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Fortnightly Open Europe Bulletin: 12 February 2010

calls for closer EU integration as European leaders contemplate bailing out Greece Open Europe analysis: Obama's decision to cancel annual EU-US summit illustrates that Lisbon won't solve the EU's problems
News in brief
Open Europe event
Open Europe in the news

Quote of the fortnight
"Britain should not sit smugly watching the worms wriggle under the eurozone stones. This is a political opportunity to find common cause. When the costs of a bailout, the waste of EU regional and agricultural aid, are truly revealed, it will be deeply unpopular in Germany. At that point, Britain should push very hard for EU budgetary reform."
Carl Mortishead, World Business Editor, The Times, 11 February

1. Calls for closer EU integration as European leaders contemplate bailing out Greece

Open Europe has published new research, looking at the various options being discussed for an EU bailout of Greece, and what these solutions could cost European taxpayers. Open Europe argues that an EU-led bailout will come with huge economic and political risks, and will, for the first time, make Europe's taxpayers liable for an individual country's debts, while centralising new economic powers at the EU-level.
The research also argues that the legality of a bailout under the EU Treaties is doubtful - of the ten options for a bailout which Open Europe looked at, only one is unambiguously legal under the Treaties, meaning that EU leaders are likely to bend EU law if they go ahead with a rescue package.
At yesterday's one-day European summit, EU leaders, led by German Chancellor Angela Merkel, refused to financially commit to any bailout of Greece. Instead, EU leaders made a general pledge to take "determined and co-ordinated action if needed" to prop up the euro. The markets remain unconvinced by the response and the euro fell sharply following the news that no detailed rescue plan had been agreed. (Times, Telegraph, 12 February)
Open Europe found that a Greek rescue operation could cost EU taxpayers up to €30 billion in a first instalment. Although unlikely, British taxpayers could be affected in six out of the ten alternatives currently being considered for a possible bailout. Of the €30 billion, based on the UK economy's size relative to other EU member states, Britain could be required to contribute over €4 billion.
However, short term measures will not address the structural lack of competitiveness that affects not only Greece, but also other eurozone countries such as Spain and Portugal. In order for this to be addressed, a one-off bailout would need to be followed by continuous financial transfers from the poorer bloc to the richer bloc within the eurozone to keep the various economies in balance.
The recent crisis has already prompted calls for greater EU powers over economic policy. Commission President Jose Manuel Barroso said, "Economic policy isn't a national, but a European matter." EU Council President Herman Van Rompuy added, "Recent developments in the euro area highlight the urgent need to strengthen our economic governance". (AFP, Handelsblatt, 9 February)
And yet, there's no public mandate or support for establishing a formal system of fiscal transfers between member states. Polling by Open Europe shows that 70% of Germans are against using taxpayers' money to bailout another member state. This means that eurozone countries are faced with a very tricky dilemma: either accept continual strains on the eurozone, or pursue a policy of closer economic integration, for which there's no public support. (Open Europe poll)
In any case, predictions that the euro project, as currently constructed, is not viable are becoming truer by the minute and it is becoming clearer that Britain made the right choice to stay out.
Please click the link below to read our briefing:
http://www.openeurope.org.uk/research/greecebailout.pdf

Click here to read the press release:
http://www.openeurope.org.uk/media-centre/pressrelease.aspx?pressreleaseid=132
Please leave your comments on our blog:
http://openeuropeblog.blogspot.com/2010/02/eurozone-vanity.html

2. Open Europe analysis: Obama's decision to cancel annual EU-US summit illustrates that Lisbon won't solve the EU's problems

Writing for the Telegraph, Open Europe Director Mats Persson looked at US President Barack Obama's decision not to attend an annual EU-US summit in Madrid this year, noting that the EU's humiliation was compounded by the fact that the EU's latest vanity project, the Lisbon Treaty, contributed to the decision.
The Lisbon Treaty, which created an EU President, Foreign Minister and diplomatic service, in addition to the six-month rotating EU Presidency held by national governments, has always been seen by the European elite as a means of projecting European influence on the global stage. It was meant to answer that old Henry Kissinger question about who to call in Europe.
However, it has only caused more confusion, with EU President Herman Van Rompuy and the Spanish EU Presidency, led by Prime Minister Jose Luis Zapatero, now fighting amongst themselves over who should represent Europe. (WSJ, 1 February; Guardian, 3 February)
The fundamental question that EU leaders seem incapable of asking - and much less answering - is: what exactly did the EU want the US President to come all the way over to Madrid to talk about?
If EU leaders really wanted to lure Obama to Europe, they could start by dropping their protectionist trade and agricultural policies and take the lead in the WTO talks; or providing a pragmatic and cost-effective solution to lowering emissions - one that the rest of the world could afford to follow; or matching its promises with expenditure on defence and security; or creating a financial and regulatory framework which could work in tandem with global initiatives rather than undermine them.
Until the EU comes up with something actually worth talking about, it's not surprising that Obama thought it more important to travel to Asia, South Africa and to attend a NATO summit in Portugal this year. Appearing in the EU's latest self-congratulation ritual is something that the leader of the world's most powerful nation has done well to stay clear of.
Please click the link below to read the article in full:
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barack
obama/7155154/EU-shambles-over-Barack-Obama-visit-shows-failure-of-Lisbon-Treaty.html

Please leave your comments on our blog:
http://openeuropeblog.blogspot.com/2010/02/figure-it-out-and-let-us-know.html

3. News in brief
German Foreign Minister calls for European army under the Lisbon Treaty. Germany's Foreign Minister Guido Westerwelle has called for a "European army" saying: "The Lisbon Treaty opened a new chapter...Lisbon is not the end but, rather, the beginning. For instance, the Treaty outlines a common security and defence policy. The German Government wants to advance along this path. The long-term goal is the establishment of a European army under full parliamentary control." (German Foreign Office, Euractiv, Open Europe blog, 6 February)

European Parliament refuses to name and shame MEPs forced to pay back €3m in allowances. The European Parliament has reclaimed almost €3 million from MEPs in wrongly-claimed allowances over the last three years, but has refused to identify the offenders and the amounts returned. MEPs were obliged to pay back £880,000 in 2007 and £1.6 million in 2008. Last year, 78 MEPs were asked to pay back £398,000 of public money, with one source indicating that "British colleagues contributed a substantial part of the reimbursement". (The Parliament, 4 February; Telegraph, 8 February)
MEPs to cost taxpayers an extra €13.3 million a year. The European Parliament's Budget Committee has now approved plans to hire 150 extra staff and boost MEPs' monthly allowances for assistants by €1,500. MEPs already had a generous budget of £360,000 a year in pay and allowances however the extra allowances will cost taxpayers a further €13.3 million a year, sending the European Parliament's total annual budget past the €1.6 billion mark. (Open Europe blog, 29 January; European Voice, 11 February)
EU farm subsidies at highest level for a decade. The International Centre for Trade and Sustainable Development has found that recent EU figures show a sharp increase in total levels of farm subsidies. Spending on subsidies stood at over €90 billion in 2006/2007, the highest level since the last decade, up from €75.6 billion in 2002, when support was at its lowest in the last fifteen years. (ICTSD)
European Commissioners spent €4 million on travel expenses, dinners and gifts last year, with Commission President Barroso having spent the most. (Telegraaf, 11 February)
EU directives may contribute to power blackouts and soaring energy bills. Energy regulator Ofgem has warned of power blackouts and spiralling consumer prices over the next decade. Chief Executive Alistair Buchanan said that the crisis had been compounded by an "unholy trinity" of factors - including the impact of the recession on energy industry investment, Britain's growing reliance on imported gas as North Sea supplies are depleted and the closure of nine ageing coal-fired and oil-fired power stations by 2015 in order to meet EU pollution laws, a move that will scrap almost a third of UK generating capacity. Ann Robinson, of the price comparison website uSwitch.com, has suggested that energy bills could reach around £5,000 by 2020. (Times, 4 February; FT, 3 February)
4. Open Europe event: "Is the EU a threat to civil liberties?"
Tuesday 23 February 2010, 5pm - 6.30pm, First Euroflat Hotel, 50 Boulevard Charlemagne, 1000 Brussels
Open Europe will be holding an evening debate in Brussels looking at the EU's increasing role in justice and home affairs policy, asking what democratic safeguards exist to protect citizens' civil liberties.
Speakers include: Jonathan Faull, Director-General, European Commission, DG Justice, Freedom and Security; Tony Bunyan, Statewatch; Birgit Sippel, German MEP, SPD.
Places are limited. If you wish to attend, please send an e-mail to pieter@openeurope.org.uk. For further information on this event, please contact Pieter Cleppe on 00 32 477 68 46 08.
 5. Open Europe in the news
EU leaders plan bailout of Greece
12 February Mirror BBC News 24 BBC Radio Five Live Prensa 11 February NPR Sky News This is Money 10 FebruaryTime Informador 9 February Le Monde 8 February Trends 7 February The Observer 6 February Express 5 February L'Expansion 4 February Le Temps 29 January Telos-EU
Open Europe's Pieter Cleppe was interviewed on Sky News, National Public Radio, and BBC Radio Five Live discussing the options for a Greek bailout and Open Europe Director Mats Persson appeared on BBC News 24. Mats was quoted by the Observer, arguing: "The question is whether Greece can ever compete as a middle-rank eurozone country without some proper structural reform, and whether that is possible without its own monetary policy."
Open Europe's briefing, on a possible Greek bailout, was covered in the Mail, This is Money, Time magazine, Belgian news site Trends and various other papers.
The Mail noted Open Europe's finding that, based on the UK economy's size relative to other EU member states, a bailout of Greece by the EU could cost UK taxpayers £3.5bn, if Britain would take part in a rescue operation. Open Europe was quoted in the Mirror and Time magazine saying, "A large scale bail-out would make taxpayers across Europe liable for the mistakes of a government over which they have no democratic control. Such a policy simply isn't reasonable and lacks public support". Open Europe was also quoted in the Express.
French website Telos-EU featured an Open Europe analysis of the legal ambiguities concerning the 'no bail-out' clause of the EU Treaties. This analysis was cited by Le Monde's website and L'Expansion. Open Europe's Pieter Cleppe argued the point again in Swiss daily Le Temps.

Mandelson calls for UK to join the Euro
12 February Express BBC Radio Humberside 11 February Telegraph
Following Lord Mandelson's comments that Britain should still join the euro, Open Europe's Sarah Gaskell was quoted in the Express saying: "This recent crisis has proved beyond doubt that Britain was right not to join the euro. It is crazy to suggest there would ever be a good time to give up the pound, when we clearly need all the flexibility that comes with it." Sarah was also interviewed on BBC Radio Humberside discussing why euro membership is not right for the UK.
Mats Persson was quoted in the Telegraph arguing that: "This episode has really highlighted the fundamental problems with the monetary union."
Hedge funds contributed €4bn in tax revenue to the EUin 2008
12 February WSJ: Woolmer
In a comment piece in the WSJ, Lord Woolmer cited Open Europe's research on the AIFM Directive, which found that hedge funds contributed just over €4bn in tax revenue to the EU in 2008.
Obama "snubs" the EU
10 February National Interest 5 February Washington Times 4 February Telegraph: Persson
Following President Obama's decision not to attend the annual EU-US summit scheduled for 2010, both the National Interest and the Washington Times cited Open Europe Director Mats Persson's article for the Telegraph, which argued: "Until the EU comes up with something actually worth talking about, it's not surprising that Obama thinks that it's more important to travel to Asia, South Africa and to attend NATO summits."
EP refuses to name MEPs forced to repay €3m in wrongly-claimed allowances
11 February Lidovky 8 February Telegraph
The Telegraph quoted Open Europe's Mats Persson saying; "If the European Parliament was serious about cleaning up its act it would name and shame the MEPs who have misused their allowances and conned the taxpayer, just as the UK Parliament is currently doing." Mats was also quoted in Czech paper Lidovky.
Are EU-funded think tanks independent?
10 February Neviditelny Pes 2 February Euractiv Euro.cz Lidove Noviny 1 February Vilaggazdasag 29 January Wiener Zeitung
Open Europe's Pieter Cleppe was quoted by Hungarian daily Vilaggazdasag, Euractiv, Czech dailies Lidove noviny and Neviditelný Pes, Czech newssite euro.cz and Austrian daily Wiener Zeitung questioning the independence of EU-funded think tanks: "They are setting up their own committees claiming that these are independent think tanks when, in fact, they are cheerleaders for the EU."
Affordability of MEP pensions
10 February Professional Pensions
In a Professional Pensions article looking at MEPs' pensions, Thomas Selby wrote: "The affordability of the current system has been widely criticised, especially after research by Open Europe revealed that all MEPs receive an annual pension of £27,954 by paying nothing."

The cost of EU regulation
7 February Vakary Ekspresas
Open Europe Director Mats Persson was quoted by Lithuanian newspaper Vakary Ekspresas, arguing that "not only are some EU Directives very costly, but they also risk damaging the EU's competitiveness, as well as encouraging protectionism, provoke investment outflows and enhance unemployment".
MEPs seek to abolish UK's veto on new EU financial regulators
2 February Telegraph
Following MEPs' calls for stronger powers for the EU's proposed financial regulators, Open Europe Director Mats Persson was quoted in the Telegraph saying, "If MEPs manage to win support for this plan, it will add further momentum to what is already a significant transfer of powers from national regulators to the EU level. These plans will leave the UK Government completely without safeguards against proposals which could hurt the City of London. Crucially, accountability will fall into a black hole between EU regulators and the states. If the crisis taught us anything, it is the importance of holding both regulators and finance ministers to account."
EU propaganda
1 February Hansard
In a House of Commons debate looking back at the 2008 EU budget, Conservative MP David Gauke cited Open Europe's research which showed that the EU spent €2.4bn in 2008 on promoting itself and its central aim of "ever closer union".
Commissioners' golden pay-offs
31 January Irish Sunday Tribune
The Irish Sunday Tribune looked at the retirement of Irish EU Commissioner Charlie McCreevy, and cited Open Europe's findings that outgoing EU Commissioners will get a €378,288 golden pay-off in transition payments and can expect a pension of €51,068. A spokesman for the Commission confirmed the generous payout.
6. Please support Open Europe
Open Europe is a small, lean operation which relies entirely on individual donations. We produce cutting-edge research on all aspects of EU policy, targeting both politicians and the media to campaign for radical reform of the EU. We unearth high-impact stories and hold high-profile events, and, despite being a small team, we are quoted and interviewed several times a week in the media.
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