Cameron claims victory at EU summit but German diplomat warns "Let's wait until October";
Sarkozy: "We are only at the beginning of the concept" of EU economic government
There is widespread coverage of yesterday's EU summit, with the UK media noting that David Cameron successfully avoided signing plans that would have required the UK to submit its budget to the EU for 'peer review' before presenting it to Parliament, or being drawn into possible sanctions for fiscal irresponsibility. However, Cameron said at the press conference after the summit: "Of course, there are those in the room who do want to press for greater integration and who still seek treaty changes to bring that about. You've always got to be on your guard." The Mail reports that a German diplomat smiled when he heard the British claims of victory at the summit and said, "Let's wait until October."
Le Figaro quotes French President Nicolas Sarkozy saying, "We are only at the beginning of the concept. Only four months ago, the words 'economic governance' were a taboo. But the idea is progressing." Sarkozy added, "There will be sanctions for those who do not fulfill their commitments on debt. Fines are not the best solution. Together with Angela Merkel, we are supportive of the withdrawal of voting rights". The latter would require treaty change but EU leaders agreed to postpone the talks on sanctions until October. AP notes that German Chancellor Angela Merkel's demands for EU treaty change are facing stiff resistance. "Treaty changes would take too much time, because different states would then want to revise different sections of the Treaty," said Swedish PM Fredrik Reinfeldt.
However, Franco-German tensions over the shape of the EU's economic governance persist, with Sarkozy still harbouring desires for a eurozone economic government rather than simply the tougher budgetary rules for all 27 member states favoured by Germany. "The idea of economic government is not only about dealing with budgetary issues. It will allow us to put into place a strategy for competitiveness in several domains, such as research, social rights and universities," Sarkozy said, according to Le Figaro. According to Liberation, he also joked, "I'm so fond of the idea of economic government that I'm ready to admit that a government in 27 works better than governance in 16".
The Italian media notes that the Italian government insisted that 'aggregate debt', including private debt as well as public debt, be included as part of the budget criteria of the EU's Stability and Growth Pact. Italian Economy Minister Giulio Tremonti described its inclusion as an "extraordinary success", while Foreign Minister Franco Frattini said, "This is fundamental, because the aggregate debt criterion puts Italy in second place, while public debt puts us second to last", according to AGI. This could potentially have important consequences for any future moves to impose sanctions on the countries that violate the stability pact.
The Guardian reports that EU leaders also discussed tougher financial regulation - seen as a potential threat to the City of London - with Chancellor Merkel revealing that regulating the financial markets was the "top topic" in her talks with Cameron. The summit conclusions called for ministers and the European Parliament to "rapidly adopt" proposals for three new EU financial regulators and the European Systemic Risk Board so that they "can begin working from the beginning of 2011."
Meanwhile, the Irish Times reports that EU leaders stepped up the pressure for a banking levy, with Austrian Chancellor Werner Faymann proposing to expand the bank tax proposal with an additional tax on transactions made by financial institutions. The UK resisted the moves but the conclusions said that leaders agreed EU member states should "introduce systems of levies and taxes" on institutions. "The introduction of a global financial transaction tax should be explored and developed further" at the G20, they added.
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Open Europe's briefing on the rise of EU economic government was cited on BBC Political Editor Nick Robinson's blog.
EU summit comment round-up;
Andrew Grice: "It suited everyone to avoid a row"
An article in Spanish daily El Mundo noted yesterday that "after a semester of emergency summits, this Thursday the EU aspired to hold the most boring European Council possible: discussing no member States' bankruptcies, agreeing no multi-billion bailouts, ending talks at 6 pm - not at 6 am of the following day - and, above all, talking as little as possible about Spain".
In the Independent, Andrew Grice writes that Cameron "didn't have to fight very hard yesterday, as it suited everyone to avoid a row." A leader in the paper argues, "There will almost certainly be friction down the line. The Common Agricultural Policy and the EU budget are traditional conflict points. But the ongoing economic and financial emergency across the eurozone and the wider Continent puts these old battles rather in the shade."
Meanwhile, a leader in the Times, citing the French President's "uncompromising commitment to Western security", argues: "for all their points of difference, Mr Sarkozy is a more obvious partner for Mr Cameron than other EU heads of government."
Ratings agency warns that ECB may have to buy "hundreds of billions" of eurozone bonds
The Telegraph reports that credit ratings agency Fitch has warned that the ECB needs to make enormous bond purchases to help the EU stave off an unstoppable debt crisis. Brian Coulton, head of sovereign ratings at the agency, said German members of the European Central Bank appear to be blocking robust intervention where it is most needed in southern European bond markets, adding: "There has been an unwillingness to follow through, and markets are going to want to see the ECB's money. It will require hundreds of billions in my opinion".
The Irish Independent reports that a successful €3.5bn bond sale by the Spanish government yesterday eased some of the concerns over eurozone government debt. Officials from the EU, ECB and IMF also said yesterday that the Greek austerity programme was on track.
FT Deutschland reports that there are growing concerns that the new conservative Slovakian government might not participate in the European Financial Stabilisation Facility (ESFS) - the €400bn package of bailout measures. The article notes that the European Commission is worried that the exit of one country might lead other countries to exit as well.
Meanwhile, Russian President Dmitry Medvedev, in an interview with the WSJ, was asked if the crisis in Europe could worsen and threaten the Continent's common currency and responded, "Not yet, but that danger can't be excluded."
ECJ Advocate General: Publishing CAP recipients' names is a violation of privacy
Spanish newspaper ABC reports that the UK Advocate General at the ECJ, Eleanor Sharpston, has said that the EU rules on the publication of farm subsidy recipients' personal data constitute a violation of privacy, as they require the automatic dissemination of farmers' names and addresses. Ms. Sharpston had been asked to express her opinion with regard to an appeal made by two German farmers. As a result, she has recommended that from now on the ECJ considers the EU regulation providing for the automatic disclosure of personal details as invalid.
EU agree to disclose banks' stress tests results by July
It is widely reported that EU leaders yesterday agreed to reveal the results of EU stress tests for banks by the end of July at the latest. Germany had previously resisted such disclosure, but softened its stance ahead of the meeting. However, the FT quotes an EU official saying that "a big battle" took place on this issue during the summit, with the Spanish PM Jose Luis Zapatero and EU Council President Van Rompuy eventually getting the upper hand with the agreement. At the end of the talks, Zapatero said: "there is nothing better than transparency to demonstrate solvency."
The Economist's Charlemagne blog argues that "for all [the EU leaders'] populist attacks on 'immorality' of financial markets and vows to rein in 'casino capitalism', their sensible decision - taken at a one-day meeting in Brussels - was prompted by market pressure. In short, for all their faults, markets have once again provided the only reliable source of discipline and rigour in this whole euro crisis".
Eurozone comment round-up
The front page of the Spectator features the headline: "Will Germany leave the euro", and writing in the paper Gerard Baker, Deputy Editor in Chief of the WSJ, argues that "a Greek departure from the eurozone is almost unthinkable. But there's a better option. If Germany left the eurozone itself, it would at a stroke free itself from an increasingly intolerable fiscal burden and leave the weaker countries with some chance of managing their way out of crisis."
Writing in the Times, Josef Joffe, Editor of Die Zeit, argues: "If the EU were like the US, that is, a real country, Germany would take care of Greece for ever, just as booming Texas helps out bankrupt California. But the EU remains a bunch of nation states. And this is why the sceptics were right in the run-up to the euro: you can't have a common currency without a common polity."
Writing in the Guardian, Simon Jenkins argues: "Since the debacle of the Lisbon referendums, Euro-pluralism has emerged as proof against ever closer union. The Single European Act of 1986 appears to have been a sort of psychological boundary, beyond which political unity should not have strayed. Go too far, as did the Lisbon treaty, and the threads would snap."
Industry warns that FSA abolition puts UK on "back foot" over EU financial regulation
The FT reports that trading experts have warned against the abolition of the Financial Services Authority. The article quotes Barney Reynolds, a lawyer at Shearman & Stirling in London, saying: "This [FSA move] weakens the position of our officials by creating distraction and reinforcing continental European views of past failure, at a time when there is a power grab going on in the EU financial sector and the UK is already on the back foot."
Coalition strains in Germany could spell trouble for Europe
Several papers report that Angela Merkel's ruling CDU-CSU-FDP coalition is coming under increasing strain. FAZ reports that the test of cohesion for the coalition will come with the election of a new President on 30 June, with some FDP MPs declaring their support for the opposition candidate Joachim Gauck, proposed by the centre-left SPD and the Greens. The WSJ notes that Angela Merkel has warned that Europe is at a crossroads, and suggests that "Backing down now could spell the end of the euro, she has warned. In Germany lies the key. The rest of Europe, and world financial markets, will be watching how successfully her wobbly coalition can force its controversial budget cuts through German parliament this autumn."
EU leaders yesterday agreed to open up membership talks with Iceland, despite the failure to thus far solve the Icesave issue with Britain and the Netherlands. According to EU diplomats, Dutch PM Jan-Peter Balkanende told his fellow leaders: "We won't block negotiations, but there are hard demands Iceland has to meet", reports EUobserver.
Sarkozy to visit Turkey this year on 'make or break' visit for membership bid
EurActiv notes that French President Nicolas Sarkozy is to travel to Turkey later this year on what may be a 'make or break' visit for Turkey's EU membership bid, and cites Turkish President Abdullah Gül saying that Turkey will not accept any framework for its relations with the EU other than full membership. The article also quotes French Europe Minister Pierre Lellouche saying: "Turkey has its project, which is membership, and we have another one, which is partnership".
Meanwhile, the Economist's Charlemagne column argues that "American voices accusing Europe of losing Turkey are guilty of oversimplification, and of ignoring what a big deal Turkish membership of the EU would be."
De Morgen reports that a building firm has been awarded the project to build the new headquarters of the European Council in Brussels, which will house EU President Herman Van Rompuy. The contract is for €180 million, but the article notes that, with study expenses, removal of asbestos and preparation works the total cost will be more like €315 million.
Finnish PM Matti Vanhanen will today officially hand in his resignation - which he had announced he would do in December. He will be replaced by Mari Kiviniemi, the second woman to hold the position.
The FT reports that the IMF has warned France against over-optimistic growth predictions, and said it should rely on independent economic forecasts when drawing up its public deficit reduction plans.
An article in the Independent looks at the lobbying effort behind the EP's decision to vote against the traffic light system for food labelling, and notes: "Lobbyists accosted MEPs in bars and restaurants and began turning up in their offices without appointments. They bombarded MEPs with documents, reports and factsheets praising GDAs and undermining traffic lights."
The WSJ reports that EU leaders yesterday agreed on a significant widening of EU sanctions against Iran because of concerns over Tehran's nuclear-weapons program. The sanctions go significantly beyond those approved by the UN Security Council last week, and target Iran's oil and gas industries. The specific details of the measures will be agreed on by European foreign ministers when they meet next month.
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