Thursday, 8 September 2011

Open Europe

Europe


Dutch PM: Eurozone must have mechanism to force profligate countries to exit;
FTD: “Karlsruhe kills Eurobonds”

Dutch Prime Minister Mark Rutte has called for a new “Commissioner for budgetary discipline” in the eurozone, who should have powers to impose budget restrictions and other penalties on profligate states that continually flout the Stability and Growth Pact rules. Rutte claimed that if such countries failed to adhere to the Commissioner’s rules then a mechanism should be put in place through which they can be forced or choose to leave the eurozone. NRC reports that, according to Dutch Finance Minister Jan Kees de Jager, Germany and Finland’s first response to the plan was positive.  

In a speech yesterday, following the ruling of the German Constitutional Court, German Chancellor Angela Merkel welcomed the Court’s decision and reiterated her support for the euro saying, “Countries that share a common currency do not wage war on each other. Thus the euro is much, much, more than just a currency,” reports the FTD. The front page of the FTD runs with the headline, “Karlsruhe kills Eurobonds”.

Open Europe’s Raoul Ruparel was quoted in the Telegraph, Bloomberg, El Pais, Bloomberg Business week, San Francisco Chronicle, EurActiv, Business Insider, L’Express and Zerohedge saying, “The ruling also seems to further entrench the German government position that Eurobonds are a no-go, by warning that Germany should not assume other countries’ liabilities. However, the wording used by the Court also seems to suggest that joint debt in the eurozone could be constitutionally allowed if it involved a stronger German say over other member states’ fiscal policies.”

Open Europe’s Director Mats Persson has been included by The Diplomatic Courier and Young Professionals in Foreign Policy (YPFP) in a list of “Top 99 under 33 foreign policy leaders.” The Fall issue of The Diplomatic Courier also features a short interview with Mats.

George Eustice: “We need to end the assumption of ever closer union”
The initiative of the new parliamentary group of new intake Conservative MPs aimed at developing thinking about how to revise the EU-UK relationship continues to receive coverage. An article in the Telegraph notes that the group “will work closely with think-tank Open Europe" and include also Labour and Lib Dem MPs.

On the BBC’s Today programme, George Eustice – one of the initiators of the new group – suggested “using this time in Government to forge a new deal for the EU and for our relationship with it.” He went on to argue, “For instance, we need to end the assumption of ever closer union. That clause that’s in all the treaties needs to be struck out and perhaps replaced by a presumption in favour of localism. If we did that, then the ECJ would be expected and required to judge in favour of returning powers, not in favour of gathering more.”  

Eurozone leaders stress that the next tranche of Greek aid is not guaranteed
In recent days numerous high profile European politicians have been extremely critical of the Greek reform programme. German Finance Minister Wolfgang Schäuble led the way saying, in a speech to the Bundestag, "There can be no illusions here. As long as [the EU/IMF/ECB] mission cannot confirm that Greece has fulfilled the conditions, then the next aid tranche cannot be paid. There is no wiggle room here." Reuters reports that, speaking during a visit to Bulgaria, Jean-Claude Juncker, Head of the Eurogroup, made strikingly similar remarks, saying, "Greece has to know that the targets we have laid out have to be reached and have to be respected…If not it cannot be taken for granted that the next disbursement will take place." Klaus Regling, Head of the EFSF, went even further yesterday saying, “The objective [of the EU/IMF aid] is clear: it is to buy time. This is now working in Ireland and Portugal but it is not yet working in Greece…The hypothesis of a return of Greece to the markets in 2013 will not happen.”

The WSJ quotes a Greek official suggesting that the Greek bond swap, part of the private sector involvement in the second Greek bailout, cannot be finalised until the expanded scope of the EFSF, the eurozone’s bailout fund, is approved by all eurozone parliaments. The official suggests this will be done by October. However Slovakia has already suggested it may not vote on the issue until December.  


The FT reports that the ECB is unlikely to change its interest rate at today’s meeting, but some indicators suggest a rate cut could happen as soon as November.

Italian Senate adopts austerity package;
Protesters clash with the police outside the Senate building during the debate
The Italian Senate gave yesterday the green light to the new set of austerity measures proposed by the Italian government to balance the budget by 2013. The lower house of the Italian parliament may vote on the package on Saturday, or next Tuesday at the latest. During the debate, about five hundred protesters clashed with the police outside the Italian Senate building, reports Il Corriere della Sera. Separately in Il Corriere della Sera, Italian economist Alberto Alesina strongly criticises the austerity package adopted by the Italian Senate yesterday, arguing that Italy is “ignoring everything that history has taught us. The austerity package relies much more on tax rises than on real cuts to [public] expenditure."

La Stampa reports that the Italian government has this morning also agreed on two separate draft laws to amend the Italian constitution in order to introduce a balanced budget rule and abolish all the Italian provinces. Separately, the Spanish Senate yesterday endorsed the introduction of deficit and debt limits in the Spanish constitution.

Ashton encouraged to push forward with EU Military HQ without the UK
The Telegraph reports that the Foreign Ministers of France, Germany, Italy, Spain and Poland have sent a secret letter to EU Foreign Minister, Baroness Catherine Ashton, suggesting that she continue with plans to set up a European military headquarters, using so-called “structured co-operation” which allows some member states to pursue further EU integration even if not all 27 member states agree. A UK government spokesman said, “Structured co-operation was designed to encourage member states to work together to increase European capabilities…It is inappropriate to use EU mechanisms to advance the political agendas of only a few member states."

The Mail reports that some aspects of the European Convention on Human Rights and EU rulings may be making it more difficult for the British government to deport criminals from EU after they are convicted compared to those who come from other parts of the world.  

EurActiv reports that the political groups in the European Parliament have reached an agreement on how EU member states should police each other’s debts in the future, paving the way for the completion of the package six proposals on economic governance, although differences over voting procedures still remain.

UK


The Times reports that the Transport Secretary, Philip Hammond, yesterday issued a damning riposte to train maker Bombardier over Thameslink, claiming it was disingenuous to blame the Government for 1,400 jobs cuts after losing the £1.5 billion contract and saying the company does not need “propping up”. A decision to select Germany's Siemens for the contract, rather than Bombardier in the UK, will not be reviewed or put out to tender again.

New on the Open Europe blog


The Karlsruhe Factor II: Open Europe responds to the German Constitutional Court ruling

Posted by Britannia Radio at 14:32