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Open Europe will host a seminar in Brussels with Prof. Dr. Markus Kerber on Thursday 9 December at 1.30pm-3pm, entitled "Will the German Constitutional Court put an end to euro bail-outs?" If you wish to attend, please contact Pieter Cleppe by e-mail at pieter@openeurope.org.uk or call 0032 477 68 46 08
Europe
Coalition's European Union Bill survives second reading
The Coalition's European Union Bill was given its second reading without a vote yesterday despite opposition from Labour and a number of Conservative backbench MPs. When asked by Conservative MP James Clappison whether he would give "serious consideration" to the question of requiring a vote in Parliament before the Government opts in to new EU laws in the Justice and Home Affairs area, Foreign Secretary William Hague said: "In the context of this bill, it is any proposal to give up our freedom not to participate in Justice and Home Affairs decisions that will be subject to a referendum." He added that the decision to opt-in belongs to a "different category" and argued that "given the strict time limits which apply to the UK's decision to exercise an opt-in - which is within three months of the receipt of a proposal - and the fact that there are 30 to 40 proposals per annum, it is not possible to place a primary legislative lock or parliamentary resolution requirement on the exercise of the opt in."
BBC: Democracy Live Express Conservative Home: Goodman OE press release OE research
IMF Chief criticises eurozone's "piecemeal approach" to debt crisis;
Irish parliament adopts €6bn austerity package
EU finance ministers yesterday formally approved loans to Ireland as part of the country's €85bn bail-out package, while no decision was taken to increase the €750bn rescue fund for eurozone countries. The Telegraph notes that EU leaders' attention is now switching to Portugal and quotes EU Economic and Monetary Affairs Commissioner Olli Rehn saying: "Currently, the Portuguese government is preparing its next steps and in our view, it is important that the Portuguese government will shortly substantiate the consolidation measures for next year."
The FT reports that, following a meeting with Greek Prime Minister George Papandreou in Athens, IMF Chief Dominique Strauss-Kahn said that "the eurozone has to provide a comprehensive solution" to the debt crisis, adding that "the piecemeal approach, one country after another, is not a good one." Strauss-Kahn also urged the EU to consider extending the repayment period on Greece's €110bn bail-out loan.
Meanwhile, a first vote in the Irish parliament gave yesterday the green light to the first part of the Irish government's four-year recovery plan, a set of austerity measures which aim to save €6bn in 2011. Writing in the WSJ, Irish Prime Minister Brian Cowen notes that "our 12.5% corporate tax rate will remain." A separate article in the paper reports that yesterday the Italian parliament also approved €25bn in budget cuts over the next two years.
In an interview with Austrian daily WirtschaftsBlatt, Austrian Chancellor Werner Faymann said that "the Spanish will do everything" to avoid a bail-out, but that "unfortunately, nobody can rule this out." In an interview with Le Monde, Gérard Longuet - head of the ruling UMP party group in the French Senate - has said that the only solution to the eurozone debt crisis is a de facto devaluation of the single currency. "Either we drop the 35-hour [working week] or we leave the euro, but we can't have both," he argued.
Meanwhile, a report written by the European Commission suggests that trading in Credit Default Swaps (CDS) was not to blame for Greece's skyrocketing borrowing costs earlier this year. The document notes that CDS prices for high-debt eurozone countries remained low, so that they "can hardly be considered to cause the high bond yields."
European Voice reports that yesterday Olli Rehn also announced that a second round of stress tests for European banks will start in February.
FT FT 2 FT: Rehn Mail Independent IHT Irish Times Irish Times 2 Irish Independent WSJ: Cowen WSJ WSJ 2 WSJ 3 Telegraph El País: Schäuble Le Monde: Schmidt Le Monde: Delors Le Figaro Euractiv EUobserver European Voice European Voice 2 Handelsblatt Handelsblatt 2 FAZ Bloomberg WirtschaftBlatt: Faymann France24 Trends Le Monde Bloomberg 2
Eurozone comment round-up
In the FT, Economist Intelligence Unit analyst Megan Greene argues that Ireland should seriously consider leaving the euro. She argues: "Sovereign default, massive bank recapitalisations, and sharply falling real wages are all given as reasons why peripheral euro area countries should hang on to monetary union. Yet, in Ireland's case, all three are going to happen anyway. If Ireland's government continues to guarantee bank debt, a restructuring of sovereign debt seems inevitable in 2013, when the present bail-out expires. Ireland simply has too much overall debt." She concludes: "For most countries the drawbacks of leaving the eurozone clearly outweigh the benefits. In Ireland, the calculation is much less clear. Ireland is by far the best candidate in the euro for abandoning monetary union."
In the Irish Independent, Kevin Myers argues: "The fiction of a truly Irish independent state is now ended. We are now a joint EU-IMF administered area, the anomalous taxes of which will sooner or later be brought into line with the economic and political engine of Europe, the Rhenish Franco-German empire. In other words, it's over."
In the Telegraph, Ambrose Evans-Pritchard compares Ireland and Iceland and argues: "The economies of the two 'over-banked' countries have both contracted by around 11% of GDP, but Iceland has achieved it with inflation that devalues debt, while Ireland has done it under an EMU deflation regime that raises the burden of debt." He concludes: "The underlying tale of Ireland and Iceland, and the tale of the 1930s, is that a devaluation shock may cause a violent crisis [...] but the slow-burn of policy austerity and debt deflation does more damage in the end."
In the Mail, Andrew Alexander writes: "The sheer disarray among European leaders over the euro, which seems to get worse whenever they meet, underlines the changing nature of the big question of the day. It is not now whether the euro system will come apart at the seams, but when: in days, months, years?"
In the Independent, Sean O'Grady argues: "There used to be joke about the old Soviet Union that its workers pretended to work and the state pretended to pay them. Something of the same is happening in the almost equally looking-glass world of the European Union. The peripheral nations, Greece, Ireland, Spain Portugal, are pretending they will be able to pay back the money the Germans are lending, and the Germans are pretending to take them seriously."
On her BBC blog, Stephanie Flanders argues: "When people come up with their doomsday scenarios for the euro, ministers like to say, grandly, that the markets are underestimating their determination to hold the eurozone together. Perhaps. But many in the markets think the politicians are overestimating their capacity to muddle through."
FT: Greene Mail: Alexander Independent: O'Grady Irish Independent: Myers WSJ: Weinstein FT: Wolf El País BBC: Flanders FAZ
European Commission plans to harmonise market abuse sanctions
The Guardian reports that EU Internal Market Commissioner Michel Barnier will today present proposals for an EU-wide system of punishments for market manipulation and abuses in the EU's financial services. "Sanctions are very different from one country to another. I want to create an internal market in financial services. The sanctions will be transversal, affecting all major pieces of market regulation," Barnier said.
EUobserver notes that a report released by Bankwatch - a Prague-based transparency lobby group - shows that billions in EU loans for small businesses in Hungary, Poland, Czech Republic and Slovakia have been used by intermediary banks to boost their own liquidity and have never been passed on to the intended recipients.
EU finance ministers agreed yesterday to remove bank secrecy as a reason for blocking investigations into cross-border tax fraud cases, EUobserver reports.
The WSJ reports that EU leaders agreed yesterday to endorse Russia's candidacy to join the World Trade Organisation. Speaking after the EU-Russia summit in Brussels, European Commission President José Manuel Barroso said it is "realistic" for Russia to complete the accession procedure next year.
A WikiLeaks cable has revealed that EU Energy Commissioner Günther Oettinger was appointed by German Chancellor Angela Merkel because she was seeking "primarily to remove an unloved lame duck from an important CDU bastion." Prior to his nomination, Oettinger was Minister-President of the powerful Baden-Württemberg region.
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