Tuesday, December 15, 2009

Open Europe press summary: 15 December 2009


Tax fraud within EU's carbon trading market costing taxpayers €5bn
The Guardian reports that EU taxpayers are likely to have lost at least €5bn (£4.5bn) to VAT fraud related to the EU's carbon trading system (ETS) and there is a risk that the criminals will now shift their attention to Europe's electricity and gas markets, according to Europol - the EU's policing agency. The article quotes Rob Wainwright, the Director of Europol, saying, "These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments."

The fraud involves a criminal registering to be able to trade carbon permits in the ETS. The criminal then starts buying carbon permits in one EU country from another, free of VAT, then sells them on with the VAT added. But instead of passing the VAT on to the relevant tax authority, he disappears without trace.

Yesterday, Open Europe published research showing that, under the ETS, oil and gas companies' operations in the UK were granted a surplus of carbon permits worth €28.6m in 2008. In addition, heavy industrial polluters such as Corus received €47m, while cement firms Hanson and Lafarge received €17.3m and €20.2m. The research also found that the increase in carbon trading is providing Europe's leading carbon exchanges with revenues of €245,000 a day, in transaction fees alone.
Guardian Irish Times Open Europe press release

EU civil servants threaten to disturb ministerial meetings to get pay increase
El Mundo reports that around 2,500 EU civil servants went on strike yesterday, protesting at a proposed cut to their annual pay rise, from which 50,000 staff are set to benefit. The BBC reports that the civil servants have said they will disrupt ministerial meetings if their demands are not met. However, the reporter comments: "with good employment terms, secured jobs, and generous allowances, it's hard to see many people having much sympathy with the Brussels bureaucrats. And even if they do disrupt ministerial meetings, nobody outside the Brussels quarter is likely to notice."

On his Coulisses de Bruxelles blog, Jean Quatremer defends the EU civil servants striking for a 3.7% pay increase - despite noting that their jobs are "particularly well paid" for the public sector - noting that it is the member states who agreed to the index used to calculate the rise. He quotes the Austrian Chancellor Werner Faymann saying that the Commission should propose "a better legal rule", and that the current mechanism, which is based on the GDP of 8 of the EU's richest member states, "cannot last forever." However the current arrangement is a deal for 2004 to 2012 and cannot be changed until then.

NOS reports that the striking civil servants are pressing for a quick solution, because the level of their Christmas bonus is dependent on the annual salary increase.
El Mundo Coulisses de Bruxelles BBC Mail: Synon blog Economist: Charlemagne notebook NRC Handelsblad NOS Video Standaard Elsevier OE blog OE bulletin

30% of UK citizens say EU membership is a good thing
The latest Eurobarometer poll from the European Commission, conducted in October and November, has found that only 30% UK voters think that EU membership is a good thing, compared with an EU average of 53%, however this is a slight rise of 2% since the last poll. 30% think it is a bad thing, compared to an EU average of 15%, and 34% think it is neither a good nor a bad thing, compared with an EU average of 28%. When asked if the UK had benefited from EU membership, 36% said it had, compared to an EU average of 57%, also a rise of 2% since the last poll. 49% said it had not benefited, against an EU average of 31%, and 15% said they didn't know.

The UK is the least trusting among member states of the European Parliament and Commission. 56% tend not to trust the European Parliament and 53% the European Commission, compared to an EU average of 33% and 32% respectively.

UK citizens are also much more concerned about immigration, rating it as the third most important issue facing the country, compared to the EU average rating it as the seventh. When asked, "In order to boost growth in a sustainable way, which of the following aspects should be prioritised in the European Union?", ten countries placed support for agriculture highest, with over 50% of respondents in Romania and Hungary placing it top. UK citizens prioritised the need to "Control migratory flux to respond to European economy needs".

UK citizens are also much more pessimistic about the future of the EU. 34% of respondents in the UK think the EU is going in the right direction, compared to an EU average of 40%, and 37% percent think it is going in the wrong direction, compared to an EU average of 28%.
Eurobarometer Eurobarometer fact sheet PA

Copenhagen climate talks branch off into two 'tracks' amid disagreement over Kyoto protocol
The Copenhagen climate change conference became stalled yesterday for five hours, when African countries and others withdrew their cooperation and accused the UN Conference chair of trying to "kill" the Kyoto protocol, according to the Guardian. Negotiations are now running on 'twin-tracks' on whether or not a new Treaty should follow on from the Kyoto protocol, which makes no binding demands on emissions from developing countries, including India and China. This means world leaders will have to contend with two draft treaties when they make their final decisions. EUobserver reports that "behind the scenes, the EU and Japan are seen as the main actors trying to kill off the protocol."

Gordon Brown will fly to Copenhagen today, two days earlier than planned, with the Times noting that he has more to lose than most because he has effectively staked his reputation on securing a robust agreement. The IHT reports that China and the US are at an impasse over how cuts in emissions should be monitored, with China rejecting independent monitoring of its emissions, agreeing only to national monitoring.

Meanwhile the Telegraph reports that there is growing support in Copenhagen for either a tax or emissions trading system specifically for aviation and shipping to provide up to a quarter of funding for a £100bn "climate aid" fund to help poorer states deal with global warming.
Guardian Mail Times WSJ Irish Times BBC Telegraph FT IHT EUobserver EurActiv Telegraph 2

Osborne meets German Finance Minister in bid to calm "isolation" fears
George Osborne, Shadow Chancellor, yesterday held a lunch with the conservative German Finance Minister Wolfgang Schäuble in Berlin in what is being described by the FT as "the latest stage of a diplomatic programme intended partly to allay City concerns that he would be isolated in Europe if the Tories won the election."

Meanwhile, John Wyles, former head of the FT's Brussels bureau, writes in European Voice looking at the appointment of Michel Barnier as the Internal Market Commissioner. Criticising Gordon Brown, he notes, "At some late stage in the allocation of portfolios it may have dawned on the UK's prime minister that he had completely mismanaged the politics of appointments to Brussels. His first error was to run Tony Blair for president of the European Council. Blair's chances were never better than 50:50...But having backed a losing horse in the presidential stakes, Brown then looked for compensation by entering Catherine Ashton in the race for the post of high representative. It is a bizarre view of the national interest that thinks it better to place an ingénue in an uncertain and largely unknown role than to bid for the leadership of European - and global - reform of financial markets and services."
FT Conservative Home European Voice

Greek PM announces austerity measures warning that Greece is "sinking" in debt
Under pressure from the EU, the Greek government has promised to radically cut its budget deficit over the next four years. The WSJ reports that Prime Minister George Papandreou said late yesterday that his country would bring its deficit down from nearly 13 percent of gross domestic product this year to 3 percent in 2013. "Greece faces the risk of sinking under its debt," Mr. Papandreou said.

A leader in the Telegraph argues "This seems an appropriate moment to remember that, for political reasons, the rules governing eurozone membership were bent to facilitate the entry of countries that were unsuited to the financial rigour required... Political imperatives trumped economic common sense, and the consequences are now being felt. There is little clear understanding of what might happen next."
City AM Telegraph FT FT 2 Irish Independent IHT EUobserver BBC WSJ Telegraph: Leader De Tijd Le Monde

Estonian President calls for newer member states to be better represented in EU diplomacy
EUobserver reports that Estonian President Toomas Ilves has said the EU's newest member states are under-represented in the bloc's diplomatic service and among senior EU Commission officials. He told Polish daily Gazeta Wyborcza yesterday, "So as not to be subjective, let's look at the figures. Out of 158 so-called European Union embassies, only one is headed by a diplomat from a new member state". He went on, "There are 41 directorates-general in the EU. We're in our sixth year of membership, and none of them is headed by a director from a new member state. These are figures, not back-chat". President Ilves called on the EU's new President to change the situation saying: "Mister Van Rompuy, please explain this to me, I'm begging you! Why is it like this? I don't understand".

EU Commission approves RBS state aid plan;
ECB pressures Austria to nationalise Hypo bank
The European Commission yesterday approved the restructuring and impaired asset relief scheme for Royal Bank of Scotland. EUobserver reports that the scale of the support from the UK Government is estimated by the EU's Competition department at £60-100 billion, and is the largest government subsidy in the EU's history. EU Competition Commissioner Neelie Kroes is quoted by City AM saying: "RBS will itself pay a sufficient share of the restructuring costs and distortions of competition will be limited by substantial divestments." She also warned that if RBS did not deliver on its targets for reducing its balance sheet by 2013, the Commission reserved the right to intervene again and request more divestments from the bank.

Meanwhile, the Telegraph reports that the European Central Bank has pressured the Austrian government to nationalise the ailing Hypo Group bank after fears that its collapse could cause a "domino effect" throughout the Austrian banking sector. Under the deal, majority shareholder Bayern Landesbank, which underpins much of the troubled German regional banking sector, has agreed to surrender its 67 percent stake for a token €1 and to waive a further €825m in liabilities.
Telegraph FT IHT WSJ City AM Telegraph 2 EUobserver European Voice

Dutch paper: Belgians want EU Foreign Minister and President to be Europe's "true spokesmen"
El Mundo reports on EU President Herman Van Rompuy's visit to Madrid today to speak with Prime Minister Jose Zapatero about coordinating with the Spanish EU Presidency which begins on 1 January. The main sticking point remains over what protocol to follow during bilateral meetings, such as those planned with the US and Latin America, and those taking place outside the EU such as with Russia and Japan. Van Rompuy will return to Spain on 8 January with Commission President Jose Barroso.

Het Financieele Dagblad reports that the Spannish Presidency could well be the last time that a country uses the EU Presidency to openly set the agenda. The article notes that Belgium takes up the Presidency in the second half of 2010 and is planning to break with the tradition of a powerful rotating presidency. The paper notes that, according to diplomats, the country wants to give the new Lisbon Treaty and chance to be effective, arguing that the new President and High Representative need to become the true spokesmen of Europe.

An El Mundo blog notes that the cost of the Spanish EU Presidency will be €55 million.
El Mundo El Mundo 2 FD

Narrow majority of Swedes back joining the euro
Svenska Dagbladet writes that, according to a poll by Statistics Sweden 44% of Swedes are now in favour of the country adopting the euro, while 42% are opposed. Around 50% of Swedish men support the EU, while only 37% women are in favour. The article quotes Carl Hammer, analyst at Statistics Sweden, saying that the result is surprising, as the economic crisis would have hit Sweden harder if the country was a member of the Eurozone. "We've had a lot of help from the relatively weak krona", he said.
Svenska Dagbladet

French MEP: "I think I'm going to have a breakdown before I finish my term."
Le Figaro reports that Rachida Dati, the French politician who left President Nicolas Sarkozy's cabinet to become an MEP, had a private phone conversation after a press conference in the European Parliament, but forgot she was still wearing a microphone. She said: "I am in the hemicycle of the Parliament in Strasbourg. I can't put up with it anymore! I can't put up with it anymore! I think I'm going to have a breakdown before I finish my term."
Le Figaro

UN official calls on EU to open doors to migrants
The IHT reports that the United Nations High Commissioner for Refugees, António Guterres, said yesterday that EU member states are playing into the hands of human traffickers by tightening immigration policies at a time when their economies increasingly depend on migrant labour.

French MEP: Commission should act as the "itching powder" for member states not endorsing the "community method"
EurActiv reports that French MEP Sylvie Goulard, who recently won the €10,000 European Book Prize for her book 'Europe for dummies', has said that too often, citizens are offered incorrect depictions of what the EU actually is, adding: "We always consider the European Union as technical and annoying, whereas it is lively and dynamic". Insisting that the gap between citizens and European elites is not only due to a lack of communication, but because "the EU in recent years has not provided the citizens what they wanted", she said: "The Community method is to think together to find the appropriate answer to a problem and not to address it from closed national positions". Member states which do not want to go further should take responsibility, Goulard said, stressing that the Commission should act as the "itching powder" of the EU.

Bloomberg reports that Deutsche Bank CEO Josef Ackermann has said that Germany has a "comparative advantage" over other financial hubs because it doesn't plan to tax bonuses like Britain and France.

The Irish Times reports that the Irish parliament's Committee on Agriculture has called for a derogation from the EU regulation requiring the mandatory electronic tagging of sheep.
Irish Times

Poul Nyrup Rasmussen has been re-elected as leader of the Party of the European Socialists, with the party pledging to put forward a candidate for European Commission President before the 2014 European elections.

The FT reports that French President Nicolas Sarkozy has earmarked €750m to 'digitise' France's cultural heritage and compete with Google's project to make millions of books available online. The French government has also urged the EU to undertake its own book digitisation project.

Die Zeit has an interview with British journalist Charles Clover, in which he criticises the EU's Common Fisheries Policy.
Die Zeit


A Guardian/ICM poll shows the Conservatives' lead cut to nine points on 40 percent, followed by Labour on 31 percent. The Lib Dems are on 18 per cent. A leader in the paper notes that a March election looks increasingly likely.
Guardian Guardian: Kettle Guardian: Leader

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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