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On Thursday 31 March from 1.30pm – 3.00pm Open Europe will be holding a panel debate in London on new EU proposals to regulate short selling. The panel includes: Syed Kamall MEP; Sam Jones, Financial Times; Andrew Baker, Chief Executive, Alternative Investment Management Association; and Michael Treip, Financial Services Authority. Places are limited. If you would like to attend, please RSVP to Sarah Hodges on shodges@openeurope.org.uk, or 0044 20 7197 2333.
Europe
EU summit agreements fall short of tackling eurozone crisis;
Pressure mounts on Portugal to seek external aid
At last week’s EU summit, eurozone leaders agreed on the details of the permanent eurozone bailout mechanism post-2013 and a plan for economic governance, however, there was no progress on how to solve the funding problem with current bailout fund or how to tackle the crisis in Portugal. The problems facing the Irish economy were also sidelined. FT Weekend argued that: “In some respects, the deal underperforms even analysts’ lowered expectations.” FAZ notes that German Finance Minister Wolfgang Schaeuble’s advisory board has branded the recent decisions at the EU summit “alarming”. The paper quotes sources saying that the permanent bailout fund will entrench “economic mismanagement” in the eurozone.
Open Europe’s briefing on the cost of a Portuguese bailout and restructuring, continues to receive coverage from around Europe. The briefing was referenced in Polish paper Gazeta Prawna, Portuguese paper Diario de Noticias and on Paul Mason’s BBC blog. Pressure continues to grow on Portugal to seek a bailout from the EU/IMF. ECB governing council member, Ewald Nowotny, said that he would “recommend” such an action from “a purely economic point of view”. Despite toppling the government with his rejection of the new austerity plan, Pedro Passos Coelho, leader of the main opposition party, has pledged that he will reduce government spending further and institute structural reforms to promote economic growth if he is elected to be the new Prime Minister. He also said that he hoped Portugal would not need external aid but added: "if it becomes inevitable to ask for a rescue, we will". Open Europe Director, Mats Persson, was quoted in Saturday’s Mail saying: “Portugal, along with other struggling countries, should restructure its debt, rather than tread water with the help of EU bailouts.”
The results of Ireland’s banking stress tests, due to be published on Thursday, are expected to show that the biggest banks need between €15bn - €25bn to recapitalise, and also need to sell off €90bn worth of assets to bring their loan-to-deposit ratios back to a reasonable level. The Irish government is requesting that the ECB set up a new €60bn medium term lending facility to help the banks achieve these requirements.
FT Weekend FAZ Guardian Reuters Gazeta Prawna BBC: Mason Diario de Noticias Saturday's Mail Saturday's Independent Saturday's Times Sunday Telegraph WSJ European Voice EUobserver EUobserver 2 BBC: Hewitt FT WSJ Independent City AM El Pais
Historic defeat for Merkel’s ruling party
Chancellor Angela Merkel’s Christian Democrats suffered a “humilating defeat” in yesterday’s regional election in the state of Baden-Württemberg, where they had ruled for 58 years; the state will now be governed by a Green-Social Democrat coalition. The Greens also did well in the other regional election held in Rhineland-Palatinate, while the FDP party, Merkel’s national coalition partner, was a big loser in both elections.
FAZ’s Günther Nonnenmacher argues the results cannot be easily dismissed as both parties consider the conservative state of Baden-Württemberg to be their “home territory”, and argues the fallout, in particular the continuing weakness of the FDP, will strain the Berlin government. While the elections were dominated by the issue of nuclear safety, anger over the eurozone bailouts also contributed to the government parties’ poor showing. Hans Michel Bach, chairman of the CSU Business Union, argued in Handelsblatt that the government’s tax, economic and European policies “firstly irritated its own people and then frightened off the voters”. Looking ahead to the upcoming 2013 general election, under the headline ‘Rage and anger directed at Merkel’, Die Welt notes that the cash to be paid to the new euro-rescue mechanism will restrict the government’s room for manoeuvre.
FT WSJ EurActiv European Voice Telegraph Telegraph 2 EUobserver City AM IHT Times Independent Reuters Welt Handelsblatt Süddeutsche FAZ: Nonnenmacher Focus Irish Times Irish Independent El Pais El Pais 2
Study reveals that EU funds in Germany are “largely distributed without achieving their targeted goal”
A special report in FTD covers a scientific study which criticises how EU funds are distributed in Germany. Johannes Bade and Jens Wäckerle, the authors of the report are quoted saying that EU funds are "largely distributed without achieving their targeted goal". Structural funds were used in order to enlarge a brewery, and money from the European social fund was used for financing interns at supermarket chains Obi and Aldi.
Meanwhile, Saturday’s Express noted that, by 2014-15, the UK’s net contribution to the EU budget is expected to hit £9bn and quoted Open Europe’s Stephen Booth saying, “The EU budget remains unreformed and a hugely wasteful use of scarce resources. This Government must use its veto over EU budget negotiations to seal a far better deal for British and European taxpayers.”
FTD Saturday's Express
Fourth MEP caught helping to amend EU laws for payment
A fourth MEP, Spaniard Pablo Zalba Bidegain from the European People’s Party, has been caught by Sunday Times reporters agreeing to change laws in return for payment. Last month Zalba tabled an amendment using the exact words written for him by undercover reporters. He was offered an advisory board position on a London-based lobby firm by the reporters, which would be compensated with €100,000 a year or a consultancy fee. Zalba has denied any wrongdoing, claiming the amendment as entirely his own work and said he had never indicated he was willing to accept the job offer from the fake lobbying company, despite twice recorded saying he “definitely” wanted to work for the company.
Sunday Times Open Europe blog
Eurozone comment round-up
In the WSJ, Irwin Stelzer writes: “The eurozone summiteers seem to have concluded that if at first you don't succeed, continue making the same mistake. If bailing out troubled economies hasn't reassured markets, well, expand the program. If flawed bank stress tests leave investors unsatisfied, well, repeat them.”
In the Guardian, Heather Stewart argues: “Time is running out, and Europe has two choices. It can continue hammering the economies of Greece, Ireland and soon Portugal deeper into crisis, while their already furious voters become increasingly resentful about the pain being imposed by their European ‘partners’; or it can accept that the scale of debts has simply become unsustainable, and open negotiations now about an orderly default.”
An editorial in the FT Weekend notes: “Throughout the financial crisis, Europe’s elected leaders have rarely missed an opportunity to disappoint…The biggest flaw in the grand bargain that wasn’t was the parties’ utter lack of attention to the most insidious problem: a banking system where the stench of the living dead keeps contaminating the prospects of healthy institutions. European leaders show no attempt to grasp that states and economies – not senior bondholders – must be kept safe from teetering banks.”
FT: Munchau FT Money Supply WSJ: Stelzer Guardian: Stewart Guardian: Marcet El Pais: leader FT Weekend: Editorial Saturday's Independent: O'Grady WSJ: Real Time Brussels Times: Emmott
EU proposes ban on petrol-fuelled cars in cities by 2050
PA reports that the European Commission has published proposals to ban the use of Petrol and diesel-driven cars from cities across Europe by 2050 to decrease dependence on oil and tackle climate change. EU Transport Commissioner Siim Kallas said, “We can break the transport system's dependence on oil without sacrificing its efficiency and compromising mobility. It can be win-win.” The plans are designed to “dramatically reduce Europe's dependence on imported oil and cut carbon emissions in transport by 60% by 2050.” The Berliner Morgenpost reports that the Commission’s proposals to “triple the size of the high speed rail network across Europe by 2030” would cost €550 billion.
Welt BerlinerMorgenpost
Leaked Commission paper says there is “no conclusive evidence” that ‘naked’ CDS trading pushes up governments’ borrowing costs
The FTfm notes that a leaked paper from the European Commission states that “Empirical investigation…provides no conclusive evidence that developments in the Credit Default Swap market causes higher funding costs for member states.” The European Parliament’s Economic and Monetary Affairs Committee voted earlier this month to press for a permanent ban on “naked” sovereign CDS transactions, which some have blamed for heightening the perceived risk of a default in struggling eurozone countries. The Commission’s paper concludes, “In the light of the evidence…it may not seem entirely appropriate to consider a ban as a permanent rule.”
Meanwhile, a separate article in the FT notes that “a battle is taking place between governments and rating agencies,” with proposed EU regulation of agencies causing “widespread alarm” among the agencies and investors.
FTfm FT
Children pose as IRA terrorists at EU-funded community centre
The Independent on Sunday reported that a community centre in Northern Ireland, which has received millions of pounds in EU funding to promote social cohesion, hosted a youth event organised by Sinn Fein at which children listened to talks by former IRA members and were photographed holding AK-47s, rifles and handguns. The discovery of the photos comes just months after the centre was criticised for using EU money to fund tours promoting the “proud tradition of resisting British rule in Ireland”.
Independent on Sunday Open Europe blog Express
Nato has agreed to take over all operations in Libya, including the recently approved air campaign against ground targets. Meanwhile, in an op-ed in Le Figaro, EU Foreign Minister Catherine Ashton looks at the future of the EU’s relations with North Africa and notes, “We are aware that aid can only play a limited role. These countries aim to achieve prosperity through trade exchanges. This is why market access is so important.”
El Pais Guardian Saturday's Guardian BBC: Today Le Figaro: Ashton EUobserver Conservative Home: Baron Times: Straw Guardian 2
The Mail on Sunday reported that Environment Minister Lord Henley is the third member of the Department for Environment, Food and Rural Affairs (Defra) to be found to be in receipt of EU farming subsidies, earning £38,000 in total.
Mail on Sunday
The BBC reports that David Cameron has called on the EU to offer a free trade deal to Japan to help it recover from the recent earthquake.
BBC
Saturday’s Mail reported that an EU Directive on marine conservation has prevented a £160 million regeneration scheme in Falmouth, Cornwall, which was expected to create 800 jobs.
Saturday's Mail
In regional elections yesterday, French voters delivered a blow to President Nicolas Sarkozy ahead of next year's presidential election, with gains for the Socialists and the National Front.
Telegraph WSJ Le Point
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How much longer can the eurozone live in an alternative reality?
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