This is a bad day for Europe’s financial transaction tax. The legal adviser to EU finance ministers — the Council legal service — has concluded that one of the main provisions of the Brussels designed tax is discriminatory, overreaches national jurisdiction and infringes the EU treaties.
In a June letter, Anastasiades called Bank of Cyprus his country's "mega-systemic bank".
After the upheaval of March’s prolonged fight over Cyprus’s €10bn bailout, much of the ensuing debate has focused on the island’s largest remaining financial institution, the Bank of Cyprus, which was saved from shuttering but faces an uncertain future.
The bank’s fate was highlighted in a letter from Cyprus’s president to EU leaders in June, where he argued that eurogroup finance ministers had not properly dealt with the “urgent need” to address the “severe liquidity strain” the bailout had placed on the country’s last “mega-systemic bank”.
“I stress the systemic importance of BoC, not only in terms of the banking system but also for the entire economy,” Nicos Anastasiades wrote at the time.
Well, the European Commission’s soon-to-be-released first review of the Cyprus programme, a draft of which was obtained by Brussels Blog and posted here, shows that the fate of the bank is still somewhat unresolved – and that the EU has decided to make Nicosia’s promise to live up to the original bailout terms a primary condition for easing onerous capital controls which still hamper economic activity. Read more
Cyprus' Mavroyiannis, right, with EU's Lewandowsky during last year's budget talks
When Andreas Mavroyiannis was appointed the Greek Cypriots’ lead negotiator with the Turkish side of the island this month, many in Brussels took note. Mavroyiannis is not only Cyprus’ former ambassador to the EU, but he served as the island’s EU minister during its eventful EU presidency last year.
Although the Cypriot presidency received mixed reviews, thanks in part to ongoing upheaval back in Nicosia surrounding the country’s then-unfinished bailout, Mavroyiannis was widely viewed as a pro, winning praise in Brussels for his handling of highly-tendentious negotiations over the EU’s €1tn seven-year budget.
So if Mavroyiannis could handle 27 warring EU heads of state, surely his appointment was a sign of new Cypriot president Nicos Anastasiades’ seriousness in tacking the 40-year division of the island, some reasoned. Anastasiades was one of the few Greek Cypriot politicians, after all, who backed the 2004 Annan Plan to reunify the island, and many EU officials have hoped the economic crisis brought on by the €10bn bailout might bring new momentum to finding a solution to the frozen conflict.
Well, not everyone agrees with that assessment – least of all Osman Ertug, the Turkish Cypriot official who will be Mavroyiannis’ chief interlocutor if and when negotiations reconvene. Read more
Brussels and Beijing appear to be nearing a settlement in a trade fight over solar panels that is the EU’s biggest ever anti-dumping case – based on the more than €20bn in Chinese-made solar products shipped to the bloc in 2011. Sometime on Friday afternoon, EU officials are expecting to learn whether or not their counterparts in Beijing have taken their latest offer.
In theory, the two sides have until August 6th to haggle over a deal. After that date, provisional duties imposed by the EU will jump from about 11 per cent to an average of 47 per cent. The reality is that they have probably already missed that deadline, according to diplomats, given the amount of legwork that Brussels must do to translate an agreement and circulate it among national governments. Hence, the next few days are crucial. Read more
Is some lobbying in Brussels too heavy and contrived for its own good?
Two examples spring to mind from some of the most over-lobbied issues handled by the European Commission: card fees and the antitrust case against Google. Read more
Günther Oettinger, EU energy commissioner, proposed tweaking the biofuels policy last year
Among the EU’s less successful policies, the one governing biofuels looms as a particular case study in unintended consequences.
Five years ago, member states agreed to binding targets requiring each country to derive 10 per cent of all transport fuel from renewables by 2020. Those targets were meant to speed the adoption of environmentally-friendly biofuels and were part of a broader campaign by Brusselsto claim the lead in the fight against global warming.
These days, that policy is a mess. The increased demand for crop-based biofuels – made from corn, rape and soya, for example – has been blamed for a surge in world food prices. It also appears to contribute to deforestation as farmers in far corners of the world chop down rainforests to plant biofuel crops.
The EU is now seeking to correct that. The European Commission, the EU’s executive arm, made a new proposal last year that aims to phase out crop-based biofuels in favour of cleaner ones derived from waste products and algae, among other substances. The European parliament’s environment committee last week voted through its own version of the draft legislation.
But it seems even the revised biofuels policy may have its own unintended consequences, including a brewing fight between Europe’s oleochemicals industry – the folks who use processed animal fats to produce everything from lubricants to lipstick – and their suppliers. Read more
Politics in Brussels can verge on the absurd. As a case in point, we bring you the bizarre tale of how Greek Stalinists seemingly helped rescue European fund managers from a bonus cap, then deployed a form of Brussels magic that lets you vote against something, then for it.
Before we start, it is worth mentioning that this blog is partly intended as a way to fully lay out the evidence and address accusations that the FT launched a “sycophantic attack” on the Greek Communist party. Read more
Greek finance minister Stournaras, left, with IMF chief Lagarde at Monday's eurogroup meeting
In an interview with five European newspapers published Thursday, Jeroen Dijsselbloem, the Dutch finance minister who heads the committee of eurozone finance ministers, said his eurogroup will need to look at whether Greece needs additional bailout aid in April 2014.
This will surprise some members of the troika, particularly the International Monetary Fund, who were pushing for a reckoning much more quickly amid signs the €172bn second Greek bailout is running out of cash much sooner than anticipated.
Once the €3bn in EU aid contained in a new €4.8bn tranche approved this week is paid out, total EU outlays will reach €133.6bn — out of a total €144.6bn committed (the IMF puts up the rest). So just €11bn left in the EU’s coffers. Further evidence that cash is leaving too quickly is contained in the latest report on Greece’s rescue prepared by the European Commission, which our friends and rivals at Reuters obtained and helpfully posted for everyone to see.
As Brussels Blog noted earlier, there is no more EU cash left in the programme for the second half of next year, even though the bailout was originally supposed to contain enough until the end of 2014. But this chart in the new report makes clear that cash may run out even quicker than that: Not only is the third and fourth quarters of 2014 completely unfunded, now there’s only €1.5bn left for the second quarter, too. Read more
A few weeks ago, the EU agreed an historic overhaul of its troubled common fisheries policy, setting binding deadlines to end decades of over-fishing that have depleted stocks from the Mediterranean to the North Sea.
But just when it seemed safe to go back in the water, the European parliament’s fisheries committee threatened to take a bite out of the reform on Wednesday. By a 12 to 11 margin, the committee approved an amendment allowing the use of up to €1.6bn in EU funds to help build new fishing boats.
The subsidies fly in the face of the conventional wisdom that the EU’s 83,000-vessel fleet is already far too large, and in need of a drastic cut – some say by half – in order to allow stocks to recover.
“For anyone with a brain this is completely outrageous and very difficult to understand,” said Markus Knigge, a fisheries advisor to the Pew Charitable Trust, citing estimates that the money could result in 19,000 new boats. Read more
Bank investors beware. Dazzling political fireworks will be launched in Brussels today that may distract you from the reform that really matters, at least over the next few years.
All the attention will naturally be on a bold move to create a powerful authority to wind up eurozone banks — a great leap forward for banking union that puts Germany’s red-lines to the test. Read more