Europe
Handelsblatt: "What remains of the Euro?";
German Bundesbank warns that Greek rescue plan would be threat to stability
Widespread newspaper coverage reports that interest rates on Greek bonds rose again yesterday, signalling that the eurozone's assurances of assistance as a last resort are not enough to calm the markets. City AM reports that the spread between Greek and German bonds widened to a euro lifetime record of 456 basis points yesterday, before falling back slightly. It also notes that Greece has enough cash on its books to service loans coming up for refinancing in April, but needs to borrow €11.5bn in May.
The BBC quotes Chris Pryce, senior Greece analyst for rating agency Fitch, saying: "Despite everything the EU and the eurozone have done, there is still a lack of clarity [and] confusion about what they intend to do, when they intend do it and how much would be involved." Former Europe Minister Jean-Pierre Jouyet said this morning, on France Inter radio: "The markets are testing Europe more so than Greece...they are testing the capacity of reaction, action and decision of the European Union...They want to know if France and Germany are agreed on the scope of a [European] agreement".
ECB Chairman Jean-Claude Trichet said yesterday that the ECB would maintain its relaxed collateral rules into next year, reports the WSJ, and accept Greek bonds as collateral, removing a source of uncertainty for Greek banks that rely heavily on Greek government bonds as backing for cheap ECB loans. This decision was met with anger in the German press.
The frontpage of Germany's leading financial daily Handelsblatt shows a €50 note going up in flames, with the headline: "what remains of the Euro?"
A leader in Handelsblatt by its Chief Editor Gabor Steingart argues that "yesterday, the German Bundesbank died." He adds that Trichet is no longer a believer in monetary policy focussed on controlling inflation, adding: "in the Greek crisis it appears that the European Central Bank is following political goals, rather than the stability culture" of the Bundesbank. He quotes a former Bundesbank President who once said: "Those who flirt with inflation, marry her", adding: "Trichet yesterday kissed her. For the spirit of the Bundesbank, that was a kiss of death."
Following Trichet's announcement that the ECB would carry on accepting Greek bonds as collateral, a comment in Boersen Zeitung argues: "it was a black day for the Euro...Trichet didn't manage to give an explanation which is in line with a stability oriented monetary policy."
The FT reports that Trichet said a decision on whether to activate the rescue package "is really in the hands of the Greek government itself". He added, "Taking all the information I have, default is not an issue for Greece."
Meanwhile, Frankfurter Rundschau reports on a leaked internal Bundesbank paper, which offers a scathing critique of the bailout agreement from EU leaders, saying the plan had been cobbled together without consulting central banks and will lead to monetisation of debt. "It brings problems in respect to stability policy that should not be underestimated", it reads. The article notes that, in the eyes of the Bundesbank, the rescue doesn't respect the 'no bailout' rule and the ban on direct financial aid between eurozone member states.
City AM Times IHT Guardian WSJ WSJ 2 WSJ 3 Irish Independent Telegraph: Hannan blog BBC EUobserver IHT 2 FT WSJ 4 Irish Independent 2 European Voice FT 2 Telegraph Independent: O'Grady NouvelObs Mail Irish Times Irish Times 2 Irish Times 3 Handelsblatt Frankfurter Rundschau Spiegel DW Boersen Zeitung Handelsblatt Leader Le Figaro France Inter
Franco Frattini: "It is necessary to create a European army"
In an interview with Le Figaro ahead of a Franco-Italian summit, Italian Foreign Minister Franco Frattini says that the Greek economic crisis "requires us to reinforce European economic governance", believing that in "this area, France has a very important role to play: next year she will chair both the G8 and the G20" and that this represents an "excellent opportunity to define this new governance."
In response to the question "What must be done to reinforce the common European identity?" Frattini replied: "Building a Europe of defence, that is to say, a European army. In order to increase its capacity for intervention on the international scene. The creation of a Franco-Italian alpine brigade, which will be announced in Paris, represents a first step. We hope that other countries will adhere to this idea. Spain, why not, or Germany? This is not about imposing a European army, but about providing the means to intervene. If it wants to be credible in the fight against terrorism, the stabilisation of crisis zones and nuclear security, Europe must 'produce' her own security and not rely solely on that of the US."
He also affirmed his "complete" support for a European citizenship policy, arguing: "We have defined the mandate of the president of Europe, reinforced the powers of the Commission, and widened those of the European parliament. It is now necessary to address the European people, explore their roots [and] reaffirm their fundamental rights. "
EU wastes £260,000 on cookbook based on banned seal products
The Telegraph reports that, although the EU has introduced a ban on all commercial trade in seal based products, it comes after it spent more than £260,000 promoting the seal hunting industry, including a cookbook with a recipe for "Seal Wellington". The cookbook was part of an EU project named "Seal: A common resource", that received £262,000, between 2000 and 2007, to help hunters make the most of the animals they were allowed to cull. The book is now to be published in Canada because its recipes are now effectively outlawed in Europe.
Nick Clegg admits Britain was right not to join euro
Speaking to the BBC Today programme on Wednesday, Lib Dem leader Nick Clegg, when asked whether he was still as "keen" on joining the euro, said: "I don't think the euro is for now. I go even further and say I don't think interest rates under the eurozone over the last few years wouldn't have been right for the British economy...I accept that eurozone interest rates over the last few years would have been wrong for Britain."
Writing in the Guardian former British diplomat Charles Crawford argues that "the UK is never going to be 'isolated' in the European Union, whichever party is in power here, for one simple reason: money. The other EU members hypocritically sneer at British supposed anti-Europeanness at the same time as clamouring for our more than generous contributions to the EU central pot."
Barnier writes to US Treasury Secretary with reassurances over AIFM Directive
The FT reports that EU Internal Market Commissioner Michel Barnier has written to US Treasury Secretary Tim Geithner to assure him that the EU's proposed Alternative Investment Fund Managers Directive will not shut foreign funds out of EU financial markets. The letter, sent last week, read: "I am convinced that access to the European single market should be granted to managers and funds domiciled in third countries, including the US, provided that high-level standards of transparency and security are guaranteed...By providing a level playing field for domestic and foreign players alike, we eliminate opportunities for regulatory arbitrage and create the conditions for fair competition."
Meanwhile the Telegraph reports that the BlueCrest capital hedge fund is relocating its headquarters to Guernsey due to a number of factors, including the risk of greater regulation.
Open Europe's recent research on the cost of eleven years of regulation in the UK is featured in Polish news magazine Wprost.
Wprost OE research OE press release
GMC accuses UK of 'gold-plating' rules on language requirements for foreign doctors
PA reports that the European Commission has responded to yesterday's report from the Commons Health Select Committee, and said that EU rules do not stop national authorities carrying out language tests on foreign doctors working in the UK. A spokesman said: "The competent authority cannot impose a general test regardless of a doctor's situation...If the competent authority is not convinced that the doctor has the right level of English they can then impose a language test", and said any language tests needed to be proportionate and on a case-by-case basis.
The General Medical Council welcomed the Commission statement on language testing of doctors, and claimed it was the "gold plating" of EU law in UK legislation that was the problem.
Writing in Le Monde, its Editor-in-Chief, Alain Frachon, argues that it is still early days for EU Foreign Minister Catherine Ashton, and that her "hybrid post" is "an innovation", meaning that it "is impossible to imagine what she will go on to do". He concludes that "courtesy and caution mean she shouldn't be shot down too soon".
An article in the Economist looks at upcoming elections in several central European countries and suggests "a deeper trend across all central European countries facing elections this year is that voters may back politicians they know even if they dislike them, rather than risk new faces from outside."
The IHT reports that a senior US Treasury Department official has said that the US would cooperate with plans for a new EU system for tracking terrorism financing - although he did not say if such cooperation would extend to sharing American bank data.
The Economist's Charlemagne column looks at the ageing of Europe's population, which produces varying opinions on working issues across EU countries, and argues: "Europe must above all avoid being pulled apart, as some countries tackle ageing better than others."
EUobserver reports that an overwhelming majority of MEPs on the EP's civil liberties, justice and home affairs committee yesterday backed plans to secure EU citizens interpretation in their own language when facing criminal trial in another EU member state. Translation and interpretation costs will have to be met by the member state, not by the suspect.
US President Barack Obama was in Prague yesterday to sign a nuclear arms treaty with his Russian counterpart before hosting a dinner with 11 heads of state and government from selected European countries. The decision to not invite any EU officials has been viewed as another put-down by some in Brussels, after Mr Obama also cancelled an US-EU summit due to take place in Madrid in May.
Knack reports that the European Parliament's Internal Market Committee has approved a proposal to implement standardised European clothing sizes.
The Telegraph reports that the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) said it has lowered the capital requirements from the draft proposals issued last year, ahead of the introduction of the Solvency II requirements in 2012.
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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