Wednesday, September 29, 2010

Open Europe press summary: 29 September 2010


AIFM Directive: France seeks more power for itself and Paris-based EU supervisor on market access rules
Euractiv notes that "a French attempt to concentrate more regulatory power in Paris has thrown a spanner" in the negotiations over the AIFM Directive. Although details remain unclear, France proposes to keep national rules to determine market access for fund managers outside the EU with minimum standards in place across the bloc, as opposed to EU-wide access based on a single set of requirements, which several other member states are pushing for. The soon to be created European Securities Markets Authority, based in Paris, would then be given a key role in resolving divergences between national fund rules, notes the WSJ's Real Time Brussels blog. MEP Syed Kamall is quoted in City AM saying, "The French are trying to undermine the Belgian presidency and form a blocking minority, and they claimed [last night] to have done so."

Ireland's borrowing costs reach new highs as rating agencies warn of new downgrade
The Irish Times notes that Ireland's borrowing costs hit a record high again yesterday after two credit rating agencies warned that Irish state debt faces further downgrades. The Telegraph notes that Standard & Poor's said the final cost for the Anglo Irish bank bailout could be much higher than the €23bn (£20bn) earmarked so far and may exceed €35bn, putting severe strains on Ireland's public finances.

Meanwhile, the Irish Independent quotes Irish Central Bank Governor Patrick Honohan insisting that entering the euro had not caused Ireland's boom to bust, even though the single currency was "part of the illusion" that sustained the toxic cycle.

Angela Merkel: no more bailouts until eurozone budget rules are strengthened and an orderly default mechanism is established
Handelsblatt reports that German Chancellor Angela Merkel has said there can be no extension of the European Financial Stability Fund until the Stability Pact is strengthened and an orderly insolvency procedure is agreed for eurozone members. A leader in the paper welcomes Chancellor Merkel's proposal for an insolvency procedure, arguing that neither banks nor countries should be "too big too fail".

On his EUobserver blog, Open Europe's Mats Persson argues that "instead of taxpayers footing the bill for the poor decisions of governments and companies they cannot vote out of office, [an orderly insolvency procedure] would mean that ultimate liability will rest with those who actually made the mistakes".

EU Commissioner for Economic and Monetary Affairs Olli Rehn will today present his proposals for the introduction of sanctions against countries running excessive public deficits and debts. The FT reports that the first round of proposals will be limited to eurozone countries, while a proposal allowing for EU funds to be withheld for non-euro countries that persistently fail to meet the Stability and Growth Pact criteria will be tabled at a later stage. However, the UK has an opt-out exempting it from EU rules on debt levels.

Meanwhile, writing in Les Echos, Laurence Boone from Barclays Capital argues that the compromise reached on sanctions is not sufficient to protect the eurozone from the risk of a new debt crisis, as it remains strictly limited to the budgetary domain, without addressing the huge competitiveness gaps existing between stronger and weaker eurozone economies. However, a comment piece in FAZ suggests that today's proposals from the Commission will go a lot further than what was expected. According to the paper, Commissioner Rehn follows what the German government wants on many points.

In the WSJ, Vice-governor of the Czech National Bank Mojmir Hampl argues: "A monetary union without a state is a unique experiment. By definition, the national budgetary sovereignty of the euro-zone's members doesn't go too well with the strict enforcement of supra-national rules. It is like having the power to sentence culprits but leaving it up to them whether they actually go to prison".

EU administration costs increased to 6.5% of the budget;
Commission to look at additional "compensation mechanisms" for net contributors
The EU released its 2009 Financial Report yesterday which explains how the EU spent its budget in 2009. The UK's contribution went up from £6.2bn in 2008 to £6.7bn in 2009. The Telegraph reports that as the fifth highest contributor to the EU, "the average British household paid £440 to be a member of the European Union last year but received only £312 back in direct benefits". The EU's administration costs increased to 6.5% of the budget (€7.4bn) from 6.2% in 2008.

EU Budget Commissioner Janusz Lewandowski has said the Commission will consider additional "compensation mechanisms" for net contributors and will present a proposal in June 2011, reports EUobserver.

Meanwhile, FD reports that the Netherlands disputes the Commission's claim that it only contributed €4bn to the 2009 EU budget. The Netherlands wants customs levied at Rotterdam Port to be included in the calculation, increasing its contribution to €5bn.

FT Deutschland quotes Belgian Finance Minister Didier Reynders saying that, "It should be possible to penalise rating agencies" if these "wrongly" downgrade a eurozone country. Meanwhile, to avoid conflicts of interest, the Commission has said it wants to abolish the practice by which member state governments pay agencies to rate their debt.

Sarkozy "repeatedly pressed" the ECB to commit to aggressive intervention in bond markets
The WSJ features a two part special on the alleged "secret committee to save the euro". The articles notes that French President Nicolas Sarkozy "repeatedly pressed" the ECB head Jean-Claude Trichet to commit to aggressive intervention in bond markets. "Mr. Trichet, unwilling to show his hand, replied that the ECB didn't take orders", notes the article. The European Commission has said it has "no information" on the 'secret committee', reports ORF.

Reformatorisch Dagblad reports that Dutch MEP Peter Van Dalen has urged the European Parliament to cut the number of cars available to staff, which cost €6,5m per year. MEPs are allowed to use luxury rental cars to travel between the airport, hotels and Parliament. Ref Dag

Knack reports that the European Court of Auditors has criticised the fact that impact assessments are rarely carried out for draft EU legislation in its final stage noting, "whilst it is common that amendments are proposed during the legislative procedure, the related impact assessments are not updated." The report cites Open Europe's research on the impact of EU regulation.

European Voice reports that the European Parliament's Committee on Budgetary Control has refused to approve the 2008 accounts of the UK-based European Police College due to a lack of progress in improving the body's financial management.

MEPs want more control over EU foreign policy spending
European Voice reports that yesterday the European Parliament's Committees on Budget and Budgetary Control endorsed a series of amendments to the financial rules proposed by the European Commission for the new European External Action Service (EEAS), including making the European Development Fund part of the EU's regular budget. The European Parliament is due to vote on the EEAS's financial and staff regulations at its plenary session on 18-21 October.

RP-Online reports that Commission President Barroso spends a total of €730,000 per year on travelling and representation - more than twice his yearly salary of €304,000. The article further reports that the ECJ will soon decide on the proposed salary increases for 44,500 EU officials.

The Irish government is in danger of losing up to €10m a year in EU funding because it imposed pay cuts on top university researchers who are funded entirely by Brussels, reports the Irish Independent.

The European Commission has attracted fresh criticism over its fledgling EU lobby register, with new analysis suggesting that data for five out of the top 15 entries is likely to be inaccurate, reports EUobserver.

Private Eye reports that a group of environmentalists are suing the European Commission and the Council for refusing to give the group access to internal EU documents on renewable energy targets.
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The Mail reports that Cadbury has been forced to axe its 'glass and a half' slogan from its Dairy Milk bars under EU rules, which state that by 2010 all weights and measures on packs must be in metric.

The European Commission is due to decide today whether to take legal action against France over the controversial deportation of the Roma.

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