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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; Olga Petrenko, the European Securities and Markets Authority; and Michael Treip, Financial Services Authority. Places are limited. If you wish to attend, please RSVP to Sarah Hodges on shodges@openeurope.org.uk or 0044 20 7197 2333.
Europe
Treasury document reveals “cross party consensus” on UK involvement in EU bail-out fund
The Telegraph reports that during a debate in the Commons yesterday former Chancellor Alistair Darling accused Prime Minister David Cameron of trying to hide the fact that the Conservatives had been consulted and agreed on the UK’s involvement in the European Financial Stability Mechanism (EFSM), the €60bn bail-out fund agreed by EU leaders during an emergency meeting in Brussels last May. Darling argued that David Cameron had given “a somewhat incomplete account of my conversation with the now Chancellor [George Osborne].” He added: “We did indeed agree that we should do everything we could to keep Britain out of the main part of the rescue fund. But in relation to the smaller element [the EFSM], which he refers to, what we discussed was not voting against but abstention, recognising that Britain could have been outvoted – exactly the same thing that the Chancellor of the Exchequer referred to when dealing with Ireland.”
The Prime Minister maintained that Chancellor George Osborne “specifically objected” to the UK signing up to the EFSM when he was consulted by his predecessor at the time.
The Guardian reports that, in a note from July last year, Economic Secretary to the Treasury Justine Greening wrote: “It should be noted that whilst agreement [to the EFSM] on behalf of the UK was given by the previous administration, cross-party consensus had been gained.”
Guardian Telegraph Mail Open Europe blog
ECB intervenes to buy Portuguese government bonds;
Sources suggest German government sees Portuguese bailout as inevitable
The ECB renewed its bond buying activities by purchasing €432m in government bonds, with the majority expected to have come from Portugal. According to Le Figaro, markets seemed to barely notice the purchases, with the yield on Portuguese ten-year bonds reaching a record high of 8.07%. Writing in FAZ in response to the eurozone crisis, Deutsche Bank Chief Economist Thomas Mayer argues that “restructurings are necessary” and until that is realised “it will be hard [for peripheral economies] to receive new loans from the market.”
Handelsblatt reports that German Finance Minister Wolfgang Schäuble now considers a bailout for Portugal almost inevitable. The newspaper adds that the German government will insist on including the IMF in the bail-out, against the wishes of the Portuguese government, which reportedly fears that the IMF would impose even stricter austerity than the European Central Bank and the European Commission, according to a government official.
Meanwhile, a Greek government source has suggested that Greece may need to request additional funding from the EU/IMF in order to reach its refinancing targets over the next three years.
Reuters reports that the ECB is putting the finishing touches to a new medium-term liquidity programme for European banks. A separate article notes that the IMF will seek to activate a $580bn global crisis fund this week, citing a source familiar with the plan saying that "the biggest worry is the high risk of contagion from Portugal and that general global uncertainty will trigger a new wave of borrowing from the fund."
Yesterday saw the deadline for the Spanish regional banks, the cajas, to announce their plans for recapitalisation to the Spanish Central Bank. Three of the cajas have opted to request €6.35bn funding from the FROB, a fund set up by the Spanish government to aid its ailing banking sector. The move amounts to a partial nationalisation, meaning that around €330bn in assets will come under Spanish government control. The largest caja, Bankia, has opted to raise the €5.7bn it needs in capital through a public offering of shares this summer. In total, the cost of recapitalisation comes to €14bn, much lower than the credit rating agencies, the Bank of Spain and investors predicted. However, this may be down to the recapitalisation requirements being set too low.
EUobserver reports that the members of the ‘euro plus pact’ will hold an annual meeting at the EU spring summit, meaning that non-members, such as the UK, will be forced to leave when discussions begin.
Het Financieele Dagblad depicts a scenario for "the day that the euro collapsed". It envisages Italy demanding a bailout but eurozone leaders failing to agree on one, causing the ECB to provide unlimited liquidity to European banks to appease financial markets. This causes massive inflation leading to bank runs. Eventually Germany, the Netherlands, Austria and Finland leave the eurozone to set up a new currency union.
Open Europe research FT FT Brussels Blog City AM Les Echos Les Echos 2 Le Figaro Telegraph Irish Independent WSJ Agenda Bloomberg Handelsblatt WSJ Irish Independent 2 Irish Independent 3 FT Alphaville EUobserver WSJ: Spiro Reuters Breaking Views Reuters Reuters 2Handelsblatt El PaisReuters 3FD Handelsblatt 2
UK rejects EU plans to ban petrol-fuelled cars from city centres by 2050
The BBC reports that yesterday the UK Government voiced its opposition to the European Commission’s proposal to ban the use of petrol and diesel-fuelled cars from city centres across Europe by 2050. Transport Minister Norman Baker is quoted saying: “We will not be banning cars from city centres any more than we will be having rectangular bananas. It is right that the EU sets high-level targets for carbon reduction, however it is not right for them to get involved in how this is delivered in individual cities.”
Open Europe is quoted in the Mail, arguing: “This goes to show the extent of the EU's ambitions to interfere in the UK's national affairs.”
BBC EUobserver Mail Handelsblatt El País European Voice
European Parliament continues to deny OLAF access to investigate MEP corruption allegations
EUobserver reports that the European Parliament is continuing to deny the EU’s anti-fraud body - OLAF - access to its buildings, despite allegations by the Sunday Times that a fourth MEP has been involved in the cash for amendments scandal. European Parliament lawyers are arguing that corruption investigations are the job of national authorities. However, OLAF spokesman Pavel Borkovec said yesterday, "Clearly this is an alleged breach of rules within the EU institutions so if it's not a case for OLAF why do we have a mandate to investigate EU staff and members of the institutions?"
EUobserver BBC EUobserver ABC 20 Minutos Monsters and Critics El Pais
Merkel urged to take tougher approach towards eurozone
Chancellor Angela Merkel yesterday blamed her CDU party’s historic defeat in Sunday’s regional election in Baden-Württemberg on the Japanese nuclear disaster in Fukushima. However, Josef Schlarmann, the CDU’s outgoing Business Minister in Stuttgart said: “It’s not just Japan and the energy issue, it’s the whole relationship of the party to business and the euro problem”, while Kurt Lauk, chairman of the party’s business council argued that Merkel’s poor communication of policies such as the eurozone rescue plans had failed to reassure voters that they would not be paying money into a “bottomless pit”.
The FT writes that Angela Merkel and French President Nicolas Sarkozy’s poor results in regional elections, together with Italian Prime Minister Silvio Berlusconi’s ongoing legal woes, mean that the leaders of the eurozone’s three largest economies have seen their political authority seriously undermined, highlighting the “crisis of authority” of Europe’s centre-right.
FT FT Editorial FT 2 FT 3 FT 4WSJ IHTIHT 2ZeitSternFAZ: Steltzner Guardian Guardian 2 Irish Independent Irish Times Irish Times: Scally El PaisWelt
EU Competition Commissioner Joaquín Almunia warned yesterday that “after mid-April, regardless of what we have on the table, my services will start preparing a decision” on whether billions of euros of government support for German regional bank WestLB amounted to illegal state aid.
FT Handelsblatt
Handelsblatt reports that the new capital requirements established by the EU’s Solvency II Directive could cause extra burdens for pension funds. Consultant Reiner Schwingerwarning is quoted arguing that “it doesn’t make sense to subject pension funds to the same capital standards as insurers.”
Handelsblatt Bloomberg
Writing on EUobserver, co-founders of the Adriatic Institute for Public Policy Natasha Srdoc and Joel Anand Samy note: “Since the mid-1990s, EU and US taxpayers have sent over $1bn to aid reforms in Croatia without results. Through the pre-accession process, the EU has carved out over €400m for Croatia's government and has promised €4bn in EU taxpayer funds when it enters the Union.”
EUobserver: Srdoc and Samy
In response to the prisoners’ vote case, the Mail reports that Lord Chief Justice Lord Judge said yesterday “Judges are obliged to apply the legislation enacted by our sovereign Parliament, and the European Communities Act 1972 and the Human Rights Act 1998 are two such Acts. No more and no less”. Decisions “must be applied whether we judges in the United Kingdom agree with them or not”, he added.
Mail Open Europe research
Speaking at a debate in Brussels, former Labour MEP Glyn Ford said that the Lisbon Treaty gives the European Parliament new powers to veto free trade agreements. He noted that MEPs have also obtained the right to “recall” at any time free trade deals, for example with Japan or Canada, because of the new “Comitology” procedure.
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European Voice reports that the European Parliament’s Budgetary Control Committee has voted to approve the EU’s spending in 2009, but only after members received assurances that the European Commission would put pressure on member states to take more responsibility for their spending of EU funds.
European Voice
World
EU divided over ceasefire plan in Libya
Foreign ministers will meet today in London to discuss the Libyan crisis. The UK and the US have signalled that they could accept a plan under which Libyan leader Col Gaddafi leaves Libya early and escapes a war crimes trial, reports the Times. Germany and Italy are expected to propose a plan to establish an internationally monitored ceasefire and to allow Gaddafi to leave the country. However, a separate statement issued by French President Nicolas Sarkozy and David Cameron last night argues that Nato forces could continue airstrikes even if a ceasefire were agreed to by Gaddafi.
Sun: Hague Express: Pollard Welt Times: leader Times: Walden Guardian Guardian: editorial EUobserver El Pais El Pais 2
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Who is responsible for making the UK liable for EU bail-outs? Darling drops a bomb
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