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Provisional deal on EU financial supervisors can be reached today;

MEP: The supervisors "will obtain considerable powers"

A meeting today between MEPs, the European Commission and the rotating Belgian EU Presidency could pave the way for a deal on the creation of the three new European Supervisory Authorities (ESA) and the European Systemic Risk Board (ESRB), the FT reports. Die Presse claims that a final agreement is as good sealed.

 

An article in Handelsblatt under the headline "The EU gets a powerful financial supervisor" quotes French liberal MEP Sylvie Goulard - who is the European Parliament's rapporteur on the ESRB - saying that "the new EU institutions will obtain considerable powers". The article also notes that member states - in particular the UK and Germany - have given in to European Parliament's demands to transfer important powers to the new EU financial watchdogs, including the mandate to intervene directly in financial firms, circumventing national regulators, and to ban "toxic" financial products.

 

A remaining issue is who would chair the ESRB, with MEPs pushing for the post to be assigned to the President of the ECB - something which the UK is strongly opposed to. Should a deal be reached, it would be endorsed by EU Finance Ministers on 7 September, while the European Parliament will vote on it at its next plenary session, scheduled on 20-23 September.

 

In a separate article, the FT reports that one of the new EU supervisors, the European Securities and Markets Authority (ESMA), will be given a major role in regulating and supervising the EU's derivatives markets, including determining which contracts should be subject to clearing at a central clearinghouse. The changes will be introduced under the Commission's separate proposal on derivatives, to be tabled soon.

 

Barney Reynolds, partner at law firm Shearman & Sterling, is quoted saying that the strong role for ESMA means that there was "a heavy political slant to the proposals". He also argued that "the UK's new Prudential Regulatory Authority is to have a highly diluted say on many key regulatory matters and no say on others. In numerous instances it will have to reach consensus within a college of regulators which will include the proposed new pan-European regulatory coordinating authority, ESMA, and the ECB, as well as other EU regulators. Yet it is the UK which is to bail out most of the European CCPs, since they are generally established here".

 

Meanwhile, contrary to what was reported in Handelsblatt yesterday, the FT notes that industrial companies will not be forced to use clearing houses for over-the-counter derivatives trades, under the Commission's proposal.

FT FT2 European Voice Handelsblatt Die Presse

 

Barroso wants to deliver a "State of the Union" address every year;

Commission wants to pay journalists to follow Barroso around

El Mundo reports on the planned "revolution" in the EU communication strategy outlined by Justice Commissioner Viviane Reding - who is also in charge of communication policy - in a letter she sent to European Commission President José Manuel Barroso in June. Among other innovations, Reding proposed that Barroso be accompanied 24 hours a day by photographers and TV producers, and that the Commission cover part of the expenses of journalists who will follow him in his visits abroad. In addition, Barroso has decided to deliver a "State of the Union" address every year - the first speech will be given next Tuesday.

 

DPA reports that Barroso could be accompanied by an EU-owned personalised TV team in the future.

El Mundo DPA European Commission

 

In an article for Swedish news site Europaportalen, Open Europe's Director Mats Persson looks at the Commission's recent attempt at presenting the results of its latest Eurobarometer survey as an endorsement for "stronger European economic governance", while the survey showed that support for the EU has fallen to a nine-year low.

Europaportalen

 

New EU rules open up for bans on short-selling and CDS activity  

A draft proposal floating around Brussels for tougher rules on short-selling would require traders and investors to tell national regulators about significant net short positions in EU sovereign bonds and there would be new thresholds for disclosure of net short positions in shares. The new European Securities and Markets Authority (ESMA) would also be mandated to draw up strict rules on naked short-selling. In addition, bans or restrictions on short-selling and Credit Default Swaps (CDS) activity would be possible when there were "adverse developments which may seriously jeopardise the orderly functioning and integrity of financial markets", including a share price fall of 10 percent plus in a single day. However, it remains unclear whether the ban would be imposed by national regulators or by the new EU supervisors.

FT Reuters ORF

 

European Parliament could block EEAS budget to ensure the "right balance" is found in new staff appointments

The EU's foreign policy minister Catherine Ashton is expected to announce on 5 September her nominations for 31 heads of mission and deputy heads of mission for key EU embassies as part of the EU's new foreign office, the European External Action Service (EEAS). Further appointments of 80 senior diplomatic postings and around 20 top administrative positions will be announced before December. The Telegraph reports that MEPs have warned against the EEAS becoming a "Western European old boys club". The article notes that "a backlash in the European Parliament against under-representation of women and East Europeans in the EU diplomatic service could see the budget of the fledgling European External Action Service (EEAS) blocked". This is echoed by EUobserver, reporting that two senior MEPs have indicated that the European Parliament will use its legal powers to make sure the "right balance" is found in the appointments.

 

Meanwhile, French Foreign Minister Bernard Kouchner has renewed his criticisms on the EU's absence from this week's talks between Israel and Palestine saying: "Europe is not condemned to be simply a financial partner. I think Europe should play a political role, in particular in the search for peace in the Middle East", reports EurActiv. EU Foreign Minister Baroness Catherine Ashton is currently on an official visit in China.

European Voice EUobserver EurActiv Telegraph

 

Eurozone bond spreads close to their all-time peaks

An article in Euro Intelligence notes that eurozone bond spreads are close to their all-time peaks, stressing that "Greek spreads are close to 1000 basis points (bp) - a level which reflects market expectations of a default at some point". However, a report released yesterday by the International Monetary Fund (IMF) argues that Greece and Ireland are "unlikely" to default as "current market indicators of default risk seem to reflect some market overreaction".

 

Meanwhile, in a letter to the FT, former deputy research director at the IMF Flemming Larsen comments on recent statistics revealing a two-speed recovery in the eurozone and argues: "Splitting the [euro] area up into two currency blocs would be messy. But it begins to look a better alternative than transforming southern Europe into a huge Mezzogiorno [a term commonly used to identify Italy's poorest Southern regions], surviving on fiscal handouts from the EU".  

EuroIntelligence EUobserver FT BBC: Flanders IMF FT: Larsen

 

The WSJ reports that yesterday the German government endorsed budget cuts worth almost €80 billion through to 2014. FT Deutschland notes that, due to resistance to an EU-wide levy on financial transactions, German Finance Minister Wolfgang Schäuble has now to explore the possibility of further budget cuts to recover the €2 billion he planned to raise through such a tax by 2012. Schäuble further stated that the German government does not intend to introduce the tax unilaterally.

WSJ

 

An article in the FT notes that, in his memoirs published yesterday, former UK Prime Minister Tony Blair admitted he wanted to join the euro early in his premiership, but eventually pulled back for fear of British public opinion rather than for the opposition of Gordon Brown - who was serving as Chancellor at the time. Blair also said he "fancied the fight" of a referendum in the UK on the EU Constitution, but he was not given the chance to call it because of the previous French rejection of the Treaty in 2005. 

FT

 

Wirtschaftswoche reveals that the number of officials working for the European Commission has risen from 18,700 in 2003 to 23,025 in 2009, although 32,000 people are currently on its payroll.

Wirtschaftswoche

 

Le Figaro reports that the European Commission has demanded more explanations from the French Government on the voluntary repatriation of the Roma, stressing that the €300 offered by France to Roma people who agree to leave the country is not enough "to take the issue out from the scope of the EU Directive on freedom of movement".

Le Figaro IHT El Pais Times

 

The Express reports that British drivers could face road pricing and higher levies on fuel in accordance with the EU's climate change policies.   

Express Express 2

 

European Voice reports that Spain has joined Italy in its opposition to the EU patent being translated only into English, French and German.

European Voice EurActiv.es

 

EurActiv reports that, according to EU sources, US officials have so far refused to let their European counterparts disclose more details on the draft Anti-Counterfeiting Trade Agreement (ACTA). 

EurActiv

 

In an interview in El Pais, Jacques Attali, famed French economist and advisor to former French President François Mitterrand, comments that "In Europe we will see a long decline in the standard of living, like what happened in Venice or Argentina in its day".

El Pais

 

El Mundo reports that yesterday a spokesman for the European Commission said the EU does not intend to give the Libyan leader Muammar Gaddafi €5 billion per year to help reduce illegal immigration into the EU. However, he confirmed that the EU is open to further negotiations with Libya on this issue.

El Mundo