Thursday, June 17, 2010

Open Europe press summary: 17 June 2010



New Open Europe briefing: The rise of EU economic government

As David Cameron attends his first EU summit, Open Europe has published a new briefing outlining recent developments and moves towards what French President Nicolas Sarkozy has labelled an economic government for the EU. The briefing sets out the proposals currently on the table and the Franco-German tensions that will underlie the negotiations at today's summit. The briefing was cited in the Mail, on the Economist's Eastern Approaches blog and on Conservative Home.

Open Europe briefing Open Europe press release Mail Economist: Eastern Approaches blog Conservative Home


European Council summit to see Cameron resisting moves for closer EU economic governance;

Barroso: It is during a crisis that we can "make progress in the European project"

EU leaders meet in Brussels today for the European Council summit, with several papers reporting that David Cameron will be resisting French and German proposals to give the EU more powers to review member states' budgets before national parliaments, with sanctions such as fines or a possible loss of EU voting rights for countries that break the rules. The Independent notes that the draft conclusions of the summit say the moves would take account of "national budgetary procedures", which would potentially allow the UK to send submit its pre-Budget report, without having to send the full Budget before it is presented to Parliament.


The FT notes that Cameron believes any toughening up of the rules must only apply to eurozone countries. The Telegraph reports that the proposals could require Parliament to pass legislation enshrining the EU's Stability and Growth Pact, which limits national deficits, into British law. The proposals would potentially require a change to the EU treaties as well, and El Pais reports that the Spanish government is opposed to any Treaty change in order to suspend the voting rights of countries that break deficit rules. "Reopening the institutional debate would plunge the EU into paralysis at the worst time possible," said a government official. The Mail cites senior EU officials saying that proposals for such sanctions are not yet formal and that there will only be "preliminary discussions" today.


Meanwhile, speaking to the European Parliament yesterday, Commission President Jose Manuel Barroso said: "Once again, we can see that a crisis can accelerate decision-making when it crystallises political will. Solutions that seemed out of reach only a few years or even months ago are now possible. As the history of European construction reminds us it is usually in times like this, in times of crisis that we can make progress in the European project", reports PA.


The Mail quotes Open Europe's Pieter Cleppe saying: "Some European leaders now want to use the economic crisis to form an EU economic government by stealth - regardless of what voters and taxpayers think. The risk is that the UK gets caught in the crossfire and is pressured into an EU-wide economic government that is essentially supposed to solve the problems of the eurozone."


EU summit comment round-up

The Economist's Charlemagne blog argues that Cameron's decision to have breakfast today with Barroso is a "shrewd idea", adding that "there is a natural alliance between the European Commission and the new British government, out there for the grabbing. It consists of resisting the current French push to use the euro crisis to create a two-speed Europe in which the 16 countries that use the single currency become a political inner core of decision-making...the stage is thus set for a strange alliance between the unelected, centralising Eurocrats of the commission and the new British government."


Le Figaro reports that both Cameron and Barroso are critical of French proposals for an 'economic government' for eurozone members, and quotes Barroso saying: "European citizens are interested in the substance" of policy measures "not in new institutions or new processes" of EU decisions.


In an opinion piece for Sueddeutsche, Claire Demesmays from the German Council of Foreign Relations writes: "Sarkozy attacked Merkel twice and lost twice: first with the Mediterranean Union, and now with 'economic government'." In an interview with Handelsblatt, Professor Charles Blankart, an economist at Berlin's Humboldt University and advisor to the German Finance Ministry, has warned against an 'economic dictatorship' by Brussels. Commenting on the agreement between Merkel and Sarkozy, he says: "Ms. Merkel can now only hope that no agreement is reached between the 27 EU member states and that a Brussels economic dictatorship is avoided for now. Great Britain and many other member states cannot be won by the argument that it would be good for the euro to take more common measures."


Meanwhile, writing in the Telegraph, Benedict Brogan argues that "Europe has fallen madly, deeply, improbably in love with the Tories", but adds "The big decisions will come in the autumn...there are uncomfortable times ahead. Once the first flush of love has passed, the threats to British sovereignty will persist. The current warmth of the Coalition's relations with the EU is unexpected and striking, but are transient."

Mail Conservative Home Telegraph FT BBC: Hewitt blog EUobserver IHT European Voice BBC: Today programme Independent Irish Independent Telegraph: Brogan FT: Analysis Economist: Charlemagne notebook Irish Times European Voice Expansion Le Figaro Le Monde Repubblica El Pais La Tribune Handelsblatt Sueddeutsche


Concerns over Spain loom over EU summit

As European leaders meet today in Brussels, there is a growing fear that Spain is preparing to ask for a bailout even larger than the Greek rescue package. Officials in Madrid and Brussels have denied that a Spanish bailout is on the agenda for the summit, according to the Independent. "It has been denied by the Spanish government, by the European Commission, and by the IMF. How much more can we deny it?" said Spanish Finance Minister Elena Salgado.


However, the Guardian reports that European debt markets remain under high stress due to the persistent reports that Spain is in secret talks for a support package of up to €250bn, the largest rescue in history. "In our view there is absolutely no doubt that a backstop facility for Spain will be put in place should stress in the system remain," said Silvio Peruzzo, an economist at RBS.


El Mundo reports that Spanish Prime Minister Jose Zapatero will attempt to defend Spanish solvency at today's summit amidst the continuing rumours and reports that the Commission has asked Spain to implement more measures for fiscal consolidation. Before leaving for Brussels, Zapatero said "Spain is a country that is solvent, solid and strong, with international credibility."


Meanwhile, the WSJ reports that although Zapatero signed a decree to overhaul Spain's labour market, it could face months of negotiations before it is implemented, as parliamentary leaders vowed to alter the measure.

Independent Independent: Comment Telegraph Guardian City AM BBC BBC 2 Expansion WSJ: Editorial El Mundo Economista WSJ FT Deutschalnd


Cameron and Reinfeldt: "The time has come for the EU to stop talking and start taking action"

Writing in the FT and Swedish daily Dagens Nyheter, David Cameron and Swedish PM Fredrik Reinfeldt outline the steps that they feel are needed to return Europe to economic growth, concluding: "The time has come for the EU to stop talking and start taking action - on debt, on fixing the banks, on creating the conditions for growth, on promoting free trade. Both of us are convinced of the strengths and potential of this union. Now we need to make use of them."


Meanwhile, the Telegraph reports that a group of 100 Italian economists have written an open letter warning that austerity policies in Italy and Europe "run the risk of accentuating the crisis in the end, causing a faster rise in unemployment and company failures, and could at a certain point compel some countries to leave monetary union. We must have an immediate debate on the extremely grave errors in economic policies now being committed".

FT: Cameron and Reinfeldt DN Telegraph


Commission to resume talks on EU carbon tax

European Voice reports that the Commission will next week resume talks on imposing a minimum EU tax on carbon, despite opposition from member states such as the UK and Ireland. The EU tax envisaged would cover energy for heating and motor fuel, and would apply to households and to sectors of the economy not covered by the EU's emissions trading scheme. Any such tax would have to be agreed unanimously by all member states.

European Voice


Commission to suggest EU pension guarantee system

According to European Voice, a policy paper calling for reforms to Europe's pension systems is soon expected to emerge for discussion in the European Commission. A draft version suggests that the Commission will call for the creation of an EU "pension benefit guarantee system", which would compensate savers if pension funds default. The President of the Commission José Manuel Barosso has said that the financial crisis has demonstrated the need for a common European pension system, to ensure that people can receive pension entitlements even in economic downturns.

European Voice


Lib Dem MEP defends Common Agricultural Policy

El Mundo reports that the European Parliament's Committee on Agriculture and Rural Development called yesterday for the Common Agricultural Policy (CAP) budget to be kept "at least" at current levels after 2013. The Committee voted in favour of the report drafted by Lib Dem MEP George Lyon, which stated that the CAP should allow European agriculture to "occupy the appropriate place within the European economy". The article notes that MEPs have also endorsed some measures aimed at giving farmers more negotiating powers, while the proposals for a "nationalisation" of the CAP were voted down.

El Mundo


Germany drops resistance to publishing results of stress tests on banks

City AM reports that Spain's central bank will publish its stress tests on banks in an attempt to dispel rumours that it is seeking Greek-style aid. AFP reports that Germany has dropped its resistance to releasing the results of the stress tests. The FT notes German officials said privately that the government had told EU and G7 partners it was now "in principle in favour" of publication, in the hope more transparency would stop speculative attacks on bank shares. The article notes that Berlin's support is likely to anger German banks, which have resisted full disclosure. Another article in the FT argues that "the threat of another crisis in the sector is growing."

AFP WSJ El Pais FT FT 2 Le Monde Handelsblatt Handelsblatt 2 Les Echos


Another EEAS meeting cancelled

EUobserver reports that yesterday MEPs and EU Foreign Minister Catherine Ashton once again failed to meet to agree on the final outline of the European External Action Service (EEAS). A new meeting is now expected to take place on Monday. According to European Voice, a senior official has said that "If we miss this moment, we will not have a service by 1 December," the current target date for the launch.

EUobserver European Voice


EurActiv reports that yesterday in Strasbourg the European Parliament voted in favour of a new directive allowing people who are facing criminal proceedings throughout Europe to receive translation and interpretation in their own language at any stage of their trial.



Il Sole 24 Ore reports that former German Chancellor Helmut Kohl has refused a prize awarded by the French and German media to all those people who contributed to the development of friendly relations between France and Germany.

Il Sole 24 Ore


Yesterday MEPs rejected for a second time the Commission's recommendation that self-employed truckers be exempted from the Working Time Directive.

EUobserver EurActiv Liberation: Blog Open Europe research


MEPs yesterday voted against a proposal for a "traffic light" display of key nutritional information on processed foods, instead voting for labels displaying guideline daily amounts.

Mail Guardian FT BBC EUobserver European Voice Independent


On his FT Brussels blog, Tony Barber looks at the EU's new 2020 economic strategy and writes, "The European Union is nothing if not addicted to targets."

FT: Brussels blog 


An opinion poll reported in Le Figaro has found that 57% of Icelandic voters would favour a withdrawal of Iceland's application for EU membership.

Le Figaro


In the WSJ, Patience Wheatcroft welcomes EU Internal Market Commissioner Michel Barnier's decision to launch a Green Paper on the role of auditors in the autumn.

WSJ: Wheatcroft


The IHT reports that the EU is facing shortages of 14 "critical" raw materials needed for mobile phones and emerging technologies like solar panels and synthetic fuels, according to a study by the European Commission.

IHT Le Monde


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