Beyond Qatargate: the EU needs a compulsory register that targets all covert lobbying

The Qatargate scandal broke in December 2022 when Belgian police arrested Vice President of the European Parliament Éva Kaïlí and several others, suspected of being bribed by the Qatar regime in order to lobby for the Gulf kingdom's foreign policy goals and play down its human rights violations. A spotlight was shone on the issue of how to tackle the lobbying influence of repressive regimes. The initial political response correctly focused on fixing the serious flaws in the European Parliament’s lobby transparency and ethics rules that allowed for scandals like this to happen.

However, in recent months political will to follow up on these commitments has evaporated and the scandal has instead sparked a number of opportunistic political initiatives that primarily target civil society. In the European Parliament, for example, Qatargate is being used by right wing politicians to cast doubt on NGOs, using the fact that the scandal involved a fake NGO set up by a former MEP.

Now the European Commission is preparing a proposed directive on 'Transparency of covert interference by third countries' (part of the forthcoming 'Defence of Democracy package'), which also has a disproportionate focus on NGOs. The proposal is being misleadingly referred to as an EU equivalent of the US ‘foreign agents’ law (FARA), however it appears to have none of FARA's strengths (very high transparency standards and legally enforced sanctions), and all of its weaknesses.

The initiative will be presented at the end of May, but judging from the information that is available so far, this new proposal from the Commission might take the form of a directive creating harmonised national-level ‘foreign influence’ registers as well as an EU level register, all strongly focusing on foreign funding. The draft legislative proposal could, as Civil Society Europe writes, “lead to the creation of a specific register for NGOs and other actors that receive foreign funding". The Commission documents preparing for the directive lack the clear and precise definitions needed for tackling problematic non-EU government influence and instead used sweeping terms such as “outside interference” and problematic language about 'foreign agents'.

Meanwhile, the real solution seems to be missing in the Commission's plans. We already have a Transparency Register at the EU level that repressive regime lobbyists easily bypass because it is weak, voluntary and poorly enforced (see our case studies on Saudi Arabia, or UAE, for example).The simplest, most obvious, and long overdue step would be to finally fill in the loopholes of the EU Transparency Register, and make it legally binding and properly enforced, in order to secure full transparency both around lobbying by repressive regimes and all other forms of lobbying.

In an open letter to the European Commission in February 2023, Civil Society Europe warned that “an excessive focus on foreign interference would be counterproductive, as it could easily be misused by autocrats to promote their own anti-democratic narratives.” To illustrate, in 2017 Hungary cracked down on civil society that received funding from abroad, and when criticised it incorrectly claimed it was simply copying the US FARA laws. Further afield in Putin’s Russia critical NGOs are labeled ‘foreign agents’ and repressed. Liberties, an NGO defending civic space in the EU, also points out that the concrete measures “intended to help counter covert foreign interference… risk having a serious negative impact on civil society organisations and on civic space.” And Carlotta Besozzi, the head of Civil Society Europe, provides a very worrying overview of the increasingly hostile environment for NGOs in the latest episode of the EU Scream podcast.

These concerns have only grown stronger in recent months, resulting in a collective statement rejecting the EU Foreign Interference Law ("EU Foreign Interference Law: Is Civil Society at Risk?"), signed by more than 230 civil society groups. Corporate Europe Observatory supports this statement, because the direction that the Commission’s proposal is taking appears seriously flawed. We made this position clear in the Commission’s recent online consultation (see full text below), recommending against a directive that narrowly targets covert interference by third country governments, let alone focusing on NGOs.

We referred to our investigations which show that repressive regimes during the last decade have primarily made use of lobby consultancy firms, PR firms, law firms, and think-tanks for their influencing efforts. There was only 1 NGO out of 128 total lobbying entities from the 21 case studies we have conducted since 2015, featuring covert influencing efforts by Russia, Saudi Arabia, UAE, Azerbaijan, Qatar, China, etc. Our conclusion was that the main concern wasnot front group NGOs; and that the Commisison's approach was misguided.

As LobbyControl explains, "NGOs already have to provide information on donors in the [EU] transparency register, whether domestic or foreign, whether close to the government or not. The same applies if foreign government agencies commission lobbying agencies or other stakeholders. The fact that there is not enough transparency here is more due to the lack of enforcement of the rules and the still insufficiently binding nature of the EU lobby register than to the lack of special rules for influence from abroad."

Thus Corporate Europe Observatory asserts that the best approach is to ensure that EU and national level lobby registers secure transparency around third country government influencing and all other forms of influencing of EU decision-making, for all types of lobbying entities, that this registration should be legally binding, publish high quality and detailed information on budgets, lobbying topics, and contracts where applicable, and should be enforced with sanctions.

We call upon the Commission to prepare a legislative proposal for compulsory lobby transparency registers both at the EU and at Member State level, which should secure transparency and ethics around all forms of influencing of decision-making, whether from within or outside the EU.

CEO contribution to public consultation on “Transparency of covert interference by third countries”

Corporate Europe Observatory has advocated for a compulsory EU lobby transparency register for two decades, published in-depth reports about covert repressive regime interference in EU decision-making, and made concrete proposals to tackle the problem. While we welcome the level of ambition of the defence of democracy package, we consider a directive focusing narrowly on foreign interference to be misguided, for a range of reasons. This includes the acute risk that it could be changed by the other EU institutions and implemented by some Member State governments, in ways that could shrink space for civil society. Considering these risks, it is highly problematic and reckless that there is no impact assessment planned. Rather we recommend an overhaul of the EU Transparency Register and the preparation of a legislative proposal for compulsory lobby transparency registers both at the EU and at Member State level. These should secure transparency and ethics around all forms of influencing of decision-making, whether foreign (non-EU) or domestic (EU).

Our investigations into covert repressive regime interference in EU decision-making (including Russia, Saudi Arabia, UAE, Azerbaijan, Qatar, China, etc) show:

• Repressive regimes have primarily made use of lobby consultancy firms, as well as PR firms, law firms and think-tanks for their influencing efforts.

• Out of 128 total lobbying vehicles (from the 21 case studies) 44% were lobby consultancies, only 1 was an NGO.

• More think tanks were used as front groups than NGOs.

Thus the main target of concern should not be front group NGOs. Rather, effective measures should address all intermediaries used by foreign governments.

The EU Transparency Register fails to secure disclosure of lobbying on behalf of foreign governments. CEO often found more information about EU-focused lobbying on behalf of foreign governments in the US FARA register (which is legally binding and with sanctions) than in the EU Transparency Register! The solution is to ensure that the EU Transparency Register becomes obligatory, with strong enforcement and sanctions for violations.

The first step towards ensuring transparency and accountability around interference by third country governments must be to evaluate the record of the EU Transparency Register. This, astonishingly, appears to be missing in the Commission’s proposals and the 'Call for Evidence'. The most recent reform of the Transparency Register clarified the obligation to disclose lobbying on behalf of third country governments, yet the register still contains almost no such entries. Key failures include that the Register is not legally binding, lacks sanctions and is poorly enforced (lacking resources and investigative powers). Rectifying this should be the highest priority. Effective disclosure requirements (including of funding sources) is crucial to ensure transparency and accountability on interference by third country governments. In addition pro-active disclosure of lobby meetings by decision-makers is necessary.

We recommend against a directive that narrowly targets covert interference by third country governments. This would be a risky tool with likely negative impacts for civic space. Interference by third country governments should be covered together with other forms of influencing of EU decision-making. Far better transparency is needed to enable public scrutiny of lobbying influence. The Commission ought to prepare a legislative proposal for compulsory lobby transparency registers both at the EU and at Member State level, which should secure transparency and ethics around all forms of influencing of decision-making, whether from within or outside the EU.

We noted that the “Call for evidence” uses sweeping terms like “foreign influence” and “outside interference”. Any new measures must be based on a clear definition of the specific problem that needs to be addressed: the covert influence of non-EU governments and state-linked entities.