Europe
German Finance Minister: Meaningful eurozone reforms require Treaty change
It is widely reported that German Finance Minister Wolfgang Schäuble will today attend an official cabinet meeting of the French government in Paris. In an interview with French daily Les Echos, he explains that "the cabinet meeting will deal with the stance France will take within the task force [on economic governance] chaired by [EU President] Herman Van Rompuy. I have been invited to participate in this debate because we are working on a common position". He added: "The question is in what way can we make the Stability and Growth Pact more effective within the framework of the existing Treaties. But it is clear that we must also come out with other proposals and accept some Treaty changes, if necessary. There is, among our partners, a bit of scepticism with regard to possible Treaty changes. Many people say it is a long-term process. However, if we consider that we cannot limit ourselves to imposing financial sanctions, and that we must also take into account non-financial instruments - such as the temporary withdrawal of voting rights - in order to make member states respect the pact, then Treaty changes are necessary".
When asked whether EU member states share the same idea of what 'economic government' is, Schäuble replied: "Substantially yes. We have a single currency, and we need better harmonisation [of economic policies] if we still want to move forward in the making of the EU. A debate is now under way in order to figure out if this can be better achieved at the eurozone level or among all 27 member states. The position of the [German] federal government has always been that it is better to act as 27 as long as possible, without questioning the fact that the single currency gives the 16 eurozone countries some special responsibilities".
Meanwhile, FT Deutschland reports that Olli Rehn, Commissioner for Economic and Financial Affairs, wants 'quasi-automatic' sanctions for eurozone countries violating deficit rules. He is quoted saying, "if a country violates the Stability and Growth Pact, the sanctions will in future start automatically, unless a majority of EU finance ministers explicitly vote against it." Rehn wants to make concrete proposals in the autumn, after Ecofin approves stricter sanctions in principle.
Rehn also added that he understood the feeling of many Germans about bailing out other member states, but said that the loans were interest bearing and "at the end of this crisis, no single state, no individual citizen, will receive less money back than he contributed."
Le Figaro La Tribune Les Echos OE blog
Private school fund for EU officials' children increases to £147m
The Telegraph reports that the cost of privately educating children of EU officials will increase by 12.5 percent to £147 million over the next year. EU civil servants, or diplomats, are entitled to free schooling in 14 taxpayer funded 'European schools' as an entitlement alongside generous pay and pensions. By 2013, the school bill will increase by 24 percent to £163 million, meaning that in three years time British taxpayers will be paying an annual £22 million contribution to the private schooling of EU officials' children.
Markets sceptical of stress tests with far fewer banks than expected to 'fail'
The FT reports that market scepticism about the credibility of European bank stress tests intensified yesterday as results began to leak that showed far fewer banks than expected have failed. The article notes that the stress tests will not reflect banks' true exposure to sovereign debt because the sovereign debt haircuts are being applied only to bonds held in banks' trading books. According to research by Morgan Stanley, 90 percent of banks' Greek sovereign debt is now held not in trading books but in banking books.
Handelsblatt notes that, according to leaked reports, the only German bank to fail will be Hypo Real Estate (HRE), despite deep concerns over the regional Landesbanken, which suffered severely in the crisis. The FT quotes one analyst saying that "If HRE is the only German bank that fails, that completely discredits the tests - not just for Germany but for the whole of Europe"
IHT BBC: Hewitt blog Irish Times FT Eurointelligence Handelsblatt
Commission publishes review of EU's counter-terror and policing databases;
Commissioner: "Some of these measures are maybe not as effective as they seem in the first place"
EUobserver reports that the Commission has published an audit of the 17 EU programmes, agencies and agreements to exchange the personal, business and telecoms data of citizens. EU Home Affairs Commissioner Cecilia Malmström is quoted saying, "The European Union has developed actions based on events, after an attack or an attempted attack causes a huge media tension, a great fear from the population and a pressure on the political leaders to act. But some of these measures are maybe not as effective as they seem in the first place."
Meanwhile, AFP reports that Cecilia Malmström will unveil a proposal in the autumn for an "EU internal security strategy" aimed at giving the EU an adequate capacity of action and reaction against terrorist groups operating within the territory of member states.
EUobserver Euro-correspondent Open Europe research AFP Presse
Government pledges overhaul of agency handling EU farm subsidies
PA reports that the Government yesterday pledged an overhaul of the leadership of the Rural Payments Agency, which is responsible for the distribution of EU agricultural subsidies in the UK, and said it would bring down the costs of administering the Single Farm Payment - currently costing an average of £1,043 per claim. In 2007/08, the number of claims for subsidies which were under £400 in value exceeded 14,000.
International Business Times reports that Roland Koch, Minister-President of Hesse, is suggesting that London and Frankfurt should combine their lobbying clout to stop damaging EU rules coming into effect, saying: "When we are not able to cooperate and communicate, especially in the issue of regulation, we both will suffer".
FAZ: EU citizens share a legal system with corrupt and inefficient states
It is widely reported that a document released by the European Commission has criticised Romania's efforts to fight corruption, while praising the work of Bulgaria's government. A leader in FAZ comments that "the EU shows patience towards Bulgaria and Romania, as if this were about agricultural reform somewhere in Africa and not about the fact that citizens in 25 other member states must continue to share their legal system with two countries which clearly have a corrupt and inefficient state".
IHT Irish Times EUobserver EurActiv European Voice El Mundo Les Echos Reuters Italia Welt Focus Presse Sueddeutsche
The FTD reports that the EU's data protection office has criticised a compulsory medical questionnaire by the EP's medical office which asks intimate questions about STDs, past encounters with haemorrhoids and the respondent's mental health history. Peter Hustinx, the EU's privacy chief has asked the medical office and the General Secretary of the EP to re-evaluate the relevance of the questions.
No link
Writing in the FT, Wolfgang Münchau looks at the waning domestic fortunes of Angela Merkel and Nicolas Sarkozy, and argues that "this crisis is global and requires leaders with a global and European mindset to solve them. In other words, it requires politicians other than Ms Merkel and Mr Sarkozy."
In the WSJ, Charles Forelle notes that the 'real-life examples' cited by a Commission press release on standardising the treatment of criminal suspects were in fact a product of the "fertile imaginations of the European Commission's press-release-writing team."
Following the Commission's announcement that it will increase its research and development budget, Handelsblatt carries the headline "EU projects are running out of control". The article notes that various high-tech projects are running over budget, including the EU's satellite navigation system, Galileo, which will need €2.5 billion more on top of its current budget of €3.4 billion euro.
No link
The European Commission has said that it wants to close down loss making coal mines in the EU by October 2014. The move will predominantly affect mines in Germany's Ruhr region, north-west Spain, Poland and Romania. New rules coming into force in January means that state aid to such mines will only be allowed to continue if closure plans are in place.
Business Week EUobserver EurActiv European Voice FT El Pais El Mundo Sueddeutsche Welt FTD
Writing in the FT, John Rathbone, Chairman of J.C. Rathbone Associates, argues that the EU's proposed reform of over-the-counter derivatives markets risks damaging the European property industry, which could become "one of the biggest victims of regulatory overreach".
BNR Radio reports that the Dutch liberal VVD party has criticised the EU for spending €14 million on an investigation into the health of apples, with its EU spokesman Han ten Broeke MP saying it is "bizarre and laughable". The main conclusion is that eating 2 apples a day is good for health.
BNR
The EU has this morning launched an appeal with the WTO against its ruling that EU subsidies to Airbus were illegal.
BBC EUobserver Reuters Bloomberg PA Le Figaro FTD Welt Spiegel FAZ
American economist Melvin Krauss argues in NRC Handelsblad that the chances of Bundesbank President Axel Weber becoming the next ECB President have considerably decreased, because he voted against the ECB decision in May to buy government bonds and disclosed his opposition to the public.
Die Welt reports that Germany's governing coalition has slumped to a record low in a new poll. According to the Forsa poll only 34 percent would vote for Angela Merkel's coalition.
An El Mundo blog piece by UKIP MEP Marta Andreasen questions why the EU's budget continues to rise when national budgets are being slashed.
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.
