Tuesday, September 28, 2010

Open Europe press summary: 28 September 2010


Focus: Trichet is risking your money
The frontpage of German magazine Focus features a picture of ECB President Jean-Claude Trichet, with the headline: "This man is risking your money". The article argues that "the interest rate time-bomb is ticking: central banks endanger prosperity". The magazine wonders whether the ECB will become a "bad bank" itself, arguing that its ongoing low interest rates, junk bond purchases and aid to private banks harm savers and investors.

ECB denies it considered triggering the eurozone rescue fund for Ireland
The Irish Times reports that the European Central Bank yesterday denied claims that it was close to calling for the activation of the eurozone rescue package for Ireland. EUobserver notes that the move would run contrary to the framework agreement for the European Financial Stability Facility (EFSF), which says that member states must first make an application for aid before the ECB and the European Commission can make a decision.

However, concerns over the stability of Ireland's economy are mounting as rating agency Moody's yesterday downgraded Anglo Irish Bank's rating to Baa3, just one notch above junk status, reports CityAM. The Irish government announced that it will disclose the final expenses of bailing out Anglo Irish Bank this week to try to calm investors' concerns. An article in the Irish Independent reports that German MEP Sven Giegold has said that Ireland now has a "moral responsibility" to change its tax policy and stop operating as a haven for tax evaders.

A group of federalist academics and think-tanks writing in the FT - endorsed by former EU Commission Presidents Jacques Delors and Romano Prodi - argue that the €440 billion European Financial Stability Facility (EFSF) should be turned into a permanent bailout fund managed by the EU institutions.

In a letter to the FT, Annerose Tashiro of legal firm Schultze & Braun argues that the eurozone should adapt and introduce "a municipal restructuring plan, similar to Chapter 9 - the US bankruptcy code that enables municipalities to restructure", in order to allow states to default inside the euro area.

Meanwhile, Dutch economist Mathijs Bouman argues on Z24 that "in May, when the aid package was set up, the Euro wasn't saved. The destruction was only postponed [...] There is still one week to save the euro", if "it works to let member states agree with [...] strict rules, high fines and harsh punishments". 

A letter seen by the Mail from the European Commission warns the UK government that current restrictions on welfare payment claims by EU immigrants are 'not compatible' with EU law and must be scrapped. The Commission has initiated legal proceedings against Britain to get restrictions on welfare claims by incomers scrapped.

France and Germany split on "automatic" sanctions for EU budget rule-breakers;
Der Spiegel: Countries with chronic trade imbalances could also face sanctions
It is widely reported that, at yesterday's meeting of the task force on economic governance chaired by European Council President Herman Van Rompuy, EU finance ministers backed tougher sanctions for countries which fail to comply with the Stability and Growth Pact criteria on deficit and debt levels.

However, Euractiv notes that France was reluctant to accept Germany's proposals for "automatic" sanctions. French Economy Minister Christine Lagarde is quoted saying: "To foresee a complete automaticity, a power totally in the hands of the experts, no [...] Politics should not abdicate in favour of the experts [...] The fate of a country can't be put totally in the hands of the experts". According to Handelsblatt, neither the temporary withdrawal of voting rights nor the suspension of EU subsidies will be included in the Commission's proposal due to be unveiled tomorrow.

ECB's President Jean-Claude Trichet yesterday restated his support for the idea of political sanctions during a hearing with the European Parliament's Committee on Economic and Monetary Affairs. Trichet is quoted by Reuters Italia saying: "It's still being debated whether political sanctions, suspension of voting rights and so forth can be used or not. We would be in favour [...] But a Treaty change may be needed".

Meanwhile, FAZ notes that a spokesman for the European Commission has denied claims that Rehn's proposals may target national wage policies directly. Der Spiegel Online reports that countries with chronic trade imbalances - such as Germany - could also face sanctions under new EU rules.

Spanish Environment Minister: Spanish Costal Law not under EU remit
El Mundo reports that in response to a question by EU Justice Commissioner Vivane Reding, Spanish Environment Minister Elena Espinosa has announced that the Spanish Costal Law does not discriminate against foreigners and therefore complaints cannot be brought forward under EU rules on freedom of movement.

The Mail reports on a study published by the UK Energy Research Centre revealing that it costs nearly twice as much to generate electricity from an offshore wind farm as it does from a conventional power station. The study comes after the world's biggest offshore wind farm - worth £780 million - was opened last week in the UK as part of plans to meet EU targets on renewable energy.  

De Volkskrant reports that the European Commission will today announce that the Netherlands pays €2 billion every year to the EU - thereby remaining the second biggest net per capita contributor to the EU budget along with Denmark. Nieuwsblad Volkskrant 1 Volkskrant 2 Elsevier

Reuters reports that during a panel discussion on financial supervision ECB's board member Ewald Nowotny argued: "It would be dangerous to feed the illusion that we could eliminate all risks from markets through more intensive supervision".

BBC News reports that Belgium - which currently holds the EU rotating presidency - wants to reach agreement on cross-border rules for traffic policing within the EU so drivers can be punished for offences they commit abroad.

The FT has a feature on the state of Germany's controversial regional banks (Landesbanken), labelling them "Germany's weakest link" and noting that a formal process will begin this week for the sale of the Düsseldorf-based WestLB, demanded by the European Commission as the price of a bail-out during the financial crisis.
Le Figaro reports that yesterday ECB Chief Jean-Claude Trichet restated his opposition to the unilateral introduction of an EU tax on financial transactions, arguing that "it could simply provoke an outflow of transactions towards other market places".

In an interview with EUobserver, Jacqueline McGlade, Director of the European Environment Agency, said that the EU is willing to make payments to developing countries to protect their biodiversity, despite recent EU statements to the contrary.

European Voice reports that EU Agriculture Ministers have hinted that Iceland's "damaging" mackerel fishing quotas could harm the country's prospects of joining the EU.

AFP reports that Home Affairs Commissioner Cecilia Malmström said yesterday that the European Commission is considering giving Greece financial aid to help the country reform its asylum system.

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