Friday, February 19, 2010

Open Europe press summary: 19 February 2010

EU Commission: New EU deposit guarantee rules could cost banks 10% of their profits
FT Deutschland reports that a Commission document, seen by the paper, proposes to introduce new EU rules requiring banks to raise their contributions to deposit guarantee funds to 2 percent of deposits they hold, in a bid to boost protection for savers. Currently, banks contribute three to five times less, on average, than the 2 percent proposed by the new rules. The Commission aims to raise the funds to a total of €128 billion in the next 10 years, up from €23 billion at present, according to the FTD.  An internal Impact Assessment by the Commission estimates that banks could lose as much as 10 percent of their profits, if the new rules are introduced. The document was recently circulated amongst the 27 member states and describes the proposal as only part of a "long term goal" to introduce a pan-European guarantee fund.
The banking lobby has heavily criticised the new plans, calling them "utopist". A spokesperson for the banking industry in Germany is quoted saying, "The Americans will laugh themselves silly. Over the next few years, the European banks will only pay for insurance, as opposed to strengthening their capital or paying dividends to investors".
Meanwhile, writing in the WSJ, Gerald Seib looks at the EU's poor growth rate in comparison to the US, arguing that the disparity suggests "at least a few things were done right in the American response to the economic crisis of the past two years, and a few things less right in Europe."
Focus  FTD  Stern  Bloomberg WSJ: Seib
Sports federations call for exemptions from EU law under Lisbon Treaty
Euractiv reports that the European Commission will shortly launch an EU-wide consultation regarding the implementation of the Lisbon Treaty's new sport provisions that allow the EU to grant exemptions to certain aspects of sport from existing EU law. The consultation will lead the way for the adoption of political documents as a follow-up to the July 2007 EU White Paper on Sport.
The Olympic Movement, together with sports federations including international football federation FIFA, last week presented a paper suggesting which areas of sports regulation should be granted "special treatment", including the regulations on the movement of players and "financial solidarity mechanisms" that promote fairness in sporting competitions. They argue that the rules set by sports associations on these issues should not be assessed solely in reference to current EU free movement and competition law.
Olympic Movement paper Euractiv
Economist: Commission's competition powers need to be curbed
A leader in the Economist notes that "Over several decades the European Commission's competition directorate has evolved into perhaps the most important regulator of its kind in the world." The article argues "despite its fine record, there are deep flaws in the way the directorate operates", adding that "by acting simultaneously as investigator, prosecutor, jury and sentencing judge, the commission is denying defendant firms the basic right to be heard by an impartial tribunal."
It concludes, "In no other area of law would it be thought acceptable for the outcome of such important cases to be determined by a bunch of politicians. In America the antitrust division of the Department of Justice has to make its arguments in open court."
A separate article notes that the EU's antitrust case against Microsoft, which resulted in a €1bn fine, revealed that investigators failed to keep a record of a meeting with an executive from Dell, raising suspicions that Commission staff overlook potentially exculpatory evidence.
Meanwhile, the IHT profiles new Competition Commissioner Joaquin Almunia, noting that Kevin Featherstone, a professor at the London School of Economics, said Mr. Almunia could have done more in his previous role as Economic Commissioner to prevent the situation in Greece by investigating more aggressively.
Economist: Leader Economist IHT
Former ECB board member: "The founding fathers wanted the euro primarily as a step towards political union"
In an interview with Reuters, Greek Finance Minister Giorgos Papakonstantinou urges the EU to make more concrete pledges on its promise to stand by Greece, saying "If you have a clear (EU) statement of intent, then my spreads will collapse within a week". He added, "I'm not asking people to say exactly what is going to happen but we need to give the assurance to markets that we are actually working toward a potential instrument ... so that we will never have to use it".
Writing in the WSJ Stephen Fidler argues: "even longer term, there seems scant prospect that European governments are interested in addressing the issue at the centre of the problem: The euro zone is a monetary union whose members are free to follow widely differing economic policies."
Writing in the FT Tommaso Padoa-Schioppa, former ECB Executive Board member, argues that the EU should provide assistance to Greece. He also argues that the "monetary union came before political union. But it did not come with a promise that there would never be such a union. Quite to the contrary: the founding fathers wanted the euro primarily as a step towards political union, knowing little of the overriding technical arguments in its favour. Those who argued against it then on the grounds that 'there can be no monetary union without political union' are precisely those who should welcome political union now that it finally knocks at the door claiming its rights."
A leader in the Economist argues that "The IMF would lend credibility to Greece's restructuring and lower the cost of emergency borrowing...The euro zone may be too proud to go to the IMF, but as any Lenten penitent should know, pride comes before a fall."
PA reports that ongoing strikes by customs officials has seen some petrol stations run dry in Greece today, and others imposing rationing.
Economist: Leader FT: Padoa-Schioppa Economist WSJ FT: Brittan WSJ: Fidler
FT: Papadimitriou Economist: Charlemagne WSJ 2 Irish Times: Comment Reuters  Spiegel Handelsblatt OE press release OE research 
Germany refuses to accept English and French as only working languages in EU External Action Service
Die Presse reports that only English and French will be the working languages of the new EU External Action Service (EAS), the outline of which is currently being drafted. The article reports that Germany is unwilling to accept this, quoting Austrian MEP Andreas Mölzer describing it as "a slap in the face of at least a hundred million EU citizens."
Die Presse
French Finance Minister: CDS market needs "better regulation"
The WSJ reports that French Finance Minister Christine Lagarde has said that the market for credit default swaps (CDS) needs "better regulation", and that speculation is partly to blame for the current eurozone problems. She added, "The sovereign CDS market is a narrow one, with few players". The European Commission has already said it plans to propose new rules for derivatives later this year and will review the EU's market-abuse laws, which mainly deal with insider trading, to ensure that regulators can detect and sanction any manipulation of derivatives trading.
Internal Markets Commissioner Michel Barnier plans to address the issue of online gambling and has already ordered the drafting of a "Green Paper" on the issue.  EurActiv quotes Mr.Barnier saying: "I want to launch a constructive dialogue [on online gambling] with the Parliament and member states and concerned stakeholders". 
EurActiv   Times of Malta
Reuters cites a French government report which has called for in-house share trading at banks to be directly regulated by the EU. The proposal is aimed at amending the Markets in Financial Instruments Directive (MiFID), which is currently being reviewed by the Commission.
EurActiv reports that Spanish Territorial Minister Manuel Chaves has said it would be an error for the EU to reduce spending on regional policy and criticised those "in Eastern Europe," who believe that only the poorest regions should benefit from cohesion funds.
In a major blow to the Government's chances of meeting domestic and EU renewable energy targets for 2020, the Times reports that Drax, Britain's biggest power station, has suspended its plan to replace coal with biomass fuels because they are not economically efficient.
Times Open Europe research
Le Monde reports that Greece is planning to cut its military expenditure, which will amount to €6 billion in 2010, the highest military budget in the whole EU, and the second-highest of NATO.
Le Monde
According to leaked extracts from a speech Gordon Brown will give in London today, he will say: "As long as I remain prime minister, Britain will stay firmly in Europe's mainstream, never in its backwaters, and we will resist the attempts of the Conservatives to pull Britain into isolation."
The Irish Times reports that a European Commission decision on the National Asset Management Agency (Nama) is likely 'within weeks.' The EU executive is expected to approve the €54 billion "bad bank" scheme.
Irish Times
EUobserver reports that during EU Foreign Minister Catherine Ashton's trip to the Balkans she urged Bosnia, Serbia and Kosovo to pursue a European political path in order to enjoy a "common future" with the EU.
EUobserver  Irish Times 
Writing in the Express Frederick Forsyth argues that if voters in the PIIGS countries could vote again they would not join the euro, adding: "the EU is a rachet mechanism. Under the steely rule of 'acquis communautaire' nothing conceded to Brussels can ever be restored to the nation state."
Express: Forsyth
Georgian President Mikheil Saakashvili has blasted France's plans to sell a warship to Russia, describing it as "very unusual and very risky."
WSJ Times EUobserver
The Guardian reports that Iceland last year experienced its largest net emigration since records began in 1887, with nearly twice as many people leaving the country as arriving.
Guardian: Islam Guardian 
The top climate-change official at the United Nations Yvo de Boer is leaving his post, a move that follows the failure of a UN climate summit in Copenhagen to produce a binding agreement to curb global greenhouse-gas emissions.
WSJ Times

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: or call us on 0207 197 2333.

No comments: