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Merkel warns that plan for European Monetary Fund requires EU treaty change;
Commission to table proposal by June
German Chancellor Angela Merkel has backed plans for an IMF-style European Monetary Fund to bailout struggling countries, but warned that establishing such a fund would require EU treaty change and the agreement of all 27 member states. "I find the idea good and interesting", Merkel said, according to EUobserver. "But of course we are going to have to ask ourselves who will pay into it, how independent it will be from the European Commission...Without treaty changes we can't form such a fund." She added that the EU should not be put off by future treaty changes, saying "We want to be able to solve our problems in the future without the IMF."
French officials have welcomed the plan, with a spokesman for French Finance Minister Christine Lagarde, saying, "It's an interesting idea. But we'll need to see how it articulates with other proposals," according to the WSJ. The FT notes that French officials said there was an "open debate" on whether an EMF would be put in place for the 16-member eurozone or for the entire EU of 27 and that much would depend on the UK's attitude. Market News notes that Lagarde has signalled caution over any proposal that would require treaty change. "Other avenues should be explored" that are in line with the Lisbon Treaty, she said.
The proposal has been criticised by Germany's representative on the Executive Board of the European Central Bank, Jürgen Stark, who fears that establishing an EMF would further increase the eurozone's susceptibility to "moral hazard". He writes in Handelsblatt, "European financial compensation that could become very expensive, which would give the wrong incentives and would burden countries with more solid public finances." He warns that "public acceptance of the euro and the European Union would be undermined."
An editorial in the paper notes that German Finance Minister Wolfgang Schäuble announced the plans at the weekend without consulting the ECB, writing that "a conflict between the independent central bank and politicians is emerging."
Meanwhile, EUobserver reports that the European Commission has said it will table a proposal for the EMF by June. The Commission's Economy Spokesman, Amadeu Altafaj Tardio, said the Commission would also come forward with plans for "reinforced economic policy co-ordination and country surveillance" at the same time as the fund proposal. The Irish Times reports that 'informed sources' said the Commission was likely to demand a say in economic monitoring over public sector pay.
In the FT, Quentin Peel notes that Germany's concept for the EMF would be a "double-edged weapon", possessing the "same very tough tools of conditionality and intervention in the fiscal policies of individual countries as the International Monetary Fund. From the German perspective, that would be its primary purpose."
A leader in the paper argues, "But what might look like a balanced European economy from Berlin looks like stagnation from anywhere else." Adding that "if Europe were only to become better at stopping debtor nations from spending excessively and no defter at encouraging parsimonious peoples to consume, the future would be bleak...Europe is more in need of a system to press surplus countries to consume than it is of further punishments for its already pummelled debtors."
FT FT 2 FT: Peel FT 3 WSJ WSJ: Analysis Times Irish Independent IHT City AM Irish Times Irish Times 2 FT: Brussels blog BBC EUobserver EurActiv EUobserver 2 FT: Leader FAZ Frankfurter Rundschau Reuters Les Echos Les coulisses de Bruxelles Le Point Le blog Finance Handelsblatt: Stark Handelsblatt Spiegel Boersen Zeitung Standaard Le Figaro Le Figaro 2 Nouvel Obs Le Point Les Echos Coulisses de Bruxelles Les Echos Le Figaro Les Echos Market News Open Europe blog
FT Deutschland: Member states are now living with the "Nightmare Lisbon Treaty"
A leader in the FT Deutschland under the headline, "Nightmare Lisbon Treaty", argues that "governments have for a long time fought for it. However three months after coming into force there is disillusionment. For many governments the outcome has bitter consequences: the power in Brussels is being distributed in a new way."
The article continues, "Between Barroso and Van Rompuy, between Commission and Council, the real power struggle is being conducted...Van Rompuy builds his influence steadily. He has created a culture shock in the Council Building as "instructions are now coming from above". Adding that, now installed in his second term as Commission President, Barroso has "suddenly discovered his heart for the European Parliament" at the expense of member state governments.
Sarkozy ready to accept reduction in EU agriculture spending in exchange for higher import barriers
French President Nicolas Sarkozy, speaking at an agriculture show in Paris on Saturday, said that he was willing to accept a reduction in agriculture spending in the EU budget in exchange for an increase in production standards on imports. He said, "I also say to our partners in Europe: you want to lower the agriculture budget, we can discuss it...I am ready to accept reductions in agriculture expenditure in the EU budget on the condition that we do what is best for the community". Farmers Guardian reports that he was referring to the high standard of environmental and welfare rules adhered to by European producers, arguing that European farmers would be able to compete on price if third country producers had to compete on standards of production.
President Sarkozy added, "It is perfectly abnormal that in Europe we continue to import some products, some meats coming from countries which don't have any rule of traceability, [and] then we impose traceability rules on our farmers...if we impose [rules] on our breeders, we must impose the same on products imported into Europe".
Farmers Guardian Elysee speech
Greek PM calls on US to clamp down on financial speculators
Speaking at the Brookings Institute in the US, Greek PM George Papandreou warned that the Greek debt crisis posed a threat to the wider financial system, saying: "If the European crisis spreads, it could create a new global financial crisis with implications as grave as the one that originated in the US two years ago", reports Greek daily Kathimerini.
The BBC reports that Mr Papandreou called on the US to clamp down on financial speculators, and impose stricter regulations on hedge funds and currency traders. He is quoted saying, "Unprincipled speculators are making billions every day by betting on a Greek default. That is why Europe and America must say 'enough is enough' to those speculators". Handelsblatt reports that German Chancellor Angela Merkel wants changes in regulation of credit default swaps at the EU level as soon as possible.
Meanwhile the FT reports that Portugal's government yesterday set out budget austerity measures including a four-year public sector wage freeze, military spending cuts and tax increases, in order to cut the budget deficit from 9.3% of GDP last year to 2.8% in 2013.
FT Mail Guardian FT 2 Guardian 2 IHT City AM BBC European Voice Kathimerini Le Figaro Focus Stern Sueddeutsche
Ashton struggles for consensus on shape of new diplomatic service
EUobserver reports that EU Foreign Minister Catherine Ashton's proposals on the shape of the new EU diplomatic service are causing a power struggle, with MEPs believing it takes away too much of what is the European Commission's responsibility. German centre-right MEP Elmar Brok, in charge of drafting the EP's opinion on the issue stated that, "What is on paper at the moment is insufficient, utterly insufficient." In the dispute, the EP is a natural ally of the Commission and, according to Austrian Socialist MEP Hannes Swoboda, "If we don't find a compromise we will not give agreement" to the proposals.
Separately, EUObserver quotes Oded Eran, Israel's former Ambassador to the EU, arguing that "both a visit and a meeting [between Lady Ashton and Hamas] are unnecessary and unhelpful...Assuming that proximity talks between Israel and the Palestinian Authority start in the next few days, why would the EU want to give a moral boost and 'victory' to Hamas...?"
Irish Times: Beesley EUobserver Times Fenetre sur l'Europe EU Observer
'No' vote hardens Dutch attitude to Iceland's EU membership talks
The European Commission said yesterday it would continue to recommend that Member States open negotiations for Icelandic EU membership, El Mundo reports, despite the rejection of an Icesave deal. Dutch daily Volkskrant, reports that the position of the Netherlands towards Iceland's EU membership bid has hardened, with the government wanting clarification on the Icesave deal before negotiations progress.
On his blog, Jean Quatremer argues that the EU should, in any case, say 'no' to Icelandic membership, as it is "clear that a future accession referendum [in Iceland] would be lost".
El Mundo Volkskrant Le Monde Coulisses de Bruxelles France Diplomatie
EU increases parental leave requirements
The BBC reports that the Council of Ministers has adopted proposals to increase the minimum level of parental leave from three months to four months for each parent, with partners only able to transfer a maximum of three months to the other. Member states now have two years to implement the changes, and are able to decide whether the leave is paid or unpaid, as well as other details.
Separately, MEPs are due to vote on Thursday on a proposal to extend maternity leave pay across the EU to a minimum of 20 weeks on full pay.
EurActiv reports that renewed debate on imposing minimum CO2 tax rates on fuel at an EU-wide level could start as soon as next month. The plan would replace the existing EU energy taxation directive in order to meet the EU's environmental goals. Meanwhile, in the WSJ, Neil Winton, argues that strict EU rules on CO2 and fuel-efficiency have "crippling financial implications" for the European car industry.
EurActiv WSJ: Winton OE Blog OE Research
Environmental NGOs sue Commission over withholding documents on biofuels
EurActiv reports that four environmental groups have lodged a lawsuit against the Commission with the EU's General Court, alleging several violations of EU laws on transparency by withholding documents they say will add to evidence that biofuels harm the environment and push up food prices.
AFP reports that Mary Ellen Callahan, Chief Privacy Officer at the US Homeland Security Department, travelled to Strasbourg yesterday to urge MEPs not to hold up a deal between the US and EU on sharing data on passenger name records.
European Voice reports that Commission President Jose Manuel Barroso has said that it will propose a law intended to harmonise how countries manage radioactive waste by the end of the year.
Goldman Sachs' Chief European Economist has said that sterling's drop to a ten-month low may help the UK grow faster than the eurozone, describing the euro as "overvalued".
The EU is putting €100 million towards a programme for micro loans to be provided, as a means out of unemployment, for those who want to set up small businesses.
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