Wednesday, November 17, 2010

Open Europe press summary: 17 November 2010


UK preparing to provide additional direct loans to Ireland;
Merkel: "We have turbulence and situations that I would not have dreamed of one and a half years ago"
A team of EU and International Monetary Fund officials will visit Ireland in the next few days for "technical talks" on the crisis affecting the eurozone, increasing the speculation that a bailout is imminent. The FT and WSJ report that there are signs that the UK is preparing its own direct loans as part of the wider aid efforts. Ireland continues to deny that it is seeking aid but, before heading to a meeting of European finance ministers later today, Chancellor George Osborne said, "Britain stands ready to support Ireland in the steps that it needs to take to bring about [...] stability."

Le Monde reports that the Chairman of the eurozone's €440bn EFSF bailout fund Klaus Regling has said that he would be able - if needed - to unblock "a significant amount of money" in 5 to 8 days.

The Mirror quotes former Irish Central Bank economist David McWilliams saying, "We need finally to be honest and say to our European colleagues that our banks are bust [...] No matter how much we bluff, that problem's not going to go away - and our problem is your problem. You have got to help us, because your problem could transfer from Ireland, Portugal and Greece to Spain and Italy."

Meanwhile, AP reports that Austrian Finance Minister Josef Pröll has said that eurozone governments have agreed to delay the payment of the next instalment of the bailout loan to Greece by a month - from December to January. Pröll is also quoted by Tagesschau saying that "we should be better [with Ireland] than we were with Greece, and above all, respond faster. Waiting too long is too expensive."

Meanwhile, the Telegraph quotes EU Council President Herman Van Rompuy saying, "We all have to work together in order to survive with the euro zone because if we don't survive with the euro zone, we will not survive with the EU." Der Spiegel quotes German Chancellor Angela Merkel saying: "I do not think that the eurozone is at risk, but we have turbulence and situations that I would not have dreamed of one and a half years ago." 

Eurozone comment round-up;
Iain Martin: Democratic consequences of eurozone crisis "have been given very little thought"
In the WSJ Iain Martin argues: "Accelerated by the crisis, a new model of government without direct accountability to voters is being constructed. And the democratic consequences have been given very little thought other than by a hardened band of opponents." In the FT, David Gardner argues: "The idea of becoming like Greece, a quasi-protectorate of the ECB, the IMF and the European Commission, sticks in the Irish gullet."

Die Welt notes that "interest rates on German bonds are increasing because financial markets are betting on a fiscal union [...] Germany might ultimately agree with a fiscal transfer community. The alternative would be a breaking up of the Eurozone, which is not likely given the historic trends under German governments." Writing in the paper, columnist Christopher B. Schiltz argues, "the euro crisis also represents the crisis of the EU: a club with 27 egos without a sense of community and identity."
On his BBC blog, Gavin Hewitt looks at the risk of contagion and argues: "If Portugal had to be bailed out, the markets might question whether Spain could service its own debt, considering it has almost zero growth. The EU's bailout mechanism may be able to handle the debts of Greece, Ireland and Portugal, but Spain would be altogether a different matter."

In the FT, columnist John Plender argues: "On the face of it the balance sheet of the eurosystem - the consolidated balance sheet of the ECB and the national central banks of the eurozone - would look racy even to a high-rolling hedge fund manager."

Europe Minister: "Political cost" of repealing new 'referendum lock' will safeguard citizens in future;
Labour MP: New Bill won't stop the continuous "ratcheting up" of EU influence in several policy areas
Open Europe yesterday hosted a debate in London discussing the implications of the 'referendum lock' contained in the new European Union Bill tabled by the Government. When asked whether future governments could repeal the referendum lock, UK Europe Minister David Lidington said that they could but that the "political cost" of doing so made it very unlikely. He added that he thought the Bill would give greater legal references by which citizens could challenge ministers' decisions on EU matters in the courts.

David Rennie - the Economist's Bagehot columnist - argued that "a UK referendum bill is a UK veto bill", since any referendum on further transfers of powers to the EU is practically impossible to win in the UK. 

Open Europe's Director Mats Persson said that the referendum lock "will make it much more difficult for politicians to hand over powers to the EU in future." However, he noted that the Bill does not address the problem of the existing balance of power between the EU and the UK, which many people in Britain are unhappy with. Mats also pointed out that the Bill should include a specific provision requiring the Government to seek approval from the Parliament before opting in to new EU rules on Justice and Home Affairs under the Lisbon Treaty.

Labour MP Kate Hoey warned that, given that the 'referendum lock' does not cover the existing EU competences, it could fail to curb the continuous "ratcheting up" of EU influence in several policy areas.

Barroso: Lack of agreement on EU budget "deals a blow to people in the developing world"
It is widely reported that yesterday European Commission President José Manuel Barroso voiced his disappointment over the lack of agreement on next year's EU budget.
"A small number of member states were not prepared to negotiate in a European spirit", he said, referring to the resistance put up by the UK, Sweden and the Netherlands to the European Parliament's demands for a serious debate on an EU tax to finance the EU budget after 2013. Without naming the countries concerned, Barroso went on to say: "Those that think they have won a victory over 'Brussels' have shot themselves in the foot. They should know that they have dealt a blow to people all over Europe and in the developing world." 

Meanwhile, in a speech at the European Parliament, former EU Commissioner Frits Bolkestein said yesterday that "the EU budget should be frozen" and that "the European Parliament and the European Commission are out of touch with reality."

City AM reports that Financial Secretary to the Treasury Mark Hoban has said that the UK will oppose the introduction of an EU-funded credit rating agency. "Credit rating agencies must have a sound business model that doesn't depend on money from the EU", he argued.

PA reports that senior doctors have written to David Cameron calling for action over a legal loophole which enables drug companies to set "exorbitant prices" for drugs to treat rare diseases. Pharmaceutical firms are obtaining licences for existing drugs under EU legislation and then hugely increasing the cost of them, they said.
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An article in the FT looks at the stark disparities in the allocation of farm subsidies across Europe on the eve of negotiations about the reform of the EU's Common Agricultural Policy after 2013. The article notes that Latvian farmers currently receive €90 per hectare in CAP subsidies while Polish farmers are given a bit less than €200 and their Greek colleagues get €560.

Italian President Giorgio Napolitano and the two speakers of the Italian Parliament's houses agreed yesterday that MPs and Senators will vote on a no-confidence motion against Prime Minister Silvio Berlusconi's government on 14 December, La Repubblica reports.

A study from the European Parliament's Directorate-General for Internal Policies shows that in 2009 the European Commission co-financed more than 3,000 NGOs "with an overall amount of more than €1.4bn." 

French Economy Minister Christine Lagarde has said that she has changed her mind and now welcomes quotas for women on company boards after a vote in the French Senate last month, the FT reports.

Handelsblatt reports on yesterday's clash over new proposals for deposit insurance. The Commission, the German Finance Ministry and private banks in Germany are calling for a uniform deposit guarantee, while the financial networks and savings banks want exceptions because of "their own adequate security systems". Concerns have been voiced that the Commission's proposals may be detrimental to the latter group.

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