels European and Global Economic Laboratory" (Bruegel), who, on its website states that its 2005 budget is euro 2 million and that "45% originates from corporations and 55% from EU member states". The Bruegel website includes a full list of its corporate members (19 in total, including BP, DaimlerChrysler, EADS, Siemens, Suez-Tractebel and Telefonica), which all "contribute the same yearly amount, i.e. €50,000 in 2005".
The websites of established institutions like the European Policy Centre (EPC - "committed to making European integration work") and the Centre for European Policy Studies (CEPS - "constructive solutions to the challenges facing Europe today") do contain information for those with sufficient time and determination to piece together the funding puzzle. Levels of transparency vary, for example the website of the EPC is not too far behind the level of online transparency provided by Bruegel. Meanwhile, the Centre for the New Europe (a radical free-market think tank) is extremely opaque. This website merely states that, "[T]he Centre is financially supported by interested individuals, foundations and corporations". It provides no information about who these foundations and corporations are, amounts they donate and for what purposes. Unfortunately this lack of transparency is not exceptional among Brussels-based think tanks.
In May and June 2005, in response to this serious lack of online financial transparency by EU think tanks, CEO conducted a survey. The survey was aimed at assessing the willingness of a selection of think tanks to provide basic financial information beyond what is currently available online. Those included in the sample were:
- The Centre for European Policy Studies (CEPS)
- The Centre for a New Europe
- The European Enterprise Institute
- The European Policy Centre (EPC)
- Friends of Europe
- Health Consumer Powerhouse
- Institut Economique Molinari
- Institut Hayek
- Institut Thomas More Brussels
- The International Council for Capital Formation
- The International Policy Network
- The Lisbon Council
- New Defence Agenda
- The Stockholm Network
- Tech Central Station
These think tanks were asked for an overview of their "sources of funding for the last financial year (including corporate donations, government grants, aggregate amount of individual donations and other sources of income), as well as a list of current funders." The questions were sent by fax and by email, with several reminders when necessary with phone calls to encourage a response. Two weeks after circulating the questionnaire, only one think tank, the l'Institut Hayek had responded. All other feedback was the result of follow-up emails and/or one or more phone calls.
Cash for access?
The most detailed responses to our survey came from the large, established think tanks, such as the European Policy Centre (EPC) and Friends of Europe. The EPC, based in the Residence Palace where also large parts of the international press corps has its offices, informed us that their annual budget in 2004 was €2,245,391, out of which €638,021 came from grants from the European Commission and the King Baudouin Foundation. The rest was membership fees (€958,566) and "income from programme activities" (€648,804). Well over half of membership fees come from large multinational corporations (Corporate Gold, Silver and Bronze members), but precise aggregate figures are not available. The EPC does not receive corporate donations except for the membership fees, although the category "income from programme activities" includes contributions from corporate members.
Friends of Europe, based in the elegant Bibliothe`que Solvay in the Leopold Parc, was the only think tank to send us aggregate figures of their sources of income. "63% (€486,450) comes from membership and/or sponsorships by a variety of some 130 companies or trade associations in various sectors", writes Nathalie Furrer, director of Friends of Europe. The remainder comes from EU institutions, governments, diplomatic missions, international organizations, foundations, NGOs, think tanks and individuals.
The New Defence Agenda was far less forthcoming in terms of information. A neighbour of Friends of Europe in the Bibliothe`que Solvay, the two organizations are strongly connected through Giles Merritt, Secretary General and Director of the two think tanks. Project Manager Jessica Henderson was clearly unhappy with previous CEO publications referring to the NDA as a mouthpiece for arms corporations. "NDA is a neutral platform, not a think-tank", she wrote, arguing that "industry does provide financial support, but do not set agenda". Henderson pointed out that the logos of NDA's members and supporters "are clearly displayed on all relevant material and on our web site". "NDA is not an arms lobby group", Henderson writes, but the range of services that NDA offers its members (including BAe Systems, Dassault Aviation, EADS, Lockheed Martin, Thales and other arms producers) raises questions about the NDA's credibility as "a neutral platform for debate". Corporations can become "Conference Initiators" for the price of €25,000, a "Tailor-made Discussion Paper" comes at the price of €30,000, whereas sponsoring an "Exclusive Press Dinner" for "top journalists and policy markers" comes at the bargain price of €6,000.
Also the Centre for European Policy Studies (CEPS), one of the largest and politically best-connected think tanks in Brussels, failed to impress in terms of financial transparency. A spokesperson from CEPS informed us that they do not disclose exact amounts, but that they "are usually very open about who is financing [us]". The bulk of their income comes from European Commission grants and corporate membership contributions. Like the EPC, CEPS has different categories of corporate members, of which Inner Circle members (such as BP, Credit Suisse and Societe Generale de Belgique) pay 30,000 euro per year. In contrast to the New Defence Agenda, CEPS does not seem to accept earmarked funding or sponsorship of events or publications from corporations. A spokesperson for CEPS argues that the institution receives funding from "a large number of companies, I think 115, so not one of them can claim ownership over us".
Apart from the issue of financial transparency, there are relevant questions to be asked concerning the independence of think tanks that are overwhelmingly dependent on corporate membership fees, as is the case for CEPS, the EPC and Friends of Europe. How likely is it that these think tanks will advocate policy recommendations that are unacceptable to the large multinational corporations on which they depend for their survival?
More radical, in terms of free market orientation, but still considered politically mainstream within the Brussels bubble, is the Lisbon Council for Economic Competitiveness, founded in 2003 with the purpose of accelerating neoliberal economic reforms. The website of the group, which describes itself as "radicals of the centre", states that "the founders invested their own time, capital and other resources to found the association and fund it through the first months" and that, "[O]ver time, the work of the Lisbon Council will be sustained by grants and contributions of its members and supporters." The Lisbon Council did not reply to our emails. When we called them, they promised to phone back, but did not.
The Silence of the Free-market Radicals
The term think tank indicates academic or otherwise independent pursuit of new ideas and solutions. However, although it is more clearly defined in some cases than in others, in reality most Brussels-based think tanks have a particular ideological orientation. The survey included ten think tanks that can be described as radical free marketeers; the fastest growing sector within the Brussels think tanks landscape. With the exception of Tech Central Station, the websites of these think tanks fail to provide any information about who funds their work. The smaller Institut Hayek was very forthcoming and clear in their response to the survey, explaining that it does not receive any funding from governments or institutions, European nor American, but "is exclusively financed by its few members". It would appear that the rest of this category of hard line neo-liberal think tanks do not want the public to know about their sources of financial support. This secrecy may have to do with the fact that the relationship between some of these think tanks and their corporate donors, goes beyond that of mainstream institutions like Bruegel or CEPS. The Centre for the New Europe and other similar think tanks accept specific project funding from corporations seeking to promote controversial positions on highly politicised concerns, such as casting doubt about the seriousness of climate change and other environmental problems.
When CEO phoned the London-based International Policy Network, who focus on EU policy-making, to ask about their sources of funding, a spokesperson told us that they "have decided not to disclose that information," because, "[W]e think it's not appropriate … Our donations come from individual sponsors so that is private information". When asked whether that means that IPN is sponsored only by individuals, the answer was "yes". In reality, as shown in the annual report of the Exxon Mobil Foundation (one of the few corporations to disclose their donations), IPN receives major grants from large corporations. In 2004, IPN received a grant of $115,000 from the Exxon Mobil Foundation for work on climate change issues. Exxon Mobil, known for its opposition to the Kyoto Protocol, gets action for its money. For example, in an article published in June 2005, Kendra Okonski and Julian Morris of the IPN argued that "the EU's obsession with reducing greenhouse gas emissions has caused a misdirection of resources which will do more harm than good."
The Centre for the New Europe (CNE) was less explicit in its denial of financial transparency, but the result was the same. Initially, CNE ignored our faxes and emails, but after several telephone reminders, they promised a response. Departing president, Tim Evans assured us that his successor Mattias Bengtsson would have no problem sending us the requested information. Unfortunately, these promises failed to materialise and CNE's sources of income remain a well-protected secret, with one notable exception. The annual reports of the Exxon Mobil Corporation (one of the few corporations to disclose such information)) reveals that CNE in 2003 and 2004 received respectively $40,000 and $80,000 respectively for its "Global Climate Change Education Efforts".
The Stockholm Network, again based in London but strongly focused on the EU, probably spent the most time responding to our survey, yet did not to disclose a single funder's name. Within two weeks the Stockholm Network's Director Helen Disney sent us four emails, the first one clarifying that "We are not a think tank, as such, but a networking service for think tanks across Europe." The Stockholm Network is funded, Disney explained, "by annual subscriptions from private individuals, companies and foundations, including think tanks". When we responded asking for a list of funders and how much they contribute, Disney told us that the Stockholm Network has "around 25 major funders across a variety of sectors including public affairs firms, venture capitalists, pharmaceutical companies, healthcare providers, trade associations, software companies and the energy sector." Still no names and no figures, although Disney did add that sponsors "do not have a veto over any research we conduct and may not commission research from the Network". When we insisted once more on names and figures, the response was that "I cannot give you the information you ask for since our accounts for 2004 will not be completed for another month". We then suggested that Disney could send us the overview for 2003, to give us an idea, but also this proved to be impossible. Disney argued that until January 2004, the Stockholm Network was technically part of the think tank Civitas, "so did not have its own accounts." At this stage, Disney did inform us about the Stockholm Network's annual subscription charges of £1000, £5000 or £10,000 per year. "Larger corporate donors tend to join at the £10,000 level", she explained. The Stockholm Network clearly took the survey seriously and spent significant amount of time responding, but with a remarkable determination to avoid naming funders.
Health Consumer Powerhouse, a new "do-tank" in Brussels with close links to CNE, promised us on the phone "to look into it", but failed to provide us with any concrete information about who funds the new institution. Director Johan Hjertqvist did write to us with the advice that "You will find the information you are looking for in our annual reporting to the Patent and Registrations Office in Sweden." We wrote back suggesting Hjertqvist to make this type information available online on the HCP website.
The European Enterprise Institute (EEI) told CEO that it "has no problem with transparency", but does not yet have a completed annual report. "We have only been officially launched since spring last year", a spokesperson explained. On our question whether the EEI would publish its sources of funding before the end the year, the response was "yes". While the European Enterprise Institute currently does not want to disclose its funding sources (rumoured to include Exxon Mobil), this promise of greater transparency is something to watch out for. Institut Thomas More and Institut Economique Molinari, two predominantly francophone think tanks with an ideological outlook similar to CNE, failed to provide any response despite phone calls and repeated reminders.
Finally, the survey also included two Brussels-based affiliates of US think tanks: Tech Central Station (TCS) Europe and the International Council on Capital Formation. TCS Europe is essentially a one-man show, run by former European Voice journalist Craig Winneker from an office in Residence Palace in the heart of the EU quarter. TCS Europe occasionally hosts public debates (as part of its Hayek Series), but its main activity is to publish articles on its website. Given this, it was not unreasonable when Craig Winneker replied to CEO with the claim that, "[W]e are not a think tank." Winneker instead describes TCS Europe as "an on-line journal of pro-free-market commentary, analysis and news". Observers of TCS' US operations describe its work as "journo-lobbying". While TCS Europe does not publish a financial report nor exact sources of income, its website does include a list of companies sponsoring its operations (including Microsoft, Exxon Mobil and McDonalds). TCS Europe is likely to be funded by its US mother organisation, which in turn receives generous funding from a whole range of large corporations. While the list of companies makes TCS more transparent than other similar think tanks, it is important to know which corporation has invested how much in this "media organisation"? For an overview of amounts received from each corporate donor, Winneker referred us to TCS US, which unfortunately did not respond to our emails.
The International Council on Capital Formation (ICCF), working from Rue Wiertz 50, a stone's throw away from the entrance of the European Parliament, is a subsidiary of the American Council for Capital Formation, a far bigger Washington D.C. think tank. The ICCF website does not include any information about who funds its work, but in response to the survey the think tank did provide an overview of its funders. Dr. Margo Thorning, the ICCF's Managing Director, sent CEO "a list of corporate underwriters for the American Council for Capital Formation, the American Council for Capital Formation Center for Policy Research and the International Council for Capital Formation in 2004-05". The long list of funders includes Daimler-Chrysler, Ford, General Motors, Oracle and Toyota. In 2004, the three institutions received a total of $1,850,000, but which corporation paid how much and to who remains unclear. The ICCF does "not provide information on the size of individual grants", Margo Thorning told CEO.
Boosting think tank transparency
In March 2005, in a landmark speech, European Commissioner Kallas announced the 'European Transparency Initiative'. He stressed that the transparency of professional lobbyists "is too deficient in comparison to the impact of their activities". Kallas also highlighted the need for increased transparency for NGOs. The European Transparency Initiative, Kallas explained, "also seeks to increase transparency in these networks, for example, by improving the current registry of NGO's. It should also contain financial information." This report has made clear that there is one category of non-governmental institutions whose financial transparency is particularly inadequate: the think tanks. Especially among the radical freemarket think tanks there is a strong unwillingness to disclose sources of funding.
Commissioner Kallas has clearly expressed his intention to establish a register of lobbyists working to influence EU decision-making. Assuming that registering and reporting becomes obligatory for all lobbyists, this would be an enormous step forwards in terms of enabling democratic scrutiny of EU decision-making. Improving the financial transparency of think tanks, however, requires additional steps, as most think tanks are not lobbying in the narrow sense of the word. Also the definition of what is a think tank is not straightforward, as this survey has shown.
As a result of a new Belgian law, many Brussels-based think tanks will soon be legally obliged to improve financial transparency to an extent. Those think tanks that are registered as non-profit associations (as a so-called "association sans but lucrative" - ASBL) will from 1 January 2006 have to file their annual financial report with the Belgian authorities. However, unfortunately this new law does not include any legal obligation to specify sources of income, so it is a limited instrument for boosting transparency.
As part of the European Transparency Initiative, the European Commission could encourage improved financial transparency for those think tanks that receive EU funding. This includes most of the large, mainstream institutions but probably not the smaller more radical think tanks that are currently the most secretive. Increased political pressure is needed to ensure that also these think tanks live up to basic transparency standards.
At this point, many readers may have asked themselves the very reasonable question: "what about the financial transparency of Corporate Europe Observatory?" CEO is committed to be as open as practically possible and we're hoping to continuously improve on this point, for instance by finalising our annual financial reports earlier. We can already at this stage safely say that we're more transparent than any of the think tanks mentioned in this report.
EU think tanks - how many are there?
The number of think tanks focusing on influencing the EU political debate has increased dramatically during the last decade and this reflects the steadily increasing power of EU institutions. Estimates vary, due to differences in definition and location, for example are only think tanks based in Brussels covered or does it also include those with an EU focus operating from elsewhere in Europe. A 2004 report about this rising number of think tanks, published by the Paris-based institution Notre Europe, estimated that there are 36 EU-specific think tanks. More recent studies indicate this is certainly too low an estimate. The think tanks category in the European Public Affairs 2005 Directory lists almost 70 "non-profit institutions researching different aspects of European integration", 25 of which are Brussels-based. CEO's monitoring suggests that the number is even higher.
On 25 July 2005 the fifteen think tanks covered in this survey had the following persons registered as accredited lobbyists at the European Parliament:
Centre for European Policy Studies Christian Egenhofer
Centre for a New Europe none European Enterprise Institute Karl Stober European Policy Centre Lorenzo Allio
Carlos Buhigas Schubert
Friends of Europe Geert Cami
Health Consumer Powerhouse (=TIMBRO) Johan Hjertqvist Institut Economique Molinari none Institut Hayek none Institut Thomas More Brussels none International Council for Capital Formation Margo Thorning International Policy Network none The Lisbon Council Paul Hofheinz
Ann Maria Mettler
New Defence Agenda none Stockholm Network none Tech Central Station none
Source: On line lobbyists register, European Parliament website, visited 25 July 2005.
- Bruegel's budget for 2004-2006 will exceed €5 million and the amount contributed by corporations will grow to over 50% in 2006. State members: Belgium, Denmark, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Slovenia, Spain, United Kingdom. Corporate members: BP, DaimlerChrysler, Deutsche Telekom, Deutsche Bo"rse, Deutsche Post, EADS, Euronext, Fortis, Goldman Sachs, International Hellenic Petroleum, HypoVereinsbank, Iberdrola, Price Waterhouse-Coopers, RWE, Renault, Siemens, Suez-Tractebel, Telecom Italia, Telefonica, Thomson. See http://www.bruegel.org/index.php?pid=9 and http://www.bruegel.org/index.php?pid=26
- "As a consequence, no single member contributed more than 7% of the 2005 total revenue of slightly above €2m; such a diversified funding base is a key requirement for Bruegel's independence." http://www.bruegel.org/index.php?pid=11 (last checked July 7th 2005).
- This would involve combining information about membership fees and lists of corporate and institutional members, but it would still not provide the full picture. http://www.theepc.be/PDF/00-Members.pdf and http://www.ceps.be/files/ActivitiesReport2003.pdf The annual report of the EPC includes the balance sheet and income/expenditure statements, but no specific information on funding sources. See EPC Annual Reports over 2003 and 2004.
- http://www.cne.org/about2.htm (checked June 8 2005)
- This was also pointed out by Dr. James McGann (Senior Fellow at the Foreign Policy Research Institute, US) at the seminar "Think Tanks in Europe and US: Converging or Diverging?" (Paris, December 13 2004), who said about EU think tanks: "there is not an appropriate level of accountability and financial transparency", http://www.notre-europe.asso.fr/IMG/pdf/Semi22-en.pdf
- See also http://www.fahayek.org
- Email from Hans Martens, June 8 2005.
- The EPC's membership "consists of Corporates (89), Diplomatic (93), Professional organizations and Trade Unions (82), NGOs (32), IGOs (12), Regional organisations (41) and Foundations (25)". Email from Hans Martens, June 8 2005. Corporate Gold, Silver and Bronze members pay respectively €10,000, €5,000 and €2,500. The contribution from the 52 Corporate Gold members alone is 520,000 euro per year. EPC Membership: Benefits and Fees.
- Email from Nathalie Furrer, June 13 2005. See also the list of "Partners": http://www.friendsofeurope.org/partners.asp
- 20% (€155,540) comes from EU Institutions, governmental bodies and diplomatic missions or international organizations,17% (€127,000) from foundations, NGOs, think tanks or individuals.
- Telephone conversation with Jessica Henderson, May 31st 2005. See for instance CEO's "Lobby Planet guide to the Brussels EU quarter, page 18.
- Email from Jessica Henderson, June 15 2005.
- NDA members and supporters are "a mixture of companies active in the fields of defence, security, transport and IT, national ministries and diplomatic missions, research institutes, international organisations and foundations." Email from Jessica Henderson, June 15 2005. The NDA website indeed provides an overview of current NDA partners, but details of the financial relationship between NDA and its partners are not specified. We found the information on membership fees and privileges on a membership form and in an NDA brochure.
- "The NDA offers a neutral platform for debate that welcomes not only industry representatives from both sides of the Atlantic, but also national, EU and NATO officials, politicians from a variety of political convictions, academics, think tankers and journalists, to openly discuss current defence and security policies. All debates are on-the-record." Email from Jessica Henderson, June 15 2005.
- New Defence Agenda "Membership Registration Form"
- Telephone conversation with Marco Incerti, May 31 2005.
- Corporate Membership Page, CEPS website, visited 26 July 2005.
- Centre for a New Europe, European Enterprise Institute, Health Consumer Powerhouse, Institut Economique Molinari, Institut Hayek, Institut Thomas More Brussels, International Council for Capital Formation, International Policy Network, Lisbon Council, Stockholm Network and TechCentralStation
- "When we organize small events, such as the "dejeuners du Sablon", where we invite an intellectual or a politician, the guests must pay their meal, therefore it costs us nothing - except, of course, the time needed to organize the thing. All the intellectuals publishing articles with the Institut Hayek do it for free as well. I, as founder and director, have never been paid a cent form the Institut Hayek. And that was very clear from the beginning: we do it because we want our ideas and ideals to be heard in the public debate, not for money." Email from Drieu Godefridi, Director of the Institut Hayek, 13 May 2005.
- See "Covert industry funding fuels the expansion of radical rightwing EU think tanks"
- Green Week: EU needs to 'get to grips' with climate change, EUpolitix.com, June 1st 2005.
- Telephone conversation with Tim Evans, June 20 2005. Evans since has moved to London where he works with the Stockholm Network.
- Email from Helen Disney, May 31st 2005.
- Email from Helen Disney, June 1st 2005.
- Email from Helen Disney, June 9th 2005.
- Email from Helen Disney, June 13th 2005.
- Telephone conversation with Johan Hjertqvist, June 8 2005.
- Email from Johan Hjertqvist, 13 June 2005.
- Telephone conversation with Craig Winneker: ""We are not a think tank. We are a media organisation. We disclose our sources of funding to the Commission; I don't know if they make this public. We have sponsored advertisement on our website. In 'about us' we publish a list of companies sponsoring us. " Is this a complete list? " I don't know, I'm just writing and editing." So who would be the person to talk to about funding sources? "I have your email so I will send you a name".
- Email from Margo Thorning, 12 June 2005.
- 2004-05 Supporters of the American Council for Capital Formation, ACCF Center for Policy Research, and International Council for Capital Formation, PDF provided to CEO by ICCF, June 2005.
- The need for a European transparency initiative, Siim Kallas, speech at the European Foundation for Management, Nottingham Business School, Nottingham, 3 March 2005.
- See What is the Transparency Initiative?
- See for instance Kallas to press on with registry of Brussels lobbyists", EurActiv, 22 July 2005.
- Europe and its think tanks: a promise to be fulfilled, Notre Europe, October 2004.
- European Public Affairs Directory 2005, Landmarks, Brussels 2005, p. 143-146.
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