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Markets react positively to EU bailout package;
Former French Europe Minister: If the UK doesn't show solidarity with the euro "let's see what happens to the UK"
Markets rallied yesterday, as details of the €750bn international rescue package to ensure the eurozone's stability were revealed.
The Guardian reports that German Chancellor Angela Merkel is to fast-track legislation through the German parliament tomorrow enacting the central part of the EU package - a scheme to create a eurozone "special purpose vehicle" which could provide up to €440bn to troubled countries. The money is to be raised through loans or loan guarantees by the 16 eurozone countries, plus Sweden and Poland. The FT reports that the Italian Foreign Minister Franco Frattini has said he hopes a new British Government may reverse Alistair Darling's decision not to take part in the €440bn programme.
The Economist's Charlemagne notebook notes that the European Commission wanted control of the "special purpose vehicle" using Article 122 of the Lisbon Treaty, which would also mean majority voting rather than unanimity, but the move was opposed by Germany, the Netherlands, the UK, Finland and Austria, among others.
The Guardian's politics blog notes that former French Europe Minister Jean-Pierre Jouyet told Europe 1 radio this morning: "There is not a two speed Europe but a three speed Europe. You have Europe of the euro, Europe of the countries that understand the euro... and you have the English. The English are very certainly going to be targeted given the political difficulties they have. Help yourself and heaven will help you. If you don't want to show solidarity to the eurozone, then let's see what happens to the United Kingdom."
In addition to the bailout package, the WSJ notes that EU Economic Commissioner Olli Rehn is to propose new eurozone rules tomorrow, including a plan for eurozone members to examine each others' budgets before they go to national parliaments. They could reject the budgets on the basis of some kind of majority vote, with the country whose budget is being examined unable to vote.
In an interview with Les Echos, French Finance Minister Christine Lagarde describes the EU's plan as "an historical turning point", adding: "When you put €500 billion on the table, that's because everyone wants it! This also means that there will be budgetary consolidation measures for everyone". Asked whether the envisaged European stabilisation fund might be seen as "an ounce of federalism", Lagarde replied: "It's more than just an ounce of federalism, since the European fund will buy bonds and propose loans".
The Scotsman quotes Open Europe Director Mats Persson warning that "this deal could easily spiral out of control and see UK and European taxpayers becoming exposed to ever growing debt burdens of governments over which they have no democratic control." Mats is also quoted on Sky News.
Sky News Scotsman IHT: Dempsey Irish Times: Leader Guardian Guardian 2 Irish Independent FT European Voice Economist: Charlemagne notebook FT 2 FT 3 EUobserver BBC: Hewitt blog Independent WSJ IHT IHT 2 Irish Times WSJ WSJ 2 Irish Times 2 Irish Times 3 Les Echos Le Figaro Le Figaro 2
German reaction to bailout;
Merkel facing a leadership challenge
FAZ reports that the German contribution to the package has been calculated by the German government at €123 billion, although it may increase. Die Zeit notes that the amount could rise to €148 billion, if countries in receipt of aid themselves did not have to contribute. Bild carries the headline, "It's incredible...We are again the duped of Europe!"
The Telegraph reports that German Chancellor Angela Merkel is facing a leadership challenge following her party's defeat in Sunday's regional elections, and amid hostility to the Greek bailout. Spiegel magazine has said that up to 10 regional CDU leaders have begun plotting to remove her after her decision to bailout Greece "failed its first democratic test" with electoral defeat. The CDU/FDP coalition has now abandoned plans for €16 billion in tax cuts because of the political setback, and the tough economic conditions. Handelsblatt reports that a group of critics, centred around Baden-Wurttemberg Minister Stefan Mappus, met yesterday evening in Berlin, discussing their unhappiness with mistakes in the election campaign.
The paper also reports that the Bavarian CSU party feels it has been bypassed in decision making, while the liberal FDP party is angry that the independence of the European Central Bank has been compromised. Former FDP Chairman Wolfgang Gerhardt also said: "These actions by governments should be respecting the independence of the ECB." CSU Minister Peter Ramsauer is quoted saying: "I found out about this listening to my car radio."
A comment piece in the FAZ argues, "The continuing attacks of the speculators indicate that EU politicians cannot fulfil their promise yet, and prefer to seek the solution in excessive regulation of the markets, in order to break the disciplinary forces of market prices. Citizens shouldn't be fooled by that. In the end, the speculator is their last ally in the fight against escalating public debt." Another article in the paper argues, "It's better to say markets show justified skepticism on the sustainability of euro deficits."
Writing in the FT Wolfgang Munchau argues that the German reaction to the bailout "was one of confusion and bewilderment." He concludes: "When Ms Merkel went to Brussels on Friday, she had a new stability pact in her handbag. Two days later, she and her country woke up to realise that Europe's monetary union is going to be something very different from what they had imagined. I wonder how she is going to explain that." A Handelsblatt leader argues that "A true decision should be made in Europe. Either in favour of a political union with all consequences of financial transfers between rich and poor countries...or we should return to a two-speed Europe."
Telegraph Handelsblatt Handelsblatt 2 Times FT: Münchau Sueddeutsche Leader FAZ Zeit FAZ: Comment Handelsblatt: Leader Handelsblatt
Threat to ECB's independence comes under fire
RTE reports that European Central Bank chief Jean-Claude Trichet has insisted that it was not political pressure which led him to agree that the ECB would buy public debt as part of the bailout package, saying "We are fiercely and totally independent". The Telegraph notes that as recently as last Thursday Mr Trichet said the ECB Governing Council had not even discussed buying bonds.
EUobserver reports that European Commission officials began telling journalists about the bond-purchase move before Mr Trichet's announcement yesterday, reinforcing the idea that external pressures played a role in the decision. City AM reports that Capital Economics has estimated that the ECB's bond-buying programme could see it spend up to €1.7 trillion.
However, there were splits over the decision in Council, with Bundesbank chief Axel Weber, favourite to take over from Trichet when he retires, telling Boersen-Zeitung yesterday: "The purchase of government bonds poses significant stability risks and that's why I'm critical toward this part of the ECB council's decision". The Telegraph suggests that at least two German members of the Council voted against the measures.
Speaking to the BBC Today programme David Marsh, author of various books on the euro, said: "The Germans signed up for swapping the d-mark for the euro on a quite different prospectus, they wanted a currency which would be under the control of an independent central bank like the Bundesbank. We've now seen the ECB, the European Central Bank, effectively losing its independence over the last weekend. So I don't think this is going to wash long term with the German parliament and with the German voters, who are the paymasters."
City AM EurActiv RTE FT FT 2 EUobserver EUobserver 2 Guardian Telegraph WSJ WSJ: Analysis Irish Times BBC: Today programme
MEPs back Frankfurt-based EU super-regulator with mandate to directly supervise banks
The European Parliament's Economic and Monetary Affairs Committee (ECON) yesterday voted to toughen up a controversial proposal which would see the creation of three new EU authorities to supervise the banking, insurance and securities sector - going well beyond measures proposed by both member states and the European Commission. Unlike previous proposals, MEPs voted to base the three authorities in Frankfurt, operating under a single "quasi-umbrella authority". The proposal gives the EU authorities substantial new powers, such as the possibility of drawing up financial rules which could then be made legally binding by Internal Market Commissioner Michel Barnier.
The authorities would have the power to override national supervisors, such as the FSA, and would be given the means to directly supervise cross-border financial institutions. In these instances, national supervisors "would act as agents of the EU authority", according to the MEPs' proposals. The authorities would also be given the power to ban a financial product if it is "felt to pose too much risk" - shortselling has previously been given as an example. Institutions directly supervised at EU level would also be obliged to contribute to a "European deposit guarantee fund" and a "European stability fund". Contributions would depend on the institutions' risk ratings, and the funds would kick in if a financial institution needed to be bailed out.
Meanwhile, ECON yesterday postponed its crucial vote on the AIFM Directive, stating that it needed more time to reconcile its version of the Directive with a draft backed by the EP's legal affairs committee (JURI), particularly on rules governing private equity-led takeovers.
Telegraph EP press release Le Monde Dow Jones EurActiv Independent
FT: "There can be no more pretence that monetary union respects the premise on which it was sold to European citizens"
An FT leader argues that "There can be no more pretence that monetary union respects the premise on which it was sold to European citizens, Germans in particular. There is a real chance that a euro member's failure to pay its debts will land neighbours or the ECB with losses that can only amount to fiscal transfers or money-printing. Strict surveillance and ECB independence was meant to make it impossible to end up in this situation; both have been undermined." The article concludes, "Pooling more sovereignty than it ever planned, the eurozone is now at the mercy of its most indebted members' sovereign decisions."
In the Telegraph, Jeremy Warner writes, "None of this is good for Britain, which is damned if the package works and damned if it doesn't. If it doesn't work, the fiscal crisis sweeping Europe will soon wash up on these shores, and there will be the added negative of a double dip recession on the Continent to cope with too. If it does work, it will be another step on the long road to greater fiscal and political union in Europe." In the Times, Bronwen Maddox argues, "Rather than address the eventual cost of the project, it may simply have put off a day of reckoning."
Writing in Le Monde, Martin Wolf argues that "This crisis confirms the view of those who considered the euro as an extremely dangerous adventure". He adds that "other Eurozone members might find themselves alone in the storm. None of them is in such a bad condition as Greece, and none of them committed the same embezzlements. Yet, some of them have unsustainable budget deficits and soaring debt ratios. From this point of view, their situation is not different from the situation in the USA or in the UK, but they don't have the same range of options at their disposal." In the FT, Gideon Rachman argues, "Europeans are discovering that the 'European project' provides no protection against the harshness of the outside world. Things can still go badly wrong - even within the walled garden of the European Union."
An editorial in Le Figaro argues: "The role played by the new institutions created by the Lisbon Treaty in the management of this unprecedented, existential crisis has been non-existent. Mr. Van Rompuy and Lady Ashton were completely off the radars. When he wanted to offer struggling Europe his support, President Obama called Sarkozy and Merkel instead."
The article goes on to argue that the next UK Prime Minister "will face hard choices. The Thatcherite attitude of being in and out of Europe at the same time cannot last. Being European means above all accepting abandonments of sovereignty. Now, Britain doesn't want to give in on any relevant issue: currency, fiscal policy, justice, home affairs. Indeed, this is Britain's right. But the Europeans also have the right to move on without the UK".
Telegraph: Warner WSJ: Analysis Guardian: Leader Times: Leader FT: Leader WSJ: Editorial WSJ: Editorial 2 Irish Times: Leader FT: Rachman Times: Maddox Irish Times: Beesley Irish Independent: Oliver FT: Barber BBC: Flanders blog FT: Boone and Johnson Telegraph: Conway blog Independent: Prosser Le Figaro: Editorial Le Monde: Wolf Irish Times: Bruton
EP Committee Chairman warns that Monti's report on single market could lead to tax harmonisation
Euractiv reports that former EU Commissioner Mario Monti has presented his report outlining a set of new legislative proposals designed to improve the EU's single market that the Commission should present by July. The article notes that Malcolm Harbour, Conservative MEP and Chairman of the European Parliament's Internal Market Committee, rebuked Monti's "strong endorsement of tax co-ordination and co-operation in the context of addressing 'social concerns' within the single market". He warned that such an initiative would lead to tax harmonisation and reduce competitiveness.
European Voice EurActiv Monti's report FT: Barber
RBS blames EU for job losses
The Telegraph notes that the Royal Bank of Scotland (RBS) has blamed the EU after making another 2,600 job cuts, making a total of 22,600 cuts worldwide since 2008. The article notes that EU pressure was given as the main reason for the cuts and the bank's need to prepare the insurance business for a sale by 2013 - the deadline imposed by the European Commission for the operation's disposal.
Norwegian state broadcaster NRK reports that opposition to joining the EU is rising in Norway. A poll has found that 55% of Norwegians are opposed to joining the EU, while only 32.3% say that they are in favour of EU membership, and 12.7% are undecided.
NRK
The Times reports that the EU will give €1million over five years to France to fund 48 "bee hotels". The initiative is designed to slow the decline of the European bee population, and therefore save vegetables, fruit and flowers.
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