Having sparked top-level diplomatic negotiations to ensure the confirmation of the new European Commission, the European Parliament again grabbed the spotlight and incited a new stream of letters between European capitals by raising the prospect of rejecting the provisional agreement with the US on sharing bank transfer data.

Parliament's civil liberties committee recommended on February 4 that the full assembly vote down the deal, citing privacy concerns, with 29 votes in favour and 23 against.

The agreement, which would be rendered legally void if the full assembly was to withhold its consent, was scheduled to be voted on by the European Parliament on February 11.

The subject of the deal is the Swift system of cross-border bank payments, operated by the Society for Worldwide Interbank Financial Telecommunication, which registers money transfers between countries. Headquartered in Belgium, Swift handles an estimated 80 per cent of the global electronic financial transfers.

The company has set up a storage centre for its European data in Switzerland, which meant that intra-European data was stored only in Europe, as opposed to a server in the US. This, in turn, required the negotiation of a new agreement between the EU and the US on a data-sharing deal.

A temporary deal was agreed with the EU's Consilium in November 2009, valid for nine months starting from February 1, giving the new European Commission time to take office and negotiate a permanent replacement.

The contents of the agreement and the way it was put in place reportedly did not sit well with MEPs.

Dutch liberal Jeanine Hennis-Plasschaert, the rapporteur on the issue, argued that it "violates the basic principles of data protection law, i.e. the principles of necessity and proportionality" and that "this cannot be subsequently rectified by mechanisms of oversight and control".

Hennis-Plasschaert's specific criticisms on details ranged from the missing provisions that would make data transfer requests subject to judicial authorisation, as well as impose a time limit, to the fact that the conditions for sharing data with third countries were not sufficiently well-defined nor was the maximum period for which the data can be retained specified.

Furthermore, citizens' rights over their own personal data, notably rights of access, rectification, compensation and redress, were also not adequately defined, she said.

The committee's resolution said that data should only be gathered "for the purposes of fighting terrorism" and the agreement should contain "the same judicial redress mechanisms as would apply to data held within the EU, including compensation in the event of unlawful processing of personal data".

War on terror

US authorities are gathering data under the Terrorist Financing and Tracking Programme and the EU's anti-terror co-ordinator Gilles de Kerchove is on record as saying that Europe's security has benefited from the US monitoring of banking data flows, the European Parliament said in a statement on February 5.

The US subpoenaed the company for bank transfer data in the aftermath of the September 11 2001 terrorist attacks in New York, but this did not become public knowledge until 2006. Public demands for EU privacy laws, which are more stringent when it comes to bank data than those in the US, to be observed resulted in a formal agreement in 2007, which was rendered obsolete by Swift's decision to store European data in Europe.

Washington would prefer to get the data from one place, rather than negotiate bilateral agreements with governments in each of the 27 EU member states, some of which may come under domestic pressure to impose stricter access restrictions.

US ambassador to the EU William Kennard has said that the US could do just that. "If the European Parliament overturns the agreement, I am unsure whether Washington agencies would again decide to address this issue at EU level," he wrote in a letter to European Parliament president Jerzy Buzek, as quoted by AFP.

According to Hennis-Plasschaert, arrangements for judicial co-operation between the EU and the US, which entered into force in 2010, already granted access to targeted financial data on request, via national authorities, ensuring that there would be no "security gap".

Fighting terrorism "does not need to involve the endless erosion of civil liberties for whole swathes of innocent civilians," Hennis-Plasschaert said, as quoted by BusinessWeek.

Power play

This stance, however, firmly put European Parliament on a collision course with the European Commission, which has long fought for a centralised approach to negotiations with Washington on major issues.

If left to negotiate individual agreements, the EC has argued, national governments ran the risk of agreeing to terms that went further than EU rules allowed, including in the area of data protection (as is the case with the US visa waiver programme).

Having tested its increased authority, granted by the Lisbon Treaty, during the confirmation hearings for the new European Commission, the European Parliament now appears set to ensure that its expanded powers, which include oversight over home affairs, are not being disregarded.

MEPs could give their consent if given a seat when talks on a permanent agreement begin, Reuters said on February 8, quoting an unnamed European Parliament source as saying that "Parliament wants to have access to negotiations on the issue from the very early stages".

The issue was discussed by ambassadors from the 27 EU governments on February 8, who urged the EC to draft guidelines for the negotiations that would take into account the concerns of the European Parliament as well as EU member states, Reuters said, quoting an unnamed EU diplomat.

MEPs asked for more access to classified information about the talks, a demand that European Commission President Jose Manuel Barroso appeared willing to grant on February 9, when he welcomed "the idea of an inter-institutional agreement enabling the Parliament to have easier access to the classified parts of international agreements on which it enjoys the right of consent," as quoted by European Voice weekly.

Barroso was quoted as saying that the Commission would "keep Parliament fully and immediately informed at all stages of the procedure" and that he "fully" understood the European Parliament's privacy concerns.

Washington also struck a conciliatory note, with secretary of state Hillary Clinton and treasury secretary Timothy Geithner writing to assure the EU's legislative body that it would have a greater role in the drafting of the permanent agreement.

However, there was no sign that MEPs were willing to settle, European Voice said, quoting Dutch liberal Sophia in 't Veld, the deputy chairperson of the social liberties committee, as saying that the offer fell short of expectations and that MEPs wanted immediate access to the EU experts' legal opinion onthe interim agreement and intelligence documents to prove the effectiveness of the previous data-sharing deal.