Brussels blog

When Willie let fly in Brussels

April 19, 2012 4:23 pm by Alex Barker

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.

Continue reading: “When Willie let fly in Brussels”

Tags: EU competition policy, Joaquín Almunia
Posted in EU, EU Commission | Permalink

When will Portugal need a 2nd bailout?

April 19, 2012 3:25 pm by Peter Spiegel

Passos Coelho with Britain's David Cameron during a visit to Downing Street on Wednesday

Largely overlooked amidst the handwringing over Spain this week was a piece written by Portuguese prime minister Pedro Passos Coelho in the FT that all but admits publicly what many officials have been saying privately for some time: Portugal is probably going to need a second bailout.

In fairness, Passos Coelho doesn’t actually come out and say that, but it sure sounds like he’s preparing the groundwork:

We are utterly committed to fulfilling our obligations. But while we are optimistic, we must also be realistic and pragmatic. This is why we accept that we may need to rely on the commitment of our international partners to extend further support if circumstances beyond our control obstruct our return to market financing.

Although Portugal’s current €78bn bailout runs through 2014, a decision on whether a second bailout is needed must be made much more quickly than that – probably sometime in the next two or three months. A look at why after the jump…

Continue reading: “When will Portugal need a 2nd bailout?”

Tags: Portugal, sovereign debt crisis
Posted in EU, Euro, Fiscal policy | Permalink

More leaked warnings, this time for Italy

April 2, 2012 8:12 pm by Peter Spiegel

Italy's Mario Monti, right, with Chinese premier Wen Jiaobao during a Beijing trip at the weekend.

Most of the focus on Friday’s meeting of eurozone finance ministers in Copenhagen was on how much leaders would increase the size of their €500bn rescue system. But according to a leaked document we got our hands on, the eurozone firewall wasn’t the only topic being debated.

The four-page report says the “Budgetary situation in Italy” was item #3 on the eurogroup’s agenda. As we wrote for Tuesday’s print edition, the report warns that any slippage in growth or a rise in borrowing rates could force the technocratic government of Mario Monti to start cutting again – something he has vowed not to do.

As is our practice, Brussels Blog thought it was worthwhile giving some more details and excerpts from the report beyond what fits in the newspaper.

Continue reading: “More leaked warnings, this time for Italy”

Tags: Italy, Mario Monti, sovereign debt crisis
Posted in EU, Fiscal policy | Permalink

Leaked EU economic analyses: have a read

April 2, 2012 4:24 pm by Peter Spiegel

Denmark's Margrethe Vestager, center, with her counterparts in Copenhagen this weekend.

Following our story Saturday and subsequent blog post on two confidential economic analyses prepared for European finance ministers in Copenhagen which paint a less-than-confident picture of the eurozone crisis, we here at Brussels Blog have received multiple requests for more on their contents.

Now that the documents are safely back in the FT’s Brussels bureau (which is fully equipped with a document scanner), we thought we’d simply post the entire reports for our regular readers to examine for themselves.

The more tough-worded analysis was prepared by the European Union’s economic and financial committee, headed by Austrian Thomas Wieser, and simply entitled “Assessment of key risks and policy issues”. A link to that 3-pager, which warns market panic could flare up again “at very short notice”, is here.

The other, longer document, prepared by the European Commission’s directorate for economic and financial affairs and entitled “Economic Outlook, Financial Stability in the EU: Policy Challenges and Way Forward”, can be read here.

Tags: EU economic policy, sovereign debt crisis
Posted in Economic growth, EU, EU Commission, Fiscal policy | Permalink

Leaked EU economic analyses on Europe’s banks

March 30, 2012 7:41 pm by Peter Spiegel

Belgium's finance minister Steven Vanackere talks to colleagues at the Copenhagen meeting.

Our front page story in tomorrow’s dead tree version of the FT includes lines from confidential analyses distributed to European Union finance ministers at their gathering in Copenhagen. As usual, we thought we’d offer a bit more from the documents here at the Brussels Blog.

Among the most interesting elements in the documents are discussions about Europe’s banks, which have seen a surge in confidence thanks to the European Central Bank’s €1tn in cheap loans, known as LTRO for long-term refinancing operations.

One of the analyses in particular – the three-page “Assessment of key risks and policy issues” prepared by the EU’s economic and policy committee – warns that there are new signs of instability in the European banking sector. Details after the jump…

Continue reading: “Leaked EU economic analyses on Europe’s banks”

Tags: European banks, European Central Bank
Posted in EU, EU Commission, Financial services | Permalink

New eurozone bailout fund: €700bn or €940bn?

March 30, 2012 8:32 am by Peter Spiegel

Klaus Regling, head of the eurozone rescue fund

Coming up with a number for the size of the new, enlarged eurozone rescue fund seems to be the favourite parlour game in the run-up to today’s meeting of eurozone finance ministers in Copenhagen.

According to a leaked copy of the draft conclusions obtained by the FT, the ceiling for the next year will be €700bn. But is that, to quote a former US president, fuzzy math? Is it really €940bn…but some leaders are afraid to admit it out of fear of angering their bailout-fatigued national parliaments?

The leaked draft has three elements of a new firewall starting in mid-2012 : €200bn is committed to the ongoing bailouts in Greece, Ireland and Portugal; €240bn of left-over money in the current, temporary rescue fund is frozen in an emergency account; and two-fifths of the new €500bn permanent rescue fund gets capitalised.

The fuzzy math comes in when you try to account for the new permanent rescue fund, called the European Stability Mechanism. An attempt to clarify, plus some excerpts from the draft, after the jump…

Continue reading: “New eurozone bailout fund: €700bn or €940bn?”

Tags: EFSF, sovereign debt crisis
Posted in EU, Euro, Fiscal policy | Permalink

Can the Pope save the euro?

March 29, 2012 12:12 pm by Peter Spiegel

Pope Benedict XVI, eurozone head of state?

Even in the midst of the eurozone crisis, senior officials in Brussels are occasionally able to maintain a sense of humour. Case in point: A press release sent out this afternoon by the office of Herman Van Rompuy announcing yet another emergency eurozone summit – on April 1.

At first glance, the press release looks genuine. The summit needs to be held because of some “inadvertent wording” in the new fiscal discipline treaty, which covers all countries “whose currency is the euro”. As a result, the heads of state of Montenegro, Kosovo, San Marino, Monaco, Andorra and Vatican City need to be brought to Brussels to weigh in on the pact, since they all use the euro as well.

“The presence of His Holiness the Pope affords an opportunity to pray for divine intervention to save the euro,” says the press release. “This is now seen as the most credible strategy.”

Tags: Herman Van Rompuy
Posted in Euro | Permalink

Sarkozy, Schäuble and eurozone musical chairs

March 28, 2012 5:41 pm by Peter Spiegel

Eurogroup contenders Juncker, left, and Schäuble

Although the financial markets and many non-Europeans will be watching Friday’s gathering of eurozone finance ministers in Copenhagen to find out how much they will enlarge Europe’s rescue fund, the Brussels echo chamber will be watching for another reason entirely: Just who will be getting three top jobs that must be filled by the time summer rolls around?

Up until the last day or two, the smart money was that Yves Mersch, head of Luxembourg’s central bank, would get the first job on offer – a coveted seat on the European Central Bank’s six-member executive board, taking away a post originally slated to go to a Spaniard, Antonio Sáinz de Vicuña.

But senior eurozone officials said the intense politicking that has occurred in the run up to Friday’s meeting has made Mersch’s appointment less certain. “It’s one of those things that could go one way or another,” said one person directly involved in the talks. “I wouldn’t bank on it yet.”

The politics get very complicated and are directly related to the re-election prospects of French president Nicolas Sarkozy. A detailed explanation of the convoluted twists after the jump…

Continue reading: “Sarkozy, Schäuble and eurozone musical chairs”

Tags: ECB, Jean-Claude Juncker, Klaus Regling, Wolfgang Schauble
Posted in EU, Euro | Permalink

Another nail in Nabucco’s coffin?

March 22, 2012 5:03 pm by Joshua Chaffin

The European commission, the European Union’s executive arm, has been one of the staunchest supporters of the proposed Nabucco pipeline, a 3,900-kilometer behemoth that would carry natural gas from the Caspian region to Austria.

For the commission, Nabucco represents the backbone of a new southern corridor that would break Europe’s dependence on imported Russian gas. It has touted the project repeatedly over the years, and has also opened its wallet, committing up to €200m in funding.

But in a recent conversation with Brussels Blog, Gunther Oettinger, the energy commissioner, made a departure from the usual script and gave support to the growing suspicion that the full Nabucco may be a lost cause.

Continue reading: “Another nail in Nabucco’s coffin?”

Tags: EU foreign policy, European Union
Posted in Energy, EU, EU Commission | Permalink

What did Ashton really say about Gaza?

March 20, 2012 4:34 pm by Peter Spiegel

The EU's Ashton and Israeli prime minister Netanyahu meet in Jerusalem last September.

Catherine Ashton, the European Union’s foreign policy chief, has spent most of the day under attack from Israeli leaders for allegedly comparing the killing a four people at a Jewish school in Toulouse yesterday to the death of children in Gaza at the hands of the Israeli military.

Ashton’s spokesmen have vehemently denied she was drawing a comparison between the two and was simply listing places where children have been violently killed, including the recent death of Belgian students in a bus crash, the shooting of Norwegian students last year by a right-wing extremist, and the Assad regime’s assault on Homs.

One problem: almost 24 hours after the speech was given, someone in the EU bureaucracy noticed the transcript posted by the European Commission’s communication team was incorrect. In the list of places cited by Ashton was also Sderot, the Israeli town near the Gaza Strip that has been targeted by Palestinian militias with rocket attacks.

The new version of the transcript still leaves out some of Ashton’s rhetorical flourishes, so Brussels Blog put together its own transcript of the section in question, which can be viewed in this video around minute 12.

Continue reading: “What did Ashton really say about Gaza?”

Tags: Catherine Ashton, Israel
Posted in EU, Foreign policy | Permalink