EU Updates – April 2013

EU Institutions Continental confidence in the European Union itself has fallen to a record low. Polls of national populations historically supportive of the EU show that over half of Italians, French, German and Spanish answered ‘no’ when asked if they had confidence in the EU as an institution. The only large country with a supportive majority was . The largest change was , with 72% Spanish people answering ‘no’ compared to just 23% in May 2007.

Cordial relations between German and UK leaders make treaty change and reform more likely. stayed with in the opulent state residence, Schloss Meseberg. Merkel agreed that ‘urgent action’ must be taken to reform the EU’s flexibility and competitiveness, whilst Cameron supported her views on banking union and promised to tighten regulation on the British Overseas Territories, which are currently seen as tax havens.

Economy The Eurozone unemployment rate hit a record high of 12.1%, or 19.2 million people. At the same time, real inflation slowed to only 1.2%. Greece’s unemployment rate is now 27.2% and Spain’s, 26.7%. This has prompted calls, particularly from the worst-hit member states, for the European Central Bank to cut inflation rates from 0.75% to 0.5%, which would be the first reduction since July. A cut would aim to discourage savers and encourage spending.

The European Parliament and Commission have extended the bankers’ bonus cap to fund managers. The cut will also be 100% of workers’ salary, but without the option to double that with the majority agreement of shareholders. This has sparked an angry reaction from financial centres such as Frankfurt and London, since fund managers were note ‘to blame’ for the financial crisis. There are fears that these moves could cause an ‘exodus’ of talented bankers to America and Hong Kong, especially in combination with January’s Financial Transaction Tax, which only the UK is legally opposing.

Dutch Finance Minister Jeroen Dijsselbloem claims that 90% of the proposed EU banking union can be achieved without treaty change. Dijsselbloem, who is chairman of the financial council, told the International Monetary Fund that existing mechanisms such as the Single Supervisory Mechanism and the European Stability Mechanism are already turning the Eurozone towards a unified system, with shared debt and deposit guarantees. German politicians fear this would weaken their national banks, which are currently strong in isolation.

EU Trade Free Trade talks with and Canada have reportedly stalled. Negotiations for the multi- billion euro deals are conducted behind closed doors, but journalists agree that absences in the place of scheduled announcements suggest that no agreements have been made. It is suspected that EU efforts are now focussed towards the FTA with the United States, especially since India has entered an ‘election phase’ during which politicians will have little time for international wrangling.

Brazilian Foreign Minister Antonio Patriota is hopeful of an EU-Mercosur trade deal. Such a move would break over 15 years of deadlock and bring the EU closer to the full members (Brazil, Argentina, Paraguay, Uruguay, Venezuela) and associate members (Peru, Bolivia, Chile, Ecuador). Many of these nations are resource-rich and fast-growing, although no timetable has been set out for negotiations.

Common Agricultural Policy (CAP) Irish chairman of the Council of Agricultural Ministers, Simon Coveney, predicts a CAP deal the end of June. Many technical points have already been agreed, and the positions of the Council, European Parliament and Commission are close. Campaigners have sent over one million emails demanding reform of the ‘Greening’ Single Farm Payment and the double- payment of agri-environment schemes.

Common Fisheries Policy (CFP) The European Council and European Parliament disagree on the date and implementation of the new ‘discard ban’. The ban was agreed in principle in February and Tom Hanney, Irish Ambassador to the EU, believes agreement can be reached under Irish presidency. The World Wildlife Fund, Greenpeace and the New Economics Foundation are all critical of countries like , Spain, Poland and Lithuania who are seen to be delaying the ban, which is designed to make fishing sustainable.

Social EU An EU ruling on gender discrimination increases the price of car insurance for young women drivers. Traditionally insurance companies charged far more for young men, who are seen to be the ‘riskiest’ driver category for speeding and drink-driving, so pay a higher premium. Young men see their costs fall as the age-group is treated with equanimity

Justice and Home Affairs A committee from the UK’s second chamber, the House of Lords, has criticised the government’s intention to opt out of police and criminal justice measures. Nations must opt in or out of the 135 pre-Lisbon measures by May 2014, but may negotiate re-entry afterwards. The Lords fear that there would be a dangerous hiatus between opting out and renegotiation of complicated issues like the European Arrest Warrant and mechanisms to share DNA, fingerprint and car registration data. They also deny that an opt in would threaten the UK common law system. currently does not participate in some such measures.

Foreign Policy The EU has loosened sanctions on Syrian oil in an attempt to ease the humanitarian crisis in the war-wracked state. Only areas held by the ‘National Coalition’ opposition to President Bashar al-Assad will be able to export petroleum and crude oil to Europe, agreed a council in . Before the war, oil accounted for 25% of Syria’s exports. Production has now fallen from 400 000 barrels per day to just 130 000. Meanwhile evidence has emerged that Assad has used chemical weapons (weapons of mass destruction) in the civil war, which may prompt American or EU military aid.

Baroness Ashton, EU High Representative, has negotiated a landmark accord between Kosovo and Serbia. Kosovo declared independence from Serbia in 2008 after years of intermittent violence, but mutual recognition has been hard to achieve due to the complicated ethnic, political and religious border regions. The countries’ leaders had reached an impasse, and even flown home, before Ashton called them back for a last-minute deal. The agreement, which safeguards minority rights in each country, has paved the way for both countries’ future EU membership.

Environment A two year partial ban has been imposed on neonicitinoid pesticides blamed for killing bees. 15 of the 27 member states supported the ban on the evidence that the pesticides posed a threat to the 22 million euro honey and bee-pollinated plant economy. Opponents including Syngenta and Britain argued that studies were inconclusive.

EU states

The – The Dutch Queen Beatrix has decided to abdicate, allowing her son Prince Willem-Alexander take the throne. The Queen is 75 years old and enjoys the popular support of Dutch ‘Orangists’, who have not had a king since 1890. Princess Catharina-Amalia is now heir apparent. The House of Orange-Nassau has little constitutional power.

Italy – After months of deadlock, Enrico Letta has become Prime Minister after forming a coalition government. Letta quickly passed a confidence vote needed to begin parliamentary business. The government contains centre-left, centre-right and technocrat elements. The influence of criminal ex-premier Silvio Berlusconi is pervasive, and Letta has already scrapped an unpopular tax despite ’s fiscal woes.

Germany – A new Eurosceptic party, ‘Alternative für Deutschland’ (Alternative for ) has been launched. The party claims to enjoy support from p to 19% of the country, and aims to win enough seats to become ‘kingmaker’ in the upcoming elections under the Proportional Representation system. AfD would leave the Euro and recreate the Deutschemark, call a plebescite on EU sovereignty and reverse or halt more bailouts.

Bulgaria and Romania – BBC polls suggests there will be no large influx from the states when they gain full free movement. The poll looked at migrant intentions and the levels of preparation people had made, such as preparing jobs and places to live. The validity of the poll, which sees some 135,000 coming to Britain, has been questioned.

Hungary –Hungarian Prime Minister Viktor Orban has partially backed down from confrontation with the Commission over Human Rights. The justice minister will no longer be able to send cases to specific courts, and party broadcasts will be allowed on commercial television, not just state channels. This comes after Commission President Barroso threatened Orban with legal action in an open letter. Friction remains between the Fidesz party and the Constitutional Court.

Scotland (UK) - An independent Scotland may be forced to join the Euro after British chancellor Osborne rejects the idea of a shared pound. Osborne argued that sterling was the UK’s currency, and that the Euro-crisis proved that currency union without economic union was a volatile mix. If the Scottish National Party succeeds in seceding in 2014 it may create its own currency or join the Euro.

EU candidate states Iceland has agreed a Free Trade Agreement with , the first European nation to do so. Icelandic Prime Minister Johanna Sigurdardottir and Chinese Premier Li Kequiang signed the agreement during the former’s visit to Beijing . Iceland gains a lucrative market for its fish and energy products while China gets a foothold in the Artic area, which is expected to yield more minerals and oil as the ice caps melt. Iceland would have to drop such bilateral trade deals if it joined the EU.

Other States Switzerland has announced that it will limit immigration from all EU member states from May, for one year. The Swiss already limited movement from some central and eastern member states, and have been criticised for breaking their commitment to the free movement of labour. The move stems from fears that large migrant worker numbers are driving down wages. will be hit hardest by the 53,700-person limit.

Compiled by

Jonathan Lindsell