Germany, France push for financial transactions tax

Germany and France asked the European Commission (...) to push ahead with plans for a financial transactions tax with a core of at least nine European Union countries, after failing to win backing for such a levy across the entire EU.

Germany had originally wanted a tax covering financial transactions across the 27-nation EU but the plan ran into opposition from Britain and some other countries, prompting it to aim instead for a core group to introduce the levy.

According to a statement released by the German finance ministry, the German and French finance ministers on Friday delivered a letter to the Commission asking for so-called "enhanced cooperation" to move ahead on the tax, a process which would need the support of a minimum nine EU member states.

Italy, Spain and Austria are among countries that have expressed support for such a tax in the past, but it remains unclear whether a full nine can be rallied to back the drive.

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Dutch pro-Europe parties win heated election

Pro-European parties swept to victory in Dutch elections on Wednesday (13 September) despite concerns that eurosceptics would increase their influence on future decision-making powers.
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But exit polls give caretaker prime minister Mark Rutte's Liberals 41 seats and the centre-left Labour Party 39 in the 150-member lower house with hardliners on both sides of the political divide losing considerable ground. Pundits had initially predicted the two would only grab 70 seats.
"We won our greatest victory in history and for the second time became the largest party in the Netherlands," said Rutte. The far-left Socialists, who had campaigned against austerity and eurozone bailouts, are likely to end up with just 15 seats. Meanwhile, firebrand Geert Wilders of the anti-immigration Freedom Party had campaigned for the Netherlands to leave the euro and the European Union. The verdict has hit Wilders' party the hardest - his party is set to lose about a third of his seats, dropping from 24 to 13.
The far-left's anti-austerity message had ignited debate on Europe's future and the Netherlands' role in the Union in the run-up to the vote.
The Liberals and the Labour parties backed the eurozone rescue packages, criticised by hardliners.
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Euobserver.com

Europe Prepares to Investigate Chinese Dumping of Solar Panels

"Defying Chinese threats of retaliation against European wines and industrial materials, the European Union is preparing to begin on Thursday morning a broad investigation into whether Chinese companies have been exporting solar panels for less than it costs to make them. 

The case would be one of the largest trade actions in European history and could lead to steep tariffs on much of China’s $20 billion in annual exports of solar products to Europe, four people familiar with the dispute said Wednesday.

The anti-dumping case, which follows a series of bankruptcies and factory closings by European and U.S. solar panel manufacturers, would broaden what has already become one of the biggest sticking points in trade relations between China and the United States. The U.S. Commerce Department imposed preliminary anti-dumping tariffs in May of at least 31 percent on Chinese solar panels, in addition to preliminary anti-subsidy tariffs of 2.9 percent to 4.73 percent that were imposed in March.

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The Union also takes longer than the United States to investigate such cases. Preliminary tariffs could be imposed in Europe next May, and final tariffs would not be set until December of next year.

E.U. officials declined to comment on the solar panel issue. Regarding the possibility of Chinese retaliation, they repeated the Union’s standard position that foreign countries should impose trade restrictions only if they follow procedures that comply with the World Trade Organization’s rules.

The United States and the Union each follow elaborate, quasi-judicial procedures for anti-dumping and anti-subsidy cases, taking voluminous statements from affected companies before acting, and following detailed rules for setting any tariffs. China’s methods for assessing trade penalties are relatively mysterious, and have been the subject of periodic European and American criticism.

The Union is preparing to start the investigation in response to a complaint filed by a coalition of about 20 European companies led by SolarWorld, a German maker of solar panels. SolarWorld, which also has operations in Oregon, had previously set up a coalition of solar panel producers in the United States that used a legal filing to force the Commerce Department to file the cases there.

Chen Huiqing, deputy director for solar products at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said at an industry conference in Guangzhou two weeks ago that the Chinese industry had sent a team of representatives to Brussels in one last bid to talk European officials out of starting a trade case. She warned that Chinese solar panel manufacturers already faced declining profit margins, shortages of capital and weakening foreign demand.

Chinese companies played a tiny role in the global solar power industry until five years ago, when they began a surge that has now brought them two-thirds of the global market. That rapid growth has been accompanied by a steep plunge in wholesale prices for solar panels, which have dropped by up to three-quarters in the past four years.

Retail prices have fallen much more slowly, as the bulk of the cost of a solar panel system lies in installation, and those costs have not fallen nearly as fast.

Chinese industry officials and regulators have periodically denied allegations that they are selling solar panels below cost in foreign markets, insisting that their huge investments in big new factories have brought down costs. But big Chinese solar companies have been posting heavy losses, particularly in the second quarter.

Frank Haugwitz, a solar industry consultant based in Beijing, said that if the Union imposed tariffs, it would be a serious blow to a Chinese industry already suffering from overcapacity. But the Chinese government is strongly committed to having a large solar panel industry, and is starting to use subsidies to expand the modest domestic market for solar panels.

“Beijing is very committed; it will not let them down,” Mr. Haugwitz said.

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Chinese retaliation against European wines could be more politically feasible in Beijing. Tales of lavish spending on expensive wines by the wealthy and by government officials periodically surface on the Chinese Internet, and feed public anxiety about the wide gap between rich and poor.

China exports over 90 percent of its solar panels. It has done so to tap into billions of dollars in subsidies from government agencies and other electricity users in the United States and Europe for homes and businesses to install solar panels. W.T.O. rules have discouraged Western countries from banning the use of their subsidies for the purchase of Chinese solar panels.

The exception has been government procurement of solar panels, for which the United States has some “buy American” provisions. China has not joined the W.T.O. side agreement on government procurement, as many Chinese provincial governments have been leery of being required to accept foreign bids for local and provincial government contracts. So Western governments also have the option not to entertain bids from Chinese companies, though this option has seldom been exercised."

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Germany wants EU convention to forge new treaty

German Chancellor Angela Merkel wants an EU 'convention' to draw up a new treaty for closer European political unification to help overcome the bloc's sovereign debt crisis, weekly Der Spiegel said on Sunday.

Germany, the European Union's biggest economy, has long argued for more national competences, including over budgets, to be transferred to European institutions but faces strong resistance from other member states.

Merkel hopes a summit of EU leaders in December can agree a concrete date for the start of the convention on a new treaty, Spiegel said.

The idea, which Spiegel said Merkel's European affairs adviser floated at meetings in Brussels, recalls the 100-plus strong convention of EU lawmakers set up in 2001 - inspired by the Philadelphia Convention that led to the adoption of the U.S. federal constitution - charged with the task of preparing a European constitution.

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Germany believes a much closer fiscal and political union - with EU oversight of national budgets - is needed to ensure that member states get their public finances fully in order and to restore stability to the euro currency.

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Romania impeachment referendum

Romania’s Prime Minister Victor Ponta has pledged not to continue his efforts to oust president Traian Basescu, after he survived an impeachment referendum. 

On Sunday, Ponta had called for Basescu’s resignation. However, his attempt to remove the president has drawn anger from the EU, and the required 50 percent turnout for the ballot did not materialise. 

Of the 46 percent of people who did vote on Sunday, more than 87 percent wanted Basescu out. Both the president and the opposition Democratic Liberal Party had urged people to boycott the ballot. 

Despite lack of support shown by the voting figures and Basescu’s falling popularity, some are glad he is still the president. 

Many speculate the rivalry between the prime minister and Basescu will continue. 

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Ex-Milosevic spokesman becomes new Serbia PM

Prime Minister Ivica Dacic was sworn in Friday, marking the first time the late Milosevic's Socialist party will dominate the government since ruling Serbia for a decade in the 1990s — an era of wars, international sanctions and economic downturn.

 During the Balkan wars Dacic was nicknamed "Little Sloba" for his admiration of Milosevic. But he has embraced a reformist course in recent years and European leaders congratulated him Friday, signaling openness to a democratically elected leader in a country that has made steady democratic strides since ousting Milosevic in 2000. 

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During a parliamentary debate on Thursday ahead of the vote that approved the new government, Dacic reiterated that Serbia will never recognize Kosovo, but stated that his government was ready to "immediately" reopen EU-brokered talks. "There has been enough blood in the Balkans," Dacic said.

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Dacic's Cabinet was approved with 142 votes for and 72 against in a 250-member assembly, ending nearly three months of political uncertainty that followed an inconclusive election on May 6. After the vote, Dacic said he was pleased with the wide backing he received. 

He promised not to stray from the EU bid, saying that he has already spoken on the phone with EU's top foreign policy official, Catherine Ashton."Serbia stands firmly on the EU path," Dacic said in a statement. 

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Oettinger warns of deindustrialization

Policies governing the European Union's drive towards a low- carbon economy should not lose sight of the need to retain the bloc's industrial base, Energy Commissioner Guenther Oettinger said in a newspaper column on Monday. 

 "Europe should think about adding a fourth goal to the three 20-20-20 energy-related ones up to the year 2020," Oettinger wrote in the business daily Handelsblatt. The bloc's goals are a planned 20 percent hike in energy efficiency, a 20 percent cut in CO2 emissions and reaching a 20 percent share of renewables in energy usage by 2020. 

"(Europe) ... should make (another) permanent goal a 20 percent industrial contribution to gross domestic product (by 2020)," Oettinger said. This share had sunk to 18 percent in 2010 from around 22 percent in 2000. 

"We need a strategy for the re-industrialization of Europe," he said. Oettinger said Europe was too dependent on energy imports - its main natural gas supplier is Russia and its oil comes mainly from the Middle East - and therefore had to ensure efficient energy production and usage, to help stand up to competitors such as the United States where gas prices have plummeted. 

Electricity would become the EU's main energy benchmark as it would expand its share in fuelling transport, Oettinger said, adding Europe needed a policy "that considered that security of supply and affordability of power are a decisive location factor in the global context," he wrote. 

Oettinger, a German national, echoed rising concern about runaway power prices in his home country, where subsidizing of fast-expanding green power is burdening industrial and household consumers. This has already caused a government rethink on, and subsequent cuts to, solar power. Environment Minister Peter Altmaier told the mass circulation Bild am Sonntag on Sunday he was skeptical about some important goals of Germany's energy U-turn, put in place last year in the wake of the Fukushima nuclear disaster. In particular, Altmaier doubted whether power usage could be cut by 10 percent up to 2020, which the government had stipulated along with goals to get out of nuclear energy fast in favor of green power.

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Romanian President Impeached, Faces Referendum

Romanian lawmakers impeached President Traian Basescu in an overwhelming vote Friday, paving the way for a national referendum that could see the divisive and increasingly unpopular leader ousted from the powerful position he's held for eight years. The vote of 256-114 in parliament came as Basescu and Prime Minister Victor Ponta have engaged in a bitter power struggle in the eastern European country of 19 million. The machinations, especially attempts to sideline the judiciary, have drawn statements of concern from the European Union and the United States. 

Basescu's opponents accused him of overstepping his authority by meddling in government business and legal affairs. The 60-year-old former ship's captain also was accused of making racist remarks about Gypsies and disabled people. 

Senate Speaker Crin Antonescu, who will serve as interim president now that Basescu has been effectively suspended from the role, said a popular referendum on Basescu's fate will be held July 29.Basescu was impeached in 2007 but survived a referendum. Still, his popularity has declined steeply, and he faces tougher odds this time. One major reason is that the Ponta-led government changed the law this week to make it easier to oust Basescu from office. Now, a simple majority of votes cast is needed to push him out. Before, a majority of all voters in Romania was required.

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Montenegró is a csatlakozás útjára léphet Jóváhagyták az európai uniós tagországok állam- és kormányfői pénteken Brüsszelben azt a döntést, amelynek értelmében megkezdődhetnek a csatlakozási tárgyalások Montenegró és az EU között. A tárgyalások megkezdését Herman Van Rompuy, a Tanács elnöke jelentette be az értekezletet lezáró nemzetközi sajtótájékoztatón. Megerősítette, hogy a tárgyalások hivatalosan már pénteken meg is kezdődnek. Ez elsősorban a most leköszönő dán elnökség kívánsága volt – így a megbeszéléssorozat még a "dán" félévben kezdetét veheti.
 (...)
 Euvonal.hu

Summit puts end to EU patent turf war

EU leaders have forged a compromise that will end a long-running dispute over a common European patent, clearing the way for easier and less costly way of registering products. National leaders ended their two-day summit on Friday (29 June) by agreeing to divide the functions of the European patent court between the three countries eager to host it – France, Germany and Britain. The location of the patent court was the last outstanding issue in a long-fought effort. 

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The main seat - the Central Division of the Court of First Instance of the Unified Patent Court (UPC) - will be in Paris. The first president of the court would come from France, as the member country hosting the central division. Given the highly specialised nature of patent litigation, two sections will be established - one in London and the other in Munich, the Danish prime minister said. (...) On 11 March 2011, ministers from 25 member states decided to go ahead with plans to introduce a common system for registering patents, without Spain and Italy, using the so-called 'enhanced co-operation' mechanism. The mechanism allows a group of at least nine EU countries to adopt new common rules among themselves, in areas where an EU-wide agreement cannot be reached. Internal Market and Services Commissioner Michel Barnier welcomed the Council decision, saying the compromise reached is a decisive step towards the creation of a unitary patent and a common patent court in Europe. “The reform will create a simpler application process and considerably reduce the costs for obtaining patent protection,” Barnier said in a statement. “All future unitary patents will eventually be available in all official EU languages, thus ensuring the dissemination of knowledge and benefiting inventors. I hope that Spain and Italy will also join the new regime soon.” He said Europe is falling behind the United States and China in the number of patents issued. French President François Hollande told a news conference there were no winners or losers. "What took place was a compromise, and it was because France and Germany were united, all through the night, that we achieved this compromise," Hollande said. The European Parliament is expected to vote on the proposal on 4 July. This would open the way toward having the first unitary patent will be registered in 2014. Euractive.com

Italy and Spain get 'breakthrough' deal on bailout funds

Eurozone leaders in the early hours of Friday morning (29 June) agreed to allow bailout funds to recapitalise banks directly and to buy bonds for "well-behaving" countries - states which are pursuing reforms but suffering from market pressure.
The deal is designed to help Spain and Italy to lower their borrowing costs, but might take several months to implement. "We agreed on something new, which is a breakthrough, that banks can be directly recapitalised in certain circumstances... and we are opening the possibility for well-behaving countries to use the EFSF/ESM [bailout funds] to reassure markets and get some stability around their sovereign bonds," EU council chief Herman Van Rompuy said in a press conference at the end of the marathon meeting.
Italy and Spain had earlier filibustered a non-controversial EU "growth pact" worth €130 billion in order to achieve concessions on their immediate concerns: their high borrowing costs.Germany insisted that the concessions only be made if proper controls are in place, however.
Spain got its long-standing demand of letting banks be directly recapitalised by the eurozone bailout funds, but only once "an effective single supervisory mechanism is established, involving the European Central Bank." This "will not happen in a few days or weeks, but in the medium term it will achieve the desired effect," said Thomas Wieser, head of the Eurogroup working group of finance ministry officials in the eurozone. Once the new supervisory body is established, the bailout will be "transferred to the new mechanism, so that it can rapidly be taken off Spain's balance sheet," Wieser said. 
Madrid also got a concession on the so-called preferred creditor status for the permanent eurozone bailout fund. Euro leaders decided that the bailout for the Spanish banks will not have such "seniority" - meaning that the permanent European Stability Mechanism will not have any priority compared to other investors in case of default. 
For his part, Italian Prime Minister Mario Monti also made some headway in his call for a "semi-automatic" mechanism so that the bailout funds buy government bonds when countries are under market pressure, but without trigerring a bailout procedure, as the rules currently stipulate. Speaking on his way out of the summit, he said he was pleased the impasse had been overcome. "There were a lot of discussions, some tension, but we made progress. At our request, we obtained a stabilisation mechanism for countries that are perfoming well under the Stability and Growth Pact, but are still under market pressure, like Italy," he said. 
Under this new mechanism, countries would sign a memorandum of understanding about continuing the reforms they are already implementing, but "there would be no troika," Monti explained, in reference to the special monitors from the EU, the International Monetary Fund and the European Central Bank that go every three months to bailed-out countries such as Greece or Portugal. 
Van Rompuy also confirmed that the conditions attached to this "flexible" mechanism would reproduce the requirements of the eurozone's beefed up economic surveillance - on budget deficits and macro-economic imbalances. "There may be just a timeline added to the memorandum, to put some pressure, but the requirements would be the same as the country-specific recommendations," he said, in reference to EU commission-issued reports for each country on where their economy stands compared to the EU rules. 
As for the long-term plan for the eurozone, the EU council chief will go back to the drawing board together with the heads of other EU institutions and come back with a "specific timelined roadmap" by October on the banking union, on more sovereignty being ceded to Brussels and on seeking ways to increase "democratic legitimacy and accountability." 
Unlike his first report discussed that night and for which there was "no agreement" on substance - Germany opposed the perspective of mutualised debt - the next one will be done "in close co-operation" with member states and also in consultation with the European Parliament, he said.
Euobserver.com

Cyprus needs money for troubled bank

A fifth euro zone country turned to Brussels for emergency funding on Monday when Cyprus announced it was seeking a lifeline for its banks and its budget, hours after Spain submitted a formal request to bail out its banks.Global share prices and the euro slid as investors bet that European leaders - due to meet this week for the 20th time since the currency zone's debt crisis hit Greece in 2010 - would fail to come up with radical measures to back up weak countries.
Germany's Chancellor Angela Merkel dashed any hope that Berlin would allow joint bonds issued by the euro zone or other measures sought by partners.Cyprus joins Greece, Ireland, Portugal and Spain in seeking EU rescue funds, meaning more than a quarter of the 17 euro zone members are now in the bloc's emergency ward. Italy's funding costs have soared too, which means it could be next.
Spain formally submitted its request for up to 100 billion euros of funds to bail out its banks, agreed on June 9.
Tiny Cyprus has just four days to raise at least 1.8 billion euros - equivalent to about 10 percent of its domestic output - to meet a deadline set by European regulators to recapitalise Cyprus Popular Bank, its second largest lender which saw its balance sheet hurt by bad Greek debt.
Finance Minister Vassos Shiarly said the country would also seek enough money to help with its budget deficit. The full amount would be decided over the course of weeks."The amount will be as much as it may be needed to cover the recapitalisation and fiscal requirements," he told Reuters.With its coffers emptying rapidly and hurtling towards an immovable deadline, Cyprus suffered a further sovereign credit rating cut on Monday by Fitch, to the junk BB+ grade. It is already shut out from raising new funds on capital markets, with yields on existing bonds well into double digits.
An island with just 1 million residents, Cyprus has a disproportionately large financial sector that is heavily exposed to Greece, a neighbour more than 10 times the size with which it shares a language, culture and close political links.
It received 2.5 billion euros in a loan from Russia last year and has been scrambling for funding from Moscow or Beijing to avoid the terms Brussels imposes in return for EU bailouts.
Jean-Claude Juncker, head of the Eurogroup of euro zone leaders, said Cyprus would have to negotiate aid conditions with the EU and European Central Bank."This will include measures that will address the main challenges of the Cyprus economy, primarily those of the financial sector, and I expect that Cyprus will engage with strong determination in the required policy actions," he said.
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Reuters

Pozitív döntés a pénzügyminiszterek tanácsában

Az uniós pénzügyminiszterek pénteki, június 22-i ülésükön megszüntették azt a márciusi döntésüket, amelyben a Magyarország számára elérhető kohéziós források befagyasztásáról határoztak.

Az Európai Unió gazdasági és pénzügyminisztereinek tanácsa (ECOFIN) június 22-i ülése döntött a Kohéziós Alapból származó kötelezettségvállalások – március 13-i tanácsi döntés alapján történt, 2013. január elsejétől hatályba lépő – részleges felfüggesztésének megszüntetéséről. A döntésre azért kerülhetett sor, mert a Tanács és az Európai Bizottság is úgy látja, hogy Magyarország megfelelő lépéseket tett a túlzott hiány megszüntetése érdekében. 

Március 13-án hoztak döntést a tagállamok pénzügyminiszterei: az Európai Bizottság javaslatára a kohéziós forrásokból 495 millió eurót fagyasztanak be 2013. január 1-től, de csak abban az esetben, ha Magyarország nem tesz hatékony lépéseket a költségvetési hiány tartósan három százalék alá szorítása érdekében. A miniszterek akkor úgy döntöttek, hogy a büntető intézkedést már idén júniusban hatályon kívül helyezik, ha Magyarország meghozza az elvárt kiigazító lépéseket. 

A deficiteljárás alól azonban legkorábban csak jövő tavasszal kerülhet ki az ország. 

A kohéziós alapra vonatkozó uniós szabályok szerint, ha valamely kedvezményezett tagállamban túlzott költségvetési hiány áll fenn, és az erről kiadott tanácsi ajánlást az érintett tagállam részéről nem követte eredményes intézkedés, a Tanács az alapból az érintett tagállam részére tett kötelezettségvállalások teljes vagy részleges felfüggesztéséről határozhat, a felfüggesztésről szóló határozatot követő év január 1-jei hatállyal. A szabályok szerint, ha a Tanács megállapítja, hogy az érintett tagállam megtette a szükséges kiigazító intézkedést, késedelem nélkül határoz az érintett kötelezettségvállalások felfüggesztésének megszüntetéséről is. 

Euvonal

A konzervatívok nyerték a görög választásokat

Az Új Demokrácia nyerte meg a vasárnapi görögországi parlamenti választást, Európa-párti koalíció alakulhat. Az Új Demokrácia a szavazatok 85 százalékának összeszámlálása alapján a voksok 29,96 százalékát kapta és 130 helyet szerezhet a görög parlamentben. A Radikális Baloldali Koalíció (Sziriza) a szavazatok 26,65 százaléka révén 71 helyet kaphat. A szocialista Pánhellén Szocialista Mozgalommal (Paszok) a voksok 12,46 százalékára tett szert, és 33 helyhez juthat a parlamentben.

Előrejelzések szerint Görögországban olyan kormány alakulhat, amelyben összefognának az Európa-párti erők, az Új Demokrácia, a Paszok és a Demokratikus Baloldal (Dimar), utóbbi a voksok 6,11 százalékával 16 képviselői helyet fog birtokolni a törvényhozásban. Antonis Samaras, az Új Demokrácia vezetője elmondta: mielőbb kormányt fognak alakítani, valamint rámutatott: nagykoalíciót szeretne létrehozni, előítéletek nélkül. 

euvonal.hu

Eurozone agrees bail-out for Spain's banks

Eurozone finance ministers on Saturday (9 June) agreed to disburse up to €100bn for Spain's troubled banks, but without an accompanying austerity programme as for Greece, Ireland and Portugal. After a two-and-a-half hour conference call, ministers said in a press statement that "up to €100 billion" will be granted from the eurozone's bail-out funds "for recapitalisation of financial institutions."

The funds will be channelled directly to a state-run fund for bank rescues in Spain, the Fund for Orderly Bank Restructuring, but the Spanish government will sign a memorandum of understanding and "will retain the full responsibility of the financial assistance," the Eurogroup said.

An assessment by the European Commission, with input from the European Central Bank, the International Monetary Fund and the EU banking authority, will spell out exactly how much money is needed, "as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance." But unlike the three other bailed-out eurozone countries (Greece, Ireland and Portugal), Spain will not be submitted to a full-blown programme with inspectors regularly checking the implementation of reforms.

Eurozone finance ministers explained that Spain has already implemented "significant" fiscal and labour market reforms and has passed laws to strengthen the capital requirements for its banks. (...)

Spain will not seek IMF assistance - again unlike its three bail-out predecessors. The Washington-based body is set to contribute only with reports on the country. It already did so on Friday (8 June) when it estimated that Spain's banks will need €37bn in the short term, not taking into account any bank restructuring or bail-outs. The IMF report was released three days ahead schedule, as eurozone finance ministers sought to seal a deal before markets open on Monday and before crucial elections in Greece next weekend.

The prospect of Greece cancelling its second bail-out and possibly exiting the eurozone drove Spain's borrowing costs into bail-out territory and led to a downgrade by Fitch ratings agency.

Speaking in Madrid after the teleconference, Spanish economy minister Luis de Guidos said it was still unclear how much his country will actually need. But he insisted that the €100bn sum was more than enough to cover the gap and calm markets.(...)"There are no conditions of any kind on economic reforms outside of the financial sector," de Guindos said. "There are only conditions for the banks. That is all. It is an injection of capital which they will have to pay back. There are no additional conditions for Spanish society." 

"This is not a bail-out," de Guindos stressed.

:))))

Euobserver

Merkel urges 'political' union

German Chancellor Angela Merkel pushed for a stronger European political union Thursday amid growing international calls for action as a brutal Spain ratings downgrade added another twist to the eurozone crisis. In the United States, Federal Reserve Chairman Ben Bernanke became the latest to sound the alarm over the European crisis, as Merkel held talks in Berlin with British Prime Minister David Cameron. 

The two leaders agreed that closer fiscal discipline in the European Union alone was not enough to stem more than two years of turbulence as the clock ticks down for Europe to help stabilise Spain's banking system. The EU fiscal pact is "necessary but not the only precondition," Merkel said, while Cameron, who has opted out of the pact, called it "important but not sufficient" to fight the crisis. Merkel also said it was "important to stress that we have created instruments for support in the eurozone" and Germany, seen by some EU partners as being inflexible and reluctant to change, backed their use. (...)

Merkel earlier Thursday told German television she saw "more Europe" as the solution. The chancellor said that in addition to the euro currency used by 17 nations, Europe needed a fiscal union and, above all, a political union, even if that came at the cost of a two-speed approach. "We need a political union first and foremost. That means we must, step by step, cede responsibilities to Europe," Merkel told ARD public television. "But we must not remain immobile because one country or another does not want to follow yet," she added. (...)

AFP

Spain appeals for EU bail-out of struggling banks

Spain's budget minister has during a radio interview appealed for an EU bail-out of the country's banks.Speaking on Tuesday (5 June) on the Onda Cero radio station, Cristobal Montoro said: "Europe should move swiftly to allow its institutions to directly boost the capital of troubled banks in Spain." He added: "The amount needed by Spain's banking system isn't very high, nor excessive. What matters is the procedure to provide such an amount - and that's why it is important that European institutions open up and proceed with this."

His reference to "direct" aid to banks is an appeal for the Union to use its Luxembourg-based EFSF bail-out fund to help Spanish lenders. The alternative - a bail-out of the Spanish state involving the EFSF and the International Monetary Fund (IMF), as in Greece, Ireland and Portugal - comes with outside supervision of national finances and would increase the country's budget deficit. He said Spain can no longer borrow money from markets due to loss of confidence which has seen borrowing costs shoot up compared to Germany. (...)

The cost of a Spanish bank rescue is being estimated at between €40 billion and €90 billion. Montero added that a full-blown EU-IMF bail-out is unfeasible because the EFSF has €440 billion in the pot, while Spain, the eurozone's fourth largest economy, owes foreign lenders almost €1 trillion. (...)

The Spanish cry got a sympathetic ear in France.French foreign minister Laurent Fabius told media while visiting Rome also on Tuesday that the EU should take a flexible approach to Madrid.

Volker Kauder, the chief whip of Chancellor Angela Merkel's Christian Democratic Union party, told the ARD TV station on Wednesday morning: (...) "Germany will demonstrate its solidarity with other states in Europe ... but the states of Europe must for their part undertake every endeavour to contribute to solving those problems themselves." The European Commission will on Wednesday propose plans for an EU "banking union" to prevent a Spanish-type scenario in years to come. 

Euobserver

Ireland votes Yes on fiscal treaty

Ireland has voted in a favour of the fiscal discipline treaty but the Yes vote is seen as grudging and the country is now expecting EU "solidarity" in return.

With all votes counted, 60.3 percent voted in favour of the Germany-inspired document enshrining balanced budgets into national law while 39.7 percent vote against. Turnout was 50.6 percent.

(...)
http://euobserver.com/843/116460

Spanish and Italian borrowing costs soar

Euobserver

The cost of insurance against a Spanish default reached another record on Monday, with Italy's borrowing costs also rising sharply amid continued market fears about the fate of the eurozone. "With a risk premium at 500 points, it is very difficult to raise finances," Spanish Prime Minister Mariano Rajoy said Monday (28 May) in a press conference. His country's 'debt risk premium' - the default insurance investors demand on Spanish bonds compared to German bunds - that day leapt to a eurozone record of 514 basis points.

But Rajoy insisted Spain was not seeking financing from the eurzone bail-out fund, but rather alluded to earlier calls for the European Central Bank (ECB) to resume its bond-purchasing or cheap bank loans programmes which last year helped both Spain and Italy lower their borrowing costs. "We need a clear, forceful and energetic defence of the euro," Rajoy said. Last week he noted that ECB money is a more pressing issue than the theoretical discussion about further political integration of the eurozone.

Part of Spain's problem is its troubled banks. The government on Friday pumped an extra €19 billion into Bankia, its fourth-largest lender, in what is so far the biggest Spanish bank bail-out. Madrid already injected €4.4 billion earlier this month. Reports suggest another €30 billion may be needed - with an independent audit under way to examine the state of Spanish lenders.

Fears about a possible Greek exit from the eurozone, labelled "Armageddon" by some senior bankers, are affecting Spain as it seeks funding from the markets. Charles Dallara, the manager of the International Institute of Finance, an umbrella group of the world's largest banks, last week said a Greek exit would cost more than €1 trillion and seriously damage other southern countries. “Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again," Dallara told Bloomberg in an interview.

Similar to Spain, Italy's borrowing costs also spiked on Monday, with two-year bonds selling at extra costs of over four percent, compared to a 3.3 percent rate last month before the Greek elections. Meanwhile, German bonds last week sold at a record of zero-percent interest, as investors are flocking to these 'safe-haven' treasury papers. European Parliament chief Martin Schulz, himself a German national, said last week that this widening gap between Germany and other eurozone countries is "destroying Europe" and urged the German chancellor to change policies.

A meeting called by Italy's premier Mario Monti next month in Rome with Rajoy, France's Francois Hollande and Germany's Angela Merkel is likely to see more pressure put on the German leader to accepting some form of joint debt issuing - the so-called eurobonds.

The prospect of having these joint bonds could help alleviate the borrowing problem for southern countries in the long run and lift the pressure from the ECB to continue buying up debt or injecting cheap loans into the eurozone banks. But Germany, who borrowing costs would rise under such a scheme, has said this is a long term solution only.

Hollande pushes EU to talk about joint euro bonds

French President Francois Hollande, standing firm in the face of stiff German opposition, said on Wednesday that European leaders should broach the possibility of jointly-issued euro bonds and that no option to resolve the bloc's crisis should be taboo. 

Hollande, due to join other European Union leaders later on Wednesday for talks over dinner, said all options should be put on the table because the gathering was about exchanging views before a decision-making summit at the end of June."This is not about entering into conflict with others," the Socialist president told a news conference in Paris. "Everyone should go into this in the best spirit."

Hollande, who held the news conference jointly with Spanish Prime Minister Mariano Rajoy after the two met, reiterated that he was committed to debt and deficit reduction but that helping economic growth was a necessary part of that objective. He said he would raise a panoply of ideas including the role of the European Central Bank and the European Financial Stability Fund on the one hand as well as euro bonds.

"It's not just about project bonds, which will also be proposed," he said at the news conference at the presidential Elysee Palace, referring to the idea of the EU backing bonds issued by managers of infrastructure projects. "It's about thinking of a means of financing that will allow all countries that have made the necessary effort to fix their public finances to gain access to financing at the lowest rates possible, sheltered from speculation or doubt in some markets," he said. "Is it acceptable that some sovereign debt has to be refinanced at rates of 6 percent when others, admittedly better regarded, can access funding at rates of close to zero in the same monetary and budgetary zone?" he asked.

Germany sold bonds offering investors no regular interest rate payments for the first time on Wednesday. Strong demand for the bonds underscored investors' desperation to find a safe place to park their euros. By contrast, investors trading in the open market were seeking returns of around 4.2 percent and 3.6 percent respectively on comparable bonds issued by vulnerable debtors Spain and Italy.

Hollande vowed during the campaign that swept him to power in a vote on May 6 where he unseated Nicolas Sarkozy that he would seek changes to a European pact on deficit reduction to add more concrete commitments to shore up economic growth. Hollande said at the news conference in Paris that he also intended to address the role of the ECB and EFSF and banking liquidity in the talks with other European leaders. "The top priority is injecting liquidity into the European financial system to ensure that European banks, all European banks, can be consolidated," he said. "It's at the end of June that we must produce solutions and do so together but it would be a shame to not go all the way on proposals," he said in defense of his position ahead of the EU meeting on Wednesday.

Reuters