Head of Flemish employers association: Greece, Portugal and Spain should leave the eurozone;
EU Commissioner: Voting rules should be changed to allow Commission to "push through sanctions"
According to Handelsblatt, EU Monetary Affairs Commissioner Olli Rehn has not ruled out changes to the EU treaties in order to step up EU economic governance but added, "Member states must decide whether to risk a new treaty." On the question of whether sanctions for states that break the rules should be automatic, he said that eurozone finance ministers would be reluctant to impose sanctions by majority vote but added that changing the voting rules "would enable the Commission to push through sanctions in the Eurogroup and Ecofin." In Die Presse, he is quoted saying that "There should be sanctions for those who oppose reforms on economic imbalances."
Writing in Belgian daily De Morgen, Johan Van Overtveldt, head of the Flemish employers organisation VKW, argues that Greece, Portugal and Spain should leave the eurozone. He argues that Commission President Jose Manuel Barroso is wrong to suggest that "The only way in which to avoid democratic apocalypse in Southern Europe", is through government austerity. Van Overtveldt argues that, "These programs will destabilise society if they cannot be implemented within an environment of economic growth."
He concludes that leaving the euro would "immediately bring about a recovery of international competiveness. Becoming poorer will be inevitable, but will happen much more gradually...Without doubt leaving the Euro is a hard and delicate operation, which will have to be dealt with by unified European forces."
Meanwhile, EurActiv France notes that leading French Socialist MEP Pervenche Berès told the French Parliament's European Affairs Committee on Wednesday that the approaches to economic governance by the Council and the Commission proposed so far are too restricted, and that she wants the issue addressed more broadly in a report to be voted on by the European Parliament in October.
The article notes that proposition 156 of the report envisages the creation of a "Mr Euro", who would combine the positions of Economic and Monetary Affairs Commissioner, the President of the Eurogroup, and the President of the Council for Economic and Financial Affairs. Berès added that, "The EU must be equipped with the financial and budgetary means it needs to take action autonomously", proposing that the proceeds of a financial transaction tax be an own resource for the EU budget.
A leader in the WSJ argues that, "As long as the deficit rules are subject to political manipulation in Brussels, the euro will have a problem with compliance."
Fears that new Slovak government could stall €440bn eurozone bailout fund;
Investors question creditworthiness of the fund
The Irish Times and the FT report that the incoming Slovakian government's objections to the eurozone bailout package are stalling its implementation and "ringing alarm bells in Brussels". Although Iveta Radicova, expected to be the new Prime Minister, softened the line yesterday, she failed to make it clear when or if her incoming government would sign up. "We do not want to block other EU countries and the political agreement that has been sealed. We cannot, however, guarantee its approval in parliament or the ratification by the Slovak president," she said.
Meanwhile, the FT reports that many investors are concerned that member states such as Spain and Portugal will be unable to meet their commitments to the eurozone's €440bn share of the bailout fund should it be called upon to meet the cost of unpaid government loans. The article notes that there are severe doubts that the fund will command a triple A rating, which is unlikely to restore confidence in eurozone nations' finances.
Hedge funds may yet be exempt from new EU rules on bonuses
Writing in the Telegraph, Louise Armistead notes that hedge fund experts suggests that they might yet be exempt, with the directive's wording reading: "The principles recognise that credit institutions and investment firms may apply the provisions in different ways according to size, internal organisation, complexity of activities... it may not be proportionate for investment firms to comply with all the principles." A leader in the Independent argues that "the surprise is that the new rules will apparently apply to hedge funds too. Is this wise? Not necessarily", adding that it could distract "from the more important task of monitoring their activities."
Meanwhile, the Telegraph reports that UK Labour MEP, and Chairwoman of the EP's Internal Market Committee, Arlene McCarthy will next week visit US Treasury Secretary Tim Geithner to try to persuade him to adopt similar proposals on bankers' remuneration to those planned by the European Parliament. The proposals mean that between 40 and 60 percent of bankers' bonuses would have to be deferred for three to five years and half the upfront bonus would have to be paid in shares or in other securities linked to the bank's performance.
The Irish Times notes that German Chancellor Angela Merkel was facing growing pressure to call a confidence motion yesterday after government rebels turned Wednesday's presidential election into a marathon no-confidence motion in her leadership. According to an ARD-Germany poll 62 percent believe that the CDU-FDP coalition will not last until the next election.
UK pushes for changes to language rules to boost representation in EU institutions
There is widespread coverage of Foreign Secretary William Hague's first major foreign policy speech yesterday, in which he pledged to increase British influence in the EU. A leader in the FT argues that "As Conservative shadow foreign secretary, Mr Hague pursued a hardline Eurosceptic policy...In office he is proving to be rather more pragmatic...This is surely the right approach as it will ensure that British voices will be heard throughout the European institutions." However, the FT Deutschland complains that "20 minutes elapsed before the words 'in groups such as the EU' came out" and questions how Mr Hague will finance his "ambitious foreign policy."
Open Europe's Mats Persson was interviewed by Deutsche Welle Radio, discussing the speech and British influence in the EU.
Meanwhile, the Telegraph reports that the UK is pushing to change the foreign language requirements of the Brussels civil service exams. At present, all candidates must complete entry examinations in a second language, but Britain has succeeded, from next year, in making sure that preselection tests for EU civil service exams can be taken in the candidate's first language. However, France is defending the linguistic requirement, fearful that the use of French is slowly dropping away.
Sarkozy: "When it's about the CAP, my margin of negotiation is non-existent";
Le Figaro reports that French President Nicolas Sarkozy has pledged to French farmers not to give in during negotiations over the future of the EU's Common Agricultural Policy (CAP). "I've done enough on behalf of France to drag Europe out of the rut during the crisis. When it's about the CAP, my margin of negotiation is non-existent", he said.
Meanwhile, during a press conference held in Vienna yesterday, EU Commissioner for Agriculture Dacian Ciolos warned of what he sees as the possible "risks" deriving from CAP budget cuts. "We need to make it clear: any reduction of the CAP budget would put further pressure on national budgets. I cannot believe that national governments will not try to secure food supplies and safeguard our natural resources", he argued. "Less than 1% of the EU GDP - including national budgets - for agriculture: this doesn't seem to me an excessive level of expenditure for all [CAP] objectives," he added.
On his Telegraph blog, Daniel Hannan MEP recounts his appearance at Open Europe's recently held event in Brussels, arguing that European prosperity was built on "a nexus of competing states, each striving to outperform its neighbours, each able to copy what worked elsewhere."
Bundesbank withdraws support for full disclosure of EU stress tests
The WSJ reports that doubts have been raised over the rigour of the EU's proposed banking stress tests after a German central banker admitted that regulators can't force banks to comply with demands for full transparency. "The stress tests should be published, but only on the basis of agreement with the respective banks," said Franz-Christoph Zeitler, head of the banking supervision department at the Bundesbank. Le Figaro reports that at least 20 European banks are expected to need to raise funds after the stress tests' results are disclosed at the end of July.
Commission exploring "legal initiatives" to encourage EU pension reform
A leaked document from the Commission's working group on pensions, obtained by EurActiv, notes that the group is called upon to examine "areas where legal initiatives could be warranted in order to ensure that the EU adds value".
Guy Verhofstadt MEP wants to free EU diplomatic service from national interests
In a letter to French daily Libération, Belgian MEP and leader of the Liberal group in the EP Guy Verhofstadt rejects the idea of the European External Action Service (EEAS) being subject to EU member states' political control. He writes: "Some nostalgic of what Europe was at the time of the Congress of Vienna, following the example of [French Europe Minister] Pierre Lellouche, would like the EEAS to become the docile servant of national interests."
Meanwhile, EU Foreign Minister Catherine Ashton has hired a Polish secret service agent to shape the internal security of the emerging European External Action Service (EEAS), EUobserver reports. He will chair a new "working group" meant to design protocols for the EU's diplomatic corps. The group also includes Commission delegates, the EU Council, the Belgian EU Presidency and representatives from member states with particular expertise in security issues.
EU proposes harmonised contract law
Sueddeutsche reports that the Commission will present a new Green Paper on harmonising contract law in the EU. Meanwhile, in an opinion piece in FAZ, leading civil rights activists warn that "While especially German and English critics fear an erosion of individual freedom, lawyers from Nordic states and also the French fear a loss of the social aspects of their private law."
Writing in the Telegraph, author Bjorn Lomborg argues that, "Expensive, poorly conceived carbon-emission plans such as the EU's will cause major economic damage and political strife, while doing little to slow global warming. Europe must change course."
EUobserver notes that the European Court of Justice has ruled that a pregnant worker granted leave from work or temporarily transferred to another job because of her pregnancy should be paid the money they were earning before the move. The Court also ruled that pregnant women that were no longer performing specific tasks rewarded by extra payments, such as on-call duty, are not automatically entitled to those payments.
British auction houses fear that an EU levy on artworks by recently deceased artists, due to be introduced in 2012, could undermine Britain's position as the world's second biggest art market.
In his final column, the Economist's Charlemagne notes that his "is a low-church sort of Euro-faith. And it does not run to believing in miracles like pan-European democracy. In the real world when democracy gets much beyond the nation-state, it stumbles."
The WSJ carries a lengthy feature looking at the tensions in the Franco-German relationship, arguing that they are "on different sides of crucial issues in Europe's debate over its economic future, from how best to encourage growth to how to tackle rising public debts."
In the WSJ, Stephen Fidler argues that the eurozone's uncompetitive economies in the South should follow Finland's model of a flexible payroll tax in order to adjust their labour costs.
In an interview with the Times, Turkish President Abdullah Gül rejects suggestions that Turkey is somehow turning its back on the West, adding: "I consider it very wrong to interpret Turkey's interests with other geographic regions as it breaking from the West, turning its back on the West or seeking alternatives to the West. Turkey is part of Europe."
The Guardian notes that Nick Clegg's new website aimed at gathering public suggestions for the repeal of oppressive laws repeatedly crashed yesterday due to heavy traffic.
A referendum on whether or not to change Britain's electoral system to the alternative vote will be held on 5 May 2011, Deputy PM Nick Clegg will announce next week according to widespread reports.
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: openeurope.org.uk or call us on 0207 197 2333.