Tuesday, October 26, 2010

Open Europe press summary: 26 October 2010

Open Europe will host an event today at 5pm-7pm in cooperation with the Bertelsmann Foundation in Berlin, entitled "How does the euro crisis affect Germany's relations with the EU?" Speakers include: Frank Schaffler (German Liberal MP), Gerhard Schick (German Green MP), Gisela Stuart MP, Stefani Weiss (Bertelsmann Foundation) and Derek Scott (Vice-Chairman, Open Europe). Places are limited, if you wish to attend please contact Pieter Cleppe on 0032 477 684608.


Cameron may agree new EU treaty in return for one-year cash freeze on budget;
France and Germany split over what new treaty should contain
The Mail reports that David Cameron has signalled that he will back French and German calls for EU treaty changes, limited to the eurozone, without holding a referendum in the UK, in return for a cap on the 2011 EU budget. Cameron is demanding a cash freeze to next year's budget and has said, "We need an alliance to block increases."
The FT reports that, despite their united calls for treaty change, France and Germany cannot agree on what the proposed "crisis resolution mechanism" for the eurozone would cover. Germany wants to install a procedure for orderly debt default, believing the possibility of sovereign default will force the markets to discipline profligate governments. However, France reportedly accepts that the private sector should be involved, but advocates doing so in a co-operative way through rolling-over debt rather than through default. "There are ways of getting the private sector involved that could have a lower cost," said a French official. "Automatic debt restructuring could be more damaging than the illness it is trying to remedy."

Meanwhile, Der Spiegel reports that, at a meeting of EU foreign ministers yesterday, Luxembourg, Austria and Czech Republic announced they would veto the proposed treaty change. Deutsche Welle quotes Finland's Foreign Minister Alexander Stubb saying he was open to the idea, adding that "at the end of the day, as long as the rules are tight, I'm happy."

Opposition to the deal continues in Germany, with politicians in Chancellor Angela Merkel's coalition arguing that giving into French demands to water down sanctions for debt and deficit rule-breakers was too high a price for vague promises of treaty change. FAZ quotes Markus Ferber, Chairman of the German CSU group in the European Parliament, saying, "With the recent weakening of the Stability and Growth pact - which Merkel and Sarkozy devised behind closed doors - Europe is killing the very real progress in terms of securing the future of the euro."

In Tagesspiegel, Liberal MEP Alexander Graf Lambsdorff describes the Franco-German agreement as one made in "never-never land". Socialist MEP Martin Schulz is quoted saying it would be "unrealistic to assume [that it will be] a smooth change of the EU-Treaty."

Commissioner: EU taxes would affect "sacred prerogative" of national sovereignty, requiring a referendum in the UK
European Budget Commissioner Janusz Lewandowski has told the Telegraph that his recent proposals to finance the EU through direct taxes would need "ratification because it is prerogative of a national state to set its own taxes. No taxation without representation - it must be ratified [...] This is a sacred prerogative of national parliaments." In such a situation, the UK Government's 'referendum lock' would lead to a referendum on the issue. The plan is doubly controversial for the UK, because giving the EU an independent income would lead to the abolition of the British rebate worth £3bn a year. Among others, Germany, France Ireland and the UK have spoken out against introducing direct EU taxes.

UK opts in to EU rules on rights for citizens arrested abroad
The BBC reports that Justice Secretary Ken Clarke has opted in to a draft EU directive which, when enforced, will guarantee minimum standards of treatment for EU citizens arrested abroad. Open Europe's Stephen Booth is quoted by PA saying that improving citizens rights across the EU is important but that, "this in itself does not correct the wrongs of the European Arrest Warrant, for example, under which UK citizens can be deported to other EU countries without due judicial process."

The WSJ reports that Todd Groome, Chairman of the Alternative Investment Management Association, has warned that the "passport" provision in the EU's proposed AIFM Directive will act as a hurdle to US firms operating in Europe.

The Parliament examines Open Europe's latest report into EU agencies, noting that the EU could save over €709mn in 2011 if it cut down on agencies that duplicate work. Open Europe's Siân Herbert is quoted saying: "Taxpayers are right to question why they should bankroll the EU's mushrooming bureaucracy when they themselves are being asked to tighten their belts."

German online magazine Onlinekosten quotes Open Europe's recent briefing on Galileo's rising costs which estimates that the project will cost EU taxpayers €22.2bn to operate over a 20 year period.

The FT reports that the German commercial banking association BDB has said the increasing regulatory burden - including a reformed EU-wide deposit insurance scheme - could cut members' post-tax profits by more than half and hamper their ability to meet higher Basel III capital standards.

Les Echos reports that EU Internal Market Commissioner Michel Barnier will unveil tomorrow a draft of the "Single Market Act", a legislative package including 50 separate proposals relating to the EU's single market.

French Ambassador to the US Pierre Vimont has been appointed as Executive Secretary General of the European External Action Service, the new EU diplomatic corps. European Commission's Director General for Trade David O'Sullivan has been appointed as the EEAS's Chief Operating Officer.   

In an interview with La Tribune, French Defence Minister Hervé Morin has lamented the lack of political will to cooperate in the defence sector among EU member states. "We are giving up being a key player on the international stage, where we are going to weigh less and less without a European political construction", he argued.

La Repubblica reports that Roberto Vincenzo Sindoni - the Mayor of Capo d'Orlando, Sicily - has been arrested for misappropriation of EU farm subsidies. He is the legal representative of an agricultural firm which allegedly obtained €1mn of EU funds presenting false documents about non-existent citrus fruit orchards.   

The Nouvel Observateur reports that a new opinion poll conducted by IFOP has shown that 70% of French are "unhappy" with French President Nicolas Sarkozy.

The FT reports that EU Internal Market Commissioner Michel Barnier has said that firms and individuals who breach rules governing financial market abuse should face tougher and more consistent penalties across the EU.

The Sun reports that the EU's free trade deal currently negotiated with India would include provisions for skilled Indian IT workers, engineers and managers to work in the UK and other EU nations for three years. The Express notes that the agreement could undermine the UK Government's plans to control immigration from outside the EU.

Sun Express

El País reports that yesterday EU foreign ministers decided to open up communication with the Cuban government. This could pave the way to removing the EU's 'Common Position' on Cuba, agreed in 1996.

EU border guards will be deployed for the first time at the Greek-Turkish border. The FT notes that "already identified as the weak link in the European Union's single currency project, Greece is now struggling to play its role in enforcing the bloc's common border ambitions."

BBC News reports that yesterday EU foreign ministers requested that the European Commission formally consider Serbia's proposal to join the EU. However, Serbia has been warned by EU ministers that its accession depends on its cooperation with the UN war crimes tribunal in capturing Ratko Mladic and Goran Hadzic - both fugitives and alleged criminals from the war in former Yugoslavia.


In an opinion piece for Le Monde, UK Foreign Secretary William Hague says that the UK and France must work together to strengthen their bilateral commercial relations.

Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: openeurope.org.uk or call us on 0207 197 2333.