Monday, February 15, 2010

Open Europe press summary: 15 February 2010


Greek government to resist pressure for additional austerity measures;
53% of Germans willing to expel Greece if it threatens single currency
The front page of the FT reports that Greece is expected to resist pressure from Germany and the ECB today for added budget austerity measures in return for financial assistance, including a 1 to 2 percent increase in value-added tax and abolishing the '14th month' salary for public sector workers at Christmas. The Times reports that senior figures at the Commission believe that the Greek plans announced so far could leave it short by as much as 1.25 of the 4 percentage-point cut to its budget deficit required by the end of 2010.

ECB Chief Economist Juergen Stark said in an interview with Spiegel that Greece's package of measures is "the absolute minimum that now needs to be implemented. More will be necessary in light of the deteriorating situation."

CNN reports that Greek PM George Papandreou criticised the EU's response to the Greek economic crisis on Saturday, saying "In the battle against the perceptions and the psychology of the markets, the EU was timid, at the least. Greece is neither a political nor an economic superpower to go it alone in this battle". The Telegraph notes he told his Cabinet, that Brussels has "created a psychology of looming collapse, that risked becoming self-fulfilling". He added that Greece had become a "guinea pig in a battle between Europe and the international markets".

Eurozone finance ministers are meeting tonight, ahead of tomorrow's ECOFIN meeting of all 27 EU finance ministers. The Times reports that the euro fell to almost nine-month lows against the dollar as investors speculated that the meeting would fail to result in a concrete bailout plan for Greece. The BBC Today programme reports German Chancellor Angela Merkel will attend tomorrow's ECOFIN meeting of finance ministers.

In a poll for German newspaper Bild, 67% of Germans have said they are against a Greek bailout, and 53% said they were in favour of expelling Greece from the eurozone if it poses a danger to the single currency. Former ECB board member Otmar Issing told Welt Am Sonntag that a Greek bailout would "put the whole structure out of sync", and said in reference to Greece's generous pension system: "One can't demand help from the outside in order to continue with something like this".

Meanwhile, the Guardian notes that El Pais has reported that Spain's intelligence services are investigating the role of British and American media in fomenting "speculative attacks" against the Spanish economy.
Guardian FT FT 2 BBC EUobserver CNN Telegraph: Johnson Telegraph Telegraph: Evans-Pritchard City AM Economist: Charlemagne notebook Telegraph: Bootle Guardian 2 WSJ WSJ WSJ 2 WSJ 3 Times Times 2 BBC: Today programme Times 3 Irish Independent EurActiv IHT

Société Générale warns that the euro is facing an "inevitable break-up"
The weekend papers featured a series of articles about Greece and the eurozone crisis. Saturday's Mail reported that strategists at French bank Société Générale have said in a note to investors that the euro is facing an 'inevitable break-up' and that any bailout of the Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone. The article quoted Open Europe Director Mats Persson saying: "The eurozone is facing a fully-fledged crisis. The Greece episode has made it painfully clear how flawed the euro project was from the very beginning. Even if Greece receives a one-off bailout it would not solve the real problem, which is the huge differences in competitiveness between the eurozone's richest and poorest members...One thing is clear, Britain made the right choice in staying out."

City AM reports that the Centre for Economic and Business Research think-tank has said that Britain's unemployment rate would be twice as high if the UK had joined the euro.

The Sunday Times reported that the response to Greece's economic crisis could be to further EU integration, and quoted Mats Persson saying: "The danger is that a lot of people in Brussels see this as an opportunity rather than a threat. A decade ago, when the euro was founded, they said that we don't have the tools now, but when a crisis comes along we will be able to take this forward." The Sunday Telegraph cited Open Europe's recent briefing, noting that there are six possible scenarios in which UK taxpayers could be asked to pay for a Greek bailout.

The Sunday Express reported that financial experts have warned that other eurozone countries could be in need of economic bailouts, with one way of assisting them being to speed up payments from the EU's structural funds budget. It quoted Open Europe's Sarah Gaskell saying, "UK taxpayers pay money into the EU budget, so they would effectively be on the hook for a rescue operation like this and could end up paying for the financial mistakes of governments they had no hand in electing. In fact, British taxpayers are set to subsidise Greece for years to come through the EU budget."
Open Europe research Open Europe press release Sunday Express Sunday Times Sunday Telegraph: Gilligan Mail Open Europe research Sunday Telegraph: Halligan Sunday Telegraph Observer Observer 2 Observer: Hutton Sunday Express: Hamilton Mail on  Sunday: Humphreys Independent on Sunday Independent on Sunday: McRae Mail on Sunday Times Observer: Leader Weekend FT Weekend FT Guardian Weekend FT City AM Irish Independent Telegraph: Johnson Die Welt Focus  Maerkische Allgemeine Handelsblatt FAZ 

Gary Younge: Eurozone crisis illustrates the democratic deficit inherent in European project
Writing in the Guardian, columnist Gary Younge argues: "The issue is not the failure to match economic and monetary ­union with political union. It is the naked disregard for democratic engagement in the entire system that in no small part ­explains why voter turnout in EU elections has plummeted by more than 30% in the last 30 years. Whenever people vote no to a phase of integration - as they did in Ireland two years ago - the EU simply orders them to vote again until they produce the right result. Once they vote yes there is no turning back...So there will be no hearings on Greece in Brussels. Jean-Claude Trichet, the head of the ECB, will face no cross-examination by elected representatives. Nor need he fear for his job. There will be no populism because the population does not count."

Writing in the Weekend FT Tony Barber argued: "It looks very much as if Greece's fiscal sovereignty will be, for most practical purposes, temporarily suspended. [The EU] can either clutch its worry beads and hope that Greece, acting under formidable outside pressure, will transform itself into a self-disciplined polity. Or it can exploit this crisis as an opportunity to shift European monetary union into a higher gear by taking irrevocable steps to closer fiscal integration."

A leader in the paper argued: "even for advocates of closer integration in Europe, this is a mistake. The EU suffers from a lack of popular legitimacy. The manner in which the Lisbon treaty was passed was unedifying, giving the impression that the EU is a stitch-up by a small elite. If Europe, or just the Eurozone, is to become more deeply joined, it should be a deliberate and honest process, not an accidental and covert one."

Wolfgang Munchau writing in the FT argues: "The surreal discussion about the eurozone's future tends to ignore the legal and political constraints. Consider one argument that central banks, not just the European Central Bank, should consider raising inflation targets from about 2 per cent. There is no danger that the ECB would adopt this proposal. If it did, the German constitutional court would be guaranteed to invoke its 1993 ruling. More importantly, I would expect German public opinion, having swallowed the toad of a Greek bail-out, would drive Germany out of the eurozone."

A leader in the Observer argued, "The crisis poses existential questions about the future direction of the EU, on which the UK depends for the bulk of its trade. British politicians are used to talking about Europe and Britain as if they were wholly separate entities."
Weekend FT: Barber Telegraph: Warner Weekend FT: Leader Guardian: Younge FT: Munchau

The Weekend FT reported that economic recovery in the eurozone is trailing behind the US with growth of only 0.1 percent compared to US growth of 1.4 percent in the fourth quarter of last year.
Weekend FT Independent

Former US Ambassador to EU: "Three Presidents, that's just too crazy for words"
In an interview with De Standaard, former US Ambassador to the EU, C. Boyden Gray, said: "in all honesty, I don't see why the EU needs a permanent President for its European Council. [Herman] Van Rompuy's job could be useful if the EU would have also had the courage to abolish the rotating presidency...And then there is also Commission President Jose Manuel Barroso. Three Presidents, that's just too crazy for words." 

He added, "The EU is the most powerful regulator in the world. It is in Brussels that for all kinds rules for products are set, not in Washington or Bejing. Microsoft can testify that Brussels uses that power without restraint, almost coming from a sort of inferiority complex...The real problem is that Washtington hasn't seen this yet."

Development campaigners say EU biofuel targets "are driving a global human tragedy"
The Guardian reports that development campaigners have said that the 2008 decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is proving disastrous for poor countries. The consequences of European biofuel targets, said a report by ActionAid, could be up to 100 million more people into famine, increased food prices and landlessness. "Biofuels are driving a global human tragedy. Local food prices have already risen massively. As biofuel production gains pace, this can only accelerate," said report author Tim Rice.

Biofuels are estimated by the IMF to have been responsible for 20-30% of the global food price spike in 2008 when 125m tonnes of cereals were diverted into biofuel production. The ActionAid report notes that the EU biofuel industry has already received €4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple to over €13.7bn if the EU meets its 2020 target.
Guardian Open Europe research

New Europe reports on the news that the European Parliament is refusing to disclose the identities of MEPs who were forced to pay back €3.4 million in "wrongly claimed" expenses, and quotes Open Europe Director Mats Persson saying: "If the European Parliament was serious about cleaning up its act it would name and shame the MEPs who have misused their allowances and conned the taxpayer, just as the UK Parliament is currently doing."
New Europe

The Guardian reports that the Liberal Democrats have criticised the Conservatives' policy of scaling back the powers of the EU's criminal and justice bodies, Eurojust and Europol, arguing that the party is putting "ideology before the safety of the British people".

EU Commissioners run up €4m bill for travel
EUobserver and La Tribune note that four million euros of taxpayers' money was spent by the European Commission on travel and other expenses last year. Commission President, Jose Manuel Barroso accounted for over €700,000 of the bill. The UK's Lady Ashton, during her time as Trade Commissioner, averaged €13,864 per trip, the fourth highest out of the 27 Commissioners.
Sunday Express La Tribune EUobserver

French Finance Minister warns of tighter regulation on trading sovereign risk
The Weekend FT reported that French Finance Minister Christine Lagarde has suggested policymakers should clamp down on the use of derivatives linked to sovereign risk, following the pressure on the euro amid the Greek crisis. Several of Europe's largest hedge funds have meanwhile told the paper they have closed out positions against the euro and European sovereign debt on the back of political developments and fears of a regulatory backlash.

Meanwhile, the Independent reports that investment bank Goldman Sachs is today at the centre of the row over the Greek government's finances, amid recriminations over complex financial instruments that allowed the country to disguise the true picture of its debt.
Weekend FT FT: Tett FT: Leader Independent IHT

Spiegel reports that the French government is supporting Bundesbank President Axel Weber, Germany's candidate to become the next head of the ECB.

Retailer Boots has said it cannot award loyalty points on formula milk for newborns because it is against "politically correct" EU laws to promote bottle feeding.

Die Presse reports that the EU's Eco-design Directive, which bans shower heads which waste too much water, has been criticised by former Bavarian PM Edmund Stoiber. He said that saving energy is "a good purpose", but such decisions should be discussed intensively with citizens, because they interfered with their "everyday life". Taps, doors, windows and insulation material are also affected by the Directive.
Die Presse

On his Coulisses de Bruxelles blog, Jean Quatremer notes that security clearance to gain access to the EU's Council costs at least €80,000 a year - a sum that would more than double if EU President Herman Van Rompuy is successful in his bid to hold monthly summits.
Coulisses de Bruxelles

Viviane Reding, EU Commissioner for Justice, Fundamental Rights and Citizenship, stated in a speech on Friday that, despite the removal of the Communication Commissioner portfolio, EU communication policy will remain a high priority for every department of the European Commission.
EurActiv Open Europe research

ORF reports that unmanned airplanes, or so-called "drones", are a key part of the European Commission's INDECT project. The system will potentially be used to detect "abnormal behaviour" in crowded areas.
ORF ORF 2 Open Europe research

The FT reports that Whitehall is boosting its efforts to get more British civil servants into EU jobs, amid fears that the UK's long-term influence in Brussels could be sapped as junior staff shun the opportunity of a career in the EU institutions.

EUobserver reports that Iceland is to hold a new round of informal talks with the UK and the Netherlands over the Icesave dispute between the three countries.

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