Open Europe press summary: 21 November 2008

Europe

Hilary Benn: "Vested interests" blocked EU farm reforms;
Sarkozy to push for continued cash and protection for farmers at December summit?
There is continued coverage of yesterday's agreement among EU farm ministers, in which overhauling reforms of the EU's controversial Common Agricultural Policy (CAP) were blocked by France, with support from Germany and Italy amongst others. The deal included provisions for continued trade-distorting aid to farmers and less money channeled to rural development than envisioned in the original Commission proposal.

The Telegraph quotes British Environment Secretary Hilary Benn saying that "the CAP creates vested interests which distort things and slow the progress of reform". According to the article, Benn also expressed concern over a "back door" deal which will allow France and some other countries to recycle unspent farm aid - worth £254 million for the French every year - into extra payments for farmers. "I regret what has been conceded in order to secure a deal...We want to see further changes for the benefit of farmers, consumers and the environment and will continue to press for this", Benn said according to PA. The Telegraph notes that the CAP costs the average British family £300 a year. In 2005, Tony Blair gave up £7 bn of the UK rebate in return for reform of the CAP.

Indhira Santos of think-tank Bruegel told the IHT that, "In practice - although these changes might mean the payments are marginally less distorting - there's really little difference because most of the money still goes to the same people." A leader in the Telegraph argues: "The negotiations were characterised by the usual hole-in-the-corner deals and conducted in the incomprehensible jargon designed to make it impossible for the taxpayers who fund the CAP to understand what is being done with their money, nearly half the EU's budget. If anything, the pace of travel towards a simpler, more market-focused CAP, appears to have slowed."

The Economist looks at a paper from the French government, to be discussed at a meeting among EU farm ministers on November 28. It is noted that the paper "praises the core principles of the CAP, including 'community preference' (favouring EU crops over imports), 'market stabilisation' (ie, subsidies linked to production and the public purchase of food if prices fall) and preserving farm income." It also calls for the EU to promote "ambitious" health standards both "inside and outside" the union - code, argues the article, for continued protectionism.

The article further notes that French President Nicolas Sarkozy may put the future of farming on the agenda for the final summit of France's EU presidency next month, following the push for a quick agreement on liberalising world trade at the G20 summit this past weekend - something which Sarkozy is said to have been "furious" about. The December EU summit may coincide with a meeting of trade ministers in Geneva. It is noted, "In exchange for accepting these trade talks, Mr Sarkozy could ask his fellow EU leaders for a solemn pledge that substantial cash and protection for farmers will survive after 2013."

The article concludes, "Farmers in emerging economies are victims without any say, as they are shut out of rich EU markets. If EU leaders defend protectionist farm policies in December, it will be more than a disappointment. It will be a cause for shame."
IHT Telegraph: Leader European Voice Economist NY Times WSJ Irish Independent Irish Times Irish Times Trouw Figaro

88 million euros to help EU sell Lisbon Treaty - Comission to use its in-house polling "more strategically"
The European Commission has launched a proposal to spend 88 million euros on information campaigns, including support for the Lisbon Treaty. A Commission Communication proposes to launch "civil society projects, with the overall objective of supporting the ratification process for the [Lisbon] Reform Treaty and the increasing participation in the 2009 European Parliament elections." The Commission declared a need "to empower citizens" in order to "promote active European citizenship".

The Commision justified the proposals saying, "There is an underlying conviction amongst European citizens that our societies can only tackle today's challenges by working on a European scale. This shift in the purpose and focus of the EU thus fits well with the aspirations of citizens." The Commission also outlined plans to use its own polling arm - Eurobarometer - "more strategically" in relevant phases of the policy process.

Meanwhile, according to Le Figaro, Czech PM Mirek Topolanek said that his country would ratify the Lisbon Treaty, despite its imperfections, as a result of fear of Russia. He said "It is better to embrace the German Chancellor than the Russian bear." Agence France Presse quotes Topolanek saying, "We criticise many EU policies, but it is better to be inside than to stand outside. The benefits of being in this civilisation space exceed the costs."

The Irish Independent reports that Irish European Affairs Minister Dick Roche criticised Irish TV channel, RTÉ, for the amount of coverage given to anti-Lisbon campaigner Declan Ganley, Chariman of Libertas, who, he claimed, had no democratic mandate and "little knowledge" of the EU. However, writing in the Irish Times, John Waters argues that the Irish government should heed Ganley's suggestions of a simplified European constitution of 15 or 25 pages and a "reinvigoration of the European ideal", suggesting that "Perhaps it is indeed time for a fundamental reappraisal of the direction of the European project, and perhaps the impetus for this should start here."

EUobserver notes that the Swedish parliament ratified the Lisbon Treaty yesterday, becoming the 23rd country to do so.
EC Communication EC press release Open Europe blog Le Figaro AFP Irish Independent Irish Times Irish Times 2 Irish Independent 2 Irish Times 3 Irish Times-Waters EUobserver Svenska Dagbladet BBC

EIB lending troubles shed doubt on delivery of EU bailout fund
Reuters reports that the European Commission will be asking member states to contribute 1 percent of GDP as part of a pan-EU stimulus package worth up to 130bn euros. German Chancellor Angela Merkel is reported to be "very optimistic" that the plans would be agreed. However, the piece also quotes the Czech Finance Minister, Miroslav Kalousek, who says that he is "not sympathetic" towards the proposal.

Reuters also report that the European Investment Bank, due to play a key part in the Commission's 130bn plans, will be given more lending powers to deliver the package. However, the Telegraph reports that the EIB has recently seen its ratio of non-performing loans shoot up to nearly 1 per cent as a result of the financial crisis. The paper notes that its loan portfolio is three times as big as the World Bank's, and that there are suggestions that the EIB has been playing a role in "covert rescue missions" of poorer member states, which may account for some of the extra lending.
FT NYT Le Monde Reuters Telegraph

EU climate package could mean protectionism, notes EP rapporteur on directive
Agence Europe reports on negotiations on the EU climate package. "What is at stake is huge", notes the article. Poland has been offered a transitional exemption from having to pay for emissions permits - a condition available to countries which have more than 60% dependency on coal for electricity production. However, it is reported that a number of other countries want this threshold lowered so that their coal plants can also benefit from free carbon permits.

Avril Doyle MEP, rapporteur on the draft ETS directive, however said that the European Parliament could try and override any deal done by the Council on the package. She also hinted that protectionism could be an outcome of the climate package, given concerns from heavy industry that the excessive costs of the plan would force them to move production offshore. "Legitimate concerns have to be taken into account," Doyle said. With no international agreement for the period after 2012, quantitative and qualitative criteria would allow the Commission to assess which industries warranted protection, she noted.

According to Belga, the Belgian Government has asked for free CO2 quotas for the Belgian chemical sector.

Meanwhile, carbon permits in Europe's Emissions Trading Scheme continue to show price volatility - which damages incentives for long-term low-carbon investment. Point Carbon reports that European carbon prices slumped 8% on Thursday as fears grow of a deep recession and a reduction in industrial emissions (which push up carbon prices). EU steel output slumped 5.7% last month from a year ago. The price of carbon is now 16 euros a tonne, and will hit a floor between 12 and 14 euros per tonne, several traders told the website. This is half the highest price reached by carbon in the second trading phase of the ETS.
Point Carbon Point Carbon 2 Point Carbon 3 Belga

EU joins scramble to exploit arctic resources
The Guardian reports that in what is described as "a first step towards an EU Arctic policy", a European Commission paper spelt out Europe's interests in the Arctic's energy resources, fisheries, new shipping routes, security concerns and environmental issues. While calling for environmental safeguards in the Arctic, the Commission said that "exploitation of Arctic hydrocarbon resources and the opening of new navigation routes can be of benefit".
European Voice Guardian EUobserver Canadian Press

EU accused of 'militarisation of space'
The Telegraph reports that the European Space Agency has been accused by a Dutch think-tank, the Transnational Institute, of developing technology to dominate the "high ground" of space, including a multimillion pound EU Satellite Centre in Spain. In a new report it suggests that, "the inclusion of space-based missile defence and other more offensive uses of space are real options for an increasingly ambitious EU military space policy."
Telegraph

Sarkozy puts "finishing touches" to 20bn euro French sovereign wealth fund
French President Nicolas Sarkozy announced yesterday that a strategic investment fund will provide at least 20bn euros to protect its key industries from "foreign hands", EUobserver reports. The IHT reports that the European Commission "will likely be scrutinising the fund's investments" to ensure they to not break EU rules on the free flow of capital.
EUobserver IHT

German rejection knocks Brown's plans for coordinated fiscal stimulus
The Times reports that Gordon Brown's plans to address the global downturn with a fiscal package consisting of coordinated EU-wide tax cuts have been rejected by the German government. Specifically, Berlin said that it would refuse to implement a Commission proposal for EU members to reduce income tax and VAT.
Times FT: Barber

EU launches online European digital library - half of content is French
The EU yesterday launched Europeana, a new online digital library of European cultural heritage, reports the Guardian. The paper writes, "It has been likened to the quest to build ancient Alexandria's famous library". However, the site experienced a number of problems on its first day and had to be taken offline due to high demand. European Voice also reports that the historical span is "not yet matched by geographical diversity", because over half the material contained on the site is from France.
Guardian European Voice

The European Parliament yesterday backed plans for a European 'blue card' scheme for skilled immigrant workers
EUobserver AFP

US Government agency: Europe will be a 'hobbled giant' by 2025
In its wide-ranging forward assessment, 'The Global Trends Review', the United States National Intelligence Council predicts that by 2025 the EU will move towards becoming a more unified political entity, but will be hamstrung internally by its democratic deficit and bickering between member states that will leave it unable to confront substantive problems such as its aging population and dependence on Russian energy.
Guardian EUobserver

Reuters reports that an agreement has been reached between the big four EU nations - Germany, Britain, France and Italy - on a proposed EU directive on car emissions limits.
Reuters

American missile defence plans falter in Eastern Europe
The Economist notes that despite becoming increasingly popular in Poland since the Georgia conflict, other European nations, notably Italy and France, remain unsympathetic to the arguments for a US missile defence system.
Economist

UK

Elliot: no need to worry about the decline in sterling
Guardian Economics Editor Larry Elliot argues that we need not fear the decline in value of the pound sterling. "Since 1997, an overvalued currency has made imports cheaper and exports dearer; there has been a silent sterling crisis that encouraged speculation while making manufacturing less profitable. The economy needs a competitive level for the pound that helps cut the trade growth and so create the conditions for more balanced growth. Its depreciation, coupled with the likely prolonged squeeze on consumers when they have to start paying back Monday's tax cuts, means there is a better chance of tackling the structural imbalances in the economy than there has been for years."
Guardian Elliot