European Union Lowers Growth Forecasts

"European Union officials on Tuesday sharply lowered growth forecasts as member states like France, Germany and Italy showed weak economic performance, and as business confidence suffered from heightened geopolitical risks.

Growth is expected to be a meager 1.3 percent in the 28-member bloc this year, instead of the 1.6 percent predicted in the spring, said the European Commission, the union’s executive arm. And the economy is not expected to get much better in 2015, when growth in Germany, the region’s economic engine, is expected to grind down to about 1 percent.

“The economic and employment situation is not improving fast enough,” Jyrki Katainen, the European Commission vice president for jobs and growth, said in a statement accompanying the closely watched economic forecast.

Unless there are additional signs of growth and job creation in the next five years, “people could despair of the European project,” Pierre Moscovici, the European commissioner for economic and monetary affairs, said at a news conference on Tuesday.

The recovery on the Continent continues to lag those in the United States and Britain. Over the next two years, annual growth in Britain is expected to be close to 3 percent, and the unemployment rate is projected to be 5.5 percent in 2016, according to the data released Tuesday. The unemployment rate in the European Union is not expected to fall below double digits, where it has been since 2012, until 2016.

The gloomier outlook will most likely raise expectations for the European Central Bank to take additional steps to stimulate the economy, though economists said they did not expect policy makers to take action at a meeting on Thursday.

The report on Tuesday did not take into account how the European economy might get a boost from a 300 billion euro, or $375 billion, plan to invest public and private money into infrastructure projects. Jean-Claude Juncker, who took office this month as president of the European Commission, has pledged to present that package before the end of the year.

The lower forecasts, especially in the 18-nation euro area, where the commission cut its projection for growth this year to 0.8 percent from an earlier 1.2 percent, are a measure of how quickly optimism about a recovery has dissipated. France has failed to grow as hoped, and Italy struggles to make overhauls. There are also signs that the German economy is stalling.

In one of the more drastic downgrades for 2015, the commission lowered Germany’s forecast for growth by nearly a full percentage point to 1.1 percent.

Among the problems facing European economies like Germany is the prospect of a “new cycle of sanctions and countersanctions” related to the restrictions that the United States and the European Union imposed on Russia in retaliation for its role in the Ukraine crisis, and reciprocal moves by Moscow, European Union officials said. Those tensions “could pose a larger roadblock to European growth prospects than currently envisaged in the forecast,” the officials said in a report accompanying the forecasts. The tensions might also “have triggered a wait-and-see attitude among firms,” the officials wrote in a section of the report that focused on Germany.

Germany is expected to post growth of 1.3 percent this year, down from an earlier forecast of 1.8 percent. The French economy is expected to grow 0.3 percent this year, down from an earlier estimate of 1 percent. Italy appeared to stand out as a poor performer: Its economy was predicted to shrink 0.4 percent this year compared with a forecast in May for growth of 0.6 percent.

“With confidence indicators declining since midyear and now back to where they were at the end of 2013, and hard data pointing to very weak activity for the rest of the year, it is becoming harder to see the dent in the recovery as the result of temporary factors only,” officials wrote in their report.

The commission said it expected growth rates to improve somewhat in 2015, rising to 1.5 percent in the European Union and to 1.1 percent in the eurozone. Even so, weaker-than-expected growth this year is likely to make it much harder for countries like France and Italy to achieve the bloc’s mandated targets to keep budget deficits and government debt in check. France and Italy could face disciplinary action and steep fines if they fail to show that they are making sufficient effort to bring their economies in line with European budgetary rules. Mr. Katainen said those recommendations would be published by the end of this month.

Over all, the commission said, the most recent figures indicate a slow fading of the legacy of the sovereign debt crisis, with many member states still weighed down by high unemployment, high debt and low output.

That prompted Mr. Katainen, the commission vice president, to call on member states to agree on the €300 billion spending plan to bolster demand. “Accelerating investment is the linchpin of economic recovery,” he said. Germany also “can play a significant role stimulating the euro area and E.U. economy” by saving less and spending more, Mr. Katainen said."

Link to NewYorkTimes

EU Sets Challenge to U.S. With Toughest Emissions Target

"European Union leaders backed the most-ambitious carbon emissions goals of any major economy, in a bid to crank up pressure on the U.S. and China ahead of climate talks in December.
Heads of government from the bloc’s 28 nations endorsed a binding target to cut greenhouse gases by at least 40 percent from 1990 levels by 2030 at a summit in Brussels. Meeting that goal would cost about 38 billion euros ($48 billion) a year, according to EU estimates. The EU is on track to meet its previous goal of a 20 percent reduction by 2020.
(...)
The European accord required unanimity and overcoming differences between poorer, mostly ex-communist east European nations and richer countries in western Europe. France, Portugal and Spain reached a compromise to build more gas and power connections across the Pyrenees while the U.K. and Germany bridged their divide over an energy efficiency goal.
(...)
Poland, which had threatened to veto the deal unless it addresses the country’s concerns of a surge in power prices, won assurances that its utilities will get free carbon permits under the EU emissions trading system, or ETS, after 2020 and that the country will have access to funds for modernizing coal-based plants.
(...)
Under today’s deal, the EU will renew a special carbon-permit reserve -- which yielded 2.2 billion euros for renewable energy and carbon-capture projects over the past four years --and extend its scope after 2020. It will also create a new fund, which would include 2 percent of ETS allowances, to help finance investment in low-income member states.
(...)
The package also envisages an indicative goal to increase energy efficiency by at least 27 percent by 2030 and a target to boost the share of renewable energy in European energy consumption to at least 27 percent. The latter would be binding at EU level but will not be translated into objectives for individual member states.
The deal as “a far cry” from what is needed to combat climate change, according to Monica Frassoni and Reinhard Buetikofer, members of European Green Party. “The adopted targets are far from ambitious and not only weaken Europe’s climate policy, but also undermine the fight against Europe’s energy independence,” they said in a statement. “They are far from ambitious regarding making economic progress through a green transformation, namely through enhanced efficiency and more renewables.”
The EU must now ensure that its package for 2030 does not harm growth and jobs and should step up efforts to secure an internationally binding agreement to protect the competitiveness of its industry, according to the European arm of the International Federation of Industrial Energy Consumers.
An energy security strategy for Europe is the fourth pillar of the deal. The leaders’ endorsement for the plan to diversify energy-supply sources and cut the region’s dependence on fossil fuels came after a pricing dispute led to the cutoff of Russian natural-gas supplies to Ukraine, the transit country for around 15 percent of the EU’s need for the fuel. The leaders agreed to improve cross-border power interconnections, which currently can handle about 8 percent of the bloc’s potential power output, less than the 10 percent target set by EU leaders in 2002, according to commission data. The target for 2030 was set at 15 percent.
(...)"
Link to Bloomberg

Sweden to become first country to recognize Palestine

"The UN General Assembly approved the de facto recognition of the sovereign state of Palestine in 2012 but the European Union and most EU countries, have yet to give official recognition.
Sweden's new center-left government will recognize the state of Palestine in a move that will make it the first major European country to take the step, Prime Minister Stefan Lofven said on Friday.
The UN General Assembly approved the de facto recognition of the sovereign state of Palestine in 2012 but the European Union and most EU countries, have yet to give official recognition. "The conflict between Israel and Palestine can only be solved with a two-state solution, negotiated in accordance with international law," Lofven said during his inaugural address in parliament. "A two-state solution requires mutual recognition and a will to peaceful co-existence. Sweden will therefore recognize the state of Palestine."
(...)"
Link to JerusalemPost

Scotland's referendum - nothing and everything changes

"In the end nothing changed and everything changed. Scottish people voted with a decisive majority against independence on Thursday (18 September) but the conversation in the UK has only just begun.
David Cameron, seemingly invigorated by almost becoming the PM who oversaw the break up of the UK, has promised devolution for everyone. In Scotland, Wales, Northern Ireland and England.

In a speech after the outcome he said Scottish people "have kept our country of four nations together. it would have broken my heart to see our United Kingdom come to an end".
The EU, watching nervously from the side lines, also welcomed the result. The No outcome removed the immediate political and legal maelstrom of what to do with an EU state that has just had a bit removed; and what exactly to do with that independent bit.
But others are contemplating similar ideas. All eyes are now on Catalonia which has vowed to press ahead with an independence 'consultation' in November.
The immediate lesson seems to be that states need to listen to their independence-minded regions. Ignoring them, or dismissing them, only serves to fuel a sense of anger. Cameron's devolution promises came only when the prospect of a Scottish independence suddenly became very real.
In Spain, Madrid's tough stance has also given a sense of righteousness to those who want independence. And while Brussels was in a state of panic about the UK's possible break-up - the irony is that the EU can inspire such movements. It is seen as providing a safe harbour. If statelets break away they are not necessarily going out into the big wide world alone. They can become members of the EU. (Yes, the EU commission did all it could to make it sound unlikely, but Scotland would have eventually joined the bloc).
In Scotland's case, this would have left a smaller, traumatised UK. And with the EU reliant on its large member states for a sense of foreign policy and defence, this matters. Numerous statelets concentrating on their own internal well-being is not necessarily going to project power into the world. And this is probably what inspired European Commission President Barroso's statement - which his spokesperson later refused to elaborate upon - that Scotland's No leaves the EU "united, open and stronger".
Meanwhile, the next big question is whether Cameron chooses to make the same 'Better Together' campaign for EU membership as he did for Scotland staying into the EU. He has promised a referendum on EU membership in 2017 if his party gets re-elected next year. The devolution to-do list he has just given himself on the back of the Scotland referendum looks like a campaign platform for the general election.
It very much looks like the two questions - UK internal devolution and EU devolution to the UK - will become entwined. This would leave Cameron overseeing the two biggest domestic and European policy questions of a generation.
If the Scotland referendum has taught us anything for the EU question it is this: The UK needs to be clear about what it wants. And the EU should not descend into histrionics about a country asking for some, clearly defined, powers to go back to or be fixed at the national level."
Link to EuObserver

European Union delays Ukraine free trade deal implementation to end-2015

The European Union, Russia and Ukraine agreed on Friday to delay the implementation of an
EU-Ukraine free trade pact until the end of next year, EU Trade Commissioner Karel De Gucht said.
Ukraine will continue to enjoy privileged access to the EU market until that
date, he said, but it will not have to cut duties on imports from the EU in
return.
The move appears to be at least partly a concession to Russia, which fears the
EU-Ukraine agreement will harm its industry.
It has been urging the EU to refrain from implementing the free-trade pact with
Ukraine until its concerns over the agreement are addressed.
(...)"
Link to TheEconomicTimes

European Union Imposes New Sanctions On Russia

"New European Union sanctions against Russia announced Friday toughen financial penalties on the country's banks, arms makers and its biggest oil company, to punish Moscow for what the West sees as efforts to destabilize Ukraine.
(...)
The EU measures include:

• Further limits to some Russian companies' ability to raise money in EU markets. The restrictions now apply not only to banks but also to major oil company Rosneft, defense companies, pipeline operator Transneft, the oil subsidiary of energy giant Gazprom and others.
• Broader limits on the export of high-technology EU goods that could also be used for military purposes.
• Travel bans and asset friezes for another 24 officials. They include four deputy Parliament speakers and leaders of the separatists in eastern Ukraine. Also hit is businessman Sergei Chemezov, who is one of President Vladimir Putin's "close associates," according to the EU.
• Bans for EU companies on new contracts in oil drilling, exploration and related services in Russia's Arctic, deep sea and shale oil projects. Russia's Rosneft oil company is majority-owned by the state, but Britain's BP holds a 19.75 percent stake in it.

Conspicuously absent from the list was Russia's gas industry, because many EU nations depend on Russian gas imports.
The measures are likely to hurt Russia's already flagging economy.
"Even though (targeted) companies are not threatened with an immediate liquidity crisis, the banks and firms concerned will painfully notice, especially the stronger constraints for short-term refinancing," said the managing director of the Association of German Banks, Michael Kemmer."
Link to Huffington Post

Italy's Mogherini and Poland's Tusk get top EU jobs

"The announcement came in tweets from the current council president, Herman Van Rompuy, at an EU summit.
Ms Mogherini, a centre-left politician, is Italy's foreign minister. She will replace the UK's Catherine Ashton. Mr Tusk, Poland's centre-right prime minister, has been Polish leader since 2007. He will chair EU summits.
The full-time appointments mean that the EU's three top jobs are now filled. Mr Tusk and Ms Mogherini will work closely with the new European Commission President, Jean-Claude Juncker.
Mr Tusk, 57, will serve for two-and-a-half years (renewable), starting on 1 December. Ms Mogherini's term, starting on 1 November, is five years.
Mr Van Rompuy called Mr Tusk "one of the veterans of the European Council", the grouping of EU government leaders. He is the only Polish prime minister to have been re-elected since the collapse of communism in 1989. Mr Van Rompuy praised "the determined and confident way he has steered Poland through the economic crisis, and managed to maintain steady economic growth". As a student Mr Tusk was active in the Solidarity anti-communist movement.
Mr Van Rompuy said Mr Tusk would face three major challenges: the stagnating European economy, the Ukraine crisis and "Britain's place in Europe". He said the EU leaders were convinced that Ms Mogherini, 41, "will prove a skilful and steadfast negotiator for Europe's place in the world". He noted Italy's "long-standing tradition of commitment to the European Union".

'Huge challenges'

Mr Tusk then made a short address in Polish. He said that "in December I'll be 100% ready" to speak English.
Ms Mogherini, speaking fluent English, later said "the challenges are huge... all around Europe we have crises - on European soil, in Ukraine, and starting from Iraq and Syria, going to Libya".
On arrival at the summit the European Parliament President Martin Schulz, a Socialist, spoke warmly of Ms Mogherini, calling himself a "fan". It was a strong indication that she would be a popular choice among MEPs. The parliament's approval is required for all 28 members of the new Commission, and the EU foreign policy chief, officially called the High Representative, is also a vice-president of the Commission.
Baroness Ashton, a centre-left UK politician, has been in the job since 2009. The High Representative runs the EU External Action Service (EEAS). Italy's centre-left Prime Minister Matteo Renzi pushed hard for Ms Mogherini to get the job.
However, last month the EU failed to get a consensus on her candidacy, as the Baltic states and Poland saw her as inexperienced and too soft on Russia. She has only been Italian foreign minister since February. "
Link to BBC

Recovery in Eurozone halts

France has all but abandoned a target to shrink its deficit, as the eurozone endured a turbulent day that raised the prospect of a triple-dip recession. Figures published by Eurostat on Thursday (14 August) indicated that the eurozone economy flatlined between April and June, while the EU-28 saw 0.2 percent growth. (...)

Germany's output fell by 0.2 percent, the same as Italy, which announced its second quarter figures last week. France recorded zero growth for the second successive quarter, while finance minister Michel Sapin suggested that the country’s deficit would exceed 4 percent this year, missing its European Commission-sanctioned 3.8 percent target.

In an article in Le Monde on Thursday (14 August), Sapin abandoned the target, commenting that “It is better to admit what is than to hope for what won't be." France would cut its deficit "at an appropriate pace," he added in a radio interview with Europe 1. Pointing to the contraction of the German economy, Sapin remarked that "the EU's big engine, Germany, is today negative. There is therefore a French problem and a European problem".

Sapin’s admission is another setback for beleaguered President Francois Hollande, who made hitting the 3 percent deficit target spelt out in the EU’s stability and growth pact by 2013 one of his key election pledges in 2012. Paris has now revised down its growth forecast from 1 percent to 0.5 percent over the whole of 2014, and cut its projection for 2015 to 1 percent from 1.7 percent.

France has already been given a two year extension to bring its deficit down to within the 3 percent limit by 2015, a target which now appears almost impossible to attain.

(...)
Euobserver

European Union imposes new sanctions against Russian officials following Ukraine crash

The European Union agreed Tuesday to impose new sanctions against Russian officials deemed responsible for the country’s actions in Ukraine, amid growing international anger after Malaysia Airlines Flight 17 was shot down over rebel-held territory.

European foreign ministers stopped short, at least for now, of more forceful sanctions that would hit full sectors of the Russian economy.

The EU agreed to impose visa bans and asset freezes on more Russian officials, Dutch Foreign Minister Frans Timmermans said. He did not say how many officials were targeted or reveal their names.

(...)

Link

EU's next challenges are geopolitical

"The shooting down of Malaysia Airlines Flight 17 with 298 people on board has dramatically raised the stakes in the war between the government of Ukraine and the pro-Russia separatists in the Donetsk region on the EU's eastern border. If Russian involvement is proved, calls for a far tougher European response than has so far been contemplated will surely be impossible to resist. Meanwhile, the EU faces massive instability along its southern border in Syria, Israel and the Palestinian territories, Egypt and Libya. European leaders have also been anxiously looking at recent political unrest in Turkey.

...

these geopolitical risks could represent a threat every bit as severe as the euro crisis to Europe's cohesion and financial stability. And as with the euro crisis, the solution is likely to lie in closer integration. But the fact that integration is necessary doesn't make it any easier to achieve."

Link

Juncker elected

Jean-Claude Juncker was elected European Commission President on Tuesday (15 July) after promising a more social Europe and paying tribute to the major integrationist politicians of the previous generation. The former Luxembourg PM, who has been on and around the EU stage for the last two decades, received 422 votes, easily surpassing the minimum 376 needed. Of the 729 MEPs that took part, 250 voted against him, 47 abstained and 10 votes were void. 

In a 50-minute speech before the ballot, the centre-right politician said he wanted the European Commission to be "very political" and indicated he will try and revive the power of the institution - seen as sidelined after member states handled the long-running economic crisis. 

He pledged to revive the "community method" - whereby the EU commission is the driver of EU law-making and strongly differentiated himself with the outgoing commission - which is associated with austerity-flavoured policies - by giving major focus to social issues in his speech. "You can't achieve competitiveness by getting rid of social security," he said, noting that the "internal market is not more important than social affairs."

He pledged to use €300bn over the next three years for projects that focus on energy, infrastructure, and digital issues. Other promises include making a lobbyist register obligatory, making documents around a controversial EU-US trade agreement public, and putting an end to the EU dealing with "every tiny problem".

He spoke of the eurozone eventually having its own budget and said the single currency area should be "represented by one single chair, one single office". But he said the stability and growth pact - the rules underpinning the euro - will not be changed. 

He also promised to tackle "social dumping", but to leave free movement of people rules intact. He will work for a common asylum policy, and indicated there will be no new EU member states under his watch.

More...

European Union leaders signal shift from austerity

In the latest shift away from the austerity of the euro zone crisis, European Union leaders signalled at a summit that they were ready to give member states extra time to consolidate their budgets as long as they pressed ahead with economic reforms.

Under pressure from Italian Prime Minister Matteo Renzi, the leaders adopted a text which pledged to make "best use" of the flexibility built into the bloc's fiscal rule book - the so-called Stability and Growth Pact. Renzi, whose country has the second biggest debt in Europe at more than 135 per cent of gross domestic product ( GDP), has been pushing for a more growth-friendly interpretation of the fiscal rules since taking office in February, because without faster growth Rome won't be able to pay down its debts. 

"If a country enacts serious structural reforms, it has the right to flexibility, which is the most important political point," Renzi told reporters at the end of the two-day summit. He called the new language a "turning point" for Europe. 

In reality, Europe has been shifting towards a softer fiscal stance since last year in an effort to revive growth in struggling southern states, and combat high unemployment, particularly among young people.

Countries like France and Spain have already been given extra time to reach the EU's deficit target of 3 per cent of gross domestic product (GDP). In parallel, the European Central Bank (ECB) has cut interest rates to record lows to ward off the threat of Japanese-style deflation in the 18-member euro zone Germany, the most ardent defender of tough budget policies, has been worried that fiscal leniency could lead to a new spending spree by governments taking advantage of low borrowing costs and open the way for a new crisis.

ITALIAN-GERMAN DEAL

But Renzi and German Chancellor Angela Merkel reached a deal late on Thursday which stresses the need  or a flexible interpretation of fiscal rules, while stopping short of any change to the EU pact. Merkel stressed at a news conference that it would be up to the European Commission, not member states themselves, to decide whether extra time was granted. "The best use of flexibility means the best use, not the fullest use but the best, the most appropriate for the situation," Merkel said. 

Under EU rules, governments have to strive towards a budget close to balance or in surplus, excluding one-off revenue and spending and the effects of the business cycle. They also have to reduce public debt. But the rules also say that governments can be given more time to reach budget balance if they undertake reforms that have a verifiable positive impact on economic growth - an option that has so far never been used. "Structural reforms that enhance growth and improve fiscal sustainability should be given particular attention, including through an appropriate assessment of fiscal measures and structural reforms, while making best use of the flexibility that is built into the existing Stability and Growth Pact rules," the text agreed by leaders read.

Link

Ukraine sings trade pact that sparked revolution

"Dealing a defiant blow to the Kremlin, President Petro O. Poroshenko of Ukraine signed a long-delayed trade pact with Europe on Friday that Moscow had bitterly opposed. He then declared he would like his country to one day become a full member of the European Union.

In so doing, Ukraine’s new leader, a billionaire confectionary magnate, has in effect raised a risky bet on the West that has cost his country hundreds of lives and the loss of the Crimean peninsula to Russia and has set off a low-level civil war in its eastern border region.

By signing the trade pact at the Brussels headquarters of the European Union, Mr. Poroshenko revived a deal whose rejection last November by his predecessor, Viktor F. Yanukovych, set off months of pro-European protests in Kiev, the Ukrainian capital, and pushed the West into its biggest test of wills with Russia since the end of the Cold War.

(...)

The completion of the association agreement between the European Union and Ukraine marked a severe setback for President Vladimir V. Putin of Russia and his oft-repeated goal of reasserting Russian influence in the “near abroad,” Moscow’s term for the territories of the former Soviet Union.

(...)

Moldova and Georgia, two other former Soviet lands that Moscow had pressured not to stray too far from its orbit, also signed agreements with the European Union on Friday. In Tbilisi, the capital of Georgia, citizens celebrated with a large public concert, which was broadcast on all major domestic television channels.

(...)

Within minutes of the signing ceremony, the news agency Interfax quoted Russia’s deputy foreign minister as warning that “serious consequences” would follow. The remark was an ominous sign of the vexation caused in Moscow by the tilt toward Europe of lands that Russia, first under czarist and then Soviet rule, for centuries considered its own.

(...)

There is no chance of the European Union admitting Ukraine, Georgia or Moldova as members any time soon. Public opinion in Europe is hostile to any further expansion of a 28-nation bloc that is already widely seen as too big and too unwieldy.All the same, Europe’s allure to so many people in former Soviet territories has infuriated Moscow, not the least because it contrasts so starkly with the cool reception given Mr. Putin’s efforts to form a rival economic bloc, the Eurasian Union, which is to start up next year. It so far has only three takers, Russia, Belarus and Kazakhstan.

(...)

Senior Russian officials quickly began warning that Russia’s businesses and economy could suffer, as their markets could be flooded with low-cost goods from Europe that skirt tariffs by first being shipped through Ukraine, which will be exempt from most European duties. Other experts have dismissed those concerns, saying Russia is quite adept at identifying and intercepting such goods as they cross the border.

European leaders, meeting Friday at a summit in Brussels dominated by wrangling over who should lead its executive arm for the next five years, announced that they would not immediately impose additional sanctions on Russia for its interference in Crimea and eastern Ukraine. But, they said in a statement that additional sanctions were being prepared and could be deployed “without delay” if Russia does not do more to curb violence in eastern Ukraine.

(...)"

Link

Results of the EU elections

These are only preliminary results, composition of the various political groups may change later, as the new EP forms.

May EU Summit

EU leaders wrestled Tuesday for a joint response to a dismal European vote that saw dramatic gains by radical anti-establishment parties, with Britain, Germany and France calling for EU reforms.

The anti-EU surge shows the European Union has got "too big and too bossy", said British Prime Minister David Cameron on arriving for an informal summit due to take stock of the election disaster.The vote "is a clear message that we cannot just shrug off... and carry on as before," he added. "The EU has got too big, too bossy, too interfering and needs to concentrate on growth and jobs."

France's President Francois Hollande, after his humiliating thrashing at the hands of the far-right National Front, also took aim at Brussels: "Europe must take heed of what happened in France," he said. The National Front topped the vote, leaving Hollande's ruling Socialists in third place with a mere 14 percent. 

Also on the leaders' dinner menu -- and perhaps just as difficult to digest -- will be tough talks on the nomination of new leaders for the different Brussels bureaucracies, in particular the presidency of the powerful European Commission.

Germany's Angela Merkel and Hungary's Viktor Orban stepped into the talks, however, publicly differing over their support for the candidate elected by the European Parliament conservatives -- ex-Luxembourg premier Jean-Claude Juncker. The conservatives are set to be the leading group in the next 751-seat parliament and Merkel said she supported Juncker, but Orban disagreed. 

The four-day European Parliament election that ended Sunday served up a clear message of voters fed up with economic distress, belt-tightening austerity, immigration and, most of all, aloof and meddlesome bureaucrats in Brussels. After decades of striving to tighten EU integration with "more Europe", many Europeans seem to believe that is no longer the answer.

Cameron, who has one eye on national elections next year, saw anti-EU outsider -- the UK Independence Party (UKIP) -- make history by topping polls in Britain. 

The vote may have produced a "big dissident voice", said UKIP leader Nigel Farage, (but)... I have just sat in a meeting where you would think nothing had happened at all, it was business as usual."

In contrast to Cameron and Hollande, Merkel came out of the Parliament elections relatively unscathed, delivering her usual message of the need for "growth and jobs... the best answer" to the EU's current malaise. 

Final figures for the four-day election have yet to be released but the latest projections give the conservative European People's Party (EPP) 213 seats out of 751, with the Socialists on 190 and the Liberals 64.That will give the centre-right, centre-left and Liberals a solid working majority.

But the eurosceptics, xenophobes and even outright fascists about to sit in parliament and win EU funding, along with radical left groups, will gain a platform for their views as well as scope to slow down the assembly's legislative process.The anti-EU camp will have about 140 seats though analysts say it will be difficult for the disparate groups to operate in a coherent fashion.

The summer meanwhile will see all the EU's top officials replaced, beginning with a new president of the Commission, the EU's executive arm which proposes and enforces laws. 

In previous years, this was the entire prerogative of the bloc's national leaders, nominations discussed among themselves behind closed doors. But the latest rules in the EU bible, set down in the Lisbon Treaty, state somewhat ambiguously that they must "take into account" the people's voice via the election results. On that basis, the five main parliament groups elected their own candidates for Commission president and warned they fully expected EU leaders to name one of them to the post. 

As Parliament is the EU's only directly elected body, they argue, this would be the best way to bolster the bloc's democratic credibility. On Tuesday, European Parliament party leaders agreed to back Juncker Commission president as his EPP topped the vote. Should he fail to put together a 376-seat majority in parliament then the job could fall to Martin Schulz of the second-placed Socialists.

A refusal by the national leaders to accept the Parliament's candidates could lead to an institutional crisis. "Our point is that theres no automatic connection between the outcome of the election and the nomination," said Hungary's Orban.

The process is expected to take weeks, perhaps months, with one senior EU official warning "there will be no white smoke" signalling a choice has been made at Tuesday's dinner.

TheEconomicTimes

EU, Ukraine sign aid deals worth $1.78 billion

Ukraine’s prime minister and European Union officials on Tuesday closed deals for a total of 1.3 billion euros ($1.78 billion) in EU assistance that Kiev could use to pay its energy bills, combat corruption and reform its institutions. (...)

In March, leaders of the 28-nation EU agreed on 11 billion euros in short-, medium- and long-term assistance for Ukraine. The memorandum signed Tuesday is for 1 billion euros in loans for macrofinancial assistance. Barroso said the first installment of 600 million euros would be disbursed soon, following ratification of the arrangement by Ukraine’s parliament.

EU officials told reporters the funds could be used to help pay Russia for natural gas purchases — a matter of dispute between the two countries. The EU loans were made contingent on the Ukrainian government committing itself to fiscal and economic reforms.

A separate “state-building contract program,” evaluated by the EU as worth 365 million euros, is intended to help Ukraine implement reforms, fight corruption, promote social and economic development and expand government capacity, Barroso said.

Link to Washingtonpost

EU sanctions target 15 individuals

The European Union has imposed sanctions related to the crisis in Ukraine on another 15 people, bringing the total number targeted to 48.
The EU said the people are collectively responsible for actions that "undermine or threaten the territorial integrity, sovereignty and independence of Ukraine."
The targets include Dmitry Kozak, Russia's deputy prime minister; Russian military chief Valery Gerasimov; and pro-Russian separatists in Ukraine, including Denis Pushilin, the self-declared leader of the "Donetsk People's Republic."
More at CNN

EU parliament gives final nod to banking union

MEPs on Tuesday (15 April) overwhelmingly approved the creation of a new authority and fund for failing banks – a missing element to the so-called banking union aimed at minimising the public cost of future financial crises.
The final vote on the creation of a €55 billion fund financed by the banks themselves passed with 570 MEPs in favour, 88 against and 13 abstentions, while new rules in cases where public money needs to be used for winding down banks also gathered a similar majority: 584 votes in favour, 80 against and 10 abstentions.
One key concession won by MEPs from governments during final negotiations was a speedier mutualisation of the fund, which will comprise of domestic bank levies paid into "national compartments". Forty percent of the fund is to be mutualised in the first year, 20 per cent in the second year, the rest equally over a further six years.
There will also be an obligation for EU countries to guarantee up to €100,000 in any savings account, but there is no common backstop in case they fall short.
A first element of the 'banking union' – single supervision of the 130 largest eurozone banks – is to become operational in November within the European Central Bank. The resolution mechanism will be independent, but take advice from the ECB as to when to step in to help or to close down a troubled bank.
Euobserver

European Union Condemns Crimea Referendum

The European Union on Sunday condemned the referendum in Ukraine's Crimea as illegal and is taking steps to increase sanctions against Russia over what many believe is a planned annexation of the bordering peninsula.
The contested vote on Crimea joining Russia further acerbated relations with Moscow, which has changed from a wary partner to a diplomatic adversary in the space of a few months. But the EU increasingly realizes change might not be imminent. (...)
Presidents Barack Obama and Vladimir Putin of Russia spoke after Crimea residents voted overwhelmingly to join Russia. Obama told Putin that the referendum would never be recognized by Washington. Obama also told him the vote violates the Ukrainian constitution and occurred under duress of Russian military intervention. He said the U.S. was prepared to impose additional penalties on Russia.
Link

Latvia joins eurozone

Latvia became the 18th country to join the eurozone on Tuesday (1 January). Joining the currency is "a big opportunity for Latvia's economic development," Prime Minister Valdis Dombrovskis said as he became the first Latvian to withdraw euro banknotes in Riga.
(...)
The country has one of the lowest levels of government budget deficit and debt in the EU at 1.2 percent of GDP and 40.7 percent of GDP, respectively. (...)
http://euobserver.com/news/122622

France, Germany and UK show discord on EU defence

EU countries have agreed to "deepen defence co-operation," but France, Germany and the UK disagreed how to do it at a summit in Brussels on Thursday (19 December).
France went into the meeting calling for a new EU fund to help pay for member states' unilateral operations - such as the French intervention in Mali or the Central African Republic (CAR) - if they serve European security. He did not get it.
German Chancellor Angela Merkel said France cannot to go to war on its own just because the EU makes decisions slowly and then expect the Union to chip in. "We cannot fund military missions in which we are not involved in the decision process," she told press after the defence talks. She added that a separate defence ministers' meeting would be needed to transform the French CAR operation into an EU intervention.
French leader Francois Hollande played down the German snub. He said the EU foreign service will draft a study on his new fund idea in the first few months of next year. He added that Poland might, on Friday, agree to also send troops to CAR, in a development which would trigger financial support from an existing EU military aid package - the so-called Athena mechanism of 2004. "The moment this happens, this will be considered a European operation and ... there will be European funding," he noted. He also said French spending on Mali and CAR will be "an element of explanation" in future talks with the European Commission on France's budget deficit for 2013 and 2014.
For his part, British Prime Minister David Cameron said he will block EU institutions from owning and operating their own military assets. "It makes sense for nation states to co-operate over matters of defence to keep us safer … but it isn't right for the European Union to have capabilities, armies, air forces and all the rest of it," he told media. He also persuaded fellow leaders to dilute the political rhetoric on joint defence.
In one example, a draft text of the summit conclusions had said in its preamble that EU countries will "strengthen [their] strategic autonomy." But on Thursday the phrase - a French concept - was bumped down to page eight of the 10-page communique, which said better industrial co-operation would "enhance its [Europe's] strategic autonomy."
The final text also underlined the primacy of Nato as Europe's security guarantor. The commission proposed back in July that it should "own and operate" its own surveillance drones. The head of the European Parliament, Martin Schulz, on Thursday also said: "We need a headquarters for civil and military missions in Brussels and deployable troops."
But fellow leaders accused Cameron of politicking for the sake of eurosceptic votes at home. Hollande indicated that member states discarded the commission proposal long ago. "This [Cameron's] statement was, in my opinion, for the large part, a bit false … Nobody envisages the creation of a European army," the French President said.
Nato chief Anders Fogh Rasmussen, who attended the summit, sympathised with Cameron's concerns. "Nato is and will remain the bedrock of Euro-Atlanic security," he said. But he added: "Let me stress: It is not Nato or the EU that possess [military] assets. They are owned by the individual nations."
The final summit communique said EU countries will co-operate on four projects.They pledged to build what Hollande called a "common drone" by 2025 at the latest. They promised to create a bigger fleet of air-to-air refuelling tankers, to work together on "next generation" satellite technology and to do joint training on cyber defence.They also said EU institutions should spend more money on military R&D and draft a new "EU Maritime Security Strategy."
Meanwhile, Rasmussen repeated his earlier warning that the 22 EU countries which are also Nato members must make a bigger contribution to Nato missions."Unless we Europeans take our security seriously, North Americans will rightly ask why they should. Unless we recommit to our own defence, we risk seeing America disengage, and Europe and America drift apart," he said.
The same day in Paris, French defence minister Jean-Yves Le Drian showed to what extent European armies depend on US technology. He said France will shortly deploy the first two of its 12 new "Reaper" drones to hunt jihadists in Mali and Niger. But with no European firm able to supply competing surveillance equipment, France bought the Reapers from US company General Atomics.
Euobserver

Ukraine opts for Russian bailout instead of EU treaty

Ukrainian leader Viktor Yanukovych has opted for a no-strings-attached Russian bailout instead of the EU alternative.He made the agreement at a meeting with Russian President Vladimir Putin in Moscow on Tuesday (17 December). 

Under the accord, Putin promised to use money from Russia's National Welfare Fund to buy $15 billion of distressed Ukrainian bonds. He also promised to cut gas prices from $400 or so per thousand cubic metres to $269 until 2019, saving Ukraine up to $2 billion a year.

(...)

Euobserver

Ukraine’s EU ‘U-turn’ dominates East Europe talks

"The Eastern Partnership Summit between EU and Eastern European leaders starts Thursday in Vilnius in the shadow of Ukraine’s decision to scrap a key trade deal with the EU following pressure from Moscow.

Ukrainian president Viktor Yanukovych has nonetheless said that he will attend the meeting. “Yanukovych said that he wanted to come and explain himself to his European counterparts, but the real reason is that the negotiations here in Vilnius are still going on right up until the last minute,” said FRANCE 24’s Gulliver Cragg in the Lithuanian capital. 

While the Ukrainian government has admitted to pulling out of the deal with the EU after pressure from Russia, diplomats were still discussing possible concessions on Wednesday. On the fourth day of mass pro-European street protests in Kiev, the Ukrainian prime minister said his government still wanted to strike an agreement with the EU.

“The document is physically on the table here in Vilnius,” Cragg said. “But Yanukovych’s main purpose here will be to convince the EU to have three-way talks with Russia.” He added that European officials were divided on the prospect of negotiations with Russian President Vladimir Putin’s government over their competing spheres of influence in Eastern Europe.

From Moscow, Guardian correspondent Shaun Walker told FRANCE 24 that a deal with Ukraine was unlikely this week but that this may be only a temporary delay. “Eventually they do want European integration, but it’s just not the right economic decision for them right now,” he said. Ukraine is heavily dependent on Russia for trade and energy supplies, and the EU’s offer appears to have been insufficient to counter Moscow’s threats of commercial retaliation.

Although Ukraine is the largest and most visible of the six countries engaged in the much-lauded EU Eastern partnership, Walker said it was not the first time Europe’s efforts to develop ties in the region have been thwarted by Russia.

“Armenia was another country – all the paperwork was ready to sign on the dotted line. A couple of months ago Vladimir Putin travelled there and the next day, Armenia announced it wasn’t joining this EU partnership – that it was in fact joining Russia’s EU-style Customs Union,” he said.

Walker and Cragg both argue that the European Union’s image and diplomatic clout have suffered in the Ukrainian rapprochement fiasco – at least in the short term. However, two other former members of the Soviet bloc, Georgia and Moldova, are due to sign free trade agreements with the EU in Vilnius. Russia’s deputy prime minister has already warned that it will apply pressure to these countries as well."

See more...

The European Union Wants To Join The Drone Club

Seven EU countries said they would form a club to produce military drones. The European project would join drones made by the U.S., Israel and more recently China.
Seven EU countries say they want to join forces and start making their own military drones by 2020 rather than relying on the Americans. The EU Observer website reported that the proposed "Medium Altitude Long Endurance (Male) craft ... can be used to strike military targets or for surveillance of migrant boats in the Mediterranean Sea."
Read more...

Elfogadta az EP az unió költségvetését

Elfogadta az Európai Unió 2014 és 2020 közötti hétéves periódusra vonatkozó keretköltségvetését kedden délben az Európai Parlament (EP).

Az állam- és kormányfők által februárban jóváhagyott keretköltségvetés (multi-annual financial framework - MFF) részleteiről hónapokon át tartó egyeztetés folyt az EP és a tagállamok szakminisztereit tömörítő tanács képviselői között.

A 2011-es árakon hét év alatt 960 milliárd euró uniós kötelezettségvállalást és 908 milliárd euró kifizetést lehetővé tevő keretköltségvetést 537 EP-képviselő támogatta, 126-an szavaztak ellene és 19-en tartózkodtak.

Link

Eurozone posts solid trade surplus for September

The 17-nation eurozone posted a $17.7 billion trade surplus in goods in September, the European Commission's data office Eurostat said Monday.

The surplus, posted as a first estimate, was significantly higher than the $9.3 billion surplus posted in August and the $11.6 billion posted in September 2012. From August, exports rose 1 percent, while imports fell 0.3 percent, Eurostat said.

In the 28-member European Union, the trade balance for the month came to $800 million, which compares to a $19.6 billion deficit from September 2012.

(...)

Link

E.U. Predicts Anemic Growth and High Unemployment in 2014

A fragile recovery across the European Union is not expected to bear fruit until next year. And unemployment is likely to remain high in countries like Greece and Spain, and even rise in France, the Union’s head of economic policy warned Tuesday.

Left-leaning lawmakers in the European Parliament immediately branded the autumn economic forecast by Olli Rehn, the European Union’s commissioner for economics and monetary affairs, as evidence that the bloc’s austerity policies were continuing to inflict unnecessary pain on millions of Europeans.

And some analysts warned that the forecasts might even be too optimistic in parts, saying that investors and business were likely to remain jittery about growth in many countries and that Europe could even face a sustained period of deflation — an affliction in which economic demand is so weak that prices actually decline, potentially making government debt reduction all the harder.

The report could increase pressure on the European Central Bank to take action to stimulate the economy when it meets on Thursday. Last week, official figures showed inflation falling to an annual rate of just 0.7 percent, well below the E.C.B.'s official target of about 2 percent.

Mr. Rehn’s forecasts could bolster those members of the E.C.B.'s Governing Council who argue that action is needed to prevent the euro zone from becoming stuck in the same kind of economic stagnation that afflicted Japan for decades.

At a news conference Tuesday, Mr. Rehn said the risk of deflation was remote, but he declined to comment on whether the E.C.B. should lower interest rates.

Mr. Rehn said economic output for all of 2013 among the 17 countries that use the euro currency was expected shrink by 0.4 percent, but would grow by 1.1 percent next year. He also said that the 28 countries of the European Union would have an average of zero growth this year, but were expected to grow by 1.4 percent in 2014.

(...)

Link

Malala Yousafzai - winner of the Sakharov Prize 2013

Pakistani campaigner for girls' education Malala Yousafzai is the laureate of the Sakharov Prize for Freedom of Thought 2013, following today's decision of the Conference of Presidents (EP President and political group leaders). She will be invited to receive the award at a ceremony in Strasbourg on 20 November.

More...

BBC EU Maps

Link to the BBC page

European Union and Canada reach landmark free trade deal

Canada and the European Union have struck a tentative free trade agreement meant to boost growth and employment, officials from both economies said Friday in Brussels.

The deal would make it easier for Canadian companies to invest in and sell to the 28-member EU and its 500 million consumers. European companies will have easier access to Canada's 35 million people. The deal will lower tariffs, streamline regulation and cut red tape. (...)

The European Union, a $17-trillion economy, is Canada's second-largest trading partner behind the U.S. The deal would also help reduce the dependence of Canada's $1.8-trillion economy on imports from the U.S. (...)

A total of 98 per cent of tariffs will be removed immediately once the agreement takes effect, Harper said. Sectors like Canada's dairy products, particularly cheese, which are likely to suffer from higher competition and see their market share fall will receive transitional assistance by the government, he said. (...)

The value of bilateral trade in goods between the EU and Canada was 62 billion euros in 2012 ($84 billion at today's value) with another 23.5 billion euros in services, according to the European Commission, the EU's executive arm. It estimates the agreement will eventually boost bilateral trade by up to a quarter. 

For the EU, Canada is only the 12th most important trading partner but the agreement will provide a boost to the nascent free trade talks between the EU and the U.S.  (...)

Link

EU to cooperate on drones, cyber defense

European Union states should work together in four areas of defense technology, including developing drones, the bloc's foreign policy chief said in a report on Tuesday. More...

European Union Official Calls for More Surveillance of Migrant Routes

(...) “I’ve asked member states to give their political support and also make available the necessary resources,” said Ms. Malmstrom, who must rely on member governments to finance and carry out search-and-rescue efforts.
The statement from Ms. Malmstrom was one of the strongest calls for a response to the disaster on Thursday, when an overstuffed and rickety trawler carrying an estimated 500 migrants fleeing war and poverty caught fire and capsized near the Italian island of Lampedusa.
(...)
Link

German elections

CDU/CSU = 41,5%
SPD = 25,7%
Die Linke = 8,6%
Grüne = 8,4%.

In the Parliament (630 seats):
CDU/CSU = 311
SPD = 192
Linke = 64
Grüne = 63

European Union, Singapore conclude far-reaching trade deal

"The European Union and Singapore submitted for approval on Friday one of the world's most comprehensive free trade agreements, which the EU sees as a stepping stone towards a wider deal with southeast Asia.
The chief negotiators of both sides presented the entire text of the agreement on Friday after initialling each page of the roughly 1,000-page document. Subject to approval in Singapore and by the 28 EU member states and the European Parliament, the agreement should enter into force in late 2014 or early 2015.
Trade in goods between the two topped 52 billion euros in 2012 and in services 28 billion euros in 2011. Mutual investment has reached 190 billion euros.
The European Union sees a free trade deal as opening the door to a deal with other members of the 10-nation Association of Southeast Asian Nations (ASEAN), which has set a goal of economic integration by 2015.
The EU and ASEAN launched free trade talks in 2007, but abandoned them two years later, the EU choosing instead to conduct bilateral talks with individual members.
The European Commission is already negotiating free trade accords with Malaysia and Vietnam and launched talks in March with Thailand.
Singapore has a population of just 5 million people, against some 600 million for the whole of ASEAN, but accounts for about a third of all EU-ASEAN trade and more than 60 per cent of all investment between the two regions.
The deal goes beyond many other free trade accords in committing to open up public procurement, an area where the EU has many leading suppliers, and agreeing on technical standards in areas such motor vehicles, electronics and green technologies. For example, a car made according to EU standards will be accepted for sale in Singapore.
The European Union also gains better protection of "geographical indications", region-specific products such as Parma ham or champagne.
EU tariffs on virtually all items from Singapore will disappear over five years. Singapore has committed to its existing zero tariffs on EU imports.
Singapore is likely to benefit from reduced tariffs for pharmaceutical and petrochemical products.
In services, particularly financial, the agreement will ensure the right to sell directly or establish branches in each other's markets and promises to provide greater transparency over the award of licences."
The Economic Times

European Union launches clampdown on shadow banking

Special funds used by big companies to park billions of euros of cash face stricter rules to make them safer, the European Commission said on Wednesday, taking a first step to reform unregulated finance known as shadow banking. The draft law will regulate money market funds, demanding some set aside cash buffers to avoid a panic should many investors withdraw their money at once.
This would lower what EU financial services chief Michel Barnier said was a risk to the financial system from the trillion euro sector but users of the funds warn that demanding they hoard more for a rainy day would make them too expensive.
The changes are part of efforts to shine a light on shadow banking, a 24-trillion-euro industry in Europe that comprises money market funds, some hedge funds, and firms involved in securities lending and repurchase markets. Such groups borrow and lend, just like banks do, but because they are not banks they often fall outside the remit of regulation, which is why they are considered to operate in the 'shadow' of traditional finance.
In the European Union, money market funds are mainly based in France, Ireland and Luxembourg and are heavily used by companies and banks which borrow from them. For companies, they are an alternative home for short-term cash. Unlike banks, they have no access to support from central banks such as the European Central Bank if things go wrong.
But the vast unchartered territory unnerves regulators in part because the sector is closely intertwined with banks, who often sponsor the funds as well as relying on them for finance themselves. "We have regulated banks and markets comprehensively," said Barnier, the EU Commissioner who has led a four-year revamp of financial rules. "We now need to address the risks posed by the shadow banking system."
The European plans draw on ideas in a global blueprint that will be submitted for approval to the world's 20 leading economies when their leaders meet in Russia on Thursday and Friday. In some cases, the EU reform is more ambitious.
The reform is a response to the 2007-2008 financial crisis, which was brought on by the collapse in prices of securities tied to risky home loans. "Shadow banking was at the heart of the crisis," said Frederic Hache, a former derivatives banker who works with public-interest group Finance Watch. "As bank regulation has since tightened, activity may shift into the shadow sector."
The most controversial element in Barnier's proposal is a requirement for one type of money market fund, known as constant net asset value (CNAV) funds, to hold a cash buffer equivalent to 3 percent of their assets.
Such funds seek to maintain a stable 1 euro per share when investors redeem or buy shares in them, to keep the value of their holding steady.
The buffer would provide a safety cushion in case there is a run on the fund, as seen in the United States when the value of one U.S. fund "broke the buck" and fell below $1 per share.
The industry says the reform would be too costly.
"Imposing a three percent buffer would make money market funds unviable," said Martin O'Donovan, deputy policy and technical director at Britain's Association of Corporate Treasurers. "To cover that, their rates would no longer be competitive."
Funds whose share price floats in line with performance are spared the buffer requirement. Imposing the buffer is meant to prompt CNAV funds to convert to funds with floating share prices, which are seen by regulators as more transparent. The funds in the EU, which include BlackRock and Legal & General, are evenly split between the two types.
The European Union's 28 member states and the bloc's parliament have the final say on the draft law and some changes are likely.
Barnier also published a "roadmap" on how the EU plans to move ahead with regulating other parts of the shadow banking sector, including a proposal to boost transparency by collecting and exchanging data among regulators. Banks could be required to hold more capital to cover risks from links to shadow banking. Shadow banking intuitions themselves could be required to hold capital, the EU executive said.
Reuters

European Union has best financial quarter since late 2011

(...)

Eurostat, the European Union’s statistics office, said the 17 EU countries that use the euro saw their collective economic output increase by 0.3 percent in the April to June period from the previous quarter.

That’s the first quarterly growth since the eurozone slipped into recession in the last three months of 2011. The ensuing recession of six quarters was the longest since the euro currency was launched in 1999.

The improvement made up for the previous quarter’s equivalent decline and was moderately better than the 0.2 percent anticipated in the markets. Growth, however anemic, had been predicted by many economists following an easing in market concerns about Europe’s debt crisis in the past year and record low interest rates from the European Central Bank.

The eurozone’s growth, which translates to an annualized rate of about 1.3 percent, is still well below the 1.8 percent the United States enjoyed during the second quarter. The wider 27-country EU, which includes non-euro countries such as Britain and Poland, also emerged from its own, milder recession, and like the eurozone is also growing at an annualized rate of around 1.3 percent.

Growth in Europe provides a boon to the global economy. The EU, which now totals 28 following Croatia’s accession in July, has a population of around 550 million and its annual gross domestic product stands at around $17.3 trillion — both more than the United States, which has GDP of $16.6 billion for 315 million people.

Growth in Europe provides a boon to the global economy. The EU, which now totals 28 following Croatia’s accession in July, has a population of around 550 million and its annual gross domestic product stands at around $17.3 trillion — both more than the United States, which has GDP of $16.6 billion for 315 million people.

The EU’s recovery marks the first time since a brief period in 2011 that the four major pillars of the world economy — the United States, China, Japan and Europe — are growing at the same time.

The figures will be greeted with a sigh of relief by Europe’s policymakers, who have spent nearly four years grappling with a debt crisis that has threatened the very future of the euro. But they were not ready to declare victory, aware that this is only the start of what is expected to be a slow and uneven recovery.

“This slightly more positive data is welcome — but there is no room for any complacency whatsoever,” Olli Rehn, the EU’s top monetary official, said in his blog after the release of the figures. “I hope there will be no premature, self-congratulatory statements suggesting ‘the crisis is over.’”

The improvement was largely because of solid growth of 0.7 percent in Germany and a surprisingly strong 0.5 percent bounce-back in France following two quarters of negative growth.
Link

EU deplores Egypt deaths, calls for restraint

The European Union deplored the killings in Egypt of dozens of demonstrators in Egypt on Wednesday as security forces cleared protest camps and it called for maximum restraint by all sides.

European Union foreign policy chief Catherine Ashton said she was following the situation in Egypt with great concern. "Confrontation and violence is not the way forward to resolve key political issues. I deplore the loss of lives, injuries and destruction in Cairo and other places in Egypt. I call on the security forces to exercise utmost restraint and on all Egyptian citizens to avoid further provocations and escalation," she said in a statement.

(...)
See more at Reuters.com

EU jobless rate falls for 1st time in over 2 years

The European Union's unemployment rate fell in June for the first time in almost two-and-a-half years, a sign that a long deterioration in the bloc's jobs market may be coming to an end as the economy stabilizes.

The number of jobless people in the countries that use the euro also fell, albeit modestly, for the first time in two years.

Eurostat, the EU's official statistics agency, said Wednesday that 10.9% of the work force in the 27 nations that then formed the EU were unemployed in June, down from 11.0% in May. That is the first fall in the jobless rate since January 2011.

The number of unemployed in the 17 euro-zone countries edged down to 19.27 million from 19.29 million, the first decline--albeit a modest one--since April 2011. The fall wasn't sufficient to move the jobless rate overall, which held firm at 12.1%--its highest on record--for the fourth straight month.

Signs that unemployment may be peaking in the EU and the 17 nations that use the euro add to recent evidence from consumer and business surveys that the region's economy has stabilized in the middle of the year, and could gather some momentum in the months to come.

Economists say any recovery will be weak in the near term, and beset by uncertainty due to problems in the euro zone in particular. The currency bloc's governments are committed to growth-sapping austerity measures, and businesses are struggling to gain financing to invest due to a hobbled banking system.

The European Central Bank isn't expected to take action to support the economy at its meeting Thursday.

Eurostat said in a separate release Wednesday that the annual inflation rate in the euro zone was unchanged in July at 1.6%, beneath the ECB's target area of just below 2.0%.

MarketWatch

EU's top diplomat meets with detained Morsi in Egypt

The European Union's top diplomat said Tuesday after meeting with deposed Egyptian President Mohammed Morsi that he is well, and that she urged all those she met with on the need to move forward peacefully following his ouster nearly a month ago.
It was Morsi's first contact with the outside world since he was toppled in a military coup on July 3.
Morsi's status has emerged as a source of contention between Egypt's interim leaders and the international community, with human rights groups insisting he either be charged or released.
EU foreign policy chief Catherine Ashton also called for an inclusive political process going ahead and an end to the violence that has left the Arab world's most populous nation deeply divided between opponents and supporters of the ousted Islamist leader.
(...)
FoxNews

Europe and China Agree to Settle Solar Panel Fight

The European Union’s trade chief said on Saturday that a deal had been reached with China to settle a dispute over exports of low-cost solar panels that had threatened to set off a wider trade war between two of the world’s largest economies.

The settlement essentially involves setting a fairly high minimum price for sales of Chinese-made solar panels in the European Union to try to prevent them from undercutting European producers.

Those producers accused Chinese manufacturers of benefiting from enormous loans from state-owned banks and other government assistance that enabled them to charge prices that would otherwise be uneconomical.

“We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” Karel De Gucht, the European trade commissioner, said in a statement.

The deal immediately met with ferocious criticism from the European manufacturers that had filed the complaint, and it complicates a similar dispute between the United States and China.

On Saturday, officials at the European Commission said they could not give details of the deal, including the price that Chinese exporters would pay to sell their panels in Europe, until the arrangement had been formally approved by the commission. But a European Union official, who spoke on condition of anonymity because the deal had not yet been formally approved, said the two sides had agreed to a minimum price of 0.56 euros per watt (74 cents), which would base any potential surcharge on the amount of electricity generated by each imported panel. 

The European solar manufacturers who lobbied for tougher action against the Chinese exporters on Saturday promised to sue over the settlement. The agreement “is contrary in every respect to European law,” said Milan Nitzschke, the president of EU ProSun, an industry group. A minimum price of 0.55 to 0.57 euros was at the level of “the current dumping price for Chinese modules,” the group said in a statement. 

The arrangement would cover exports from 90 of about 140 Chinese exporters that were examined during the investigation, and that represent 60 percent of the panels sold in Europe, the government official said. Those 90 companies would no longer face tariffs that were put in place in June. Chinese exporters that did not agree to the terms will still face tariffs that are set to rise to 47.6 percent on Aug. 6 from the current level of 11.8 percent, the official said.

The Chinese government hoped from the start of the trade case with the European Union for a negotiated settlement instead of a legal battle. This deal comes as a relief, said He Weiwen, the co-director of the China-United States-European Union Study Center at the China Association of International Trade in Beijing.

(...)

Link (New York Times)

Member states agree to fast-track youth money

A low-key EU summit finished Friday (28 June) with an agreement to fast-track money to tackle youth unemployment and boost lending to small companies, but the meeting was nearly overshadowed by side issues, including a colouring-book featuring fictional MEPs.

"It has been a very productive summit," said EU Council President Herman Van Rompuy, with governments pledging to spend €6 billion over the next two years to support getting young people into jobs or training.

They also agreed to "prioritise" any unspent money from the budget for employment issues, although critics say the sums are too small to make a difference to the EU's 26 million without work.

The European Investment Bank was given the nod to lend hundreds of billions of euros to small businesses - seen as the backbone of the economy, but currently starved of credit.

There was no progress on further steps to banking union, considered essential for ensuring the longterm stability of the eurozone. But the commission said it would come forward with plans on how to wind down failing banks - a key and controversial part of banking union - within two weeks.

(...)
Euobserver

EU agrees agriculture policy reform

EU member states and the European Parliament on Wednesday (26 June) agreed major changes to the bloc's Common Agricultural Policy (CAP). The deal will determine how the €50 billion a year pot is divided among countries over the next 2014-2020 period.

CAP - which eats up the biggest chunk of the EU budget - is meant to aid farmers throughout the EU, but has been criticised for the opaque way it distributes subsidies. The biggest losers in the new deal are set to be large farms in countries such as France and Germany, as the agreement changes how entitlements for subsidies are calculated, no longer tying historical production levels to direct payments.

To stop large farms losing too much of their current subsidies, the deal gives governments the option of limiting the losses to 30 percent. Farmers receiving the least amount of direct payments per hectare will be entitled to at least 60 percent of the national or regional average.

Other provisions include abolishing sugar quotas by 2017, mandatory aid for young farmers, and tying some direct payments to help the environment in rural areas.

(...)

Meanwhile, one issue which remains to be decided is a proposals to limit payments to large farms to €300,000 a year - something governments say should be optional but which parliament wants to be mandatory.

(...)

Under the compromise, 30 percent of all future direct subsidies would be dependent on farmers becoming greener, including leaving 5 percent of their arable land fallow for wildlife.

(...)

Euobserver

EU Releases Hungary From Budget Scrutiny

"European Union finance ministers on Friday released Hungary from the bloc's budget scrutiny after a series of at times controversial moves by the Hungarian government to boost revenue. 

Since Hungary joined the EU in 2004 it has been under review for having budget deficits significantly higher than the EU-mandated 3% of gross domestic product. The European Commission, the EU's executive arm, proposed to allow the country to exit the monitoring procedure in May. Friday's decision formally ends the process".

Link

Czech PM to quit over graft and spying scandal

Czech Prime Minister Petr Necas is to resign today over a corruption and spying scandal involving his closest aid. Although he has denied any involvement, his coalition partners have pulled their support.

The ruling coalition will now try to form a new government led by someone nominated by Necas’s own Civic Democratic Party (ODS)

“I’ve been following the political developments which began last Wednesday and I know full well what the consequences are for me. That’s why I have announced to the Civic Democratic Party management and also to our coalition partners that I will step down as prime minister,” said Petr Necas.

Pressure had been growing on Necas since his chief of staff, Jana Nagyova was charged with bribing members of parliament and ordering intelligence agents to spy on several people. One of the targets was Necas’s own wife who is divorcing him.

Police who raided government and private offices last week have also detained two former MPs, an ex-minister and the current and former heads of military intelligence.

Link

MEPs approve Mimica as Croatia's first commissioner

MEPs have cleared Neven Mimica to become Croatia's first commissioner when the country joins the EU on 1 July. Mimica, who currently serves as his country's deputy prime minister, will be consumer protection commissioner until next year's European elections provided he receives the backing of EU governments.

Link

EU ends arms embargo on Syria rebels

European Union foreign ministers have said they will not renew an arms embargo on the Syrian opposition, due to expire on Saturday. But there was no immediate decision to send arms to Syrian rebels and all other sanctions remained in force.

More...
BBC

EU summit backs shale gas 'revolution'

EU energy policy must shift towards diversifying supply, with natural shale gas likely to be part of the mix, EU leaders said at a summit in Brussels on Wednesday (22 May). (...)

For his part, European Council President Herman van Rompuy said the summit was the "right moment for a strategic debate on European energy policy." He noted that "Europe will soon be the only continent dependent on imported energy." He also called for increased investment in energy infrastructure and efficiency in a bid to cut costs. 

Energy prices in Europe are over twice the levels in the US. The emphasis on competitiveness and prices is an indication that environmental and climate concerns are falling down the EU's list of priorities, however. (...)

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Hollande calls for euro government

French President Francois Hollande has called for the creation of a eurozone government as a solution to the wide-spread recession that threatens "the very identity" of Europe. Hollande spelled out his views on Europe during a two-and-a-half hour long press conference in Paris on Thursday (16 May) after being accused of lacking leadership and vision for the EU project.

With record low popularity rates and on the back of news that France has slipped back into recession, Hollande said an economic government for the eurozone, with its own budget, right to borrow and harmonised taxes, is the only way out the economic slump. "It is my responsibility as leader of a founding member of the European Union... to pull Europe out of the lethargy that has gripped it," Hollande said.

"If Europe stays in the state it is now, it could be the end of the project," he warned. 

Hollande said he can imagine the new structures - which would require a change to the EU treaties - to come into force within two years. He admitted that this step towards deeper eurozone integration would be a hard sell in Germany, where the idea of a "transfer union" - mutualising debt and redistributing wealth across the bloc - is taboo.

"Germany has several times said it is ready for political union, for a new phase in integration. Well France is ready to give body to this political union ... It is a question of European urgency," he said.

He argued that while the financial crisis is now "behind us ... what is hitting Europe is recession, provoked by austerity policies." The German government is seen as a staunch defender of austerity policies, even though it has changed its discourse in the past few months and speaks more about youth unemployment.

Amid debate on the lack of personal chemistry in current Franco-German relations, Chancellor Angela Merkel in Berlin noted that she is not "bosom friends" with Hollande, but that they "get along fine." "What we need above all is a common understanding in Europe - and there unfortunately isn't one yet - of what actually makes us strong and where growth comes from," she said at a European policy forum also on Thursday.

Euobserver

Bulgarian Center-Right Wins Most of the Votes

The center-right party of former Prime Minister Boiko Borisov has fallen far short of winning a majority needed to form a government, according to nearly final election results released on Monday, and appears to have no willing partners to join a coalition.

That would leave the second-place party in position to lead a new government. Borisov's Citizens for Bulgaria's European Development party amassed the most votes with 30.7 percent, followed by the opposition Socialists with 27 percent with 96 percent of the ballots counted.

Results published by the Central Election Commission showed that two more parties will enter Parliament — the mainly Turkish MRF party with 10.7 percent and the nationalist Ataka party with 7.4 percent.

Borisov led his party to victory in 2009 with just under 40 percent of the vote and headed a minority government, but resigned as prime minister in February amid sometimes violent protests against poverty, high utility bills and corruption.

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EU agrees China solar panel duties

The European Commission agreed on Wednesday to impose punitive import duties on solar panels from China in a move to guard against what it sees as Chinese dumping of cheap goods in Europe. EU commissioners backed EU Trade Chief Karel De Gucht's proposal to levy the provisional duties by June 6 and make Chinese solar exports less attractive in Europe, two officials said.

The investigation into accusations of dumping is the biggest the commission has launched but Brussels is trying to tread a careful path, knowing it needs China, the EU's second largest trading partner, to help the bloc pull out from recession.
China's ambassador to the World Trade Organisation, Yi Xiaozhun, called the decision a mistake although he declined to comment on any possible retaliation by Beijing. "It will send the wrong message to the world that protectionism is coming," Yi told Reuters in Geneva.
Given that Germany and France are seeking to increase exports to China, De Gucht will try for a negotiated solution with new Chinese Commerce Minister Gao Hucheng before an EU deadline in December to cement the levies for up to five years. That could mean agreeing a minimum price at which all solar panels makers selling in Europe adhere to, diplomats said.
The EU duties, which will come into effect once the Commission publishes the decision in its Official Journal, will be set at an average of 47 percent, officials said.
Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago, exporting 21 billion euros ($27 billion) to the European Union in 2011. As a result, Chinese-made panels are as much as 45 percent cheaper than those made in Europe, industry executives say. Europe accounted for half of the global market in 2012, which was worth $77 billion, according to research firm IHS.
The commission started its investigation in September, taking up a complaint by a group of mainly German and Italian companies led by SolarWorld, which was once Germany's biggest solar group but now has 900 million euros in liabilities. Its smaller rival Q-Cells filed for insolvency last year.
The United States levied its own duties on Chinese solar energy products in 2012, arguing that China's rapid expansion into the industry has created a massive oversupply.
Solar is the leading source of renewable energy after hydro and wind, and companies are in a race to win contracts as countries seek to limit pollution and global warming.
Germany was the world's biggest market last year, followed by China, Italy and the United States, according to the European Photovoltaic Industry Association. Germany installed more solar panels than any other country in 2012, at 7.6 gigawatts of newly connected systems, while China was second with 5 gigawatts.
Solar covers about 3 percent of Europe's electricity demands but government support for developing the green energy source varies widely across Europe with the euro zone debt crisis dampening government support in Spain and Greece.
Europe's stance on solar energy is complicated by the fact that some in the EU solar sector, notably importers and installers, support cheap panel imports from China. They say EU tariffs would be damaging for efforts to develop clean energy. Some fear retaliation by Beijing. "Protective duties are poisonous for the solar industry," said Udo Mohrstedt, chief executive of Germany's IBC Solar. "These guarding measures will endanger more than 70,000 jobs in medium-sized companies in Germany alone," he said.
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Enrico Letta sera-t-il l'homme qui a fait bouger Angela Merkel ?

Mariano Rajoy et Enrico Letta se sont entendus sur la mise en place d'une "task force" commune en vue de présenter un plan de sortie de crise à la zone euro au sommet européen de juin prochain. A la suite de sa tournée européenne, le chef du gouvernement italien a su réunir derrière lui un front en vue de présenter une alternative à la gestion de la crise par Angela Merkel. Pour le chef du gouvernement italien, qui risque gros sur le plan interne, l'enjeu est majeur. Reste à convaincre une chancelière allemande en pleine campagne électorale de faire un geste...
Lire la suite ici.

David Cameron’s Conservatives suffer blows in UK local elections from anti-EU UKIP

David Cameron’s Conservatives took a drubbing in local elections amid a surge of support for an anti-European Union and anti-immigration party, heaping pressure on the British prime minister to appeal to the dissident right-wing of his own party. Echoing results across Europe, British voters appeared to punish the ruling government, fed up with economic doldrums and austerity measures. Britain’s nationalist party appeared to be the recipient of a sizeable protest vote against the political elite and the EU, analysts said.

According to returns Friday from 34 contests across England, the right-wing United Kingdom Independence Party, or UKIP, won 139 county council seats, while the mainstream opposition Labour Party gained 291. The Liberal Democrats — junior partners in Britain’s coalition government — were down 124 county council seats, while Cameron’s ruling Conservatives lost 335 seats in Thursday’s vote.

UKIP leader Nigel Farage — whose party Cameron once referred to as a bunch of “fruitcakes, loonies and closet racists” — said the results will send a “shock wave” through the British political establishment. “This is a real sea-change in British politics,” Farage told the BBC.

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ECB cuts interest rates, open to further action

The European Central Bank cut interest rates for the first time in 10 months on Thursday and held out the possibility of further policy action to support the recession-hit euro zone economy. Responding to a drop in euro zone inflation well below its target level and rising unemployment, the ECB lowered its main rate by a quarter percentage point to a record low 0.50 percent.

ECB President Mario Draghi, promising to provide as much liquidity as euro zone banks need well into next year and to help smaller companies get access to credit, also indicated that some policymakers had pushed for a bigger cut. "There was a very, very strong prevailing consensus towards an interest rate cut," he told a news conference after the ECB's Governing Council met in Bratislava. "Within that, there was a prevailing consensus for a cut of only 25 basis points."

Reuters

Italy’s new government wins 1st confidence vote

Italy’s new government easily passed its first confirmation vote Monday in Parliament after Premier Enrico Letta made concessions to his uneasy coalition allies, promising to ease part of a slate of austerity measures that have weighed on Italians impatient at the slow pace of economic recovery.

While pledging the country will do what the eurozone wants to improve its public finances and debt problem, the center-left leader has to placate his tense two-day-old coalition, including former premier Silvio Berlusconi’s conservatives, whose support he needs for confirmation. (...)

Bending in part to a key Berlusconi campaign promise, Letta said his government will immediately suspend an unpopular tax on primary residences due in June and make it fairer to less affluent taxpayers. He also pledged not to raise the sales tax and to reduce some payroll taxes. “Reducing taxes is a priority,” Letta said, promising he would “pinpoint a strategy to revive growth without interfering with the process to heal finances.”

The European Union has insisted on rigorous austerity to heal Italy’s finances, but the public’s patience has been tried by spending cuts and higher taxes. Voters across the continent have been rebelling against governments that have imposed such measures. While Letta stressed the urgency of reducing the tax burden on homeowners, consumers and businesses, he didn’t say how he planned to make up for the reduced revenues. He might have to resort to more spending cuts, which could ultimately sharpen an already harsh part of the austerity agendas. (...)

Intent on reassuring eurozone governments and European Union officials that despite his demanding coalition partners, Italy’s would stay the course of economic reform, Letta will soon visit major European capitals. He begins in Berlin on Tuesday, assuming his government wins the Senate confidence vote. He’ll also visit Paris and Brussels to give, as he put it, a “sign that this is a European and a pro-Europe government.”

He vowed to keep the sales tax from rising to 22 percent from 21 percent in July, as predecessor Mario Monti’s government had planned. Italy’s business sector is worried the higher tax would discourage consumers from buying everything from washing machines to new clothing. The new premier also pledged to reduce payroll taxes for businesses hiring the young or those currently on temporary work contracts.

Italy’s central bank said Monday that Italian companies were suffering ever more as loans dry up, with banks reluctant to make risky deals. Italians are impatient after 18 months of austerity budget, pension reform and new taxes under Monti to see jobs return and the small and medium firms that power the economy bounce back. Letta denounced the “anger and conflict” that the five-year economic slump has triggered.

On Sunday, an unemployed man shot and wounded two police officers Sunday in a crowded square outside the prime minister’s office at the same time the government was being sworn in elsewhere in the capital. 

The premier indicated his impatience with the political class’ failure to enact reforms. He indicated that he would give this legislature 18 months to make serious inroads or he might throw in the towel. However, virtually nobody expects the new government to last anywhere near Parliament’s five-year term.

WP