Bundesbank officials suggest French "conspiracy" over ECB bond purchase
Der Spiegel reports that the Bundesbank suspects a French "conspiracy" over the €25 billion which the ECB has spent purchasing Greek bonds so far. According to the magazine, Bundesbank officials suspect that the move is intended to allow French banks to unload their Greek bonds. One high ranking official is cited suggesting that ECB President Jean-Claude Trichet gave into pressure from French President Nicolas Sarkozy to change the ECB's stance opposing the purchase of member state governments' bonds.
Additionally, German banks are not allowed to sell their Greek bonds to the ECB, following a promise made by them to the German Finance Minister to keep the bonds until May 2013. Le Monde reports that "a perfume of divorce is floating between the Germans and the ECB".
France to revive agenda for an EU "economic government"
Saturday's Le Monde reported that French President Nicolas Sarkozy is reviving the idea of separate economic management of the eurozone. According to his 'entourage', he envisages a forum for the heads of state and eurozone governments, with its own secretariat which will be "the real economic government of Europe", according to the article. It also suggests that Germany is not yet ready to accept the proposals.
The article adds that the French President has chosen not to discuss his view of an economic government publicly, because a French-German rift at the moment could be "fatal for the euro". Sarkozy has also avoided suggesting that he could be President of the eurogroup, as he did a year ago, which would suggest current EU President Herman Van Rompuy as a possible candidate.
Speaking in the French Assembly yesterday, Les Echos reports that French Finance Minister Christine Lagarde said: "It is imperative to reinforce the economic governance of the European Union, and even more so the governance of the eurozone with a real economic government", capable of applying "sanctions" if the case arises. She also said it was necessary that Eurostat be able to verify statistics from member states.
Meanwhile, in an interview with Le Monde, former French President Valéry Giscard d'Estaing said that re-establishing Franco-German "intimacy" is fundamental in order for Europe to keep on growing. He said: "we are now in a three-speed Europe. On the one side there is Britain, which has decided to stand outside European integration, and has already announced that nothing is going to change during the next five years, as the new government has ruled out the adoption of the euro. As regards decisions concerning the Eurozone, it will not be necessary to take into account its point of view. The second group is - with some exceptions, including Sweden and Poland - the one of new EU members, which have stood back during the euro crisis. The third group is the 'Eurogroup', which is relatively homogeneous".
Commission to consider introducing minimum rate for carbon tax
Reuters reports that, according to a draft briefing document, the European Commission is considering introducing an EU-wide carbon tax. The amount of the new tax would range between €4 and €30 per CO2 ton, with the plan to be further discussed by the Commission on 23 June. If approved, the rules would be phased in between 2013 and 2018, laying down minimum rates of taxation for everything from coal, to heating oil to biodiesel.
The draft document suggests that revenues from any carbon taxes could be used by member states to help their budget deficits, reading: "The global financial and economic crisis has left deep strains on the public finances of most countries. This...should play an important role in offering member states a basis...to shift the tax burden away from labor or capital." Commission tax spokeswoman Emer Traynor refused to comment on the draft document, although she said that "the objective is not to raise taxes - it is to restructure them in a way that consumers can understand and manage."
Belgian Europe Minister pledges to give EU President and Foreign Minister more powers during country's rotating Presidency
Belgian State Secretary for European Affairs Olivier Chastel has said that the Belgian Presidency will take a back seat role to EU Foreign Minister Catherine Ashton and EU President Herman Van Rompuy, during the country's sixth-month EU Presidency, Euractiv reports. He said, "Both will have full responsibility for their entire field of competence," adding that the Belgian presidency will implement "the Lisbon Treaty, all the Lisbon Treaty and nothing but the Lisbon Treaty". On the foreign policy front, he made clear that the Belgian Foreign Affairs Ministry and diplomacy "will be at [Ashton's] disposal - and I said at her disposal - to do everything she considers the rotating presidency should do. And not the opposite, not on an equal footing." This, he said, would mark a "rupture" from current practice. He also said that the Presidency will start with Belgium having a caretaker government.
Cathy Ashton planning reshuffle of Special Representative roles
EUobserver reports that EU Foreign Minister Catherine Ashton is planning to reshuffle the EU's 11 special representatives (EUSRs), scrapping the positions appointed to individual countries, in favour of regional EUSR portfolios. The final decision on the 11 existing EUSRs is likely to be made as part of a wider package of 40 or 50 senior appointments in the EU's External Action Service. Speculation is mounting that former Liberal Democrat leader Lord Ashdown would be the favourite for EUSR to the Balkans.
Out of the 136 Commission delegations around the world, 81 are set to have become EU embassies by the time Spain ends its rotating EU presidency at the end of June, with the rest to follow by the end of the year, according to EUobserver.
European Commission to propose new rules for rating agencies;
France suggest credit insurers should be allowed to act as rating agencies
The FT reports that the European Commission will put forward proposals today for pan-EU supervision of credit rating agencies. Earlier measures increasing supervision of the agencies were agreed in 2008, and will come into force in December, but EU officials are questioning whether they will be sufficient.
One of the planned EU financial supervisory authorities - currently under negotiation with member states and the European Parliament - will handle the registration and oversight of the credit agencies. Die Welt has seen the proposals, and reports that ESMA (European Securities and Markets Authority) will have investigative powers over credit rating agencies, and have the power to impose large fines on them.
FT Deutschland reports that debt issuers will in the future have to provide information of their structured products, not only to the rating agency they have employed, but also to other rating agencies as well, in order to create more competition among the agencies.
Meanwhile, Handelsblatt reports that France wants to promote credit insurers Euler Hermes over other 'Anglosaxon' ratings agencies. In an interview with the newspaper, French Central Bank Chief Christian Noyer says that: "credit insurers as Euler-Hermes and Coface assess the quality of credits. They could issue their own ratings. They have the knowledge, the appropriate experience, and they must pay when the ratings are wrong. They could easily conquer the ratings market."
UK Defra Secretary calls for "reduction and reorientation" of CAP spending;
Germany set to "fight side by side with France"
During a meeting of EU agriculture ministers in Merida yesterday, France, Germany and the UK all unveiled their positions on CAP reform. French Agriculture Minister Bruno Le Maire, said: "It would be an historical mistake for Europe to undermine its agricultural sector while other continents are defending and developing theirs". German Agriculture Minister Ilse Aigner is quoted by AFP saying that Germany is ready to "fight side by side with France" over CAP reform.
New UK Secretary for Agriculture and the Environment Caroline Spelman called for "reduction and reorientation" of CAP spending, adding: "we cannot leave aside the fact that Europe is without money. We will therefore have to set our priorities, and this will be an issue to be negotiated among [Agriculture] Ministers".
German Presidential election schedule for 30 June
The FT reports that German Chancellor Angela Merkel has scheduled the election for a new German President for 30 June, the last date allowed by law. The German press reports that the German Labour Minister Ursula von der Leyen is an early favourite, as well as Christian Wulff, the Governor of Lower Saxony.
The Times quotes Stephan-Andreas Casdorff, Editor of Der Tagesspiegel, saying: "Never has a German government started so badly. Never has Germany, and above all its chancellor, been so isolated and poorly regarded in Europe. Never have a German foreign minister and deputy chancellor been so unpopular and so lacking in influence."
FAZ reports that, despite the pledge made by Tony Blair that the EU budget was to be 'fundamentally revised', five years after the compromise and two and a half years after the debate, the EU is still waiting for the new draft of the budget. The EU Commission has failed to even put forward a report on the budget reform that could be the basis for further discussion.
MEPs vote in favour of controversial EU divorce rules
MEPs on the European Parliament's Legal Affairs Committee yesterday voted in favour of controversial EU divorce rules for mixed nationality couples, to be introduced under so-called 'enhanced co-operation' with 12 participating countries. If the initiative gets the backing of EU ministers and the full European Parliament, it will be the first time enhanced co-operation is used since it was enshrined in the EU treaties, back in 1997.
Czech President: "The eurozone has failed"
Writing in the WSJ under the headline "The eurozone has failed", Czech President Vaclav Klaus argues: "During its first 10 years, the euro zone has not led to any measurable homogenization of its member states' economies...The mechanism that will save the European monetary union is the increasing volume of financial transfers that will have to be sent to euro-zone countries suffering from the biggest economic and financial problems."
The WSJ reports that Germany's economy is forecast to grow at three to four percent this quarter.
The BBC reports that unemployment in the eurozone has risen to an all-time high of 15.86 million, or 10.1% of the population. The Spanish unemployment rate is now close to 20%. However, the FT reports that economists have said renewed demand for temporary labour signals that unemployment is near its recessionary peak.
At yesterday's EU-Russia summit, relaxation of visa requirements was discussed, as well as Russia's bid to join the WTO, separately from Belarus and Kazakhstan, and human rights abuses and press freedom in Russia.
The US is pressuring the EU to run stress tests on major European banks and publish the results, in order to boost confidence in the financial system. Germany remains sceptical, reports the WSJ.
A new study claims that investors' tendency to chase performance at all costs, irrespective of the risks, makes the introduction of the EU's proposed AIFM Directive necessary.
Italian news agency Asca reports that, during a press conference held yesterday, Turkish Minister for European Affairs Ezemen Bagis described as "nonsense" EU Foreign Minister Cathy Ashton's calls for Israel to open an inquiry on the attack on the Gaza-bound flotilla. "If there has to be an inquiry, this has to be carried out by either the UN or the EU: one cannot ask the aggressors to investigate on themselves", he said.
On his FT blog, Tony Barber looks at the Union for the Mediterranean, noting that it hasn't played any role in the recent Gaza conflict. He notes, "The EU, for its part, is caught in the middle - stuck, not for the first time, with a foreign policy initiative that didn't look well-conceived in the first place and is now making the Europeans seem more ineffectual than ever."
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