Thursday, April 15, 2010

Open Europe press summary: 15 April 2010



Greek bailout faces stiff tests in German parliament and Constitutional Court

The FT reports that the German government yesterday signalled it would seek parliamentary approval for any emergency aid for Greece, while the Telegraph notes that four German professors are preparing to challenge the EU-IMF rescue at Germany's Constitutional Court as soon as the mechanism is activated, claiming that it violates the 'no-bail-out' clause of the EU Treaties.


Dr Karl Albrecht Schachtschneider, a law professor at Nuremberg and author of the legal complaint, said, "It is a question of law. The duty of the court to defend the German constitution. They have no choice other than reaching a lawful decision. This may cause a great crisis in Europe but we already have a crisis."


Dr Wilhelm Hankel, another of the four litigants, said the complaint would also aim to stop the European Central Bank relaxing its collateral rules to help Greek banks borrow cheaply - essentially a covert bailout. Jean-Claude Trichet, the ECB's President, said the bank's decision to continue accepting bonds with a BBB- rating had nothing to do with Greece. However, he was contradicted yesterday by the Netherlands' ECB member, Nout Wellink, who said the decision was "of course" linked to Greece.


FAZ notes that the professors' case might not be a matter for the German Constitutional Court, but the European Court of Justice, because it relates to a European rule, article 125 TFEU, on which the EU judges have so far not taken a decision. However, the paper also suggests that the German Court's ruling on the Lisbon Treaty made it clear that it should be up to the member states to decide whether the EU is moving within the powers it has been given by national governments.


The FT looks at German Chancellor Angela Merkel's decision to back a Greek bailout, after initial hesitance, and notes that according to some German reports, Ms Merkel was "bounced" by French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi, who threatened to bailout Athens on their own.


EU Monetary Affairs Commissioner Olli Rehn has said that the Greek fiscal crisis has "amplified" the "shortcomings" of the single currency, reports The Parliament.


Meanwhile Business Week notes that the Fitch ratings agency has said that Greece may be forced to request aid within the next two weeks.


Writing in the Telegraph, Edmund Conway looks at how the one-size-fits-all nature of European monetary union rules out the possibility of using monetary policy to resolve Greece's problems. In the FTDeutschland, Wolfgang Munchäu remarks that German Chancellor Angela Merkel's cabinet was "ignorant" about the Greek situation and that there was a move from "apathy to panic".  He adds that "the aid package will not solve the Greek solvency situation".

Telegraph: Conway Telegraph FT European Voice Business Week IHT Mail Le Point Le Figaro FT 2 Le Figaro FT: Gros FT: Brussels blog The Parliament Handelsblatt FTD: Munchau FAZ

Economic Commissioner calls for "permanent crisis mechanism";

Handelsblatt: Emergency fund could lead to transfer union

EUobserver reports that the Commission has held a first discussion on plans to strengthen the enforcement of the Stability and Growth Pact, requiring member states to keep their budget deficit below 3% of GDP. A draft communication to be discussed by EU finance ministers meeting on Friday will discuss plans to potentially suspend EU cohesion funds for repeat offenders of the rule. Another idea under consideration is to give member states more power to review one another's budget activities, according to the FT.


The Commission says it will come forward with concrete plans on 12 May to toughen up the fiscal rules, measures that it argues can be carried out under the Lisbon Treaty. FAZ remarks that the Commission wants to use Article 136 of the Treaties to enforce such measures saying: "the Commission wants to make from this article a sort of general clause for everything, which now urges changes in the rules. That it is therefore thinking about more powers for itself, is evident... Some have scoffed that this article is Barroso's new antibiotic for monetary union."

The communication will also explore mechanisms for a permanent crisis fund to help struggling states, potentially including participation from the UK. Commissioner Rehn said that: "The ad-hoc mechanism for possible financial assistance for Greece serves the immediate need. However the college is of the view that it is necessary to set up a permanent crisis resolution mechanism with strong built-in disincentives for activation, including of course vigorous conditionality." However, he said that the Commission isn't ready to make a firm proposal for the fund, but is still "reflecting" on it.


He also rejected the German suggestion that habitual deficit offenders should be expelled from the eurozone, saying: "According to the treaty, this is not possible. This idea would require a treaty change. Personally I have some reservations."


In an interview with Spanish newspaper Expansion, Eurozone chief Jean-Claude Juncker appeared to back Commissioner Rehn's calls for a permanent crisis fund mechanism: "We [the Eurogroup] had to resort to bilateral loans because the EU Treaty didn't provide for any alternative solution. In the future we must set up a European mechanism...To be sure, I can't rule out that we might need a Treaty change".


A leader in Handelsblatt argues "Watch out, transfer union!" adding that "The emergency fund as proposed by Rehn could lead to a Transfer Union, which Germany doesn't want. He talks about measures that would keep known budget sinners from always relying on their more solid partners for help."

FT EurActiv Deutsche Welle Expansion Le Point El Pais WSJ IHT Irish Times La Tribune Irish Independent BBC EUobserver La Tribune Le Figaro Handelsblatt Leader FAZ Handelsblatt 2


Member states "not impressed" with MEPs' demands for more money and staff

European Voice reports that several member states, including the UK, Germany, Sweden, and the Netherlands, are opposing the proposed increase in the European Parliament's 2010 budget, to allow them to hire 150 extra staff and increase staff allowances for MEPs by €1,500 a month.


A Swedish diplomat said that Sweden was "not too impressed" with the number of extra staff being asked for by the Parliament, adding: "We think it's quite a high number and not well explained."


The Spanish EU Presidency said it had not yet taken an opinion on the issue, which would be discussed by EU ambassadors next week.

European Voice


18 MEPs with no powers to cost taxpayers €30m

The Parliament reports that the 18 'ghost MEPs' created by the Lisbon Treaty have entered the European Parliament and been given 'observer' status, although they will not officially be allowed to start work until June 2014, after the next European elections. Despite not being able to work as MEPs, they will be entitled to annual salaries, plus tax-free allowances for every day of their time 'in limbo' in Brussels. They are also able to claim back business class travel and staff and office allowances. The article notes that the total cost to taxpayers by 2014 is likely to be in the region of €30m.

The Parliament 


Justice ministers to discuss EU-wide restraining orders

European Voice reports that EU justice ministers will on 23 April discuss a Spanish proposal for a European protection order that would provide victims of violence with the same level of protection in all EU member states. Under the proposal, restraining orders issued by one member state would apply across the EU. However, the upper chamber of the German Parliament has indicated that it thinks the proposal violates the subsidiarity principle. The EP is tentatively scheduled to vote on the proposal in June.

European Voice


An article in Swiss weekly magazine Weltwoche looks at Open Europe's recent research on the cost of eleven years of regulation in the UK, which found that EU regulation has cost the UK economy £124 billion since 1998.

Weltwoche OE research


A leader in the FT argues that, if the proposed compromise over non-EU based funds and managers in the EU's AIFM Directive is agreed: "it will be quite a turnround. What started out as an actively bad proposal will end up a broadly neutral one. That will be a relief to fund managers. But it is no way to legislate."

FT: Leader Open Europe research


European Voice reports that EU interior ministers will next week endorse the start of negotiations between the EU and US on sharing bank transfer data, to replace the Swift agreement that the European Parliament rejected earlier this year.

European Voice 


The Irish Times reports that two Irish aid agencies have urged the Government to seek changes to plans for the European External Action Service (EEAS), the new EU diplomatic corps. They argued that the proposals advanced by EU Foreign Minister Cathy Ashton have the potential to damage Europe's development work.

Irish Times


Bridges weekly trade news looks at the EU's newly launched 'public debate' on the future of the CAP and quotes Scottish Lib Dem MEP George Lyon saying, "Disappointingly, the debate on CAP reform has so far focused on who the support should go to. This kind of talk will get us nowhere. The debate needs to shift to the big battle of defending the CAP budget from deep and painful cuts."



The Public Service news website reports that the Lib Dems have pledged their support for a Europe-wide data sharing initiative to share crime data on citizens, the European Criminal Records Information System (ECRIS), in their election manifesto.
Public OE research


EurActiv reports that the Czech Europe Minister Juraj Chmiel has criticised the appointment by Commission President Barroso of João Vale de Almeida as EU Ambassador to Washington, saying: "The appointment of the EU's ambassador to the USA without the awareness of the member states is exactly the way it shouldn't look".

EurActiv OE blog


AP reports that eurozone industrial output rose by 0.9 percent on the previous month, much higher than the 0.1 percent increase expected by the markets.



An article in the WSJ suggests that Europe may be a drag on global economic growth, and is growing slower than its potential.

WSJ: Wessel


EurActiv reports that French Minister for European Affairs Pierre Lellouche has stressed the importance for France of increasing its political weight within the European Parliament as a means to gain more influence on the whole European decision-making process.



At a debate in Brussels organised by the German FDP party, German MEP Holger Krahmer argued that EU lawmakers should sometimes work more slowly, saying that "the EU's emissions trading system was rushed through in half a year. It's very expensive, especially for Germany".

OE research


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