On the eurozone crisis, he said, “What Europe really needs in this crisis is to knuckle down and create a package of far-sighted, clever and non-ideological measures. It will be more expensive than without the mistakes but we have no choice if we want to prevent Europe breaking apart.” Asked about the design flaws of the euro, Kohl responded, “Of course I would have wished many a time, a further decision, especially in the early nineties with a view to the euro and political union.” He added that had he remained Chancellor he would not have approved Greek entry into the euro without major structural reform in the country. Meanwhile, economic experts from German Chancellor Angela Merkel’s CDU party and junior coalition partner FDP yesterday criticised the German government’s draft framework agreement for the EFSF – the eurozone’s bailout fund – arguing that it leaves national parliaments on the side lines. FT Deutschland quotes Deputy FDP Chairman Florian Toncar, saying, “The planned changes by heads of government to the EFSF cannot pass without parliamentary control.” Klaus-Peter Flosbach, CDU and CSU fiscal policy spokesperson stressed that the government would make sure that “the Bundestag is adequately involved.” Separately, French Prime Minister François Fillon yesterday announced an austerity package aimed at saving €1bn this year and €11bn in 2012. The measures include increases on some capital income taxes, the elimination of capital gains tax loopholes, increases in tobacco and alcohol taxes as well as an exceptional tax levy of 3% on the very rich. The plan also contains proposals aimed at harmonising the French tax system with that of Germany. Meanwhile, in an interview with Le Monde, German Economist Henrik Enderlein – who is an economic advisor to the German Social-Democratic party – notes, “Germany’s political landscape is more complex than it seems…Should there be a vote in the [German] parliament today, a solid majority of MPs would vote overwhelmingly in favour of Eurobonds.” Bloomberg reports that Estonian President Toomas Ilves suggested that some members of the eurozone may have to leave, saying, “The eurozone may not take the same form it does today” in the future.Open Europe Europe
New on the Open Europe blog
Thursday 25 August 2011
Kohl: Germany’s “erratic” foreign policy is endangering EU’s future;
Merkel: “All times have their own specific demands”
Former German Chancellor Helmut Kohl has warned that Berlin’s “erratic” foreign policy is endangering the future of the EU, citing the recent decision to abstain in the UN vote on Libya as the most recent example. “Where is Germany now and where does it want to go? It’s a question being asked by our partners and allies abroad,” said Kohl in interview with Internationale Politik, Germany’s foremost foreign policy journal.
Chancellor Angela Merkel, Kohl’s former protégée, responded to his comments saying, “All times have their own specific demands,” according to Handelsblatt.
Schäuble: Greco-Finnish collateral deal “is no longer on the table”;
France announces new €12bn austerity package
Handelsblatt reports that yesterday German Finance Minister Wolfgang Schäuble said at a CDU/CSU parliamentary group meeting that the Greco-Finnish collateral deal “is no longer on the table.” Greek borrowing costs of two year debt reached record highs of 44% yesterday over fears that the second Greek bailout could be delayed due to the collateral dispute.
The Irish Independent reports that the OECD predicted yesterday that the eurozone would not drop back into recession or break-up, but would in fact return to growth and take in new members. It also called for the EFSF to be increased to €1 trillion and said Eurobonds were not a viable short term option.
BBC EUobserver Le Monde Le Figaro Le Figaro 2 Les Echos La Tribune FT CityAM WSJ Reuters Times Irish Independent Irish Times FT 2 CityAM 2 TelegraphLe Point Le Point 2 Le Point 3 Le Point 4 Le Figaro 3 WSJ Reuters 2 IHT Times Mail Irish Independent 2 Irish Times 2 Scotsman Irish Independent 3 Irish Independent 4 Bloomberg Expansión Kauppalehti Handelsblatt Handelsblatt 2 Handelsblatt 3 Handelsblatt 4
The WSJ reports that funding stresses are surfacing for European banks again, with the use of the ECB’s emergency lending facility increasing yesterday, usually a last resort when banks struggle to gain liquidity from traditional sources. Additionally, Greek banks are expected to face losses of around €5bn from their participation in the second Greek bailout, according to the WSJ.
Sarkozy heralds NATO’s role in the Libyan conflict
French President Nicolas Sarkozy yesterday said that the defeat of Colonel Gaddafi has brought the Western and Arab worlds closer and that he was right to put France fully back into NATO, reports EUobserver. He also announced that France will host a meeting on 1 September with David Cameron, Libyan rebel leaders, delegates from the 28-country-strong anti-Gaddafi coalition, the Libya Contact Group, and states hostile to Western intervention in Libya, including China, India, Russia and South Africa.
An editorial in the Spectator argues, “For its part, the European Union can do something to redeem itself….Dropping all tariffs and including North Africa and the EU free-trade zone would be the surest way to bring the prosperity that guarantees stability.”
Former Le Figaro editor: European elites must acknowledge their failure with the euro
In an op-ed in Le Monde, French Professor Gérard Lafay and former editor of Le Figaro Philippe Villin argue that “Europe’s political and technocratic elites must acknowledge their failure with the euro”, adding, “The only sensible solution is to dismantle the euro in an organised manner, as quickly as possible, before everything blows up. One should start from a massive devaluation, before arranging an orderly comeback to the various national currencies.”
In the FT, columnist Chris Giles suggests that the UK should take part in Eurobonds. Meanwhile, in City AM, Anthony Browne quotes Open Europe’s finding that, of the annual €81bn an EU-wide tax on financial transactions could raise, €58bn would come from the UK.
Open Europe research FT: Giles CityAM: Browne WSJ: Smith WSJ: Blackstone Le Monde: Lafay and Villin Repubblica: Spinelli Il Sole 24 Ore: Mauro & Pittella Il Sole 24 Ore: Caselli Times: King Expansión: Schwartz IHT: Dempsey FAZ: Steltzner
In a Forbes special report looking at the world’s most powerful women, German Chancellor Angela Merkel comes first.
L’Express reports on a new CSA poll showing that François Hollande, one of the most likely Socialist candidates for next year’s French presidential elections, would be ahead in the first round with 27% of votes, while French President Nicolas Sarkozy would only get 26%.
The EU yesterday imposed sanctions against Iran's Revolutionary Guard, alleging it is providing equipment and other support to Syrian President Bashar al-Assad, reports the Independent.
A leader in the New Statesman argues, “It is absurd that EU students receive a free university education in Scotland, while UK students pay full fees.”
Should the UK issue Eurobonds? An un-makeable bond
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