Europe
France wants new EU supervisor to issue passports for third-country-based hedge funds;
US Treasury Secretary: France's proposals are "discriminatory" and "unfair"
The FT reports that EU member states seem to be closer to a deal on hedge fund rules. This comes after France dropped its opposition in principle to the introduction of a passport giving managers of funds based in third countries marketing rights throughout the EU, once they meet certain regulatory conditions. However, French officials insist that the power to issue such a passport should be entirely remitted to the new Paris-based European Securities and Markets Authority.
Meanwhile, Reuters reports that the US Treasury Secretary Timothy Geithner has written a letter to French Economy Minister Christine Lagarde, warning that "a proposal that limits or delays the access of third country firms to a passport - while granting EU domiciled managers and funds access to the European market - would be discriminatory and contrary to G20 commitments. We would consider adoption of such a proposal as unfair and damaging to our shared interest in maintaining an open, global financial system".
Swedish and German parliaments try to block Commission proposal under Lisbon Treaty;
Deadline to get support from nine national parliaments is 25 October
The Swedish Parliament, the Riksdag, and the German Bundesrat have objected to the Commission's proposed amendments to the Deposit Guarantee Schemes Directive. Under the amended Directive, deposit guarantee schemes must offer depositors up to €100,000, if their bank collapses. The schemes are to be 75% pre-funded from bank contributions, with the remainder coming from other sources. However, the Riksdag is opposed to a provision in the Commission's proposal which could see an EU country being forced to lend money to other member states' funds, if these funds face a shortfall. The Riksdag, going against the Swedish government, said that such mandatory lending could lead to some member states under-funding their deposit schemes, knowing that someone else would act as the lender of last resort. The Bundesrat and the Riksdag also argued that the provision represents a violation of the EU's subsidiarity principle.
The Lisbon Treaty gives national parliaments the right to ask the Commission to re-consider - but not scrap - a proposal, if a third of national parliaments object to the proposed legislation within an eight week window. The deadline for national parliaments to object to the Deposit Guarantee Schemes Directive is 25 October, and so far only six parliaments have even begun scrutinising the proposal, since it coincides with parliamentary recesses in most countries. This is the first time the new provision in the Lisbon Treaty has been tested. The Bundestag will today decide whether to officially object to the proposal, reports DPA.
Cost of EU's Galileo satellite system sky-rockets
FT Deutschland reports that the European satellite navigation system Galileo will far exceed previous cost estimates, needing an additional €1.5bn to €1.7bn. Galileo will launch with a 10 year delay and cost the European taxpayer about €20bn over the next 20 years. Klaus Hagemann, member of the budget committee for the German SPD party, said that "it's a very big deal that it is only revealed now that Galileo will need long term subsidies".
€10m EU contract to press agency raises conflict of interest fears
The Parliament reports that the EU has contracted the AFP news agency to provide 24 hour media coverage of the European institutions in six languages. The contract, worth an estimated €10m over four years, will also "establish image banks illustrating the themes of major importance to the commission, the parliament and the councilof Europe." AFP has issued a statement saying, "AFP has decided to develop this activity as a totally separate entity from editorial; the contract is being managed by a wholly-owned subsidiary of AFP and by a specially formed unit to avoid any possible conflict with its traditional role as a news agency."
Stern reports that German Finance Minister Wolfgang Schaeuble has offered his resignation to German Chancellor Angela Merkel, which has so far been rejected. Eurointelligence notes that his possible successor Thomas de Maizière is "known for his eurosceptical views."
The Nouvel Observateur reports that French Foreign Minister Bernard Kouchner could quit his post shortly. The magazine reveals that he presented a letter of resignation to French President Nicolas Sarkozy at the end of August, lamenting a series of "humiliations" he had been subjected to by Sarkozy's personal advisors.
Hague announces sovereignty clause and referendum lock
There is widespread coverage of William Hague's announcement yesterday that the Government will table a European Union Bill containing a sovereignty clause and 'referendum lock'. The Mail quotes Open Europe's Stephen Booth welcoming the proposals but warning, "These safeguards are not enough in order to inspire public trust on their own. There are still areas under the Lisbon Treaty, such as justice and home affairs, where there is still a day-to-day risk of powers being ceded to Brussels and EU judges in particular."
Ireland's credit rating downgraded again;
Declan Ganley: One year after the Lisbon Treaty "we are closer to ruin"
The WSJ reports that Ireland was hit by a further ratings downgrade by Fitch yesterday. City AM quotes Evolution Securities' Gary Jenkins saying that the markets are pricing in an Irish bailout. He said, "Clearly there isn't a default scenario being priced in because otherwise the yields would be a lot higher. At the moment Europe daren't do anything other than bail them out because the system is so fragile that if one country fails the knock-on impact could lead to a complete meltdown." However, he added, "But fast forward four years: if the economic outlook is rosier, the ECB might allow one of them to go".
The Irish Times reports that Ireland's EU Commissioner Máire Geoghegan-Quinn has denied Brussels is "dictating the pace" of current austerity measures to the Irish government.
In The Journal.ie, Declan Ganley, Chairman of the Libertas group, evaluates Ireland's economic situation one year after the Lisbon Treaty was approved in a second referendum, arguing that "one year on, we are closer to ruin, and farther from recovery, than could have been imagined possible". He argues that "We were told it would make the EU more democratic - but we are still being lectured by unelected commissioners...We now have the spectre of the EU Commissioner telling us that we must become a high tax economy - instead of being free to focus on growth and renewal".
WSJ City AM La Tribune FT Irish Independent: Keenan Les Echos FT blog: Alphaville IHT City AM 2 Irish Times Irish Independent 2 TheJournal.ie: Ganley
Fears over "currency war" increase as China rebuffs the EU
At yesterday's EU-China summit, Chinese Premier Wen Jiabao hit back at EU criticisms that China's currency is undervalued, saying "don't join the chorus pressing to revalue the yuan", warning that the move would "bring disaster to China and the world", reports the WSJ. The Summit also saw China push the EU to reclassify China as a 'market-economy', in a bid to reduce tariffs for Chinese exports to Europe.
Regulators meet in London to discuss EU rules on bankers' bonuses
The Independent reports that financial regulators from the 27 EU member states will today meet in the City of London to agree new rules on bankers' bonuses. The article notes that the most interesting outcome of today's meeting will concern how much of bankers' remuneration packages will be paid in cash, with the FSA proposing that 50% of any remuneration package should be in shares or other equivalent non-cash instruments.
Bloomberg reports that chief executives at Denmark's top three financial companies have advised that the country may stay out of the euro for at least five more years. Public support for the euro is dwindling; the last poll showed that 47% of Danes support the euro, compared to 51% who want to keep the national currency.
A leader in the FT argues that the European Parliament should ratify the EU's new free trade deal with South Korea in order to dispel the popular opinion that "MEPs are less immune than the European Commission to protectionist interests and the lobbyists in Brussels who promote them."
EU transport ministers are poised to strike a deal that would require lorry drivers to pay for the environmental harm caused by their vehicles. The new rules would apply to any motorway in the EU.
Kyiv Post reports that the Ukrainian Parliament has voted down the resolution suggesting Ukraine submit its application for membership of the European Union.
Turkish Prime Minister Tayyip Erdogan has asked the EU to clarify its position on Turkey's potential EU accession, reports Europa Press. "If you don't want Turkey in the EU, you must say it...don't keep us waiting", he said.
The Telegraph reports that banks may have to offer basic current accounts to all adults, regardless of their credit history or income, under new regulations proposed by the EU.
Euractiv reports that MEPs in the Constitutional Affairs Committee have agreed on a new "Framework Agreement" with the European Commission, paving the way for the European Parliament to be given more decision-making powers in accordance with the Lisbon Treaty. The agreement will be voted on by the European Parliament's plenary session on 20 October.
EUobserver reports that a group of EU Commissioners from smaller member states is growing increasingly angry with a number of their larger-state colleagues, perceiving their actions as being driven by national interests.
Final negotiations on the controversial Anti-Counterfeiting Trade Agreement (ACTA) have been completed in Tokyo, with EU sources insisting that the draft accord will not restrict the freedoms of EU citizens or require legislative changes.
The latest attempt to establish an EU-wide patent system looks increasingly likely to fall through in the face of continued Spanish and Italian resistance to the scheme's proposed language regime, which would only include English, French and German.
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.
