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France and Germany push for EU economic government led by EU President;
French translation still refers to "economic government" despite resistance from Brown
There is widespread coverage of yesterday's European Council summit in Brussels. In addition to agreeing on a Greek bailout, the draft version of the Council conclusions says that EU leaders "consider that the European Council should become the economic government of the EU and we propose to increase its role in economic surveillance and the definition of the EU's growth strategy."
PA reports that Gordon Brown intervened last night to change the wording from "economic government" to "economic governance", backed by Ireland, Sweden, the Netherlands, Poland, and the European Commission, telling the summit dinner that the term was contentious.
However, the Economist's Charlemagne blog notes that the Council conclusions in the French version still say "gouvernement économique", or 'economic government'. When asked about it in a press conference, EU President Herman Van Rompuy said, "There is no fundamental difference of view, but rather a sensitivity to certain words which has led to an asymmetrical translation."
The draft conclusions say that President Van Rompuy will head a 'task force' looking at 'all options' to achieve the legal framework for economic government - which could mean EU Treaty changes. German Chancellor Angela Merkel has called for the Lisbon Treaty to be amended in order to prevent any repetition of the current crisis in exchange for German agreement for a Greek rescue package. The Telegraph notes that Croatia's likely EU membership next year would need an "amending Treaty", providing an easy opportunity to lever the proposals into the Treaties.
The Times quotes French President Nicolas Sarkozy saying: "The economic government of Europe is the European Council, which has been taken up by the 16 [eurozone members]. It is still a subject for debate among the 27 members because our English friends are not on the same line. But we are making progress." The article also suggests that economic governance could mean handing powers to the European Council, allowing it to tell any country how to manage its national debt or to invest more in EU priority areas such as education or poverty reduction, or it could mean more powers for the EU to better monitor economies such as Greece.
Open Europe Director Mats Persson is quoted in the Mail and This is Money describing the plans as "an astonishing power grab", adding: "It is a ground-breaking development which paves the way for full scale economic federalism, with the European Council controlling the economic policy of member states, particularly those that are not well managed and have large budget deficits like the UK. It is obviously a very significant move and it is hard to see how it could be forced through without a referendum in the UK."
Sun Express Telegraph Irish Times This is Money Mail Guardian Independent Times WSJ
EU leaders agree on emergency bailout mechanism for Greece;
Berlusconi: Contributions from non-eurozone members should not be ruled out
Following a principle agreement between France and Germany yesterday afternoon, eurozone leaders last night agreed on a rescue deal for Greece in the event of "very serious difficulties", which will consist of assistance from the IMF and bilateral loans from eurozone member states. The assistance would require unanimous approval from eurozone members and be "based on an assessment by the European Commission and the European Central Bank" that such help was a "last resort", reports the Guardian.
French President Nicolas Sarkozy said of the estimated €20-22bn funding needed, the proportion of funding would be one-third IMF and two-thirds eurozone. Le Monde quotes him saying: "The agreement we have found is clearly preventative in nature. The goal is not to use it...We wait to see if this translates into a calming of the markets with regard to Greece". Greek PM George Papandreou described it as "a very satisfactory decision" and Jean-Claude Trichet, President of the European Central Bank, said he was "entirely content" with the deal, reports that FT.
The Italian press reports that Italian PM Silvio Berlusconi has said that if a bailout is needed, Greece could receive support from non-eurozone member states, adding: "Since the very beginning, we [the EU leaders] have all agreed on the need for the EU to act in its entirety, not only through the Eurogroup. Otherwise, what kind of Europe would this be?..the possibility for non-Eurozone member states to offer Greece their own contribution must not be ruled out".
According to a survey of German, French, Italian, Spanish and UK voters published yesterday by the French Institut Français d'Opinion Publique, 58% of respondents disagreed with bailing out Greece. 22% of voters in the UK; 24% of voters in Germany; 53% of voters in France; 55% of voters in Spain; and 67% of voters in Italy agreed with the bailout.
Two-thirds of respondents were also against the "creation of a European tax" to help member states in the grip of a serious crisis, reports AFP.
Le Figaro reports that Chinese Central Bank Governor Zhu Min has said, "I do not think that Greece will go bankrupt because it is [a country] of relatively modest size... Greece is one case, but it is only the tip of the iceberg. The main preoccupation today is evidently Spain and Italy".
Economist: Charlemagne notebook FT FT 2 IHT Economist Telegraph City AM Irish Times BBC EurActiv European Voice European Voice 2 EUobserver EUobserver FT 3 FT 4 European Voice Irish Independent Irish Times Affari Italiani ASCA Wall Street Italia AFP Le Figaro EUobserver Le Monde BBC: Today programme Guardian
Comment roundup;
Times: "Economic governance over the whole of the EU is a clear challenge to Britain and would reopen the Lisbon treaty"
A leader in the Times argues: "Ms Merkel's demand that the European Council should assume powers of economic governance over the whole of the EU is a clear challenge to Britain and would reopen the Lisbon treaty. One thing is clear: Germany is making the running in Europe and the next British government will need to pay close attention to Ms Merkel."
An editorial in Handelsblatt looks at Germany's demands for tough economic governance and argues "The iron Chancellor may have obtained a victory, but she has destroyed a lot of porcelain."
Writing in the FT, four German professors, who took the German government to the German constitutional court in 1998 over Germany's entry into the euro, argue that Greece has "no way out" but to leave the euro, and suggest that if eurozone members assist Greece in a manner that contravenes the no-bailout clause they will lodge a new complaint with the German Constitutional Court.
In the Times, Bronwen Maddox argues that Angela Merkel's "sermon about the virtue of thrift is no answer to that debate about how fast to cut deficits, one of the most important of the recovery. Nor does she admit that Germany's success rests on eurozone imbalances and is unsustainable. Out of self interest, as well as solidarity, Germany needs to lead eurozone reform. Yesterday's deal is only a start."
In the WSJ, Stephen Fidler argues that, while "European leaders may have bought some time by backing in principle a bailout for Greece," the eurozone's next big test is the "competitiveness challenge: structurally weak economies, in Southern Europe and elsewhere, locked by a common currency to Germany's low inflation rate and economic stringency."
FT: Stephens FT: Hankel, Nolling, Schnachtschneider and Starbatty Times: Leader Times: Maddox Times: Boyes WSJ: Fidler Les Echos Economist: Charlemagne Handelsblatt
Author of AIFM Directive: We need to go back to the original proposal to avoid protectionism
Open Europe yesterday organised a debate in Brussels, looking at the EU's proposed AIFM Directive and to what extent the proposal would hurt investors and lead to more protectionism. The European Commission's Uwe Eiteljoerge, who is one of the authors of the draft Directive, suggested that member states and the EP should go back to the Commission's controversial first draft: "My answer to the question how to avoid protectionism is to go back to our original proposal last year...because it provides market access to third country funds and at the same time it establishes a level playing field between third country fund managers and European fund managers."
Open Europe's Mats Persson argued that this would be a bad idea, since the Commission's original proposal was flawed, in particular with regard to the restrictions on offshore managers and funds. He also noted that while both the EP and the Council have made good progress on the Directive, they're now moving towards a more protectionist approach, which would be counterproductive. He said that a protectionist Directive would "have a real life impact and a global impact" since it would hurt pension funds, charities and cut off funding to developing countries.
Swedish MEP Gunnar Hökmark warned that an overly burdensome Directive could lead to economic stagnation in the EU, saying "Listen to a shocking truth now. We need to have dynamic financial markets in Europe. Have you heard that lately? Too much stability gives you stagnation."
OE Research: AIFMD OE Research: AIFMD and Investment Trusts
A third of MEPs call for work-free Sundays to be considered in Working Time Directive revision
EUobserver reports that a third of MEPs have signed an appeal to the Commission to consider work-free Sundays in its upcoming review of EU rules on working hours, under the Working Time Directive. EU Employment Commissioner Laszlo Andor told MEPs that "Currently, it is up to member states to define Sunday as their weekly resting day, and in doing so, by taking into consideration cultural, ethnic and religious diversity." He did however promise that "the Commission will consider all contributions in the review of the working time directive".
EU police agency gains extensive surveillance powers
The Express notes that, under the Lisbon Treaty, the EU's police agency Europol has gained a wide-ranging capacity to gather criminal intelligence if it suspects EU citizens are involved in any "preparatory act" which could lead to criminal activity. The article quotes James Welch, Legal Director of campaign group Liberty saying: "We have huge concerns that Europol appears to have been given powers to hold very sensitive information and to investigate matters that aren't even crimes in this country. Any extension of police powers at any level needs to be properly debated and scrutinised".
Timothy Kirkhope, Conservative leader in the European Parliament, is quoted saying: "Europol's new mandate has significantly expanded its powers...There is a real chance that the vague mandate will enable it to gradually extend its areas of intervention even further."
Express Express: Leader Open Europe research
MEPs reject Ashton's blueprint for EU diplomatic service as key aide resigns;
Brown floats idea of EU "peace corps"
MEPs last night rejected EU Foreign Minister Catherine Ashton's blueprint for the EU's new External Action Service (EAS), with MEPs of all main parties issuing a joint statement demanding "decisive changes" to her proposals. The Telegraph reports that member states, including Britain, are concerned that the EAS' proposed structure, including a secretary-general, will allow the service to be hijacked by the French official who is expected to land the job. Pierre Vimont, French Ambassador to Washington, is the favourite for the job and would be in direct "day-to-day" command of the EU's intelligence, military and crisis response bodies.
EUobserver notes that MEPs are also angry with Ashton's decision to propose a powerful secretary-general, describing it as a "recipe for incoherence."
The Independent reports that Ashton's announcement on the EAS was overshadowed by the resignation of her Chief Spokesman Lutz Güllner. The Mail notes that Güllner initially indicated that the criticism of Ashton's poor performance was "part" of the motivation for quitting. He added, "To do this job you need to have a certain amount of trust". He later said his remarks had been taken out of context.
Meanwhile, the Guardian reports that Gordon Brown used yesterday's EU summit to propose the establishment of an EU "peace corps". He said, "A European peace corps would inject fresh energy into our own ambitions for the EU to play a practical role in meeting the global challenges of stability and poverty."
Express Telegraph Irish Times EurActiv European Voice EUobserver BBC Independent WSJ: Editorial Guardian
In the WSJ, Fredrik Erixon, Director of the European Centre for International Political Economy, looks at the EU's new 2020 economic strategy and argues, "the belief that one central strategy can fit the entire EU, with 27 disparate economies of different profiles and reform requirements, borders on a central-planning mentality that can only do damage to economic growth."
The Economist argues that Spain is not doing enough to tackle its economic problems.
The Guardian reports that the FSA has warned that EU rules may stop building societies' plan to raise capital through issuing "mutual ordinary deferred shares".
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