Who will succeed José Manuel Barroso as president of the European commission?
That question has long been debated around the corridors and coffee bars ofBrussels. But it gained special urgency after Barroso’s state-of-the-union speech in Strasbourg last week. In it, Barroso suggested that each political party nominate their own choice for commission president and place that person atop their list for the 2014 European elections.
The idea is to generate some much-needed excitement for EU elections that tend to suffer from paltry voter turnout.
“This would be a decisive step to make the possibility of a European choice offered by these elections even clearer. I call on the political parties to commit to this step and thus to further Europeanise these elections,” Barroso said.
So that begs the question: who is generating the most buzz as the next commission president? Who has the right stuff? As a service to our readers, Brussels Blog has decided to present a list of early contenders from each of the major political families. Read more
Is it possible to have one supervisor for eurozone banks, while keeping 17 different paymasters for when things go wrong?
It is the big potential problem of phasing in a banking union – while prudential responsibility is centralized under one supervisor, the means to pay for bank failure isn’t. One cynical diplomat likened it to “telling all cars to suddenly change sides and drive on the left of the road – but leaving the lorries to drive on the right.”
Just think through what would happen in the case of a failed financial institution once the European Central Bank takes over supervision.
Under the Brussels banking union plan, the ECB will have the power to shut down the lender by removing its license to operate. But in practice it would require the authorisation of the bank national authority. As we know, some banks perform vital functions for the economy and are too big to fail. For the ECB to pull the plug, someone would have to be available to pay for winding it up or bailing it out. Read more
China’s solar panel manufacturers are facing an uphill battle in their legal fight against the EU, which last week targeted them as it launched the bloc’s biggest-ever an anti-dumping investigation. The case involves Chinese exports of solar panels, wafers and other products that totalled some €21bn last year.
More than half of such anti-dumping investigations result in tariffs being imposed, according to EU officials. Yet there are at least two technical factors at work in the solar dispute that could make the odds even worse for the Chinese. Read more
Viviane Reding, left, confers with José Manuel Barroso during a July meeting in Cyprus.
Over the last couple of days, we’ve been chronicling the increasingly contentious effort by EU justice commissioner Viviane Reding to enact legislation requiring all major listed companies in Europe to have at least 40 per cent of their boards comprised of women.
The UK and Sweden– as well as some free-market oriented Reding counterparts on the European Commission – are not enamoured of the idea, which the Luxembourger is hoping to introduce next month. As we reported in today’s dead-tree edition of the FT, the UK has circulated a letter to other EU countries which would lay out their objections to Reding and her boss, commission president José Manuel Barroso.
As is our practice here at the Brussels Blog, we thought we’d provide some more detail on the leaked documents we’ve been basing our reporting on. First, click here for a copy of the draft legislation that has been making the rounds within the commission. After the jump is the text of the draft UK letter that’s now being circulated on the topic. Read more
Planning for a European banking union is racing ahead, in spite of the considerable political obstacles. The vision is for two, five or even ten years in the future. But be in no doubt: the institutional turf war is already afoot.
It was on display today in the pages of the international press. Speaking to the FT Jose Manuel Barroso, the European commission president, laid out his vision of a banking union built on the foundations of existing EU institutions.
At the same time Christian Noyer, the governor of the Bank of France, made his pitch in the Wall Street Journal for eurozone central banks to provide “the backbone of the financial union”.
The clashing views highlight the great unanswered question of the banking union: if power over banks is centralised, who will be given control? Cui bono? These three scenarios lay down the broad templates for a union, and the institutions that would stand to win and lose depending on the outcome.
1. An EU banking union
Broadly as outlined by Barroso. A single supervisor, resolution regime and deposit guarantee fund serving all 27 member states. Should the UK refuse to take part — which it will — arrangements would be found to enable the other members to go forward. This union would cover countries outside and inside the single currency club, but remain within an EU framework.
Treaty change would not be necessary, at least according to the commission. Read more
As momentum builds towards finding a “roadmap” for commonly-backed eurozone bonds ahead of next month’s EU summit, where the topic is likely to be on the table, officials have begun focusing on interim steps before getting to full-blow mutualisation of debt, which Berlin has made clear it will not support.
Much of the attention thus far has gone to a “wise men” report put out by five German economists last year that would create a “debt redemption fund,” which would refinance debts from eurozone countries over 60 per cent of their gross domestic product. The fund would jointly guarantee the excess debt to help pay it off through cheaper borrowing costs.
But in recent weeks, people briefed on internal debates in Frankfurt and Brussels say another incremental idea has caught the interest of EU officialdom: instead of eurozone bonds, the currency bloc should start with eurozone bills, short-term debt backed by all 17 euro members. Read more
Italy's Mario Monti and Spain's Mariano Rajoy chat during a March EU summit in Brussels.
The leaked copy of the Italy “country-specific report” from the European Commission which we got a hold of before its official publication Wednesday contains lots of warnings about tax evasion and the black economy. But with Spain and Greece dominating headlines these days, one thing that stands out from reading the report is that Italy is not Spain or Greece.
Both Spain and Greece are struggling mightily to get their budget deficits under control, and some analysts argue they’re failing because of a “debt spiral” where their governments attempt to close shortfalls by instituting severe austerity measures – thus killing economic growth and causing bigger deficits.
The European Commission report (which we’re posting online here) shows how much better Italy’s situation is when it comes to its budgetary situation. Not only is Italy not dealing with huge deficits like Spain and Greece; last year it actually had a primary budget surplus – in other words, it took in more money than it spent, if you don’t count debt payments.
That’s a significant difference, and may be one of the main reasons Italy appears to be decoupling from Spain, as our friends and rivals over at Reuters noted in a Tweet this morning: the spread between Spanish and Italian 10-year bonds have shifted a pretty dramatic 250 basis points over the course of the year. Read more
In our interview published today with Michel Barnier, the silver-haired Frenchman who oversees the EU’s financial system, he talks in great depth about the future of banking regulation and his relationship with François Hollande.
EU commissioner Michel Barnier
For Barnier, the election back home not only brought him a new French president to deal with, but also a mixed legacy for his political home, the centre-right UMP. The party’s standard-bearer Nicolas Sarkozy used the waning days of the campaign to openly court voters who had supported the far-right National Front through anti-EU rhetoric.
In addition to threatening to pull France out of the EU’s passport-free Schengen travel zone, Sarkozy regularly belittled the European Commission and urged “buy French” policies that violated the EU’s common market.
In our hour-long interview, Barnier insisted that such Europe-bashing was only the result of overheated politics ahead of a contentious vote. “I think you have to put to one side the electoral campaign,” he said, citing UMP party luminaries like François Fillon and Alain Juppé who have strong pro-European pedigrees.
Still, Barnier said he intends to actively insert himself in the post-Sarkozy debate about the UMP’s future – though he assiduously declined to say what role him himself might play in that new party. Read more
France's Nicolas Sarkozy has made EU borders an issue in his re-election campaign
The issue of the European Union’s passport-free travel zone has become a political hot potato again, thanks in part to Nicolas Sarkozy, who has warned during his presidential re-election campaign that France would withdraw from the border agreement unless more safeguards are adopted.
With just days before voting in the first round of the French election, Sarkozy’s government is pushing the issue back onto the EU agenda, this time with German assistance.
In a joint letter sent to the Danish presidency, Claude Gueant, the French interior minister, and Hans-Peter Friedrich, his German counterpart, are calling for countries to be granted the right to re-impose border controls unilaterally for 30 days if national authorities believe other countries – particularly on the EU’s southern and eastern frontiers – aren’t securing their borders.
A leaked copy of the letter Brussels Blog got its hands on (in French) can be read here. A look at the proposal (in English) after the jump… Read more
Proud competition commissioners and hard-charging chief executives are a combustible mix. Many a business leader has arrived in Brussels imagining that a bit of face time with the man in charge will clinch approval for their compelling merger proposal. How wrong they can be.
The latest lesson in bad lobbying is provided by Willie Walsh, chief executive of IAG, the parent company of British Airways and Iberia. Admittedly the story ended positively for Walsh, who last month won approval for his takeover of British carrier BMI. But the stakes were high (BMI was on the verge of collapse), the decision was finely balanced (and may still be appealed) and Walsh almost wrecked the chances of getting an early green light.
The details of the drama, which played out in February and March, are slowly emerging. One calamitous meeting between Walsh and Joaquín Almunia, Europe’s competition enforcer, nearly overshadowed the entire process. Read more