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Andrea Leadsom MP: New governments ought to be able to opt out of EU laws signed by their predecessors;
Commission pushes for intergovernmental treaty to be incorporated into EU law
The Independent reports that the ‘Fresh Start’ group of Conservative MPs calling for EU reform will publish its ‘White Paper’ in July, which will set out the powers and functions that could be returned from the EU to the UK. Andrea Leadsom MP, who co-chairs the group, told the paper that she wanted to see elected governments given more power in relation to the EU institutions, including a new rule allowing member states to opt out of EU laws whenever they have a change of government, arguing, “The massive problem with the EU is that it still holds to directives and measures signed 40 years ago. It is ludicrous to say you can change national governments every five years but that you can never change anything that comes out of Europe.”

Meanwhile, European Voice reports that the European Commission and the European Parliament have agreed that the draft European fiscal pact should be amended to require that it be incorporated into EU law “within five years” of its entry into force. However, this would need the UK’s approval. A Commission spokesman said, “We can't have parallel structures for ever…The common EU law will be stronger than intergovernmental agreements.” Handelsblatt notes that some aspects of the pact, such as national debt brakes, could be incorporated into EU law without an EU Treaty change, while other parts, such as deficit limits, could not. Discussions on the fiscal pact will resume tomorrow.

In an interview with Le Figaro, Italian Prime Minister Mario Monti said, “Europe was right to say ‘no, thanks’ to the rather regressive conditions that David Cameron wanted to impose, such as unanimity voting on [EU] financial regulation. This would make the decision-making process heavier and slower. Having said that, if in order to agree to the [fiscal] pact the UK demanded – as it is in the British DNA – that the single market be taken more seriously…I’m convinced that continental Europe would have all the interest in accepting such demands.”

Separately, former Lib Dem leader Sir Menzies Campbell has argued that EU authorities are failing to fully follow the EU principle of subsidiarity, under which decisions should be made as close to citizens as possible, singling out the Working Time Directive in particular.
Independent European Voice Handelsblatt DPA Le Figaro: Monti Evening Standard

Greek PM: Delays in agreeing second bailout risk uncontrolled Greek default in March
Greek Prime Minister Lucas Papademos said yesterday, “Without an agreement with the troika and further funding, Greece faces an immediate risk of an uncontrolled default in March.” The WSJ reports that the Greek government insists that significant progress has been made in the negotiations with private Greek bondholders, with a deal expected in the next couple of weeks.

Meanwhile, the level of overnight borrowing from the ECB’s emergency marginal lending facility remained high yesterday at €15bn. The on-going trend has led to speculation that an individual bank in the eurozone is under significant pressure and may be close to failing, although there could also be technical explanations such as banks’ management of collateral or unexpected delays to transactions.

Italian bank UniCredit saw its stock plummet yesterday after attempting to raise €7.5bn in capital by offering shares at a much larger than expected discount to existing shareholders. The issue is seen as a litmus test for how European banks will fair this year in their attempts to raise the €115bn in capital required by the European Banking Authority. Il Sole 24 Ore reports that Italian Prime Minister Mario Monti will meet French President Nicolas Sarkozy in Paris tomorrow and German Chancellor Angela Merkel in Berlin on Wednesday to prepare for the upcoming summit of EU leaders.

Germany succeeded in selling €4bn in 10 year bonds yesterday although demand was significantly subdued due to record low yields. Portugal also held a successful auction of short term debt, seeing rates fall compared to last month’s auction. Separately, the Irish government announced yesterday that it looks likely to meet its deficit target for the end of 2011, despite tax revenues being lower than expected.
FT CityAM WSJ BBC Le Monde Expansión Handelsblatt Handelsblatt 2 FT 2 CityAM 2 Guardian WSJ 2 FT 3 CityAM 3 WSJ 3 TelegraphCityAM 4 WSJ 4 IHT Irish Independent Il Sole 24 Ore EUobserver Times Telegraph 2 Independent: Ben Chu FT: Giles FT: Perotti FT: BarberCityAM: Hellier WSJ: Zhong Irish Independent BBC: Hewitt

EU Court rejects legal complaint against ECB bond-buying programme
Bloomberg reports that the EU General Court yesterday rejected the legal complaint brought by a lawyer working for the Europolis group – which is headed by German Professor Markus C. Kerber – against the ECB’s purchases of sovereign debt and its continued acceptance of Greek, Irish and Portuguese debt as collateral for lending. The Court ruled that the claim was “manifestly inadmissible” since it was filed two months after the start of the ECB’s decisions.
Bloomberg

In an interview with Die Welt, the instigator of the FDP’s internal referendum on the European Stability Mechanism, Frank Schäffler, insists that despite its defeat, he will continue to oppose the bailouts from within the party and does not entertain the possibility of joining a new anti-bailout party, arguing that “let [such voters] join the FDP in order to make the significant minority of bailout opponents into a majority. That makes more sense than to dream of a new party.”
Welt: Schäffler

Expansión: Spain considers requesting EU-IMF aid;
Spanish Economy Minister envisages €50bn of new bank capital provisions on bad real estate assets
Expansión reports that Spanish Prime Minister Mariano Rajoy is considering asking for EU-IMF funds to help Spain cope with the restructuring of its financial sector, but the Spanish government promptly denied the reports. Meanwhile, in an interview with the FT, Spanish Economy Minister Luis de Guindos estimated that, as part of a new round of reforms of Spain’s financial sector, Spanish banks will need to set aside an extra €50bn in capital provisions on the bad real estate assets they hold, adding that “in the great majority of cases, they can provide it themselves from their profits…and it could be done not in one year but over several years.”

De Guindos also said that the government is planning to introduce “additional instruments of control and budgetary adjustment for the finances of the autonomous regions.” This follows reports by El País that the central government had to step in to help the Valencia region pay back a €123m loan to Deutsche Bank. Meanwhile, the Spanish government is to unveil a new set of measures to reduce public deficit today, focusing on the abolition of superfluous public bodies and agencies.
El Economista El País El País El Mundo ABC FT FT 2 FT: de Guindos WSJ El País

Die Welt reports that an EU financed ski-slope on the Danish island of Bornholm –which due to a lack of snowfall is only operational for several days a year – is to receive a further €33,000 of EU funds for the purpose of expanding its ski lifts. The article notes that the ski-slope, highlighted in Open Europe’s 2008 “100 Examples of EU Fraud and Waste”, is not an isolated example, and cites other cases from Open Europe research.
Welt Open Europe Research

PwC: EU plans may “kill off” occupational pension schemes
The Telegraph reports that a study by accountancy firm PwC estimates that European Commission plans to extend Solvency II-style capital requirements to occupational pension schemes could cost pension funds between £250bn and £500bn. Raj Mody, head of PwC's pensions group, warned, “While attempting to improve pension scheme security, these new rules could actually kill off occupational pension schemes altogether. The additional costs for companies would ultimately be borne by individual savers, who would see less generous pensions.”
CityAM Telegraph

Hungary was forced to cancel a bond auction yesterday as yields on its ten-year bonds soared to 10.5%, and the value of the Hungarian forint fell to a record low against the euro.
EUobserver Telegraph Welt Guardian: Kinsky

The BBC reports that China’s top airlines have said that they will not pay a new EU aviation carbon tax under the EU’s Emissions Trading Scheme (ETS) from 1 January.
BBC

European Voice notes that, in the report on the first year of operations of the EU’s diplomatic service, the EEAS, EU Foreign Minister Baroness Catherine Ashton acknowledged the need to improve policy formulation and delivery within the EEAS, but failed to provide details as to how she plans to do so.
European Voice

EUobserver reports that EU Employment Commissioner Laszlo Andor will next month publish non-binding recommendations for EU countries to raise their retirement ages to cope with the economic problems associated with an ageing population.
EUobserver

The WSJ reports that the price of oil has risen in advance of an expected EU embargo on Iranian oil due to be formally approved by EU foreign ministers later this month.
WSJ CityAM EurActiv European Voice BBC Irish Times