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Franco-German pledge to reform Schengen treaty; Sarkozy to pursue unilateral action; Hollande supports ECB reform; last poll results before election

20 Apr 2012

Berlin has lent its support to Nicolas Sarkozy’s election proposal for a “non-negotiable” reform of the free movement Schengen treaty in a Franco-German letter published today. Signed by the two countries’ interior ministers, the letter calls for greater powers for member states, who will be able to “at last resort…reintroduce internal frontiers for a period not greater than 30 days”, in “exceptional circumstances”, the definition of which will be at the discretion of national governments. On RTL this morning, Sarkozy claimed that he would introduce “three or four strong reforms at an international level” by the end of 2012.

In today’s Le Figaro, Sarkozy clarifies that he would not pursue an empty chair policy in European negotiations “as it no longer makes any sense in a 27 member state Europe”. However, he stressed that he was ready “to take unilateral measures until other [states] join us”.

In an interview on Europe 1 last night, Francois Hollande called for the ECB’s  refinancing operations to bypass banks and lend directly to states. He added “I know that Germany is totally hostile, so this is another topic for discussion”.  

Today is the last opportunity for candidates at the French presidential elections to campaign. Under strict electoral rules, polling institutes are also forbidden from publishing results after Friday.  In the latest Ipsos results, Hollande leads the first round with 29% of voting intentions, 3.5% ahead of Sarkozy on 25.5%. Far-right nominee Marine Le Pen is in third place with 16%, followed by Left-front candidate Jean-Luc Melenchon on 14%, four points ahead of centrist Francois Bayrou.
BBC Le Monde Le Monde 2 EurActiv FT WSJ CityAM FT 2 FT 3 Les Echos Liberation  Le Monde 3 Süddeutsche Le Monde 4 Telegraph Le Figaro: Sarkozy EUobserver Le Figaro

UK could have to pay an additional £900m into next year’s EU budget

Following the news that the European Commission is set to propose a £7.4bn increase in next year’s EU budget next week, the Telegraph reports that this would increase the UK’s net contribution to next year’s budget by £900m. Open Europe Director Mats Persson is quoted as saying that “The double standards here are extraordinary. The same Commission that is literally drawing up blueprints for how member states should cut spending proposes a massive increase to its own budget."
Telegraph

US, Canada and the BRICs hesitant over providing additional IMF funds;Lagarde insists it is in the UK’s interest to contribute more resources to the IMF
The IMF holds its spring conference in Washington, where G20 finance ministers will discuss increasing its funds by $400bn. The IMF said it was confident it would reach an agreement, as $320bn has already been pledged. The US has ruled out committing any additional funds. China and Brazil are reluctant to commit any more funds until emerging markets are given a larger say in how the IMF is run. Dow Jones reports that Canada has insisted that the IMF funds are “adequate” and looks unlikely to commit extra resources.

The UK Government said yesterday that any deal on increased resources must be done at the “global level” and must include “strict conditions”. The Government can commit a further £10bn without holding another parliamentary vote, which, given divisions over the issue within the Conservative party, it is keen to avoid. IMF Director Christine Lagarde said yesterday that it is in the UK’s “interest” to contribute more funds to the IMF, especially if it helps avoid a weak eurozone. Open Europe’s Raoul Ruparel appeared on BBC Radio 5’s ‘Wake up to Money’ show discussing the IMF and the eurozone crisis this morning.

Kathimerini reports that Evangelos Venizelos has called on the EU and IMF to give Greece an extra year to meet its deficit targets. The article also notes that both PASOK and New Democracy, the two main parties, have run into problems this week in drawing up their candidate lists with many candidates rejecting the chance to stand in the election. Le Monde reports on a new Greek plan which will see almost all companies submitting their transactions to a single government database in an attempt to crackdown on the level fraud in the economy.
FT CityAM Dow Jones WSJ Irish Times Les Echos Guardian Les Echos 2 Le Monde Les Echos 3 Les Echos 4 Les Echos 5 Les Echos 6 Guardian 2 BBC Wake up to money Kathimerini Handelsblatt El Pais Kathimerini 2 Le Monde 2 La Tribune Les Echos 7 Le Monde Coulisses de Bruxelles blog

Rift between Spanish government and regions grows
The confrontation between the Spanish government and the regions over this year’s budget is escalating. El País reports that Spanish Treasury Minister Cristóbal Montoro has rejected the adjustment plans of Catalonia and Andalusia – Spain’s two most populous regions. Catalan nationalist party Convergence and Union (CiU) has threatened to submit amendments to every single line of the draft budget to delay its approval in the Spanish parliament.
Cinco Días
El País El País 2 El Mundo Les Echos BBC Irish Independent Les Echos

Some EU members continue to push for maximum level of bank capital
Reuters reports that splits remain over the EU implementation of the Basel III bank capital requirements, with some countries still pushing for a harmonised maximum capital ratio. Denmark, which currently holds the EU presidency, suggested that the ‘systemic risk buffer’ which allows countries to temporarily increase maximum ratio could be increased to 5% from 3%. Divisions also remain over the type of assets which will count towards core capital, with Britain pushing for the strict Basel III definition to be used although other EU states want more flexibility. Additionally France and Germany are pushing for the mandatory publishing of a bank’s leverage ratio to be delayed until 2018.
Reuters

UK Justice Secretary Ken Clarke has set out an agreement by the 47 members of the European Human Rights Court (ECHR) for modest changes to the court’s workings. The agreement aims to tackle a backlog of 150,000 cases by restricting the number of cases appealed to Strasbourg.
Independent BBC Mail Guardian Times Times Express Express Telegraph Telegraph EUobserver

Senior European officials suggested yesterday that EU foreign ministers look set to suspend most of the EU sanctions of Myanmar for a year when they meet on Monday.
WSJ

According to a senior EU source quoted by EUobserver, a reflection group of select EU foreign ministers founded by German Foreign Minister Guido Westerwelle have been discussing the idea of merging the roles of the European Council and European Commission Presidents – with the new figure being elected by MEPs. The UK is not part of the group.  
EUobserver

EU agriculture ministers will begin discussing the European Commission's proposed changes to the Common Agricultural Policy next week.
European Voice
Open Europe research

A leader in the Economist argues that “a eurozone needs a Eurobond, of some sort”, but warns, “Joint liability should also be limited…Any move towards such Eurobonds must balance the need for a common safe asset for all with the dangers of moral hazard.”

Economist: Leader Economist Economist 2 Economist: Charlemagne Economist: Free exchange

In the Guardian, Deputy Prime Minister Nick Clegg and Ed Davey MP urge for a commitment to climate action to ensure a more sustainable. They write, “It is crucial that Europe implements a 30% cut in carbon by 2020. And it'll make us globally competitive too.”
Guardian: Clegg and Davey

Asked about the FDP’s prospects in upcoming regional elections in an interview with Bild, FDP leader and Economy Minister Philipp Rösler argued that “we are the party of economic rationality… we have demonstrated this through our successful opposition to Eurobonds which would have led to higher interest rates in Germany”.
Bild

Climate Action Commissioner Connie Hedegaard announced yesterday that the Emissions Trading Scheme (ETS) will be reviewed a year earlier than previously agreed, providing a “golden opportunity” to re-examine the current rules and help improve the struggling carbon market.
EurActiv

The Irish Times reports that MEPs have backed a plan to introduce a common consolidated corporate tax base (CCCTB), which Irish Taoiseach Enda Kenny has termed tax harmonisation by the “back door”.
Irish Times

Die Presse
reports that despite the admission of the European Food Safety Authority (EFSA) that allowing the former head of its gm-crops unit to move immediately to a biotech lobbyist organisation in 2008 was “regrettable”, the EU agency is facing scrutiny over the transfers of two further employees under similar "revolving door" arrangements.

Die Presse

The Slovenian parliament yesterday ratified the ‘fiscal treaty’ on budgetary discipline by an overwhelming majority. Of the 76 MPs present, 74 voted in favour, notes Les Echos.
WSJ Les Echos Les Echos 2

The European Parliament yesterday approved a new agreement with the US under which airline passenger data such as names and addresses will automatically be forwarded to US security services.
AP Focus European Voice

German Chancellor Merkel has insisted that Germany must implement the EU directive on data retention by the Commission imposed deadline of next Thursday, despite disagreement amongst the government, as otherwise Germany will face a fine.
DPA

Bloomberg reports that the EU will cut export subsidies for beef by 33% because of elevated prices.
Bloomberg


Iran’s oil minister Rostam Ghasemi has threatened to cut crude oil exports to all European countries if financial sanctions laid down by the EU are not lifted during talks over the next month.
FT

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