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Europe
UK welcomes first coalition Government for 70 years;
Europe remains a divisive issue as Lib Dems agree to referendum on future transfers of power to EU
Gordon Brown resigned last night, and new Prime Minister David Cameron has formed a Government in coalition with the Liberal Democrats, with Nick Clegg to be his Deputy Prime Minister.
According to Politics Home, William Hague, expected to be made the new Foreign Secretary later today, said the Conservatives and Lib Dems had agreed that they would create a legal guarantee for a referendum over any potential handover of powers to the EU. The coalition also agreed that the Government would not propose joining the euro.
Hague said, "Our approach has been to tackle the most difficult issues", adding "Europe is one of those issues, it was not difficult to agree between us that we do, that neither party is in favour of handing any more powers to the European Union, but that we want from the outset of this Government, as I have always said, a positive approach, we will be active and activist from the very beginning in European Union affairs. We have also agreed that the British people will have the assurance that we will write into law, that if any government proposes handing future powers or sovereignty to the European Union there must be a referendum by law and that is the agreed policy of this coalition."
Conservative backbencher Bill Cash yesterday told the BBC that defending UK sovereignty against furthers transfers of power to the EU was a "red line" issue for his party, warning that Conservative MPs would be watching out for any Lib Dem attempts to promote EU integration. He also said that a Conservative government would have resisted taking part in the 'stabilisation' bailout fund for the eurozone, agreed over the weekend, which has made British taxpayers liable for about €8 billion in potential loans to eurozone countries. However, the decision to activate the loans was made using majority voting and the Conservatives would not have been able to block it, even if they were in government.
Meanwhile Le Figaro reports on what French President Nicolas Sarkozy told UMP deputies last week: "If Cameron wins, he'll do like the others, said the president. 'He'll start out anti-European and he'll finish pro-European. That's the rule'."
Politics Home BBC: Today programme WSJ Guardian Mail Reuters Telegraph FT Times BBC OE research: Where the parties stand on Europe Le Figaro BBC 2
EU faces showdown with Germany over plans to "intervene" in national budgets;
IMF Chief backs plan for 'short-term' EU fiscal transfers
Deutsche Welle reports that European Commission President Jose Manuel Barroso and EU Economic and Monetary Affairs Commissioner Olli Rehn will today outline plans to strengthen the EU's power to monitor national budgets in the eurozone. However, it is still unclear what level of supervision non-eurozone countries will be subject to.
"We want governments to send their budget outlines to Brussels for review before they are approved by their national parliaments," Rehn said, according to Die Zeit. "We can then see early whether a country is adhering to the Stability and Growth Pact. If not, we would intervene," he added. Handelsblatt reports on leaked information that the Commission is planning to introduce a "European budget semester", which would mean that in the first half of the year all eurozone governments would submit their budget and economic strategy for the next year, and then national budget planning would follow in the second half of the year.
Deutsche Welle suggests that Berlin will resist such measures, however, arguing it would impact on its budget sovereignty. German Finance Ministry spokesman Michael Offer is quoted in the WSJ saying, "Budget laws are a national responsibility. In Germany, naturally, it's in our own best interest, and we have historical precedent, for national jurisdiction over budget law. And we want to keep that independence." Germany is also likely to resist any French demands that it should do more to increase domestic demand to reduce economic imbalances within the eurozone.
The Irish Times reports that the Commission will say its budget oversight measures can be introduced under Article 136 of the Lisbon Treaty, which empowers it to adopt "measures specific" to euro countries. The plans are also likely to ensure that no finance minister could veto a negative finding by the other ministers.
Nouvel Observateur quotes French Europe Minister Pierre Lellouche, saying: "One implication [of the European plan] is that each one's discipline becomes everyone's problem: we will have the right to oversee each other's accounts."
Bild argues that "the French have trapped the Chancellor", noting that "French President Nicolas Sarkozy, ECB Chief Jean-Claude Trichet and IMF Chief Dominique Strauss-Kahn put the eurozone aid package together - without the Chancellor, who was at that time still campaigning in the North Rhine-Westphalia elections. When she appeared in Brussels, everything was already settled."
The FT notes that French ministers and officials are hailing the €750bn plan to prop up the eurozone agreed this week as a turning point in its long-running battle with Germany to rewrite the rules of the euro.
Meanwhile, the FT reports that Dominique Strauss-Kahn, IMF Managing Director, has suggested introducing short-term fiscal transfers between member states as a way to avoid a repeat of the crisis. "What you need is stronger surveillance and tools to organise transfers from one part of the area to other parts," he said. Strauss-Kahn stressed that he had short-term budgetary transfers in mind, rather than a permanent plan under which Germany, for example, would prop up debt-burdened countries such as Greece and Portugal.
Irish Times FT IHT EUobserver European Voice Reuters FT 2 Irish Independent WSJ DW WSJ 2 FT 3 FT 4 Economist: Charlemagne notebook Les Echos Nouvel Obs Le Figaro Bild Handelsblatt Reuters
German MPs warn that Merkel's government will have to reduce spending to pay for bailout;
CDU budget spokesman: We were shocked at the size of the bailout
The IHT reports that just as the German cabinet formally approved €123 billion in loans to support the euro yesterday, German MPs warned that the government would need to make radical cuts in spending to balance Germany's budget. The proposed cuts, put forward by prominent conservative politicians, included spending on child care and education, which have been Chancellor Angela Merkel's domestic priorities.
Handelsblatt quotes a CDU budget spokesman, Norbert Barthle, saying that "my colleagues were shocked on the size so shortly after the aid package to Greece." The paper notes that the Bavarian CSU, the sister party of Chancellor Merkel's CDU, has complained about being absent from the bailout decision. Georg Nüßlein MP is quoted saying, "the CSU wasn't at the table of such an important cabinet meeting...as a consequence the Chancellor shouldn't be surprised when the CSU doesn't vote in the way she wants."
Reuters reports that the leader of the CDU in the European Parliament, Werner Langen MEP, has said that the eurozone aid package is a clear breach of the EU Treaties, as "the article which is being used (122 EU Treaty) is actually meant for natural disasters and unique emergency situations and not for saving countries from a debt crisis for which they are responsible themselves." He added that the EU had become a transfer union overnight.
When asked in an interview with Le Monde whether Germany is ever likely to get its money back from Greece, Barclays Capital Chief Economist for Germany Thorsten Polleit said, "I think that money will never be repaid". He added, "In order to support debt-crisis-hit countries, governments will have to borrow again. This is not a solution."
Meanwhile, the Mail reports that market volatility returned yesterday afternoon, after initial optimism following the €750bn eurozone bailout package was announced. However, the WSJ notes that market fears over the euro have been further eased today by Spain's announcement that it plans to accelerate plans to reduce the budget deficit, with a five percent cut in public sector wages, as well as reductions in pensions and regional government funding.
Mail WSJ IHT BBC EUobserver European Voice Le Monde Independent Le Point Mail 2 European Voice FT FT 2 IHT 2 FD Handelsblatt Focus WAZ Welt Bild Reuters Handelsblatt 2
Displeasure in Europe over UK refusal to take part in €440bn bailout package
Swedish Finance Minister Anders Borg has called on Britain to change its mind over its refusal to participate in the 'special purpose vehicle' of €440bn loans and loan guarantees for any countries getting into financial difficulties in future, saying: "It is completely unrealistic to think one cannot [take part]."
The FT quotes Süddeutsche Zeitung, which argues there is a "crack in the sign of strong unity in Brussels as, with astonishing insensitivity for the dramatic situation, Britain coolly declared that the crisis was a problem for the eurozone and not for London - as if the crisis would make a point of avoiding the [British] Isles."
Telegraph FT IHT City AM EUobserver OE press summary
Catherine Ashton: I would have tweaked Lisbon Treaty to make EU Foreign Minister's job "more possible"
In a speech to the LSE last night, EU Foreign Minister Catherine Ashton outlined some of her priorities for the job, and for the European External Action Service (EEAS), the final shape of which is still under negotiation.
In her opening remarks she said: "My journey to this job actually began in the House of Lords where, as leader of the House of Lords, I decided, rather recklessly, that I would take through the Lisbon treaty. Had I known what was going to happen to me, I must admit, I might have tweaked it here and there - because I might have tried to make the job just a little more possible than perhaps it is, and certainly I would have liked to have filled in a few of the blanks that I've found as I've tried to translate the written word of the treaty into the job and the work that we have to do." In response to a question asking what she might change about her job if she could, she replied: "The only thing I would change is perhaps a few of the expectations at the beginning."
When asked whether the EEAS would be budget neutral, in line with its stated aims, requiring no additional monies than the previous external representation departments which it took over from, Cathy Ashton did not rule out increasing member states' contributions towards the EEAS.
She said: "I'm ambitious with the service, and of course I recognise that in order to do some of the changes that we want to do - ultimately we've got to decide how resources are spent. But it's a combination of things. First of all it's about the allocation of resources that currently exist...Secondly it's about moving beyond where we currently are to where we'd like to be in the future, and I've got to do that realistically against the backdrop of the economic situation across Europe, and that's what we've been doing."
She added, "we haven't drawn up the final budget yet, but it will be with those things in mind - how do we make the cake work better, what are the things we'd like to do, but maybe we can't do straight away...but wish to highlight things for the future as well."
Meanwhile EUobserver reports that further talks on the creation of the EEAS broke down on Monday with no real progress between the European Parliament and Cathy Ashton.
Eurozone comment;
David McWilliams: "the people are pulling one way, but the political elite are pulling the other"
Writing in the Times Anatole Kaletsky argues: "one of the most important financial decisions in EU history, which will now lead inexorably to the creation of a federal budget running into trillions of euros, should not have been taken in one Sunday night sitting, on a proposal that had not even been mooted until the previous Friday, and at a time when Britain did not have a functioning government and the German finance minister was suddenly in hospital."
Writing in the Irish Independent economic author David McWilliams asks whether, in order to make the guarantees on the bailout valid: "does there not have to be much closer integration in Europe...But will this fly? While the EU elite might want this, the people of Europe don't. France, Holland and Ireland have all rejected more integration when asked (okay, we voted again). But the signal from the street is that the French want to remain French and sovereign, the Dutch do too and doubtless the Germans, Danes and Greeks feel the same way. So the people are pulling one way, but the political and banking elite are pulling the other."
Writing in the WSJ, one of its editorial writers Daniel Schwammenthal argues: "hysterical complaints about alleged German euroskepticism bespeak a confused and ultimately undemocratic mindset. The idea that Berlin's hesitancy to violate the EU's no-bailout law could somehow be evidence of the country's new anti-EU attitude has an Orwellian quality. Once the need for a mega-bailout became consensus in the halls of Brussels, anybody who questioned the wisdom of such moral hazard automatically became a brute 'euro-skeptic' who lacks 'solidarity.' Any questions about the compatibility with European Union law and basic economic principles were swept aside."
Times: Kaletsky IHT: Leader WSJ: Schwammenthal WSJ: De Vos Guardian: Tisdall Independent: Prosser Irish Independent: McWilliams
MEPs to vote on allowance increase next week
European Voice reports that MEPs are to discuss increasing their own office allowances by €1,500 a month and adding 150 posts to the Parliament's payroll in their plenary session next Tuesday. Ahead of that, member states' ambassadors to the EU will discus proposed changes to the EU's 2010 budget today, in particular whether to support an increase in the Parliament's administrative spending for 2010 of €13.4 million.
EU Commission instigates discussion on increasing carbon targets from 20% to 30%
The Guardian reports that EU Climate Commissioner Connie Hedegaard is to formally propose an increase in the EU's target of reducing carbon emissions by 20% by 2020 on 1990 levels to 30% next week. The EU has previously said it would only move to 30% if other countries followed suit as part of a new climate deal. The costs and benefits of the increase will be set out in a paper published this month.
City AM reports that EU Internal Market Commissioner Michel Barnier has signalled that the EU is close to agreement with the US over its plans for the AIFM Directive, saying the two were "in the last stretch" of thrashing out a compromise.
The Telegraph reports that the EU is risking a trade row with China by imposing a 20.6 percent duty on aluminium car wheel imports for six months, accusing China of dumping the products below the price of the cost of production.
The Irish Times reports that the Turkish President Abdullah Gul has said that countries such as France and Netherlands have to make decisions about their future, adding: "If you come to the conclusion that Turkey will be a burden on you or the EU, you should not be forced to accept Turkey as a member of the EU".
EUobserver reports that ten EU 'farming' member states have opposed the resumption of trade talks with the Mercosur group of South American countries, saying the talks would send "a highly negative signal" to the EU's farming sector, and that no further agricultural concessions should be extended beyond those in the Doha round.
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