Italy and Spain call for more decisive action from ECB amid fears of contagion;
New study foresees eurozone collapse within three years
The WSJ reports that Italy and Spain are seeking more decisive action from the European Central Bank to calm the markets and prevent the eurozone debt crisis from spreading further, including boosting its purchases of sovereign bonds issued by weaker eurozone countries. The Irish Times reports that the ECB is widely expected to announce an increase in its bond-buying programme after today's meeting of its governing council.
Meanwhile, the IHT reports that yesterday Spanish Prime Minister José Luís Rodríguez Zapatero announced a new package of austerity measures including selling its lucrative state lottery company, and scrapping a special unemployment benefit which was introduced in response to rising unemployment in February 2011. Die Welt quotes German Economy Minister Reiner Brüderle saying "the chances are high that both countries [Portugal and Spain] will make it without EU help."
La Stampa notes that during a meeting with representatives from Italian regions - Italian Economy Minister Giulio Tremonti has described the current situation as "indecipherable" and the next weekend as "unpredictable".
The Irish Independent reports that under the bailout agreement, the Irish government will have to give weekly economic reports to the EU, ECB and IMF, in an unprecedented flow of information to external bodies. The FT notes that, according to the Bank for International Settlements, Ireland's banks are among the most exposed to some of the other weaker eurozone countries.
An article in the Telegraph notes that, should the contagion spread to Portugal and Spain, the UK could be liable for at least £20bn - £773 for every British household - through commitments made to the EU-IMF bailout package and bilateral arrangements. Open Europe's Director Mats Persson is quoted saying: "Few people realise how deeply the UK is already involved in the euro zone rescue operation - the legality and democratic legitimacy of which is very questionable". Mats also appeared on BBC Radio 4's the World Tonight programme. "We see some of the underlying tensions within the eurozone coming to the fore now again and again and without some fundamental solutions to these fundamental problems, I don't see how the eurozone can survive in the long-term. We need to see changes to the rules and possibly to the membership of the eurozone" he said.
The Express reports on a study to be published today by the London-based Legatum Institute and the American Enterprise Institute, claiming that EU leaders must brace themselves for the collapse of the euro within three years.
Speaking on the BBC's Hardtalk programme, French Economy Minister Christine Lagarde said that eurozone countries would be ready to support weaker members of the single currency in future, if necessary. She argued: "What did we do for Greece? What did we do for Ireland? We showed solidarity. We put in place guarantees [...] to support these countries and we will continue to do so. This is the principle of monetary zone." The Irish Times reports that the €440bn eurozone rescue fund - the European Financial Stability Facility - will issue between €5bn and €8bn of bonds next month, in what will be the first ever debt offering by the eurozone as a single entity.
The World Tonight WSJ 2 BBC European Voice BBC: Lagarde WSJ Irish Times Irish Times 2 Irish Times 3 Irish Times 4 Irish Times 5 Guardian Guardian 2 Telegraph Telegraph Welt Express Irish Independent Irish independent2 Times Times IHT IHT IHT FT FT FT FT FT FT Handelsblatt Euractiv Mail
Open Europe's Vincenzo Scarpetta appeared on Radio France Internationale discussing the impact of the the EU's new diplomatic service, the EEAS, on the future of EU foreign policy. Vincenzo argued that the EEAS is of "no added value" and that "the EU has only created a bureaucratic giant which will not transform the EU into a diplomatic giant."
€1.5m of EU structural funds given to tobacco manufacturers contravenes WTO guidelines
The FT continues to publish the findings of its joint investigation, with the Bureau of Investigative Journalism, into the EU's structural funds. An article reports that more than €3m in public funds, an estimated €1.5m from EU structural funds, have been allocated to tobacco companies. This appears to breach WHO guidelines under the Framework Convention on Tobacco Control. The EU also spends more than €16m a year on antismoking campaigns.
A second article notes that EU subsidies have been allocated to companies relocating factories from west to east Europe despite this contravening EU rules. A third article notes that some of the biggest beneficiaries of structural funds are multinational companies, including IBM, Coca-Cola, McDonald's and Japan Tobacco International. A fourth article reports that one of the biggest corporate beneficiaries, private contractor A4e, received £60m from the EU since 2007, despite allegations that it is not meeting performance targets.
Eurozone comment roundup
In Der Spiegel, columnist Stefan Schultz argues that the EU's new debt mechanism is "long overdue, but it won't solve the current euro crisis". The article notes that "since the start of the crisis, Europe's leaders have perfected two techniques: scrambling to catch up with events, and playing them down."
Writing in the FT, former member of the European Central Bank's executive board Otmar Issing argues "Outline proposals for a mechanism have now been presented. It seems, however, that private investors would have to take losses only in extreme cases and after ad hoc decisions. Which authority will judge that the debt position of a country is unsustainable and that a process of restructuring has to be started? Such a regime would lack credibility and predictability. It would be based on discretionary decisions and set the stage for future political tension, uncertainty and market volatility".
On Conservative Home, former Deputy Chairman of the Conservative Party Howard Flight argues that "Germany should leave the euro", noting that "the present position of Germany in relation to less competitive Europe is analogous to that of China to the rest of the world. Germany now has, effectively, an undervalued currency and can out-compete everybody else in the euro block; and is, therefore, booming. Yet Germany, somewhat like China, does not appear to understand the other side of the coin; that they have little choice other than either to buy the Bonds which their less competitive euro member Governments need to issue to keep their economies afloat, or to help finance them as the major part of EU initiatives".
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The Telegraph reports that David Cameron may have failed to get support from the EU's net contributing countries for a proposal to cut the EU's long-term budget from its current level of 1.1% of Gross National Income to 0.85%.
European Voice reports that EU finance ministers are due to approve legislation on tax cooperation next week. Euractiv reports that the Commission is also set to review rules on VAT in order "to strengthen its coherence with the single market [and] its capacity as a revenue raiser."
EU Competition Commissioner, Joaquín Almunia, yesterday announced tougher state aid rules for banks which will see aid gradually phased out.
The Express reports that UK taxpayers paid more than £10m to environmental groups last year - nearly three quarters of this was given through EU grants with the rest distributed by Whitehall officials and town halls.No link
Euractiv reports that member states are nearing a deal on new food labeling rules which would allow retailers to choose their own schemes, including the positioning of nutritional information on the product's packaging.
On 6 December, EU employment and social affairs ministers are expected to oppose the European Parliament's plans to extend EU maternity leave to 20 weeks at full pay, reports European Voice.
The BBC reports that EU transport ministers will today discuss a draft directive, which aims to set up an EU-wide database of vehicle registration details.
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.