Thursday, 20 October 2011

Open Europe

Europe

Commons EU referendum vote moved forward to allow Cameron and Hague to attend;
Merkel calls for greater urgency for EU Treaty changes
A Commons vote on whether to stage a referendum on Britain's future in the EU will now take place on Monday rather than next Thursday. David Cameron and William Hague were both due to be out of the country, but the Foreign Secretary is understood to want to lead the Government’s opposition to the proposal. The motion, which is not binding on the Government, has now been signed by 61 Conservative MPs. However, another amendment may be tabled, calling for EU renegotiation without the need for a referendum. Writing in the Telegraph, Chairman of the 1922 Committee Graham Brady MP argues that it is not appropriate for Cameron to use Parliamentary whips to force Conservative MPs to vote against the plan for a referendum.

In the Spectator, James Forsyth argues that, “If Cameron really does decide to whip against it, he could have a proper parliamentary scrap on his hands. The European issue is now so big and pressing a feature of our national life, that the government cannot simply ‘park it’”. In the Telegraph, Chris Heaton-Harris MP argues that, “the fiscal union solution being touted now [for the eurozone] could lead to us being tied to a block of countries which would be rightly focused on solutions that help the core, but are potentially damaging to the countries on the outside…So without a doubt we need a debate on these matters and there are MPs in all Parties that have, quite understandably, different views on what the UK’s relationship with this new EU should be.” Lib Dem Business Secretary Vince Cable is quoted by the Telegraphsaying, that it is “not realistic” for Britain to seek to renegotiate its relationship with the EU.

Meanwhile, German Chancellor Angela Merkel yesterday expressed her frustration at the slow speed of decision making in Europe, arguing, “Where it is actually written, that a treaty change at the European level must always take a decade. The German Unification and the accompanying Two-Plus-Four Treaty came about in an extremely short time. If we are committed to more Europe, then we must really conceive of the crisis as an opportunity, and be ready to undertake faster and unconventional actions.”

Lord Wolfson’s offer of a £250,000 prize to the person who comes up with the best plan for winding up the euro in an orderly way continues to receive coverage. The initiative is mentioned by the WSJ, while in City AM Anthony Browne writes, “The Wolfson prize might seem like a lot of money at £250,000. But if it helps avert financial chaos in Europe, it could be one of the best investments ever made.” Open Europe’s Pieter Cleppe appeared on BBC World Service discussing how a eurozone break up could be managed.

Eurozone leaders fail to reach agreement as riots escalate in Greece
The FT reports that EU plans to recapitalise European banks may reach only €80bn, falling far short of the €200bn estimated by the IMF and missing market expectations. One reason for the difference is that the EU plans allow banks to mark up their holdings of sovereign debt which have increased in market value, such as British and German bonds. Open Europe’s findings that, in an adverse scenario, a bank recapitalisation could cost between €260bn - €372bn were cited in the Telegraph, Sun, Der Standard, Wirtschaftsblatt, Italian financial news site Linkiesta, Wall Street Italia, Finnish business magazine Talouselämä, HVG, Slovakian daily Hospodárske Noviny and Czech daily Financní Noviny.

Division still remain in the eurozone ahead of this weekend’s summit, with French President Nicolas Sarkozy telling French MPs that discussions were bogged down over whether the ECB should be used to leverage the EFSF, the eurozone’s bailout fund, with Sarkozy reportedly commenting, “If there isn't a solution by Sunday, everything is going to collapse,” according to one of the MPs present. Meanwhile, some of the largest protests in Greece yet turned violent yesterday as protestors clashed with police ahead of a vote on further austerity measures in the Greek parliament.

In an op-ed in City AM, Open Europe’s Raoul Ruparel criticises the plan to use the EFSF to insure sovereign debt, arguing, “any EFSF insurance would prove ineffective, since countries [such as Italy and Spain] would be partly guaranteeing themselves through their membership of the fund and unable to make good on these guarantees if under threat of default – the exact moment when the guarantees would need to be called upon.” Raoul warns that this “conjures images of the excessive leverage, unfunded liabilities and misleading credit enhancements that helped fuel the financial crisis. Putting these at the heart of the eurozone sets the scene for another crisis.”

FAZ reports that all parties in the Bundestag have complained about the "extreme time pressure" they are under to make choices on the future of the eurozone’s rescue fund, the EFSF, with Merkel possibly forced to travel to Sunday’s summit without a clear mandate. SPD MP Thomas Oppermann criticised the process saying, “The planned course of action running up to the EU-summit on Sunday has by no means been deemed appropriate by parliament. In a democracy, you cannot treat a parliament like this”.
FT FT 2 WSJ European Voice El Mundo Le Figaro Les Echos Le Monde Irish Independent Irish Times Guardian NY Times EUobserverEUobserver 2 WSJ 2 BBC BBC 2 BBC 3 BBC: Hewitt Sueddeutsche NY Times 2 Welt Welt 2 Telegraph Talouselämä HVG Wall Street Italia Linkiesta Wirtschaftsblatt Der Standard Hospodárske Noviny Financní Noviny FT 3 FT 4 FT Analysis Irish Times 2 El País ExpansiónEl Mundo 2 Repubblica Times Welt 3 Telegraph: Evans-Pritchard Telegraph 2 Le Monde NY Times Hospodarske Noviny Sueddeutsche 2Le Figaro Le Monde economyElsevierFTDDPAFTD 2Reuters FranceLes Echos 2 Le Figaro 2 Le Point FAZ Welt 4 Welt: Krauel Puls Biznesu CityAM: Ruparel Telegraph: Warner BBC: Peston Economist: Charlemagne Independent: Hamilton Independent: McRae WSJ: Dalton WSJ Heard on the Street Guardian: Pratley Conservative Home: Norman FT: Davies FT: Wadhwani WSJ: Booth Conservative Home: Browne

EUobserver reports that yesterday European Commission President José Manuel Barroso proposed that €230m worth of EU ‘project bonds’ to finance major infrastructure projects across Europe be launched next year instead of 2014.

The Telegraph reports that a series of secret reports released by the European Parliament’s auditor, after the threat of legal action, has revealed that significant breaches of the rules were common including staff authorising their own expenses and paying allowances to family members.

Lord Judge, the Lord Chief Justice, has told the Lords Constitutional Committeethat the UK need only “take account” of the decisions of the European Court of Human Rights but not necessarily follow them.

Bild reports that according to calculations made by Inge Gräßle, the CDU’s budgetary expert in the European Parliament, 11,119 EU officials, roughly one in every four, earns over €10,000 per month when their basic salary and expatriation allowance are combined.

According to FTD, EU Home Affairs Commissioner Cecilia Malmström and national governments are “so hopelessly at odds with each other, that they can’t even agree on the legal basis for changing the [Schengen] border treaty, not to mention the content.”
No link

The Telegraph reports that the EU will today propose new criminal sanctions for insider trading and market manipulation. The industry faces up to €732m (£638m) in one-off charges to comply and up to €586m every year after that.

The BBC notes that a cross-party Public Accounts Committee report has warned that more UK development aid could be lost to fraud because of plans to spend a greater portion of aid via organisations like the European Commission and the World Bank.Der Standard cites EU Development Commissioner Andris Piebalgs pledging to make EU development aid more efficient by focusing on "fewer countries, fewer areas".

The FTD today published a proposal by Michel Barnier, European Commissioner for the Single Market, which would allow EU financial supervisor ESMA to temporarily ban credit rating agencies, such as Moody’s, from publishing sovereign debt ratings at “inopportune moments”.

New on the Open Europe blog

A chance to get rich off the eurozone crisis…

No way out? Short term options for the eurozone

Meanwhile, out there in space…

Eurozone could be insuring its own downfall


Posted by Britannia Radio at 14:04