“Our dependence is independent” – Ministry of Truth

Who funds the pro-EU Bruegel group? Here is what their website tells us:


Bruegel’s answer is strange: “We’re an independent, non-doctrinal think tank … that just happens to be funded by most of the EU’s member states (acting in syndicate), as well as a bunch of central banks and big global corporations.” People might be forgiven for raising an eyebrow. How can you be objective about the EU, central banks and big business, when you’re funded by EU states, central banks and big business? In this post, we examine Bruegel’s funding by the central banks – and the Bank of England in particular – and big global corporations.


The Bank of England funds Bruegel

Bruegel’s “Institutional Members” are, unsurprisingly, a mixture of national central banks, European supra-national banks (the European Investment Bank and EBRD) and state-owned but nominally independent banking groups (Spain’s publicly owned ICO foundation and France’s state investment bank La Caisse des Dépots), with central banks paying €25,000 and the other institutions €50,000 in annual subscription fees. The countries whose national central banks are members is a little surprising however. On the list we find: France, Italy, Sweden, Denmark, Poland, Roumania, Luxembourg and … the UK. But no Bundesbank and neither of the strongest supporters of its late and much lamented orthodox approach to fiscal stability, the Dutch and Finnish central banks. Portugal and Ireland are notable absentees among the “beneficiaries” of ECB assistance following the European sovereign debt crisis. The Banks of Italy and of Roumania only joined in 2015 and 2016, respectively. Institutional Members, though consisting of high profile institutions, only contributed €425 thousand in subscriptions in 2017.

Central banks

Central banks’ current policy of quantitative easing is highly controversial (I write about QE here) as was the the Bank of England’s scaremongering about Brexit during the referendum campaign. Some may approve of these members’ various agendas, no doubt, but they are certainly agendas.

The Bank of England’s continuing membership of such an organisation as Bruegel is scandalous, given its anti-Brexit bias during the referendum, noted above. The expenditure of fee, trading and other income earned thanks to government granted authority by the Bank of England on Bruegel membership is outrageous funding of political propaganda.


Bruegel’s corporate members: the big business agenda

“Corporate Members” are the second largest contributors, after national governments, to Bruegel’s core subscription income, with just over €1.7m in 2017. Unlike governments or public sector banks, corporations have narrow, private interests which are not subject to any public interest considerations. Which companies back a group like Bruegel might say a lot about the particular interests it represents. However, one should caveat that statement with an acknowledgement that Corporate Members are capped by Bruegel at €50,000 in annual subscriptions (2016 annual report p. 84), which is c. 1.3% of total donations and 3.5% of corporate donations, so no single corporate donor can be large enough to influence the group on its own. Moreover, these are often large, sprawling organisations which hand out money to lots of institutions like Bruegel out of a sense of civic duty, or to advertise their intellectual credentials. In some cases, there will be ties, historical or current, between a firm and its government, and the corporate donation may be a kind of favor to an influential politician. That may be fishy in itself, but it isn’t necessarily designed to push a particular political agenda.

Bruegel corporate members I

Bruegel corporate members II

Those caveats aside, there are some very strong common threads running through Bruegel’s Corporate Members. Most notable is the preponderance of financial companies, which represent just over half (17 out of 32) of Bruegel’s total Corporate Members in December 2016. These comprise international full service (i.e. combining retail and investment banking) banks based in Europe (Deutsche Bank, Société Générale, Unicredito, BBVA, Santander) and the UK (HSBC), with Standard Chartered being a former member; investment bank Morgan Stanley; asset managers (Blackrock and Schroders), with Tudor Capital and Moore Capital/MEMC being former members; international insurance companies based in Europe (Generali and ING) and the US (Metlife), with the UK’s Prudential being a former member; the ratings agencies (Moody’s and S&P), which gave sub-prime bonds AAA ratings before the sub-prime crash; credit card company Mastercard; and, for some reason, Japan’s agricultural cooperative bank, Norinchunkin.

Among these financial companies Blackrock merits further comment. Its CEO Larry Fink has issued repeated and strident warnings about Brexit. Fink is not only an interesting character for his political views. Before joining Blackrock, he lost around $100m as a bond trader, and before becoming its CEO created Blackrock’s Aladdin risk management software, a fact which is discussed in Adam Curtis’s intriguing documentary Hypernormalisation. Moore Capital’s founder, Louis Bacon, was a donor to the Jeb Bush campaign.

Apart from the financial companies we also find big pan-European telco (Telefonica and Deutsche Telekom, who merged their UK operations); controversial Chinese telco equipment manufacturer Huawei, which is accused of being an arm of the Chinese army and of being used by China to spy on its customers; utilities Enel (Italy), EDP (Portugal) and Iberdrola (Spain), all of which are highly active in green energy, as is French former member EDF; energy and energy related companies (Schneider electric and Shell); US and Swiss pharma companies (Merck, Pfizer and Novartis); silicon valley companies Microsoft, founded by vocal internationalist Bill Gates (who recently urged the UK to maintain its commitment to spend 0.7% of GDP on foreign aid), Amazon, which supplies the CIA with cloud storage and whose founder Jeff Bezos is the owner of the Washington Post (a situation which some allege has led the Washington Post to be too close to the CIA in its recent political reporting), google, who some argue biased its search results against the Brexit campaign, and Uber; and Toyota, which for some reason is listed in the annual report but not on the website.

What we can clearly see is that, apart from the odd charming exception like Norinchukin, these companies demonstrate one or several of the following characteristics:

  1. They are led by someone with anti-Brexit (notably Blackrock) or internationalist establishment (notably amazon, Microsoft and Moore Capital) views, or promote such views as a firm (google);
  2. Their business model is based on hierarchies of authority which are analogous to the authority which the EU seeks to preserve vis à vis its member States (ratings agencies and google);
  3. They have assets and liabilities denominated in euros (all the banks and insurers) or activities (the ratings agencies) which would be severely impacted by any break-up of the euro or of European financial integration;
  4. They benefit from financial regulations, such as MIFID, which benefit incumbent asset managers and investment banks;
  5. They benefit from European market and regulatory integration, in particular due to their cross border assets (telcos, utilities, pharma, Schneider, banks and insurers, possibly Toyota);
  6. They have an interest in favorable EU regulation to facilitate their challenger business model (Huawei, Uber).

Thus, while none of these Corporate Members is large enough in itself to influence the Bruegel group, they all have common corporate interests in favor of international integration in general and European integration in particular, and against the kind of populist and nationalist movements represented by Brexit. In total, the Corporate Members contributions are enough to pay for over 47% of Bruegel’s €3.58m staff costs making the common interests we have identified a potentially important factor in Bruegel’s research conclusions.

However, one should not be too hasty in determining which way the chain of causality runs. It may very well be that the Bruegel group attracted such corporate members because of its pro-European integration views. That is all fine per se, but it is not consistent with Bruegel’s claims to be “independent and non-doctrinal.” Its business model is not viable without money from institutions or corporations supporting  supra-national political structures and international political integration, particularly through the EU and big international corporate interests. It is an agenda driven organisation, not an impartial one.