La Treizième Étoile: 09/05/10 - 16/05/10 Blog Archives
News from the European Union with a focus on the South West UK and Gibraltar region and its MEPs
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Tories appoint 'Euro-realist' Lidington to symbolic post of Europe Minister

Friday, 14 May 2010
While many Europhiles in the UK and leaders around Europe uneasily greeted the confirmation of well-known Eurosceptic William Hague’s appointment to the Foreign Office, it seems the pro-European Liberal Democrats have managed a major concession.

David Lidington MPOn its frontpage today, the Guardian says the appointment of David Lidington, pictured left, to the symbolically important post of Europe minister, one of the most senior jobs outside of the cabinet, “signals the end of more than a decade of Tory hostility to Europe”.

In a move that they believe will be welcomed in chancelleries across the continent, the appointment of the former Foreign Office adviser Lidington could be interpreted as a sign of the former MEP Nick Clegg’s influence over David Cameron since he takes up the job earmarked for Mark Francois who was the Eurosceptic shadow Europe minister.

It was Mr Francois, ironically with a French-originating surname, who was instrumental in orchestrating the Conservative MEP’s controversial split from the main centre-right EPP group in the European Parliament to found the new ECR group on the sidelines.

Lidington will hopefully seek to balance the fiercely Eurosceptic Hague, who, in 2001 ran a strongly nationalistic election campaign as Tory leader in which he warned that Britain was turning into a "foreign land".

But Lidington, who according to the Guardian is seen as “a Euro-realist rather than a pro-European”, does has strong relations with Mr Hague after having served as his parliamentary aide for the first two years of his leadership of the Conservative Party.

However, one look at his voting record shows that he has consistently voted very strongly against EU integration.

Welcoming Mr Cameron into office in a manner only French President Nicolas Sarkozy could do, he made himself abundantly clear that he hoped to open a new chapter with the Tories when he said he looked forward to "strengthening the very close cooperation and exceptional ties woven between our two countries".

On the sensitive issue of Europe, the Conservatives have been publicly advocating (uncharacteristically) in recent months prior to the election that they would be adopting a less confrontational approach to the EU. David Cameron indeed dropped his pledge to hold a referendum on the Lisbon Treaty, and Mr Hague said in March that they had made a strategic decision not to pick a fight with the EU.

In order to prove that this new appointment is not just symbolic of appeasement towards Europe, firm and plentiful political actions will have to be made to prove the intention were good in the first place. After all, who can actually be sure of the Conservative’s real policy towards Europe following the leaked letter outlining its ‘hardline’ stance should they win office…

Estonia gets Commission green light to adopt Euro in 2011

Wednesday, 12 May 2010
The European Commission has today given Estonia the green light to become the 17th country to adopt the single currency after its regular Convergence Report concluded it now meets the required economic and legislative criteria.

Estonia has achieved a high degree of sustainable economic convergence and is ready to adopt the Euro on 1 January 2011,Olli Rehn, the Commissioner for Economic and Budgetary Affairs, said this morning.

But he repeated that to ensure that the adoption of the Euro is a success, “Estonia must pursue its efforts to maintain a prudent fiscal policy stance… [and] remain vigilant and react early and decisively” should any problems emerge.

The latest report comes on the back of the recent announcement of a €750 billion economic stabilisation programme for Eurozone countries to protect the currency from further instability and Mr Rehn said today's decision on Estonia "is also a strong signal about the euro area" which "underpins the role of the Euro as medium-term policy anchor" for the bloc as a whole. That said, Estonia's finances are rather well managed in comparison to other Eurozone countries - it has comparatively little public debt (only 7% GDP) and an annual budget deficit of 1.7% GDP in 2009.

The 2010 Convergence Report also shows that the other eight countries with a so-called 'derogation' have made uneven progress on the road to the single currency, and so are not yet ready to adopt the Euro.

As required by Article 140(1) of the TFEU, the Commission (alongside the European Central Bank) reassesses the status of each country holding this status at least every two years or at the request of a particular member state.

The eight countries that consequently will have to wait longer to join the currency bloc are Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Sweden.

The Council of EU finance ministers (ECOFIN) will take the final decision on Estonia’s adoption of the Euro in July once the European Parliament has given its opinion and the EU Heads of State and Government have discussed the subject at their summit meeting in June.

Eurozone members announce €750 billion ‘Mother of all rescue plans’ to save Greece and the Euro

Monday, 10 May 2010
It has taken many long and agonisingly uncertain weeks but at last it is confirmed, and they could not have chosen a more symbolic moment.

Exactly 60 years to the day since the Schuman Declaration which lead to the formation of the European Union as we know today, that during a press conference in the early hours of this morning (2am Brussels time) after 11 long hours of talks the details of a long-overdue €750 billion bailout plan emerged to stifle a sovereign debt crisis that began in Greece but now threatens the stability of the single currency.

Via the new “European Financial Stabilisation Mechanism”, money is to be made available to rescue fellow Eurozone economies that get into financial troubles, and would consist of €440 billion of loans from Eurozone governments and topped up by €250 billion from the International Monetary Fund.

In addition, the European Commission would make €60 billion available to support member states experiencing "difficulties caused by exceptional circumstances beyond their control", as Spanish Finance Minister Elena Salgado revealed.

The European Central Bank (ECB) also announced that it would buy Eurozone government and private debt "to ensure depth and liquidity in those market segments which are dysfunctional" - a move they were previously very keen not to do.

"It shows through this decision that we are placing considerable sums in the interest of stability in Europe,” Ms Salgado said. "Our conclusions also reiterate yet again the need for progress to be made on regulating the financial system, on oversight and the supervision of the financial system, in particular derivatives and the role of rating agencies."

The moves sent the Euro and European shares sharply higher, with the pan-European Stoxx 600 Index rising 4%, London's FTSE100 up 3.5% and in Paris the CAC-40 surged 5.8%. After all, throughout the whole Greek crisis the only way of calming financial markets has remained the firm announcement an initiative that would exceed their expectations and convince them that Europe would do whatever was necessary to save its monetary union.

While €750 billion sounds like a large, unimaginable figure, the massive size of the bailout package reflects the gravity of the crisis gripping Europe and growing fears that the situation could grow so dire that it could hamper its fragile recovery in the global economic situation.

Perhaps more noticeably, it dispels that long-held notion that each EU member should manage its own finances as each Eurozone state contributes to the new mechanism. It is consequently opening an era in which members of the Euro take on unprecedented responsibilities for each others' fiscal troubles. No longer is the Eurozone just an area of common monetary policy, but national control of budgets. For a single currency to truly thrive it ultimately requires a transfer of fiscal powers towards the centre.

As the EU’s Economic and Monetary Affairs Commissioner Ollie Rehn said in the late-night press conference: “the fiscal efforts of the EU member states, the financial assistance by the Commission and by the member states, actions taken today by the ECB prove we shall defend the euro whatever it takes."

Eurozone members (Source: BBC)The €60 billion to be stumped up by the Commission will be available much more quickly to troubled countries and is to be compiled from funds dispensed under the overall EU budget - under a treaty provision for natural disasters and other "exceptional occurrences." The crisis "is a threat to financial stability of the Euro area and the European Union, and therefore it is justified," Mr Rehn said.

Alistair Darling, the British Chancellor of the Exchequer who attended the meeting, said the United Kingdom would back the balance-of-payments facility, but, he stressed that creating a "stability fund for the Euro" – the €440 billion part of the package - had to be "a matter for the Euro-group countries” – in other words, ‘we’re not contributing to that!’.

What this plan reveals is that the EU is signalling that even small members of the Eurozone are too big to fail, which is a significant political statement and will do much to promote the single currency’s attractiveness to investors.

To further ensure the Eurozone doesn’t encounter another confidence crisis of such proportions, perhaps they should take another significant step and take heed of an idea flouted by the German Chancellor Angela Merkel when she called for countries to face sanctions for failing to respect the Stability and Growth Pact that states' annual budget deficit should not exceed 3% of national GDP…

Revealed - the future British Conservative government's 'hardline' Eurosceptic view towards Europe

Sunday, 9 May 2010
It is no secret that the United Kingdom’s potential next Prime Minister David Cameron is hardly pro-European. Last year he instructed his MEPs to leave the EPP centre-right majority grouping and creating a new European Conservatives and Reformists (ECR) group on the sidelines of the European Parliament.

David Cameron (Photo: Guardian)Throughout the election campaign, he and his party have promoted an anti-Europe ticket yet maintained a facade towards Europe and the EU in which they courted it and pledge cooperation yet vow never to join the Euro single currency.

But now, thanks to a leaked top-secret letter published in full in today’s Observer from Mr Cameron and William Hague the would-be Conservative Foreign Secretary, to the rest of his party, the picture has become clearer about the future British government position towards Europe when indeed the Conservatives are asked to form a government (either as a minority power or in a coalition).

In the letter, which was reportedly compiled by civil servants but written in the first person, outlines the hardline Eurosceptic stance Cameron and Hague planned to adopt in government.

The letter, also penned a week before the election result was known, the Conservative party assumed an outright victory and spelt out how its Foreign Secretary designate Hague intended to adopt a very tough approach to Europe:

Hague tells Cameron how his message would be that "the British relationship with the EU has changed with our election" to one firmly against any further integration.

William HagueHe says he would demand the right to repatriate powers over criminal justice as well as social and employment policy during the first term of a Tory government – demands many EU leaders say they would resist.

In addition, if that wasn’t enough, Hague, left, planned to tell his EU counterparts: "Rest assured that we seek engagement, not confrontation. But our aim is to achieve these commitments during this parliament." He would also tell them that "we will never join the Euro" and conclude that "you will find us firm but fair, playing a leading role, fighting our corner, practical and straight-talking."

This leaked-letter will undoubtedly undermine David Cameron's hopes of quickly forming a coalition with the Liberal Democrats as it exposes the massive gulf between the two parties on Europe, particularly since the Lib Dems are the only party up-front in its support of the EU.

The letter in full:

"How to promote our national interest in an open and democratic Europe

We have discussed the approach I plan to take at the Foreign Affairs Council in Brussels on Monday when I will have the first opportunity to explain to EU opposite numbers and publicly how the new government under your leadership will implement our manifesto commitments on Europe. It will be important to send an early signal to EU partners and the British people on the broad outlines of our approach. We will need an early collective discussion on a detailed strategy to implement our commitments. As our approach will change British policy across the full range of different Council formations, I am copying the letter to all Cabinet colleagues so that we can all take the same approach.

Our overall strategy has four main elements:

– UK legislation – the referendum lock, sovereignty bill, and ratchet clauses.
– Return of powers on criminal justice, the Charter of Fundamental Rights, and social/employment issues from the EU to the UK level.
– Positive agenda of areas where we will engage constructively in the EU.
– Promoting and vigorously defending the national interest through ongoing EU business.

We have agreed that the first should be done as rapidly as possible to demonstrate to the British people and beyond that the UK's relationship with Europe has really changed. On the second, you have given us the full first term to deliver - we need to manage expectations and explore with partners how to implement our commitment.

The third and fourth will be ongoing.

Reflecting these four strands, I propose the following core script:

"We will be positive members of the EU. We want to work with you to boost global economic growth, fight global poverty, build energy security and combat global climate change. We support the aims of the EU 2020 strategy, for an open, competitive and entrepreneurial Europe, with less bureaucracy and regulation. We are also committed to free trade, open markets, the single market, and European action to boost innovation and competitiveness.

"We are firm supporters of enlargement, and want to see a more muscular EU approach in Bosnia. We want an effective EU response to the top strategic challenges like preventing Iran from acquiring nuclear weapons, searching for peace in the Middle East, and engaging with the big powers around the world. We favour an outward-looking Europe, so will want the External Action Service to be a success, working in partnership with national diplomatic services to deliver those objectives we have all agreed, and Cathy Ashton has our support.

"But the British relationship with the EU has changed with our election. We will never join the euro. We will introduce legislation early [I won't pre-empt the Queen's Speech with detail] to implement our commitments: any Treaty change transferring competence or powers would require a referendum; the sovereignty bill; and increased parliamentary controls on any use of ratchet clauses.

"These changes are similar to the position in several other member states – Germany on sovereignty, Ireland and Denmark on reuiring a referendum for major Treaty changes, and Germany again on ratchet clauses. So our partners should not doubt our commitment to the EU.

"Third, we are committed to returning powers from the European level to the UK in three key areas – the Charter of Fundamental Rights, criminal justice, and social and employment legislation. My colleagues and I will explore with partners how to implement these commitments, since we want and will need agreement of our 27 partners.

"Rest assured that we seek engagement not confrontation. But our aim is to achieve these commitments during this parliament.

"Finally on current business, the EU agenda is full with some tough crunch points ahead, particularly on economic, social and justice issues.

"The toughest issue is the economic turbulence in the eurozone. This is a matter for the countries in the euro to tackle, and I am glad that they are doing so. The UK's national economic interest is best served by a stable euro. As the UK is not in the euro, I have no intention of offering a running commentary on the issue.

"Like others, we will fight our corner to protect our national interests through engagement and influence. Britain's interests are best served by membership of an EU that is an association of sovereign Member States, not a federal Europe. You will find us firm but fair, playing a leading role, fighting our corner, practical and straight talking."

I am planning bilateral meetings with my key opposite numbers during my visit to Brussels, to be followed by early visits to Warsaw, Berlin and Paris, plus contacts between Mark Francois and his opposite numbers. We will repeat these messages during those discussions. You have already taken this line in your early discussions with [Sarkozy, Merkel, Zapatero, Barroso and Van Rompuy].

We should hold a very early meeting of Ministers under [your/my] chairmanship to inaugurate the new EU committee, agree our strategy in more detail and look ahead to the key decisions coming up in sectoral Councils and the June European Council. In particular we need to:

– Reach a common view across Government on our overall EU strategy, including how and when to seek to implement our commitments on the three repatriations, and how this fits with the rest of the agenda.

– Decide how and when to communicate this to the British people and to our European partners.

– Agree how to tackle the trickiest issues due to arise in May and June, including: Greece/eurozone and its consequences, the financial issues coming to ECOFIN including the Hedge Funds Directive and Financial Supervision, the first opt-in decisions on Justice and Home Affairs, preparation for the June European Council including national targets for the EU2020 strategy, the EU role on climate change, and Iceland.

I am copying this letter to all Cabinet colleagues.

The Conservative Party have since told the Observer they have no knowledge of the letter...

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