Monday, May 24, 2010

Open Europe press summary: 24 May 2010

Cameron rules out any Treaty change which affects UK;
EU task force emphasises need for sanctions to protect eurozone
At Friday's meeting with German Chancellor Angela Merkel, PM David Cameron ruled out any EU Treaty change to give the EU more powers over eurozone economies, if it were to affect the UK, saying: "There is no question of agreeing to a treaty that transfers powers from Westminster to Brussels. Britain is obviously not in the eurozone and is not going to be joining, so it wouldn't agree to any treaty that drew us further into the euro area". He added, "Any treaty, even one that only applies to the euro area would have to be agreed by 27 countries, and Britain there has a veto, it is very important to make that clear."
Angela Merkel said, "Germany tabled some ideas where a treaty change plays a certain role, but let me tell you we're at the beginning, it's very early days as regards to the working group [a taskforce led by EU Council President Herman Van Rompuy] and there is no agreement yet in the group about what needs to be done". The Sunday Times reported that, after the press conference, Merkel said to an aide: "That went very well, it was quite pleasant. We will be able to do things together."
Saturday's Mail quoted Open Europe Director Mats Persson saying: "If this ends up involving any transfer of powers to Brussels then the coalition has to call a referendum. The crisis has already sucked us into the bailout package and there is a clear drive to put new controls in place, some of which will include the UK." Mats was also quoted in This is Money.
In an article for Conservative Home, Mats argues that this "is also a once-in-a-decade opportunity for Cameron... Treaty changes - or any substantial changes that require unanimity in the EU - could actually be good news for the UK. It would finally present a British Government with real leverage in negotiations with EU partners: in return for allowing the eurozone to integrate further, the UK should ask for any of a number of things in return, including the repatriation of powers and a more sensible EU budget."
Meanwhile, EU President Herman Van Rompuy's eurozone taskforce, comprising finance ministers and ECB representatives, agreed four main objectives for reform: greater budgetary discipline, reducing different levels of competitiveness between member states, building an effective crisis mechanism to deal with future crises, and strengthening the EU's economic governance. They also discussed sanctions for states that violate the Stability and Growth Pact. The next meeting of the task force will be on 7 June.
French Finance Minister Christine Lagarde played down the debate over Treaty change, saying: "Forget about the treaty...focus on what we can achieve in the short term. What we are saying today is what are the deliverables we can produce very, very quickly. It is more of a timing issue rather than a treaty change or no treaty change. We are more concerned about being efficient and practical." German Finance Minister Wolfgang Schäuble added: "we have all agreed on Mrs. Lagarde's proposal to focus on measures we can implement within the existing Treaties...Only during the next stages it will be possible to assess options requiring Treaty changes".
Handelsblatt reports that EU finance ministers want agreement on changes to the Stability Pact by October, with an interim report from the taskforce to be ready by 17 June. Le Soir quotes Van Rompuy saying: "we need to stay within the existing Treaties", adding: "we won't go again in the adventure of Treaty change. We have better things to do." The article adds that it is clear that any debate on Treaty change will now only come after reforms agreed by October.
A leader in Saturday's Times argued: "Paris and Berlin are looking at bailout measures that are eurofederalist and further centralise powers in Brussels. This is, therefore a moment for Mr Cameron's sensible approach to Europe: a firm, hard-headed europragmatism. The policy of being in Europe but not run by Europe is right. Quite suddenly, it is also timely."
Economist: Charlemagne notebook EUobserver European Voice EUobserver 2 European Voice 2 Sunday Times Express Telegraph Sun Independent Guardian Telegraph: Leader Times: Leader Weekend FT Weekend FT 2 Conservative Home: Persson Mail This is Money Handelsblatt Europolitics Reuters EurActiv France Il Sole 24 Ore
French Foreign Minister: Eurozone economic government would have "more powers than the Commission or the 27"
The Sunday Times looked at French President Nicolas Sarkozy's proposal for EU economic government, which he has described as a 'eurozone council'. The article quoted French Foreign Minister Bernard Kouchner, saying that Sarkozy wanted vast powers for the council: "So far the 27 haven't managed to meet often enough. The eurozone council means we would see each other more often," he explained. "It would have more powers than the European commission or the 27. There would be a secretariat and an agency, that is a proposal of the president."
He added, "Look at your sterling, I bet you're happy with it. But in the eurozone there will be economic government, a lot of defence mechanisms will be set up, with more harmonisation between member states' policies. It won't stop you joining the euro one day, I hope." The article also quotes Alain Minc, a close friend of Sarkozy who has been branded 'France's Peter Mandelson', saying: "Thank God for [Nick] Clegg, because things could have been more dramatic. Joining the eurozone is in your interest...if you want a look-in on the eurozone council, you have to join the euro."
Meanwhile, Le Soir reports that France is to introduce its own proposals for euro reform by the end of May, according to French Finance Minister Christine Lagarde.
Sunday Times
Former Bundesbank President: Eurozone bailout "is a violation of every rule";
"Some of the smaller countries should leave the single currency"
In an interview with Der Spiegel, former Bundesbank President Karl Otto Pöhl has said that "the euro is not in peril, but some of the smaller countries should leave the single currency". He added that the recent bailout plan has betrayed some essential principles enshrined in the EU Treaties. "The foundations of the euro have fundamentally changed as a result of the decision by Eurozone governments to transform themselves into a transfer union. This is a violation of every rule. In the Treaties governing the functioning of the European Union, it's explicitly stated that no country is liable for the debts of any other. But what we are doing right now is exactly that. Added to this is the fact that, against all its vows, and against an explicit ban within its own constitution, the ECB has become involved in financing States. Obviously, all of that will have an impact", he warns. Mr. Pöhl also questions the German government's claims that there was "no alternative" to the bailout, saying: "Of course there were alternatives. In the first place, never having allowed Greece to become part of the Eurozone".
Meanwhile, in an interview with El Pais, Greek PM George Papandreou has rejected suggestions that letting Greece join the Eurozone was a mistake. He said that "the Commission was provided with incorrect figures for six years. Indeed, part of the responsibility was on Greece, but the Eurozone also lacked the tools to notice that".   
Der Spiegel Expansion El Pais
Spanish bank bailout adds to market concerns over eurozone
German President Horst Koehler on Saturday signed the law authorising Germany to contribute €148bn in loan guarantees to the €750bn eurozone bailout package. However, the Guardian reports that Europe's financial markets are set for another turbulent week after Spain was forced to bailout a regional mortgage lender. The Sunday Telegraph quoted one hedge fund trader saying: "Shorting the euro is the biggest bet in town".
Guardian EurActiv Sunday Telegraph Sunday Times City AM Telegraph Telegraph: Evans-Pritchard Sunday Express Times Guardian IHT
ECB starts work on new £730m HQ
The Sunday Times reported that work has started on the European Central Bank's new headquarters in Frankfurt. The article noted that the project is already three years behind schedule and costs have risen from £430m to £730m. An ECB spokeswoman confirmed that Britain's shareholding in the bank meant that part of the funding came from the British taxpayer, although she could not give a precise figure. Open Europe's Mats Persson was quoted saying, "It's mind-boggling that the ECB is going ahead with such a grand project only weeks after taxpayers were asked to cough up € 500 billion to save the eurozone." Mats was also quoted in Italian paper the Corriere della Sera.
Sunday Times Corriere della Sera
Eurozone comment round-up
In Saturday's Guardian, Larry Elliot wrote, "Greece has underlined the design flaws in the euro project, the immense difficulty in bolting together different economies and forcing them to operate under a one-size fits all monetary policy. But the crisis, while long in the coming, has been amplified by human error; Merkel's kamikaze attempt to outlaw naked short-selling being merely the latest example of months of dither and blunder."
In Saturday's Mail, former British Ambassador to Germany Christopher Meyer argued, "Worst of all, Germany, the principal architect and paymaster of the eurozone, is having acute difficulty coming to terms with the logic of the situation: namely that, with its enormous trade surplus, it cannot avoid helping to finance the southern states' deficits."
Writing in the Independent on Sunday Business Editor Margareta Pagano suggested: "If Merkel wants to survive, she and her partners should be drawing up contingency plans for a two-tier type euro allowing ClubMed countries such as Portugal and Greece, and possibly Italy and Spain, to devalue."
Writing in the Observer, Ruth Sunderland argued, "If political leaders fail to underpin the euro with genuine co-operation, and to carry their countries with them, they may be taking the first steps along the fork in the road that leads to a break-up." The Indpenendent on Sunday and Observer both ran features noting that public opinion in Germany is turning against the euro.
In Saturday's Independent, Hamish McRae argued, "Will the euro survive? It is a question that, two years ago, would have seemed outrageous. Anyone who suggested that the eurozone was fatally flawed was branded as a Europhobe, someone who hated the European Union, not just its single currency."
Independent on Sunday: Pagano Times Conservative Home: Ellwood Independent on Sunday Observer Observer: Leader Sunday Telegraph: Hannan Telegraph: Bootle Mail: Leader Mail: Meyer Independent: Leader Sun: Leader Guardian: Elliott Independent: McRae Observer: Behr Observer: Sunderland
The FT reports that the German government is set to embark on a drastic budget austerity programme from next year, cutting at least €10bn a year until 2016, government officials have said.
FT FT: Munchau
European Parliament calls for total ban on naked short selling
The FT reports that the European Parliament's ECON Committee has proposed a complete ban on naked short selling, expanding the clampdown announced by Germany last week, in an amendment to the AIFM Directive. The Committee also argued that the European Securities and Markets Authority, a proposed pan-EU supervisor, should be given powers to restrict all forms of short selling "in exceptional circumstances or in order to ensure the stability and integrity of the financial system".
The article quotes Lib Dem MEP Sharon Bowles, Chair of the Committee, saying the amendment did not belong in the Directive, adding: "The rapporteur [Jean-Paul Gauzès] and others got carried away and said they were introducing an amendment into the AIFM. It's just not normal to invent something which is not directly connected." Mr Gauzès told the paper: "As long as there won't be a legislative initiative [by the European Commission] we will continue to push this case. I am sure that there will be regulation".
Meanwhile, writing in the Sunday Telegraph Christopher Booker noted in his column that Open Europe's press summary last week revealed that Chancellor Merkel has called for a "global" tax on financial transactions to raise €321 billion a year Europe-wide - €204 billion of which would come from Britain, with €43 billion from Germany and just €17 billion from France.
FT Sunday Telegraph: Booker OE press summary
An article in New Europe magazine looks at continuing tensions over the EU's proposed AIFM Directive to introduce more strict regulations on hedge funds and private equity firms, and cites Open Europe's research that the industry generates around €5.3 billion in tax revenues for the UK. The research is also cited in Spanish paper El Periodico de Aragon.
New Europe El Periodico de Aragon OE research
MEPs to receive new Apple iPads to "stay connected"
The Sunday Times reported that the European Parliament's administrative bureau has earmarked £4.3m for an "IT mobility project" which will provide all 736 MEPs with an Apple iPad, a portable tablet computer, likely to cost over £500 each. Despite having recently been equipped with new Hewlett-Packard laptops, MEPs have reportedly complained that they are too cumbersome in comparison with the iPad, which has not even been released in Europe yet.
Sunday Times
20% of farms account for 73% of EU farming subsidies in UK
The News of the World reported that 29 large agri-businesses each received EU farm subsidy payments of more than £1 million in 2009, as 20,000 small farms received less than £300 each. It added that, in the UK, the top 20 percent of farm subsidy recipients received 73 percent of all of the EU grants paid in the UK. The article quoted Jack Thurston, of, saying "Most people think farm subsidies are there to help the little guy. They're not...Our tax money is going to the fat cats, not the small family farms."
No link
The new 'Burdens Barometer' from the British Chambers of Commerce has estimated that 40 new regulations introduced in the last year have cost business an additional £1bn a year. The research also found that EU legislation accounts for 68.8% of the total regulatory burden measured in the report.
FT Independent Telegraph Open Europe research - regulation
Der Spiegel notes that Greece continues to purchase weapons from German manufacturers despite having to be bailed out by the eurozone and IMF. The article suggests that Greek PM George Papandreou recently ordered two submarines in order to secure German support for the European aid package.
Der Spiegel Der Spiegel 2
EUobserver reports that the European Commission has proposed setting up a 'crisis cell' to allow for better co-ordination in extraordinary aviation events, such as the recent volcanic eruptions.

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