Beppe Grillo’s Five Star troops are on side with a vengeance. The Lithuanian stunt pilot is pledging loyalty. The Calvinist isn’t taking calls from British Tories bearing gifts. Even given the faltering efforts to woo the Irish cannabis campaigner, things are looking up for Nigel Farage in the wacky world of the European parliament group building. Read more
David Cameron and his wife Samantha after voting in last week's EU parliament elections
David Cameron’s anti-federalist group in the European parliament entered these elections looking a bit shaky. While anti-establishment parties were faring well, the polls for the ECR group were worrying. Cameron took a huge gamble when leaving the centre-right European People’s Party to form a eurosceptic bloc. Some ECR folk feared the group could unravel in the wake of the election.
Daniel Hannan, one of the ECR’s best known MEPs, dismissed the doom laden predictions from “half-clever commentators” (this correspondent included). He was correct; the speculation proved only half-right. The ECR have emerged in a solid position from the vote. It survived and its feathers are well preened for a beauty contest for the leadership of Europe’s eurosceptics. But the dynamics of the group are changing — and it poses some serious political dilemmas for Cameron.
1) The ECR is here to stay….
If it makes no new allies and loses no group members, the ECR will live on. The election results show it has cleared the rather arbitrary seven country official threshold to form a group (there are MEPs from at least 8 member states). At present though, their numbers are down. The ECR is projected to reach 45, a loss of 11 seats. The Tories and the Czech members both suffered at the hands of the electorate.
2) ….with reduced Tory influence
Perhaps as significant is the changing balance of power within the party. Read more
It is safe to assume that there are parts of the UK Treasury already in a tremendous froth over this leaked opinion from the legal advisers to EU finance ministers.
Remember the only thing that would make George Osborne, the UK chancellor, hate the Financial Transaction Tax idea more than he already does would be its extension to currency exchange transactions. Even the European Commission didn’t go that far.
For that reason this opinion from the EU Council legal service will cause a stir, at least in Brussels. It contradicts the Commission’s own legal service (they are making a habit of this on the FTT) and says that there is no law in principle preventing a joint levy on foreign exchange. This effectively reopens a debate that makes London very nervous. Read more
German finance miniser Wolfgang Schäuble with Finland's Jutta Urpilainen at Monday's eurogroup
The German finance ministry is on the brink of an extraordinary achievement. Like many power shifts within the EU, it is happily hidden behind the most fiendish jargon. But if all goes to plan, Berlin is securing something rare and coveted in Brussels: the effective power to block future EU banking regulation.
Put another way, it is quietly resetting the ground rules of the single market in financial services without the need for treaty change or a referendum or a big speech. Take note David Cameron.
How has Berlin managed it? It is all concealed in the thicket of legal arguments over establishing Europe’s €55bn bank rescue fund via an intergovernmental agreement, rather than through the EU’s normal “community method”, where majority (or at least qualified majority) rules.
To translate: at German behest, the rules for pooling banking union rescue funds are laid out in a side-deal between governments, rather than under legislation agreed between EU member states and European parliament. Such intergovernmental pacts are allowed; remember the fiscal compact? But they are not supposed to change or impact the EU’s common rulebook, outlined in the EU treaties. Read more
Does David Cameron now need a reopening of the EU's treaties more than Angela Merkel does?
We have hardly heard a peep from Britain on the latest leg of Europe’s banking union. It is natural enough given the UK will be outside the proposed system for shuttering shaky banks, which is primarily for eurozone countries. But do not imagine it is unimportant for London. Strictly in terms of David Cameron’s plans to renegotiate Britain’s place in the EU, there has perhaps been no more worrying a development in Brussels all year.
Why? Cameron’s renegotiation strategy is partly based on this assumption: the eurozone will need a banking union to survive, and a fully-fledged banking union will need a re-write of EU treaties before 2017. That necessity opens the door for Cameron to press demands to repatriate powers.
The trouble is that this week’s banking union negotiation is showing that Germany and the eurozone will go to great lengths to avoid giving Cameron the leverage he craves. In one senior EU official’s words: “Nobody wants to give the keys to the UK”. Read more
ECB chief Mario Draghi, left, with eurogroup chair Jeroen Dijsselbloem at last night's meeting
Whenever it comes to eurozone backstops, it usually pays to be beware of fine print and Germans bearing gifts.
Eurozone finance ministers reached a tentative agreement in the early hours of this morning that is significant in this sense: it paves the way for a final deal on a common resolution system for the banking union.
In terms of substance, the big breakthrough is a commitment to establish a common backstop — by 2025 at the latest — that will provide taxpayer support to the bank resolution system, should its resources be overwhelmed in a crisis.
Germany was staunchly opposed so it represents an important concession to Italy, France and the European Commission. What it does not do, however, is detail what form that backstop should take — that is left open. And they have a decade to fight over what the commitment actually entails. Read more
Are the Dutch attempting to lead a mutiny on bank reform? It is hard to tell whether the objections are serious enough to unravel the deal last week on the EU rules for handling a bank crisis. But something mildly rebellious is certainly afoot. And it could end in another golden-gloves showdown between Jeroen Dijsselbloem, the Dutch finance minister, and his Swedish sparring partner Anders Borg.
At issue is the draft deal on the bank recovery and resolution directive (BRRD), which was agreed between negotiators for the European parliament and EU member states on Wednesday, brining to a close months of difficult talks. The reforms give all EU countries a rulebook at national level to handle a bank in trouble and, if necessary, bail-in creditors to help foot the bill.
The Dutch, however, are unimpressed. They think the draft agreement offers too much freedom to governments wanting bailout banks with public money, rather than impose losses on bondholders. And it looks like they have a significant number of allies. 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