Marcin's Feed
Jan 19, 2010
via Global News Journal

Euro zone ministers puzzle over how to pick ECB vice-president


Lucas Papademos

Euro zone finance ministers have failed to pick the next vice president of the European Central Bank, partly because they are not sure how to do it under the European Union’s new Lisbon treaty. The treaty, which came into force in December, gives the euro area finance ministers — the Eurogroup — legal status and is supposed to simplify decision-making in the 27-nation bloc. But the 16 euro zone ministers decided to ask lawyers how to choose a successor to ECB Vice-President Lucas Papademos, delaying the decision until February, one diplomat said. Vitor Constancio and Yves Mersch, central bank chiefs of Portugal and Luxembourg respectively, are running, as is Peter Praet of Belgium’s central bank.

The problem is uncertainty about how the Eurogroup should vote under the treaty.
 In fact, the Eurogroup, which met on Monday as usual on the the eve of an Ecofin meeting of all of the EU’s 27 finance ministers, and is described in the EU treaty as an informal group, cannot take formal votes. But it can probably hold informal ones.
 Formal votes are held at the Ecofins, but on issues concerning the euro zone only Eurogroup ministers vote. If they do, then what majority is needed? What if you have to choose from among three, not two candidates?  In theory, the Eurogroup ministers could hold a vote on what voting rules to apply. But in that case, there is also no clarity on how to vote.

Jan 19, 2010

EU urges Greece to act on debt, reform statistics

BRUSSELS, Jan 19 (Reuters) – Spain’s finance minister played
down the risk of a Greek debt default on Tuesday but European
Union ministers kept pressure on Athens to repair its public
finances and what one called fraudulent statistics.

With financial markets fretting about its ability to service
one of Europe’s biggest sovereign debts, Greece tried to
reassure the other 26 EU states after a charm offensive on
Monday with ministers from the countries that use the euro.

Jan 19, 2010

Euro ministers press Greece to tackle debt hard

BRUSSELS, Jan 18 (Reuters) – Greece received a stern message
over its bloated debt on Monday when Germany and other euro zone
countries said it was up to Athens to sort out the problem, even
if it could count on their backing.

With financial markets fretting over Greece’s ability to
service one of Europe’s biggest sovereign debts, the warning
came from German Finance Minister Wolfgang Schaeuble and others
at a Eurogroup meeting of euro zone ministers in Brussels.

Dec 11, 2009

Leaders back 2010 debate on EU budget overhaul

BRUSSELS, Dec 11 (Reuters) – European Union governments will
start a repeatedly delayed discussion next year on overhauling
the bloc’s farm-heavy budget, a draft EU summit statement said
on Friday.

The European Commission, the EU’s executive, postponed its
proposal on the budget several times over concerns the fierce
debate around it would get in the way of ratification of the
EU’s Lisbon reform treaty.

Nov 19, 2009

Euro zone to urge China for more flexible FX policy

BRUSSELS, Nov 19 (Reuters) – Top euro zone officials will
urge China this month to move towards a more flexible exchange
rate policy but it will not be easy to introduce change soon, EU
Monetary Affairs Commissioner Joaquin Almunia said on Thursday.

European Central Bank President Jean-Claude Trichet, the
chairman of euro zone finance ministers, Jean-Claude Juncker,
and Almunia will travel to China at the end of November for
talks on exchange rates.

Nov 10, 2009

EU agrees on 2011 budget action, lifts bank capital

BRUSSELS, Nov 10 (Reuters) – EU finance ministers agreed on
Tuesday to start major efforts to narrow budget gaps in 2011 at
the latest and reached preliminary agreement to boost the amount
of capital banks must hold to offset risky activities.

But the ministers decided at a meeting in Brussels that it
was too early to consider setting deadlines for ending bank
support in the 27-country European Union.

Oct 30, 2009

EU agrees on climate deal, fails to choose president

BRUSSELS, Oct 30 (Reuters) – The European Union agreed a deal on Friday to help developing nations combat climate change and urged other world powers to follow suit to win the fight against global warming.

EU leaders bridged a rift between rich and less prosperous member states after two days of summit talks, enabling them to agree a joint position for talks in Copenhagen in December on a new global pact against climate change. [ID:nLU124102]

The agreement was a relief for the EU leaders who also made progress towards ratification of a treaty to increase the bloc’s global influence but acknowledged an extra summit may be needed to decide who will be their first president.

They are looking for a leader who will help reinforce the 27-country bloc’s standing on the world stage but have made clear it will not be former British Prime Minister Tony Blair.

"We can now look the rest of the world in the eyes and say we have done our job, we are ready for Copenhagen," said Jose Manuel Barroso, the president of the EU executive, the European Commission. [ID:LU606514]

"We can take this message to Washington, to New Delhi, to Beijing and elsewhere… We are now at a very critical moment. There are many people who believe that the Copenhagen summit is at risk. I think, we think, that we can make it a success."


The worst financial crisis since the 1930s has distracted attention from global warming and the United Nations and many countries say a legally binding treaty is impossible at the Copenhagen meeting from Dec. 7-18.

Funding is central to the chances of success in Copenhagen because developing countries say they will not sign up to tackling climate change without enough funds from rich nations.

Barroso and other EU leaders gave few details of how a deal was reached to ease the concerns of eastern European states over how much money they will asked to provide to help developing nations tackle the effects of global warming.

An EU statement said the member states had agreed developing nations would need about 100 billion euros ($148 billion) each year by 2020 to tackle climate change.

Of that sum, about 22-50 billion euros would have to come from public funds, as opposed to industry — and the EU would put up about one quarter of that sum.

"We have reached a compromise that is good for climate and addresses the concerns of poorer EU countries," Polish Prime Minister Donald Tusk said. "There are no losers. Everyone gave ground a bit, but the deal is good for everybody."

Tusk was among leaders criticised in a letter by South African cleric Desmond Tutu, who urged world leaders to do more to make a deal possible in Copenhagen.

"World leaders are backtracking, mumbling about domestic difficulties and lack of time whilst the European Union, previously progressive champions for action on climate change, is paralysed by the unseemly bickering amongst its member states over who will pay the bill," he wrote. [ID:nLU673876]


The leaders reached an agreement on Thursday that opened the way to ratification of the Lisbon treaty, which would ease EU decision-making, create an EU president and increase the powers of its foreign policy chief. [ID:nLU615465]

Under the deal, the leaders accepted Czech President Vaclav Klaus’s demands for an opt-out from a rights charter attached to the treaty, to shield the Czech Republic from property claims by ethnic Germans expelled after World War Two.

"I have accepted the decision of the Brussels European summit," Klaus said. "I am not going to raise any further conditions for the ratification of the Lisbon Treaty".

Ratification by the Czech Republic, the only EU state that has not ratified, now depends on its constitutional court rejecting a legal challenge in a ruling expected on Tuesday. Blair’s hopes of becoming EU president faded when his candidacy failed to secure the blessing of European socialists, his Labour Party’s allies. Several EU leaders said a special summit would probably be held next month to discuss the job.

The post is now more likely to go to a centre-right leader, especially as centre-right parties dominate the European Parliament and form a majority among EU leaders.

No front-runner has emerged, but possible contenders include Dutch Prime Minister Jan Peter Balkenende, former Finnish prime minister Paavo Lipponen and Luxembourg Prime Minister Jean-Claude Juncker. [ID:nLT673586] (Writing by Timothy Heritage; Editing by Dominic Evans)

Oct 26, 2009

EU looks to divert budget spending towards climate

BRUSSELS (Reuters) – The European Union should shift more of its spending to climate and energy security as part of a radical overhaul of the bloc’s budget, according to a draft paper by the EU’s executive arm

The proposal, which the European Commission is likely to be table in late November, would mark a long-term shift of funds away from agriculture.

Oct 26, 2009

EU plans budget shake-up, less cash for farms-draft

BRUSSELS, Oct 26 (Reuters) – The European Union’s executive arm will propose this year a radical overhaul of the bloc’s budget that would shift spending away from agriculture towards innovation, climate and energy, a draft paper showed on Monday.

The proposal, likely to be made in late November, will set the scene for some two years of tough negotiations among the bloc’s 27 governments, with Britain and France expected to fight especially hard to keep their current budget privileges.

The European Commission’s draft proposal, obtained by Reuters, does not mention a size for the budget, now worth 125 billion euros ($188 billion) annually.

It calls for discipline, however, as governments will need to cut their fiscal deficits in the aftermath of the global economic crisis.

From 2013, when the EU’s current long-term spending plan ends, there should be "a major refocusing of EU spending priorities, with more emphasis on growth and jobs, climate and energy security … and less emphasis on agriculture".

Foreign aid would be another priority, assisting the EU to play a robust international role and helping foster reforms in developing countries, the Commission said.

More than 40 percent of the EU budget is now spent on the farm sector and about a third on regional aid, such as motorway construction, preserving the environment and job training.


The draft said regional aid should focus more on high-value projects such as research and development, innovation, training and trans-national programmes, rather than simple infrastructural schemes.

The proposal to cut farm spending is certain to irk France, which is the main recipient of EU agricultural payments, along with Ireland and Poland.

Less spending for poor regions could irritate Poland and other new EU members from central and eastern Europe, which lag western Europe in wealth after decades of communist rule.

In another potentially explosive proposal, the draft said Britain’s cherished rebate from its contribution to the EU budget should be phased out gradually.

The rebate, worth billions of euros a year, was won in 1984 by the Conservative then-prime minister, Margaret Thatcher.

The proposal to scrap it will infuriate the Eurosceptic Conservatives, expected to win a forthcoming general election.

"The justification for the existence of the remaining correction in favour of the United Kingdom … disappears progressively," the draft said.

The Commission said the current, complex system of collecting the budget should be radically simplified, possibly by linking it to a new or old tax or levy.

Proceeds from the sale of allowances for greenhouse gas emissions could be such a revenue source, it said.

On agriculture, the Commission said direct aid to farmers should no longer be based on historic production levels, but on promoting sustainable farming and rural development.

"Market intervention mechanisms could be rolled back further to become a genuine safety net," the draft said. (Editing by Dale Hudson)

Oct 20, 2009

ECB chief repeats FX policy line after talks

LUXEMBOURG, Oct 19 (Reuters) – ECB chief Jean-Claude Trichet
discussed exchange rates with euro zone finance ministers on
Monday but said nothing new on a dollar slide that some fear
could hurt Europe’s economic recovery.

The European Central Bank president repeated a now well-worn
line that he had no reason for doubt when U.S. Treasury
Secretary Timothy Geithner or Federal Reserve Chairman Ben
Bernanke said a strong dollar was in U.S. interests.

    • About Marcin

      "Based in Brussels, I cover macroeconomy, EU budget, issues related to central and eastern Europe. I previously worked in Warsaw as deputy bureau chief"
    • Follow Marcin