The timing was hardly ideal. Just as funding seized up for some of Europe’s banks, Brussels was gearing up this fortnight to tell senior bondholders to shoulder the burden of rescuing stricken financial institutions.
Whatever the merits of the “bail-in” proposals — and analysts say there are many — it is not exactly a palliative for panicky investors. Little wonder the plan has been shelved, at least for a month or two.
You could see it as a lesson learned. When Michel Barnier, the internal market commissioner, floated the measures in January, bond markets virtually froze for a few days. The stakes are only higher now.
The principle behind the reforms is simple enough: finding a mechanism to save struggling banks by forcing investors to take a hair-cut rather than forcing taxpayers to fund a bail-out.
Tripoli's Old City. September 4.
The European Union’s diplomatic corps, the External Action Service, has landed in Tripoli – the first step in a move to establish a delegation office there. But now that the EU is on the ground in the Libyan capital, don’t expect a torrent of aid to begin flowing just yet.
A post-Gaddafi Libya, and the Arab Spring, in general, present a big opportunity for the new EAS to demonstrate that it can play a useful role helping to promote development and nurture fledgling democracies in the region. The EAS was envisioned as one of the main levers of the EU’s “soft power” when it was enshrined in the 2009 Lisbon treaty. Yet it has got off to a decidedly rocky start.
The extent of the EAS’s role in Libya remains in question. EU officials say they have been told by Libya’s National Transitional Council that it does not intend to hand over the country’s post-conflict reconstruction to foreign interests, and that it will insist on leading the process itself.
Gerhard Schröder’s unexpected re-emergence as a voice for European fiscal integration may or may not change minds in increasingly eurosceptic Germany. But in our half-hour interview, the former chancellor made a pretty heart-felt case that the country’s leadership should be pressing ahead with pro-EU economic policies, even if they are unpopular.
Given the limited space we have in the daily newspaper, we thought Brussels Blog readers might be interested in a fuller account of his views on the issue. As we noted, Schröder was careful not to directly attack his successor, Angela Merkel, for her recent handling of the crisis – something done last month by Helmut Kohl, who unlike Schröder is a member of Merkel’s own political party.
But he did take a more subtle dig. He made the case that politicians need to push through unpopular policies if they believe in them – and then noted he paid the price for reforms in German labour and social benefit policies, collectively known as Agenda 2010, which are now credited with leading to an economic turnaround.
The US isn’t the only big democracy electing a new president in 2012. The European Union will also potentially select a fresh leader after Herman Van Rompuy’s first two-and-a-half year term expires next spring.
The European battle was never likely to rival the US ballot for excitement. For one, the president of the European Council – Van Rompuy’s job title – is “elected” only by members of the said Council, which is made up of national leaders.
On top of that, it was always widely assumed that Van Rompuy would be put in for a second two-and-a-half years, matching the five year tenure of other EU officials. On Monday he indicated his interest in staying on through January 2015, in an interview on Belgian radio VRT:
If I dare to think about a second term, it’s because the work is not yet done. I must not do it for my own glory.
In interviews on the sidelines of the Ambrosetti forum in northern Italy, economists Martin Feldstein and Hans-Werner Sinn say leaving the euro may be the only choice left for Greece. Former Spanish prime minister José María Aznar, though, urges peripheral countries to continue reforms.
At the Ambrosetti forum in northern Italy, Nouriel Roubini, the US-based economist, weighs in on the health of Europe’s banks and sides with IMF chief Christine Lagarde on the need for the sector to raise even more capital.
According to the Belgian press, the European Commission is readying itself to wade into the miasma that is Belgian politics, urging the country to end its 492-day run without a permanent government.
Thursday’s Le Soir newspaper claims the EU’s executive arm has lost patience with its host country’s political class, and will publicly urge a coalition to be forged in double quick time in order to enact economic reforms.
The article prompted an energetic rebuttal from the Commission, which released a statement making clear that it has no new views on the subject. Yves Leterme, caretaker prime minister, also dismissed the story.
To wit: it’s not that the EU would object as such to a new government. It’s just not complaining about the current absence of one. It “has confidence in the democratic process in Belgium”, such as it is.