Monday, February 07, 2011

Open Europe

Franco-German “pact for competitiveness” faces resistance
It is widely reported that the set of proposals put forward by France and Germany at the EU summit on Friday – the so-called “pact for competitiveness” – was met with significant hostility from other eurozone members and seems unlikely to form the basis of any agreement. After Belgian Prime Minister Yves Leterme, Luxembourg’s Prime Minister Jean-Claude Juncker also voiced his opposition to scrapping the link between wage increases and the level of inflation across the eurozone, arguing that he did not see “how abolishing wage indexation would increase the competitiveness of [Luxembourg] or the eurozone.” Mariano Rajoy, leader of Spain’s opposition Partido Popular, is quoted in Expansión saying: “As a Spaniard, I don’t like to be told what I have to do by the outside.” Austria, Poland and the Netherlands were also said to have criticised the initiative’s attempts to reach into policy areas normally the reserve for national parliaments. "There were 18, 19 countries who spoke up to make known their regret on the way it was presented and also on the content […] It was truly a surreal summit," Leterme commented.
EU leaders also failed to reach an agreement on expanding the eurozone’s rescue fund, as they only stated that it must have the “necessary effectiveness” to tackle any eurozone problems. Without an agreement on the “pact for competitiveness”, German support for expansion of the bailout fund remains unlikely. European Council President Herman Van Rompuy is now expected to hold bilateral discussions with eurozone leaders in an attempt to form a consensus by March – widely seen as the deadline for a deal in order to calm the markets.
On the UK’s position in the discussions, Prime Minister David Cameron said: "I have made Britain's position on this very clear: we are not in the euro, we will not be joining the euro, nor will we be drawn into further measures to support the euro.”
Eurozone comment round-up
In the FT, Wolfgang Münchau argues that the current approach taken by EU leaders, including the “pact for competitiveness”, is failing to tackle the crisis of the banking sector, the eurozone’s biggest problem. He also expects both Greece and Ireland to need some form of debt restructuring (sovereign and banking respectively) in the near future.
In an interview with FAZ, Citigroup’s chief economist Willem Buiter argues that a rescheduling of Greek and Irish debt is virtually unavoidable.
A comment piece in the Irish Times argues that the constitutional cap on government borrowing (aka “debt brake”), which Germany is trying to push through, would have done little to help Ireland in the current crisis. It would have done nothing to prevent or predict the banking collapse and may have made the ensuing bailout illegal, leaving Ireland in dire straits.
Writing in Sunday’s FAZ, Economics Editor Christian Siedenbiedel criticised the Franco-German plans to harmonise wage and tax policies in the eurozone. He argued that “more central economic planning is not only harmful, but it contradicts the European idea, in which Europeans saw competition as the engine of prosperity.” “A single economic policy deprives weak countries of their greatest opportunity: to lower wages and taxes more than other countries – thereby making their products cheaper on world markets,” he added.
Third robbery in two years at the European Parliament
It is widely reported that, during the European Council summit on Friday, two men – one of them armed – entered the European Parliament’s post office in Brussels and got away with at least €8,000. It is the third robbery over the last two years. EUobserver quotes a senior EP official involved in the investigations, saying: “Obviously this is coming from people within the EU community. We are convinced […] It could be assistants, there are dozens of companies that come in and out, journalists. Technically, it could even be MEPs.”  
Policy Exchange: UK should leave the European Court of Human Rights
A report by think-tank Policy Exchange has urged the Government to leave the Strasbourg-based European Court of Human Rights (ECHR), warning that the UK has become “subservient” to a "virtually unaccountable supra-national bureaucracy.” The author of the report, former Government adviser Dr. Michael Pinto-Duschinsky, noted that “there is strong evidence to suggest that the UK's membership of the European Union and of the Council of Europe does not require continued adherence to the judgments of the European Court of Human Rights should the UK opt for such a withdrawal.”
Speaking on the BBC’s Today programme, Policy Exchange Director Neil O’Brien said: "Although it is not an easy or simple thing to cut our ties with the court, it is possible, and we argue that for a whole series of reasons we should now cut our ties with the court because it is, increasingly by trivialising and over-extending the concept of human rights into areas where it really doesn't belong [...] it's really undermining support for human rights."
The Telegraph reports that a three-day junket by 75 MEPs to Uruguay will cost the taxpayer £1.2m. The trip will come out of the European Parliament’s £10m fund for overseas visits.
Writing in the Sunday Telegraph to mark the paper’s 50th anniversary, its longest-serving columnist Christopher Booker looks back on his 21 years of campaigning against the EU. He argues that EU legislation has “amounted to a mutation in the nature of our governance […] The consequence is that we are now ruled by a vast maze of bureaucratic structures, not answerable to Parliament […] The power of elected politicians at all levels of government has been immeasurably diminished.”
An article in the FT Weekend looked at the European Court of Justice’s expected ruling on whether “gender-based pricing” for pension annuities amounts to unlawful discrimination and noted: “No matter that women’s greater longevity is a biological fact. No matter that annuities ultimately pay the same to women as to men over their lifetimes. It seems that an unelected, unaccountable cabal of judges in Luxembourg has given itself the power to overturn basic principles of risk and insurance – and overrule the laws of nature.”
The Independent on Sunday noted that the Conservative Party is not planning to opt in to a new EU Directive on human trafficking, despite it being voted by almost all UK MEPs – including Tories. A petition launched by the paper urging the Government to sign up to the Directive has so far collected more than 20,000 signatures. 
It is widely reported that disagreements between EU leaders at last Friday’s summit meant that the declaration on Egypt did not demand President Hosni Mubarak's resignation. German Chancellor Angela Merkel said that EU leaders “are of the opinion that we should not interfere on that particular issue.”
EUobserver reports that Romania has reached an agreement with the EU and the IMF over a new “precautionary” loan worth €5bn.
Writing in Gazeta Wyborcza, Polish President Bronisław Komorowski has said he hopes cooperation of the Franco-German-Polish “Weimar group” will help Poland and Europe to achieve its objectives in terms of security, a good EU budget for the next seven years, and the development of Eastern Europe in “our desired direction.”
New on the Open Europe blog
When a “family photo” of EU leaders speaks: In need of an ice-breaker
A look at the reactions to the Franco-German plan for a eurozone economic government: Saying “nein” to Angie

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