Europe Juncker: German government's thinking is "un-European" and "a bit simplistic" FAZ: Is it European to bend the EU Treaties and break the bail-out ban? The European media continues to report on the disagreements between eurozone governments over the size of the bail-out package and eurozone bonds. Handelsblatt reports that Angela Merkel continues to publicly oppose Eurobonds, stating that they would require significant changes to the treaties, "a problem which [ECB President] Trichet ignores". The German opposition party SPD has also come out against the idea. In an interview in Die Zeit, Luxembourg's Prime Minister Jean-Claude Juncker has accused the German government's way of thinking on Eurobonds as being "un-European" and "a bit simplistic". A leader in FAZ criticises Juncker for his comments: "apparently it is un-European to raise taboos. Is it however European to bend EU treaties and to break the ban on bailouts? When a Eurobond is issued [...] countries with a bad name can enjoy lower interest rates, countries with better solvency are paying the price for that. These mathematical financial facts are real, whatever else Juncker may state." Der Spiegel reports that with Juncker's comments, the euro-crisis is threatening to turn into a wider EU crisis. The article quotes German government sources noting that eurobonds would increase interest by one percent for Germany - which would add an extra €480m for every €48bn the country borrowed. "Is this what being a good European means?", the government source said. The Telegraph reports that yesterday German government bonds saw yields rise to the highest in seven months. An article in Die Welt reports that Belgium's "debts are explosive and the political problems are enormous" noting that according to European Commission estimates, in 2012, Belgium's debt will be at 102% of GDP - the third highest in Europe, behind only Greece and Italy. If banking sector debt is added, it reaches almost 150% of GDP. UK Chancellor George Osborne yesterday announced £3.25bn in initial loans to Ireland, stressing that the loan is "for Ireland only". The FT reports that Irish Finance Minister, Brian Lenihan, said yesterday "A small country like Ireland cannot engage in a default without the support of the [ECB] because you have to have the bank loaded with cash while you're engaging in such a default and its not feasible for us to do this." The likely date of the Irish general election has been pushed back to March or even later, following a row between coalition partners Fianna Fáil and the Green Party, report the Irish Times. Spiegel Handelsblatt Reuters FT Telegraph Eurointelligence Handelsblatt Reuters Reuters WeltFT Mail Irish Times Irish Times 2 Times El Pais FT 2 BBC: Brown BBC: Peston BBC: HewittZeit: Juncker EUobserver European Voice WSJ Irish Independent Irish Independent 2 Le FigaroIrish Independent 3 Irish Times Der Spiegel Eurozone comment round-up In an interview with the BBC, former Prime Minister Gordon Brown said: "I sense that in the first few months of 2011 we [will] have a major crisis in the euro area", due to the combination of high fiscal deficits, massive bank liabilities and inflexibility of the single currency acting as an "impediment to growth". Brown went on to say that, in the absence of a coordinated action by its leaders, Europe is to face "an unnecessary and avoidable period of low growth and high unemployment, and diminishing living standards." A leader in the Times argues: "A bigger stabilisation fund and big budgetary transfers across national borders are the logic of supporting the euro. Other schemes being suggested, such as creating euro-denominated bonds, reinforce the impression that the euro is a political more than an economic project. Having stayed out of the euro, the UK should play no part in further arrangements designed to support it." In the Independent, Adrian Hamilton argues: "Having embarked in more optimistic days on the ill-chosen course of the Lisbon Treaty, the EU is now saddled with a second-rate President, a third-rate foreign representative and a public which will simply not accept any more treaties or referendums. Any long-term solution is going to have to - and politically should - involve the banks, which lent so carelessly to countries living beyond their means, to share in the sacrifice of restoring their finances." David McWilliams writes in the Irish Independent: "Ireland is a systemic risk to the euro. We can deal with our own sovereign debt. We cannot deal with the debts of private institutions that went on a lending splurge to the private Irish banks for quick profits, nor should we. If the ECB does not allow us to forego the bank debt, then it will reap what it is sowing." In the FT, Ousmène Mandeng of Ashmore Investment Management notes that "while the euro epitomised the advantages of currency consolidation, it may now be a reason for currency diversification." In a separate op-ed, Lib Dem MEP Andrew Duff writes: "Europe is slithering into a fiscal union. Slither is not good. How to slither is not in the European Union's rule books [...] What is happening is not very democratic and it will take years for politicians to explain and justify the process by which fiscal union came about." However, he argues, "fiscal union is not only the right answer to Europe's present difficulties, it is the only answer." Guardian: Glover Times: leader FT: Mandeng FT:Duff Irish Independent: McWilliamsIndependent: Hamilton BBC: Brown The Guardian reports that Irish Bank AIB, which is due to receive a €3.5bn bail-out, confirmed that it will pay out €40mn in Christmas bonuses this year. Row erupts between Spanish government and FT Deutschland over bail-out speculations Writing in FT Deutschland, EU correspondent Peter Ehrlich laments how "the Spanish government sees the FTD as a sort of enemy of the state", describing how Spanish security service CNI has accused the paper of distributing "false information", in relation to reports of the ECB and a majority of eurozone countries pressuring Portugal to apply for a bail-out, amid fears that contagion would spread to Spain. Ehrlich notes that "only two people saw a problem with [the report], the main denial came from European Commission President José Manuel Barroso and Spanish PM José Luis Zapatero". German Defence Minister calls for greater European military cooperation In an op-ed for FAZ, German Defence Minister Karl-Theodor zu Guttenberg argues that "the commitment to European defence must be more than just lip service" and says he is willing for the German Bundeswehr to share some of its duties with other armies in Europe. Deutsche Welle notes that Guttenberg is expected to present - together with his Swedish counterpart Sten Tolgfors - a project calling for greater European military cooperation at today's meeting of EU defence ministers. The Mail reports that UK stores are being banned from selling Christmas crackers to people under-16 since an EU Directive classes them as "category 1 fireworks". The article notes that the EU's Directive recommends a ban on under-12s, however gold-plating by the UK increased the limit. Swedish Television reports that Iceland is on the path of recovery, currently boosting an unemployment rate of 6.4% and low interest rates. "An important factor has been Reykjavik's possibility to let its currency take the hit", Swedish Television notes. An agreement between MEPs and member states on the EU's 2011 budget looks likely this week - the agreement would set a 2.9% limit on the increase for next year but would include a political declaration to give the European Parliament a greater say over the EU's long-term budget. 10 countries are considering establishing a single EU patent under so-called 'enhanced cooperation', should the idea fail to get the approval of all member states. Spain and Italy have so far opposed the proposal amid disagreements over translation. El País reports that yesterday the European Commission backed down to German and Spanish requests, and gave the green light for an extension of state subsidies for loss-making coal mines until 2018. The European Commission yesterday released plans for reforming the Markets in Financial Instruments Directive (Mifid), including new rules on the trading of shares, bonds and derivatives. One proposal will see those involved in high frequency trading having to be authorised as an investment company. Looking back at Belgium's EU Presidency, Belgian Foreign Minister has said that, "[the]Lisbon [Treaty] is a bundle of paradoxes, because it creates and strengthens a lot of power sources in Europe [...] What we didn't want to be was a fifth wheel on the wagon." European Voice reports that EU Justice and Fundamental Rights Commissioner Viviane Reding intends to propose the introduction of a standardised EU-wide format for birth and marriage certificates. Open Europe
Thursday, 9 December 2010
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