EU's diplomatic service is £29 million over budget despite promises of 'budget neutrality'
EU Foreign Minister Baroness Catherine Ashton has broken her promise to deliver a neutral budget for the European External Action Service (EEAS) for next year, as it emerged that the administrative costs of the EU's new diplomatic corps are overrunning by £29 million to reach £399 million, even before it is fully operational. According to a new proposal tabled by the Commission, member states will have to contribute an extra £24.6 million - which will go towards EU diplomats' wages - and an extra £4.4 million towards upgrading buildings for the EEAS's new Brussels headquarters, which has yet to be chosen.
The proposals also warn that the EEAS will face unknown costs when fully operational, the Telegraph reports. Open Europe's Mats Persson is quoted saying: "The cost of the EU's diplomatic bureaucracy is already unacceptably high, particularly as the new structure stands the risk of adding more, not less, confusion about who is speaking on behalf of Europe, in addition to drawing funds away from national foreign ministries at a time when funds are scarce".
Meanwhile, EUobserver notes that Ashton is looking at housing her new diplomatic corps in the so-called Lex building in Brussels, which is owned by the EU Council and therefore would be cheaper than the originally intended building owned by the Axa group, which would cost €10 million a year to rent.
Eurozone bailout fund receives top rating;
Goldman Sachs warns clients of "measurable risk" that Ireland and Portugal will tap fund
The major credit rating agencies Standard & Poor's and Fitch have both granted the eurozone's €440 billion rescue fund, known as the European Financial Stability Facility (EFSF), an AAA credit rating. The Telegraph notes that Goldman Sachs has warned its clients of a "measurable risk" that both Ireland and Portugal may have to tap the EFSF, though "probably only early next year" since both countries have adequate funding for several months.
The article notes that the AAA rating for the EFSF "has raised eyebrows since half the contributing members are not AAA rated and Germany's constitutional court has not yet ruled on the legality of the body". A reserve cushion means that only funding up to €350 billion is fully covered by AAA contributors such as Germany, France, and Holland. FAZ reports that the actual amount that the EFSF could therefore loan struggling countries is only €250 billion after taking into account the reserve cushion and collateralisation requirements.
Klaus Regling, who heads the EFSF, is quoted by the Irish Independent saying: "My central scenario is there is no need for the EFSF to become operational". However, the Guardian reports that the cost of borrowing for Ireland and Portugal reached record highs yesterday, with the head of Ireland's central bank, Patrick Honohan, acknowledging that even tougher action on public spending may be required to win back investor confidence. An article in Handelsblatt also notes that doubts are increasing in Brussels over Ireland's ability to solve its financial problems on its own. A comment piece in the paper suggests that "the EU had better prepare to use its big aid package for the first time".
Meanwhile, the WSJ reports that the European Central Bank said it spent €323 million on government bonds last week, up from €237 million the previous week amid rising concerns about Greece, Ireland and Portugal.
Commission set to clamp down on commodity speculation
EU Commissioner for Internal Market Michel Barnier said yesterday at a conference that he will use the planned revision of the Market in Financial Instruments Directive (MiFID) to introduce new regulations addressing commodity-based derivatives. Speaking at the same conference, EU Commissioner for Agriculture Dacian Cioloş stressed that the new proposals should address the issue of position limits on futures markets.
However, UK junior farm minister Jim Paice is quoted by Reuters arguing: "I find it very difficult to see how you can put a cap on prices, because we are expecting farmers to operate closer with the global market. At the end of the day you can't buck the market".
According to the FT, Barnier separately said that he hopes that negotiations over the controversial AIFM Directive will be complete in time to allow the European Parliament to vote on it in October.
Meanwhile, a comment piece in the FT Deutschland looks at the Commission's recent proposals for regulation of derivatives and notes that they "have a side effect: when the 'interoperability' will be hindered, big clearing houses might get an advantage. That again would lead to a concentration of risks in only a few houses".
Corruption investigation reopened into financing of European Parliament buildings
The Parliament reports that Olaf, the EU's anti-fraud office, has agreed to look again at claims of alleged irregularities in the financing of the European Parliament's buildings. It has been claimed Parliament had agreed to pay a company for services relating to the buildings' purchase, without publishing a call for tender. Olaf had previously opened an inquiry, and closed the case in 2006 without recommending any follow-up.
European Voice reports that Client Earth - a group of environmental lawyers - has filed two separate lawsuits against the European Commission and the Council of Ministers, over allegations that the two institutions have tried to restrict access to information regarding the EU's bio-fuels policy.
EU Commissioner for Digital Agenda Neelie Kroes unveiled yesterday her proposals to make part of the radio spectrum used to beam television channels available to providers of wireless broadband services by 2013 at the latest. However, Euractiv reports that Kroes's plans are very likely to face opposition from some member states and key industry groups.
In an interview with Euractiv, Slovakian EU Commissioner Maros Sefcovic said that the Commission will propose an increase in the money directly raised in revenues by the EU for the next budget period.
EUobserver reports that the European Parliament's plenary session in Strasbourg will end one day early due to a general strike called for next Thursday in France which would cause travel disruptions to MEPs.
AFP reports that Home Affairs Commissioner Cecilia Malmström announced yesterday new proposals to restrict access to chemicals that can be used to produce home-made explosives. The new rules - if adopted - would see the sales of several products limited or banned if they exceed a certain concentration of potentially dangerous chemicals.
The Times reports that Energy Secretary Chris Huhne is backing plans for a "carbon floor price" to encourage investment in nuclear and low carbon technologies. Meanwhile, Huhne has added that he want to put Britain "amongst the better performing members of the EU" on green taxes, according to the Mail.
The Mail features a diary of a junior doctor, which reads, as a result of the 48-hour week enforced by the EU's Working Time Directive: "One or two junior doctors working at night in a specialism can end up having to look after between 100 and 400 patients on their own, with no back-up".
The Mirror reports that the European Commission is considering the introduction of a specific food label for "products of mountain farming". Under the new scheme, firms would no longer be allowed to use mountain images to promote food, if the advertised products do not actually come from mountain areas.
FAZ quotes Norbert Winkeljohann of Pricewaterhouse Coopers complaining that Commission plans for new regulations for certified public accountants would "raise bureaucracy, lead to few security and decrease quality of the investigations, instead of raising it".
Die Welt reports that Gemany is planning to send 10,000 Roma people back to Kosovo.
Wirtschaftswoche reports that former Bundesbank Chief Karl Otto Pöhl has called for stronger eurozone countries to be given greater voting weight within the ECB's governing council, arguing: "It cannot be the case that central banks from Malta or Cyprus have as much as a say as the [German] Bundesbank. That waters down decisions of the ECB [...] The 'one country, one vote' principle is no longer timely".
Il Sole 24 Ore reports that French President Nicolas Sarkozy has called for a global financial transaction tax at the UN summit. Meanwhile, Commission President José Manuel Barroso has proposed that the EU provide €1 billion to the world's poorest countries via the European Development Fund.
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