Wednesday, October 27, 2010

Open Europe press summary: 27 October 2010


EU Commissioner: Franco-German calls for treaty change are "irresponsible";
Commission seeks eurozone crisis mechanism without treaty change;
The creation of a permanent crisis resolution mechanism for eurozone countries will be discussed at the European summit this Thursday and Friday, following Franco-German calls for EU treaty change to enable struggling eurozone countries to default. The Mail and the Express report that comments from Downing Street that David Cameron may agree to treaty change in return for a one-year cash freeze on the 2011 EU budget has attracted widespread criticism from Conservative backbenchers, who have called for Cameron to repatriate powers. Open Europe is quoted by Euractiv saying that the prospect of a new treaty constitutes "a once-in-a-generation opportunity to renegotiate the UK's relationship with the EU" and bring powers back from Brussels.

Meanwhile, EU Economic and Monetary Affairs Commissioner Olli Rehn said yesterday that the Commission would "by far" prefer introducing a permanent crisis resolution mechanism without treaty change. He added that Germany's proposal to suspend voting rights within the Council for countries in breach of EU rules on deficit and debt "is not necessarily in line with the idea of ever closer union."

In an interview with Die Welt, EU Justice Commissioner Viviane Reding said that Franco-German calls for Treaty change are "irresponsible". Reding is quoted in Le Figaro saying that "decisions [in the EU] are not taken in Deauville, but at 27 and by unanimity". She goes on to argue: "France and Germany are the two countries who scuttled the first version of the [Stability and Growth] Pact in 2004 and 2005. The euro has undergone a severe crisis since, but it seems like someone has not yet drawn the lesson...We must stop destroying what the EU institutions propose."

French Europe Minister Pierre Lellouche is quoted by AFP saying that Reding's declarations are "unacceptable".  "When you are a European Commissioner, and moreover Vice-President of the Commission, is it conceivable that you call the President of the French Republic and the Chancellor of the Federal Republic of Germany 'irresponsible'?" he argued.    

Focus quotes German opposition party SPD Vice-Chairman Axel Schaefer saying plans for a treaty change are a "mirage" as all 27 member states must agree to them. In the WSJ, Terence Roth argues: "A permanent crisis management facility may prevent another mortal threat to the euro-zone project. So if the eurozone's top two national leaders are to go down in defeat on their bid to reopen the treaty, they might as well do so in a worthy cause."

An opinion piece in Die Zeit suggests that while France and Germany often lead Europe, "what is the point, if the two-stroke engine runs so fast that it breaks down the body of the EU-vehicle?" The newspaper compares the proposed Franco-German request to being "like trying to persuade a round of alcoholics not only to abstain but to also understand the need to fine them, should they drink again."

Open Europe eurozone debate in Berlin: German MPs warn that 'EU solidarity' doesn't extend to constant wealth transfers from North to South
Open Europe yesterday hosted a debate in Berlin in cooperation with the Bertelsmann Foundation, discussing how the eurozone crisis has affected Germany's relations with the EU. German Green MP Manuel Sarrazin argued that Germany has benefited from the introduction of the single currency, but that continuous transfers of money from stronger to weaker eurozone countries made in the name of "European solidarity" are not a viable solution in the long term.

Open Europe Vice Chairman Derek Scott pointed out that the least expensive solution for Germany would be leaving the euro. Otherwise, Germany may face perpetual payments to deficit countries. German Liberal MP Frank Schäffler noted that "there is a misunderstanding in the concept of [European] solidarity" and that EU law is being broken "in a manipulative way" to support cash-strapped eurozone countries. He also said that Greece will not regain competitiveness while it is in the "chains" of the euro.

A more extended write up will be available on our events page later today.

Final deal reached on the AIFM Directive;
Xavier Rolet: London Stock Exchange at risk from "jealous" regulators in Europe
EU finance ministers and MEPs have reached a compromise deal on the EU's AIFM Directive on hedge fund and private equity managers. The proposal will by 2018 give the Commission and the soon-to-be created European Securities and Market Authority the right to decide whether funds and managers based outside the EU should be granted EU-wide market access.

Open Europe Director Mats Persson was quoted in the Mail saying that the compromise deal would be less damaging than the plans originally proposed by the Commission. But he warned of the risk that the EU's new powers on market access could in future be hijacked by protectionist forces, which would have "a negative impact on growth and investment in Europe at a time when we can least afford it". Mats is also quoted by The Parliament.

Meanwhile, the Telegraph reports that the French Chief Executive of the London Stock Exchange Xavier Rolet has warned MPs that the LSE is at risk from "jealous" regulators in Europe.

Open Europe's Pieter Cleppe was interviewed by German television ARD yesterday, criticising the spiralling cost of the EU's Galileo satellite project, which Open Europe research shows will cost European taxpayers €22bn over 20 years.

Markets spooked by prospect of Greek election
The Telegraph reports that Greek PM George Papandreou has said he will call national elections if his party fails to win upcoming local elections. The main opposition group - New Democracy - has not yet confirmed if it would honour the conditions of the EU-IMF €110bn bailout plan. A socialist rebel candidate opposed to the terms of the bailout currently leads the polls for the Athens region. Yields on 10-year Greek bonds jumped 31 basis points to 9.57%.

Meanwhile, Ireland's government said yesterday that budget cuts of €15 billion are needed over the next four years, double the amount previously expected, in order to meet EU targets, reports the WSJ.

Proposed EU rules on gender discrimination could increase women drivers' insurance premiums by 25%
The Mail reports that research commissioned by the Association of British Insurers reveals that the proposed EU directive on gender discrimination could see costs rise for women drivers by as much as 25% while pension payments made to men would decrease.

AFP reports that EU agriculture ministers met yesterday in Luxembourg. France, Italy and Germany rejected the abolition of direct aid to farmers.

On his BBC blog, Gavin Hewitt argues: "The idealism, the grand projects, the dreams of ever closer union have lost their appeal to a new generation. The memories of war have faded. The Cold War has been consigned to history. The great expansion of democracy to Eastern Europe is over. Increasingly Europeans approach the EU like any other institution and ask what is it delivering, what is it for?"

An editorial in Le Monde looks at the future of the European External Action Service and argues: "If the [EU's] diplomatic service is to avoid bureaucracy and stalemate it will have to be first and foremost realistic: it will not be the tool of a Europe 'which speaks in a single voice' or of the 'Europe puissance' imagined by the founding fathers."

The WSJ reports that EU officials say they hope to pressure China into conceding more openness and access to public procurement contracts for European firms.

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