France and Germany restate calls for "political sanctions" for eurozone members but remain unclear on Treaty change;
Sarkozy envisages "fiscal harmonisation" between Paris and Berlin
France and Germany yesterday agreed a common position on the reform of economic governance in the EU. German Finance Minister Wolfgang Schäuble - who attended a cabinet meeting in Paris - and his French counterpart Christine Lagarde wrote a joint letter to EU Council President Herman Van Rompuy, which reads, "A single currency simply cannot work properly without enhanced economic policy coordination". It goes on, "political sanctions such as the suspension of voting rights should be imposed on member states which infringe common engagements in a serious and/or repeated manner [...] This mechanism should be included in any revision of the [EU] Treaty that could be accepted in the future".
FAZ notes that Germany conceded to enlarging economic surveillance not only to budgetary supervision, but also supervision of competitiveness and structural reforms. The article adds that no mention was made of previous German demands for an 'orderly sovereign insolvency procedure' for struggling eurozone members. On the thorny issue of Treaty change, which would be required to suspend voting rights for example, the article notes that the Franco-German text suggests that "in the short term, a non-binding political alternative could take the form of a political accord" between eurozone members.
Meanwhile, French President Nicolas Sarkozy spoke in favour of the "necessary" fiscal harmonisation between France and Germany. "Convergence between our fiscal systems constitutes an essential element of our economic integration and of the deepening of the internal market in Europe [...] Together, we must make common proposals for the reinforcement of the economic government of Europe and of the cohesion of the economic and monetary union".
An editorial in Le Figaro argues: "France and Germany have now agreed on a common position [on economic governance] and Herman Van Rompuy will have to take inspiration from it when he makes his proposals to the 27 [EU member states] in October. Budgetary coordination is taking shape. It paves the way for necessary fiscal harmonisation. Paris and Berlin are on a good path".
Meanwhile, Le Figaro reports that, as a follow-up to Mr. Schäuble's visit, French Agriculture Minister Bruno Le Maire will take part in a cabinet meeting in Germany - probably at the end of September - in order to discuss a common position on the Common Agricultural Policy.
Member states resist transferring powers to EU officials in crisis situations;
FAZ: "Since Ms. Ashton has been in Brussels, the EU has hardly featured on the stage of world politics"
European Voice reports that EU member states are objecting to proposals which would give EU President Herman Van Rompuy, Commission President Jose Manuel Barroso, and EU Foreign Minister Cathy Ashton the ability to trigger crisis procedures in the event of a terrorist attack or a natural disaster, under the EU's Crisis Co-ordination Arrangements (CCA).
The CCA sets out how EU institutions and member states should cooperate in such an event, and under existing rules, only the country holding the rotating EU Presidency can trigger the crisis mechanism. The only CCA which has been initiated to date followed the terrorist attack in Mumbai, India, in November 2008.
Meanwhile, Finnish MEP Heidi Hautala, Chairwoman of the EP Sub-Committee on Human Rights, has called on EU Foreign Minister Cathy Ashton to be more outspoken on countries which violate human rights, saying her use of "quiet diplomacy" was insufficient for the EU to be treated as a serious player on the world stage. An analysis in FAZ on the internal power struggle which has occurred since the entering into force of the Lisbon Treaty notes that "since Ms. Ashton has been in Brussels, the EU has hardly featured on the stage of world politics." The article questions "whether she has any friends at all in Brussels", noting that there is "nostalgia for [previous High Representative Javier] Solana".
The Irish Times reports that the Irish government has presented a paper to EU ambassadors, calling for a debate in the EU on deeper military co-operation with the UN, including by directly supporting the planning and operational cycles of missions and exploring "the concept of EU force components forming an integral component of a UN 'blue helmet' operation".
UK Takeover Panel warns against giving EU supervisors power to intervene in mergers
The European Securities and Markets Authority (ESMA), one of three new EU financial supervisors, may be given the power to set EU standards for buyout bids or intervene in individual deals, the London-based Takeover Panel said in its annual report today, Bloomberg reports. Such a move "would be inappropriate, not least because takeover regulation must reflect company law, which still varies considerably between member states," Gordon Langley, Chairman of the Panel, said in the report.
IMF joins chorus calling for more transparency on bank stress tests;
Robert Peston: Test exercise has revealed EU's "contempt for markets"
The FT reports that the IMF has added to the calls for greater transparency within the EU's banking stress tests, due to be published tomorrow. The IMF's annual health check on the eurozone economy, released yesterday, said that while the markets seemed to have taken a positive view of the process so far, "some uncertainty regarding the stringency of the tests is likely to remain". However, on the key question of banks' exposure to sovereign debt, Luc Everaert, Assistant Director of the IMF's European department, said only that it was a "delicate issue" and that Friday's tests would provide more information.
On his BBC blog, Robert Peston notes that "the European Union's governments, central bankers and financial regulators are not prepared to admit the possibility that an EU government could actually default on its debts - even as part of the totally theoretical exercise of the stress tests." This, he adds, reveals much about the EU's attitudes to markets: "Now it's all very well to argue that markets are frequently wrong. There's plenty of evidence of market prices overshooting in boom years and undershooting in lean years. But it is something different altogether to say that when the price of Greek debt falls by a quarter, that can never betoken a possible default by the Greek government."
Meanwhile, European Voice notes that markets are still not clear about important aspects of how the eurozone bailout fund will operate, particularly with regard to the kind of financial difficulties that could qualify a member state for support, and whether the facility can cope with an extreme situation in which a country fails to pay back its loans.
Cameron forced to reassure Wall Street that EU regulation will be "sensible"
The FT reports that David Cameron yesterday tried to "reassure" Wall Street that the UK is still a prime area for investment, despite imminent EU regulation. Cameron said that Britain would be "at the centre" of EU negotiations to ensure a "sensible" new framework is designed.
German think-tank criticises Big Three's calls to raise EU emissions target
In Handelsblatt, Lüder Gerken, of German think-tank Centrum für Europäische Politik, criticises the justifications made by the German Environment Minister Norbert Röttgen, together with the British and French ministers, to increase the EU's emissions target. "The politicians ignore what students of economics learn in their first semester - that the overall economic product falls when a production factor that was once free, bears costs; and it falls even more when one puts tax on it", he said. He adds that it will lead to a "decrease in production" and "cuts in employment".
MEP hits out at colleagues' "lack of common sense" on rules for self-employed drivers
The Scotsman reports that Scottish MEP George Lyon has warned that MEPs' decision to oppose the Commission's attempts to exclude self-employed drivers from the EU's working time rules could have a devastating effect on the road haulage industry. "In striking down the Commission's common sense exclusion of self-employed drivers from the Directive, the European Parliament has set a dangerous precedent. It is quite clear this issue is being driven by ideology and not common sense," he said.
Malmström's "lack of concern" for privacy is surprising for a "liberal Swedish EU Commissioner"
In Swedish daily Svenska Dagbladet, Professor Detlef Quast argues that EU Home Affairs Commissioner Cecilia Malmström does not pay sufficient attention to people's right to privacy. He suggests that, Malmström's "considerable lack of concern" is demonstrated by her role in the introduction of the Data Retention Directive, as well as by her handling of the Swift Agreement negotiations with the US on the transfer of citizens' bank data. Professor Quast argues, "It is surprising how a liberal Swedish EU Commissioner can act in this way, when the obvious starting point for any decision in questions of integrity must be the right to retain privacy".
A leader in the Spectator argues that David Cameron "may well have no interest in Brussels, but Brussels has all too much interest in Britain...The government has adopted a see-no-evil policy - knowing that there can be no such thing as a united Tory-Lib Dem policy on the subject...If ministers will not speak about Europe, MPs must."
The FT looks at the fortunes of the Italian, French and German ruling parties and writes, "At a time when members of the European Union are struggling to agree on new rules and a permanent crisis mechanism to stabilise the euro, leaders of the three largest economies in the common currency zone have been forced on to the defensive at home."
The front page of FT Deutschland reports that German Chancellor Angela Merkel, when commenting on the Commission's demand to halt state subsidies to inefficient coal plants in 4 years time, said, "It wouldn't have been mistaken to have talked with member states about it first."
FAZ has published an interview with EU Justice Commissioner Vivian Reding, in which she proposes quotas for women on management boards. "If the companies do not place more women in senior position by the end of the year, the EU will have to intervene," she said.
EUobserver reports that the Commission is likely to propose caps on the size of handouts given to farmers under the Common Agricultural Policy (CAP) after 2013.
Writing in the Telegraph, Ambrose Evans-Pritchard notes that the surge in the Swiss franc is due to capital flight from the eurozone, for which the Swiss economy is too small to absorb.
EUobserver reports that Paris and Berlin have agreed on the coordination of defence spending cuts. "We want to avoid that Germany or France take unilateral decisions that endanger common projects", said French Defence Minister Hervé Morin.
FAZ reports that Germany has rejected any increase to the IMF's financial resources, as proposed by IMF Director Dominique Strauss-Kahn, with a German official quoted saying "the priority should go to reaching agreement on the future role of the IMF".
In the IHT, Judy Dempsey writes, "Were Berlin to establish a separate strategy for Ukraine instead of always looking at the region through the prism of Russia, Europe might have a real chance in halting Ukraine's slide away from democracy and into Russia's sphere of influence."
The long-awaited ruling on the legality of Kosovo's 2008 declaration of independence will be disclosed by the International Court of Justice in The Hague tomorrow.
According to a report by corruption watchdog Transparency International, Spain, Cyprus and Luxembourg are the least transparent members of the EU.
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