Europe
New study warns EU's AIFM Directive could hit pension funds by 1bn pounds a year
A new study commissioned by the Financial Services Authority has found that pension funds will be over 1bn pounds a year worse off under the EU's Alternative Investment Fund Managers Directive, which seeks to impose stricter regulation on hedge funds and private equity firms, according to the Telegraph. The Directive would see pension funds prohibited from investing in 40 percent of all hedge funds and 35 percent of all private equity funds, restricting investor choice and reducing returns to investors, reports the Times.
The study said EU pension funds have about 5,000 billion euros under management and more than half of them invest in alternative investment managers, and calculates that the Directive will lower the funds' returns by 0.05 percent a year, or 1.4 billion euros. It also said: "This is a conservative estimate of total loss of return since pension funds are only a portion of the relevant investor universe".
The FT notes that, under the Directive, most fund managers based outside the EU would not be able to sell funds to European clients. If alternative funds based outside the region chose to shift their bases to Europe, they would face one-off compliance costs of up to 3.2bn euros and annual costs of about 311m euros, which critics fear would be passed on to investors. Private equity would be hit particularly hard by annual compliance costs, equivalent to nearly 0.13 percent of assets held in a fund, and venture capital by costs of 0.25 percent. The industry also estimates extra custodial costs for alternative investments at half a percent of assets held in a fund.
Meanwhile, UK City Minister Lord Myners is travelling to Spain to lobby Spain's Finance Minister Elena Salgado, whose country holds the EU Presidency in the first half of 2010, as the Government steps up the fight to reform the Directive. The Guardian reports that Lord Myners told the British Private Equity and Venture Capital Trust annual summit: "The case needs to be made that it is not just about London, but that it would be a lost opportunity for Europe as a whole if the private equity and hedge fund industries were damaged".
Open Europe yesterday organised a roundtable discussion with MEPs in Brussels, to discuss the AIFM Directive and how it can be amended. The discussion is featured in an article in Belgian daily De Staandard, which also cites from Open Europe's recent report on the draft Directive.
FT Guardian City AM WSJ Times Telegraph Cinco Das De Standaard Open Europe research Open Europe press release
France, Germany and the UK begin negotiations over shape of EU diplomatic service;
French Foreign Minister: Lisbon Treaty will lead to a "true European defence policy"
Le Monde reports that member states, including the UK, France and Germany, are already negotiating over the new "diplomatic service", without waiting for the Lisbon Treaty to be ratified, or for the election of the EU Foreign Minister.
The French Foreign Office reports that French Foreign Minister Bernard Kouchner has said this week that, during the European Council meeting on 29-30 October, "the general lines of the European External Action Service will be sketched, in other words the future EU 'Foreign Affairs Minister'. This [diplomatic] service will have to put its members at the core of the Commission, the Council's Secretary General, but also of the 27 member states. The credibility and effectiveness of European diplomacy will depend on its ability to analyse and act. The biggest mistake would be to create new European bureaucracy."
He added, "I am thinking about Europe's contribution in Afghanistan, very active but too dispersed between the Commission, the EU's special representative and member states, depriving us of the political leadership that we could aspire to. The Lisbon Treaty will put us in the right place."
Le Monde reports that, according to Paris, London and Berlin, the diplomatic service should not have more than a couple of hundred people in the service to begin with, and a third of the whole service should be composed by their national civil servants, contrary to the wishes of EU diplomats and small members that were hoping to use this instrument to create a real European diplomacy.
The paper also reports that the UK is also looking to integrate member states' military contingent in Brussels into the External Action Service. The French Foreign Office quotes Bernard Kouchner saying the Lisbon Treaty, "will lead to an influential Europe that will be able to make its voice heard on the international scene because it will be more effective and visible with a stable President of the Council and...a High Representative of the Union for Foreign Affairs and a security policy benefitting from reinforced means of actions, a true European defence policy, and the necessary conditions for powerful diplomacy. Can the diplomat do without the soldier...? I don't think so."
The article also reports that France and Spain have been pushing to devolve some management of development aid back to member states, but the UK and the Scandinavian members want to leave it in the hands of the Commission.
LeMonde FrenchDiplomaticService OE blog
Sarkozy leads the charge to strong-arm Klaus into signing Lisbon
The FT reports that French President Nicolas Sarkozy has described Czech President Vaclav Klaus' refusal to sign the Lisbon Treaty as "unacceptable". "Decision time is coming for him and it will not be without consequence," Mr Sarkozy said in an interview with Le Figaro. "And whatever happens, this issue will be resolved by the end of the year."
The FT quotes a French official saying, "The Czech government has signed it, the Czech parliament has signed it. We don't expect the Czechs' president to put himself in a position where he breaks the word of the Czech Republic. The EU runs on people holding to their word. There would be serious consequences."
The article notes that France regards Mr Klaus's bid for an opt-out from the Charter of Fundamental Rights, over concerns about Sudeten German property rights in the Czech Republic, as "artificial" but that it would accept a political declaration if it led to speedy ratification of the Treaty.
In a press release from the French Foreign Office, Foreign Minister Bernard Kouchner is quoted saying, "Above all, it is President Vaclav Klaus' attitude, a convinced and perseverant eurosceptic, [which is] the main problem." He adds, "Some recommend not provoking President Klaus, hoping that he will find himself incapacitated of continuing with his project [delaying the ratification of the Lisbon Treaty until the British elections]. Personally, I believe we ought to keep a firm hand since everyone has already voted, including the Czech Republic. A single man will not know how to oppose the will of 500 million Europeans. The European Council that will take place at the end of the month will be the right occasion to test the determination of Europeans and to put pressure on the Czech President."
A WSJ leader writes, "Having browbeaten Ireland into reversing its verdict on the Lisbon Treaty earlier this month, Brussels is now trying its Sopranos act on the Czech president, the last treaty hold-out...[Commission President Jose Manuel] Barroso does himself and the institution he represents no favors by trying to strong arm yet another small country." In the Sun, Trevor Kavanagh argues, "The Czechs have a well-run economy. They cannot be bounced like recession hit Ireland."
The BBC notes that former Czech President Vaclav Havel has called on Klaus to sign the Treaty and Czech paper Novinki reports that Alena Gajduskova, Vice-Chairwomen of the Czech Senate has said that she will try to deprive Klaus of the powers of the Head of State, which would transfer certain Presidential powers to the Prime Minister and the Chairman of the Chamber of Deputies of the Parliament.
Meanwhile, PA reports that Irish President Mary McAleese has signed the Irish Bill of the Lisbon Treaty, making the Yes vote in the referendum legally binding.
FT French Foreign Office Irish Times BBC Times Telegraph: Hannan blog WSJ: Leader Telegraph: Leader Lidovky.cz Salon Japolana Salon24 Lidovky.cz Novinki.cz Focus Der Standard OE blog
50 hospitals to see temporary derogation from EU Working Time rules until 2011
The Mail reports that the EU's Working Time Directive, limiting the hours that junior doctors can work to 48-per week, has been lifted for at least 50 hospitals. The temporary reprieve was granted after medical professionals claimed the Directive might put patient safety at risk.
Doctors at 38 NHS trusts have now been granted a derogation from the rules, and will be allowed to work 52 hours a week averaged over six months until 2011, in certain specialties including obstetrics and paediatrics.
Mail Open Europe research OE blog
Sarkozy rolls back support for Tony Blair as EU President
EUobserver reports that French President Nicolas Sarkozy has indicated that Tony Blair may not be acceptable as a future permanent President of the EU, a position created by the Lisbon Treaty. When asked by Le Figaro whether Mr Blair is a good candidate for the job, Mr Sarkozy said: "It is too early to say. There will be a discussion on it. There are two ideas on this: Should there be a strong and charismatic president or a president who facilitates finding a consensus and who organises the work [of the European Council]. Personally I believe in a Europe that is politically strong and embodied by a person. But the fact that Great Britain is not in the euro remains a problem."
Meanwhile, in an interview with European Voice Tony Blair's former EU advisor Stephen Wall has said that the potential for tension between the President of the European Council and the new EU Foreign Minister "is very evident", and that having a high-profile figure in the position of EU President "is not necessarily a very good idea".
EUobserver Times Time European Voice Le Figaro OE blog
Civil liberties group Statewatch has obtained a draft from the EU Presidency on the EU's proposed new justice and home affairs programme, dubbed the 'Stockholm Programme'. The programme calls for further cooperation in many areas, including defining "an EU internal security strategy."
Draft Presidency Conclusions
Swedish EU Presidency considers extension of data sharing agreement with US
As part of ongoing negotiations on data sharing of SWIFT bank transfers between the EU and the US, the Swedish EU Presidency has drawn up a draft paper indicating that the US would be able to access both data on international transfers and national banks, reports Handelsblatt. The European Parliament has described the plan as an alarming development and is threatening legal action.
Handelsblatt
The Parliament reports on criticism towards a European Parliament award for European journalists. It quotes a British deputy, who did not wish to be named, saying, "The whole thing is a farce. You've got journalists being well rewarded by parliament for writing or broadcasting pieces that sell the merits of the EU. Where is the objectivity or journalistic integrity in that?"
The Parliament EP Press release Open Europe research: The hard sell
Commissioner McCreevy delays plans to reform EU rules on bank capital
The Telegraph reports that the Commission is backtracking on imposing stricter rules on how much capital banks should be required to keep, with Charlie McCreevy, the outgoing EU Single Market Commissioner, saying the issue was "not ripe" yet. The delay will allow the Commission to review any rule changes suggested later this year by the Basel Committee, which sets the international capital standards for banks.
Telegraph
MEPs call for compulsory school lessons on the EU
The Telegraph reports that leaders of the centre-right EPP grouping in the European Parliament have said there should be compulsory classes on the EU for 14-year-olds in all member states. Portuguese MEP Mario David said he wanted to get cross-party support for his plan and hoped it would take less than two years to get EU studies into schools.
Telegraph
EU Commission Vice-President wants to "push member states to harmonise" asylum procedures
In an interview with Toute l'Europe, Jacques Barrot, Vice-President of the European Commission, argues that the European Commission needs to support the European Council to successfully complete the moves made under the French Presidency to harmonise immigration and asylum, in order to "convince certain member states that face economic crisis, show concerns and are very hesitant about welcoming new immigrants who are asylum seekers." Barrot also said it was important to "push member states to harmonise procedures for asylum seekers" and expressed a wish that EU member states better share the burden of asylum amongst member states.
Toute l'Europe
EurActiv reports that Siim Kallas, Vice-President of the EU Commission has called for changes to the EU's "absurd" staffing policy and recruitment system, criticising the fact that people working for the Commission come without any professional experience and often stay until retirement.
EurActiv
European Court of Auditors opposes deregulation of EU milk market
In a report on EU milk market regulations, the European Court of Auditors has said that the deregulation of the dairy industry in Europe could quickly prove untenable and recommends that the Commission and EU member states concentrate on the European domestic market and ensure a fair standard of living for farmers, rather than deregulating the sector.
Die Presse EurActiv Reuters Reuters
A leader in the FT argues that "This week's mildly optimistic Brussels report-card on enlargement should start a new push to bring the western Balkans in faster, before a new cycle of conflict and Balkanisation ignites."
FT: Leader
The FT reports that Russia, Belarus and Kazakhstan have abandoned their bid to join the World Trade Organisation as a single customs union, and will pursue lone accession bids.
FT
The Economist's Charlemagne looks at English and Welsh 'exceptionalism' with regards to inheritance laws in Europe, arguing it is based on ideological differences based on values of "freedom" versus "solidarity", the latter of which is favoured on the Continent.
Economist: Charlemagne
A leader in the Economist argues that the EU should ease the way for small, troubled currencies to join the Euro, and argues that a good option for Latvia would be to join now.Economist: Leader
An article in the Economist looks at the EU's Common Fisheries Policy and notes that negotiations on the Commission's 2010 proposals for the North Sea will reach a climax in December, but could take an unusual turn, following the Commission's admission in April that the CFP is failing fishermen and in conservation.
Economist
EUobserver reports that the new German conservative-liberal coalition has reached a compromise on the question of Turkey's EU membership, and decided to support 'open-ended' EU-Turkey negotiations and favour a 'privileged partnership' in the event that they fail.
EUobserver Focus NRC Handelsblad
Welt reports that MEPs from the German CSU party are demanding that the next German EU Commissioner comes from the CDU party, with the Vice Chairman of the European People's Party, Manfred Weber, saying that a "market radical" - referring to the FDP party - is not acceptable as EU Commissioner.
Welt
Lloyds Banking Group may sell about 200 bank branches in Scotland as part of its agreement with the European Commission over the billions of pounds of state aid it has received.
Times
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.
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