Open Europe : Press Summary
(07/09/2012) Barroso calls for new treaty and more integration
European Commission President José Manuel Barroso has made his clearest call yet for fundamental change to the EU treaties, saying on Saturday that, “Europe and the principles of the Treaty need to be renewed. We need more integration, and the corollary of more integration has to be more democracy. This European renewal must represent a leap in quality and enable Europe to rise to the challenges of the world today.
WSJ Observer EUobserver
German Finance Minister Wolfgang Schäuble has said he believes it is unlikely that a new Europe-wide banking supervisory system will be up and running in the New Year telling a German radio station “The ECB has itself said it does not have the potential to supervise the European Union's 6,000 banks in the foreseeable future” reports the Irish Times.
RTE Irish Times
OECD calls on Draghi to launch “unlimited” bond buying programme;
Bundesbank resistance calls Draghi’s plans into doubt
The European Central Bank should launch an “unlimited” bond buying programme to stem the debt crisis, the Secretary-General of the OECD has warned. Angel Gurria told a conference in Slovenia, “The system is at stake, the euro should not be put at risk ... the EFSF and the ESM
ECB President Mario Draghi was expected at this Thursday’s crucial ECB meeting to unveil a new bondbuying programme to help Spain and Italy go on without a formal bailout. However, reports suggested that Bundesbank chief Jens Weidmann threatened to quit in protest at the plan. “By being so outspoken beforehand, he hopes to limit the extent of the operation,” a senior ECB source told Reuters. “That would constantly put a question mark over how far we could go.” Fellow German ECB policymaker Jörg Asmussen said the ECB should only buy bonds if the IMF was involved in setting an economic reform programme in return.
Handelsblatt columnist Torsten Riecke writes that Chancellor Angela Merkel is increasingly inclined to back Draghi over Wiedmann: “It is an irony of history, that the Bundesbank, which was supported by the German policy establishment as a model for the ECB, is now sidelined by the new Merkel / Draghi axis.
Telegraph Guardian Saturday's Telegraph IHT Sunday Times FT Sunday Telegraph: Halligan Handelsblatt Handelsblatt 2
FTD reports that Slovenia may be the next country to need bail-out. Janez Jansa, Slovenian PM, is quoted as saying, “A national bankruptcy may happen in October if we cannot sell sovereign bond” adding it is "practically impossible" to obtain financing on the markets.
In an interview with Bild am Sonntag, Spanish PM Mariano Rajoy proposed a three step plan to fiscal union with eurobonds, in which member states first realise convergence criteria by 2013-2014, set up a European budget authority by 2015-2016 to control national budgets, and finally introduce eurobonds by 2017-2018.
The FT reports that Spain has announced its plans for a “bad bank” in order to clear the way for an EU bank bailout but has been forced to inject more capital into Bankia. Separately, European Voice reports that the Spanish central bank has said that €315.6 billion of deposits have been taken out of the country in the past year
Saturday's Guardian European Voice FT Weekend El Pais FTD
Former Dutch Central Bank Governor criticises politicians for telling half-truths about euro crisis
De Telegraaf reports former Dutch Central Bank Governor Nout Wellink has criticised Dutch politicians for not being honest enough about the issues raised by the eurozone crisis, saying: “If you have started a monetary union, you will need to complete the story. That includes a second pillar. That is more political integration. And there even isn't a way back.” In the Sunday Telegraph, Harriet Alexander looked ahead to the Dutch elections, noting that, “The rise of the Dutch Socialist Party could end Holland's reputation as a Brussels-friendly member of the beleaguered Eurozone club.”
Meanwhile, on Dutch news site De Dagelijkse Standaard, Open Europe's Pieter Cleppe argues that the Dutch employers’ federation campaign backing both EU and euro membership is wrong to link the two, writing that people should instead be questioning whether “the euro might threaten all the benefits that EU membership has offered”
De Dagelijkse Standaard: Cleppe Open Europe blog Sunday Telegraph Observer Telegraaf
Deutsche Welle notes that Frank Stronach, an 80-year-old auto parts magnate, is due to launch a new political party in September, which will campaign to leave the euro and stand in the 2013 Austrian elections.
Over the weekend, France's Finance Ministry said it would guarantee the debt of Caisse Centrale du Crédit Immobilier de France, or CCCIF, after the bank sought emergency assistance. The government will underwrite nearly €5 billion in immediate financing for the bank.
WSJ WSJ 2 BBC FT Les Echos
An FT/ Harris poll finds that only a quarter of Germans think Greece should stay in the eurozone or get more help.
The FT reports that Angela Merkel says Germany has no interest in starting a trade war with China as EU officials use their powers to investigate Chinese sola panel exports.
FT FT 2 Euractiv
Euractiv reports that France and other established wine producers are lobbying to retain restrictions on emerging EU wine producers due to expire in 2016.
EurActiv France reported. Euractiv
The European Commission will propose that by 2020 40% of all major EU company boards should be female, reports Die Welt.
An opinion poll prior to Finland’s municipal elections predicts that Timo Soin’s euro - critical Finns Party could triple their share of the vote obtaining 16.3%.
Iltalehti poll Yle poll
MEPs leak reports of ECB bond buying
Following a closed door meeting between ECB President Mario Draghi and the European Parliament’s economic and monetary affairs committee, MEP Jean-Paul Gauzes told Bloomberg that Draghi had suggested ECB purchases of shorter maturity debt, under three years, would not constitute ECB financing of governments – thereby dismissing concerns over the legality of such purchases. Sven Giegold MEP, also present at the meeting said, “I assume after this meeting that there will continue to be
Writing in the FTD Sven Oliver Clausen recommends that Bundebank President Jens Weidmann, who he terms as “the banker of the people”, should not shy away from informing the public if his independence is threatened either by Draghi or by German Chancellor Angela Merkel and domestic policy objectives.
WSJ Times Bloomberg Telegraph Handelsblatt FTD: Clausen
Spanish government to inject €4.5bn into Bankia as Andalucia requests government aid
The Spanish government announced last night that it will immediately inject €4.5bn into Bankia to raise its capital requirements above the minimum requirement. The money will be repaid once the Spanish bank bailout is finalised in November according to officials. Meanwhile, Andalucia yesterday became the fourth Spanish region to suggest it will need government aid, asking for a state loan of €1bn. However, the regional government said it would not formally make the request until it became clear what conditions would be attached to the loan.
FT WSJ FT CityAM WSJ Review & Outlook
Bulgarian Prime Minister Boyko Borisov and Finance Minister Simeon Djankov have said their country has indefinitely frozen plans to join the Single Currency. “The momentum has shifted in our thinking and among the public.…Right now, I don't see any benefits of entering the euro zone, only costs,” Mr. Djankov said.
Germany's Finance Minister Wolfgang Schäuble said yesterday “The constitutional court will not block, I am sure, the treaties of the fiscal compact and the ESM
AFP Irish Independent Reuters
Moody’s last night moved the EU’s triple-A rating to a negative outlook.
CityAM Telegraph Le Monde
Kimmo Sasi, Chairman of the Finnish Parliament’s Finance Committee, argues in Hufvudstadsbladet that: “If a euro country does not fulfil the growth pact conditions, it first would get a warning. Then an arrangement could be put in place to force a country out of the currency union after two ‘red cards’.”
French PM warns coalition MPs that a close vote on fiscal treaty “would mean weakening France”
The French government has moved to avert an embarrassing backbench revolt among governing Socialist and Green party MPs on the EU fiscal treaty, warning that a close vote in parliament would weaken France on the European stage. Marine Le Pen has said that she will organise a campaign against the fiscal treaty reports the Telegraph.
Irish Times Telegraph
House of Commons debates ratification of EU treaty change
In the House of Commons last night, William Hague said that ratification of the EU treaty change establishing the eurozone’s permanent bailout mechanism does not trigger the ‘referendum lock’ as it will not affect the UK, and added, “the UK will no longer be exposed to any future programmes of financial assistance for the eurozone through the EU budget.
The FT notes that the Dutch centre-left PvdA party is gaining ground in polls ahead of the 12 September elections, increasing the chances of a coalition of the centre.
Open Europe blog: Dutch election primer FT WSJ
EU proposes sanctions if companies fail to meet gender quotas
According to European Justice Commissioner Viviane Reding’s proposals, national authorities would be able to choose one or all of the following options to enforce a quota of 40% of the seats on supervisory boards being filled by women: financial penalties; exclusion from bids on public contracts; restricting access to national and European subsidies; and requirements to cancel appointments of women or men when a board is too heavily tilted toward one gender.
IHT Telegraph City AM
The FT reports that, according to data from the ECB, borrowing costs for small businesses in struggling eurozone countries are skyrocketing, making these companies less competitive and further driving divergence within the single currency.
FT FT 2
The IHT looks at the ways US firms are planning for the possibility of a Greek exit from the euro.
The IHT notes that, according to official statistics, 30,000 Spaniards registered to work in Britain in the last year, a 25% increase from a year earlier.
Cyprus will today present its latest deficit cutting plan ahead of the next round of talks as it looks to secure a eurozone bailout.
Glyn Moody in an article for Computer World UK argues that the European Commission is attempting to use the E-commerce directive to reintroduce elements of the ACTA treaty rejected by MEPs.
Following reports that the plenary chamber in the European Parliament had to be shut yesterday due to a cracking ceiling, Bild notes the cost of EU premises: the new Council building costs €290m, construction and rental fees of the Commission buildings in Brussels come to €204m, and the EP's “House of European History” project has, so far, cost €31m.
Handelsblatt: Quartet of EU presidents working on plans for a new eurozone parliament
Citing EU diplomats, Handelsblatt reports that plans being developed by Council President Herman Van Rompuy, Commission President José Manuel Barroso, Eurogroup chief Jean-Claude Juncker, and ECB President Mario Draghi, would see the creation of a new ‘eurozone parliament’. The new parliament, in which both MEPs and national parliamentarians would sit, would have powers over eurozone members’ fiscal and economic policy. Other proposals include a stronger role for the European Commission to veto national spending plans. The far-reaching proposals would require changes to the EU Treaties.
ECB to announce unlimited bond purchases but with emphasis on conditions
Bloomberg reported yesterday that the ECB will at today’s monthly meeting announce a new bond buying plan termed “monetary outright transactions”, which will involve potentially unlimited purchases of short term government debt (under three years). However, the purchases would be sterilised to offset any inflation fears and the ECB will not publicly announce a cap on the spread in borrowing costs between different eurozone members. Countries wishing to receive such assistance will also have to apply to the eurozone bailout funds and adhere to a strict reform programme.
Reports suggested that Bundesbank President Jens Weidmann remained the only member of the ECB’s Governing Council to object to the proposed plan. The FT reports that Netherlands, Belgium, Luxembourg and Finland have insisted that a discussion of plans for a credible exit strategy from the bond buying be added to the agenda for today’s meeting. In a joint statement leading business groups from France, Germany, Italy and Spain issued a call for greater action from both governments and the ECB to safeguard the euro, although they added that the current pessimism was unjustified with structural reforms beginning to take effect. Carsten Schneider, budgetary spokesman for the SPD, accused German Chancellor Angela Merkel of forcing the ECB to break its mandate and take on a governing role due to her inability to make decisions, according to Handelsblatt.
Bloomberg FT WSJ Bloomberg 2 Independent Irish independent Euractiv BBC: Hewitt Telegraph The Irish Times Corriere della Sera Sole 24 Ore Le Monde Le Monde2 Le Figaro Repubblica FT Times: Leader Times Guardian European Voice FT: Atkins FT: Barber FT: Davies Handelsblatt
Persson: Cheap ECB cash could prove to be the worst form of bailout
Writing on his Telegraph blog Open Europe’s Director Mats Persson warns against becoming reliant on ECB intervention to save the euro, arguing, “Once the ECB taps are opened, it’s incredibly hard to turn them off without causing huge market distortions and creating an even graver crisis than the one that the original intervention was meant to stave off. That is why the ECB is right to insist on countries committing to reforms (through an intergovernmental decision) before it bails them out. Perhaps that mix could work for struggling Eurozone countries. But there's also a huge risk that Europe, in the long-term, will pay a very high price for what is only (at best) a short-term fix.”
Austerity puts strains on Greek coalition;
New poll puts far-right Golden Dawn as third largest party in Greece
Kathimerini reports that Greek Prime Minister Antonis Samras has dismissed his coalition partners’ fears over the latest €11.5bn austerity package, dismissing calls to relax some of the more onerous measures. The Greek government will restart discussions with the EU/IMF/ECB troika tomorrow, although officials have insisted the talks will focus on current reform plans, dismissing reports of plans for a six day working week and deeper labour market reform. Meanwhile, Dutch Prime Minister Mark Rutte said during a televised election debate that “Enough is enough…the dikes around Greece are high enough. Leaving the euro may become unavoidable. That is a decision for Greece.”
A new poll published today in Greek weekly To Podiki puts Golden Dawn as the third largest party with 10.5% of the vote, behind New Democracy on 25% and SYRIZA on 24%, but ahead of PASOK which has slipped to 8%.
Kathimerini Kathimerini 2 Euractiv
The FT reports that, according to unnamed officials, Italy could be forced to seek an EU bond buying programme in exchange for significant reforms as uncertainty looms ahead of the next election.
Germany yesterday struggled to issue ten year debt, managing only to sell €3.6bn of bonds compared to a target of €5bn as investors waited to hear details of potential ECB bond buying.
The Finnish economy contracted by 1.1% in the second quarter of the year as the eurozone crisis dampened demand for exports.
European Internal Market Commissioner Michel Barnier yesterday launched a consultation on the future of Libor and other similar key lending rates as he seeks to clamp down on financial manipulation across the EU.
Handelsblatt reports that the eurozone is considering introducing a minimum corporate tax to discourage “unfair” tax competition within the monetary union.
The IMF yesterday approved a €920 million loan tranche for Ireland, with the Irish Independent noting that new figures suggest the Irish economy expanded more than previously thought last year and the government is closer to reaching the debt targets set out by the troika.
Irish Independent Irish Times WSJ
European Commission trade officials are to open a formal investigation today into Chinese solar panel manufacturers to examine whether or not the companies violated trade rules by dumping their products, or selling them below cost, on the EU market.
FT WSJ Le Figaro
Poland will miss its deficit target this year, the country's finance minister said yesterday, as the economy shows increasing signs of a slowdown caused by slumping domestic demand and the impact of the eurozone crisis.
German outcry against ECB plans for bond purchases;
Welt: “Financial markets celebrate the death of the Bundesbank”
As expected the ECB yesterday announced a plan to perform unlimited, but sterilised, purchases of government bonds from struggling countries which apply for a eurozone bailout programme. Open Europe produced an analysis of the decision which is cited by Bloomberg Businessweek, Forex info and El Economista. Open Europe’s Raoul Ruparel is quoted on the front page of City AM saying, “Borrowing costs are mostly a symptom of the underlying differences and problems – not a cause…Unless these issues – mismatched competitiveness, undercapitalised banks, lack of growth prospects and political uncertainty – are tackled then masking the gap in borrowing costs can only, at best, buy time.” The market reacted positively to the decision with borrowing costs dropping for struggling countries and stock markets rallying across Europe.
After Bundesbank President Jens Weidmann was the only member of the ECB Governing Council to vote against the measures. In a statement the Bundesbank said that Weidmann regarded the bond purchases “as being tantamount to financing governments by printing banknotes,” adding, “The announced interventions carry the additional danger that the central bank may ultimately redistribute considerable risks among various countries’ taxpayers.”
Meanwhile, the ECB decision drew widespread criticism in Germany. Die Welt argued that “Financial markets celebrate the death of the Bundesbank”, adding that Draghi had “brazenly broken with the principles of German monetary policy.” CDU MP Klaus-Peter Willsch said Berlin should “not shy away from an action before the European Court of Justice against the ECB.”
However, German Chancellor Angela Merkel supported the decision, saying the ECB had acted “within the framework of its mandate”. DPA reports that SPD parliamentary leader Frank-Walter Steinmeier argued that the ECB’s decision is the “documentation of Chancellor Merkel’s failure...
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Rajoy repeats ‘wait and see’ position on Spanish bailout request
Spanish Prime Minister Mariano Rajoy met with German Chancellor Angela Merkel yesterday just as Mario Draghi was making his announcement on future ECB intervention in the crisis. Asked whether Spain would now seek a bailout, Mr Rajoy said, “When there is news I will tell you. I haven't had time to read Draghi's speech yet.” He said he had not committed to any new reforms for Spain in his meeting with Merkel and had no intention of changing the pension system, which is an area where he has not yet cut spending.
Following the meeting, a Spanish government source said, “Our decision will depend on the conditions, on the detailed mechanism and on the need for the Spanish economy. Right now we don't see any emergency. We've sold three bonds this morning, all went well.” The source also said the Spanish government wanted to see first how the market would react to the ECB plan.
WSJ FT IHT FT: Gardener Euractiv Times: King Irish Independent
Germany wants tighter controls on deficit rule breakers’ access to EU budget funds
EurActiv reports that Germany has tabled proposals for the long-term EU budget, setting hurdles for countries with excessive deficits to access EU funding. The German proposal adds, “This applies in particular to those cases in which a member state is subject to a macroeconomic Excessive Imbalance Procedure, has to reduce its excessive deficit, has failed to take measures to implement adjustment programmes or is not complying with the conditions attached to ESM
Greek unemployment climbed to 24.4% in June from 23.1% in May, with 1.2m people out of work, according to figures released yesterday by Elstat, the independent statistical agency
FT Guardian: Lapavitas Euobserver
Money Marketing reports on the European Parliament’s attempts to insert a cap on banking bonuses into legislation implementing bank capital rules (CRD IV). They report the Parliament may now agree to a German compromise. Open Europe’s Raoul Ruparel is quoted discussing the issue.
Open Europe is quoted in the Mail as saying that the Advocate General of the ECJ’s recommendation to reject a bid by MEPs to reduce the number of times they have to shuttle between the Strasbourg and Brussels parliaments is another illustration of how the ECJ "works against taxpayers to increase costs.”
Handelsblatt reports that a recent Bloomberg survey of traders, investors and analysts found that 85% of the respondents expected that Spain will request a bailout, while 59% believe that Italy will avoid one. 92% expect a Greek default, and 56% believe that the country will be ejected from the eurozone.
An online survey by YouGov has found that 53% of Germans are against the transfer of more competencies to the EU against 27% in favour, with 54% of the respondents wanting the German constitutional court to decide against the ESM and the fiscal pact reports De Welt.