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New Open Europe briefing - The rise of EU economic government
Cameron's first EU summit: the calm before the storm?
News in brief
Open Europe in the news
Quote of the fortnight:
"What went wrong wasn't what happened this year. What went wrong was what happened in the first 11 years of the euro's history. In some ways we were victims of our success...It was like some kind of sleeping pill, some kind of drug. We weren't aware of the underlying problems".
European Council President Herman Van Rompuy, 14 June 2010
1. New Open Europe briefing - The rise of EU economic government
With German Chancellor Angela Merkel and French President Nicolas Sarkozy saying that a change to the EU Treaties might be necessary to achieve stronger economic governance, Open Europe has published a briefing outlining recent developments and potential future moves towards an 'economic government' for the EU.
While the UK risks being pressured into an EU-wide economic government that is essentially supposed to solve the problems of the eurozone, the UK could use this to its advantage and decide to work with Angela Merkel, using her demand for Treaty change to repatriate powers back to Westminster.
The debates surrounding the current economic crises have also revealed that the contrasting Franco-German visions of the euro are near breaking point. German taxpayers have already been asked to bailout other EU member states, and the question is whether they will stomach any further incursions on their economic sovereignty in the guise of a French-inspired economic government.
To read the full report, click here:
http://www.openeurope.org.uk/research/economicgovernment.pdf
To read the press release, click here:
http://www.openeurope.org.uk/media-centre/pressrelease.aspx?pressreleaseid=140
Please leave your comments on our blog:
http://openeuropeblog.blogspot.com/2010/06/keeping-dream-alive.html
2. Cameron's first EU summit: the calm before the storm?
David Cameron attended his first EU summit as Prime Minister in Brussels yesterday, a summit which Spanish daily El Mundo described as the "most boring European Council possible". Cameron emerged having successfully avoided signing plans that would have required the UK to submit its budget to the EU for 'peer review' before presenting it to Parliament, or being drawn into possible sanctions for breaking the EU's budget rules. (El Mundo FT Independent, 18 June)
However, as our new briefing sets out, calls for greater EU integration in the shape of an 'economic government' will not go away. Indeed, as Cameron said in his post-summit press conference, "Of course, there are those in the room who do want to press for greater integration and who still seek treaty changes to bring that about. You've always got to be on your guard." (Telegraph, 18 June)
But this is not your typical Franco-German grand project. In fact, there are signs that the age-old Franco-German motor is spluttering. Although Chancellor Angela Merkel and President Nicolas Sarkozy now seem united in their view that a change to the EU treaties might be necessary to achieve stronger economic governance, the outcome is likely to depend on the contrasting Franco-German visions of how to deal with the current economic problems. Beyond all, it will depend on whether German taxpayers and voters, who are set to underwrite some €120 billion in eurozone loans, will stomach another round of European integration. The chances are that they will not.
France hopes to move a step closer to its long-held desire for economic government of the eurozone, including the greater harmonisation of all economic policy across its 16 members. Germany, on the other hand, is pushing for much tougher budgetary rules for the eurozone, backed by "sanctions", but wants to water down the French plans for economic government by more loosely applying aspects of them to the entire 27 EU member states.
Despite these fundamental divisions, the wheels have been set in motion, following an uneasy Franco-German compromise earlier this week. President Sarkozy said, "We are only at the beginning of the concept. Only four months ago, the words 'economic governance' were a taboo. But the idea is progressing." (Le Figaro, 18 June)
However, decisions on the more difficult issues surrounding economic government, including potential sanctions, have been delayed until the next summit in October - and any potential Treaty change will take years and is likely to face massive opposition (EU leaders remember the Lisbon Treaty too well).
The other important issue at the summit was finance and tougher regulation - seen as a potential threat to the City of London - with Chancellor Merkel revealing that regulating the financial markets was the "top topic" in her talks with Cameron. The summit conclusions backed a proposal for a tax on banks and for ministers and the European Parliament to "rapidly adopt" proposals for three new EU financial supervisors with the power to overrule national regulators, such as the FSA. (Guardian, 18 June)
Media reports have been full of 'surprise' at Cameron's "constructive approach" but, as Andrew Grice put it in the Independent, "He didn't have to fight very hard yesterday, as it suited everyone to avoid a row." (Independent: Grice Independent: Leader Guardian: Leader, 18 June)
With France and Germany likely to push harder on both economic government and financial regulation next time around, predictions of a Cameron-EU love-in may be a little premature. In the words of a German diplomat, who upon reportedly hearing British claims of a victory at the summit said, "Let's wait until October". (Mail, 18 June)
Please leave your comments on our blog:
http://openeuropeblog.blogspot.com/2010/06/managing-expectations-over-english.html
3. News in brief
UK's net contribution to EU budget will rise to £10.3billion by 2014. Tony Blair's decision to surrender part of Britain's rebate in EU budget negotiations in 2005 will lead to a massive increase in the annual cost of Britain's EU membership. The Office of Budget Responsibility revised Britain's net contribution to the EU upwards by more than half a billion pounds for the present year and predicted that the cost of membership will reach £10.3 billion by 2014/15. Mail, 15 June)
Government wasted £71 million on special motorbike test centres to comply with EU rules. A major review of the motorbike L-test has been ordered after the previous government built 'super test centres' to comply with an EU metric rule. In order to comply with the rules, the Driving Standards Agency was forced to build 66 multipurpose 'super test centres' - at a cost of £71million - so that motorcycle candidates could take the manoeuvring elements of the test. (Mail, 9 June)
MEPs call for web searches to be recorded for up to two years. Over 300 MEPs have backed plans to force search engines such as Google to store details of web searches for up to two years. A written declaration, which has so far been signed by 324 MEPs, would extend existing EU legislation which obliges internet service providers to retain basic data for up to two years. (Independent, 8 June)
ECJ legal advisor: Publishing recipients of EU farm subsidies is a violation of privacy. The UK Advocate General at the European Court of Justice, Eleanor Sharpston, has said that the current EU rules requiring the publication of the names and addresses of those receiving EU's controversial farm subsidies constitutes a violation of privacy. As a result, in a major blow to transparency, she has recommended that from now on the ECJ considers the EU regulation providing for the automatic disclosure of personal details as invalid. (ABC, 18 June)
62% of French think euro has aggravated crisis. An opinion poll conducted in France has found that 62 percent of French people think that the euro has aggravated the effects of the economic crisis, compared with 28 percent who think that it has protected France during the crisis, with 10 percent saying they were undecided. (Le Monde, 15 June)
Lib Dem MEP comes to defence of Common Agricultural Policy. George Lyon, a Lib Dem MEP representing Scotland, has drafted a report calling for the Common Agricultural Policy (CAP) budget to at least be maintained at current levels after 2013. The report has already been endorsed by the European Parliament's Committee on Agriculture and Rural Development, and will be voted on during the plenary session in July. (El Mundo, 16 June)
4. Open Europe in the news
European Council summit sees Cameron resisting moves for closer EU economic governance
17 June BBC: Robinson Mail Conservative Home 16 June Economist: Eastern Approaches blog
Open Europe's new briefing on EU proposals for economic governance was cited on BBC Political Editor Nick Robinson's blog, the Economist's Eastern Approaches blog, and on Conservative Home.
The Mail quoted Open Europe's Pieter Cleppe saying: "Some European leaders now want to use the economic crisis to form an EU economic government by stealth - regardless of what voters and taxpayers think. The risk is that the UK gets caught in the crossfire and is pressured into an EU-wide economic government that is essentially supposed to solve the problems of the eurozone."
The effects of the CAP in Poland
17 June Dziennik
An article in Polish newspaper Dziennik looking at the effects of the EU's Common Agricultural Policy cited Open Europe's research revealing that the EU spends €293m subsidising tobacco farmers.
Britain could be forced to accept EU vetting of budget
16 June FT Video 11 June Telegraph
Open Europe Director Mats Persson was quoted in an article in the Telegraph looking at EU proposals to review national budgets before national Parliaments, saying, "Bulldozing over Britain on a matter of economic and parliamentary sovereignty at this sensitive time would do nothing to improve EU-UK relations. It also runs counter to the constructive spirit now needed to save the euro zone and get Europe's economy back on track."
Ahead of the European Council summit, Mats appeared on FT Video discussing recent tensions between France and Germany over the eurozone debt crisis.
UK's net contribution to EU budget will rise to £10.3billion by 2014
15 June Mail on Sunday
Following the publication of a new report from the Office of Budget Responsibility which estimated that the UK's contribution to the EU budget would reach £10.3 billion by 2014/15, Open Europe's Sarah Gaskell was quoted in the Mail saying: "It is now shockingly clear just how poor the deal Tony Blair negotiated in 2005 was for the UK."
The cost of regulation
15 June Express: Clark
In his column in the Express, Ross Clark cited Open Europe's research, which found that regulation introduced between 1998 and 2008 cost the UK economy £148 billion.
Van Rompuy admits €750bn eurozone aid package may not be enough
11 June Telegraph: Hannan 7 June Telegraph: O'Brien
On his Telegraph blog Conservative MEP Daniel Hannan 'hat-tipped' Open Europe's press summary, which revealed comments from EU President Herman Van Rompuy, who said that the cost of eurozone bailouts may rise above the €750bn already agreed by EU governments.
On his Telegraph blog, Policy Exchange Director Neil O'Brien also recommended Open Europe's daily press summary.
MEPs want to snoop on web searches
8 June Mail on Sunday
In an article in the Mail on Sunday looking at a European Parliament proposal to more closely monitor citizens' web searches, Open Europe's Sarah Gaskell was quoted saying: "MEPs should have a serious re-think before supporting this declaration which would open up even more of citizens' personal data to monitoring and abuse. People already have serious concerns about the EU's role in the erosion of their civil liberties and this declaration would only serve to reinforce those views. The Data Retention Directive has been very controversial with some member states refusing to even implement it. Extending it to internet searches as well is very troubling, even if the purpose it is intended for is a good one."
Life after the Commission
8 June Le Post
An article in Le Post cited Open Europe's research, which found that retiring EU Commissioners would receive more than £1 million each in pension payments and payoffs.
The true cost of compliance
7 June Private Equity Manager
An article in Private Equity Manager cited Open Europe's research on the EU's AIFM Directive, which found that the Directive could add an additional €1.9 billion in compliance costs in the first year of implementation and €985 million annually after that for the industry.
Government promises "fresh approach" on UK involvement in EU
4 June LBC radio
Open Europe's Sarah Gaskell appeared on LBC radio, discussing the coalition Government's policy on Europe.
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