Open Europe is holding an event tomorrow in Brussels from 5 - 6.30pm, entitled "The EU after the euro crisis: superstate or disintegration?" Speaking at the event will be: Dan Hannan, UK MEP; Jochen Bittner, EU Correspondent for Die Zeit; Giles Merritt, Secretary-General, Friends of Europe; and Mats Persson, Director, Open Europe.
Places are limited. If you would like to attend, please RSVP to Pieter Cleppe at pieter@openeurope.org.uk or Tel: 00 32 2 540 86 25 .
Europe
Catherine Ashton strikes deal over EU diplomatic corps;
EP compromise will see her given seven deputies
It is widely reported that yesterday in Madrid EU Foreign Minister Catherine Ashton managed to strike a deal with the representatives from the three main political groups in the European Parliament on the shape of the European External Action Service (EEAS) - the new EU diplomatic corps.
The EEAS will be provided with a staff of more than 6,000 people. According to the FT, the European Parliament "won language clarifying that at least 60 per cent of EEAS staff should be permanent EU officials rather than national diplomats, in an effort to ensure their first loyalty would be to the new service". The paper also cites sources involved in the talks, explaining that under yesterday's compromise, the EEAS' operational budget (including €6 billion per year for development aid) will be part of the Commission's budget, while its administrative budget will be separate.
According to EurActiv, Cathy Ashton bowed under EP pressure and accepted its calls to have the Foreign Minister of the country holding the rotating EU Presidency as her deputy. In addition, the relevant three EU Commissioners (Enlargement, Development and Humanitarian Aid) will also serve as deputies for issues under EU competence.
Cathy Ashton also managed to keep the three proposed senior Secretaries-General positions. Pierre Vimont, current French ambassador to the US, will be the main Secretary-General, with Mikolaj Dowgielewicz of Poland, and Helga Schmid of Germany serving as his informal deputies.
Spain's European Minister Diego López Garrido is quoted by La Razón, saying that the European Parliament will exert "an important political control" over the EEAS. Italian MEP Roberto Gualtieri, chief negotiator for the Socialist Group, is quoted by EurActiv claiming that "on the whole, European Parliament's requests have been fulfilled". According to Baroness Ashton, the EEAS might be operational by the autumn.
FT EUobserver EurActiv European Voice El Mundo La Razon IHT EP press release Le Figaro Les Echos Irish Times
Trichet calls for "quantum leap" in EU economic governance;
"We need the equivalent of a fiscal federation"
The WSJ reports that, in a speech to MEPs yesterday, ECB President Jean-Claude Trichet called for a "quantum leap" in the governance of the eurozone that would broaden the powers of the Commission and member states over each country's budget position and overall competitiveness. He said that, "The ECB believes that a true quantum leap is needed in the framework for surveillance and adjustment of fiscal policies," adding, "we need the equivalent of a fiscal federation."
Trichet said an independent agency, preferably housed within the Commission, should have the powers to hand down sanctions on countries whose budgetary and macroeconomic policies would lead to losses of competitiveness. "The Commission should have greater responsibility by making proposals which can only be modified with unanimity in the council rather than mere recommendations under the stability and growth pact," Mr. Trichet said. He added, "Conscious management of wages and costs in order to maintain a healthy position for the economy within a competitive environment - this should be the core focus of such broader macroeconomic surveillance."
Trichet also hinted that he would support the use of sanctions for member states outside the eurozone which break debt and deficit rules. He said, "At the level of the EU27, and in particular within the euro area, we must have effective instruments to prevent - and, where necessary, correct - excessive deficits and debt levels...The initiation of sanctions also needs to be quasi-automatic."
FAZ reports that the ECB has also called for a new institution to deal with crises in the eurozone, similar to the idea of a European Monetary Fund, recently floated by German Chancellor Angela Merkel. The article notes that, while the ECB has avoided the term "monetary fund" and "state insolvency", the institution would be charged with extending loans to or buying the bonds of struggling states, funded by the penalty payments of countries which have breached the stability pact. An ECB policy paper suggests that the institution would impose "strong conditionality" and that the involvement of the IMF "could be envisaged" in the loans.
On his FT Brussels blog, Tony Barber looks at the contrasting Franco-German views on EU economic government and argues, "France wants a eurozone economic government because it is increasingly looking like the only way of holding on to Germany's tails and exerting any influence on German policy."
Meanwhile, in the WSJ, Patience Wheatcroft argues, "That there should be such a drive by European officials to increase their influence over the member states is not without irony. The commission itself isn't a model of financial rectitude. Its own accounts have failed to secure a clean bill of health from the European Court of Auditors for the past 15 years. There is little confidence that its budget, set at €142.6 billion for next year, will be well spent."
FT Irish Independent FT: Brussels blog EUobserver European Voice EurActiv WSJ City AM IHT Reuters Economist: Charlemagne notebook WSJ: Wheatcroft FAZ Handelsblatt NouvelObs AP Reuters BBC Sofia Echo Trichet's speech ECB paper EP press release
Cameron tells Parliament he is willing to support EU treaty changes
In his statement to Parliament on his first European Council, David Cameron told the Commons yesterday that the UK would be prepared to support changes to the EU treaties to strengthen the rules of the euro, as long as they did not affect Britain. He said: "Sorting out the eurozone and adding to its governance arrangements is clearly vital for Europe. There may well be significant changes coming down the track...We will back measures that help sort out the eurozone. We will not back measures that pass power from the UK to Brussels. And, as we are not a member of the euro, we will not back measures that draw Britain further into financial support for the euro area."
Open Europe Director Mats Persson is quoted in the Mail suggesting that Cameron should approve a Treaty change in return for EU reform, adding: "This is an opportunity for David Cameron to seek to repatriate some powers to Britain".
In her Parliamentary sketch for the Times Ann Treneman writes: "His [Cameron's] message was relentless, his argument crude, his attack total. It was exactly the sort of dog's breakfast argument, though in reverse, that Gordon Brown used to deploy."
Meanwhile, FT Deutschland reports that, after Cameron announced that he rejected supervision of national budgets by the EU Commission, the EU is still planning to push through the reforms "with variable intensity". According to the EU diplomats, "it would be possible to divide the 27 member states in three categories for which different sanctions would apply". These would be the eurozone countries, countries that plan to enter the Eurozone, and the countries, "such as Great Britain and Denmark, which do not want to enter the Eurozone" - for whom no sanctions would be introduced.
In an editorial on the EU's plans for increased economic governance, FAZ argues that "the fact that the individual member states have made glaring mistakes is no reason for the EU to seize more competences and ignore the subsidiarity principle."
Mail Independent: Carr Guardian
European Commissioner De Gucht: "Greek bailout is against the EU Treaties"
EU Trade Commissioner Karel De Gucht has said on Flemish TV VRT that the guarantee arrangement for Greece breaches the EU Treaties: "You shouldn't forget that in the Treaties it is provided that a bailout is not possible...What has been done is to collectively deviate from the Treaties, because the guarantee arrangement is a system of bailout, no matter how you look at it. One has deviated from that, one has actually done something against the Treaties because one has seen that it was necessary." De Gucht added, on the new measures over budget supervision, that "EU leaders of course want to claim they made those decisions... When you look at the details, everything comes from the European Commission."
Meanwhile, on his Coulisses de Bruxelles blog, Jean Quatremer argues that the "knives are out" between ECB President Jean-Claude Trichet and Axel Weber, President of the German Bundesbank, citing Trichet's weekend interview in which he criticised the German reaction to the eurozone bailout.
VRT 11'45 in FD Blog Open Europe Research Coulisses de Bruxelles
Barroso: "We should not only be a monetary union, but also an economic union"
In an interview with the IHT, EU Commission President José Manuel Barroso has rejected concerns that Europe is moving too quickly toward economic austerity, instead saying it is vital to cut debt to restore market and voter confidence.
Mr Barroso is also quoted saying that his main goal in his second term is "to make the EU really stronger in terms of economic governance, to make Europe, and also our partners, understand that we should not only be a monetary union, but also an economic union."
European Parliament officials granted non-existent salary grades
The Express reports on the story that over 1,000 EU civil servants are paid more than the Prime Minister, and quotes Stephen Booth of Open Europe saying: "While the Government prepares for the most painful Budget in recent memory, taxpayers will be outraged to hear that their money is spent on eye-watering salaries for unelected Brussels bureaucrats."
On his EUobserver blog, Telegraph correspondent Bruno Waterfield notes that the European Parliament's Secretary-General Klaus Welle earns €216,301.08 a year, and that his salary grade is AD99 - a grade that does not exist - to reflect the "fact that the post of secretary general is regarded as outside the main framework of staff grades, being formally more senior than everyone else", according to the EP's press service.
Le Monde: Sarkozy and Merkel desperate to show united front on bank tax
City AM reports that President Nicolas Sarkozy and Chancellor Angela Merkel have written a joint letter to Canadian PM Stephen Harper calling for a G20 agreement on an international levy or tax on financial institutions. However, a leader in Le Monde suggests, "Neither Mr. Sarkozy nor Ms. Merkel are so naïve to believe that other G20 members will suddenly change their mind [on the tax on financial transactions]. Their real target is elsewhere. After six months of quarrels and Franco-German divergences on the best way to deal with the crisis, the leaders of the two most important Eurozone countries need to show that the old Franco-German tandem is still in working order".
Belgian Constitutional Court calls on EU judges to show restraint
Gazet van Antwerpen reports that, when speaking in the European Parliament, Marc Bossuyt, the President of the Belgian Constitutional Court, has called on European Judges to show more restraint, saying that the Courts in Luxembourg and Strasbourg are subject both to national Supreme Courts and to the elected policy makers of national states, which he said not only the ECHR in Strasbourg, but also the ECJ in Luxembourg is at risk of forgetting.
Results of Spanish banks' stress tests under scrutiny
The Telegraph reports that recent stress tests of Spanish banks BBVA and Santander, which led the Bank of Spain to declare them the best capitalised institutions in Europe, are being challenged by a study by Joseph Dickerson of Executive Nobel.
Telegraph WSJ: Annunziata WSJ: Real Time Brussels blog
Writing in the FT Gideon Rachman argues that, "Beyond its immediate economic and sporting struggles, Europe is suffering from a deeper malaise...The early stages of the financial crisis have set nations against each other - most obviously in the bitter words exchanged between Greeks and Germans. It is true that some people get through their midlife crises strengthened and emerge with a new sense of purpose and vitality. But others simply get divorced."
The Telegraph reports that Business Minister David Willetts has written to Britain's biggest business trade bodies urging their members to provide him with examples of "extra" regulations that impede business across Europe, and has pledged to make a representation to the European Commission about them.
The Coulisses de Bruxelles blog notes that former German Chancellor Helmut Schmidt has criticised Angela Merkel for failing to properly consult France during the economic crisis, and has described Herman Van Rompuy and Baroness Ashton as "Mr and Miss Nobody", and called Barroso "weak".
Coulisses de Bruxelles
Private Eye's Brussels Sprouts column notes that research by fishsubsidy.org has uncovered a direct link between EU subsidies and illegal fishing, and adds that millions of euros under the Common Fisheries Policy have gone to further deplete ocean fish stocks.
No link
Liberation reports that a new poll by BVA-Absoluce-Les Echos-France Info has shown that more than half of the French electorate (56%) are hostile to pension reform and two-thirds (67%) consider the government's economic plan to be "bad".
An editorial in El Pais argues that, "The truth is that the East [European countries] have lived in almost constant turmoil since 1989. Some of the countries which have joined the EU still have trouble achieving stable democratic systems...The economic crisis has only broadened the debate on whether they were prepared to enter the EU in the first place."
The FT reports that Germany has warned that a failure to reduce public debts could trigger another worldwide economic crisis, saying that its planned cuts in spending will not endanger global growth.
The Telegraph reports that Lach Walesa, the former Solidarity leader, has said that it would be a "disaster" for Poland if Jaroslaw Kaczynski won the Presidential election run-off on 4 July, calling him an "irresponsible and dangerous politician".
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.
