Daily Press Summary
New Open Europe report: EU farm subsidies and tariffs cost European consumers and taxpayers almost €90bn a year; Only 13.6% of CAP subsidies goes towards environmental aims
Open Europe has today published a new report looking at the EU’s Common Agricultural Policy (CAP), arguing that the on-going negotiations over the EU’s next long-term budget provide an opportunity for the UK to present a fresh and radical alternative for reforming a clearly failing policy. The report shows that the UK remains a big loser from the CAP having contributed £33.7bn between 2007 and 2013, but having only got back £26.6bn – a net contribution of £7.1bn. The report also notes that the cost to consumers and taxpayers across Europe of the EU’s farm subsidies and tariffs now stands at €86.9bn – of this, €52.5bn stems from CAP subsidies. In addition, the CAP fails to deliver ‘public goods’ on the scale that it should – the amount spent on explicit environmental aims in the UK is only 13.6%. By failing to differentiate between different types of land, direct CAP subsidies actively channel public resources away from where they could create the biggest environmental gain.
Open Europe’s report proposes a pragmatic mix: a new, radically revamped EU farm policy. The current CAP structure would be replaced with a system of agri-environmental allowances. Funding for member states would be allocated according to environmental criteria, such as bio-diversity, but would be administered nationally. Payments could then be transferred between farmers depending on where the environmental gain is the greatest. After complying with some minimum environmental standards, farmers would then be free to opt in or out of this scheme. By simultaneously streamlining the CAP budget, including devolving responsibility for rural development back to richer EU member states, such a system could reduce the UK’s contribution to the EU budget by £7.3bn over seven years.
Open Europe press release Open Europe research
G20 refuses to increase IMF funds until eurozone boosts bailout funds;
German Interior Minister calls for Greece to leave the eurozone
At this weekend’s meeting of the G20, finance ministers from around the world warned the eurozone that they would not commit any more resources to the IMF until the eurozone has increased the size of its bailout funds. However, German opposition to such move is said to be softening. European officials said that it is still unlikely that a decision will be made on whether to increase the eurozone bailout funds at this week’s EU summit.
On Friday, Greece launched its bond swap plan for private sector involvement in the second Greek bailout. The plan gives private bondholders until 8 March to decide whether to participate in the plan. Reuters reports that €50bn has been earmarked to recapitalise Greek banks after the swap takes place, most of which will be provided through the Hellenic Financial Stability Fund (HFSF).
Over the weekend German Interior Minister Hans-Peter Friedrich became the first German cabinet minister to call for Greece to leave the euro, saying, “The chances that Greece can renew itself and become more competitive are surely greater outside the currency union than within it.” According to an Emnid poll published by Bild am Sonntag, 62% of Germans are against the €130bn second Greek bailout compared to only 33% in favour. A similar poll in September found 53% against compared to 43% in favour. Today’s Bild front page calls for German MPs to reject the second Greek bailout.
In a letter to German MPs on Friday, German Finance Minister Wolfgang Schäuble warned “this may not be the last time” that Greece is offered financial assistance. Parliamentary Head of the FDP Rainer Brüderle said in an interview with WSJ Deutschland that he would probably not support further aid for Greece since “at some point, you reach the end of the line because further liquidity is not solving the problems.” Süddeutsche reports that both Schäuble and Economy Minister Philipp Rösler believe that the second Greek bailout will solve little and are in favour of a Greek default. However, the German Bundestag is expected to approve the second Greek bailout package in a vote this afternoon.
NTV reports that German Bundestag Speaker Norbert Lammert has warned that the Bundestag cannot approve the ESM, the eurozone’s permanent bailout fund, if the total size of the fund isn’t sufficiently clear. Lammert also added that the Bundestag may insert a clause which would require every future bailout or capital increase under the ESM to have full Bundestag approval. Open Europe’s Mats Persson is quoted by Deutsche Mittelstands Nachrichten arguing, “Germany wanted to a mechanism to handle the insolvency of states, but the ESM in its present form does not allow for this. Instead, it is a prelude to a full transfer union, with taxpayers collectively paying Europe’s debts. The ESM contains no accountability for those who ultimately decide how the money is to be used.”
Expansión reports that the Spanish government has adopted plans to allow private suppliers to recover, by the end of March, between €30bn and €50bn in overdue bills they are owed by Spanish municipalities – a move which is expected to expose the real size of Spain’s public debt.
FT FT 2 Telegraph CityAM WSJ WSJ 2 BBC Guardian EurActiv FT Weekend Sunday Telegraph Reuters BBC: Today EUobserver Bild am Sonntag FT 3 Guardian FT Weekend 2 Saturday’s Times Saturday’s Guardian CityAM 2 WSJ 3 EUobserver 2 Kathimerini Saturday’s Telegraph Le Figaro Kathimerini 2 Saturday’s Telegraph 2 CEPR briefing Saturday’s Times 2 Süddeutsche Zeitung Handelsblatt Der Spiegel NTV Bild Handelsblatt Deutsche MittelstandsNachrichten: Persson Deutsche MittelstandsNachrichten DPA FAZ NTV 2 Reuters 2 FAZ 2 FTD Der Spiegel Sunday Times Monde Les Echos Les Echos 2 Les Echos 3 La Tribune Expansión FT 5 Les Echos La Tribune
In an interview with Polish daily Rzeczpospolita, Open Europe’s Chris Howarth argues that the differences in the UK and Germany’s approach to European policy reflect the fact that Germany feels a historic obligation to pursue European integration, while the UK adopts a more pragmatic stance.
Second round of ECB long-term loans expected to top €500bn;
Die Welt: “ECB is destroying Germany’s creditworthiness”
Ahead of the second ECB Long-Term Refinancing Operation (LTRO) on Wednesday, the UK’s two partly nationalised banks, RBS and Lloyds, are expected to tap the offering for around €5bn and €10bn respectively. The total amount expected to be requested is around €500bn. Die Welt reports that the ECB now holds €263bn in peripheral sovereign debt from Southern European banks. The article argues, “The ECB is destroying Germany's creditworthiness in a way that goes unnoticed [as it] is giving billion euro loans to Southern European banks, which borrow that money to their governments.”
IHT Saturday’s Telegraph FT CityAM Welt Welt: Eigendorf
In an op-ed in Le Figaro, German Foreign Minister Guido Westerwelle suggests re-orienting EU aid for regions to benefit EU member states most adversely affected by the debt crisis, arguing, “The money is there, but unfortunately it’s not always invested where it’s most needed.”
Le Figaro: Westerwelle Open Europe research
In the Sun, Trevor Kavanagh lists a series of high-profile UK and European politicians who changed their mind on the euro, including former Lib Dem leader Charles Kennedy, Nick Clegg, and former Dutch EU Commissioner Frits Bolkestein.
Sun: Kavanagh Open Europe: They said it IHT: Dixon Telegraph: Bootle FT: Munchau FT: Atkins FT: Dizard CityAM: Bojesen WSJ: Nixon Sunday Times: Dey
The European Fund and Asset Management Association (EFAMA) has calculated that an EU-wide financial transactions tax would have cost the asset management industry €38bn had it been in place in 2011 – two thirds of the amount the European Commission has estimated the FTT would raise every year from the entire financial services industry.
FT Open Europe research
In an op-ed in Libération, French Socialist presidential candidate François Hollande writes, “Among the 60 commitments I have made to the French people, I have proposed creating a tax on all financial transactions, which you understand will be more ambitious than the one proposed by the outgoing majority.”
Libération: Hollande Le Monde
The BBC reports that The Prudential, the UK’s biggest insurer, is considering moving its headquarters from London to Hong Kong to escape the EU’s Solvency II rules for the insurance sector, due to come into force in 2014.
BBC Independent Telegraph
Speaking on French radio RTL, Nicolas Sarkozy said he will not put the new European fiscal treaty on budgetary discipline to a referendum if he wins re-election, due to the complexity of the issue. Separately, former Taoiseach John Bruton warned against holding a referendum on the treaty in Ireland, arguing that a victory of the ‘No’ could force the country out of the eurozone.
La Tribune Le Monde Nouvel Observateur Le Point FT Reuters
European Voice reports that the Danish rotating EU Presidency intends to push ahead with the adoption of an upgraded version of the EU’s Savings Taxation Directive. Negotiations have been stalling so far due to Austria and Luxembourg’s concerns over the impact of the new rules on their own culture of banking secrecy.
Seventeen Scottish skippers and a processing firm have been fined £720,000 for their participation in a fraud designed to evade EU fishing quotas and illegally sell vast quantities of mackerel and herrings, Saturday’s Independent reported.
Saturday’s Independent Saturday’s Guardian Saturday’s Times BBC