Monday, December 14, 2009

Open Europe press summary: 14 December 2009


EU environmental policy awards millions in windfall profits to oil companies and heavy industry
As national ministers meet this week in Copenhagen to discuss a new climate change deal, Open Europe has found that under the EU's Emissions Trading Scheme (ETS), oil and gas companies' operations in the UK were granted a surplus of carbon permits worth €28.6m in 2008. For example, ExxonMobil received €4.3m and Total received €5.4m.

Meanwhile, heavy industrial polluters such as Corus received €47m, while cement firms Hanson and Lafarge received €17.3m and €20.2m.

Due to the economic downturn, many heavy polluters, such as oil and gas companies and heavy industrials, have been left with a surplus of carbon permits - essentially a free asset that firms can sell on to bolster their short term profits.

The glut of surplus permits on the market has driven down the price of carbon and led to a sharp increase in the number of permits being traded via carbon exchanges. Open Europe has found that the two largest carbon trading exchanges, European Climate Exchange and Bluenext, which includes members such as Barclays Bank, JP Morgan, Merrill Lynch and Shell, have earned a combined average of €245,000 a day from the trading of carbon permits so far in 2009, in transaction fees alone. In total, they have made over €57m between them in 2009.
Open Europe press release

18 'ghost' MEPs to receive full pay from New Year
The Telegraph reports that a source in the Swedish government, which currently holds the rotating EU Presidency, has said the 18 'observer' MEPs whose seats were created by the Lisbon Treaty but who cannot do any work until an agreement has been ratified by all 27 member states, will be put on full pay in the New Year. A European Parliament source said the ratification process could take between two to four years. MEPs earn £81,745 from their salary alone, and if the observers receive the other perks and allowances available to MEPs, the 18 extra MEPs will cost the taxpayer more than £6 million a year.

Open Europe Director Lorraine Mullally is quoted saying, "It's typical of the bloated EU institutions to pay 18 superfluous politicians to do absolutely nothing and for no good reason. We're in the middle of the worst recession since the 1930s and yet here we are paying for nobodies to do nothing in the European Parliament. It's madness. So much for streamlining things - Lisbon just adds to the ridiculous waste and bureaucracy and taxpayers have to foot the bill."

The UK stands to gain one additional MEP, but who it will be has still not been decided. Sources indicate that the extra seat will go to the West Midlands region, with the Conservative candidate Anthea McIntyre probably appointed. However, Scotland and London are seeking an exception to the existing rules so that their region would receive the new MEP. El Mundo notes that Spain is the biggest winner from the new arrangements and will receive an extra 4 'observer' MEPs.

Meanwhile, Conservative MEP Daniel Hannan's Telegraph blog notes that, since July, MEPs have been paid a standardised salary and taxed directly by the EU, at around 20%, with national governments entitled to levy an additional rate. However, he writes: "As far as I can tell, only two governments have availed themselves of this facility: the United Kingdom and Sweden. MEPs from the other 25 states pay no national taxes."
Telegraph: Hannan blog Telegraph OE research El Mundo

Polish Prime Minister vows to be "stubborn" over EU civil servants' pay rise demands
Thousands of EU civil servants in Brussels are striking today in protest over attempts by 20 member states to block an inflation-busting 3.7% pay rise. Saturday's Independent described the move as "a public relations disaster", and noted that nearly 45,000 bureaucrats are in line for the rise.

EU salaries are pegged to civil service wages in eight of the richest EU countries in an automatic legal mechanism. But some politicians have said the hikes should be put aside at a time when many EU citizens are struggling because of the recession. On Friday Polish Prime Minister Donald Tusk said "I have had enough of hypocrisy. At the summit, at the level of leaders, everybody says: There is no question of higher expenditure, there is a crisis. But later, somewhere on the sly, this process goes on. So we're going to be stubborn to the end on this one." An unnamed ambassador from a Nordic EU country said, "It would send out completely the wrong signal to go ahead with the rise at this time. It would portray Brussels as a gravy train of fat cats that keeps on rolling while everyone else is tightening their belts."

However, the Independent noted that the challenge could unleash a bitter wrangle, and quoted an EU diplomat saying "We've never managed to overturn this rule in the past," referring to the oil crisis of 1972 when member states lost a case against the European Commission. Officials believe that the Council will eventually be forced to accept the pay increase this year but they fear that governments will try to renegotiate the method early next year. Renzo Carpenito, the EU Council delegate to the FFPE union, said: "This subject has been blown out of proportion by the media, so the member states are looking for a way out. It's all about saving face. The personnel here work very hard, often late into the evening, to solve European problems."

Meanwhile, a leader in the FT Deutschland argues: "If EU staffers insist on their pay rise, they will prove to be criminally lacking in political instincts. Instead of threatening strikes, the bureaucrats of the institutions in Brussels should rather adopt a voluntary pay freeze. That would be a service to Europe, of which they could be proud."
FTD Leader Independent Telegraph: Hannan blog EUobserver WSJ: Editorial OE bulletin

Government still to estimate cost of EU temp rules to NHS
A Parliamentary answer has revealed that the UK Government has not yet calculated the cost to the NHS of the EU's Temporary Agency Workers' Directive, to come into force in 2011. The article notes that the NHS is one of the biggest public sector employers of agency staff. The Directive, which will give temporary workers equal rights and pay to full-time staff, will cost the private sector between £1.2bn and £1.5bn a year, while the cost for the public sector as a whole will be £227m to £337m a year, according to the Government's Impact Assessment. But the exact cost to the NHS is unknown.

The Conservatives' Shadow Business Minister, Jonathan Djanogly, is quoted in the FT saying that the lack of an estimate for the NHS showed "the government does not have a handle on what the impact is on the public sector". It was "absolutely unacceptable" to be driving through such regulations without being aware of the detailed effects on the public sector, he said. John Cridland, CBI Deputy Director-General, warned that the new rules would mean employers were "going to have to make radical changes to their business model". The Directive was agreed last year following a deal between the unions and the CBI to agree to the rules, in return for the UK maintaining its opt-out from the EU's maximum 48-hour working week.
FT Open Europe research

Le Monde: Van Rompuy to travel to Spain to explain to Zapatero "that he is now the boss"
Le Monde reports that even though he will not take up his position formally until 1 January 2010, EU President Herman Van Rompuy has already made his mark at last week's European Council meeting, changing the rules to keep in the spirit of the Lisbon Treaty, starting by excluding European foreign ministers from the meeting, and announcing an extraordinary summit will take place in February 2010 in order to find "a clear economic strategy" over the next six months. The article notes that Spain, which will hold the rotating Council Presidency from January, is resisting the new Lisbon rules. It says: "Prime Minister Jose Luis Rodriquez Zapatero wants to receive South American leaders but also Barack Obama. Mr Van Rompuy will go to Spain on 15 December to explain to him that he is now the boss." It adds that EU Foreign Minister Catherine Ashton has been to Madrid to discuss the sharing of roles with Spanish Foreign Minister Miguel Angel Moratinos.
Le Monde

House of Lords committee blasts EU's AIFM Directive
The House of Lords EU committee has written to City Minister Lord Myners warning him against accepting the EU's proposed AIFM Directive, following an inquiry by the committee into the draft Directive. The Committee, which will publish a full report on the proposal in February, says the Directive risks seriously damaging the EU economy unless it permits the marketing of non-EU funds within the EU and also allows EU funds to invest outside of the EU. They say that the Directive is 'protectionist' and brings with it the danger that pension funds, charities and other institutional investors in Alternative Investment Funds will see diminishing investment returns.

Baroness Cohen, Chairman of the House of Lords EU Sub-Committee on Economic and Financial Affairs, said, "Alternative Investment Funds are an important part of the economy and while they should be regulated properly, they must not be driven out of the EU. It is vital that the European Commission have regard to the international competitiveness of European based Alternative Investment Funds. The most important thing is that regulation in Europe complements international regulation and works alongside proposals in the US. We are concerned that the current proposals do not achieve that. We will keep the AIFMD under scrutiny until we are convinced it has been improved to be in the best interests of the UK and EU economy, and of EU investors."

Law firm Freshfields Bruckhaus Deringer has warned that if proposals for restrictions on hedge fund managers' remuneration, entailed in later drafts of the AIFM Directive, became law the impact would be "rapid and hedge funds will operate from within the EU", according to the FT.

Meanwhile, according to the German fund industry association BVI, the Directive could add about €1bn to the annual costs for Germany's institutional funds industry because of higher fees and reduced returns.
House of Lords press release Open Europe research FT FT2 FT3

UK Government claims to have cut £3bn in red tape
According to the Better Regulation Executive's annual report, the UK Government is saving almost £3bn a year, following moves to cut red tape, reduce burdensome form-filling and introducing the latest technology, as part of the so-called Administrative Burdens Reduction Programme. The Government plans to slash a further £6.5bn worth of regulation over the next five years, the Guardian reports. In the past 12 months, the BRE has pushed through more than 280 changes to the UK's vast array of business rules, according to the report.
Guardian Open Europe research

Commission warns Government over failure to implement EU anti-discrimination directives
The Guardian reports that the European Commission has said that parts of UK law to protect people from discrimination at work, including provisions on sexual orientation and disability, are inadequate and are failing to comply with EU anti-discrimination directives. It warns that the Commission could refer the situation to the European Court of Justice.

EU Equal Opportunities Commissioner Vladimir Spidla said: "This [Equal Treatment] directive was agreed unanimously by all EU countries in 2002 but, to be effective, it needs to be fully and correctly transposed into national law. We call on the UK government to make the necessary changes to its gender equality legislation as soon as possible so as to fully comply with the EU rules."

EU pledges €7.2 billion in climate funding over three years to developing countries
EUobserver reports that EU leaders agreed to offer around €7.2 billion to help developing countries deal with the effects of climate change over the next three years at their summit on Friday, with approximate contributions ranging from €1.6 billion from the UK down to €30,000 from Latvia. Poland will offer €50 to €60 million, with this money coming not from the government but from the sale of excess carbon allowances. The European Commission itself will also contribute €150 million. China's Ambassador to the EU Song Zhe told European Voice that the pledge from EU leaders "still falls far short of the recommendations of a United Nations report issued in September".

The FT reports that leading EU companies have attacked proposals for the bloc to increase existing commitments to cut greenhouse gas emissions from 20% by 2020, to 30% by 2020. Fulvio Conti, Chief Executive of Enel, Italy's largest utility, said: "A 30 per cent reduction by 2020 would be physically impossible." The Guardian reports that Gordon Brown and Nicolas Sarkozy, in a joint statement on Friday, proposed the idea that a global 'Tobin' tax on financial transactions could be used to fund the fight against climate change.

The Times reports that a draft text published by the UN says that there should be a review of any deal in Copenhagen in 2016, which the article suggests negotiators from developed countries are planning to use to justify failing to agree the 25-40 percent cut on 1990 emissions levels by 2020, recommended by the Intergovernmental Panel on Climate Change.

Meanwhile, in the Sunday Telegraph Christopher Booker noted that steelmaker Corus' plans to close production at Redcar will mean a reduction in emissions of up to six million tones of CO2 a year, allowing the company to benefit from surplus carbon allowances which could, according to European Commission projections, be worth up to £600 million over the three years before current allocations expire. In addition, by increasing steel production in India in the same period, and replacing inefficient old plants with new ones, Corus' owner Tata could claim a further £600 million under the UN's Clean Development Mechanism.
Sunday Telegraph: Booker Mail EU Referendum FT Independent Guardian FT: Brussels blog EUobserver European Voice Saturday's Mail Saturday's Independent Sunday Times Times WSJ WSJ 2 Guardian 2 Die Welt

Barroso asks for "binding" standards on member states' budgets
Handelsblatt reports that "the EU has put its member states on a leash", noting that as a consequence of the Greek debt crisis, European Commission President Jose Manuel Barroso has called for binding "quality control" on member states' budgets. The article argues that: "Governments seem to be prepared to allow the intervention in their national fiscal sovereignty".

The stronger control on budgets is a part of the "Growth Strategy 2020" which the EU wants to tackle the challenges of globalisation. Commission President Barroso will produce concrete proposals for the strategy in January and a special summit is being planned at the beginning of February. As part of this, Barroso wants to enforce mandatory standards for national budgets. The article adds that the Commission has blamed the failure of the Lisbon strategy, which preceded the Growth Strategy 2020, on the fact that it was non-binding.

Meanwhile, the front page of the FT reports that Greek Prime Minister George Papandreou will outline structural reforms today aimed at cutting the budget deficit from 12.7 percent to 3 percent of GDP over the next four years. EU Economic and Monetary Affairs Commissioner Joaquin Almunia told El Pais yesterday that Greece could not rely on the eurozone to come to its rescue, saying "If Greece does not take the necessary measures to overcome its problems, the eurozone won't be able to take them in the name of Greece".

Ambrose Evans-Pritchard writes in the Telegraph: "Before we blame Greece for making a hash of the euro, let us not forget how we got here. EMU lured Club Med into a trap. Interest rates were too low for Greece, Portugal, Spain, and Ireland, causing them all to be engulfed in a destructive property and wage boom. The ECB was complicit. It breached its inflation and M3 money target repeatedly in order to nurse Germany through slump...This was poison for overheating Southern states. The deeper truth that few in Euroland are willing to discuss is that EMU is inherently dysfunctional - for Greece, for Germany, for everybody."

Meanwhile, a leader in the FTDeutschland accuses Germany of "wage dumping", as it notes that Greece has lost competitiveness because "between 1999 and 2009 Greek labour costs per unit have risen by 26 percent whereas in Germany only by 8 percent."
FT FT: Munchau Guardian Irish Times Telegraph Die Presse FTD Leader

EU leaders adopt five-year plan on 'Stockholm programme'
EUobserver reports that EU leaders on Friday adopted a five-year plan on the so-called 'Stockholm programme', reconfirming the aim of setting up a common asylum system by 2012. Friday's Stockholm agreement called for the development of an EU-wide "internal security strategy," focusing on the division of labour between Brussels and national capitals in counter-terrorism, border management, civil protection and judicial co-operation in criminal matters.
Euractiv EU Observer Open Europe research

PA reports that three days of talks between EU fisheries ministers over the annual allocation of fish quotas under the EU's Common Fisheries Policy begin today, amid warnings that more than 80% of EU stocks are over-fished, compared with a global average of 28%. EU Fisheries Commissioner Joe Borg is recommending cuts of up to a quarter in permitted catches for some species next year.
No link

The Mail on Sunday reported that David Miliband has banned British diplomats from assisting BNP MEPs Nick Griffin and Andrew Brons.
Mail on Sunday

The Mail reports that, amid growing speculation that the Speaker of the House of Commons could be defeated by former UKIP leader Nigel Farage at the next General Election, John Bercow has proposed a new seat for the Speaker, called St Stephen's, with only MPs for constituents.

The Sunday Express reported that the EU's guidance on 'Gender-Neutral Language' could bring an end to such bingo calls as "Two Fat Ladies, 88, Old Age Pension, 65". A campaign to prevent players being forced to use the language is underway on the internet.
Sunday Express: Leader

Speaking in London on Friday, European Central Bank President Jean-Claude Trichet joined the chorus of criticism against bankers' bonuses, Saturday's Guardian reported. Trichet said, "I will say that the so-called bonus culture is one of the many factors that can drive the financial system in the wrong direction - away from intermediation to self-referential speculation; away from medium-term stability to short-term orientation; and away from being a service sector to being a self-serving sector."

Several papers report that the European Commission is calling for a suggested maximum volume to be set on MP3 players, to protect users' hearing. In January, a two-month consultation of all EU standardisation bodies will begin on proposals for a default maximum setting of 85 decibels, with a final agreement expected in the spring.
Mirror Independent BBC Sunday Express

Catalonia yesterday held an informal referendum on independence. Although not officially mandated by the Spanish government, turnout was at 30%, with around 95% of those voting for Catalonia to become independent.
BBC EUobserver EurActiv AD

EUobserver reports that part of the ceiling in the European Parliament complex in Strasbourg, housing communication staff, fell down over the weekend, the second such incident in 18 months.

FTD reports that Germany has obtained a top EU appointment as Uwe Corsepius becomes General Secretary of the European Council.


A ComRes poll for the Independent on Sunday put the Conservatives on 42 percent, 17 points ahead of Labour with 24 percent. The Lib Dems were on 21 percent.
Independent on Sunday

Conservative leader David Cameron has said that a snap General Election in March is "quite likely", with 25 March being widely touted as a possible date.
Independent Guardian Express Telegraph

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: or call us on 0207 197 2333.

No comments: