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Europe
ECB prepares legal ground for a euro break-up
The WSJ reports that Greece's growing budget deficit and worries that the government will struggle to repair the state's finances will dominate this week's meeting of EU finance ministers, which begins today. Writing in the paper, Managing Director at Standard & Poor's Ratings Services Moritz Kraemer looks at the sustainability of the euro and notes that, "Once the preserve of fringe political commentators, speculation about the possibility of a eurozone break-up has now crept into mainstream economic and political debate." However, he argues "the possibility of such an event remains remote...eurozone governments are aware of the risks associated with exiting the eurozone and the potential costs of such an action for their economies. They understand what is at stake and that the price to pay would be too high."
In the Telegraph, Ambrose Evans-Pritchard writes that fears of a euro break-up have reached the point where the European Central Bank has issued a legal analysis of what would happen if a country tried to leave monetary union. He notes that "Crucially, he [the author] argues that eurozone exit entails expulsion from the European Union as well." Evans-Pritchard adds, "This is a warning shot for Greece, Portugal, Ireland and Spain. If they fail to marshal public support for draconian austerity, they risk being cast into Icelandic oblivion."
Former IMF analyst Desmond Lachman is quoted in CityAM warning: "Much like Argentina a decade ago, Greece is approaching the final stages of its currency arrangement. There is every prospect that within two to three years...Greece's European membership will end with a bang."
In the Times, Brownen Maddox argues that the Greek government's plan to rebalance its budget "remains incredible" and notes that if it is unable to avoid crisis alone then "The burden of Europe's most difficult decision this year would fall on Angela Merkel, the German Chancellor, who would have to decide whether to rescue Greece." She adds, "The threat of a Greek default may matter even more to the eurozone than it does to Greece itself. If Greece defaulted, other countries with high debt would all face dramatically higher borrowing costs." Maddox notes that while Merkel would "almost certainly" come to the rescue, Wolfgang Schäuble, the Finance Minister, has said that German taxpayers should not have to foot the bill.
An Open Europe poll of German voters in June 2009, in collaboration with the Institute for Free Enterprise in Berlin, found that 70% of Germans were against using public money to bail out other countries that have got into financial difficulties.
In the European Journal Mona O'Connor argues: "why has no-one in the UK made the link between the introduction of the euro and the UK/European Credit Crunch?" She argues that "European exposure to domestic subprime credits was far less than America but our crisis was made worse by the greater error of monetary union when interest rates were being pushed too low to suit 'one size fits all' by the European political elite."
Telegraph: Evans-Pritchard Telegraph: Hannan blog WSJ: Kraemer WSJ Times: Maddox Sueddeutsche City AM FT: Brussels blog The European Journal OE poll
EU's bid to end opt-out from 48 hour week will push costs to £12bn a year
The Sunday Express reported that the European Commission is once again considering an end to the opt-out from the Working Time Directive, which limits the working week to 48 hours. The loss of the UK's opt-out would force up to three million British workers currently exempt from the legislation to limit their working week. The article cites Open Europe's research into the Directive, based on the Government's own impact assessment, which found that losing the opt-out could cost the UK economy as much as £12bn a year by 2011.
The article noted that NHS staff are warning that patients' lives are at risk because of the EU restrictions. In August last year, junior doctors and surgeons in Britain were brought under the Directive. Shadow Foreign Secretary William Hague said that "We need to have the strongest possible safeguard for the NHS and our other public services by getting a permanent opt-out from EU laws." Open Europe's Stephen Booth was quoted saying that the UK should regain control of social legislation.
Sunday Express Open Europe research
Councils spend over £5 million a year to maintain presence in Brussels
The Sunday Express reported that tens of millions of pounds of public money is being used to run council branch offices in Brussels. They use the offices to lobby bureaucrats, hold receptions for councillors and MEPs, and market their organisations to EU decision-makers at meetings and information roadshows.
Almost all councils and development agencies in England and Wales, as well as the Local Government Association, hire permanent staff in Brussels. Their operations, which have run for two decades, cost taxpayers at least £5million a year in staff and office costs alone, excluding trips to Brussels for meetings each year. The biggest spender is the Welsh Assembly, which employs 10 staff in Brussels at a cost of £880,000 a year.
Sunday Express Sunday Express-leader
Juncker calls for stronger economic governance of the eurozone
EUobserver reports that Luxembourg PM and Head of the Eurogroup Jean-Claude Juncker, who looks set to be re-elected to the post today, has called for better oversight of the eurozone, with a greater role for the European Commission to reprimand countries for falling behind. In a letter to eurozone finance ministers, he wrote: "The European Commission should not hesitate to...address a warning to the member state" not respecting economic criteria and commitments. FTDeutschland notes that Juncker added he is keen to boost the eurozone's profile in international institutions, including the creation of a single seat for the currency club in the G20 and International Monetary Fund, which is provided for in article 138 of the EU Treaties. Meanwhile, in FTDeutschland Luxembourg Finance Minister Luc Frieden argues in favour of an EU tax, which should serve to finance the EU budget.
EUobserver AFP FT Deutschland Les Echos Le Figaro FT Deutschland: Frieden
MEPs face Thursday deadline for amendments to AIFM Directive
The FT reports that a document published by the Spanish EU Presidency last week summarises the key differences left to resolve in the EU's proposed Alternative Investment Fund Managers (AIFM) Directive to regulate hedge funds and private equity firms. The article notes that outstanding issues include depository matters; valuation models; remuneration; and third country issues.
Thursday is the deadline for amendments from MEPs, who last month welcomed a revised Directive from rapporteur Jean-Paul Gauzès. The Gauzès text requires that marketing a non-EU-based fund within the EU would need approval from individual EU member states, one at a time. An exception would be where there might be a "co-operation agreement" between member states.
Meanwhile, the Sunday Times reported that the UK's largest hedge fund Brevan Howard is reportedly considering a move to Switzerland, with Chief Operating Officer James Vernon, saying that the AIFM Directive would make it "impossible" for it to do business in Britain.
Times Sunday Times FT Open Europe research
EP Committee to give assessment of Bulgaria Commissioner-designate today
EUobserver reports that Commission President Jose Manuel Barroso has issued a "subdued endorsement" of Bulgaria's Commissioner designate, Rumiana Jeleva, who has come under scrutiny over whether her business interests have met conflict of interest guidelines. The European Parliament's Development Committee, which conducted her hearing, is due to give a formal assessment of her today, but AFP reports that the EP's legal services have cleared her financial declarations.
The final four Commissioner-designate hearings will be held in Strasbourg today and tomorrow. EUobserver reports that a meeting of European Parliament's President Jerzy Buzek, the heads of the political groups and the chairs of the Committees will decide on Thursday whether or not they are happy for a vote on the Commission to go ahead on 26 January. Centre-right MEPs have threatened to delay the vote over a list of six demands, such as the right to interview candidates for senior EU diplomatic posts.
Handelsblatt reports that the leader of the Socialists in the European Parliament Martin Schulz is demanding the "right of initiative" for legislation, meaning the Commission would be required to produce a legislative proposal within one year after a Parliamentary initiative. Mr Schulz said the initiative is being supported by all EP groups.
The Sunday Express featured a profile of some of the incoming EU Commissioners, noting that they will each receive a basic salary of £220,000 plus perks, and that the entire Commission will cost taxpayers £70 million in a five-year term.
EurActiv reports that, at his European Parliamentary hearing, Romanian candidate for Agriculture Commissioner Dacian Cioloş's said he did not want a reduction in the amount of the EU budget allocated to agriculture, but was prepared for there to be some reforms in the way in which subsidies reach farmers. He said the EU should not return to the old days of market intervention mechanisms, in which the EU bought excess food, or quotas for production. He also said: "It is not my intention to go for liberalization willy nilly. We have to use it to make agriculture more competitive."
EUobserver EurActiv European Voice European Voice 2 Times AFP Il Sole 24 Ore EUobserver 2 AD FT EP Press Release Le Monde Euractiv 2 European Voice 3
EU member states unable to agree on increase to emissions targets
EU member states have spent the weekend in Seville, debating whether to raise the bloc's CO2 carbon emissions reduction targets from 20% to 30% by 2020. EUobserver quotes EU Environment Commissioner Stavros Dimas saying that "there was no unanimity around the table". The UK, France, Belgium and Spain are in favour of an increase to 30%, but Italy and Poland are strongly opposing the increase, fearing that costs for domestic industry and households will be raised sharply without similar commitments by other world powers. The WSJ reports that, as a compromise, Belgium has suggested a reduction pledge of 25 percent.
As part of the Copenhagen agreement reached in December, countries are to submit their greenhouse gas reduction pledges by the end of January. EUobserver notes that "it appears unlikely that the EU will move to the upper end of a 20-30 percent range before this deadline, given the limited reduction commitments made by other major emitters".
Euractiv reports that Connie Hedegaard, the EU's incoming Climate Commissioner, in her confirmation hearing on Friday said that she had been "a strong advocate for Europe going to 30%."
Meanwhile, the Sunday Telegraph reported that wind farms could blight one in six officially-designated beauty spots in the UK. Out of 89 sites given special protection due to the quality of their landscape, planning permission for turbines has been approved or sought at 14. The UK is required to source 15% of its energy from renewable sources by 2020 under EU targets.
Sunday Telegraph EUobserver Reuters Germany Taz Wir Klimaretter Die Zeit WSJ EurActiv
Conservatives would give after-hours care back to GPs
The Sunday Telegraph quoted Shadow Health Secretary Andrew Lansley saying, "GPs should be collectively responsible for commissioning out-of-hours services", after the scandal of foreign locum doctors putting patients' lives at risk. Out-of-hours services, formerly provided by GPs but now the responsibility of UK primary care trusts (PCTs), have been known to pay up to £800 per shift and EU rules mean "that a doctor certified in any EU country -- even the newest and least familiar -- must be automatically accepted as fit to practice here," notes Libby Purves in the Times.
The FT reports that a Conservative Home survey of prospective Conservative parliamentary candidates, to be released on Wednesday, reveals that they rate the issue of "cutting red tape" as second only to tackling the budget deficit in terms of priorities. The article also notes that there is resistance to environmental regulation.
FT Open Europe research: regulation
In the Sunday Telegraph Christopher Booker notes that the European Parliament last week spent €70,000 on a propaganda exercise at Olympia, designed to turn children into "active EU citizens".
French pressure succeeds in maintaining domestic car manufacturing
The FT reports that France has said it has secured confirmation that part production of its future Clio car destined for the domestic market would be made in France. Renault's Executive Chairman Carlos Ghosn said that production of the Clio in France would be roughly similar to the number of Clios sold in France, indicating that most of the production will take place in Bursa, Turkey. European Voice reports that outgoing EU Competition Commissioner Neelie Kroes has written to the French government seeking an explanation about the pressure being put on Renault.
Weekend FT FT City AM IHT European Voice WSJ
Writing in the WSJ Irwin Stelzer looks at the EU's long term prospects and argues, "By seeking to control exchange rates and entrench economic and cultural protectionism...the EU seems to be trying to protect itself from the 21st century's version of the refreshing winds of change. It is liable to catch its death of cold in the process."
European Parliament threatens to derail EU-US bank data deal
EUobserver reports that the EU Parliament is threatening to impede an interim agreement to allow US authorities "to track European bank transactions in terrorism investigations unless certain concessions are made." A statement by the Liberal group in the EP has said that they wish to be "granted full access to information related to this interim agreement".
Bloomberg notes that European finance ministers will debate today who will replace Lucas Papademos as Vice-President of the European Central Bank, with likely candidates Luxembourg Central Bank chief Yves Mersch, Portuguese counterpart Vitor Constancio and ECB Banking Supervision Committee Chairman Peter Praet.
The Ukrainian Presidential election will go to a run-off between the pro-Western Yuliya Tymoshenko and the pro-Russian Viktor Yanukovych.
WSJ Times IHT Guardian BBC EurActiv EUobserver
The Weekend FT reported that countries involved in the over-budget A400m military transport aircraft have said they are committed to the project, and prepared to negotiate with Airbus over extra funding. Airbus wants the 6 EU member states, plus Turkey, to accept a 25 percent price increase, equal to about €5.3bn, although the countries are unlikely to agree to that much.
Hunters in Canada and Greenland are challenging a European Union regulation banning the import of seal products, fearing that it will remove a vital source of income for families and force Arctic communities to live off handouts.
Writing in the Sunday Telegraph Christopher Booker argued that the difference in response to the Haiti crisis by the EU and US shows that the EU is not a superpower.
Sunday Telegraph-Booker Mail: Mckay Le Figaro
A new report from the Migration Policy Institute has found that the "almost unprecedented" immigration of 1.5m eastern Europeans since 2004 has brought down the wages of the lowest-paid and changed the "social fabric of Britain", reported the Observer. The report added that around half of those immigrants remain in the UK today.
EurActiv reports that former French Prime Minister Jean-Pierre Raffarin has outlined a more "offensive" approach to promote the use of French in the EU.
UK
A new YouGov poll for the Sunday Times has put the Conservatives on 40% with a nine-point lead over Labour, at 31%, both unchanged on last month and with Labour holding on to the gains that it had made in the wake of the pre-budget report. The Liberal Democrats are up two points at 18%.
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