Thursday, 6 October 2011

Open Europe

Europe

Merkel and Barroso: Treaty change cannot be ruled out;
Merkel backs recapitalisation of European banks

German Chancellor Angela Merkel yesterday issued her support for a bank recapitalisation scheme at the European level, saying, “I think it is right if we have a joint approach to all of this…Germany is prepared to move to recapitalisation.”The European Banking Authority, which conducted the recent round of European stress tests, is holding an emergency two day meeting, during which it will reassess the strength of Europe’s banks by marking their holdings of sovereign debt to market prices and judging the impact on bank capital. Officials insist that the move is designed to highlight the recapitalisation requirements of European banks and not to prepare for a Greek default. The IMF yesterday reiterated its calls for the bank recapitalisation to happen swiftly but at a European rather than national level.

The FT reports that the German plans for recapitalisation differ from those of France and the IMF, since Germany sees the EFSF, the eurozone’s bailout fund, only being used as a last resort, while France keen to see any capital increase done only at the European level, for fear of a detrimental impact on its credit rating. Antonio Borges, IMF’s Europe Director, said yesterday that the IMF may enter the bond market to aid with purchases of peripheral sovereign debt, although his statement was later retracted.

In a joint press conference yesterday Merkel and European Commission President Jose Manuel Barroso, reiterated their previous claims that an EU treaty change cannot be ruled out in order to improve the economic governance of the eurozone. Jean-Claude Trichet will hold his last meeting as ECB President today, and is expected to announce new stimulus measures aimed at increasing funding to European banks, including longer term liquidity provision, although it is uncertain if he will go as far as cutting interest rates.

Greece was ground to a halt yesterday by nationwide strikes against the latest austerity measures, while protesters clashed with police in Athens. Despite these problems, the next tranche of Greek bailout funds is expected to be approved by next month, according to Reuters.Kathimerini reports that Greece will hold a referendum on constitutional changes later this year aimed at increasing labour market flexibility and increasing tax collection. Meanwhile, French Finance Minister François Baroin admitted for the first time yesterday that larger write downs for private Greek bondholders may be needed in the wake of recent developments, according to the WSJ.
FT CityAM WSJ EurActiv FT 2 CityAM 2 WSJ 2 Independent FT 3 CityAM 3 EurActiv 2 Times EUobserver El País Telegraph Irish TimesIrish Independent Irish Times 2 Guardian FT 4 FT 5 CityAM 4 WSJ 3 Times FT 6 WSJ 4 Handelsblatt Guardian 2 Guardian 3 CityAM 5 WSJ 5 WSJ 6 WSJ 7 BBC Le Figaro Irish Times 3 Reuters Reuters 2 FTD Times 2 EUobserver Le Figaro 2 Les Echos Les Echos 2 Telegraaf Le Monde Le Monde 2 Kathimerini Reuters France Kathimerini 2 Kathimerini 3 Reuters 3 Trends Nieuwsblad Nieuwsblad 2 Kathimerini 4FAZ Welt EconomicTimes Financial Times Deutschland FT 7 Irish Times 4 Irish Times 5 Irish Times 6 FT Editorial FT: Davies WSJ: SmithWSJ The Source WSJ: Forelle IHT: Erlanger BBC: Mason El País: Vidal-Folch Il Sole 24 Ore: Bastasin Corriere della Sera: BattistaTelegraph: Hannan Spectator: Islam Irish Independent: O'Callaghan

Cameron blasts EU overregulation;
Hague: We should reduce power of the EU “when the right moments come”
In his party conference speech yesterday, David Cameron said, “Unlocking growth and rebalancing our economy also requires change in Brussels. The EU is the biggest single market in the world – but it’s not working properly. Almost every day, I see pointless new regulation coming our way.” In his speech, William Hague said, “The EU has more power in our national life than it should, and I believe as strongly as I ever have that when the right moments come this Party should set out to reduce it.”

Meanwhile, Defence Minister Liam Fox stressed that Britain would block plans for a permanent EU operational military headquarters and called on other member states to fulfil their commitments to NATO. “You know, many of those calling for deeper EU defence integration are already failing to fulfil their commitments to Nato. You cannot expect to have the insurance policy but ask others to pay the premiums,” he said.

Spanish newspaper ABC quotes Open Europe’s Director Mats Persson commenting on the Conservative party’s position on the EU. TheTimes argues that the section of David Cameron’s conference speech on the future of Europe “was inadequate.” Writing in the paper, Camilla Cavendish argues that the “State has to roll up its sleeves on growth…That ought to mean tearing up the damaging EU Working Time Directive” and other employment rules.

Stern reports that a new Forsa poll has found that 54% of German citizens want to return to the D-Mark. In Eastern Germany, the figure was 67% and the poll suggested that a party supporting the reintroduction of the D-Mark would have a potential national vote of 18%. TAZ quotes Hans-Olaf Henkel, the former head of German employers’ federation BDI, saying, "if the FDP doesn't manage to do it, we need a new party, and I am standing ready to join it.”

EFSF approval still in doubt as Malta delays vote and deal fails to materialise in Slovakia
The Slovak Spectator reports that a deal on Slovakia approving the EFSF, the eurozone’s bailout fund, is still uncertain. Richard Sulík, leader of the Freedom and Solidarity party (SaS), said in Parliament yesterday that he is keen to find a solution under which other member states can continue with the expanded EFSF but without Slovakia having to contribute, although he added, “such a solution is nowhere in sight”. The largest opposition party, previously thought to support the proposal, has now said it will vote against it, casting further doubt over the vote on 11 October. Malta announced this morning that it will delay its vote on the expanded EFSF, after new legal questions were raised by a former prime minister. The debate on the topic will resume on Monday with the vote expected to be held the same day. The Netherlands will vote on the proposal today and is expected to approve it, since, although the governing party is still pushing for the Dutch parliament to have a greater say in the use of the fund, it looks to lack the support to push such an amendment through.

Separately, German FDP MP Frank Schaeffler has reached the required number of signatures to prompt the FDP to hold a vote on whether to support the ESM, the eurozone’s permanent bailout fund. If the vote comes out against the ESM, it could threaten the German governing coalition. Meanwhile, Handelsblatt reports that there are plans in place to help the ESM obtain a banking licence and therefore gain funding from the ECB.

EUobserver reports that MEPs have voted to restore the EU’s original draft budget for 2012, despite member states cutting the Commission’s proposed 2012 budget of €132.7 billion to €129 billion in July 2011. The MEPs’ demanded increase therefore represents a 4.2% rise.

Finland defends collateral deal as other countries brand it “extremely expensive”
Newsroom Finland reports that Finnish Prime Minister Jyrki Katainen has defended the Greek collateral deal being offered after being criticised for being the only country to accept it, arguing that it would "insure Finland against the risk of losses" and that “Finland got what it wanted.” Austrian Finance Minister Maria Fekter said the deal was “extremely expensive” according to Helsinki Times, while Dutch Finance Minister Jan Kees de Jager is quoted by AFN saying, "All countries have been offered the deal, but if you look at it, it seems very unattractive."

Italian daily Il Corriere della Sera reports that Italian Economy Minister Giulio Tremonti is increasingly isolated after his remarks following the meeting of EU finance ministers in Luxembourg, when he suggested that Spain’s borrowing costs were lower than Italy’s probably because Spanish Prime Minister José Luis Rodríguez Zapatero had announced early elections.

Writing in City AM, Anthony Browne argues that the UK should consider pushing for the adoption across the EU of the Vickers Commission proposals to ring-fence investment banking from retail banking.

Jyllands Posten reports that Enheidslisten, a socialist party with 12 MPs currently supporting the new Danish government, is opposing plans outlined in the governing programme, published on Monday, to hold a referendum on Denmark’s EU opt-outs.

Europaportalen quotes Finnish MEP and European Parliament Rapporteur on the EU-Morocco fisheries agreement Carl Haglund saying, “I have examined the agreement primarily from an economic and fishing policy perspective and based on that we find that it is incredibly bad.” He added, “It has been easier to work with Moroccan authorities than the EU Commission.”

The FT reports that bankers, analysts and investors are warning that the Financial Transaction Tax proposed by the EU Commission will not hit large financial institutions as intended, because they will be able to pass much of the cost on to their customers.

In an op-ed piece in the Times, Russian Prime Minister Vladimir Putin argues that the newly established Eurasian Union, composed of former Soviet Republics, will create “a powerful supranational union capable of becoming a pole of the modern world, binding together Europe and the dynamic Asia-Pacific region.”

EurActiv reports that a new report published yesterday by the OECD suggests that high commodity prices have made farmers within the EU much less dependent on farm subsidies, creating a good opportunity for the EU to reform the CAP.

Belgian daily De Standaard looks ahead at Open Europe’s event of next week which will feature German Professor Markus C. Kerber who will explain more about his complaint against ECB President Jean-Claude Trichet with the EU’s General Court in Luxembourg.
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