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Europe
EU stress tests "out of line with market expectations";
Six German banks refuse to publish sovereign debt holdings
There is widespread coverage of Friday's stress tests on European banks. From the 91 tested, only Germany's Hypo Real Estate bank, five Spanish regional savings banks - the "cajas" - and Greece's ATE Bank failed the tests. In total, the banks needed to raise €3.5bn (£2.7bn) to reach the minimum capital ratio required. The Telegraph quotes Marco Annunziata, from Unicredit, saying, "There are serious questions about whether the tests can be considered sufficiently stringent. The capital shortfall is so small, and so out of line with market expectations, that it will be regarded with some scepticism."
The WSJ notes that the report from the EU's Committee of European Banking Supervisors (CEBS), which coordinated the tests, repeatedly says that its stress test included a "sovereign shock" scenario. But crucially, "sovereign default was not included in the exercise." The CEBS said the EU's €440bn Stability Facility (EFSF) for eurozone debtors "provides reassurance that the default of a member state will not occur". The Telegraph notes that a report by Citigroup said the EFSF rescue fund and the Commission's own €60bn facility "would appear to rest on shaky legal foundations", and face serious legal challenges in Germany.
Meanwhile, the Irish Times notes that six of the 14 German banks tested - Deutsche Bank, Postbank, Hypo Real Estate, mutual groups DZ and WGZ, and Landesbank Berlin - did not publish the expected detailed breakdown of sovereign debt holdings, fuelling suspicion they had something to hide. Arnoud Vossen, Secretary-General of the CEBS, said it had agreed with all supervisory authorities and with the banks in the exercise that there would be a bank-by-bank disclosure of sovereign risks but officials from the German regulatory authorities - Bafin and the Bundesbank - said local law meant they could not force banks to publish such details.
In the FT, Wolfgang Munchau writes, "If you tried to test the safety of cars or children's toys using the same method the European Union applied in its stress tests on banks, you would end up in jail." A WSJ editorial declares ironically, "don't worry. A sovereign default in Europe has been declared impossible. Now we can all relax."
Independent Independent on Sunday Mail Express Mail 2 El Pais Weekend FT Guardian Welt FTD AFP La Repubblica Telegraph: Fletcher Guardian Weekend FT: Leader FT: Munchau IHT Handelsblatt WSJ: Stelzer WSJ Telegraph FT: Analysis WSJ: Editorial WSJ: Nixon Irish Times Le Monde Independent: Leader
German professor: Eurozone rescue fund is a threat to social peace;
Greece expects second tranche of EU/IMF bailout loan
In an interview with EUobserver, Wilhelm Nolling - one of the five German professors challenging the legality of the European Financial Stability Facility (EFSF) - has warned that the new eurozone rescue mechanism could engender deep tensions between EU citizens. "A transfer union will destroy the social peace in Europe", he said, predicting that people in lender countries will increasingly question the utility of the ESFS as a whole, especially if Greece is unable to pay back its loans. "We need to form a new heart of the euro: France, Germany, Finland, Austria and the Netherlands. All the other states should be given their freedom back. That would give them a real opportunity to increase their competitiveness through currency devaluations", Professor Nolling suggested as an alternative solution.
Meanwhile, Greek Finance Minister George Papaconstantinou announced on Saturday that his country will get the second tranche of the €110 billion EU/IMF joint bailout loan. "The disbursement of the second tranche depends on whether we meet the targets we have been set to meet by June 30. These conditions have been met and we have taken a further step by passing the pension reform bill", he explained. The Guardian reports that experts from the European Commission, the IMF and the ECB will today begin a two-week mission to Athens to assess the Greek government's progress in implementing economic reforms.
EUobserver: Nolling Guardian EUobserver AFP Les Echos FT
The Telegraph cites Open Europe's finding that between 2007 and 2009 the EU has funded £400m worth of "confidential" projects. The article also provides particular examples of wasteful EU spending, the details of which were published by the Commission, including a £145,000 scheme to print 736 postcards for MEPs that "reflect the current problems in Europe that generate social exclusion".
Home Office prepares to sign off new powers over Britons to European police forces
According to the Telegraph, Home Secretary Theresa May will today announce that she plans to sign up to the European Investigation Order (EIO). The provisions of the EIO will allow prosecutors from any EU country to demand details, such as DNA or bank data, from domestic police forces on anyone they suspect of a crime, and will enable foreign police officers to come to the UK and work alongside national police officers in investigating individuals. Conservative MP David Davis is quoted in the article saying: "Clearly, this should go in front of the House of Commons to be debated before Britain sings up to something that will be impossible to reverse out of."
Commission under pressure to investigate defence deals between EU members
EUobserver reports that the European Commission is under pressure to investigate alleged market-distorting and corrupt side-deals to big weapon dealers between member states. One case concerns allegations of bribery by the German engineering group Ferrostaal in securing defence contracts in Portugal and Greece. This investigation 'touches on' former Party colleagues of EU Commission President Jose Manuel Barroso, who was Prime Minister at the time the contracts were signed. Mr Barroso has denied any involvement in the alleged bribery scheme. Portuguese Socialist MEP Ana Gomes is quoted saying: "these contracts totally violate the EU's internal market competition rules. They are contracts negotiated among companies with government favouring and in total disregard of the competition rules."
PwC: Labour laws restraining EU firms
The WSJ reports that research by PricewaterhouseCoopers has shown that firms in the EU are being hampered by strict domestic labour market laws, leaving them struggling to compete with US rivals.
EU Foreign Ministers will today agree a tough package of economic sanctions against Iran in a bid to force Tehran to end its uranium enrichment plans. Iranian President Mahmoud Ahmadinejad has said the EU will "regret" imposing economic sanctions, according to EUobserver.
BBC BBC 2 BBC: Hewitt blog EUobserver Telegraph Le Figaro El Mundo Independent Guardian FT Irish Times Presse Focus Sueddeutsche
Swedish dailies Svenska Dagbladet and Dagens Nyheter note that a new report from the European Commission has revealed that there are 18 different systems in the EU for collecting and exchanging sensitive personal data on EU citizens.
Svenska Dagbladet Dagens Nyheter
In the Irish Times, Donncha O'Connell writes that the negotiations currently underway for the EU's accession to the European Convention on Human Rights (ECHR), will mean that the EU can be brought before the European Court of Human Rights to answer accusations of a breach of the ECHR once all relevant EU remedies have been exhausted.
An article in the Mail on Sunday urged the Secretary of State for Communities and Local Government, Eric Pickles, to admit that the EU's Landfill Directive has caused significant problems in the UK, saying: "We face gigantic Euro-fines if we continue to dump our garbage in landfill sites, thanks to a law we didn't make and can't change."
Diplomatic sources indicated on Friday that Iceland could initiate the first round of negotiations for EU accession in the next few days, El Mundo reports.
Commission proposes new 'eco-driving' criteria for driving tests
Saturday's Telegraph reported that as part of the EU's 'Road Safety Programme', the Commission has proposed that learner drivers be tested on their understanding of 'eco-driving', noting that: "Braking suddenly, revving the engine or wasting fuel by being too heavy on the accelerator pedal could prove costly. The Commission has also proposed that newly qualified drivers should be subject to a "probation period" with stricter restrictions than other motorists.
The Sunday Mirror reported that David Cameron's support for Turkey's accession to the EU risks upsetting back-bench Conservatives. Cameron and Foreign Secretary William Hague will fly out to Turkey today on an official visit.
The Mail reports that Energy Secretary Chris Huhne has signalled that the number of wind farms to be built in the UK will dramatically increase, to ensure that EU renewable energy targets can be met and "to stop power black-outs".
In an interview with Die Welt, Hungary's Prime Minister Viktor Orban argues that the reason for his country's ban on land acquisitions by foreigners is the large price differential across EU countries. Furthermore, he affirms Hungary's openness to foreign investment. "We welcome it when foreigners open businesses in Hungary...European companies bring new technologies...and they create jobs."
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