Barnier, standing at right, may be in for another tussle with Germany's Wolfgang Schäuble.
With Brussels gearing up for tomorrow’s much-anticipated unveiling of the European Commission’s proposal for a new EU agency to take over responsibility for bailing out and restructuring failing banks, we thought it was as good a time as any to post the outline of the plan presented to commissioners last month.
As we reported in today’s dead-tree edition of the FT, the Commission’s legislative proposal that is to be agreed at Wednesday’s meeting of the college is not much different from the eight-page blueprint (read it here) presented by Michel Barnier, the commissioner in charge of financial regulations, and José Manuel Barroso, the commission president.
Fellow Brussels Blogger Alex Barker has written extensively about the outline both for the FT and the Brussels Blog, but it will serve as a good comparison to what comes out tomorrow since the German government has made clear it is unhappy with key elements of the original outline – particularly its contention that a “network of national resolution authorities and funds” is “not sufficient”. Read more
If there were an award for the most powerful group in Brussels that nobody outside the EU bubble has ever heard of, it would probably go to something called Coreper, which is short for comité des représentants permanents – or the committee of permanent representatives.
Its fancy name belies its simple makeup: the 28 ambassadors sent by the EU’s member states to represent them in Brussels. But don’t let that simplicity fool you. In many respects, their powers rival national ministers.
Their weekly (at least) meetings set the course for EU summits and bargains on every piece of European legislation, from budgets to banking union to border security, and many EU perm reps participate in cabinet meetings back home. Indeed, they sit in for national ministers when they can’t attend regular Brussels gatherings.
But Coreper’s relative anonymity means its members are not widely known at home and it may be why something else has gone largely unnoticed: one of the largest departures of senior Coreper ambassadors in recent memory. By Brussels Blog’s count, this summer will see three of the committee’s six longest-serving members – including its vice-dean – either retire or move onto other postings. Read more
Pedro Passos Coelho, Portugal's prime minister, addresses his nation on Tuesday
Portugal’s political wobble has raised anew questions about whether it will need a second bailout once its current €78bn rescue runs out in the middle of next year. With bond market borrowing costs hovering above 7 per cent – just below levels where Lisbon was forced into the rescue in April 2011 – a full return to market financing appears far less likely than it did just a few days ago.
What are the options if Portugal can’t make it? Back in February, when eurozone finance ministers were weighing whether to give both Ireland and Portugal more time to pay off their bailout loans, EU officials drew up a memo that included a section titled “Options beyond the current programmes and the role of the ESM”.
Although it’s over four months old, it hasn’t been made public before and it offers some newly-relevant insights into what path Portugal may take if it can’t stand on its own by May 2014. Read more
A report in Der Spiegel about US snooping on the EU has thrown a very big spanner into trans-Atlantic relations. As we reported in today’s FT, some EU officials – and members of the European parliament – are already warning it could have grave implications for a pending EU-US trade agreement.
But to those committed to the European project, the news is not all bad. As Martin Schulz, the parliament president, noted in an interview on Sunday, the revelations – if proven true – offered an unintended measure of validation for the EU on the international stage. Read more
Merkel speaks at the post-EU summit press conference where she chided Anglo Irish bankers
The explosive disclosure of audio tapes capturing phone conversations of executives at the failed Anglo Irish Bank, which appear to show a strategy to win government bailout money by exaggerating the bank’s financial health, have up until now largely been a domestic political scandal confined to Ireland.
But revelations that one executive, the then-head of the bank’s capital markets operations, sang the Nazi-era version of the German national anthem when he learned the bank had won funding from Germany brought a stern rebuke from Angela Merkel early Thursday morning after Irish Times Berlin correspondent Derek Scally asked her about it at a post-EU summit press conference.
“I cannot but express my contempt at this,” Merkel said. Here are her complete remarks on the topic:
Today’s EU summit is getting under way but Brussels’ blogger Joshua Chaffin and Peter Spiegel discuss how most of the big deals have been cut on the sidelines of the big event.
EU leaders have been arriving at the summit. In a little Brussels Blog attempt at innovation, James Fontanella-Khan and Peter Spiegel did a two-way Twitter chat on the goings on:
After two sets of late-night negotiations that stretched into early morning, EU finance ministers finally reached a deal Thursday on new bail-out rules for European banks. A quick primer:
Is the deal a big step towards a banking union? It is definitely progress. But this is no leap towards centralisation. The bank bailout blueprint was proposed even before a eurozone banking union was endorsed by EU leaders last year. It is more a political pre-condition for deeper financial integration. The reform frames the powers of EU national authorities in handling bank failures and applies to euro and non-euro countries.
The impetus primarily came from the global regulatory response to the Lehman Brothers collapse in 2008. These reforms are supposed to answer the “too big to fail” question, readying the defences for the next crisis and introducing powers to make creditors shoulder the costs of bank collapse, rather than taxpayers. It just turned out the reforms were shaped in the middle of a European banking crisis, rather than in the wake of the US one.
EU financial services chief Michel Barnier takes questions on the bank bail-in debate Wednesday
Call it the Cinderella rule: complex bank reforms cannot be agreed in Brussels until after midnight. So it will be this evening as ministers reconvene to negotiate laws on how to shut down failing banks, a deal that eluded them in the early hours of Saturday morning. (Though it should be noted negotiators for the Irish government, holders of the EU’s rotating presidency, are telling interlocutors they hope to be at the pub before midnight.)
The talks don’t start in earnest until after 7pm but a compromise text is circulating. It is the opening shot from the Irish to break the impasse. Officials are more optimistic about a deal this time. Fellow Brussels Blogger Peter Spiegel has written extensively on the context of the negotiations already, so this blog offers a short summary of the main changes for those who have followed the talks:
Greek prime minister Antonis Samaras, centre, holds a cabinet meeting this week.
Just how off track is Greece’s €172bn second bailout? When the FT reported that a new €3bn-€4bn financing gap had opened up in the programme, EU and International Monetary Fund officials went out of their way to insist there wasn’t a gap at all.
“There is no financial gap. The programme is fully financed for at least another year, so there is no problem, on the premise that we reach a final agreement on the review in July,” said Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup.
IMF spokesman Gerry Rice weighed in with a written statement: “If the review is concluded by the end of July 2013, as expected, no financing problems will arise because the program is financed till end-July 2014.”
Notice the caveats, however. Both Dijsselbleom and Rice say there won’t be a shortfall – as long as the IMF is able to distribute its next €1.8bn aid tranche before the end of July. Why? Because of the new financing gap, which means the Greek programme essentially runs out of money in July 2014. The IMF must have certainty that Greece is fully financed for 12 months or it can’t release its cash, so after July, it must suspend its payments. Read more