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David Cameron: Eurozone “either has to make-up or it is looking at a potential break-up”

17 May 2012

In a speech to business leaders today, David Cameron said that “either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone or we are in uncharted territory which carries huge risks for everybody.”

On the BBC’s Today programme, Business Secretary Vince Cable also warned that there were risks to Britain if the “crisis were to spread to other weaker countries in southern Europe” but that there was “no reason why that should happen.” He added, “We can’t directly influence what's happening in the eurozone because we're not part of it, but what we can do is to make sure that the UK is a well-run economy.” 

Separately, Bank of England Governor Sir Mervyn King has said that Britain is discussing “contingency plans”, since “the euro area is tearing itself apart, without any obvious solution.” The Times reports that the bank has warned that UK borrowers could suffer from higher interest rates as a result. Meanwhile, former Chancellor Lord Lamont told the BBC’s Today programme there would be no retreat from the fiscal treaty, adding, “Interestingly, [French President] Hollande is promising to eliminate, not reduce, eliminate France’s deficit in a couple of years, they are moving far faster than us.”
City AM FT BBC Times Telegraph Mail Express Irish Times Sun Le Monde Guardian politics live blog Guardian BBC today: Lamont Times Telegraph: Oborne Irish Times Politicshome

Caretaker government takes over in Greece until new elections on 17 June;
ECB suspends loans to four Greek banks

Greece’s caretaker government, led by the former President of the Council of State, Panayiotis Pikrammenos, was sworn in this morning. New elections have been scheduled for 17 June. Speaking to the press yesterday, European Commission President José Manuel Barroso suggested that the elections will effectively be a vote on Greece’s euro membership, saying, “The ultimate resolve to stay in the euro area must come from Greece itself.”

Meanwhile, the ECB said yesterday that it would temporarily stop lending money to four unnamed Greek banks until they have completed their recapitalisation. Separately, AFP quotes a high-ranking European diplomat saying that the EU could make concessions on the “pace” of Greece’s fiscal consolidation, while leaving the targets unchanged.  
Kathimerini Kathimerini 3 Independent WSJ Times Irish Times Le Monde Les Echos Les Echos 2 Guardian Kathimerini 2 Kathimerini 4 City AM FT Telegraph Irish Times Les Echos Kathimerini 5 Le Figaro WSJ 2 Il Sole 24 Ore Expansión WSJ 3 Irish Times Telegraph Guardian BBC El País El Mundo FT Welt IHT Les Echos Times

Open Europe event: “Reforming the EU’s long-term budget: Now or never?”
On Tuesday, Open Europe organised a panel discussion in Brussels in cooperation with Friedrich Naumann Foundation, entitled, “Reforming the EU’s long-term budget: Now or never?”, ahead of Open Europe’s forthcoming report on the topic. The panel consisted of Open Europe Director Mats Persson, Chairman of the European Parliament’s Budgetary Control Committee, Michael Theurer MEP (ALDE), and Chairman of the ECR Group in the European Parliament, Martin Callanan MEP. The discussion was chaired by Hans Stein, Director of the Friedrich Naumann Foundation.

Mats presented Open Europe’s research outlining ideas for how to gear the EU budget towards growth and jobs including limiting EU regional policy to the poorest member states and slimming down and re-focussing the CAP away from direct subsidies to the provision of environmental public goods. Michael Theurer looked at the problem some countries have to absorb EU funding, also calling Open Europe’s proposal for CAP reform “very interesting”, as in the longer term farmers should become independent from public subsidies. He also called for the EU have its “own resources” via EU taxes.

Martin Callanan argued it was “crazy” that almost half of the EU budget was still going towards subsidising farmers and landowners, and that there was “very little value” in sending regional development funds to rich regions in Germany or the UK, He added that he was opposed to direct EU taxes on the basis it would make the budget harder to control.

Meanwhile, Open Europe’s fact-check of the European Commission’s draft 2013 EU budget, which noted that the Commission’s proposed staff cuts only amount to a net loss of 6 out of almost 41,000 jobs across all the EU institutions is cited by Private Eye’s Brussels Sprouts column.
Open Europe events Open Europe Research: 2013 EU Budget Factcheck Open Europe Research: Off Target Open Europe Research: CAP Reform

Hollande unveils new French government;
Anti-European constitution campaigner appointed as new Foreign Minister
French President Francois Hollande has appointed his 34-strong new cabinet, which comprises 17 women. Laurent Fabius, a former Prime Minister who successfully campaigned for a ‘No’ vote in the 2005 French referendum on the European constitution is the new Foreign Minister. Pierre Moscovici, Hollande’s campaign manager and former European Affairs Minister, has been appointed as Economy and Finance Minister.
Le Figaro WSJ FT La Stampa Telegraph Mail Irish Times Les Echos Le Monde Les Echos 2 Les Echos 3 La Tribune

German Association of Family Businesses urges Bundestag to vote against ESM treaty;
Geert Wilders to sue the Dutch state over ESM treaty ratification
SPD parliamentary leader Frank-Walter Steinmeier has described German government plans to ratify both the fiscal treaty and the ESM treaty – establishing the eurozone’s permanent bailout fund - later this month as “completely unrealistic”. Meanwhile, Handelsblatt reports that the German Association of Family Businesses has urged the Bundestag not to ratify the ESM treaty.

Separately, the Dutch parliament has pushed back the debate on the treaty establishing the ESM until next week, as opposed to September as some MPs had demanded. Far-right leader Geert Wilders has said that he will sue the Dutch state, in a bid to get an injunction preventing parliamentary approval of the ESM treaty.

On Dutch blog De Dagelijkse Standaard, Open Europe’s Pieter Cleppe looks at the implications of the ESM on the Netherlands noting that “the Dutch Court of Auditors has already stated that budgetary control on the ESM is insufficient.”
Handelsblatt De Dagelijkse Standaard: Cleppe NOS Elsevier Nu.nl Le Monde Focus

In the New Statesman, chief political commentator Rafael Behr argues, “The crisis in the eurozone will result in either a messy unravelling of the single currency or its renewal through deeper economic and political integration. Either way, the EU will be transformed and new rules of engagement between Britain and the rest of the continent will have to be set. The pressure to offer that revised arrangement to the public in a referendum will be irresistible.”
New Statesman: Behr Independent: Ben Chu Le Figaro: Editorial City AM: Heath WSJ: Kara WSJ: Nixon FT: Leader FT: Bini-Smaghi BBC: Peston BBC: Flanders Times: Leader Times: Wighton Times: Cavendish

Ahead of the Irish referendum on the fiscal treaty on 31 May, an Irish Independent poll shows that 35% of respondents are still undecided, while 37% said they would vote ‘Yes’ and 24% said they would vote ‘No’.
Irish Independent

A Greek militant group calling itself the “Friends of Loukanikos” (a reference to a dog regularly spotted at anti-austerity protests in Athens) has claimed responsibility for Sunday’s arson attack on the house and car of Horst Reichenbach – the head of the European Commission inspection team in Greece.

Irish Times Welt Handelsblatt FAZ

Spanish Economy Minister Luis de Guindos has said that the ECB will take part in the independent auditing of the real estate assets held by Spanish banks, reports Cinco Días. Spain managed to sell €2.5bn of medium-term debt this morning, but had to pay higher interest rates.
FT Le Figaro Cinco Días El País BBC

German Finance Minister Wolfgang Schäuble yesterday said that Europe’s long-term response to the economic crisis must be further political and economic integration, arguing, “I would be for the further development of the European Commission into a government. I am for the election of a European President.”

In its first annual report on the Schengen agreement released yesterday, the EU Commission found that around 75% of irregular crossings of the EU’s external borders took place on the Greek-Turkish border.
EUobserver Spiegel Open Europe Research: Free Movement

Former Bavarian Minister-President Edmund Stoiber – who chairs a group tasked with reducing red tape stemming from EU regulations – told Handelsblatt that the EU will reach its target of cutting red tape for businesses by 25% by the end of 2012, adding, “We have made over 300 suggestions to the Commission. With them, the costs of European red tape would be reduced by €41bn in a year…from around €124bn to €83bn.”
Handelsblatt Open Europe Research

In the IHT, Anders Fogh Rasmussen, the Secretary General of NATO, writes that “while Europe contributes more to its security within its borders, it must also contribute more beyond them. Europe needs to retain a global perspective and the capabilities to act globally when required.”

IHT: Rasmussen IHT: Larrabee & Wilson

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