Pity the Lithuanians. When assuming the EU rotating presidency next month they will inherit the mother of all regulatory backlogs, especially when it comes to the financial sector. It is an impossible and thankless task, a numbingly complex pile of half-negotiated, often paralysed and always contentious directives and regulations, which the European Commission is still adding to with some gusto.
There are going to be around 25 financial services files for the Lithuanians to shepherd through, either in negotiations between member states, or directly with the European parliament. The poor Lithuanian officials strong-armed to work the files will have to become instant experts. Most of the proposals will require countless long meetings with member state or parliamentary negotiators; some will need ministerial input and some sacrificial political blood.
The demands could dwarf the resources and time available. After March 2014, the parliament essentially shuts shop for European-wide elections, so the Lithuanian presidency, which runs through the end of this year, is pivotal. Some countries only have one or two financial services attachés covering the bulk of files. Getting MEPs together for talks is like herding cats. Getting them to agree is even harder, especially in this pre-election environment. A lot of the initiatives will not make it through; their fate is then in the hands of the next leaders of the EU’s parliament, commission and council. Read more
After months of deliberation and some not-so-private sparring with Berlin, the European Commission has pretty much anointed who it wants to be the all-powerful bank bailout and clean-up authority for Europe’s banking union: the European Commission.
This (somewhat predictable) conclusion to its internal policymaking journey is outlined in a paper, seen by the Financial Times, which was distributed to commissioners ahead of their weekly college debate on Wednesday.
There is no sign of Brussels bowing to pressure from Berlin. At the heart of the Commission’s proposed system is a powerful central authority, which has access to a single bailout fund and the clout to shut down a bank even against the wishes of its home state’s government. Brussels wants it operating by 2015.
What about those German concerns that this would breach the EU treaties? Michel Barnier, the EU commissioner responsible for financial issues, concedes in the paper that “only an EU institution” has the legal authority to take important decisions with European effect. Given there is no legal basis to give the European Central Bank this role, the Commission concludes that the only option is to anoint itself as the top resolution authority. Read more
Predicting what Germany will do in a negotiation is fast becoming the Brussels equivalent of soothsaying. Tuesday’s tetchy banking union talks set off yet another diplomatic stampede to consult the ouija boards, throwing canes and tarot cards in order to find out what Berlin really wants.
Were the strident objections of Wolfgang Schäuble, the German finance minister, just negotiating tactics? A manifestation of German domestic politics? Or are they red lines that will require the reforms to create a single banking supervisor to be totally recast or significantly delayed? We’ve consulted the FT Brussels Blog Oracle (and a few diplomats) to draw up these two scenarios.
The Germans are digging in: no deal this year
There was genuine shock at Schäuble’s intervention. Ahead of Tuesday’s meeting of finance ministers, four EU ambassadors predicted to us that a deal — or partial agreement — was at hand. That was until Schäuble spoke. He opened with a dispute that officials thought was close to being resolved: whether small banks fall under the ECB’s supervision responsibilities. Don’t think this will pass the German parliament, he warned.
More worrying for some was his next point. Read more