Europe
Germany to demand EU treaty changes to establish eurozone "crisis resolution mechanism";
Former EU Commissioner: Ireland must make further cuts to avoid bailout
The FT reports that Germany will next month outline proposals for a permanent "crisis resolution mechanism" for the eurozone, laying down rules for member states facing debt rescheduling - proposals that would require changes to the EU treaties. The new mechanism would replace the €440 billion European Financial Stability Facility, which is supposed to last for three years, until June 2013, three months before a German general election.
The article notes that the plans for the crisis resolution mechanism as well as tough sanctions against fiscal "sinners" in the eurozone will be put forward in the second phase of negotiations in the taskforce chaired by European Council President Herman Van Rompuy in November. Germany is hoping for agreement by summer next year, which would mean treaty changes could be attached to the accession treaty for Croatia. The article notes that the UK is thought to be one of the member states most opposed to any treaty change.
Meanwhile, the Irish Independent reports that former Irish EU Commissioner Peter Sutherland last night said that Ireland must go well beyond the €3 billion deficit reduction previously set for the 2011 budget to prevent the EU or IMF taking control of the economy. "Economic and fiscal conditions mean tightening in the range of €4 billion to €5 billion should be implemented", he said. The governing and opposition parties met last night to discuss further budget measures.
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Ashton misses EU budget meeting and chance to defend UK's rebate
The Times and the Telegraph report that EU Foreign Minister Baroness Catherine Ashton - who is also the UK's EU Commissioner - failed to attend a critical debate in Brussels yesterday on proposals to scrap Britain's annual £3 billion EU rebate because she was taking part in an anti-piracy conference at a luxurious island resort in Mauritius. The articles report that her absence meant that no one raised any objections to plans by the EU's Budget Commissioner Janusz Lewandowski to include proposals to end the rebate in the EU budget review which will go before politicians later this month. The Times notes that Ashton also missed the first budget meeting last month when Lewandowski said that the 1984 rebate deal had lost its original "justification".
Bundestag agrees on starting "yellow card" procedure
Handelsblatt reports that the German Bundestag has rejected the EU's proposed Deposit Guarantee Schemes Directive. If the German complaint will be successful remains to be seen as so far only Sweden has voted to take similar action. To stop the implementation of the proposal and force the EU to reconsider it needs one third of all national parliaments to join Germany's and Sweden's protest by 14 October. The Austrian Government is expected to join next week and is optimistic that the Czech Republic, Slovakia, and Hungary will follow suit. It is rumoured that France will join the protest while the position of the UK remains unknown.
Fears that applying EU bank bonus rules to global subsidiaries will harm competitiveness
The FT reports that European regulators plan tougher-than-expected restrictions on bankers' pay, in spite of concerns raised by French, UK and Spanish officials that the rules could make the EU uncompetitive. The article notes that the rules would apply to the worldwide operations of EU-based banks and the European subsidiaries of any non-EU banks. Writing in the Guardian, Nils Pratley argues, "the global application of the rules could have unintended consequences. Barclays and Deutsche, the two big European firms on Wall Street, would be playing under rules in the US that would not apply to the locals, such as JP Morgan, Bank of America and Goldman Sachs. Would that make the European banks safer? It is not obvious how".
There is further disagreement about how strictly to interpret a planned cap on upfront cash payments. Discussions concluded late yesterday and draft regulations are expected within days.
Commission proposes EU-wide tax on banks' profits and remuneration
EU Tax Commissioner Algirdas Semeta yesterday presented a paper supporting the introduction of a Financial Activities Tax in Europe, which would tax profits and remuneration at banks and other financial services companies, reports the FT. It is estimated that the new levy could generate €25 billion. However, Handelsblatt notes that Semeta failed to explain how a financial activity tax would fit with the bank levy proposed by Internal Market Commissioner Michel Barnier.
Proposals for a Financial Transactions Tax, although strongly supported by Germany, have been shelved for the moment amid fears that businesses would relocate to other regions. However, EurActiv reports that EU officials insist that Brussels will continue to push for the introduction of this tax at an international level.
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Mats Persson: The EU hasn't gone away as an issue for the Coalition
In an article for House Magazine, Open Europe's Mats Persson argues that the EU is very likely to come to the fore again as a potentially divisive issue for the Coalition. "So far there has barely been a whimper about the EU within the coalition [...] But this doesn't mean that the EU has gone away - on the contrary", he writes. Mats identifies financial regulation, justice and home affairs and rules on working time for junior doctors as the three main areas where the Coalition will come under pressure to act.
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McCreevy resigns from new job following controversial conflict of interest allegations
AFP reports that Charles McCreevy has resigned from the board of British investment firm NBNK after the EU's ethics committee found a conflict of interest with his new job and his previous work as EU Commissioner in charge of financial services. The article quotes Open Europe's estimates showing that European Commission President José Manuel Barroso earns $400,000 per year - as much as US President Barack Obama.
EU set to cap subsidies for big farmers
Le Monde reports that EU Agriculture Commissioner Dacian Ciolos has outlined proposals for reform of the EU's Common Agricultural Policy (CAP) in a document to be adopted by the European Commission in November. The paper establishes that the CAP must remain "a strong common policy". However, the document also envisages the introduction of caps for direct aid to big farmers and suggests that, in the future, farm subsidies should be directed exclusively to "active farmers", rather than to big landowners.
FT Deutschland notes that under the proposed reform the biggest beneficiaries of the current payment scheme could suffer a cut in subsidies of up to 30%. A fixed per hectare rate of €250 - which would be the same throughout Europe - could also be introduced.
The WSJ reports that Standard & Poor's Ratings Services has estimated that, due to ageing populations and state pension commitments, in the UK, government debt will rise to over 430% of GDP by 2050, while German government debt will rise to more than 400%.
The European Parliament's Committee for Regional Development yesterday passed a resolution calling for regional funds to remain at current levels and rejecting calls to renationalise cohesion funds, reports EurActiv.
Euractiv Deutschland reports that Dieter Spöri - President of the European Movement Germany - has criticised EU plans for the introduction of common EU bonds, arguing: "The European Commission is itself - correctly - urging member states all the time to pursue finance consolidation [...] However, it then comes up with a proposal to solve its own financial problems which comes down to raising debt volumes through the EU".
Euractiv reports that yesterday, in a speech to the European Parliament, former European Commission President Jacques Delors questioned whether Germany is still interested in the European project.
The NGO Médecins Sans Frontières has accused the EU of restricting developing countries from accessing cheap generic medicines by aggressively pushing policies, including a trade agreement with India, which limit the practises of pharmaceutical companies, reports ABC.
Le Figaro reports that French President Nicolas Sarkozy's office has denied receiving a letter of resignation from French Foreign Minister Bernard Kouchner.
BBC News reports that yesterday the European Parliament's Committee on Budgetary Control decided to freeze €425,000 of funding for the UK-based European Police College for next year, claiming that the body has failed to meet EU accounting standards.
In the WSJ, Stephen Fidler criticises the flaws of the European Commission's voluntary lobby register and notes: "Apart from including organisations who don't lobby or may not even exist, the register also doesn't include a lot of organisations that do lobby".
The European Commission has proposed trade preferences for Pakistan worth around €300 million over the next three years to support the flood-hit country's economy. The WSJ notes that the proposed concessions have triggered a backlash from European manufacturers, led by the textile sector.
European Voice reports that the European Commission has begun coordinating the EU's response to the toxic sludge spill in Hungary that is threatening to pollute the Danube.
UK
UK nuclear warheads could be serviced in French laboratory
The FT reports that an agreement being negotiated between the UK and France would see Britain use a French laboratory to help maintain and service its 160 nuclear warheads. French defence analyst François Heisbourg is quoted saying that sharing warhead research would assume "that the British break their very special relationship with America in that field". However, according to a person familiar with the negotiations the UK Government has already consulted the US on the issue.
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