Open Europe press summary: 2 December 2008

Europe

Poland: EU "very close" to climate package deal;
Lord Turner: UK climate targets will push up electricity prices by 25%
Reuters reports that Poland's Prime Minster Donald Tusk yesterday said that EU ministers are "very close" to a deal on the controversial EU climate package. Poland has opposed planned revisions to the EU's Emissions Trading Scheme, which it claims would raise electricity prices to unacceptable levels. However, Warsaw said it would be willing to accept the deal should it be given more "free" pollution allowances after 2013.

Euractiv reports that French President and EU Presidency holder Nicolas Sarkozy will this weekend attempt to convince eastern EU member states to sign up to the climate package. Sarkozy will meet with leaders from Poland, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Romania and Slovakia.

However, Reuters notes that Italy says that it will veto the agreement unless the package is watered down to reduce costs for industry and consumers. "If the climate package passes as it stands it will lead to a 17 percent hike in electricity bills for every Italian," Andrea Ronchi, Italy's European Policy Minister, told reporters in Brussels.

According to the FT, the Commission has taken a softer stance on the share of pollution allowances that will allocated for free as opposed to auctioned - one of the most controversial aspects of the proposal. The Commission has long favoured making industry pay for allowances, but is now willing to revise its position in light of opposition from member states and the economic downturn.

It is reported that Germany has led an effort to ensure that manufacturers - including those in chemicals, glass, steel and cement - receive free allocations if they are forced to compete against companies from non-EU countries. The German government has proposed that no company should have to buy more than 20 percent of its allowances at auction - regardless of "carbon leakage".

The package will require the unanimous approval of all 27 heads of state and government at an EU summit in Brussels on 11-12 December.

Meanwhile, there is widespread coverage of a report from the Government's Committee on Climate Change on how the UK could meet its pledge to cut carbon dioxide and other greenhouse gases by 80% from 1990 levels by 2050. The report recommends an interim target for 2020 of 34%, or 42% if there is a global deal to cut emissions.

The Telegraph notes that Lord Turner, the Committee's chair, admitted the cuts would shrink the UK economy by one per cent by 2020. The biggest impact will be on electricity prices which are expected to rise by 25 per cent for the average family, pushing 1.7 million people into fuel poverty. On Newsnight last night Lord Turner argued that Britain had opted for a more expensive renewable option than Germany and Spain, choosing to deploy more off-shore wind generation as opposed to cheaper on-shore wind generation.

The report recommended the use of renewable electricity is increased from the current five per cent to more than 30%, which would mean a massive increase in wind generation capacity.

The requirement to expand renewables to account for 30 to 40 % of UK electricity generation is contained in the EU climate package, which proposes binding targets for renewable energy use.
Telegraph Irish Times Reuters FT FT 2 Euractiv El Pais AFP Independent Independent McCarthy Guardian Guardian-Monbiot Guardian-leader BBC Newsnight

Mandelson at centre of Britain euro membership rumours
There is continued speculation today that Peter Mandelson is behind the European Commission President's claims that key British Government figures are keen to join the euro as the recession worsens. The FT quotes Jose Manuel Barroso as saying "Some British politicians have already told me: 'If we had the euro, we would have been better off.'" A Telegraph leader notes, "There is a clue. The Business Secretary said at the weekend that he believed 'that our aim, our goal, should be to enter the single currency'. It was the first time the euro has been mentioned by a Cabinet minister in years".

The story is reported on the front page of the Express, which quotes Open Europe's Lorraine Mullally arguing, "There is nothing to suggest that we would be better off in the euro... If the last few months have taught us anything, it's that we need as much flexibility and as many tools as we can get."

Ambrose-Evans Pritchard also notes in a piece for the Telegraph that despite Barroso's claims that the financial crisis was behind the "undercurrent" in favour of euro membership, the UK's problems could not be solved by a change in currency. He argues "How, exactly, would we have been better off?. . [the euro] would have made matters worse".
Daily Express Evening Standard Conservative Home Hague Telegraph: Leader Telegraph: Evans-Pritchard IHT Daily Mail Sun FT BBC AFP

Germany quashes EU Commission's economic stimulus plan
The FT reports that "Differences were widening on Monday over a European Commission 200 billion euro economic recovery plan, with France and the UK eager to see a big, coordinated stimulus package but Germany more critical of such reflationary measures." German Chancellor Angela Merkel yesterday ruled out significant tax cuts and Peer Steinbruck, Finance Minister, at the weekend likened countries that are ready to adopt large-scale deficit spending programmes to "lemmings" hurrying down the path to mass suicide.

According to AFP, Steinbruck described the Commission proposals as "ineffective populist measures," and insisted that each EU country should be able to tailor its response to the crisis without having plans imposed from Brussels. "We shouldn't copy what all other countries are doing, but we must coordinate among us," he said.

In an article in Les Echos, Economic editor Paul Fabra supports German resistance to the EU stimulus plans, saying that Chancellor Merkel doesn't share the "illusion" of France and the UK who believe that the crisis can be solved by huge fiscal stimulus.
Finanznachrichten FAZ Le Figaro leader Le Figaro FT EUobserver AFP DW Guardian EUobserver Les Echos

French plans for the CAP rejected
European Voice reports that Latvia, Sweden and the UK have rejected a French attempt to outline the future of the EU's Common Agricultural Policy (CAP) based on the traditional model of EU farm subsidies. References to market stabilisation, farm income protection and 'community preference' contained in the original French plan, were removed. The revised text emphasises securing the "competitiveness and economic dynamism of rural areas within and outside of agriculture".

The changes to the proposals meant that they were adopted not as conclusions of the EU's Council of Ministers but as conclusions of the French EU Presidency. Michel Barnier, France's Agriculture Minister, said he regretted the decision to downgrade the status of the proposals. It is now unclear whether the text will be discussed at a summit of EU leaders on 11-12 December, as was Barnier's original wish.
European Voice

EU car emissions agreement watered down
The EU has reached agreement that carmakers must cut carbon emissions from new cars by 18%, on a sliding scale for 65% of cars by 2012 to 100% by 2015, reports EUobserver. However, the deal represents a compromise because the Commission's proposals originally pushed for 100% compliance by 2012. The fines for breaching emissions targets have also been reduced.
Reuters El Pais EUobserver AFP Elsevier Zeit

Czech PM fears Lisbon Treaty may be rejected by MPs next week
AFP reports that Czech MPs will debate ratification of the EU's Lisbon Treaty on 9 December, with Prime Minister Mirek Topolanek warning that it might be rejected.
Topolanek's centre-right government has already given the Treaty its approval, and the constitutional court ruled last week that it was in line with the country's constitution.

However Topolanek, who views the Treaty as a "necessary evil", said a month ago that it should not be debated in parliament until early next year. "If the session takes place (in December), I fear the worst, namely that in the current agitated atmosphere the Treaty of Lisbon will be rejected by the Chamber of Deputies," he said on Sunday during a televised debate.
Týden Gazeta Wyborcza

MEP: Mumbai attacks show we need 'more Europe'
El Pais reports that Spanish MEP Ignasi Guardans, returning from Mumbai yesterday, lamented the "lack of coordination" of the EU during the terror attacks in the city. He said "Being a European citizen hasn't been any use at all in Bombay, each member state helped its citizens in an independent way." He added, "There has to be a profound revision of Europe's role in crisis situations. There are moments when Europe should prove it exists".
El Pais

The EU is to force Lithuania to close a nuclear power plant, leaving it dependent on Russian energy, according to the FT.
FT

Senior EU and Russian officials will today resume talks on a new "Strategic Partnership Treaty", with the conflict in Georgia low on the agenda.
EUobserver

Angela Merkel was overwhelmingly re-elected as leader of the German Christian Democrat party yesterday, although the IHT reports that the party remains divided over the way she is handling the financial crisis.
IHT