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Merkel: Fiscal treaty is not open for re-negotiation; Die Welt: If it continues like this, that’s the end of the eurozone

27 Apr 2012

In an interview with several regional papers, German Chancellor Angela Merkel has reiterated that the ‘fiscal treaty’ on budgetary discipline “can’t be re-negotiated” – a clear response to the French Socialist presidential front-runner François Hollande’s recent pledge to block the ratification of the treaty unless a growth clause is added to it.

In Die Welt, Brussels correspondent Florian Eder writes, “If it continues like this, that’s the end of the eurozone”, noting that “the fiscal pact is the best thing Europe has. Now it has come to an end even before its introduction…If the rescue of the eurozone looks like that, then goodnight!” A separate article in the paper notes that up to ten eurozone countries could seek to relax their strict austerity targets, setting the scene for a showdown with Germany at the next meeting of EU finance ministers on 15 May.

Meanwhile, the EU/IMF/ECB troika yesterday completed the sixth review of the Irish bailout, praising Ireland for its implementation of the programme but also warning that “significant challenges remain” particularly in regards to its high deficits. European Council President Herman Van Rompuy has suggested that the EU could hold an informal summit focused on growth before the next meeting of EU leaders in June.
Welt: Eder El País El Mundo Spiegel Welt Spiegel Welt Irish Times Irish Times 2 EUobserver La Stampa Les Echos Les Echos 2 FT CityAM DPA Telegraph VoxEU: Buti Welt FT 2 CityAM 2 CityAM 3 WSJ Telegraph FT Editorial WSJ: Fidler Economist Economist 2 Economist: Charlemagne Economist 3 Irish Times: Murtagh Expansión

Open Europe fact-checks Commission’s claims on draft EU budget for 2013;
Proposed staff cut only amounts to net loss of 6 out of almost 41,000 EU jobs
Open Europe has today published a fact-check of the Commission’s claim that the draft EU budget for 2013 – despite proposing an increase in spending of 6.8% from the previous year – contains “tough” decisions on savings, such as a 1% cut in the Commission’s workforce, while still promoting “jobs and growth”. Upon closer examination, Open Europe found that total EU expenditure on administration is in fact going up by 3.2%, while the proposed staff cut for next year only amounts to a net loss of 6 out of almost 41,000 EU jobs. In addition, several EU bodies such as the Economic and Social Committee are seeing an increase in their budgets, despite their added value being highly contested. 
Open Europe press release

Open Europe’s Pawel Swidlicki appeared on ITV Wales’ Sharp End politics programme arguing that the EU’s structural funds were flawed and that Wales would benefit from an additional £1bn over seven years if regional policy was devolved back entirely for richer member states such as the UK.
Open Europe research

MPs warn of damaging effect of EU working time rules on the NHS;
Commission threatens UK with court action over EU citizens’ access to healthcare
MPs yesterday debated the impact of the EU’s Working Time Directive on the NHS, with some warning the Directive is “compromising” care and “devastating the NHS”. In the Times, Charlotte Leslie MP writes, “Ministers say that they are working to achieve [reform] through dialogue in Europe. But this has been going on for almost a decade, with no agreement in sight…We have to do what Ireland, Spain and the Netherlands have done: say a French ‘bof’ to Brussels bureaucracy and find a way round this directive.”

During the debate, Ms Leslie said, “Open Europe has suggested an interesting double-lock mechanism for negotiating our way out of what was the social chapter and creating a situation in which we are not bound by the rulings of the European Court of Justice. Those are big, radical steps and will take time, but it is something that we should look at.”

Meanwhile, the European Commission is calling on the UK to drop an allegedly unlawful restriction stopping unemployed EU citizens who want to reside in Britain from claiming the NHS as their “sickness insurance”. Such insurance is a condition to reside in other member state under EU free movement rules. UK officials argue that the NHS cannot be seen as a full insurance policy to EU citizens without health insurance and that the controls are essential to ensure the NHS is not overburdened with bills for treating non-UK citizens who are not working or economically active. The Commission has threatened to take the UK to the ECJ if the rules are not changed within the next two months.
Open Europe research: EU social policy Open Europe research: Free movement Times: Leslie Hansard FT Telegraph Express

Sarkozy threatens to close France’s public markets unless reciprocity with third countries is achieved
On French RTL radio this morning, Nicolas Sarkozy argued that Europe “doesn’t protect enough”, and stressed that “if within a year we have not obtained a reciprocity with our biggest [trade] partners, we will keep all public [procurement] markets – communal, regional, national – for companies which operate and create jobs in Europe.”

According to the latest BVA poll, Socialist candidate François Hollande leads the second round on 54.5%, compared to Sarkozy on 45.5%. A leader in the Economist argues, “If we had a vote on 6 May, we would give it to Mr Sarkozy – but not on his merits, so much as to keep out Mr Hollande.”
Economist: Leader Economist: Briefing FT WSJ Le Monde Les Echos Le Monde 2

S&P downgrades Spain’s credit rating by two notches;
IMF: Spanish banks may need more public money
Standard & Poor’s downgraded Spain’s credit rating by two notches yesterday, following data from the Spanish central bank, which showed that the country has entered recession. Meanwhile, the conclusions of a new IMF report due for publication in June have warned that “greater reliance on public funding may be needed” to complete the restructuring of Spanish banks.

Meanwhile, Spain’s two largest banks, Santander and BBVA, have warned that they will have to slow down their purchases of Spanish bonds, as their exposure to Spanish debt has already attained considerable levels. 
EUobserver 2 Il Sole 24 Ore Repubblica Cinco Días Times FT FT 2 FT Alphaville CityAM WSJ WSJ 2 Guardian  Le Monde Les Echos Bloomberg FT 3 CityAM 2 FT 4

Dutch political parties reach budget agreement although new government will have scope to adjust deal
Dutch political parties reached a deal on the 2013 budget yesterday, which will allow the Netherlands to meet the 3% deficit target demanded by the EU. The minority government was able to push through the deal with the support of the D66, Christian Union and Green Left parties. De Volkskrant reports that the agreement includes a VAT increase, cuts to healthcare spending, labour market reforms and fewer cuts to foreign aid than the previous budget deal. There is scope for the deal to be adjusted by the new government following the elections in September.
Reuters Volkskrant Volkskrant 2 IHT EUobserver FT Le Monde Les Echos Les Echos 2

EU officials dismiss prospect of bailout funds lending directly to banks
Reuters reports that EU officials have dismissed the prospect of the eurozone bailout funds being altered so that they can lend directly to banks, despite reports that an ECB working group would be set up to discuss the issue. ECB President Mario Draghi yesterday called for the creation of a eurozone bank resolution scheme to correct the problems highlighted by the current crisis.
Reuters FT Süddeutsche Spiegel FAZ Handelsblatt CNBC

MPs: “Unacceptable” that only 46% of EU aid reaches poorer countries
More than half of the EU’s development aid budget is going to “relatively rich” countries like Turkey and Serbia, MPs on the International Development Committee have warned. The UK gave £1.23bn in aid via the EU in 2010, but only 46% of EU aid for developing countries goes to low-income states – a figure the Committee calls “unacceptable”.

MPs urged the UK to challenge the definition of official development assistance (ODA), through which the relevant EU aid is spent. “It appears to be being used as a way of fudging the figures to help other European countries meet the (internationally agreed) target for 0.7% of GDP to be given as aid,” Chairman and Liberal Democrat MP Malcolm Bruce said. Open Europe gave written and oral evidence to the Committee’s inquiry.
Open Europe research Open Europe blog ITV BBC International Development Committee

European Investment Bank to remove ‘drachma clauses’ after criticism from the Commission
EU Economic and Monetary Affairs Commissioner Olli Rehn has said that the European Investment Bank’s decision to include ‘drachma clauses’ on its loans to Greek companies was “unfortunate and incomprehensible” and that all the clauses will be removed. Writing in the Guardian, former Greek Prime Minister Costas Simitis argues that Greece did not cause the crisis but simply exposed the “inherent flaws within the eurozone.” Meanwhile, Kathimerini reports that a total of 32 political parties will stand in the Greek elections on 6 May.
Kathimerini Kathimerini 2 Kathimerini 3 Kathimerini 4 Guardian

EU interior ministers discuss Franco-German plans for Schengen reform
At a meeting of EU interior ministers yesterday, France and Germany argued that member states need more power over border rules to ensure security in the EU’s border-free Schengen area. Kathimerini reports that, without naming France, EU Home Affairs Commissioner Cecilia Malmström warned that the Schengen Treaty is “too important to be held hostage by a pre-election campaign.”
Irish Times Kathimerini Le Monde Les Echos

The German Interior Ministry has calculated that Germany could face a fine of up to €32.5m for failing to implement the EU’s Data Retention Directive. Die Welt reports that Angela Merkel’s CDU party is calling for Justice Minister Sabine Leutheusser-Schnarrenberger – from junior coalition party FDP – to resign after Germany missed the European Commission’s deadline for implementing the Directive.
Handelsblatt Welt

European Voice reports that the European Parliament’s Constitutional Affairs Committee has voted down a proposal to record how MEPs vote in Committees.
European Voice

The Mirror reports that UKIP plans to use European Parliament funds to invite its supporters to Brussels for “political banter, nice dinners and bar hopping” have been criticised by Shadow Europe Minister Emma Reynolds as “hypocritical”. 
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The Secretary General of the European Court of Auditors used public funds to hire lawyers and to sue the EU's anti-fraud office (OLAF) over an inquiry into how he hired security guards. He lost the case, but no action was taken against him.

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