Økonomer: Vi lader som om Grækenland kan betale

Økonomer: Vi lader som om Grækenland kan betale

Økonomer: Vi lader som om Grækenland kan betale

By Simon Tilford, 01 July 2015
From Information

Link to press quote(s):

http://www.information.dk/538308

Greek financial crisis raises existential questions for EU

Griekse geldcrisis stelt EU voor existentiële vragen

Greek financial crisis raises existential questions for EU

By Charles Grant, 27 June 2015
From NRC Handelsblad

Greece debt crisis puts euro, European Union in peril

Greece debt crisis puts euro, European Union in peril

Greece debt crisis puts euro, European Union in peril

By Simon Tilford, 28 June 2015
From The LA Times

Link to press quote(s):

http://www.latimes.com/world/europe/la-fg-greece-banks-crisis-20150628-story.html#page=1

World Insight - EU at a crossroads

World Insight - EU at a crossroads


By Ian Bond, 26 June 2015

Week in Westminster - Radio 4

Week in Westminster - Radio 4


By Charles Grant, 27 June 2015

Will Europe ever stop being a headache for David Cameron?

Will Europe ever stop being a headache for David Cameron?

Will Europe ever stop being a headache for David Cameron?

Written by Charles Grant, 26 June 2015
From The Telegraph

Britain’s EU referendum: Cameron cannot please two audiences any longer

Britain’s EU referendum: Cameron cannot please two audiences any longer

Written by Charles Grant, 26 June 2015

David Cameron kicked off the renegotiation of Britain’s EU membership at the European Council in Brussels. The modesty of his demands for reform will inevitably lead him into a breach with Conservative eurosceptics.

For some time, David Cameron has been trying to satisfy two very different audiences on Britain’s renegotiation with the EU. One is the Conservative eurosceptics. Many of them argue that he cannot achieve radical reform without making ambitious demands and threatening to recommend a ‘No’ vote unless he is satisfied. The other audience, the EU’s leaders, say they will give Cameron more help if he speaks softly and keeps his demands within the realm of the possible.

When Cameron kicked off the renegotiation at the European Council in Brussels, over dinner on Thursday night, it became clear that he will work broadly within parameters that are acceptable to his fellow leaders. British officials briefed that the government understood the EU treaties cannot be changed before a referendum. That has been pretty obvious for a long time to anyone who understands the EU’s rules on treaty change, or who talks to other EU governments, but not to all Conservative eurosceptics. As more of them come to realise that Cameron’s ambitions on EU reform are in fact quite modest, they will prepare to attack him. He is reaching the stage where he can no longer appeal to both audiences.

At the European Council, there was not a lot of time to talk about the British question. The EU’s leaders were busy with Mediterranean boat-people and the increasing danger that Greece may leave the euro. But Cameron managed to outline the broad headings of his demands for reform, repeating much of what he had already said on a recent tour of European capitals. The others listened politely and there was no substantive discussion. EU leaders asked the secretariat of the Council of Ministers to work with UK officials on the details of their proposals. Cameron hopes to clinch a final deal in December – allowing a referendum on membership to be held in 2016, probably in the autumn.

Some governments grumble that Cameron has not yet been specific on his ideas for reform. The Germans, however, think this is tactically wise. As soon as his list of demands is known, eurosceptics will attack him for a lack of ambition, while integrationists in other capitals will cry “impossible”, and he will lay himself open to the prospect of failure. Cameron may say very little on specifics until shortly before the December summit.

In recent weeks I have spoken to some of those who met Cameron on his European tour. They told me they were concerned about Cameron’s ability to navigate the many obstacles that he will face between now and the referendum. In particular, they wondered whether he regards Conservative party unity as more important than winning the referendum. They noted his recent about-turns under pressure from anti-EU Tories – on whether ministers would have to support his line in the campaign, and whether the civil service could take sides. But Cameron has a justification for these shifts: if he can retain the support of moderate eurosceptics – so that no more than, say, 50 Tory MPs back ‘Brexit’ – he is more likely to win the referendum.

Other EU governments want to see Cameron make the case for membership, which to them means taking on the eurosceptics and making enemies in his party. Some of them told me that only when he does that will they believe he is determined to prevent Brexit, and therefore worth negotiating with on a serious basis. But Cameron will not want to make the case in Britain until he has struck a deal in Europe. In the meantime, if he can convince other leaders that he will – as he said in his 2013 Bloomberg speech – fight to keep Britain in the EU “with all my heart and soul”, they will probably do business with him.

EU leaders worry that domestic politics may blow Cameron off course. Will Conservative backbenchers push him to demand reforms that are unattainable, thereby making it hard for him to claim a successful outcome? So far he has not asked for much that his partners regard as ridiculous, except for the idea that EU migrants should be denied benefits until they have lived in the UK for four years. Will he carry the cut-and-thrust of Westminster politics – focused on victory and defeat – into EU councils, which usually work towards careful compromises that offer something for everybody? Other leaders claim that if Cameron threatens them they are less likely to help. But some of them are already resigned to the December summit being the scene of a ferocious battle from which Cameron plans to emerge blood-stained but victorious.


Cameron’s task is that much harder because he has few friends in other EU capitals. His peers view him as a ‘transactional’ politician who is a skilled negotiator on particular issues but fails to invest in long-term relationships. For example, some Italians thought it odd that when he met Prime Minister Matteo Renzi in Milan earlier this month, asking for help on EU reform, he would not offer to take a single Mediterranean refugee. But Cameron’s recent European tour suggests, at least, that he sees the need to deploy some gentlemanly charm on his peers.

Chancellor Angela Merkel of Germany, the most influential EU leader, likes Cameron, but they have several times misunderstood each other (as in December 2011, when he refused to sign a treaty on fiscal discipline because she rejected a Treasury protocol that would have given the City of London some extra protection). Her officials have warned the British not to assume that she can fix the rest of the EU; 26 other governments, plus the European Commission and Parliament, also matter. One senior German told me that, though he thought Brexit would be damaging, allowing the UK to undermine the EU’s core principles – for example by disregarding rules on freedom of movement or non-discrimination – would be even worse for Europe.

Though the Germans share Cameron’s desire for a more competitive EU economy, they disagree with many other UK priorities. They oppose turning the ‘yellow card’ procedure – through which national parliaments can club together to ask the Commission to withdraw a draft law – into a ‘red card’, because they do not want to make it harder for the EU to legislate. They are hostile to Cameron’s desire for mechanisms to protect the single market against the risk of the eurozone imposing decisions on it, pointing out that the eurozone has never caucused; they suggest that what the British are really after is a veto for the City of London over financial rules. As for Cameron’s priority of preventing EU migrants from claiming in-work benefits such as tax credits, the Germans cite treaty articles banning discrimination on grounds of nationality. They point out that not only Poland and the other Central European states, but also countries like Spain would never agree to amend these articles.

Merkel’s advisers predict that she will ‘lead from behind’ during the British renegotiation, allowing Donald Tusk, the president of the European Council, to broker agreements among governments, while Jean-Claude Juncker, the Commission president, prepares relevant legislation. In dealing with the crises in Ukraine and Greece, Merkel has kept France’s President François Hollande at her side – to minimise the impression of German dominance and ensure that he is supportive. She will similarly enlist Hollande on the British question.

The final deal that Cameron obtains will mix EU-wide reform with UK-specific provisions. The mechanisms for delivering change will be varied: declarations and decisions of the European Council, as well as legislation and promises to amend the EU treaties at some unspecified point in the future. Those amendments will not happen any time soon. Most leaders view re-opening the treaties as a mad idea – nobody knows where the process would end, and several countries would have to hold their own referendums.

As for substance, Cameron will probably win an accord on ‘competitiveness’ that covers extending the single market, negotiating more trade agreements with other parts of the world and curbing unnecessary EU red tape (in fact the Commission is already doing these). He may get something on restricting immigrants’ rights to unemployment benefits, but nothing on tax credits unless the UK changes its own rules (for example, by introducing a residency qualification that applies to everyone, Britons included). He might win a treaty article promising to protect the single market, and an ‘emergency brake’ enabling any government to delay – but not stop – a decision that it thought damaged the market. On the treaties’ commitment to ‘ever closer union’, the British are unlikely to gain a full opt out, but words will be found to reassure them. The yellow card procedure could be beefed up so that national parliaments can more easily object to draft EU laws.

None of this will change the fundamentals of how the EU works. If Cameron tries to claim the contrary he will sound unconvincing. Besides, the essence of the campaign will be about whether Britain is better off in or out. Cameron likes the mantra that Britain should stay “in a reformed EU”, as it helps him to keep much of his party together. But if he wants to win the referendum, he will have to upset some Tories and admit that the EU per se is good for Britain. If he tries to keep both audiences happy, he will fail.

Charles Grant is director of the Centre for European Reform. An earlier and shorter version of this article appeared in the Observer on June 21st.

Comments

Added on 12 Jul 2015 at 08:35 by Anonymous

uk must leave EU and govern to use its own common sense not other countries or peoples.Great Britain has has faired well in the past by itself but certaily not so good since its farcicle entry into the EU.I myself would plus many other would certainly return to the UK if the UK governed itself once more, instead of throwing good british ideas and money away. Yours A JACKSON.WESTERN AUSTRALIA.

Beware the four horsemen circling Europe: Greece, Russia, migrants and the Brexit

Beware the four horsemen circling Europe: Greece, Russia, migrants and the Brexi

Beware the four horsemen circling Europe: Greece, Russia, migrants and the Brexit

Written by Rem Korteweg, 25 June 2015
From The Independent

The four horsemen circling the European Council summit

EU Council summit

The four horsemen circling the European Council summit

Written by Rem Korteweg, 24 June 2015

Simultaneous crises are the new normal. Europe’s leaders must confront a quartet of challenges if they want to prevent the European Union falling apart.

Four horsemen will be circling around this week’s European Council. They represent four crises that threaten the EU: ‘Grexit’; the Mediterranean migration crisis; Russian aggression; and Britain’s threat to leave if the club is not reformed. Any of these issues could dominate the European Council’s agenda: each could alter the fundamental character of the Union. While none of them is particularly new – Greece's economic and financial woes have troubled the EU for six years – they are circling together and affecting each other.

‘Grexit’ looms first. The risk of a Greek default and possible exit from the eurozone is the most acute of the four crises.  Over the past several months, Greece’s creditors and the government of Alexis Tsipras have played a dangerous game of chicken. As a deadline approaches for Greece to repay the IMF €1.6 billion, it seems Greece may give in. An emergency summit on Monday brought renewed hope for a deal, as Greece offered more cuts to pensions and higher taxes. Tsipras now faces an uphill battle in the European Council to convince sceptical creditors like Germany and Finland, or fellow debtors like Spain and Portugal. For a deal to stick, the Greek leader must persuade sceptical members of his own party that he is not caving in to demands from Brussels. But even if a deal is clinched, as CER’s Christian Odendahl recently pointed out, a lasting solution to Greece’s economic problems will remain elusive. And so, despite the brinkmanship of the past weeks, even if Europe’s leaders hammer out an accord with Greece they may simply buy more time rather than remove the risk of Grexit.

Russia hovers over the ‘Grexit’ talks too. Should Greece leave the eurozone, it will need to attract credit, loans and investment from elsewhere, and Russia has shown an interest. This has strengthened Tsipras’ hand in the negotiations with Brussels. On Friday June 19th, the day after the Eurogroup failed to reach a Greek bailout agreement, Tsipras flew to Saint Petersburg for a meeting with Russia’s president Vladimir Putin and Alexei Miller, the head of Gazprom. The Greek leader signed a preliminary agreement to build a $2 billion pipeline across Greece, as part of Gazprom’s ‘Turkish stream’ project. The agreement is non-binding, but pokes a finger at the Commission’s plans to reduce the EU’s dependence on Russian gas imports. Tsipras’ flirtation with Moscow, at a time of high stakes negotiations with Brussels, has raised eyebrows. An increasingly Russia-friendly Greece would make it more difficult for the EU to maintain a unified position against Russian assertive behaviour in Ukraine and Eastern Europe.

Meanwhile, people continue to die on a daily basis in Ukraine’s ongoing conflict, though at less alarming rates than before. The ‘Minsk-II’ ceasefire is flawed, but most European governments are unwilling to give up on it. They think Russian help is needed elsewhere, such as the Iran nuclear talks and the Syrian civil war. As long as the fighting does not escalate dramatically, European leaders will not step up pressure on Russia to change its behaviour. Some leaders worry about the impact of sanctions on business (though statistics show the effect is limited), and argue that the current lull warrants a thaw in relations with Moscow. While France has cancelled the controversial sale of the Mistral amphibious ships, three European oil and gas companies have recently struck new commercial deals in Russia.

For now, however, the EU remains politically unified: most of the sanctions have been extended until January 2016, while those specific sanctions linked to the annexation of Crimea have been rolled over for a year. That unity may not endure, however. Regardless of what happens in the Donbass, by the end of the year, investigators will have published their official findings into the shooting down of flight MH17, which killed 298 people. One potential finding of the report could point to Russian complicity, either in delivering the missile system, or in the chain of command that led to the missile’s firing. European leaders will then need to decide whether to punish this crime or do nothing. A push for new sanctions could strain today’s delicate unity on Russia, while inaction would be a sign of weakness and an insult to the victims. The creation of an international tribunal to persecute the culprits may offer a sensible, but unsatisfying, middle road.

The desire to avoid ruffling Russian feathers means that Ukraine will not figure prominently at the European Council meeting either. But that is a mistake. Ukraine needs money: earlier this year Kyiv said that it required some $40 billion over the next five years, to avoid economic collapse, but with the economy continuing to deteriorate that sum now looks inadequate. As Charles Grant and Ian Bond have highlighted, some of that money is coming from the IMF, and some may eventually come via debt restructuring, but most of the money will need to come from the EU and the US. If Ukraine’s economy collapses, the ensuing political chaos would threaten the pro-Western leadership in Kyiv, handing Vladimir Putin the victory he has not been able to achieve through military force.


The third horseman circling is the migration crisis in the Mediterranean. In the first six months of 2015, 1,868 migrants have died trying to cross from North Africa. According to the International Organisation for Migration (IOM), some 114,000 migrants have reached Europe, mostly landing in Greece and Italy. In summer the weather is calmest and crossings increase, so both numbers are likely to rise. In response, the EU is trying to look tough. On June 22nd, it launched an Italian-led mission to monitor the maritime movements of smugglers. A subsequent stage of the operation would see European navies board and seize migrant ships, including in Libyan waters. Diplomats in New York are currently drafting the necessary United Nations mandate. The EU also wants the permission to destroy ships used by traffickers, although this is not likely to get international or Libyan support.

None of these measures will solve the migration crisis. The EU should take a broad approach, in terms of geography and reach. It will not be enough to track smugglers’ movements at sea, although it is a start. Gathering accurate intelligence on smuggling networks requires a presence on land or a credible Libyan counterpart with which to co-operate. And a focus on Libya makes sense at first, but smugglers could soon exploit the route of least resistance by shifting their activities to other parts of the North African coast. Many migrants are Syrian refugees, but a solution to Syria’s civil war remains out of reach. The EU must also review its development and humanitarian policies in transit countries like Libya, and in source countries across the African continent. A humanitarian tragedy cannot be reduced to a mere security challenge.

The tough debate in the European Council will, however, be less about the military mission or the EU’s foreign policy response, and more about migration’s ramifications within the EU. In May, the European Commission proposed a quota system, which would alleviate the burden on countries such as Italy and Greece, and redistribute 40,000 asylum seekers across the EU. Many, including the Central and Eastern European countries, object to this mandatory system. Under quotas, they would receive many more migrants than would otherwise be expected to make their way to them. Northern member-states also object because they ultimately feel these asylum seekers should be processed in southern Europe. Italy feels abandoned by the rest of the EU and has threatened to give migrants temporary visas so they can travel to other member-states. France has retorted that this might trigger the re-imposition of French border controls. The Schengen border code allows temporary border controls in exceptional circumstances, such as in the event of a serious threat to the internal security of a member-state. But in this case its invocation would not be the result of an acute threat to internal security, but of the breakdown of European solidarity. All this could cause a serious Schengen crisis, and draw into question one of the foundations of the EU – the free movement of people.

That leads to the fourth issue, which although not a crisis (yet) will preoccupy European leaders for the coming year. Britain’s prime minister, David Cameron, will outline his EU reform agenda at the summit meeting. He hopes to get results before an in-out referendum on EU membership, which may well take place in autumn 2016.

Among other things, Cameron wants to cut EU migrants’ access to benefits (particularly those going to people in work), in the hope that this would deter people from coming to the UK. This puts him on a collision course with several member-states, including Germany and Poland, which point out that this would violate EU treaty articles banning discrimination on grounds of nationality. The other member-states are very reluctant to open up the treaties to accommodate British reforms. They fear that one or other member-state would grab the opportunity to make special demands themselves. In some countries, like France, Ireland and the Netherlands, treaty change would trigger risky referendums. Cameron’s dilemma, however, is that a lot of Conservative backbenchers will not support his effort to keep Britain in the EU unless he achieves radical change.

Other British ideas may go down better in Europe, such as strengthening the EU’s ‘competitiveness’ by trimming cumbersome regulation, negotiating free-trade agreements and deepening the single market. The forthcoming European Council gives Cameron a platform to launch his renegotiation campaign, though for now he will avoid going into the details of what he wants. The secretariat of the Council of Ministers will be tasked with taking forward the detailed work, together with British officials. Cameron will find it hard to convince his European colleagues that they need to change EU policies and institutions in order to help him. As Charles Grant wrote recently, member-states fear that Eurosceptic backbenchers will push Cameron into demanding reforms that are unobtainable. The fewer allies Cameron has in the Europe, the tougher the negotiations will be, and the more the ‘British question’ will become an irritant in European politics.

The EU’s leaders will find it hard to tame these four horsemen. No country can afford to pick and choose which of these issues to take seriously and which not. All four are dangerous, and they all require a coherent European response. The four horsemen threaten the EU precisely because they raise issues that can only be solved if governments prioritise a European solution over narrow national agendas. If a European answer cannot be found, the horsemen will continue to promote chaos, instability and mutual recrimination within the EU.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

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