Open Europe press summary: 9 December 2008

Europe

Dublin expected to agree to second referendum on Lisbon Treaty
EUobserver reports that Irish Foreign Minister Micheál Martin has declined to explicitly state his country's position on holding a second referendum on the Lisbon Treaty next year, despite reports of an impending announcement. However, on his BBC blog Mark Mardell writes "if he's very lucky and doesn't face any hard ball interviews, the Irish Prime Minister Brian Cowen may not actually be made to utter the words 'second referendum', but this is what it is all about."

The Irish Times reports that French Foreign Minister Bernard Kouchner told journalists yesterday the Lisbon Treaty discussions were "panning out nicely" and that "Before the end of 2009 we need to find a way for our Irish friends to join us". The article notes that EU diplomats said a draft "road map" on how to push through ratification of the Treaty would be agreed by leaders late on Wednesday night, ahead of the EU summit. The formal declaration of the summit is expected to set a deadline of 1 January 2010, for the coming into force of the Treaty.

Ireland's Minister for Europe Dick Roche told the BBC Today programme that "We do however believe we can craft legally robust instruments which are Ireland-specific and...do not require a renegotiation [of the Treaty]."

Declan Ganley, head of anti-Lisbon group Libertas, told the programme that he expected any second referendum to be rejected by the Irish people and that, "What we are seeing here is an absolute contempt for the democratic process being shown by unaccountable elites in Brussels...A higher percentage of the Irish electorate voted No to this Treaty than the American electorate voted for Barack Obama. I don't hear calls for another election there."

Jyllands-Posten notes that there is still discussion among member states over Ireland's wish to retain one Commissioner per country, with Belgium, the Netherlands and Luxembourg insisting that the number of Commissioners be reduced.
Irish Independent Irish Independent 2 Irish Times Irish Times: Leader Irish Times: Comment Guardian BBC Mardell: Blog EUobserver Jyllands-Posten BBC Today Evening Standard-Waugh

Mittal: EU climate package will drive steel jobs away from Europe
Reuters reports that member states pushing for changes to the EU climate package have divided into two camps - with the demands of each undermining the interests of the other.

It notes that one group, led by Poland, objects to "proposals to make power stations buy permits to pollute from 2013. The plan could ramp up costs for Poland's power sector, which is about 95 percent dependent on highly polluting coal." However, Germany and Italy fear that plans to make industry pay for permits to pollute will damage their countries' abilities to compete in global markets, and lead to huge job losses.

Around 10 percent of future revenues from the sale of emissions permits have been earmarked for a "solidarity fund" to compensate eastern European nations. If western European industry was forced to buy permits, the fund would be worth around 7.5bn euros per year in transfer payments to the east. However, the German and Italian demands for exemptions for their industries would reduce the funds available to Poland and its allies.

A British diplomat hinted that if no agreement could be reached on this issue, eastern member states would need to be bought off instead with more cash from the central EU budget: "If there is any further need for solidarity, then we believe this should be dealt with through the EU's budget and not through the EU ETS."

The WSJ has a news feature on the fears within Europe's steel industry resulting from the EU climate package. It reports that steel industry association Eurofer estimates the EU's proposal would cost the steel industry between 50 billion and 100 billion euros if the EU Commission decides to force the industry to buy all its permit requirements.

Lakshmi Mittal, Chief Executive of ArcelorMittal, the world's largest steelmaker, said "Why are we [European steel producers] the only ones to be subjected to stringent CO2 limits while there are other producers in the world who do not have stringent requirements for CO2 emissions? If we continue to follow those stringent requirements, there could be a displacement of jobs in the future because European industry wouldn't be as competitive." Even under the current EU emissions trading regime, ArcelorMittal reportedly came close to permanently shutting down a blast furnace in Belgium this year after failing to secure enough emissions allowances to make the plant economically viable.

The steel industry is also said to be suffering from reduced investment as a result of the uncertainty created by the EU's position on "energy-intensive" sectors, and its failure to say which industries will be exempt from having to pay for permits.
Reuters Reuters 2 WSJ WSJ-editorial Times Independent-Lawson Euractiv FT

Commission's competition rules crumble
The FT reports that the Commission decided yesterday to make concessions on state aid rules, by separating assistance to "fundamentally sound" banks affected by market turmoil from that given to ailing institutions. For banks that are sound, EU governments will be able to provide funds on much more favourable terms than before, but still with incentives in place for the banks to repay the state when the market improves.

Distressed banks, however, will have to pay a higher rate for funds, accept a restrictive dividend policy, produce restructuring proposals within six months and limit executive remuneration. "No concessions have been made but rather we have looked at how we can make things more flexible," EU Competition Commissioner Neelie Kroes said, according to AFP.

The relaxation came following pressure primarily from the French government who wanted an approval of a 10.5bn euro French scheme to recapitalise its sound banks. The scheme was approved within hours of the Commission's announcement.

However, Kroes said she expected Germany to toughen the terms of a financial rescue plan for Commerzbank AG before the EU could clear it, reports the WSJ. A spokesman for the German Finance Ministry said his country doesn't intend to change its plans to aid Commerzbank, which has been a source of contention between the EU and the German government for several weeks.

Meanwhile, at yesterday's "Global Europe" summit in London, Gordon Brown and Nicolas Sarkozy pointed to a massive public works plan by Barack Obama, US President-Elect, as further evidence that they are right to argue for a large and coordinated stimulus package in Europe.

Brown and Sarkozy also revealed that they had spoken to Angela Merkel, who was not invited to the summit and who has consistently opposed a pan-European stimulus package, to reassure her that they were not ganging up on Germany days before an EU summit which will discuss the economic crisis. "There is no disagreement [with Germany]," Sarkozy said after the summit. EU leaders are expected to use this week's summit to endorse an EU recovery plan worth up to 200bn euros.
Irish Times IHT Guardian European Voice FT AFP WSJ IHT 2 Guardian 2 BBC FT 2

Congo on EU Foreign Ministers agenda
At a meeting of European Foreign Ministers yesterday, the BBC reports that ministers were divided over whether or not to send troops to the Democratic Republic of Congo. According to EUobserver, Belgian Foreign Minister Karel De Gucht failed to secure support from his counterparts for the deployment of an EU mission to take place even though, he said, "It will take four to six months before the additional troops for Monuc [the UN peacekeeping force] will arrive".

Separately, the EU has extended a travel ban to 11 more Zimbabwean officials and joined calls for President Robert Mugabe to stand down.

In a comment piece in the WSJ Tomas Valasek, Director of Foreign Policy and Defence at the Centre for European Reform, argues that the European Security and Defence Policy has made the EU a more strategic actor but has also exposed its military weaknesses, such as with the mission in Chad which was hampered by embarrassing logistical delays.
WSJ-Valasek European Voice BBC FT EUobserver Independent

The EU's mission in Kosovo, Eulex, has been launched after months of delays but the WSJ cautions that the mission is facing "steep challenges."
BBC WSJ

Philip Stephens, in a comment piece for the FT, writes that when Britain emerges from the recession, it will be the right time to join the euro.
FT