Monthly Archives: February 2013

Monti casts his vote in this week's Italian parliamentary elections.

Just 48 hours after receiving a drubbing at the polls, outgoing Italian prime minister Mario Monti came to Brussels and delivered his first major address since the election, in which he issued a dire warning to other leaders attempting to reform their countries in the midst of a deepening recession: what just happened to me can happen to you.

Monti’s remarks, which appeared off the cuff, came at the end of a detailed review of Italian and EU competition policy as part of a conference Thursday hosted by Joaquin Almunia, one of Monti’s successors as EU competition commissioner.

Monti warned that because economies take a long time to grow after implementing tough austerity and economic reform measures, public opinion quickly turns against the policies and the result is “the coming up of political forces that, of course, oppose the right policies” – a not-so-veiled reference to the Five Star Movement of Italian populist Beppe Grillo, which well outpolled Monti’s coalition in this week’s vote. 

Politicians the world over have huffed and puffed about excessive pay at banks since 2008. While remuneration curbs were put in place, nothing fundamentally challenged bank operations, or their ultimate flexibility to reward staff. The European Parliament has bucked that trend with the mother of all bonus clampdowns. Here are five key questions on the cap: how it works, how you can avoid it, whether it will really pass and what it means for Britain and the City.

1. How is the cap calculated and applied? 

The EU clampdown on bankers’ bonuses is nigh. The final talks (or so diplomats hope) have begun and the room is booked until midnight. The frantic politicking earlier today certainly indicates the deal is close. This blog includes some of the latest political intelligence and a few tentative predictions. But be warned: the Brussels blog would not wager its bonus on the outcome.

1) Britain is looking isolated. It is a complex picture, but the UK is running short of allies, especially on the terms of the cap on variable-fixed pay. Most member states are happy to compromise with the European parliament, which is leading the bonus charge. Berlin is showing no appetite for running to London’s rescue. Even Sweden, the UK’s main friend on financial issues, was relatively silent at a meeting yesterday. The Netherlands said it could even accept a tougher crackdown. Ireland want a deal this evening. 

Finance ministers MIchael Noonan of Ireland, center, and Vito Gaspar of Portugal, right, with the EU's Olli Rehn at January's meeting.

After Greece last year won a restructuring of its €172bn rescue that included an extension of the time Athens has to pay off its bailout loans, Ireland and Portugal decided they should get a piece of the action, too.

So at the January meeting of EU finance ministers in Brussels, both Dublin and Lisbon made a formal request: they’d also like more time to pay off their bailout loans. According to a seven-page analysis prepared for EU finance ministry officials a few weeks ago, though, the prospect is not as straight forward as it may seem.

The document – obtained by the Brussels Blog under the condition that we not post it on the blog – makes pretty clear that while an extension might help smooth “redemption humps” that now exist for Ireland (lots of loans and bonds come due in 2019 and 2020) and Portugal (2016 and 2021), it’s not a slam dunk case. 

Should bankers breathe a sigh of relief over the deadlock in EU talks last night on introducing a bonus cap?

The British are certainly happy to have a bit more time to achieve the improbable and turn opinion in Brussels against strict limits on bonuses that are double or triple fixed pay.

At the same time, the omens from parliament are looking no better for the City’s finest. Just look at the tone of this statement the MEPs spearheading the talks put out today:

We are ready to give the Council one more week for internal discussions. If – after ten months of negotiations – a viable compromise cannot be found on 27 February, we do not see any other possibility than to ask the plenary of the European Parliament to vote on its position.

The threat of a vote is mainly symbolic. But there is no sign of backing down. Indeed parliament is upping the ante. They are pressuring the EU member states — who are represented by the Irish presidency — to override the hold-outs to a deal. It is, in other words, a challenge to force the Brits into line or outvote them within the week. High stakes. 

A missing piece in the eurozone’s newly strengthened fiscal defence is poised to fall into place after a compromise was struck between national governments, members of the European Parliament and the European Commission over new budget rules.

At the heart of the agreement is a commitment by the commission, the EU’s executive arm, to set up a high-level working group to study the feasibility of creating a debt redemption fund for eurozone countries – an idea that some view as a step towards mutually guaranteed eurozone bonds.

 

Hamburger anyone? Getty Images

There is never a good time for a food chain scandal in which people across a continent are suddenly informed that what they thought was beef lasagne was actually horsemeat of unknown provenance.

But there is an added wrinkle of awkwardness to the EU’s horsemeat scandal, since it coincides with the launch of free-trade negotiations with the US in which food safety standards will be central.

The EU-US effort to forge a trans-Atlantic free-trade agreement was announced with great fanfare on Wednesday afternoon in Brussels by José Manuel Barroso, the European commission president, and Karel De Gucht, the bloc’s trade commissioner. The press conference was the culmination of more than a year of diplomatic spadework between the two sides and decades of dreaming by free-traders, business groups and Atlanticists. 

The politics and rituals surrounding the selection of a new pope are even more opaque and mysterious than the back-room negotiations over a long-term EU budget (a recent source of obsession at the Brussels Blog).

Herman Van Rompuy, the European council president, has added to the sense of papal mystery surrounding the resignation announced on Monday by Benedict XVI with the release of a terse, two-line statement. 

It’s hard enough to get 27 member states to agree unanimously on a seven-year, €1,000bn budget – as anyone following the latest EU summit wrestling match can attest. But completing an EU budget deal requires one more thing: the consent of the European parliament.

Martin Schulz, the German social democrat and parliament president, reminded EU leaders and the Brussels press pack of this fact on Thursday evening. In a mildly foreboding press conference, Schulz re-stated his threat that leaders should be prepared for MEPs to block any budget proposal that strays too far from the €1,033bn proposal submitted more than a year ago by the European commission, the EU’s executive arm.

“Yes, we are prepared to make savings, but we are not prepared to have the European Union budget simply amputated,” he said.

Schulz declined to say whether the latest €960bn proposal being considered by Herman Van Rompuy, the European council president, crossed the line from extreme weight loss to amputation. But he was clearly displeased. 

There have not been too many Greek success stories in Brussels the last few years. But one of them may have emerged on Wednesday after a landmark vote in the European parliament to overhaul Europe’s troubled common fisheries policy.

Many hands deserve the credit – from MEPs to environmental campaigners and fishermen, themselves. But near the top of the list must be Greece’s Maria Damanaki, the fisheries commissioner.

Damanaki got the ball rolling when she introduced her own proposal curb overfishing in 2011, and has worked tirelessly since then to keep the momentum going.

“I’m a big fan,” Richard Benyon, the UK fisheries minister, said in December. “I think she has driven the reform process in a very determined way.”