Monday, 5 September 2011

Open Europe

Europe


Spiegel: Merkel considering a separate Eurozone Treaty to operate in parallel with Lisbon Treaty;


Standard & Poor’s suggest Eurobonds would have same rating as Greece


Spiegel suggests that German Chancellor Angela Merkel is considering abandoning her plan to increase economic cooperation between all EU member states, in order to reinforce Eurozone cooperation, through the creation of Eurozone Treaty, which would operate in parallel with the Lisbon Treaty. Eurointelligence reports that this would involve Herman Van Rompuy becoming Eurozone President, with a specified secretariat at the expense of the current DG ECFIN, the Commission directorate for economic affairs. Spiegel notes that opposition to such a move would be huge, not just from non-eurozone countries but also from the Commission and European Parliament, as well as from within Merkel’s coalition government, which fears a loss of sovereignty. The article suggests that the proposal marks a U-turn from Merkel’s previous position, since she has consistently rejected the possibility of a ‘two-speed Europe’.

Meanwhile, Annette Schavan, Germany’s Minister for Education and Research, told Handelsblatt that if the EU wanted to move towards a "United States of Europe", it may need to amend the Lisbon Treaty. The article notes that such a move would be incredibly difficult given opposition within the German Parliament and as such any such proposal from the German government is unlikely in the near future.

Over the weekend, numerous German MPs openly called for Greece to exit the eurozone. Wolfgang Bosbach, a prominent CDU MP, told Tagesspiegel that Athens should consider an exit, because "it cannot expect massive financial support in the long run." His views were echoed by FDP MP Otto Solms and former Europe Comissioner Frits Bolkestein. Commission President Herman Van Rompuy said, on Belgian Radio 1, that such proposals would not be discussed.

Reuters reports that Standard & Poor's has said over the weekend that a Eurobond issued by eurozone countries would get the weakest member's rating, if the issue was jointly guaranteed. Moritz Kraemer, S&P managing director for EMEA sovereign ratings, speaking at a panel discussion at the Alpbach European Forum, said, “If we have a euro bond where Germany guarantees 27%, France 20 and Greece 2% then the rating of the euro bond would be CC, which is the rating of Greece."

The Greek Finance Minister Evangelos Venizelos hit out at critics of the Greek reform programme yesterday, accusing them of creating “a mood of uncertainty and scaremongering.” This follows the 10 day suspension of the latest EU/IMF/ECB review of the Greek bailout programme on Friday, after Venizelos made it clear he would not institute any additional austerity measures this year to cover a €1.2bn shortfall in the budget. The FT Weekend quoted a European official close to the situation saying, “How can you expect the Bundestag to vote through a second bail-out for Greece when it isn’t meeting the promises made in the first package?”

Reuters reports that Richard Sulik, Head of the Freedom and Solidarity party in Slovakia, has warned that Slovakia may not approve the newly expanded powers of the EFSF, the eurozone bailout fund, until December. Writing onLewRockwell.com Gary North cites Open Europe’s finding that the ECB has an exposure of €444bn to the PIIGS.


New Open Europe briefing: What will the German Constitutional Court ruling mean for the eurozone crisis?


Open Europe has today published a briefing, looking at the forthcoming German Constitutional Court ruling on the legality of the eurozone bailouts, setting out what the ruling could mean for the Single Currency. The Court’s ruling is expected on 7 September. Open Europe’s Director Mats Persson was quoted in the Sunday Telegraph saying, "The Court will almost certainly approve the bail-outs, possibly citing as a reason that monetary stability is a legally protected interest. However, the Court is also susceptible to public opinion and, in order to guard its reputation, could well demand more influence for the German parliament and lay down additional constitutional red lines in return for approving the bail-outs." Mats added, “Injecting more parliamentary democracy into the eurozone crisis is clearly a good thing but it will also further limit European Union leaders' room for manoeuvre to deal with the crisis, which in turn could increase market uncertainty.”


Lord Lawson: UK government should push for a new EU constitution which abandons “ever closer union”


In the Times, Lord Lawson – former Chancellor to the Exchequer – argues that the notion of “ever closer union” in Europe has to be “explicitly abandoned” and replaced by a “constitution that sets out the entrenched and unalterable competences and responsibilities of the member states of the Union…The present British Government, as it surveys the wreckage of the eurozone, has a golden opportunity to promote this.” Meanwhile, a conference on EU reform is being organised today by Bill Cash MP. Participants include Jacob Rees-Mogg MP and Bernard Jenkin, the Conservative chairman of the Public Administration Committee. Cash is quoted in the Times saying, “we are taking the wrong turn by endorsing fiscal union and creating two Europes without renegotiating Europe, without renegotiating the treaties.”


Merkel suffers another regional election blow


Sunday’s state elections in Mecklenburg-Vorpommern produced another disaster for German Chancellor Angela Merkel's coalition as support for CDU dropped to a historical low of 23.1% in the State. The FDP didn't even make it over the 5% threshold, with 2.7% support, meaning they trail behind the extreme right nationalists NPD. Winners were incumbent SPD Prime Minister Erwin Sellering who scored 35.7%, the Left, with 18.4% and the Greens with 8.4% support. Although, the national relevance of the results is limited since the state is small and has a particularly poor economic situation, it will not aid the growing divisions within the governing coalition.


Eurozone comment round-up


Der Spiegel features an interview with former German Chancellor Gerhard Schroeder, in which he calls for closer EU integration in the wake of the eurozone crisis. He argues that, “The Commission will have to be turned into a government that is controlled, in parliamentary terms, by the European Parliament. That translates into a United States of Europe”. He added that the UK creates the “biggest problems” in the EU.Meanwhile, commenting in Handelsblatt, German economics Professor Harald Hau, calls "the road to full debt guarantees" an "illusion", arguing, "The problems are merely being postponed…The euro-bond neither delivers debt reduction nor new capacity to take on debt for the eurozone". Instead he proposes the obligatory recapitalisation of banks, and orderly state defaults, "which would not mean the end of the euro".

In La Stampa, Gian Enrico Rusconi describes yesterday’s vote in the local elections in Germany as “a vote against the euro”, adding that Merkel has so far been pursuing a “dilatory and oscillating policy which now seems to have reached its terminus.” In an op-ed in Il Corriere della Sera, Italian economist Francesco Giavazzi criticises the Italian government for diluting its new austerity package, warning that the ECB’s bond buying has acted as a “sweet opiate”, which “made us think that our illness had miraculously disappeared.”


EUobserver reports that a new customs deal has been agreed between the EU and Kosovo, allowing goods from Kosovo to travel across the border, carrying a ‘Customs of Kosovo’ stamp, in an attempt to boost regional trade and make the region look more European. The deal does, however, face significant opposition from Serbia.


The Independent reports that EU foreign ministers have agreed to a ban on Syrian oil worth over $3bn a year, in an attempt to cut off one of the Syrian regime’s main income sources. However, several pressure groups have made clear how the ban does not prevent certain European firms from still importing Syrian oil until 2012.


Ceske Noviny reports that the Czech coalition government has agreed not to link the votes on the opt-out from the Lisbon Treaty, demanded by the President Vaclav Klaus, and Croatia’s EU entry in July 2013.




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Posted by Britannia Radio at 18:36