Mario Draghi, left, stands next to Noonan at last week's finance ministers' meeting
Given the eurozone crisis has, for more than a year, failed to seriously rankle the financial markets, those of us still preoccupied with its aftermath and how it is changing Europe can occasionally feel like a small band of obsessives offering up Talmudic pronouncements of interest to a dwindling number of fellow crisis junkies.
But occasionally one of those textual debates rises to the level of importance that’s worth the attention of a broader audience. And one of those occasions seems to have occurred over the last couple of weeks regarding Ireland and the European Central Bank’s bond-buying programme, known as Outright Monetary Transactions (OMT).
For those who haven’t been following this obsessively, the discussion is important because most officials and market analysts credit OMT with, essentially, ending the hair-on-fire phase of the eurozone crisis last year. Read more
Demonstrators in Berlin protest against alleged US spying activities in July.
In today’s dead-tree edition of the FT, we report on a draft of a stinging report the European Commission will issue Wednesday which could send shock waves through the US tech industry: unless the Obama administration changes the way it handles online data of European citizens, American companies like Google and Facebook will have to find another way to do business in the EU.
Given the importance of the Commission’s review of the 13-year-old “safe harbour” agreement with the US – which allows American firms to operate in Europe under US privacy rules because of an assumption that Washington treats the data similarly to European governments – and the fact we got our hands on it before its official release, we thought Brussels Blog readers might be interested in a bit more detail about the Commission’s findings. Read more
Van Rompuy at last month's EU summit. Will December's summit agree to the contracts?
When is a eurozone bailout not a eurozone bailout?
It’s a question that sherpas to the EU’s presidents and prime ministers will be grappling with on Tuesday when they are scheduled to debate a new proposal from Herman Van Rompuy, the European Council president, intended to further centralise economic decision-making in Brussels.
Under the 9-page plan (first uncovered by our friends and rivals at Reuters; we’ve posted the copy we got our hands on here), a country that is struggling economically could agree to a “contractual agreement” with Brussels that legally codifies its economic reform programme.
In return, that country could avail itself of a low-cost loan that would only be disbursed in tranches to insure compliance with the “contractual arrangement”. Oh, and one other thing: the European Commission would monitor the country to make sure its complying with the “contractual arrangement”.
Legally-binding economic reform agreement. Low-cost eurozone loans. European Commission monitoring missions. Sounds a bit like a bailout, no? Well, because it would be available to all eurozone countries, Van Rompuy doesn’t call it a bailout. In eurocrat-ese, it’s a “solidarity mechanism”. And if sherpas give it the signoff Tuesday, it will be debated by EU leaders at their December summit. Read more
Rehn, left, with President José Manuel Barroso at Wednesday's press conference
It may have appeared that Olli Rehn, the EU’s economic chief, today was siding with Washington in the going transatlantic tussle over Germany’s current account surplus by launching an inquiry into whether the surplus was harming growth in the rest of Europe.
But Rehn went out of his way to make clear that he was no fan of the US Treasury department report that pushed the dispute into overdrive last month.
Speaking at a press conference announcing the European Commission’s decision to launch the “in-depth review” of Germany’s surplus, Rehn said the US Treasury’s report was “to my taste somewhat simplified and too straight forward”. Read more
Rehn, right, consults with Germany's Wolfgang Schäuble at last month's IMF meetings.
Over the last few weeks, the normally über-dismal science of German economic policymaking has unexpectedly become stuff of international diplomatic brinkmanship, after the US Treasury department accused Berlin of hindering eurozone and global growth by suppressing domestic demand at a time its economy is growing on the backs of foreigners buying German products overseas.
The accusation not only produced the expected counterattack in Berlin, but has become the major debating point among the economic commentariat. Our own Martin Wolf, among others, has taken the side of Washington and our friend and rival Simon Nixon over at the Wall Street Journal today has backed the Germans.
Now comes the one voice that actually can do something about it: Olli Rehn, the European Commission’s economic tsar who just made his views known in a blog post on his website. Why should Rehn’s views take precedence? Thanks to new powers given to Brussels in the wake of the eurozone crisis, he can force countries to revise their economic policies – including an oversized current account surplus – through something soporifically known as the Macroeconomic Imbalance Procedure.
On Wednesday, Rehn will announce his decision on whether Germany will be put in the dock for exactly what the US has been accusing it of: building up a current account surplus at the expense of its trading partners. And if Rehn’s blog post is any indication, he’s heading in exactly that direction. Read more
So this is it. Google’s revised offer to settle the European Commission probe into its search business has been described extensively in the press. But the actual text and screenshots of how new Google searches will look under the proposal were not published, much to the annoyance of the complainants asked for confidential feedback. One of the parties has decided to revolt and set the documents free. We’re publishing them here in full.
Before the legal text, a screenshot: this is what Google proposes its EU sites will look like for a restaurant search. Note the three “Almunia links” — what negotiators are calling the forced search results that display competitors’ offerings — that appear under the paid-for “sponsored” Google search results. Under the revised offer, they are spruced up with bigger fonts, icons and two lines of text.
And here is what a search for an iPod would look like. It’s important to note that the Almunia links (to rival price comparison sites Supaprice, Kelkoo and Shopzilla) are still paid for through an auction, but the minimum offer price has been reduced. More on the objections to that at the bottom of the post.
The three-year Brussels probe into Google’s search business seems to be meandering towards a thundering anticlimax. With every legal twist, revised settlement offer and procedural shuffle, the case is losing the zip that made it a cause célèbre in the antitrust world. The opposing camps, meanwhile, appear ever more entrenched and polarised. Nobody is satisfied.
For now Joaquín Almunia, the EU competition chief, is still ploughing towards a settlement, rather than issuing formal charges. But it has been a bumpy ride. The protracted process will have many more months or years to run, especially with legal appeals. There could still be surprises, even perhaps a charge-sheet, the so-called “statement of objections”. The anti-Google camp are far from surrendering. The details still matter.
The latest inch-forward came on Monday with Almunia seeking feedback on Google’s second settlement bid. The terms of the latest package will not be published, for various reasons that are hard fathom. Even so, all the complainants and most journalists covering the case now have a copy of the offer or have been talked through it. Below is a medley of insights on what is on the table and what to expect next: Read more
Ireland's Enda Kenny, left, and Germany's Angela Merkel meeting last year in Berlin
With just over a month of funding left in Ireland’s €67.5bn three-year bailout, Irish prime minister Enda Kenny sent a subtly-worded letter to his fellow EU leaders as they gathered in Brussels today for their two-day summit.
At first glance, the letter (we’ve posted a copy here) seems to simply repeat messages that Kenny has made in the past: he’s weighing whether to request a line of credit after they exit the bailout; he wants quick completion of the eurozone’s “banking union”; he continues to hit his bailout targets.
But a closer read between the lines shows a more complicated game going on. In essence, Kenny is reminding other leaders they have failed to live up to promises made to Ireland last year that would have significantly lowered the Dublin’s sovereign debt levels. An annotated look at the letter after the jump.
Herman Van Rompuy during a public appearance at the European Council building on Wednesday
EU leaders are gearing up for their first summit in four months tomorrow – the longest hiatus since the outbreak of the eurozone crisis three years ago.
It is a measure of how calm the financial markets have been that no major decisions are to be taken at the two-day get-together, which is supposed to focus on telecommunications and digital policy issues. “It’s not a summit for decisions,” said one top EU diplomat. “The objective is decisions at the December summit.”
Still, for the cognoscenti there is much to comb over, including the simmering spat between France and Britain over José Manuel Barroso’s effort to streamline EU regulations.
On Wednesday afternoon, the office of Herman Van Rompuy, president of the European Council and chair of all summits, circulated a final draft of the summit communiqué, which Brussels Blog got its hands on and posted here. A few things worth noting: Read more
Did tight-fisted budget policies in Germany help make the eurozone crisis deeper and more difficult for struggling bailout countries like Greece and Portugal?
That appears to be the conclusions of a study by a top European Commission economist that was published online Monday – but then quickly taken down by EU officials.
Our eagle-eyed friend and rival Nikos Chrysoloras, Brussels correspondent for the Greek daily Kathimerini, was able to download the report and note its findings before the link went dark (Nikos kindly provided Brussels Blog a copy, which we’ve posted here).
Shortly after being contacted by Brussels Blog, officials said they would republish the 28-page study, titled “Fiscal consolidation and spillovers in the Euro area periphery and core”, once a few charts were fixed. And as Brussels Blog was writing this post, it was indeed republished here.
Still, the paper’s day-long disappearance looks suspicious given the hard-hitting nature of its findings. For some, they may not be surprising. Many economists have argued that it was the simultaneous austerity undertaken by nearly all eurozone countries over the course of the crisis that pushed the bloc into a deeper recession than predicted, hitting Greece and other weak economies particularly hard.
But coming from the European Commission’s economic and financial affairs directorate – which was responsible for helping administer Greek and Portuguese bailouts as well as provide semi-mandatory policy advice to other eurozone economies – the criticism of Berlin is unexpected, to say the least. Read more