Friday, May 14, 2010

Open Europe press summary: 14 May 2010



Merkel: "We have to view the crisis as a motive, to make up for failures - failures that were not remedied by the Lisbon Treaty"

The EU may "dare to take further steps, for example for a European army"

In a speech at a prize-giving ceremony for Polish Prime Minster Donald Tusk yesterday, German Chancellor Angela Merkel said that the eurozone crisis is "existential" and "must be overcome" in order to avoid "unforeseeable consequences" for the future of the EU. In order to do this it would have to "equip itself more strongly, both fiscally and economically".


The German Chancellor warned that "We have a shared currency but no real economic or political union. This must change. If we were to achieve this, therein lies the opportunity of the crisis. We have to view the crisis as a motive, to make up for failures - failures that were not remedied by the Lisbon Treaty." On Wednesday Chancellor Merkel insisted that EU Treaty changes were the only way to achieve the kind of EU budgetary discipline and surveillance measures Berlin is seeking.


On the importance of the euro, Ms. Merkel said: "The euro is our currency, and yet more than our currency...I stand by my vision that one day all member states of the European Union will have the euro as their currency...If the euro were to fall apart, it would not only be the currency, but also the EU and the idea of European unification". Ms. Merkel outlined her strong support for deeper European integration saying, "And beyond the economic, after the shared currency, we will perhaps dare to take further steps, for example for a European army".


The Irish Times has called the speech a rallying cry to MPs in the Christian Democratic party (CDU) ahead of next week's vote on the €750 billion aid package for Greece, of which her party has been critical.


A comment piece in German daily FAZ argues: "One thing is clear: EU member states' room for manoeuvre will be further reduced through a 'hardened' stability pact. There will be resistance to this in the Parliament and the public feel a sense of alienation and subservience. And therefore the question is whether 'forced further integration' into the EU, seemingly an unavoidable consequence of the monetary union, is politically enforceable? Ms. Merkel said in Aachen, when the euro fails, so does the idea of European integration. But will the voters believe her?"

Chancellor Merkel's speech Irish Times  Reuters Irish Times Irish Times: Leader Spiegel Bild Welt Sueddeutsche Focus FAZ FAZ 2 Economist


France and Germany lead push to outvote UK on controversial alternative investment rules

The FT reports that the UK faces a major blow as EU member states, led by France and Germany, plan to push through the controversial AIFM Directive next week, after turning down British pleas to delay the vote. Elena Salgado, Finance Minister of Spain, which holds the rotating EU Presidency, said that other finance ministers would not agree to a further delay and already had a majority to push through the proposals, which have been opposed in their current form by both the Conservatives and many Lib Dems in the European Parliament. "We have a sufficient qualified majority," Ms Salgado said. "There is a very clear majority of countries that want to approve it."


The Directive still contains two of the proposals, on restrictions on leverage and restrictions on market access to non-EU funds, which are most at odds with the UK's position, despite the fact that it is Europe's main private equity centre and home to 80 percent of its hedge fund industry. The article notes that Chancellor George Osborne said that he is seeking to salvage what he can from the Directive. But his spokesman said it was already "a long way down the track".


Meanwhile, writing in the Telegraph, Tracy Corrigan argues that there are "reams of regulations" set to come from Brussels and that "more broadly, through the Group of 20 and in Brussels, ministers need lobby for reform that will produce safe but fair and fully functional financial system."

Telegraph Times FT FT: Analysis City AM Telegraph: Corrigan Open Europe research: AIFM Directive Open Europe research: AIFMD and Investment Trusts


Economist: Commission's proposals for more economic surveillance sets the scene "for an ugly battle"

Le Monde: Key weakness of monetary union is lack of "economic government"

A leader in the Economist looks at the Commission's plans for greater surveillance of member states' budgets and argues: "The one thing that seems clear is that all this will lead to greater interference in countries' politics...The scene is set for an ugly political battle over how to run Europe." The magazine's Charlemagne column argues that the rules of the eurozone "are clearly in flux".


Reaction to the Commission's proposals has been mixed in France. An editorial on the front page of Le Monde argues: "this radical rupture with the operating rules of the eurozone since its creation has demonstrated, like never before, the key weakness of the monetary union: it is not supported by an economic government...This initiative, of the Commission, shows again the European democratic deficit...Barroso seems to have learned nothing from the failure of the Constitutional Treaty in 2005. Without doubt the European people are not ready to accept a European federation, which is the logical culmination of the collective adventure started sixty years ago."


However, an article in the paper reports that the French Parliament is "very reserved" about the Commission's proposals for member states to submit their budgets to the EU for review, before going to national parliaments. It quotes the Chairman of the parliamentary Finance Committee, Jerome Cahuzac, saying that the Commission "did not demonstrate its legitimacy when faced with the crisis."


The paper also reports that Spanish PM Jose Luis Zapatero has said that French President Nicolas Sarkozy threatened last week to "re-examine France's position in the euro", unless there was a commitment from all to help Greece. The paper quotes one unnamed Spanish official saying, "France, Italy and Spain formed a common front against Germany, and Sarkozy arrived to threaten Merkel with breaking off the traditional French-German axis."


Meanwhile, on his Coulisses de Bruxelles blog, Jean Quatremer argues that "Herman Van Rompuy is no longer president of the European Council. He was the victim of a successful coup d'état by the American President who has decided to take charge of European affairs, tired of seeing these brats unable to agree to save their single currency which risks triggering a tsunami that could devastate the planet." He adds that "among Merkel and Sarkozy, there is now a mounting mutual mistrust and no 'Entente cordiale'".
Irish Times: Klau Irish Times: Analysis Economist: Leader Economist: Charlemagne

Le Monde Le Monde 2 Le Monde: Editorial Le Monde 3 Irish Independent AFP Der Spiegel Bild Times Frankfurter Allgemeine Zeitung Telegraph Coulisses de Bruxelles


David Lidington appointed Europe Minister

David Lidington has been appointed as the new Minister for Europe, in place of Mark Francois, who was Shadow Europe Minister. The Mail reports that, in the hours before the decision was announced, a Conservative MP on the right of the party said: "It had better be Francois or there is going to be trouble." Friends of Mr Lidington pointed out that he is a eurosceptic but also a pragmatist. The Guardian describes him as a "Euro-realist rather than a pro-European", who enjoys strong relations with Foreign Minister William Hague. The Independent reports that flashpoints with the Lib Dems could be over justice and home affairs, financial regulation and calls by the German Chancellor, Angela Merkel, for greater EU powers to impose budgetary discipline on member states following the crisis in Greece.


Meanwhile, 69% of 2,143 Conservative members surveyed yesterday by Conservative Home agreed that "The Coalition is, overall, a good thing for the nation." 20% disagreed, with 11% saying they didn't know.

Guardian Independent Mail FT Conservative Home IHT


German criticism of bailout grows, as Trichet calls on country to 'police' the eurozone

Handelsblatt reports that criticism of Angela Merkel's agreement to the eurozone aid package is becoming stronger in Germany. The German Greens have accused her of having breached the German Constitution, with faction leaders Renate Künast and Jürgen Trittin saying that the German government is obliged to give the Bundestag the opportunity to give its opinion "when it comes to its participation in legislative acts of the European Union." That has not happened.


The Chairman of Deutsche Bank, Josef Ackermann, has expressed doubts over whether Greece will be able to pay back its debts, saying; "Whether Greece will be in a position to the muster the capital, I doubt this very much, it would require 'unrealisable efforts'", Mr. Ackermann told ZDF last night. However, he warned that were the country to fall, "its problems would almost certainly spread to other countries" and cause "a kind of meltdown".


German magazine Focus reports that ECB President Jean-Claude Trichet has blamed Germany for the eurozone crisis, citing him saying: "in 2004 and 2005 I had to fight against the demand to destroy the Stability and Growth Pact. This request came from the big Eurozone countries, including Germany and France." A headline in Handelsblatt reads that he sees Germany as the 'Euro-police', and quotes him saying: "I count on the active role of all countries, including Germany, to introduce the new task of observation."


Meanwhile Handelsblatt reports that German Chancellor Angela Merkel has denied its report, claiming that she has used the negotiations on the eurozone aid package to push for Bundesbank chief Axel Weber to become the next ECB President.

Focus Handelsblatt Zeit Handelsblatt 2 Handelsblatt 3


German support for financial transaction tax grows;

Proposals would hit City hardest

AFP reports that support for a global financial transaction tax is growing within the German Christian Democrat party. Prominent CDU MP Wolfgang Bosbach said yesterday that Germany should push for such a tax at the international level, as it would only make sense at such a level. CSU leader Horst Seehofer confirmed that his party is currently considering the idea of a transactions tax. Chancellor Angela Merkel is, however, still opposed. Her liberal coalition partner the FDP has also ruled the idea out, favouring instead a financial activities tax, affecting both the profits and salaries of banks, rather than all financial transactions.


AFP publishes data showing that the financial transaction tax would raise €321.3 billion per year in Europe, with €204.4 billion coming from the UK, €43.3 billion from Germany, and €18.8 billion from France. Die Zeit reports that the German Social Democrats have made the commitment to such a tax one of the conditions for approving the eurozone aid package. However, the package can be passed by the German parliament without Social Democrat support.

AFP 1 AFP 2 AFP Graph Zeit


Europe prepares for austerity

Several papers report on the impending austerity measures that face all European countries. Portugal yesterday introduced new austerity measures including rises in income tax, corporation tax, and VAT - which it is calling 'crisis taxes' - and Spanish trade unions yesterday called for a public sector workers' strike on 2 June.


In an interview with the FT, Spanish Finance Minister Elena Salgado said: "We are a strong economy, but it's not the German economy or the French economy and therefore for us it's very important to generate confidence in the markets".

FT FT 2 City AM IHT EurActiv FT 3 WSJ: Jamieson WSJ WSJ 2 Telegraph WSJ: Fidler


EurActiv reports that the NGO Transparency International has expressed "strong concern" after four former Commissioners from the first Barroso Commission accepted jobs in the private sector, and is demanding a review of the Code of Conduct for Commissioners.



Economists at Credit Suisse and Morgan Stanley are starting to worry about a harmful jump in inflation, concerned that European Central Bank President Jean-Claude Trichet and Bank of England Governor Mervyn King aren't taking as aggressive a stance against inflation as once believed.

WSJ WSJ: Nixon


Het Laatste Nieuws reports that the Belgian EU presidency, which begins in July, will be opened by 40,000 people dancing at the same time in 12 Belgian cities.

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