Wednesday, 1 February 2012

Open Europe

Europe

David Cameron under pressure in Parliament over “phantom” veto;
Czech government split over decision not to join the fiscal treaty
David Cameron yesterday faced criticism from some Conservative backbench MPs over his decision not to challenge the role of the EU institutions under the new European fiscal treaty, while Labour leader Ed Miliband criticised what he called a “phantom veto”. In his statement to the House of Commons, the Prime Minister insisted, “We will watch this closely and if necessary we will take action, including legal action, if our national interests are threatened by misuse of the [EU] institutions.”

On his Telegraph blog, Open Europe’s Director Mats Persson argues that “contrary to popular belief, if played cleverly, the veto could remain a source of UK leverage in Europe for years to come…the threat of legal action is Cameron's greatest asset at the moment. Any legal challenge would be a messy, lengthy affair, involving a lot of uncertainty. The Germans in particular – ever conscious of their Constitutional Court – know that the current arrangement involving an ad hoc euro treaty is legally dubious. As long as the Germans feel uncomfortable, Cameron maintains his leverage.” Mats also appeared onRadio Sweden discussing Cameron’s veto.

In an op-ed in Spanish daily La Razón, Open Europe’s Vincenzo Scarpetta argued, “The fiscal treaty in itself would not change much structurally for Britain in Europe. Cameron’s biggest challenge is what happens next: if the eurozone takes a quantum leap towards greater integration…Britain will face a slew of new challenges, including how to safeguard one of its greatest economic assets, its financial services industry, when so many decisions could be pushed inside the eurozone. To deal with such tensions, a more open and flexible model for European cooperation could be the right way forward – for the UK and the EU as a whole.” Open Europe’s Raoul Ruparel appeared on RTE Drivetime and is quoted by theWashington Post, Chicago Tribune, Bloomberg, Businessweek, Lidovky and several other papers discussing the fiscal pact and the EU summit.

A leader in Sweden’s largest quality daily Dagens Nyheter laments the “miserable form of secrecy” surrounding the negotiations over the fiscal treaty, noting, “Thanks to the think-tank Open Europe, which has obtained and published the drafts of the treaty on its website, journalists and other interested people have still been given access to the documents.” Meanwhile, FT Deutschland reports that the Czech ruling coalition is split over the decision not to join the fiscal treaty, as the Foreign Minister Karel Schwarzenberg said that Prime Minister Petr Necas’ attitude “harms the Czech Republic.” Separately, pressure on the Irish government is growing, as Fianna Fáil and Sinn Féin – Ireland’s two main opposition parties – both call for a referendum on the fiscal treaty, reports the Irish Times.

Tensions rise over second Greek bailout as German government faces rebellion
A deal on the voluntary Greek restructuring could be struck as early as tomorrow, although tensions are rising over the second Greek bailout which should follow the restructuring. Germany and the IMF continue to insist on greater commitment to austerity given Greek failure to meet many of the targets set out for it over the past year. The Guardian reports that there could be a crisis meeting of Greek party leaders tomorrow in an attempt to find consensus to support the austerity measures demanded by the EU and IMF.

Bild reports that around 40 MPs from the CDU, CSU and FDP coalition could rebel against the second Greek bailout, meaning that the government may only win a narrow majority. Rheinische Post reports that CSU General Secretary Alexander Dobrindt has called for Greece to voluntarily leave the eurozone if “it is unable to summon the necessary will to implement the inevitable financial restructuring programme.”

Portuguese bond yields fell yesterday after a relentless rise over the past few weeks thanks to ECB interventions in the market. Meanwhile, eurozone unemployment remained at record highs in December, although the individual country data highlighted continuing divergences with German unemployment reaching the lowest levels since reunification, while Portugal and Greece saw joblessness reach record levels.

German Chancellor Angela Merkel leaves today on a state visit to China, where among others, she will again try to solicit Chinese investment in the eurozone’s bailout fund, the EFSF, reports FT Deutschland.

Polish Finance Minister Jacek Rostowski said this morning that while Poland would fulfil the fiscal criteria for eurozone entry by 2015, it ought to wait until the eurozone’s problems were “fixed” and no longer posed a threat to its members.

Derek Scott: IMF should not bail out states that refuse to leave the eurozone
In a letter to the FT Derek Scott, the Vice-Chairman of Open Europe, argues that if EU states requiring IMF funding do not leave the eurozone the IMF is unlikely to get their money back. He argues that a “traditional IMF package has three elements: reduced public expenditure, increased taxes and a depreciation of the currency” but as the last element is impossible within the eurozone “there is not the slightest chance of Greece, Portugal, Spain and Italy (and probably Ireland) getting out of the current mess.” He goes on to argue that if a country exited the eurozone there would be an appropriate role for the IMF in helping to stabilise the transition and a good chance of the IMF getting its money back.

Andrew Tyrie, the Chairman of the Treasury Select committee argues in the WSJ that the UK should contribute to the IMF but that in return the IMF must impose conditions on Eurozone countries that tackle the underlying problems.

The website of Belgian magazine Knack has featured Open Europe’s website as its “site of the day”.

Reuters reports that the Financial Secretary to the Treasury Mark Hoban has told Parliament that a French Financial Transaction Tax would encourage business to move elsewhere. The Telegraph reports the Mayor of London Boris Johnson and the Head of the British Bankers’ Association Angela Knight have concluded that London would benefit.

French presidential frontrunner François Hollande has increased his lead over incumbent Nicolas Sarkozy to 9%. In the most recent poll, the socialist candidate stands at 34%, Sarkozy at 25%, and the far-right Front National leader Marine Le Pen at 15%, down by 3%.

Negotiations between the Commission, Parliament and member states on trading derivatives regulation reached a deadlock yesterday, after MEPs called for an increase in the mediatory powers of the European Securities and Markets Authority.

Dutch Interior Minister, Gerd Leers has defended the installation of cameras on the German/Dutch border as compliant with EU rules and the Schengen code.

The FT reports that the Dutch Socialist Party has gained in popularity as a result of the eurozone crisis, doubling their vote to 20%. The Socialists are attracting Dutch voters through their strong message against government austerity measures and eurozone bailouts.

Die Welt reports that Internal Market Commissioner Michel Barnier has said that if remuneration in the financial services sector continues to contravene “reasonable grounds, common sense and morality” he will bring in additional measures to tackle the issue by the end of the year. The measures could include an upper limit on pay differentials between the highest and lowest salaries within a bank.

Handelsblatt reports that the EU Commission could impose a fine totalling millions of euros on Goldman Sachs as a result of alleged anti-competitive behaviour.

The European Parliament is being called to reject EU-US agreement of sharing the information of trans-Atlantic flight passengers, in a protest lead by Dutch MEP Sophie In’t Veld. The deal, which is seen by the MEP as failing to meet European standards of data-protection, would enable passenger’s contact and bank details to be held by the US for 15 years.

The WSJ reports that exchange operators Deutsche Börse AG and NYSE Euronext are preparing for their yearlong planned merger to be rejected following an announcement by EU regulators that the plan is anti-competitive.

New on the Open Europe blog

Calm down dear: Cameron’s EU veto isn’t dead yet

Posted by Britannia Radio at 19:50