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Europe
EU clamps down on bankers' and fund managers' bonuses;
Commission spokesman: "Rest of financial sector" will be next
The FT reports that, under EU legislation expected to pass the European Parliament next week, between 40 and 60 percent of bankers' bonuses would have to be deferred for three to five years and half the upfront bonus would have to be paid in shares or in other securities linked to the bank's performance. As a result, the cash portion would be limited to between 20 percent and 30 percent, far tighter than the limits currently used by most member states. A spokesman for EU Financial Services Commissioner Michel Barnier is quoted in the Telegraph saying, "The Commission is now looking at similar rules for the rest of the financial sector."
On the BBC's Today Programme, Business Editor Robert Peston notes that hedge fund managers will be included in the directive and notes that the UK's Financial Services Authority "didn't believe initially that it was appropriate to have strict conditions set on those bonuses." He added that, as a result of the new rules, "there could be a big exodus of hedge funds from London."
City AM FT BBC BBC: Peston blog BBC: Today programme EUobserver EurActiv WSJ Irish Independent Telegraph
Commission outlines plan to suspend EU subsidies for countries flouting deficit rules
The Commission yesterday published its proposals to improve economic governance in the EU and strengthen the Stability and Growth pact, following the Greek sovereign debt crisis. The plans mean that countries that persistently violate the rules on budget deficits and public debts could be denied EU financial aid, such as regional aid, agriculture and fishing subsidies.
EU Economic Affairs Commissioner Olli Rehn said yesterday: "The time to act is now...We propose for all EU member states to use the EU budget for additional leverage." The paper notes that it is not clear whether the suspension of aid funds would be automatic, or would require political approval from EU governments. This will likely be clarified when the Commission publishes the final version of its proposals in September.
Reuters Italia also quotes Rehn confirming that "it is public debt which will be taken into account to apply sanctions", rather than private debt.
The Telegraph notes that Britain receives up to £3.6 billion in farm payments and £1.9 billion in aid for poor regions annually - an amount which could be partly suspended if the plans are agreed. Open Europe's Stephen Booth is quoted calling on the Government to oppose a "disproportionate" measure, adding: "The UK has said it will play no part in the euro for the very reason that it wants to maintain control over economic and monetary policy. Why would the government then agree to be sanctioned by an economic government designed for the eurozone?" The WSJ notes that France receives around €10 billion in farm subsidies alone.
The plans also contain proposals for a 'European budget semester', under which countries would submit an outline of their budget plans in April for review by the Commission and other member states.
An editorial in FAZ argues: "What is remarkable about the proposals is what is missing - there is no longer any talk of 'automatism'. It's a poor show that the Commission has abandoned this already. Let no one believe that the SGP tightening will go beyond what has been now proposed. These proposals may lead in the right direction, but they don't have any semblance of bite".
Telegraph FT EurActiv Irish Independent Reuters Italia WSJ IHT Irish Times Commission press release Commission communication Le Figaro
In an interview with French daily La Tribune, EU Internal Market Commissioner Michel Barnier has reiterated that "we have agreed on almost everything" in the EU's AIFM Directive, except for the question of the passport scheme. When asked whether a deal on this issue could be struck without the approval of the UK Government, he replied: "Objectively yes. An agreement could be reached without London".
Foreign Secretary wants more British officials in EU institutions
In a speech to the Foreign Office today setting out the future of British foreign policy, Foreign Secretary William Hague has said he is seeking to increase British influence in the EU. Mr Hague accused the previous government of having allowed a "generation gap" to develop among British EU officials and "neglected to ensure that sufficient numbers of bright British officials entered EU institutions".
Speaking on the BBC's Today Programme, Mr Hague said that relations with the EU are crucial, but have been neglected by the last government. The Foreign Secretary wants Britain to "bat its weight" in the EU: at present, less than 2 percent of entry level officials in the European Commission are Brits, while the country holds 12 percent of the EU's total population.
BBC FT: Westminster blog BBC: Today programme Guardian Conservative Home Spectator: Coffee House blog Hague speech
German Chancellor Angela Merkel's preferred candidate Christian Wulff has won the German Presidential election, but the WSJ notes that the need for three rounds and nine hours of voting for the largely ceremonial post is a "blow to her [Merkel's] authority".
WSJ WSJ: Lehming IHT Irish Times Irish Times: Scally Guardian: Leader Guardian Independent FT BBC BBC: Hewitt blog Handelsblatt Le Figaro Irish Independent Telegraph Telegraph 2
Belgium takes over EU Presidency, warning that the European Parliament is a "badly organised partner"
Belgium today takes over the rotating EU Presidency for six-months, with outgoing PM Yves Leterme running day-to-day affairs and the EU Presidency while talks on forming a new coalition continue. In an interview with De Tijd, Jean De Ruyt, the head of the Belgian Permanent Representation to the EU says: "The biggest stumbling blocks for the Belgian presidency are with the European Parliament, an incalculable and badly organised partner. You don't know whether the opinion of the MEPs is being decided by the content of a matter or by the wish to be visible and show its own power. In some matters they don't even know that themselves."
In an interview with Le Figaro, Belgian Finance Minister Didier Reynders says: "One cannot go on calling for the creation of an economic government without realising that this requires a reinforcement of the EU institutions, that is to say enhancing the role played by the Commission. Otherwise, the EU will remain stuck into endless negotiations among capitals", he argues.
Meanwhile, Spanish Europe Minister Diego López Garrido has called for a working accord to improve relations between the European Parliament and other EU institutions, saying: "We feel the governments were not sufficiently aware of the new situation, of the new powers of the new Parliament".
European Voice AFP Bieler Tagblatt Eurotopics L'Express PAP Tijd The Parliament Knack Belgian Presidency Programme Die Presse CDU Press Release Le Figaro
British MEPs have the worst attendance rate in EP
Die Presse reports that British MEPs have the worst attendance rate in the European Parliament - 85.22 percent, while Austrian MEPs have the best one at 94.86 percent.
New budget line to be created for EU bailout fund
Member states, the Commission and the Parliament agreed yesterday on the creation of a specific EU budget line for the new EU stabilisation mechanism, including loan guarantees worth €60 billion. An EP press release notes that MEPs share EU budgetary powers with the Council of Ministers, so any use of EU money must be approved by both institutions. Parliament's support is therefore needed to mobilise the mechanism, should this become necessary (i.e. in the event that a member state in receipt of a loan from proves unable to reimburse it and funds from the EU budget are required to cover the loan).
Meanwhile, an editorial in FAZ argues that "a systemic shift is currently under way which might bring the political project of the Euro to the border of failure". It notes that if the bailout packages "bring about the introduction of an unlimited transfer union, this will soon hit its limits. In Europe, the willingness to carry the weight for others is a lot smaller than within Germany... when one asks the Dutch whether they are prepared to pay for the Greek debt, or when one asks the French how big their compassion if for Spanish building developers. In most cases the answer will be a resounding no... Those who want to bring Europe forward and to keep the Euro, shouldn't overburden the project. With a healthy Euro goes a healthy dose of self-interest".
Two-thirds EU business executives expect euro to be permanently weakened by crisis;
German economic advisor warns Greece may have to leave the eurozone
Handelsblatt reports that almost two-thirds of European business executives expect the eurozone to be permanently weakened or even threatened by the economic crisis, although half of German executives expect the eurozone to "come out of the crisis strengthened."
Meanwhile, Bild reports that a German economist and professor, Peter Bofinger, is the first member of the German government's economic advisory committee to consider it possible that Greece will leave the eurozone, warning in an SPD presidium meeting that "if the burdens keep rising and unemployment grows, then the political pressure will increase. Then more and more [Greek] voices will say that it is no longer worthwhile for us to remain in the eurozone."
Eurozone banks "still on welfare support" but in better shape than expected
The WSJ reports that European banks borrowed less from the European Central Bank than had been expected yesterday, a reassuring sign that banks are weaning themselves off the central bank as a source of liquidity. However, on his BBC blog, Robert Peston writes, "Eurozone banks are still on welfare support."
Meanwhile, according to information obtained by FT Deutschland, the Bundesbank has managed to pressure the German government into limiting the scope of the stress tests which will be conducted for German banks, supporting their resistance to the measurse agreed by EU leaders at their June summit. "We should thank God we have Weber", a representative of one of the big banks is quoted, referring to Bundesbank Chief Axel Weber.
FT Deutschland Guardian FT: Leader City AM Independent FT FT 2 WSJ IHT BBC: Peston's blog Open Europe blog
Shares fall as Moody's considers cutting Spain's rating
The Guardian's Market Forces blog reports that shares on the London Stock Exchange fell to their lowest level in nearly 10 months this morning amid fears that Spain was about to be pulled deeper into the European debt crisis. Last night, rating agency Moody's alarmed the financial markets by announcing that it had put Spain's AAA sovereign rating on review for "possible downgrade."
MEPs seek to delay vote on EU's foreign service
European Voice reports that MEPs from the centre-right European People's Party (EPP) are calling for the European Parliament to delay until September a vote on whether to approve the structure of the EU's new diplomatic service, the European External Action Service (EEAS).
A separate article notes that, as of today, the delegations of the European Commission in Baku, Seoul and Singapore are now formally delegations of the EU and will be staffed by senior officials of the new EEAS, once the service has been launched. In total, 106 Commission offices have been upgraded to full EU delegations since the Lisbon Treaty came into effect.
European Voice European Voice 2
On his EUobserver blog, Open Europe Director Mats Persson details Open Europe's event held in Brussels last week, entitled: "The EU after the Euro crisis: Superstate or disintegration?"
EU Environment Commissioner: EU carbon tax is a "good path"
In an interview with Le Monde, EU Environment Commissioner Janez Potocnik has said he is in favour of introducing an EU carbon tax and argues: "A large number of countries are trying to increase their levies. It is our responsibility to show them that the carbon tax is a good path, since it allows us to give resources the right price - which is what was lacking in the economic model that led to the crisis".
Gazeta Wyborcza and Rzeczpospolita report that the EU has penalised 17 major steel companies and steel producers across Europe with a fine of €518mn for price fixing and pre-arranging market share. Arcelor Mittal has to pay the most at €276mn. ARD notes that the entire amount will go directly to the EU budget.
Handelsblatt Leader GazetaWyborcza Rzeczpospolita Independent ARD
The Mail reports that Deputy PM Nick Clegg will today invite the public to nominate laws, regulations and infringements to their liberty they want repealed.
Mail BBC: Today programme Telegraph Telegraph: Clegg BBC OE research: Regulation
The WSJ reports that Hungary took a step forward yesterday in securing investor confidence by stating its intention to seek a new agreement with the International Monetary Fund for next year.
The World Trade Organisation has ruled that the EU paid illegal subsidies to Airbus through risk-free loans, and research and infrastructure funding, upholding some of the complaints made by the US. The WTO is expected to rule on whether the US illegally supported Boeing in a similar way next month.
FT BBC EUobserver EurActiv WSJ WSJ: Editorial
EUobserver reports that the EU has agreed to open a minor chapter in Turkey's accession talks on food security, bringing the number of chapters opened to 13 of 35.
FT: Brussels blog EUobserver LePoint
The Irish Times reports that the EU has introduced a €50 cap on internet roaming charges for mobile phones.
Le Figaro reports that a new poll has found that French President Nicolas Sarkozy's popularity has dropped to 26%, the lowest since he took office three years ago. French PM Francois Fillon's popularity stands at 35%, and IMF Director Dominique Strauss-Kahn is the most popular French politician, with public support at 43%.
The BBC reports that a Bulgarian court has jailed a local businessman and his wife for embezzling €7.5m of EU farm subsidies by importing old meat processing equipment which they had declared as "new".
Apcom news agency reports that Italian Economy Minister Giulio Tremonti said yesterday that Italian regions have so far spent only €3.6 billion out of the total €44 billion of EU regional funds they received for the period 2007-2013.
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