EU OBSERVER 10.6.09
Tough decisions on financial supervision remain for summit
ANDREW WILLIS
BRUSSELS - Finance ministers meeting in Luxembourg on Tuesday (9
June) made progress on a new financial supervisory framework for the
European Union but failed to reach an agreement on several of its
most contentious issues.
Division over who should chair a new body designed to monitor overall
risk levels in the European financial system mean EU leaders will be
left to make the tough decisions when they meet in Brussels on 18-19
June.
At stake is the chairmanship of the proposed European Systemic Risk
Council, with the European Commission last month suggesting the
position should be filled by the president of the European Central Bank.
The UK and a number of other member states outside the Eurozone
however, fear their interests will not be represented sufficiently if
this is the case, with wrangling now likely to continue all the way
up to the next European summit in just over one week.
"I am fully sure that the European Council [of EU leaders] will adopt
the commission position," economy commissioner Joaquin Almunia said
confidently on Tuesday evening, citing the Eurozone's 16-country
membership as sufficient to ram the proposal through.
Binding mediation
As well as the ESRC chairmanship, another bone of contention
surrounds commission proposals to give powers of "binding mediation"
to three new European-level authorities that will oversee national
regulators in the areas of banking, insurance and securities.
While finance ministers agreed on Tuesday that the three authorities
should have "their own personality", the UK opposes handing them the
power to settle disputes between national regulators.
Writing in the Financial Times on Tuesday, Lord Myners, financial
services secretary to the UK Treasury, said shifting powers to the EU
level brought no guarantee of strengthened stability and that
ultimately national governments should retain the last word.
"National supervision must be pre-eminent when the cost of the
failure of an institution lies with the taxpayer," says Mr Myners in
the article.
However Swedish Prime Minister Fredrik Reinfeldt, whose country will
take over the EU's rotating presidency next month, appeared to take a
different position when speaking in Brussels on Tuesday.
"Financial turmoil is above the nation state," said Mr Reinfeldt
while addressing an audience at the Centre for European Policy
Studies. The Swedish leader said Stockholm would seek to get
agreement on the issue under its presidency.
Considerable agreement despite the disagreement
As well as preparing the background on financial supervision for the
upcoming summit, finance ministers signed off on a report stating
that stimulus spending to date within the EU has been "timely,
targeted and temporary" and that no further spending was needed at
present.
"Today we paid attention to an exit strategy and this discussion will
continue in the coming months," said Mr Almunia, whose institution
has warned over the dangers of rising budget deficits in different
member states.
Czech Finance Minister Eduard Janota - whose country currently holds
the EU presidency - said the recapitalisation of banks and the
various guarantee schemes had helped prevent a financial meltdown but
cautioned against over optimism.
"The banking sector remains fragile and in the future we will need to
deal with the bad assets [held by banks]," he said.
The ministers also discussed the financing of measures to fight
climate change as the EU attempts to come up with a common position
before entering into United Nations discussions in Copenhagen this
December.
"The EU is at the forefront of the fight against climate change and
we should not abandon this position," said Mr Almunia, an
acknowledgement that some EU member states including Poland are keen
to calculate individual contributions before agreeing on a final EU
figure. [Separately on climate change the Chinese are stirring it
and trying to set the developed world at loggerheads with the rest of
the world. China plays the 'big power' card when it wants to and the
poor 'developing'country' card when it suits itself! -cs]
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