Commission proposes direct EU tax and complete phase-out of UK rebate in draft review of EU budget
A leaked document from the European Commission proposes that funding of the EU budget should in future be made through a direct EU tax, rather than the present model in which national contributions are based on Gross National Income (GNI). The document suggests that money to the EU budget should be raised through levies on phone calls, flights, financial transactions or carbon emissions. Controversially, the Commission also proposes that the UK's rebate from the EU budget - worth £4.9 billion in 2008 - should be phased out. The document says: "The justification for the existence of the remaining correction in favour of the United Kingdom...disappears progressively". In addition, the plans would see less subsidies given to farmers, and more of the EU budget invested in projects with "more added value", such as green technology - a proposal which has already caused angry reactions amongst French politicians.
The front page of the Express reports on the document and quotes Open Europe Research Director Mats Persson warning that the plans for an EU tax would "rightly cause concern among British taxpayers". A spokeswoman for the European Commission is quoted in the article saying that the draft report seen by the paper was a "work in progress" that will be presented by the end of the year." A leader in the paper argues, "The prospect of the Euroepan Union eliminating what is left of Britain's rebate and imposing its own taxes upon this nation is an outrage."
Express Leaked Commission Communication
Derek Scott: The eurozone is "balanced on a cliff like the bus in the Italian Job"
Open Europe held an event yesterday entitled: "Eurozone: out of the woods, or off the cliff?" David Marsh, Chairman of the London and Oxford Group, said that the real test for the eurozone may come once the economic crisis is over and member states begin to implement "exit strategies" to move away from excessive public spending. He argued that the "underlying problems with the eurozone haven't gone away", pointing in particular to the large divergence in competiveness between different EMU countries, with Germany coping rather well with the current financial crisis but others falling behind.
Looking ahead, David predicted that a "stronger political union" will inevitably be needed to address the growing divergences within the eurozone. He said that such a union is likely to be pushed "through the back door", and will be led by Germany with German standards and rules becoming the norm for the entire eurozone.
Otmar Issing, former member of the Executive Board of the German Central Bank and the European Central Bank, argued that "if we still had national currencies the crisis would have been much worse," noting that the situation in the eurozone is now "beginning to stabilise". Refuting David Marsh's argument, he said that "a monetary union can function without a political union", as long as the ECB has a clear mandate in order to ensure continued price stability.
Derek Scott, Managing Consultant at Europe Economics and former economic advisor to Tony Blair, as well as Open Europe's Vice-Chairman, argued that part of the blame for the crisis must be laid with the European Monetary Union itself, since the ECB fuelled the asset bubble in several member states. His conclusion was that the eurozone is "balanced on a cliff like the bus in the Italian Job".
On the prospect of Britain joining the Euro, David pointed out that historically, "when Britain wants to join, the other EU countries do not want us to join" - and vice versa. He argued that the UK would only join the euro, if the country faces "a cataclysmic economic failure."
Open Europe events
EU big three prepare to stitch up Lisbon Treaty top jobs
Following news yesterday that Downing Street is subtly lobbying other EU member states for Tony Blair to become EU President, the Telegraph reports that Gordon Brown is now actively seeking to negotiate a deal with France and Germany to secure Blair the post.
The article notes that Downing Street believes that Angela Merkel, the German Chancellor, will add her support to the move if she is allowed to choose a German for the other new role created by the Lisbon Treaty, the EU's Foreign Minister. The French President, Nicolas Sarkozy, would be offered the chance to select a politician to take on one of the top economic portfolios in the Commission, possibly the EU Trade Commissioner's role currently held by Britain. EUobserver notes that Merkel and Sarkozy are likely to discuss the issue at a working dinner in Paris tonight ahead of tomorrow's EU summit in Brussels.
The Times reports that David Cameron said he would "deal reasonably" with Tony Blair if he were appointed EU President, adding "You have to work with what you inherit and with you've got. I will try to deal reasonably with whoever I have to deal with." He went on to say, "I don't think we should be having a president at all. I don't think the Lisbon Treaty is the right step forward...That said, if we absolutely have to go in that direction I would prefer someone who took a view that it was about being a chairman of the Council of Ministers, rather than some all-singing, all-dancing, all-acting president. And I think I can see what sort of president Tony Blair would be." The Guardian quotes Liberal Democrat leader Nick Clegg saying, "Blair really is the wrong person for this job."
A leader in the Mail criticises Foreign Secretary David Miliband's public support for Blair arguing that he "appears ready to compromise his country's independence to further his own political ambitions and those of his patron, Bonaparte Blair."
PA notes that Labour MP Peter Kilfoyle, who resigned as a Defence Minister over the Iraq war, has presented an early day motion to Parliament saying that Blair would be "wholly unsuitable" for the role. He added, "The Foreign Secretary is both wrong and unwise to promote his candidature for the post."
Meanwhile, the FT reports that Jean-Claude Juncker, Luxembourg's Prime Minister, is taking on Blair for the job, after telling Le Monde yesterday that "If I were asked, I wouldn't have any reason to refuse to listen." The Times quotes Franco Frattini, Italy's Foreign Minister, saying, "the entry into the fray of Mr Juncker and why not [Dutch Prime Minister Jan-Peter] Balkenende changes the picture."
Swedish news site Europaportalen notes that the Swedish EU Presidency has insisted that no names will be discussed at the Council summit tomorrow in relation to the new posts of EU Foreign Minister and EU President, since the Treaty is still awaiting the signature of Czech President Vaclav Klaus. However, the French Foreign Office has confirmed that the issue of the EU President will be discussed at the summit. The Swedish Government has also said that it might call an extra Council meeting later in the year, to discuss the new posts.
BBC Le Figaro Telegraph Times Times 2 Times: Political Sketch Guardian EUobserver Mail Mail 2 Mail: Leader Mail: Letts Mail: Letts 2 Early Day Motion Telegraph: Hannan blog Independent FT FT 2 FT: Brussels blog EUobserver EurActiv WSJ FT 3 Telegraph 2 FT: Leader Europaportalen Europaportalen2 Draft Council conclusions OE blog
EU taxpayers fund £250,000 for unused luxury shower for French EU Presidency
The front page of the Metro reports that a £250,000 shower - which had air conditioning, radio 'surround sound' and was built to the exact specifications of the French President Nicolas Sarkozy - was built using EU taxpayers' money for the French Presidency's three-day summit held in Paris in July 2008, only to be disposed of soon afterwards, unused, together with most of the equipment bought for the £16million conference. The article also reports that other expenses included £1million spent on the opening dinner alone - more than £23,000 for each of the 43 heads of state, including Gordon Brown. Around £300,000 was spent on the conference podium, £90,000 on a carpet and £195,000 on the gardens.
France's six-month Presidency of the EU was one of the most expensive in history at an estimated €171-176 million. However, Jean Quatremer writes on his Coulisses de Bruxelles blog that, in spite of everything, the Presidency still cost less than the €180 million German Presidency in 2007.
Metro Telegraph Coulisses de Bruxelles
Lord Howell: Good Europeans must lead us away from the tramline thinking embodied in the Lisbon Treaty
In a speech to the Global Strategy Forum yesterday, Lord Howell of Guildford, Shadow Deputy Leader of the Lords and Shadow Minister for Foreign and Commonwealth Affairs, argued that "20th century visions of Europe as a bloc or super-power are substantially outdated. The world is no longer defined by powerful regional blocs. It is defined by powerful global networks. Neither the Lisbon Treaty aficionados nor the majority blocs in the sadly remote European Parliament have grasped this. Good Europeans should be looking in radical new directions and leading our region away from the tramline thinking embodied in the now dated Lisbon texts."
He warned: "if we rely on 'the EU partners' or 'EU common foreign policy' to promote or defend our interests we do so at our peril. The UK's history, experience and connections (the Commonwealth again) give it a potentially huge advantage in relating to the new power centres of the post-Western world - advantages that most other EU members have no interest at all in promoting. EU cooperation is certainly indispensable on some fronts. But I very much doubt whether the EU 'strengthens our clout in Washington, Beijing or Moscow', as David Miliband was proclaiming only yesterday. It almost certainly does the opposite, with our views being frequently blended down into a fuzzy and ineffectual EU consensus."
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Sarkozy: I want to "renew agricultural policy like we are doing with financial capitalism"
The FT reports that French President Nicolas Sarkozy has unveiled a rescue package for French farmers, which he described as "unprecedented" in scale, consisting of €1bn (£905m) in subsidised loans and €650m in cuts to land and energy taxes and social charges. Le Figaro quotes him saying that he wants "to renew agricultural policy like we are doing with financial capitalism". The package signals a tougher stance by Paris as the EU gears up to overhaul and scale back the subsidies under its Common Agricultural Policy, of which France is the biggest recipient.
Mr Sarkozy also attacked the European Commission for dragging its feet on proposals to help dairy farmers suffering from a recent drop in milk prices and said that he wanted tighter regulation of the milk market from next year. France has been lobbying other EU member states to oppose European Commission plans to phase out milk quotas but has not yet found sufficient support to block them.
FT EUobserver EurActiv WSJ LeFigaro LeFigaro2 LeMonde
Romanian newspaper Ziua cites Open Europe's research on a raft of controversial EU proposals which will have a serious impact on citizens' civil liberties, including a target to train a third of all police officers across the EU in a "common culture" of policing, and the mass collection and sharing of personal data, including DNA.
Ziua Open Europe research Open Europe press release
An article on Wales Online cites Open Europe's finding that Lord and Lady Kinnock received some £8m in salaries and allowances and another £4m in six publicly-funded pensions, worth about £150,000 a year, from their times as EU Commissioner and MEP in Brussels.
Wales Online OE bulletin
Spanish news website soitu.es quotes Open Europe's Stephen Booth, in an article discussing the use of the press by the EU, saying: "Instead of trying to sell 'ever closer union' to the media the EU would do far better to listen to citizens' demands for a more transparent and democratic EU, and concentrate on reforming many of its failing policies."
Soitu Open Europe research: EU communication policy
Czech court postpones hearing on Lisbon Treaty
European Voice reports that the Czech Constitutional Court has postponed its verdict on the compatibility of the Lisbon Treaty with the Czech Constitution until after EU leaders meet for their summit on Thursday and Friday. It notes that the Court said that it will resume discussions on Tuesday 3 November. The hold-up means EU leaders will have to delay appointing the first EU President and Foreign Minister.
According to the FT, the demand by Czech President Vaclav Klaus for an 'opt out' from the Charter of Fundamental Rights, brought into force by Lisbon, will be discussed at this week's Council meeting. Slovakia has called for similar assurances, but has already ratified the Treaty.
EUobserver reports that the Slovak stance has led to a retaliatory statement from Hungary. A spokesman for the Hungarian Foreign Minister, Peter Balazs, said that the Czech text "should not have any reference to the past or any reference to national legislation...and it should only concern the member state where ratification is still ongoing."
In the WSJ, Libertas founder Declan Ganley writes, "The primary claim to persuade Mr. Klaus has been that all other EU member states have already ratified the Lisbon Treaty. So by refusing to sign, Mr. Barroso and his minions say, the 'democratic will' of Europe is being somehow denied. The urgency of Brussels' intimidation effort is driven by its desperation to deny the British people the referendum that was promised, then denied, by Gordon Brown, and is now promised by de-facto Prime Minister-in-waiting David Cameron, likely to be elected by May."
European Voice Irish Times BBC Standaard Volkskrant Irish Times EUobserver European Voice 2 LeFigaro LeMonde Euractiv Euractiv 2 OE24 Maerkische Allgemeine FTD Lidové noviny European Voice: paper clip Rp.pl WSJ: Ganley Open Europe blog
European Commission to approve Northern Rock restructuring plan
The BBC reports that the European Commission is today set to approve plans for the nationalised bank Northern Rock to be split into a 'good' bank and a 'bad bank', with the 'bad bank' holding largely the toxic assets of the lender.
The Independent reports that, as well as the changes to Northern Rock, the EU's Competition Commissioner Neelie Kroes will order Royal Bank of Scotland and Lloyds Banking Group to sell off hundreds of bank branches in the weeks ahead, according to Government sources.
A comment piece by Simon Nixon in the WSJ notes that RBS could be forced into disposals of assets above the 40% reduction in its balance sheet that its strategic review already proposed. However, he suggests that "Lloyds is likely to be different. The EU is under pressure to be softer to avoid embarrassing the U.K. government, which waived competition rules to engineer Lloyds's acquisition of HBOS."
Independent City AM BBC Guardian Guardian Bloomberg Mail WSJ Times WSJ: Comment
In a lecture given by Dr Wilfried Martens, former Belgian PM and President of the European People's Party (EPP), at the House of Commons today he said that one of the EPP's priorities is to establish a "Transatlantic Parliamentary Assembly, composed of representatives of the EU, the US, and Canada. Dr Martens notes that a new US administration as well as a new EU Commission might bring about the political momentum to advance such ideas. He also suggested that that the EU Service Directive will create 80.000 jobs in Britain.
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Writing in Le Figaro, French Europe Minister Pierre Lellouche, and Eric Besson, French Minister for Immigration, argue in favour of greater EU powers and the creation of a European border police to halt the flow of irregular migrants into the EU.
Le Figaro
The Economist's Charlemagne blog imagines a letter to David Cameron from Conservative party activists, outlining what fights the Conservatives should pick in Europe. It includes offering a concession on EU defence, by allowing an EU defence HQ in Brussels and "stuffing it with Brits", and in return picking a fight on financial regulation, getting an assurance that Britain has a veto on regulation affecting the City.
Economist: Charlemagne notebook
The Irish Independent reports that Irish PM Brian Cowen is under pressure from Commission President Barroso to nominate a woman as the next Irish Commissioner, and the French government is backing an Irish candidate for Agriculture Minister. However, proposing Tanaiste Mary Coughlan, former Agriculture Minister, would endanger Cowen's current majority.
Irish Independent
A comment in Handelsblatt by its Paris correspondent predicts upcoming budgetary squabbles between France and Germany, as France will reach the mark of 100% government debt of GDP by 2012. It predicts that German Chancellor Angela Merkel will have to choose whether to back Sarkozy, as the Commission will have to criticise the budgetary situation.
Handelsblatt: Alich
The Irish Independent reports that Stefan Ingves, the Governor of the Swedish Central Bank, said yesterday that eurozone governments may have to give up some national sovereignty in order to create a system of bank regulation which can deal with trans-national banks.
Irish Independent
A press release of the European Parliament claims that the "new European External Action Service EEAS will oversee Europe's huge aid and humanitarian budget".
EP Press Release
El Mundo reports that Spanish Vice-President, María Teresa Fernandez de la Vega, has announced duplicate Spanish EU Presidency plans for EU financial regulation, provoking surprise in Brussels, as most of the plans have already been put forward.
El Mundo
Austrian newspapers report that Austrian Federal Minister for Science and Research Johannes Hahn will become the next Austrian EU Commissioner. Reports note that Austria hopes for the research portfolio in the Commission.
Kleine Zeitung OOENachrichten
Writing in the Telegraph, Irwin Stelzer argues that it would be a relief if David Miliband were appointed to be the EU's first Foreign Minister, as he "has a record of bumbling at the Foreign Office that is reassuring to those who do not want nation states superseded by an unaccountable bureaucracy when it comes to the making of foreign policy."
Telegraph: Stelzer
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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