Europe
Commission backs MEPs over new EU financial supervisors' power to overrule national regulators
The WSJ reports that the Commission has proposed a compromise between MEPs and member states on the EU's three new financial supervisors for banking, insurance and securities. The Commission has backed MEPs' desire for the supervisors to have direct powers over financial institutions in an 'emergency' and where national regulators disagree about oversight of a cross-border financial institution. The compromise offered to member states, which are mostly opposed to the EU supervisors having the power to overrule national regulators, would preserve a clause that no decision by the agencies could intervene on a national government's fiscal affairs "in any way." The compromise also allows national governments in the Council to determine when an emergency exists that would give direct supervision powers to the new agencies.
Talks on AIFM Directive break down;
EP vote postponed until September
Reuters reports that talks between member states and MEPs on the EU's proposed alternative investment rules have collapsed over disagreements on the rules for foreign funds wanting to operate across the EU. "The Spanish presidency [of the EU] informed me it would not be possible to reach a deal before the end of June," said the EP's rapporteur on the AIFM Directive, Jean-Paul Gauzes. "I have yesterday taken the decision to delay the vote until the second parliamentary session in September."
Reuters Handelsblatt Open Europe research
George Soros: Germany's economic policy "is becoming a danger for Europe"
O'Grady: Germany has the choice of protecting the euro or her own prosperity
The Guardian reports that billionaire financier George Soros has warned that German economic policy "is becoming a danger for Europe, it could destroy the European project." According to Reuters, he said, "By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro, Germany is actually making it more difficult for the other countries to regain competitiveness."
Soros described the euro as "a patently flawed construct" and said Germany was putting the currency at risk by no longer pursuing deeper political and economic union. "Something has gone fundamentally wrong in Germany's attitude towards the European Union." The Telegraph quotes him saying, "Unless Germany changes policy, its withdrawal from the currency union would be helpful for the rest of Europe."
Open Europe's Stephen Booth is quoted in the Express saying, "Germany understandably wants to maintain control over its economic policy but this crisis has shown that being part of the single currency involves huge responsibilities to the other euro countries, something which politicians didn't tell their citizens when they signed up to the euro." In the Independent, Sean O'Grady writes, "The upshot is that Germany has a choice: protecting the euro and the European project, or her own prosperity. She cannot have both."
Le Figaro notes that the Nobel Prize winning economist Paul Krugman doubts whether German Bundesbank Chief Axel Weber would be the fittest person to be appointed as the next ECB President. Krugman is quoted arguing that "the risk of contagion from Greece to Spain, Portugal, and even Italy, would be much higher with such a conservative President running the ECB".
Meanwhile, the FT notes that banks in Greece, Portugal, Ireland and Spain account for more than two-thirds of the increase in lending to eurozone financial institutions by the European Central Bank. The heavy reliance on the ECB for funding is a sign that investors and other banks are refusing to lend to them out of fear that the eurozone debt crisis will deepen.
Express Guardian Telegraph Reuters AP CityAM EUobserver Independent: O'Grady FT FTD Le Figaro
Slovakia's new PM opposed to funding eurozone bailouts
DPA reports that Slovakia's new Prime Minister Iveta Radicova is opposed to contributing to the eurozone bailout fund. In her campaign she said, "Why should poor Slovakia pay for the richer Greece?"
EU takes on extra 18 MEPs for £7 million
The Telegraph reports that an Intergovernmental Conference (IGC) of EU ambassadors has amended the Lisbon Treaty to allow an extra 18 MEPs to begin work at a cost of £7 million a year to taxpayers. EU leaders at last week's summit agreed to launch the IGC in order to revise the Treaty. European Voice notes that the conference only lasted fifteen minutes. The cost of the amendment will be £28 million, the bill for the pay and perks of the MEPs over the next four years. The amendment must now be ratified by all 27 member states, which will mean a House of Commons vote on the amendment later this year.
Open Europe's Pieter Cleppe is quoted by the Telegraph, saying, "It's strange that the EU sees it fit to go through a complicated process of treaty reform just to provide for more jobs in the European Parliament - at a time when virtually every country in Europe is cutting back. This says a lot about the EU's priorities. If anything, the EU's institutions should be slimmed down."
Commission proposes a bond levy for debt-laden member states
Bloomberg reports that EU leaders will soon consider introducing a tax on bond sales by countries which violate debt rules outlined in the Stability and Growth Pact. The article quotes a Commission draft proposal stating that debt-laden member states would face "a levy in the form of a predefined percentage on any issuance of government debt". According to the article, the extra charge would be paid into a blocked account and then confiscated if the country concerned fails to bring its debt back into line. The Commission's proposal will be discussed at the next ECOFIN meeting on 12 July.
Former German Chancellor: Merkel's EU policy has been "foolish"
An article in the FT notes that the economic crisis in the eurozone has exposed deep and long-standing divisions between France and Germany. According to former German Chancellor Helmut Schmidt, German foreign policy under Chancellor Merkel is "pompous", particularly with regard to Franco-German relations. Schmidt is quoted in the Irish Times saying: "The way in which our government has treated the French in the last months - and, vice versa, how the French have treated Merkel - has been foolish on both sides."
MEP blasts report calling for greater EU communication spending
Conservative MEP Emma McClarkin has criticised an EP report calling for the EU to use taxpayers' money to sell the EU in the media. She said "this report has been hijacked by some MEPs who want to change the rules on how the European Parliament is reported by forcing broadcasters to include more EU content, by funding training programmes for journalists in EU affairs and by funding student radio and broadcasters to cover EU matters."
Commissioners at odds over extension of coal subsidies
European Voice reports that on 6 July EU Competition Commissioner Joaquin Almunia will publish plans to maintain special subsidies for the coal industry until 2023. The draft proposals are being met with strong opposition from EU Climate Change Commissioner Connie Hedegaard and EU Environment Commissioner Janez Potocnik.
Berlingske Tidende reports that Danish support for introducing the euro is declining. A recent poll shows that only 32.1% are in favour of joining the European currency, whereas 47.8% oppose it.
An editorial in the WSJ looks at ECB President Jean-Claude Trichet's call for an EU 'fiscal federation' and argues, "Fiscal policy is fundamentally a political matter for each country. Brussels lacks the ability, expertise and the political legitimacy to impose its preferred solutions on wayward countries."
WSJ: Editorial Washington Post
In a paper for ECIPE, Valentin Zahrnt looks at the EU's Common Agricultural Policy, arguing that in an era of fiscal austerity, the idea of billions of euros moving from one country's taxpayers to another country's farmers is likely to be politically controversial, particularly when the biggest payouts go to Europe's wealthiest citizens and most profitable companies.
In a paper for the Centre for European Policy Studies, Vasilis Margaras argues that the Lisbon Treaty has not made any significant progress in the EU's bid to develop a common foreign policy.
The IHT reports that business surveys released yesterday pointed to dimming confidence about prospects for growth in the eurozone, showing slow private sector growth and low demand for goods and services in Germany.
HLN reports that Belgian electricity producers have made €1.7 billion in windfall profits due to charging customers for freely allocated EU CO2 emission rights, the Belgian regulator has announced.
El Mundo reports that in yesterday's European Parliament debate on last week's European Council meeting, both Council President Herman Van Rompuy and Commission President Jose Manuel Barroso conspicuously failed to mention or thank the Spanish EU Presidency for its role in the summit.
World
Merkel and Schaeuble defiant as G-20 raises pressure to spend
The Independent reports that German Chancellor Angel Merkel has repeatedly rejected US warnings that massive budget deficit cuts will damage global recovery. In the FT German Finance Minister Wolfgang Schaeuble defends Merkel's cuts, writing, "This controlled and measured approach to reducing our deficit is hardly what one would call 'slamming on the brakes'. Indeed, one of its objectives is to strengthen our growth potential...Seeking to engineer more domestic demand by raising government borrowing even further would, here at least, be counterproductive."
Meanwhile, European Council's President Herman Van Rompuy and Commission's President José Manuel Barroso yesterday wrote a joint letter to non-EU G20 members, expressing their personal thoughts on key issues to be discussed at this weekend's summit in Toronto. The letter reads: "We have an agreement at European level that Member States should introduce systems of levies or taxes on financial institutions, to ensure fair burden sharing and set incentives to contain systemic risk, as part of a credible crisis resolution framework...the introduction of a global financial transaction tax should be explored and developed further in that context".
Letter WSJ WSJ 2 WSJ: Real Time Economics blog FT FT: Schaeuble FT Economista Independent
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