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French Europe Minister: Through eurozone bailout we have "De facto changed the treaty";
Franco-German relations at an all-time low
In an interview with the FT, French Europe Minister Pierre Lellouche has said that the eurozone's €440bn debt guarantee scheme marks an "unprecedented" change to the EU treaties. "It is an enormous change," Mr Lellouche said. "It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bail-out clause. De facto, we have changed the treaty," he added. "The €440bn mechanism is nothing less than the importation of Nato's Article 5 mutual defence clause applied to the eurozone. When one member is under attack the others are obliged to come to its defence."
Mr Lellouche rejected suggestions that the Franco-German relationship had broken down because of tensions over the Greek and eurozone bail-out plans. But he conceded that it required a lot of effort to make the relationship work, likening the current challenge to postwar reconciliation between the two countries. "To hold out our hands and offer a partnership of equals with Germany required a lot of vision. That's a bit what it is like today." He added that France accepted as "normal" that Germany now asserted its own national interests, Mr Lellouche said. "Since when did we expect Germany to act as cash cow indefinitely?"
Wirtschaftswoche reports that relations between France and Germany - particularly between President Nicolas Sarkozy and Chancellor Angela Merkel - have reached a new low. It notes that Germany was angered by Sarkozy's claim that "95 percent" of the eurozone rescue deal corresponded to French demands. "In this government one can talk anti-French without being punished", an experienced German Christian Democrat source notes, adding "that wasn't the case at the time of [Chancellor] Kohl". The article suggests that relations between Sarkozy and Merkel are at such a low ebb that "Merkel likes to imitate the vain behaviour of the little Frenchman, thereby making friends in her party laugh during the late hours."
The Economist's Charlemagne column argues, "Anger and denial are hardly surprising. Germans were promised that the single currency would be the old Deutschmark in new clothes, backed by Teutonic discipline and a fiercely independent central bank. Arguably, that fantasy Deutschmark died early on May 10th, when a euro-zone bail-out mechanism was agreed and the European Central Bank started buying government bonds by the bucket load. Germans are now in mourning. How they recover is not just their problem, but Europe's".
A leader in the IHT argues, "Now, at the worst possible moment, Germany is turning to nationalist illusions." Writing in the FT, Phillip Stephens argues, "Angela Merkel has begun to sound awfully like Margaret Thatcher."
Die Welt reports that a new poll for ARD has found that 78% of respondents are dissatisfied with Angela Merkel's performance as Chancellor, and only 20% are satisfied.
Open Europe research Open Europe press release FT WSJ FT: Stephens Economist: Charlemagne IHT Wirtschaftswoche Die Welt
Commission considers suggestion for raising retirement age to 70
FT Deutschland reports that the Commission's draft 'green book' on pensions is suggesting that EU workers should work longer hours and retire later, or risk a "painful combination of smaller payouts and higher contributions". The green book is just a source of advice for member states, designed to provoke debate, which sometimes leads to legislative proposals. The Commission paper suggests that by 2060, Europeans will live, on average, seven years longer. This would mean extending the retirement age to almost 70 in order to maintain the balance of not spending more than a third of adult life, over 18 years, in retirement. The Commission's green book is to be presented before the summer break.
EUobserver FT Deutschland Sueddeutsche
The Express reports on EU President Herman Van Rompuy's comments that the "man on the street" has been misled over the implications of the euro. The article cites Open Europe's briefing "They said it: How the EU elite got it wrong on the euro", and quotes Open Europe saying: "More than 10 years since the euro was launched, and with the single currency facing its greatest ever crisis, the parameters have radically changed."
Express Open Europe briefing Open Europe press release
Outgoing head of EU military staff: Single EU military HQ is unworkable
AFP reports that the outgoing British head of the European Union's military staff, Lieutenant-General David Leakey, said yesterday that the French-led drive for a single EU military command centre was unworkable, adding: "There is not a one-sized feasible solution, neither from the point of view of politics nor from the pratical, military one". Concerning the current situation, where the lead nation on missions hosts the HQ, he said: "The lead nation has a moral responsibility and puts its political weight behind (efforts) to make sure it's a success. If you have a permanent HQ mandated on a multinational basis, then you would lose an ownership of those operations."
Spanish parliament approves austerity package by just one vote
The Times reports that Spanish PM José Luis Rodríguez Zapatero narrowly managed to get a €15bn austerity package, including a 5 percent cut in public sector wages, through parliament yesterday, winning by only a single vote. The Telegraph reports that public sector unions have called a strike on 8 June to protest what they describe as an act of "ultimate aggression" against the people. The article notes that Italy has announced €24bn worth of cuts over two years, with PM Silvio Berlusconi saying, "Italy's spending is out of control: this irresponsible system worked as long as we could devalue the currency."
In the WSJ, Iain Martin writes, "In terms of European thinking about the state and its obligations, it shouldn't be underestimated how significant the consequences of these developments are likely to be. The way large parts of Europe have liked to conduct business - with high social spending, and costs loaded on the next generation - has run smack into two roadblocks: market fears about unsustainable debts and demographic change."
On Swedish news site Europaportalen, political consultant Jesper Katz argues that "because of the eurozone, the [economic] crisis could for many years remain hidden by the overheating which came about as a result of low interest rates...it's impossible to separate the present European misery from the eurozone experiment."
Meanwhile, the WSJ looks at the long term possibility of Greece restructuring its debt, reporting that in 2012 the country is expected to be generating enough money to fund itself, and would be borrowing just to fund its interest payments, noting that "In that situation, it could better afford to restructure and presumably anger lenders."
FT 2 Le Monde Europaportalen: Katz Guardian Times City AM Irish Independent Le Monde EUobserver BBC EurActiv IHT WSJ Telegraph WSJ: Martin
US Treasury Secretary says EU and US in "broad agreement" over financial reform
US Treasury Secretary Tim Geithner has said there is broad agreement between the US and EU over introducing "more conservative restraints on capital and leverage", but said that regulation should not be so drastic as to "create headwinds to the economic recovery".
He added: "But it's clear one also has to keep in mind that the traditions and structures of the financial sectors in the US are naturally quite different than in continental Europe and that's why not everything that goes in the same direction can be translated one-to-one for both areas." He declined to criticise Germany's unilateral move to ban naked short-selling.
WSJ: Surest route to a low-carbon world is to make everyone poorer
The Economist looks at proposals for increasing the EU's emissions targets to a 30% reduction by 2020, up from the current target of 20%. The article notes that the Commission estimates the cost of the higher target at €81 billion a year, against €48 billion to deliver the 20% target. It concludes that "The weightiest argument for looking at a 30% cut is that it is already EU policy in certain circumstances".
A leader in the WSJ argues, "The European Union economy shrank by 4.2% last year. The global recession cost the Continent millions of jobs, billions in tax revenue and contributed to a sovereign-debt crisis that has left the entire EU project at risk. But it turns out all this is good news, at least for global warming campaigners, since hobbled European industries have also rendered European climate policy about one-third 'cheaper' than before the downturn, according to a European Commission report published on Wednesday. Er. . . congratulations?"
EU prepares for first use of 'enhanced cooperation' under Lisbon
European Voice reports that EU justice ministers are expected to approve 11 member states to go ahead under enhanced cooperation measures in the Lisbon Treaty to set common rules for divorce law, determining which jurisdiction would apply, at a meeting on 4 June. It will mark the first time that the enhanced cooperation procedure introduced under Lisbon has been used.
The EU's outermost islands in the Atlantic and Indian Oceans have said that EU policies on trade, agriculture and fisheries do not sufficiently take into account their interests and problems.
Le Monde reports that the five of the political parties in the Dutch elections on 9 June have made election promises that are in breach of EU rules on immigration, according to research by two Dutch universities. These include the PVV, and the Dutch Socialist Party.
The Telegraph reports that more eastern European migrants are now leaving the UK than are arriving, for the first time since the EU's 2004 enlargement.
EUobserver reports that academics have said that the European Council and the Parliament have been the 'winners' so far under the Lisbon Treaty, with a relative decrease in power for the European Commission.
The IHT reports that the Commission has proposed that Albania and Bosnia be extended rights for visa-free travel to the EU. The plan must now be approved by member states and the European Parliament.
A High Court judge yesterday referred a case to the European Court of Justice concerning an American airline organisation's challenge to the EU's directive extending the Emissions Trading Scheme to international airlines, which has claimed that the move is contrary to international law, reports PA.
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UK
The Conservatives have won the final seat in Parliament, Thirsk and Malton, after the election was delayed for three weeks because of the death of the UKIP candidate.
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