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German Economy Ministry: New eurozone budget rules should include 2% deficit limit for member states;
France wary of German plans to transfer budgetary sovereignty to Brussels
A German Economy Ministry document seen by Die Welt sets out what could potentially form part of EU Treaty changes to achieve greater eurozone budgetary integration, which include a 2% deficit limit for all members, the possibility of withholding structural funds from those who break the rules and the creation of an independent ‘stability board’ to oversee the integration process. According to Bild, “To avoid the impression of a two-speed Europe, [French President Nicolas Sarkozy and German Chancellor Angela Merkel] are courting Poland and Sweden to join [new economic governance plans] as non-eurozone members. However, little consideration is being given to the EU Commission and the UK.”

Les Echos reports that, in what has been seen as a sign of France’s reluctance to give the EU institutions more powers to enforce budgetary discipline on eurozone countries, French Budget Minister Valérie Pécresse yesterday told reporters, “What we want is greater budgetary discipline, but a budgetary discipline enforced by the states, with a real participation by national parliaments. This question of sovereignty does not arise for us.”

Meanwhile, during a press conference in Brussels yesterday, French Socialist party’s candidate to next year’s presidential elections, François Hollande, criticised German plans to allow the ECJ to impose sanctions on eurozone countries breaching EU deficit and debt rules, arguing, “I will never accept the fact that, in the name of control over national budgets…the ECJ can be judge of the expenses and revenues of a sovereign state.” Prominent Socialist MP Arnaud Montebourg yesterday warned, “The question of German nationalism is re-emerging through Merkel’s à la Bismarck policy.”
EUobserver Coulisses de Bruxelles Coulisses de Bruxelles 2 Libération Le Figaro: Editorial Le Figaro Irish Times Le Figaro 2 Les Echos FT Welt SueddeutscheWelt Bild

Central banks move to boost financial markets against eurozone crisis
In a coordinated move by six central banks, including the ECB, the rate charged on lending under the dollar swap lines from the Federal Reserve was cut in half to 0.5% yesterday. The ECB also announced it would reduce the amount of collateral it demands in return for access to the dollar swap line. The moves are designed to ease the access to liquidity for banks around the world. Following the announcement global financial markets jumped significantly.

Meanwhile, EU finance ministers have stepped up the pressure on the ECB to intervene in the eurozone crisis, with Finnish Finance Minister Jutta Urpilainen saying, “If there’s nothing else left on the table and we’re still in crisis, then I’m ready to think about strengthening the role of the ECB.” Didier Reynders, Belgian Finance Minister, said that there are a “number of possibilities on the table” but all involve the ECB taking “stronger action,” according to the FT. German Finance Minister Wolfgang Schäuble didn’t change his stance on the ECB, but did accept that increasing the resources of the IMF may be necessary, saying, “We are prepared to increase the resources of the IMF through bilateral loans. Naturally, the details would have to be discussed.”
FT CityAM CityAM 2 WSJ EUobserver BBC IHT IHT 2 Independent Irish Times Times Mail Telegraph Telegraph FT 2 Irish Times FT 3 FT 4 CityAM 3 CityAM 4Guardian Telegraph Express WSJ 2 BBC Irish Times Irish Times EUobserver Il Sole 24 Ore CityAM 5 WSJ 3 Jornal de Negocios

Times: Cameron prepared to concede ground on repatriating powers from Brussels to resolve eurozone crisis
The Times reports that, given the severity of the eurozone crisis, Prime Minister David Cameron is prepared to forgo the chance of repatriating powers from Brussels, including added protection for the City of London from EU directives. Cameron is due to meet with French President Nicolas Sarkozy tomorrow, and he is reportedly prepared to accept the 17 eurozone countries agreeing to closer integration even without the blessing of non-euro members.

However, Employment Minister Chris Grayling is quoted in the Telegraph as saying, “First and foremost in any process that might take place – however long it takes – the most important thing will be to protect the position of non-eurozone member states.” On the possibility for the UK to use support for Treaty change to seek repatriation of EU employment law, Grayling said, “We are in a world of flux. I couldn’t say that by X we intend to achieve Y, the situation is much too complex…It is not about individual pieces of [EU] legislation like the Working Time Directive.”
Open Europe research Times Telegraph Times: Cavendish

In the Telegraph, Prof. Ragnar Lofstedt, author of an independent review of health and safety legislation commissioned by the Government, cites research from Open Europe’s ‘Still out of control’ report which showed that that EU Directives accounted for 94% of the cost of UK health and safety laws introduced between 1998 and 2009.
Open Europe Research Telegraph: Lofstedt

Former EU Commissioner Bolkestein: Euro break-up is “unavoidable”
In an interview with AD, former Dutch EU Commissioner Frits Bolkestein says that a break-up of the euro is “unavoidable”, adding, “We constructed something that does not work in the long term.” He goes on to argue, “Eurobonds are a disastrous idea. They mean that the Netherlands would have to pay more interest, up to €7bn more every year. We already have more than enough problems to save €18bn in four years.”

The frontpage of Handelsblatt features a comment by German economist Gustav Horn, arguing, “I think the euro has only three to six months left” if current policies remain unchanged. Meanwhile, in the FT, former ECB Chief Economist Otmar Issing looks at the ECB’s role in the eurozone crisis, arguing, “The situation in the euro area is fundamentally different from the US or the UK. No one would argue that the Fed should guarantee the debt of individual states…If the ECB goes in the direction of becoming the ultimate buyer of the public debt of member states detailed consequences are hard to predict. However, one thing seems to be certain. It would be a daunting challenge to restore credibility.”
AD: Bolkestein Handelsblatt BBC: Hewitt IHT: Erlanger IHT: Leader Independent: Whittam Smith Times: Wighton FT: Issing FT Editorial WSJ Review&OutlookWSJ: Melloan WSJ Review&Outlook 2 WSJ: Wessel Telegraph: Warner Telegraph: Reece Guardian Guardian: Editorial

A leader in FAZ dismisses EU Internal Market Commissioner Michel Barnier’s proposals for an overhaul of the audit sector as “false proposals”, arguing, “None of the planned measures will counter concentration in the markets. On the contrary: market leaders will profit from their use, not the smaller firms.”
FAZ

Polish President “annoyed” by Sikorski’s pro-Germany speech
Gazeta Wyborcza reports that ahead of his speech in Berlin in which he called for a more integrated Europe and for Germany to play a more leading role in European affairs, Polish Foreign Minister Radoslaw Sikorski did not consult either Prime Minister Donald Tusk or President Bronislaw Komorowski, who was reportedly “annoyed” by the speech. Jaroslaw Kaczynski, leader of Poland’s opposition Law and Justice party, has called for Sikorski to face a State Tribunal on the grounds that by calling for Polish sovereignty to be limited, he violated the Polish Constitution.
Gazeta Wyborcza Welt

EU finance ministers agree to guarantee EU bank bonds
The WSJ reports that EU finance ministers yesterday agreed that national governments would work in concert to guarantee bonds issued by banks in order to allow them to raise unsecured, long-term funding. However, officials rejected a more ambitious proposal backed by the ECB and other EU institutions which would have created a single "syndicate" in which all member states would have jointly issued guarantees.
WSJ

Belgium’s politicians yesterday agreed the last details of a government deal, 535 days after June 2010 elections. The six-party coalition government led by French-speaking Socialist leader Elio Di Rupo is expected to be sworn in on Monday.
EUobserver BBC Bloomberg Le Soir Standaard Standaard 2

City AM reports that, according to a UK Treasury source, the Government could have to wait to implement its credit easing proposals until next spring, as they contend with EU state aid rules.
CityAM

An article in the Telegraph notes that a total of 48 British citizens were surrendered to other EU member states under the European Arrest Warrant scheme last year, compared with 145 during the previous seven years.
Telegraph

The lower house of the Italian parliament yesterday adopted in first reading a draft law introducing the balanced budget rule in the Italian constitution, reports La Repubblica.
Repubblica

In a press release trailing the publication of its latest Corruption Perception Index today, Transparency International noted, “Eurozone countries suffering debt crises, partly because of public authorities' failure to tackle the bribery and tax evasion that are key drivers of debt crisis, are among the lowest-scoring EU countries,” reports EUobserver.
EUobserver

The IHT reports that the European Commission is today expected to propose a new market-based system for allocating take-off and landing slots at European airports aiming at reducing travel delays.
IHT

The IHT reports that the European Commission yesterday proposed new measures that could make billions of euros of research and development financing conditional on any resulting inventions being marketed in Europe first.
IHT

World

EU foreign ministers are expected to discuss new measures against Iran today, following the attack on the UK embassy in Teheran, reports the BBC.Le Figaro notes that France temporarily recalled its Ambassador from Iran yesterday.
Le Figaro BBC

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