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Europe
German Finance Minister foresees stronger 'political union' in ten years;
CEBR Chief: Euro has a one-in-five chance of surviving in its current form
In an interview with Bild am Sonntag, German Finance Minister Wolfgang Schäuble said that Germany is open to discussions on greater eurozone tax harmonisation, arguing: "The basic decision was for fiscal and budgetary policy to be decided on the national level. If that is to be changed, then we can talk about it." He also predicted that "in ten years, we will have a structure that will resemble far more what one describes as political union...the euro will not fail."
Schäuble's remarks follow calls for deeper integration between eurozone countries made by French President Nicolas Sarkozy and German Chancellor Angela Merkel after their meeting in Freiburg. Merkel was quoted in the Weekend FT saying that harmonisation of tax policies or labour laws would be beneficial, "this is not just about currency issues but also about political cooperation, which has to be deepened", she said. He also announced that France and Germany would "jointly table structural answers" to the eurozone debt crisis "in the first weeks of the new year", as a complement to the permanent crisis mechanism which EU leaders are set to adopt at this week's European Council summit.
The two leaders restated their opposition to the creation of common eurozone bonds and to an enlargement of the €440bn eurozone rescue fund, the European Financial Stability Facility. The front page of FAZ reports that the introduction of common eurozone bonds would cost Germany an extra €17bn per year in borrowing costs, according to calculations provided to Chancellor Merkel. The paper notes that the average yield on government bonds within the eurozone is 3.31%, compared to only 1.73% on the German bund. AFP reports that a new poll shows that a majority of Germans (56%) think that the Deutschemark is a better currency than the euro. Handelsblatt notes that the crisis has started to affect demand for German government bonds, having secondary affects on German pension funds.
Meanwhile, an article in today's FT notes that Italian bank UniCredit has warned that eurozone nations will have to refinance more debt in 2011 than at any time since the single currency was introduced in 1999. The IHT notes that, in its latest quarterly report, the Bank for International Settlements has said that foreign banks cut their exposure to government debt in Greece, Ireland, Portugal and Spain by 14% compared with the previous quarter. The Telegraph reports that, in a research paper published today, the Centre for Economics and Business Research claims that keeping "the euro alive will require cuts in living standards greater than the UK faced in the Second World War" for weaker eurozone countries. CEBR Chief Executive Douglas McWilliams is quoted saying, "I think there is at best a one-in-five chance that the euro will survive as it is."
The Irish Times reports that the Irish government looks set to win this week's crucial vote in the Irish parliament on the EU-IMF bailout deal, having secured the support of three independent MPs.
Telegraph EUobserver Euractiv Euractiv 2 Les Echos Le Figaro BBC AFP AFP 2 El Pais IHT FT FT 3 FT 2 Irish Times Irish Independent 2 WSJ Irish Times 2 Irish Independent FAZ Handelsblatt Handelsblatt 2 FAZ 2 Standaard
£8.3bn 'pre-accession aid' allocated to countries that may never join the EU
The Sunday Times reported that about £8.3bn of pre-accession EU funds has been allocated to Turkey, Albania, Bosnia and other countries, despite the fact that they are unlikely to become members of the EU. Of this, the UK contributes £1.1bn. In 2009, £100m of money paid out was deemed 'irregular', including suspected fraud cases. Open Europe's Mats Persson was quoted saying that enlargement comes with benefits, however the EU risked "sending billions of taxpayers' money into a black hole" if there was no prospect of recipient countries joining the bloc. Mats is also quoted in the Express.
Sunday Times Express Express: Leader
Saturday's Telegraph reported that the EU spent €3m on an anti-poverty development conference for 6,000 participants, including a fashion show and a cocktail party. Open Europe's Siân Herbert was quoted saying, "We're dubious as to how this would help 'tackle poverty and meet development goals'".
Spiegel: Schäuble wants to merge German and French finance ministries
Spiegel reports that German Finance Minister Wolfgang Schäuble is pushing for a far-reaching coordination of Franco-German financial policies. The paper notes that, in private conversations, he has proposed merging policy departments of the French and German finance ministries. The article also notes that Schäuble is coming round to the French view that a European financial transaction tax should be used to part fund development aid spending.
Eurozone comment
On the front page of FAZ, Editor Holger Steltzner argues "before each three EU crisis summits this year, at home German Chancellor Angela Merkel has defended the stability principles. Each time it turned out differently. In March she rejected aid for Greece. In May she wanted to sharpen the stability pact, but then decided upon an aid package of over €750bn. In October she wanted to let private creditors share in the burden of default of insolvent countries, but she came back from Brussels with the unlimited continuation of the eurozone aid scheme which was meant to be limited to three years." In De Tijd, MEP Derk-Jan Eppink argues that "the day when the German voter starts doubting the euro, it will crash", calling regional elections in Baden-Württemberg in March 2011 a "test for Merkel and the euro".
In Le Figaro, former German Foreign Minister Joschka Fischer argues, "To believe that it is possible to impose stability just through rules, regulations and bureaucratic sanctions within a eurozone with multiple-speed economies will prove to be a false idea." In a comment piece in Le Monde, Pierre-Antoine Delhommais argues that Germany's leadership in the eurozone will grow stronger and "the euro will really speak German" if Axel Weber manages to obtain the post of ECB President in 2011
In the FT, Romano Prodi, former Italian Prime Minister and former European Commission President, argues "When I see Germans balking at the Greek or Irish rescue packages, exposing the euro to serious strains, I wonder why they do not see that most of their great economic strength has been possible thanks to the single currency and its success in preventing competitive devaluations".
In the Telegraph, Ambrose Evans-Pritchard, International Business Editor, notes that "To those who blithely argue that EMU is a good racket for German exporters because it locks in Germany's competitive advantage, he [Hans-Werner Sinn, head of Germany IFO institute] retorts that a trade surplus is the flip side of a capital deficit. Germany has seen €1 trillion - or two thirds of its entire savings since 2002 - leak out to fund the EMU party, gutting investment at home. This is toxic for Germany too".
In the Times, author Kevin Toolis writes, "Ireland's economic meltdown is Sinn Féin's opportunity and within two months Gerry Adams could be in power in Dublin...The party's economic message is still vague and suicidal: a flat-out rejection of the EU bailout plan without explaining how Ireland will get out the current financial mess".
WSJ: Stelzer WSJ: Aznar Telegraph: Johnson Telegraph: Evans-Pritchard Telegraph: Bootle Le Monde: Delhommais Le Figaro: Fischer El Pais: Colombani Times: Toolis El Pais: Estefania FT: Munchau FT: Prodi FT Alphaville Telegraph FAZ Tijd: Eppink
Yvette Cooper to attack Coalition's policy on Europe
The Express reports that Shadow Foreign Secretary Yvette Cooper will today accuse the Government of turning its back on Brussels. "Just when we need a serious British strategy for Europe, instead the Government is pursuing a narrow agenda constrained both by domestic politics, pandering to the Eurosceptics, and by their flawed economic policy too," she is expected to say.
Council and Parliament strike deal on Budget
The Sunday Times reported that the latest EU budget proposal includes a 2.9% increase in the budget for MEPs' junkets - raising it to £105bn a year. A trip to South Africa has already been scheduled for February, with an estimated cost of £100,000 for five MEPs.
Saturday's Guardian reported on a WikiLeaks cable revealing that the Pope was responsible for the Vatican's resistance to Turkey joining the EU and wanted a reference to Europe's "Christian roots" included in the EU constitution.
The Sunday Mirror reported that, according to Downing Street sources, David Cameron is ready to parachute Lib Dem leader Nick Clegg into Brussels as Britain's next EU Commissioner amid fears he will struggle to hold his seat as an MP at the next election.
Saturday's Telegraph reported that the Committee of European Banking Supervisors (CEBS) has proposed that only 20-30% of bankers' bonuses can be paid in upfront cash and that 40-60% of payments should be deferred over three to five years. The bonus limits will apply to the entire global staff of subsidiaries of EU-based banks.
Guardian Guardian: Leader Telegraph BBC BBC: Peston's blog
Writing in the FTfm, Mirzha de Manuel of the European Capital Markets Institute argues that the complexity of the passporting rights contained in the EU's AIFM Directive has resulted in a "dysfunctional set of rules".
FTfm: de Manuel Open Europe research
In the Sunday Telegraph, Tim Breedon, Chairman of the Association of British Insurers, argued that 2011 and 2012 will be key years for the insurance industry, citing the implementation of the EU's Solvency II Directive as a major challenge.
Italian Prime Minister Silvio Berlusconi will today speak in both the Houses of the Italian Parliament. A vote of confidence is scheduled for tomorrow and he is very unlikely to obtain a majority, at least in the lower house.
World
Huhne: Cancun deal means EU "more likely" to raise its emissions cut target to 30%
The Cancun climate talks ended without a legally binding agreement on carbon emission cuts but EU Climate Commissioner Connie Hedegaard said that "progress" had been achieved with the formal recognition that the world's emission pledges need to go further. The Irish Times quotes UK Climate and Energy Secretary Chris Huhne saying that the outcome of the Cancun talks would encourage the EU to up its target of cutting emissions by 2020 from 20 to 30%. The agreement "definitely makes an agreement on 30%...more likely," he said.
European Voice EUobserver Independent: Leader Irish Times Irish Times: Leader Telegraph: Lean
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