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“Their world collapses. Ours is built.” So said Florian Philippot, the main adviser to Marine Le Pen, hailing Donald Trump’s victory as the start of a new order in world politics. Elections in France, the Netherlands and Germany will give this theory a thorough real-world test in 2017.
In France, Ms Le Pen of the National Front leads the way in first-round voting, but lags comfortably behind potential rivals in polls on a presidential run-off. Now, after duff calls in both Britain and the US pollsters are viewed with scepticism.
“Before the American result, the question seemed absurd,” says the Economist. “Now, the unthinkable has become conceivable.” The FT’s Anne-Sylvaine Chassany quotes Dominique de Villepin, a former French prime minister: “France and the US are like twins. What is possible in the US is possible in France, even if the system is refusing to see it.” Read more
Next week, the European Commission will take its latest step in its ongoing quest to move beyond the LuxLeaks corporate tax avoidance scandal that has periodically dogged President Jean-Claude Juncker.
Pierre Moscovici, the EU’s tax policy chief, is set to unveil a flurry of proposals aimed at tackling so-called base erosion and profit shifting: in other words the aggressive tactics used by multinationals to shrink their tax bills by as much as possible. This morning, we’ve done a story about the new proposals, which we obtained. But we’ve also now posted them here for others to read.
The so-called LuxLeaks revelations emerged shortly after Mr Juncker became commission president in November 2014, and dogged his early days in office. They documented how during his two decades as Luxembourg prime minister, up to 340 multinational companies, ranging from Ikea to Pepsi, funnelled profits through the tiny country to lower their tax bills to as little as 1 per cent.
The commission has embarked on a wave of regulatory changes to close loopholes, including making a renewed push for the longstanding EU goal of having a common consolidated corporate tax base for companies. It is also pursuing high profile competition cases against tax deals Luxembourg and others struck with multinationals such as Apple, Amazon and Fiat.
Most recently, the European Commission ordered Belgium to recoup about €700m from 35 multinational companies that have benefited from the country’s generous fiscal incentive scheme.
Mr Moscovici’s plans, which are outlined in a 13-page summary posted here, enshrine international agreements reached by the Organization for Economic Cooperation and Development into EU law, and in some cases go even further – notably when it comes to restricting the ability of companies to shift of profits from parent companies to lightly taxed subsidiaries. Read more
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Le Monde called it François Hollande’s “last-chance plan”. Struggling with an unemployment rate that stubbornly remains above 10 per cent, and saddled with a promise not to seek re-election in 2017 unless joblessness falls, the French president on Monday unveiled a €2bn scheme aimed at reversing an “economic emergency” facing his country.
The measures themselves are mostly targeted at the young: a €2,000 subsidy for each young worker hired by small companies; creating 500,000 vocational training schemes; and a programme to boost apprenticeships. The price-tag may be high, but taken together the initiatives appear less ambitious than the so-called “Loi Macron”, an economic reform plan passed a year ago under the aegis of Mr Hollande’s youthful economic minister. That plan has failed to produce any signs that unemployment is dropping, raising questions over whether the new programme will provide much help.
As with the Loi Macron, Mr Hollande’s new plan seemed to please nobody. Reformers like Mr Macron and Manuel Valls, the prime minister, are viewed with suspicion from within the ruling Socialists because of their “liberal” views. But the measures backed by the two men never seem to go far enough to please business interests, either.
The French business daily Les Echos has a useful summary of reactions from business and labour leaders, with Medef, the main French employers’ association, offering a rather tepid endorsement by calling it a step “in the right direction.” The head Medef’s sister organisation for small and medium-sized businesses was similarly lukewarm, saying he was doubtful it would have any long-term effects. Predictably, the Républicains, as party boss Nicolas Sarkozy has re-branded the French centre-right, were withering in their criticism. The conservative Le Figaro quotes party spokesman William Larrivé calling the plan “an insult” to France’s unemployed. Read more
One of the more controversial actions taken by the Juncker Commission in its still-short life was January’s move to make the EU’s crisis-era budget rules more “flexible,” an announcement many took as a signal it was preparing to let both Italy and France off the hook for their recent fiscal transgressions. Which it ultimately did.
According to Commission officials, the so-called “flexibility communication” caused ructions among the 28 commissioners both because of its substance and the process by which it was agreed: the college was only allowed to see a hard copy of the highly-technical document for about a half hour before it was taken away, and then presented for adoption later in the day.
Among those who were angered by the way it was forced through the college over the complaints of some of the Commission’s budget hawks was Chancellor Angela Merkel who, according to our friends and rivals at the German weekly Der Spiegel (no relation), complained to Juncker that “her commissioner” – German Günther Oetttinger – had only received the document a few hours before it was to be approved. “Why ‘your’ commissioner?” Juncker reportedly replied coolly. “That’s my commissioner.”
Now it seems that Berlin is not the only place where objections are being raised about some of the decisions taken in the “flexibility communication”. According to a leaked opinion by the European Council’s legal service – which Brussels Blog got its hands on and has posted here – last month, lawyers on the other side of Rue de la Loi appear to have decided a central part of the new guidelines might be illegal. Read more
After months of speculation, official confirmation finally came on Friday that Ramon Fernandez, one of the central players in Brussels on the French side throughout eurozone crisis negotiations, will step down as head of the French Treasury at the end of June.
He will be replaced by Bruno Bézard, 51, currently director general of public finances at the finance ministry and a figure firmly in the tradition of French haut functionnaires: a graduate of both Ena and L’Ecole Polytechnique, the elite graduate schools, he was an economic adviser to former socialist prime minister Lionel Jospin and has headed the APE, the agency that holds most of the state’s big company shareholdings.
Fernandez, 46, an amiable figure who combines formidable technical skills with an impish sense of humour, found himself in an uncomfortable position after the election in 2012 of President François Hollande. Firmly identified with the centre-right, Fernandez was appointed in 2009 by former president Nicolas Sarkozy and was regarded with deep suspicion by many on the socialist left, notably the voluble Arnaud Montebourg, now economy and industry minister. The directeur du Trésor is a powerful position as the senior civil servant in the finance ministry empire. Read more
As part of the big Franco-German deal announced last night in Paris, President François Hollande and Chancellor Angela Merkel took everyone by surprise by announcing they now want a permanent head of the so-called eurogroup, the committee of 17 eurozone finance ministers that does all the heavy lifting on regional economic policy, including bailouts.
The timing of the agreement (it’s on page 8 of the nine-page “contribution”, which we’ve posted here) is a bit awkward, since a new part-time eurogroup chairman was appointed just six months ago: Dutch finance minister Jeroen Dijsselbloem.
Most EU officials view the deal as more an effort at Franco-German rapprochement than an attempt to force Dijsselbloem out, despite the fact he has stirred controversy in his short tenure in the job. As one senior official put it, agreeing to language that eurozone reforms “could include” a permanent eurogroup chair “is not exactly ousting someone”.
We here at Brussels Blog asked the FT’s man in Amsterdam, Matt Steinglass, to send us the reaction from Dijsselbloem’s homeland:
There is surprise and a bit of resentment. Dijsselbloem was forced to issue a hasty statement that he did not support the move and would not accept the position if it meant he could no longer serve as finance minister.
This issue has always been a potential dealbreaker: how will Germany’s politically powerful network of small public banks — or Sparkassen — sit under the bailiwick of a single bank supervisor? Until now we’ve mainly seen diplomatic shadow-boxing on the matter. But that fight is beginning in earnest.
As is the custom in Brussels, some ambiguous and unclear summit conclusions are helping spur things along. Chancellor Angela Merkel last week hailed a one particular sentence as a breakthrough for Germany: that the European Central Bank would “be able, in a differentiated way, to carry out direct supervision” over eurozone banks.
To her, that vague language was recognition that the Sparkassen would be treated differently — the ECB would concentrate on big banks and those that are facing troubles, and leave the rest to national authorities. Read more
In our interview published today with Michel Barnier, the silver-haired Frenchman who oversees the EU’s financial system, he talks in great depth about the future of banking regulation and his relationship with François Hollande.
For Barnier, the election back home not only brought him a new French president to deal with, but also a mixed legacy for his political home, the centre-right UMP. The party’s standard-bearer Nicolas Sarkozy used the waning days of the campaign to openly court voters who had supported the far-right National Front through anti-EU rhetoric.
In addition to threatening to pull France out of the EU’s passport-free Schengen travel zone, Sarkozy regularly belittled the European Commission and urged “buy French” policies that violated the EU’s common market.
In our hour-long interview, Barnier insisted that such Europe-bashing was only the result of overheated politics ahead of a contentious vote. “I think you have to put to one side the electoral campaign,” he said, citing UMP party luminaries like François Fillon and Alain Juppé who have strong pro-European pedigrees.
Still, Barnier said he intends to actively insert himself in the post-Sarkozy debate about the UMP’s future – though he assiduously declined to say what role him himself might play in that new party. Read more
By Tom Burgis, John Aglionby and Esther Bintliff in London with contributions from FT correspondents around the world. All times are London time.
This post should update automatically every few minutes, although it might take longer on mobile devices.
12.44 Borzou Daragahi, the FT’s north Africa correspondent, reports on the response to the French election results in the Arab world:
Across a region undergoing tumultous change, many greeted the fall of Nicolas Sarkozy with glee, hopeful it would spell the end of French foreign policies considered too Atlantacist, pro-Israel and anti-immigrant.
Though many Libyans hailed Mr Sarkozy for his role in spearheading Nato’s help in toppling Col Muammer Gaddafi, others remember his administration’s cozy ties with deposed Tunisian leader Zein el Abidine ben Ali and Egypt’s former President Hosni Mubarak.
Ties between Tunisia’s new government, dominated by a coalition of Islamists and leftists, and France have grown particularly strained. In an interview with the FT in January, Islamist party leader Rachid Ghannouchi accused France of arrogantly giving Tunisia ‘lessons’ on economic and social policy despite its own problems.
After Mr Sarkozy’s defeat, Mustapha ben Jaafar, speaker of the Tunisian parliament and leader of the left-leaning Ettakatol party, hailed François Hollande’s arrival as way to update bilateral relations.
“We are hopeful that the arrival of the Socialists will give impetus to the historically strong relationships between our two countries,” he said in a statement. “With France, the new democratic Tunisia wants to build a true partnership that respects the values of freedom and human rights, based on a strategy of co-development and shared prosperity.”
12.22 The election results in Greece testify to widespread dissatisfaction with the country’s mainstream conservative and socialist parties. Voters have punished the political groups they see as jointly responsible for the economic crisis, with once marginal groups rapidly gaining ground.
Has the UK lost its influence in Europe? That has become the conventional wisdom in Brussels after prime minister David Cameron last week spurned France and Germany by refusing to sign up to a new “fiscal compact” to further integrate the bloc’s economies.
A first indication may come over the next 24 hours, during which a group of bleary-eyed ministers will try to close an agreement on the European Union’s annual fisheries quotas. Unlikely as it may seem, the UK is expected to get its way because it has rounded up support from France and Germany.
The December fisheries council is one of Brussels’ quirky annual rites and arguably the world’s ultimate fish market. Working late into the night, European diplomats barter quotas on scores of salt water species – from North Sea cod to the nephrop norvegicus – to piece together a comprehensive agreement governing the fisheries of the world’s biggest seafood consumer.
It will be Luxembourg that will have the final say on Brussels versus Strasbourg, now that Paris has decided to sue under Lisbon.
In other words, the fight over the seat of the European Parliament has suddenly become a full-blown EU inter-institutional brawl.
The French government on Tuesday decided to take the European Parliament to the European Court of Justice in Luxembourg after parliamentarians last week decided to tweak the terms of their regular commute between Brussels and Strasbourg. Paris claims the move violates the EU’s new Lisbon treaty, its governing constitution. Read more
Paris lost no time in rebutting yesterday’s study suggesting members of the European Parliament would rather end the monthly to-and-fro between Brussels and Strasbourg.
A statement released by the foreign ministry on Friday was a Gallic blend of rebuke, snub and curtness.
“The question of the seats is judicially mandated by the treaties: these are applicable to member states and to institutions alike,” it reads. Read more
There are plenty of things to like about Strasbourg – the Christmas market, the soaring cathedral and the ambient spirit of Franco-German reconciliation. But you might not want to visit the place 12 times a year.
That appears to be the verdict of members of the European Parliament, who – in one of the European Union’s stranger rituals – decamp to the Alsatian capital roughly once a month for a plenary session. Accompanying them on their journey from Brussels are thousands of journalists, assistants and diplomats – as well as a special trainload of files.
But a new study commissioned by Briton Edward McMillan-Scott, a Liberal Democrat MEP, indicates that 91 per cent of MEPs and their staff find the trip intolerable and would prefer to stay put in Brussels. Schlepping to Strasbourg is inefficient, they say, and takes a toll on their work and emotional life. Read more
In today’s paper, fellow Brussels Blogger Stanley Pignal has a nice scoop about a letter France and Germany sent to European Union officials announcing their formal objections to including Bulgaria and Romania in the Schengen area, the visa-free travel zone that most EU members are part of.
Traian Basescu, the Romanian president, has already responded this morning by calling the letter a “discriminatory act against Romania,” and vowing to fight the move.
Because the issue could get even hotter, especially since the incoming Hungarian presidency had made Bulgarian and Romanian Schengen membership such a priority, we thought we should post the letter here, with some annotations of our own. Read more
Twenty-six European leaders turned up for a dinner in Brussels this evening with one burning question to discuss: Whether or not to change the European Union treaties to accommodate Germany’s demands for a new permanent bailout fund?
But one European leader burst in and insisted on talking about something else. That would be David Cameron, the UK prime minister, and his obsession was the European budget. Read more
The call by Angela Merkel to reopen the European Union’s treaties in a major address to the Bundestag is already generating reaction from heads of government in other member states as they begin descending on Brussels for a two-day summit.
Ms Merkel worked the phones the day before the summit, calling several of her counterparts in an attempt to shore up support – a sign of just how precarious her position is and her need to come out of the summit with a victory following intense criticism at home for her political deal-making to win over reluctant allies. Read more
Viviane Reding was the star of the European Commission’s surprisingly blunt condemnation of France for its treatment of the Roma. And rightfully so. The prepared statement read by the famously helmet-haired commissioner on Wednesday forcefully punctuated weeks of caution and dissembling by the commission. More than one Brussels correspondent expressed shock at the outbreak of bonafide news at the typically somnolent midday briefing. Read more
Christian Wulff, Germany’s new federal president, has not been idle. He had barely wiped his feet on the doormat in Schloss Bellevue, his splendid new Berlin residence, before setting off on a foreign trip.
While his job is without power, it carries lots of prestige. Indeed, the role is more about symbolism than substance. But the symbolism matters.
His first stop on Wednesday was in Strasbourg to meet Jerzy Buzek, European Parliament president. Second stop was Paris, for a chat with Nicolas Sarkozy at the Elysée palace. And third stop, on Thursday, was Brussels, where he had lined up Herman Van Rompuy, president of the European Council, José Manuel Barroso, president of the European Commission, and Anders Fogh Rasmussen, Nato secretary-general.
It was all about pouring oil on troubled waters, to be sure. Germany’s relationship to the European Union has seldom caused so much anxiety amongst its neighbours, since Berlin started to bang the drum with a vengeance about the need for fiscal discipline – first in Greece, and now in the rest of the eurozone. Read more
There is a gulf separating Germany from France on how to cure the eurozone’s ills, and it does not bode well.
Germany identifies the eurozone’s chief problems as excessive budget deficits, weak fiscal rules and a general culture of over-spending in the region’s weaker countries. The remedy, say the Germans, lies in austerity measures, tougher punishments for rule-breakers and better housekeeping. Germany is so sure that it has got the answer right that it is introducing a €80bn programme of tax increases and spending cuts – not because the German economy desperately needs such measures, but because the government in Berlin wants to set an example to other eurozone states.
France knows the eurozone has a fiscal problem, but it disagrees with the German view that immediate and drastic austerity measures are essential. The French contend that, if budget hawks win the day, Europe’s fragile economic recovery will fade away and there may even be another recession (as Paul Krugman notes, an example often cited in support of this argument is the “Roosevelt recession” of 1937, when President Franklin D. Roosevelt, having just about dragged the US economy out of the Great Depression, inadvertently caused another economic downturn with a premature attempt to balance the budget). Read more