Tuesday, January 04, 2011

Open Europe press summary: 4 January 2011

49% of Germans want return to Deutsche Mark;
Poles and Czechs not keen on following Estonia into the eurozone
Estonia joined the euro on New Year’s Day, becoming the 17th member of the eurozone. However, the FT/Reuters noted that many eastern European countries remain wary, quoting Polish Central Bank Governor Marek Belka saying, “In the eurozone there are dramatic things happening, so why rush? Czech Prime Minister Petr Necas said that the euro would not be to the country’s advantage for a long time. A poll by German daily Bild found that 49% of German voters favour a return to the Deutsche Mark, against 41% who do not. 51% said they were dissatisfied with the euro.
The FT reported that the European Central Bank increased its intervention in government bond markets over the Christmas period, making €1.1bn in purchases, but failed to reabsorb or ‘sterilise’ funds used to fund its purchases, in turn increasing the risk of inflation.  Writing in El País, Chinese Deputy Prime Minister Li Keqiang has pledged that China will continue to buy Spanish government debt in future. Centre for Economic and Business Research has said living standards in the eurozone’s weaker economies would have to fall by about 15% if the single currency was to survive. The Irish Independent notes that Ireland’s banks saw more than €70bn in deposits withdrawn in 2010.
In his New Year’s address French President Nicolas Sarkozy said, “The end of the euro would be the end of Europe.” A leader in FAZ argued that Estonia's accession to the euro means that “Germany has a new ally in order to achieve a stricter stability pact”. In the Telegraph, Ambrose Evans-Pritchard argues that as monetary union “edges closer to a full-fledged debt union” it is “less clear” why countries would wish to take on the “shared burden of Greek, Irish, Portuguese, Spanish, Italian, Belgian, and French debt.”
Government’s EU Bill to face opposition from Conservative and Labour MPs
The Sunday Telegraph reported that David Cameron could suffer a defeat over the Government’s European Union bill, designed to increase parliamentary and popular control over future legislation coming from Brussels. The Bill, which goes to the House of Commons’ Committees next week, faces opposition from backbench Conservative MPs but the article noted that Labour sources signalled that Ed Miliband, the Labour leader, may order his MPs to oppose the legislation too.
On Conservative Home, Martin Howe QC argued, “the ‘referendum lock' provisions of this Bill are essentially the best that can be done within the constraints of our present constitution…the Bill stops us on the escalator of European integration but it does not, and cannot, switch off that escalator”. The Sunday Telegraph argued, “Resisting the pressure for integration is not just about passing a single Bill – it is about remaining watchful in the face of a threat that expresses itself on multiple fronts…Mr Cameron has a strong hand to play in defending Britain’s interests. We urge him to do so.”
Merkel’s coalition partners step up pressure over eurozone policy
FT Deutschland reports that the Bavarian CSU party has slammed German Finance Minister Wolfgang Schäuble's plans for a “political union” within the eurozone. CSU MP Hans-Peter Friedrich is quoted saying “a centralised EU economic policy would certainly be a failure.” Handelsblatt notes that Chancellor Merkel’s junior coalition partner, the FDP, has hardened its stance on the euro. FDP Economy Minister Rainer Brüderle is quoted saying that his party will become more assertive, warning Merkel that “our task is not to be everybody's darling in Europe, but to make Europe fit for the future.” The eurozone “shouldn’t slip into a transfer union,” he added. Meanwhile, an article in the IHT notes that pressure is mounting on German Foreign Minister Guido Westerwelle to quit as leader of the FDP.
Open Europe’s briefing on the EU in 2011 featured in an article in the NZ Herald.
Le Figaro: EU foreign service appointments “the bureaucratic equivalent of the battle of Trafalgar”
Euractiv reports that EU Foreign Minister Cathy Ashton has concluded appointments for the 28 top positions in the EU’s new foreign service, the EEAS. Only two of the 28 are women, an article in Le Figaro described the process as “the bureaucratic equivalent of the battle of Trafalgar” for French diplomats. The article noted that five out of the 17 directorates-general and divisions within the EEAS have been assigned to Britons, while France has only obtained two.
The Hungarian government – which took over the EU’s rotating Presidency on January 2 – has come under increased scrutiny after deciding to introduce a new law to restrict the media and a windfall tax used “selectively” by the government.
The Telegraph reports that Greece has announced plans to build a controversial new wall along its 128 mile-long land border with Turkey to prevent illegal immigration.
Handelsblatt reports that the European Investment Bank wants to help countries pre-finance their ‘co-financed’ share of EU structural funds in order to increase uptake. EU funds cannot be spent unless they are co-financed by national or regional governments.
The Guardian reported that the European Commission is debating whether the British Government's plan to take over Royal Mail's pension scheme, which has an £8.4bn deficit, constitutes state aid that would give the group an unfair advantage over rivals.
A leader in the FT argues, “seven years after joining, Poland is taking its place as one of the leading powers in the European Union.”
Looking ahead to 2011, the Independent commented on some of the suggestions made to the Coalition by the public on how to improve the UK, arguing that the EU law outlawing 800 traditional vegetables could be repealed.
Euractiv reports that the Romanian government has threatened to leave the Cooperation and Verification Mechanism (CVM), an EU mechanism to monitor Romania’s law-enforcement system, in response to France’s and Germany’s decision to postpone its accession to the EU’s Schengen area.