Europe
Euro keeps falling as EU leaders pledge action but no cash to rescue Greece;
Expansion: Total bail-out for PIGS could cost €320 billion
At yesterday's one-day European summit EU leaders, led by German Chancellor Angela Merkel, refused to commit to any bailout of Greece. Instead, EU leaders made a general pledge to take "determined and co-ordinated action if needed" to prop up the euro. According to the Telegraph, Merkel said, "Greece is a part of the European Union and won't be left on its own, but there are rules and these rules need to be adhered to." The euro fell sharply following the news that no detailed rescue plan had been agreed.
The WSJ describes yesterday's announcements as a "watershed acknowledgment that the fiscal problems of one euro-zone country have now become the problems of all." However, the article notes that the details of promised help remain vague and public scepticism in Germany towards a Greek bailout meant that the EU statement paired a promise of support for Greece with demands for "additional measures" if current efforts by Athens to repair its budget fail to convince markets.
The Telegraph's Ambrose Evans-Pritchard notes that "There was an element of bluff in Thursday's accord, as if the EU leaders hope to muddle through with 'constructive ambiguity', fingers crossed that their vague political pledge will never be tested. Bluff is a valid tool of statemanship, but in this case their bluff could be called very soon."
Open Europe Director Mats Persson appeared on BBC News 24 discussing a possible bailout for Greece yesterday, and Open Europe's briefing on the Greek bail-out is quoted in the Mirror warning that, "A large scale bail-out would make taxpayers across Europe liable for the mistakes of a government over which they have no democratic control."
Handelsblatt reports that the political will to bailout Greece is still lacking in Berlin, with a diplomat saying that "Germany is standing on the brakes in an extreme way on the whole process." According to the FT, a German official said, "Our main problem with the whole idea was less the potential cost - helping the Greeks won't cost that much - but allowing the precedent to be set. We had to be sure to attach conditions tough enough to guarantee it wasn't just about possible emergency funding." FTD also reports that aid to Greece has become the subject of a huge conflict inside Angela Merkel's coalition.
President of the eurozone group of finance ministers, and Luxembourg Prime Minister, Jean-Claude Juncker said Greece won't get any "money for free." A leader in the FTD argues that the bailout "takes away the pressure for Greece to get to grips with its debt problem. In the worst case Spain, Italy and Portugal interpret this as a promise that Europe will also stand by them."
In the FT, Tony Barber writes "Greece's budgetary and economic policies will be subjected to an unprecedented degree of surveillance by European Union authorities as the price of a promise of support...The measures are more intrusive than anything adopted in the EU's 53-year history and, if applied to the letter, will amount to a significant curtailment of Greece's fiscal sovereignty." Swedish daily Dagens Nyheter notes that Greek protesters marching against the current austerity measures burned an EU flag yesterday.
A Telegraph leader argues "The very act of coming together to save one of the weaker brethren transforms the dynamics of monetary union as, to oversee the rescue, a central treasury function will have to emerge."
Spanish paper Expansión notes that a BNP Paribas study warns that the bailouts won't stop with Greece and that Spain will be far more expensive to rescue. The article states, "The Spanish bill could rise to €200 billion, according to the calculations of BNP Paribas. The Portuguese, €30 billion, and the Irish, €35 billion. In total, to rescue the PIGS could cost some €320 billion, 3.5 percent of the GDP of the eurozone. Or, more than three times the size of the 2009 German budget deficit."
A spokesman for Hypo Real Estate, the German mortgage bank that had to be bailed out by the German federal government, told the FT Deutschland that they have an exposure of €4bn to Greek debt. If this exposure had to be written off, the bank, and thus the government, would need to strengthen the bank's capital base by €100bn.
Meanwhile, the IHT notes that the recent crisis is causing the EU's Baltic states to rethink their current bids to join the single currency. The WSJ reports that economists have warned that even if Greece's current economic crisis is solved, economic malaise in Europe's most debt-laden countries could undercut economies as a whole and linger for years.
City AM City AM 2 Economist Economist 2 Times FT FT 2 Telegraph Telegraph 2 Irish Times Irish Times: Beesley Irish Times 2 Irish Times 3 IHT Economist: Charlemagne notebook BBC European Voice EurActiv Guardian Guardian Guardian Guardian: Elliott FT: Barber Telegraph: Leader Irish Times FT: Brussels blog Times Times 2 FT 4 EUobserver BBC: Hewitt blog Mirror WSJ IHT City AM: Heath Express: Roycroft-Davis Mail: Brummer Telegraph: Hannan blog BBC: Stephanomics blog Guardian: Leader DN Independent Independent: Leader Independent 2 Irish Independent Irish Independent: Keenan Expansion Eurointelligence FAZ OE press release WSJ
Lord Mandelson claims joining euro still in Britain's long-term interests
Business Secretary Lord Mandelson said in an interview yesterday that the euro had been a "remarkable success", and insisted: "I think in the longer term it would be in Britain's interests to be part of the eurozone." Open Europe's Sarah Gaskell is quoted in the Express arguing: "This recent crisis has proved beyond doubt that Britain was right not to join the euro. It is crazy to suggest there would ever be a good time to give up the pound, when we clearly need all the flexibility that comes with it." Open Europe Director Mats Persson is quoted in the Telegraph arguing: "This episode has really highlighted the fundamental problems with the monetary union."
Express Telegraph Mail
Van Rompuy launches "audacious bid for power"
The Independent reports that EU President Herman Van Rompuy has made an "audacious bid for power" by proposing to triple the number of EU leaders' summits in Brussels to twelve a year, with himself as the host. After hosting yesterday's summit, Van Rompuy said, "Let me tell you that the European Council is very ambitious. We want ownership, we want to lead... though, of course, in consultation with member states. And that's why I proposed that the Council will gather regularly, every month."
Dutch daily De Volkskrant notes that Van Rompuy's bid has angered Commission President Jose Manuel Barroso. Handelsblatt quotes German government sources saying: "the European Council should become the central body of decision making in the EU. The European Council would need to become a sort of 'European economic government'."
Meanwhile, Handelsblatt reports that, in a strategic paper for the EU summit, President Van Rompuy has blamed Germany for carrying out "non-cooperative economic policies", in a direct complaint about the German trade surplus. EurActiv also reports that President Van Rompuy has proposed rewarding EU governments with extra funding if they meet their commitments under the new 'Europe 2020' economic strategy. Member states will not be punished for missing targets, but could be publicly chastised for failure to deliver.
Handelsblatt Independent Handelsblatt 2 Volkskrant EurActiv
Stephen Fidler: Could market speculators' pressure on the euro lead to more EU financial regulation?
In the WSJ, Stephen Fidler asks whether, as speculators have piled the pressure on the eurozone in the last couple of weeks, there will be consequences in the form of tougher regulation of Europe's financial markets. He adds, "There is a palpable sense among government officials, opinion formers and more widely among ordinary people in Spain [which holds the rotating EU Presidency] that what has been experienced is a deliberate effort from New York and the City of London to undermine the euro."
WSJ: Fidler
Commission refuses to publish damning evidence which could "kill" biofuels
Reuters reports that the European Commission has received new scientific reports casting a new negative light on biofuels due to their impact on land use, but has not made them public, says environmental group T&E. The group has made a legal request to the Commission for the documents, but it has so far taken more than three-times the statutory 30 days to provide them. The EU aims to achieve the majority of its 10 percent target for renewable energy use in transport through biofuels.
The IHT reports that the top civil servant in the Agriculture Department at the European Commission, Jean-Luc Demarty, wrote in internal correspondence that the evidence could be used to "kill" subsidised biofuels.
Reuters IHT OE research
Charlemagne: Catherine Ashton is a symptom of the EU's shrinking ambition
The Economist's Charlemagne column reports on an interview with EU Foreign Minister Catherine Ashton, noting: "Ask whether Europe can achieve a common foreign policy, and she explains why it should, which is not the same thing...Ask what the EAS is for, and Lady Ashton lists things the EU already does, then suggests they need to be done better... At their bleakest, diplomats worry that a huge job has fallen onto a mid-sized politician, who is now tailoring the job to fit. Is Lady Ashton the wrong woman for her job? Ask EU leaders: they picked her. She is a symptom of Europe's shrinking ambitions, not the cause."
Economist: Charlemagne
MEP accuses Government of "selling out" citizens' rights to privacy over EU-US data-sharing deal
The European Parliament yesterday rejected a bank data deal with the US that would have allowed American investigators to track European transactions in the search for terrorist funding, arguing that the deal provided insufficient safeguards for EU citizens' privacy. The agreement with the US was fast-tracked by national governments so that MEPs were unable to scrutinise the deal.
The Telegraph notes that Baroness Ludford, a Liberal Democrat MEP, blamed the British, and other EU governments of "selling out European rights to privacy". She added, "This is not some boring Brussels battle. What's at stake is ensuring in the long term that the legitimate goal of fighting terrorism does not throw rights out of the window."
US and UK officials had put pressure on MEPs to agree the deal and the US called the decision to reject the deal a "setback for EU-US counter-terror co-operation."
Telegraph IHT BBC European Voice EurActiv EUobserver Euronews Les Echos Ouest France ABC
Shadow Defence Secretary says he would boost military ties with France, but will re-examine participation in EU Defence Agency
The FT reports that Shadow Defence Secretary Liam Fox has said that a Conservative government would seek to boost military ties with France and see "a renewed and energised Anglo-French synergy". However, he reiterated opposition to further EU military integration. He added: "Any [EU] military capability must supplement and not supplant our national defence and Nato. Nato members, who are already falling well below expectations in their military budgets, must not be allowed to diversify scarce resources away from Nato towards EU capabilities."
Reuters also reports that he also said he would leave open the option of pulling out of the European Defence Agency: "We will look at provisions like permanent structured cooperation and the European Defence Agency (EDA) closely if we form the next government, to determine if we see any value in Britain's participation".
FT Reuters
In a comment piece in the WSJ Lord Woolmer cites Open Europe's research on the AIFM Directive, which found that hedge funds contributed just over €4bn in tax revenue to the EU in 2008.
WSJ: Woolmer Open Europe research
The WSJ reports that Spain is to reintroduce restrictions on offshore funds in the AIFM Directive.
WSJ
Dutch daily Trouw reports that the Dutch Court of Audit has concluded "It remains unclear how most European countries spend the money they get from the EU".
Trouw Novum Il Sole 24 Ore
PA reports that the European Commission was criticised today by the European Ombudsman for refusing to correct a bureaucratic error which has cost Clydeside fishermen vital cod catches.
No link
EUobserver reports that Lithuania and Latvia have said that France's handling of an arms deal with Russia has breached good faith with its EU and Nato allies and may be in violation of an EU weapons code. The Lithuanian defence minister Rasa Jukneviciene said they only learnt of the deal through the media, and would raise the issue at a meeting of EU defence ministers in Mallorca later this month.
EUobserver OE blog
The BBC reports that Germany's economic recovery has ground to a halt, and failed to grow in the last quarter of 2009, with GDP unchanged from the third quarter.
FT BBC
The Irish Times reports that the Irish Farmers Association has met with EU Agriculture Commissioner Dacian Ciolos and were 'impressed' by his commitment to maintain agriculture spending in the EU budget.
Irish Times
An opinion piece in The Economist calls for Spanish PM Jose Luis Zapatero to show some "leadership" as unemployment stands at 19.5%; a domestic poll rates him as less popular than the opposition party; possibilities of a strike begin to be whispered and as his credibility continues to be challenged both at home and abroad.
Economist: Leader Economist Irish 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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