Wednesday, June 30, 2010

Open Europe press summary: 30 June 2010

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EU officials predict that David Cameron will yield to EU demands for transfer of powers

The Telegraph reports that senior European officials have predicted that David Cameron will break his promise not to transfer powers to Brussels by yielding to plans for an EU "economic government" and increased regulation of the City. The article quotes a senior Belgian official, whose country is due to take over the EU's rotating Presidency tomorrow, saying the Prime Minister will ultimately back down now that the election is over: "We will wait until some weeks after the elections. It is sometimes easier to discuss after elections." The source observed that no EU agreements would ever be possible if all European leaders stuck to the "totality" of their election manifestoes, suggesting that the coalition agreement to oppose any transfer of power to the EU during this Parliament would be sacrificed.


The article also notes that Belgian officials, with strong French and German support, are pushing hard to set up new EU financial supervisors to police financial markets, with the power to dictate to regulators in the City of London, saying: "It is necessary to transfer some decisions away from national to European authorities".


The Belgian EU Presidency will also consider the issue of direct EU taxation, and quotes the government source saying: "We can also explore, for example, the financing of European projects via new sources of revenue". The source added that new types of taxation, such as levies on financial transactions or CO2 emissions, could part fund the EU budget, saying: "Couldn't these new types of income at least in part be channelled towards major European-level projects? This is a debate we should be holding. We shouldn't bury everything in national budgets."


A Reuters Deutschland article notes that Belgian Deputy PM Didier Reynards has hinted that he would not rule out proposing majority voting against a member state in order to advance EU financial supervision and regulation.

Telegraph Irish Independent


Commission unveils its plans for tighter economic governance;

Belgian EU Presidency likely to back plan to give Commission power to enforce sanctions

EU Commissioner for Economic and Monetary Affairs Olli Rehn will today present the Commission's proposals to strengthen economic governance in the EU. French paper La Tribune reports that the plans envisage a broader range of sanctions including the suspension of EU funds as well as the introduction of new measures for the assessment of member states' debt levels, notably the amount of "private debt" and the inflation rate.


According to AFP - which has seen a leaked working document - the temporary suspension of subsidies would be used as an "early warning" system for countries breaching EU debt rules. The article notes that the temporary withdrawal of voting rights is not mentioned by the Commission, since its introduction would require an EU Treaty change.


The incoming Belgian EU Presidency is likely to back recent ECB demands for the implementation of "semi-automatic sanctions", which would mean giving the European Commission the power to sanction member states directly in certain circumstances. A Belgian government official is quoted by AFP saying: "Since it's about giving the whole process some automaticity, it would not be abnormal if the Commission had the capacity to act for certain sanctions. Otherwise, [member States'] behaviour will not change".

AFP La Tribune Nouvel Observateur Irish Times Open Europe research


Markets slump over concerns for eurozone's banks;

ECB's anti-inflation strategy fails to convince

The FT reports that bankers have warned that the European Central Bank's decision not to renew its one-year emergency loans to financial institutions worth €442bn has stoked concern about the ability of some eurozone banks to access funding. Shares fell as a result and the euro dropped 0.5 percent against the pound, its lowest against sterling for 19 months.


The ECB's decision prompted an appeal from Spain's Finance Minister Elena Salgado, who said: "The ECB says it doesn't like governments telling it what to do. I simply say I hope on this occasion, as in others, the ECB will be aware of the needs of the Spanish financial system." In the Independent, David Prosser warns that "the withdrawal of the ECB support is another threat to the eurozone's economic recovery (and that of the UK, by extension)."


The FT notes that Spain's Foreign Minister Miguel Ángel Moratinos has hit out angrily at rumours that Spain would need to draw on the eurozone's €440bn bailout package. "I say, let's trust the government. Don't listen only to rumours and to those who have an interest in spreading speculation," he said.


Meanwhile, the WSJ notes that the ECB's effort to convince the markets, and Germany, that it isn't printing money and risking inflation with its bond-buying program suffered a setback yesterday, when the bank failed to take in as much money from Europe's banking system as it spent on bond purchases. When the ECB began the program in May, it pledged to "sterilize" its purchases of Greek and other debt in Europe's troubled periphery by accepting an equal amount in interest-bearing deposits from banks, so that the total overall money supply would remain unchanged.


The paper also notes that EU officials have said that the number of banks that would be subject to a stress-test exercise will expand from just over 20 of the top banks to include a further 60 to 120 banks.

WSJ FT FT 2 BBC Irish Times Irish Independent City AM City AM 2 Independent: Prosser FT 3 FT 4 Telegraph WSJ 2 City AM 3 Handelsblatt


Greek Finance Minister: Greek debt restructuring "would have destroyed the euro"

In an interview with the WSJ, Greek Finance Minister George Papaconstantinou has said that Greece expects to meet or even exceed its deficit targets this year. He added that he was "not worried about disruptive protests. Even though there will be protests, they are less than in other countries where fewer measures have been taken". Meanwhile, in an interview with Liberation journalist Jean Quatremer, when asked whether a restructuring of the debt would be less painful for Greece, Papaconstantinou said: "Above all, I think that a Greek restructuring would have destroyed the euro."

WSJ WSJ: Hanke Coulisses de Bruxelles Irish Independent IHT Guardian FT BBC


Open Europe's Mats Persson appeared on Russia Today, discussing the austerity programmes around Europe and the eurozone crisis.

Russia Today


Government warned it cannot meet proposed increase to EU emissions target

The Independent reports that the independent Committee on Climate Change has warned the Government today that it is not on course to meet its climate change targets for reducing carbon emissions. When the economy recovers, the Committee warns, the rate of reduction due will not be adequate to achieve the 34 percent reduction in CO2 (on 1990 levels) by 2020, to which the Government is already committed - or the 42 percent reduction to which it has said it will move if a tougher target can be agreed with the rest of the EU.



Belgian Presidency fears MEPs' demands may hold up agreement on EU budget

EUobserver reports that a senior Belgian official has expressed fears that MEPs may use their ability to sanction the annual budget, in order to extract more long-term demands from member states over the seven year financial framework, potentially leaving the EU without a format budget in 2011. The article quotes the official saying: "There is a real possibility of not agreeing a 2011 budget. As the first budget to be agreed under the Lisbon Treaty, it would not set a good precedent."



Commission looks into subsidising Europe's tourism industry

The FT reports that the European Commission will present a number of measures today to prolong the tourist season in order to help the European tourist sector recover from a two year crisis. According to the plans, measures will include improving offers and extending access to leisure services for disadvantaged people. The Commission document also raises the possibility of the creation of a new financial instrument aimed exclusively at backing tourism, according to EurActiv.

FT EurActiv


Belgian EU Presidency "ready to give more space" to Van Rompuy and Ashton

Polish daily Gazeta Wyborcza notes that Belgian Prime Minister Yves Leterme has said the Belgian EU Presidency will take a back seat and allow its former PM Herman Van Rompuy to take a leading role as EU Council President. He said: "We are ready to give more space to Herman Van Rompuy and [EU Foreign Minister] Catherine Ashton". The paper argues that this is bad news for Poland, which takes over the rotating EU Presidency in the second half of 2011, arguing that, "The shoes left by Belgium and Hungary may turn out to be too small".



The BBC reports that German Chancellor Angela Merkel's candidate, Christian Wulff, currently has a slight edge on opposition candidate Joachim Gauck in today's presidential election.

Irish Times IHT Guardian FT EurActiv BBC BBC: Hewitt blog FAZ Die Welt


CityAM reports that proposed EU rules will not allow bankers in Europe to take home more than a third of their bonuses in cash from the start of next year. A new watchdog agency for European banks will be tasked with deciding on the definition of a "large bonus", which would then be capped at one-fifth.

City AM


The German press notes that a recent draft proposal put forward by the European Parliament would "assassinate" Nutella, the hazelnut and chocolate spread. Under the proposal, foods with more than ten grams of sugar and more than four grams of fat per 100 grams will need to be marked with warnings as unhealthy food. The EP has denied MEPs want to ban the sale or marketing of Nutella.

Telegraph Die Welt Die Welt 2 Bild La Stampa EP press release


FAZ columnist: Citizens do not need happiness prescribed by the EU Commission

FAZ columnist Hendrik Kafsack writes: "Since the citizens have informed the EU Commission in the referendums in the Netherlands and France that they are not enamoured with the EU at the moment, the Brussels' authorities keep proposing various packets to make people happy." However, he argues that a mature citizen does not fit into the Commission's plan "because they could find out the tariffs for mobile phones, the amount of fat and salt in their food [...] and they could even know better than the authorities what is good for them."



The Irish Independent quotes US President Barack Obama saying, "Because of the troubles we've seen in Europe, we're now seeing some headwinds and skittishness and nervousness on the part of the markets."

Irish Independent


In the FT, former EU Commissioner Peter Sutherland argues that "The cost of not having the euro would have been far greater over the past two years than the cost of having it has been over the past three months."

FT: Sutherland


Conservative Home notes that "the eurosceptic Tory Right" is well represented in the new Parliamentary Backbench Business Committee, which will help determine backbencher-initiated business in the House of Commons.

Conservative Home


The Irish Times reports that top US environmental lawyer James Thornton is taking legal action to force radical reforms in the EU Common Fisheries Policy.

Irish Times


According to the IHT, EU Commissioner for the Internal Market Michel Barnier will tomorrow push to oblige member states to accept patents in English, French or German, thus making it simpler for companies to validate their patents across the EU.

IHT Handelsblatt


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