Monday, 12 September 2011

Open Europe

On 14 September, Open Europe will host an event in London, entitled, “How much power should the EU have over Justice and Home Affairs?” – For more information, please contact Sarah Hodges on 0044 (0)207 197 2333 or shodges@openeurope.org.uk

Europe

New Open Europe briefing: The case for European localism
In a briefing note for Open Europe, Anthony Browne, former Director of Policy Exchange, and Mats Persson, Director of Open Europe, argue that in the wake of the euro crisis the UK should position itself as the national champion of “European localism”, a new long-term strategy that is capable of winning support across the political spectrum in the UK, and from governments and parliaments across the EU. In a comment piece for the Sunday Times, trailing the publication of the report, Anthony and Mats argue, “The euro crisis has tested to destruction the principle of ever closer union — its momentum required Greece to join the euro when it was not ready, directly leading to turmoil. As the crisis has unfolded, the debate has moved to an existential question: what kind of Europe do Europeans want?” They note that a new UK strategy would take “the principles and rhetoric of localism widely endorsed at a national level and applying them at a European level. The same arguments apply: if you devolve where possible and centralise only where necessary, you get better democratic engagement, more flexibility and better policy making."

The briefing sets out a number of specific proposals for how to achieve European localism in practice, including: put in place a “red card” mechanism allowing national parliaments to block a Commission proposal or over-turn ECJ rulings; allow the UK parliament to approve the appointment of ECJ judges; and introduce a new mechanism enabling member states to repatriate powers over certain policy areas. The briefing also argues that the Government should consider taking the European Commission to the ECJ for breaches of the subsidiarity principle. The briefing was covered in the Sunday Telegraph, Sunday Express,Times, Mail, andExpress.

Hague says Britain “may get ahead” as a result of looser EU ties – New group of reformist MPs “will be welcome” in Foreign Secretary’s office;
Osborne: New EU treaty on the cards within two years
In an interview with Saturday’s Times, William Hague said that the UK could benefit from loosening its ties with the EU. “It’s true of the euro, it could be true of more areas in future. In fact we may get ahead as a result of being outside,” he said. Repatriating powers from Brussels was “clearly something I’m in favour of” but was a victim of coalition horse trading, he said. “That’s the area we had to compromise on in return for other compromises.”

Hague said of the new 90-strong group of backbench MPs, due to meet for the first time tonight, which is calling for a new relationship with the EU, “I was talking to some of them about it last night…It’s certainly not career suicide. I’m always pleased by good, healthy, democratic debate. They’re not approaching it in a confrontational spirit. They will be welcome in this office to discuss it.” Several papers note that Open Europe will be closely involved in developing a blueprint for what such a re-ordered relationship would look like, working with Conservative MPs as well as MPs from other parties. On Conservative Home, Bernard Jenkin MP notes that “Parliament must be prepared to legislate unilaterally” to achieve EU reform. He argues that “this will take time. But the unusual meeting of Conservative MPs today might just be the genesis of something big.”

Meanwhile, the Telegraph reports that George Osborne has said that “I think it is on the cards that there may be a treaty change imposed in the next year or two” to “further strengthen fiscal integration” in the eurozone. “It is crucial that Britain's interests on financial services, on the single market, on competition are protected, that we're not outvoted by the eurozone, that there is not an inbuilt eurozone caucus in the system,” he added. The Telegraph notes that Mr Osborne also revealed that Mr Hague was drawing up a list of demands for powers to be repatriated to Britain in return for treaty change. According to the paper, a proposal will be tabled next month that would see negotiations over an EU treaty change launched as early as December.

Disagreements over ECB’s bond-buying push German board member to quit
ECB Chief Economist Jürgen Stark resigned from the ECB’s Executive Board on Friday “for personal reasons” – although the move is almost certainly linked to disagreements over the ECB’s on-going purchases of weaker eurozone countries’ bonds. The decision has thrown global markets into fresh turmoil. Stark will be replaced by Germany’s Deputy Finance Minister Jörg Asmussen.

The WSJ’s Heard on the Street column asks, “What is the future of the euro if old hands from Germany's Bundesbank have lost faith in the institution charged with overseeing the currency?” In Italian business daily Il Sole 24 Ore, economist Luigi Zingales warns, “9 September 2011 risks being remembered as the beginning of the end of the euro, at least of the euro at 17 countries. Jürgen Stark’s resignation…means that Germany is distancing itself from an institution [the ECB] in which it doesn’t recognise itself anymore.” The front page of Handelsblatt notes, “With the resignation of [former Bundesbank Chief] Axel Weber and Jürgen Stark it has become clear [that] Germany’s stability culture has not managed to prevail within the ECB. The [European] Central Bank is increasingly becoming an instrument of politicians.”

Spiegel: German Finance Ministry considering a Greek default;
German Economy Minister: Greece’s orderly bankruptcy must not be a taboo
Reports from the German press suggest that the German government is now openly considering a Greek default as an option. Der Spiegel reports that the German Finance Ministry is considering measures to contain the impact from a potential Greek default under two scenarios: Greece remaining in the eurozone or Greece leaving the single currency. In an op-ed in Welt am Sonntag, German Economy Minister Philip Rösler has argued that “in the worst case, an orderly bankruptcy of Greece” must be considered, “as long as the sufficient instruments are in place.”

A separate article in Der Spiegel reports that a group of eurosceptic members of Germany’s junior coalition partner FDP are planning to organise an internal referendum on the launch of the European Stability Mechanism (ESM), the eurozone’s post-2013 permanent bailout fund. The article notes that 3,400 signatures – about 5% of FDP members – are needed to call a referendum. If one-third of party members vote against the ESM, the result will become official party policy.

Meanwhile, in an interview with Greek TV channel Mega, Greek Deputy Finance Minister Filippos Sachinidis has warned that Greece will run out of money next month, if the next tranche of the first EU/IMF bailout is not paid out. Separately, the Greek government yesterday announced the introduction of a new property tax, expected to raise €2bn over the next two years. In an interview with French TV channel M6 on Sunday, French Budget Minister Valérie Précresse said, “Greece must make efforts, otherwise we won't lend to them.”

In an interview with Expansión, EU Competition Commissioner Joaquín Almunia has said that “one can’t swear” that the time of eurozone bailouts has passed.

SME reports that Slovakian President Ivan Gasparovic has admitted that the Slovakian government may collapse as a result of disagreements over changes to the EFSF, the eurozone’s temporary bailout mechanism.

Berlusconi to discuss austerity package with Barroso and Van Rompuy tomorrow
Italian Prime Minister Silvio Berlusconi will meet European Council President Herman Van Rompuy and Commission President José Manuel Barroso in Strasbourg tomorrow to explain to them the details of Italy’s second austerity package. The new measures are expected to be approved by the lower house of the Italian parliament later this week, probably on Wednesday. Meanwhile, €11.5bn of short-term Italian bonds will be auctioned today, with the interest rate widely expected to rise from the previous auction.

The WSJ reports that France's largest publicly traded banks face another week of turbulence as Moody's Investors Service Inc. may cut the credit ratings of BNP Paribas SA, Société Générale SA and Crédit Agricole SA because of the banks' exposure to Greek sovereign debt.

AFP reports that Europe ministers from nine member states – including Germany, France and the UK – are expected to sign a joint position paper criticising the European Commission’s draft 2014-2020 EU budget as “too high.”

Handelsblatt has obtained information from EU diplomats that there are plans to provide the eurozone with its own institutions in Brussels, starting from the second half of 2012 – when Jean-Claude Juncker's term as Eurogroup Chairman ends.

The Telegraph notes that George Osborne has ruled out an EU financial transaction tax. Meanwhile, the FT Weekend noted that, in a letter circulated among EU finance ministers, Wolfgang Schäuble, German Finance Minister, and his French counterpart François Baroin asked the European Commission to put the topic on its agenda despite UK objections.

In an interview with Bild, EU Energy Commissioner Günther Oettinger has proposed flying the flags of debt-laden eurozone countries at half-mast on EU buildings, arguing that “this would be a symbolic gesture with high effect of deterrence.”

UK

In the Times, Lib Dem peer Ken Macdonald QC argues that the European Court of Human Rights “is no longer fit for our purpose” and that Britain should use the Court “only for exceptional cases.”

New on the Open Europe blog

Go local: Eurozone crisis provides opportunity for the UK to pursue European localism

Europe: It’s so hot right now

Posted by Britannia Radio at 13:59