Monthly Archives: May 2013

Dijsselbloem, right, meeting Greek prime minister Antonis Samaras in Athens this morning.

As part of the big Franco-German deal announced last night in Paris, President François Hollande and Chancellor Angela Merkel took everyone by surprise by announcing they now want a permanent head of the so-called eurogroup, the committee of 17 eurozone finance ministers that does all the heavy lifting on regional economic policy, including bailouts.

The timing of the agreement (it’s on page 8 of the nine-page “contribution”, which we’ve posted here) is a bit awkward, since a new part-time eurogroup chairman was appointed just six months ago: Dutch finance minister Jeroen Dijsselbloem.

Most EU officials view the deal as more an effort at Franco-German rapprochement than an attempt to force Dijsselbloem out, despite the fact he has stirred controversy in his short tenure in the job. As one senior official put it, agreeing to language that eurozone reforms “could include” a permanent eurogroup chair “is not exactly ousting someone”.

We here at Brussels Blog asked the FT’s man in Amsterdam, Matt Steinglass, to send us the reaction from Dijsselbloem’s homeland:

There is surprise and a bit of resentment. Dijsselbloem was forced to issue a hasty statement that he did not support the move and would not accept the position if it meant he could no longer serve as finance minister.

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Slovenian finance minister Cufer agreed to the outside banking audit just last week.

Last night, after everyone in Brussels had spent most of the day digesting the European Commission’s reports on all 27 EU countries’ budget plans, officials quietly posted far more interesting documents online: the “staff working papers” that underpin the policy recommendations issued earlier in the day.

According to Commission officials, this was done intentionally. They wanted reporters and national officials to focus on the recommendations and not the analysis behind them.

But starting this morning, Brussels Blog began combing through the working documents – which are much longer and more detailed than the Commission recommendations – starting with the country many consider the next eurozone bailout candidate: Slovenia. It makes for eye-opening reading. Read more

EU trade chief Karel De Gucht speaks at a press conference in Beijing in 2011

While almost everyone in Brussels was asleep last night – except EU foreign ministers fighting about Syria– the Chinese delegation to the EU put out what can only be described as its toughest response yet to the burgeoning trade dispute between Brussels and Beijing.

The statement, which we’ve posted in its entirety here, came after China’s trade representative Zhong Shan met in Brussels yesterday with the EU’s trade chief, Karel De Gucht, in a last-ditch attempt to head off two trade cases that are among the biggest and most politically radioactive the European Commission has ever attempted: punitive tariffs against Chinese solar panel imports and an anti-dumping investigation of Chinese telecommunications equipment.

In the statement, the Chinese delegation is pretty blunt: If De Gucht moves forward with the cases, there will be retaliation – and that retaliation could lead to a full-blown trade war:

If the EU were to impose provisional anti-dumping duties on Chinese solar panels and to initiate an ex-officio case on Chinese wireless communications networks, the Chinese government would not sit on the sideline but would rather take necessary steps to defend its national interest. Despite the heightened risk of the China-EU bilateral trade dispute widening and escalating, the Chinese government would nevertheless make a best effort for hope of reaching a consensus and avoiding a trade war, but this would require restraint and cooperation on the EU’s part.

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It may seem a moot point now that Cyprus’ financial system has, for all intents and purposes, collapsed in the wake of last month’s €10bn eurozone rescue that forced the island to impose capital controls on any large withdrawals from its banks.

But as part of the bailout deal, Nicosia agreed to allow international inspectors to rummage around its banks to investigate allegations of rampant money laundering that were once a major bone of contention in Berlin. The investigation was completed late last month.

Last week, a damning four-page summary of their findings written by the so-called “troika” of bailout lenders was obtained by Brussels Blog and other news organisations (we’re posting it here for the first time, since we only recently able to return to blogging after a hacker attack). The “confidential” troika summary paints a picture of lax enforcement and repeated breakdowns in anti-money laundering procedures.

This afternoon, the Cypriot central bank fired back, issuing its own two-page synopsis of the two reports – one by Deloitte, the other by Moneyval, the Council of Europe’s anti-money laundering monitoring body – which accused the troika of “drawing inferences where none exists in the original reports.” We’ve posted the Cypriot response hereRead more

Bratusek: "Slovenia can on its own without any supervision resolve its problems.”

Amid all the talk that Spain, France and the Netherlands will get waivers next week on tough EU budget rules, allowing them to breach yet again Brussels-mandated deficit ceilings, there are growing signals that one country may not get let off: Slovenia.

Although Slovenia has budget deficit problems similar to its western European counterparts, Brussels’ real concern is about its banking sector, which needs another infusion of taxpayer money to return it to health as non-performing loans continue to rise. Questions about the stability of its three largest banks, all state owned, has put a target on the small former Yugoslav republic as potentially the next eurozone country to need a bailout.

As a result, Slovenia’s demarche from EU economics chief Olli Rehn on Wednesday is likely to come from a place outside the eurozone’s budget deficit rules: new post-crisis enforcement powers Rehn has never used before, the awkwardly named “excessive imbalance procedure”. This authority allows the European Commission to poke around more deeply into a eurozone country’s entire economy – not just government fiscal policy – and demand reforms under threat of swingeing fines.

Alenka Bratusek, Slovenia’s recently-minted prime minister, isn’t too pleased with the prospect of being the first eurozone country to be subject to the EIP. In a meeting with a small group of reporters after Wednesday’s EU summit, Bratusek said officials in Brussels seem to think an EIP citation would help her. She says it won’t. Read more

Late last week, blogs and Twitter accounts belonging to the Financial Times became the latest news outlets to be attacked by hackers claiming to be part of the so-called Syrian Electronic Army, a band loyal to the regime of Syrian president Bashar al-Assad. Since then, the FT has been forced to lock down both this blog and its associated Twitter account, @FTBrussels.

As editors in London get on top of the problem, we are gradually reopening our blogs and official Twitter accounts. So while the hiatus here at the Brussels Blog is finally coming to an end, security restrictions remain, meaning our blogging may be less frequent for a few more days. But please have patience – we should be back at full strength shortly.

Tax evasion was put on to the EU summit’s agenda two months ago but the US Senate probe of Apple’s tax dealings in Ireland has pushed corporate tax avoidance to the forefront of leaders’ attention. Peter Spiegel and James Fontanella-Khan report from the summit meeting in Brussels.

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