Cameron heads for row over EU calls to review national budgets before national parliaments;
Van Rompuy: We haven't ruled out Treaty change
Eurozone finance ministers yesterday reached agreement on the key mechanism by which they will operate the majority of the â¬750bn bailout fund for euro members. Under the agreement, a "special purpose vehicle" capable of raising up to â¬440bn, will be based in Luxembourg and be backed by individual guarantees provided by all 16 members of the eurozone, based on their shares in the ECB. Member states have also committed to guarantee an extra 20% beyond their share in the ECB, in case some countries are unable to provide financial guarantees due to economic difficulties of their own.
EU finance ministers also agreed new measures to step up EU economic governance, including the controversial proposal to submit member states' budgets to national finance ministers for 'peer review', and to the Commission, before they are submitted to national parliaments, and new sanctions for member states that break the EU limit of a 3% budget deficit. It is not yet clear what shape these sanctions will take but EU President Herman Van Rompuy, who is leading a taskforce to establish an EU 'economic government', said that yesterday's talks primarily concentrated on financial sanctions, as non-financial sanctions would involve changing the EU Treaty. La Tribune quotes Van Rompuy saying, "We have not ruled out future Treaty changes, but we have focused on what we can do in the short term."
The Telegraph quotes Van Rompuy saying, "A government presenting a budget plan with a high deficit would have to justify itself in front of its peers, among finance ministers". The article notes that the UK was left isolated in the meeting and that David Cameron will now face a potential row when he attends his first EU summit next Thursday, where Van Rompuy's proposals will be put for approval. A British diplomat is quoted saying, "The UK would not be prepared to submit draft budgets to the European Commission or peer review before putting them to parliament. We will not support measures that undermine the role of parliament." But EU officials and French diplomats have insisted that British Chancellors of the Exchequer will be required to give their budgetary plans to the EU not after they are given to MPs in Westminster, "but before or simultaneously". The UK would not be subject to the same sanctions as eurozone members under the current plans.
On his Telegraph blog, Policy Exchange Director Neil O'Brien notes that during a meeting in London yesterday, Van Rompuy said in response to a question on whether politicians failure to be transparent about the euro had illustrated the need for the EU to be more open in dealing with the eurozone crisis moving forward: "How we meet is not so important. We are in a crisis, not in some kind of exercise about the right negotiating model. I am not that bothered about whether we are transparent, the most important thing is the outcome." Citing Open Europe's press summary Neil describes the disillusionment with the euro in Germany and notes that Van Rompuy also admitted that the euro had acted as a "sleeping pill" for some governments, rather than a catalyst for reforms as its enthusiasts had hoped.
Meanwhile, a separate proposal agreed yesterday will see the European Commission given the power to monitor and intervene in national economic statistics. PA quotes a UK official saying, "We originally rejected this idea, but ...a lot has changed in the last few months, and people are ready to accept some things that they would not have done just a short time ago."
The Times reports that the IMF has put further pressure on eurozone governments to reform the euro's rules. "The euro area fiscal framework needs to be substantially strengthened to deliver the collective fiscal responsibility required for a well-functioning monetary union," it said.
FT City AM IHT Reuters FT: Brussels blog European Voice WSJ BBC EUobserver EurActiv European Voice Irish Times Bloomberg Telegraph Times Guardian Economist: Charlemagne notebook Telegraph: O'Brien blog Le Monde APCOM Le Monde 2 AFP La Tribune AFP Le Monde 3 LeParisien RFI European Council: Van Rompuy's remarks
William Hague: "We will not let ourselves be dragged further into the Eurozone"
In an interview with Le Figaro, Foreign Secretary William Hague has reiterated that the UK Government will not offer the eurozone any more financial support than it currently does. He said: "As regards the financial support Britain might offer the Eurozone, our stance is the same as for Gordon Brown's government. Our country has to face the largest budgetary deficit of its history [...] and our priority is the reduction of this deficit to a level where it can be kept under control. We are not in the condition to offer more financial guarantees".
When asked about UK participation in the bailout packages for struggling eurozone countries, Mr. Hague replied: "The previous government accepted participation in one of these funds a couple of weeks ago. We will take charge of our responsibilities and fulfill our commitments. But we will not let ourselves be dragged further into the Eurozone. This is not what British citizens expect from their government. And we will not offer more than what has been already proposed".
EU ministers agree controversial plan to return failed child asylum seekers
The Guardian reports that a plan agreed by EU justice ministers last Thursday will see member states return unaccompanied 16 and 17-year olds whose asylum claims have not been successful, back to their countries of origin, to "reception centres that can provide care for minors when the family cannot be found". The Times reports that money for the reception centres will be available from the European Return Fund, a budget run by the European Commission. The UK Border Agency received Â£425,000 in 2008 to develop such projects.
Estonia is to join the eurozone on 1 January 2011, after winning support from EU finance ministers last night, which will make it the seventeenth member of the single currency.
Ed Balls calls for rethink on EU free movement rules
Speaking to the BBC Politics Show on Sunday, former Cabinet minister Ed Balls said: "I support Turkey joining the EU...but the kind of transitional arrangements on labour, which we should have done to Poland and other AA countries in 2004, we absolutely must do for a sustained period, because if not the movement of unskilled Turkish labour across Europe will be so destabilising in our communities that we will not sustain political support for the European Union going on."
In his Observer article he also argued that "Europe's leaders need to revisit the Free Movement Directive, not to undermine the union, but to make it economically and politically sustainable. That means re-examining the relationship between domestic laws and European rules which allow unaccompanied migrants to send child benefit and tax credits back to families at home."
Merkel and Sarkozy postpone crucial meeting, amid continued Franco-German tensions
The FT reports that talks between Angela Merkel and Nicolas Sarkozy, in which they were expected to try to bridge their differences over new rules for the euro, were cancelled at the last minute yesterday and rescheduled for 14 June, adding to the impression of difficult relations between the two leaders. An editorial in Le Figaro argues: "The missed rendez-vous illustrates the difficulties in communication existing between the two big countries which should lead Europe in such hard times. It makes clear, above all, what Ms. Merkel's priorities are".
MEPs call for web searches to be recorded for up to two years
The Independent reports that over 300 MEPs have backed plans to force search engines such as Google to store details of web searches for up to two years. A Written Declaration, which has so far won the backing of 324 MEPs, would extend existing EU legislation which obliges internet service providers to retain basic session data for up to two years. The European Commission will have to examine the proposal should it win the backing of 369 MEPs, but it will be under no obligation to make it law.
Germany joins European austerity moves with â¬80bn cuts by 2014
There is widespread coverage of the German budget measures announced yesterday, which will see â¬80 billion cut from the budget by 2014. Net spending cuts in the first year will be â¬11.1bn, followed by â¬16.1bn in 2012, â¬25.7bn in 2013, and â¬32.4bn in 2014. The plan includes new taxes on air travel and the nuclear power industry, and some form of financial transaction tax, in addition to a banking levy already agreed by the German government. A decision on the abolition of conscription in the armed forces has been postponed, reports the FT.
Meanwhile, EU and national leaders have attempted to shore up confidence in Hungary, following damaging comments over the weekend, likening the country's situation to that of Greece. Eurozone Chairman Jean-Claude Juncker said yesterday: "I do not see any problem at all with Hungary. I only see the problem that politicians from Hungary talk too much", reports the IHT.
Spanish public sector workers are holding strikes today against the average five percent pay cut proposed by the government. Sueddeutsche reports that EU finance ministers meeting today will discuss additional steps that Spain, Portugal and Italy could take to reduce their deficits.
Commission considers extending bank levy to other financial firms
Reuters notes that a new report from the European Commission has said that the proposed levy on banks could be extended to other financial institutions, such as major insurers. "A levy should be applied to all banks, and possibly to other categories of financial institutions on the grounds that their failure would pose risks to financial stability and/or because they would profit from financial stability," says the report.
France and Poland line up to oppose reform of CAP
Le Monde reports that French Agriculture Minister Bruno Le Maire said yesterday that France will oppose any "reappraisal" of the EU's Common Agricultural Policy (CAP), beyond a revision of the outdated criteria for the distribution of farm subsidies, based on historical levels of production. During a joint press conference with his Polish counterpart Marek Sawicki, Mr. Le Maire said: "France, as well as Poland, calls for a strong and modern common agricultural policy, funded by an adequate budget. We are opposed to any reappraisal of the common agricultural policy".
Private Eye's Brussels Sprouts column notes that the Commission has estimated the windfall that companies are to receive from cashing in unused carbon permits under the Emissions Trading Scheme is Â£10.2bn. Up to 8 percent of the free allowances in the 2008-2012 period could be carried over to the next phase (2013-2020), which would equal around 766.5 million allowances, which currently sell at Â£13 each.
The IHT reports that EU Energy Commissioner GÃ¼nther Oettinger will announce a new "quality-certification" process for biofuels on Thursday, setting limits on fuels from sensitive areas like forests and partly drained peat lands, following long-standing criticism over the negative effects of biofuels.
A Belgian regional judge has lodged two complaints with the European Court of Justice, calling for the EU to ban the sale of cigarettes and the collection of excise duties on tobacco products in Belgium, and to examine if the sale of tobacco products goes against the Lisbon Treaty and the Charter of Fundamental Rights. In theory, if the judgement ruled that the sale were against the Lisbon Treaty, it could lead to smoking being banned across the EU. An EU tribunal will now consider whether the case is admissible.
Die Welt reports that French Europe Minister Pierre Lellouche has criticised the EU's Fundamental Rights Agency, asking: "What is the point of such an institution?" He adds that abolishing it would be "an opportunity to save money".
Germany's trade surplus widened slightly in April as a decline in imports outpaced a fall in exports, preliminary official data showed today.
An article in the FT looks at the EULEX mission in Kosovo and its investigation into allegations of money-laundering and embezzlement concerning the Kosovan Transport Minister, and suggests it is a big test for the mission.
EUobserver reports that officials working on the creation of the EU's External Action Service believe it could be up and running by 1 December. Negotiations between EU Foreign Minister Catherine Ashton and leading MEPs will continue today. A meeting of European Parliament group leaders may be ready to give their support to the proposal at a meeting on Thursday.
The Irish Times reports on the ongoing dispute between Spain and the Commission over the rotating EU Presidency's proposal for an EU-wide protection order for victims of domestic violence. Spain is now claiming that the UK cannot block the initiative, because of the protocol allowing its 'opt-out' from Justice and Home Affairs initiatives under the Lisbon Treaty.
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