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
Wolfgang Schäuble, centre, last week with Jeroen Dijsselbloem, right, and Dutch aide Hans Vijlbrief
EU finance ministers start descending on Brussels this evening for what is expected to be at least two days of marathon negotiations over the second leg of the EU’s nascent banking union: a new agency to deal with failing banks and an accompanying rescue fund to recapitalise them or wind them down.
Senior EU officials have begun to worry that, despite this being the second such gathering in as many weeks, differences are still so significant that a deal may not get done by the time the ministers’ bosses – the EU’s presidents and prime ministers – arrive in Brussels Thursday for their own end-of-the-year summit.
But if it falls to them, officials say the heads of government are unlikely to make final decisions on the resolution system at their two-day summit – and would only set new political parameters for their finance ministers, who might be forced to come back to Brussels over the winter holiday. Joy to the world.
So just where are the differences? The Lithuanians, as holders of the EU’s rotating presidency, helpfully produced a 19-page note for all delegations heading into tonight’s start of the talks, which Brussels Blog got its hands on and posted here. A summary on its main points after the jump. Read more
EU's Füle, right, with Ukrainian president Viktor Yanikovich in Kiev earlier this year
Is Twitter the right place to announce major foreign policy changes?
That’s the question on the lips of several EU foreign ministers today after Stefan Füle, the EU Commissioner in charge of neighbourhood policy, put a landmark integration deal with Ukraine on hold via these two tweets Sunday morning.
On his way into to a meeting of EU foreign ministers on Monday Morning, Frans Timmermans, the Dutch foreign minister, attacked not only the medium, but the message as well.
“I think that making policy on the basis of a Twitter notice by Mr Füle is perhaps not the best way of approaching this is issue,” said Mr Timmermans. “I believe the best signal we can give Ukraine is simply that the door is still open.” 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
Sweden's Borg, centre, during last night's meeting, where he sparred with his Dutch counterpart
It’s become something of a routine in the EU’s ongoing effort to build a “banking union” that finance ministers try to come to a deal at their normal Brussels meetings – only to fail and call a special emergency session at the 11th hour before a crucial summit.
It happened last December when ministers held a last-minute emergency meeting to agree a new EU supervisor for all eurozone banks; it happened again in June to get to a deal on rules for how much creditors should lose when a bank fails. After yesterday’s 15-hour marathon on a new EU bank resolution authority, ministers will now have one last shot next Wednesday before the last EU summit of the year begins the next day.
The hold-up this time is a dispute over how a new EU-wide bank rescue fund should function. And if anyone is looking for evidence of how much work still needs to be done, consider these two documents which were circulated among finance ministers late last night – one here outlining an emergency backup to the fund and another here on a new treaty to set up the fund. Both are almost completely substance free, meaning a lot must be done before Wednesday. Read more
Wolfgang Schäuble, the German finance minister, during the marathon talks on Tuesday
EU finance ministers meeting late into the night are edging closer to a deal on a new European bank executioner. But as always in the eurozone crisis, ministers have become hung up on small but potential significant details. Officials say the differences are significant enough that a final deal will have to be delayed until next week.
Brussels Blog got its hand on “Terms of Reference” circulated by the Lithuanians, who hold the rotating EU presidency, around 6:30pm this evening that includes some details that are new – but have already raised objections in certain quarters. We’ve posted a copy of the 10-page document here. Read more
David Cameron, UK prime minister, has been loudly campaigning for a crackdown on EU migration in an effort to curb the influx of workers from poorer member states to Britain.
But on Monday, the Tory-led government tried to block key amendments to EU legislation that seeks to do exactly that: reduce the inflow of workers from central and eastern Europe to wealthier member states.The so-called “posting of workers directive” was agreed by member states in 1996 to make it easier for EU workers to carry out work outside of their home country for a limited period of time.
But a number of countries led by France, Germany and Belgium have over the years complained that the directive was being used inappropriately to undercut local labour rules in richer countries. Essentially, workers from poorer countries offered their services at below market prices without asking for any social security contributions. Read more
Mario Draghi, left, stands next to Noonan at last week's finance ministers' meeting
Given the eurozone crisis has, for more than a year, failed to seriously rankle the financial markets, those of us still preoccupied with its aftermath and how it is changing Europe can occasionally feel like a small band of obsessives offering up Talmudic pronouncements of interest to a dwindling number of fellow crisis junkies.
But occasionally one of those textual debates rises to the level of importance that’s worth the attention of a broader audience. And one of those occasions seems to have occurred over the last couple of weeks regarding Ireland and the European Central Bank’s bond-buying programme, known as Outright Monetary Transactions (OMT).
For those who haven’t been following this obsessively, the discussion is important because most officials and market analysts credit OMT with, essentially, ending the hair-on-fire phase of the eurozone crisis last year. Read more
Demonstrators in Berlin protest against alleged US spying activities in July.
In today’s dead-tree edition of the FT, we report on a draft of a stinging report the European Commission will issue Wednesday which could send shock waves through the US tech industry: unless the Obama administration changes the way it handles online data of European citizens, American companies like Google and Facebook will have to find another way to do business in the EU.
Given the importance of the Commission’s review of the 13-year-old “safe harbour” agreement with the US – which allows American firms to operate in Europe under US privacy rules because of an assumption that Washington treats the data similarly to European governments – and the fact we got our hands on it before its official release, we thought Brussels Blog readers might be interested in a bit more detail about the Commission’s findings. Read more
Van Rompuy at last month's EU summit. Will December's summit agree to the contracts?
When is a eurozone bailout not a eurozone bailout?
It’s a question that sherpas to the EU’s presidents and prime ministers will be grappling with on Tuesday when they are scheduled to debate a new proposal from Herman Van Rompuy, the European Council president, intended to further centralise economic decision-making in Brussels.
Under the 9-page plan (first uncovered by our friends and rivals at Reuters; we’ve posted the copy we got our hands on here), a country that is struggling economically could agree to a “contractual agreement” with Brussels that legally codifies its economic reform programme.
In return, that country could avail itself of a low-cost loan that would only be disbursed in tranches to insure compliance with the “contractual arrangement”. Oh, and one other thing: the European Commission would monitor the country to make sure its complying with the “contractual arrangement”.
Legally-binding economic reform agreement. Low-cost eurozone loans. European Commission monitoring missions. Sounds a bit like a bailout, no? Well, because it would be available to all eurozone countries, Van Rompuy doesn’t call it a bailout. In eurocrat-ese, it’s a “solidarity mechanism”. And if sherpas give it the signoff Tuesday, it will be debated by EU leaders at their December summit. Read more