Merkel, Sarkozy and Monti agree Treaty change to push ahead with greater fiscal governance but will not demand help from the ECB
Following a meeting in Strasbourg yesterday, German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Mario Monti reaffirmed their commitment to increasing fiscal governance in the eurozone. Sarkozy and Merkel announced that they would present EU Treaty changes aimed at achieving this “within the forthcoming days”, with the aim of having a wider discussion on them at the 9 December summit of EU leaders.
During the meeting, Merkel reiterated her opposition to the European Commission’s proposed Eurobonds, saying that: “My attitude has not changed [eurobonds] would be a very bad omen”. However Sarkozy voiced his support for the proposal, arguing that the Treaty changes were “part of a whole”, and that that it was inappropriate to propose Eurobonds, without talking about an economic government, and vice versa. Meanwhile, Italy was this morning forced to pay a record interest rate of 6.5% in an auction of 6 month bills, compared to a rate of 3.53% in a similar auction on 26 October.
Merkel also seemed to have won the discussion over the role of the ECB, for now, with Sarkozy admitting, “The three of us have indicated that we will respect the independence of this essential institution and we agreed that we should refrain from making any demand, positive or negative, on it.” French officials stressed after the meeting that this also means that any decision by the ECB to expand its bond buying will not be held back by German criticism, according to the FT.
Meanwhile, the ECB is considering offering long term loans to banks, possibly up to two to three years compared to the current maximum of 13 months, in an attempt to ease the funding crisis in European banks. Another option being considered is broadening the range of assets banks can use as collateral to obtain ECB funds. Belgian daily De Tijd reports that Belgium’s Central Bank Governor Luc Coene told a dinner of Belgian business people that the ECB is likely to cut interest rates again if “the current [economic] trends continue.”
FT CityAM WSJ EurActiv European Voice FT 2 Irish Independent BBC Telegraph Guardian Times Independent Irish Times Irish Independent 2 EUobserver FT 3 FT 4 CityAM 2 FT 5 WSJ 2 FT 6 CityAM 3 WSJ 3 Guardian Irish Independent FT 7 CityAM 4 WSJ 4Guardian BBC Independent: McRae FAZ FAZ 2 Welt Welt 2 Sueddeutsche Sueddeutsche 2 Express Le Monde Le Monde blogs: Leparmentier IHT Le Figaro Les Echos La Tribune Corriere della Sera Corriere della Sera 2 La Stampa Expansión RepubblicaRepubblica 2 Tijd
Belgian King urges continuation of coalition talks
Belgian King Albert II has rejected the resignation of Socialist leader Elio Di Rupo, the man tasked with forming a new coalition government, and urged him to push ahead with coalition talks. EUobserver reports that Belgian Prime Minister Yves Leterme has appealed to Belgians to buy more government bonds and will increase the size of the ‘citizen auctions’.
Le Figaro Expansión EUobserver Les Echos CityAM
Eurozone Comment Round-up
FAZ‘s political correspondent Nikolas Busse notes that the disagreement between Angela Merkel and Commission President Barroso over the introduction of Eurobonds has developed into a personal rift between the two which would previously have been unthinkable, given that in terms of his EU career, Barroso is “Frau Merkel’s creation”.
An editorial on Le Figaro‘s front page argues, “In the search for an indispensable compromise, one has to note that only France has done its bit, accepting a revision of the [EU] Treaties which will lead to the loss of sovereignty in the economic and budgetary domains. Berlin, on the other hand, remains inflexible on the role of the ECB…Europe, and Germany itself, risk paying a high price for this obstinacy.” In Les Echos, Editor-in-Chief Dominique Seux writes, “Paris is convincing itself that the worsening situation will force [ECB President] Mario Draghi to give up and open his strongbox. The problem is that…Berlin holds the key of the strongbox, and time goes by.”
A leader in the Economist argues that Germany’s attitude “has to change, or the euro will break up. Fears of moral hazard mean less now that all peripheral-country governments are committed to austerity and reform. Debt mutualisation can be devised to stop short of a permanent transfer union. Mrs Merkel and the ECB cannot continue to threaten feckless economies with exclusion from the euro in one breath and reassure markets by promising the euro’s salvation with the next. Unless she chooses soon, Germany’s Chancellor will find that the choice has been made for her.”
FAZ: Busse El País: Editorial Il Sole 24 Ore: Leipold Corriere della Sera: Galli della Loggia Corriere della Sera: Alesina and GiavazziEconomist: Briefing Economist: Charlemagne Economist Economist: Leader Les Echos: Seux Le Figaro: Editorial IHT: CastleIndependent: McRae Independent: Delors BBC: Hewitt
The BBC reports that Hungary has had its debt downgraded by credit rating agency Moody’s to junk status due to high levels of debt and weak prospects for growth.
The FT reports that France is pushing for EU oil sanctions on Iran following a report from the International Atomic Energy Agency detailing Iran’s efforts to obtain nuclear weapons. The WSJ reports likely opposition from EU states concerned about higher oil costs, and notes Italy and Spain’s dependency on Iranian oil.
The Telegraph reports that the UK faces a bill of £20m from the European Commission after allegedly failing to pay enough duty on imports of Chinese garlic between 2005 and 2006, and that if the amount is not paid within two months, the UK could face legal proceedings before the European Court of Justice.
EUobserverreports that the European Court of Justice ruled yesterday that Internet Service Providers (ISPs) cannot be forced to filter internet traffic and block users from trading copyright music or other files, as such practices undermine privacy rights and people’s ability to freely exchange information.
BBC EUobserver IHT WSJ EurActiv
The WSJ reports that the European Commission is planning to sue Germany for a second time over its ‘Volkswagen law’ which prevents any shareholder from exercising more than 20% of voting rights over the organisation, and which, according to the Commission, violates the free movement of capital in the EU and shields the company from a hostile takeover.
WSJ FAZ: Ritter
Les Echos reports that France has officially proposed the Deputy Director-General of the Finance Ministry, Benoît Coeuré, to succeed to Italy’s Lorenzo Bini-Smaghi on the ECB’s Executive Board.
Les Echos Le Figaro
The EU is facing “scathing criticism” from environmental groups for not applying sufficient rigour in its ‘stress tests’ which found that European nuclear power plantswere in good enough shape to withstand a Fukushima-type scenario,EUobserver reports.
European Voice reports that during a meeting yesterday EU energy ministers expressed dissatisfaction with the European Commission’s proposal detailing efficiency targets for energy suppliers and public buildings, arguing that the targets might affect energy suppliers’ competitiveness.
FSA warns that UK banks should plan for euro breakup
The Telegraph reports that Andrew Bailey, Deputy Head of the FSA’s Prudential Business Unit, has said UK banks should plan for a disorderly breakup of the euro. “We cannot be, and are not, complacent on this front. As you would expect, as supervisors we are very keen to see the banks plan for any disorderly consequence of the euro area crisis” he said.
Telegraph Times FTD
In the Times, Neil Bentley, Deputy-Director General of the CBI, argues against an EU financial transaction tax; “The Commission cannot argue that the financial services sector does not make a fair tax contribution. The UK’s financial services industry accounts for about 10 per cent of total economic output, 11 per cent of the UK’s total income tax, and 15 per cent of corporation tax.”
This post originally appeared on Open Europe.