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Fortnightly Open Europe Bulletin: 3 June 2010
New Open Europe briefing: They said it: How the EU elite got it wrong on the euro
Cameron rules out any EU Treaty change which affects UK
News in brief
Open Europe in the news




Quote of the fortnight:



"Paris and Berlin are looking at bailout measures that are eurofederalist and further centralise powers in Brussels. This is, therefore a moment for Mr Cameron's sensible approach to Europe: a firm, hard-headed europragmatism. The policy of being in Europe but not run by Europe is right. Quite suddenly, it is also timely."



Leading article, Times, 22 May 2010




1. New Open Europe briefing: They said it: How the EU elite got it wrong on the euro





The sovereign debt crisis that started with Greece now casts a long shadow over the entire eurozone, and indeed Europe as a whole. Open Europe has released a new briefing entitled: "How the EU elite got it wrong on the euro: broken promises and reckless predictions from before the crisis".



It is in everyone's interest for the eurozone to return to stability. However, moving forward, we must also ask: how did we end up in this mess? Politicians, after all, reassured us this was never going to happen. Open Europe has published some of the promises that the EU elite made over the last 15 years, highlighting that the politicians who sold their citizens the euro failed to either grasp or tell the whole truth about the single currency.



While it is a reminder that the experts and our elected representatives do get it wrong, more importantly, it is a call for greater honesty about the future of European cooperation and a reminder of the urgent need to find a new model that is both politically and economically sustainable; one that is more in tune with the interests and preferences of European citizens.



Speaking last week, EU President Herman Van Rompuy also admitted that people had been misled about the true economic and political implications of adopting the euro, saying: "Nobody ever told the proverbial man in the street that sharing a single currency was not just about making peoples' lives easier when doing business or travelling abroad, but also about being directly affected by economic developments in the neighbouring countries." (Telegraph, 27 May)



To read Open Europe's briefing, click here:

http://www.openeurope.org.uk/research/eurotheysaidit.pdf



Please leave your comments on our blog:

http://openeuropeblog.blogspot.com/2010/05/how-eu-elite-got-it-wrong-on-euro.html



2. Cameron rules out any EU Treaty change which affects UK




Following his first meeting with German Chancellor Angela Merkel, David Cameron ruled out agreeing to any new EU Treaty to strengthen the rules of the eurozone if it were to affect the UK, saying: "There is no question of agreeing to a treaty that transfers powers from Westminster to Brussels. Britain is obviously not in the eurozone and is not going to be joining, so it wouldn't agree to any treaty that drew us further into the euro area".



He added, "Any treaty, even one that only applies to the euro area would have to be agreed by 27 countries, and Britain there has a veto, it is very important to make that clear." (European Voice EUobserver , 21 May)



Speaking to the BBC Today programme a few days later, David Cameron then declined to specify whether a new eurozone Treaty, which did not affect the UK, would be put to a referendum, saying: "I think we're all getting slightly ahead of ourselves here. I mean, even the eurozone doesn't have any unanimity about whether there should be a treaty." (BBC: Today programme, 27 May)



Although Germany has been calling for a Treaty change to bolster the eurozone and win back German confidence in its stability, its calls have been rebuffed by other countries. (European Voice, 21 May)



Commission President Jose Manuel Barroso also engaged in a piece of rare public criticism of an EU leader, calling Angela Merkel "naïve" for wanting to change the EU Treaties: "It would be naïve to think one can reform the treaty only in areas Germany considers important. Then of course the British and others will come with their wishes. We will not propose treaty modifications even though we are open to good ideas." (Handelsblatt Le Soir, 24 May; FAZ, 25 May)



3. News in brief




MEPs have spent £5m on foreign trips since 2004. New research by Open Europe has revealed that MEPs have spent £4.7 million and clocked up over 14 million air miles in foreign travel and 'fact-finding' missions since 2004. The distance travelled is equivalent to flying to the moon and back 29 times, and has left a carbon footprint of around 4,200 tonnes of CO2. The most widely travelled UK MEP was Glenys Kinnock, who racked up 143,033 airmiles between 2004 and 2009 on trips which cost almost £60,000. Jim Nicholson, the Ulster Unionist, was second with trips costing nearly £52,000, and totalling 137,506 miles. (Sunday Telegraph News of the World, 31 May)



ECB starts work on new £730m HQ. The European Central Bank has begun construction on its new headquarters in Frankfurt, amidst the ongoing turmoil in the eurozone. The project is already three years behind schedule, and costs have risen from £430m to £730m. An ECB spokeswoman confirmed that Britain's shareholding in the bank meant that part of the funding came from the British taxpayer, although she could not give a precise figure for that contribution. (Sunday Times Corriere della Sera, 23 May)



20% of farms account for 73% of EU farming subsidies in UK. New information released about the recipients of EU farm subsidies has revealed that, in the UK, the top 20 percent of farm subsidy recipients received 73 percent of all grants paid in 2009. Moreover, 29 large agri-businesses each received EU farm subsidy payments of more than £1 million in 2009, while 20,000 small farms received less than £300 each. (News of the World, 23 May)



51% of voters say EU membership has been bad for UK. A new opinion poll by Angus Reid has found that 51 percent of respondents say EU membership has been negative for the UK. 38 percent say it has been positive. If a referendum on EU membership were to be called, 42 percent said they would vote in favour of leaving, while 35 percent said they would vote to stay, and 20 percent said they were unsure. In a referendum on joining the euro, 79 percent said they would vote against joining, and nine percent said they would vote in favour. (Vision Critical Poll Telegraph: Hannan blog, 2 June)



EU Budget Commissioner sets sights on British rebate. In an interview with a French newspaper, EU Budget Commissioner Janusz Lewandowski has said "we must simplify the system of national contributions" to the EU budget. He added, "There are too many corrections for political reasons...this will lead us directly to the issue of the British rebate. Negotiations will therefore have to strike the right balance between CAP payments and the British rebate". (Le Monde, 3 June)

4. Open Europe in the news




Sweden must resist moves towards fiscal federalism

1 June Svenska Dagbladet: Persson & Sigfrid



Open Europe's Mats Persson and Karl Sigfrid, MP for Swedish governing party Moderaterna, wrote an op-ed for Swedish daily Svenska Dagbladet, in which they argued that "what we probably will see in the eurozone in the long-term is common fiscal policies, which aim to even out economic differences", that could include direct EU taxes. "EU taxes and fiscal federalism would disadvantage Sweden and lack democratic legitimacy...through large financial transactions Swedish taxpayers would be forced to pay for the mistakes of governments which they cannot vote out of office," they noted.



MEPs have spent £5m on foreign trips since 2004

31 May Sunday Telegraph News of the World



Open Europe researcher Siân Herbert was quoted in the Sunday Telegraph and News of the World saying: "It seems ridiculous that while the EU faces economic crisis, MEPs jet to far-flung destinations and stay in luxury hotels."



Stanley Fink: "The last government was asleep at the watch" on AIFM Directive

31 May Sunday Telegraph 24 May New Europe El Periodico de Aragon



An article featuring an interview with Stanley Fink, sometimes referred to as the 'godfather' of the UK hedge fund industry, in the Sunday Telegraph cited Open Europe's research on the AIFM Directive, which estimated that €5.3bn in annual tax revenues will be lost to Britain if hedge fund managers conduct their business elsewhere, and that in total the Directive could end up costing the UK economy between €6.8bn and €9.6bn by 2020.



The research was also cited in Spanish paper El Periodico de Aragon, and in an article in New Europe magazine discussing the directive.



Frosty relations between France and Germany

31 May EUobserver blog: Persson



On his EUobserver blog, Open Europe Director Mats Persson looked at the Franco-German relationship and argued, "If Merkel sounds like Thatcher, what exactly is that a sign of? German taxpayers are potentially liable for some €120 billion in eurozone loans and have just seen the independence of the ECB kissed goodbye - after having been promised that neither could ever happen. Whining over the fact that the Germans are not acting like this is 'business as usual' just isn't serious."



Van Rompuy admits citizens were misled about the euro

28 May Express 27 May Telegraph



Both the Telegraph and Express featured Open Europe's new briefing, "They said it: How the EU elite got it wrong on the euro". Open Europe analyst Vincenzo Scarpetta was quoted in the articles saying: "The euro zone crisis is not simply about economic failure but also a breakdown in trust between the political class and European citizens. The EU elite simply got it wrong on the euro."



ECB starts work on new £730m HQ

29 May Hospodarske Noviny 24 May Property Week 23 May Sunday Times Corriere della Sera



In an article looking at the construction of the European Central Bank's new headquarters in Frankfurt, the Sunday Times quoted Open Europe Director Mats Persson saying: "It's mind-boggling that the ECB is going ahead with such a grand project only weeks after taxpayers were asked to cough up €500 billion to save the eurozone." Mats was also quoted in Italian paper Corriere della Sera, Property Week, and in Slovakian newspaper Hospodarske Noviny.



Divisions emerge on EU approach to banking levy

27 May Mail This is Money



Following the publication of new proposals from the Commission for an EU-wide tax on banks to set up 'resolution funds' to manage future bank failures in a structured way, Open Europe was quoted in the Mail and This is Money saying: "The Government must resist any moves by the Commission towards anything which looks like an EU-wide tax".



Cameron rules out any EU Treaty change which affects UK

26 May Telegraph 25 May Economist: Charlemagne notebook 22 May Conservative Home: Persson Mail This is Money



The Mail quoted Open Europe Director Mats Persson saying: "If this ends up involving any transfer of powers to Brussels then the coalition has to call a referendum. The crisis has already sucked us into the bailout package and there is a clear drive to put new controls in place, some of which will include the UK." Mats was also quoted in This is Money.



In an article for Conservative Home, Mats argued that this "is also a once-in-a-decade opportunity for Cameron... Treaty changes - or any substantial changes that require unanimity in the EU - could actually be good news for the UK. It would finally present a British Government with real leverage in negotiations with EU partners: in return for allowing the eurozone to integrate further, the UK should ask for any of a number of things in return, including the repatriation of powers and a more sensible EU budget." The article was cited on the Economist's Charlemagne blog, looking at the reaction of the British media to potential Treaty change.



Mats was also quoted in the Telegraph, saying that Conservative MPs may rebel if David Cameron did not use the "ideal opportunity" for Britain to repatriate powers: "Cameron will come under massive pressure from his own ranks but he should not fear going down this road. If successful, Cameron would set an important precedent for Europe by which powers can be brought back to member states as well as handed over to the EU."



Germany backs tax on financial transactions

23 May Sunday Telegraph: Booker



In his Sunday Telegraph column, Christopher Booker cited Open Europe's press summary which revealed that Chancellor Angela Merkel has called for a "global" tax on financial transactions.

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