Interview Bob van Heuvelen: public affairs after the US elections

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On the day after the American elections, Public Matters spoke with Bob Van Heuvelen, Founder and CEO of Van Heuvelen Strategies in Washington, DC – one of Public Matters’ international partners. Together we looked ahead to a new presidency and what it means for public affairs professionals in- and outside Washington. And of course, you can’t look ahead without looking back on four years of Donald Trump and his impact on the public affairs profession in the U.S. Van Heuvelen Strategies Associates Bobby Cunningham and Sam Yntema also joined the conversation.

Contrast

“There couldn’t be a more dramatic contrast,” Bob Van Heuvelen starts off. While the world watched Trump toss aside the Paris Agreement, call out NATO, and revisit international trade agreements, we can now expect a radical turnaround when Joe Biden takes office: “American presidents normally color within the lines of the rule of law – with Biden we expect a return to stable government and processes.” Therefore, one of Biden’s international policy priorities is to rejoin the Paris Agreement. “We also anticipate that the Biden Administration will re-initiate multilateral trade negotiations with its European and Asian allies. This also illustrates what the world can expect on U.S. trade policy: a focus on trade agreements and climate objectives.”

Familiar faces

As an agency, Van Heuvelen Strategies has built up a broad network of contacts. A change of presidential administration need not have a dramatic impact on this. Although several new political faces will appear, many of the career civil servants will remain the same. Biden will put a couple of familiar faces in high positions. Moreover, Biden is a stable political figure, which means that the connections will likely be more long-term. “The people under Trump were more difficult to get to know, not in the least because they were replaced very quickly,” notes Van Heuvelen. The figures confirm this: Trump has the highest ‘turnover’ in recent American history: 91% of his ‘A-Team’ has been replaced since he took office.

FOX news

“One clear way in which our industry’s work will change,” adds Bobby Cunningham, “is in the tactics behind the strategy — the Trump Administration operated in a very centralized manner with respect to decision making that originated inside the White House and those within the president’s immediate orbit.” Cunningham grew up in Washington and started at Van Heuvelen Strategies at the tail end of the Obama Administration. He noted an industry-wide shift in the primacy of data driven lobbying of officials who have been around town for a long time to tactics more focused on making an impression on a select group of political aides and confidants after Trump took office: “What can we do to get this on the president’s radar and in front of his eyes? Should we get drinks at the Trump Hotel tonight, and how do I get reported on FOX News? How do I get the president to tweet about this issue in a way that is positive for a client’s interests or negative to a competitor’s? How can we tie our message to President Trump’s campaign promises and his reelection hopes?” And this is a logical move, since from early on in his tenure, the president’s Tweets have been considered ‘official Presidential statements’. For example, the Washington Post recently wrote about a fundraising meeting for Trumps’ election campaign – where the president’s first policy pledges appeared on Twitter mere hours later. “A transition to Biden does not mean a full return to Obama-era strategies,” notes to Van Heuvelen. According to him, Biden will have to figure out how to use the new media situation and expectations of his supporters to his advantage.

Creature of Washington

A similar middle ground is expected from a new administration and its view on professional influence. “Obama had a strict anti-lobbying policy,” notes Van Heuvelen. The expectation is that Biden will partially pick this up where Obama left it. Trump was much more receptive to business influences: according to ProPublica, Trump had 281 lobbyists working under him in 2019, and OpenSecrets reports a clear increase in lobby spending since he took office. But Obama and Biden’s anti-lobbying policy should also be viewed in perspective: “Obama had about 70 former lobbyists in his administration, and I think President-elect Biden will be keenly aware of the need to dispel perceptions of corruption as well as America’s desire to root out undue influence. Indeed, the transition team has already placed waiver requirements on lobbyists seeking to shape the new administration. Ethics and good government should and will take priority in a Biden Administration,” notes Cunningham, and Van Heuvelen also sees Biden as a “Creature of Washington.” In short, we anticipate that lobbying will remain a critical part of any corporation’s advocacy strategy.

Lobbying Presence

“The expectation is that the coming years will continue to be dominated by a suspicion of the ‘foreign lobby’,” says Van Heuvelen, “who do you work for, and what are you doing for them?” remains a frequently asked question. Of particular significance are foreign government clients, who are subject to special scrutiny under American law. In addition, more attention will be paid to the “revolving door”, especially regarding who rotates out of the Trump government and into the business world.

Business as usual

For international trade, global changes will be noticeable in the long term. In the short term, however, it is business as usual. “Trump’s rhetoric was to get jobs back to the US, and Biden won’t flip 180 degrees on this. However, we do expect a more balanced and climate-focused trade policy.” Even the critical view of large multinationals with a lot of market power will not change much – according to Van Heuvelen, this is not a partisan issue: “We would anticipate that the Biden Administration will be more inclined to view large corporations in a way that is more in line with the European attitude.” Just as is the case worldwide.

Collaboration

The partnership with Van Heuvelen Strategies in Washington is part of the further growth of the public affairs & lobby consultancy Public Matters. This partnership enables Public Matters to better anticipate transatlantic issues in both Europe and the United States, and to actively exchange trends and knowledge in the field of public affairs between the United States and Europe. In our blogs we follow transatlantic developments in the field of public affairs.

How the Dutch government is protecting its open economy

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The Netherlands has one of the most open economies in the world, but its economic policies are becoming increasingly nationalistic. The Dutch government is currently working on a legislative package to protect Dutch companies against undesirable foreign influence or hostile foreign takeovers. The final piece of legislation is the adoption of the Undesirable Control of Telecommunications Act by the House of Representatives early this month, in order to protect Dutch digital infrastructure against cyber espionage or digital warfare. The key question of 2020 is how the Netherlands will find a balance between an open economy on the one hand, and protective measures on the other hand. What does this development mean for telecom companies that (aspire to) do business in the Netherlands?

The Dutch business community as well as Dutch politicians were surprised by the imminent takeover of national pride KPN by Mexican América Móvil in 2013. And, in 2017, attempts were made to acquire AkzoNobel and Unilever. The question that emerged was: how can Dutch companies be protected against financially powerful competitors from abroad, especially in economic downturns? In addition, due to transnational issues such as geopolitical tensions, cyber espionage and digital warfare, there has been a growing desire to better protect telecommunications services against undesirable influences from abroad.

This has resulted in various measures, such as the Undesirable Control of Telecommunications Act (Wozt), an Investment Test for risks to national security, a reflection period for listed companies and the implementation of the European Foreign Direct Investment (FDI) screening regulation. A robust arrangement of measures to protect Dutch companies and interests. The Wozt in particular led to many discussions in the Dutch parliament as well as amongst employers’ organizations. The Act gives the Dutch government new far-reaching rights to actively intervene in takeovers.

Protecting vital infrastructure

The purpose of the Wozt is to protect providers of certain telecommunication services, such as data centers, hosting providers, telecoms services, domain names, communication networks and internet nodes. In the event of a takeover or a merger, the Ministry of Economic Affairs must be notified. If the takeover affects national security, the Minister has the legal power to block a takeover. Specifically, in the case of engaged geopolitical interests in the takeover, such as a foreign authority that wishes to strengthen its position to the detriment of the Netherlands. Under certain conditions, it is even possible to dissolve a takeover with retroactive effect if geopolitical relations change, such as the election of a newly elected foreign leader that implements a policy that is not beneficial for Dutch interests.

Extending powers causes criticism

Thus, the law gives the government far-reaching powers to intervene in ownership relations. In March 2019, this resulted in 16 pages of critical questions from the House of Representatives. It lasted more than six months until State Secretary Keijzer (Economic Affairs) formulated a response to all the questions and announced her amendment proposals. Despite the changes, the employers’ organisation VNO-NCW and the sector association DDA (Dutch Data Center Association) remained critical. Both organisations acknowledged the importance of the law, but the proposal had to be ‘in balance with the open economy (…) and the possibility of retrospective intervention in the ownership relationship is at odds with this’.

VNO-NCW is concerned about the executive powers of the minister that allow interventions, as well as about insufficient guarantees. Moreover, it is unclear whether the power to intervene after a takeover already has a precedent in other European countries. Business association VNO-NCW does not want the Netherlands to occupy an exceptional position in this respect. The organisations fear that the legislative proposal will have a negative impact on the Dutch investment climate.

A majority of the House of Representatives shared these concerns; seven motions and four amendments in total were adopted to improve the proposal. The House of Representatives wanted stronger safeguards related to the exceptional powers of the Minister. For example, Mr. Weverling (VVD – Conservative Liberals), asked parliament to be reluctant in the retroactive intervention in ownership relations. Additionally, he argued that affected companies should be able to submit their position to the ministry in order to improve the involvement of companies in the process. Ms. Van den Berg (CDA) asked for an annual report on the application of the law and the prohibition power, for an evaluation of the law after five years, and does not want directors to be held liable when they have to carry out assignments related to unwinding a takeover.

These motions and amendments were adopted with broad support from the House of Representatives. By demanding additional guardrails, the House of Representatives is demanding the minister to be more cautious. Moreover, with the implementation of evaluations and annual reporting, the House of Representatives constantly keeps its finger on the pulse of the implementation of the law. This demonstrates that measures that affect the openness of the Dutch economy can count on a critical look from left as well as right parties in the House of Representatives.

The proof is in the pudding

The Cabinet is in a hurry to implement the draft legislation, as it fears that the corona crisis will make Dutch telecom companies extra vulnerable to foreign takeovers. The bill has passed the Senate this week, but this will not be the last time that we will hear from the Wozt. Although most large Dutch telecom companies are owned by foreign parent companies, there are still a few smaller Dutch data companies as well as Dutch telecom company KPN.

We also have to ask the question; what will happen if such a foreign parent company is taken over and this leads to undesirable influence in the eyes of the Dutch minister? At that point, the Dutch minister can block the takeover of the Dutch subsidiary, and hence the Dutch government also gains indirect influence in takeovers of foreign companies. Or suppose a takeover has to be reversed retroactively by order of the Ministry? In any case, these situations will lead to a lot of attention and discussion in domestic and foreign politics and media and may even lead to increased geopolitical tensions. After all, it is not easy wanting to be an open economy and at the same time protect national interests in a globalized world!

Public Matters advises many companies that are active in the tech sector or that are directly related to technological developments such as the Wozt. Check this page for more information

One for all, and trade associations for …?!

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Especially in these challenging times trade associations should look beyond the interests of their members and seek cooperation with other stakeholders. This is in their own interest, because when the government will oblige cooperation this could lead to undesirable outcomes.

Since te start of the COVID-19 crisis the role of trade associations has become more visible as these organizations draw up sector protocols, assess how companies and sectors are affected and should be supported. What was very striking is that in the Netherlands most sectors are almost exclusively focusing on the interests of their own members. A good example is the debate about the rents for retail spaces regarding which different trade associations were fighting each other, rather than working together.

Recently, historian Bas van Bavel of Utrecht University held a plea (Telegraaf, 13 March 2020) for associative and cooperative solutions, referring to the cooperation between farmers’ unions and housing corporations. Immediately it reminded me of the former product and business partnerships. These semi-governmental organisations acted as trade associations, but with compulsory levies and with representatives of trade unions in the board of directors. Many businesses, especially in the agri-sector opposed the compulsory nature of the cooperation, which resulted in the dissolvement of these product and business boards five years ago. Nonetheless, these product and business boards would have been useful in these crisis times as their set up and structure creates a place for cooperation in the chain. After all, this crisis is affecting every entrepreneur in every sector, and not just retail, catering and ornamental horticulture sectors. Thus, shifting problems from entrepreneurs in one sector to suppliers, landlords or other parties, does much better align with the current prevailing sentiment in society. The Cabinet of Prime Minister Rutte is therefore right to emphasize the fact that as a society we can only tackle this together.

Although I don’t blame entrepreneurs for focusing on their own business interests during times of crisis, I believe that trade associations in particular should not only focus on the interests of their members, but rather opt for the stakeholder approach. This approach means that directors consider the interests of other stakeholders in the chain and offer solutions that would also serve stakeholders like trade unions, suppliers, landlords and the logistics chain. Such a stakeholder approach is in contrast with an approach that is mostly about exchanging positions, but is aimed at realizing long-term solutions, for example the future of a city center, or the expected challenge of supplying pharmaceuticals.

The stakeholder approach requires courage of the directors of trade asociations, simply because focusing on your own interest seems the fastest way of scoring points, at least in the short term. However, I am convinced that trade associations that listen carefully to their members will find out that most entrepreneurs are well aware that cooperation is in their own interest, in both the long and short term.

If trade associations are really protecting the interests of their members, they would use the current sense of unity to create lasting cooperations between trade associations. Because if chains do not succeed in this, there is a chance this will be obliged by the government again, which could lead to the return of a system such as the product and business boards. As an entrepreneur you will need to ask yourself the question if you are better off in that case.

EP 2019: between now and summer recess everything will change

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With the European elections coming up, what can we expect from the Dutch?

In March, provincial and senate elections might result in a shift in power for the current Dutch coalition: if it loses its senate majority, passing bills will ultimately be more challenging. Furthermore, recent polls see the rise of another Eurosceptic party – Forum for Democracy, which would make selling EU policies to the Dutch electorate increasingly difficult over the coming years.

But why should you care about the Netherlands, you ask?

Is PM Mark Rutte looking for a job in Brussels?

Some may remember Mark Rutte’s mild Euroscepticism at the onset of his career as Dutch Prime Minister. No more money to Greece was one of his party’s unofficial slogans of 2012. It exemplified Rutte’s approach.

According to rumours, Rutte is now aiming for a high position in Brussels. This comes as no surprise: in 2019, evidence for Rutte’s change of heart is plain to see. Only one thing stands in the way of this prediction: it seems he does not want to leave domestic politics. Where Rutte’s initial denial of his European ambitions could be seen as self-defence (never reveal your true ambitions), his current promise to the Dutch voter to finish what he started is pretty convincing. Especially considering he would already have had to book his tickets to Bruxelles-Schuman by now.

But Rutte remains an interesting cog from a business perspective. The ex-Unilever-manager-turned-Prime-Minister is known for his business friendly liberal approach. And the new and improved Euro-friendly Rutte has blossomed into one of Brussel’s old boys. The ‘three M’-powerhouse that is Merkel, Macron, and Mark takes centre stage in Brexit negotiations, refugee rebates, you name it. He is an eager initiator in and out of the spotlights. No wonder the Netherlands are mentally preparing for his departure – whether it be in May or later.

What about the ambitions of European Commission Vice-President Timmermans?

Septilingual Commission VP Frans Timmermans is our second key Dutch player in the European arena. Timmermans’ Dutch Spitzenkandidatur is not unique: Bas Eickhout is also Spitzenkandidat, but for the Greens (sharing his kandidatur with Ska Keller). Unlike Eickhout however, Timmermans actually has a – tiny – shot at the presidency. Without a coalition partner Timmermans’ chances seem negligible, but this should not stop us from considering his role in Brussels.

Timmermans is responsible for the fairly recent revision of the transparency register for lobbyists in Brussels, one of Commission President Juncker’s early promises. The Council of Ministers is now subject to this register as well. Critics wanted to extend the register to the Member State Permanent Representations, but for Timmermans this was a bridge too far. Either way, Timmermans himself is known for his extensive EU-network.

An October 2018 poll revealed over half of Dutch citizens to be in favour of Timmermans becoming the next Commission President. An interesting detail is that any president of the European Commission has to be approved by the Council, which means Rutte might have to approve Timmermans’ possible ascension to the throne. But barring the unlikely, Timmermans’ popularity won’t be enough for the Dutch to welcome their first Commission President.

Brexit and the Dutch

But let me be honest, only one issue really dominates the European agenda in the Netherlands: Brexit is coming. The Dutch have an immense interest in this area, their main business-partners have committed kamikaze and the Dutch are scrambling to minimise the damage. Rutte’s and Timmermans’ ambitions reflect their approach to Brexit. Rutte’s main efforts in Brussels are centred around damage control for the Dutch. The stakes are high, a British business exodus favours settlement in the Netherlands. Timmermans repeatedly warns of the damage that Brexit will cause – from a European perspective. Precisely what you would expect froman aspiring Commission President.

With elections at home and in Brussels, and Brexit on the horizon, we can predict only one thing: between now and summer recess, everything will change.

 

This blog can also be found on the EU-website of APCO.

Dutch Lib Dems open fire on Big Tech

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The Dutch Liberal-Democrats (D66) launched a plan to restrain (mainly US) tech companies. In a 17-page document published earlier this month, the Lib Dems propose to cap market power by companies such as Facebook, Amazon, Apple, Netflix and Google (dubbed ‘FAANGS’) by adjusting current competition laws. The Parliament will discuss the plan with the Cabinet at the end of March, but not before the parliamentary fractions have had the chance to provide input on the Lib Dem initiative.

Decreasing support for digital platforms

The most striking fact is that D66 has always embraced tech firms as many of their voters find their way in the new digital economy. When even the Lib Dems are decreasing their support for the digital platforms, big tech could expect an increase of political pressure in the upcoming EP elections and probably in other elections as well.

The initiative by Mr. Kees Verhoeven MP consists of 14 measures to constrain the ‘Techgiants’. Notably, all the measures refer to revising current Dutch and European competition laws which, dating back to as early as the 1890 U.S. Sherman Antitrust Act. The 5 most eye-catching proposals are highlighted below:

1) Enable ex ante obligations in tech M&A’s

To prevent incorrect market definitions, competition regulation needs to adapt to the fact that platforms operate in multilateral markets;

2) Include privacy legislation in the scope of competition rules

D66 wants to oblige data-sharing to prevent tech platforms from gaining an unfair competitive advantage or raising the bar for market entrants;

3) The European Commission should investigate future market potentials when assessing acquisitions

This should prevent a continuous acquisition of start-ups by tech-platforms;

4) Introducing a new limit regarding the marketshare definition in the competition law

Article 102 VWEU should be adapted. D66 suggests the market shares of major tech companies should be below 50%;

5) Lowering turnover threshold for acquisitions

Based on the example of the Facebook takeover of Whatsapp. Following Germany and Austria, the initiator suggests to oblige companies to notify when a ‘target’ has substantial activities in NL;

#EP2019

For those who read carefully it is clear that the foundation for these issues was outlined in the earlier published D66/ALDE election program for the EP elections. The issue was discussed extensively between world and business leaders during last January’s World Economic Forum in Davos as well, where Big Tech was even compared to the Tobacco Industry. These developments could probably make it one of the main issues during the campaigns of the European Parliament elections in May.

Protectionism in the Netherlands

The initiative can be seen as part of a larger trend of protectionism in the Netherlands similar to the introduction of a ‘cool-down period’ for (hostile) takeover bids on Dutch companies. As the initiative is now primarily targeted at the US-tech companies, it would be even better if the plan would be linked to an ambition to stimulate Dutch (tech) companies to build up similar positions. When one decides to adjust competition law, it can never be adjusted based on developments in the tech-sector solely however. Therefore – and as the Cabinet has to formally react to the D66 plan – we assume that the competition directorate of the ministry of Economic Affairs will investigate the effects in a variety of business sectors.

Coalition agreement

As the Dutch government faces an unstable 2019 and Dutch competition law has not changed for a while, many of the measures proposed in the paper are expected to be input for the next Dutch coalition agreement or at least the next D66 election program. During a debate on competition in Dutch Parliament last week, a first introduction of Mr. Verhoeven’s plans was supported by both opposition and coalition. Parliament now has a month to comment on the Lib Dem initiative. After 21 March 21 the ministry of Economic Affairs will provide its view.