Open Europe press summary: 5 May 2009

Europe

Experts warn of "mass migration" of hedge funds from City if new EU regulation goes through
Lawyers have warned that the EU's proposal for tougher regulation of alternative investment funds will affect other classes of alternative investment such as property funds and investment trusts, the FT reports. The Commission's proposed directive, published in full last Friday, will cover managers of all alternative funds selling to the EU, unless they have very small portfolios. They will have to seek authorisation and meet regulatory, governance and disclosure standards, including minimum capital requirements. The City of London, where 80% of the EU's hedge fund industry is based, has raised serious concerns over the proposal.

In the Telegraph, Ambrose Evans-Pritchard argues, "Given that 80pc of Europe's hedge business sits in Mayfair, the latest EU directive is a discriminatory political attack on the City and almost certainly the start of something broader and nastier. Powerful forces in Paris, Berlin, and the EU institutions have long held a repressed urge to break the City's hold on chunks of global finance, from bonds to currencies and metals. Some wish to shut 'Le Casino' altogether. They at last have the chance to act on it."

In the Independent on Sunday, Margareta Pagano argued that, "The EU's directive on tougher controls for the industry is a bad and unnecessary piece of regulation on two simple counts and should be booted out of court."

In the Sunday Times, Kate Walsh noted that Kinetic Partners, a consultancy that helps hedge funds move to Geneva, "has been inundated" with calls from London-based managers looking for advice. David Butler, founder of Kinetic, was quoted predicting that up to 150 funds could go. "Call it the twin pillars of doom," he said, "Put together the UK tax changes and what the ogres in France and Germany have created and you will see a mass migration."

Meanwhile, Le Monde reports that Pervenche Berès MEP, Chairman of the Committee on Economic and Monetary Affairs has proposed a European tax on banks. In an article Berès argues that regulatory and fiscal 'dumping' is one of the causes of the crisis and that the financial sector should therefore "contribute to its rescue and the cost of its regulation" through paying this additional tax.
FT Telegraph: Evans-Pritchard Independent: Pagano Sunday Times Le Monde

Czech Senate expected to ratify Lisbon Treaty tomorrow
Le Figaro and the FT report that the Czech Senate will vote on ratifying the Lisbon Treaty tomorrow. If it is approved, it must be signed by Czech President Vaclav Klaus. Alexandr Vondra, the Czech EU Affairs Minister, said yesterday "I think the treaty will make it through".

Meanwhile, Focus reports that several senators from the ODS party are planning a new challenge to the Lisbon Treaty with the Constitutional Court. ODS senator Jiri Oberpfalzer is quoted by Focus confirming his "fundamental" rejection of the Treaty, which "only restricts our influence on the future development of the EU". Oberpfalzer also expects there will be a majority in support of Lisbon in the Senate.
Focus FT

Irish Europe Minister promises not to put same text to voters in second referendum
According to the Irish Times, Minister for European Affairs Dick Roche has said that the second referendum on the Lisbon Treaty will be held in the autumn. Roche said "Our partners understand, I believe, that we cannot and will not put the same package to our people later this year. They have shown genuine understanding of our situation and a real willingness to respond positively to the issues we have raised." He added "I want them to vote Yes because they want Ireland to stay at the heart of a Union...ratifying Lisbon is the best way for us to do this."

Also in the Irish Times, Jamie Smyth argues "If Irish voters torpedo the Lisbon Treaty in a second referendum in October there will be no further enlargement of the Union. Even Croatia may find the EU door bolted shut."

Meanwhile this week MEPs will vote on five reports concerning the implementation of the Lisbon Treaty and the impact it will have on the European Parliament, should it be approved. The reports have drawn criticism from Fianna Fáil and MEP Mary Lou McDonald said "This house should show some measure of humility and some respect for the democratic process. We all know Ireland has rejected the Lisbon Treaty."
Irish Times Irish Times: Smyth Irish Times 2

The German Constitutional Court will give a judgement on the compatibility of the Lisbon Treaty with the German Constitution after the European elections in June, according to Focus. Focus

Independent: EP election indifference is foolish, because EU legislation affects all our lives;
MacShane: Conservatives' "xenophobic" attacks on Brussels aid the BNP
Open Europe's Mats Persson appeared on BBC Radio 4's Today in Parliament discussing the role and significance of the European Parliament. Mats highlighted how the European Parliament too often acts as a centralising institution that transfers more powers to the EU. He argued, "It's very hard to find examples, and I can't think of any right now, where [MEPs] say, 'well, this is not for us, this is probably better decided on the national level'. You just hope that that will happen more often in the future because there are a lot of things that they decide on that, quite frankly, are better decided locally, regionally or nationally."

In an article in the FT, Quentin Peel looks to the European elections and argues that people's ignorance of what the European Parliament does is "compounded by the attitude of national political parties. They treat the European Parliament poll as an alternative, and decidedly second-class, national election." He also suggests that low voter turnout could see extremist parties do better.

A leader in the Independent also urges people to vote in order to contribute more to solving the European project's "all too obvious problems." It also argues that "This growing indifference is foolish and a pity, not just because of the obvious point that European legislation directly affects all of our lives."

Meanwhile, WAZ notes that because of the generous staff allowances in the European Parliament, MEPs can take home €1 million in a five-year term by employing family members. Süddeutsche looks at the lack of awareness about the European elections among both voters and national politicians, quoting German MEP Elmar Brok asking why national politicians demand "more rights" for the European Parliament: "They don't even know how much power we already have", he said.

Former Labour party leader Neil Kinnock has warned that undermining Gordon Brown's leadership could boost the BNP in the European elections, reports the Guardian. Senior Labour officials have admitted that the party could receive a "bloody nose" in the elections, according to the Independent.

The Mail reports that former Europe Minister Denis MacShane has claimed that the Conservatives have "prepared the ground" for a surge by the British National Party. The article notes that MacShane said the Conservatives' "xenophobic" attacks on the EU would be to blame if the far-right party made ground in next month's European elections.
Mail BBC 4 - Today in Parliament Open Europe briefing on the European Parliament WAZ Süddeutsche Europa-transparent bloq FT: Peel Guardian Independent Independent 2 Independent: Leader

Sarkozy blames Czechs' EU Presidency for low interest in EP elections
Le Figaro reports that Nicolas Sarkozy will make a speech tonight in front of 4000 supporters in which he is expected to emphasise the success of the French EU Presidency and outline the UMP's ideas on the future of Europe. Meanwhile the Élysée has said that the two reasons for the lack of interest in the European elections are the weak Czech leadership and the electoral system which consists of eight decentralised constituencies.

The Élysée is quoted saying, "Europe has disappeared from the landscape with the Czech Presidency".
Le Figaro Liberation El País Le Figaro 2

Commission forecast predicts EU economy will shrink 4% this year
A new economic forecast from the European Commission predicts that the recession will last at least six months longer than it originally thought and predicts a 4 percent contraction for the EU economy this year, more than double its January forecast, and a 0.1 percent contraction next year, according to the WSJ.

Ireland and Germany are expected to be the worst-performing economies in the eurozone. Ireland's economy is predicted to shrink 9 percent this year while Germany's will contract 5.4 percent.

El Mundo reports that the Spanish unemployment rate is predicted to reach 20.5 percent by next year and that the economy will contract by 3.2 percent this year. The Commission also predicts that unemployment in the EU as a whole will average 9.4 percent in 2009, rising to 10.9 percent in 2010. It also raised its 2009 outlook for average budget deficits in the eurozone to 5.3 percent of GDP, from the 4 percent it predicted in January.

The Commission has also warned that Britain's public finances will be among the worst in the EU and it expects the UK economy to contract by 3.8 percent this year, more pessimistic than the Treasury's estimate, according to the FT. UK Government debt could reach almost 85 percent by 2010/2011, according to Commission estimates reports the Mail.

Meanwhile, EUobserver reports that Eurogroup President Jean Claude Juncker has warned that the potential social fallout and unemployment caused by the economic crisis could be "explosive". He told eurozone finance ministers that, "We are in the heart of an economic and financial crisis and we are headed towards a social crisis."
WSJ EUobserver IHT Irish Independent Gazeta Wyborcza onet.pl Irish Times Guardian Independent EurActiv European Voice FT Express Mail Telegraph EUobserver 2 El Mundo

Foreign Office concerned by Conservatives' EU policy
The Independent on Sunday reported that Foreign Office diplomats have warned that David Cameron risks leaving Britain isolated when the Conservatives leave the European People's Party grouping to form a new centre-right group in the European Parliament. The article notes that officials are also alarmed that the Shadow Foreign Secretary, William Hague, has told Sir Peter Ricketts, the Foreign Office's Permanent Secretary, to prepare for a referendum on the Lisbon Treaty as the first act of a Conservative government.
Independent

Taxpayers' Alliance: UK taxes being used to bribe people in favour of EU
Monday's Mail reported that a new paper from the Taxpayers' Alliance has criticised EU grants for funding 'absurd' projects, including £1.4 million given to an "Explaining Religion" programme at Oxford University. The report also criticised funding for media training for European Commission officials and said the EU paid London-based consultancy Consilia £460,000 in 2007 for 'media training for senior Commission personnel'. They also suggested that the EU had funded visits to the European Commission and Parliament by business group 'Forward Ladies Europe', suggesting tax money was being used 'to bribe people to speak up in favour of the EU political project'.
Mail Express Open Europe: 100 examples of EU fraud and waste

Former Polish President Lech Walesa appears as guest speaker at Libertas convention;
Ganley announces Libertas to field 169 candidates in 12 countries
Saturday's Irish Times reported on the first Libertas convention in Rome over the weekend, and revealed that former Polish President and Nobel Peace Prize winner Lech Walesa was a guest speaker. Walesa expressed his support saying, "Declan Ganley and Libertas have the potential to change Europe for the better. This European project has all the ingredients to become a historic force for good in the world, and grow into so much more than it is today, but for that to happen, we need to heed the Libertas message and put the people back at the heart of the project". Ganley reportedly said that Libertas will be fielding 169 candidates in 12 countries. Irish Times Sunday Times EU Observer Die Presse Euractiv

Treasury tries to renegotiate Eurofighter contract
The Times reports that the UK Treasury is reconsidering its £1 billion contract to buy 40 Eurofighter Typhoon jets for the Royal Air Force. The contract was agreed a decade ago and German Chancellor Angela Merkel has made a personal plea that the deal be honoured. Germany, Italy and Spain are all committed to buying their share of 112 aircraft in the latest run of production. Britain insisted on onerous penalties in the original contract, and so could still suffer financially if it scaled back its commitment. It is reportedly negotiating a compromise which could see it assign part of its order to Saudi Arabia.
Times FT

European Commission plans to create a Europe-wide copyright licence for online content
The IHT reports that Viviane Reding, EU Telecommunications and Media Commissioner, and Meglena Kuneva, Consumer Affairs Commissioner, will outline a plan in Strasbourg this week that could enable cross-border sales of digital music, games and video within the EU.

Meanwhile, Viviane Reding has also called for an independent body to assign internet addresses. At present, the Internet Corporation for Assigned Names and Numbers (Icann) operates under the US Department for Commerce.
IHT EUobserver

Lack of public support threatens future EU enlargement
El País reports that in a recent Eurobarometer survey 36% of Europeans said that expansion of the EU has weakened it. A leader in the FT notes that majorities in France and Germany agreed with this statement.

El Mundo reports that Rocco Buttiglione, the leader of the Italian Christian Democratic party has said "Europeans don't want Turkey to enter into the EU. Furthermore, they don't want any other expansion".
El País El País 2 El Mundo FT: Leader Irish Times: Leader FT: Brussels blog

The FT reports that British farmers could potentially get a 13 percent increase in their EU agricultural subsidies due to the high value of the euro versus the pound.
FT

A leader in the Times criticises the European Central Bank's monetary policy, describing it as "slow and stubborn in easing monetary conditions. Its inaction threatens the livelihoods of millions of people in Europe."
Times: Leader

The Czech EU Presidency has criticised Austria and Germany's decision to extend restrictions on migrants from new EU member states to May 2011, according to FAZ.No link

The head of the Financial Affairs Unit of the Permanent Representation of Germany to the EU, Thomas Westphal, has opposed the idea of European common issuance of sovereign debt.
Debate Madariaga Foundation

Italian Foreign Minister Franco Frattini has said that ties between Israel and the EU must be strengthened if the EU wants to play a "major role" in the Middle East peace process.
BBC

On the fifth anniversary of EU enlargement to eastern Europe, a survey conducted by Rzeczpospolita shows that 52% of Poles pointed to Polish accession to the EU as the greatest achievement of the last 20 years.
Rzeczpospolita

The IHT reports that Prague is to host a summit meeting of European leaders with a view to launch the plan for the Eastern Partnership with Armenia, Azerbaijan, Belarus, Georgia, Ukraine and Moldova this Thursday.
IHT FT: Barber

Euractiv reports that Executive Director of the European Chemicals Agency (ECHA), Geert Dancet, has said that European companies are not fully complying with new EU regulation on chemicals (REACH), with many failing to complete the necessary registration of chemicals.
EurActiv

In an interview with El Mundo, Ukrainian President Viktor Yushchenko said "The integration of the Ukraine into the EU is as important and beneficial for the EU as it is for the Ukraine".
El Mundo WSJ: Kwasniewski

Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: openeurope.org.uk or call us on 0207 197 2333.