Tuesday, September 07, 2010

Open Europe press summary: 7 September 2010



UK Government set to endorse the creation of EU financial supervisors

Il Sole 24 Ore: "London knows that it can only limit the damage"

PA reports that UK Chancellor George Osborne is today set to endorse the proposals for the creation of a European Systemic Risk Board and three new EU supervisors to oversee financial markets in the EU at a meeting of EU finance ministers. A Government spokesman is quoted describing the proposals as "a good deal for us" and arguing: "We are happy with this. Once it has been agreed by finance ministers, the technical details will be sorted out by national officials later this week or next week. But day-to-day supervision [of British banks and financial institutions] remains at national level - that is what we have said all along".


Open Europe's new briefing on the new EU supervisors is cited in several British and European media outlets. The briefing argues that new supervisors could benefit the City of London but that the voting structure in the supervisors also leaves the UK in an unusually weak position to block proposals it disagrees with. Open Europe's Director Mats Persson is quoted by Italian daily Il Sole 24 Ore arguing: "Once established, the EU supervisors are likely to extend their powers incrementally, since the proposal is designed to allow for more and more laws to come under their authority".


The article goes on to note that "London knows that it can only limit the damage in comparison with the objectives it had initially set" on the reform of financial supervision in the EU, and notes that from "now on [the Coalition government] will probably follow Open Europe's advice and seek alliances" on financial regulation with other European countries. Mats is also quoted by PA, the Express, Le Monde, Dow Jones Newswires and by Chinese news agency Caixun. Conservative Home also mentions Open Europe's briefing.


In the WSJ, Patience Wheatcroft takes a detailed look at Open Europe's report, citing the conclusion that "a 'single rulebook' [for financial institutions] could benefit the City, but that assumes that the UK will write it". She argues, "Instead, the rulebook will be written by a committee of disparate interests. The issue is just the latest to highlight the tensions in the EU that emanate from the fact that it encompasses some very different economies. While the initial powers proposed for the new regulatory bodies are limited, there is scope for them to become much stronger. There could be battles ahead". Also citing Open Europe's briefing, Allister Heath argues in City AM that, "One of the problems with Gordon Brown's idiotic tripartite regulatory system was that powers and responsibility were divided; it is absurd, therefore, that the coalition is willing to sign up to a similarly fudged solution on a European level."


Meanwhile, in an interview with Libération, French MEP Sylvie Goulard - European Parliament's rapporteur on the European Systemic Risk Board - says: "Member states have refused to give [the new EU financial supervisors] direct powers (although envisaged in the Maastricht Treaty) over cross-border institutions. The European Parliament will try to impose their control during future negotiations on the regulation of credit rating agencies and clearing houses [...] We have clashed with member states at every stage of negotiations. This is why we did not manage to scrap the article establishing that a country can appeal against decisions from EU supervisors if they have an impact on its budget".


Later today, finance ministers from member-states will discuss Internal Market Commissioner Michel Barnier's proposal for a pan-European network of bank levies. Notably, Britain and Germany disagree on whether the revenues of the tax should go back to national budgets or should be ring-fenced for nationally based "bank resolution" funds, reports the FT. Euractiv reports that an internal Commission paper criticises the first approach, saying that it would "handicap [national] authorities' ability to coordinate intervention in a cross-border case". However, a Treasury source quoted by City AM said: "We have been very clear that revenues should go to the Exchequer and should not be ring-fenced nationally or at a European level".


Separately, the Commission has also proposed that the EU should look at introducing transaction taxes and bank activity taxes. France and Germany reportedly support an international transaction tax. Het Financieele Dagblad reports that 70 percent of the revenues from such a tax would be raised in the UK. However, Handelsblatt reports that the unilateral introduction of a financial transaction tax is off the table.

PA WSJ: Wheatcroft Express City AM: Heath Conservative Home Le Monde Il Sole 24 Ore Caixun El Pais Today Programme: Fraser Telegraph FT EUobserver European Voice EurActiv WSJ City AM FT FD Handelsblatt This is Money HLN Dow Jones


UK Government insists the rebate remains "fully justified" on grounds of fairness

EU Budget Commissioner Janusz Lewandowski's announcement that the British rebate "has lost its original justification" has met with widespread criticism in the British press. A UK Treasury spokesman insisted the rebate remains "fully justified" as "without the rebate, the UK's net contribution as a percentage of national income would be twice as big as France's, and one and a half times bigger than Germany's", reports the Telegraph. Open Europe's Mats Persson is quoted in the Telegraph saying: "This government must not repeat the mistakes of its predecessor and hand over billions of pounds of taxpayers' cash in return for vague promises which lead to nothing. The EU budget is out of date, inefficient, irrational and extremely wasteful. Until it's cut in size and fundamentally reformed, the UK's rebate remains wholly justified." Mats also appeared on the BBC's Today Programme this morning.


A leader in the Mail argues: "This breathtakingly hypocritical proposal is an early and important test for David Cameron's handling of our relationship with the EU. Not only must he defend - as he has promised - our rebate. He must also make it clear that there cannot possibly be an increase in the EU's budget in a year when the UK will cut spending in key areas by one quarter. Brussels must learn - like the rest of us -to live within its means."

Die Presse Telegraph Times FT Express Express: Leader Mail Mail: Leader Today Programme BBC IHT EurActiv Independent ORF News AdHoc


Finance ministers agree EU peer review of national budgets;

Italian Economy Minister: "This will be a huge devolution of powers from national governments to Brussels"

EU finance ministers yesterday agreed changes to the EU's budget rules, which will introduce a so-called "European Semester" to co-ordinate and supervise national budgets for the forthcoming year. Under the agreement, national budgets will be "monitored in parallel during a six-month period every year, starting in 2011, so as to detect any inconsistencies and emerging imbalances." Based on reports from the European Commission "the European Council and the Council will provide policy advice before the member states finalise their budgets for the following year."


Reuters quotes Italian Economy Minister Giulio Tremonti who said ahead of the meeting that, "This will be a huge devolution of powers from national governments to Brussels." He added, "Budget policies in European countries cannot be national policies any more."


Discussions on proposed sanctions for countries which do not comply with the EU's budget rules are still under discussion. Bloomberg quotes Economic and Monetary Affairs Commissioner Olli Rehn saying, "We agree on the need to have credible sanctions. It's a bit like a football game. It won't work if the players start to discuss and argue the rules of the game with the referee every time they commit a foul." However, German Finance Minister Wolfgang Schaeuble has said that he fears a return to economic stability is slowing Germany's push for tighter rules and sanctions, saying there had been "a slight slackening of the dynamism to draw consequences" from the crisis.


The article notes that discussions have moved to "quasi-automatic" sanctions rather than the automatic sanctions favoured by Germany and the Commission, after countries such as France indicated they would demand a vote before any country is penalised. Spain, a big recipient of EU regional funds, is also reportedly reluctant to agree to these funds being taken away as a sanction.


EU Council President Herman Van Rompuy's taskforce on economic government also met yesterday to discuss the proposals. Van Rompuy will present a report to EU leaders at a summit on 16 September, with concrete proposals expected at the regular autumn summit in October.

Bloomberg Council press release Reuters DPA FAZ Il Sole 24 Ore La Repubblica Reuters Italia ASCA AGI Euractiv.fr Il Gioranle Nouvel Observateur El Mundo AFP


BIS report: Banks in euro-zone countries hold the greatest share of bonds from the PIIGS countries

A report by the Bank for International Settlements (BIS) has revealed that European banks increased their holdings of Greek, Irish, Portuguese and Spanish debt in the first quarter, despite the sovereign debt crisis. Banks in euro-zone countries hold the greatest share of bonds from the PIIGS countries. The report argues that European banks were most likely to buy the debt because they could use it as collateral for funds from the European Central Bank, reports the Irish Times.


Meanwhile, the WSJ notes that the EU's banking stress tests understated some lenders' holdings of potentially risky government debt, with figures from the Bank for International Settlements showing much larger holdings of Spanish and Greek debt by Europe's banks.

WSJ Express.be Les Echos Irish Times AFP EUobserver Irish Independent: Keenan


Doctors' leaders angered by Government's failure to deliver on promise to review EU's Working Time Directive

The Times looks at the impact of the European Working Time Directive on the NHS and features a series of letters from medical professionals. John Black, President of the Royal College of Surgeons, warns that the "inflexible" limit is eroding the country's "hard-won reputation as a centre of excellence in medicine".


The coalition Government's programme promised "to work to limit the application of the Working Time Directive in the United Kingdom". However, Mr Black said he was frustrated by the lack of action from ministers nearly four months later. Andrew Lansley, the Health Secretary, had referred him to the Department for Business, Innovation and Skills, where Vince Cable will lead negotiations on the Directive at a European level next year. But so far, ministers had not agreed to take it farther, Mr Black said. "The issue seems to have become stuck between two government departments with neither taking overall responsibility," the letter adds.

Times Times: Finlay Times: Lister Times: Letters Open Europe research


Home Secretary to review application of European Arrest Warrant

The Telegraph reports that Home Secretary Theresa May is to launch a review of the UK's extradition agreements with the US and European nations. The review will examine five key areas of the 2003 Extradition Act, including the operation of the European Arrest Warrant (EAW). The number of people seized in Britain under an EAW has risen by more than 50 percent in a year.

Telegraph Mail


A comment piece by FT Brussels correspondent Stanley Pignal argues that the European globalisation adjustment fund is "plagued by poor design and sclerotic bureaucracy" reporting that only €140m of the €2bn fund has been used.

FT FT: Pignal Irish Times


An editorial in the WSJ looks at recent comments made by EU Trade Commissioner Karel De Gucht about Jewish people and notes: "A decade ago, the EU enforced a cordon sanitaire around Austria's government after a close election led the Christian Democrats to enter a coalition with Jörg Haider's Freedom Party [...] How times change. Last week, the European Commission's own trade commissioner, Karel De Gucht, gave vent to his own anti-Semitic riff on Belgian radio. This time, the official reaction seems to be a collective yawn".

WSJ: Editorial


Barroso to propose the creation of common European bonds to finance infrastructure projects

European Commission President, Jose Manuel Barroso gave his first 'State of the Union' address today using the US Presidential style format to outline EU priorities. Barroso also announced that he "will propose the creation of common European bonds" to finance major infrastructure projects throughout the EU, reports AFP. The article notes that the idea has so far been rejected by several EU member states - including Germany.


Contrary to earlier announcements, the Commission finally decided to scrap the controversial plan to fine MEPs if they did not attend the three hour speech, reports EUobserver.

AFP ASCA BBC El Mundo AFP EUobserver Telegraaf Spiegel


The Telegraph reports that Italian mafia groups are fraudulently claiming millions of euros from both the Italian government and the European Union by receiving generous grants designed to boost the use of alternative energies. The article notes that recent research by Kroll, international corporate security firm, has discovered examples all over Europe of criminals capitalising on 'clean energy' schemes.

Sunday Telegraph


Only a few weeks after the formal start of Iceland's accession talks with the European Union, the country's parliament is preparing for a vote on a resolution calling for the withdrawal of the membership application, reports EuroPolitics.



EU agencies and institutions cost the EU €1,66bn per year

A report in FT Deutschland reveals that the number of institutions and agencies outside of Brussels has increased from 12 to 38 in the last years employing a total of 6,700 bureaucrats and costing a total of €1,66bn per year. Examples include the Institute for Food Safety in Parma, the Agency for Chemicals in Helsinki and or the Network and Information Security Agency on the Greek island of Crete.

FT Deutschland



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