Ministerial aides threaten resignation over EU referendum vote
Friday, October 21, 2011
David Cameron looks set to face a tense vote on Monday over a motion calling for a referendum on the UK’s EU membership, with over 50 Conservative MPs likely to vote against the Government. George Eustice MP has tabled an alternative motion calling for a referendum on the EU but only after a successful renegotiation of powers. His amendment also calls for the Government to publish a White Paper in the 2012-13 session of Parliament on what EU powers the Government would seek to repatriate from Brussels.
It remains unclear whether the Government would back the Eustice amendment, which could allow MPs a chance to vent their views on the EU without openly defying the Government. However, the Guardian reports that one No 10 source said that while the Prime Minister agrees with the Eustice amendment, he cannot support it – and would whip his MPs to vote against it – because it would be unacceptable to the Liberal Democrats. The Telegraph reports that five parliamentary private secretaries are considering resigning in order to back a referendum in Monday’s vote. Cameron is expected to hold a private meeting with PPSs before the vote, urging them to stay loyal. Labour and Lib Dem MPs are expected to vote against the motion.
In the Times, Dominic Raab argues, “The executive should have the magnanimity to allow the legislature its say…There will always be different shades of opinion in a democratic party: on the extent of repatriation; whether a referendum should be held in the short or longer term; or whether we should withdraw altogether. But the political weather has changed – at home and abroad. The Government would do better to have this rising headwind to its back than its front.”
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European leaders announce extra summit after failing to agree on comprehensive solution for the eurozone;
EU/IMF/ECB estimates Greek debt will reach 181% of GDP next year
European leaders yesterday announced that they will hold a second summit, most likely on Wednesday, after failing to reach an agreement on how to best leverage the EFSF, the eurozone’s bailout fund. A statement by French President Nicolas Sarkozy’s office confirmed that the focus of this Sunday’s summit would now be “in-depth” discussions, with no concrete decisions expected. Les Echos reports that Sarkozy is locked in a disagreement with the French Finance Ministry over whether to use the EFSF to insure sovereign debt, with the French President more likely to eventually back the proposal to safeguard relations with Germany. The paper also notes that Italy and Spain are opposed to using the EFSF to insure part of their debt. Sarkozy will meet German Chancellor Angela Merkel in Brussels on Saturday in attempt to form a consensus ahead of the summit.
Amid further violent protests the Greek parliament voted to back another round of austerity measures demanded by the EU/IMF. The latest report on the Greek economy from the EU/IMF/ECB review team, which was circulated yesterday, stated that “[Greek] debt sustainability has effectively deteriorated,” with Greece expected to miss this year’s deficit target by up to €2bn and its debt to GDP ratio expected to hit 181% next year. The report also accepts that Greece will not be able to meet its privatisation targets in terms of timing or revenue, meaning the current size of the second Greek bailout will not be enough to cover the country’s funding needs. Despite this the report concludes that the next tranche of the Greek bailout should be paid as soon as possible. The FT Deutschland reports that the IMF and the ECB are in conflict over whether Greece needs to impose bigger write downs on bondholders and if it can handle more austerity.
The FT reports that, according to draft guidelines seen by the paper, banks which are recapitalised by the EFSF or national governments could be subject to restructuring or possibly even wound down, making the plans consistent with EU state aid rules. GFS news cites Open Europe’s estimates that, in an adverse scenario, European banks could require a recapitalisation of €370bn.
Meanwhile, Standard & Poor’s said yesterday that it would likely downgrade the credit rating of France, Spain, Italy, Ireland and Portugal if the eurozone entered recession, as looks increasingly possible.
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Raoul Ruparel: The UK and the eurozone cannot afford another non-solution from this weekend’s summit
On Conservative Home, Open Europe’s Raoul Ruparel argues that “at this weekend’s EU summit [the UK government] will have the chance to act as the voice of reason amongst the cacophony of empty promises and grand gestures.” Raoul suggests that the “only viable short term option for the eurozone remains a debt restructuring in Greece and Portugal and a full recapitalisation of European banks. The UK government has another opportunity to grasp this, it would do well to take it, otherwise we could end up with yet another non-solution to the crisis, which not only the eurozone but also the UK can no longer afford.”
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Bundestag insists on participating in EFSF decision;
Merkel goes to Brussels without a mandate
German Chancellor Angela Merkel has been forced to head to this weekend’s summit without a negotiating mandate from the Bundestag. German MPs were due to scrutinise the plan to be discussed at the summit. However, divisions between the French and German governments meant they did not receive the proposals – which reportedly lacked key details and were initially only available in English – until late on Wednesday night.
CDU parliamentary group leader Volker Kauder is quoted in FT Deutschland saying, “Without the mandate of the Parliament the government has no means to act”. MPs from the coalition parties are content for the Bundestag’s budgetary committee to give its approval, however, the opposition is demanding a vote at a full plenary session, either of which could take place next Tuesday. SPD leader Frank-Walter Steinmeier is quoted in Handelsblatt saying, “Since I cannot imagine a decision that requires no increase in liability risk, I also cannot imagine a solution that does not require re-referral to the Bundestag.”
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FSA Chairman attacks EU financial regulation as Commission unveils new rules
In a speech at Mansion House yesterday, the Chairman of the Financial Services Authority Lord Turner criticised heavy-handed EU financial regulation, arguing, “The idea that securing the single market requires the harmonisation of maximum as well as minimum standards is simply wrong and potentially harmful.”
His remarks came on the day EU Internal Market Commissioner Michel Barnier unveiled his plans to upgrade the Markets in Financial Instruments and the Market Abuse Directives. Barnier’s proposals involve tougher regulation of high-frequency trading and commodity derivatives, but fall short of offering specific details on how tough sanctions would be, reports EurActiv. The WSJ notes that, in a concession to the UK, the proposed MiFID requirements cover all financial instruments and not just those sold over-the-counter.
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FAZ Economics Editor Holger Steltzner writes of EU Internal Market Commissioner Michel Barnier’s proposal to temporarily ban credit rating agencies from publishing sovereign ratings of ailing eurozone countries, “Fortunately, Barnier is not responsible for education. Otherwise, he would come up with the idea to outlaw bad grades in school.”
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FAZ reports that the leadership of German Chancellor Angela Merkel’s CDU party has reacted positively to an internal plan suggesting that the European Commission’s President should be directly elected by EU citizens in the future. A decision on the proposal will be made at the CDU’s party conference in mid-November.
EUobserver reports that a group of six EU member states, including the UK, Germany and the Netherlands, have been criticised by EU Agriculture Commissioner Dacian Ciolos for blocking the renewal of a €500m EU food aid scheme, which will now be cut by three quarters from 1 January 2012.
Outsider candidate Ignazio Visco was yesterday nominated to succeed to Mario Draghi as governor of the Bank of Italy. The appointment leaves open the issue of Italy’s ECB executive board member Lorenzo Bini-Smaghi, with French President Nicolas Sarkozy pushing for him to resign before Jean-Claude Trichet leaves the ECB Presidency at the end of October.
Corriere della Sera Il Sole 24 Ore
In a joint communiqué, European Council President Herman Van Rompuy and Commission President José Manuel Barroso said that Colonel Gaddafi’s death “marks the end of an era of despotism and repression” in Libya.
The Guardian notes that the British delegation to the UN has blocked more than 70 EU statements to UN committees because it insisted those statements should be delivered on behalf of the “EU and its member states” rather than simply on behalf of the EU.
This post originally appeared on Open Europe.