Ripples of discontent as MEPs reject US bank data deal

EU lawmakers called for a better deal, which should include tougher data protection measures, despite warnings from Washington, the European Commission and the Spanish EU presidency that the rejection of the interim agreement would lead to a "security gap" for US and European citizens alike.

The interim agreement had been in force since 1 February pending the consent of Parliament, which has gained new powers in the field after EU's new legal framework, the Lisbon Treaty, came into force.

It would have been in force only for a maximum of nine months, in which a more wide-ranging final agreement was to be negotiated.

"The proposed interim agreement is simply a bad deal. The rule of law is important and currently our laws are being broken and under this agreement they would continue to be broken. Parliament should not be complicit in this," said Liberal Dutch MEP Jeanine Hennis-Plasschaert, who drafted the report in favour of scrapping the deal.

The US expressed its "disappointment" over the decision of the European Parliament, after having urged MEPs to postpone the vote so that those who were new to the issue could have a more informed opinion over the data protection measures included in the package.

"The outcome is a serious setback to US-EU counter-terrorist co-operation. We are now evaluating the options we have on how to proceed further from here," a spokesperson for the US mission to Brussels told EUobserver.

In past days, Washington deployed intense diplomatic efforts to try to change the minds of MEPs, especially after a key committee last week recommended the rejection of the deal.

After calling top EU officials on the phone, US secretary of state Hillary Clinton wrote a letter together with treasury secretary Timothy Geithner to the President of the European Parliament, Jerzy Buzek, in which they stressed the importance of the pact.

If the legislature rejects it, this would "jeopardize a valuable and carefully constructed counter-terrorism programme of importance to countries affected by terrorism around the world," the letter, seen by EUobserver, says.

The interim deal was put together by the Swedish EU presidency last year to help the US out of legal loophole, as the main company dealing with international bank transactions, Swift, was about to re-configure its database structure, no longer keeping information on European transactions on US soil.

Swift became embroiled in a scandal back in 2006 when news broke that the US was secretly using information on European transactions as part of the "War on terror" launched by the Bush administration following the terrorist attacks on New York and Washington on 11 September 2001.

The Belgian-based company had subsequently pledged to re-configure its architecture, so that it would no longer keep European data on US soil, which was automatically accessible to American investigators. But EU governments and the commission, as well as a minority of MEPs, are convinced that the programme has been useful to countering terrorist attacks.

"This is a serious setback in the fight against terrorism as the agreement has supplied vital leads against those terrorists responsible for planning or committing attacks against EU citizens," a spokesperson for the British government said on Thursday.

European diplomats raised concerns that the US would now walk away from negotiating an agreement with the EU and go for bilateral deals with member states, which would lower the standards for data protection.

"I'd like to know how MEPs think they have improved things by voting against this agreement. It's only by negotiating directly with the US that we've secured the stronger data safeguards that the parliament wanted. Now the US can walk away, ignore any concerns we have and stop providing the vital leads we need to help to prevent terrorist attacks," one EU diplomat told this website.

On the commission side, officials received the news with "regret."

"Following today's vote in the European Parliament, we will have now to reflect together with our US partners on the possible negotiation of a new agreement," home affairs commissioner Cecilia Malmstrom said in a statement.

Her colleague in charge of justice and fundamental rights, Viviane Reding, added that: "EU-US relations are critical of the freedom and security of our citizens. This is why we will work with our US partners to ensure that the new Swift agreement will at the end be able to receive the consent of the European Parliament."