| Open Europe |
| Fortnightly Open Europe Bulletin: 21 May 2010 |
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| Quote of the fortnight:
"European co-operation and combination are necessary, political and currency union impossible. That might change if attitudes and institutions meld, as in America . But a freemasonry of like-minded Eurocrats does not make a united Europe ."
Guardian columnist Simon Jenkins, 21 May 2010 |
| 1. Conservatives forced to make concessions on Europe policy in coalition agreement |
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Following the General Election on 6 May, the Conservatives and Liberal Democrats last week entered into a formal coalition to form a new Government, the first coalition government in the UK for 70 years. The coalition's agreement on Europe contains a number of concessions from the Conservatives, who have rolled back many of the pledges in their manifesto as part of their compromise with the Liberal Democrats.
These include dropping their commitment to introduce a UK Sovereignty Bill, instead agreeing only to "examine the case for one", and abandoning their plan to elevate the position of Europe Minister to the Cabinet. The Government appointed David Lidington as the new Europe Minister, instead of Mark Francois who shadowed the role for three years in opposition. (Mail Guardian, 14 May)
The Conservatives also dropped their pledge to try and get an opt-out from the Charter of Fundamental Rights, and watered down their commitment to repatriate social and employment policy. Instead the coalition agreement only says it "will examine the balance of the EU's existing competences", and will try and limit the application of the Working Time Directive in the UK , which could mean trying to gain an opt-out for the public sector.
They also said they would not work for an opt-out from EU crime and policing measures, but will approach any new legislation introduced by the EU in criminal justice on a "case-by-case basis".
For their part, the Lib Dems agreed to the Conservatives' plans to introduce a 'referendum lock' to ensure that any further EU Treaty changes which involves a transfer of power from the UK to the EU should be put to a referendum. The agreement also pledged that "there should be no further transfer of sovereignty or powers over the course of the next Parliament" from the UK to the EU.
The agreement also says the Government will "rule out joining or preparing to join the European Single Currency for the duration of this agreement." However, the widespread troubles in the eurozone make it highly unlikely that any party would have been calling for such a move in the life of this Parliament, making this a token gesture. (Coalition agreement, 20 May)
In a press release, responding to the announcement, Open Europe set out a number of flashpoints which could present problems for the unity of the coalition, but said the retention of the pledge to introduce a referendum lock was "welcome", and that "the Tories should be given credit for having kept it." (Open Europe press release, 14 May)
Please leave your comments on our blog: http://openeuropeblog.blogspot.com/2010/05/what-does-con-lib-coalition-offer-on.html
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| 2. Germany seeks EU treaty changes after agreeing to €750bn eurozone bailout |
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Following the failure of the unprecedented €110bn Greek bailout to calm the markets, eurozone leaders last week agreed a further €500bn package to shore up confidence in other governments such as Spain , Portugal and Ireland . The IMF said it would contribute an additional sum of at least half of the EU's total contribution, or €250bn. Spanish daily El Pais reported that French President Nicolas Sarkozy had threatened to leave the euro unless Angela Merkel agreed to the bailout package. (Times, 10 May; Telegraph, 14 May)
While the UK will not take part in the €440bn aid package, it does participate in the EU's 'stability fund', originally designed to aid struggling eastern European countries but which has now been extended to cover the eurozone. This 'stability fund' allows the Commission to borrow up to €60 billion a year on international markets, in addition to €50 billion that was already in the pot, using the EU budget as collateral. If a receiving country fails to pay back the loan, all 27 EU member states would be forced to pay into the EU budget to cover the default, meaning that British taxpayers would be liable for about 13 percent of any losses.
Extraordinarily, the legal basis for the extension of the stability fund will be Article 122 of the Lisbon Treaty, which allows money to be sent to countries within 48 hours in the event of a natural disaster or other "exceptional event" beyond its control. The major decisions were made at a specially convened meeting of eurozone ministers, leaving the UK almost entirely sidelined. In any event, the use of Article 122 meant that the decision was taken by Qualified Majority Voting and that the UK could not have blocked the decision. (PA, 10 May)
In another unprecedented move the European Central Bank has started buying eurozone governments' bonds, a move criticised by German central bank chief Axel Weber and seen by the German media as undermining the Bank's political independence. (Bloomberg Die Welt, 10 May)
Meanwhile, Germany has called for a change to the EU treaties in order to strengthen the eurozone's rules and establish an EU 'economic government', with proposals ranging from fiscal transfers to increased EU powers over national budgets and sanctions for countries breaking the rules. The proposals were outlined today in a meeting of EU finance meetings held under a 'task force' headed by EU President Herman Van Rompuy.
These proposals will primarily cover the eurozone, but may spill over to Britain in one way or another. German Finance Minister Wolfgang Schäuble said, "We won't make it without amendments to the existing treaties. I know many other countries are sceptical. That is why we will be having arguments back and forth." Writing in today's FT, former Italian PM and European Commission President Romano Prodi described the recent developments "as a very important step towards the gradual creation of a European fiscal federalism." (Telegraph FT: Prodi, 21 May)
In a joint press conference with German Chancellor Angela Merkel today, David Cameron said, " Britain obviously is not in the euro and Britain is not going to be in the euro, and so Britain would not be agreeing to any agreement or treaty that drew us further into supporting the euro area." He added, "There is no question of agreeing to a treaty that transfers power from Westminster to Brussels ." (PA, 21 May)
Any Treaty change that involved a transfer of powers would have to be put to a referendum, if the coalition is to stick to the word of its agreement. How the Lib Dem-Conservative coalition defines a 'transfer of powers' will therefore be absolutely crucial.
Please leave your comments on our blog: http://openeuropeblog.blogspot.com/2010/05/they-said-it-wouldnt-happen.html
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| 3. News in brief |
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MEPs vote to increase their allowance by €1,500. In their plenary session in Strasbourg , MEPs this week voted in favour of increasing their allowances by €1,500 per month, bringing their allowances up to a total of €19,040 per month. This is set to increase the European Parliament's administrative budget by €9.4m to €1.6 billion. MEPs claimed they needed the extra money and additional staff to compensate for their increased work load under the Lisbon Treaty. (Irish Times, 20 May; Guardian Times Reuters PA Mail, 19 May)
New attempt to curtail EP's 'travelling circus' thwarted. The Conservatives' ECR group in the European Parliament this week proposed an amendment to reduce the number of EP sessions in its second seat of Strasbourg , and potentially save it up to €17m. The proposal was voted down by 380 MEPs, with 265 voting in favour and 24 abstaining. (The Parliament, 20 May)
EU ministers agree to new rules for hedge funds despite UK opposition. EU finance ministers this week agreed to a draft of the controversial AIFM Directive, which would introduce new rules for hedge funds and private equity firms, despite the opposition from the UK , which is home to 80 percent of the industry. ( FT FT 2 FT 3 BBC EUobserver, 19 May) |
| 4. Open Europe in the news |
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Alistair Darling agrees to help the eurozone 21 May BBC World Service 18 May EUobserver blogs 11 May Sky News Scotsman 10 May Mail Yorkshire Post This is Money Sky News 2 Express Sun Telegraph
Open Europe Director Mats Persson appeared on the BBC World Service discussing the future of the eurozone.
Sky News, The Sunday Telegraph, Sun, Express, Mail, Yorkshire Post, This is Money and The Scotsman quoted Mats saying "While it is in everyone's interest for Europe's economy to stabilise, 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 whatsoever. This is simply unsustainable - both from a democratic and an economic point of view."
Mats also examined the recent eurozone events on his EUobserver blog.
Regional 'stars' rewarded for innovative projects 21 May Euractiv
In an article looking at an awards ceremony for EU-funded regional projects, Euractiv quoted Open Europe 's Mats Persson saying, "While more effective targeting of cohesion funds certainly should be encouraged, you would think that the EU had bigger things on its plate at the moment than engaging in self-congratulatory ceremonies at the taxpayers' expense."
New UK coalition should have the courage to pursue EU reform 20 May The Parliament 18 May Telegraph: Persson 17 May EurActiv
Following the coalition agreement between the Conservatives and the Lib Dems, EurActiv cited Open Europe welcoming the commitment to hold a referendum on any future Treaty changes. Mats was quoted saying: "What cannot happen is for the new government to adopt the calculating, spinning, referendum-dodging approach of its predecessor in order to avoid facing up to the electorate and honouring its pledges, particularly on the transfer of powers to Brussels."
The Parliament quoted Open Europe saying, "We encourage the new UK government to push for genuine EU reform, including repatriating powers from Brussels . Most importantly, the coalition must break with the Labour government's record, and be fully honest with voters about when powers are being transferred from Westminster to Brussels - and take the voters' side in opposing such moves."
Writing for the Telegraph, Mats argued: "It's clear that the EU's flagship project, the eurozone, was built on an unsustainable political and economic model, and that people across the continent are becoming increasingly fed-up with the entire European project. This gives the Conservatives the backdrop they need to push for long overdue changes in Europe ."
European Commission proposes to oversee member states' budgets 19 May Full Fact 16 May Sunday Express
The Sunday Express quoted Open Europe 's Sarah Gaskell saying, "Any suggestion that budgets should be more tailored towards the EU is undemocratic and a huge encroachment on member states' powers."
The fact-check website Full Fact also quoted Sarah saying, "While it remains to be seen whether or not these proposals will elicit the required level of support - it is important that the UK Government does not sit back and allow proposals to take shape without their input, or they may find EU economic cooperation moving further than they expect or want."
George Osborne forced to accept EU hedge funds regulation 19 May TAZ Mail Sueddeutsche 18 May Guardian EUobserver Europolitics EUobserver: blog
The Guardian, Sueddeutsche and Tageszeitung cited Open Europe 's research into the AIFM Directive. The Guardian, EUobserver and Europolitics quoted Open Europe Director Mats Persson saying, "Forcing through the directive could cause serious damage to the UK's economy and jeopardise billions in funding to developing countries...The decision is being taken by the bloc's finance ministers only one week after the new UK government has taken office, leaving it virtually no room to prepare for the negotiations."
The Mail quoted Mats saying, "The current UK Government was landed in a real mess by its predecessor and should be given credit for trying to make the best of a bad situation. The attempts to remove the most protectionist (hedge fund) rules are clearly welcome...The last thing the EU needs is the City of London and the British Government feeling like victims of a political point-scoring exercise in Europe. Constructive relationships have to work both ways." |
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