EU

Workers shutter a branch of Laiki Bank, which was closed under Cyprus' €10bn bailout last year

For those not following every twist and turn in the EU’s debate over how to bail out failing banks, it may come as a bit of a surprise that finance ministers are still fighting over who pays for a collapsed financial institution given the deal struck in December on this very issue.

But a three-page “issues note” sent to national capitals this week ahead of EU finance ministers’ meetings on Monday and Tuesday – obtained by Brussels Blog and posted here – makes clear that there are still a lot of unanswered questions about a new EU-wide bank rescue fund to pay for such bailouts. And it’s perhaps no surprise that most of the unanswered questions centre around one thing: money. Read more

Do last week’s German constitutional court ruling lambasting – but failing to overturn – the European Central Bank’s crisis-fighting bond-buying programme and today’s political upheaval in Italy have anything in common?

In the view of many ECB critics, particularly in Berlin, the two are not only related, but one may have caused the other. Read more

EU commissioner Neelie Kroes

Neelie Kroes has built up a formidable reputation over four decades in politics – from privatising Dutch state telecom and postal services in the 1980s, to slapping a record $1.4bn fine on Microsoft as the EU’s anti-trust chief in 2008, to liberalising Europe’s fragmented telecoms market.

So when she announced her ambition to “reform and globalise how the internet is run” on Wednesday, some feared a power grab of audacious proportions.

Was the formidable Ms Kroes seeking to take on the management of the internet itself? Had the Commissioner’s ambitious instincts finally gotten the better of her?

The true scale of Ms Kroes’ ambitions are far more modest – by seeking to wrest some control from the US over the regulation of key web functions, such as top level domain name registration and the routing of web traffic, the Commission is seeking a small but significant role in managing the nuts and bolts of the internet. Read more

Jean-Claude Trichet, right, with the parliament's economic committee chair, Sharon Bowles

The troika of bailout lenders has not been getting much love at the European Parliament’s ongoing inquiry into its activities in recent weeks. But the criticism is not just coming from MEPs in the throes of election fever. Predictions of the troika’s demise have come from some unexpected quarters, including current and former members of the European Central Bank executive board.

During the hearings, MEPs have particularly criticised the troika — made up of the International Monetary Fund, European Commission and the ECB — for its overly optimistic growth forecasts for bailout countries, which have been repeatedly revised downwards. Perhaps unsurprisingly, they have also suggested that the troika be subject to greater parliamentary oversight.

Hannes Swoboda, the Austrian social democrat who heads the centre-left caucus in the parliament, went further, saying the body is undemocratic, hostile to social rights and that the EU would be better off without it. Read more

EU foreign policy chief Catherine Ashton, left, with Ukrainian opposition leaders in Kiev last week

One of the lingering questions left after Ukraine’s failure to sign its long-negotiated integration treaty with the EU at a November summit in Vilnius – setting off months of protests in Kiev – is whether more needs to be offered to former Soviet republics than the current “Eastern Partnership”, which promises “association” but not future membership with the EU.

A Swedish-led effort to restart that conversation will be discussed at Monday’s meeting of EU foreign ministers, according to a “restricted distribution” document handed out to all 28 capitals ahead of the gathering. According to the “non-paper” – which Brussels Blog has posted here – 12 countries have signed onto the Swedish initiative, most of them former Soviet-bloc EU members, but also the UK and Germany.

Among other things, the paper, titled “20 points on the Eastern Partnership post-Vilnius”, argues quick signatures of treaties with Georgia and Moldova, the only two remaining after Ukraine and Armenia reneged at the last minute. Read more

By Christian Oliver

Expectations from the EU’s 2030 energy and climate targets: The EU will on Wednesday propose a series of energy and climate targets that will have a profound impact on how the continent generates its power. The overarching goals will be accompanied by proposals on the development of shale gas and measures to rescue the EU’s carbon market, which has fallen into disarray. The measures are being hotly contested as the targets are seen as vital to determining power prices and industrial competitiveness.

Early drafts of the package and people close to the talks suggest that the following are the most likely outcomes: Read more

Verhofstadt, right, with his centre-right counterpart in the European parliament, Joseph Daul

Despite the hopes advocates had for a full-scale political campaign for European Commission president this year, the contest thus far has been a rather staid affair: German Social Democrat Martin Schulz, the European parliament president, sewed up the centre-left’s nomination unopposed and nobody yet has formally thrown their hat in the ring on the centre-right.

The one place where an all-out race is underway, however, is among the centrist Liberals, where two high-profile candidates – Guy Verhofstadt, the former Belgian prime minister and Liberal leader in the European parliament, and Olli Rehn, the Finnish economic chief on the European Commission – are locked in a neck-and-neck fight to become the party’s presidential candidate.

The chance of the Liberals – whose two largest parties, the British Liberal Democrats and the German Free Democrats, are expected to take a drubbing in May’s European elections – actually getting the Commission presidency job are slim. But that hasn’t stopped Rehn and Verhofstadt from engaging in a spirited battle ahead of the party voting, which opens January 24 and ends February 1.

Olli Rehn

The latest salvo is over Verhofstadt’s desire to have a two-man debate, which Rehn has apparently refused to participate in. According to an internal party email sent to the two men yesterday and obtained by Brussels Blog (and posted here), a Liberal party leader – whose name has been redacted – says the Rehn team has begged off:

I have this afternoon been informed that it will not be possible for you, Olli, to commit to such a debate by today’s deadline. I have therefore no option than to cancel our plans for a debate and propose to move to our alternative proposed solution, that I have previously communicated to both of you, which is the separate Q&A sessions by each nominee to be webstreamed.

 Read more

Merkel mentioned the "contractual arrangements" in maiden Bundestag speech of her third term

Although the two-day EU summit that begins today in Brussels is nominally about defence policy, the main event most delegations were watching was whether summiteers would sign up to a German-backed plan that would require all eurozone countries to sign annual contracts with Brussels obligating them to liberalise their economies.

These so-called “contractual arrangements” have been bubbling around for more than a year, but fiercely resisted by Italy and other southern eurozone countries, who view it as another effort by Berlin to dictate economic policy for the rest of the currency union. Angela Merkel, in her maiden speech before the Bundestag after her re-election as German chancellor yesterday, mentioned them yet again as a necessity.

Paris has led the charge to change contracts into more of a two-way street: If eurozone countries are going to be forced to sign such agreements – which in many ways echo the “memorandums of understanding” that now are forced on bailout countries like Greece– then they should get some financial assistance in return.

Originally, Pierre Moscovici, the French finance minister, advocated a eurozone budget accessible to countries that participate and would pool responsibility for things like unemployment insurance. That idea didn’t go very far, but in the last draft of the summit communiqué sent to national delegations last night (and obtained by Brussels Blog) suggests other financial sweeteners – like loans, grants or guarantees – might be in the offing. 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