Open Europe press summary: 17 December 2009

Europe
 
MEPs to receive extra £32,000 a year to work under the Lisbon Treaty
Amid the dispute over a 3.7 percent pay-rise for EU officials and MEPs, the Telegraph reports that MEPs are to receive an extra £32,000 a year in staff allowances "following the entry into force of the Lisbon Treaty", with the payments phased in over two years. A European Parliament official said, "With more power comes more work."
 
MEPs can use the extra funds to employ extra staff or increase the salaries of existing assistants. The increase, which comes at a time of cutbacks and austerity in national public sectors, will take the annual allowance to £203,000 in 2010. The article notes that staff expenses will be further increased by another £16,000 in 2011, taking the total annual allowance to almost £220,000.
 
As well as staff allowances, MEPs receive a "general expenditure allowance" worth over £44,000 without having to provide any receipts. While working in Brussels or Strasbourg, MEPs pocket a £265 cash subsistence payment, worth over £40,000 tax-free every year.
 
The boost to staffing payments will come on top of a proposed recession-busting 3.7 percent pay increase for all EU officials, taking the annual salary of an MEP to almost £86,000, which twelve member states including the UK and Germany are trying to block.
 
The BBC reports that EU staff today plan to step up their protests over member states' refusal to grant the pay-rise by holding a one-day strike at the European Council building. European Voice notes that staff unions rejected the offer of a 2 percent increase and the rest being phased in over an undetermined period, with Günther Lorenz, Secretary-General of the Union Syndicale trade union declaring the option "illegal". The article notes that the Commission is planning to take the member states to the European Court of Justice, whose judges are also set to benefit from any increase, over the dispute.
 
EUobserver notes that member states may seek to 'punish' EU civil servants by applying a tough EU entrance exam to any applicants wishing to join the EU's newly created External Action Service.
Telegraph The Parliament Irish Independent European Voice BBC Irish Times European Voice 2 EUobserver OE blog
 
UK's biggest charity criticises EU's AIFM Directive
Danny Truell, Chief Investment Officer at Britain's biggest charity The Wellcome Trust - which finances medical research in the UK and poor countries around the world - has warned that the EU's proposed AIFM Directive would restrict the charity's ability to invest in non-EU based hedge funds and private equity funds, which in turn could hurt its future performance. Truell is quoted in the FT saying, "Professional investors do gain some benefits in terms of disclosure and regulation from the directive, but these would be more than offset if they were prevented from choosing which funds they invest in."
 
Meanwhile, in an article looking at the hedge fund industry, Reuters cited Open Europe's study on the AIFM Directive which found that the initial costs for the combined hedge fund and private equity sectors of the new rules could be between €1.3 billion and €1.9 billion.
WSJ: Wheatcroft FT Open Europe research
 
Barroso says plans for EU financial supervision have become too "diluted";
MEPs fast-track proposals to keep pressure on member states
EUobserver reports that European Commission President Jose Manuel Barroso has said plans to overhaul the EU's system of financial supervision have been "diluted a bit too much". Earlier this month, EU finance ministers agreed plans to set up three new European supervisory authorities to monitor the bloc's banking, insurance and securities sectors with binding powers over national regulators, and an overarching risk board to act as an 'early warning system' for macroeconomic shocks.
 
The proposals have widely been seen as a threat to the independence of national regulators and will reduce the UK's influence over regulating the City of London. However, Barroso told MEPs yesterday that "I hope the European parliament will reinforce and rebalance the regulations in this area in the next negotiating phase."
 
European Voice notes that the European Parliament's Economic and Monetary Affairs Committee has set out an ambitious timetable for its scrutiny of the proposals. According to the timetable, the five MEPs leading the Parliament's work on the reforms are to finish their draft reports on the European Commission's proposals by 5 February. Committee members will then have until 4 March to propose amendments.
 
The article reports that MEPs want the EU's new supervisory system to be established during 2010, but they fear that national governments are already losing their appetite for reforms that were put forward in the wake of the financial crisis.
EUobserver European Voice Open Europe press release
 
EU Galileo satellite programme could see a "crab-like" movement to military capability
A feature in Prospect magazine looks at the EU's civilian satellite navigation programme Galileo, due to launch in 2013, and questions whether it will be used for any military purpose. It notes that in a recent response to an MEP's question, EU Transport Commissioner Antonio Tajani refused to rule out its application for military uses. The article argues, "There may be nothing intrinsically wrong with a military role for the satellites, but citizens of the EU are entitled to a greater clarity about the nature of such a role." Richard Whitman, an EU policy expert from the University of Bath, is quoted saying, "What you're much more likely to get is a kind of crab-like move to a much increased EU military capability."
Prospect
 
Ashton: EU diplomatic service will be the "envy of the world"
Writing in the Times EU Foreign Minister Catherine Ashton reveals that her "first priority will be to build the new diplomatic service that the Lisbon Treaty creates. The European External Action Service (EEAS) will be based in Brussels, with representations throughout the world. It should be a network that is the pride of Europe and the envy of the rest of the world, with the most talented people from all member states of the EU working in our common interest."
 
El Mundo reports that Spanish PM Jose Zapatero, due to hold the EU's rotating Presidency next year, has said that the EEAS will start with a staff of 300 (of which 30 diplomats and high functionaries will be Spanish) and is predicted to rise to a total of 5,000 diplomats.
Times: Ashton El Mundo OE blog
 
Queens Law Professor: Lisbon Treaty makes "absolutely no difference" in EU response to financial crisis
At a seminar on the Lisbon Treaty yesterday at King's College London, Takis Tridimas, Professor of Law at Queen Mary University of London, confirmed that the Lisbon Treaty "makes absolutely no difference to the EU's response to the financial crisis", and "very little difference" to the EU's response to the terrorist threat. He said, "I was asking myself the following questions... Does it really enable the European Union to deal with the things which affect the citizens?  If we take for example the two greatest crises in the last ten years: the threat from terrorism and the financial crisis.  Does the Lisbon Treaty make any difference to the EU response to these crises?  I would say to you that it makes little difference - or to put it differently - the absence of the Lisbon Treaty did not substantially inhibit the EU from responding to the terrorist crisis.  And it makes no difference whatsoever to the EU's response to the financial crisis, which has been, and continues to be, very extensive."
 
During the debate surrounding the Lisbon Treaty in Ireland this year, the Irish government said that the Lisbon Treaty would help Ireland during the economic crisis.
Open Europe research
 
WSJ: EU's carbon scheme means "Corus is being paid to lay off British workers"
A leader in the WSJ looks at the EU's Emissions Trade Scheme and notes that, by closing the Corus steel plant in Redcar, the company will produce six million fewer tonnes of CO2, which could translate into about $300 million a year for the company, which has surplus carbon allowances under the ETS. The leader argues, "Corus is essentially being paid to lay off British workers... The Corus story also shows that cap and trade isn't really a free market. Markets develop to efficiently allocate resources and capital. Carbon cap and trade is a government-rigged market, in which carbon allowances are dispensed based on political influence. Such a system is ripe for manipulation, and Corus is merely the latest example."
 
Meanwhile, in an interview with City AM, the Chief Executive of Drax power station Dorothy Thompson argues that "The EU got this [ETS] wrong to begin with, and issued too many credits and they could be traded very cheaply. Part of the problem with this market is that it is a construct of EU policy, and unlike a classic market it is difficult to test how flexible supply really is."
WSJ WSJ: Leader City AM Open Europe research Open Europe press release
 
Greece suffers another debt downgrade;
Germany warns of future fiscal crackdown in thinly-veiled message to eurozone
The WSJ reports that Greece has suffered its second debt-rating downgrade in a week, with Standard & Poor's cutting its rating to triple-B-plus and warning of future downgrades. A leader in the FT notes that "After this torrent of bad news, Greek 10-year borrowing costs are 2.5 percentage points higher than Germany's. For a country in such a condition, this is quite cheap. But the Greek risk premium is being kept relatively low by the assumption of many investors that the debt is, in truth, being backed by the Bundesrepublik."
 
The WSJ quotes Norbert Barthle, Budget Spokesman for the ruling Christian Democratic Union of German Chancellor Angela Merkel, saying Greece is just "the tip of the iceberg" as fears continue to grow over other eurozone countries such as Italy and Spain.
 
The FT notes that Germany is "keen to broadcast the message about tougher fiscal discipline" to its eurozone neighbours, with Finance Minister Wolfgang Schäuble warning that tackling Germany's increasing budget deficit will take "a huge effort" after the recession.
WSJ City AM FT FT: Leader Telegraph BBC FT 2 IHT European Voice Guardian Mail Irish Independent WSJ 2 FT 3 FT 4 OE blog
 
Writing on Conservative Home, Howard Flight, former Shadow Chief Secretary to the Treasury, argues that the time has come to hold a referendum on the UK's EU membership.
Conservative Home
 
On an El Mundo blog, Iratxe García Pérez, Spanish MEP and member of the Group of the Progressive Alliance of Socialists and Democrats, writes in firm support for the EU's Common Agricultural Policy. He notes that the Spanish EU Presidency will encourage debate on the matter, declaring that: "Spain cannot miss the opportunity to be part of the common defence of agricultural and livestock activity that is so important for our country".
El Mundo Blog
 
European Voice reports that Slovenia is once again blocking Croatia's negotiations on admission to the EU, with Samuel Zbogar, Slovenia's Foreign Minister, declaring "reservations" over the three accession chapters on the environment, on fisheries, and on foreign, security and defence policy.
European Voice
 
The WSJ reports that the French government plans to follow UK plans to tax bonuses awarded to bank employees next year at 50 percent.
WSJ City AM
 
The European Commission yesterday agreed to abandon its decade-old case against Microsoft over abusing its market dominance. EU Competition Commissioner Neelie Kroes called the decision a "Christmas present" for European consumers.
WSJ City AM FT Telegraph IHT EUobserver Irish Times Independent El País
 
The European Commission has decided to suspend Sri Lanka's preferential trade status following a probe criticising the island's human rights record.
AFP
 
World
 
Ethiopian Prime Minister tables compromise proposal for funding in Copenhagen;
China signals it sees no chance of binding agreement by Friday
The Times reports that Meles Zenawi, Prime Minister of Ethiopia and spokesman for the African Union group of 52 countries, has said that the group would be willing to reduce their demands for compensation from rich countries in exchange for a deal on climate change, and would accept a global climate fund of $100 billion (£61 billion) a year by 2020.
 
African countries had been demanding up to $400 billion, or 1% of developed countries' GDP, in return for a climate change deal. In return, developing nations would assure a reduction in the growth of their greenhouse gas emissions and limit their call for higher reductions from the developed nations. The compromise proposed by Mr Zenawi does not state what mix of public and private cash should make up the figure, reports EUobserver.
 
However, the G77's Chief Negotiator Lumumba Di-Aping accused Mr Zenawi of capitulating to rich country pressure, saying: "Meles [Zenawi] agrees with the EU perspective and the EU perspective accepts the destruction of a whole continent plus dozens of other states. The EU's very moral foundation is deeply questionable because she accepts that a large section of the human family should suffer in order for her to continue to thrive and prosper."
 
Around 130 world leaders will attend the talks today, with President Obama arriving tomorrow. A proposed new text circulated by the Danish presidency had still not been published last night and seemed to have been withdrawn, because of objections raised by the G77, who saw it as unbalanced, reports the Irish Times. Die Welt reports that the head of the Chinese delegation Su Wei expressed frustration with the way negotiations were developing, saying: "You can't just make up new proposals out of thin air".
 
Meanwhile, Reuters reports that a source has indicated that China sees virtually no possibility of an agreement by Friday, and will likely only agree to a brief political declaration.
Times EUobserver EurActiv Reuters WSJ FT FT 2 IHT BBC Irish Times Irish Independent: Webster Irish Times 2 AFP Mail Die Welt Die Zeit FAZ
 

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