Romania to Raise Taxes

Romania said it would raise taxes to shore up state finances as it seeks to qualify for continued help from the International Monetary Fund and other lenders and reassure jittery markets focused on government spending and debt. Cabinet ministers approved the tax increase at an emergency meeting Saturday in order to plug a hole in the budget created Friday when the country's highest court declared that government-imposed pension cuts were unconstitutional.

Friday's court ruling, which called into question the government's ability to carry out its austerity plans, jolted markets and pushed the Romanian currency, stocks and bonds sharply lower. The currencies of neighboring Hungary and Poland also lost ground on fears those countries could have trouble curbing deficits. The cabinet's decision to boost the value-added tax to 24% from the current 19% will solve the immediate problem of holding the government budget deficit to the promised 6.8% of gross domestic product. But it is also likely to serve as a further break on economic expansion in a country where GDP fell more than 7% last year.

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EU greenlights Estonia eurozone entry in 2011

Leaders of the 27 European Union nations on Thursday gave their green light for Estonia to adopt the troubled euro currency as of January 1, 2011.

According to the latest EU estimates, Estonia will post a public deficit amounting to 2.4 percent of gross domestic product this year and debt of 9.6 percent of GDP -- levels which most of Europe can only dream of. However, the European Central Bank has warned Estonia that it could struggle to keep inflation under control once it joins the eurozone.

The country shifted rapidly from a communist command economy to the free market after breaking from the crumbling Soviet bloc in 1991 and its economy began to grow quickly, especially after joining the European Union in 2004. Hit by the global crisis in 2008, Estonia's government slashed public spending to confront the crisis and maintain its drive to switch from the national currency, the kroon, to the euro. The Estonian kroon was created in 1992 to replace the Soviet ruble. First pegged to the German mark, it was then linked to the euro in 2002 and its rate has not changed since

AFP

EU invites Iceland to membership talks

European Union leaders agreed Thursday to open membership negotiations with Iceland despite differences over whale hunting and a bank collapse that hit British and Dutch investors. European heads of state and government meeting in Brussels gave Iceland candidate status less than a year after it applied to join the 27-nation bloc.

Britain and the Netherlands said the talks should go hand in hand with negotiations over demands that Iceland reimburse compensation paid out by those two countries to citizens who held accounts at the failed Icesave bank. "My government is fully committed to resolving this issue," Johannesson said. "It's a bilateral issue."

Dutch Prime Minister Prime Minister Jan Peter Balkenende said that while his country wasn't blocking the start of Iceland's membership negotiations. "before it can become a member, it will have to fulfil its obligations toward Britain and the Netherlands."

The Icelandic authorities will also have to make extensive moves towards shutting down their controversial whaling industry before they can think of taking their seat in Brussels, as European rules ban whale hunting.

Iceland's application to join the European Union and adopt the euro as its currency, which it lodged in July 2009, could also stumble on the issue of access for European fleets to Icelandic fishing waters.

But potential problems are not only with its would-be partners. An opinion poll this week showed a substantial majority of Icelanders want their government to tear up the EU application form. A national referendum will have to be held before Iceland can join the EU club. In a March referendum Icelanders massively rejected a deal to pay Britain and the Netherlands billions for their losses in the collapse of the Icesave bank.

It was only after the global financial hurricane battered its banks, forced its currency down and pushed it to the International Monetary Fund cap in hand that Reykjavik decided to apply for EU membership.

However European capitals see Iceland as a natural fit for the EU, as long as the obvious hurdles can be overcome. "There are a lot of conditions to be fulfilled but in due course Iceland can become a member of the club," said EU president Herman Van Rompuy.

AFP

Tőkés Lászlót az EP alelnökévé választották

A néppárti frakció jelöltjét, Tőkés Lászlót az Európai Parlament egyik alelnökévé választották kedden (2010. június 15.).

Tőkés Lászlót 334 szavazattal, 287 tartózkodás mellett választották a tizennégy alelnök egyikévé, miután a korábbi magyar EP-alelnök, Schmitt Pál lemondott európai parlamenti mandátumáról és a Magyar Országgyűlés elnöke lett.

Az alelnök - csakúgy, mint az elnök - irányítja az Európai Parlament és szervei (az Elnökség, illetve az Elnökök Értekezlete) munkáját, valamint vezeti a plenáris ülésszakokon folytatott vitákat. Amennyiben az elnök nincs jelen, vagy akadályoztatva van hivatali kötelességei ellátásában, illetve ha részt kíván venni valamilyen parlamenti vitában, az egyik alelnök veszi át az elnöklést. Az elnök bármely megbízatást átruházhat az alelnökökre, például a Parlament képviseletét ünnepi alkalmakkor vagy eseményeken. (Az alelnökök feladatait az EP Eljárási Szabályzatának20. cikke rögzíti.)

Euvonal

Franco-German relations hit new low

The French president has surrendered to the German Chancellor's demands on EU economic governance and her idea of "red cards" for member states that break spending rules set in Brussels. Mr Sarkozy had been determined to create an "economic government" of the 16 eurozone countries with a powerful secretariat to coordinate national budgets, tax and spending.

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President Sarkozy was then bludgeoned into accepting a German ultimatum that euro zone states that persistently breach budget deficit limits should have their voting rights suspended on economic issues, even if that requires changing the EU treaty. Previously, the issue of treaty change has been taboo for Mr Sarkozy who fears a French referendum. "If a treaty change is needed we will propose it," he conceded in Berlin.

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Centre-right coalition set to take over in Slovakia

Slovakia's governing Smer-Social Democracy have boosted their support by six percent in the weekend's general election to win 62 seats, far and away the most popular party. But current Prime Minister Robert Fico will most likely not return to power, as support for his two hard-right coalition partners slumped, and all four centre-right opposition parties have ruled out working with his centre-left group.

On Monday (14 June), Slovak President Ivan Gasparovic approached Mr Fico, asking him to form a government without a majority in the 150-seat chamber. However, despite the president's move, the opposition parties, with a total of 79 seats, have already launched coalition talks among themselves.

Smer won 36 percent of the vote, almost double the next closest party, the conservative Slovak Christian and Democratic Union (SDKU-DS) of sociology professor Iveta Radicova, the likely next prime minister, who won 15.4 percent, down some three percent from the last general election in 2006. The free-market liberals of Freedom and Solidarity (SaS) - who are strongly pro-business but also favour drugs liberalisation and same-sex marriage - came second on 12.1 percent, followed by the country's second Christian Democratic party, the Christian Democratic Movement (KDH) of former EU education commissioner Jan Figel on 8.5 percent, and Most-HID, an ethnic Hungarian grouping, on 8.1 percent.

The four parties should have little trouble working together, although there are frictions between the two Christian Democratic groups.

Mr Fico's main coalition partner, the extreme-right Slovak National Party, slid 11 seats down to nine on 5.07 percent - only barely above the five-percent threshold required to enter the Narodna rada, while the nationalists of former prime minister Vladimir Meciar, the Movement for a Democratic Slovakia (LS-HZDS), won no seats at all.

The priorities of what will likely be a highly fiscally conservative government will focus on slashing spending in what is already the poorest country in the euro area. The country's budget deficit was 6.8 percent in 2009, well above the three-percent limit for eurozone members.

Euobserver

Hungarian Leader Announces 29-Point Budgetary Plan

The prime minister of Hungary, Viktor Orban, introduced a mix of cost-cutting and tax measures Tuesday, including cuts in public-sector wages and new levies on banks, as part of its efforts to reassure jittery investors that the country could reach its budgetary targets.

“The time has come to replace the country’s old economic system with a new one,” Mr. Orban said, introducing the measures before Parliament, which was expected to approve them...

Link to the NYT

Germany moves to save $96 billion

Germany will cut welfare benefits, introduce new taxes and shed government jobs to save as much as euro80 billion ($96 billion) through 2014 and set an example for the rest of Europe, Chancellor Angela Merkel said Monday.

The wide-ranging savings package finalized by the Cabinet includes trims in social programs such a subsidy for new parents who stay home, more taxation for the nuclear power industry, and delaying the building of a replica of a Prussian palace in the heart of Berlin.

Merkel said as many as 15,000 federal government jobs could be shed through 2014.

In addition, the government wants to levy a special charge on passengers flying from German airports until aviation is included in an international carbon dioxide emissions trading scheme. Looking farther ahead, the Cabinet said it hopes to save money by reforming the military and will consider trimming the 250,000-strong force by up to 40,000.

The new nuclear tax is aimed at netting euro10 billion throughout 2014, but the bulk of the savings will come from the welfare budget — a total of euro30 billion.

AP