Open Europe press summary: 27 February 2009

Europe

Merkel hints that Germany may come to Ireland's aid;
Former Bundesbank President: Eurozone bailout would open a Pandora's Box
EUobserver reports that German Chancellor Angela Merkel has given the strongest signal to date that Germany may come to the rescue of struggling eurozone economies, specifically mentioning Ireland. "We have shown solidarity and that will remain so. We should use Sunday's summit [in Brussels] for member states affected to give an honest report of their situation," she said yesterday at a press conference in Berlin.

The article notes that while Merkel refused to be drawn on the exact nature of financial support, she made it clear that action to tackle excessive budget deficits would be a stipulation for receiving aid. She indicated such action could be carried out under Article 100 of the Maastricht Treaty that allows financial assistance to be given to countries experiencing "difficulties caused by natural disasters or exceptional occurrences beyond its control."

The Irish Times reports that German officials admit assistance for several EU members, including Ireland, is all but inevitable. They are now 'brainstorming' possible options and are considering making individual preconditions for each aid recipient. The paper notes that that help for Ireland could be conditional on changes to its corporate tax regime.

Speaking at the LSE yesterday, Karl Otto Pohl, former President of Germany's Bundesbank, said that if Germany decided to bail out other members of the eurozone it would open a Pandora's Box. He said, "It would be like jumping in a swimming pool without water". However, he rejected the idea that the eurozone might break up, saying that for struggling members, "There is no way out". He said that struggling eurozone members would have to change their domestic policies and live with stagnant wage levels until they regain competitiveness.

He added that any bailout of European governments should fall at the door of the International Monetary Fund (IMF), adding that the institution's resources had to be doubled or even trebled in order to deal with the crisis.

A separate EUobserver article notes that the Nordic Council of Ministers is sceptical about any proposal to issue 'eurobonds', which would see the sale of bonds guaranteed by all 16 members of the eurozone. Danish Prime Minister Anders Fogh Rasmussen said, "We should not water down national responsibility in financing public debt." Germany has also expressed its opposition to the proposal, which is supported by Italy, Luxembourg and the IMF.

Meanwhile, the BBC reports that the banking sectors of central and eastern Europe are to get a 24.5bn euro rescue package to support them in the economic crisis. The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have pledged the investment.

The Telegraph notes that capital markets have become increasingly wary over proposals to use the EIB as "an all-purpose fireman to prop up weaker regions of the eurozone or come to the rescue of Eastern Europe". The borrowing cost on the EIB's 10-year bonds has risen to 90 basis points above the benchmark German Bunds, suggesting that investors already suspect the bank will be used to issue "EU bonds" for rescue purposes - whatever its original mandate.

The article notes that although there is no EU treaty mechanism for the sort of 'EU bond' proposed by Italy's Finance Minister Giulio Tremonti, "The EIB could take on the role quite easily with a tweak to its mandate and little creativity by EU lawyers."
Irish Times EUobserver FT Telegraph FT 2 FT: Topolanek Telegraph: Hannan blog SKY EUobserver 2 Telegraph: Evans-Pritchard blog BBC WSJ: Kerry Figaro Les Echos WSJ FTD Guardian

Le Monde: "ECB facing a bill of over 1 billion euros due to bankrupt banks"
Le Monde reports that bankrupt banks have left the European Central Bank facing a bill of over 1 billion euros which must be shared between national central banks. Reportedly, Germany's Bundesbank was one of the worst affected by its dealing with Lehman Brothers, and the Luxembourg and Dutch central banks had suffered from the collapse of Icelandic banks.
Le Monde FTD Guardian FAZ FT AFP

Verheugen: "I belong to those in the EU who are against a centralised state. I want independent nation states. I do not want a super-state"
During his visit to Ireland, EU Industry Commissioner Gunther Verheugen told members of the Oireachtas Committee on Foreign Affairs that, "I belong to those in the EU who are against a centralised state. I want independent nation states. I do not want a super-state".

Fianna Fáil TD Michael Mulcahy told Verheugen that "You guys in the European Commission and in the European Central Bank have got to roll up your sleeves," and take various measures that he said would help Europe out of the economic downturn, including the creation of a "bad bank" to absorb toxic assets. Verheugen responded saying that the ECB is independent under the EU treaties, while also warning against protectionism: "We can't reverse globalisation. It wasn't imposed by China, or India. It was the western industrialised countries that have imposed it on them. We have forced developing countries to open up their markets, so we should not complain. It wasn't foreseen that it would create very strong competitors."
Irish Times

New poll: Reducing immigration and the EU's powers should be top priorities of incoming Conservative government
A Daily Telegraph/YouGov survey published today shows that 52 per cent of voters said they wanted a future Conservative government to make its top priority reducing immigration. 62 per cent of Conservative backers and 42 of Labour voters wanted a cut in immigration.

In second place amongst the priorities came reducing the power of the EU and providing more to help families is third.

The poll also shows that in overall support the Conservatives are on 41 percent, down two on last month, and Labour on 31, down one point. The Liberal Democrats polled 15 per cent, down one. When asked who would make the better Prime Minister, 25 per cent said Gordon Brown, down two, and 33 per cent David Cameron, also down two.
Telegraph EurActiv

EU students failing to pay off university loans say Conservatives
The Telegraph reports that 1,580 out of 2,240 students from outside the UK who should have started repaying loans have failed to hand money over. The Conservatives branded the system used to track down foreign graduates "shockingly ineffective". So far, 46,000 students have borrowed £130m.
Telegraph EU Referendum blog BBC Mail

FIFA's 6 + 5 rule does not conflict with EU law, says independent report
The Institute for European Affairs (INEA) has issued a report, commissioned by FIFA, which argues that there is "no conflict in European law" on the free movement of workers with the idea of restricting foreign players in football teams. The 6 + 5 rule established that a football club must field at least six players in any match who would be eligible for the national team of the club's country.
Guardian Times Telegraaf IHT Belfast Telegraph Sun

Schengen could impede Guantanamo prisoners' resettlement
European Voice reports that the Schengen agreement could cause a problem for the possible acceptance of any former Guantanamo prisoners from the US. Detainees accepted by a country within the 25-member Schengen bloc would be able to travel unimpeded to other states in the Schengen zone. Jacques Barrot, the European Commissioner for Justice, Freedom and Security has said the co-ordination between member states is essential and that "there are legitimate doubts that have to be aired because of Schengen".

The 2008 US State Department report on human rights has highlighted issues within several countries including ethnic discrimination in the Belgian labour market and abuses against Roma in nine EU countries.
European Voice EUobserver

Hannan: Alleanza Nazionale to join EPP
On his Telegraph blog, Dan Hannan reports that the Italian Alleanza Nazionale party will join the EPP in June, as part of Silvio Berlusconi's new political movement, Il Popolo della Libertà . He goes to say that ten years ago, suggestions that the Conservatives were in talks with the Alleanza Nazionale were met with newspaper stories that they were in "secret talks" with "neo-fascists". He argues that "I'm waiting for all those Guardianistas and BBC pundits and Labour MPs who have spent the past decade telling us how awful the 'neo-fascists' are to turn their fire against the EPP. Having made clear that the Conservatives should in no circumstances sit with so loathsome a party as the Alleanza Nazionale, they will presumably now demand that we leave the EPP. Won't they? Or am I missing something?"
Telegraph: Hannan blog

EurActiv reports that EU Budget Commissioner Dalia Grybauskaite is to run for the Lithuanian Presidency, with the backing of the current Prime Minister. She will reportedly take a leave of absence until the first round of elections on 17 May, and her portfolio will be assigned to another Commissioner.
The Parliament EurActiv Open Europe blog

Both the FT and the Times have a letter from the MP Bill Cash, in which he argues that the de Larosiere report calling for a European supervisory scheme for banks and financial institutions is "potentially disastrous" for the City of London. It also quotes a report which argues that the EU's Financial Services Action Plan may cost the City up to 23.5 billion pounds.
FT: Letters Times: Letters

US Secretary of State Hilary Clinton is to meet with officials from the EU Presidency, Council of Ministers and European Commission on a visit to Brussels next week.
European Voice

Writing on European Voice Borut Grgic, the founder of the Institute for Strategic Studies, argues that, instead of travelling to Central Asia to secure gas supplies like Russia and Iran, "Europe organises energy conferences - one after the other... Europe's problem is that there are too many cooks, that it does too much talking and too little acting."
European Voice

Austria and Luxembourg have declared that they will resist attempts to crack down on banking secrecy, despite calls from other EU states including Germany and the European Commission for stricter rules to tackle tax evasion.
European Voice

In an article in Le Monde Luc Chatel, French Secretary of State for Industry and Consumption, argues that France's policy of supporting the automobile sector is "not protectionist" and "on the contrary" should be considered "an asset for Europe".
Le Monde

Eurotopics reports that five other EU states in addition to Slovenia are blocking Croatia's accession talks to the EU.
Eurotopics

Caroline Flint, Britain's Minister for Europe, has warned Labour MPs and trade unions that their campaign against companies which recruit "foreign workers" and undercut local pay levels is playing into the hands of the BNP.
Independent

Greece, Cyprus, Malta and Italy are asking for urgent help from the European Union to deal with illegal immigration as their respective Ministers of the Interior have said they are unable to contain the large flow of migrants from other parts of the Mediterranean.
Le Figaro

In an interview with the FTD Polish PM Donald Tusk has cricitised state spending by the big member states, saying "the whole festival of big plans and big numbers which one can hear every couple of days makes me nervous", adding that "in Poland we know that a life on credit doesn't lead to anywhere".
FTD

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