Jose Manuel Barroso

Renzi arrives at the EU summit in Brussels on Thursday and quickly took issue with Barroso

If you read the EU’s budget rules, it appears to be a cut and dried affair: if the European Commission has concerns that a eurozone country’s budget is in “particularly serious non-compliance” with deficit or debt limits, it has to inform the government of its concerns within one week of the budget’s submission. Such contact is the first step towards sending the budget back entirely for revision.

As the FT was the first to report this week, the Commission decided to notify five countries – Italy, France, Austria, Slovenia and Malta – that their budgets may be problematic on Wednesday. Helpfully, the Italian government posted the “strictly confidential” letter it received from the Commission’s economic chief, Jyrki Katainen, on its website today.

But at day one of the EU summit in Brussels, the letter – and Italy’s decision to post it – suddenly became the subject of a very public tit-for-tat between José Manuel Barroso, the outgoing Commission president, and Matteo Renzi, the Italian prime minster.

Barroso fired the first shot at a pre-summit news conference, expressing surprise and annoyance that Renzi’s government had decided to make the letter public. For good measure, he took a pop at the Italian press, which in recent days has been reporting that Barroso was the one pushing for a hard line against Rome, and implying he was motivated by his desire to score political points back home in Portugal, where he has long been rumoured as a potential presidential candidate after leaving the Commission:

The first thing I will say is this: If you look at the Italian press, if you look at most of what is reported about what I’ve said or what the Commission has said, most of this news is absolutely false, surreal, having nothing to do with reality. And if they coincide with reality, I think it’s by chance.

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Barroso, right, meets with UK prime minister David Cameron at Downing Street last year.

José Manuel Barroso, the president of the European Commission, caused quite a kerfuffle in London at the weekend when he said on one of Britain’s most-watched political chat shows that Scotland would find it “extremely difficult, if not impossible” to rejoin the EU if it were to secede from the UK.

But for those who have been following the debate closely, Barroso’s position had been telegraphed long before – in fact, it has been the stated European Commission view for nearly a decade.

In 2004, then-Commission president Romano Prodi, in a statement published in the Official Journal of the European Union – where all laws and decisions must be published before they can take legal effect – made clear that any region that decided to declare independence must reapply for EU membership and face the same kind of unanimous agreement as any other applicant: Read more

Van Rompuy, left, has set out a different vision of common eurozone debt than Barroso, right.

Herman Van Rompuy, the European Council president, published the latest iteration of his plan to overhaul the eurozone this morning, just a week after his counterpart across the Rue de la Loi, European Commission president José Manuel Barroso, offered his own blueprint.

Van Rompuy’s 14-page outline includes many of the ideas he’s been proffering since October, including a requirement that all eurozone countries engage in “contractual arrangements” with Brussels, committing them to economic reform plans, and the creation of a eurozone budget. Barroso’s plan has similar elements.

But it’s worth noting where Barroso and Van Rompuy differ, because it could have major implications for the direction the eurozone heads in the coming months. And the differences are perhaps nowhere more evident than on one of the issues that has bedevilled the eurozone since the outset of the crisis: so-called “eurobonds”.

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Van Rompuy is, once again, asking summiteers to endorse the idea in draft conclusions.

When José Manuel Barroso, the European Commission president, unveiled his blueprint for the future of the eurozone last week, aides acknowledged it contained some blue-sky ideas that were meant to provoke debate as much as set firm policies.

But EU presidents and prime ministers may be asked to endorse some of its more controversial ideas if a leaked copy of the communiqué for next week’s EU summit is any indication – including a plan to have all eurozone countries sign “contractual” agreements with Brussels akin to the detailed reform plans currently required only of bailout countries. We’ve posted a copy of the draft, dated Monday, here.

The idea of the Brussels contracts was originally advocated by the summit’s chair, European Council president Herman Van Rompuy, ahead of October’s gathering. But in the end, summiteers only agreed that such a plan should be “explored”Read more

Photo AFP

Mohamed Morsi, the new Egyptian president, arrived in Brussels today for day-long meetings with top EU officials. But most of the world’s attention was back in Cairo, where the US embassy, like other embassies in the region, had been the target of attacks by demonstrators angry about an anti-Muslim movie clip uploaded onto YouTube in the US.

Morsi’s morning press conference with European Commission president José Manuel Barroso was his first chance to publicly address the incidents and followed concerns in Washington that he had not condemned the attacks strongly enough. Indeed, US president Barack Obama himself warned that the US did not consider Egypt an ally, nor an enemy, and was watching closely how Morsi would respond.

In order for our readers to make their own judgment, the complete transcript of Morsi’s comments on the incident at the Brussels presser, as conveyed through a translator, are below. He falls short of specifically condemning the attacks, but does say “the Egyptian people reject any such unlawful act” against “individuals, the properties and the embassies.” Read more

Orban walks on stage in front of Hungary's parliament for Thursday's national day address.

[UPDATE] We’ve obtained the English-language version of Orban’s March 13 letter to Barroso requesting assistance on reopening talks with the IMF for a line of credit. The letter can be read here.

The war of words between Brussels and Budapest continued on Friday, with José Manuel Barroso, president of the European Commission, hitting back at Hungarian prime minister Viktor Orban, who a day earlier compared Barroso’s Commission to Soviet apparatchiks and Hapsburg imperialists.

Orban’s tongue lashing, made at a national day rally in front of thousands in central Budapest, came after a series of recent moves by the Commission, the European Union’s executive branch, to sanction the Hungarian government for violating EU rules on deficits and democratic institutions.

Through his spokesperson, Barroso questioned Orban’s grasp of democratic principles, a rebuke sure to rankle the Hungarian prime minister, who as a young anti-Communist activist became famous for publicly calling for the withdrawal of the Red Army in 1989.

“Those who compare the European Union with the USSR show a complete lack of understanding of what democracy is, in his view,” said the spokesperson, adding she was relating Barroso’s personal comments. “They also fail to understand the important contribution of all those who have defended and fought for freedom and democracy.” Read more

Finn Olli Rehn, last week in Davos, has been seen on Finnish media by 45% of his fellow countrymen.

In Brussels, being a member of the European Commission, the EU’s executive branch, is about as high as an official can climb in the eurocracy. But just how well are those Brussels luminaries known back in their home countries?

Thanks to the commission itself, we now have a good idea. According to a telephone survey conducted by Eurobarometer – the results of which haven’t been published, but were presented to commissioners during a meeting Tuesday – the best-known is Finland’s Olli Rehn, the economic commissioner who has been in the press almost constantly thanks to the eurozone crisis. He also contemplated running for president of Finland last year, which undoubtedly helped boost his score.

According to the survey, obtained by Brussels Blog, 45 per cent of Finns said they had seen or heard Rehn in the media, far ahead of the rest of the commission – including its president, Portugal’s José Manuel Barroso, who finished 9th with 31 per cent of Portuguese respondents saying they’ve seen the former prime minister on local media.

At the bottom of the list were commissioners from two of the largest member states: France’s Michel Barnier, who only 8 per cent of French respondents said they had heard or seen, and Britain’s Cathy Ashton, who came in at 16 per cent.

The complete list after the jump. Read more

Barroso, left, at Thursday's news conference with Denmark's Thorning-Schmidt in Copenhagen

A good chunk of the Brussels press corps has been in Copenhagen this week for the formal kick-off of Denmark’s turn at the EU’s 6-month rotating presidency. Days of back-to-back ministerial briefings and ceremonial events have focused intensively on the Danish government’s “green growth” agenda – down to the green skirt-clad Danish National Girls Choir performing “Plant a Tree” at a concert attended by EU bigwigs Wednesday night.

But when it came to today’s official handoff of the EU reins to Danish prime minister Helle Thorning-Schmidt, there was a slight hiccup: Denmark’s Vestas, the world’s largest maker of wind turbines, chose the same day to announce it was cutting 2,335 jobs – most of them in its home country. Read more

Hungary's Viktor Orban, left, with José Manuel Barroso during an EU summit earlier this year.

Perhaps because it is not in the eurozone, the recent turbulence in Hungary has not gotten a huge amount of attention internationally. But Budapest and Brussels are currently on a collision course that could have significant consequences for the region’s economic stability.

At issue is whether the European Union and the International Monetary Fund will provide financial assistance to Hungary at a time the florint is in free-fall and the government’s borrowing costs are skyrocketing, with 10-year bond yields now above 9 per cent, well above levels where Ireland, Greece and Portugal were forced into bail-outs. Standard & Poor’s downgraded Hungarian bonds Wednesday evening, citing the unpredictability of prime minister Viktor Orban’s economic policies – including his attempt to assert more control over Hungary’s central bank.

In a letter to Orban sent this week by José Manuel Barroso, the European Commission president, and obtained by the FT, Barroso drives a hard bargain. Not only does he “strongly advise” Orban to withdraw the proposed laws governing the central bank, but he makes clear that any assistance will come with tough conditions.

Excerpts after the jump. Read more

Merkel and Sarkozy at their post-summit news conference Tuesday evening in Paris

The letter Nicolas Sarkozy and Angela Merkel sent yesterday to the president of the European Council, Herman Van Rompuy, contains a lot of ideas that have been discussed previously in Brussels and not gone very far, raising questions as to how much of the new Franco-German agenda can actually be implemented.

But reading between the lines of the letter, one theme that has gone almost unnoticed is the seeming sidelining of the institution that is supposed to be at the centre of European integration: the European Commission, the EU’s executive branch headed by José Manuel Barroso.

Suggesting that Van Rompuy head regular summits of eurozone heads of state as “the cornerstone of the enhanced economic governance of the euro area” is only part of the seemingly anti-Commission tenor of the plan. Read more

New York Stock Exchange on August 4, 2011. Image by AFP

In a sign of the severity of this week’s market turbulence, Olli Rehn, Europe’s economics commissioner, has cut short his holiday and will be back in Brussels today. Rehn is to address the press corps at midday – presumably to undo some of the damage caused by an explosive letter penned by his boss, José Manuel Barroso, the European Commission president.

In his letter – which was sent to the eurozone heads of government on Wednesday, but released to the press on Thursday – Barroso acknowledged that the big decisions taken at a eurozone summit on July 21 were not having the intended effect on financial markets. He also called for a “rapid reassessment” of the eurozone’s €440bn bailout fund just two weeks after leaders had armed it with new weapons following a torturous, months-long debate. Read more

The analysis piece we ran in yesterday’s paper about the threat populism poses to European integration has gotten so much feedback, that I thought I’d post more on the interview I had with Dutch European affairs minister Ben Knapen, which helped inspire it.

As mentioned in the original piece, Knapen is highly critical of officials — including José Manuel Barroso, the president of the European commission — who argue that populist sentiments should be marginalised or ignored by European leaders. Instead, he thinks Brussels should take such concerns more seriously than they are now.

In fact, Knapen singled out Barroso in our interview, which Dutch officials tell me is a bit of pushback to recent comments Barroso made urging European leaders to “not give in to the populists or extremists” in upcoming EU budget negotiations, remarks picked up by the Dutch press. Said Knapen: Read more

For those looking for a break from Osama bin Laden news, Brussels Blog is keen to tout our scoop today on the forthcoming European Commission proposal on migration, and how it’s expected to suggest allowing countries to re-impose border controls when they’re overwhelmed by illegal immigrants.

Although some diplomats had been concerned about a new round of demagoguery over the issue, the decision by José Manuel Barroso, the Commission president, to embrace calls for overhauling Europe’s visa-free Schengen area rules appears designed to turn the debate into a technocratic one over when and where such controls can be reinstituted.

In a letter over the weekend to Nicolas Sarkozy and Silvio Berlusconi, the French and Italian leaders whose dispute over North African immigrants has put the issue back in the spotlight, Barroso acknowledged the “temporary restoration of borders is a possibility” he was considering, but emphasised the devil is in the details: Read more

It has been more than a week since European presidents and prime ministers signed off on a raft of measures to shore up the eurozone’s debt-ridden peripheral economies, but so far the markets haven’t responded the way most leaders hoped – particularly in Portugal, where the ongoing political turmoil has driven borrowing costs to euro-era records just as the country needs to dip back into the market.

There have also been some rather unusual public recriminations from top European Union leaders who feel the so-called “grand bargain” did not go far enough, including Jean-Claude Trichet, president of the European Central Bank, and José Manuel Barroso, the European Commission president. Read more

On Monday, we had a scoop on a new effort by the European Union’s two presidents, José Manuel Barroso and Herman Van Rompuy, to revive a “pact for competitiveness” – an economic coordination scheme among the 17 eurozone countries that would entail significant new austerity measures. Read more

Putin and BarrosoIn today’s paper, we have a story about the history of bad blood between Russian prime minister Vladimir Putin and European Commission president José Manuel Barroso, an account based on dozens of US diplomatic cables that we got our hands on thanks to WikiLeaks.

The two men are summiting today in Brussels, so we thought it would be worth posting the full text of a cable from the US embassy in Moscow detailing the last time the two men summited in February 2009. Although we have redacted the names of the officials who briefed US diplomats, they included a senior European Commission official and a top diplomat in Russia’s ministry of foreign affairs. Read more

José Manuel Barroso, European Commission president, tells Peter Spiegel, Brussels bureau chief, that he is confident an agreement over what to do with the euro will be reached when the eurozone member states meet at a summit in March.  Read more

Here at the Brussels blog, we’re keeping a close eye on the run-up to next Friday’s rare one-day summit of European Union heads of government. And nothing is occupying more of our attention than whether leaders will actually tackle the ongoing eurozone crisis at the conclave.

One of the events that had been closely monitored by the tea-leaf readers was Tuesday night’s private dinner outside Berlin between the two main antagonists in the debate, José Manuel Barroso, president of the European Commission, and Angela Merkel, the German chancellor.

According to people we have talked to, however, there was little meeting of the minds. Even though the dinner lasted for well over three hours – and almost all of it was occupied by discussions of economic policy – there is still no agreement on whether to put reforms touted by Barroso, including a revamp of the EU’s €440bn bail-out fund, on next week’s agenda. Read more

The EU’s final two-day heads of government summit of 2010 starts Thursday and early betting is that it will be much quieter than the last time the 27 leaders assembled in Brussels, a gathering that set off a bond market panic which the continent is still recovering from.

The main event will be Thursday night, when the leaders are expected to sign off on a brief change in the EU’s treaty to allow for the creation of a new financial rescue system to replace the current, temporary €750bn bail-out fund.

There is still some nervousness that Angela Merkel, the German chancellor, may push for additional language in the text to make explicit that the new bail-out system can only be accessed as a “last resort,” or ultima ratio in Latin, the phrase being used by the cognoscenti.

But Merkel did not mention the ultima ratio demand in her list of principles before the Bundestag Wednesday, and there seems to be little appetite among other members to let her bulldoze the new language in – particularly since it could cause more confusion among bond traders, who might wonder what all the other resorts are before the last one. Read more

Among the hundreds of confidential US diplomatic cables disclosed by WikiLeaks thus far, very few have dealt with Washington’s relations with the EU. But occasionally, EU leaders have popped up in summaries of other international events in which they have only tangentially been involved.

The most pointed EU-related revelation to be released thus far comes in a 2008 cable from the American embassy in Moscow following French President Nicolas Sarkozy’s heated September 8 confrontation with Russian Foreign Minister Sergei Lavrov over the Kremlin’s invasion of Georgia.

The US account of the “at times…openly hostile” meeting, where Sarkozy “at one point grabbed FM Lavrov by the lapels and called him a liar in very strong terms,” has been reported widely. Less noticed, however, was Moscow’s reception of José Manuel Barroso, the European Commission president.

In a section labeled secret and “noforn,” meaning it was not to be shown to non-American officials, an unnamed French source retells how “the Russians treated Barroso harshly and condescendingly, and tried to exclude him from many of the sessions.” Read more