Open Europe press summary: 22 October 2008

Europe

Sarkozy moves to set up parallel EU Presidency to 'circumvent the Czechs and Swedes';
Sarkozy to be President of eurozone summits throughout 2009
Le Monde reports that Nicolas Sarkozy "wants to profit from the financial crisis by imposing his economic vision of Europe and continue to preside over the EU at the level of the eurozone, at least for an extra year." The paper reports that this plan was confirmed by several sources at the Elysée Palace.

Sarkozy is reportedly concerned that 2009 will not be conducive to action, because of the Czech EU Presidency in the first half, and the Swedish Presidency in the second - neither of which use the euro. There is also the fact that the Commission will come to the end of its current term during the year. According to a roadmap unveiled by Sarkozy, "If Irish ratification [of the Lisbon Treaty] does not take place, it will be impossible to act at the level of the 27. But it is possible to circumvent the Czechs, and then the Swedes, by meeting at the level of the 16 eurozone leaders, as was the case on 12 October, before the European Council." Eurozone finance ministers already have their own meetings, but Sarkozy said "the meeting of finance ministers alone is not commensurate with the seriousness of the crisis."

The plan is for Nicolas Sarkozy to be President of eurozone summit leaders' meetings until 1 January 2010, when Spain takes over the rotating EU Presidency. According to the article, the British Prime Minister would be invited to meetings, so that the City of London is on board. The paper also notes that Sarkozy did not warn Angela Merkel before his speech and is awaiting her reaction. Germany has long been reticent about an economic government.
Le Monde Standaard

Sarkozy calls for European "economic government" and sovereign wealth fund
Nicolas Sarkozy has called for a European "economic government" to ensure a united response to the global financial crisis, reports the BBC. He has also suggested that European leaders have behaved "like statues", and said "What's wrong with European political debate is the lack of ideas", according to Agence Europe.

Sarkozy yesterday called for the establishment of a European sovereign wealth fund to take stakes in large European enterprises, protecting them from falling into the hands of foreign investors. He said, "I don't want the citizens of Europe to wake up in a few months and discover that European businesses belong to non-European capitals", according to El Pais. Agence Europe reports that Sarkozy has stressed the need to "radically reform capitalism", but a leader in the WSJ, states that Sarkozy "is using the financial crisis as an excuse to indulge in the Continent's worst anticapitalist and antiforeigner tendencies."

Commission President José Manuel Barroso called the French proposals "extremely interesting", according to the IHT. However, Sarkozy's suggestions were dismissed almost immediately by the German Economic Minister, Michael Glos. He is quoted in FAZ suggesting that "the French proposal, to protect European industry from foreign takeover through state participations, is in violation of all fundamental principles of our economic policy".

The LA Times has run a story chronicling European "sniping" over Gordon Brown "hogging a spotlight" over the financial crisis. The piece quotes Open Europe Director Lorraine Mullally stating that, "Apparently Sarkozy didn't like that [the 'Brown plan'] and he's been referring to it consistently as the 'European plan'".
El Pais WSJ-leader FAZ Le Figaro BBC Le Point IHT FT Volkskrant Telegraph EUobserver European Voice AFP LA Times

MEPs approve controversial Agency Workers Directive;
UK could lose working time opt-out as 'package deal' unravels
MEPs today approved a controversial directive that will require UK employers to pay temporary and agency workers the same as permanent staff after only 12 weeks in a job. After years of blocking the proposal, the UK Government agreed to back it in return for being allowed to retain the British opt-out from separate EU rules restricting working hours. However, it is noted that MEPs are threatening to vote against the working hours opt-out when a revised working time directive is debated early next month - a large number of MEPs both from the socialist and conservative groups in the EP have expressed their opposition to the UK opt-out.

If MEPs reject the opt-out, the proposal will to go to so-called conciliation with EU Ministers. The article quotes David Yeandle, Head of Employment Policy at the EEF, representing UK manufacturers, saying that the UK could then find itself under severe pressure from other nations to give way.

Some British Labour MEPs are also expected to vote against the working time opt-out after a trade union motion was passed at last month's Labour Party conference. Stephen Hughes, Labour MEP for North-East England and head of the Socialist group on the European Parliament's Social Affairs Committee, said the conference decision had sent a "strong signal to sister parties across the EU. A totally united Socialist group in the European Parliament will help achieve the majority to finally end the opt-out."
FT Open Europe briefing note EP press release Open Europe press release

Rome: "All manufacturing sectors are threatened" by EU climate package
Italian Environment Minister Stefania Prestigiacomo issued a warning yesterday on the EU's controversial climate and energy package, upon which negotiations between EU governments are deadlocked. She said that "The main risk is relocation, and even countries like Germany have mentioned this problem," she told the financial daily Il Sole 24 Ore. "All manufacturing sectors are threatened," she added.

Reuters reports that Italian Prime Minister Silvio Berlusconi warned yesterday that 10 other EU nations backed his efforts to block an EU climate plan. "It cannot be up to us, who have the biggest manufacturing economy in Europe along with Germany, to take on the costs that would depress our economy, our automotive sector, compared with other economies, in a moment of crisis," Berlusconi said, winning applause from business people at a conference in Naples. "I've always admired Don Quixote," he said. "Absolutely! Let's go on the attack! But let's go on the attack with rationality. And above all... in a balanced and just way."

The Independent has a feature on wind power, huge amounts of which will be necessary for the UK to hit the target set by the EU for renewable energy. It notes that "the 2020 target for 15 per cent of all energy, or around one-third of UK electricity, to be renewable requires wind-power generation to soar by a factor of 10".

Alongside the obstacle of planning bottlenecks for wind turbines, it notes that grid connection will be a major added cost: "The existing infrastructure was built around large central power plants, rather than the North Scottish, Welsh and off shore locations favoured by the wind sector. The cost and complexity of building transmission capacity out to remote locations are significant, and can take up to 10 years."
Independent-analysis AFP Spiegel Reuters

Sarkozy blames Irish for igniting bank deal crisis
French President Nicolas Sarkozy has repeated his criticism of the Irish bank guarantee scheme, complaining that the 500 billion euro plan was largely to blame for the lack of liquidity in the European banking sector, the Irish Independent reports. Sarkozy, addressing the European Parliament in Strasbourg, claimed that the guarantee that covered 11 of Ireland's domestic banks, caused money to flow between European markets depending on what deal they offered on bank deposits, the Irish Times reports. Sarkozy went on to use the Irish example of unilateral action to justify his calls for a "united European response" in the future, and for sovereign wealth funds to protect banks from foreign takeovers.
Irish Independent Irish Times

EU raises cost of food with grain tariffs
Dan Hannan argues on his Telegraph blog, "Last week, the EU promised to fend off the global recession by returning to the table and pushing for trade liberalisation. This week, truer to form, the European Commission announced that it was reimposing a grain tariff. Who said we couldn't go back to the 1930s?"
Telegraph-Hannan

Ashdown and Holbrook: We are sleepwalking into another Balkan crisis
Writing in the Guardian Paddy Ashdown and Richard Holbrook warn that as a "result of a distracted international community" the Balkans and Bosnia in particular may, once again, succumb to nationalism and war. They point out that the "suspicion and fear that began the war in 1992 has been reinvigorated...A destructive dynamic is accelerating, and Bosnian and Croat nationalism is on the rise".

Ashdown and Holbrook note that "EU membership has been the critical lever for pressing reforms in Bosnia since it was made policy in 2003...But the EU did not develop a coherent strategy". They go on to argue that "Post-Irish referendum, the EU's foreign policy will be, above all, a Balkan policy. Attention has recently focused on Kosovo. But Bosnia has always been the bigger and more dangerous challenge."
Guardian-Ashdown and Holbrook

Peter Mandelson has been urged by British MEP Syed Kamall to return to Brussels and disclose his relationship with Russian businessman Oleg Deripaska, to clarify any potential conflict of interest whilst he was EU Commissioner for Trade.
Times

Carl Mortishead writes in the Times that the imminent formation of a cartel amongst gas producers Russia, Iran and Qatar "could pose a serious economic threat to Europe".
Times-Mortished

France and Germany are boosting efforts to curb tax havens in Europe, with Berlin suggesting Switzerland should be added to an OECD blacklist of fiscal paradises, while accusing it of a "lack of cooperation".
EU Observer Standaard

Nicolas Sarkozy has stressed the need for the EU to resume talks on a new partnership agreement with Russia in November.
EUobserver

The European Commission wants to close the rest of the chapters in Croatia's EU accession negotiations by the end of 2009.
Reuters

The EU is to spend 1 billion euros between 2009 and 2013 to attract non-European students to the EU, having approved the second Erasmus Mundus Program.
De Morgen

UK

Shadow Chancellor George Osbourne is facing tough questions over allegations he solicited illegal donations from Russian oligarch Oleg Deripaska.
Times Times 2 Times-Miles Independent Independent-leader Guardian FT