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Bundesbank President: Proposal for European Monetary Fund is "not helpful";
Conservatives could be forced to call referendum if EMF results in new treaty
The FT reports that German Bundesbank President Axel Weber has said that proposals, announced by the German Finance Ministry and backed by Chancellor Angela Merkel, for the creation of a European Monetary Fund (EMF) are "not helpful" and are "a sideshow that will distract from the necessary consolidation" of budget deficits in struggling countries such as Greece. He added, "The no-bailout clause is a central part of the European Union framework," according to Reuters.
Mr Weber, who is widely tipped to become the next President of the European Central bank, added that he had not been involved in the Finance Ministry's discussions and that it was still unclear what such a plan would entail.
The IHT notes that French Finance Minister Christine Lagarde yesterday described the idea as interesting, but not urgent. "It does not appear to me to be the absolute priority in the short term," she said. A spokesman for the Dutch Finance Ministry said, "Our first reaction is reluctance. It's hard to react to something that we've not seen on paper."
With discussions at an early stage, important questions remain unanswered, including whether the creation of an EMF would require a full-scale change to the EU treaties or simply a unanimous decision by all 27 member states. Chancellor Merkel has already suggested that it would require treaty change and the Irish Times quotes Commission President Jose Manuel Barroso agreeing it "may well require a change to the treaty".
However, the Economist's Charlemagne blog notes, "I am told (but have not confirmed) that the legal services of the EU council of ministers (the bit of the machine that brings together national governments) have prepared a legal opinion saying you do not need to touch the treaties to create such a fund, and that a unanimous decision of the 27 heads of state and government would do."
The Telegraph notes that the prospect of EU treaty change could force a Conservative government to call a referendum, as it would fall under the party's promise to put any future EU treaty to a referendum. The article notes that Conservative officials confirmed that the so-called referendum "lock" would be applied to any new EMF treaty.
Downing Street said yesterday that it would oppose any new treaty: "The Government opposes further institutional change in the relationship between the EU and member states for this parliament and the next." However, in a speech organised by the think-tank Progress last night, Europe Minister Chris Bryant said that the Government was so far "agnostic" about the idea of an EMF.
Open Europe Director Mats Persson is quoted by the Telegraph saying that the creation of an EMF will "be seen, rightly, as a step towards fiscal federalism. That would be a step in the wrong direction for the UK." He added that, although Britain is outside the euro, it was "not inconceivable that the UK could take part in some way" in an EU bailout fund.
Open Europe's Stephen Booth is quoted in the Express saying, "The UK should play no role in any bail-out fund for the EU. British taxpayers should not be asked to underwrite the debts of EU governments that they cannot vote from office."
Meanwhile, Reuters reports that Barroso has said that the Commission is finalising a bailout mechanism to help Greece if necessary, which would not breach the EU's current "no bailout clause". He said, "The Commission is ready to propose a European framework for coordinated assistance, which would require the support of euro area member states." He added, "Such a mechanism would be in conformity with the current Lisbon Treaty, in particular with the 'no bailout' clause. It would include stringent conditionality."
Telegraph Express Express: Leader Economist: Charlemagne notebook El Pais Guardian: Pratley Reuters Investir.fr Romandie Les Echos Irish Times Irish Times 2 EUobserver IHT BBC: Hewitt blog FAZ FAZ 2 Der Spiegel FT Spectator: Coffee House blog Telegraph: Michaels' blog Telegraph: Kirkup's blog Independent: O'Grady Irish Independent Irish Times 3 Reuters Guardian: Leader Reuters 2 Open Europe blog
Hague: We will repatriate powers if there is another EU treaty
In an interview with the FT, Shadow Foreign Secretary William Hague announced that the Conservatives had made a "strategic decision" to be "highly active and activist in European affairs." He added, "We have enough on our hands without an instant confrontation with the EU." However, Hague continued to say that there were limits to the level of EU integration he would tolerate, singling out defence and plans for a European Monetary Fund as areas of potential future conflict. In particular, he mentioned plans to withdraw from the European Defence Agency and the repatriation of employment and social regulation in the event that other member states insisted on further treaty change.
Meanwhile, in a speech to the Progress think-tank last night, Europe Minister Chris Bryant admitted that "Europe isn't perfect" but condemned the Conservatives' Europe policy, adding: "Cameron's proposals on Europe are naïve, unworkable and, frankly, downright wrong". He went on to say that any repatriation of social and employment legislation is "completely unachievable".
MEPs to vote on 'Tobin Tax'
Later today MEPs are will vote on whether to implement a controversial new financial transactions tax, otherwise known as the Tobin Tax. Euractiv reports that the US, like the UK, have been slow in showing support for the tax, as they have different views on which instruments and banks should be taxed and are waiting for an IMF report due in April before they decide.
On his Telegraph blog, MEP Daniel Hannan writes, "The case for a small levy on financial transactions is not intrinsically absurd: an argument can be made either way...But there is no argument whatever for pursuing such a tax only on a regional level. Doing so will simply drive business away from the EU."
EurActiv Telegraph: Hannan blog
Investors warn that AIFM Directive could "close Europe off" from capital
The FT reports that the International Limited Partners Association, representing 220 of the biggest pension funds, endowments and sovereign wealth funds with $1,000bn invested in private equity worldwide, has warned that the EU's proposed Alternative Investment Fund Managers Directive risks building a protectionist wall between Europe and the global private equity industry.
In a letter to EU Internal Market Commissioner Michel Barnier and French rapporteur for the proposal in the EP Jean Paul Gauzès, the group warned that the proposed Directive could "severely disturb" many of the world's biggest private equity groups by depriving them of access to EU investors, while in turn reducing foreign investment into EU companies. It also said: "Not only will EU investors have reduced access to non-EU private equity managers, there exists a real concern that the proposal will effectively close Europe off from the capital solutions...that comprise the global private equity industry".
French prepared to offer concessions on EDA
The Guardian reports that French President Nicolas Sarkozy is willing to offer concessions to a Conservative government over the future of the European Defence Agency, which the Conservatives have threatened to withdraw from. The article reports that the French may be willing to see it radically reformed, in exchange for British agreement on energy co-operation, carbon pricing and wider defence cooperation in Europe. Sarkozy is due to meet David Cameron on Friday.
Commission readies proposal to crack down on CDS trading
European Voice reports that, Commission President Jose Manuel Barroso promised the European Parliament yesterday, to examine whether legislative action was needed to limit trade in financial instruments, including credit default swaps. He added that the problem of "naked" practices - where traders buy the default swaps without owning the underling bond - "needs particular attention", and could be banned outright.
German Chancellor Angela Merkel yesterday called for the "fastest possible" adoption of new rules to clamp down on the most speculative elements of derivatives trading, including so-called naked transactions, reports the FT.
The Commission started work on legislation for the derivates market in 2009, and President Barroso said EU Internal Market Commissioner Michel Barnier would present a proposal on this before the summer.
A leader in the Independent argues that, in order for countries including Ireland, Spain and Greece, to return to economic health, "Europe needs fundamental reforms to its labour markets and a major shift in internal demand. This is not about appeasing speculators, but ensuring the very viability of the European currency union."
City AM Independent Independent: Leader BBC European Voice EurActiv FT FT 2 IHT: Papandreou Telegraph Coulisses de Bruxelles El Pais El Pais 2 Spiegel WSJ
EU Foreign Minister caught up in "ill will" of Brussels
In a speech to the European Parliament today EU Foreign Minister Cathy Ashton said that EU operations in the western Balkans were a model for future EU action adding, "Wider international credibility depends on getting our neighbourhood right", according to the BBC. Writing before the speech today, the Times reports that Ashton would use the speech to call for an end to the infighting in Brussels over the creation of the EU's External Action Service. On the BBC Today programme Europe Editor Gavin Hewitt quotes one official speaking of Brussels: "this is the town that feasts on ill will, and she's caught up in it".
Times BBC Today programme FT ABC
Commission propose to provide criminal suspects and lawyers with translation services
PA reports that under a new Commission proposal announced yesterday, member states will be required to provide full interpretation and translation services for suspects and lawyers in criminal trials and investigations. The proposal is the first to be brought in under the Lisbon Treaty in order to establish a set of EU standards in criminal cases. PA report that the costs of these services "must be met by the country, not the suspect - whatever the final verdict of the case".
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SKY Italia reports that Google is considering dropping its 'Street View' service in Europe after complaints from the EU over possible violations of privacy. "I think we would consider whether we want to drive through Europe again, because it would make the expense so draining", Michael Jones, Google's Chief Technology Advocate, said in an interview at the Cebit Technology Fair in Hanover.
An FT leader notes that ministers have accused Washington of bias following the decision of Europe's largest aerospace and defence company, EADS, to withdraw from a multibillion dollar race with US company Boeing to supply the US military, citing unfair competition.
On his Coulisses de Bruxelles blog, Jean Quatremer reports that the Fitch credit rating agency has said it may downgrade the credit ratings of France, Spain, and the UK.
Independent Coulisses de Bruxelles
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