Thursday, August 26, 2010

Open Europe press summary: 26 August 2010



The Commission wants a 7.6% increase in EU budget by 2013

The Telegraph reports that the EU's budget could rise by more than £8.8 billion to £125 billion in 2013 - a 7.6 percent rise on this year's spending levels, if European Commission's proposals are approved. The increase will mean that the British contribution to the EU rises to £10.3 billion over the next three years, the article notes.


The Commission also wants to increase its spending on administration by 15 percent, taking the cost up to £3.2 billion and give pay rises worth 5.3 percent to EU officials by the end of 2011 under automated wage adjustments. The proposed budget increase, spelled out in Commission documents, comes in spite of calls from the UK and other member states for cuts in the budget to reflect the austerity measures taking place elsewhere.  ''The Government remains concerned that the commission's proposal for an increase in the 2011 EU budget is out of step with the situation across the EU's member states and at a time when so many European countries are tightening their belts, the EU should do the same," said a spokesman for the UK government. Open Europe's Director Mats Persson is quoted saying: "People and governments across Europe are fed up with the EU being the only public body protected from spending cuts."



EU Foreign Minister will be allowed to speak on behalf of the EU at the UN General Assembly

EurActiv reports that the United Nations will grant EU Foreign Minister Baroness Catherine Ashton the right to speak on behalf of the EU at the UN General Assembly ahead of its 64th session, scheduled for 15 September. So far, the EU has only been allowed observer status within the UN. Polish daily Rzeczpospolita notes that France and the UK - permanent members of the UN Security Council - were initially reluctant, but eventually gave the go-ahead to a compromise whereby Lady Ashton will have the right to speak on the EU's behalf in the General Assembly but not in the Security Council.


Meanwhile, Open Europe's Siân Herbert is quoted in the Mail and on page 2 of the Express commenting on the prospective £8 million that the the EU is considering to spend per year to lease the new European External Action Service (EEAS) headquarters in Brussels. "The ballooning costs of the EU's new foreign service are becoming an increasing burden on British taxpayers and stand in sad contrast to the cuts facing the UK's Foreign Office, which does a much better job of representing UK citizens' interests throughout the world", she said.

EurActiv Mail Express Express 2


Swedish Parliament tries to get Commission to reconsider a proposal in first test of new provisions in the Lisbon Treaty;

Mandatory lending between member states under revised Deposit Guarantee Schemes Directive violates of the subsidiarity principle

The Swedish Parliament, the Riksdag, has announced it will oppose the Commission's proposed amendments to the Deposit Guarantee Schemes Directive. Under the amended Directive, deposit guarantee schemes must offer depositors up to €50,000, if their bank collapses. The schemes are to be 75 per cent pre-funded from bank contributions, with the remainder coming from additional contributions from other sources. However, the Treasury Committee of the Riksdag argued that the Commission wants to oblige member states to lend money to other member states which don't manage to fund a deposit scheme on their own. The Riksdag, going against the government, said that this represents a violation of the EU's subsidiarity principle. It will now seek to stop the proposal under a provision in the Lisbon Treaty which obliges the Commission to reconsider, but not scrap, the proposal if one third of national parliaments object to it, within a window of eight weeks.

Europaportalen Press release from the Riksdag


Ireland must now pay more than Greece to borrow

It is widely reported that yesterday's credit rating downgrade by Standard and Poor's has forced Ireland to auction off €600 million today in treasury bills. Ireland is rapidly being seen by economists as the second riskiest country in the eurozone after Greece, reports the Guardian. In his Telegraph blog, Ambrose Evans-Pritchard notes that Ireland must now pay more than Greece to borrow and argues: "To add insult to injury Ireland is having to subsidize Greece to meet its share of the rescue fund". Bloomberg reports that the difference in yield between Irish and German 10-year bonds climbed to a record 345 basis points today.


Meanwhile, an op-ed in the WSJ by Philip Whyte, senior research fellow at the Center for European Reform, argues: "Far from spurring economic liberalization, the euro's introduction may even have slowed it [...] [Eurozone members] saw the euro as a shield, rather than a corset imposing disciplines of its own. In effect, they believed that the euro offered them a free lunch".

Independent Guardian Guardian 2 Irish Independent IHT WSJ: Whyte Bloomberg Irish Independent 2 Telegraph: Evans-Pritchard Zero Hedge


Merkel rejects calls for relaxed debt criteria and restates need for Treaty change

AFP reports that yesterday, during a joint press conference held with Slovakian Prime Minister Iveta Radicova in Berlin, German Chancellor Angela Merkel said Germany is opposed to any softening of the Stability and Growth Pact (SGP) criteria for debt assessment. "I prefer that we learn the lessons from the crisis and work on Treaty changes in order to have sanctions against violations of the [Stability and Growth] pact", she said.


FAZ reports that Angela Merkel has also urged to end skirmishes between the Slovakian government and European Commissioner Olli Rehn on the Greek bailout. "Both will undoubtedly get along with each other and have a chat", she said. This follows the refusal of the European Commission to apologise for Olli Rehn's harsh criticisms of Slovakia after its Parliament refused to take part in the €110 billion aid package for Greece.



Commissioner for Budget is working on an EU tax "like a scientist in a lab", a spokesman says

EurActiv quotes Patrizio Fiorilli, a spokesman for EU Commissioner for Budget Janusz Lewandowski, commenting on media coverage of Lewandowski's proposals to introduce an EU-wide tax to fund the EU budget directly. He describes recent reports as "a distortion of the truth", adding that "we are not working on a direct EU tax". However, Mr. Fiorilli goes on to say: "[Commissioner Lewandowski] is just a scientist in a lab examining four samples" - a carbon tax, an air travel tax, a tourism tax and a financial transactions tax. He also notes that a levy on financial transactions could end to be the preferred option, as it is uncomplicated to administer, politically acceptable and does not impose "any further fiscal burden on member states". 



De Morgen reports that yesterday night five activists from the group Désobéissance Civile Belgique occupied a crane in the centre of Brussels to protest against the Treaty of Lisbon, which according to them "rejects the European member states and has been ratified without consulting the citizens". They attached a banner to the crane criticising the "antidemocratic move" of the EU. They also argue in a communication that no referendum has been held on the euro and that EU President Herman Van Rompuy was elected without elections.

De Morgen


Le Point reports that a new opinion poll conducted by IPSOS has shown that 62 percent of French citizens are planning to vote against Nicolas Sarkozy at the next presidential elections, to be held in 2012.

Le Point


EUobserver notes that according to Charlie Miller - a mathematician who served for five years at the US National Security Agency (NSA) - €86 million and 750 hackers would be enough to launch a devastating cyber attack on the EU.





Tackling exchange rate volatility will be a priority for France G20 Presidency, Sarkozy says

It is widely reported that French President Nicolas Sarkozy has identified excessive exchange rate and commodity price volatility, along with the introduction of a global financial transaction tax, as priority issues for the upcoming French G20 Presidency, due to start in January 2011. Sarkozy is quoted by EurActiv saying "Who would challenge the fact that exchange rate instability poses a major threat to global economic growth?". He scaled down his initial proposals for a "new Bretton Woods" and the reintroduction of fixed exchange rates. However, he said: "What we surely need to do is go further and map out a new framework for consultation on exchange rate developments". The WSJ notes that Sarkozy also argued that the G20 needs to work on improving the transparency of agricultural markets, as well as on the creation of insurance instruments by international financial institutions aimed at helping importing countries protect themselves against price volatility.

EurActiv Les Echos FT WSJ Nouvel Observateur


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